TAX COOPERATION AGREEMENT
between
OMI Corp.
and
OMI Corporation
TAX COOPERATION AGREEMENT
This Agreement is entered into as of this 15th of June ,1998, by and
between OMI Corp., a Delaware corporation ("OMI"), and OMI Corporation, a
Republic of the Xxxxxxxx Islands company ("International") and a direct,
wholly-owned subsidiary of OMI. OMI and International are sometimes collectively
referred to herein as the "Companies." Capitalized terms used in this Agreement
are defined in Section 1 below. Unless otherwise indicated, all "Section"
references in this Agreement are to sections of this Agreement.
RECITALS
WHEREAS, OMI will acquire all of the outstanding shares of common stock of
Marine Transport Lines ("MTL"), a Delaware corporation, in exchange for OMI
common stock (the "Acquisition"), as contemplated by the Acquisition Agreement
by and among OMI, MTL and the shareholders of MTL, dated as of September 15,
1997 (the "Acquisition Agreement");
WHEREAS, pursuant to the Distribution Agreement between OMI and
International dated as of the 15th of June, 1998 (the "Distribution Agreement"),
OMI will distribute all of the outstanding shares of International to OMI
shareholders in a transaction intended to qualify as tax-free distribution under
Section 355 of the Code (as defined below);
WHEREAS, OMI, MTL and the shareholders of MTL intend the Acquisition to be
a reorganization within the meaning of Section 368(a) of the Code; and
WHEREAS, the Companies desire to provide for and agree upon the
responsibility for the preparation and filing of Tax Returns and other rights
and obligations relating to Taxes with respect to taxable periods before and
after the Distribution;
NOW THEREFORE, in consideration of the mutual agreements contained herein,
the Companies hereby agree as follows:
Section 1. Definition of Terms. For purposes of this Agreement (including
the recitals hereof), the following terms have the following meanings:
"Accounting Firm" shall have the meaning provided in Section 8.
"Acquisition" shall have the meaning set forth in the Recitals.
"Acquisition Agreement" shall have the meaning set forth in the Recitals.
"Affiliate" means, with respect to any Person, any other Person directly or
indirectly controlling, controlled by, or under direct or indirect common
control with such Person. A Person shall be deemed to control a second Person if
such first Person possesses, directly or indirectly, the power (i) to vote 20%
or more of the securities having ordinary voting power for the election of
directors or managers of such second Person or (ii) to direct or cause the
direction of the management and policies of such second Person, whether through
the ownership of voting securities, by contract or otherwise. For purposes of
this Agreement, any member of the OMI Group shall not be treated as an Affiliate
of any member of the International Group and any member of the International
Group shall not be treated as an Affiliate of any member of the OMI Group.
"Agreement" shall mean this Tax Cooperation Agreement.
"Approved Actions" shall be the actions set forth on Schedule A hereto.
"Code" means the U.S. Internal Revenue Code of 1986, as amended, or any
successor law.
"Companies" means OMI and International, collectively, and "Company" means
either OMI or International.
"Corporate Restructuring Transactions" shall have the same meaning as in
the Distribution Agreement.
"Dispose" (and, with correlative meaning, "Disposition") shall mean pay,
discharge, settle or otherwise dispose.
"Distribution" means the distribution to OMI shareholders on the
Distribution Date of all of the outstanding stock of International pursuant to
the Distribution Agreement.
"Distribution Agreement" shall have the meaning set forth in the Recitals.
"Distribution Date" means the date of the Distribution.
"Domestic Business" shall have the same meaning as in the Distribution
Agreement.
"Due Date" shall mean, with respect to any Tax Return or payment, the date
on which such Tax Return is due to be filed with or such payment is due to be
made to the appropriate Tax Authority pursuant to applicable law, giving effect
to any applicable extensions of the time for such filing and payment.
"Federal Income Tax" means any Tax imposed by Subtitle A or F of the Code.
"Final Determination" shall mean (1) the entry of a decision of a court of
competent jurisdiction at such time as an appeal may no longer be taken from
such decision or (2) the execution of a closing agreement or its equivalent
between the particular taxpayer and the relevant Tax Authority.
"Foreign Business" shall have the same meaning as "International Business"
in the Distribution Agreement.
"Foreign Income Tax" means any Tax imposed by any foreign country or any
possession of the United States, or by any political subdivision of any foreign
country or United States possession, which is an income tax as defined in
Treasury Regulation Section 1.901-2.
