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EXHIBIT 10.5
TAX SHARING AGREEMENT
This Tax Sharing Agreement (this "Agreement"), by and among the U.S.
entities of the Pacific Dunlop Group listed below, is made as of the ____day of
_____,_____,
WITNESSETH:
WHEREAS, the parties to this Agreement (the "Group") include only the
U.S. entities as follows:
Group Members Unit
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Pacific Dunlop Investments (USA) Inc. Administration
Pacific Dunlop Capital Inc. Administration
Pacific Dunlop Finance Company Inc. Administration
Pacific Dunlop Footwear, Inc. Administration
Pacific Dunlop Holdings (USA) Inc. Administration
Pacific Dunlop Holdings Inc. Administration
Pacific Dunlop USA Inc. Administration
PAC Brands USA Inc. PAC Brands
Pacific Dunlop GNB Corporation Batteries
GNB Technologies Inc. Batteries
GNB Industrial Battery Company Batteries
GNB Battery Technologies Japan Inc. Batteries
Pacific Chloride Inc. Batteries
New Enpak Inc. Batteries
Ansell Healthcare Incorporated Ansell
Ansell Healthcare Products, Inc. Ansell
Ansell Protective Products, Inc. Ansell
Ansell Services, Inc. Ansell
TPL Holdings Inc. Accufix
TPLC Holdings Inc. Accufix
Cotac Corporation Accufix
Accufix Research Institute Inc. Accufix
WHEREAS, Pacific Dunlop Investments (USA) Inc. ("PD Investments") is
the common parent corporation of all of the Group members,
WHEREAS, the members of the Group have made or will make an election to
file consolidated federal income tax returns pursuant to Section 1501 of the
Internal Revenue Code, and the regulations thereunder. Such federal consolidated
returns are being filed on a fiscal-year basis commencing July 1, and
WHEREAS, the parties desire to set forth their agreement with respect
to:
(1) The allocation and payment of the liabilities and benefits
arising from the filing of a consolidated tax return and the
accounting therefore; and
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(2) the participation and cooperation by each Group member in
coordinated tax planning and other matters related to the
preparation and filing of consolidated tax returns.
NOW, THEREFORE, in consideration of the premises and the mutual
agreement and benefits herein set forth, the parties agree as follows:
I. DEFINITIONS
A. Profitable Unit shall have the meaning attributed to it in
Paragraph II(1)
B. Loss Unit shall have the meaning attributed to it in Paragraph
II(2)
C. Separate Return Tax Liability shall mean the U.S. tax
liability of a Unit, net of foreign tax credits, that would
have accrued and be payable in any tax year, including U.S.
alternative minimum tax, if applicable, if such Unit were
required to have filed a Separate Unit Return (as defined
below).
D. Separate Unit Book Income shall mean the income or loss of
each Unit, computed pursuant to generally accepted accounting
principles.
E. Separate Unit Return shall mean with respect to a Unit
composed of more than one corporation a consolidated federal
income tax return prepared as if such Unit was separate from
the Group and with respect to a Unit which is composed of a
single corporation a separate federal income tax return
prepared as if such Unit was separate from the Group.
F. Unit shall mean the reporting division (e.g., Administration,
PAC Brands, Batteries, Ansell, or Accufix) to which each group
member is assigned by PD Investments and designated on page 1
of this agreement.
G. 100% Owned shall mean a Unit or where applicable a Group
member all of whose common shares are owned directly or
indirectly by PD Investments.
II. PURPOSE
The purposes and intended effects of this Agreement are:
(1) To require Units having positive taxable income ("Profitable
Units") to pay their share of the Group's consolidated tax
liability pursuant to Paragraph III(B) hereafter; and
(2) To compensate Group Units with excess losses or credits ("Loss
Units") which are utilized by Profitable Units to reduce such
Profitable Units' share of the Group's consolidated tax
liability when Loss Units could have used the losses or
credits if such Unit filed a Separate Unit Return.
III. TAX SHARING
A. The parties to this Agreement will use their best efforts and
will take all necessary action to assure that a consolidated
federal income tax return is filed by the Group for each year
that PD Investments is entitled to file a consolidated return
for the Group. PD Investments shall sign separate company tax
returns on behalf of the Group member.
