EXHIBIT 10 (S)
TAX SHARING AND INDEMNITY AGREEMENT
This TAX SHARING AND INDEMNITY AGREEMENT (the "Agreement"), dated as of this
19th day of March, 2004, by and between ▇▇▇▇▇▇ CORPORATION ("▇▇▇▇▇▇"), a Nevada
corporation, and SAFETY COMPONENTS INTERNATIONAL, INC. ("Safety"), a Delaware
corporation.
R E C I T A L S:
▇. ▇▇▇▇▇▇ is the common parent of an affiliated group of corporations
within the meaning of Section 1504(a) of the Internal Revenue Code of 1986, as
amended.
B. Safety and its affiliates are members of the affiliated group of
corporations with respect to which ▇▇▇▇▇▇ is the common parent.
▇. ▇▇▇▇▇▇ has filed consolidated income tax returns, and intends to
file consolidated income tax returns, and combined income tax returns where
advisable.
▇. ▇▇▇▇▇▇ and Safety desire to agree upon a method of determining the
financial consequences to each party resulting from the filing of consolidated
or combined income tax returns.
E. Safety desires to be indemnified by ▇▇▇▇▇▇ with respect to certain
tax liabilities.
▇. ▇▇▇▇▇▇ desires to be indemnified by Safety with respect to certain
tax liabilities.
NOW, THEREFORE, in consideration of their mutual promises, the parties
hereby agree as follows:
ARTICLE 1
DEFINITIONS
1.1 As used in this Agreement, the following terms shall have the
following meanings:
"After-Tax Cash Benefit" means the excess, if any, of a member's
separate return tax liability for the Consolidated Group under Treas. Reg.
Section 1.1552-1(a)(2)(ii) over the amount of the tax liability of the
Consolidated Group allocated to the member pursuant to Section 3.1 of this
Agreement.
"Code" means the Internal Revenue Code of 1986, as amended, or any
successor thereto, as in effect for the taxable period in question.
"Consolidated Group" means the group of corporations that
immediately prior to the Effective Date are members of the affiliated group of
corporations (within the meaning of Section 1504 of the Code) that files or is
required to file consolidated tax returns of which ▇▇▇▇▇▇, or its successor, is
the common parent.
"Effective Date" means the date upon which ▇▇▇▇▇▇ and its affiliates
cease to own eighty percent (80%) of the issued and outstanding shares of Safety
within the meaning of Section 1504(a) of the Code.
"Final Determination" shall mean the final resolution of liability
for any Tax for a taxable period, including any related interest or penalties,
(a) by Internal Revenue Service Form 870 or 870-AD (or any successor forms
thereto), on the date of acceptance by or on behalf of the Internal Revenue
Service ("IRS"), or by a comparable form under the laws of other jurisdictions;
except that a Form 870 or 870-AD or comparable form that reserves (whether by
its terms or by operation of law) the right of the taxpayer to file a claim for
refund and/or the right of the Taxing Authority to assert a further deficiency
shall not constitute a Final Determination; (b) by a decision, judgment, decree,
or other order by a court of competent jurisdiction, which has become final and
unappealable; (c) by a closing agreement or accepted offer in compromise under
Section 7121 or 7122 of the Code, or comparable agreements under the laws of
other jurisdictions; (d) by any allowance of a refund or credit in respect of an
overpayment of Tax, but only after the expiration of all periods during which
such refund may be recovered (including by way of offset) by the Tax imposing
jurisdiction; or (e) by any other final disposition, including by reason of the
expiration of the applicable statute of limitations.
"Representative" means with respect to any person or entity, any of
such person's or entity's directors, officers, employees, agents, consultants,
advisors, accountants, attorneys, and representatives.
"Safety Businesses" means the present and future subsidiaries,
divisions and business of Safety and any Safety Post-Closing Affiliate.
"Safety Pre-Closing Affiliate" means any corporation, partnership or
other entity directly or indirectly controlled by Safety on or before the
Effective Date.
"Safety Post-Closing Affiliate" means any corporation, partnership
or other entity directly or indirectly controlled by Safety after the Effective
Date.
