Section 368(a) Reorganization Covenants Clause Samples

Section 368(a) Reorganization Covenants. (a) Prior to the Effective Time, each party will use its best efforts to cause the Merger to qualify as a reorganization within the meaning of Section 368(a) of the Code and, either before or after the Merger, no party will take any action reasonably likely to cause the Merger not to qualify as such reorganization. Pursuant to the foregoing, each party agrees to make such commercially reasonable additions or modifications to the terms of this Agreement as may be reasonably necessary to permit the Merger so to qualify. (b) The Purchaser will cause the Surviving Corporation or other members of the Purchaser “qualified group” (within the meaning of Treasury Regulations Section 1.368-1(d)(4)(ii)) to either continue the historic business of Target or use a significant portion of Target’s historic business assets in a business, both within the meaning of Treasury Regulation Section 1.368-1(d). (c) The parties hereto agree that, unless otherwise required by law, they (i) will report in their respective federal income Tax Returns for the taxable period including the Closing Date that the Merger qualified as a reorganization under Section 368(a)(1)(A) of the Code and Section 368(a)(2)(E) of the Code, (ii) will not take any Tax reporting position inconsistent with the characterization of the Merger as a reorganization within the meaning of Section 368(a) of the Code, and (iii) will properly file with their federal income Tax Returns all information required by Treasury Regulations Section 1.368-3.