EXHIBIT 2.3
TAX ALLOCATION AND INDEMNITY AGREEMENT
This Tax Allocation and Indemnity Agreement is entered into this ____ day
of September, 1997, by and between BEI Electronics, Inc., a Delaware corporation
("ELECTRONICS"), and __________________, a Delaware corporation
("TECHNOLOGIES").
RECITALS
1. ELECTRONICS is the common parent of the ELECTRONICS Affiliated Group,
and ELECTRONICS and various of its direct and indirect subsidiaries are members
of the ELECTRONICS Unitary Group (as those terms are defined below);
2. On ____________, 1997, ELECTRONICS contributed the stock of BEI Sensors
and Systems Company to TECHNOLOGIES in exchange for all of TECHNOLOGIES capital
stock and TECHNOLOGIES thereby became a member of the ELECTRONICS Affiliated
Group and ELECTRONICS Unitary Group;
3. ELECTRONICS intends to distribute its TECHNOLOGIES stock to its
shareholders in a transaction under Section 355 of the Code, at which time
TECHNOLOGIES would no longer be a member of the ELECTRONICS Affiliated Group and
the ELECTRONICS Unitary Group; and
4. ELECTRONICS, on behalf of itself and the members of the ELECTRONICS
Subgroup, and TECHNOLOGIES, on behalf of itself and the members of the
TECHNOLOGIES Subgroup (as those terms are defined below), intend in this
Agreement to provide for the allocation among themselves of Tax liabilities
arising from tax returns filed after, and Final Determinations made after,
September 27, 1997, for the period that TECHNOLOGIES and the other members of
the TECHNOLOGIES Subgroup are members of the ELECTRONICS Affiliated Group and
the ELECTRONICS Unitary Group; reimbursement for payment of Tax liabilities and
use of Tax benefits arising during that period for tax returns filed after
September 27, 1997; indemnification and procedures for audits and contests with
respect to subsequent adjustments of such Tax liabilities for Final
Determinations made after September 27, 1997; and cooperation in filing of
returns and other matters relating to Taxes;
NOW, THEREFORE, the parties agree as follows:
ARTICLE I
DEFINITIONS
For the purpose of this Agreement the following terms shall have the
following meanings:
1.1 "Affiliated Period" means the period during which TECHNOLOGIES or any
other member of the TECHNOLOGIES Subgroup is a member of the ELECTRONICS
Affiliated Group and/or the ELECTRONICS Unitary Group.
1.2 "Agreement" means this Tax Allocation and Indemnity Agreement, as
amended from time to time.
1.3 "Code" means the Internal Revenue Code of 1986, as amended, or any
similar or successor statute.
1.4 "Combined Return" means any state, local or, if applicable, foreign
income, franchise or similar tax return which has been or will be filed by any
ELECTRONICS Subgroup member or TECHNOLOGIES Subgroup member on a basis which
reports Taxes for two or more members of such subgroup using combined
consolidated or unitary business tax reporting principles.
1.5 "Consolidated Return" means a consolidated U.S. federal income tax
return filed by or on behalf of an affiliated group of corporations within the
meaning of Section 1504 of the Code.
1.6 "Distribution" means a distribution by ELECTRONICS of its capital
stock of TECHNOLOGIES to the shareholders of ELECTRONICS.
1.7 "Final Determination" means, with respect to any liability for Taxes
for any period, (a) a final, unappealable decision by a court of competent
jurisdiction, (b) the expiration of applicable statutes of limitations on
assessment of Taxes or filing of claims for refund, (c) the execution of a
closing agreement under Section 7121 of the Code or the acceptance by the IRS of
an offer in compromise pursuant to Section 7122 of the Code (or similar
agreements with tax authorities entered into under applicable state, local or
foreign tax law), (d) a binding agreement without reservation on IRS Form 870-AD
or a comparable agreement form under the laws of any other taxing jurisdiction
or (e) any other final, irrevocable and unappealable determination of Taxes for
such period.
1.8 "IRS" means the United States Internal Revenue Service or any
successor thereto.
1.9 "ELECTRONICS Affiliated Group" means the affiliated group of
corporations (within the meaning of Section 1504 of the Code) of which
ELECTRONICS is the common parent.
