Exhibit 10.3
TAX SHARING AGREEMENT
This TAX SHARING AGREEMENT (the "Agreement") is entered into as of
December 3, by and between TransDigm Holding Company, ("Parent") and Transdigm
Inc. (the "Subsidiary");
WHEREAS, Parent and Subsidiary are members of an affiliated group of
corporations within the meaning of Section 1504(a) of the Internal Revenue Code
of 1986, as amended (the "Code"), of which Parent is the common parent
corporation (the "Group"); and
WHEREAS, Parent and Subsidiary desire to provide for the sharing and
allocation of income taxes in accordance with this Agreement.
NOW, THEREFORE, in consideration of their mutual covenants set forth
herein, the parties hereto agree as follows:
1. Agreement to File Consolidated Income Tax Returns. Subsidiary, on
behalf of Subsidiary and the subsidiaries of Subsidiary that are members of the
Group within the meaning of Section 1504(a) of the Code (a "Sub-Subsidiary" or
"Sub-Subsidiaries"), consents to the filing with the Group of consolidated
Federal income tax returns for all taxable periods in which each of them is
eligible to be a member of the Group. Parent, as an agent of the Group, agrees
to file such consents, elections, returns and other documents, and to take such
other actions as may be necessary or appropriate to file a consolidated Federal
income tax return for each taxable period for which the Group is required or
permitted to file such a tax return. Any taxable period ending after the date of
this Agreement for which Parent and Subsidiary is included in a consolidated
Federal income tax return filed by the Group is referred to as a "Consolidated
Return Year."
2. Payments by Subsidiary; Audit Adjustments. On each due date
(including extensions) for the payment of any Federal income tax (or any portion
thereof, including installments of estimated tax) by the Group for each
Consolidated Return Year, Subsidiary shall pay to Parent the amount of income
tax liability it would have had on such due date if it had filed a separate
consolidated Federal income tax return for the affiliated group consisting of it
and Sub-Subsidiaries ( the "Subsidiary Group") for such taxable year and all
prior taxable years. In the event that upon audit of any consolidated Federal
income tax return for the Parent Group, there are adjustments that affect the
computations under the preceding sentence of this paragraph or paragraphs 3 or 4
hereof, appropriate adjustments and payments shall be made to reflect the
difference between the amounts previously paid and the amounts due taking into
account the effect of such adjustments.
3. Computation of Subsidiary Group Separate Income Tax Liability.
The amount of the Federal income tax liability that the Subsidiary Group would
have had for any Consolidated Return Year if it had not joined in a consolidated
Federal income tax return with the Group shall be computed as if it were filing
a separate consolidated Federal income tax return. Subsidiary shall be entitled
to credit against any income tax liability so computed the net amount of any
credit at the time outstanding to its account arising by reason of the
provisions of paragraph 4 hereof.
4. Tax Benefits. If, on the basis of the computations made by Parent
in accordance with paragraph 3 hereof, the Subsidiary Group would have had a net
loss, tax credit or claim for a refund of Federal income taxes, Parent will
credit to Subsidiary an amount equal to such net loss, tax credit or refund, the
extent such net loss, tax credit or refund reduced the
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consolidated Federal income tax liability of the Group (excluding the Subsidiary
Group). As used herein, the term "net loss" shall include a capital loss. Any
such credit to Subsidiary shall be applied against payments due under paragraph
2 hereof (as described in paragraph 3 hereof) after the date of such credit;
provided, however, that if Parent would have a shortfall in its cash to pay the
Group's tax liability currently due if such credit were to be allowed, such
credit would be carried forward to be used in the future.
5. State, Local or Foreign Income Tax Returns. In the event Parent
files combined or consolidated state, local or foreign income tax returns with
Subsidiary, the provisions of paragraphs 1 through 5 hereof shall apply and
govern the amount and time of payment by Subsidiary to Parent and by Parent to
Subsidiary, as if such combined or consolidated income tax returns filed were
consolidated Federal income tax returns.
6. Obligations and Entitlements of Sub-Subsidiaries. Each
Sub-Subsidiary shall be obligated to make such payments to Subsidiary, and shall
be entitled to receive such payments and other credits from Subsidiary, pursuant
to paragraphs 1 through 6 hereof as if each Sub-Subsidiary were in Subsidiary
position and Subsidiary were in Parent's position.
7. New Subsidiaries. Any future directly or indirectly owned
subsidiary of Subsidiary that is acquired or established subsequent to the date
of this Agreement shall be bound by the terms of this Agreement.
8. Further Actions. The parties will execute and deliver such
further instruments and do such further acts and things (including, without
limitation, by causing their subsidiaries to do such acts and things) as may be
required to carry out the intent and purposes of this Agreement.
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9. Termination of Prior Tax Sharing Agreements. Any and all tax
sharing agreements or arrangements binding on any of Parent, Subsidiary or
Sub-Subsidiaries shall be terminated and have no further force and effect as of
the date hereof.
10. Successors. This Agreement shall be binding on and shall inure
to the benefit of any successor, by merger, acquisition of assets or otherwise,
to any of the parties hereto, to the same extent as if such successor had been
an original party to this Agreement.
11. Governing Law. This Agreement shall be construed in accordance
with and governed by the laws of the state of New York, without giving effect to
the conflict laws of such state.
12. Severability. Every provision of this Agreement is intended to
be severable. If any term or provision hereof is illegal or invalid for any
reason whatsoever, such illegality or invalidity shall not affect the validity
or legality of the remainder of this Agreement.
13. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same instrument.
14. Headings. The headings of the paragraphs of this Agreement are
for reference only and shall not modify, define, expand or limit any of the
terms or provisions hereof.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their respective officers duly authorized as of the day and year
first above written.
Parent: TRANSDIGM HOLDING COMPANY
By: /s/ Xxxxx Xxxxxxxxxx
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Name: Xxxxx Xxxxxxxxxx
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Title: Chief Financial Officer
Subsidiary: TRANSDIGM INC.
By: /s/ Xxxxx Xxxxxxxxxx
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Name: Xxxxx Xxxxxxxxxx
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Title: Chief Financial Officer
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