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EXHIBIT 10.30
CONSOLIDATED FEDERAL INCOME TAX
ALLOCATION AGREEMENT
WHEREAS, Millers Mutual Fire Insurance Company of Texas (Mutual) and
all its includible subsidiaries (Subsidiary Companies), as defined in IRC
Section 1504, intend to file a Consolidated Income Tax Return (the
"Consolidated Return").
NOW, THEREFORE, it is agreed as follows:
1. Effective Period of Consolidation.
The election to allocate the Consolidated Tax Liability under IRC
Section 1552 shall be effective as of January 1, 1994 through December
31, 1994 and for subsequent years as determined by Mutual.
2. Allocation of Consolidated Taxable Income or Loss.
A consolidated Federal Income Tax Return will be filed for Mutual and
all includible subsidiaries. The taxable income or loss for each
subsidiary company will be computed and calculated in accordance with
the Internal Revenue Code, as though that company were filing a
separate return. The amount of taxable income or loss for each company
will then be used in computing such company's portion of the current
tax liability or benefit.
3. Determination of Current Tax Liability or Benefit.
(a) Each subsidiary company will compute its current estimated tax
liability or benefit based upon the company's taxable income
or loss. These tax calculations will be determined as if the
company has filed a separate tax return and was not part of a
consolidated group. Each company will be liable for the tax
liability computed under this method or will be entitled to
receive a benefit for its loss utilized in the Consolidated
Return. Any taxable loss not utilized in the current or prior
years tax returns will be carried forward by such company. The
benefit will be recognized by the company when the
carryforward is
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ALLOCATION AGREEMENT
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utilized in a subsequent taxable year.
(b) Pursuant to IRC Regulations Section 1.1552-1(c), Mutual as the
common parent has elected to allocate the tax liability of the
group in the manner provided by IRC Regulations Section
1.1552-1(a)(2).
Further pursuant to IRC Regulations Section 1.1502-33(d)(3),
Mutual has elected to allocate the Federal income tax
liability of the group beginning with the taxable year ending
December 31, 1994 in the manner provided by Regulations
Section 1.1502-33(d)(2)(ii) in conjunction with the method
described in Regulation Section 1.1552-1(a)(2). In reference
to Regulation Section 1.1502-33(d)(2)(ii), the percentage of
the excess provided in Regulations Section
1.1502-33(d)(2)(ii)(b) and (c) to be allocated to each member
is 100%.
4. Payment of Current Tax Liabilities or Refunds.
Final calculations will be made and the Subsidiary Companies
will remit any adjusted tax liabilities to Mutual within 30
days after the filing of the Consolidated Tax Return. Mutual
will remit any refunds and/or benefits simultaneously to the
appropriate Subsidiary Company.
5. Representations and Agreements.
(e) Within 90 days after filing the Consolidated Return
or any amendment thereto, an additional review and
adjustment (where necessary) will be made to insure
that;
1. The allocated tax liability for the companies
will not be greater than the tax liability
they would have incurred if they had been
filing separate returns for all years of the
consolidated period; and
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ALLOCATION AGREEMENT
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2. The allocated tax refund for the companies
will not be less than the tax refund they
would have incurred if they had been filing
separate returns for all years of the
consolidation period.
(b) Mutual further represents that the companies will be
adequately indemnified by their affiliates in the
event the Internal Revenue Service levies taxes in
excess of the amount specified in 5(a) above.
(c) Records of the tax allocations, the subsequent review
of such allocations, and any adjustments specified by
5(a) above will be maintained at the office of
Mutual.
6. Acquisition or Formation of Subsidiaries
Any subsidiaries acquired, formed, or to be acquired or formed
in the future shall become parties to this tax sharing
agreement when such subsidiaries become members of the
consolidated group for federal income tax purposes.
