EXHIBIT 10.2
AMENDED AND RESTATED TAX SHARING AGREEMENT
TAX SHARING AGREEMENT (the "Agreement") entered into as of June 24,
1992, by and among MAFCO HOLDINGS, Inc., a Delaware corporation ("Parent"),
REVLON HOLDINGS INC., a Delaware corporation ("Holdings"), REVLON, INC., a
Delaware corporation ("Public Co."), REVLON CONSUMER PRODUCTS CORPORATION, a
Delaware corporation ("Operating Co.") and the Subsidiaries (as hereinafter
defined) of Public Co. that are signatories hereto (including the entities which
become parties hereto pursuant to Paragraph 20 hereof) as amended and restated
as of January 1, 2001. Public Co. and its Subsidiaries (including Operating Co.)
are hereinafter sometimes referred to as the "Public Co. Group," and Parent and
its subsidiaries are hereinafter sometimes referred to as the "Parent Group."
WHEREAS Parent, Holdings, Public Co. and the Subsidiaries of Public Co.
desire, to the extent permitted by the Internal Revenue Code of 1986, as amended
(the "Code"), and the regulations promulgated thereunder, (the "Treasury
Regulations"), to be included in the filing of consolidated Federal income tax
returns on behalf of the Parent Group;
WHEREAS Parent, Holdings and the Public Co. Group wish to allocate and
settle among themselves in an equitable manner the consolidated Federal income
tax liability of the Parent Group;
WHEREAS Parent, Holdings, Public Co. and the Subsidiaries of Public Co.
desire to participate, to the extent permitted by applicable state or local law,
in combined state or local income tax returns (which shall be deemed for all
purposes of this Agreement to include any consolidated state or local tax
return) if so requested by Parent or any Subsidiary of Parent and to allocate
and settle among themselves in an equitable manner the state or local income tax
liability shown on such combined returns; and
WHEREAS, Public Co., and its Subsidiaries desire to be indemnified by
Parent with respect to certain tax liabilities, and Parent is willing to so
indemnify Public Co. and each of the Subsidiaries of Public Co.
NOW, THEREFORE, in consideration of the mutual covenants contained
herein, the parties agree as follows:
1. Definitions. For purposes of this Agreement, the following
terms shall be defined as follows:
(a) "Taxable Period" shall mean any taxable year or portion
thereof beginning on or after January 1, 1992 with respect to which a
consolidated Federal income tax return is filed on behalf of the Parent
Group which includes Public Co. or (in the case of any combined state
or local return) any such taxable year with respect to which a combined
state or local income tax return is filed by Parent or any Subsidiary
of Parent (other than Public Co. or any Subsidiary of Public Co.) which
includes Public Co. or any Subsidiary of Public Co.
(b) "Public Co. Group's Federal Taxable Income" for a Taxable
Period shall mean the consolidated Federal taxable income (including,
for all purposes of this Agreement, alternative minimum taxable income)
for such Taxable Period
2
that the Public Co. Group would have reported if it had not been
included in the consolidated Federal income tax return filed for the
Parent Group with respect to such Taxable Period but instead had filed
its own consolidated return with all of its Subsidiaries for such
Taxable Period; provided, however, that in computing such taxable
income, the Public Co. Group shall not take into account any amounts
paid or payable by Parent or Holdings to Public Co. under Paragraphs 2
or 6 hereof or by Parent to Public Co. or any Subsidiary of Public Co.
under Paragraph 8 hereof. In computing such taxable income, the Public
Co. Group shall be entitled to take into account deductions and credits
attributable to the carryover or carryback of any losses or credits of
Public Co. or any of the Subsidiaries of Public Co., but only to the
extent that such losses or credits arose in a Taxable Period and after
taking into account any limitations on the use of such losses and
credits imposed pursuant to Sections 172, 382, 383, 384, 904 or 1212 of
the Code or by Treasury Regulations ss.ss.1.1502-15, 1.1502-20,
1.1502-21 or 1.1502-22. In addition, to the extent that items
attributable to the expenses reflected as "Restructuring Charges" in
the Consolidated Statements of Operations of Public Co. for the periods
ended December 31, 1991 and March 31, 1992, as set forth in the
Registration Statement on Form S-1 in the form filed with the
Securities and Exchange Commission on May 22, 1992 in connection with
the public offering of the stock of Public Co., are deductible for
Federal income tax purposes for any period beginning on or after
January 1, 1992 but are not otherwise deductible by Operating Co. or
its Subsidiaries in a Taxable Period,
3
such items shall be deducted by Operating Co. in computing such taxable
income for the first Taxable Period.
