APPLIED DIGITAL SOLUTIONS, INC./
INTELLESALE.COM, INC.
TAX SHARING AGREEMENT
THIS AGREEMENT dated as of October __, 1999, by and among
APPLIED DIGITAL SOLUTIONS, INC., a Missouri corporation ("ADS"),
Intellesale.com, Inc., a Delaware corporation ("Intellesale"), and Intellesale's
domestic affiliates that are signatories to this Agreement (each, an
"Intellesale Subsidiary"). Defined terms are set forth in Article I.
WHEREAS, ADS is the common parent of the ADS Consolidated
Group and such group includes Intellesale and other members of the Intellesale
Sub Group. The ADS Consolidated Group files a Consolidated Federal Income Tax
Return;
WHEREAS, ADS expects that, as a result of the sale of the
common stock of Intellesale, pursuant to an initial public offering ("IPO"),
Intellesale will cease to be a member of the ADS Consolidated Group; and
WHEREAS, ADS and Intellesale desire to set forth their
agreement on the proper allocation among ADS, Intellesale and their respective
Affiliates of foreign, federal, state and local Taxes incurred in taxable
periods beginning prior to (and in certain respects, subsequent to) the
Deconsolidation Date and their respective obligations in respect of the same;
NOW, THEREFORE, in consideration of their mutual promises, the
parties hereby agree as follows:
1. Definitions.
(a) As used in this Agreement:
"ADS Consolidated Group" means, with respect to any taxable
period, the corporations which are members of the affiliated group of
corporations of which ADS is the common parent (within the meaning of Section
1504 of the Code).
"ADS Income Tax Liability" means (i) the ADS Sub Group's
allocable share of the liability for Federal Taxes of the ADS Consolidated Group
for all periods that the ADS Sub Group were members of such group determined as
if the members of the ADS Sub Group were the only members of the ADS
Consolidated Group; (ii) the ADS Sub Group's allocable share of the Consolidated
Non-Federal Tax liability of the ADS Sub Group for all periods they joined in
the filing of a Tax Return in respect of a Consolidated Non-Federal Tax with ADS
determined as if the members of the ADS Sub Group were the only members included
in such Tax Return; and (iii) any liability resulting from any Income Taxes of
the ADS Sub Group with respect to any Post-Deconsolidation Tax Period or any
Income Taxes of the ADS Sub Group allocated to such group pursuant to Section
2(c) hereof. The parties intend that the ADS Sub Group's allocable share of the
liability for Federal Taxes or Consolidated Non-Federal Taxes as determined in
clause (i) or (ii) above, when added to the Intellesale Sub Group's allocable
share of the liability for Federal Taxes or Consolidated Non-Federal Taxes for
the same period will equal 100% of the liability for Federal Taxes of the ADS
Consolidated Group or Consolidated Non-Federal Taxes for such period, and that
any difference shall be allocated between the ADS Sub Group and the Intellesale
Sub Group in proportion to the amount determined under clause (i) or (ii) above
with respect to both the ADS Sub Group and the Intellesale Sub Group.
"ADS Indemnitee" means ADS and its Affiliates.
"ADS Sub Group" means, jointly and severally, the ADS
Consolidated Group, but does not include any corporation that is a member of the
Intellesale Sub Group.
"Affiliate" of any person means any person, corporation,
partnership or other entity directly or indirectly controlling, controlled by or
under common control with such person excluding any shareholder of ADS.
References herein to an Affiliate of ADS shall mean any Affiliate of ADS,
excluding on or after the Deconsolidation Date, Intellesale, any subsidiaries of
Intellesale, of which Intellesale owns at least fifty percent (50%) of the total
combined voting power, and all shareholders of Intellesale. References herein to
an Affiliate of Intellesale shall exclude ADS, all subsidiaries of ADS which are
not subsidiaries of Intellesale and all shareholders of Intellesale.
