FORM OF
TAX SHARING AGREEMENT
between
CPC International Inc.
and
Corn Products International, Inc.
Dated _______, 1997
ARTICLE 1 - DEFINITIONS........................................2
SECTION 1.01. GENERAL............................................2
ARTICLE 2 - TAX RETURN FILING..................................7
SECTION 2.01. CPC CONSOLIDATED RETURNS...........................7
SECTION 2.02. CORN F.I.T. RETURNS................................8
SECTION 2.03. CPC STATE OR LOCAL RETURNS.........................8
SECTION 2.04. CORN STATE OR LOCAL RETURNS........................9
SECTION 2.05. CPC SALARIED EMPLOYEE RETURNS......................9
SECTION 2.06. CPC HOURLY EMPLOYEE RETURNS.......................10
SECTION 2.07. CORN EMPLOYEE RETURNS.............................10
SECTION 2.08. CPC SALES, USE AND PROPERTY TAX RETURNS...........11
SECTION 2.09. CORN SALES, USE AND PROPERTY TAX RETURNS..........11
SECTION 2.10. OTHER CPC RETURNS.................................12
SECTION 2.11. OTHER CORN RETURNS................................13
SECTION 2.12. FOREIGN DISTRIBUTING ENTITY RETURNS...............13
SECTION 2.13. CORN FOREIGN RETURNS..............................14
SECTION 2.14. DESIGNATION OF AGENT..............................14
SECTION 2.15. POST-DISTRIBUTION DATE RETURNS AND POSITION--NO
INCONSISTENT POSITIONS............................15
ARTICLE 3 - TAX LIABILITY.....................................16
SECTION 3.01. CPC LIABILITY.....................................16
SECTION 3.02. CORN LIABILITY....................................16
ARTICLE 4 - POST-DISTRIBUTION CARRYBACKS OF TAX BENEFITS......17
SECTION 4.01. CARRYBACK PROVISIONS..............................17
ARTICLE 5 - POST-DISTRIBUTION CARRYOVERS OF TAX BENEFITS
AND ATTRIBUTES....................................18
SECTION 5.01. CPC GROUP ITEMS...................................18
SECTION 5.02. EARNINGS AND PROFITS..............................19
ARTICLE 6 - ADJUSTMENTS.......................................19
SECTION 6.01. CPC RETURNS AND FOREIGN DISTRIBUTING
ENTITY RETURNS....................................19
SECTION 6.02. CORN RETURNS......................................21
SECTION 6.03. EXPENSES..........................................21
ARTICLE 7 - CONTESTS..........................................22
SECTION 7.01. CPC, CPC COMPANY, AND FOREIGN DISTRIBUTING
ENTITY CONTESTS; NOTIFICATION AND COMMUNICATION...22
SECTION 7.02. GROUP CONTESTS; CONTROL AND MANAGEMENT OF CLAIMS..22
ARTICLE 8 - INFORMATION AND COOPERATION; BOOKS AND RECORDS....24
SECTION 8.01. GENERAL...........................................24
ARTICLE 9 - GENERAL PROVISIONS................................26
SECTION 9.01. EFFECTIVENESS.....................................26
SECTION 9.02. NOTICES...........................................26
SECTION 9.03. COMPLETE AGREEMENT; CONSTRUCTION..................27
SECTION 9.04. COUNTERPARTS......................................27
SECTION 9.05. WAIVER............................................27
SECTION 9.06. AMENDMENTS........................................28
SECTION 9.07. SUCCESSORS AND ASSIGNS............................28
SECTION 9.08. SUBSIDIARIES......................................28
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SECTION 9.09. THIRD PARTY BENEFICIARIES.........................28
SECTION 9.10. HEADINGS..........................................29
SECTION 9.11. SPECIFIC PERFORMANCE..............................29
SECTION 9.12. GOVERNING LAW.....................................29
SECTION 9.13. ARBITRATION.......................................30
SECTION 9.14. SEVERABILITY......................................30
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TAX SHARING AGREEMENT
This TAX SHARING AGREEMENT (this "Agreement") is dated
as of ________, 1997, by and between CPC INTERNATIONAL INC., a
Delaware corporation ("CPC") and CORN PRODUCTS INTERNATIONAL,
INC., a Delaware corporation ("Corn").
WITNESSETH
WHEREAS, CPC is the common parent of an affiliated
group of corporations which includes Corn and which group and the
members thereof file U.S. consolidated federal income tax
returns;
WHEREAS, CPC, as well as its foreign and domestic
subsidiaries file certain other Tax returns relating to U.S. and
foreign Taxes;
WHEREAS, the Board of Directors of CPC has determined
that it is appropriate and desirable to effect the Distribution
as described in the Distribution Agreement between CPC and Corn
dated, , 1997 (the "Distribution Agreement"), subject to
the satisfaction or waiver of the conditions set forth therein;
WHEREAS, the Board of Directors of CPC has determined
that it is appropriate and desirable to take all corporate action
and to cause its subsidiaries to take all corporate action
necessary to effect the division of certain foreign direct and
indirect subsidiaries of CPC as of specified dates to be
determined (each such date shall sometimes hereinafter be
referred to as the "Applicable Foreign Distribution Date"); and
WHEREAS, the parties hereto desire to set forth their
agreements with regard to their respective liabilities for
federal, state, local and foreign Taxes for Tax periods before
and after the Distribution Date and the Applicable Foreign
Distribution Dates, and to provide for certain other Tax matters.
NOW, THEREFORE, in consideration of the mutual
agreements, provisions and covenants contained in this Agreement,
the parties hereby agree as follows:
ARTICLE 1
DEFINITIONS
SECTION 1.01. General. As used in this Agreement, the
following terms shall have the following meanings (such meanings
to be equally applicable to both the singular and plural forms of
the terms defined):
"Affiliate" shall mean, when used with respect to a
specified Person, another Person that directly, or indirectly
through one or more intermediaries, will control, or will be
controlled by or will be under common control with the Person
specified immediately following the Distribution Date.
"Agreement" shall have the meaning described in the
above preamble.
"Applicable Foreign Distribution Date" shall have the
meaning described in the above preamble.
"Code" shall mean the Internal Revenue Code of 1986,
as amended.
