OKE » Topics » TAX MATTERS

These excerpts taken from the OKE 10-Q filed Nov 4, 2005.

TAX MATTERS

 

Section 9.1 Transaction Taxes. All transfer, documentary, recording, notarial, sales, use, registration, stamp and other similar taxes, fees and expenses (including, but not limited to, all applicable stock transfer, real estate transfer or gains Taxes and including any penalties, interest and additions to such tax) (“Transaction Taxes”) incurred in connection with this Agreement and the transactions contemplated hereby shall be borne by Purchaser, to the extent that Purchaser is legally obligated to pay those Transaction Taxes, and shall be borne by the Seller, to the extent that Seller is legally obligated to pay Transaction Taxes, regardless of whether the tax authority seeks to collect such Taxes from Seller or Purchaser. Purchaser and the Seller shall cooperate in timely making and filing all Tax Returns as may be required to comply with the provisions of laws relating to such Transaction Taxes. Seller shall prepare all tax filings related to any Transaction Taxes. Fifteen (15) days prior to making such filings, Seller shall provide to Purchaser Seller’s work papers for Purchaser’s review and approval. Ten (10) days prior to the filing date, Purchaser shall provide to Seller approval of such work papers. Within ten (10) days of receiving notice from Seller of the amount of Transaction Taxes due, Purchaser shall pay such amount to Seller for remittance to the applicable Governmental Authority. Seller shall give prompt written notice to Purchaser of any proposed adjustment or assessment of any Transaction Taxes with respect to the transaction, or of any examination of said transaction in a sales, use, transfer or similar tax audit. In any proceedings, whether formal or informal, Seller shall permit Purchaser to participate and control the defense of such proceeding and shall take all actions and execute all documents required to allow such participation. Seller shall not negotiate a settlement or compromise of any Transaction Taxes without the prior written consent of Purchaser, which consent shall not be unreasonably withheld or delayed.

 

Section 9.2 Real and Personal Property Taxes. All real and personal property Taxes and assessments arising with respect to the Company shall be prorated between Purchaser and Seller based on the relative periods of time the Company was owned by each Party or their respective Affiliates (based on the Effective Date) during the fiscal period for which such Taxes are imposed by the applicable Tax Authority (as such fiscal period is or may be reflected on the bill rendered by such Tax Authority). Purchaser shall pay to Seller at Closing (or an appropriate increase shall be made to the Base Purchase Price), to reflect Seller’s estimate of Purchaser’s pro rata share of the Company’s ad valorem tax liability for the calendar year in which Closing occurs. Upon receipt by Seller of the tax bill, invoice or other statement regarding such real and personal property Taxes, Seller shall calculate the actual pro rata share of such tax bill, invoice or other statement attributable to each of Purchaser and Seller. Seller shall forward, as soon as practicable, to Purchaser a copy of such tax bill, invoice or statement along with the supporting documentation relating to the calculation of the pro rata share to Purchaser. If Purchaser’s actual pro rata share of the Company’s ad valorem tax liability is greater than the estimated amount paid by Purchaser, as set forth above, then Purchaser

 

34


shall forward to Seller payment in immediately available funds of the additional amount of its pro rata share of such Taxes. If Purchaser’s actual pro rata share of such tax liability is less than the estimated amount paid, then Seller shall forward to Purchaser the difference in such amounts. Seller will pay the full amount of the tax bill, invoice or statement to the applicable Tax Authority. In the event Purchaser first receives a tax bill, invoice or statement relating to the Company from a Tax Authority for ad valorem taxes for the year in which Closing occurs, Purchaser shall immediately forward such tax bill, invoice or statement to Seller. Purchaser will be responsible for filing all ad valorem Tax Returns for the Company for the calendar years 2006 and beyond.

 

Section 9.3 Taxes Based on Revenues. All sales, franchise, gross receipts and other similar Taxes based upon revenues relating to the Company shall be prorated between Purchaser and Seller, with Seller being obligated to reimburse Purchaser only for the portion of any such Tax that is applicable to the cash received by Seller prior to the Effective Date that relates to the revenues of the Company being taxed. Upon receipt by Purchaser of the Tax Return, tax bill, invoice or other statement regarding such Taxes, Purchaser shall calculate the pro rata share of such Tax Return, tax bill, invoice or other statement attributable to Purchaser and Seller. Purchaser then shall forward, as soon as practicable, to Seller a copy of such tax bill, invoice or statement along with the supporting documentation relating to the calculation of the pro rata share to Seller. Seller then shall forward to Purchaser payment in immediately available funds of its pro rata share of such Taxes as soon as practicable in advance of the due date of the tax bill, invoice or statement and in time to avoid the incurrence of penalties or interest. Upon its receipt of such payment, Purchaser will pay the full amount of the tax bill, invoice or statement to the applicable Tax Authority. In the event Seller first receives a tax bill, invoice or statement relating to the revenues of the Company from a Tax Authority, Seller shall immediately forward such tax bill, invoice or statement to Purchaser.

