Exhibit 10.2
FORM OF TAX SHARING AGREEMENT
This Tax Sharing Agreement (this “Agreement”) is made as of the  _____  day of
 _____  2011 (the “Effective Date”) by and between                
                          , a                                           
corporation (“Subsidiary”), and Homeland Security Capital Corporation, a
Delaware corporation (“Parent”).
BACKGROUND
The background of this Agreement is as follows:
A. The Subsidiary is indirectly majority owned by Parent.
B. Subsidiary is a member of an “affiliated group,” as defined in §1504 of the
Internal Revenue Code of 1986, as amended from time to time and the regulations
thereunder (the “Code”), of which Parent is the common parent corporation.
C. Parent and Subsidiary desire that Subsidiary be included in the consolidated
federal income tax return of Parent.
D. Parent and Subsidiary wish to utilize the Tax Attributes (as defined herein)
of Parent to offset certain liabilities of the Combined Group (as defined
herein) and to strengthen the Subsidiary’s balance sheet.
E. A purpose of this Agreement is to set forth the obligations to be fulfilled
by Subsidiary under the consolidated reporting rules of the Code, as directed by
Parent, including without limitation the provisions of Treas. Regs. §1.1
502-33(d)(2) and § 1.1 552-1(b)(2), and to provide for specific treatment by
Subsidiary to Parent of certain Tax Attributes (as defined herein) of Parent
utilized by the Subsidiary on the Consolidated Return (as defined herein). An
additional purpose of this Agreement is to set forth the obligation of
Subsidiary to bear the full burden of its state tax liabilities, if any, to the
extent that Parent is required to pay state taxes based on Subsidiary’s income.
F. The parties intend that this Agreement shall terminate on the earlier of
(i) the mutual written agreement of the parties, (ii) if either party ceases to
be a member of the same Consolidated Group, and (iii) if the Consolidated Group
to which Parent and Subsidiary belong elects not to file a Consolidated Return
for any taxable year.
RECITAL
To the extent operating profits of Subsidiary provide for the use of and
viability of Parent’s Tax Attributes, this Agreement will set forth the terms
and conditions of utilization of the Tax Attributes.

 

 

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AGREEMENT
For valuable consideration, the receipt and adequacy of which are hereby
acknowledged, the parties agree as follows:
1. This Agreement is to be effective beginning with Parent’s combined group tax
reporting commencing                     , 2011. The term of this Agreement
shall continue until terminated in accordance with the terms hereof.
2. Subsidiary agrees to comply with all requests of Parent in connection with
this Agreement and pursuant to the Consolidated Group reporting requirements of
the Code.
3. Subsidiary agrees to execute or cause the execution of any further
documentation, including returns or elections, necessary or appropriate in
connection with or pursuant to the terms of this Agreement.
4. Not later than fifteen (15) days following the filing of the Company’s
Quarterly or Annual Report on Form 10-Q or Form 10-K, respectively, Parent shall
determine (and provide written notice (the “Tax Notice”) to the Subsidiary of
the aggregate amount of the Tax Attributes of Parent that are utilized to offset
income of the Subsidiary (the “Subsidiary Allocated Attributes”) as of the end
of such quarter and shall inform Subsidiary of such determination. The amount of
the Subsidiary Allocated Attributes shall be reflected in the intercompany
accounts as an amount payable by Subsidiary to Parent (on a dollar for dollar
basis). Subsidiary agrees to pay in pro rata monthly payments (as requested by
Parent) all intercompany payables related to the Subsidiary Allocated
Attributes.
For any fiscal quarter beginning on or after the Effective Date, in the event of
a change in the treatment of any Tax Item of any member of the Consolidated
Group as a result of a Final Determination, Parent shall calculate the change to
the Subsidiary’s Federal Income Tax and any change to the Subsidiary Allocated
Attributes, and such changes shall be properly reflected in the intercompany
accounts described in the preceding paragraph. Any change to the Subsidiary
Allocated Attributes shall be properly reflected in payments from Parent to
Subsidiary, or from Subsidiary to Parent, as the case may be.
To the extent Tax Attributes are determined and used by the Subsidiary, Parent
will first reduce any intercompany payables to the Subsidiary, and, to the
extent a balance of Tax Attributes remain, Parent, in light of the overall and
singular interests and business circumstances of Parent and Subsidiary, will
either
(i) Reinvest the remaining Tax Attribute balance as Additional Paid In Capital
to the Subsidiary;
(ii) Cause payment of the remaining Tax Attribute balance to Parent, or
(iii) A combination of (i) and (ii) above.
Parent and Subsidiary will review on a quarterly basis the treatment of the Tax
Attributes.

 

