Exhibit 10.30
AMENDED AND RESTATED
TAX INDEMNIFICATION AGREEMENT
AAF-XxXXXX HOLDINGS, INC., A TEXAS CORPORATION,
AAF-XxXXXX INC., A DELAWARE CORPORATION,
XXXXXXX X. XXXXXX,
XXXXXXX X. XXXXXX,
THE XXXX XXXXXX IRREVOCABLE TRUST DATED DECEMBER 27, 0000,
XXX XXXXXXX XXXX IRREVOCABLE TRUST
DATED DECEMBER 29, 1993,
THE XXX XXXXXX IRREVOCABLE TRUST DATED DECEMBER 27, 1991,
THE XXXXX XXXXXX IRREVOCABLE TRUST
DATED DECEMBER 27, 1991,
THE JORDAN XXXXX XXXXXX IRREVOCABLE TRUST
DATED DECEMBER 27, 1991,
THE XXXXXXX XXXXXX XXXXXX IRREVOCABLE TRUST
DATED DECEMBER 29, 1993,
THE XXXXXX XXXXXX IRREVOCABLE TRUST
DATED DECEMBER 27, 1991,
THE XXXXXX XXXXXXX IRREVOCABLE TRUST
DATED DECEMBER 27, 1991,
XXXXXXX XXXXX XXXXXX, XX.,
AND
XXXXXX XXXXXXXX XXXXXX
AMENDED AND RESTATED
TAX INDEMNIFICATION AGREEMENT
This Amended and Restated Tax Indemnification Agreement (the
"Agreement") is made and entered into on the 8th day of July, 1998, by and among
AAF-XxXxxx Inc., a Delaware corporation ("AMI"), AAF-XxXxxx Holdings, Inc., a
Texas corporation, Xxxxxxx X. Xxxxxx and Xxxxxxx X. Xxxxxx, both individuals
residing in Dallas County, Texas (collectively, the "Xxxxxxx"), The Xxxx Xxxxxx
Irrevocable Trust dated December 27, 0000, Xxx Xxxxxxx Xxxx Irrevocable Trust
dated December 29, 1993, The Xxx Xxxxxx Irrevocable Trust dated December 27,
1991, The Xxxxx Xxxxxx Irrevocable Trust dated December 27, 1991, The Jordan
Xxxxx Xxxxxx Irrevocable Trust dated December 27, 1991, The Xxxxxxx Xxxxxx
Xxxxxx Irrevocable Trust dated December 29, 1993, The Xxxxxx Xxxxxx Irrevocable
Trust dated December 27, 1991, The Xxxxxx Xxxxxxx Irrevocable Trust dated
December 27, 1991 (collectively, the "Trusts"), and Xxxxxxx Xxxxx Xxxxxx, Xx.
and Xxxxxx Xxxxxxxx Xxxxxx, both individuals residing at Fort Xxxxx, Indiana
(the "Individual Minority Shareholders") (the Xxxxxxx, the Trusts, and the
Individual Minority Shareholders collectively referred to hereinafter as the
"Shareholders" and, collectively with AMI and AAF-XxXxxx Holdings, Inc., the
"Parties").
W I T N E S S E T H:
WHEREAS, during the period beginning March 29, 1987, in the case of
SnyderGeneral Corporation (subsequently renamed "AAF-XxXxxx Inc."), a Delaware
corporation, and November 26, 1986, in the case of SnyderGeneral Holding Company
(subsequently renamed "AAF-XxXxxx Holdings, Inc."), a Texas corporation (each a
"Company" and, collectively, the "Companies"), and continuing until the
termination of the applicable election pursuant to the disposition of the
Shareholders' interests in the Companies on May 2, 1994 (for each of the
Companies, the corresponding "S Corporation Period"), each of the Companies
maintained an election to be taxed as a "subchapter S corporation" pursuant to
sections 1361 and 1362 of the Code (as hereinafter defined) (such elections
collectively referred to in this Agreement as the "S Elections"); and
WHEREAS, the Companies historically had distributed cash to the
Shareholders in amounts intended to correspond with the federal and state income
taxes imposed on the Shareholders and attributable to the Companies' respective
taxable incomes; and
WHEREAS, the Shareholders also historically had remitted to the
Companies, when received from the various taxing authorities, refunds of
overpayments of such federal and state income taxes attributable to the
Companies' taxable incomes; and
WHEREAS, pursuant to that certain Stock Purchase Agreement dated as of
March 31, 1994 by and among O.Y.L. Industries Berhad, the Shareholders,
SnyderGeneral Corporation, Xxxxxxx Xxxxx, Xx., Xxxxxx X. Xxxxxx, Xxxxxx X.
Xxxxxx, Xxxxx X. Xxxx, Xxxx X. Xxxxxx, Xxxxxxx X. Xxxxxxxx, Xxxxx X. Xxxxxx, and
Xxxxxxx X. Xxxxxxxxxx (the "Stock Purchase Agreement"), and that certain
Redemption and Asset Transfer Agreement dated as of May 2, 1994, by and among
the Companies and the Shareholders, the Shareholders disposed of their interests
in the Company; and
WHEREAS, on May 2, 1994, the Parties entered into that certain Tax
Indemnification Agreement (the "Original Agreement") for the purpose of setting
forth their agreements with respect to, among other things, the federal and
state income tax liabilities associated with the S Elections; and
WHEREAS, AMI, the Xxxxxxx, and certain other parties are entering into
a Settlement Agreement and Complete and Permanent Release dated as of July 8,
1998, to which this Agreement is ancillary and which shall terminate the rights
and obligations of the parties under the Stock Purchase Agreement; and
WHEREAS, the Parties desire to enter into this Agreement for the
purpose of making certain amendments to the terms of the Original Agreement, and
to adopt the terms of this Agreement as the complete expression of their
covenants, agreements, and undertakings with respect to its subject matter,
thereby superseding the Original Agreement in its entirety;
NOW, THEREFORE, the Shareholders, on behalf of themselves and their
respective heirs, personal and legal representatives, successors, and assigns,
and AMI and AAF-XxXxxx Holdings, Inc., on behalf of themselves and their present
and future subsidiaries, successors, and assigns, enter into this Agreement:
1. Definitions. As used in this Agreement, the following terms have the
following meanings (such meanings to be equally applicable to both the singular
and the plural forms of the terms defined):
(a) "Code" means the Internal Revenue Code of 1986, as
amended, and includes corresponding provisions of any subsequently enacted
federal tax laws.
