Exhibit 99.3
Execution Copy
TAX MATTERS AGREEMENT
THIS TAX MATTERS AGREEMENT (the "Agreement") is made as of the
Distribution Date (as defined in the Distribution Agreement (as defined below))
by and among Thermo Electron Corporation, a Delaware corporation ("Thermo
Electron" and, together with its subsidiaries existing immediately following the
Distribution, the "Thermo Electron Group"), and Viasys Healthcare Inc., a
Delaware corporation and a wholly owned subsidiary of Thermo Electron
("Viasys" and, together with its subsidiaries existing immediately following the
Distribution, the "Viasys Group"). For purposes of this Agreement, Kadant Inc.
shall be deemed to be a part of the Thermo Electron Group regardless of the fact
that the Second Distribution (as defined below) occurred prior to the
Distribution Date.
WHEREAS, Thermo Electron and Viasys have entered into a Plan and Agreement
of Distribution dated as of November 15, 2001 (the "Distribution Agreement"),
providing for the distribution of all of the issued and outstanding shares of
Viasys common stock owned by Thermo Electron to Thermo Electron's shareholders
in accordance with the Distribution Agreement (the "Distribution");
WHEREAS, prior to the Distribution, the Thermo Electron Group and the
Viasys Group were part of an affiliated group of corporations that filed
consolidated and combined Returns (as defined below) and of which Thermo
Electron was the common parent, within the meaning of Section 1504(a) of the
Internal Revenue Code of 1986, as amended;
WHEREAS, Thermo Electron and Viasys desire to set forth their agreement
regarding the allocation between the Thermo Electron Group and the Viasys Group
of all responsibilities, liabilities and benefits relating to or affecting Taxes
(as defined below) paid or payable by either of them for all taxable periods.
NOW, THEREFORE, in consideration of the mutual agreements, provisions and
covenants contained in this Agreement, the parties hereby agree as follows:
1. Definitions. Capitalized terms not otherwise defined herein shall
have the meanings given them in the Distribution Agreement. As used in this
Agreement, the following terms shall have the following meanings:
"Affiliate" of any person means any person, corporation, partnership
or other entity directly or indirectly controlling, controlled by or under
common control with such person.
"Code" means the Internal Revenue Code of 1986, as amended or, as
the context may require, the Internal Revenue Code applicable to the taxable
year in question.
"Distribution Agreement" has the meaning set forth in the preamble
hereto.
"Final Determination" shall mean the final resolution of liability
for any Tax for a taxable period (i) by Internal Revenue Service Form 870 or
870-AD (or any successor forms
thereto), on the date of acceptance by or on behalf of the taxpayer, or by a
comparable form under the laws of any other jurisdiction; 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 shall not constitute a Final
Determination; (ii) by a decision, judgment, decree or other order by a court of
competent jurisdiction, which has become final and unappealable; (iii) by a
closing agreement or accepted offer in compromise under Section 7121 or 7122 of
the Code, or comparable agreements under the laws of other jurisdictions; (iv)
by any allowance of a refund or credit in respect of an overpayment of Tax, but
only after the expiration of all periods during which such refund may be
recovered (including by way of offset) by the Taxing Authority; or (v) by any
other final disposition, including by reason of the expiration of the applicable
statute of limitations or by mutual agreement of the parties.
"Post-Distribution Act" means any event or transaction (or the
execution of an agreement, letter of intent or option providing for a
transaction) in which Viasys participates after the Distribution and in which
any of the following occurs:
(i) Viasys transfers a material portion of its assets (other than
a transfer of assets in the ordinary course of business) within two years
following the Distribution Date;
(ii) Viasys merges with another corporation within two years
following the Distribution Date;
(iii) Within two years following the Distribution Date Viasys
discontinues a material portion of its historic business activities including
the design, manufacture, marketing and sale of respiratory care, neuro care and
critical care/OEM products;
(iv) Within one year following the Distribution Date a material
portion of the shares of Viasys common stock distributed in the Distribution is
converted into (or redeemed or exchanged for) any other stock, any security, any
property or cash;
(v) Within two years following the Distribution Date, Viasys
issues its capital stock in one or more issuances, whether incident to a stock
offering, an acquisition transaction or otherwise, which causes the aggregate
amount of shares issued or acquired in all such transactions to represent a
greater-than-twenty-percent interest in the total issued and outstanding stock
of Viasys determined in accordance with Section 355(d)(4) of the Code as of the
date of the Distribution without Viasys having delivered to Thermo Electron an
opinion of counsel reasonably acceptable to Thermo Electron to the effect that
such Post-Distribution Act will not cause Section 355(e) of the Code to apply
with respect to the Distribution, which opinion shall be in such form and based
upon such factual representations and assumptions as may be reasonably
acceptable to Thermo Electron.
"Post-Distribution Taxes" means any and all liability for Taxes of
the Viasys Group or the Thermo Electron Group, as appropriate, other than for
Pre-Distribution Taxes.
