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Exhibit 10(a)
XXXX TAX SHARING AGREEMENT
This Tax Sharing Agreement ("Agreement") is executed on this
____ day of ______, 2000 (the "Merger Date"), by and among Xxxx Industries, Inc.
("Xxxx"), PM Holdings Corporation ("Holdings"), the subsidiaries of Holdings
listed on Schedule I and their successors and assigns hereto (the "Holdings
Subsidiaries").
RECITALS
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1. Xxxx is the parent of an affiliated group of companies, as defined
in section 1504(a) of the Internal Revenue Code of 1986 (the "Code"), that files
consolidated federal income tax returns (the "Affiliated Group"). Holdings and
the Holdings Subsidiaries (Holdings and the Holdings Subsidiaries are referred
to herein collectively as the "Holdings Sub-Group") are members of the
Affiliated Group. The Holdings Sub-Group became part of the Affiliated Group as
a result of Xxxx Agriculture Company's acquisition of Holdings on March 12,
1998; the members of the Holdings Sub-Group (each a "Holdings Member") were
included in the Affiliated Group's federal income tax return for the first time
for the taxable year ending December 31, 1998.
2. On March 12, 1998, Xxxx and Holdings entered into the Parent Tax
Sharing Agreement.
3. On October 28, 1999, several Holdings Members (the "Debtors") filed
for bankruptcy under chapter 11 of the Bankruptcy Code. Pursuant to and in
connection with the described filing for bankruptcy, on January 18, 2000, the
Debtors filed a Joint Plan of Reorganization of Purina Xxxxx, Inc. ("PMI"), Its
Parent Corporation, and Its Debtor Subsidiaries (the "Plan").
4. On the date of execution of this Agreement, Purina Xxxxx, Inc.
merged with and into its sole shareholder, Holdings (the "Merger"), pursuant to
the Plan.
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5. As of the Effective Date of the Plan, the outstanding stock of
Holdings will be canceled, and the Holdings Sub-Group will leave the Affiliated
Group.
6. It is the intent and desire of the parties hereto that agreement be
reached (a) on the allocation of responsibility for payment of, or the right to
refunds of, the federal, state, local and foreign consolidated or combined
income tax liability (including penalties and interest thereon) ("Taxes") of the
Affiliated Group between the Holdings Sub-Group, on the one hand, and the
members of the Affiliated Group other than the Holdings Sub-Group (the "Xxxx
Entities"), on the other; (b) on certain matters regarding any Taxes
attributable to each Non-Affiliated Taxable Period, as hereinafter defined; and
(c) on the rights and responsibilities of each party hereto with respect to
certain administrative matters relating to Taxes.
AGREEMENT
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Now, therefore, in consideration of the mutual covenants and promises
contained herein, the parties hereto agree as follows:
1. PARENT TAX SHARING AGREEMENT. Xxxx hereby waives any and all claims,
matured and unmatured, that it might have against the Holdings Sub-Group and
each Holdings Subsidiary under the Parent Tax Sharing Agreement. Holdings and
each Holdings Subsidiary hereby waive any and all claims, matured and unmatured,
that they might have against the Xxxx Entities under the Parent Tax Sharing
Agreement. This Agreement supersedes the Parent Tax Sharing Agreement in all
respects; as of the Effective Date, the Parent Tax Sharing Agreement shall be of
no further force or effect.
2. NON-AFFILIATED TAXABLE PERIODS. None of the Xxxx Entities shall have
any responsibility whatsoever for the payment of Taxes due from any Holdings
Member for any taxable period during which the Holdings Sub-Group was not or is
not part of the Affiliated Group (a "Non-Affiliated Taxable Period"), and
Holdings hereby agrees to indemnify and hold harmless each of the Xxxx Entities
with respect to any such Taxes. Similarly, no Holdings Member shall have any
responsibility whatsoever for the payment of Taxes due from any one of
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the Xxxx Entities for any Non-Affiliated Taxable Period, and Xxxx hereby agrees
to indemnify and hold harmless each Holdings Member with respect to any such
Taxes.
