EXHIBIT 10.3
AMENDED AND RESTATED TAX ALLOCATION AGREEMENT
This agreement (the "Agreement") is entered into as of September
29, 2001 by and between Xxx. Xxxxxx' Holding Company, Inc., a Delaware
corporation ("MFH"), TCBY Holding Company, Inc., a Delaware corporation
("TCBY"), Xxx. Xxxxxx Famous Brands, Inc., a Delaware corporation
("Parent"), and all direct and indirect subsidiaries of Parent as set forth
on Schedule A attached hereto as such Schedule may be amended from time to
time (MFH, TCBY and each other such subsidiary is referred to separately as
the "Subsidiary" or collectively as the "Subsidiaries").
Recitals
MFH and each direct and indirect subsidiary thereof were, prior to
the date hereof, includible corporations in an affiliated group of
corporations of which MFH was the common parent, all within the meaning of
Section 1504 of the Internal Revenue Code of 1986, as amended (the "Code").
TCBY and each direct and indirect subsidiary thereof (except for
TCBY Systems, LLC, which was and continues to be treated as a disregarded
entity for U.S. Federal income tax purposes, and Americana Foods Limited
Partnership, which was and continues to be treated as a partnership for
U.S. Federal income tax purposes) were, prior to the date hereof,
includible corporations in an affiliated group of corporations of which
TCBY was the common parent (the "TCBY Group"), all within the meaning of
Section 1504 of Code.
On the date hereof, MFH and TCBY each became wholly-owned
subsidiaries of Parent, in a series of transactions (the "Combination")
treated for United States Federal income tax purposes as a "reverse
acquisition" within the meaning of Treasury Regulation ss.1.1502-75(d)(3),
such that the following were deemed to occur: (i) the affiliated group of
which MFH was the common parent continued in existence, with Parent joining
such affiliated group and replacing MFH as the common parent of such
affiliated group (the "Group"); (ii) the TCBY Group ceased to exist, and
(iii) TCBY and the TCBY subsidiaries became members of the Group.
Parent and each Subsidiary (except for TCBY Systems, LLC, which is
treated as a disregarded entity for U.S. Federal income tax purposes, and
Americana Foods Limited Partnership, which is treated as a partnership for
U.S. Federal income tax purposes) are includible corporations in an
affiliated group of corporations of which Parent is the common parent, all
within the meaning of Section 1504 of the Code.
Parent (i) will file consolidated Federal income tax returns on
behalf of itself and the other members of the Group and (ii) will file
unitary, combined, consolidated or similar state, local and foreign income
tax returns on behalf of itself and the other relevant members of the Group
in all jurisdictions where advisable.
Parent and the other members of the Group wish to allocate and
settle among themselves the consolidated Federal, and unitary, combined,
consolidated or similar state, local and foreign, income tax liabilities
of the Group.
Accordingly, the parties agree as follows:
1. Definitions. For purposes of this Agreement, except as
otherwise expressly provided or unless the context otherwise requires:
(a) "Estimated Tax Payments" for any Taxable Period means
the aggregate payments for such Taxable Period provided in Paragraph 5.
(b) "Final Determination" means a closing agreement with the
Internal Revenue Service (the "IRS"), claim for refund which has been
allowed, deficiency notice with respect to which the period for filing a
petition with the Tax Court has expired, or a decision of any court of
competent jurisdiction that is not subject to appeal or the time for appeal
of which has expired.
(c) "Group" means (1) for Federal income tax purposes,
Parent, the Subsidiaries and all other corporations (whether now existing
or hereafter formed or acquired) that at the time would be entitled or
required to join with Parent in filing a consolidated Federal income tax
return and (2) for unitary, combined, consolidated or similar state, local
or foreign income tax purposes, Parent, the Subsidiaries and all other
corporations (whether now existing or hereafter formed or acquired) that at
the time would be entitled or required to join with Parent in filing a
unitary, combined, consolidated or similar state, local or foreign income
tax return.
