EX-10.1 5 d138358dex101.htm EX-10.1 FORM OF TAX MATTERS AGREEMENT between EMERSON ELECTRIC CO., on behalf of itself and the members of the Distributing Group, and Vertiv Co., on behalf of itself and the members of the Controlled Group Dated as of [ ],...
Exhibit 10.1
FORM OF
between
XXXXXXX ELECTRIC CO.,
on behalf of itself
and the members
of the Distributing Group,
and
Vertiv Co.,
on behalf of itself
and the members
of the Controlled Group
Dated as of [ ], 2016
This TAX MATTERS AGREEMENT (the “Agreement”) is entered into as of [ ], 2016 between Xxxxxxx Electric Co. (“Distributing”), a Missouri corporation, on behalf of itself and the members of the Distributing Group, as defined below, and Vertiv Co. (“Controlled,” and together with Distributing, the “Parties”), a Delaware corporation, on behalf of itself and the members of the Controlled Group, as defined below.
(a) As used in this Agreement:
“Active Trade or Business” shall mean, (i) with respect to Controlled, the active conduct (as defined in Section 355(b)(2) of the Code and the regulations thereunder) of the NP Business, or (ii) with respect to any other Separation Transaction intended to qualify as tax-free pursuant to Section 355 of the Code or analogous provisions of state or local law, the active conduct (as defined in Section 355(b)(2) of the Code and the regulations thereunder or the analogous provisions of state or local law) by the relevant member of the Controlled Group of the NP Business relating to such Controlled Group member, as conducted immediately prior to such Separation Transaction.
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“Adjustment Request” means any formal or informal claim or request filed with any Taxing Authority, or with any administrative agency or court, for the adjustment, refund, or credit of Taxes, including (a) any amended Return claiming adjustment to the Taxes as reported on a Return, (b) any claim for equitable recoupment or other offset, and (c) any claim for Refund of Taxes previously paid.
“Affiliate” shall mean, when used with respect to a specified Person, a Person that directly or indirectly, through one or more intermediaries, controls, is controlled by or is under common control with such specified Person. For the purpose of this definition, “control,” when used with respect to any specified Person, shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities or other interests, by contract or otherwise. It is expressly agreed that, from and after the Distribution Date, no member of the Distributing Group shall be deemed to be an Affiliate of any member of the Controlled Group, and no member of the Controlled Group shall be deemed to be an Affiliate of any member of the Distributing Group.
“After-Tax Amount” shall mean an additional amount equal to the hypothetical incremental Tax liability resulting from the receipt or accrual of any payment (including a payment of the After-Tax Amount), using the maximum statutory rate (or rates, in the case of an item that affects more than one Tax) applicable to the recipient of such payment for the relevant Taxable period, reflecting, for example, the effect of the deductions available for interest paid or accrued and for Taxes, such as state and local income Taxes. For the avoidance of doubt, the After-Tax Amount shall include any amount for or on account of any Tax that is required to be withheld or deducted from any payment.
“Agreement” shall have the meaning ascribed thereto in the preamble hereto.
“Applicable Law” means, with respect to any Person, any federal, state, local or foreign law (statutory, common or otherwise), constitution, treaty, convention, ordinance, code, rule, regulation, order, injunction, judgment, decree, ruling, directive, guidance, instruction, direction, permission, waiver, notice, condition, limitation, restriction or prohibition or other similar requirement enacted, adopted, promulgated, imposed, issued or applied by a Governmental Authority that is binding upon or applicable to such Person, its properties or assets or its business or operations, as amended unless expressly specified otherwise.
“ASCO Power Charitable Contribution” shall mean the charitable donation of certain real property (the “Donation Property”) by ASCO Power Technologies, L.P., a Delaware limited partnership (“ASCO Power”) to Xxxxxxx Charitable Trust, a Missouri trust (the “Trust”), to be effected pursuant to the Agreement for Conveyance of Real Property entered into on October 23, 2015 by and between ASCO Power and the Trust.
“Business Day” shall mean a day, other than Saturday, Sunday or other day on which commercial banks in New York, New York are authorized or required by Applicable Law to close.
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“Canadian Reorganization” shall mean the divisive reorganization of Xxxxxxx Electric Canada Limited under paragraph 55(3)(b) of the ITA, and related transactions, undertaken in connection with the Restructuring.
“Canadian Ruling” shall mean the advance income tax ruling in respect of the Canadian Reorganization issued to Distributing or the relevant member of the Distributing Group by the Canada Revenue Agency prior to the Distribution Date, and includes all supplemental rulings, requests for rulings, information and legal submissions and exhibits to the foregoing.
“Canadian TC” shall mean the transferee corporation (as defined in the definition of “distribution” in subsection 55(1) of the ITA) incorporated under the laws of British Columbia as part of the Canadian Reorganization.
“Closing of the Books Method” shall mean the apportionment of items between portions of a Taxable period based on a closing of the books and records on the close of the Distribution Date (in the event that the Distribution Date is not the last day of the Taxable period, as if the Distribution Date were the last day of the Taxable period), subject to adjustment for items accrued on the Distribution Date that are properly allocable to the Taxable period following the Distribution, as determined by Distributing in accordance with Applicable Law; provided that any items not susceptible to such apportionment shall be apportioned on the basis of elapsed days during the relevant portion of the Taxable period.
“Code” shall have the meaning ascribed thereto in the recitals hereto.