"After-Tax Amount" means an amount that shall be equal to the
hypothetical after-tax amount of the indemnity payment due hereunder, taking
into account the hypothetical Tax consequences of the payments or accruals of
the amounts which give rise to the indemnity obligation. References to
"After-Tax basis", "hypothetical Tax consequences" and "hypothetical After-Tax
amount" refer to calculations of Tax at the maximum statutory rate (or rates, in
the case of an item that affects more than one Tax) applicable to an ADS
Indemnitee or an Intellesale Indemnitee, as the case may be, for the relevant
year. Such After-Tax Amount shall take into account the benefit or detriment in
a subsequent period of an item of adjustment which gives rise to an Indemnitee
payment.
"Applicable Rate" means the interest rate determined under the
provisions of sections 6621 and 6622 of the Code.
"Code" means the Internal Revenue Code of 1986, as amended.
"Consolidated Non-Federal Tax" means, with respect to each
foreign, state or local taxing jurisdiction, any income or franchise Tax payable
to any such jurisdiction in which Intellesale or any of its Affiliates is or may
be liable for such Tax on a consolidated, combined or unitary basis with ADS or
any of its Affiliates.
"Consolidated Federal Income Tax Return" means any Tax Return
with respect to Federal Income Taxes filed on a consolidated basis when
Intellesale or one or more of its Affiliates join in filing such Tax Return with
ADS or one or more ADS Affiliate.
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"Deconsolidation" shall mean any event pursuant to which
Intellesale ceases to be a member of the ADS Consolidated Group.
"Deconsolidation Date" means the date that Intellesale ceases
to be a member of the ADS Consolidated Group as determined under Treas. Reg. ss.
1.1502-76(b).
"Federal Tax" means any United States net income,
environmental, excise, alternative or add-on minimum Tax.
"Final Determination" means: (i) with respect to Federal
Taxes, (A) a "determination" as defined in section 1313(a) of the Code, or (B)
the date of acceptance by or on behalf of the Internal Revenue Service of Form
870-AD (or any successor form thereto) as a final resolution of tax liability
for any taxable period, except that a Form 870-AD (or successor form thereto)
that reserves the right of the taxpayer to file a claim for refund and/or the
right of the Internal Revenue Service to assert a further deficiency shall not
constitute a Final Determination with respect to the item or items so reserved;
(ii) with respect to Taxes other than Federal Taxes, any final determination of
liability in respect of a Tax provided for under applicable law; (iii) any final
disposition by reason of the expiration of the applicable statute of
limitations; and (iv) the payment of Tax by the ADS Sub Group or the Intellesale
Sub Group, whichever is responsible for payment of such Tax under applicable
law, with respect to any item disallowed by a Taxing Authority, provided that
the provisions of Section 6(b) hereof have been complied with, or, if such
Section 6(b) is inapplicable, that the party responsible under the terms of this
Agreement for such Tax is notified by the party paying such Tax that it has
determined that no action should be taken to recoup such disallowed item, and
the other party agrees with such determination.
"Income Taxes" means any Federal Tax, foreign, state or local
income or franchise tax or other tax measured by income and all other taxes
reported on returns which include federal, state or local income or franchise
taxes or other taxes measured by income, together with any interest, penalties
or additions to tax imposed with respect thereto.
"Income Tax Return" means any foreign, federal, state or local
consolidated or separate Tax Return which reports Income Taxes of ADS,
Intellesale or their Affiliates.
