CINERGY CORP. AND SUBSIDIARY COMPANIES
AGREEMENT FOR FILING CONSOLIDATED
INCOME TAX RETURNS AND FOR
ALLOCATION OF CONSOLIDATED INCOME
TAX LIABILITIES AND BENEFITS
Cinergy Corp., a registered public utility holding company, and its
Subsidiaries hereby agree to join annually in the filing of a consolidated
Federal income tax return and to allocate the consolidated Federal income tax
liabilities and benefits among the members of the consolidated group in
accordance with the provisions of this Agreement.
1. DEFINITIONS
"Consolidated tax" is the aggregate current Federal income tax
liability for a tax year, being the tax shown on the consolidated Federal
income tax return and any adjustments thereto, as described in section 5
hereof.
"Corporate taxable income" is the positive taxable income of an
associate company for a tax year, computed as though such company had filed a
separate return on the same basis as used in the consolidated return, except
that dividend income from associate companies shall be disregarded, and other
intercompany transactions, eliminated in consolidation, shall be given
appropriate effect.
"Corporate taxable loss" is the taxable loss of an associate company
for a tax year, computed as though such company had filed a separate return on
the same basis as used in the consolidated return, except that dividend income
from associate companies shall be disregarded, and other intercompany
transactions, eliminated in consolidation, shall be given appropriate effect.
"Corporate tax credit" is a negative separate regular tax of a
subsidiary company for a tax year, equal to the amount by which the
consolidated regular tax is reduced by including the corporate taxable loss of
such subsidiary company in the consolidated tax return.
"Separate return tax" is the tax on the corporate taxable income or
loss of an associate company as though such company were not a member of a
consolidated group.
These definitions shall apply, as appropriate, in the context of the
regular income tax and the Alternative Minimum Tax ("AMT") unless otherwise
indicated in this Agreement.
2. TAX ALLOCATION PROCEDURES
The consolidated tax shall be allocated among the members of the
group consistent with Rule 45(c) of the Public Utility Holding Company Act of
1935, utilizing the separate "corporate taxable income" method, in the
following manner:
a) Each subsidiary which has a corporate taxable loss will be
entitled to a corporate tax credit equal to the amount by which the
consolidated regular income tax is reduced by including the corporate tax loss
of such subsidiary in the consolidated tax return. The members having
corporate taxable income will be allocated an amount of regular income tax
liability equal to the sum of the consolidated regular tax liability and the
corporate tax credits allocated to the subsidiaries having corporate tax
losses based on the ratio that each such member's corporate taxable income
bears to the total corporate taxable income of all members having corporate
taxable income.
If the aggregate of the members' corporate tax losses are not
entirely utilized on the current year's consolidated return, the consolidated
carry back or carry forward of such losses to the applicable taxable year(s)
will be allocated to each member having a corporate taxable loss in the ratio
that such member's separate corporate tax loss bears to the total corporate
tax losses of all members having corporate taxable losses.
b) The consolidated Environmental Tax will be allocated among the
members of the group by applying the procedures set forth in subsection a)
above, except that the basis for allocation will be Alternative Minimum
Taxable Income ("AMTI") rather than regular corporate taxable income.
c) The consolidated AMT will be allocated among the members in
accordance with the procedures and principles set forth in Proposed Treasury
Regulation section 1.1502-55 in the form such Regulation existed on the date
on which this Agreement was executed.
d) Tax benefits such as general business credits, foreign tax
benefits, or other tax credits shall be apportioned directly to those members
whose investments or contributions generated the credit or benefit.
If the credit or benefit can not be entirely utilized to offset
current consolidated tax, the consolidated credit carryback or carryforward
shall be apportioned to those members whose investments or contributions
generated the credit or benefit in proportion to the relative amounts of
credits or benefits generated by each member.
e) If the amount of consolidated tax allocated to any subsidiary
under this Agreement, as determined above, exceeds the separate return tax of
such subsidiary, such excess shall be reallocated among those members whose
allocated tax liability is less than the amount of their respective separate
return tax liabilities. The reallocation shall be proportionate to the
respective reductions in separate return tax liability of such members. Any
remaining unallocated tax liability shall be assigned to Cinergy Corp. The
term "tax" and "tax liability" used in this subsection shall include regular
tax, Environmental Tax and AMT.
