Tax Indemnification. (i) Subject to Section 6.5(d)(v), from and after the Closing, Seller Parent agrees to indemnify and hold harmless Purchaser and its Subsidiaries (including the Conveyed Subsidiaries and their Subsidiaries after the Closing Date) (collectively, the “Purchaser Tax Indemnified Parties”) from and against all liability, without duplication, for (1) Taxes of the Conveyed Subsidiaries and their Subsidiaries for any Pre-Closing Tax Period (including any Taxes payable in respect of an election under Section 965(h) of the Code), (2) Taxes of any Seller (other than any Transfer Taxes and VAT for which Purchaser is responsible hereunder) including, Taxes (other than Taxes of the Conveyed Subsidiaries and their Subsidiaries) imposed with respect to, arising out of or relating to the Purchased Assets or the Business for a Pre-Closing Tax Period, (3) Taxes of any Person (other than the Conveyed Subsidiaries and their Subsidiaries) for a Pre-Closing Tax Period for which any Conveyed Subsidiary (or any Subsidiary thereof) is liable under Treasury Regulation Section 1.1502-6 (or a similar provision of state, local or foreign Law), or as a transferee or successor or by Contract (other than Contracts that do not relate primarily to Taxes), (4) Taxes arising out of or resulting from any breach of any covenant or agreement of Seller Parent or any of its Affiliates contained in this Agreement, (5) Taxes for a Pre-Closing Tax Period imposed on (x) any transaction effected pursuant to Section 2.3(b), (y) any settlement of any intercompany accounts of Seller Parent or its Subsidiaries pursuant to Section 6.7, or (z) any transaction or step forming part of the Seller Internal Restructurings, (6) Transfer Taxes for which Seller Parent is responsible under Section 6.5(j), (7) Taxes required to be deducted or withheld with respect to the payment of the Purchase Consideration or any amounts payable to Seller Parent pursuant to Section 2.8 or Section 2.9, including any penalties imposed on Purchaser as a result of Purchaser’s failure to deduct or withhold any such amounts that Purchaser (or a Purchaser Designated Affiliate) was permitted to withhold under Section 2.10 (in each case, subject to Purchaser’s compliance with the notice and cooperation requirements of Section 2.10 and except for any such Taxes (and any related penalties) required to be deducted or withheld solely as a result of any assignment by Purchaser or its Affiliates for which Purchaser is responsible pursuant to Section 10.3), (8) Taxes arising from any breach of any representation or warranty contained in Section 4.16(k), (9) Taxes arising as a result of any Conveyed Subsidiary or any Subsidiary of any Conveyed Subsidiary at any time ceasing to be a member of a group for the purposes of any Tax, of which group Seller Parent or any Subsidiary of Seller Parent is or was also a member and (10) any costs and expenses, including reasonable legal and accounting fees and expenses, attributable to any item described in clauses (1) through (9) (any such Taxes for which Seller Parent is responsible pursuant to this Section 6.5(d)(i), subject to the following proviso, “Seller Indemnified Taxes”); provided that Seller Parent shall not be required to indemnify or hold harmless any Purchaser Tax Indemnified Party from and against any liability pursuant to this Section 6.5(d)(i) for (A) Taxes attributable to any action taken after the Closing by Purchaser, any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries), or any transferee of Purchaser or any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries), other than any such action that (1) is in the ordinary course of business, (2) is expressly permitted or contemplated by this Agreement, or (3) is required to be taken in order to comply with applicable Law or as a result of a change in applicable Law (a “Purchaser Tax Act”), (B) Taxes that were reflected, accrued or reserved for in the Final Closing Statement, Final Business Working Capital, or Final Business Net Cash, (C) Income Taxes to the extent that a Conveyed Subsidiary or any Subsidiary thereof had any Tax Assets as of the close of business on the Closing Date that were available, or would have been available but for their prior utilization by Purchaser or any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries after the Closing) to offset or otherwise reduce the applicable Tax Liability in respect of such Income Taxes (except any Tax Asset reflected as an asset in the Final Closing Statement and taken into account in the calculation of the Final Business Working Capital or the Final Business Net Cash), or (D) Taxes for which Purchaser Parent is responsible under Section 6.5(d)(ii). (ii) Subject to Section 6.5(d)(v), from and after the Closing, Purchaser Parent shall indemnify and hold harmless the Purchaser Tax Indemnified Parties from and against all liability, without duplication, for (1) all Taxes of Purchaser Parent and its Affiliates (other than Purchaser and its Subsidiaries) for any Tax period (other than Transfer Taxes and VAT for which Seller Parent is responsible hereunder), (2) Taxes of Purchaser and its Subsidiaries (other than the Conveyed Subsidiaries and their Subsidiaries) for any Pre-Closing Tax Period, (3) Taxes of any Person for a Pre-Closing Tax Period for which Purchaser (or any Subsidiary thereof other than any Conveyed Subsidiaries and their Subsidiaries) is liable under Treasury Regulation Section 1.1502-6 (or a similar provision of state, local or foreign Law), or as a transferee or successor or by Contract (other than Contracts that do not relate primarily to Taxes), (4) Taxes arising out of or resulting from any breach of any covenant or agreement of Purchaser Parent, Purchaser or their respective Affiliates contained in this Agreement, (5) Transfer Taxes for which Purchaser Parent is responsible under Section 6.5(j), (6) Taxes arising from any breach of any representation or warranty in Section 5.17(k), (7) Taxes for a Pre-Closing Tax Period imposed on (x) any settlement of any intercompany accounts of Purchaser or any Subsidiary of Purchaser, on the one hand, and Purchaser Parent or any Subsidiary of Purchaser Parent (other than Purchaser and its Subsidiaries), on the other hand, pursuant to Section 6.7 or (y) any transaction or step forming part of the Purchaser Internal Restructurings, (8) Taxes required to be deducted or withheld with respect to any amounts payable to Purchaser Parent pursuant to Section 2.8 or Section 2.9, including any penalties imposed on Purchaser as a result of Purchaser’s failure to deduct or withhold any such amounts, (9) Taxes arising as a result of Purchaser or any Subsidiary of Purchaser (other than any Conveyed Subsidiary or a Subsidiary thereof) at any time ceasing to be a member of a group for the purposes of any Tax, of which group Purchaser Parent or any Subsidiary of Purchaser Parent (other than Purchaser or any Subsidiary of Purchaser) is or was also a member and (10) any costs and expenses, including reasonable legal and accounting fees and expenses, attributable to any item described in clauses (1) through (9) (any such Taxes for which Purchaser Parent is responsible pursuant to this Section 6.5(d)(ii), subject to the following proviso, “Purchaser Parent Indemnified Taxes”); provided that Purchaser Parent shall not be required to indemnify or hold harmless any Purchaser Tax Indemnified Party from and against any liability for (A) Taxes attributable to any action taken after the Closing by Seller Parent or any of its Affiliates, other than any such action that (1) is in the ordinary course of business, (2) is expressly permitted or contemplated by this Agreement, or (3) is required to be taken in order to comply with applicable Law or as a result of a change in applicable Law (a “Seller Tax Act”), (B) Taxes that were reflected, accrued or reserved for in the Final Closing Statement, Final Purchaser Working Capital or the Final Purchaser Net Cash, (C) Income Taxes to the extent that Purchaser or any Subsidiary thereof had any Tax Assets as of the close of business on the Closing Date that were available, or would have been available but for their prior utilization by Purchaser or any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries after the Closing), to offset or otherwise reduce the applicable Tax Liability in respect of such Income Taxes (except any Tax Asset reflected as an asset in the Final Closing Statement and taken into account in the calculation of the Final Purchaser Working Capital or the Final Purchaser Net Cash), or (D) Taxes for which Seller Parent is responsible under Section 6.5(d)(i). (iii) To the extent permitted or required by applicable Law, the taxable year of each of the Conveyed Subsidiaries and their Subsidiaries and any Subsidiary of Purchaser that includes the Closing Date shall be treated as closing on (and including) the Closing Date. Otherwise, for purposes of this Agreement, in the case of any Straddle Period: (A) Property Taxes allocable to the Pre-Closing Tax Period shall be computed based upon the ratio of the number of days in the Pre-Closing Tax Period to the number of days in the entire Straddle Period; and (B) Taxes (other than Property Taxes) allocable to the Pre-Closing Tax Period shall be computed as if such Tax period ended as of the close of business on the Closing Date and, in the case of any Taxes of Conveyed Subsidiaries (and their Subsidiaries) and Seller Parent, or in the case of any Taxes of Purchaser Parent and Purchaser (and their Subsidiaries prior to the Closing), in each case attributable to the ownership of any equity interest in any partnership or other “flow through” entity for tax purposes (including of any “controlled foreign corporation,” as defined under the Code) as if the Tax period of such partnership or other “flow through” entity ended as of the close of business on the Closing Date with the Taxes of such entity for the Pre-Closing Tax Period deemed to include any Taxes on the allocable income of such entity in respect of such Tax period; provided that exemptions, allowances or deductions that are calculated on an annual basis (including depreciation and amortization deductions) shall be allocated between the period ending on the Closing Date and the period beginning after the Closing Date in proportion to the number of days in each period. (iv) Any claim for indemnification under this Section 6.5(d) shall be made in writing upon the party from whom indemnification is sought, and shall specify in reasonable detail the basis for such claim. Any indemnity payment required to be made pursuant to this Section 6.5(d) shall be made within thirty (30) days after the indemnified party makes written demand upon the indemnifying party, but in no case earlier than five (5) Business Days prior to the date on which the relevant Taxes are required to be paid to the applicable Taxing Authority. (v) With respect to any Taxes suffered or incurred by any Conveyed Subsidiary (or any Subsidiary thereof) that was not wholly owned by Seller Parent (directly or indirectly) as of immediately prior to the Closing, the indemnification obligations of Seller Parent pursuant to Section 6.5(d)(i) in respect of such Taxes (or related costs and expenses) shall in no event exceed an amount equal to (A) the amount of such Taxes (or related costs and expenses) for which the Purchaser Tax Indemnified Parties would otherwise be entitled to indemnification pursuant to Section 6.5(d), as if such Conveyed Subsidiary (or any Subsidiary thereof) were wholly owned by Seller Parent, multiplied by (B) the direct and indirect percentage ownership of Seller Parent of such Conveyed Subsidiary (or Subsidiary thereof) as of immediately prior to the Closing. With respect to any Taxes suffered or incurred by any Subsidiary of Purchaser Parent (including Purchaser and its Subsidiaries) that was not wholly owned by Purchaser Parent (directly or indirectly) as of immediately prior to the Closing, the indemnification obligations of Purchaser Parent pursuant to Section 6.5(d)(ii) in respect of such Taxes (or related costs and expenses) shall in no event exceed an amount equal to (A) the amount of such Taxes (or related costs and expenses) for which the Purchaser Tax Indemnified Parties would otherwise be entitled to indemnification pursuant to Section 6.5(d), as if such Subsidiary were wholly owned by Purchaser Parent, multiplied by (B) the direct and indirect percentage ownership of Purchaser Parent of such Subsidiary as of immediately prior to the Closing. (vi) Without duplication to any other amounts paid pursuant to this Section 6.5: (A) Within thirty (30) days following the filing of any Income Tax Return for any Conveyed Subsidiary (or any Subsidiary thereof), on the one hand, or Purchaser (or any Subsidiary thereof, other than the Conveyed Subsidiaries and their Subsidiaries), on the other hand, for any Pre-Closing Tax Period or for any Straddle Period, Seller Parent or Purchaser Parent shall (or Purchaser Parent shall cause Purchaser to) prepare a statement showing (i) the amount of Income Taxes shown as due on such filed Income Tax Return with respect to the relevant Pre-Closing Tax Period or the portion of any Straddle Period ending on and including the Closing Date (the “Final Pre-Closing Income Tax Amount”) and (ii) the amount of the Seller Accrued Income Taxes or Purchaser Accrued Income Taxes, as applicable, attributable to such Income Tax Return as reflected on the Final Closing Statement (the “Pre-Closing Income Tax Amount”) and deliver such statement to Seller Parent and Purchaser Parent, as applicable. Purchaser Parent or Seller Parent, as applicable, shall have a period of fifteen (15) Business Days to provide comments to a schedule prepared (or caused to be prepared) by Seller Parent or Purchaser Parent, respectively. If Purchaser Parent or Seller Parent, as applicable, do not provide any comments to Seller Parent or Purchaser Parent, respectively, during such period, the statement as so prepared shall be final and binding. (B) In the event the Final Pre-Closing Income Tax Amount with respect to any Income Tax Return is less than the amount of the Pre-Closing Income Tax Amount attributable to such Income Tax Return that was included on the Final Closing Statement, the Purchaser shall within five (5) Business Days following the finalization of the Final Pre-Closing Income Tax Amount hereunder (i) pay to Seller Parent the amount of such difference with respect to a Conveyed Subsidiary and their Subsidiaries and (ii) pay to Purchaser Parent the amount of such difference with respect to Purchaser and its Subsidiaries. (vii) The Parties shall use reasonable best efforts to structure any indemnity payment, true-up payment, or payment in respect of Tax Benefits made by any Party pursuant to this Agreement (including pursuant to this Section 6.5, Section 6.6 and Article VII) and any payment made by Purchaser Parent to Purchaser pursuant to Section 2.8 or Section 2.9 in the manner set forth in Clause 10 of the Structuring Considerations Agreement. The Parties shall use reasonable best efforts to structure as a special dividend any payment made by Purchaser to Purchaser Parent pursuant to Section 2.8, Section 2.9 or this Section 6.5.

Appears in 4 contracts

Sources: Stock and Asset Purchase Agreement (Haleon PLC), Stock and Asset Purchase Agreement (Haleon PLC), Stock and Asset Purchase Agreement (Glaxosmithkline PLC)

Tax Indemnification. (ia) ~~Subject to Section 6.5(d)(v), from~~ From and ~~after the Closing, Seller Parent agrees to indemnify and hold harmless Purchaser and its Subsidiaries (including the Conveyed Subsidiaries and their Subsidiaries~~ after the Closing Date) , Parent and Seller shall indemnify and defend Buyer, its Affiliates and each member of the Company Group (each, a “Tax Indemnified Buyer Party” and collectively, the “~~Purchaser~~ Tax Indemnified Buyer Parties”) against and hold the Tax Indemnified Buyer Parties harmless from any and ~~against~~ all ~~liability, without duplication, for (1) Taxes~~ of the Conveyed Subsidiaries and their Subsidiaries for any Pre-Closing Tax Period (including any Taxes payable in respect of an election under Section 965(h) of the Code), (2) Taxes of any Seller (other than any Transfer following Taxes and VAT for which Purchaser is responsible hereunder) including, Taxes (other than Taxes of the Conveyed Subsidiaries and their Subsidiaries) imposed with respect to, arising out of or relating to the Purchased Assets or the Business for a Pre-Closing Tax Period, (3) Taxes of any Person (other than the Conveyed Subsidiaries and their Subsidiaries) for a Pre-Closing Tax Period for which any Conveyed Subsidiary (or any Subsidiary thereof) is liable under Treasury Regulation Section 1.1502-6 (or a similar provision of state, local or foreign Law), or as a transferee or successor or by Contract (other than Contracts that do not relate primarily to Taxes), (4) Taxes arising out of or resulting from any breach of any covenant or agreement of Seller Parent or any of its Affiliates contained in this Agreement, (5) Taxes for a Pre-Closing Tax Period imposed on (x) any transaction effected pursuant to Section 2.3(b), (y) any settlement of any intercompany accounts of Seller Parent or its Subsidiaries pursuant to Section 6.7, or (z) any transaction or step forming part of the Seller Internal Restructurings, (6) Transfer Taxes for which Seller Parent is responsible under Section 6.5(j), (7) Taxes required to be deducted or withheld with respect to the payment of the Purchase Consideration or any amounts payable to Seller Parent pursuant to Section 2.8 or Section 2.9, including any penalties imposed on Purchaser as a result of Purchaser’s failure to deduct or withhold any such amounts that Purchaser (or a Purchaser Designated Affiliate) was permitted to withhold under Section 2.10 related Damages (in each case, ~~subject~~ whether imposed, assessed, due or otherwise payable directly, as a successor or transferee, jointly and/or severally, pursuant to ~~Purchaser’s compliance with~~ a contract or other agreement entered (or assumed) by any member of the ~~notice and cooperation requirements of Section 2.10 and except~~ Company Group on or prior to the Closing Date, or for any ~~such Taxes~~ other reason) actually incurred (each a “Tax Loss” and ~~any related penalties) required to be deducted or withheld solely as a result of any assignment by Purchaser or its Affiliates for which Purchaser is responsible pursuant to Section 10.3)~~collectively, (8) Taxes arising from any breach of any representation or warranty contained in Section 4.16(k), (9) Taxes arising as a result of any Conveyed Subsidiary or any Subsidiary of any Conveyed Subsidiary at any time ceasing to be a member of a group for the purposes of any Tax, of which group Seller Parent or any Subsidiary of Seller Parent is or was also a member and (10) any costs and expenses, including reasonable legal and accounting fees and expenses, attributable to any item described in clauses (1) through (9) (any such Taxes for which Seller Parent is responsible pursuant to this Section 6.5(d)(i“Tax Losses”), subject to the following proviso, “Seller Indemnified Taxes”); provided that Seller Parent shall not be required to indemnify or hold harmless any Purchaser Tax Indemnified Party from and against any liability pursuant to this limitations in Section ~~6.5(d)(i~~9.3(f) ~~for (A) Taxes attributable to any action taken after~~ of the Closing by Purchaser, any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries), or any transferee of Purchaser or any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries), other than any such action that (1) is in the ordinary course of business, (2) is expressly permitted or contemplated by this Agreement, or (3) is required to be taken in order to comply with applicable Law or as a result of a change in applicable Law (a “Purchaser Tax Act”), (B) Taxes that were reflected, accrued or reserved for in the Final Closing Statement, Final Business Working Capital, or Final Business Net Cash, (C) Income Taxes to the extent that a Conveyed Subsidiary or any Subsidiary thereof had any Tax Assets as of the close of business on the Closing Date that were available, or would have been available but for their prior utilization by Purchaser or any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries after the Closing) to offset or otherwise reduce the applicable Tax Liability in respect ~~of such Income Taxes~~ of: (except any Tax Asset reflected as an asset in the Final Closing Statement and taken into account in the calculation of the Final Business Working Capital or the Final Business Net Cash), or (D) Taxes for which Purchaser Parent is responsible under Section 6.5(d)(ii). (ii) Subject to Section 6.5(d)(v), from and after the Closing, Purchaser Parent shall indemnify and hold harmless the Purchaser Tax Indemnified Parties from and against all liability, without duplication, for (1) all Taxes of Purchaser Parent and its Affiliates (other than Purchaser and its Subsidiaries) for any Tax period (other than Transfer Taxes and VAT for which Seller Parent is responsible hereunder), (2) Taxes of Purchaser and its Subsidiaries (other than the Conveyed Subsidiaries and their Subsidiaries) for any Pre-Closing Tax Period, (3i) Taxes of any Person for a Pre-Closing Tax Period for which Purchaser (or any Subsidiary thereof other than any Conveyed Subsidiaries and their Subsidiaries) is liable under Treasury Regulation Section 1.1502-6 (or a similar provision of state, local or foreign Law), or as a transferee or successor or by Contract (other than Contracts that do not relate primarily to Taxes), (4) Taxes arising out of or resulting from any breach of any covenant or agreement of Purchaser Parent, Purchaser or their respective Affiliates contained in this Agreement, (5) Transfer Taxes for which Purchaser Parent is responsible under Section 6.5(j), (6) Taxes arising from any breach of any representation or warranty in Section 5.17(k), (7) Taxes for a Pre-Closing Tax Period imposed on (x) any settlement of any intercompany accounts of Purchaser or any Subsidiary of Purchaser, on the one hand, and Purchaser Parent or any Subsidiary of Purchaser Parent (other than Purchaser and its Subsidiaries), on the other hand, pursuant to Section 6.7 or (y) any transaction or step forming part member of the Purchaser Internal Restructurings, (8) Taxes required to be deducted or withheld with respect to any amounts payable to Purchaser Parent pursuant to Section 2.8 or Section 2.9, including any penalties imposed on Purchaser as a result of Purchaser’s failure to deduct or withhold any such amounts, (9) Taxes arising as a result of Purchaser or any Subsidiary of Purchaser (other than any Conveyed Subsidiary or a Subsidiary thereof) at any time ceasing to be a member of a group for the purposes of any Tax, of which group Purchaser Parent or any Subsidiary of Purchaser Parent (other than Purchaser or any Subsidiary of Purchaser) is or was also a member and (10) any costs and expenses, including reasonable legal and accounting fees and expenses, Company Group attributable to any item described in clauses (1) through (9) (any such Taxes for which Purchaser Parent is responsible pursuant to this Section 6.5(d)(ii), subject to the following proviso, “Purchaser Parent Indemnified Taxes”); provided that Purchaser Parent shall not be required to indemnify taxable periods ending on or hold harmless any Purchaser Tax Indemnified Party from and against any liability for (A) Taxes attributable to any action taken after the Closing by Seller Parent or any of its Affiliates, other than any such action that (1) is in the ordinary course of business, (2) is expressly permitted or contemplated by this Agreement, or (3) is required to be taken in order to comply with applicable Law or as a result of a change in applicable Law (a “Seller Tax Act”), (B) Taxes that were reflected, accrued or reserved for in the Final Closing Statement, Final Purchaser Working Capital or the Final Purchaser Net Cash, (C) Income Taxes to the extent that Purchaser or any Subsidiary thereof had any Tax Assets as of the close of business on before the Closing Date ~~that were available,~~ or would have been available but for their prior utilization by Purchaser or any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries after the Closing), to offset or otherwise reduce the applicable Tax Liability in respect of such Income Taxes (except any Tax Asset reflected as an asset in the Final Closing Statement and taken into account in the calculation of the Final Purchaser Working Capital or the Final Purchaser Net Cash), or (D) Taxes for which Seller Parent is responsible allocable under Section 6.5(d)(i). (iii) To the extent permitted or required by applicable Law, the taxable year of each of the Conveyed Subsidiaries and their Subsidiaries and any Subsidiary of Purchaser that includes the Closing Date shall be treated as closing on (and including) the Closing Date. Otherwise, for purposes 5 of this ~~Agreement, in the case of any Straddle Period: (A) Property Taxes allocable~~ Annex I to the Pre-Closing Tax Period shall be computed based upon the ratio of the number of days in the Pre-Closing Tax Period to the number of days in the entire Straddle Period; and (B) Taxes (other than Property Taxes) allocable to the Pre-Closing Tax Period shall be computed as if such Tax period ended as of the close of business on the Closing Date and, in the case of any Taxes of Conveyed Subsidiaries (and their Subsidiaries) and Seller Parent, or in the case of any Taxes of Purchaser Parent and Purchaser (and their Subsidiaries prior to the Closing), in each case attributable to the ownership of any equity interest in any partnership or other “flow through” entity for tax purposes (including of any “controlled foreign corporation,” as defined under the Code) as if the Tax period of such partnership or other “flow through” entity ended as of the close of business on the Closing Date with the Taxes of such entity for the Pre-Closing Tax Period deemed to include any Taxes on the allocable income of such entity in respect of such Tax period; provided that exemptions, allowances or deductions that are calculated on an annual basis (including depreciation and amortization deductions) shall be allocated between the period ending on the Closing Date and the period beginning after the Closing Date in proportion to the number of days in each period. (iv) Any claim for indemnification under this Section 6.5(d) shall be made in writing upon the party from whom indemnification is sought, and shall specify in reasonable detail the basis for such claim. Any indemnity payment required to be made pursuant to this Section 6.5(d) shall be made within thirty (30) days after the indemnified party makes written demand upon the indemnifying party, but in no case earlier than five (5) Business Days prior to the date on which the relevant Taxes are required to be paid to the applicable Taxing Authority. (v) With respect to any Taxes suffered or incurred by any Conveyed Subsidiary (or any Subsidiary thereof) that was not wholly owned by Seller Parent (directly or indirectly) as of immediately prior to the Closing, the indemnification obligations of Seller Parent pursuant to Section 6.5(d)(i) in respect of such Taxes (or related costs and expenses) shall in no event exceed an amount equal to (A) the amount of such Taxes (or related costs and expenses) for which the Purchaser Tax Indemnified Parties would otherwise be entitled to indemnification pursuant to Section 6.5(d), as if such Conveyed Subsidiary (or any Subsidiary thereof) were wholly owned by Seller Parent, multiplied by (B) the direct and indirect percentage ownership of Seller Parent of such Conveyed Subsidiary (or Subsidiary thereof) as of immediately prior to the Closing. With respect to any Taxes suffered or incurred by any Subsidiary of Purchaser Parent (including Purchaser and its Subsidiaries) that was not wholly owned by Purchaser Parent (directly or indirectly) as of immediately prior to the Closing, the indemnification obligations of Purchaser Parent pursuant to Section 6.5(d)(ii) in respect of such Taxes (or related costs and expenses) shall in no event exceed an amount equal to (A) the amount of such Taxes (or related costs and expenses) for which the Purchaser Tax Indemnified Parties would otherwise be entitled to indemnification pursuant to Section 6.5(d), as if such Subsidiary were wholly owned by Purchaser Parent, multiplied by (B) the direct and indirect percentage ownership of Purchaser Parent of such Subsidiary as of immediately prior to the Closing. (vi) Without duplication to any other amounts paid pursuant to this Section 6.5: (A) Within thirty (30) days following the filing of any Income Tax Return for any Conveyed Subsidiary (or any Subsidiary thereof), on the one hand, or Purchaser (or any Subsidiary thereof, other than the Conveyed Subsidiaries and their Subsidiaries), on the other hand, for any Pre-Closing Tax Period or for any Straddle Period, Seller Parent or Purchaser Parent shall (or Purchaser Parent shall cause Purchaser to) prepare a statement showing (i) the amount of Income Taxes shown as due on such filed Income Tax Return with respect to the relevant Pre-Closing Tax Period or the portion of any Straddle Period ending on ~~and including~~ the Closing Date (~~the~~ “~~Final~~ Pre-Closing ~~Income Tax Amount~~Taxes”) , and such periods (~~ii) the amount of the Seller Accrued Income Taxes or Purchaser Accrued Income Taxes~~and portions thereof), ~~as applicable~~collectively, ~~attributable to such Income Tax Return as reflected on the Final Closing Statement (~~the “Pre-Closing ~~Income~~ Taxable Period”); (ii) Taxes of any member of an affiliated, consolidated, combined or unitary group of which any member of the Company Group is or was a member on or prior to the Closing Date (including the Affiliated Group), including such Taxes that any member of the Company Group is liable for under Treas. Reg. § 1.1502-6 or comparable provision of foreign, state or local Law; (iii) Taxes resulting from (A) a breach of a representation or warranty contained in Section 3.8 (Tax ~~Amount”~~Matters) ~~and deliver such statement to Seller Parent and Purchaser Parent,~~ (in each case construed as ~~applicable. Purchaser Parent~~ if they were not qualified by “knowledge,” “material,” “material adverse effect” or ~~Seller Parent, as applicable, shall have a period of fifteen (15~~similar language) ~~Business Days to provide comments to a schedule prepared (~~or caused to be prepared) by Seller Parent or Purchaser Parent, respectively. If Purchaser Parent or Seller Parent, as applicable, do not provide any comments to Seller Parent or Purchaser Parent, respectively, during such period, the statement as so prepared shall be final and binding. (B) In a breach of a covenant or other agreement of the ~~event~~ Seller contained in this Annex I or Section 6.1(a)(ii)(N); (iv) Seller’s allocable share of all Transfer Taxes as determined under Section 8 of this Annex I; (v) Taxes resulting from any loss, reduction, disallowance, or unavailability (in whole or in part) of any refund (whether as cash or a credit or offset against Taxes otherwise payable) that (A) was included in the ~~Final~~ computation of Net Working Capital or Net Company Debt as finally determined or (B) gave rise to a payment to, or for the benefit of Seller under Section 6 of this Annex I; (vi) Taxes resulting from the Pre-Closing ~~Income Tax Amount~~ Transactions; and (vii) Taxes incurred by Buyer, or any of its Affiliates with respect to any income of any member of the Company Group that is a “controlled foreign corporation” or partnership for U.S. federal Income Tax ~~Return~~ purposes which was realized in its year including the Closing Date, but is ~~less than~~ attributable to the ~~amount~~ portion of such year that ends on the Closing Date (computed assuming each member of the ~~Pre~~Company Group had a year that ended as of the end of the Closing Date); provided, however, that Parent and Seller shall not be liable for (x) any Taxes to the extent reserved for as an Included Current Liability in the computation of Net Working Capital, as finally determined (or in the case of Income Taxes, to the extent included in the computation of Net Company Debt, as finally determined); (y) any Taxes imposed on any member of the Company Group as a result of transactions occurring on the Closing Date that are outside the ordinary course of business and not contemplated by this Agreement and properly allocable (based on, among other relevant factors, factors set forth in Treas. Reg. § 1.1502-76(b)(1)(ii)(B)) to the portion of the Closing ~~Income~~ Date after the Closing; or (z) any interest or penalties imposed or assessed, or Tax ~~Amount~~ Losses incurred, to the extent attributable to ~~such Income~~ Buyer’s late filing or lack of cooperation as required by Section 3(c) of this Annex I that causes late filing by Parent or Seller of any Tax Return ~~that was included on the Final Closing Statement, the Purchaser shall within five (5) Business Days following the finalization~~ of a member of the ~~Final Pre-~~Company Group due after the Closing ~~Income~~ Date (after taking into account all appropriately requested extensions made by Parent, Seller or a member of the Company Group prior to the Closing Date) or late payment of any Taxes shown as due on such Tax ~~Amount hereunder~~ Return (unless such late filing or payment is attributable to a breach of a covenant by Seller or Parent or representation or warranty with respect to any member of the Company Group by the Seller or Parent). (b) From and after the Closing Date, Buyer shall indemnify and defend Parent, Seller, and their Affiliates, and hold them harmless against the following Taxes: (i) ~~pay~~ Taxes of any member of the Company Group for a taxable period, or portion of the Straddle Period for which Buyer is responsible pursuant to Section 5 of this Annex I, (other than to the extent such Taxes are to be paid or otherwise indemnified by Parent of Seller ~~Parent the amount~~ under Section 1(a) of ~~such difference with respect to a Conveyed Subsidiary and their Subsidiaries and~~ this Annex I); (ii) ~~pay to Purchaser Parent~~ Buyer’s allocable share of all Transfer Taxes as determined under Section 8 of this Annex I; (iii) Taxes as a result of transaction occurring on the ~~amount~~ Closing Date that are outside of ~~such difference with respect to Purchaser~~ the ordinary course of business and ~~its Subsidiaries. (vii) The Parties shall use reasonable best efforts to structure any indemnity payment, true-up payment, or payment in respect of Tax Benefits made~~ not contemplated by ~~any Party pursuant to~~ this Agreement and properly allocable (~~including pursuant to this Section 6.5~~based on, ~~Section 6.6 and Article VII) and any payment made by Purchaser Parent to Purchaser pursuant to Section 2.8 or Section 2.9 in the manner~~ among other relevant factors, factors set forth in ~~Clause 10~~ Treas. Reg. § 1.1502-76(b)(1)(ii)(B)) to the portion of the ~~Structuring Considerations Agreement. The Parties~~ Closing Date after the Closing; (iv) Taxes to the extent reserved for as an Included Current Liability in the computation of the Net Working Capital, as finally determined (or in the case of Income Taxes, included in the computation of Net Company Debt, as finally determined); and (v) any interest or penalties imposed or assessed, or Tax Losses incurred, to the extent attributable to Buyer’s late filing or lack of cooperation as required by Section 3(c) of this Annex I that causes late filing by Parent or Seller of any Tax Return of any member of the Company Group due after the Closing Date (after taking into account all appropriately requested extensions made by Parent, Seller or member of the Company Group prior to the Closing Date) or a late payment of any Taxes shown as due on such Tax Return (other than to the extent such Taxes are to be indemnified by Parent or Seller under Section 1(a) of this Annex I).; provided, however, Buyer shall ~~use reasonable best efforts~~ not have any obligation under any provision of this Annex I for any interest or penalties imposed or assessed, or Tax Losses incurred, to ~~structure~~ the extent attributable to Parent, Seller, or any of their Affiliates late filing of any Tax Return or late payment of any Taxes shown as due on such Tax Return, other than as a ~~special dividend any payment made~~ result of a lack of cooperation by ~~Purchaser to Purchaser Parent pursuant to~~ Buyer as required by Section ~~2.8, Section 2.9 or~~ 3(c) of this ~~Section 6.5.~~Annex I.

Appears in 4 contracts

Sources: Share Purchase Agreement (SSI Southland Holdings, Inc.), Share Purchase Agreement (Trestle Transport, Inc.), Transition Services Agreement (St. Johnsbury Transfer Station, Inc.)

Tax Indemnification. (ia) ~~Subject to Section 6.5(d)(v), from~~ From and after the Closing, ~~Seller~~ Parent agrees to indemnify the Purchaser Indemnitees against and agrees to hold each of them harmless from any and all Damages incurred or suffered by any Purchaser ~~and its Subsidiaries (including~~ Indemnitee to the Conveyed Subsidiaries and their Subsidiaries after the Closing Date) (collectively, the “Purchaser Tax Indemnified Parties”) from and against all liability, without duplication, for (1) Taxes of the Conveyed Subsidiaries and their Subsidiaries for any Pre-Closing Tax Period (including any Taxes payable in respect of an election under Section 965(h) of the Code), (2) Taxes of any Seller (other than any Transfer Taxes and VAT for which Purchaser is responsible hereunder) including, Taxes (other than Taxes of the Conveyed Subsidiaries and their Subsidiaries) imposed with respect to, extent arising out of or relating ~~to the Purchased Assets or the Business for a Pre-Closing Tax Period,~~ to: (3i) ~~Taxes~~ any breach of any ~~Person~~ representation or warranty of Parent in Section 4.14 of this Agreement; (~~other than the Conveyed Subsidiaries and their Subsidiaries~~ii) for a Pre-Closing Tax Period for which any Conveyed Subsidiary (or any Subsidiary thereof) is liable under Treasury Regulation Section 1.1502-6 (or a similar provision of state, local or foreign Law), or as a transferee or successor or by Contract (other than Contracts that do not relate primarily to Taxes), (4) Taxes arising out of or resulting from any breach of any covenant or agreement ~~of Seller~~ made or to be performed by Parent or any of its Affiliates contained in this Agreement, (5) Taxes for a Pre-Closing Tax Period imposed on (x) any transaction effected pursuant to Section 2.3(b), (y) any settlement of any intercompany accounts of Seller Parent or its Subsidiaries pursuant to Section 6.7, or (z) any transaction or step forming part of the Seller Internal Restructurings, (6) Transfer Taxes for which Seller Parent is responsible under Section 6.5(j), (7) Taxes required to be deducted or withheld with respect to the payment of the Purchase Consideration or any amounts payable to Seller Parent pursuant to Section 2.8 or Section 2.9, including any penalties imposed on Purchaser as a result of Purchaser’s failure to deduct or withhold any such amounts that Purchaser (or a Purchaser Designated Affiliate) was permitted to withhold under Section 2.10 (in each case, subject to Purchaser’s compliance with the notice and cooperation requirements of Section 2.10 and except for any such Taxes (and any related penalties) required to be deducted or withheld solely as a result of any assignment by Purchaser or its Affiliates for which Purchaser is responsible pursuant to Section 10.3), (8) Taxes arising from any breach of any representation or warranty contained in Section 4.16(k), (9) Taxes arising as a result of any Conveyed Subsidiary or any Subsidiary of any Conveyed Subsidiary at any time ceasing to be a member of a group for the purposes of any Tax, of which group Seller Parent or any Subsidiary of Seller Parent is or was also a member and (10) any costs and expenses, including reasonable legal and accounting fees and expenses, attributable to any item described in clauses (1) through (9) (any such Taxes for which Seller Parent is responsible pursuant to this ~~Section 6.5(d)(i), subject~~ Agreement and relating to ~~the following proviso, “Seller Indemnified~~ Taxes”); provided that Seller Parent shall not be required to indemnify or hold harmless any Purchaser Tax Indemnified Party from and against any liability pursuant to this Section 6.5(d)(i) for (A) Taxes attributable to any action taken after the Closing by Purchaser, any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries), or any transferee of Purchaser or any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries), other than any such action that (1) is in the ordinary course of business, (2) is expressly permitted or contemplated by this Agreement, or (3) is required to be taken in order to comply with applicable Law or as a result of a change in applicable Law (a “Purchaser Tax Act”), (B) Taxes that were reflected, accrued or reserved for in the Final Closing Statement, Final Business Working Capital, or Final Business Net Cash, (C) Income Taxes to the extent that a Conveyed Subsidiary or any Subsidiary thereof had any Tax Assets as of the close of business on the Closing Date that were available, or would have been available but for their prior utilization by Purchaser or any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries after the Closing) to offset or otherwise reduce the applicable Tax Liability in respect of such Income Taxes (except any Tax Asset reflected as an asset in the Final Closing Statement and taken into account in the calculation of the Final Business Working Capital or the Final Business Net Cash), or (D) Taxes for which Purchaser Parent is responsible under Section 6.5(d)(ii).; (ii) Subject to Section 6.5(d)(v), from and after the Closing, Purchaser Parent shall indemnify and hold harmless the Purchaser Tax Indemnified Parties from and against all liability, without duplication, for (1iii) all Taxes ~~of Purchaser Parent and its Affiliates (other than Purchaser and its Subsidiaries) for any Tax period~~ (other than Transfer Taxes ~~and VAT for which Seller Parent is responsible hereunder)~~described in Section 10.9) (A) imposed on or payable by or on behalf of the Purchased Companies or (B) imposed on or payable by or with respect to the Business, ~~(2) Taxes of Purchaser and its Subsidiaries (other than the Conveyed Subsidiaries and their Subsidiaries) for~~ in each case allocable to any Pre-Closing Tax Period, including (3for the avoidance of doubt) Taxes attributable to the transactions contemplated by Sections 1.6 and 3.3; (iv) all Taxes (other than Transfer Taxes described in Section 10.9) of Parent or any ~~Person~~ of its Affiliates (except for the Purchased Companies) for any taxable period; (v) all Taxes of a ~~Pre-Closing Tax Period~~ third party for which ~~Purchaser~~ any Purchased Company becomes liable (A) as a result of being or ~~any Subsidiary thereof other than any Conveyed Subsidiaries and their Subsidiaries~~having been a member of an affiliated, consolidated, combined, unitary, aggregate or similar group before the Closing or (B) ~~is liable under Treasury Regulation Section 1.1502-6 (or a similar provision of state, local or foreign Law), or~~ as a transferee or ~~successor or~~ successor, by Contract or otherwise, to the extent such Taxes described in this subclause (B) relate to an event or transaction occurring before the Closing; and (vi) all Transfer Taxes allocated to Parent under Section 10.9; provided, however, that Parent shall have no obligation under this Article X (or Article IX) for any Taxes to the extent such Taxes arise from (1) an action taken or not taken by Parent or Sellers at the request of Purchaser, or (2) an action taken or not taken by Purchaser, its Affiliates or any Purchaser Indemnitee after Closing that (A) Purchaser or such Affiliate or Purchaser Indemnitee knew or should reasonably have known would give rise to such Taxes and (B) was outside of the ordinary course of business, in each case, other than ~~Contracts~~ (x) any action taken that ~~do not relate primarily to Taxes)~~is required or expressly permitted by this Agreement, (4y) ~~Taxes~~ any action not taken that is prohibited by this Agreement and (z) any action taken or not taken that Parent consents in writing shall be so taken or not taken (which consent shall not be unreasonably withheld, conditioned or delayed). (b) From and after the Closing, Purchaser agrees to indemnify Parent and its Affiliates against and agrees to hold each of them harmless from any and all Damages incurred or suffered by any Seller Indemnitee to the extent arising out of or resulting ~~from~~ from: (i) all Taxes (A) imposed on or payable by or on behalf of the Purchased Companies or (B) imposed on or payable by or with respect to the Business, in each case allocable to any Post-Closing Tax Period and (ii) any breach of any covenant or agreement ~~of Purchaser Parent, Purchaser~~ made or their respective Affiliates contained in this Agreement, (5) Transfer Taxes for which Purchaser Parent is responsible under Section 6.5(j), (6) Taxes arising from any breach of any representation or warranty in Section 5.17(k), (7) Taxes for a Pre-Closing Tax Period imposed on (x) any settlement of any intercompany accounts of Purchaser or any Subsidiary of Purchaser, on the one hand, and Purchaser Parent or any Subsidiary of Purchaser Parent (other than Purchaser and its Subsidiaries), on the other hand, pursuant to Section 6.7 or (y) any transaction or step forming part of the Purchaser Internal Restructurings, (8) Taxes required to be ~~deducted or withheld with respect to any amounts payable to~~ performed by Purchaser Parent pursuant to Section 2.8 or Section 2.9, including any penalties imposed on Purchaser as a result of Purchaser’s failure to deduct or withhold any such amounts, (9) Taxes arising as a result of Purchaser or any Subsidiary of Purchaser (other than any Conveyed Subsidiary or a Subsidiary thereof) at any time ceasing to be a member of a group for the purposes of any Tax, of which group Purchaser Parent or any Subsidiary of Purchaser Parent (other than Purchaser or any Subsidiary of Purchaser) is or was also a member and (10) any costs and expenses, including reasonable legal and accounting fees and expenses, attributable to any item described in clauses (1) through (9) (any such Taxes for which Purchaser Parent is responsible pursuant to this ~~Section 6.5(d)(ii), subject~~ Agreement and relating to ~~the following proviso, “Purchaser Parent Indemnified~~ Taxes”); provided that Purchaser Parent shall not be required to indemnify or hold harmless any Purchaser Tax Indemnified Party from and against any liability for (A) Taxes attributable to any action taken after the Closing by Seller Parent or any of its Affiliates, other than any such action that (1) is in the ordinary course of business, (2) is expressly permitted or contemplated by this Agreement, or (3) is required to be taken in order to comply with applicable Law or as a result of a change in applicable Law (a “Seller Tax Act”), (B) Taxes that were reflected, accrued or reserved for in the Final Closing Statement, Final Purchaser Working Capital or the Final Purchaser Net Cash, (C) Income Taxes to the extent that Purchaser or any Subsidiary thereof had any Tax Assets as of the close of business on the Closing Date that were available, or would have been available but for their prior utilization by Purchaser or any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries after the Closing), to offset or otherwise reduce the applicable Tax Liability in respect of such Income Taxes (except any Tax Asset reflected as an asset in the Final Closing Statement and taken into account in the calculation of the Final Purchaser Working Capital or the Final Purchaser Net Cash), or (D) Taxes for which Seller Parent is responsible under Section 6.5(d)(i). (~~iii~~c) To the extent permitted or required by applicable Law, the taxable year of each of the Conveyed Subsidiaries and their Subsidiaries and any Subsidiary of Purchaser that includes the Closing Date shall be treated as closing on (and including) the Closing Date. Otherwise, for For purposes ~~of this Agreement~~hereof, in the case of any Straddle Tax Period: : (A) Property Taxes of any Purchased Company or the Business allocable to the Pre-Closing Tax Period ~~shall~~ will be ~~computed based upon~~ equal to the ~~ratio~~ amount of such Property Taxes for the entire Straddle Tax Period multiplied by a fraction, the numerator of which is the number of days during such period that are in the Pre-Closing Tax Period to and the denominator of which is the number of days in the entire ~~Straddle Period; and~~ period, and (B) Taxes (other than Property Taxes) of any Purchased Company or the Business allocable to the Pre-Closing Tax Period ~~shall~~ will be computed (1) as if such ~~Tax~~ taxable period ended ~~as of the close of business~~ on the Closing Date ~~and,~~ and (2) in the case of any such Taxes ~~of Conveyed Subsidiaries (and their Subsidiaries) and Seller Parent, or in the case of any Taxes of Purchaser Parent and Purchaser (and their Subsidiaries prior to the Closing), in each case~~ attributable to the ownership of any equity interest in ~~any partnership or~~ a partnership, other “~~flow through~~flowthrough” entity ~~for tax purposes (including of any~~ or “controlled foreign corporation,” ~~as defined under~~ (within the ~~Code~~meaning of Section 957(a) of the Code or any comparable applicable Law), as if the ~~Tax~~ taxable period of ~~such partnership or other “flow through”~~ that entity ended as of the close of business on the Closing ~~Date with~~ Date. (d) Payment in full of any amount due from Parent or Purchaser under this Section 10.1 will be made to the Person to whom such amount is due in immediately available funds at least five Business Days before the date payment of the Taxes to which such payment relates is due, or, if no Tax is payable, within 30 days after written demand is made for such payment. (e) The indemnification obligations of ~~such entity for~~ the ~~Pre-Closing~~ Parties under Section 10.1(a) and Section 10.1(b) shall survive until the expiration of the applicable Tax ~~Period deemed~~ statute of limitations (giving effect to ~~include~~ any ~~Taxes on the allocable income of such entity in respect of such Tax period~~validly obtained extensions); provided that ~~exemptions~~such obligations shall survive the expiration of such statute if the Indemnified Party delivers written notice, allowances or deductions that are calculated on an annual basis (including depreciation and amortization deductions) shall be allocated between the period ending on the Closing Date and the period beginning after the Closing Date in proportion to the number of days in each period. (iv) Any claim for indemnification under this Section 6.5(d) shall be made in writing upon the party from whom indemnification is sought, and shall specify setting forth in reasonable detail the ~~basis for such~~ nature of the applicable claim~~. Any indemnity payment required to be made pursuant to this Section 6.5(d) shall be made within thirty (30) days after the indemnified party makes written demand upon the indemnifying party~~, ~~but in no case earlier than five (5) Business Days prior~~ to the ~~date on which~~ other Party before the relevant Taxes are required to be paid to the applicable Taxing Authority. (v) With respect to any Taxes suffered or incurred by any Conveyed Subsidiary (or any Subsidiary thereof) that was not wholly owned by Seller Parent (directly or indirectly) as of immediately prior to the Closing, the indemnification obligations of Seller Parent pursuant to Section 6.5(d)(i) in respect expiration of such Taxes (or related costs and expenses) shall in no event exceed an amount equal to (A) the amount of such Taxes (or related costs and expenses) for which the Purchaser Tax Indemnified Parties would otherwise be entitled to indemnification pursuant to Section 6.5(d), as if such Conveyed Subsidiary (or any Subsidiary thereof) were wholly owned by Seller Parent, multiplied by (B) the direct and indirect percentage ownership of Seller Parent of such Conveyed Subsidiary (or Subsidiary thereof) as of immediately prior to the Closing. With respect to any Taxes suffered or incurred by any Subsidiary of Purchaser Parent (including Purchaser and its Subsidiaries) that was not wholly owned by Purchaser Parent (directly or indirectly) as of immediately prior to the Closing, the indemnification obligations of Purchaser Parent pursuant to Section 6.5(d)(ii) in respect of such Taxes (or related costs and expenses) shall in no event exceed an amount equal to (A) the amount of such Taxes (or related costs and expenses) for which the Purchaser Tax Indemnified Parties would otherwise be entitled to indemnification pursuant to Section 6.5(d), as if such Subsidiary were wholly owned by Purchaser Parent, multiplied by (B) the direct and indirect percentage ownership of Purchaser Parent of such Subsidiary as of immediately prior to the Closingstatute. (vi) Without duplication to any other amounts paid pursuant to this Section 6.5: (A) Within thirty (30) days following the filing of any Income Tax Return for any Conveyed Subsidiary (or any Subsidiary thereof), on the one hand, or Purchaser (or any Subsidiary thereof, other than the Conveyed Subsidiaries and their Subsidiaries), on the other hand, for any Pre-Closing Tax Period or for any Straddle Period, Seller Parent or Purchaser Parent shall (or Purchaser Parent shall cause Purchaser to) prepare a statement showing (i) the amount of Income Taxes shown as due on such filed Income Tax Return with respect to the relevant Pre-Closing Tax Period or the portion of any Straddle Period ending on and including the Closing Date (the “Final Pre-Closing Income Tax Amount”) and (ii) the amount of the Seller Accrued Income Taxes or Purchaser Accrued Income Taxes, as applicable, attributable to such Income Tax Return as reflected on the Final Closing Statement (the “Pre-Closing Income Tax Amount”) and deliver such statement to Seller Parent and Purchaser Parent, as applicable. Purchaser Parent or Seller Parent, as applicable, shall have a period of fifteen (15) Business Days to provide comments to a schedule prepared (or caused to be prepared) by Seller Parent or Purchaser Parent, respectively. If Purchaser Parent or Seller Parent, as applicable, do not provide any comments to Seller Parent or Purchaser Parent, respectively, during such period, the statement as so prepared shall be final and binding. (B) In the event the Final Pre-Closing Income Tax Amount with respect to any Income Tax Return is less than the amount of the Pre-Closing Income Tax Amount attributable to such Income Tax Return that was included on the Final Closing Statement, the Purchaser shall within five (5) Business Days following the finalization of the Final Pre-Closing Income Tax Amount hereunder (i) pay to Seller Parent the amount of such difference with respect to a Conveyed Subsidiary and their Subsidiaries and (ii) pay to Purchaser Parent the amount of such difference with respect to Purchaser and its Subsidiaries. (vii) The Parties shall use reasonable best efforts to structure any indemnity payment, true-up payment, or payment in respect of Tax Benefits made by any Party pursuant to this Agreement (including pursuant to this Section 6.5, Section 6.6 and Article VII) and any payment made by Purchaser Parent to Purchaser pursuant to Section 2.8 or Section 2.9 in the manner set forth in Clause 10 of the Structuring Considerations Agreement. The Parties shall use reasonable best efforts to structure as a special dividend any payment made by Purchaser to Purchaser Parent pursuant to Section 2.8, Section 2.9 or this Section 6.5.

