TAX RECEIVABLE AGREEMENT dated as of
This TAX RECEIVABLE AGREEMENT (as amended from time to time, this “Agreement”), dated
as of _________, 2008, is hereby entered into by and among Xxxxxx Investments, Inc., a
Pennsylvania corporation (the “Corporation”), Xxxxxx Investment Partners, Inc., a
Pennsylvania corporation (“TIP Inc.”), Xxxxxx Investment Partners, LLC, a Pennsylvania limited
liability company (“TIP LLC”), Xxxxxx Founders, L.P., a
Pennsylvania partnership, and each of the other undersigned parties hereto identified as “Members.”
RECITALS
WHEREAS, TIP, Inc. holds membership interests (“Units”) in TIP LLC, which is treated as a
partnership for United States federal income Tax (as defined below) purposes;
WHEREAS, the Corporation is the managing member of, and holds and will hold Units in TIP LLC;
WHEREAS, TIP, Inc. will sell Units to the Corporation, and Xxxxxx Founders, L.P. may sell
Units to the Corporation (if the underwriters exercise their option to purchase additional shares)
(collectively, the “Original Sale”) as described in the Form S-1 Registration Statement of Xxxxxx
Investments, Inc;
WHEREAS, the Units are exchangeable for Class A Shares of the Corporation;
WHEREAS, TIP LLC and each of its direct and indirect subsidiaries treated as a partnership for
United States federal income Tax purposes has or will have in effect an election under Section 754
of the Internal Revenue Code of 1986, as amended (the “Code”), for the Taxable Year (as
defined below) in which the Original Sale occurs and for each subsequent Taxable Year in which an
exchange of Units for Class A Shares occurs, which election will result in an adjustment to the Tax
basis of the assets owned by TIP LLC and such subsidiaries, solely with respect to the Corporation,
at the time of the Original Sale, an exchange of Units for Class A Shares or any other deemed or
actual acquisition of Units by the Corporation for cash or otherwise (collectively, and together
with the Original Sale, an “Exchange”) (such time, including the date of the Original Sale,
the “Exchange Date”) by reason of such Exchange and the payments under this Agreement;
WHEREAS, the income, gain, loss, expense and other Tax items of (i) TIP LLC, solely with
respect to the Corporation, may be affected by the Basis Adjustment (defined below) and (ii) the
Corporation may be affected by the Imputed Interest (as defined below);
WHEREAS, the parties to this Agreement desire to make certain arrangements with respect to the
effect of the Basis Adjustment and Imputed Interest on the actual liability for Taxes of the
Corporation;
NOW, THEREFORE, in consideration of the foregoing and the respective covenants and agreements
set forth herein, and intending to be legally bound hereby, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
Section 1.01. Definitions. As used in this Agreement, the terms set forth in this
Article I shall have the following meanings (such meanings to be equally applicable to both the
singular and plural forms of the terms defined).
“Advisory Firm” means any accounting firm or law firm that is nationally recognized as
being expert in tax matters and that is appointed by the Board.
“Advisory Firm Letter” shall mean a letter from the Advisory Firm stating that the
relevant schedule, notice or other information to be provided by the Corporation to the Applicable
Member and all supporting schedules and work papers were prepared by the Corporation in good faith.
“Affiliate” means, with respect to any Person, any other Person that directly or
indirectly, through one or more intermediaries, Controls, is Controlled by, or is under common
Control with, such first Person.
“Agreed Rate” means LIBOR plus 100 basis points.
“Agreement” is defined in the Recitals of this Agreement.
“Aggregate Reduction Amount” is defined in Section 3.03(b) of this Agreement.
“Amended Schedule” is defined in Section 2.04(b) of this Agreement.
“Applicable Member” means in respect of that portion of any Tax Benefit Payment that
arises from an Exchange or a deemed Exchange pursuant to clause (5) of the definition of “Valuation
Assumptions,” the Exchanging Member or Member deemed to Exchange, as applicable.
“Assumed Tax Rate” means the highest marginal federal, state and local income tax rate
applicable to an individual working and residing in New York, New York (taking into account the
character (e.g., long-term or short-term capital gain or ordinary income) of the applicable
income), for the Taxable Year for which such determination is applicable.
“Basis Adjustment” means the adjustment to the Tax basis of an Exchange Asset as a
result of an Exchange and the payments made pursuant to this Agreement, as calculated under Section
2.01 of this Agreement, under Section 732 of the Code (in situations where, as a result of one or
more Exchanges, TIP LLC becomes an entity that is disregarded as separate from its owner for Tax
purposes) or Sections 743(b) and 754 of the Code (including in situations where, following an
Exchange, TIP LLC remains in existence as an entity for Tax purposes) or otherwise, as applicable,
and, in each case, comparable sections of state, local and foreign Tax laws. Notwithstanding any
other provision of this Agreement, the amount of any Basis Adjustment resulting from an Exchange of
one or more Units shall be determined without regard
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to any Pre-Exchange Transfer of such Units and as if any such Pre-Exchange Transfer had not
occurred.
A “Beneficial Owner” of a security is a Person who directly or indirectly, through any
contract, arrangement, understanding, relationship or otherwise, has or shares: (i) voting power,
which includes the power to vote, or to direct the voting of, such security and/or (ii) investment
power, which includes the power to dispose of, or to direct the disposition of, such security. The
terms “Beneficially Own” and “Beneficial Ownership” shall have correlative
meanings.
“Board” means the board of directors of the Corporation.
“Business Day” means Monday through Friday of each week, except that a legal holiday
recognized as such by the government of the United States of America or the Commonwealth of
Pennsylvania shall not be regarded as a Business Day.
“Change Notice” is defined in Section 3.03(a) of this Agreement.
“Change of Control” means the occurrence of any of the following events:
(i) any Person or any group of Persons acting together which would constitute a “group” for
purposes of Section 13(d) of the Securities and Exchange Act of 1934, or any successor provisions
thereto (excluding any group of Persons which includes Xxxxxx X. Xxxxxx, or any of Affiliate of
Xxxxxx X. Xxxxxx, where Xxxxxx X. Xxxxxx continues to Control the Corporation), is or becomes the
Beneficial Owner, directly or indirectly, of securities of the Corporation representing more than
fifty percent (50%) of the combined voting power of the Corporation’s then outstanding voting
securities; or
(ii) the following individuals cease for any reason to constitute a majority of the number of
directors of the Corporation then serving: individuals who, on the date of the consummation of the
IPO, constitute the Board and any new director (other than a director whose initial assumption of
office is in connection with an actual or threatened election contest, including but not limited to
a consent solicitation, relating to an election of directors of the Corporation) whose appointment
or election by the Board or nomination for election by the Corporation’s stockholders was approved
or recommended by a vote of at least a majority of the directors then still in office who either
were directors on the date of the consummation of the IPO or whose appointment, election or
nomination for election was previously so approved or recommended by the directors referred to in
this clause (ii); or
(iii) there is consummated a merger or consolidation of the Corporation with any other
corporation or other entity, and, immediately after the consummation of such merger or
consolidation, either (x) the Board immediately prior to the merger or consolidation does not
constitute at least a majority of the board of directors of the company surviving the merger or, if
the surviving company is a subsidiary, the ultimate parent thereof, or (y) all of the Persons who
were the respective Beneficial Owners of the voting securities of the Corporation immediately prior
to such merger or consolidation do not Beneficially Own, directly or indirectly, more than 50% of
the combined voting power of the then outstanding voting securities of the Person resulting from
such merger or consolidation; or
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(iv) the stockholders of the Corporation approve a plan of complete liquidation or dissolution
of the Corporation or there is consummated an agreement or series of related agreements for the
sale or other disposition, directly, or indirectly, by the Corporation of all or substantially all
of the Corporation’s assets, other than such sale or other disposition by the Corporation of all or
substantially all of the Corporation’s assets to an entity, at least fifty percent (50%) of the
combined voting power of the voting securities of which are owned by stockholders of the
Corporation in substantially the same proportions as their voting power of the Corporation
immediately prior to such sale.
