Common use of Allocation of Tax Liability Clause in Contracts

Allocation of Tax Liability. a. Any state tax liability before tax credits (including liability for interest, penalties, and/or other additions to such taxes) associated with the filing of a consolidated, combined or unitary combined state tax return shall be allocated to the GPE members and RSAE companies included in such returns following the procedures set forth in the Agreement, subject to the provisions of this Section 2. b. Because certain states utilize a combined, consolidated or unitary combined reporting methodology, the aggregate state tax liability before credits of the members within a state group may exceed the sum of the members' separate return state tax liabilities to that state. Conversely, the sum of the members' separate state tax return liabilities may exceed the state group's aggregate state tax liability to the state before credits. Notwithstanding anything to the contrary in the Agreement, subject to the next sentence and Sections 2.c. and 2.d., the liability or benefit allocated to each member in a state group will be the member's corporate taxable income or corporate taxable loss modified by appropriate state tax adjustments, in compliance with state statutes and regulations, multiplied by the state group's apportionment factor multiplied by the appropriate state statutory rate. Any benefit arising out of GPE's corporate taxable loss will be allocated to those members of the relevant state group or groups with corporate taxable income. c. If an RSAE company does not have a positive separate return tax for a tax year, that RSAE company shall not receive any payment from other members of any state group as a result of any such loss or credit attributable to that RSAE company. If and when that RSAE company would be able to utilize any previous losses or credits if, under the applicable state tax law, it had filed a state tax return on a separate basis, the members of the state groups who received the benefit of such losses or credits shall, on a proportionate basis, pay to that RSAE company an amount equal to the refund which would have been realized by that RSAE company as a result of the carry over of such loss or credit, with such payment being made in the year in which that RSAE company would have received the refund for such loss or credit on a separate return basis. d. In the event that an RSAE company is no longer a part of a state group with any GPE member, it shall immediately cease being a party to this Addendum and shall not be entitled to any further payment or other benefits pursuant to this Addendum. Great Plains Energy Incorporated Great Plains Power Incorporated By /s/▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ By ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ Title: President and CEO Title: President Kansas City Power & Light Company Home Service Solutions, Inc. By ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ By ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ Title: President Title: President KLT Inc. KLT Energy Services Inc. By ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ By ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ Title: President Title: President KLT Investments Inc. KLT Gas Inc. By ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ By ▇▇▇▇▇▇▇ ▇. ▇▇▇▇ Title: President Title: President KLT Investments II Inc. KLT Telecom Inc. By ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ By ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ Title: President Title: President Worry Free Services, Inc. KLT Gas Operating Company By: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ By: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇ Title: President Title: President FAR Gas Acquisitions Corporation Great Plains Energy Services Incorporated By: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇ By: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ Title: President Title: President Kansas City Power & Light Innovative Energy Consultants Inc Receivables Company By: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ By: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ Title: President Title: President

Allocation of Tax Liability. The consolidated tax shall be allocated among the members of the Group consistent with Rule 45(c) of the Public Utility Holding Company Act of 1935, in the following manner: a. Any state The consolidated tax liability before tax credits (including of the Group will be allocated to each member of the Group with corporate taxable income before tax credits on the basis of the ratio of their corporate taxable income before tax credits to the total of all members of the Group with corporate taxable income before tax credits. b. An additional amount of consolidated tax before tax credits will be allocated to each member of the Group equal to the excess, if any, of the positive separate return tax before tax credits of each member of the Group for the year over the tax liability for interest, penalties, and/or other additions allocated to such