Looking for an agreement? Search from over 1 million agreements now.

Tax Liability Allocation & Indemnification Agrmt

This is an actual contract by Liberty Digital.

Save time and money with our Premium Packages.
Buy all (8) recommended agreements for
$140.00 (50% savings)
Agreement Preview
Sectors: Telecommunications
Effective Date: September 09, 1999
Search This Document
TAX LIABILITY ALLOCATION AND
INDEMNIFICATION AGREEMENT


This Agreement, made and entered into as of the 9th day of September, 1999, by and between LIBERTY MEDIA CORPORATION, a Delaware corporation ("Liberty"), LIBERTY DIGITAL, INC., a Delaware corporation ("Digital"), for and on behalf of itself and each member of the Digital Group (as defined below), and LIBERTY MEDIA GROUP LLC, a Delaware limited liability company ("Liberty Group LLC").


WITNESSETH:


WHEREAS, AT&T Corp., a New York corporation ("AT&T"), Liberty, for and on behalf of each member of the Liberty Group (as defined below) and Digital Group, Tele-Communications, Inc., a Delaware corporation ("TCI"), Liberty Ventures Group LLC, a Delaware limited liability company, Liberty Group LLC, TCI Starz, Inc., a Colorado corporation, TCI CT Holdings, Inc., a Delaware corporation, each Covered Entity (as defined therein), and certain other entities which may become parties thereto pursuant to Section 23 thereof, have entered into a Tax Sharing Agreement dated as of March 9, 1999, as amended (the "AT&T/Liberty TSA"), which allocates and settles (i) the consolidated federal income Tax liability of the AT&T Affiliated Group and the TCI Affiliated Group and (ii) the state, local and foreign Tax liability in connection with all combined, consolidated and unitary state, local and foreign Tax returns which include members of the Liberty Group and either the Common Stock Group or the TCI Group; and


WHEREAS, Liberty has incurred obligations under the AT&T/Liberty TSA for and on behalf of the Digital Group; and


WHEREAS, it is deemed equitable that with respect to each Taxable period for which a Joint Return (as defined below) is filed in any Tax jurisdiction, Digital pay to Liberty an amount equal to the Digital Group's Separate Return Tax Liability (as defined below) in each such Tax jurisdiction; and


WHEREAS, it is deemed equitable that with respect to each Taxable period for which a Joint Return is filed in any Tax jurisdiction and in which the Affiliated Group for such Tax jurisdiction utilizes a net operating loss or credit of Digital, Liberty shall, in the manner prescribed hereinafter, credit against the future liability of Digital to Liberty hereunder an amount equal to the Tax benefit obtained by such Affiliated Group as a result of the utilization of such net operating loss or credit of Digital; and


WHEREAS, it is deemed equitable that in the event that Digital or its Subsidiaries for any reason become disaffiliated from any Affiliated Group, the portion of the economic


1 2


burdens and benefits of Tax payments, deficiencies and refunds of such Affiliated Group which are attributable to the period in which disaffiliation occurs and for prior Joint Return periods in which Digital or any other member of the Digital Group was included in such Affiliated Group, are to be allocated to Liberty and Digital as hereinafter provided.


NOW, THEREFORE, the parties signatory hereto agree as follows:


1. Definitions. For purposes of this Agreement, the following terms shall be defined as follows:


(a) "Affiliated Group" shall mean, for any federal, state, local or foreign Tax jurisdiction, the consolidated, combined or unitary group that files a Joint Return.


(b) "AT&T" shall have the meaning set forth in the recitals hereto.


(c) "AT&T Tax Proceedings" shall have the meaning given to such term in Section 12(b) hereof.


(d) "AT&T/Liberty TSA" shall have the meaning set forth in the recitals hereto.


(e) "Code" shall mean the Internal Revenue Code of 1986, as amended.


(f) "Common Stock Group" shall have the meaning given to such term in the AT&T/Liberty TSA.


(g) "Consolidated Return Regulations" shall mean the Treasury Regulations promulgated under Chapter 6 of Subtitle A of the Code, including, as applicable, any predecessors or successors thereto.