Notwithstanding the foregoing, except with respect to clause (ii) and clause (iii)(x) above, a
“Change in Control” shall not be deemed to have occurred by virtue of the consummation of any
transaction or series of integrated transactions immediately following which the record holders of
the shares of capital stock of the Corporation immediately prior to such transaction or series of
transactions continue to have substantially the same proportionate voting power in an entity which
owns all or substantially all of the assets of the Corporation immediately following such
transaction or series of transactions.
“Class A Shares” is defined in the Recitals of this Agreement.
“Code” is defined in the Recitals of this Agreement.
“Control” means the possession, direct or indirect, of the power to direct or cause
the direction of the management and policies of a Person, whether through ownership of voting
securities, by contract or otherwise.
“Corporation” is defined in the Recitals of this Agreement.
“Corporation Return” means the U.S. federal, state, local and/or foreign Tax Return,
as applicable, of the Corporation filed with respect to Taxes of any Taxable Year.
“Cumulative Net Realized Tax Benefit” for a Taxable Year means the cumulative amount
of Realized Tax Benefits for all Taxable Years of the Corporation, up to and including such Taxable
Year, net of the cumulative amount of Realized Tax Detriments for the same period. The Realized Tax
Benefit and Realized Tax Detriment for each Taxable Year shall be determined based on the most
recent Tax Benefit Schedule or Amended Schedule, if any, in existence at the time of such
determination.
“Default Rate” means LIBOR plus 300 basis points.
“Determination” shall have the meaning ascribed to such term in Section 1313(a) of the
Code or similar provision of state, local and foreign tax law, as applicable, or any other event
(including the execution of a Form 870-AD) that finally and conclusively establishes the amount of
any liability for Tax.
“Determination Notice” is defined in Section 3.03(b) of this Agreement.
“Dispute” is defined in Section 7.08(a) of this Agreement.
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“Early Termination Date” means the date of an Early Termination Notice for purposes of
determining the Early Termination Payment.
“Early Termination Notice” is defined in Section 4.02 of this Agreement.
“Early Termination Schedule” is defined in Section 4.02 of this Agreement.
“Early Termination Payment” is defined in Section 4.03(b) of this Agreement.
“Early Termination Rate” means the long-term Treasury rate in effect on the applicable
date.
“Excepted Transferee” means Xxxxxx Investment Partners, Inc., Xxxxxx X. Xxxxxx, Xxxx
X. Xxxxxx, and Xxxxxxxxxxx X. XxXxxx (Xxxxxx X. Xxxxxx, Xxxx X. Xxxxxx and Xxxxxxxxxxx X. XxXxxx
are referred to individually as a “Founder” and collectively as “Founders”), and
(1) a Founder’s spouse; (2) any descendant of a Founder; (3) any revocable or irrevocable trust(s)
created by (A) a Founder, (B) a Founder’s spouse, or (C) any descendant of a Founder, to which such
person(s) have made transfers of Units during their lives; (4) the estate of any of (A) a Founder,
(B) a Founder’s spouse, or (C) any descendant of a Founder; and (5) any trusts for the primary
benefit of any of (A) a Founder, (B) a Founder’s spouse, or (C) any descendants of a Founder.
“Excess Tax Benefit Payment” is defined in Section 3.03(b) of this Agreement.
“Exchange” is defined in the Recitals of this Agreement; “Exchanged” and “Exchanging”
shall have correlative meanings.
“Exchange Assets” means the assets held by TIP LLC, or by any of its direct or
indirect subsidiaries treated as a partnership or disregarded entity for purposes of the applicable
Tax, at the time of an Exchange.
“Exchange Basis Schedule” is defined in Section 2.02 of this Agreement.
“Exchange Date” is defined in the Recitals of this Agreement.
“Exchange Payment” is defined in Section 5.01 of this Agreement.
“Expert” is defined in Section 7.09 of this Agreement.
“Hypothetical Tax Liability” means, with respect to any Taxable Year, the liability
for Taxes of the Corporation (or TIP LLC, but only with respect to income realized by TIP LLC the
Tax liability for which is allocable to the Corporation for such Taxable Year using the same
methods, elections, conventions and similar practices used on the relevant Corporation Return) but
using the Non-Stepped Up Tax Basis instead of the Tax Basis of the Exchange Assets and excluding
any deduction attributable to Imputed Interest.
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“Imputed Interest” shall mean any interest imputed under Section 1272, 1274 or 483 or
other provision of the Code and any similar provision of state, local and foreign tax law with
respect to the Corporation’s payment obligations under this Agreement.
“Interest Amount” is defined in Section 3.01(b) of this Agreement.
“IPO” means the initial public offering of the Class A Shares that is being
consummated on the date hereof.
“IRS” means the United States Internal Revenue Service.
“LIBOR” means for each month (or portion thereof) during any period, an interest rate
per annum equal to the rate per annum reported, on the date two days prior to the first day of such
month, on the Telerate Page 3750 (or if such screen shall cease to be publicly available, as
reported on Reuters Screen page “LIBO” or by any other publicly available source of such market
rate) for London interbank offered rates for U.S. dollar deposits for such month (or portion
thereof).
“LLC Agreement” means, with respect to TIP LLC, the Amended and Restated Operating
Agreement of TIP LLC dated as of the date hereof.
“Market Value” means, with respect to the Class A Shares, on any given date: (i) if
the Class A Shares are listed for trading on the NASDAQ stock market, the closing sale price per
share of the Class A Shares on the NASDAQ stock market on that date (or, if no closing sale price
is reported, the last reported sale price), (ii) if the Class A Shares are not listed for trading
on the NASDAQ stock market, the closing sale price (or, if no closing sale price is reported, the
last reported sale price) as reported on that date in composite transactions for the principal
national securities exchange registered pursuant to Section 6(g) of the Securities and Exchange Act
of 1934, as amended, on which the Class A Shares are listed, (iii) if the Class A Shares are not so
listed on a national securities exchange, the last quoted bid price for the Class A Shares on that
date in the over-the-counter market as reported by Pink Sheets LLC or a similar organization, or
(iv) if the Class A Shares are not so quoted by Pink Sheets LLC or a similar organization such
value as the Board, in its sole discretion, shall determine in good faith.
“Material Objection Notice” has the meaning set forth in Section 4.02.
“Members”
means each of the parties hereto identified as “Members”
on the signature page hereof and each other Person
who from time to time executes a joinder agreement in the form attached hereto as Exhibit A.
“Non-Stepped Up Tax Basis” means, with respect to any asset at any time, the Tax basis
that such asset would have had at such time if no Basis Adjustment had been made.
“Objection Notice” has the meaning set forth in Section 2.04(a) of this Agreement.
“Original Sale” is defined in the Recitals to this Agreement.
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“Payment Date” means any date on which a payment is required to be made pursuant to
this Agreement.
“Person” means any individual, corporation, firm, partnership, joint venture, limited
liability company, estate, trust, business association, organization, governmental entity or other
entity.
