PDD WITH ALL INFORMATION AND
OTHER ASSISTANCE REASONABLY REQUESTED BY PDD TO ENABLE THE PDD AFFILIATES TO
PREPARE AND FILE PDD SEPARATE RETURNS REQUIRED TO BE FILED BY THEM PURSUANT TO
THIS AGREEMENT.
4.2.
AUDITS AND ADJUSTMENTS.
(A)
WHENEVER A PHARMACOPEIA AFFILIATE OR PDD
AFFILIATE RECEIVES IN WRITING FROM THE IRS OR ANY OTHER TAXING AUTHORITY NOTICE
OF AN ADJUSTMENT THAT MAY GIVE RISE TO A PAYMENT FROM THE OTHER PARTY UNDER THIS
AGREEMENT OR OTHERWISE AFFECT THE OTHER PARTY'S TAXES, PHARMACOPEIA OR PDD, AS
THE CASE MAY BE, SHALL GIVE WRITTEN NOTICE OF THE ADJUSTMENT TO THE OTHER PARTY
IN ACCORDANCE WITH THE TERMS OF ARTICLE VIII.
THE AUDIT SHALL BE CONTROLLED AND
SETTLED PURSUANT TO THE TERMS OF THAT ARTICLE.
(B)
PDD AGREES REASONABLY TO COOPERATE WITH
PHARMACOPEIA IN THE NEGOTIATION, SETTLEMENT, OR LITIGATION OF ANY LIABILITY FOR
TAXES OF ANY PHARMACOPEIA AFFILIATE.
(C)
PHARMACOPEIA AGREES REASONABLY TO
COOPERATE, AND TO CAUSE EACH PHARMACOPEIA AFFILIATE TO COOPERATE, WITH PDD IN
THE NEGOTIATION, SETTLEMENT, OR LITIGATION OF ANY LIABILITY FOR TAXES OF ANY PDD
AFFILIATE.
(D)
PHARMACOPEIA WILL REASONABLY PROMPTLY NOTIFY
PDD IN WRITING OF ANY ADJUSTMENT INVOLVING A CHANGE IN THE TAX BASIS OF ANY
ASSET OF ANY PDD AFFILIATE, SPECIFYING THE NATURE OF THE CHANGE SO THAT SUCH PDD
AFFILIATE WILL BE ABLE TO REFLECT THE REVISED BASIS OF ITS TAX BOOKS AND RECORDS
FOR PERIODS BEGINNING ON OR AFTER THE DISTRIBUTION DATE.
4.3.
PDD CARRYBACKS.
WHENEVER PERMITTED TO DO SO
BY APPLICABLE LAW, AND UNLESS AGREED OTHERWISE BY PHARMACOPEIA, PDD SHALL ELECT
TO RELINQUISH ANY CARRYBACK PERIOD WHICH WOULD INCLUDE ANY PRE-DISTRIBUTION TAX
PERIOD.
For purposes of this Article IV, the term "party" shall refer to any
Pharmacopeia Affiliate and any PDD Affiliate, as the case may be.
8
ARTICLE V
RETENTION OF RECORDS
5.1.
RETENTION OF RECORDS.
PHARMACOPEIA AND PDD
AGREE TO RETAIN THE APPROPRIATE RECORDS WHICH MAY AFFECT THE DETERMINATION OF
THE LIABILITY FOR TAXES OF ANY PDD AFFILIATE OR PHARMACOPEIA AFFILIATE,
RESPECTIVELY, UNTIL SUCH TIME AS THERE HAS BEEN A FINAL DETERMINATION WITH
RESPECT TO SUCH LIABILITY FOR TAXES.
A PARTY MAY SATISFY ITS OBLIGATIONS UNDER
THE PRECEDING SENTENCE BY ALLOWING THE OTHER PARTY TO DUPLICATE RECORDS AT SUCH
SECOND PARTY'S REQUEST AND EXPENSE.
5.2.
STATUTE OF LIMITATIONS.
PHARMACOPEIA AND PDD
WILL NOTIFY EACH OTHER IN WRITING OF ANY WAIVERS OR EXTENSIONS OF THE APPLICABLE
STATUTE OF LIMITATIONS THAT MAY AFFECT THE PERIOD FOR WHICH ANY MATERIALS,
RECORDS, OR DOCUMENTS MUST BE RETAINED.
ARTICLE VI
COVENANTS
6.1.
PHARMACOPEIA COVENANTS.
PHARMACOPEIA
COVENANTS TO PDD THAT:
(A)
NO PHARMACOPEIA AFFILIATE WILL TAKE ANY
ACTION OR FAIL TO TAKE ANY ACTION, WHICH ACTION OR FAILURE TO ACT WOULD CAUSE
THE CONTRIBUTION AND THE DISTRIBUTION TO FAIL TO QUALIFY UNDER SECTIONS 351(A),
355(A), AND 368(A)(1)(D) OF THE CODE OR ANY CORRESPONDING PROVISION OF STATE OR
LOCAL LAW.
WITHOUT LIMITING THE FOREGOING, PHARMACOPEIA COVENANTS TO PDD THAT:
(I)
DURING THE SIX-MONTH PERIOD FOLLOWING
THE DISTRIBUTION DATE, NO PHARMACOPEIA AFFILIATE WILL LIQUIDATE, MERGE, OR
CONSOLIDATE WITH ANY PERSON