"Group" means the OMI Group, or the International Group, as the context
requires.
"Income Tax" means any Federal Income Tax, State Income Tax, or Foreign
Income Tax.
"International" means OMI Corporation, a Republic of the Xxxxxxxx Islands
company, and any successor.
"International Group" means International and its Affiliates as determined
immediately after the Distribution.
"IRS" means the Internal Revenue Service
"IRS Ruling Letter" shall have the meaning set forth in Distribution
Agreement.
"OMI" means OMI Corp., a Delaware corporation, and any successor.
"OMI Group" means OMI and its Affiliates as determined immediately after
the Distribution.
"Person" means any natural person, corporation, business trust, joint
venture, association, company, partnership, limited liability company or other
entity.
"Post-Distribution Period" means any Tax Period beginning after the
Distribution Date, and, in the case of any Straddle Period, that portion of such
Straddle Period beginning the day immediately following the Distribution Date.
"Pre-Distribution Period" means any Tax Period ending on or before the
Distribution Date and, in the case of any Straddle Period, that portion of such
Straddle Period ending on and including the Distribution Date.
"Prohibited Action" shall have the meaning provided in Section 6.
"Responsible Company" means, with respect to any Tax Return, the Company
having responsibility for preparing and filing such Tax Return under this
Agreement.
"Ruling Request" means the letter filed by OMI with the IRS requesting
rulings from the Internal Revenue Service regarding certain Federal Income Tax
consequences of the Transactions (including all attachments, exhibits, and other
materials submitted with such letter) and any amendment or supplement to such
letter.
"Special Taxes" shall have the same meaning as in the Distribution
Agreement.
"State Income Tax" means any Tax imposed by any State of the United States
or by any political subdivision of any such State which is imposed on or
measured by net income, including state and local income, franchise or similar
Taxes measured by net income.
"Straddle Period" means any Tax Period that begins on or before and ends
after the Distribution Date.
"Tax" or "Taxes" shall have the same meaning as in the Acquisition
Agreement.
"Tax Authority" means, with respect to any Tax, the IRS and any other
state, local or foreign governmental authority responsible for the
administration and/or collection of Taxes.
"Tax Contest" shall mean a notice of deficiency, proposed adjustment,
assessment, audit, examination, suit, dispute or other claim with respect to
Taxes or a Tax Return.
"Tax Item" means, with respect to any Income Tax, any item of income, gain,
loss, deduction, and credit.
"Tax Law" means the law of any governmental entity or political subdivision
thereof relating to any Tax.
"Tax Period" means, with respect to any Tax, the period for which the Tax
is reported as provided under the Code or other applicable Tax Law.
"Tax Records" means Tax Returns, workpapers, documents, records, accounting
data and any other information (including computer data) necessary for (i) the
preparation and filing of all Tax Returns and the determination of all Taxes of
the OMI Group or the International Group, (ii) responding to or defending any
Tax Claim by a Tax Authority relating to such Tax Returns and such Taxes, or
(iii) compliance with the terms of or any record retention agreement with any
Tax Authority.
"Tax Return" means any report, claim for refund, information, return,
schedule, estimate or other similar statement, declaration, filing or document
filed or required by any Tax Authority to be filed with respect to Taxes,
including any attachments, exhibits, schedules or other materials relating to or
submitted with any of the foregoing, any amendments or supplements to any of the
foregoing, and requests for extensions of time to file any item described in
this paragraph.
"Transactions" means the transactions contemplated by the Distribution
Agreement (including the Corporate Restructuring Transactions, as defined in
such agreement) and by the Acquisition Agreement.
"Transfer Taxes" means all stamp, transfer, documentary, sales, use,
registration and other similar Taxes and fees.
Section 2. Preparation and Filing of Tax Returns and Payments with Respect
to Taxes.
2.1. Preparation of Tax Returns Relating to Foreign Income Taxes and Other
Non-U.S. Taxes. International, with the cooperation of OMI and any member of the
OMI Group (as provided for in Section 3 hereof), shall prepare (or cause to be
prepared) all Tax Returns relating to Foreign Income Taxes and all other
non-U.S. Tax Returns with respect to any member of the OMI Group and any member
of the International Group for any Pre-Distribution Period and any Straddle
Period and with respect to any member of the International Group for any
Post-Distribution Period, provided, however, that if a Tax Return described in
this Section 2.1 relates solely to the Domestic Business and OMI (or a member of
the OMI Group) has the sole liability for Taxes reflected on such Tax Return
pursuant to this Agreement and the Distribution Agreement, then OMI shall
prepare (or cause to be prepared) such Tax Return.
