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EXHIBIT 10.17
TAX SHARING AGREEMENT
Agreement effective January 1, 1997 by and among ALLIED Group, Inc. ("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.
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(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.
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.
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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.
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.
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IN WITNESS WHEREOF, the parties hereto have caused this agreement to be executed
by their duly authorized representatives.
ALLIED Group, Inc.
By /s/ Xxxxx X. Xxxxxxx Date
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Xxxxx X. Xxxxxxx
Senior Vice President
Treasurer
Chief Financial Officer
AMCO Insurance Company
By /s/ Xxxxxxx X. Xxxxx Date
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Xxxxxxx X. Xxxxx
Assistant Vice President
ALLIED Property and Casualty
Insurance Company
By /s/ Xxxxxxx X. Xxxxx Date
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Xxxxxxx X. Xxxxx
Assistant Vice President
Depositors Insurance Company
By /s/ Xxxxxxx X. Xxxxx Date
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Xxxxxxx X. Xxxxx
Assistant Vice President
Western Heritage Insurance Company
By /s/ Xxxxx X. Xxxxxx Date
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Xxxxx X. Xxxxxx
Treasurer/Assistant Secretary
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ALLIED Group Mortgage Company
By /s/ Xxxxxxx X. Xxxxx Date
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Xxxxxxx X. Xxxxx
Assistant Vice President
ALLIED General Agency Company
By /s/ Xxxxxxx X. Xxxxx Date
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Xxxxxxx X. Xxxxx
Assistant Vice President
ALLIED Group Information Systems, Inc.
By /s/ Xxxxxxx X. Xxxxx Date
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Xxxxxxx X. Xxxxx
Assistant Vice President
The Freedom Group, Inc.
By /s/ Xxxxxxx X. Xxxxx Date
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Xxxxxxx X. Xxxxx
Assistant Vice President
Midwest Printing Services, Ltd.
By /s/ Xxxxxxx X. Xxxxx Date
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Xxxxxxx X. Xxxxx
Assistant Vice President
