1
Page _28_ of _34_ Pages
EXHIBIT 17
TAX SHARING AGREEMENT
This Tax Sharing Agreement ("Agreement") is effective as of the 1st
day of November 1996, by and among GUARDIAN INDUSTRIES CORP., a Delaware
corporation (hereinafter referred to as the "Parent Company"), and OIS OPTICAL
IMAGING SYSTEMS, INC. a Delaware corporation (hereinafter referred to as the
"Subsidiary" or "OIS").
The term "Parent Company" shall include Guardian Industries Corp. and
any subsidiary thereof whose stock is owned directly or indirectly by Guardian
Industries Corp. and which qualifies as a member of the Parent Company's
affiliated group as defined in Section 1504(a) of the Internal Revenue Code of
1986, as amended ("Internal Revenue Code") and such term shall exclude OIS (and
its subsidiaries). The terms "Subsidiary" and "OIS" shall include OIS Optical
Imaging Systems, Inc. and any of its subsidiaries acquired or formed after the
effective date of this Agreement, and which later qualify as members of the
Parent Company's affiliated group as defined in Section 1504(a) of the Internal
Revenue Code.
WITNESSETH
WHEREAS, the Parent Company and Subsidiary are expected to qualify as
members of an affiliated group as defined in Section 1504 (a) of the Internal
Revenue Code ("Affiliated Group"), commencing on November 1, 1996.
WHEREAS, the Parent Company and Subsidiary desire to file a United
States consolidated income tax return as an Affiliated Group for the taxable
period which includes November 1, 1996 through December 31, 1996 and to file,
if qualified to do so as an Affiliated Group, United States consolidated income
tax returns for subsequent tax years (or other taxable periods).
WHEREAS, it is the intent and desire of the Parent Company and
Subsidiary that a method be established for each tax year (or other taxable
period) that a United States consolidated income tax return is filed by the
Affiliated Group for sharing and allocating the United States consolidated
income tax liability of the Affiliated Group among its members, for reimbursing
the Parent Company for payment of such tax liability, if any, and for providing
for the allocation of any United States income tax refund arising from a
carryback of losses or tax credits from subsequent tax years (or other taxable
periods).
WHEREAS, the Parent Company and Subsidiary will make available any
current and net operating losses and tax credits as they may have available to
reduce the United States consolidated income tax liability of the Affiliated
Group.
WHEREAS, The Parent Company and Subsidiary desire to provide for the
reimbursement to the Parent Company and/or Subsidiary whose current and net
operating losses and tax credits have been used to reduce the United States
consolidated income tax liability of the Affiliated Group.
2
Page _29_ of _34_ Pages
NOW THEREFORE, In consideration of the mutual covenants and promises
contained in this Agreement, the parties hereto do hereby agree as follows:
A. CONSOLIDATED FEDERAL INCOME TAX RETURNS
(l) A United States consolidated income tax return shall be filed
by the Parent Company for the taxable year ending December 31, 1996 and for
each subsequent taxable period during which this Agreement is in effect and for
which the Affiliated Group is required or permitted to file a United States
consolidated income tax return.
(2) For each tax year (or other taxable period) the aggregate
United States consolidated income tax liability for members of the Affiliated
Group shall be computed twice, once with the inclusion of the Subsidiary in
such computation and secondly with the exclusion of the Subsidiary from such
computation.
(3) To the extent that members (including the Parent Company and
Subsidiary) of the Affiliated Group have had their United States income tax
liabilities, as computed on an aggregate basis, increased by inclusion of
Subsidiary, an account payable (liability) of the Subsidiary ("Tax Liability to
Parent") to the Parent Company shall be established on the books of the Parent
Company and of the Subsidiary. To the extent that members (including the
Parent Company and Subsidiary) of the Affiliated Group have had their United
States income tax liabilities, as computed on an aggregate basis, decreased by
inclusion of Subsidiary, an account payable (liability) of the Parent Company
("Tax Liability to Subsidiary") to the Subsidiary shall be established on the
books of the Parent Company and of the Subsidiary. In determining whether the
tax liability of the Affiliated Group has been reduced by the Subsidiary's
deductions or credits it will be assumed that the Affiliated Group first
utilizes comparable credits and net operating loss carryovers from prior years
generated by other members of the Affiliated Group.