2.2. Preparation of Tax Returns Relating to Federal Income Taxes, State
Income Taxes, and Other Non-Foreign Taxes. OMI, with the cooperation of
International and any member of the International Group (as provided for in
Section 3 hereof), shall prepare (or cause to be prepared) all Tax Returns
relating to Federal Income Taxes, State Income Taxes and other U.S. federal,
state or local Taxes with respect to any member of the OMI Group and any member
of the International Group for any Pre-Distribution Period and any Straddle
Period and with respect to any member of the OMI Group for any Post-Distribution
Period, provided, however, that if a Tax Return described in this Section 2.2
relates solely to the Foreign Business and International (or a member of the
International Group) has the sole liability for Taxes reflected on such Tax
Return pursuant to this Agreement and the Distribution Agreement, then
International shall prepare (or cause to be prepared) such Tax Return.
2.3. Filing of Certain Pre-Distribution Period Tax Returns. At least 10
days before the Due Date of any Tax Return which a member of one Group (the
"Preparer") is required to prepare (or cause to be prepared) pursuant to section
2.1 or 2.2 hereof and a member of the other Group (the "Filer") is required to
file, the Preparer shall deliver to the Filer such Tax Return. The Filer shall
timely file (or cause to be filed) any such Tax Return as prepared by the
Preparer with the appropriate Tax Authority.
2.4. Approval of Certain Tax Returns. With respect to any Tax Return
required to be prepared and filed by International or any Affiliate of
International with respect to which OMI may be liable for any Tax shown to be
due thereon pursuant to this Agreement or the Distribution Agreement, at least
20 days prior to the Due Date thereof, International shall deliver such Tax
Return (or cause such Tax Return to be delivered) to OMI for this review,
together with a statement showing in reasonable detail International's
calculation of any Taxes attributable to the Domestic Business (excluding
Special Taxes). International shall file such Tax Return, with OMI's prior
written consent, which shall not be unreasonably withheld or delayed.
With respect to any Tax Return required to be prepared and filed by OMI or
any Affiliate of OMI with respect to which International may be liable for any
Tax shown to be due thereon pursuant to this Agreement or the Distribution
Agreement, at least 20 days prior to the Due Date thereof, OMI shall deliver
such Tax Return (or cause such Tax Return to be delivered) to International for
its review, together with a statement showing in reasonable detail OMI's
calculation of any Taxes attributable to the Foreign Business and any Special
Taxes. OMI shall file such Tax Return, with International's prior written
consent, which shall not be unreasonably withheld or delayed.
2.5. Preparation and Filing of Post-Distribution Period Tax Returns. Except
as set forth in this Section 2, with respect to Post-Distribution Periods,
International shall not have any responsibility for preparing (or causing to be
prepared) and timely filing (or causing to be timely filed) any Tax Return with
respect to any member of the OMI Group, and OMI shall not have any
responsibility for preparing (or causing to be prepared) and timely filing (or
causing to be filed) any Tax Return with respect to any member of the
International Group.
2.6. Modifying Tax Position. Except as otherwise provided in Section 2.7,
with respect to a Tax Return prepared and filed by a member of one Group (the
"Preparer-Filer"), if a member of the other Group (the "Payor") is required to
pay amounts to the Preparer-Filer with respect to such Tax Return, and the Payor
identifies a position that has a reasonable basis and that would reduce the
amount required to be paid by the Payor, the Preparer-Filer shall, upon the
written request of the Payor, adopt such position on such Tax Return if (a) such
position does not increase the amount of Taxes owed by the Preparer-Filer or (b)
the Payor pays to the Preparer-Filer the amount of increased Taxes (including,
without limitation, a gross-up for Taxes on such Taxes and the value of any Tax
Items lost or used) owed by the Preparer-Filer (due to taking such position).
2.7. Reporting of Transaction Tax Items. Each Tax Return described in this
Section 2 shall be consistent with the rulings obtained in the IRS Ruling Letter
and, to the extent not inconsistent with such rulings, with the Acquisition
Agreement and the Distribution Agreement.