“Combined Group” shall mean any group that filed or was required to file (or will file or be required to file) a Return on a consolidated, combined or unitary basis that includes at least one member of the Distributing Group and at least one member of the Controlled Group.
“Combined Return” shall mean a Return filed in respect of federal, state, local or foreign Income Taxes for a Combined Group.
“Company” shall mean Distributing or Controlled (or the appropriate member of each of their respective Groups), as appropriate.
“Compensatory Equity Interests” shall mean any options, stock appreciation rights, restricted stock, stock units or other rights with respect to Distributing Stock or Controlled Stock that are granted on or prior to the Distribution Date by any member of the Distributing Group or any member of the Controlled Group in connection with employee, independent contractor or director compensation or other employee benefits (including, for the avoidance of doubt, options, stock appreciation rights, restricted stock, stock units or other rights issued in respect of any of the foregoing by reason of the Distribution or any subsequent transaction).
“Controlled” shall have the meaning ascribed thereto in the recitals hereto.
“Controlled Business” shall mean the NP Business.
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“Controlled Carried Item” shall mean any Tax Attribute of the Controlled Group that may or must be carried from one Taxable Period to another prior Taxable Period, or carried from one Taxable Period to another subsequent Taxable Period, under the Code or other Applicable Law.
“Controlled Group” shall mean Controlled and each of its direct and indirect Subsidiaries immediately after the Distribution, including any predecessors thereto (other than those entities comprising the Distributing Group). For the avoidance of doubt, any reference herein to the “members” of the Controlled Group shall include Controlled.
“Controlled Separate Return” shall mean a Separate Return of or including any member of the Controlled Group.
“Distributing” shall have the meaning ascribed thereto in the recitals hereto.
“Distributing Business” shall mean the Emerson Business, as defined in the Distribution Agreement.
“Distributing Group” shall mean Distributing and each of its direct and indirect Subsidiaries immediately after the Distribution, including any predecessors thereto (other than those entities comprising the Controlled Group). For the avoidance of doubt, any reference herein to the “members” of the Distributing Group shall include Distributing.
“Distributing Separate Return” shall mean a Separate Return of or including any member of the Distributing Group.
“Distribution” shall have the meaning ascribed thereto in the recitals hereto.
“Distribution Agreement” shall have the meaning ascribed thereto in the recitals hereto.
“Distribution Date” shall mean the date on which the Distribution occurs.
“Emerson Contribution” shall have the meaning ascribed thereto in the Distribution Agreement.
“Equity Interests” shall mean any stock or other securities treated as equity for tax purposes, options, warrants, rights, convertible debt, or any other instrument or security that affords any Person the right, whether conditional or otherwise, to acquire stock or to be paid an amount determined by reference to the value of stock.
“Final Determination” shall mean (i) with respect to U.S. federal Income Taxes, (A) a “determination” as defined in Section 1313(a) of the Code (including, for the avoidance of doubt, an executed IRS Form 906) or (B) the execution of an IRS Form 870-AD (or any successor form thereto), as a final resolution of Tax liability for any Taxable period, except that a Form 870-AD (or successor form thereto) that reserves the right of the taxpayer to file a claim for Refund or the right of the IRS to assert a further deficiency shall not constitute a Final Determination with
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respect to the item or items so reserved; (ii) with respect to Taxes other than U.S. federal Income Taxes, any final determination of liability in respect of a Tax that, under Applicable Law, is not subject to further appeal, review or modification through proceedings or otherwise; (iii) with respect to any Tax, any final disposition by reason of the expiration of the applicable statute of limitations; or (iv) with respect to any Tax, the payment of such Tax by any member of the Distributing Group or any member of the Controlled Group, whichever is responsible for payment of such Tax under Applicable Law, with respect to any item disallowed or adjusted by a Taxing Authority, provided, in the case of this clause (iv), that the provisions of Section 15 hereof have been complied with, or, if such section is inapplicable, that the Company responsible under this Agreement for such Tax is notified by the Company paying such Tax that it has determined that no action should be taken to recoup such disallowed item, and the other Company agrees with such determination.
“Foreign TC” shall mean the transferee corporation (as defined in the definition of “distribution” in subsection 55(1) of the ITA) incorporated under the laws of England and Wales as part of the Canadian Reorganization.
“Gain Recognition Agreement” shall mean a gain recognition agreement as described in Treasury Regulations Section 1.367(a)-8 or any successor provision thereto.
“Group” shall mean the Controlled Group or the Distributing Group, as appropriate.
“Income Tax” shall mean any U.S. federal, state, local or foreign Tax that is, in whole or in part, based on or measured by net income or gains.
“IRS” shall mean the United States Internal Revenue Service.
“ITA” shall mean the Income Tax Act (Canada), R.S.C. 1985, 5th Supplement, as amended.
“Joint Return” shall mean any (i) Combined Return or (ii) Return that includes Tax Items attributable to both the Distributing Business and the Controlled Business.
“Non-Income Tax” shall mean any Tax that is not an Income Tax.
“NP Business” shall have the meaning ascribed thereto in the Distribution Agreement.
“Parties” shall have the meaning set forth in the preamble hereto.
“Person” shall have the meaning ascribed to it in Section 7701(a)(1) of the Code.
“Post-Distribution Period” shall mean any Taxable period (or portion thereof) beginning after the Distribution Date.
“Pre-Distribution Period” shall mean any Taxable period (or portion thereof) ending on or before the Distribution Date.
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“Proposed Acquisition Transaction” shall have the meaning ascribed thereto in Section 9(b)(vii) of this Agreement.
