EXHIBIT 10.11
TAX SHARING AGREEMENT
AMONG
NARA BANCORP, INC.,
AND
NARA BANK, N.A.
AND
NARA BANCORP CAPITAL TRUST I
AND
NARA LOAN CENTER CORPORATION
Nara Bank, N.A. ("Bank"), Nara Bancorp, Inc., ("Bancorp"), Nara
Bancorp Capital Trust I (a wholly owned subsidiary of Bancorp) ("Nara Capital")
and Nara Loan Center Corporation (a wholly owned subsidiary of Bank) ("Nara
Loan") hereby enter into this Agreement effective as of the _____ day of
__________, 2002 pursuant to which tax liabilities or refunds will be allocated
properly among Bank, Bancorp, Nara Capital and Nara Loan.
NOW, THEREFORE, in consideration of the premises and of the
mutual covenants and agreements hereinafter set forth, the parties agree as
follows:
AGREEMENT
ARTICLE I
DEFINITIONS
Unless otherwise indicated, the following terms shall, for the
purposes of this Agreement, be defined as follows:
1.1 Code shall mean the Internal Revenue Code of 1986, as
amended.
1.2 Independent Public Accountant shall mean the firm of
certified independent public accountants as may from time to time be retained by
Bancorp.
ARTICLE II
TAX SHARING
2.1 Federal Income Tax.
(a) It is the desire and intent of the parties to this
Agreement to establish a method for allocating the consolidated tax liability of
each member among the Affiliated Group (hereinafter defined), for reimbursing
each member for payment of such tax liability, for compensating members of the
Affiliated Group for use of their losses or tax credits, and to provide for the
allocation and payment of any refunds arising from a carryback of losses or tax
credits from subsequent taxable years.
(b) For purposes of this Article II, the term "Affiliated
Group" shall have the meaning assigned to it in Code Section 1504(a) and shall
include all members of the group included in the filing of Bancorp consolidated
tax return for federal income tax purposes. Bancorp, Bank, Nara Loan, and Nara
Capital are members of the Affiliated Group. In the event additional
corporations become members of the Affiliated Group, the parties to this
Agreement shall use their best efforts to include such corporations as parties
to this Agreement.
(c) A U.S. consolidated income tax return will be filed by
Bancorp for each taxable year for which this Agreement is in effect and for
which members of the Affiliated Group are required or permitted to file a
consolidated tax return. The members of the Affiliated Group shall execute and
file such consents, elections and other documents that may be required or
appropriate for the proper filing of such returns.
(d) For each taxable period, members of the Affiliated
Group shall compute their separate tax liability as if they had filed a separate
tax return. The separate return tax liability of the members of the Affiliated
Group shall be computed in a manner consistent with the provisions of Treasury
Regulation Section 1.1552-1(a)(2)(ii), provided that the carryover of any tax
attribute from a prior taxable year, which is not available in determining the
consolidated tax liability of the Affiliated Group for such taxable period,
shall be disregarded. Moreover, the parties agree to reimburse any member which
has tax losses or credits in an amount equal to 100% of the tax benefits
realized by the other members of the Affiliated Group as a result of the
utilization by them of such member's tax losses or credits. It is the intent of
the members of the Affiliated Group that the tax liability will be allocated in
accordance with the "percentage method" of Section 1.1502-33(d)(3) of the
Treasury Regulations and that the percentage referred to in Section
1.1502-33(d)(3)(i) shall be 100%. Bancorp is authorized to elect the "percentage
method" in accordance with the procedures specified in Section 1.1502-33(d)(5)
of the Treasury Regulations.
(e) Payment of the consolidated tax liability for a
taxable period shall include the payment of estimated tax installments due for
such taxable period and members of the Affiliated Group shall promptly pay to
Bank their estimated tax payments as computed in
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paragraph 2.1(d) upon receiving notice of such payments from Bancorp, but in no
event later than the due date for each estimated tax payment. Upon receipt of
the estimated tax payment by the members of the Affiliated Group, Bank will make
the tax payment pursuant to the Treasury Regulations. Overpayments of estimated
tax by members of the Affiliated Group as determined by Bancorp shall be
refunded promptly to the appropriate members of the Affiliated Group.