"Pre-Distribution Taxes" means any and all Taxes of the Thermo
Electron Group or the Viasys Group, as appropriate, for all periods that ended
on or prior to the Distribution
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Date. For purposes of computing the amount of Pre-Distribution Taxes in the case
of a Tax period that begins before and ends after the Distribution Date, the
amount of Taxes considered to have accrued with respect to the portion of the
Tax period that ended on the Distribution Date shall be determined as follows:
(i) In the case of any ad valorem, personal property and real
property Taxes, an amount of such Tax for the entire Tax period multiplied by a
fraction the numerator of which is the number of days in the portion of the Tax
period ended on the Distribution Date and the denominator of which is the number
of days in the entire Tax period, provided that such allocation of Taxes shall
be appropriately adjusted to reflect any material acquisitions or dispositions
of property during the Tax period;
(ii) In the case of any withholding Tax, the amount of Taxes
required to be withheld which relates to any payment by any member of the Thermo
Electron Group or the Viasys Group on or before the Distribution Date; and
(iii) In the case of any Tax other than ad valorem, personal
property and real property Taxes or any withholding Tax, the amount that would
be payable if the relevant Tax period ended on the Distribution Date.
In the case of any credits relating to a Tax period that begins
before and ends after the Distribution Date, only those credits that would have
resulted had the relevant Tax period ended on the Distribution Date shall be
taken into account.
"Returns" means all returns, reports and information statements
(including all exhibits and schedules thereto) required to be filed with a
Taxing Authority with respect to any Taxes.
"Second Distribution" has the meaning set forth in the definition of
"Viasys-Caused Taxes".
"Tax Allocation Agreement" means that certain Tax Allocation
Agreement by and between Thermo Electron and Viasys dated as of
August 7, 1995 (copy attached).
"Taxes" means any income, alternative or add-on minimum tax, gross
income, gross receipts, sales, use, ad valorem, franchise, profits, license,
withholding, payroll, employment, environmental excise, severance, stamp,
transfer, recording occupation, premium, property, value added, windfall profit
tax, custom, duty or other tax of any kind whatsoever, together with any
interest and any penalty, addition to tax or additional amount imposed by any
Taxing Authority.
"Taxing Authority" means any governmental authority responsible for
the imposition of any Tax (domestic or foreign).
"Thermo Electron" has the meaning set forth in the preamble hereto.
"Thermo Electron Group" has the meaning set forth in the preamble
hereto.
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"Thermo Electron Tax" means any Tax for which Thermo Electron or any
member of the Thermo Electron Group is responsible under Section 2 hereof.
"Transition Services Agreement" means that certain Transition
Services Agreement by and between Thermo Electron and Viasys dated as of
November 15, 2001 (copy attached).
"Viasys" has the meaning set forth in the preamble hereto.
"Viasys Group" has the meaning set forth in the preamble hereto.
"Viasys Issue" has the meaning set forth in Section 3(a) hereof.
"Viasys Tax" means any Tax for which Viasys or any member of the
Viasys Group is responsible under Section 2 hereof.
"Viasys-Caused Taxes" means any liability for Taxes (less an amount
equal to any Taxes that would be attributable to the distribution of shares of
Viasys or Kadant Inc. described in Section 355(a)(3)(B) of the Code if the
Distribution and the Second Distribution were to otherwise qualify as tax-free
transactions under Section 355(c) of the Code) incurred by the Thermo Electron
Group or the Viasys Group arising from or attributable to any of the
transactions that are directly related to either the Distribution or to the
distribution of Kadant Inc. ("Kadant") stock owned by Thermo Electron to Thermo
Electron's shareholders (the "Second Distribution") (including, without
limitation, the contribution and/or licensing of assets to Viasys or Kadant by
Thermo Electron, the recapitalization of Viasys or Kadant and the Distribution
or the Second Distribution itself) failing to qualify as a tax-free transaction
under Code Sections 351, 355, 361 or 368 (or any comparable provisions of state
law), but only if such failure (i) was caused (within the meaning of clause (c)
of the next sentence) by an act that occurred after the Distribution and in
which Viasys participated; (ii) was attributable (within the meaning of clause
(c) of the next sentence) to Viasys failing to undertake an offering of at least
ten-percent of its outstanding shares within twelve months following the
Distribution Date (or such later date as the Internal Revenue Service (the
"IRS") may indicate in a written supplement to the private letter ruling
designated as PLR 108328-00); or (iii) was otherwise attributable (within the
meaning of clause (c) of the next sentence) to one or more of the
representations contained in Section 8 hereof failing to be true. For purposes
of this definition (subject to clause (c) hereof), (a) if any failure to so
qualify occurs and Viasys has participated in a Post-Distribution Act, such
failure shall be deemed to have been caused by Viasys' participation in the
Post-Distribution Act unless established to the contrary by clear and convincing
evidence that the Post-Distribution Act did not cause the failure to qualify as
a tax-free transaction under Code Sections 351, 355, 361 or 368; (b) all
transactions described in the request for ruling submitted to the Internal
Revenue Service and dated April 7, 2000 (including supplemental information
submitted in connection therewith) shall be included as transactions considered
to be directly related to the Distribution or the Second Distribution (as
appropriate); (c) the failure to qualify as a tax-free transaction pursuant to
Code Sections 351, 355, 361 and 368 shall be considered to have been caused or
attributable to an act or omission by Viasys if the transaction would have so
qualified but for the act or omission; and (d) the qualification of a
transaction as "tax-free" shall be made without regard to taxable income or gain
attributable to the distribution of shares of Kadant described in Section
355(a)(3)(B) of the Code or any cash received in lieu of fractional shares.