“Restructuring” shall have the meaning ascribed thereto in the Distribution Agreement.
“Return” shall mean any Tax return, statement, report, form, election, claim or surrender (including estimated Tax returns and reports, extension requests and forms, and information returns and reports) filed or required to be filed with any Taxing Authority.
“Separate Return” shall mean any Return required to be filed by a member of the Distributing Group or a member of the Controlled Group that is not a Joint Return.
“Separation Transactions” shall mean the Emerson Contribution, Distribution and all other transactions contemplated by the Restructuring.
“Separation Taxes” shall mean any Taxes (including, for the avoidance of doubt, Income Taxes and Transfer Taxes) imposed on any member of the Distributing Group or Controlled Group arising from, or attributable to, any transfer of assets or liabilities in connection with the Separation Transactions that are incurred on or prior to the Distribution, but that are not and do not give rise to Tax-Related Losses.
“Straddle Period” shall mean any Tax period that begins on or before and ends after the Distribution Date.
“Subsidiary” of any Person shall mean any corporation, partnership or other entity directly or indirectly owned more than 50 percent (by vote or value) by such Person.
“Tax” (and the correlative meaning, “Taxes,” “Taxing” and “Taxable”) shall mean (i) any tax imposed under Subtitle A of the Code, or any net income, gross income, gross receipts, alternative or add-on minimum, sales, use, business and occupation, value-added, trade, goods and services, ad valorem, franchise, profits, license, business royalty, withholding, payroll, employment, capital, excise, transfer, recording, severance, stamp, occupation, premium, property, asset, real estate acquisition, environmental, custom duty, or other tax, governmental fee or other like assessment or charge of any kind whatsoever, together with any interest and any penalty, addition to tax or additional amount imposed by a Taxing Authority; or (ii) any liability of any member of the Distributing Group or any member of the Controlled Group for the payment of any amounts described in clause (i) as a result of any express or implied obligation to indemnify any other Person.
“Tax Advisor” shall mean, with respect to U.S. Tax matters, a U.S. Tax counsel or accounting firm of recognized national standing, and, with respect to non-U.S. Tax matters, a local Tax counsel or accounting firm of recognized national standing in the relevant jurisdiction.
“Tax Attribute” shall mean a net operating loss, net capital loss, unused investment credit, unused foreign tax credit, excess charitable contribution, general business credit, the alternative minimum tax credit, or any other Tax item that could reduce a Tax liability.
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“Tax Benefit” shall mean any refund, credit, offset or other reduction in otherwise required Tax payments.
“Tax-Free Status” shall mean (i) the qualification of the Emerson Contribution and Distribution as (A) a reorganization described in Sections 355(a) and 368(a)(1)(D) of the Code, (B) a transaction in which the stock distributed thereby is “qualified property” for purposes of Sections 355(d), 355(e) and 361(c) of the Code and (C) a transaction in which Distributing, Controlled, and the shareholders of Distributing recognize no income or gain for U.S. federal income tax purposes pursuant to Sections 355, 361 and 1032 of the Code (except with respect to fractional shares), and (ii) the qualification of any other Separation Transaction to be free from Tax, whether U.S. federal, state or local or foreign Tax, but only to the extent such transaction was intended by the parties to be free from such Tax, including as described in the Tax Opinions/Canadian Ruling. Such term does not include, in the case of Distributing or Controlled, any intercompany items or excess loss accounts taken into account pursuant to the Treasury Regulations promulgated under Section 1502 of the Code.
“Tax Item” shall mean any item of income, gain, loss, deduction, credit recapture of credit or any other item that increases or decreases Taxes paid or payable.
“Tax Opinions” shall mean (i) the legal opinion delivered to Distributing by Xxxxx Xxxx & Xxxxxxxx LLP with respect to certain U.S. federal Income Tax consequences of the Emerson Contribution, SpinCo Cash Payment and Distribution and (ii) any other written opinions, memoranda or similar written correspondence on the U.S. federal, state, local and non-U.S. tax consequences of certain aspects of the Separation Transactions provided by any Tax Advisor to any member of the Distributing Group, including the documents listed on Exhibit [A] hereto.
“Tax Opinions/Canadian Ruling” shall mean the Tax Opinions and/or the Canadian Ruling deliverable to any member of the Distributing Group in connection with the Separation Transactions.
“Tax Proceeding” shall mean any Tax audit, dispute, proceeding, investigation or review (whether administrative, judicial, contractual, formal or informal).
“Tax-Related Losses” means (i) all Taxes (including interest and penalties thereon) imposed pursuant to any settlement, determination, judgment or otherwise; (ii) all accounting, legal and other professional fees, and court costs incurred in connection with such Taxes, as well as any other out-of-pocket costs incurred in connection with such Taxes and (iii) all damages, costs, and expenses associated with stockholder litigation or controversies and any amount paid by any member of the Distributing Group or any member of the Controlled Group in respect of the liability of shareholders, whether paid to shareholders or to the IRS or any other Taxing Authority, in each case, resulting from the failure of the Tax-Free Status or from the failure of a Separation Transaction to have the tax treatment described in the Tax Opinions/Canadian Ruling.
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“Taxing Authority” shall mean any Governmental Authority (domestic or foreign), including, without limitation, any state, local, municipality, political subdivision or governmental agency, responsible for the imposition of any Tax.
“Transaction Tax Proceeding” means a Tax Proceeding with the purpose or effect of determining or redetermining the Tax liability in respect of any Separation Transaction that could give rise to Tax-Related Losses.