(b) "Final Determination" means the final resolution of the
liability for Tax for any taxable period affected by the allocation of Company
Tax Items to the Shareholders (i) by IRS Form 870 or 870-AD (or any successor
forms thereto) on the date of acceptance by or on behalf of the IRS with respect
to United States federal Taxes, or by a comparable form under the laws of any
other jurisdictions; except that a Form 870 or 870-AD or comparable form that
reserves (whether by its terms or by operation of law) the right of the taxpayer
to file a claim for refund and (or) the right of the taxing authority to assert
a further deficiency for any Tax shall not constitute a Final Determination for
such Tax until the expiration of the applicable statute of limitations; (ii) by
a decision, judgment, decree, or other order by a court of competent
jurisdiction that has become final and unappealable; (iii) by a closing
agreement or accepted offer in compromise under section 7121 or section 7122 of
the Code with respect to federal Taxes, or comparable agreements as to other
Taxes under the laws of any other jurisdictions; (iv) by an allowance of a
refund or credit in respect of any overpayment of Tax, but only after the
expiration of all periods during which such refund may be recovered by the
jurisdiction assessing or imposing any such Tax; or (v) by any other final
disposition, including by reason of the expiration of the applicable statute of
limitations.
(c) "IRS" means the Internal Revenue Service, U.S. Department
of the Treasury.
(d) "Shareholder Income Tax Liability" with respect to either
Company from time to time means (i) liabilities, whether as reported on an
original or amended Tax Return filed after May 2, 1994, or upon a Final
Determination occurring after May 2, 1994, and including estimated liabilities
to the extent amounts are required to be paid on an estimated basis after the
date of this Agreement, for all applicable federal and state income taxes,
however denominated, imposed as a result of the attribution to the Shareholders
of Company Tax Items under the provisions of subchapter S of the Code or
analogous state income Tax laws, computed as hereinafter provided, plus (ii) any
interest, penalties, additions to Tax, or additional amounts with respect
thereto. Shareholder Income Tax Liability also includes liabilities for Taxes
imposed on a Shareholder attributable to the Shareholder's receipt of interest
properly allocable to a Tax Refund. Shareholder Income Tax Liability shall be
determined under all applicable provisions of the Code and state income tax
laws, taking into account all attributes resulting from or arising out of a
Shareholder's status as such under subchapter S of the Code or analogous state
income tax laws for any S Corporation Period, including, without limitation, net
operating loss carryovers and carrybacks, losses that are suspended under Code
section 1366(d), and credits under Code section 53 for alternative minimum taxes
paid. The liabilities for federal and state income Taxes imposed as a result of
the attribution to the Shareholders of Company Tax Items under subchapter S of
the Code shall be computed as the increase in Tax owed to a taxing authority by
a Shareholder and attributable to such Company Tax Items. In the case of an
original Tax Return filed after May 2, 1994, such increase in Tax shall be equal
to the liability of the Shareholder attributable to all such Company Tax Items
as reported on that return. In the case of an amended Tax Return filed after May
2, 1994, such increase in Tax shall be measured as the liability of the
Shareholder attributable to all such Company Tax Items as reported on the
amended Tax Return in excess of the total amount of Tax paid in respect of the
original Tax Return or previously filed amended Tax Return for the same taxable
period. In the case of a Final Determination
occurring after May 2, 1994, such increase in Tax shall be measured as the
liability of the Shareholder resulting therefrom and attributable to all such
Company Tax Items in excess of the total amount of Tax paid in respect of the
applicable original or amended Tax Return, whichever the case may be. This same
method shall be employed, mutatis mutandis, in computing the amount of Tax
Distributions required in respect of estimated tax payments made after the date
of this Agreement or in respect of the "gross-up" component thereof referred to
in clause (iii) of subsection 3(a). Shareholder Income Tax Liability, as
computed in accordance with the foregoing provisions of this subsection 1(d),
shall encompass only amounts actually owed by a Shareholder to a taxing
authority on or after May 2, 1994, with respect to Tax Returns (whether original
or amended) filed, or Final Determinations occurring, after May 2, 1994.
(e) "Tax" or "Taxes" means any federal or state tax imposed on
or measured by net income or a taxable base in the nature of net income,
including, without limitation, the taxes imposed by subtitle A of the Code.
(f) "Tax Distributions" means the payments required to be made
by AMI to the Shareholders pursuant to section 3 of this Agreement.
(g) "Tax Item" means any item of income, gain, loss,
deduction, credit, recapture of credit, or any other item that increases or
decreases Taxes paid or payable, including an adjustment under Code section 481
resulting from a change in accounting method, and whether as originally
reported, as amended, or upon a Final Determination.
