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 (S) 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 (S) 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
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Name: Xxxxxxx X. Xxxxxxxxxxx
Title: President & CEO
COMPUTER SCIENCE INNOVATIONS, INC.
By: /s/ Xxxxxx Xxxxxxxx
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Name: Xxxxxx Xxxxxxxx
Title: President
UNIVERSAL TRADING TECHNOLOGIES
CORPORATION
By: /s/ Xxxxxx Xxxxxx
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Name: Xxxxxx X. Xxxxxx
Title: President