“Transfer Taxes” means all U.S. federal, state, local or foreign sales, business, value-added, consumption, use, privilege, transfer, documentary, stamp, duties, recording and similar Taxes and fees (including any penalties, interest or additions thereto) imposed upon any member of the Distributing Group or any member of the Controlled Group in connection with the Separation Transactions.
(b) All capitalized terms used but not defined herein shall have the same meanings as in the Distribution Agreement. Any term used in this Agreement which is not defined in this Agreement or the Distribution Agreement shall, to the extent the context requires, have the meaning assigned to it in the Code or the applicable Treasury Regulations thereunder (as interpreted in administrative pronouncements and judicial decisions) or in comparable provisions of Applicable Law.
SECTION 3. Allocation of Taxes.
(i) Allocation of Income Taxes Reflected on Joint Returns. Distributing shall be allocated all Income Taxes reported, or required to be reported, on any Joint Return that any member of the Distributing Group or Controlled Group files or is required to file under the Code or Applicable Law; provided, however, that to the extent that any such Joint Return includes any Tax Item attributable to (A) any member of the Controlled Group or (B) the Controlled Business, in each case, for any Post-Distribution Period, Controlled shall be allocated all Income Taxes (as determined by Distributing based on the Closing of the Books Method) attributable to such Tax Items.
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(ii) Allocation of Income Taxes Reflected on Separate Returns. Distributing shall be allocated all Income Taxes that are attributable to members of the Distributing Group and reported, or required to be reported, on a Distributing Separate Return. Controlled shall be allocated all Income Taxes that are attributable to members of the Controlled Group and reported, or required to be reported, on a Controlled Separate Return.
(i) Except as provided in Section 3(c) and in any of the Transfer Agreements, Distributing shall be allocated all Non-Income Taxes that are attributable to the Distributing Business and Controlled shall be allocated all Non-Income Taxes attributable to the Controlled Business, in each case, as determined under Section 3(b)(ii).
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SECTION 4. Preparation and Filing of Returns.
(a) Responsibility for Preparing Returns
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(c) Tax Reporting and Accounting Practices
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(d) Filing of Returns and Payment of Taxes.
(i) Each Party shall execute and timely file (or cause to be executed and timely filed) each Return that it is responsible for filing under Applicable Law. Distributing shall pay (or cause to be paid) to the proper Taxing Authority the Tax shown as due on any Return which a member of the Distributing Group is responsible for filing under this Section 4, and Controlled shall pay (or cause to be paid) to the proper Taxing Authority the Tax shown as due on any Return which a member of the Controlled Group is responsible for filing under this Section 4.
(ii) If any member of the Distributing Group is required to make a payment to a Taxing Authority for Taxes allocated to Controlled under Section 3, Controlled shall indemnify Distributing for the amount of such Taxes in accordance with Section 11 and Section 12. If any member of the Controlled Group is required to make a payment to a Taxing Authority for Taxes allocated to Distributing under Section 3, Distributing shall indemnify Controlled for the amount of such Taxes in accordance with Section 11 and Section 12.
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the prior written consent of Distributing (which consent shall not be unreasonably withheld or delayed), file, or cause to be filed, any such Adjustment Request to the extent that such filing, if accepted, is likely to increase the Taxes allocated to, or the Tax indemnity obligations under this Agreement of, Distributing for any Tax Period (or portion thereof) by more than a de minimis amount; provided, however, that such consent need not be obtained if Controlled agrees to indemnify Distributing for the incremental Taxes allocated to, or the incremental Tax indemnity obligation resulting under this Agreement to, Distributing as a result of the filing of such Adjustment Request.
SECTION 5. Apportionment of Earnings and Profits and Tax Attributes.
(a) Tax Attributes arising in a Taxable period that ends on the Distribution Date or includes a Pre-Distribution Period will be allocated to (and the benefits and burdens of such Tax Attribute will inure to) the members of the Distributing Group and the members of the Controlled Group in accordance with Distributing’s historical practice (including historical methodologies for making corporate allocations), the Code, Treasury Regulations, and any applicable state, local and foreign law, as determined by Distributing in its sole discretion.
(b) Distributing shall in good faith advise Controlled after the close of the relevant Taxable period in which the Distribution occurs in writing of the portion, if any, of any earnings and profits, Tax Attributes, overall foreign loss or other consolidated, combined or unitary attribute which Distributing determines shall be allocated or apportioned to the members of the Controlled Group under Applicable Law. All members of the Controlled Group shall prepare all Returns in accordance with such written notice. In the event of an adjustment to the earnings and profits, any Tax Attributes, overall foreign loss or other consolidated, combined or unitary attribute determined by Distributing, Distributing shall promptly notify Controlled in writing of such adjustment. For the avoidance of doubt, Distributing shall not be liable to any member of the Controlled Group for any failure of any determination under this Section 5(b) to be accurate under Applicable Law, provided such determination was made in good faith.
(c) Except as otherwise provided herein, to the extent that the amount of any Tax Attribute is later reduced or increased by a Taxing Authority or as a result of a Tax Proceeding, such reduction or increase shall be allocated to the Company to which such Tax Attribute was allocated pursuant to this Section 5, as determined by Distributing in its sole discretion.
SECTION 6. Utilization of Tax Attributes.
