Exhibit 10.3
TAX CONSOLIDATION
AGREEMENT
OF MORRIS PUBLISHING GROUP,
LLC
TAX CONSOLIDATION AGREEMENT dated
with an effective date of August 7, 2003 between MORRIS PUBLISHING
GROUP, LLC, a Georgia limited liability company (the
“Company”), MORRIS COMMUNICATIONS COMPANY, LLC, a
Georgia limited liability company (“Morris”) and
SHIVERS TRADING & OPERATING COMPANY, a Georgia corporation
(“Shivers”).
The Company and Morris are
disregarded entities for federal tax purposes and, thus, are
treated as part of Shivers.
Shivers is (and will continue to be
for the remainder of 2003) a member of an affiliated group of
corporations (collectively, the “Group”) as defined in
Section l504 of the Internal Revenue Code of l986 (as amended, the
“Code”), of which Shivers is the common parent, and
files consolidated federal income tax returns pursuant to Treas.
Reg. §1.1502-75(a)(2). In addition, the Company, Morris and
Shivers (together with subsidiaries of the Company, Morris and
Shivers) may be eligible to file consolidated or combined state or
local income or franchise tax returns and may wish to file
consolidated or combined state or local income or franchise tax
returns.
The Company is a wholly owned
subsidiary of Morris. Morris and Shivers entered into an Amended
and Restated Tax Consolidation Agreement with an effective date of
August 7, 2003 whereby Shivers files consolidated tax returns for
the Group. Shivers will continue to file consolidated returns and
will include all items of income or loss of the Company as part of
Shivers’ returns, but will not treat the Company as a
separate member of the Group. For purposes of this Agreement, a
return (including a return with respect to other tax liabilities of
the Group, such as employment, excise, sales taxes) in which
Shivers includes on Shivers’ return all items of income, loss
or other activities of the Company (as a disregarded entity) shall
be treated as a consolidated return.
Shivers, Morris and the Company
desire to allocate among themselves the benefits and burdens which
arise from filing of consolidated federal tax returns and which may
arise from filing of consolidated or combined state and local tax
returns, as if each entity was treated as a corporation taxed under
Subchapter C of the Code.
The Company has issued $250,000,
000.00 of senior subordinated debt under an indenture dated August
7, 2003 executed by and between the Company and Wachovia Bank,
National Association, as trustee (“Trustee”). It is a
condition precedent to the making of the indenture that Shivers,
Morris and the Company enter into this Agreement.
Accordingly, Shivers, Morris and the
Company hereby agree as follows:
Section 1. Tax Allocations
.
1.01 Consolidated Tax Returns
. Shivers will file a consolidated federal income tax return for
all taxable periods for which the Group is permitted to file such a
return. Shivers, Morris and the Company agree (and agree to cause
their respective subsidiaries) to file such consents, elections and
other documents and to take such other action as may be necessary
or appropriate to carry out the purposes of this Section
1.01.
1.02 Payment of Tax Liability
. Shivers will timely pay the Group’s federal tax liability.
For each period during which the Company’s tax items are
included in a consolidated federal tax return with Shivers, the
Company shall pay to Morris an amount equal to the federal income
tax liability that the Company would pay (taking into account net
operating loss carry forwards and carry backs) if it were filing
its federal tax returns separately as a C corporation for that
period and had filed separate tax returns for all other periods
(including, without limitation, for all periods prior to the date
hereof). In computing its federal income taxes, the Company shall
assume that Shivers has made on its behalf elections and taken
deductions and credits and adopted methods of reporting income and
expense that (i) Shivers is permitted to make, take or adopt under
the Code and (ii) minimize the separate liability, or increase any
refunds, of the Company.
1.03 Estimated Taxes .
Payments due pursuant to Section 1.02 hereof shall be made on an
estimated basis, such estimates being calculated, to the extent not
inconsistent with said Section 1.02, in accordance with conventions
used by Shivers to compute its estimated tax (or, with respect to
the first fiscal quarter of each fiscal year of the Company, at the
Company’s option, on a three-month annualized basis, whether
or not the estimated payment of Shivers for the corresponding
period is based upon such convention). Estimated payments shall be
made prior to the due date of the corresponding estimated payments
of Shivers. Shivers shall calculate the amount payable by the
Company pursuant to this Section 1.03 and shall provide the Company
and Morris with notice of any payments prior to the due date
therefor. The difference, if any, between the liability of the
Company for any taxable period, computed in accordance with Section
1.02 hereof, and the estimated payments made by the Company to
Morris pursuant to this Section 1.03 shall be payable by or
refundable to the Company and Morris prior to the date of filing of
the consolidated federal income tax returns of the Group for the
taxable period. Shivers shall calculate such amount and, if any
amount is payable by the Company, shall provide the Company and
Morris with notice of the amount due prior to the due date therefor
and the Company shall make such payment to Morris. If such amount
is payable to the Company, Shivers shall pay Morris, and Morris
shall pay the Company, such amounts.
1.04 Refunds . If on the
basis of the computation made by the Company in accordance with
Section 1.02 hereof, the Company would have been entitled to a
refund of federal taxes, Shivers shall pay Morris and Morris shall
pay the Company the amount of that refund at the time that, if a
refund has been applied for, the Internal Revenue Service makes the
refund and, if a refund has not been applied for, at the time the
Internal Revenue Service would have made the refund if it had been
timely applied for. For example, if the Company has a net operating
loss that, on a separate return basis, it could carry back and be
entitled to a refund, Shivers shall pay Morris and Morris shall pay
the Company the amount of the refund even if no refund was
actually
received from the Internal Revenue Service
because the net operating loss was used against income of Shivers
or because no taxes were paid in a prior year because of losses of
Shivers. Conversely, if the Company has a net operating loss that,
on a separate return basis, it could not carry back but would
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