EXHIBIT 10.10
[EXECUTION COPY]
TAX SHARING AGREEMENT
BY AND AMONG
CENTEX CORPORATION
AND ITS AFFILIATES
AND
CAVCO INDUSTRIES, INC.
Dated June 30, 2003
This TAX SHARING AGREEMENT (the "Agreement") dated as of June 30, 2003, by
and among Centex Corporation ("Centex"), a Nevada corporation and each Centex
Affiliate (as defined below), and Cavco Industries, Inc. ("Cavco"), a newly
formed Delaware corporation and indirect, wholly owned subsidiary of Centex, is
entered into in connection with the Distribution (as defined below).
RECITALS
WHEREAS, the Centex Board of Directors has determined, subject to certain
conditions, that it is appropriate and desirable to make a pro rata distribution
of one hundred percent (100%) of the stock of Cavco to its common shareholders,
with cash distributed in lieu of any fractional shares of Cavco, on the
Distribution Date, as defined below (the "Public Distribution"); and
WHEREAS, in order to consummate the Public Distribution, it is necessary
and desirable for AAA Holdings, Inc. ("AAA"), a Delaware corporation and
currently the direct parent of Cavco Industries, LLC ("Cavco LLC") to form Cavco
and to then merge Cavco LLC with and into Cavco (the "Merger"); and
WHEREAS, in order to consummate the Public Distribution, it is necessary
and desirable for AAA to make a pro rata distribution of one hundred percent
(100%) of the stock of Cavco to its sole shareholder, Centex Real Estate
Corporation ("CREC") (the "Internal Distribution 1"); and
WHEREAS, in order to consummate the Public Distribution, it is necessary
and desirable for CREC to make a pro rata distribution of one hundred percent
(100%) of the stock of Cavco to its sole shareholder, Centex International, Inc.
("International") (the "Internal Distribution 2"); and
WHEREAS, in order to consummate the Public Distribution, it is necessary
and desirable for International to make a pro rata distribution of one hundred
percent (100%) of the stock of Cavco to its sole shareholder, Centex (the
"Internal Distribution 3"); and
WHEREAS, the Merger is intended to qualify as a reorganization under
section 368(a)(1)(D) of the Internal Revenue Code of 1986, as amended (the
"Code"), and the Public Distribution and Internal Distributions 1 through 3
(collectively the "Internal Distributions") are intended to qualify as tax free
distributions under Code section 355; and
WHEREAS, it is appropriate and desirable to set forth the principles and
responsibilities of the parties to this Agreement regarding the allocation of
Tax (as defined below) and other related liabilities and adjustments with
respect to Taxes, Tax contests and other related Tax matters; and
WHEREAS, to that end, the parties wish to enter into this Tax Sharing
Agreement;
AGREEMENT
NOW, THEREFORE, in consideration of the mutual covenants and promises
contained herein, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:
ARTICLE 1
DEFINITIONS
"Audit" includes any audit, assessment of Taxes, other examination by any
Tax Authority, proceeding, or appeal of such a proceeding relating to Taxes,
whether administrative or judicial.
"Centex Affiliate" means any corporation or other entity directly or
indirectly controlled by Centex, excluding Cavco.
"Centex Group" means the affiliated group of corporations as defined in
Section 1504 (a) of the Code, or similar group of entities as defined under
corresponding provisions of the laws of other jurisdictions, of which Centex is
the common parent, and any corporation or other entity which may be, may have
been or may become a member of such group from time to time, but excluding
Cavco.
"Combined Group" means a group of corporations or other entities that
files a Combined Return.
"Combined Return" means any Tax Return with respect to Non-Federal Taxes
filed on a consolidated, combined (including nexus combination, worldwide
combination, domestic combination, line of business combination or any other
form of combination) or unitary basis wherein Cavco joins in the filing of such
Tax Return (for any taxable period or portion thereof) with Centex or one or
more Centex Affiliates.
"Consolidated Group" means an affiliated group of corporations within the
meaning of Section 1504 (a) of the Code that files a Consolidated Return.
"Consolidated Return" means any Tax Return with respect to Federal Income
Taxes filed on a consolidated basis wherein Cavco joins in the filing of such
Tax Return (for any taxable period or portion thereof) with Centex or one or
more Centex Affiliates.
"Distribution" means the Internal Distributions and/or the Public
Distribution.
"Distribution Date" means the close of business on the date on which the
Public Distribution is effected.
"Federal Income Tax" means any Tax imposed under Subtitle A of the Code
(including the Taxes imposed by Sections 11, 55, 59A, and 1201(a) of the Code),
and any interest, additions to Tax or penalties applicable or related thereto,
and any other income-based United States federal Tax which is hereinafter
imposed upon corporations.
