Looking for an agreement? Search from over 1 million agreements now.

Tax Sharing And Indemnification Agreement

This is an actual contract by Nu Skin.

Save time and money with our Premium Packages.
Buy all (8) recommended agreements for
$140.00 (50% savings)
Agreement Preview
Sectors: Consumer Products (Non-Durables)
Governing Law: Utah, View Utah State Laws
Effective Date: December 31, 1997
Search This Document
TAX SHARING AND INDEMNIFICATION AGREEMENT


THIS TAX SHARING AND INDEMNIFICATION AGREEMENT (the "Agreement") is dated as of December 31, 1997, is by and among Nu Skin International, Inc., a Utah corporation ("NSI"), Nu Skin USA, Inc., a Delaware corporation ("NUSA"), and the shareholders of NSI and NUSA and their successors and assigns (the "Shareholders").


RECITALS


WHEREAS, NSI and NUSA have entered into a Contribution and Distribution Agreement dated as of December 31, 1997 (the "Distribution Agreement"); and


WHEREAS, pursuant to the Distribution Agreement, NSI shall distribute all the issued and outstanding common stock of NUSA (pro rata) to the Shareholders (the "Distribution"); and


WHEREAS, there are no tax allocation agreements between NSI and NUSA;


WHEREAS, NSI and NUSA each have been taxed as an "S corporation" as that term is defined in Section 1361 of the Code at all times during their respective existences;


WHEREAS, the Shareholders intend to transfer the stock of NSI along with the stock of other corporations to Nu Skin Asia Pacific, Inc., a Delaware corporation ("NSAP") in exchange for stock of NSAP.


WHEREAS, NSI will receive or has received an opinion of Price Waterhouse that the Distribution, taking into account the contribution of NSI by the Shareholders to NSAP, will qualify for tax-free treatment under Section 368(a)(1)(D) and 355 of the Code;


WHEREAS, NSI, NUSA and the Shareholders desire to enter into this Agreement to provide for the allocation among NSI, NUSA and the Shareholders of all responsibilities, liabilities and benefits relating to or affecting Taxes (as hereinafter defined) paid or payable by any of them for all taxable periods, whether beginning before, on or after the Distribution Date (as hereinafter defined), to indemnify NSI if the Contribution and Distribution fails to qualify for tax-free treatment under Section 368(a)(1)(D) and 355 of the Code, and to provide for certain other matters. This Agreement also provides, among other things, for NUSA, NSI and the Shareholders to assist each other for an interim period in the preparation of Tax Returns (as hereinafter defined) required to be filed after the Distribution Date.
NOW, THEREFORE, in consideration of the mutual covenants and promises contained herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:


AGREEMENT


ARTICLE I.


DEFINITIONS


Section 1.1 As used in this Agreement, the following terms shall have the following meanings (such meanings to be equally applicable to both the singular and the plural forms of the terms defined). Capitalized terms used herein and not otherwise defined shall have the meanings given to them in the Distribution Agreement.


"Action" shall have the meaning ascribed to such term in Section 4.1.


"Change" shall mean (i) any audit, amendment or other change in a Tax Return, or (ii) the expiration of the statute of limitations with respect to any Tax Item allocated to NUSA and/or NSI in the Workpapers; provided, such Tax Item was not subject to a Change by application of clause (i) of this definition.


"Closing Balance Sheets" shall mean the NUSA Closing Balance Sheet and the NSI Closing Balance Sheet.


"Code" means the Internal Revenue Code of 1986, as amended, and shall include corresponding provisions of any subsequently enacted federal tax laws.


"Corporate-Level Restructuring Taxes" shall mean Restructuring Taxes payable by NSI or NUSA.


"Corporate-Level Taxes" means Taxes that are taxed to NSI or NUSA and not to the Shareholders.


"Distribution" shall have the meaning ascribed to such term in the recitals.


