EXHIBIT 99.5
AMENDED AND RESTATED
AGREEMENT FOR
THE ALLOCATION OF UNITED STATES INCOME TAXES
This Amended and Restated Agreement for the Allocation of United States
Income Taxes (this "Agreement") is made between General Motors Corporation, a
Delaware corporation ("GM"), and Xxxxxx Electronics Corporation, a Delaware
corporation ("Xxxxxx"), for the purpose of amending and restating the Agreement
for the Allocation of United States Income Taxes that was entered into by and
between GM and Xxxxxx on December 17, 1997.
RECITALS
1. GM and Xxxxxx intend that capitalized terms shall have the meaning set
forth in Article I of this Agreement.
2. GM is the common parent corporation of the GM Group, which includes
Xxxxxx.
3. GM, HEC, Delco Electronics Corporation ("Delco") and HE Holdings, Inc.
("HEH") are parties to that certain Agreement for the Allocation of
United States Federal Income Taxes, effective as of December 29, 1985
(the "1985 TAA"), a conformed copy of which is attached hereto as
Exhibit A.
4. GM, Xxxxxx and Delco are parties to that certain Agreement for the
Allocation of United States Income Taxes, effective as of December 17,
1997 (the "1997 TAA"), a conformed copy of which is attached hereto as
Exhibit B.
5. Before the Raytheon Spin-Off, the GM Group included the HEC Group. The
HEC Group included (i) Delco and its subsidiaries, (ii) HEH and its
subsidiaries and (iii) Xxxxxx and its subsidiaries.
6. As part of the Raytheon Spin-Off, (i) HEC merged with and into GM, (ii)
Delco and HEH became direct subsidiaries of GM, (iii) HEH distributed
all of the capital stock of Xxxxxx to GM and (iv) GM distributed all of
its HEH capital stock to its $1-2/3 common stockholders and to its
Class H common stockholders in a tax-free spin-off under Section 355 of
the Code.
7. Following the Raytheon Spin-Off, Raytheon Company merged with and into
HEH, and HEH changed its name to Raytheon Company ("New Raytheon").
8. As a result of the transactions described in Recitals 6 and 7, the
former HEC Group includes only Xxxxxx and its subsidiaries.
9. GM, Xxxxxx and New Raytheon are parties to that certain Tax Sharing
Agreement, dated December 17, 1997 (the "Raytheon Agreement"), a
conformed copy of which is attached hereto as Exhibit C.
10. GM and Xxxxxx are parties to the Implementation Agreement and the
Separation Agreement, pursuant to which GM will effect the Spin-Off of
Xxxxxx.
11. GM and Xxxxxx intend to supersede the 1997 TAA with this Agreement, in
order to provide for, among other things, (i) the determination and
allocation of federal, state and local income tax liabilities, (ii) the
payment of any amounts between GM and Xxxxxx in respect of the
determination and allocation of income tax liabilities, (iii) the
allocation between GM and Xxxxxx of tax attributes available to be
carried forward to Separate Return Tax Periods, (iv) the rights, duties
and responsibilities of the parties in connection with audits,
protests, appeals, litigation and other proceedings with respect to the
Consolidated Tax Periods, (v) the treatment of any carryback item from
a Separate Return Tax Period to a Consolidated Tax Period and (vi) the
relationship of the parties as it relates to income tax matters from
the Effective Date until the date of the Final Determination of the
last of the Consolidated Tax Period income tax liabilities to be so
finally determined.
NOW THEREFORE, in consideration of the mutual covenants contained
herein and other good and valuable consideration, the parties hereto do hereby
agree as follows:
ARTICLE I
Definitions
"Actual Separate Xxxxxx Group Tax Liability" means the Xxxxxx Group consolidated
federal income tax liability calculated using the Assumed Rate, determined as if
the Xxxxxx Group were a separate affiliated group of corporations filing a
consolidated federal income tax return, taking into account the items of income,
gain, deduction, loss and credit of the Xxxxxx Group as reported in the GM Group
consolidated income tax returns as actually filed or as adjusted pursuant to a
Final Determination; provided, however, that (i) applicable limitations on
deductions or credits shall be determined on the basis of the actual items of
the Xxxxxx Group without regard to such items of other members of the GM Group
and (ii) for Consolidated Tax Periods ending after December 31, 2000, "Actual
Separate Xxxxxx Group Tax Liability" shall be determined in the manner
prescribed in Section 3.6.
"Agreement" means this Amended and Restated Agreement for the Allocation of
United States Income Taxes.
"Assumed Rate" means (i) with respect to any Consolidated Tax Period ending
after December 31, 2000, twenty percent (20%) and (ii) with respect to any other
Consolidated Tax Period, the highest rate of tax specified in subsection (b) of
Section 11 of the Code.
"Business Day" means any day other than a Saturday, a Sunday or a day on which
banking institutions located in the States of Michigan or California are
authorized or obligated by law or executive order to close.
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"Carryforward Tax Attribute" means a deductible or creditable consolidated tax
attribute, including (i) a consolidated net operating loss, a consolidated net
capital loss, a consolidated unused investment credit, a consolidated unused
foreign tax credit or a consolidated excess charitable contribution (as such
terms are defined in the Regulations), and (ii) the minimum tax credit, or other
general business credits, that can be carried forward to a Separate Return Tax
Period (or, for purposes of Section 5.4 and Section 8.1(c), that can be carried
forward to a tax period beginning after the date of the Raytheon Spin-Off).
"Code" means the United States Internal Revenue Code of 1986, as amended.
"Consolidated Return Item" means an item of income, gain, deduction, loss or
credit that is computed or subject to a limitation only on a federal tax
consolidated or state or local consolidated or combined basis, including
charitable contributions, capital losses, foreign tax credits, research and
experimentation credits and Code Section 1231 gains and losses.
"Consolidated State or Local Income Tax Returns" means consolidated, unitary or
combined state or local income, franchise, single business, gross receipts or
other tax returns or reports, based on or measured in whole or in part by
reference to gross receipts, gross income or net income, and includes
consolidated, unitary or combined capital or net worth tax returns. Tax returns
with respect to telecommunications, gross receipts transactional taxes and sales
and use taxes, or other similar types of transactional taxes, shall not be
considered "Consolidated State or Local Income Tax Returns" for purposes of this
Agreement.
"Consolidated Tax Period" means any tax period of the GM Group ending before, or
with, or that includes, the Effective Date, during which any member of the HEC
Group or the Xxxxxx Group was a member of the GM Group, or, as the context may
require, all such periods collectively.
"Delco" means Delco Electronics Corporation, a Delaware corporation.
"Delco Group" means Delco and all corporations that from time to time join with
Delco in filing a consolidated federal income tax return with Delco as the
common parent corporation of that group.
"Effective Date" shall have the meaning set forth in Section 2.1 of this
Agreement.
"Final Determination" means the final resolution of liability for any Income Tax
for a taxable period (i) by IRS Form 870 or 870-AD (or any successor forms
thereto), on the date of acceptance by or on behalf of the taxpayer, or by a
comparable form under the laws of other jurisdictions; except that a Form 870 or
870-AD or comparable form that reserves (whether by its terms or by operation of
law) the right of the taxpayer to file a claim for refund and/or the right of
the taxing authority to assert a further deficiency shall not constitute a Final
Determination; (ii) by a decision, judgment, decree or other order by a court of
competent jurisdiction, which has become final and unappealable; (iii) by a
closing agreement or accepted offer in compromise under Section 7121 or 7122 of
the Code, or comparable agreements under the laws of other jurisdictions; (iv)
by any allowance of a refund or credit in respect of an overpayment of Income
Tax, but only after the expiration of all periods during which such refund may
be recovered (including by way of offset) by the taxing jurisdiction; or (v) by
any
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other final disposition, including by reason of the expiration of the applicable
statute of limitations or by mutual agreement of the parties.
"GM" means General Motors Corporation, a Delaware corporation.
"GM Group" means GM and all corporations that from time to time join with GM in
filing a consolidated federal income tax return with GM as the common parent
corporation of that group.