(d) "Subsidiary Separate Tax" for any Subsidiary with
respect to any Taxable Period means, subject to the rules set forth below
in this Paragraph 1(d) and Paragraph 6, a hypothetical Federal income tax
liability that the Subsidiary would have for such Taxable Period determined
as if the Subsidiary had filed its own separate Federal income tax return
for such Taxable Period (or during any Taxable Period prior thereto), and
calculated by (i) taking into account only losses, credits, and carryovers
of losses and credits, from prior or subsequent Taxable Periods, and other
tax attributes of the Subsidiary, which losses, credits, carryovers and
other attributes are subject to limitations under the Code to the extent
that such attributes would actually be utilized in the determination of the
Subsidiary's Federal income tax if the Subsidiary filed a separate Federal
income tax return for all Taxable Periods relating to the computation, (ii)
imposing a tax on the taxable income of the Subsidiary at a rate equal to
the highest marginal rate of corporate tax specified under the Code and
applicable to that Taxable Period and taking into account minimum tax,
alternative minimum tax and recapture of credits and (iii) employing the
methods and principles of accounting, elections and conventions that are
used by the Group.
For purposes of determining Subsidiary Separate Tax for any
Subsidiary with respect to any Taxable Period, the following special rules
shall apply:
(A) Subsidiary Separate Tax may constitute the
combined returns of certain member subgroups of the Group, as
determined by Parent in its reasonable discretion from time to
time with respect to any Taxable Period, and any obligation of a
subgroup shall be a joint and several obligation of each member
of the subgroup;
(B) The Subsidiary's tax basis in stock held by
it (including the triggering of any excess loss account with
respect to such stock under the consolidated return provisions of
the Code and regulations thereunder ("Treasury Regulations"))
shall not be affected by the calculation of hypothetical liability
required by Paragraph 1(d); and
(C) Parent may from time to time establish any
other special rules that Parent in its reasonable discretion deems
necessary or appropriate to carry out the underlying principles of
and procedures for allocation of this Agreement (including, without
limitation, rules relating to carryovers of losses and credits).
(e) "Taxable Period" means any 52/53-week period ending on
the Saturday closest to December 31 with respect to which a consolidated
Federal income tax return is filed on behalf of the Group.
2. Payments by Subsidiary to Parent. For every Taxable Period in
which the Subsidiary Separate Tax exceeds the Estimated Tax Payments or the
Subsidiary Separate Tax as recomputed according to Paragraph 6 exceeds the
Subsidiary Separate Tax, the Subsidiary shall pay to Parent an amount equal
to such excess.
3. Payments by Parent to Subsidiary. For every Taxable Period in
which the Estimated Tax Payments exceed the Subsidiary Separate Tax or the
Subsidiary Separate Tax exceeds the Subsidiary Separate Tax as recomputed
according to Paragraph 6, Parent shall pay to the Subsidiary the amount of
such excess.
4. Time and Form of Payment. Payments pursuant to Paragraphs 2 and
3 shall be made by check or wire transfer of funds no later than three (3)
days prior to the due date of the Group's consolidated Federal income tax
return for the Taxable Period in question, not including extensions. If the
due date for such return is extended, such payments shall be made on an
estimated basis and shall be recalculated no later than three (3) days
prior to the extended due date for such return, or the date that such
return is actually filed, if earlier, and any difference between such
recalculated payments and such estimated payments shall be paid by check or
wire transfer of funds to the party entitled thereto at the time of such
recalculation.
5. Estimated Tax Payments. For every Taxable Period, each
Subsidiary shall pay to Parent (by check or wire transfer of funds), no
later than three (3) days prior to the fifteenth day of the fourth, sixth,
ninth and twelfth months of such Taxable Period, 25%, 50%, 75% and 100%,
respectively, of the current annual estimated Federal income taxes
(including, without limitation, alternative minimum tax and superfund tax)
that the Subsidiary would be required to pay for such Taxable Period, less
any prior payments for such Taxable Period. Such hypothetical estimated
Federal income tax liability shall be determined in a manner consistent
with Paragraph l(d) and subject to approval by Parent.
6. Adjustments
(a) Carryback of Losses or Credits. Subject to the special
rule in Paragraph 1(d)(A), in the event that a Subsidiary realizes in any
Taxable Period a loss or credit that would be permitted under applicable
provisions of the Code and Treasury Regulations (taking into account any
election under Section 172(b)(3) of the Code) to be carried to one or more
Taxable Periods that precede such Taxable Period if the Subsidiary had
filed a separate Federal income tax return for all such Taxable Periods,
the Subsidiary Separate Tax shall be recomputed for such preceding Taxable
Periods to take into account such carryback and the payments pursuant to
Paragraphs 2 and 3 shall be appropriately adjusted as determined by Parent
in its reasonable discretion in a manner consistent with the underlying
principles of and procedures for allocation of this Agreement; provided,
however, that no such adjustments to Subsidiary Separate Tax or to the
payments required pursuant to Paragraphs 2 and 3 shall be made with respect
to any loss or credit carried back to a taxable year in which the
Subsidiary was not a member of the Group. Any payment from Parent to the
Subsidiary required by reason of such adjustment shall be paid by check or
wire transfer of funds within the earlier of (i) 30 days following Parent's
receipt of the related actual refund from the IRS or (ii) 90 days after the
filing of the actual consolidated Federal income tax return on which the
loss or credit is reported.