B. Each Unit shall pay to PD Investments an amount equal to its
Separate Return Tax Liability. If the Unit is 100% Owned on
the last day of the taxable year, the tax computation shall
take into consideration the unexpired carryforward tax
benefits that such Unit generated prior to the tax year. If
the Unit is not 100% Owned on the last day of the taxable
year, the tax computation shall take into consideration only
the unexpired carryforward tax benefits that such Unit
generated (1)
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in prior tax years that it was not 100% Owned for the entire
tax year; and (2) in the tax year that it became non-100%
Owned, the prorated portion of the unexpired carryforward tax
benefits determined to be generated after the date it was no
longer 100% Owned. The prorated portion of the unexpired
carryforward tax benefits generated after the date the Unit
was no longer 100% Owned will be determined based on the
entire carryforward tax benefit generated in that tax year
multiplied by the percentage of days in the tax year the Unit
was not 100% Owned.
Payments to PD Investments by any Unit shall not be increased
because a separate company tax benefit is limited as a result
of a consolidated income tax return being filed, provided that
benefit could have been used to reduce the Unit's tax
liability if the Unit filed a Separate Unit Return.
Based on information provided by Units, PD Investments will
determine the required installment for the payment period and
xxxx each Profitable Unit accordingly. PD Investments will
remit the appropriate amount of the estimated consolidated
federal tax liability to the Internal Revenue Service ("IRS").
Profitable Units shall pay PD Investments, by the last day of
the month following the end of each fiscal quarter, an amount
equal to the estimated combined federal and state effective
income tax rate as determined by PD Investments for this
purpose on an annual basis multiplied by the period to date
tax-adjusted book income calculated through the end of each
fiscal quarter, less tax payments previously made. However,
any Unit which is 100% Owned by PD Investments at the end of
the fiscal quarter and with carryforward tax benefits
generated prior to the tax year, which could be used by that
Unit if a Separate Unit Return were filed, will not have to
make payments to PD Investments until such benefits have been
used (as computed on a separate company basis, or expire
unused). Any Unit which is not 100% Owned at the end of the
fiscal quarter and with carryforward tax benefits generated
(1) in prior years in which it was not 100% Owned, or (2) in a
prior year in which it was not 100% Owned for part of the tax
year, as determined in paragraph 1 of Section III B. above,
which could be used by that Unit if such Unit filed a Separate
Unit Return, will not have to make payments to PD Investments
until such benefits either would have been used or would have
expired unused by such Unit (if the Unit filed a Separate Unit
Return).
If a Unit has underestimated its tax-adjusted Separate Unit
Book Income for any period, such Unit shall pay PD Investments
all interest and penalties attributable to such
underestimation.
PD Investments will be responsible for managing the funds
received from Profitable Units in excess of estimated
consolidated federal tax liability and shall, in its sole
discretion, advance such excess funds to Loss Units in
accordance with the excess losses or credits of the Loss Units
utilized by Profitable Units to reduce such Profitable Unit's
share of the Group's consolidated tax liability. The advance
of such excess funds will bear interest at the rate determined
by PD Investments to be paid on intercompany group advances,
either until such advance is repaid or until the time PD
Investments is required to credit or pay such excess funds to
the Loss Unit. PD Investments shall be required to credit or
pay such excess funds, less amounts previously advanced or
allowed as a credit against the estimated tax liability owed
to PD Investments, to any Loss Unit at the time the Loss Unit
would be able to utilize eligible carryforward tax benefits if
it filed a Separate Unit Return.
Within thirty (30) days after the filing of the federal
consolidated tax return or such other later date as PD
Investments may determine, a final payment or credit, as
determined herein, will be due from or to each Unit. Such
final payment or credit shall be equal to the difference
between the total estimated payments made by such Units for
the year, the Separate Return Tax Liability and the state tax
liability, as determined in accordance with Article IV below,
and adjusted for
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each Unit's actual share of interest, late payment penalties
and other penalties (if any) arising from the filing of a
federal consolidated or state tax return.
