EXHIBIT 5
TAX ALLOCATION AGREEMENT
BETWEEN
MCKESSON CORPORATION
AND
ARMOR ALL PRODUCTS CORPORATION
DATED AS OF JULY 1, 1986
TAX ALLOCATION AGREEMENT
THIS AGREEMENT dated as of July 1, 1986, is between McKesson Corporation, a
Maryland corporation ("McKesson"), and Armor All Products Corporation, a
Delaware corporation ("Armor All").
INTRODUCTION
X. XxXxxxxx is the common parent corporation of an affiliated group of
corporations within the meaning of Section 1504(a) of the Internal Revenue Code
of 1954, as amended (the "Code"), and Armor All is a member of said affiliated
group.
X. XxXxxxxx and Armor All deem it appropriate to define the method by which
the Federal income tax liability of the affiliated group shall be allocated
between the parties and the manner in which such allocated liability shall be
paid.
ACCORDINGLY, the parties hereto agree as follows:
1. DEFINITIONS
The following terms as used in this Agreement shall have the meanings set
forth below:
(a) "McKesson Group" shall mean the affiliated group of corporations
within the meaning of Section 1504(a) of the Code of which McKesson is the
common parent.
(b) "Member" shall mean each includible member of the McKesson Group.
(c) "Consolidated Return" shall mean a consolidated Federal income tax
return filed pursuant to Section 1501 of the Code.
(d) "Regulations" shall mean the Treasury regulations as in effect from
time to time.
(e) "IRS" shall mean the Internal Revenue Service.
(f) "Consolidated Tax Liability" shall mean the consolidated Federal
income tax liability of the McKesson Group for any taxable year for which
the McKesson Group files a Consolidated Return.
(g) "Separate Return Tax Liability" shall mean the Federal income tax
liability of a member computed as if it had filed a separate Federal income
tax return for the applicable taxable year with the modifications set forth
in Section 1.1552-1(a)(2)(ii) of the Regulations. If the computation of a
Member's Separate Return Tax Liability as provided herein does not result in
a positive amount, such Member's Separate Return Tax Liability shall be
deemed to be zero.
(h) "Separate Tax Liability" shall mean the amount determined under
Section 2 hereof.
(i) "Additional Amount" shall mean the amount determined under Section 3
hereof.
2. SEPARATE TAX LIABILITY
(a) If a Consolidated Return is filed by the McKesson Group for any
taxable year, the Separate Tax Liability of Armor All for such taxable year
shall be the amount set forth in paragraph (b) hereof as modified by
paragraph (c) hereof.
(b) The amount referred to in this paragraph (b) shall be an amount
equal to that portion of the Consolidated Tax Liability for such taxable
year that the Armor All Separate Return Tax Liability for such taxable year
bears to the sum of the Separate Return Tax Liabilities of all Members for
such taxable year; PROVIDED, HOWEVER, that such amount shall not exceed the
Consolidated Tax Liability for such taxable year.
(c) The amount computed pursuant to paragraph (b) above shall be
increased by 100% of the excess, if any, of the Armor All Separate Return
Tax Liability for such taxable year over such amount.
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3. ADDITIONAL AMOUNT
If a Consolidated Return is filed by the McKesson Group for any taxable
year, the Additional Amount shall be equal to 100% of the amount, if any, by
which the Consolidated Tax Liability for such taxable year has been decreased by
reason of the inclusion of Armor All in the McKesson Group for such taxable
year.
4. PAYMENTS
For each taxable year with respect to which McKesson files, or it is
reasonably anticipated that McKesson will file, a Consolidated Return which
includes Armor All, payment of the Separate Tax Liability or the Additional
Amount with respect to such taxable year shall be made as follows:
(a) On or before the 15th day of the fourth month of such taxable year,
McKesson and Armor All shall estimate the Separate Tax Liability or the
Additional Amount for such taxable year.