Viasys-Caused Taxes, as defined above, shall include increases in Taxes of the
Thermo Electron Group or the Viasys Group for any period to the extent such
increases in Taxes would not have occurred but for the transactions directly
related to the Distribution or the Second Distribution
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failing to qualify as a tax-free transaction under Sections 351, 355, 361 or 368
of the Code (or comparable provisions of state law). Thus, for example, if the
failure of any of the transactions to so qualify results in additional income
being realized by the Thermo Electron Group in its tax year that includes the
Distribution or the Second Distribution, but such income is substantially offset
by operating losses or net operating loss carryovers, Viasys-Caused Taxes will
include (to the extent the other requirements of this definition are met) any
increase in Taxes realized by any member of the Thermo Electron Group in
subsequent years to the extent such increase in Taxes would not have been
realized had the loss or loss carryovers not been used in the tax year that
includes the Distribution or the Second Distribution.
2. Operative Provisions.
(a) Thermo Electron shall indemnify Viasys against and be
responsible for all Post-Distribution Taxes attributable to any member of the
Thermo Electron Group and all Pre-Distribution Taxes other than (i)
Viasys-Caused Taxes and (ii) Pre-Distribution Taxes for which Viasys or any
member of the Viasys Group was responsible under the Tax Allocation Agreement.
(b) Viasys shall indemnify Thermo Electron against and shall be
responsible for all Post-Distribution Taxes attributable to any member of the
Viasys Group, all Viasys-Caused Taxes and all Pre-Distribution Taxes for which
Viasys or any member of the Viasys Group was responsible under the Tax
Allocation Agreement.
(c) With respect to the tax year of the Thermo Electron Group that
includes the Distribution Date and the tax year of Viasys that commences
immediately following the Distribution Date, the Thermo Electron Group (which,
for this purpose only, shall include the Viasys Group) shall claim on its
federal income tax returns the benefit of (i) the graduated tax rates of Code
Section 11, (ii) the $25,000 bracket amount in Code Section 38, (iii) the
$40,000 exemption amount and the $175,000 bracket amount in Code Section 55 and
(iv) the $2,000,000 bracket amount in Code Section 59A, and neither Viasys nor
any member of the Viasys Group shall claim any of such benefits for their Tax
year that commences on the date immediately following the Distribution Date.
(d) Notwithstanding the provisions of Section 2 hereof, for all tax
years through and including 2001, Taxes imposed upon Thermo Electron or a member
of the Thermo Electron Group, or Viasys or a member of the Viasys Group, that
are determined or assessed on a separate company basis, will be the separate
liability of Thermo Electron, Viasys or such member and not subject to
allocation or sharing among other members of the Thermo Electron Group and the
Viasys Group.
(e) For purposes of this Section 2, the determination of the
respective liabilities of the Thermo Electron Group and the Viasys Group for all
Pre-Distribution Taxes
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shall be made in accordance with the provisions of the Tax Allocation Agreement
consistently applied in accordance with past practice.
3. Returns; Refunds; Contest Provisions.
(a) Thermo Electron shall have the obligation and the sole right and
full discretion to control (i) the preparation of all Returns that pertain (in
whole or in part) to Pre-Distribution Taxes (including Viasys-Caused Taxes) and
(ii) the defense, settlement or compromise of any audit, examination,
investigation, suit, action or other proceeding relating to Pre-Distribution
Taxes (including Viasys-Caused Taxes) and shall be entitled to all refunds of
any Thermo Electron Taxes; provided, however, that such preparation of Returns
and such defense, settlement or compromise of a proceeding shall be done in a
manner consistent with past practices. In the event that the proceeding
referenced in clause (ii) of the preceding sentence involves an issue that
relates to Viasys Taxes (a "Viasys Issue"), Viasys shall have the right to
participate in (but not control) such proceeding with respect to the Viasys
Issue only at its own cost and expense. Notwithstanding the foregoing, in the
event that Thermo Electron decides to abandon the defense of, or settle or
compromise any claim relating solely to a Viasys Issue, Thermo Electron shall
notify Viasys of such decision and Viasys shall have ten days to notify Thermo
Electron that it assumes all liability with respect to the Viasys Taxes
attributable to such Viasys Issue under dispute and wishes to assume the defense
of such audit or other proceedings at its own expense. In the event that Thermo
Electron timely receives such notice from Viasys, it shall use all reasonable
efforts to cooperate so as to facilitate Viasys' handling of such proceedings.
