Exhibit 10.01
SECOND AMENDED AND
RESTATED
TAX ALLOCATION
AGREEMENT
THIS AGREEMENT originally entered
into as of January 1, 1987 and amended January 1, 1990 and restated
as of January 1, 2002, and hereby further amended and restated as
of March 11th, 2004, between MBIA Inc., a Connecticut company,
(“P”), and MBIA Insurance Corporation, a New York stock
insurance company (“Corp”), and all Subsidiaries of P
that are signatories to this agreement
(“Subsidiaries”).
W I T N E S S E T
H:
WHEREAS, P is the common parent and
Corp is a member of an affiliated group of corporations (the
“Group”) as defined in section 1504(a) of the U.S.
Internal Revenue Code of 1986, as amended (“Code”);
and
WHEREAS, the Group has, since
January 1, 1987, filed and intends to continue to file consolidated
federal income tax returns under section 1501 of the Code so that
the tax liability of the Group is determined under section 1502 of
the Code and the Regulations thereunder by consolidating the
income, expenses, gains, losses and credits of all of the members
of the Group; and
WHEREAS, Corp is and has been a
member of the Group at all times since January 1, 1987;
WHEREAS, P and Corp, on behalf of
itself and their present and future Subsidiaries, wish to amend and
restate this Agreement as it applies to tax years beginning on or
after January 1, 2002 so as to set forth their understanding as to
certain matters pertaining to their federal income tax liabilities
for such periods, in a manner consistent with the requirements of
New York State Insurance Department Circular Letter No. 33
(December 20, 1979);
NOW, THEREFORE, P, Corp, and all
Subsidiaries agree as follows:
1. Definitions. For purposes of this
Agreement:
(i) “Group” means P,
Corp and all other corporations, which P is eligible at any time to
include in a consolidated federal income tax return with P as the
common parent corporation.
(ii) “Consolidated Return
Year” means any taxable year or period for which P or any one
or more subsidiaries of P owns an amount of Corp’s
outstanding stock which meets the requirements of section
1504(a)(1) of the Code.
(iii) “Return Date”
means each date upon which the Group shall file its federal income
tax return.
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(iv) “IRS” means the
United States Internal Revenue Service.
(v) “Regulations” mean
the regulations issued by the Secretary of the Treasury
interpreting the Code.
(vi) “Subsidiary” means
any corporation, which would be eligible for inclusion in a
consolidated income tax return with P as the common parent and
which is a signatory hereto.
(vii) “Credits” shall
have the meaning set forth in Section 5(b) below.
2. Consent to File Consolidated Returns.
P and Corp hereby consent to the filing of consolidated federal
income tax returns by the Group for each Consolidated Return Year
and each Subsidiary agrees to furnish all information and to
execute all elections and other documents which may be necessary or
appropriate to evidence such consent or to enable P to prepare and
file such returns.
3. Determination of Stand-Alone Tax
Liability. Promptly after the close of each Consolidated Return
Year, Corp shall prepare and furnish to P a computation of the
separate federal income tax liability (“Separate
Return”) of Corp. and each Subsidiary, computed as described
below. Such Separate Return shall be prepared as if Corp and each
Subsidiary had filed separate tax returns for all Consolidated
Return Years, subject to the following modifications:
(1) all tax elections shall be
consistent with the elections of the Group for such
year;
(2) for any Consolidated Return
Year, the Separate Return of Corp and each Subsidiary, shall be
computed by applying the rules set forth in section 1.1502-12 of
the Regulations, except that capital gains and losses, and gains
and losses subject to section 1231 (in each case other than gains
and losses from deferred intercompany transactions within the
meaning of section 1.1502-13 of the Regulations), net operating
loss deductions, and charitable contributions shall be taken into
account as if Corp and each Subsidiary, if any, had filed on a
separate return basis for each Consolidated Return Year;
(3) the Separate Return of Corp and
each Subsidiary will be computed without regard to any
carryforwards of Credits for which P has paid Corp or any
Subsidiary pursuant to Section 5(b).
