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EXHIBIT 10.2
TAX ALLOCATION AGREEMENT
This TAX ALLOCATION AGREEMENT is dated as of September __,
2000, between THE DUN & BRADSTREET CORPORATION, a Delaware corporation (the
"Corporation"), and THE NEW D&B CORPORATION, a Delaware corporation ("New D&B")
(collectively, the "Parties").
WHEREAS, as of the date hereof, the Corporation is the common
parent of an affiliated group of domestic corporations within the meaning of
Section 1504(a) of the Code, including Dun & Bradstreet, Inc. ("D&B Opco Inc.")
and ▇▇▇▇▇'▇ Investors Service, Inc. ("Moody's"), and others, and the members of
the affiliated group have heretofore joined in filing consolidated federal
income tax returns;
WHEREAS, the Board of Directors of the Corporation has
determined that it is appropriate, desirable and in the best interests of the
Corporation and its businesses, as well as holders of shares of common stock,
par value $0.01 per share, of the Corporation (the "D&B Common Stock") to take
certain steps to reorganize the Corporation's Subsidiaries (as defined herein)
and businesses and to distribute to the holders of D&B Common Stock all the
outstanding shares of common stock of New D&B, together with associated Rights
(collectively, the "New D&B Common Shares");
WHEREAS, as a result of the Reorganization (as defined herein)
and Distribution (as defined herein), New D&B, D&B Opco Inc., and others, will
not be included in the consolidated federal income tax return of the Corporation
for the portion of the year following the Distribution or in future years;
WHEREAS, the Parties desire to allocate the tax burdens and
benefits of transactions which occurred on or prior to the Distribution Date and
to provide for certain other tax matters, including the assignment of
responsibility for the preparation and filing of tax returns, the payment of
taxes, and the prosecution and defense of any tax controversies;
NOW, THEREFORE, in consideration of the mutual agreements,
provisions and covenants contained in this Agreement, the Parties hereby agree
as follows:
ARTICLE I. DEFINITIONS
SECTION 1.1. General. Capitalized terms used in this Agreement
and not defined herein shall have the meanings that such terms have in the
Distribution Agreement. As used in this Agreement, the following terms shall
have the following meanings:
(a) "Adjusted Taxes" shall mean all Tax liabilities (or
refunds of Taxes) arising from any audit adjustment (including any state, local
or foreign audit adjustment resulting from a federal audit adjustment). Adjusted
Taxes shall include Tax liabilities (or refunds of Taxes) shown on Tax Returns
filed
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in any jurisdiction (x) in which no Tax Return with respect to such Taxes was
filed prior to the Distribution Date or (y) in which Tax Returns are filed or a
Tax liability becomes due as a result of action by a Governmental Authority in
such jurisdiction.
(b) "Agreement" shall mean this Tax Allocation Agreement.
(c) "Ancillary Agreements" shall mean all of the written
agreements, instruments, assignments or other arrangements (other than this
Agreement) entered into in connection with the transactions contemplated hereby,
including, without limitation, the Distribution Agreement, the Conveyance and
Assumption Agreements, the Employee Benefits Agreement, the Shared Transaction
Services Agreement, the Transition Services Agreement, the Data Services
Agreement, the Distribution Agent Agreement, the Insurance and Risk Management
Services Agreement and the Intellectual Property Assignment.
(d) "Audited Party" shall have the meaning as defined in
Section 4.2(a).
(e) "Code" shall mean the Internal Revenue Code of 1986, as
amended, and the Treasury regulations promulgated thereunder, including any
successor legislation.
(f) "Combined and Consolidated Income Taxes" shall mean Income
Taxes other than Separate Company Foreign, State or Local Income Taxes.
(g) "Controlled Entity" shall mean any corporation,
partnership or other entity of which another entity (i) owns, directly or
indirectly, ownership interests sufficient to elect a majority of the Board of
Directors (or persons performing similar functions) (irrespective of whether at
the time any other class or classes of ownership interests of such corporation,
partnership or other entity shall or might have such voting power upon the
occurrence of any contingency) or (ii) is a general partner or an entity
performing similar functions (e.g., a trustee).
(h) "Deferred Compensation Adjustment" shall mean a Deferred
Compensation Deduction that is disallowed for the issuer of the stock with
respect to which the option is being exercised on the basis that the Deferred
Compensation Deduction should have been taken by the employer of the individual
exercising such option.
(i) "Deferred Compensation Deduction" shall mean a deduction
with respect to deferred compensation payments and/or the exercise of stock
options in the Corporation or New D&B by
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any former employee of the Pre-Distribution D&B Group (whether or not such
employee was employed by any member of the New D&B Group or the Moody's Group
after the Distribution Date).
(j) "Distribution" shall mean the distribution on the
Distribution Date to holders of record of shares of D&B Common Stock as of the
Distribution Record Date of the New D&B Common Shares owned by the Corporation
on the basis of one New D&B Common Share for each two outstanding shares of D&B
Common Stock.
(k) "Distribution Agreement" shall mean the agreement between
the Corporation and New D&B, dated as of September __, 2000, to, among other
things, allocate certain assets and allocate and assign responsibility for
certain liabilities of the Corporation and its current and former Subsidiaries.
(l) "Distribution Date" shall mean September __, 2000.
(m) "Distribution Record Date" shall mean such date as may be
determined by the Corporation's Board of Directors as the record date for the
determination of holders entitled to receive the Distribution.
(n) "Eligible Amount" shall have the meaning as defined in
Section 4.1.