(4) An estimate of the Tax Liability to Parent or Tax Liability
to Subsidiary shall be made by the Parent Company not later than March 15th for
the preceding calendar year (or taxable period ending on December 31st). The
resulting estimated account payable shall be collected within thirty (30) days
of the date that such estimate is made. A final calculation of the Tax
Liability to Parent or Tax Liability to Subsidiary shall be made within 30 days
of the date that the Parent Company files the consolidated return for any
calendar year (or taxable period ending on December 31st). The resulting final
account payable shall be collected within 30 days of the date that such final
calculation of the Tax Liability to Parent or Tax Liability to Subsidiary is
provided by the Parent Company to Subsidiary.
(5) The Parent Company will determine the allocation of the
United States consolidated income tax liability, and the account payables and
receivables to be reflected on the books of the Parent Company and Subsidiary
in accordance with this Agreement. To the extent that the Subsidiary disagrees
with such determination, the matter shall be referred to the independent
certified public accountants then auditing the books of the Parent Company,
whose determination shall be final.
(6) Payment of the actual United States consolidated income tax
liability for a taxable year (or other taxable period) shall include the
payment of estimated income tax installments due
3
Page _30_ of _34_ Pages
for such tax year (or other taxable period), which payments, if any, will be
determined by the Parent Company based on an estimate of income tax liability
for the tax year (or other taxable period). The Subsidiary shall pay to the
Parent Company, the Subsidiary's share of each payment of the actual estimated
consolidated income tax liability, within thirty (30) days of receiving notice
of such payment from the Parent Company. The Subsidiary's share of any
overpayment of estimated income tax will be refunded to the Subsidiary by the
Parent Company within thirty (30) days after it is determined that the
Subsidiary has overpaid the estimated income tax.
(7) If the United States consolidated income tax liability is
adjusted for any tax year (or other taxable period), whether by means of an
amended tax return, claim for refund or after a tax audit by the United States
Internal Revenue Service, the Tax Liability to Parent or Tax Liability to
Subsidiary for that year (or other taxable period) shall be recomputed to give
effect to such adjustments. The resulting change in the Tax Liability to
Parent or Tax Liability to Subsidiary, shall be determined in the same manner
as in Paragraph A (2) of this Agreement. In the case of an increase in Tax
Liability to Parent (or decrease in Tax Liability to Subsidiary), the
Subsidiary shall pay the resultant difference to the Parent Company within
thirty (30) days after receiving notice of such liability from the Parent
Company. In the case of a decrease in Tax Liability to Parent (or increase in
Tax Liability to Subsidiary), the Parent Company shall pay the resultant
difference to Subsidiary within thirty (30) days after the adjustment has been
finally determined. Any interest (income or expense) and penalties arising
from adjustments to the United States consolidated income tax liability shall
be equitably apportioned between the Parent Company and Subsidiary.
B. PARENT AS AGENT AND CONSENTS
(1) The Subsidiary irrevocably designates the Parent Company as
its agent for the purpose of taking any and all action necessary or incidental
to the filing of United States consolidated income tax returns and state
combined or consolidated returns (including, but not limited to, the conduct of
any audit by any taxing authority).
(2) The Subsidiary agrees to furnish the Parent Company with any
and all information requested by the Parent Company to carry out the provisions
of this Agreement, to cooperate with Parent Company in filing any return or
consent contemplated by this Agreement and to cooperate in connection with any
refund claim, audit, judicial or other like or similar proceeding.
(3) At the direction of the Parent Company, the Subsidiary shall
execute and file such consents, elections, and other documents that may be
required or appropriate for the proper filing of each United States
consolidated income tax return and state combined or consolidated returns.
(4) Subsidiary hereby consents to all elections made by the
Parent Company on behalf of the Affiliated Group.
C. CONSOLIDATED AND COMBINED STATE INCOME TAX RETURNS
If the Affiliated Group or any members thereof is required or elects
to file combined or consolidated state or local tax returns including the
Subsidiary, the Parent Company shall not be required to reimburse the
Subsidiary for any of the Subsidiary's tax losses or attributes which are
4
Page _31_ of _34_ Pages
utilized by the Affiliated Group or any members thereof. In the event that the
Subsidiary would have a stand alone income, franchise or similar tax liability
for state and local taxes, then Parent Company shall make an allocation of such
state or local tax liability to Subsidiary consistent with the principles set
forth in Paragraph A (2) of this Agreement.
D. SUBSIDIARY LEAVING THE AFFILIATED GROUP
(1) If the Subsidiary (or a subsidiary of the Subsidiary) is no
longer a member of the Affiliated Group (a "Former Member"), the Parent Company
shall, upon the request of a Former Member, provide any assistance that shall
be reasonably required to enable the Former Member to pursue any tax refund,
including but not limited to the filing of tax refund claims on behalf of the
Former Member.