(b) Except as otherwise provided in the Transition Services
Agreement, Viasys shall have the obligation and the sole right and full
discretion to control (i) the preparation of all Returns that pertain
exclusively to Post-Distribution Taxes that are Viasys Taxes and (ii) the
defense, settlement or compromise of any audit, examination, investigation,
suit, action or other proceeding relating to Post-Distribution Taxes that are
Viasys Taxes. Viasys shall be entitled to all refunds of any Viasys Taxes.
(c) Thermo Electron shall have the obligation and the sole right and
full discretion to control (i) the preparation of all Returns with respect to
Post-Distribution Taxes that are Thermo Electron Taxes and (ii) the defense,
settlement or compromise of any audit, examination, investigation, suit, action
or other proceeding relating to Post-Distribution Taxes that are Thermo Electron
Taxes.
4. Stock Options.
(a) From and after the Distribution Date, if an employee or service
provider of any member of the Viasys Group who is not also an employee or
service provider of any member of the Thermo Electron Group exercises a stock
option to acquire stock of Thermo Electron, the parties hereto agree that Viasys
shall be entitled to any resulting Tax deduction and shall be fully responsible
for all associated Tax reporting, withholding and similar obligations.
(b) From and after the Distribution Date, if an employee or service
provider of any member of the Thermo Electron Group who is not also an employee
or service provider of
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any member of the Viasys Group exercises a stock option to acquire stock of
Viasys, the parties agree that Thermo Electron shall be entitled to any
resulting Tax deduction and shall be fully responsible for all associated Tax
reporting, withholding and similar obligations.
(c) Except as provided in subsections (a) and (b) above, all
deductions, reporting and withholding obligations associated with the exercise
of a stock option shall be attributed to the respective group (i.e. Thermo
Electron Group or the Viasys Group) to which the company that issued the stock
upon exercise of the option belongs.
5. Agency.
Viasys irrevocably designates Thermo Electron (and shall cause each
member of the Viasys Group to irrevocably designate Thermo Electron) as its
agent and attorney in fact (and shall execute any necessary powers of attorney)
for the purpose of taking any and all actions necessary or incidental to the
filing of federal income tax Returns and state unitary or combined Returns for
(i) any period during which any member of the Viasys Group or any predecessor
qualified to file a consolidated, combined, unitary or similar Return with any
member of the Thermo Electron Group and (ii) any period ending on or before the
Distribution Date. Thermo Electron shall keep Viasys reasonably informed of, and
shall reasonably consult with Viasys with respect to, all actions to be taken on
behalf of any member of the Viasys Group. Thermo Electron and Viasys will each
furnish the other any and all information which the other may reasonably request
in order to carry out the provisions of this Agreement to determine the amount
of any Tax liability.
6. Consistent Reporting.
(a) With respect to all taxable periods ending on or prior to
December 31, 2005, Viasys, each member of the Viasys Group and any future
Affiliates thereof shall file federal income tax and state income tax Returns in
a manner consistent with the Returns filed (or to be filed) in respect of
Pre-Distribution Taxes and in a manner consistent with the form of the
transactions contemplated by the Distribution Agreement (the "Form"), including
that the Distribution qualifies under Section 355 of the Code.
(b) For purposes of subsection (a) of this Section 6, to the extent
there is an inconsistency or an apparent inconsistency between the Returns
relating to Pre-Distribution Taxes (including Returns to be filed after the
Distribution Date) and the Form, Viasys shall file Returns with respect to
Post-Distribution Taxes in the manner reasonably directed by Thermo Electron.
(c) Thermo Electron and Viasys agree to contest any proposed
adjustment by any Taxing Authority that is, in the sole judgment of Thermo
Electron, inconsistent with the provisions of this Section 6 or the Form.
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7. Covenants of Viasys and Thermo Electron Relating to Actions After
the Distribution Date.
(a) Viasys shall, and shall cause each member of the Viasys Group
to, refrain from participating in any Post-Distribution Act without the prior
written consent of Thermo Electron.
(b) Viasys and Thermo Electron shall cooperate (and shall cause each
of their Affiliates to cooperate) fully at such time and to the extent
reasonably requested by the other party in connection with the preparation and
filing of any Return or the conduct of any audit, dispute, proceeding, suit or
action in respect of Taxes or other Tax matters. Such cooperation shall include,
without limitation, (i) the retention and provision on demand of books, records,
documentation or other information relating to any Return until the expiration
of the applicable statute of limitation (giving effect to any extension, waiver
or mitigation thereof) plus two years; (ii) the execution of any document that
may be necessary or reasonably helpful in connection with the filing of any
Return by any member of the Thermo Electron Group or the Viasys Group or in
connection with any audit, examination, investigation, suit, action or other
proceeding; and (iii) the use of the parties' reasonable best efforts to obtain
any documentation from a governmental authority or a third party that may be
necessary or helpful in connection with the foregoing.