3. FILING OF RETURNS FOR AFFILIATED TAXABLE PERIODS. For all taxable
periods during which the Holdings Sub-Group is part of the Affiliated Group
(each an "Affiliated Taxable Period"), Xxxx shall cause consolidated federal
income tax returns (each a "Xxxx Consolidated Return") and estimated tax returns
for the Affiliated Group to be prepared and filed. All Holdings Members shall
execute and file such consents, elections, and other documents as Xxxx
determines are required or appropriate for the proper filing of such returns and
shall furnish to Xxxx any and all information reasonably requested by Xxxx in
order to carry out the provisions of this paragraph. For all Affiliated Taxable
Periods, Holdings shall cause to be prepared hypothetical estimated and final
federal income tax returns showing the estimated and final federal income tax
liability of the Holdings Sub-Group, calculated as if the Holdings Sub-Group
filed a separate consolidated return.
4. ALLOCATION OF TAX LIABILITY. Xxxx and the Holdings Members agree
that the Affiliated Group's consolidated federal income tax liability,
determined in accordance with Treas. Regs. ss. 1.1502-2, for each Affiliated
Taxable Period shall be apportioned between the Xxxx Entities as a group and the
Holdings Sub-Group (each a "Member") in accordance with the provisions of Treas.
Regs. ss. 1.1552-1(a)(2) and 1.1502-33(d)(2). Any Taxes attributable to the
Affiliated Taxable Period within which the Effective Date falls shall be
allocated, using a closing-of-the-books method, between the period during which
the Holdings Members are members of the Affiliated Group and the period during
which the Holdings Members are not members of the Affiliated Group, and any
Taxes attributable to the first period (but not those attributable to the
second) shall be apportioned using the method of allocation described herein.
The consolidated federal tax liability of the Affiliated Group shall be
allocated to each of the two Members on the basis of the percentage of the total
tax that the tax of such Member (if computed on a separate return basis) would
bear to the total amount of taxes for both Members so computed pursuant to
section 1552(a)(2) of the Code and Treas. Regs. ss. 1.1552-1(a)(2). In
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computing the tax that it would owe on a separate return basis for the period
ending on the Effective Date, the Holdings Sub-Group shall take into account any
items of gain or loss that will in fact be triggered to any Holdings Member
under Treas. Reg. Section 1.1502-13 or section 267(f) of the Code upon the
departure of the Holdings Sub-Group from the Affiliated Group as of the
Effective Date (other than an item generated by the transaction described in
section IV.B.3.b of the Plan). If a Member (the "Tax Attribute Member") is
unable to absorb a tax attribute on a separate return basis in one year but is
able to absorb that attribute on a separate return basis in a subsequent year in
which it continues to be a part of the Affiliated Group, a portion of the
consolidated tax liability which otherwise would have been allocated to the Tax
Attribute Member in the subsequent year under Treas. Regs. Section
1.1552-1(a)(2) will instead be reallocated to the other Member of the Affiliated
Group using the principles of Treas. Regs. Section 1.1502-33(d)(2). This
allocation, including the effect of any reallocation, shall be each Member's
"Allocated Tax Liability" for that year. For purposes of this Agreement, the
consolidated tax liability shall include any liability for alternative minimum
tax.
5. PAYMENT OF TAX. For all Affiliated Taxable Periods, Holdings and the
Holdings Subsidiaries shall be jointly and severally liable to pay to Xxxx no
later than 10 days before the date on which the Xxxx Consolidated Return is
required to be filed (giving effect to any extensions thereof) the separate
return tax liability of the Holdings Sub-Group determined pursuant to Treas.
Regs. Sections 1.1552-1(a)(2)(ii) and 1.1502-33(d)(2) plus its ratable
share of any interest or penalties shown as due on the Xxxx Consolidated Return
(determined by multiplying such interest or penalties by a fraction, the
numerator of which equals the Holdings Sub-Group's Allocated Tax Liability
(before interest or penalties) and the denominator of which equals the
Affiliated Group's tax liability (before interest or penalties)).
6. CARRYFORWARD/CARRYBACK OF LOSSES AND CREDITS. If part or all of an
unused loss or tax credit is allocated to a Member pursuant to Treas. Regs.
