STATE TAX SHARING AGREEMENT
This Tax Sharing Agreement (the "Agreement") is
made this 21st day of October, 1996, effective for
taxable periods beginning on or after January 1, 1995 (the
"Effective Date"), between (i) BHC Communications, Inc., a
Delaware corporation having offices at 000 Xxxxx Xxxxxx, Xxx
Xxxx, Xxx Xxxx (the "BHC Representative"), (ii) the
"Affiliates" (as defined below) of the BHC Representative
that are listed on Exhibit A hereto (collectively with the
BHC Representative, the "BHC Group"), (iii) United
Television, Inc., a Delaware corporation having offices at
000 X. Xxxxx Xxxxx, Xxxxxxx Xxxxx, Xxxxxxxxxx (the "UTV
Representative"), and (iv) the Affiliates of the UTV
Representative that are listed on Exhibit B hereto
(collectively with the UTV Representative, the "UTV Group").
Each of the corporations described in clauses (i)-(iv) above
is hereinafter sometimes referred to as a "Member," and
collectively as the "Members"; and each of the corporations
described i and (iii) above is hereinafter sometimes
referred to as a "Representative," and collectively as the
"Representatives."
WHEREAS, by reason of recent additions to and
changes in the business activities conducted by the Members
of the BHC Group and the UTV Group (each a "Group" and
collectively the "Combined Group"), it is believed that the
Members constitute a single unitary group for purposes of
the state income and
franchise taxes (each a "Tax" and collectively the "Taxes")
imposed on corporations by one or more of (i) the states of the United
States of America, (ii) the District of Columbia, add (iii) the
possessions of the United States (hereinafter each a "State"
and collectively the "States") in which the Members now conduct business
activities;
WHEREAS, the Members therefore believe it
appropriate that specified Members commence filing single
combined returns or reports for Taxes (each a "Combined
Report") on behalf of Members of both Groups; and
WHEREAS, the parties hereto wish to set forth
their agreement regarding the manner in which Combined
Reports shall be filed and certain related matters.
NOW, THEREFORE, in consideration of the premises
and of the mutual covenants and agreements herein set forth,
the BHC Group and the UTV Group hereby agree as follows:
1. Intention to File Combined Reports.
a. General. It is the intention of the Members
to file Combined Reports, for taxable periods beginning on
or after the Effective Date, in each State in which Combined
Reports may properly be filed. The States where Combined
Reports are to be filed, and the Members to be included in
Combined Reports for each such State, are listed on Exhibit
C hereto, which shall be amended from time to time by
agreement between the BHC Representative and the UTV
Representative to reflect changes in
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the Members filing
Combined Reports in each State; provided, however, that the
addition or withdrawal of a Member or Affiliate thereof to
or from the Combined Group may be effected by a writing
executed by such Member or Affiliate and its Representative
(a copy of which shall be provided promptly to the other
Representative).
Except as indicated by the following sentence,
nothing herein shall impose any obligation on any Member to
file, join in the filing of, or apply for permission to file
a Combined Report with respect to any State not listed on
Exhibit C. This Agreement shall also apply to the greatest
extent practicable with respect to Taxes imposed by any
State in which a Combined Report (i) is not filed by the
Members or (ii) is filed by Members of the Combined Group
but does not include any Member or Affiliate thereof for a
taxable period beginning on or after the Effective Date, if
a "Final Determination" (as defined in the following
sentence) is made to the effect that the Members of the BHC
Group and UTV Group (or any Member(s) of the Combined Group
or Affiliate(s) thereof not previously included in a
Combined Report for such State) are required to file Tax
returns or reports in such State on a combined basis. A
"Final Determination" shall mean (x) a judgment, decree, or
other order by any court of competent jurisdiction which has
become final and unappealable; (y) a closing agreement or
similar agreement with the taxing authority of a State; or
(z) any other final
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disposition by reason of the
expiration of the applicable statute of limitations.
