FAIRFAX INC. and ODYSSEY RE
HOLDINGS CORP.
INTER-COMPANY TAX ALLOCATION AGREEMENT
WHEREAS, Fairfax
Inc., a Wyoming corporation (“Parent”) and Odyssey Re
Holdings Corp., a Delaware Corporation (“ORH”), became
members of an affiliated tax group filing consolidated tax returns
on March 4, 2003;
WHEREAS, ORH
automatically became a member of the TIG Holdings, Inc.,
Inter-Company Tax Allocation Agreement effective January 1,
2000 (the “2000 Agreement”) on March 4,
2003;
WHEREAS, TIG
Holdings, Inc and ORH desire to remove ORH from the 2000 Agreement
and Parent and ORH desire to enter into an Inter-Company Tax
Allocation Agreement effective March 4, 2003;
NOW, THEREFORE,
the parties agree as follows:
The purpose of
this agreement (the “Agreement”) is to determine the
amount of federal and (where applicable) state income tax allocated
ORH and the amount ORH will pay to or receive from Parent. This
Agreement is between Parent and ORH. Parent and ORH are sometimes
hereafter collectively referred to as the
“Group”.
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1.
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ORH
and Parent are affiliated corporations and have elected to file a
consolidated federal income tax return pursuant to the provisions
of Section 1502, et seq., the Internal Revenue Code of 1986,
as amended, (the “Code”).
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1
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2.
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ORH
shall compute and pay to the Parent its federal income tax
liability as if computed on a separate return. ORH shall have first
use of all of its current operating losses and credits.
Additionally, Parent shall reimburse ORH for any net operating
losses (NOL’s) that can be utilized by ORH Subsidiaries
reflected in Schedule 1. To the extent ORH NOL’s can be
utilized by ORH subsidiaries, such NOL’s are deemed utilized
by ORH in the same tax year. The calculation of the separate
federal income tax liability of ORH shall be made pursuant to the
Code and its regulations, as well as applicable cases, rulings,
etc., and shall be determined by utilizing the maximum applicable
corporate income tax rate.
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3.
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ORH
shall pay such separate return tax liability to the Parent by no
later than the applicable due date or dates that such payments
would have been required by the Internal Revenue Service if ORH had
filed a separate return, or as soon thereafter as
possible.
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4.
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If
ORH would not have to pay any federal income tax or would have a
claim for refund of federal income taxes, the Parent will pay to
ORH an amount equal to the refund ORH would have been entitled to
obtain from the Internal Revenue Service. The Parent shall make the
payment to ORH by no later than the applicable due date or dates
that payment would have been made by the Internal Revenue Service
if ORH had filed a timely claim for refund, or as soon thereafter
as possible.
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5.
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In
the event that ORH or the Parent is required or has elected to file
a unitary or combined state income tax return, which may include
other affiliate companies,
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2
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the
Parent will compute, report, and pay the state income tax liability
in accordance with the applicable state laws and regulations and
will file the required annual return. Within thirty (30) days
from the filing of any combined state income tax return the Parent
will calculate and assess ORH’s share of the combined state
income tax liability based on (i) the methodology required or
established by state income tax law
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