1.10 "ELECTRONICS Subgroup" means ELECTRONICS and all other corporations
included in the ELECTRONICS Affiliated Group and/or the ELECTRONICS Unitary
Group other than TECHNOLOGIES and other corporations included in the
TECHNOLOGIES Subgroup.
1.11 "ELECTRONICS Unitary Group" means any group of corporations including
ELECTRONICS filing or required to file any Combined Return.
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1.12 "Tax" or "Taxes" means any or all taxes, however denominated,
including any interest, penalties or other additions to tax that may become
payable in respect thereof, imposed by any federal, territorial, state, local or
foreign government or any agency or political subdivision of any such
government, which taxes shall include, without limiting the generality of the
foregoing, all income or profits taxes (including but not limited to, federal,
state and foreign income taxes), payroll and employee withholding taxes,
unemployment insurance contributions, social security taxes, sales and use
taxes, ad valorem taxes, excise taxes, franchise taxes, gross receipts taxes,
business license taxes, occupation taxes, real and personal property taxes,
stamp taxes, environmental taxes, transfer taxes, and other governmental charges
or obligations of the same or of a similar nature to any of the foregoing, which
are required to be paid, withheld or collected.
1.13 "TECHNOLOGIES Subgroup" means TECHNOLOGIES and all of its direct and
indirect subsidiaries, whether currently or hereafter existing, which would be
included in an affiliated group of corporations (within the meaning of Section
1504(a) of the Code) and/or combined, consolidated or unitary state or other tax
filing groups of corporations of which TECHNOLOGIES would be the ultimate parent
corporation if TECHNOLOGIES were not a member of the ELECTRONICS Affiliated
Group or ELECTRONICS Unitary Group, respectively.
ARTICLE II
FILING OF RETURNS
2.1 Consolidated Returns and Combined Returns.
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(a) ELECTRONICS shall have exclusive authority and responsibility to
prepare and file Consolidated Returns and Combined Returns on behalf of the
ELECTRONICS Affiliated Group and ELECTRONICS Unitary Group, respectively (as
well as any other documents, statements or elections required to be filed or
included with such Consolidated Returns or Combined Returns), for all taxable
years (or portions thereof) included in the Affiliated Period. ELECTRONICS
shall have sole authority and discretion to determine (i) the manner in which
such Consolidated Returns and Combined Returns (and related documents) shall be
prepared and filed, including without limitation the manner in which any item of
income, gain, loss, deduction or credit included in such returns shall be
reported and the corporations appropriately included in the ELECTRONICS Unitary
Group filing a Combined Return, (ii) whether any extensions of time to file a
Consolidated Return or Combined Return shall be requested, and (iii) the
elections that will be made in such returns on behalf of the ELECTRONICS
Affiliated Group, the ELECTRONICS Unitary Group or any members thereof
(including members of the TECHNOLOGIES Subgroup).
(b) TECHNOLOGIES and each member of the TECHNOLOGIES Subgroup hereby
irrevocably appoint ELECTRONICS as their agent and attorney-in-fact to take such
actions (including the execution of documents on behalf of TECHNOLOGIES or any
other member of the TECHNOLOGIES Subgroup) as may be appropriate to effectuate
the filing of
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such Consolidated Returns and Combined Returns. TECHNOLOGIES and each
TECHNOLOGIES Subgroup member agree to file such consents, elections and other
documents, provide information as requested by ELECTRONICS and otherwise
cooperate with ELECTRONICS as necessary to carry out the purpose of this
section. The TECHNOLOGIES Subgroup shall be allocated and TECHNOLOGIES shall pay
to ELECTRONICS an appropriate share of ELECTRONICS' costs (as reasonably
determined by ELECTRONICS) of preparing and filing returns under this Section
2.1.