"Federal Tax" means any Tax imposed or required to be withheld by any Tax
Authority of the United States.
"Final Determination" means any of (a) the final resolution of any Tax (or
other matter) for a taxable period, including related interest or penalties,
that, under applicable law, is not subject to further appeal, review or
modification through proceedings or otherwise, including (1) by the expiration
of a statute of limitations or a period for the filing of claims for refunds,
amending Tax Returns, appealing from adverse determinations, or recovering any
refund (including by offset), (2) by a decision, judgment, decree, or other
order by a court of competent jurisdiction, which has become final and
unappealable, (3) by a closing agreement or an accepted offer in compromise
under Section 7121 or 7122 of the Code, or comparable agreements under laws of
other jurisdictions, (4) by execution of an Internal Revenue Service Form 870 or
870AD, or by a comparable form under the laws of other jurisdictions (excluding,
however, with respect to a particular Tax Item for a particular taxable period
any such 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 Tax
Authority to assert a further deficiency with respect to such Tax Item for such
period), or (5) by any allowance of a refund or credit, but only after the
expiration of all periods during which such refund or credit may be recovered
(including by way of offset), or (b) the payment of Tax by any member of the
Consolidated Group or Combined Group with respect to any Tax Item disallowed or
adjusted by a Tax Authority provided that Centex determines that no action
should be taken to recoup such payment.
"Income Taxes" means (a) any Tax based upon, measured by, or calculated
with respect to (1) net income or profits (including any capital gains Tax,
minimum Tax and any Tax on items of Tax preference, but not including sales,
use, real or personal property, gross or net receipts, transfer or similar
Taxes) or (2) multiple bases if one or more of the bases upon which such Tax may
be based, measured by, or calculated with respect to, is described in clause (1)
above, or (b) any U.S. state or local franchise Tax.
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"Interest Accrual Period" has the meaning set forth in Section 6.4 of this
Agreement.
"Non-Federal Combined Tax" means any Non-Federal Tax with respect to which
a Combined Return is filed.
"Non-Federal Separate Tax" means any Non-Federal Tax other than a
Non-Federal Combined Tax.
"Non-Federal Tax" means any Tax other than a Federal Tax.
"Payment Period" has the meaning set forth in Section 5.3 of this
Agreement.
"Post-Distribution Period" means a taxable period beginning after the
Distribution Date.
"Pre-Distribution Period" means a taxable period beginning on or before
the Distribution Date.
"Privilege" means any privilege that may be asserted under applicable law
including, any privilege arising under or relating to the attorney-client
relationship (including the attorney-client and work product privileges), the
accountant-client privilege, and any privilege relating to internal evaluation
processes.
"Restructuring Tax" means any Tax imposed upon Centex or a Centex
Affiliate and reasonable professional fees that are attributable to, or result
from, the failure of the Distribution to qualify under Section 355 of the Code
(including any Tax attributable to the application of Section 355(e) or Section
355(f) of the Code to the Distribution) or corresponding provisions of the laws
of other jurisdictions. Each Tax referred to in the preceding sentence shall be
determined using the highest marginal corporate Tax rate for the relevant
taxable period (or any portion thereof). For the avoidance of doubt,
Restructuring Tax does not include an amount described in this paragraph that is
imposed upon a shareholder of Centex in its capacity as a shareholder of Centex.
"Ruling Documents" means (a) the request for a ruling under Section 355
and various other sections of the Code, filed with the Service on November 5,
2002, together with any supplemental filings or ruling requests or other
materials subsequently submitted on behalf of Centex, its subsidiaries and
shareholders to the Service, the appendices and exhibits thereto, and any
rulings issued by the Service to Centex (or any Centex Affiliate) in connection
with the Distribution or (b) any similar filings submitted to, or rulings issued
by, any other Tax Authority in connection with the Distribution.
"Separate Return" means any Tax Return with respect to Non-Federal
Separate Taxes filed by Centex, Cavco, or any of their respective affiliates.
"Service" means the Internal Revenue Service.
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"Tax" means any charges, fees, levies, imposts, duties, or other
assessments of a similar nature, including income, alternative or add-on
minimum, gross receipts, profits, lease, service, service use, wage, wage
withholding, employment, workers compensation, business occupation, occupation,
premiums, environmental, estimated, excise, employment, sales, use, transfer,
license, payroll, franchise, severance, stamp, occupation, windfall profits,
withholding, social security, unemployment, disability, ad valorem, estimated,
highway use, commercial rent, capital stock, paid up capital, recording,
registration, property, real property gains, value added, business license,
custom duties, or other tax or governmental fee of any kind whatsoever, imposed
or required to be withheld by any Tax Authority including any interest,
additions to tax, or penalties applicable or related thereto.