(o) "Excess Amount" shall have the meaning as defined in
Section 4.2(d).
(p) "Governmental Authority" shall mean any federal, state,
local, foreign or international court, government, department, commission,
board, bureau, agency, official or other regulatory, administrative or
governmental authority.
(q) "Income Tax Return" shall mean any Tax Return relating to
Income Taxes.
(r) "Income Taxes" shall mean any federal, state, local or
foreign Taxes determined by reference to income, net worth, gross receipts or
capital or any federal, state, local or foreign Taxes imposed in lieu of income
Taxes.
(s) "Indemnifying Party" shall have the meaning as defined in
Section 3.6(c).
(t) "Indemnitee" shall have the meaning as defined in Section
3.6(c).
(u) "IRS" shall mean the Internal Revenue Service.
(v) "Moody's Group" shall have the meaning as defined in the
Distribution Agreement.
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(w) "New D&B Group" shall have the meaning as defined in the
Distribution Agreement.
(x) "Nonperforming Party" shall have the meaning as defined in
Section 5.2.
(y) "Other Taxes" shall mean any federal, state, local or
foreign Taxes other than Income Taxes.
(z) "Parties" shall have the meaning as defined in the
recitals hereto.
(aa) "Post-Distribution Tax Period" shall mean any period
beginning after the Distribution Date and the portion of any period including
but ending after the Distribution Date that begins on the day following the
Distribution Date.
(bb) "Pre-Distribution Tax Period" shall mean any period
ending on or before the Distribution Date and the portion of any period
including but ending after the Distribution Date that ends on the Distribution
Date.
(cc) "Pre-Distribution D&B Group" shall mean the Corporation
and all of its Subsidiaries (direct and indirect, domestic and foreign) at any
time prior to the Distribution.
(dd) "Proceeding" shall have the meaning as defined in
Section 5.1(a).
(ee) "Reorganization" shall mean the series of contributions
and distributions of Controlled Entities and assets, transfers, including
transfers of real property, and assumptions of liabilities, and other
transactions whereby the New D&B Group and the Moody's Group are formed and all
Controlled Entities of the Corporation prior to the Distribution (other than New
D&B and the members of the Moody's Group) are placed under the control of New
D&B in preparation for the Distribution.
(ff) "Reorganization Tax Payment" shall mean the payment of
any Tax for which either Party is liable pursuant to Section 3.4 of this
Agreement and the imposition and/or payment of which will permit the other Party
or any of its Subsidiaries to increase deductions, losses or Tax credits or
decrease income, gains or recapture of Tax credits for any taxable period or
periods.
(gg) "Separate Company State, Local or Foreign Income Taxes"
shall mean any Taxes with respect to a state, local or foreign Income Tax Return
filed on a separate basis for the most recent Tax period in which an Income Tax
Return was filed prior to the Distribution Date (whether or not it is
subsequently determined that such Income Tax Return should have been filed on a
combined basis).
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(hh) "Shared Liability Tax Items" shall mean Tax Items in
respect of which the Parties share liability for Taxes
pursuant to the terms of this Agreement or any Ancillary
Agreement.
(ii) "Subsidiary" shall have the meaning as defined in
the Distribution Agreement.
(jj) "Tax" or "Taxes" whether used in the form of a noun or
adjective, shall mean taxes on or measured by income, capital, net worth,
franchise, gross receipts, sales, use, excise, payroll, personal property, real
property, ad-valorem, value-added, leasing, leasing use or other taxes, levies,
imposts, duties, charges or withholdings of any nature. Whenever the term "Tax"
or "Taxes" is used (including, without limitation, regarding any duty to
reimburse another Party for indemnified taxes or refunds or credits of taxes) it
shall include penalties, fines, additions to tax and interest thereon.
(kk) "Tax Benefit" shall mean the sum of the amount by which
the Tax liability (after giving effect to any alternative minimum or similar
Tax) of a corporation or group of affiliated corporations to an applicable
taxing authority is reduced (including, without limitation, by deduction,
entitlement to refund, credit or otherwise, whether available in the current
taxable year, as an adjustment to taxable income in any other taxable year or as
a carryforward or carryback, as applicable) plus any interest from such
government or jurisdiction relating to such Tax liability.
(ll) "Tax Detriment" shall mean the sum of the amount by which
the Tax liability (after giving effect to any alternative minimum or similar
Tax) of a corporation or group of affiliated corporations to an applicable
taxing authority is increased plus any interest or penalties due to such
government or jurisdiction relating to such Tax liability.
(mm) "Tax Item" shall mean any item of income, capital gain,
net operating loss, capital loss, deduction, credit or other Tax attribute
relevant to the calculation of a Tax liability.
(nn) "Tax Returns" shall mean all reports or returns
(including information returns) required to be filed or that may be filed for
any period with any taxing authority (whether domestic or foreign) in connection
with any Tax or Taxes (whether domestic or foreign).
(oo) "Timing Adjustment" shall mean any adjustment which (x)
decreases deductions, losses or credits or increases income (including any
increases in income where no income was previously reported), gains or recapture
of Tax credits for the
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period in question, and for which either Party is liable pursuant to this
Agreement, and (y) will permit an increase in deductions, losses or Tax credits
or a decrease in income, gains or recapture of Tax credits for another taxable
period, and with respect to which the other Party or any of its Subsidiaries
benefits.
