This excerpt taken from the FST 8-K filed Aug 10, 2009.
Section 8.3 Taxes.
(a) Each party shall provide the other party with reasonable information which may be required by the other party for the purpose of preparing tax returns and responding to any audit by any taxing jurisdiction. Each party shall cooperate with all reasonable requests of the other party made in connection with contesting the imposition
of taxes. Notwithstanding anything to the contrary in this Agreement neither party shall be required at any time to disclose to the other party any tax returns or other confidential tax information.
(b) Seller and Purchaser shall report the information required by Section 1060 of the Code, (or any corresponding state or local income tax statute), on all tax returns including, but not limited to, Internal Revenue Service Form 8594, in a manner consistent with
(i) the allocations set forth on Schedule 2.3(b), as adjusted pursuant to this Agreement and
(ii) the requirements of such Section 1060.
If, contrary to the intent of the parties hereto as expressed in this Section 8.3(b), any taxing authority makes or proposes an allocation different from the allocation determined under this Section 8.3(b), Purchaser and Seller shall cooperate with each other in good faith to contest such taxing authoritys allocation (or proposed allocation), provided, however, that, after consultation with the party adversely affected by such allocation (or proposed allocation), the other party hereto may file such protective claims or tax returns as may be reasonably required to protect its interests.
(c) All ad valorem taxes, real property taxes, personal property taxes and similar obligations (Property Taxes) attributable to the Assets with respect to the tax period in which the Effective Time occurs shall be apportioned as of the Effective Time between Seller and Purchaser based on the number of days in such period which fall on each side of the Effective Time (with the day on which the Effective Time falls being counted in the period after the Effective Time). The owner of record on the assessment date shall file or cause to be filed all required reports and returns incident to the Property Taxes and shall pay or cause to be paid to the taxing authorities all Property Taxes relating to the tax period on which the Effective Time occurs. If Seller is the owner of record on the assessment date, then Purchaser shall pay to Seller Purchasers pro rata portion of Property Taxes within 30 days after receipt of Sellers invoice therefor, except to the extent taken into account as an adjustment to the Purchase Price pursuant to Section 2.4. If Purchaser is the owner of record as of the assessment date then Seller shall pay to Purchaser Sellers pro rata portion of Property Taxes within 30 days after receipt of Purchasers invoice therefor.
(d) Subject to the provisions of Section 8.3(e), Seller shall indemnify Purchaser for all liabilities that are assessed against Purchaser for foreign, federal, state, local or Indian Tribal taxes in respect of the ownership or operation of the Assets prior to the Effective Time, together with penalties and interest thereon (provided such penalties and interest do not result from the negligence, late filing, fraud or acts of misfeasance or malfeasance of Purchaser), to the extent such liabilities exceed the amounts of such taxes
paid by Seller; provided that Seller shall be entitled to all refunds or rebates of taxes paid in respect of the ownership or operation of the Assets prior to the Effective Time that may be received by Seller or Purchaser. Subject to the provisions of Section 8.3(e), Purchaser shall indemnify Seller for all liabilities which are assessed against Seller for foreign, federal, state, local or Indian Tribal taxes, together with penalties and interest thereon (provided such penalties and interest do not result from the negligence, late filing, fraud or acts of misfeasance or malfeasance of Seller), to the extent such liabilities relate to the ownership or operation of the Assets from and after the Effective Time; provided, however, that such indemnity shall not apply to such taxes to the extent (but only to the extent) such taxes are included in the determination of the Final Purchase Price, and provided further, however, that Purchaser shall be entitled to all refunds or rebates of taxes attributable to the Assets on or after the Effective Time that may be received by Seller or Purchaser, except to the extent (but only to the extent) such refunds or rebates are included in the determination of the Final Purchase Price. Seller and Purchaser agree that any amounts recoverable by any party pursuant to this Section 8.3(d) shall be treated as adjustments to the Purchase Price for all tax purposes.