(h) "Tax Refund" means a Shareholder's receipt of a refund of
Tax (or an allowance of a credit against other Shareholder Taxes by a taxing
authority) after May 2, 1994 for any taxable period (including, without
limitation, taxable periods of the Shareholders subsequent to the S Corporation
Periods) attributable to or arising out of: (i) adjustments of Company Tax Items
resulting from a Final Determination, or (ii) an original or amended Company Tax
Return (and a corresponding original or amended Shareholder Tax Return). A "Tax
Refund," for the purposes of this Agreement, also includes any reduction in
capital gains Tax from the disposition of the Shareholders' interests in the
Companies (a) attributable to the Shareholders' remittance of any amount to AMI
in respect of Tax Refunds, as required by section 3(b) or 3(c) of this
Agreement, or (b) to the extent that the attribution of additional taxable
income or gain to the Shareholders results in increased tax basis in the shares
of common stock of the Companies. The term "Tax Refund" also includes any
interest properly allocable to such refund of Tax and any reduction of penalties
or additions to tax previously paid and properly allocable to Company Tax Items.
For the purposes of the first sentence of this section 1(h) , a Tax Refund shall
be computed as the decrease in Tax owed to a taxing authority by a Shareholder
and attributable to such Company Tax Items. In the case of an original or
amended Shareholder Tax Return filed after May 2, 1994, such decrease in Tax
shall be equal to the overpayment of Tax shown on that return attributable to
all such Company Tax Items. In the case of a Final Determination occurring after
May 2, 1994, such decrease in Tax shall be measured as the overpayment of Tax
resulting therefrom and attributable to Company Tax Items in excess of the total
amount of Tax paid in respect of the applicable original or amended Shareholder
Tax Return, whichever the case may be.
(i) "Tax Return" means any return, claim for refund, form,
filing, questionnaire, or other document required to be filed (or that may be
filed), including requests for extensions of time, filings made with estimated
tax payments, and amended returns that may be filed for any period with any
taxing authority in connection with any Tax or Taxes (whether or not a payment
is required to be made with respect to such filing).
2. General Intent; Rule of Construction. It is the general intent of
the parties to this Agreement that AMI shall economically bear the burden of all
Taxes imposed on the Shareholders attributable to the Companies' Tax Items with
respect to taxable periods, or portions of taxable periods, ending on or before
the termination of the applicable S Corporation Period, together with any
interest, penalties, additions to tax, or additional amounts or costs with
respect thereto, and that the Shareholders shall remit to AMI all refunds, when
received, of overpayments of Taxes attributable to the Companies' Tax Items,
together with any properly allocable interest and reductions of penalties or
additions to tax previously paid. This Agreement shall be construed accordingly.
3. Tax Distributions and Tax Refund Remittances.
(a) AMI shall make Tax Distributions to the Shareholders in an
amount equal to the sum of (i) the Shareholder's Shareholder Income Tax
Liability, plus (ii) the amount of all reasonable and necessary expenses,
reasonable and necessary attorneys' fees, and reasonable and necessary
accountants' fees incurred by the Shareholder in connection with or as a result
of the attribution of the Company's Tax Items to him, her, or it, plus (iii)
such amount as will reimburse the Shareholder for the amount of any and all
additional federal and state Taxes payable by him, her, or it as a result of the
Shareholder's receipt of all amounts due under this paragraph (a).
(b) Subject to section 3(d) of this Agreement, each
Shareholder shall promptly remit to AMI any Tax Refund received after May 2,
1994, within ten (10) days of receipt (or realization in the case of a reduction
of Tax occurring after May 2, 1994, that does not result in the refund of an
overpayment of Tax). Each Shareholder shall timely take all steps reasonably
necessary to preserve his, her, or its claims for refunds of Tax and to secure
the maximum reduction in Taxes attributable to a Company's Tax Items; provided,
however, that, to the extent a Shareholder incurs out-of-pocket expenses
(including reasonable and necessary accountants' and attorneys' fees) in
preserving or securing such refunds of Tax, AMI shall reimburse the Shareholder
for those expenses within ten (10) days of receiving notice that the Shareholder
has paid the expense.
(c) Notwithstanding anything contained herein, including the
provisions of paragraphs (a) and (b) immediately above, if (i) that certain
Agreement as to Final Determination of Tax Liability executed and delivered by
the Xxxxxxx to the IRS on or about October 31, 1997, (ii) that certain Agreement
as to Final Determination of Tax Liability and Specific Matters executed and
delivered by AMI to the IRS on or about October 31, 1997, and (iii) that certain
Agreement as to Final Determination of Tax Liability and Specific Matters
executed and delivered by AAF-XxXxxx Holdings, Inc. to the IRS on or about
October 31, 1997 (such agreements hereinafter collectively referred to as the
"Closing Agreements"), are executed and delivered by the IRS to the applicable
party, and thus become effective, then in lieu of the payments required to be
made pursuant to paragraphs (a) and (b) immediately above with respect to
federal Taxes only, the Shareholders shall pay to AMI those amounts set forth on
Schedule B attached hereto opposite the label "Net due to AMI" for each of the
Shareholders' taxable years 1987 through and including 1995 and opposite the
label "Net due to AMI" under the heading "Adjustments to Capital Gain on Stock
Sale," as such amounts are adjusted pursuant to the following sentence. The
above-described amounts set forth opposite "Net due to AMI" shall be adjusted as
appropriate to reflect changes in federal tax rates applicable to capital gains
and ordinary income, and statutory interest on deficiencies and refunds
determined under applicable provisions of the Code, and shall be further
adjusted as appropriate for corresponding changes in the "39.6% Tax on interest
refund." In addition, the amounts set forth opposite "Net due to AMI" shall be
adjusted as appropriate to reflect any changes made by the IRS under applicable
law to the amounts set forth opposite the label "Account balance as of October
31, 1997." Payments required to be made by the Shareholders to AMI pursuant to
this paragraph (c) shall be made within ten (10) days of the receipt of the
overpayments identified on Schedule B or within ten (10) days of realization of
the amount labeled as "Adjustments to Capital Gain on Stock Sale" shown thereon.
Following receipt by AMI of all payments required to be made by the Shareholders
pursuant to this paragraph (c), neither AMI nor the Shareholders shall have any
further obligations to, or claims against, each other in respect of Tax
Distributions for federal Taxes or remittances of refunds of federal Taxes or of
federal Tax benefits realized, notwithstanding any other provision of this
Agreement to the contrary.
