Exhibit 10.7
Ongoing Businesses Tax Agreement
dated as of April 30, 2002
between
The MONY Group, Inc.
and
MONY Holdings, LLC
ONGOING BUSINESSES TAX AGREEMENT
ONGOING BUSINESSES TAX AGREEMENT (this "Agreement"), dated as of April 30, 2002,
between The MONY Group, Inc., a Delaware corporation ("Parent") and MONY
Holdings, LLC, a Delaware limited liability company ("Holdings").
RECITALS
WHEREAS, MONY Life Insurance Company, a New York stock life insurance
company that is directly wholly-owned by Holdings ("MONY Life"), and each
subsidiary of MONY Life that is a member of the Parent tax affiliated group will
be parties to the Agreement to Allocate Consolidated Federal Income Tax
Liability effective as of January 1, 1994 (as it may be amended from time to
time, the "Affiliated Group's Tax Sharing Agreement");
WHEREAS, under the Affiliated Group's Tax Sharing Agreement, MONY Life
and each of its subsidiaries that is a member of the Parent tax affiliated group
will be required to make a payment to, or entitled to receive a payment from,
Parent with respect to each entity's allocated share of the Parent affiliated
group's United States federal income tax liability and benefits;
WHEREAS, Parent and Holdings desire that for tax purposes the Closed
Block Business within MONY Life (it being understood that there is no Closed
Block Business within any subsidiary of MONY Life) will be treated as if it were
a consolidated subsidiary under the Affiliated Group's Tax Sharing Agreement
(and, in addition, the Ongoing Businesses within MONY Life will be treated as if
it were a consolidated subsidiary under the Affiliated Group's Tax Sharing
Agreement);
WHEREAS, Parent and Holdings wish to establish arrangements for the
allocation and payment of the amounts due to and from MONY Life and its
subsidiaries that are members of the Parent tax affiliated group, on the one
hand, and Parent on the other, under the Affiliated Group's Tax Sharing
Agreement and to provide (i) in this Agreement for the allocation and payment of
certain tax benefits and tax liabilities attributable to the Ongoing Businesses
of each legal entity (including Parent, Holdings, MONY Life and each subsidiary
of MONY Life that is a member of the Parent tax affiliated group) (it being
understood that the entirety of the business of Parent and of each subsidiary of
MONY Life is attributable to the OB Businesses) and (ii) in a separate agreement
(the "CBB Tax Agreement") entered into by Parent and Holdings concurrently with
the entering into of this Agreement, for the allocation and payment of certain
tax benefits and tax liabilities attributable to the Closed Block Business of
MONY Life and Holdings; and
WHEREAS, Parent and Holdings wish to establish arrangements for the
netting of certain payments due under this Agreement and the CBB Tax Agreement
to insure that no entity will, on any Payment Date (as defined herein), be both
making a payment to another entity and receiving a payment from that other
entity and wish to set
forth these netting procedures in detail in the CBB Tax Agreement (and not in
this Agreement);
NOW, THEREFORE, in consideration of these premises and of the mutual
agreements and covenants contained herein, Parent and Holdings agree as follows:
ARTICLE I
DEFINITIONS
Capitalized terms used but not defined in this Agreement shall have
the meanings ascribed to them in the Indenture. In addition, as used in this
Agreement, the following terms have the following meanings:
"Affiliated Group's Tax Sharing Agreement" has the meaning specified
in the recitals to this Agreement.
"CBB Tax Agreement" has the meaning specified in the recitals to this
Agreement.
"CB Debt" means the senior, secured indebtedness of Holdings to be
issued pursuant to the Indenture.
"Holdings" has the meaning specified in the preamble to this
Agreement.
"Indenture" means the Indenture, dated as of April 30, 2002, by and
among Holdings, Ambac Assurance Corporation, Parent and Bank One Trust Company,
N.A.
"Member of the Domestic Life Insurance Group" has the meaning
specified in Section 2.02 hereof.
"MONY Life" has the meaning specified in the recitals to this
Agreement.
"Parent" has the meaning specified in the preamble to this Agreement.
"Payment Date" means any date of settlement or payment referred to in
the Affiliated Group's Tax Sharing Agreement.
"Tax Agreements" means this Agreement and the CBB Tax Agreement.
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ARTICLE II
TAX ALLOCATIONS AND PAYMENTS
Section 2.01. Computation and Payment of U.S. Federal, State and Local
Tax Liabilities and Benefits Allocated to Holdings.
(a) Holdings will be allocated a federal, state and local income tax
liability or a federal, state and local income tax benefit (associated with
deductions and credits) with respect to its Ongoing Businesses, calculated as if
Holdings' Ongoing Businesses were a separate subsidiary subject to the
Affiliated Group's Tax Sharing Agreement.
(b) Holdings' Ongoing Businesses will not be allocated any federal,
state or local income tax benefits associated with the CB Debt.
(c) Holdings agrees to pay to Parent an amount equal to any tax
liability allocated to Holdings pursuant to this Section 2.01 and Parent agrees
to pay to Holdings an amount equal to any tax benefit allocated to Holdings
pursuant to this Section 2.01 (in accordance with Sections 2.04 and 2.05
hereof).
Section 2.02. Payments from Members of the Domestic Life Insurance
Group.