taxesmember under the previous paragraph. c. The total additional amounts of consolidated tax before tax credits allocated under this procedure will be credited to those. members of the Group, excluding GPE, which had corporate taxable losses, deductions or tax credits which serve to reduce the consolidated tax. Thus, these members will be given the benefits of the resulting reduction in the consolidated tax of the Group. d. If GPE would have a negative separate return tax, then each member having a positive separate return tax shall receive a negative allocation in an amount equal to such negative separate return tax multiplied by that member's share of the sum of the positive separate return tax. e. An allocation of the Alternative Minimum Tax ("AMT") associated will only be performed when the consolidated return reflects an AMT liability. In computing the allocation of the AMT, the same computation methodology utilized in allocating the regular income tax will be utilized. The consolidated AMT liability will be allocated to each member of the Group with positive Alternative Minimum Taxable Income ("AMTI") on the filing basis of the ratio of its AMTI to the total of all members of the Group with positive AMTI. An additional amount of AMT will be allocated to each member of the Group based on the excess, if any, of the AMT liability that would have been paid had the member of the Group filed a consolidated, combined or unitary combined state separate tax return for the year over the AMT liability allocated to it under the previous provision. The total additional amounts of AMT charged under this provision will be allocated to each member of the Group based on the ratio of its separate return AMTI to the total AMTI of the members of the Group. In no event shall a member of the Group be required to pay a greater amount of AMT for any period than it would have been required to pay had it filed a separate income tax return for the period. Any excess of the consolidated AMT allocated to a member of the Group under this method over its separate return AMT will be allocated among the other members of the Group using the methodology described above. Any minimum tax credits available for use in future periods will be allocated to the GPE members and RSAE companies included in such returns following of the procedures set forth Group in the Agreement, subject same ratio as the taxes which gave rise to the provisions of this Section 2credits. Minimum Tax Credits used in the consolidated return will be deemed to have been utilized on a first-in, first-out basis. b. Because certain states utilize a combinedf. Any investment tax credits, consolidated or unitary combined reporting methodology, other tax benefits and material items taxed at rates other than the aggregate state tax liability before credits of the members within a state group may exceed the sum of the members' separate return state tax liabilities rate applicable to that state. Conversely, the sum of the members' separate state tax return liabilities may exceed the state group's aggregate state tax liability to the state before credits. Notwithstanding anything to the contrary in the Agreement, subject to the next sentence and Sections 2.c. and 2.d., the liability or benefit allocated to each member in a state group will be the member's corporate taxable income or corporate taxable loss modified by appropriate state tax adjustments, in compliance with state statutes and regulations, multiplied by the state group's apportionment factor multiplied by the appropriate state statutory rate. Any benefit arising out of GPE's corporate taxable loss will shall be allocated directly to the members of the Group giving rise to them. If the credit or benefit cannot be entirely utilized to offset current consolidated tax, the consolidated credit carry back or carry forward shall be apportioned to those members of the relevant state group Group giving rise to them in proportion to the relative amounts of credits or groups with benefits generated by each such member of the Group. g. If the amount of consolidated tax allocated to any member of the Group, excluding GPE, exceeds the separate return tax of such member of the Group, such excess shall be reallocated among those members of the Group whose allocated tax liability is less than the amount of their respective separate return tax liabilities. Any remaining unallocated tax liability shall be assigned to GPE. h. Pursuant to that certain Shareholders Agreement dated as of February 6, 2001, among KLT Telecom Inc., DTI Holdings, Inc. and Richard D. Weinstein, the net operating losses in▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇, ▇▇▇▇ by DTI Holdings, Inc., Digital Teleport, Inc. and Digital Teleport of Virginia, Inc. (each an "Excluded Company") shall be allocated to and used by KLT Telecom Inc., except to the extent the Excluded Companies would otherwise have corporate taxable income in the same tax year in which the members of the Group use such net operating losses. KLT Telecom Inc. and the Excluded Companies acknowledge that the Shareholders