MILLERS MUTUAL FIRE INSURANCE COMPANY
BY: /s/ F. XXXXXX XXXXXX, III
---------------------------------
MILLERS CASUALTY INSURANCE COMPANY
BY: /s/ F. XXXXXX XXXXXX, III
---------------------------------
MILLERS LIFE INSURANCE COMPANY
BY: /s/ F. XXXXXX XXXXXX, III
---------------------------------
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ADDENDUM TO CONSOLIDATED FEDERAL INCOME
TAX ALLOCATION AGREEMENT
WHEREAS, The Millers Mutual Fire Insurance Company, The Millers
Casualty Insurance Company, and The Millers Life Insurance Company entered into
that certain Consolidated Federal Income Tax Allocation Agreement to be
effective January 1, 1994 (the "Agreement");
WHEREAS, subsequent to the effective date of the Agreement, two other
Subsidiary Companies of The Millers Mutual Fire Insurance Company were formed;
and
WHEREAS, the two new Subsidiary Companies, Millers Holding Corporation
and Millers Integrated Claims Resources, Inc., have agreed to abide by and be
bound by the terms of the Agreement.
NOW, THEREFORE, Millers Holding Corporation and Millers Integrated
Claims Resources, Inc. agree to execute this Addendum indicating their
agreement to the terms and conditions set forth therein.
Executed to be effective the 30th day of September, 1995.
Millers Holding Corporation Millers Integrated Claims
Resources, Inc.
By: /s/ F. XXXXXX XXXXXX, III By: /s/ XXX X. XXXXXX
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ADDENDUM NO. 2 TO CONSOLIDATED FEDERAL INCOME
TAX ALLOCATION AGREEMENT
This Addendum No. 2 to Consolidated Federal Income Tax Allocation
Agreement (this "Addendum No. 2") is made and entered into this 15th day of
August, 1997.
WHEREAS, The Millers Mutual Fire Insurance Company ("Mutual") and all
of its includible subsidiaries ("the Subsidiary Companies"), within the meaning
of Section 1504 of the Internal Revenue Code of 1986, as amended, constitute a
consolidated group (the "Group") for federal income tax purposes and file a
Consolidated Income Tax Return (the "Consolidated Return"); and
WHEREAS, Mutual and the Subsidiary Companies entered into that certain
Consolidated Federal Income Tax Allocation Agreement (the "Allocation
Agreement") effective as of January 1, 1994; and
WHEREAS, subsequent to the effective date of the Allocation Agreement,
two new Subsidiary Companies, Millers Holding Corporation and Millers
Integrated Claims Resources, Inc., were formed, and agreed to abide by and be
bound by the terms of the Allocation Agreement, and evidenced such agreement by
executing that certain Addendum to Consolidated Federal Income Tax Allocation
Agreement effective as of the 20th day of September, 1995; and
WHEREAS, Millers Integrated Claims Resources, Inc., subsequently
changed its name to MiliRisk, Inc., and MiliRisk, Inc. later changed its name
to INSpire Insurance Solutions, Inc. ("INSpire");
WHEREAS, subsequent to the effective date of the Allocation Agreement,
INSpire acquired Strategic Data Systems, Inc., a Wisconsin corporation ("SDS"),
which in turn wholly owned Applied Quoting Systems, Inc., a Wisconsin
corporation ("AQS") and the parties desire that SDS and AQS become parties to
the Allocation Agreement; and
WHEREAS, subsequent to the acquisition of SDS by INSpire, SDS was
merged with and into INSpire; and
WHEREAS, subsequent to the effective date of the Allocation Agreement,
Millers Holding Corporation acquired two additional Subsidiary Companies, The
Millers Direct Insurance Company (f/k/a Amtex Insurance Company) ("Millers
Direct") and Lutheran Benevolent Insurance Exchange ("LBIE") and the parties
desire that Millers Direct and LBIE become parties to the Allocation Agreement;
and
WHEREAS, an amount of stock of INSpire will be issued in an initial
public offering ("IPO") which will cause INSpire to be ineligible to continue
to be included in the Consolidated Return; and
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WHEREAS, INSpire has entered into a letter of intent contemplating the
sale of AQS to a third party purchaser which if consummated will cause AQS to
be ineligible to continue to be included in the Consolidated Return; and
WHEREAS, INSpire and AQS are hereby collectively referred to as the
"Withdrawing Members" or individually as a "Withdrawing Member"; and
WHEREAS, the parties desire to terminate the Allocation Agreement as
to the Withdrawing Members.