"Intellesale Income Tax Liability" means (i) the Intellesale
Sub Group's allocable share of the liability for Federal Taxes of the ADS
Consolidated Group for all periods that the Intellesale Sub Group were members
of such group determined as if the members of the Intellesale Sub Group were the
only members of the ADS Consolidated Group; (ii) the Intellesale Sub Group's
allocable share of the Consolidated Non-Federal Tax liability of the Intellesale
Sub Group for all periods they joined in the filing of a Tax Return in respect
of a Consolidated Non-Federal Tax with ADS, determined as if the members of the
Intellesale Sub Group were the only members included in such Tax Return; (iii)
any liability resulting from any Income Taxes of the Intellesale Sub Group with
respect to any Post-Deconsolidation Tax Period or any Income Taxes of the
Intellesale Sub Group allocated to such party for any taxable period commencing
at the Deconsolidation Date pursuant to Section 2(c) hereof; and (iv) any
Federal Tax liability or any other Income Tax liability of any member of the
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Intellesale Sub Group attributable to any period prior to the date any member of
the Intellesale Sub Group became a member of the ADS Consolidated Group. The
parties intend that the Intellesale Sub Group's allocable share of the liability
for Federal Taxes or Consolidated Non-Federal Taxes as determined in clause (i)
or (ii) above when added to the ADS Sub Group's allocable share of the liability
for Federal Taxes or Consolidated Non-Federal Taxes for the same period will
equal 100% of the liability for Federal Taxes of the ADS Consolidated Group or
Consolidated Non-Federal Tax for such period, and that any difference shall be
allocated between the Intellesale Sub Group and the ADS Sub Group in proportion
to the amount determined under clause (i) or (ii) above with respect to both the
Intellesale Sub Group and the ADS Sub Group.
"Intellesale Indemnitee" means Intellesale and each of its
Affiliates.
"Intellesale Sub Group" means, jointly and severally,
Intellesale and any subsidiaries of Intellesale which would be members of an
affiliated group of corporations if Intellesale were the common parent (within
the meaning of Section 1504 of the Code).
"Other Taxes" means taxes other than Income Taxes.
"Post-Deconsolidation Tax Period" means a tax period beginning
after the Deconsolidation Date.
"Pre-Deconsolidation Tax Period" means any tax period
beginning before the Deconsolidation Date.
"Tax" means (A) any net income, alternative or add-on minimum,
gross income, gross receipts, sales, use, ad valorem, franchise, profits,
license, withholding, payroll, employment, excise, transfer, recording,
severance, stamp, occupation, premium, property, environmental, custom duty, or
other tax, governmental fee or other like assessment or charge of any kind
whatsoever, together with any interest and any penalty, addition to tax or
additional amount imposed by any governmental authority responsible for the
imposition of any such domestic or foreign tax (a "Taxing Authority"); and (B)
any liability of Intellesale, ADS or any of their Affiliates (or, in each case,
any successor in interest thereto by merger or otherwise), as the case may be,
for the payment of any amounts of the type described in clause (A) for any
taxable period resulting from the application of Treasury Regulation Section
1.1502-6 or, in the case of any Consolidated Non-Federal Tax, any similar
provision applicable under State law.
"Tax Assets" means any Tax Item that could reduce the amount
of Tax liability, including a net operating loss, net capital loss, investment
Tax credit, foreign Tax credit, charitable deduction or credit relative to
alternative minimum tax or any other Tax credit.
"Tax Item" means any item of income, gain, loss, deduction or
credit or other attribute that may increase or decrease a Tax.
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"Tax Return" means all reports, estimates, extensions,
information statements and returns relating to or required by law to be filed in
connection with the determination, assessment or collection of any Taxes and in
the case of consolidated or combined tax returns, by ADS, Intellesale or their
Affiliates on behalf of the Intellesale Sub Group, and all information returns
(e.g., Form W-2, Form 1099) and reports relating to Taxes and employee benefit
plans of ADS, Intellesale or their Affiliates.
(b) Any term used in this Agreement which is not
defined in this Agreement shall, to the extent the
context requires, have the meaning assigned to it in the Code or applicable
Treasury Regulations thereunder.
