Exhibit 10.4
FIRST AMENDED AND RESTATED SFAC TAX SHARING AGREEMENT
FIRST AMENDED AND RESTATED TAX SHARING AGREEMENT, made as of June
11, 1999, by and among Specialty Foods Acquisition Corporation ("SFAC") and SFC
New Holdings, Inc. ("SFC Holdings"). SFAC and all of the direct or indirect
domestic subsidiaries of SFAC which are includible in the consolidated Federal
income tax return ("Consolidated Return") of the affiliated group (within the
meaning of Section 1504 of the Internal Revenue Code of 1986, as may be amended
from time to time (the "Code")) of which SFAC is the common parent corporation
for any fiscal year ending on or after December 31, 1999, or portion thereof,
shall be hereinafter referred to as the "SFAC Group." SFC Holdings and all of
the direct or indirect domestic subsidiaries of SFC Holdings which would be
includible in the Consolidated Return of the affiliated group (all such terms
within the meaning of Section 1504 of the Code) of which SFC Holdings would be
the common parent corporation for any fiscal year ending on or after December
31, 1999, or portion thereof, shall be referred to as the "SFC Holdings Group."
WHEREAS, SFAC, Specialty Foods Corporation ("SFC") and their
subsidiaries contemplate a proposed corporate and financial restructuring
transaction (the "Transaction");
WHEREAS, in connection with the Transaction, SFC and SFC Holdings
have entered into an assignment and assumption agreement dated as of
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June 11, 1999 whereby SFC Holdings has assumed the rights and liabilities of SFC
under the tax sharing agreement dated as of August 16, 1993 between SFAC and
SFC;
WHEREAS, simultaneously herewith, SFC, SFC Sub, Inc. and SFAC New
Holdings, Inc. (together, the "SFC Group") are entering into a tax sharing
agreement with SFAC, dated as of June 11, 1999, pursuant to which SFC shall make
payments to SFAC in respect of the consolidated Federal income tax and certain
state and local tax liabilities of the SFC Group and SFAC shall make payment
with respect to such taxes to the relevant taxing authorities;
WHEREAS, simultaneously herewith, the SFC Holdings Group is entering
into an amended and restated tax sharing agreement with SFAC;
WHEREAS, SFAC and SFC Holdings wish to provide for payment of the
consolidated Federal income tax and certain state and local tax liabilities of
the SFC Holdings Group by SFAC; and
WHEREAS, SFAC and SFC Holdings wish to provide for the contribution
to such payment by SFC Holdings;
NOW, THEREFORE, in consideration of the foregoing, and of the mutual
covenants and promises herein contained, SFAC and SFC Holdings agree as follows:
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1. Allocation and Payment of Tax
Liability of Members of SFAC Group.
1.1 SFC Holdings agrees to join with SFAC in any Consolidated Return
filed by SFAC for any taxable year (or portion thereof) with respect to the SFC
Holdings Group.
1.2 SFC Holdings hereby designates SFAC as its agent, as long as SFC
Holdings or the SFC Holdings Group is a member of the SFAC Group, for the
purpose of taking any and all action necessary or incidental to the filing of
Consolidated Returns. SFC Holdings agrees to furnish SFAC with any and all
information requested by SFAC in order to carry out the provisions of this
Agreement; to cooperate with SFAC in filing any return or consent contemplated
by this Agreement; to take such action as SFAC 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 in
connection with any refund claim.
1.3 For the fiscal year ended December 31, 1999, and for each
subsequent fiscal year for which this Agreement may remain in effect, SFC
Holdings shall be required to pay to SFAC (in the manner provided in Paragraph
1.4 hereof), in satisfaction of the SFC Holdings Group's share of the
consolidated Federal income tax liability (including for all purposes of this
Agreement, alternative minimum tax liability) of the SFAC Group, an amount equal
to the product of the actual consolidated Federal income tax liability of the
SFAC Group, as computed by SFAC, and a fraction, the numerator of which is the
Federal income tax liability that would have been payable by the SFC Holdings
Group for such year if it had filed a separate
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consolidated income tax return for such year and all prior years, taking into
account the adjustments provided for in Treasury Regulation
ss.1.1552-1(a)(2)(ii), and the denominator of which is the sum of such Federal
income tax liability and the (positive) Federal income tax liabilities of all
other members of the SFAC Group computed on a similar basis for such year;
provided, however, that SFC Holdings shall not be required to pay to SFAC for
any fiscal year an amount greater than the Federal income tax liability the SFC
Holdings Group would have incurred for such year if it had filed a separate
consolidated income tax return for such year and all prior years during which
this Agreement is in effect.
