TAX SHARING AGREEMENT
TAX SHARING AGREEMENT (the "Agreement"), made as of the 22nd day of May.
1997 by and among Triarc Companies, Inc., a Delaware corporation ("TRI"), and
Triarc Beverage Holdings Corp., a Delaware corporation ("TBHC"), Snapple
Beverage Corp. ("Snapple") and Mistic Brands, Inc. ("Mistic").
TRI is the common parent of an affiliated group (within the meaning of
Section 1504 of the Internal Revenue Code of 1986, as amended (the "Code")) of
corporations (collectively the "TRI Group") of which TBHC, Snapple and Mistic
are members, and files consolidated federal income tax returns on the basis of a
taxable year ending December 31st on behalf of itself and all other members of
the TRI Group.
Each of TRI, TBHC, Snapple and Mistic desires to provide, from and after
the date hereof (the "Effective Date"), for payment on behalf of TBHC and any
direct or indirect subsidiaries of TBHC (including, without limitation, Snapple
and Mistic) that may now or after the Effective Date be included in the TRI
Group (the "TBHC Subsidiaries") (hereinafter, TBHC and the TBHC Subsidiaries (if
any) are sometimes collectively referred to as the "TBHC Group") to TRI of the
amounts payable by the TBHC Group in respect of federal income taxes and of
certain state and local taxes and for payments by TRI to TBHC as provided
herein.
Accordingly, TRI, TBHC, Snapple and Mistic agree as follows:
1. Agreement to Join in Consolidated Returns
1.1 TBHC agrees to join, and to cause the other members of the TBHC
Group to join, with TRI in any consolidated federal income tax return
("Consolidated Return") for any taxable year for which TRI files a Consolidated
Return that includes TBHC or such other member of the TBHC Group.
1.2 TBHC, on behalf of itself and the other members of the TBHC Group,
hereby irrevocably designates TRI as its agent for the purpose of taking any and
all actions necessary or incidental to the filing of Consolidated Returns. TBHC
agrees to furnish, and to cause the TBHC Subsidiaries to furnish, TRI with any
and all information requested by TRI in order to carry out the provisions of
this Agreement; to cooperate, and to cause the TBHC Subsidiaries to cooperate,
with TRI in filing any return or consent contemplated by this Agreement; to
take such actions, and to cause the TBHC Subsidiaries to take such actions, as
TRI may request, including, but not limited to, the filing of all elections and
the filing of requests for the extension of time within which to file tax
returns; and to cooperate, and to cause the TBHC Subsidiaries to cooperate, in
connection with any refund claim.
1.3 In each taxable year ending after the Effective Date, TBHC shall
make or cause any of the TBHC Subsidiaries to make payment to TRI of an amount
in respect of federal income taxes of the TBHC Group for such taxable year,
determined in accordance with Section 2 hereof, and TRI shall have the sole
responsibility for making any required payments to the Internal Revenue Service
(the "Service") in satisfaction of the consolidated federal income tax liability
of the TBHC Group for such year. For each quarter of each fiscal year ending
after the Effective Date, TBHC shall make or cause any of the TBHC Subsidiaries
to make payment to TRI of a portion of the amount required to be paid pursuant
to Section 2 hereof equal to the amount of the installment payment of estimated
income tax TBHC would be required to make on behalf of the TBHC Group to the
Service for such quarter under Section 6655 of the Code no later than five
business days prior to the date upon which TBHC would be required to make such
payment to the Service. Promptly following the close of each fiscal year ending
after the Effective Date, TBHC shall pay or cause any of the TBHC Subsidiaries
to pay to TRI the excess, if any, of the amount payable with respect to such
taxable year, determined in accordance with Section 2 hereof, over the aggregate
of all amounts previously paid pursuant to this Section 1.3 by or on behalf of
TBHC to TRI with respect to such taxable year. Each member of the TBHC Group
shall be jointly and severally liable for any payments due TRI by TBHC under
this Agreement. If TRI fails to file a Consolidated Return that includes the
TBHC Group for any taxable year for which TBHC has made or caused to be made a
payment or payments
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pursuant to this Section 1.3, TRI shall promptly refund such payment or
payments.
1.4 The amount of any overpayment or underpayment made pursuant to
Section 1.3 hereof shall be credited against or added to, as the case may be,
the amount otherwise required to be paid for the fiscal quarter within which
the amount of such overpayment or underpayment first becomes reasonably
ascertainable; provided, however, that, upon TBHC providing to TRI all
information required by the Service (including supporting schedules) after the
close of any taxable year but within the period described in section 6425(a)(1)
of the Code, TRI shall repay to or on behalf of TBHC, within the period
described in section 6425(b)(1) of the Code, the amount of any net remaining
overpayment of consolidated tax liability of the TBHC Group for such year.
