TAX ADJUSTMENT AGREEMENT
 
 
 
 THIS TAX SHARING AGREEMENT, dated as of January 1, ......, is by and between
XYZ, Inc., a New Jersey corporation ("XYZ") and MMM,
Inc., a New Jersey corporation ("MMM").
 
 WHEREAS, XYZ and MMM have executed that certain Distribution
Agreement dated as of January 1, ......, pursuant to which XYZ's existing
business of providing internet solutions will be separated into an independent
public company; and
 
 
 
 
 
 
 
 
 
 
WHEREAS, it is appropriate and desirable to set forth the principles and
responsibilities of the parties to this Agreement regarding future Adjustments
with respect to Taxes, Tax Contests and other related Tax matters; and
 
 

IL DOCUMENTO È INCOMPLETO, A RICHIESTA SARÀ INVIATA UNA COPIA COMPLETA (artt.17 ss Cod.Deont.)

STUDIO

MISURACA & Associati/Associates

Studio Legale

Law Firm

www.smaf-legal.com

Il documento manca di molte parti, lo studio legale SMAF invia su gentile richiesta una completa copia a titolo di prestazione professionale a pagamento ex artt.17 ss. Cod. Deont. Forense / The document has missing parts; please, consider SMAF law firm allowed to send a you a payable copy according to Italian Forensic Deontology Code.

20123 MILANO (MI), Italia

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e-mail: misuraca@smaf-legal.com

 
 
 WHEREAS, the business operations of MMM were previously conducted
within XYZ as a division and, for purposes of this Tax Sharing
Agreement, the business  operations of MMM shall include all past, present
and future MMM Subsidiaries (as hereinafter defined) regardless of whether
any such subsidiary was owned by the MMM Group at the time a tax benefit or
detriment may arise.
 
 NOW, THEREFORE, the parties, intending to be legally bound, agree as
follows:
 
 ARTICLE I
 DEFINITIONS
 
 For the purpose of this Agreement the following terms shall have the
following meanings:
 
 1.1. "Adjustment" means the deemed increase or decrease in a Tax,
determined on an issue-by-issue or transaction-by-transaction basis, as
appropriate, and using the assumptions set forth in the next sentence, resulting
from an adjustment made or proposed by a Taxing Authority with respect to any
amount reflected or required to be reflected on any Return relating to such Tax.
For purposes of determining such deemed increase or decrease in a Tax, the
following assumptions will be used: (a) in the case of any income Tax, the
highest marginal Tax rate or, in the case of any other Tax, the highest
applicable Tax rate, in each case in effect with respect to that Tax for the
Taxable period or any portion of the Taxable period to which the adjustment
relates; and (b) such determination shall be made without regard to whether any
actual increase or decrease in such Tax will in fact be realized with respect to
the Return to which such adjustment relates.
 
 1.2. "Affiliate" means, with respect to any Person, any Person directly or
indirectly controlling, controlled by, or under common control with, such other
Person. For the 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 the ownership of voting
securities, by contract or otherwise; and the terms "controlling" and
"controlled" have
 
 
<PAGE>
 
meanings correlative to the foregoing. For purposes of this Agreement, no member
of one Group shall be treated as an Affiliate of any member of the other Group.
 
 1.3. "Agreement" means this Tax Sharing Agreement, including any schedules,
exhibits and appendices attached hereto.
 
 1.4. "Code" means the Internal Revenue Code of 1986, as amended.
 
 1.5. "Consolidated Return" means, as appropriate, for any Taxable period or
any portion of a Taxable period ending or deemed to end on or prior to the
Distribution Date, any consolidated or combined Return that includes one or more
members of the XYZ Group and/or one or more members of the MMM
Group.
 
 1.6. "Consolidation" means, as appropriate, any Taxable period or any
portion of a Taxable period during which one or more members of the MMM
Group are members of a XYZ Consolidated Return.
 
