Exhibit 10.2
TAX SHARING AGREEMENT
This TAX SHARING AGREEMENT (this "Agreement"), dated as of December
30,
2005, by and between SkyTerra Communications, Inc., a Delaware
corporation
("SkyTerra") and Hughes Communications, Inc., a Delaware
corporation and a
wholly owned subsidiary of SkyTerra ("Divco"). Each of SkyTerra and
Divco is
sometimes referred to herein as a "Party" and collectively, as the
"Parties."
WITNESSETH
WHEREAS, SkyTerra and Divco have entered into a Separation
Agreement,
dated as of December 30, 2005 (the "Separation Agreement");
WHEREAS, SkyTerra intends to distribute all of the shares of
Common
Stock(1) of Divco to the holders of capital stock, certain warrants
and certain
options to purchase common stock of SkyTerra in the
Distribution;
WHEREAS, at the close of business on the Distribution Date, the
taxable
year of the Divco Consolidated Group (as defined below) shall close
for U.S.
federal income tax purposes, and Divco and its Subsidiaries shall
leave the
SkyTerra Consolidated Group (as defined below); and
WHEREAS, the Parties hereto wish to provide for the payment of
Taxes
(each as defined below) and entitlement to Refunds (as defined
below) thereof,
allocate responsibility for and provide for cooperation in
connection with the
filing of returns in respect of Taxes, and provide for certain
other matters
relating to Taxes;
NOW, THEREFORE, in consideration of the premises and the
representations, covenants and agreements herein contained and
intending to be
legally bound hereby, the Parties hereto agree as follows:
1. Definitions. For purposes of this Agreement, the following
terms
shall have the meanings set forth below:
"Actually Realized" shall mean, for purposes of determining the
timing of the realization of a Refund or Tax Attribute by a Person
in respect of
any payment, transaction, occurrence or event, the time at which
the amount of
Taxes paid or Refund realized by such Person is reduced below the
amount of
Taxes that such Person would have been required to pay but for such
payment,
transaction, occurrence or event (calculated, for these purposes,
without regard
to the availability of any net operating loss, net capital loss,
unused
investment credit, unused foreign Tax credit or any other Tax
Attribute).
"Carryback" shall mean the carryback of a Tax Attribute by
Divco
from a Post-Distribution Taxable Period to a Pre-Distribution
Taxable Period.
"Carryback Benefit" shall mean, in respect of a Person or group
of
Persons for any taxable period, the excess of (a) the hypothetical
Tax Liability
of such Person or group of Persons for such taxable period,
calculated as if the
Carryback had not occurred but with all other facts unchanged, over
(b) the
actual Tax Liability of such Person or group of Persons for such
taxable period,
calculated taking into account the Carryback (and treating any
Refund as a
negative Tax Liability and taking into account credits, if any, for
purposes of
such calculation).
"Code" shall mean the Internal Revenue Code of 1986, as
amended.
"Combined Return" shall mean a consolidated, combined or unitary
Tax
Return that actually includes, by election or otherwise, one or
more members of
the SkyTerra Group together with Divco and/or any member of the
Divco Group.
"Divco Consolidated Group" shall mean the affiliated group of
corporations (within the meaning of Section 1504(a) of the Code) of
which Divco
is the common parent immediately after the Distribution (and any
predecessor or
successor to such affiliated group).
"Divco Group" shall mean (a) Divco and each Person that is a
direct
or indirect Subsidiary of Divco (including any Subsidiary of Divco
that is
disregarded for U.S. federal income Tax purposes (or for purposes
of any state,
local, or foreign Tax law)) immediately after the Distribution, (b)
any
corporation (or other Person) that shall have merged or liquidated
with or into
Divco or any such Subsidiary and (c) any predecessor or successor
to any Person
otherwise described in this definition.
"Divco Separate Return" shall mean any Tax Return required to
be
filed by any member of the Divco Group that does not include any
member of the
SkyTerra Group.
