Exhibit 10.2
Form of Agreement
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TAX SHARING AGREEMENT
dated as of [________], 1997
by and between
▇▇▇▇▇▇ International, Inc.,
an Indiana corporation
and
New ▇▇▇▇▇▇ International, Inc.,
an Indiana corporation
TABLE OF CONTENTS
Page
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ARTICLE I
DEFINITIONS
.................................................. 2
ARTICLE II
FILING OF TAX RETURNS
Section 2.01 Manner of Filing.................................. 6
Section 2.02 Pre-Distribution Tax Returns...................... 7
Section 2.03 Post-Distribution Tax Returns..................... 9
ARTICLE III
BALANCE SHEET ADJUSTMENTS AND PAYMENT OF TAXES
Section 3.01 Allocation of Tax Liabilities With Respect
to Unfiled Returns for Pre-Distribution
Periods......................................... 10
(a) United States Consolidated Income
Tax for Periods Ended on the
Distribution Date.......................... 10
(b) State and Local Income and Similar
Taxes for Periods Ended on or
Before the Distribution Date for
which the Company is Responsible........... 13
(c) Federal, State and Local Taxes Other
Than Income Taxes for Periods that
Include the Distribution Date for
which the Company is Responsible........... 16
(d) Federal, State and Local Taxes for
which New ▇▇▇▇▇▇ is Responsible............ 18
(e) Foreign Tax Returns.......................... 21
Section 3.02
(a) Change in the Company Filed Returns.......... 21
(b) Changes in New ▇▇▇▇▇▇ Group Member
Filed Returns.............................. 24
(c) Manner of Payment; Miscellaneous............. 27
Section 3.03 Restructuring Taxes............................... 27
Section 3.04 Liability for Taxes with Respect to Post-
Distribution Periods............................ 28
Section 3.05
(a) Carrybacks................................... 29
(b) Payment...................................... 30
Section 3.06 Liabilities....................................... 30
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Section 3.07 Payment........................................... 33
Section 3.08 Breach............................................ 33
ARTICLE IV
INDEMNITY; COOPERATION AND EXCHANGE OF INFORMATION
Section 4.01 Indemnity......................................... 34
Section 4.02 Tax Controversies................................. 35
Section 4.03 Cooperation and Exchange of Information........... 39
ARTICLE V
MISCELLANEOUS
Section 5.01 Expenses.......................................... 42
Section 5.02 Entire Agreement; Termination of Prior
Agreements...................................... 42
Section 5.03 Notices........................................... 43
Section 5.04 Resolution of Disputes............................ 44
Section 5.05 Application to Present and Future
Subsidiaries.................................... 44
Section 5.06 Term.............................................. 45
Section 5.07 Titles and Headings............................... 45
Section 5.08 Legal Enforceability.............................. 45
Section 5.09 Singular and Plural............................... 46
Section 5.10 Governing Law..................................... 46
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TAX SHARING AGREEMENT
Tax Sharing Agreement (the "Agreement"), dated as of [________],
1997, by and between ▇▇▇▇▇▇ International, Inc., an Indiana corporation (the
"Company"), and New ▇▇▇▇▇▇ International, Inc., an Indiana corporation and a
wholly owned subsidiary of the Company ("New ▇▇▇▇▇▇").
WHEREAS, the Board of Directors of the Company has determined it is
appropriate and desirable to enter into the Distribution Agreement (the
"Distribution Agreement") dated as of [________], 1997, by and between the
Company and New ▇▇▇▇▇▇, pursuant to which, among other things, the Company will
distribute to holders of its common stock all the issued and outstanding shares
of common stock of New ▇▇▇▇▇▇ (the "Distribution");
WHEREAS, the Board of Directors of the Company has determined it is
appropriate and desirable to enter into the Combination Agreement, dated as of
November 25, 1996 (the "Combination Agreement"), by and among the Company,
Autoliv AB, a corporation organized under the laws of the Kingdom of Sweden
("Autoliv"), Autoliv, Inc., a Delaware corporation ("New Parent"), and ASP
Merger Sub Inc., a Delaware corporation and a wholly owned subsidiary of New
Parent ("Safety Sub"), pursuant to which, among other things, Safety Sub will be
merged with and into the Company (the "Merger") and New Parent will offer to
acquire all of the outstanding capital stock of Autoliv
pursuant to the Offer (as defined in the Combination Agreement, and, together
with the other transactions contemplated thereby, the "Transactions");
WHEREAS, the Company, on behalf of itself and its present and future
subsidiaries other than the New ▇▇▇▇▇▇ Group (as hereinafter defined) (the
"Company Group"), and New ▇▇▇▇▇▇, on behalf of itself and its present and future
subsidiaries (the "New ▇▇▇▇▇▇ Group"), wish to provide for the allocation
between the Company Group and the New ▇▇▇▇▇▇ Group of all responsibilities,
liabilities and benefits relating to or affecting Taxes (as hereinafter defined)
paid or payable by either of them for all taxable periods, whether beginning
before, on or after the Distribution Date (as hereinafter defined) and to
provide for certain other matters.
NOW, THEREFORE, in consideration of the mutual agreements,
provisions and covenants contained in this Agreement, the parties hereby agree
as follows:
ARTICLE I
DEFINITIONS
Any capitalized terms used but not defined in this Agreement shall
have the meanings ascribed thereto in the Distribution Agreement. As used in
this Agreement, the following terms shall have the following meanings (such
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meanings to be equally applicable to both the singular and the plural forms of
the terms defined):
"Code" means the Internal Revenue Code of 1986, as amended, and
shall include corresponding provisions of any subsequently enacted federal tax
laws.
"Distribution Date" means the date determined by the Company's Board
of Directors as of which the Distribution shall be effected[, which is presently
contemplated to be [ ], 1997.]
"due date" means, with respect to any Tax Return or payment, the
date on which such Tax Return is due to be filed with or such payment is due to
be made to the appropriate governmental authority pursuant to applicable law,
giving effect to any applicable extensions of the time for such filing or
payment.
"Final Determination" shall mean the final resolution of liability
for any Tax for a taxable period, (i) by IRS Form 870 or 870-AD (or any
successor forms thereto), on the date of acceptance by or on behalf of the IRS,
or by a comparable form under the laws of other jurisdictions; except that a
Form 870 or 870-AD or comparable form that reserves (whether by its terms or by
operation of law) the right of the taxpayer to file a claim for refund and/or
the right of the taxing authority to
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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 Tax imposing jurisdiction; or (v)
by any other final disposition, including by reason of the expiration of the
applicable statute of limitations.
"IRS" means the Internal Revenue Service.
"Reasonable Basis" means "reasonable basis" within the meaning of
section 1.6662-7(d) of the Treasury Regulations.
"Restructuring Taxes" means any Taxes resulting from the transfers
of stock and/or assets undertaken to effect the Distribution; including, without
limitation, any Tax imposed pursuant to or as a result of Code Section 311.
"Tax" means any of the Taxes.
"Tax Benefit" means any item of loss, deduction, credit or any other
Tax Item which decreases Taxes paid or payable.
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"Tax Detriment" means any item of income, gain, recapture of credit
or any other Tax Item which increases Taxes paid or payable.
"Tax Item" means any item of income, gain, loss, deduction, credit,
recapture of credit or any other item which increases or decreases Taxes paid or
payable, including an adjustment under Code Section 481 resulting from a change
in accounting method.
"Tax Return" means any return, filing, questionnaire or other
document required to be filed, including requests for extensions of time,
filings made with estimated tax payments, claims for refund and amended returns
that may be filed, for any period with any taxing authority (whether domestic or
foreign) in connection with any Tax or Taxes (whether or not a payment is
required to be made with respect to such filing).