8. Viasys Representations. Viasys hereby represents and warrants to
Thermo Electron and each member of the Thermo Electron Group that the
representations and statements relating to Viasys, the Viasys Group or their
respective operations (and not Thermo Electron and its Shareholders) made, or to
be made (to the extent Viasys is provided the opportunity to review such future
representations and statements prior to their submission), to the IRS in
connection with any ruling obtained, or to be obtained, by Thermo Electron from
the IRS with respect to any transaction contemplated by the Distribution
Agreement, as well as the statements contained in this Section 8, are true and
correct in all material respects on the date hereof:
(a) To the best of Viasys' knowledge and belief, no shares of Viasys
common stock being distributed in the Distribution will be received by a
shareholder of Thermo Electron in such shareholder's capacity as a creditor or
employee or in any capacity other than that of a shareholder of Thermo Electron.
(b) To the best of Viasys' knowledge and belief, immediately
following the Distribution, no person, group of related persons or persons who
acted in concert pursuant to a prearranged plan or arrangement will own 50% or
greater of the Thermo Electron Common Stock or the Viasys common stock as a
result of purchases of stock within five years of the Distribution Date.
(c) Viasys has no plan or intention to issue Viasys common stock,
whether incident to a stock offering, an acquisition transaction or otherwise,
which causes the aggregate amount of Viasys common stock issued or acquired in
any such transaction to represent a fifty percent (50%) or greater interest in
the total issued and outstanding Viasys common stock within the meaning of
Section 355(d)(4) of the Code.
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(d) Viasys has no plan or intention to liquidate Viasys, to merge
with another corporation or to sell or otherwise dispose of a material portion
of its assets subsequent to the Distribution except in the ordinary course of
business.
(e) To the best of Viasys' knowledge and belief, no plan or
intention exists by the shareholders of Thermo Electron to sell, exchange,
transfer by gift or otherwise dispose of a material portion of either Thermo
Electron Common Stock or Viasys common stock held by them (in the aggregate)
subsequent to the Distribution.
(f) Following the Distribution, each of Thermo Electron and Viasys
will operate as independent corporations except that certain administrative and
other common activities of the two corporations will be undertaken by common
personnel in accordance with the Transition Services Agreement. Payments made in
connection with all continuing transactions not expressly covered by the
Transition Services Agreement between, and services provided for, each of Thermo
Electron and Viasys will be for fair market value based on terms and conditions
arrived at by the parties bargaining at arm's length.
(g) Viasys has no plan or intention to transfer or substantially
discontinue the historic business of Viasys following the Distribution.
9. Payments. All payments to be made hereunder shall be made in
immediately available funds. Unless otherwise provided herein, any payment not
made when due hereunder shall bear interest from the due date at an annual rate
equal to the prime rate (as determined by FleetBoston Financial Corporation (or
successor organization)) plus 2%, compounded and adjusted monthly. For purposes
of this Agreement, the following payments shall be due at the following times:
(a) Payments due under Section 2 hereof shall be paid within 10 days
of the receipt of notice from the party entitled to the payment indicating the
occurrence of the later of (i) a Final Determination relating to the item or
items giving rise to the Tax for which indemnification is made and (ii) actual
payment of the Tax giving rise to the claim for indemnification.
(b) In the case of any refunds of Taxes received by a party other
than the party entitled to such refunds pursuant to Section 3 hereof, the
recipient of the refund shall pay the amount of such refund to the other party
within five days of the receipt of such refund.
10. Resolution of Certain Disputes. Disagreements between Thermo
Electron and Viasys shall be resolved as quickly as possible and, if not
resolved within thirty days, shall be referred for binding resolution to a
mutually agreeable accounting firm as soon as practicable thereafter. In the
event an accounting firm cannot be mutually agreed upon, an accounting firm
shall be chosen by lot from among the "Big Five" accounting firms (or such other
commonly acknowledged number of preeminent accounting firms as are then in
existence) other than any such firms that are the regular accountants for Thermo
Electron or Viasys; provided, however, that at any time prior to the selection
of an accounting firm in accordance with the foregoing procedure, Thermo
Electron or Viasys may elect by providing written notice to the other to refer
the dispute to an arbitrator selected by the American Arbitration Association
for binding
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arbitration in accordance with the commercial arbitration rules of such
association. A dispute shall be deemed to exist to the extent one party does not
affirmatively agree with the position held by the other party. The parties shall
be required to use their best efforts to resolve any dispute as quickly as
possible. The costs and fees of the accounting firm or arbitrator, as
applicable, shall be divided equally except to the extent a party's position is
unreasonable (as determined by the accounting firm or arbitrator, as
applicable), in which case such party shall bear all expenses (including without
limitation such fees) allocable to such position and the dispute relating
thereto.
11. Costs and Expenses. Except as expressly set forth in this Agreement,
each party shall bear its own costs and expenses incurred pursuant to this
Agreement regardless of the beneficiary of the items or services relating to
such costs and expenses.