 1.7. "Controlling Party" means XYZ or any other member of the
XYZ Group, MMM or any other member of the MMM Group, as the
case may be, that filed or, if no such Return has been filed, was required to
file, a Return that is the subject of any Tax Contest, or any successor and/or
assign of any of the foregoing; provided, however, that in the case of any
Consolidated Return, the Person that actually filed such Consolidated Return (or
any successor and/or assign of such Person) will be the Controlling Party,
unless such Tax Contest arises from the business activities of only MMM or
any other member of the MMM Group, in which case MMM will be the
Controlling Party.
 
 1.8. "Correlative Adjustment" means, in the case of an Adjustment
comprising a Non-Line of Business Adjustment, the net present value of any
future increases or decreases in a Tax that would be realized, using the
assumptions set forth in the next sentence, by either XYZ or any other
member of the XYZ Group or MMM or any other member of the MMM
Group, as the case may be, in one or more Taxable periods (or any portion of a
Taxable period) but only if such increases or decreases (a) are a direct result
of the Non-Line of Business Adjustment and (b) will take effect or begin to take
effect in the Taxable period or portion of a Taxable period of or immediately
following the Taxable period or portion of a Taxable period in which the
Non-Line of Business Adjustment to such Tax is made. For purposes of determining
the net present value of any such future increases or decreases in a tax, the
following assumptions will be used: (i) a discount rate equal to the sum of the
Federal Short-Term Rate as of the date of the Final Determination relating to
such Non-Line of Business Adjustment plus 3.5%; (ii) in the case of any income
Tax, the highest marginal Tax rate or, in the case of any other Tax, the highest
applicable Tax rate, in each case in effect with respect to that Tax for the
Taxable period, or portion of the Taxable period, in which the Non-Line of
Business Adjustment was made; (iii) the depreciation, amortization or credit
rate or lives, if applicable, in effect for the Taxable period, or portion of
the Taxable period, in which the Non-Line of Business Adjustment was made; and
(iv) such determination shall be made without regard to whether any actual
increases or decreases in such Tax will in fact be realized with respect to the
future Returns to which such Correlative Adjustment relates.
 
 
  -2-
<PAGE>
 
 1.9. "Disputed Adjustment" has the meaning set forth in Section 3.4(b)
hereof.
 
 1.10. "Distribution" means the distribution by XYZ on the
Distribution Date of the MMM Common Stock, par value $.01 per share, owned
by XYZ to the shareholders of XYZ as of the Record Date.
 
 1.11. "Distribution Date" means the business day as of which the
Distribution shall be effected.
 
 1.12. "Distribution Documents" means all of the agreements and other
documents entered into in connection with the restructuring, the Distribution or
the other transactions contemplated hereby, including without limitation, this
Agreement and the Distribution Agreement.
 
 1.13. "Federal Short-Term Rate" means the applicable federal short-term
rate as determined under Section 1274(d) of the Code.
 
 1.14. "Final Determination" means (a) a decision, judgment, decree or other
order by any court of competent jurisdiction, which has become final and is
either no longer subject to appeal or for which a determination not to appeal
has been made; (b) a closing agreement made under Section 7121 of the Code or
any comparable foreign, state, local, municipal or other Taxing statute; (c) a
final disposition by any Tax Authority of a claim for refund; or (d) any other
written agreement relating to an Adjustment between any Taxing Authority and any
Controlling Party the execution of which is formal and prohibits such Taxing
Authority or the Controlling Party from seeking any further legal or
administrative remedies with respect to such Adjustment.
 
 1.15. "Group" means, as the context requires, the XYZ Group or the
MMM Group.
 
 1.16. "Indemnified Party" has the meaning set forth in Section 4.1(c)
hereof.
 
 1.17. "Indemnifying Party" has the meaning set forth in Section 4.1(c)
hereof.
 
 1.18. "Independent Third Party" means a nationally recognized law firm or
any of the following accounting firms or their successors: Arthur Andersen LLP;
Ernst & Young; KPMG Peat Marwick; Deloitte & Touche; PricewaterhouseCoopers LLP.
 