"Corn" shall have the meaning described in the above
preamble.
2
"Corn Companies" shall mean, collectively, Corn and
each subsidiary of Corn, including without limitation any entity
owned directly or beneficially by Corn after the Distribution
Date (or, if later, the Applicable Foreign Distribution Date).
"Corn Division" shall mean the division of CPC that
operates CPC's U.S. corn refining business before the
Distribution Date.
"Corn Domestic Companies" shall mean, collectively,
each Corn Company incorporated or organized under the laws of one
of the respective States of the United States.
"Corn Employee Returns" shall have the meaning
described in Section 2.07 below.
"Corn F.I.T. Return" shall mean any federal income tax
return or amendment thereof of Corn or any member of the Corn
Group, including any consolidated federal income tax return or
amendment thereof of the Corn Group.
"Corn Foreign Returns" shall have the meaning set
forth in Section 2.13 below.
"Corn Group" shall mean the affiliated group of
corporations as defined in Section 1504(a) of the Code of which
Corn is the common parent.
"Corn Return" shall mean any of a Corn F.I.T. Return,
any of the Corn State or Local Returns, a Corn Employee Return,
any Corn Foreign Return, any of the Corn Sales, Use and Property
Tax Returns, and any Other Corn Return.
"Corn Sales, Use and Property Tax Returns" shall have
the meaning described in Section 2.09 below.
3
"Corn State or Local Returns" shall have the meaning
described in Section 2.04 below.
"CPC" shall have the meaning described in the above
preamble.
"CPC Companies" shall mean, collectively, CPC and each
subsidiary of CPC.
"CPC Consolidated Return" shall mean any consolidated
federal income tax return or amendment thereof of the CPC Group
which includes one or more of the Corn Domestic Companies.
"CPC Consolidated Return Period" shall mean a tax
period for which a CPC Consolidated Return is filed.
"CPC Group" shall mean the affiliated group of
corporations as defined in Section 1504(a) of the Code of which
CPC is the common parent.
"CPC Hourly Employee Returns" shall have the meaning
described in Section 2.06 below.
"CPC Return" shall mean any of a CPC Consolidated
Return, any of the CPC State or Local Returns, a CPC Salaried
Employee Return, a CPC Hourly Employee Return, any of the CPC
Sales, Use and Property Tax Returns, or any Other CPC Return.
"CPC Salaried Employee Returns" shall have the meaning
described in Section 2.05 below.
"CPC Sales, Use and Property Tax Returns" shall have
the meaning described in Section 2.08 below.
4
"CPC State or Local Returns" shall have the meaning
described in Section 2.03 below.
"CPC Subsidiary" shall mean any subsidiary of CPC
other than any of the Corn Companies.
"Distribution" shall mean the distribution by CPC to
its public shareholders of the stock of Corn as more particularly
described in the Distribution Agreement and any transactions
relating thereto.
"Distribution Agreement" shall have the meaning
described in the above preamble.
"Distribution Date" shall be the date on which the
Distribution occurs.
"Foreign Distributed Entity" shall mean a newly
created foreign company that will conduct corn refining business
operations after the Applicable Foreign Distribution Date, and
that will be owned by Corn after the later of the Distribution
Date or the Applicable Foreign Distribution Date.
"Foreign Distributing Entities" shall mean the foreign
CPC Subsidiaries that prior to the Applicable Foreign
Distribution Date conduct both corn refining business operations
and consumer foods business operations in a single entity.
"Foreign Distributing Entity Return" shall mean any
foreign Tax return or amendment thereof of a Foreign Distributing
Entity.
"IRS" shall mean the Internal Revenue Service.
5
"IRS Penalty Rate" shall mean the rate of interest
imposed from time to time on underpayments of income Tax pursuant
to Code section 6621.
"IRS Ruling" shall mean the ruling issued by the IRS
which states the tax treatment of the Distribution and related
transactions.
"Other Corn Returns" shall have the meaning described
in Section 2.11 below.
"Other CPC Returns" shall have the meaning described
in Section 2.10 below.
"Person" shall mean any natural person, corporation,
business trust, joint venture, association, company, partnership
or government, or any agency or political subdivision thereof.
"Tax" shall mean all federal, state, local and foreign
gross or net income, gross receipts, sales, use, ad valorem, VAT,
GST, franchise, profits, license, withholding, payroll,
employment, excise, transfer, recording, severance, stamp,
occupation, premium, property, environmental, custom duty, or
other tax, governmental fee or other like assessment or charge of
any kind whatsoever, together with any interest and any penalty,
addition to tax or additional amount imposed by any governmental
authority responsible for the imposition of any tax.
"Tax Indemnification Agreement" shall mean the Tax
Indemnification Agreement dated of even date herewith between CPC
and Corn.
"Taxing Authority" shall mean any governmental
authority responsible for the imposition of any Tax.
"Temporary Differences" attributable to any entity
shall mean (a) any single item of income or deduction in a CPC
Return or any Foreign Distributing Entity Return in respect of
any Tax period that should reverse in one or more subsequent Tax
periods assuming proper Tax
6
treatment and no change in law or in the Tax accounting policies
of such entity (each an "Originating Temporary Difference") or
(b) the partial or complete reversal of an Originating Temporary
Difference.
ARTICLE 2
TAX RETURN FILING
SECTION 2.01. CPC Consolidated Returns. CPC shall
prepare and file with the IRS all CPC Consolidated Returns
required to be filed by CPC after the Distribution Date. CPC
shall make all decisions relating to the preparation and filing
of such returns (including, without limitation, the manner in
which any item of income, gain, loss, deduction or credit shall
be reported) and shall inform Corn of any such decisions that
might materially affect a Corn Return. CPC shall have the sole
right to determine the elections that will be made pursuant to
the Code on behalf of any member of CPC Group and shall inform
Corn of any such elections that may materially affect a Corn
Return. Corn further agrees that it will, and will compel the
Corn Domestic Companies to, file or join in the filing of such
authorizations, elections, consents and other documents, and take
such other actions as may be necessary or appropriate, in the
opinion of CPC, to carry out the purposes and intent of this
Section 2.01, provided that such actions are not inconsistent
with this Agreement or the Tax Indemnification Agreement. Corn
shall furnish CPC at least thirty (30) days before the due date
(excluding extensions) of any such CPC Consolidated Return all
information necessary for CPC to complete the CPC Consolidated
Return. Any such information requested by CPC shall be consistent
with current practices and applicable law and regulations. Corn
shall also furnish CPC work papers and other such
7
information and documentation as may be reasonably
requested by CPC with respect to the Corn Companies.
