TAX SHARING AGREEMENTTax Allocation or Sharing Agreement |
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Search Tax Allocation or Sharing Agreement by:
Exhibit 10.3
TAX SHARING AGREEMENT
by and between
iGATE CORPORATION and
MASTECH HOLDINGS, INC.
September 30, 2008
TABLE OF CONTENTS
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ARTICLE I |
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DEFINITIONS AND INTERPRETATION |
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Section 1.1 |
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General |
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2 |
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Section 1.2 |
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References; Interpretation |
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10 |
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Section 1.3 |
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Effective Time |
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10 |
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ARTICLE II |
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PREPARATION AND FILING OF TAX RETURNS |
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Section 2.1 |
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Responsibility of iGATE to prepare and file Pre-Spin Tax Returns and Post-Spin Tax Returns |
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Section 2.2 |
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Responsibility of Mastech to prepare and file Mastech Tax Returns |
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Section 2.3 |
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Time of filing Tax Returns; manner of Tax Return preparation |
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12 |
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ARTICLE III |
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RESPONSIBILITY FOR PAYMENT OF TAXES |
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Section 3.1 |
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Responsibility of iGATE to pay Taxes |
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Section 3.2 |
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Responsibility of Mastech to pay Taxes |
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Section 3.3 |
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Responsibility for Pre-Spin Taxes |
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ARTICLE IV |
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REFUNDS AND OTHER MATTERS |
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Section 4.1 |
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Refunds for the benefit of iGATE |
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Section 4.2 |
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Refunds for the benefit of Mastech |
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13 |
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Section 4.3 |
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Pre-Spin Refunds |
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13 |
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Section 4.4 |
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Carrybacks |
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14 |
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Section 4.5 |
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Amended Tax Returns |
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14 |
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Section 4.6 |
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Payments of Refunds |
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14 |
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ARTICLE V |
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DISTRIBUTION TAXES |
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Section 5.1 |
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Liability for Distribution Taxes |
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Section 5.2 |
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Definition of Fault |
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15 |
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Section 5.3 |
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Limits on Proposed Acquisition Transactions and other transactions for Restricted Period |
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15 |
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ARTICLE VI |
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INDEMNIFICATION |
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Section 6.1 |
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Indemnification obligations of iGATE |
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Section 6.2 |
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Indemnification obligations of Mastech |
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ARTICLE VII |
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PAYMENTS |
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Section 7.1 |
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General |
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Section 7.2 |
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Treatment of payments made pursuant to Tax Sharing Agreement and Separation and Distribution Agreement |
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Section 7.3 |
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Treatment of payments made upon the exercise of Options |
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ARTICLE VIII |
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AUDITS |
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Section 8.1 |
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Notice |
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Section 8.2 |
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Pre-Spin Audits |
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Section 8.3 |
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Audits exclusively controlled by iGATE |
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21 |
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Section 8.4 |
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Audits exclusively controlled by Mastech |
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Section 8.5 |
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Payment of Pre-Spin Audit Tax Amounts |
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ARTICLE IX |
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COOPERATION AND EXCHANGE OF INFORMATION |
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Section 9.1 |
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Cooperation and Exchange of Information |
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Section 9.2 |
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Retention of Records |
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ARTICLE X |
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ALLOCATION OF TAX ATTRIBUTES, DUAL CONSOLIDATED LOSSES GAIN RECOGNITION AGREEMENTS AND OTHER TAX MATTERS |
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Section 10.1 |
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Allocation of Tax Attributes |
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ARTICLE XI |
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DEFAULTED AMOUNTS |
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Section 11.1 |
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General |
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ARTICLE XII |
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DISPUTE RESOLUTION |
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Section 12.1 |
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Negotiation |
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Section 12.2 |
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Arbitration |
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Section 12.3 |
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Continuity of Service and Performance |
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Section 12.4 |
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Costs |
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ARTICLE XIII |
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MISCELLANEOUS |
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Section 13.1 |
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Counterparts; Facsimile Signatures |
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Section 13.2 |
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Survival |
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Section 13.3 |
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Notices |
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Section 13.4 |
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Waivers |
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Section 13.5 |
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Amendments |
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Section 13.6 |
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Assignment |
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Section 13.7 |
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Successors and Assigns |
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Section 13.8 |
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Certain Termination and Amendment Rights |
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Section 13.9 |
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No Circumvention |
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Section 13.10 |
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Subsidiaries |
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Section 13.11 |
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Third Party Beneficiaries |
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Section 13.12 |
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Title and Headings |
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Section 13.13 |
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Exhibits and Schedules |
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Section 13.14 |
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Governing Law |
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Section 13.15 |
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Consent to Jurisdiction |
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Section 13.16 |
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Specific Performance |
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Section 13.17 |
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Waiver of Jury Trial |
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Section 13.18 |
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Severability |
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Section 13.19 |
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Force Majeure |
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Section 13.20 |
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Construction |
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Section 13.21 |
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Changes in Law |
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Section 13.22 |
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Authority |
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Section 13.23 |
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Severability |
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30 |
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Section 13.24 |
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Tax Sharing Agreements |
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30 |
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Section 13.25 |
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Exclusivity |
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30 |
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Section 13.26 |
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No Duplication, No Double Recovery |
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TAX SHARING AGREEMENT
THIS TAX SHARING AGREEMENT (this “ Agreement ”) is made and entered into as of the 30 th day of September, 2008, by and between iGATE Corporation, a Pennsylvania corporation (“ iGATE ”) and Mastech Holdings, Inc., a Pennsylvania corporation (“ Mastech ”). Each of iGATE and Mastech are sometimes referred to herein as a “ Party ” and collectively, as the “ Parties ”.
