Exhibit 10.1
TAX INDEMNIFICATION AGREEMENT
THIS TAX INDEMNIFICATION AGREEMENT (this "Agreement"), dated as of July
, 2007, is entered into by and between ENTHRUST FINANCIAL SERVICES, INC.
(the "Company"), and the individuals and entities listed on the signature page
hereof (collectively, the "Indemnitees").
WHEREAS, each of the Indemnitees is currently or was formerly a member
of Xxxxxx & Xxxxxxx Holding, LLC ("Holding") or was a member or stockholder of
such member.
NOW, THEREFORE, the parties agree as follows:
1. DEFINITIONS.
(a) "Covered Period" means, with respect to an Indemnitee,
any taxable year of the Indemnitee for which, as of the date hereof, a taxing
authority is not precluded by the applicable statute of limitations from
assessing a liability for Tax with respect to a Holding Item.
(b) "Holding Item" means, with respect to an Indemnitee, any
item of income, gain, loss, deduction, credit or credit recapture directly
relating to any activity of Holding or any affiliate and required to be
reflected in a Return filed by Holding or any affiliate, but only if (i) the
item is required to be reflected in a U.S. federal, state or local or other
Return filed by such Indemnitee or (ii) such Indemnitee is required to make a
Tax payment to any taxing authority in respect of such item.
(c) "Increased Taxes" means, with respect to each
Indemnitee, an amount, determined by the Company in its reasonable discretion,
equal to the excess of (i) the excess of Taxes payable by the Indemnitee in
respect of Holding Items for all Covered Periods over the Taxes in respect of
Holding Items shown as payable on Returns for all such periods as originally
filed (or as amended prior to the date hereof) over (ii) the amount of any Tax
benefits (including deductions, credits or refunds) estimated by the Company, in
its sole discretion, to be available to such Indemnitee in any period as a
result of the increase in Taxes described in clause (i) of this definition;
provided, however, that, unless otherwise determined by the Company, in its sole
discretion, any adjustments arising from (A) an Indemnitee's individual
circumstances and (B) correlative adjustments resulting from Returns as
originally filed shall not be taken into account in determining Increased Taxes.
(d) "Return" means any report, information statement or
return relating to, or required to be filed in connection with, any Tax.
(e) "Tax" means any tax, including any interest, penalty or
addition to tax, imposed by any U.S. federal, state, local or other government,
or any agency or political subdivision thereof.
2. INDEMNITY OBLIGATION.
(a) The Company hereby agrees to indemnify each Indemnitee
against and to pay to, or on behalf of, each Indemnitee an amount equal to such
Indemnitee's Increased Taxes.
(b) If the Company determines, in its sole discretion, that
the initial determination of Increased Taxes was incorrect (whether by reason of
a subsequent examination by a taxing authority or otherwise), the Company shall
make an additional payment to the Indemnitee or the Indemnitee shall make a
payment to the Company equal to the difference between (i) the payment
previously made pursuant to Section 2(a) hereof and (ii) the payment that would
have been made had such original determination been correct. If more than one
payment is to be made pursuant to this Section 2(b), the later payments shall
take into account the effect of any prior payments.
(c) Notwithstanding anything to the contrary contained
herein, the Company shall be permitted, but not required, to advance the full
amount of Taxes immediately payable by an Indemnitee in circumstances in which
the Increased Taxes are less than the initial Tax payment (E.G., because the Tax
payment gives rise to a tax benefit in the same or subsequent years). The
Company shall be permitted, if it so elects, to charge interest on any advance
made pursuant to this Section 2(c) at the applicable U.S. federal rate for the
date such advance is made as described in Section 7872(f)(2)(B) of the Internal
Revenue Code.
3. PROCEDURAL MATTERS.
(a) The Company (or its designee) shall, at the Company's
expense, represent Holding, each affiliate and each Indemnitee in any
examination of (or other proceeding relating to) Holding's or affiliate's
Returns for all taxable years and, in the case of an Indemnitee, in any
examination of (or other proceeding relating to) the Indemnitee's Returns for
any Covered Period to the extent the examination relates to a Holding Item with
respect to which the Company is required to indemnify the Indemnitee. Each
Indemnitee shall, to the extent reasonably requested, promptly cooperate with
the Company (or its designee) in such matters including, without limitation, by
providing a duly executed Internal Revenue Service Form 2848 (or successor form)
or similar form applicable for state, local or other Tax purposes.
