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Exhibit 10.5
TAX SHARING AGREEMENT
Agreement effective as of the first day of the 1989 consolidated
return year by and among Xxxxxxx Industries, Inc. ("Parent") and each of the
undersigned ("Subsidiaries"):
AP Holdings Inc. ("APH")
APA Acquisition, Inc. ("APA")
APCOA, Inc. ("APCOA")
WHEREAS, the parties (hereinafter, together with any other members
of the affiliated group, sometimes referred to as "Members"; or in the singular
"Member") hereto are part of an affiliated group ("Affiliated Group") as defined
by the Internal Revenue Code of 1986, as amended ("Code"), Section 1504; and
WHEREAS, such Affiliated Group may elect to file a consolidated
federal income tax return in accordance with Code Section 1501 and, if so, will
be required to file consolidated income tax returns for years subsequent to such
first year of consolidated filing; and
WHEREAS, it is the intent and desire of the parties hereto that a
method be established for allocating federal income tax liability among Members
of the Affiliated Group; and to provide for the allocation and distribution of
any refund arising from a carryback of net operating losses or tax credits or
capital losses from subsequent taxable years.
NOW, THEREFORE, in consideration of the mutual covenants and
promises contained herein, the parties hereto agree as follows:
1. A U.S. consolidated federal income tax return may be filed by Parent
for the taxable year ended December 31, l989, and for each subsequent taxable
year in respect of which this Agreement is in effect and for which the
Affiliated Group is required or permitted to file a consolidated federal income
tax return. The Parent, and each Subsidiary shall execute and file such
consents, elections, and other documents that may be required or appropriate for
the proper filling of such returns.
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2. The member of the Affiliated Group agree to determine and allocate
their tax liability in the following manner:
(a) Each Member shall pay to Parent the amount of federal income tax that
it would be required to pay on a separate return basis for the year in question;
provided, however that the amount that any Member shall be obligated to pay
Parent for a taxable year shall not exceed the tax liabilities of such Member on
a separate return basis for all taxable years to which this Agreement applies,
and for which such Member joined in the filing of a consolidated return of the
Affiliated Group (including the current taxable years, computed as if it had
actually filed separate returns for all such years and taking into account any
net operating loss carryforward a Member would have had if it had filed a
separate return for all such years. The amount of any excess tax liability which
would be allocated to a Member of the Affiliated Group but for the proviso above
shall be borne by Parent.
(b) The "net operating loss" of a Member is the deduction which such
Member would have had available if it actually filed a separate return for all
years and thus would not include any portion of a Member's net operating loss
sustained in a prior or subsequent year which had been absorbed by the Member in
computing separate return liabilities for prior or subsequent years.
Notwithstanding the preceding sentence, no benefit under this Agreement shall be
granted a Member unless the net operating loss is availed of in reducing the
consolidated federal income tax liability. The rules stated in the previous
sentences regarding carryover net operating losses will also apply in the
computation of other carryover items such as general business credits, foreign
tax credits, capital losses and charitable contribution deductions.
(c) In calculating any benefit from a carryback or carryover of net
operating losses, adjustments shall be made to such prior or subsequent year's
separate return tax liability as required under Sections 172(b) (2) and 172(d).
For purposes of this calculation, the election under Section 172(b) (3) shall be
made on a separate company basis.
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3. The provisions of this Agreement shall be administered by the President
of Parent.
4. Each Member shall pay the Parent its allocated consolidated federal
income tax liability under Section 2(a) of this Agreement and, subject to
Section 2, shall be entitled to any refund of taxes generated by it.
5. The President of Parent shall have the right to assess Members their
share of estimated tax payments to be made on the projected consolidated federal
income tax liability for each year. Payment to the Parent shall be made after
such assessment. Such Member will receive credit for such prepayments in the
year-end computation under Section 2 of this Agreement.
6. If part or all of an unused consolidated net operating loss or tax
credit is allocated to a Member of the Affiliated Group pursuant to Regulations
Section 1.1502-79, and it is carried back or forward to a year in which such
Member filed a separate income tax return or a consolidated federal income tax
return with another affiliated group, any refund or reduction in tax liability
arising from the carryback or carryover shall be retained by such Member.
7. If the consolidated federal income tax liability is adjusted for any
taxable period, whether by means of an amended return, claim for refund, or tax
audit by the Internal Revenue Service, the liability of each Member shall be
recomputed under Section 2 of this Agreement to give effect to such adjustments.
In the case of a refund, the Parent shall make payment to each Member for its
share of the refund, determined in the same manner in Section 2 of this
Agreement, within ten days after the refund is received by the Parent, and in
the case of an increase in tax liability, each Member shall pay to the Parent
its allocable share of such increased tax liability after receiving notice of
such liability from the Parent. If any interest is to be paid or received as a
result of a consolidated federal income tax deficiency or refund, such interest
shall be allocated to the Members in the ratio each Member's change in
consolidated federal income tax liability bears to the total change in tax
liability. Any penalty shall be allocated upon such basis as the President of
Parent deems just and proper in view of all applicable circumstances.