Appears in 3 contracts

Sources: Stock and Asset Purchase Agreement, Stock and Asset Purchase Agreement (Stanley Black & Decker, Inc.), Stock and Asset Purchase Agreement (Newell Brands Inc)

Tax Indemnification. (ia) Subject to Section ~~6.5(d)(v)~~13.3, from and after the ~~Closing~~Closing Date, ~~Seller Parent agrees~~ ASC (for purposes of this Article XI only, the “Tax Indemnifying Party”), shall be responsible for, shall pay or cause to ~~indemnify~~ be paid, and shall indemnify, defend and hold harmless ~~Purchaser~~ the Buyer and ~~its Subsidiaries~~ the Companies and reimburse the Buyer and the Companies for the following Taxes, to the extent that such Taxes have not been paid as of the Closing Date and are not reflected in the determination of Working Capital: (~~including~~ i) all Taxes imposed on the ~~Conveyed Subsidiaries~~ Companies or the Buyer as a result of the operations of the Companies with respect to any taxable year or period ending on or before the Closing Date; (ii) with respect to taxable years or periods beginning before the Closing Date and ~~their Subsidiaries~~ ending after the Closing Date, all Taxes imposed on the Companies or the Buyer as a result of the operations of the Companies, which Taxes are allocable to the portion of such taxable year or period ending on the Closing Date (an “Interim Period”) (~~collectively,~~ Interim Periods and any taxable years or periods that end on or prior to the Closing Date being referred to collectively hereinafter as “~~Purchaser Tax Indemnified Parties”) from and against all liability, without duplication, for (1) Taxes of the Conveyed Subsidiaries and their Subsidiaries for any~~ Pre-Closing ~~Tax Period~~ Periods”); (~~including any Taxes payable in respect of an election under Section 965(h) of the Code), (2~~iii) Taxes of any ~~Seller~~ member of any affiliated group of corporations (~~other than any Transfer Taxes and VAT for which Purchaser is responsible hereunder) including, Taxes (other than Taxes~~ as defined in Section 1504 of the ~~Conveyed Subsidiaries and their Subsidiaries~~Code) ~~imposed~~ with ~~respect to, arising out of or relating to~~ which the Purchased Assets or the Business for a Pre-Closing Tax Period, (3) Taxes of any Person (other than the Conveyed Subsidiaries and their Subsidiaries) for a Pre-Closing Tax Period for which any Conveyed Subsidiary (or any Subsidiary thereof) is liable under Treasury Regulation Section 1.1502-6 (or a similar provision of state, local or foreign Law), or as a transferee or successor or by Contract (other than Contracts that do not relate primarily to Taxes), (4) Taxes arising out of or resulting from any breach of any covenant or agreement of Seller Parent Companies or any of ~~its Affiliates contained in this Agreement~~their respective Subsidiaries files or has filed a Tax Return on a consolidated, combined, affiliated, unitary or similar basis for a taxable year or period beginning before the Closing Date; (5iv) Taxes ~~for a Pre-Closing Tax Period imposed on (x) any transaction effected pursuant to Section 2.3(b), (y) any settlement of any intercompany accounts of Seller Parent~~ or ~~its Subsidiaries pursuant to Section 6.7, or (z) any transaction or step forming part~~ other costs of the Seller Internal Restructurings, (6) Transfer Taxes for which Seller Parent is responsible under Section 6.5(j), (7) Taxes required to be deducted or withheld with respect to the payment of the Purchase Consideration or any amounts Buyer Indemnitees payable to Seller Parent pursuant to Section 2.8 or Section 2.9, including any penalties imposed on Purchaser as a result of Purchaser’s failure to deduct or withhold any such amounts that Purchaser (or a Purchaser Designated Affiliate) was permitted to withhold under Section 2.10 (in each case, subject to Purchaser’s compliance with the notice and cooperation requirements of Section 2.10 and except for any such Taxes (and any related penalties) required to be deducted or withheld solely as a result of any ~~assignment by Purchaser~~ inaccuracy in or ~~its Affiliates for which Purchaser is responsible pursuant to Section 10.3), (8) Taxes arising from any~~ breach of any representation or warranty ~~contained~~ made in Section ~~4.16(k), (9) Taxes arising as a result~~ 3.17 of ~~any Conveyed Subsidiary~~ this Agreement or any Subsidiary of any Conveyed Subsidiary at any time ceasing to be a member of a group for the purposes of any Tax, of which group Seller Parent or any Subsidiary of Seller Parent is or was also a member and (10) any costs and expenses, including reasonable legal and accounting fees and expenses, attributable to any item described in clauses (1) through (9) (any such Taxes for which Seller Parent is responsible pursuant to this Section 6.5(d)(i), subject to the following proviso, “Seller Indemnified Taxes”); provided that Seller Parent shall not be required to indemnify or hold harmless any Purchaser Tax Indemnified Party from and against any liability pursuant to this Section 6.5(d)(i) for (A) Taxes attributable to any action taken after the Closing by Purchaser, any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries), or any transferee of Purchaser or any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries), other than any such action that (1) is in the ordinary course of business, (2) is expressly permitted or contemplated by this Agreement, or (3) is required to be taken in order to comply with applicable Law or as a result of a change in applicable Law (a “Purchaser Tax Act”), (B) Taxes that were reflected, accrued or reserved for in the Final Closing Statement, Final Business Working Capital, or Final Business Net Cash, (C) Income Taxes to the extent that a Conveyed Subsidiary or any Subsidiary thereof had any Tax Assets as of the close of business on the Closing Date that were available, or would have been available but for their prior utilization by Purchaser or any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries after the Closing) to offset or otherwise reduce the applicable Tax Liability in respect of such Income Taxes (except any Tax Asset reflected as an asset in the Final Closing Statement and taken into account in the calculation of the Final Business Working Capital or the Final Business Net Cash), or (D) Taxes for which Purchaser Parent is responsible under Section 6.5(d)(ii). (ii) Subject to Section 6.5(d)(v), from and after the Closing, Purchaser Parent shall indemnify and hold harmless the Purchaser Tax Indemnified Parties from and against all liability, without duplication, for (1) all Taxes of Purchaser Parent and its Affiliates (other than Purchaser and its Subsidiaries) for any Tax period (other than Transfer Taxes and VAT for which Seller Parent is responsible hereunder), (2) Taxes of Purchaser and its Subsidiaries (other than the Conveyed Subsidiaries and their Subsidiaries) for any Pre-Closing Tax Period, (3) Taxes of any Person for a Pre-Closing Tax Period for which Purchaser (or any Subsidiary thereof other than any Conveyed Subsidiaries and their Subsidiaries) is liable under Treasury Regulation Section 1.1502-6 (or a similar provision of state, local or foreign Law), or as a transferee or successor or by Contract (other than Contracts that do not relate primarily to Taxes), (4) Taxes arising out of or resulting from any breach of any covenant ~~or agreement of Purchaser Parent, Purchaser or their respective Affiliates~~ contained in this ~~Agreement~~Article XI, without duplication; and (5v) ~~Transfer~~ any Taxes ~~for which Purchaser Parent is responsible~~ or other payments required to be made after the Closing Date by the Companies or any of their respective Subsidiaries to any Person under ~~Section 6.5(j)~~any Tax sharing, indemnity or allocation agreement or other arrangement in effect prior to the Closing (6whether or not written) ~~Taxes arising from any breach of any representation or warranty in Section 5.17(k), (7) Taxes for~~ with respect to a Pre-Closing ~~Tax Period imposed on~~ Period. (xb) any settlement of any intercompany accounts of Purchaser or any Subsidiary of Purchaser, on the one hand, and Purchaser Parent or any Subsidiary of Purchaser Parent (other than Purchaser and its Subsidiaries), on the other hand, pursuant to Section 6.7 or (y) any transaction or step forming part of the Purchaser Internal Restructurings, (8) Taxes required to be deducted or withheld with respect to any amounts payable to Purchaser Parent pursuant to Section 2.8 or Section 2.9, including any penalties imposed on Purchaser as a result of Purchaser’s failure to deduct or withhold any such amounts, (9) Taxes arising as a result of Purchaser or any Subsidiary of Purchaser (other than any Conveyed Subsidiary or a Subsidiary thereof) at any time ceasing to be a member of a group for the For purposes of any Tax, of which group Purchaser Parent or any Subsidiary of Purchaser Parent (other than Purchaser or any Subsidiary of Purchaser) is or was also a member and (10) any costs and expenses, including reasonable legal and accounting fees and expenses, attributable to any item described in clauses (1) through (9) (any such Taxes for which Purchaser Parent is responsible pursuant to this Section ~~6.5(d)(ii)~~11.1, subject to the following proviso, “Purchaser Parent Indemnified Taxes”); provided that Purchaser Parent shall not be required to indemnify or hold harmless any Purchaser Tax Indemnified Party from and against any liability for (A) Taxes attributable to any action taken after the Closing by Seller Parent or any of its Affiliates, other than any such action that (1) is in the ordinary course of business, (2) is expressly permitted or contemplated by this Agreement, or (3) is required to be taken in order to ~~comply with applicable Law~~ apportion appropriately any Taxes relating to any taxable year or ~~as a result of a change in applicable Law (a “Seller Tax Act”)~~period that includes an Interim Period, ~~(B) Taxes that were reflected~~the parties hereto shall, ~~accrued or reserved for in the Final Closing Statement, Final Purchaser Working Capital or the Final Purchaser Net Cash, (C) Income Taxes~~ to the extent ~~that Purchaser or any Subsidiary thereof had any~~ permitted under applicable law, elect with the relevant Tax ~~Assets~~ authority to treat for all purposes the Closing Date as the last day of the ~~close~~ taxable year or period of ~~business~~ the Companies. In any case where applicable law does not permit the Companies to treat the Closing Date as the last day of the taxable year or period, then, in each such case, the portion of any Taxes that are allocable to the portion of the Interim Period ending on the Closing Date ~~that were available, or would have been available but for their prior utilization by Purchaser or any of its Affiliates~~ shall be: (including the Conveyed Subsidiaries and their Subsidiaries after the Closing), to offset or otherwise reduce the applicable Tax Liability in respect of such Income Taxes (except any Tax Asset reflected as an asset i) in the ~~Final Closing Statement and taken into account in~~ case of Taxes that are based upon or related to income or receipts, deemed equal to the calculation of the Final Purchaser Working Capital or the Final Purchaser Net Cash), or (D) Taxes for which Seller Parent is responsible under Section 6.5(d)(i). (iii) To the extent permitted or required by applicable Law, amount that would be payable if the taxable year ~~of each of the Conveyed Subsidiaries and their Subsidiaries and any Subsidiary of Purchaser that includes the Closing Date shall be treated as closing~~ or period ended on ~~(and including)~~ the Closing Date~~. Otherwise~~; and (ii) in the case of Taxes not described in subparagraph (i) above that are imposed on a periodic basis, deemed to be the amount of such Taxes for ~~purposes of this Agreement~~the entire period (or, in the case of ~~any Straddle Period: (A~~such Taxes determined on an arrears basis, the amount of such Taxes for the immediately preceding period) ~~Property Taxes allocable to~~ multiplied by a fraction the ~~Pre-Closing Tax Period shall be computed based upon the ratio~~ numerator of which is the number of calendar days in the ~~Pre-Closing Tax~~ Interim Period to the number of days in the entire Straddle Period; and (B) Taxes (other than Property Taxes) allocable to the Pre-Closing Tax Period shall be computed as if such Tax period ended as of the close of business on the Closing Date and, in the case of any Taxes of Conveyed Subsidiaries (and their Subsidiaries) and Seller Parent, or in the case of any Taxes of Purchaser Parent and Purchaser (and their Subsidiaries prior to the Closing), in each case attributable to the ownership of any equity interest in any partnership or other “flow through” entity for tax purposes (including of any “controlled foreign corporation,” as defined under the Code) as if the Tax period of such partnership or other “flow through” entity ended as of the close of business on the Closing Date with the Taxes of such entity for the Pre-Closing Tax Period deemed to include any Taxes on the allocable income of such entity in respect of such Tax period; provided that exemptions, allowances or deductions that are calculated on an annual basis (including depreciation and amortization deductions) shall be allocated between the period ending on the Closing Date and the ~~period beginning after the Closing Date in proportion to~~ denominator of which is the number of calendar days in ~~each~~ the entire relevant period. (ivc) ~~Any claim for indemnification~~ Subject to Section 11.5 and the limitations contained in Section 11.3(b), payment of any amount by the Tax Indemnifying Party under this Section 6.5(d) shall be made in writing upon the party from whom indemnification is sought, and shall specify in reasonable detail the basis for such claim. Any indemnity payment required to be made pursuant to this Section 6.5(d) 11.1 shall be made within ~~thirty~~ ten (3010) days ~~after~~ following written notice by the ~~indemnified party makes written demand upon~~ Buyer or a Company to ASC that a Company is required to pay such amounts to the ~~indemnifying party~~appropriate Tax authority; provided, ~~but in no case~~ however, that the Tax Indemnifying Party shall not be required to make any payment to Buyer or a Company hereunder earlier than five (5) Business Days ~~prior~~ before it is due to the ~~date on which the relevant Taxes are required to be paid to the applicable Taxing Authority~~appropriate Tax authority. (vd) ~~With respect~~ All matters relating in any manner to ~~any Taxes suffered or incurred by any Conveyed Subsidiary (or any Subsidiary thereof) that was not wholly owned by Seller Parent (directly or indirectly) as of immediately prior to the Closing, the~~ Tax indemnification obligations ~~of Seller Parent pursuant to Section 6.5(d)(i) in respect of such Taxes (or related costs~~ and expenses) shall in no event exceed an amount equal to (A) the amount of such Taxes (or related costs and expenses) for which the Purchaser Tax Indemnified Parties would otherwise be entitled to indemnification pursuant to Section 6.5(d), as if such Conveyed Subsidiary (or any Subsidiary thereof) were wholly owned by Seller Parent, multiplied by (B) the direct and indirect percentage ownership of Seller Parent of such Conveyed Subsidiary (or Subsidiary thereof) as of immediately prior to the Closing. With respect to any Taxes suffered or incurred by any Subsidiary of Purchaser Parent (including Purchaser and its Subsidiaries) that was not wholly owned by Purchaser Parent (directly or indirectly) as of immediately prior to the Closing, the indemnification obligations of Purchaser Parent pursuant to Section 6.5(d)(ii) in respect of such Taxes (or related costs and expenses) shall in no event exceed an amount equal to (A) the amount of such Taxes (or related costs and expenses) for which the Purchaser Tax Indemnified Parties would otherwise be entitled to indemnification pursuant to Section 6.5(d), as if such Subsidiary were wholly owned by Purchaser Parent, multiplied by (B) the direct and indirect percentage ownership of Purchaser Parent of such Subsidiary as of immediately prior to the Closing. (vi) Without duplication to any other amounts paid pursuant to this Section 6.5: (A) Within thirty (30) days following the filing of any Income Tax Return for any Conveyed Subsidiary (or any Subsidiary thereof), on the one hand, or Purchaser (or any Subsidiary thereof, other than the Conveyed Subsidiaries and their Subsidiaries), on the other hand, for any Pre-Closing Tax Period or for any Straddle Period, Seller Parent or Purchaser Parent shall (or Purchaser Parent shall cause Purchaser to) prepare a statement showing (i) the amount of Income Taxes shown as due on such filed Income Tax Return with respect to the relevant Pre-Closing Tax Period or the portion of any Straddle Period ending on and including the Closing Date (the “Final Pre-Closing Income Tax Amount”) and (ii) the amount of the Seller Accrued Income Taxes or Purchaser Accrued Income Taxes, as applicable, attributable to such Income Tax Return as reflected on the Final Closing Statement (the “Pre-Closing Income Tax Amount”) and deliver such statement to Seller Parent and Purchaser Parent, as applicable. Purchaser Parent or Seller Parent, as applicable, shall have a period of fifteen (15) Business Days to provide comments to a schedule prepared (or caused to be prepared) by Seller Parent or Purchaser Parent, respectively. If Purchaser Parent or Seller Parent, as applicable, do not provide any comments to Seller Parent or Purchaser Parent, respectively, during such period, the statement as so prepared payments shall be ~~final and binding~~governed exclusively by this Article XI except for provisions regarding notice of claims, which shall be governed by Section 10.5. (B) In the event the Final Pre-Closing Income Tax Amount with respect to any Income Tax Return is less than the amount of the Pre-Closing Income Tax Amount attributable to such Income Tax Return that was included on the Final Closing Statement, the Purchaser shall within five (5) Business Days following the finalization of the Final Pre-Closing Income Tax Amount hereunder (i) pay to Seller Parent the amount of such difference with respect to a Conveyed Subsidiary and their Subsidiaries and (ii) pay to Purchaser Parent the amount of such difference with respect to Purchaser and its Subsidiaries. (vii) The Parties shall use reasonable best efforts to structure any indemnity payment, true-up payment, or payment in respect of Tax Benefits made by any Party pursuant to this Agreement (including pursuant to this Section 6.5, Section 6.6 and Article VII) and any payment made by Purchaser Parent to Purchaser pursuant to Section 2.8 or Section 2.9 in the manner set forth in Clause 10 of the Structuring Considerations Agreement. The Parties shall use reasonable best efforts to structure as a special dividend any payment made by Purchaser to Purchaser Parent pursuant to Section 2.8, Section 2.9 or this Section 6.5.

Appears in 3 contracts

Sources: Purchase Agreement (Peak Resorts Inc), Purchase Agreement (Peak Resorts Inc), Purchase Agreement (American Skiing Co /Me)

Tax Indemnification. (ia) ~~Subject to Section 6.5(d)(v), from~~ From and ~~after the Closing, Seller Parent agrees to indemnify and hold harmless Purchaser and its Subsidiaries (including the Conveyed Subsidiaries and their Subsidiaries~~ after the Closing Date, Seller shall indemnify the Purchaser Indemnified Persons against and hold them harmless from any Losses arising from, relating to or otherwise in respect of, except as provided in Section 11.07(b), (i) ~~(collectively,~~ any Taxes imposed on the ~~“Purchaser Tax Indemnified Parties”) from and against all liability, without duplication, for (1) Taxes of~~ Business or the ~~Conveyed Subsidiaries and their Subsidiaries for~~ Transferred Entities with respect to any Pre-Closing Tax Period (including ~~any Taxes payable in respect of an election under Section 965(h)~~ as a result of the ~~Code~~Pre-Closing Restructuring), (2ii) any Taxes that are Retained Liabilities hereunder, (iii) any Taxes imposed on a Transferred Entity (including any Taxes imposed under Treasury Regulations Section 1.1502-6 or any corresponding provision of state, local or non-U.S. Tax Law) as a result of its inclusion with Seller, any ~~Seller~~ Subsidiary Transferor or any other Person (other than a Transferred Entity) in a consolidated, combined or unitary Tax group, for any Transfer Taxes and VAT for which Purchaser is responsible hereunder) including, Taxes (other than Taxes of the Conveyed Subsidiaries and their Subsidiaries) imposed with respect to, arising out of or relating to the Purchased Assets or the Business for a Pre-Closing Tax Period, (3iv) any Taxes ~~of any Person (other than the Conveyed Subsidiaries and their Subsidiaries) for a Pre-Closing Tax Period~~ for which ~~any Conveyed Subsidiary (~~a Transferred Entity, Purchaser or any ~~Subsidiary thereof)~~ Affiliate of Purchaser is liable ~~under Treasury Regulation Section 1.1502-6 (or a similar provision of state, local or foreign Law), or~~ as a transferee or successor or by Contract (other than Contracts that do not primarily relate ~~primarily~~ to Taxes), ~~(4)~~ in each case, to the extent such Taxes ~~arising out~~ are attributable to the operation of the Business or ~~resulting from any breach~~ ownership of ~~any covenant or agreement of Seller Parent or any of its Affiliates contained in this Agreement~~the Transferred Assets prior to the Closing, (5v) any Taxes attributable to any “subpart F income” (including any increase thereto under Section 965 of the Code) required to be included in income in a Post-Closing Tax Period solely to the extent such subpart F income is attributable to income or earnings of a Transferred Entity for a Pre-Closing Tax Period ~~imposed on~~ (~~x) any transaction effected pursuant to~~ determined in accordance with the principles set forth in Section ~~2.3(b~~8.03(a)), (y) any settlement of any intercompany accounts of Seller Parent or its Subsidiaries pursuant to Section 6.7, or (z) any transaction or step forming part of the Seller Internal Restructurings, (6) Transfer Taxes for which Seller Parent is responsible under Section 6.5(j), (7) Taxes required to be deducted or withheld with respect to the payment of the Purchase Consideration or any amounts payable to Seller Parent pursuant to Section 2.8 or Section 2.9, including any penalties imposed on Purchaser as a result of Purchaser’s failure to deduct or withhold but excluding any such ~~amounts~~ inclusion that Purchaser (or a Purchaser Designated Affiliate) was permitted to withhold under Section 2.10 (in each case, subject to Purchaser’s compliance with the notice and cooperation requirements of Section 2.10 and except for any such Taxes (and any related penalties) required to be deducted or withheld solely as a result of any assignment by Purchaser or its Affiliates for which Purchaser is responsible pursuant to Section 10.3), (8) Taxes arising from any breach of any representation or warranty contained in Section 4.16(k), (9) Taxes arising as a result of any Conveyed Subsidiary or any Subsidiary of any Conveyed Subsidiary at any time ceasing to be a member of a group for the purposes of any Tax, of which group Seller Parent or any Subsidiary of Seller Parent is or was also a member and (10) any costs and expenses, including reasonable legal and accounting fees and expenses, attributable to any item described in clauses (1) through (9) (any such Taxes for which Seller Parent is responsible pursuant to this Section 6.5(d)(i), subject to the following proviso, “Seller Indemnified Taxes”); provided that Seller Parent shall not be required to indemnify or hold harmless any Purchaser Tax Indemnified Party from and against any liability pursuant to this Section 6.5(d)(i) for (A) Taxes attributable to any action actions taken after the Closing by Purchaser, any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries), or any transferee of Purchaser or any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries), other than any such action that (1) is in the ordinary course of business, (2) is expressly permitted or contemplated by this Agreement, or (3) is required to be taken in order to comply with applicable Law or as a result of a change in applicable Law (a “Purchaser Tax Act”), (B) Taxes that were reflected, accrued or reserved for in the Final Closing Statement, Final Business Working Capital, or Final Business Net Cash, (C) Income Taxes to the extent that a Conveyed Subsidiary or any Subsidiary thereof had any Tax Assets as of the close of business on the Closing Date that were available, or would have been available but for their prior utilization by Purchaser or any of its Affiliates ~~(including the Conveyed Subsidiaries and their Subsidiaries~~ after the Closing, (vi) any Taxes attributable to ~~offset~~ any breach or violation of any of Seller’s representations set forth in Section 4.15, (vii) any German Trade Tax imposed on ▇▇▇▇▇ Grundstücksverwaltungsgesellschaft mbH & Co. Vermietungs KG resulting from capital gains or profits triggered by the sale of the limited partner interests by Spectrum Brands Real Estate B.V. or by any special business income (Sonderbetriebseinnahmen) or resulting from supplementary balance sheets (Ergänzungsbilanzen) of Spectrum Brands Real Estate B.V, and (viii) any German business Taxes of Spectrum Brands Real Estate B.V. in the meaning of Section 75 German Tax Code (Abgabenordnung) imposed on Purchaser, an Affiliate of Purchaser or a Transferred Entity that acquires real estate from Spectrum Brands Real Estate B.V. (b) From and after the Closing Date, Purchaser and the Transferred Entities shall, jointly and severally, indemnify the Seller Indemnified Persons and hold them harmless from any Losses arising from, relating to or otherwise ~~reduce the applicable Tax Liability~~ in respect of (i) any Taxes imposed on the Transferred Assets, the Business or the Transferred Entities (other than, for the avoidance of doubt, as contemplated by Section 11.01(a)(vi)) with respect to any Post-Closing Tax Period, except to the extent such ~~Income~~ Taxes are attributable to a breach of any representation set forth in Section 4.15(k) or Section 4.15(l) or any inaccuracy in Section 4.15(h) of the Seller Disclosure Letter (~~except~~ as such Section of the Seller Disclosure Letter may be revised pursuant to Section 8.06(c)), (ii) any ~~Tax Asset reflected as an asset in the Final Closing Statement and~~ Taxes taken into account in the ~~calculation of the Final Business Working Capital or the Final Business Net Cash), or (D) Taxes for which Purchaser Parent is responsible under~~ adjustment described in Section 6.5(d)(ii). (ii) Subject to Section 6.5(d)(v), from and after the Closing, Purchaser Parent shall indemnify and hold harmless the Purchaser Tax Indemnified Parties from and against all liability, without duplication, for (1) all Taxes of Purchaser Parent and its Affiliates (other than Purchaser and its Subsidiaries) for any Tax period (other than Transfer Taxes and VAT for which Seller Parent is responsible hereunder)2.04, (2iii) any Taxes of Purchaser and its Subsidiaries (other than the Conveyed Subsidiaries and their Subsidiaries) for any Pre-Closing Tax Period, (3) Taxes of any Person for a Pre-Closing Tax Period for which Purchaser (or any Subsidiary thereof other than any Conveyed Subsidiaries and their Subsidiaries) is liable under Treasury Regulation Section 1.1502-6 (or a similar provision of state, local or foreign Law), or as a transferee or successor or by Contract (other than Contracts that do not relate primarily attributable to ~~Taxes), (4) Taxes arising out of or resulting from~~ any breach or nonperformance of Purchaser’s obligations pursuant to Article VIII, and (iv) any ~~covenant or agreement of Purchaser Parent, Purchaser or their respective Affiliates contained in this Agreement, (5)~~ Transfer Taxes for which Purchaser ~~Parent~~ is ~~responsible~~ liable under Section ~~6.5(j)~~8.01, (6) Taxes arising from any breach of any representation or warranty in Section 5.17(k), (7) Taxes for a Pre-Closing Tax Period imposed on (x) any settlement of any intercompany accounts of Purchaser or any Subsidiary of Purchaser, on the one hand, and Purchaser Parent or any Subsidiary of Purchaser Parent (other than Purchaser and its Subsidiaries), on the other hand, pursuant to Section 6.7 or (y) any transaction or step forming part of the Purchaser Internal Restructurings, (8) Taxes required to be deducted or withheld with respect to any amounts payable to Purchaser Parent pursuant to Section 2.8 or Section 2.9, including any penalties imposed on Purchaser as a result of Purchaser’s failure to deduct or withhold any such amounts, (9) Taxes arising as a result of Purchaser or any Subsidiary of Purchaser (other than any Conveyed Subsidiary or a Subsidiary thereof) at any time ceasing to be a member of a group for the purposes of any Tax, of which group Purchaser Parent or any Subsidiary of Purchaser Parent (other than Purchaser or any Subsidiary of Purchaser) is or was also a member and (10) any costs and expenses, including reasonable legal and accounting fees and expenses, attributable to any item described in clauses (1) through (9) (any such Taxes for which Purchaser Parent is responsible pursuant to provided that this Section ~~6.5(d)(ii), subject to the following proviso, “Purchaser Parent Indemnified Taxes”); provided that Purchaser Parent~~ 11.07(b) shall not be ~~required to indemnify or hold harmless~~ construed as limiting any Purchaser Tax Indemnified Party from and against any liability for (A) Taxes attributable to any action taken after the Closing by Seller Parent or any of its Affiliates, other than any such action that (1) is indemnity set forth in the ordinary course of business, (2) is expressly permitted or contemplated by this Agreement, or (3) is required to be taken in order to comply with applicable Law or as a result of a change in applicable Law (a “Seller Tax Act”), (B) Taxes that were reflected, accrued or reserved for in the Final Closing Statement, Final Purchaser Working Capital or the Final Purchaser Net Cash, (C) Income Taxes to the extent that Purchaser or any Subsidiary thereof had any Tax Assets as of the close of business on the Closing Date that were available, or would have been available but for their prior utilization by Purchaser or any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries after the Closing), to offset or otherwise reduce the applicable Tax Liability in respect of such Income Taxes (except any Tax Asset reflected as an asset in the Final Closing Statement and taken into account in the calculation of the Final Purchaser Working Capital or the Final Purchaser Net Cash), or (D) Taxes for which Seller Parent is responsible under Section 6.5(d)(i). (iii) To the extent permitted or required by applicable Law, the taxable year of each of the Conveyed Subsidiaries and their Subsidiaries and any Subsidiary of Purchaser that includes the Closing Date shall be treated as closing on (and including) the Closing Date. Otherwise, for purposes of this Agreement, in the case of any Straddle Period: (A) Property Taxes allocable to the Pre-Closing Tax Period shall be computed based upon the ratio of the number of days in the Pre-Closing Tax Period to the number of days in the entire Straddle Period; and (B) Taxes (other than Property Taxes) allocable to the Pre-Closing Tax Period shall be computed as if such Tax period ended as of the close of business on the Closing Date and, in the case of any Taxes of Conveyed Subsidiaries (and their Subsidiaries) and Seller Parent, or in the case of any Taxes of Purchaser Parent and Purchaser (and their Subsidiaries prior to the Closing), in each case attributable to the ownership of any equity interest in any partnership or other “flow through” entity for tax purposes (including of any “controlled foreign corporation,” as defined under the Code) as if the Tax period of such partnership or other “flow through” entity ended as of the close of business on the Closing Date with the Taxes of such entity for the Pre-Closing Tax Period deemed to include any Taxes on the allocable income of such entity in respect of such Tax period; provided that exemptions, allowances or deductions that are calculated on an annual basis (including depreciation and amortization deductions) shall be allocated between the period ending on the Closing Date and the period beginning after the Closing Date in proportion to the number of days in each period. (iv) Any claim for indemnification under this Section 6.5(d) shall be made in writing upon the party from whom indemnification is sought, and shall specify in reasonable detail the basis for such claim. Any indemnity payment required to be made pursuant to this Section 6.5(d) shall be made within thirty (30) days after the indemnified party makes written demand upon the indemnifying party, but in no case earlier than five (5) Business Days prior to the date on which the relevant Taxes are required to be paid to the applicable Taxing Authority. clause (v) ~~With respect to any Taxes suffered or incurred by any Conveyed Subsidiary (or any Subsidiary thereof~~of Section 11.07(a) ~~that was not wholly owned by Seller Parent (directly or indirectly) as of immediately prior to the Closing, the indemnification obligations of Seller Parent pursuant to~~ and Section ~~6.5(d)(i) in respect of such Taxes (or related costs and expenses~~11.07(b)(i) shall not be construed as limiting any indemnity set forth in no event exceed an amount equal to (A) the amount of such Taxes (or related costs and expenses) for which the Purchaser Tax Indemnified Parties would otherwise be entitled to indemnification pursuant to Section 6.5(d), as if such Conveyed Subsidiary (or any Subsidiary thereof) were wholly owned by Seller Parent, multiplied by (B) the direct and indirect percentage ownership of Seller Parent of such Conveyed Subsidiary (or Subsidiary thereof) as of immediately prior to the Closing. With respect to any Taxes suffered or incurred by any Subsidiary of Purchaser Parent (including Purchaser and its Subsidiaries) that was not wholly owned by Purchaser Parent (directly or indirectly) as of immediately prior to the Closing, the indemnification obligations of Purchaser Parent pursuant to Section 6.5(d)(ii) in respect of such Taxes (or related costs and expenses) shall in no event exceed an amount equal to (A) the amount of such Taxes (or related costs and expenses) for which the Purchaser Tax Indemnified Parties would otherwise be entitled to indemnification pursuant to Section 6.5(d), as if such Subsidiary were wholly owned by Purchaser Parent, multiplied by (B) the direct and indirect percentage ownership of Purchaser Parent of such Subsidiary as of immediately prior to the Closing. (vi) Without duplication to any other amounts paid pursuant to this Section 6.5: (A) Within thirty (30) days following the filing of any Income Tax Return for any Conveyed Subsidiary (or any Subsidiary thereof), on the one hand, or Purchaser (or any Subsidiary thereof, other than the Conveyed Subsidiaries and their Subsidiaries), on the other hand, for any Pre-Closing Tax Period or for any Straddle Period, Seller Parent or Purchaser Parent shall (or Purchaser Parent shall cause Purchaser to) prepare a statement showing (i) the amount of Income Taxes shown as due on such filed Income Tax Return with respect to the relevant Pre-Closing Tax Period or the portion of any Straddle Period ending on and including the Closing Date (the “Final Pre-Closing Income Tax Amount”) and (ii) the amount of the Seller Accrued Income Taxes or Purchaser Accrued Income Taxes, as applicable, attributable to such Income Tax Return as reflected on the Final Closing Statement (the “Pre-Closing Income Tax Amount”) and deliver such statement to Seller Parent and Purchaser Parent, as applicable. Purchaser Parent or Seller Parent, as applicable, shall have a period of fifteen (15) Business Days to provide comments to a schedule prepared (or caused to be prepared) by Seller Parent or Purchaser Parent, respectively. If Purchaser Parent or Seller Parent, as applicable, do not provide any comments to Seller Parent or Purchaser Parent, respectively, during such period, the statement as so prepared shall be final and binding. (B) In the event the Final Pre-Closing Income Tax Amount with respect to any Income Tax Return is less than the amount of the Pre-Closing Income Tax Amount attributable to such Income Tax Return that was included on the Final Closing Statement, the Purchaser shall within five (5) Business Days following the finalization of the Final Pre-Closing Income Tax Amount hereunder (i) pay to Seller Parent the amount of such difference with respect to a Conveyed Subsidiary and their Subsidiaries and (ii) pay to Purchaser Parent the amount of such difference with respect to Purchaser and its Subsidiaries. clause (vii) ~~The Parties shall use reasonable best efforts to structure any indemnity payment, true-up payment, or payment in respect~~ of ~~Tax Benefits made by any Party pursuant to this Agreement (including pursuant to this~~ Section 6.5, Section 6.6 and Article VII) and any payment made by Purchaser Parent to Purchaser pursuant to Section 2.8 or Section 2.9 in the manner set forth in Clause 10 of the Structuring Considerations Agreement. The Parties shall use reasonable best efforts to structure as a special dividend any payment made by Purchaser to Purchaser Parent pursuant to Section 2.8, Section 2.9 or this Section 6.511.07(a).

Appears in 3 contracts

Sources: Acquisition Agreement (SB/RH Holdings, LLC), Acquisition Agreement (Energizer Holdings, Inc.), Acquisition Agreement (Energizer Holdings, Inc.)

Tax Indemnification. 12.4.1 Parent shall indemnify Holdings and its Affiliates and hold them harmless from and against (i) ~~Subject to~~ any Taxes of Sellers and its Affiliates (other than Taxes described in Section ~~6.5(d)(v~~12.4.2), ~~from and after the Closing, Seller Parent agrees to indemnify and hold harmless Purchaser and its Subsidiaries~~ (~~including the Conveyed Subsidiaries and their Subsidiaries after the Closing Date~~ii) ~~(collectively, the “Purchaser Tax Indemnified Parties”) from and against all liability, without duplication,~~ any liability for ~~(1)~~ Taxes of the ~~Conveyed~~ Transferred Subsidiaries or otherwise relating to the Assets or Business for all taxable periods ending on or before the Closing Date and ~~their Subsidiaries~~ for ~~any~~ the Pre-Closing ~~Tax Period~~ Period, (~~including~~ iii) any liability for Taxes ~~payable in respect~~ which result from (A) the deemed sale of an assets pursuant to the Elections or any election under Section ~~965(h~~338(g) of the Code), and (B) the deemed sale of assets pursuant to any comparable elections under state or local tax laws, (2iv) any liability for Taxes of imposed upon any ~~Seller (other than any Transfer Taxes and VAT for which Purchaser is responsible hereunder) including, Taxes (other than Taxes~~ of the ~~Conveyed~~ Transferred Subsidiaries ~~and their Subsidiaries) imposed with respect to, arising out of or relating~~ pursuant to the Purchased Assets or the Business for a Pre-Closing Tax Period, (3) Taxes of any Person (other than the Conveyed Subsidiaries and their Subsidiaries) for a Pre-Closing Tax Period for which any Conveyed Subsidiary (or any Subsidiary thereof) is liable under Treasury Regulation Section 1.1502-6 (or a similar provision of under any state, local or foreign ~~Law~~Tax law) as a result of being a member of an affiliated group, within the meaning of Section 1504 of the Code (or similar provision under any state, local or foreign Tax law), or prior to the Closing, and any liability for Taxes imposed on any of the Transferred Subsidiaries as a transferee or successor (where such Transferred Subsidiary became a transferee or successor before the Closing) or by ~~Contract~~ contract (~~other than Contracts that do not relate primarily~~ where such contract was entered into prior to ~~Taxes~~the Closing), and (4v) ~~Taxes arising out of or resulting from~~ any Loss attributable to any breach of ~~any covenant or agreement of Seller Parent or any of its Affiliates~~ the representations and warranties contained in ~~this Agreement~~Section 7.8. 12.4.2 Holdings shall indemnify Parent and its affiliates and hold them harmless from and against (i) any liability for Taxes of the Transferred Subsidiaries or otherwise relating to the Assets or Business for any taxable period ending after the Closing Date (except to the extent such taxable period began before the Closing Date, ~~(5)~~ in which case Holdings' indemnity will cover only that portion of any such Taxes ~~for a~~ that is not attributable to the Pre-Closing ~~Tax Period imposed on~~ Period), and (xii) any ~~transaction effected pursuant to Section 2.3(b)~~liability for sales and use Taxes, ~~(y) any settlement of any intercompany accounts of Seller Parent or its Subsidiaries pursuant to Section 6.7~~value added Taxes, or (z) any transaction or step forming part of the Seller Internal Restructurings, (6) Transfer Taxes for which Seller Parent is responsible under Section 6.5(j), (7) Taxes required to be deducted or withheld with respect to the payment of the Purchase Consideration or any amounts payable to Seller Parent pursuant to Section 2.8 or Section 2.9, including any penalties imposed on Purchaser as a result of Purchaser’s failure to deduct or withhold any such amounts that Purchaser (or a Purchaser Designated Affiliate) was permitted to withhold under Section 2.10 (in each case, subject to Purchaser’s compliance with the notice and ~~cooperation requirements of Section 2.10~~ real and except for any such Taxes (and any related penalties) required to be deducted or withheld solely as a result of any assignment by Purchaser or its Affiliates for which Purchaser is responsible pursuant to Section 10.3), (8) Taxes arising from any breach of any representation or warranty contained in Section 4.16(k), (9) Taxes arising as a result of any Conveyed Subsidiary or any Subsidiary of any Conveyed Subsidiary at any time ceasing to be a member of a group for the purposes of any Tax, of which group Seller Parent or any Subsidiary of Seller Parent is or was also a member and (10) any costs and expenses, including reasonable legal and accounting fees and expenses, attributable to any item described in clauses (1) through (9) (any such Taxes for which Seller Parent is responsible pursuant to this Section 6.5(d)(i), subject to the following proviso, “Seller Indemnified Taxes”); provided that Seller Parent shall not be required to indemnify or hold harmless any Purchaser Tax Indemnified Party from and against any liability pursuant to this Section 6.5(d)(i) for (A) personal property Taxes attributable to ~~any action taken after the~~ Pre-Closing by Purchaser, any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries), or any transferee of Purchaser or any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries), other than any such action that (1) is in the ordinary course of business, (2) is expressly permitted or contemplated by this Agreement, or (3) is required to be taken in order to comply with applicable Law or as a result of a change in applicable Law (a “Purchaser Tax Act”), (B) Taxes that were reflected, accrued or reserved for in the Final Closing Statement, Final Business Working Capital, or Final Business Net Cash, (C) Income Taxes Periods to the extent that ~~a Conveyed Subsidiary or any Subsidiary thereof had any Tax Assets as of the close of business~~ each is accrued on the Closing ~~Date that were available, or would have been available but for their prior utilization by Purchaser or any of its Affiliates (including the Conveyed Subsidiaries~~ Balance Sheet and ~~their Subsidiaries after the Closing) to offset or otherwise reduce the applicable Tax~~ included as a Current Liability in ~~respect~~ the computation of ~~such Income Taxes (except any Tax Asset reflected as an asset in the Final~~ Closing ~~Statement and taken into account in the calculation of the Final Business~~ Net Working ~~Capital or the Final Business Net Cash), or (D) Taxes for which Purchaser Parent is responsible under Section 6.5(d)(ii)~~Capital. (ii) Subject to Section 6.5(d)(v), from and after the Closing, Purchaser Parent shall indemnify and hold harmless the Purchaser Tax Indemnified Parties from and against all liability, without duplication, for (1) all Taxes of Purchaser Parent and its Affiliates (other than Purchaser and its Subsidiaries) for any Tax period (other than Transfer Taxes and VAT for which Seller Parent is responsible hereunder), (2) Taxes of Purchaser and its Subsidiaries (other than the Conveyed Subsidiaries and their Subsidiaries) for any Pre-Closing Tax Period, (3) Taxes of any Person for a Pre-Closing Tax Period for which Purchaser (or any Subsidiary thereof other than any Conveyed Subsidiaries and their Subsidiaries) is liable under Treasury Regulation Section 1.1502-6 (or a similar provision of state, local or foreign Law), or as a transferee or successor or by Contract (other than Contracts that do not relate primarily to Taxes), (4) Taxes arising out of or resulting from any breach of any covenant or agreement of Purchaser Parent, Purchaser or their respective Affiliates contained in this Agreement, (5) Transfer Taxes for which Purchaser Parent is responsible under Section 6.5(j), (6) Taxes arising from any breach of any representation or warranty in Section 5.17(k), (7) Taxes for a Pre-Closing Tax Period imposed on (x) any settlement of any intercompany accounts of Purchaser or any Subsidiary of Purchaser, on the one hand, and Purchaser Parent or any Subsidiary of Purchaser Parent (other than Purchaser and its Subsidiaries), on the other hand, pursuant to Section 6.7 or (y) any transaction or step forming part of the Purchaser Internal Restructurings, (8) Taxes required to be deducted or withheld with respect to any amounts payable to Purchaser Parent pursuant to Section 2.8 or Section 2.9, including any penalties imposed on Purchaser as a result of Purchaser’s failure to deduct or withhold any such amounts, (9) Taxes arising as a result of Purchaser or any Subsidiary of Purchaser (other than any Conveyed Subsidiary or a Subsidiary thereof) at any time ceasing to be a member of a group for the purposes of any Tax, of which group Purchaser Parent or any Subsidiary of Purchaser Parent (other than Purchaser or any Subsidiary of Purchaser) is or was also a member and (10) any costs and expenses, including reasonable legal and accounting fees and expenses, attributable to any item described in clauses (1) through (9) (any such Taxes for which Purchaser Parent is responsible pursuant to this Section 6.5(d)(ii), subject to the following proviso, “Purchaser Parent Indemnified Taxes”); provided that Purchaser Parent shall not be required to indemnify or hold harmless any Purchaser Tax Indemnified Party from and against any liability for (A) Taxes attributable to any action taken after the Closing by Seller Parent or any of its Affiliates, other than any such action that (1) is in the ordinary course of business, (2) is expressly permitted or contemplated by this Agreement, or (3) is required to be taken in order to comply with applicable Law or as a result of a change in applicable Law (a “Seller Tax Act”), (B) Taxes that were reflected, accrued or reserved for in the Final Closing Statement, Final Purchaser Working Capital or the Final Purchaser Net Cash, (C) Income Taxes to the extent that Purchaser or any Subsidiary thereof had any Tax Assets as of the close of business on the Closing Date that were available, or would have been available but for their prior utilization by Purchaser or any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries after the Closing), to offset or otherwise reduce the applicable Tax Liability in respect of such Income Taxes (except any Tax Asset reflected as an asset in the Final Closing Statement and taken into account in the calculation of the Final Purchaser Working Capital or the Final Purchaser Net Cash), or (D) Taxes for which Seller Parent is responsible under Section 6.5(d)(i). (iii) To the extent permitted or required by applicable Law, the taxable year of each of the Conveyed Subsidiaries and their Subsidiaries and any Subsidiary of Purchaser that includes the Closing Date shall be treated as closing on (and including) the Closing Date. Otherwise, for purposes of this Agreement, in 12.4.3 In the case of any Straddle Period~~: (A) Property~~ , the liability for Taxes allocable to the Pre-Closing Tax Period shall be computed based upon the ratio of the number of days in the Pre-Closing Tax Period to the number of days in the entire Straddle Period; and (B) Taxes (other than Property Taxes) allocable to the Pre-Closing Tax Period shall be computed as if such Tax period ended as of the close of business on the Closing Date and, in the case of any Taxes of Conveyed Subsidiaries (and their Subsidiaries) and Seller Parent, or in the case of any Taxes of Purchaser Parent and Purchaser (and their Subsidiaries prior to the Closing), in each case attributable to the ownership of any equity interest in any partnership or other “flow through” entity for tax purposes (including of any “controlled foreign corporation,” as defined under the Code) as if the Tax period of such partnership or other “flow through” entity ended as of the close of business on the Closing Date with the Taxes of such entity for the Pre-Closing ~~Tax~~ Period ~~deemed to include any Taxes~~ shall be determined on an interim-closing-of-the-books basis as if such taxable period ended on and included the ~~allocable income of such entity in respect of such Tax period; provided~~ Closing Date, except that (i) all standard deductions, exemptions, allowances ~~or deductions that are calculated on an annual basis (including depreciation~~ and ~~amortization deductions)~~ other similar items shall be ~~allocated between the period ending on the Closing Date and the period beginning after the Closing Date in proportion~~ apportioned to the number of days in each period. (iv) Any claim for indemnification under this Section 6.5(d) shall be made in writing upon the party from whom indemnification is sought, and shall specify in reasonable detail the basis for such claim. Any indemnity payment required to be made pursuant to this Section 6.5(d) shall be made within thirty (30) days after the indemnified party makes written demand upon the indemnifying party, but in no case earlier than five (5) Business Days prior to the date on which the relevant Taxes are required to be paid to the applicable Taxing Authority. (v) With respect to any Taxes suffered or incurred by any Conveyed Subsidiary (or any Subsidiary thereof) that was not wholly owned by Seller Parent (directly or indirectly) as of immediately prior to the Closing, the indemnification obligations of Seller Parent pursuant to Section 6.5(d)(i) in respect of such Taxes (or related costs and expenses) shall in no event exceed an amount equal to (A) the amount of such Taxes (or related costs and expenses) for which the Purchaser Tax Indemnified Parties would otherwise be entitled to indemnification pursuant to Section 6.5(d), as if such Conveyed Subsidiary (or any Subsidiary thereof) were wholly owned by Seller Parent, multiplied by (B) the direct and indirect percentage ownership of Seller Parent of such Conveyed Subsidiary (or Subsidiary thereof) as of immediately prior to the Closing. With respect to any Taxes suffered or incurred by any Subsidiary of Purchaser Parent (including Purchaser and its Subsidiaries) that was not wholly owned by Purchaser Parent (directly or indirectly) as of immediately prior to the Closing, the indemnification obligations of Purchaser Parent pursuant to Section 6.5(d)(ii) in respect of such Taxes (or related costs and expenses) shall in no event exceed an amount equal to (A) the amount of such Taxes (or related costs and expenses) for which the Purchaser Tax Indemnified Parties would otherwise be entitled to indemnification pursuant to Section 6.5(d), as if such Subsidiary were wholly owned by Purchaser Parent, multiplied by (B) the direct and indirect percentage ownership of Purchaser Parent of such Subsidiary as of immediately prior to the Closing. (vi) Without duplication to any other amounts paid pursuant to this Section 6.5: (A) Within thirty (30) days following the filing of any Income Tax Return for any Conveyed Subsidiary (or any Subsidiary thereof), on the one hand, or Purchaser (or any Subsidiary thereof, other than the Conveyed Subsidiaries and their Subsidiaries), on the other hand, for any Prepre-Closing ~~Tax Period or for any Straddle Period, Seller Parent or Purchaser Parent shall (or Purchaser Parent shall cause Purchaser to) prepare~~ period on a statement showing (i) the amount of Income Taxes shown as due on such filed Income Tax Return with respect to the relevant Pre-Closing Tax Period or the portion of any Straddle Period ending on and including the Closing Date (the “Final Pre-Closing Income Tax Amount”) per diem basis and (ii) real and personal property Taxes shall be apportioned between Parent and Holdings in accordance with the ~~amount~~ principles under Section 164(d) of the Seller Accrued Income Taxes or Purchaser Accrued Income Taxes, as applicable, attributable to such Income Tax Return as reflected on the Final Closing Statement (the “Pre-Closing Income Tax Amount”) and deliver such statement to Seller Parent and Purchaser Parent, as applicable. Purchaser Parent or Seller Parent, as applicable, shall have a period of fifteen (15) Business Days to provide comments to a schedule prepared (or caused to be prepared) by Seller Parent or Purchaser Parent, respectively. If Purchaser Parent or Seller Parent, as applicable, do not provide any comments to Seller Parent or Purchaser Parent, respectively, during such period, the statement as so prepared shall be final and bindingCode. (B) In the event the Final Pre-Closing Income Tax Amount with respect to any Income Tax Return is less than the amount of the Pre-Closing Income Tax Amount attributable to such Income Tax Return that was included on the Final Closing Statement, the Purchaser shall within five (5) Business Days following the finalization of the Final Pre-Closing Income Tax Amount hereunder (i) pay to Seller Parent the amount of such difference with respect to a Conveyed Subsidiary and their Subsidiaries and (ii) pay to Purchaser Parent the amount of such difference with respect to Purchaser and its Subsidiaries. (vii) The Parties shall use reasonable best efforts to structure any indemnity payment, true-up payment, or payment in respect of Tax Benefits made by any Party pursuant to this Agreement (including pursuant to this Section 6.5, Section 6.6 and Article VII) and any payment made by Purchaser Parent to Purchaser pursuant to Section 2.8 or Section 2.9 in the manner set forth in Clause 10 of the Structuring Considerations Agreement. The Parties shall use reasonable best efforts to structure as a special dividend any payment made by Purchaser to Purchaser Parent pursuant to Section 2.8, Section 2.9 or this Section 6.5.