2. Income Taxes.
(a) Applicable Agreements. On and after the
Deconsolidation Date, this Agreement shall constitute the sole Tax Sharing
Agreement between the ADS Sub Group and the Intellesale Sub Group, and except as
otherwise provided in this Agreement, all such agreements, if any, shall be
terminated effective as of the end of the Deconsolidation Date. Any such
termination shall not be effective as to any right or obligation of the ADS Sub
Group or the Intellesale Sub Group with respect to any third party.
(b) Filing Returns.
(i) ADS shall prepare (or cause to be
prepared) and file (or cause to be filed)
for all taxable periods ending with or prior
to the Deconsolidation Date all Consolidated
Federal Income Tax Returns for ADS, the ADS
Consolidated Group, the ADS Sub Group, the
Intellesale Sub Group and all other
consolidated, combined or unitary Tax
Returns for such entities. Included as a Tax
Return to be filed by ADS pursuant to the
preceding sentence is the Consolidated
Federal Income Tax Return of the ADS
Consolidated Group for the year of the IPO,
which will include all income and loss of
ADS for such year and the income and loss of
the Intellesale Sub Group for the portion of
such year ending on the Deconsolidation
Date.
(ii) Intellesale shall be responsible for
preparing and filing all Income Tax Returns
required to be filed by or on behalf of the
Intellesale Sub Group, for all taxable
periods beginning after the Deconsolidation
Date.
(iii) Those Income Tax Returns of the
Intellesale Sub Group which include any
taxable period beginning before and ending
after the Deconsolidation Date shall be
prepared by Intellesale and filed by
Intellesale on a basis which is consistent
with the manner in which ADS or its
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Affiliates filed such Tax Returns in the
past, unless a contrary treatment is
required by law.
(iv) The Intellesale Sub Group hereby
irrevocably designates ADS as its agent (and
the agent of all Intellesale Affiliates) for
the purpose of taking any and all actions
necessary or incidental to the filing of any
Tax Return required to be filed by ADS
pursuant to this Agreement or filing any
amended Consolidated Federal Income Tax
Return or Consolidated Non-Federal Tax
Return in respect of any adjustment of Tax
attributable to any period during which
Intellesale was a member of the ADS
Consolidated Group or any Consolidated
Non-Federal Group. ADS shall fully inform
Intellesale in writing, prior to taking such
actions, of all actions to be taken on
behalf of Intellesale. Intellesale shall
provide ADS with a Power of Attorney in
respect of the filing of such returns.
Notwithstanding any indication to the
contrary in this Section 2(b)(iv) or
elsewhere in this Agreement, ADS shall not
have the authority as agent for the
Intellesale Sub Group (or any Intellesale
Affiliate) or pursuant to the Power of
Attorney to take a position with respect to
a Tax Item, on a Tax Return required to be
filed by ADS pursuant to this Agreement or
any amended Consolidated Federal Income Tax
Return or Consolidated Non-Federal Tax
Return, that is inconsistent with the
position taken in the past with respect to
such Tax Item or that could reasonably be
expected to affect adversely the Intellesale
Sub Group or any Intellesale Affiliate with
respect to Tax Returns filed after the
Deconsolidation Date.
(c) Allocation of Tax Liability. For purposes
of allocation of Income Tax liability, between the ADS Sub Group and the
Intellesale Sub Group for purposes of this Agreement, the deconsolidation of
Intellesale shall be effective for Income Tax purposes in all taxing
jurisdictions as of the end of the Deconsolidation Date (even though the laws of
a particular Taxing jurisdiction do not recognize a short Tax period in respect
to the issuance of common stock of Intellesale for purposes of defining a
Consolidated Group). For purposes of this Section 2(c), the Income Taxes for the
portion of the taxable period up to and including the Deconsolidation Date shall
be determined on the basis of an interim closing of the books as of the end of
the Deconsolidation Date.