W I T N E S S E T H:
WHEREAS, iGATE, acting through its direct and indirect Subsidiaries, currently conducts a number of businesses, including: (i) the iGATE Business; and (ii) the Mastech Business;
WHEREAS, the Board of Directors of iGATE has determined that it is appropriate, desirable and in the best interests of iGATE and its stockholders to separate iGATE into two (2) separate, publicly traded companies, one for each of: (i) the iGATE Business, which shall be owned and conducted, directly or indirectly, by iGATE; and (ii) the Mastech Business, which shall be owned and conducted, directly or indirectly, by Mastech;
WHEREAS, in order to effect such separation, the Board of Directors of iGATE has determined that it is appropriate, desirable and in the best interests of iGATE and its stockholders: (i) for iGATE and certain of its subsidiaries to enter into a series of transactions whereby, among other things, iGATE will contribute to Mastech the stock of Mastech Trademark Systems, Inc., Global Financial Services of Nevada, iGATE Mastech, Inc., and RPOworldwide, Inc.; and (ii) for iGATE to distribute to the holders of iGATE Common Stock on a pro rata basis (in each case without consideration being paid by such stockholders) all of the issued and outstanding shares of common stock of Mastech (the “ Mastech Common Stock ”) (such transactions as they may be amended or modified from time to time, collectively, the “ Plan of Separation ”);
WHEREAS, it is the intention of the Parties that each of the contributions of assets to, and the assumption of liabilities by, Mastech together with the corresponding distribution of all of the Mastech Common Stock shall qualify as a reorganization within the meaning of Sections 368(a)(1)(D) and 355 of the Internal Revenue Code of 1986, as amended (the “ Code ”);
WHEREAS, it is the intention of the Parties that the distribution of Mastech Common Stock to the stockholders of iGATE will qualify as a tax-free distribution within the meaning of Section 355(a) of the Code to such stockholders; and
WHEREAS, in connection with the Plan of Separation, each of the Parties desire to set forth their agreement on the rights and obligations with respect to handling and allocating Taxes and related matters.
NOW, THEREFORE, in consideration of the foregoing and the terms, conditions, covenants and provisions of this Agreement, each of the Parties mutually covenant and agree as follows:
ARTICLE I
DEFINITIONS AND INTERPRETATION
Section 1.1 General . As used in this Agreement, the following terms shall have the following meanings:
(1) “ AAA ” has the meaning set forth in Section 12.2 .
(2) “ Accounting Dispute ” has the meaning set forth in Section 12.2 .
(3) “ Affiliate ” means a Person that directly, or indirectly, through one or more intermediaries, controls, or is controlled by, or is under common control with, a specified Person. A Person shall be deemed to control another Person if such first Person possesses, directly or indirectly, the power to direct, or cause the direction of, the management and policies of such other Person, whether through the ownership of voting securities, by contract or otherwise. For purposes hereof, none of the Parties or their respective Subsidiaries (determined immediately after the Distribution Date) shall he considered an “Affiliate” of the other Party or its respective Subsidiaries (determined on the same basis).
(4) “ Agreement ” has the meaning set forth in the preamble hereto.
(5) “ Ancillary Agreements ” has the meaning set forth in the Separation and Distribution Agreement.
(6) “ Audit ” means any audit, assessment of Taxes, other examination by any Taxing Authority, proceeding, or appeal of such a proceeding relating to Taxes, whether administrative or judicial, including proceedings relating to competent authority determinations.