"Tax Authority" means governmental authority or any subdivision, agency,
commission or authority thereof or any quasi-governmental or private body having
jurisdiction over the assessment, determination, collection or imposition of any
Tax (including the Service).
"Tax Item" means any item of income, gain, loss, deduction or credit, or
other attribute that may have the effect of increasing or decreasing any Tax.
"Tax Return" means any return, report, certificate, form or similar
statement or document (including, any related or supporting information or
schedule attached thereto and any information return, amended tax return, claim
for refund or declaration of estimated tax) required to be supplied to, or filed
with, a Tax Authority in connection with the determination, assessment or
collection of any Tax or the administration of any laws, regulations or
administrative requirements relating to any Tax.
ARTICLE 2
PREPARATION AND FILING OF TAX RETURNS
2.1 In General.
(a) Centex shall have the sole and exclusive responsibility for the
preparation and filing of the following Tax Returns: (1) all
Consolidated Returns for any Pre-Distribution Period, (2) all
Combined Returns for any Pre-Distribution Period, and (3) any
Separate Return for any Pre-Distribution Period beginning before and
ending on or before the Distribution Date (specifically including,
but not limited to, any Texas franchise tax returns for the fiscal
year ending March 31, 2003).
(b) Except as provided in Section 2.1(a) of this Agreement, Cavco shall
have the sole and exclusive responsibility for the preparation and
filing of all other Tax Returns for Cavco (or which relate to its
businesses, assets or activities) which are required to be filed for
any Pre-Distribution Period (including (i) any Pre-Distribution
Period beginning before and ending on or before the Distribution
Date and (ii) any Pre-Distribution Period beginning before and
ending after the Distribution Date) and any Post-Distribution
Period.
2.2 Manner of Filing Tax Returns.
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(a) All Tax Returns filed after the date of this Agreement by Centex,
any Centex Affiliate, or Cavco shall be
(1) prepared in a manner that is consistent with the Ruling
Documents, and
(2) filed on a timely basis (including extensions) by the party
responsible for such filing under Section 2.1 of this
Agreement.
(b) Centex and Cavco agree to file all Tax Returns for any
Pre-Distribution Period, as provided for in Section 2.1, and to take
all other actions in a manner consistent with the position that
Cavco is part of any Consolidated Group and any Combined Group for
all days through and including the Distribution Date.
(c) Except as otherwise provided in this Section 2.2, Centex shall have
the exclusive right, in its sole discretion, with respect to any Tax
Return described in Section 2.1(a) of this Agreement to determine:
(1) the manner in which such Tax Return shall be prepared and
filed, including the elections, methods of accounting,
positions, conventions and principles of taxation to be used
and the manner in which any Tax Item shall be reported;
(2) whether any extensions may be requested;
(3) the elections that will be made by Centex, any Centex
Affiliate, and Cavco in such Tax Return;
(4) whether any amended Tax Returns shall be filed;
(5) whether any claims for refund shall be made;
(6) whether any refunds shall be paid by way of refund or credited
against any liability for the related Tax; and
(7) whether to retain outside specialists to prepare such Tax
Return, whom to retain for such purpose and the scope of any
such retainer.
(d) In the event that a Tax Item is includable in a Tax Return described
in Section 2.1(a) of this Agreement and also in a Tax Return
described in Section 2.1(b) of this Agreement that is filed after
the date of this Agreement, Cavco preparing, or causing the
preparation of, such Tax Return under Section 2.1(b) of this
Agreement shall conform the treatment of such Tax Item in such Tax
Return described in Section 2.1(b) of this Agreement to the
treatment of such Tax Item in the applicable Tax Return described in
Section 2.1(a) of this Agreement.
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(e) Any Tax Return described in (1) Section 2.1(a) of this Agreement
(but only with respect to Tax Items of Cavco) or (2) Section 2.1(b)
of this Agreement, in either case which Tax Return is filed after
the date of this Agreement, shall be prepared on a basis consistent
with the elections, methods of accounting, positions, conventions
and principles of taxation and the manner in which any Tax Item or
other information is reported as reflected on the most recently
filed Tax Returns involving similar matters. The preceding sentence
shall not apply (1) to the extent otherwise required by Section
2.2(a)(1) of this Agreement or (2) if (i) Cavco obtains Centex's
prior written consent (which consent shall not be unreasonably
withheld), (ii) there has been a controlling change in law or
circumstances, or (iii) the failure to be consistent will not result
in an increased Tax liability to, or reduction in a Tax Asset of,
Centex or any Centex Affiliate with respect to a Pre-Distribution
Period, not fully compensated by Cavco. For purposes of this Section
2.2(e), a controlling change in law or circumstances includes, with
respect to Post-Distribution Periods (but not Pre-Distribution
Periods), permission to change a method of accounting granted by the
relevant Tax Authority.