12. Termination and Survival. Notwithstanding anything in this Agreement
to the contrary, this Agreement shall remain in effect and its provisions shall
survive for the full period of all applicable statutes of limitation relating to
the assessment of Taxes (giving effect to any extension, waiver or mitigation
thereof) plus two years.
13. Amendments; Limitation on Waivers.
(a) Any provision of this Agreement may be amended if, and only if,
such amendment is in writing and signed by Thermo Electron and Viasys.
(b) The provisions of this Agreement may be waived only if the
waiver is in writing and signed by the party making the waiver. No delay or
omission in exercising any right under this Agreement will operate as a waiver
of the right on any further occasion. No waiver of any particular provision of
this Agreement will be treated as a waiver of any other provision, and no waiver
of any right will be deemed a continuing waiver of the same right with respect
to subsequent occurrences that give rise to such right. All rights given by this
Agreement are cumulative to other rights provided for in this Agreement and to
any other rights available under applicable law.
14. Governing Law and Interpretation. This Agreement shall be governed
by, interpreted and enforced in accordance with the laws of the Commonwealth of
Massachusetts (regardless of the laws that might be applicable under conflict of
law principles).
15. Confidentiality. Each party shall hold and shall cause its
consultants and advisors to hold in strict confidence, unless compelled to
disclose by judicial or administrative process or, in the opinion of its
counsel, by other requirements of law, all information (other than any such
information relating solely to the business or affairs of such party) concerning
the other parties hereto furnished it by such other party or its representatives
pursuant to this Agreement (except to the extent that such information can be
shown to have been (a) in the public domain through no fault of the party to
which it was furnished or (b) later lawfully acquired from other sources by the
party to which it was furnished), and each party shall not release or disclose
such information to any other person, except its auditors, attorneys, financial
advisors, bankers and other consultants and advisors who shall be advised of the
provisions of this Section 15. Each party shall be deemed to have satisfied its
obligation to hold confidential information concerning
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or supplied by the other party if it exercises the same care as it takes to
preserve confidentiality for its own similar information.
16. Counterparts. This Agreement may be executed in two counterparts,
each of which shall be deemed to be an original, but both of which together
shall constitute one and the same instrument.
17. Assignments and Third-Party Benefit. This Agreement and the terms
and provisions hereof shall be binding upon, and shall inure to the benefit of
the parties hereto and their respective successors and assigns.
18. Severability. If any term, provision, condition or covenant of this
Agreement, or the application thereof to any party or circumstance, shall be
held by a court of competent jurisdiction to be invalid, unenforceable or void,
the remainder of this instrument, or the application of such term, provision,
condition or covenant to persons or circumstances other than those as to whom or
to which it is held invalid or unenforceable, shall not be affected thereby, and
each term and provision of this Agreement shall be valid and enforceable to the
fullest extent permitted by law.
19. Merger of Prior Agreements.
(a) This Agreement contains all of the terms and provisions and
constitutes the entire agreement between the parties with respect to the subject
matter hereof and supersedes all prior written, oral or implied understandings,
representations and agreements of the parties relating to the subject matter of
this Agreement, including the Tax Allocation Agreement. Without limiting the
foregoing, the parties acknowledge and agree that in the event of any conflict
or inconsistency between the provisions of this Agreement and the provisions of
the Distribution Agreement or the Transition Services Agreement, the provisions
of this Agreement shall control and to such extent shall be deemed to supersede
such conflicting provisions under the Distribution Agreement or the Transition
Services Agreement.
(b) The parties acknowledge that pursuant hereto, any and all
existing tax sharing agreements or arrangements binding or benefiting Viasys,
including the Tax Allocation Agreement, shall be terminated as of the close of
business on the Distribution Date, and that after the Distribution Date this
Agreement shall constitute the sole tax sharing agreement between Thermo
Electron and Viasys. For periods prior to the Distribution Date, the Tax
Allocation Agreement shall continue in effect except to the extent it is
inconsistent with the terms of this Agreement.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed as of the day and year first above written.
THERMO ELECTRON CORPORATION
By: /s/ Xxxx Xxxxx-Xxxxxxx
--------------------------------------
Xxxx Xxxxx-Xxxxxxx
Vice President and Chief Financial
Officer
VIASYS HEALTHCARE INC.
By: /s/ Xxxxxxx X. Xxxxx
--------------------------------------
Xxxxxxx X. Xxxxx
Chairman of the Board
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EXECUTION COPY
TAX ALLOCATION AGREEMENT
THIS TAX ALLOCATION AGREEMENT is made as of August 7, 1995, between
Thermo Electron Corporation, a Delaware corporation ("Thermo Electron") and
Thermo Biomedical Inc., a Delaware corporation ("Biomedical").
PRELIMINARY STATEMENT
Thermo Electron is the parent of an affiliated group of corporations
(including Biomedical) within the meaning of Section 1504(a) of the Internal
Revenue Code of 1986, as amended (the "Code").
