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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
ZAPATA CORPORATION ("Zapata"), a Nevada
corporation, and SAFETY COMPONENTS
INTERNATIONAL, INC. ("Safety"), a Delaware
corporation.
R E C I T A L S:
A.
Zapata 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 Zapata
is the common parent.
C.
Zapata has
filed consolidated income tax returns, and intends to
file consolidated income tax returns, and
combined income tax returns where
advisable.
D.
Zapata 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 Zapata with respect to certain
tax liabilities.
F.
Zapata
desires to be indemnified by Safety with respect to certain
tax liabilities.
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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 Zapata, or its successor, is
the common parent.
"Effective Date" means
the date upon which Zapata 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
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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).
"Zapata Affiliate" means any corporation, partnership or other
entity directly or indirectly controlled by
Zapata, other than Safety, a Safety
Pre-Closing Affiliate, or a Safety
Post-Closing Affiliate.
"Zapata 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.
"Zapata 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
Zapata, 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. Zapata 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 Zapata with any
tax-related information reasonably
requested by Zapata 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 Zapata, upon Zapata's
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.
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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.
Zapata shall prepare and file, or cause to
be prepared and filed, all Tax
Returns for the Zapata 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 Zapata.
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 Zapata 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
Co
