Exhibit 10.7
TAX INDEMNIFICATION AGREEMENT, dated as of _______ __ , 2004, among
Xxxxxxxxx & Co., Inc. (the "COMPANY"), Xxxxxxxxx & Co. Cayman Limited ("SUB"),
the current and former members of Xxxxxxxxx & Co. Holdings, LLC ("US LLC") and
their respective partners and shareholders listed on Schedule I hereto (together
the "US INDEMNITEES"), and the current and former partners of Xxxxxxxxx & Co.
International LLP ("UK LLP") listed on Schedule II hereto (the "UK
INDEMNITEES," together with the US Indemnitees, the "INDEMNITEES").
NOW, THEREFORE, the parties agree as follows:
1. Definitions.
(a) "AFFILIATE" means any entity that at any time prior to the date
hereof was consolidated with the US LLC and/or the UK LLP for financial
reporting purposes, and any other entity specified by the Company, in its
sole discretion.
(b) "COVERED PERIOD" means, with respect to an Indemnitee, any taxable
year of the Indemnitee for which, as of the date hereof, a taxing authority
is not precluded by the applicable statute of limitations from assessing a
liability for Tax with respect to an Indemnifiable Item.
(c) "INCREASED TAXES" means, with respect to each Indemnitee, an
amount, determined by the Company in its sole discretion, equal to the
excess of (i) the excess of Taxes payable by the Indemnitee in respect of
Indemnifiable Items for all Covered Periods over the Taxes in respect of
Indemnifiable Items reflected on Returns for all such periods as originally
filed (or as amended prior to the date hereof) over (ii) the amount of any
Tax benefits (including deductions, credits or refunds) estimated by the
Company, in its sole discretion, to be available to such Indemnitee in any
period as a result of any excess described in clause (i) of this
definition; provided, however, that, unless otherwise determined by the
Company, in its sole discretion, any adjustments arising from (I) an
Indemnitee's individual circumstances and (II) correlative adjustments
resulting from Returns as originally filed, shall not be taken into account
in determining Increased Taxes.
(d) "INDEMNIFIABLE ITEM" means, with respect to an Indemnitee, any
item of income, gain, loss, deduction, credit or credit recapture directly
relating to any activity of the US LLC, the UK LLP or any Affiliate
undertaken in the ordinary course of such entity's trade or business and
reflected in a Return of the US LLC, UK LLP or Affiliate, but only if the
item is required to be reflected in a Return of such Indemnitee.
(e) "RETURN" means any report, information statement, partnership
account or return relating to, or required to be filed in connection with,
any Tax.
(f) "TAX" means any tax, including any interest, penalty or addition
to tax, imposed by any taxing authority,
(g) "TAX RATE" means, with respect to US Indemnitees, 40% or such
other rate as the Company shall determine in its sole discretion as being
the effective rate at which a plurality of the US Indemnitees will be
subject to US federal, state and local income tax on the amounts paid by
the Company pursuant to this Agreement, and with respect to UK Indemnities,
such Tax Rate as the Company shall in its sole discretion determine, based
on an estimation of the effective tax rate of such Indemnitees on any
amount paid by the Company pursuant to this Agreement provided, however,
that in any event (i) the same Tax Rate shall apply to all US Indemnitees
and (ii) the same Tax Rate shall apply to all UK Indemnitees.
(h) "TRIGGER AMOUNT" means with respect to an Indemnitee the amount
specified by the Company in writing to such Indemnitee.
2. Indemnity Obligation. (a) The Company, in the case of a US Indemnitee,
or Sub, in the case of a UK Indemnitee, hereby agrees to indemnify each
Indemnitee against and to pay to, or on behalf of, each Indemnitee an amount
equal to such Indemnitee's Increased Taxes.
