EXHIBIT 10.5(b)
TAX SHARING AGREEMENT
THIS AGREEMENT is made and entered into as of July 28, 1993,
by and among Cinemark USA, Inc. ("Parent") and Cinemark Mexico (USA), Inc.
("Subsidiary"). Subsidiary and all members of the group of corporations which
would be an affiliated group under Section 1504(a) of the Internal Revenue Code
of 1986 (the "Code"), if Subsidiary were not itself a member of an affiliated
group shall be referred to as the Subsidiary Group herein, and the aggregate
income or loss and tax of such corporations shall be computed as though they
were a separate affiliated group filing a separate consolidated tax return since
the effective date of this Agreement, and thus will take into account, for
example, net operating loss carryforwards that would have been available to such
a separate affiliated group. Such consolidated tax liability shall be regarded
as having been computed on a Separate Return Basis (as defined herein) for
purposes of this Agreement. If a Subsidiary Group does not exist, references to
the Subsidiary Group shall be references solely to Subsidiary.
WITNESSETH:
WHEREAS, Parent is a common parent corporation of an affiliated group
of corporations (the "Affiliated Group") within the meaning of Code section
1504(a);
WHEREAS, the Affiliated Group has historically filed a consolidated
federal income tax return and intends to continue filing consolidated federal
income tax returns ("Consolidated Returns");
WHEREAS, Parent and Subsidiary will derive mutual benefits from filing
Consolidated Returns;
WHEREAS, Parent and Subsidiary desire to share on an equitable basis
the benefits and burdens that may arise from the filing of Consolidated Returns;
NOW, THEREFORE, the parties hereto agree as follows:
1. Consolidated and Combined Returns.
(a) Subsidiary hereby agrees to join and cause the other members of the
Subsidiary Group to join in the Consolidated Returns to be filed by the
Affiliated Group, for all taxable periods for which Subsidiary is requested from
time to time by Parent to join, and to take no action inconsistent therewith.
(b) Subsidiary hereby agrees to join and to cause the other members of
the Subsidiary Group to join in any state, city or local combined or similar
income or franchise tax return (the "Combined Returns") to be filed by any group
of corporations of which Parent is or shall become a member (the "Combined
Group") for all taxable periods for which it is so requested from time to time
by Parent, and to take no action inconsistent therewith.
(c) Subsidiary will not elect to file and will cause the other members
of the Subsidiary Group to not elect to file a separate federal income tax
return for any period described
in Section 1(a) above or to file a separate state, city or local income tax or
franchise tax return for any taxable period described in section 1(b) above.
2. Parent As Agent.
Subsidiary irrevocably designates and shall cause the other members of
the Subsidiary Group to irrevocably designate (i) Parent as its agent for the
purpose of taking any and all action necessary or incidental to the filing of
Consolidated Returns (including, but not limited to, the conduct of any audit or
other proceeding by any taxing authority) and (ii) Parent as its agent for the
purpose of taking any and all action necessary or incidental to the filing of
Combined Returns (including, but not limited to, the conduct of any audit by any
taxing authority). Subsidiary further agrees and shall cause the other members
of the Subsidiary Group (i) to furnish Parent or other corporations selected by
Parent with any and all information requested by Parent in order to carry out
the provisions of this Agreement, (ii) to cooperate with Parent in filing any
return or consent pursuant to or contemplated by this Agreement, (iii) to take
such action as Parent may request including, but not limited to, the filing of
requests for the extension of time within which to file tax returns, and (iv) to
cooperate in connection with any refund claim, audit, judicial, or other
proceeding.