(e) In order for Seller or Purchaser (Claimant) to make a claim against the other (Indemnitor) under this Section 8, Claimant shall give prompt notice to Indemnitor of any liability for which Claimant would claim indemnification under this Section 8.3, which notice shall include the circumstances surrounding such liability. Indemnitor shall then have the right but not the obligation, to contest such liability at its sole cost and expense by giving written notice to Claimant of such election within 30 days after Indemnitor receives Claimants notice. Should Indemnitor fail to notify Claimant within such 30-day period, Indemnitor shall be deemed to have elected not to contest such liability. Should Indemnitor elect (or be deemed to have elected) not to contest such liability, Indemnitor shall pay the full amount due under Section 8.3(d) in respect of such liability to Claimant in cash within 30 days after Indemnitor elects (or is deemed to have elected) not to contest such liability. Except as specifically provided in this Section 8.3 with respect to certain tax issues which must be combined or joined with other tax issues, if Indemnitor elects to contest any such liability, Claimant shall give Indemnitor full authority to defend, adjust, compromise or settle such liability and any action, suit, or proceeding in which Indemnitor contests such liability, in the name of Claimant or otherwise as Indemnitor shall elect. In any administrative or legal proceeding, Indemnitor shall employ counsel selected by it and reasonably acceptable to Claimant. With respect to tax issues incident to any such liability that must be combined or joined with one or more other tax issues which Claimant desires to contest, Claimant and Indemnitor shall cooperate fully, and control of any administrative legal proceeding shall rest with the party having the greater ultimate liability (including liability under Section 8.3(d) for the taxes in dispute). The party in control may not adjust, compromise or settle taxes which are contested by or on behalf of the other party without the consent of the other party. With respect to any liability contested by Indemnitor under the terms of this Section 8.3(d), Indemnitor shall pay the full amount due under Section 8.3(d) in respect of such liability to Claimant in cash within 30 days after the liability is finally determined
either by settlement or pursuant to the final unappealable judgment of a court of competent jurisdiction.
(f) Purchaser shall pay and be liable for all sales taxes occasioned by the sale of the Assets and all documentary, transfer, filing, licensing, and recording fees required in connection with the processing, filing, licensing or recording of any assignments, titles, or bills of sale.
(g) The provisions of Article VI limiting the obligations of Seller notwithstanding, the obligations of the parties pursuant to this Section 8.3 shall survive for a period of four (4) years following Closing.
Section 8.4 Receipts and Credits.
Subject to the terms hereof and except to the extent same have already been taken into account as an adjustment to the Purchase Price, all monies, proceeds, receipts, credits and income attributable to the ownership and operation of the Assets (a) for all periods of time from and subsequent to the Effective Time, shall be the sole property and entitlement of Purchaser, and to the extent received by Seller, Seller shall within 10 business days after such receipt, fully disclose, account for and transmit same to Purchaser and (b) for all periods of time prior to the Effective Time, shall be the sole property and entitlement of Seller and, to the extent received by Purchaser, Purchaser shall fully disclose, account for and transmit same to Seller within 10 business days. Subject to the terms hereof and except to the extent same have already been taken into account as an adjustment to the Purchase Price, all costs, expenses, disbursements, obligations and liabilities attributable to the Assets (i) for periods of time prior to the Effective Time, regardless of when due or payable, shall be the sole obligation of Seller and Seller shall promptly pay, or if paid by Purchaser, promptly reimburse Purchaser for and hold Purchaser harmless from and against same and (ii) for periods of time from and subsequent to the Effective Time, regardless of when due or payable, shall be the sole obligation of Purchaser and Purchaser shall promptly pay, or if paid by Seller, promptly reimburse Seller for and hold Seller harmless from and against same.
Section 8.5 Suspense Accounts.
At the Closing, Seller agrees to transfer to Purchaser and provide information regarding all of Sellers payable accounts holding monies in suspense attributable to the Assets. Purchaser agrees to take and apply such monies in a manner consistent with prudent oil and gas business practices and to indemnify Seller against any claim relating to the failure to pay such funds after the Closing.
This excerpt taken from the FST 8-K filed Sep 30, 2008.
Section 4.13. Taxes.
(a) All ad valorem and severance Taxes due and payable for the Oil and Gas Assets have been paid.
(b) With respect to Taxes related to the Oil and Gas Assets, (i) all material Tax Returns required to be filed on or before the date hereof by Seller have been timely filed with the appropriate Governmental Entity; (ii) such Tax Returns are true and correct in all material respects; (iii) all material Taxes reported on such Tax Returns have been paid, except those being contested in good faith; (iv) there are not currently in effect any extension or waiver by Seller of any statute of limitations of any jurisdiction regarding the assessment or collection of any such Tax; and (v) there are no administrative Proceedings or lawsuits pending against the Oil and Gas Assets or Seller with respect to the Oil and Gas Assets by any taxing authority.
