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EXHIBIT 10.11
TAX SHARING AGREEMENT
TAX
SHARING AGREEMENT (the " Agreement "), dated as of
January 26, 2007, between HARRIS STRATEX NETWORKS, INC., a
Delaware corporation (the " Company "), and HARRIS
CORPORATION, a Delaware corporation (" Harris "),
collectively referred to herein as the "parties".
W I T N E
S S E T H :
WHEREAS,
Harris, the Company, Stratex Networks, Inc., a Delaware corporation
(" Stratex "), and Stratex Merger Corp., a Delaware
corporation and wholly owned subsidiary of the Company, have
entered into an Amended and Restated Formation, Contribution and
Merger Agreement, dated as of December 18, 2006 (the "
Formation Agreement "), among the parties thereto
(capitalized terms used herein but not otherwise defined shall have
the meanings assigned to them in the Formation Agreement), pursuant
to which the Company was formed to acquire Stratex pursuant to the
Merger and to receive the Contributed Assets from Harris in the
Contribution Transaction, in each case on the terms and subject to
the conditions set forth in the Formation Agreement;
WHEREAS,
pursuant to the terms of the Formation Agreement, Harris and the
Company have agreed that Harris shall retain the Excluded Assets
and the Company shall not assume the Excluded Liabilities, which
include Income Taxes imposed with respect to the Contributed Assets
for the tax periods, or portions thereof, ended on or before the
Closing Date;
WHEREAS,
Harris owns approximately 56% of the voting equity interests of the
Company, which were acquired as of the date hereof pursuant to a
contribution of certain assets and subsidiaries in accordance with
the terms of the Formation Agreement; and
WHEREAS,
Harris may be required, under applicable law, to file Tax Returns
(as defined below) on a consolidated, combined or unitary basis
with the Company and/or one or more Subsidiaries of the Company
(each of the Company and such Subsidiaries, a "Company Affiliate")
which could result in a Company Affiliate deriving a benefit or
suffering a detriment attributable to some or all of Harris’s
retained Income Tax liabilities and assets.
NOW,
THEREFORE, in consideration of these premises and of the mutual
agreements and covenants herein contained, Harris and the Company
agree as follows:
SECTION 1. Consent . If
some or all of the items of gross income, gain, loss, deduction or
credit of any Company Affiliate (collectively " Company
Financial Results ") are required by law to be included in a
consolidated, combined or unitary income or franchise tax return or
report (a " Combined Return ") filed in any foreign, state
or local jurisdiction by Harris or any of its Subsidiaries other
than a Company Affiliate (each of Harris and such Subsidiaries, a "
Harris Affiliate ") for any taxable period ending after the
date of this Agreement, or if Harris and the Company mutually agree
to have one or more
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Harris Affiliates file a Combined Return including one or more
Company Affiliates, the Company consents, and agrees to cause its
Subsidiaries to consent, to be included, or otherwise have the
relevant Company Financial Results and any other items necessary to
prepare the Combined Return incorporated in such Combined Return.
If some or all of the items of gross income, gain, loss, deduction
or credit of any Harris Affiliate (collectively " Harris
Financial Results ") are required by law to be included in a
Combined Return filed in any foreign, state or local jurisdiction
by a Company Affiliate for any taxable period ending after the date
of this Agreement, or if Harris and the Company mutually agree to
have one or more Company Affiliates file a Combined Return
including one or more Harris Affiliates, Harris consents, and
agrees to cause its Subsidiaries to consent, to be included, or
otherwise have the relevant Harris Financial Results and any other
items necessary to prepare the Combined Return incorporated in such
Combined Return. In either case, each of Harris and the Company
shall execute and file, or cause its Subsidiaries to execute and
file, such consents, elections and other documents as may be
required or appropriate for the proper filing of such Combined
Returns. Each of Harris and the Company agrees that it shall
provide all of the information reasonably requested by the other in
connection with the preparation of any such Combined Return.
SECTION 2. Filing of Return and
Payment of Consolidated Tax Liability . The company designated
on any Combined Return as the principal reporting corporation (or
equivalent thereof) shall file the Combined Return and shall pay
the applicable Taxing
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authority the total Tax liability shown on the Combined Return,
including any interest, additions and penalties, at such time and
in such manner as such payments are required to be made.