 

Section 9.4 Section 338(h)(10) Election. Purchaser and Seller (or its applicable Affiliate) shall make timely, joint elections under Section 338(h)(10) of the Code and Treasury Regulations Section 1.338(h)(10) and any comparable election under foreign, state or local tax law (the Elections”) with respect to the purchase and sale of the Shares pursuant to this Agreement. Purchaser shall be responsible for and control the preparation and filing of the Elections in accordance with the allocation of the Purchase Price described in Section 9.5 below. In particular, Seller shall deliver to Purchaser all information reasonably requested to enable Purchaser to prepare Forms 8023 and all attachments required to be filed therewith (the Forms”), including the schedule of data required by the Forms, no later than ninety (90) days before the Forms are due to be filed. Once prepared by Purchaser, a draft copy of the Forms shall be forwarded to Seller for its approval at least thirty (30) days prior to the filing due date for the Forms and which approval shall not be unreasonably withheld or delayed. The Forms shall be duly executed by an authorized person for each Party and duly and timely filed by Purchaser on behalf of Purchaser and Seller (or its applicable Affiliate). The Purchaser and Seller will file all Tax Returns (including the Forms) in a manner consistent with such election. Notwithstanding any other provision of this Agreement to the contrary, Seller agrees that any income and gain recognized as a result of, and in accordance with (i) the making of the Section 338(h)(10) Election will be included in Seller’s Federal and applicable foreign, state and local income tax returns. Seller shall be liable for and shall timely pay to the appropriate Governmental Authorities an amount equal to the resulting Tax liability attributable to the Section 338(h)(10) Election, and (ii) if the 338(h)(10) Election is disallowed by the Governmental Authority and such disallowance is agreed to by Seller or upheld by any court (in whole or in part), provided such court decision is final and nonappealable, then Seller shall pay to Purchaser an amount equal to the amount of such Tax liability.

 

35


Section 9.5 Allocation of Purchase Price. As promptly as practicable, but in no event later than sixty (60) days after the Closing Date, Purchaser shall prepare and deliver to Seller a statement (the “Allocation Statement”) allocating the Purchase Price among the assets of the Company in accordance with Section 1060 of the Code and the Treasury regulations promulgated thereunder and consistent with the allocation set forth on Exhibit B. Seller shall have fifteen (15) days to review the Allocation Statement and shall notify Purchaser of any disputes with the allocation as set forth in the Allocation Statement. Seller and Purchaser shall negotiate in good faith to resolve any such dispute prior to the date that is sixty (60) days prior to the due date of the Tax Returns that reflect the allocation. If Seller and Purchaser cannot resolve the disputed allocation prior to such date, then Seller and Purchaser shall refer the dispute to the Accountant to review and to determine the proper allocation (it being understood that in making such determination, the Accountant shall be functioning as an expert and not as an arbitrator). The Accountant shall deliver to Seller and Purchaser, as promptly as practicable (but in any case no later than thirty (30) days from the date of engagement of the Accountant), a determination of the allocation. This determination will be binding on the Parties hereto and all Tax Returns filed by Purchaser, Seller and each of their Affiliates shall be prepared consistently with such allocation. The cost of such review and report shall be borne by Purchaser.

 

Section 9.6 Conflict. In the event of a conflict between the provisions of this Article 9, on the one hand, and the provisions of Article 10, on the other hand, the provisions of this Article 9 shall control.

