Exhibit 10.72
Execution Copy
TAX SHARING
AGREEMENT
This TAX SHARING AGREEMENT, made as
of this 1st day of August, 2005 (this “ Agreement
”), by and among CONSOL Energy Inc., a Delaware corporation
(“ Parent ”), and CNX Gas Corporation, a
Delaware corporation (“ Gasco ”).
Recitals
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A.
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Parent and
Gasco are members of an affiliated group (the “ Group
”) within the meaning of Section 1504(a) of the Internal
Revenue Code of 1986, as amended (the “ Code ”),
of which Parent is the common parent corporation; and
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B.
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It is desired
to set forth the rights and obligations of the parties with respect
to consolidated tax liability of the Group, and to set forth
certain other matters relating to the filing of consolidated
returns and the payment of tax for the Group; and
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C.
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It is the
intention of the parties that Gasco shall bear its fair share of
the Group’s consolidated Federal income tax liability, and to
the extent applicable, state income tax liability.
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Now therefore, for and in
consideration of the premises and mutual covenants and agreements
herein contained and intending to be legally bound, each of Parent
and Gasco agree as follows:
1. Definitions
As used herein, the following terms
shall have the following meanings:
Adjustment
shall have the meaning set forth in
Section 10.
Code shall mean the Internal Revenue Code of 1986, as
amended.
Deconsolidation
shall have the meaning set forth in
Section 13.
Federal Group Consolidated
Return shall have the
meaning set forth in Section 2.
Federal Income Taxes
shall mean the taxes imposed by
Sections 11, 55 and 59A of the Code (or any successor provisions),
as well as any penalties, additions to tax and interest imposed
with respect thereto.
Gasco means CNX Gas Corporation, a Delaware
corporation.
Gasco Items
shall have the meaning set forth in
Section 10.
Gasco Stand-Alone
Attribute shall have the
meaning set forth in Section 6.
Gasco Subgroup
shall mean the group of corporations
consisting of Gasco and all corporations which would constitute an
affiliated group (within the meaning of Section 1504(a) of the
Code) of which Gasco was the common parent corporation were it not
for the fact that Gasco is a member of the Group.
Tax Sharing Agreement
Group Consolidated
Return shall have the
meaning set forth in Section 2.
Group shall mean the affiliated group (within the
meaning of Section 1504(a) of the Code) of which Parent is the
common parent corporation.
Parent shall mean CONSOL Energy Inc. a Delaware
corporation.
Post-Deconsolidation
Year shall mean any
taxable year which ends after a Deconsolidation.
Pre-Agreement Year
shall have the meaning set forth in
Section 9.
Records shall have the meaning set forth in Section
11.
Spin-Off shall have the meaning set forth in Section
13.
Stand-Alone Tax
Liability shall have the
meaning set forth in Section 5.
State Group Consolidated or
Combined Return shall
have the meaning set forth in Section 2.
State Income Tax
shall mean any tax imposed by the
various states or commonwealths wherein Gasco or any member of a
Gasco Subgroup has a taxable presence or may be required to share
in the combined tax return filed by Parent.
2. Filing of Consolidated United
States Federal and State Income Tax Returns
For each taxable year in which Gasco
is a member of the Group, the Group (a) shall file consolidated
Federal income tax returns (“ Federal Group Consolidated
Returns ”) and Gasco hereby consents to join in such
Federal Group Consolidated Returns, and (b) may be required to file
certain consolidated or combined State Income Tax returns (“
State Group Consolidated or Combined Returns ” and
together with the Federal Group Consolidated Returns, collectively,
the “ Group Consolidated Returns ”) and Gasco
hereby consents to join in such State Group Consolidated or
Combined Returns. The Parent, on behalf of the Group, shall prepare
and file such Group Consolidated Returns, and shall make all
remittances of Federal Income Tax and State Income Tax (including
estimated tax), as required by law. Parent shall, in its sole
discretion, have exclusive control over the preparation and filing
of Group Consolidated Returns (including, without limitation,
making any elections with respect thereto, providing, however, that
any election that affects only Gasco shall be made, after
consultation with Gasco, in a manner that is reasonable and fair to
Gasco).
3. State and Other Tax
Reporting
In the event consolidated, combined
or similar reporting is available but not required for purposes of
state income taxation, Parent, in its sole discretion, shall
determine whether to report in such manner. In the event that such
a consolidated or combined tax return is filed, Gasco’s share
of consolidated or
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Tax Sharing Agreement
combined tax liability shall be determined, and
payments with respect thereto, shall be made in accordance with the
principles of this Agreement. If consolidated or combined reporting
is not available, or is not used, with respect to any tax, Gasco
agrees to file such returns or reports, and to pay such amounts of
tax, at the time, and in the manner, required by law.