Appears in 2 contracts

Sources: Asset Purchase Agreement (Boise Cascade Holdings, L.L.C.), Asset Purchase Agreement (Boise Cascade Holdings, L.L.C.)

Tax Indemnification. ~~(i) Subject to Section 6.5(d)(v)~~Each Indemnifying Person will jointly and severally indemnify, ~~from and after the Closing~~exonerate, ~~Seller Parent agrees to indemnify~~ and hold free and harmless ~~Purchaser and its Subsidiaries (including~~ the ~~Conveyed Subsidiaries and their Subsidiaries after the Closing Date) (collectively, the “Purchaser Tax~~ Indemnified ~~Parties”)~~ Persons from and against any and all ~~liability~~Losses incurred or suffered by the Indemnified Persons or any of them as a result of, ~~without duplication~~arising out of, ~~for~~ or directly or indirectly relating to:- (1a) Taxes (or the non-payment thereof) of Main Union or the PRC Affiliate for all Taxable periods ending on or before the Completion Date and the portion through the end of the ~~Conveyed Subsidiaries and their Subsidiaries~~ Completion Date for any Taxable period that includes (but does not end on) the Completion Date (the “Pre-~~Closing~~ Completion Tax ~~Period~~ Period”), (~~including any Taxes payable in respect of an election under Section 965(h~~b) ~~of the Code), (2)~~ all Taxes of any ~~Seller (other than any Transfer Taxes and VAT~~ member of an affiliated, consolidated, combined or unitary group for Tax purposes of which ~~Purchaser~~ Main Union or the PRC Affiliate is ~~responsible hereunder) including, Taxes (other than Taxes of the Conveyed Subsidiaries and their Subsidiaries) imposed with respect to, arising out of~~ or ~~relating~~ was a member on or prior to the ~~Purchased Assets or the Business for a Pre-Closing Tax Period~~Completion Date, and (3c) any and all Taxes of any Person (other than Main Union or the ~~Conveyed Subsidiaries and their Subsidiaries~~PRC Affiliate) ~~for a Pre-Closing Tax Period for which any Conveyed Subsidiary (~~imposed on Main Union or ~~any Subsidiary thereof) is liable under Treasury Regulation Section 1.1502-6 (or a similar provision of state, local or foreign Law), or~~ the PRC Affiliate as a transferee or ~~successor~~ successor, by Contract, or by Contract (other than Contracts that do not relate primarily to Taxes), (4) Taxes arising out of or resulting from any breach of any covenant or agreement of Seller Parent or any of its Affiliates contained in this Agreement, (5) Taxes for a Pre-Closing Tax Period imposed on (x) any transaction effected pursuant to ~~Section 2.3(b)~~any law, ~~(y)~~ rule or regulation, which Taxes relate to an event or transaction occurring before the Completion. Notwithstanding any settlement of any intercompany accounts of Seller Parent or its Subsidiaries pursuant to Section 6.7, or (z) any transaction or step forming part of the Seller Internal Restructurings, (6) Transfer Taxes for which Seller Parent is responsible under Section 6.5(j), (7) Taxes required to be deducted or withheld with respect to the payment of the Purchase Consideration or any amounts payable to Seller Parent pursuant to Section 2.8 or Section 2.9, including any penalties imposed on Purchaser as a result of Purchaser’s failure to deduct or withhold any such amounts that Purchaser (or a Purchaser Designated Affiliate) was permitted to withhold under Section 2.10 (in each case, subject to Purchaser’s compliance with the notice and cooperation requirements of Section 2.10 and except for any such Taxes (and any related penalties) required to be deducted or withheld solely as a result of any assignment by Purchaser or its Affiliates for which Purchaser is responsible pursuant to Section 10.3), (8) Taxes arising from any breach of any representation or warranty contained in Section 4.16(k), (9) Taxes arising as a result of any Conveyed Subsidiary or any Subsidiary of any Conveyed Subsidiary at any time ceasing to be a member of a group for the purposes of any Tax, of which group Seller Parent or any Subsidiary of Seller Parent is or was also a member and (10) any costs and expenses, including reasonable legal and accounting fees and expenses, attributable to any item described in clauses (1) through (9) (any such Taxes for which Seller Parent is responsible pursuant to this Section 6.5(d)(i), subject to the following proviso, “Seller Indemnified Taxes”); provided that Seller Parent shall not be required to indemnify or hold harmless any Purchaser Tax Indemnified Party from and against any liability pursuant to this Section 6.5(d)(i) for (A) Taxes attributable to any action taken after the Closing by Purchaser, any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries), or any transferee of Purchaser or any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries), other than any such action that (1) is in the ordinary course of business, (2) is expressly permitted or contemplated by this Agreement, or (3) is required to be taken in order to comply with applicable Law or as a result of a change in applicable Law (a “Purchaser Tax Act”), (B) Taxes that were reflected, accrued or reserved for in the Final Closing Statement, Final Business Working Capital, or Final Business Net Cash, (C) Income Taxes to the extent that a Conveyed Subsidiary or any Subsidiary thereof had any Tax Assets as of the close of business on the Closing Date that were available, or would have been available but for their prior utilization by Purchaser or any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries after the Closing) to offset or otherwise reduce the applicable Tax Liability in respect of such Income Taxes (except any Tax Asset reflected as an asset in the Final Closing Statement and taken into account in the calculation of the Final Business Working Capital or the Final Business Net Cash), or (D) Taxes for which Purchaser Parent is responsible under Section 6.5(d)(ii). (ii) Subject to Section 6.5(d)(v), from and after the Closing, Purchaser Parent shall indemnify and hold harmless the Purchaser Tax Indemnified Parties from and against all liability, without duplication, for (1) all Taxes of Purchaser Parent and its Affiliates (other than Purchaser and its Subsidiaries) for any Tax period (other than Transfer Taxes and VAT for which Seller Parent is responsible hereunder), (2) Taxes of Purchaser and its Subsidiaries (other than the Conveyed Subsidiaries and their Subsidiaries) for any Pre-Closing Tax Period, (3) Taxes of any Person for a Pre-Closing Tax Period for which Purchaser (or any Subsidiary thereof other than any Conveyed Subsidiaries and their Subsidiaries) is liable under Treasury Regulation Section 1.1502-6 (or a similar provision of state, local or foreign Law), or as a transferee or successor or by Contract (other than Contracts that do not relate primarily to Taxes), (4) Taxes arising out of or resulting from any breach of any covenant or agreement of Purchaser Parent, Purchaser or their respective Affiliates contained in this Agreement, (5) Transfer Taxes for which Purchaser Parent is responsible under Section 6.5(j), (6) Taxes arising from any breach of any representation or warranty in Section 5.17(k), (7) Taxes for a Pre-Closing Tax Period imposed on (x) any settlement of any intercompany accounts of Purchaser or any Subsidiary of Purchaser, on the one hand, and Purchaser Parent or any Subsidiary of Purchaser Parent (other than Purchaser and its Subsidiaries), on the other hand, pursuant to Section 6.7 or (y) any transaction or step forming part of the Purchaser Internal Restructurings, (8) Taxes required to be deducted or withheld with respect to any amounts payable to Purchaser Parent pursuant to Section 2.8 or Section 2.9, including any penalties imposed on Purchaser as a result of Purchaser’s failure to deduct or withhold any such amounts, (9) Taxes arising as a result of Purchaser or any Subsidiary of Purchaser (other than any Conveyed Subsidiary or a Subsidiary thereof) at any time ceasing to be a member of a group for the purposes of any Tax, of which group Purchaser Parent or any Subsidiary of Purchaser Parent (other than Purchaser or any Subsidiary of Purchaser) is or was also a member and (10) any costs and expenses, including reasonable legal and accounting fees and expenses, attributable to any item described in clauses (1) through (9) (any such Taxes for which Purchaser Parent is responsible pursuant to this Section 6.5(d)(ii), subject to the following proviso, “Purchaser Parent Indemnified Taxes”); provided that Purchaser Parent shall not be required to indemnify or hold harmless any Purchaser Tax Indemnified Party from and against any liability for (A) Taxes attributable to any action taken after the Closing by Seller Parent or any of its Affiliates, other than any such action that (1) is in the ordinary course of business, (2) is expressly permitted or contemplated by this Agreement, or (3) is required to be taken in order to comply with applicable Law or as a result of a change in applicable Law (a “Seller Tax Act”), (B) Taxes that were reflected, accrued or reserved for in the Final Closing Statement, Final Purchaser Working Capital or the Final Purchaser Net Cash, (C) Income Taxes to the extent that Purchaser or any Subsidiary thereof had any Tax Assets as of the close of business on the Closing Date that were available, or would have been available but for their prior utilization by Purchaser or any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries after the Closing), to offset or otherwise reduce the applicable Tax Liability in respect of such Income Taxes (except any Tax Asset reflected as an asset in the Final Closing Statement and taken into account in the calculation of the Final Purchaser Working Capital or the Final Purchaser Net Cash), or (D) Taxes for which Seller Parent is responsible under Section 6.5(d)(i). (iii) To the extent permitted or required by applicable Law, the taxable year of each of the Conveyed Subsidiaries and their Subsidiaries and any Subsidiary of Purchaser that includes the Closing Date shall be treated as closing on (and including) the Closing Date. Otherwise, for purposes of this Agreement, in the case of any Straddle Period: (A) Property Taxes allocable to the Pre-Closing Tax Period shall be computed based upon the ratio of the number of days in the Pre-Closing Tax Period to the number of days in the entire Straddle Period; and (B) Taxes (other than Property Taxes) allocable to the Pre-Closing Tax Period shall be computed as if such Tax period ended as of the close of business on the Closing Date and, in the case of any Taxes of Conveyed Subsidiaries (and their Subsidiaries) and Seller Parent, or in the case of any Taxes of Purchaser Parent and Purchaser (and their Subsidiaries prior to the Closing), in each case attributable to the ownership of any equity interest in any partnership or other “flow through” entity for tax purposes (including of any “controlled foreign corporation,” as defined under the Code) as if the Tax period of such partnership or other “flow through” entity ended as of the close of business on the Closing Date with the Taxes of such entity for the Pre-Closing Tax Period deemed to include any Taxes on the allocable income of such entity in respect of such Tax period; provided that exemptions, allowances or deductions that are calculated on an annual basis (including depreciation and amortization deductions) shall be allocated between the period ending on the Closing Date and the period beginning after the Closing Date in proportion to the number of days in each period. (iv) Any claim for indemnification indemnity under this ~~Section 6.5(d) shall~~ Clause 25.3 will not be ~~made~~ subject to any limitation contained elsewhere in ~~writing upon the party from whom indemnification is sought~~this Agreement; provided, ~~and shall specify in reasonable detail the basis for such claim. Any indemnity payment required to~~ however, that no claim may be made pursuant to this ~~Section 6.5(d~~Clause 25.3 subsequent to the sixtieth (60th) ~~shall be made within thirty (30) days~~ day after the ~~indemnified party makes written demand upon the indemnifying party, but in no case earlier than five (5) Business Days prior to the date on which the relevant Taxes are required to be paid to~~ expiration of the applicable ~~Taxing Authority.~~ statute of limitations (~~v) With respect to~~ taking into account any ~~Taxes suffered or incurred by any Conveyed Subsidiary (or any Subsidiary thereof) that was not wholly owned by Seller Parent (directly or indirectly) as~~ tolling periods and other extensions). For the avoidance of ~~immediately prior to the Closing~~doubt, the ~~indemnification obligations of Seller Parent pursuant to Section 6.5(d)(i~~limitations in Clauses 12.4(a) ~~in respect of such Taxes~~ (or related costs and expenses) shall in no event exceed an amount equal to (A) the amount of such Taxes (or related costs and expenses) for which the Purchaser Tax Indemnified Parties would otherwise be entitled to indemnification pursuant to Section 6.5(d), as if such Conveyed Subsidiary (or any Subsidiary thereof) were wholly owned by Seller Parent, multiplied by (B) the direct and indirect percentage ownership of Seller Parent of such Conveyed Subsidiary (or Subsidiary thereof) as of immediately prior to the Closing. With respect to any Taxes suffered or incurred by any Subsidiary of Purchaser Parent (including Purchaser and its Subsidiaries) that was not wholly owned by Purchaser Parent (directly or indirectly) as of immediately prior to the Closing, the indemnification obligations of Purchaser Parent pursuant to Section 6.5(d)(ii) in respect of such Taxes (or related costs and expenses) shall in no event exceed an amount equal to (A) the amount of such Taxes (or related costs and expenses) for which the Purchaser Tax Indemnified Parties would otherwise be entitled to indemnification pursuant to Section 6.5(d), as if such Subsidiary were wholly owned by Purchaser Parent, multiplied by (B) the direct and indirect percentage ownership of Purchaser Parent of such Subsidiary as of immediately prior to the Closing. (vi) Without duplication to any other amounts paid pursuant to this Section 6.5: (A) Within thirty (30) days following the filing of any Income Tax Return for any Conveyed Subsidiary (or any Subsidiary thereof), on the one hand, or Purchaser (or any Subsidiary thereof, other than the Conveyed Subsidiaries and their Subsidiaries), on the other hand, for any Pre-Closing Tax Period or for any Straddle Period, Seller Parent or Purchaser Parent shall (or Purchaser Parent shall cause Purchaser to) prepare a statement showing (i) the amount of Income Taxes shown as due on such filed Income Tax Return with respect to the relevant Pre-Closing Tax Period or the portion of any Straddle Period ending on and including the Closing Date (the “Final Pre-Closing Income Tax Deductible Amount”) and 12.4(b) (iiMaximum Liability for Breach of Warranty) ~~the amount of the Seller Accrued Income Taxes or Purchaser Accrued Income Taxes, as applicable, attributable~~ will not apply to such Income Tax Return as reflected on the Final Closing Statement (the “Pre-Closing Income Tax Amount”) and deliver such statement to Seller Parent and Purchaser Parent, as applicable. Purchaser Parent or Seller Parent, as applicable, shall have a period of fifteen (15) Business Days to provide comments to a schedule prepared (or caused to be prepared) by Seller Parent or Purchaser Parent, respectively. If Purchaser Parent or Seller Parent, as applicable, do not provide any comments to Seller Parent or Purchaser Parent, respectively, during such period, the statement as so prepared shall be final and bindingclaims for indemnification under this Clause 25.3. (B) In the event the Final Pre-Closing Income Tax Amount with respect to any Income Tax Return is less than the amount of the Pre-Closing Income Tax Amount attributable to such Income Tax Return that was included on the Final Closing Statement, the Purchaser shall within five (5) Business Days following the finalization of the Final Pre-Closing Income Tax Amount hereunder (i) pay to Seller Parent the amount of such difference with respect to a Conveyed Subsidiary and their Subsidiaries and (ii) pay to Purchaser Parent the amount of such difference with respect to Purchaser and its Subsidiaries. (vii) The Parties shall use reasonable best efforts to structure any indemnity payment, true-up payment, or payment in respect of Tax Benefits made by any Party pursuant to this Agreement (including pursuant to this Section 6.5, Section 6.6 and Article VII) and any payment made by Purchaser Parent to Purchaser pursuant to Section 2.8 or Section 2.9 in the manner set forth in Clause 10 of the Structuring Considerations Agreement. The Parties shall use reasonable best efforts to structure as a special dividend any payment made by Purchaser to Purchaser Parent pursuant to Section 2.8, Section 2.9 or this Section 6.5.

Appears in 2 contracts

Sources: Sale and Purchase Agreement, Share Purchase Agreement (AGY Holding Corp.)

Tax Indemnification. Pro-Fac shall indemnify the Company, its Subsidiaries, Buyer, and each Buyer Affiliate and hold them harmless from and against without duplication, any loss, claim, liability, expense, or other damage attributable to (i) ~~Subject to Section 6.5(d)(v), from and after~~ all Income Taxes (or the ~~Closing, Seller Parent agrees to indemnify and hold harmless Purchaser~~ non-payment thereof) of the Company and its Subsidiaries ~~(including the Conveyed Subsidiaries and their Subsidiaries after~~ for all taxable periods ending on or before the Closing ~~Date) (collectively,~~ Date and the ~~“Purchaser Tax Indemnified Parties”) from and against all liability, without duplication, for (1) Taxes~~ portion through the end of the ~~Conveyed Subsidiaries and their Subsidiaries~~ Closing Date for any ~~Pre-~~taxable period that includes (but does not end on) the Closing ~~Tax Period~~ Date (including any Taxes payable in respect of an election under Section 965(h) of the Code), (2) Taxes of any Seller (other than any Transfer Taxes and VAT for which Purchaser is responsible hereunder) including, Taxes (other than Taxes of the Conveyed Subsidiaries and their Subsidiaries) imposed with respect to, arising out of or relating to the Purchased Assets or the Business for a "Pre-Closing Tax Period"), (3ii) all Income Taxes of any member of an affiliated, consolidated, combined or unitary group of which the Company or any of its Subsidiaries (or any predecessor of any of the foregoing) is or was a member on or prior to the Closing Date, including pursuant to Treasury Regulation Section 1.1502-6 or any analogous or similar state, local, or foreign law or regulation, and (iii) any and all Income Taxes of any Person (other than the ~~Conveyed Subsidiaries~~ Company and ~~their~~ its Subsidiaries) ~~for a Pre-Closing Tax Period for which any Conveyed Subsidiary (~~imposed on the Company or any ~~Subsidiary thereof) is liable under Treasury Regulation Section 1.1502-6 (or a similar provision~~ of ~~state, local or foreign Law), or~~ its Subsidiaries as a transferee or ~~successor~~ successor, by contract or by Contract (other than Contracts that do not relate primarily to Taxes), (4) Taxes arising out of or resulting from any breach of any covenant or agreement of Seller Parent or any of its Affiliates contained in this Agreement, (5) Taxes for a Pre-Closing Tax Period imposed on (x) any transaction effected pursuant to ~~Section 2.3(b)~~any law, rule, or regulation, which Income Taxes relate to an event or transaction occurring before the Closing; provided, that Pro-Fac shall be liable under clauses (yi) through (iii) above only to the extent that such losses, claims, liabilities, expenses and other damages exceed the Income Tax Reserve. Pro-Fac shall reimburse Buyer for any ~~settlement~~ Income Taxes of ~~any intercompany accounts of Seller Parent~~ the Company or its Subsidiaries ~~pursuant to Section 6.7, or (z) any transaction or step forming part~~ which are the responsibility of the Seller Internal Restructurings, (6) Transfer Taxes for which Seller Parent is responsible under Section 6.5(j), (7) Taxes required to be deducted or withheld with respect to the payment of the Purchase Consideration or any amounts payable to Seller Parent pursuant to Section 2.8 or Section 2.9, including any penalties imposed on Purchaser as a result of Purchaser’s failure to deduct or withhold any such amounts that Purchaser (or a Purchaser Designated Affiliate) was permitted to withhold under Section 2.10 (in each case, subject to Purchaser’s compliance with the notice and cooperation requirements of Section 2.10 and except for any such Taxes (and any related penalties) required to be deducted or withheld solely as a result of any assignment by Purchaser or its Affiliates for which Purchaser is responsible pursuant to Section 10.3), (8) Taxes arising from any breach of any representation or warranty contained in Section 4.16(k), (9) Taxes arising as a result of any Conveyed Subsidiary or any Subsidiary of any Conveyed Subsidiary at any time ceasing to be a member of a group for the purposes of any Tax, of which group Seller Parent or any Subsidiary of Seller Parent is or was also a member and (10) any costs and expenses, including reasonable legal and accounting fees and expenses, attributable to any item described in clauses (1) through (9) (any such Taxes for which Seller Parent is responsible Pro-Fac pursuant to this Section 6.5(d)(i), subject to the following proviso, “Seller Indemnified Taxes”); provided that Seller Parent shall not be required to indemnify or hold harmless any Purchaser Tax Indemnified Party from and against any liability pursuant to this Section 6.5(d)(i9.1 within fifteen (15) ~~for (A) Taxes attributable to any action taken~~ business days after the Closing by Purchaser, any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries), or any transferee of Purchaser or any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries), other than any such action that (1) is in the ordinary course of business, (2) is expressly permitted or contemplated by this Agreement, or (3) is required to be taken in order to comply with applicable Law or as a result of a change in applicable Law (a “Purchaser Tax Act”), (B) Taxes that were reflected, accrued or reserved for in the Final Closing Statement, Final Business Working Capital, or Final Business Net Cash, (C) Income Taxes to the extent that a Conveyed Subsidiary or any Subsidiary thereof had any Tax Assets as of the close of business on the Closing Date that were available, or would have been available but for their prior utilization by Purchaser or any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries after the Closing) to offset or otherwise reduce the applicable Tax Liability in respect payment of such Income Taxes ~~(except any Tax Asset reflected as an asset in~~ by Buyer, the ~~Final Closing Statement and taken into account in the calculation of the Final Business Working Capital or the Final Business Net Cash)~~Company, or (D) Taxes for which Purchaser Parent is responsible under Section 6.5(d)(ii). (ii) Subject to Section 6.5(d)(v), from and after the Closing, Purchaser Parent shall indemnify and hold harmless the Purchaser Tax Indemnified Parties from and against all liability, without duplication, for (1) all Taxes of Purchaser Parent and its Affiliates (other than Purchaser and its Subsidiaries) for any Tax period (other than Transfer Taxes and VAT for which Seller Parent is responsible hereunder), (2) Taxes of Purchaser and its Subsidiaries (or any Affiliate of Buyer. The indemnities contained in this Article IX shall not be subject to the limitations contained in Article X other than the Conveyed Subsidiaries and their Subsidiaries) for any Pre-Closing Tax Period, (3) Taxes of any Person for a Pre-Closing Tax Period for which Purchaser (or any Subsidiary thereof other than any Conveyed Subsidiaries and their Subsidiaries) is liable under Treasury Regulation Section 1.1502-6 (or a similar provision of state, local or foreign Law), or as a transferee or successor or by Contract (other than Contracts that do not relate primarily to Taxes), (4) Taxes arising out of or resulting from any breach of any covenant or agreement of Purchaser Parent, Purchaser or their respective Affiliates monetary limitations contained in ~~this Agreement~~Section 10.1(d); provided, (5) Transfer Taxes for which Purchaser Parent is responsible under Section 6.5(j), (6) Taxes arising from any breach of any representation or warranty in Section 5.17(k), (7) Taxes for a Pre-Closing Tax Period imposed on (x) any settlement of any intercompany accounts of Purchaser or any Subsidiary of Purchaser, on the one hand, and Purchaser Parent or any Subsidiary of Purchaser Parent (other than Purchaser and its Subsidiaries), on the other hand, pursuant to Section 6.7 or (y) any transaction or step forming part of the Purchaser Internal Restructurings, (8) Taxes required to be deducted or withheld with respect that such monetary limitations shall not apply to any amounts payable to Purchaser Parent pursuant to Section 2.8 or Section 2.9, including any penalties imposed on Purchaser as a result of Purchaser’s failure to deduct or withhold any such amounts, (9) Taxes arising as a result of Purchaser or any Subsidiary of Purchaser (other than any Conveyed Subsidiary or a Subsidiary thereof) at any time ceasing to be a member of a group for the purposes of any Tax, of which group Purchaser Parent or any Subsidiary of Purchaser Parent (other than Purchaser or any Subsidiary of Purchaser) is or was also a member and (10) any costs and expenses, including reasonable legal and accounting fees and expenses, attributable to any item described in clauses (1) through (9) (any such Taxes for which Purchaser Parent is responsible pursuant to this Section 6.5(d)(ii), subject to the following proviso, “Purchaser Parent Indemnified Taxes”); provided that Purchaser Parent shall not be required to indemnify or hold harmless any Purchaser Tax Indemnified Party from and against any liability for (A) Taxes attributable to any action taken after the Closing by Seller Parent or any of its Affiliates, other than any such action that (1) is in the ordinary course of business, (2) is expressly permitted or contemplated by this Agreement, or (3) is required to be taken in order to comply with applicable Law or as a result of a change in applicable Law (a “Seller Tax Act”), (B) Taxes that were reflected, accrued or reserved for in the Final Closing Statement, Final Purchaser Working Capital or the Final Purchaser Net Cash, (C) Income Taxes to the extent that Purchaser or any Subsidiary thereof had any Tax Assets as of the close of business on the Closing Date that were available, or would have been available but for their prior utilization by Purchaser or any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries after the Closing), to offset or otherwise reduce the applicable Tax Liability in respect of such Income Taxes (except any Tax Asset reflected as an asset in the Final Closing Statement and taken into account in the calculation of the Final Purchaser Working Capital or the Final Purchaser Net Cash), or (D) Taxes for which Seller Parent is responsible under Section 6.5(d)(i). (iii) To the extent permitted or required by applicable Law, the taxable year of each of the Conveyed Subsidiaries and their Subsidiaries and any Subsidiary of Purchaser that includes the Closing Date shall be treated as closing on (and including) the Closing Date. Otherwise, for purposes of this Agreement, in the case of any Straddle Period: (A) Property Taxes allocable to the Pre-Closing Tax Period shall be computed based upon the ratio of the number of days in the Pre-Closing Tax Period to the number of days in the entire Straddle Period; and (B) Taxes (other than Property Taxes) allocable to the Pre-Closing Tax Period shall be computed as if such Tax period ended as of the close of business on the Closing Date and, in the case of any Taxes of Conveyed Subsidiaries (and their Subsidiaries) and Seller Parent, or in the case of any Taxes of Purchaser Parent and Purchaser (and their Subsidiaries prior to the Closing), in each case damages attributable to the ~~ownership~~ nondeductibility of any equity interest in any partnership or other “flow through” entity for tax purposes (including of any “controlled foreign corporation,” as defined under the Code) as if the Tax period of such partnership or other “flow through” entity ended as of the close of business on the Closing Date with the Taxes of such entity for the Pre-Closing Tax Period deemed to include any Taxes on the allocable net patronage income of such entity in respect of such Tax period; provided that exemptions, allowances or deductions that are calculated on an annual basis (including depreciation and amortization deductions) shall be allocated between the period ending on the Closing Date Pro-Fac and the ~~period beginning after~~ Company for their respective fiscal year ending June 29, 2002 utilized to calculate the ~~Closing Date in proportion to the number of days in each period~~Permitted Patronage Amount. (iv) Any claim for indemnification under this Section 6.5(d) shall be made in writing upon the party from whom indemnification is sought, and shall specify in reasonable detail the basis for such claim. Any indemnity payment required to be made pursuant to this Section 6.5(d) shall be made within thirty (30) days after the indemnified party makes written demand upon the indemnifying party, but in no case earlier than five (5) Business Days prior to the date on which the relevant Taxes are required to be paid to the applicable Taxing Authority. (v) With respect to any Taxes suffered or incurred by any Conveyed Subsidiary (or any Subsidiary thereof) that was not wholly owned by Seller Parent (directly or indirectly) as of immediately prior to the Closing, the indemnification obligations of Seller Parent pursuant to Section 6.5(d)(i) in respect of such Taxes (or related costs and expenses) shall in no event exceed an amount equal to (A) the amount of such Taxes (or related costs and expenses) for which the Purchaser Tax Indemnified Parties would otherwise be entitled to indemnification pursuant to Section 6.5(d), as if such Conveyed Subsidiary (or any Subsidiary thereof) were wholly owned by Seller Parent, multiplied by (B) the direct and indirect percentage ownership of Seller Parent of such Conveyed Subsidiary (or Subsidiary thereof) as of immediately prior to the Closing. With respect to any Taxes suffered or incurred by any Subsidiary of Purchaser Parent (including Purchaser and its Subsidiaries) that was not wholly owned by Purchaser Parent (directly or indirectly) as of immediately prior to the Closing, the indemnification obligations of Purchaser Parent pursuant to Section 6.5(d)(ii) in respect of such Taxes (or related costs and expenses) shall in no event exceed an amount equal to (A) the amount of such Taxes (or related costs and expenses) for which the Purchaser Tax Indemnified Parties would otherwise be entitled to indemnification pursuant to Section 6.5(d), as if such Subsidiary were wholly owned by Purchaser Parent, multiplied by (B) the direct and indirect percentage ownership of Purchaser Parent of such Subsidiary as of immediately prior to the Closing. (vi) Without duplication to any other amounts paid pursuant to this Section 6.5: (A) Within thirty (30) days following the filing of any Income Tax Return for any Conveyed Subsidiary (or any Subsidiary thereof), on the one hand, or Purchaser (or any Subsidiary thereof, other than the Conveyed Subsidiaries and their Subsidiaries), on the other hand, for any Pre-Closing Tax Period or for any Straddle Period, Seller Parent or Purchaser Parent shall (or Purchaser Parent shall cause Purchaser to) prepare a statement showing (i) the amount of Income Taxes shown as due on such filed Income Tax Return with respect to the relevant Pre-Closing Tax Period or the portion of any Straddle Period ending on and including the Closing Date (the “Final Pre-Closing Income Tax Amount”) and (ii) the amount of the Seller Accrued Income Taxes or Purchaser Accrued Income Taxes, as applicable, attributable to such Income Tax Return as reflected on the Final Closing Statement (the “Pre-Closing Income Tax Amount”) and deliver such statement to Seller Parent and Purchaser Parent, as applicable. Purchaser Parent or Seller Parent, as applicable, shall have a period of fifteen (15) Business Days to provide comments to a schedule prepared (or caused to be prepared) by Seller Parent or Purchaser Parent, respectively. If Purchaser Parent or Seller Parent, as applicable, do not provide any comments to Seller Parent or Purchaser Parent, respectively, during such period, the statement as so prepared shall be final and binding. (B) In the event the Final Pre-Closing Income Tax Amount with respect to any Income Tax Return is less than the amount of the Pre-Closing Income Tax Amount attributable to such Income Tax Return that was included on the Final Closing Statement, the Purchaser shall within five (5) Business Days following the finalization of the Final Pre-Closing Income Tax Amount hereunder (i) pay to Seller Parent the amount of such difference with respect to a Conveyed Subsidiary and their Subsidiaries and (ii) pay to Purchaser Parent the amount of such difference with respect to Purchaser and its Subsidiaries. (vii) The Parties shall use reasonable best efforts to structure any indemnity payment, true-up payment, or payment in respect of Tax Benefits made by any Party pursuant to this Agreement (including pursuant to this Section 6.5, Section 6.6 and Article VII) and any payment made by Purchaser Parent to Purchaser pursuant to Section 2.8 or Section 2.9 in the manner set forth in Clause 10 of the Structuring Considerations Agreement. The Parties shall use reasonable best efforts to structure as a special dividend any payment made by Purchaser to Purchaser Parent pursuant to Section 2.8, Section 2.9 or this Section 6.5.

Appears in 2 contracts

Sources: Unit Purchase Agreement (Pro Fac Cooperative Inc), Unit Purchase Agreement (Agrilink Foods Inc)