"Tax" or "Taxes" means (a) all forms of taxation, whenever created
or imposed, and whenever imposed by a national, municipal, governmental, state,
federal or other body, whether domestic or foreign (a "Taxing Authority"), and
without limiting the generality of the foregoing, shall include net income,
alternative or add-on minimum tax, gross income, sales, use, ad valorem, gross
receipts, value added, franchise, profits, license, transfer, recording,
withholding, payroll, employment, excise, severance, stamp, occupation, premium,
property, windfall profit, custom duty, or other tax, governmental fee or other
like assessment or charge of any kind whatsoever, together with any related
interest, penalties, or other additions to tax, or additional amounts imposed by
any such Taxing Authority, (b) liability for the payment of any amounts of the
type described in (a) as a result of being a member of an affiliated,
consolidated, combined or unitary group for any period, including any liability
arising pursuant to Treas. Reg. Section 1.1502-6, or as a result of being a
party to any agreement or arrangement
2
whereby liability for payment of such amounts was determined or taken into
account with reference to the liability of another party and (c) liability for
the payment of any amounts of the type described in (a) as a result of any
express or implied obligation to indemnify any other person.
"Tax Attributes" shall include, but not be limited to, losses (i.e.
current, carryback and carryforward), deductions and credits with respect to
"regular" and "alternative minimum" Taxes.
"Taxing Authority" is defined under the term "Taxes."
"Taxable Period" or "Taxable Periods" means the tax year for the
"Consolidated Group" as that term is defined in this Article 1.
"Tax Return" means any return, filing, questionnaire or other
document required to be filed, including requests for extensions of time,
filings made with estimated Tax payments, claims for refund and amended returns
that may be filed, for any taxable period with any Taxing Authority in
connection with any Tax (whether or not a payment is required to be made with
respect to such filing).
"▇▇▇▇▇▇ Affiliate" means any corporation, partnership or other
entity directly or indirectly controlled by ▇▇▇▇▇▇, other than Safety, a Safety
Pre-Closing Affiliate, or a Safety Post-Closing Affiliate.
"▇▇▇▇▇▇ Businesses" means the present and future subsidiaries,
divisions and business of any member of the Consolidated Group, other than the
present and future subsidiaries, divisions and business of Safety, any Safety
Pre-Closing Affiliate and any Safety Post-Closing Affiliate.
"▇▇▇▇▇▇ Group" means the group of corporations that immediately
after the Effective Date are members of the affiliated group of corporations
(within the meaning of Section 1504 of the Code) that files or is required to
file consolidated tax returns of which ▇▇▇▇▇▇, or its successor, is the common
parent.
ARTICLE 2
PREPARATION AND FILING OF TAX RETURNS
2.1 INCOME INCLUDED. All Tax Returns required to be filed by the
Consolidated Group relating to Taxable Periods ending before or including the
Effective Date and filed after the date of this Agreement shall include the
income of Safety and Safety Pre-Closing Affiliates (as determined in this
Section 2.1) attributable to such Taxable Periods (including, for federal income
Tax purposes, any deferred income triggered into income by Treas. Reg. Section
1.1502-13 and any excess loss accounts taken into income under Treas. Reg.
Section 1.1502-19) required to be reported in the Consolidated Group's
consolidated federal income Tax Returns (or under any similar rules applicable
to any state, local or other income Tax Returns filed on a consolidated or
combined basis). The income of Safety and Safety Pre-Closing Affiliates will be
apportioned beginning with the first day of the Taxable Period through and
including the Effective Date and the period after the Effective Date by closing
the books of Safety and such Safety Pre-Closing Affiliates as of the end of the
Effective Date. The income of Safety and any Safety Pre-Closing Affiliate shall
not include: (1) any deferred income triggered into income by Treas. Reg.
Section 1.1502-13 or any similar Treasury Regulation or state law; and (2) any
excess loss accounts taken into income under Treas. Reg. Section 1.1502-19 or
any similar Treasury Regulation or state law, attributable to any other member
of the Consolidated Group.