2.3 Agent. Cavco hereby irrevocably designates Centex as its sole and
exclusive agent and attorney-in-fact to take such action (including
execution of documents) as Centex, in its sole discretion, may deem
appropriate in any and all matters (including Audits) relating to any Tax
Return described in Section 2.1(a) of this Agreement.
2.4 Provision of Tax Return Information.
(a) Both Cavco and Centex agree to provide all documents and
information, and to make available their employees and officers, as
may be reasonably requested by either party to prepare any Tax
Return described in Section 2.1 of this Agreement.
(b) In the case of any Tax Return described in Section 2.1(a) that is
filed after the date of this Agreement, Centex shall, upon request
of Cavco, provide Cavco a copy of each such Tax Return and all
related Tax accounting work papers to the extent that they relate to
Cavco.
(c) In the case of any Tax Return in Centex's possession that was filed
before the date of this Agreement, Centex shall, upon request of
Cavco, provide Cavco a copy of each such Tax Return and all related
Tax accounting work papers to the extent that they relate to Cavco.
(d) Notwithstanding any other provision of this Agreement, no member of
the Centex Group shall be required to provide Cavco access to or
copies of:
(1) any information that relates to any member of the Centex
Group,
(2) any information as to which any member of the Centex Group is
entitled to assert the protection of any Privilege, or
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(3) any information as to which any member of the Centex Group is
subject to an obligation to maintain the confidentiality of
such information.
Centex shall use reasonable efforts to separate any such information
from any other information to which Cavco is entitled to access or
to which Cavco is entitled to copy under this Agreement, to the
extent consistent with preserving its rights under this Section
2.4(d).
ARTICLE 3
TAX SHARING AND PAYMENT OF TAXES
3.1 Cavco Liability for Payment of Taxes. Cavco shall pay to the appropriate
Tax Authorities all Taxes due and payable for all Pre-Distribution Periods
and all Post-Distribution Periods for which it is responsible for filing
any Tax Return pursuant to Section 2.1(b). Cavco shall also provide Centex
a check made payable to the appropriate Tax Authority for all Taxes due
and payable for any Pre-Distribution Period for which Centex is
responsible for filing any Separate Return pursuant to Section 2.1(a)(3).
Cavco shall deliver such check to Centex within 5 days of Centex's request
for such payment.
3.2 Centex Liability for Payment of Taxes. Except as provided in Section 3.1
(with respect to Cavco's payment of any Tax that may be due of a Separate
Return filed by Centex pursuant to Section 2.1(a)(3)), Centex shall pay to
the appropriate Tax Authorities all Taxes due and payable for all
Pre-Distribution Periods for which it is responsible for filing any Tax
Return pursuant to Section 2.1.
3.3 Additional Liability Allocation. Except with respect to any Restructuring
Tax, Cavco shall have no further liability to Centex for any Taxes for any
Pre-Distribution Period for which Centex is responsible for filing any Tax
Return pursuant to Section 2.1(a)(1) and 2.1(a)(2).
ARTICLE 4
DECONSOLIDATION
4.1 Distribution Related Items.
(a) Restrictions on Certain Post-Distribution Actions.
(1) Cavco Restrictions. Cavco covenants to Centex that it will not
take or fail to take any action where such action or failure
to act would cause the Merger and Distribution to fail to
qualify under Sections 355(a) and 368(a)(1)(D) of the Code or
any corresponding provisions of state or local law. Without
limiting the foregoing, Cavco covenants to Centex that: (i)
during the two-year period following the Distribution Date,
Cavco will not liquidate, merge or consolidate with any other
person; (ii) during the two-year period following the
Distribution Date, Cavco will not sell, exchange, or
distribute or otherwise dispose of all or a substantial
portion of its assets except in the ordinary course of
business; (iii) during the two-year period following the
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Distribution Date, Cavco will continue the active conduct of
the historic business as transferred to it in the Merger; (iv)
Cavco will not take any action inconsistent with the
information and representations in the Ruling Documents; (v)
Cavco will not repurchase stock of Cavco in a manner contrary
to the requirements of Section 4.05(1)(b) of Revenue Procedure
96-30 or in a manner contrary to the representations made in
the Ruling Documents; and (vi) Cavco will not enter into any
negotiations, agreements or arrangements with respect to any
of the foregoing.
(2) Centex Restrictions. Centex convenants to Cavco that it will
not take or fail to take any action where such action or
failure to act would cause the Merger and Distribution to fail
to qualify under Sections 355(a) and 368(a)(1)(D) of the Code
or any corresponding provisions of state or local law.