"Final Determination" shall mean the final resolution of the liability for any Tax Item for a taxable period, (i) by IRS Form 870 or 870-AD (or any successor forms thereto), on the date of acceptance by or on behalf of the IRS with respect to United States Federal taxes, 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 for any Tax Item shall not constitute a Final Determination for such Tax Item; (ii) by a decision, judgment, decree, or other order by a court of competent jurisdiction, which has become final and unappealable; (iii) by a closing agreement or accepted offer in compromise under Section 7121 or 7122 of the Code, with respect to Federal Taxes, or comparable agreements as to other Taxes under the laws of other jurisdictions; (iv) by an allowance of a refund or credit in respect of any overpayment of Tax, but only after the expiration of all periods during which such refund may be recovered by the Tax imposing jurisdiction; or (v) by any other final disposition, including by reason of the expiration of the applicable statute of limitations.
"IRS" shall mean the Internal Revenue Service.


"NSI Businesses" means the businesses conducted by NSI immediately following the Distribution.


"NSI Closing Balance Sheet" shall mean the balance sheet of NSI, dated as of December 31, 1997.


"NSI Group" shall mean NSI and all of its future subsidiaries.


"NSI" shall have the meaning ascribed to such term in the preamble.


"NUSA Businesses" means the businesses conducted by NUSA immediately following the Distribution.


"NUSA Closing Balance Sheet" shall mean the balance sheet of NUSA , dated as of December 31, 1997.


"NUSA Group" shall mean NUSA and all of its future subsidiaries.


"NUSA" shall have the meaning ascribed to such term in the preamble.


"Permanent Tax Item" shall mean any Tax Item other than a Temporary Tax Item.


"Reorganization" shall mean NSI's distribution of all of the NUSA shares to the Shareholders.


"Restricted Period" shall mean the two-year period following the Distribution Date.


"Restructuring Taxes" means any Taxes (other than Transfer Taxes) resulting from the Reorganization or the Distribution including, without limitation, any Tax arising pursuant to, or as a result of, Section 311 of the Code.


"Settlement Amount" shall have the meaning ascribed to such term in Section 4.1.
"Tax Benefit" means any item of loss, deduction, credit or any other Tax Item which decreases Taxes paid or payable.


"Tax Detriment" means any item or income, gain, recapture of credit or any other Tax Item which increases Taxes paid or payable.


"Tax Item" means any return, form, filing, questionnaire or other document required to be filed (or which may 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 period with any taxing authority (whether domestic or foreign) in connection with any Tax or Taxes (whether or not a payment is required to be made with respect to such filing).


"Tax Returns" means any return, declaration, statement, report, schedule, certificate, form, information return or any other document (and related or supporting information) including an amended tax return filed with respect to Taxes.


"Taxes" means all forms of taxation, whenever created or imposed, and whether of the United States or elsewhere, and whether imposed by a local, municipal, governmental, state, federation or other body, and without limiting the generality of the foregoing, shall include income, sales, use, ad valorem, gross receipts, value added, franchise, transfer, recording, withholding, payroll, employment, excise, occupation, and property taxes, together with any related interest, penalties and additions to any such tax, or additional amounts imposed by any taxing authority (domestic or foreign) upon NSI or NUSA their divisions or branches or upon the Shareholders.


"Temporary Tax Item" shall mean any Tax Item to the extent the Tax Detriment or Tax Benefit relating to such Tax Item in one tax period creates or results from a corresponding Tax Benefit or Tax Detriment, respectively, in a different tax period; provided, that if the parties cannot agree whether a Tax Item is a Temporary Tax Item, then generally accepted accounting principles in effect on the Distribution Date shall determine if a Tax Item is a Temporary Tax Item.


"Transfer Taxes" shall mean any real property transfer or gains, sales, use, transfer, value added, stock transfer, and stamp taxes, any transfer, recording, registration, and other fees, and any similar Taxes which become payable in connection with the Distribution or Reorganization.