(c) ELECTRONICS shall be liable, and shall indemnify TECHNOLOGIES and
each other member of the TECHNOLOGIES Subgroup, for any penalties or other
damages attributable to the failure of ELECTRONICS to make timely filings of
Consolidated Returns or Combined Returns for the Affiliated Period or full and
timely payment of all amounts shown to be due thereon, provided that
TECHNOLOGIES and the TECHNOLOGIES Subgroup members have complied with their
obligations to make Tax payments to, provide information to, and otherwise
cooperate on a timely basis with ELECTRONICS as provided under the provisions of
this Agreement. In the event ELECTRONICS pays penalties or other damages as a
result of TECHNOLOGIES' failure to provide information to, or otherwise
cooperate on a timely basis with ELECTRONICS as provided under the provisions of
this Agreement, TECHNOLOGIES shall indemnify ELECTRONICS and each other member
of the ELECTRONICS Subgroup for such penalties or other damages.
2.2 Other Returns.
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(a) Except as otherwise provided herein or as the parties hereto may
otherwise agree, TECHNOLOGIES shall have exclusive authority and responsibility
to prepare and file all tax returns by or on behalf of it and any member of the
TECHNOLOGIES Subgroup, other than Consolidated Returns and Combined Returns
subject to the provisions of Section 2.1. ELECTRONICS shall provide (and shall
cause each ELECTRONICS Subgroup member and their representatives to provide)
reasonable access to books, records, returns and other information to the extent
necessary to permit TECHNOLOGIES timely to prepare and file such tax returns and
shall otherwise cooperate as reasonably requested by TECHNOLOGIES in connection
with the preparation and filing of such returns.
(b) TECHNOLOGIES shall be liable, and shall indemnify ELECTRONICS and
each other member of the ELECTRONICS Subgroup, for any penalties or other
damages attributable to the failure of TECHNOLOGIES to make timely filings of
tax returns for which it is responsible under this Section 2.2(b) or full and
timely payment of amounts shown to be due thereon, provided that ELECTRONICS and
the ELECTRONICS Subgroup members have complied with their obligations to provide
information and otherwise cooperate as provided hereunder.
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ARTICLE III
ALLOCATION OF LIABILITIES FOR TAXES
3.1 Federal Income Taxes.
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(a) For each taxable year (or portion thereof) in which TECHNOLOGIES
and any other members of the TECHNOLOGIES Subgroup are included in the
ELECTRONICS Affiliated Group, the TECHNOLOGIES Subgroup shall be allocated and
TECHNOLOGIES shall pay to ELECTRONICS the TECHNOLOGIES Subgroup's federal income
Tax liability, if any (including any alternative minimum tax or environment tax,
as determined under this Section 3.1). Such federal Tax liability shall equal
the hypothetical separate return tax liability of such subgroup for such taxable
year, as determined in accordance with the provisions of Treasury Regulations
Section 1.1552-1(a)(2)(ii) (treating references to a "member" therein as
references to the TECHNOLOGIES Subgroup, and including the adjustments under
clauses (a) - (h) thereof) as if the TECHNOLOGIES Subgroup had filed a separate
consolidated federal income tax return for such taxable year. If the
TECHNOLOGIES Subgroup's federal Tax liability as so determined is zero, then
ELECTRONICS shall pay to TECHNOLOGIES the excess, if any, of the ELECTRONICS
Subgroup's federal income Tax liability, determined as if the ELECTRONICS
Subgroup had filed a separate consolidated federal income tax return for such
taxable year under the same principles as set forth in the preceding sentence,
over the actual federal income Tax liability of the ELECTRONICS Affiliated
Group.