(b) Liability for Undertaking Certain Actions.
(1) Cavco Liability. Cavco shall be responsible for one hundred
percent (100%) of any Restructuring Taxes that are
attributable to, or result from, any act or failure to act
described in Section 4.1(a)(1) of this Agreement by Cavco.
Cavco shall indemnify Centex, each Centex Affiliate and their
directors, officers and employees and hold them harmless from
and against any such Restructuring Taxes.
(2) Centex Liability. Centex and each Centex Affiliate shall be
responsible for one hundred percent (100%) of any
Restructuring Taxes that are attributable to, or result from,
any act or failure to act described in Section 4.1(a)(2) of
this Agreement by Centex or any Centex Affiliate. Centex and
each Centex Affiliate shall jointly and severally indemnify
Cavco and their directors, officers and employees and hold
them harmless from and against any such Restructuring Tax.
(c) Information. Centex has provided Cavco with copies of the Ruling
Documents submitted on or prior to the date hereof, and shall
provide Cavco with copies of any additional Ruling Documents
prepared after the date hereof prior to the submission of such
Ruling Documents to a Tax Authority.
(d) Liability for Breach of Representation. Each of Centex and Cavco
hereby represents that (1) it has read the Ruling Documents
submitted on or prior to the date hereof, (2) all information
contained in such Ruling Documents that concerns or relates to such
party or any affiliate of such party, other than information which
is provided by an external expert, is true, correct and complete in
all material respects, and (3) except to the extent that such party
shall have notified the other party in writing to the contrary and
with reasonable specificity prior to the Distribution Date, all such
information that concerns or relates to such party or any affiliate
of such party, other than information which is provided by an
external
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expert, is and will be true, correct and complete in all material
respects as of the Distribution Date.
Cavco acknowledges and agrees that the term "Ruling Documents,"
whenever used in this Agreement, includes all filings or ruling
requests or other materials, appendices and exhibits submitted after
the date hereof to the Service or any Tax Authority in connection
with the Distribution and provided by Centex to Cavco under Section
4.1 of this Agreement.
If any Tax Authority withdraws any portion of a ruling issued to
Centex in connection with the Distribution because of a breach by
Cavco of a representation made in this Section 4.1, Cavco shall be
responsible for one hundred percent (100%) of any Restructuring
Taxes. In such event, Cavco shall indemnify Centex, each Centex
Affiliate and their directors, officers and employees and hold them
harmless from and against any Restructuring Taxes. If any Tax
Authority withdraws any portion of a ruling issued to Centex in
connection with the Distribution because of a breach by Centex or
any Centex Affiliate of a representation made in this Section 4.1,
Centex and each Centex Affiliate shall be responsible for one
hundred percent (100%) of any Restructuring Taxes. In such event,
Centex and each Centex Affiliate shall jointly and severally
indemnify Cavco and its directors, officers and employees and hold
them harmless from and against any Restructuring Taxes.
(e) Payment. Cavco shall make or cause to be made all payments for which
it may be liable under this Section 4.1. Such payments shall be made
to Centex or to the appropriate Tax Authority as specified by Centex
no later than five (5) days after delivery by Centex to Cavco of
written notice of a payment by or liability of Centex (or a Centex
Affiliate or a director, officer or employee) based on a Final
Determination, together with a computation of the amounts due.
4.2 Information for Shareholders. Centex shall provide each shareholder that
receives stock of Cavco pursuant to the Public Distribution with the
information necessary for such shareholder to comply with the requirements
of Section 355 of the Code and the Treasury regulations thereunder with
respect to statements that such shareholders must file with their Federal
Income Tax Returns demonstrating the applicability of Section 355 of the
Code to the Public Distribution.
4.3 Special Indemnification. Centex expressly agrees to indemnify Cavco for
any Federal Income Tax with respect to any Consolidated Return for which
Centex is responsible for filing pursuant to Section 2.1(a)(1) in the
event that Cavco is liable to the Service for any such Federal Income Tax
pursuant to Treasury Regulation section 1.1502-6.
ARTICLE 5
ADDITIONAL OBLIGATIONS
5.1 Provision of Information.
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(a) Cavco shall furnish to Centex in a timely manner such information
and documents as Centex may reasonably request for purposes of (1)
preparing any Tax Return for which Centex has filing responsibility
under this Agreement, (2) contesting or defending any Audit, and (3)
making any determination or computation necessary or appropriate
under this Agreement.
(b) Cavco shall make its employees available to provide explanations of
documents and other materials and such other information as Centex
may reasonably request in connection with any of the foregoing.
(c) Cavco shall cooperate in any Audit of any Consolidated Return or
Combined Return.
