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Exhibit 10.48
AMENDED AND RESTATED COMPANY/SUBSIDIARIES TAX ALLOCATION AGREEMENT
THIS AMENDED AND RESTATED COMPANY/SUBSIDIARIES TAX ALLOCATION AGREEMENT
(this "Agreement") is made and entered into as of November 30, 2000, by and
among RIGHTCHOICE MANAGED CARE, INC., a Delaware corporation ("Parent"), and
HEALTHY ALLIANCE LIFE INSURANCE COMPANY ("HALIC"), DIVERSIFIED LIFE INSURANCE
AGENCY OF MISSOURI, INC. ("DLIAM"), HMO MISSOURI, INC. ("HMO Missouri"),
HEALTHLINK, INC. ("HealthLink"), HEALTHLINK HMO, INC. ("HealthLink HMO"),
RIGHTCHOICE INSURANCE COMPANY ("RightCHOICE Insurance"), PREFERRED HEALTH PLANS
OF MISSOURI, INC. ("PHPMo"), FORTY-FOUR FORTY-FOUR FOREST PARK REDEVELOPMENT
CORPORATION ("Forest Park"), R & P REALTY, INC. ("R & P") and C & S PROPERTIES,
INC. ("C & S") (hereinafter referred to individually as "Subsidiary" or
collectively as "Subsidiaries").
WITNESSETH:
WHEREAS, RightCHOICE Managed Care, Inc., a Missouri corporation
("RightCHOICE"), HALIC, DLIAM, HMO Missouri and certain others entered into that
certain Company/Subsidiaries Tax Allocation Agreement dated August 1, 1994 ("Tax
Agreement"), as amended by that certain Amendment dated October 6, 1995 between
RightCHOICE and HealthLink ("First Amendment"), that certain Second Amendment
dated July 8, 1996 between RightCHOICE and HealthLink HMO ("Second Amendment"),
that certain Third Amendment dated November 1, 1999 between RightCHOICE and
RightCHOICE Insurance ("Third Amendment"), and that certain Fourth Amendment
dated November 1, 1999 between RightCHOICE and PHPMo ("Fourth Amendment")(the
Tax Agreement, First Amendment, Second Amendment, Third Amendment and Fourth
Amendment are collectively referred to hereinafter as the "Original Agreement");
WHEREAS, RightCHOICE and its parent, Blue Cross and Blue Shield of
Missouri (as the same may have been amended from time to time, the "BCBSMo"),
entered into that certain Tax Allocation Agreement dated August 8, 1994 ("BCBSMo
Agreement");
WHEREAS, BCBSMo, Forest Park, R & P and C & S entered into that certain
Tax Allocation Agreement dated September 30, 1994 (as the same may have been
amended from time to time, the "BCBSMo Subsidiary Agreement");
WHEREAS, BCBSMo merged into Parent on the effective date of this
Agreement and, subsequent to that merger, RightCHOICE also merged into Parent;
WHEREAS, as a result of the merger of BCBSMo into Parent and
RightCHOICE into Parent, the successor-in-interest to BCBSMo, the parties desire
to terminate and replace the BCBSMo Agreement and the BCBSMo Subsidiary
Agreement, to add Forest Park, R & P and C & S as parties to the Original
Agreement and to amend and restate the Original Agreement as hereinafter
provided;
WHEREAS, to the extent this Agreement conflicts or is inconsistent with
any term or condition of the Original Agreement, the terms and conditions of
this Agreement shall supersede such term or condition in the Original Agreement;
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");
WHEREAS, Parent and its eligible subsidiaries (the "Consolidated
Group") have elected and consented to file consolidated Federal income tax
returns; and
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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 Federal income tax based upon the
amount of Federal income taxes which would be payable by the Subsidiary if it
filed a separate Federal income tax return, which includes the income, gain,
loss and deductions of Subsidiary.
NOW, THEREFORE, Parent and Subsidiary hereby agree as follows:
I. Consolidated Return.
Parent and the Subsidiaries, have elected to file consolidated Federal
income tax returns for the taxable period ending December 31, 2000, and
for any subsequent taxable period for which the Consolidated Group is
permitted to file a consolidated Federal income tax return.
Each of the Subsidiaries agrees 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 Federal Income Tax Liability.
A. Beginning with the period ended December 31, 2000, and for
each tax year thereafter, each Subsidiary will calculate the
Federal income tax liability for such Subsidiary (for the
period during which such Subsidiary was a direct or indirect
subsidiary of Parent), without considering the Federal
alternative minimum tax ("AMT"), as if such Subsidiary were to
file a separate Federal income tax return for such period, as
modified by the provisions of paragraph B below.