"GM Group Tax Liability" means the consolidated federal, state and local income
tax liability of the GM Group, determined as of the end of the applicable tax
period, determined in accordance with Section 1.1502-1 et seq. of the
Regulations.
"GMHE Group" is the term used in the 1985 TAA to refer to the HEC Group.
"HEC" means old Xxxxxx Electronics Corporation, a Delaware corporation (formerly
XX Xxxxxx Electronics Corporation) that merged into GM in connection with the
Raytheon Spin-Off.
"HEH" means HE Holdings, Inc., a Delaware corporation, formerly known as Xxxxxx
Aircraft Company.
"HEH Group" means the HE Holdings Group immediately before the distribution by
GM of the HEH Class A common stock to GM's common stockholders in connection
with the Raytheon Spin-Off.
"HEC Group" means that group of corporations existing before the Raytheon
Spin-Off that consisted of HEC and all corporations which from time to time
would join with HEC in filing a consolidated federal income tax return, with HEC
as the common parent corporation of that group if HEC were not a member of the
GM Group. The HEC Group is referred to as the GMHE Group in the 1985 TAA, and
included HEH (New Raytheon), Delco and Xxxxxx.
"Xxxxxx" means Xxxxxx Electronics Corporation, a Delaware corporation, formerly
known as Xxxxxx Network Systems, Inc., and referred to as "Telecom" in the 1997
TAA.
"Xxxxxx Group" means Xxxxxx and all corporations that, from time to time, would
join with Xxxxxx in filing a consolidated federal income tax return with Xxxxxx
as the common parent corporation of that group if Xxxxxx were not a member of
the GM Group. The Xxxxxx Group is referred to as the Telecom Group in the 1997
TAA.
"Xxxxxx Group State Tax Liability" shall mean, with respect to any state or
local return that any member of the GM Group and any member of the Xxxxxx Group
files on a consolidated, combined or unitary basis, the Xxxxxx Group
consolidated state or local income tax liability, determined as of the end of
the applicable tax period as if the Xxxxxx Group were a separate group of
corporations filing a consolidated, combined or unitary state or local income
tax return, including any elections which have been or could be made by Xxxxxx
pursuant to State Law or State Regulations.
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"Xxxxxx Separate Company Carryforward Tax Attribute" means the Carryforward Tax
Attributes of the Xxxxxx Group that would result if the tax liability and tax
items of the Xxxxxx Group for all taxable years after the Raytheon Spinoff were
computed on the basis of the Actual Separate Xxxxxx Group Tax Liability.
"Implementation Agreement" means that certain agreement by and among GM, Xxxxxx,
and EchoStar Communications Corporation, dated as of October 27, 2001.
"Income Tax" means any United States federal, state or local (but not foreign)
tax, charge, fee, levy or other assessment which is imposed on or determined
with reference to (i) gross or net income or profits (including, but not limited
to, the Michigan Single Business Tax and capital gains, gross receipts or
minimum tax, but not including sales or use, rental, value added, property
(tangible and intangible), excise, stamp or telecommunications taxes) or (ii)
multiple bases, including corporate franchise, gross receipts, net worth,
privilege, doing business or occupation taxes, if one of the bases is listed in
clause (i), together with any interest (including look-back interest reported
pursuant to Section 1.460-6(f)(2) of the Regulations) and penalties, fines,
additions to tax or additional amounts imposed by any taxing authority.
"Merger Agreement" means that certain agreement by and among Xxxxxx and EchoStar
Communications Corporation, dated as of October 27, 2001.
"New Raytheon" means HEH determined immediately after the merger of Raytheon
Company into HEH and the change of HEH's name to Raytheon Company.
"New Raytheon Group" means New Raytheon and all corporations that from time to
time join with New Raytheon in filing a consolidated federal income tax return
with New Raytheon as the common parent corporation of that group.
"Raytheon Agreement" has the meaning ascribed to it in the recitals.
"Raytheon Spin-Off" means the distribution by GM of the HEH Class A common stock
to GM's common stockholders in a tax-free transaction under Section 355 of the
Code, and related transactions, including the merger of HEC into GM and the
distribution of Xxxxxx capital stock by HEH to GM.
"Regulations" means the final or temporary regulations promulgated under the
Code, in effect from time to time.
"Separate Return Tax Period" means (i) any tax period of Xxxxxx or any member of
the Xxxxxx Group not included in a Consolidated Tax Period or (ii) any tax
period of GM or any member of the GM Group that does not include any member of
the Xxxxxx Group.
"Separation Agreement" means that certain agreement by and between GM and
Xxxxxx, dated as of October 27, 2001.
"Spin-Off" means the distribution by GM of Xxxxxx capital stock to GM's
stockholders as contemplated by Section 1.5 of the Implementation Agreement.
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"State Law" means provisions of state or local Income Tax law that are similar
to provisions of the Code, determined on a jurisdiction-by-jurisdiction basis,
as amended from time to time.
"State Regulations" means final or temporary Income Tax regulations under State
Law, in effect from time to time.
"State Tax Liability" means the liability in connection with consolidated,
unitary or combined state or local Income Tax.
"1985 TAA" has the meaning ascribed to it in the recitals.
"1997 TAA" has the meaning ascribed to it in the recitals.
ARTICLE II
General Provisions; Effective Date and Prior Agreements
Section 2.1 Effective Date. This Agreement is effective on the date on
which the Merger Effective Time (as defined in the Merger Agreement) occurs (the
"Effective Date"). This Agreement shall apply to all Consolidated Tax Periods as
specifically set forth herein. This Agreement will remain in full force and
effect until the Final Determination of the GM Group Tax Liability has been made
for each Consolidated Tax Period.
Section 2.2 General Provision. Except as otherwise provided in this
Agreement, GM and Xxxxxx agree to handle tax matters with respect to
Consolidated Tax Periods, including tax return preparation, audits, appeals and
litigation, in a manner that is consistent with the past practice of GM and
Xxxxxx before the Spin-Off.
Section 2.3 Prior and Continuing Tax Allocation Agreements.
(a) Except as otherwise provided in this Agreement, GM and
Xxxxxx agree and acknowledge that the Spin-Off will have no effect on the
relationship between them for any of the Consolidated Tax Periods. GM and Xxxxxx
intend this Agreement to supersede the 1997 TAA (but not the 1985 TAA or the
Raytheon Agreement, which shall remain in full force and effect except as
specifically modified by the provisions of this Agreement), and to confirm and
clarify their understandings with respect to (i) matters relating to the
determination and allocation of any federal, state and local (but not foreign)
Income Tax liabilities with respect to all Consolidated Tax Periods and (ii) the
payment of any amounts between GM and Xxxxxx with respect to any such
determination and allocation.
(b) From and after December 17, 1997, the rights and
obligations of GM, Xxxxxx and the members of the HEH Group with respect to tax
allocation matters among New Raytheon, Xxxxxx and GM will continue to be
determined by the Raytheon Agreement. The rights and obligations of GM and
Xxxxxx, as between themselves, in respect of the Raytheon Agreement are governed
by Section 8.1 of this Agreement.
(c) Xxxxxx is the successor to HEC with respect to all tax
allocation matters and, with respect to Consolidated Tax Periods, has all of the
rights and obligations that HEC
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would have had under the 1985 TAA and under additional agreements entered into
among the parties to the 1985 TAA from time to time, as if HEC had not merged
into GM.
(d) Except as provided in this Section 2.3, the 1985 TAA will
remain in full force and effect for all Consolidated Tax Periods, until the GM
Group Tax Liability for each of those tax periods has been established by a
Final Determination. All amounts that would have been payable to or by HEC under
the 1985 TAA will be payable to or by Xxxxxx.
Section 2.4 Application of the Code. Unless otherwise indicated, the
words and concepts used in this Agreement shall be given the same definitions
and meanings ascribed to them by the Code and the Regulations. Any alteration,
modification, addition, deletion or other change in the applicable provisions of
the Code or the Regulations automatically will be applicable to this Agreement.