Section 1.1502-21 and is carried back or forward to a Non-Affiliated Taxable
Year, any refund or reduction in tax liability arising from the carryback or
carryforward shall be retained by such Member. Notwithstanding the foregoing,
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Xxxx shall determine whether an election shall be made (i) not to carry back any
portion of any such loss arising in an Affiliated Taxable Year (including any
portion allocated to a Member under Treas. Regs. Section 1.1502-21) in
accordance with section 172(b)(3) of the Code, or (ii) to reattribute to itself
any portion of any loss attributable to the disposition of the stock of any
Holdings Member, to the extent permitted by Treas. Regs. Section 1.1502-20(g).
The Holdings Members agree to join with Xxxx in filing any necessary elections
under Treas. Regs. Section 1.1502-20(g) to reflect such reattribution.
7. ESTIMATED TAX PAYMENTS. If the Affiliated Group is required to make
estimated federal income tax payments (including payments due at the time any
extension of time is sought for the filing of the Xxxx Consolidated Return),
Holdings shall, if requested by Xxxx, pay to Xxxx, no later than 10 days before
the date such estimated tax payment is to be made by Xxxx, that percentage of
the estimated tax payment that equals the percentage which the estimated
Allocated Tax Liability of the Holdings Sub-Group for the taxable period or year
to which such estimated tax payment relates bears to the aggregate estimated tax
liability of the Affiliated Group for such taxable period or year. Such
estimates shall be determined by Xxxx in good faith after reviewing relevant
information provided to Xxxx by Holdings. Any estimated tax payments made by
Holdings under this paragraph 7 with respect to any taxable period shall be
applied to reduce the amount, if any, owed by Holdings under paragraph 4 hereof
with respect to such period. Any excess of such estimated payments by Holdings
over the amount described in paragraph 5 for such taxable period shall be repaid
by Xxxx to Holdings no later than 10 days after the date of filing of the Xxxx
Consolidated Return for such taxable period or, to the extent such excess
represents all or a part of a tax refund to be received by the Affiliated Group,
no later than 10 days after the receipt of the refund.
8. ADJUSTMENTS TO TAX LIABILITY. If the consolidated tax liability of
the Affiliated Group is adjusted for any Affiliated Taxable Period, whether
pursuant to an amended return, a claim for refund, a tax audit by the Internal
Revenue Service (the "IRS") or for some other reason, the liability of each
Member shall be recomputed in accordance with the principles of this
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Agreement to give effect to such adjustments, and, in the case of a refund, Xxxx
shall make payment to Holdings for the Holdings Sub-Group's share of the refund,
determined in the same manner as in paragraph 4 above, within 10 days after the
refund is received by Xxxx. In the case of an increase in tax liability, the
Holdings Sub-Group shall pay to Xxxx the Holdings Sub-Group's allocable share of
such increased tax liability (including interest and penalties but excluding the
taxes with respect to which Xxxx has indemnified the Holdings Sub-Group under
paragraph 9(b) of this Agreement), reduced to the extent that the Holdings
Sub-Group generated any attributes during an Affiliated Taxable Period that it
was previously unable to absorb on a separate return basis, if the Holdings
Sub-Group would have been able to use such adjusted income attributed to it to
absorb such attributes, in accordance with the provisions of paragraph 4 hereof,
in the taxable year being adjusted. Such payment, if any, will be made within 10
days after receiving notice of such liability from Xxxx. The parties recognize
that a recomputation of the consolidated tax liability for any taxable year
under this paragraph 8 is not necessarily the final liability for such year, and
such liability may be recomputed more than once.
9. INDEMNITY FOR ASSESSMENT OF SEPARATE ENTITY TAXES.
(a) Notwithstanding any provision of this Agreement to
the contrary, Xxxx hereby agrees to indemnify and
hold harmless each and every member of the Holdings
Sub-Group with respect to any Taxes (and for any
foreign, state, and local taxes, including penalties
and interest thereon not subsumed within the term
"Taxes") collected from any members thereof to the
extent that such Taxes would have properly been
attributable to the consolidated federal taxable
income of the Xxxx Entities computed as if the
Holdings Sub-Group was not a member of Affiliated
Group.
(b) Xxxx hereby agrees to indemnify and hold harmless
each and every Holdings Member with respect to Taxes
(and for any foreign, state and local taxes,
including penalties and interest thereon, not
subsumed within the term "Taxes"), if any, imposed by
any taxing authority with respect to the
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separately calculated taxable income of any Holdings
Member as a result of the implementation of sections
III.C.3, III.C.6, and IV.B.3.b of the Plan.