 

TAX MATTERS

 

Section 9.1 Transaction Taxes. All transfer, documentary, recording, notarial, sales, use, registration, stamp and other similar taxes, fees and expenses (including, but not limited to, all applicable stock transfer, real estate transfer or gains Taxes and including any penalties, interest and additions to such tax) (Transaction Taxes) incurred in connection with this Agreement and the transactions contemplated hereby shall be borne by Purchaser, to the extent that Purchaser is legally obligated to pay those Transaction Taxes, and shall be borne by the Seller, to the extent that Seller is legally obligated to pay Transaction Taxes, regardless of whether the tax authority seeks to collect such Taxes from Seller or Purchaser. Purchaser and the Seller shall cooperate in timely making and

 

34


filing all Tax Returns as may be required to comply with the provisions of laws relating to such Transaction Taxes. Seller shall prepare all tax filings related to any Transaction Taxes. Fifteen (15) days prior to making such filings, Seller shall provide to Purchaser Seller’s work papers for Purchaser’s review and approval. Ten (10) days prior to the filing date, Purchaser shall provide to Seller approval of such work papers. Within ten (10) days of receiving notice from Seller of the amount of Transaction Taxes due, Purchaser shall pay such amount to Seller for remittance to the applicable Governmental Authority. Seller shall give prompt written notice to Purchaser of any proposed adjustment or assessment of any Transaction Taxes with respect to the transaction, or of any examination of said transaction in a sales, use, transfer or similar tax audit. In any proceedings, whether formal or informal, Seller shall permit Purchaser to participate and control the defense of such proceeding and shall take all actions and execute all documents required to allow such participation. Seller shall not negotiate a settlement or compromise of any Transaction Taxes without the prior written consent of Purchaser, which consent shall not be unreasonably withheld or delayed.

 

Section 9.2 Real and Personal Property Taxes. All real and personal property Taxes and assessments arising with respect to the Companies shall be prorated between Purchaser and Seller based on the relative periods of time the Companies were owned by each Party or their respective Affiliates (based on the Effective Date) during the fiscal period for which such Taxes are imposed by the applicable Tax Authority (as such fiscal period is or may be reflected on the bill rendered by such Tax Authority). Purchaser shall pay to Seller at Closing (or an appropriate increase shall be made to the Purchase Price), to reflect Seller’s estimate of Purchaser’s pro rata share of each Company’s ad valorem tax liability for the calendar year in which Closing occurs. Upon receipt by Seller of the tax bill, invoice or other statement regarding such real and personal property Taxes, Seller shall calculate the actual pro rata share of such tax bill, invoice or other statement attributable to each of Purchaser and Seller. Seller shall forward, as soon as practicable, to Purchaser a copy of such tax bill, invoice or statement along with the supporting documentation relating to the calculation of the pro rata share to Purchaser. If Purchaser’s actual pro rata share of the Companies’ ad valorem tax liability is greater than the estimated amount paid by Purchaser, as set forth above, then Purchaser shall forward to Seller payment in immediately available funds of the additional amount of its pro rata share of such Taxes. If Purchaser’s actual pro rata share of such tax liability is less than the estimated amount paid, then Seller shall forward to Purchaser the difference in such amounts. Seller will pay the full amount of the tax bill, invoice or statement to the applicable Tax Authority. In the event Purchaser first receives a tax bill, invoice or statement relating to any Company from a Tax Authority for ad valorem taxes for the year in which Closing occurs, Purchaser shall immediately forward such tax bill, invoice or statement to Seller. Purchaser will be responsible for filing all ad valorem Tax Returns for each all of the Companies for the calendar years 2006 and beyond.

 

Section 9.3 Taxes Based on Revenues. All sales, franchise, gross receipts and other similar Taxes based upon revenues relating to any Company shall be prorated between Purchaser and Seller, with Seller being obligated to reimburse Purchaser only for the portion of any such Tax that is applicable to the cash received by Seller prior to the Effective Date that relates to the revenues of the Company being taxed. Upon receipt by Purchaser of the Tax Return, tax bill, invoice or other statement regarding such Taxes, Purchaser shall calculate the pro rata share of such Tax Return, tax bill, invoice or other statement attributable to Purchaser and Seller. Purchaser then shall forward, as soon as practicable, to Seller a copy of such tax bill, invoice or statement along with the supporting documentation relating to the calculation of the pro rata share to Seller. Seller then shall forward to Purchaser payment in immediately available funds of its pro rata share of such Taxes as soon as

 

35


practicable in advance of the due date of the tax bill, invoice or statement and in time to avoid the incurrence of penalties or interest. Upon its receipt of such payment, Purchaser will pay the full amount of the tax bill, invoice or statement to the applicable Tax Authority. In the event Seller first receives a tax bill, invoice or statement relating to the revenues of any Company from a Tax Authority, Seller shall immediately forward such tax bill, invoice or statement to Purchaser.