(b) For purposes of determining allocation of Tax liabilities and
payment obligations under this Section 3.1, (i) any Taxes attributable to the
transfer by ELECTRONICS to TECHNOLOGIES of the stock of BEI Sensors and Systems
Company in connection with the formation and initial capitalization of
TECHNOLOGIES shall be allocated to the ELECTRONICS Subgroup, (ii) any Taxes
attributable to the Distribution being treated as a taxable event to ELECTRONICS
shall be allocated to the party breaching the "Agreement Regarding Certain
Representations and Covenants", provided if neither party has breached such
agreement, or both parties have breached such agreement, then the Taxes shall be
allocated based on a ratio equal to the market capitalization of the ELECTRONICS
Subgroup to the TECHNOLOGIES Subgroup on the date of the distribution, (iii) any
Taxes attributable to the restoration of an excess loss account or intercompany
gain in connection with the Distribution or other event causing termination of
membership by TECHNOLOGIES and other members of the TECHNOLOGIES Subgroup in the
ELECTRONICS Affiliated Group shall be allocated to whichever subgroup includes
the corporation required to restore such item under applicable Treasury
Regulations pursuant to Section 1502 of the Code, (iv) the benefit of the
graduated Tax rates provided under Section 11 of the Code and any alternative
minimum tax exemption amount under Section 55 of the Code shall be allocated to
the TECHNOLOGIES Subgroup in proportion to the ratio of the TECHNOLOGIES
Subgroup's federal Tax liability to the total federal Tax liability of the
ELECTRONICS Affiliated Group (computed without regard to such benefit), and (v)
ELECTRONICS shall otherwise have discretion to allocate items between the
TECHNOLOGIES Subgroup and the ELECTRONICS Subgroup not otherwise specifically
addressed hereunder in any reasonable manner that it deems appropriate in light
of the provisions and purposes of this Agreement.
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(c) The TECHNOLOGIES Subgroup's federal Tax liability for the taxable
year during or with which the Affiliated Period ends shall be determined in
accordance with the provisions of Treasury Regulations Section 1.1502-76(b) by
closing the books of TECHNOLOGIES and the TECHNOLOGIES Subgroup members as of
the end of the last day of the Affiliated Period and taking into account only
items accruing during the portion of the taxable year ending on such date in
computing such liability. Items shall not be pro-rated in accordance with
clauses (ii) or (iii) of Section 1.1502-76(b)(2) of the treasury regulations
except to the extent ELECTRONICS in its discretion determines that it is
impracticable to allocate particular items in accordance with the preceding
sentence.
(d) The parties acknowledge that the allocation of federal Tax
liability provided for by this Section 3.1 is for purposes of determining the
parties' actual payment obligations to each other with respect to Taxes of the
ELECTRONICS Affiliated Group for the Affiliated Period and not for purposes of
computing earnings and profits pursuant to Section 1552 of the Code, and
recognize that such allocation may differ from the allocation provided by
Section 1552 for earnings and profits purposes.
3.2 State Income and Franchise Taxes.
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(a) For each taxable year (or portion thereof) for which TECHNOLOGIES
and/or any other members of the TECHNOLOGIES Subgroup are included in any
combined Return filed by the ELECTRONICS Unitary Group, the TECHNOLOGIES
Subgroup shall be allocated and TECHNOLOGIES shall pay to ELECTRONICS the state
income Tax liability of TECHNOLOGIES and/or such other TECHNOLOGIES Subgroup
members that are so included, as determined under this Section 3.2. Such state
income Tax liability shall equal the hypothetical state income tax liability of
the TECHNOLOGIES Subgroup members so included, computed as if they filed a
Combined Return (or if only one such member is so included, a separate state
income or franchise tax return) including only such included member(s). To the
extent that the same or analogous federal consolidated reporting principles as
are referred to in Section 3.1 apply for purposes of filing such Combined
Returns, then such principles as are referred to in Section 3.1 apply for
purposes of determining the TECHNOLOGIES Subgroup's state Tax liability in
respect of any Combined Return of the ELECTRONICS Unitary Group. If the state
income Tax liability of the TECHNOLOGIES Subgroup as so determined is zero, then
ELECTRONICS shall pay to TECHNOLOGIES the excess, if any, of the ELECTRONICS
Subgroup's state income Tax liability, determined as if the ELECTRONICS Subgroup
had filed a separate Combined Return not including any TECHNOLOGIES Subgroup
members, over the actual state income Tax liability of the ELECTRONICS Unitary
Group. ELECTRONICS shall have the discretion to make determinations of each
subgroup's liability for Taxes under this Section 3.2(a) in any manner that is
reasonable in light of the applicable state and local Tax reporting principles
and the purposes of this Agreement.
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(b) TECHNOLOGIES shall be responsible for payment of any state Taxes
due from it or any members of the TECHNOLOGIES Subgroup, and ELECTRONICS shall
be responsible for payment of any state Taxes due from ELECTRONICS or any
members of the ELECTRONICS Subgroup, in connection with state income or
franchise tax returns that are not Combined Returns.
