Exhibit 10.2
STATE TAX ALLOCATION AGREEMENT
THIS AGREEMENT is entered into as of this 31st day of May, 1985, by
LANE INDUSTRIES, INC., a Delaware corporation ("Lane"), AMERICAN
MALTING, INC.,
a New York corporation, LANE DATA SERVICES, INC., an Illinois
corporation, LANE
AIR, INC., a Delaware corporation, LANE HOTELS, INC., a Delaware
corporation,
LANE ROCK SPRINGS, INC., a Delaware corporation, LANE RAWLINS,
INC., a Delaware
corporation, LANE DILLON, INC., a Delaware corporation, LANE
SKOKIE, INC., a
Delaware corporation, GENERAL BINDING CORPORATION, a Delaware
corporation
("GBC"), WEBTRON CORP., a Florida corporation, U.S. RING BINDER
CORP., a
Massachusetts corporation, and GBC INTERNATIONAL, INC., a Nevada
Corporation.
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, Lane is at present the parent member of the Lane Group,
and
WHEREAS, GBC is at present the parent member of the GBC Group, and
WHEREAS, during the course of a routine audit by the Illinois
Department of Revenue ("Illinois"), a determination was made by
Illinois that
the tax liability of GBC should be computed utilizing the combined
method of
apportionment with GBC and all of its domestic and foreign
subsidiaries as part
of the unitary group, and
WHEREAS, an agreement was reached between Lane, GBC and Illinois
that
the tax liability of GBC would be computed utilizing the combined
method of
apportionment, but that the unitary group would consist of GBC and
all of its
domestic and foreign subsidiaries together with Lane and all of its
subsidiaries, which unitary group is more specifically defined
below as the
"Combined Group", and
WHEREAS, it is the desire of the parties hereto that the tax
liability
of the Combined Group, and any tax savings resulting to such Group,
either from
Illinois or from any other State in which a Unitary Return (as
defined below) is
filed, be allocated among the members of such Group as herein
provided,
NOW THEREFORE, in consideration of the premises and the mutual
undertakings and covenants herein contained, the parties hereto
hereby agree as
follows:
ARTICLE 1
DEFINITIONS
For purposes of this Agreement, the following definitions shall
apply:
1.1
Additional Liability means, except as otherwise provided herein,
with respect to any taxable year, an amount equal to 80% of any Tax
Savings
realized by a Group for such year.
1.2
Affiliated Group means an "affiliated group" as defined in
Section 1504(a) of the Code.
1
1.3
Code means the Internal Revenue Code of 1954, as amended and in
effect from time to time and any law which may be a successor
thereto. A
reference to any section of the Code means such section as in
effect from time
to time and any comparable provision of any successor law.
1.4
Combined Group means the combination of the members of the GBC
Group and the Lane Group included in any Unitary Return.
1.5
Fees means professional fees, including but not limited to
accounting and attorney fees, attributable only to the
determination as to
whether GBC Group should be included in a Unitary Return. Such fees
shall
exclude all fees associated with the preparation, interpretation or
enforcement
of this Agreement.
1.6
GBC Group means GBC and any corporation, partnership or other
entity of which GBC owns a controlling interest, determined without
regard to
whether GBC is itself a subsidiary Member of another Affiliated
Group. GBC shall
own a controlling interest when it owns more than 50% of the voting
stock or
equity value either directly or indirectly (as defined in Section
318 of the
Code.)
1.7
Group means the GBC Group or the Lane Group, as appropriate.
1.8
Hypothetical Tax Liability means, with respect to any taxable
year, the Tax Liability of a Group computed as if the Members of
such Group had
filed a separate unitary return for all taxable years after 1978
without regard
to items of income, gain, loss, deduction, credit or apportionment
factors of
the Members of the other Group for such year, except as otherwise
provided
herein. In making such computation for a taxable year, (i)
carryover items shall
not be taken into account to the extent that such items were deemed
absorbed in
computing allocations of Tax Liabilities and Additional Liabilities
for prior
taxable years; (ii) carryback items shall be taken into account
only to the
extent that such items are deemed absorbed in computing the
allocation of the
Tax Liability of the Combined Group and any Additional Liability
for such year;
and (iii) any elections which would be available to the Group for
such year,
including elections as to whether to claim an item as a deduction
or credit, or
as a carryback, shall be made on a basis consistent with any
elections actually
made by the Combined Group for such year provided, however, if no
election has
been made for or is available to the Combined Group in respect of
such item, the
Group to which such item is available shall make its election with
respect to
such item in writing and shall give notice of such election to the
parent Member
of the other Group. Any such hypothetical election shall be
effective to the
same extent as if made in an actual return by such Group.
1.9
Lane Group includes any corporation, partnership or other entity
in the Unitary Return not in the GBC Group.
1.10
Member means each corporation, partnership or other entity
included within a Group.
1.11
Payee means the Group or Member receiving the payment.
1.12
Payor means the Group or Member making the payment.
2
1.13
State means any one of the United States of America or the
District of Columbia or any of the territorial possessions of the
United States.
1.14
Tax Liability means, with respect to any taxable year, the
unitary tax liability for the Combined Group determined under the
laws of the
State for which the Unitary Return is filed (including, as to a
Group, so much
of the Tax Liability of the Combined Group as is allocable to such
Group under
Section 3.1 of this Agreement), including in each case any
recomputations of
such liability as may be required on account of items which may be
carried back
or over to the taxable year and adjustments to items reported or
reportable in
such taxable year.