(c) "Public Co. Group's Federal Tax" for a Taxable Period
shall mean the consolidated Federal income tax liability or, if
applicable, the consolidated Federal alternative minimum tax liability
for such Taxable Period that the Public Co. Group would have incurred
if it had not been included in the consolidated Federal income tax
return filed for the Parent Group with respect to such Taxable Period,
but had instead filed its own consolidated return for such Taxable
Period. In computing such tax liability for any Taxable Period, the
Public Co. Group shall not take into account any amounts paid or
payable by Parent or Holdings to Public Co. under Paragraphs 2 or 6
hereof or paid or payable by Parent to Public Co. or any Subsidiary of
Public Co. under Paragraph 8 hereof. In computing such tax liability
the Public Co. Group shall be entitled to take into account deductions
and credits attributable to the carryover or carryback of any losses or
credits of Public Co. or any of the Subsidiaries of Public Co., but
only to the extent that such losses or credits arose in a Taxable
Period and after taking into account any limitations on the use of such
losses and credits imposed pursuant to Sections 172, 382, 383, 384, 904
or 1212 of the Code or by Treasury Regulations ss.ss.1.1502-15,
1.1502-20, 1.1502-21 or 1.1502-22. In addition, to the extent that
items attributable to the expenses reflected as "Restructuring Charges"
in the Consolidated Statements of Operations of Public Co. for the
periods ended December 31, 1991 and March 31, 1992, as set forth in the
Registration Statement on Form S-1 in the form filed with the
Securities and Exchange Commission on May 22, 1992 in connection
4
with the public offering of the stock of Public Co., are deductible for
Federal income tax purposes for any period beginning on or after
January 1, 1992 but are not otherwise deductible by the Operating Co.
or its Subsidiaries in a Taxable Period, such items shall be deducted
by Operating Co. in computing such tax liability for the first Taxable
Period. If the computation of the Public Co. Group's Federal Tax does
not result in a positive number, the Public Co. Group's Federal Tax
shall be deemed to be zero.
(d) "Public Co. Group's State and Local Taxable Income" shall
mean the state and local taxable income, computed in a manner
consistent with the computation of the Public Co. Group's Federal
Taxable Income, as defined above, that Public Co. and/or any of its
Subsidiaries would have reported with respect to each state or local
taxing jurisdiction for any Taxable Period for which Public Co. and/or
any such Subsidiary of Public Co. participates, with Parent or any
Subsidiary of Parent (other than Public Co. or any of its
Subsidiaries), in the filing of a combined state or local income tax
return with such jurisdiction if Public Co. and/or any such Subsidiary
of Public Co. had filed with each such jurisdiction either a separate
return (in a case where only one member of the Public Co. Group joins
in the filing of such combined return) or a combined return including
only those members of the Public Co. Group actually joining in such
combined return (in a case where more than one member of the Public Co.
Group joins in the filing of such combined return). In addition, to the
extent that items attributable to the expenses reflected as
"Restructuring Charges" in the Consolidated Statements of Operations of
Public Co. for the periods ended December 31, 1991 and March 31,
5
1992, as set forth in the Registration Statement on Form S-1 in the
form filed with the Securities and Exchange Commission on May 22, 1992
in connection with the public offering of the stock of Public Co., are
deductible for relevant state or local income tax purposes for any
period beginning on or after January 1, 1992 but are not otherwise
deductible by Operating Co. or one of its Subsidiaries in a Taxable
Period, such items shall be deducted by Operating Co. or one of its
Subsidiaries, as appropriate, in computing such taxable income for the
first Taxable Period.
(e) "Public Co. Group's State and Local Tax" shall mean the
aggregate state and local income tax, computed in a manner consistent
with the computation of the Public Co. Group's Federal Tax, as defined
above, that Public Co. and/or any of its Subsidiaries would have
incurred with respect to each relevant state and local taxing
jurisdiction for any Taxable Period for which Public Co. and/or any
such Subsidiary participates with Parent or any Subsidiary of Parent
(other than Public Co. or any of its Subsidiaries) in the filing of a
combined state or local income tax return with such jurisdiction if
Public Co. and/or any such Subsidiary of Public Co. had filed with such
jurisdiction either a separate return (in a case where only one member
of the Public Co. Group joins in the filing of such combined return) or
a combined return (in a case where more than one member of the Public
Co. Group joins in the filing of such combined return). In addition, to
the extent that items attributable to the expenses reflected as
"Restructuring Charges" in the Consolidated Statements of Operations of
Public Co. for the periods ended December 31, 1991 and March 31, 1992,
as set forth in the Registration Statement on Form S-1 in the form
filed with the Securities and
6
Exchange Commission on May 22, 1992 in connections with the public
offering of the stock of Public Co., are deductible for relevant state
or local income tax purposes for any period beginning on or after
January 1, 1992 but are not otherwise deductible by Operating Co. or
one of its Subsidiaries in a Taxable period, such items shall be
deducted by Operating Co. or one of its Subsidiaries in computing such
tax liability for the first Taxable Period.
(f) "Estimated Tax Payments" shall mean for a Taxable Period
the aggregate payments for such Taxable Period provided in Paragraph 3
hereof.
(g) "Final Determination" shall mean a closing agreement with
the Internal Revenue Service or the relevant state or local taxing
authorities, a claim for refund which has been allowed, a deficiency
notice with respect to which the period for filing a petition with the
Tax Court or the relevant state or local tribunal has expired or a
decision of any court of competent jurisdiction that is not subject to
appeal or as to which the time for appeal has expired.