Thermo Electron owns over 80% of the issued and outstanding shares of
voting common stock of Biomedical, the only class of stock of Biomedical
outstanding. Biomedical is required to file consolidated federal income tax
returns with Thermo Electron.
Thermo Electron as the common parent of an affiliated group of
corporations and Biomedical recognize that any one of them that sustains a net
operating loss or otherwise generates beneficial tax attributes for a taxable
period may be deprived of such benefits when offset in that or other periods
against income or tax liabilities of the others.
AGREEMENTS
IT IS MUTUALLY agreed by the parties hereto as follows:
1. DEFINITIONS AND CONSTRUCTION.
1.1 The Term "Thermo Electron Group" means the group of
corporations of which Thermo Electron is the common parent and with which Thermo
Electron files a consolidated federal income tax return, excluding Biomedical
and subsidiaries of Biomedical that may exist now or in the future. For purposes
of this Agreement, the Thermo Electron Group shall be treated as a single
corporate entity. The Thermo Electron Group and Biomedical and its subsidiaries,
respectively, are sometimes herein referred to collectively as the "Two
Companies" or the "Companies." This Agreement anticipates that Thermo Electron
will set aside and retain certain sums calculated as provided herein. All
reference to Thermo Electron paying sums to itself pursuant to this Agreement
shall be satisfied by Thermo Electron setting aside sums in respect of the
obligations established under this Agreement.
1.2 The paragraph titles used herein are for convenience of
reference only and will not be considered in the interpretation or construction
of any of the provisions hereof. Words may be construed in the singular or the
plural as the context requires.
2. TAX RETURNS.
2.1 FEDERAL TAX RETURNS. Thermo Electron as the common parent
will prepare and file or cause to be prepared and filed federal and state income
tax returns on a consolidated basis, for the Thermo Electron Group and
Biomedical and its subsidiaries for all
fiscal periods as to which a consolidated return is appropriate in accordance
with the terms of this Agreement.
2.2 STATE TAX RETURNS. Thermo Electron as the common parent
will prepare and file or cause to be filed state income tax returns on a
combined, consolidated, unitary, or other method that Thermo Electron believes
will result in a lower overall tax liability to the Two Companies. Biomedical
will reimburse Thermo Electron for its portion of the tax. Such reimbursement
will be the tax Biomedical would have paid on a separate return basis, but only
if it was required to file a return in that state.
3. TIME OF PAYMENT OF FEDERAL OBLIGATIONS TO THERMO ELECTRON.
The obligations of the Companies for Federal income tax payments will be
determined and paid as follows:
(a) Not later than the 15th day after the end of the fourth,
sixth, ninth and twelfth months of each consolidated taxable year of Thermo
Electron, Thermo Electron will make a reasonable determination (consistent with
the provisions of Section 6655 of the Code) of the separate federal income tax
liability that each Company would be required to pay as estimated payments on a
separate return basis for that period. Each Company shall pay to Thermo Electron
the amount of such liability within ten days.
(b) After the end of Thermo Electron's fourth accounting
quarter and before the 15th day of the third month thereafter, each Company will
promptly pay to Thermo Electron the entire amounts estimated to be due and
payable under such Company's federal income tax return as if filed on a separate
return basis, less all amounts previously paid with respect to that year
pursuant to subparagraph (a) of this Paragraph 3.
(c) If upon the filing of the consolidated income tax return,
a revised calculation is made in the manner set forth in subparagraph (b) of
this Paragraph 3, and it is determined that either Company has paid to Thermo
Electron with respect to the consolidated taxable year an amount greater than
that required by Paragraph 3(b), then that excess will be promptly paid by
Thermo Electron to that Company.
4. TAX OBLIGATIONS OF THERMO ELECTRON. Thermo Electron will pay
the consolidated tax liabilities of the Companies arising from filing a
consolidated federal tax return.
5. PAYMENT OF FUNDS BY THERMO ELECTRON. If in any year Biomedical
incurs a loss or generates tax credits or similar tax benefits (a "tax benefit
item"), Thermo Electron shall pay to Biomedical a sum equal to the amount of
benefit realized by Thermo Electron that is attributable to the Biomedical tax
benefit item: payments due to Biomedical from Thermo Electron under this section
shall be made upon the earlier of (1) the year in which Biomedical would have
obtained a tax benefit from the tax benefit item if Biomedical had in all years
filed a separate federal income tax return or (2) the year in which any
applicable carry-forward period with respect to the tax benefit item expires;
provided that payments under this section shall be made first by being taken
into account in determining amounts payable to Biomedical under Section 3, and
any remaining amount due to Biomedical shall be paid by
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Thermo Electron to Biomedical at the times set forth for payments by Biomedical
under Section 3.