(d) Cavco shall retain and provide on demand books, records,
documentation or other information relating to any Tax Return until
the later of (1) the expiration of the applicable statute of
limitations (giving effect to any extension, waiver, or mitigation
thereof) and (2) in the event any claim is made under this Agreement
for which such information is relevant, until a Final Determination
with respect to such claim.
(e) Cavco shall take such action as Centex may reasonably deem
appropriate in connection with the provision of information under
this Section 5.1.
5.2 Indemnification.
(a) Failure to Pay. Centex and each Centex Affiliate shall jointly and
severally indemnify Cavco and its respective directors, officers and
employees, and hold them harmless from and against any loss, cost,
damage or expense, including reasonable attorneys' fees and costs,
that is attributable to, or results from the failure of Centex, any
Centex Affiliate or any director, officer or employee to make any
payment required to be made under this Agreement. Cavco shall
indemnify Centex, each Centex Affiliate and their respective
directors, officers and employees, and hold them harmless from and
against any loss, cost, damage or expense, including reasonable
attorneys' fees and costs, that is attributable to, or results from,
the failure of Cavco or any director, officer or employee to make
any payment required to be made under this Agreement.
(b) Inaccurate or Incomplete Information. Centex and each Centex
Affiliate shall jointly and severally indemnify Cavco and their
respective directors, officers and employees, and hold them harmless
from and against any cost, fine, penalty, or other expense of any
kind attributable to the negligence of Centex or any Centex
Affiliate in supplying Cavco with inaccurate or incomplete
information, in connection with the preparation of any Tax Return.
Cavco shall indemnify Centex, each Centex Affiliate and their
respective directors, officers and employees, and hold them harmless
from and against any cost, fine, penalty, or other expenses of
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any kind attributable to the negligence of Cavco in supplying Centex
or any Centex Affiliate with inaccurate or incomplete information,
in connection with the preparation of any Tax Return.
5.3 Interest. Payments pursuant to this Agreement that are not made within the
period prescribed in this Agreement or, if no period is prescribed, within
thirty (30) days after demand for payment is made (the "Payment Period")
shall bear interest for the period from and including the date immediately
following the last date of the Payment Period through and including the
date of payment (the "Interest Accrual Period") at a per annum rate equal
to Cavco's weighted average interest rate for debt capital for each year,
or part thereof, included in the Interest Accrual Period plus 50 basis
points. Such interest will be payable at the same time as the payment to
which it relates and shall be calculated on the basis of a year of 365
days and the actual number of days for which due.
ARTICLE 6
AUDITS
6.1 In General.
(a) Centex shall have the exclusive right, in its sole discretion, to
control, contest, and represent the interests of Centex, any Centex
Affiliate, or Cavco in any Audit relating to any Tax Return
described in Section 2.1(a)(1) or 2.1(a)(2) of this Agreement and to
resolve, settle or agree to any deficiency, claim or adjustment
proposed, asserted or assessed in connection with or as a result of
any such Audit.
(b) Cavco shall have the exclusive right, in its sole discretion, to
control, contest, and represent the interests of Cavco in any Audit
relating to any Tax Return described in Section 2.1(b) or Section
2.1(a)(3) of this Agreement and to resolve, settle, or agree to any
deficiency, claim or adjustment proposed, asserted or assessed in
connection with or as a result of any such Audit.
(c) After the Distribution Date, Centex and Cavco shall cooperate in
order to transfer to Cavco the exclusive right to control, contest
and represent the interests of Cavco in any Audit and to resolve,
settle, or agree to any deficiency, claim or adjustment proposed,
asserted or assessed in connection with or as a result of any such
Audit in each case relating to all Separate Returns of Cavco
relating to Non-Federal Separate Taxes.
6.2 Notice. If, after the Distribution Date, Centex or any member of the
Centex Group receives written notice of, or relating to, an Audit from a
Tax Authority that asserts, proposes or recommends a deficiency, claim or
adjustment that, if sustained, would result in any Restructuring Taxes for
which Cavco could be responsible under this Agreement, Centex shall notify
Cavco in writing of such deficiency, claim or adjustment within ten (10)
days of its receipt. If Cavco receives written notice of or relating to an
audit from a Tax Authority with respect to a Tax Return described in
Section 2.1(a)(1) or 2.1(a)(2) of this Agreement, Cavco shall provide a
copy of such notice to Centex within ten (10) days of
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receiving such notice of such Audit, but in no case later than thirty (30)
days before a response is required to be provided to the relevant Tax
Authority.
