Exhibit 10.38
RESTATED AND AMENDED TAX SHARING AGREEMENT
THIS RESTATED AND AMENDED TAX SHARING AGREEMENT ("The Agreement"),
dated as of October 25, 2000 is by and among D and W Holdings, Inc., a Delaware
corporation ("Holdings"), Atrium Companies, Inc., a Delaware corporation, and
the direct and indirect subsidiaries of Atrium Companies, Inc., listed on the
signature pages hereto (together with any direct or indirect subsidiary of
Atrium Companies, Inc. acquired or formed subsequent to the date hereof)
(collectively, the "Atrium Companies Subsidiaries" and, together with Atrium
Companies, the "Atrium Entities").
WITNESSETH:
WHEREAS, upon the consummation of the transactions described in the
Second Amended and Restated Purchase Agreement, dated as of October 17, 2000
(the "Closing"), Holdings will own one hundred percent (100%) of the issued and
outstanding shares of Atrium Companies, Inc.'s common stock, par value $.01 per
share;
WHEREAS, following the Closing, Holdings and the Atrium Entities (or
certain of the Atrium Entities, as the case may be) will become members of one
or more consolidated, combined or unitary groups (each such group, the "Group"),
which will file consolidated federal income Tax returns ("Federal Consolidated
Returns") and, at Holdings' option, may (or, if otherwise required by law, will)
file consolidated, combined and/or unitary Tax returns for state, local and/or
foreign Tax purposes ("Other Consolidated Returns," and, collectively with
Federal Consolidated Returns, "Consolidated Returns"); and
WHEREAS, it is the intent and desire of the parties hereto that a
method be established for allocating the Group's Tax liability among its
members; for reimbursing Holdings and/or
other members for the payment of any such Tax liability; and for reimbursing
members for the use of any Tax Attribute (as hereinafter defined) that reduces
the Group's Tax liability otherwise payable.
NOW, THEREFORE, in consideration of the promises, covenants and
agreements contained herein, the parties hereto agree as follows:
1. DEFINITIONS.
"Tax" means any form of taxation, whenever created or imposed, and
whenever imposed by a national, municipal, governmental, state, federal,
foreign, or other body (a "Taxing Authority"), and without limiting the
generality of the foregoing, shall include any net income, alternative or add-on
minimum tax, gross income, sales, use, ad valorem, gross receipts, value added,
franchise, profits, license, transfer, recording, withholding, payroll,
employment, excise, severance, stamp, occupation, premium, property, windfall
profit, custom duty, or other tax, government fee or other like assessment or
charge of any kind whatsoever, together with any related interest, penalties, or
other additions to tax, or additional amount imposed by any such Taxing
Authority.
"Tax Attribute" means any net operating loss, net capital loss,
excess charitable contribution, foreign Tax credit, investment Tax credit or
other similar item.
2. FILING OF CONSOLIDATED RETURNS. Holdings will file, and the Atrium
Entities agree to join in the filing of, a Federal Consolidated Return for any
taxable year (or portion thereof) for which such corporations are permitted or
required to file a Federal Consolidated Return. In addition, each of the Atrium
Entities agrees, at Holdings' direction, to join in any Other Consolidated
Return for any taxable year (or portion thereof) for which such corporations are
permitted or required to file a Consolidated Return.
2
3. COOPERATION ON CONSOLIDATED RETURN MATTERS. The Atrium Entities
hereby designate Holdings (or Holdings' designee) as their agent for the purpose
of taking any and all action necessary or incidental to the filing of
Consolidated Returns. The Atrium Entities agree to furnish Holdings with any and
all information (including, without limitation, the Atrium Entities' pro-forma
consolidated Tax returns with supporting separate company pro-forma Tax returns)
in the manner and format requested by Holdings in order to carry out the
provisions of this Agreement; to cooperate with Holdings in any Tax return or
consent contemplated by this Agreement; to take such action with respect to such
returns as Holdings may request, including, without limitation, the filing of
all elections and the filing of all requests for the extension of time within
which to file Tax returns; to cooperate in connection with any audit or refund
claim; and to undertake all of the foregoing obligations on a timely basis as
requested by Holdings.