Unless otherwise indicated, all references herein to a particular Section of the
Code or the Regulations will include any successor provision designated by a
different or additional Section reference.
ARTICLE III
Tax Payments; Consolidated Returns
Section 3.1 Agreement to File. For all Consolidated Tax Periods, GM and
Xxxxxx (and all members of the Xxxxxx Group) hereby agree to file consolidated
federal income tax returns in the United States, and to execute such documents
and take such actions as are necessary or appropriate in connection with filing
those returns.
Section 3.2 Elections. For purposes of the Income Tax returns actually
filed by the GM Group, all elections that are available to the GM Group under
the Regulations relating to the filing of consolidated federal income tax
returns or comparable State Regulations will be made by GM in its sole
discretion, and all determinations of Income Tax return filing positions will be
made by GM in its sole discretion.
Section 3.3 Payment of Tax to Internal Revenue Service or State or
Local Taxing Authorities. For each tax year covered by this Agreement, GM will
pay to the Internal Revenue Service, or to any other payee that may be required
by the Code, State Law or State Regulations, the GM Group Tax Liability as shown
on the consolidated federal income tax return or Consolidated State or Local
Income Tax Return filed with the appropriate taxing authority.
Section 3.4 Payment of Actual Separate Xxxxxx Group Tax Liability:
Consolidated Returns.
(a) Estimated Tax Calculation. Not less than ten (10) Business
Days prior to the date on which GM is required to make payments of estimated tax
(as defined in Section 6655 of the Code or a similar provision of State Law) on
behalf of the GM Group for any quarter that is part of a Consolidated Tax
Period, Xxxxxx shall submit to GM a calculation of the separate Xxxxxx Group
estimated tax, determined on the basis of the estimated Actual Separate Xxxxxx
Group Tax Liability or the estimated Xxxxxx Group State Tax Liability, as the
case may be.
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(b) Estimated Tax Payment. On or before the due date of GM's
payment of estimated tax, Xxxxxx will pay to GM the amount, if any, shown in the
calculation of Xxxxxx Group estimated tax described in (a) above.
(c) Underpayment Penalty. If an additional tax would have been
imposed on the Xxxxxx Group under Section 6655 or a similar provision of State
Law because of an underpayment of estimated tax had the Xxxxxx Group paid the
calculated separate Xxxxxx Group estimated tax and incurred the Actual Separate
Xxxxxx Group Tax Liability or the Xxxxxx Group State Tax Liability, as the case
may be, Xxxxxx will pay to GM the amount of the additional tax on the date the
additional tax would have been due regardless of whether the GM Group Tax
Liability is increased under Section 6655 of the Code or similar provision of
State Law.
(d) Tax Return Payment. Not later than the due date (including
extensions) for filing the GM Group consolidated federal income tax return for
any Consolidated Tax Period, Xxxxxx shall pay to GM or GM shall pay to Xxxxxx,
as the circumstances warrant, the difference between the Actual Separate Xxxxxx
Group Tax Liability and the estimated tax payments previously made by Xxxxxx
with respect to the relevant tax liability.
(e) State or Local Income Tax Return Payment. On or before
January 15 of the second year following each Consolidated Tax Period, Xxxxxx
will pay to GM or GM will pay to Xxxxxx, as appropriate, the difference between
the aggregate Xxxxxx Group State Tax Liability for such tax year and the
estimated tax payments paid by Xxxxxx for that tax year.
Section 3.5 Final Consolidated Tax Period. Notwithstanding anything in
this Agreement to the contrary, the Actual Separate Xxxxxx Group Tax Liability
and, to the extent applicable, the Xxxxxx Group State Tax Liability for the
Consolidated Tax Period during which Xxxxxx ceases to be a member of the GM
Group shall be determined pursuant to Section 1.1502-76 of the Regulations (and
similar provisions, if any, of State Law or State Regulations) by including only
that portion of the taxable year ending on and including the date on which
Xxxxxx ceases to be a member of the GM Group, based on a closing of the books
for income tax purposes, and, immediately before the Spin-Off, items of income,
gain, loss, deduction and credit will be taken into account by the Xxxxxx Group
(to the extent not previously taken into account in the computation of the
Actual Separate Xxxxxx Group Tax Liability or the Xxxxxx Group State Tax
Liability, as the case may be) as required by the Code and the Regulations or
similar State Law or State Regulations, including all items of income (including
income recognized as a result of excess loss accounts or deferred intercompany
transactions), gain, loss, deduction and credit that must be recognized by any
member of the Xxxxxx Group as a result of deconsolidation (e.g., intercompany
gains and losses recognized immediately before the Spin-Off).
Section 3.6 Tax Return Preparation. Xxxxxx shall provide GM with a pro
forma federal income tax return and pro forma state and local income tax returns
pursuant to Section 7.1(c) of this Agreement on or before a date that permits GM
sufficient time to prepare and file the consolidated returns and that is
consistent with past practice. For any Consolidated Tax Period ending after
December 31, 2000, the Actual Separate Xxxxxx Group Tax Liability shall be
calculated based on the pro forma federal income tax returns provided by Xxxxxx
to GM;
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provided that such pro forma federal income tax returns (i) shall be adjusted as
necessary to reflect differences in depreciation resulting from different
depreciation methods used by Xxxxxx and by GM and (ii) shall be adjusted further
as reasonably requested by GM (it being agreed that any request would not be
considered reasonable if such request (A) does not result in the creation of a
correlative tax deduction (other than the reduction of gain or the increase of
loss on a sale or disposition) which, in the case of a one-time deduction is
expected to be available to Xxxxxx within 5 years after the Spin-Off and, in the
case of a series of deductions (such as by amortization or depreciation) is
expected to be available to Xxxxxx over a period of not more than 10 years or
(B) results in aggregate increases in income that exceed the cumulative net loss
of the Xxxxxx Group for tax periods ending after December 31, 2000, excluding
the portion of such loss that could be carried back to prior Consolidated Tax
Periods (determined without regard to adjustments made pursuant to clause (ii)
of this proviso); it being further agreed that no request that (x) results in
the creation of a method of accounting that will be binding on Xxxxxx in any
Separate Return Tax Period which is less favorable than the current practice
adopted by Xxxxxx, or (y) denies Xxxxxx the ability to claim a deduction (in
lieu of a credit) for foreign taxes paid by Xxxxxx, xxxx be reasonable).
Section 3.7 Separate State or Local Income Tax Returns. With respect to
those jurisdictions in which Xxxxxx, or members of the Xxxxxx Group, do not file
Consolidated State or Local Income Tax Returns with GM or a member of the GM
Group, Xxxxxx shall prepare and file its tax returns, and shall pay the related
tax liability directly to the relevant taxing authorities.
Section 3.8 Method of Payment. Unless otherwise mutually agreed, all
payments required by this Agreement will be made by wire transfer to the
appropriate bank account as may from time to time be designated for that
purpose, and notice of the transfer will be given to the payee of the payment in
accordance with Section 10.6 of this Agreement.
Section 3.9 Interest. If any payment required by this Agreement is not
timely paid, interest shall accrue on the unpaid amount at the rate provided by
Section 6621 of the Code with respect to underpayments, where appropriate, or at
the rate provided by Section 6621 with respect to overpayments, where
appropriate. For this purpose, a payment will be timely paid only if actually
received by the payee on or before the due date of the payment.
ARTICLE IV
Recomputations and Adjustments
Section 4.1 Adjustments of GM Group Tax Liability in Consolidated Tax
Periods.
(a) Adjusting Payments. For any Consolidated Tax Period, if
any item of income, gain, loss, deduction or credit of the GM Group is adjusted
by the IRS or by a state or locality and such change is part of a Final
Determination, then GM will pay Xxxxxx or Xxxxxx will pay GM an amount,
including any interest paid or received by the GM Group and any penalties or
additions to tax imposed on the GM Group, as may be necessary to adjust the
payments between Xxxxxx and GM to reflect payments that would have been made
under this Agreement or the 1985 TAA or, with respect to items relating to
payments made on Consolidated State or Local Income Tax Returns for tax years
1985 through 1997, in accordance
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with the past custom and practice of the parties, had the adjustment as finally
determined been taken into account in determining the amount of those payments.