(pp) "Unadjusted Taxes" shall mean Tax liabilities (or refunds
of Taxes) shown as due (or, in the case of a refund, as receivable) on a Tax
Return. Unadjusted Taxes shall not include Tax liabilities (or refunds of Taxes)
shown on Tax Returns filed in any jurisdiction (x) in which no Tax Return with
respect to such Taxes was filed prior to the Distribution Date or (y) in which
Tax Returns are filed or a Tax liability becomes due as a result of action by a
Governmental Authority in such jurisdiction.
SECTION 1.2. References; Interpretation. References in this
Agreement to any gender include references to all genders, and references to the
singular include references to the plural and vice versa. The words "include",
"includes" and "including" when used in this Agreement shall be deemed to be
followed by the phrase "without limitation". Unless the context otherwise
requires, references in this Agreement to Articles, Sections, Exhibits and
Schedules shall be deemed references to Articles and Sections of, and Exhibits
and Schedules to, such Agreement. Unless the context otherwise requires, the
words "hereof", "hereby" and "herein" and words of similar meaning when used in
this Agreement refer to this Agreement in its entirety and not to any particular
Article, Section or provision of this Agreement.
ARTICLE II. PREPARATION AND FILING OF TAX RETURNS
SECTION 2.1. Predistribution Tax Returns.
(a) All federal Income Tax Returns and combined state, local
and foreign Income Tax Returns of the Pre-Distribution D&B Group for the 1999
and 2000 Tax years shall be prepared by New D&B and filed by the Corporation,
provided such Tax Returns are prepared in accordance with Section 2.3 hereof.
(b) In the case of Tax Returns for non-combined foreign, state
and local Income Taxes and Other Taxes of any member of the Pre-Distribution D&B
Group that may be or are required to be filed for any period beginning before
the Distribution Date, New D&B shall prepare and file such Tax Returns (or shall
cause such Tax Returns to be prepared and filed) if they relate to a member of
the New D&B Group and the Corporation shall prepare and file such Tax Returns
(or shall cause such Tax Returns to be prepared and filed) if they relate to a
member of the Moody's Group.
(c) In the case of any partnership in which a member of the
Pre-Distribution D&B Group is the designated tax matters
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partner, the Corporation or New D&B, as the case may be, shall cause such entity
to prepare and file such partnership's Tax Returns for all periods beginning
prior to the Distribution Date.
SECTION 2.2. Post-Distribution Tax Returns.
(a) The filing of all Tax Returns for periods beginning on or
after the Distribution Date shall be the responsibility of the Corporation if
they relate to any member of the Moody's Group and shall be the responsibility
of New D&B if they relate to any member of the New D&B Group.
(b) In the case of any partnership in which a member of the
Pre-Distribution D&B Group is the designated tax matters partner, the
Corporation or New D&B, as the case may be, shall cause such entity to continue
to prepare and file such partnership's Tax Returns.
SECTION 2.3. Manner of Preparation.
(a) Unless otherwise required by the IRS, any Governmental
Authority or a court, the Parties hereby agree to treat the Distribution Date as
the last day on which any member of the New D&B Group was included in the
Pre-Distribution D&B Group and to file all Tax Returns, and to take all other
actions, in a manner consistent with such position. For any period that includes
but does not end on the Distribution Date, to the extent permitted by law or
administrative practice, the taxable year of each member of the Pre-Distribution
D&B Group and any group of such members shall be treated as ending on the
Distribution Date.
(b) In the case of federal Income Tax Returns and combined
state, local and foreign Income Tax Returns, the non-preparing Party to be
included in such Tax Returns shall prepare, in a manner consistent with prior
practice, a tax package for itself and each of its Subsidiaries included in the
relevant Tax Return and shall provide such tax package to the Party preparing
the Tax Return at least 90 days prior to the due date (including extensions) of
the Tax Return. Each such tax package shall be in the form of pro forma Tax
Returns for the non-preparing Party and each of its included Subsidiaries.
(c) To the extent not inconsistent with Section 2.3(d) of this
Agreement, with regard to Tax Returns to be prepared by one Party or any of its
Subsidiaries with respect to which the other Party has liability under Article
III hereof, the preparing Party shall submit such Tax Return to the other Party
at least 30 days prior to the date on which such Tax Return is due (including
extensions). The other Party shall submit its comments to the preparing Party
within 10 days of receipt of such Tax Return. The preparing Party shall alter
the Tax Return to reflect the comments of the other Party with respect to Tax
Items in respect of which the other Party is wholly liable for Taxes unless the
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preparing Party receives an opinion of tax counsel, which counsel shall be
reasonably acceptable to the other Party, to the effect that such alteration
would create a significant risk of the imposition of a penalty on the filing
Party or any of its Subsidiaries. New D&B shall propose the positions to be
taken with respect to any Shared Liability Tax Items, and the Parties shall
attempt to reach agreement on positions taken with respect to the Shared
Liability Tax Items. In the event that the Parties cannot agree with respect to
the positions taken on any Shared Liability Tax Items, New D&B shall have the
right to determine the position taken with respect to such Shared Liability Tax
Items; provided, however, that, if the Parties have not agreed with respect to
the position taken, then, notwithstanding Article III hereof, the Corporation
shall not be liable for any additional Tax liability imposed as a result of the
position taken with respect to such Shared Liability Tax Items as compared with
the position proposed by the Corporation.
