TAX SHARING AGREEMENT
THIS AGREEMENT is made and entered into as of June 10, 1992, by and
among Cinemark USA, Inc. ("Parent") and Cinemark II, Inc. ("Subsidiary").
Subsidiary and all members of the group of corporations which would be an
affiliated group under Section 1504(a) of the Internal Revenue Code of 1986 (the
"Code"), if Subsidiary were not itself a member of an affiliated group, shall be
referred to as the Subsidiary Group herein and the aggregate income or loss and
tax of such corporations shall be computed as though they were a separate
affiliated group filing a separate consolidated tax return since the effective
date of this Agreement, and thus will take into account, for example, net
operating loss carryforwards that would have been available to such a separate
affiliated group. Such consolidated tax liability shall be regarded as having
been computed on a Separate Return Basis (as defined herein) for purposes of
this Agreement. If a Subsidiary Group does not exist, references to the
Subsidiary Group shall be references solely to Subsidiary.
WITNESSETH:
WHEREAS, Parent is a common parent corporation of an affiliated group of
corporations (the "Affiliated Group") within the meaning of Code section
1504(a);
WHEREAS, the Affiliated Group has historically filed a consolidated federal
income tax return and intends to continue filing consolidated federal income tax
returns ("Consolidated Returns");
WHEREAS, Parent and Subsidiary will derive mutual benefits from filing
Consolidated Returns;
WHEREAS, Parent and Subsidiary desire to share on an equitable basis the
benefits and burdens that may arise from the filing of Consolidated Returns;
NOW, THEREFORE, the parties hereto agree as follows:
1. Consolidated and Combined Returns.
(a) Subsidiary hereby agrees to join and to cause the other members of the
Subsidiary Group to join in the Consolidated Returns to be filed by the
Affiliated Group, for all taxable periods for which Subsidiary is requested from
time to time by Parent to join, and to take no action inconsistent therewith.
(b) Subsidiary hereby agrees to join and to cause the other members of the
Subsidiary Group to join in any state, city, or local combined or similar income
or franchise tax return (the "Combined Returns") to be filed by any group of
corporations of which Parent is or shall become a member (the "Combined Group")
for all taxable periods for which it is so requested from time to time by
Parent, and to take no action inconsistent therewith.
(c) Subsidiary will not elect to file and will cause the other members of
the Subsidiary Group to not elect to file a separate federal income tax return
for any period described in Section 1(a) above or to file a separate state,
city, or local income tax or franchise tax return for any taxable period
described in Section 1(b) above.
2. Parent as Agent.
Subsidiary irrevocably designates and shall cause the other members of the
Subsidiary Group to irrevocably designate (i) Parent as its agent for the
purpose of taking any and all action necessary or incidental to the filing of
Consolidated Returns (including, but not limited to, the conduct of any audit or
other proceeding by any taxing authority) and (ii) Parent as its agent for the
purpose of taking any and all action necessary or incidental to the filing of
Combined Returns (including, but not limited to, the conduct of any audit by any
taxing authority). Subsidiary further agrees and shall cause the other members
of the Subsidiary Group (i) to furnish parent or
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other corporations selected by Parent with any and all information requested by
Parent in order to carry out the provisions of this Agreement, (ii) to cooperate
with Parent in filing any return or consent pursuant to or contemplated by this
Agreement, (iii) to take such action as Parent may request including, but not
limited to, the filing of requests for the extension of time within which to
file tax returns, and (iv) to cooperate in connection with any refund claim,
audit, judicial, or other proceeding.
3. Federal Income Tax Payments Between Parent and Subsidiary.
(a) No later than 15 days after the due dates for payments of federal
income tax installments prescribed by Code Section 6154(a), Subsidiary shall pay
to Parent an amount equal to the required installment of the estimated federal
income tax liability of the Subsidiary Group for the taxable year, said
liability to be computed as though Subsidiary were reporting its income as a
separate corporation, since the effective date of this Agreement, making
elections which are consistent with those made by the Affiliated Group, but
without regard to any benefit which would be derived from the use of the
graduated corporate rate structure, if any (a "Separate Return Basis"). The
federal income tax liability of the Subsidiary Group on a Separate Return Basis
(the "Separate Return Tax Liability") shall be recomputed as of the close of the
taxable year and the amount by which the recomputed Separate Return Tax
Liability of the Subsidiary Group exceeds, or is less than, the sum of the
estimated payments made by Subsidiary to Parent for the taxable year, shall be
paid to Parent or remitted to Subsidiary, as the case may be, within 15 days
after the filing of the federal income tax return. In calculating the Separate
Return Tax Liability of the Subsidiary Group, any deduction, credit, or
allowance that has resulted in a credit or payment from Parent to Subsidiary
pursuant to paragraph 3(b) shall be treated as unavailable.
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(b) If the Subsidiary Group has any deduction, credit, or allowance arising
out of a taxable period in which the Subsidiary Group files as a member of the
Affiliated Group, which on a Separate Return Basis would be allowed as a
carryback to a prior year to offset the Separate Return Tax Liability of the
Subsidiary Group, and said prior year was a year in which the Subsidiary Group
filed as a member of the Affiliated Group, Parent shall pay or credit to
Subsidiary an amount equal to the tax refund the Subsidiary Group would be
entitled to receive if it had filed on a Separate Return Basis. Such payments
shall be made within 15 days after the date of filing of the Affiliated Group's
Consolidated Return for the year in which the Subsidiary Group's deduction,
credit, or allowance arose. If (i) the Subsidiary Group has any deduction,
credit, or allowance arising out of a taxable period in which the Subsidiary
Group files as a member of the Affiliated Group, which on a Separate Return
Basis would be allowed as a carryforward to a subsequent year to reduce any
Separate Return Tax Liability of the Subsidiary Group and (ii) such deduction,
credit, or allowance is absorbed in the tax return of the Affiliated Group, then
Parent shall pay or credit to Subsidiary an amount equal to the reduction in the
tax liability of the Affiliated Group as a result of the absorption of such
deduction, credit, or allowance. Such payments shall be made within 15 days
after the date of filing of the Affiliated Group's Consolidated Return for the
year in which the Affiliated Group absorbs the deduction, credit, or allowance.