b. Cooperation. The Members mutually agree
to cooperate fully in providing to each other the
necessary information for the preparation of the
Combined Reports and the calculation of tax payments and
agree to use their best efforts to ensure that all
Combined Reports are timely filed and required tax
payments are timely made. Each Member responsible for
the preparation of a Combined Report under this
Agreement agrees to provide draft copies of such reports
to the other Members to be included in such Combined
Report (or the Representatives of such Members) for
their review a reasonable time before the required date
of filing.
c. Treatment of Items on Return: Cooperation
in Audits. The appropriate treatment on each Combined
Report of items of income, gain, loss, deduction or
credit (each an "Item") concerning which there is
disagreement between the Members shall ultimately be
determined by the BHC Representative, which
determination may be made in its sole discretion,
provided that the treatment of each such Item is
reasonable and adopted in good faith. Each Member
agrees to cooperate fully with the other Members in
resolving any issue that may arise in connection with
any audit, claim, investigation, litigation or other
dispute by or with a taxing authority, including a claim
for refund (each a "Contest"), with respect to a
Combined Report.
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d. Agency. Each Member of the BHC Group
hereby appoints the BHC Representative as its agent, and
each Member of the UTV Group hereby appoints the UTV
Representative as its agent, for purposes of asserting
its rights and performing its obligations under this
Agreement, including, without limitation, the right and
power to receive and transmit information, to make and
receive payments, and to execute Combined Reports and
other documents as provided for in this Agreement (to
the extent permitted by applicable law), and for
purposes of the amendment of this Agreement and the
exhibits thereto.
2. Responsibility for Filings and Payments.
a. Entity Filing Combined Report. The BHC
Representative and the UTV Representative shall jointly
determine the Member of the Combined Group responsible
for the preparation and filing of each Combined Report
to be filed by the Members, subject to the requirements
of applicable law and the provisions of this Agreement.
It is anticipated that, except as may otherwise be
agreed upon by the BHC Representative and the UTV
Representative or as may be required by applicable law:
(i) the BHC Representative, or another Member of the BHC
Group, will file any Combined Report which includes the
BHC Representative in California and in any other State
in which the BHC Representative is permitted by law to
do so; and (ii) the UTV Representative will file any
Combined Report, not described in clause (i), which
includes the UTV Representative in Arizona, Minnesota,
Utah, and
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any other State in which the UTV
Representative is permitted by law to do so. It is also
anticipated that KCOP Television, Inc. will be
designated the "key corporation" for purposes of the
filing of Combined Reports in California.
b. Responsibilities of Member Filing Combined
Report. Except as may otherwise be agreed upon, each
Member designated hereunder as responsible for filing a
Combined Report shall: file such Combined Report and
any related form or other document (including, without
limitation, any form required in connection with the
payment of estimated taxes, and any request for
extension of time to file); pay any Tax and any
interest, addition to tax or penalty relating thereto
(collectively "Related Amounts") shown on such Combined
Report, any estimated Tax payment relating to the
taxable period covered by such Combined Report, and any
additional Tax and Related Amounts required to be paid
with respect to such period following the filing of a
Combined Report; and file any amended return or claim
for refund with respect to such period and pay or
receive any resulting additional Tax or refund of Tax
and Related Amounts. The Member responsible for filing a
Combined Report for a taxable period shall also respond
to any notice or inquiry from a taxing authority
regarding such report and represent the Combined Group
in any Contest regarding such period or report. Each
Representative shall provide promptly (or shall cause a
Member of its Group to provide promptly) copies of any
notice of deficiency
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or other significant communication
from a taxing authority regarding Taxes that is received
by the Representative or any Member of its Group to the
other Representative, together with the attachments
thereto, and shall keep the other Representative fully
apprised of developments in any Contest. If the Member
representing the Combined Group in a Contest is other
than the BHC Representative, such Member shall cooperate
with the BHC Representative in such manner as the BHC
Representative may reasonably request in determining the
positions to be adopted and filings to be made in such
Contest.