4. (a) Tax Payments From Corp to P. For
each Consolidated Return Year, Corp shall pay to P an amount equal
to the lesser of (x) the federal income tax liability of the Group
as reported on the consolidated federal income tax return of the
Group for such year or (y) the aggregate amount shown as due on the
Separate Returns of Corp and each Subsidiary prepared pursuant to
Section 3 above for such year, in either case reduced by the amount
of any payment with respect to estimated federal income taxes paid
by Corp to P for such year pursuant to Section 4(c)
below.
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(b) Tax Payments From each
Subsidiary to Corp. For each tax year, each Subsidiary shall
pay to Corp an amount equal to the federal income taxes shown as
due on the Separate Return of such subsidiary prepared pursuant to
Section 3 above. Such payments shall be made each year within
thirty (30) days following the filing of the consolidated federal
income tax return of the Group. P will include a schedule listing
all of the members of the Group and further agrees to revise this
schedule as changes occur to the members of the Group. All
settlements made to MBIA Insurance Corp. of Illinois shall be in
cash or securities eligible as investments pursuant to Section
125.1a through 125.14a of the Illinois Insurance Code [215 ILCS
5/125a through 125.14a] for such insurer, at market
value.
(c) Payments of Estimated
Taxes. For each tax period beginning on or after January 1,
2002, on each date, as determined under section 6655 of the Code
(or any successor provision then in effect), for payment of an
installment of estimated federal income taxes: (i) Corp shall pay
to P an amount equal to the lesser of (x) the installment which P
is required to pay to the IRS on such date as an estimated payment
of federal income taxes for the Group or (y) the aggregate amount
of the installments which Corp and each Subsidiary would have been
required to pay to the IRS as estimated payments of federal income
taxes on such date if Corp and each Subsidiary were filing a
separate federal income tax return for such tax period or portion
thereof. For purposes of determining the amount of estimated tax
that would be due on a separate return basis, the provisions of
Section 3 shall apply. If, for any Consolidated Return Year tax
year, (1) the total amount of all installments of estimated taxes
which are paid by Corp to P pursuant to this Section 4(c) with
respect to such year exceeds (2) the amount which Corp is required
to pay to P pursuant to Section 4(a) above with respect to such
year, as computed without regard to any reduction for payments of
estimated federal income taxes pursuant to this Section 4(c), the
amount of such excess shall be paid by P to Corp within forty-five
days of receipt of any federal income taxes refunded.
(d) No payment shall be made by Corp
to P pursuant to Section 4(a) above for any year in an amount which
exceeds the federal income tax liability of the Group as reported
on the consolidated federal income tax return of Group for such
year unless an escrow account shall have been established in a
manner consistent with the requirements of New York State Insurance
Department Circular Letter No. 33 (December 20, 1979). To the
extent, if any, that the amounts paid by Corp to P in any year with
respect to federal income taxes for such year exceed the amounts
which P is actually required to pay to the IRS with respect to the
federal income tax liability of the Group for such year, such
excess will be deposited in the escrow account maintained pursuant
to the preceding sentence. Any amount so deposited will be released
from such escrow account to P (a) to the extent necessary to fund
any amounts payable by P to Corp pursuant to Section 5, or (b) to
the extent not previously released pursuant to clause (a) of this
sentence, on or after the date which is the third anniversary of
the due date for the filing of the federal income tax return of the
Group (determined without regard to extensions) for the year with
respect to which each amount deposited was paid by Corp to
P.
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5. Determination of Credits and
Refund.
(a) If, for any Consolidated Return
Year, (x) the federal income tax liability of the Group shown as
due on the consolidated federal income tax return filed with
respect to the Group for such year equals or exceeds the aggregate
amount shown as due on the Separate Returns of Corp and each
Subsidiary prepared pursuant to Section 3 above for such year and
(y) the federal income tax liability shown as due on such
consolidated return is reduced solely as a result of the use by the
Group of any foreign tax credits, general business credits, losses
or loss carryovers (collectively “Credits”) which were
generated by Corp or any Subsidiary but which did not reduce the
separate tax liability reflected on the Separate Return prepared by
Cor