4. Sharing of Information;
Cooperation
(a) Parent and Gasco shall cooperate
fully in the determination of the amount of estimated tax payments,
the preparation and filing of Group Consolidated Returns, tax
planning, determination of appropriate reserves for current and
deferred taxes and the administration of the Group’s tax
matters, including executing any consents or other documents,
providing Parent with all information, and providing Parent with
access to any records, that are necessary in connection with such
determination, preparation, filing, planning or administration, or
with any audit or examination, or which are reasonably requested by
Parent in connection therewith.
5. Payments By
Gasco
Each year, at the times and in the
manner set forth in Section 7, Gasco shall make payments in an
amount equal to Gasco’s Stand-Alone Tax Liability. For
purposes of this Agreement, the “ Stand-Alone Tax
Liability ” of Gasco shall be the amount (but not below
zero) of Federal Income Tax and State Income Tax liability (in
those cases where Gasco joined in the filing of a State Group
Consolidated or Combined Return with the Group), which Gasco would
have incurred had it filed a separate Federal Income Tax or State
Income Tax return for all years subject to this Agreement (as
provided in Section 9), provided , however , that the
determination of Gasco’s Stand-Alone Tax Liability shall not
take into account any deduction or other tax benefit attributable
to the exercise of an option to purchase Parent stock by an
employee of Gasco. The determination of Gasco’s Stand-Alone
Tax Liability shall be made in a manner that reflects all
elections, positions, and methods used in the Group Consolidated
Return as actually filed (or will be filed) and otherwise shall be
prepared in a manner consistent with such Group Consolidated
Return. The determination of Gasco’s Stand-Alone Tax
Liability shall reflect any carryovers of net operating losses, net
capital losses, excess tax credits, or other tax attributes from
prior years subject to this Agreement which could have been
utilized by Gasco (excluding, however, those attributes utilized on
a Group Consolidated Return for which a payment was made by Parent
to Gasco pursuant to Section 6 hereof) if Gasco had never been
included in the Group and Gasco had actually filed separate returns
(prepared in a manner consistent with that set forth in this
Section 5 for determining Gasco’s Stand-Alone Tax Liability),
but shall not reflect any tax benefits that arise from any
adjustment to a Pre-Agreement Year or carryovers of any tax
attributes from a Pre-Agreement Year, regardless of whether such
attributes were utilized (on audit or otherwise) on a tax return of
Parent in a Pre-Agreement Year, provided , however ,
that in the case of any limitations on the use of net operating
losses, credits or other tax attributes which, in the Group
Consolidated Return as actually filed, are determined on a
consolidated basis (such as the foreign tax credit limitation) or
by taking into account items related to persons other than the
member which generated such tax attribute (such as the limitation
on the deductibility of interest expense under Code §163(j)),
Gasco’s Stand-Alone Tax Liability shall be determined based
on the actual amount of such limitations in the Group Consolidated
Return as filed, and not by recalculating such limitations as
though separate Federal income tax returns were filed. For purposes
of this Agreement, the term “credit” or “tax
credit” shall not include any credit for amounts of tax
previously paid.
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Tax Sharing Agreement
6. Use of Net Operating Losses or
Credits
If, for a taxable year subject to
this Agreement, a calculation of Gasco’s Stand-Alone Tax
Liability in accordance with the principles of Section 5 results in
a net operating loss, net capital loss, excess tax credit or other
tax attribute (a “ Gasco Stand-Alone Attribute
”), which is actually utilized in a Group Consolidated Return
(including any amendments thereto), then, within 30 days after the
later of (i) the due date for the Group Consolidated Return (taking
into account any extensions thereof) or (ii) the date such Gasco
Stand-Alone Attribute is actually realized in cash (whether
directly or by offset), Parent shall pay to Gasco an amount equal
to the lesser of (x) the refund which Gasco would have received as
a result of the carryback of such Gasco Stand-Alone Attribute to
any prior year or years (determined as if such attributes could not
be carried back to any year prior to the earliest year subject to
this Agreement) or (y) the tax savings or tax benefit realized by
Parent with respect to the use of such Gasco Stand-Alone Attribute
in a Group Consolidated Return. All calculations of deemed refunds
pursuant to this Section 6 shall include interest computed as if
Gasco had filed a claim for refund or an application for a
tentative carryback adjustment pursuant to Section 6411(a) of the
Code on the date on which the Group Consolidated Return is
filed.
7. Timing and Manner of
Payments
(a) At least 5 business days before each quarterly
payment of estimated Federal Income Tax or State Income Tax is due
on behalf of the Group, Gasco shall provide to Parent an estimate
of Gasco’s Stand-Alone Tax Liability and any other
information reasonably necessary to determine the amount of
Gasco’s share of such quarterly payment, based on a
reasonable estimate in accordance with the principles of Section 5,
and shall pay such amount to Parent.
(b) No later than 5 business days before the due
date (taking into account extensions) of the Federal Group
Consolidated Return or any State Group Consolidated or Combined
Return for each taxable year, Gasco shall (i) determine its
Stand-Alone Tax Liability for such year, (ii) shall notify Parent
of such amount, and (iii) provide information to Parent as is
reasonably necessary