(b) Redeterminations of Tax Liability. In the event of any
redetermination of the consolidated Federal income tax liability of the
Group for any Taxable Period as a result of an audit by the IRS, the
allowance of a claim for refund, court determination, or otherwise, the
Subsidiary Separate Tax shall be recomputed for such Taxable Period to take
into account such redetermination in a manner consistent with such revised
treatment and the payments pursuant to Paragraphs 2 and 3 shall be
appropriately adjusted by Parent in its reasonable discretion in a manner
consistent with the underlying principles of and procedures for allocation
of this Agreement. Any additional payment required to be made by a party
hereto by reason of such adjustment shall be paid by check or wire transfer
of funds within 30 days of the date of a Final Determination with respect
to such redetermination, or as soon as such adjustment can practicably be
calculated, if later, together with interest for the period and at the rate
provided for in applicable provisions of the Code and, if applicable,
penalties and additions to tax.
(c) Deconsolidation. In the event that a Subsidiary is
determined not to have been properly treated as an includible corporation
in the Group with respect to any Taxable Period, the amount of any payments
made under Paragraphs 2, 3 and 5 (taking into account any adjustments
pursuant to Paragraphs 6(a) and (b)) shall be refunded to the party
entitled to such net amount within 30 days of a Final Determination of such
deconsolidation, or as soon as the amount to be refunded can practicably be
determined, if later, together with any applicable interest for the period.
(d) Ceasing to Be a Member of the Group. Unless Parent in
its reasonable discretion agrees otherwise, no adjustment to Paragraphs 2
and 3 shall be made in the event that a Subsidiary ceases to be a member of
the Group and thereafter realizes in any taxable year a loss or credit that
would be permitted under applicable provisions of the Code and Treasury
Regulations to be carried to one or more Taxable Periods of the Group that
precede such taxable year.
7. Filing of Returns, Cooperation; Indemnification
(a) Parent As Agent. Each Subsidiary hereby appoints Parent
as its agent for the purpose of (i) filing such consolidated Federal income
tax returns for the Group as Parent may elect or be required to file, (ii)
making any Federal election (including, without limitation, selecting
methods of accounting) or (iii) taking any other action in connection
therewith on behalf of the members of the Group. Each Subsidiary hereby
consents to the filing of such returns, the making of such elections and
applications and the taking of such action.
(b) Cooperation. Each Subsidiary shall cooperate with Parent
regarding the application of this Agreement and the filing of any
consolidated Federal income tax returns for the Group by maintaining such
books and records and providing such information as may be necessary or
useful for the application of this Agreement or for the timely filing of
such returns and by executing any documents and taking any other action
that Parent may reasonably request in connection therewith.
(c) Indemnification. Each Subsidiary will indemnify and hold
harmless Parent from any interest, penalties or additions to tax for any
failure to timely file the consolidated Federal income or estimated tax
return of the Group for any Taxable Period to the extent that such failure
is attributable to the failure of such Subsidiary to make the payments
required pursuant to Paragraphs 2, 4 and 5 or to the failure of such
Subsidiary to comply with Paragraph 7(b).
8. Resolution of Disputes. Any dispute or ambiguity concerning the
calculation or basis of determination of any payment provided for under
this Agreement, or any dispute or ambiguity concerning any other matter not
otherwise addressed in this Agreement, shall be resolved by Parent in a
manner consistent with the underlying principles of and procedures for
allocation of this Agreement as determined by Parent in its reasonable
discretion.
9. Adjudications. 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 of any of its members
(an "Adjudication"), the Group and each of its members shall be represented
by persons selected by Parent. Each Subsidiary shall cooperate with Parent
regarding any Adjudication. The settlement and terms of settlement of any
issues relating to an Adjudication shall be in the reasonable discretion of
Parent.
10. Binding Effect; Successors. This Agreement shall inure to the
benefit of and be binding upon the parties hereto (including each member of
the Group, whether or not such member was a member of the Group upon the
original execution of this Agreement) and their respective successors and
permitted assigns to the same extent as if such successors or assigns (or
such future members) had been original parties to this Agreement. Parent
will use its best efforts to cause each future member of the Group to
assent formally to this Agreement.
