Exhibit 10.6
INTERCOMPANY TAX SHARING AGREEMENT
This Intercompany Tax Sharing Agreement (this "Agreement") is made entered into
by and between First American Capital Corporation ("FACC" and "Parent") and
First Life America Corporation ("FLAC" and "Subsidiary") on December 31, 2003.
RECITALS
A. FACC and FLAC compromise a Consolidated Group filing a Consolidated Return
(as defined herein) under the applicable provisions of the Code.
B. The parties wish to specify the manner in which they will share the
Consolidated Tax Liability (as defined herein) of the Consolidated Group
and the manner in which Tax Attributes (as defined herein) are to be
treated as among the members of the Consolidated Group.
NOW, THEREFORE, it is hereby agreed as follows:
1 DEFINITIONS
1.1 "AMT" means the alternative minimum tax determined as provided in
Section 55 of the Code.
1.2 "Code" means the Internal Revenue Code of 1986, as amended, together
with the Treasury Regulations promulgated thereunder and the
applicable rulings and interpretations thereof, and any successor
provision thereof.
1.3 "Consolidated Return" means the consolidated federal income tax return
filed by the Parent on behalf of the Group.
1.4 "Consolidated Return Year" means any Taxable Year for which a
Consolidated Return is filed.
1.5 "Consolidated Tax Attributes" means any Tax Attributes available to
reduce the Regular Tax liability or the AMT liability, as the case may
be, of a member of the Group in a Consolidated Return Year in excess
of the Tax Attributes that would have been available to such member
in such Taxable Year on a Separate Return Basis.
1.6 "Consolidated Tax Liability" means the overall liability of the Group
for Taxes in any Consolidated Return Year, as reported on the
Consolidated Return
1.7 "Net Operating Loss" means any net operating loss or net operating
loss carryover or carryback, as defined in Section 172 of the Code.
1.8 "Original Company" means the Company, which generated a particular
Tax Attribute.
1.9 "Regular Tax" means that regular tax imposed on the taxable income
of a corporation at the rates specified in Section 11 of the Code.
1.10 "Separate Tax Liability" means the amount (if any) of Regular Tax
for which a Company would be liable in any Taxable Year if the
Company had not joined in the filing of a Consolidated Return, but
had instead filed and computed its Tax on a separate return basis
1.11 "Separate Return Basis" means the computation of Tax for a member of
the Consolidated Group on the basis of a separate federal income tax
return for the Taxable Year.
1.12 "Tax or Taxes" means, with respect to any taxpayer for any Taxable
Year, either the Regular Tax or the AMT, whichever is applicable for
such Taxable Year.
1.13 "Taxable Year" means any Consolidated Return Year or separate taxable
year, as the case may be.
1.14 "Tax Attributes" means either Net operating Loss or Tax Credits.
1.15 "Tax Credit" means any credit or credit carryover that may be
applied to reduce the taxpayer's Regular Tax liability, including
but not limited to the minimum tax credit determined as provided in
Section 53 of the Code.
1.16 "Utilization Year" means the Taxable Year in which a particular Tax
Attribute is utilized to offset the income of, or reduce the Taxes
attributable to, a Company other than the Originating Company in
determining the Consolidated Group's Consolidated Tax Liability.
2 ALLOCATION OF CONSOLIDATED TAXABLE LIABILITY
2.1 Consolidated Return - For each Taxable Year, commencing with the
effective date of this Agreement, the Parent and the Subsidiary shall
join in the filing of a Consolidated Return; and the parties agree to
file such consents, elections and other documents as may be necessary
or appropriate for such purpose. Parent shall pay on behalf of the
Consolidated Group, on or before the due date for each Consolidated
Return Year (including extensions), all Taxes reported thereon.
2.2 Allocation of Consolidated Tax Liability Between Parent and
Subsidiary - Each Company shall be responsible for and shall
reimburse the Parent for its share of the Consolidated Group's
Consolidated Tax Liability. A Company's share of the Consolidated
Group's Consolidated Tax Liability shall be determined as follows:
A. If Regular Tax Is Payable - If the Consolidated Group's Consolidated
Tax Liability is for Regular Tax, the Company's share of such tax
shall be equal to its Regular Tax liability, computed on a Separate
Return Basis, after taking into account all Consolidated Tax
Attributes available to such Company to reduce its Separate Tax
Liability.
B. If AMT Is Payable - If the Consolidated Group's Consolidated Tax
Liability is for AMT, the Company's share of such Tax shall be the
amount of AMT for which the Company would be liable if computed on
a Separate Return Basis (and without regard to the Regular Tax for
such Taxable Year), after taking into account all Consolidated Tax
Attributes available for such Company to reduce AMT.
2.3 Payment - Each Company shall pay promptly to the Parent, on a
quarterly basis not later than the due date for the estimated
quarterly payment of the Taxes of the Consolidated Group, the
Company's share of such payment, estimated in the same manner as
specified in Section 2.2, with the final adjustments to be made
following the preparation of the Consolidated Return for the
Consolidated Return Year.