2.2 TAX RETURNS FOR TAXABLE PERIODS ENDING BEFORE OR INCLUDING THE
EFFECTIVE DATE. ▇▇▇▇▇▇ shall have the responsibility and authority to timely
prepare and file, or cause to be timely prepared and filed, the federal
Consolidated Group Tax Returns and any state, local or other income Tax Returns,
filed on a consolidated or combined basis relating to Taxable Periods ending
before or including the Effective Date. Safety shall provide ▇▇▇▇▇▇ with any
tax-related information reasonably requested by ▇▇▇▇▇▇ with respect to any
Taxable Periods ending on or before the Effective Date. Furthermore, with
respect to separate Tax Returns of Safety or any Safety Pre-Closing Affiliates,
Safety shall provide ▇▇▇▇▇▇, upon ▇▇▇▇▇▇'▇ request, with a pre-filing draft of
such returns no later than fifteen (15) business days prior to their due date,
and proof of timely filing and payment of any associated Taxes.
3
2.3 TAX RETURNS FOR TAXABLE PERIODS BEGINNING AFTER THE EFFECTIVE DATE.
Safety shall prepare and file, or cause to be prepared and filed, all Tax
Returns for Safety and any Safety Post-Closing Affiliate for taxable periods of
Safety and any Safety Post-Closing Affiliate beginning after the Effective Date.
▇▇▇▇▇▇ shall prepare and file, or cause to be prepared and filed, all Tax
Returns for the ▇▇▇▇▇▇ Group for taxable periods beginning after the Effective
Date.
2.4 CARRY-OVER PERIOD RETURNS.
(a) Safety shall prepare and file on a timely basis any Tax
Returns (but not including any federal income Tax Return, or any state, local,
or other income Tax Return filed on a consolidated or combined basis) of Safety
and any Safety Pre-Closing Affiliate for any Taxable Period beginning before and
ending after the Effective Date (a "Carry-Over Period").
(b) All other Tax Returns for a Carry-Over Period required to be
filed by any member of the Consolidated Group other than Safety or any Safety
Pre-Closing Affiliate shall be timely prepared and filed, or caused to be timely
prepared and filed, by ▇▇▇▇▇▇.
ARTICLE 3
ALLOCATION OF INCOME TAX LIABILITIES; PAYMENT OF TAX
3.1 ALLOCATION OF INCOME TAX LIABILITIES WITH RESPECT TO TAXABLE PERIODS
ENDING BEFORE OR INCLUDING THE EFFECTIVE DATE.
(a) Except as otherwise provided in this Agreement, the
consolidated federal income Tax liability of the Consolidated Group for all
Taxable Periods ending before or including the Effective Date shall be allocated
pursuant to Section 1552(a)(1) of the Code and the Regulations thereunder among
the members of the Consolidated Group in accordance with the ratio which that
portion of the consolidated taxable income attributable to each member of the
Consolidated Group having taxable income bears to the consolidated taxable
income of the Consolidated Group. The same allocation principles shall apply in
determining each member's share of any state, local or other income Tax
liability determined on a consolidated or combined basis to the extent such
principles are not inconsistent with requirements imposed by such state, local,
or other Taxing Authority. Each member shall be responsible for, and shall
immediately pay to ▇▇▇▇▇▇ its allocable portion of the consolidated federal
income Tax liability of the Consolidated Group, as well as its allocable portion
of state, local, or other Tax liability determined on a consolidated or combined
basis.
(b) If the consolidated federal income Tax liability or state,
local, or other income Tax liability determined on a consolidated or combined
basis is adjusted for any Taxable Period, whether by means of an amended return,
claim for refund, or an audit by a Taxing Authority, the liability of each
member of the Consolidated Group shall be recomputed to give effect to such
adjustments in accordance with Section 3.1(a) of this Agreement; provided that
any accuracy-related penalty imposed under Section 6662 of the Code or any fraud
penalty under Section 6663 of the Code shall be allocated to and be borne by
each member to the extent the imposition of such penalty against the
Consolidated Group is the result of adjustments to the Tax liability of the
Consolidated Group attributable to adjustments (i) which are inconsistent with
Tax Return positions taken by such member and, if such member is not the common
parent, communicated to the common parent of the Consolidated Group, or (ii)
which are inconsistent with Tax Return information furnished by such member to
the common parent of the Consolidated Group.