(h) "Subsidiary" as to any entity (the parent corporation)
shall mean a corporation that would be an includible corporation in an
affiliated group of corporations of which the parent corporation would
be the common parent, all within the meaning attributable to such terms
in Section 1504 of the Code and Treasury Regulations thereunder.
2. Payments between Holdings and Public Co.
(a) For each Taxable Period, Public Co. shall pay to Holdings
an amount equal to the excess, if any, of the Public Co. Group's
Federal Tax for such Taxable Period over the aggregate amount of the
Public Co. Group's Estimated
7
Tax Payments actually made to Holdings with respect to Federal income
taxes for such Taxable Period. If the aggregate amount of the Public
Co. Group's Estimated Tax Payments actually made to Holdings with
respect to Federal income taxes for such Taxable Period exceeds the
Public Co. Group's Federal Tax for such Taxable Period, Holdings shall
pay to Public Co. an amount equal to such excess.
(b) For each Taxable Period with respect to which Public Co.
or any of its Subsidiaries participates in the filing of any combined
state or local income tax return with Parent or any Subsidiary of
Parent (other than Public Co. or any of its Subsidiaries), Public Co.
shall pay to Holdings an amount equal to the excess, if any, of the
Public Co. Group's State and Local Tax for such period the aggregate
amount of the Public Co. Group's over the aggregate amount of the
Public Co. Group's Estimated Tax Payments actually made to Holdings
with respect to such state or local income tax for such period. If the
aggregate amount of the Public Co. Group's Estimated tax payments
actually made to Holdings with respect to such state and local income
tax for such period exceeds the Public Co. Group's State and Local Tax
for such period, Holdings shall pay to Public Co. an amount equal to
such excess.
3. Estimate Tax Payments.
(a) For every Taxable Period, Public Co. shall pay to
Holdings, no later than the tenth day of each of the fourth, sixth,
ninth and twelfth months of such Taxable Period, the amount of
estimated Federal income taxes that the Public Co. Group would have
been required to pay on or before the fifteenth day of each
8
month if Public Co. were filing a consolidated Federal income tax
return for such Taxable Period for an affiliated group of corporations
of which Public Co. was the common parent and that consisted only of
the members of the Public Co. Group. Such estimated Federal income tax
liability shall be determined consistent with the calculation of the
Public Co. Group's Federal Tax and shall reflect estimated taxable
income projected for three, six, nine and twelve months, respectively.
(b) For every Taxable Period with respect to which one or more
members of the Public Co. Group participates in the filing of a
combined state or local income tax return with Parent or any Subsidiary
of Parent (other than Public Co. or any of its Subsidiaries), Public
Co. shall pay to Holdings, no later than the fifth day prior to the
date an estimated state or local payment is due, the amount of
estimated taxes that Public Co. or any such Subsidiary of Public Co.
would have been required to pay if Public Co. or any such Subsidiary of
Public Co. had filed for such period either a separate return (in the
case where only one member of the Public Co. Group joins in the filing
of such combined return) or a combined return (in a case where more
than one member of the Public Co. Group joins in the filing of such
combined return). Such estimated state or local income tax liability
shall be determined consistent with the calculation of the Public Co.
Group's State and Local Tax.
4. Time and Form of Payment.
(a) Payments between Public Co. and Holdings pursuant to
Paragraph 2 hereof shall be made no later than the fifth day prior to
the due date of the Parent
9
Group's consolidated Federal income tax return or any relevant combined
state or local income tax return for the period for which such a
payment is due. If the due date for any such return is extended, any
amounts due at the time of filing a request for extension of time to
file shall be paid on an estimated basis. No later than five (5) days
prior to the extended due date for such return for such Taxable period,
Public Co.'s payment shall be recalculated, and any difference between
(i) the tax liability of the Public Co. Group to be reflected on such
return and (ii) all of Public Co.'s prior estimated payments with
respect to such Taxable Period shall be paid by such fifth day to the
party entitled thereto, with interest from the original due date at the
relevant statutory rate.