Agreement does not provide for, and does not contemplate, reimbursement of any loss or credit availed of by KLT Telecom Inc. or other members of the Group, and that such was part of the bargained-for consideration to be received by KLT Telecom Inc. in the transactions associated with the execution of the Shareholders Agreement. Accordingly, the income. c. , gain, loss, deductions and credits of each of the Excluded Companies shall be taken into account in the determination of KLT Telecom Inc.'s apportioned obligation for the consolidated income tax under this Agreement, and payments on account thereof shall solely be made between GPE and KLT Telecom Inc. The obligations between KLT Telecom Inc. and the Excluded Companies shall be controlled by the Shareholders Agreement, and payments shall be made among such parties in accordance with such agreement and consistent with this Agreement. Subsequent to the execution of the Shareholders Agreement, KLT Telecom Inc. and the Excluded Companies became subsidiaries of GPE, a registered holding company. The terms and conditions of Shareholders Agreement respecting tax allocations may be deemed inconsistent with the requirements of Rule 45(c)(4), and KLT Telecom Inc., the Excluded Companies and the other members of the Group agree to seek any necessary Securities and Exchange Commission authorization to allocate tax losses and credits as set forth in the first paragraph of this Section h. Notwithstanding anything in the first paragraph of this Section h. to the contrary, if required by Rule 45(c)(4) and only to the extent required under Rule 45(c)(4) the following paragraph shall be effective until such authorization is received: If an RSAE company does Excluded Company will not have a positive separate return tax for a tax year, that RSAE company such Excluded Company shall be excluded from the allocation of the consolidated tax liability and, thus, such Excluded Company shall not receive any payment from other members of any state group KLT Telecom Inc. as a result of any such loss or credit attributable to that RSAE companyan Excluded Company. If and when that RSAE company an Excluded Company would be have been able to utilize any previous losses or credits if, under the applicable state tax law, it had filed a state tax return on a separate basis, the members of the state groups who received the benefit of such losses or credits shall, on a proportionate basis, KLT Telecom Inc. shall pay to that RSAE company the appropriate Excluded Company an amount equal to the refund which such Excluded Company would have been realized by that RSAE company as a result of the carry over of such loss or credit, with such payment being made amount payable by KLT Telecom Inc. in the year in which that RSAE company such Excluded Company would have received the refund for such loss or credit on a separate return basis. If any amounts are deemed payable by KLT Telecom Inc. to an Excluded Company pursuant to the preceding paragraph, the Excluded Companies shall be deemed to have distributed any such amounts to KLT Telecom Inc., to the extent any such amounts may properly be distributed to KLT Telecom Inc. under state and Federal law. d. i. In the event that an RSAE company is no longer a part of a state group with any GPE membercorporation leaves the Group, it shall immediately cease being a party to this Addendum Agreement and shall not be entitled to any further payment payments or other benefits pursuant to this Addendum. Great Plains Energy Incorporated Great Plains Power Incorporated By /s/▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ By ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ Title: President and CEO Title: President Kansas City Power & Light Company Home Service Solutions, Inc. By ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ By ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ Title: President Title: President KLT Inc. KLT Energy Services Inc. By ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ By ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ Title: President Title: President KLT Investments Inc. KLT Gas Inc. By ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ By ▇▇▇▇▇▇▇ ▇. ▇▇▇▇ Title: President Title: President KLT Investments II Inc. KLT Telecom Inc. By ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ By ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ Title: President Title: President Worry Free Services, Inc. KLT Gas Operating Company By: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ By: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇ Title: President Title: President FAR Gas Acquisitions Corporation Great Plains Energy Services Incorporated By: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇ By: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ Title: President Title: President Kansas City Power & Light Innovative Energy Consultants Inc Receivables Company By: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ By: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ Title: President Title: PresidentAgreement.