(b) Armor All shall pay to McKesson or McKesson shall pay to Armor All,
as the case may be, on or before each of the due dates upon which McKesson
shall make payment of estimates of the Federal income taxes for such taxable
year one-fourth of the amount estimated pursuant to paragraph (a) above (the
"Estimated Amount"). If, after paying any such installment of the Estimated
Amount, McKesson and Armor All make a new estimate, the amount of each
remaining installment (if any) shall be the amount which would have been
payable if the new estimate had been made when the first estimate for the
taxable year was made, increased or decreased, as applicable, by the amount
computed by dividing:
(i) the difference between (A) the amount of the Estimated Amount
required to be paid before the date on which the new estimate is made,
and (B) the amount of the Estimated Amount which would have been required
to be paid before such date if the new estimate had been made when the
first estimate was made, by (ii) the number of installments remaining to
be paid on or after the date on which the new estimate is made.
(c) If, after the end of each such taxable year with respect to which
McKesson filed, or reasonably anticipates that it will file, a Consolidated
Return which includes Armor All, it is determined that the actual Separate
Tax Liability or Additional Amount for such taxable period exceeds the
aggregate amount paid pursuant to subparagraph (b) above with respect to
such taxable period, then such excess shall be paid on or before the later
of (i) the 15th day of the third month after the end of such taxable period
and (ii) the date on which such excess is finally determined, which shall be
not later than 60 days after the Consolidated Return for such taxable period
is filed.
(d) If, after the end of such taxable year with respect to which
McKesson filed, or reasonably anticipates that it will file, a Consolidated
Return which includes Armor All, it is determined that the amount paid
pursuant to subparagraph (b) above with respect to such taxable period
exceeds the actual Separate Tax Liability or Additional Amount for such
taxable period, then such excess shall be paid on or before the later of (i)
the 15th day of the third month after the end of such taxable period and
(ii) the date on which such excess is finally determined, which shall be not
later than 60 days after the Consolidated Return for such taxable period is
filed.
5. CARRYBACKS
(a) If the McKesson Group has a consolidated unused investment credit, a
consolidated unused foreign tax, a consolidated excess charitable contribution,
a consolidated net capital loss or a consolidated net operating loss, as such
terms are defined in the Regulations (a "Consolidated Excess Amount") for any
taxable year, the portion of such Consolidated Excess Amount which is
attributable to a Member (the "Separate Excess Amount") shall be computed in
accordance with Section 1.1502-79 of the Regulations.
(b) If such Consolidated Excess Amount is carried back to a prior taxable
year of the McKesson Group during which Armor All was a Member or was not in
existence, then the amounts due under this
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Agreement for such prior taxable year shall be redetermined by taking into
account such Consolidated Excess Amount and any Separate Excess Amounts
allocable to such taxable year.
(c) Payment of any amount due under this Section 5 shall be made on the date
that a credit or refund is allowed with respect to the taxable year to which
such payment relates and shall include any interest attributable thereto under
Section 6611 of the Code.
6. SUBSEQUENT ADJUSTMENTS
If any adjustments (other than adjustments made pursuant to Section 5
hereof) are made to the income, gains, losses, deductions or credits of the
McKesson Group for a taxable year during which Armor All is a member, whether by
reason of the filing of an amended return or a claim for refund with respect to
such taxable year or an audit with respect to such taxable year by the IRS, the
amounts due under this Agreement for such taxable year shall be redetermined by
taking into account such adjustments. If, as a result of such redetermination,
any amounts due under this Agreement shall differ from the amounts previously
paid, then payment of such difference shall be made (a) in the case of an
adjustment resulting in a credit or refund, on the date on which such credit or
refund is allowed with respect to such adjustment or (b) in the case of an
adjustment resulting in the assertion of a deficiency, on the date on which such
deficiency is paid. Any amounts due under this Section 6 shall include any
interest attributable thereto under Section 6601 or 6611 of the Code, as the
case may be, and any penalties or additional amounts which may be imposed.