(d) All Tax Returns filed on or after the Distribution Date
shall be prepared on a basis that is consistent with the rulings obtained from
the IRS or any other Governmental Authority in connection with the
Reorganizations or Distribution (in the absence of a controlling change in law
or circumstances) and shall be filed on a timely basis (including pursuant to
extensions) by the Party responsible for such filing under this Agreement. In
the absence of a controlling change in law or circumstances and unless deviation
from past practice would have no adverse effect on either Party, all Tax Returns
filed after the date of this Agreement shall be prepared on a basis consistent
with the elections, accounting methods, conventions, assumptions and principles
of taxation used for the most recent taxable periods for which Tax Returns
involving similar Tax Items have been filed. In the event of a material
deviation from such past practices by either Party, the deviating Party shall
not be in breach of this Agreement, but, notwithstanding Article III, the other
Party shall have no liability for any increased Taxes resulting from such
deviation and the deviating Party shall hold the other Party harmless from any
such increased Tax liability; provided, however, either Party filing any Tax
Return that does not conform to such past practices shall not be liable for any
additional Tax liability imposed (subject to Article III), in whole or in part,
as a result of such deviation from past practice if: (i) for Tax Returns filed
within three years of the Distribution Date, 30 days prior to the filing of such
Tax Return, the Party filing such Tax Return notifies the other Party; and (ii)
the Party filing such Tax Return establishes that conformity with past practice
involves a significant risk of the imposition of a penalty.
ARTICLE III. PAYMENT OF TAXES
SECTION 3.1. Separate Income Taxes. The Moody's Group and the
New D&B Group shall be liable for and shall pay their own
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Separate Company Foreign, State or Local Income Taxes (or be entitled to their
own refunds), including any liabilities arising from any audit adjustment
(including any state, local or foreign audit adjustment resulting from a federal
audit adjustment) for all periods. New D&B and the Corporation shall each be
liable for one-half of any Separate Company Foreign, State or Local Income Taxes
(or be entitled to one-half of such refunds) that do not relate to any member of
the New D&B Group or any member of the Moody's Group.
SECTION 3.2. Combined and Consolidated Income Taxes.
In the case of any Combined and Consolidated Income Taxes:
(a) Pre-Distribution Taxes.
(i) Unadjusted Taxes. The Corporation and New D&B shall each
be liable for and shall pay one-half of all Unadjusted Taxes (or receive
one-half of such refunds) of the Pre-Distribution D&B Group attributable to the
Pre-Distribution Tax Period to the extent such Unadjusted Taxes become due and
payable (or, in the case of refunds, are received) after the Distribution Date.
The amount of Unadjusted Taxes payable by the Corporation and New D&B pursuant
to this Section 3.2 (a)(i) shall be reduced by the amount of any estimated Taxes
paid by the Pre-Distribution D&B Group (or any member thereof) prior to the
Distribution Date. If the amount of any such estimated Taxes exceeds the amount
of Unadjusted Taxes payable pursuant to this Section 3.2(a)(i), then the Party
benefitting from such excess shall pay the other Party half of the amount of
such excess.
(ii) Adjusted Taxes. Adjusted Taxes with respect to any
Pre-Distribution Tax Period (A) shall be the responsibility of New D&B to the
extent that the audit adjustments giving rise to the Adjusted Taxes relate to
any member of the New D&B Group, (B) shall be the responsibility of the
Corporation to the extent that the audit adjustments giving rise to the Adjusted
Taxes relate to any member of the Moody's Group, and (C) shall be shared equally
by the Corporation and New D&B to the extent that the audit adjustments giving
rise to the Adjusted Taxes are attributable to neither a member of the New D&B
Group nor a member of the Moody's Group. Notwithstanding the foregoing, if the
Adjusted Taxes attributable to the New D&B Group or the Moody's Group pursuant
to clauses (A) or (B) as the case may be, on the one hand, are a Tax liability
and the Adjusted Taxes attributable to the other Party pursuant to such clauses,
on the other hand, are a Tax refund, then (x) the Party with respect to which
the Adjusted Taxes are a Tax liability shall pay the full amount of any net
Adjusted Tax liability to the relevant taxing authority; (y) the Party with
respect to which the Adjusted Taxes are a Tax refund shall be entitled to
receive the full amount of any net Adjusted Tax refund from the relevant taxing
authority; and (z) the Party with respect to which the Adjusted Taxes are a Tax
liability shall pay the other Party the amount of such Tax refund (net of any
amount received from a taxing authority pursuant to clause (y)). If the
preceding sentence would apply but for the fact that the Adjusted Taxes in
question are attributed to the Parties pursuant to clause (C) (rather than
clause (A) or (B)), then the preceding sentence shall apply but shall be
modified to account for the shared liability of the Parties pursuant to clause
(C).
(b) Post-Distribution Taxes. The Moody's Group and the New D&B
Group shall each be responsible for their own Tax liabilities (or be entitled to
their own refunds) attributable to all Post-Distribution Tax Periods, including
Taxes shown on Tax Returns that have not yet been filed, as well as liabilities
arising from any audit adjustment (including any state, local or foreign audit
adjustment resulting from a federal audit adjustment).
(c) Any apportionment of Tax Items between Pre-Distribution
Tax Periods and Post-Distribution Tax Periods will
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be done on a closing of the books basis, except that Tax Items that are
calculated on an annual basis shall be apportioned on a time basis. The
apportionment of subpart F income (as defined in Section 952 of the Code) shall
be governed by the timing provisions of Section 951 of the Code.
SECTION 3.3. Other Taxes. The Moody's Group and the New D&B
Group shall each be responsible for their own Other Taxes (or be entitled to
their own refunds) for all periods. New D&B and the Corporation shall each be
liable for one-half of any Other Taxes (or be entitled to one-half of such
refunds) that do not relate to any member of the New D&B Group or any member of
the Moody's Group.