3. Apportionment of Tax Obligations.
a. General. With respect to the Tax imposed
for a taxable period by each State in which a Combined
Report will be filed, the amount to be paid by the UTV
Group under this Agreement shall be the amount of Tax
and Related Amounts that would have been shown on a
Combined Report for the Members of the UTV Group for
such period for each such State (each, a "UTV Pro Forma
Return"), prepared on the basis of a unitary group
comprised solely of members of the UTV Group. Each UTV
Pro Forma Return shall be prepared by the UTV
Representative on a basis consistent, to the extent
feasible, with the tax accounting principles and
positions heretofore applied by Members of the UTV Group
in the preparation of tax returns, and with the
principles and positions applied in the preparation of
Combined Reports including such Members; and any
inconsistency with such
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principles and positions as
previously reflected shall be identified as such before
or upon the transmittal of a UTV Pro Forma Return to the
BHC Representative, which transmittal shall occur a
reasonable time before the Combined Report for such
period is due.
Each UTV Pro Forma Return shall be subject to
review by the BHC Representative, and the
Representatives shall use reasonable best efforts to
resolve any differences between them regarding the
treatment of any item. If the BHC Representative
concludes that (i) there is not "substantial authority"
for such treatment (as determined by reference to the
principles of the definition of substantial authority in
Section 6662 of the Internal Revenue Code of 1986, as
amended (the "Code") and the Regulations thereunder), or
(ii) that such treatment, if reflected on a Combined
Report, may conflict with (in a manner contrary to
applicable law) or otherwise undermine positions
reflected or to be reflected on Combined Reports
previously filed or to be filed by the Combined Group
for the current period, the UTV Pro Forma Return shall
be revised accordingly, with such assistance from the
UTV Representative as the BHC Representative may
reasonably request. However, such revision shall not
affect the amounts to be paid by the UTV Group under
this Agreement with respect to such UTV Pro Forma
Return, which shall be based on the return as initially
prepared by the UTV Representative, provided that each
position reflected in such return has a reasonable
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basis and is adopted in good faith.
b. Costs. The costs incurred by Members to
provide information required for the preparation of
Combined Reports, and all employee compensation and
other overhead costs incurred by Members relating to the
preparation of Combined Reports and other matters
addressed herein, shall be borne by the Member providing
such information or incurring such compensation or other
overhead costs, and shall not be reimbursable by any
other Member. All other costs and expenses incurred by
Members in connection with the preparation and filing of
a Combined Report or in any Contest relating thereto,
including, without limitation, all fees and
disbursements of attorneys, accountants and expert
witnesses (collectively, "Costs"), shall be paid or
reimbursed by the Member responsible for filing such
Combined Report, subject to the following two sentences.
Any Costs incurred in a Contest to defend the position
that the Members that filed the Combined Report at issue
constitute a unitary group eligible to file a Combined
Report shall be paid or reimbursed by the BHC
Representative. In addition, if the Member that filed a
Combined Report does not desire to defend at its cost a
position reflected on a Combined Report that is
challenged by a taxing authority, any other Member may
request that such position be defended by the filing
Member, provided that such other Member undertakes to
bear all Costs relating thereto.
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4. Payment. In the case of California or any
other State in which the BHC Representative or another
Member of the BHC Group is responsible for filing the
Combined Report, the UTV Representative will remit to
the BHC Representative or its designee the amount of Tax
and Related Amounts for which the UTV Group is
responsible under Section 3.
If, as a result of the settlement or other
conclusion of a Contest (including a claim for refund),
an amount of Tax is required to be paid or is refunded,
a corresponding adjustment shall be made between the UTV
Representative and the BHC Representative to restore the
BHC Group and the UTV Group, to the extent possible, to
the same position (disregarding the time value of money)
as if the treatment of an Item or Items on the basis of
which Tax is being paid or refunded had been reflected
on the relevant UTV Pro Forma Return and Combined
Report. If the Contest is resolved on the basis of the
payment of Tax or a refund in an amount less than the
amount originally claimed to be due or refundable, the
resulting payment or refund will be apportioned to the
UTV Representative and BHC Representative on a pro rata
basis between the two Groups as determined by reference
to the manner in which an amount equal to the original
proposed assessment or refund would have been
apportioned. Any Related Amount with respect to an
amount of Tax apportioned under this Section will be
determined in a manner that reasonably approximates the
method used by the taxing authority. Remittance
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of any audit settlement payment or refund will be in accordance
with Sections 2 and 3 as applicable.
