Back to top

TAX SHARING AGREEMENT

Tax Allocation or Sharing Agreement

TAX SHARING AGREEMENT You are currently viewing:
This Tax Allocation or Sharing Agreement involves

MASTECH HOLDINGS, INC. | iGATE Global Solutions Limited

. RealDealDocs™ contains millions of easily searchable legal documents and clauses from top law firms. Search for free - click here.
Title: TAX SHARING AGREEMENT
Governing Law: Pennsylvania     Date: 10/1/2008
Law Firm: Reed Smith    

Search Tax Allocation or Sharing Agreement by:

Document Title:

Entire Document: (optional)

50 of the Top 250 law firms use our Products every day

Exhibit 10.3

TAX SHARING AGREEMENT

by and between

iGATE CORPORATION and

MASTECH HOLDINGS, INC.

September 30, 2008

 


TABLE OF CONTENTS

 

 

 

 

 

 

 

  

 

  

Page

ARTICLE I

  

 

DEFINITIONS AND INTERPRETATION

  

 

 

 

 

Section 1.1

  

General

  

2

Section 1.2

  

References; Interpretation

  

10

Section 1.3

  

Effective Time

  

10

 

 

ARTICLE II

  

 

PREPARATION AND FILING OF TAX RETURNS

  

 

 

 

 

Section 2.1

  

Responsibility of iGATE to prepare and file Pre-Spin Tax Returns and Post-Spin Tax Returns

  

11

Section 2.2

  

Responsibility of Mastech to prepare and file Mastech Tax Returns

  

12

Section 2.3

  

Time of filing Tax Returns; manner of Tax Return preparation

  

12

 

 

ARTICLE III

  

 

RESPONSIBILITY FOR PAYMENT OF TAXES

  

 

 

 

 

Section 3.1

  

Responsibility of iGATE to pay Taxes

  

12

Section 3.2

  

Responsibility of Mastech to pay Taxes

  

12

Section 3.3

  

Responsibility for Pre-Spin Taxes

  

13

 

 

ARTICLE IV

  

 

REFUNDS AND OTHER MATTERS

  

 

 

 

 

Section 4.1

  

Refunds for the benefit of iGATE

  

13

Section 4.2

  

Refunds for the benefit of Mastech

  

13

Section 4.3

  

Pre-Spin Refunds

  

13

Section 4.4

  

Carrybacks

  

14

Section 4.5

  

Amended Tax Returns

  

14

Section 4.6

  

Payments of Refunds

  

14

 

 

ARTICLE V

  

 

DISTRIBUTION TAXES

  

 

 

 

 

Section 5.1

  

Liability for Distribution Taxes

  

14

Section 5.2

  

Definition of Fault

  

15

Section 5.3

  

Limits on Proposed Acquisition Transactions and other transactions for Restricted Period

  

15


 

 

 

 

 

ARTICLE VI

  

 

INDEMNIFICATION

  

 

 

 

 

Section 6.1

  

Indemnification obligations of iGATE

  

16

Section 6.2

  

Indemnification obligations of Mastech

  

17

 

 

ARTICLE VII

  

 

PAYMENTS

  

 

 

 

 

Section 7.1

  

General

  

17

Section 7.2

  

Treatment of payments made pursuant to Tax Sharing Agreement and Separation and Distribution Agreement

  

17

Section 7.3

  

Treatment of payments made upon the exercise of Options

  

18

 

 

ARTICLE VIII

  

 

AUDITS

  

 

 

 

 

Section 8.1

  

Notice

  

19

Section 8.2

  

Pre-Spin Audits

  

19

Section 8.3

  

Audits exclusively controlled by iGATE

  

21

Section 8.4

  

Audits exclusively controlled by Mastech

  

21

Section 8.5

  

Payment of Pre-Spin Audit Tax Amounts

  

21

 

 

ARTICLE IX

  

 

COOPERATION AND EXCHANGE OF INFORMATION

  

 

 

 

 

Section 9.1

  

Cooperation and Exchange of Information

  

22

Section 9.2

  

Retention of Records

  

22

 

 

ARTICLE X

  

 

ALLOCATION OF TAX ATTRIBUTES, DUAL CONSOLIDATED LOSSES GAIN RECOGNITION AGREEMENTS AND OTHER TAX MATTERS

  

 

 

 

 

Section 10.1

  

Allocation of Tax Attributes

  

23

 

 

ARTICLE XI

  

 

DEFAULTED AMOUNTS

  

 

 

 

 

Section 11.1

  

General

  

24

 

 

ARTICLE XII

  

 

DISPUTE RESOLUTION

  

 

 

 

 

Section 12.1

  

Negotiation

  

24

Section 12.2

  

Arbitration

  

24

Section 12.3

  

Continuity of Service and Performance

  

26

Section 12.4

  

Costs

  

26

 

 

ARTICLE XIII

  

 

MISCELLANEOUS

  

 

 

 

 

Section 13.1

  

Counterparts; Facsimile Signatures

  

26

 

- ii -


 

 

 

 

 

Section 13.2

  

Survival

  

26

Section 13.3

  

Notices

  

26

Section 13.4

  

Waivers

  

27

Section 13.5

  

Amendments

  

27

Section 13.6

  

Assignment

  

27

Section 13.7

  

Successors and Assigns

  

27

Section 13.8

  

Certain Termination and Amendment Rights

  

27

Section 13.9

  

No Circumvention

  

27

Section 13.10

  

Subsidiaries

  

27

Section 13.11

  

Third Party Beneficiaries

  

28

Section 13.12

  

Title and Headings

  

28

Section 13.13

  

Exhibits and Schedules

  

28

Section 13.14

  

Governing Law

  

28

Section 13.15

  

Consent to Jurisdiction

  

28

Section 13.16

  

Specific Performance

  

28

Section 13.17

  

Waiver of Jury Trial

  

28

Section 13.18

  

Severability

  

29

Section 13.19

  

Force Majeure

  

29

Section 13.20

  

Construction

  

29

Section 13.21

  

Changes in Law

  

29

Section 13.22

  

Authority

  

29

Section 13.23

  

Severability

  

30

Section 13.24

  

Tax Sharing Agreements

  

30

Section 13.25

  

Exclusivity

  

30

Section 13.26

  

No Duplication, No Double Recovery

  

30

 

- iii -


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

 

- 2 -


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:

 

 

(i)

a final decision, judgment, decree or other order by any court of competent jurisdiction that can no longer be appealed;

 

 

(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;

 

 

(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

 

 

(iv)

any other final disposition, including by reason of the expiration of the applicable statute of limitations.

 

- 3 -


(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.

 

- 4 -


(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:

 

 

(i)

any Income Tax Returns required to be filed by any Tax Group of which Mastech or a Mastech Subsidiary is the Common Parent;

 

- 5 -


 

(ii)

any U.S., state, local or foreign separate Income Tax Return required to be filed by Mastech or a Mastech Subsidiary; and

 

 

(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:

 

 

(i)

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;

 

 

(ii)

any U.S., state, local or foreign separate Income Tax Ret