"Taxes" means all forms of taxation, whenever created or imposed,
and whether of the United States or elsewhere, and whether imposed by a local,
municipal, governmental, state, federation or other body, and without limiting
the generality of the foregoing, shall include income, sales, use, ad valorem,
gross receipts, value added, franchise, transfer, recording, withholding,
payroll, employment, excise, occupation, premium and property taxes, together
with any related interest, penalties and additions to any such tax, or
additional amounts imposed by any taxing authority (domestic or foreign) upon
the
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New ▇▇▇▇▇▇ Group, the Company Group or any of their respective members,
divisions, assets or branches.
ARTICLE II
FILING OF TAX RETURNS
Section 2.01. Manner of Filing. All Tax Returns filed after the date
hereof relating to taxable periods beginning prior to the close of business on
the Distribution Date shall be prepared on a basis which is consistent with the
rulings obtained in connection with the Distribution (in the absence of a
controlling change in law or circumstances) and otherwise in accordance with
past practice and shall be filed on a timely basis (including extensions) by the
party responsible for such filing under this Agreement. To the extent that an
inconsistent position would result in a Tax Detriment to the other party and in
the absence of a controlling change in law or circumstances, all Tax Returns
filed after the date hereof relating to taxable periods beginning prior to the
Distribution Date shall be prepared on a basis consistent with the elections,
accounting methods, conventions, and principles of taxation used for the most
recent taxable periods for which Tax Returns involving similar Tax Items have
been filed. Subject to the provisions of this Agreement, all decisions relating
to the preparation of Tax Returns shall be made in the reasonable discretion of
the party responsible under this Agreement for such preparation.
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Section 2.02. Pre-Distribution Tax Returns. All consolidated federal
income Tax Returns which include a member of the Company Group and the New
▇▇▇▇▇▇ Group that are required to be filed for periods beginning before the
Distribution Date ("Pre-Distribution Federal Periods") shall be prepared by New
▇▇▇▇▇▇ and provided to the Company at least twenty days prior to the due date
for such Tax Return. If requested to do so by New ▇▇▇▇▇▇, the Company shall make
consent dividend elections or any other elections provided for under the Code
and, for a newly organized New ▇▇▇▇▇▇ Group member, including, without
limitation, New ▇▇▇▇▇▇, to adopt any permissible accounting method with respect
to the Company's consolidated federal income Tax Return for the Company's
taxable year ending on the Distribution Date; provided, that the Company shall
not be required to make any such election if the Company determines in good
faith that such election would cause a material Tax Detriment or other material
adverse effect to any member of the Company Group.
All state and local income and/or franchise Tax Returns or other Tax
Returns for state and local Taxes measured by income including, without
limitation, the Michigan Single Business Tax, which include a member of the
Company Group and/or the New ▇▇▇▇▇▇ Group that may be or are required to be
filed for periods beginning before the Distribution Date shall be prepared by
New ▇▇▇▇▇▇ and provided to the Company at least
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twenty days prior to the due date for such Tax Return. Notwithstanding the
foregoing, if the corresponding return for the most recent period for which such
a Tax Return was filed was filed by a member of the New ▇▇▇▇▇▇ Group, such New
▇▇▇▇▇▇ Group member shall file such return.
Unless otherwise agreed to by the Company and New ▇▇▇▇▇▇, all
foreign Tax Returns and any other Tax Returns not described elsewhere in this
Section 2.02 which include a member of the New ▇▇▇▇▇▇ Group that are required to
be filed for periods beginning before the Distribution Date shall be prepared by
New ▇▇▇▇▇▇ and provided to the Company at least twenty days prior to the due
date for such Tax Return. Such Tax Return shall be filed by the member of the
Company Group or the New ▇▇▇▇▇▇ Group, as the case may be, who filed the
corresponding Tax Return for the most recent period for which such a Tax Return
has been filed, or, if no such corresponding Tax Return has been filed, by the
appropriate entity in accordance with local law or custom.
Except as otherwise provided in this Section 2.02, the Company shall
consent to and assume responsibility for the filing of each Tax Return described
in this Section 2.02 as prepared by New ▇▇▇▇▇▇, which consent shall not be
withheld unless the Company delivers written notice to New ▇▇▇▇▇▇ that the
Company disagrees with one or more Tax Items (each, a "Disputed Item") in such
Tax Return at least ten days prior to the
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due date for such Tax Return. If, after receiving such notice and prior to such
due date for such Tax Return, New ▇▇▇▇▇▇ delivers to the Company an opinion of
nationally recognized tax counsel to the effect that each of the Disputed Items
has a Reasonable Basis, then the Company shall file such Tax Return as prepared
by New ▇▇▇▇▇▇, and an amended Tax Return shall, if necessary, be filed to report
such Disputed Item as determined pursuant to Section 5.04 of this Agreement.
Notwithstanding the foregoing, if the Company disagrees with the treatment of
any Tax Item as reported on a Tax Return described in this Section 2.02, and
such Tax Item is a Tax Item the liability for which is allocated to the Company
pursuant to Article III hereof (a "Safety Item"), such Safety Item shall be
reported as directed by the Company, provided that the Company shall first
provide New ▇▇▇▇▇▇ with an opinion of counsel to the effect that there is a
Reasonable Basis for the treatment of such Safety Item as directed by the
Company. If New ▇▇▇▇▇▇ and the Company have not agreed to the treatment of a
Safety Item as of the due date of such Tax Return, the Tax Return shall be filed
as prepared by New ▇▇▇▇▇▇, and an amended Tax Return shall, if necessary, be
filed to report such Safety Item as determined pursuant to Section 5.04 of this
Agreement.
Section 2.03. Post-Distribution Tax Returns. All Tax Returns for
periods beginning after the Distribution Date shall be the responsibility of the
New ▇▇▇▇▇▇ Group if such Tax
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Returns relate solely to New ▇▇▇▇▇▇ Businesses, and all other Tax Returns shall
be the responsibility of the Company.
ARTICLE III
BALANCE SHEET ADJUSTMENT
AND PAYMENT OF TAXES
Section 3.01. Allocation of Tax Liabilities With Respect to
Unfiled Returns for Pre-Distribution Periods.
(a) United States Consolidated Income Tax for Periods Ended on the
Distribution Date. Except as otherwise provided in this Section 3.01(a), the
Company shall pay, on a timely basis, all Taxes due with respect to the United
States consolidated income tax liability for Pre-Distribution Federal Periods
("Pre-Distribution Consolidated Federal Tax Liability"). New ▇▇▇▇▇▇ hereby
assumes and agrees to pay on or prior to the due date for payment thereof its
share of the Pre-Distribution Consolidated Federal Tax Liability, which payment
may be made either directly to the IRS by New ▇▇▇▇▇▇ (provided that New ▇▇▇▇▇▇
shall provide the Company with written notice of such payment at least ten
business days prior to the due date of the corresponding Tax Return and provide
proof of such payment within five business days of making such payment) or to
the Company which shall then forward such New ▇▇▇▇▇▇ payment to the IRS together
with its own payment, if any.