(b) If the Company determines, in its sole discretion, that the
initial determination of Increased Taxes was incorrect (whether by reason
of a subsequent examination by a Taxing authority or otherwise), the
Company or Sub, as the case may be, shall make an additional payment to the
Indemnitee or the Indemnitee shall make a payment to the Company or Sub, as
the case may be, equal to the difference between (i) the payment previously
made pursuant to Section 2(a) hereof and (ii) the payment that would have
been made had such original determination included the correct
determination of Increased Taxes. If more than one payment is to be made
pursuant to this Section 2(b), the later payments shall take into account
the effect of any prior payments.
(c) After the Company or Sub has made payments (as adjusted pursuant
to Section 2(b) hereof) to, or on behalf of, an Indemnitee in respect of
Increased Taxes that equal the Trigger Amount for such Indemnitee, any
payments made by the Company or Sub pursuant to this Agreement in respect
of any additional Increased Taxes shall equal the product of (i) such
additional Increased Taxes and (ii) a fraction, the numerator of which is
one and the denominator of which is one minus the Tax Rate.
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(d) Notwithstanding anything to the contrary contained herein, the
Company or Sub, as the case may be, shall be permitted, but not required,
to advance the full amount of Taxes immediately payable by an Indemnitee in
circumstances in which the Increased Taxes are less than the initial Tax
payment (e.g. because the Tax payment gives rise to a tax benefit in the
same or subsequent years) provided that the Indemnitee provides an
undertaking to repay such advance as and when such tax benefit is realized.
Any such advance shall be in an amount equal to the excess of the initial
Tax payment over the Increased Taxes for which the Indemnitee is
indemnified hereunder, or such lesser amount as the Company or Sub shall
determine in its sole discretion.
3. Procedural Matters. (a) To the extent permitted by law, any Indemnitee
hereby agrees to permit the Company's internal tax department (or, if the
Company elects, the Company's designee) to prepare such Indemnitee's personal
income tax Returns (including any amended Returns) for all Covered Periods and,
provided such Returns are true and accurate in all material respects, file such
Returns. The Indemnitee shall, if requested by the Company, pay to the Company
the reasonable costs (including allocable internal costs) of preparing such
Returns. Nothing in this Agreement shall require the Company to prepare personal
income tax Returns for any Indemnitee.
(b) The Company (or its designee) shall, at the Company's expense,
represent the US LLC, the UK LLP and each Affiliate in any examination of
(or other proceeding relating to) a Return of the US LLC, UK LLP or
Affiliate for all taxable years and, in the case of an Indemnitee, in any
examination of (or other proceeding relating to) the Indemnitee's Returns
for any Covered Period to the extent the examination relates to an
Indemnifiable Item with respect to which the Company or Sub is required to
indemnify the Indemnitee. Each Indemnitee shall, to the extent reasonably
requested, promptly cooperate with the Company (or its designee) in such
matters including, without limitation, by providing a duly executed
Internal Revenue Service Form 2848 (or successor form) or similar form
applicable for state, local, UK, or other Tax purposes.
(c) To the extent permitted by law, the Company or Sub, as the case
may be, may make all payments in respect of Taxes required to be made by
them pursuant to this Agreement directly to the relevant taxing authority
on behalf of the Indemnitee within the period prescribed by law. To the
extent the Company or Sub, as the case may be, does not elect to make such
Tax payments directly to the taxing authority, the Company or Sub, as the
case may be, shall either make any required payments to the Indemnitee or
deliver to the Indemnitee a check made out in the amount of the required
payments payable to the applicable taxing authority, in either case within
thirty (30) days of receiving notice that the Indemnitee has paid Increased
Taxes.
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(d) To the extent permitted by law, each Indemnitee shall direct the
relevant taxing authority to pay any refund in respect of Taxes for any
Covered Period directly to the Company or Sub, as the case may be, and
these refunds shall be credited against the Indemnitee's obligation to make
payments to the Company or Sub under Sections 2(b)[, 2(d)] and 3(e) (or the
gross amount shall be returned to the Indemnitee if the Indemnitee does not
owe any amounts to the Company or Sub, as the case may be). The Indemnitee
shall notify the Company or Sub within thirty (30) days of the receipt by
such Indemnitee of a refund of Taxes in respect of any Indemnifiable Item
for any Covered Period.
