EXHIBIT 10.39
TAX ALLOCATION AGREEMENT
AGREEMENT dated March 27, 1997, by and among The Ashton Technology Group,
Inc. (Parent) and each of its undersigned subsidiaries (Subsidiaries).
WITNESSETH
WHEREAS, the parties hereto are members of an affiliated group (Affiliated
Group) as defined in Section 1504(a); and
WHEREAS, such Affiliated Group will file a U.S. consolidated income tax
return for its taxable year ended March 31, 1997 and is required to file
consolidated tax returns for subsequent years; and
WHEREAS, it is the intent and desire of the parties hereto that a method be
established for allocating the consolidated tax liability of the Affiliated
Group among its members, for reimbursing the Parent for payment of such tax
liability, for compensating any party for use of its losses or tax credits, and
to provide for the allocation and payment of any refund arising from a carryback
of losses or tax credits from subsequent tax years.
Now, THEREFORE, in consideration of the mutual covenants and promises
contained herein, the parties hereto agree as follows:
1. A U.S.consolidated income tax return shall be filed by the Parent for
the tax year ended March 31, 1997, and for each subsequent taxable period in
respect of which this Agreement is in effect and for which the Affiliated Group
is required or permitted to file a consolidated tax return. Each Subsidiary
shall execute and file such consent, elections, and other documents that may be
required or appropriate for the proper filing of such returns.
2. For each tax period, each member of the Affiliated Group shall compute
its tax liability in accordance with the provisions of Regulation (beta)
1.1502-33(d)(3) with a fixed percentage of 100 percent and shall pay such amount
(including any increased liability allocated pursuant to such regulation above
any liability allocated pursuant to section 1552 of the Internal Revenue Code)
to the Parent. For purposes of this Agreement, any liability for alternative
minimum tax shall be treated as a tax liability subject to this paragraph.
3. Payment of the consolidated tax liability for a taxable period shall
include the payment of estimated tax installments due for such taxable period,
and each Subsidiary shall pay to the Parent its share of each payment within ten
days of receiving notice of such payment from the Parent, but in no event later
than the due date for each such payment. Any amounts paid by a Subsidiary on
account of a separate return or separate estimated tax payments that are
credited against the consolidated tax liability of the Affiliated Group shall be
included in determining the payments due from such Subsidiary. Any overpayment
of estimated tax should be refunded to the Subsidiary. Any payments made by a
Subsidiary to the Parent under this Agreement, including payments by a
Subsidiary to the Parent of any estimated tax installments due for each taxable
period, shall be paid to the Parent, even if the Affiliated Group as a whole
does not have any consolidated estimated tax liability for such period.
4. To the extent payments received in respect of a taxable year by Parent
pursuant to paragraph 2, above, exceed the consolidated tax liability for such
period as a result of the absorption or utilization of losses, deductions,
credits or similar items of certain members against other members' income, gain
or similar items, then the Parent shall pay such excess amount received to those
members whose items were absorbed or utilized in a manner that reasonably
reflects such utilization or absorption within 10 days of filing its
consolidated federal income tax return for such period.
5. If part or all of an unused loss or tax credit is allocated to a member
of the Affiliated Group pursuant to Regulation (beta) 1.1502-79, and is carried
back or forward to a year in which such member filed a separate return or a
consolidated return with another affiliated group, any refund or reduction in
tax liability arising from the carryback or carryover shall be retained by such
member. Notwithstanding the above, the Parent shall determine whether an
election shall be made not to carry back part or all of a consolidated net
operating loss for any tax year in accordance with Section 172(b)(3).
6. If the consolidated tax liability is adjusted for any taxable period,
whether by means of an amended return, claim for refund, or after a tax audit by
the Internal Revenue Service, the liability of each member shall be recomputed
to give effect to such adjustments, and in the case of a refund, the Parent
shall make payment to each member for its share of the refund, determined in the
same manner as in paragraphs 2 and 4 above, within ten days after the refund is
received by the Parent, and in the case of an increase in tax liability, each
member shall pay to the Parent its allocable share of such increased tax
liability within ten days after receiving notice of such liability from the
Parent.
7. If during a consolidated return period the Parent or any Subsidiary
acquires or organizes another corporation that is required to be included in the
consolidated return, then such corporation shall join in and be bound by this
Agreement.
8. This Agreement shall apply to the tax year ending March 31, 1997, and
all subsequent taxable periods unless the Parent and the Subsidiaries agree to
terminate the Agreement. Notwithstanding such termination, this Agreement shall
continue in effect with respect to any payment or refunds due for all taxable
periods prior to termination.
9. Notwithstanding any other provisions of this Agreement, payment of any
estimated tax installment by a Subsidiary to the Parent under this Agreement for
the tax year ending March 31, 1997 shall be made on or before March 31, 1997.
10. This Agreement shall be binding upon and inure to the benefit of any
successor, whether by statutory merger, acquisition of assets, or otherwise, to
any of the parties hereto, to the same extent as if the successor had been an
original party to the Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized representatives on March 27, 1997.
THE ASHTON TECHNOLOGY GROUP, INC.
By: /s/ Xxxxxxx Xxxxxxxxxxx
Name: Xxxxxxx X. Xxxxxxxxxxx
Title: President & CEO
COMPUTER SCIENCE INNOVATIONS, INC.
By: /s/ Xxxxxx Xxxxxxxx
Name: Xxxxxx Xxxxxxxx
Title: President
UNIVERSAL TRADING TECHNOLOGIES
CORPORATION
By: /s/ Xxxxxx Xxxxxx
Name: Xxxxxx X. Xxxxxx
Title: President