4. APPORTIONMENT OF TAXES. For each taxable period (or portion thereof)
for which a Federal Consolidated Return is filed pursuant to this Agreement, the
consolidated federal income Tax liability of the Group, as determined under
Treasury Regulations ss. 1.1502-2 and the remaining consolidated return
regulations, will be apportioned among the members of the Group pursuant to
Treasury Regulations ss. 1.1552-1(a)(1)(i) in accordance with the ratio which
that portion of the consolidated taxable income attributable to each member of
the Group having taxable income bears to the total consolidated taxable income.
5. PAYMENT OF TAXES. For each taxable period (or portion thereof) for
which a Federal Consolidated Return is filed pursuant to this Agreement,
Holdings shall prepare or cause to be prepared the Federal
3
Consolidated Return of the Group and shall pay all Taxes (including any
penalties, fines, interest or other additions thereto) reported on such Federal
Consolidated Return to the relevant Taxing Authority. At least five (5) business
days prior to the due date of any payment Holdings is required to make to any
Taxing Authority of any Taxes due with respect to a Federal Consolidated Return
of the Group (including, without limitation, estimated Tax payments, extension
Tax payments, deposits and Tax payments due with a Consolidated Return), each
Atrium Entity that is included in such Federal Consolidated Return shall pay to
Atrium Companies, Inc. an amount equal to its share of the consolidated federal
income Tax liability of the Group as determined under Section 4 of this
Agreement, and Atrium Companies, Inc. shall immediately remit such payments so
received to Holdings.
6. TAX BENEFIT. For each taxable period (or portion thereof) for which
a Federal Consolidated Return is filed pursuant to this Agreement, Holdings
shall elect in the manner specified in Treasury Regulations ss. 1.1502-33(d)(5)
that the method described in Treasury Regulations ss. 1.1502-33(d)(3) be applied
to the Group with respect to additional allocations of income Tax liability.
Pursuant to Treasury Regulations ss. 1.1502-33(d)(3), an additional liability
will be allocated to each member of the Group that, as a result of any Tax
Attribute arising from or generated by the activities of another member with
respect to a taxable period (or portion thereof) for which a Federal
Consolidated Return was filed, has an allocated Tax liability as determined
under Section 4 of this Agreement that is smaller than its Tax liability if such
Tax liability had been computed on a separate Tax return ("Separate Return Tax
Liability"). The additional Tax liability allocated to such member shall be
equal to 100 percent of the excess, if any, of (i) the Separate Return Tax
Liability of such member for the taxable year, over (ii) the allocated Tax
liability as determined under Section 4 above. The total of any additional
amounts determined in this Section 6 shall be paid to Atrium Companies, Inc. and
Atrium Companies, Inc. shall immediately remit any payments that it receives to
the member
4
that generated such Tax Attribute to which such total is attributable. Any such
payment shall be made pursuant to a consistent method which reasonably reflects
such items and which is substantiated by specific records maintained by the
Group for such purposes. Notwithstanding anything in this section 6 to the
contrary, all payments under this section 6 shall be reduced and/or delayed to
the extent necessary (and only to such extent) to prevent any such payment from
being a restricted payment that is not within Section 4.4(b)(vi) of that certain
Indenture, dated as of November 27, 1996, as amended, with Atrium Companies,
Inc. as issuer of $100 million of senior subordinated notes (and a payment in
the amount of any such reduction shall be made as soon as it would be within
such Section 4.4(b)(vi)).