(e) Any Indemnitee will forfeit any right to receive any payments
under this Tax Indemnification Agreement (and promptly refund to the
Company or Sub, as the case may be, any amounts previously paid by the
Company or Sub, as the case may be, to, or on behalf of, such Indemnitee
under this Agreement) if such Indemnitee (i) takes any action independent
of the Tax Matters Partner (as defined in Section 6231(a)(7) of the
Internal Revenue Code) or the Company on any examination or other
proceeding in respect of a Return of the US LLC, UK LLP, or any Affiliate,
(ii) takes any position in any Return or other Tax filing inconsistent with
the position taken by the US LLC, UK LLP, any Affiliate, or the Company,
(iii) fails to cooperate fully with the Company or the Tax Matters Partner
in pursuing any contest or other proceeding in respect of Taxes or fails to
permit the Company or the Tax Matters Partner to file amended returns on
behalf of such Indemnitee, if so requested by the Company in accordance
with Section 3 hereof, (iv) fails to provide the Company or its designee
upon request with a duly executed Internal Revenue Service Form 2848 (or
successor form) or similar form applicable for state, local, UK or other
Tax purposes or (v) fails to notify the Company of the receipt of a refund
of Taxes as required by Section 3(d) hereof that is material in amount.
(f) Subject to Section 3(a) hereof, each Indemnitee agrees to promptly
and timely file Returns which are required to be filed by such Indemnitee
and which include any Indemnifiable Item, and to timely pay the Taxes shown
as due on such Returns. To the extent permitted by law, each Indemnitee
agrees to report any item on such Returns, and to take positions in any
other Tax filings, in a manner consistent with the positions taken by the
US LLC, UK LLP, or any Affiliate.
4. Character of Payment. Any payments made pursuant to this Agreement shall
be treated as adjustments to the consideration received upon the merger of US
LLC into the Company or upon the exchange of UK LLP interests for shares of Sub,
unless a final determination is made by the relevant taxing authority to treat
any such payment otherwise.
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5. Determinations. The Company shall make all determinations necessary to
administer this Agreement including, without limitation, determinations of (i)
eligibility for payment, (ii) the amount of any payment to be made by the
Company or Sub and (iii) the amount of any refund to be paid to the Company or
Sub by an Indemnitee. Any such determinations by the Company shall, absent
manifest error, be final, binding and conclusive on the Indemnitee.
6. Arbitration. (a) Without diminishing the finality and conclusive effect
of any determination by the Company of any matter under this Agreement which is
provided herein to be determined by the Company, and subject to the provisions
of paragraphs (b) and (c) below, any dispute, controversy or claim arising out
of or relating to or concerning the provisions of this Agreement shall be
finally settled by arbitration in New York City before, and in accordance with
the rules then obtaining of, the New York Stock Exchange, Inc. (the "NYSE") or,
if the NYSE declines to arbitrate the matter, the American Arbitration
Association (the "AAA") in accordance with the commercial arbitration rules of
the AAA.
(b) Notwithstanding the provisions of Section 6(a), and in addition to
its right to submit any dispute or controversy to arbitration, the Company
may bring an action or special proceeding in a state or federal court of
competent jurisdiction sitting in the City of New York, whether or not an
arbitration proceeding has theretofore been or is ever initiated, for the
purpose of temporarily, preliminarily, or permanently enforcing the
provisions of this Agreement, or to enforce an arbitration award, and, for
the purposes of this Section 6(b), each Indemnitee (i) expressly consents
to the application of Section 6(c) to any such action or proceeding, (ii)
agrees that proof will not be required that monetary damages for breach of
the provisions of this Agreement would be difficult to calculate and that
remedies at law would be inadequate and (iii) irrevocably appoints [ ] as
the Indemnitee's agent for service of process in connection with any such
action or proceeding, who shall promptly advise the Indemnitee of any such
service of process.
