EXHIBIT 10.13
TAX SHARING AGREEMENT
This Agreement is effective as of the first day of the consolidated return
year ending December 31, 1998, and is entered into between AXIA Group, Inc. (the
"Parent"), AXIA Holdings Corp., AXIA Incorporated, Xxxx Taping Tool Systems
Inc., and TapeTech Tool Company, Inc. (the "Subsidiaries").
W I T N E S S E T H:
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WHEREAS, the parties (hereinafter sometimes referred to as "Members"; or in
the singular "Member") hereto are part of an affiliated group of corporations of
which Parent is the common parent (the "AXIA Group, Inc. Affiliated Group") as
defined in Section 1504(a) of the Internal Revenue Code of 1986, as amended (the
"Code"); and
WHEREAS, the AXIA Group, Inc. Affiliated Group will file a consolidated
federal income tax return for its initial taxable period ending December 31,
1998 in accordance with Section 1501 of the Code and is required to file
consolidated income tax returns for years subsequent to such year; and
WHEREAS, it is the intent and desire of the parties hereto that a method be
established for allocating the AXIA Group, Inc. Affiliated Group's consolidated
federal regular income tax liability and its consolidated federal minimum tax
liability among the Members (as required by Section 1552(a) of the Code); for
reimbursing the Parent for payment of such tax liability; and to provide for the
allocation and payment of any refund arising from a carryback of tax items or
attributes, such as net operating 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. CONSOLIDATED FEDERAL INCOME TAX RETURN. Parent shall file a U.S.
consolidated federal income tax return for the AXIA Group, Inc. Affiliated Group
for the taxable year ending December 31, 1998 and for each subsequent taxable
year in respect of which this Agreement is in effect and for which the AXIA
Group, Inc. Affiliated Group is required or permitted to file a consolidated
federal income tax return. The Parent and each
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of the Subsidiaries shall execute and file such consents, elections, and other
documents that may be required or appropriate for the proper filing of such
returns.
2. ALLOCATION ELECTION UNDER SECTION 1552(B) OF THE CODE. Consistent
with the requirements of Section 1552(b) of the Code and Sections 1.1552-1(d) of
the Regulations, Parent shall, within the time permitted under the Code and the
Regulations, cause the AXIA Group, Inc. Affiliated Group to elect a method to
apportion its consolidated federal regular income tax liability from those
methods permitted by the Regulations, and Parent shall cause the AXIA Group,
Inc. Affiliated Group to apportion its consolidated federal regular income tax
liability among the Members in accordance with such method. The Parent shall
cause the AXIA Group, Inc. Affiliated Group to allocate its consolidated federal
minimum tax liability as provided in Proposed Regulations Section 1.1552-1(g).
3. ALLOCATION OF REGULAR CONSOLIDATED FEDERAL INCOME TAX LIABILITY AMONG
MEMBERS. The Members agree to determine and allocate the consolidated federal
regular income tax liability of the AXIA Group, Inc. Affiliated Group among
themselves in the following manner:
Step 1. The consolidated federal regular income tax liability of the
AXIA Group, Inc. Affiliated Group, as determined under Section 1.1502-2,
shall be allocated to the Members as provided in Paragraph 2 of this
Agreement;
4. ALLOCATION OF CONSOLIDATED FEDERAL MINIMUM TAX LIABILITY AMONG
MEMBERS. The Members of the AXIA Group, Inc. Affiliated Group agree to
determine and allocate the consolidated federal minimum tax liability among
themselves in the following manner:
Step 1. The consolidated federal minimum tax liability of the AXIA
Group, Inc. Affiliated Group shall be allocated among the Members as
provided in Paragraph 2 of this Agreement;
5. RULES REGARDING ALLOCATION METHOD. Regarding the application of the
allocation method in Paragraphs 3 and 4 of this Agreement, it is acknowledged
that the amount of consolidated federal regular income tax liability or the
consolidated federal minimum tax liability of the AXIA Group, Inc. Affiliated
Group allocated to each Member
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under the method elected in Paragraph 2 of this Agreement shall (i) decrease the
earnings and profits of such Member, and (ii) be treated as a liability of such
Member for such amount.
6. ADMINISTRATION OF TAX ALLOCATION AGREEMENT. The provisions of this
Agreement shall be administered by the chief financial officer of Parent.
7. PAYMENTS. Each Member shall pay the Parent its allocated consolidated
federal regular income tax liability and/or consolidated federal minimum tax
liability as determined under Paragraphs 3 and 4 of this Agreement. Payments
are to be made no later than thirty days after the date of filing of the
consolidated federal income tax return for such taxable year.
8. ESTIMATED TAX ASSESSMENT. The chief financial officer of Parent shall
have the right to assess Members their share of estimated tax payments to be
made on the projected consolidated federal income tax liability for each year.
Payment to the chief financial officer shall be made ten days after such
assessment. Such member will receive credit for such prepayments in the year-
end computation under Paragraph 7 of this Agreement.