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Item, and (z) make or cause to be made any affirmative election to claim in any Pre-Distribution Period any Controlled Carried Item. Subject to Section 6(b), Controlled shall submit a written request to Distributing in order to seek Distributing’s consent with respect to any of the actions described in this Section 6(a).
(b) Controlled Carrybacks to Joint Returns.
(i) Each member of the Controlled Group shall elect, to the extent permitted by Applicable Law, to forgo the right to carry back any Controlled Carried Item from a Post-Distribution Period to a Pre-Distribution Period with respect to a Joint Return. Such elections shall include, but not be limited to, the election described in Treasury Regulation Section 1.1502-21(b)(3)(ii)(B), and any analogous election under state, local, or foreign Income Tax laws, to waive the carryback of any Tax Attribute.
(ii) If a member of the Controlled Group determines that it is required by Applicable Law to carry back any Controlled Carried Item to a Pre-Distribution Period with respect to a Joint Return, it shall notify Distributing in writing of such determination at least 90 days prior to the due date for filing the Return on which such carryback will be reflected. Such notification shall include a description in reasonable detail of the basis for any expected Tax Benefit and the amount thereof, and a certification by an appropriate officer of Controlled setting forth Controlled’s belief (together with supporting analysis) that the Tax treatment of such Controlled Carried Item is more likely than not correct. If Distributing disagrees with such determination, the parties shall resolve their disagreement pursuant to the procedures set forth in Section 23.
(iii) If, notwithstanding the provisions of Section (b)(i), a Controlled Carried Item is carried back to a Joint Return, Distributing shall promptly remit to Controlled any Tax Benefit (including interest received from the relevant Tax Authority, but net of any Taxes imposed with respect to such Tax Benefit and any other reasonable costs) that the Distributing Group actually realizes with respect to any such carryback. If Distributing pays any amount to Controlled under this Section 6(b)(iii) and, as a result of a subsequent Final Determination, the Tax Benefit that gave rise to such payment is subsequently disallowed, Distributing shall notify Controlled of the amount to be repaid to Distributing, and Controlled shall then repay such amount to Distributing, together with any interest, fines, additions to Tax, penalties or any additional amounts imposed by a Taxing Authority relating thereto.
(iv) For purposes of this Section 6, a Tax Benefit shall be deemed to have been realized at the time any actual refund of Taxes is received or, where a Tax Benefit is received in the form of a deduction from, or credit or other offset against other or future Tax liabilities, at the time of filing the Return (including a Return for estimated Taxes) on which such Tax Benefit is applied in reduction of Taxes that would otherwise be payable.
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SECTION 7. Certain Equity-Based Awards.
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(a) Distributing shall be entitled to any Tax Benefits (including, in the case of any refund received, any interest thereon actually received from the applicable Taxing Authority) received by any member of the Distributing Group or any member of the Controlled Group, other than any Tax Benefits (or any amounts in respect of Tax Benefits) to which Controlled is entitled pursuant to Section 8(b). Controlled shall not be entitled to any Tax Benefits received by any member of the Distributing Group or the Controlled Group, except as set forth in Section 8(b).
(b) Controlled shall be entitled to:
(i) retain any Tax Benefits (including, in the case of any refund received, any interest thereon actually received from the applicable Taxing Authority) received from an applicable Taxing Authority after the Distribution Date in respect of Tax for which a member of the Controlled Group is liable under this Agreement;
(ii) any payment in respect of Tax Benefits to which Controlled is entitled under Section 6; and
(iii) the Tax Benefit of any deductions to which Controlled is entitled under Section 7.
(c) To the extent permitted by Applicable Law, a Company receiving a Tax Benefit to which another Company is entitled hereunder (a “Tax Benefit Recipient”) shall pay over the amount of such Tax Benefit (including interest received from the relevant Tax Authority, but net of any Taxes imposed with respect to such Tax Benefit and any other reasonable costs) within five (5) Business Days of receipt thereof; provided, however, that the other Company, upon the request of such Tax Benefit Recipient, shall repay the amount paid to the other Company (plus any penalties, interest or other charges imposed by the relevant Tax Authority) in the event, as a result of a subsequent Final Determination, a Tax Benefit that gave rise to such payment is subsequently disallowed.
(d) Where a Tax Benefit is received in the form of a deduction from, or credit or other offset applied against, other or future Tax liabilities, reimbursement with respect to such Tax Benefit shall be due within five (5) Business Days from the due date for payment of the Tax from or against which such Tax Benefit has been deducted, credited or otherwise offset.
(e) Within 90 days after the ASCO Power Charitable Contribution, Controlled shall remit to Distributing an amount in cash equal to the product of (i) the amount of the Tax deduction Controlled reasonably expects to claim in respect of the ASCO Power Charitable Contribution, which shall be consistent with the fair market valuation of the Donation Property conducted by a qualified appraiser, and (ii) 38%.
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SECTION 9. Certain Representations and Covenants.