(7) “ Business Day ” means any day other than a Saturday, Sunday or a day on which banks are required to be closed in Pittsburgh, Pennsylvania.
(8) “ Business Entity ” means any corporation, partnership, limited liability company or other entity.
(9) “ Code ” has the meaning referred to in the recitals to this Agreement.
(10) “ Common Parent ” means: (i) for U.S. federal income tax purposes, the “common parent corporation” of an “affiliated group” (in each case, within the meaning of Section 1504 of the Code) filing a U.S. federal consolidated income tax return; or (ii) for state, local or foreign income tax purposes, the common parent (or similar term) of a consolidated, unitary, combined or similar group.
(11) “ Credit Carryover ” means the aggregate of all alternative minimum Tax credit carryovers, general business credit carryovers and foreign Tax credit carryovers.
(12) “ Dispute ” means any dispute, controversy or claim arising out of, in connection with, or in relation to the interpretation, performance, nonperformance, validity or
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breach of this Agreement or otherwise arising out of, or in any way related to, this Agreement or the transactions contemplated thereby, including any claim based in contract, tort, statute or constitution.
(13) “ Dispute Notice ” has the meaning set forth in Section 12.1 .
(14) “ Distribution ” means the distribution on the Distribution Date to holders of record of shares of iGATE Common Stock as of the Distribution Record Date of the Mastech Common Stock owned by iGATE on the basis of one (1) share of Mastech Common Stock for every 15 outstanding shares of iGATE Common Stock.
(15) “ Distribution Date ” means September 30, 2008.
(16) “ Distribution Record Date ” means September 16, 2008.
(17) “ Distribution Taxes ” means any and all Taxes required to be paid by or imposed on the Parties (or any Tax Group of the Parties) resulting from, or directly arising in connection with, the failure of the Distribution to qualify under Section 355(a) or (c) of the Code or, if applicable, Section 361(c) of the Code, or the application of Sections 355(d) or (e) of the Code to the Distribution, or under the corresponding provisions of the Laws of other jurisdictions.
(18) “ Due Date ” means the date (taking into account all valid extensions) upon which a Tax Return is required to be filed.
(19) “ Fault ” has the meaning set forth in Section 5.2 .
(20) “ Fifty Percent or Greater Interest ” means a “50-percent or greater interest” for purposes of Sections 355(d) and (e) of the Code and the Treasury Regulations promulgated thereunder.
(21) “ Final Determination ” means the final-resolution of liability for any Tax for any taxable period, by or as a result of:
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a final decision, judgment, decree or other order by any court of competent jurisdiction that can no longer be appealed; |
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(ii) |
a final settlement with the IRS, a closing agreement or accepted offer in compromise under Sections 7121 or 7122 of the Code, or a comparable agreement under the Laws of other jurisdictions, which resolves the entire Tax liability for any taxable period; |
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(iii) |
any allowance of a refund or credit in respect of an overpayment of Tax, but only after the expiration of all periods during which such refund may be recovered by the jurisdiction imposing the Tax; or |
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(iv) |
any other final disposition, including by reason of the expiration of the applicable statute of limitations. |
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(22) “ Final Tax Attribute Allocation ” has the meaning set forth in Section 10.1(b) .
(23) “ Force Majeure ” has the meaning set forth in the Ancillary Agreements.
(24) “ Group ” means the iGATE Group or the Mastech Group.
(25) “ IRS ” means the United States Internal Revenue Service or any successor thereto, including, but not limited to its agents, representatives, and attorneys.
(26) “ iGATE ” has the meaning set forth in the preamble of this Agreement.
(27) “ iGATE Business ” has the meaning set forth in the Separation and Distribution Agreement.
(28) “ iGATE Common Stock ” has the meaning set forth in the Separation and Distribution Agreement.
(29) “ iGATE Employee ” has the meaning set forth in the Separation and Distribution Agreement.
(30) “ iGATE Group ” has the meaning set forth in the Separation and Distribution Agreement.
(31) “ iGATE Indemnitees ” means iGATE, each member of the iGATE Group, each of their respective directors, officers, employees and agents and each of the heirs, executors, successors and assigns of any of the foregoing, except the Mastech Indemnitees.
(32) “ iGATE Option ” means an option to acquire iGATE Common Stock.
(33) “ iGATE Option Holder ” means a holder of an iGATE Option.
(34) “ iGATE Subsidiaries ” means all direct and indirect Subsidiaries of iGATE, determined immediately after the Distribution Date.