2.8. Right to Review Tax Returns. The Responsible Company with respect to
any Tax Return shall make such Tax Return and related workpapers (including
workpapers prepared by external tax preparers such as accountants and attorneys)
available for review by the other Company, if requested, to the extent (i) such
Tax Return relates to Taxes for which the requesting party may be liable, (ii)
such Tax Return relates to Taxes for which the requesting party may be liable in
whole or in part for any additional Taxes owing as a result of adjustments to
the amount of Taxes reported on such Tax Return, or (iii) the requesting party
reasonably determines that it must inspect such Tax Return to confirm compliance
with the terms of this Agreement. The Companies shall attempt in good faith to
resolve any issues arising out of the review of any such Tax Return.
2.9. Payment of Taxes.
(a) (i) For all Taxes with respect to which OMI or any member of the OMI
Group is required to file Tax Returns pursuant to Section 2.2 and 2.3 hereof,
except as otherwise provided below in 2.9(a)(ii), International shall pay OMI
the amount of such Taxes relating to the Foreign Business and any Special Taxes
(including, without limitation, any Federal Income Taxes arising under Subpart F
of the Code) at least 5 business days prior to the Due Date of the Tax Return
reporting such Taxes.
(ii) If International (or a member of the International Group) is required
to make a payment pursuant to Section 2.9(a)(i) hereof in respect of Federal
Income Taxes reported on a consolidated United States federal income Tax Return
that includes OMI and relates to tax year 1997 or a Straddle Period, then the
amount of such payment shall be determined by OMI and shall take into account
Tax Items of the Domestic Business in a manner consistent with the rules of
Treas. Reg. ss. 1.1502-76(b) without regard to any ratable allocations under
Treas. Reg. ss. 1.1502-76(b)(2)(ii) or (iii), provided, however, that for
purposes of this Section 2.9(a)(ii), with respect to a Straddle Period, the
amount of any Tax Items of the Domestic Business that are losses or deductions
shall not exceed the lesser of: (A) the amount of losses or deductions of the
Domestic Business as of the close of the Distribution Date, and (B) the amount
of losses and deductions of the Domestic Business as of the end of the tax year
that includes the Straddle Period.
(b) For all Taxes with respect to which International or any member of the
International Group is required to file Tax Returns pursuant to Sections 2.1 and
2.3 hereof, OMI shall pay International the amount of such Taxes relating to the
Domestic Business (which shall not include any Special Taxes and any Federal
Income Taxes arising under Subpart F of the Code) at least 5 business days prior
to the Due Date of the Tax Return reporting such Taxes.
(c) OMI and International, as the case may be, shall each remit or cause to
be remitted in a timely manner to the appropriate Tax Authority all Taxes due in
respect of any Tax for which it is required to file a Tax Return pursuant to
Section 2 hereof.
Section 3. Assistance and Cooperation.
3.1. General. After the Distribution Date, each of the Companies shall
cooperate (and cause their respective Affiliates to cooperate) with each other
and with each other's agents, including accounting firms and legal counsel, in
connection with matters relating to Taxes of the Companies and their Affiliates
including (i) the preparation and filing of any Tax Returns, (ii) determining
the liability for and amount of any Taxes due (including estimated Taxes) or the
right to and amount of any refund of Taxes, (iii) examinations of Tax Returns,
and (iv) any administrative or judicial proceeding in respect of Taxes assessed
or proposed to be assessed. Such information and documents shall include,
without limitation, records, returns, schedules, documents, work papers or other
relevant materials. Each of the Companies shall also make available to each
other, as reasonably requested and on a mutually convenient basis, (A) the Tax
Records described in Section 3.3 and 3.4, and (B) personnel (including officers,
directors, employees and agents of the Companies or their respective Affiliates)
to provide such assistance as might be reasonably required. Any information or
documents provided under this Section 3 shall be kept confidential by the
Company receiving the information or documents, except as may otherwise be
necessary in connection with the filing of Tax Returns or in connection with any
communications with a Tax Authority or any administrative or judicial
proceedings relating to Taxes or any Tax Return. Specifically, International
shall also make available to OMI, as reasonably requested and available,
personnel (including officers, directors, employees and agents of the Companies
or their respective Affiliates) who have knowledge of the Tax matters of OMI and
are therefore able to assist in the preparing, maintaining, and interpreting of
information and documents relevant to OMI's Taxes for the taxable year ending
December 31, 1997.