(i) liquidate Controlled or to merge or consolidate any member of the Controlled Group with any other Person subsequent to the Distribution;
(ii) sell or otherwise dispose of any material asset of any member of the Controlled Group subsequent to the Distribution (including, for the avoidance of doubt, any shares of Foreign TC or Canadian TC or any property deriving more than 10% of its value from such shares), except in the ordinary course of business;
(iii) undertake any significant acquisition in Foreign TC or Canadian TC (whether directly or indirectly) which could reasonably be expected to result in the shares of Controlled deriving more than 10% of their fair market value from the shares of Foreign TC or Canadian TC;
(iv) cause [Great River Holding LLC] to be treated as a corporation for U.S. federal income tax purposes following the Xxxxxxx Contribution;
(v) repurchase stock of Controlled other than in a manner that satisfies the requirements of IRS Revenue Procedure 96-30 (as in effect prior to the amendment of such Revenue Procedure by IRS Revenue Procedure 2003-48) and consistent with any representations made to any Tax Advisor or Taxing Authority in connection with the Tax Opinions/Canadian Ruling;
(vi) enter into any negotiations, agreements, or arrangements with respect to transactions or events (including stock issuances, pursuant to the exercise of options or otherwise, option grants, the adoption of, or authorization of shares under, a stock option plan, capital contributions, or acquisitions, but not including the Distribution) that could reasonably be expected to cause the Distribution to be treated as part of a plan pursuant to which one or more Persons acquire directly or indirectly Controlled stock representing a 50% or greater interest within the meaning of Section 355(d)(4) of the Code or that could reasonably be expected to result in an acquisition of control of Controlled, Foreign TC or Canadian TC for purposes of the ITA;
(vii) take or fail to take any action in a manner that management of Controlled knows, or should know, is reasonably likely to contravene any agreement with a Taxing Authority entered into prior to the Distribution Date to which any member of the Controlled Group or the Distributing Group is a party, including the agreements set forth in Exhibit [B]; or
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(viii) take or fail to take any action in a manner that is inconsistent with the information and representations furnished to any Tax Advisor or Taxing Authority in connection with the Tax Opinions/Canadian Ruling, regardless of whether such information and representations were included in the Tax Opinions/Canadian Ruling.
(i) during the two-year period following the Distribution Date (the “Restricted Period”), Controlled will (A) maintain its status as a company engaged in the Active Trade or Business for purposes of Section 355(b)(2) of the Code, (B) not engage in any transaction that would result in it ceasing to be a company engaged in the Active Trade or Business for purposes of Section 355(b)(2) of the Code, (C) cause each other member of the Controlled Group whose Active Trade or Business is relied upon for purposes of qualifying any Separation Transaction as tax-free pursuant to Section 355 of the Code or other Applicable Law to maintain its status as a company engaged in such Active Trade or Business for purposes of Section 355(b)(2) of the Code and any such other Applicable Law, (D) not engage in any transaction or permit any other member of the Controlled Group to engage in any transaction that would result in a member of the Controlled Group described in clause (C) hereof ceasing to be a company engaged in the relevant Active Trade or Business for purposes of Section 355(b)(2) of the Code or such other Applicable Law, taking into account Section 355(b)(3) of the Code for purposes of clauses (A) through (D) hereof, and (E) not dispose of or permit any other member of the Controlled Group to dispose of, directly or indirectly, any interest in a member of the Controlled Group described in clause (C) hereof or permit any such member of the Controlled Group to make or revoke any election under Treasury Regulations Section 301.7701-3;
(ii) during the Restricted Period, Controlled will not sell or transfer (or cause or permit to be transferred), other than sales or transfers in the ordinary course of business, (A) all or substantially all of the assets that were transferred to Controlled as part of the Xxxxxxx Contribution, (B) more than 25% of the aggregate book value of the total assets of the Controlled Group (as of the Distribution Date); or (C) more than 25% of the aggregate book value of the assets of any member of the Controlled Group whose Active Trade or Business is relied upon for purposes of qualifying any Separation Transaction as tax-free pursuant to Section 355 of the Code;
(iii) during the Restricted Period, Controlled will not repurchase stock of Controlled in a manner contrary to the requirements of IRS Revenue Procedure 96-30 (as in effect prior to the amendment of such Revenue Procedure by IRS Revenue Procedure 2003-48) or inconsistent with any representations made to any Tax Advisor in connection with the Tax Opinions/Canadian Ruling;
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(iv) during the Restricted Period, Controlled will not cause [Great River Holding LLC] to be treated as a corporation for U.S. federal income tax purposes at any time on or prior to the Distribution Date;
(v) during the Restricted Period, no member of the Controlled Group will, or will agree to, sell or otherwise issue to any Person, or redeem or otherwise acquire from any Person, any Equity Interests of Controlled or any other member of the Controlled Group; provided, however, that Controlled may (x) repurchase stock of Controlled to the extent not inconsistent with Section 9(b)(iii) hereof and (y) issue such Equity Interests to the extent such issuances satisfy Safe Harbor VIII (relating to acquisitions in connection with a person’s performance of services) or Safe Harbor IX (relating to acquisitions by a retirement plan of an employer) of Treasury Regulations Section 1.355-7(d);
(vi) during the Restricted Period, no member of the Controlled Group will (A) solicit any Person to make a tender offer for, or otherwise acquire or sell, the Equity Interests of Controlled, (B) participate in or support any unsolicited tender offer for, or other acquisition, issuance or disposition of, the Equity Interests of Controlled or (C) approve or otherwise permit any proposed business combination or any transaction which, in the case of clauses (A) or (B), individually or in the aggregate, together with any transaction occurring within the four-year period beginning on the date which is two years before the Distribution Date and any other transaction which is part of a plan or series of related transactions (within the meaning of Section 355(e) of the Code) that includes the Distribution, could result in one or more Persons acquiring (except for acquisitions that otherwise satisfy Safe Harbor VIII (relating to acquisitions in connection with a person’s performance of services) or Safe Harbor IX (relating to acquisitions by a retirement plan of an employer) of Treasury Regulations Section 1.355–7(d)) directly or indirectly stock representing a 40% or greater interest, by vote or value, in Controlled (or any successor thereto) (any such transaction, a “Proposed Acquisition Transaction”);
