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EXHIBIT 10.(h)
TAX SHARING AGREEMENT
THIS AGREEMENT is entered into by and
between ING AMERICA INSURANCE HOLDINGS,
INC. ("ING") and each of its undersigned
subsidiaries (the "Subsidiaries", or in
the singular "Subsidiary").
WITNESSETH:
WHEREAS, ING and/or some or all of the
Subsidiaries may join in the filing of a
state or local tax return on a
consolidated, combined or unitary basis; and
WHEREAS, it is desirable for the
Subsidiaries and ING to enter into this Tax
Sharing Agreement ("Agreement") to provide
for the manner of computation of the
amounts and timing of payments among them,
and various related matters;
NOW, THEREFORE, in consideration of the
agreements contained herein and of other
good and valuable consideration, the
receipt and sufficiency of which are hereby
acknowledged, the parties hereby agree as
follows:
1. APPLICABILITY
The parties
intend that the provisions of this Agreement shall apply to
situations in
which a state or local franchise, income tax or other tax
return based on,
or measured by, net income ("state or local income tax
return") is
filed on behalf of more than one party to this Agreement on a
consolidated,
combined, or unitary basis (each company participating in
such a return is
referred to herein as a "Group Member"). ING is hereby
authorized to
determine, in its sole discretion, whether any of the
Subsidiaries
will be included in the filing of a consolidated, combined, or
unitary state or
local income tax return, or whether any Subsidiary will
file a separate,
stand-alone state or local income tax return, in states
where the choice
is available.
2. ALLOCATION OF LIABILITY
For each taxable
year during which a consolidated, combined or unitary
state or local
income tax return is filed, each Group Member will pay to
the Designated
Lead Company of such group an amount determined as follows:
i) Where the tax liability of
the group of companies is calculated by
reference to the consolidated, combined, or unitary apportionment
or
allocation factors of the group as a whole, the amount of tax
liability payable by each Group Member will be determined on the
basis
of its proportional share of the total group's apportionment or
allocation factor. Each Group Member generating tax losses or
credits,
including any carryovers thereof, will be paid for such losses
or
credits as they are recognized and actually utilized to reduce
the
total tax liability of the group.
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ii) Where the tax liability of the
group of companies is calculated for
each Group Member on a separate company basis utilizing
separate
company apportionment or allocation factors, the amount of tax
liability payable by each Group Member will be an amount equal to
its
separate company tax liability. Separate company losses or
credits,
and any carryovers thereof, will only be recognized and paid for
at
the time, and to the extent, that they are utilized in the
reduction
of the consolidated, combined or unitary taxable income of the
group.
iii) In those
situations in which ING or any of the Subsidiaries files
separate, stand-alone state or local income tax returns, each
such
party will be solely responsible for all taxes, additions to
tax,
penalties, and interest associated with such stand-alone
filings.
iv) Unless specifically approved in
writing, all payments made pursuant to
this Agreement by a Group Member shall be made by that Group
Member,
and not by any other company or business unit on its behalf.
3. SEPARATE RETURN YEARS
To the extent
any portion of a tax loss or credit of a consolidated,
combined or
unitary group is carried back or carried forward to a separate
return year of a
Group Member (whether by operation of law or at the
discretion of
the Designated Lead Company) the Group Member shall not be
entitled to
payment from the Designated Lead Company with respect thereto.
This shall be
the case whether or not the Group Member actually receives
payment for the
benefit of such tax loss or credit from the applicable tax
authority or
otherwise.
4. INSTALLMENT PAYMENTS
a. During and following a
taxable year in which Group Members are
included in a state or local income tax return filed on a
consolidated, combined or unitary basis, each shall pay to the
Designated Lead Company, or receive from the Designated Lead
Company,
as the case may be, installment payments of the amount
determined
pursuant to section 2 of this Agreement. Payments shall made by or
to
each Group Member in amounts that produce, on a group basis,
cumulative installments consistent with the payment rules of
the
applicable taxing authority. Payments shall be made to/by each
Group
Member to/by the Designated Lead Company within 30 days of the
installment payment date mandated by the applicable taxing
authority.
The Designated Lead Company may revise the schedule of
installment
payments set forth in this paragraph, and may provide for
annual
rather than quarterly payments in cases where amounts due fall
below a
certain threshold, although any such change shall be prospective
and
shall not take effect prior to written notice to the Group
Members.
