This excerpt taken from the DPZ 8-K filed Feb 7, 2007.
Retention of Notes (applicable to both non-U.S. and U.S. Holders)
Under applicable Treasury Regulations, a modification of a debt instrument will be treated as a deemed exchange of the original debt instrument (Old Note) for a new debt instrument (New Note) upon which gain or loss is realized for U.S. federal income tax purposes if the modification is significant. A modification of a debt instrument will be treated as a significant modification and, as a result, will be treated as a deemed exchange if, based on all the facts and circumstances and taking into account all modifications of the debt instrument collectively, the degree to which legal rights or obligations are altered is economically significant. The Treasury Regulations provide that a modification of a debt instrument that adds, deletes or alters customary accounting or financial covenants is not a significant modification.
Although the matter is not free from doubt, we believe that the adoption of the Proposed Amendments does not cause a significant modification of the Notes under the Treasury Regulations. Therefore, the adoption of the Proposed Amendments should not result in a deemed exchange by the non-tendering Holders for U.S. federal income tax purposes. In that case, a Holder who does not tender the Notes would not recognize any gain or loss for U.S. federal income tax purposes even if the Proposed Amendments were to become operative.
In the event that the Proposed Amendments are treated as constituting a significant modification of the Notes, the Holders will be deemed to have exchanged the Old Notes for the New Notes. This deemed exchange would be a taxable event unless the Notes, both as originally issued and as modified, constitute securities exchanged in a tax-free recapitalization.
The rules regarding significant modification and recapitalizations are complex. Non-tendering Holders are urged to consult their own tax advisors.
Certain significant restrictions on the exercise of the Companys legal defeasance option will be eliminated if the Proposed Amendments to the Indenture become operative. If the legal defeasance option is exercised, the Notes held by the Holders at that time, because of the deemed substitution or a new obligor, will be deemed to have been exchanged in a taxable transaction at the time of defeasance, and a Holder would be required to recognize capital gain or loss (subject to the market discount rules) in connection with such deemed exchange (even though the Holder will not receive payments of principal until the stated maturity date). After such deemed exchange, a Holder generally would also be required to recognize income from the property deemed to have been received in such exchange over the remaining life of the transaction in a manner or amount that is different than if legal defeasance had not occurred. Holders should consult their tax advisors as to the specific consequences arising from legal defeasance in their particular situations.