(f) If part or all of an unused loss or tax credit is
allocated to a member of the Affiliated Group pursuant to Treasury Regulation
Section 1.1502-79, and is carried back or forward to a year in which the
Affiliated Group member filed a separate return or a consolidated return with
another affiliated group, any refund or reduction in tax liability arising from
the carryback or carry forward shall be retained by the subject Affiliated Group
member. Notwithstanding the above, Bancorp shall determine whether an election
shall be made not to carry back part or all of a consolidated net operating loss
for any taxable year in accordance with Section 172(b)(3) of the Code.
(g) If the consolidated tax liability is adjusted for any
taxable period, whether by means of an amended return, claim for refund, or
after a tax audit by the Internal Revenue Service, the liability of the
Affiliated Group members shall be recomputed by Bancorp to give effect to such
adjustments. In the case of a refund, Bancorp shall promptly make payment to
each Affiliated Group member for its share of the refund, determined in the same
manner as in paragraph (d) above, after Bancorp receives the refund. In the case
of an increase in tax liability, each Affiliated Group member shall promptly pay
to Bank its allocable share of such increased tax liability after receiving
notice of such liability from Bancorp, but in no event later than the due date
for tax payment.
(h) The parties agree that it is their express intent that
this Agreement shall at all times be construed in a manner consistent with any
law or regulation applicable to any member as now or hereafter in effect.
Anything to the contrary herein notwithstanding, (1) Bank shall not pay to
members an amount greater than the tax which Bank would have been required to
pay had it filed a separate tax return, taking maximum advantage of available
reductions in taxable income; (2) any payments made pursuant to paragraphs
2.1(e), (f) and (g) of this Agreement shall be made only with reference to the
time taxes are actually paid or refunds or credits are actually received, it
being understood that Bank shall at no time make advance payments with respect
to the foregoing to any member, and (3) any funds (i) received by Bancorp from
any member for the payment by Bank of taxes or (ii) received by Bancorp from any
taxing authority by reason of any refund, credit or overpayment and properly
allocable to another member, shall at all times be held by Bancorp in a
segregated account solely as agent for such member and shall at no time be
commingled with any other funds held by Bancorp.
2.2 Certain State Taxes. For each taxable period, members of the
Affiliated Group shall compute their separate state tax liability. The separate
return state tax liability of the members of the Affiliated Group shall be
computed in a manner consistent with the relevant state law provisions. After
the computation of their state tax liability, members of the Affiliated Group
shall promptly pay to Bank their estimated tax payments, but in no event later
than the due date for each estimated tax payment. Upon receipt of the estimated
tax payment by the members of the Affiliated Group, Bank will make the tax
payment pursuant to the relevant state
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taxing authorities. Overpayments of estimated tax by members of the Affiliated
Group, as determined by Bancorp, shall be refunded promptly to the appropriate
members of the Affiliated Group. If the state tax return is reviewed by a state
taxing authority and adjustments are made which will either increase or decrease
the tax previously reported and paid, the Affiliated Group members affected by
such adjustments shall pay all costs or receive all benefits from such
adjustment.
2.3 Other Taxes. The other Affiliated Group members may from time to
time become subject to additional taxes by federal, state or local authorities.
In such event the members of the Affiliated Group shall consult with each other
to determine a mutually acceptable form of allocation or apportionment of such
taxes; provided, however, that Bancorp shall pay the Delaware franchise tax.
2.4 Procedural Matters.
(a) Bancorp shall prepare and file consolidated returns,
and any other returns, documents or statements required to be filed with the
Internal Revenue Service or any other relevant taxing authority with respect to
the determination of the tax liability of Bancorp and the Affiliated Group
members for all taxable periods commencing with the tax period applicable as of
the date of the execution of this Agreement. Bancorp shall have the right, in
its sole discretion: (i) to determine (A) the manner in which such returns shall
be prepared and filed, including, without limitation, the manner in which any
item of income, gain, loss, deduction or credit shall be reported; provided,
however, that Bancorp shall consider in good faith any treatment proposed by the
Affiliated Group members, (B) whether any extensions of the statute of
limitations may be granted and (C) the elections that will be made pursuant to
the Code (or applicable state tax laws) on behalf of any member of the
consolidated group (it being agreed, however, that Bancorp shall not
unreasonably withhold its consent to any elections that members of the
Affiliated Group desire to make); (ii) to contest, compromise or settle any
adjustment or deficiency proposed, asserted or assessed as a result of any audit
of any such returns; (iii) to file, prosecute, compromise or settle any claim
for refund; and (iv) to determine whether any refunds to which the consolidated
group may be entitled shall be paid by way of refund or credited against the tax
liability of the consolidated group.