(b) Time of Payment. A payment required under this Section 4.1
will be due twenty (20) calendar days following the date that one party gives
notice to the other party that a payment is due.
(c) Required Notice. In the circumstances described in this
Section 4.1, the notice provided pursuant to Section 7.1(a) shall include a copy
of the notice of deficiency or other written communication from an authority
describing the Final Determination and, if necessary, detailed calculations
supporting the amount due.
Section 4.2 Refunds Related to Carryback Items from Separate Return Tax
Periods.
(a) Election to Forego Carryback Period. With respect to
carrybacks by Xxxxxx or any member of the Xxxxxx Group of net operating losses,
net capital losses, unused tax credits and other deductible or creditable tax
attributes to a Consolidated Tax Period from a Separate Return Tax Period which
would be permitted under the Code and the Regulations or State Law and State
Regulations based on the Consolidated Tax Period income tax returns actually
filed, and taking into consideration the separate return limitation year rules,
whenever permitted to do so by the Code, the Regulations, State Law or State
Regulations, Xxxxxx and each other member of the Xxxxxx Group shall elect to
relinquish any carryback period which would include any Consolidated Tax Period.
(b) Carryback to Consolidated Tax Period. In cases where
Xxxxxx or a member of the Xxxxxx Group cannot relinquish the carryback period,
GM shall cooperate with Xxxxxx in seeking tax refunds from the appropriate
taxing authority, at Xxxxxx' expense, and Xxxxxx shall be entitled to such
refund, including interest paid by the taxing authority in connection with such
refunds, within 15 Business Days after the date of a Final Determination that
the refund is allowable.
(c) Refund Credited to GM Tax Liability. In the event that:
(i) Xxxxxx or a member of the Xxxxxx Group has filed
a refund claim with a taxing authority for a Consolidated Tax Period as
contemplated by this Section 4.2;
(ii) the refund claim has been allowed; and
(iii) the taxing authority has applied the refund to
an amount owed by GM, then GM shall pay Xxxxxx the amount of the refund,
including the amount of interest that would otherwise have been paid by the
taxing authority to Xxxxxx or such member of the Xxxxxx Group, within 15
Business Days after the date of a Final Determination that the refund is
allowable.
Section 4.3 Other Adjustments. If there is any change of or adjustment
to any item relating to the computation of payments under this Agreement that is
not otherwise provided for herein (such as a correction of a previous erroneous
calculation), then GM shall make such
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payments to Xxxxxx, or Xxxxxx shall make such payments to GM, in such manner and
at such time as may be necessary or appropriate to reflect the intent of this
Agreement.
ARTICLE V
Transitional Matters
Section 5.1 Allocation of GM Consolidated Tax Attributes.
(a) Federal Regulation Section 1.1502-79 Tax Attributes. If
the GM Group has a consolidated net operating loss, a consolidated net capital
loss, a consolidated unused investment credit, a consolidated unused foreign tax
credit or a consolidated excess charitable contribution (as such terms are
defined in the Regulations) that can be carried to a Separate Return Tax Period,
then the portion, if any, of such Carryforward Tax Attribute that is
attributable to Xxxxxx or any member of the Xxxxxx Group shall be determined in
accordance with Section 1.1502-79 of the Regulations, based upon the Actual
Separate Xxxxxx Group Tax Liability for the applicable Consolidated Tax Periods.
The portion, if any, of any GM Group consolidated unused foreign tax credit that
is attributable to the Xxxxxx Group shall be determined separately with respect
to each of the items of income listed in Section 904(d) of the Code (i.e.,
determined separately on a basket-by-basket basis).
(b) Other Federal Tax Attributes. If the GM Group has federal
Carryforward Tax Attributes other than those described in Section 5.1(a),
including the minimum tax credit, the research and experimentation credit or
other general business credits, then the portion of the Carryforward Tax
Attribute, if any, attributable to the Xxxxxx Group shall be the lesser of (i)
the amount of the Carryforward Tax Attribute and (ii) the amount, if any, of the
corresponding Xxxxxx Separate Company Carryforward Tax Attribute for the
applicable Consolidated Tax Periods.
(c) State and Local Tax Attributes. No Carryforward Tax
Attributes arising from Consolidated State or Local Income Tax Returns shall be
attributable to any member of the Xxxxxx Group, unless, under the provisions of
applicable State Law or State Regulations, such tax attributes must be
attributed to a member of the Xxxxxx Group.
(d) Calculations. Calculation of the portion of any
Carryforward Tax Attribute that is attributable to Xxxxxx or to any member of
the Xxxxxx Group shall be made by GM in accordance with Sections 5.1(a)-(c)
above and provided to Xxxxxx as soon as practicable, but in any case estimates
shall be provided to Xxxxxx not later than the date that permits Xxxxxx
sufficient time to prepare and to timely file its Income Tax Returns for Xxxxxx'
first Separate Return Tax Period, taking all extensions of time to file Income
Tax Returns into consideration.
(e) Tax Attributes to be Claimed for Separate Return Tax
Periods. Xxxxxx shall prepare and file all of its Income Tax returns for all
Separate Return Tax Periods taking into account the amount of the Carryforward
Tax Attributes carried forward from the final Consolidated Tax Period provided
to Xxxxxx by GM pursuant to Section 5.1(d), or such Carryforward Tax Attributes
as finally determined.
(f) Earnings and Profits. As provided by Section 312(h) of the
Code, earnings and profits shall be allocated between GM and Xxxxxx under
Regulation Section 1.312-
11
10(b). The allocation of earnings and profits shall be determined by GM and
shall be provided to Xxxxxx as soon as practicable, but in any case estimates
shall be provided to Xxxxxx not later than a date that permits Xxxxxx sufficient
time to prepare and to timely file its Income Tax Returns for Xxxxxx' first
Separate Return Tax Period, taking all extensions of time to file Income Tax
Returns into consideration.
Section 5.2 Payments Related to Allocation of Consolidated TaxGeneral
Provisions. Payments required by this Section 5.2 are intended to compensate for
the difference, if any, for federal Income Tax purposes, between the allocation
of tax attributes for federal income tax return filing purposes pursuant to
Section 5.1, and the Xxxxxx Separate Company Carryforward Tax Attributes. If,
for federal Income Tax purposes, the portion of any GM consolidated tax
attribute attributable to the Xxxxxx Group under Section 5.1(a) and (b) as
calculated under Section 5.1(d) is greater than the amount of the associated
Xxxxxx Separate Company Carryforward Tax Attribute (a "Xxxxxx Excess Tax
Attribute"), then Xxxxxx shall pay GM as provided in this Section 5.2. If, for
federal Income Tax purposes, the portion of any GM consolidated tax attribute
attributable to the Xxxxxx Group under Section 5.1(a) and (b) as calculated
under Section 5.1(d) is less than the amount of the associated Xxxxxx Separate
Company Carryforward Tax Attribute (a "GM Excess Tax Attribute"), then GM shall
pay Xxxxxx as provided in this Section 5.2. Notwithstanding any other provision
of this Agreement, neither GM nor Xxxxxx makes any representation to the other
or to any other Person as to the existence or amount of any actual tax
attribute, any Xxxxxx Excess Tax Attribute or any GM Excess Tax Attribute,
whether prior to, at or after the Effective Time. GM and Xxxxxx agree to take
steps reasonably acceptable to each of them to minimize (consistent with the
proviso in Section 3.6) any GM Excess Tax Attribute or any Xxxxxx Excess Tax
Attribute. In connection therewith, Xxxxxx agrees that it shall be acceptable to
Xxxxxx to transfer (at a time mutually acceptable to both GM and Xxxxxx) shares
of capital stock of PanAmSat within the Xxxxxx Group in such a manner that gain
with respect to such securities will be recognized by the Xxxxxx Group as a
result of the Spin-Off.
(a) Amount and Time of Payments.
