Exhibit 10.26
INCOME TAX SHARING AGREEMENT
THIS INCOME TAX SHARING AGREEMENT ("Agreement"), made this 29th day
of October 1999, by and among XX.XXX HOLDINGS, LIMITED, a Delaware corporation
("Holdings") and XX.XXX CORP., a Delaware corporation ("Intermediate Holdings").
WHEREAS, Intermediate Holdings is a wholly-owned subsidiary of
Holdings;
WHEREAS, Holdings and Intermediate Holdings 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 Holdings is the
common parent corporation (the "XX.Xxx Group"); and
WHEREAS, Holdings and Intermediate Holdings desire to provide for
the sharing and allocation of income taxes in accordance with this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants contained
herein, the parties hereto agree as follows:
1. FILING OF RETURNS.
Intermediate Holdings, on behalf of itself and each of its
subsidiaries, consents to the filing by Holdings of consolidated federal
income tax returns for all taxable periods in which it is eligible to be a
member of the XX.Xxx Group. Holdings agrees to file such consents,
elections, tax 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 XX.Xxx Group is required
or permitted to file a consolidated federal income tax return. Any taxable
period ending after the date of this Agreement for which Intermediate
Holdings is included in a consolidated federal income tax return filed by
the XX.Xxx Group is referred to herein as a "Consolidated Return Year."
2. PAYMENT OF CONSOLIDATED TAX LIABILITY.
Holdings shall pay the consolidated Federal income tax
liability of the XX.Xxx Group for each taxable year for which it files
consolidated returns for the XX.Xxx Group at such time and in such manner
as such payments may be required. Holdings shall indemnify and hold
Intermediate Holdings and each of it subsidiaries harmless from and
against any claims of liability for Federal income tax, interest and
penalties thereon (other than interest and penalties attributable to
information supplied by Intermediate Holdings or any of its subsidiaries)
with respect to all Consolidated Return Years, except to the extent that
Intermediate Holdings or any of its subsidiaries has failed to make a
payment in respect of such liability that it is obligated to make under
the provisions of this Agreement.
3. SHARING AND SETTLEMENT OF U.S. FEDERAL CONSOLIDATED INCOME
TAXES.
For each Consolidated Return Year, (a) Intermediate Holdings
shall pay to Holdings an amount equal to the separate return liability of
Intermediate Holdings for the taxable year, if any; and (b) Holdings shall
pay to Intermediate Holdings an amount equal to the excess for the taxable
year of the separate return liability of Holdings, if any, over the
consolidated Federal income tax liability of the XX.Xxx Group, if any.
The separate return liability of Intermediate Holdings and the
separate return liability of Holdings for a taxable year shall be the
Federal income tax liability such corporation would have had for such year
had it filed a separate Federal income tax return or, if it has any
subsidiaries, had it filed a consolidated Federal income tax return as the
common parent of an affiliated group of corporations that included each
corporation eligible to be included therein except, in the case of the
Holdings, for Intermediate Holdings and any subsidiary of Intermediate
Holdings. The separate return liability of Intermediate Holdings and the
separate return liability of Holdings for a taxable year shall be computed
(i) to the extent permitted by law, as though such corporation and its
subsidiaries had used such accounting methods and principles and made such
tax elections as were used or made by Holdings in determining the federal
income tax liability of the XX.Xxx Group, (ii) without regard to any
carryovers to such taxable year that were utilized in determining the
consolidated Federal income tax liability of the XX.Xxx Group in another
year and (iii) by eliminating from taxable income any payments from
Holdings or Intermediate Holdings under this agreement and, in the case of
Holdings, any dividends from Intermediate Holdings.
4. SUBSEQUENT RETURN ADJUSTMENTS
In the event a consolidated federal income tax return for a
Consolidated Return Year is amended or adjusted (whether by reason of the
filing of an amended return, a claim for refund, an audit adjustment or
otherwise), the tax liabilities and benefits of Holdings and Intermediate
Holdings will be redetermined, adjusted and settled on a basis consistent
with Sections 2 and 3 of this Agreement. Payments reflecting such
redeterminations or adjustments shall be made at the time the amended
return or refund claim is filed or, in the case of an audit adjustment,
upon the earlier to occur of (a) the date a settlement is entered into
with the taxing authority, (b) the date a decision of a court having
jurisdiction in the matter becomes final and is not subject to appeal, or
(c) the date a tax payment is made with respect to the adjustment.
5. INTEREST RECEIVED FROM THE IRS.
If any interest is received from the United Sates with respect
any Consolidated Return Year, such interest shall be paid by paid by
Holdings to the corporation(s) included with the XX.Xxx Group to which the
interest is fairly attributable.
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6. BILLING.
