MERGER AGREEMENT.
(D)
EXCEPT AS SET FORTH IN THIS AGREEMENT AND IN
CONSIDERATION OF THE MUTUAL INDEMNITIES AND OTHER OBLIGATIONS OF THIS AGREEMENT,
ANY AND ALL PRIOR TAX SHARING OR ALLOCATION AGREEMENTS, ARRANGEMENTS OR
PRACTICES BETWEEN ANY MEMBER OF THE VERIZON GROUP AND ANY MEMBER OF THE SPINCO
GROUP SHALL BE TERMINATED WITH RESPECT TO THE SPINCO GROUP AS OF THE
DISTRIBUTION DATE, AND NO MEMBER OF THE SPINCO GROUP SHALL HAVE ANY CONTINUING
RIGHTS OR OBLIGATIONS THEREUNDER.
(E)
FAIRPOINT SHALL BE ENTITLED TO ANY REFUND
OF OR CREDIT FOR TAXES FOR WHICH FAIRPOINT IS RESPONSIBLE UNDER THIS AGREEMENT,
AND VERIZON SHALL BE ENTITLED TO ANY REFUND OF OR CREDIT FOR TAXES FOR WHICH
VERIZON IS RESPONSIBLE UNDER THIS AGREEMENT.
A PARTY RECEIVING A REFUND TO
WHICH ANOTHER PARTY IS ENTITLED PURSUANT TO THIS AGREEMENT SHALL PAY THE AMOUNT
TO WHICH SUCH OTHER PARTY IS ENTITLED WITHIN FIVE DAYS AFTER THE RECEIPT OF THE
REFUND.
EACH PARTY SHALL BE ENTITLED TO OFFSET ANY AMOUNT WHICH IT IS OWED
UNDER THE TRANSACTION AGREEMENTS BY ANY AMOUNTS OWED TO IT BY THE OTHER PARTY
UNDER THIS SECTION 2.04(E) OR ANY OTHER PROVISION OF THIS AGREEMENT.
(F)
ALL INDEMNIFICATION OBLIGATIONS IN
RESPECT OF TAXES PURSUANT TO THIS AGREEMENT SHALL BE INCREASED TO INCLUDE (I)
ALL REASONABLE ACCOUNTING, LEGAL AND OTHER PROFESSIONAL FEES AND COURT COSTS
INCURRED IN CONNECTION WITH SUCH TAXES, (II) WITH RESPECT TO TAXES RELATED TO
THE TRANSACTIONS, ALL COSTS, DAMAGES OR SETTLEMENT PAYMENTS ASSOCIATED WITH ANY
STOCKHOLDERS LITIGATION IN RESPECT OF ADVERSE TAX CONSEQUENCES OF THE
TRANSACTIONS, PROVIDED, IN THE CASE OF SETTLEMENT PAYMENTS, THAT ANY SETTLEMENT
OF SUCH LITIGATION FOR AN AMOUNT EQUAL TO OR IN EXCESS OF $15 MILLION SHALL NOT
BE MADE WITHOUT THE PRIOR WRITTEN CONSENT OF THE INDEMNIFYING PARTY, WHICH
CONSENT SHALL NOT BE UNREASONABLY WITHHELD, DELAYED OR CONDITIONED, AND (III)
TAXES RESULTING FROM INDEMNIFICATION PAYMENTS HEREUNDER, AND SHALL BE REDUCED BY
ANY TAX BENEFIT REALIZED BY THE INDEMNIFIED PARTY IN RESPECT OF TAXES OR OTHER
LOSSES SUBJECT TO INDEMNIFICATION UNDER THIS AGREEMENT.
(G)
THE PARTIES AGREE THAT ANY PAYMENTS MADE
AMONG THE PARTIES PURSUANT TO THIS AGREEMENT OR ANY OTHER TRANSACTION AGREEMENT
SHALL BE TREATED, TO THE EXTENT PERMITTED BY LAW, FOR ALL TAX PURPOSES AS
NONTAXABLE PAYMENTS MADE IMMEDIATELY PRIOR TO THE DISTRIBUTION.
9
ARTICLE III
CARRYBACKS; AMENDED RETURNS; COMPENSATION DEDUCTIONS
SECTION 3.01
CARRYBACKS.
WITHOUT THE CONSENT OF
VERIZON, NO MEMBER OF THE SPINCO GROUP SHALL CARRY BACK ANY TAX ATTRIBUTE
(UNLESS REQUIRED TO CARRY BACK SUCH TAX ATTRIBUTE BY LAW) FROM A
POST-DISTRIBUTION PERIOD TO A PRE-DISTRIBUTION PERIOD, PROVIDED THAT IF THE
CARRYBACK IS REQUIRED BY LAW, VERIZON (OR ANY OTHER MEMBER OF THE VERIZON GROUP
RECEIVING SUCH REFUND) SHALL PROMPTLY REMIT TO FAIRPOINT ANY TAX BENEFIT IT
REALIZES WITH RESPECT TO ANY SUCH CARRYBACK.
SECTION 3.02
AMENDED RETURNS.
FAIRPOINT SHALL
NOT, AND SHALL NOT PERMIT ANY MEMBER OF THE SPINCO GROUP TO, FILE ANY AMENDED
TAX RETURN OF A MEMBER OF THE SPINCO GROUP WITH RESPECT TO INCOME TAXES OR