7. CARRYBACKS FROM SEPARATE RETURN YEARS
If, for any separate return year, as defined in Section 1.1502-1 of the
Regulations, Armor All has a net operating loss, a net capital loss or is
entitled to credits against tax which, under the applicable provisions of the
Code and the Regulations, may be carried back to a taxable year during which
Armor All was a Member, McKesson shall pay to Armor All the amount of any refund
or credit or Federal income tax that McKesson receives as a result of the
carryback of such losses or credits. Such payment shall be made not later than
60 days after McKesson receives such refund or credit and shall include any
interest attributable thereto under Section 6611 of the Code.
8. DETERMINATIONS
All determinations required hereunder shall be made by the independent
public accountants regularly employed by the McKesson Group at the time that
such determination is required to be made. Such determinations shall be binding
and conclusive upon the parties for purposes hereof.
9. PROCEDURAL MATTERS
McKesson shall prepare and file the Consolidated Return and any other
returns, documents or statements required to be filed with the IRS with respect
to the determination of the Federal income tax liability of the McKesson Group.
In its sole discretion, McKesson shall have the right with respect to any
Consolidated Returns which it has filed or will file, (a) to determine (i) the
manner in which such returns, documents or statements shall be prepared and
filed, including, without limitation, the manner in which any item of income,
gain, loss, deduction or credit shall be reported, (ii) whether any extensions
may be requested and (iii) the elections that will be made by any Member, (b) to
contest, compromise or settle any adjustment or deficiency proposed, asserted or
assessed as a result of any audit of such returns by the IRS, (c) to file,
prosecute, compromise or settle any claim for refund and (d) to determine
whether any refunds, to which the McKesson Group may be entitled, shall be paid
by way of refund or credited against the tax liability of the McKesson Group.
Armor All hereby irrevocably appoints McKesson as its agent and attorney-in-fact
to take such action (including the execution of documents) as McKesson may deem
appropriate to effect the foregoing.
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10. STATE TAXES
In the event that McKesson or Armor All, or both, pays any state tax
liability or deficiency on the basis that they are parts of the same unitary
business, as that term has been applied under the California Revenue and
Taxation code Sections 25101-25139 and analogous provisions of other state
taxing statutes,
(a) in the case Armor All pays any state tax liability or deficiency which
exceeds its liability or deficiency on a separate return basis, McKesson shall
pay to Armor All the amount by which the liability or deficiency exceeds Armor
All's liability or deficiency on a separate return basis, on the date which
Armor All pays all liability or deficiency, or;
(b) in the case Armor All pays any state tax liability or deficiency which
is less than its liability or deficiency on a separate return basis, Armor All
shall pay to McKesson the amount by which its liability or deficiency on a
separate return basis exceeds the liability or deficiency actually paid, on the
date the liability or deficiency is paid, or;
(c) in the case Armor All is allowed a credit or refund which it would not
be allowed on a separate return basis, Armor All shall pay to McKesson the
amount of such credit or refund on the date when such credit or refund is
allowed to Armor All.
Any amounts due under this Section 10 include any interest attributable
thereto under the law of the taxing state, and any penalties or additional
amounts which may be imposed. This Section 10 does not affect the separate
responsibility of McKesson and Armor All, respectively, with regard to state tax
adjustments not attributable to treating McKesson and Armor All as parts of the
same unitary business.
11. MISCELLANEOUS PROVISIONS
(a) This Agreement contains the entire understanding of the parties hereto
with respect to the subject matter contained herein. No alteration, amendment or
modification of any of the terms of this Agreement shall be valid unless made by
an instrument signed in writing by an authorized officer of each party hereto.
(b) This Agreement has been made in and shall be construed and enforced in
accordance with the laws of the State of California from time to time obtaining.
(c) This Agreement shall be binding upon and inure to the benefit of each
party hereto and its respective successors and assigns.
(d) This Agreement may be executed simultaneously 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.
(e) The headings of the paragraphs of this Agreement are inserted for
convenience only and shall not constitute a part hereof.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed and their respective corporation seals to be affixed hereto, all on the
date first above written.
MCKESSON CORPORATION
Attest:
By:
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Title:
ARMOR ALL PRODUCTS CORPORATION
Attest:
By:
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Title:
Attest:
By:
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Title:
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