1.5 Except for the payments required under this Agreement, TRI agrees to
indemnify and hold harmless the TBHC Group against and from any claims of
liability, for federal income tax, interest thereon, and penalties with respect
thereto asserted by the Service, arising from any taxable period for which this
Agreement is in effect, provided, however, that no such indemnification shall be
made to the extent that TBHC has failed to make or cause to be made any payments
required to be made to TRI in respect of such liability under the provision of
this Agreement.
1.6 TBHC shall cooperate, and cause the TBHC Subsidiaries to cooperate,
fully with TRI in any audit or any proceeding relating to any Consolidated
Return and shall pay an appropriate share of the expenses of any such audit or
other proceeding. TRI shall have sole control over and discretion as to the
undertaking, conduct, settlement or other disposition of any tax controversy
arising out of any Consolidated Return filed by TRI.
2. Computation of Tax Liability of the TBHC Group.
For the first taxable year ending after the Effective Date, and for
each subsequent taxable year of the TRI Group for which this Agreement remains
in effect, TBHC shall pay or cause to be paid to TRI (in the manner provided in
Section 1.3 hereof), on behalf of itself and any members of
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the TBHC Group, an amount equal to the federal income tax liability that
would have been payable by the members of the TBHC Group for such year,
determined as if TBHC had filed a separate, consolidated federal income tax
return for such year and all prior years for which the Agreement was in effect
on behalf of itself and all TBHC Subsidiaries that were includible corporations
(within the meaning of section 1504(a)(1) of the Code) in the TBHC Group for
such year, computed in accordance with the actual elections, conventions and
other determinations with respect to the TBHC Group reflected in the
Consolidated Return filed by TRI; provided. however, that any item of income or
loss of a member of the TBHC Group that is treated as deferred on the
Consolidated Return filed by TRI (e.g., gain or loss on an intercompany
transaction between a member of the TBHC Group and TRI that is deferred
pursuant to section 1.1502-13 or 1.1502-13T of the regulations) shall be taken
into account in computing taxable income of the TBHC Group for purposes of this
Agreement only at such time and in such amount as such item is actually taken
into account on the Consolidated Return filed by TRI. If TBHC shall be the sole
member of the TBHC Group for any year (or portion thereof), the payment
required to be made by or on behalf of TBHC pursuant to this Section 2 shall be
determined as hereinbefore provided in this Section, but as if TBHC had filed a
separate income tax return for such year (or portion thereof). Any amount
payable by or on behalf of TBHC pursuant to this Section 2 shall be allocated
among the members of the TBHC Group as directed by TBHC. Payments made by TBHC
or on behalf of TBHC by the TBHC Subsidiaries pursuant to this Section and
Section 1.3 above shall be in lieu of any other payment by the TBHC Group (or
any member thereof) on account of its share, if any, of the consolidated
federal income tax liability of the TRI Group for such taxable year. Except as
hereinbefore provided with respect to deferred transaction, payments made for
any taxable year by TBHC pursuant to this Section 2 shall be made without
regard to the actual consolidated federal income tax liability, if any, of the
TRI Group for such taxable year.
3. Adjustments
Any adjustment of income, deduction, or credit that results after the
taxable year in question by reason of any carryback, amended return, claim for
refund, or audit shall be given effect
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by redetermining amounts payable and reimbursable hereunder for such taxable
year (and other taxable years, where appropriate) for which the Agreement is in
effect as if such adjustment had been part of the original determination
hereunder, with interest payable (by TBHC or TRI, as the case may be) in the
amounts provided in section 6621 of the Code and penalties thereon payable only
to the extent that penalties are actually paid by TRI to any taxing authority
with respect to such adjustment. Except with respect to any required adjustment
in accordance with Sections 1.3, 1.4, 2 and 3 hereof, any increases in the
consolidated federal income tax liability (including interest and penalties) of
the TRI Group shall be the sole responsibility of TRI and any refunds of
consolidated federal income taxes previously paid shall be the sole property of
TRI.
4. Payment for Tax Benefits of Members
The TBHC Group shall be entitled to a refund of federal income taxes
previously paid to TRI pursuant to this Agreement computed in the manner
described in Section 2 hereof as a result of any consolidated net operating
losses, net capital losses or tax credits claimed by the TBHC Group for any
taxable year for which this Agreement is in effect (provided such losses or
credits are not in fact utilized in a taxable year in which this Agreement is
not in effect), determined as if TBHC had filed a separate consolidated federal
income tax return for such year on behalf of itself and all the TBHC
Subsidiaries that were includible corporations in the manner described in
Section 2 above (any such loss or credit being referred to herein as a "TBHC
Group Loss" and any such entitlement to a refund being referred to herein as a
"TBHC Group Benefit"), that would otherwise have been available to the TBHC
Group by reason of a carryback of such TBHC Group Loss, determined in
accordance with the actual election under Section 172(b)(3) of the Code
reflected in the Consolidated Return filed by TRI, provided TBHC furnishes to
TRI all information required by the Service (including supporting schedules)
within the period described in section 6411(a) of the Code, and TRI shall pay
the amount of such TBHC Group Benefit to TBHC, within the period described in
section 6411(b) of the Code. If TBHC shall be the sole member of the TBHC
Group for any year, the payment of the TBHC Group Benefit to TBHC pursuant to
this Section 4 shall be determined as hereinbefore provided in this Section,
but as if TBHC had filed a separate income tax return for
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such year. The portion of such TBHC Group Loss (if any) that is not carried back
shall be carried forward to the extent otherwise permitted by the Code in
computing the liability of the TBHC Group pursuant to Section 2 above.