6. CHANGES IN PRIOR YEAR'S TAX LIABILITIES. In the event that the
consolidated tax liability or the separate tax liability referred to in
Paragraphs 3 and 5 hereof for any year for which a consolidated tax return for
the two Companies was filed is or would be increased or decreased by reason of
filing an amended return or returns (including carry-back claims), or by reason
of the examination of the returns by the Internal Revenue Service, the amounts
due Thermo Electron for payment of taxes under Paragraph 3 hereof, and the
amount to be paid to Thermo Electron for allocation to Biomedical under
Paragraph 4 hereof for each year will be recomputed by Thermo Electron to
reflect the adjustments to taxable income and tax credits for the taxable year
and interest or penalties, if any. In accordance with those recomputations,
additional sums will be paid by the Companies to Thermo Electron or paid by
Thermo Electron to the companies regardless of whether a member has become a
Departing Member (as defined in Paragraph 8 hereof) subsequent to the taxable
year of recomputation.
7. NEW MEMBERS. The Companies agree that if, subsequent to the
execution of this Agreement, Thermo Electron becomes the "parent", as that term
is used in Section 1504 of the Code, of one or more subsidiary corporations, in
addition to Biomedical, then each newly acquired subsidiary corporation may
become a separate party to this Agreement by consenting in writing to be bound
by its provisions, effective immediately upon its delivery to Thermo Electron,
but the income, deductions and tax credits of the newly acquired subsidiary
corporations will first be included in the consolidated federal income tax
return as required by the Code.
8. DEPARTING MEMBERS.
8.1 The term "Departing Members," as used herein, will mean a
company that is no longer permitted under the Code to be included in the
consolidated federal income tax return.
8.2 In applying this Agreement to a Departing Member for the
final taxable year in which its income, deductions, and tax credits are required
to be included in the consolidated federal income tax return: (i) the amount
required to be paid by a Departing Member under the provisions of Paragraph 3
hereof and (ii) the amount that the Departing Member is entitled to receive
under the provisions of Paragraph 5 hereof, will be determined by taking into
account the income, deductions and tax credits of the Departing Member only for
the fractional part of such year as the Departing Member was a member of the
consolidated group and included in the consolidated federal income tax return.
8.3 After the filing of the consolidated federal income tax
return for the last taxable year that the Departing Member was included therein,
the Departing Member will be informed of the amount of consolidated carry-overs
as of the end of the taxable year or period which are attributable to the
Departing Member, as provided by Treasury Regulations Section 1.1502-79 or
otherwise, including the agreement of the parties.
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9. DETERMINATION OF SUMS DUE FROM AND PAYABLE TO MEMBERS. Thermo
Electron will determine the sums due from and payable to the Companies under the
provisions of this Agreement (including the determination for purposes of
Paragraph 6 hereof). The Companies agree to provide Thermo Electron with such
information as may reasonably be necessary to make these determinations. Issues
arising in the course of the determinations that are not expressly provided for
in this agreement will be resolved in an equitable manner.
10. TAX CONTROVERSIES. If a consolidated federal income tax return
for any taxable year during which this Agreement is in effect is examined by the
Internal Revenue Service, the examination, as well as any other matters relating
to that tax return, including any tax litigation, will be handled solely by
Thermo Electron. Biomedical will cooperate with Thermo Electron and to this end
will execute protests, petitions, and any other documents as Thermo Electron
determines to be necessary or appropriate. The cost and expense of Thermo
Electron's handing of any tax controversy, including legal and accounting fees,
will be allocated to and paid by the Company to whom the tax controversy
relates. If the tax controversy relates to both Companies, the cost and expense
will be allocated between the Companies in the proportion that each Company's
potential additional tax liability bears to the total potential additional tax
liability of both Companies (determined in accordance with Paragraph 6 hereto
and assuming that the tax controversy is resolved in favor of the Internal
Revenue Service) for the taxable year on issue. If the tax controversy
encompasses more than one taxable year, Thermo Electron will first allocate the
cost and expense to each taxable year in the proportion that the potential
additional tax liability for each taxable year bears to the total potential
additional tax liability for the taxable years in issue.
11. EFFECTIVE DATE. This Agreement shall be effective beginning as
of the date of the Agreement, and will continue on a year-to-year basis
thereafter with respect to Biomedical for so long as Biomedical is permitted to
file a consolidated federal income tax return with Thermo Electron.
12. STATE TAXES. The two Companies will jointly file any state tax
return on a combined, consolidated, unitary, or other method that Thermo
Electron determines results in a lower overall tax liability to the Two
Companies. In the event that said state tax returns shall be filed, the
provisions of Sections 1-11 hereof shall apply, MUTATIS MUTANDIS (the necessary
changes being made) to the allocation, preparation, filing and payment related
to such state taxes and tax returns provided, however, that any benefit realized
by the filing of the combined, consolidated or unitary return will remain with
Thermo Electron.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized officers as of the date first above written.
THERMO ELECTRON CORPORATION
By: /s/ Xxxx X. Xxxxxxxxx
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Name: Xxxx X. Xxxxxxxxx
Title: Assistant Secretary
THERMO BIOMEDICAL INC.
By: /s/ Xxxxxx Xxxxxxxxxx
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Name: Xxxxxx Xxxxxxxxxx
Title: Assistant Secretary
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