Exhibit 10.9
TAX SHARING AGREEMENT
This TAX SHARING AGREEMENT for the allocation and settlement of
consolidated U.S. federal income tax liability (hereinafter referred to as
the "Agreement") is dated as of October 18, 1998 between DIMAC Holdings,
Inc., a Delaware corporation ("Parent") and DIMAC Corporation, a Delaware
corporation, DIMAC Marketing Corporation, a Delaware corporation, AmeriComm
Holdings, Inc., a Delaware corporation, DIMAC DIRECT, Inc., a Missouri
corporation, The XxXxxxx Group Inc., a Missouri corporation, MBS/Multimode
Inc., a Missouri corporation, Xxxxxx & Associates Inc., a Missouri
corporation, Palm Coast Data Inc., a Missouri corporation and AmeriComm
Direct Marketing, Inc., a Delaware corporation, (each, a "Subsidiary" and
together, the "Subsidiaries").
RECITALS
A. Parent and each Subsidiary are members of an affiliated group
(the "Affiliated Group") as defined in Section 1504(a) of the Internal
Revenue Code of 1986, as amended (the "Code").
B. The Affiliated Group intends to file consolidated federal income
tax returns.
C. Parent and the Subsidiaries desire to establish a method for (i)
allocating the consolidated federal income tax liability of the Affiliated
Group between the Parent and each Subsidiary and (ii) reimbursing Parent for
payment of such tax liability.
NOW THEREFORE, in consideration of the mutual covenants contained
herein, the parties agree as follows:
1. PAYMENT OF FEDERAL INCOME TAXES OF AFFILIATED GROUP. Parent
shall file all federal income tax returns on behalf of the Affiliated Group
and pay to the Internal Revenue Service (the "IRS") all income taxes of the
Affiliated Group.
2. CONTRIBUTION BY MEMBER FOR TAX LIABILITY. Each Subsidiary shall
compute and pay to Parent, an amount equal to the greater of (a) the federal
income taxes that the Subsidiary would be required to pay with respect to
such taxable year if the Subsidiary had filed a separate federal income tax
return for the current year and all prior taxable years (collectively, the
"Separate Federal Income Tax Liability"), and (b) the product of (i) the
federal income tax liability of the Affiliated Group for such year and (ii) a
fraction, (x) the numerator of which is an amount equal to the Separate
Federal Income Tax Liability of the Subsidiary for such year and (y) the
denominator of which is the aggregate total of the Separate Federal Income
Tax Liability that each member of the Affiliated Group would have incurred
for such year if such corporations had filed separate federal income tax
returns for such year and all prior years.
3. ESTIMATED TAX PAYMENTS. Each Subsidiary shall compute on the same
basis as set forth in Paragraph 2 its contribution to the estimated federal
income tax installments due for each taxable period, and it shall pay such
amount to Parent on a timely basis. Any amounts paid under this Paragraph 3
shall be credited against the amounts payable by such Subsidiary to Parent
under Paragraph 2.
4. REFUNDS AND DEFICIENCIES. In the event that for any reason there
is an adjustment of the Affiliated Group's federal income tax liability, the
tax liability of each member of the Affiliated Group shall be recomputed in
accordance with the provisions of this Agreement to reflect such adjustment.
Any additional payments (including refunds) required by such adjustment shall
be paid within ten (10) days of the date of a Final Determination with
respect to such redetermination, or as soon as such adjustment can
practicably be calculated, if later, together with interest for the period
and at the rate provided for underpayments in Section 6621 of the Code (or
such successor section). The term "Final Determination" shall mean a closing
agreement with the IRS, a claim for refund which has been allowed, a
deficiency notice with respect to which the period for filing a petition with
the United States Tax Court has expired or a decision of any court of
competent jurisdiction which is not subject to appeal or the time for appeal
of which has expired.