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New ▇▇▇▇▇▇'▇ share of the Pre-Distribution Consolidated Federal
Tax Liability for each Pre-Distribution Federal Period shall be
(i) that portion of the total tax liability shown on the Company's
United States consolidated income tax return for such Pre-Distribution Federal
Period, as filed (each, a "Company Pre-Distribution Consolidated Federal
Return"), as would be allocated to New ▇▇▇▇▇▇ under the Company's existing
federal income tax allocation election if: (p) the Company and New ▇▇▇▇▇▇ were
separately incorporated members of the same consolidated group for such
Pre-Distribution Federal Period and all previous taxable periods; (q) the
Company owned and operated the Safety Business during such Pre-Distribution
Federal Period and all previous taxable periods; and (r) New ▇▇▇▇▇▇ owned and
operated the New ▇▇▇▇▇▇ Businesses during such Pre-Distribution Federal Period
and all previous taxable periods;
(ii) reduced by the sum of (x) all amounts paid by New ▇▇▇▇▇▇ after
the Distribution Date with respect to such Pre-Distribution Consolidated Federal
Tax Liability, and (y) an amount equal to New ▇▇▇▇▇▇'▇ share of all estimated
federal income tax payments remitted by the Company to the IRS on or prior to
the Distribution Date with respect to such Pre-Distribution Federal Period. New
▇▇▇▇▇▇'▇ share of all estimated federal income tax payments remitted by the
Company to the IRS on or prior to the Distribution Date with respect to
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such Pre-Distribution Federal Period shall (A) with respect to any such payment
made on or before June 30, 1996, be an amount equal to the product of (r) all
such payments and (s) the relevant New ▇▇▇▇▇▇ Pre-Distribution Federal Tax Ratio
(as defined below) and (B) with respect to any such payment made on or after
July 1, 1996, be equal to the amount of such payments less the amounts taken
into account in determining "cash used in the Safety Business" for purposes of
Section 2.01(c) of the Distribution Agreement. The "New ▇▇▇▇▇▇ Pre-Distribution
Federal Tax Ratio" for any Pre-Distribution Federal Period shall be the ratio of
New ▇▇▇▇▇▇'▇ allocated federal income tax liability for such Pre-Distribution
Federal Period under Section 3.01(a)(i) above to the sum of the total tax
liability of the New ▇▇▇▇▇▇ Group and the Company Group for such
Pre-Distribution Federal Period.
If the calculations made pursuant to paragraphs (i) and (ii) of this
Section 3.01(a) indicate that New ▇▇▇▇▇▇ has either overpaid or underpaid its
share of any such Pre-Distribution Consolidated Federal Tax Liability, then at
the time that the relevant Company Pre-Distribution Consolidated Federal Return
is filed, the Company shall pay New ▇▇▇▇▇▇ the amount of any such overpayment or
New ▇▇▇▇▇▇ shall pay the Company the amount of any such underpayment, the amount
of such overpayment or underpayment, as the case may be, to be equal to the
difference between the amounts calculated pursuant to paragraphs (i) and (ii) of
this Section 3.01(a).
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All calculations and determinations required to be made pursuant to
this Section 3.01(a) shall be made in good faith by New ▇▇▇▇▇▇ and shall be
subject to the Company's approval, which approval shall not be withheld unless
the Company in good faith reasonably disputes any such calculation or
determination, in which case any payments shall nevertheless be made in
accordance with New ▇▇▇▇▇▇'▇ calculations and determinations, subject to
subsequent adjustment in accordance with the provisions of Section 5.04 of this
Agreement.
(b) State and Local Income and Similar Taxes for Periods Ended on or
Before the Distribution Date for which the Company is Responsible. Except as
otherwise provided in this Section 3.01(b), the Company shall pay, on a timely
basis, all state and local income taxes, and other Taxes the calculations of
which are based upon income, including, without limitation, the Michigan Single
Business Tax, with respect to taxable periods ending on or before the
Distribution Date ("Pre-Distribution State or Local Taxable Periods") for those
Tax Returns with respect to which it has filing responsibility pursuant to
Section 2.02 of this Agreement (each such Tax being individually referred to as
a "Pre-Distribution State or Local Income Tax"). New ▇▇▇▇▇▇ hereby assumes and
agrees to pay on or prior to the due date thereof its share of each
Pre-Distribution State or Local Income Tax, which payment may be made either
directly to the appropriate taxing authority by New
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▇▇▇▇▇▇ (provided that New ▇▇▇▇▇▇ shall provide the Company with written notice
of such payment at least ten business days prior to the due date of the
corresponding Tax Return and provide proof of such payment within five business
days of making such payment) or to the Company which shall then forward such New
▇▇▇▇▇▇ payment to the appropriate taxing authority together with its own
payment, if any. For each Pre-Distribution State or Local Taxable Period, New
▇▇▇▇▇▇'▇ share of each Pre-Distribution State or Local Income Tax shall be
(i) that portion of each such Tax as shown on the applicable Tax
Return, as filed, as the ratio (referred to as the "New ▇▇▇▇▇▇ State or Local
Income Tax Ratio"), of the aggregate Pre-Distribution State or Local Income Tax
liability of the New ▇▇▇▇▇▇ Group with respect to such Pre-Distribution State or
Local Taxable Period (determined on a separate return basis as if the corporate
separation contemplated by the Distribution Agreement had been effected on the
first day of each relevant taxable period), bears to the sum of the applicable
Pre-Distribution State or Local Income Tax liability of the New ▇▇▇▇▇▇ Group and
the Company Group (each determined on a separate return basis as if the
corporate separation contemplated by the Distribution Agreement had been the
first day of each relevant taxable period);
(ii) reduced by the sum of (x) all amounts paid by New ▇▇▇▇▇▇ after
the Distribution Date with respect to such
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Pre-Distribution State or Local Income Tax and (y) an amount equal to New
▇▇▇▇▇▇'▇ share of all estimated tax payments remitted by the Company to the
relevant taxing authority on or prior to the Distribution Date with respect to
each such Pre-Distribution State or Local Income Tax. New ▇▇▇▇▇▇'▇ share of each
such estimated tax payment remitted by the Company to the relevant taxing
authority on or before the Distribution Date shall (A) with respect to any such
payment made on or before June 30, 1996, be an amount equal to the product of
(r) such payment and (s) the applicable New ▇▇▇▇▇▇ Pre-Distribution State or
Local Income Tax Ratio and (B) with respect to any such payment made on or after
July 1, 1996, be equal to the amount of such payments less the amounts taken
into account in determining "cash used in the Safety Business" for purposes of
Section 2.01(c) of the Distribution Agreement.
With respect to each Pre-Distribution State or Local Income Tax, if
the calculations made pursuant to paragraphs (i) and (ii) of this Section
3.01(b) indicate that New ▇▇▇▇▇▇ has either overpaid or underpaid its share of
such liability, then not later than 30 days after the actual filing date, the
Company shall pay New ▇▇▇▇▇▇ the amount of any such overpayment or New ▇▇▇▇▇▇
shall pay the Company the amount of any such underpayment, the amount of such
overpayment or underpayment, as the case may be, to be equal to the difference
between the amounts calculated pursuant to paragraphs (i) and (ii) of this
Section 3.01(b).
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All calculations and determinations required to be made pursuant to
this Section 3.01(b) shall be made in good faith by New ▇▇▇▇▇▇ and shall be
subject to the Company's approval, which approval shall not be withheld unless
the Company in good faith reasonably disputes any such calculation or
determination, in which case any payments shall nevertheless be made in
accordance with New ▇▇▇▇▇▇'▇ calculations and determinations, subject to
subsequent adjustment in accordance with the provisions of Section 5.04 of this
Agreement.
(c) Federal, State and Local Taxes Other Than Income Taxes for
Periods that Include the Distribution Date for which the Company is Responsible.
