Common use of Protective Tax Election Clause in Contracts

Protective Tax Election. The Company and Newco shall make a protective election under Section 362(e)(2)(C) of the Code as provided in Proposed Treasury Regulation § 1.362-4(c)(1) and Notice 2005-70, 2005-2 CB 694 such that if the basis of the Company assets is greater than their fair market value at the time of the Transaction, the basis of said assets shall not be reduced and instead the basis of Newco stock issued in the Transaction is reduced. The Company and Newco agree to cooperate to perfect said protective election if it is determined that the basis of the Company assets is in excess of their fair market value. The Company and Newco shall attach such statements as they mutually agree to their income tax returns as are necessary to make said protective election, to perfect such protective election if necessary, or to make an election under Section 362(e)(2)(C) of the Code if by the time said returns are filed such an election is necessary because the Company and Newco have determined at the time of the Transaction that the fair market value of the Company assets was less than their basis. Notwithstanding the foregoing, the Company and Newco agree that a protective election will not be made if the Company and Newco determine that Section 362(e)(2) of the Code does not apply to the Transaction pursuant to Proposed Treasury Regulation § 1.362-4(b)(6) or for any other reason.