The monetary obligations of Holdings and Intermediate Holdings
under this Agreement shall be paid at least ten (10) days prior to the
date the related taxes are payable, whether for estimated taxes or
otherwise (or, if no taxes are payable, the date of filing by Holdings of
the consolidated Federal income tax return for the XX.Xxx Group), and upon
execution of this Agreement for taxes due prior to the date of this
Agreement ("Execution Payment"). Late payments (if any) shall bear an
annual rate of interest equal to the statutory rate of interest for the
underpayment of taxes then in effect from the date such payments are due.
7. PROCEDURAL MATTERS.
So long as any party to this Agreement remains part of the
XX.Xxx Group for federal income tax purposes, Holdings will prepare and
file the consolidated returns, along with any other documents or
statements that are required to be filed with the taxing authorities for
U.S. federal income tax purposes related to consolidated returns. The
parties hereto acknowledge that, with respect to consolidated tax returns
which they have filed or will file, Holdings has the right, in its sole
discretion, to:
(a) determine:
(i) the manner in which such returns, documents or statements
are prepared and filed including, without limitation, the manner in
which any item of income gain, loss, deduction or credit shall be
reported;
(ii) the manner in which the consolidated tax liability will
be allocated for the purpose of determining the taxable earnings and
profits of each corporation;
(iii) whether any extensions may be requested; and
(iv) the elections that are made by any corporation
included in XX.Xxx Group's consolidated returns;
(b) contest, compromise or settle any adjustment or deficiency
proposed, asserted or assessed as a result of any audit of such returns by
the taxing authorities;
(c) file, prosecute, compromise or settle any claim for
refund; and
(d) determine whether any refunds to which Holdings or its
subsidiaries may be entitled are paid by way of refund or credited against
the tax liability of XX.Xxx Group.
Without limiting its rights and obligations, Intermediate Holdings hereby
irrevocably appoints Holdings as its agent and attorney-in-fact to take
such action (including the
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execution of documents) as Holdings may deem appropriate to effect the
foregoing.
8. STATE, LOCAL OR FOREIGN INCOME TAXES.
In the event Holdings files combined, unitary or consolidated
state, local or foreign income tax returns with Intermediate Holdings and
any of its subsidiaries, the provisions of this Agreement shall be
applicable, mutatis mutandis, as if such combined, unitary or consolidated
income tax returns filed were consolidated federal income tax returns.
9. NO OTHER TAX SHARING OBLIGATIONS.
No tax sharing obligations between the parties to this
Agreement shall arise out of any taxes other than those taxes referred to
in this Agreement.
10. MISCELLANEOUS PROVISIONS.
(a) NOTICES. Notices and other communications with respect to this
Agreement shall be in writing and shall be delivered by hand or overnight
courier service, or sent by telecopy. Unless other addresses or telecopy
numbers are specified in writing pursuant to this Section 10(a) to each
party to this Agreement, such notices or other communications shall be
sent to the following addresses or telecopy numbers, as the case may be:
(i) if to Holdings, to it at:
XX.Xxx Holdings, Limited
0000 X. Xxxxxx
Xxxxxxxx, Xxxxxxxxxx 00000
Attn.: Xxxx Xxxxx
Telephone: 000-000-0000
Telecopy: 000-000-0000
(ii) if to Intermediate Holdings, to it at:
XX.Xxx Corp.
0000 X. Xxxxxx
Xxxxxxxx, Xxxxxxxxxx 00000
Attn.: Xxxx Xxxxx
Telephone: 000-000-0000
Telecopy: 000-000-0000
(b) BINDING EFFECT. This Agreement shall be binding upon and inure
to the benefit of the parties hereto and their respective successors and
permitted assigns. Each of Holdings and Intermediate Holdings shall cause
their respective affiliates to carry out any obligation of such affiliate
specified herein.
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(c) GOVERNING LAW. The parties hereto hereby agree that this
Agreement shall be construed in accordance with and governed by the laws
of the State of New York, without regard to any other applicable conflict
of law provision.
(d) WAIVERS; AMENDMENT; MODIFICATION. Neither this Agreement nor any
provision hereof may be waived, amended or modified, except pursuant to an
agreement or agreements in writing entered into by all the parties hereto.
(e) ENTIRE AGREEMENT. This Agreement constitutes the entire
agreement among the parties hereto with respect to the subject matter
hereof.
(f) SEVERABILITY. In the event any one or more of the provisions
contained in this Agreement should be held invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability of
the remaining provisions contained herein shall not in any way be affected
or impaired thereby.
(g) COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall constitute an original but all of which,
when taken together, shall constitute but one contract.
(h) 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, if any, to do such acts
and things) as may be required to carry out the intent and purposes of
this Agreement.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the undersigned parties have caused this
Agreement to be executed as of the date first above written.
XX.XXX HOLDINGS, LIMITED
By /s/ Xxxxxxx Xxxxx
-----------------------------------------------
Name: Xxxxxxx Xxxxx
Title: Vice Chairman and Executive Vice President
XX.XXX CORP.
By /s/ Xxxxxxx Xxxxx
-----------------------------------------------
Name: Xxxxxxx Xxxxx
Title: Vice Chairman and Executive Vice President
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