Common use of Tax Audit Clause in Contracts

Tax Audit. Seller and the Company have advised Purchaser that by letter dated January 11, 2012, the Minnesota Department of Revenue (the “State Tax Authority”) notified the Company in writing with respect to an audit of the Company’s Minnesota Corporation Franchise Tax returns filed for the tax year(s) ended December 31, 2007 through 2010 (the “State Tax Audit”). Seller acknowledges and reaffirms that any Tax payable by any of the Acquired Companies with respect to the income, property or operations of the Acquired Companies for Pre-Closing Tax Periods that result from the State Tax Audit is and will remain subject to payment by Seller pursuant to Section 8.9 of the Stock Purchase Agreement and that in connection therewith, the procedures set forth in Section 8.10 of the Stock Purchase Agreement shall apply to the State Tax Audit. In furtherance of the foregoing, Seller acknowledges and agrees that of the total Indemnification Escrowed Funds (as increased by the Certificate Escrowed Funds), notwithstanding anything to the contrary set forth in the Stock Purchase Agreement or the Escrow Agreement, an amount equal to $1,000,000 (the “Tax Escrowed Funds”) shall be retained as part of the Indemnification Escrowed Funds and not released until the earlier of (x) completion and final resolution of the State Tax Audit and final determination of any amount of Taxes required to be paid with respect to the income, property or operations of the Acquired Companies for Pre-Closing Tax Periods as a result of the State Tax Audit (including any appeals or subsequent proceedings brought by the State Tax Authority or Seller (or the Acquired Companies at the request of Seller)) and payment in full thereof and (y) the date that is thirty (30) months after the Closing Date. Seller, Purchaser and the Company acknowledge and agree that the Tax Escrowed Funds, so long as they shall be retained pursuant to this Amendment and the Escrow Agreement, shall be available for payment of any claim for indemnification by the Purchaser Indemnitees under this Amendment and the Stock Purchase Agreement that is validly made under Section 9.4(c) of the Stock Purchase Agreement if a Claim Notice (as defined in the Escrow Agreement) with respect to such claim has been validly delivered in accordance with the Escrow Agreement before the Scheduled Expiration Date (as defined in the Escrow Agreement).

Tax Audit. (a) While the Company will be responsible directly to the Canada Revenue Agency or other Governmental Entity, as applicable, (the “CRA”) for the pending GST audit (the “GST Audit”) by the CRA under Part IX of the Excise Tax Act (Canada), the Company will consult with, and seek the assistance of, Parent in a timely fashion in order to address any GST Audit issues or concerns raised by the CRA. The Seller, at its sole cost and expense, shall have the right to control any audit or other legal proceeding in respect of any Tax Return or Taxes of the Company to the extent such audit or legal proceeding relates solely or mostly to Taxes for which the Seller may be liable under this Agreement (the “Seller Indemnified Taxes”) and cannot reasonably be expected to have a material adverse impact on Taxes for a Post-Closing Tax Period (a “Tax Contest”); provided, however that (i) the Seller shall keep the Purchaser reasonably informed regarding the status of such Tax Contest and shall provide to the Purchaser copies of any material correspondence relating to such Tax Contest, (ii) the Seller shall consult in good faith with the Purchaser and the Company have advised regarding the defense of such Tax Contest and the Purchaser that by letter dated January 11, 2012, the Minnesota Department of Revenue (the “State Tax Authority”) notified and the Company shall have the right to participate in writing such Tax Contest, (iii) the Seller shall provide the Purchaser and the Company with a reasonable opportunity to comment on any representations or submissions proposed to be made to a Governmental Entity in respect of such Tax Contest and to attend any meeting with any such Governmental Entity with respect to an audit such matters and (iv) the Seller shall not settle, resolve or abandon, (and shall not allow the Company to settle, resolve or abandon), such Tax Contest without the prior