 1.19. "XYZ Group" means XYZ and its Subsidiaries (other
than any member of the MMM Group). The members of the XYZ Group,
as of the date of this Agreement, are set forth on Schedule A attached hereto.
 ----------
 
 1.20. "XYZ Tax Benefit" means, with respect to any Taxable period
or portion of a Taxable period, and as computed separately with respect to each
Tax, the net decrease in each such Tax equal to the sum of all Adjustments made
pursuant to a Final Determination with respect to each such Tax for each such
Taxable period or portion of a Taxable period that are clearly attributable, or
attributable by means of a reasonable apportionment, to the XYZ Group.
 
 -3-
<PAGE>
 
 1.21. "XYZ Tax Detriment" means, with respect to any Taxable
period or portion of a Taxable period, and as computed separately with respect
to each Tax, the net increase in each such Tax equal to the sum of all
Adjustments made pursuant to a Final Determination with respect to each such Tax
for each such Taxable period or portion of a Taxable period that are clearly
attributable, or attributable by means of a reasonable apportionment, to the
XYZ Group.
 
 1.22. "Interested Party" means XYZ or any other member of the
XYZ Group or MMM or any other member of the MMM Group
(including any successor and/or assign of any of each of the foregoing), as the
case may be, to the extent (a) such Person is not the Controlling Party with
respect to a Tax Contest; and (b) such Person (i) may be liable for, or required
to make, any indemnity payment, reimbursement or other payment pursuant to the
provisions of this Agreement with respect to such Tax Contest; or (ii) may be
entitled to receive any indemnity payment, reimbursement or other payment
pursuant to the provisions of this Agreement with respect to such Tax Contest.
 
 1.23. "Interested Party Notice" has the meaning set forth in Section 3.4(b)
hereof.
 
 1.24. "Non-Line of Business Adjustment" means, with respect to any Taxable
period or portion of a Taxable period, and as computed separately with respect
to each Tax, the net increase or decrease in each such Tax, as the case may be,
equal to the sum of all Adjustments made pursuant to a Final Determination with
respect to each such Tax for each such Taxable period or portion of a Taxable
period other than (a) any Tax Detriments or (b) any Tax Benefits.
Notwithstanding any other provisions of this Agreement (except Section 2.3(e))
or the Distribution Agreement to the contrary, Non-Line of Business Adjustments
shall include, but not be limited to, Restructuring Adjustments.
 
 1.25. "Person" means an individual, corporation, limited liability company,
partnership, association, trust or other entity or organization, including a
governmental or political subdivision or an agency or instrumentality thereof.
 
 1.26. "Record Date" means the date determined by XYZ's Board of
Directors (or determined by a committee of such Board of Directors or by any
person pursuant to authority delegated to such committee or such person) as the
record date for determining the shareholders of XYZ Common Stock
entitled to receive MMM Common Stock pursuant to the Distribution
 
 1.27. "Restructuring Adjustment" means, with respect to any Taxable period
or portion of a Taxable period, and as computed separately with respect to each
Tax, the net increase or decrease in each such Tax, as the case may be, equal to
the sum of all Adjustments made pursuant to a Final Determination with respect
to each such Tax for each Taxable period or portion of a Taxable period that are
attributable to, or as a result of, any transactions undertaken to effectuate
the separation of XYZ's existing business of providing internet
solutions into one independent business as contemplated under the Distribution
Agreement including, but not limited to, any transactions undertaken pursuant to
or relating to the Distribution, the MMM Stock Plan, and any offering of
equity or equity-linked instruments by XYZ within one year of the
Distribution Date.
 
 -4-
<PAGE>
 
 1.28. "Return" means any return, report, form or similar statement or
document (including, without limitation, any related or supporting information
or schedule attached thereto and any information return, claim for refund,
amended return and declaration of estimated tax) that has been or is required to
be filed with any Taxing Authority or that has been or is required to be
furnished to any Taxing Authority in connection with the determination,
assessment or collection of any Taxes or the administration of any laws,
regulations or administrative requirements relating to any Taxes.
 
 1.29. "Separate Return" means any Return other than a Consolidated Return.
 