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8. This Agreement shall apply to the taxable year specified in the
preamble of this Agreement, and all subsequent taxable years, unless the Members
agree in writing to terminate the Agreement. Notwithstanding such termination,
this Agreement shall continue in effect with respect to any payment or refunds
due for all taxable periods prior to termination.
9. The Agreement shall not be assignable to any Member without the prior
written consent of the others.
10. All material including, but not limited to, returns, supporting
schedules, work papers, correspondence, and other documents relating to the
consolidated federal income tax returns filed for a taxable year during which
this Agreement was in effect shall be made available to any Member to the
Agreement during regular business hours.
11. This Agreement supersedes the Tax Sharing Agreement among the parties
dated April 14, 1989.
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IN WITNESS WHEREOF, the parties hereto have caused their names to be
subscribed and executed by their respective authorized officers on the dates
indicated, effective as of the date first written above.
XXXXXXX INDUSTRIES, INC.
By: /s/ Xxxx X. Xxxxxx Date: April 28, 1989
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AP HOLDINGS, INC.
By: /s/ W Suelpe Date: April 28, 1989
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APA ACQUISITION, INC..
By: /s/ W Suelpe Date: April 28, 1989
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APCOA, INC..
By: /s/ W Suelpe Date: April 28, 1989
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AMENDMENT NO. 1
TO
TAX SHARING AGREEMENT
AMENDMENT NO. 1 dated as of March 30, 1998 (this "Amendment") to the
Tax Sharing Agreement effective as of the first day of the 1989 consolidated
return year by and among Xxxxxxx Industries, Inc. ("Parent"), AP Holdings, Inc.,
a Delaware corporation, APA Acquisition, Inc., a Delaware corporation, and
APCOA, Inc., a Delaware corporation (the "Tax Sharing Agreement"). Capitalized
terms used but not defined in this Amendment shall have the meanings ascribed to
them in the Tax Sharing Agreement.
WHEREAS, the parties hereto desire to amend the Tax Sharing
Agreement to provide for the eventuality of the possible deconsolidation of one
or more of the Members from the Affiliated Group.
NOW, THEREFORE, in consideration of the mutual covenants and
promises contained herein, the parties hereto agree as follows:
The Tax Sharing Agreement is hereby amended to add a new Section 12
thereto, reading in its entirety as follows:
"12. In the event that any Member (the "Departing Member") ceases to
be a Member during any federal taxable year of the Affiliated Group beginning on
or after January 1, 1997, the following provisions shall govern the relationship
between the Departing Member and the other Members with respect to United States
federal income taxes:
(a) Except as set forth in this Section 12, this Agreement shall
terminate as to the Departing Member and no further payments shall be due from
or to such Departing Member under this Agreement with respect to any taxable
year.
(b) The Departing Member shall join in the United States
consolidated federal income tax return for the taxable year of the Parent (the
"Deconsolidation Year") that includes the date on which the Departing Member
ceased to be a Member (the "Deconsolidation Date"). Parent and the Departing
Member shall execute and file such consents, elections, and other documents as
may be necessary for the Departing Member to join in such return for such the
Deconsolidation Year.
(c) Within 60 days after the Deconsolidation Date, the Departing
Member shall pay to the Parent the amount (if any) of federal income tax that it
would be required to pay on a separate return basis for the portion of the
Deconsolidation Year ending on the Deconsolidation Date. In computing the amount
of federal income tax that the Departing Member would be required to so pay, the
provisions of Section 2 of this Agreement shall govern.
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(d) If, after the Deconsolidation Date, the consolidated federal
income tax liability of the Affiliated Group is adjusted for the Deconsolidation
Year or any prior consolidated return year of the Affiliated Group, whether by
means of an amended return, claim for refund, or tax audit by the Internal
Revenue Service, the liability of Parent or the Departing Member, as the case
may be, shall be recomputed under Section 2 of this Agreement and this Section
12 to give effect to such adjustments. A payment shall be made by Parent or the
Departing Member, as appropriate, reflecting such recomputation within 10 days
after the receipt by Parent of a refund or the receipt by the Departing Member
of notice from the Parent of an increase in tax liability. Interest and
penalties relating to any adjustment described in this Section 12(d) shall be
allocated between the Departing Member and other Members in a manner consistent
with Section 7 of this Agreement."
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IN WITNESS WHEREOF, the parties hereto have caused their names to be
subscribed and executed by their respective authorized officers as of the date
first written above.
XXXXXXX INDUSTRIES, INC.
By: /s/ A. Xxxxxx Xxxxxxx
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Name: A. Xxxxxx Xxxxxxx
Title: Senior Vice President,
Chief Financial Officer
and Treasurer
AP HOLDINGS, INC.
By: /s/ Xxxxxxx X. Xxxxxxxxxx
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Name: Xxxxxxx X. Xxxxxxxxxx
Title: Treasurer
APA ACQUISITION, INC.
By: /s/ Xxxxxxx X. Xxxxxxxxxx
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Name: Xxxxxxx X. Xxxxxxxxxx
Title: Treasurer
APCOA, INC
By: /s/ Xxxxxxx X. Xxxxxxxxxx
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Name: Xxxxxxx X. Xxxxxxxxxx
Title: Treasurer
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