TAX ALLOCATION AGREEMENT

Exhibit 10.1

Execution Copy

TAX ALLOCATION AGREEMENT

By and between

AUTOMATIC DATA PROCESSING, INC.

and

BROADRIDGE FINANCIAL SOLUTIONS, INC.

Dated as of March 29, 2007

TABLE OF CONTENTS

 

 

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TAX ALLOCATION AGREEMENT dated as of March 29, 2007 (this “ Agreement ”) between Automatic Data Processing, Inc., a Delaware corporation (“ ADP ”) and Broadridge Financial Solutions, Inc., a Delaware corporation whose sole shareholder is ADP (“ Broadridge ” and, together with ADP, each, a “ Party ” and collectively, the “ Parties ”).

WHEREAS, as of the date of this Agreement, the ADP affiliated group includes Broadridge and its subsidiaries;

WHEREAS, the Parties (or their predecessors-in-interest) have entered into the Separation and Distribution Agreement, pursuant to which ADP has contributed to Broadridge the stock and assets associated with the Broadridge Business (as defined herein) in exchange for shares of common stock of Broadridge, cash and the assumption by Broadridge of certain liabilities related to the Broadridge Business (the “ Contribution ”);

WHEREAS, ADP intends to distribute on a pro rata basis to its shareholders all of the shares of stock of Broadridge (the “ Distribution ”);

WHEREAS, the Parties believe the Distribution will provide greater flexibility for management, capital requirements and growth of the Broadridge Business while ensuring that ADP senior management can focus its time and resources on the development of the ADP retained businesses;

WHEREAS, the Parties intend that the Contribution and Distribution qualify as a “reorganization” under Section 368(a) of the U.S. Internal Revenue Code of 1986, as amended (the “ Code ”), with respect to which no gain or loss is recognized under Code Sections 361 and 355;

WHEREAS, as a result of and upon the Distribution, Broadridge and its subsidiaries will cease to be members of the ADP Group; and

WHEREAS, the Parties desire to allocate the Tax responsibilities, liabilities and benefits of transactions that occur on or prior to, and that may occur after, the date on which the Distribution occurs (the “ Distribution Date ”) and to provide for and address certain other Tax matters.

NOW, THEREFORE, in consideration of the mutual covenants and agreements contained herein, the Parties (each on behalf of itself and each of its Affiliates) hereby agree as follows:

ARTICLE I

DEFINITIONS

Section 1.01 Definition of Terms . The following terms shall have the following meanings (such meanings to apply equally to both the singular and the plural forms of the terms defined). All Section and Exhibit references are to this Agreement unless otherwise stated.

 

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“ Action ” means any claim, demand, action, cause of action, suit, countersuit, arbitration, litigation, inquiry, proceeding or investigation by or before any Governmental Authority or any arbitration or mediation tribunal or authority.

“ Active Trade or Business ” means the active conduct by Broadridge of the businesses conducted by the members of the Broadridge Group as of the Distribution (determined in accordance with Code Section 355(b)).

“ Adjustment Request ” means any formal or informal claim or request filed with any governmental authority for any Refund, underpayment or overpayment of Tax or any change in available Tax Attributes.

“ ADP ” has the meaning set forth in the recitals.

“ ADP Consolidated Group ” means the affiliated group of corporations (within the meaning of Section 1504 of the Code) of which ADP is the common parent prior to the Distribution Date.

“ ADP Employee ” means an employee of ADP or any ADP Affiliate immediately after the Distribution.

“ ADP Group ” means ADP and each of its Affiliates and Subsidiaries, and any corporation or other entity that may become part of such Group from time to time. For the avoidance of doubt, the ADP Group excludes any entity that is a member of the Broadridge Group.

“ ADP Restricted Stock ” means ADP common stock received by an ADP or Broadridge Employee in connection with his or her employment, which stock has not yet been included in the income of such Employee as of the Distribution Date.

“ ADP Stock Option ” means an Option to acquire ADP common stock received by an ADP or Broadridge Employee in connection with his or her employment, which Option has not yet been exercised as of the Distribution Date.

“ Affiliate ” of any Person means any entity that, after the Distribution, is directly or indirectly “controlled” by any of (i) the Person in question, (ii) any Person of which the Person in question is an Affiliate under clause (i), or (iii) any Affiliate under clause (i) of a Person described in clause (ii). For purposes of this definition, “ control ” means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through ownership of voting securities or other interests, by contract or otherwise.