 1.30. "MMM Group" means MMM and the MMM Subsidiaries (other
than any member of the XYZ Group) including the predecessor operations
of MMM which were formerly a division of XYZ and which were
contributed to MMM and all MMM Subsidiaries for any historical periods
prior to the contribution of such subsidiaries to MMM. "MMM
Subsidiaries" means all past, present and future subsidiaries of MMM,
regardless of whether such subsidiary was directly owned by the MMM Group
at such time. As of the date of this Tax Sharing Agreement, such subsidiaries
include the MMM Limited, Azimuth Companies, NetPub, and XYZ India,
all as defined in the Distribution Agreement between MMM and XYZ,
executed contemporaneously with the execution of this Tax Sharing Agreement.
 
 1.31. "MMM Stock Plan" means the MMM 1999 Stock Plan.
 
 1.32. "MMM Tax Detriment" means, with respect to any Taxable period or
portion of a Taxable period, and as computed separately with respect to each
Tax, the net increase in each such Tax equal to the sum of all Adjustments made
pursuant to a Final Determination with respect to each such Tax for each such
Taxable period or portion of a Taxable period that are clearly attributable, or
attributable by means of a reasonable apportionment, to the MMM Group.
 
 1.33. "MMM Tax Benefit" means, with respect to any Taxable period or
portion of a Taxable period, and as computed separately with respect to each
Tax, the net decrease in each such Tax equal to the sum of all Adjustments made
pursuant to a Final Determination with respect to each such Tax for each such
Taxable period or portion of a Taxable period that are clearly attributable, or
attributable by means of a reasonable apportionment, to the MMM Group.
 
 1.34. The "Shared XYZ Percentage" shall be such percentage as is
reasonably apportionable to XYZ based on the actual Tax at issue, or if
no such percentage is reasonably apportionable, then such percentage shall be
70%.
 
 1.35. The "Shared MMM Percentage" shall be such percentage as is
reasonably apportionable to MMM based on the actual Tax at issue, or if no
such percentage is reasonably apportionable, then such percentage shall be 30%.
 
 1.36. "Significant Obligation" means, in the case of an Interested Party,
and with respect to any Adjustment, an obligation to make or right to receive
any indemnity payment, reimbursement or other payment with respect to any such
Adjustment (including the effect of
 
 
 -5-
<PAGE>
 
any Correlative Adjustment relating thereto) pursuant to the terms of this
Agreement that is greater than $10,000.
 
 1.37. "Subsidiary" means, with respect to any Person, any other entity of
which securities or other ownership interests having ordinary voting power to
elect a majority of the Board of Directors or other persons performing similar
functions are at the time directly or indirectly owned by such Person.
 
 1.38. "Tax" (and, with correlative meanings, "Taxes" and "Taxable") means,
without limitation, and as determined on a jurisdiction-by-jurisdiction basis,
each foreign or U.S. federal, state, local or municipal income, alternative or
add-on minimum, gross receipts, sales, use, ad valorem, transfer, franchise,
profits, license, withholding, payroll, employment, excise, severance, stamp,
occupation, premium, property or any other tax, custom, tariff, impost, levy,
duty, governmental fee or other like assessment or charge of any kind
whatsoever, together with any interest or penalty, addition to tax or additional
amount related thereto, imposed by any Taxing Authority.
 
 1.39. "Tax Benefits" means any XYZ Tax Benefit or any MMM Tax
Benefit, as the case may be.
 
 1.40. "Tax Contest" means, without limitation, any audit, examination,
claim, suit, action or other proceeding relating to Taxes in which an Adjustment
may be proposed, collected or assessed and in respect of which an indemnity
payment, reimbursement or other payment may be sought under this Agreement.
 
 1.41. "Tax Detriments" means any XYZ Tax Detriment or any MMM
Tax Detriment, as the case may be.
 
 1.42. "Taxing Authority" means any governmental authority or any
subdivision, agency, commission or authority thereof, or any quasi-governmental
or private body  having jurisdiction over the assessment, determination,
collection or other imposition of Taxes.
 
 1.43. "Ultimate Determination" has the meaning set forth in Section
3.5(b)(i) hereof.
 