5. Time and Form of Payment.
a. Time. In general, each Representative
shall make any payment due hereunder to the other
Representative at least one business day prior to the
date on which payment of the Tax obligation (including
an estimated Tax payment, payment made with an
application for extension of time to file, or audit
settlement payment) to which such intercompany payment
relates is required to be made to the taxing authority.
The preceding sentence shall not apply, however, with
respect to any payment of a Tax obligation that
accompanies the filing of a Combined Report. The
difference, if any, between the aggregate amount of the
estimated and other interim payments made on behalf of a
Group with respect to a Tax for a taxable period and the
Group's share thereof as determined under Section 3,
will be paid or refunded by and to the appropriate
Representatives within 15 business days after the filing
of the Combined Report. Refunds with respect to audit
settlements will be remitted to the respective
Representatives within 10 business days after receipt
from the taxing authority.
b. Form. All payments to be made hereunder
shall be made in U.S. Dollars in immediately available
funds.
6. Interpretation: Amendments. The Members agree
to negotiate in good faith to attempt to resolve any
differences between them regarding the interpretation of
this Agreement, and
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to consider such amendment or
amendments of this Agreement as may prove appropriate
over time. Any such amendment shall be in writing,
shall become effective and binding upon the parties
hereto upon the execution thereof by the BHC
Representative and the UTV Representative, and shall
apply with respect to taxable periods ending after the
date of such Amendment or as otherwise set forth in such
Amendment.
7. Delegation of Duties; Change in
Representative. Each Representative may cause an
obligation of such Representative under this Agreement
to be assumed and discharged by another member of the
Group of which the Representative is a Member, if such
other Member is reasonably believed by such
Representative to be capable of discharging such
obligation; provided, however, that except under the
circumstances stated below in this Section such
assumption shall not relieve the Representative of any
of its obligations hereunder. A Representative may at
any time designate another Member of the Group of which
the Representative is a Member as the successor
Representative for that Group, by 30 days' advance
written notice to the other Representative. Such change
shall be effective for all purposes under this Agreement
on the 3Oth day following the date on which notice is
given.
8. Joint and Several Liability: Indemnification.
a. Liability. The Members of the BHC Group
shall have joint and several liability for all
obligations of each Member of the BHC Group under this
Agreement, and the Members of
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the UTV Group shall have
joint and several liability for all obligations of each
Member of the UTV Group under this Agreement.
b. Indemnification. The BHC Group hereby
agrees to indemnify and hold harmless the UTV Group with
respect to any claim for collection of any amount of Tax
or Related Amount required to be paid by the BHC Group
under this Agreement; and the UTV Group hereby agrees to
indemnify and hold harmless the BHC Group with respect
to any claim for collection of any amount of Tax or
Related Amount required to be paid by the UTV Group
under this Agreement.
9. Applicable Law; Assignment; No Third Party
Beneficiary. This Agreement and its validity,
construction and performance will be governed by the
laws of the State of Delaware, without regard to the
principles thereof regarding conflicts of law, and shall
be binding upon and shall inure to the benefit of the
parties hereto and their respective successors and
permitted assigns. The Agreement may not be assigned by
any party thereto (other than to an Affiliate of such
party) except with the prior consent of the
Representative of the Group of which the assignor is a
Member, and any purported assignment without such
consent shall be null and void and of no force or
effect. Notice of any such assignment shall be provided
promptly by such Representative to the Other
Representative. Nothing herein shall confer or is
intended to confer on any person which is not a party to
this Agreement any rights under this Agreement.