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5. The following capitalized terms used in this Agreement will have the
following meanings:
“Combined Return” means any Tax Return (other than for Federal Income Taxes)
filed on a consolidated, combined (including nexus combination, worldwide
combination, domestic combination, line of business combination or any other
form of combination), unitary or group relief basis for the Consolidated Group.
“Consolidated Group” means the affiliated group of corporations (as defined in
Section 1504(a) of the Code) of which Parent is the common parent corporation.
“Consolidated Return” means a Tax Return filed with respect to Federal Income
Taxes for the Consolidated Group.
“Federal Income Tax” means any Tax imposed under Subtitle A of the Code or any
other provision of United States Federal Income Tax law (including, without
limitation, the Taxes imposed by Sections 11, 55, 59A, and 1201(a) of the Code),
and any interest, additions to Tax or penalties applicable or related thereto.
“Final Determination” means the final resolution of any Tax (or other matter)
for a taxable period, including related interest or penalties, that, under
applicable law, is not subject to further appeal, review or modification through
proceedings or otherwise, including (i) by the expiration of a statute of
limitations or a period for the filing of claims for refunds, amending Tax
Returns, appealing from adverse determinations, or recovering any refund
(including by offset), (ii) by a decision, judgment, decree, or other order by a
court of competent jurisdiction, which has become final and unappealable,
(iii) by a closing agreement or an accepted offer in compromise under
Section 7121 or 7122 of the Code, or comparable agreements under laws of other
jurisdictions, (iv) by execution of an Internal Revenue Service Form 870 or
870-AD, or by a comparable form under the laws of other jurisdictions
(excluding, however, with respect to a particular Tax Item for a particular
taxable period any such form that reserves (whether by its terms or by operation
of law) the right of the taxpayer to file a claim for refund and/or the right of
the Tax Authority to assert a further deficiency with respect to such Tax Item
for such period), or (v) by any allowance of a refund or credit, but only after
the expiration of all periods during which such refund may be adjusted.
“IRS” means the United States Internal Revenue Service or any successor thereto,
including, but not limited to, its agents, representatives, and attorneys.
“Tax Attribute” means (i) with respect to the Consolidated Return, a
consolidated net operating loss, a consolidated net capital loss, a consolidated
unused investment credit, a consolidated unused foreign tax credit, a
consolidated excess charitable contribution, a U.S. federal minimum tax credit
or U.S. federal general business credit (but not tax basis or earnings and
profits) and (ii) any comparable Tax Item reflected on a Combined Return.
“Tax Authority” means a governmental authority (foreign or domestic) or any
subdivision, agency, commission or authority thereof or any quasi-governmental
or private body having jurisdiction over the assessment, determination,
collection or imposition of any Tax (including, without limitation, the IRS).
“Tax Item” means any item of income, gain, loss, deduction or credit, or other
item reflected on a Tax Return or any Tax Attribute.

 

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“Taxes” means all forms of taxation, whenever created or imposed, and whenever
imposed by a national, local, municipal, governmental, state, federation or
other body, and without limiting the generality of the foregoing, shall include
net income, alternative or add-on minimum tax, gross income, sales, use, ad
valorem, gross receipts, value added, franchise, profits, license, transfer,
recording, withholding, payroll, employment, excise, severance, stamp
occupation, premium, property, windfall profit, custom duty, or other tax,
governmental fee or other like assessment or charge of any kind whatsoever,
together with any related interest, penalties, or other additions to tax, or
additional amounts imposed by any such Tax Authority.
“Tax Return” means any return, report, certificate, form or similar statement or
document (including, any related or supporting information or schedule attached
thereto and any information return, amended Tax Return, claim for refund or
declaration of estimated tax) required to be supplied to, or filed with, a Tax
Authority in connection with the determination, assessment or collection of any
Tax or the administration of any laws, regulations or administrative
requirements relating to any Tax.
6. If, due to any change in applicable law or regulations or the interpretation
thereof by any court of law or other governing body having jurisdiction
subsequent to the date of this Agreement, performance of any provision of this
Agreement or any transaction contemplated thereby shall become impracticable or
impossible, the Parties hereto shall use their best efforts to find and employ
an alternative means to achieve the same or substantially the same result as
that contemplated by such provision.
7. If Parent is found liable to pay any state corporate Tax with respect to
income earned by Subsidiary, Subsidiary agrees to pay to Parent the entire
amount of such state corporate Tax liability within 45 days of written request
therefor, under such method as shall be adopted by Parent and Subsidiary from
time to time.
8. This Agreement shall be applicable only with respect to periods for which
Subsidiary and Parent are members of the same Consolidated Group filing a
Consolidated Return. No adjustments shall be made with respect to periods for
which either Subsidiary or Parent filed or files a separate return or is a
member of another Consolidated Group filing a Consolidated Return.
9. This Agreement shall terminate on the earlier of (i) the mutual written
agreement of the parties, (ii) if either party ceases to be a member of the same
Consolidated Group, and (iii) if the Consolidated Group to which Parent and
Subsidiary belong elects not to file a Consolidated Return for any taxable year.
However, notwithstanding termination, this Agreement shall continue to be
effective with respect to any period during the tax year in which termination
occurred for which the income of Subsidiary is includable in such Consolidated
Return. Notwithstanding any such termination, if upon audit by the IRS of the
Consolidated Return for a period during which Subsidiary and Parent were members
of a Consolidated Group, or as a result of any final administrative or judicial
proceedings for any such period, there is any adjustment to Federal Taxable
Income or any Tax Attributes of Parent, then such resulting change in the
Consolidated Group’s Consolidated Return will be allocated to Subsidiary in
accordance with the provisions of this Agreement.

 

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10. This Agreement shall commence on the Effective Date and shall continue in
effect as set forth in Section 9 hereof. Notwithstanding anything in this
Agreement to the contrary, the covenants in this Agreement shall remain in
effect and its provisions shall survive for the full period of all applicable
statutes of limitation (giving effect to any extension, waiver or mitigation
thereof).
11. This Agreement may not be assigned by either party without the prior written
consent of the other.
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The parties hereto have executed this Agreement as of the date set forth above.

                                              Homeland Security Capital
Corporation                          
 
                           
By:
              By:                                  
 
  Name:               Name:        
 
  Title:  
 
          Title:  
 
   
 
     
 
             
 
   

 

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