3.3 Other Taxes. Any taxes other than Taxes allocated under Sections 3.1
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and 3.2 shall be the responsibility of the party incurring such Tax under
applicable law. Notwithstanding the foregoing, in the event that the applicable
law of any foreign taxing jurisdiction provides for filing of Combined Returns
including one or more members of each of the TECHNOLOGIES Subgroup and the
ELECTRONICS Subgroup, then principles similar to those set forth above in
Section 3.2(a) shall be applied for purposes of determining an appropriate
allocation of Taxes required to be reported with such Combined Returns.
ARTICLE IV
PAYMENT AND INDEMNIFICATION
4.1 Estimated Tax Payments. ELECTRONICS shall have the right to assess
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TECHNOLOGIES for the TECHNOLOGIES Subgroup's share of any estimated Tax payment
liability incurred by the ELECTRONICS Affiliated Group or the ELECTRONICS
Unitary Group for any taxable year (or portion thereof) included in the
Affiliated Period, as determined by ELECTRONICS in its reasonable discretion
applying the principles of Sections 3.1 and 3.2. For this purpose, TECHNOLOGIES'
share of each such estimated Tax payment liability shall not exceed the
ELECTRONICS Affiliated Group's or ELECTRONICS Unitary Group's actual estimated
Tax payment liability for the relevant period and ELECTRONICS shall have no
obligation to make any payment to TECHNOLOGIES. ELECTRONICS shall provide
TECHNOLOGIES with notice of its estimated Tax payment obligation hereunder at
least five days prior to the due date thereof as specified in such notice,
together with a summary of the basis for the calculation of such obligation, and
TECHNOLOGIES shall pay the amount owed no later than such due date. Any payments
made by TECHNOLOGIES under this Section 4.1 shall be credited against the final
Tax payment obligations due for the entire taxable year (or portion thereof)
under Section 4.2.
4.2 Final Tax Payments. As soon as practicable after the end of each
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taxable year (or portion thereof) included in the Affiliated Period, but in no
event later than 30 days prior to the due date (including extensions) for filing
the applicable Consolidated Return or Combined Return therefor, ELECTRONICS
shall prepare and submit to TECHNOLOGIES a statement setting forth the final
amount determined by ELECTRONICS to be due from TECHNOLOGIES or ELECTRONICS, as
the case may be, in accordance with the provisions of Sections 3.1 and 3.2,
taking into account any amounts credited to TECHNOLOGIES under Section 4.1.
Such statement shall include sufficient supporting information to show the basis
for the amount determined. Unless TECHNOLOGIES objects to the amount
determined, such amount shall be paid no later than five days thereafter. In
the event of a dispute, such dispute shall be resolved by the independent
accounting firm then employed by ELECTRONICS.
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4.3 Indemnification. Provided that TECHNOLOGIES has made the payments to
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ELECTRONICS required under this Agreement, ELECTRONICS shall be responsible for,
shall protect, indemnify and hold harmless TECHNOLOGIES and each TECHNOLOGIES
Subgroup member from, and shall be entitled to any refunds of (i) any Taxes
imposed on the ELECTRONICS Affiliated Group or the ELECTRONICS Unitary Group (or
any member thereof), including without limitation any obligation to contribute
to the payment of any such Taxes (other than as provided in this Agreement) and
any liability arising from the several liability for Taxes of an affiliated
group under Treasury Regulations Section 1.1502-6 or any analogous provisions of
other applicable law, and (ii) any other Taxes imposed on any member of the
ELECTRONICS Subgroup. Except as provided in the preceding sentence,
TECHNOLOGIES shall be responsible for, shall protect, indemnify and hold
harmless ELECTRONICS and each ELECTRONICS Subgroup member from, and shall be
entitled to any refunds of, Taxes imposed on the TECHNOLOGIES Subgroup or any
member thereof.