If a Unit incurs a Net Operating Loss or has excess credits
(determined as if the Unit filed a Separate Unit Return) for a
Taxable Year and such Unit could carry back such Net Operating
Loss or credits on a Separate Unit Return basis, then such
Unit will be treated as carrying back such Net Operating Loss
or credits and will be entitled to payment in accordance with
this paragraph. A Net Operating Loss incurred or credit
generated by a Unit which is 100% Owned for the full year in
which such Net Operating Loss was incurred or credit generated
may be carried back on a Separate Unit Return basis only to
years in which the Unit was 100% Owned for the full year. A
Net Operating Loss incurred or credit generated by a Unit that
is not 100% Owned for the full year in which such Net
Operating Loss was incurred or credit generated may be carried
back only to years in which the Unit was not 100% Owned for
the full year. If a Unit may carry back a Net Operating Loss
or credits under this paragraph, then it shall calculate the
refund, if any, to which it would be entitled, if it had filed
Separate Unit Returns for the current and carryback years. PD
Investments shall pay to the Unit the amount of such refund
within 30 days of filing of the Consolidated Federal Income
Tax Return for the year in which such Net Operating Loss or
credits arise. A Net Operating Loss or Credit which cannot be
carried back may be carried forward as provided in this
Agreement.
C. PD Investments will have the responsibility for handling all
IRS examinations for the Group for all years for which the
Group files a consolidated federal income tax return. All
expenses of the examination and of defending any adjustments
or proposed adjustments which are directly attributable to a
specific Unit will be billed to such Unit. In addition, all
costs and expenses not directly attributable to any specific
Unit will be allocated by PD Investments among the Group in an
equitable manner.
D. If the consolidated federal tax liability for a taxable year
is changed as a result of an amended return, an IRS audit, or
a carryover or carryback of losses and/or credits, the Unit's
allocated shares of federal income tax liability will be
recomputed. Any difference between a Unit's previously
allocated share of the tax liabilities and benefits arising
from the filing of a consolidated tax return of the taxable
year and its recomputed allocated share of the tax liability,
benefits, interest, late payment penalties and other penalties
(if any), shall be remitted to PD Investments or the Units as
the case may be, within thirty (30) days after the change has
been determined to be final. Interest will be charged or paid
after thirty (30) days (such interest to be computed from the
date the change has been determined to be final) at the same
rate or rates used by the IRS with respect to late payments of
tax. Notwithstanding anything to be contrary, any Unit that is
not 100% Owned shall not be required to pay any amount to PD
Investments as a result of an adjustment which reduces a
Unit's Net Operating Loss carryover from a year or portion
thereof in which such Unit was 100% owned.
If any interest is to be paid to or received from the IRS as a
result of a consolidated tax deficiency or refund, such
interest will be allocated to Units in the same ratio that
each Unit's change in tax liabilities and benefits bears to
the total change in tax liability and shall be remitted to PD
Investments or the Unit, as the case may be.
E. Separate Return Tax Liability will be computed by allocating
all credits and adjustments to the Unit who earned the credit.
F. Pursuant to Section I C. above, Separate Return Tax Liability
includes U.S. alternative minimum tax. Each Unit shall
determine tax liabilities and make payments to PD Investments
equal to its
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Separate Return Tax Liability, including U.S. alternative
minimum tax, following the principle as discussed in Section
III B. above.
G. This Agreement shall govern the use of all carryover or
carryback of net operating losses of each Group member for
federal income tax purposes including those, if any, which
arose in a prior separate return limitation year ( as defined
in the Internal Revenue Code of 1986, as amended and the
treasury regulations issued thereunder).
H. PD Investments agrees to indemnify each Unit of the Group for
taxes (including interest and penalties) assessed directly on
and collected from the Unit by a governmental authority as a
result of filing a consolidated return with the Group to the
extent the Unit has previously made payment of such taxes
(including interest and penalties) under this agreement to PD
Investments or such taxes (including interest and penalties)
are properly charged under this agreement to another Unit
regardless of whether such taxes (including interest and
penalties) have been paid by the other Unit to PD Investments.
