EXHIBIT 10.5
TAX SHARING AGREEMENT
THIS AGREEMENT, effective as of December 19, 1994, by and among Perry
Capital Corp. ("Parent") and Florists' Transworld Delivery, Inc. ("Subsidiary").
WHEREAS, Parent is the common parent of an affiliated group (the "Group")
of domestic corporations (as such terms are defined in Section 1504(a) of the
Internal Revenue Code of 1986, as amended) (the "Code");
WHEREAS, Subsidiary is presently a subsidiary of Parent and a member of the
Group; and
WHEREAS, Parent and Subsidiary wish to allocate and settle between each
other in an equitable manner the consolidated federal income tax liability of
the Group.
NOW, THEREFORE, in consideration of the mutual covenants contained herein,
the parties agree as follows:
1. For each taxable year, Parent shall file, and shall cause all
includable members of the Group to join in the filing of, consolidated federal
income tax returns. Parent and Subsidiary shall execute and file such consents,
elections and other documents as Parent reasonably believes may be required or
appropriate for the filing of such returns.
2. (a) Except as otherwise provided herein, within 15 days of each of
Parent's estimated federal income tax payment dates and the March 15 extension
date and within 30 days of the filing of the Group's federal income tax return,
Parent and Subsidiary shall settle and pay, where appropriate, any amounts that
may be allocated under this Agreement; provided, however, that Subsidiary may
defer payment of any amount owing by it to Parent within 15 days of each such
estimated federal income tax payment date and the March 15 extension date until
the earlier of (1) 30 days prior to the filing of the federal income tax return
or (ii) 15 days prior to the next
estimated federal income tax payment date or extension date of the Group for
which the Group actually incurs a federal income tax liability. The amount of
any overpayment or underpayment pursuant to this Section 2(a) shall be credited
against, or added to, as the case may be, the amount otherwise required to be
paid for the period within which the amount of such overpayment or underpayment
first becomes reasonably ascertainable. The settlements may be satisfied by
check or wire transfer or by such other means as the parties may mutually agree.
(b) To the extent the Subsidiary has "Separate Company Tax Liability"
(hereinafter defined), the Subsidiary shall pay Parent in the time and manner
described in Section 2(a). For purposes of this Agreement, "Separate Company Tax
Liability" for any taxable year or fractional period shall be the amount, if
any, of the federal income tax liability (including, without limitation,
liability for any penalty, fine, additions to tax, interest, minimum tax (but
only to the extent of Subsidiary's allocable share of actual consolidated
minimum tax liability based upon Subsidiary's relative amounts of items of tax
preference, and any credit with respect thereto shall be allocated to
Subsidiary) and other items of any nature applicable to the Subsidiary in
connection with the determination of Subsidiary's tax liability) which
Subsidiary would have incurred if Subsidiary had filed a separate federal income
tax return (or estimated federal income tax return) for a taxable period
consisting of such taxable year or fractional period computed in a manner
consistent with (i) general tax accounting principles, (ii) the Code and
regulations thereunder, and (iii) so long as a reasonable legal basis exists
therefor, prior custom and practice. Transactions between Subsidiary and Parent
which are deferred under the federal income tax return shall also be deferred
for purposes of this Agreement. In the event Subsidiary owns subsidiaries that
are members of the Group, Separate Company Tax Liability shall be computed on a
deemed consolidated basis as if Subsidiary were the common parent of an
affiliated group of domestic corporations (within the meaning of Section 1504(a)
of the Code)
2
consisting of itself and its includable subsidiaries (the "Hypothetical
Subsidiary Group"). In no event shall the amount required to be paid by
Subsidiary to Parent on behalf of Parent exceed the amount that would have been
paid had Subsidiary (or the Hypothetical Subsidiary Group) filed on a separate
basis.
(c) In the event Subsidiary (or the Hypothetical Subsidiary Group, if
applicable) realizes in any taxable year any tax losses or tax credits that
would be permitted under the Code and regulations to be carried back or forward
to one or more taxable years if the Subsidiary had filed a separate federal
income tax return (or a Hypothetical Subsidiary Group return, if applicable) for
any such taxable years, Separate Company Tax Liability shall be computed for
such preceding and succeeding taxable years taking into account such carryback
or carryforward and the payments pursuant to Section 2 (b) shall be
appropriately adjusted. Any payment from Parent to Subsidiary required by such
adjustment shall be paid within 15 days of the date the benefit of the carryover
would have been realized by Subsidiary had it filed its own federal income tax
return or as soon as such adjustment can practicably be calculated, if later.
