EXHIBIT 99.5
TAX ALLOCATION AGREEMENT
This Tax Allocation Agreement (this "Agreement") dated December 21, 2000,
by and among Security Capital Corporation, a Delaware corporation ("Parent"),
and each of its undersigned subsidiaries of Parent (each a "Subsidiary" and
collectively the "Subsidiaries"). For purposes of this Agreement, the term
"Schedule A Subsidiary Group" shall be used to refer to the group of
Subsidiaries which would themselves constitute an affiliated group as defined in
Section 1504(a) of the Internal Revenue Code of 1986, as amended (the "Code")
and are designated as a single Subsidiary on Schedule A hereto.
WITNESSETH:
WHEREAS, the parties hereto are members of an affiliated group as defined
in Section 1504(a) of the Code, of which Parent is the common parent (the
"Affiliated Group"); and
WHEREAS, such Affiliated Group will file a U.S. consolidated income tax
return for its tax year ending December 31, 2000, and, subject to the provisions
of this Agreement, for subsequent years; and
WHEREAS, certain of the parties hereto are signatories to or otherwise
bound by (i) a Loan Agreement dated as of the date hereof, among each of the
undersigned Subsidiaries and Bank One, N.A., as the same may be amended or
modified after the date hereof (the "Loan Agreement"), and (ii) a Note Purchase
Agreement dated the date hereof, among each of the undersigned Subsidiaries and
Banc One Mezzanine Corporation, as the same may be amended or modified after the
date hereof (the "Note Purchase Agreement");
WHEREAS, it is the intent and desire of the parties hereto that a method
be established for allocating the tax liability of the Affiliated Group among
its members, for reimbursing the Parent for payment of such 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 carry back of losses or
tax credits from subsequent tax years.
Now, therefore, in consideration of the mutual covenants and promises
contained herein, the parties hereto agree as follows:
1. A U.S. consolidated income tax return shall be filed by the Parent for
the tax year ending December 31, 2000, and for each subsequent taxable period in
respect of which this Agreement is in effect and for which the Affiliated Group
is required or permitted to file a consolidated tax return. Each Subsidiary
shall execute and file such consents, elections, and other documents that may be
required or appropriate for the proper filing of such returns.
2. a. For each tax period, the Schedule A Subsidiary Group shall compute
its separate consolidated federal income tax liability as if it had filed a
separate tax return and, subject to Section 7.17 of the Loan Agreement and
Section 7.10 of the Note Purchase Agreement,
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shall pay such amount to the Parent. For purposes of this Agreement, any
liability for alternative minimum tax shall be treated as part of the Schedule A
Subsidiary Group's separate tax liability.
b. The separate return tax liability of the Schedule A Subsidiary Group
shall be computed in a manner consistent with the provisions of Treasury
Regulation Section 1.1552- 1(a)(2)(ii), provided that the carryover of any tax
attribute from a prior tax year that is not available in determining the
consolidated tax liability of the Affiliated Group for the current taxable
period shall be disregarded.
3. Payment of the consolidated tax liability for a taxable period shall
include the payment of estimated tax installments due for such taxable period,
and, subject to Section 7.17 of the Loan Agreement and Section 7.10 of the Note
Purchase Agreement, the Schedule A Subsidiary Group shall pay to the Parent its
share of each payment within ten days of receiving notice of the amount of such
payment from the Parent, but in no event later than the due date for each
payment.
4. If for any consolidated tax year the separate return tax liability of
the Schedule A Subsidiary Group is a loss, or if a tax credit or other item is
used to reduce the consolidated tax liability for such year, then Parent shall
credit to the Schedule A Subsidiary Group an amount equal to the tax benefit
resulting from the utilization of such loss, credit or other item. Such credit
shall be made at the time and to the extent such loss, credit or other item
could be used to reduce the separate return tax liability of the Schedule A
Subsidiary Group. Any such credit shall be applied against payments due to
Parent under paragraphs 2 or 3 above.
5. If part or all of an unused loss or tax credit is allocated to a member
of the Affiliated Group pursuant to applicable Treasury Regulations and 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 carry back part or all of a consolidated net
operating loss for any tax year in accordance with applicable Treasury
Regulations.
6. If the consolidated 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, the liability of each member shall be recomputed
to give effect to such adjustments. 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 2 above, within ten days after the refund is received by
the Parent; and in the case of an increase in tax liability, subject to Section
7.17 of the Loan Agreement and Section 7.10 of the Note Purchase Agreement, the
Schedule A Subsidiary Group shall pay to the Parent its allocable share of such
increased tax liability within ten days after receiving notice of such liability
from the Parent.
7. If during a consolidated return period Parent or any Subsidiary
acquires or organizes another corporation that is required to be included in the
Parent's consolidated return, that corporation shall join in and be bound by
this Agreement.
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8. The principles of this Agreement shall apply to federal, state, local
and foreign taxes of all types, including without limitation franchise taxes,
that are filed on a combined, consolidated or unitary basis or that otherwise
are paid by one member of the Affiliated Group on behalf of another.
9. Subject to paragraph 11 below, this Agreement shall apply to the tax
year ending December 31, 2000, and all subsequent taxable periods.
Notwithstanding such termination, this Agreement shall continue in effect with
respect to any payment or refunds due for all taxable periods prior to
termination.
10 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 of the parties hereto, to the same extent as if the successor had been an
original party to this Agreement.
11. Subject to applicable law, this Agreement may be amended, modified,
supplemented or terminated by written agreement of Parent and the Subsidiaries,
provided that the Parent shall have the right in its sole discretion to make any
and all available tax elections with respect to the Affiliated Group, including,
without limitation, the right to determine for a particular tax year whether or
not the Parent and the Subsidiaries will file tax returns on a consolidated,
combined, unitary or other basis.
12. This Agreement may be executed in counterparts, each of which shall be
an original, but all of which together shall constitute one instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized representative on December 21, 2000.
SECURITY CAPITAL CORPORATION
By: /S/ XXXXX X. XXXXXXXXXX
Name: Xxxxx X. Xxxxxxxxxx
Title: Chairman
WC HOLDINGS, INC.
By: /S/ XXXX X. XXXXXX
Name: Xxxx X. Xxxxxx
Title: CFO
HEALTH POWER, INC.
By: /S/ XXXX X. XXXXXX
Name: Xxxx X. Xxxxxx
Title: CFO
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COMPMANAGEMENT, INC.
By: /S/ XXXX X. XXXXXX
Name: Xxxx X. Xxxxxx
Title: CFO
COMPMANAGEMENT HEALTH SYSTEMS, INC.
By: /S/ XXXX X. XXXXXX
Name: Xxxx X. Xxxxxx
Title: CFO
M & N RISK MANAGEMENT, INC.
By: /S/ XXXX X. XXXXXX
Name: Xxxx X. Xxxxxx
Title: CFO
M & N ENTERPRISES, INC.
By: /S/ XXXX X. XXXXXX
Name: Xxxx X. Xxxxxx
Title: CFO
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SCHEDULE A
The following Subsidiaries would themselves constitute an affiliated group
of which WC Holdings, Inc. would be the common parent and are designated
as the Schedule A Subsidiary Group:
WC Holdings, Inc.
Health Power, Inc.
CompManagement, Inc.
CompManagement Health Systems, Inc.
M & N Risk Management, Inc.
M & N Enterprises, Inc.
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