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Exhibit 10.7
TAX SHARING AGREEMENT
AGREEMENT made as of November 27, 1996, between CMH Holdings
Corporation, a Delaware corporation ("Holdings"), and XXXXX Material Handling
Company, a Delaware corporation ("CMHC").
WHEREAS, Holdings and CMHC join in the filing of a consolidated
Federal income tax return for a group of affiliated companies of which Holdings
is the common parent (the "Consolidated Group"); and
WHEREAS, Holdings and CMHC wish to establish a policy as to the
sharing of Consolidated Federal Income Tax (as defined in paragraph V.A.1
below); and
WHEREAS, Holdings and CMHC wish to establish procedures for
making payments or remitting funds of Consolidated Federal Income Tax;
NOW, THEREFORE, in consideration of the mutual covenants
contained herein and intending to be legally bound, Holdings and CMHC agree as
follows:
I. SHARING OF CONSOLIDATED FEDERAL INCOME TAX
A. Taxable Income. CMHC agrees to pay to Holdings, for each taxable
year during the term of this Agreement, an amount equal to the
result of the following equation:
(i) the Separate Taxable Income of CMHC (but not less
than 0) divided by
(ii) the sum of the Separate Taxable Incomes of each
member of the Consolidated Group that has positive
Separate Taxable Income for the year, the resulting
quotient multiplied by
(iii) the Federal income tax liability of the
Consolidated Group, prior to the application of
foreign tax credits, for the year, the resulting
product reduced by
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(iv) the foreign tax credits of CMHC that are credited
against the Federal income tax liability of the
Consolidated Group for the year, applying the
principles of Treas. Reg. Section 1.1502-4.
B. Separate Taxable Income. For purposes of this Agreement, the
Separate Taxable Income of each member of the Consolidated Group
shall be determined under Treas. Reg. Section 1.1502-12 with the
adjustments provided in Treas. Reg. Section 1.1552-1(a)(1)(ii).
C. Subsequent Adjustments. In the event that the Separate Taxable
Income of any member of the Consolidated Group is adjusted by
reason of an amended return, claim for refund, or examination by
the Internal Revenue Service, the amount due from CMHC under
paragraph I.A. shall be recomputed using the adjusted Separate
Taxable Income. CMHC agrees to pay to Holdings any additional
amount owed (with full credit given for any prior payments for
the year), and Holdings agrees to pay to CMHC any overpayment
made by CMHC.
D. Refunds. In the event that CMHC's Separate Taxable Income is
negative (determined without reference to the adjustments
provided in Treas. Reg. Section 1.1552-1(a)(1)(ii)) and CMHC
would be entitled to receive a refund for the year if CMHC
were not a member of the Consolidated Group, Holdings shall pay
to CMHC an amount equal to such refund. In no event, however,
shall the amount payable by Holdings pursuant to this paragraph
I.D. exceed the amount previously paid by CMHC to Holdings during
the relevant carryback period under section 172 of the Internal
Revenue Code of 1986, as amended, or any successor provision.
II. PAYMENT PROCEDURE
A. Current Year Tax Liability of CMHC. Payments to be made by CMHC
to Holdings pursuant to paragraph I.A. with respect to any year
shall be made in installments, as set forth in this paragraph.
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1. Quarterly Installments. Within 30 days after the close of
each calendar quarter, CMHC will pay to Holdings an amount
equal to the product of CMHC's estimated Separate Taxable
Income for the quarter (but not less than 0) multiplied by
the highest marginal corporate tax rate provided in
section 11 of the Internal Revenue Code of 1986, as
amended (or any successor provision).
2. Final Installment. Within 30 days after CMHC has received
from Holdings a copy of its separate company federal
income tax return for the relevant tax year, CMHC will pay
to Holdings the excess, if any, of CMHC's liability
pursuant to paragraph I.A. over the sum of all payments
with respect to such year made by CMHC pursuant to
paragraph II.A.1. If the sum of the payments with respect
to such year made by CMHC pursuant to paragraph II.A.1.
exceeds CMHC's liability pursuant to paragraph I.A., then
Holdings shall refund the difference within 30 days to
CMHC.