7. SUBSEQUENT ADJUSTMENTS. If for any taxable period (or portion
thereof) for which a Federal Consolidated Return is filed pursuant to this
Agreement, the federal income Tax liability of the Group as reported on such
Federal Consolidated Return is adjusted, including, without limitation, by means
of an amended Tax return, a claim for refund, notification of audit changes, or
an audit by the relevant Taxing Authority, then the liabilities of Holdings and
each Atrium Entity that is included in such Federal Consolidated Return shall be
recomputed under the relevant sections of this Agreement to give effect to those
adjustments as if such adjustments had been part of the original determination
of the Group's consolidated federal income Tax liability. In the case of a
refund, Holdings shall make payment to each such Atrium Entity of its share of
the refund within five (5) business days after the refund is received by
Holdings and, in the case of an increase in Tax liability, each such Atrium
Entity shall pay to Atrium Companies, Inc. its allocable share of such increased
Tax liability at least five (5) business days prior to the date on which
Holdings reasonably expects to pay such liability to the relevant Taxing
Authority, and Atrium Companies, Inc. shall immediately remit any such
5
payments to Holdings. If any interest is to be paid or received as a result of
any Tax deficiency or refund, that interest shall be allocated to Holdings and
each Atrium Entity that is included in such Federal Consolidated Return in the
ratio that each such member's positive change in income Tax liability bears to
the total change in the income Tax liability of the Group. If any penalty is to
be paid or received as a result of any Tax deficiency or refund, that penalty
shall be allocated to the member whose income resulted in the imposition of such
penalty.
8. ELECTION FOR COMPUTING EARNINGS AND PROFITS. For each taxable period
(or portion thereof) for which a Federal Consolidated Return is filed pursuant
to this Agreement, Holdings shall elect (if necessary) in the manner specified
in Treasury Regulations ss. 1.1552-1(c) that the Group's consolidated federal
income Tax liability be apportioned for purposes of computing earnings and
profits in accordance with the method provided in Section 1552(a)(1) of the Code
and Treasury Regulations ss. 1.1552-1(a)(1).
9. OTHER TAX ITEMS. This Agreement shall not apply with respect to the
carryback of any Tax Attribute generated by a party and attributable to a
taxable year beginning after the date hereof in which such party is not a member
of the relevant Group.
10. OTHER CONSOLIDATED RETURNS. The Atrium Entities (or those of the
Atrium Entities as Holdings may direct) agree, at the request of Holdings, to
join with Holdings (or any direct or indirect subsidiary of Holdings (if
relevant)) in any Other Consolidated Return for any taxable period (or portion
thereof) for which Holdings (or any direct or indirect subsidiary of Holdings
(if any)) elects to file an Other Consolidated Return that includes such Atrium
Entities. If at any time subsequent to the date hereof, the liability for any
state, local or foreign income, franchise or other Tax of Holdings, the Atrium
Entities and/or any other affiliated corporation (if any) is determined on a
unitary, consolidated, group or combined basis (or any
6
member becomes responsible for the payment of any such Tax), this Agreement
shall be applied to such state, local or foreign income, franchise or other Tax
in like manner as it is applied to matters relating to federal income Taxes,
after taking into consideration the extent to which each party has been included
in an Other Consolidated Return that relates to those Taxes and other relevant
issues.
11. DISPUTES. Any dispute concerning the interpretation of a Section or
an amount of payment due under this Agreement shall be resolved by Holdings,
whose judgment shall be conclusive and binding on the parties.
12. SUCCESSORS. A party's rights and obligations under this Agreement
may not be assigned without the prior written consent of the other parties to
this Agreement. This Agreement shall be binding upon and inure to the benefit of
any successor to any party hereto.
13. EXCLUSIVE AGREEMENT. This Agreement embodies the entire
understanding among the parties as to the subject matter hereof, and no change
or modification may be made except in writing by each of the parties.
14. WAIVERS. The waiver of a breach of any term or condition of this
Agreement shall not be deemed to constitute the waiver of any other breach of
the same or any other term or condition.
15. COUNTERPARTS. This Agreement may be executed in counterparts, each
of which shall be deemed an original and all of which together shall constitute
one and the same instrument.