Notwithstanding the immediately preceding sentence,
in no case shall this indemnity extend to Taxes (or
to any foreign, state and local taxes, including
penalties and interest thereon, not subsumed within
the term "Taxes"), if any, attributable to: (i)
income or gain of one or more Holdings Members
recognized (but deferred and taken into account under
Treasury Regulation Section 1.1502-13, or under
similar principles of foreign, state or local tax
law, as a result of the departure of the Holdings
Sub-Group from the Affiliated Group) in connection
with any intercompany transaction (other than the
transaction described in section IV.B.3.b of the
Plan) completed prior to the Effective Date of the
Plan; (ii) income or gain of any Holdings Subsidiary
arising out of the implementation of sections III.C.3
or III.C.6 of the Plan; (iii) income or gain of
Holdings arising out of the implementation of
sections III.C.3 or III.C.6 of the Plan other than
income or gain resulting solely from Holdings'
previous inclusion in the Affiliated Group; or (iv)
income or gain that would not otherwise have existed
had Restructuring Transactions (as that term is
defined in the Plan), other than the transaction
described in section IV.B.3.b of the Plan, not been
carried out.
(c) Notwithstanding any other provision of this Agreement
to the contrary and except as provided in the
immediately preceding subsection (b), Holdings and
the Holdings Subsidiaries each hereby agree to
indemnify and hold harmless the Xxxx Entities with
respect to any Taxes (and for any foreign, state and
local taxes, including penalties and interest thereon
not subsumed within the term "Taxes") collected from
the Xxxx Entities to the extent that such Taxes would
have properly been attributable to the consolidated
federal taxable income of the Holdings Sub-Group
computed as if the Holdings Sub-Group
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constituted a separate consolidated group for federal
income tax purposes, provided, however, that in no
event will Holdings or any Holdings Subsidiary have
any obligation under this paragraph 9(c) to indemnify
any Xxxx Entity for Taxes against which the Holdings
Members are indemnified pursuant to paragraph 9(b) of
this Agreement, and provided further that, in
computing the Taxes that would have been attributable
to the Holdings Sub-Group, effect shall be given to
any attributes generated by the Holdings Sub-Group or
any Holdings Subsidiary during any Affiliated Taxable
Period that the Holdings Sub-Group was previously
unable to absorb on a separate return basis.
10. CLAIMS FOR INDEMNIFICATION.
(a) Any claim for indemnification under this Agreement
shall be made in writing, along with proof of the
final determination of the Taxes for which a claim is
made, and the indemnifying party shall reimburse the
indemnified party for the full amount of such
assessment within 10 days of receiving such notice.
For these purposes, a "final determination" shall
mean any administrative or judicial determination
that an amount of Taxes is due and owing, to the
extent such determination is not subject to any
further administrative or judicial appeal.
(b) In calculating the amount of any claim for
indemnification under this Agreement, it shall be
assumed that (i) payments received in the form of
indemnification represent payment by the indemnifying
party of its own joint and several liability for
taxes of the Affiliated Group and as such will not be
subject to tax, (ii) in the event, after a final
determination, such payments in the form of
indemnification have been determined to be taxable,
then and only then shall the indemnifying party make
an additional payment to the indemnified party, such
that the total amount received pursuant to this
paragraph 10, reduced by the amount of tax paid
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thereon, shall equal the amount originally paid by
the indemnified party which gave rise to the claim
for indemnification pursuant to this paragraph 10 as
increased by any related deficiency interest and
penalties imposed on the indemnified party by the
taxing authority, but only to the extent that such
interest and penalties would not have been imposed
had the amount originally paid by the indemnifying
party been timely reported to such taxing authority
as taxable income.