written consent of the Company’s Minnesota Corporation Franchise Company and the Purchaser, which consent shall not be unreasonably withheld, conditioned, or delayed. If the Seller does not assume control of a Tax returns filed for Contest or cannot do so, but has an interest in the tax year(soutcome as it has a reasonable likelihood of affecting the Taxes in the Pre-Closing Tax Period, the Purchaser and the Company shall provide the Seller with a reasonable opportunity to comment on any representations or submissions proposed to be made to a Governmental Entity in respect of such Tax Contest and to attend any meeting with any such Governmental Entity with respect to such matters. In addition, the requirements in (i) ended December 31, 2007 through 2010 to (iv) above shall apply mutatis mutandis to the “State Tax Audit”). Seller acknowledges and reaffirms that any Tax payable by any of the Acquired Companies Purchaser with respect to the income, property or operations of the Acquired Companies for Pre-Closing Tax Periods that result from the State Tax Audit is and will remain subject to payment by Seller pursuant to Section 8.9 of the Stock Purchase Agreement and that in connection therewith, the procedures set forth in Section 8.10 of the Stock Purchase Agreement shall apply to the State Tax Audit. In furtherance of the foregoing, Seller acknowledges and agrees that of the total Indemnification Escrowed Funds (as increased by the Certificate Escrowed Funds), notwithstanding anything to the contrary set forth in the Stock Purchase Agreement or the Escrow Agreement, an amount equal to $1,000,000 (the “Tax Escrowed Funds”) shall be retained as part of the Indemnification Escrowed Funds and not released until the earlier of (x) completion and final resolution of the State Tax Audit and final determination of any amount of Taxes required to be paid with respect to the income, property or operations of the Acquired Companies for Pre-Closing Tax Periods as a result of the State Tax Audit (including any appeals or subsequent proceedings brought by the State Tax Authority or Seller (or the Acquired Companies at the request of Seller)) and payment in full thereof and (y) the date that is thirty (30) months after the Closing Date. Seller, Purchaser and the Company acknowledge and agree that the Tax Escrowed Funds, so long as they shall be retained pursuant to this Amendment and the Escrow Agreement, shall be available for payment of any claim for indemnification by the Purchaser Indemnitees under this Amendment and the Stock Purchase Agreement that is validly made under Section 9.4(c) of the Stock Purchase Agreement if a Claim Notice (as defined in the Escrow Agreement) with respect to such claim has been validly delivered in accordance with the Escrow Agreement before the Scheduled Expiration Date (as defined in the Escrow Agreement).

Tax Audit. Seller and (a) As promptly as practicable following the Signing, the Company have advised Purchaser that by letter dated January 11will engage PriceWaterhouseCoopers, 2012, the Minnesota Department of Revenue LLC (the “State Tax AuthorityPWC”) notified the Company in writing with respect to an conduct a forensic audit of the Company’s Minnesota Corporation Franchise Tax returns filed for the tax year(s) ended December 31, 2007 through 2010 (the “State Tax Audit”)records. Seller acknowledges and reaffirms that Parent shall initially pay any Tax payable by any of the Acquired Companies with respect to the income, property or operations of the Acquired Companies for Pre-Closing Tax Periods that result from the State Tax Audit is and will remain subject to payment by Seller pursuant to Section 8.9 of the Stock Purchase Agreement and that costs PWC in connection therewithwith the audit that exceed $25,000, provided that Parent shall be reimbursed for all such costs through a claim against the procedures set forth Tax Escrow Fund in Section 8.10 of the Stock Purchase Agreement shall apply to the State Tax Audit. In furtherance of the foregoing, Seller acknowledges and agrees that of the total Indemnification Escrowed Funds (as increased by the Certificate Escrowed Funds), notwithstanding anything to the contrary set forth in the Stock Purchase Agreement or the Escrow Agreement, an amount equal to $1,000,000 such costs, and such reimbursement shall