3. Federal Income Tax Payments Between Parent and Subsidiary.
(a) No later than 15 days after the due dates for payments of federal
income tax installments prescribed by Code Section 6154(a), Subsidiary shall pay
to Parent an amount equal to the required installment of the estimated federal
income tax liability of the Subsidiary Group for the taxable year, said
liability to be computed as though Subsidiary were reporting its income as a
separate corporation, since the effective date of this Agreement, making
elections which are consistent with those made by the Affiliated Group, but
without regard to any benefit which would be derived from the use of the
graduated corporate rate structure, if any (a "Separate Return Basis"). The
federal income tax liability of the Subsidiary Group on a Separate Return Basis
(the "Separate Return Tax Liability") shall be recomputed as of the close of the
taxable year and the amount by which the recomputed Separate Return Tax
Liability of the Subsidiary Group exceeds, or is less than, the sum of the
estimated payments made by Subsidiary to Parent for the taxable year, shall be
paid to Parent or remitted to Subsidiary, as the case may be, within 15 days
after the filing of the federal income tax return. In calculating the Separate
Return Tax Liability of the Subsidiary Group, any deduction, credit, or
allowance that has resulted in a credit or payment from Parent to Subsidiary
pursuant to paragraph 3(b) shall be treated as unavailable.
(b) If the Subsidiary Group has any deduction, credit, or allowance
arising out of a taxable period in which the Subsidiary Group files as a member
of the Affiliated Group, which on a Separate Return Basis would be allowed as a
carryback to a prior year to offset the Separate Return Tax Liability of the
Subsidiary Group, and said prior year was a year in which the Subsidiary Group
filed as a member of the Affiliated Group, Parent shall pay or credit to
Subsidiary an amount equal to the tax refund the Subsidiary Group would be
entitled to receive if it had filed on a Separate Return Basis. Such payments
shall be made within 15 days after the date of filing of the Affiliated Group's
Consolidated Return for the year in which the Subsidiary Group's deduction,
credit, or allowance arose. If (i) the Subsidiary Group has any deduction,
credit, or allowance arising out of a taxable period in which the Subsidiary
Group files as a
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member of the Affiliated Group, which on a Separate Return Basis would be
allowed as a carryforward to a subsequent year to reduce any Separate Return Tax
Liability of the Subsidiary Group and (ii) such deduction, credit, or allowance
is absorbed in the tax return of the Affiliated Group, then Parent shall pay or
credit to Subsidiary an amount equal to the reduction in the tax liability of
the Affiliated Group as a result of the absorption of such deduction, credit, or
allowance. Such payments shall be made within 15 days after the date of filing
of the Affiliated Group's Consolidated Return for the year in which the
Affiliated Group absorbs the deduction, credit, or allowance.
(c) If there are any adjustments to or redeterminations of the net
taxable income of the Subsidiary Group when it was included in the Affiliated
Group's Consolidated Returns or any adjustments to or redetermination of any
deduction, credit, or allowance of Subsidiary which was or could be used by the
Affiliated Group, an appropriate increase or decrease in the amount of payments,
made pursuant to Section 3(a) through Section 3(c) hereof, shall be made by
Parent or Subsidiary within 120 days of the date of any final administrative or
judicial determination of such adjustments or redeterminations.
(d) If the Subsidiary Group has any deduction, credit, or allowance
arising out of a taxable period in which the Subsidiary Group is not a member of
the Affiliated Group and such deduction, credit, or allowance is allowed as a
carryback to a year in which the Subsidiary Group joined in the filing of a
Consolidated Return with the Affiliated Group, then Parent shall pay or credit
to Subsidiary an amount equal to the tax refund the Subsidiary Group would have
been entitled to receive on a Separate Return Basis if it itself had utilized
such deduction, credit, or allowance. Such payment shall not exceed the amount
of the tax benefit received by the Affiliated Group from the utilization of such
deduction, credit, or allowance. If such deduction, credit, or allowance is
subsequently disallowed by the Internal Revenue Service, Subsidiary shall refund
any payment made by Parent pursuant to this paragraph within 15 days of the
receipt by Parent of a notice from the Internal Revenue Service of such
disallowance.