SECTION 2.02. Corn F.I.T. Returns. Corn shall prepare
and file with the IRS all Corn F.I.T. Returns required to be
filed by Corn or any member of the Corn Group (whether said
returns are filed on a consolidated basis or otherwise) for all
Tax periods beginning on or after the Distribution Date
(including any short-period returns). Subject to the provisions
of Section 2.15 hereof, Corn shall make all decisions relating to
the preparation and filing of such returns (including, without
limitation, the manner in which any item of income, gain, loss,
deduction or credit shall be reported). Subject to the provisions
of Section 2.15 hereof, Corn shall have the right to determine
the elections that will be made pursuant to the Code on behalf of
any member of Corn Group.
SECTION 2.03. CPC State or Local Returns. CPC will
prepare and file all state and local income or franchise Tax
returns and any amendments thereto which are required to be filed
by CPC after the Distribution Date and which include the Corn
Division (together with such returns filed prior to the
Distribution Date, "CPC State or Local Returns"). CPC shall make
all decisions relating to the preparation and filing of such
returns, and shall inform Corn of any such decisions that may
materially affect a Corn Return. Corn shall furnish CPC at least
thirty (30) days before the due date (excluding extensions) of
any such CPC State or Local Return with a final copy of the
information necessary for CPC to complete such CPC State or Local
Return. Corn shall also furnish CPC work papers and other such
information and documentation as may be reasonably requested by
CPC.
8
SECTION 2.04. Corn State or Local Returns. Each Corn
Domestic Company will prepare and file all respective state and
local income or franchise Tax returns and any amendments thereto
which are required to be filed by such party after the
Distribution Date, and not otherwise described in Section 2.03
above (herein, together with such returns filed prior to the
Distribution Date, "Corn State or Local Returns"), except that
CPC shall prepare all such Corn State or Local Returns required
to be filed after the Distribution Date for Tax periods ending on
or before, or beginning before and ending after, the Distribution
Date. Subject to the provisions of Section 2.15 hereof, each Corn
Domestic Company shall make all decisions relating to the
preparation and filing of such returns.
SECTION 2.05. CPC Salaried Employee Returns. CPC shall
prepare and file all employment Tax returns required to be filed
by CPC after the Distribution Date, and any amendments thereto,
relating to salaried employees of CPC who provided services
directly to the Corn Division on or prior to the Distribution
Date, for all Tax periods ending on or before, or beginning
before and ending after, the Distribution Date (herein, together
with such returns filed prior to the Distribution Date, the "CPC
Salaried Employee Returns"). CPC shall make all decisions
relating to the preparation and filing of such returns, and shall
inform Corn of any such decisions that may materially affect a
Corn Return. Corn shall furnish CPC at least thirty (30) days
before the due date (excluding extensions) of any such CPC
Salaried Employee Return all information necessary for CPC to
complete the CPC Salaried Employee Return. Corn shall also
furnish CPC work papers and other such information and
documentation as may be reasonably requested by CPC with respect
to the completion of any CPC Salaried Employee Return for any Tax
period or portion thereof preceding the Distribution Date.
9
SECTION 2.06. CPC Hourly Employee Returns. Corn,
subject to the provisions of Section 2.15 hereof, shall prepare
and CPC shall file all employment Tax returns and any amendments
thereto that are required to be filed by CPC after the
Distribution Date for Tax periods ending on or before, or
beginning before and ending after, the Distribution Date relating
to hourly employees of CPC who provided services directly to the
Corn Division on or prior to the Distribution Date (herein,
together with such returns filed prior to the Distribution Date,
the "CPC Hourly Employee Returns"). CPC shall have ultimate
authority to make all decisions relating to the preparation and
filing of such returns, and Corn shall comply with all such
decisions of CPC relating to the preparation of such returns. CPC
shall inform Corn of any such decision that may materially affect
a Corn Return. Corn shall furnish CPC at least thirty (30) days
before the due date (including extensions) completed copies of
any such CPC Hourly Employee Returns. Corn shall also furnish CPC
work papers and other such information and documentation as may
be reasonably requested by CPC with respect to the completion of
any CPC Hourly Employee Returns for any such Tax period.
SECTION 2.07. Corn Employee Returns. Each Corn
Domestic Company will prepare and file all respective employment
Tax returns and any amendments thereto that are required to be
filed by such entities after the Distribution Date, (herein,
together with such returns filed prior to the Distribution Date,
"Corn Employee Returns"), except that with respect to any Corn
Employee Returns which were prepared by CPC for periods prior to
the Distribution Date. CPC shall prepare such Corn Employee Returns
due after the Distribution Date for Tax periods ending on or before,
or beginning before and ending after, the Distribution Date. Subject
10
to the provisions of Section 2.15 hereof, each Corn
Domestic Company shall make all decisions relating to the
preparation and filing of its returns.
SECTION 2.08. CPC Sales, Use and Property Tax Returns.
Corn, subject to the provisions of Section 2.15 hereof, shall
prepare and CPC shall file all sales, use and property Tax
returns and any amendments thereto that are required to be filed
by CPC after the Distribution Date for all Tax periods ending on
or before, or beginning before and ending after, the Distribution
Date relating to sales, use and property Taxes levied upon
property or transactions of the Corn Division (herein, together
with such returns filed prior to the Distribution Date, the "CPC
Sales, Use and Property Tax Returns"). CPC shall have ultimate
authority to make all decisions relating to the preparation and
filing of such returns, and Corn shall comply with all such
decisions of CPC relating to the preparation of such returns. CPC
shall inform Corn of any such decisions that may materially
affect a Corn Return. Corn shall furnish CPC at least thirty (30)
days before the due date (including extensions) completed copies
of any such CPC Sales, Use and Property Tax Returns. Corn shall
also furnish CPC work papers and other such information and
documentation as may be reasonably requested by CPC with respect
to the completion of any CPC Sales, Use and Property Tax Returns
for any Tax period preceding or including the Distribution Date.
