Exhibit 10.3
TAX ALLOCATION AGREEMENT
THIS AGREEMENT is made as of November 14th, 1997 between
Thermo Electron Corporation , a Delaware corporation ("TMO "), and
Thermo Vision Corporation, a Delaware corporation ("Vision" - The
term "Vision" shall refer to Vision and those of its subsidiaries
that are members of an affiliate group of corporations including
Vision within the meaning of Section 1504(a) of the Internal
Revenue Code of 1986, as amended (the "Code")).
Preliminary Statement
TMO is the parent of an affiliate group of corporations
(including Vision) within the meaning of Section 1504(a) of the
Code (the "Thermo Group"). The Thermo Group has elected to file
a consolidated return for federal income tax purposes.
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 and state
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 "TMO Group" means the group of
corporations of which TMO is common parent and with which TMO
files an affiliated consolidated federal income tax return,
excluding Vision and subsidiaries of Vision that may exist now or
in the future. For purposes of this Agreement, the TMO Group
shall be treated as a single corporate entity. The TMO Group and
Vision and its subsidiaries, respectively, are sometimes herein
referred to collectively as the "Two Companies" or the
"Companies." This Agreement anticipates that TMO will set aside
and retain certain sums calculated as provided herein. All
reference to TMO paying sums to itself pursuant to this Agreement
shall be satisfied by TMO 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.
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Words may be construed in the singular or the plural as the
context requires.
2. Tax Returns.
2.1. Federal Tax Returns. TMO as the common parent
will prepare and file or cause to be prepared and filed federal
income tax returns on a consolidated basis, for the TMO Group and
Vision 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 . TMO 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 TMO
believes will result 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. Vision will reimburse TMO for Vision's
portion of the tax. Such reimbursement will be the tax Vision
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 TMO . 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 TMO, TMO 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 TMO the amount
of such liability within ten days.
(b) After the end of TMO's fourth accounting quarter
and before the 15th day of the third month thereafter, each
Company will promptly pay to TMO 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 TMO with respect to the consolidated
taxable year an amount greater than that required by Paragraph
3(b), then that excess will be promptly paid by TMO to that
Company.
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4. Tax Obligations of TMO . TMO will pay the consolidated
tax liabilities of the Companies arising from filing a
consolidated federal income tax return.
5. Payment of Funds by TMO. After the end of TMO's fourth
quarter and before the 15th day of the third month thereafter, if
in any year Vision incurs a loss, TMO shall pay to Vision a sum
equal to the amount of benefit realized by members of the TMO
Group (other than Vision) that is attributable to the loss
incurred by Vision.
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, 4 and 5 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 of payments under Paragraphs 3, 4 or 5, as
the case may be, for each such year will be recomputed by TMO 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 TMO or paid by TMO 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, TMO becomes the parent, as
that term is used in Section 1504 of the Code, of one or more
subsidiary corporations, in addition to Vision, 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 TMO, 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
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
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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.
TMO 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 TMO 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
TMO. Vision will cooperate with TMO and to this end will execute
protests, petitions, and any other documents as TMO determines to
be necessary or appropriate. The cost and expense of TMO'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, TMO 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 Vision for so
long as Vision is permitted to file a consolidated federal income
tax return with TMO.
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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 ELECTRON CORPORATION
By: /s/Xxxx X. Xxxxxxxxxxx
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Title: President
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THERMO VISION CORPORATION
By: /s/Xxxxxxxx Xxxxx Xxxxxxx
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Title: President
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