(d) If at the time AMI is obligated to make a Tax Distribution
to a Shareholder, the Shareholder is obligated to remit a Tax Refund to AMI,
then any distribution by AMI or any remittance by the Shareholder, as the case
may be, shall be on a net basis.
(e) Upon request by AMI, a Shareholder shall provide
substantiation in reasonable detail for any expenses for which reimbursement is
sought pursuant to this section 3. In addition, a Shareholder shall provide AMI
with copies of any Tax Return filed by the Shareholder (including supporting
work papers and an associated IRS Form 8821) and copies of any communications
between the Shareholder and the applicable taxing authorities to the extent
reasonably deemed relevant by AMI in determining whether the Shareholder has
realized a Tax Refund that he, she, or it is obligated to remit to AMI under
this section 3.
(f) Payments or remittances made pursuant to this section 3
shall be treated by the Shareholders as adjustments to the purchase price for
their share interests.
4. Ratification of Prior Tax Distributions and Tax Refund Remittances.
Notwithstanding any provision of this Agreement to the contrary other than the
provisions of section 3(c), by entering into this Agreement the Parties agree
that all distributions to the Shareholders in respect of Taxes made by the
Companies prior to May 2, 1994, and all refunds of Tax remitted to the Companies
by the Shareholders prior to May 2, 1994, were correct in their amounts when
made or remitted, are final, are not subject to adjustment, and, accordingly,
are hereby ratified, confirmed, and approved by all Parties such that AMI and
the Shareholders shall have no further obligations to, or claims against, one
another with respect to Tax Distributions or remittances of Tax Refunds made, or
that should have been made, on or before May 2, 1994. This section 4 shall have
no applicability to Shareholder Tax liabilities arising, or Tax Refunds received
or realized by the Shareholders, after May 2, 1994.
5. Payment. Any payment required to be made by AMI pursuant to section
3 of this Agreement shall be made within ten (10) days after a Shareholder has
provided (i) written notice to AMI of its obligation to make such a payment, and
(ii) except for Tax payments that are required to be made on an estimated basis,
a copy of the Tax Return or other reasonably satisfactory document evidencing
the corresponding liability to a federal or state taxing authority. Any
remittance required to be made by a Shareholder pursuant to section 3 of this
Agreement shall be made within the time period specified in Section 3(b). Any
payment or remittance required under section 3 not so made shall thereafter bear
interest at two percentage points (2%) above the federal short-term rate
established pursuant to section 6621 of the Code until such payment is actually
made. AMI's obligation to make Tax Distributions to the Shareholders, and each
Shareholder's obligation to remit Tax Refunds to AMI, is absolute and
unconditional and shall not be affected by any circumstances, including, without
limitation, any set-off, counterclaim, recoupment, defense, or other right that
AMI may have against a Shareholder or anyone else, or other right that a
Shareholder may have against AMI or anyone else, excepting, however, to the
extent, and only to the extent, as otherwise provided in subsection 3(d).
6. Preparation and Filing of Tax Returns. All Tax Returns contemplated
by this Agreement shall be prepared in accordance with applicable law and shall
be filed on a timely basis (including pursuant to allowed extensions) by the
Party responsible for such filing under applicable law. In addition, to the
extent applicable, all such affected Tax Returns shall be prepared in a manner
consistent with the Closing Agreements, unless prior to the filing of any such
Tax Return the IRS shall have notified AMI or the Xxxxxxx that it does not
intend to execute the Closing Agreements. Subject to the requirements of the
immediately preceding sentence, (i) in the absence of a controlling change in
law or circumstances, or except as otherwise agreed in writing by AMI and the
Shareholders, all Tax Returns filed after the effective date of this Agreement
shall be prepared on a basis consistent with the elections, accounting methods,
conventions, and principles of taxation used for the most recent taxable periods
for which Tax Returns involving similar Tax Items have been filed, and (ii)
subject to the provisions of this Agreement, all decisions relating to the
preparation of Tax Returns shall be made in the sole discretion of the Party
responsible for such preparation under applicable law.
7. Tax Audits and Controversies.
(a) In the event that AMI or a Shareholder receives notice of
a pending or threatened Tax audit or of an assessment that could give rise to a
Shareholder Income Tax Liability (referred to in this Agreement as a "Potential
Tax Claim"), the recipient shall give notice thereof to the other Party as
promptly as practicable; provided, however, that the Parties agree that the
Shareholders need not give notice to AMI with respect to the fact of the
potential assessments of various state Tax liabilities arising out of the Final
Determinations reflected in the Closing Agreements. The notice required to be
given by the Shareholders and AMI under this paragraph is referred to in this
Agreement as the "Potential Tax Claim Notice." A Potential Tax Claim Notice
shall contain all information known to the Party giving the notice pertaining to
the Tax liability in question. The failure to provide a Potential Tax Claim
Notice
shall excuse the Party that would have received such notice from liability under
this Agreement to the extent that such failure is prejudicial to that Party.
(b) AMI shall, at its election, have the primary right to
represent the Shareholders' interests in any Tax inquiry, investigation, audit,
or administrative or court proceeding (collectively, a "Proceeding") relating to
a Potential Tax Claim or any challenge to a Company's S corporation status,
including the right to (i) employ counsel of its choice reasonably acceptable to
the Xxxxxxx at its expense, and (ii) subject to the exceptions provided
hereinafter, to control the conduct of the Proceedings, including the settlement
or other disposition thereof. AMI shall, however, (x) reasonably and in good
faith consult with the Xxxxxxx with respect to the defense against, or
compromise of, the Potential Tax Claim to the extent that an adverse resolution
of such Proceeding might adversely affect the Shareholders (directly or
indirectly), (y) afford the Shareholders the right to have representatives
reasonably satisfactory to AMI attend all administrative conferences, hearings,
appeals, or other proceedings or conferences with any taxing authority in
respect of any Potential Tax Claim (with timely notice of such proceedings being
provided to the Xxxxxxx), and (z) provide the Shareholders the opportunity to
review and discuss any settlement offer proposed to be made by AMI.