(i) Time for Payment. In the case of a Xxxxxx Excess
Tax Attribute or a GM Excess Tax Attribute (other than a foreign tax credit),
Xxxxxx shall pay GM or GM shall pay Xxxxxx, as the case may be, within 20
Business Days after the filing of the GM consolidated federal income tax return
for the taxable year that includes the Effective Time.
(ii) Amount. The amount of the payment referred to in
Section 5.2(b)(i) above shall be equal to (A) in the case of an item of loss or
deduction, the amount of such loss or deduction multiplied by the Assumed Rate;
and (B) in the case of a credit, the amount of such credit.
(b) Special Considerations for Foreign Tax Credits.
(i) Use of Foreign Tax Credits. In the case of a GM
Excess Tax Attribute consisting of foreign tax credits, GM shall pay Xxxxxx the
amount of such foreign tax credit as such foreign tax credits would have been
utilized by the Xxxxxx Group in a Separate Return Tax Period. The determination
of the amount of foreign tax credit that would have been
12
utilized by the Xxxxxx Group in any Separate Return Tax Period shall take into
consideration the overall foreign losses (as defined in Section 904(f) of the
Code) ("OFL") of the Xxxxxx Group that would have been taken into consideration
in determining the Xxxxxx Group's foreign tax credit utilization if the tax
liability determined for the Separate Return Tax Period were the Actual Separate
Xxxxxx Group Tax Liability for the relevant tax period.
(ii) Notice and Time for Making Payment. Payments
pursuant to this Section 5.2(c) shall be made within twenty (20) Business Days
after notice is given by the party seeking payment to the other party that the
foreign tax credit could have been utilized had the foreign tax credit not been
allocated to, or utilized by, the other party. Such notice shall include a copy
of the relevant filed tax return, together with the calculation of the amount of
the payment due as described in Section 5.2(b). The notice described in this
Section 5.2(c) must include workpapers showing the calculation of the amount of
the Xxxxxx Group's OFL carryforward offset by foreign source income for the
Xxxxxx Group, including only those corporations that were members of the Xxxxxx
Group immediately before the Spin-Off (or any corporation that succeeds to the
items of any such member listed in ss.381(c) of the Code), for tax periods
between the last Consolidated Tax Period and the tax period for which payment is
claimed under this Section 5.2, together with copies of pro-forma tax returns
for the relevant tax periods. These workpapers and tax returns will be subject
to the verification procedures set forth in Section 5.2(d) below.
(c) Verification. The party obligated to make a payment under
this Section 5.2 shall have the right to engage a law firm or an accounting firm
to review the tax returns and calculations included with the notice. Any
disclosure of a party's information by the other party for this purpose shall
not constitute a breach of confidentiality under this Agreement.
Section 5.3 Redetermination of Amount or Allocation of Carryforward Tax
Attributes. If there is a Final Determination for any Consolidated Tax Period
that results in any change to or adjustment of (i) the amount of any
Carryforward Tax Attribute or any Xxxxxx Separate Company Carryforward Tax
Attribute or (ii) the portion of any Carryforward Tax Attribute that is
attributable to Xxxxxx or to any member of the Xxxxxx Group pursuant to Section
5.1, then Xxxxxx shall file amended returns for Separate Return Tax Periods, as
may be necessary to reflect the adjusted amount or adjusted allocation of the
Carryforward Tax Attribute.
Section 5.4 Xxxxxx Separate Company Carryforward Tax Attributes From
1997. For purposes of this Agreement, the amount of the Xxxxxx Separate Company
Carryforward Tax Attributes available to carry forward from tax year 1997 to
subsequent tax years of the Xxxxxx Group will be determined by apportioning the
Carryforward Tax Attributes of the former HEC Group, determined on a Separate
HEC Group Tax Liability basis under the 1985 TAA, among the New Raytheon Group
(i.e., the former HEH Group), the Delco Group and the Xxxxxx Group (i.e., the
Telecom Group under the 1997 TAA) as described below:
(a) Federal Reg. Section 1.1502-79. If the former HEC Group
would have, on a Separate HEC Group Tax Liability basis under the 1985 TAA, a
net operating loss, net capital loss, unused investment credit, unused foreign
tax credit or excess charitable contribution (as such terms are defined in the
Regulations) that could be carried forward to tax periods after the Raytheon
Spin-Off, then the portion thereof that is attributable to (i) the New Raytheon
Group,
13
(ii) Xxxxxx or any member of the Xxxxxx Group or (iii) the Delco Group, will be
determined in accordance with the principles of Section 1.1502-79 of the
Regulations, based upon the computation of the respective separate group's
notional tax liability for the applicable tax periods. The determination of the
amount of unused foreign tax credit attributable to each respective group will
be made on a basket-by-basket basis.
(b) Other Federal Tax Attributes. If the former HEC Group
would have, on a Separate HEC Group Tax Liability basis under the 1985 TAA,
deductible or creditable federal tax attributes other than those described in
Section 5.4(a), including minimum tax credits or general business credits, that
could be carried forward to tax periods after the Raytheon Spin-Off, then the
portion thereof that is attributable to (i) New Raytheon, (ii) Xxxxxx or any
member of the Xxxxxx Group or (iii) the Delco Group will be based upon the
relevant tax attribute carryover of each respective group determined
consistently with the computation of the Separate HEC Group Tax Liability under
the 1985 TAA.
(c) Telecom Group Carryforward Tax Attributes. The
Carryforward Tax Attributes available to the Xxxxxx Group for the determination
of the Actual Separate Xxxxxx Group Tax Liability for Consolidated Tax Periods
beginning after the Raytheon Spin-Off are those tax attributes attributable to
Xxxxxx or any member of the Xxxxxx Group, determined in accordance with Section
5.4(a) or 5.4(b).
ARTICLE VI
Audits, Protests, Appeals and Tax Litigation
Section 6.1 General Contest Rights - Notice. GM shall promptly notify
Xxxxxx in writing upon receipt by GM or any member of the GM Group of each
written communication with respect to any pending or threatened audit, dispute,
suit, action, proposed assessment or other proceeding in connection with any
Consolidated Tax Period concerning a liability of Xxxxxx under this Agreement or
an issue for which Xxxxxx may be liable under this Agreement. GM shall include
with the notice to Xxxxxx a true, correct and complete copy of the written
communication received.
Section 6.2 Audits.
(a) Control of Audits for which Xxxxxx is Solely Liable. In
connection with examinations by federal, state or local taxing authorities,
Xxxxxx shall separately control examination issues for which it is solely liable
under this Agreement or under the 1985 TAA. Such control shall be limited to (i)
the responsibility for communicating with agents of the taxing authorities and
(ii) the authority to enter into settlements of Income Tax liabilities, provided
that such settlement does not directly result in an adjustment to any item for
which GM (or any member of the GM Group that is not a member of the Xxxxxx
Group) is liable and not indemnified hereunder or to the calculation of any
state or local apportionment factors for GM or any member of the GM Group that
is not a member of the Xxxxxx Group. In the event that a proposed settlement
does directly result in an adjustment to any item for which GM (or any member of
the GM Group that is not a member of the Xxxxxx Group) is liable and not
indemnified hereunder or to the calculation of any state or local apportionment
factors for GM or any member of the GM Group that is not a member of the Xxxxxx
Group, Xxxxxx may
14
nevertheless settle the issue provided that such settlement does not materially
(A) increase the difference between the consolidated GM Group Tax Liability and
the Actual Separate Xxxxxx Group Tax Liability for any Consolidated Tax Period,
(B) increase the GM Group Tax Liability for any Separate Return Tax Period or
(C) otherwise increase the amount of any tax for which Xxxxxx is not liable
under this Agreement or under the 1985 TAA. Xxxxxx may determine whether it has
the authority described in this Section 6.2 by giving notice to GM, including
the details of any proposed settlement (whether written, proposed by a taxing
authority, proposed by Xxxxxx or otherwise) and requesting GM's confirmation
(which confirmation shall not be unreasonably withheld) that Xxxxxx has the
authority to enter into the settlement described in the notice. If GM fails to
respond within ninety (90) calendar days of its receipt of the notice, GM shall
be deemed to have confirmed that Xxxxxx has the authority under this Section
6.2(a) to enter into a settlement as described in such notice and that such
settlement does not have one of the effects described in clauses (A)-(C) of this
Section 6.2.