SECTION 2.09. Corn Sales, Use and Property Tax Returns.
Each Corn Domestic Company will prepare and file all respective
sales, use and property Tax returns and any amendments thereto that
are required to be filed by such party after the Distribution Date
relating to sales, use and property Taxes levied upon such entity's
property or transactions involving such entity's property (herein,
together with such returns filed prior to the Distribution Date, "Corn
11
Sales, Use and Property Tax Returns"). Subject to the
provisions of Section 2.15 hereof, each Corn Domestic Company
shall make all decisions relating to the preparation and filing
of its returns.
SECTION 2.10. Other CPC Returns. CPC shall prepare and
file with the applicable Taxing Authorities all other Tax returns
and any amendments thereto required to be filed by CPC after the
Distribution Date with respect to the business and operations of
the Corn Division for all Tax periods ending on or before, or
beginning before and ending after, the Distribution Date and that
are not otherwise described in this Article 2 (herein, together
with all such returns filed prior to the Distribution Date, the
"Other CPC Returns"), except that Corn shall prepare, and CPC
shall file, any Other CPC Return required to be filed by CPC
after the Distribution Date with respect to such Tax periods,
that, prior to the Distribution Date, had been prepared by the
Corn Division. CPC shall make all decisions relating to the
preparation and filing of all such returns, and Corn shall comply
with all such decisions of CPC relating to the preparation of
such returns. CPC shall inform Corn of any such decision that may
materially affect a Corn Return. Corn shall furnish CPC at least
thirty (30) days before the due date (excluding extensions) of
any such Other CPC Return all information necessary for CPC to
complete any Other CPC Returns. Additionally, Corn will furnish
completed copies of any Other CPC Return prepared by Corn. Corn
shall also furnish CPC work papers and other such information and
documentation as may be reasonably requested by CPC with respect
to the completion of any Other CPC Return for any Tax period or
portion thereof preceding the Distribution Date.
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SECTION 2.11. Other Corn Returns. Each Corn Domestic
Company will prepare and file all other Tax returns and any
amendments thereto that are required to be filed by such party
after the Distribution Date that are not otherwise described in
this Article 2 (herein, together with such returns filed prior to
the Distribution Date, "Other Corn Returns"). Subject to the
provisions of Section 2.15 hereof, each Corn Domestic Company
shall make all decisions relating to the preparation and filing
of such returns.
SECTION 2.12. Foreign Distributing Entity Returns.
Except as otherwise provided in an agreement between a Foreign
Distributing Entity and a Foreign Distributed Entity, the Foreign
Distributing Entity will prepare and file all foreign Tax returns
and any amendments thereto which are required to be filed by the
Foreign Distributing Entity after the Applicable Foreign
Distribution Date for all Tax periods which include the
operations conducted before or as of the Applicable Foreign
Distribution Date of the corn refining division of the Foreign
Distributing Entity (herein, together with such returns filed
prior to the Applicable Foreign Distribution Date, "Foreign
Distributing Entity Returns"). The Foreign Distributing Entity
shall make all decisions relating to the preparation and filing
of such returns and shall inform the Foreign Distributed Entity
of any such decision that may materially affect a return filed by
such entity after the Applicable Foreign Distribution Date. The
Foreign Distributed Entity shall furnish the Foreign Distributing
Entity at least thirty (30) days before the due date (excluding
extensions) of any such Foreign Distributing Entity Return with a
final copy of the information necessary for the Foreign
Distributing Entity to complete such Foreign Distributing Entity
Return. The Foreign Distributed Entity shall also furnish the
Foreign Distributing Entity
13
work papers and other such information and documentation as
may be reasonably requested by the Foreign Distributing Entity.
SECTION 2.13. Corn Foreign Returns. Each foreign Corn
Company will prepare and file all respective foreign Tax returns
and any amendments thereto which are (i) not otherwise described
in Section 2.12 above and (ii) with respect to each Foreign
Distributed Entity, required to be filed by such party for all
Tax periods beginning on or after the Applicable Foreign
Distribution Date or, with respect to every other foreign Corn
Company, required to be filed by such party for all Tax periods
ending before, on or after the Distribution Date ("Corn Foreign
Returns"). A foreign Corn Company (other than a Foreign
Distributed Entity) may request a foreign CPC Company, if such
foreign CPC Company is better suited, to prepare the foreign Tax
returns due after the Distribution Date for any Tax periods of
the foreign Corn Company that end on or before, or begin before
and end after, the Distribution Date. Subject to the provisions
of Section 2.15 hereof, the foreign Corn Company shall make all
decisions relating to the preparation and filing of all Corn
Foreign Returns.
SECTION 2.14. Designation of Agent. Corn hereby
irrevocably designates CPC, and will cause each applicable Corn
Company to irrevocably designate, CPC, or, as applicable, the
respective Foreign Distributing Entity, as its agent,
coordinator, and administrator for the purpose of taking any and
all actions (including the execution of waivers of applicable
statutes of limitation) necessary or incidental to the filing of
(i) a CPC Return, or a Foreign Distributing Entity Return or (ii)
an amended CPC Return or Foreign Distributing Entity Return or
(iii) an amended Corn Return, filed with respect to a Corn Return
(other than a Corn Foreign Return), filed prior to the Distribution
Date, in order to make any claim for refund (even though an item
14
or Tax attribute giving rise to an amended return or refund
claim arises after the Distribution Date or, as appropriate, the
Applicable Foreign Distribution Date), credit or offset of Tax or
any other proceedings relating to any Tax period or portion
thereof ending prior to the Distribution Date or as appropriate,
the Applicable Foreign Distribution Date. Notwithstanding the
previous sentence, Corn shall not designate CPC as its agent with
respect to any amended CPC Return, or claim for refund, relating
to any assessment of property taxes on real property of the Corn
Division for any period prior to the Distribution Date. CPC, as
agent, or when applicable, the Foreign Distributing Entity, as
agent, shall be responsible to see that all such administrative
matters relating thereto shall be handled promptly and
appropriately. CPC, or, when applicable, the Foreign Distributing
Entity shall inform and consult with Corn or the Foreign
Distributed Entity prior to taking any action on behalf of, or
which will have any material impact on, any of the Corn
Companies, including, without limitation, strategies relating to
waivers of any statute of limitations.