“Pre-Exchange Transfer” means any transfer (including upon the death of a Limited
Partner) of one or more Units (i) that occurs prior to an Exchange of such Units, and (ii) to which
Section 743(b) of the Code applies.
“Realized Tax Benefit” means, for a Taxable Year and for all Taxes collectively, the
net excess, if any, of the Hypothetical Tax Liability over the actual liability for Taxes of the
Corporation (or TIP LLC, but only with respect to income realized by TIP LLC, the Tax liability for
which is allocable to the Corporation for such Taxable Year using the same methods, elections,
conventions and similar practices used on the relevant Corporation Return), determined, for the
avoidance of doubt, using the “with or without” methodology. If all or a portion of the actual
liability for Taxes of the Corporation (or TIP LLC, but only with respect to income realized by TIP
LLC, the Tax liability for which is allocable to the Corporation for such Taxable Year using the
same methods, elections, conventions and similar practices used on the relevant Corporation Return)
for the Taxable Year arises as a result of an audit by a Taxing Authority of any Taxable Year, such
liability shall not be included in determining the Realized Tax Benefit unless and until there has
been a Determination.
“Realized Tax Detriment” means, for a Taxable Year and for all Taxes collectively, the
net excess, if any, of the actual liability for Taxes of the Corporation (or TIP LLC, but only with
respect to income realized by TIP LLC the Tax liability for which is allocable to the Corporation
for such Taxable Year using the same methods, elections, conventions and similar practices used on
the relevant Corporation Return) over the Hypothetical Tax Liability for such Taxable Year
determined, for the avoidance of doubt, using the “with or without” methodology. If all or a
portion of the actual liability for Taxes of the Corporation (or TIP LLC, but only with respect to
income realized by TIP LLC the Tax liability for which is allocable to the Corporation for such
Taxable Year using the same methods, elections, conventions and similar practices used on the
relevant Corporation Return) for the Taxable Year arises as a result of an audit by a Taxing
Authority of any Taxable Year, such liability shall not be included in determining the Realized Tax
Detriment unless and until there has been a Determination.
“Reconciliation Dispute” is defined in Section 7.09 of this Agreement.
“Reconciliation Procedures” shall mean those procedures set forth in Section 7.09 of
this Agreement.
“Repayment Amount” is defined in Section 3.03(b) of this Agreement.
“Schedule” means any Exchange Basis Schedule, Tax Benefit Schedule and the Early
Termination Schedule.
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“Senior Obligations” is defined in Section 5.01 of this Agreement.
“Subsidiaries” means, with respect to any Person, as of any date of determination, any
other Person as to which such Person, owns, directly or indirectly, or otherwise controls more than
50% of the voting power or other similar interests or the sole general partner interest or managing
member or similar interest of such Person.
“Tax Benefit Payment” is defined in Section 3.01(b) of this Agreement.
“Tax Benefit Schedule” is defined in Section 2.03 of this Agreement.
“Tax Return” means any return, declaration, report or similar statement required to be
filed with respect to Taxes (including any attached schedules), including, without limitation, any
information return, claim for refund, amended return and declaration of estimated Tax.
“Taxable Year” means a taxable year as defined in Section 441(b) of the Code or
comparable section of state, local or foreign tax law, as applicable, (and, therefore, for the
avoidance of doubt, may include a period of less than 12 months for which a Tax Return is made)
ending on or after the Exchange Date in which there is a Basis Adjustment due to an Exchange.
“Taxes” means any and all U.S. federal, state, local and foreign taxes, assessments or
similar charges measured with respect to net income or profits, whether as an exclusive or on an
alternative basis, and any interest related to such Tax.
“Taxing Authority” shall mean any domestic, foreign, federal, national, state, county
or municipal or other local government, any subdivision, agency, commission or authority thereof,
or any quasi-governmental body exercising any taxing authority or any other authority exercising
Tax regulatory authority.
“Treasury Regulations” means the final, temporary and proposed regulations under the
Code promulgated from time to time (including corresponding provisions and succeeding provisions)
as in effect for the relevant taxable period.
“Units” are defined in the Recitals of this Agreement.
“Valuation Assumptions” shall mean, as of an Early Termination Date, or following a
Change of Control, as applicable, the assumptions that (1) in each Taxable Year ending on or after
such Early Termination Date, the Corporation will have sufficient Taxable income to fully offset
the deductions in such Taxable Year attributable to any Basis Adjustment, increased depreciation or
amortization deductions attributable to an Exchange, and Imputed Interest, (2) the U.S. federal
income Tax rates and state, local and foreign income Tax rates that will be in effect for each such
Taxable Year will be those specified for each such Taxable Year by the Code and other law as in
effect on the Early Termination Date, (3) any loss carryovers generated by any Basis Adjustment or
Imputed Interest and available as of the date of the Early Termination Schedule will be used by the
Corporation on a pro rata basis from the date of the Early Termination Schedule through the
scheduled expiration date of such loss carryovers, (4)
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any non-amortizable assets will be disposed of on the fifteenth anniversary of the Early
Termination Date, provided, however, that, in the event of a Change of Control,
non-amortizable assets shall be deemed disposed of at the earlier of (i) the time of sale of the
relevant asset or (ii) as generally provided in this Valuation Assumption (4), and (5) if, at the
Early Termination Date, there are Units that have not been Exchanged, then each such Unit shall be
deemed to be Exchanged for the Market Value of the Class A Shares and the amount of cash that would
be transferred if the Exchange occurred on the Early Termination Date.
“Yearly Reduction Amount” is defined in Section 3.03(b) of this Agreement.
ARTICLE II
DETERMINATION OF CUMULATIVE REALIZED TAX BENEFIT
Section 2.01. Basis Adjustment.
(a) Exchange Assets. For purposes of this Agreement, TIP LLC shall be entitled to a
Basis Adjustment for the Exchange Assets with respect to the Corporation, the amount of which Basis
Adjustment will be the excess, if any, of (i) the sum of (x) the Market Value of the Class A
Shares, cash or the amount of any other consideration transferred to the Applicable Member pursuant
to the Exchange as payment for the exchanged Units, to the extent attributable to such Exchange
Assets, plus (y) the amount of payments made pursuant to this Agreement with respect to such
Exchange, to the extent attributable to such Exchange Assets, plus (z) the amount of debt and other
liabilities allocated to the Units acquired pursuant to such Exchange, to the extent attributable
to such Exchange Assets; over (ii) the Corporation’s share of TIP LLC’s basis for such Exchange
Assets immediately after the Exchange, attributable to the Units exchanged, determined as if (x)
TIP LLC were to remain in existence as an entity for Tax purposes and (y) TIP LLC had not made the
election provided by Section 754 of the Code. For the avoidance of doubt, unless otherwise
specifically noted, the tax principles set forth in the Code and applicable Treasury Regulations
are to be applied in making the determinations necessary in this Section 2.01.
(b) Imputed Interest. For the avoidance of doubt, payments made under this Agreement
shall not be treated as resulting in a Basis Adjustment to the extent such payments are treated as
Imputed Interest.