Allocation of Tax Liability. The consolidated tax shall be allocated among the members of the Group consistent with Rule 45(c) of the Public Utility Holding Company Act of 1935, in the following manner: a. Any state The consolidated tax liability before tax credits (including liability for interest, penalties, and/or other additions to such taxes) associated with the filing of a consolidated, combined or unitary combined state tax return shall be allocated to the GPE members and RSAE companies included in such returns following the procedures set forth in the Agreement, subject to the provisions of this Section 2. b. Because certain states utilize a combined, consolidated or unitary combined reporting methodology, the aggregate state tax liability before credits of the members within a state group may exceed the sum of the members' separate return state tax liabilities to that state. Conversely, the sum of the members' separate state tax return liabilities may exceed the state group's aggregate state tax liability to the state before credits. Notwithstanding anything to the contrary in the Agreement, subject to the next sentence and Sections 2.c. and 2.d., the liability or benefit Group will be allocated to each member in a state group will be of the member's Group with corporate taxable income or before tax credits on the basis of the ratio of their corporate taxable loss modified by appropriate state income before tax adjustments, in compliance credits to the total of all members of the Group with state statutes and regulations, multiplied by the state group's apportionment factor multiplied by the appropriate state statutory rate. Any benefit arising out of GPE's corporate taxable loss income before tax credits. b. An additional amount of consolidated tax before tax credits will be allocated to each member of the Group equal to the excess, if any, of the positive separate return tax before tax credits of each member of the Group for the year over the tax liability allocated to such member under the previous paragraph. c. The total additional amounts of consolidated tax before tax credits allocated under this procedure will be credited to those members of the relevant state group or groups with Group, excluding GPE, which had corporate taxable incomelosses, deductions or tax credits which serve to reduce the consolidated tax. Thus, these members will be given the benefits of the resulting reduction in the consolidated tax of the Group. c. d. If GPE would have a negative separate return tax, then each member having a positive separate return tax shall receive a negative allocation in an amount equal to such negative separate return tax multiplied by that member's share of the sum of the positive separate return tax. e. An allocation of the Alternative Minimum Tax ("AMT") will only be performed when the consolidated return reflects an AMT liability. In computing the allocation of the AMT, the same computation methodology utilized in allocating the regular income tax will be utilized. The consolidated AMT liability will be allocated to each member of the Group with positive Alternative Minimum Taxable Income ("AMTI") on the basis of the ratio of its AMTI to the total of all members of the Group with positive AMTI. An additional amount of AMT will be allocated to each member of the Group based on the excess, if any, of the AMT liability that would have been paid had the member of the Group filed a separate tax return for the year over the AMT liability allocated to it under the previous provision. The total additional amounts of AMT charged under this provision will be allocated to each member of the Group based on the ratio of its separate return AMTI to the total AMTI of the members of the Group. In no event shall a member of the Group be required to pay a greater amount of AMT for any period than it would have been required to pay had it filed a separate income tax return for the period. Any excess of the consolidated AMT allocated to a member of the Group under this method over its separate return AMT will be allocated among the other members of the Group using the methodology described above. Any minimum tax credits available for use in future periods will be allocated to the members of the Group in the same ratio as the taxes which gave rise to the credits. Minimum Tax Credits used in the consolidated return will be deemed to have been utilized on a first-in, first-out basis. f. Any investment tax credits, other tax benefits and material items taxed at rates other than the rate applicable to corporate taxable income shall be allocated directly to the members of the Group giving rise to them. If the credit or benefit cannot be entirely utilized to offset current consolidated tax, the consolidated credit carry back or carry forward shall be apportioned to those members of the Group giving rise to them in proportion to the relative amounts of credits or benefits generated by each such member of the Group. g. If the amount of consolidated tax allocated to any member of the Group, excluding GPE, exceeds the separate return tax of such member of the Group, such excess shall be reallocated among those members of the Group whose allocated tax liability is less than the amount of their respective separate return tax liabilities. Any remaining unallocated tax liability shall be assigned to GPE. h. Pursuant to that certain Shareholders Agreement dated as of February 6, 2001, among KLT Telecom Inc., DTI Holdings, Inc. and Richard D. Weinstein, the net operating losses