SECTION 2.15. Post-Distribution Date Returns and
Position--No Inconsistent Positions. No Corn Company will
knowingly treat any item in a Corn Return filed by a Corn
Company, or CPC Return prepared by a Corn Company after the
Distribution Date, in a manner inconsistent with the treatment of
the same item in a CPC Return, a Foreign Distributing Entity
Return or any Tax return filed by a CPC Company (including a CPC
Company that will become solely a Corn Company after the Distri-
bution Date). CPC will inform Corn of any changes or amendments
after the Distribution Date to any CPC Return or any Foreign Distri-
buting Entity Return or other Tax return filed by a CPC Company
that would affect any item in a Corn Return. CPC will, or if appli-
cable, cause a CPC Company to, provide any assistance reasonably
15
requested by a Corn Company in satisfying its obligations
under this Section 2.15. If requested by Corn, CPC will review
any Corn F.I.T. Return prepared by a Corn Company with respect to
its first Tax period ending after the Distribution Date; provided
that said review shall be a desk review on CPC's premises
consistent in manner and scope with the review that CPC's senior
Tax Department management performs in respect of CPC Returns. It
is understood that any such review of a Corn F.I.T. Return
pursuant to this Section 2.15 would be undertaken strictly as a
courtesy to Corn, and CPC shall have no liability to Corn or any
Corn Company as a result of any such review. No such review of
any Corn F.I.T. Return will waive any obligations or liabilities
of any Corn Company to CPC under this Agreement.
ARTICLE 3
TAX LIABILITY
SECTION 3.01. CPC Liability. Except to the extent
otherwise provided herein and in the Tax Indemnification
Agreement, the CPC Companies shall be liable for and indemnify
Corn and each Corn Company against all costs, Taxes and other
liabilities incurred in respect of (i) all CPC Returns, (ii) all
Foreign Distributing Entity Returns, (iii) each Corn Return for
which Corn or a Corn Company, pursuant to Section 2.14, has
designated CPC, as its agent in filing an amended Corn Return,
(iv) any other Tax return (other than a Corn Return) required to
be filed by CPC, a Foreign Distributing Entity or any other CPC
Company (provided that such company would not be a Corn Company
following the Distribution Date), with respect to any Tax period
beginning before, on or after the Distribution Date.
SECTION 3.02. Corn Liability. Except to the extent
otherwise provided herein and in the Tax Indemnification
Agreement, the Corn Companies shall be liable for and
16
indemnify CPC and each CPC Company against (i) all costs,
Taxes and other liabilities incurred in respect of all Corn
Returns other than Corn Returns for which Corn or a Corn Company,
pursuant to Section 2.14, has designated CPC as its agent in
filing an amended Corn Return (ii) notwithstanding any other
provision hereof, all costs, Taxes and other liabilities incurred
by CPC or any CPC Company as a result of a violation by Corn or
any Corn Company of Section 2.15 and (iii) notwithstanding any
other provision hereof, all costs, Taxes and other liabilities
incurred by CPC, Corn, any CPC Company or any Corn Company, after
the Distribution Date in respect of any assessment of property
tax referred to in Section 7.02(c)(ii) or any refund thereof
referred to in Section 6.01(b).
ARTICLE 4
POST-DISTRIBUTION CARRYBACKS OF TAX BENEFITS
SECTION 4.01. Carryback Provisions. Corn shall be
entitled to any refund for any Tax obtained by CPC (or any member
of the CPC Group) as a result of the carryback of losses or
credits of any member of the Corn Group from any Tax period
beginning on or after the Distribution Date to a CPC Consolidated
Return for any CPC Consolidated Return Period, provided that CPC
approves in writing such carryback. Such refund is limited to the
net amount received (by refund, offset against other Taxes or
otherwise), net of any net Tax cost incurred by CPC or a CPC
Company resulting from such refund, and shall be paid whenever
payment is received from a Taxing Authority. If such approval is
not granted by CPC, Corn may elect to carryback such losses or
credit in which event CPC shall pay Corn the amount to which it
would be entitled under the preceding sentence reduced by an amount
equal to any CPC Tax detriment which may be incurred in any Tax
period resulting from such carryback; provided that CPC will
17
not be obligated to make any payment to Corn in respect of
any carryback that, in the aggregate, is less than $50,000. When
and if any CPC Tax detriment is reduced, CPC shall pay the amount
of such reduction to Corn. If CPC shall have paid a refund to
Corn in respect of a carryback permitted hereunder, and in a
subsequent Tax period, CPC shall suffer a Tax detriment by reason
of such carryback (that was not contemplated in the computation
of the amount refunded to Corn), Corn shall compensate CPC, on
demand, for the full amount of such Tax detriment. The
application of any such carrybacks by Corn and/or any other
current or former member of the CPC Group shall be in accordance
with the Code and the consolidated return regulations promulgated
thereunder. Corn shall indemnify CPC for any costs and
liabilities including interest and penalties arising out of an
audit by the IRS of the carryback of any item under this
paragraph. Upon request by Corn, CPC shall advise Corn of any
estimate of the Tax detriment it projects will be associated with
any carryback of losses or credits of a member of the Corn Group.
Notwithstanding this Section 4.01, Corn and any member of the
Corn Group shall have the right, in its sole discretion, to make
any election, including the election under Section 172(b)(3) of
the Code, which would eliminate or limit the carryback of any
loss or credit to any Tax period ending before or including the
Distribution Date.
ARTICLE 5
POST-DISTRIBUTION CARRYOVERS OF TAX BENEFITS AND ATTRIBUTES
SECTION 5.01. CPC Group Items. CPC shall notify Corn
as soon as practicable after the Distribution Date of any
carryover item which may be partially or totally attributed to
and carried over by a Corn Company and will notify Corn of
subsequent adjustments which may affect such carryover item. CPC
and Corn each agree to compute their respective Tax liabilities,
18
and the Tax liabilities of their Affiliates, for Tax years after
the Distribution Date consistent with these determinations.