ARTICLE V
SUBSEQUENT ADJUSTMENTS
5.1 Subsequent Adjustments. In the event that a Final Determination
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adjusts any items of income, gain, loss, deduction or credit of the ELECTRONICS
Affiliated Group, the ELECTRONICS Unitary Group or any member thereof for any
taxable year (or portion thereof) included in the Affiliated Period, then the
payment obligations under Article III of this Agreement shall be redetermined in
the following manner: (a) any adjustments related to tax returns filed on or
before September 27, 1997 shall be the responsibility of, or enjoyed by,
TECHNOLOGIES, except to the extent ELECTRONICS' aggregate cumulative liability
under such adjustments exceeds $200,000. In the event ELECTRONICS aggregate
cumulative liability exceeds $200,000, then the payment obligations under
Article III of this Agreement shall be redetermined to reflect such adjustments
and ELECTRONICS shall pay TECHNOLOGIES or TECHNOLOGIES shall pay ELECTRONICS, as
the case may be, the difference between the amounts owed under such section as
so adjusted and the amounts owed as originally determined, together with an
appropriate share of any interest actually due or received in respect of such
adjustment; (b) any adjustments, however, that are a liability attributable to
the carryback of an ELECTRONICS loss or credit shall be allocable to ELECTRONICS
to the extent thereof. Any payment required pursuant to this Article V shall be
made promptly after the occurrence of such Final Determination.
ARTICLE VI
CONTROVERSIES
6.1 Taxes of ELECTRONICS Affiliated Group or Unitary Group. ELECTRONICS
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shall have exclusive authority to represent TECHNOLOGIES and each TECHNOLOGIES
Subgroup member in any audit, examination or other controversy before the IRS or
any other governmental authority or court regarding the Taxes of the ELECTRONICS
Affiliated Group or ELECTRONICS Unitary Group for all taxable years or portions
thereof included in the Affiliated Period. Such authority shall include, but
not be limited to, (a) the exclusive control of any response to any examination
by the IRS or any other taxing authority, and (b) the exclusive
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control of any contest of any issue through a Final Determination, including,
but not limited to whether and in what forum to conduct such contest, the choice
of counsel, and whether and on what basis to settle. ELECTRONICS shall timely
notify TECHNOLOGIES of any controversy relating to Tax items of TECHNOLOGIES or
any other member of the TECHNOLOGIES Subgroup and promptly provide TECHNOLOGIES
with copies of all correspondence relating to such controversy. Subject to
ELECTRONICS' exclusive authority over Tax controversies as provided for herein,
TECHNOLOGIES shall have the right to consult with ELECTRONICS and participate in
the conduct of such controversies to the extent the controversy relates to items
of the TECHNOLOGIES Subgroup.
6.2 Other Taxes. Except as the parties may otherwise agree, each of
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ELECTRONICS and TECHNOLOGIES shall have exclusive authority to represent itself
and its respective subgroup members in any controversies relating to Taxes of
its respective subgroup (or any members thereof), other than Taxes referred to
in Section 6.1.
6.3 Cooperation. ELECTRONICS and TECHNOLOGIES shall cooperate with each
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other, and shall cause their respective subgroup members and representatives
also to cooperate, in the conduct of any controversy relating to Taxes. Such
cooperation shall include, without limitation, (a) execution of powers of
attorney or other documents necessary to enable the party having authority to
control a contest to take all actions desired by such party with respect
thereto, including making elections, filing claims for refund, and receiving
funds, and (b) making available to the other party, during normal business hours
and on reasonable terms, all books, records (including, but not limited to,
workpapers and schedules), information and employees reasonably requested in
connection with such controversy. In the event of any dispute between the
parties, the parties will adhere to Article 4 "Dispute Resolution" of the
"Distribution" agreement.
6.4 Records. ELECTRONICS and TECHNOLOGIES agree that all records,
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including but not limited to, tax returns, supporting schedules, workpapers,
correspondence and other documents within their possession or the possession of
the members of their respective subgroups and relating to Taxes arising during
the Affiliated Period, shall be retained for as long as such records may be
material to the determination of liabilities or refunds of such Taxes and shall
be made reasonably available to the other party upon request during normal
business hours for inspection and copying. Prior to destroying any such
records, the party in possession thereof shall notify the other of such intent
and shall offer to deliver such records to the other.
