Free Affidavit - District Court of Federal Claims - federal

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Case 1:05-cv-00231-EJD

Document 97-11

Filed 07/17/2007

Page 1 of 6

PLEASE. D_~I'iR THE FCLLOV\'ING PAGE(S) TO;

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PC). Be-x 5205. i"or1t-i C:h8.rlf9.f~on, SC 29405 .. (843) 74--5174 .. FlEx (8-4-3) 747-4092

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Case 1:05-cv-00231-EJD
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Document 97-11

Filed 07/17/2007

Page 2 of 6
Jerry Zucker
Chairman, President and
Chief Executive Officer

ilD~

MEMO

TO:

Ray Knight

E& Y
FROM:
DATE:
Jerry Zucker

November 12, 1999

Attached is an executed copy of the engagement letter. I have signed the letter and returning, subject to you clarifying what information from me and/or the partnership you are relying upon, and also confirming to me that I will, in fact, receive two legal opinion
letters from reputable firm(s).

Additionally, i want you to confirm my understanding of Paragraph 3 (reading of the paragraph suggests that my maximum exposure for a $ i 00 million loss is $8 1/2 million. If the actual cost is different from this amount, i would appreciate you informing me immediately.

Further, the document does not refer specifically to the $100 million loss. I assume this is, in fact, the number to be allocated 98/2, as per our discussion.

å~
cc: Jim Boyd

(843) 744-5174 . Fax (843) 747-4092
4838 Jenkins Avenue. P.O. Box 5205 . North Charleston, SC 29405

Case 1:05-cv-00231-EJD

Document 97-11

Filed 07/17/2007

Page 3 of 6
. Phone: iO-i 372 6300

s! ERNST & YOUNG LLP

. 101 Independence Center

Suit!! 1100

101 North Tryon Street Charlotte. North Carollna 28246

PERSONAL AND CONFIDENTIAL
November 11, 1999
Mr. Jerr Zucker

16 Buckingham Drive Charleston, South Carolina 29407
Dear Jerr:

Ths letter will confirm our engagement to provide tax advice to you concerning the

implementation of the COBRA strategy we have discussed with you. This strtegy will involve the creation of a Parnership by you and third paries. Our work will include assisting in the tax
planing aspects or

this transaction, working with counel and other third pares in reviewing the tax aspects pf the entities and other consulting servces as required. If necessar, we also agree

to reresent you before the Internal Revenue Seiice with respect to tax issues associated with this strategy up to and including the appellate leveL If you would like us to represent you with

regard to other tax issues in the event of an audit, we would charge our normal fees for time and j

expenses in connection with such representation. D ~
In ths engagement, we wil be using information provided by you and the Parership and Wi1i-l~( be relying upon you and the Parership for the accuracy and completeness of this information. 1
We wil maintain the information provided to us in confdence within our firm and wil not \

disclose to others such confidential information except with your consent or as required by law )
or permitted under professional standads:

'-

Our fee for providing the professional serces referred to above will be $1.5 million on a total

investment in the Parership by you and other individual(s) in the amount of $7.0 milion. Investment in parership equals Cost of long option contract equal to 5% of desired loss, plus the desired loss. We will invoice you for our fee afer the foreign curency cash equal to 2% of

7
~i .StAt-

option contrts and requied amount of cas have been contrbuted to the Parership. In the
event you later decide not to implement the technque descnbed above, our fee wil be paid by you and will be lited to our tie incured from the date ths letter is signed up to the date we receive wrtten notification of your decision not to proeed, and will be biled at our standard hourly rats. In addition to bills for our hourly fees, an adistrative expense charge of 8.5% of our standad fees will be biled at the same time.

Al advice and other servces we provide purant to this argement are intended to be solely
for your benefit and that of the Parership and are not for the benefit of anyone else.

Accordgly, our advice may not be relied upon by any other peron or persons, used in
connection with any other traction, or used for any other purose without our prior wrtten

const. Furerore, the content of any oral or wrtten communcation made by us in

connection with th engagement shall not be communcat to the public or otherwse publicized in any maner without our prior wrtten consent.
Ernst & Young LLF i~ a member of Ernst & Young InternationaL, ltd.

Case 1:05-cv-00231-EJD

Document 97-11

Filed 07/17/2007

Page 4 of 6
Page 2

Mr. Jerr Zucker

November 11, 1999

Ernst & Young LLP wil not be liable for any clai for daages arsing out of or in connection
with any ta serices provided to you in an amount greater than the amount of fees actually paid

to Ernst & Young LLP with respect to the serices directly relatg to and formng the basis of such claim.

Any controversy or claim ansing out of or relating to tax and tax-related serices now or hereafter provided by us to you (includig any such matter involving any parent, subsidiar,
affliate, successor in interest, or agent of Ernst & Young LLP) shall be submitted first to voluntar medation, and if mediation is not successful, then to binding arbitration, in accordance with the dispute resolution procedures set forth in the Attachment to this letter. Judgment on any arbitration award may be entered in any court having proper jurisdiction.

Except as expressly provided herein, this engagement letter does not modify the terms or
provisions of any engagement letter for other professional serVices which were agreed to prior to the date noted below.