SECTION 5.02. Earnings and Profits. Based on CPC's
determination, CPC shall notify Corn as soon as practicable after
the Distribution Date of the amount of earnings and profits and
associated Tax attributes, if any, which are allocated to a Corn
Company and will notify Corn of subsequent adjustments which may
affect the amount of earnings and profits and associated Tax
attributes, if any, of a Corn Company. CPC and Corn each agree to
compute their respective Tax liabilities, and the Tax liabilities
of their Affiliates, for Tax years after the Distribution Date
consistent with this determination.
ARTICLE 6
ADJUSTMENTS
SECTION 6.01. CPC Returns and Foreign Distributing
Entity Returns. (a) Except as provided in the Tax Indemnification
Agreement, if any Tax liability or refund in respect of any CPC
Company (or a Corn Company that prior to the Distribution Date
was a CPC Company) arises as a result of an amended filing, a
protest, an audit by the IRS or other Taxing Authority, or for
any other reason, and such Tax liability or refund relates to (i)
a CPC Return filed in respect of any Tax period commencing before
or including the Distribution Date, (ii) a Foreign Distributing
Entity Return in respect of any Tax period commencing before or
including the Applicable Foreign Distribution Date, or (iii) a
Corn Return for which Corn or a Corn Company, pursuant to Section
2.14, has designated CPC as its agent in filing an amended Corn
Return, and such liability:
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(x) does not relate to Temporary Differences
attributable to a Corn Company, then CPC or a Foreign
Distributing Entity, as applicable, shall be liable for and shall
pay any Tax liabilities and any interest and penalties associated
therewith and CPC or a Foreign Distributing Entity, as
applicable, shall receive any Tax refunds and any interest
associated therewith.
(y) does relate to Temporary Differences attributable to
a Corn Company and such Taxing Authority:
(i) acknowledges directly or indirectly to the
satisfaction of CPC or, as applicable, the Foreign
Distributing Entity that CPC or, as applicable, the
Foreign Distributing Entity may solely utilize such
Temporary Differences in computing Tax liability,
benefit or refunds in respect of post-Distribution
Date (or Applicable Foreign Distribution Date) Tax
periods, CPC or the Foreign Distributing Entity, as
applicable, shall be liable for and shall pay any such
Tax liability and any interest and penalties
associated with such Tax liability and shall receive
any such benefit or refunds and any interest
associated therewith; or
(ii) does not acknowledge directly or indirectly
to the satisfaction of CPC or, as applicable, the
Foreign Distributing Entity that CPC or as applicable,
the Foreign Distributing Entity may solely utilize
such Temporary Differences in computing Tax liability,
benefit or refunds in respect of post-Distribution
Date (or Applicable Foreign Distribution Date) Tax
periods, the party hereto against which the issue
giving rise to such Tax liability is directed shall be
liable for and shall pay any such Tax liability and
any interest and penalties associated with such Tax
20
liability and shall receive any such benefit or
refunds and any interest associated therewith;
(b) Notwithstanding any other provision hereof,
Corn shall be entitled to, and shall receive, all refunds of
property tax assessed on real property of the Corn Division,
provided that Corn shall be liable for and shall indemnify and
hold CPC harmless against any Tax in respect of such refunds.
SECTION 6.02. Corn Returns. Except as described in the
Tax Indemnification Agreement, if any Tax liability or refunds in
respect of any Corn Company arises as a result of an amended
filing, a protest, an audit by the IRS or other Taxing Authority,
or for any other reason, and such Tax liability or refund relates
to a Corn Return other than for a Corn Return for which Corn or a
Corn Company, pursuant to Section 2.14, has designated CPC as its
agent in filing an amended Corn Return, Corn or a Corn Company
shall be liable for and shall pay any Tax liabilities and any
interest and penalties associated therewith and Corn or a Corn
Company shall receive any such Tax refunds and any interest
associated therewith.
SECTION 6.03. Expenses. Any out-of-pocket expenses
(e.g., travel expenses, accountants' fees, attorneys' fees,
experts' fees, etc.) incurred by a CPC Company in connection with
proposed or actual liabilities or refunds of the type
contemplated in this Article 6 shall be paid by the entities to
which such liabilities or refunds are allocated hereunder. In
cases where such expenses relate to more than one CPC Company or
more than one party hereto, the parties affected shall allocate
such expenses in proportion to the amount of proposed liabilities
or refunds allocable to each, or by some other reasonable method
which results in an equitable allocation of such expenses.
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ARTICLE 7
CONTESTS
SECTION 7.01. CPC, CPC Company, and Foreign
Distributing Entity Contests; Notification and Communication. If
either party, or an Affiliate of either party, receives a notice
of audit by any Taxing Authority with respect to (i) the Corn
Division with regard to any CPC Return, (ii) a Corn Company with
regard to a CPC Consolidated Return or any Corn Return for which
CPC is designated as agent, (iii) a foreign Corn Company with
regard to any Foreign Distributing Entity Return, or (iv) a Corn
Foreign Return, other than a Corn Foreign Return which is filed
after the Distribution Date and in respect of which the matter
under audit would not affect a Corn Foreign Return filed prior to
the Distribution Date, such party shall promptly notify the other
party of such event. Thereafter, CPC or Corn, as the case may be,
shall keep the others, on a timely basis, informed of all
material developments in connection with audits, administrative
proceedings, litigation and other similar matters that may affect
their respective Tax liabilities. Failure or delay in providing
notification hereunder shall not relieve any party hereto of any
obligation hereunder in respect of any particular Tax liability,
except to the extent that such failure or delay restricts the
ability of such party to contest such liability administratively
or in the courts and otherwise materially and adversely
prejudices such party.