(b) To the extent permitted by law, the Company may make all
Tax payments required to be made pursuant to this Agreement directly to the
relevant taxing authority on behalf of the Indemnitee and shall promptly notify
the Indemnitee that such payments have been made. To the extent the Company does
not elect to make such Tax payments directly to the taxing authority, the
Company shall either make any required payments to the Indemnitee or deliver to
the Indemnitee a check made out in the amount of the required payments payable
to the applicable taxing authority, in either case within thirty (30) days of
receiving notice that the Indemnitee has paid Increased Taxes.
(c) To the extent permitted by law, each Indemnitee shall
direct the relevant taxing authority to pay any refund in respect of Taxes for
any Covered Period directly to the Company and these refunds shall be credited
against the Indemnitee's obligation to make
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payments to the Company under Sections 2(b) and 3(e) (or returned to the
Indemnitee if the Indemnitee does not owe any amounts to the Company). The
Indemnitee shall notify the Company within thirty (30) days of the receipt by
such Indemnitee of a refund of Taxes in respect of any Holding Item for any
Covered Period.
(d) An Indemnitee will forfeit any right to receive any
payments under this Agreement (and promptly refund to the Company any amounts
previously paid by the Company to, or on behalf of, such Indemnitee under this
Agreement) if such Indemnitee (i) takes any action independent of the Tax
Matters Partner (as defined in Section 6231(a)(7) of the Internal Revenue Code)
of Holding or of the Company on any examination or other proceeding in respect
of Holding's Returns, (ii) takes any position in any Return or other Tax filing
inconsistent with the position taken by Holding or the Company, (iii) fails to
cooperate fully with the Company, Holding or the Tax Matters Partner, in
pursuing any contest or other proceeding in respect of Taxes or fails to permit
the Company or the Tax Matters Partner to file amended returns on behalf of such
Indemnitee, if so requested by the Company, (iv) fails to provide the Company or
its designee upon request with a duly executed Internal Revenue Service Form
2848 (or successor form) or similar form applicable for state, local or other
Tax purposes or (v) fails to notify the Company of the receipt of a refund of
Taxes as required by Section 3(c) hereof.
(e) Each Indemnitee agrees to promptly and timely file
Returns which are required to be filed by such Indemnitee and which include any
Holding Item, and to timely pay the Taxes shown as due on such Returns. To the
extent permitted by law, each Indemnitee agrees to report any item on such
Returns, and to take positions in any other Tax filings, in a manner consistent
with the positions taken by Holding, the Company or an affiliate.
4. DETERMINATIONS. The Company shall make all determinations
necessary to administer this Agreement including, without limitation,
determinations of (i) eligibility for payment, (ii) the amount of any payment to
be made by the Company and (iii) the amount of any refund to be paid to the
Company by an Indemnitee. Any such determinations by the Company shall, absent
manifest error, be final, binding and conclusive on the Indemnitee.
5. ARBITRATION.
(a) Without diminishing the finality and conclusive effect
of any determination by the Company of any matter under this Agreement which is
provided herein to be determined by the Company, and subject to the provisions
of paragraphs (b) and (c) below, any dispute, controversy or claim arising out
of or relating to or concerning the provisions of this Agreement shall be
finally settled by arbitration in New York, New York before, and in accordance
with the rules then obtaining of, the NASD or, if the NASD declines to arbitrate
the matter, the American Arbitration Association (the "AAA") in accordance with
the commercial arbitration rules of the AAA.
(b) Notwithstanding the provisions of Section 5(a), and in
addition to its right to submit any dispute or controversy to arbitration, the
Company may bring an action or special proceeding in a state or federal court of
competent jurisdiction sitting in the City of New York, whether or not an
arbitration proceeding has theretofore been or is ever initiated, for the
purpose
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of temporarily, preliminarily, or permanently enforcing the provisions of this
Agreement, or to enforce an arbitration award, and, for the purposes of this
Section 5(b), each Indemnitee (i) expressly consents to the application of
Section 5(c) to any such action or proceeding, (ii) agrees that proof will not
be required that monetary damages for breach of the provisions of this Agreement
would be difficult to calculate and that remedies at law would be inadequate and
(iii) irrevocably appoints the General Counsel of the Company as the
Indemnitee's agent for service of process in connection with any such action or
proceeding, who shall promptly advise the Indemnitee of any such service of
process.