Section 2.02. Exchange Basis Schedule. Within 45 calendar days after the filing of
the United States federal income Tax return of the Corporation for each Taxable Year, the
Corporation shall deliver to each Member a schedule (the “Exchange Basis Schedule”) that
shows, in reasonable detail, for purposes of Taxes, (i) the actual unadjusted Tax basis of the
Exchange Assets as of each applicable Exchange Date, (ii) the Basis Adjustment with respect to the
Exchange Assets as a result of the Exchanges effected in such Taxable Year, calculated in the
aggregate, (iii) the period or periods, if any, over which the Exchange Assets are amortizable
and/or depreciable and (iv) the period or periods, if any, over which each Basis Adjustment is
amortizable and/or depreciable (which, for non-amortizable assets, shall be based on the Valuation
Assumptions).
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Section 2.03. Tax Benefit Schedule. Within 45 calendar days after the filing of the
United States federal income Tax return of the Corporation for any Taxable Year in which there is a
Realized Tax Benefit or Realized Tax Detriment, the Corporation shall provide to each Member a
schedule showing, in reasonable detail, the calculation of the Realized Tax Benefit or Realized Tax
Detriment for such Taxable Year (a “Tax Benefit Schedule”). The Tax Benefit Schedule will
become final as provided in Section 2.04(a) and may be amended as provided in Section 2.04(b).
Section 2.04. Procedures, Amendments.
(a) Procedure. Every time the Corporation delivers to the Applicable Member an
applicable Schedule under this Agreement, including any Amended Schedule delivered pursuant to
Section 2.04(b), but excluding any Early Termination Schedule or amended Early Termination
Schedule, the Corporation also shall (x) deliver to the Applicable Member schedules and work papers
providing reasonable detail regarding the preparation of such Schedule and an Advisory Firm Letter
supporting such Schedule and (y) allow the Applicable Member reasonable access, at no cost, to the
appropriate representatives at the Corporation and the Advisory Firm in connection with a review of
such Schedule. The applicable Schedule shall become final and binding on all parties unless the
Applicable Member, within 30 calendar days after receiving an Exchange Basis Schedule or amendment
thereto or a Tax Benefit Schedule or amendment thereto, provides the Corporation with notice of a
material objection to such Schedule (“Objection Notice”) made in good faith. If the
parties, for any reason, are unable to successfully resolve the issues raised in such notice within
30 calendar days of receipt by the Corporation of an Objection Notice with respect to such Exchange
Basis Schedule or Tax Benefit Schedule, the Corporation and the Applicable Member shall employ the
reconciliation procedures as described in Section 7.09 of this Agreement (the “Reconciliation
Procedures”).
(b) Amended Schedule. The applicable Schedule for any Taxable Year may be amended from
time to time by the Corporation (i) in connection with a Determination affecting such Schedule,
(ii) to correct material inaccuracies in the Schedule identified as a result of the receipt of
additional factual information relating to a Taxable Year after the date the Schedule was provided
to the Applicable Member, (iii) to comply with the Expert’s determination under the Reconciliation
Procedures, (iv) to reflect a material change in the Realized Tax Benefit or Realized Tax Detriment
for such Taxable Year attributable to a carryback or carryforward of a loss or other Tax item to
such Taxable Year, (v) to reflect a material change in the Realized Tax Benefit or Realized Tax
Detriment for such Taxable Year attributable to an amended Tax Return filed for such Taxable Year,
or (vi) to adjust the Exchange Basis Schedule to take into account payments made pursuant to this
Agreement (such Schedule, an “Amended Schedule”).
ARTICLE III
TAX BENEFIT PAYMENTS; INDEMNIFICATION
Section 3.01. Payments.
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(a) Payments. Within three (3) business days of a Tax Benefit Schedule that was
delivered to an Applicable Member becoming final in accordance with Section 2.04(a), the
Corporation shall pay to the Applicable Member for such Taxable Year the Tax Benefit Payment
determined pursuant to Section 3.01(b). Each such Tax Benefit Payment shall be made by wire
transfer of immediately available funds to a bank account of the Applicable Member previously
designated by such Member to the Corporation. For the avoidance of doubt, no Tax Benefit Payment
shall be made in respect of estimated Tax payments, including, without limitation, U.S. federal
income Tax payments.
(b) A “Tax Benefit Payment” means an amount, not less than zero, equal to 85% of the
sum of the Net Tax Benefit and the Interest Amount. The “Net Tax Benefit” for each Taxable Year
shall be an amount equal to the excess, if any, of the Cumulative Net Realized Tax Benefit as of
the end of such Taxable Year over the total amount of payments previously made under this Section
3.01, excluding payments attributable to the Interest Amount. The “Interest Amount” for a
given Taxable Year shall equal the interest on the Net Tax Benefit for such Taxable Year calculated
at the Agreed Rate from the due date (without extensions) for filing the Corporation Return with
respect to Taxes for the most recently ended Taxable Year until the Payment Date. The Net Tax
Benefit and the Interest Amount shall be determined separately with respect to each separate
Exchange. Notwithstanding the foregoing, for each Taxable Year ending on or after the date of a
Change of Control, all Tax Benefit Payments, whether paid with respect to Units that were exchanged
(i) prior to the date of such Change of Control or (ii) on or after the date of such Change of
Control, shall be calculated by utilizing Valuation Assumptions (1), (3), and (4), substituting in
each case the terms “the closing date of a Change of Control” for an “Early Termination Date”.
(c) For purposes of clarity, it is the intention of the parties to this Agreement that TIP,
Inc. shall receive all Tax Benefit Payments with respect to the Basis Adjustments associated with
the Original Sale. Members (including TIP, Inc., if applicable) shall be entitled to Tax Benefit
Payments hereunder when such Member(s) (or their respective successors, assigns, heirs, executors,
administrators and legal representatives as permitted in this Agreement) engage(s) in an Exchange.
Section 3.02. No Duplicative Payments. It is intended that the provisions of this
Agreement will not result in duplicative payment of any amount (including interest) required under
this Agreement. It is also intended that the provisions of this Agreement will result in 85% of the
Corporation’s Cumulative Net Realized Tax Benefit, and the Interest Amount thereon, being paid to
the Members pursuant to this Agreement. The provisions of this Agreement shall be construed in the
appropriate manner to achieve these fundamental results.
Section 3.03. Change Notices; Determinations; Repayment Obligation of Applicable
Members.
(a) Receipt of Change Notice. The Corporation shall promptly notify the Applicable
Member(s) within thirty (30) calendar days in the event the Corporation receives a 30-day letter, a
final audit report, a statutory notice of deficiency, or similar written notice from any Taxing
Authority relating to the Tax treatment affecting the calculation of a Cumulative Net Realized Tax
Benefit under Section 3.01(b) for a prior Taxable Year (a “Change Notice”),
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which, if sustained, would result in a reduction in the amount of Tax Benefit Payments which
the Corporation would be required to pay to an Applicable Member(s) for any Taxable Years after and
including the Taxable Year in which the Change of Notice is received, which notice shall include a
copy of the Change Notice. For avoidance of doubt, the Company’s obligation to make Tax Benefit
Payments shall not be suspended upon the delivery of a Change Notice.
(b) Receipt of Determination; Repayment Obligation. If a Determination affecting a
Tax Benefit Schedule is received by the Corporation, the Corporation shall promptly notify the
Applicable Member(s) within thirty (30) calendar days of receipt of such Determination (a
“Determination Notice”), which notice shall include an Amended Schedule incorporating the
results of such Determination and an Advisory Firm Letter with respect to such Amended Schedule.