(c) In the event that a Shareholder reasonably believes that
AMI may not have adequate resources to pay the amount of a Potential Tax Claim
reasonably likely to become due, he may request the primary right to represent
the Shareholders' interests in the affected Proceeding. Such right shall not
arise, however, if within thirty (30) days of such request, AMI delivers to such
Shareholder a sworn certificate of AMI's chief financial officer stating that
AMI has and expects to continue to have resources available to pay in full the
amount of the Potential Tax Claim.
(d) In the event that AMI wishes to settle or compromise any
Proceeding by making or accepting an offer or compromise ("Offer"), it shall
provide notice containing full particulars concerning the Offer to the
Shareholders. If the Shareholders disapprove the Offer within twenty (20) days
of the receipt of the notice referred to in the preceding sentence (the failure
to disapprove the Offer in writing within such time being deemed the approval
thereof), AMI may not settle such Proceeding; and the Shareholders shall
thereafter have the primary right at their expense to represent their interests,
which may as a matter of fact involve representation of a Company in such
Proceeding (with AMI having the rights described in clauses (x), (y), and (z) of
paragraph (b) hereof) upon receipt of an instrument from the Shareholders by
which they agree to indemnify and hold harmless AMI for any Taxes in excess of
the amount specified in the Offer resulting therefrom. If the ultimate
resolution of the Tax claim exceeds the amount specified by the Offer, then
AMI's liability under this Agreement shall not exceed the amount specified in
the Offer. Notwithstanding the foregoing provisions to the contrary, this
paragraph (d) shall be applicable to Proceedings involving (i) federal Tax only
if the Closing Agreements are not executed and delivered by the IRS, and (ii)
state Tax only if the liability of the Shareholders that would result from the
settlement or compromise of a particular Proceeding in accordance with the Offer
is reasonably expected to exceed $100,000.
(e) Notwithstanding anything to the contrary in this
Agreement, if in any Proceeding the nature of which is litigation involving the
correctness of a denial of a refund by a taxing authority, and the Shareholder
made the payment to the taxing authority that forms the basis for such refund
claim, then the Shareholders shall receive any and all refunds of their Taxes
that result from the ultimate resolution of the Proceeding; and the Shareholders
shall have no duty to reimburse or refund to AMI any portion of the refund that
is the subject matter of the Proceeding unless the refund is attributable to a
Tax Distribution made to the Shareholders after May 2, 1994.
8. Disallowance of S Election.
(a) In the event of a Final Determination that a Company was
not, for any taxable year during the applicable S Corporation Period, a
qualifying S corporation as defined in section 1362 of the Code or similarly
qualified under any parallel provision of applicable state law, then the
Shareholders shall (i) promptly use reasonable best efforts to obtain refunds
from the applicable taxing authorities of all Taxes paid with respect to the
imputation to such Shareholders of income or gain resulting from S corporation
status for such year, (ii) upon receipt, promptly deliver to AMI an amount equal
to such refunds received, together with any interest paid thereon, (iii) use
their reasonable best efforts to obtain the benefit of a deduction for the
transfer of amounts described in clauses (ii) and (iv) to AMI, and (iv) further
deliver to AMI an amount equal to any tax benefit realized by them by reason of
such deduction referred to in clause (iii); provided, however, that amounts
payable pursuant to clauses (ii) and (iv) hereof shall not exceed the amount of
a Company's Tax with respect to the income and gain for the period for which its
S corporation status was disallowed.
(b) In the event that the refunds described in paragraph (a)
receivable by the Shareholders with respect to any taxable year or years that
are the subject of a Tax audit or controversy can reasonably be expected to
exceed $100,000, AMI shall have the primary right to represent the Shareholders'
interests in (i) seeking such refund, including in any related Proceeding, and
(ii) conducting any Proceeding relating to the allowability of the deduction
described in paragraph (a)(iii), but only as such Proceeding relates to the
allowability of said deduction, in both cases in accordance with the provisions
of section 7.
(c) Promptly upon becoming aware of any threatened or actual
challenge to a Company's S corporation status for any taxable year, the
Shareholders shall take the necessary actions to preserve their claims for
refunds of Taxes described in paragraph (a); the representation rights referred
to in paragraph (b) of this section shall apply for this purpose.
(d) For the purposes of this section 8, "S corporation status"
means the status of a Company as an electing subchapter S corporation under
section 1362 of the Code or an equivalent status under a parallel provision of
state law.