1.4 SFC Holdings shall make payment to SFAC of any amount allocated
to it pursuant to this Section 1.4, and SFAC shall have sole responsibility for
making any required payments to the Internal Revenue Service (the "IRS") in
satisfaction of the consolidated Federal income tax liability of the SFAC Group
(including the SFC Holdings Group) for each fiscal year. SFAC shall provide
notice to SFC Holdings, in accordance with Section 12 hereof, of any and all
amounts allocated to SFC Holdings pursuant to this Section 1.4 no later than ten
(10) days prior to the date on which such payment is due under this Section 1.4.
For each quarter of each fiscal year after the year ended December 31, 1999, SFC
Holdings, as long as SFC Holdings is a member of the SFAC Group, shall make
payment to SFAC of an amount, determined by SFAC and communicated to SFC
Holdings in a notice given in accordance with Section 12 hereof no later than
five (5) days prior to the date on which such payment is due under this Section
1.4, equal to the product of the installment payment of estimated Federal income
tax that the SFAC Group is required
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to pay to the IRS for such quarter under Section 6655 of the Code and a
fraction, the numerator of which is the amount of the installment payment of
estimated Federal income tax that the SFC Holdings Group would have been
required to pay to the IRS for such quarter under Section 6655 of the Code if
the SFC Holdings Group were filing a separate consolidated income tax return for
such taxable year, taking into account the adjustments provided for in Treasury
Regulation ss. 1.1552-1(a)(2)(ii), ("Separate Return Installment") and the
denominator of which is the sum of the installment payments of Federal income
tax of each member of the SFAC Group for such quarter determined on such a
separate income tax return method; provided, however, that SFC Holdings shall
not be required to make any payment to SFAC pursuant to this Section 1.4 for any
quarter in an amount greater than its Separate Return Installment for such
quarter. Payments pursuant to this Section 1.4 shall be made no later than the
fifth day prior to the due date of an estimated Federal income tax payment or,
if later, the fifth day after notice of the amount of such payment is given by
SFAC. The amount of any overpayment or underpayment pursuant to this Section 1.4
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, and, in the
case of any such underpayment, notice is provided to SFC Holdings by SFAC;
provided, however, that, upon written request (including supporting schedules)
of SFC Holdings, made after the close of any fiscal year but within the period
described in Section 6425(a)(1) of the Code, SFAC shall repay to SFC Holdings,
within the period
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described in Section 6425(b)(1) of the Code, the amount of any net remaining
overpayment of consolidated tax liability made by SFC Holdings for such year.
2. Adjustments.
Any adjustment of income, deduction or credit of any party to this
Agreement that results after the fiscal year in question by reason of any
carryback, amended return, claim for refund or audit shall be given effect by
redetermining amounts payable and reimbursable for such fiscal year hereunder as
if such adjustment had been part of the original determination hereunder,
whether such adjustment relates to the SFAC Group, SFC Holdings or any other
member of the SFC Holdings Group. In the case of a refund, SFAC shall pay to SFC
Holdings its share (determined in accordance with the preceding sentence) of the
refund within 20 days after the refund is received, and, in the case of an
increase in tax liability, SFC Holdings shall pay to SFAC its share (determined
in accordance with the preceding sentence) of such increased tax liability
within 20 days after receiving notice of such liability from SFAC. If any
interest is to be paid as a result of a consolidated Federal income tax
deficiency or refund, such interest shall be allocated between SFAC and SFC
Holdings in the same manner as their shares of the deficiency or refund. Any
penalty imposed with respect to any Consolidated Return filed on behalf of the
SFAC Group shall be the sole responsibility of SFAC.