ARTICLE VII
CARRYBACKS
7.1 Carrybacks. Unless ELECTRONICS in its sole and absolute discretion
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consents thereto, or unless specifically required by law, neither TECHNOLOGIES
nor any member of the TECHNOLOGIES Subgroup shall carry back any losses or
credits arising after the Affiliated Period to a taxable year occurring during
the Affiliated Period, and TECHNOLOGIES and each member of the TECHNOLOGIES
Subgroup shall make any elections and take all such action necessary to avoid
any such carryback. Even if a carryback is required by law, ELECTRONICS
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shall make no payment to TECHNOLOGIES and TECHNOLOGIES shall be entitled to no
refund to the extent that the use of such carryback prevented ELECTRONICS or any
member of the ELECTRONICS Subgroup from using a credit or loss which it would
otherwise use in the year or years to which the TECHNOLOGIES credit or loss is
carried back. In the event that a carryback is not required by law, and
ELECTRONICS, in its sole and absolute discretion, consents to such a carryback,
then ELECTRONICS sole obligation shall be to make reasonable efforts to prepare
and file an amended return based on information supplied to ELECTRONICS by
TECHNOLOGIES and, in the event of the collection of any refund as a result
thereof, to pay to TECHNOLOGIES the amount thereof (including interest received
thereon) attributable to the carryback of such losses and credits. As a
condition precedent to any such action by ELECTRONICS, TECHNOLOGIES shall agree
to indemnify and hold ELECTRONICS harmless with respect to all costs and
expenses incurred in connection therewith and the full amount of any increase in
the ELECTRONICS Affiliated Group Taxes, including interest and penalties,
arising as a result of such amended return.
ARTICLE VIII
MISCELLANEOUS
8.1 Counterparts; Entire Agreement; Corporate Power.
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(a) This Agreement may be executed in one or more counterparts, all of
which shall be considered one and the same agreement, and shall become effective
when one or more counterparts have been signed by each of the parties and
delivered to the other party.
(b) This Agreement contains the entire agreement between the parties
with respect to the subject matter hereof and thereto, supersede all previous
agreements, negotiations, discussions, writings, understandings, commitments and
conversations with respect to such subject matter, and there are no agreements
or understandings between the parties other than those set forth or referred to
herein or therein.
(c) ELECTRONICS represents on behalf of itself and each other member
of the ELECTRONICS Group and TECHNOLOGIES represents on behalf of itself and
each other member of the TECHNOLOGIES Group as follows:
(i) each such person has the requisite corporate or other power
and authority and has taken all corporate or other action necessary in order to
execute and deliver this Agreement to which it is a party and, subject to
receipt of approval of the stockholders of ELECTRONICS of the Distribution, to
consummate the transactions contemplated hereby and thereby; and
(ii) this Agreement to which it is a party has been duly executed
and delivered by it and constitutes a valid and binding agreement of it,
enforceable in accordance with the terms thereof.
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8.2 Governing Law. This Agreement shall be governed by and construed and
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interpreted in accordance with the laws of the State of California, irrespective
of the choice of laws principles of the State of California, as to all matters,
including matters of validity, construction, effect, enforceability, performance
and remedies.
8.3 Assignability. This Agreement shall be binding upon and inure to the
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benefit of the parties hereto and thereto, respectively, and their respective
successors and assigns; provided, however, that no party hereto or thereto may
assign its respective rights or delegate its respective obligations under this
Agreement without the express prior written consent of the other parties hereto
or thereto.
8.4 Third Party Beneficiaries. Except for the indemnification rights
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under this Agreement of any ELECTRONICS indemnitee or TECHNOLOGIES indemnitee in
their respective capacities as such, (a) the provisions of this Agreement are
solely for the benefit of the parties hereto or thereto and are not intended to
confer upon any person except the parties any rights or remedies hereunder, and
(b) there are no third party beneficiaries of this Agreement and this Agreement
shall not provide any third person with any remedy, claim, liability,
reimbursement, claim of action or other right in excess of those existing
without reference to this Agreement. No party hereto shall have any right,
remedy or claim with respect to any provision of this Agreement to the extent
such provision relates solely to the other party hereto.