9. Cooperation in Return Filings, Examinations, and Controversies. AMI,
each Shareholder, and its or his representatives shall cooperate fully in a
prompt and timely manner in connection with (A) the preparation and filing of,
and (B) any inquiry, audit, examination, investigation, dispute, or litigation
involving, any Tax Return filed or required to be filed (under either applicable
law or the terms of this Agreement) with respect to any S Corporation Period or
other taxable period of which the liability for, or the overpayment of, Tax is
directly or indirectly affected by the attribution to the Shareholders of
Company Tax Items. Such cooperation shall include, but not be limited to, (i)
the execution and delivery to AMI by the appropriate Shareholder of any power of
attorney or other document necessary to allow AMI and its counsel to participate
on behalf of the Shareholder in any Proceeding and to assume the defense or
prosecution, as the case may be, of any Proceeding pursuant to the terms of
section 7 of this Agreement, (ii) the execution and delivery to the Shareholder
by AMI of any power of attorney or other document necessary to allow the
Shareholder and his or its counsel to participate on behalf of AMI in any
Proceeding and to assume the defense or prosecution, as the case may be, of any
Proceeding pursuant to the terms of section 7 of this Agreement, (iii) making
available, during normal business hours, and within ten (10) days of any request
therefor, all books, records, and information (which books, records, and
information may be copied by the requesting Party at his or her expense), and
the assistance of all officers and employees, reasonably necessary or useful in
connection with any Proceeding, and (iv) the giving of testimony and the
production of witnesses as reasonably necessary in connection with any
Proceeding. AMI and the Shareholders agree to make available to each other and
to any taxing authority, as reasonably requested, all information, records, or
documents relating to federal, state, county, local, or foreign Tax matters of
the Companies for all S Corporation Periods. AMI and the Shareholders agree to
keep confidential the contents of the information, records, and documents made
available under this provision and to not use or disclose them or any
information contained therein; provided, however, that: (i) the Xxxxxxx may
disclose those portions of such information pertaining to the Xxxxxxx, (ii) AMI
may disclose those portions of such information, records, or documents that
disclose information pertaining to the Companies or any of their subsidiaries,
and (iii) both the Xxxxxxx and AMI may disclose any of such information,
records, or documents where such disclosure is made (A) to a taxing authority,
(B) in the course of any judicial proceeding for the determination of liability
for Taxes, (C) otherwise as required by law, or (D) any such information,
records, or documents that has or have become generally available to the public
through no fault of the Party seeking to make the disclosure.
10. Retention of Books and Records. Except as provided on the attached
Schedule A to this Agreement, AMI and each Shareholder agrees to retain all Tax
Returns, related schedules and workpapers, and all material records and other
documents relating thereto existing on May 2, 1994, or created through or with
respect to all S Corporation Periods or other taxable period of which the
liability
for, or the overpayment of, Tax is directly or indirectly affected by the
attribution to the Shareholders of Company Tax Items, until the last to occur of
(i) the expiration of the statute of limitations (including extensions) of the
taxable year to which such Tax Returns and other documents relate, or (ii) one
(1) year following a Final Determination of any Proceeding affecting a Tax Item
to which such document relates, or (iii) six (6) years from the date of this
Agreement. AMI shall retain all existing files relating to each Company's Taxes
and Tax Returns.
11. Breach. Any Party that breaches any obligation under this Agreement
indemnifies and holds harmless the other Parties from and against any payment
required to be made as a result of the breach.
12. Remedies. The Parties to this Agreement recognize that failure to
comply with their respective obligations under this Agreement may result in
irreparable harm to the other Parties, and that the other Parties may not be
adequately compensated by monetary damages for such failure. If any Party fails
to comply with its obligations under this Agreement, then the other Parties
shall be entitled to injunctive relief and specific performance in addition to
all other remedies.
13. Expenses. Unless otherwise expressly provided in this Agreement,
each Party shall bear any and all expenses that arise from its obligations under
this Agreement. In addition, AMI and the Shareholders agree that each shall bear
the legal and professional fees and expenses incurred by it, him, or her in
connection with the negotiation and drafting of this Agreement.
14. Entire Agreement; Termination of Prior Agreements. This Agreement
constitutes the entire agreement of the parties concerning the subject matter of
this Agreement and supersedes all other agreements, whether or not written, in
respect thereof. This Agreement may not be amended except by an agreement in
writing, signed by all the Parties to this Agreement. Anything in this Agreement
to the contrary notwithstanding, in the event and to the extent that there is a
conflict between the provisions of this Agreement and any other agreement, the
provisions of this Agreement shall control.
15. Notices. All notices and other communications required under this
Agreement shall be in writing and shall be delivered by hand, or mailed by
registered or certified mail (return receipt requested), to the Parties at the
following addresses (or at such other addresses for a Party as may be specified
by like notice) and shall be deemed given on the date on which such notice is
received:
If to AMI or to AAF-XxXxxx
Holdings, Inc.: 000 Xxxxx Xxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxx, Xxxxxxxx 00000
If to the Xxxxxxx: 0000 Xxxxx Xxxx Xxxxxxx
Xxxxxx, Xxxxx 00000
With copies to: Xxxxxxx X. Xxxxxx, Xx.
0000 XxXxxxxx Xxxxxx
Xxxxxx, Xxxxx 00000
W. Xxxxxx Xxxxxx, Esq.
Xxxx, Xxxxxxxx & Xxxxxx PLLC
0000 XxXxxxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000-0000
X. Xxxxxxx Xxxxx, Jr., C.P.A.
Xxxxx & Associates, P.C.
Heritage Square I
0000 XXX Xxxxxxx, Xxxxx 000
Xxxxxx, Xxxxx 00000
If to the Trusts: 0000 Xxxxx Xxxx Xxxxxxx
Xxxxxx, Xxxxx 00000
If to the Minority Shareholders: 000 Xxxxxx Xxxx
Xxxx Xxxxx, Xxxxxxx 00000
If the last day for providing any notice, communication, or payment under this
Agreement is a Saturday, a Sunday, or a legal holiday, then such due date shall
be extended to the next business day.
16. Arbitration To Enforce Agreement.
(a) The Parties specifically agree that any controversy,
claim, or dispute arising out of this Agreement, or any alleged breach of this
Agreement, shall be resolved exclusively by arbitration. Any arbitration shall
take place at Dallas, Texas, and be administered by the Dallas office of the
American Arbitration Association (the "AAA") in accordance with its Commercial
Arbitration Rules in effect at the time the arbitration is initiated
(collectively, the "Rules").
(b) As soon as a demand for arbitration is made by any Party,
the AAA shall proceed to provide a list of arbitrators from the Commercial Panel
from which the Parties shall select a panel of three neutral arbitrators in
accordance with the Rules and the normal procedures of the Dallas office of the
AAA. If necessary, the AAA may select some or all of the arbitrators when it is
authorized to do so under the Rules.
