<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) October 29, 1996
---------------------------
OIS OPTICAL IMAGING SYSTEMS, INC.
- --------------------------------------------------------------------------------
(Exact Name of Registrant as Specified in its Charter)
Delaware
- --------------------------------------------------------------------------------
(State or Other Jurisdiction of Incorporation or Organization)
0-16343 38-2544320
------------------------- ---------------------------------
(Commission File Number) (IRS Employer Identification No.)
47050 Five Mile Road, Northville, Michigan 48167
-------------------------------------------------------------------------
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including Area Code (313) 454-5560
----------------------
<PAGE> 2
ITEM 5. OTHER EVENTS
Creation of Series B Preferred Stock. On October 29, 1996, the Board of
Directors of the Registrant authorized the issuance of 100,000 shares of a
Series B Cumulative Preferred Stock, par value $0.01 (the "Series B
Preferred"). The Series B Preferred is not convertible into Common Stock or
any other security of the Registrant. However, each share of Series B
Preferred entitles the holder thereof to 350 votes on every matter submitted to
a vote of the shareholders of the Registrant. The Series B Preferred bears a
cumulative dividend at a rate of 8% for three years from the date of issuance
and at an increasing floating rate thereafter (subject to a cap of 16.5% per
year). The purchaser of shares of Series B Preferred cannot cause their
redemption, and the Registrant can redeem shares of Series B Preferred only
upon a vote of the directors of the Registrant that are independent of the
owner or owners of the shares of Series B Preferred being redeemed. The
foregoing description of the rights and preferences of the Series B Preferred
is qualified in its entirety by reference to the express provisions of the
resolution adopted by the Board of Directors of the Registrant setting forth
the rights and preferences of the Series B Preferred, a copy of which is
attached to this Form 8-K as Exhibit 4.1 and incorporated herein by reference.
Exchange of Preferred Stock. On October 30, 1996, the Registrant issued
38,137 shares of Series B Preferred to Guardian Industries Corp. ("Guardian")
in exchange for the 35,000 shares of Series A Preferred Cumulative Preferred
Stock previously acquired by Guardian. This exchange was approved by the
independent members of the Registrant's Board of Directors.
Purchase of Preferred Stock. On October 31, 1996, GD Investments Corp., a
Delaware corporation and subsidiary of Guardian ("GDIC"), purchased 21,000
shares of Series B Preferred from the Registrant for $1,000 per share. The
investment by GDIC was approved by the independent members of the Registrant's
Board of Directors. The investment in Series B Preferred will be accounted for
as equity by the Registrant.
Tax Consolidation. On October 31, 1996, the Registrant became eligible,
and has elected, to become a member of an affiliated group under Section
1504(a) of the Internal Revenue Code of 1986, as amended, with Guardian, GDIC
and Guardian's other qualifying subsidiaries (the "Affiliated Group"). As a
member of the Affiliated Group, the Registrant's tax attributes generated after
October 31, 1996 will be included in the single consolidated federal income tax
return filed by the Affiliated Group. Net operating losses of the Registrant
generated prior to October 31, 1996 will only be eligible to offset future
taxable income of the Registrant and cannot be used to offset the income of
other companies included in the Affiliated Group.
Tax Sharing Agreement. In order to provide funding for future operations
of the Registrant, the Registrant has entered into a Tax Sharing Agreement with
Guardian effective Novermber 1, 1996. Under the terms of the Tax Sharing
Agreement, Guardian will compensate the Registrant for the value of the
Registrant's losses and credits which are utilized by the
<PAGE> 3
Affiliated Group by making payments to the Registrant in an amount equal to
the difference between (i) the liability reflected on the Affiliated Group's
consolidated federal income tax return with the inclusion of the Registrant and
(ii) the liability without the inclusion of the Registrant. The foregoing
description of the terms of the Tax Sharing Agreement is qualified in its
entirety by reference to the express terms of the Tax Sharing Agreement, a copy
of which is attached to this Form 8-K as Exhibit 99.1 and incorporated herein
by reference.
ITEM 7. EXHIBITS
4.1 Resolution of the Board of Directors of the Registrant Establishing
the Series B Cumulative Preferred Stock
99.1 Tax Sharing Agreement between Guardian and the Registrant
SIGNATURES
Pursuant to requirements of the Securities and Exchange Act of 1934, the
Registrant has duly caused this Form 8-K to be signed on its behalf by the
undersigned, thereto duly authorized.
OIS OPTICAL IMAGING SYSTEMS, INC.