8.5 Notices. All notices or other communications under this Agreement
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shall be in writing and shall be deemed to be duly given when (a) delivered in
person or (b) deposited in the United States mail or private express mail,
postage prepaid, addressed as follows:
If to ELECTRONICS, to :
If to TECHNOLOGIES, to:
Any party may, by notice to the other party, change the address to which
such notices are to be given.
8.6 Severability. If any provision of this Agreement or the application
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thereof to any person or circumstance is determined by a court of competent
jurisdiction to be invalid, void or unenforceable, the remaining provisions
hereof or thereof, or the application of such provision to persons or
circumstances or in jurisdictions other than those as to which it has been held
invalid or unenforceable, shall remain in full force and effect and shall in no
way be affected, impaired or invalidated thereby, so long as the economic or
legal substance of the transactions contemplated hereby or thereby, as the case
may be, is not affected in any manner adverse to any
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party. Upon such determination, the parties shall negotiate in good faith in an
effort to agree upon such a suitable and equitable provision to effect the
original intent of the parties.
8.7 Force Majeure. No party shall be deemed in default of this Agreement
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to the extent that any delay or failure in the performance of its obligations
under this Agreement results from any cause beyond its reasonable control and
without its fault or negligence, such as acts of God, acts of civil or military
authority, embargoes, epidemics, war, riots, insurrections, fires, explosions,
earthquakes, floods, unusually severe weather conditions, labor problems or
unavailability of materials, or, in the case of computer systems, any failure in
electrical or air conditioning equipment. In the event of any such excused
delay, the time for performance shall be extended for a period equal to the time
lost by reason of the delay.
8.8 Publicity. Prior to the Distribution, each of TECHNOLOGIES and
---------
ELECTRONICS shall consult with the other prior to issuing any press releases or
otherwise making public statements with respect to the Distribution or any of
the other transactions contemplated by this Agreement and prior to making any
filings with any governmental authority with respect thereto.
8.9 Expenses. Except as expressly set forth in this Agreement, whether or
--------
not the Distribution is consummated, all third party fees, costs and expenses
paid or incurred in connection with the Distribution will be allocated to the
parties on an equitable basis.
8.10 Headings. The Article, Section and Paragraph headings contained in
--------
this Agreement are for reference purposes only and shall not affect in any way
the meaning or interpretation of this Agreement.
8.11 Waivers of Default. Waiver by any party of any default by the other
------------------
party of any provision of this Agreement shall not be deemed a waiver by the
waiving party of any subsequent or other default, nor shall it prejudice the
rights of the other party.
8.12 Specific Performance. In the event of any actual or threatened
--------------------
default in, or breach of, any of the terms, conditions and provisions of this
Agreement, the party who is or is to be thereby aggrieved shall have the right
to specific performance and injunctive or other equitable relief of its rights
under this Agreement, in addition to any and all other rights and remedies at
law or in equity, and all such rights and remedies shall be cumulative. The
parties agree that the remedies at law for any breach or threatened breach,
including monetary damages, are inadequate compensation for any loss and that
any defense in any action for specific performance that a remedy at law would be
adequate is waived. Any requirements for the securing or posting of any bond
with such remedy are waived.
8.13 Amendments. No provisions of this Agreement shall be deemed waived,
----------
amended, supplemented or modified by any party, unless such waiver, amendment,
supplement or modification is in writing and signed by the authorized
representative of the party against whom it is sought to enforce such waiver,
amendment, supplement or modification.
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8.14 Words in the singular shall be held to include the plural and vice
versa and words of one gender shall be held to include the other genders as the
context requires. The terms "hereof," "herein," and "herewith" and words of
similar import shall, unless otherwise stated, be construed to refer to this
Agreement as a whole and not to any particular provision of this Agreement.
Article and Section references are to the Sections to this Agreement unless
otherwise specified. The word "including" and words of similar import when used
in this Agreement shall mean "including, without limitation," unless the context
otherwise requires or unless otherwise specified. The word "or" shall not be
exclusive.
IN WITNESS WHEREOF, the parties hereto have caused this Tax Allocation and
Indemnity Agreement to be executed by their duly authorized representatives.
ELECTRONICS
By:____________________________________
Name:__________________________________
Title:___________________________________
TECHNOLOGIES
By:____________________________________
Name:__________________________________
Title:___________________________________
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