SECTION 7.02. Group Contests; Control and Management of
Claims. (a) As among the parties hereto, CPC shall control the
prosecution of any audits and any contests in respect of any claim
made by a Taxing Authority on audit or in a related administrative
or judicial proceeding or in respect of any refund or credit of Taxes,
and shall make and prosecute other claims for refunds with respect
to any Tax liability, that relates to a CPC Return (other than
22
in respect of an assessment of property taxes referred to in
Section 7.02(c)(ii) or a Foreign Distributing Entity Return or
any Corn Return for which CPC is designated as an agent. Corn may
participate in such audits or contests to the extent that CPC in
its sole discretion shall deem appropriate, provided, however,
that CPC shall have the sole right to control, at CPC's expense,
the prosecution of any audit, refund claim or related
administrative or judicial proceeding with respect to those
matters which could affect the CPC Group's Tax liability. CPC
shall be entitled to participate in any audit not described in
this section 7.02(a) (and related contests) for which it is
entitled to receive notice under Section 7.01, including without
limitation any matter referred to in Section 7.02(c)(ii).
(b) With respect to a Tax liability or refund that, pur-
suant to the provisions hereof, may be attributable to (i) the Corn
Division with regard to any CPC Return, (ii) a Corn Company with
regard to a CPC Consolidated Return, or a Corn Return for which
CPC is designated as an agent, or (iii) a foreign Corn Company
with respect to any Foreign Distributing Entity Return, if CPC
elects not to exercise its rights of control under subsection (a)
hereof, and if Corn so requests, CPC shall contest, control and
allow Corn to participate to the extent that CPC in its sole
discretion shall deem appropriate, all at Corn's expense, or in
the alternative shall permit Corn at its own expense to contest
and control a claim made by a Taxing Authority on audit or in a
related administrative or judicial proceeding or by appropriate
claim for refund or credit of Taxes (or to make and prosecute
other claims for refund). Corn shall pay all out-of-pocket and
other costs relating to such contests, including but not limited
to fees for attorneys, accountants, expert witnesses or other
consultants.
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(c) With respect to a Tax liability or refund that,
pursuant to the provisions hereof, may be attributable to (i)
Corn or a Corn Company with regard to a Corn Return, other than a
Corn Return with respect to which CPC is designated as an agent,
or (ii) the Corn Division with respect to an assessment of
property tax on real property of the Corn Division for any period
prior to the Distribution Date, or (iii) a foreign Corn Company
with respect to any Corn Foreign Return, Corn, a Corn Company or
a foreign Corn Company shall control at its own expense the
prosecution of any audits and any contests in respect of any
claim made by a Taxing Authority on audit or in a related
administrative or judicial proceeding or by appropriate claim for
refund or credit of Taxes (or to make and prosecute other claims
for refund).
(d) If asserted liabilities unrelated to the matters
contemplated herein become grouped with contests arising
hereunder, the parties shall use their respective best efforts to
cause the contest arising hereunder to be the subject of a
separate proceeding.
(e) With respect to matters arising hereunder
controlled by CPC, and where deemed necessary by CPC, Corn shall
compel the relevant Corn Company to authorize by appropriate
powers of attorney such Persons as CPC shall designate to
represent such Corn Company with respect to such matters. The
parties hereto shall reasonably cooperate with one another in a
timely manner with respect to any matter arising hereunder.
ARTICLE 8
INFORMATION AND COOPERATION; BOOKS AND RECORDS
SECTION 8.01. General. (a) Corn shall deliver to CPC,
as soon as practicable after CPC's request, and CPC shall deliver to
Corn as soon as practicable after Corn's request such information and
data concerning the operations conducted by the Corn Companies or the
24
CPC Companies, respectively and make available such
knowledgeable employees of the Corn Companies or the CPC
Companies respectively as CPC or Corn, as the case may be, may
reasonably request, including providing the information and data
required by CPC's or Corn's customary internal Tax and accounting
procedures, in order to enable each of CPC or Corn, as the case
may be, to complete and file all Tax forms or reports that it may
be required to file with respect to the activities of the Corn
Companies for Tax periods ending on, prior to or including the
Distribution Date, to respond to audits by any Taxing Authorities
with respect to such activities, to prosecute or defend any
administrative or judicial proceeding, and to otherwise enable
CPC or Corn, as the case may be, to satisfy its accounting and
Tax requirements. Corn shall provide office space to IRS and
other Tax Authorities when they are conducting on-site audits,
and to employees and representatives of CPC or Corn, as the case
may be, for so long as the Tax period for which a CPC Return, a
Foreign Distributing Entity Return or a Corn Return for which CPC
has been designated as an agent, is open to assessment of
additional Taxes or an assessment with respect to such period is
being contested. CPC shall deliver to Corn as soon as practical
after Corn's request, such information and data concerning any
Tax attributes which were allocated to a Corn Company that is
reasonably necessary in order to enable Corn to complete and file
all Tax forms or reports that it may be required to file with
respect to such activities of the Corn Companies from and after
the Distribution Date, to respond to audits by any Tax
Authorities with respect to such activities, to prosecute or
defend claims for Taxes in any administrative or judicial
proceeding, and to otherwise enable Corn to satisfy its
accounting and Tax requirements. In addition, CPC shall make
available to Corn, and Corn shall make available to CPC, its
knowledgeable employees for such purpose.
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(b) Until the expiration of the applicable statute of
limitations (including any extension or waiver thereof), each
Corn Company shall retain all books, records, documentation or
other information in its possession relating to any CPC Return,
any Foreign Distributing Entity Return, and any Corn Return, and
each CPC Company shall retain all books, records, documentation
or other information in its possession relating to any Corn
Return. Upon the expiration of any statute of limitations, the
foregoing information may be destroyed or disposed of provided
that (i) the party in possession of such books, records,
documentation or other information has provided sixty (60) days'
prior written notice to the other party, describing in reasonable
detail the documentation to be destroyed or disposed of and (ii)
such other party has not removed or made arrangements for
removing of such materials.
ARTICLE 9
GENERAL PROVISIONS
SECTION 9.01. Effectiveness. The effectiveness of this
Agreement and the obligations and rights created hereunder are
subject and conditioned upon the completion of the Distributions.