SECTION 3.4. Restructuring Taxes. Notwithstanding any
statement to the contrary in this Agreement and except as otherwise provided in
the Distribution Agreement, to the extent that any Taxes are found to arise out
of the Reorganization or the Distribution, then half of any such Tax liability
incurred by the Parties (or any of their Subsidiaries) shall be the
responsibility of New D&B and the other half of any such Tax liability shall be
the responsibility of the Corporation.
SECTION 3.5. Gain Recognition Agreements.
(a) Notwithstanding Sections 2.1 and 2.3 of this Agreement,
New D&B shall prepare all documentation required to be filed with any Tax
Returns, including required annual certifications, relating to gain recognition
agreements under Section 367(a) of the Code entered into with respect to
transactions relating to members of the New D&B Group, and the Corporation shall
prepare all documentation required to be filed with any Tax Returns, including
required annual certifications, relating to gain recognition agreements under
Section 367(a) of the Code entered into with respect to transactions relating to
members of the Moody's Group. Such documentation shall be provided to the Party
filing the relevant Tax Return at least 30 days prior to the date on which such
Tax Return is due (including extensions), and the Party filing such Tax Return
shall be obligated to file such documentation with the appropriate Tax Return.
(b) In the event that any member of the Moody's Group
transfers, liquidates or otherwise disposes of the stock or assets of any entity
subject to a gain recognition agreement under Section 367(a) of the Code that
results in any member of the New D&B Group recognizing gain pursuant to such
gain recognition agreement, then the Corporation shall be liable for any
resulting Taxes that any member of the New D&B Group is required to pay. In the
event that any member of the New D&B Group transfers, liquidates or otherwise
disposes of the stock or assets of any entity subject to a gain recognition
agreement under Section 367(a) of the Code that results in any member of
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the Moody's Group recognizing gain pursuant to such gain recognition agreement,
then New D&B shall be liable for any resulting Taxes that any member of the
Moody's Group is required to pay.
SECTION 3.6. Indemnification.
(a) Indemnification by New D&B. New D&B shall indemnify,
defend and hold harmless the Moody's Group (and their respective affiliates)
from and against any and all Tax liabilities allocated to the New D&B Group by
this Agreement.
(b) Indemnification by the Corporation. The Corporation shall
indemnify, defend and hold harmless the New D&B Group (and their respective
affiliates) from and against any and all Tax liabilities allocated to the
Moody's Group by this Agreement.
(c) Indemnity Payments.
(i) To the extent that one Party (the "Indemnifying Party")
owes money to another Party (the "Indemnitee") pursuant to this Section 3.6, the
Indemnitee shall provide the Indemnifying Party with its calculations of the
amount required to be paid pursuant to this Section 3.6, showing such
calculations in sufficient detail so as to permit the Indemnifying Party to
understand the calculations. The Indemnifying Party shall pay the Indemnitee, no
later than the later of 30 business days prior to the due date (including
extensions) of the relevant Tax Returns and 14 business days after the
Indemnifying Party receives the Indemnitee's calculations, the amount that the
Indemnifying Party is required to pay or indemnify the Indemnitee under this
Section 3.6 unless the Indemnifying Party disagrees with the Indemnitee's
calculations (in which case any dispute regarding such calculations shall be
resolved in accordance with Section 5.4 of this Agreement).
(ii) All indemnity payments shall be net of any Tax Benefit
and grossed-up in the case of any Tax Detriment to the Indemnitee as a result of
the payment of such Taxes.
(iii) All indemnity payments shall be treated as contributions
to capital and/or dividends immediately prior to the Distribution.
ARTICLE IV. TAX ATTRIBUTES, TIMING ADJUSTMENTS AND
REORGANIZATION TAX PAYMENTS
SECTION 4.1. Carrybacks. In the event any net operating loss,
capital loss or credit of either party for any Post-Distribution Tax Period is
eligible to be carried back to a Pre-Distribution Tax Period for which a
consolidated or combined
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Income Tax Return was filed (any such amount, an "Eligible Amount"), such party
may, to the extent permitted under applicable Tax law, elect not to carry back
such Eligible Amount. To the extent any Eligible Amount is carried back by and
used by either New D&B or the Corporation for a Pre-Distribution Tax Period,
then the Corporation shall be obligated to pay one-half of any refund that it
receives as a result of such carried back Eligible Amount to New D&B. Upon
request by the either Party, the other Party shall, within 90 days of such
request, deliver an officer's certificate to the requesting Party stating
whether or not it has any Eligible Amount.
SECTION 4.2. Timing Adjustments, Reorganization Tax
Payments, and Deferred Compensation Deductions.
(a) Deferred Compensation Deductions.
(i) New D&B shall be entitled to take all Deferred
Compensation Deductions that result from the exercise of stock options in New
D&B, and the Corporation shall be entitled to take all Deferred Compensation
Deductions that result from the exercise of stock options in the Corporation, in
each case notwithstanding the fact that some or all of the services in respect
of which the stock option was granted may have been performed for the other
party. If, after the date of this Agreement, the IRS or any other Governmental
Authority issues rules, regulations or other authority contrary to the above
treatment of such Deferred Compensation Deductions, then New D&B and the
Corporation shall confer and determine whether a change in the above reporting
position should be made. If the parties disagree as to whether the reporting
position should be changed, then counsel reasonably acceptable to both parties
will be retained to make the determination. For purposes of this Agreement, the
issuer's inability to claim such Deferred Compensation Deduction because of a
change in the above reporting position shall be treated as a Deferred
Compensation Adjustment and governed by Section 4.2(a)(ii) below.