B. Payment of Subsequent Adjustments. Payments to be made by CMHC
to Holdings pursuant to paragraph I.C. shall be made within 30
days after CMHC has received from Holdings a copy of the filed
amended return or an agreement in writing with the Internal
Revenue Service on proposed adjustments. Payments made by
Holdings to CMHC pursuant to paragraph I.C. or paragraph I.D.
shall be made within 30 days after receipt by Holdings of a
refund, or offset against adjustments of the Consolidated Group,
resulting from the filing of a return, an amended return, Form
1139 Corporation Application for Tentative Refund, claim for
refund, or agreement in writing with the Internal Revenue Service
on proposed adjustments.
III. STATE TAXES
A. To the extent appropriate, rules similar to the provisions
of Sections I and II of this Agreement shall be applied to
the payment of state franchise or income tax liabilities
to which CMHC and Holdings are
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subject and which are required to be determined on a
unitary, combined or consolidated basis.
IV. TERM AND CONDITIONS
A. This Agreement shall be effective as of November 27, 1996
and shall continue thereafter until the parties hereto
terminate this Agreement by mutual consent.
V. OTHER MATTERS
A. Definitions. For purposes of this Agreement, the terms
listed below have the following meanings:
1. Consolidated Federal Income Tax. The regular
Federal income tax (not including any Alternative
Minimum Tax) shown on the consolidated Federal
income tax return of the Consolidated Group,
including interest and penalties, if any, as last
determined reflecting any adjustments made by an
amended return, claim for refund, carryback claim,
or examination by the Internal Revenue Service.
2. Separate Taxable Income shall have the meaning
given in section I.B.
B. Method of Allocation. This Agreement shall have no effect
on, and shall not be affected by, the method of allocation
of tax liability between members of the Consolidated Group
selected by the Consolidated Group pursuant to Section
1552 of the Internal Revenue Code.
C. Notices. All notices and other communications required or
permitted hereunder shall be in writing and shall be given
by hand delivery,
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telecopier, commercial courier service with guaranteed
one-day delivery, or prepaid first class mail to the
following addresses:
If to Holdings, to:
CMH Holdings Corporation
000 Xxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Attention: Xxxxxxx Xxxxxxxx, Esq.
Fax No.: (000) 000-0000
With a Copy to:
Dechert Price & Xxxxxx
4000 Xxxx Atlantic Tower
0000 Xxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000
Attention: G. Xxxxxx X'Xxxxxxx, Esq.
Fax No.: (000) 000-0000
If to CMHC, to:
XXXXX Material Handling Company
000 Xxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Attention: Xxxxxxx Xxxxxxxx, Esq.
Fax No.: (000) 000-0000
With a Copy to:
Dechert Price & Xxxxxx
4000 Xxxx Atlantic Tower
0000 Xxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000
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Attention: G. Xxxxxx X'Xxxxxxx, Esq.
Fax No.: (000) 000-0000
D. Succession. This Agreement shall be binding on and inure
to the benefit of any successor, by merger, acquisition of
assets or otherwise, to any of the parties hereto
(including but not limited to any successor of Holding or
CMHC succeeding to the tax attributes of either under
Section 381 of the Internal Revenue Code), to the same
extent as if the successor had been an original party to
this Agreement.
E. Amendments. This Agreement shall not be modified, amended
or supplemented except in writing executed by both parties
hereto.
F. Governing Law. This Agreement shall be governed by and
interpreted in accordance with the laws of the State of
Delaware.
CMH Holdings Corporation
By: /s/ Xxxxxx Xxxxx
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Xx. Xxxxxx Xxxxx
President and Chief Executive Officer
XXXXX Material Handling Company
By: /s/ Xxxxxx Xxxxx
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Xx. Xxxxxx Xxxxx
President and Chief Executive Officer
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