3.2 TAX ATTRIBUTES.
(a) Except as otherwise provided in this Agreement, each member of
the Consolidated Group shall be compensated to reflect the absorption of its Tax
Attributes by one or more other members in accordance with the "Percentage
Method" principles set forth in Treas. Reg. Section 1.1502-33(d)(3). For this
purpose, a member that absorbs the Tax Attributes of another member shall be
responsible for paying that member 100% of the After-Tax Cash Benefits realized
as a result of utilizing such member's Tax Attributes no later than thirty (30)
days after the filing of the consolidated federal income tax return for the
Consolidated Group. The same allocation and payment principles shall apply with
respect to the absorption of Tax Attributes relating to any state, local, or
other
4
Tax liability determined on a consolidated or combined basis, to the extent such
principles are not inconsistent with requirements imposed by such state, local,
or other Taxing Authority.
(b) If the consolidated federal income Tax liability or state,
local, or other Tax liability determined on a consolidated or combined basis is
adjusted for any Taxable Period, whether by means of an amended return, claim
for refund, or an audit by a Taxing Authority, the liability of each member of
the Consolidated Group under Section 3.2(a) of this Agreement shall be
recomputed to give effect to such adjustments in accordance with Section 3.1(a)
and Section 3.2(a) of this Agreement.
3.3 ESTIMATED TAX PAYMENTS. ▇▇▇▇▇▇ shall have the right to assess Safety
and Safety Pre-Closing Affiliates for their share of estimated Tax payments to
be made on the projected consolidated or combined income Tax liability each
year. Payments shall be made by Safety to ▇▇▇▇▇▇ and shall be made within ten
(10) days after such assessment. Safety and Safety Pre-Closing Affiliates will
receive credit for such prepayments in the year-end computation under Section
3.1(a) of this Agreement.
3.4 TAX RETURNS WHICH ARE NOT CONSOLIDATED OR COMBINED INCOME TAX
RETURNS. Safety shall be responsible for timely paying all Taxes imposed on
Safety and any Safety Pre-Closing Affiliate, which are not attributable to a
consolidated or combined income tax return.
3.5 SEPARATION PAYMENT WITH RESPECT TO FEDERAL INCOME TAXES. ▇▇▇▇▇▇
shall give Safety notice of the filing of ▇▇▇▇▇▇'▇ consolidated federal income
Tax Returns and Tax Returns for any state, local, or other Tax Authority
determined on a consolidated or combined basis for its first taxable year ending
after the Effective Date ("Final Return Notice"). To the extent not previously
paid to ▇▇▇▇▇▇ in accordance with Article 3, Safety and each Safety Pre-Closing
Affiliate shall pay to ▇▇▇▇▇▇, within thirty (30) days after receipt by Safety
of the Final Return Notice, its allocable portion pursuant to Section 3.1(a)
hereof, of (1) such consolidated federal income Tax liability of the
Consolidated Group; and (2) such state, local, or other income Tax liability
determined on a consolidated or combined basis. ▇▇▇▇▇▇ shall not withdraw any
earnings or assets of Safety or any Safety Pre-Closing Affiliates prior to the
Effective Date.
3.6 LIABILITY FOR TAXES WITH RESPECT TO POST-EFFECTIVE DATE TAXABLE
PERIODS. The ▇▇▇▇▇▇ Group shall pay all Taxes of the ▇▇▇▇▇▇ Group and shall be
entitled to receive and retain all refunds of Taxes of the ▇▇▇▇▇▇ Group with
respect to Taxable Periods beginning after the Effective Date which are
attributable to the ▇▇▇▇▇▇ Businesses. Safety shall pay all Taxes of Safety and
any Safety Post-Closing Affiliate and shall be entitled to receive and retain
all refunds of Taxes of Safety and any Safety Post-Closing Affiliate for all
periods beginning after the Effective Date which are attributable to the Safety
Businesses.