Except as otherwise provided in this Section 3.01(c), the Company shall pay, on
a timely basis, all federal, state and local Taxes not dealt with in either
Section 3.01(a) or 3.01(b), with respect to all Tax Returns due after the
Distribution Date that include any period ending on or before the Distribution
Date with respect to which it has filing responsibility pursuant to Section 2.02
of this Agreement (each such Tax being individually referred to as an "1997
Other Tax"). New ▇▇▇▇▇▇ hereby assumes and agrees to pay prior to the due date
thereof its share of each 1997 Other Tax, which payment may be made either
directly to the appropriate taxing authority by New ▇▇▇▇▇▇ (provided that New
▇▇▇▇▇▇ shall provide the Company with written notice of such payment at least
ten business days prior to the due date of the corresponding Tax
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Return and provide proof of such payment within five business days of making
such payment) or to the Company which shall then forward such New ▇▇▇▇▇▇ payment
to the appropriate taxing authority together with its own payment, if any. New
▇▇▇▇▇▇'▇ share of each 1997 Other Tax shall be
(i) that portion of each such Tax as shown on the applicable Tax
Return, as filed, as the ratio (referred to as the "New ▇▇▇▇▇▇ 1997 Other Tax
Ratio") of the applicable 1997 Other Tax liability of the New ▇▇▇▇▇▇ Group
(determined on a separate return basis as if the corporate separation
contemplated by the Distribution Agreement had been effected July 1, 1996),
bears to the sum of the applicable 1997 Other Tax liability of the New ▇▇▇▇▇▇
Group and the Company Group (each determined on a separate return basis as if
the corporate separation contemplated by the Distribution Agreement had been
effected July 1, 1996);
(ii) reduced by the sum of (x) all amounts paid by New ▇▇▇▇▇▇ after
the Distribution Date with respect to such 1997 Other Tax and (y) an amount
equal to New ▇▇▇▇▇▇'▇ share of all estimated or other similar payments remitted
by the Company to the relevant taxing authority on or prior to the Distribution
Date with respect to each such 1997 Other Tax. New ▇▇▇▇▇▇'▇ share of each such
estimated or other similar payment remitted by the Company on or before the
Distribution Date
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shall be an amount equal to the product of (r) such payments and (s) the
applicable New ▇▇▇▇▇▇ 1997 Other Tax Ratio.
With respect to each 1997 Other Tax, if the calculations made
pursuant to paragraphs (i) and (ii) of this Section 3.01(c) indicate that New
▇▇▇▇▇▇ has either overpaid or underpaid its share of such liability, then, not
later than 30 days after the actual filing date, the Company shall pay New
▇▇▇▇▇▇ the amount of such overpayment or New ▇▇▇▇▇▇ shall pay the Company the
amount of any such underpayment, the amount of such overpayment or underpayment,
as the case may be, to be equal to the difference between the amounts calculated
pursuant to paragraphs (i) and (ii) of this Section 3.01(c).
All calculations and determinations required to be made pursuant to
this Section 3.01(c) shall be made in good faith by New ▇▇▇▇▇▇ and shall be
subject to the Company's approval, which approval shall not be withheld unless
the Company in good faith reasonably disputes any such calculation or
determination, in which case any payments shall nevertheless be made in
accordance with New ▇▇▇▇▇▇'▇ calculations and determinations, subject to
subsequent adjustment in accordance with the provisions of Section 5.04 of this
Agreement.
(d) Federal, State and Local Taxes for which New ▇▇▇▇▇▇ is
Responsible. New ▇▇▇▇▇▇ or a member of the New ▇▇▇▇▇▇ Group, as the case may be,
shall pay, on a timely basis,
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all federal, state and local Taxes with respect to all Tax Returns due after the
Distribution Date with respect to periods ending on or before the Distribution
Date for which New ▇▇▇▇▇▇ or any member of the New ▇▇▇▇▇▇ Group has filing
responsibility pursuant to Section 2.02 of this Agreement (each such Tax being
individually referred to as a "New ▇▇▇▇▇▇ 2.02 Tax"). The Company hereby assumes
and agrees to pay prior to the due date thereof its share of each New ▇▇▇▇▇▇
2.02 Tax, which payment may be made either directly to the appropriate taxing
authority by the Company (provided that the Company shall provide New ▇▇▇▇▇▇
with written notice of such payment at least ten business days prior to the due
date of the corresponding Tax Return and provide proof of such payment within
five business days of making such payment) or to New ▇▇▇▇▇▇ which shall then
forward such Company payment to the appropriate taxing authority together with
its own payment, if any. The Company's share of each New ▇▇▇▇▇▇ 2.02 Tax shall
be
(i) that portion of each such Tax as shown on the applicable Tax
Return (other than any amended Tax Return), as filed, as the ratio (referred to
as the "Company 2.02 Ratio") of the applicable New ▇▇▇▇▇▇ 2.02 Tax liability of
the Company Group (determined on a separate return basis as if the corporate
separation contemplated by the Distribution Agreement had been effected July 1,
1996), bears to the sum of the applicable New ▇▇▇▇▇▇ 2.02 Tax liability of the
Company Group and the New ▇▇▇▇▇▇ Group (each determined on a separate return
basis as if
-19-
the corporate separation contemplated by the Distribution Agreement had been
effected July 1, 1996);
(ii) reduced by the sum of (x) all amounts paid by the Company after
the Distribution Date with respect to such New ▇▇▇▇▇▇ 2.02 Tax and (y) an amount
equal to the Company's share of all estimated or other similar payments remitted
by the Company on or prior to the Distribution Date, with respect to each such
New ▇▇▇▇▇▇ 2.02 Tax. The Company's share of each such estimated or other similar
payment remitted by the Company on or before the Distribution Date shall be an
amount equal to the product of (r) such payments and (s) the applicable Company
2.02 Ratio.
With respect to each New ▇▇▇▇▇▇ 2.02 Tax, if the calculations made
pursuant to paragraphs (i) and (ii) of this Section 3.01(d) indicate that the
Company has either overpaid or underpaid its share of such liability, then not
later than 30 days after the actual filing date, New ▇▇▇▇▇▇ shall pay the
Company the amount of any such overpayment or the Company shall pay New ▇▇▇▇▇▇
the amount of such underpayment, the amount of such overpayment or underpayment,
as the case may be, to be equal to the difference between the amounts calculated
pursuant to paragraphs (i) and (ii) of this Section 3.01(d).
All calculations and determinations required to be made pursuant to
this Section 3.01(d) shall be made in good
-20-
faith by New ▇▇▇▇▇▇ and shall be subject to the Company's approval, which
approval shall not be withheld unless the Company in good faith reasonably
disputes any such calculation or determination, in which case any payments shall
nevertheless be made in accordance with New ▇▇▇▇▇▇'▇ calculations and
determinations, subject to subsequent adjustment in accordance with the
provisions of Section 5.04 of this Agreement.
(e) Foreign Tax Returns. The New ▇▇▇▇▇▇ Group shall be responsible
for the filing of all foreign Tax Returns that are due with respect to periods
ending on or before the Distribution Date and for the payment of all Taxes due
or payable in connection therewith.
Section 3.02. (a) Change in the Company Filed Returns. If as a
result of any audit, amendment or other change in a Tax Return as filed by the
Company or any of the Automotive Safety Businesses with respect to any period
ending on or before the Distribution Date, any Tax Benefit or Tax Detriment is
changed (a "Change"), then:
(i) If in connection with any such Change, the amount of the Tax
Detriments generated by or attributable to New ▇▇▇▇▇▇ Businesses with respect to
the taxable period to which such return relates ("New ▇▇▇▇▇▇ Business Tax
Detriments") exceeds the amount of Tax Benefits generated by or attributable to
New ▇▇▇▇▇▇ Businesses with respect to such taxable period ("New ▇▇▇▇▇▇ Business
Tax Benefits"), New ▇▇▇▇▇▇
-21-
hereby assumes and agrees to pay to the appropriate taxing authority (provided
that New ▇▇▇▇▇▇ shall provide the Company with written notice of such payment at
least ten business days prior to the due date of the corresponding Tax Return
and provide proof of such payment within five business days of making such
payment), or to the Company to the extent payment cannot be made directly to
such taxing authority the Company has previously made the payment to such taxing
authority, or no payment is due to the taxing authority, an amount equal to the
product of (x) the amount by which New ▇▇▇▇▇▇ Business Tax Detriments exceed New
▇▇▇▇▇▇ Business Tax Benefits and (y) the actual marginal tax rate applicable
with respect to the relevant Tax Return, with appropriate adjustment to account
for Tax credits generated by or attributable to New ▇▇▇▇▇▇ Businesses included
in such calculation and an amount equal to all interest payable with respect
thereto, which interest shall be calculated as hereinafter set forth. New ▇▇▇▇▇▇
shall pay interest at the rate the taxing jurisdiction imposes upon tax
deficiencies (the "Deficiency Rate") for the relevant periods with respect to
that portion of such tax payment attributable to the lesser of (a) the amount by
which New ▇▇▇▇▇▇ Business Tax Detriments exceed New ▇▇▇▇▇▇ Business Tax
Benefits, and (b) the amount by which New ▇▇▇▇▇▇ Business Tax Detriments (net of
New ▇▇▇▇▇▇ Business Tax Benefits) exceeds Automotive Safety Business Tax
Benefits net of Automotive Safety Business Tax
-22-
Detriments, each as defined below. New ▇▇▇▇▇▇ shall pay interest on the balance,
if any, of such tax payment (the "Balance") in an amount equal to one-half of
the sum of (x) the interest the taxing jurisdiction would have paid with respect
to the Balance had the Balance been a refund from the taxing jurisdiction, and
(y) the interest that New ▇▇▇▇▇▇ would have paid to the taxing authority with
respect to the tax deficiency represented by the Balance, in each case, for the
relevant periods (the "Blended Rate").
