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EXHIBIT 10.4
TAX ALLOCATION AGREEMENT
AGREEMENT dated ______________ by and among Odetics, Inc. (Parent FEIN:
00-0000000) and each of its undersigned subsidiaries.
WITNESSETH
WHEREAS, the parties hereto are members of an affiliated group (Affiliated
Group) as defined in Section 1504(a); and
WHEREAS, such Affiliated Group has filed U.S. consolidated income tax returns
for its tax years ended March 31, 1993 through March 31, 1995 and is required
to file consolidated tax returns for subsequent years; and
WHEREAS, it is the intent and desire of the parties hereto that a formalized
agreement be entered into to document the method established for allocating the
consolidated tax liability of the Affiliated Group among its members, for
reimbursing the Parent (or the subsidiary making such payment for the Parent)
of such tax liability, and for allocating and paying any refund arising from a
carryback of losses or tax credits from subsequent tax years.
Now, THEREFORE, in consideration of the mutual covenants and promises contained
herein, the parties hereto agree as follows:
1. A U.S. consolidated income tax return is filed by the Parent. Each
subsidiary shall execute and file such consent, elections, and other
documents that may be required or appropriate for the proper filing of
such returns.
2. The Parent and each Subsidiary agree that the consolidated tax
liability for each year, determined in accordance with Regulation
Section 1.1502-2, shall be apportioned among them in accordance with
Internal Revenue Code Section 1552(a)(1). For purposes of this
agreement, the consolidated tax liability shall include any liability
for alternative minimum tax. In applying that Internal Revenue Code
and regulations, the tax liability for a given tax year shall be
apportioned only among the members of the Affiliated Group with
separate company taxable income for that tax year. The tax liability
will be allocated to these profit members in the same ratio as each
member's separate company taxable income bears to the total of the
separate company taxable incomes of all profit members. No tax
liability will be allocated to a member of the affiliated group with a
current year taxable loss. Further, no benefit will be provided to a
loss member for utilization of its net operating loss by another
member. For purposes of allocating alternative minimum tax,
alternative minimum taxable income amounts shall be substituted for
taxable income amounts in the this calculation.
3. Payment of the consolidated tax liability for a taxable period shall
include the payment of estimated tax installments due to such taxable
period, each subsidiary shall pay to the Parent its share of each
payment within _____ days of receiving notice of such payment from the
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Tax Allocation Agreement December 1, 1996
Parent, but in no event later than the due date for each such payment.
Any amounts paid by a subsidiary on account of a separate return or
separate estimated tax payments that are credited against the
consolidated tax liability of the Affiliated Group shall be included
in determining the payments due from such subsidiary. Any overpayment
of estimated tax should be refunded to the subsidiary.
4. If part or all of an unused tax credit is allocated to a member of the
Affiliated Group pursuant to Regulation Section 1.1502-79, and is
carried back or forward to a year in which such 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 carryover shall be retained by such member.
Notwithstanding the above, the Parent shall determine whether an
election shall be made not to carry back part or all of a consolidated
net operating loss for any tax year in accordance with Internal
Revenue Code Section 172(b)(3).
5. If the consolidated tax liability is adjusted for any taxable period,
whether by means of an amended return, net operating loss carryback,
claim for refund, or after a tax audit by the Internal Revenue
Service, the liability of each member shall be recomputed to give
effect to such adjustments, and in the case of a refund, the Parent or
designated subsidiary shall make payment to each member for its share
of the refund, determined in the same manner as in paragraph 2 above,
within ___ days after the refund is received by the Parent, and in the
case of an increase in tax liability, each member shall pay to the
Parent its allocable share of such increased tax liability within ___
days after receiving notice of such liability from the parent.
6. If during a consolidated return period, the Parent or any subsidiary
acquires or organizes another corporation that is required to be
included in the consolidated return, then such corporation shall join
in and be bound by this agreement.
7. This agreement shall apply to the tax year ending _________________,
and all subsequent taxable periods unless the Parent and the
subsidiaries agree to terminate the agreement and the Affiliated Group
properly elects to change its method for allocating tax liability
pursuant to the Internal Revenue Code and Treasury Regulations.
Notwithstanding such termination, this agreement shall continue in
effect with respect to any payment or refunds due for all taxable
periods prior to termination.
8. 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 the agreement.
IN WITNESS WHEREOF, the parties hereto have caused this agreement to be
executed by their duly authorized representatives on _______________.
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Tax Allocation Agreement December 1, 1996
ODETICS, INC. (FEIN #: 00-0000000)
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Officer Title
ATL PRODUCTS, INC. (FEIN #: 00-0000000)
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Officer Title