(d) Tax Refunds. Intellesale shall be entitled
to, and ADS agrees to promptly pay to Intellesale, an amount equal to all
foreign, federal, state and local Tax refunds and interest thereon, if any was
paid or credited (including, without limitation, as a credit or offset against
any other Taxes) (collectively "Refunds"), received by the ADS Sub Group to the
extent attributable to any Taxes for which Intellesale has indemnified the ADS
Sub Group pursuant to this Agreement.
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(e) ADS Indemnification. The ADS Sub Group
will jointly and severally indemnify each Intellesale Indemnitee against and
hold it harmless from (i) any ADS Income Tax Liability and (ii) all liability
for fees, costs and expenses (including but not limited to reasonable attorneys'
fees) arising out of or incident to any proceeding before any Taxing Authority
or any judicial authority with respect to any amount indemnifiable under clause
(i) of this section 2(e).
(f) Intellesale Indemnification. The Intellesale
Sub Group will jointly and severally indemnify each ADS Indemnitee against and
hold it harmless from (i) any Intellesale Income Tax Liability and (ii) all
liability for fees, costs and expenses (including, but not limited to,
reasonable attorneys' fees) arising out of or incident to any proceedings before
any Taxing Authority or any judicial authority with respect to any amount
indemnifiable under clause (i) of this Section 2(f) or with respect to Section
3(c).
(g) Indemnification Payments. ADS, the ADS Sub
Group and the Intellesale Sub Group shall discharge their obligations under
Sections 2(e) and 2(f) hereof by paying an After-Tax Amount within 30 days of
demand therefor. Notwithstanding the foregoing, if either Intellesale or ADS
disputes the fact or the amount of an obligation under Section 2(e) or 2(f),
then no payment shall be required until any such good faith dispute is resolved
in accordance with Section 13(b) hereof; provided, however, that any amount not
paid within 30 days of demand therefor shall bear interest at the Applicable
Rate from the date on which such demand was made until the date of payment.
(h) Taxes on Issuance. Any tax liability for Income
Taxes attributable to the issuance by Intellesale of Intellesale stock shall be
and remain the sole liability of Intellesale and the ADS Sub Group shall not
have any responsibility therefor.
3. Carrybacks; Other Tax Adjustments.
(a) If allowable by applicable law, Intellesale
will permit, in it's sole discretion, the use in any Pre-Deconsolidation Tax
Period of the Intellesale Sub Group of any Tax Asset by ADS arising in a
Post-Deconsolidation Tax Period. Likewise, if allowable by applicable law, ADS
will permit, in it's sole discretion, the use in any Pre-Deconsolidation Tax
Period of the ADS Sub Group or Intellesale Sub Group of any Tax Asset by
Intellesale arising in a Post-Deconsolidation Tax Period. The benefit from such
Tax Assets shall be considered equal to (i) the excess of the amount of Federal
Taxes or Consolidated Non-Federal Taxes, as the case may be, that would have
been payable by the ADS Consolidated Group or any relevant Consolidated
Non-Federal Group in the absence of such carryback over (ii) the amount of
Federal or Consolidated Non-Federal Taxes, as the case may be, actually payable
by the ADS Consolidated Group or relevant Consolidated Non-Federal Group. ADS
shall pay to Intellesale 50% of the benefit of such Tax Asset. Payment of the
amount of such benefit shall be made within 30 days of the receipt by ADS of any
refund, credit or other offset attributable thereto. Such amount payable shall
not exceed 50% of the amount that would have been received if the Intellesale
Sub Group or the ADS Sub Group, as the case may be, had filed as a separate
consolidated group.
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(b) At either ADS or Intellesale's request and
expense, the other party shall undertake those actions reasonably necessary to
enable such party to receive the benefit of any Tax Asset.