3.2. Tax Information Package. International shall prepare (or cause to be
prepared) a Tax information package which includes all relevant materials,
information, data, work papers and similar documents and records with respect to
Taxes relating to any Pre-Distribution Period for which OMI has the obligation
to prepare a Tax Return pursuant to Section 2.2 hereof. International shall
deliver such Tax information package to OMI no later than 90 days after the
Distribution Date.
3.3. Retention of Tax Records. International shall preserve and keep all
Tax Records until the later of (i) the expiration of any applicable statutes of
limitation (giving effect to any applicable extensions or waivers), and (ii)
seven years after the Distribution Date. If, prior to the expiration of the
applicable statute of limitation and such seven-year period, International
wishes to dispose of any Tax Records, International may dispose of such records
upon 180 days prior notice to OMI. Such notice shall include a detailed list of
the Tax Records to be disposed of. OMI or any of its Affiliates shall have the
opportunity, at its cost and expense, to copy or remove, within such 180-day
period, all or any part of such Tax Records.
3.4. Access to Tax Records. The Companies and their respective Affiliates
shall make available to each other for inspection and copying during normal
business hours upon reasonable notice all Tax Records in their possession to the
extent reasonably required by the other Company in connection with the
preparation, review or audit of Tax Returns, Tax litigation and claims, and the
resolution of items under this Agreement.
Section 4. Liability for Taxes.
4.1. General. (a) Except as expressly set forth in this Agreement, the
Distribution Agreement shall govern the indemnification obligations with respect
to Taxes between the OMI Group and the International Group.
(b) To the extent that a party (the "Indemnifying Party") is required to
make an indemnification payment to another party (the "Indemnitee") pursuant to
Section 7.01 or 7.02 of the Distribution Agreement or Section 2.9 or 4.3 hereof,
the Indemnifying Party shall pay the Indemnitee no later than 5 business days
prior to the Due Date of the relevant Tax Return or 5 business days after the
Indemnifying Party receives the Indemnitee's calculations of the Indemnifying
Party's indemnification obligation hereunder, whichever occurs last, the amount
of such indemnification obligation.
(c) All indemnification payments made pursuant to this Agreement and the
Distribution Agreement shall be treated as occurring immediately before the
Distribution, and no member of the OMI Group and the International Group and
none of the subsidiaries (as defined in Section 3.14 of the Acquisition
Agreement) of any such member shall take any position inconsistent with such
treatment before any Tax Authority, except to the extent that a Final
Determination with respect to the recipient party causes any such payment to not
be so treated.
(d) Except as otherwise expressly provided in Section 2.9(a)(ii), all
indemnification payments relating to the liability for Taxes of the OMI Group
and the International Group under this Agreement and the Distribution Agreement
shall be determined on a pre-Tax basis, i.e., without regard to the Tax
consequences to the indemnified party of making a payment that is indemnified by
another party under this Agreement or of receiving a payment under this
Agreement as indemnification therefor.
4.2. Tax Obligations Arising Under a Pre-Distribution Tax Sharing
Agreement. Except as set forth in this Agreement, any and all existing Tax
sharing agreements and practices regarding Taxes and their payment, allocation,
or sharing between any member of the International Group and any member of the
OMI Group or its subsidiaries (as defined in Section 3.14 of the Acquisition
Agreement) shall be terminated with respect to the International Group as of the
Distribution Date and no remaining liabilities thereunder shall exist
thereafter.
4.3. Transfer Taxes. International shall prepare (or cause to be prepared)
and timely file (or cause to be timely filed) with the appropriate Tax Authority
all Tax Returns with respect to Transfer Taxes imposed with respect to the
Corporate Restructuring Transactions, the Distribution and the Acquisition.
International shall pay (or cause to be paid) all Transfer Taxes attributable to
the Corporate Restructuring Transactions and the Distribution. International, on
the one hand, and OMI, on the other hand, shall share equally the liability for
all Transfer Taxes attributable to the Acquisition. Notwithstanding anything in
this Section 4.3 to the contrary, if any member of the OMI Group is required to
file a Tax Return in respect of Transfer Taxes, then International shall deliver
to OMI the prepared Tax Return together with amount of Taxes shown to be due on
such Tax Return and for which International is liable at least 5 days prior to
the Due Date thereof and OMI shall timely file (or cause to be timely filed)
with the appropriate Tax Authority such Tax Return as prepared by International
and remit to such Tax Authority the amount of Transfer Taxes shown to be due on
such Tax Return.