11. Legal and Accounting Fees. Any fees or expenses for legal,
accounting or other professional services rendered in connection with the
preparation of a consolidated Federal income tax return for the Group, the
application of the provisions of this Agreement or any audit, conference or
proceeding of the IRS or judicial proceedings relevant to any determination
required to be made under this Agreement, may be allocated appropriately by
and between Parent and each Subsidiary.
12. State, Local and Foreign Taxes. The underlying principles of
and procedures for allocation and payment of Federal income tax liabilities
and all of the other provisions of this Agreement (including, without
limitation, Paragraph 7) may, in the reasonable discretion of Parent, apply
in the same general way with respect to unitary, combined, consolidated or
similar state, local and foreign taxes.
13. Effect of Agreement. This Agreement shall determine the rights
and liabilities of Parent and each other member of the Group as to the
matters provided for in this Agreement, whether or not such determination
is effective for purposes of the Treasury Regulations, financial reporting
purposes or other purposes. Notwithstanding anything expressed or implied
to the contrary in this Agreement, the terms and conditions of the
Supplement to Tax Allocation Agreement, entered into as of August 31, 2001
by and among MFH, the MFH Subsidiaries (as defined therein), TCBY, the TCBY
Subsidiaries (as defined therein), and Parent shall govern if and to the
extent that such terms and conditions would conflict with this Agreement.
14. Entire Agreement. This Agreement sets forth the entire
agreement and understanding of the parties in respect of the subject matter
contained in this Agreement and supersedes all prior or contemporaneous
agreements, promises, covenants, arrangements, communications,
representations or warranties, whether oral or written, by any party or by
any officer, employee or representative of any party. This Agreement shall
not be modified, supplemented or terminated except by a writing duly signed
by each of the parties hereto, and no waiver of any provision of this
Agreement shall be effective unless in a writing duly signed by the party
sought to be bound.
15. Code References. Any references to Sections of the Code shall
be deemed to refer to any successor provisions of the Code and shall refer
to such Sections or provisions as in effect from time to time.
16. Notices. Any payment, notice, communication or approval
required or permitted to be given under this Agreement shall be deemed to
have been duly given if delivered by hand or deposited in the United States
mail, postage prepaid and sent by certified or registered mail, addressed
to a Subsidiary at the address appearing opposite such Subsidiary's name on
Schedule A and, if addressed to Parent, at:
Xxx. Xxxxxx Famous Brands, Inc.
ATTENTION: Xxxxxx Xxxxx
0000 Xxxx Xxxxxxxxxx Xxxxxxx, Xxxxx 000
Xxxx Xxxx Xxxx, XX 00000
17. Third Parties. Except as specifically set forth or referred to
in this Agreement, nothing expressed or implied in this Agreement is
intended or shall be construed to confer upon or give to any person or
corporation other than the parties hereto (and, in accordance with
Paragraph 10, their successors or assigns) any rights or remedies under or
by reason of this Agreement.
18. Governing Laws. This Agreement and the legal relations among
the parties hereto shall be governed by and construed in accordance with
the laws of the State of Delaware, without regard to its conflict of laws
provisions.
19. Term. This Agreement shall cease to be effective at such time
as the parties hereto mutually agree in writing.
20. Severability. If any provision of this Agreement or the
application thereof to any party is held invalid or unenforceable, the
remainder of this Agreement and the application of such provision to other
parties or circumstances will not be affected thereby, the provisions of
this Agreement being severable in any such instance.
21. Counterparts. 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.
The parties hereto have caused this Agreement to be duly executed
as of the date first written above.
XXX. XXXXXX FAMOUS BRANDS, INC.
By: /s/ XXXXXXX XXXX
----------------------------------------
Name: Xxxxxxx Xxxx
Title: Senior V.P.
XXX. XXXXXX' HOLDING COMPANY, INC.
By: /s/ XXXXXXX XXXX
----------------------------------------
Name: Xxxxxxx Xxxx
Title: Senior V.P.
TCBY HOLDING COMPANY, INC.
By: /s/ XXXXXXX XXXX
----------------------------------------
Name: Xxxxxxx Xxxx
Title: Senior V.P.
SUBSIDIARIES:
XXX. XXXXXX' ORIGINAL COOKIES, INC.,
SUNSHINE PRETZEL TIME, INC., PEACHTREE
PRETZEL TIME, INC., CMBC, INC., THE XXX.