“ Agreement ” has the meaning set forth in the recitals.

 

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“ Ancillary Agreement ” has the meaning set forth in the Separation and Distribution Agreement.

“ APA ” means the advance pricing agreement currently being negotiated, as such agreement is finally agreed, or any similar agreement (including any related competent authority agreement for pre-APA years) that is finally agreed, by ADP, ADP Canada, a Canadian corporation that is wholly owned by ADP, and ADP Investor Communications Corporation (“ ICC ”), a Canadian corporation that is directly and wholly owned by ADP Canada, with the Internal Revenue Service and the Canada Revenue Agency (including any competent authority for the United States or Canada) relating to the pricing of services and software that ADP and its U.S. subsidiaries (both in the Broadridge Business and in ADP’s other businesses) provide to ADP Canada and its subsidiaries.

“ Balance Sheet ” has the meaning set forth in Section 2.01(a).

“ Broadridge ” has the meaning set forth in the recitals.

“ Broadridge Business ” means all of the ADP Brokerage Services’ and Securities Clearing and Outsourcing Services’ business and operations, as more fully described in ADP’s Form 10-K for the fiscal year ended June 30, 2006.

“ Broadridge Capital Stock ” means (i) all classes or series of capital stock of Broadridge, including common stock and all other instruments treated as equity in Broadridge for U.S. federal Income Tax purposes and (ii) all options, warrants and other rights to acquire such capital stock.

“ Broadridge Cash ” means the cash amounts which are distributed to ADP in one or more transactions intended to qualify as tax-free pursuant to Section 361(b) of the Code.

“ Broadridge Employee ” means an employee of Broadridge or any Broadridge Affiliate immediately after the Distribution.

“ Broadridge Group ” means Broadridge and each of its Subsidiaries and Affiliates and any corporation or other entity that may become part of such Group from time to time.

“ Broadridge Restricted Stock ” means Broadridge common stock received by a Broadridge Employee or ADP Employee in connection with his or her employment, which stock has not yet been included in the income of such Employee as of the Distribution Date.

“ Broadridge Stock Option ” means an Option to acquire Broadridge common stock received by a Broadridge Employee or ADP Employee in connection with his or her employment, which Option has not yet been exercised as of the Distribution Date.

 

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“ Butterfly Transactions ” means each of the transactions involving ADP, Broadridge and the other applicable parties specifically set out in the Canadian Tax Ruling.

“ Canadian Tax Ruling ” means the advance income tax ruling issued by the CRA (whether granted prior to, on or after the date hereof) relating to the Butterfly Transactions and includes all supplemental rulings, requests for rulings, information and legal submissions and exhibits to the foregoing.

“ Canadian Tax-Free Status ” means the Canadian federal and provincial income tax position of the applicable parties relating to the Butterfly Transactions that would arise on the assumptions that (i) each of the rulings and opinions provided in the Canadian Tax Ruling applied to determine such income tax position of the applicable parties and (ii) the requisite conditions for such rulings and opinions as set out in the Canadian Tax Ruling were satisfied.

“ Code ” has the meaning set forth in the recitals.

“ Contribution ” has the meaning set forth in the recitals.

“ CRA ” means the Canada Revenue Agency.

“ Distribution ” has the meaning set forth in the recitals.

“ Distribution Date ” has the meaning set forth in the recitals.

“ Employee Restricted Stock ” means either ADP Restricted Stock or Broadridge Restricted Stock.

“ Employee Stock Option ” means either an ADP Stock Option or a Broadridge Stock Option.

“ Final Determination ” means the final resolution of liability for any Tax for any taxable period by or as a result of (i) a final and unappealable decision, judgment, decree or other order by any court of competent jurisdiction; (ii) a final settlement with the IRS, a closing agreement or accepted offer in compromise under Code Sections 7121 or 7122, or a comparable arrangement under the laws of another jurisdiction; (iii) any allowance of a Refund in respect of an overpayment of Tax, but only after the expiration of all periods during which such amount may be recovered by the Taxing Authority imposing the Tax; or (iv) any other final disposition, including by reason of the expiration of the applicable statute of limitations.

“ Gain Recognition Agreement ” means any agreement to recognize gain that is described in Treasury Regulation Section 1.367(a)-8 and entered into in connection with the Transactions and to which any member of the ADP Group or the Broadridge Group is a party.