5. State Taxes
5.1 TBHC agrees at the request of TRI to join, and to cause the TBHC
Subsidiaries to join, TRI or any direct or indirect subsidiary of TRI in any
consolidated or combined state or local income or franchise tax return
("Combined Return") for any taxable year for which TRI or any direct or indirect
subsidiary of TRI files a Combined Return that may include TBHC or any of the
TBHC Subsidiaries.
5.2 If, at any time from and after the Effective Date, the liability for
any state or local income or franchise taxes of (i) TBHC or any of the TBHC
Subsidiaries and (ii) TRI or any other direct or indirect subsidiary of TRI is
determined on a consolidated or combined basis, this Agreement shall be applied
in like manner to all matters relating to such taxes; provided. however, that
the liability of the TBHC Group with respect to a Combined Return shall be at
least equal to any increase in taxes resulting from the inclusion of TBHC or any
of the TBHC Subsidiaries in such Combined Return.
6. Prior Agreement
The terms of the tax sharing agreement by and between TRI and Mistic
dated August 9, 1995 shall continue to apply to Mistic and TRI to determine
amounts to be paid by, or to, Mistic after the Effective Date of this Agreement
with respect to taxable periods (or portions thereof) prior to the Effective
Date of this Agreement.
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7. Disputes
In the event of a disagreement between TRI and TBHC with respect to any
determination required to be made pursuant to this Agreement, the determination
of the Chief Financial Officer of TRI, in the absence of manifest error, shall
be conclusive.
8. Effective Date and Termination
This Agreement shall be effective for the taxable years of TRI, TBHC and
the TBHC Subsidiaries ending after the Effective Date in which TRI files a
Consolidated Return that includes TBHC, unless terminated by mutual agreement of
the parties.
9. Captions
All Section captions contained in this Agreement are for convenience
only and shall not be deemed a part of this Agreement.
10. Counterparts
This Agreement may be executed in counterparts, each of which shall
constitute an original and all of which, when taken together, shall constitute
one agreement.
11. Amendment: Waiver
This Agreement may be amended, modified, superseded, cancelled or
extended, and the provisions hereof may be waived, only by a written instrument
signed by the parties or, in the case of a waiver, by the party waiving
compliance.
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12. Governing Law
This Agreement shall be governed by the laws of the State of New York,
without regard to the conflict of laws rules thereof.
13. Successors and Assigns
This Agreement shall be binding upon, and shall inure to all the
benefits of, the parties hereto and their respective successors and assigns.
14. Notices
Any notice or other communication required or permitted hereunder shall
be in writing and shall be delivered personally, telegraphed, telexed, sent by
facsimile transmission or sent by certified, registered or overnight express
mail, postage prepaid. Any such notice shall be deemed given when so delivered
personally, telegraphed, telexed or sent by facsimile transmission or, if mailed
by overnight mail, the day after the date of deposit with a reputable courier
service, or if mailed by non-overnight certified or registered mail, five days
after the date of deposit in the United States mails, as follows:
(i) if to TRI to:
Triarc Companies, Inc.
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Executive Vice President
and General Counsel
Facsimile: (000) 000-0000
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(ii) if to TBHC, Snapple or Mistic to:
Triarc Beverage Holdings Corp.
000 Xxxxxxxxxxx Xxxxxx
Xxxxx Xxxxxx, XX 00000
Attention: President
Facsimile: (000) 000-0000
Any party may by notice given in accordance with this Section to the other
parties designate another address or person for receipt of notices hereunder.
IN WITNESS WHEREOF, TRI and TBHC have executed this Agreement as of the
day and year first above written.
TRIARC COMPANIES, INC. TRIARC BEVERAGE HOLDINGS CORP.
By: /s/ Xxxxxxx X. XxXxxxxx By: /s/ Xxxxxx X. Xxxxxxx
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Name: Name:
Title: Title:
SNAPPLE BEVERAGE CORP. MISTIC BRANDS, INC.
By: /s/ Xxxxxx X. Xxxxxxx By: /s/ Xxxxxx X. Xxxxxxx
------------------------------ ---------------------------------
Name: Name:
Title: Title:
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