(h) "Contested Digital Group Item" shall have the meaning given to such term in Section 12(b) hereof.


(i) "Contributed Entities" shall mean each of the "Contributed Subsidiaries" and each "Additional Contributed Subsidiary," as such terms are defined in the Contribution Agreement.


(j) "Contribution Agreement" shall mean the Agreement dated ______, 1999, by and among Liberty, LMC Capital, LLC, a Delaware limited liability company, Liberty DMX, Inc., a Colorado corporation, TCI Interactive, Inc., a Delaware corporation, ETC w/tci, Inc., a Delaware corporation, and Digital.


(k) "Digital" shall have the meaning set forth in the first paragraph hereof.


2 3


(l) "Digital Group" shall mean Digital and each of the other Legal Entities that is or was at any time owned directly or indirectly by Digital, including, without limitation, each of the Contributed Entities and any of their direct or indirect Subsidiaries for all Taxable periods covered by this Agreement.


(m) "DIT" shall mean any "deferred intercompany transaction" or "intercompany transaction" within the meaning of the Treasury Regulations (or predecessors thereto), or any similar transaction under state, local or foreign Tax law.


(n) "Final Determination" shall mean a closing agreement with the Internal Revenue Service or the relevant state, local or foreign Taxing authorities, an agreement contained in Internal Revenue Service Form 870AD or other similar form, an agreement that constitutes a determination under Section 1313(a)(4) of the Code, a claim for refund which has been allowed, 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.


(o) "Governmental Authority" shall have the meaning set forth in the definition of "Tax."


(p) "Group" shall mean either the Liberty Group or the Digital Group.


(q) "Joint Return" shall mean any federal, state, local or foreign Tax Return that includes at least two Legal Entities, of which one Legal Entity is a member of the Digital Group and the other Legal Entity is a member of the Liberty Group, the TCI Group or the Common Stock Group.


(r) "Legal Entity" shall mean a corporation, partnership, limited liability company or other legal entity under the corporation, partnership, limited liability company or other organizational laws of a state or other jurisdiction.


(s) "Liberty" shall have the meaning set forth in the first paragraph hereof.


(t) "Liberty Group" shall have the meaning given to such term in the AT&T/Liberty TSA; provided, however, that such term shall not include any Legal Entity for such period as and to the extent that such Legal Entity is a member of the Digital Group.


(u) "Liberty Group Contribution Agreement" shall mean the Contribution Agreement, dated as of March 9, 1999, by and among Liberty, Liberty Media Management LLC, Liberty Group LLC and Liberty Ventures Group LLC.


3 4


(v) "Liberty Group LLC" shall have the meaning set forth in the first paragraph hereof.


(w) "Liberty Tax Proceedings" shall have the meaning given to such term in Section 12(b) hereof.


(x) "Losses" shall mean costs, expenses, fees, liabilities, obligations and losses.


(y) "Merger Agreement" shall mean the Agreement and Plan of Restructuring and Merger dated as of June 23, 1998, by and among AT&T, Italy Merger Corp. and TCI.


(z) "Parent" shall mean, as the context may require, the common parent of any consolidated, combined, or unitary group that has filed, or is required to file, any Joint Return.


(aa) "Redetermination" shall mean any redetermination as the result of an audit by the Internal Revenue Service (or the relevant state, local or foreign Governmental Authority), a claim for refund, an amended Tax Return or otherwise.


(bb) "Separate Return" shall mean any Tax Return that is not a Joint Return.


(cc) "Separate Return Tax Liability" shall have the meaning given to such term in Section 3 hereof.


(dd) "Subsidiary" means, as to any Legal Entity, any other Legal Entity of which at least (i) 50% of the equity and (ii) 50% of the voting interests are owned, directly or indirectly, by such first Legal Entity.