 

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“ Governmental Authority ” means any federal, state, local, foreign or international court, government, department, commission, board, bureau or agency, or any other regulatory, self-regulatory, administrative or governmental organization or authority, including the New York Stock Exchange, Inc.

“ Group ” means the ADP Group and/or the Broadridge Group, as the context requires.

“ Income Taxes ” means all federal, state, local, and foreign income or franchise Taxes or other Taxes based on income or net worth.

“ Indemnifying Party ” has the meaning set forth in Section 5.01.

“ Indemnitee ” has the meaning set forth in Section 5.01.

“ IRS ” means the U.S. Internal Revenue Service.

“ Joint Return ” means any Return that includes both a member of the ADP Group and a member of the Broadridge Group.

“ Law ” means any applicable foreign, federal, national, state, provincial or local law (including common law), statute, ordinance, rule, regulation, code or other requirement enacted, promulgated, issued or entered into, or act taken, by a Governmental Authority.

“ Option ” means an option to acquire common stock, or other equity-based incentives the economic value of which is designed to mirror that of an option, including non-qualified stock options, discounted non-qualified stock options, cliff options to the extent stock is issued or issuable (as opposed to cash compensation), and tandem stock options to the extent stock is issued or issuable (as opposed to cash compensation).

“ Other Taxes ” means all Taxes other than Income Taxes, including (but not limited to) transfer, sales, use, payroll, property, and unemployment Taxes.

“ Past Practices ” has the meaning set forth in Section 3.03(a).

“ Person ” means any natural person, corporation, general or limited partnership, limited liability company or partnership, joint stock company, joint venture, association, trust, bank, trust company, land trust, business trust or other organization, whether or not a legal entity, and any Governmental Authority.

“ Post-Distribution Tax Period ” means any taxable period (or portion thereof) beginning after the Distribution Date.

“ Pre-Distribution Tax Period ” means any taxable period (or portion thereof) ending on or before the close of the Distribution Date.

 

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“ Proposed Acquisition Transaction ” has the meaning set forth in Section 4.02(b)(i).

“ Refund ” means any cash refund of Taxes or reduction of Taxes by means of credit, deduction, offset or otherwise.

“ Reportable Transaction ” means a reportable or listed transaction as defined in Section 6011 of the Code or the Treasury Regulations promulgated thereunder.

“ Restricted Period ” means the period beginning on the date of this Agreement and ending on, and including, the last day of the two-year period following the Distribution Date.

“ Restricted Stock ” means either ADP Restricted Stock or Broadridge Restricted Stock.

“ Ruling ” means all private letter rulings granted by the IRS, the CRA or any other taxing authority relating to the Transactions (whether granted prior to, on or after the date hereof), requests for such rulings, including all supplemental ruling requests and information submissions, and any exhibit to any of the foregoing.

“ Satisfactory Guidance ” means either a ruling from the IRS (or the CRA in respect of Section 4.04) or an Unqualified Tax Opinion, at the election of Broadridge, in either case reasonably satisfactory to ADP in both form and substance, including with respect to any underlying assumptions or representations. Satisfactory Guidance shall not include an Unqualified Tax Opinion with respect to which ADP’s counsel, of recognized national standing, provides an opinion to ADP that the conclusions in such Unqualified Tax Opinion are not free from doubt. For the avoidance of doubt, this definition is intended to allow ADP to prevent Broadridge from taking the action that is the subject of a ruling from the IRS or an Unqualified Tax Opinion, if ADP determines in good faith that there is any Tax risk to it from such action based upon either (1) any uncertainty concerning any underlying assumptions or representations in such ruling or opinion or (2) any legal uncertainty referred to in advice it receives from its counsel.

“ Separate Return ” means (i) in the case of the Broadridge Group, a Tax Return of any member of that Group (including any consolidated, combined, affiliated or unitary Return) that does not include, for all or any portion of the relevant taxable period, any member of the ADP Group and (ii) in the case of the ADP Group, a Tax Return of any member of that Group (including any consolidated, combined, affiliated or unitary Return) that does not include, for all or any portion of the relevant taxable period, any member of the Broadridge Group.

“ Separation and Distribution Agreement ” means the Separation and Distribution Agreement, as amended from time to time, by and between ADP and Broadridge (or its predecessor-in-interest) dated as of March 20, 2007.

 

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“ Straddle Period ” means any taxable period beginning on or before the Distribution Date and ending after the Distribution Date.

“ Tax Advisor ” means a U.S. Tax counsel or other Tax advisor of recognized national standing reasonably acceptable to both Parties.

