Exhibit
10.8


 


TAX SHARING AGREEMENT


THIS
AGREEMENT (this “Agreement”) made
and entered into as of                ,
2004, by and among PP Holding Corporation II, a Delaware corporation
(“PHC II”), PP Holding
Corporation, a Delaware  corporation
and direct wholly owned subsidiary of PHC II (“PHC”), Polypore, Inc., a Delaware  corporation and direct wholly owned subsidiary of PHC (“Polypore”), and such direct and indirect
subsidiaries of PHC II that are listed on Exhibit A hereto
from time to time (collectively with PHC and Polypore, the “Subsidiaries” and each individually, a “Subsidiary”).


WITNESSETH:


WHEREAS,
PHC II and each of the Subsidiaries qualifies as an “includible
corporation” within the meaning of Section 1504(b) of the Internal Revenue Code
of 1986, as amended (the “Code”);


WHEREAS,
the affiliated group of corporations, consisting of PHC II, as the common
parent, and each of the Subsidiaries (the “Polypore Group”), qualifies as an
“affiliated group” within the meaning of Section 1504(a) of the Code; and


WHEREAS,
the Polypore Group desires to take advantage of the tax savings that may result
from the filing of U.S. federal income tax returns on a consolidated basis, in
accordance with Sections 1501 et seq.
of the Code and the Treasury Regulations promulgated thereunder.


NOW,
THEREFORE, in consideration of the covenants, agreements, terms and conditions
contained herein, and for other good, valid and binding consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto, intending
to be legally bound, hereby agree as follows:


SECTION 1.  Defined Terms.  As used in this Agreement, the following
terms shall have the following meanings.


“Code” shall have the
meaning set forth in the recitals of this Agreement.


“Fiscal Year” shall mean
the annual accounting period of PHC II and any other Member.


“Interim Payments” shall
have the meaning set forth in Section 3(b) of this Agreement.


“Member” shall mean a
member (as defined in Treasury Regulations Section 1.1502-1(b)) of the Polypore
Group.


“PHC” shall have the
meaning set forth in the heading of this Agreement.


“PHC II” shall have
the meaning set forth in the heading of this Agreement.


“Polypore”
shall have the meaning set forth in the heading of this Agreement.


 

















 


“Polypore  Group”
shall have the meaning set forth in the recitals of this Agreement.


“Separate Return Liability”
shall mean, with respect to any Subsidiary for any Fiscal Year, the U.S.
federal income taxes (including any minimum tax or alternative minimum tax)
that would be payable by such Subsidiary to the U.S. Treasury had the
Subsidiary filed a separate income tax return for that Fiscal Year based on the
Subsidiary’s Separate Taxable Income for that Fiscal Year.


“Separate Taxable Income”
shall mean, with respect to any Subsidiary for any Fiscal Year, the income,
gains, losses, deductions and credits of such Subsidiary for that Fiscal Year
calculated as follows:  (i) any
dividends received by one Member from another Member will be assumed to qualify
for the 100% dividends received deduction of Section 243 of the Code or shall
otherwise be eliminated from such calculation; (ii) gain or loss on
intercompany transactions, whether or not deferred, shall be treated by each
Member in the manner required by Treasury Regulations Section 1.1502-13;
(iii) limitations on the calculation of a deduction or the utilization of
tax credits or the calculation of a tax liability shall be made on a
consolidated basis; (iv) net operating losses and credits of a Subsidiary
shall be treated as available to such Subsidiary in determining such
Subsidiary’s Separate Taxable Income, and shall not be reduced even if such net
operating losses or credits are used in determining the consolidated taxable
income of the Polypore Group, instead, such net operating losses and credits
shall be reduced only if, when and to the extent used in determining the
Separate Taxable Income of the Subsidiary; and (v) elections relating to
tax credits and tax computations that differ from the consolidated treatment if
separate returns were filed shall be made on an annual basis by PHC II.


“Subsidiary” and “Subsidiaries” shall have the meanings set
forth in the heading of this Agreement.


SECTION 2.  Consent to
Filing of Consolidated Return.