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10. Term of Agreement; Termination.
a. Term of Agreement. This Agreement shall
be effective as of the Effective Date and shall apply
with respect to all Tax returns and reports filed or
required to be filed and payments required to be made
for taxable periods beginning on or after that date and
before the fifth anniversary of such date (the "Initial
Term"), subject to termination as provided below in this
Section. On the fourth anniversary of the Effective
Date and on each succeeding anniversary of such date,
the Initial Term shall be extended by one year, unless
notice of termination is given prior to such date.
b. Termination. Either Representative may
terminate this Agreement by notice to the other
Representative, such termination to be effective as to
all members of the Combined Group as of the date (the
"Termination Date") specified in such notice, which
shall be not less than 90 days after the date of such
notice. Such termination shall be effective with
respect to taxable periods beginning on or after the
Termination Date, but shall not affect the rights and
obligations of the Members of the Combined Group for
periods beginning before such date. If the parties
hereto do not enter into a new tax sharing agreement
with respect to Taxes for taxable periods beginning on
and after the Termination Date, then the BHC Group and
UTV Group will endeavor, to the greatest extent
possible, to file Tax reports and returns separately.
If combined filings are required by a state taxing
14
authority with respect to a Tax, the parties hereto will
use their reasonable best efforts to agree upon an
equitable allocation of the obligations of each Member
in relation to such Tax, including without limitation
(i) the responsibility to file returns and reports and
(ii) payments to be made to a Member for the use of tax
attributes of the Member to offset income of other
Members. If the parties are unable to agree upon an
allocation of such obligations, the issues in
controversy shall be submitted to arbitration in the
City of New York, New York before a panel of three
arbitrators in accordance with the rules of the American
Arbitration Association then pertaining in the City of
New York. In any such arbitration, one arbitrator shall
be selected by each Representative and the third
arbitrator shall be selected by the first two
arbitrators. The arbitration award shall be final and
binding upon the parties and judgment thereon may be
entered in any court having jurisdiction thereof. The
arbitrators shall be deemed to possess the power to
issue mandatory orders and restraining orders in
connection with such arbitration.
11. Notices. Any notice, demand, claim or
communication under this Agreement shall be in writing
and shall be deemed to have been given (i) upon the
delivery thereof, if delivered by messenger; (ii) when
received, if sent by telecopier (acknowledged by
customary electronic means); (iii) on the first business
day after being sent by nationally recognized commercial
courier service; (iv) three business days after being mailed
15
through the United States Postal Service by
registered or certified mail, postage prepaid; or (v)
upon receipt, if mailed through the United States Postal
Service by ordinary first class mail, postage prepaid,
to the other Representative at the following address (or
at such other address as one Representative may specify
by notice to the other):
If to the BHC Representative, to:
BHC Communications, Inc.
Attention: Xxxxxx X. Xxxxxx, Vice
President and Treasurer
0000 Xxxx Xxxxxx Xxxx, Xxxxx 000
Xxxx Xxxxx, XX 00000-0000
Telecopier: (000) 000-0000
If to the UTV Representative, to:
United Television, Inc.
Attention: Xxxxx X. Xxxxxxx, Executive
Vice President, Chief Financial
Officer and Secretary
000 X. Xxxxx Xxxxx, 0xx Xxxxx
Xxxxxxx Xxxxx, XX 00000-0000
Telecopier: (000) 000-0000
12. Severability. If any provision in this
Agreement is held to be invalid, void or unenforceable,
(i) the remainder of the provisions in this Agreement
shall remain in full force and effect and shall in no
way be affected, impaired or invalidated, and (ii) to
the fullest extent possible, the provisions of this
Agreement (including, without limitation, all portions
of any section of this Agreement containing any such
provision held to be invalid, void or unenforceable that
are not themselves invalid, void or unenforceable) shall
be construed so as to give effect to the intent
manifested by the provisions held invalid,
16
void or unenforceable.
13. Counterparts. This Agreement may be executed
in one or more counterparts, each of which shall be
deemed an original.
14. Complete Agreement. This Agreement (including
the exhibits thereto) sets forth the entire agreement
and understanding of the parties relating to the subject
matter hereof, and supersedes all prior agreements,
arrangements and understandings, written or oral,
between the parties.
15. Construction. The headings of the sections,
paragraphs and exhibits of this Agreement are inserted
for convenience of reference only and shall not
constitute a part hereof.
16. Consent to Jurisdiction. Each party hereto
hereby irrevocably submits to the jurisdiction of, and
agrees that any suit shall be brought only in the state
and federal courts located in the County of New Castle,
State of Delaware for the purpose of any suit, action or
other proceeding arising out of or based upon this
Agreement.