SECTION 9.02. Notices. All notices, requests, claims,
demands and other communications hereunder shall be in writing
and shall be given or made (and shall be deemed to have been duly
given or made upon receipt) by delivery in person, by courier
service (including overnight delivery), by cable, by telecopy
confirmed by return telecopy, by telegram, by telex or by
registered or certified mail (postage prepaid, return receipt
requested) to the respective parties at the addresses (or at such
other address for a party as shall be specified in a notice given
in accordance with this Section 9.02) listed below:
26
(a) To CPC:
X.X. Xxx 0000
Xxxxxxxxxxxxx Xxxxx
Xxxxxxxxx Xxxxxx, XX 00000
Telecopy: (000) 000-0000
Attn: Vice President-Taxes
with a copy to: General Counsel
(b) To Corn:
X.X. Xxx 000
0000 Xxxxxx Xxxx
Xxxx, Xxxxxxxx 00000
Telecopy: (000) 000-0000
Attn: Chief Financial Officer
with a copy to: General Counsel
SECTION 9.03. Complete Agreement; Construction. This
Agreement is intended to provide rights, obligations and
covenants in respect of Taxes and, together with the Tax
Indemnification Agreement, shall supersede all prior agreements
and undertakings, both written and oral, between the parties with
respect to the subject matter hereof and thereof. In the event
provisions of this Agreement are inconsistent with provisions in
a Tax Indemnification Agreement, the provisions in the Tax
Indemnification Agreement shall control, except in cases where
this construction would provide a duplicate benefit.
SECTION 9.04. Counterparts. This Agreement may be
executed in one or more counterparts, and by the different
parties hereto in separate counterparts, each of which when
executed shall be deemed to be an original but all of which taken
together shall constitute one and the same agreement.
SECTION 9.05. Waiver. The parties to this Agreement may
(a) extend the time for the performance of any of the obligations
or other acts of the other party or parties, (b) waive
27
any inaccuracies in the representations and warranties of
the other party or parties contained herein or in any document
delivered by the other party or parties pursuant hereto or (c)
waive compliance with any of the agreements or conditions of the
other party or parties contained herein. Any such extension or
waiver shall be valid only if set forth in an instrument in
writing signed by the party to be bound thereby. Any waiver of
any term or condition shall not be construed as a waiver of any
subsequent breach or a subsequent waiver of the same term or
condition, or a waiver of any other term or condition, of this
Agreement. The failure of any party to assert any of its rights
hereunder shall not constitute a waiver of any such rights.
SECTION 9.06. Amendments. This Agreement may not be
amended or modified except (a) by an instrument in writing signed by,
or on behalf of, the parties or (b) by a waiver in accordance with
Section 9.05.
SECTION 9.07. Successors and Assigns. The provisions of
this Agreement shall be binding upon, inure to the benefit of and
be enforceable by the parties and their respective successors and
permitted assigns. This Agreement cannot be assigned by CPC or
Corn without the consent of the other party.
SECTION 9.08. Subsidiaries. Each of the parties hereto
shall cause to be performed, and hereby guarantees the
performance of, all actions, agreements and obligations set forth
herein to be performed by any subsidiary of such party or by any
entity that is contemplated to be a subsidiary of such party on
and after the Distribution Date.
SECTION 9.09. Third Party Beneficiaries. This
Agreement shall be binding upon and inure solely to the benefit
of the parties hereto and their respective subsidiaries, and
nothing herein, express or implied, is intended to or shall
confer upon any third parties any legal
28
or equitable right, benefit or remedy of any nature whatsoever
under or by reason of this Agreement.
SECTION 9.10. Headings. The descriptive headings contained
in this Agreement are for convenience of reference only and shall
not affect in any way the meaning or interpretation of this
Agreement.
SECTION 9.11. Specific Performance. The parties hereto
agree that irreparable damage would occur in the event any
provision of this Agreement was not performed in accordance with
the terms hereof and that the parties shall be entitled to
specific performance of the terms hereof, in addition to any
other remedy at law or equity.
SECTION 9.12. Governing Law. This Agreement shall be
governed by and construed in accordance with the laws of the
State of New York applicable to contracts made and to be
performed in the State of New York. Without limiting the
provisions of Section 9.13 hereof, each of the parties
irrevocably submits to the exclusive jurisdiction of (a) the
Superior Court of the State of New Jersey, Bergen County, and (b)
the United States District Court for the District of New Jersey,
for the purposes of any suit, action or other proceeding arising
out of this Agreement or any transaction contemplated hereby.
Each of the parties agrees to commence any action, suit or
proceeding relating hereto that is not required to be submitted
to arbitration pursuant to Section 9.13 hereof either in the
United States District Court for the District of New Jersey or if
such suit, action or other proceeding may not be brought in such
court for jurisdictional reasons, in the Superior Court of the
State of New Jersey, Bergen County. Each of the parties further
agrees that service of any process, summons, notice or document
by U.S. registered mail to such party's respective address set
forth above shall be effective service of
29
process for any such action, suit or proceeding in New
Jersey with respect to any matters to which it has submitted to
jurisdiction in this Section 9.12. Each of the parties
irrevocably and unconditionally waives any objection to the
laying of venue of any action, suit or proceeding arising out of
this Agreement or the transactions contemplated hereby in (i) the
Superior Court of the State of New Jersey, Bergen County, or (ii)
the United States District Court for the District of New Jersey,
and hereby further irrevocably and unconditionally waives and
agrees not to plead or claim in any such court that any such
action, suit or proceeding brought in any such court has been
brought in an inconvenient forum.
SECTION 9.13. Arbitration. Any conflict or disagreement
arising out of the interpretation, implementation, or compliance
with the provisions of this Agreement shall be finally settled
pursuant to the dispute resolution procedures set forth in the
Distribution Agreement, which provisions are incorporated herein
by reference.
SECTION 9.14. Severability. If any term or other
provision of this Agreement is invalid, illegal or incapable of
being enforced by any law or public policy, all other terms and
provisions of this Agreement shall nevertheless remain in full
force and effect so long as the economic or legal substance of
the transactions contemplated hereby is not affected in any
manner materially adverse to any party. Upon such determination
that any term or other provision is invalid, illegal or incapable
of being enforced, the parties hereto shall negotiate in good
faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible in an acceptable
manner in order that the transactions contemplated hereby are
consummated as originally contemplated to the greatest extent
possible.
30
IN WITNESS WHEREOF, the parties have caused this
Agreement to be executed as of the date first written above by
their respective officers thereunto duly authorized.
CPC INTERNATIONAL INC.
By:____________________________
Name:
Title:
CORN PRODUCTS INTERNATIONAL, INC.
By:____________________________
Name:
Title:
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