GSIC » Topics » 11.3 Tax Matters .

This excerpt taken from the GSIC 8-K filed Aug 17, 2007.

11.3 Tax Matters.

11.3.1 Tax Periods Ending on or Before the Effective Date. GSI shall prepare or cause to be prepared and file or cause to be filed all Tax Returns for the Acquired Companies for all Tax periods ending on or prior to the Effective Date (“Pre-Closing Tax Periods”) which are required to be filed after the Effective Date and relate to Pre-Closing Tax Periods. To the extent time permitting so that neither GSI nor the Acquired Companies will be adversely affected, the Stakeholder Representative shall be entitled to request, such request not to be unreasonably refused, the opportunity to review and suggest reasonable revisions for each such Tax Return. The Principal Stakeholders shall be responsible for all Taxes of the Acquired Companies for all Pre-Closing Tax Periods and shall pay to (or as directed by) the Acquired Companies any Taxes of the Acquired Companies for all Pre-Closing Tax Periods to the extent such Taxes (i) have not already been paid by the Acquired Companies prior to the Effective Date or (ii) have not been accrued for on the books and records of the Acquired Companies as of the Effective Date and such payments shall be made in each applicable case within ten days after the date when GSI notifies the Stakeholders of an amount of such Taxes that is payable to the relevant Taxing Authority.

 

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11.3.2 Tax Periods Beginning Before and Ending After the Effective Date. GSI shall prepare or cause to be prepared and file or cause to be filed any Tax Returns of the Acquired Companies for Tax periods which begin before the Effective Date and end after the Effective Date (“Straddle Tax Periods”). The Principal Stakeholders shall pay to (or as directed by) the Acquired Companies an amount equal to the portion of such Taxes which relates to the portion of such Straddle Tax Period ending on the Effective Date to the extent such Taxes (i) have not already been paid by the Acquired Companies prior to the Effective Date or (ii) have not been accrued for on the books and records of the Acquired Companies as of the Effective Date. Any such payment for Taxes for any Straddle Tax Period shall be made by the Principal Stakeholders to the Acquired Companies within ten days after the date when GSI notifies the Principal Stakeholders of an amount of such Taxes that is payable to the relevant Taxing Authority. For purposes of this Section 11.3.2, in the case of any Taxes that are imposed on a periodic basis and are payable for a Straddle Tax Period, the portion of such Tax which relates to the portion of such Tax period ending on the Effective Date shall in the case of any Tax other than Taxes based upon or related to sales, income or receipts, be deemed to be the amount of such Tax for the entire Tax period multiplied by a fraction the numerator of which is the number of days in the Tax period ending on the Effective Date and the denominator of which is the number of days in the entire Tax period. In the case of Taxes imposed by sales, income, receipts or similar measures, such Taxes shall be deemed equal to the amount which would be payable if the taxable year ended on the Closing Date (based on an interim closing of the books method). Any credits relating to a Straddle Tax Period shall be taken into account as though the relevant Tax period ended on the Effective Date.

11.3.3 Amendments, Etc. In the event GSI determines that it is necessary or advisable to amend a prior-filed Tax Return, enter into any closing agreement, settle any Tax claim or assessment, carryback any Tax attributes, surrender any right to claim a refund of Taxes, consent to any extension or waiver of the limitation period applicable to any Tax claim or assessment, or take any other similar action relating to the filing of any Tax Return or the payment of any Tax, it shall provide written notice to the Stakeholder Representative describing in reasonable detail the action proposed to be taken. If the Stakeholder Representative does not provide to GSI written notice of objection setting forth in reasonable detail the reasons for such objections within ten business days of its receipt of notice of action from GSI, then GSI shall be entitled to proceed with the proposed action and shall, if applicable, be entitled to indemnification pursuant to Section 13 hereof. If the Stakeholder Representative objects in writing within the time period allotted, the parties shall submit the matter to a neutral, mutually agreed third-party expert for a determination regarding whether such proposed action is legally required. Upon a determination being reached that such proposed action is legally required, GSI shall proceed with such proposed action and shall, if applicable, be entitled to indemnification therefore pursuant to Section 13 hereof. In the event a determination is reached that such proposed action is not legally required, GSI may proceed with such proposed action, but shall not be entitled to indemnification under Section 13 hereof. The parties agree to appoint PricewaterhouseCoopers LLP as such third-party expert with respect to tax and financial matters.

11.3.4 Cooperation on Tax Matters. GSI and the Acquired Companies, on the one hand, and the Principal Stakeholders, on the other hand, shall cooperate fully, as and to the extent reasonably requested by the other party, in connection with the filing of Tax Returns pursuant to this Section 11.3 and any audit, litigation or other Proceeding with respect to Taxes. Such cooperation shall

 

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include the retention and (upon the other party’s request) the provision of records and information which are reasonably relevant to any such audit, litigation or other proceeding and making employees available on a mutually convenient basis to provide additional information and explanation of any material provided hereunder. GSI and the Principal Stakeholders agree (A) to retain all books and records with respect to Tax matters pertinent to the Acquired Companies relating to any Tax period beginning before the Effective Date until the expiration of the statute of limitations (and, to the extent notified by GSI or Principal Stakeholders, any extensions thereof) of the respective Tax periods, and to abide by all record retention agreements entered into with any Taxing Authority and (B) to give the other parties reasonable written notice prior to transferring, destroying or discarding any such books and records and, if another party so requests, to allow the other party to take possession of such books and records.

11.3.4 Certain Taxes. All transfer, documentary, sales, use, stamp, registration and other such Taxes and fees (including, without limitation, any penalties and interest) incurred in connection with this Agreement and any other similar Tax that may be imposed, shall be paid one-half by Stakeholders (from the Merger Consideration) and one-half by GSI when due, and Stakeholder Representative will, at the Principal Stakeholder’s own expense, file all necessary Tax Returns and other documentation with respect to all such transfer, documentary, sales, use, stamp, registration and other Taxes and fees, and, if required by applicable Law, GSI will join in the execution of any such Tax Returns and other documentation.

11.4 Books and Records. GSI shall, and shall cause the Surviving Corporation to, (i) preserve and keep the records held by each of them, their Subsidiaries and their Affiliates relating to the Acquired Companies for a period of three (3) years from the Effective Date and (ii) make such records and personnel (to the extent that it does not interfere with their normal duties) available during normal business hours to the Stakeholder Representative as may be reasonably required by it, including without limitation, in connection with, among other things, any insurance claims by, legal proceedings against or governmental investigations of any Acquired Company or any of their Affiliates (other than any Proceeding in which any Stakeholder and any Acquired Company or GSI Company are adverse parties) or in order to enable the Stakeholders to comply with their respective obligations under this Agreement and each other agreement, document or instrument contemplated hereby. If either GSI or the Surviving Corporation wishes to destroy such records after that time, such party shall first give 30 days prior written notice to the Stakeholder Representative and it shall have the right, at Stakeholder Representative’s expense, upon prior written notice given to GSI within that 30 day period, to take possession of the records within 10 days after the date of such notice.

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