be made by the Escrow Agent within five (5) Business Days of a claim by Parent upon submission of an invoice from PWC (for avoidance of doubt, the Escrow Agent shall disburse funds for such reimbursement without the consent of, or any instruction from, the Stockholder Representative). PWC shall prepare and deliver to Parent and the Company (or the Company Stockholder Representative if the audit is completed post-Closing) a report (the “Tax Escrowed FundsAudit Report”) shall be retained as part of detailing the Indemnification Escrowed Funds and not released until the earlier of (x) completion and final resolution of the State Tax Audit and final determination amount of any amount of Taxes required potential Tax liability relating to be paid the Company’s failure to pay any sales or use Tax with respect to any Tax year or portion thereof ending on or before the incomedate of this Agreement (or for any Tax year beginning before and ending after the date of this Agreement, property or operations to the extent allocable (as determined in the last sentence in Section 6.4(b)) to the portion of such period beginning before and ending on the date of this Agreement (the “Tax Liability”). The Company (and Parent if the audit does not conclude by the Closing) shall provide PWC with reasonable access to review the computations, work papers (including access to accountants’ work papers, subject to such confidentiality restrictions as such accountants may reasonably request) and underlying books and records reasonably related to PWC’s preparation of the Acquired Companies for Pre-Closing Tax Periods as a result Audit Report. Following receipt of the State Tax Audit (including any appeals or subsequent proceedings brought by Report, the State Tax Authority or Seller (Company or the Acquired Companies at Company Stockholder Representative, as applicable, shall have ten (10) business days in which to approve or object to the request Tax Audit Report in writing. Any notice of Sellerobjection shall include in reasonable detail the basis for such objection. If the Tax Audit Report is approved, or if the aforementioned ten (10) business days shall have lapsed without the delivery of a written objection, then the Tax Audit Report shall be deemed final (a “Final Tax Audit Report”)) . If an objection is made pursuant to this Section 7.11(a), Parent and payment PWC shall in full thereof good faith negotiate and (y) attempt to agree with the date that is thirty (30) months after the Closing Date. SellerCompany or Company Stockholder Representative, Purchaser as applicable, and the Company acknowledge and agree that the Tax Escrowed Funds, so long as they shall be retained pursuant to this Amendment and the Escrow Agreement, shall be available for payment of any claim for indemnification by the Purchaser Indemnitees under this Amendment and the Stock Purchase Agreement that is validly made under Section 9.4(c) of the Stock Purchase Agreement if a Claim Notice Accountant (as defined below) upon the objectionable items in the Escrow Agreement) Tax Audit Report. For such purpose, the Company or Company Stockholder Representative may, at its sole cost and expense, retain the services of independent public accounts of nationally recognized standing as determined by the Company (“Company Accountant”). Also for such purpose, PWC shall provide the Company or Company Stockholder Representative, as applicable, and Company Accountant, if any, with respect reasonable access to review the computations, work papers (including access to PWC’s work papers, subject to such claim has been validly confidentiality restrictions as PWC may reasonably request) and underlying books and records reasonably related to PWC’s preparation of the Tax Audit Report. If the Company or Company Stockholder Representative, as applicable, Company Accountants, if any, Parent and PWC shall so agree, then the Tax Audit Report shall be so revised and deemed final (such Tax Audit Report also deemed a “Final Tax Audit Report”). If no such agreement is reached after good faith negotiation, the Tax Audit Report originally delivered in accordance with the Escrow Agreement before the Scheduled Expiration Date by PWC shall be deemed final and binding (as defined in the Escrow Agreementsuch Tax Audit Report then deemed a “Final Tax Audit Report”).