6.3 Participation Rights.
(a) If a Tax Authority asserts, proposes or recommends a deficiency,
claim or adjustment that, if sustained, would result in
Restructuring Taxes for which Cavco could be responsible under this
Agreement, and Cavco acknowledges in writing to Centex that, as
between Cavco and Centex, Cavco shall be responsible for one hundred
percent (100%) of any such Restructuring Taxes that are determined
pursuant to a Final Determination, then (1) Centex shall take all
actions requested by Cavco to contest such deficiency, claim or
adjustment, including administrative and judicial proceedings; (2)
Cavco shall have the right to fully participate with respect to such
deficiency, claim or adjustment and related proceedings and Centex
shall accept all reasonable suggestions by Cavco in connection with
the management and substance of such proceedings, and (3) in no
event shall Centex settle or compromise any such deficiency, claim
or adjustment without the written consent of Cavco.
(b) If a Tax Authority asserts, proposes or recommends a deficiency,
claim or adjustment that, if sustained, would result in
Restructuring Taxes for which Cavco could be responsible under this
Agreement and has not admitted liability for such Restructuring
Taxes pursuant to Section 6.3(a):
(1) Centex shall keep Cavco informed in a timely manner of all
material actions taken or proposed to be taken by Centex in
connection with such deficiency, claim or adjustment;
(2) Centex shall reasonably consider any comments that Cavco makes
with respect to the handling of the case and provide Cavco an
opportunity to attend any meetings with the Tax Authority; and
(3) Centex shall have no obligation to appeal a determination of
any Tax Authority in any judicial forum.
6.4 Failure to Notify, Etc. The failure of Centex promptly to notify Cavco of
any matter relating to a particular Tax for a taxable period or to take
any action specified in Section 6.3 of this Agreement shall not relieve
Cavco of any liability and/or obligation which it may have to Centex or
any Centex Affiliate under this Agreement with respect to such
Restructuring Taxes except to the extent that Cavco's rights hereunder are
materially prejudiced by such failure and in no event shall such failure
relieve Cavco of any other liability and/or obligation which it may have
to Centex or any Centex Affiliate.
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ARTICLE 7
DISPUTE RESOLUTION
7.1 Governed by Distribution Agreement. Any dispute arising out of or relating
to this Agreement, including the breach or termination hereof, shall be resolved
in accordance with the procedures specified in Article 8 of that certain
Distribution Agreement between Centex and Cavco dated as of _____________ to
which this Agreement is attached as an exhibit.
ARTICLE 8
MISCELLANEOUS
8.1 Effectiveness. This Agreement shall become effective upon execution by
both parties hereto.
8.2 Notices. Any notice, request, instruction or other document to be given or
delivered under this Agreement by any party to another party shall be in
writing and shall be deemed to have been duly given or delivered when (1)
delivered in person, (2) sent by facsimile, (3) deposited in the United
States mail, postage prepaid and sent certified mail, return receipt
requested, or (4) delivered to Federal Express or similar service for
overnight delivery to the address of the party set forth below.
If to Centex or any Centex Affiliate, to:
Centex Corporation
0000 Xxxxx Xxxxxxx
Xxxxxx, Xxxxx 00000
Fax No.: (214) ____________________
Attention: ________________________
With copy to:
Centex Corporation
0000 Xxxxx Xxxxxxx
Xxxxxx, XX 00000
Fax. No.: (000) 000-0000
Attention: General Counsel
If to Cavco:
Cavco Industries, Inc.
0000 Xxxxx Xxxxxxx Xxxxxx
Xxxxx 000
Xxxxxxx, Xxxxxxx 00000
Fax No.: (000) 000-0000
Attention: Chief Executive Officer
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Any party may, by written notice to the other parties, change the address
or the party to which any notice, request, instruction or other document
(or any copy thereof) is to be delivered.
8.3 Changes in Law. Any reference to a provision of the Code or a law of
another jurisdiction shall include a reference to any applicable successor
provision or law.
8.4 Confidentiality. Each party shall hold and cause its directors, officers,
employees, advisors and consultants to hold in strict confidence, unless
compelled to disclose by judicial or administrative process or, in the
opinion of its counsel, by other requirements of law, all information
(other than any such information relating solely to the business or
affairs of such party) concerning the other parties hereto furnished it by
such other party or its representatives pursuant to this Agreement (except
to the extent that such information can be shown to have been (1)
previously known by the party to which it was furnished, (2) in the public
domain through no fault of such party, or (3) later lawfully acquired from
other sources not under a duty of confidentiality by the party to which it
was furnished), and each party shall not release or disclose such
information to any other person, except its directors, officers,
employees, auditors, attorneys, financial advisors, bankers and other
consultants who shall be advised of and agree to be bound by the
provisions of this Section 9.4. Each party shall be deemed to have
satisfied its obligation to hold confidential information concerning or
supplied by the other party if it exercises the same care as it takes to
preserve confidentiality for its own similar information.