“ Tax Attribute ” means a net operating loss, net capital loss, investment credit, foreign Tax credit, excess charitable contribution, general business credit or any other item of loss, deduction or credit that could reduce a Tax liability.

“ Tax Contest ” means an audit, review, examination or any other administrative or judicial proceeding with the purpose or effect of determining or redetermining Taxes (including any administrative or judicial review of any Adjustment Request).

“ Tax Dispute ” means any dispute arising in connection with this Agreement.

“ Tax-Free Status ” means the qualification of the Contribution and Distribution taken together as a transaction, (i) that is a “reorganization” described in Code Sections 355(a) and 368(a)(1)(D), (ii) in which the Broadridge stock distributed is “qualified property” for purposes of Code Sections 355(c) and 361(c), (iii) in which no gain or loss will be recognized by ADP upon the receipt of the Broadridge Cash from Broadridge, (iv) in which ADP, Broadridge and the shareholders of ADP recognize no income or gain for U.S. federal Income Tax purposes pursuant to Code Sections 355, 361 and 1032 and (v) that qualifies for tax-free treatment under comparable provisions of state, local and foreign law. For the avoidance of doubt, recognition of income or gain that relates to items described in Sections 2.03(c)(i)(A) or 2.04 or to intercompany items shall not cause the Distribution to fail to achieve Tax-Free Status.

“ Tax Item ” means any item of income, gain, loss, deduction, credit, recapture of credit, or any other item (including the basis or adjusted basis of property) which increases or decreases Income Taxes paid or payable in any taxable period.

“ Tax Opinions/Rulings ” means (i) any Ruling and (ii) the opinions of Tax Advisors relating to the Transactions including, without limitation, those issued either at the time of the Distribution or to allow a Party to take actions otherwise prohibited under this Agreement.

“ Tax Return ” or “ Return ” means any return, filing, report, questionnaire, information statement, claim for Refund, or other document required or permitted to be filed, including any amendments that may be filed, for any taxable period with any Taxing Authority.

“ Taxes ” means all forms of taxation or duties imposed, or required to be collected or withheld, including charges, together with any related interest, penalties or other additional amounts. For the avoidance of doubt, the term “Taxes” does not include amounts to be paid to any governmental authority pursuant to escheat law.

 

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“ Taxing Authority ” means any governmental authority imposing Taxes.

“ Transaction Taxes ” means all (i) Taxes of any member of the ADP Group or the Broadridge Group resulting from, or arising in connection with, the failure of the Contribution and the Distribution to have Tax-Free Status, (ii) Taxes of the type described in clause (i) of any third party for which any member of the ADP Group or the Broadridge Group is or becomes liable, and (iii) reasonable out of pocket legal, accounting and other advisory and court fees in connection with liability for Taxes described in clauses (i) or (ii).

“ Transactions ” means the Contribution, the Distribution, the transactions contemplated by the Separation and Distribution Agreement and any other transfer of assets (whether by contribution, sale or otherwise) between any member of the ADP Group and any member of the Broadridge Group in connection with the Contribution or the Distribution.

“ Unqualified Tax Opinion ” means an unqualified “will” opinion of a Tax Advisor that permits reliance by ADP. The Tax Advisor, in issuing its opinion, shall be permitted to rely on the validity and correctness, as of the date given, of any previously issued Tax Opinions/Rulings, unless such reliance would be unreasonable under the circumstances.

ARTICLE II

PAYMENT OF TAXES

Section 2.01 Income Taxes .

(a) Except as provided in sections 2.02 and 2.04, ADP shall be responsible for all Income Taxes (i) of Broadridge and its Affiliates for any Pre-Distribution Tax Period; (ii) of Broadridge and its Affiliates for any Straddle Period, but only to the extent allocated to ADP pursuant to Section 2.05; or (iii) imposed under Treasury Regulation Section 1.1502–6 or under any comparable or similar provision of state, local or foreign laws or regulations on Broadridge or an Affiliate solely as a result of such company being a member of a consolidated, combined, or unitary group with ADP or any ADP Affiliate during any Tax period, in each case to the extent in excess of amounts provided for in respect of such Income Taxes on the condensed combined balance sheet of Broadridge, including the notes thereto, as of March 30, 2007 (the “ Balance Sheet ”).

