TAX ALLOCATION AGREEMENT
This Agreement is entered into as of July 30, 1997, by and between Amoco
Corporation, an Indiana corporation ("Amoco"), and Vysis, Inc., a Delaware
corporation ("Vysis").
WHEREAS, Amoco and Vysis are part of an affiliated group as defined in section
1504(a) of the Internal Revenue Code, and join in the filing of a consolidated
federal income tax return and may, from time to time, join in the filing of one
or more consolidated or combined state and local income tax returns.
WHEREAS, Vysis is an indirect, wholly-owned subsidiary of Amoco.
WHEREAS, Vysis owns all the issued and outstanding stock of other companies.
WHEREAS, Vysis anticipates selling its own common stock to investors in one or
more series of issues such that Vysis and its domestic subsidiaries will
eventually no longer be entitled to file consolidated federal income tax returns
or, in some cases, consolidated or combined state and local income tax returns,
effective as of a date yet to be determined.
WHEREAS, Amoco and Vysis desire to clarify the method for allocating among
themselves and their respective affiliates their consolidated federal income tax
liability, together with their consolidated or combined state and local income
tax liability or foreign tax liability, and any adjustments thereto.
NOW, THEREFORE, in consideration of the mutual promises contained herein, the
parties agree as follows:
1. DEFINITIONS
For purposes of this Agreement, the following terms shall have the meanings set
forth herein:
(a) "AMOCO AFFILIATED GROUP": The affiliated group of corporations, of which
Amoco is the common parent, that joins in the filing of a consolidated federal
income tax return under Subtitle A, Chapter 6 of the Code.
(b) "AMOCO ALLOCATION METHODOLOGY": The consolidated tax allocation methodology
currently used by the Amoco Affiliated Group under sections 1.1552-1(a)(2)(ii)
and 1.1502-33(d)(2)(ii) of the Regulations as in effect prior to 1995, using 100
percent as the fixed percentage for purposes of allocating the additional amount
under section 1.1502-33(d)(2)(ii)(b).
(c) "AMOCO MEMBER": A corporation, including Amoco, which is a member of the
Amoco Affiliated Group.
(d) "CODE": The Internal Revenue Code of 1986, as amended.
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(e) "DECONSOLIDATION DATE": The date, if any, on which Vysis ceases to be an
Amoco Member.
(f) "REGULATIONS": Federal income tax regulations.
(g) "THIRD PARTY INVESTORS": Holders of Vysis common stock other than Amoco or
an Amoco Member.
(h) "VYSIS MEMBER": A corporation, including Vysis, that would join in the
filing of a federal consolidated income tax return under Subtitle A, Chapter 6
of the Code with Vysis as the common parent if Vysis were not an Amoco Member,
whether or not such corporation is also an Amoco Member.
(i) "VYSIS SUBSIDIARY": A corporation, not a Vysis Member, in which a Vysis
Member owns at least 50 percent of the common stock.
2. FILING OF TAX RETURNS; LIABILITY FOR TAX (IN GENERAL)
Amoco shall be responsible for the filing of consolidated federal income tax
returns for a Vysis Member for each year during which such corporation shall
continue to be an Amoco Member, including any partial year ending with the
Deconsolidation Date. Amoco shall also file or cause to be filed all required
state and local income and franchise tax returns for years in which both an
Amoco Member and a Vysis Member or Vysis Subsidiary are required to be included.
Amoco shall not otherwise be responsible for the filing of any federal, state or
local tax returns for or on behalf of any Vysis Member, including any federal
income tax returns for years beginning on or after the Deconsolidation Date, nor
shall Amoco be responsible for the filing of any foreign tax returns. Except as
otherwise provided in Section 4, Amoco shall be responsible for the payment of
all taxes (and shall be entitled to all refunds) with respect to which Amoco is
required to file a return under this section, but shall not be responsible for
the payment of any other taxes (of any kind) that may be assessed against or
owed or incurred by any Vysis Member or Vysis Subsidiary.