17. Affiliates. For purposes of this Agreement,
an "Affiliate" of a Member means any corporation that is
a member of the "affiliated group," as defined in
Section 1504 of the Code, of which such Member is a
member.
IN WITNESS WHEREOF, the parties have duly
executed this Agreement on the date first written above.
BHC COMMUNICATIONS, INC.
By:_________________________
Xxxxxx X. Xxxxxx
Vice President and
Treasurer
BHC NETWORK PARTNER, INC.
By:_________________________
Name:____________________
Title:___________________
BHC NETWORK PARTNER II, INC.
By:_________________________
Name:____________________
Title:___________________
BHC NETWORK PARTNER III, INC.
By:_________________________
Name:____________________
Title:___________________
XXXXX-CRAFT BROADCASTING, INC.
By:_________________________
Name:____________________
Title:___________________
XXXXX-CRAFT TELEVISION, INC.
By:_________________________
Name:____________________
Title:___________________
XXXXX-CRAFT TELEVISION
PRODUCTIONS, INC.
By:_________________________
Name:____________________
Title:___________________
XXXXXX, INC.
By:_________________________
Name:____________________
Title:___________________
JUST U PRODUCTIONS, INC.
By:_________________________
Name:____________________
Title:___________________
KCOP TELEVISION, INC.
By:_________________________
Name:____________________
Title:___________________
MAGIC MOLEHILL PRODUCTIONS,
INC.
By:_________________________
Name:____________________
Title:___________________
OREGON TELEVISION, INC.
By:_________________________
Name:____________________
Title:___________________
PINELANDS, INC.
By:_________________________
Name:____________________
Title:___________________
PINELANDS BROADCASTING, INC.
By:_________________________
Name:____________________
Title:___________________
XXXXXX PRODUCTIONS, INC.
By:_________________________
Name:____________________
Title:___________________
U JUST U PUBLISHING, INC.
By:_________________________
Name:____________________
Title:___________________
U MUSIC, INC.
By:_________________________
Name:____________________
Title:___________________
WWOR-TV, INC.
By:_________________________
Name:____________________
Title:___________________
UNITED TELEVISION, INC.
By:_________________________
Name:____________________
Title:___________________
UEG PRODUCTIONS, INC.
By:_________________________
Name:____________________
Title:___________________
UTV OF SAN ANTONIO, INC.
By:_________________________
Name:____________________
Title:___________________
UTV OF SAN FRANCISCO, INC.
By:_________________________
Name:____________________
Title:___________________
UNITED ENTERTAINMENT GROUP,
INC.
By:_________________________
Name:____________________
Title:___________________
UNITED TELEVISION SALES, INC.
By:_________________________
Name:____________________
Title:___________________
SECTION 1. Intention to File Combined Reports.. . . . . 2
SECTION 2. Responsibility for Filings and Payments. . . 5
SECTION 3. Apportionment of Tax Obligations . . . . . . 7
SECTION 4. Payment. . . . . . . . . . . . . . . . . . . 10
SECTION 5. Time and Form of Payment . . . . . . . . . . 11
SECTION 6. Interpretation: Amendments . . . . . . . . . 12
SECTION 7. Delegation of Duties; Change in
Representative. . . . . . . . . . . . . . . . . . . . . . 12
SECTION 8. Joint and Several Liability:
Indemnification . . . . . . . . . . . . . . . . . . . . . 13
SECTION 9. Applicable Law; Assignment; No Third Party
Beneficiary. . . . . . . . . . . . . . . . . . 13
SECTION 10. Term of Agreement; Termination . . . . . . . 14
SECTION 11. Notices. . . . . . . . . . . . . . . . . . . 16
SECTION 12. Severability . . . . . . . . . . . . . . . . 17
SECTION 13. Counterparts . . . . . . . . . . . . . . . . 17
SECTION 14. Complete Agreement . . . . . . . . . . . . . 17
SECTION 15. Construction . . . . . . . . . . . . . . . . 18
SECTION 16. Consent to Jurisdiction. . . . . . . . . . . 18
SECTION 17. Affiliates . . . . . . . . . . . . . . . . . 18