B. In so computing the Federal income tax liability of each
Subsidiary:
1. Except as otherwise provided herein, "separate
company taxable income (loss)" shall be determined as
if the Subsidiary was filing a separate tax return,
and the term will not have the same meaning as
described in Regulation Section 1.1502-12.
2. Any dividends received by one corporation in the
Consolidated Group from another corporation in the
Consolidated Group will be assumed to qualify for the
100% dividend received deduction of Section 243 and
shall be eliminated from such computation in
accordance with Regulation Section 1.1502-14(a)(1).
3. Gain or loss on intercompany transactions, whether
deferred or not shall be treated by the Subsidiary in
the manner required by Regulation Section 1.1502-13
(so that the Subsidiary reports the gain or loss on
intercompany transactions consistent with the
treatment accorded such transactions on the
Consolidated Group's consolidated Federal income tax
return).
4. Certain limitations, as provided in the Code,
regarding the calculation or utilization of a
deduction, the utilization of credits and the
computation of separate company tax liability of the
Subsidiary shall be made on a consolidated basis.
a. The limitation on charitable contribution
deductions as provided in Code Section
170(b)(2), shall be computed in accordance
with Regulation Section 1.1502-24.
b. The limitation on the utilization of foreign
tax credits, as provided in Code Section
904(a), shall be computed in accordance with
Regulation Section 1.1502-4.
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c. The limitation on the utilization of jobs
tax credits and other general business
credits, as provided in Code Section
38(c)(1), shall be computed on a
consolidated basis.
d. The computation of the limitation on capital
losses, as provided in Code Section 1211(a),
shall be computed in accordance with
Regulation Section 1.1502-22.
e. The computation of Code Section 1231 gain or
loss shall be made in accordance with
Regulation Section 1.1502-23.
f. The computation and utilization of any net
operating loss deduction, as provided in
Code Section 172(b)(2) shall be computed in
accordance with Regulation Section
1.1502-21.
g. The utilization and limitation of certain
built-in deductions, as provided in
Regulation Section 1.1502-15, as computed in
accordance with such section.
h. The computation of the dividend received
deduction with respect to dividends received
from outside the Group, as provided in Code
Sections 243 through 247 shall be computed
in accordance with Regulation Section
1.1502-26.
i. With respect to similar limitations not
specifically mentioned herein, they shall be
applied on a consolidated basis.
5. Deductions and credits which can be partially
utilized as a result of applying such consolidated
limitations shall be allocated and apportioned among
the Subsidiaries and the other members of the
Consolidated Group based upon the proportion of each
such deductions and credits of such corporation to
the aggregate amount of each such deductions and
credits.
6. Notwithstanding Regulation Section 1.1502-17, Parent
may direct a subsidiary to apply, with the
commissioner of the Internal Revenue Service, under
Code Section 446(e), for a change in the method of
accounting for such corporation on an overall basis
or for any material item.
7. Notwithstanding Regulation Section 1.1502-17, Parent
must consent to any change in method of accounting by
a Subsidiary on an overall basis or for any material
item. If a method of accounting has not been
established by Subsidiary, Parent must consent to the
selection of an accounting method by such
corporation.
8. Notwithstanding Regulation Section 1.1502-17, Parent
must direct and must authorize any election which a
Subsidiary may make under the Code or Treasury
Regulations which may affect the Consolidated Group's
taxable position. This authorization includes, but is
not limited to, Section 453 (installment
obligations), Section 248 (organizational
expenditures) and Section 1033 (involuntary
conversions).
9. The amounts in each taxable income bracket in the tax
table in Code Section 11(b) shall be allocated in any
given year to the members of the Consolidated Group
as Parent shall elect.
10. The $25,000 direct offset to tax liability provided
for in Code Section 38(c)(1)(B) shall be allocated in
any given year to those members of the Consolidated
Group as Parent shall elect.
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11. In calculating any carryback or carryover of net
operating losses, adjustments shall be made to such
prior or subsequent years' separate company taxable
income and tax as determined under Code Section
172(b)(1). For purposes of such adjustments, any
election under Code Section 172(b)(3) to forego a
loss carryback shall be made by the Parent.
C. The AMT will be determined on a consolidated basis by the
Parent. The AMT will be allocated to Subsidiary based upon the
Subsidiary's portion of tax preferences, adjustments, and
other items causing the AMT to be applicable at the
consolidated level, as follows:
Excess of AMT Portion of Tax Preferences Excess of AMT Over
and Adjustments Regular Tax Allocated to
Over Regular Tax X Attributable to Subsidiary = Subsidiary
__________________________
Total of Tax Preferences
and Adjustments for Parent
and Subsidiaries
The "Excess of AMT Over Regular Tax Allocated" to a Subsidiary
shall be added to such Subsidiary's separate return tax
liability determined in paragraphs A and B above. The AMT
allocated to a Subsidiary for any tax year shall not exceed
the excess of Federal AMT allocable to Parent, nor shall such
allocation be less than zero.