3. State Taxes.
3.1 SFC Holdings agrees, on behalf of itself and the other members
of the SFC Holdings Group, at the request of SFAC, to join, or have any other
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member of the SFC Holdings Group join, with SFAC or any direct or indirect
subsidiary of SFAC in any combined or consolidated state or local income or
franchise tax return ("Combined Return") for any taxable year for which SFAC or
any such direct or indirect subsidiary of SFAC files a Combined Return that may
include SFC Holdings or any other member of the SFC Holdings Group.
3.2 If, at any time from and after the date of this Agreement, the
liability for any state or local income or franchise tax of any member of the
SFC Holdings Group and SFAC or any other direct or indirect subsidiary of SFAC
is determined on a consolidated or combined basis, this Agreement shall be
applied in like manner to all matters relating to such taxes.
4. Adjudications.
In any audit, conference, or other proceeding with the IRS or the
relevant state or local authorities, or in any judicial proceedings concerning
the determination of the Federal income tax liability of the SFAC Group
(including any of the members of the SFC Holdings Group) or the state or local
income tax liability of any combined or consolidated group including any member
of the SFAC Group in addition to any member of the SFC Holdings Group, SFAC and
each relevant member of the SFC Holdings Group shall be represented by persons
selected by SFAC. The settlement and terms of settlement of any issues relating
to such proceeding shall be in the sole discretion of SFAC, and SFC Holdings, on
behalf of itself and each member of the SFC Holdings Group, hereby appoints SFAC
as its agent for the purposes of proposing and concluding any such settlement.
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5. Entire Agreement; Assignment.
This Agreement embodies the entire understanding between 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.
6. Termination.
This Agreement may be terminated at any time upon mutual agreement
of the parties hereto; provided, however, that such termination shall not
relieve SFAC or SFC Holdings of any obligations pursuant to Sections 1.4, 2 and
3 hereof.
7. Effective Date.
This Agreement shall be effective for the taxable year of the SFAC
Group ended December 31, 1999, and for all taxable years thereafter.
8. Captions.
All section captions contained in this Agreement are for convenience
only and shall not be deemed a part of this Agreement.
9. 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.
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10. Governing Law.
This Agreement shall be governed by the laws applicable to contracts
entered into and to be fully performed within the State of New York by residents
thereof.
11. Successors and Assigns.
This Agreement shall be binding upon and shall inure to the benefit
of the parties hereto and their respective successors and assigns.
12. Notices.
Any payment, notice or communication required or permitted to be
given under this Agreement shall be in writing (including telegraphic, telecopy,
telex, facsimile transmission or cable communication) and mailed, telegraphed,
telecopied, telexed, faxed, cabled or delivered:
If to SFAC, to it at:
Specialty Foods Acquisition Corporation
000 Xxxx Xxxx Xxxx, Xxxxx 000
Xxxxxxxxx, XX 00000
Attention: Xxxxxx X. Xxxx
Telecopy: (000) 000-0000
If to SFC Holdings, to it at:
SFC New Holdings, Inc.
000 Xxxx Xxxx Xxxx, Xxxxx 000
Xxxxxxxxx, XX 00000
Attention: Xxxxxx X. Xxxx
Telecopy: (000) 000-0000
or to such other address as a party shall furnish in writing in a notice
similarly given to the other parties. All such notices and communications shall
be deemed given (i) if
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mailed, four days after the date of mailing, or (ii) when delivered to the
telegraph company, transmitted by telecopier, confirmed by telex answerback,
sent by facsimile transmission, or delivered to the cable company, respectively.
13. No Third-Party Beneficiaries.
Nothing in this document shall be deemed to create any right in any
person not a party hereto and this instrument shall not be construed in any
respect to be a contract in whole or in part for the benefit of any third party
except as aforesaid.
IN WITNESS WHEREOF, SFAC and SFC Holdings have executed this
Agreement as of the day and year first above written.
SPECIALTY FOODS ACQUISITION CORPORATION
By: /s/ Xxxx X. Xxxxx
--------------------------------------------
Name: Xxxx X. Xxxxx
Title: Vice President, Treasurer & Assistant
Secretary
SFC NEW HOLDINGS, INC.
By: /s/ Xxxx X. Xxxxx
--------------------------------------------
Name: Xxxx X. Xxxxx
Title: Vice President, Treasurer & Assistant
Secretary