Tax Indemnification. (ia) ~~Subject to Section 6.5(d)(v), from~~ From and after the Closing, ~~Seller~~ Parent ~~agrees to~~ and Holdings, jointly and severally, shall be liable for, and shall indemnify ~~and hold harmless Purchaser and~~ Purchaser, its ~~Subsidiaries~~ Affiliates (including the ~~Conveyed Subsidiaries~~ Companies) and each of their ~~Subsidiaries after the Closing Date)~~ respective directors, officers, employees, shareholders, agents, successors and assigns (~~collectively,~~ the “Purchaser ~~Tax Indemnified Parties~~Indemnitees”) ~~from~~ against and ~~against all liability,~~ hold them harmless (without duplication, ) from (i) all Liability for ~~(1)~~ Taxes of the ~~Conveyed Subsidiaries and their Subsidiaries~~ Companies with respect to any Pre-Closing Tax Period or attributable to the income, assets or operations of the Companies for any Pre-Closing Tax ~~Period~~ Period; (~~including any Taxes payable in respect of an election under Section 965(h~~ii) ~~of the Code), (2) Taxes of any Seller (other than any Transfer~~ all Taxes and ~~VAT for which Purchaser is responsible hereunder) including~~Losses resulting from, ~~Taxes (other than Taxes of the Conveyed Subsidiaries and their Subsidiaries) imposed~~ arising out of, or incurred with respect to, ~~arising out of or relating to the Purchased Assets or the Business for a Pre-Closing Tax Period~~any claims that may be asserted by any party based on, (3) Taxes of any Person (other than the Conveyed Subsidiaries and their Subsidiaries) for a Pre-Closing Tax Period for which any Conveyed Subsidiary (or any Subsidiary thereof) is liable under Treasury Regulation Section 1.1502-6 (or a similar provision of state, local or foreign Law)attributable to, or ~~as a transferee or successor or by Contract (other than Contracts that do not relate primarily to Taxes), (4) Taxes arising out of or~~ resulting from any breach of any covenant or agreement of Seller Parent or any of its Affiliates contained in this Agreement, (5) Taxes for a Pre-Closing Tax Period imposed on (x) any transaction effected pursuant to Section 2.3(b), (y) any settlement of any intercompany accounts of Seller Parent or its Subsidiaries pursuant to Section 6.7, or (z) any transaction or step forming part of the Seller Internal Restructurings, (6) Transfer Taxes for which Seller Parent is responsible under Section 6.5(j), (7) Taxes required to be deducted or withheld with respect to the payment of the Purchase Consideration or any amounts payable to Seller Parent pursuant to Section 2.8 or Section 2.9, including any penalties imposed on Purchaser as a result of Purchaser’s failure to deduct or withhold any such amounts that Purchaser (or a Purchaser Designated Affiliate) was permitted to withhold under Section 2.10 (in each case, subject to Purchaser’s compliance with the notice and cooperation requirements of Section 2.10 and except for any such Taxes (and any related penalties) required to be deducted or withheld solely as a result of any assignment by Purchaser or its Affiliates for which Purchaser is responsible pursuant to Section 10.3), (8) Taxes arising from any breach of any representation or warranty contained in Section ~~4.16(k),~~ 3.08 or covenant contained in this Article VIII; (9iii) all Taxes ~~arising~~ of Parent and its Subsidiaries (other than Taxes of the Companies that are not described in clause (ii) of the definition of Taxes) imposed on the Companies as a result of ~~any Conveyed Subsidiary~~ the provisions of Treasury Regulations Section 1.1502-6 or ~~any Subsidiary~~ the analogous provisions of any ~~Conveyed Subsidiary at any time ceasing~~ state, local or foreign law; (iv) all Taxes (other than the Transfer Taxes that are the responsibility of Purchaser pursuant to ~~be a member~~ Section 8.06) resulting from, arising out of, or incurred with respect to (A) the transfer of ~~a group for~~ the purposes of any Tax, of which group Seller Parent or any Subsidiary of Seller Parent is or was also a member and (10) any costs and expenses, including reasonable legal and accounting fees and expenses, attributable to any item described in clauses (1) through (9) (any such Taxes for which Seller Parent is responsible Membership Interests pursuant to this Agreement (including, but not limited to, any Tax resulting from any election made under Section ~~6.5(d)(i)~~338(h)(10) of the Code (and any corresponding elections under state, ~~subject~~ local or other applicable law) pursuant to Section 8.10) and (B) any other transfer or other transaction contemplated by this Agreement or any Transaction Document, including, without limitation, any action taken in connection with or related to the ~~following proviso~~Reorganization; (v) all other Taxes of Parent, ~~“Seller Indemnified Taxes”); provided that Seller Parent shall not be required to indemnify or hold harmless any Purchaser Tax Indemnified Party from~~ Holdings and ~~against any liability pursuant to this Section 6.5(d)(i~~their Subsidiaries and Affiliates (other than the Companies) for any period; (vi) all Liabilities and Taxes imposed on Purchaser or any of the Companies as a result of (A) ~~Taxes attributable to any action taken after~~ N.J. Rev. Stat. §54:50-38, et seq., together with all regulations, announcements, guidance and other administrative releases or requirements relating thereto (collectively, the ~~Closing~~ “Bulk Sale Act”) or (B) a failure by Purchaser, any of ~~its Affiliates (including~~ the ~~Conveyed Subsidiaries and their Subsidiaries),~~ Companies or any ~~transferee~~ other Person to comply in any or all respects with the Bulk Sale Act, in connection with (1) any of ~~Purchaser~~ the transactions contemplated by this Agreement or any Transaction Document (including, but not limited to, the purchase of ~~its Affiliates~~ the Membership Interests, and any other sale, transfer or assignment, whether in connection with the Reorganization or otherwise) or (~~including~~ 2) any other transaction engaged in by any of the ~~Conveyed Subsidiaries and their Subsidiaries),~~ Companies occurring on or prior to the Closing Date; (vii) Recaptured Section 1603 Payments related to any transfer by Parent or Holdings (other than any ~~such~~ Recaptured Section 1603 Payment resulting from Purchaser’s breach of Section 4.11) or action ~~that~~ taken by the Parent or Holdings related to property eligible for the Cash Grant; and (1viii) is any Tax indemnity obligation of Conectiv Mid-Merit, LLC pursuant to Article II.H. of the Interconnect Lateral Agreement with respect to any taxable event occurring in a Pre-Closing Tax Period. Notwithstanding the foregoing, Parent and Holdings shall have no Liability for the payment of any Tax pursuant to this Section 8.02(a) to the extent of Taxes reflected as current liabilities in the ~~ordinary course~~ calculation of ~~business, (2)~~ Closing Date Working Capital or if such Tax is ~~expressly permitted or contemplated by this Agreement, or (3) is required to be taken in order to comply with applicable Law or~~ imposed as a result of ~~a change~~ Purchaser’s breach of any covenant contained in applicable Law (a “Purchaser Tax Act”), (B) Taxes that were reflected, accrued or reserved for in the Final Closing Statement, Final Business Working Capital, or Final Business Net Cash, (C) Income Taxes to the extent that a Conveyed Subsidiary or any Subsidiary thereof had any Tax Assets as of the close of business on the Closing Date that were available, or would have been available but for their prior utilization by Purchaser or any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries after the Closing) to offset or otherwise reduce the applicable Tax Liability in respect of such Income Taxes (except any Tax Asset reflected as an asset in the Final Closing Statement and taken into account in the calculation of the Final Business Working Capital or the Final Business Net Cash), or (D) Taxes for which Purchaser Parent is responsible under Section 6.5(d)(ii)this Article VIII. (iib) ~~Subject to Section 6.5(d)(v), from~~ From and after the Closing, Purchaser ~~Parent~~ shall be liable for and shall indemnify Parent, Holdings and their Affiliates and each of their respective directors, officers, employees, shareholders, agents, successors and assigns against and hold them harmless ~~the Purchaser Tax Indemnified Parties~~ from ~~and against all liability, without duplication, for~~ (1i) all Liability for Taxes ~~of Purchaser Parent and its Affiliates~~ (other than ~~Purchaser~~ (A) the Transfer Taxes that are the responsibility of the Parent pursuant to Section 8.06 and ~~its Subsidiaries~~(B) the Taxes described in clauses (iii)-(viii) of Section 8.02(a)) of the Companies attributable to the income, assets or operations of the Companies for any Tax period (other than Transfer Taxes and VAT for which Seller Parent is responsible hereunder), (2) Taxes of Purchaser and its Subsidiaries (other than the Conveyed Subsidiaries and their Subsidiaries) for any PrePost-Closing Tax Period, (3ii) ~~Taxes of~~ any ~~Person for a Pre-Closing Tax Period for which~~ breach by Purchaser ~~(or any Subsidiary thereof other than any Conveyed Subsidiaries and their Subsidiaries) is liable under Treasury Regulation Section 1.1502-6 (or a similar provision of state, local or foreign Law)~~of, or ~~as a transferee~~ failure by Purchaser to perform, any of its covenants or successor or by Contract (other than Contracts that do not relate primarily to Taxes), (4) Taxes arising out of or resulting from any breach of any covenant or agreement of Purchaser Parent, Purchaser or their respective Affiliates obligations contained in this ~~Agreement,~~ Article VIII; (5iii) ~~Transfer Taxes~~ any Liability for ~~which Purchaser Parent is responsible under Section 6.5(j), (6)~~ Taxes arising solely from any ~~breach of any representation or warranty in Section 5.17(k), (7) Taxes for a Pre-Closing Tax Period imposed on (x) any settlement of any intercompany accounts of~~ actions taken by Purchaser or any Subsidiary of Purchaser, on the one hand, and Purchaser Parent or any Subsidiary of Purchaser Parent (other than Purchaser and its Subsidiaries), on the other hand, pursuant to Section 6.7 or (y) any transaction or step forming part of the Purchaser Internal Restructurings, (8) Taxes required to be deducted or withheld with respect to any amounts payable to Purchaser Parent pursuant to Section 2.8 or Section 2.9, including any penalties imposed on Purchaser as a result of Purchaser’s failure to deduct or withhold any such amounts, (9) Taxes arising as a result of Purchaser or any Subsidiary of Purchaser (other than any Conveyed Subsidiary or a Subsidiary thereof) at any time ceasing to be a member of a group for the purposes of any Tax, of which group Purchaser Parent or any Subsidiary of Purchaser Parent (other than Purchaser or any Subsidiary of Purchaser) is or was also a member and (10) any costs and expenses, including reasonable legal and accounting fees and expenses, attributable to any item described in clauses (1) through (9) (any such Taxes for which Purchaser Parent is responsible pursuant to this Section 6.5(d)(ii), subject to the following proviso, “Purchaser Parent Indemnified Taxes”); provided that Purchaser Parent shall not be required to indemnify or hold harmless any Purchaser Tax Indemnified Party from and against any liability for (A) Taxes attributable to any action taken after the Closing by Seller Parent or any of its Affiliates, other than any such action that (1) is in the ordinary course of business, (2) is expressly permitted or contemplated by this Agreement, or (3) is required to be taken in order to comply with applicable Law or as a result of a change in applicable Law (a “Seller Tax Act”), (B) Taxes that were reflected, accrued or reserved for in the Final Closing Statement, Final Purchaser Working Capital or the Final Purchaser Net Cash, (C) Income Taxes to the extent that Purchaser or any Subsidiary thereof had any Tax Assets as of the close of business on the Closing Date that ~~were available~~are not contemplated by this Agreement; and (iv) any Recapture Section 1603 Payment related to any transfer by Purchaser, any action taken by the Purchaser related to property eligible for the Cash Grant, or ~~would have been available but for their prior utilization~~ any breach by Purchaser ~~or any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries after the Closing),~~ with respect to offset or otherwise reduce the applicable Tax Liability in respect of such Income Taxes (except any Tax Asset reflected as an asset in the Final Closing Statement and taken into account in the calculation of the Final Purchaser Working Capital or the Final Purchaser Net Cash), or (D) Taxes for which Seller Parent is responsible under Section ~~6.5(d)(i)~~4.11. (~~iii~~c) To the extent permitted or required by applicable Law, the taxable year of each of the Conveyed Subsidiaries and their Subsidiaries and any Subsidiary of Purchaser that includes the Closing Date shall be treated as closing on (and including) the Closing Date. Otherwise, for purposes of this Agreement, in In the case of any taxable period that includes (but does not begin on) the Closing Date (a “Straddle Period: ”): (Ai) real, personal and intangible property Taxes (“Property ~~Taxes allocable to~~ Taxes”) of any of the Companies for the Pre-Closing Tax Period shall ~~be computed based upon~~ equal the ~~ratio~~ Property Taxes owed by the Company or such Subsidiary for such Straddle Period multiplied by a fraction, the numerator of which is the number of days during the Straddle Period that are in the Pre-Closing Tax Period to and the denominator of which is the number of days in the ~~entire~~ Straddle Period; ~~and~~ and (Bii) Taxes (of the Companies, other than Property Taxes~~) allocable to~~ , for the Pre-Closing Tax Period shall be computed as if ~~such Tax period~~ the entire Straddle Period ended as on the day preceding the Closing Date. Parent shall be liable for Taxes of the ~~close~~ Companies that are attributable to the portion of the Straddle Period ending on the day preceding the Closing Date, and shall pay such amounts to Purchaser on or before five (5) days prior to the due date of such Taxes (except to the extent such amount was taken into account in calculating Closing Date Working Capital). (d) Notwithstanding anything in this Agreement to the contrary, any transaction that occurs outside of the ordinary course of business and is not contemplated pursuant to this Agreement, and that occurs on the Closing Date, but prior to the Closing (which for the purpose of this Section 8.02(d) shall mean the actual time of Closing and not the Closing as deemed to occur at 12:01am on the Closing Date) or after Closing as a result of an action taken by Parent or any of its Affiliates prior to Closing, shall be deemed for purposes of this Article VIII as occurring in a Pre-Closing Tax Period. For the avoidance of doubt, any transaction not contemplated by this Agreement that occurs on the Closing Date ~~and,~~ but after the actual time of Closing shall be deemed to occur for purposes of this Article VIII in the case of any Taxes of Conveyed Subsidiaries (and their Subsidiaries) and Seller Parent, or in the case of any Taxes of Purchaser Parent and Purchaser (and their Subsidiaries prior to the Closing), in each case attributable to the ownership of any equity interest in any partnership or other “flow through” entity for tax purposes (including of any “controlled foreign corporation,” as defined under the Code) as if the Tax period of such partnership or other “flow through” entity ended as of the close of business on the Closing Date with the Taxes of such entity for the Prea Post-Closing Tax Period deemed to include any Taxes on the allocable income of such entity in respect of such Tax period; provided that exemptions, allowances or deductions that are calculated on an annual basis (including depreciation and amortization deductions) shall be allocated between the period ending on the Closing Date and the period beginning after the Closing Date in proportion to the number of days in each periodPeriod. (ive) ~~Any claim for indemnification~~ Parent has requested, and Purchaser hereby agrees, that none of Parent, Purchaser or any of the Companies shall make any filings pursuant to the Bulk Sale Act with respect to the transactions contemplated by this Agreement. Notwithstanding anything in this Agreement to the contrary, the failure of Purchaser, any of the Companies or any other Person, including Parent and Holdings, to comply in any respect with any or all obligations imposed by or under the Bulk Sale Act shall not be treated as a breach or failure to perform by Purchaser, Parent or Holdings of any representation, warranty, covenant, agreement or other obligation contained in this ~~Section 6.5(d) shall be made in writing upon the party from whom indemnification is sought~~Agreement, and shall ~~specify~~ not in ~~reasonable detail~~ any way limit or reduce the ~~basis for such claim. Any indemnity payment required to be made~~ obligations of Purchaser, Parent and Holdings pursuant to this ~~Section 6.5(d) shall be made within thirty (30) days after the indemnified party makes written demand upon the indemnifying party~~Agreement, but in no case earlier than five (5) Business Days prior to the date on which the relevant Taxes are required to be paid to the applicable Taxing Authority. (v) With respect to any Taxes suffered or incurred by any Conveyed Subsidiary (or any Subsidiary thereof) that was not wholly owned by Seller Parent (directly or indirectly) as of immediately prior to the Closingincluding, without limitation, the indemnification obligations of ~~Seller~~ Purchaser, Parent ~~pursuant to Section 6.5(d)(i) in respect of such Taxes (or related costs~~ and expenses) shall in no event exceed an amount equal to (A) the amount of such Taxes (or related costs and expenses) for which the Purchaser Tax Indemnified Parties would otherwise be entitled to indemnification pursuant to Section 6.5(d), as if such Conveyed Subsidiary (or any Subsidiary thereof) were wholly owned by Seller Parent, multiplied by (B) the direct and indirect percentage ownership of Seller Parent of such Conveyed Subsidiary (or Subsidiary thereof) as of immediately prior to the Closing. With respect to any Taxes suffered or incurred by any Subsidiary of Purchaser Parent (including Purchaser and its Subsidiaries) that was not wholly owned by Purchaser Parent (directly or indirectly) as of immediately prior to the Closing, the indemnification obligations of Purchaser Parent pursuant to Section 6.5(d)(ii) in respect of such Taxes (or related costs and expenses) shall in no event exceed an amount equal to (A) the amount of such Taxes (or related costs and expenses) for which the Purchaser Tax Indemnified Parties would otherwise be entitled to indemnification pursuant to Section 6.5(d), as if such Subsidiary were wholly owned by Purchaser Parent, multiplied by (B) the direct and indirect percentage ownership of Purchaser Parent of such Subsidiary as of immediately prior to the Closing. (vi) Without duplication to any other amounts paid Holdings pursuant to this Section 6.5: (A) Within thirty (30) days following the filing of any Income Tax Return for any Conveyed Subsidiary (or any Subsidiary thereof), on the one hand, or Purchaser (or any Subsidiary thereof, other than the Conveyed Subsidiaries and their Subsidiaries), on the other hand, for any Pre-Closing Tax Period or for any Straddle Period, Seller Parent or Purchaser Parent shall (or Purchaser Parent shall cause Purchaser to) prepare a statement showing (i) the amount of Income Taxes shown as due on such filed Income Tax Return with respect to the relevant Pre-Closing Tax Period or the portion of any Straddle Period ending on and including the Closing Date (the “Final Pre-Closing Income Tax Amount”) and (ii) the amount of the Seller Accrued Income Taxes or Purchaser Accrued Income Taxes, as applicable, attributable to such Income Tax Return as reflected on the Final Closing Statement (the “Pre-Closing Income Tax Amount”) and deliver such statement to Seller Parent and Purchaser Parent, as applicable. Purchaser Parent or Seller Parent, as applicable, shall have a period of fifteen (15) Business Days to provide comments to a schedule prepared (or caused to be prepared) by Seller Parent or Purchaser Parent, respectively. If Purchaser Parent or Seller Parent, as applicable, do not provide any comments to Seller Parent or Purchaser Parent, respectively, during such period, the statement as so prepared shall be final and bindingArticle VIII. (B) In the event the Final Pre-Closing Income Tax Amount with respect to any Income Tax Return is less than the amount of the Pre-Closing Income Tax Amount attributable to such Income Tax Return that was included on the Final Closing Statement, the Purchaser shall within five (5) Business Days following the finalization of the Final Pre-Closing Income Tax Amount hereunder (i) pay to Seller Parent the amount of such difference with respect to a Conveyed Subsidiary and their Subsidiaries and (ii) pay to Purchaser Parent the amount of such difference with respect to Purchaser and its Subsidiaries. (vii) The Parties shall use reasonable best efforts to structure any indemnity payment, true-up payment, or payment in respect of Tax Benefits made by any Party pursuant to this Agreement (including pursuant to this Section 6.5, Section 6.6 and Article VII) and any payment made by Purchaser Parent to Purchaser pursuant to Section 2.8 or Section 2.9 in the manner set forth in Clause 10 of the Structuring Considerations Agreement. The Parties shall use reasonable best efforts to structure as a special dividend any payment made by Purchaser to Purchaser Parent pursuant to Section 2.8, Section 2.9 or this Section 6.5.

Appears in 2 contracts

Sources: Purchase Agreement (Calpine Corp), Purchase Agreement (Pepco Holdings Inc)

Tax Indemnification. (i) Subject to Section ~~6.5(d)(v~~5.7(g)(iii), Seller shall indemnify Purchaser and its Affiliates (including, from and after the Closing, ~~Seller Parent agrees to indemnify and hold harmless Purchaser and its Subsidiaries (including~~ the ~~Conveyed Subsidiaries and their Subsidiaries after the Closing Date) (collectively, the “Purchaser Tax Indemnified Parties”~~Company) from and against ~~all liability, without duplication, for~~ (1A) any Taxes ~~of the Conveyed Subsidiaries and their Subsidiaries~~ for any Pre-Closing Tax Period ~~(including~~ resulting from, arising out of, relating to or caused by any ~~Taxes payable in respect of an election under Section 965(h)~~ Liability or obligation of the ~~Code), (2)~~ Company for Taxes of any Seller (other than any Transfer Taxes and VAT for which Purchaser is responsible hereunder) including, Taxes (other than Taxes of the Conveyed Subsidiaries and their Subsidiaries) imposed with respect to, arising out of or relating to the Purchased Assets or the Business for a Pre-Closing Tax Period, (3) Taxes of any Person (person other than the ~~Conveyed Subsidiaries~~ Company and ~~their Subsidiaries~~all losses, claims, Liabilities, costs and expenses (including without limitation reasonable expenses of investigation and reasonable attorneys’ fees and disbursements) ~~for a Pre-Closing Tax Period for which any Conveyed Subsidiary~~ (~~or any Subsidiary thereof~~“Losses”) ~~is liable~~ relating to such Taxes (1) under Treasury Regulation Section 1.1502-6 (or a any similar provision of ~~state,~~ state or local ~~or foreign~~ Law), or as a transferee or successor or by Contract (other than Contracts that do not relate primarily to Taxes), (4) Taxes arising out of or resulting from any breach of any covenant or agreement of Seller Parent or any of its Affiliates contained in this Agreement, (5) Taxes for a Pre-Closing Tax Period imposed on (x) any transaction effected pursuant to Section 2.3(b), (y) any settlement of any intercompany accounts of Seller Parent or its Subsidiaries pursuant to Section 6.7, or (z) any transaction or step forming part of the Seller Internal Restructurings, (6) Transfer Taxes for which Seller Parent is responsible under Section 6.5(j), (7) Taxes required to be deducted or withheld with respect to the payment of the Purchase Consideration or any amounts payable to Seller Parent pursuant to Section 2.8 or Section 2.9, including any penalties imposed on Purchaser as a result of Purchaser’s failure to deduct or withhold any such amounts that Purchaser (or a Purchaser Designated Affiliate) was permitted to withhold under Section 2.10 (in each case, subject to Purchaser’s compliance with the notice and cooperation requirements of Section 2.10 and except for any such Taxes (and any related penalties) required to be deducted or withheld solely as a result of any assignment by Purchaser or its Affiliates for which Purchaser is responsible pursuant to Section 10.3), (8) Taxes arising from any breach of any representation or warranty contained in Section 4.16(k), (9) Taxes arising as a result of any Conveyed Subsidiary or any Subsidiary of any Conveyed Subsidiary at any time ceasing to be a member of a group for the purposes of any Tax, of which group Seller Parent or any Subsidiary of Seller Parent is or was also a member and (10) any costs and expenses, including reasonable legal and accounting fees and expenses, attributable to any item described in clauses (1) through (9) (any such Taxes for which Seller Parent is responsible pursuant to this Section 6.5(d)(i), subject to the following proviso, “Seller Indemnified Taxes”); provided that Seller Parent shall not be required to indemnify or hold harmless any Purchaser Tax Indemnified Party from and against any liability pursuant to this Section 6.5(d)(i) for (A) Taxes attributable to any action taken after the Closing by Purchaser, any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries), or any transferee of Purchaser or any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries), other than any such action that (1) is in the ordinary course of business, (2) is expressly permitted or contemplated by this Agreement, or (3) is required to be taken in order to comply with applicable Law or as a result of a change in applicable Law (a “Purchaser Tax Act”), (B) Taxes that were reflected, accrued or reserved for in the Final Closing Statement, Final Business Working Capital, or Final Business Net Cash, (C) Income Taxes to the extent that a Conveyed Subsidiary or any Subsidiary thereof had any Tax Assets as of the close of business on the Closing Date that were available, or would have been available but for their prior utilization by Purchaser or any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries after the Closing) to offset or otherwise reduce the applicable Tax Liability in respect of such Income Taxes (except any Tax Asset reflected as an asset in the Final Closing Statement and taken into account in the calculation of the Final Business Working Capital or the Final Business Net Cash), or (D) Taxes for which Purchaser Parent is responsible under Section 6.5(d)(ii). (ii) Subject to Section 6.5(d)(v), from and after the Closing, Purchaser Parent shall indemnify and hold harmless the Purchaser Tax Indemnified Parties from and against all liability, without duplication, for (1) all Taxes of Purchaser Parent and its Affiliates (other than Purchaser and its Subsidiaries) for any Tax period (other than Transfer Taxes and VAT for which Seller Parent is responsible hereunder), (2) as a transferee or successor, (3) by contract, or (4) otherwise, (B) any Taxes ~~of Purchaser~~ resulting from the Section 338(h)(10) Election, (C) any Taxes resulting from any transaction described in Section 1.4 or any transaction undertaken by the Company, Seller or its Affiliates in preparation for or in connection with the transactions described in this Agreement, and ~~its Subsidiaries~~ (~~other than~~ D) any Taxes imposed on the ~~Conveyed Subsidiaries and their Subsidiaries)~~ Company for any Pre-Closing Tax ~~Period, (3)~~ Period and any Losses relating to such Taxes of and any Person for a Pre-Closing Tax Period for which Purchaser (or any Subsidiary thereof other than any Conveyed Subsidiaries and their Subsidiaries) is liable under Treasury Regulation Section 1.1502-6 (or a similar provision of state, local or foreign Law), or as a transferee or successor or by Contract (other than Contracts that do not relate primarily to Taxes), (4) Taxes ~~arising out of or~~ resulting from ~~any~~ a breach by Seller of ~~any covenant or agreement of Purchaser Parent, Purchaser or their respective Affiliates contained in this Agreement, (5) Transfer Taxes for which Purchaser Parent is responsible~~ its obligations under Section ~~6.5(j),~~ 5.7. (6ii) ~~Taxes arising from any breach of any representation or warranty in Section 5.17(k), (7) Taxes for a Pre-Closing Tax Period imposed on (x) any settlement of any intercompany accounts of~~ Purchaser or any Subsidiary of Purchaser, on the one hand, and Purchaser Parent or any Subsidiary of Purchaser Parent (other than Purchaser and its Subsidiaries), on the other hand, pursuant to Section 6.7 or (y) any transaction or step forming part of the Purchaser Internal Restructurings, (8) Taxes required to be deducted or withheld with respect to any amounts payable to Purchaser Parent pursuant to Section 2.8 or Section 2.9, including any penalties imposed on Purchaser as a result of Purchaser’s failure to deduct or withhold any such amounts, (9) Taxes arising as a result of Purchaser or any Subsidiary of Purchaser (other than any Conveyed Subsidiary or a Subsidiary thereof) at any time ceasing to be a member of a group for the purposes of any Tax, of which group Purchaser Parent or any Subsidiary of Purchaser Parent (other than Purchaser or any Subsidiary of Purchaser) is or was also a member and (10) any costs and expenses, including reasonable legal and accounting fees and expenses, attributable to any item described in clauses (1) through (9) (any such Taxes for which Purchaser Parent is responsible pursuant to this Section 6.5(d)(ii), subject to the following proviso, “Purchaser Parent Indemnified Taxes”); provided that Purchaser Parent shall ~~not be required to~~ indemnify ~~or hold harmless any Purchaser Tax Indemnified Party~~ Seller from and against any ~~liability for (A)~~ Taxes ~~attributable~~ of the Company relating to ~~any action taken after the~~ Post-Closing ~~by Seller Parent or any of its Affiliates~~Tax Periods, other than ~~any such action that (1) is~~ those described in the ordinary course of business, (2) is expressly permitted or contemplated by this Agreement, or (3) is required to be taken in order to comply with applicable Law or as a result of a change in applicable Law (a “Seller Tax Act”Section 5.7(g)(i), ~~(B)~~ and any Losses relating to such Taxes ~~that were reflected, accrued or reserved for in the Final Closing Statement, Final Purchaser Working Capital or the Final Purchaser Net Cash, (C) Income~~ and any Taxes to the extent that Purchaser or any Subsidiary thereof had any Tax Assets as of the close of business on the Closing Date that were available, or would have been available but for their prior utilization resulting from a breach by Purchaser ~~or any~~ of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries after the Closing), to offset or otherwise reduce the applicable Tax Liability in respect of such Income Taxes (except any Tax Asset reflected as an asset in the Final Closing Statement and taken into account in the calculation of the Final Purchaser Working Capital or the Final Purchaser Net Cash), or (D) Taxes for which Seller Parent is responsible obligations under this Section ~~6.5(d)(i)~~5.7. (iii) To the extent permitted or required by applicable Law, the taxable year of each of the Conveyed Subsidiaries and their Subsidiaries and any Subsidiary of Purchaser that includes the Closing Date shall be treated as closing on (and including) the Closing Date. Otherwise, for purposes of this Agreement, in the case of any Straddle Period: (A) Property Taxes allocable to the Pre-Closing Tax Period shall be computed based upon the ratio of the number of days in the Pre-Closing Tax Period to the number of days in the entire Straddle Period; and (B) Taxes (other than Property Taxes) allocable to the Pre-Closing Tax Period shall be computed as if such Tax period ended as of the close of business on the Closing Date and, in the case of any Taxes of Conveyed Subsidiaries (and their Subsidiaries) and Seller Parent, or in the case of any Taxes of Purchaser Parent and Purchaser (and their Subsidiaries prior to the Closing), in each case attributable to the ownership of any equity interest in any partnership or other “flow through” entity for tax purposes (including of any “controlled foreign corporation,” as defined under the Code) as if the Tax period of such partnership or other “flow through” entity ended as of the close of business on the Closing Date with the Taxes of such entity for the Pre-Closing Tax Period deemed to include any Taxes on the allocable income of such entity in respect of such Tax period; provided that exemptions, allowances or deductions that are calculated on an annual basis (including depreciation and amortization deductions) shall be allocated between the period ending on the Closing Date and the period beginning after the Closing Date in proportion to the number of days in each period. (iv) Any claim for indemnification under this Section 6.5(d) shall be made in writing upon the party from whom indemnification is sought, and shall specify in reasonable detail the basis for such claim. Any indemnity payment required to be made ~~pursuant to~~ under this Section ~~6.5(d~~5.7(g) shall be made ~~within thirty~~ by the Tax Indemnifying Party on or before the later of (30x) ~~days after the indemnified party makes written demand upon the indemnifying party, but in no case earlier than~~ five (5) ~~Business Days prior~~ calendar days after the Tax Indemnified Party gives notice to the ~~date on which~~ Tax Indemnifying Party of the ~~relevant Taxes are required~~ Tax or Loss to be paid to the applicable Taxing Authority. (v) With respect to any Taxes suffered or incurred by any Conveyed Subsidiary (or any Subsidiary thereof) that was not wholly owned by Seller Parent (directly or indirectly) as of immediately prior to the Closingindemnified, ~~the indemnification obligations of Seller Parent pursuant to Section 6.5(d)(i) in respect of such Taxes (or related costs and expenses)~~ which notice shall ~~in no event exceed an amount equal to (A)~~ set forth the amount ~~of such Taxes~~ thereof or (~~or related costs and expenses~~y) for which the Purchaser Tax Indemnified Parties would otherwise be entitled to indemnification pursuant to Section 6.5(d), as if such Conveyed Subsidiary (or any Subsidiary thereof) were wholly owned by Seller Parent, multiplied by (B) the direct and indirect percentage ownership of Seller Parent of such Conveyed Subsidiary (or Subsidiary thereof) as of immediately prior to the Closing. With respect to any Taxes suffered or incurred by any Subsidiary of Purchaser Parent (including Purchaser and its Subsidiaries) that was not wholly owned by Purchaser Parent (directly or indirectly) as of immediately prior to the Closing, the indemnification obligations of Purchaser Parent pursuant to Section 6.5(d)(ii) in respect of such Taxes (or related costs and expenses) shall in no event exceed an amount equal to (A) the amount of such Taxes (or related costs and expenses) for which the Purchaser Tax Indemnified Parties would otherwise be entitled to indemnification pursuant to Section 6.5(d), as if such Subsidiary were wholly owned by Purchaser Parent, multiplied by (B) the direct and indirect percentage ownership of Purchaser Parent of such Subsidiary as of immediately prior to the Closing. (vi) Without duplication to any other amounts paid pursuant to this Section 6.5: (A) Within thirty (30) days following the filing of any Income Tax Return for any Conveyed Subsidiary (or any Subsidiary thereof), on the one hand, or Purchaser (or any Subsidiary thereof, other than the Conveyed Subsidiaries and their Subsidiaries), on the other hand, for any Pre-Closing Tax Period or for any Straddle Period, Seller Parent or Purchaser Parent shall (or Purchaser Parent shall cause Purchaser to) prepare a statement showing (i) the amount of Income Taxes shown as due on such filed Income Tax Return with respect to the relevant Pre-Closing Tax Period or the portion of any Straddle Period ending on and including the Closing Date (the “Final Pre-Closing Income Tax Amount”) and (ii) the amount of the Seller Accrued Income Taxes or Purchaser Accrued Income Taxes, as applicable, attributable to such Income Tax Return as reflected on the Final Closing Statement (the “Pre-Closing Income Tax Amount”) and deliver such statement to Seller Parent and Purchaser Parent, as applicable. Purchaser Parent or Seller Parent, as applicable, shall have a period of fifteen (15) Business Days to provide comments to a schedule prepared (or caused to be prepared) by Seller Parent or Purchaser Parent, respectively. If Purchaser Parent or Seller Parent, as applicable, do not provide any comments to Seller Parent or Purchaser Parent, respectively, during such period, the statement as so prepared shall be final and binding. (B) In the event the Final Pre-Closing Income Tax Amount with respect to any Income Tax Return is less than the amount of the Pre-Closing Income Tax Amount attributable to such Income Tax Return that was included on the Final Closing Statement, the Purchaser shall within five (5) ~~Business Days following~~ calendar days before the ~~finalization~~ payment by the Tax Indemnified Party or its Affiliate of the ~~Final Pre-Closing Income~~ applicable Tax Amount hereunder (i) pay to Seller Parent the amount of such difference with respect to a Conveyed Subsidiary and their Subsidiaries and (ii) pay to Purchaser Parent the amount of such difference with respect to Purchaser and its Subsidiariesor Loss. (vii) The Parties shall use reasonable best efforts to structure any indemnity payment, true-up payment, or payment in respect of Tax Benefits made by any Party pursuant to this Agreement (including pursuant to this Section 6.5, Section 6.6 and Article VII) and any payment made by Purchaser Parent to Purchaser pursuant to Section 2.8 or Section 2.9 in the manner set forth in Clause 10 of the Structuring Considerations Agreement. The Parties shall use reasonable best efforts to structure as a special dividend any payment made by Purchaser to Purchaser Parent pursuant to Section 2.8, Section 2.9 or this Section 6.5.

Appears in 2 contracts

Sources: Purchase and Sale Agreement (Bank of Montreal /Can/), Purchase and Sale Agreement (E Trade Financial Corp)

Tax Indemnification. (i) ~~Subject to Section 6.5(d)(v), from~~ From and after the Closing, ~~Seller Parent agrees to indemnify~~ Sellers shall indemnify, save and hold harmless ~~Purchaser and its Subsidiaries (including~~ the ~~Conveyed Subsidiaries and their Subsidiaries after the Closing Date) (collectively, the “Purchaser Tax~~ Buyer Indemnified ~~Parties”)~~ Parties from and against (a) all ~~liability, without duplication,~~ Liability for ~~(1)~~ Taxes of the ~~Conveyed Subsidiaries and their Subsidiaries for any Pre-Closing Tax Period (including any Taxes payable in respect of~~ Partnership constituting an ~~election under Section 965(h) of the Code)~~Excluded Liability, (2b) ~~Taxes~~ any and all Damages arising out of, resulting from or incident to any breach by Sellers of any ~~Seller~~ covenant contained in Sections 4.1(a) and 8.21 and (~~other than~~ c) any ~~Transfer Taxes~~ and ~~VAT for which Purchaser is responsible hereunder) including, Taxes (other than Taxes of the Conveyed Subsidiaries and their Subsidiaries) imposed with respect to,~~ all Damages arising out of of, resulting from or ~~relating~~ incident to the Purchased Assets or the Business for a Pre-Closing Tax Period, (3) Taxes of any Person (other than the Conveyed Subsidiaries and their Subsidiaries) for a Pre-Closing Tax Period for which any Conveyed Subsidiary (or any Subsidiary thereof) is liable under Treasury Regulation Section 1.1502-6 (or a similar provision of state, local or foreign Law), or as a transferee or successor or by Contract (other than Contracts that do not relate primarily to Taxes), (4) Taxes arising out of or resulting from any breach of any representation, warranty or covenant or agreement of Seller Parent or any of its Affiliates contained in this Agreement, (5) Taxes for a Pre-Closing Tax Period imposed on (x) any transaction effected pursuant to Section 2.3(b), (y) any settlement of any intercompany accounts of Seller Parent or its Subsidiaries pursuant to Section 6.7, or (z) any transaction or step forming part of the Seller Internal Restructurings, (6) Transfer Taxes for which Seller Parent is responsible under Section 6.5(j), (7) Taxes required to be deducted or withheld with respect to the payment of the Purchase Consideration or any amounts payable to Seller Parent pursuant to Section 2.8 or Section 2.9, including any penalties imposed on Purchaser as a result of Purchaser’s failure to deduct or withhold any such amounts that Purchaser (or a Purchaser Designated Affiliate) was permitted to withhold under Section 2.10 (in each case, subject to Purchaser’s compliance with the notice and cooperation requirements of Section 2.10 and except for any such Taxes (and any related penalties) required to be deducted or withheld solely as a result of any assignment by Purchaser or its Affiliates for which Purchaser is responsible pursuant to Section 10.3), (8) Taxes arising from any breach of any representation or warranty contained in Section ~~4.16(k)~~6.6, (9) Taxes arising as a result of any Conveyed Subsidiary or any Subsidiary of any Conveyed Subsidiary at any time ceasing to be a member of a group for the purposes of any Tax, of which group Seller Parent or any Subsidiary of Seller Parent is or was also a member and (10) any costs and expenses, including reasonable legal and accounting fees and expenses, attributable to any item described in clauses (1) through (9) (any such Taxes for which Seller Parent is responsible pursuant to this Section 6.5(d)(i), subject to the following proviso, “Seller Indemnified Taxes”); provided that Seller Parent shall not be required to indemnify or hold harmless any Purchaser Tax Indemnified Party from and against any liability pursuant to this Section 6.5(d)(i) for (A) Taxes attributable to any action taken after the Closing by Purchaser, any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries), or any transferee of Purchaser or any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries), other than any such action that (1) is in the ordinary course of business, (2) is expressly permitted or contemplated by this Agreement, or (3) is required to be taken in order to comply with applicable Law or as a result of a change in applicable Law (a “Purchaser Tax Act”), (B) Taxes that were reflected, accrued or reserved for in the Final Closing Statement, Final Business Working Capital, or Final Business Net Cash, (C) Income Taxes except to the extent that ~~a Conveyed Subsidiary or~~ any ~~Subsidiary thereof had any Tax Assets as of~~ such Damages are otherwise indemnified pursuant to the ~~close of business on the Closing Date that were available, or would have been available but for their prior utilization by Purchaser or any of its Affiliates~~ foregoing clauses (~~including the Conveyed Subsidiaries~~ i) and ~~their Subsidiaries after the Closing) to offset or otherwise reduce the applicable Tax Liability in respect of such Income Taxes~~ (except any Tax Asset reflected as an asset in the Final Closing Statement and taken into account in the calculation of the Final Business Working Capital or the Final Business Net Cash), or (D) Taxes for which Purchaser Parent is responsible under Section 6.5(d)(iiii). (ii) ~~Subject to Section 6.5(d)(v), from~~ From and after the Closing, ~~Purchaser Parent~~ Buyer shall ~~indemnify~~ indemnify, save and hold harmless the ~~Purchaser Tax~~ Sellers Indemnified Parties from and against ~~all liability, without duplication, for~~ (1a) all Liability for Taxes of ~~Purchaser Parent~~ the Partnership constituting an Assumed Liability and ~~its Affiliates~~ (~~other than Purchaser~~ b) any and its Subsidiaries) for any Tax period (other than Transfer Taxes and VAT for which Seller Parent is responsible hereunder), (2) Taxes of Purchaser and its Subsidiaries (other than the Conveyed Subsidiaries and their Subsidiaries) for any Pre-Closing Tax Period, (3) Taxes of any Person for a Pre-Closing Tax Period for which Purchaser (or any Subsidiary thereof other than any Conveyed Subsidiaries and their Subsidiaries) is liable under Treasury Regulation Section 1.1502-6 (or a similar provision of state, local or foreign Law), or as a transferee or successor or by Contract (other than Contracts that do not relate primarily to Taxes), (4) Taxes all Damages arising out ~~of or~~ of, resulting from ~~any~~ or incident to the breach by Buyer of any covenant ~~or agreement of Purchaser Parent, Purchaser or their respective Affiliates~~ contained in ~~this Agreement, (5~~Sections 4.1(a) Transfer Taxes for which Purchaser Parent is responsible under Section 6.5(j), (6) Taxes arising from any breach of any representation or warranty in Section 5.17(k), (7) Taxes for a Pre-Closing Tax Period imposed on (x) any settlement of any intercompany accounts of Purchaser or any Subsidiary of Purchaser, on the one hand, and Purchaser Parent or any Subsidiary of Purchaser Parent (other than Purchaser and its Subsidiaries), on the other hand, pursuant to Section 6.7 or (y) any transaction or step forming part of the Purchaser Internal Restructurings, (8) Taxes required to be deducted or withheld with respect to any amounts payable to Purchaser Parent pursuant to Section 2.8 or Section 2.9, including any penalties imposed on Purchaser as a result of Purchaser’s failure to deduct or withhold any such amounts, (9) Taxes arising as a result of Purchaser or any Subsidiary of Purchaser (other than any Conveyed Subsidiary or a Subsidiary thereof) at any time ceasing to be a member of a group for the purposes of any Tax, of which group Purchaser Parent or any Subsidiary of Purchaser Parent (other than Purchaser or any Subsidiary of Purchaser) is or was also a member and (10) any costs and expenses, including reasonable legal and accounting fees and expenses, attributable to any item described in clauses (1) through (9) (any such Taxes for which Purchaser Parent is responsible pursuant to this Section 6.5(d)(ii), subject to the following proviso, “Purchaser Parent Indemnified Taxes”); provided that Purchaser Parent shall not be required to indemnify or hold harmless any Purchaser Tax Indemnified Party from and against any liability for (A) Taxes attributable to any action taken after the Closing by Seller Parent or any of its Affiliates, other than any such action that (1) is in the ordinary course of business, (2) is expressly permitted or contemplated by this Agreement, or (3) is required to be taken in order to comply with applicable Law or as a result of a change in applicable Law (a “Seller Tax Act”), (B) Taxes that were reflected, accrued or reserved for in the Final Closing Statement, Final Purchaser Working Capital or the Final Purchaser Net Cash, (C) Income Taxes to the extent that Purchaser or any Subsidiary thereof had any Tax Assets as of the close of business on the Closing Date that were available, or would have been available but for their prior utilization by Purchaser or any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries after the Closing), to offset or otherwise reduce the applicable Tax Liability in respect of such Income Taxes (except any Tax Asset reflected as an asset in the Final Closing Statement and taken into account in the calculation of the Final Purchaser Working Capital or the Final Purchaser Net Cash), or (D) Taxes for which Seller Parent is responsible under Section 6.5(d)(i)8.21. (iii) To the extent permitted or required by applicable Law, the taxable year of each of the Conveyed Subsidiaries and their Subsidiaries and any Subsidiary of Purchaser that includes the Closing Date shall be treated as closing on (and including) the Closing Date. Otherwise, for purposes of this Agreement, in In the case of any Straddle Period: (A) any Taxes levied on a per diem basis, other than Property Taxes ~~allocable to~~ (“Per Diem Taxes”), of the Partnership for a Pre-Closing Tax Period shall be ~~computed based upon~~ equal to the ~~ratio~~ amount of such Per Diem Taxes for the entire Straddle Period multiplied by a fraction, the numerator of which is the number of days during the Straddle Period that are in the Pre-Closing Tax Period to and the denominator of which is the total number of days in the ~~entire~~ Straddle Period; and (B) the Taxes of the Partnership (other than ~~Property~~ Per Diem Taxes) ~~allocable to the~~ for any Pre-Closing Tax Period shall be computed as if such ~~Tax~~ taxable period ended as of the close of business on the Closing Date and, in the case of any Taxes of Conveyed Subsidiaries (and their Subsidiaries) and Seller Parent, or in the case of any Taxes of Purchaser Parent and Purchaser (and their Subsidiaries prior to the Closing), in each case attributable to the ownership of any equity interest in any partnership or other “flow through” entity for tax purposes (including of any “controlled foreign corporation,” as defined under the Code) as if the Tax period of such partnership or other “flow through” entity ended as of the close of business on the Closing Date with the Taxes of such entity for the Pre-Closing Tax Period deemed to include any Taxes on the allocable income of such entity in respect of such Tax period; provided that exemptions, allowances or deductions that are calculated on an annual basis (including depreciation and amortization deductions) shall be allocated between the period ending on the Closing Date and the period beginning after the Closing Date in proportion to the number of days in each periodDate. (iv) Any claim for indemnification under this Section 6.5(d) shall be made in writing upon the party from whom indemnification is sought, and shall specify in reasonable detail the basis for such claim. Any indemnity payment required to be made pursuant to this Section 6.5(d) shall be made within thirty (30) days after the indemnified party makes written demand upon the indemnifying party, but in no case earlier than five (5) Business Days prior to the date on which the relevant Taxes are required to be paid to the applicable Taxing Authority. (v) With respect to any Taxes suffered or incurred by any Conveyed Subsidiary (or any Subsidiary thereof) that was not wholly owned by Seller Parent (directly or indirectly) as of immediately prior to the Closing, the indemnification obligations of Seller Parent pursuant to Section 6.5(d)(i) in respect of such Taxes (or related costs and expenses) shall in no event exceed an amount equal to (A) the amount of such Taxes (or related costs and expenses) for which the Purchaser Tax Indemnified Parties would otherwise be entitled to indemnification pursuant to Section 6.5(d), as if such Conveyed Subsidiary (or any Subsidiary thereof) were wholly owned by Seller Parent, multiplied by (B) the direct and indirect percentage ownership of Seller Parent of such Conveyed Subsidiary (or Subsidiary thereof) as of immediately prior to the Closing. With respect to any Taxes suffered or incurred by any Subsidiary of Purchaser Parent (including Purchaser and its Subsidiaries) that was not wholly owned by Purchaser Parent (directly or indirectly) as of immediately prior to the Closing, the indemnification obligations of Purchaser Parent pursuant to Section 6.5(d)(ii) in respect of such Taxes (or related costs and expenses) shall in no event exceed an amount equal to (A) the amount of such Taxes (or related costs and expenses) for which the Purchaser Tax Indemnified Parties would otherwise be entitled to indemnification pursuant to Section 6.5(d), as if such Subsidiary were wholly owned by Purchaser Parent, multiplied by (B) the direct and indirect percentage ownership of Purchaser Parent of such Subsidiary as of immediately prior to the Closing. (vi) Without duplication to any other amounts paid pursuant to this Section 6.5: (A) Within thirty (30) days following the filing of any Income Tax Return for any Conveyed Subsidiary (or any Subsidiary thereof), on the one hand, or Purchaser (or any Subsidiary thereof, other than the Conveyed Subsidiaries and their Subsidiaries), on the other hand, for any Pre-Closing Tax Period or for any Straddle Period, Seller Parent or Purchaser Parent shall (or Purchaser Parent shall cause Purchaser to) prepare a statement showing (i) the amount of Income Taxes shown as due on such filed Income Tax Return with respect to the relevant Pre-Closing Tax Period or the portion of any Straddle Period ending on and including the Closing Date (the “Final Pre-Closing Income Tax Amount”) and (ii) the amount of the Seller Accrued Income Taxes or Purchaser Accrued Income Taxes, as applicable, attributable to such Income Tax Return as reflected on the Final Closing Statement (the “Pre-Closing Income Tax Amount”) and deliver such statement to Seller Parent and Purchaser Parent, as applicable. Purchaser Parent or Seller Parent, as applicable, shall have a period of fifteen (15) Business Days to provide comments to a schedule prepared (or caused to be prepared) by Seller Parent or Purchaser Parent, respectively. If Purchaser Parent or Seller Parent, as applicable, do not provide any comments to Seller Parent or Purchaser Parent, respectively, during such period, the statement as so prepared shall be final and binding. (B) In the event the Final Pre-Closing Income Tax Amount with respect to any Income Tax Return is less than the amount of the Pre-Closing Income Tax Amount attributable to such Income Tax Return that was included on the Final Closing Statement, the Purchaser shall within five (5) Business Days following the finalization of the Final Pre-Closing Income Tax Amount hereunder (i) pay to Seller Parent the amount of such difference with respect to a Conveyed Subsidiary and their Subsidiaries and (ii) pay to Purchaser Parent the amount of such difference with respect to Purchaser and its Subsidiaries. (vii) The Parties shall use reasonable best efforts to structure any indemnity payment, true-up payment, or payment in respect of Tax Benefits made by any Party pursuant to this Agreement (including pursuant to this Section 6.5, Section 6.6 and Article VII) and any payment made by Purchaser Parent to Purchaser pursuant to Section 2.8 or Section 2.9 in the manner set forth in Clause 10 of the Structuring Considerations Agreement. The Parties shall use reasonable best efforts to structure as a special dividend any payment made by Purchaser to Purchaser Parent pursuant to Section 2.8, Section 2.9 or this Section 6.5.