3.7 CARRY-OVER PERIOD PAYMENTS. ▇▇▇▇▇▇ shall be responsible for (and
shall pay) any Taxes shown to be due on a Tax Return for a Carry-Over Period
filed pursuant to Section 2.4(b) hereof by any member of the Consolidated Group
other than Safety or a Safety Pre-Closing Affiliate. Safety shall be responsible
for (and shall pay) any Taxes shown to be due on a Tax Return for a Carry-Over
Period filed by Safety and any Safety Pre-Closing Affiliate pursuant to Section
2.4(a) hereof.
ARTICLE 4
CARRYFORWARDS; CARRYBACKS; REFUNDS;
POST-CLOSING ELECTIONS
4.1 UNUSED CARRY-FORWARD ATTRIBUTES. Except as otherwise provided in
this Agreement, ▇▇▇▇▇▇ and Safety agree that, for purposes of all required
returns and reports with respect to Taxes, the amount of unused tax credits
under the Code attributable to Safety and each of the Safety Pre-Closing
Affiliates that may be carried forward to Taxable Periods ending after the
Effective Date shall, unless otherwise required by law or regulations, be
determined in accordance with the principles of Treas. Reg. Section 1.1502-79(c)
or other similar provisions of the Code or Treasury Regulations. Any other
carry-forward attributes shall similarly be determined in accordance with
applicable regulations.
4.2 CARRY-BACKS. ▇▇▇▇▇▇ shall be entitled to any refund of any Tax
obtained by the Consolidated Group (or any member of the Consolidated Group) as
a result of the carry-back of losses or credits of Safety or any
5
Safety Post-Closing Affiliate from any taxable period beginning after the
Effective Date to any Taxable Period ending before or including the Effective
Date. The application of any such carry-backs by Safety and/or any other current
or former member of the Consolidated Group shall be in accordance with the Code
and the Treasury Regulations promulgated thereunder. Notwithstanding this
Section 4.2, Safety and any Safety Post-Closing Affiliate shall have the right,
in its sole discretion, to make any election, including, without limitation, the
election under Section 172(b)(3) of the Code, which would eliminate or limit the
carry-back of any loss or credit to any Taxable Period ending before or
including the Effective Date.
4.3 POST-CLOSING ELECTIONS. At ▇▇▇▇▇▇'▇ request, Safety and the Safety
Pre-Closing Affiliates shall make and/or join with ▇▇▇▇▇▇ in making any Tax
elections reasonably requested by ▇▇▇▇▇▇ after the Effective Date, if the making
of such election does not have a material adverse impact on Safety or any Safety
Pre-Closing Affiliate for any post-Effective Date Taxable Period.
4.4 REFUNDS. Safety and any Safety Pre-Closing Affiliate shall be
entitled to any refund of any Tax obtained by the Consolidated Group (or any
member of the Consolidated Group) as a result of any audit, amendment or other
change in the Tax Return as filed by the Consolidated Group or any member
thereof to the extent the refund is attributable to Safety and any Safety
Pre-Closing Affiliate for any Taxable Period of the Consolidated Group ending
before or including the Effective Date. ▇▇▇▇▇▇ will cooperate with Safety and
any Safety Pre-Closing Affiliate in obtaining such refunds, including, but not
limited to, the filing of amended Tax Returns or refund claims. ▇▇▇▇▇▇ will
immediately pay to Safety and any Safety Pre-Closing Affiliate any Tax refund
described in this Section 4.4 when such refund is received by the ▇▇▇▇▇▇ Group.
All other refunds arising from Tax Returns filed for the Consolidated Group will
belong to ▇▇▇▇▇▇.