NOW, THEREFORE, in consideration of the mutual covenants and promises
contained herein, the parties hereto agree as follows:
1. Effective as of March 12, 1997, INSpire and AQS agree to abide by
and be bound by the terms of the Allocation Agreement.
2. Effective as of March 24, 1997, Millers Direct agrees to abide by
and be bound by the terms of the Allocation Agreement.
3. Effective as of Xxxxx 00, 0000, XXXX agrees to abide by and be
bound by the terms of the Allocation Agreement.
4. The Allocation Agreement shall be terminated as to INSpire as of
the effective date of the IPO, but will continue in full force and
effect with respect to the other parties to the Allocation Agreement.
5. The Allocation Agreement shall be terminated as to AQS as of the
earlier to occur of the effective date of the IPO or the effective
date of the sale of AQS.
6. Notwithstanding such termination as to a Withdrawing Member, the
Allocation Agreement shall continue in effect with respect to all
parties to the Allocation Agreement, including such Withdrawing
Member, with respect to any payments or refunds due or any other
obligations relating to taxable periods prior to termination. All
parties, including the Withdrawing Members, agree that Mutual shall
represent the Group in any income tax proceeding, audit, or other
matter relating to a taxable period for which a Consolidated Return
has been filed by the Group and may bind the Group with respect to
items in that year. Notwithstanding the foregoing sentence, Mutual
agrees to notify a Withdrawing Member of any material adjustment
proposed by the Internal Revenue Service that either would give rise
to any obligation of such Withdrawing Member to Mutual and to contest
at such Withdrawing Member's request, expense and direction, through
counsel reasonably satisfactory to such Withdrawing Member, any such
proposed adjustment until final judgment by the highest court having
jurisdiction thereof. In the event of any adjustment to the
Consolidated Returns as filed (by reason of an amended return, claim
for refund, settlement of an Internal Revenue Service or judicial
action), the respective obligations of the parties hereunder shall be
redetermined to give effect to any such adjustment in accordance with
the Allocation Agreement as if it had been made a part of the original
computations thereunder, and any additional accounting entries,
payments or reimbursements between the parties as may be required on
account thereof shall be made
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promptly, in the case of an uncontested adjustment, after agreement
thereon is reached, or, in the case of a contested adjustment after a
final determination of the contest. If any interest or penalty is to
be paid or received as a result of a tax deficiency or refund, such
interest or penalty shall be allocated to the parties in the ratio
each corporation's change in taxable income bears to the total change
in taxable income.
7. This Addendum No. 2 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 Addendum No. 2.
8. Notwithstanding any other provision hereof, this Addendum No. 2
shall not become effective and binding on the parties hereto until
this Addendum No. 2 is filed with and approved by the Texas Department
of Insurance as may be required under applicable insurance holding
company laws and regulations.
IN WITNESS WHEREOF, the parties hereto have caused this Addendum No. 2
to be executed by their duly authorized representatives.
The Millers Mutual Fire Insurance Company INSpire Insurance Solutions, Inc.
By: /s/ XXX X. XXXXXX By: F. XXXXXX XXXXXX, III
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The Millers Casualty Insurance Company Applied Quoting Systems, Inc.
By: /s/ XXX X. XXXXXX By: F. XXXXXX XXXXXX, III
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Millers Holding Corporation
By: /s/ F. XXXXXX XXXXXX, III
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The Millers Direct Insurance Company
By: /s/ XXX X. XXXXXX
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Lutheran Benevolent Insurance Exchange
By: /s/ XXX X. XXXXXX
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