(c) Notwithstanding any provision hereof to the contrary,
Xxxx shall not be responsible for the payment of any
claim for indemnification unless the claimant (i)
shall notify Xxxx of the proposed assessment of such
tax, penalties, or interest at a time and in a manner
that affords Xxxx a meaningful opportunity to
contest, compromise or settle any such proposed
assessment, (ii) shall, upon contact by an examining
agent or officer of the taxing authority for the
purpose of conducting an examination, notify such
agent or officer of the identity of the parent of the
Affiliated Group and request that such agent or
officer deal directly with said parent as the agent
for the Affiliated Group, (iii) shall cooperate fully
with Xxxx'x efforts to contest, compromise or settle
any such proposed assessment, and (iv) prior to any
payment of tax giving rise to such claim for
indemnification, shall provide a copy of the
collection notice or other xxxx reflecting the amount
due to the taxing authority following a final
determination of such tax liability and shall have
provided a 30-day period (or such reasonable lesser
period as required to allow the party requesting
indemnity to make payment on such notice or xxxx in
the event Xxxx does not exercise its exclusive right
under this subsection (iv) of paragraph 10(c))
immediately following the provision of such notice or
xxxx, prior to
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and during which the indemnifying party shall have
had the exclusive right to make payment directly to
such taxing authority.
(d) Notwithstanding any provision of this paragraph 10 to
the contrary, no Holdings Member shall be responsible
for the payment of any claim for indemnification
unless Xxxx (i) shall notify Holdings of the proposed
assessment of such tax, penalties, or interest and
(ii) shall make a good faith effort to contest any
such proposed assessment.
11. REPORTING THE MERGER. All parties hereto agree that, on any return
filed by the Affiliated Group, Xxxx or the Holdings Sub-Group, the party or
parties filing such return shall report the transaction described in section
IV.B.3.b of the Plan as a reorganization described in section 368(a)(1) of the
Code as to which, pursuant to sections 354(a) and 361, no gain or loss is
recognized by Holdings or any Holdings Subsidiary in connection with that
transaction. Except as otherwise provided in this Agreement, no party to this
Agreement may take a position contrary to that described in the preceding
sentence on any return or in the course of any audit, dispute, proceeding or
action.
12. TERM OF AGREEMENT. All terms of this Agreement shall first take
effect on the date or dates set forth in Section 20 below and shall continue in
effect with respect to all Affiliated Taxable Periods, except that the
provisions of paragraphs 2, 9, 11, 14(c), 14(d), and 14(e) shall continue in
effect with respect to all taxable periods.
13. POST-CONSOLIDATED GROUP PERIOD. The Xxxx Entities and each Holdings
Member shall cooperate fully and to the extent reasonably requested by each
other in connection with the preparation and filing of any tax return or the
conduct of any audit, dispute, proceeding or action concerning any issues or any
other matter contemplated hereunder. Such cooperation shall include, without
limitation, the retention and provision upon demand of books, records,
documentation or other information (including, without limitation, returns,
supporting schedules, work papers, correspondence and other documents) relating
to the tax liability of the
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Affiliated Group or any Holdings Member for any taxable year in which such
member was included in the Affiliated Group. The obligation to retain records
and provide them upon reasonable request shall not terminate until the
expiration of all applicable statutes of limitation (giving effect to any
extension, waiver or mitigation thereof).
The Xxxx Entities and each Holdings Member shall furnish each other
information and assistance required and take all steps necessary to apply for
and obtain the benefit of any carryback of a net operating or capital loss or
any investment, foreign tax or other credit of a Holdings Member for an
Affiliated Taxable Period.
The parties hereto also agree to execute any document that may be
necessary or helpful in connection with the filing of any tax return by the
Affiliated Group or any Holdings Member or in connection with any tax-related
(i) audit, (ii) dispute, (iii) proceeding or (iv) action, any of which involve
the Affiliated Group or any Holdings Member, and to use their best efforts to
obtain any documentation from a governmental authority or a third party that may
be necessary or helpful in connection with the foregoing. Xxxx and Holdings will
cause each member of the Affiliated Group and of the Holdings Sub-Group to make
its employees and facilities available on a mutually convenient basis to
facilitate the cooperation required hereunder and will retain as permanent
records all documentation necessary to enable it to determine any obligation
under this Agreement.
14. AUDITS AND REFUND CLAIMS.
(a) Xxxx shall be the sole and exclusive agent of the
Affiliated Group with respect to any and all matters
relating to the federal income tax liability of the
Affiliated Group. Except as provided in the
immediately following subsection, Xxxx shall have the
right (i) to contest, compromise or settle any
adjustment or deficiency proposed, asserted, or
assessed by the IRS and (ii) to decide whether to
file and how to prosecute, compromise or settle any
claim for refund on behalf of the Affiliated
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Group. Except as provided in the immediately
following subsection, Xxxx shall have the right to
make the final determination as to the response of
the Affiliated Group to any audit and shall have the
sole right to control, at its own expense, any
contest of any change proposed and any proposed
disallowance of a refund claim by the IRS through
Examination, the Appeals Office of the IRS, and the
courts in connection with any Affiliated Taxable
Period.
