Common use of Allocation Conventions Clause in Contracts

Allocation Conventions. (i) All Taxes allocated pursuant to Section 3(a) shall be allocated between the Pre-IPO Period and the Post-IPO Period in accordance with the Closing of the Books Method; provided, however, that if Applicable Tax Law does not permit a Solta Group member to close its Taxable year on the IPO Date, the Tax attributable to the operations of the members of the Solta Group for any Post-IPO Period shall be the Tax computed using a hypothetical closing of the books consistent with the Closing of the Books Method (except to the extent otherwise agreed upon by Parent and Solta). (ii) For purposes of Section 3(a)(i), the amount of Taxes attributable to the member(s) of the Solta Group or the Solta Business, as applicable, shall be determined by Parent on a pro forma basis prepared (A) assuming that such member(s) were not included in the group of companies filing the applicable Joint Tax Return, but rather filed a separate Joint Tax Return that includes only such member(s), (B) including only Tax Items of such member(s), (C) except as provided in clause (E) hereof, using all elections, accounting methods and conventions used on such Joint Tax Return for such period, (D) applying the highest statutory marginal Tax rate in effect for such period, (E) assuming that such member(s) elect not to carry back any net operating losses and (F) assuming that such member(s) utilization of any Tax Attribute carryforward or carryback is limited to the Tax Attributes of such member(s) arising in Post-IPO Periods determined in accordance with this Section 3(b)(ii); provided that the amount of Taxes so determined shall not be less than zero. (iii) Any Tax Item of Solta or any member of the Solta Group arising from a transaction engaged in outside the ordinary course of business on the IPO Date shall be allocable to Solta; provided that the foregoing shall not include any action that is undertaken pursuant to the Separation or the Contribution.

Allocation Conventions. (i) All Taxes allocated pursuant to Section 3(a) shall be allocated between the Pre-IPO Period and the Post-IPO Period in accordance with the Closing of the Books Method; provided, however, that if Applicable Tax Law does not permit a Solta Kontoor Brands Group member to close its Taxable year on the IPO Distribution Date, the Tax attributable to the operations of the members of the Solta Kontoor Brands Group for any PostPre-IPO Distribution Period shall be the Tax computed using a hypothetical closing of the books consistent with the Closing of the Books Method (except to the extent otherwise agreed upon by Parent VF and SoltaKontoor Brands). Notwithstanding any other provision of this Agreement, any and all Taxes under Section 951(a) and 951A(a) of the Code attributable to any member of the Kontoor Brands Group that is included in the gross income of any member of the VF Group with respect to any period beginning on or after March 31, 2019 (“Kontoor Brands Subpart F Taxes”) shall be allocated to Kontoor Brands to the extent any member of the Kontoor Brands Group realizes a corresponding Tax Benefit, determined using a “with and without” methodology. Kontoor Brands and VF share use reasonable best efforts to minimize any detriment to VF with respect to such Kontoor Brands Subpart F Taxes. (ii) For purposes of Section 3(a)(i), the amount of Taxes attributable to the member(s) of the Solta Group or the Solta Business, as applicable, shall be determined by Parent on a pro forma basis prepared (A) assuming that such member(s) were not included in the group of companies filing the applicable Joint Tax Return, but rather filed a separate Joint Tax Return that includes only such member(s), (B) including only Tax Items of such member(s), (C) except as provided in clause (E) hereof, using all elections, accounting methods and conventions used on such Joint Tax Return for such period, (D) applying the highest statutory marginal Tax rate in effect for such period, (E) assuming that such member(s) elect not to carry back any net operating losses and (F) assuming that such member(s) utilization of any Tax Attribute carryforward or carryback is limited to the Tax Attributes of such member(s) arising in Post-IPO Periods determined in accordance with this Section 3(b)(ii); provided that the amount of Taxes so determined shall not be less than zero. (iii) Any Tax Item of Solta Kontoor Brands or any member of the Solta Kontoor Brands Group arising from a transaction engaged in outside the ordinary course of business on the IPO Distribution Date after the Distribution Time shall be allocable to SoltaKontoor Brands and any such transaction by or with respect to Kontoor Brands or any member of the Kontoor Brands Group occurring after the Distribution Time shall be treated for all Tax purposes (to the extent permitted by Applicable Tax Law) as occurring at the beginning of the day following the Distribution Date in accordance with the principles of Treasury Regulations Section 1.1502-76(b) (assuming no election is made under Treasury Regulations Section 1.1502-76(b)(2)(ii) (relating to a ratable allocation of a year’s Tax Items)); provided that the foregoing shall not include any action that is undertaken pursuant to the Separation Restructuring, the Contribution or the ContributionDistribution.

Allocation Conventions. (i) All Taxes allocated pursuant to Section 3(a) shall be allocated between the Pre-IPO Period and the Post-IPO Period in accordance with the Closing of the Books Method; provided, however, that if Applicable Tax Law does not permit a Solta Kontoor Brands Group member to close its Taxable year on the IPO Distribution Date, the Tax attributable to the operations of the members of the Solta Kontoor Brands Group for any PostPre-IPO Distribution Period shall be the Tax computed using a hypothetical closing of the books consistent with the Closing of the Books Method (except to the extent otherwise agreed upon by Parent VF and SoltaKontoor Brands); provided further that any and all Taxes under Section 951(a) or Section 951A(a) of the Code attributable to any member of the Kontoor Brands Group (whether included in gross income by a member of the VF Group or the Kontoor Brands Group) (x) with respect to any period beginning on or after April 1, 2019 shall be allocated to Kontoor Brands (y) with respect to the members of the Kontoor Brands Group set forth on Schedule B, shall be allocated as if such member’s Taxable year ended as of [—], 2019 using such conventions as VF determines in its reasonable discretion. (ii) For purposes of Section 3(a)(i), the amount of Taxes attributable to the member(s) of the Solta Group or the Solta Business, as applicable, shall be determined by Parent on a pro forma basis prepared (A) assuming that such member(s) were not included in the group of companies filing the applicable Joint Tax Return, but rather filed a separate Joint Tax Return that includes only such member(s), (B) including only Tax Items of such member(s), (C) except as provided in clause (E) hereof, using all elections, accounting methods and conventions used on such Joint Tax Return for such period, (D) applying the highest statutory marginal Tax rate in effect for such period, (E) assuming that such member(s) elect not to carry back any net operating losses and (F) assuming that such member(s) utilization of any Tax Attribute carryforward or carryback is limited to the Tax Attributes of such member(s) arising in Post-IPO Periods determined in accordance with this Section 3(b)(ii); provided that the amount of Taxes so determined shall not be less than zero. (iii) Any Tax Item of Solta Kontoor Brands or any member of the Solta Kontoor Brands Group arising from a transaction engaged in outside the ordinary course of business on the IPO Distribution Date after the Distribution Time shall be allocable to SoltaKontoor Brands and any such transaction by or with respect to Kontoor Brands or any member of the Kontoor Brands Group occurring after the Distribution Time shall be treated for all Tax purposes (to the extent permitted by Applicable Tax Law) as occurring at the beginning of the day following the Distribution Date in accordance with the principles of Treasury Regulations Section 1.1502-76(b) (assuming no election is made under Treasury Regulations Section 1.1502-76(b)(2)(ii) (relating to a ratable allocation of a year’s Tax Items)); provided that the foregoing shall not include any action that is undertaken pursuant to the Separation Restructuring, the Contribution or the ContributionDistribution.