If the Tax Benefit Payments received by Applicable Member(s) for all prior Taxable Years exceeds
the amount set forth in such Amended Schedule for all such prior Taxable Years (an “Excess Tax
Benefit Payment”), the Applicable Member(s) shall repay to the Corporation, within thirty (30)
calendar days from the receipt of such Determination Notice, an amount equal to (x) the Excess Tax
Benefit Payment, less (y) the Aggregate Reduction Amount (the “Repayment Amount”). For
this purpose, “Aggregate Reduction Amount” means the sum of all Yearly Reduction Amounts.
The term “Yearly Reduction Amount” means, for any Taxable Year, the amount equal to the
product of (y) the portion of the Excess Tax Benefit Payment attributable to such Taxable Year
multiplied by (B) the Assumed Tax Rate applicable to such Taxable Year. No interest shall be paid
by the Applicable Member(s) with respect to the Repayment Amount. The Applicable Member(s) shall
not be liable for any interest and/or penalties to which the Corporation may be subject as a result
of the Determination. Any repayment obligation with respect to an Applicable Member under this
Section 3.03(b) shall be an unsecured obligation and a several liability (and not a joint
liability) of each Applicable Member. If the Tax Benefit Payments reflected in the Amended
Schedule for all prior Taxable Years exceeds the amount received by the Applicable Member(s) for
all such prior Taxable Years, the Corporation shall pay such amounts to the Applicable Members
within thirty (30) days and shall include interest at the Default Rate from the date such amounts
would have otherwise been paid with respect to the Taxable Year(s) which were the subject of the
Determination. The repayment obligation set forth in this Section 3.03(b) shall be the obligation
of the Applicable Member which received the Tax Benefit Payment reduced in the applicable Amended
Schedule.
ARTICLE IV
TERMINATION
Section 4.01. Early Termination and Breach of Agreement.
(a) The Corporation may terminate this Agreement with respect to all of the Units held (or
previously held and Exchanged) by all Members at any time by paying to the Members the Early
Termination Payment; provided, however, that this Agreement shall terminate only upon the receipt
of the Early Termination Payment by all Members, and provided, further, that the Corporation may
withdraw any notice to execute its termination rights under this Section 4.01(a) prior to the time
at which any Early Termination Payment has been paid. Upon payment of the Early Termination
Payments by the Corporation, neither the Members nor the
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Corporation shall have any further payment obligations under this Agreement, other than for
any (x) Tax Benefit Payment agreed by the Corporation acting in good faith and the Applicable
Member to be due and payable but unpaid as of the Early Termination Notice and (y) Tax Benefit
Payment due for the Taxable Year ending with or including the date of the Early Termination Notice
(except to the extent that the amount described in clause (y) is included in the Early Termination
Payment). For the avoidance of doubt, if an Exchange occurs after the Corporation makes the Early
Termination Payments with respect to all Members, the Corporation shall have no obligations under
this Agreement with respect to such Exchange, and its only obligations under this Agreement in such
case shall be its obligations to all Members under Section 4.03(a).
(b) In the event that the Corporation breaches any of its material obligations under this
Agreement, whether as a result of failure to make any payment when due, failure to honor any other
material obligation required hereunder or by operation of law as a result of the rejection of this
Agreement in a case commenced under the Bankruptcy Code or otherwise, then all obligations
hereunder shall be accelerated and such obligations shall be calculated as if an Early Termination
Notice had been delivered on the date of such breach and shall include, but shall not be limited
to, (1) the Early Termination Payment calculated as if an Early Termination Notice had been
delivered on the date of a breach, (2) any Tax Benefit Payment agreed by the Corporation acting in
good faith and any Applicable Member to be due and payable but unpaid as of the date of a breach,
and (3) any Tax Benefit Payment due for the Taxable Year ending with or including the date of a
breach. Notwithstanding the foregoing, in the event that the Corporation breaches this Agreement,
the Members shall be entitled to elect to receive the amounts set forth in clauses (1), (2) and (3)
above or to seek specific performance of the terms hereof. The parties agree that the failure to
make any payment due pursuant to this Agreement within three months of the date such payment is due
shall be deemed to be a breach of a material obligation under this Agreement for all purposes of
this Agreement, and that it shall not be considered to be a breach of a material obligation under
this Agreement to make a payment due pursuant to this Agreement within three months of the date
such payment is due. Any amounts due and payable as described in this Section 4.01(b) shall
include any interest provided thereon pursuant to Section 5.02.
(c) The Corporation, TIP LLC and each of the Members hereby acknowledge that, as of the date
of this Agreement, the aggregate value of the Tax Benefit Payments cannot reasonably be ascertained
for United States federal income Tax or other applicable Tax purposes.
Section 4.02. Early Termination Notice. If the Corporation chooses to exercise its
right of early termination under Section 4.01 above, the Corporation shall deliver to each present
or former Member notice of such intention to exercise such right (“Early Termination
Notice”) and a schedule (the “Early Termination Schedule”) specifying the Corporation’s
intention to exercise such right and showing in reasonable detail the calculation of the Early
Termination Payment. The Early Termination Schedule shall become final and binding on all parties
unless an Applicable Member, within 30 calendar days after receiving the Early Termination
Schedule, provides the Corporation with notice of a material objection to such Schedule made in
good faith (“Material Objection Notice”). If the parties, for any reason, are unable to
successfully resolve the issues raised in such notice within 30 calendar days after receipt by the
Corporation of the Material Objection Notice, the Corporation and the applicable
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Member shall employ the Reconciliation Procedures as described in Section 7.09 of this
Agreement.
Section 4.03. Payment upon Early Termination.
(a) Within three (3) business days after the Early Termination Schedule has become final and
binding, the Corporation shall pay to each Applicable Member an amount equal to the Early
Termination Payment. Such payment shall be made by wire transfer of immediately available funds to
a bank account designated by the Applicable Member.
(b) The “Early Termination Payment” as of the date of the delivery of an Early
Termination Schedule shall equal with respect to the Applicable Member the present value,
discounted at the Early Termination Rate as of such date, of all Tax Benefit Payments that would be
required to be paid by the Corporation to the Applicable Member beginning from the Early
Termination Date and assuming that the Valuation Assumptions are applied.
ARTICLE V
SUBORDINATION AND LATE PAYMENTS
Section 5.01. Subordination. Notwithstanding any other provision of this Agreement to
the contrary, any Tax Benefit Payment or Early Termination Payment required to be made by the
Corporation to the Members under this Agreement (an “Exchange Payment”) shall rank
subordinate and junior in right of payment to any principal, interest or other amounts due and
payable in respect of any obligations in respect of indebtedness for borrowed money of the
Corporation and its Subsidiaries (“Senior Obligations”) and shall rank pari passu with all
current or future unsecured obligations of the Corporation that are not Senior Obligations.
Section 5.02. Late Payments by the Corporation. The amount of all or any portion of
any Exchange Payment not made to any Member when due (without regard to Section 5.01) under the
terms of this Agreement shall be payable together with any interest thereon, computed at the
Default Rate and commencing from the date on which such Exchange Payment was due and payable.
ARTICLE VI
NO DISPUTES; CONSISTENCY; COOPERATION
Section 6.01. Member Participation in the Corporation and TIP LLC’s Tax Matters.
Except as otherwise provided herein, the Corporation shall have full responsibility for, and sole
discretion over, all Tax matters concerning the Corporation and TIP LLC, including without
limitation the preparation, filing or amending of any Tax Return and defending, contesting or
settling any issue pertaining to Taxes. Notwithstanding the foregoing, the Corporation shall notify
each applicable Member of, and keep such applicable Member reasonably informed with respect to the
portion of any audit of the Corporation and TIP LLC by a Taxing Authority the outcome of which is
reasonably expected to affect such applicable Member’s rights and obligations under this Agreement,
and shall provide to such applicable Member reasonable opportunity to provide information and other
input to the Corporation, TIP
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LLC and their respective advisors concerning the conduct of any such portion of such audit;
provided, however, that the Corporation and TIP LLC shall not be required to take any action that
is inconsistent with any provision of the LLC Agreement.