 

Section 9.4 Section 338(h)(10) Election. Purchaser and Seller (or its applicable Affiliate) shall make timely, joint elections under Section 338(h)(10) of the Code and Treasury Regulations Section 1.338(h)(10) and any comparable election under foreign, state or local tax law (the Elections”) with respect to the purchase and sale of the Membership Interests pursuant to this Agreement. Purchaser shall be responsible for and control the preparation and filing of the Elections in accordance with the allocation of the Purchase Price described in Section 9.5 below. In particular, Seller shall deliver to Purchaser all information reasonably requested to enable Purchaser to prepare Forms 8023 and all attachments required to be filed therewith (the Forms”), including the schedule of data required by the Forms, no later than ninety (90) days before the Forms are due to be filed. Once prepared by Purchaser, a draft copy of the Forms shall be forwarded to Seller for its approval at least thirty (30) days prior to the filing due date for the Forms and which approval shall not be unreasonably withheld or delayed. The Forms shall be duly executed by an authorized person for each Party and duly and timely filed by Purchaser on behalf of Purchaser and Seller (or its applicable Affiliate). The Purchaser and Seller will file all Tax Returns (including the Forms) in a manner consistent with such election. Notwithstanding any other provision of this Agreement to the contrary, Seller agrees that any income and gain recognized as a result of, and in accordance with (i) the making of the Section 338(h)(10) Election will be included in Seller’s Federal and applicable foreign, state and local income tax returns. Seller shall be liable for and shall timely pay to the appropriate Governmental Authorities an amount equal to the resulting Tax liability attributable to the Section 338(h)(10) Election, and (ii) if the 338(h)(10) Election is disallowed by the Governmental Authority and such disallowance is agreed to by Seller or upheld by any court (in whole or in part), provided such court decision is final and nonappealable, then Seller shall pay to Purchaser an amount equal to the amount of such Tax liability.

 

Section 9.5 Allocation of Purchase Price. As promptly as practicable, but in no event later than sixty (60) days after the Closing Date, Purchaser shall prepare and deliver to Seller a statement (the Allocation Statement) allocating the Purchase Price among the assets of the Companies in accordance with Section 1060 of the Code and the Treasury regulations promulgated thereunder and consistent with the allocation set forth on Exhibit B. Seller shall have fifteen (15) days to review the Allocation Statement and shall notify Purchaser of any disputes with the allocation as set forth in the Allocation Statement. Seller and Purchaser shall negotiate in good faith to resolve any such dispute prior to the date that is sixty (60) days prior to the due date of the Tax Returns that reflect the allocation. If Seller and Purchaser cannot resolve the disputed allocation prior to such date, then Seller and Purchaser shall refer the dispute to the Accountant to review and to determine the proper allocation (it being understood that in making such determination, the Accountant shall be functioning as an expert and not as an arbitrator). The Accountant shall deliver to Seller and Purchaser, as promptly as practicable (but in any case no later than thirty (30) days from the date of engagement of the Accountant), a determination of the allocation. This determination will be binding on the Parties hereto and all Tax Returns filed by Purchaser, Seller and each of their Affiliates shall be prepared consistently with such allocation. The cost of such review and report shall be borne by Purchaser.

 

36


Section 9.6 Conflict. In the event of a conflict between the provisions of this Article 9, on the one hand, and the provisions of Article 10, on the other hand, the provisions of this Article 9 shall control.

 

EXCERPTS ON THIS PAGE:

10-Q (2 sections)
Nov 4, 2005
Wikinvest © 2006, 2007, 2008, 2009, 2010, 2011, 2012. Use of this site is subject to express Terms of Service, Privacy Policy, and Disclaimer. By continuing past this page, you agree to abide by these terms. Any information provided by Wikinvest, including but not limited to company data, competitors, business analysis, market share, sales revenues and other operating metrics, earnings call analysis, conference call transcripts, industry information, or price targets should not be construed as research, trading tips or recommendations, or investment advice and is provided with no warrants as to its accuracy. Stock market data, including US and International equity symbols, stock quotes, share prices, earnings ratios, and other fundamental data is provided by data partners. Stock market quotes delayed at least 15 minutes for NASDAQ, 20 mins for NYSE and AMEX. Market data by Xignite. See data providers for more details. Company names, products, services and branding cited herein may be trademarks or registered trademarks of their respective owners. The use of trademarks or service marks of another is not a representation that the other is affiliated with, sponsors, is sponsored by, endorses, or is endorsed by Wikinvest.
Powered by MediaWiki