Appears in 2 contracts

Sources: Partnership Interest Purchase Agreement (Harrahs Entertainment Inc), Partnership Interest Purchase Agreement (Boyd Gaming Corp)

Tax Indemnification. (ia) ~~Subject to Section 6.5(d)(v), from~~ From and after the Closing, ~~Seller Parent agrees to~~ each of the Indemnifying Parties shall severally and not jointly (pro rata in accordance with such Indemnifying Party’s Pro Rata Portion) indemnify and hold ~~harmless Purchaser~~ each of Parent and Merger Sub and its ~~Subsidiaries~~ Affiliates (~~including~~ including, after the ~~Conveyed Subsidiaries~~ Closing, the Acquired Companies) (each, a “Tax Indemnitee”), harmless in accordance with the provisions of Article 10 from any and ~~their Subsidiaries after~~ all Taxes levied or imposed on the Acquired Companies in respect of its income, Business, property or operations or for which the Acquired Companies may otherwise be liable (i) for any period ending prior to or on the Closing Date~~) (collectively~~, including the “Purchaser Tax Indemnified Parties”) from and against all liability, without duplication, for (1) Taxes of the Conveyed Subsidiaries and their Subsidiaries for any Pre-Closing Tax Period (including any Taxes payable in respect of an election under Section 965(h) of the Code), (2) Taxes portion of any ~~Seller (other than any Transfer~~ Straddle Period ending on the Closing Date, and including Taxes ~~and VAT for which Purchaser is responsible hereunder) including, Taxes (other than Taxes of the Conveyed Subsidiaries and their Subsidiaries) imposed with respect to,~~ arising out of ~~or relating~~ the transactions and deemed transactions contemplated in this Agreement; provided, however, that the Indemnifying Parties shall be liable under this clause (i) only to the ~~Purchased Assets~~ extent that any such Tax exceeds the amount, if any, reserved for such Tax in the Final Working Capital (“Current Taxes Payable”); (ii) for any obligation to contribute to the payment of a Tax determined on a consolidated, combined, or unitary basis with respect to a group of corporations of which the ~~Business for a Pre-Closing Tax Period, (3) Taxes~~ Payment Parties or any subsidiary of ~~any Person~~ the Payment Parties (other than the ~~Conveyed Subsidiaries and their Subsidiaries~~Acquired Companies), are or were the common parent; (iii) except as otherwise provided in Section 7.5, for any costs or expenses of contests or controversies relating to Taxes indemnified hereunder; or (iv) a ~~Pre-~~sale occurring on or prior to the Closing ~~Tax Period~~ Date that is accounted for ~~which any Conveyed Subsidiary~~ under the installment method of accounting as defined in section 453(c) of the Code (or any ~~Subsidiary thereof) is liable under Treasury Regulation Section 1.1502-6 (or a similar~~ corresponding provision of state, local or foreign income Tax Law). Notwithstanding anything herein to the contrary, in no event will a Tax Indemnitee be indemnified pursuant to this Agreement for (i) any Taxes of the Acquired Companies for any taxable period or portion thereof commencing after the Closing, or ~~as a transferee or successor or by Contract~~ (~~other than Contracts that do not relate primarily to Taxes), (4~~ii) any Taxes arising ~~out of~~ from, and attributable to, any discretionary act, omission or ~~resulting from any breach of any covenant or agreement of Seller~~ transaction that is initiated by Parent or any of its Affiliates contained in this Agreement, (5) Taxes for a Pre-Closing Tax Period imposed on (x) any transaction effected pursuant to Section 2.3(b), (y) any settlement of any intercompany accounts of Seller Parent or its Subsidiaries pursuant to Section 6.7, or (z) any transaction or step forming part of the Seller Internal Restructurings, (6) Transfer Taxes for which Seller Parent is responsible under Section 6.5(j), (7) Taxes required to be deducted or withheld with respect to the payment of the Purchase Consideration or any amounts payable to Seller Parent pursuant to Section 2.8 or Section 2.9, including any penalties imposed on Purchaser as a result of Purchaser’s failure to deduct or withhold any such amounts that Purchaser (or a Purchaser Designated Affiliate) was permitted to withhold under Section 2.10 (in each case, subject to Purchaser’s compliance with the notice and cooperation requirements of Section 2.10 and except for any such Taxes (and any related penalties) required to be deducted or withheld solely as a result of any assignment by Purchaser or its Affiliates for which Purchaser is responsible pursuant to Section 10.3), (8) Taxes arising from any breach of any representation or warranty contained in Section 4.16(k), (9) Taxes arising as a result of any Conveyed Subsidiary or any Subsidiary of any Conveyed Subsidiary at any time ceasing to be a member of a group for the purposes of any Tax, of which group Seller Parent or any Subsidiary of Seller Parent is or was also a member and (10) any costs and expenses, including reasonable legal and accounting fees and expenses, attributable to any item described in clauses (1) through (9) (any such Taxes for which Seller Parent is responsible pursuant to this Section 6.5(d)(i), subject to the following proviso, “Seller Indemnified Taxes”); provided that Seller Parent shall not be required to indemnify or hold harmless any Purchaser Tax Indemnified Party from and against any liability pursuant to this Section 6.5(d)(i) for (A) Taxes attributable to any action taken after the Closing by Purchaser, any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries), or any transferee of Purchaser or any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries), other than any such action that (1) is in Acquired Companies outside the ordinary course of ~~business,~~ business any time after Closing (2) is expressly permitted or contemplated by this Agreement, or (3) is required to be taken in order to comply with applicable Law or as a result of a change in applicable Law (a “Purchaser Tax Act”), (B) Taxes that were reflected, accrued or reserved for in the Final Closing Statement, Final Business Working Capital, or Final Business Net Cash, (C) Income Taxes to the extent that a Conveyed Subsidiary or any Subsidiary thereof had any Tax Assets as of the close of business including on the Closing Date but after Closing), and that were available, or would have been available but for their prior utilization by Purchaser or any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries after the Closing) to offset or are not otherwise ~~reduce the applicable Tax Liability~~ contemplated in respect of such Income Taxes (except any Tax Asset reflected as an asset in the Final Closing Statement and taken into account in the calculation of the Final Business Working Capital or the Final Business Net Cash)this Article 7, or (Diii) ~~Taxes for which Purchaser Parent is responsible under Section 6.5(d)(ii)~~any employer-paid employment taxes resulting from cashing out Company Options and Stock Appreciation Rights in the Acquired Companies where the payment of employment taxes reduces the amount of such employment taxes that would be payable later in the year of the Closing. (iib) ~~Subject~~ If, during any taxable period beginning prior to ~~Section 6.5(d)(v)~~the final release of the Escrow Fund, ~~from and after the Closing~~a Tax Indemnitee derives a Tax benefit (including without limitation a refund, ~~Purchaser Parent shall indemnify and hold harmless the Purchaser Tax Indemnified Parties from and against all liability~~credit, ~~without duplication~~or reduction in Tax) that is attributable, ~~for (1) all Taxes of Purchaser Parent and its Affiliates (other than Purchaser and its Subsidiaries) for any Tax period (other than Transfer Taxes and VAT~~ directly or indirectly, to an event or circumstance for which ~~Seller Parent~~ it received an indemnity payment under this Section 7.1, and the Tax Indemnitee determines, in its commercially reasonable judgment, that the effect of the Tax benefit is ~~responsible hereunder)~~to reduce or offset, ~~(2) Taxes of Purchaser and its Subsidiaries (other than~~ in whole or in part, the ~~Conveyed Subsidiaries and their Subsidiaries) for any Pre-Closing Tax Period, (3) Taxes of any Person for a Pre-Closing Tax Period~~ cost for which ~~Purchaser (or any Subsidiary thereof other than any Conveyed Subsidiaries and their Subsidiaries) is liable under Treasury Regulation Section 1.1502-6 (or a similar provision of state~~it was indemnified, ~~local or foreign Law), or as a transferee or successor or by Contract (other than Contracts that do not relate primarily~~ then the Tax Indemnitee shall rebate to Taxes), (4) Taxes arising out of or resulting from any breach of any covenant or agreement of Purchaser Parent, Purchaser or their respective Affiliates contained in this Agreement, (5) Transfer Taxes for which Purchaser Parent is responsible under Section 6.5(j), (6) Taxes arising from any breach of any representation or warranty in Section 5.17(k), (7) Taxes for a Pre-Closing Tax Period imposed on (x) any settlement of any intercompany accounts of Purchaser or any Subsidiary of Purchaser, on the ~~one hand, and Purchaser Parent or any Subsidiary of Purchaser Parent (other than Purchaser and its Subsidiaries), on~~ Payment Parties the ~~other hand, pursuant to Section 6.7 or (y) any transaction or step forming part~~ amount of the ~~Purchaser Internal Restructurings, (8) Taxes required~~ actual economic savings that it reasonably determines to be deducted or withheld with respect to any amounts payable to Purchaser Parent pursuant to Section 2.8 or Section 2.9, including any penalties imposed on Purchaser as a result of Purchaser’s failure to deduct or withhold any such amounts, (9) Taxes arising as a result of Purchaser or any Subsidiary of Purchaser (other than any Conveyed Subsidiary or a Subsidiary thereof) at any time ceasing to be a member of a group for the purposes of any Tax, of which group Purchaser Parent or any Subsidiary of Purchaser Parent (other than Purchaser or any Subsidiary of Purchaser) is or was also a member and (10) any costs and expenses, including reasonable legal and accounting fees and expenses, attributable to any item described in clauses (1) through (9) (any such Taxes for which Purchaser Parent is responsible pursuant to this Section 6.5(d)(ii), subject to the following proviso, “Purchaser Parent Indemnified Taxes”); provided that ~~Purchaser Parent shall not be required to indemnify~~ reduction or hold harmless any Purchaser Tax Indemnified Party from and against any liability for (A) Taxes attributable to any action taken after the Closing by Seller Parent or any of its Affiliates, other than any such action that (1) is in the ordinary course of business, (2) is expressly permitted or contemplated by this Agreement, or (3) is required to be taken in order to comply with applicable Law or as a result of a change in applicable Law (a “Seller Tax Act”), (B) Taxes that were reflected, accrued or reserved for in the Final Closing Statement, Final Purchaser Working Capital or the Final Purchaser Net Cash, (C) Income Taxes to the extent that Purchaser or any Subsidiary thereof had any Tax Assets as of the close of business on the Closing Date that were available, or would have been available but for their prior utilization by Purchaser or any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries after the Closing), to offset or otherwise reduce the applicable Tax Liability in respect of such Income Taxes (except any Tax Asset reflected as an asset in the Final Closing Statement and taken into account in the calculation of the Final Purchaser Working Capital or the Final Purchaser Net Cash), or (D) Taxes for which Seller Parent is responsible under Section 6.5(d)(i)offset. (~~iii~~c) To the extent permitted or required by applicable Law, the taxable year of each of the Conveyed Subsidiaries and their Subsidiaries and any Subsidiary of Purchaser that includes the Closing Date shall be treated as closing on (and including) the Closing Date. Otherwise, for purposes of this Agreement, in the case of any Straddle Period: (A) Property Taxes allocable to the Pre-Closing Tax Period shall be computed based upon the ratio of the number of days in the Pre-Closing Tax Period to the number of days in the entire Straddle Period; and (B) Taxes (other than Property Taxes) allocable to the Pre-Closing Tax Period shall be computed as if such Tax period ended as of the close of business on the Closing Date and, in the case of any Taxes of Conveyed Subsidiaries (and their Subsidiaries) and Seller Parent, or in the case of any Taxes of Purchaser Parent and Purchaser (and their Subsidiaries prior to the Closing), in each case attributable to the ownership of any equity interest in any partnership or other “flow through” entity for tax purposes (including of any “controlled foreign corporation,” as defined under the Code) as if the Tax period of such partnership or other “flow through” entity ended as of the close of business on the Closing Date with the Taxes of such entity for the Pre-Closing Tax Period deemed to include any Taxes on the allocable income of such entity in respect of such Tax period; provided that exemptions, allowances or deductions that are calculated on an annual basis (including depreciation and amortization deductions) shall be allocated between the period ending on the Closing Date and the period beginning after the Closing Date in proportion to the number of days in each period. (iv) Any claim for indemnification under this Section 6.5(d) shall be made in writing upon the party from whom indemnification is sought, and shall specify in reasonable detail the basis for such claim. Any indemnity payment required to be made pursuant to this Section ~~6.5(d)~~ 7.1 shall be made ~~within thirty (30) days after the indemnified party makes written demand upon the indemnifying party~~pursuant to, ~~but in no case earlier than five (5) Business Days prior~~ and subject to the ~~date on which the relevant Taxes are required to be paid to the applicable Taxing Authority~~conditions and limitations contained in, Article 10. (v) With respect to any Taxes suffered or incurred by any Conveyed Subsidiary (or any Subsidiary thereof) that was not wholly owned by Seller Parent (directly or indirectly) as of immediately prior to the Closing, the indemnification obligations of Seller Parent pursuant to Section 6.5(d)(i) in respect of such Taxes (or related costs and expenses) shall in no event exceed an amount equal to (A) the amount of such Taxes (or related costs and expenses) for which the Purchaser Tax Indemnified Parties would otherwise be entitled to indemnification pursuant to Section 6.5(d), as if such Conveyed Subsidiary (or any Subsidiary thereof) were wholly owned by Seller Parent, multiplied by (B) the direct and indirect percentage ownership of Seller Parent of such Conveyed Subsidiary (or Subsidiary thereof) as of immediately prior to the Closing. With respect to any Taxes suffered or incurred by any Subsidiary of Purchaser Parent (including Purchaser and its Subsidiaries) that was not wholly owned by Purchaser Parent (directly or indirectly) as of immediately prior to the Closing, the indemnification obligations of Purchaser Parent pursuant to Section 6.5(d)(ii) in respect of such Taxes (or related costs and expenses) shall in no event exceed an amount equal to (A) the amount of such Taxes (or related costs and expenses) for which the Purchaser Tax Indemnified Parties would otherwise be entitled to indemnification pursuant to Section 6.5(d), as if such Subsidiary were wholly owned by Purchaser Parent, multiplied by (B) the direct and indirect percentage ownership of Purchaser Parent of such Subsidiary as of immediately prior to the Closing. (vi) Without duplication to any other amounts paid pursuant to this Section 6.5: (A) Within thirty (30) days following the filing of any Income Tax Return for any Conveyed Subsidiary (or any Subsidiary thereof), on the one hand, or Purchaser (or any Subsidiary thereof, other than the Conveyed Subsidiaries and their Subsidiaries), on the other hand, for any Pre-Closing Tax Period or for any Straddle Period, Seller Parent or Purchaser Parent shall (or Purchaser Parent shall cause Purchaser to) prepare a statement showing (i) the amount of Income Taxes shown as due on such filed Income Tax Return with respect to the relevant Pre-Closing Tax Period or the portion of any Straddle Period ending on and including the Closing Date (the “Final Pre-Closing Income Tax Amount”) and (ii) the amount of the Seller Accrued Income Taxes or Purchaser Accrued Income Taxes, as applicable, attributable to such Income Tax Return as reflected on the Final Closing Statement (the “Pre-Closing Income Tax Amount”) and deliver such statement to Seller Parent and Purchaser Parent, as applicable. Purchaser Parent or Seller Parent, as applicable, shall have a period of fifteen (15) Business Days to provide comments to a schedule prepared (or caused to be prepared) by Seller Parent or Purchaser Parent, respectively. If Purchaser Parent or Seller Parent, as applicable, do not provide any comments to Seller Parent or Purchaser Parent, respectively, during such period, the statement as so prepared shall be final and binding. (B) In the event the Final Pre-Closing Income Tax Amount with respect to any Income Tax Return is less than the amount of the Pre-Closing Income Tax Amount attributable to such Income Tax Return that was included on the Final Closing Statement, the Purchaser shall within five (5) Business Days following the finalization of the Final Pre-Closing Income Tax Amount hereunder (i) pay to Seller Parent the amount of such difference with respect to a Conveyed Subsidiary and their Subsidiaries and (ii) pay to Purchaser Parent the amount of such difference with respect to Purchaser and its Subsidiaries. (vii) The Parties shall use reasonable best efforts to structure any indemnity payment, true-up payment, or payment in respect of Tax Benefits made by any Party pursuant to this Agreement (including pursuant to this Section 6.5, Section 6.6 and Article VII) and any payment made by Purchaser Parent to Purchaser pursuant to Section 2.8 or Section 2.9 in the manner set forth in Clause 10 of the Structuring Considerations Agreement. The Parties shall use reasonable best efforts to structure as a special dividend any payment made by Purchaser to Purchaser Parent pursuant to Section 2.8, Section 2.9 or this Section 6.5.

Appears in 2 contracts

Sources: Merger Agreement (GXS Worldwide, Inc.), Merger Agreement (Open Text Corp)

Tax Indemnification. ~~(i) Subject to Section 6.5(d)(v), from~~ From and ~~after the Closing, Seller Parent agrees to indemnify and hold harmless Purchaser and its Subsidiaries (including the Conveyed Subsidiaries and their Subsidiaries~~ after the Closing Date) , Seller shall indemnify Purchaser, the Genesis Companies and their respective Affiliates (each a “Tax Indemnified Buyer Party” and collectively, the “~~Purchaser~~ Tax Indemnified Buyer Parties”) against and hold harmless from any and ~~against~~ all ~~liability, without duplication, for~~ Losses which Purchaser suffers or incurs arising out of: (1a) Taxes of the ~~Conveyed Subsidiaries and their Subsidiaries~~ Genesis Companies for ~~any~~ periods or portions thereof ending on or before the Closing Date (“Pre-Closing Taxes”); (b) Taxes for which any Genesis Company is or becomes liable pursuant to Treasury Regulation § 1.1502-6, Treasury Regulation § 1.1502-78 or any comparable provision of foreign, state, provincial or local Tax ~~Period (including any Taxes payable in respect~~ law by reason of being or having been a member of an ~~election~~ affiliated, consolidated, combined or unitary group on or prior to the Closing Date; (c) without duplication, Taxes imposed on a Tax Indemnified Buyer Party as a result of a breach of a Tax Representation or Tax Covenant; provided, that for purposes of calculating the amount of Losses that are the subject matter of such claim for indemnification pursuant to this Section 8.2, the Tax Representations contained in this Agreement shall be deemed to have been made without any qualifications as to “materiality,” “material adverse effect,” “Material Adverse Effect,” “knowledge,” “Company’s Knowledge” or any other materiality qualifications; (d) Seller’s portion of Taxes arising out of any transactions contemplated by this Agreement as determined pursuant to Section 10.12; (e) Taxes or other payments required to be paid after the Closing Date by any Genesis Company to any party under any Tax Sharing Agreement (whether written or not) or by reason of being a successor-in-interest or transferee of another entity; (f) Taxes attributable to or arising out of the Loan Repayment and Contributions or the Redemption; (g) Taxes of or attributable to Enterprises; (h) Taxes attributable to transactions entered into on or prior to the Closing Date governed by Section ~~965(h~~367(d) of the Code); (i) Taxes attributable to a breach of the covenant in Section 5.13; and (j) Taxes attributable to (1) any “excess loss accounts” or any similar amount under a comparable state, local or foreign Tax law of or (2) ~~Taxes of~~ any ~~Seller (other than any Transfer Taxes and VAT for which Purchaser is responsible hereunder) including, Taxes (other than Taxes of the Conveyed Subsidiaries and their Subsidiaries) imposed~~ “deferred gains” with respect ~~to, arising out of or relating~~ to ~~the Purchased Assets or the Business for a Pre-Closing Tax Period, (3) Taxes of~~ any ~~Person (other than the Conveyed Subsidiaries and their Subsidiaries) for a Pre-Closing Tax Period for which any Conveyed Subsidiary (~~“deferred intercompany transactions” or any ~~Subsidiary thereof) is liable~~ similar amount under any comparable state, local of foreign Tax law, within the meaning of Treasury Regulation Section 1.1502-~~6 (~~19 and 1.1502-13 respectively, or ~~a similar provision of~~ any comparable state, local or foreign ~~Law)~~Tax law, or as a transferee or successor or by Contract (other than Contracts that do not relate primarily to Taxes), (4) Taxes arising out of or resulting from any breach of any covenant or agreement of Seller Parent or any of its Affiliates contained in this Agreement, (5) Taxes for a Pre-Closing Tax Period imposed on (x) any transaction effected pursuant to Section 2.3(b), (y) any settlement of any intercompany accounts of Seller Parent or its Subsidiaries pursuant to Section 6.7, or (z) any transaction or step forming part of the Seller Internal Restructurings, (6) Transfer Taxes for which Seller Parent is responsible under Section 6.5(j), (7) Taxes required to be deducted or withheld with respect to the payment of the Purchase Consideration or any amounts payable to Seller Parent pursuant to Section 2.8 or Section 2.9, including any penalties imposed on Purchaser as a result of Purchaser’s failure to deduct or withhold any such amounts that Purchaser (or a Purchaser Designated Affiliate) was permitted to withhold under Section 2.10 (in each case, subject to Purchaser’s compliance with the notice and cooperation requirements of Section 2.10 and except for any such Taxes (and any related penalties) required to be deducted or withheld solely as a result of any assignment by Purchaser or its Affiliates for which Purchaser is responsible pursuant to Section 10.3), (8) Taxes arising from any breach of any representation or warranty contained in Section 4.16(k), (9) Taxes arising as a result of any Conveyed Subsidiary or any Subsidiary of any Conveyed Subsidiary at any time ceasing to be a member of a group for the purposes of any Tax, of which group Seller Parent or any Subsidiary of Seller Parent is or was also a member and (10) any costs and expenses, including reasonable legal and accounting fees and expenses, attributable to any item described in clauses (1) through (9) (any such Taxes for which Seller Parent is responsible pursuant to this Section 6.5(d)(i), subject to the following proviso, “Seller Indemnified Taxes”); provided that Seller Parent shall not be required to indemnify or hold harmless any Purchaser Tax Indemnified Party from and against any liability pursuant to this Section 6.5(d)(i) for (A) Taxes attributable to any action taken after the Closing by Purchaser, any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries), or any transferee of Purchaser or any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries), other than any such action that (1) is in the ordinary course of business, (2) is expressly permitted or contemplated by this Agreement, or (3) is required to be taken in order to comply with applicable Law or as a result of a change in applicable Law (a “Purchaser Tax Act”), (B) Taxes that were reflected, accrued or reserved for in the Final Closing Statement, Final Business Working Capital, or Final Business Net Cash, (C) Income Taxes to the extent that a Conveyed Subsidiary or any Subsidiary thereof had any Tax Assets as of the close of business existing on the Closing Date that were available, or would have been available but for their prior utilization by Purchaser or any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries after the Closing) to offset or otherwise reduce the applicable Tax Liability in respect of such Income Taxes (except any Tax Asset reflected as an asset in the Final Closing Statement and taken into account in the calculation of the Final Business Working Capital or the Final Business Net Cash), or (D) Taxes for which Purchaser Parent is responsible under Section 6.5(d)(ii)Date. (ii) Subject to Section 6.5(d)(v), from and after the Closing, Purchaser Parent shall indemnify and hold harmless the Purchaser Tax Indemnified Parties from and against all liability, without duplication, for (1) all Taxes of Purchaser Parent and its Affiliates (other than Purchaser and its Subsidiaries) for any Tax period (other than Transfer Taxes and VAT for which Seller Parent is responsible hereunder), (2) Taxes of Purchaser and its Subsidiaries (other than the Conveyed Subsidiaries and their Subsidiaries) for any Pre-Closing Tax Period, (3) Taxes of any Person for a Pre-Closing Tax Period for which Purchaser (or any Subsidiary thereof other than any Conveyed Subsidiaries and their Subsidiaries) is liable under Treasury Regulation Section 1.1502-6 (or a similar provision of state, local or foreign Law), or as a transferee or successor or by Contract (other than Contracts that do not relate primarily to Taxes), (4) Taxes arising out of or resulting from any breach of any covenant or agreement of Purchaser Parent, Purchaser or their respective Affiliates contained in this Agreement, (5) Transfer Taxes for which Purchaser Parent is responsible under Section 6.5(j), (6) Taxes arising from any breach of any representation or warranty in Section 5.17(k), (7) Taxes for a Pre-Closing Tax Period imposed on (x) any settlement of any intercompany accounts of Purchaser or any Subsidiary of Purchaser, on the one hand, and Purchaser Parent or any Subsidiary of Purchaser Parent (other than Purchaser and its Subsidiaries), on the other hand, pursuant to Section 6.7 or (y) any transaction or step forming part of the Purchaser Internal Restructurings, (8) Taxes required to be deducted or withheld with respect to any amounts payable to Purchaser Parent pursuant to Section 2.8 or Section 2.9, including any penalties imposed on Purchaser as a result of Purchaser’s failure to deduct or withhold any such amounts, (9) Taxes arising as a result of Purchaser or any Subsidiary of Purchaser (other than any Conveyed Subsidiary or a Subsidiary thereof) at any time ceasing to be a member of a group for the purposes of any Tax, of which group Purchaser Parent or any Subsidiary of Purchaser Parent (other than Purchaser or any Subsidiary of Purchaser) is or was also a member and (10) any costs and expenses, including reasonable legal and accounting fees and expenses, attributable to any item described in clauses (1) through (9) (any such Taxes for which Purchaser Parent is responsible pursuant to this Section 6.5(d)(ii), subject to the following proviso, “Purchaser Parent Indemnified Taxes”); provided that Purchaser Parent shall not be required to indemnify or hold harmless any Purchaser Tax Indemnified Party from and against any liability for (A) Taxes attributable to any action taken after the Closing by Seller Parent or any of its Affiliates, other than any such action that (1) is in the ordinary course of business, (2) is expressly permitted or contemplated by this Agreement, or (3) is required to be taken in order to comply with applicable Law or as a result of a change in applicable Law (a “Seller Tax Act”), (B) Taxes that were reflected, accrued or reserved for in the Final Closing Statement, Final Purchaser Working Capital or the Final Purchaser Net Cash, (C) Income Taxes to the extent that Purchaser or any Subsidiary thereof had any Tax Assets as of the close of business on the Closing Date that were available, or would have been available but for their prior utilization by Purchaser or any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries after the Closing), to offset or otherwise reduce the applicable Tax Liability in respect of such Income Taxes (except any Tax Asset reflected as an asset in the Final Closing Statement and taken into account in the calculation of the Final Purchaser Working Capital or the Final Purchaser Net Cash), or (D) Taxes for which Seller Parent is responsible under Section 6.5(d)(i). (iii) To the extent permitted or required by applicable Law, the taxable year of each of the Conveyed Subsidiaries and their Subsidiaries and any Subsidiary of Purchaser that includes the Closing Date shall be treated as closing on (and including) the Closing Date. Otherwise, for purposes of this Agreement, in the case of any Straddle Period: (A) Property Taxes allocable to the Pre-Closing Tax Period shall be computed based upon the ratio of the number of days in the Pre-Closing Tax Period to the number of days in the entire Straddle Period; and (B) Taxes (other than Property Taxes) allocable to the Pre-Closing Tax Period shall be computed as if such Tax period ended as of the close of business on the Closing Date and, in the case of any Taxes of Conveyed Subsidiaries (and their Subsidiaries) and Seller Parent, or in the case of any Taxes of Purchaser Parent and Purchaser (and their Subsidiaries prior to the Closing), in each case attributable to the ownership of any equity interest in any partnership or other “flow through” entity for tax purposes (including of any “controlled foreign corporation,” as defined under the Code) as if the Tax period of such partnership or other “flow through” entity ended as of the close of business on the Closing Date with the Taxes of such entity for the Pre-Closing Tax Period deemed to include any Taxes on the allocable income of such entity in respect of such Tax period; provided that exemptions, allowances or deductions that are calculated on an annual basis (including depreciation and amortization deductions) shall be allocated between the period ending on the Closing Date and the period beginning after the Closing Date in proportion to the number of days in each period. (iv) Any claim for indemnification under this Section 6.5(d) shall be made in writing upon the party from whom indemnification is sought, and shall specify in reasonable detail the basis for such claim. Any indemnity payment required to be made pursuant to this Section 6.5(d) shall be made within thirty (30) days after the indemnified party makes written demand upon the indemnifying party, but in no case earlier than five (5) Business Days prior to the date on which the relevant Taxes are required to be paid to the applicable Taxing Authority. (v) With respect to any Taxes suffered or incurred by any Conveyed Subsidiary (or any Subsidiary thereof) that was not wholly owned by Seller Parent (directly or indirectly) as of immediately prior to the Closing, the indemnification obligations of Seller Parent pursuant to Section 6.5(d)(i) in respect of such Taxes (or related costs and expenses) shall in no event exceed an amount equal to (A) the amount of such Taxes (or related costs and expenses) for which the Purchaser Tax Indemnified Parties would otherwise be entitled to indemnification pursuant to Section 6.5(d), as if such Conveyed Subsidiary (or any Subsidiary thereof) were wholly owned by Seller Parent, multiplied by (B) the direct and indirect percentage ownership of Seller Parent of such Conveyed Subsidiary (or Subsidiary thereof) as of immediately prior to the Closing. With respect to any Taxes suffered or incurred by any Subsidiary of Purchaser Parent (including Purchaser and its Subsidiaries) that was not wholly owned by Purchaser Parent (directly or indirectly) as of immediately prior to the Closing, the indemnification obligations of Purchaser Parent pursuant to Section 6.5(d)(ii) in respect of such Taxes (or related costs and expenses) shall in no event exceed an amount equal to (A) the amount of such Taxes (or related costs and expenses) for which the Purchaser Tax Indemnified Parties would otherwise be entitled to indemnification pursuant to Section 6.5(d), as if such Subsidiary were wholly owned by Purchaser Parent, multiplied by (B) the direct and indirect percentage ownership of Purchaser Parent of such Subsidiary as of immediately prior to the Closing. (vi) Without duplication to any other amounts paid pursuant to this Section 6.5: (A) Within thirty (30) days following the filing of any Income Tax Return for any Conveyed Subsidiary (or any Subsidiary thereof), on the one hand, or Purchaser (or any Subsidiary thereof, other than the Conveyed Subsidiaries and their Subsidiaries), on the other hand, for any Pre-Closing Tax Period or for any Straddle Period, Seller Parent or Purchaser Parent shall (or Purchaser Parent shall cause Purchaser to) prepare a statement showing (i) the amount of Income Taxes shown as due on such filed Income Tax Return with respect to the relevant Pre-Closing Tax Period or the portion of any Straddle Period ending on and including the Closing Date (the “Final Pre-Closing Income Tax Amount”) and (ii) the amount of the Seller Accrued Income Taxes or Purchaser Accrued Income Taxes, as applicable, attributable to such Income Tax Return as reflected on the Final Closing Statement (the “Pre-Closing Income Tax Amount”) and deliver such statement to Seller Parent and Purchaser Parent, as applicable. Purchaser Parent or Seller Parent, as applicable, shall have a period of fifteen (15) Business Days to provide comments to a schedule prepared (or caused to be prepared) by Seller Parent or Purchaser Parent, respectively. If Purchaser Parent or Seller Parent, as applicable, do not provide any comments to Seller Parent or Purchaser Parent, respectively, during such period, the statement as so prepared shall be final and binding. (B) In the event the Final Pre-Closing Income Tax Amount with respect to any Income Tax Return is less than the amount of the Pre-Closing Income Tax Amount attributable to such Income Tax Return that was included on the Final Closing Statement, the Purchaser shall within five (5) Business Days following the finalization of the Final Pre-Closing Income Tax Amount hereunder (i) pay to Seller Parent the amount of such difference with respect to a Conveyed Subsidiary and their Subsidiaries and (ii) pay to Purchaser Parent the amount of such difference with respect to Purchaser and its Subsidiaries. (vii) The Parties shall use reasonable best efforts to structure any indemnity payment, true-up payment, or payment in respect of Tax Benefits made by any Party pursuant to this Agreement (including pursuant to this Section 6.5, Section 6.6 and Article VII) and any payment made by Purchaser Parent to Purchaser pursuant to Section 2.8 or Section 2.9 in the manner set forth in Clause 10 of the Structuring Considerations Agreement. The Parties shall use reasonable best efforts to structure as a special dividend any payment made by Purchaser to Purchaser Parent pursuant to Section 2.8, Section 2.9 or this Section 6.5.

Appears in 2 contracts

Sources: Stock Purchase Agreement (Amaya Inc.), Stock Purchase Agreement (AP Gaming Holdco, Inc.)

Tax Indemnification. ~~(i) Subject~~ Sellers hereby agree, jointly and severally, to ~~Section 6.5(d)(v), from~~ be liable for and ~~after the Closing, Seller Parent agrees~~ to indemnify and hold the Purchaser Indemnified Parties harmless Purchaser and its Subsidiaries (including the Conveyed Subsidiaries and their Subsidiaries after the Closing Date) (collectively, the “Purchaser Tax Indemnified Parties”) from and against all liability, without duplication, for (1) Taxes of the Conveyed Subsidiaries and their Subsidiaries for any Pre-Closing Tax Period (including any Taxes payable in respect of an election under Section 965(h) of the Code), (2) Taxes of any Seller (other than any Transfer Taxes and VAT for which Purchaser is responsible hereunder) including, Taxes (other than Taxes of the Conveyed Subsidiaries and their Subsidiaries) imposed with respect to, arising out of or relating to the Purchased Assets or the Business for a Pre-Closing Tax Period, (3) Taxes of any Person (other than the Conveyed Subsidiaries and their Subsidiaries) for a Pre-Closing Tax Period for which any Conveyed Subsidiary (or any Subsidiary thereof) is liable under Treasury Regulation Section 1.1502-6 (or a similar provision of state, local or foreign Law), or as a transferee or successor or by Contract (other than Contracts that do not relate primarily to Taxes), (4) Taxes arising out of or resulting from any breach of any covenant or agreement of Seller Parent or any of its Affiliates contained in this Agreement, (5) Taxes for a Pre-Closing Tax Period imposed on (x) any transaction effected pursuant to Section 2.3(b), (y) any settlement of any intercompany accounts of Seller Parent or its Subsidiaries pursuant to Section 6.7, or (z) any transaction or step forming part of the Seller Internal Restructurings, (6) Transfer Taxes for which Seller Parent is responsible under Section 6.5(j), (7) Taxes required to be deducted or withheld with respect to the payment of the Purchase Consideration or any amounts payable to Seller Parent pursuant to Section 2.8 or Section 2.9, including any penalties imposed on Purchaser as a result of Purchaser’s failure to deduct or withhold any such amounts that Purchaser (or a Purchaser Designated Affiliate) was permitted to withhold under Section 2.10 (in each case, subject to Purchaser’s compliance with the notice and cooperation requirements of Section 2.10 and except for any such Taxes (and any related penalties) required to be deducted or withheld solely as a result of any assignment by Purchaser or its Affiliates for which Purchaser is responsible pursuant to Section 10.3), (8) Taxes arising from any breach of any representation or warranty contained in Section 4.16(k), (9) Taxes arising as a result of any Conveyed Subsidiary or any Subsidiary of any Conveyed Subsidiary at any time ceasing to be a member of a group for the purposes of any Tax, of which group Seller Parent or any Subsidiary of Seller Parent is or was also a member and (10) any costs and expenses, including reasonable legal and accounting fees and expenses, attributable to any item described in clauses (1) through (9) (any such Taxes for which Seller Parent is responsible pursuant to this Section 6.5(d)(i), subject to the following proviso, “Seller Indemnified Taxes”); provided that Seller Parent shall not be required to indemnify or hold harmless any Purchaser Tax Indemnified Party from and against any ~~liability pursuant~~ and all Losses in respect of (i) all Taxes of the Company and the Subsidiaries (or any predecessor thereof) (to ~~this Section 6.5(d)(i~~be satisfied by way of payment to the Purchaser only) ~~for~~ (A) ~~Taxes attributable to~~ for any ~~action taken after~~ taxable period ending on or before the Closing ~~by Purchaser~~Date, ~~any of its Affiliates (including the Conveyed Subsidiaries~~ and their Subsidiaries), or any transferee of Purchaser or any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries), other than any such action that (1) is in the ordinary course of business, (2) is expressly permitted or contemplated by this Agreement, or (3) is required to be taken in order to comply with applicable Law or as a result of a change in applicable Law (a “Purchaser Tax Act”), (B) ~~Taxes that were reflected, accrued or reserved~~ for in the ~~Final Closing Statement, Final Business Working Capital, or Final Business Net Cash, (C) Income Taxes to the extent that a Conveyed Subsidiary or~~ portion of any ~~Subsidiary thereof had any Tax Assets as of~~ Straddle Period ending at the close of business on the Closing Date ~~that were available, or would have been available but~~ (determined as provided in Section 9.6(c)); (ii) any and all Taxes arising in relation to any taxable period ending after the Closing Date and for ~~their prior utilization by Purchaser~~ which the Company or any of ~~its Affiliates~~ the Subsidiaries is liable and would not have been liable but for having at any time on or before the Closing Date been a member of a group for Tax purposes with any company other than the Company or any Subsidiary, including, without limitation, pursuant to Treasury Regulation Section 1.1502-6(a) (~~including~~ or any predecessor or successor thereof or any analogous or similar provision under United States federal, state, local or foreign (whether in the ~~Conveyed Subsidiaries~~ United Kingdom or elsewhere) Law); (iii) the failure of any of the representations and ~~their Subsidiaries after~~ warranties contained in Sections 5.13(iv) and (v) and 5.14 to be true and correct in all respects (determined without regard to any qualification related to materiality contained therein) or the ~~Closing~~failure to perform any covenant contained in this Agreement with respect to Taxes; and (iv) ~~to offset~~ any Taxes arising from or ~~otherwise reduce the applicable Tax Liability~~ in respect of ~~such Income Taxes (except any Tax Asset reflected as an asset~~ the transactions described in the ~~Final Closing Statement and~~ BDO Step Paper; provided, that the Sellers shall have no liability to the Purchaser under this Section 9.6 with respect to (w) Taxes which are taken into account in the calculation of the Final Business Working Capital or the Final Business Net Cash), or (D) Taxes for which Purchaser Parent is responsible under Section 6.5(d)(ii). (ii) Subject to Section 6.5(d)(v), from and after the Closing, Purchaser Parent shall indemnify and hold harmless the Purchaser Tax Indemnified Parties from and against all liability, without duplication, for (1) all Taxes of Purchaser Parent and its Affiliates (other than Purchaser and its Subsidiaries) for any Tax period (other than Transfer Taxes and VAT for which Seller Parent is responsible hereunder), (2) Taxes of Purchaser and its Subsidiaries (other than the Conveyed Subsidiaries and their Subsidiaries) for any Pre-Closing Tax Period, (3) Taxes of any Person for a Pre-Closing Tax Period for which Purchaser (or any Subsidiary thereof other than any Conveyed Subsidiaries and their Subsidiaries) is liable under Treasury Regulation Section 1.1502-6 (or a similar provision of state, local or foreign Law), or as a transferee or successor or by Contract (other than Contracts that do not relate primarily to Taxes), (4) Taxes arising out of or resulting from any breach of any covenant or agreement of Purchaser Parent, Purchaser or their respective Affiliates contained in this Agreement, (5) Transfer Taxes for which Purchaser Parent is responsible under Section 6.5(j), (6) Taxes arising from any breach of any representation or warranty in Section 5.17(k), (7) Taxes for a Pre-Closing Tax Period imposed on Indebtedness (x) any settlement of any intercompany accounts of Purchaser or any Subsidiary of Purchaser, on the one hand, and Purchaser Parent or any Subsidiary of Purchaser Parent (other than Purchaser and its Subsidiaries), on the other hand, pursuant Taxes which are solely attributable to ~~Section 6.7 or (y) any transaction or step forming part~~ voluntary acts of the Purchaser ~~Internal Restructurings~~or the Company and any of the Subsidiaries that are not required by Law where such acts occur after Closing and outside the Ordinary Course of Business, (8) Taxes required to be deducted or withheld with respect to any amounts payable to Purchaser Parent pursuant to Section 2.8 or Section 2.9, including any penalties imposed on Purchaser as a result of Purchaser’s failure to deduct or withhold any such amounts, (9) Taxes arising as a result of Purchaser or any Subsidiary of Purchaser (other than any Conveyed Subsidiary or a Subsidiary thereof) at any time ceasing to be a member of a group for the purposes of any Tax, of which group Purchaser Parent or any Subsidiary of Purchaser Parent (other than Purchaser or any Subsidiary of Purchaser) is or was also a member and (10) any costs and expenses, including reasonable legal and accounting fees and expenses, attributable to any item described in clauses (1) through (9) (any such Taxes for which Purchaser Parent is responsible pursuant to this Section 6.5(d)(ii), subject to the following proviso, “Purchaser Parent Indemnified Taxes”); provided that Purchaser Parent shall not be required to indemnify or hold harmless any Purchaser Tax Indemnified Party from and against any liability for (Ay) Taxes attributable to a change in legislation or published practice of any ~~action taken~~ Taxing Authority occurring in either case after Closing, and (z) any Transfer Taxes payable in connection the ~~Closing by Seller Parent or any of its Affiliates, other than any such action that (1) is in the ordinary course of business, (2) is expressly permitted or~~ transactions contemplated by this Agreement, or (3) is required to be taken in order to comply with applicable Law or as a result of a change in applicable Law (a “Seller Tax Act”), (B) Taxes that were reflected, accrued or reserved for in the Final Closing Statement, Final Purchaser Working Capital or the Final Purchaser Net Cash, (C) Income Taxes to the extent that Purchaser or any Subsidiary thereof had any Tax Assets as of the close of business on the Closing Date that were available, or would have been available but for their prior utilization by Purchaser or any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries after the Closing), to offset or otherwise reduce the applicable Tax Liability in respect of such Income Taxes (except any Tax Asset reflected as an asset in the Final Closing Statement and taken into account in the calculation of the Final Purchaser Working Capital or the Final Purchaser Net Cash), or (D) Taxes for which Seller Parent is responsible under Section 6.5(d)(i). (iii) To the extent permitted or required by applicable Law, the taxable year of each of the Conveyed Subsidiaries and their Subsidiaries and any Subsidiary of Purchaser that includes the Closing Date shall be treated as closing on (and including) the Closing Date. Otherwise, for purposes of this Agreement, in the case of any Straddle Period: (A) Property Taxes allocable to the Pre-Closing Tax Period shall be computed based upon the ratio of the number of days in the Pre-Closing Tax Period to the number of days in the entire Straddle Period; and (B) Taxes (other than Property Taxes) allocable to the Pre-Closing Tax Period shall be computed as if such Tax period ended as of the close of business on the Closing Date and, in the case of any Taxes of Conveyed Subsidiaries (and their Subsidiaries) and Seller Parent, or in the case of any Taxes of Purchaser Parent and Purchaser (and their Subsidiaries prior to the Closing), in each case attributable to the ownership of any equity interest in any partnership or other “flow through” entity for tax purposes (including of any “controlled foreign corporation,” as defined under the Code) as if the Tax period of such partnership or other “flow through” entity ended as of the close of business on the Closing Date with the Taxes of such entity for the Pre-Closing Tax Period deemed to include any Taxes on the allocable income of such entity in respect of such Tax period; provided that exemptions, allowances or deductions that are calculated on an annual basis (including depreciation and amortization deductions) shall be allocated between the period ending on the Closing Date and the period beginning after the Closing Date in proportion to the number of days in each period. (iv) Any claim for indemnification under this Section 6.5(d) shall be made in writing upon the party from whom indemnification is sought, and shall specify in reasonable detail the basis for such claim. Any indemnity payment required to be made pursuant to this Section 6.5(d) shall be made within thirty (30) days after the indemnified party makes written demand upon the indemnifying party, but in no case earlier than five (5) Business Days prior to the date on which the relevant Taxes are required to be paid to the applicable Taxing Authority. (v) With respect to any Taxes suffered or incurred by any Conveyed Subsidiary (or any Subsidiary thereof) that was not wholly owned by Seller Parent (directly or indirectly) as of immediately prior to the Closing, the indemnification obligations of Seller Parent pursuant to Section 6.5(d)(i) in respect of such Taxes (or related costs and expenses) shall in no event exceed an amount equal to (A) the amount of such Taxes (or related costs and expenses) for which the Purchaser Tax Indemnified Parties would otherwise be entitled to indemnification pursuant to Section 6.5(d), as if such Conveyed Subsidiary (or any Subsidiary thereof) were wholly owned by Seller Parent, multiplied by (B) the direct and indirect percentage ownership of Seller Parent of such Conveyed Subsidiary (or Subsidiary thereof) as of immediately prior to the Closing. With respect to any Taxes suffered or incurred by any Subsidiary of Purchaser Parent (including Purchaser and its Subsidiaries) that was not wholly owned by Purchaser Parent (directly or indirectly) as of immediately prior to the Closing, the indemnification obligations of Purchaser Parent pursuant to Section 6.5(d)(ii) in respect of such Taxes (or related costs and expenses) shall in no event exceed an amount equal to (A) the amount of such Taxes (or related costs and expenses) for which the Purchaser Tax Indemnified Parties would otherwise be entitled to indemnification pursuant to Section 6.5(d), as if such Subsidiary were wholly owned by Purchaser Parent, multiplied by (B) the direct and indirect percentage ownership of Purchaser Parent of such Subsidiary as of immediately prior to the Closing. (vi) Without duplication to any other amounts paid pursuant to this Section 6.5: (A) Within thirty (30) days following the filing of any Income Tax Return for any Conveyed Subsidiary (or any Subsidiary thereof), on the one hand, or Purchaser (or any Subsidiary thereof, other than the Conveyed Subsidiaries and their Subsidiaries), on the other hand, for any Pre-Closing Tax Period or for any Straddle Period, Seller Parent or Purchaser Parent shall (or Purchaser Parent shall cause Purchaser to) prepare a statement showing (i) the amount of Income Taxes shown as due on such filed Income Tax Return with respect to the relevant Pre-Closing Tax Period or the portion of any Straddle Period ending on and including the Closing Date (the “Final Pre-Closing Income Tax Amount”) and (ii) the amount of the Seller Accrued Income Taxes or Purchaser Accrued Income Taxes, as applicable, attributable to such Income Tax Return as reflected on the Final Closing Statement (the “Pre-Closing Income Tax Amount”) and deliver such statement to Seller Parent and Purchaser Parent, as applicable. Purchaser Parent or Seller Parent, as applicable, shall have a period of fifteen (15) Business Days to provide comments to a schedule prepared (or caused to be prepared) by Seller Parent or Purchaser Parent, respectively. If Purchaser Parent or Seller Parent, as applicable, do not provide any comments to Seller Parent or Purchaser Parent, respectively, during such period, the statement as so prepared shall be final and binding. (B) In the event the Final Pre-Closing Income Tax Amount with respect to any Income Tax Return is less than the amount of the Pre-Closing Income Tax Amount attributable to such Income Tax Return that was included on the Final Closing Statement, the Purchaser shall within five (5) Business Days following the finalization of the Final Pre-Closing Income Tax Amount hereunder (i) pay to Seller Parent the amount of such difference with respect to a Conveyed Subsidiary and their Subsidiaries and (ii) pay to Purchaser Parent the amount of such difference with respect to Purchaser and its Subsidiaries. (vii) The Parties shall use reasonable best efforts to structure any indemnity payment, true-up payment, or payment in respect of Tax Benefits made by any Party pursuant to this Agreement (including pursuant to this Section 6.5, Section 6.6 and Article VII) and any payment made by Purchaser Parent to Purchaser pursuant to Section 2.8 or Section 2.9 in the manner set forth in Clause 10 of the Structuring Considerations Agreement. The Parties shall use reasonable best efforts to structure as a special dividend any payment made by Purchaser to Purchaser Parent pursuant to Section 2.8, Section 2.9 or this Section 6.5.

Appears in 2 contracts

Sources: Share Purchase Agreement (Warner Electric International Holding, Inc.), Share Purchase Agreement (Altra Industrial Motion, Inc.)