(ii) If in connection with any such Change, the New ▇▇▇▇▇▇ Business
Tax Benefits exceed the New ▇▇▇▇▇▇ Business Tax Detriments, the Company shall
pay or cause to be paid to New ▇▇▇▇▇▇ the product of (x) the amount by which New
▇▇▇▇▇▇ Business Tax Benefits exceed New ▇▇▇▇▇▇ Business Tax Detriments and (y)
the actual marginal Tax rate applicable with respect to the relevant Tax Return,
with appropriate adjustment to account for Tax credits generated by or
attributable to New ▇▇▇▇▇▇ Businesses included in such calculation plus a
payment equal to any interest received by the Company, acting as agent for New
▇▇▇▇▇▇ with respect to such amount. If, however, the refund of tax, exclusive of
interest, received by the Company as New ▇▇▇▇▇▇'▇ agent is less than the amount
due New ▇▇▇▇▇▇ pursuant to this Section 3.02(a)(ii), the Company shall also pay
to New ▇▇▇▇▇▇ interest on the additional tax amount (the "Excess") in an amount
equal to one-half of the sum of (x) the interest the taxing jurisdiction would
have paid to the Company with respect
-23-
to the Excess had the Excess been refunded by the taxing jurisdiction, and (y)
the interest the Company would have paid to the taxing jurisdiction with respect
to the Excess had the Excess been a deficiency due from the Company to such
jurisdiction, in each case, for the relevant periods.
(b) Changes in New ▇▇▇▇▇▇ Group Member Filed Returns. If as a result
of any Change in any Tax Return as filed by any member of the New ▇▇▇▇▇▇
Businesses with respect to any period ending on or before the Distribution Date,
any Tax Benefit or Tax Detriment is changed, then:
(i) If in connection with any such Change, the amount of the Tax
Detriments generated by or attributable to Automotive Safety Businesses with
respect to the taxable period to which such return relates ("Automotive Safety
Business Tax Detriments") exceeds the amount of Tax Benefits generated by or
attributable to Automotive Safety Businesses with respect to such taxable period
("Automotive Safety Business Tax Benefits"), the Company shall pay to the
appropriate New ▇▇▇▇▇▇ Business or to the appropriate taxing authority (provided
that the Company shall provide New ▇▇▇▇▇▇ with written notice of such payment at
least ten business days prior to the due date of the corresponding Tax Return
and provide proof of such payment within five business days of making such
payment) an amount equal to the product of (x) the amount by which Automotive
Safety Business Tax Detriments exceed Automotive Safety
-24-
Business Tax Benefits and (y) the actual marginal Tax rate applicable with
respect to the relevant Tax Return, with appropriate adjustment to account for
Tax credits generated by or attributable to the Safety Business included in such
calculation and an amount equal to all interest payable with respect thereto,
which interest shall be calculated as hereinafter set forth, any such payment to
be reduced to the extent it would otherwise duplicate any Tax refund received by
New ▇▇▇▇▇▇. The Company shall pay interest at the Deficiency Rate for the
relevant periods with respect to that portion of such tax payment attributable
to the lesser of (a) the amount by which the Automotive Safety Business Tax
Detriments exceed the Automotive Safety Business Tax Benefits, and (b) the
amount by which the Automotive Safety Business Tax Detriments (net of the
Automotive Safety Business Tax Benefits) exceeds New ▇▇▇▇▇▇ Business Tax
Benefits (net of New ▇▇▇▇▇▇ Business Tax Detriments). The Company shall pay
interest on the balance, if any, of such tax payment (the "Company Balance") in
an amount equal to one-half of the sum of (x) the interest the taxing
jurisdiction would have paid with respect to the Company Balance had the Company
Balance been a refund from the taxing jurisdiction, and (y) the interest that
the Company would have paid to the taxing authority with respect to the tax
deficiency represented by the Company Balance, in each case, for the relevant
periods (the "Company Blended Rate").
-25-
(ii) If in connection with any such Change, the Automotive Safety
Business Tax Benefits exceed the Automotive Safety Business Tax Detriments, the
appropriate New ▇▇▇▇▇▇ Business shall pay to the Company the product of (x) the
amount by which Automotive Safety Business Tax Benefits exceed Automotive Safety
Business Tax Detriments and (y) the actual marginal Tax rate applicable with
respect to the relevant Tax Return, with appropriate adjustment for Tax credits
generated by or attributable to the Safety Business included in such
calculation, such payment to be reduced to the extent it would otherwise
duplicate any Tax refund received by the Company directly from a taxing
authority plus a payment equal to any interest received by New ▇▇▇▇▇▇, acting as
agent for the Company with respect to such amount. If, however, the refund of
tax, exclusive of interest, received by New ▇▇▇▇▇▇ as the Company's agent is
less than the amount due the Company pursuant to this Section 3.02(a)(ii), New
▇▇▇▇▇▇ shall also pay to the Company interest on the additional tax amount (the
"Company Excess") in an amount equal to one-half of the sum of (x) the interest
the taxing jurisdiction would have paid New ▇▇▇▇▇▇ with respect to the Company
Excess had the Company Excess been refunded by the taxing jurisdiction, and (y)
the interest New ▇▇▇▇▇▇ would have paid to the taxing jurisdiction with respect
to the Company Excess had the Company Excess been a deficiency due from New
▇▇▇▇▇▇ to such jurisdiction, in each case, for the relevant periods.
-26-
(c) Manner of Payment; Miscellaneous. Any payment required to be
made pursuant to this Section 3.02 with respect to any Tax Return shall be made
by the party obligated to make such payment at such time as such party shall
reasonably determine and direct.
Section 3.03. Restructuring Taxes. (a) (i) Notwithstanding any other
provision of this Agreement to the contrary, and except as otherwise provided in
this Section 3.03(a) or in Section 9.03 of the Distribution Agreement, New
▇▇▇▇▇▇ shall pay or cause to be paid, and shall fully indemnify and hold
harmless the Company from and against, all Restructuring Taxes, including all
liability, costs and expenses associated with claims with respect to such
Restructuring Taxes asserted by third parties against any member of the Company
Group. New ▇▇▇▇▇▇ hereby assumes and agrees to pay prior to the due date thereof
all such Restructuring Taxes, which payment may be made either directly to the
appropriate taxing authority by New ▇▇▇▇▇▇ (provided that New ▇▇▇▇▇▇ shall
provide the Company with written notice of such payment at least ten business
days prior to the due date of the corresponding Tax Return and provide proof of
such payment within five business days of making such payment) or to the Company
which shall then forward such New ▇▇▇▇▇▇ payment to the appropriate taxing
authority.