 ARTICLE II
  ADJUSTMENTS
 
 2.1. IN GENERAL. In determining any liability and/or obligation to make, or
right to receive, any indemnity payment, reimbursement or other payment to or
from any party to this Agreement pursuant to this Agreement, any Taxable period
or portion of a Taxable period that includes the Distribution Date shall be
deemed to include and end on such Distribution Date and no party to this
Agreement shall have any liability and/or obligation to make, or right to
receive, any such indemnity payment, reimbursement or other payment with respect
to any Taxable period or portion of a Taxable period that begins or is deemed to
begin after the Distribution Date.
 
 
  -6-
<PAGE>
 
 2.2. TAX DETRIMENTS AND BENEFITS. (a) MMM shall be liable for, and
shall indemnify and hold harmless, subject to Section 3.4 and Section 3.5
hereof, any member of the XYZ Group against any and all MMM Tax
Detriments for any Taxable period or portion of a Taxable period ending or
deemed to end on or before the Distribution Date with respect to any Return
which properly includes any member of the MMM Group or the XYZ
Group. MMM shall be entitled to receive, and shall be paid, subject to
Section 3.4 and Section 3.5 hereof, by XYZ, the amount of any MMM
Tax Benefits for any Taxable period or portion of a Taxable period ending or
deemed to end on or before the Distribution Date with respect to any Return
which properly includes any member of the XYZ Group.
 
 (b) XYZ shall be liable for, and shall indemnify and hold
harmless, as appropriate, and subject to Section 3.4 and Section 3.5 hereof, any
member of the MMM Group against any and all XYZ Tax Detriments for
any Taxable period or portion of a Taxable period ending or deemed to end on or
before the Distribution Date with respect to any Return which properly includes
any member of the MMM Group or the XYZ Group. XYZ shall
be entitled to receive, and shall be paid, subject to Section 3.4 and Section
3.5 hereof, by MMM, the amount of any XYZ Tax Benefits for any
Taxable period or portion of a Taxable period ending or deemed to end on or
before the Distribution Date with respect to any Return which properly includes
any member of the MMM Group.
 
 2.3. NON-LINE OF BUSINESS ADJUSTMENTS. (a) MMM shall be liable for,
and shall indemnify and hold harmless, as appropriate, any member of the
XYZ Group against MMM's share, as determined in Section 2.3(c)
below, of any Non-Line of Business Adjustment the amount of which increases a
Tax for any Taxable period or portion of a Taxable period ending or deemed to
end on or before the Distribution Date with respect to any Return which properly
includes any member of the MMM Group or the XYZ Group. MMM
shall be entitled to receive, and shall be paid by XYZ, MMM's
share, as determined in Section 2.3(c) below, of any Non-Line of Business
Adjustment the amount of which decreases a Tax for any Taxable period or portion
of a Taxable period ending or deemed to end on or before the Distribution Date
with respect to any Return which properly includes any member of the
XYZ Group.
 
 (b) XYZ shall be liable for, and shall indemnify and hold
harmless, as appropriate, any member of the MMM Group against
XYZ's share, as determined in Section 2.3(c) below, of any Non-Line of
Business Adjustment the amount of which increases a Tax for any Taxable period
or portion of a Taxable period ending or deemed to end on or before the
Distribution Date with respect to any Return which properly includes any member
of the MMM Group or the XYZ Group. XYZ shall be entitled
to receive, and shall be paid by MMM, XYZ's share, as determined
in Section 2.3(c) below, of any Non-Line of Business Adjustment the amount of
which decreases a Tax for any Taxable period or portion of a Taxable period
ending or deemed to end on or before the Distribution Date with respect to any
Return which properly includes any member of the MMM Group.
 
 (c) XYZ and MMM shall share the amount of any Non-Line
of Business Adjustment to the extent each such party is liable for and/or has an
obligation to make, or has the right to receive, as the case may be, any
indemnity payment, reimbursement or other
 
 
 -7-
<PAGE>
 
payment with respect to such Non-Line of Business Adjustment under this
Agreement, in proportion to the Shared XYZ Percentage and the Shared
MMM Percentage, respectively; provided, however, that in the event that
there is any Correlative Adjustment with respect to any such Non-Line of
Business Adjustment, then XYZ and MMM shall share such Non-Line of
Business Adjustment in the following manner in order to ensure that the party or
parties that will bear the burden or inure to the benefit of the Correlative
Adjustment in the future will share the Non-Line of Business Adjustment in
proportion to each of their respective Shared Percentages after giving effect to
such Correlative Adjustment:
 