(c) If, subsequent to the payment by ADS to
Intellesale of any amount referred to in Section 3(a) above, there shall be (A)
a Final Determination under applicable law of a deficiency of Federal Taxes or
Consolidated Non-Federal Taxes of the ADS Consolidated Group or the relevant
group filing Consolidated Non-Federal Tax Returns, on the grounds that the Tax
Asset giving rise to such payment was in fact not available in whole or in part,
or (B) a Final Determination resulting from an audit of the Intellesale Sub
Group (or any successor thereto) which results in a reduction of any Tax Asset
so carried back, Intellesale shall repay to ADS, within 30 days of such Final
Determination, an After-Tax Amount reflecting the amount which would not have
been payable to Intellesale pursuant to this Section 3 had the amount of the
benefit been determined in light of such event.
(d) ADS and the members of the ADS Sub Group agree to
pay Intellesale the detriment to the Intellesale Sub Group (or any successor
thereto) from an adjustment to the ADS Income Tax Liability which results in an
increase of Intellesale liability for any Post-Deconsolidation Tax Period.
Intellesale and the members of the Intellesale Sub Group agree to pay ADS the
benefit received by the Intellesale Sub Group (or any successor thereto) from an
adjustment to the ADS Income Tax Liability which results in a reduction of
Intellesale liability for any Post-Deconsolidation Tax Period. Such
detriment/benefit shall be considered equal to the difference between the amount
of Federal Taxes or Non-Federal Taxes, as the case may be, that would have been
payable by the Intellesale Sub Group and the amount of Federal Taxes or
Non-Federal Taxes, as the case may be, actually payable by the Intellesale Sub
Group, taking into account such adjustment. Payment of such detriment/benefit
shall be made within 30 days of the filing of the applicable Tax Return
(including, without limitation, any amended or estimated return) for the taxable
period for which the benefit is utilized. Intellesale agrees to file such an
applicable Tax Return as soon as practicable after receiving notice from ADS to
the effect that such an adjustment to the ADS Income Tax Liability had been
made.
4. Other Taxes.
Liability for Other Taxes of the Intellesale Sub Group
(including any Tax liability in respect of the operations of the Intellesale Sub
Group prior to the Deconsolidation Date whether or not such operations were
conducted as a division of ADS) shall be the sole responsibility of the
Intellesale Sub Group, and liability for all Other Taxes that are attributable
to the ADS Sub Group (other than any operations of any of the Intellesale Sub
Group operated as a division of ADS) shall be the sole responsibility of the ADS
Sub Group. The ADS Sub Group and the Intellesale Sub Group each agrees to
indemnify and hold the other harmless in accordance with such undertaking.
Any Tax liabilities (including, but not limited to, sales Tax,
stock transfer Tax, documentary Tax and start-up Tax) attributable to the
Deconsolidation, including a public offering of Intellesale stock, shall be the
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sole responsibility of Intellesale and none of the members of the ADS Sub Group
shall have any responsibility therefor.
5. Additional Covenants.
(a) Intellesale and ADS shall cooperate (and shall
cause each of their Affiliates to cooperate) fully at such time and to the
extent reasonably requested by the other parties in connection with the
preparation and filing of any return, claim for a refund or other claim with
respect to Taxes or the conduct of any audit, dispute, proceeding, suit or
action concerning any return, amounts indemnifiable hereunder or any other
matter contemplated hereunder. Such cooperation shall include, without
limitation, the following: (i) the retention and provision for inspection on
reasonable request of books, records, documentation or other information
relating to any return until the expiration of the applicable statute of
limitation (giving effect to any extension, waiver or mitigation thereof); (ii)
the provision of additional information and explanation of material provided
under clause (i) of this Section 5(a); (iii) the execution of any document that
may be necessary or helpful in connection with the filing of any return by ADS,
Intellesale or any Affiliate of either, or any audit, proceeding, suit or action
addressed in the preceding sentence; and (iv) the use of the parties' best
efforts to obtain any documentation from a governmental authority or a third
party that may be necessary or helpful in connection with the foregoing.