(ii) Anything in this Section 3.03(a) to the contrary
notwithstanding, Section 3.03(a) hereof shall not apply
-27-
to any Restructuring Taxes to the extent that all or any portion of such
Restructuring Taxes would not have resulted but for an act or omission of the
Company or any of its affiliates, a misrepresentation on the part of the Company
made in connection with the opinions of counsel described in Section 6.03 of the
Distribution Agreement, or any other post Distribution Date transaction
involving either the stock or assets of the Company or any of its affiliates.
(b) If the Company is otherwise required to recognize gain pursuant
to Code Section 311 with respect to the Distribution, then, to the extent
permitted by law or regulation, the Company, if so requested by New ▇▇▇▇▇▇,
shall elect pursuant to Code Section 336(e) to treat the Distribution as a
disposition of all the assets of New ▇▇▇▇▇▇; provided, that the Company shall
not be required to make any such election if the Company determines in good
faith that such election would cause a material Tax Detriment or other material
adverse effect to any member of the Company Group.
Section 3.04. Liability for Taxes with Respect to Post-Distribution
Periods. Unless otherwise provided in this Agreement, the Company Group shall
pay all Taxes and shall be entitled to receive and retain all refunds of Taxes
with respect to periods beginning after the Distribution Date which are
attributable to Automotive Safety Businesses. Unless otherwise provided in this
Agreement, the New ▇▇▇▇▇▇ Group shall
-28-
pay all Taxes and shall be entitled to receive and retain all refunds of Taxes
with respect to periods beginning after the Distribution Date which are
attributable to New ▇▇▇▇▇▇ Businesses.
Section 3.05. (a) Carrybacks. Except as provided in this Section
3.05, if the consolidated federal income taxes of the Company Group are reduced
for a taxable period ending on or before the Distribution Date (a "Company Tax
Reduction"), by reason of (i) a New ▇▇▇▇▇▇ loss or other Tax attribute arising
on or after the Distribution Date (a "New ▇▇▇▇▇▇ Carryback"), and/or (ii) a
Company loss or other Tax attribute arising on or after the Distribution Date (a
"Company Carryback"), then the Company shall pay to New ▇▇▇▇▇▇ an amount equal
to the portion of the Company Tax Reduction which is attributable to the New
▇▇▇▇▇▇ Carryback. If both a New ▇▇▇▇▇▇ Carryback and a Company Carryback exist,
the rules of Treas. Reg. ss. 1.1502-21T(b) shall be applied to determine the
portion of the Company Tax Reduction attributable to the New ▇▇▇▇▇▇ Carryback
and the Company Carryback, respectively. The preceding two sentences shall
apply, mutatis mutandis, to state and local Taxes. The Company shall, and shall
cause each member of the Company Group to, take all steps reasonably necessary
to receive a reduction in Taxes attributable to a New ▇▇▇▇▇▇ Carryback.
Notwithstanding anything in this Section 3.05 to the contrary, the Company shall
not be required to take any action to carry back a New ▇▇▇▇▇▇ Carryback if the
Company determines in good faith that
-29-
carrying back such New ▇▇▇▇▇▇ Carryback would cause a material Tax Detriment or
other material adverse effect to any member of the Company Group.
(b) Payment. Any payment required to be made pursuant to this
Section 3.05 shall be made no later than 10 days after the Company Tax Reduction
is actually received, credited or otherwise utilized by the Company. Any payment
not so made within 10 days shall thereafter bear interest at the Federal
short-term rate established pursuant to Section 6621 of the Code.
Section 3.06. Liabilities.
(a) To the extent that Taxes imposed on a member of the New ▇▇▇▇▇▇
Group are reduced for a taxable period beginning after the Distribution Date
(the "Section 3.06(a) Tax Reduction") by reason of a deduction, loss or credit
with respect to an item for which a member of the Company Group bore the
economic responsibility (such as a foreign tax credit), then New ▇▇▇▇▇▇ shall
pay to the Company an amount equal to the Section 3.06(a) Tax Reduction;
provided, however, that if a New ▇▇▇▇▇▇ Tax Benefit, but for such deduction,
loss or credit, would have resulted in a reduction in Taxes by New ▇▇▇▇▇▇ or any
member of the New ▇▇▇▇▇▇ Group (the "Section 3.06(a) Hypothetical Tax
Reduction") in the same taxable period with respect to which the Section 3.06(a)
Tax Reduction occurred (assuming that such
-30-
New ▇▇▇▇▇▇ Tax Benefit had been utilized to the extent otherwise possible in
such taxable period), New ▇▇▇▇▇▇ shall pay to the Company only an amount equal
to the excess, if any, of the Section 3.06(a) Tax Reduction over the Section
3.06(a) Hypothetical Tax Reduction plus, for the taxable period in which the New
▇▇▇▇▇▇ Tax Benefit, in fact, results in a reduction of Taxes payable by the New
▇▇▇▇▇▇ Group an amount equal to such reduction of Taxes (but such aggregate
payments shall not exceed the amount of the Section 3.06(a) Tax Reduction). New
▇▇▇▇▇▇ shall, and shall cause each member of the New ▇▇▇▇▇▇ Group to, take all
steps reasonably necessary to receive a reduction in Taxes attributable to such
deduction, loss or credit. Within twelve months of the end of each taxable year
New ▇▇▇▇▇▇ shall provide the Company with an accounting setting forth the
utilization of the Section 3.06(a) Tax Reduction and New ▇▇▇▇▇▇ Tax Benefits.
(b) To the extent that Taxes imposed on a member of the Company
Group are reduced for a taxable period (the "Section 3.06(b) Tax Reduction") by
reason of a deduction, loss or credit with respect to an item for which a member
of the New ▇▇▇▇▇▇ Group bore the economic responsibility (such as a foreign tax
credit), then the Company shall pay to New ▇▇▇▇▇▇ an amount equal to the Section
3.06(b) Tax Reduction; provided, however, that if the Company Tax Benefit, but
for such deduction, loss or credit, would have resulted in a reduction in Taxes
by the Company or any member of the Company Group (the
-31-
"Section 3.06(b) Hypothetical Tax Reduction") in the same taxable period with
respect to which the Section 3.06(b) Tax Reduction occurred (assuming that such
Company Tax Benefit had been utilized to the extent otherwise possible in such
taxable period), the Company shall pay to New ▇▇▇▇▇▇ only an amount equal to
such excess, if any, of the Section 3.06(b) Tax Reduction over the Section
3.06(b) Hypothetical Tax Reduction plus, for the taxable period in which the
Company Tax Benefit, in fact, results in a reduction of Taxes payable by the
Company Group an amount equal to such reduction of Taxes (but such aggregate
payments shall not exceed the amount of the Section 3.06(b) Tax Reduction). The
Company shall, and shall cause each member of the Company Group to, take all
steps reasonably necessary to receive a reduction in Taxes attributable to such
deduction, loss or credit. Within twelve months of the end of each taxable year
the Company shall provide New ▇▇▇▇▇▇ with an accounting setting forth the
utilization of the Section 3.06(b) Tax Reduction and the Company Tax Benefits.
(c) Any payment required to be made pursuant to this Section 3.06
shall be made no later than 10 days after the Section 3.06(a) Tax Reduction and
New ▇▇▇▇▇▇ Tax Benefits or the Section 3.06(b) Tax Reduction, as the case may
be, is actually received, credited or otherwise utilized, after giving effect to
the Section 3.06(a) Hypothetical Tax Reduction or the Section 3.06(b)
Hypothetical Tax Reduction and the Company Tax Benefits, as the case may be. Any
payment not so made within
-32-
10 days shall thereafter bear interest at the Federal short-term rate
established pursuant to Section 6621 of the Code.