(a)           PHC II shall
file a consolidated U.S. federal income tax return, and pay to the U.S.
Treasury any taxes due thereon, on behalf of the Polypore Group for the taxable
year ending December 31, 2004, and for each subsequent taxable period for which
this Agreement is in effect and for which the Polypore Group is required or
permitted to file a consolidated tax return; provided, that PHC II
shall not be liable for any taxes attributable to a Subsidiary if such
Subsidiary has not complied with its tax payment requirements as set forth in
Section 3 hereof.  Each Subsidiary shall
execute and file such consents, elections and other documents that may be
required or appropriate for the proper filing of such returns.


(b)           Each corporation
that, subsequent to the date of this Agreement, becomes a Member shall be added
to the list of Subsidiaries contained in Exhibit A hereto.  Polypore (or the applicable Member that is
the direct parent corporation of such Subsidiary) shall cause each of the
Subsidiaries listed on Exhibit A hereto, as amended from time to time,
to become a party hereto by executing this Agreement in counterpart.


 


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SECTION 3.  Tax Payments.


(a)           Each Subsidiary
shall make payments to PHC II with respect to each Fiscal Year equal to its
respective Separate Return Liability for such Fiscal Year.  Such payments shall be made in the manner
set forth in paragraphs (b) and (c) below.


(b)           From time to time
during the Fiscal Year each Subsidiary shall make interim payments (“Interim
Payments”) to PHC II with respect to its Separate
Return Liability (i) pursuant to the schedule set forth in Section 6655(c)
of the Code and (ii) calculated under the principles Section 6655(d) of
the Code.  Interim Payments shall be
made no later than 5 calendar days prior to the due date of the relevant
estimated tax payment.


(c)           If a Subsidiary’s
Separate Return Liability for a particular Fiscal Year is greater than its
aggregate Interim Payments with respect to such Fiscal Year, then such
Subsidiary shall pay to PHC II the excess of its Separate Return Liability
over its aggregate Interim Payments at least five calendar days before
PHC II files the Polypore Group’s consolidated U.S. federal income tax
return in respect of such Fiscal Year. 
If a Subsidiary’s aggregate Interim Payments for a particular Fiscal
Year exceed its Separate Return Liability with respect to such Fiscal Year,
such excess shall be allowed as a credit to the Subsidiary in respect of the
Interim Payment next due from that Subsidiary to PHC II.


SECTION 4.  Adjustments to
the Separate Return Liability.


(a)           If for any Fiscal
Year the Internal Revenue Service makes an upward adjust to, or PHC II
files an amended return resulting in an upward adjustment of, the Polypore
Group’s consolidated U.S. federal income tax liability with respect to such
Fiscal Year, then each Subsidiary shall pay to PHC II an amount equal to
the excess of the Separate Return Liability for such Fiscal Year, as adjusted,
over the Separate Return Liability for such Fiscal Year paid to date.  In the event of a downward adjustment, the
excess of a Subsidiary’s Separate Return Liability for such Fiscal Year paid to
date over its Separate Return Liability, as adjusted, shall be allowed as a credit
to the Subsidiary in respect of the Interim Payment next due from that
Subsidiary to PHC II under Section 3 of this Agreement.


(b)           The payments
required under this Section 4 shall be made promptly after a “determination”
(as defined in Section 1313(a) of the Code) in respect of the amount at issue; provided,
however, that payments in the case of the filing of an amended return
shall be made promptly upon such filing.


SECTION 5.  Interest
Payments.  Interest
will be paid pursuant to this Agreement only with respect to payments required
to be made by a Subsidiary as a result of any adjustment or redetermination of
income by the Internal Revenue Service or in the case of a filing of an amended
return.  Such interest will be
calculated at the applicable overpayment or underpayment rate and shall otherwise
be determined in the same manner as would be determined by the Internal Revenue
Service.


SECTION 6.  Appointment of
PHC II as Agent.  Each
Subsidiary hereby appoints PHC II its agent with full power to act on its
behalf in all matters concerning the consolidated U.S. federal income tax
returns filed on behalf of the Polypore Group, including the preparation 


 


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and
filing of such returns (including any amendments thereto), making or revoking
all elections with respect thereto, negotiating and settling any audit,
examination or administrative proceeding with respect to such tax returns, and
commencing and prosecuting any judicial proceeding related to such tax returns.