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b. The Designated Lead Company
shall pay to the applicable taxing
authority all required installments of state or local estimated
taxes
pursuant to applicable provisions of state or local law on behalf
of
itself and each Group Member. The Designated Lead Company shall
have
the sole right to determine the amount of each such tax payment
with
respect to the group's tax liability for the taxable year.
c. Should the amount of any tax
payment made by the Designated Lead
Company under this section to the taxing authority exceed the sum
of
installment payments made by all Group Members for any
corresponding
installment date, the Designated Lead Company may, in its sole
discretion, determine each Group Member's fair and reasonable share
of
that excess, and notify each Group Member thereof. The amount of
such
excess amount shall be paid over to the Designated Lead Company
within
15 business days of the date of notification.
d. If a penalty or an addition
to tax for underpayment of estimated taxes
is imposed on the group with respect to any required installment
under
applicable state or local law, the Designated Lead Company shall,
in
its sole discretion, determine the amount of each Group Member's
share
of such penalty or addition to tax, which amount shall be paid over
to
the Designated Lead Company within 15 business days of the date
of
notification.
5. ADJUSTED RETURNS
If any
adjustments are made to the consolidated, combined or unitary
returns for a
taxable year, whether by reason of the filing of an amended
return, or a
claim for refund with respect to such taxable year, or an
audit with
respect to such taxable year, the amounts due under this
Agreement for
such taxable year shall be redetermined by the Designated
Lead Company
taking into account such adjustments. If, as a result of such
redetermination,
any amounts due under this Agreement shall differ from the
amounts
previously paid, then, except as provided in section 6 hereof,
payment of such
difference shall be made by each Group Member to the
Designated Lead
Company, or by the Designated Lead Company to the Group
Member, as the
case may be, (a) in the case of an adjustment resulting in a
refund or
credit, not later than thirty (30) days after the date on which
such refund is
received or credit is allowed with respect to such
adjustment or
(b) in the case of an adjustment resulting in the assertion
of a deficiency,
not later than thirty (30) days after the Group Member is
notified of the
deficiency. Any amounts due to or from a Group Member under
this section
shall be determined with respect to such refund or deficiency
taking into
account any penalties, interest or other additions to tax which
may be imposed.
ING shall indemnify each Subsidiary in the event the taxing
authority levies
upon such Subsidiary's assets for unpaid taxes in excess
of the amount
required to be paid by such Subsidiary in relation to a
consolidated,
combined or unitary return filed pursuant to this Agreement.
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6. PROCEDURAL MATTERS
The Designated
Lead Company shall prepare and file the consolidated,
combined or
unitary state or local return and any other returns, documents
or statements
required to be filed with the appropriate jurisdiction, with
respect to the
determination of the tax liability of the filing group. In
its sole
discretion, the Designated Lead Company shall have the right
with
respect to any
return which it has filed or will file, (a) to determine (i)
the manner in
which such returns, documents or statements shall be prepared
and filed,
including, without limitation, the manner in which any item of
income, gain,
loss, deduction or credit shall be reported, (ii) whether any
extensions may
be requested and (iii) the elections that will be made by
any Group
Member, (b) to contest, compromise or settle any adjustment or
deficiency
proposed, asserted or assessed as a result of any audit of such
returns by the
taxing authority, (c) to file, prosecute, compromise or
settle any claim
for refund and (d) to determine whether any refunds to
which the filing
group may be entitled shall be paid by way of refund or
credited against
the tax liability of the group. Each Group Member hereby
irrevocably
appoints the Designated Lead Company as its agent and
attorney-in-fact
to take such action (including the execution of documents)
as the
Designated Lead Company may deem appropriate to effect the
foregoing.
7. ADDITIONAL MEMBERS
If future
subsidiaries are acquired or created and they participate in
the
consolidated,
combined or unitary filing, such subsidiaries shall join in
and be bound by
this Agreement. This section will also apply to
subsidiaries
that are not eligible immediately to join the filing group,
when they become
eligible to join the filing group.
8. COMPANIES LEAVING GROUP
Except as
specifically treated to the contrary herein, a Group Member
shall
be treated as
having withdrawn from this Agreement upon the signing of a
letter of intent
or a definitive agreement to sell the Group Member.
