Exhibit 10.2





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.


 


 









 





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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