TAX SHARING AGREEMENT
Agreement effective January 1, 1997 by and among ALLIED Life Financial
Corporation ("Parent") and each of its undersigned subsidiaries.
WHEREAS, the parties hereto are members of an affiliated group ("Affiliated
Group") as defined in Section 1504(a) of the Internal Revenue Code of 1986
as amended; and
WHEREAS, some of the parties hereto may be members of a unitary group
("Unitary Group") as defined by various state laws; and
WHEREAS, the parties hereto may elect or be required to file their federal
income tax returns on a consolidated basis and file their various state
income tax returns on a consolidated, unitary or separate basis and desire
to properly account for the economic consequences of this arrangement,
WHEREAS, it is the intent and desire of the parties hereto that a method be
established for reimbursing the Parent for payment of tax liability, for
compensating any party for use of its losses or tax credits, and to provide
for the allocation and payment of any refund arising from a carryback of
losses or tax credits from subsequent taxable years,
NOW THEREFORE, in consideration of the mutual covenants and promises
contained herein, the parties hereto agree as follows:
1. Parent to Prepare and File Returns. A consolidated federal income
tax return and consolidated, unitary, or separate state tax income tax
returns shall be prepared and filed by the Parent for the taxable year
ended December 31, 1997 and for each subsequent taxable period in
respect of which this agreement is in effect. Each subsidiary shall
execute and file such consent, elections, and other documents that may
be required or appropriate for the proper filing of such returns.
2. Federal Tax Allocation. For each taxable period, each member of the
Affiliated Group shall compute its separate tax liability as if it had
filed a separate tax return and shall pay such amount to the Parent.
The separate return tax liability of each member shall be computed
pursuant to the provision of Regulations Section 1.1502-33(d)(3) in a
manner provided by Regulations Section 1.1502-33(d)(2)(ii) in
conjunction with the method described in Regulations Section
1.1552-1(a)(2).
3. State Tax Allocation.
(a) Separate Returns.
The Parent and each subsidiary shall be
allocated its own separately computed state income tax
liability from those states requiring tax to be computed on a
separate return basis.
(b) Unitary Group and Affiliated Group Returns.
The Unitary or Affiliated Group shall
allocate to each member the total state income tax liability
from those states requiring a consolidated or unitary return
filing based on the following formula:
[each members separate company state taxable income
or loss before apportionment and net operating loss
deduction] divided by [total sum of all members
separate state taxable income or loss before
apportionment and net operating loss deduction]
multiplyed by [total affiliated or unitary state
income tax on taxable income before net operating
deduction and tax credits]
All prior tax year carryover tax credits and tax
benefits of net operating loss deductions shall be
specifically allocated to those members based on the
allocation used in the tax year in which the net
operating loss or tax credit was originally created.
All tax credits except prior tax year carryover
credits shall be specifically allocated to the
unitary members computed on a separate return basis.
All tax credits and net operating losses carried
forward from years prior to a member joining the
Affiliated or Unitary Group shall be specially
allocated to that member.
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4. Payments. Each subsidiary shall pay to the Parent its allocation of
quarterly estimated, final or amended return taxes payable to the
Internal Revenue Service and any other state taxing authority within
five days of receiving notice of such payment from the Parent.
5. Refund of Overpayment. If for any taxable period the separate return
liability of each member of the Affiliated Group, including the Parent
or Unitary Group, exceeds the consolidated or unitary tax liability for
such period as a result of any excess losses or tax credits of one or
more members, then the Parent shall pay to each such member its
allocable portion of such excess amount within sixty days after the
date of filing of the consolidated or unitary return for such period.
The excess federal tax amount to be reimbursed to such member shall be
computed in a manner consistent with the provisions of Regulation
Section 1.1502- 33(d)(2)(ii). In utilization of this Regulation
Section, the percentage referred to in Regulation Section
1.1502-33(d)(2)(ii)(b) shall be 100 percent.