D. In determining the portion of tax preferences attributable to
a Subsidiary, the portion of the consolidated adjustment for
adjusted current earnings of Code Section 56(c)(1), if any,
allocable to the Subsidiary shall be an amount equal to the
lesser of (1) the adjustment for adjusted current earnings
computed for such Subsidiary, or (2) the consolidated
adjustment for adjusted current earnings.
If a consolidated AMT credit carryforward is generated and
utilized for any year, the credit shall be allocated to a
Subsidiary based upon the proportion of excess AMT over
regular tax allocated to such Subsidiary in the year(s) in
which the credit arose. The amount of Federal alternative
minimum tax credit allocated to Subsidiary shall not exceed
the consolidated AMT credit.
III. Liability for Tax Payments - Federal.
A. If a Subsidiary would be subject to Federal income tax
liability resulting from the calculation required by Paragraph
II above, such Subsidiary shall pay such liability to Parent.
B. If a Subsidiary would be entitled to a refund of Federal
income tax resulting from the calculation required by
Paragraph II, above, such Subsidiary shall receive such refund
from Parent. However, any such refund is subject to the
limitations included in Subparagraph B of Paragraph II.
C. Neither Parent nor any Subsidiary shall pay or credit any
amount to the other hereunder even though the Federal income
tax liability of the Consolidated Group may have been
increased or reduced by reason of the inclusion of the Parent
or the Subsidiaries in the filing of a consolidated income tax
return.
D. Each Subsidiary agrees to Parent's appointment as the agent
for and to act in its own name in all matters relating to the
corporation Federal income tax liability, including payment of
such
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liability, for any year in which it elects or is required to
file a consolidated Federal 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 Internal Revenue Service as
provided in Regulation Section 1.1502-5 with respect to Federal income
taxes.
V. Adjustment of Tax Liability.
In the event of any adjustment of the tax liability as to the
consolidated Federal 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
IRS, 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 manual
agreement of the parties, this Agreement shall remain in effect with
respect to all taxable years for which consolidated Federal income tax
returns are filed by the Consolidated Group and such Subsidiary is
included as a member of the Consolidated Group.
VIII. Earnings and Profits Adjustment.
This Agreement is not intended to establish the method by which the
earnings and profits of each member of the Consolidated 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 subject matter hereof. 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.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized officer, and the amendment and restatement of
the Original Agreement is effective as of November 30, 2000.
RIGHTCHOICE MANAGED CARE, INC. HEALTHY ALLIANCE LIFE INSURANCE COMPANY
By: /s/ Xxxx X. X'Xxxxxx By: /s/ Xxxx X. X'Xxxxxx
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Xxxx X. X'Xxxxxx Xxxx X. X'Xxxxxx
President and Chief Executive Officer President and Chairman
DIVERSIFIED LIFE INSURANCE AGENCY OF HMO MISSOURI, INC.
MISSOURI, INC.
By: /s/ Xxxx X. X'Xxxxxx By: /s/ Xxxx X. X'Xxxxxx
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Xxxx X. X'Xxxxxx Xxxx X. X'Xxxxxx
Chairman President and Chairman
HEALTHLINK, INC. HEALTHLINK HMO, INC.
By: /s/ Xxxx X. X'Xxxxxx By: /s/ Xxxx X. X'Xxxxxx
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Xxxx X. X'Xxxxxx Xxxx X. X'Xxxxxx
Chairman Chairman
RIGHTCHOICE INSURANCE COMPANY PREFERRED HEALTH PLANS OF MISSOURI, INC.
By: /s/ Xxxx X. X'Xxxxxx By: /s/ Xxxx X. X'Xxxxxx
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Xxxx X. X'Xxxxxx Xxxx X. X'Xxxxxx
President and Chairman Chairman
FORTY-FOUR FORTY-FOUR FOREST PARK R & P REALTY, INC.
REDEVELOPMENT CORPORATION
By: /s/ Xxxx X. X'Xxxxxx By: /s/ Xxxx X. X'Xxxxxx
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Xxxx X. X'Xxxxxx Xxxx X. X'Xxxxxx
President President
C & S PROPERTIES, INC.
By: /s/ Xxxx X. X'Xxxxxx
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Xxxx X. X'Xxxxxx
President
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