TAX SHARING AGREEMENT
EXHIBIT 10.1
This Tax Sharing Agreement
(this “Agreement”) is entered into as of June 13, 2008 between
Bentley Pharmaceuticals, Inc., a Delaware corporation (“Bentley”), and CPEX
Pharmaceuticals, Inc., a Delaware corporation and wholly owned subsidiary of Bentley
(“CPEX” and together with Bentley, the “Parties”). Capitalized terms used in this
Agreement and not otherwise defined herein shall have the meanings ascribed to such terms in the
Separation and Distribution Agreement, dated as of the date hereof, by and between Bentley and CPEX
(the “Separation Agreement”).
Whereas, pursuant to the Separation Agreement, among other things, Bentley will transfer to
CPEX all of the CPEX Assets and CPEX will issue to Bentley shares of CPEX Common Stock and CPEX
will contribute all of the CPEX Assets to CPEX Pharma, Inc., a Delaware corporation, newly-formed
and wholly owned subsidiary of CPEX, in exchange for common stock (collectively, the “Contribution”);
ARTICLE I.
“Affiliate” shall have the meaning set forth in the Separation Agreement.
“Agreement” shall have the meaning set forth in the preamble to this Agreement.
“Ancillary Agreements” shall mean the Ancillary Agreements as set forth in the Separation
Agreement together with the Separation Agreement.
“Bentley” shall have the meaning set forth in the preamble to this Agreement.
“Bentley Filed Tax Return” shall have the meaning set forth in Section 2.01(a).
“Bentley Group” shall have the meaning set forth in the Separation Agreement.
“Bentley Indemnitees” shall have the meaning set forth in Section 4.01(b).
“Bentley Taxes” shall have the meaning set forth in Section 2.03(b).
“Code” shall have the meaning set forth in the recitals.
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“Contribution” shall have the meaning set forth in the recitals.
“Contribution Tax Treatment” shall have the meaning set forth in the recitals.
“CPEX” shall have the meaning set forth in the preamble to this Agreement.
“CPEX Assets” shall have the meaning set forth in the Separation Agreement.
“CPEX Business” shall have the meaning set forth in the Separation Agreement.
“CPEX Common Stock” shall have the meaning set forth in the Separation Agreement.
“CPEX Filed Tax Return” shall have the meaning set forth in Section 2.01(b).
“CPEX Group” shall have the meaning set forth in the Separation Agreement.
“CPEX Indemnitees” shall have the meaning set forth in Section 4.01(a).
“CPEX Taxes” shall have the meaning set forth in Section 2.03(a).
“Dispute” shall have the meaning set forth in Article VIII.
“Distribution” shall have the meaning set forth in the recitals.
“Distribution Date” shall mean the date on which the Distribution shall become effective.
“Distribution Tax Treatment” shall have the meaning set forth in the recitals.
“Final Determination” shall mean a determination within the meaning of Section 1313 of the
Code or any similar provision of state or local Tax law.
“Governmental Authority” shall have the meaning set forth in the Separation Agreement.
“Group” shall have the meaning set forth in the Separation Agreement.
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“Liabilities” shall have the meaning set forth in the Separation Agreement.
“Merger Date” shall mean the Closing Date as set forth in the Agreement and Plan of Merger,
dated as of the date hereof, by and among Teva Pharmaceutical Industries Limited, Beryllium Merger
Corporation and Bentley.
“Parties” shall have the meaning set forth in the preamble to this Agreement.
“Person” shall have the meaning set forth in the Separation Agreement.
“Post-Distribution Period” shall mean any taxable year or other taxable period beginning
after the Distribution Date and, in the case of any taxable year or other taxable period that
begins before and ends after the Distribution Date, that part of the taxable year or other taxable
period that begins at the beginning of the day after the Distribution Date.
“Pre-Distribution Period” shall mean any taxable year or other taxable period that ends on
or before the Distribution Date and, in the case of any taxable year or other taxable period that
begins before and ends after the Distribution Date, that part of the taxable year or other taxable
period through the close of the Distribution Date.
“Separation Agreement” shall have the meaning set forth in the preamble to this Agreement.
“Subsidiary” shall have the meaning set forth in the Separation Agreement.
