Common use of Tax Consequences of Payments Clause in Contracts

Tax Consequences of Payments. Except as otherwise required by applicable Law, for all Tax purposes, the Parties agree to treat: (a) any payment required by this Agreement (other than payments with respect to interest accruing from the date an applicable payment is required to be made pursuant to this Agreement) as either a contribution by YUM to SpinCo or a distribution by SpinCo to YUM, as the case may be, occurring immediately prior to the Effective Time, or as a payment of an assumed or retained liability; and (b) any payment of interest as taxable or deductible, as the case may be, to the Party entitled under this Agreement to receive such payment or required under this Agreement to make such payment. In the event that, pursuant to Section 4.5 or otherwise pursuant to this Agreement any such payment is made by a member of the YUM Group or the SpinCo Group (other than YUM or SpinCo) or is received by a member of the YUM Group or the SpinCo Group (other than YUM or SpinCo), then for all Tax purposes the Parties shall treat such payment as being made and received by YUM or SpinCo, as the case may be, with corresponding distributions or contributions deemed to occur between YUM and the applicable members of the YUM Group or SpinCo and the applicable members of the SpinCo Group, as the case may be. If any payment under this Agreement causes, directly or indirectly, an increase in the Taxes owed by the recipient (or any of the members of its Group) under one or more applicable Tax Laws through withholding or otherwise, the payor’s payment obligation under this Agreement shall be grossed up to take into account any additional Taxes that may be owed by the recipient (or any of the members of its Group) as a result of such payment. For the avoidance of doubt, the preceding sentence shall not be applied to result in any duplication of a payment where, in accordance with another provision herein, a payment under this Agreement is calculated on an After-Tax Basis. The Parties shall cooperate in good faith to calculate any such gross up and After-Tax Basis amount, to minimize the amount of any Taxes imposed with respect to the receipt of any payment under this Agreement and to maximize the amount of any Tax Benefits to the recipient of any such indemnity payment with respect to the underlying liability. In the event that a Tax Authority asserts that the treatment by YUM, SpinCo or a member of their respective Groups of a payment pursuant to this Agreement should be other than as required pursuant to this Section 4.7, YUM or SpinCo, as appropriate, shall promptly provide written notice to the other Party and use its commercially reasonable efforts to contest such assertion.

Tax Consequences of Payments. Except as otherwise required by applicable Law, for For all Tax purposes, the Parties agree to treat: hereto shall treat (ai) any payment required by made pursuant to this Agreement (other than payments with respect to interest accruing from the date an applicable payment is required to be made pursuant to this Agreementrepresenting interest) as either a contribution by YUM to SpinCo the relevant entity or a distribution by SpinCo the relevant entity (or as adjustments to YUMsuch contribution or distribution) occurring immediately prior to the VRLP Distribution or the Distribution or the VRLP Contribution, as the case may be, occurring immediately prior to the Effective Time, or as a payment of an assumed or retained liability; and (bii) any payment of interest as taxable or deductible, as the case may be, to the Party entitled under this Agreement to receive retain such payment or required under this Agreement to make such payment. In the event that, pursuant to Section 4.5 or in either case except as otherwise pursuant to this Agreement any such payment is made required by a member of the YUM Group or the SpinCo Group (other than YUM or SpinCo) or is received by a member of the YUM Group or the SpinCo Group (other than YUM or SpinCo), then for all Tax purposes the Parties shall treat such payment as being made and received by YUM or SpinCo, as the case may be, with corresponding distributions or contributions deemed to occur between YUM and the applicable members of the YUM Group or SpinCo and the applicable members of the SpinCo Group, as the case may beLaw. If the receipt or accrual of any indemnity payment under this Agreement causes, directly or indirectly, an increase in the Taxes owed by taxable income of the recipient (or any of the members of its Group) under one or more applicable Tax Laws through withholding or otherwiseLaws, such payment shall be increased so that, after the payment of any Taxes with respect to the payment, the payor’s recipient thereof shall have realized the same net amount it would have realized had the payment obligation under this Agreement shall be grossed up to take into account any additional Taxes that may be owed by the recipient (or any of the members of its Group) as a result of such paymentnot resulted in taxable income. For the avoidance of doubt, any liability for Taxes due to an increase in taxable income described in the immediately preceding sentence shall be governed by this Section 4.4 and not be applied by Section 2.1. To the extent that Taxes for which any Party hereto (the “Indemnifying Party”) is required to result in any duplication of a payment where, in accordance with another provision herein, a payment under pay an Indemnified Party pursuant to this Agreement is calculated on an After-Tax Basis. The Parties shall cooperate may be deducted or credited in good faith to calculate any such gross up and After-Tax Basis amount, to minimize determining the amount of any other Taxes imposed required to be paid by the Indemnified Party (for example, state Taxes which are permitted to be deducted in determining federal Taxes), the amount of any payment made to the Indemnified Party by the Indemnifying Party shall be decreased by taking into account any resulting reduction in other Taxes actually realized by the Indemnified Party. If such a reduction in Taxes of the Indemnified Party occurs following the payment made to the Indemnified Party with respect to the receipt of any payment under this Agreement and to maximize relevant indemnified Taxes, the Indemnified Party shall promptly repay the Indemnifying Party the amount of any such reduction when actually realized. If the Tax Benefits to Benefit arising from the recipient foregoing reduction of any such indemnity payment with respect to the underlying liability. In the event that a Tax Authority asserts that the treatment by YUM, SpinCo or a member of their respective Groups of a payment pursuant to this Agreement should be other than as required pursuant to Taxes described in this Section 4.74.4 is subsequently decreased or eliminated, YUM or SpinCo, as appropriate, then the Indemnifying Party shall promptly provide written notice to pay the other Indemnified Party and use its commercially reasonable efforts to contest the amount of the decrease in such assertionTax Benefit.