(2) The Former Member shall be able to participate, in good faith
and at its own expense, in the audit of the portion of the United States
consolidated income tax return of the Affiliated Group which relates to its
separate taxable income or loss and shall be able to participate, in good faith
and at its own expense, in any contest, litigation, or settlement of any issue
relating to such separate taxable income or loss.
(3) The Former Member and the remaining members of the Affiliated
Group will fully cooperate with each other in connection with the allocation of
income and expense for the taxable year in which the Former Member leaves the
Affiliated Group.
(4) The Former Member (and, in the event the Affiliated Group
ceases to file a United States consolidated return, the Parent Company) shall
be bound by the terms of this Agreement with respect to all tax years during
which such Former Member joined in the filing of United States consolidated
income tax returns and state combined or consolidated returns.
(5) The Former Member and the remaining members of the Affiliated
Group will cooperate and provide such information as will be necessary to
enable each of them to file whatever returns are required for United States
income tax purposes and state combined or consolidated returns, or in
connection with any audit or litigation with respect to such returns.
E. MISCELLANEOUS PROVISIONS
(1) This Agreement shall apply to the taxable year ending
December 31, 1996 and all subsequent taxable periods unless the Parent Company
and Subsidiary agree to terminate or modify this Agreement. Any termination or
modification, no matter when agreed to, shall be deemed effective as of the end
of the then current taxable period. Notwithstanding termination, this
Agreement shall continue in effect with respect to any payment or refund (Tax
Liability to Parent or Tax Liability to Subsidiary) due for all taxable periods
prior to termination.
(2) All notices under this Agreement shall be in writing and
shall be deemed to have been sufficiently given or served and effective for all
purposes when presented personally, or sent by facsimile transmission (if
receipt of the transmission is confirmed in writing by the addressee) or three
days after being deposited in a United States postal receptacle for registered
or certified mail addressed, return receipt requested, postage prepaid, to any
person at the address set forth
5
Page _32_ of _34_ Pages
below, or at such other address as such party shall subsequently designate in
writing delivered in the form of a notice to:
If to Parent Company: Guardian Industries Corp.
Vice President and Tax Counsel
0000 Xxxxxx Xxxx
Xxxxxx Xxxxx, Xxxxxxxx 00000
If to Subsidiary: OIS Optical Imaging Systems, Inc.
Chief Financial Officer
00000 Xxxx Xxxx Xxxx
Xxxxxxxxxx, Xxxxxxxx 00000
(3) Neither this Agreement nor any provision hereof may be
changed, waived, discharged, or terminated orally but only by an instrument in
writing signed by the party against whom enforcement of the change, waiver,
discharge, or termination is sought.
(4) This Agreement shall constitute the entire agreement between
the parties concerning the subject matter hereof and shall supersede any prior
agreements and understandings between or among the parties with respect to the
subject matter hereof.
(5) The validity, interpretation, and enforceability of this
Agreement shall be governed in all respects by the laws of the State of
Michigan.
(6) Failure of any party at any time to require the other party's
performance of any obligation under this Agreement shall not affect the right
to require performance of that obligation. Any waiver by any party of any
breach of any provision of this Agreement shall not be construed as a waiver or
modification of the provision itself, or a waiver of any rights under this
Agreement.
(7) Every provision of this Agreement is intended to be
severable. If any term or provision is illegal or invalid for any reason
whatsoever, such illegality or invalidity shall not affect the validity of the
remainder of this Agreement.
(8) This Agreement may be executed in multiple counterparts each
of which shall be deemed an original and all of which shall constitute one
agreement, and the signatures of any party to any counterpart shall be deemed
to be a signature to, and may be appended to, any other counterpart.
(9) This Agreement shall be binding upon and inure to the benefit
of any successor, whether by statutory merger, acquisition of assets or
otherwise, to any of the parties hereto, to the same extent as if the successor
had been an original party to this Agreement.
(10) If during a United States consolidated income tax return
period Subsidiary acquires or organizes another corporation or company that is
allowed to be included in the consolidated return of the Affiliated Group, then
such corporation or company shall join in and be bound by this Agreement.
6
Page _33_ of _34_ Pages
IN WITNESS WHEREOF , the parties hereto have caused this Agreement to
be executed by their duly authorized representatives as of the date first above
written.
GUARDIAN INDUSTRIES CORP.
By / Xxxxxxx X. Xxxxxx /
--------------------------------------
Xxxxxxx X. Xxxxxx
Group Vice President/Finance
OIS OPTICAL IMAGING SYSTEMS, INC.
By / Xxxxxxx X. Xxxxxx /
--------------------------------------
Xxxxxxx X. Xxxxxx Executive
Vice-President and Chief
Financial Officer