(b) Broadridge shall be responsible for all Income Taxes (i) of Broadridge and its Affiliates which are not the responsibility of ADP pursuant to Section 2.01(a) (including, without limitation, Income Taxes for Post–Distribution Tax Periods of Broadridge and its Affiliates); and (ii) of ADP and its Affiliates attributable to acts or

 

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omissions of Broadridge or its Affiliates taken after the Distribution (other than acts or omissions in the ordinary course of business or otherwise contemplated by the Separation and Distribution Agreement and Ancillary Agreements).

Section 2.02 Transaction Taxes .

(a) Broadridge shall be liable, and shall indemnify the ADP Group, for any Transaction Taxes that are attributable to (i) any inaccurate statement or representation of fact or intent (or omission to state a material fact) in Section 4.01 that relates to the Broadridge Group; (ii) any inaccurate statement or representation of fact or intent (or omission to state a material fact) in a letter or certificate that is provided by any member of the Broadridge Group after the date hereof, and that forms the basis for the Tax Opinions/Rulings; (iii) any act or omission by the Broadridge Group after the date of this Agreement inconsistent with the covenants set forth in this Agreement; or (iv) any other act or omission by the Broadridge Group after the date of this Agreement (except for acts disclosed in any Ruling request submitted to the IRS or the CRA prior to the date hereof), including any act or omission that would have resulted in Broadridge being in breach of Section 4.02(b) but for the receipt by Broadridge of a Ruling from the IRS or the CRA, an Unqualified Tax Opinion or a waiver.

(b) ADP shall be liable, and shall indemnify the Broadridge Group, for any Transaction Taxes attributable to: (i) any inaccurate statement or representation of fact or intent (or omission to state a material fact) made (x) in Section 4.01 that relates to the ADP Group or (y) before the date hereof and that formed the basis for any Tax Opinions/Rulings; (ii) any inaccurate statement or representation of fact or intent (or omission to state a material fact) in a letter or certificate that is provided by any member of the ADP Group after the date hereof and that forms the basis for the Tax Opinions/Rulings; (iii) any act or omission by the ADP Group after the date of this Agreement inconsistent with the covenants set forth in this Agreement; or (iv) any other act or omission (except for acts disclosed in any Ruling request submitted to the IRS prior to the date hereof) by the ADP Group.

(c) Liability for any Transaction Taxes described in both paragraphs (a) and (b) shall be shared by ADP and Broadridge according to relative fault.

Section 2.03 Other Taxes .

(a) ADP shall be responsible for all Other Taxes attributable to ADP and its Affiliates (other than Broadridge and its Affiliates) and to its business activities other than the Broadridge Business, or resulting from the Transactions for all Pre–Distribution Tax Periods, Straddle Periods, and Post–Distribution Tax Periods.

(b) Broadridge shall be responsible for all Other Taxes attributable to Broadridge and its Affiliates or to the Broadridge Business for all Pre–Distribution Tax Periods, Straddle Periods, and Post–Distribution Tax Periods.

(c) In each case the responsibilities of 2.03(a) and 2.03(b) shall be consistent with the principles described below:

 

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(i) Transfer Taxes .

(A) The ADP Group shall be liable, and shall indemnify the Broadridge Group, for any stamp, sales, use, gross receipts, value-added, real estate transfer or other transfer Taxes imposed in connection with the Transactions.

(B) If business operations of an ADP entity are transferred to a Broadridge entity as part of the Transactions, the transferee shall assume any and all liabilities for stamp, sales, use, gross receipts, value-added, real estate transfer and other transfer Taxes associated with such transferred operations and will have sole responsibility for satisfying such liabilities.

(C) With respect to Refund claims pending on the Distribution Date involving any sales, use, gross receipts or other similar Taxes, (x) in the case of a Refund received by ADP and payable to Broadridge pursuant to the terms hereof, the amount of such payment shall be net of all contingent fee expenses and Taxes paid by ADP and related to such Refund, or (y) in the event that Broadridge receives a Refund directly from the relevant Taxing Authority, it shall reimburse ADP for all contingent fee expenses and Taxes paid by ADP with respect to such Refund. For the avoidance of doubt, Broadridge shall not be liable for any contingent fee expenses or Taxes related to Refunds received prior to the Distribution Date.

(ii) Property Taxes . If property is transferred between legal entities, the transferee shall assume any and all liabilities for real and personal property Taxes associated with such transferred property and will have sole responsibility for satisfying such liabilities.

(iii) Payroll Taxes . If an employee moves from one employer to another, the “new” employer shall assume any and all employment related Taxes attributable to such transferred employee and will have sole responsibility for satisfying such liabilities.