(b) Each of the Subsidiaries of Operating Co. agrees to pay to
Operating Co. an amount equal to its liability for Federal, state and
local income taxes (including estimated taxes), if any; such liability
to be determined as if such Subsidiary had not been included in the
consolidated income tax return for the Parent Group with respect to
such Taxable Period but had instead filed its own separate return for
such Taxable Period but otherwise calculated in accordance with the
principles of Paragraphs 1(c), 1(e), 3(a) and 3(b) hereof, no later
than one business day prior to the date upon which the relevant payment
by Operating Co. to Public Co. is required to be made under the terms
hereof or, if no such payment by Operating Co. is required to be made
hereunder, not later than one business day prior to the due date of the
Parent Group's consolidated Federal income tax return or any relevant
combined state or local income tax return (or the relevant due date for
the payment of Estimated Taxes), as the case may be, for such
10
Taxable Period. Operating Co. agrees to pay Public Co. its share, if
any, of each of the items of Public Co. Group's Federal Tax and Public
Co. Group's State and Local Tax and of payments of Estimated Tax, each
such share to be determined in accordance with the principles of
Paragraphs 1(c), 1(e), 3(a) and 3(b) hereof as if Operating Co. had not
been included in the consolidated income tax return for the Parent
Group with respect to such Taxable Period but had instead filed its own
consolidated return for such Taxable Period, no later than one business
day prior to the date upon which the relevant payment by Public Co. is
required to be made under the terms hereof. Public Co. agrees to pay to
Operating Co. its share of any payment received by Public Co. from
Parent or Holdings pursuant to this Agreement and Operating Co. agrees
to pay to each Subsidiary of Operating Co. its share of any payment
received by Operating Co. from Public Co. pursuant to this Agreement,
in each case, each such share to be determined in accordance with the
principles of Paragraphs 1(c), 1(e), 3(a) and 3(b) hereof as if
Operating Co. or such Subsidiary of Operating Co., as the case may be,
had not been included in the consolidated income tax return for the
Parent Group with respect to such Taxable Period but had instead filed
its own consolidated return for such Taxable Period, as promptly as
practicable following the receipt of any such payment and the
determination of such share.
5. Restricted Payments. Notwithstanding any other provision of
this Agreement, in no event shall any payment be made by Operating Co. to Public
Co. pursuant to this Agreement to the extent that and for so long as such
payment is prohibited under or is inconsistent with the terms of that certain
Credit Agreement dated
11
as of June 24, 1992, among Operating Co., the lenders that are parties thereto,
the Chase Manhattan Bank, N.A., Chemical Bank and Citibank, N.A., as Managing
Agents for the lenders, and Chemical Bank, as Administrative Agent, and any
credit agreement resulting from the refinancing of such Agreement (any such
agreement and refinancing agreement shall be referred to as the "Credit
Agreement"). To the extent that and for so long as any such payment by Operating
Co. to Public Co. is prohibited, Public Co. shall not be required to make the
corresponding payments to Holdings; provided that Public Co. shall be liable to
pay over such amount promptly upon termination of such prohibition.
6. Adjustments.
(a) Redeterminations of Tax Liability. In the event of any
redetermination of the consolidated Federal income tax liability of the
Parent Group for any Taxable Period (or of the combined state or local
income tax liability for any Taxable Period for which a combined return
is filed) as the result of an audit by the Internal Revenue Service (or
the relevant state or local taxing authorities), a claim for refund or
otherwise, the Public Co. Group's Federal Tax (or the Public Co.
Group's State or Local Tax) shall be recomputed for such Taxable Period
and any prior and subsequent Taxable Periods to take into account such
redetermination, and payments due pursuant to Paragraph 2 hereof shall
be appropriately adjusted. Any payment between Public Co. and Holdings
required by such adjustment shall be paid within seven (7) days after
the date of a Final Determination with respect to such redetermination
or as soon as such adjustment
12
can practicably be calculated, if later, together with interest for the
period at the rate provided for in the relevant statute.
(b) Refund of Tax Sharing Payment. In the event that the
calculation of the Public Co. Group's Federal Taxable Income (or the
Public Co. Group's State and Local Taxable Income) for any Taxable
Period results in a loss, such loss may be carried back and deducted in
calculating the Public Co. Group's Federal Tax (or the Public Co.
Group's State and Local Tax) only for prior Taxable Periods in the same
manner as it would have been carried back and deducted had it
constituted a net operating loss deduction under Section 172 of the
Code or a net capital loss deduction under Section 1212 of the Code (or
in the case of state and local tax, under applicable state or local
provisions), as such provisions would have been applied to a
consolidated (or combined) return filed with respect to Public Co.
Group (or one or more members thereof), but after taking into account
any limitation on the use of such loss imposed pursuant to Section 382,
383 or 384 of the Code or Treasury Regulation Sections 1.1502-15,
1.1502-20, 1.1502-21 and 1.1502-22 (or with respect to state and local
tax, applicable state or local provisions). In such case the Public Co.
Group's Federal Tax (or the Public Co. Group's State and Local Tax)
shall be recomputed for the Taxable Period or Periods to which such
loss is carried and for any subsequent Taxable Periods to take into
account the deductions of such loss, and payments made pursuant to
Paragraph 2 hereof shall be appropriately adjusted. In the case of any
carryback of a loss pursuant to this Paragraph 6(b), any payment
between Holdings and Public Co. required by such adjustment shall be
paid within seven
13
(7) days after the date of filing the consolidated Federal income tax
return of the Parent Group (or the relevant combined state or local tax
return) for the year in which such loss arises. Excess credits for any
Taxable Period shall be carried back and otherwise treated in a manner
consistent with the provisions of this Paragraph 6.