Tax Indemnification. ~~(i)~~ 12.5.1.1 Subject to the provisions of Section ~~6.5(d)(v), from and after the Closing~~12.5.7, Seller ~~Parent agrees to~~ shall indemnify Purchaser and its Affiliates (including TCH and each Subsidiary) and each of their respective officers, directors, employees, stockholders, agents and representatives and hold them harmless from all liabilities for Excluded Taxes. Notwithstanding the foregoing, Seller shall not indemnify and hold harmless Purchaser and its ~~Subsidiaries~~ Affiliates (including ~~the Conveyed Subsidiaries~~ TCH and ~~their Subsidiaries after the Closing Date~~each Subsidiary) (collectively, the “Purchaser Tax Indemnified Parties”) from and against all liability, without duplication, for (1) Taxes of the Conveyed Subsidiaries and their Subsidiaries for any Pre-Closing Tax Period (including any Taxes payable in respect of an election under Section 965(h) of the Code), (2) Taxes of any Seller (other than any Transfer Taxes and VAT for which Purchaser is responsible hereunder) including, Taxes (other than Taxes of the Conveyed Subsidiaries and their Subsidiaries) imposed with respect to, arising out of or relating to the Purchased Assets or the Business for a Pre-Closing Tax Period, (3) Taxes of any Person (other than the Conveyed Subsidiaries and their Subsidiaries) for a Pre-Closing Tax Period for which any Conveyed Subsidiary (or any Subsidiary thereof) is liable under Treasury Regulation Section 1.1502-6 (or a similar provision of state, local or foreign Law), or as a transferee or successor or by Contract (other than Contracts that do not relate primarily to Taxes), (4) Taxes arising out of or resulting from any breach of any covenant or agreement of Seller Parent or any of ~~its Affiliates contained in this Agreement~~their respective officers, ~~(5) Taxes for a Pre-Closing Tax Period imposed on (x) any transaction effected pursuant to Section 2.3(b)~~directors, ~~(y) any settlement of any intercompany accounts of Seller Parent~~ employees or ~~its Subsidiaries pursuant to Section 6.7~~agents, or (z) any transaction or step forming part of the Seller Internal Restructurings, (6) Transfer Taxes for which Seller Parent is responsible under Section 6.5(j), (7) Taxes required to be deducted or withheld with respect to the payment of the Purchase Consideration or any amounts payable to Seller Parent pursuant to Section 2.8 or Section 2.9, including any penalties imposed on Purchaser as a result of Purchaser’s failure to deduct or withhold any such amounts that Purchaser (or a Purchaser Designated Affiliate) was permitted to withhold under Section 2.10 (in each case, subject to Purchaser’s compliance with the notice and cooperation requirements of Section 2.10 and except for any such Taxes (and any related penalties) required to be deducted or withheld solely as a result of any assignment by Purchaser or its Affiliates for which Purchaser is responsible pursuant to Section 10.3), (8) Taxes arising from any breach of any representation or warranty contained in Section 4.16(k), (9) Taxes arising as a result of any Conveyed Subsidiary or any Subsidiary of any Conveyed Subsidiary at any time ceasing to be a member of a group liability for the purposes of any Tax, of which group Seller Parent or any Subsidiary of Seller Parent is or was also a member and (10) any costs and expenses, including reasonable legal and accounting fees and expenses, attributable to any item described in clauses (1) through (9) (any such Taxes for which Seller Parent is responsible pursuant to this Section 6.5(d)(i), subject to the following proviso, “Seller Indemnified Taxes”); provided that Seller Parent shall not be required to indemnify or hold harmless any Purchaser Tax Indemnified Party from and against any liability pursuant to this Section 6.5(d)(i) for (A) Taxes attributable to any action taken after the Closing by Purchaser, any of its Affiliates (including TCH and each Subsidiary after the ~~Conveyed Subsidiaries and their Subsidiaries),~~ Closing) or any transferee of Purchaser or any of its Affiliates (~~including the Conveyed Subsidiaries and their Subsidiaries),~~ other than any ~~such~~ action ~~that (1) is in the ordinary course of business, (2) is~~ expressly ~~permitted~~ required by applicable Law or contemplated by this Agreement~~, or (3~~) ~~is required to be taken in order to comply with applicable Law or as a result of a change in applicable Law~~ (a “"Purchaser Tax Act~~”), (B~~") ~~Taxes that were reflected, accrued~~ or ~~reserved for in the Final Closing Statement, Final Business Working Capital, or Final Business Net Cash, (C) Income Taxes~~ attributable to a breach by Purchaser of its obligations under this Agreement. 12.5.1.2 Subject to the ~~extent that a Conveyed~~ provisions of Section 12.5.7, Purchaser shall, and shall cause TCH and each Subsidiary or to, indemnify Seller and its Affiliates and each of their respective officers, directors, employees, stockholders, agents and representatives and hold them harmless from (i) all liability for Taxes of TCH and each Subsidiary for any ~~Subsidiary thereof had any Tax Assets as of the close of business on~~ Straddle Period ending after the Closing Date for that were available, or would have been available but for their prior utilization by Purchaser or any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries after the Closing) to offset or otherwise reduce the applicable Tax Liability in respect of such Income Taxes (except any Tax Asset reflected as an asset in the Final Closing Statement and taken into account in the calculation of the Final Business Working Capital or the Final Business Net Cash), or (D) Taxes for which Purchaser Parent is responsible under Section 6.5(d)(ii). (ii) Subject to Section 6.5(d)(v), from and after the Closing, Purchaser Parent shall indemnify and hold harmless the Purchaser Tax Indemnified Parties from and against all liability, without duplication, for (1) all Taxes of Purchaser Parent and its Affiliates (other than Purchaser and its Subsidiaries) for any Tax period (other than Transfer Taxes and VAT for which Seller Parent is responsible hereunder), (2) Taxes of Purchaser and its Subsidiaries (other than the Conveyed Subsidiaries and their Subsidiaries) for any Pre-Closing Tax Period, (3) Taxes portion of any ~~Person~~ such Taxes that are not for a the Pre-Closing Tax Period ~~for which Purchaser~~ (~~or any Subsidiary thereof other than any Conveyed Subsidiaries~~ and ~~their Subsidiaries) is liable under Treasury Regulation Section 1.1502-6 (or a similar provision of state, local or foreign Law), or as a transferee or successor or by Contract (other than Contracts~~ except to the extent that ~~do not relate primarily to~~ such Taxes are Excluded Taxes), (4ii) all liability for Taxes ~~arising out~~ attributable to a Purchaser Tax Act or to a breach by Purchaser of ~~or resulting from any breach of any covenant or agreement of Purchaser Parent, Purchaser or their respective Affiliates contained in~~ its obligations under this Agreement; and (iii) all liability for Taxes attributable to a Purchaser Tax Act resulting in the termination or elimination of a deduction, ~~(5) Transfer Taxes for which Purchaser Parent is responsible under Section 6.5(j)~~tax abatement or tax credit lawfully claimed by Seller, (6) Taxes arising from any breach of any representation or warranty in Section 5.17(k), (7) Taxes for a Pre-Closing Tax Period imposed on (x) any settlement of any intercompany accounts of Purchaser or any Subsidiary of Purchaser, on the one hand, and Purchaser Parent or any Subsidiary of Purchaser Parent (other than Purchaser and its Subsidiaries), on the other hand, pursuant to Section 6.7 or (y) any transaction or step forming part of the Purchaser Internal Restructurings, (8) Taxes required to be deducted or withheld with respect to any amounts payable to Purchaser Parent pursuant to Section 2.8 or Section 2.9, including any penalties imposed on Purchaser as a result of Purchaser’s failure to deduct or withhold any such amounts, (9) Taxes arising as a result of Purchaser or any Subsidiary of Purchaser (other than any Conveyed Subsidiary TCH or a Subsidiary ~~thereof) at any time ceasing~~ prior to be a member of a group for the purposes of any Tax, of which group Purchaser Parent or any Subsidiary of Purchaser Parent (other than Purchaser or any Subsidiary of Purchaser) is or was also a member and (10) any costs and expenses, including reasonable legal and accounting fees and expenses, attributable to any item described in clauses (1) through (9) (any such Taxes for which Purchaser Parent is responsible pursuant to this Section 6.5(d)(ii), subject to the following proviso, “Purchaser Parent Indemnified Taxes”); provided that Purchaser Parent shall not be required to indemnify or hold harmless any Purchaser Tax Indemnified Party from and against any liability for (A) Taxes attributable to any action taken after the Closing by Seller Parent or any of its Affiliates, other than any such action that (1) is in the ordinary course of business, (2) is expressly permitted or contemplated by this Agreement, or (3) is required to be taken in order to comply with applicable Law or as a result of a change in applicable Law (a “Seller Tax Act”), (B) Taxes that were reflected, accrued or reserved for in the Final Closing Statement, Final Purchaser Working Capital or the Final Purchaser Net Cash, (C) Income Taxes to the extent that Purchaser or any Subsidiary thereof had any Tax Assets as of the close of business on the Closing Date that were available, or would have been available but for their prior utilization by Purchaser or any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries after the Closing), to offset or otherwise reduce the applicable Tax Liability in respect of such Income Taxes (except any Tax Asset reflected as an asset in the Final Closing Statement and taken into account in the calculation of the Final Purchaser Working Capital or the Final Purchaser Net Cash), or (D) Taxes for which Seller Parent is responsible under Section 6.5(d)(i). (iii) To the extent permitted or required by applicable Law, the taxable year of each of the Conveyed Subsidiaries and their Subsidiaries and any Subsidiary of Purchaser that includes the Closing Date shall be treated as closing on (and including) the Closing Date~~. Otherwise, for purposes of this Agreement, in~~ . 12.5.1.3 In the case of any taxable period that includes (but does not end on) the Closing Date (a "Straddle Period:"): 12.5.1.3.1 real, personal and intangible property Taxes (A"Property Taxes") ~~Property Taxes~~ of TCH and each Subsidiary allocable to the Pre-Closing Tax Period shall be ~~computed based upon~~ equal to the ~~ratio~~ amount of such Property Taxes for the entire Straddle Period multiplied by a fraction, the numerator of which is the number of days during the Straddle Period that are in the Pre-Closing Tax Period to and the denominator of which is the number of days in the ~~entire~~ Straddle Period; and ~~(B)~~ 12.5.1.3.2 the Taxes (other than Property Taxes) of TCH and each Subsidiary allocable to the Pre-Closing Tax Period shall be computed as if such ~~Tax~~ taxable period ended as of the ~~close of business~~ Effective Time on the Closing ~~Date and~~Date, in the case of any Taxes of Conveyed Subsidiaries (and their Subsidiaries) and Seller Parent, or in the case of any Taxes of Purchaser Parent and Purchaser (and their Subsidiaries prior to the Closing), in each case attributable to the ownership of any equity interest in any partnership or other “flow through” entity for tax purposes (including of any “controlled foreign corporation,” as defined under the Code) as if the Tax period of such partnership or other “flow through” entity ended as of the close of business on the Closing Date with the Taxes of such entity for the Pre-Closing Tax Period deemed to include any Taxes on the allocable income of such entity in respect of such Tax period; provided that applying all exemptions, allowances or deductions ~~that are calculated on an annual basis~~ (~~including~~ including, but not limited to, depreciation and amortization deductions) ~~shall be allocated between the period ending on the Closing Date and the period beginning after the Closing Date in proportion~~ applicable to the number of days in each period. (iv) Any claim for indemnification under this Section 6.5(d) shall be made in writing upon the party from whom indemnification is sought, and shall specify in reasonable detail the basis for such claim. Any indemnity payment required to be made pursuant to this Section 6.5(d) shall be made within thirty (30) days after the indemnified party makes written demand upon the indemnifying party, but in no case earlier than five (5) Business Days prior to the date on which the relevant Taxes are required to be paid to the applicable Taxing Authority. (v) With respect to any Taxes suffered or incurred by any Conveyed Subsidiary (or any Subsidiary thereof) that was not wholly owned by Seller Parent (directly or indirectly) as of immediately prior to the Closing, the indemnification obligations of Seller Parent pursuant to Section 6.5(d)(i) in respect of such Taxes (or related costs and expenses) shall in no event exceed an amount equal to (A) the amount of such Taxes (or related costs and expenses) for which the Purchaser Tax Indemnified Parties would otherwise be entitled to indemnification pursuant to Section 6.5(d), as if such Conveyed Subsidiary (or any Subsidiary thereof) were wholly owned by Seller Parent, multiplied by (B) the direct and indirect percentage ownership of Seller Parent of such Conveyed Subsidiary (or Subsidiary thereof) as of immediately prior to the Closing. With respect to any Taxes suffered or incurred by any Subsidiary of Purchaser Parent (including Purchaser and its Subsidiaries) that was not wholly owned by Purchaser Parent (directly or indirectly) as of immediately prior to the Closing, the indemnification obligations of Purchaser Parent pursuant to Section 6.5(d)(ii) in respect of such Taxes (or related costs and expenses) shall in no event exceed an amount equal to (A) the amount of such Taxes (or related costs and expenses) for which the Purchaser Tax Indemnified Parties would otherwise be entitled to indemnification pursuant to Section 6.5(d), as if such Subsidiary were wholly owned by Purchaser Parent, multiplied by (B) the direct and indirect percentage ownership of Purchaser Parent of such Subsidiary as of immediately prior to the Closing. (vi) Without duplication to any other amounts paid pursuant to this Section 6.5: (A) Within thirty (30) days following the filing of any Income Tax Return for any Conveyed Subsidiary (or any Subsidiary thereof), on the one hand, or Purchaser (or any Subsidiary thereof, other than the Conveyed Subsidiaries and their Subsidiaries), on the other hand, for any Pre-Closing Tax ~~Period or for any Straddle~~ Period. 12.5.1.4 For the avoidance of doubt, ~~Seller Parent or Purchaser Parent~~ the obligations in this Section 12.5.1 shall ~~(or Purchaser Parent shall cause Purchaser to) prepare a statement showing (i) the amount of Income Taxes shown as due on such filed Income Tax Return with respect~~ not be subject to the relevant Pre-Closing Tax Period or the portion of any Straddle Period ending on and including the Closing Date (the “Final Pre-Closing Income Tax Amount”) and (ii) the amount of the Seller Accrued Income Taxes or Purchaser Accrued Income Taxes, as applicable, attributable to such Income Tax Return as reflected on the Final Closing Statement (the “Pre-Closing Income Tax Amount”) and deliver such statement to Seller Parent and Purchaser Parent, as applicable. Purchaser Parent or Seller Parent, as applicable, shall have a period of fifteen (15) Business Days to provide comments to a schedule prepared (or caused to be prepared) by Seller Parent or Purchaser Parent, respectively. If Purchaser Parent or Seller Parent, as applicable, do not provide any comments to Seller Parent or Purchaser Parent, respectively, during such period, the statement as so prepared shall be final and bindingCap in Section 12.2. (B) In the event the Final Pre-Closing Income Tax Amount with respect to any Income Tax Return is less than the amount of the Pre-Closing Income Tax Amount attributable to such Income Tax Return that was included on the Final Closing Statement, the Purchaser shall within five (5) Business Days following the finalization of the Final Pre-Closing Income Tax Amount hereunder (i) pay to Seller Parent the amount of such difference with respect to a Conveyed Subsidiary and their Subsidiaries and (ii) pay to Purchaser Parent the amount of such difference with respect to Purchaser and its Subsidiaries. (vii) The Parties shall use reasonable best efforts to structure any indemnity payment, true-up payment, or payment in respect of Tax Benefits made by any Party pursuant to this Agreement (including pursuant to this Section 6.5, Section 6.6 and Article VII) and any payment made by Purchaser Parent to Purchaser pursuant to Section 2.8 or Section 2.9 in the manner set forth in Clause 10 of the Structuring Considerations Agreement. The Parties shall use reasonable best efforts to structure as a special dividend any payment made by Purchaser to Purchaser Parent pursuant to Section 2.8, Section 2.9 or this Section 6.5.

Appears in 2 contracts

Sources: Contribution and Purchase Agreement (Tecumseh Products Co), Contribution and Purchase Agreement (Tecumseh Products Co)

Tax Indemnification. (ia) Subject to Section ~~6.5(d)(v)~~8.5, from and after the ~~Closing~~Closing Date, each Seller, severally (in proportion to its Seller ~~Parent agrees~~ Proportion, except to the extent subject to the second sentence of this Section 9.1(a)) but not jointly, shall pay or cause to be paid and shall indemnify and hold harmless the Purchaser ~~and its Subsidiaries (including the Conveyed Subsidiaries and their Subsidiaries after the Closing Date) (collectively, the “Purchaser Tax~~ Indemnified ~~Parties”)~~ Parties from and against ~~all liability, without duplication, for~~ (1i) ~~Taxes of the Conveyed Subsidiaries and their Subsidiaries for~~ any ~~Pre-Closing Tax Period (including any Taxes payable in respect of an election under Section 965(h) of the Code), (2) Taxes of any Seller (other than any Transfer~~ Excluded Taxes and ~~VAT for which Purchaser is responsible hereunder) including, Taxes~~ (other than Taxes of the Conveyed Subsidiaries and their Subsidiaries) imposed with respect to, arising out of or relating to the Purchased Assets or the Business for a Pre-Closing Tax Period, (3) Taxes of any Person (other than the Conveyed Subsidiaries and their Subsidiaries) for a Pre-Closing Tax Period for which any Conveyed Subsidiary (or any Subsidiary thereof) is liable under Treasury Regulation Section 1.1502-6 (or a similar provision of state, local or foreign Law), or as a transferee or successor or by Contract (other than Contracts that do not relate primarily to Taxes), (4) Taxes arising out of or resulting from any breach of any covenant or agreement of Seller Parent or any of its Affiliates contained in this Agreement, (5) Taxes for a Pre-Closing Tax Period imposed on (x) any transaction effected pursuant to Section 2.3(b), (y) any settlement of any intercompany accounts of Seller Parent or its Subsidiaries pursuant to Section 6.7, or (z) any transaction or step forming part of the Seller Internal Restructurings, (6) Transfer Taxes for which Seller Parent is responsible under Section 6.5(j), (7) Taxes required to be deducted or withheld with respect to the payment of the Purchase Consideration or any amounts payable to Seller Parent pursuant to Section 2.8 or Section 2.9, including any penalties imposed on Purchaser as a result of Purchaser’s failure to deduct or withhold any such amounts that Purchaser (or a Purchaser Designated Affiliate) was permitted to withhold under Section 2.10 (in each case, subject to Purchaser’s compliance with the notice and cooperation requirements of Section 2.10 and except for any such Taxes (and any related penalties) required to be deducted or withheld solely as a result of any assignment by Purchaser or its Affiliates for which Purchaser is responsible pursuant to Section 10.3), (8) Taxes arising from any breach of any representation or warranty contained in Section 4.16(k), (9) Taxes arising as a result of any Conveyed Subsidiary or any Subsidiary of any Conveyed Subsidiary at any time ceasing to be a member of a group for the purposes of any Tax, of which group Seller Parent or any Subsidiary of Seller Parent is or was also a member and (10ii) any costs and expenses, including reasonable legal ~~and accounting~~ fees and ~~expenses,~~ expenses attributable to any ~~item described in clauses (1) through (9) (any such Taxes for which Seller Parent is responsible pursuant to this Section 6.5(d)(i), subject to the following proviso, “Seller Indemnified~~ Excluded Taxes”); provided that no Seller ~~Parent~~ shall ~~not~~ be required to pay or cause to be paid or indemnify or hold harmless any Purchaser Tax Indemnified Party from and against any liability pursuant to this Section 6.5(d)(i) for (A) Taxes attributable to any action taken after the Closing by Purchaser, any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries), or any transferee of Purchaser or any of its Affiliates ~~(including the Conveyed Subsidiaries~~ from and ~~their Subsidiaries~~against any Taxes for which Purchaser is responsible pursuant to Section 9.1(b). For purposes of this Section 9.1(a), ~~other than~~ Excluded Taxes described in clauses (a), (b), (c), (d), (e)(ii), (f)(ii) and (h) of the definition thereof shall be borne by each Seller in proportion to its Seller Proportion; Excluded Taxes described in clause (e)(i) of the definition thereof shall be borne by the breaching Seller; and Excluded Taxes described in clauses (f)(i) and (g) of the definition thereof shall be borne the Seller whose action or failure to act caused the imposition of the relevant Tax. (b) Subject to Section 8.5, Purchaser shall pay or cause to be paid and shall indemnify and hold harmless Sellers from and against (i) any ~~such~~ Taxes arising from or in connection with any action or transaction taken by Purchaser on the Closing Date after the Closing that ~~(1)~~ is in outside the ordinary course of business, (2) is expressly permitted or contemplated by this Agreement, or (3) is required to be taken in order to comply with applicable Law or as a result of a change in applicable Law (a “Purchaser Tax Act”), (B) Taxes that were reflected, accrued or reserved for in the Final Closing Statement, Final Business Working Capital, or Final Business Net Cash, (C) Income Taxes to the extent that a Conveyed Subsidiary or any Subsidiary thereof had any Tax Assets as of the close of business on the Closing Date that were available, or would have been available but for their prior utilization by Purchaser or any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries after the Closing) to offset or otherwise reduce the applicable Tax Liability in respect of such Income Taxes (except any Tax Asset reflected as an asset in the Final Closing Statement and taken into account in the calculation of the Final Business Working Capital or the Final Business Net Cash), or (D) Taxes for which Purchaser Parent is responsible under Section 6.5(d)(ii). (ii) Subject to Section 6.5(d)(v), from and after the Closing, Purchaser Parent shall indemnify and hold harmless the Purchaser Tax Indemnified Parties from and against all liability, without duplication, for (1) all any Taxes of Purchaser Parent and its Affiliates (other than Purchaser and its Subsidiaries) for any Tax period (other than Transfer Taxes and VAT for which Seller Parent is responsible hereunder), (2) Taxes of Purchaser and its Subsidiaries (other than the Conveyed Subsidiaries and their Subsidiaries) for any Pre-Closing Tax Period, (3) Taxes of any Person for a Pre-Closing Tax Period for which Purchaser (or any Subsidiary thereof other than any Conveyed Subsidiaries and their Subsidiaries) is liable under Treasury Regulation Section 1.1502-6 (or a similar provision of state, local or foreign Law), or as a transferee or successor or by Contract (other than Contracts that do not relate primarily to Taxes), (4) Taxes arising out of or resulting from any breach of any covenant or agreement of Purchaser ~~Parent, Purchaser or their respective Affiliates~~ contained in this Agreement, (5iii) ~~Transfer~~ any Taxes for which Purchaser ~~Parent~~ is responsible under Section 6.5(j), (6) Taxes arising from any breach of any representation or warranty in Section 5.17(k), (7) Taxes for a Pre-Closing Tax Period imposed on (x) any settlement of any intercompany accounts of Purchaser or any Subsidiary of Purchaser, on the one hand, and Purchaser Parent or any Subsidiary of Purchaser Parent (other than Purchaser and its Subsidiaries), on the other hand, pursuant to Section ~~6.7 or (y) any transaction or step forming part of the Purchaser Internal Restructurings~~9.6, (8) Taxes required to be deducted or withheld with respect to any amounts payable to Purchaser Parent pursuant to Section 2.8 or Section 2.9, including any penalties imposed on Purchaser as a result of Purchaser’s failure to deduct or withhold any such amounts, (9) Taxes arising as a result of Purchaser or any Subsidiary of Purchaser (other than any Conveyed Subsidiary or a Subsidiary thereof) at any time ceasing to be a member of a group for the purposes of any Tax, of which group Purchaser Parent or any Subsidiary of Purchaser Parent (other than Purchaser or any Subsidiary of Purchaser) is or was also a member and (10iv) any costs ~~and expenses,~~ or expenses including reasonable legal ~~and accounting~~ fees and ~~expenses,~~ expenses attributable to any item described in clauses (1) through (9) (any such Taxes for which Purchaser Parent is responsible pursuant to this Section 6.5(d)(ii), subject to the following proviso, “Purchaser Parent Indemnified Taxes”); provided that Purchaser Parent shall not be required to indemnify or hold harmless any Purchaser Tax Indemnified Party from and against any liability for (A) Taxes attributable to any action taken after the Closing by Seller Parent or any of its Affiliates, other than any such action that (1) is in the ordinary course of business, (2) is expressly permitted or contemplated by this Agreement, or (3) is required to be taken in order to comply with applicable Law or as a result of a change in applicable Law (a “Seller Tax Act”Sections 9.1(b)(i), (B) Taxes that were reflected, accrued or reserved for in the Final Closing Statement, Final Purchaser Working Capital or the Final Purchaser Net Cash, (C) Income Taxes to the extent that Purchaser or any Subsidiary thereof had any Tax Assets as of the close of business on the Closing Date that were available, or would have been available but for their prior utilization by Purchaser or any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries after the Closing), to offset or otherwise reduce the applicable Tax Liability in respect of such Income Taxes (except any Tax Asset reflected as an asset in the Final Closing Statement and taken into account in the calculation of the Final Purchaser Working Capital or the Final Purchaser Net Cash), or (D) Taxes for which Seller Parent is responsible under Section 6.5(d)(i). (iii) To the extent permitted or required by applicable Law, the taxable year of each of the Conveyed Subsidiaries and their Subsidiaries and any Subsidiary of Purchaser that includes the Closing Date shall be treated as closing on (and including) the Closing Date. Otherwise, for purposes of this Agreement, in the case of any Straddle Period: (A) Property Taxes allocable to the Pre-Closing Tax Period shall be computed based upon the ratio of the number of days in the Pre-Closing Tax Period to the number of days in the entire Straddle Period; and (B) Taxes (other than Property Taxes) allocable to the Pre-Closing Tax Period shall be computed as if such Tax period ended as of the close of business on the Closing Date and, in the case of any Taxes of Conveyed Subsidiaries (and their Subsidiaries) and Seller Parent, or in the case of any Taxes of Purchaser Parent and Purchaser (and their Subsidiaries prior to the Closing), in each case attributable to the ownership of any equity interest in any partnership or other “flow through” entity for tax purposes (including of any “controlled foreign corporation,” as defined under the Code) as if the Tax period of such partnership or other “flow through” entity ended as of the close of business on the Closing Date with the Taxes of such entity for the Pre-Closing Tax Period deemed to include any Taxes on the allocable income of such entity in respect of such Tax period; provided that exemptions, allowances or deductions that are calculated on an annual basis (including depreciation and amortization deductions) shall be allocated between the period ending on the Closing Date and the period beginning after the Closing Date in proportion to the number of days in each period. (iv) Any claim for indemnification under this Section 6.5(d) shall be made in writing upon the party from whom indemnification is sought, and shall specify in reasonable detail the basis for such claim. Any indemnity payment required to be made pursuant to this Section 6.5(d) shall be made within thirty (30) days after the indemnified party makes written demand upon the indemnifying party, but in no case earlier than five (5) Business Days prior to the date on which the relevant Taxes are required to be paid to the applicable Taxing Authority. (v) With respect to any Taxes suffered or incurred by any Conveyed Subsidiary (or any Subsidiary thereof) that was not wholly owned by Seller Parent (directly or indirectly) as of immediately prior to the Closing, the indemnification obligations of Seller Parent pursuant to Section 6.5(d)(i) in respect of such Taxes (or related costs and expenses) shall in no event exceed an amount equal to (A) the amount of such Taxes (or related costs and expenses) for which the Purchaser Tax Indemnified Parties would otherwise be entitled to indemnification pursuant to Section 6.5(d), as if such Conveyed Subsidiary (or any Subsidiary thereof) were wholly owned by Seller Parent, multiplied by (B) the direct and indirect percentage ownership of Seller Parent of such Conveyed Subsidiary (or Subsidiary thereof) as of immediately prior to the Closing. With respect to any Taxes suffered or incurred by any Subsidiary of Purchaser Parent (including Purchaser and its Subsidiaries) that was not wholly owned by Purchaser Parent (directly or indirectly) as of immediately prior to the Closing, the indemnification obligations of Purchaser Parent pursuant to Section 6.5(d)(ii) in respect of such Taxes (or related costs and expenses) shall in no event exceed an amount equal to (A) the amount of such Taxes (or related costs and expenses) for which the Purchaser Tax Indemnified Parties would otherwise be entitled to indemnification pursuant to Section 6.5(d), as if such Subsidiary were wholly owned by Purchaser Parent, multiplied by (B) the direct and indirect percentage ownership of Purchaser Parent of such Subsidiary as of immediately prior to the Closing. (vi) Without duplication to any other amounts paid pursuant to this Section 6.5: (A) Within thirty (30) days following the filing of any Income Tax Return for any Conveyed Subsidiary (or any Subsidiary thereof), on the one hand, or Purchaser (or any Subsidiary thereof, other than the Conveyed Subsidiaries and their Subsidiaries), on the other hand, for any Pre-Closing Tax Period or for any Straddle Period, Seller Parent or Purchaser Parent shall (or Purchaser Parent shall cause Purchaser to) prepare a statement showing (i) the amount of Income Taxes shown as due on such filed Income Tax Return with respect to the relevant Pre-Closing Tax Period or the portion of any Straddle Period ending on and including the Closing Date (the “Final Pre-Closing Income Tax Amount”ii) and (ii) the amount of the Seller Accrued Income Taxes or Purchaser Accrued Income Taxes, as applicable, attributable to such Income Tax Return as reflected on the Final Closing Statement (the “Pre-Closing Income Tax Amount”) and deliver such statement to Seller Parent and Purchaser Parent, as applicable. Purchaser Parent or Seller Parent, as applicable, shall have a period of fifteen (15) Business Days to provide comments to a schedule prepared (or caused to be prepared) by Seller Parent or Purchaser Parent, respectively. If Purchaser Parent or Seller Parent, as applicable, do not provide any comments to Seller Parent or Purchaser Parent, respectively, during such period, the statement as so prepared shall be final and bindingiii). (B) In the event the Final Pre-Closing Income Tax Amount with respect to any Income Tax Return is less than the amount of the Pre-Closing Income Tax Amount attributable to such Income Tax Return that was included on the Final Closing Statement, the Purchaser shall within five (5) Business Days following the finalization of the Final Pre-Closing Income Tax Amount hereunder (i) pay to Seller Parent the amount of such difference with respect to a Conveyed Subsidiary and their Subsidiaries and (ii) pay to Purchaser Parent the amount of such difference with respect to Purchaser and its Subsidiaries. (vii) The Parties shall use reasonable best efforts to structure any indemnity payment, true-up payment, or payment in respect of Tax Benefits made by any Party pursuant to this Agreement (including pursuant to this Section 6.5, Section 6.6 and Article VII) and any payment made by Purchaser Parent to Purchaser pursuant to Section 2.8 or Section 2.9 in the manner set forth in Clause 10 of the Structuring Considerations Agreement. The Parties shall use reasonable best efforts to structure as a special dividend any payment made by Purchaser to Purchaser Parent pursuant to Section 2.8, Section 2.9 or this Section 6.5.

Appears in 2 contracts

Sources: Interests Purchase Agreement (Tegna Inc), Interests Purchase Agreement (McClatchy Co)

Tax Indemnification. (ia) ~~Subject to Section 6.5(d)(v), from~~ From and after the Closing, Seller ~~Parent agrees to~~ shall indemnify Purchaser Indemnitees against and hold them harmless ~~Purchaser and its Subsidiaries~~ from (~~including the Conveyed Subsidiaries and their Subsidiaries after the Closing Date~~i) (collectively, the “Purchaser Tax Indemnified Parties”) from and against all liability, without duplication, for (1) Taxes of the Conveyed Subsidiaries and their Subsidiaries for any Pre-Closing Tax Period (including any Taxes ~~payable in respect of an election under Section 965(h) of the Code), (2) Taxes of~~ suffered or incurred by any Seller (other than any Transfer Taxes and VAT for which Purchaser is responsible hereunder) including, Taxes (other than Taxes of the Conveyed Subsidiaries and their Subsidiaries) imposed with respect to, arising out of or relating such indemnified party to the ~~Purchased Assets or~~ extent arising from (A) the Business for a Pre-Closing Tax Period, (3) Taxes of any Person (other than the Conveyed Subsidiaries and their Subsidiaries) for a Pre-Closing Tax Period for which any Conveyed Subsidiary (or any Subsidiary thereof) is liable under Treasury Regulation Section 1.1502-6 (or a similar provision of state, local or foreign Law), or as a transferee or successor or by Contract (other than Contracts that do not relate primarily to Taxes), (4) Taxes arising out of or resulting from any breach of any ~~covenant or agreement of Seller Parent or any of its Affiliates contained in this Agreement, (5) Taxes for a Pre~~Tax-Closing Tax Period imposed on (x) any transaction effected pursuant to Section 2.3(b), (y) any settlement of any intercompany accounts of Seller Parent or its Subsidiaries pursuant to Section 6.7, or (z) any transaction or step forming part of the Seller Internal Restructurings, (6) Transfer Taxes for which Seller Parent is responsible under Section 6.5(j), (7) Taxes required to be deducted or withheld with respect to the payment of the Purchase Consideration or any amounts payable to Seller Parent pursuant to Section 2.8 or Section 2.9, including any penalties imposed on Purchaser as a result of Purchaser’s failure to deduct or withhold any such amounts that Purchaser (or a Purchaser Designated Affiliate) was permitted to withhold under Section 2.10 (in each case, subject to Purchaser’s compliance with the notice and cooperation requirements of Section 2.10 and except for any such Taxes (and any related penalties) required to be deducted or withheld solely as a result of any assignment by Purchaser or its Affiliates for which Purchaser is responsible pursuant to Section 10.3), (8) Taxes arising from any breach of any representation or warranty of Seller contained in Section ~~4.16(k), (9) Taxes arising as a result~~ 4.03 of any Conveyed Subsidiary or any Subsidiary of any Conveyed Subsidiary at any time ceasing to be a member of a group for the purposes of any Tax, of which group Seller Parent or any Subsidiary of Seller Parent is or was also a member and (10) any costs and expenses, including reasonable legal and accounting fees and expenses, attributable to any item described in clauses (1) through (9) (any such Taxes for which Seller Parent is responsible pursuant to this Section 6.5(d)(i), subject to the following proviso, “Seller Indemnified Taxes”); provided that Seller Parent shall not be required to indemnify or hold harmless any Purchaser Tax Indemnified Party from and against any liability pursuant to this Section 6.5(d)(i) for (A) Taxes attributable to any action taken after the Closing by Purchaser, any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries), or any transferee of Purchaser or any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries), other than any such action that (1) is in the ordinary course of business, (2) is expressly permitted or contemplated by this Agreement, or (3B) the breach of any Tax-related covenant or other agreement of Seller contained in Section 5.02 or 8.05; and (ii) any Excluded Tax Liability; provided, however, that, in each case, Seller is not required to ~~be taken in order~~ satisfy any claim under this Section 10.03(a) to ~~comply with applicable Law or~~ the extent that (A) the Tax arises as a result of a change in ~~applicable Law (a “Purchaser~~ any Tax ~~Act”)~~law, including any increase in the rates of Tax, announced after the date of this Agreement, (B) ~~Taxes that were reflected, accrued~~ the liability for Tax is disclosed on Section 4.03 of the Seller Disclosure Schedule or ~~reserved for in the Final Closing Statement, Final Business Working Capital, or Final Business Net Cash,~~ (C) ~~Income Taxes to~~ the ~~extent that~~ Tax arises as a ~~Conveyed Subsidiary or~~ result of any ~~Subsidiary thereof had any Tax Assets as of the close of business on the Closing Date that were available, or would have been available but for their prior utilization~~ action taken by Purchaser or any of its Affiliates ~~(including~~ outside the ~~Conveyed Subsidiaries and their Subsidiaries~~ ordinary course on the Closing Date after the Closing) to offset or otherwise reduce the applicable Tax Liability in respect of such Income Taxes (except any Tax Asset reflected as an asset in the Final Closing Statement and taken into account in the calculation of the Final Business Working Capital or the Final Business Net Cash), or (D) Taxes for which Purchaser Parent is responsible under Section 6.5(d)(ii). (iib) ~~Subject to Section 6.5(d)(v), from~~ From and after the Closing, Purchaser ~~Parent~~ shall indemnify Seller against and hold Seller harmless ~~the Purchaser~~ from (i) any Transfer Tax ~~Indemnified Parties from and against all liability, without duplication, for (1) all Taxes~~ liability of Purchaser ~~Parent and its Affiliates~~ imposed pursuant to Section 8.06(a); (~~other than Purchaser and its Subsidiaries~~ii) ~~for~~ any ~~Tax period (other than Transfer Taxes and VAT for which~~ Losses suffered or incurred by Seller ~~Parent is responsible hereunder), (2) Taxes of Purchaser and its Subsidiaries (other than~~ to the Conveyed Subsidiaries and their Subsidiaries) for any Pre-Closing Tax Period, (3) Taxes of any Person for a Pre-Closing Tax Period for which Purchaser (or any Subsidiary thereof other than any Conveyed Subsidiaries and their Subsidiaries) is liable under Treasury Regulation Section 1.1502-6 (or a similar provision of state, local or foreign Law), or as a transferee or successor or by Contract (other than Contracts that do not relate primarily to Taxes), (4) Taxes extent arising ~~out of or resulting~~ from ~~any~~ the breach of any covenant or other agreement of Purchaser ~~Parent, Purchaser or their respective Affiliates~~ contained in ~~this Agreement,~~ Section 8.06; and (5) Transfer Taxes for which Purchaser Parent is responsible under Section 6.5(j), (6) Taxes arising from any breach of any representation or warranty in Section 5.17(k), (7) Taxes for a Pre-Closing Tax Period imposed on (xiii) any settlement of any intercompany accounts of Purchaser or any Subsidiary of Purchaser, on the one hand, and Purchaser Parent or any Subsidiary of Purchaser Parent (other than Purchaser and its Subsidiaries), on the other hand, pursuant to Section 6.7 or (y) any transaction or step forming part of the Purchaser Internal Restructurings, (8) Taxes required to be deducted or withheld with respect to any amounts payable to Purchaser Parent pursuant to Section 2.8 or Section 2.9, including any penalties imposed on Purchaser as a result of Purchaser’s failure to deduct or withhold any such amounts, (9) Taxes arising as a result of Purchaser or any Subsidiary of Purchaser (other than any Conveyed Subsidiary or a Subsidiary thereof) at any time ceasing to be a member of a group for the purposes of any Tax, of which group Purchaser Parent or any Subsidiary of Purchaser Parent (other than Purchaser or any Subsidiary of Purchaser) is or was also a member and (10) any costs and expenses, including reasonable legal and accounting fees and expenses, attributable to any item described in clauses (1) through (9) (any such Taxes for which Purchaser Parent is responsible pursuant to this Section 6.5(d)(ii), subject relating to the ~~following proviso, “Purchaser Parent Indemnified Taxes”); provided~~ Acquired Assets that Purchaser Parent shall not be required to indemnify or hold harmless any Purchaser Tax Indemnified Party from and against any liability for (A) Taxes attributable to any action taken after the Closing by Seller Parent or any of its Affiliates, other than any such action that (1) is in the ordinary course of business, (2) is expressly permitted or contemplated by this Agreement, or (3) is required to be taken in order to comply with applicable Law or as a result of a change in applicable Law (a “Seller Tax Act”), (B) Taxes that were reflected, accrued or reserved for in the Final Closing Statement, Final Purchaser Working Capital or the Final Purchaser Net Cash, (C) Income Taxes to the extent that Purchaser or any Subsidiary thereof had any Tax Assets as of the close of business on the Closing Date that were available, or would have been available but for their prior utilization by Purchaser or any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries after the Closing), to offset or otherwise reduce the applicable Tax Liability in respect of such Income Taxes (except any Tax Asset reflected as an asset in the Final Closing Statement and taken into account in the calculation of the Final Purchaser Working Capital or the Final Purchaser Net Cash), or (D) Taxes for which Seller Parent is responsible under Section 6.5(d)(i)are Assumed Liabilities. (~~iii~~c) To the extent permitted or required by applicable Law, the taxable year of each of the Conveyed Subsidiaries and their Subsidiaries and any Subsidiary of Purchaser that includes the Closing Date shall be treated as closing on (and including) the Closing Date. Otherwise, for purposes of this Agreement, in the case of any Straddle Period: (A) Property Taxes allocable to the Pre-Closing Tax Period shall be computed based upon the ratio of the number of days in the Pre-Closing Tax Period to the number of days in the entire Straddle Period; and (B) Taxes (other than Property Taxes) allocable to the Pre-Closing Tax Period shall be computed as if such Tax period ended as of the close of business on the Closing Date and, in the case of any Taxes of Conveyed Subsidiaries (and their Subsidiaries) and Seller Parent, or in the case of any Taxes of Purchaser Parent and Purchaser (and their Subsidiaries prior to the Closing), in each case attributable to the ownership of any equity interest in any partnership or other “flow through” entity for tax purposes (including of any “controlled foreign corporation,” as defined under the Code) as if the Tax period of such partnership or other “flow through” entity ended as of the close of business on the Closing Date with the Taxes of such entity for the Pre-Closing Tax Period deemed to include any Taxes on the allocable income of such entity in respect of such Tax period; provided that exemptions, allowances or deductions that are calculated on an annual basis (including depreciation and amortization deductions) shall be allocated between the period ending on the Closing Date and the period beginning after the Closing Date in proportion to the number of days in each period. (iv) Any claim for indemnification under this Section 6.5(d) shall be made in writing upon the party from whom indemnification is sought, and shall specify in reasonable detail the basis for such claim. Any indemnity payment ~~required~~ to be made ~~pursuant to this Section 6.5(d)~~ hereunder shall be ~~made~~ paid within ~~thirty~~ ten (3010) days after the indemnified party makes written demand upon the indemnifying party, but in no case earlier than five (5) ~~Business Days~~ business days prior to the date on which the relevant Taxes (including any estimated Tax payments) are required to be paid to the ~~applicable~~ relevant Taxing ~~Authority~~authority. (v) With respect to any Taxes suffered or incurred by any Conveyed Subsidiary (or any Subsidiary thereof) that was not wholly owned by Seller Parent (directly or indirectly) as of immediately prior to the Closing, the indemnification obligations of Seller Parent pursuant to Section 6.5(d)(i) in respect of such Taxes (or related costs and expenses) shall in no event exceed an amount equal to (A) the amount of such Taxes (or related costs and expenses) for which the Purchaser Tax Indemnified Parties would otherwise be entitled to indemnification pursuant to Section 6.5(d), as if such Conveyed Subsidiary (or any Subsidiary thereof) were wholly owned by Seller Parent, multiplied by (B) the direct and indirect percentage ownership of Seller Parent of such Conveyed Subsidiary (or Subsidiary thereof) as of immediately prior to the Closing. With respect to any Taxes suffered or incurred by any Subsidiary of Purchaser Parent (including Purchaser and its Subsidiaries) that was not wholly owned by Purchaser Parent (directly or indirectly) as of immediately prior to the Closing, the indemnification obligations of Purchaser Parent pursuant to Section 6.5(d)(ii) in respect of such Taxes (or related costs and expenses) shall in no event exceed an amount equal to (A) the amount of such Taxes (or related costs and expenses) for which the Purchaser Tax Indemnified Parties would otherwise be entitled to indemnification pursuant to Section 6.5(d), as if such Subsidiary were wholly owned by Purchaser Parent, multiplied by (B) the direct and indirect percentage ownership of Purchaser Parent of such Subsidiary as of immediately prior to the Closing. (vi) Without duplication to any other amounts paid pursuant to this Section 6.5: (A) Within thirty (30) days following the filing of any Income Tax Return for any Conveyed Subsidiary (or any Subsidiary thereof), on the one hand, or Purchaser (or any Subsidiary thereof, other than the Conveyed Subsidiaries and their Subsidiaries), on the other hand, for any Pre-Closing Tax Period or for any Straddle Period, Seller Parent or Purchaser Parent shall (or Purchaser Parent shall cause Purchaser to) prepare a statement showing (i) the amount of Income Taxes shown as due on such filed Income Tax Return with respect to the relevant Pre-Closing Tax Period or the portion of any Straddle Period ending on and including the Closing Date (the “Final Pre-Closing Income Tax Amount”) and (ii) the amount of the Seller Accrued Income Taxes or Purchaser Accrued Income Taxes, as applicable, attributable to such Income Tax Return as reflected on the Final Closing Statement (the “Pre-Closing Income Tax Amount”) and deliver such statement to Seller Parent and Purchaser Parent, as applicable. Purchaser Parent or Seller Parent, as applicable, shall have a period of fifteen (15) Business Days to provide comments to a schedule prepared (or caused to be prepared) by Seller Parent or Purchaser Parent, respectively. If Purchaser Parent or Seller Parent, as applicable, do not provide any comments to Seller Parent or Purchaser Parent, respectively, during such period, the statement as so prepared shall be final and binding. (B) In the event the Final Pre-Closing Income Tax Amount with respect to any Income Tax Return is less than the amount of the Pre-Closing Income Tax Amount attributable to such Income Tax Return that was included on the Final Closing Statement, the Purchaser shall within five (5) Business Days following the finalization of the Final Pre-Closing Income Tax Amount hereunder (i) pay to Seller Parent the amount of such difference with respect to a Conveyed Subsidiary and their Subsidiaries and (ii) pay to Purchaser Parent the amount of such difference with respect to Purchaser and its Subsidiaries. (vii) The Parties shall use reasonable best efforts to structure any indemnity payment, true-up payment, or payment in respect of Tax Benefits made by any Party pursuant to this Agreement (including pursuant to this Section 6.5, Section 6.6 and Article VII) and any payment made by Purchaser Parent to Purchaser pursuant to Section 2.8 or Section 2.9 in the manner set forth in Clause 10 of the Structuring Considerations Agreement. The Parties shall use reasonable best efforts to structure as a special dividend any payment made by Purchaser to Purchaser Parent pursuant to Section 2.8, Section 2.9 or this Section 6.5.