Section 6.02. Consistency. The Corporation and the Applicable Member agree to report
and cause to be reported for all purposes, including U.S. federal, state, local and foreign Tax
purposes and financial reporting purposes, all Tax-related items (including without limitation the
Basis Adjustment and each Tax Benefit Payment) in a manner consistent with that specified by the
Corporation in any Schedule required to be provided by or on behalf of the Corporation under this
Agreement. Any Dispute concerning such advice shall be subject to the terms of Section 7.09. In the
event that an Advisory Firm is replaced with another firm acceptable to the Corporation and the
Applicable Member, such replacement Advisory Firm shall be required to perform its services under
this Agreement using procedures and methodologies consistent with the previous Advisory Firm,
unless (a) otherwise required by law or (b) the Corporation and the Applicable Member agree to the
use of other procedures and methodologies.
Section 6.03. Cooperation. The Applicable Member shall (a) furnish to the Corporation
in a timely manner such information, documents and other materials as the Corporation may
reasonably request for purposes of making any determination or computation necessary or appropriate
under this Agreement, preparing any Tax Return or contesting or defending any audit, examination or
controversy with any Taxing Authority, (b) make itself available to the Corporation and its
representatives to provide explanations of documents and materials and such other information as
the Corporation or its representatives may reasonably request in connection with any of the matters
described in clause (a) above, and (c) reasonably cooperate in connection with any such matter
described in clause (a) above. The Corporation shall reimburse the Applicable Member for any
reasonable third-party costs and expenses incurred pursuant to this Section 6.03.
ARTICLE VII
MISCELLANEOUS
Section 7.01. Notices. All notices, requests, claims, demands and other communications
hereunder shall be in writing and shall be deemed duly given and received (a) on the date of
delivery if delivered personally, or by facsimile upon confirmation of transmission by the sender’s
fax machine if sent on a Business Day (or otherwise on the next Business Day) or (b) on the first
Business Day following the date of dispatch if delivered by a recognized next—day courier service.
All notices hereunder shall be delivered as set forth below, or pursuant to such other instructions
as may be designated in writing by the party to receive such notice:
If
to the Corporation, TIP Inc. or TIP LLC, to:
c/x Xxxxxx Investments, Inc.
0000 Xxxxxxxxx Xxxxx, Xxxxx 000
Xxxxxx, XX 00000
(T) (000) 000-0000
0000 Xxxxxxxxx Xxxxx, Xxxxx 000
Xxxxxx, XX 00000
(T) (000) 000-0000
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Attention: Xxxxx X. XxXxxxx, Esq.
Vice President and General Counsel
Vice President and General Counsel
with a copy to:
Xxxxxx, Xxxxx & Xxxxxxx LLP
0000 Xxxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000
(T) (000) 000-0000
(F) (000) 000-0000
Attention: Xxxxx X. XxXxxxxx, Xx., Esq.
0000 Xxxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000
(T) (000) 000-0000
(F) (000) 000-0000
Attention: Xxxxx X. XxXxxxxx, Xx., Esq.
If
to a Member, to:
The address and facsimile number set forth in the records of TIP LLC.
Any party may change its address or fax number by giving the other party written notice of its
new address or fax number in the manner set forth above.
Section 7.02. Counterparts. This Agreement may be executed in two or more
counterparts (delivery of which may occur via facsimile or as an attachment to an electronic mail
message in “pdf” or similar format), each of which shall be binding as of the date first written
above, and, when delivered, all of which shall constitute one and the same instrument. This
Agreement and any other document required to be delivered pursuant to this Agreement, and any
amendments hereto or thereto, to the extent signed and delivered by means of a facsimile machine or
as an attachment to an electronic mail message in “pdf” or similar format, shall be treated in all
manner and respects as an original agreement or instrument and shall be considered to have the same
binding legal effect as if it were the original signed version thereof delivered in person. At the
request of any party hereto or to any such agreement or instrument, each other party hereto or
thereto shall re-execute original forms thereof and deliver them to all other parties. No party
hereto or to any such agreement or instrument shall raise the use of a facsimile machine or
electronic mail attachment in “pdf” or similar format to deliver a signature or the fact that any
signature or agreement or instrument was transmitted or communicated through the use of a facsimile
machine or as an attachment to an electronic mail message as a defense to the formation of a
contract and each such party forever waives any such defense. A facsimile signature or
electronically scanned copy of a signature shall constitute and shall be deemed to be sufficient
evidence of a party’s execution of this Agreement, without necessity of further proof. Each such
copy shall be deemed an original for purposes of this Section 7.02, and it shall not be necessary
in making proof of this Agreement to produce or account for more than one such counterpart.
Section 7.03. Entire Agreement; No Third Party Beneficiaries. This Agreement
constitutes the entire agreement and supersedes all prior agreements and understandings, both
written and oral, among the parties with respect to the subject matter hereof. This Agreement shall
be binding upon and inure solely to the benefit of each party hereto and their respective
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successors and permitted assigns, and nothing in this Agreement, express or implied, is
intended to or shall confer upon any other Person any right, benefit or remedy of any nature
whatsoever under or by reason of this Agreement.
Section 7.04. Governing Law. This Agreement shall be governed by, and construed in
accordance with, the laws of the Commonwealth of Pennsylvania without giving effect to the
principles of conflicts of laws.
Section 7.05. Severability. If any term or other provision of this Agreement is
invalid, illegal or incapable of being enforced by any law or public policy, all other terms and
provisions of this Agreement shall nevertheless remain in full force and effect so long as the
economic or legal substance of the transactions contemplated hereby is not affected in any manner
materially adverse to any party. Upon such determination that any term or other provision is
invalid, illegal or incapable of being enforced, the parties hereto shall negotiate in good faith
to modify this Agreement so as to effect the original intent of the parties as closely as possible
in an acceptable manner in order that the transactions contemplated hereby are consummated as
originally contemplated to the greatest extent possible.
Section 7.06. Successors; Assignment; Amendments; Waivers.
(a) No Member may assign this Agreement to any person without the prior written consent of the
Corporation; provided, however, that (i) to the extent Units are transferred in accordance with the
terms of the LLC Agreement, the transferring Member shall have the option to assign to the
transferee of such Units the transferring Member’s rights and obligations under this Agreement with
respect to such transferred Units, as long as such transferee has executed and delivered, or, in
connection with such transfer, executes and delivers, a joinder to this Agreement, in form and
substance reasonably satisfactory to the Corporation, agreeing to become a “Member” for all
purposes of this Agreement, except as otherwise provided in such joinder, and (ii) once an Exchange
has occurred, any and all payments that may become payable to a Member pursuant to this Agreement
with respect to the Exchanged Units may be assigned to any Person or Persons as long as any such
Person has executed and delivered, or, in connection with such assignment, executes and delivers, a
joinder to this Agreement, in form and substance reasonably satisfactory to the Corporation,
agreeing to be bound by Section 7.12, acknowledging specifically the terms of the next paragraph of
this Section 7.06, and the obligations of Section 3.03(b). For the avoidance of doubt, if a Person
transfers Units (regardless of whether the transferee is a “Permitted Transferee” under the terms
of the LLC Agreement) but does not assign to the transferee of such Units such Person’s rights, if
any, under this Agreement with respect to such transferred Units, such Person shall be entitled to
receive the Tax Benefit Payments, if any, due hereunder with respect to, including any Tax Benefit
Payments arising in respect of a subsequent Exchange of, such Units and such Person shall continue
to bear the obligations of Section 3.03(b).