(b) In the event of an audit, dispute, proceeding or
action involving the proper tax treatment of any item
or items reported by any Holdings Member for any
Affiliated Taxable Period (other than items which
could give rise to taxes against which the Holdings
Members are indemnified pursuant to paragraph 9(b) of
this Agreement), Xxxx (i) shall provide the affected
Holdings Subsidiary with a meaningful opportunity to
comment on and propose revisions to any
communications that Xxxx proposes to provide to any
governmental authority relating to the treatment of
such item or items, (ii) shall not unreasonably
reject any revisions proposed by the affected
Holdings Subsidiary, and (iii) shall not compromise
or settle any such issue on any basis other than "as
filed" on the tax return without written approval
from the affected Holdings Subsidiary, such consent
not to be unreasonably withheld.
(c) In the event of an audit, dispute, proceeding or
action involving the proper tax treatment of any
transaction that is or was part of the Plan on a tax
return of the Holdings Sub-Group or any Holdings
Subsidiary for a Non-Affiliated Taxable Period, the
Holdings Sub-Group or the affected Holdings
Subsidiary (i) shall make all reasonable efforts to
support and uphold in all administrative proceedings
and in litigation the treatment given to such
transaction on its return as filed pursuant to the
requirements of paragraph 11 hereof, (ii) shall
provide Xxxx with a meaningful opportunity to comment
on and propose revisions to any communications
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that the Holdings Sub-Group or affected Holdings
Subsidiary proposes to provide to any governmental
authority relating to the treatment of such
transaction, (iii) shall not unreasonably reject any
revisions proposed by Xxxx hereunder, and (iv) shall
not compromise or settle any such issue on any basis
other than "as filed" on the tax return without
written approval from Xxxx, such consent not to be
unreasonably withheld.
(d) Xxxx and each Holdings Member shall use reasonable
efforts to keep each other advised as to the status
of any tax audits, disputes or litigation involving
any issue which relates in any way to any transaction
described in the Plan or which could affect the tax
treatment of any transaction described in the Plan.
Xxxx and each Holdings Member shall each promptly
notify the other of any inquiries by any taxing
authority or other administrative, judicial or other
governmental authority, to the extent that such
inquiries relate in any way to any transaction
described in the Plan or which could affect the tax
treatment of any transaction described in the Plan.
Each party hereto shall promptly furnish to each
other party a copy of those portions of any notices
of proposed adjustment, revenue agent's reports, or
notices of deficiency that relate to any matter that
could affect such other party's tax liability.
(e) Notwithstanding any provision herein to the contrary,
in the event of any change in applicable law, after
the effective date of such change, no party shall be
required to file any return treating any item in a
manner not then permitted by law.
15. Representations and Warranties.
(a) Xxxx'x Representations and Warranties.
x. Xxxx represents and warrants that as of the
Merger Date:
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(a) All tax returns, reports, information
returns or other documents (including any
related or supporting information and, where
applicable, profit and loss accounts and
balance sheets) ("Tax Returns") required to
be filed by Xxxx on behalf of Holdings have
been timely filed with the appropriate
governmental authorities. All Taxes shown to
be due on any such Tax Returns have been
timely paid or, if applicable, withheld and
paid to the appropriate taxing authority in
the manner provided by law.
(b) To the best of Xxxx'x knowledge, all Tax
Returns required to be filed by Holdings
during any Affiliated Taxable Period have
been timely filed with the appropriate
governmental authorities, and all Taxes
shown to be due on any such Tax Returns have
been timely paid or, if applicable, withheld
and paid to the appropriate taxing authority
in the manner provided by law.
(c) Except as shown on Schedule II hereto, to
the best of Xxxx'x knowledge there are no
federal, state, local or foreign audits,
administrative proceedings or court
proceedings pending with regard to any Taxes
of Holdings relating to any Affiliated
Taxable Period or Tax Returns of Holdings
relating to any Affiliated Taxable Period,
and there are no outstanding deficiencies or
assessments with respect thereto that have
been asserted or proposed.