7. Interest on Unpaid Amounts. In the event that any party
fails to pay any amount owed pursuant to this Agreement within ten (10) days
after the date when due, interest shall accrue on any unpaid amount at the
"designated rate" from the due date until such amounts are fully paid. For
purposes of this Agreement, the "designated rate" shall mean ten percent (10%).
8. Indemnification.
(a) Parent shall indemnify Public Co. and Operating Co. on an
after tax basis (taking into account, when realized, any tax detriment
or tax benefit to Public Co. (or any Public Co. Subsidiary) of (x) a
payment hereunder or (y) the liability to the Internal Revenue Service
or state, local or foreign taxing authority giving rise to such a
payment), with respect to and in the amount of:
(i) any liability for Federal income tax incurred by Public
Co. or any Subsidiary of Public Co. for any Taxable Period with respect
to which Public Co. or such Subsidiary is included in a consolidated
Federal income tax return filed on behalf of the Parent Group;
(ii) any liability for state or local income tax incurred by
Public Co. or any Subsidiary of Public Co. with respect to any
jurisdiction for any Taxable Period with respect to which Public Co. or
any such Subsidiary of Public Co.
14
participates in the filing of a combined return with Parent or any
Subsidiary of Parent (other than Public Co. or any Subsidiary of Public
Co.);
(iii) any liability for Federal, state or local income tax
incurred by Public Co. or any Subsidiary of Public Co., to the extent
attributable to any member of the Parent Group (other than Public Co.
or any of its Subsidiaries) and for which Public Co. or such Subsidiary
is liable as a result of being included in a consolidated Federal
income tax return of the Parent Group or as a result of participating
in the filing of a combined state or local income tax return with
Parent or any Subsidiary of Parent (other than Public Co. or any of the
Subsidiaries of Public Co.);
(iv) any liability for Federal, foreign, state or local income
imposed on Public Co. or any corporation which is a Subsidiary of
Public Co. as of the date hereof with respect to any taxable period or
portion thereof ending before January 1, 1992; provided, however, that
Parent shall not be obligated to indemnify Public Co. for any such
liability if and to the extent that such liability was assumed by
Public Co. pursuant to Section 1.02 of the Asset Transfer Agreement;
and
(v) interest, penalties and additions to tax, and costs and
expenses in connection with any liabilities described in
Paragraphs 8(a)(i), (ii), (iii) and (iv) above.
Parent shall pay to Public Co. amounts due under Paragraphs 8(a)(i), (ii), (iii)
and (iv) and Paragraph 8(a)(v) (to the extent such amounts are related to
amounts under Paragraphs 8(a)(i), (ii), (iii) and (iv)) no later than seven (7)
days after the date of a Final Determination with respect thereto.
15
(b) If any adjustment giving rise to a tax liability described
in Paragraph 8(a) (iv) hereof as to which Parent has previously
provided indemnification results in any tax deduction or tax credit for
Federal, state, local or foreign income tax purposes to Public Co. or
any of its Subsidiaries for any Taxable Period Public Co. shall pay to
Parent an amount equal to the sum of (x) the amount of such credit and
(y) the amount of such deduction, multiplied by the maximum composite
Federal, state, local and foreign income tax rate to which Public Co.
or the relevant Subsidiary is subject for the year in which or with
respect to which such benefit is realized; provided, however, that such
composite rate shall be calculated by taking into account only those
Federal, state, local or foreign income taxes with respect to which
such deduction is allowed. If any adjustment with respect to any member
of the Parent Group for any period ending on or before December 31,
1991 results in any increase in tax liability for Federal, state, local
or foreign income tax purposes of Public Co. or any of its Subsidiaries
for any Taxable Period, Parent shall pay to Public Co. an amount equal
to such increase in liability, calculated in the manner set forth
above. Payments under this paragraph shall be made upon the later to
occur of (x) 120 days after there has been a Final Determination under
applicable law of the adjustment giving rise to such payment and (y) 90
days after the filing of the tax return for the year in which such tax
deduction or tax credit is utilized or absorbed, or such tax liability
is due, as the case may be.
9. Filing of Returns, Payment of Tax.
16
(a) Appointment of Parent as Agent. Public Co. and each of its
Subsidiaries hereby appoint Parent as their agent, so long as Public
Co. or such Subsidiary, as the case may be, is a member of the Parent
Group, for the purpose of filing consolidated Federal income tax
returns and for making any election or application or taking any action
in connection therewith on behalf of Public Co. and such Subsidiary
consistent with the terms of this Agreement. Public Co. and each of its
Subsidiaries hereby appoint Parent as their agent, so long as Public
Co. or such Subsidiary, as the case may be, is a member of the Parent
Group, for the purpose of filing any combined state or local income tax
returns that Parent may elect to file, and for making any election or
application or taking any action in connection therewith on behalf of
Public Co. and such Subsidiary consistent with the terms of this
Agreement. Public Co. and each of its Subsidiaries hereby consent to
the filing of such returns, and to the making of such elections and
applications. Parent agrees that to the extent the filing of any
combined state or local return by Parent or any Subsidiary of Parent
with Public Co. or any of its Subsidiaries for any period will reduce
the state or local tax liability of Public Co. or any Subsidiary of
Public Co., without causing an increase in the state or local tax
liability of Parent or any Subsidiary of Parent (other than Public Co.
