A. Contractor
and Artist have entered into an Actor Loanout Agreement
dated as of Jun 6, 2001 (the "Agreement") pursuant
to which, inter alia, Artist is rendering acting services
in connection with the production of that certain feature
length motion picture tentatively entitled "Terminator
3" (the "Picture").
B. A portion of the services of Artist to be provided under
the Agreement may be rendered outside the United States.
C. As a material inducement to Artist to enter into the
Agreement, and in partial consideration of the performance
of services thereunder, Contractor has agreed to reimburse
Artist on a fully "grossed up" basis for the payment
of any taxes (including, without limitation, income tax,
social security tax, payroll taxes and other social charges,
the value added tax and any penalties and interest on any
of such taxes) to any foreign country or subdivision thereof
imposed on Artist by reason of Artist's rendering of services
to Contractor in any foreign country under the Agreement
(the "Subject Taxes"), all on the terms and subject
to the provisions more particularly set forth hereinbelow.
D. The parties' intention in entering into this Tax Reimbursement
Agreement is to put Artist in the same economic after-tax
position as Artist would have been in had all of Actor's
services under the Agreement been performed solely in California
through a U.S. "loanout" corporation, and this
Tax Reimbursement Agreement shall be interpreted consistent
with that intention.
E. The parties' current expectation is that, based on current
law and facts, Contractor will not be obligated to make
any payments under this Tax Reimbursement Agreement (but
such expectation shall have no bearing on the parties= respective
rights and obligations under this Tax Reimbursement Agreement).
NOW, THEREFORE, on the basis of the foregoing facts, and
in reliance thereon, the parties hereto hereby covenant
and agree as follows:
1. Obligation to Reimburse.
(a) Subject to the conditions contained herein, Contractor
hereby covenants and agrees to reimburse Artist for an amount
(the "Reimbursement Amount") for any calendar
year equal to the sum of (i) the amount determined by dividing
the difference between the amount determined in Paragraph
1(a)(i) and the amount determined in Paragraph 1(a)(ii),
by the number determined in Paragraph 1(a)(iii), plus the
amount determined in Paragraph 1(a)(iv):
(i) the sum of the Subject Taxes and the aggregate amount
of taxes Artist is required to pay to the United States
and any state, city or subdivision thereof, for such year
(after taking full advantage of all credits, deductions,
offsets and exemptions to which Artist would have been legally
entitled under the laws of any of the same); less
(ii) the aggregate amount of taxes which Artist would have
been required to pay to the United States and any state,
city or subdivision thereof for such year (after taking
full advantage of all credits, deductions, offsets and exemptions
to which Artist would have been legally entitled) if all
of the services by Actor with respect to the Agreement had
been performed wholly in California through a domestic "loanout"
corporation; divided by
(iii) the excess of one (1) over the actual combined state,
city and federal marginal income tax rate of Actor (including
the effects of any surtax, plus 1.45% to reflect the hospital
insurance portion of FICA) (after taking full advantage
of all credits, deductions, offsets and exemptions to which
Actor would have been legally entitled) for the year in
which the Reimbursement Amount is paid to Artist; plus
(iv) the amount of any professional fees and costs incurred
by Artist to obtain foreign tax advice in connection with
the Picture, if any.
(b) In computing the Reimbursement Amount, all allowable
exemptions, credits, deductions and offsets against the
Subject Taxes shall be taken into account and, except as
provided to the contrary in Paragraph 4(b), below, Artist
shall be deemed to be resident of the United States and
the State of California irrespective of Artist's actual
residence. The Reimbursement Amount shall not include any
amounts solely and directly resulting from actions or omissions
on the part of Artist (except to the extent such actions
or omissions are undertaken (or not undertaken, as the case
may be) consistent with the Tax Reimbursement Agreement,
with the Agreement or with the prior written approval of
Contractor).
[back to archive]
|