"Final Determination" shall mean the final resolution of
liability
for any Tax, which resolution may be for a specific issue or
adjustment or for a
taxable period, (a) 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 a state, local, or foreign taxing
jurisdiction, except
that a Form 870 or 870-AD or comparable form shall not constitute a
Final
Determination to the extent that it reserves (whether by its terms
or by
operation of law) the right of the taxpayer to file a claim for
Refund or the
right of the Taxing Jurisdiction to assert a further deficiency in
respect of
such issue or adjustment or for such taxable period (as the case
may be); (b) by
a decision, judgment, decree, or other order by a court of
competent
jurisdiction, which has become final and unappealable; (c) by a
closing
agreement or accepted offer in compromise under Sections 7121 or
7122 of the
Code, or a comparable agreement under the laws of a state, local,
or foreign
Taxing Jurisdiction; (d) by any allowance of a Refund or credit in
respect of an
overpayment of 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 imposing such Tax; or (e) by any other final
disposition, including
by reason of the expiration of the applicable statute of
limitations or by
mutual agreement of the Parties.
"Indemnified Party" shall mean any Person seeking
indemnification
pursuant to the provisions of this Agreement.
"Indemnifying Party" shall mean any Party hereto from which any
Indemnified Party is seeking indemnification pursuant to the
provisions of this
Agreement.
"Person" shall mean any individual, partnership, joint venture,
limited liability company, corporation, association, joint stock
company, trust,
unincorporated organization or similar entity or a governmental
authority or any
department or agency or other unit thereof.
"Post-Distribution Taxable Period" shall mean a taxable period
that
begins after the Distribution Date.
"Pre-Distribution Taxable Period" shall mean a taxable period
that
ends on or before the Distribution Date.
"Post-Change of Control Taxable Period" shall mean a taxable
period
that begins after the closing date of a Change of Control.
"Pre-Change of Control Taxable Period" shall mean a taxable
period
that ends on or before the closing date of a Change of Control.
"Proceeding" shall mean any audit or other examination, or
judicial
or administrative proceeding relating to liability for, or Refunds
or
adjustments with respect to, Taxes.
"Refund" shall mean any refund of Taxes, including any reduction
in
Tax Liabilities by means of a credit, offset or otherwise.
"Representative" shall mean with respect to a Person, such
Person's
officers, directors, employees and other authorized agents.
"Separation Agreement" shall have the meaning set forth in the
recitals of this Agreement.
"SkyTerra Consolidated Group" shall mean the affiliated group
of
corporations (within the meaning of Section 1504(a) of the Code) of
which
SkyTerra is the common parent (and any predecessor or successor to
such
affiliated group).
"SkyTerra Group" shall mean (a) SkyTerra and each Person that is
a
direct or indirect Subsidiary of SkyTerra (including any Subsidiary
of SkyTerra
that is disregarded for U.S. federal income Tax purposes (or for
purposes of any
state, local, or foreign Tax law)) immediately after the
Distribution, (b) any
corporation (or other Person) that shall have merged or liquidated
with or into
SkyTerra or any such Subsidiary and (c) any predecessor or
successor to any
Person otherwise described in this definition.
"SkyTerra Separate Return" shall mean any Tax Return required to
be
filed by any member of the SkyTerra Group that does not include any
member of
the Divco Group.
"Straddle Period" shall mean any taxable period commencing on
or
prior to, and ending after, the closing date of a Change of
Control.
"Tax or Taxes" (a) means any and all federal, state, local,
foreign
or other tax of any kind (together with any and all interest,
penalties, fines,
additions to tax and additional amounts imposed with respect
thereto) imposed by
any Taxing Jurisdiction, including taxes on or with respect to
income,
alternative minimum, accumulated earnings, personal holding
company, capital,
transfer, stamp, franchises, windfall or other profits, gross
receipts,
property, sales, use, capital stock, payroll, employment,
unemployment, social
security, workers' compensation or net worth, and taxes in the
nature of excise,
withholding, ad valorem or value added and (b) shall include any
transferee
liability in respect of an amount described in clause (a) of this
definition.
"Tax Attribute" shall mean any net operating loss, net capital
loss,
unused investment credit, unused foreign Tax credit, excess
charitable
contribution, minimum Tax credit or general business credit, in
each case, with
respect to the current year and any carryover.
"Tax Liabilities" shall mean all liabilities for Taxes.
"Tax Return" shall mean any return, report, filing, statement,
questionnaire, declaration or other document required to be filed
with a Taxing
Jurisdiction in respect of Taxes, including any attachments
thereto, and any
information return, claim for refund, amended return or declaration
of estimated
Taxes.
"Taxing Jurisdiction" a governmental authority (foreign or
domestic)
or any subdivision, agency, commission or authority thereof having
jurisdiction
over the assessment, determination, collection or imposition of any
Tax
(including, without limitation, the IRS) on SkyTerra, Divco or any
of their
respective Affiliates.
"Underpayment Rate" shall mean the annual rate of interest
described
in Section 6621(c) of the Code for large corporate underpayments of
income Tax
(or similar provision of state, local, or foreign income Tax law,
as
applicable), as determined from time to time.
2. Filing of Tax Returns; Payment of Taxes.
a. Combined Returns, SkyTerra Consolidated Group Returns and
SkyTerra Separate Returns.
(i) SkyTerra shall prepare and file (or cause to be prepared
and
filed) (A) all Combined Returns, (B) all other consolidated Tax
Returns of the
SkyTerra Consolidated Group and (C) all SkyTerra Separate Returns.
SkyTerra
shall pay (or cause to be paid) any and all Taxes due with respect
to such
Combined Returns, other consolidated Tax Returns of the SkyTerra
Consolidated
Group and SkyTerra Separate Returns; provided that, with respect to
any payments
of such Taxes made after the Distribution Date, Divco shall be
liable for (A)
all Taxes shown due on such Combined Returns (including all Tax
Liabilities
resulting from the Distribution and the restructuring related
thereto) other
than any Taxes that directly or indirectly relate to MSV or
Terrestar and (B)
all Taxes shown due on such other consolidated Tax Returns of the
SkyTerra
Consolidated Group and SkyTerra Separate Returns for all Pre-Change
of Control
Taxable Periods and, with respect to any Straddle Period, the
portion of such
Straddle Period ending on the closing date of the Change of
Control, in all
cases, other than any Taxes that directly or indirectly related to
MSV,
Terrestar or a Change of Control; and provided further that, Divco
shall not be
liable for any Taxes with respect to such Combined Returns, other
consolidated
Tax Returns of the SkyTerra Consolidated Group and SkyTerra
Separate Returns to
the extent any Tax Attribute is available to any member of the
SkyTerra Group to
reduce the amount of any such Taxes.
(ii) The allocation of Taxes for a Straddle Period shall be
apportioned between the Pre-Change of Control Taxable Period and
the Post-Change
of Control Taxable Period based on a closing of the books method as
if the
closing date of the Change of Control was the end of the taxable
period.
(iii) With respect to any member of the Divco Group that is
included in both a Divco Separate Return pursuant to Section 2(b)
and a Combined
Return, Divco shall provide to SkyTerra a schedule setting forth
the items of
income, gain, loss, deduction and credit of such member with
respect to such
Combined Return no later than forty-five (45) days prior to the due
date
(including extensions) for the filing of such Combined Return, and
SkyTerra
shall prepare such Combined Return in accordance with the schedule
Divco so
provides.
(iv) All Combined Returns, other consolidated Tax Returns of
the
SkyTerra Consolidated Group and SkyTerra Separate Returns that
include Taxes for
which Divco is liable shall be (A) prepared by SkyTerra, in a
manner consistent
with past practice, to the extent permissible under applicable law
and (B) duly
and timely filed by SkyTerra in accordance with all applicable
laws. All such
Tax Returns shall be submitted to Divco no later than thirty (30)
days prior to
the due date (including extensions) for filing of such Tax Returns
(or if such
due date is within forty-five (45) days following the Distribution
Date, as
promptly as practicable following the Distribution Date). Divco
shall have the
right to review such Tax Returns and all work papers and procedures
used to
prepare such Tax Returns. Within ten (10) days after delivery of
any such Tax
Return, Divco shall notify SkyTerra in writing if it objects to any
of the items
in such Tax Return which items could reasonably be expected to
adversely impact
any member of the Divco Group. If Divco does not so notify SkyTerra
of any
objection, Divco shall be considered to have consented to the
filing of such Tax
Return. If Divco objects to any such item on such a Tax Return,
SkyTerra and
Divco shall attempt in good faith to resolve the dispute and, if
they are unable
to do so, the disputed items shall be resolved (within a reasonable
time, taking
into account the deadline for filing such Tax Return) in accordance
with Section
10(d). Upon resolution of all such items, the relevant Tax Return
shall be filed
on that basis. Divco shall pay to SkyTerra the Taxes for which it
is liable no
later than five (5)
