Common use of Characterization of and Adjustments to Payments Clause in Contracts

Characterization of and Adjustments to Payments. (a) For all Tax purposes, Navy and Red Lion agree to treat (i) any payment required by this Agreement (other than payments with respect to interest accruing after the Closing Date) as either a contribution by Navy to Red Lion or a Red Lion Entity or a distribution by Red Lion or a Red Lion Entity to Navy, as the case may be, occurring immediately prior to the Closing Date and (ii) any payment of non-federal Taxes by or to a Taxing Authority or any payment of interest as taxable or deductible, as the case may be, as paid to the Party entitled under this Agreement to retain such payment or required under this Agreement to make such payment, in either case except as otherwise required by applicable Law. (b) Any indemnity payment under this Article III shall be decreased to take into account an amount equal to the Tax Benefit actually realized by the Indemnified Party (which Tax Benefit would not have arisen or been realized but for such indemnified liability).