Appears in 2 contracts

Sources: Asset Purchase Agreement, Asset Purchase Agreement (Seattle Genetics Inc /Wa)

Tax Indemnification. (ia) ~~Subject~~ The Stockholders, severally (but not jointly) in proportion to ~~Section 6.5(d)(v)~~their respective ownership of Company Capital Stock, ~~from and after the Closing, Seller Parent agrees to~~ shall indemnify and hold harmless ~~Purchaser~~ the Acquiror Indemnified Parties from and against any and all Damages in respect of (i) all Taxes of the Company and its Subsidiaries (~~including the Conveyed Subsidiaries and their Subsidiaries after~~ A) for any taxable period ending on or before the Closing Date, and (B) for the portion of any Straddle Period (~~collectively,~~ as defined below) ending on the ~~“Purchaser Tax Indemnified Parties”~~Closing Date (determined as provided in Section 6.2(d)); (ii) ~~from and against~~ all ~~liability, without duplication, for (1)~~ Taxes attributable to any inclusion under Section 951 of the ~~Conveyed Subsidiaries and their Subsidiaries for any Pre-Closing Tax Period (including any Taxes payable in respect of an election under Section 965(h)~~ Code by Acquiror or its Affiliates at the end of the ~~Code), (2) Taxes~~ taxable year of ~~any Seller (other than any Transfer Taxes and VAT for which Purchaser is responsible hereunder) including, Taxes (other than Taxes~~ a Subsidiary of the ~~Conveyed Subsidiaries and their Subsidiaries) imposed with respect to,~~ Company that includes the Closing Date arising out of any income accrued by such Subsidiary on or ~~relating~~ prior to the ~~Purchased Assets~~ Closing Date; (iii) all Taxes imposed on any member of a consolidated, combined, unitary or similar group of which any of the ~~Business for~~ Company or its Subsidiaries is or was a ~~Pre-~~member on or prior to the Closing ~~Tax Period~~Date, ~~(3) Taxes~~ by reason of the liability of any ~~Person (other than~~ of the ~~Conveyed~~ Company or its Subsidiaries ~~and their Subsidiaries) for a Pre-Closing Tax Period for which any Conveyed Subsidiary (or any Subsidiary thereof) is liable under~~ pursuant to Treasury Regulation Section 1.1502-6 6(a) (or a any predecessor or successor thereof or any analogous or similar provision of under state, local or foreign Law); and (iv) all Taxes required to be paid by the Stockholders pursuant to Section 6.7 hereof. (b) The Parties agree that any and all indemnification obligations hereunder of the Stockholders made pursuant to Section 6.1(a) shall be satisfied first from the available amount of the Indemnity Escrow Fund then on deposit with the Escrow Agent. If and only if the Indemnity Escrow Fund is exhausted or is otherwise unavailable, then the Stockholders, severally (but not jointly) in proportion to their respective ownership of Company Capital Stock, shall be liable to the Acquiror Indemnified Parties for all indemnification obligations pursuant to Section 6.1(a). (c) Any refunds of Taxes with respect to the Company or ~~as a transferee~~ its Subsidiaries that are paid or ~~successor or by Contract (other than Contracts that do not relate primarily~~ credited to ~~Taxes)~~the Acquiror, ~~(4) Taxes arising out of or resulting from any breach of any covenant or agreement of Seller Parent~~ the Company, or any of its Subsidiaries or Affiliates ~~contained in this Agreement, (5) Taxes for a Pre-Closing Tax Period imposed~~ and that relate to taxable periods ending on ~~(x) any transaction effected pursuant~~ or prior to Section 2.3(b), (y) any settlement of any intercompany accounts of Seller Parent or its Subsidiaries pursuant to Section 6.7, or (z) any transaction or step forming part of the Seller Internal Restructurings, (6) Transfer Taxes for which Seller Parent is responsible under Section 6.5(j), (7) Taxes required to be deducted or withheld with respect to the payment of the Purchase Consideration or any amounts payable to Seller Parent pursuant to Section 2.8 or Section 2.9, including any penalties imposed on Purchaser as a result of Purchaser’s failure to deduct or withhold any such amounts that Purchaser (or a Purchaser Designated Affiliate) was permitted to withhold under Section 2.10 (in each case, subject to Purchaser’s compliance with the notice and cooperation requirements of Section 2.10 and except for any such Taxes (and any related penalties) required to be deducted or withheld solely as a result of any assignment by Purchaser or its Affiliates for which Purchaser is responsible pursuant to Section 10.3), (8) Taxes arising from any breach of any representation or warranty contained in Section 4.16(k), (9) Taxes arising as a result of any Conveyed Subsidiary or any Subsidiary of any Conveyed Subsidiary at any time ceasing to be a member of a group for the purposes of any Tax, of which group Seller Parent or any Subsidiary of Seller Parent is or was also a member and (10) any costs and expenses, including reasonable legal and accounting fees and expenses, attributable to any item described in clauses (1) through (9) (any such Taxes for which Seller Parent is responsible pursuant to this Section 6.5(d)(i), subject to the following proviso, “Seller Indemnified Taxes”); provided that Seller Parent shall not be required to indemnify or hold harmless any Purchaser Tax Indemnified Party from and against any liability pursuant to this Section 6.5(d)(i) for (A) Taxes attributable to any action taken after the Closing by Purchaser, any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries), or any transferee of Purchaser or any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries), other than any such action that (1) is in the ordinary course of business, (2) is expressly permitted or contemplated by this Agreement, or (3) is required to be taken in order to comply with applicable Law or as a result of a change in applicable Law (a “Purchaser Tax Act”), (B) Taxes that were reflected, accrued or reserved for in the Final Closing Statement, Final Business Working Capital, or Final Business Net Cash, (C) Income Taxes to the extent that a Conveyed Subsidiary or any Subsidiary thereof had any Tax Assets as of the close of business on the Closing Date that were available, or would have been available but for their prior utilization by Purchaser or any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries after the Closing) to offset or otherwise reduce the applicable Tax Liability in respect of such Income Taxes (except any Tax Asset reflected as an asset in the Final Closing Statement and taken into account in the calculation of the Final Business Working Capital or the Final Business Net Cash), or (D) Taxes for which Purchaser Parent is responsible under Section 6.5(d)(ii). (ii) Subject to Section 6.5(d)(v), from and after the Closing, Purchaser Parent shall indemnify and hold harmless the Purchaser Tax Indemnified Parties from and against all liability, without duplication, for (1) all Taxes of Purchaser Parent and its Affiliates (other than Purchaser and its Subsidiaries) for any Tax period (other than Transfer Taxes and VAT for which Seller Parent is responsible hereunder), (2) Taxes of Purchaser and its Subsidiaries (other than the Conveyed Subsidiaries and their Subsidiaries) for any Pre-Closing Tax Period, (3) Taxes of any Person for a Pre-Closing Tax Period for which Purchaser (or any Subsidiary thereof other than any Conveyed Subsidiaries and their Subsidiaries) is liable under Treasury Regulation Section 1.1502-6 (or a similar provision of state, local or foreign Law), or as a transferee or successor or by Contract (other than Contracts that do not relate primarily to Taxes), (4) Taxes arising out of or resulting from any breach of any covenant or agreement of Purchaser Parent, Purchaser or their respective Affiliates contained in this Agreement, (5) Transfer Taxes for which Purchaser Parent is responsible under Section 6.5(j), (6) Taxes arising from any breach of any representation or warranty in Section 5.17(k), (7) Taxes for a Pre-Closing Tax Period imposed on (x) any settlement of any intercompany accounts of Purchaser or any Subsidiary of Purchaser, on the one hand, and Purchaser Parent or any Subsidiary of Purchaser Parent (other than Purchaser and its Subsidiaries), on the other hand, pursuant to Section 6.7 or (y) any transaction or step forming part of the Purchaser Internal Restructurings, (8) Taxes required to be deducted or withheld with respect to any amounts payable to Purchaser Parent pursuant to Section 2.8 or Section 2.9, including any penalties imposed on Purchaser as a result of Purchaser’s failure to deduct or withhold any such amounts, (9) Taxes arising as a result of Purchaser or any Subsidiary of Purchaser (other than any Conveyed Subsidiary or a Subsidiary thereof) at any time ceasing to be a member of a group for the purposes of any Tax, of which group Purchaser Parent or any Subsidiary of Purchaser Parent (other than Purchaser or any Subsidiary of Purchaser) is or was also a member and (10) any costs and expenses, including reasonable legal and accounting fees and expenses, attributable to any item described in clauses (1) through (9) (any such Taxes for which Purchaser Parent is responsible pursuant to this Section 6.5(d)(ii), subject to the following proviso, “Purchaser Parent Indemnified Taxes”); provided that Purchaser Parent shall not be required to indemnify or hold harmless any Purchaser Tax Indemnified Party from and against any liability for (A) Taxes attributable to any action taken after the Closing by Seller Parent or any of its Affiliates, other than any such action that (1) is in the ordinary course of business, (2) is expressly permitted or contemplated by this Agreement, or (3) is required to be taken in order to comply with applicable Law or as a result of a change in applicable Law (a “Seller Tax Act”), (B) Taxes that were reflected, accrued or reserved for in the Final Closing Statement, Final Purchaser Working Capital or the Final Purchaser Net Cash, (C) Income Taxes to the extent that Purchaser or any Subsidiary thereof had any Tax Assets as of the close of business on the Closing Date that were available, or would have been available but for their prior utilization by Purchaser or any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries after the Closing), to offset or otherwise reduce the applicable Tax Liability in respect of such Income Taxes (except any Tax Asset reflected as an asset in the Final Closing Statement and taken into account in the calculation of the Final Purchaser Working Capital or the Final Purchaser Net Cash), or (D) Taxes for which Seller Parent is responsible under Section 6.5(d)(i). (iii) To the extent permitted or required by applicable Law, the taxable year of each of the Conveyed Subsidiaries and their Subsidiaries and any Subsidiary of Purchaser that includes the Closing Date shall be treated as closing on (and including) the Closing Date. Otherwise, for purposes of this Agreement, in the case of any Straddle Period: (A) Property Taxes allocable to the Pre-Closing Tax Period shall be computed based upon the ratio of the number of days in the Pre-Closing Tax Period to the number of days in the entire Straddle Period; and (B) Taxes (other than Property Taxes) allocable to the Pre-Closing Tax Period shall be computed as if such Tax period ended as of the close of business on the Closing Date and, in the case of any Taxes of Conveyed Subsidiaries (and their Subsidiaries) and Seller Parent, or in the case of any Taxes of Purchaser Parent and Purchaser (and their Subsidiaries prior to the Closing), in each case attributable to the ownership of any equity interest in any partnership or other “flow through” entity for tax purposes (including of any “controlled foreign corporation,” as defined under the Code) as if the Tax period of such partnership or other “flow through” entity ended as of the close of business on the Closing Date with the Taxes of such entity for the Pre-Closing Tax Period deemed to include any Taxes on the allocable income of such entity in respect of such Tax period; provided that exemptions, allowances or deductions that are calculated on an annual basis (including depreciation and amortization deductions) shall be allocated between the period ending on the Closing Date and the period beginning after the Closing Date in proportion to the number of days in each period. (iv) Any claim for indemnification under this Section 6.5(d) shall be made in writing upon the party from whom indemnification is sought, and shall specify in reasonable detail the basis for such claim. Any indemnity payment required to be made pursuant to this Section 6.5(d) shall be made within thirty (30) days after the indemnified party makes written demand upon the indemnifying party, but in no case earlier than five (5) Business Days prior to the date on which the relevant Taxes are required to be paid to the applicable Taxing Authority. (v) With respect to any Taxes suffered or incurred by any Conveyed Subsidiary (or any Subsidiary thereof) that was not wholly owned by Seller Parent (directly or indirectly) as of immediately prior to the Closing, the indemnification obligations of Seller Parent pursuant to Section 6.5(d)(i) in respect of such Taxes (or related costs and expenses) shall in no event exceed an amount equal to (A) the amount of such Taxes (or related costs and expenses) for which the Purchaser Tax Indemnified Parties would otherwise be entitled to indemnification pursuant to Section 6.5(d), as if such Conveyed Subsidiary (or any Subsidiary thereof) were wholly owned by Seller Parent, multiplied by (B) the direct and indirect percentage ownership of Seller Parent of such Conveyed Subsidiary (or Subsidiary thereof) as of immediately prior to the Closing. With respect to any Taxes suffered or incurred by any Subsidiary of Purchaser Parent (including Purchaser and its Subsidiaries) that was not wholly owned by Purchaser Parent (directly or indirectly) as of immediately prior to the Closing, the indemnification obligations of Purchaser Parent pursuant to Section 6.5(d)(ii) in respect of such Taxes (or related costs and expenses) shall in no event exceed an amount equal to (A) the amount of such Taxes (or related costs and expenses) for which the Purchaser Tax Indemnified Parties would otherwise be entitled to indemnification pursuant to Section 6.5(d), as if such Subsidiary were wholly owned by Purchaser Parent, multiplied by (B) the direct and indirect percentage ownership of Purchaser Parent of such Subsidiary as of immediately prior to the Closing. (vi) Without duplication to any other amounts paid pursuant to this Section 6.5: (A) Within thirty (30) days following the filing of any Income Tax Return for any Conveyed Subsidiary (or any Subsidiary thereof), on the one hand, or Purchaser (or any Subsidiary thereof, other than the Conveyed Subsidiaries and their Subsidiaries), on the other hand, for any Pre-Closing Tax Period or for any Straddle Period, Seller Parent or Purchaser Parent shall (or Purchaser Parent shall cause Purchaser to) prepare a statement showing (i) the amount of Income Taxes shown as due on such filed Income Tax Return with respect to the relevant Pre-Closing Tax Period or the portion of any Straddle Period ending on ~~and including~~ the Closing Date shall be for the account of the Stockholders other than (i) with respect to amounts that were shown as an asset on the ~~“Final Pre-~~Closing ~~Income Tax Amount”)~~ Balance Sheet and (ii) refunds attributable to the carryback of losses or other Tax attributes of the Company or any of its Subsidiaries from any period beginning after the Closing Date or the post-Closing portion of any Straddle Period. The Acquiror shall pay over to the Stockholder Representative any such refund or the amount of any such credit, net of any Tax or expense incurred in respect of the ~~Seller Accrued Income Taxes~~ receipt thereof or Purchaser Accrued Income Taxes, as applicable, attributable to such Income Tax Return as reflected on the Final Closing Statement (the “Pre-Closing Income Tax Amount”) and deliver such statement to Seller Parent and Purchaser Parent, as applicable. Purchaser Parent or Seller Parent, as applicable, shall have a period of entitlement thereto within fifteen (15) ~~Business Days to provide comments to a schedule prepared (~~days after receipt or caused to be prepared) by Seller Parent or Purchaser Parent, respectively. If Purchaser Parent or Seller Parent, as applicable, do not provide any comments to Seller Parent or Purchaser Parent, respectively, during such period, the statement as so prepared shall be final and bindingentitlement thereto. (B) In the event the Final Pre-Closing Income Tax Amount with respect to any Income Tax Return is less than the amount of the Pre-Closing Income Tax Amount attributable to such Income Tax Return that was included on the Final Closing Statement, the Purchaser shall within five (5) Business Days following the finalization of the Final Pre-Closing Income Tax Amount hereunder (i) pay to Seller Parent the amount of such difference with respect to a Conveyed Subsidiary and their Subsidiaries and (ii) pay to Purchaser Parent the amount of such difference with respect to Purchaser and its Subsidiaries. (vii) The Parties shall use reasonable best efforts to structure any indemnity payment, true-up payment, or payment in respect of Tax Benefits made by any Party pursuant to this Agreement (including pursuant to this Section 6.5, Section 6.6 and Article VII) and any payment made by Purchaser Parent to Purchaser pursuant to Section 2.8 or Section 2.9 in the manner set forth in Clause 10 of the Structuring Considerations Agreement. The Parties shall use reasonable best efforts to structure as a special dividend any payment made by Purchaser to Purchaser Parent pursuant to Section 2.8, Section 2.9 or this Section 6.5.

Appears in 2 contracts

Sources: Agreement and Plan of Merger (STR Holdings LLC), Agreement and Plan of Merger (STR Holdings (New) LLC)

Tax Indemnification. (a) ▇▇. ▇▇▇▇▇▇ and Seller hereby, jointly and severally, indemnify each Buyer Indemnified Person (which term for purposes of this Agreement shall, following the Closing, include the Company) against and agree to hold each Buyer Indemnified Person harmless from any (u) Tax of the Company described in clause (i) Subject to Section 6.5(d)(v), from and after the Closing, Seller Parent agrees to indemnify and hold harmless Purchaser and its Subsidiaries (including the Conveyed Subsidiaries and their Subsidiaries after the Closing Date) (collectively, the “Purchaser Tax Indemnified Parties”) from and against all liability, without duplication, for (1) Taxes of the ~~Conveyed Subsidiaries and their Subsidiaries for any Pre-Closing~~ definition of Tax Period (including any Taxes payable in respect of an election under Section 965(h) of the Code), (2) Taxes of any Seller (other than any Transfer Taxes and VAT for which Purchaser is responsible hereunder) including, Taxes (other than Taxes of the Conveyed Subsidiaries and their Subsidiaries) imposed with respect to, arising out of or relating related to ~~the Purchased Assets or the Business for~~ a Pre-Closing Tax Period, (3v) ~~Taxes~~ Tax described in clause (ii) or (iii) of the definition of Tax, (w) Tax of the Company resulting from a breach of the provisions of Section 3.13 (x) Tax resulting from the application of Section 280G of the Code to any payment made pursuant to this Agreement or to any payment made as a result of, or in connection with, any transaction contemplated by this Agreement, (y) Tax of the Company resulting from a termination of any ~~Person~~ Tax Sharing Agreement pursuant to Section 5.05(d) and (~~other than the Conveyed Subsidiaries~~ z) any liabilities, costs, expenses (including, without limitation, reasonable expenses of investigation and their Subsidiaries) for a Pre-Closing Tax Period for which any Conveyed Subsidiary (or any Subsidiary thereof) is liable under Treasury Regulation Section 1.1502-6 (or a similar provision of state, local or foreign Lawattorneys’ fees and expenses), losses, damages, assessments, settlements or ~~as a transferee or successor or by Contract (other than Contracts that do not relate primarily to Taxes), (4) Taxes~~ judgments arising out of or ~~resulting from any breach~~ incident to the imposition, assessment or assertion of any ~~covenant or agreement of Seller Parent or any of its Affiliates contained~~ Tax described in ~~this Agreement~~(u), (~~5) Taxes for a Pre-Closing Tax Period imposed on~~ v), (w), (x) ~~any transaction effected pursuant to Section 2.3(b~~or (y), (the sum of (v), (w), (x), (y) ~~any settlement of any intercompany accounts of Seller Parent or its Subsidiaries pursuant to Section 6.7, or~~ and (z) ~~any transaction or step forming part of the Seller Internal Restructurings, (6) Transfer Taxes for which Seller Parent is responsible under Section 6.5(j), (7) Taxes required~~ being referred to be deducted or withheld with respect to the payment of the Purchase Consideration or any amounts payable to Seller Parent pursuant to Section 2.8 or Section 2.9, including any penalties imposed on Purchaser herein as a result of Purchaser’s failure to deduct or withhold any such amounts that Purchaser (or a Purchaser Designated Affiliate) was permitted to withhold under Section 2.10 (in each case, subject to Purchaser’s compliance with the notice and cooperation requirements of Section 2.10 and except for any such Taxes (and any related penalties) required to be deducted or withheld solely as a result of any assignment by Purchaser or its Affiliates for which Purchaser is responsible pursuant to Section 10.3), (8) Taxes arising from any breach of any representation or warranty contained in Section 4.16(k), (9) Taxes arising as a result of any Conveyed Subsidiary or any Subsidiary of any Conveyed Subsidiary at any time ceasing to be a member of a group for the purposes of any Tax, of which group Seller Parent or any Subsidiary of Seller Parent is or was also a member and (10) any costs and expenses, including reasonable legal and accounting fees and expenses, attributable to any item described in clauses (1) through (9) (any such Taxes for which Seller Parent is responsible pursuant to this Section 6.5(d)(i), subject to the following proviso, “~~Seller Indemnified Taxes~~Tax Loss”); provided that neither ▇▇. ▇▇▇▇▇▇ nor Seller ~~Parent~~ shall ~~not be required to indemnify or hold harmless any Purchaser Tax Indemnified Party from and against~~ have any liability ~~pursuant to this Section 6.5(d)(i)~~ for ~~(A) Taxes attributable to~~ the payment of any action taken after the Closing by Purchaser, any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries), or any transferee of Purchaser or any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries), other than any such action that (1) is in the ordinary course of business, (2) is expressly permitted or contemplated by this Agreement, or (3) is required to be taken in order to comply with applicable Law or as a result of a change in applicable Law (a “Purchaser Tax Act”), (B) Taxes that were reflected, accrued or reserved for in the Final Closing Statement, Final Business Working Capital, or Final Business Net Cash, (C) Income Taxes to the extent that a Conveyed Subsidiary or any Subsidiary thereof had any Tax Assets as of the close of business on the Closing Date that were available, or would have been available but for their prior utilization by Purchaser or any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries after the Closing) to offset or otherwise reduce the applicable Tax Liability ad valorem real property tax in respect of ~~such Income Taxes (except~~ the Land in respect of any ~~Tax Asset reflected as an asset in the Final Closing Statement and taken into account in the calculation of the Final Business Working Capital or the Final Business Net Cash)~~period beginning after December 31, ~~or (D) Taxes for which Purchaser Parent is responsible under Section 6.5(d)(ii)~~2005. (iib) Subject to Section 6.5(d)(v), from and after the Closing, Purchaser Parent shall indemnify and hold harmless the Purchaser Tax Indemnified Parties from and against all liability, without duplication, for (1) all Taxes of Purchaser Parent and its Affiliates (other than Purchaser and its Subsidiaries) for any Tax period (other than Transfer Taxes and VAT for which Seller Parent is responsible hereunder), (2) Taxes of Purchaser and its Subsidiaries (other than the Conveyed Subsidiaries and their Subsidiaries) for any Pre-Closing Tax Period, (3) Taxes of any Person for a Pre-Closing Tax Period for which Purchaser (or any Subsidiary thereof other than any Conveyed Subsidiaries and their Subsidiaries) is liable under Treasury Regulation Section 1.1502-6 (or a similar provision of state, local or foreign Law), or as a transferee or successor or by Contract (other than Contracts that do not relate primarily to Taxes), (4) Taxes arising out of or resulting from any breach of any covenant or agreement of Purchaser Parent, Purchaser or their respective Affiliates contained in this Agreement, (5) Transfer Taxes for which Purchaser Parent is responsible under Section 6.5(j), (6) Taxes arising from any breach of any representation or warranty in Section 5.17(k), (7) Taxes for a Pre-Closing Tax Period imposed on (x) any settlement of any intercompany accounts of Purchaser or any Subsidiary of Purchaser, on the one hand, and Purchaser Parent or any Subsidiary of Purchaser Parent (other than Purchaser and its Subsidiaries), on the other hand, pursuant to Section 6.7 or (y) any transaction or step forming part of the Purchaser Internal Restructurings, (8) Taxes required to be deducted or withheld with respect to any amounts payable to Purchaser Parent pursuant to Section 2.8 or Section 2.9, including any penalties imposed on Purchaser as a result of Purchaser’s failure to deduct or withhold any such amounts, (9) Taxes arising as a result of Purchaser or any Subsidiary of Purchaser (other than any Conveyed Subsidiary or a Subsidiary thereof) at any time ceasing to be a member of a group for the purposes of any Tax, of which group Purchaser Parent or any Subsidiary of Purchaser Parent (other than Purchaser or any Subsidiary of Purchaser) is or was also a member and (10) any costs and expenses, including reasonable legal and accounting fees and expenses, attributable to any item described in clauses (1) through (9) (any such Taxes for which Purchaser Parent is responsible pursuant to this Section 6.5(d)(ii), subject to the following proviso, “Purchaser Parent Indemnified Taxes”); provided that Purchaser Parent shall not be required to indemnify or hold harmless any Purchaser Tax Indemnified Party from and against any liability for (A) Taxes attributable to any action taken after the Closing by Seller Parent or any of its Affiliates, other than any such action that (1) is in the ordinary course of business, (2) is expressly permitted or contemplated by this Agreement, or (3) is required to be taken in order to comply with applicable Law or as a result of a change in applicable Law (a “Seller Tax Act”), (B) Taxes that were reflected, accrued or reserved for in the Final Closing Statement, Final Purchaser Working Capital or the Final Purchaser Net Cash, (C) Income Taxes to the extent that Purchaser or any Subsidiary thereof had any Tax Assets as of the close of business on the Closing Date that were available, or would have been available but for their prior utilization by Purchaser or any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries after the Closing), to offset or otherwise reduce the applicable Tax Liability in respect of such Income Taxes (except any Tax Asset reflected as an asset in the Final Closing Statement and taken into account in the calculation of the Final Purchaser Working Capital or the Final Purchaser Net Cash), or (D) Taxes for which Seller Parent is responsible under Section 6.5(d)(i). (iii) To the extent permitted or required by applicable Law, the taxable year of each of the Conveyed Subsidiaries and their Subsidiaries and any Subsidiary of Purchaser that includes the Closing Date shall be treated as closing on (and including) the Closing Date. Otherwise, for For purposes of this ~~Agreement~~Section 9.03(a), in the case of any ~~Straddle Period:~~ Taxes that are imposed on a periodic basis and are payable for a Tax period that includes (Abut does not end on) ~~Property Taxes allocable~~ the Closing Date, the portion of such Tax related to the ~~Pre-~~portion of such Tax period ending on and including the Closing ~~Tax Period~~ Date shall ~~be computed~~ (x) in the case of any Taxes other than gross receipts, sales or use Taxes and Taxes based upon or related to income, be deemed to be the ~~ratio~~ amount of such Tax for the entire Tax period multiplied by a fraction the numerator of which is the number of days in the ~~Pre-~~Tax period ending on and including the Closing ~~Tax Period to~~ Date and the denominator of which is the number of days in the entire ~~Straddle Period; and~~ Tax period, and (By) ~~Taxes (other than Property Taxes) allocable to the Pre-Closing Tax Period shall be computed as if such Tax period ended as of the close of business on the Closing Date and,~~ in the case of any ~~Taxes~~ Tax based upon or related to income and any gross receipts, sales or use Tax, be deemed equal to the amount which would be payable if the relevant Tax period ended on and included the Closing Date. (c) Not later than 30 days after receipt by ▇▇. ▇▇▇▇▇▇ or Seller of ~~Conveyed Subsidiaries (~~written notice from Buyer stating that any Tax Loss has been incurred by a Buyer Indemnified Person and ~~their Subsidiaries)~~ the amount thereof and of the indemnity payment requested, ▇▇. ▇▇▇▇▇▇ and Seller ~~Parent, or in~~ shall discharge their obligation to indemnify the ~~case of any Taxes of Purchaser Parent and Purchaser (and their Subsidiaries prior~~ Buyer Indemnified Person against such Tax Loss by paying to Buyer an amount equal to the Closing), in each case attributable to the ownership of any equity interest in any partnership or other “flow through” entity for tax purposes (including of any “controlled foreign corporation,” as defined under the Code) as if the Tax period of such partnership or other “flow through” entity ended as of the close of business on the Closing Date with the Taxes of such entity for the Pre-Closing Tax Period deemed to include any Taxes on the allocable income of such entity in respect amount of such Tax ~~period; provided that exemptions~~Loss. Notwithstanding the foregoing, ~~allowances~~ if Buyer provides ▇▇. ▇▇▇▇▇▇ or deductions that are calculated on an annual basis (including depreciation and amortization deductions) shall be allocated between the period ending on the Closing Date and the period beginning after the Closing Date in proportion to the number Seller with written notice of a Tax Loss at least 30 days in each period. (iv) Any claim for indemnification under this Section 6.5(d) shall be made in writing upon the party from whom indemnification is sought, and shall specify in reasonable detail the basis for such claim. Any indemnity payment required to be made pursuant to this Section 6.5(d) shall be made within thirty (30) days after the indemnified party makes written demand upon the indemnifying party, but in no case earlier than five (5) Business Days prior to the date on which the relevant ~~Taxes are~~ Tax Loss is required to be paid by any Buyer Indemnified Person, within that 30-day period ▇▇. ▇▇▇▇▇▇ and Seller shall discharge their obligation to indemnify the Buyer Indemnified Person against such Tax Loss by making payments to the ~~applicable~~ relevant Taxing ~~Authority. (v) With respect to any Taxes suffered~~ Authority or ~~incurred~~ Buyer, as directed by ~~any Conveyed Subsidiary (or any Subsidiary thereof) that was not wholly owned by Seller Parent (directly or indirectly) as of immediately prior to the Closing~~Buyer, ~~the indemnification obligations of Seller Parent pursuant to Section 6.5(d)(i)~~ in ~~respect of such Taxes (or related costs and expenses) shall in no event exceed~~ an aggregate amount equal to ~~(A)~~ the amount of such ~~Taxes~~ Tax Loss. The payment by a Buyer Indemnified Person of any Tax Loss shall not relieve ▇▇. ▇▇▇▇▇▇ or Seller of their obligations under this Section 9.03. (d) Buyer agrees to give prompt notice to ▇▇. ▇▇▇▇▇▇ and Seller of any Tax Loss or ~~related costs and expenses) for which~~ the ~~Purchaser Tax Indemnified Parties would otherwise be entitled to indemnification pursuant to Section 6.5(d)~~assertion of any claim, ~~as if such Conveyed Subsidiary (~~or the commencement of any ~~Subsidiary thereof) were wholly owned by Seller Parent~~suit, ~~multiplied by (B) the direct and indirect percentage ownership of Seller Parent of such Conveyed Subsidiary (~~action or Subsidiary thereof) as of immediately prior to the Closing. With respect to any Taxes suffered or incurred by any Subsidiary of Purchaser Parent (including Purchaser and its Subsidiaries) that was not wholly owned by Purchaser Parent (directly or indirectly) as of immediately prior to the Closing, the indemnification obligations of Purchaser Parent pursuant to Section 6.5(d)(ii) proceeding in respect of which indemnity may be sought hereunder which Buyer deems to be within the ambit of this Section 9.03 (specifying with reasonable particularity the basis therefor). Buyer shall give ▇▇. ▇▇▇▇▇▇ and Seller such ~~Taxes~~ information with respect thereto as either or them may reasonably request. Each of ▇▇. ▇▇▇▇▇▇ and Seller may, at his or its own expense, participate in the defense of such suit, action or proceeding, it being understood that all determinations as to the ultimate conduct of such action, suit or proceeding (~~or related costs and expenses~~including the settlement thereof) shall be in no event exceed an amount equal to (A) the amount of such Taxes (or related costs and expenses) for which the Purchaser Tax Indemnified Parties would otherwise be entitled to indemnification pursuant to Section 6.5(d), as if such Subsidiary were wholly owned by Purchaser Parent, multiplied by (B) the direct and indirect percentage ownership of Purchaser Parent of such Subsidiary as of immediately prior to the ClosingBuyer’s sole discretion. (vie) ~~Without duplication~~ Any claim of any Buyer Indemnified Person under this Section 9.03 may be made and enforced by Buyer on behalf of such Buyer Indemnified Person. (f) Disputes arising under Section 9.03 and not resolved by mutual agreement within 30 days shall be resolved by the Settlement Accountants within five days of the date on which the need to choose the Settlement Accountants arises. The Settlement Accountants shall resolve any ~~other amounts paid~~ disputed items within 30 days of having the item referred to it pursuant to ~~this Section 6.5: (A) Within thirty (30) days following~~ such procedures as it may require. The costs, fees and expenses of the ~~filing of any Income Tax Return for any Conveyed Subsidiary (or any Subsidiary thereof),~~ Settlement Accountants shall be borne equally by Buyer on the one ~~hand, or Purchaser (or any Subsidiary thereof, other than the Conveyed Subsidiaries~~ hand and ~~their Subsidiaries),~~ ▇▇. ▇▇▇▇▇▇ and Seller on the other hand, for any Pre-Closing Tax Period or for any Straddle Period, Seller Parent or Purchaser Parent shall (or Purchaser Parent shall cause Purchaser to) prepare a statement showing (i) the amount of Income Taxes shown as due on such filed Income Tax Return with respect to the relevant Pre-Closing Tax Period or the portion of any Straddle Period ending on and including the Closing Date (the “Final Pre-Closing Income Tax Amount”) and (ii) the amount of the Seller Accrued Income Taxes or Purchaser Accrued Income Taxes, as applicable, attributable to such Income Tax Return as reflected on the Final Closing Statement (the “Pre-Closing Income Tax Amount”) and deliver such statement to Seller Parent and Purchaser Parent, as applicable. Purchaser Parent or Seller Parent, as applicable, shall have a period of fifteen (15) Business Days to provide comments to a schedule prepared (or caused to be prepared) by Seller Parent or Purchaser Parent, respectively. If Purchaser Parent or Seller Parent, as applicable, do not provide any comments to Seller Parent or Purchaser Parent, respectively, during such period, the statement as so prepared shall be final and bindingother. (B) In the event the Final Pre-Closing Income Tax Amount with respect to any Income Tax Return is less than the amount of the Pre-Closing Income Tax Amount attributable to such Income Tax Return that was included on the Final Closing Statement, the Purchaser shall within five (5) Business Days following the finalization of the Final Pre-Closing Income Tax Amount hereunder (i) pay to Seller Parent the amount of such difference with respect to a Conveyed Subsidiary and their Subsidiaries and (ii) pay to Purchaser Parent the amount of such difference with respect to Purchaser and its Subsidiaries. (vii) The Parties shall use reasonable best efforts to structure any indemnity payment, true-up payment, or payment in respect of Tax Benefits made by any Party pursuant to this Agreement (including pursuant to this Section 6.5, Section 6.6 and Article VII) and any payment made by Purchaser Parent to Purchaser pursuant to Section 2.8 or Section 2.9 in the manner set forth in Clause 10 of the Structuring Considerations Agreement. The Parties shall use reasonable best efforts to structure as a special dividend any payment made by Purchaser to Purchaser Parent pursuant to Section 2.8, Section 2.9 or this Section 6.5.

Appears in 2 contracts

Sources: Purchase and Sale of Membership Interest (Florida East Coast Industries, Inc.), Purchase and Sale of Membership Interest (Florida East Coast Industries, Inc.)

Tax Indemnification. (ia) ~~Subject to Section 6.5(d)(v), from~~ From and ~~after the Closing, Seller Parent agrees to indemnify and hold harmless Purchaser and its Subsidiaries (including the Conveyed Subsidiaries and their Subsidiaries~~ after the Closing Date~~) (collectively~~, the ~~“Purchaser~~ Diageo Tax ~~Indemnified Parties”)~~ Indemnitors shall pay or cause to be paid, and jointly and severally shall indemnify each General ▇▇▇▇▇ Tax Indemnitee and protect, save and hold each General ▇▇▇▇▇ Tax Indemnitee harmless from and against ~~all liability, without duplication, for~~ the following Taxes: (1i) ~~Taxes of the Conveyed Subsidiaries and their Subsidiaries for any Pre-Closing~~ Any Tax Period (including any Taxes payable in respect of an election under Section 965(h) of the Code), (2) Taxes of any Seller (other than any Transfer Taxes and VAT for which Purchaser is responsible hereunder) including, Taxes (other than Taxes of the Conveyed Subsidiaries and their Subsidiaries) imposed ~~with respect to, arising out of~~ upon or relating to Diageo or any of the ~~Purchased Assets or the Business~~ Continuing Affiliates for ~~a Pre-Closing~~ any period, including any such Tax ~~Period, (3) Taxes of any Person (other than the Conveyed Subsidiaries and their Subsidiaries) for a Pre-Closing Tax Period~~ for which any ~~Conveyed Subsidiary~~ of the Business Entities (or any Non-Controlled Foreign Entity or Subsidiary thereof) is may be liable (w) under ~~Treasury Regulation~~ Section 1.1502-6 of the Treasury Regulations (or a any similar provision of state, local or foreign ~~Law~~law), or (x) as a transferee or ~~successor or by Contract (other than Contracts that do not relate primarily to Taxes)~~successor, (4y) ~~Taxes arising out~~ by contract or (z) otherwise; A-44 <PAGE> (ii) Any Tax imposed upon or relating to any of the Business Entities for any Pre-Closing Period; and (iii) Any Tax imposed upon, relating to or resulting from ~~any breach of any covenant or agreement of Seller Parent or any of its Affiliates contained in this Agreement, (5) Taxes for a Pre-Closing Tax Period imposed on~~ (x) ~~any transaction effected pursuant~~ the Merger or the provisions of Section 2.13 or 2.14 hereof (except, in each case, to the extent set forth in Section ~~2.3(b~~7.3(b)(ii) below), (y) any ~~settlement~~ of ~~any intercompany accounts of Seller Parent or its Subsidiaries pursuant to Section 6.7,~~ the Subsidiary Purchases or (z) any ~~transaction or step forming part~~ restructuring undertaken in contemplation of the ~~Seller Internal Restructurings~~Merger or any of the Subsidiary Purchases. (b) From and after the Closing Date, ~~(6) Transfer Taxes for which Seller Parent is responsible under Section 6.5(j), (7) Taxes required~~ the General ▇▇▇▇▇ Tax Indemnitors shall pay or cause to be ~~deducted or withheld with respect to the payment of the Purchase Consideration or any amounts payable to Seller Parent pursuant to Section 2.8 or Section 2.9~~paid, including any penalties imposed on Purchaser as a result of Purchaser’s failure to deduct or withhold any such amounts that Purchaser (or a Purchaser Designated Affiliate) was permitted to withhold under Section 2.10 (in and jointly and severally shall indemnify each ~~case~~Diageo Tax Indemnitee and protect, ~~subject to Purchaser’s compliance with the notice~~ save and cooperation requirements of Section 2.10 and except for any such Taxes (and any related penalties) required to be deducted or withheld solely as a result of any assignment by Purchaser or its Affiliates for which Purchaser is responsible pursuant to Section 10.3), (8) Taxes arising from any breach of any representation or warranty contained in Section 4.16(k), (9) Taxes arising as a result of any Conveyed Subsidiary or any Subsidiary of any Conveyed Subsidiary at any time ceasing to be a member of a group for the purposes of any Tax, of which group Seller Parent or any Subsidiary of Seller Parent is or was also a member and (10) any costs and expenses, including reasonable legal and accounting fees and expenses, attributable to any item described in clauses (1) through (9) (any such Taxes for which Seller Parent is responsible pursuant to this Section 6.5(d)(i), subject to the following proviso, “Seller Indemnified Taxes”); provided that Seller Parent shall not be required to indemnify or hold each Diageo Tax Indemnitee harmless ~~any Purchaser Tax Indemnified Party~~ from and against any liability pursuant to this Section 6.5(d)(i) for (A) Taxes attributable to any action taken after the Closing by Purchaser, any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries), or any transferee of Purchaser or any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries), other than any such action that (1) is in the ordinary course of business, (2) is expressly permitted or contemplated by this Agreement, or (3) is required to be taken in order to comply with applicable Law or as a result of a change in applicable Law (a “Purchaser Tax Act”), (B) Taxes that were reflected, accrued or reserved for in the Final Closing Statement, Final Business Working Capital, or Final Business Net Cash, (C) Income Taxes to the extent that a Conveyed Subsidiary or any Subsidiary thereof had any Tax Assets as of the close of business on the Closing Date that were available, or would have been available but for their prior utilization by Purchaser or any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries after the Closing) to offset or otherwise reduce the applicable Tax Liability in respect of such Income Taxes (except any Tax Asset reflected as an asset in the Final Closing Statement and taken into account in the calculation of the Final Business Working Capital or the Final Business Net Cash), or (D) Taxes for which Purchaser Parent is responsible under Section 6.5(d)(ii). (ii) Subject to Section 6.5(d)(v), from and after the Closing, Purchaser Parent shall indemnify and hold harmless the Purchaser Tax Indemnified Parties from and against all liability, without duplication, for (1) all Taxes of Purchaser Parent and its Affiliates (other than Purchaser and its Subsidiaries) for any Tax period (other than Transfer Taxes and VAT for which Seller Parent is responsible hereunder), (2) Taxes of Purchaser and its Subsidiaries (other than the Conveyed Subsidiaries and their Subsidiaries) for any Pre-Closing Tax Period, (3) Taxes of any Person for a Pre-Closing Tax Period for which Purchaser (or any Subsidiary thereof other than any Conveyed Subsidiaries and their Subsidiaries) is liable under Treasury Regulation Section 1.1502-6 (or a similar provision of state, local or foreign Law), or as a transferee or successor or by Contract (other than Contracts that do not relate primarily to Taxes), (4) Taxes arising out of or resulting from any breach of any covenant or agreement of Purchaser Parent, Purchaser or their respective Affiliates contained in this Agreement, (5) Transfer Taxes for which Purchaser Parent is responsible under Section 6.5(j), (6) Taxes arising from any breach of any representation or warranty in Section 5.17(k), (7) Taxes for a Pre-Closing Tax Period imposed on (x) any settlement of any intercompany accounts of Purchaser or any Subsidiary of Purchaser, on the one hand, and Purchaser Parent or any Subsidiary of Purchaser Parent (other than Purchaser and its Subsidiaries), on the other hand, pursuant to Section 6.7 or (y) any transaction or step forming part of the Purchaser Internal Restructurings, (8) Taxes required to be deducted or withheld with respect to any amounts payable to Purchaser Parent pursuant to Section 2.8 or Section 2.9, including any penalties imposed on Purchaser as a result of Purchaser’s failure to deduct or withhold any such amounts, (9) Taxes arising as a result of Purchaser or any Subsidiary of Purchaser (other than any Conveyed Subsidiary or a Subsidiary thereof) at any time ceasing to be a member of a group for the purposes of any Tax, of which group Purchaser Parent or any Subsidiary of Purchaser Parent (other than Purchaser or any Subsidiary of Purchaser) is or was also a member and (10) any costs and expenses, including reasonable legal and accounting fees and expenses, attributable to any item described in clauses (1) through (9) (any such Taxes for which Purchaser Parent is responsible pursuant to this Section 6.5(d)(ii), subject to the following ~~proviso, “Purchaser Parent Indemnified~~ Taxes”); provided that Purchaser Parent shall not be required to indemnify or hold harmless any Purchaser Tax Indemnified Party from and against any liability for (A) Taxes attributable to any action taken after the Closing by Seller Parent or any of its Affiliates, other than any such action that (1) is in the ordinary course of business, (2) is expressly permitted or contemplated by this Agreement, or (3) is required to be taken in order to comply with applicable Law or as a result of a change in applicable Law (a “Seller Tax Act”), (B) Taxes that were reflected, accrued or reserved for in the Final Closing Statement, Final Purchaser Working Capital or the Final Purchaser Net Cash, (C) Income Taxes to the extent that Purchaser or any Subsidiary thereof had any Tax Assets as of the close of business on the Closing Date that were available, or would have been available but for their prior utilization by Purchaser or any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries after the Closing), to offset or otherwise reduce the applicable Tax Liability in respect of such Income Taxes (except any Tax Asset reflected as an asset in the Final Closing Statement and taken into account in the calculation of the Final Purchaser Working Capital or the Final Purchaser Net Cash), or (D) Taxes for which Seller Parent is responsible under Section 6.5(d)(i). (iii) To the extent permitted or required by applicable Law, the taxable year of each of the Conveyed Subsidiaries and their Subsidiaries and any Subsidiary of Purchaser that includes the Closing Date shall be treated as closing on (and including) the Closing Date. Otherwise, for purposes of this Agreement, in the case of any Straddle Period: (Ai) ~~Property Taxes allocable~~ Any Tax imposed upon or relating to any of the ~~Pre~~Business Entities for any Post-Closing ~~Tax Period shall be computed based upon the ratio of the number of days in the Pre-Closing Tax Period to the number of days in the entire Straddle~~ Period; and (B) Taxes (other than Property Taxes) allocable to the Pre-Closing Tax Period shall be computed as if such Tax period ended as of the close of business on the Closing Date and, in the case of any Taxes of Conveyed Subsidiaries (and their Subsidiaries) and Seller Parent, or in the case of any Taxes of Purchaser Parent and Purchaser (and their Subsidiaries prior to the Closing), in each case attributable to the ownership of any equity interest in any partnership or other “flow through” entity for tax purposes (including of any “controlled foreign corporation,” as defined under the Code) as if the Tax period of such partnership or other “flow through” entity ended as of the close of business on the Closing Date with the Taxes of such entity for the Pre-Closing Tax Period deemed to include any Taxes on the allocable income of such entity in respect of such Tax period; provided that exemptions, allowances or deductions that are calculated on an annual basis (including depreciation and amortization deductions) shall be allocated between the period ending on the Closing Date and the period beginning after the Closing Date in proportion to the number of days in each period. (iv) Any claim for indemnification under this Section 6.5(d) shall be made in writing upon the party from whom indemnification is sought, and shall specify in reasonable detail the basis for such claim. Any indemnity payment required to be made pursuant to this Section 6.5(d) shall be made within thirty (30) days after the indemnified party makes written demand upon the indemnifying party, but in no case earlier than five (5) Business Days prior to the date on which the relevant Taxes are required to be paid to the applicable Taxing Authority. (v) With respect to any Taxes suffered or incurred by any Conveyed Subsidiary (or any Subsidiary thereof) that was not wholly owned by Seller Parent (directly or indirectly) as of immediately prior to the Closing, the indemnification obligations of Seller Parent pursuant to Section 6.5(d)(i) in respect of such Taxes (or related costs and expenses) shall in no event exceed an amount equal to (A) the amount of such Taxes (or related costs and expenses) for which the Purchaser Tax Indemnified Parties would otherwise be entitled to indemnification pursuant to Section 6.5(d), as if such Conveyed Subsidiary (or any Subsidiary thereof) were wholly owned by Seller Parent, multiplied by (B) the direct and indirect percentage ownership of Seller Parent of such Conveyed Subsidiary (or Subsidiary thereof) as of immediately prior to the Closing. With respect to any Taxes suffered or incurred by any Subsidiary of Purchaser Parent (including Purchaser and its Subsidiaries) that was not wholly owned by Purchaser Parent (directly or indirectly) as of immediately prior to the Closing, the indemnification obligations of Purchaser Parent pursuant to Section 6.5(d)(ii) in respect of such Taxes (or related costs and expenses) shall in no event exceed an amount equal to (A) the amount of such Taxes (or related costs and expenses) for which the Purchaser Tax Indemnified Parties would otherwise be entitled to indemnification pursuant to Section 6.5(d), as if such Subsidiary were wholly owned by Purchaser Parent, multiplied by (B) the direct and indirect percentage ownership of Purchaser Parent of such Subsidiary as of immediately prior to the Closing. (vi) Without duplication to any other amounts paid pursuant to this Section 6.5: (A) Within thirty (30) days following the filing of any Income Tax Return for any Conveyed Subsidiary (or any Subsidiary thereof), on the one hand, or Purchaser (or any Subsidiary thereof, other than the Conveyed Subsidiaries and their Subsidiaries), on the other hand, for any Pre-Closing Tax Period or for any Straddle Period, Seller Parent or Purchaser Parent shall (or Purchaser Parent shall cause Purchaser to) prepare a statement showing (i) the amount of Income Taxes shown as due on such filed Income Tax Return with respect to the relevant Pre-Closing Tax Period or the portion of any Straddle Period ending on and including the Closing Date (the “Final Pre-Closing Income Tax Amount”) and (ii) Any Tax imposed upon the ~~amount~~ Pillsbury Stockholder on the Merger that would not have arisen but for a breach by General ▇▇▇▇▇ of any of the Seller Accrued Income Taxes or Purchaser Accrued Income Taxes, as applicable, attributable to such Income Tax Return as reflected on the Final Closing Statement (the “Pre-Closing Income Tax Amount”) and deliver such statement to Seller Parent and Purchaser Parent, as applicable. Purchaser Parent or Seller Parent, as applicable, shall have a period of fifteen (15) Business Days to provide comments to a schedule prepared (or caused to be prepared) by Seller Parent or Purchaser Parent, respectively. If Purchaser Parent or Seller Parent, as applicable, do not provide any comments to Seller Parent or Purchaser Parent, respectively, during such period, the statement as so prepared shall be final and bindingrepresentations set forth in Section 7.2. (Bc) In Except as otherwise provided in Section 7.7, payment in full of any amount due to a Tax Indemnitee under this Section 7.3 shall be made to the ~~event~~ affected Tax Indemnitee in immediately available funds at least two Business Days before the ~~Final Pre-Closing Income Tax Amount with respect to any Income Tax Return is less than the amount~~ date payment of the ~~Pre-Closing Income Tax Amount attributable~~ Taxes to which such Income Tax Return that was included on the Final Closing Statement, the Purchaser shall within five (5) Business Days following the finalization of the Final Pre-Closing Income Tax Amount hereunder (i) pay to Seller Parent the amount of such difference with respect to a Conveyed Subsidiary and their Subsidiaries and (ii) pay to Purchaser Parent the amount of such difference with respect to Purchaser and its Subsidiariespayment relates is due. (vii) The Parties shall use reasonable best efforts to structure any indemnity payment, true-up payment, or payment in respect of Tax Benefits made by any Party pursuant to this Agreement (including pursuant to this Section 6.5, Section 6.6 and Article VII) and any payment made by Purchaser Parent to Purchaser pursuant to Section 2.8 or Section 2.9 in the manner set forth in Clause 10 of the Structuring Considerations Agreement. The Parties shall use reasonable best efforts to structure as a special dividend any payment made by Purchaser to Purchaser Parent pursuant to Section 2.8, Section 2.9 or this Section 6.5.