(b) ADS and Intellesale shall advise each other with
respect to any proposed Tax adjustments relating to the ADS Consolidated Group
or any other consolidated, combined or unitary group of which Intellesale or its
Affiliates have filed with ADS or any of its Affiliates which are the subject of
any Internal Revenue Service or other Tax authority, audit or investigation, or
are the subject of any proceeding or litigation, and which may affect any Tax
attribute of any of the Intellesale Sub Group or the ADS Sub Group (including,
but not limited to, basis in an asset or the amount of earnings and profits).
(c) ADS and Intellesale, as the case may be, shall
promptly furnish to the other upon receipt a copy of any revenue agent's report
or similar report, notice of proposed adjustment, or notice of deficiency
received by ADS, any Affiliate of ADS, Intellesale, or any Affiliate of
Intellesale, as the case may be, relating to the other party's (or its
Affiliate's) obligations under Sections 2 or 3 hereof, or any adjustment
referred to in Section 5(c) hereof. ADS and Intellesale shall cooperate to keep
each other fully informed with respect to any development relating to all
matters described in this Agreement.
(d) ADS shall not without the prior written consent
of Intellesale modify or make any election (except as required by law) with
respect to Taxes affecting or binding on Intellesale or any of its Affiliates
for any taxable period beginning after the Deconsolidation Date. Intellesale
shall not, without the prior written consent of ADS, modify or make any election
(except as required by law) with respect to Taxes affecting or binding on the
ADS Sub Group for any taxable period.
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6. Cooperation and Contest.
(a) ADS shall have control over all matters in
respect of any Tax Return filed by ADS, or any Tax audit, dispute or proceeding
(whether administrative or judicial) relating to any Tax matters in respect of
any Tax Return filed by ADS. ADS shall promptly notify Intellesale of any
inquiries from the Internal Revenue Service or any other Tax authority which
relate to matters described in Sections 2(f) and 3. Intellesale shall have
control over all matters in respect of any Tax Return filed by Intellesale or
any Tax audit, dispute or proceeding (whether administrative or judicial)
relating to any Tax matters in respect of any Tax Return filed by Intellesale.
Intellesale shall promptly notify ADS of any inquiries from the Internal Revenue
Service or any other Tax authority which relate or may relate to matters
described in Sections 2(e) and 3.
(b) No settlement of any Internal Revenue Service or
other Tax authority audit relating to any matter which would cause a payment
under Sections 2(e), 2(f) or 3 shall be accepted or entered into by or on behalf
of the party entitled to receive a payment under Sections 2(e), 2(f) or 3,
whichever is applicable (the "Indemnitee"), unless (x) the party ultimately
responsible for such payment under Sections 2(e), 2(f) or 3, whichever is
applicable (the "Indemnitor"), consents thereto in writing (which consent shall
not be unreasonably withheld), or (y) the Indemnitor does not consent and it has
provided the Indemnitee with an opinion of its counsel that there is substantial
authority for the Indemnitor's position.
(c) In the event that a judgment of the United States
Tax Court or other court of competent jurisdiction results in an adverse
determination with respect to any issue which would cause Intellesale to pay ADS
any amount under Sections 2(f) or 3, Intellesale shall have the right to cause
ADS to appeal from such adverse determination at Intellesale's expense if
Intellesale delivers to ADS an opinion from its counsel that such appeal will
more likely than not succeed.
7. Payments.
All Payments to be made hereunder shall be made in immediately
available funds and, unless otherwise provided herein, within 30 days of the
date determined herein.
8. Notices.
All notices, demands, claims, or other communications under
this Agreement shall be in writing and shall be deemed to have been given upon
the delivery or mailing thereof, as the case may be, if delivered personally or
sent by certified mail, return receipt requested, postage prepaid, to the
parties at the following addresses (or at such other address as a party may
specify by notice to the other):
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If to ADS, to:
APPLIED DIGITAL SOLUTIONS, INC.
