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EXHIBIT 10.44
TAX ALLOCATION AGREEMENT BETWEEN
DART GROUP CORPORATION AND
TRAK AUTO CORPORATION
THIS TAX ALLOCATION AGREEMENT, dated as of December 27, 1994, by and
between Dart Group Corporation, a Delaware corporation ("Dart"), and Trak Auto
Corporation, a Delaware corporation ("Trak Auto"). This agreement shall apply
to taxable years of Trak Auto beginning on or after January 28, 1995.
WITNESSETH:
WHEREAS, Dart and certain of its subsidiaries comprise a consolidated
group, as defined in Section 1.1502-1(h) of the Treasury Regulations issued
under the Internal Revenue Code of 1986, as amended (the "Code") (the "Initial
Group"); and
WHEREAS, Trak Auto and certain of its subsidiaries comprise a
consolidated group, as defined in Section 1.1502-1(h) of the Treasury
Regulations (the "Trak Auto Group"); and
WHEREAS, Trak Auto will become a member, within the meaning of Section
1504(a) of the Code, of the affiliated group of which Dart is the common parent
and, consequently, the members of the Trak Auto Group and the Initial Group
will become members of the same consolidated group (the combined groups shall
hereinafter be collectively referred to as the "Expanded Group"); and
WHEREAS, Dart and Trak Auto have reached an agreement concerning the
allocation of U.S. tax liability between the Initial Group and the Trak Auto
Group based on the economic privileges and rights that would have accrued to
each group from the filing of returns as separate consolidated groups;
NOW, THEREFORE, in consideration of the foregoing and the mutual
agreements hereinafter contained, the parties hereto agree as follows:
1. DEFINITIONS. For purposes of this
Agreement, the following terms shall apply:
1.1 "Expanded Group Taxable Year" shall mean any taxable period in
which the Trak Auto Group is included in a consolidated group, as defined in
section 1.1502-1(h) of the Treasury Regulations, of which Dart is the common
parent.
1.2 "Separate Consolidated Taxable Income" shall mean the amount of
taxable income a group (i.e., the Initial Group, the Trak Auto Group or the
Expanded Group) would have for any taxable period if each group were to file
separate consolidated returns for United States federal income tax purposes,
subject to the following modifications and principles:
(a) Dividends received by the Initial Group from the Trak Auto
Group will be treated as qualifying for the 100 percent
dividends received deduction.
(b) Gain or loss on intercompany transactions, whether deferred or
not, between any members of the Expanded Group will not be
taken into account until required by Section 1.1502-13 of the
Treasury Regulations.
(c) Limitations on the calculation of deductions, the utilization
of credits, or the calculation of liability will be made on a
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consolidated basis for the Expanded Group as a whole.
(d) Short and long-term capital gains and losses shall be
separately determined for each group.
(e) Carrybacks and carryforwards of tax attributes will be
determined separately for each group and will be taken into
account when absorbed.
(f) Alternative minimum taxable income will be separately
determined for each group, taking into account the principles
set forth in this Section 1.2.
(g) Other adjustments, consistent with the foregoing modifications
and principles, will be made as appropriate to carry out the
intent of this Agreement.
1.3 "Separate Group Tax Liability" shall mean for any group (i.e.,
the Initial Group, the Trak Auto Group, or the Expanded Group) for any taxable
period, the sum of (a) the amount of United States federal income tax liability
each group would have had if it had filed a consolidated return reporting its
Separate Consolidated Taxable Income and (b) the amount of any state income or
franchise tax liability each group would have had if its members had filed in
each state on a separate basis (though filing combined returns with other
members of their own group where appropriate).
2. CONSOLIDATED RETURN. The Trak Auto Group
shall cooperate with Dart in filing a consolidated
federal income tax return for the Expanded
Group and consolidated or combined state
income tax returns (where beneficial to the
Expanded Group as a whole) for each Expanded
Group Taxable Year. Dart and Trak Auto shall file
such consents and other documents and take such
actions as may be necessary to file consolidated tax
returns for the Expanded Group. Dart or its designee
shall have the responsibility and authority on behalf
of the Expanded Group to make tax payments due to tax
authorities and to collect all refunds due from tax
authorities.
3. INDEMNIFICATION. Dart shall indemnify
the Trak Auto Group against any Separate
Group Tax Liability of the Initial Group
that may be assessed against any member of the Trak
Auto Group for any Expanded Group Taxable Year.
4. TRAK AUTO LIABILITY TO DART FOR EXPANDED GROUP
TAXABLE YEARS.
4.1 Liability. If for any Expanded Group Taxable Year the Trak
Auto Group has a Separate Group Tax Liability, Trak Auto shall be obligated to
pay Dart the amount of the Trak Auto Group's Separate Group Tax Liability in
the manner provided in Sections 4.2 through 4.4.
4.2 Timing and Amount of Payment. Trak Auto shall be required to
make payments of its Separate Group Tax Liability to Dart no later than 120
days after the end of any Expanded Group Taxable Year for which the Expanded
Group has a Separate Group Tax Liability. The amount of Trak Auto's payment
for each such Expanded Group Taxable Year shall equal the lesser of (a) the
Trak Auto Group's Separate Group Tax Liability for such year and all prior
years ("cumulative Separate Group Tax Liability") reduced by any amounts of
such
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Separate Group Tax Liability previously paid or (b) the amount of the
Expanded Group's Separate Group Tax Liability for such year. Any portion of
the Trak Auto Group's cumulative Separate Group Tax Liability that is not paid
to Dart for any Expanded Group Taxable Year pursuant to this Section 4.2 shall
be carried forward indefinitely and shall be paid by Trak Auto to Dart in
subsequent years in accordance with the terms of this Section 4.2.