 (i) first, the amount of any such Non-Line of Business Adjustment
shall be increased or decreased, as appropriate, by the amount of the
Correlative Adjustment, the net amount resulting from such increase or decrease
being hereinafter referred to as the "Net Non-Line of Business Adjustment" for
purposes of this Section 2.3(c);
 
  (ii) second, the Net Non-Line of Business Adjustment shall be
allocated among XYZ and MMM in proportion to the Shared
XYZ Percentage and the Shared MMM Percentage, respectively, to the
extent each such party is liable for and/or has an obligation to make, or has
the right to receive, as the case may be, any indemnity payment, reimbursement
or other payment with respect to such Non-Line Of Business Adjustment under this
Agreement; and
 
 (iii) finally, with respect to a party to which a Correlative
Adjustment is attributable, that party's share of the Net Non-Line of Business
Adjustment as allocated pursuant to paragraph (ii) of this Section 2.3(c) will
be increased or decreased, as appropriate, by the amount, if any, of the
Correlative Adjustment that is attributable to such party in order to arrive at
such party's share of the Non-Line of Business Adjustment.
 
 (d) Following the determination of a party's share of a Non-Line of
Business Adjustment pursuant to Section 2.3(c) above, and subject to Section 3.4
and 3.5 hereof, the Controlling Party that controls the Tax Contest to which
such Non-Line of Business Adjustment relates shall (i) be entitled to
reimbursement from XYZ or MMM, as the case may be, for each of
their respective shares, if any, of any Non-Line of Business Adjustment the
amount of which increases a Tax; and (ii) reimburse XYZ or MMM, as
the case may be, for each of their respective shares, if any, of any Non-Line of
Business Adjustment the amount of which decreases a Tax.
 
 (e) Notwithstanding any other provision of this Agreement or the
Distribution Agreement to the contrary, if after the Distribution Date,
XYZ or MMM takes any action or fails to take any action that
directly or indirectly results in the Distribution not qualifying as a tax-free
distribution under Section 355 of the Code, then XYZ or MMM, as
the case may be, will be liable for any increased tax liability of XYZ
and MMM arising therefrom. For purposes of this subparagraph (e), in the
event the shareholders of either XYZ or MMM engage in a
transaction which results in the Distribution not qualifying as a tax-free
distribution under Section 355 of the Code, then the corporation which such
shareholders own (that is, either XYZ or MMM, as the case may be)
shall be liable for any increased tax liability arising therefrom.
 
 
 -8-
<PAGE>
 
 (f) Notwithstanding any other provision of this Agreement or the
Distribution Agreement to the contrary, if the Distribution does not qualify as
a tax-free distribution under Section 355 of the Code for reasons other than
those described within subparagraph (e) above, including an Internal Revenue
Service challenge or other third-party action, then any tax liability arising
therefrom (including any settlement of liability) shall be allocated among
XYZ and MMM in proportion to the Shared XYZ Percentage
and the Shared MMM Percentage, respectively.
 
 ARTICLE III
 TAX CONTESTS
 
 3.1. NOTIFICATION OF TAX CONTESTS. The Controlling Party shall promptly
notify all Interested Parties of (a) the commencement of any Tax Contest
pursuant to which such Interested Parties may be required to make or entitled to
receive an indemnity payment, reimbursement or other payment under this
Agreement; and (b) as required and specified in Section 3.4 hereof, any Final
Determination made with respect to any Tax Contest pursuant to which such
Interested Parties may be required to make or entitled to receive any indemnity
payment, reimbursement or other payment under this Agreement. The failure of a
Controlling Party to promptly notify any Interested Party as specified in the
preceding sentence shall not relieve any such Interested Party of any liability
and/or obligation which it may have to the Controlling Party under this
Agreement except to the extent that the Interested Party was prejudiced by such
failure, and in no event shall such failure relieve the Interested Party from
any other liability or obligation which it may have to such Controlling Party.
 