~

Information relating to federal tax advice we provide to you, including conuunications between us and material we create in the course of providing that advice, may be privileged and protected

fTom disclosure to the Internal Revenue Service. Should the Interal Revenue Service seek disclosure from you or us of wrtten or oral communcations relating to such advice, we wil
discuss with you whether and how you asser, or waive, the privilege.

If any portion of this letter is held to be void, invalid, or otheiwse unenforceable, in whole or par, the remaining portions of this letter shall remai in effect.
thi letter and ret it to me in the
If these arangements are acceptable, please sign one copy of

enclosed self-addressed envelope. If you have any questions concerning our engagement, please

cali me at 704/331.1933. We appreciate the opportunty to work with you.
Ver trly yours,

-t~~/tM
Ray A. Ki.ght

Pricipal
Attachment Agreed to by:
Name:
Date:

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Case 1:05-cv-00231-EJD
Mr. Jer Zucker

Document 97-11

Filed 07/17/2007

Page 5 of 6
Page 3

November 11, 1999

Dispute Resolution Procedures
The followin procedures shall be used to resolve any contrversy or claim ("dispute") as provided in our engagement letter of
July 23, 1998. If any of these provisions are detemied to be invalid or unenforceable, tiie remaining provisions shall remain in effect and binding on tho paries to the fullest extent permtted by law, .

Medfation A dispute shall be submitted to mediation by written notice to the other pany or paries. In the medition process, the pares will
tr to resolve the differences voluntarily wiil the aid of an imaral mediator, who will attempt to facilitate negotiations. The

meditor wil be selected by agreement of the parties, If the partes caruot agree on a mediator, a mediator shall be designated by
the Amrica Aritration Association ('f AA ") or JAMS/Endispute at the request of a pary, Any mediator 60 designated must be

aceptale to all partes.

The mediation will be conducted as specified by the mediator and agred upon by the pares, The partes agree to
discuss their differences in good faith and to a.ttmpt, with the assistance of the mediator, to reach an amicable
resolution of

the dispute.

The mediation wil be trated as a settlement discussion and therefore will be confdentiaL. TIie mediator may not testify for either
part in any later proceeding relatig to the dispute. No recordig or trancript shall be made of the mediation proceedings.

Each parr will bear its own costs in the mediation, The fees and expenses of the meditor will be shared equally by the partes.
;,.c::-

Arbìtra¡fon

If a dispute has not been resolved within 90 days after the writtn notice begining the mediation process (or a longer period, if the pares agree to extend the mediation), the mediatioii shall tenate and the dispute will be setted by arbitration. The arbitration will be conducted in accordance with the procedures in this document and the Arbitration Rules for Professional Accountig 8Ild Related Serices Disputes of the AA as in effect on the date of the engagement letter (tlAA Rules"). In the event of a conflict, the provisions of ths document will control.

The arbitrtion will be conducted before a panel of thee arbitrtors, regardless of the size of the dispute, to be selected as provided in the AA Rules. Any issue concerng the extent to which any dispute is subject to arbitration, or concernin the
applicabilty, interpretation, or enforceability of these procedures, inluding any contention that al or part of

these procedues are

invalid or unenforceable, shall be governed by the Federal Arbitration Act and resolved by the arbitrtors. No potential arbitrtor

may see on the panel unless he or she ha agreed in wrtig to abide and be bound by these procedures.

Th aritto may not award non-monetary or equitable relief of any sort. They shall have no power to award puntive dages

or any other damges not measured by the prevailg par's actul daages, aD the pares expressly waive their right to obta
suh dages in aritrtion or in any other foru In no eveit, even if any other porton of these prviioIl is held to be invalid
or unenorceable, shall the aritrators have power to mae an awad or imose a remedy tht could not be made or imposed by a

COur decidin th matt in the same jursdicton.
No discover wil be perttd in connection with th arbitration unless it is expresly authoried by the aritration panel upon a showg of substatil need by the par seekig dìcover.

AU asects of the aritration shall be treated as confdential Neither the pares nor the arbitrtors may diclose the exitence,
contet or rests of Ùle arbitration, except as necessar to comply with lega or reguato requements. Before makg any such

disclosu, a par sha give wrtten nonce to al oth paros an shall aford such pares a reonable opportty to protect
tb intests.
The reul of the aritrtion wi be biDdig on the pares, and judgent on the arbitrtors' award may bo entered in any cour

havi jurctn.

Case 1:05-cv-00231-EJD

Document 97-11

Filed 07/17/2007

Page 6 of 6

~

æu ERNST & YOUNG LLP
FROM THOUGHT To FINISH. 1M

Tax Deparent
Charlotte Office
101 Independence Center, Suite 1100

101 North Tryon Street, Charlotte, NC 28246
"

Telephone: (704) 372-6300

Fax: (704) 331-1853

FAX TRASMISSION COVER PAGE
To:
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CONFENTIT NOllCE
The informtion contained in this facsime message may be privieged and confdenti and is inended only for the use of

the individua or entity namd above. If th rede of th message is not th inteded recipient, or an emloyee or agent responsible for deliverg th message to the intended recipien you ar herby notied tht any discmtion, dímDution, or copying of ths communtion is stcty prohibited If you have reived ths commcation in eror, please noti us
imedately by telephone and tetu the origùl message to the above addrss vi the u.s. Postl Serice. Thnk YOIL

Ert & Young LLP