(c) (i) THE INDEMNITEE AND THE COMPANY HEREBY IRREVOCABLY SUBMIT TO
THE EXCLUSIVE JURISDICTION OF ANY STATE OR FEDERAL COURT LOCATED IN THE
CITY OF NEW YORK OVER ANY SUIT, ACTION, OR PROCEEDING ARISING OUT OF OR
RELATING TO OR CONCERNING THIS AGREEMENT THAT IS NOT OTHERWISE ARBITRATED
OR RESOLVED ACCORDING TO SECTION 6(a) HEREOF. This includes any suit,
action or proceeding to compel arbitration or to enforce an arbitration
award. The Indemnitee and the Company acknowledge that the forum designated
by this Section 6(c) has a reasonable relation to this Agreement, and to
the Indemnitee's relationship to the Company. Notwithstanding the
foregoing, nothing herein shall preclude the Company from bringing any
action or proceeding in any other court for the purpose of enforcing the
provisions of this Section 6.
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(ii) The agreement of the Indemnitee and the Company as to forum
is independent of the law that may be applied in the action, and the
Indemnitee and the Company agree to such forum even if the forum may
under applicable law choose to apply non-forum law. The Indemnitee and
the Company hereby waive, to the fullest extent permitted by
applicable law, any objection which the Indemnitee or the Company now
or hereafter may have to personal jurisdiction or to the laying of
venue of any such suit, action or proceeding brought in any court
referred to in Section 6(c)(i). The Indemnitee and the Company
undertake not to commence any action arising out of or relating to or
concerning this Agreement in any forum other than a forum described in
this Section 6(c). The Indemnitee and the Company agree that, to the
fullest extent permitted by applicable law, a final and non-appealable
judgment in any such suit, action, or proceeding in any such court
shall be conclusive and binding upon the Indemnitee and the Company.
7. Notices. Any notice under this Agreement shall be in writing and shall
be deemed to have been given upon the delivery or mailing thereof, as the case
may be, if delivered personally or sent by certified mail, return receipt
requested, postage prepaid, to the following address:
Notice to the Company or Sub:
Xxxxxxxxx & Co., Inc.
000 Xxxx Xxxxxx
00xx Xxxxx
Xxx Xxxx, XX 00000
Attn: Chief Financial Officer
Notice to an Indemnitee:
At the last address appearing on the Company's business records
or as provided to the Company pursuant to Section 8 hereof.
8. Indemnitee Addresses. Each Indemnitee hereby agrees to provide prompt
notice to the Company of any change in the address and telephone and telecopy
numbers of such Indemnitee.
9. Entire Agreement. This Agreement represents the entire understanding
between the Company, Sub and each Indemnitee with respect to the subject matter
hereof and supersedes all prior negotiations among the parties hereto with
respect to such subject matter.
10. Company Guarantee. To the extent that Sub has insufficient funds to
make any payment to a UK Indemnitee required to be made hereunder, the
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Company shall, whether through a loan, capital contribution, share subscription
or otherwise, put Sub in a position in which it is able to may such payment.
11. Amendments. The Company will be permitted to amend this Agreement in
any respect, so long as such amendment does not materially adversely affect the
amount which an Indemnitee is entitled to receive from the Company pursuant to
this Agreement.
12. Miscellaneous. (a) This Agreement shall inure solely to the benefit of
the Indemnitees and their respective heirs, executors, administrators and
successors, and no other person shall acquire or have any right under or by
virtue of this Agreement.
(b) This Agreement will be governed by and construed in accordance
with the laws of the State of New York, without regard to principles of
conflicts of laws.