or any Subsidiary of Public Co.) in such period, Parent will file or
cause to be filed for such taxable period a combined state or local
income tax return with Public Co. and/or its Subsidiaries; provided,
however, that such filing is permitted by applicable state or local
law. Except as provided in this Paragraph 9, nothing herein shall be
construed as requiring Parent or any Subsidiary of Parent to file
17
combined state or local income tax returns on behalf of any members of
the Parent Group (or the Public Co. Group) for any taxable period.
(b) Cooperation. The Public Co. Group shall cooperate with
Parent in the filing, to the extent permitted by law, of a consolidated
Federal income tax return and such combined state or local income tax
returns for members of the Parent Group or the Public Co. Group as
Parent elects to file or cause to be filed, by maintaining such books
and records and providing such information as may be necessary or
useful in the filing of such returns and executing any documents and
taking any actions which Parent may reasonably request in connection
therewith. Parent shall provide Public Co., upon request, with copies
of any combined or consolidated returns that include any member of the
Public Co. Group promptly after such returns are filed. Parent and
Public Co. shall provide one another with such information concerning
such returns and the application of payments made under this Agreement
as Parent or Public Co. may reasonably request of one another.
(c) Payment of Tax. For each Taxable Period, Parent shall
timely pay or discharge, or cause to be timely paid or discharged, the
consolidated Federal income tax liability of the Parent Group for such
Taxable Period and the combined state or local income tax liability
shown on any combined return that Parent or any Subsidiary of Parent
elects or is required to file that includes Public Co. or any
Subsidiary of Public Co.
10. Resolution of Disputes. Any dispute concerning the
calculation or basis of determination of any payment provided for hereunder
shall be resolved by the
18
independent certified public accountants for Parent, whose judgement shall be
conclusive and binding upon the parties, in the absence or manifest error.
11. Adjudications. In any audit, conference, or other
proceeding with the Internal Revenue Service or the relevant state or local
authorities, or in any judicial proceedings concerning the determination of the
Federal income tax liabilities of the Parent Group or Public Co. (or any of the
Subsidiaries of Public Co.) or the state or local income tax liability of any
combined group including Parent or Public Co. (or any of the Subsidiaries of
Public Co.), the parties shall be represented by persons selected by Parent. The
settlement and terms of settlement of any issues relating to such proceeding
shall be in the sole discretion of Parent, absent manifest error, and Public Co.
and each Subsidiary of Public Co. hereby appoints Parent as its agent for the
purpose of proposing and concluding any such settlement.
12. Binding Effect; Successors and Assigns. This Agreement
shall be binding upon Parent, Holdings, Public Co. and each of the Subsidiaries
of Public Co. that are signatories hereto and the Subsidiaries of Public Co.
that become parties hereto pursuant to Paragraph 20 hereof. This Agreement shall
inure to the benefit of, and be binding upon, any successors or assigns of the
parties hereto (including, without limitation, any Subsidiary of Public Co. that
becomes a party hereto pursuant to Paragraph 20). Parent, Holdings and Public
Co. and each other party hereto may assign their right to receive payments under
this Agreement but may not assign or delegate their obligations hereunder.
Without limitation of the foregoing, Holdings and Public Co. (and their
respective successors and assigns) may assign all of their respective rights
under and interest in this Agreement pursuant to and as contemplated by the
Credit Agreement as
19
collateral security for the obligations of Public Co. and Operating Co.
thereunder (and those of any of their successors and assigns) to the Agent and
the Lenders (as such terms are defined in the Credit Agreement).
13. Interpretation. This Agreement is intended to calculate
and allocate certain Federal and state and local income tax liabilities of the
members of the Parent Group and the Public Co. Group, and any situation or
circumstance concerning such calculation and allocation that is not specifically
contemplated hereby or provided for herein shall be dealt with in a manner
consistent with the underlying principles of calculation and allocation in this
Agreement.
14. Legal and Accounting Fees. Any fees or expenses for legal,
accounting or other professional services rendered in connection with (i) the
preparation of a consolidated Federal or combined state or local income tax
return for the Parent Group or members of the Parent Group (to the extent that
such services reasonably pertain to the tax liability of members of the Public
Co. Group rather than any other members of the Parent Group) or the Public Co.
Group, (ii) the application of the provisions of this Agreement or (iii) the
conduct of any audit, conference or proceeding of the Internal Revenue Service
or relevant state or local authorities or judicial proceedings relevant to any
determination required to be made hereunder shall be allocated between Parent
and Public Co. in a manner resulting in Public Co. bearing a reasonable
approximation of the actual amount of such fees or expenses hereunder reasonably
related to, and for the benefit of, Public Co. and its Subsidiaries, rather than
to or for other members of the Parent Group.