SECTION 3. Reimbursements .
For any Combined Return to which this Agreement applies, the Tax
liability shown thereon shall be allocated based upon a
Hypothetical Harris Group Income (as computed under
Section 3(d) ), a Harris Credit Amount (as computed
under Section 3(c) ), a Hypothetical Company Group Income
(as computed under Section 3(d) ), and a Company Credit
Amount (as computed under Section 3(c) ), and
reimbursements shall be paid as described in the following
subparagraphs:
(a) If
the Taxes shown on a Combined Return were paid by a Harris
Affiliate, the Company shall reimburse Harris for the share of such
Taxes allocable to the Company, as computed under
Section 3(b) or Section 3(c) , as
applicable, or if the Company’s share of such Taxes is a
negative number, Harris shall reimburse the Company by an
offsetting amount. If the Taxes shown on a Combined Return were
paid by a Company Affiliate, Harris shall reimburse the Company for
the share of such Taxes allocable to Harris, as computed under
Section 3(b) , or if Harris’s share of such Taxes
is a negative number, the Company shall reimburse Harris by an
offsetting amount.
(b) The
pre-credit Tax liability shown on the Combined Return, exclusive of
interest and penalties, shall be allocated proportionally to Harris
and the Company
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based upon the ratio between the Hypothetical Harris Group
Income and the Hypothetical Company Group Income, each as computed
under Section 3(d) . If either element of such ratio is
a negative number, the allocation of Tax liability to the
corresponding party shall correspondingly be a negative number.
Harris’s allocated share of such Tax liability shall be
reduced (possibly below zero) by the Harris Credit Amount, and the
Company’s share of such Tax liability shall be reduced
(possibly below zero) by the Company Credit Amount, as computed
under Section 3(c) . Any imposition of interest and
penalties shall be allocated to the party whose act or failure to
act caused the interest or penalties to be imposed.
(c) The
Harris Credit Amount shall be the portion of the credits shown on a
Combined Return that were generated by activities or expenditures
of Harris Affiliates, and the Company Credit Amount shall be the
portion of the credits shown on the Combined Return that were
generated by activities or expenditures of Company Affiliates. If
any credit or credit limitation is computed on a combined basis,
the credit allowed shall be allocated based upon the respective
portions of the gross credit generated by Harris Affiliates, on the
one hand, and Company Affiliates, on the other, and the amount of
any carryback or carryover shall be likewise allocated.
(d) In
order to allocate the income and Taxes shown on a Combined Return,
the parties shall calculate (1) a Hypothetical Harris Group
Income as if the Combined Return had been prepared taking into
account only the Harris Financial Results relevant to such Combined
Return and (2) a Hypothetical Company Group
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Income as if the Combined Return had been prepared taking into
account only the Company Financial Results relevant to such
Combined Return.
(e) The
party whose affiliate has responsibility under
Section 2 for filing a Combined Return (the "Filing
Party") shall, for purposes of this Section 3 , make
initial computations of: (i) all amounts relevant to the
allocation of the Taxes shown on such Combined Return and
(ii) the allocation of interest and penalties, if any, and
shall provide the other party (the "Receiving Party") with a
detailed explanation in writing of such computations. If a Combined
Return shows losses, credits or other items that are eligible under
applicable law to be carried back or forward to another Taxable
year, the Filing Party shall also provide to the Receiving Party a
computation (following the principles of this Section 3
) of the amount of such losses, credits or other items that is
allocable to each party. The Receiving Party shall have thirty days
to review such computations.
(f) In
the event that the Receiving Party does not agree with the
computations provided pursuant to Section 3(g) , the
Receiving Party must provide its objection(s) in writing to the
Filing Party by the end of the thirty day review period. If the
Receiving Party fails to object in writing, it shall be deemed to
have consented to the Filing Party’s initial determination
and the amount owed by either party shall be due immediately. If
the Receiving Party objects in writing, the parties shall, in good
faith, use reasonable efforts to resolve the dispute. If the
dispute is not resolved within thirty days from the date of the
written objection, the dispute shall be referred to an
internationally recognized accounting firm, such accounting firm to
be selected with the
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consent of each party (such consent not to be unreasonably
withheld or delayed), f
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