Notwithstanding the foregoing provisions of this Section 7.06, no transferee described in
clause (i) of the first sentence of the immediately preceding paragraph (except for an Excepted
Transferee) shall have the right to enforce the provisions of Section 2.04, 4.02, 6.01 or 6.02 of
this Agreement, and no assignee described in clause (ii) of the first sentence of the immediately
preceding paragraph shall have any rights under this Agreement except for the right
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to enforce its right to receive payments under this Agreement. For purposes of clarity, an Excepted
Transferee shall have all rights to enforce the provisions of Section 2.04, 4.02, 6.01 or 6.02 of
this Agreement and all other rights as if such Excepted Transferee were a Member holding Units.
No provision of this Agreement may be amended unless such amendment is approved in writing by
each of the Corporation, TIP LLC and by Members who would be entitled to receive at least
two-thirds of the Early Termination Payments payable to all Members hereunder if the Corporation
had exercised its right of early termination on the date of the most recent Exchange prior to such
amendment (excluding, for purposes of this sentence, all payments made to any Member pursuant to
this Agreement since the date of such most recent Exchange); provided, however,
that no such amendment shall be effective if such amendment would have a disproportionate effect on
the payments certain Members will or may receive under this Agreement, unless such Members
disproportionately effected holding a majority of the Early Termination Payments payable to such
Members hereunder if the Corporation had exercised its right of early termination under Section
4.01(a) on the date of the most recent Exchange prior to such amendment (excluding, for purposes of
this sentence, all payments made to such Members pursuant to this Agreement since the date of such
most recent Exchange) consent in writing to such amendment. No provision of this Agreement may be
waived unless such waiver is in writing and signed by the party against whom the waiver is to be
effective.
Except as otherwise specifically provided herein, all of the terms and provisions of this
Agreement shall be binding upon, shall inure to the benefit of and shall be enforceable by the
parties hereto and their respective successors, assigns, heirs, executors, administrators and legal
representatives. The Corporation shall require and cause any direct or indirect successor (whether
by purchase, merger, consolidation or otherwise) to all or substantially all of the business or
assets of the Corporation, by written agreement, expressly to assume and agree to perform this
Agreement in the same manner and to the same extent that the Corporation would be required to
perform if no such succession had taken place. Notwithstanding anything to the contrary herein, in
the event a Member transfers his Units to a Permitted Transferee (as defined in the LLC Agreement),
excluding any other Member, such Member shall have the right, on behalf of such transferee, to
enforce the provisions of Sections 2.04, 4.02, 6.01 or 6.02 with respect to such transferred Units.
Section 7.07. Titles and Subtitles. The titles of the sections and subsections of
this Agreement are for convenience of reference only and are not to be considered in construing
this Agreement.
Section 7.08. Resolution of Disputes.
(a) Unless otherwise specifically provided in this Agreement, any claim, action, suit or
proceeding seeking to enforce any provision of, or based on any matter arising out of or in
connection with, this Agreement or the transactions contemplated hereby shall be heard and
determined in any Pennsylvania Commonwealth or federal court sitting in the city of Philadelphia,
Pennsylvania, and each of the parties hereto hereby consents to the exclusive jurisdiction of such
courts (and of the appropriate appellate courts therefrom in any such claim, action, suit or
proceeding) and irrevocably waives, to the fullest extent permitted by law, any
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objection which it may now or hereafter have to the laying of venue of any such claim, action,
suit or proceeding in any such court or that any such claim, action, suit or proceeding which is
brought in any such court has been brought in an inconvenient forum.
(b) EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION,
PROCEEDING OR COUNTERCLAIM (WHETHER BASED IN CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR THE ACTIONS OF ANY PARTY IN THE NEGOTIATION, ADMINISTRATION,
PERFORMANCE AND ENFORCEMENT THEREOF.
Section 7.09. Reconciliation. In the event that the Corporation and the applicable
Member are unable to resolve a disagreement with respect to the matters governed by Sections 2.04,
4.02 and 6.02 within the relevant period designated in this Agreement (“Reconciliation
Dispute”), the Reconciliation Dispute shall be submitted for determination to a nationally
recognized expert (the “Expert”) in the particular area of disagreement mutually acceptable
to both parties. The Expert shall be a partner in a nationally recognized accounting firm or a law
firm (other than the Advisory Firm), and the Expert shall not, and the firm that employs the Expert
shall not, have any material relationship with either the Corporation or the applicable Member or
other actual or potential conflict of interest. If the parties are unable to agree on an Expert
within fifteen (15) days of receipt by the respondent(s) of written notice of a Reconciliation
Dispute, the Expert shall be appointed by the International Chamber of Commerce Centre for
Expertise. The Expert shall resolve any matter relating to the Exchange Basis Schedule or an
amendment thereto or the Early Termination Schedule or an amendment thereto within thirty (30)
calendar days and shall resolve any matter relating to a Tax Benefit Schedule or an amendment
thereto within fifteen (15) calendar days or as soon thereafter as is reasonably practicable, in
each case after the matter has been submitted to the Expert for resolution. Notwithstanding the
preceding sentence, if the matter is not resolved before any payment that is the subject of a
disagreement would be due (in the absence of such disagreement) or any Tax Return reflecting the
subject of a disagreement is due, the undisputed amount shall be paid on such date and such Tax
Return may be filed as prepared by the Corporation, subject to adjustment or amendment upon
resolution. In the event that this reconciliation provision is utilized, the fees of the Expert
shall be paid in proportion to the manner in which the dispute is resolved, such that, for example,
if the entire dispute is resolved in favor of the Corporation, the applicable Member shall pay all
of the fees, or if the items in dispute are resolved 50% in favor of the Corporation and 50% in
favor of the applicable Member, each of the Corporation and the applicable Member shall pay 50% of
the fees of the Expert. Any dispute as to whether a dispute is a Reconciliation Dispute within the
meaning of this Section 7.09 shall be decided by the Expert. The Expert shall finally determine any
Reconciliation Dispute and the determinations of the Expert pursuant to this Section 7.09 shall be
binding on the Corporation and the applicable Member and may be entered and enforced in any court
having jurisdiction.
Section 7.10. Withholding. The Corporation shall be entitled to deduct and withhold
from any payment payable pursuant to this Agreement such amounts as the Corporation is required to
deduct and withhold with respect to the making of such payment under the Code or any provision of
state, local or foreign Tax law. To the extent that amounts are so withheld and paid over to the
appropriate Taxing Authority by the Corporation, such withheld amounts shall be treated for all
purposes of this Agreement as having been paid to the Applicable Member.
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Section 7.11. Admission of the Corporation into a Consolidated Group; Transfers of
Corporate Assets.
(a) If the Corporation becomes a member of another affiliated or consolidated group of
corporations that files a consolidated income Tax return pursuant to Sections 1501 et seq. of the
Code or any corresponding provisions of state, local or foreign law, then: (i) the provisions of
this Agreement shall be applied with respect to the group as a whole; and (ii) Tax Benefit
Payments, Early Termination Payments and other applicable items hereunder shall be computed with
reference to the consolidated Taxable income of the group as a whole.
