EXHIBIT 10.11
TAX MATTERS AGREEMENT
BETWEEN
CCPC ACQUISITION CORP.
AND
WKI HOLDING COMPANY, INC.
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This tax matters agreement ("Agreement") dated as of January 31, 2003, is
entered into between CCPC Acquisition Corp. ("CCPC"), WKI Holding Company, Inc.
(including its successors, "WKI"), and the direct and indirect subsidiaries of
WKI listed on Schedule I.
RECITALS
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A. CCPC acquired 92% of the outstanding shares of common stock of WKI
on April 1, 1998, and, since that time, CCPC, WKI, and the members of their
Affiliated Group, as defined below, have filed a consolidated tax return for
U.S. federal income tax purposes.
B. CCPC owns no material assets other than its stock in WKI. Since
April 1, 1998, CCPC has not had any material gross income apart from any gross
income generated from its investments in the stock of WKI.
C. On May 31, 2002, WKI and various of its direct and indirect
subsidiaries (collectively, the "Debtors") filed for bankruptcy protection under
chapter 11 of the United States Bankruptcy Code, 11 U.S.C. Sec.Sec. 101, et seq.
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(the "Bankruptcy Code"), in the United States Bankruptcy Court for the Northern
District of Illinois (the "Bankruptcy Court"). On November 15, 2002, the
Debtors filed the Second Amended Joint Plan of Reorganization of World Kitchen,
Inc., Its Parent Corporation and Its Subsidiary Debtors (as subsequently
2
modified, the "Plan") in connection with their bankruptcy filing. The Plan was
confirmed by an order of the Bankruptcy Court dated December 23, 2002.
D. Pursuant to the Plan, the currently outstanding stock of WKI will be
cancelled and, as a result, WKI and its direct and indirect subsidiaries will
leave the Affiliated
E. CCPC is contemplating its dissolution in a proceeding under chapter
7 of the Bankruptcy Code.
F. The parties desire to designate WKI to act, for federal income tax
purposes, as sole agent for each member of the Affiliated Group, as defined
below, and to allocate responsibility for (1) the preparation of the Affiliated
Group's consolidated federal income Tax Returns for all periods prior to the
termination of the Affiliated Group (collectively, the "Pre-Termination
Period"), (2) the preparation of WKI's and its subsidiaries' other Tax Returns
for any period that includes any portion of the Pre-Termination Period, and (3)
dealing with federal income Tax and other Tax authorities in connection with all
Tax matters related to the Pre-Termination Period.
AGREEMENT
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In consideration of the mutual covenants and promises contained in this
Agreement, the parties agree as follows:
1. DEFINITIONS. For purposes of this Agreement, the following
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terms are defined as follows:
(a) "Affiliated Group" means the affiliated group of
corporations, within the meaning of section 1504(a) of the Code, of which CCPC
is the common parent.
(b) "Code" means the Internal Revenue Code of 1986, as
amended.
(c) "Pre-Termination Period" has the meaning set forth in
Recital F.
(d) "Subsidiary" means any corporation or other entity whose
stock or membership interests are owned in whole or in part, directly or
indirectly through any entity or entities, by WKI.
(e) "Tax Return" means any return, report, form, statement,
or other documentation filed or maintained or required to be filed or maintained
with respect to or in connection with the calculation, determination,
assessment, or collection of any Taxes.
(f) "Taxes" means all federal, state, local, or foreign
income, gross receipts, windfall profits, severance, property, production,
sales, use, license, excise, franchise, employment, withholding, or similar
taxes imposed on the income, properties, or operations of the Affiliated Group
or any member or members of the Affiliated Group, together with any interest,
additions, or penalties with respect thereto and any interest in respect of such
additions or penalties.
2. DESIGNATION OF WKI AS AGENT FOR THE AFFILIATED GROUP FOR
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TAXABLE YEARS BEFORE JUNE 28, 2002. CCPC will notify the Internal Revenue
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Service, pursuant to Treasury Regulations Sec. 1.1502-77A(d) and Revenue
Procedure 2002-43, Sec. 7, 2002-28 I.R.B. 99, that it is contemplating
dissolution under chapter 7 of the Bankruptcy Code and that it designates WKI to
act as its agent in its place under Treasury Regulations Sec. 1.1502-77A(a), to
the same extent and subject to the same conditions and limitations that are
applicable to CCPC. Such designation will be for all taxable years of the
Affiliated Group beginning before June 28, 2002. CCPC will not elect to apply
Treasury Regulations Sec. 1.1502-77(d)(1) to the taxable years encompassed by
this Section 2.