 3.2. TAX CONTEST SETTLEMENT RIGHTS. The Controlling Party shall have the
sole right to contest, litigate, compromise and settle any Adjustment that is
made or proposed in a Tax Contest without obtaining the prior consent of any
Interested Party; provided, however, that, unless the parties provide notice of
the waiver of such right, the Controlling Party shall, in connection with any
proposed or assessed Adjustment in a Tax Contest for which an Interested Party
may be required to make or entitled to receive an indemnity payment,
reimbursement or other payment under this Agreement (a) keep all such Interested
Parties informed in a timely manner of all actions taken or proposed to be taken
by the Controlling Party; and (b) provide all such Interested Parties with
copies of any correspondence or filings submitted to any Taxing Authority or
judicial authority, in each case in connection with any contest, litigation,
compromise or settlement relating to any such Adjustment in a Tax Contest. The
failure of a Controlling Party to take any action as specified in the preceding
sentence with respect to an Interested Party shall not relieve any such
Interested Party of any liability and/or obligation which it may have to the
Controlling Party under this Agreement except to the extent that the Interested
Party was prejudiced by such failure, and in no event shall such failure relieve
the Interested Party from any other liability or obligation which it may have to
such Controlling Party. The Controlling Party may, in its sole discretion, take
into account any suggestions made by an Interested Party with respect to any
such contest, litigation, compromise or settlement of any Adjustment in a Tax
Contest. All costs of any Tax Contest are to be borne by the Controlling Party
and all Interested Parties in proportion to their respective liability to make
indemnity payments, reimbursements or other payments under this Agreement with
respect to an Adjustment made in such Tax Contest; provided, however, that (x)
any costs related to an
 
 
 -9-
<PAGE>
 
Interested Party's attendance at any meeting with a Taxing Authority or hearing
or proceeding before any judicial authority pursuant to Section 3.3 hereof, and
(y) the costs of any legal or other representatives retained by an Interested
Party in connection with any Tax Contest that is subject to the provisions of
this Agreement, shall be borne by such Interested Party.
 
 3.3. TAX CONTEST PARTICIPATION. Unless waived by the parties in writing,
the Controlling Party shall provide an Interested Party with notice reasonably
in advance of, and such Interested Party shall have the right to attend, any
formally scheduled meetings with Taxing Authorities or hearings or proceedings
before any judicial authorities in connection with any contest, litigation,
compromise or settlement of any proposed or assessed Adjustment that is the
subject of any Tax Contest pursuant to which such Interested Party may be
required to make or entitled to receive an indemnity payment, reimbursement or
other payment under this Agreement, but only if the Interested Party bears, or
in the good faith judgment of the Controlling Party, may bear, a Significant
Obligation with respect to such Adjustment; provided, however, that the
Controlling Party may, in its sole discretion, permit an Interested Party that
does not bear, or potentially bear, such a Significant Obligation with respect
to such an Adjustment, to attend any such meetings, hearings or proceedings that
relate to such Adjustment. In addition, unless waived by the parties in writing,
the Controlling Party shall provide each Interested Party with draft copies of
any correspondence or filings to be submitted to any Taxing Authority or
judicial authority with respect to such Adjustments for such Interested Party's
review and comment. The Controlling Party shall provide such draft copies
reasonably in advance of the date that they are to be submitted to the Taxing
Authority or judicial authority and the Interested Party shall provide its
comments, if any, with respect thereto within a reasonable time before such
submission. The failure of a Controlling Party to provide any notice,
correspondence or filing as specified in this Section 3.3 to an Interested Party
shall not relieve any such Interested Party of any liability and/or obligation
which it may have to the Controlling Party under this Agreement except to the
extent that the Interested Party was prejudiced by such failure, and in no event
shall such failure relieve the  Interested Party from any other liability or
obligation which it may have to such Controlling Party.
 
 3.4. TAX CONTEST WAIVER. (a) The Controlling Party shall promptly provide
notice to all Interested Parties in a Tax Contest (i) that a Final Determination
has been made with respect to such Tax Contest; and (ii) enumerating the amount
of the Interested Party's share of each Adjustment reflected in such Final