ARTICLE 5
COOPERATION AND EXCHANGE OF INFORMATION
5.1 COOPERATION. Safety shall cooperate (and shall cause any Safety
Post-Closing Affiliate to cooperate) fully at such time and to the extent
reasonably requested by ▇▇▇▇▇▇ in connection with the preparation and filing of
any Tax Return or the conduct of any audit, dispute, proceeding, suit or action
concerning any issues or any other matter contemplated hereunder relating to any
Taxable Period ending before or including the Effective Date. Such cooperation
shall include, without limitation, (a) the retention and provision on demand of
copies of books, records, documentation or other information relating to any
such Tax Return until the later of (i) the expiration of the applicable statute
of limitation (giving effect to any extension, waiver, or mitigation thereof)
and (ii) in the event any claim has been made under this Agreement for which
such information is relevant, until a Final Determination with respect to such
claim; (b) the execution of any document that may be necessary or reasonably
helpful in connection with the filing of any such Tax Return, or in connection
with any audit, proceeding, suit or action addressed in the preceding sentence;
and (c) the use of the parties' reasonable best efforts to obtain any
documentation from a governmental authority or a third party that may be
necessary or helpful in connection with the foregoing. Each party shall make its
employees and facilities available on a mutually convenient basis to facilitate
such cooperation.
5.2 TAX RETURNS FOR TAXABLE PERIODS INCLUDING THE EFFECTIVE DATE. ▇▇▇▇▇▇
will provide Safety with the opportunity to review and comment upon any Tax
Returns, for Tax Periods including the Effective Date, to be filed after the
date of this Agreement (including any amended returns), and will provide Safety,
promptly upon its request, with copies of such Tax Returns (including any
amended returns).
5.3 AUDITS. ▇▇▇▇▇▇ will allow Safety and any Safety Pre-Closing
Affiliate and its counsel to participate (at the expense of Safety or its Safety
Pre-Closing Affiliate) in any audits of ▇▇▇▇▇▇'▇ consolidated federal income Tax
Returns to the extent that such returns relate to Safety and any Safety
Pre-Closing Affiliate. ▇▇▇▇▇▇ shall have sole authority to settle any such
audit.
5.4 CONTEST PROVISIONS. ▇▇▇▇▇▇ shall have full responsibility and
discretion in the handling of any Tax controversy, including, without
limitation, an audit, a protest to the Appeals Division of the IRS, and
litigation in Tax Court or any other court or administrative body of competent
jurisdiction involving a Tax Return of the Consolidated Group or the ▇▇▇▇▇▇
Group.
6
ARTICLE 6
MISCELLANEOUS
6.1 TAX INDEMNIFICATION.
(a) ▇▇▇▇▇▇ shall defend, indemnify and hold harmless Safety and
each Safety Pre-Closing Affiliate from and against any liability, cost or
expense, including, without limitation, any fine, penalty, interest, charge or
reasonable accountant's fee, for any Tax required under this Agreement to be
allocated to and paid by ▇▇▇▇▇▇ or any member of the Consolidated Group other
than Safety or a Safety Pre-Closing Affiliate.
(b) Safety shall indemnify and hold harmless ▇▇▇▇▇▇ and each
member of the ▇▇▇▇▇▇ Group from and against any liability, cost or expense,
including without limitation, any fine, penalty, interest, charge or reasonable
accountant's fee, for any Tax required under this Agreement to be allocated to
and paid by Safety or any Safety Pre-Closing Affiliate.
(c) The amount of any payment made with respect to this Section
6.1 shall include any additional amount necessary to indemnify the recipient of
the payment against any Taxes imposed or incurred (including any increase in
liability or taxes resulting from a reduction in the amount of the loss), and
any reasonable professional fees or other litigation costs incurred, in
connection with such payment, and (ii) be reduced by the amount of any tax
benefit realized or to be realized by the recipient as a result of its payment
of the Taxes being indemnified hereunder.
6.2 BREACH. ▇▇▇▇▇▇ shall defend, indemnify and hold harmless Safety and
each Safety Pre-Closing Affiliate and Safety and each Safety Pre-Closing
Affiliate shall defend, indemnify and hold harmless ▇▇▇▇▇▇ and each member of
the ▇▇▇▇▇▇ Group from and against any payment required to be made under this
Agreement as a result of the breach by a member of the ▇▇▇▇▇▇ Group or by Safety
or a Safety Pre-Closing Affiliate, as the case may be, of any obligation under
this Agreement.