Notwithstanding anything to the contrary in this Section 6.2(a), if a
taxing authority makes a written settlement offer with respect to any issue for
which Xxxxxx may be liable under this Agreement or the 1985 TAA and Xxxxxx
notifies GM in writing that it desires to accept the settlement offer, then GM
may (at its sole cost and expense) continue to contest, defend or compromise
such issue and, in such event, the amount of the payment due to GM pursuant to
Article IV of this Agreement shall not exceed the amount of the settlement
offer, including interest and penalties that would have been imposed pursuant to
the settlement offer.
If Xxxxxx is precluded from settling an issue pursuant to the
provisions of this Section 6.2(a), then GM and Xxxxxx agree that the fair
allocation of the tax liability, including for purposes of Article IV of this
Agreement, with respect to such issue as finally determined shall be the subject
of good faith negotiations between the parties. In the event that the parties
are not able to agree upon an allocation of the tax liability, the fair
allocation of the tax liability shall be subject to the dispute resolution
procedure in Section 9.2, and the arbitrator shall consider, among other
factors, the amount for which the issue could have been settled by Xxxxxx with
the taxing authority had Xxxxxx not been precluded from settling the issue
pursuant to this Section 6.2. GM shall reasonably cooperate with Xxxxxx and its
counsel in the defense against or compromise of any claim in any examination. GM
shall give Xxxxxx notice and an opportunity to participate in any meeting with
taxing authorities that is scheduled to address Xxxxxx issues.
(b) Control of State or Local Audits.
(i) Consolidated State or Local Income Tax Returns.
Except as provided in section 6.2(a) above, in connection with examinations or
audits of any Consolidated State or Local Income Tax Return which includes
Xxxxxx or a member of the Xxxxxx Group, GM shall have exclusive control of the
examination issues, including the responsibility for communicating with agents
of the state or local taxing authority, and shall have exclusive authority to
enter into settlements, and shall bear all fees, costs and expenses associated
with such examinations or audits; provided, however, that GM shall provide
Xxxxxx an opportunity to review and comment upon GM's communications with state
or local taxing authorities to the extent such communications relate to Xxxxxx
or the Xxxxxx Group. Xxxxxx or a member of the Xxxxxx Group shall promptly
execute and deliver to GM any power of attorney or other
15
document reasonably requested in writing by GM in connection with the
examination of any state or local tax return contemplated by this Section
6.2(b).
If GM proposes to accept or compromise a proposed adjustment
that would result in an additional liability (or reduction of refund) of Xxxxxx
or a member of the Xxxxxx Group under this Agreement or the 1985 TAA, then GM
shall notify Xxxxxx in a reasonable period of time. If Xxxxxx does not consent
to such acceptance or compromise, and provided that there is reasonable basis to
contest the issue involved, then Xxxxxx may (at its sole cost and expense)
continue to contest, defend or compromise such issue. In such event, the amount
of the payment due to GM pursuant to Article IV of this Agreement shall be the
excess of (i) the tax liability reflected in the Final Determination, including
penalties and interest, over (ii) the tax liability of the GM Group, excluding
members of the Xxxxxx Group, that would have been reflected in the Final
Determination if GM had compromised or settled the issue, plus interest and
penalties that would have been imposed pursuant to the settlement or compromise.
(ii) Separate State or Local Income Tax Returns. In
connection with examinations or audits of any state or local Income Tax Returns
for Consolidated Tax Periods that are not Consolidated State or Local Income Tax
Returns with a member of the GM Group other than members of the Xxxxxx Group,
Xxxxxx shall have exclusive control of the examination, appeals and litigation.
Section 6.3 Protests and Appeals.
(a) Federal Protests and Appeals. GM and Xxxxxx shall
cooperate in the preparation and filing of any protest for any Consolidated Tax
Period in which Xxxxxx received audit adjustments which it seeks to contest in
the Appeals Division of the IRS. Xxxxxx shall be responsible for the preparation
of its portion of the GM Group protest in the form prescribed by GM, and shall
be responsible for presenting its issues in conference and negotiating
settlement alternatives with the Appeals Division of the IRS.
(b) State and Local Protests and Appeals. GM shall have the
exclusive control of the preparation or filing of any protest or appeal
involving a Consolidated State or Local Income Tax Return which includes Xxxxxx
or any member of the Xxxxxx Group, and shall bear all fees, costs and expenses
associated with such protest or appeal; provided, however, that GM shall provide
Xxxxxx an opportunity to review and comment upon GM's communications with state
or local taxing authorities. If GM proposes to accept or compromise a proposed
adjustment that would result in an additional liability (or reduction of refund)
of Xxxxxx or a member of the Xxxxxx Group under this Agreement or the 1985 TAA,
then GM shall notify Xxxxxx in a reasonable period of time. If Xxxxxx does not
consent to such acceptance or compromise, and provided that there is reasonable
basis to contest the issue involved, consistent with past practice, Xxxxxx may
(at its sole cost and expense) continue to contest, defend or compromise such
issue. In such event, the amount of the payment due to GM pursuant to Article IV
of this Agreement shall be the excess of (i) the tax liability reflected in the
Final Determination, including penalties and interest, over (ii) the tax
liability of the GM Group, excluding members of the Xxxxxx Group, that would
have been reflected in the Final Determination if GM had compromised or settled
the issue, plus interest and penalties that would have been imposed pursuant to
the settlement or compromise. Xxxxxx or a member of the
16
Xxxxxx Group shall promptly execute and deliver to GM any power of attorney or
other document reasonably requested in writing by GM in connection with the
examination of any state or local tax return contemplated by this Section
6.3(b). Notwithstanding any other provision of this section 6.3(b), if the
protest or appeal relates to issues for which Xxxxxx is solely liable under this
Agreement or under the 1985 TAA, Xxxxxx shall have the exclusive control of the
preparation or filing of any protest or appeal; provided that Xxxxxx shall not
take any position during any such protest or appeal that could have any of the
results described in (A), (B) or (C) of section 6.2(a).
Section 6.4 Litigation.
(a) General. If GM and Xxxxxx are not able to reach a
satisfactory settlement of all issues through administrative procedures for any
Consolidated Tax Period in any jurisdiction in which Xxxxxx or any member of the
Xxxxxx Group joined in the filing of a tax return with GM, then GM shall
control, including as to choice of forum, the litigation of the issues affecting
the liability of Xxxxxx hereunder or under the 1985 TAA, subject to consultation
with Xxxxxx; provided, however, that both parties must consent to appeal an
adverse judgment affecting the liability of Xxxxxx hereunder or under the 1985
TAA (provided that one party may prosecute the appeal of an adverse judgment
without the other's consent if the appealing party indemnifies the nonconsenting
party against any increase in such nonconsenting party's liability for taxes,
interest and penalties over and above such nonconsenting party's liability for
taxes, interest and penalties under the judgment being appealed); provided,
further, that Xxxxxx shall prepare its portion of any filings and pleadings in a
form prescribed by GM and shall be responsible for presenting its issues and
negotiating settlement alternatives. If GM elects to proceed in a refund action,
then GM and Xxxxxx shall each pay any deficiency relating to the issues for
which it is liable under this Agreement or under the 1985 TAA.
(b) Settlement. In the event that a taxing authority has made
a written settlement offer with respect to any issue for which Xxxxxx may be
liable under this Agreement and Xxxxxx notifies GM in writing that it desires to
accept the settlement offer, then GM may (at its sole cost and expense) continue
to contest, defend or compromise such issue and, in such event, the amount of
the payment due to GM pursuant to Article IV of this Agreement shall not exceed
the amount of the settlement offer, including interest and penalties that would
have been imposed pursuant to the settlement offer.