By: /s/ Rex Tapp
-----------------------------
Rex Tapp, President and Chief
Executive Officer
Date: November 5, 1996
<PAGE> 1
EXHIBIT 4.1
OIS OPTICAL IMAGING SYSTEMS, INC.
RESOLUTION AUTHORIZING
THE SERIES B CUMULATIVE PREFERRED STOCK
RESOLVED, that in accordance with the provisions of the Company's
Restated Certificate of Incorporation, as amended, (the "Certificate of
Incorporation") a series of cumulative preferred stock, $0.01 par value
("Series B Preferred"), be and hereby is created and authorized for issuance,
and that the designations and amounts thereof and the preferences,
qualifications, privileges, limitations, options, and other rights (the "Rights
and Preferences") of the Series B Preferred are as set forth in this resolution
(this "Designation Resolution"):
SECTION 1. Designation and Amount. The Company has authority to
issue 100,000 shares of Series B Preferred, which number may be increased or
decreased at any time and from time to time by resolution of the Board of
Directors (the "Board"), except that no decrease will reduce the number of
authorized shares of Series B Preferred to a number less than the number of
shares of Series B Preferred then outstanding.
SECTION 2. Dividends and Distributions.
2.1 Accrual of Dividends. The holders of shares of
Series B Preferred will be entitled to receive, when, as, and if declared by
the Board, out of legally available funds, dividends payable in cash as
hereinafter provided, which dividends will be paid prior and in preference to
any payment of any dividend to the holders of the common stock of the Company
and to all other classes or series of capital stock of the Company that are
hereafter designated to be subordinated to the Series B Preferred. Dividends
on each share of Series B Preferred will begin to accrue from the Original Date
Of Issuance (as defined in Section 9.1) of any such share and will accumulate
and be payable in cash (and not in kind) on the last day of June and December
in each year, computed on the Original Issuance Price (as defined in Section
9.2), at the following rates:
(a) during each of the first three (3) years from the
Original Date Of Issuance of any such share and
through the last day of June or December (as the case
may be), at an annual rate of 8%; and
(b) thereafter during each of years four (4) through six
(6) following the Original Date Of Issuance at one of
the following rates, as selected by a majority of the
disinterested members of the Company's Board of
Directors (the "Independent Directors") (and in the
absence of a selection by the Independent Directors,
the rate computed as provided in paragraph (i) will
apply):
<PAGE> 2
(i) a rate per annum equal to the sum of: (A)
LIBOR, as quoted on the Reuters Data Service
on the first day of January or July, as the
case may be; and (B) 125 basis points, which
rate will be recalculated as of the first day
of each January and July for the following
six-month period; or
(ii) a rate per annum equal to the sum of (A) the
three-year Treasury Bill yield, as quoted on
the Reuters Data Service on the first day of
the three-year period, and (B) 200 basis
points; and
(c) thereafter the "Independent Directors" may select one
of the following rates (in the absence of a selection
by the Independent Directors, the rate computed as
provided in paragraph (i) will apply):
(i) a rate per annum equal to the sum of: (A)
LIBOR, as quoted on the Reuters Data Service
on the first day of January or July, as the
case may be; and (B) 350 basis points, which
rate will be recalculated as of the first day
of each January and July for the following
six-month period; or
(ii) a rate per annum equal to the sum of (A) the
three-year Treasury Bill yield, as quoted on
the Reuters Data Service on the first day of
the applicable three-year period, and (B) 400
basis points, which rate will be recalculated
as of the first day of each three-year
period; and
(d) thereafter beginning with year ten (10) after the
Original Date Of Issuance and on each successive
three-year anniversary the rate then in effect will
increase by an additional 150 basis points.
(e) Notwithstanding anything herein to the contrary, the
dividend rate shall not at anytime exceed 16.5% per
annum.
During each of the first three (3) years from the Original Date of Issuance of
any share, no interest or sum of money in lieu of interest will be payable in
respect of any dividend payment or payments that may be in arrears, and accrued
and unpaid dividends will not compound. Thereafter, interest on accrued and
unpaid dividends will accrue and will be compounded semi-annually at the annual
dividend rate then in effect.
2.2 Payment of Dividends. Dividends on shares of Series B
Preferred will be paid on dates established by the Board of Directors (each
such date, a "Dividend Payment Date"). Dividends accruing on shares of Series
B Preferred for any period of less than a full year will be computed on the
basis of a 365 day year. Dividends paid on shares of Series B Preferred in an
<PAGE> 3
amount less than the total amount of the dividends accumulated on such shares
will be allocated in such manner so that holders of Series B Preferred share
ratably in the dividends so paid.