6.3 RESOLUTION OF CERTAIN DISPUTES.
(a) Arbitration. Disagreements between ▇▇▇▇▇▇ and Safety with
respect to amounts that either claims is owed by the other (or by an Affiliate
of the other) under this Agreement, or other matters under this Agreement that
are not resolved by mutual agreement, shall be resolved by arbitration pursuant
to this Section 6.3.
(b) Selection of the Arbitrator. Any arbitrator selected pursuant
to this Section 6.3(b) shall have at least ten (10) years of experience in the
field of corporate taxation, shall be an attorney licensed to practice law in
any state of the United States or a certified public accountant licensed to
practice in any state of the United States and shall not be or have been
employed by or affiliated with either party. The parties shall first attempt to
agree on a mutually satisfactory arbitrator. If the parties are unable to agree
on a mutually satisfactory arbitrator within thirty (30) days after either party
notifies the other in writing of a disagreement requiring arbitration pursuant
to this Section 6.3 (15 days in the case of a disagreement with respect to
Section 5.1 through Section 5.4), each party shall select an arbitrator. The two
arbitrators thus selected shall agree on and select a third arbitrator. If the
two arbitrators cannot agree on such third arbitrator within thirty (30) days
(fifteen (15) days in the case of a disagreement with respect to Section 5.1
through Section 5.4), the parties shall each select a different arbitrator and
renew the foregoing procedure. If the position of an arbitrator is vacated, the
person or persons who originally selected the arbitrator to fill such position
shall select a new arbitrator to fill the position, unless the parties agree to
continue the arbitration with the remaining arbitrators. When used hereinafter,
the term "arbitrator" shall refer to the three arbitrators so selected when
appropriate and a decision of a majority of such arbitrators shall constitute a
decision by the arbitrator in the appropriate context.
(c) Arbitration Procedures.
(i) The arbitration shall be conducted under the auspices of
the American Arbitration Association.
7
(ii) Each party within thirty (30) days after engagement of
the arbitrator (fifteen (15) days in the case of a disagreement with respect to
Section 5.1 through Section 5.4) shall submit to the arbitrator a written
statement of the party's position (including where relevant the total net amount
it asserts is owed by it or is due to it) regarding the total amount in dispute.
(iii) The arbitrator shall base his decision on the following
standards. In the case of a factual dispute between the parties, the arbitrator
shall make a determination of the correct facts. In the case of a dispute
regarding a legal issue, including the proper application of the Tax laws or the
proper interpretation of this Agreement, the arbitrator shall make a
determination in accordance with his best legal judgment. Upon making
determinations with respect to all factual and legal issues in dispute, the
arbitrator shall determine the amount due by one party to the other or such
other matter with respect to the matter subject to the arbitration. Where
relevant, as to each matter in dispute, the arbitrator shall find in favor of
the party whose statement submitted pursuant to paragraph (ii) above proposed
the amount closest to the amount so determined.
(iv) The arbitrator shall render a written decision stating
only the result of such decision as soon as practicable. The arbitrator shall
also orally explain the bases of such decision to both parties as soon as
practicable. If and only if both parties request, the arbitrator shall state the
bases of such decision in writing. Where relevant, as to each matter in dispute,
the arbitrator's decision shall be in an amount equal to one of the total
amounts asserted by one of the parties in the written statements submitted
pursuant to paragraph (ii) above. The arbitrator shall not, and is not
authorized to, render a decision in any other amount.
(v) The arbitrator's decision shall be final and binding on
the parties. No appeal to any court is contemplated by this Agreement and each
party, to the maximum extent permissible by law, waives and relinquishes all
rights and entitlements to appeal such decision.
(vi) The arbitrator shall determine a fair allocation of the
costs of the arbitration proceeding (including each party's legal fees) as
between the parties.