(c) None of the Oil and Gas Assets were bound as of the Effective Time or will be bound at Closing by any tax partnership agreement binding upon Seller or are otherwise deemed by Applicable Law or agreement to be held by a partnership for U.S. federal income tax purposes.
(d) The Oil and Gas Assets constitute the entire operating assets of a separate division, branch or identifiable segment of Sellers business within the meaning of Texas Comptrollers Sales Tax Rule 34 Tex. Admin. Code § 3.316(d) and Texas Tax Code § 151.304(b)(2) and, accordingly, the sale of the Assets qualifies as an occasional sale pursuant to Texas Comptrollers Sales Tax Rule 34 Tex. Admin. Code § 3.316 and Texas Tax Code § 151.304.
This excerpt taken from the FST 8-K filed May 30, 2007.
13.1 Sales and Use Taxes; Property Taxes. The Purchase Price, as adjusted herein, is exclusive of any sales taxes and other transfer taxes in connection with the sale of the Membership Interests. Buyer shall bear the cost of all applicable sales taxes, real property transfer taxes, and filing and recording fees payable as a result of the transfer of the Membership Interests. If at any time after the Closing, Seller or any Affiliate shall become liable for taxes or
fees for which Buyer is responsible under this paragraph, Buyer shall promptly reimburse Seller or such Affiliate for such taxes and fees, including any penalties and interest thereon. Buyer shall defend, indemnify and hold Seller harmless with respect to the payment of any such taxes and fees, including any interest or penalties assessed thereon.
13.2 Tax Proceedings. In the event Seller receives notice of any payments due, claim, adjustment or other proceeding relating to Real or Personal Property Taxes for the year in which the Effective Date occurs, Seller shall notify Buyer in writing within 30 days of receiving notice thereof. As to any such taxes Buyer shall, at Buyers expense, control or settle the contest of such examination, claim, adjustment, or other proceeding, and shall indemnify Seller against all losses, damages, costs, expenses, liabilities, claims, demands, penalties, fines, assessments, settlements, and any related expenses in connection therewith. If, on execution of this Agreement, Seller or the Company is actively disputing any Real or Personal Property Tax assessments involving the Oil and Gas Properties for the year in which the Effective Date occurs, Seller shall fully inform Buyer of the basis for, and status of, the dispute and shall permit Buyer to direct and/or participate in the dispute to the full extent permitted by law.
13.3 Real and Personal Property Taxes. All ad valorem taxes, real property taxes and personal property taxes (Real and Personal Property Taxes) for the year in which the Effective Date occurs shall be apportioned as of the Effective Date between Seller and Buyer. Seller shall be liable for the portion of such Real and Personal Property Taxes based upon the number of days in the year occurring prior to the Effective Date, and Buyer shall be liable for the portion of such taxes based upon the number of days in the year occurring on and after the Effective Date. At least 5 days prior to Closing, Seller will provide Buyer with the amount of Real and Personal Property Taxes paid by Seller with respect to the year which includes the Effective Date and the amount of such Taxes allocable to Buyer, which amount shall be deducted from the Purchase Price at Closing.
13.4 Property Tax Reporting. Company has, or will have, filed any such renditions, reports, or returns required to be filed with respect to Real and Personal Property Taxes before Closing. Buyer shall file all reports and returns required to be filed or submitted after Closing that are incident to Real and Personal Property Taxes assessed for the year in which the Effective Date occurs but that are not submitted by Seller prior to the Closing Date. Buyer shall pay any assessed Real and Personal Property Taxes assessed after Closing and shall invoice Seller for its allocable share of such taxes, if any, pursuant to Section 13.3 above, which invoice shall be paid promptly by Seller.
13.5 Production Taxes. All Production Taxes (including deductions, credits or refunds pertaining thereto) attributable to the ownership or operation of, or production and revenue from, the Oil and Gas Properties prior to the Effective Date are Sellers responsibility, and shall be allocated to and paid by Seller. All Production Taxes (including deductions, credits or refunds pertaining thereto) attributable to the ownership or operation of, or production and revenue from, the Oil and Gas Properties on and after the Effective Date are the responsibility of Buyer, and shall be allocated to and paid by Buyer. Production Taxes will be allocated by the Parties so that the Party which is entitled to the revenue from production shall bear the burden of the Production Tax in respect thereto. Notwithstanding the foregoing, any excess Production Tax credits