“Taxes” shall mean (i) all taxes, charges, fees, duties, levies, imposts, rates or other
assessments or governmental charges of any kind imposed by any federal, state, local or foreign
Governmental Authority, including, without limitation, income, gross receipts, employment, excise,
severance, stamp, occupation, premium, windfall profits, environmental, custom duties, property,
sales, use, license, capital stock, transfer, franchise, registration, payroll, withholding, social
security, unemployment, disability, value added, alternative or add-on minimum or other taxes,
whether disputed or not, and including any interest, penalties, charges or additions attributable
thereto, (ii) liability for the payment of any amount of the type described in clause (i) above
arising as a result of being (or having been) a member of any group or being (or having been)
included or required to be included in any Tax Return related thereto, and (iii) liability for the
payment of any amount of the type described in clauses (i) or (ii) above as a result of any express
or implied obligation to indemnify or otherwise assume or succeed to the liability of any other
Person.
“Tax Advisor” shall have the meaning set forth in Article VIII.
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“Tax Contest” shall have the meaning set forth in Section 5.01.
“Tax Information Packages” shall mean any information required in order to prepare and file
any Bentley Filed Tax Return.
“Tax Materials” shall have the meaning set forth in Section 3.01(a).
“Tax Return” shall mean any return, report, certificate, form or similar statement or
document (including any related supporting information or schedule attached thereto and any
information return, amended tax return, claim for refund or declaration of estimated tax) required
to be supplied to, or filed with, a Governmental Authority or any xxxx for or notice related to ad
valorem or other similar Taxes received from a Governmental Authority, in each case, in connection
with the determination, assessment or collection of any Tax or the administration of any laws,
regulations or administrative requirements relating to any Tax.
ARTICLE II.
(a) Bentley shall have the sole and exclusive responsibility for the preparation and filing of
each Tax Return that (x) includes any member of the Bentley Group or the CPEX Group and that is
required to be filed on or before the Distribution Date or (y) includes any member of the Bentley
Group and that is required to be filed after the Distribution Date (each, a “Bentley Filed Tax
Return”); provided, however, that (1) all Bentley Filed Tax Returns shall be prepared on a
basis that is consistent with both the Contribution Tax Treatment and the Distribution Tax
Treatment, (2) CPEX shall promptly prepare and deliver to Bentley in a manner consistent with past
practices pro forma Tax Returns and Tax Information Packages for any
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taxable period in which any member of the CPEX Group is included in, or any portion of the
CPEX Business is reflected on, a Bentley Filed Tax Return, (3) Bentley shall provide to CPEX
sufficiently in advance of the due date for the filing thereof, and CPEX shall have a reasonable
opportunity to review and comment on, any such Bentley Filed Tax Return (or the relevant portion
thereof) to the extent that CPEX is responsible for any portion of the Taxes reported on such
Bentley Filed Tax Return, and (4) in the case of any Bentley Filed Tax Return that includes any
member of the CPEX Group or the CPEX Business only for the portion of the relevant taxable period
that ends on the Distribution Date, Taxes shall be allocated to the portion of such taxable period
that ends on the Distribution Date based on an actual or hypothetical closing of the books at the
close of the Distribution Date. Each member of the CPEX Group hereby irrevocably authorizes and
designates Bentley as its agent, coordinator and administrator for the purpose of taking any and
all actions necessary or incidental to the filing of any such Bentley Filed Tax Returns and, except
as otherwise provided herein, for the purpose of making payments to, or collecting refunds from,
any Governmental Authority in respect of a Bentley Filed Tax Return. Except as otherwise provided
herein, Bentley shall have the exclusive right to file, prosecute, compromise or settle any claim
for, or refund of, Taxes in respect of a Bentley Filed Tax Return for which Bentley bears
responsibility hereunder and to determine whether any refunds of Taxes to which the Bentley Group
may be entitled shall be received by way of refund or credit against the Tax liability of the
Bentley Group.