9. CARRY BACK OR FORWARD OF CONSOLIDATED NET OPERATING LOSS OR CREDIT TO
SEPARATE RETURN YEAR OR CONSOLIDATED RETURN YEAR FOR OTHER AFFILIATED GROUP. If
part or all of an unused consolidated net operating loss or tax credit is
allocated to a Member pursuant to Section 1.1502-21T of the Regulations, and it
is carried back or forwarded to a year in which such Member filed a separate
income tax return or a consolidated federal income tax return with another
affiliated group, any refund or reduction in tax liability arising from the
carryback or carryover shall be retained by such Member. (If such refund or
reduction goes to some entity other than the Member, then such entity shall pay
over such amount to the Member.) Notwithstanding the above, the Parent shall
determine whether an election shall be made not to carryback any consolidated
net operating loss arising in a consolidated return year (including any portion
allocated to a Member under Section 1.1502-21T) in accordance with Section
172(b)(3)(C) of the Code.
10. ADJUSTMENT TO CONSOLIDATED FEDERAL INCOME TAX LIABILITY. If the
consolidated federal income tax liability of the AXIA Group, Inc. Affiliated
Group is adjusted for any taxable period, whether by means of an amended return,
claim for refund, or after-tax audit by the Service, the liability of each
Member shall be recomputed under Paragraphs 2, 3 and 4 of this Agreement to give
effect to such adjustments. In the case of
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a refund, the Parent shall make payment to each Member for its shares of the
refund, determined in the same manner as in Paragraph 7 of this Agreement,
within thirty 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. If any interest is to be paid or
received as a result of a consolidated federal income tax deficiency or refund,
such interest shall be allocated to the Members in the ratio each Member's
change on consolidated federal income tax liability bears to the total change in
tax liability. Any penalty shall be allocated upon such basis as the chief
financial officer of the Parent deems just and proper in view of all applicable
circumstances.
11. TERM. This Agreement shall apply to the taxable year specified in the
preamble of this Agreement, and all subsequent taxable years, unless the Members
agree in writing 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.
12. ASSIGNABILITY. The Agreement shall not be assignable by any Member
without the prior written consent of the others.
13. AVAILABILITY OF RECORDS. All material including, but not limited to,
returns, supporting schedules, work papers, correspondence, and other documents
relating to the consolidated federal income tax returns filed for a taxable year
during which this Agreement was in effect shall be made available to any Member
to the Agreement during regular business hours for a minimum period equal to
applicable federal record retention requirements.
14. RESOLUTION OF DISPUTES. A dispute or difference between the parties
with respect to the operation or interpretation of this Agreement shall be
decided by three arbitrators who must all be certified public accountants. Each
Member (or if there are more than three members, all members will be divided
into three groups) shall elect an arbitrator. The court of arbitrators shall be
held in the office of Parent. The parties shall bear the cost of arbitration,
including all fees for attorneys and accountants, in a ratio to be determined by
Parent.
15. DEPARTURE OF MEMBER FROM AXIA GROUP, INC. AFFILIATED GROUP. Any
Member which leaves the consolidated group shall be bound by this Agreement.
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16. ADDITIONAL MEMBERS. The Members hereto specifically recognize that
from time to time other companies may become Members of the AXIA Group, Inc.
Affiliated Group and hereby agree that such new Members may become parties to
this Agreement by executing the master copy of this Agreement which shall be
maintained at Parent's headquarters. It will not be necessary for all the other
Members to resign the Agreement but the new Member may simply sign the existing
Agreement and it will be effective as if the old Members had resigned.
17. CHANGE IN CONSOLIDATED INCOME TAX LAW. Any alteration, modification,
addition, deletion, or other change in the consolidated income tax return
provision of the Code or the regulations thereunder shall automatically be
applicable to this Agreement mutatis mutandis.
18. CONTINUATION OF AGREEMENT. Failure of one or more parties hereto to
qualify by meeting the definition of Member of the "AXIA Group, Inc. Affiliated
Group" shall not operate to terminate this Agreement with respect to the other
parties as long as two or more parties hereto continue so to qualify.
19. SUCCESSORS AND ASSIGNS. This Agreement shall bind and inure to the
respective successors and assigns of the parties hereto; but no assignment shall
relieve any party's obligations hereunder without the written consent of the
other parties.
20. CHOICE OF LAW. This Agreement shall be governed by the laws of the
State of Delaware.
IN WITNESS WHEREOF, the parties hereto have caused their names to be
subscribed and executed by their respective authorized officers on the dates
indicated, effective as of the date first written above.
PARENT
AXIA Group, Inc.
By: /s/ Xxxx X. Xxxx
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Name: Xxxx X. Xxxx
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Date: July 22, 1998 Title: VP Finance
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SUBSIDIARIES
AXIA Holdings Corp.
By: /s/ Xxxx X. Xxxx
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Name: Xxxx X. Xxxx
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Date: July 22, 1998 Title: VP Finance
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AXIA Incorporated
By: /s/ Xxxx X. Xxxx
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Name: Xxxx X. Xxxx
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Date: July 22, 1998 Title: VP Finance
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Xxxx Taping Tool Systems Inc.
By: /s/ Xxxx X. Xxxx
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Name: Xxxx X. Xxxx
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Date: July 22, 1998 Title: VP Finance
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TapeTech Tool Company, Inc.
By: /s/ Xxxx X. Xxxx
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Name: Xxxx X. Xxxx
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Date: July 22, 1998 Title: VP Finance
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