"Workpapers" shall mean the workpapers underlying the preparation of the 1997 Federal Tax Return of NSI and the Closing Balance Sheets.
ARTICLE II.


PREPARATION AND FILING OF TAX RETURNS


Section 2.1 Manner of Preparation. All Tax Returns of NSI or NUSA filed after the Distribution Date shall be prepared on a basis which is consistent with the tax opinions obtained from Price Waterhouse in connection with the Reorganization and the Distribution (in the absence of a controlling change in law or circumstances) and shall be filed on a timely basis (including pursuant to extensions) by the party responsible for such filing under this Agreement. In the absence of a controlling change in law or circumstances, or except as otherwise agreed in writing, all Tax Returns of NSI or NUSA filed after the date of this Agreement shall be prepared on a basis consistent with the elections, accounting methods, conventions, and principles of taxation used for the most recent taxable periods for which Tax Returns of NSI involving similar Tax Items have been filed, except that, with respect to Tax Items not relating to the Reorganization or Distribution, one party may take an inconsistent position to the extent that, with respect to Tax Items not relating to the Reorganization or Distribution, such position does not create a Tax Detriment to the other party or to the Shareholders of the other party.


Section 2.2 Pre-Distribution Tax Returns.


(a) All federal or state income Tax Returns that are required
to be filed for periods beginning before the Distribution Date shall be
prepared and filed by the Shareholders or by NSI.


(b) All Tax Returns for state and local sales, use, property,
transfer and other Taxes for periods beginning before the Distribution
Date which are not measured by income shall be prepared and filed by
NSI. NSI shall prepare all Federal and state payroll Tax Returns
required to be filed by it after the Distribution which include any
period beginning before the Distribution Date.


(c) All foreign Tax Returns and any other Tax Returns not
described elsewhere in this Section 2.2 that are required to be filed
for any period beginning before the Distribution Date shall be prepared
and filed by NSI.


Section 2.3 Post-Distribution Corporate Tax Returns. All Tax Returns for periods beginning after the Distribution Date with respect to NSI shall be prepared and filed by NSI. All tax returns for periods beginning after the Distribution Date with respect to NUSA shall be prepared and filed by NUSA. The Shareholders shall file all Tax Returns required to be filed by them that relate to or include Tax Items associated with NSI or NUSA.
ARTICLE III.


PAYMENT OF TAXES


Section 3.1 Tax for Taxable Periods Beginning Prior to the Distribution Date.


(a) The Shareholders shall pay all Taxes due (or receive all
refunds) in connection with the filing of NSI's federal income Tax
Returns for all taxable periods ending on or before the Distribution
Date.


(b) NSI or the Shareholders shall pay to the relevant taxing
authority all non-U.S. federal income Taxes for the Tax Returns for all
taxable periods ending on or before the Distribution Date with respect
to which NSI and the Shareholders each have a respective filing
responsibility under relevant state, local or foreign law.


(c) NSI shall be responsible for the payment of all Taxes due
or payable with respect to taxable periods beginning on or before the
Distribution Date that are required to be reported on the Tax Returns
described in Sections 2.2(b) and 2.2(c).


Section 3.2 NSI and Shareholder Tax Deficiencies and Refunds for Periods Prior to the Distribution Date. If there is a Change in a Tax Return filed by NSI and with respect to which NSI, for a taxable period prior to the Distribution Date, has tax liability pursuant to Section 3.1, irrespective of whether such Change occurs before, on or after the Distribution Date, NSI shall pay and discharge any Tax or receive any refund of Tax associated with such Change. For taxable periods beginning prior to the Distribution Date, the Shareholders shall bear the burden of any Tax arising from a Change in Tax Returns filed by them that relate to or include Tax Items associated with NSI and with respect to which they are liable, and shall have the benefit of any refun
-- End of Preview --
Home| About Us| FAQ| Subscription | Contact Us |

Privacy Policy   Terms of Service  3.85.10.62