3. TAX PAYMENTS AND COLLECTIONS FOR ALLOCATIONS
Cinergy Corp. shall make any calculations on behalf of the members
necessary to comply with the estimated tax provisions of the Internal Revenue
Code of 1986 as amended (the "Code"). Based on such calculations Cinergy
Corp. shall charge or refund to the members appropriate amounts at intervals
consistent with the dates indicated by Code section 6655. Cinergy Corp. shall
be responsible for paying to the Internal Revenue Service the consolidated
current Federal income tax liability.
After filing the consolidated Federal income tax return and
allocating the consolidated tax liability among the members, Cinergy Corp.
shall charge or credit, as appropriate, the members to reflect the difference
between prior payments or credits and their current tax as allocated under
this Agreement.
4. ALLOCATION OF STATE TAX LIABILITIES OR BENEFITS
State and local income tax liabilities will be allocated, where
appropriate, among members in accordance with principles similar to those
employed in this Agreement for the allocation of consolidated Federal income
tax liability.
5. TAX RETURN ADJUSTMENTS
In the event the consolidated tax return is subsequently adjusted by
the Internal Revenue Service, state tax authorities, amended returns, claims
for refund, or otherwise, such adjustments shall be reflected in the same
manner as though they had formed part of the original consolidated return.
Interest paid or received, and penalties imposed on account of any adjustment
will be allocated to the responsible member.
6. NEW MEMBERS
If, at any time, any other company becomes a member of the
Affiliated Group, the parties hereto agree that such new member may become a
party to this Agreement by executing a duplicate copy of this Agreement.
Unless otherwise specified, such new member shall have similar rights and
obligations of all other members under this Agreement.
7. MEMBERS LEAVING THE AFFILIATED GROUP
In the event that any member of the Affiliated Group at any time
leaves the Group and, under any applicable statutory provision or regulation,
that member is assigned and is deemed to take with it all or a portion of any
of the tax attributes (including, but not limited to, net operating losses,
credit carryforwards, and Minimum Tax Credit carryforwards) of the Affiliated
Group, then, to the extent the amount of the attributes so assigned differs
from the amount of such attributes previously allocated to such member under
this Agreement, the leaving member shall appropriately settle with the Group.
Such settlement shall consist of payment on a dollar-for-dollar basis for all
differences in credits and, in the case of net operating loss differences, in
an amount computed by reference to the highest marginal corporate tax rate.
The settlement amounts shall be allocated among the remaining members of the
Group in proportion to the relative level of attributes possessed by each
member and the attributes of each member shall be adjusted accordingly.
8. SUCCESSORS, ASSIGNS
The provisions and terms of this Agreement shall be binding on and
inure to the benefit of any successor or assignee by reason of merger,
acquisition of assets, or otherwise, of any of the members hereto.
9. AMENDMENT AND TERMINATION
This Agreement may be amended at any time by the written agreement
of the parties hereto at the date of such amendment and may be terminated at
any time by the written consent of all such parties.
10. GOVERNING LAW
This Agreement is made under the law of the State of Ohio, which law
shall be controlling in all matters relating to the interpretation,
construction, or enforcement hereof.
11. EFFECTIVE DATE
This Agreement is effective for the allocation of the current
Federal income tax liabilities of the members for the consolidated tax year
1994 and all subsequent years until this Agreement is revised in writing.
12. APPROVAL
This Agreement is subject to the approval of the Securities and
Exchange Commission. A copy of this Agreement will be filed as an exhibit to
the Form U5S Annual Report to the Securities and Exchange Commission by
Cinergy Corp. for the year ended December 31, 1996.
