10.2 TAX SHARING AGREEMENT, DATED MARCH 15, 1993, BY AND AMONG D.A.H., INC.,
TSH AND XXXXXXXXXXX INTERNATIONAL, INC.
TAX SHARING AGREEMENT
between
XxXXXXX AIRCRAFT HOLDINGS, INC.
and
ITS SUBSIDIARY CORPORATIONS
Agreement dated March 15, 1993 by and among D.A.H., Inc. ("Parent") and each of
its undersigned subsidiaries:
WITNESSETH
WHEREAS, the parties hereto are members of an affiliated group ("Affiliated
Group") as defined in Section 1504(a) of the Internal Revenue Code of 1986, as
amended (the "Code"); and
WHEREAS, such Affiliated Group has filed a U.S. consolidated income tax return
for its taxable year ended August 31, 1991 and is required to file consolidated
income 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 income tax liability of the
Affiliated Group among its members, for:
- Reimbursing the Parent for payment of such tax liability;
- Establishing payables/receivables among members arising from the
use of one member's losses or tax credits by other member(s) and
defining the circumstances under which cash is to be exchanged,
and;
- Providing for the allocation and payment of any refund arising
from a carryback of losses or tax credits from subsequent taxable
years;
NOW, THEREFORE, in consideration of the mutual covenants and promises contained
herein, the parties hereto agree as follows:
1. CONSENT TO FILE CONSOLIDATED TAX RETURN
A U.S. consolidated income tax return has been filed by the Parent for
the taxable year ended August 31, 1991 and shall be filed 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
return.
2. RESPONSIBILITY FOR PAYMENT OF CONSOLIDATED TAX LIABILITY
If, in any taxable year, there is a consolidated tax liability, the
Parent shall be responsible for the payment to the Internal Revenue Service of
the consolidated tax liability.
3. METHOD OF ALLOCATION OF CONSOLIDATED TAX LIABILITY
(a) The Parent and each Subsidiary agree that the consolidated tax
liability for each year shall be apportioned among them in accordance with the
provisions of Regulation Section 1.1552-1(a)(2) for tax return purposes.
Regulation Section 1.1552-1(a)(2) requires the consolidated tax liability of the
group to be allocated among the members of the Affiliated Group on the basis of
the percentage of the total tax which the tax of such member, if computed on a
separate return basis, would bear to the total amount of the tax for all members
computed on a separate return basis.
(b) In addition, for financial statement ("book") purposes, the
Parent and each Subsidiary agree to the immediate allocation of 100% of the tax
benefits utilized to those members who generated the benefits. In determining
the amount of tax benefits utilized, all profitable members will establish a Tax
Payable account in an amount which equals their separate return liability (as
defined under Section 4), and all loss members establish a Tax Receivable
account in a corresponding amount.
In any year in which the total amount of tax benefits utilized by
the profitable members of the Affiliated Group are less than the total amount of
tax benefits available, the losses and credits of each member that has generated
such tax benefits will be deemed to be utilized in the same proportion as such
member's cumulative tax benefits bear to the total cumulative tax benefits of
all members.
(c) Each member of the group shall maintain a record of their tax
liability computed on a separate return basis for each year this agreement is in
effect for purposes of making the calculations under Section 3(a) and (b).
(d) If a member of the affiliated group is:
(1) merged into another member of the affiliated group, or
(2) liquidated into another member of the affiliated group,
then the successor corporation will assume any liability or succeed to any
benefit that the dissolving member would be obligated or entitled to under
Sections 3(a) and (b) if it had not been merged or liquidated.
4. DETERMINATION OF SEPARATE RETURN LIABILITY
(a) The term "separate tax liability" of each member, as it is used
in Section 3(b), means the amount of tax it would owe for each period in which
it is a member of the Affiliated Group, computed as if it had filed a separate
return for each period, adjusted as follows:
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(1) No surtax exemption will be allowed, and
(2) Net operating losses, tax credits (including the alternative
minimum tax credit) and other items which, under the Code,
could have been carried forward or back by a member if it
were filing a separate return shall be included in computing
its tax liability provided such attributes were generated in
a period in which it was a member of the Affiliated Group
and have not been deemed to be utilized by another member
under Section 3(b).
5. PAYMENT AMONG MEMBERS
(a) Each subsidiary shall pay to the Parent its share of tax
liability allocated under Section 3(a) UPON DEMAND FOR such payment from the
Parent.
(b) The only circumstances in which cash will be exchanged between
the subsidiaries with respect to the Tax Receivables/Payables established
pursuant to Section 3(b) are as follows:
(1) A previously non-profitable subsidiary AND the Affiliated
Group become profitable, or
(2) A subsidiary is sold.
Payments to members for benefits surrendered and utilized under Section 3(b),
will be paid UPON MEETING the conditions set forth in either (1) or (2) above.
(c) No interest will either accrue or be paid on the balances due
from one member to another which are attributable to Tax Payables/Receivables
arising under Section 3(b).
6. ESTIMATED TAX PAYMENTS
In the event the Affiliated Group is required to make quarterly
estimated tax payments, each subsidiary shall pay to the Parent its share of
each payment, as determined by the Parent, UPON receiving notice from the
Parent. Any amount paid by a subsidiary will be included in determining the
payments due under Section 5. Any overpayments of estimated tax will be
refunded to the subsidiary.
7. TERMINATION
(a) This agreement shall terminate with respect to any subsidiary on
the happening of any of the following events:
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(1) If the Parent and such subsidiary agree, in writing, to
terminate this agreement, or;
(2) Notwithstanding Section 3(d), if such subsidiary ceases to
be a member of the Affiliated Group.
(b) For purposes of this agreement, any subsidiary which is required
to recognize income or recapture credits as a result of an election made or
deemed to be made under IRC Section 338 shall be treated as if such income or
recaptured credits were generated after such subsidiary ceased being a member of
the affiliated group.
8. SUBSEQUENT ADJUSTMENTS
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 Section 3 above, AS SOON AS THE refund is received by the
Parent. In the case of an increase in tax liability, each member shall pay to
the Parent its allocable share of such increased tax liability under Section
3(a) after receiving notice of such liability from the Parent and recompute any
Tax Receivables/Payables required under Section 3(b) as well as payments
required under Section 5(b) based upon the adjusted separate return liabilities
of the members of the group.
9. NEW MEMBERS OF THE AFFILIATED GROUP
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.
10. EFFECTIVE DATES
This agreement shall apply to the taxable year ending August 31, 1991
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 refund due for all
taxable periods prior to termination.
11. MISCELLANEOUS PROVISIONS
This agreement shall be binding upon and inure to the benefits 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.
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For the purposes of this section, the term "successor" shall include
the direct parent corporation of a subsidiary corporation that dissolves without
distributing any net assets to the direct parent.
IN WITNESS THEREOF, the parties hereto have caused this agreement to be executed
by their duly authorized representatives on March 15, 1993.
D.A.H., INC. TRI-STAR HOLDINGS, INC.
/s/ R. Xxxx XxXxxxx /s/ Xxxxxx Xxxxxx
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XXXXXXXXXXX INTERNATIONAL, INC.
/s/ R. Xxxx XxXxxxx
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