20
15. Effect of the Agreement. This Agreement shall determine
the liability of Parent, Holdings and Public Co. to each other as to the matters
provided for herein, whether or not such determination is effective for purposes
of the Code or of state or local revenue laws, or for financial reporting
purposes or for any other purposes.
16. Entire Agreement. This Agreement embodies the entire
understanding among the parties relating to its subject matter and supersedes
and terminates all prior agreements and understandings among the parties with
respect to such subject matter including, without limitation, the Tax Allocation
Agreement dated as of June 26, 1990 between MacAndrews & Forbes Holdings, Inc.,
Revlon Group Incorporated and New Revlon Holdings Inc. and its Subsidiaries. Any
and all prior correspondence, conversations and memoranda are merged herein and
shall be without effect hereon. No promises, covenants or representations of any
kind, other than those expressly stated herein, have been made to induce either
party to enter into this Agreement. This Agreement, including this provision
against oral modification, shall not be modified or terminated except by a
writing duly signed by each of the parties hereto (but, in the case of each
Subsidiary of Public Co., only for so long as it remains a Subsidiary of Public
Co.), and no waiver of any provisions of this Agreement shall be effective
unless in writing duly signed by the party sought to be bound.
17. Code References. Any references to the Code or Treasury
Regulations shall be deemed to refer to the relevant provisions of any successor
statute or regulation and shall refer to such provisions as in effect from time
to time.
21
18. Notices. Any payment, notice or communication required or
permitted to be given under this Agreement shall be in writing (including
telecopy communication) and mailed, telecopied or delivered:
If to Parent:
Mafco Holdings, Inc.
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Senior Vice President - Law
22
If to Holdings:
Revlon Holdings Inc.
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Senior Vice President - Law
If to Public Co.:
Revlon, Inc.
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Senior Vice President - General Counsel
If to Operating Co.:
Revlon Consumer Products Corporation
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Senior Vice President - General Counsel
or to such other address as a party shall furnish in writing to the other party.
All such notices and communications shall be effective when received.
19. Counterparts. This Agreement may be executed in two 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.
20. New Members. Each of the parties to this Agreement
recognizes that from time to time, new Subsidiaries of Public Co. may be added
to the Public Co. Group. Each of the parties agree that any new Subsidiary of
Public Co. shall, without the express written consent of the other parties,
become a party to this Agreement for all purposes of this Agreement with respect
to taxable periods ending after such Subsidiary was added to
23
the Public Co. Group. Public Co. shall cause any new Subsidiary to execute and
deliver to Holdings, the Agent and the Lenders an instrument evidencing its
agreement to become a party to this Agreement.
21. Nature of Parent's Obligations. Parent acknowledges and
agrees that its obligations under this Agreement shall not be affected by any
impossibility, illegality, impracticability, frustration of purpose, force
majeure, act of government, bankruptcy or insolvency of Public Co. or any other
party to this Agreement, failure or refusal of Public Co. or any other party to
this Agreement to perform its obligations hereunder (other than the obligations
to make payments hereunder to Parent to the extent that such failure was not
caused by the act or omission of Parent), dispute, setoff or counterclaim (other
than disputes, setoffs and counterclaims relating to Public Co.'s payment
obligations under this Agreement that were not caused by the act or omission of
Parent or that arose because Public Co. was prevented from performing its
payment obligations by any restrictions on any of its contractual obligations),
change in the amount, composition or terms of the assets, liabilities or equity
of Public Co. or any other party to this Agreement, or any other defense or
right which Parent has or may have that might have the effect of releasing
Parent from such obligations (other than performance of such obligations and
except as provided above).
22. Separate Undertaking. Without limiting the generality of
any of the foregoing provisions of this Agreement (but subject to the
limitations expressly set forth in Paragraph 21), Parent irrevocably waives, to
the full extent permitted by applicable law, and for the benefit of, and as a
separate undertaking with, Public Co. and its Subsidiaries and their respective
assigns, any defense to the performance of this
24
Agreement which may be available to Parent (i) as a consequence of this
Agreement being rejected or otherwise not assumed by Public Co. or any of is
Subsidiaries or any trustee or other similar official for any of them or for any
substantial part of their respective properties or (ii) as a consequence of this
Agreement being otherwise terminated or modified, in either such clause (i) or
clause (ii) in any proceeding seeking to adjudicate Public Co. or any Public Co.