(35) “ Income Tax Returns ” mean all Tax Returns relating to Income Taxes.
(36) “ Income Taxes ” means: (i) all Taxes based upon, measured by, or calculated with respect to (A) net income or profits (including, but not limited to, any capital gains, minimum Tax or any Tax on items of Tax preference, but not including sales, use, real or personal property, gross or net receipts, transfer or similar Taxes) or (B) multiple bases (including, but not limited to, corporate franchise, doing business and occupation Taxes) if one or more bases upon which such Tax may be based, measured by, or calculated with respect to, is described in clause (i)(A) above; and (ii) all U.S., state, local or foreign franchise Taxes, including in the case of each of (i) and (ii) any related interest and any penalties, additions to such Tax or additional amounts imposed with respect thereto by any Tax Authority.
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(37) “ Indemnified Party ” means the Party (or Indemnitee) which is or may be entitled pursuant to this Agreement to receive any payments (including reimbursement for Taxes or costs and expenses) from the other Party to this Agreement.
(38) “ Indemnifying Party ” means the Party which is or may be required pursuant to this Agreement to make indemnification or other payments (including reimbursement for Taxes and costs and expenses) to the other Party to this Agreement.
(39) “ Indemnitee ” means an iGATE Indemnitee or a Mastech Indemnitee.
(40) “ Independent Firm ” means a nationally recognized accounting firm other than UHY LLP and Ernst & Young.
(41) “ Law ” means any U.S. or non-U.S. federal, national, supranational, state, provincial, local or similar statute, law, ordinance, regulation, rule, code, administrative pronouncement, order, requirement or rule of law (including common law).
(42) “ Mastech ” has the meaning set forth in the recitals to this Agreement.
(43) “ Mastech Business ” has the meaning set forth in the Separation and Distribution Agreement.
(44) “ Mastech Common Stock ” has the meaning set forth in the recitals hereto.
(45) “ Mastech Employee ” has the meaning set forth in the Separation and Distribution Agreement.
(46) “ Mastech Group ” has the meaning set forth in the Separation and Distribution Agreement.
(47) “ Mastech Indemnitees ” means Mastech, each member of the Mastech Group, each of their respective directors, officers, employees and agents and each of the heirs, executors, successors and assigns of any of the foregoing.
(48) “ Mastech Option ” means an option to acquire Mastech Common Stock.
(49) “ Mastech Option Holder ” means a holder of a Mastech Option.
(50) “ Mastech Subsidiaries ” means all direct and indirect Subsidiaries of Mastech, determined immediately after the Distribution (and predecessors of such entities).
(51) “ Mastech Tax Audit ” means all Audits relating to or involving a Mastech Tax Return.
(52) “ Mastech Tax Return ” means:
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any Income Tax Returns required to be filed by any Tax Group of which Mastech or a Mastech Subsidiary is the Common Parent; |
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(ii) |
any U.S., state, local or foreign separate Income Tax Return required to be filed by Mastech or a Mastech Subsidiary; and |
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(iii) |
any U.S., state, local or foreign separate Non-Income Tax Return required to be filed by Mastech or a Mastech Subsidiary. |
(53) “ Mastech Taxes ” means all Taxes required to be paid by or imposed upon Mastech or a Mastech Subsidiary with respect to all Mastech Tax Returns.
(54) “ Non-Income Tax Returns ” mean all Tax Returns other than Income Tax Returns.
(55) “ Non-Income Taxes ” mean all Taxes other than Income Taxes.
(56) “ Options ” means, collectively, and as the context requires, iGATE Options and Mastech Options.
(57) “ Ordinary Course of Business ” means an action taken by a Person only if such action is taken in the ordinary course of the normal day-to-day operations of such Person consistent with the past practices of such Person.
(58) “ Other Dispute ” has the meaning set forth in Section 12.2(b) .
(59) “ Party ” has the meaning set forth in the preamble hereto.
(60) “ Pennsylvania Courts ” has the meaning set forth in Section 13.15.
(61) “ Person ” means any natural person, firm, individual, corporation, business trust, joint venture, association, company, limited liability company, partnership or other organization or entity, whether incorporated or unincorporated, or any governmental entity.
(62) “ Plan of Separation ” has the meaning set forth in the recitals hereto.
(63) “ Post-Spin Tax Return ” means:
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any Income Tax Return required to be filed by any Tax Group of which iGATE is the Common Parent for Tax years beginning on or after the Distribution Date; |
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(ii) |
any U.S., state, local or foreign separate Income Tax Ret |