(d) Parent agrees to make all required payments to the Internal
Revenue Service ("IRS") of the federal consolidated tax liability, if any, of
the Group.
3. If the consolidated federal income tax liability of the Group is
adjusted for any taxable period for any reason other than a loss or credit
carryback to the extent already provided for in Section 2(c), whether by means
of an amended return, judicial decision, claim for refund or after a tax audit
by the IRS, the Separate Company Tax Liability of Subsidiary shall be recomputed
to give effect to such adjustment, and Parent shall make payment to Subsidiary
for its allocable share of any refund (plus interest) of payments made under
Section 2 to which Subsidiary is entitled, based upon Subsidiary's recomputed
Separate Company Tax Liability, and Subsidiary shall pay to Parent its allocable
share of any increased tax liability and interest which
3
it is obligated to pay under Section 2, based upon Subsidiary's recomputed
Separate Company Tax Liability. Any payments to be paid to or by Subsidiary
under this Section 3 shall be made within 15 days after any refund is received
by (or credited to) Parent (in the event such adjustment results in a net refund
to the Group) or within 15 days after payment is made by Parent (in the event
such adjustment results in a net increase in tax liability to the Group) .
4. Parent and Subsidiary agree that the preparation of the federal income
tax returns, amended returns, claims for refund, IRS examination or litigation
relating to the foregoing, may require the use of records and information that
is within the exclusive possession and control of either of Parent and
Subsidiary. Each of Parent and Subsidiary will provide such records, information
and assistance (which may include making employees of any of the foregoing
entities available to provide additional information and explanation material
hereunder) as are requested by Parent or Subsidiary, as the case may be, during
regular business hours, in connection with any of the developments described in
the preceding sentence. Any of the information obtained pursuant to this Section
or any Section hereof providing for the sharing of information shall be kept
confidential by the parties hereto.
5. This Agreement shall not be assignable by any party hereto without the
prior written consent of the other parties hereto. The rights and obligations
hereunder of the parties shall be binding upon and inure to the benefit of the
parties and their respective successors and permitted assigns. Subsidiary shall
cause each member of the Hypothetical Subsidiary Group to formally assent to the
terms hereof. Nothing in this Agreement shall confer any right or benefit upon
any person or entity other than the parties hereto and their respective
successors and permitted assigns.
6. This Agreement contains the entire Agreement of Parent and Subsidiary
with respect to the subject matter hereof and there are no other agreements,
representations or
4
warranties with respect to the subject matter hereof not contained herein. This
Agreement may not be modified or amended except by written instrument.
7. Any dispute concerning the interpretation of a Section or amount of
payment due under this Agreement shall be resolved by the independent public
accountants for Parent, whose judgment shall be conclusive and binding on the
parties.
8. In any audit conference or other proceeding with the IRS or in any
judicial proceedings concerning the determination of the federal income tax
liabilities of the Group or any of its members, including Subsidiary, the Group
and each of its members 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, and Subsidiary hereby appoints Parent
as its agent for the purpose of proposing and concluding any such settlement.
9. All provisions of this Agreement shall apply with the same force and
effect to any state or local income tax liabilities that are computed with a
combined, consolidated or unitary method by the parties.
10. This Agreement shall be governed by and construed in accordance with
the laws of the State of Delaware, without regard to its conflict of law
provisions.
11. This Agreement shall terminate with respect to a member of the Group if
(a) all the parties hereto agree in writing to such termination or (b) such
member is no longer includable in the Group; provided, however, that (i) this
Agreement shall remain in effect with respect to any period of time during which
it is applicable by its terms (regardless of whether such member is included in
the Group for such period of time) and (ii) no such termination shall affect any
party's rights to receive payments hereunder for any period during which this
Agreement was in effect.
5
12. This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
IN WITNESS WHEREOF, the undersigned parties have caused this Agreement to
be duly executed, and their respective corporate seals to be affixed hereto, all
as of the date first above written.
PERRY CAPITAL CORP.
By: /s/ Xxxxxxx X. Xxxxx
---------------------------------------
Name: Xxxxxxx X. Xxxxx
Title: President
FLORISTS' TRANSWORLD DELIVERY, INC.
By: /s/ Xxxxxxx X. Xxxxx
---------------------------------------
Name: Xxxxxxx X. Xxxxx
Title: President
6