(c) Litigation Expense. Except as otherwise provided in this
Agreement, each party shall bear its own litigation expenses (including
attorney's fees, court costs, expenses of consultants and expert witnesses)
unless Xxxxxx is forced to litigate issues that it otherwise would settle, in
which event all costs and expenses of such litigation shall be borne by GM.
ARTICLE VII
Cooperation and Confidentiality
Section 7.1 Cooperation.
(a) General. Xxxxxx and GM shall each cooperate (and shall
cause each member of the GM Group and each member of the Xxxxxx Group,
respectively, to cooperate)
17
fully at such time and to the extent reasonably requested by the other party in
connection with the preparation and filing of any tax return or claim for refund
or the conduct of any audit, dispute, proceeding, suit or action concerning any
issues or other matters addressed in this Agreement. Such cooperation shall
include, to the extent relevant to the other party's liability under this
Agreement, the following: (i) forwarding promptly to the other party copies of
all notices and forms or other communications (including, but not limited to,
any IRS information document request, IRS revenue agents report or similar
report, notice of proposed adjustment or notice of deficiency) received from or
sent to any taxing authority or any other administrative, judicial or other
governmental authority that concerns a tax liability under this Agreement or an
issue that may affect the other party's liability for tax or for payments under
this Agreement; (ii) upon the other party's request, providing the other party
the opportunity to review and comment upon communications to any taxing
authority; (iii) retaining and providing to the other party on demand copies of
tax returns, books, records (including those concerning ownership and tax basis
of property which either party may possess), documentation or other information
relating to the tax returns, including accompanying schedules, related
workpapers and documents relating to rulings or other determinations by taxing
authorities, until the termination of this Agreement; (iv) the provision of
additional information and explanations of documents and information provided
under this Agreement; (v) the execution of any document that may be necessary or
reasonably helpful in connection with the filing of a tax return by GM or Xxxxxx
or any member of their respective Groups, or in connection with any audit,
dispute, proceeding, suit or action, including such waivers, consents or powers
of attorney as may be necessary for a party to exercise its rights under this
Agreement; and (vi) the use of the parties' reasonable efforts to obtain any
documentation from a government authority or a third party that may be necessary
or reasonably helpful in connection with any of the foregoing. GM and Xxxxxx
each shall indemnify and hold the other harmless from and against all penalties
and interest that may be asserted against one party by any taxing authority as a
result of the other party's failure to retain records as required by federal,
state or local law.
(b) Tax Controversies. Each party and the members of its
respective Group shall use reasonable efforts (including the duties and
responsibilities described in Article VI of this Agreement) to keep the other
party advised as to the status of tax audits, controversies or litigation
concerning any Consolidated Tax Period liability or an issue for which such
other party may be liable under this Agreement and shall cooperate in a defense
with respect to such liability or an issue in any tax controversy.
(c) Tax Returns. Subject to the final sentence of this Section
7.1(c), this Section 7.1(c) shall apply solely for the purpose of preparing and
filing the GM Group's consolidated federal income tax returns and the
Consolidated State or Local Income Tax Returns for the Consolidated Tax Period
ending on December 31, 2001 and for the Consolidated Tax Period that includes
the Effective Date. For the Consolidated Tax Period ending on December 31, 2001,
Xxxxxx shall provide GM with a pro forma federal income tax return and pro forma
state and local income tax returns for each jurisdiction in which Xxxxxx or any
member of the Xxxxxx Group is included in the Consolidated State or Local Income
Tax Return of the GM Group on or before a date that permits GM sufficient time
to prepare and file the consolidated returns and that is consistent with past
practice. For the Consolidated Tax Period that includes the Effective Date,
Xxxxxx shall provide GM with a pro forma federal income tax return and pro forma
state and local income tax returns for each jurisdiction in which Xxxxxx or any
member of
18
the Xxxxxx Group is included in the Consolidated State or Local Income Tax
Return of GM as soon as practicable, but in no event later than a date that
permits GM sufficient time to prepare and file the consolidated returns and that
is consistent with past practice. Each pro forma income tax return provided to
GM shall be signed by an officer of Xxxxxx in the space provided for the
taxpayer's signature on the appropriate income tax return form. All such pro
forma income tax returns shall be prepared on a basis consistent with the
preparation of income tax returns for prior tax years, provided, however, that
items of income, gain, deduction, loss and credit to be included in the pro
forma income tax returns for the Consolidated Tax Period that includes the
Effective Date shall be determined by the method described in Section 3.5.
Notwithstanding any provision of Section 7.2 of this Agreement to the contrary,
GM shall have the right to engage a law firm or accounting firm to review the
pro forma income tax returns described in this Section 7.1(c), and any
disclosure of Xxxxxx information by GM to a law firm or accounting firm for this
purpose shall not constitute a breach of confidentiality under this Agreement.
In the event that the Spin-Off occurs after December 31, 2002, the parties agree
that appropriate amendments will be made to this Section 7.1(c).
(d) Employees and Facilities. Each party shall make its
employees and facilities available on a reasonable and mutually convenient basis
in connection with any of the foregoing matters.
(e) Interim Tax Information. Xxxxxx shall continue to provide
GM with interim financial and tax information for all Consolidated Tax Periods
on a basis that is consistent with past practice, and shall provide GM with any
additional information or explanations reasonably requested by GM in connection
with such interim information.
Section 7.2 Confidentiality. Any information obtained by either party
under this Agreement shall be kept confidential, except as may be necessary in
connection with the filing of tax returns or claims for refund or in connection
with an audit, dispute, proceeding, suit or action concerning any issues or
matters addressed in this Agreement, or unless a party is compelled to disclose
information by judicial or administrative process or, in the opinion of its
counsel, by other requirements of law. Except as otherwise provided herein with
respect to Consolidated Tax Periods, Xxxxxx shall not be required to make
available to GM or its representatives any books, records, documents or other
information that Xxxxxx reasonably determines to be subject to attorney-client
privilege; provided, however, that Xxxxxx shall be required to make available to
GM any information reasonably requested by GM in connection with the preparation
of the GM Group's consolidated federal income tax return, or Consolidated State
or Local Income Tax Returns, or any audit, protest, appeal, litigation or other
proceeding in connection such income tax returns. Except as otherwise provided
herein, GM shall not be required to make available to Xxxxxx or its
representatives any books, records, documents or other information that GM
reasonably determines to be subject to attorney-client privilege; provided,
however, that GM shall be required to make available to Xxxxxx any information
reasonably requested by Xxxxxx in connection with the preparation of the Xxxxxx
Group tax returns for any Consolidated Tax Period or any Separate Return Tax
Period, or any audit, protest, appeal, litigation or other proceeding with
respect to any Consolidated Tax Period.
19
ARTICLE VIII
Indemnification
Section 8.1 Raytheon Agreement.
(a) Xxxxxx Rights and Obligations. GM and Xxxxxx acknowledge
that the Raytheon Agreement was generally intended to be an agreement between
New Raytheon and Xxxxxx. Pursuant to Section 12 of the Raytheon Agreement, GM
has assigned to Xxxxxx, and Xxxxxx has accepted, all of GM's obligations under
the Raytheon Agreement, except that:
(i) GM will determine the portion of its consolidated
tax attributes that must be apportioned to New Raytheon pursuant to Section 6 d.
of the Raytheon Agreement;
(ii) GM will retain records and will have the right
to take possession of New Raytheon records as provided in Section 7c. of the
Raytheon Agreement;
(iii) GM will retain the right to assert the remedies
provided in Section 7d. (i) of the Raytheon Agreement;
(iv) consistent with past practice, GM will prepare
and file tax returns, and pay the tax liability associated with those returns;
and
(v) GM will handle audits, appeals and litigation in
a manner consistent with past practice.
(b) Costs. Xxxxxx shall bear all of the costs associated with
the obligations of GM or of Xxxxxx described in the Raytheon Agreement,
including the costs of tax return preparation, audits, appeals and litigation,
except those costs incurred by GM that are described in (a)(iv) and (v) above.