6.4 NOTICES. Any notice, demand, claim or other communication under this
Agreement shall be in writing and shall be deemed given upon delivery if
delivered personally, upon mailing if sent by certified mail, return receipt
requested, postage prepaid, or upon completion of transmission if sent by
telecopy or facsimile, to the parties at the following address:
If to ▇▇▇▇▇▇:
▇▇▇▇▇▇ Corporation
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇▇▇▇▇▇, Chief Executive Officer
If to Safety:
Safety Components International, Inc.
▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Chief Financial Officer
6.5 ENTIRE AGREEMENT. This Agreement constitutes the entire agreement of
the parties concerning the subject matter hereof, and supersedes all other
agreements, whether or not written, in respect of any Tax between or among any
member or members of the ▇▇▇▇▇▇ Group, on the one hand, and Safety and any
Safety Pre-Closing Affiliate, on the other hand. This Agreement may not be
amended except by an agreement in writing, signed by the parties hereto.
6.6 GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with, the laws of the State of New York.
8
6.7 SUCCESSORS AND ASSIGNS. A party's rights and obligations under this
Agreement may not be assigned without the prior written consent of the other
party. All of the provisions of this Agreement shall be binding upon and inure
to the benefit of the parties and their respective successors and permitted
assigns.
6.8 NO THIRD PARTY BENEFICIARIES. This Agreement is solely for the
benefit of the parties to this Agreement and their respective subsidiaries and
should not be deemed to confer upon third parties any remedy, claim, liability,
reimbursement, claim of action or other right in excess of those existing
without this Agreement.
6.9 LEGAL ENFORCEABILITY. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to that jurisdiction,
be ineffective to the extent of the prohibition or unenforceability without
invalidating the remaining provisions. Any prohibition or unenforceability of
any provision of this Agreement in any jurisdiction shall not invalidate or
render unenforceable the provision in any other jurisdiction.
6.10 EXPENSES. Unless otherwise expressly provided in this Agreement,
each party shall bear any and all expenses that arise from their respective
obligations under this Agreement. In the event either party to this Agreement
brings an action or proceeding for the breach or enforcement of this Agreement,
the prevailing party in such action or proceeding, whether or not such action or
proceeding proceeds to final judgment, shall be entitled to recover as an
element of its costs, and not as damages, such reasonable attorneys' fees as may
be awarded in the action or proceeding in addition to whatever other relief to
which the prevailing party may be entitled.
6.11 CONFIDENTIALITY. Each party shall hold and cause its Representatives
to hold in strict confidence, unless compelled to disclose by judicial or
administrative process or, in the opinion of its counsel, by other requirements
of law, all information (other than any such information relating solely to the
business or affairs of such party) concerning the other parties hereto furnished
it by such other party or its Representatives pursuant to this Agreement (except
to the extent that such information can be shown to have been (a) previously
known by the party to which it was furnished, (b) in the public domain through
no fault of such party, or (c) later lawfully acquired from other sources by the
party to which it was furnished), and each party shall not release or disclose
such information to any other person, except its auditors, attorneys, financial
advisors, bankers and other consultants and advisors who shall be advised of the
provisions of this Section. Each party shall be deemed to have satisfied its
obligation to hold confidential information concerning or supplied by the other
party if it exercises the same care as it takes to preserve confidentiality for
its own similar information.
6.12 COUNTERPARTS. This Agreement may be signed in any number of
counterparts, each of which shall be an original, with the same effect as if the
signature thereto and hereto were upon the same instrument.
6.13 HEADINGS. Introductory headings used in this Agreement are solely
for the convenience of the parties and shall not be deemed to be limitations
upon or descriptive of the contents of the Section or sub-sections concerned.
IN WITNESS WHEREOF, the parties have executed and delivered this Agreement
as of the date first above written.
SAFETY COMPONENTS INTERNATIONAL, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
----------------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Vice President and Chief Executive Officer
▇▇▇▇▇▇ CORPORATION
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇
-------------------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇
Title President and Chief Executive Officer
9