(c) (i) THE INDEMNITEE AND THE COMPANY HEREBY
IRREVOCABLY SUBMIT TO THE EXCLUSIVE JURISDICTION OF ANY STATE OR FEDERAL COURT
LOCATED IN THE CITY OF NEW YORK OVER ANY SUIT, ACTION, OR PROCEEDING ARISING OUT
OF OR RELATING TO OR CONCERNING THIS AGREEMENT THAT IS NOT OTHERWISE ARBITRATED
OR RESOLVED ACCORDING TO SECTION 5(a) HEREOF. This includes any suit, action or
proceeding to compel arbitration or to enforce an arbitration award. The
Indemnitee and the Company acknowledge that the forum designated by this Section
5(c) has a reasonable relation to this Agreement, and to the Indemnitee's
relationship to the Company. Notwithstanding the foregoing, nothing herein shall
preclude the Company from bringing any action or proceeding in any other court
for the purpose of enforcing the provisions of this Section 5.
(ii) The agreement of the Indemnitee and the Company as to
forum is independent of the law that may be applied in the action, and the
Indemnitee and the Company agree to such forum even if the forum may under
applicable law choose to apply non-forum law. The Indemnitee and the Company
hereby waive, to the fullest extent permitted by applicable law, any objection
which the Indemnitee or the Company now or hereafter may have to personal
jurisdiction or to the laying of venue of any such suit, action or proceeding
brought in any court referred to in Section 5(c)(i). The Indemnitee and the
Company undertake not to commence any action arising out of or relating to or
concerning this Agreement in any forum other than a forum described in this
Section 5(c). The Indemnitee and the Company agree that, to the fullest extent
permitted by applicable law, a final and non-appealable judgment in any such
suit, action, or proceeding in any such court shall be conclusive and binding
upon the Indemnitee and the Company.
6. NOTICES. Any notice under this Agreement shall be in writing and
shall be deemed to have been given upon the delivery or mailing thereof, as the
case may be, if delivered personally or sent by certified mail, return receipt
requested, postage prepaid, to the following address:
Notice to the Company:
0000 Xxxxxx xx xxx Xxxxxxxx, 00xx xxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxx Xxxxx, President
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Notice to an Indemnitee:
At the last address appearing on the Company's business records.
7. INDEMNITEE ADDRESSES. Each Indemnitee hereby agrees to provide
prompt notice to the Company of any change in the address and telephone and
telecopy numbers of such Indemnitee.
8. ENTIRE AGREEMENT. This Agreement represents the entire
understanding between the Company and each Indemnitee with respect to the
subject matter hereof and supersedes all prior negotiations among the parties
hereto with respect to such subject matter.
9. AMENDMENTS. The Company will be permitted to amend this
Agreement in any respect, so long as such amendment does not materially
adversely affect the amount which an Indemnitee is entitled to receive from the
Company pursuant to this Agreement.
10. MISCELLANEOUS.
(a) This Agreement shall inure solely to the benefit the
Company and its successors and assigns and the Indemnitees and their respective
heirs, executors, administrators and successors, and no other person shall
acquire or have any right under or by virtue of this Agreement.
(b) THIS AGREEMENT WILL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO THE
CONFLICTS OF LAWS PROVISIONS THEREOF THAT WOULD REQUIRE THE APPLICATION OF THE
LAWS OF ANY OTHER JURISDICTION.
(c) If any provision of this Agreement is finally held to be
invalid, illegal or unenforceable (whether in whole or in part), such provision
shall be deemed modified to the extent, but only to the extent, of such
invalidity, illegality or unenforceability and the remaining provisions shall
not be affected thereby.
11. EXECUTION IN COUNTERPARTS. This Agreement may be executed in any
number of counterparts, each of which shall be deemed an original, but all such
counterparts shall together constitute but one and the same instrument.
SIGNATURE PAGE FOLLOWS
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IN WITNESS WHEREOF, the Company and each Indemnitee have executed this
Agreement as of the day and year first above written.
ENTHRUST FINANCIAL SERVICES, INC.
By: ________________________________
Name:
Title:
XXXX XXXXXX, LLC
By: ________________________________
Name:
Title:
XXXX XXXXXX, LLC MEMBERS: RRCG STOCKHOLDERS:
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________________________________ ________________________________
Xxxxxx Xxxxx Xxxx X. Xxxxx III
ARF Trust, u/a/d July 15, 2002 ________________________________
Xxxxx Xxxxxx
By: _____________________________
Xxxxxx X. Xxxxxxxx, Trustee ________________________________
Xxxx Xxxxxxx
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Xxxxxx Xxxxxxx
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Xxxxxx Xxxxxxxx
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Xxxxxxxx Xxxxxx
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Xxxxxxxxx Xxxxxxxx
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Xxxxxx Xxxxxx
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Xxxxxxx Xxxx
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Xxxxxx Xxxxx
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