Section 3.07. Payment. Pursuant to Article V of the Distribution
Agreement and Article III of this Agreement, a member of the Company Group will
or may assume or satisfy, or make an indemnification payment with respect to, a
liability of a member of the New ▇▇▇▇▇▇ Group, and vice versa. If any such
payment or portion thereof by any member of either the New ▇▇▇▇▇▇ Group or the
Company Group pursuant to Article III of this Agreement or Article V of the
Distribution Agreement is characterized by any taxing authority as a Tax
Detriment to a member of the other Group, then the payor shall pay the other
Group an additional amount so the total payments made by the payor equal the
sume of (i) the portion, if any, of such payments that was not characterized by
such taxing authority as a Tax Detriment, plus (ii) x/(l-y) where x is the
amount payable under said Article V of the Distribution Agreement or Article III
of this Agreement, as the case may be, which was characterized by such taxing
authority as a Tax Detriment, without reference to this Section 3.07, and y is
the then highest marginal blended rate reflecting the federal corporate income
Tax and applicable state and local corporate income Taxes.
Section 3.08. Breach. The Company shall indemnify and hold harmless
each member of the New ▇▇▇▇▇▇ Group and New ▇▇▇▇▇▇ shall indemnify and hold
harmless each member of the Company Group from and against any payment required
to be made as a result of the breach by a member of the
-33-
Company Group or the New ▇▇▇▇▇▇ Group, as the case may be, of any obligation
under this Agreement.
ARTICLE IV
INDEMNITY; COOPERATION AND EXCHANGE OF INFORMATION
Section 4.01. Indemnity. (a) Notwithstanding anything to the
contrary in this Agreement, the Company shall indemnify and hold harmless each
member of the New ▇▇▇▇▇▇ Group for, from and against all liability for all Taxes
or portion thereof for the payment of which the Company is responsible pursuant
to Article III of this Agreement.
(b) Notwithstanding anything to the contrary in this Agreement, New
▇▇▇▇▇▇ shall indemnify and hold harmless each member of the Company Group for,
from and against all liability for all Taxes or portion thereof for the payment
of which New ▇▇▇▇▇▇ is responsible pursuant to Article III of this Agreement,
including, without limitation, any liability for Taxes for which New ▇▇▇▇▇▇ is
responsible under Article III and which is imposed upon any member of the
Company Group pursuant to Treasury Regulation Section 1.1502-6 or any similar
provision of state, local or foreign law as a result of any member of the New
▇▇▇▇▇▇ Group or the Company Group being a member of an affiliated, combined,
consolidated, unitary or similar group of corporations.
-34-
Section 4.02. Tax Controversies. (a) Whenever a party hereto
(hereinafter an "Indemnitee") is notified in writing by any taxing authority of
the existence of an issue which could increase the liability for any Tax of the
other party hereto or any member of its Group (hereinafter an "Indemnity
Issue"), the Indemnitee shall promptly give notice to such other party
(hereinafter the "Indemnitor") of such Indemnity Issue. The Indemnitor and its
representatives, at the Indemnitor's expense, shall be entitled to participate
(i) in all conferences, meetings or proceedings with any taxing authority, the
subject matter of which is or includes an Indemnity Issue and (ii) in all
appearances before any court, the subject matter of which is or includes an
Indemnity Issue. The Responsible Party (as defined below) for any Tax Return
with respect to which there is an increase or decrease in liability for any Tax
or with respect to which a payment is required hereunder shall have the right to
decide as between the parties hereto how such matter is to be dealt with and
finally resolved with the appropriate taxing authority and shall control all
audits and similar proceedings. The Responsible Party agrees to cooperate in the
settlement of any Indemnity Issue with the other party and to take such other
party's interests into account. If the Indemnitor is not the Responsible Party,
such cooperation may include permitting the Indemnitor, at the Indemnitor's sole
expense, to litigate or otherwise resolve any Indemnity Issue. Notwithstanding
the foregoing, if the Responsible Party
-35-
is not the Indemnitor, the Responsible Party shall not enter into a final
settlement with the relevant taxing authority with respect to any matter
involving an Indemnity Issue without first presenting the proposed settlement to
the Indemnitor, who shall provide the Responsible Party with written consent to
such settlement within ten days of receipt (which consent may not unreasonably
be withheld), whereupon (or if the Indemnitor fails to respond to such
settlement in writing within such ten day period) the Responsible Party may
enter into such settlement with the relevant taxing authority; provided,
however, that the Indemnitor may withhold its consent to the proposed settlement
by notifying the Responsible Party in writing within such ten day period that
the Indemnitor does not consent to the proposed settlement. If the Indemnitor
provides the Responsible Party with written notification withholding consent in
accordance with the immediately preceding sentence, then:
(1) The Indemnitor shall fully indemnify and hold harmless the
Responsible Party from and against any and all liabilities for Taxes and other
costs and expenses (including, without limitation, reasonable attorneys' and
accountants' fees) over and above the payments that the Responsible Party would
have been liable for if the Responsible Party had entered into the proposed
settlement; and
(2) The Responsible Party shall, in its sole discretion:
-36-
(A) enter into a closing agreement or other final resolution
with respect to such matter with the relevant taxing authority with
respect to all issues other than Indemnity Issues and shall allow the
Indemnitor to continue to defend the Indemnity Issues in proceedings with
the relevant taxing authority; or
(B) settle all issues with respect to such matter with the
relevant taxing authority and/or pay any additional liability for Taxes as
provided for in such settlement, provided, that such settlement shall
permit the Indemnitor to file a claim for refund with respect to any
Indemnity Issues; or
(C) pay to the Indemnitor any additional liability for Taxes
as provided for in such settlement to the extent that such liability
relates to issues other than Indemnity Issues, whereupon the Indemnitor
shall assume control over and responsibility for any proceeding related to
such matter and shall be fully liable for and shall fully indemnify and
hold the Responsible Party harmless from and against any and all liability
for Taxes with respect to such matter.
For purposes of this Agreement, "Responsible Party" shall mean (x) with respect
to a Tax Return that relates solely to the operations of the Safety Business,
the Company, and (y) with
-37-
respect to a Tax Return that relates solely to the operations of the New ▇▇▇▇▇▇
Business, New ▇▇▇▇▇▇. With respect to all Tax Returns other than those described
in clauses (x) and (y), above, the Company and New ▇▇▇▇▇▇ shall attempt to
separate the Indemnity Issues in controversy with respect to such Tax Return
into Indemnity Issues for which the Company shall be the Responsible Party and
Indemnity Issues for which New ▇▇▇▇▇▇ shall be the Responsible Party. If the
Company and New ▇▇▇▇▇▇ do not succeed in separating such Indemnity Issues, the
Company and New ▇▇▇▇▇▇ shall jointly act as Responsible Party with respect to
such Tax Return and shall cooperate reasonably in any audit or similar
proceeding with respect to such Tax Return, provided, that New ▇▇▇▇▇▇ shall
always be the Responsible Party with respect to Indemnity Issues relating to
Restructuring Taxes to the extent that New ▇▇▇▇▇▇ bears indemnification
responsibility with respect thereto pursuant to this Agreement. Neither the
Company nor New ▇▇▇▇▇▇ shall take any action with respect to such Tax Return
without the other's written consent, which consent shall not be unreasonably
withheld, and the Company and New ▇▇▇▇▇▇ shall agree as to any settlement or
compromise of Indemnity Issues on such Tax Return. If the Company and New ▇▇▇▇▇▇
cannot agree as to any action to be taken with respect to any Indemnity Issue on
such Tax Return, the parties shall take such action as shall be determined
pursuant to Section 5.04 with respect to such Indemnity Issue.
-38-
(b) Notwithstanding the foregoing, if the settlement of any
Indemnity Issue would materially increase the other party's liability for Taxes,
the Responsible Party shall not enter into a final settlement without the
consent of the other party, which consent shall not be unreasonably withheld.
(c) The right to participate referred to in Section 4.01(a) shall
include the submission and content of documentation, protests, memoranda of fact
and law and briefs, the conduct of oral arguments or presentations, the
selection of witnesses and the negotiation of stipulations of fact.