(d) To the best of Xxxx'x knowledge, Holdings is
not a party to any agreement providing for
the allocation or sharing of Taxes
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other than the Parent Tax Sharing Agreement and the Sub-Group
Tax Sharing Agreement executed on March 12, 1998.
(e) Xxxx has not filed on Holdings' behalf a consent to
the application of section 341(f) of the Code.
ii. For a period of one year after the Effective Date, Xxxx
shall indemnify and hold harmless any and all Holdings Members
against any costs or expenses of any sort whatever (including
attorneys' fees) arising out of or resulting from any breach
of any representation or warranty of Xxxx set forth in this
section.
(b) Holdings Representations and Warranties.
i. Holdings represents and warrants that:
(a) Following the completion of the transaction
described in section IV.B.3.b of the Plan,
Holdings will either (i) continue one or
more significant historic businesses of PMI
in a manner that satisfies the requirements
of Treas. Reg. Sec. 1.368-1(d)(2) or (ii)
use a significant portion of PMI's historic
business assets in the conduct of a trade or
business in a manner that satisfies the
requirements of Treas. Reg. Sec.
1.368-1(d)(3).
(b) None of Holdings, its officers, directors,
or subsidiaries has any plan or intention to
take any action, or fail to take any action,
that would result in Holdings' failure to
satisfy the continuity of business
enterprise requirement of Treas. Reg. Sec.
1.368-1(d) with respect to the transaction
described in section IV.B.3.b of the Plan.
ii. If gain is recognized by PMI in connection with the
transaction described in section IV.B.3.b of the Plan that,
but for a violation of the immediately preceding warranty and
representation by Holdings, would not have been recognized by
PMI, then, any provision of this Agreement to the contrary
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notwithstanding, each Xxxx Entity shall be released from any
and all obligations created in this Agreement to indemnify
Holdings in respect of any Tax attributable to such gain.
16. SETTLEMENT OF DISPUTES. A dispute or difference between any Xxxx
Entity and any Holdings Member with respect to the operation or interpretation
of this Agreement shall be decided by three arbitrators. Xxxx and Holdings shall
each select one arbitrator and the arbitrators selected by the parties shall
select a third arbitrator. The decision of such arbitrators shall be final. The
Xxxx Entities and the Holdings Members respectively shall be jointly and
severally liable for one-half the fees of such arbitrators.
17. ELECTIONS. Xxxx shall have the sole authority to make any and all
Affiliated Group elections available under the Code, Treasury regulations and
any applicable state or local income tax code, law or statute.
18. FOREIGN, STATE AND LOCAL INCOME TAXES. The principles underlying
the rights and obligations hereunder of the Members in respect of federal income
taxes shall be applied in respect of any foreign, state or local tax (however
denominated) of the Affiliated Group or any of its members (a "Non-Federal
Tax"). All of the procedural and timing requirements of this Agreement
applicable to federal income taxes shall be equally applicable to any
Non-Federal Tax, with appropriate adjustments thereto to reflect the
differences, if any, in corresponding provisions of the applicable income tax
code, law or statute governing any such Non-Federal Tax and any administrative
provisions relating thereto.
19. ENTIRE AGREEMENT. This Agreement contains the entire understanding
of the parties hereto with respect to the subject matter contained herein. No
alteration, amendment or modification of any of the terms of this Agreement
shall be valid unless made by an instrument signed in writing by an authorized
officer of each party.
20. BINDING AGREEMENT AND EFFECTIVE DATE.
(b) This Agreement shall be binding upon and inure to the
benefit of each party hereto and its respective
successors and assigns.
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(c) The provisions of this Agreement shall only be in
force and become effective on the Effective Date of
the Plan, except that the provisions contained in the
waiver provision of paragraph 1 (with respect to any
claims arising out of matters subject to the
indemnity provided in paragraph 9(b) hereof),
paragraph 9(b), and paragraph 11 shall be effective
as of the Merger Date.
21. GOVERNING LAW. This Agreement shall be governed by and interpreted
in accordance with the laws of the State of Delaware.
22. COUNTERPARTS. This Agreement may be executed simultaneously in two
or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
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