Section 2.04 Other Income Taxes . Without regard to anything to the contrary in this Article II, ADP shall be liable, and shall indemnify the Broadridge Group, for all Taxes arising as a result of the Transactions from (i) excess loss accounts taken into account under Code Section 1502, (ii) Code Section 357(c) or (iii) Code Section 361(b), in each case, including under similar state and local law provisions. Any Taxes attributable to deferred intercompany gains that are triggered as a result of the Transactions shall be the responsibility of ADP and shall not be included in determining the Broadridge Group’s Income Tax liability. To the extent there are adjustments to the amount of any deferred intercompany gain triggered as a result of the Distribution, ADP shall be responsible for paying the additional Tax associated with any increase in the amount of gain and shall also be entitled to a Refund attributable to any reduction of gain.

 

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Section 2.05 Allocation of Certain Income Taxes and Income Tax Items .

(a) If ADP, Broadridge or any of their respective Affiliates is permitted but not required under applicable U.S. federal, state, local or foreign Tax laws to treat the Distribution Date as the last day of a taxable period, then the Parties shall treat such day as the last day of a taxable period under such applicable Tax law, and shall file any elections necessary or appropriate to such treatment; provided that this Section 2.05(a) shall not be construed to require ADP to change its taxable year.

(b) Transactions occurring, or actions taken, on the Distribution Date but after the Distribution outside the ordinary course of business by, or with respect to, Broadridge or any of its Affiliates shall be deemed subject to the “next day rule” of Treasury Regulation Section 1.1502–76(b)(1)(ii)(B) (and under any comparable or similar provision under state, local or foreign laws or regulations, provided that if there is no comparable or similar provision under state, local or foreign laws or regulations, then the transaction will be deemed subject to the “next day rule” of Treasury Regulation Section 1.1502–76(b)(1)(ii)(B)) and as such shall for purposes of this Agreement be treated (and consistently reported by the Parties) as occurring in a Post–Distribution Tax Period of Broadridge or an Broadridge Affiliate, as appropriate.

(c) Any Taxes for a Straddle Period with respect to Broadridge and/or its Affiliates (or entities in which Broadridge and/or one of its Affiliates has an ownership interest) shall, for purposes of this Agreement, be apportioned between ADP and Broadridge based on the portion of the period ending on and including the Distribution Date and the portion of the period beginning after the Distribution Date, and each such portion of such period shall be deemed to be a taxable period (whether or not it is in fact a taxable period). Any allocation of income or deductions required to determine any Income Taxes for a Straddle Period shall be made by means of a closing of the books and records of Broadridge and its Affiliates as of the close of business on the Distribution Date; provided that (i) ADP may elect to allocate Tax Items (other than any extraordinary Tax Items) ratably in the month in which the Distribution occurs (and if ADP so elects, Broadridge shall so elect) as described in Treasury Regulation Section 1.1502–76(b)(2)(iii) and corresponding provisions of state, local, and foreign Tax laws; and (ii) subject to (i), exemptions, allowances or deductions that are calculated on an annual basis, and not on a closing of the books method, (including, but not limited to, depreciation and amortization deductions) shall be allocated between the period ending on and including the Distribution Date and the period beginning after the Distribution Date based on the number of days for the portion of the Straddle Period ending on and including the Distribution Date, on the one hand, and the number of days for the portion of the Straddle Period beginning after the Distribution Date, on the other hand.

(d) Tax Attributes determined on a consolidated or combined basis for taxable periods ending before or including the Distribution Date shall be allocated to ADP and its Affiliates, and Broadridge and its Affiliates, in accordance with the Code and the Treasury Regulations (and any applicable state, local, or foreign law or regulation). ADP shall reasonably determine the amounts and proper allocation of such

 

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attributes, and the Tax basis of the assets and liabilities transferred to Broadridge in connection with the Transactions, as of the Distribution Date; provided that Broadridge shall be entitled to participate in such determination. ADP and Broadridge agree to compute their Tax liabilities for taxable periods after the Distribution Date consistent with that determination and allocation, and treat the Tax Attributes and Tax Items as reflected on any federal (or applicable state, local or foreign) Income Tax Return filed by the Parties as presumptively correct.

Section 2.06 Refunds . Except as provided in Section 2.07:

(a) ADP shall be entitled to all Refunds with respect to any Tax for which ADP is responsible under Sections 2.01, 2.