16. CHOICE OF LAW; AMENDMENTS; HEADINGS; JURISDICTION. This Agreement
shall be governed by the internal laws of the State of New York. This Agreement
may not be amended
7
or modified orally. The headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation of
this Agreement.
17. SEVERABILITY. Any term or provision of this Agreement which is
invalid or unenforceable in any jurisdiction shall, as to that jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction. If any provision of this
Agreement is so broad as to be unenforceable, the provision shall be interpreted
to be only so broad as is enforceable.
8
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the date first written above.
D AND W HOLDINGS, INC., a Delaware corporation
By:
----------------------------------
Name: Xxxx X. Xxxx
Title: Executive Vice President
ATRIUM COMPANIES, INC., a Delaware corporation
By:
----------------------------------
Name: Xxxx X. Xxxx
Title: Executive Vice President
THE ATRIUM COMPANIES, INC. SUBSIDIARIES:
WING INDUSTRIES HOLDINGS, INC., a Delaware
corporation
By:
----------------------------------
Name: Xxxx X. Xxxx
Title: Executive Vice President
DOOR HOLDINGS, INC., a Delaware corporation
By:
----------------------------------
Name: Xxxx X. Xxxx
Title: Executive Vice President
9
WING INDUSTRIES, INC., a Texas corporation
By:
----------------------------------
Name: Xxxx X. Xxxx
Title: Executive Vice President
X.X. XXXXX COMPANY, INC.,
an Alabama corporation
By:
----------------------------------
Name: Xxxx X. Xxxx
Title: Executive Vice President
TOTAL TRIM, INC., an Alabama corporation
By:
----------------------------------
Name: Xxxx X. Xxxx
Title: Executive Vice President
ATRIUM DOOR AND WINDOW COMPANY - WEST
COAST, a Texas corporation
By:
----------------------------------
Name: Xxxx X. Xxxx
Title: Executive Vice President
ATRIUM DOOR AND WINDOW COMPANY OF THE
NORTHEAST, a Connecticut corporation
By:
----------------------------------
Name: Xxxx X. Xxxx
Title: Executive Vice President
10
ATRIUM DOOR AND WINDOW COMPANY OF NEW
YORK, a Connecticut corporation
By:
----------------------------------
Name: Xxxx X. Xxxx
Title: Executive Vice President
ATRIUM DOOR AND WINDOW COMPANY OF
ARIZONA, a Delaware corporation
By:
----------------------------------
Name: Xxxx X. Xxxx
Title: Executive Vice President
ATRIUM DOOR AND WINDOW COMPANY OF NEW
ENGLAND, INC., a Connecticut corporation
By:
----------------------------------
Name: Xxxx X. Xxxx
Title: Executive Vice President
BEST BUILT, INC., a Delaware corporation
By:
----------------------------------
Name: Xxxx X. Xxxx
Title: Executive Vice President
CHAMPANGE INDUSTRIES, INC.,
a Delaware corporation
By:
----------------------------------
Name: Xxxx X. Xxxx
Title: Executive Vice President
11
HEAT, INC., a Delaware corporation
By:
----------------------------------
Name: Xxxx X. Xxxx
Title: Executive Vice President
H.I.G. VINYL, INC., a Delaware corporation
By:
----------------------------------
Name: Xxxx X. Xxxx
Title: Executive Vice President
X.X XXXXX COMPANY - SOUTH,
a Delaware corporation
By:
----------------------------------
Name: Xxxx X. Xxxx
Title: Executive Vice President
THERMAL INDUSTRIES, INC.,
a Delaware corporation
By:
----------------------------------
Name: Xxxx X. Xxxx
Title: Executive Vice President
TOTAL TRIM, INC. - SOUTH,
a Delaware corporation
By:
----------------------------------
Name: Xxxx X. Xxxx
Title: Executive Vice President
12
VES, INC., a Delaware corporation
By:
----------------------------------
Name: Xxxx X. Xxxx
Title: Executive Vice President
13