(b) Bancorp, to the extent such information is available,
shall promptly notify the members of the Affiliated Group of any tax liability
or refund issue, and shall advise and consult in good faith with such members
with respect to contest, compromise or settlement thereof.
(c) In the event of any disagreement as to the method of,
or principles followed in, the computation, or as to the amount of income,
deduction, gain, loss or credit, the parties shall submit the dispute to the
Independent Public Accountant and the determination of such firm shall be
conclusive and binding.
2.5 Cooperation.
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(a) At all times during which this Agreement is in force,
the parties shall make available to each other during normal business hours and
in a manner which will not interfere with the other party's business, its tax,
accounting and legal staff to the extent reasonably required in connection with
the preparation of tax returns and other tax matters.
(b) In the event of the termination of this Agreement, the
parties will use their best efforts to make available to the others, upon
written request, its officers and employees in connection with any tax
proceedings.
ARTICLE III
MISCELLANEOUS
3.1 Entire Agreement. This Agreement contains the entire
understanding of the parties hereto with respect to the subject matter contained
herein. No alteration, amendment or modification of any of the terms of this
Agreement shall be valid unless made by an instrument signed by an authorized
officer of the parties hereto.
3.2 Law Governing. This Agreement has been made in and shall be
construed and enforced in accordance with the laws of the State of California,
as such laws may from time to time be amended or revised.
3.3 Headings. The headings contained in this Agreement are inserted
for convenience only and shall not constitute a part hereof.
3.4 Notices. Any notice, demand, claim or other communication under
this Agreement shall be in writing and shall be deemed to have been given upon
the delivery or mailing thereof, as the case may be, if delivered personally or
sent by certified mail, return receipt requested, postage prepaid, to the
parties at the following addresses (or at such other address as a party may
specify by notice to the others):
If to Bancorp, to: ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: Bon T. Goo, CFO and Executive VP
If to Bank, to: ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: Bon T. Goo, CFO and Executive VP
If to Nara Capital, to: ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: Bon T. Goo, Administrative Trustee
If to Nara Loan, to: ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: Bon T. Goo, CFO
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3.5 No Assignment Or Subcontracting. This agreement is not
assignable in whole or in part by the parties without the other parties' prior
written consent. Any attempted assignment without such consent will be null and
void.
3.6 Successors. Subject to the restrictions on assignment set forth
above, this agreement shall be binding upon and shall inure to the benefit of
the parties and their respective successors and assigns.
3.7 Authority. The parties represent and warrant that they have the
full right, power and authority to enter into and perform this agreement in
accordance with its terms and that the execution and delivery of this agreement
have been duly authorized by proper corporate action.
3.8 Severability. If any provision of this agreement is determined
to be illegal, unenforceable or void, this agreement shall be construed as if
not containing that provision, and the rest of the agreement shall remain in
full force and effect. If any provision of this agreement or any other agreement
incorporating this agreement is determined to violate Federal Reserve Act
Section 23A or 23B the parties agree to amend the provision, nunc pro tunc, in a
manner which brings it into compliance with the law.
3.9 No Third Party Beneficiaries. Nothing in this agreement shall be
construed to confer any right or benefit on any person who is not a party to
this agreement.
IN WITNESS WHEREOF, each party has caused their name to be subscribed and
executed by their respective authorized officer on the dates indicated,
affective as of the date first set forth above.
NARA BANK, N.A. NARA LOAN CENTER CORPORATION
Date: Date:
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By: By:
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Its: Its:
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NARA BANCORP, INC. NARA BANCORP CAPITAL TRUST I
Date: Date:
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By: By:
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Its: Its:
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