The parties hereto shall use reasonable best efforts to reduce any
transfer, sales or other similar Taxes that may be incurred with respect to the
transactions contemplated by the Distribution Agreement and the Acquisition
Agreement.
Section 5. Tax Contests.
5.1. General. International shall have sole control over all Tax Contests
with respect to any Tax Items for which International may be liable pursuant to
this Agreement or the Distribution Agreement, and OMI shall have sole control
over all Tax Contests with respect to any Tax Items for which OMI may be liable
pursuant to this Agreement or the Distribution Agreement. The party controlling
a Tax Contest shall have the sole right to contest, litigate and Dispose of such
Tax Contest and to employ counsel of its choice at its sole expense; provided,
however, that the other party may participate in (but not control) the defense
of any such Tax Contest at its own expense. If pursuant to this Section 5.1, a
Tax Contest presents issues for which both parties may be liable pursuant to
this Agreement or the Distribution Agreement or an issue which affects both the
Domestic Business and the Foreign Business, the party controlling such Tax
Contest shall not litigate or Dispose of such Tax Contest without the prior
written consent of the other party, which shall not be unreasonably withheld or
delayed.
5.2. Tax Contest Management. International or OMI, as the case may be,
shall promptly notify the other party in writing of any Tax Contest that may
reasonably be likely to result in liability of the other party under this
Agreement or the Distribution Agreement. With respect to any such Tax Contest,
the party not controlling such Tax Contest shall (i) not make any submission to
any Tax Authority without offering the other party the opportunity to review and
approve it, (ii) not take any action or make (or purport to make) any
representations in connection with such Tax Contest with respect to issues
affecting the other party's indemnity hereunder, (iii) keep the other party
informed as to any information that it receives regarding the progress of such
Tax Contest, (iv) provide the other party with any information that it receives
regarding the nature and amounts of any proposed Disposition of the Tax Contest,
(v) permit the other party to participate in all conferences, meetings or
proceedings with any Tax Authority in which the indemnified party is or may be a
subject, and (vi) permit the other party to participate in all court appearances
in which the indemnified party is or may be a subject.
Section 6. Subsequent Actions.
(a) Actions Taken After the Spin-Off. Notwithstanding anything to the
contrary in the Acquisition Agreement or the Distribution Agreement, except for
an action permitted by clause (i), (ii), or (iii) of this Section 6(a), none of
OMI, International and any of their respective Affiliates shall take any action
that (A) is inconsistent with (x) the Tax treatment of the Transactions set
forth in the IRS Ruling Letter or (y) a factual statement or a representation
set forth in the Ruling Request (as amended by any supplement) or (B) causes a
Corporate Restructuring Transaction for which a ruling is not requested from the
IRS and which is intended to qualify as a tax-free transaction under Section
332, 351, 355 or 368 of the Code to fail to so qualify.
(i) Approved Actions. OMI and its Affiliates are expressly permitted to
take any Approved Action.
(ii) Subsequent Approved Actions. Each Company and its Affiliates are
expressly permitted to take an action if the other Company has given its prior
written consent, which consent shall not be unreasonably withheld or delayed
unless the action at issue is described by Section 6(a)(A)(y).
(iii) Actions Permitted by a Ruling of a Tax Authority. A Company or any of
its Affiliates may apply for and obtain a ruling with respect to any action from
the IRS (or any other applicable Tax Authority) subject to the provisions of
Section 6(b). If such ruling is reasonably satisfactory to the other Company,
the Company or any of its Affiliates is expressly permitted to take such action.
(b) Amendments and Supplements to the Ruling Request. Except as otherwise
provided in this Section 6(b), each Company covenants and agrees that it will
not file, and it will cause its Affiliates to refrain from filing, any amendment
or supplement to the Ruling Request without the consent of the other Company,
which consent shall not be unreasonably withheld or delayed. With respect to a
proposed action, if one Company or any of such Company's Affiliates (the
"Requesting Party") desires to apply for a ruling from the IRS (or any other
applicable Tax Authority) in accordance with Section 6(a)(iii), such Requesting
Party shall not submit such request for a ruling if the other Company (the
"Requested Party") determines in good faith that the filing of such request is
likely to have a material adverse effect upon such Requested Party, provided,
however, that if the Requested Party makes such determination, the Requesting
Party may dispute such determination, and at the joint expense of both Companies
(shared equally), the Companies shall engage a nationally recognized law firm
reasonably acceptable to both Companies to make a final determination as to
whether the filing of such a ruling request is likely to have a material adverse
effect upon the Requested Party.