Section 4.03. Cooperation and Exchange of Information. (a) New
▇▇▇▇▇▇ shall prepare and submit to the Company on a timely basis blank Tax
Return workpaper packages for the year of the Distribution. The Company shall,
and shall cause each appropriate member of the Company Group to, prepare and
submit to New ▇▇▇▇▇▇ in accordance with the various due dates set forth in the
tax package instructions, all information as New ▇▇▇▇▇▇ shall reasonably request
to enable New ▇▇▇▇▇▇ to prepare the Company Tax Returns for the taxable year
ended the Distribution Date.
(b) The Company, on behalf of itself and each member of the Company
Group, agrees to provide the New ▇▇▇▇▇▇ Group, and New ▇▇▇▇▇▇, on behalf of
itself and each member of the New ▇▇▇▇▇▇ Group, agrees to provide the Company
Group, with such
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cooperation and information as the other shall reasonably request of the other
in connection with the preparation or filing of any Tax Return or claim for
refund contemplated by this Agreement or in conducting any audit or other
proceeding in respect of Taxes. The Company shall file on a timely basis all Tax
Returns prepared by New ▇▇▇▇▇▇ for filing by the Company, in accordance with
this Agreement. Such cooperation and information shall include without
limitation promptly forwarding copies of appropriate notices and forms or other
communications received from or sent to any taxing authority which relate to
Automotive Safety Businesses in the case of the New ▇▇▇▇▇▇ Group and New ▇▇▇▇▇▇
Businesses in the case of the Company Group, and providing copies of all
relevant Tax Returns, together with accompanying schedules and related
workpapers, documents relating to rulings or other determinations by taxing
authorities, including without limitation, foreign taxing authorities, and
records concerning the ownership and Tax basis of property, which either party
may possess. Each party shall make its employees and facilities available on a
mutually convenient basis to provide explanation of any documents or information
provided hereunder.
(c) New ▇▇▇▇▇▇ and the Company agree to retain all Tax Returns,
related schedules and workpapers, and all material records and other documents
relating thereto existing on the date hereof or created through or with respect
to periods ending on or before the Distribution Date, until the expiration of
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the statute of limitations (including extensions) of the taxable years to which
such Tax Returns and other documents relate and until the Final Determination of
any payments which may be required in respect of such years under this
Agreement. The Company and New ▇▇▇▇▇▇ agree to advise each other promptly of any
such Final Determination. Any information obtained under this Agreement shall be
kept confidential, except as may be otherwise necessary in connection with the
filing of Tax Returns or claims for refund or in conducting any audit or other
proceeding.
(d) If any member of the Company Group or the New ▇▇▇▇▇▇ Group, as
the case may be, fails to provide any information requested pursuant to this
Section 4.02 by (i) the dates, specified in subsection (a) hereof or, (ii) with
respect to information not requested pursuant to subsection (a) hereof, within a
reasonable period, as determined in good faith by the party requesting
information, then the requesting party shall have the right to engage a public
accountant of its choice to gather such information. New ▇▇▇▇▇▇ and the Company,
as the case may be, agree upon 24 hours' notice, in the case of a failure to
provide information pursuant to subsection (a) hereof, and otherwise upon 30
days' notice after the expiration of such reasonable period, to permit any such
public accountant full access to all appropriate records or other information in
the possession of any member of the Company Group or the New ▇▇▇▇▇▇ Group, as
the case may be, during reasonable business
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hours, and to reimburse or pay directly all costs and expenses in connection
with the engagement of such public accountant.
ARTICLE V
MISCELLANEOUS
Section 5.01. Expenses. Unless otherwise expressly provided in this
Agreement or in the Distribution Agreement, each party shall bear any and all
expenses that arise from their respective obligations under this Agreement.
Section 5.02. Entire Agreement; Termination of Prior Agreements.
This Agreement constitutes the entire agreement of the parties concerning the
subject matter hereof and supersedes all other agreements, whether or not
written, in respect of any Tax between or among any member or members of the
Company Group, on the one hand, and any member or members of the New ▇▇▇▇▇▇
Group, on the other hand. All such agreements are hereby cancelled and any
rights or obligations existing thereunder are hereby fully and finally settled
without any payment by any party thereto. This Agreement may not be amended
except by an agreement in writing, signed by the parties hereto. Anything in
this Agreement or the Distribution Agreement to the contrary notwithstanding, in
the event and to the extent that there shall be a conflict between the
provisions of this Agreement and the Distribution Agreement, the provisions of
this Agreement shall control.
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Section 5.03. Notices. All notices and other communications
hereunder shall be in writing and shall be delivered by hand or mailed by
registered or certified mail (return receipt requested) to the parties at the
following addresses (or at such other addresses for a party as shall be
specified by like notice) and shall be deemed given on the date on which such
notice is received:
To the Company or any member of the Company Group:
[Autoliv ASP, Inc.]
[3350 Airport Road]
[▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇]
Attention: Corporate Secretary
with a copy to:
Autoliv, Inc.
[Address To Come]
Attention: Corporate Secretary
and
Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇, Esq.
To New ▇▇▇▇▇▇ or any member of the New ▇▇▇▇▇▇ Group:
▇▇▇▇▇▇ International, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Corporate Secretary
with a copy to:
Wachtell, Lipton, ▇▇▇▇▇ & ▇▇▇▇
▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
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Section 5.04. Resolution of Disputes. Any disputes between the
parties with respect to this Agreement that cannot be resolved by good faith
effort by the parties shall be resolved by a "Big Six" public accounting firm or
a law firm satisfactory to the Company and New ▇▇▇▇▇▇, whose determination shall
be final and binding on all parties and whose fees and expenses shall be shared
by each of New ▇▇▇▇▇▇ and the Company in accordance with the final allocation of
the Tax liability in dispute.
Section 5.05. Application to Present and Future Subsidiaries. This
Agreement is being entered into by the Company and New ▇▇▇▇▇▇ on behalf of
themselves and each member of the Company Group and New ▇▇▇▇▇▇ Group,
respectively. This Agreement shall constitute a direct obligation of each such
member and shall be deemed to have been readopted and affirmed on behalf of any
corporation which becomes a member of the Company Group or New ▇▇▇▇▇▇ Group in
the future. The Company and New ▇▇▇▇▇▇ hereby guarantee the performance of all
actions, agreements and obligations provided for under this Agreement of each
member of the Company Group and the New ▇▇▇▇▇▇ Group, respectively. The Company
and New ▇▇▇▇▇▇ shall, upon the written request of the other, cause any of their
respective group members formally to execute this Agreement. This Agreement
shall be binding upon, and shall inure to the benefit of, the successors,
assigns and persons controlling any of the corporations
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bound hereby for so long as such successors, assigns or controlling persons are
members of the Company Group or the New ▇▇▇▇▇▇ Group or their successors and
assigns.
Section 5.06. Term. This Agreement shall commence on the date of
execution indicated below and shall continue in effect until otherwise mutually
agreed to in writing by the Company and New ▇▇▇▇▇▇, or their successors.
Section 5.07. Titles and Headings. Titles and headings to sections
herein are inserted for the convenience of reference only and are not intended
to be a part or to affect the meaning or interpretation of this Agreement.
Section 5.08. Legal Enforceability. Any provision of this Agreement
which is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof. Any such
prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction. Without prejudice
to any rights or remedies otherwise available to any party hereto, each party
hereto acknowledges that damages would be an inadequate remedy for any breach of
the provisions of this Agreement and agrees that the obligations of the parties
hereunder shall be specifically enforceable.
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Section 5.09. Singular and Plural. As used herein, the singular
shall include the plural and vice versa.
Section 5.10. Governing Law. This Agreement shall be governed by the
laws of the State of Delaware.
IN WITNESS WHEREOF, the parties have executed this agreement as of
the [____________] day of [____________], 1996.
▇▇▇▇▇▇ INTERNATIONAL, INC. NEW ▇▇▇▇▇▇ INTERNATIONAL, INC.
By ________________________________ By ___________________________________