The above procedure for apportioning the consolidated annual net current
Federal and state tax liabilities and tax benefits of Cinergy Corp. and its
consolidated affiliates have been agreed to by each of the below listed
members of the consolidated group as evidenced by the signature of an officer
of each company.
Cinergy Corp.
By:/s/ J. Wayne Leonard_ ____________ Date:1-23-95_________
Cinergy Services, Inc.
By:/s/ J. Xxxxx Xxxxxxx _____________ Date:1-23-95_________
The Cincinnati Gas & Electric Company
By:/s/ Xxxxxxx X. Sheafer____________ Date:1-23-95_________
PSI Energy, Inc.
By:/s/ J. Wayne Leonard______________ Date:1-23-95_________
PSI Energy Argentina, Inc.
By:/s/ J. Wayne Leonard______________ Date:1-23-95_________
South Construction Company, Inc.
By:/s/ J. Wayne Leonard______________ Date:1-23-95_________
The Union Light, Heat and Power Company
By:/s/ Xxxxxxx X. Sheafer____________ Date:1-23-95_________
Miami Power Corporation
By:/s/ Xxxxxxx X. Sheafer____________ Date:1-23-95_________
Lawrenceburg Gas Company
By:/s/ Xxxxxxx X. Sheafer____________ Date:1-23-95_________
The West Xxxxxxxx Gas and Electric Company
By:/s/ Xxxxxxx X. Sheafer____________ Date:__1-23-95_______
Tri-State Improvement Company
By:/s/ Xxxxxxx X. Sheafer____________ Date:__1-23-95_______
KO Transmission Company
By:/s/ Xxxxxxx X. Sheafer____________ Date:__1-23-95_______
Cinergy Investments, Inc.
By:/s/ J. Wayne Leonard______________ Date:__1-23-95_______
PSI Recycling, Inc.
By:/s/ Xxxxxxx X. Winger_____________ Date:__1-23-95_______
Power Equipment Supply Co.
By:/s/ Xxxxxxx X. Winger_____________ Date:__1-23-95_______
PSI Power Resource Operations, Inc.
By:/s/ Xxxxxxx X. Winger_____________ Date:__1-23-95_______
PSI Power Resource Development, Inc.
By:/s/ Xxxxxxx X. Winger_____________ Date:__1-23-95_______
PSI Sunnyside, Inc.
By:/s/ Xxxxxxx X. Xxxxxx ____________ Date:__1-23-95_______
PSI International, Inc.
By:/s/ Xxxxxxx X. Winger_____________ Date:__1-23-95_______
PSI T&D International, Inc.
By:/s/ J. Xxxxx Xxxxxxx _____________ Date:__1-23-95_______
PSI Yacyreta, Inc.
By:/s/ J. Wayne Leonard______________ Date:__1-23-95_______
Cinergy Capital & Trading, Inc.
By:/s/ Xxxxxxx X. Winger_____________ Date:__1-23-95_______
PSI Argentina, Inc.
By:/s/ J. Wayne Leonard______________ Date:__1-23-95_______
CGE XXX, Inc.
By:/s/ Xxxxxxx X. Sheafer____________ Date:__1-23-95_______
Costanera Power Corp.
By:/s/ J. Wayne Leonard______________ Date:__1-23-95_______
Enertech Associates, Inc.
By:/s/ Xxxxxxx X. Sheafer____________ Date:__1-23-95_______
Cinergy Communications, Inc.
By:/s/ Xxxxxxx X. Xxxxxx Date: 12-27-96 _____
Cinergy Cooling Corp.
By:/s/ Xxxxxxx X. Xxxxxx Date: 12-27-96_ _____
Cinergy Resources, Inc.
By:/s/ Xxxxxxx X. Xxxxxx Date: 12-27-96_ _____
Cinergy Technology, Inc.
By:/s/ Xxxxxxx X. Xxxxxx Date: 12-27-96_______
Cinergy UK, Inc.
By:/s/ Xxxxxxx X. Xxxxxx Date: 12-27-96_______