Section 7. Survival of Obligations. The representations, warranties,
covenants and agreements set forth in this Agreement shall be unconditional and
absolute and shall remain in effect without limitation as to time.
Section 8. Disagreements. If, after good faith negotiations, the parties
cannot resolve any disagreement on the application of this Agreement to any
matter, then any agreed-upon amount shall be paid to the appropriate party, and
the dispute shall be resolved within 15 days thereafter by a "Big Six"
accounting firm acceptable to both of the parties (the "Accounting Firm"). Any
such resolution by the Accounting Firm will be conclusive and binding on all
parties to this Agreement. The fees and expenses (including the fees and
expenses of its representatives) incurred in connection with the referral to and
decision by the Accounting Firm shall be shared equally by the parties.
Following the decision of the Accounting Firm, each of OMI and International
shall take (or cause to be taken) any action that is necessary or appropriate to
implement such decision, including, without limitation, the filing of amended
Tax Returns and prompt payment of any amounts in dispute plus interest at the
rate specified under Section 6621(a)(2) of the Code.
Section 9. Expenses. Except as provided in Section 8, each Company and its
Affiliates shall bear their respective expenses incurred in connection with
preparation of Tax Returns, Tax Contests, and other matters related to Taxes
under the provisions of this Agreement.
Section 10. Miscellaneous Provisions.
10.1. Addresses and Notices. Any notice, demand, request or report required
or permitted to be given or made to any party under this Agreement shall be in
writing and shall be deemed given or made when delivered in person or when sent
by first class mail or by other commercially reasonable means of written
communication (including delivery by an internationally recognized courier
service or by facsimile transmission) to the party at the party's address as
follows:
If to OMI: Director, Taxes
OMI Corp.
00 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
with a copy to: Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxxxxxx X. Xxxxxxx
and a copy to: Marine Transport Lines, Inc.
0000 Xxxxxx Xxxx. X-000
Xxxxxxxxx, XX 00000-0000
Attn: General Counsel
If to International: Director, Taxes
OMI Corporation
Xxx Xxxxxxx Xxxxx
Xxxxxxxx, XX 00000
with a copy to: White & Case
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, XX 00000
Attn: Xxxx X. Xxxxxx, Xx.
A party may change the address for receiving notices under this Agreement by
providing written notice of the change of address to the other parties.
10.2. Binding Effect. This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and assigns.
10.3. Waiver. No failure by any party to insist upon the strict performance
of any obligation under this Agreement or to exercise any right or remedy under
this Agreement shall constitute waiver of any such obligation, right, or remedy
or any other obligation, rights, or remedies under this Agreement.
10.4. Invalidity of Provisions. If any provision of this Agreement is or
becomes invalid, illegal or unenforceable in any respect, the validity,
legality, and enforceability of the remaining provisions contained herein shall
not be affected thereby.
10.5. Interest on Late Payments. Any payment required by this Agreement
which is not made on or before the date required to be made hereunder shall bear
interest after such date at the rate specified in Section 6621(a)(2) of the
Code.
10.6. Integration. This Agreement constitutes the entire agreement among
the parties pertaining to the subject matter of this Agreement and supersedes
all prior agreements and understandings pertaining thereto. In the event of any
inconsistency between this Agreement and the Distribution Agreement or any other
agreements relating to the transactions contemplated in furtherance of the
Distribution Agreement, the provisions of this Agreement shall control.
10.7. Construction. The language in all parts of this Agreement shall in
all cases be construed according to its fair meaning and shall not be strictly
construed for or against any party.
10.8. Counterparts. This Agreement may be executed in two or more
counterparts each of which shall be deemed an original, and all of which taken
together shall constitute one and the same instrument
10.9. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware applicable to contracts
executed in and to be performed in that State.
10.10. Amendments. This Agreement may not be amended except by an agreement
in writing, signed by the parties.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
by the respective officers as of the date set forth above.