6. Carryback or Forward of Unused Federal Loss or Tax Credit.
If part of all of an unused loss or tax credit is allocated to a member
of the Affiliated Group pursuant to Regulation Section 1.1502-79, and
it is carried back or forward to a year in which such member filed a
separate return or a consolidated return with another affiliated group,
any refund or reduction in tax liability arising from the carryback or
carryover shall be retained by such member. Notwithstanding the above,
the Parent shall determine whether an election shall be made not to
carryback part or all of the consolidated net operating loss for any
taxable year in accordance with Section 172(b)(3)(c) of the Internal
Revenue Code of 1986 as amended.
7. Adjustment of Taxable Period. If the consolidated or unitary tax
liability is adjusted for any taxable period, whether by means of an
amended return, claim for refund or after a tax audit by the Internal
Revenue Service or respective states, the liability of each member
shall be recomputed to give effect to such adjustments, and in the case
of a refund, the Parent shall make payment to each member for its share
of the refund, determined in the same manner as in paragraph (5) above,
within thirty days after the refund is received by the Parent, and in
the case of an increase in tax liability, each member shall pay to the
parent its allocable share of such increased tax liability within five
days after receiving notice of such liability from the Parent. In the
event that the taxing authority levies upon a member's assets in excess
of its adjusted portion of the consolidated tax liability, the member
will be adequately indemnified by the other members.
8. Acquisition through Organization or Additional Corporation. If
during a consolidated return period the Parent or any subsidiary
acquires or organizes another corporation that is required to be
included in the consolidated return, then such corporation shall join
in and be bound by this agreement.
9. Term. This agreement shall apply to the taxable year ending December
31, 1997 and all subsequent taxable periods unless the Parent and the
subsidiaries agree to terminate the agreement. Notwithstanding such
termination, this agreement shall continue in effect with respect to
any payment or refund for all taxable periods prior to termination.
10. Application to Successors in Interest. This agreement shall be
binding upon and inure to the benefit of any successor, whether by
statutory merger, acquisition of assets or otherwise, to any parties
hereto, to the same extent as if the successor had been an original
party to the agreement.
11. Arbitration. Any dispute arising out of or relating to this Tax
Sharing Agreement("Agreement") or the breach thereof between Parent and
any of the subsidiaries signatory hereto shall be settled by
arbitration in accordance with the Commercial Arbitration Rules of the
American Arbitration Association. Arbitration may be initiated by any
party to a dispute, giving notice to each other party two copies of
such notice with the American Arbitration Association and by complying
with other applicable provisions of the Association's Rules.
12. Modification of Agreement. No party has the authority to change any
provisions of this Agreement or waive any of its provisions. No change
in this Agreement shall be binding, unless first expressed in writing
and signed by each party hereto.
13. Superseding Agreement. The parties hereto acknowledge that this
agreement shall supersede all other agreements, oral or written,
between the parties.
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14. Exchange of Information. The parties hereto acknowledge that the
exchange and flow of information is critical to the operation of this
agreement. Having acknowledged this fact, the parties hereby agree to
grant free and unrestricted access, at reasonable times, to those books
and records necessary for the operation of this agreement.
IN WITNESS WHEREOF, the parties hereto have caused this agreement to be
executed by their duly authorized representatives.
ALLIED Life Financial Corporation
By /s/ Xxxxxxx Xxxxxxx Date February 25, 1997
Xxxxxxx X. Xxxxxxx
Vice President/Treasurer
ALLIED Life Brokerage Agency
By /s/ Xxxxxxx X. Xxxxxxx Date February 25, 1997
Xxxxxxx X. Xxxxxxx
Assistant Vice President
ALLIED Group Merchant Banking Corporation
By /s/ Xxxxxxx X. Xxxxxx Date February 25, 1997
Xxxxxxx X. Xxxxxx
Secretary/Treasurer
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