(vii) during the Restricted Period, if any member of the Controlled Group proposes to enter into any transaction or series of transactions that is not a Proposed Acquisition Transaction but would be a Proposed Acquisition Transaction if the percentage reflected in the definition of Proposed Acquisition Transaction were 25% instead of 40% (a “Section 9(b)(vi) Acquisition Transaction”) or, to the extent Controlled has the right to prohibit any Section 9(b)(ix) Acquisition Transaction, proposes to permit any Section 9(b)(ix) Acquisition Transaction to occur, in each case, Controlled shall provide Distributing, no later than 10 Business Days following the signing of any written agreement with respect to the Section 9(b)(ix) Acquisition Transaction, with a written description of such transaction (including the type and amount of Equity Interests of the Controlled to be issued in such transaction) and a certificate of the board of directors of Controlled to the effect that the Section 9(b)(ix) Acquisition Transaction is not a Proposed Acquisition Transaction;
(viii) during the Restricted Period, no member of the Controlled Group will amend its certificate of incorporation (or other organizational documents), or take any
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other action, whether through a stockholder vote or otherwise, affecting the voting rights of the Equity Interests of Controlled (including, without limitation, through the conversion of one class of Equity Interests of Controlled into another class of Equity Interests of Controlled);
(ix) during the Restricted Period, Controlled will not directly or indirectly solicit or initiate any transaction which, if completed, (x) would result in (A) an acquisition of control of Controlled, Foreign TC or Canadian TC for purposes of the ITA or (B) a disposition of shares of Foreign TC or Canadian TC, or of property which could reasonably be expected to derive more than 10% of its fair market value from such shares, by a particular vendor to a person not related to that vendor for purposes of paragraph 55(3.1)(b) of the ITA, or (y) could reasonably be expected to result in the shares of Controlled deriving more than 10% of their fair market value from the shares of Foreign TC or Canadian TC;
(x) Controlled will file, and will cause any applicable member of the Controlled Group to file, any Gain Recognition Agreement necessary or reasonably requested and determined by Distributing to be necessary so as to (A) allow for or preserve the tax-free or tax-deferred nature, in whole or part, of any Separation Transaction, or (B) avoid Distributing or any member of the Distributing Group recognizing gain under any Gain Recognition Agreement, and to the extent allowed or required by Treasury Regulations Section 1.367(a)-8, any such Gain Recognition Agreement shall provide that any gain recognized thereunder shall be included in taxable income in the Taxable year during which the gain recognition event occurs;
(xi) Controlled will not (A) take any action (including, but not limited to, the sale or disposition of any stock, securities, or other assets), (B) permit any member of the Controlled Group to take any such action, (C) fail to take any action, or (D) permit any member of the Controlled Group to fail to take any action, in each case that would cause Distributing or any member of the Distributing Group to recognize gain under any Gain Recognition Agreement;
(xii) Controlled shall neither cause nor permit any foreign Subsidiary of Controlled to (A) through September 30, 2016, enter into any transaction or take any action that would be considered under the Code to constitute the payment of, or otherwise be treated as giving rise to, a dividend for U.S. federal income tax purposes (including, without limitation, pursuant to Sections 302, 304, 964(e) or 1248 of the Code) or (B) change its Taxable year under the Code or under any foreign Tax laws for a Taxable year that commenced on or before September 30, 2016, in each case. without obtaining the prior written consent of Distributing;
(xiii) during the Restricted Period, Controlled will not take or fail to take, or permit any other member of the Controlled Group to take or fail to take, any action which would cause Avocent Corporation to cease to be (A) wholly and directly owned by Liebert Corporation and (B) treated as a corporation for U.S. federal income tax purposes; and
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(xiv) on or after the Distribution Date, Controlled will not, nor will it permit any other member of the Controlled Group to, make or change any accounting method, amend any Return or take any Tax position on any Return, take any other action or enter into any transaction that results in any increased Tax liability or reduction of any Tax asset of any member of the Distributing Group in respect of any Pre-Distribution Period;
(xv) Controlled will not, nor will it permit any other member of the Controlled Group to, take or fail to take any action in a manner that management of Controlled knows, or should know, is reasonably likely to contravene any agreement with a Taxing Authority entered into prior to the Distribution Date to which any member of the Controlled Group or the Distributing Group is a party, including the agreements set forth on Exhibit [B];
(xvi) Controlled will not, nor will it permit any other member of the Controlled Group to, take or fail to take any action in a manner that is inconsistent with the information and representations furnished to any Tax Advisor or Taxing Authority in connection with the Tax Opinions/Canadian Ruling, regardless of whether such information and representations were included in the Tax Opinions/Canadian Ruling; and
(xvii) Controlled will not take or fail to take, or permit any other member of the Controlled Group to take or fail to take, any action which prevents or could reasonably be expected to result in tax treatment that is inconsistent with the Tax-Free Status or the intended tax treatment of any Separation Transaction described in the Tax Opinions/Canadian Ruling;
(xviii) Controlled will not take or fail to take, or permit any other member of the Controlled Group to take or fail to take, any action which could cause the Canadian Reorganization to be taxed in a manner inconsistent with that provided for in the Canadian Ruling without obtaining an advance income tax ruling from the Canada Revenue Agency or an opinion from a nationally recognized law or accounting firm that such action, omission or transaction will not have such effect; and
(xix) Except as required by Applicable Law, Controlled will not, nor will it permit any other member of the Controlled Group to, interact with or provide information to the relevant Taxing Authority in respect of any Transaction Tax Proceeding.
