EXHIBIT 10.3
TAX ALLOCATION AGREEMENT
THIS AGREEMENT is made as of the 19th day of November, 1997
between Thermo TerraTech Inc., a Delaware corporation ("TTT"),
and The Randers Group Incorporated, a Delaware corporation
("Randers" - The term "Randers" shall refer to Randers and those
of its subsidiaries that are at least 80% owned by The Randers
Group Incorporated).
Preliminary Statement
TTT is the parent of an affiliated group of corporations
(including Randers) within the meaning of Section 1504(a) of the
Internal Revenue Code of 1986, as amended (the "Code").
TTT owns or may in the future own more than 80% of the
issued and outstanding shares of voting common stock of Randers,
the only class of stock that Randers is authorized to issue.
Randers is required to file consolidated federal income tax
returns with TTT.
TTT is the common parent of an affiliated group of
corporations and Randers recognizes that any one of them that
sustains a net operating loss or otherwise generates beneficial
tax attributes for a taxable period may be deprived of such
benefits when offset in that or other periods against income or
tax liabilities of the others.
By this Agreement, the parties desire to set forth the
understanding they have reached with respect to the filing of the
consolidated United States federal income tax returns. Foreign
tax returns are not subject to this Agreement.
Agreements
IT IS MUTUALLY agreed by the parties hereto as follows:
1. Definitions and Construction.
1.1. The Term "TTT Group" means the group of
corporations of which TTT is common parent and with which TTT
files an affiliated consolidated federal income tax return,
excluding Randers and subsidiaries of Randers that may exist now
or in the future. For purposes of this Agreement, the TTT Group
shall be treated as a single corporate entity. The TTT Group and
Randers and its subsidiaries, respectively, are sometimes herein
referred to collectively as the "Two Companies" or the
"Companies." This Agreement anticipates that TTT will set aside
and retain certain sums calculated as provided herein. All
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reference to TTT paying sums to itself pursuant to this Agreement
shall be satisfied by TTT setting aside sums in respect of the
obligations established under this Agreement.
1.2. The paragraph titles used herein are for
convenience of reference only and will not be considered in the
interpretation or construction of any of the provisions hereof.
Words may be construed in the singular or the plural as the
context requires.
2. Tax Returns.
2.1. Federal Tax Returns. TTT as the common parent
will prepare and file or cause to be prepared and filed federal
and state income tax returns on a consolidated basis, for the TTT
Group and Randers and its subsidiaries for all fiscal periods as
to which a consolidated return is appropriate in accordance with
the terms of this Agreement.
2.2. State Tax Returns. TTT as the common parent will
prepare and file or cause to be filed state income tax returns on
a combined, consolidated, unitary, or other method that TTT
believes will result in a lower overall tax liability to the Two
Companies. Randers will reimburse TTT for its portion of the
tax. Such reimbursement will be the tax Randers would have paid
on a separate return basis, but only if it was required to file a
return in that state.
3. Time of Payment of Federal Obligations to TTT. The
obligations of the Companies for Federal income tax payments will
be determined and paid as follows:
(a) Not later than the 15th day after the end of the
fourth, sixth, ninth and twelfth months of each consolidated
taxable year of TTT, TTT will make a reasonable determination
(consistent with the provisions of Section 6655 of the Code) of
the separate federal income tax liability that each Company would
be required to pay as estimated payments on a separate return
basis for that period. Each Company shall pay to TTT the amount
of such liability within ten days.
(b) After the end of TTT's fourth accounting quarter
and before the 15th day of the third month thereafter, each
Company will promptly pay to TTT the entire amounts estimated to
be due and payable under such Company's federal income tax return
as if filed on a separate return basis, less all amounts
previously paid with respect to that year pursuant to
subparagraph (a) of this Paragraph 3.
(c) If upon the filing of the consolidated income tax
return, a revised calculation is made in the manner set forth in
subparagraph (b) of this Paragraph 3, and it is determined that
either Company has paid to TTT with respect to the consolidated
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taxable year an amount greater than that required by Paragraph
3(b), then that excess will be promptly paid by TTT to that
Company.
4. Tax Obligations of TTT. TTT will pay the consolidated
tax liabilities of the Companies arising from filing a
consolidated federal income tax return.
5. Payment of Funds by TTT. After the end of TTT's fourth
quarter and before the 15th day of the third month thereafter, if
in any year Randers incurs a loss, TTT shall pay to Randers a sum
equal to the amount of benefit realized by TTT that is
attributable to the loss incurred by Randers.