3. DESIGNATION OF WKI AS AGENT FOR THE AFFILIATED GROUP FOR
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TAXABLE YEARS BEGINNING AFTER JUNE 27, 2002. CCPC will notify the Internal
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Revenue Service, pursuant to Treasury Regulations Sec. 1.1502-77(d) and Revenue
Procedure 2002-43, Sec. 7, 2002-28 I.R.B. 99, that it is contemplating
dissolution under chapter 7 of the Bankruptcy Code and that it designates WKI
under Treasury Regulations Sec. 1.1502-77(d) to act as substitute agent in its
place under Treasury Regulations Sec. 1.1502-77(a). Such designation will be
for all taxable years of the Affiliated Group beginning after June 27, 2002.
WKI agrees that it will act as substitute agent for all such taxable years.
4. PREPARATION OF FEDERAL INCOME TAX RETURNS. WKI will prepare
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and cause to be filed all federal income Tax Returns for the Affiliated Group
for the Pre-Termination Period. Prior to the effectiveness of WKI's appointment
as agent of the Affiliated Group under Section 2 or Section 3 of this Agreement,
as relevant, CCPC will sign all such Tax Returns and will execute any consent,
election, and other document that WKI determines, in its sole discretion, is
required or appropriate for the filing of such Tax Returns. CCPC will provide
to WKI all information reasonably requested by WKI to carry out the provisions
of this Section 4.
5. PREPARATION OF OTHER TAX RETURNS. WKI will prepare and cause
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to be filed for all periods all Tax Returns not encompassed by Section 4 of this
Agreement that relate, in whole or in part, to WKI or any of its Subsidiaries.
CCPC will sign such Tax Returns if WKI determines, in its sole discretion, that
CCPC's signature is required in order properly to execute such Tax Returns, and
CCPC will execute any consent, election, and other document that WKI determines,
in its sole discretion, is required or appropriate for the filing of such Tax
Returns. CCPC will provide to WKI all information reasonably requested by WKI
to carry out any of the provisions of this Section 5.
6. AUTHORITY TO ACT IN CONNECTION WITH FEDERAL INCOME TAX MATTERS.
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Prior to the effectiveness of WKI's appointment as agent of the Affiliated Group
under Section 2 or Section 3 of this Agreement, as relevant, WKI will have the
sole and exclusive authority to act on behalf of the Affiliated Group in
connection with all matters related to the determination of federal income Taxes
for the Pre-Termination Period. Thus, among other things, WKI will have the
sole and exclusive right for any Pre-Termination Period (a) to contest,
compromise, or settle any adjustment or deficiency proposed, asserted, or
assessed by the Internal Revenue Service against any member of the Affiliated
Group for any Pre-Termination Period, and (b) to control any administrative,
judicial, or other proceeding involving the Affiliated Group's consolidated
federal income Tax Return or the federal income Tax liability of any member of
the Affiliated Group. CCPC will execute any consent and any other document that
WKI determines, in its sole discretion, is required or appropriate for WKI to
exercise its authority specified in this Section 6.
7. AUTHORITY TO ACT IN CONNECTION WITH OTHER TAX MATTERS. WKI will
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have the sole and exclusive authority to act on behalf of itself and each of its
Subsidiaries in connection with all matters related to the determination of any
Tax not encompassed by Section 6 of this Agreement, for all periods. Thus,
among other things, WKI will have the sole and exclusive right (a) to contest,
compromise, or settle any adjustment or deficiency proposed, asserted, or
assessed by any non-federal income Tax authority against WKI or any of its
Subsidiaries, and (b) to control any administrative, judicial, or other
proceeding involving any non-federal income Tax Return or Tax liability of WKI
or any of its Subsidiaries. CCPC will execute any consent and any other
document that WKI determines, in its sole discretion, is required or appropriate
for WKI to exercise its authority specified in this Section 7.
8. TERMINATION OF TAX SHARING AGREEMENT. The parties hereby
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terminate the Tax Sharing Agreement ("Tax Sharing Agreement") entered into as of
April 30, 1998, between CCPC, Corning Consumer Products Company (the predecessor
of WKI), and Revere Xxxx Corporation. The Tax Sharing Agreement will have no
further force or effect.
IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
executed by its respective duly authorized officers as of the date set forth
above.
CCPC ACQUISITION CORP.
By: /s/ Xxxxxx Xxxxx
WKI HOLDING COMPANY, INC., on behalf of itself
and its Subsidiaries listed on the attached Schedule I
By: /s/ Xxxx Xxxxxxxx