5. STATE AND LOCAL TAXES. If, under the laws of any state (or
subdivision thereof) or foreign country (or subdivision thereof) in which the
Affiliated Group is subject to income tax, Parent and a Subsidiary are
required or permitted to file their income tax returns on a combined or
consolidated basis, then the provisions of Paragraphs 1 through 4 hereof
shall be applicable as if such combined or consolidated income tax returns
were consolidated federal income tax returns.
6. TIME AND FORM OF PAYMENT. Payments pursuant to Paragraphs 2, 3
and 5 hereof shall be made by check no later than seven (7) days prior to the
due date of the Affiliated Group's consolidated federal income tax return for
the taxable year with respect to which a consolidated federal income tax
return is filed on behalf of the Affiliated Group (hereinafter referred to as
the "Taxable Period"), not including extensions. If the due date for such
return is extended, such payments shall be made on an estimated basis and
shall be recalculated no later than seven (7) days prior to the extended due
date for such return, and any difference between such recalculated payments
and such estimated payments shall be paid by check to the party entitled
thereto at the time of such recalculation with interest from such due date at
the rate provided for in Section 6621 of the Code.
7. RESOLUTION OF DISPUTES. Any dispute concerning the calculation
or basis of determination of any payment provided for hereunder shall be
resolved by the independent public accountants for Parent, whose judgment
shall be final, conclusive and binding upon the parties.
8. COOPERATION. Each Subsidiary shall cooperate with Parent in the
filing of any consolidated federal income tax returns for the Affiliated
Group which Parent elects to file by maintaining such books and records and,
within sixty (60) days following the close of every
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Taxable Period, providing such information as may be necessary or useful in
the filing of such returns and executing any documents and taking any actions
which Parent may reasonably request in connection therewith. Parent and each
Subsidiary will provide one another such information concerning such returns
and the application of this Agreement as Parent or such Subsidiary may
reasonable request of one another.
9. ADJUDICATIONS. In any audit, conference or other proceeding with
the Internal Revenue Service or in any judicial proceedings concerning the
determination of the federal income tax liabilities of the Affiliated Group,
the Affiliated Group shall be represented by persons selected by Parent. The
settlement and terms of settlement of any issues relating to such proceeding
shall be in the sole discretion of Parent, and each Subsidiary hereby
appoints Parent as its agent for the purpose of proposing and concluding any
such settlement.
10. 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 instrument.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
signed by their duly authorized representative as of the date first above
written.
DIMAC HOLDINGS, INC.
By: /s/ Xxxxx Xx
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Name: Xxxxx Xx
Title: Assistant Secretary
DIMAC CORPORATION
By: /s/ Xxxxx Xx
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Name: Xxxxx Xx
Title: Assistant Secretary
DIMAC MARKETING CORPORATION
By: /s/ Xxxxx Xx
-----------------------------
Name: Xxxxx Xx
Title: Assistant Secretary
AMERICOMM HOLDINGS, INC.
By: /s/ Xxxxx Xx
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Name: Xxxxx Xx
Title: Assistant Secretary
DIMAC DIRECT, INC.
By: /s/ Xxxxx Xx
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Name: Xxxxx Xx
Title: Assistant Secretary
THE XXXXXXX GROUP INC.
By: /s/ Xxxxx Xx
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Name: Xxxxx Xx
Title: Assistant Secretary
MBS/MULTIMODE INC.
By: /s/ Xxxxx Xx
-----------------------------
Name: Xxxxx Xx
Title: Assistant Secretary
XXXXXX & ASSOCIATES INC.
By: /s/ Xxxxx Xx
-----------------------------
Name: Xxxxx Xx
Title: Assistant Secretary
PALM COAST DATA INC.
By: /s/ Xxxxx Xx
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Name: Xxxxx Xx
Title: Assistant Secretary
AMERICOMM DIRECT MARKETING, INC.
By: /s/ Xxxxx Xx
-----------------------------
Name: Xxxxx Xx
Title: Assistant Secretary