OMI CORP.
By: /s/ Xxxxxxx de Sostoa
Title: Senior Vice President
OMI Corporation
By: /s/ Xxxxxxx de Sostoa
Title: Senior Vice President
Schedule A
Approved Actions
o Any acquisition of assets or stock from entities that
are not a part of OMI's consolidated group for cash,
stock and/or debt.
o Any sale, exchange or other disposition of one or
more of the assets of OMI in the ordinary course of
operating any of the businesses conducted directly or
indirectly by OMI or MTL, provided that the sale of a
ship generally will be treated as a disposition in
the ordinary course of business, and provided
further, that the sale, exchange or other disposition
of the U.S. Flag business, the Lightering Services
business or the Ship Management business (as each
term is defined in the Ruling Request), in its
entirety, shall not constitute an Approved Action.
o Any sale, exchange or other disposition of one or
more of the assets (including, without limitation,
stock of a subsidiary) or any business of MTL.
o Any issuance of new shares of OMI, provided that, in
the aggregate, such shares and the shares issued in
the Acquisition would not constitute 50% or more of
the equity of OMI if such issuances and the
Acquisition had occurred simultaneously (i.e., at the
time of the Acquisition).
o Any redemption, exchange, transfer or other
disposition of MTL Class B stock (if such stock is
issued), except to the extent limited by the
immediately preceding paragraph.
o Any sale, exchange or other disposition of stock of
OMI or International by any Shareholder except for
sales, exchanges or other dispositions actually
planned or intended at the time of the First Closing
or the Second Closing (as those terms are defined in
the Acquisition Agreement).
o Any borrowing or issuance of new debt by OMI.
o The reflagging of one or more of the following ships:
the Courier, the Patriot and the Rover.
o Any action required or expressly permitted by the
Acquisition Agreement, the Distribution Agreement,
the Tax Cooperation Agreement, the Escrow Agreement
and any ancillary agreement executed among any of
OMI, International and MTL (including, without
limitation, the preparation or filing of any
supplemental request for rulings or any additional
information in accordance with the provisions of
Section 6 of the Tax Cooperation Agreement).
o Any action taken in the ordinary course of operating
any of the businesses conducted directly or
indirectly by OMI or MTL (including, without
limitation, negotiating, entering into or terminating
contracts, hiring and terminating employees and
independent contractors, licenses, leases, charters,
and employment agreements).
o Any action required by law, provided that no
alternative action could reasonably avoid such
required action.
o Any action taken by MTL, OMI or any subsidiary of MTL
or OMI after the second anniversary of the Second
Closing (as defined in the Acquisition Agreement)
unless actually planned before such date.
TABLE OF CONTENTS
Section 1. Definition of Terms
Section 2. Preparation and Filing of Tax Returns and Payments with Respect
to Taxes
2.1. Preparation of Tax Returns Relating to Foreign Income Taxes and
Other Non-U.S. Taxes
2.2. Preparation of Tax Returns Relating to Federal Income Taxes,
State Income Taxes, and
Other Non-Foreign Taxes
2.3. Filing of Certain Pre-Distribution Period Tax Returns
2.4. Approval of Certain Tax Returns
2.5. Preparation and Filing of Post-Distribution Period Tax Returns
2.6. Modifying Tax Position
2.7. Reporting of Transaction Tax Items
2.8. Right to Review Tax Returns
2.9. Payment of Taxes
Section 3. Assistance and Cooperation
3.1. General
3.2. Tax Information Package
3.3. Retention of Tax Records
3.4. Access to Tax Records
Section 4. Liability for Taxes
4.1. General
4.2. Tax Obligations Arising Under a Pre-Distribution Tax Sharing
Agreement
4.3. Transfer Taxes
Section 5. Tax Contests
5.1. General
5.2. Tax Contest Management
Section 6. Subsequent Actions
(a) Actions Taken After the Spin-Off
(b) Amendments and Supplements to the Ruling Request
Section 7. Survival of Obligations
Section 8. Disagreements
Section 9. Expenses
Section 10. Miscellaneous Provisions
10.1. Addresses and Notices
10.2. Binding Effect
10.3. Waiver
10.4. Invalidity of Provisions
10.5. Interest on Late Payments
10.6. Integration
10.7. Construction
10.8. Counterparts
10.9. Governing Law
10.10. Amendments