(b) CPEX shall have the sole and exclusive responsibility for the preparation and filing of
each Tax Return that is required to be filed after the Distribution Date that includes any member
of the CPEX Group or otherwise relates to the CPEX Business that is not a Bentley Filed Tax Return
(each, a “CPEX Filed Tax Return”); provided, however, that, except as otherwise required by
law, (1) all CPEX Filed Tax Returns shall be prepared on a basis that is consistent with both the
Contribution Tax Treatment and the Distribution Tax Treatment, (2) CPEX shall provide to Bentley
sufficiently in advance of the due date for the filing thereof, and Bentley shall have a reasonable
opportunity to review and comment on, any such CPEX Filed Tax Return (or the relevant portion
thereof) to the extent that Bentley is responsible for any portion of the Taxes reported on such
CPEX Filed Tax Return, and (3) in the case of any CPEX Filed Tax Return that includes any member of
the CPEX Group or the CPEX Business only for the portion of the relevant taxable period that begins
after the Distribution Date, Taxes shall be allocated to the portion of such taxable period that
begins after the Distribution Date based on an actual or hypothetical closing of the books at the
close of the Distribution Date.
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two (2) Business Days before payment of the relevant amount is due to a Governmental
Authority.
(a) CPEX and the members of the CPEX Group shall be responsible for the payment of (and shall
be entitled to any refund of or credit for) all Taxes (i) that are attributable to any member of
the CPEX Group or the CPEX Business for any taxable period, in accordance with the principles set
forth in Section 2.01(a)(4), provided, however, that (x) the determination of any such Taxes for
any Pre-Distribution Period shall be made treating the CPEX Group or the CPEX Business, as
applicable, as a stand-alone corporation, using methods and conventions consistent with past
practices, (y) such Taxes shall not include any Taxes incurred by any member of any Group in
connection with either the Contribution or the Distribution, and (z) such Taxes shall be net of any
Tax attributes attributable to the CPEX Group, the CPEX Business or the Bentley Group that are
available as of the close of the Merger Date (taking into account any Tax liability incurred by any
member of the Bentley Group in connection with either the Contribution or the Distribution) to
reduce (whether or not they actually reduce as of such date) the Tax Liability of any member of any
Group for any Pre-Distribution Period or any member of the Bentley Group for any Post-Distribution
Period, or (ii) resulting from any breach of or inaccuracy in any representation, covenant or
obligation of any member of the CPEX Group under this Agreement (collectively, “CPEX
Taxes”).
(b) Bentley and the members of the Bentley Group shall be responsible for the payment of (and
shall be entitled to any refund of or credit for) all Taxes (i) that are attributable to any member
of the Bentley Group, other than CPEX Taxes, or (ii) resulting from any breach of or inaccuracy in
any representation, covenant or obligation of any member of the Bentley Group under this Agreement
(collectively, “Bentley Taxes”).
(c) If, prior to the Distribution, a deposit (including a payment of estimated Taxes) were
made with respect to any Tax for which CPEX or the members of the CPEX Group are responsible under
this Agreement, such deposit shall be assigned to CPEX and CPEX shall be liable only for the amount
of such Tax ultimately due in excess of the applicable deposit. To the extent the amount of such
deposit exceeds the amount of Tax attributable to such deposit that is ultimately due, Bentley
shall pay such excess over to CPEX within five days after the filing of the applicable Bentley
Filed Tax Return.
(d) Refunds received and the amount of credits claimed by one Party with respect to Taxes for
which the other Party or the members of such other Party’s Group are responsible under this
Agreement, shall be remitted to such other Party within five days after the first Party receives
such refund or files the Tax Return claiming such refund or credit, as applicable. In the event
that any such credit is subsequently reduced as a result of any adjustment required by any
Governmental Authority, such other Party shall pay the amount of
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such reduction to the first Party within five days of receiving notice of such reduction from
the first Party.
(e) At CPEX’s request, the Bentley Group shall, at CPEX’s expense, use its reasonable best
efforts to obtain any refund or credit of a Tax or item included in a Bentley Filed Tax Return to
which any member of the CPEX Group is entitled pursuant to this Agreement, including through filing
appropriate forms with the applicable Governmental Authority; provided that the Bentley Group shall
not be required to comply with such request if Bentley reasonably determines that attempting to
obtain such refund or credit will have a material adverse impact on any member of the Bentley
Group.
(f) Except as set forth in this Agreement, any and all prior Tax sharing or allocation
agreements or practices between any member of the Bentley Group and any member of the CPEX Group
shall be terminated with respect to the CPEX Group as of the Distribution Date, and no member of
the CPEX Group shall have any continuing rights or obligations thereunder.