(xx) Controlled shall file, or shall cause to be filed, a new domestic use agreement (as defined in Treasury Regulations Section 1.1503(d)-6(f)(2)(iii)) with respect to each dual consolidated loss set forth in Exhibit [C], so as to render the exception set forth in Treasury Regulations Section 1.1503(d)-6(f)(2) available with respect to any “triggering event” arising by reason of the transactions contemplated by the Distribution Agreement or any of the Ancillary Agreements.
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(i) any Tax liability allocated to Controlled pursuant to Section 3 of this Agreement;
(ii) any Tax-Related Losses resulting from a breach by Controlled or any other member of the Controlled Group of any representation or covenant made by the members of the Controlled Group herein (including, for the avoidance of doubt, any Tax-Related Losses resulting from any action for which the conditions set forth in Section 9(c) are satisfied); and
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(iii) any Tax liability of Distributing that is attributable to any action of Controlled or any other member of the Controlled Group (including, for the avoidance of doubt, any action for which the conditions set forth in Section 9(c) are satisfied), other than any action required by the Distribution Agreement or contemplated by the Restructuring, without regard to whether Distributing has consented to such action; and
(iv) all liabilities, costs, expenses (including, without limitation, reasonable expenses of investigation and attorneys’ fees and expenses), losses, damages, assessments, settlements or judgments arising out of or incident to the imposition, assessment or assertion of any Tax liability or damage described in (i), (ii) or (iii), including those incurred in the contest in good faith in appropriate proceedings relating to the imposition, assessment or assertion of any such Tax, liability or damage.
(i) any Tax liability allocated to Distributing pursuant to Section 3;
(ii) any Taxes imposed on any member of the Controlled Group under Treasury Regulations Section 1.1502-6 (or similar provision of state, local or foreign law) solely as a result of any such member being or having been a member of a Combined Group; and
(iii) all liabilities, costs, expenses (including, without limitation, reasonable expenses of investigation and attorneys’ fees and expenses), losses, damages, assessments, settlements or judgments arising out of or incident to the imposition, assessment or assertion of any Tax liability or damage described in (i) or (ii), including those incurred in the contest in good faith in appropriate proceedings relating to the imposition, assessment or assertion of any such Tax, liability or damage.
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member of the Distributing Group, respectively, any Tax Benefit which would not, but for such adjustment, be allowable, then any such indemnification obligation shall be an amount equal to (x) the amount otherwise due but for this Section 11(d), minus (y) the present value (as determined in good faith by Distributing based on reasonable projections, following consultation with Controlled) of the product of the Tax Benefit multiplied by (A) the maximum applicable federal, foreign, state or local, as the case may be, corporate Tax rate in effect at the time such Tax Benefit becomes allowable to the applicable member of the Controlled Group or the applicable member of the Distributing Group (as the case may be) or (B) in the case of a credit, 100 percent. The present value of such product shall be determined by discounting such product from the time the Tax Benefit becomes allowable at the rate equal to the “prime” rate as published in the Wall Street Journal, Eastern Edition on the date of such determination.
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SECTION 14. Communication and Cooperation.
(i) the retention, and provision on reasonable request, of any and all information including all books, records, documentation or other information pertaining to Tax matters relating to the Distributing Group and the Controlled Group, any necessary explanations of information, and access to personnel, until the later of (A) five (5) years after the date of the Distribution and (B) one (1) year after the expiration of the applicable statute of limitation (giving effect to any extension, waiver, or mitigation thereof);
(ii) the execution and filing of any document that may be necessary (including to give effect to Section 15) or helpful in connection with any required Return or in connection with any audit, proceeding, suit, action, investigation or review; and
(iii) the use of the parties’ commercially reasonable efforts to obtain any documentation from a governmental authority or a third party that may be necessary or helpful in connection with the foregoing.
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SECTION 15. Audits and Contest.
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If to Distributing or the Distributing Group, to:
Xxxxxxx Electric Co. | ||
000 Xxxx Xxxxxxxxxx Xxxxxx | ||
X.X. Xxx 0000 | ||
Xx. Xxxxx, XX 00000 | ||
Attention: | ||
Facsimile No.: | ||
E-mail: | ||
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with a copy to: | ||
Xxxxx Xxxx & Xxxxxxxx LLP | ||
000 Xxxxxxxxx Xxxxxx | ||
Xxx Xxxx, Xxx Xxxx 00000 | ||
Attention: | ||
Facsimile No.: | ||
E-mail: | ||
If to Controlled or the Controlled Group, to:
Vertiv Co. | ||
[1050 Xxxxxxxx Xxxxx | ||
Xxxxxxxx, XX 00000 ] | ||
Attention: | ||
Facsimile No.: | ||
E-mail: |
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SECTION 21. Entire Agreement; Amendments and Waivers.
SECTION 22. Governing Law and Interpretation. This Agreement shall be construed and enforced in accordance with the laws of the State of New York, without giving effect to laws and principles relating to conflicts of law.
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Distributing on its own behalf and on behalf of the members of the Distributing Group. | ||
By: |
| |
Name: | ||
Title: | ||
Controlled on its own behalf and on behalf of the members of the Controlled Group. | ||
By: |
| |
Name: | ||
Title: |
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