incur▇▇▇ ▇▇▇▇▇ February 8, 2001 by DTI Holdings, Inc., Digital Teleport, Inc. and Digital Teleport of Virginia, Inc. (each an "Excluded Company") shall be allocated to and used by KLT Telecom Inc., except to the extent the Excluded Companies would otherwise have corporate taxable income in the same tax year in which the members of the Group use such net operating losses. KLT Telecom Inc. and the Excluded Companies acknowledge that the Shareholders Agreement does not provide for, and does not contemplate, reimbursement of any loss or credit availed of by KLT Telecom Inc. or other members of the Group, and that such was part of the bargained-for consideration to be received by KLT Telecom Inc. in the transactions associated with the execution of the Shareholders Agreement. Accordingly, the income, gain, loss, deductions and credits of each of the Excluded Companies shall be taken into account in the determination of KLT Telecom Inc.'s apportioned obligation for the consolidated income tax under this Agreement, and payments on account thereof shall solely be made between GPE and KLT Telecom Inc. The obligations between KLT Telecom Inc. and the Excluded Companies shall be controlled by the Shareholders Agreement, and payments shall be made among such parties in accordance with such agreement and consistent with this Agreement. Subsequent to the execution of the Shareholders Agreement, KLT Telecom Inc. and the Excluded Companies became subsidiaries of GPE, a registered holding company. The terms and conditions of Shareholders Agreement respecting tax allocations may be deemed inconsistent with the requirements of Rule 45(c)(4), and KLT Telecom Inc., the Excluded Companies and the other members of the Group agree to seek any necessary Securities and Exchange Commission authorization to allocate tax losses and credits as set forth in the first paragraph of this Section h. Notwithstanding anything in the first paragraph of this Section h. to the contrary, if required by Rule 45(c)(4) and only to the extent required under Rule 45(c)(4) the following paragraph shall be effective until such authorization is received: If an RSAE company does Excluded Company will not have a positive separate return tax for a tax year, that RSAE company such Excluded Company shall be excluded from the allocation of the consolidated tax liability and, thus, such Excluded Company shall not receive any payment from other members of any state group KLT Telecom Inc. as a result of any such loss or credit attributable to that RSAE companyan Excluded Company. If and when that RSAE company an Excluded Company would be have been able to utilize any previous losses or credits if, under the applicable state tax law, it had filed a state tax return on a separate basis, the members of the state groups who received the benefit of such losses or credits shall, on a proportionate basis, KLT Telecom Inc. shall pay to that RSAE company the appropriate Excluded Company an amount equal to the refund which such Excluded Company would have been realized by that RSAE company as a result of the carry over of such loss or credit, with such payment being made amount payable by KLT Telecom Inc. in the year in which that RSAE company such Excluded Company would have received the refund for such loss or credit on a separate return basis. If any amounts are deemed payable by KLT Telecom Inc. to an Excluded Company pursuant to the preceding paragraph, the Excluded Companies shall be deemed to have distributed any such amounts to KLT Telecom Inc., to the extent any such amounts may properly be distributed to KLT Telecom Inc. under state and Federal law. d. i. In the event that an RSAE company is no longer a part of a state group with any GPE membercorporation leaves the Group, it shall immediately cease being a party to this Addendum Agreement and shall not be entitled to any further payment payments or other benefits pursuant to this Addendum. Great Plains Energy Incorporated Great Plains Power Incorporated By /s/▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ By ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ Title: President and CEO Title: President Kansas City Power & Light Company Home Service Solutions, Inc. By ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ By ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ Title: President Title: President KLT Inc. KLT Energy Services Inc. By ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ By ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ Title: President Title: President KLT Investments Inc. KLT Gas Inc. By ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ By ▇▇▇▇▇▇▇ ▇. ▇▇▇▇ Title: President Title: President KLT Investments II Inc. KLT Telecom Inc. By ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ By ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ Title: President Title: President Worry Free Services, Inc. KLT Gas Operating Company By: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ By: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇ Title: President Title: President FAR Gas Acquisitions Corporation Great Plains Energy Services Incorporated By: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇ By: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ Title: President Title: President Kansas City Power & Light Innovative Energy Consultants Inc Receivables Company By: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ By: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ Title: President Title: PresidentAgreement.