(c) The arbitration panel shall render a full, complete,
conclusive, and binding resolution of the dispute. The arbitration award shall
assess all reasonable attorneys' fees and costs, including the costs of the
arbitration and the arbitrators' compensation, against the losing Party.
Judgment on the award may be entered in any court having jurisdiction thereof.
17. Application to Present and Future Affiliates and Successors. This
Agreement is being entered into by AMI and by AAF-XxXxxx Holdings, Inc. and by
each Shareholder on behalf of themselves. This Agreement shall inure to the
benefit of, and be enforceable by, a Shareholder's personal and legal
representatives, successors, and assigns. This Agreement shall constitute a
direct obligation of each Party. This Agreement shall inure to the benefit of,
and be binding upon, AMI, AAF-XxXxxx Holdings, Inc., and their successors. AMI
shall require any successor to all or substantially all of the business and (or)
the assets of AMI or of AAF-XxXxxx Holdings, Inc., whether directly or
indirectly, by purchase, merger, consolidation, acquisition of stock, or
otherwise, by an agreement in form and substance satisfactory to each
Shareholder, expressly to assume and agree to perform this Agreement in the same
manner and to the same extent as AMI or AAF-XxXxxx Holdings, Inc. would be
required to perform it if no such succession had taken place.
18. Term. This Agreement shall continue in effect until six (6) months
following the expiration of the last to expire of the applicable statutes of
limitations for assessment and collection with respect to all taxable periods of
which the liability for, or the overpayment of, Tax is directly or indirectly
affected by the attribution to the Shareholders of Company Tax Items, or as
otherwise agreed to in writing by all the parties.
19. Legal Enforceability. Any provision of this Agreement that is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions of this Agreement. Any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
20. Titles and Headings. Titles and headings to sections herein are
inserted for the convenience of reference only and are not intended to be a part
or to affect the meaning or interpretation of this Agreement.
21. Singular and Plural. As used herein, the singular includes the
plural and vice versa.
22. Governing Law. This Agreement shall be governed by the laws of the
State of Texas without regard to its principles of conflict of laws, taking into
account applicable tax law contemplated by the terms hereof. The obligations and
undertakings of each of the parties to this Agreement shall be performable in
Dallas County, Texas, alone.
23. Exclusive Jurisdiction. The Parties intend that any dispute
regarding this Agreement be resolved by arbitration as provided in section 16;
but to the extent that any Party seeks a judicial determination of the meaning
of section 16 or seeks to compel, prevent, or limit a pending arbitration, the
Parties agree that any such suit, action, or proceeding shall be brought in the
courts of the State of Texas, County of Dallas, or in the United States District
Court for the Northern District of Texas; and each Party by this Agreement
hereby submits to the exclusive jurisdiction of such courts for the purpose of
any such suit, action, or proceeding relating to this Agreement.
IN WITNESS WHEREOF, this Amended and Restated Tax Indemnification
Agreement has been duly executed on July 8, 1998.
AMI:
AAF-XxXXXX INC.
By: /s/ Xxxxx X. Xxxxxx
Name: Xxxxx X. Xxxxxx
Title: General Counsel and
Assistant Secretary
AAF-XxXXXX HOLDINGS, INC.
By: /s/ Xxxxx X. Xxxxxx
Name: Xxxxx X. Xxxxxx
Title: General Counsel and
Assistant Secretary
THE XXXXXXX:
/s/ Xxxxxxx X. Xxxxxx
Xxxxxxx X. Xxxxxx
/s/ Xxxxxxx X. Xxxxxx
Xxxxxxx X. Xxxxxx
THE TRUSTS:
THE XXXX XXXXXX IRREVOCABLE TRUST
By: /s/ Xxxxxxx X. Xxxxxx, XX
Xxxxxxx X. Xxxxxx, XX,
Trustee
By: /s/ Xxxxxx X. Xxxxxx
Xxxxxx X. Xxxxxx, Trustee
By: /s/ Xxxxxx X. Xxxxxx
Xxxxxx X. Xxxxxx, Trustee
THE XXXXXXX XXXX IRREVOCABLE TRUST
By: /s/ Xxxxxxx X. Xxxxxx, XX
Xxxxxxx X. Xxxxxx, XX,
Trustee
THE XXX XXXXXX IRREVOCABLE TRUST
By: /s/ Xxxxxxx X. Xxxxxx, XX
Xxxxxxx X. Xxxxxx, XX,
Trustee
By: /s/ Xxxxxx X. Xxxxxx
Xxxxxx X. Xxxxxx, Trustee
By: /s/ Xxxxxx X. Xxxxxx
Xxxxxx X. Xxxxxx, Trustee
THE XXXXX XXXXXX IRREVOCABLE TRUST
By: /s/ Xxxxxx X. Xxxxxx
Xxxxxx X. Xxxxxx, Trustee
THE JORDAN XXXXX XXXXXX
IRREVOCABLE TRUST
By: /s/ Xxxxxx X. Xxxxxx
Xxxxxx X. Xxxxxx, Trustee
THE XXXXXXX XXXXXX XXXXXX
IRREVOCABLE TRUST
By: /s/ Xxxxxx X. Xxxxxx
Xxxxxx X. Xxxxxx, Trustee
THE XXXXXX XXXXXX IRREVOCABLE
TRUST
By: /s/ Xxxxxxx X. Xxxxxx, XX
Xxxxxxx X. Xxxxxx, XX,
Trustee
By: /s/ Xxxxxx X. Xxxxxx
Xxxxxx X. Xxxxxx, Trustee
By: /s/ Xxxxxx X. Xxxxxx
Xxxxxx X. Xxxxxx, Trustee
THE XXXXXX XXXXXXX IRREVOCABLE
TRUST
By: /s/ Xxxxxx X. Xxxxxx
Xxxxxx X. Xxxxxx, Trustee
THE INDIVIDUAL MINORITY
SHAREHOLDERS:
/s/ Xxxxxxx Xxxxx Xxxxxx, Xx.