(b) If any entity that is obligated to make an Exchange Payment hereunder transfers one or
more assets to a corporation with which such entity does not file a consolidated Tax return
pursuant to Section 1501 of the Code, such entity, for purposes of calculating the amount of any
Exchange Payment (e.g., calculating the gross income of the entity and determining the Realized Tax
Benefit of such entity) due hereunder, shall be treated as having disposed of such asset in a fully
Taxable transaction on the date of such contribution. The consideration deemed to be received by
such entity shall be equal to the fair market value of the contributed asset, plus (i) the amount
of debt to which such asset is subject, in the case of a contribution of an encumbered asset or
(ii) the amount of debt allocated to such asset, in the case of a contribution of a partnership
interest.
Section 7.12. Confidentiality. Each Member and assignee acknowledges and agrees that
the information of the Corporation and of its Affiliates is confidential and, except in the course
of performing any duties as necessary for the Corporation and its Affiliates, as required by law,
self-regulatory agency, stock exchange or legal process or to enforce the terms of this Agreement,
such person shall keep and retain in the strictest confidence and not disclose to any Person any
confidential matters, acquired pursuant to this Agreement, of the Corporation and its Affiliates
and successors, concerning TIP LLC and its Affiliates and successors or the other Members, learned
by the Member heretofore or hereafter. This Section 7.12 shall not apply to (i) any information
that has been made publicly available by the Corporation or any of its Affiliates, becomes public
knowledge (except as a result of an act of such Member in violation of this Agreement) or is
generally known to the business community and (ii) the disclosure of information to the extent
necessary for a Member to prepare and file his or her Tax returns, to respond to any inquiries
regarding the same from any Taxing authority or to prosecute or defend any action, proceeding or
audit by any Taxing authority with respect to such returns. Notwithstanding anything to the
contrary herein, each Member and assignee (and each employee, representative or other agent of such
Member or assignee, as applicable) may disclose to any and all Persons, without limitation of any
kind, the Tax treatment and Tax structure of the Corporation, TIP LLC, the Members and their
Affiliates, and any of their transactions, and all materials of any kind (including opinions or
other Tax analyses) that are provided to the Members relating to such Tax treatment and Tax
structure.
If a Member or assignee commits a breach, or threatens to commit a breach, of any of the
provisions of this Section 7.12, the Corporation shall have the right and remedy to have the
provisions of this Section 7.12 specifically enforced by injunctive relief or otherwise by any
court of competent jurisdiction without the need to post any bond or other security, it being
acknowledged and agreed that any such breach or threatened breach shall cause irreparable
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injury to the Corporation or any of its Subsidiaries or the other Members and the accounts and
funds managed by the Corporation and that money damages alone shall not provide an adequate remedy
to such Persons. Such rights and remedies shall be in addition to, and not in lieu of, any other
rights and remedies available at law or in equity.
Section 7.13. LLC Agreement. This Agreement shall be treated as part of the Amended
and Restated Operating Agreement of TIP LLC as described in Section 761(c) of the Code and Sections
1.704-1(b)(2)(ii)(h) and 1.761-1(c) of the Treasury Regulations.
Section 7.14. Partnerships. The Corporation hereby agrees that, to the extent it
acquires a general partnership interest, managing member interest or similar interest in any Person
after the date hereof, it shall cause such Person to execute and deliver a joinder to this
Agreement and such Person shall be treated as a “partnership” for all purposes of this Agreement.
Section 7.15. Certain Legal Matters. Each Person signing this Agreement (i)
understands and agrees that this Agreement contains legally binding provisions and has certain
financial and tax consequences for Members, (ii) has had the opportunity to consult with an
independent lawyer regarding such provisions and consequences, and (iii) has either consulted such
a lawyer or consciously decided not to consult such a lawyer.
Section 7.16. Further Assurances. Each party shall perform all other acts and execute
and deliver all other documents as may be necessary or appropriate to carry out the purposes and
intent of this Agreement.
[Remainder of Page Intentionally Left Blank]
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IN
WITNESS WHEREOF, the Corporation, TIP Inc., TIP LLC, and each Member have duly executed this Agreement as of
the date first written above.
| XXXXXX INVESTMENTS, INC. |
||||
| By: | ||||
| Name: | Xxxxxx X. Xxxxxx | |||
| Title: | Chairman and Chief Executive Xxxxxxx | |||
| XXXXXX INVESTMENT PARTNERS, LLC By: Xxxxxx Investments, Inc., its managing member |
||||
| By: | ||||
| Name: | Xxxxxx X. Xxxxxx | |||
| Title: | Chairman and Chief Executive Xxxxxxx | |||
| XXXXXX INVESTMENT PARTNERS, INC. |
||||
| By: | ||||
| Name: | Xxxxxx X. Xxxxxx | |||
| Title: | Chairman, Chief Executive Officer and Chief Investment Officer | |||
[Signatures
Continued on the Next Page]
MEMBERS:
| XXXXXX FOUNDERS, L.P. By: Xxxxxx XX, LLC, its general partner |
||||
| By: | ||||
| Name: | Xxxxxx X. Xxxxxx | |||
| Title: | Managing Member of Xxxxxx XX, LLC | |||
| Xxxxx X. Xxxxx | ||||
| Xxxxxx X. XxXxxxx | ||||
| Xxxxx Xxxxxx | ||||
| Xxxxxxx X. XxXxxx | ||||
| Xxxx X. Xxxxxxxx | ||||
| Xxxxx X. Xxxxxxxxx | ||||
| Xxxxxx X. Xxxxx, Xx. | ||||
Signature page to the TRA
EXHIBIT A
JOINDER AGREEMENT
The undersigned, intending to be legally bound, hereby consents to, and agrees to become a
party to and bound by, that certain Tax Receivable Agreement, dated as of
(the “Agreement”), by and among Xxxxxx Investments, Inc., a Pennsylvania corporation (the
“Corporation”), Xxxxxx Investment Partners, Inc., a Pennsylvania corporation, Xxxxxx Investment
Partners, LLC, a Pennsylvania limited liability company, Xxxxxx Founders, L.P., a Pennsylvania
partnership and each of the other parties thereto identified as Members. The undersigned hereby
acknowledges receipt of a copy of the Agreement and hereby acknowledges and agrees to become a
Member for all purposes of the Agreement, including but not limited to, being bound by Sections
2.04, 3.03(b), 4.02, 6.01 and 6.02 and 7.12 of the Agreement, with respect to the Acquired
Interests, and any other Interests the undersigned acquires hereafter. The undersigned has caused
this Joinder Agreement (this “Joinder Agreement”) to be duly executed as of the date written below.
Capitalized terms used and not otherwise defined herein shall have the meanings given such terms
in the Agreement. This Joinder Agreement may be executed in two or more counterparts (delivery of
which may occur via facsimile or as an attachment to an electronic mail message in “pdf” or similar
format), each of which shall be binding as of the dates set forth below, and, when delivered, all
of which shall constitute one and the same instrument. The undersigned authorizes the Corporation
to attach this signature page to the Agreement in order to make the undersigned a party to the
Agreement.
Date: |
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| Address: |
| Acknowledged and Agreed as of | ||||
| XXXXXX INVESTMENTS, INC. | ||||
By: |
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Name:
|
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Title: |
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| XXXXXX INVESTMENT PARTNERS, LLC | ||||
| By: Xxxxxx Investments, Inc., its managing member | ||||
By: |
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Name:
|
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Title: |
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A-1