4. Consents.
(a) Parent and Subsidiary hereby consent to the filing of a
Consolidated Return for each year Subsidiary remains a member of the Affiliated
Group, until such time as Parent may elect to discontinue the filing of a
Consolidated Return. Subsidiary shall cause the other members of the Subsidiary
Group to consent to the filing of such Consolidated Returns.
(b) Subsidiary hereby consents and shall cause the other members of the
Subsidiary Group to consent to all elections made by Parent on behalf of the
Affiliated Group.
5. State Income Tax Payments Between Parent and Subsidiary.
(a) In the event members of the Subsidiary Group are included in a
combined, joint, consolidated, or unitary state income or franchise tax return
with any member of the Affiliated Group, Subsidiary shall make payments to
Parent and Parent shall make payments to Subsidiary on a state-by-state Separate
Return Basis in a manner consistent with that provided by Section 3 hereof.
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(b) Payments made by Subsidiary pursuant to Section 5(a) will be deemed
deductible pursuant to Code Section 164 for purposes of computing the Separate
Return Tax Liability of a subsidiary pursuant to Section 3(a) hereof.
6. Interest Payments.
Interest will be charged or paid by Parent pursuant to this Agreement
only with respect to payments required to be made as a result of any adjustment
or redetermination of the net taxable income of the Subsidiary Group by any
taxing authority. Such interest will be determined in the same manner as would
be determined for federal or state tax purposes.
7. Miscellaneous.
(a) All notices under this Agreement shall be in writing and shall be
deemed to have been sufficiently given or served and effective for all purposes
when presented personally, or five days after being deposited in a United States
postal receptacle for registered or certified mail addressed, return receipt
requested, postage prepaid, or two business days after delivering to a small
package air courier offering service to the address of the intended recipient
with shipping prepaid, to any person at the address set forth below, or at such
other address as said person shall subsequently designate in writing delivered
in the form of a notice to:
If to Parent:
Cinemark USA, Inc.
0000 Xxxxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxx, Xxxxx 00000-0000
If to Subsidiary:
Cinemark Mexico (USA), Inc.
0000 Xxxxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxx, Xxxxx 00000-0000
(b) Neither this Agreement nor any provision hereof may be changed,
waived, discharged, or terminated orally but only by an instrument in writing
signed by the party against whom enforcement of the change, waiver, discharge,
or termination is sought.
(c) This Agreement shall constitute the entire agreement between the
parties concerning the subject matter hereof and shall supersede any prior
agreements and understandings between or among the parties with respect to the
subject matter hereof.
(d) The validity, interpretation, and enforceability of this Agreement
shall be governed in all respects by the laws of the State of Texas.
(e) Failure of any party at any time to require the other party's
performance of any obligation under this Agreement shall not affect the right to
require performance of that obligation. Any waiver by any party of any breach of
any provision of this Agreement shall not
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be construed as a waiver of any continuing or succeeding breach of such
provision, a waiver or modification of the provision itself, or a waiver of any
right under this Agreement.
(f) Section and other headings contained in this Agreement are for
reference purposes only and are in no way intended to describe, interpret,
define, or limit the scope, extent, or intent of this Agreement or any provision
hereof.
(g) Every provision of this Agreement is intended to be severable. If
any term or provision hereof is illegal or invalid for any reason whatsoever,
such illegality or invalidity shall not affect the validity of the remainder of
this Agreement.
(h) This Agreement may be executed in multiple counterparts, each of
which shall be deemed an original and all of which shall constitute one
agreement, and the signatures of any party to any counterpart shall be deemed to
be a signature to, and may be appended to, any other counterpart.
IN WITNESS WHEREOF, the parties have executed this Agreement through
their duly authorized representatives as of the day and year first written
above.
CINEMARK USA, INC.
By: /s/ Xxxx Xxxxxxx
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Name: Xxxx Xxxxxxx
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Title: Vice President
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CINEMARK MEXICO (USA), INC.
By: /s/ Xxxx Xxxxxxx
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Name: Xxxx Xxxxxxx
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Title: Vice President
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