3. ALLOCATION OF CONSOLIDATED FEDERAL INCOME TAX LIABILITY
For so long as Vysis shall continue to be an Amoco Member, every Vysis Member
that is an Amoco Member shall remain subject to the Amoco Allocation
Methodology. Consistently with that methodology, it is understood and agreed
that Amoco shall not be required to credit or reimburse any Vysis Member for any
tax benefit Amoco has received or may receive as a result of deductions or
losses attributable to any Vysis Member for any year prior to 1996. However,
for any taxable year, including a partial year, beginning in 1996 and ending on
the Deconsolidation Date, in which the Vysis Group in the aggregate has
deductions or losses which provide a tax benefit to Amoco, computed in a manner
consistent with the Amoco Allocation Methodology, Amoco shall reimburse Vysis
for such tax benefit by reducing, by the amount of the benefit, the Vysis equity
or debt to which Amoco would otherwise have been or will be entitled as a result
of its incremental funding of Vysis. Amoco shall not, however, be required to
reimburse Vysis for any research
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credits or any other tax credits which Amoco may claim, whether or not based in
whole or in part on activities conducted by Vysis. Vysis Members leaving the
Amoco Affiliated Group during a taxable year shall not retain any tax attributes
acquired while an Amoco Member except those attributes specifically addressed in
section 1.1502-79 of the Regulations.
4. ALLOCATION OF STATE AND LOCAL TAX LIABILITY
For any year, including a partial year, beginning on or after the
Deconsolidation Date in which any Vysis Member or Vysis Subsidiary is required
to be included in any combined or consolidated state or local income or
franchise tax filing by an Amoco Member, Vysis shall pay Amoco an amount equal
to the total incremental tax liability occasioned by the inclusion of Vysis
Members or Vysis Subsidiaries in such filings, and Amoco shall pay Vysis an
amount equal to the total incremental tax savings occasioned by the inclusion of
Vysis Members or Vysis Subsidiaries in such filings. The payment by Amoco or by
Vysis shall be determined by taking the total combined or consolidated state and
local tax liability resulting from such filings for such year, and comparing
that liability to the liability computed with respect to the same filings as if
no Vysis Member or Vysis Subsidiary were included.
5. PAYMENT
Payments, if any, due to Amoco from Vysis under Section 3 of this Agreement,
including estimated tax payments, shall be made the later of the dates Amoco is
required to pay estimated and final taxes or within ten days after the date
Amoco notifies the Vysis Group that payment is due. Any amounts due Amoco from
Vysis under Section 4 shall be made within 10 days after Amoco shall have
notified Vysis of such amounts due, after computation under the methodology set
forth in that Section. Any amounts due Vysis from Amoco under Section 4 shall
be made within 45 days after Amoco shall have filed the last state return
required to make the computation described in that Section.
6. ADJUSTMENTS TO STATE, LOCAL, OR CONSOLIDATED FEDERAL INCOME TAX LIABILITY
If state or local tax liability is adjusted, whether by amended return or audit,
and such adjustment shall affect the allocation prescribed in Section 4, the
liability of each Amoco Member or Vysis Member or Vysis Subsidiary under that
Section shall, where appropriate, be recomputed, and Vysis or Amoco, as the case
may be, shall pay the other party such amounts as may be determined by the
recomputation; but no amounts shall be paid during any year in which the net
amount due to one party or the other does not exceed $50,000. Except as
provided in the preceding sentence, any deficiencies or refunds on any tax with
respect to any Vysis Member or Vysis Subsidiary, whether by amended return or
audit, for any period up to and including the Deconsolidation Date shall be for
the sole account of Amoco. In no event shall there be any recomputation of
reimbursements due from Amoco to Vysis for tax benefits pursuant to Section 3 on
account of such deficiencies or refunds.
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7. TERMINATION
This Agreement shall terminate on December 31, 1998. It may, however, be
renewed for an additional term of three years at Amoco's option upon written
notice to Vysis, which notice must be delivered or postmarked no later than
November 30, 1998.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized Officers on the dates indicated below.
AMOCO CORPORATION
By: Date:
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Its:
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VYSIS, INC.
By: Date:
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Its:
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