(ii) If an audit or other examination of any Income Tax Return
for any taxable period shall result (by settlement or otherwise) in a Deferred
Compensation Adjustment, then the Party for whom the Deferred Compensation
Deduction was disallowed (the "Audited Party") shall promptly notify the other
Party (the other Party in this case shall be the Indemnifying Party) of the
disallowance of such Deferred Compensation Deduction. Subject to subsection
(iii) below regarding contests, the Indemnifying Party shall, within 10 days of
such notification, pay the Audited Party the amount of the Tax Detriment to the
Audited Party resulting from the denial of such Deferred Compensation Deduction.
It is the intention of the parties that if at any time the Audited Party is
required to make a payment with respect to such Deferred Compensation
Adjustment, then the Indemnifying Party shall pay the amount of such payment to
the Audited Party prior to the time any such payment is due.
(iii) The Indemnifying Party may, within ten business days of
receiving the notification referred to in clause (ii), request the consent of
the Audited Party to contest the denial of the Deferred Compensation Deduction.
The Indemnifying Party and the Audited Party shall consult in good faith
regarding the Audited Party's consent to the contest. The Indemnifying Party may
not contest the denial of any Deferred Compensation Deduction unless (a) the
Indemnifying Party receives written consent from the Audited Party permitting
the contest within ten business days of the Indemnifying Party's request for
such consent; or (b) in the event that the Audited Party does not so consent,
the Indemnifying Party receives an opinion from counsel mutually acceptable to
the Indemnifying Party and the Audited Party stating that the Indemnifying Party
on behalf of the Audited Party will more likely than not prevail in such contest
within 60 days of such request. In either event, to the extent practicable, the
Indemnifying Party shall have the right to control the conduct of the contest,
including settlement or other disposition thereof, and shall bear all costs and
expenses of such contest; provided, however, that the Audited Party shall have
the right to consult with the Indemnifying Party regarding the contest at the
Audited Party's own expense. The Audited Party shall cooperate with the
Indemnifying Party and its representatives in a prompt and timely manner in
connection with such contest. If the Audited Party does not consent to the
contest, and the opinion of counsel referred to in clause (b) is not obtained,
the Indemnifying Party shall pay the amount due to the Audited Party pursuant to
this section at the end of the 60 day period referred to in clause (b). If the
Indemnifying Party contests the denial but does not prevail in such contest, the
Indemnifying Party shall pay the amount due to the Audited Party pursuant to
this section within ten business days of receipt of notice of the final
disposition of the contest.
(b) If an audit or other examination of any Income Tax Return
for any taxable period shall result (by settlement or otherwise) in a Timing
Adjustment, or if any Reorganization Tax Payment is made by either Party, then:
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(i) The Party benefitting from the Timing Adjustment or
Reorganization Tax Payment shall pay the other Party the Excess Amount of any
Tax Benefit that results from such Timing Adjustment or Reorganization Tax
Payment within 30 business days of the date such Tax Benefits are realized; and
(ii) Notwithstanding the foregoing, the Party entitled to
obtain such Tax Benefit shall only be required to take steps to obtain such Tax
Benefit or to pay the other Party if, in the opinion of its tax counsel, which
counsel shall be reasonably acceptable to the other Party, the reporting of such
Tax Benefit shall not expose the first Party to the imposition of a penalty.
(c) If an audit or other examination of any Income Tax Return
for any taxable period shall result (by settlement or otherwise) in a Timing
Adjustment to the Tax Detriment of either Party after the Distribution Date,
then the other Party shall pay the Party suffering such Tax Detriment the lesser
of (i) the Excess Amount of any such Tax Detriment and (ii) the Excess Amount of
the actual Tax Benefit to the other Party that results from such Timing
Adjustment.
(d) The "Excess Amount" of any Tax Benefit or Tax Detriment is
the absolute value of the difference between (x) the amount of the Tax Benefit
or Tax Detriment and (y) the amount of such Tax Benefit or Tax Detriment
allocable pursuant to this Agreement to the Party obtaining such Tax Benefit or
Tax Detriment.
(e) Realization of Tax Benefits.
(i) For purposes of this Section 4.2, a Tax Benefit shall be
deemed to have been realized at the time any refund of Taxes is received or
applied against other Taxes due, or at the time of filing of a Tax Return
(including any Tax Return relating to estimated Taxes) on which a loss,
deduction or credit is applied in reduction of Taxes which would otherwise be
payable. Where a Party has other losses, deductions, credits or similar items
available to it, such deductions, credits or similar items of such Party may
only be applied after the use of any Timing Adjustment or Reorganization Tax
Payment.
(ii) Either Party may, at its election, pay the amount of any
Tax Benefit to the other Party rather than filing amended returns or otherwise
reflecting adjustments or taking positions on its Tax Returns. If such an
election is made, the Party making such election will be treated as having
realized a Tax Benefit at the time it would have realized a Tax Benefit had it
chosen to file amended returns or otherwise to reflect adjustments or to take
positions on its Tax Returns.
(f) Tax Benefits Subsequently Denied. If any Tax Benefit
realized pursuant to Section 4.2(e)(i) is subsequently
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denied, then the Corporation or New D&B, as the case may be, shall be obligated
to refund the amount of any payment for such Tax Benefit in accordance with
Section 3.6(c) of this Agreement.
ARTICLE V. TAX AUDITS, TRANSACTIONS AND OTHER MATTERS
SECTION 5.1. Tax Audits and Controversies.