(c) Apportionment of Tax Attributes. If the apportionment of
tax attributes to New Raytheon pursuant to Section 6 d. of the Raytheon
Agreement results in a reduction of the GM Group's Carryforward Tax Attributes,
then Xxxxxx will pay GM an amount equal to the excess, if any, of (i) the
decrease in the amount of the GM Group's Carryforward Tax Attributes directly
resulting from such apportionment over (ii) the decrease in the amount of the
Xxxxxx Group's Carryforward Tax Attributes directly resulting from such
apportionment. A payment under this Section 8.1(c) will be due at the same time
as the final payment for the tax return for the tax period in which GM would
have used the Carryforward Tax Attribute had it not been apportioned to New
Raytheon.
(d) Adjustments. Payments between Xxxxxx and New Raytheon in
connection with adjustments to income tax liabilities (including state and local
income tax liabilities) provided for by Section 6 of the Raytheon Agreement will
not affect payments to be made between Xxxxxx and GM.
(e) Indemnification. Except as otherwise provided in this
Section 8.1, Xxxxxx will indemnify and hold harmless GM and all members of the
GM Group (other than members of
20
the Xxxxxx Group) from and against all income tax liabilities and all costs,
expenses and damages incurred in connection with the Raytheon Agreement.
Section 8.2 General Indemnification.
(a) GM Group Taxes. Subject to Section 8.2(c), GM will
indemnify Xxxxxx for all Income Taxes that GM is required to pay (including
Income Taxes imposed on GM or any member of the GM Group (including the Xxxxxx
Group) as a result of the failure of the Spin-Off to qualify as a transaction
described in Section 355(a) of the Code or any analagous provision of state,
local or foreign law and any Income Tax that a taxing authority may attempt to
collect from Xxxxxx pursuant to Section 1.1502-6 of the Regulations or similar
provisions of State Law or State Regulations), except those Xxxxxx is required
to pay to GM pursuant to this Agreement, the 1985 TAA or the Raytheon Agreement.
(b) Xxxxxx Separate Taxes. Xxxxxx will indemnify GM for all
Income Taxes that Xxxxxx or a member of the Xxxxxx Group is required to pay to
any taxing authority, including those related to state or local Income Tax
Returns for Consolidated Tax Periods that are not Consolidated State or Local
Income Tax Returns with a member of the GM Group other than members of the
Xxxxxx Group.
(c) Coordination With Other Agreements. Nothing in this
Agreement will limit the covenants, representations or warranties, or the
indemnification obligations of the parties with respect to Income Tax related
matters, in the Implementation Agreement, Separation Agreement or Merger
Agreement. Article 6 of the Implementation Agreement, rather than this
Agreement, shall govern any matter to which the terms of Article 6 of the
Implementation Agreement apply. In particular, nothing in this Agreement shall
limit the indemnification obligations of Xxxxxx pursuant to Section 6.4 of the
Implementation Agreement, and, for the avoidance of doubt, the indemnification
obligations of GM pursuant to Section 8.2(a) of this Agreement shall not apply
to or in respect of any matter for which any of Xxxxxx or Euripides is required
to indemnify GM pursuant to Section 6.4 of the Implementation Agreement.
ARTICLE IX
Dispute Resolution
Section 9.1 Intent of the Parties. It is the intent of the parties
that, for all Consolidated Tax Periods, the Xxxxxx Group federal income tax
liability will be determined as if the Xxxxxx Group were a separate affiliated
group of corporations filing a consolidated federal income tax return.
Section 9.2 Dispute Resolution. If there is any dispute between GM and
Xxxxxx with respect to:
(i) the application or interpretation of this
Agreement;
(ii) the computation of any tax liability under this
Agreement;
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(iii) the allocation between the GM Group and the
Xxxxxx Group of any consolidated tax attribute available to carry forward from
the last Consolidated Tax Period to the first Separate Return Tax Period; or
(iv) any other matter contemplated by this Agreement;
that dispute will be resolved in accordance with the dispute resolution
procedures set forth in Section 6.6 of the Implementation Agreement.
ARTICLE X
Miscellaneous Provisions.
Section 10.1 Additional Members. The parties recognize that from time
to time other corporations may become members of the GM Group or the Xxxxxx
Group during the term of this Agreement, and GM and Xxxxxx agree to use their
best efforts to cause such corporations to be bound by all of the terms and
conditions of this Agreement.
Section 10.2 Successors and Assigns. This Agreement shall inure to the
benefit of, and be binding upon the parties and their respective successors,
predecessors and assigns, but no assignment of this Agreement shall relieve any
party of its obligations without the written consent of the other party.
Section 10.3 Entire Understanding. This Agreement, the 1985 TAA and the
Raytheon Agreement contain the entire understanding of the parties with respect
to the subject matter hereof.
Section 10.4 Amendment. This Agreement may not be amended except by a
written agreement executed by the parties. The parties recognize and acknowledge
their intention to enter into additional agreements from time to time with
respect to the allocation of taxes not covered by this Agreement. This Agreement
is separate from, and will not effect or be effected by, the rights and
obligations of the parties under the Separation Agreement or Implementation
Agreement.
Section 10.5 Notices. Every notice, request, statement, or xxxx or
other communication provided for in this Agreement (a "Notice") must be in
writing and may be personally served, provided a receipt is obtained, or may be
sent by certified mail, return receipt requested, postage prepaid, or may be
sent by facsimile, with acknowledgment of receipt requested, to the parties at
the following addresses (or such other address as one party may specify by
Notice to the other parties):
(a) TO: GM
Chief Tax Officer
GENERAL MOTORS CORPORATION
000 Xxxxxxxxxxx Xxxxxx
X.X. Xxx 000
Xxxxxxx, Xxxxxxxx 00000-0000
COPY TO: Xxxxxxx X. Xxxxxxxxx
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Xxxx X. Xxxxxx
Xxxxxxxx & Xxxxx
000 Xxxx Xxxxxxxx Xx.
Xxxxxxx, Xxxxxxxx 00000
(b) TO: Xxxxxx
Chief Financial Officer
Xxxxxx Electronics Corporation
000 X. Xxxxxxxxx Xxxx.
Xx Xxxxxxx, Xxxxxxxxxx 00000
COPY TO: Xxxx Xxxxxxxxxx
Weil, Gotshal & Xxxxxx, LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
A Notice, which is delivered personally, is given as of the date specified in
the written receipt. A Notice sent by certified mail is given on the third
Business Day following the date of mailing. A Notice by facsimile is given on
the date it is transmitted.
Section 10.6 Counterparts. This Agreement may be executed in two or
more counterparts, each of which will be an original, but all of which together
will constitute one and the same instrument.
Section 10.7 Change in Law. If, due to any change in applicable law or
regulation or the interpretation thereof by any court of law or other governing
body having jurisdiction, subsequent to the date of the Agreement, performance
of any provision of or any transaction contemplated by this Agreement shall
become impracticable or impossible, the parties will use their best efforts to
find and employ an alternative means to achieve the same or substantially the
same result as that contemplated by this Agreement.
Section 10.8 Governing Law. This Agreement shall be construed and
interpreted in accordance with the laws of the State of Delaware (without
reference to choice of law provisions).
Section 10.9 No Third Party Beneficiaries. This Agreement shall not
confer on any person other than the parties hereto any rights or remedies.
Section 10.10 Interpretation. The headings contained in this Agreement
are for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. Whenever the word "include," "includes" or
"including" is used in this Agreement, it shall be deemed to be followed by the
words "without limitation."
* * * * *
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The parties have duly executed this Agreement on the date indicated.
GENERAL MOTORS CORPORATION
By: /s/ Xxxx Xxxxxxxxx Date: 10-28-2001
----------------------------------------- ----------------
Xxxx Xxxxxxxxx
Vice President Finance and Treasurer
XXXXXX ELECTRONICS CORPORATION
(formerly Xxxxxx Network Systems, Inc.)
By: /s/ X. X. Xxxxxx Date: 10-28-2001
----------------------------------------- ----------------
Xxxxxxx Xxxxxx
Chief Financial Officer
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