Subsidiary a bankrupt or insolvent, or seeking liquidation, winding up,
reorganization, arrangement, adjustment, protection, relief or composition of
Public Co. or any Public Co. Subsidiary or the debts of Public Co. or any Public
Co. Subsidiary under any law relating to bankruptcy, insolvency or
reorganization or relief of debtors, whether such rejection, nonassumption,
termination or modification by reason of this Agreement being held to be an
executory contract or by reason of any other circumstance. If this Agreement
shall be so rejected or otherwise not assumed, or so terminated or modified,
Parent agrees for the benefit of, and as a separate undertaking with, Public Co.
and its Subsidiaries and their respective assigns that Parent will be
unconditionally liable to pay Public Co. or its Subsidiaries and their
respective assigns, as the case may be, an amount equal to each payment that
would otherwise be payable by Parent under or in connection with this Agreement
if this Agreement were not so rejected or otherwise not assumed or were
otherwise not so terminated or modified (taking into account any right of offset
or any defenses relating to failures or refusals to perform that Parent is
permitted to assert under Paragraph 21), such amount to be payable to such
person at its office specified in accordance with the instructions of such
person as and when such payment would otherwise be payable hereunder.
Notwithstanding the
25
foregoing, Parent does not waive any right against Public Co. or any Public Co.
Subsidiary that it may have in any such proceeding.
23. Liquidated Damages. If Parent shall at any time and from
time to time fail to timely perform or comply with any of its payment
obligations contained in this Agreement, then in each such case:
(a) it shall be conclusively assumed without necessity of
proof that such failure by Parent was the sole and direct cause of
damages incurred by the payee of such payment irrespective of any other
contributing or intervening cause whatsoever;
(b) Parent agrees that it will be unconditionally liable for
liquidated damages (for loss of a bargain and not as a penalty) for the
amount of such payment not received when so due and payable as well as
for all costs and expenses, if any, including reasonable attorney's
fees and expenses, incurred in enforcing this Agreement; and
(c) Parent further irrevocably waives to the full extent
permitted by applicable law any right or defense Parent may have to
cause the payee to prove the cause of such damages or to mitigate the
same, provided that the party seeking to enforce this Agreement against
Parent shall nevertheless be required to prove that Parent failed to
timely perform or comply with its obligation to make such payment.
24. Third-Party Beneficiaries. The parties hereto hereby
acknowledge that the Lenders (as defined in the Credit Agreement) are relying on
the provisions hereof in entering into, and agreeing to extend credit to
Operating Co., under the Credit
26
Agreement, and are intended to be third-party beneficiaries of the provisions
hereof. The parties hereto further acknowledge and agree that the Agent under
the Credit Agreement, on behalf of the Lenders, as third-party beneficiaries
hereof, shall have the right and power to enforce the provisions hereof, in the
name and on behalf of Public Co. and Operating Co.
25. Termination. This Agreement shall terminate at such time
as all obligations and liabilities of the parties hereto have been satisfied.
Except as otherwise provided herein, none of the parties hereto shall have any
obligations or liabilities under this Agreement with respect to any Taxable
Period during which Public Co. is not a member of the Parent Group; provided,
however, that the indemnification obligations and liabilities of Parent under
Paragraph 8 shall continue and shall not terminate. The obligations and
liabilities of the parties arising under this Agreement with respect to any
Taxable Period during which Public Co. is a member of the Parent Group and the
indemnification obligations and liabilities of Parent arising under Paragraph 8
shall continue in full force and effect until all such obligations have been met
and such liabilities have been paid in full, whether by expiration of time,
operation of law, or otherwise. The obligations and liabilities of each party
are made for the benefit of, and shall be enforceable by, the other parties and
their successors and permitted assigns.
27
IN WITNESS WHEREOF, each of the parties has caused this
Agreement to be executed by its respective duly authorized officer as of the
date first set forth above.
MAFCO HOLDINGS INC.
by
s/s XXXXX X. XXXXXXXX
-------------------------------------
Name: Xxxxx X. Xxxxxxxx
Title: Executive Vice President
REVLON HOLDINGS INC.
by
s/s XXXXX X. XXXXXXXX
-------------------------------------
Name: Xxxxx X. Xxxxxxxx
Title: Executive Vice President
REVLON, INC.
by
s/s XXXXXX X. XXXXXXXX
-------------------------------------
Name: Xxxxxx X. Xxxxxxxx
Title: Senior Vice President
REVLON CONSUMER
PRODUCTS CORPORATION
by
s/s XXXXXX X. XXXXXXXX
-------------------------------------
Name: Xxxxxx X. Xxxxxxxx
Title: Senior Vice President
28
ALMAY, INC.
XXXXXXXXXX PARFUMS LTD.
XXXXXXX XXXXXX INC.
XXXXXXX OF THE RITZ GROUP LTD.
COSMETICS & MORE INC.
NORTH AMERICA REVSALE INC.
PACIFIC FINANCE & DEVELOPMENT CORP.
PPI TWO CORPORATION
XXXXXXXX XXXXXXXXXX, LTD.
REVLON CONSUMER CORP.
REVLON GOVERNMENT SALES, INC.
REVLON INTERNATIONAL CORPORATION
REVLON PRODUCTS CORP.
REVLON REAL ESTATE CORPORATION
RIROS CORPORATION
RIROS GROUP INC.
RIT INC.
For and on behalf of the
above-listed companies:
s/s XXXXXX X. XXXXXXXX
-------------------------------------
Name: Xxxxxx X. Xxxxxxxx
Title: Vice President and Secretary
29