400 Royal Palm Way, Suite 410
Palm Beach , Florida 33480
Attention: Chief Financial Officer
Fax: (561) 366-0002
If to Intellesale, to:
INTELLESALE.COM, INC.
2047 Route 130 North
Burlington, New Jersey 08016
Attention: Chief Financial Officer
Fax: (973) 694-1616
9. Costs and Expenses.
Except as expressly set forth in this Agreement, each party
shall bear its own costs and expenses incurred pursuant to this Agreement. ADS
shall receive reimbursement for any expenses in respect of any Return filed by
ADS on behalf of Intellesale. Such expenses shall include any services performed
by ADS on behalf of Intellesale at the rate of $150 per hour for officers of ADS
and $50 per hour for non-officers of ADS.
10. Termination and Survival.
Notwithstanding anything in this Agreement to the contrary,
this Agreement shall remain in effect and its provisions shall survive for the
full period of all applicable statutes of limitation (giving effect to any
extension, waiver or mitigation thereof).
11. Section Headings.
The section headings contained in this Agreement are for
reference purposes only and shall not in any way affect the meaning or
interpretation of this Agreement.
12. Amendments; No Waivers.
(a) Any provision of this Agreement may be amended or
waived if, and only if, such amendment or waiver is in writing and signed, in
the case of an amendment, by ADS and Intellesale or, in the case of a waiver, by
the party against whom the waiver is to be effective.
(b) No failure or delay by any party in exercising
any right, power or privilege hereunder shall operate as a waiver thereof nor
shall any single or partial exercise thereof preclude any other or further
exercise thereof or the exercise of any other right, power or privilege.
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13. Governing Law and Interpretation.
(a) This Agreement shall be governed by and construed
in accordance with the laws of the State of Missouri.
(b) Any disagreement between the parties hereto with
respect to this Agreement, other than Sections 2 and 3, not resolved by mutual
agreement of the parties shall be settled by arbitration in the City of St.
Louis, State of Missouri in accordance with the Rules of the American
Arbitration Association, and judgment upon the award so rendered may be entered
in any court having jurisdiction thereof.
14. Counterparts.
This Agreement may be executed in one or more counterparts,
each of which shall be deemed to be an original, but all of which together shall
constitute one and the same instrument.
15. Assignment.
This Agreement shall be binding upon and shall inure to the
benefit of the parties hereto and their respective successors, provided that no
party may assign, delegate or otherwise transfer any of its rights or
obligations under this Agreement without the consent of the other parties
hereto.
--------------------------------
12
THIS AGREEMENT CONTAINS BINDING ARBITRATION PROVISIONS WHICH MAY
BE ENFORCED BY THE PARTIES.
IN WITNESS WHEREOF, the parties hereto have executed and
delivered this Agreement as of the day and year first above written.
APPLIED DIGITAL SOLUTIONS, INC. PORT PARTIES, LTD.
By: ___________________________ By: ___________________________
Its: President Its: President
Intellesale.COM, INC. BLUE STAR ELECTRONICS, INC.
By: ___________________________ By: ___________________________
Its: President Its: President
PIZARRO RE-MARKETING, INC. CONSOLIDATED MICRO
COMPONENTS, INC.
By: ___________________________ By: ___________________________
Its: President Its: President
NORCOM RESOURCES, INC. DATA PATH TECHNOLOGIES, INC.
By: ___________________________ By: ___________________________
Its: President Its: President
CYBERTECH STATION, INC. INTERNET MARKETING AND
RESEARCH, INC.
By: ___________________________ By: ___________________________
Its: President Its: President
13
GDB SOFTWARE SERVICES, INC. BOSTEK, INC.
By: ___________________________ By: ___________________________
Its: President Its: President
SERVICE TRANSPORT COMPANY FISCAL ADVANTAGE CORPORATION
By: ___________________________ By: ___________________________
Its: President Its: President
14
Tax Sharing Agreement - Applied Digital Solutions Inc. and Intellesale.com Inc.
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