2.3 Record Date. The Board of Directors may fix a record
date for the determination of holders of shares of Series B Preferred entitled
to receive payment of a dividend or distribution declared thereon, which record
date will be no more than 60 days prior to the date fixed for the payment.
SECTION 3. No Conversion or Redemption Rights.
3.1 No Conversion Right. The holders of the shares of
Series B Preferred will not have any right to convert any such shares into
shares of any other class or series of capital stock of the Company, or into
rights, options or warrants to subscribe for or purchase shares of any other
class or series of capital stock of the Company.
3.2 No Redemption Right. The holders of Series B
Preferred will not have any right to require the Company to redeem any or all
of their shares. The Company will not redeem any shares of Series B Preferred
without the affirmative vote of a majority of the Independent Directors.
SECTION 4. Certain Restrictions.
4.1 Dividends and Distributions. At any time while any
shares of Series B Preferred are outstanding and any dividends accrued thereon
remain unpaid after any Liquidation (as defined in Section 6 below), the
Company will not:
(a) declare or pay dividends or make any other
distributions on any shares of stock ranking junior to the Series B Preferred
as to dividends; or
(b) declare or pay dividends or make any other
distributions on any shares of stock ranking on a parity with the Series B
Preferred as to dividends, except dividends or other distributions paid on the
Series B Preferred and all such parity stock in such proportions so that the
amount of dividends or other distributions declared in respect of each such
series or class of stock bear the same ratio to each other as the ratio that
the accumulated but unpaid dividends in respect of each such series or class of
stock bear to each other.
4.2 Redemption and Purchase. At any time while any shares
of Series B Preferred remain outstanding, the Company will not:
(a) redeem, purchase or otherwise acquire for
consideration (including pursuant to sinking fund requirements) shares of any
stock ranking junior to the Series B Preferred as to dividends and as to
liquidating distributions, except that the Company may at any time redeem,
purchase or otherwise acquire shares of any such junior stock by the conversion
of
<PAGE> 4
such shares into, or the exchange of such shares for, shares of any stock of
the Company ranking junior to the Series B Preferred as to dividends and as to
liquidating distributions;
(b) redeem pursuant to a sinking fund or otherwise
shares of any stock of the Company ranking on a parity with the Series B
Preferred as to dividends and as to liquidating distributions, except (i) by
means of a redemption pursuant to which all outstanding shares of Series B
Preferred and all stock of the Company ranking on a parity with the Series B
Preferred as to dividends and as to liquidating distributions are redeemed or
pursuant to which a pro rata redemption is made from all holders of the Series
B Preferred and all stock of the Company ranking on a parity with the Series B
Preferred as to dividends and as to liquidating distributions, the amount
allocable to each class or series of such stock being determined on the basis
of the aggregate liquidation preference of the outstanding shares of each such
class or series being redeemed, or (ii) by conversion of such parity stock
into, or exchange of such parity stock for, stock of the Company ranking junior
to the Series B Preferred as to dividends and as to liquidating distributions;
or
(c) purchase or otherwise acquire for any
consideration any stock of the Company ranking on a parity with the Series B
Preferred as to dividends and as to liquidating distributions, except (i)
pursuant to an acquisition made in accordance with the terms of one or more
offers to purchase all of the outstanding shares of Series B Preferred and all
stock of the Company ranking on a parity with the Series B Preferred as to
dividends and as to liquidating distributions (which offers will describe such
proposed acquisition of all such parity stock), each of which offers will have
been accepted by the holders of at least 50% of the shares of each series or
class of stock receiving such offer outstanding at the commencement of the
first of such purchase offers, or (ii) by conversion of such parity stock into,
or exchange of such parity stock for, stock of the Company ranking junior to
the Series B Preferred as to dividends and as to liquidating distributions.
SECTION 5. Reacquired Shares. Any shares of Series B Preferred
redeemed, purchased, or otherwise acquired by the Company in any manner
whatsoever will have the status of authorized but unissued shares of Series B
Preferred.
SECTION 6. Liquidation, Dissolution or Winding Up.