(c) If any provision of this Agreement is finally held to be invalid,
illegal or unenforceable (whether in whole or in part), such provision
shall be deemed modified to the extent, but only to the extent, of such
invalidity, illegality or unenforceability and the remaining provisions
shall not be affected thereby.
13. Execution in Counterparts. This Agreement may be executed in any number
of counterparts, each of which shall be deemed an original, but all such
counterparts shall together constitute but one and the same instrument.
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IN WITNESS WHEREOF, the Company and each Indemnitee have executed this
Agreement as of the day and year first above written.
XXXXXXXXX & CO., INC.
By:
--------------------------------
Name:
Title:
XXXXXXXXX & CO. CAYMAN LIMITED
By:
--------------------------------
Name:
Title:
GREENHILL FAMILY LIMITED PARTNERSHIP
By:
--------------------------------
Name:
Title:
By:
--------------------------------
Xxxxx X. Xxxxxxxx
By:
--------------------------------
Xxxxxx X. Xxxxxxxxx, Xx.
By:
--------------------------------
Xxxx X. Xxxxxxxxx
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RIVERSVILLE AIRCRAFT CORPORATION II
By:
--------------------------------
Name:
Title:
By:
--------------------------------
Xxxxxx X. Xxxxxxxxx
By:
--------------------------------
Xxxxx X. Xxxxxx
By:
--------------------------------
Xxxxxxx X. Xxxxxx
By:
--------------------------------
Xxxxx X. Xxx
By:
--------------------------------
Xxxxxx X. Xxxxxxx
By:
--------------------------------
Xxxxxxx X. Xxxxxx
By:
--------------------------------
Xxxxxxx X. Xxxxxx
By:
--------------------------------
Xxxxxxx X. Xxxxxxxx
9
By:
--------------------------------
Xxxxxxx X. Xxxxx
By:
--------------------------------
Xxxx Xxx
By:
--------------------------------
Xxxxxx X. Xxxxxxxxx, Xx.
By:
--------------------------------
Xxxxxxx Xxxxxxxx
By:
--------------------------------
Xxxxxxx Xxxxxx
By:
--------------------------------
Xxxxxx Xxxxxx
By:
--------------------------------
Xxxxx Xxxxxx
By:
--------------------------------
Xxxxxxx Xxxxxxxx
By:
--------------------------------
Xxxxx Xxxxxxx
By:
--------------------------------
Xxxxx Xxxxxx
10
By:
--------------------------------
Xxxxx Xxx
By:
--------------------------------
Xxxxx Xxxxx
By:
--------------------------------
Xxxxx Xxxxxx
By:
--------------------------------
Lord Xxxxx Xxxxx of Rowington
By:
--------------------------------
Xxxxxxx Xxxxx
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SCHEDULE I
US INDEMNITEES
Xxxxxx X. Xxxxxxxxx
Xxxxxxxxx Family Limited Partnership
Xxxxx X. Xxxxxxxx
Xxxxxx X. Xxxxxxxxx, Xx.
Xxxx X. Xxxxxxxxx
Riversville Aircraft Corporation II
Xxxxx X. Xxxxxx
Xxxxxxx X. Xxxxxx
Xxxxx X. Xxx
Xxxxxx X. Xxxxxxx
Xxxxxxx X. Xxxxxx
Xxxxxxx X. Xxxxxx
Xxxxxxx X. Xxxxxxxx
Xxxxxxx X. Xxxxx
Xxxx Xxx
Xxxxxx X. Xxxxxxxxx, Xx.
Xxxxxxx Xxxxxxxx
Xxxxxxx Xxxxxx
Xxxxxx Xxxxxx
Xxxxx Xxxxxx
Xxxxxxx Xxxxxxxx
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SCHEDULE II
UK INDEMNITEES
Xxxxx Xxxxxxx
Xxxxx Xxxxxx
Xxxxx Xxx
Xxxxx Xxxxx
Xxxxx Xxxxxx
Lord Xxxxx Xxxxx of Rowington
Xxxxxxx Xxxxx
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