(ee) "Tax" shall mean any tax, wherever created or imposed, and whether of the United States or elsewhere, and whether imposed by a local, municipal, governmental, state, foreign, federation or other body (a "Governmental Authority"), and, without limiting the generality of the foregoing, shall include income, gross receipts, property, sales, use, license, excise, franchise, employment, payroll, unemployment insurance, social security, stamp, environmental, value added, alternative or added minimum, ad valorem, trade, recording, withholding, occupation or transfer tax, custom or duty or other like governmental assessment or charge of any kind whatsoever, together with any related interest, penalties and additions imposed by any Governmental Authority.


(ff) "Tax Item" shall mean any item of income, gain, loss, deduction, credit, recapture of credit or any other item which increases or decreases Taxes paid or payable, including an adjustment under Code Section 481 resulting from a change in accounting method.


4 5


(gg) "Tax Proceeding" shall mean any Tax audit, examination, controversy or litigation.


(hh) "Tax Return" shall mean any Tax report, return or other information (including any attached schedules or any amendments to such report, return or other information) required to be supplied to or filed with a Governmental Authority, including an information return, claim for refund, amended return or declaration or estimated Tax return.


(ii) "TCI" shall have the meaning set forth in the recitals hereto.


(jj) "TCI Group" shall have the meaning given to such term in the AT&T/Liberty TSA.


(kk) "Treasury Regulations" shall mean the Treasury Regulations promulgated under the Code.


2. Payment of Separate Return Tax Liability by Digital to Liberty. With respect to each Taxable period for which a Joint Return is filed in any Tax jurisdiction, Digital shall pay to Liberty an amount equal to the Separate Return Tax Liability of the Digital Group, determined in accordance with Section 3 hereof, such payment by Digital, including installments of estimated Tax payments, to be made to Liberty at least five business days prior to the due dates thereof (including extensions), whether or not the Affiliated Group is obligated to pay a Tax liability for the applicable period. The amount of estimated Tax payments to be made by Digital to Liberty shall be reasonably determined by Liberty.


3. Determination of Separate Return Tax Liability. For each Taxable period during which a Joint Return is filed in any Tax jurisdiction, the Separate Return Tax Liability of the Digital Group for such Tax jurisdiction shall mean the hypothetical federal, state, local or foreign Tax liability (computed without regard to any credit or net operating loss deduction) determined as if the Digital Group had filed a separate consolidated, combined or unitary Tax return for the applicable period in such Tax jurisdiction and its income were taxable at the highest corporate tax rate in effect for such period; provided, however, that the Consolidated Return Regulations (or any similar provisions of state, local or foreign Tax law) and the Joint Returns filed by the Affiliated Group in such Tax jurisdiction shall determine the timing of the recognition of Tax Items with respect to DITS and the determination of which Legal Entity shall bear the Tax benefit or burden of such Tax Items, and the Digital Group shall be responsible for the Tax Items recognized by its respective members with respect to any DITS. If the computation of the Separate Return Tax Liability of the Digital Group pursuant to this Section 3 for a Taxable period does not result in positive Tax liability, then for purposes of Section 2 hereof the Separate Return Tax Liability of the Digital Group shall be deemed to be zero, and any net operating loss or Tax credit of the Digital Group for such period shall be taken into account only as otherwise provided herein. The determination of the Separate Return Tax Liability of the Digital Group shall be made by Liberty and such determination shall be conclusive for purposes hereof.


5 6


4. Credit to Separate Return Tax Liability of Digital. If the Digital Group is entitled to a Tax credit or would incur a net operating loss during a Taxable period if it filed a separate consolidated, combined or unitary Tax return for such period, or would, if it filed a separate consolidated, combined or unitary Tax return for all periods covered by this Agreement computed as described in Section 3, be entitled to a credit or a net operating loss deduction with respect to net operating losses or credits carried forward or back to such period (exclusive of net operating losses or credits utilized by any Affiliated Group for prior or subsequent periods for which the Digital Group has previously received credit because of the Tax benefit to such Affiliated Group as described below), and if it is determined by Liberty that such credit, net operating loss or
-- End of Preview --
Home| About Us| FAQ| Subscription | Contact Us |

Privacy Policy   Terms of Service  34.204.169.76