1.15
Tax Savings means, with respect to the Combined Group for any
taxable year, the excess, if any, of the sum of the Hypothetical
Tax Liabilities
of the Groups for the taxable year over the Tax Liability of the
Combined Group
for such year and, with respect to a Group for any taxable year,
means the
excess of the Hypothetical Tax Liability of such Group for the year
over that
portion of the Tax Liability of the Combined Group allocable to
such Group under
Section 3.1 of this Agreement for such year.
1.16
Unitary Return means a tax return filed or required to be filed
in any State using any form of the unitary concept and including
both a Member
or Members of the GBC Group and a Member or Members of the Lane
Group.
ARTICLE 2
STATEMENT OF INTENTION
2.1
Except as otherwise expressly provided herein, this Agreement
shall be understood and construed consistent with the following
statement of the
general intention of the parties which is intended as an aid in the
interpretation and construction of the operative provisions of this
Agreement as
set forth below:
(a) This Agreement shall be considered a two-party agreement,
with the GBC Group being one party and the Lane Group being the
other party.
(b) For each taxable year for which the GBC Group is included
in a Unitary Return, (i) the Hypothetical Tax Liability for such
taxable year
will be calculated for each Group, and (ii) the Tax Liability of
the Combined
Group will be calculated for the Unitary Return(s) actually filed
for the
Combined Group for such taxable year.
(c) The allocations of Tax Liabilities and Additional
Liabilities under this Agreement are intended to be in the same
proportion as
the Hypothetical Tax Liability of one Member or Group is to the
total of the
Hypothetical Tax Liabilities for all Members or Groups.
(d) If the Tax Liability of the Combined Group as reflected on a
Unitary Return is less than the sum of the Hypothetical Tax
Liabilities of the
Groups for such year, the difference shall be considered Tax
Savings for such
year, and an amount equal to 80% of such Tax Savings shall be
considered an
Additional Liability of the Group which realizes the benefit of
such Tax
Savings. Such Additional Liability shall be payable to the other
Group. For the
tax
3
years 1979-1981, Additional Liability for the GBC Group, plus
interest, cannot
exceed $550,000 in the aggregate.
(e) In order to avoid any detriment to the GBC Group from
inclusion in a Unitary Return, Lane shall reimburse GBC for the
excess, if any,
of (i) the cumulative Tax Liabilities (including the portions of
the Tax
Liabilities of the Combined Group allocable to the GBC Group under
this
Agreement), Additional Liabilities and Fees payable by the GBC
Group for all
taxable years after 1981 for all States in which a Unitary Return
is filed or is
required to be filed, reduced by any Additional Liabilities of the
Lane Group
payable to the GBC Group under this Agreement, over (ii) what the
GBC Group's
cumulative Tax Liabilities would have been for all such years had
the Members of
the GBC Group not become Members of the Combined Group.
(f) Lane shall indemnify GBC for any interest and penalties
which may be assessed against the GBC Group by reason of the GBC
Group being
included in a Unitary Return if and to the extent that it is
determined that
such interest or penalties exceed the aggregate amount of such
items that would
have been payable by the GBC Group had the Members of the GBC Group
not become
Members of the Combined Group. Lane shall pay 80% and GBC shall pay
20% of the
Fees incurred for all taxable years after 1981. Lane shall pay 100%
of the Fees
incurred for the years 1979-1981.
(g) Any refund or other benefit resulting from a carryback of an
item of loss, deduction or credit arising in a taxable year for
which the
Members of the GBC Group are not included in a Unitary Return shall
be the sole
property of the corporation to which such item is attributable,
subject,
however, to the limitation that any such post unitary benefits
derived by the
Lane group (or any of its Members) shall not reduce any benefits
derived by the
GBC Group (or any of its Members) for or in respect of any taxable
year for
which the Members of the GBC Group were included in a Unitary
Return.
ARTICLE 3
ALLOCATION OF TAX
LIABILITY BETWEEN GROUPS
3.1
For each taxable year for which the Combined Group files a
Unitary Return, the Tax Liability of the Combined Group shall be
determined as
if the Combined Group were comprised of only two Members, namely,
the GBC Group
and the Lane Group, and as if the Hypothetical Tax Liabilities of
the respective
Groups were the respective separate return tax liabilities of such
Members for
such year. The Tax Liability of the Combined Group shall then be
allocated to a
Group in the same proportion as the Hypothetical Tax Liability of
such Group is
to the total of the Hypothetical Tax Liabilities for all Groups.
3.2
For each taxable year for which the Combined Group files a
Unitary return, any Additional Liability of a Group shall also be
determined and
allocated to it provided, however, that the aggregate Additional
Liability for
the GBC Group for the tax years 1979-1981 together with interest
thereon as
provided by this Agreement shall not exceed $550,000.
4
3.3
Any Tax Liability allocable to the GBC Group pursuant to Section
3.1 shall be paid by GBC to Lane or to the State as appropriate, in
accordance
with the laws of the State for which the Unitary Return is filed.
3.4
Except as otherwise provided herein, any Additional Liability
allocated to a Group (the "First Group") pursuant to Section 3.