Xxxxxxx Xxxxx Xxxxxx, Xx.
/s/ Xxxxxx Xxxxxxxx Xxxxxx
Xxxxxx Xxxxxxxx Xxxxxx
Schedule A
Amended and Restated Tax Indemnification Agreement
Dated July 8, 1998
Records Requiring Permanent Retention
The following records relating to each of SnyderGeneral Corporation,
SnyderGeneral Holding Company, and their Subsidiaries are required to be
permanently retained by AMI:
1. Board of Directors and shareholder minutes for each domestic
corporation.
2. Stock record books for each domestic corporation.
3. All documents relating to acquisitions/mergers relating to
companies/assets still owned.
4. All top level LIFO records, including double extensions and index
calculations.
5. All fixed asset records including cost, etc., as long as company(s) own
or use asset.
6. General ledgers and journal vouchers.
7. Annual financial statements with supporting work papers.
8. All records normally retained for tax audits until the year is closed
for IRS purposes.
9. All records physically in the Dallas tax department, along with tax
records located in Louisville and Minneapolis, unless destruction is
authorized in writing. These records will include (among other
records):
(a) All federal and state income and franchise tax returns with
supporting M-1 detail;
(b) All sales tax returns with supporting workpapers;
(c) Revenue Agents Reports;
(d) All fixed asset and depreciation records; and
(e) LIFO calculations.
10. Documents of the foreign subsidiaries maintained at their locations
that correspond to the above U.S. items.
Schedule B
Amended and Restated Tax Indemnification Agreement
Dated July 8, 1998
Calculations Related to Closing Agreements
PAGE 18
PAGE 7
Schedule B
Amended and Restated Tax Indemnification Agreement
Calculations Calculations Payment
Including Excluding Due to/
Shareholder Taxable Year SnyderTech SnyderTech (from) AMI Totals
1987
Account balance as of October 31, 1997 0 0 0
Tax increase (decrease) per Closing Agreement 0 0 0
Deficiency interest due 0 0 0
Refund interest due 0 0 0
--------------------------
Account balance as of May 31, 1998 0 0
--------------------------
--------------------------
39.6% Tax on interest refund 0
-----------
Net due to AMI $ -
1988
Account balance as of October 31, 1997 0 0 0
Tax increase (decrease) per Closing Agreement (1,169,123) (1,169,123) 1,169,123
Deficiency interest due 0 0 0
Refund interest due (736,711) (681,895) 681,895
Credit applied to 1990 770,950 848,807 (848,807)
--------------------------
Account balance as of May 31, 1998 (1,134,884) (1,002,211)
--------------------------
--------------------------
39.6% Tax on interest refund (270,030)
-----------
Net due to AMI $ 732,181
1989
Account balance as of October 31, 1997 (1,790,708) (1,790,708) 1,790,708
Tax increase (decrease) per Closing Agreement 1,422,457 1,542,414 (1,542,414)
Deficiency interest due 96,936 147,458 (147,458)
Refund interest due (98,634) (34,150) 34,150
--------------------------
Account balance as of May 31, 1998 (369,949) (134,986)
--------------------------
--------------------------
39.6% Tax on interest refund (13,523)
-----------
Net due to AMI $ 121,463
1990
Account balance as of October 31, 1997 0 0 0
Tax increase (decrease) per Closing Agreement 582,171 660,029 (660,029)
Deficiency interest due 0 0 0
Refund interest due (71,636) (71,636) 71,636
Credit applied from 1988 (770,950) (848,807) 848,807
--------------------------
Account balance as of May 31, 1998 (260,415) (260,414)
--------------------------
--------------------------
39.6% Tax on interest refund (28,368)
-----------
Net due to AMI $ 232,046
1991
Account balance as of October 31, 1997 0 0 0
Tax increase (decrease) per Closing Agreement (394,096) (404,433) 404,433
Reduction in deficiency interest due (16,573) (16,991) 16,991
Refund interest due -208,188 -213,664 213,664
--------------------------
Account balance as of May 31, 1998 (618,857) (635,088)
--------------------------
--------------------------
39.6% Tax on interest refund (84,611)
-----------
Net due to AMI $ 550,477
1992 and 1993
Account balance as of October 31, 1997 0 0 0
Tax increase (decrease) per Closing Agreement 0 0 0
Deficiency interest due 0 0 0
Refund interest due 0 0 0
--------------------------
Account balance as of May 31, 1998 0 0
--------------------------
--------------------------
39.6% Tax on interest refund 0
-----------
Net due to AMI $ -
1994
Account balance as of October 31, 1997 0 0 0
Tax increase (decrease) per Closing Agreement (1,878,377) (1,811,326) 1,811,326
Deficiency interest due 0 0 0
Refund interest due (528,639) (509,769) 509,769
--------------------------
Account balance as of May 31, 1998 (2,407,016) (2,321,095)
--------------------------
--------------------------
39.6% Tax on interest refund (201,869)
-----------
Net due to AMI $2,119,226
1995
Account balance as of October 31, 1997 0 0 0
Tax increase (decrease) per Closing Agreement (237,283) (237,283) 237,283
Deficiency interest due 0 0 0
Refund interest due (42,892) (42,892) 42,892
--------------------------
Account balance as of May 31, 1998 (280,175) (280,175)
--------------------------
--------------------------
39.6% Tax on interest refund (16,985)
-----------
Net due to AMI $ 263,190
----------
Adjustments to Capital Gain on Stock Sale
Sub-total of net amounts due to AMI which increase Shareholder stock basis
$4,018,583 Net due to AMI (tax benefit on above at 20% rate, plus gross-up
thereon) 1,004,646
----------
TOTAL NET DUE TO AMI $5,023,228
----------
----------