(a) CPEX shall not, and shall not permit any member of the CPEX Group to, file any amended Tax
Return that includes any member of the Bentley Group.
(b) Bentley shall not, and shall not permit any member of the Bentley Group to, file any
amended Tax Return that that may increase any CPEX Tax or otherwise give rise to indemnification
pursuant to Section 4.01(b).
ARTICLE III.
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foregoing, Bentley or a member of the Bentley Group may take or permit to be taken any action
prohibited by the preceding sentence, subject to, and without limiting or modifying, Bentley’s
continuing indemnification obligation under Section 4.01(a), if (x) Bentley obtains the written
consent of CPEX (which consent shall not be unreasonably withheld) or (y) Bentley obtains a ruling
from the Internal Revenue Service or an opinion of a nationally recognized law firm, in form and
substance reasonably satisfactory to CPEX, that the taking of such action will not materially
adversely affect either the Contribution Tax Treatment or the Distribution Tax Treatment.
ARTICLE IV.
(a) Notwithstanding whether any action is permitted or consented to hereunder and
notwithstanding anything else to the contrary contained herein, Bentley shall indemnify and hold
harmless CPEX, each member of the CPEX Group and their respective directors, officers and employees
(collectively, the “CPEX Indemnitees”) from and against, and will reimburse the CPEX
Indemnitees for (i) all Bentley Taxes and (ii) all Taxes, Liabilities and related losses arising
out of, based upon or relating or attributable to any breach of or inaccuracy in any
representation, covenant or obligation of any member of the Bentley Group under this Agreement.
(b) CPEX shall indemnify and hold harmless Bentley, each member of the Bentley Group and their
respective directors, officers and employees (collectively, the “Bentley Indemnitees”) from
and against, and will reimburse the Bentley Indemnitees for (i) all CPEX Taxes and (ii) all Taxes,
Liabilities and related losses arising out of, based upon or relating or attributable to any breach
of or inaccuracy in any representation, covenant or obligation of any member of the CPEX Group
under this Agreement.
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ARTICLE V.
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ARTICLE VI.
ARTICLE VII.
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ARTICLE VIII.
ARTICLE IX.
9.01 GOVERNING LAW. This Agreement, except as expressly provided herein, shall be governed by
and construed and interpreted in accordance with the laws of the State of Delaware, irrespective of
the choice of laws principles of the State of Delaware as to all matters, including matters of
validity, construction, effect, enforceability, performance and remedies.
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If to Bentley:
Bentley Pharmaceuticals, Inc.
Xxxxxxx Xxxx, 0 Xxxxxxx Xxx
Xxxxxx, Xxx Xxxxxxxxx 00000
Attn: Xxxxx X. Xxxxxx
Xxxxxxx Xxxx, 0 Xxxxxxx Xxx
Xxxxxx, Xxx Xxxxxxxxx 00000
Attn: Xxxxx X. Xxxxxx
If to CPEX:
CPEX Pharmaceuticals, Inc.
Xxxxxxx Xxxx, 0 Xxxxxxx Xxx
Xxxxxx, Xxx Xxxxxxxxx 00000
Attn: Xxxx X. Xxxxx
Xxxxxxx Xxxx, 0 Xxxxxxx Xxx
Xxxxxx, Xxx Xxxxxxxxx 00000
Attn: Xxxx X. Xxxxx
Either Party may, by notice to the other Party, change the address to which such notices are
to be given. Notice delivered personally shall be deemed delivered when received by the recipient.
Notice given by mail as set out above shall be deemed delivered five calendar days after the date
the same is mailed.
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faith in an effort to agree upon such a suitable and equitable provision to affect the
original intent of the Parties.
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IN WITNESS WHEREOF, the Parties have caused this Tax Sharing Agreement to be executed by their
duly authorized representatives as of the day and year first above written.
BENTLEY PHARMACEUTICALS, INC. |
||||
By: | /s/ Xxxxx X. Xxxxxx | |||
Name: | Xxxxx X. Xxxxxx | |||
Title: | Chief Executive Officer | |||
CPEX PHARMACEUTICALS, INC. |
||||
By: | /s/ Xxxx X. Xxxxx | |||
Name: | Xxxx X. Xxxxx | |||
Title: | President and Chief Executive Officer | |||
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