6.1 Liquidation Procedure. Upon any voluntary or
involuntary liquidation, dissolution, or winding up of the Company (a
"Liquidation"), the holders of the Series B Preferred then outstanding will be
entitled to be paid out of the assets of the Company available for distribution
to its shareholders an amount equal to the Original Issuance Price for each
outstanding share of Series B Preferred, plus any accrued but unpaid dividends
(the "Redemption Price"). No distribution will be made:
(a) to the holders of shares of stock ranking junior
to the Series B Preferred upon a Liquidation unless, prior thereto, each holder
of shares of Series B Preferred has
<PAGE> 5
received a distribution in the amount of the Redemption Price of such holder's
shares of Series B Preferred; or
(b) to the holders of shares of stock ranking on a
parity with the Series B Preferred upon a Liquidation, except distributions
made ratably on the Series B Preferred and all other such parity stock in
proportion to the total amounts to which the holders of all such shares are
entitled upon a Liquidation.
6.2 Shortfall in Payment on Liquidation. If the amount
available for distribution on Liquidation to holders of shares of Series B
Preferred is less than the aggregate Redemption Price of such shares, the
amount so available for distribution will be allocated among such holders in
such manner so that holders of Series B Preferred share ratably in the
distributions upon Liquidation so paid according to the respective aggregate
Redemption Price of shares of Series B Preferred held by such holders at the
time of such distribution.
6.3 No Other Rights. After payment in full of the
Redemption Price of the Series B Preferred, the Series B Preferred will not be
entitled to receive any additional cash, property, or other assets of the
Company upon the Liquidation of the Company. If the Company pays a liquidation
payment amounting in the aggregate to less than the Redemption Price of the
Series B Preferred, the Company in its discretion may require the surrender of
certificates evidencing the shares of Series B Preferred and issue a
replacement certificate or certificates, or it may require the certificates
evidencing the shares in respect of which such payments are to be made to be
presented to the Company, or its agent, for notation thereon of amounts of the
Redemption Price paid for such shares. If a certificate for Series B Preferred
on which payment of one or more partial Liquidation payments has been made is
presented for exchange or transfer, the certificate issued upon such exchange
or transfer will bear an appropriate notation as to the aggregate amount of the
Redemption Price that had been paid.
SECTION 7. Event of Default. An "Event of Default" will occur if the
Company fails to pay (a) the Redemption Price on any shares of the Series B
Preferred within thirty (30) days after such Redemption Price will be due or
(b) a dividend payment within thirty (30) days after the Dividend Payment Date.
SECTION 8. Voting Rights. The holders of shares of Series B Preferred
will have only the voting rights expressly provided in this Section 8 and the
rights expressly required by applicable law.
8.1 Ordinary Matters. Each share of Series B Preferred
will entitle the holder thereof to 350 votes on each and every matter submitted
to a vote of the shareholders of the Company.
8.2 Matters Affecting the Rights of Series B Preferred.
The affirmative vote of the holders of 75% of the outstanding shares of Series
B Preferred will be required for the Company to (a) amend or repeal any
provisions of the Certificate of Incorporation or of this
<PAGE> 6
Designation Resolution, if the amendment or repeal would materially adversely
affect the Rights and Preferences of the Series B Preferred, or (b) amend the
Certificate of Incorporation or adopt a designation resolution to create or
increase the amount of any class or series of capital stock that would rank
senior to or on parity with the Series B Preferred as to dividend and/or
liquidation rights.
8.3 Voting Rights Upon Default in Payment of Dividends.
Without in any way limiting the rights and remedies of holders of shares of
Series B Preferred at law, in equity, or pursuant to contractual arrangement
with the Company, upon an Event of Default the affirmative vote of the holders
of a majority of outstanding shares of Series B Preferred will be required for
the Company to sell or lease all or substantially all of the Company's
properties or assets.
SECTION 9. Definitions.
9.1 "Original Date Of Issuance" of any share of Series B
Preferred means the date on which: (a) a subscription agreement for that share
has been received by the Company and (b) the consideration for that share has
been fully paid by the initial purchaser.
9.2 "Original Issuance Price" means, with respect to
Series B Preferred, One Thousand Dollars ($1,000.00) per share.
<PAGE> 1
EXHIBIT 99.1
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.
<PAGE> 2
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
<PAGE> 3
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
<PAGE> 4
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
<PAGE> 5
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
2300 Harmon Road
Auburn Hills, Michigan 48326
If to Subsidiary: OIS Optical Imaging Systems, Inc.
Chief Financial Officer
47050 Five Mile Road
Northville, Michigan 48167
(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.
<PAGE> 6
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 / Jeffrey A. Knight /
--------------------------------------
Jeffrey A. Knight
Group Vice President/Finance
OIS OPTICAL IMAGING SYSTEMS, INC.
By / Charles C. Wilson /
--------------------------------------
Charles C. Wilson Executive
Vice-President and Chief
Financial Officer