(a) Parent agrees to irrevocably instruct MONY Life and each of its
subsidiaries that is a member of the Parent tax affiliated group (each,
including MONY Life, a "Member of the Domestic Life Insurance Group") for the
benefit of Holdings, until such time as Holdings has repaid the CB Debt or is
released from its obligations under the CB Debt and to the Insurer, to pay to
Holdings any amounts such Member owes to Parent under the Affiliated Group's Tax
Sharing Agreement that are attributable to such Member's Ongoing Businesses,
subject, in the case of MONY Life, to Section 3.01 of the CBB Tax Agreement.
Holdings agrees to pay such amounts to Parent (in accordance with Sections 2.04
and 2.05 hereof). Parent hereby agrees that until such time as Holdings has
repaid the CB Debt or is released from its obligations under the CB Debt and to
the Insurer, Parent will not exercise the option set forth in the penultimate
sentence of the first paragraph of Section (6) of the Affiliated Group's Tax
Sharing Agreement.
(b) In no event will any Member of the Domestic Life Insurance Group
be obligated to pay under the Affiliated Group's Tax Sharing Agreement and the
Tax Agreements, taken together, any amount (after taking into account, in the
case of MONY Life, any netting under Section 3.01 of the CBB Tax Agreement) in
excess of the amount such Member would otherwise have been obligated to pay
under the Affiliated Group's Tax Sharing Agreement.
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Section 2.03. Payments to Members of the Domestic Life Insurance
Group.
Holdings agrees that, until such time as Holdings has repaid the CB
Debt or is released from its obligations under the CB Debt and to the Insurer,
it will pay to each Member of the Domestic Life Insurance Group any amounts owed
to such Member by Parent under the Affiliated Group's Tax Sharing Agreement that
are attributable to such Member's Ongoing Businesses. Parent agrees to pay such
amounts to Holdings (in accordance with Sections 2.04 and 2.05 hereof).
Section 2.04. Timing of Tax Allocation Computations and Payments.
The amounts due under Sections 2.01, 2.02 and 2.03 hereof will,
subject to Sections 3.01, 3.02 and 3.04 of the CBB Tax Agreement, be payable on
the corresponding Payment Dates under the Affiliated Group Tax Sharing
Agreement.
Section 2.05. Netting of Payments Between Parent and Holdings.
Subject to Sections 3.01, 3.02 and 3.04 of the CBB Tax Agreement, all
payments to be made by Parent to Holdings, and all payments to be made by
Holdings to Parent, on any Payment Date under this Agreement will be netted and
set off against one another, and only a single payment of the net amount due
will be payable by the party owing the larger amount.
Section 2.06. Payments Made to/from Outside of Debt Service Coverage
Account.
All payments made or received by Holdings under this Agreement will be
made from or held outside the Debt Service Coverage Account (subject to Sections
3.03 and 3.05 of the CBB Tax Agreement) and will not be made from or added to
the Collateral.
ARTICLE III
ALLOCATION OF ADJUSTMENTS AND PENALTIES
In determining the amount of tax liabilities and tax benefits
attributable to the Ongoing Businesses within each entity (including Holdings)
(i) in the case of any adjustment attributable to the settlement or other
resolution of a tax controversy or the filing of an amended tax return (to the
extent related to a tax period covered by the Tax Agreements), the Ongoing
Businesses within each entity will be allocated their appropriate shares of any
tax and related interest liability or tax and related interest benefit arising
therefrom (as if they were a single consolidated subsidiary under the Affiliated
Group's Tax Sharing Agreement) and (ii) in the case of any penalties due, the
penalties will be allocated to the Ongoing Businesses within each entity (as if
they were a single consolidated subsidiary under the Affiliated Group's Tax
Sharing Agreement) in
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the manner described in the Affiliated Group's Tax Sharing Agreement. Parent
generally intends that this allocation not result in penalties being allocated
to any entity (or the Ongoing Businesses within any entity) that did not
contribute to the activity that gave rise to the penalty.
ARTICLE IV
INTERPRETATION
Section 4.01. General.
The parties intend that this Agreement (together with the CBB Tax
Agreement) be consistent with the Affiliated Group's Tax Sharing Agreement and
that it be interpreted and applied accordingly.
Section 4.02. No Double Counting of Any Tax Item.
The parties intend that the provisions of this Agreement and the CBB
Tax Agreement be applied in a manner that prevents any item of income,
deduction, gain, loss, credit, tax cost or tax benefit from being taken into
account more than once.
Section 4.03. Duplicative Provisions.
If any provision of this Agreement is duplicative of any provision of
the CBB Tax Agreement, the two provisions will together be applied only once and
any payment or other action taken pursuant thereto shall be considered to have
been made pursuant to both provisions.
Section 4.04. Nature of Payments.
Unless otherwise provided herein, any net payment required under this
Agreement from one corporation (or limited liability company) to another
corporation (or limited liability company) shall be a timely cash payment rather
than an internal book adjustment.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed, and their respective seals to be hereunto affixed and
attested, all as of the day and year first above written.
THE MONY GROUP, INC.
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇
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Name: ▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Senior Vice President
and General Counsel
MONY HOLDINGS, LLC
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Chief Financial Officer