Where PD Investments has indemnified a Unit of the Group for
another Unit's taxes (including interest and penalties), the
Unit to whom the taxes (including interest and penalties) are
properly charged under this agreement must remit payment to PD
Investments upon notice.
IV. STATE INCOME TAXES
In the event consolidated or combined unitary state income tax returns
are required or elected, each Unit shall pay to PD Investment an amount
equal to its separate return tax liability using the apportionment
factors applicable if a separate state income tax return were filed.
Each Unit shall further determine tax liabilities and make payments to
PD Investments following the principle as discussed in Section III B.
above.
V. DURATION
This Agreement shall continue in full force and effect for so long as
the relationship among the Group members permits them to participate in
a consolidated return, unless otherwise terminated. In the event that a
party to this Agreement ceases to be a Group member, the Agreement
shall continue among the remaining Group members and their Units. In
the event a party to this Agreement ceases to be a Group member or in
the event a new election is validly exercised by the Group not to file
a consolidated federal income tax return, then an accounting shall be
made to determine the extent, if any, that a Group member received a
credit, payment or advance for any tax benefit which has not been
realized by the Group. Such amounts previously credited shall become
null and void. Amounts paid or advanced to such member will become due
and payable to PD Investments within thirty (30) days of termination.
VI. MODIFICATIONS
This Agreement may be modified by a signed writing to reflect changes
in the tax law, changes required by regulatory agencies, or changes to
more equitably share tax liability. This Agreement may also be modified
to include new subsidiaries joining the Group. Additional subsidiaries
will be covered by this Agreement in writing among PD Investments and
the subsidiaries.
VII. EFFECTIVE DATE
This Agreement shall be effective with respect to all taxable years
beginning after June 30, 1999.
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VIII. MISCELLANEOUS
This Agreement may be modified in whole or in party by a duly
authorized written instrument signed by all of the parties. If any
provisions of this Agreement are declared invalid, unenforceable or in
conflict with any applicable statute, rule or law, then such provisions
shall be deemed null and void to the extent that they conflict
therewith, but without invalidating any other provision hereof. This
Agreement shall be governed by and construed in accordance with the
state laws of the state of Delaware and the federal laws of the United
States.
[Signatures on next page]
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IN WITNESS WHEREOF, the parties have set forth their hands and seals below.
PACIFIC DUNLOP INVESTMENTS (USA) INC. PACIFIC DUNLOP CAPITAL INC.
By: By:
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Name: Name:
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Title: Title:
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PACIFIC DUNLOP FINANCE COMPANY INC. PACIFIC DUNLOP FOOTWEAR, INC.
By: By:
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Name: Name:
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Title: Title:
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PACIFIC DUNLOP HOLDINGS (USA), INC. PACIFIC DUNLOP HOLDINGS, INC.
By: By:
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Name: Name:
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Title: Title:
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PACIFIC DUNLOP USA INC. PAC BRANDS USA, INC.
By: By:
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Name: Name:
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Title: Title:
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PACIFIC DUNLOP GNB CORPORATION GNB TECHNOLOGIES INC.
By: By:
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Name: Name:
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Title: Title:
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XXX XXXXXXXXXX XXXXXXX COMPANY GNB BATTERY TECHNOLOGIES JAPAN INC.
By: By:
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Name: Name:
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Title: Title:
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PACIFIC CHLORIDE INC. NEW ENPAK INC.
By: By:
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Name: Name:
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Title: Title:
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ANSELL HEALTHCARE INCORPORATED ANSELL HEALTHCARE PRODUCTS, INC.
By: By:
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Name: Name:
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Title: Title:
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ANSELL PROTECTIVE PRODUCTS, INC. ANSELL SERVICES, INC.
By: By:
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Name: Name:
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Title: Title:
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TPL HOLDINGS INC. TPLC HOLDINGS INC.
By: By:
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Name: Name:
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Title: Title:
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COTAC CORPORATION ACCUFIX RESEARCH INSTITUTE, INC.
By: By:
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Name: Name:
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Title: Title:
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