(a) In the case of any audit, examination or other proceeding
("Proceeding") brought against either Party (or its Subsidiaries) with respect
to Taxes for which the other Party is or may be liable in whole or in part
pursuant to this Agreement, the Party subject to such Proceeding shall promptly
inform the other Party and shall execute or cause to be executed any powers of
attorney or other documents necessary to enable the other Party to take all
actions desired with respect to such Proceeding consistent with this Section
5.1. Each Party shall have the right to control, at its own expense, the portion
of any such Proceeding that relates to Taxes for which such Party is or may be
liable pursuant to this Agreement; provided, however, that New D&B shall have
the right to control, with each party bearing half of the related expenses, that
portion of any Proceeding relating to Shared Liability Tax Items.
(b) The Party in control of a Proceeding or any part thereof
pursuant to Section 5.1(a) above shall consult with the other Party with respect
to any issue that may affect such other Party (or its Subsidiaries). The Party
in control of such Proceeding or any part thereof shall not enter into any final
settlement or closing agreement that may adversely affect the other Party (or
its Subsidiaries) without the consent of such other Party, which consent may not
unreasonably be withheld. Where consent to any final settlement or closing
agreement is withheld, the Party withholding consent shall continue or initiate
further proceedings, at its own expense, and the liability of the Party in
control of such Proceeding with respect to Taxes encompassed by the proposed
final settlement or closing agreement shall not exceed the liability that would
have resulted from the proposed closing agreement or final settlement (including
interest, additions to Tax and penalties which have accrued at that time).
(c) If New D&B determines that a Proceeding with respect to
any Shared Liability Tax Item should be pursued in the United States District
Court or any other forum in which payment of the Taxes in dispute must be made
in advance, then the Corporation shall make one-half of the advance payment
required, and New D&B shall make the other half of the advance payment required,
with respect to such Shared Liability Tax Item at the time such advance payment
is due. If the total Tax liability with respect to such Shared Liability Tax
Item is later determined to be greater than the amount of the advance payment,
then the Corporation shall pay New D&B one-half of such
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difference, and if the total Tax liability with respect to such Shared Liability
Tax Item is later determined to be less than the amount of the advance payment,
then New D&B shall pay the Corporation one-half of such difference, in either
case at the time of such later determination.
(d) If the Indemnifying Party determines that a Proceeding
with respect to any Deferred Compensation Adjustment should be pursued in the
United States District Court or any other forum in which payment of the Taxes in
dispute must be made in advance, then the Indemnifying Party shall make the
advance payment required with respect to such Deferred Compensation Adjustment
at the time such advance payment is due. If the total Tax liability with respect
to such Deferred Compensation Adjustment is later determined to be greater than
the amount of the advance payment, then the Indemnifying Party shall pay the
difference, and if the total Tax liability with respect to such Deferred
Compensation Adjustment is later determined to be less than the amount of the
advance payment, then the Audited Party shall pay the Indemnifying Party the
difference, in either case at the time of such later determination.
SECTION 5.2. Cooperation. The Corporation and New D&B shall
cooperate with each other in the filing of any Tax Returns and the conduct of
any audit or other proceeding and each shall execute and deliver such powers of
attorney and other documents and make available such information and documents
as are necessary to carry out the intent of this Agreement. To the extent such
cooperation involves the services of officers, directors, employees, or agents
of either Party, such services shall be made available in accordance with
Section 2.9 of the Distribution Agreement. Each Party agrees to notify the other
Party of any audit adjustment that does not result in Tax liability but can
reasonably be expected to affect Tax Returns of the other Party or any of its
Subsidiaries. Notwithstanding any other provision of this Agreement, if a Party
(the "Nonperforming Party") fails to give its full cooperation and use
reasonably diligent efforts in the conduct of an audit or other proceeding as
provided by this Section 5.2, and such failure results in the imposition of
additional Taxes for the period or periods involved in the audit or other
proceeding, the Nonperforming Party shall be liable in full for such additional
Taxes.
SECTION 5.3. Retention of Records; Access.
(a) The Corporation and New D&B shall, and shall cause each of
their Controlled Entities to, retain adequate records, documents, accounting
data and other information (including computer data) necessary for the
preparation and filing of all Tax Returns required to be filed by any member of
the Pre-Distribution D&B Group or any combination of such members and for any
audits and litigation relating to such Tax Returns or to any
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Taxes payable by any member of the Pre-Distribution D&B Group or any combination
of such members.
(b) The Corporation and New D&B shall, and shall cause each of
their Controlled Entities to, give to the other Party reasonable access to (i)
all records, documents, accounting data and other information (including
computer data) necessary for the preparation and filing of all Tax Returns
required to be filed by any member of the Pre-Distribution D&B Group or any
combination of such members and for any audits and litigation relating to such
Tax Returns or to any Taxes payable by any member of the Pre-Distribution D&B
Group or any combination of such members and (ii) its personnel and premises,
for the purpose of the review or audit of such reports or returns to the extent
relevant to an obligation or liability of a Party under this Agreement and in
accordance with the procedures provided in Article IV of the Distribution
Agreement.
(c) The obligations set forth above in Sections 5.3(a) and
5.3(b) shall continue until the final conclusion of any litigation to which the
records and information relate or until expiration of all applicable statutes of
limitations, whichever is longer. For purposes of the preceding sentence, each
Party shall assume that no applicable statute of limitations has expired unless
such Party has received notification or otherwise has knowledge that such
statute of limitations has expired.
(d) Notwithstanding any other provision of this Agreement, if
a Party fails to comply with any of its obligations set forth in this Section
5.3 and such failure results in the imposition of additional Taxes, such
nonperforming Party shall be liable in full for such additional Taxes.