Tax Audit. Seller and If Purchaser (which, for purposes of this first sentence of this Section 8.5, shall be deemed to include any of its Affiliates or any of the Company have advised Purchaser Transferred Entities) or Parent (which, for purposes of this first sentence of this Section 8.5, shall be deemed to include any of its Affiliates (other than the Transferred Entities)) receives notice of any Action in respect of any Taxes or any Tax Return of the Transferred Entities for any taxable period ending on or before the Closing Date or any Straddle Period, then such party will promptly give written notice along with copies of any assessment, notice or other document received from any Governmental Entity to the other party; provided, that the failure of such party to give such prompt notice shall not relieve the other party of any of its obligations under this Article VIII. To the extent that portion of any such audit, investigation, or other Action is reasonably expected to relate to a Parent Tax Return or the validity of the Tax treatment of the steps contemplated by letter dated January 11, 2012, the Minnesota Department of Revenue Exhibit A (the portion of each Action, a “State Tax Authority”) notified the Company in writing with respect to an audit of the Company’s Minnesota Corporation Franchise Tax returns filed for the tax year(s) ended December 31, 2007 through 2010 (the “State Parent Tax Audit”), Parent will have the right, at its own expense, to control the defense of the Parent Tax Audit, provided that (A) Parent gives written notice to the Purchaser within fifteen (15) days after the Parent receives notice of the Parent Tax Audit from the Purchaser (or any of its Affiliates) or the applicable Governmental Entity, (B) Parent keeps the Purchaser reasonably informed of all material matters that come to its attention in respect of the Parent Tax Audit, (C) Parent offers Purchaser an opportunity to comment before submitting any written materials prepared or furnished in connection with such Parent Tax Audit, (D) Parent defends such Parent Tax Audit diligently and in good faith as if it were the only party in interest in connection with such Parent Tax Audit, and (E) Parent does not settle, compromise or abandon any such Parent Tax Audit without obtaining the prior written consent of the Purchaser, which consent shall not be unreasonably withheld, conditioned or delayed. Seller acknowledges The Purchaser will be entitled to participate in the defense of any Parent Tax Audit, at its own expense. Where Parent does not elect to control the defense of the Parent Tax Audit, Purchaser shall be entitled to control such Parent Tax Audit and reaffirms to settle or compromise such Parent Tax Audit, without the consent of Parent. Notwithstanding the foregoing, to the extent that any audit, investigation, or other Action is reasonably expected to relate to the validity of the Tax payable treatment of the steps contemplated by or the Post-Closing Restructuring Schedule, Purchaser shall not settle or compromise any such audit, investigation, or other Action without the prior written consent of Parent, which consent shall not be unreasonably withheld, conditioned or delayed. In addition, with respect to any U.S. Transferred Entity that is or was a partnership for U.S. federal income Tax purposes, (i) the parties agree that an election under Section 6226 of the Code with respect to such Transferred Entity for any Tax period ending on or before the Closing Date or any Straddle Period shall be made, and (ii) at the request of the Purchaser, subject to the terms of this Section 8.5, the Parent shall (and, if applicable, shall cause its Affiliates, any Person appointed as the “partnership representative” of any of the Acquired Companies with respect to Transferred Entities, and any Person appointed as the income, property or operations “designated individual” of any of the Acquired Companies Transferred Entities to) promptly revoke the appointment, or cause the resignation, of any Person previously appointed as the “partnership representative” or the “designated individual” of any of the Transferred Entities (in each case, pursuant to Treasury Regulations Section 301.6223-1) for any Pre-Closing Tax Periods that result from the State Tax Audit is and will remain subject to payment by Seller pursuant to Section 8.9 of the Stock Purchase Agreement and that in connection therewith, the procedures set forth in Section 8.10 of the Stock Purchase Agreement shall apply to the State Tax Audit. In furtherance of the foregoing, Seller acknowledges and agrees that of the total Indemnification Escrowed Funds (as increased by the Certificate Escrowed Funds), notwithstanding anything to the contrary set forth in the Stock Purchase Agreement or the Escrow Agreement, an amount equal to $1,000,000 (the “Tax Escrowed Funds”) shall be retained as part of the Indemnification Escrowed Funds and not released until the earlier of (x) completion and final resolution of the State Tax Audit and final determination of any amount of Taxes required to be paid with respect to the income, property or operations of the Acquired Companies for Pre-Closing Tax Periods as a result of the State Tax Audit Period (including any appeals or subsequent proceedings brought by the State Tax Authority or Seller (or the Acquired Companies at the request of Seller)Straddle Period) and payment in full thereof and (y) the date that is thirty (30) months after the Closing Date. Seller, Purchaser and the Company acknowledge and agree that the Tax Escrowed Funds, so long as they shall be retained pursuant to this Amendment and the Escrow Agreement, shall be available for payment of any claim for indemnification by the Purchaser Indemnitees under this Amendment and the Stock Purchase Agreement that is validly made under Section 9.4(c) of the Stock Purchase Agreement if a Claim Notice (as defined in the Escrow Agreement) with respect to such claim has been validly delivered in accordance with the Escrow Agreement before procedures described in Treasury Regulations Section 301.6223-1 in connection with any Tax Proceeding with respect to any of the Scheduled Expiration Date (as defined in Transferred Entities under the Escrow Agreement)Partnership Tax Audit Rules.