SECTION 7.  State Tax
Returns.  The provisions of this
Agreement shall apply, as appropriately adjusted, to any Members filing
combined, consolidated, unitary or similar income or franchise returns for
state tax purposes.


SECTION 8.  Miscellaneous.


(a)           This Agreement and
any provision hereof may be amended, waived, discharged or terminated only by
an instrument in writing signed by the party against whom enforcement of the
amendment, waiver, discharge or termination is sought.


(b)           This Agreement shall
constitute the entire agreement between the parties concerning the subject
matter hereof and shall supersede any prior agreements and understandings
between or among the parties with respect to the subject matter hereof.


(c)           The validity,
interpretation and enforceability of this Agreement shall be governed in all
respects by the laws of the State of New York, without regard to conflict of
law principles.


(d)           Failure of any party
at any time to require the other party’s performance of any obligation under
this Agreement shall not affect the right to require performance of that
obligation.  Any waiver by any party of
any breach of any provision of this Agreement shall not be construed as a
waiver of any continuing or succeeding breach of such provision, a waiver or
modification of the provision itself, or a waiver of any right under this
Agreement.


(e)           Section and other
headings contained in this Agreement are for reference purposes only and are in
no way intended to describe, interpret, define or limit the scope, extent or
intent of this Agreement or of any provision hereof.


(f)            Every provision of
this Agreement is intended to be severable. 
If any term or provision hereof is determined to be illegal or invalid
for any reason whatsoever, such illegality or invalidity shall not affect the
validity of the remainder of this Agreement.


(g)           This Agreement may
be executed in multiple counterparts, each of which shall be deemed an original
and all of which together shall constitute one agreement.  The signatures of any party to any such
counterpart shall be deemed to be a signature to, and may be appended to, any
other counterpart.


(h)           This Agreement and
all of the provisions hereof shall be binding upon and inure to the benefit of,
and be enforceable by, the parties hereto and their respective successors and
permitted assigns, but neither this Agreement nor any of the rights, interests
or obligations herein shall be assigned by any party hereto without the prior
written consent of the other parties hereto.


 


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(i)            Matters of
interpretation and calculations under this Agreement shall be made in good
faith by PHC II.


(j)            Upon request by
PHC II, each Subsidiary shall pay to PHC II, no later than the due
date of the next Interim Payment due following such request, such Subsidiary’s pro rata share of (i) amounts
expended by PHC II in connection with the determination of the tax
liability of the Polypore Group and the preparation of necessary tax return
filings and (ii) amounts expended by PHC II in determining amounts
due pursuant to this Agreement.


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IN
WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date
first set forth above.


 


	
  PP HOLDING CORPORATION II

  	
   

  	
  PP HOLDING CORPORATION

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Lynn Amos

  	
   

  	
  By:

  	
  /s/ Lynn Amos

  
	
  Name:

  	
   

  	
  Name:

  
	
  Title

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  POLYPORE, INC.

  	
   

  	
  CELGARD, INC.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Lynn Amos

  	
   

  	
  By:

  	
  /s/ Lynn Amos

  
	
  Name:

  	
   

  	
  Name:

  
	
  Title

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  DARAMIC, INC.

  	
   

  	
  DARAMIC ASIA, INC.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Lynn Amos

  	
   

  	
  By:

  	
  /s/ Lynn Amos

  
	
  Name:

  	
   

  	
  Name:

  
	
  Title

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  DARAMIC INTERNATIONAL, INC.

  	
   

  	
  POLYPORE HOLDINGS, INC.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Lynn Amos

  	
   

  	
  By:

  	
  /s/ Lynn Amos

  
	
  Name:

  	
   

  	
  Name:

  
	
  Title:

  	
   

  	
  Title:

  



 


 


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EXHIBIT A


 


Celgard, Inc., a Delaware corporation


Daramic, Inc., a Delaware corporation


Daramic Asia, Inc., a Delaware corporation


Daramic International, Inc., a Delaware
corporation


Polypore Holdings, Inc., a Delaware
corporation


 


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