Amounts payable
to or receivable from Designated Lead Company shall be
recomputed with
respect to the withdrawing Group Member, including an
estimate of the
remaining taxes actually payable or receivable upon the
filing of the
tax return for the year of withdrawal, as of the last day
such Group
Member is a member of the group. Any amounts so computed as due
to or from the
Designated Lead Company to or from Group Member shall be
paid prior to
its leaving the group, provided, however, that any deficiency
or excess of
taxes determined on the basis of the tax return filed for the
year of
withdrawal, and paid to or from Designated Lead Company related
to
the tax
liability of the withdrawing Group Member for the portion of
the
year of
withdrawal during which it had been a member of the affiliated
group, shall be
settled not later than November 15 of the year following
the year of the
date of withdrawal.
The extent to
which Designated Lead Company or such Group Member is
entitled to any
other payments as a result of adjustments, as provided in
section 5
hereof, determined after such Group Member has left the
affiliated group
but affecting any taxable year
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during which
this Agreement was in effect with respect to the Designated
Lead Company and
such Group Member, shall be provided for pursuant to a
separate written
agreement between ING and the former Group Member or its
new owner, or in
the absence of such agreement, pursuant to the provision
of section 5
hereof. Tax benefits arising from the carry back of losses or
credits of the
former Group Member to tax years during which it was a
member of the
group shall not be refunded to the Group Member, unless
specifically
provided for pursuant to a separate written agreement between
ING and the former
Group Member, or its new owner.
9. BOOKS AND RECORDS
The books,
accounts and records of ING and the Subsidiaries shall be
maintained so as
to provide clearly and accurately the information required
for the
operation of this Agreement. Notwithstanding termination of
this
Agreement, all
materials including, but not limited to, returns, supporting
schedules,
workpapers, correspondence and other documents relating to the
combined,
consolidated or unitary tax return shall be made available to
ING
and/or any
Subsidiary during regular business hours. Records will be
retained by ING
and by each Subsidiary, in a manner satisfactory to ING,
adequate to
comply with any audit request by the appropriate State or local
taxing
authority, and, in any event to comply with any record
retention
agreement
entered into by ING or any Subsidiary with such taxing
authority.
10. ESCROW AGREEMENTS
The parties
hereto agree that, to the extent required by applicable law,
they shall enter
into and file with appropriate jurisdictions any escrow
agreements or
similar contractual arrangements with respect to the taxes
covered by this
Agreement. The terms of such agreements shall, to the
extent set forth
therein, and with respect to the parties thereto, prevail
over the terms
of this Agreement.
11. TERMINATION
This Agreement
shall be terminated if ING and the Subsidiaries agree in
writing to such
termination.
12. ADMINISTRATION
This Agreement
shall be administered by the Vice President of Taxes of ING
or, in his/her
absence, by any other officer of ING so designated by the
Controller of
ING. Disputes between ING and any Subsidiary shall be
resolved by the
Vice President of Taxes of ING or other designated officer
and the senior
financial officer of each Subsidiary involved in the
dispute. Should
ING, in its sole discretion, determine that any provision
of this
Agreement cannot be applied practicably to any item or any part
of
any state or
local income tax return, ING shall apply a reasonable rule of
operation in
such situation, as determined in its sole discretion, but
predicated on
the principle of equitable sharing of the tax impact of such
item among those
parties included in the tax return responsible for such
tax impact. ING
and the Subsidiaries each agree to indemnify any
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party to this
agreement for any loss or other injury sustained as a result
of errors or
omissions committed by ING or one of the Subsidiaries in
connection with
this Agreement.
13. PERIOD COVERED
This Agreement
shall be effective with respect to each party thereto upon
signing by such
party, and shall supersede all previous agreements between
ING and any
Subsidiary with respect to the matters contained herein and
such previous
agreement shall thereupon terminate. The Agreement shall
apply to the
taxable year 2001, to all prior taxable years which are open
to adjustments
as provided in section 5 hereof (to the extent not subject
to any separate
tax sharing agreement) and to all subsequent periods unless
and until
amended or terminated, as provided in section 11 hereof.
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IN WITNESS WHEREOF, the parties hereto have
execut