SECTION 5.4. Dispute Resolution. Any dispute or claim arising
out of, in connection with, or in relation to the interpretation, performance,
nonperformance, validity or breach of this Agreement or otherwise arising out
of, or in any way related to this Agreement, shall be resolved in the manner set
forth in Article VI of the Distribution Agreement.
SECTION 5.5. Confidentiality; Ownership of Information;
Privileged Information. The provisions of Article IV of the Distribution
Agreement relating to confidentiality of information, ownership of information,
privileged information and related matters shall apply with equal force to any
records and information prepared and/or shared by and among the Parties in
carrying out the intent of this Agreement.
ARTICLE VI. MISCELLANEOUS
SECTION 6.1. Complete Agreement; Construction. This
Agreement, including the Exhibits and Schedules, and the Ancillary Agreements
shall constitute the entire agreement
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between the Parties with respect to the subject matter hereof and shall
supersede all previous negotiations, commitments and writings with respect to
such subject matter. In the event of any inconsistency between this Agreement
and any Schedule hereto, the Schedule shall prevail.
SECTION 6.2. 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 both Parties.
SECTION 6.3. Survival of Agreements. Except as otherwise
contemplated by this Agreement, all covenants and agreements of the Parties
contained in this Agreement shall survive the Distribution Date.
SECTION 6.4. Expenses. Except as otherwise set forth in this
Agreement, all costs and expenses incurred on or prior to the Distribution Date
(whether or not paid on or prior to the Distribution Date) in connection with
the preparation, execution, delivery and implementation of this Agreement shall
be shared equally by the Parties. Except as otherwise set forth in this
Agreement, each Party shall bear its own costs and expenses incurred after the
Distribution Date.
SECTION 6.5. 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 the Corporation:
Moody's Corporation
▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: General Counsel
To New D&B:
The Dun & Bradstreet Corporation
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: General Counsel
SECTION 6.6. Waivers. The failure of any Party to require
strict performance by the other Party of any provision in
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this Agreement will not waive or diminish that Party's right to demand strict
performance thereafter of that or any other provision hereof.
SECTION 6.7. Amendments. This Agreement may not be
modified or amended except by an agreement in writing signed by the Parties
hereto.
SECTION 6.8. Assignment. 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, and any attempt to
assign any rights or obligations arising under this Agreement without such
consent shall be void.
SECTION 6.9. Successors and Assigns. 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.
SECTION 6.10. Termination. This Agreement may be terminated,
amended, modified or abandoned at any time prior to the Distribution by and in
the sole discretion of the Corporation without the approval of New D&B or the
stockholders of the Corporation. In the event of such termination, no Party
shall have any liability of any kind to any other Party or any other person.
After the Distribution, this Agreement may not be terminated except by an
agreement in writing signed by the Parties.
SECTION 6.11. Controlled Entities. Each of the Parties hereto
shall cause to be performed, and hereby guarantees the performance of, all
actions, agreements and obligations set forth herein to be performed by any
Controlled Entity of such Party or by any entity that is contemplated to be a
Controlled Entity of such Party on and after the Distribution Date.
SECTION 6.12. Third Party Beneficiaries. This Agreement is
solely for the benefit of the Parties hereto and their respective Subsidiaries
and should not be deemed to confer upon third parties any remedy, claim,
liability, reimbursement, claim of action or other right in excess of those
existing without reference to this Agreement.
SECTION 6.13. Title and Headings. Titles and headings to
sections herein are inserted for the convenience of reference only and are not
intended to be a part of or to affect the meaning or interpretation of this
Agreement.
SECTION 6.14. Exhibits and Schedules. The Exhibits and
Schedules 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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SECTION 6.15. GOVERNING LAW. THIS AGREEMENT SHALL BE
GOVERNED BY AND CONSTRUED 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.
SECTION 6.16. Consent to Jurisdiction. Without limiting the
provisions of Section 5.4 hereof, each of the Parties irrevocably submits to the
exclusive jurisdiction of (a) the Supreme Court of the State of New York, New
York County, and (b) the United States District Court for the Southern District
of New York, for the purposes of any suit, action or other proceeding arising
out of this Agreement or any transaction contemplated hereby. Each of the
Parties agrees to commence any action, suit or proceeding relating hereto either
in the United States District Court for the Southern District of New York or if
such suit, action or other proceeding may not be brought in such court for
jurisdictional reasons, in the Supreme Court of the State of New York, New York
County. Each of the Parties further agrees that service of any process, summons,
notice or document by U.S. registered mail to such Party's respective address
set forth above shall be effective service of process for any action, suit or
proceeding in New York with respect to any matters to which it has submitted to
jurisdiction in this Section 6.16. Each of the Parties irrevocably and
unconditionally waives any objection to the laying of venue of any action, suit
or proceeding arising out of this Agreement or the transactions contemplated
hereby in (i) the Supreme Court of the State of New York, New York County, or
(ii) the United States District Court for the Southern District of New York, and
hereby further irrevocably and unconditionally waives and agrees not to plead or
claim in any such court that any such action, suit or proceeding brought in any
such court has been brought in an inconvenient forum.
SECTION 6.17. 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 and therein 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.
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IN WITNESS WHEREOF, the Parties have caused this Agreement to
be duly executed as of the day and year first above written.
THE DUN & BRADSTREET CORPORATION
By: ______________________
Name:
Title:
THE NEW D&B CORPORATION
By: ______________________
Name:
Title: