EXHIBIT 10.12
TAX SHARING AGREEMENT
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THIS TAX SHARING AGREEMENT is made and entered into this
3rd day of
November, 2004 (this "Agreement"), by and among TAL International
Group, Inc., a
Delaware corporation (the "Company"), Transamerica Leasing Inc., a
Delaware
corporation ("Leasing"), Trans Ocean Ltd., a Delaware corporation
("Trans
Ocean"), and each corporation, other than the Company, Leasing and
Trans Ocean,
which is a signatory to this Agreement (Leasing, Trans Ocean and
such other
corporations shall collectively be referred to as the
"Subsidiaries" and
individually referred to as a "Subsidiary").
WITNESSETH:
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WHEREAS, the Company owns directly or indirectly capital
stock of each
of the Subsidiaries which represents at least 80 percent of the
vote and value
of each of the Subsidiaries and may, therefore, include the income
and expense
of each of the Subsidiaries in the Company's consolidated federal
income tax
returns; and
WHEREAS, the parties hereto desire to consolidate such
returns upon the
terms and conditions herein set forth;
NOW, THEREFORE, in consideration of the premises and the
mutual
covenants and agreements herein set forth, the parties hereto do
hereby agree as
follows:
1. Filing and Preparation of Future Returns. Each of the
Subsidiaries
agrees to consent to joining with the Company and its consolidated
Subsidiaries
(the Company and each of the Subsidiaries being herein collectively
referred to
as the "Group") in the filing of the consolidated federal income
tax returns for
any taxable year for which a consolidated return can be filed and
each taxable
year thereafter, in accordance with applicable income tax laws and
regulations.
The Company agrees that it will prepare and file in a timely manner
all federal
income tax returns required to be filed on behalf of the Company
and its
consolidated Subsidiaries and will pay the taxes shown to be due
thereon.
2. Tax Payments; Estimated Tax Payments.
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( a) For each taxable year ending after the date
hereof during
which a Subsidiary is included in a consolidated Federal income tax
return with
the Company, each Subsidiary will pay to the Company an amount
equal to its
Subsidiary Tax Liability, as defined in the next sentence.
Subsidiary Tax
Liability means the hypothetical Federal income tax liability of a
Subsidiary
for a taxable year determined as if such Subsidiary had filed its
own separate
Federal income tax return for such taxable year and all prior
taxable years
ending after the date hereof, except that such Subsidiary shall be
treated as
having available as loss or credit carryovers for purposes of
computing such
Subsidiary's Subsidiary Tax Liability all losses or credits
previously generated
by it and utilized by other Subsidiaries, other than any such
losses or credits
that were previously taken into account in computing such
Subsidiary's
Subsidiary Tax Liability, each such Subsidiary shall be treated as
though such
Subsidiary made an election specified in Section 172(b)(3) of the
Internal
Revenue Code of 1986, as amended (the "Code") to forgo the
carryback period for
net operating losses and all credits and other tax attributes shall
also be
carried forward
only, and shall not be carried back to prior taxable years. Such
hypothetical
Federal income tax liability shall be determined at the end of the
taxable year
and shall reflect any tax elections, conventions, treatments or
methods which
are actually utilized by the Group in filing its consolidated
Federal income tax
return. Such hypothetical Federal income tax liability shall not be
less than
zero. To the extent that the obligation to pay such amount has not
fully
satisfied pursuant to paragraph 2(b) of this Agreement, such
Subsidiary shall
pay any such remaining amount to the Company on the last date on
which the
Company is required to make its final payment of Federal income
taxes for the
taxable year without incurring any penalties or additions to tax.
(b) On any date on which the Company is required to
make an
estimated payment of the consolidated Federal income tax of the
Group under
Section 6655 of the Code, each Subsidiary will make estimated
payments to the
Company in an amount equal to such Subsidiary's hypothetical
estimated
consolidated Federal income tax liability for a Subsidiary
determined in
accordance with the principles of paragraph 2(a). If the total of
such estimated
payments made by such Subsidiary to the Company with respect to a
taxable year
shall be in excess of the liability of such Subsidiary to the
Company pursuant
to paragraph 2(a) of this Agreement for such taxable year, the
Company shall pay
the amount of such excess to such Subsidiary no later than the date
on which the
Company files the consolidated Federal income tax return for the
Group.
3. Adjustments to Liability.
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(a) If the Subsidiary Tax Liability of a Subsidiary
is changed as
the result of any final administrative or judicial determination
(including a
final "determination" as defined in Section 1313(a) of the Code)
with respect to
consolidated Federal income tax returns actually filed by the
Group, then the
amount of the payments required from such Subsidiary to the Company
under
paragraph 2(a) shall be recomputed by substituting the amount of
such
Subsidiary's Subsidiary Tax Liability after the adjustments
described above in
place of such Subsidiary's Subsidiary Tax Liability, provided that
the
principles of paragraph 2(a) shall be applied in connection with
such
recomputation notwithstanding any contrary determination. If such
final
determination results in an increase in the Subsidiary Tax
Liability, such
Subsidiary shall, subject to the reduction provided for in the next
sentence,
pay to the Company not later than five days after such final
determination an
amount equal to the excess of the new Subsidiary Tax Liability over
the amount
previously paid to the Company by such Subsidiary. If such final
determination
results in a reduction in such Subsidiary's Subsidiary Tax
Liability for a
taxable year, such reduction shall first be applied to offset any
increase to
such Subsidiary's Subsidiary Tax Liability for any other taxable
year to which
such final determination applies, and any remaining amount of such
reduction
shall be carried forward and credited against such Subsidiary's
Subsidiary Tax
Liability for succeeding taxable years. The parties recognize that
such new
liability for any taxable year is not necessarily such Subsidiary's
final
liability for that year, and may be recomputed more than once.
(b) Payments made pursuant to paragraph 2(a) shall
bear interest
in the same manner as any late payment or refund of Federal income
tax.
4. Other Taxes. In the event there shall be imposed on
the Company or
any of the Subsidiaries any foreign, federal, state or local tax to
which
principles of consolidated taxation
2
may be applied and practical, each of the Company and each of the
Subsidiaries
agree that this Agreement shall also be applicable with respect to
such taxes.
For purposes of this Agreement, the term taxes shall include, but
is not limited
to, all net income, capital gains, gross income, gross receipts,
sales, use,
transfer, franchise, profits, license, capital, payroll, excise,
value added or
other taxes and any related interest or governmental charge.
5. Payment. Any payment required by a Subsidiary to the
Company under
Sections 2, 3 or 4 of this Agreement shall be made first by
reducing the amount
of any account payable created under the next sentence (but not
below zero), and
then by entering or increasing an account payable to the Company on
the books of
account of such Subsidiary. Any payment required by the Company to
a Subsidiary
under this Agreement shall be made first by reducing the amount of
any account
payable created under the prior sentence (but not below zero), and
then by
entering or increasing an account payable to such Subsidiary on the
books of
account of the C
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