(c) If there are any adjustments to or redeterminations of the net taxable
income of the Subsidiary Group when it was included in the Affiliated Group's
Consolidated Returns or any adjustments to or redetermination of any deduction,
credit, or allowance of Subsidiary which was or could be used by the Affiliated
Group, an appropriate increase or decrease in the amount of payments, made
pursuant to Section 3(a) through Section 3(c) hereof, shall be made by Parent
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or Subsidiary within 120 days of the date of any final administrative or
judicial determination of such adjustments or redeterminations.
(d) If the Subsidiary Group has any deduction, credit, or allowance arising
out of a taxable period in which the Subsidiary Group is not a member of the
Affiliated Group and such deduction, credit, or allowance is allowed as a
carryback to a year in which the Subsidiary Group joined in the filing of a
Consolidated Return with the Affiliated Group, then Parent shall pay or credit
to Subsidiary an amount equal to the tax refund the Subsidiary Group would have
been entitled to receive on a Separate Return Basis if it itself had utilized
such deduction, credit, or allowance. Such payment shall not exceed the amount
of the tax benefit received by the Affiliated Group from the utilization of such
deduction, credit, or allowance. If such deduction, credit, or allowance is
subsequently disallowed by the Internal Revenue Service, Subsidiary shall refund
any payment made by Parent pursuant to this paragraph with 15 days of the
receipt by Parent of a notice from the Internal Revenue Service of such
disallowance.
4. Consents.
(a) Parent and Subsidiary hereby consent to the filing of a Consolidated
Return for each year Subsidiary remains a member of the Affiliated Group, until
such time as Parent may elect to discontinue the filing of a Consolidated
Return. Subsidiary shall cause the other members of the Subsidiary Group to
consent to the filing of such Consolidated Returns.
(b) Subsidiary hereby consents and shall cause the other members of the
Subsidiary Group to consent to all elections made by Parent on behalf of the
Affiliated Group.
5. State Income Tax Payments Between Parent and Subsidiary.
(a) In the event members of the Subsidiary Group are included in a
combined, joint, consolidated, or unitary state income or franchise tax return
with any member of the Affiliated
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Group, Subsidiary shall make payments to Parent and Parent shall make payments
to Subsidiary on a state-by-state Separate Return Basis in a manner consistent
with that provided by Section 3 hereof.
(b) Payments made by Subsidiary pursuant to Section 5(a) will be deemed
deductible pursuant to Code Section 164 for purposes of computing the Separate
Return Tax Liability of a Subsidiary pursuant to Section 3(a) hereof.
6. Interest Payments.
Interest will be charged by or paid by Parent pursuant to this Agreement
only with respect to payments required to be made as a result of any adjustment
or redetermination of the net taxable income of the Subsidiary Group by any
taxing authority. Such interest will be determined in the same manner as would
be determined for federal or state tax purposes.
7. Miscellaneous.
(a) All notices under this Agreement shall be in writing and shall be
deemed to have been sufficiently given or served and effective for all purposes
when presented personally, or five days after being deposited in a United States
postal receptacle for registered or certified mail addressed, return receipt
requested, postage prepaid, or two business days after delivering to a small
package air courier offering service to the address of the intended recipient
with shipping prepaid, to any person at the address set forth below, or at such
other address as said person shall subsequently designate in writing delivered
in the form of a notice to:
If to Parent:
0000 Xxxxxxxxxx Xxxxxx
Xxxxx 000 - XX0
Xxxxxx, Xxxxx 00000
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If to Subsidiary:
0000 Xxxxxxxxxx Xxxxxx
Xxxxx 000 - XX0
Xxxxxx, Xxxxx 00000
(b) Neither this Agreement nor any provision hereof may be changed, waived,
discharged, or terminated orally but only by an instrument in writing signed by
the party against whom enforcement of the change, waiver, discharge, or
termination is sought.
(c) 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.
(d) The validity, interpretation, and enforceability of this Agreement
shall be governed in all respects by the laws of the State of Texas.
(e) 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.
(f) 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 any provision
hereof.
(g) Every provision of this Agreement is intended to be severable. If any
term or provision hereof is illegal or invalid for any reason whatsoever, such
illegality or invalidity shall not affect the validity of the remainder of this
Agreement.
(h) This Agreement may be executed in multiple counterparts each of which
shall be deemed an original and all of which shall constitute one agreement, and
the signatures of any party to any counterpart shall be deemed to be a signature
to, and may be appended to, any other counterpart.
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IN WITNESS WHEREOF, the parties have executed this Agreement through their
duly authorized representatives as of the day and year first written above.
CINEMARK USA, INC.
By: /s/ Xxx Xxx Xxxxxxxx
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Title: President
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CINEMARK II, INC.
By: /s/ Xxxxx Xxxxxx
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Title: Vice President
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