STATE INCOME
TAX ALLOCATION AGREEMENT
THIS AGREEMENT, is made and entered into as of the 30th
of September, 1999 by and among RIGHTCHOICE MANAGED CARE,
INC., (hereinafter referred to as "Parent") and DIVERSIFIED
LIFE INSURANCE AGENCY OF MISSOURI, INC. ("DLIAM"), HMO
MISSOURI, INC. ("HMO Missouri"), HEALTHLINK, INC.
("HEALTHLINK") and PREFERRED HEALTH PLANS OF MISSOURI, INC.
("PHPMo") (hereinafter referred to individually as
"Subsidiary" or collectively as "Subsidiaries").
WITNESSETH:
WHEREAS, Parent and Subsidiaries are members of an
affiliated group of corporations within the meaning of section
1504(a)(1) of the Internal Revenue Code of 1986 (the "Code")
for which Parent is the parent corporation;
WHEREAS, Parent and its eligible subsidiaries ("the
Consolidated Group") have elected and consented to file and do
file consolidated state income tax returns; and
WHEREAS, the parties to this Agreement wish to agree on
the payment of tax liabilities between Parent and the
Subsidiaries in a manner pursuant to which each Subsidiary
pays Parent an amount of state income tax based upon the
amount of state income taxes which would be payable by the
Subsidiary if it filed a separate state income tax return,
which includes the income, gain, loss and deductions of
Subsidiary;
NOW, THEREFORE, Parent and each Subsidiary hereby agrees
as follows:
I. Consolidated Return
Parent and its includible subsidiaries, including the
Subsidiaries, have elected to file consolidated state
income tax returns for the taxable period ending December
31, 1997, and for any subsequent taxable period for which
the Consolidated Group is permitted to file a
consolidated state income tax return. Each of the
Subsidiaries agree to file such consents and other
documents and to take such action as may be necessary to
carry out the purposes and provisions of this paragraph.
II. Calculation of Separate Company State Income Tax Liability
A. Beginning with the period ended December 31, 1997, and
for each tax year thereafter, each Subsidiary will calculate
the state income tax liability for each Subsidiary (for the
period during which such Subsidiary was a direct or indirect
subsidiary of Parent), as if such Subsidiary were to file a
separate state income tax return for such period.
III. Liability for Tax Payments - State
A. If a Subsidiary would be subject to state income tax
liability resulting from the calculation required by Paragraph
II, above, such Subsidiary shall pay such liability to Parent.
B. If a Subsidiary has a net operating loss for the period,
such Subsidiary will be entitled to a refund from the Parent
at such time as the Subsidiary can utilize the net operating
loss if it filed a separate state income tax return.
C. Parent agrees to be the sole agent for Subsidiary and to
act in its own name in all matters relating to the corporation
state income tax liability, including payment of such
liability, for any year in which it elects or is required to
file a consolidated state income tax return.
IV. Method and Time of Payment
Any amount to be paid by a Subsidiary to Parent or by
Parent to a Subsidiary by reason of paragraph III shall
be paid quarterly based on Subsidiary's estimated tax
liability. The quarterly payment shall be made in time
to reasonably permit Parent to make required estimated
payments or final settlements with the state.
V. Adjustment of Tax Liability
In the event of any adjustment of the tax liability as to
the consolidated state income tax return of the
Consolidated Group, by reason of the filing of an amended
return, a tentative loss carryback refund application,
claim for refund, or arising out of an audit by the
state, the liability of the Parent and Subsidiary
hereunder shall be redetermined after fully giving effect
to any such adjustment as if such adjustment had been a
part of the original computation, including any interest
and penalties attributable to any such adjustment.
VI. Successors, Assigns
The provisions and terms of this Agreement shall be
binding on and inure to the benefit of any successor, by
merger, acquisition of assets or otherwise, to any of the
parties hereto.
VII. Duration
With respect to each Subsidiary, unless earlier
terminated by mutual agreement of the parties, this
Agreement shall remain in effect with respect to all
taxable years for which consolidated state income tax
return are filed by the Consolidated Group and such
Subsidiary is included as a member of the Consolidated
Group.
VIII. Earnings and Profits Adjustments
This agreement is not intended to establish the method by
which the earnings and profits of each member of the
Consolidate Group will be determined.
IX. Miscellaneous
This agreement contains the entire Agreement among the
parties hereto, and supersedes any prior written or oral
understanding or agreement among the parties with respect
to the settlement of state income taxes. No
modification, extension, renewal, recession, termination
or waiver of any of the provisions contained herein shall
be binding upon any party unless made in writing and
signed on its behalf by one of its officers.
X. GOVERNING LAW
THE PROVISIONS OF THIS AGREEMENT SHALL BE GOVERNED AND
INTERPRETED IN ACCORDANCE WITH THE LAWS OF MISSOURI.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their duly authorized officer as
of the day and year first above written.
PREFERRED HEALTH PLANS OF RIGHTCHOICE MANAGED CARE, INC.
MISSOURI
By: /s/ Xxxxxx Xxx Xxxxxx By: /s/ Xxxx X'Xxxxxx
Name: Xxxxxx X. Xxx Xxxxxx Name: Xxxx X. X'Xxxxxx
Title: Sr. Executive Vice Title: President
President
DIVERSIFIED LIFE INSURANCY AGENCY
OF MISSOURI, INC.
By: /s/ Xxxxxx Xxx Xxxxxx
Name: Xxxxxx X. Xxx Xxxxxx
Title: Sr. Executive Vice President
HMO MISSOURI, INC.
By: /s/ Xxxxxx Xxx Xxxxxx
Name: Xxxxxx X. Xxx Xxxxxx
Title: Sr. Executive Vice President
HEALTHLINK, INC.
By: /s/ Xxxxx X. Xxx
Name: Xxxxx Xxx
Title: President