4.3 No Interest or Costs. Trak Auto shall not pay Dart any
interest or costs with respect to any deferral of payment pursuant to Section
4.2.
4.4 Election to Defer Payment. If Trak Auto is required to pay an
amount of its Separate Group Tax Liability to Dart no later than 120 days after
the end of an Expanded Group Taxable Year pursuant to Section 4.2, Trak Auto
may elect to defer payment of such amount for up to five years from the date
payment is otherwise due. Any amount deferred pursuant to this Section 4.4
shall bear interest at the prime rate, adjusted quarterly as of the first day
of each calendar quarter, as published in the "money rates" column of the Wall
Street Journal until such amount is paid.
5. DART LIABILITY TO TRAK AUTO FOR EXPANDED
GROUP TAXABLE YEARS.
5.1 Liability. If for any Expanded Group Taxable Year, the Separate
Group Tax Liability of the Initial Group would be reduced by taking into
account net operating losses or credits of the Trak Auto Group (determined on
the basis of the Trak Auto Group's Separate Taxable Income), Dart shall pay
Trak Auto an amount equal to the amount of such reduction.
5.2 Timing of Payment. Any payment required by Section 5.1 shall
be made within 120 days after the end of the Expanded Group Taxable Year in
which the liability arises. Any amount not paid by the due date shall bear
interest at the prime rate, adjusted quarterly as of the first day of each
calendar quarter, as published in the "money rates" column of the Wall Street
Journal until such amount is paid.
6. TAX ADJUSTMENTS. In the event of any
adjustment of the Separate Group Tax
Liability of the Expanded Group, by reason of the
filing of an amended return or claim for refund
(including a claim for refund by reason of carrying
back a net operating loss), or arising out of an
audit by a taxing authority, the Separate Group Tax
Liabilities of the Trak Auto Group, the Initial Group
and the Expanded Group shall be redetermined for
purposes of this Agreement to give effect to any such
adjustment as if it had been made as part of the
original computation of Separate Group Tax Liability,
and the amount and timing of payments between Dart
and Trak shall be redetermined in accordance with the
terms of Sections 4 and 5; provided however, that no
amount shall be considered due as a consequence of
such adjustment or refund until 120 days after the
adjustment is finally determined or the refund is
paid.
7. FURNISHING OF TAX INFORMATION TO DART.
Trak Auto shall deliver to Dart or its
designee before such date as is reasonably
determined by Dart all data required for the
determination of the Trak Group's Separate Group
Taxable Income and for preparing the Expanded Group's
consolidated return and making estimated tax
payments. Such tax data shall have been
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reviewed by the principal financial officer
of Trak Auto, and shall be as full and complete
as would have been required to file a separate
consolidated return for the Trak Auto Group
(or to pay estimated taxes with respect thereto).
vii . EARNINGS AND PROFITS ADJUSTMENTS. This
Agreement is not intended to establish
the method by which the earnings and
profits of each member of the Expanded
Group will be determined. Dart reserves
the right to elect the method for
allocating tax liability for the
purposes of determining earnings and
profits as set forth in Sections
1.1552-1(a) and 1.1502-33(d) of the
Treasury Regulations.
8. MISCELLANEOUS PROVISIONS.
9.1 Authority to Change Agreement. Trak Auto hereby agrees that
Dart as the common parent of the Expanded Group shall have the authority to
make any alterations in this Agreement that are needed to comply with changes
in the provisions of the Code, Treasury Regulations, or state provisions
relating to consolidated income tax returns.
9.2 Consent to Regulations. Trak Auto, for itself and on behalf
of all the members of the Trak Auto Group, consents to joining in the Expanded
Group consolidated return and to reporting in accordance with all regulations
relating to the filing of a consolidated tax return.
9.3 Term of Agreement. This Agreement shall be effective on the
date Trak Auto becomes a member of the Expanded Group and shall remain in
effect between Dart and Trak Auto with respect to any Expanded Group Taxable
Year in which the parties hereto are included as members of the Expanded Group.
9.4 Subsequent Alterations and Modifications. Subject to the
rights of Dart set forth in Section 9.1 hereof to modify the provisions of this
Agreement for purposes of conforming with the applicable provisions of the Code
or Regulations relating to consolidated income tax returns, all alterations and
modifications of this Agreement shall be in writing and signed by all parties.
9.5 Elections. Trak Auto, for itself and on behalf of all members
of the Trak Auto Group, hereby agrees that Dart, as the common parent, shall
have the authority to make any or all elections which are available under the
Code, Regulations, or state provisions.
9.6 Subsidiaries. If at any time the Initial Group or the Trak
Auto Group acquires or creates one or more subsidiary corporations that are
affiliated, within the meaning of section 1504(a), with the Initial Group or
the Trak Auto Group, respectively, such subsidiary corporations shall be
included in the Initial Group or the Trak Auto Group, as the case may be, and
all references to the Initial Group or the Trak Auto Group herein shall
thereafter be interpreted to include such subsidiaries.
7.7 Successors. This Agreement shall be binding on and inure to
the benefit of any successor, by merger, acquisition of assets or otherwise, to
any of the parties hereto (including but not limited to any successor of Dart
or Trak Auto succeeding to the tax attributes of either under Section 381 of
the Internal Revenue Code), to the same extent as if such successor had been an
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original party to this Agreement.
IN WITNESS THEREOF, the parties hereto have caused their names to be subscribed
and executed by their respective authorized officers on the date indicated
above.
DART GROUP CORPORATION
BY: /s/ Robert A. Marmon
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Name: Robert A. Marmon
Title: Chief Financial Officer
TRAK AUTO CORPORATION
BY: /s/ R. Keith Green
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Name: R. Keith Green
Title: President