6. Changes in Prior Year's Tax Liabilities. In the event
that the consolidated tax liability or the separate tax liability
referred to in Paragraphs 3 and 4 hereof for any year for which a
consolidated tax return for the two Companies was filed is or
would be increased or decreased by reason of filing an amended
return or returns (including carry-back claims), or by reason of
the examination of the returns by the Internal Revenue Service,
the amounts due TTT for payment of taxes under Paragraph 3
hereof, and the amount to be paid to TTT for allocation to
Randers under Paragraph 4 hereof for each such year will be
recomputed by TTT to reflect the adjustments to taxable income
and tax credits for the taxable year and interest or penalties,
if any. In accordance with those recomputations, additional sums
will be paid by the Companies to TTT or paid by TTT to the
Companies regardless of whether a member has become a Departing
Member (as defined in Paragraph 8 hereof) subsequent to the
taxable year of recomputation.
7. New Members. The Companies agree that if, subsequent
to the execution of this Agreement, TTT becomes the parent, as
that term is used in Section 1504 of the Code, of one or more
subsidiary corporations, in addition to Randers, then each newly
acquired subsidiary corporation may become a separate party to
this Agreement by consenting in writing to be bound by its
provisions, effective immediately upon its delivery to TTT, but
the income, deductions and tax credits of the newly acquired
subsidiary corporations will first be included in the
consolidated federal income tax return as required by the Code.
8. Departing Members.
8.1. The term "Departing Member," as used herein, will
mean a Company that is no longer permitted under the Code to be
included in the consolidated federal income tax return.
8.2. In applying this Agreement to a Departing Member
for the final taxable year in which its income, deductions, and
tax credits are required to be included in the consolidated
federal income tax return: (i) the amount required to be paid by
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a Departing Member under the provisions of Paragraph 3 hereof and
(ii) the amount that the Departing Member is entitled to receive
under the provisions of Paragraph 4 hereof, will be determined by
taking into account the income, deductions and tax credits of the
Departing Member only for the fractional part of such year as the
Departing Member was a member of the consolidated group and
included in the consolidated federal income tax return.
8.3. After the filing of the consolidated federal
income tax return for the last taxable year that the Departing
Member was included therein, the Departing Member will be
informed of the amount of consolidated carry-overs as of the end
of the taxable year or period which are attributable to the
Departing Member, as provided by Treasury Regulations Section
1.1502-79 or otherwise, including the agreement of the parties.
9. Determination of Sums Due from and Payable to Members.
TTT will determine the sums due from and payable to the Companies
under the provisions of this Agreement (including the
determination for purposes of Paragraph 6 hereof). The Companies
agree to provide TTT with such information as may reasonably be
necessary to make these determinations. Issues arising in the
course of the determinations that are not expressly provided for
in this Agreement will be resolved in an equitable manner.
10. Tax Controversies. If a consolidated federal income
tax return for any taxable year during which this Agreement is in
effect is examined by the Internal Revenue Service, the
examination, as well as any other matters relating to that tax
return, including any tax litigation, will be handled solely by
TTT. Randers will cooperate with TTT and to this end will
execute protests, petitions, and any other documents as TTT
determines to be necessary or appropriate. The cost and expense
of TTT's handling of a tax controversy, including legal and
accounting fees, will be allocated to and paid by the Company to
whom the tax controversy relates. If the tax controversy relates
to both Companies, the cost and expense will be allocated between
the Companies in the proportion that each Company's potential
additional tax liability bears to the total potential additional
tax liability of both Companies (determined in accordance with
Paragraph 6 hereto and assuming that the tax controversy is
resolved in favor of the Internal Revenue Service) for the
taxable year on issue. If the tax controversy encompasses more
than one taxable year, TTT will first allocate the cost and
expense to each taxable year in the proportion that the potential
additional tax liability for each taxable year bears to the total
potential additional tax liability for the taxable years in
issue.
11. Effective Date. This Agreement shall be effective
beginning as of the date of this Agreement, and will continue on
a year-to-year basis thereafter with respect to Randers for so
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long as Randers is permitted to file a consolidated federal
income tax return with TTT.
12. State Taxes. The two Companies will jointly file any
state tax return on a combined, consolidated, unitary, or other
method that TTT determines results in a lower overall tax
liability to the Two Companies. In the event that said state tax
returns shall be filed, the provisions of sections 1 through 11
hereof shall apply, mutatis mutandis (the necessary changes being
made) to the allocation, preparation, filing and payment related
to such state taxes and tax returns.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their duly authorized officers as of
the date first above written.
THERMO TERRATECH INC. THE RANDERS GROUP
INCORPORATED
By: /s/ Xxxxxxx X. Xxxxxxx By: /s/ Xxxx X. Xxxxxxx
Title: Treasurer Title: President and
Chief Executive
Officer