3 UTILIZATION OF TAX ATTRIBUTES
3.1 Generally - In certain Consolidated Return Years, the Separate Tax
Liability of one Company of the Consolidated Group may be reduced
through the utilization of Net Operating Losses of a Company, or the
taxes payable by the Consolidated Group as a whole may be reduced by
Tax Credits generated or earned by one Company of the Consolidated
Group which are in effect used to reduce the Separate Tax Liability
of the other Company. The parties intend that the tax savings
attributable to the use of such Tax Attributes should inure generally
to the benefit of the Company of the Consolidated Group ("Originating
Company") that earned or generated the Tax Attributes in question;
and that the members of the Consolidated Group should reimburse one
another, through the common parent, for the value of the Consolidated
Tax Attributes utilized in each Consolidated Return Year.
3.2 Reimbursement for Utilization of Tax Attributes - For each
Consolidated Return Year in which Consolidated Tax Attributes
generated or earned by a Company are utilized to reduce the Regular
Tax Liability of other Companies of Consolidated Group (without
regard to whether the Consolidated Group's Consolidated Tax Liability
for such Taxable Year is computed with references to the Regular Tax
or the AMT), the Company utilizing the Tax Attributes shall reimburse
each Originating Company, for the value of the Consolidated Tax
Attributes so utilized. Such reimbursements shall be made as
provided in Paragraph 3.4; and the value of the Tax Attributes in
question shall be determined by reference to the differences between
(i) the Company's share of the Consolidated Group's Consolidated Tax
Liability in the Utilization Year(s), and (ii) the share (as
calculated pursuant to Section 2.2) of such Consolidated Tax Liability
that the Company would have been responsible for had said Tax
Attributes not been available to the Consolidated Group in the
Utilization Year(s).
3.3 Components - The parties will not reimburse one another for the use
of components of taxable income other than the specific Tax
Attributes named. Therefore such components as capital loss
carryforwards, excess charitable contributions, etc., will not be
accounted for on a Separate Return Basis for purposes of this
Agreement.
3.4 Payment - Each Company shall pay or credit Parent, and Parent shall
pay or credit each Originating Company, on a quarterly basis in each
Utilization Year, not later than the due date for the estimated
quarterly tax payment of Taxes of the Consolidated Group for such
year, the estimated amount which each such member of the
Consolidated Group is required to pay, or is entitled to receive,
for such quarter, with a final adjustment to be made following the
preparation of the Consolidated Return for such Utilization Year.
4 Adjustment - In the event of any adjustment of the Consolidated Tax
Liability of the Consolidated group for any Consolidated Return Year,
by reason of the filing of an amended return, tentative loss
carryback refund applications, claim for refund, or an examination
by the Internal Revenue Service, the respective liabilities of Parent
and Subsidiary shall be redetermined hereunder after fully giving
effect to any such adjustment, as if such adjustment had been part
of the original computation; and the parties shall promptly settle
any amounts owing among them.
5 Financial Accounting Standards - For purposes of applying Statement
of Financial Accounting Standards No 109 ("FAS 109"), "current tax
liability" of any Company shall mean the amount due to the Parent
under Section 2.2 of this Agreement, and "deferred tax liability"
shall mean the deferred tax liability of each Company based on the
books and records of the Company. Each Company agrees to record
income tax liability in its books and records in accordance with
FAS 109. To the extent required by regulations promulgated by the
applicable domiciliary state, the Parent and or Subsidiary agrees
to account for income taxes in accordance with the Statement of
Statutory Accounting Principles Number 10, as amended from time to
time.
6 MISCELLANEOUS PROVISIONS
6.1 The provisions and terms of this Agreement shall be binding on and
shall inure to the benefit of any successor (whether by operation
of law or otherwise) to any parties hereto.
6.2 Unless earlier terminated by the written mutual agreement of the
parties, this Agreement shall remain in effect with respect to all
taxable years for which Consolidated Returns are filed by the
Consolidated Group.
6.3 No modification, extension, renewal, recession, termination, or
waiver of any provision contained herein shall be binding upon
any party unless made in writing and signed on its behalf by any
authorized officer of such party.
6.4 If at any time any other company becomes a member of the
Consolidated Group, the parties hereto agree that such new member
may become a party to this Agreement by executing a duplicated
copy of this Agreement. Unless otherwise specified, such new
member shall have all rights and obligations of each other Company
under this Agreement.
6.5 This Agreement and any amendments to this Agreement may be executed
in any number of counterparts, each of which shall be deemed to be
the original, although the others shall not be produced, and
execution of a counterpart shall be sufficient to make this
Agreement binding upon executing the same.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day
and year first above set forth.
[FIRST AMERICAN CAPITAL CORPORATION]
By: /s/ Xxxxxxx X. Xxxxxxx
Print Name: Xxxxxxx X. XXxxxxx
Date: 12/31/03
[FIRST LIFE AMERICA CORPORATION]
By: /s/ Xxxxxxx X. Xxxxxxxx
Print Name: Xxxxxxx X. Xxxxxxxx
Date: 12/31/03