8.5 Successors. This Agreement shall be binding on and inure to the benefit of
any successor, by merger, acquisition of assets or otherwise, to any of
the parties hereto, to the same extent as if such successor had been an
original party.
8.6 Affiliates. Centex shall cause to be performed, and hereby guarantees the
performance of, all actions, agreements and obligations set forth herein
to be performed by a Centex Affiliate; provided, however, that if a Centex
Affiliate ceases to be a Centex Affiliate as a result of a transfer of its
stock or other ownership interests to a third party in exchange for
consideration in an amount approximately equal to the fair market value of
the stock or other ownership interests transferred and such consideration
is not distributed outside of the Centex Group to the shareholders of
Centex then Cavco shall, upon request, execute a release of such Centex
Affiliate from its obligations under this Agreement upon such transfer
provided that such Centex Affiliate shall have executed a release of any
rights it may have against Cavco or any Cavco Affiliate by reason of this
Agreement.
8.7 Authorization, Etc. Each of the parties hereto hereby represents and
warrants that it has the power and authority to execute, deliver and
perform this Agreement, that this Agreement has been duly authorized by
all necessary corporate action on the part of such party, that this
Agreement constitutes a legal, valid and binding obligation of each such
party and that the execution, delivery and performance of this Agreement
by such party does not contravene or conflict with any provision of law or
of its charter or bylaws or any agreement, instrument or order binding on
such party.
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8.8 Entire Agreement. This Agreement contains the entire agreement among the
parties hereto with respect to the subject matter hereof and amends and
restates all prior Tax sharing agreements between Centex or any Centex
Affiliate and Cavco and such prior tax sharing agreements shall have no
further force and effect.
8.9 Section Captions. Section captions used in this Agreement are for
convenience and reference only and shall not affect the construction of
this Agreement.
8.10 Governing Law. This Agreement shall be governed by and construed in
accordance with laws of the State of Texas without giving effect to laws
and principles relating to conflicts of law.
8.11 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same Agreement.
8.12 Severability. If any term, provision, covenant, or restriction of this
Agreement is held by a court of competent jurisdiction (or an arbitrator
or arbitration panel) to be invalid, void, or unenforceable, the remainder
of the terms, provisions, covenants, and restrictions set forth herein
shall remain in full force and effect, and shall in no way be affected,
impaired, or invalidated. It is hereby stipulated and declared to be the
intention of the parties that they would have executed the remaining
terms, provisions, covenants, and restrictions without including any of
such which may be hereafter declared invalid, void, or unenforceable. In
the event that any such term, provision, covenant or restriction is held
to be invalid, void or unenforceable, the parties hereto shall use their
best efforts to find and employ an alternate means to achieve the same or
substantially the same result as that contemplated by such terms,
provisions, covenant, or restriction.
8.13 No Third Party Beneficiaries. This Agreement is solely for the benefit of
Centex, the Centex Affiliates, and Cavco. This Agreement should not be
deemed to confer upon third parties any remedy, claim, liability,
reimbursement, cause of action or other rights in excess of those existing
without this Agreement.
8.14 Waivers, Etc. No failure or delay on the part of the parties in exercising
any power or right hereunder shall operate as a waiver thereof, nor shall
any single or partial exercise of any such right or power, or any
abandonment or discontinuance of steps to enforce such right or power,
preclude any other or further exercise thereof or the exercise of any
other right or power. No modification or waiver of any provision of this
Agreement nor consent to any departure by the parties therefrom shall in
any event be effective unless the same shall be in writing, and then such
waiver or consent shall be effective only in the specific instance and for
the purpose for which given.
8.15 Setoff. All payments to be made by any party under this Agreement shall be
made without setoff, counterclaim, or withholding, all of which are
expressly waived.
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8.16 Change of Law. If, due to any change in applicable law or regulations or
their interpretation by any court of law or other governing body having
jurisdiction subsequent to the date of this Agreement, performance of any
provision of this Agreement or any transaction contemplated thereby shall
become impracticable or impossible, the parties hereto shall use their
commercially reasonable efforts to find and employ an alternative means to
achieve the same or substantially the same result as that contemplated by
such provision.
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to be
executed by a duly authorized officer as of the date first above written.
CENTEX CORPORATION, on behalf of itself and its affiliates
By
Name: /s/ XXXXXXX X. XXXXXXXX
-----------------------------------------------------
Title: Senior Vice President
CAVCO INDUSTRIES, INC.
By
Name: /s/ XXXXXX X. XXXXXXXXX
-----------------------------------------------------
Title: President and Chief Executive Officer
