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EXHIBIT 10.24
TAX ALLOCATION AGREEMENT
This TAX ALLOCATION AGREEMENT (Agreement),
made and entered into as of October
15, 2003 and effective February 13, 2003 by
and among Infinity Property and
Casualty Corporation ("Parent") and each
one of those companies set forth herein
on Exhibit A attached hereto and
incorporated herein by this reference
(hereinafter collectively referred to as
"Subsidiaries").
Parent and Subsidiaries are members of an
affiliated group of corporations (the
"AFFILIATED GROUP") within the meaning of
section 1504(a) of the Internal
Revenue Code of 1986, as amended (the
"CODE"). The Affiliated Group includes
Parent and Subsidiaries (individually, a
"MEMBER" and collectively, the
"MEMBERS"). Pursuant to section 1501 of the
Code and Regulations thereunder,
Members will elect to file a U.S.
consolidated income tax return for the taxable
year beginning February 13, 2003 and ended
December 31, 2003, and for each
subsequent taxable period in respect of
which this Agreement is in effect and
for which the Affiliated Group is required
or permitted to file a consolidated
tax return. 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. The Members deem it
appropriate to define the method by which the
Federal income tax liability of the
affiliated group shall be allocated among
them and the manner in which such allocated
tax liability shall be paid.
NOW, THEREFORE, in consideration of the
promises and mutual covenants
hereinafter set forth and intending to be
legally bound, the parties hereto
agree as follows:
1.
Definitions: The following terms as used in this Agreement shall
have
the meanings set forth below:
(a) "ALLOCATED
TAX LIABILITY", in respect of a Member, shall mean
the amount (whether positive or negative) of tax (net all
credits)
allocated to such Member pursuant to paragraph 2
hereof.
(b)
"CONSOLIDATED RETURN" shall mean a consolidated Federal income
tax return filed by the Affiliated Group pursuant to section
1501 of the Code.
(c)
"CONSOLIDATED TAX LIABILITY" shall mean the Federal income tax
liability as determined pursuant to Reg. section 1.1502-2 of
the Affiliated Group for any taxable year for which a
Consolidated Return is filed.
(d) "IRS"
shall mean the Internal Revenue Service.
(e)
"REGULATIONS" OR "REG." shall mean the Income Tax Regulations
promulgated under the Code and as in effect from time to time.
(f)
"REASONABLE PERIOD OF TIME" shall mean a period of time not
exceeding 60 days in duration.
(g)
"SUBSIDIARIES" shall mean all of the Members other than the
Parent.
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Tax Allocation Agreement
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2.
Allocation of Consolidated Tax Liability.
(a) Parent and
Subsidiaries agree that the consolidated tax
liability for each year, determined in accordance with Income
Tax Regulation ("Regulation") 1.1502-2, shall be apportioned
among them in accordance with the provisions of Regulation
1.1502-33(d)(3) in conjunction with the method described in
Regulation 1.1552-1(a)(2) and allocated pursuant to the
following:
(i)
Consolidated Tax Liability is determined and
allocated to Members with positive tax liabilities.
Consolidated Tax Liability is allocated in the ratio
of the Member's separate tax liability to the total
separate return tax liability of all Members with
positive tax liabilities.
(ii)
An additional amount is allocated to each Member in
2(a)(i) equal to 100% of the excess of the Member's
separate return tax liability for the year over the
amount allocated to the Member under 2(a)(i) above.
(iii) The
total of the amounts allocated under 2(a)(ii)
above is credited to Members who incurred net
operating losses or credits which were not utilizable
by such Member on a separate return basis but were
available to the Members with taxable income. Amounts
credited under this subparagraph shall be allocated
in a manner that reasonably reflects the absorption
of the Member's tax attributes.
3.
Payments. Each subsidiary shall pay to the Parent amounts
allocated
pursuant to paragraph 2(a)(i) and 2(a)(ii) above. Payments under
this
paragraph shall be made within a Reasonable Period of Time
after
receiving request for payment from Parent.
(a) The Parent
shall pay to each Subsidiary with excess tax
credits or losses during the taxable year the amounts
allocated pursuant to paragraph 2(a)(iii) above to the extent
actually used in the Consolidated Return. Payments under this
paragraph shall be made within a Reasonable Period of Time
after the date of filing the Consolidated Return for such
taxable year. Once the Subsidiary has been paid for its
credits or losses, it cannot use such credits or losses in
calculating its separate return tax liability under paragraph
2 above. Any of the Subsidiary's credits or losses which are
not used in the Consolidated Return and for which it has not
been paid shall be retained by the Subsidiary for possible
future use.
(b) Payment of
the Consolidated Tax Liability for a taxable period
shall include the payment of estimated tax due on or before
the required installment due dates for such taxable year
(Estimated Tax Installment). Parent shall or shall cause the
Members to estimate the Consolidated Tax Liability (or, if
applicable, the alternative minimum tax which may be imposed
on the Affiliated Group) and each Member's Allocated Tax
Liability for purposes of each Estimated Tax Installment. Each
Subsidiary shall pay
to the Parent its share of the Estimated
Tax Installments within a Reasonable Period of Time after
receiving request for payment from Parent and after taking
into consideration Estimated Tax Installments previously made
for the taxable year. Any overpayment of the Estimated Tax
Installment will be refunded to the Subsidiary within a
Reasonable Period of Time after the installment due date for
such taxable year.
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Tax Allocation Agreement
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(c) Payment of
the Consolidated Tax Liability for a taxable period
shall include the extension request payment due under the
Code. Parent shall or shall cause the Members to estimate the
Consolidated Tax Liability (or, if applicable, the alternative
minimum tax which may be imposed on the Affiliated Group) and
each
Member's Allocated Tax Liability for purposes of an
extension of time for filing the Consolidated Return
(Consolidated Return Extension). Within a Reasonable Period of
Time after receiving request for payment from Parent of the
Consolidated Return Extension, each of the Subsidiaries shall
pay to the Parent or the Parent shall pay to each of the
Subsidiaries, as the case may be, the difference (if any)
between the sum of such Subsidiary's Allocated Tax Liability
as calculated for the Consolidated Return Extension request
and all Estimated Tax Installments thereof previously paid by
or to such Subsidiary.
(d) Within a
Reasonable Period of Time after receiving request for
payment from Parent of the tax due for the Consolidated
Return, each of the Subsidiaries shall pay to the Parent or
the Parent shall pay to each of the Subsidiaries, as the case
may be, the difference (if any) between such Subsidiary's
actual Allocated Tax Liability and all Estimated Tax
Installments and the Consolidated Return Extension amounts
previously paid by or to such Subsidiary for such taxable
year.
(e) Parent
shall have the responsibility and authority to make or
cause to be made all Estimated Tax Installments, Consolidated
Return Extension and Consolidated Return deposits of the
Consolidated Tax Liability or alternative minimum tax, as the
case may be, and shall collect all refunds thereof.
4.
Alternative Minimum Tax. The provisions of paragraphs 2 and 3 shall
not
apply to any consolidated alternative minimum tax ("AMT")
liability
determined in accordance with Code Section 55.
(a) The Parent
and Subsidiaries agree that any AMT incurred on a
consolidated basis by the Affiliated Group shall be allocated
among the Members of the Affiliated Group. The consolidated
liability for AMT shall be individually allocated to each
member in the proportion that each Member's separate AMT tax
liability for such tax has to the total of all