XXXXXX' BRAND, INC., XXX. XXXXXX COOKIES
AUSTRALIA, H&M OF CANADA, GREAT
AMERICAN COOKIE COMPANY, INC.,
LV-H&M, PRETZELMAKER, INC., FAIRFIELD
FOODS, INC., AIRPORT COOKIES, INC.,
PRETZEL TIME, INC.
By: /s/ XXXXXXX XXXX
----------------------------------------
Name: Xxxxxxx Xxxx
Title: Senior V.P.
TCBY ENTERPRISES, INC., TCBY INTERNA-
TIONAL, INC., CMI PROPERTY HOLDINGS,
INC., JUICE WORKS DEVELOPMENT, INC.,
RIVERPORT EQUIPMENT AND DISTRIBUTION
COMPANY, TCBY OF KUWAIT, TCBY INTERNATIONAL
FOREIGN SALES CORPORATION, TCBY OF ARUBA,
INC., TCBY OF AUSTRALIA, INC., TCBY OF
BOLIVIA, INC., TCBY OF COLUMBIA, INC.,
TCBY OF IRELAND, INC., TCBY OF ISRAEL, INC.,
TCBY OF JORDAN, INC., TCBY OF MEXICO, INC.,
TCBY OF THE NETHERLANDS, INC., TCBY OF THE
PHILIPPINES, INC., TCBY OF PORTUGAL,
INC., TCBY OF QATAR, INC., TCBY OF SAUDI
ARABIA, INC., TCBY OF SOUTH AFRICA,
INC., TCBY OF TEXAS, INC., TCBY OF TURKEY,
INC., TCBY UNITED KINGDOM, INC., AMERICANA
FOODS GENERAL PARTNER, INC., FSL, INC.
By: /s/ XXXXXXX XXXX
----------------------------------------
Name: Xxxxxxx Xxxx
Title: Senior V.P., General Counsel
TCBY SYSTEMS, LLC
By: /s/ XXXXXXX XXXX
----------------------------------------
Name: Xxxxxxx Xxxx
Title: Senior V.P., General Counsel
AMERICANA FOODS LIMITED PARTNERSHIP
By: Americana Foods General Partner, Inc.
Its: General Partner
By: /s/ XXXXXXX XXXX
----------------------------------------
Name: Xxxxxxx Xxxx
Title: Senior V.P., General Counsel
All those other Subsidiaries appearing on
Schedule A to the Tax Allocation
Agreement, as such Schedule may be
amended from time to time.
SCHEDULE A
TO
AMENDED AND RESTATED TAX ALLOCATION AGREEMENT
DATED AS OF SEPTEMBER 29, 2001
BY AND BETWEEN
PARENT AND
EACH SUBSIDIARY
Subsidiary
Xxx. Xxxxxx' Holding Company, Inc.
Sunshine Pretzel Time, Inc.
Peachtree Pretzel Time, Inc.
CMBC, Inc.
Xxx. Xxxxxx' Original Cookies, Inc.
The Xxx. Xxxxxx' Brand, Inc.
Xxx. Xxxxxx Cookies Australia
H&M of Canada
Great American Cookie Company, Inc.
LV-H&M
Pretzelmaker, Inc.
Fairfield Foods, Inc.
Airport Cookies, Inc.
Pretzel Time, Inc.
TCBY Holding Company, Inc.
TCBY Enterprises, Inc.
TCBY Systems, LLC
TCBY International, Inc.
CMI Property Holdings, Inc.
Juice Works Development, Inc.
Riverport Equipment and Distribution Company
TCBY of Kuwait
TCBY International Foreign Sales Corporation
TCBY of Aruba, Inc.
TCBY of Australia, Inc.
TCBY of Bolivia, Inc.
TCBY of Columbia, Inc.
TCBY of Ireland, Inc.
TCBY of Israel, Inc.
TCBY of Jordan, Inc.
TCBY of Mexico, Inc.
TCBY of the Netherlands, Inc.
TCBY of the Philippines, Inc.
TCBY of Portugal, Inc.
TCBY of Qatar, Inc.
TCBY of Saudi Arabia, Inc.
TCBY of South Africa, Inc.
TCBY of Texas, Inc.
TCBY of Turkey, Inc.
TCBY United Kingdom, Inc.
Americana Foods General Partner, Inc.
FSL, Inc.
Americana Foods Limited Partnership