Appears in 1 contract

Sources: Merger Agreement

Tax Indemnification. (ia) ~~Subject to Section 6.5(d)(v), from~~ From and after the Closing, Seller ~~Parent agrees to~~ shall indemnify the Purchaser Indemnified Parties against and hold them harmless ~~Purchaser and its Subsidiaries~~ from (~~including the Conveyed Subsidiaries and their Subsidiaries after the Closing Date~~i) ~~(collectively, the “Purchaser Tax Indemnified Parties”) from and against~~ all ~~liability, without duplication,~~ liability for ~~(1)~~ Taxes of the ~~Conveyed Subsidiaries and their Subsidiaries~~ Companies for any Pre-Closing Tax Period ~~(including any Taxes payable in respect of an election under Section 965(h) of the Code), (2)~~ or Pre-Closing Straddle Period and all Taxes of any ~~Seller~~ affiliated, consolidated, combined, unitary, or similar group of which either of the Companies, prior to the Closing, has ever been a member, (ii) all other ~~than any Transfer Taxes and VAT~~ liability for ~~which Purchaser is responsible hereunder) including, Taxes (other than~~ Taxes of ~~the Conveyed Subsidiaries~~ Seller and ~~their Subsidiaries) imposed with respect to, arising out of or relating to the Purchased Assets or the Business for a Pre-Closing Tax Period, (3) Taxes of any Person~~ its Affiliates (other than the Conveyed Subsidiaries and their Subsidiaries) for a Pre-Closing Tax Period for which any Conveyed Subsidiary (or any Subsidiary thereof) is liable under Treasury Regulation Section 1.1502-6 (or a similar provision of state, local or foreign LawCompanies), or including any liability of a Purchaser Indemnified Party for such Taxes as a ~~transferee or successor or by Contract (other than Contracts that do not relate primarily to Taxes)~~result of applicable bulk transfer Laws, (4iii) all liability for Taxes ~~arising out~~ incurred as a result of or the Section 338(h)(10) Election, and 50% of all Transfer Taxes and (iv) all Taxes resulting from ~~any~~ a breach of the representations and warranties set forth in Section 2.10. Notwithstanding the foregoing, Seller shall not indemnify and hold harmless any ~~covenant or agreement of Seller Parent or~~ Purchaser Indemnified Party from any ~~of its Affiliates contained in this Agreement, (5)~~ liability for Taxes ~~for a Pre-Closing Tax Period imposed on (x) any transaction effected pursuant~~ solely attributable to ~~Section 2.3(b),~~ (y) any ~~settlement of any intercompany accounts of Seller Parent~~ action taken by Purchaser or its ~~Subsidiaries pursuant~~ Affiliates that causes the Section 338(h)(10) Election to ~~Section 6.7,~~ be void or invalid or (z) any transaction or step forming part of the Seller Internal Restructurings, (6) Transfer Taxes for which Seller Parent is responsible under Section 6.5(j), (7) Taxes required to be deducted or withheld with respect to the payment of the Purchase Consideration or any amounts payable to Seller Parent pursuant to Section 2.8 or Section 2.9, including any penalties imposed on Purchaser as a result of Purchaser’s failure to deduct or withhold any such amounts that Purchaser (or a Purchaser Designated Affiliate) was permitted to withhold under Section 2.10 (in each case, subject to Purchaser’s compliance with the notice and cooperation requirements of Section 2.10 and except for any such Taxes (and any related penalties) required to be deducted or withheld solely as a result of any assignment by Purchaser or its Affiliates for which Purchaser is responsible pursuant to Section 10.3), (8) Taxes arising from any breach of any representation or warranty contained in Section 4.16(k), (9) Taxes arising as a result of any Conveyed Subsidiary or any Subsidiary of any Conveyed Subsidiary at any time ceasing to be a member of a group for the purposes of any Tax, of which group Seller Parent or any Subsidiary of Seller Parent is or was also a member and (10) any costs and expenses, including reasonable legal and accounting fees and expenses, attributable to any item described in clauses (1) through (9) (any such Taxes for which Seller Parent is responsible pursuant to this Section 6.5(d)(i), subject to the following proviso, “Seller Indemnified Taxes”); provided that Seller Parent shall not be required to indemnify or hold harmless any Purchaser Tax Indemnified Party from and against any liability pursuant to this Section 6.5(d)(i) for (A) Taxes attributable to any action taken at or after the Closing by Purchaser, any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries), or any transferee of Purchaser or any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries), other than any such action that (1) is in outside the ordinary course of business, (2) is expressly permitted or contemplated by this Agreement, or (3) is required to be taken in order to comply with applicable Law or as a result of a change in applicable Law (a “Purchaser Tax Act”), (B) Taxes that were reflected, accrued or reserved for in the Final Closing Statement, Final Business Working Capital, or Final Business Net Cash, (C) Income Taxes to the extent that a Conveyed Subsidiary or any Subsidiary thereof had any Tax Assets as of the close of business ~~on the Closing Date that were available, or would have been available but for their prior utilization~~ by Purchaser or any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries after the Closing) to offset or otherwise reduce the applicable Tax Liability in respect of such Income Taxes (except any Tax Asset reflected as an asset in the Final Closing Statement and taken into account in the calculation either of the ~~Final Business Working Capital~~ Companies) (other than any such action expressly required by applicable Law or by this Agreement, it being understood that for purposes of this Section 7.06, no Taxes owed in a jurisdiction in which a Section 338(h)(10) Election is made under applicable Law shall be considered to be attributable solely to an action described in this clause (z)) (any of the ~~Final Business Net Cash)~~foregoing actions, ~~or (D) Taxes for which~~ a “Purchaser ~~Parent is responsible under Section 6.5(d)(ii~~Tax Act”). (iib) ~~Subject to Section 6.5(d)(v), from~~ From and after the Closing, Purchaser ~~Parent~~ shall indemnify the Seller Indemnified Parties and hold them harmless ~~the Purchaser Tax Indemnified Parties~~ from and against all liability, without duplication, for (1) all Taxes of Purchaser Parent and its Affiliates (other than Purchaser and its Subsidiaries) for any Tax period (other than Transfer Taxes and VAT for which Seller Parent is responsible hereunder), (2) Taxes of Purchaser and its Subsidiaries (other than the Conveyed Subsidiaries and their Subsidiaries) for any Pre-Closing Tax Period, (3) Taxes of any Person for a Pre-Closing Tax Period for which Purchaser (or any Subsidiary thereof other than any Conveyed Subsidiaries and their Subsidiaries) is liable under Treasury Regulation Section 1.1502-6 (or a similar provision of state, local or foreign Law), or as a transferee or successor or by Contract (other than Contracts that do not relate primarily to Taxes), (4) Taxes arising out of or resulting from any breach of any covenant or agreement of Purchaser Parent, Purchaser or their respective Affiliates contained in this Agreement, (5) Transfer Taxes for which Purchaser Parent is responsible under Section 6.5(j), (6) Taxes arising from any breach of any representation or warranty in Section 5.17(k), (7) Taxes for a Pre-Closing Tax Period imposed on (x) any settlement of any intercompany accounts of Purchaser or any Subsidiary of Purchaser, on the one hand, and Purchaser Parent or any Subsidiary of Purchaser Parent (other than Purchaser and its Subsidiaries), on the other hand, pursuant to Section 6.7 or (y) any transaction or step forming part of the Purchaser Internal Restructurings, (8) Taxes required to be deducted or withheld with respect to any amounts payable to Purchaser Parent pursuant to Section 2.8 or Section 2.9, including any penalties imposed on Purchaser as a result of Purchaser’s failure to deduct or withhold any such amounts, (9) Taxes arising as a result of Purchaser or any Subsidiary of Purchaser (other than any Conveyed Subsidiary or a Subsidiary thereof) at any time ceasing to be a member of a group for the purposes of any Tax, of which group Purchaser Parent or any Subsidiary of Purchaser Parent (other than Purchaser or any Subsidiary of Purchaser) is or was also a member and (10) any costs and expenses, including reasonable legal and accounting fees and expenses, attributable to any item described in clauses (1) through (9) (any such Taxes for which Purchaser Parent is responsible pursuant to this Section 6.5(d)(ii), subject to the following proviso, “Purchaser Parent Indemnified Taxes”); provided that Purchaser Parent shall not be required to indemnify or hold harmless any Purchaser Tax Indemnified Party from and against any liability for (A) Taxes attributable to any action taken after the Closing by Seller Parent or any of its Affiliates, other than any such action that (1) is in the ordinary course of business, (2) is expressly permitted or contemplated by this Agreement, or (3) is required to be taken in order to comply with applicable Law or as a result of a change in applicable Law (a “Seller Tax Act”), (B) Taxes that were reflected, accrued or reserved for in the Final Closing Statement, Final Purchaser Working Capital or the Final Purchaser Net Cash, (C) Income Taxes to the extent that Purchaser or any Subsidiary thereof had any Tax Assets as of the close of business on the Closing Date that were available, or would have been available but for their prior utilization by Purchaser or any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries after the Closing), to offset or otherwise reduce the applicable Tax Liability in respect of such Income Taxes (except any Tax Asset reflected as an asset in the Final Closing Statement and taken into account in the calculation of the Final Purchaser Working Capital or the Final Purchaser Net Cash), or (D) Taxes for which Seller Parent is responsible under Section 6.5(d)(i). (iii) To the extent permitted or required by applicable Law, the taxable year of each of the Conveyed Subsidiaries and their Subsidiaries and any Subsidiary of Purchaser that includes the Closing Date shall be treated as closing on (and including) the Closing Date. Otherwise, for purposes of this Agreement, in the case of any Straddle Period: (A) Property Taxes allocable to the Pre-Closing Tax Period shall be computed based upon the ratio of the number of days in the Pre-Closing Tax Period to the number of days in the entire Straddle Period; and (B) Taxes (other than Property Taxes) allocable to the Pre-Closing Tax Period shall be computed as if such Tax period ended as of the close of business on the Closing Date and, in the case of any Taxes of Conveyed Subsidiaries (and their Subsidiaries) and Seller Parent, or in the case of any Taxes of Purchaser Parent and Purchaser (and their Subsidiaries prior to the Closing), in each case attributable to the ownership of any equity interest in any partnership or other “flow through” entity for tax purposes (including of any “controlled foreign corporation,” as defined under the Code) as if the Tax period of such partnership or other “flow through” entity ended as of the close of business on the Closing Date with the Taxes of such entity for the Pre-Closing Tax Period deemed to include any Taxes on the allocable income of such entity in respect of such Tax period; provided that exemptions, allowances or deductions that are calculated on an annual basis (including depreciation and amortization deductions) shall be allocated between the period ending on the Closing Date and the period beginning after the Closing Date in proportion to the number of days in each period. (iv) Any claim for indemnification under this Section 6.5(d) shall be made in writing upon the party from whom indemnification is sought, and shall specify in reasonable detail the basis for such claim. Any indemnity payment required to be made pursuant to this Section 6.5(d) shall be made within thirty (30) days after the indemnified party makes written demand upon the indemnifying party, but in no case earlier than five (5) Business Days prior to the date on which the relevant Taxes are required to be paid to the applicable Taxing Authority. (v) With respect to any Taxes suffered or incurred by any Conveyed Subsidiary (or any Subsidiary thereof) that was not wholly owned by Seller Parent (directly or indirectly) as of immediately prior to the Closing, the indemnification obligations of Seller Parent pursuant to Section 6.5(d)(i) in respect of such Taxes (or related costs and expenses) shall in no event exceed an amount equal to (A) the amount of such Taxes (or related costs and expenses) for which the Purchaser Tax Indemnified Parties would otherwise be entitled to indemnification pursuant to Section 6.5(d), as if such Conveyed Subsidiary (or any Subsidiary thereof) were wholly owned by Seller Parent, multiplied by (B) the direct and indirect percentage ownership of Seller Parent of such Conveyed Subsidiary (or Subsidiary thereof) as of immediately prior to the Closing. With respect to any Taxes suffered or incurred by any Subsidiary of Purchaser Parent (including Purchaser and its Subsidiaries) that was not wholly owned by Purchaser Parent (directly or indirectly) as of immediately prior to the Closing, the indemnification obligations of Purchaser Parent pursuant to Section 6.5(d)(ii) in respect of such Taxes (or related costs and expenses) shall in no event exceed an amount equal to (A) the amount of such Taxes (or related costs and expenses) for which the Purchaser Tax Indemnified Parties would otherwise be entitled to indemnification pursuant to Section 6.5(d), as if such Subsidiary were wholly owned by Purchaser Parent, multiplied by (B) the direct and indirect percentage ownership of Purchaser Parent of such Subsidiary as of immediately prior to the Closing. (vi) Without duplication to any other amounts paid pursuant to this Section 6.5: (A) Within thirty (30) days following the filing of any Income Tax Return for any Conveyed Subsidiary (or any Subsidiary thereof), on the one hand, or Purchaser (or any Subsidiary thereof, other than the Conveyed Subsidiaries and their Subsidiaries), on the other hand, for any Pre-Closing Tax Period or for any Straddle Period, Seller Parent or Purchaser Parent shall (or Purchaser Parent shall cause Purchaser to) prepare a statement showing (i) all liability for Taxes of the ~~amount of Income Taxes shown as due on such filed Income Tax Return with respect to the relevant Pre~~Companies for any Post-Closing Tax Period or the ~~portion of any Straddle Period ending on and including the Closing Date (the “Final Pre~~Post-Closing ~~Income Tax Amount”)~~ Straddle Period, and (ii) ~~the amount of the Seller Accrued Income~~ any liability for Taxes ~~or Purchaser Accrued Income Taxes, as applicable,~~ solely attributable to ~~such Income~~ a Purchaser Tax Return as reflected on the Final Closing Statement (the “Pre-Closing Income Tax Amount”) and deliver such statement to Seller Parent and Purchaser Parent, as applicable. Purchaser Parent or Seller Parent, as applicable, shall have a period of fifteen (15) Business Days to provide comments to a schedule prepared (or caused to be prepared) by Seller Parent or Purchaser Parent, respectively. If Purchaser Parent or Seller Parent, as applicable, do not provide any comments to Seller Parent or Purchaser Parent, respectively, during such period, the statement as so prepared shall be final and bindingAct. (B) In the event the Final Pre-Closing Income Tax Amount with respect to any Income Tax Return is less than the amount of the Pre-Closing Income Tax Amount attributable to such Income Tax Return that was included on the Final Closing Statement, the Purchaser shall within five (5) Business Days following the finalization of the Final Pre-Closing Income Tax Amount hereunder (i) pay to Seller Parent the amount of such difference with respect to a Conveyed Subsidiary and their Subsidiaries and (ii) pay to Purchaser Parent the amount of such difference with respect to Purchaser and its Subsidiaries. (vii) The Parties shall use reasonable best efforts to structure any indemnity payment, true-up payment, or payment in respect of Tax Benefits made by any Party pursuant to this Agreement (including pursuant to this Section 6.5, Section 6.6 and Article VII) and any payment made by Purchaser Parent to Purchaser pursuant to Section 2.8 or Section 2.9 in the manner set forth in Clause 10 of the Structuring Considerations Agreement. The Parties shall use reasonable best efforts to structure as a special dividend any payment made by Purchaser to Purchaser Parent pursuant to Section 2.8, Section 2.9 or this Section 6.5.

Appears in 1 contract

Sources: Purchase Agreement (National City Corp)

Tax Indemnification. (ia) ~~Subject to Section 6.5(d)(v), from and after~~ To the ~~Closing~~extent not paid (including the payment of estimated Taxes) before Closing or reflected as a dollar amount on the Closing Statement of Net Assets, Seller ~~Parent agrees to~~ shall indemnify ~~and hold harmless~~ Purchaser and its ~~Subsidiaries (including the Conveyed Subsidiaries~~ Affiliates and ~~their Subsidiaries after the Closing Date) (collectively, the “Purchaser Tax Indemnified Parties”)~~ hold them harmless from ~~and against~~ all ~~liability, without duplication,~~ liability for (1A) Excluded Taxes, (B) Taxes arising from or in connection with any breach by Seller of any covenant contained in this Article (but only to the ~~Conveyed Subsidiaries~~ extent appropriate to reflect the relative fault of Seller, on the one hand, and ~~their Subsidiaries for any Pre-Closing Tax Period (including any Taxes payable in respect of an election under Section 965(h) of~~ Purchaser, on the ~~Code~~other hand), (2) Taxes of any Seller (other than any Transfer Taxes and VAT for which Purchaser is responsible hereunder) including, Taxes (other than Taxes of the Conveyed Subsidiaries and their Subsidiaries) imposed with respect to, arising out of or relating to the Purchased Assets or the Business for a Pre-Closing Tax Period, (3) Taxes of any Person (other than the Conveyed Subsidiaries and their Subsidiaries) for a Pre-Closing Tax Period for which any Conveyed Subsidiary (or any Subsidiary thereof) is liable under Treasury Regulation Section 1.1502-6 (or a similar provision of state, local or foreign Law), or as a transferee or successor or by Contract (other than Contracts that do not relate primarily to Taxes), (4) Taxes arising out of or resulting from any breach of any covenant or agreement of Seller Parent or any of its Affiliates contained in this Agreement, (5) Taxes for a Pre-Closing Tax Period imposed on (x) any transaction effected pursuant to Section 2.3(b), (y) any settlement of any intercompany accounts of Seller Parent or its Subsidiaries pursuant to Section 6.7, or (z) any transaction or step forming part of the Seller Internal Restructurings, (6C) Transfer ~~Taxes for which Seller Parent is responsible under Section 6.5(j), (7)~~ Taxes required to be ~~deducted or withheld with respect to the payment of the Purchase Consideration or any amounts payable to~~ borne by Seller ~~Parent~~ pursuant to Section 2.8 or Section 2.9, including any penalties imposed on Purchaser as a result of Purchaser’s failure to deduct or withhold any such amounts that Purchaser (or a Purchaser Designated Affiliate) was permitted to withhold under Section 2.10 (in each case, subject to Purchaser’s compliance with the notice and cooperation requirements of Section 2.10 and except for any such Taxes (and any related penalties) required to be deducted or withheld solely as a result of any assignment by Purchaser or its Affiliates for which Purchaser is responsible pursuant to Section 10.3)14.4, (8) D) Taxes ~~arising from any~~ attributable to a breach of ~~any representation or warranty contained~~ the representations and warranties set forth in Section ~~4.16(k)~~4.7, (9) Taxes arising as a result of any Conveyed Subsidiary or any Subsidiary of any Conveyed Subsidiary at any time ceasing to be a member of a group for the purposes of any Tax, of which group Seller Parent or any Subsidiary of Seller Parent is or was also a member and (10E) ~~any~~ all costs and expenses, including reasonable legal ~~and accounting~~ fees and expenses, attributable to any item ~~described~~ in clauses (1A) through (9D). (b) ~~(any such Taxes for which~~ Purchaser shall indemnify Seller ~~Parent is responsible pursuant to this Section 6.5(d)(i), subject to the following proviso, “Seller Indemnified Taxes”); provided that Seller Parent shall not be required to indemnify or~~ and its Affiliates and hold them harmless ~~any Purchaser Tax Indemnified Party~~ from ~~and against any~~ all liability ~~pursuant to this Section 6.5(d)(i)~~ for (A) any and all Taxes attributable to ~~any action taken after~~ a Post-Closing Tax Period of the Business or reflected as a dollar amount on the Closing ~~by Purchaser, any~~ Statement of ~~its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries), or any transferee of Purchaser or any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries)~~Net Assets, other than any such action that (1) is in the ordinary course of business, (2) is expressly permitted or contemplated by this Agreement, or (3) is required to be taken in order to comply with applicable Law or as a result of a change in applicable Law (a “Purchaser Tax Act”)Excluded Taxes, (B) Transfer Taxes ~~that were reflected, accrued or reserved for in the Final Closing Statement, Final Business Working Capital, or Final Business Net Cash~~required to be borne by Purchaser pursuant to Section 14.4, (C) ~~Income~~ Taxes arising from or in connection with any breach by Purchaser of any covenant contained in this Article XIV (but only to the extent ~~that a Conveyed Subsidiary or any Subsidiary thereof had any Tax Assets as of~~ appropriate to reflect the close of business on the Closing Date that were available, or would have been available but for their prior utilization by Purchaser or any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries after the Closing) to offset or otherwise reduce the applicable Tax Liability in respect of such Income Taxes (except any Tax Asset reflected as an asset in the Final Closing Statement and taken into account in the calculation of the Final Business Working Capital or the Final Business Net Cash), or (D) Taxes for which Purchaser Parent is responsible under Section 6.5(d)(ii). (ii) Subject to Section 6.5(d)(v), from and after the Closing, Purchaser Parent shall indemnify and hold harmless the Purchaser Tax Indemnified Parties from and against all liability, without duplication, for (1) all Taxes of Purchaser Parent and its Affiliates (other than Purchaser and its Subsidiaries) for any Tax period (other than Transfer Taxes and VAT for which Seller Parent is responsible hereunder), (2) Taxes of Purchaser and its Subsidiaries (other than the Conveyed Subsidiaries and their Subsidiaries) for any Pre-Closing Tax Period, (3) Taxes of any Person for a Pre-Closing Tax Period for which Purchaser (or any Subsidiary thereof other than any Conveyed Subsidiaries and their Subsidiaries) is liable under Treasury Regulation Section 1.1502-6 (or a similar provision of state, local or foreign Law), or as a transferee or successor or by Contract (other than Contracts that do not relate primarily to Taxes), (4) Taxes arising out of or resulting from any breach of any covenant or agreement of Purchaser Parent, Purchaser or their respective Affiliates contained in this Agreement, (5) Transfer Taxes for which Purchaser Parent is responsible under Section 6.5(j), (6) Taxes arising from any breach of any representation or warranty in Section 5.17(k), (7) Taxes for a Pre-Closing Tax Period imposed on (x) any settlement of any intercompany accounts of Purchaser or any Subsidiary relative fault of Purchaser, on the one hand, and ~~Purchaser Parent or any Subsidiary of Purchaser Parent (other than Purchaser and its Subsidiaries)~~Seller, on the other hand~~, pursuant to Section 6.7 or (y~~) any transaction or step forming part of the Purchaser Internal Restructurings, (8) Taxes required to be deducted or withheld with respect to any amounts payable to Purchaser Parent pursuant to Section 2.8 or Section 2.9, including any penalties imposed on Purchaser as a result of Purchaser’s failure to deduct or withhold any such amounts, (9) Taxes arising as a result of Purchaser or any Subsidiary of Purchaser (other than any Conveyed Subsidiary or a Subsidiary thereof) at any time ceasing to be a member of a group for the purposes of any Tax, of which group Purchaser Parent or any Subsidiary of Purchaser Parent (other than Purchaser or any Subsidiary of Purchaser) is or was also a member and (10D) ~~any~~ all costs and expenses, including reasonable legal ~~and accounting~~ fees and expenses, attributable to any item ~~described~~ in clauses (1A) through (9) (any such Taxes for which Purchaser Parent is responsible pursuant to this Section 6.5(d)(ii), subject to the following proviso, “Purchaser Parent Indemnified Taxes”); provided that Purchaser Parent shall not be required to indemnify or hold harmless any Purchaser Tax Indemnified Party from and against any liability for (A) Taxes attributable to any action taken after the Closing by Seller Parent or any of its Affiliates, other than any such action that (1) is in the ordinary course of business, (2) is expressly permitted or contemplated by this Agreement, or (3) is required to be taken in order to comply with applicable Law or as a result of a change in applicable Law (a “Seller Tax Act”), (B) Taxes that were reflected, accrued or reserved for in the Final Closing Statement, Final Purchaser Working Capital or the Final Purchaser Net Cash, (C) Income Taxes to the extent that Purchaser or any Subsidiary thereof had any Tax Assets as of the close of business on the Closing Date that were available, or would have been available but for their prior utilization by Purchaser or any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries after the Closing), to offset or otherwise reduce the applicable Tax Liability in respect of such Income Taxes (except any Tax Asset reflected as an asset in the Final Closing Statement and taken into account in the calculation of the Final Purchaser Working Capital or the Final Purchaser Net Cash), or (D) Taxes for which Seller Parent is responsible under Section 6.5(d)(i). (~~iii~~c) To the extent permitted or required by applicable Law, the taxable year of each of the Conveyed Subsidiaries and their Subsidiaries and any Subsidiary of Purchaser that includes the Closing Date shall be treated as closing on (and including) the Closing Date. Otherwise, for purposes of this Agreement, in the case of any Straddle Period: (A) Property Taxes allocable to the Pre-Closing Tax Period shall be computed based upon the ratio of the number of days in the Pre-Closing Tax Period to the number of days in the entire Straddle Period; and (B) Taxes (other than Property Taxes) allocable to the Pre-Closing Tax Period shall be computed as if such Tax period ended as of the close of business on the Closing Date and, in the case of any Taxes of Conveyed Subsidiaries (and their Subsidiaries) and Seller Parent, or in the case of any Taxes of Purchaser Parent and Purchaser (and their Subsidiaries prior to the Closing), in each case attributable to the ownership of any equity interest in any partnership or other “flow through” entity for tax purposes (including of any “controlled foreign corporation,” as defined under the Code) as if the Tax period of such partnership or other “flow through” entity ended as of the close of business on the Closing Date with the Taxes of such entity for the Pre-Closing Tax Period deemed to include any Taxes on the allocable income of such entity in respect of such Tax period; provided that exemptions, allowances or deductions that are calculated on an annual basis (including depreciation and amortization deductions) shall be allocated between the period ending on the Closing Date and the period beginning after the Closing Date in proportion to the number of days in each period. (iv) Any claim for indemnification under this Section 6.5(d) shall be made in writing upon the party from whom indemnification is sought, and shall specify in reasonable detail the basis for such claim. Any indemnity payment ~~required~~ to be made pursuant to this Section ~~6.5(d)~~ 14.1 shall be ~~made within thirty~~ paid no later than the latest of (30i) ten (10) days after the indemnified party makes written demand upon the indemnifying party, ~~but in no case earlier than~~ (ii) five (5) ~~Business Days~~ days prior to the date on which the ~~relevant Taxes are~~ underlying amount is required to be paid to by the ~~applicable Taxing Authority~~indemnified party and (iii) five (5) days after any dispute about the liability for or amount of such indemnity payment is resolved. (vd) ~~With~~ The indemnification provisions in this Section 14.1 shall survive the Closing until 90 days after the expiration of the applicable statute of limitations for the Tax giving rise to the claim for indemnification. (e) The Closing Statement of Net Assets is to reflect (i) prepaid Property Taxes as an asset and (ii) accrued Property Taxes as a liability. The parties agree that all Property Taxes imposed on or with respect to the Purchased Assets will be pro-rated as of the Closing Date and that, notwithstanding any ~~Taxes suffered or incurred~~ other provision of this Agreement, the economic burden of any such Property Tax will be borne by Seller for all Pre-Closing Tax Periods (including the portion of a Straddle Period through the Closing Date) and by Purchaser for all Post-Closing Tax Periods (including the portion of a Straddle Period after the Closing Date). Accordingly, notwithstanding any ~~Conveyed Subsidiary~~ other provision of this Agreement, (i) if Seller or any ~~Subsidiary thereof~~of its Affiliates pays (either before or after Closing) ~~that was not wholly owned by~~ any such Property Tax with respect to a Post-Closing Tax Period, Purchaser will reimburse Seller Parent (directly or indirectly) as of immediately prior to the Closing, the indemnification obligations of Seller Parent pursuant to Section 6.5(d)(i) in respect of such Taxes (or related costs and expenses) shall in no event exceed an amount equal to (A) upon demand for the amount of such ~~Taxes~~ Property Tax to the extent it is not reflected as an asset on the Closing Statement of Net Assets; and (~~or related costs and expenses~~ii) ~~for which the~~ if Purchaser ~~Tax Indemnified Parties would otherwise be entitled to indemnification pursuant to Section 6.5(d), as if such Conveyed Subsidiary (~~or any ~~Subsidiary thereof~~of its Affiliates pays (after Closing) ~~were wholly owned by Seller Parent, multiplied by (B) the direct and indirect percentage ownership of Seller Parent of~~ any such ~~Conveyed Subsidiary (or Subsidiary thereof) as of immediately prior to the Closing. With~~ Property Tax with respect to ~~any Taxes suffered or incurred by any Subsidiary of~~ a Pre-Closing Tax Period, Seller will reimburse Purchaser Parent (including Purchaser and its Subsidiaries) that was not wholly owned by Purchaser Parent (directly or indirectly) as of immediately prior to the Closing, the indemnification obligations of Purchaser Parent pursuant to Section 6.5(d)(ii) in respect of such Taxes (or related costs and expenses) shall in no event exceed an amount equal to (A) upon demand for the amount of such ~~Taxes (or related costs and expenses) for which the Purchaser~~ Property Tax Indemnified Parties would otherwise be entitled to indemnification pursuant to Section 6.5(d), as if such Subsidiary were wholly owned by Purchaser Parent, multiplied by (B) the direct and indirect percentage ownership of Purchaser Parent of such Subsidiary as of immediately prior to the Closing. (vi) Without duplication to any other amounts paid pursuant to this Section 6.5: (A) Within thirty (30) days following the filing of any Income Tax Return for any Conveyed Subsidiary (or any Subsidiary thereof), extent it is not reflected as a liability on the one hand, or Purchaser (or any Subsidiary thereof, other than the Conveyed Subsidiaries and their Subsidiaries), on the other hand, for any Pre-Closing Tax Period or for any Straddle Period, Seller Parent or Purchaser Parent shall (or Purchaser Parent shall cause Purchaser to) prepare a statement showing (i) the amount of Income Taxes shown as due on such filed Income Tax Return with respect to the relevant Pre-Closing Tax Period or the portion of any Straddle Period ending on and including the Closing Date (the “Final Pre-Closing Income Tax Amount”) and (ii) the amount of the Seller Accrued Income Taxes or Purchaser Accrued Income Taxes, as applicable, attributable to such Income Tax Return as reflected on the Final Closing Statement ~~(the “Pre-Closing Income Tax Amount”) and deliver such statement to Seller Parent and Purchaser Parent, as applicable. Purchaser Parent or Seller Parent, as applicable, shall have a period~~ of fifteen (15) Business Days to provide comments to a schedule prepared (or caused to be prepared) by Seller Parent or Purchaser Parent, respectively. If Purchaser Parent or Seller Parent, as applicable, do not provide any comments to Seller Parent or Purchaser Parent, respectively, during such period, the statement as so prepared shall be final and bindingNet Assets. (B) In the event the Final Pre-Closing Income Tax Amount with respect to any Income Tax Return is less than the amount of the Pre-Closing Income Tax Amount attributable to such Income Tax Return that was included on the Final Closing Statement, the Purchaser shall within five (5) Business Days following the finalization of the Final Pre-Closing Income Tax Amount hereunder (i) pay to Seller Parent the amount of such difference with respect to a Conveyed Subsidiary and their Subsidiaries and (ii) pay to Purchaser Parent the amount of such difference with respect to Purchaser and its Subsidiaries. (vii) The Parties shall use reasonable best efforts to structure any indemnity payment, true-up payment, or payment in respect of Tax Benefits made by any Party pursuant to this Agreement (including pursuant to this Section 6.5, Section 6.6 and Article VII) and any payment made by Purchaser Parent to Purchaser pursuant to Section 2.8 or Section 2.9 in the manner set forth in Clause 10 of the Structuring Considerations Agreement. The Parties shall use reasonable best efforts to structure as a special dividend any payment made by Purchaser to Purchaser Parent pursuant to Section 2.8, Section 2.9 or this Section 6.5.

Appears in 1 contract

Sources: Asset Purchase Agreement (Dana Corp)

Tax Indemnification. (ia) ~~Subject to Section 6.5(d)(v), from and after the Closing,~~ Seller ~~Parent agrees to~~ shall indemnify ~~and hold harmless Purchaser~~ Buyer and its ~~Subsidiaries~~ Affiliates (including the ~~Conveyed Subsidiaries~~ Transferred Subsidiaries) and each of their ~~Subsidiaries after the Closing Date)~~ respective officers, directors, employees, stockholders, agents and representatives (collectively, the ~~“Purchaser Tax Indemnified Parties”~~"BUYER INDEMNITEES") and hold them harmless from ~~and against~~ (i) all ~~liability, without duplication,~~ liability for ~~(1)~~ Taxes of the ~~Conveyed Subsidiaries and their~~ Transferred Subsidiaries for ~~any Pre-Closing Tax Period (including any Taxes payable in respect of an election under Section 965(h) of~~ the Code), (2) Taxes of any Seller (other than any Transfer Taxes and VAT for which Purchaser is responsible hereunder) including, Taxes (other than Taxes of the Conveyed Subsidiaries and their Subsidiaries) imposed with respect to, arising out of or relating to the Purchased Assets or the Business for a Pre-Closing Tax Period, (3ii) all Taxes arising out of a breach of the representations and warranties set forth in Sections 3.08(c), (f), (h) and (i) of this Agreement, PROVIDED, HOWEVER, that there shall be no indemnity with respect to breaches of the representations and warranties set forth in Sections 3.08 (f) and (h) of this Agreement to the extent liabilities resulting therefrom relate solely to United States Federal income Taxes or income Taxes of ~~any Person (other than the Conveyed Subsidiaries and their Subsidiaries)~~ states, local jurisdictions or foreign jurisdictions that, for ~~a Pre-Closing Tax Period for which any Conveyed Subsidiary (or any Subsidiary thereof) is liable under Treasury Regulation Section 1.1502-6 (or a similar provision of~~ state, local or foreign ~~Law)~~law purposes, or have adopted rules analogous to those set forth in Section 338(h)(10) of the Code and the Treasury Regulations promulgated thereunder, (iii) all liability (as a ~~transferee~~ result of Treasury Regulation ss. 1.1502-6(a) or ~~successor~~ otherwise) for Taxes of the Selling Companies or ~~by Contract~~ any other person or entity (other than ~~Contracts that do not relate primarily~~ the Transferred Subsidiaries) which is or has been affiliated with any of the Transferred Subsidiaries prior to ~~Taxes)~~Closing, (4iv) all liability for Taxes ~~arising out of or~~ resulting from ~~any breach~~ the Section 338(h)(10) Elections contemplated by Section 10.09 of ~~any covenant or agreement of Seller Parent or any of its Affiliates contained in~~ this Agreement, (~~5) Taxes for a Pre-Closing Tax Period imposed on (x~~v) any transaction effected pursuant to Section 2.3(b), (y) any settlement of any intercompany accounts of Seller Parent or its Subsidiaries pursuant to Section 6.7, or (z) any transaction or step forming part of the Seller Internal Restructurings, (6) Transfer Taxes for which Seller Parent is responsible under Section 6.5(j), (7) Taxes payment required to be ~~deducted~~ made after the Closing Date under any Tax sharing, Tax indemnity, Tax allocation or ~~withheld with respect~~ similar contract (whether or not written) to which any Transferred Subsidiary was obligated, or was a party, on or prior to the payment of the Purchase Consideration or any amounts payable to Seller Parent pursuant to Section 2.8 or Section 2.9, including any penalties imposed on Purchaser as a result of Purchaser’s failure to deduct or withhold any such amounts that Purchaser Closing Date and (~~or a Purchaser Designated Affiliate~~vi) ~~was permitted to withhold under Section 2.10 (in each case, subject to Purchaser’s compliance with the notice~~ all liability for reasonable legal fees and ~~cooperation requirements of Section 2.10 and except~~ expenses for any such Taxes (and any related penalties) required to be deducted or withheld solely as a result of any assignment by Purchaser or its Affiliates for which Purchaser is responsible pursuant to Section 10.3), (8) Taxes arising from any breach of any representation or warranty contained in Section 4.16(k), (9) Taxes arising as a result of any Conveyed Subsidiary or any Subsidiary of any Conveyed Subsidiary at any time ceasing to be a member of a group for the purposes of any Tax, of which group Seller Parent or any Subsidiary of Seller Parent is or was also a member and (10) any costs and expenses, including reasonable legal and accounting fees and expenses, item attributable to any item ~~described~~ in ~~clauses~~ clause (~~1) through (9) (any such Taxes for which Seller Parent is responsible pursuant to this Section 6.5(d)(i~~i), ~~subject to~~ (ii), (iii), (iv) or (v) above. Notwithstanding the ~~following proviso~~foregoing, “Seller ~~Indemnified Taxes”); provided that Seller Parent~~ shall not ~~be required to~~ indemnify or and hold harmless ~~any Purchaser Tax Indemnified Party~~ the Buyer Indemnitees from ~~and against~~ any liability ~~pursuant to this Section 6.5(d)(i)~~ for ~~(A)~~ Taxes attributable to any action taken after the Closing by ~~Purchaser~~Buyer, any of its Affiliates (including the ~~Conveyed Subsidiaries and their~~ Transferred Subsidiaries), or any transferee of ~~Purchaser~~ Buyer or any of its ~~Affiliates (~~Affiliates, including the ~~Conveyed Subsidiaries and their Subsidiaries), other than~~ making of any ~~such action that (1~~election under Section 338(g) is in the ordinary course of business, (2) is expressly permitted or contemplated by this Agreement, or (3) is required to be taken in order to comply with applicable Law or as a result of a change in applicable Law (a “Purchaser Tax Act”), (B) Taxes that were reflected, accrued or reserved for in the Final Closing Statement, Final Business Working Capital, or Final Business Net Cash, (C) Income Taxes to the extent that a Conveyed Subsidiary or any Subsidiary thereof had any Tax Assets as of the close of business on the Closing Date that were available, or would have been available but for their prior utilization by Purchaser or any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries after the Closing) to offset or otherwise reduce the applicable Tax Liability in respect of such Income Taxes (except any Tax Asset reflected as an asset in the Final Closing Statement and taken into account in the calculation of the Final Business Working Capital or the Final Business Net Cash), or (D) Taxes for which Purchaser Parent is responsible under Section 6.5(d)(ii). (ii) Subject to Section 6.5(d)(v), from and after the Closing, Purchaser Parent shall indemnify and hold harmless the Purchaser Tax Indemnified Parties from and against all liability, without duplication, for (1) all Taxes of Purchaser Parent and its Affiliates (other than Purchaser and its Subsidiaries) for any Tax period (other than Transfer Taxes and VAT for which Seller Parent is responsible hereunder), (2) Taxes of Purchaser and its Subsidiaries (other than the Conveyed Subsidiaries and their Subsidiaries) for any Pre-Closing Tax Period, (3) Taxes of any Person for a Pre-Closing Tax Period for which Purchaser Code (or any ~~Subsidiary thereof other than any Conveyed Subsidiaries and their Subsidiaries) is liable under Treasury Regulation Section 1.1502-6 (or a similar~~ comparable provision of state, local or foreign ~~Law), or as a transferee or successor or by Contract~~ tax law) with respect to the Puerto Rico Company (other than ~~Contracts~~ (i) any action carried out or effected under any binding commitment that do any of the Selling Companies or the Transferred Subsidiaries enters or has entered into prior to Closing, (ii) any action carried out or effected in the ordinary course of business of the Transferred Subsidiaries or (iii) any action expressly required by applicable law or regulations of any Tax or governmental authority or by this Agreement) (a "BUYER TAX ACT") or attributable to a breach by Buyer of its obligations under this Agreement. (b) Buyer shall, and shall cause the Transferred Subsidiaries to, indemnify Seller and its Affiliates and each of their respective officers, directors, employees, stockholders, agents and representatives and hold them harmless from (i) all liability for Taxes of the Transferred Subsidiaries for any taxable period ending after the Closing Date (except to the extent such taxable period began before the Closing Date, in which case Buyer's indemnity will cover only that portion of any such Taxes that are not ~~relate primarily to Taxes~~for the Pre-Closing Tax Period), (4ii) all liability for Taxes ~~arising out~~ attributable to a Buyer Tax Act or to a breach by Buyer of its obligations under this Agreement and (iii) all liability for reasonable legal fees and expenses attributable to any item in clause (i) or ~~resulting from any breach~~ (ii) above. (c) In the case of any ~~covenant or agreement of Purchaser Parent~~taxable period that includes (but does not end on) the Closing Date (a "STRADDLE PERIOD"): (i) real, ~~Purchaser or their respective Affiliates contained in this Agreement,~~ personal and intangible property Taxes (5"PROPERTY TAXES") ~~Transfer Taxes~~ for ~~which Purchaser Parent is responsible under Section 6.5(j), (6) Taxes arising from any breach of any representation or warranty in Section 5.17(k), (7) Taxes for a~~ the Pre-Closing Tax Period ~~imposed on (x) any settlement~~ shall equal to the amount of any intercompany accounts of Purchaser or any Subsidiary of Purchaser, on the one hand, and Purchaser Parent or any Subsidiary of Purchaser Parent (other than Purchaser and its Subsidiaries), on the other hand, pursuant to Section 6.7 or (y) any transaction or step forming part of the Purchaser Internal Restructurings, (8) such property Taxes required to be deducted or withheld with respect to any amounts payable to Purchaser Parent pursuant to Section 2.8 or Section 2.9, including any penalties imposed on Purchaser as a result of Purchaser’s failure to deduct or withhold any such amounts, (9) Taxes arising as a result of Purchaser or any Subsidiary of Purchaser (other than any Conveyed Subsidiary or a Subsidiary thereof) at any time ceasing to be a member of a group for the ~~purposes of any Tax~~entire Straddle Period multiplied by a fraction, the numerator of which ~~group Purchaser Parent or any Subsidiary~~ is the number of ~~Purchaser Parent~~ days during the Straddle Period that are in the Pre-Closing Tax Period and the denominator of which is the number of days in the Straddle Period; and (ii) all other than Purchaser or any Subsidiary of Purchaser) is or was also a member and (10) any costs and expenses, including reasonable legal and accounting fees and expenses, attributable to any item described in clauses (1) through (9) (any such Taxes for which Purchaser Parent is responsible pursuant to this Section 6.5(d)(ii), subject to the following proviso, “Purchaser Parent Indemnified Taxes”); provided that Purchaser Parent shall not be required to indemnify or hold harmless any Purchaser Tax Indemnified Party from and against any liability for (A) Taxes attributable to any action taken after the Closing by Seller Parent or any of its Affiliates, other than any such action that (1) is in the ordinary course of business, (2) is expressly permitted or contemplated by this Agreement, or (3) is required to be taken in order to comply with applicable Law or as a result of a change in applicable Law (a “Seller Tax Act”), (B) Taxes that were reflected, accrued or reserved for in the Final Closing Statement, Final Purchaser Working Capital or the Final Purchaser Net Cash, (C) Income Taxes to the extent that Purchaser or any Subsidiary thereof had any Tax Assets as of the close of business on the Closing Date that were available, or would have been available but for their prior utilization by Purchaser or any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries after the Closing), to offset or otherwise reduce the applicable Tax Liability in respect of such Income Taxes (except any Tax Asset reflected as an asset in the Final Closing Statement and taken into account in the calculation of the Final Purchaser Working Capital or the Final Purchaser Net Cash), or (D) Taxes for which Seller Parent is responsible under Section 6.5(d)(i). (iii) To the extent permitted or required by applicable Law, the taxable year of each of the Conveyed Subsidiaries and their Subsidiaries and any Subsidiary of Purchaser that includes the Closing Date shall be treated as closing on (and including) the Closing Date. Otherwise, for purposes of this Agreement, in the case of any Straddle Period: (A) Property Taxes allocable to the Pre-Closing Tax Period shall be computed ~~based upon the ratio~~ by using an "interim closing of the ~~number~~ books" method. Seller's indemnity obligation in respect of ~~days in the Pre-Closing Tax Period to the number of days in the entire~~ Taxes for a Straddle ~~Period; and (B) Taxes (other than Property Taxes) allocable to the Pre-Closing Tax~~ Period shall initially be ~~computed as if such Tax period ended as~~ effected by its payment to Buyer of the ~~close~~ excess of ~~business on the Closing Date and, in the case of any~~ (A) such Taxes of Conveyed Subsidiaries (and their Subsidiaries) and Seller Parent, or in the case of any Taxes of Purchaser Parent and Purchaser (and their Subsidiaries prior to the Closing), in each case attributable to the ownership of any equity interest in any partnership or other “flow through” entity for tax purposes (including of any “controlled foreign corporation,” as defined under the Code) as if the Tax period of such partnership or other “flow through” entity ended as of the close of business on the Closing Date with the Taxes of such entity for the Pre-Closing Tax Period ~~deemed to include any Taxes on~~ over (B) the ~~allocable income~~ amount of such ~~entity in respect~~ Taxes paid by the Selling Companies or any of their Affiliates (other than the Transferred Subsidiaries) at any time plus the amount of such ~~Tax period; provided that exemptions~~Taxes paid by the Transferred Subsidiaries on or prior to the Closing Date. Seller shall initially pay such excess to Buyer within 30 days after the return, ~~allowances~~ report or ~~deductions that are calculated~~ form with respect to the liability for such Taxes is required to be filed (or, if later, is actually filed). If the amount of such Taxes paid by the Selling Companies or any of their Affiliates (other than the Transferred Subsidiaries) at any time plus the amount of such Taxes paid by the Transferred Subsidiaries on ~~an annual basis (including depreciation and amortization deductions) shall be allocated between the period ending on~~ or prior to the Closing Date ~~and~~ exceeds the ~~period beginning~~ amount payable by Seller pursuant to the preceding sentence, Buyer shall pay to Seller the amount of such excess within 30 days after the ~~Closing Date in proportion~~ return, report or form with respect to the number of days in each period. (iv) Any claim for indemnification under this Section 6.5(d) shall be made in writing upon the party from whom indemnification is sought, and shall specify in reasonable detail the basis final liability for such ~~claim~~Taxes is required to be filed. ~~Any indemnity payment required~~ The payments to be made pursuant to this Section 6.5(d) shall be made within thirty (30) days after the indemnified party makes written demand upon the indemnifying party, but in no case earlier than five (5) Business Days prior to the date on which the relevant Taxes are required to be paid to the applicable Taxing Authority. (v) With respect to any Taxes suffered or incurred by any Conveyed Subsidiary (or any Subsidiary thereof) that was not wholly owned paragraph by Seller ~~Parent (directly~~ or indirectly) as of immediately prior to the Closing, the indemnification obligations of Seller Parent pursuant to Section 6.5(d)(i) in respect of such Taxes (or related costs and expenses) shall in no event exceed an amount equal to (A) the amount of such Taxes (or related costs and expenses) for which the Purchaser Tax Indemnified Parties would otherwise be entitled to indemnification pursuant to Section 6.5(d), as if such Conveyed Subsidiary (or any Subsidiary thereof) were wholly owned by Seller Parent, multiplied by (B) the direct and indirect percentage ownership of Seller Parent of such Conveyed Subsidiary (or Subsidiary thereof) as of immediately prior to the Closing. With respect to any Taxes suffered or incurred by any Subsidiary of Purchaser Parent (including Purchaser and its Subsidiaries) that was not wholly owned by Purchaser Parent (directly or indirectly) as of immediately prior to the Closing, the indemnification obligations of Purchaser Parent pursuant to Section 6.5(d)(ii) in respect of such Taxes (or related costs and expenses) shall in no event exceed an amount equal to (A) the amount of such Taxes (or related costs and expenses) for which the Purchaser Tax Indemnified Parties would otherwise be entitled to indemnification pursuant to Section 6.5(d), as if such Subsidiary were wholly owned by Purchaser Parent, multiplied by (B) the direct and indirect percentage ownership of Purchaser Parent of such Subsidiary as of immediately prior to the Closing. (vi) Without duplication to any other amounts paid pursuant to this Section 6.5: (A) Within thirty (30) days following the filing of any Income Tax Return for any Conveyed Subsidiary (or any Subsidiary thereof), on the one hand, or Purchaser (or any Subsidiary thereof, other than the Conveyed Subsidiaries and their Subsidiaries), on the other hand, for any Pre-Closing Tax Period or for any Straddle Period, Seller Parent or Purchaser Parent shall (or Purchaser Parent shall cause Purchaser to) prepare a statement showing (i) the amount of Income Taxes shown as due on such filed Income Tax Return with respect to the relevant Pre-Closing Tax Period or the portion of any Straddle Period ending on and including the Closing Date (the “Final Pre-Closing Income Tax Amount”) and (ii) the amount of the Seller Accrued Income Taxes or Purchaser Accrued Income Taxes, as applicable, attributable to such Income Tax Return as reflected on the Final Closing Statement (the “Pre-Closing Income Tax Amount”) and deliver such statement to Seller Parent and Purchaser Parent, as applicable. Purchaser Parent or Seller Parent, as applicable, shall have a period of fifteen (15) Business Days to provide comments to a schedule prepared (or caused to be prepared) by Seller Parent or Purchaser Parent, respectively. If Purchaser Parent or Seller Parent, as applicable, do not provide any comments to Seller Parent or Purchaser Parent, respectively, during such period, the statement as so prepared shall be final and binding. (B) In the event the Final Pre-Closing Income Tax Amount with respect to any Income Tax Return is less than the amount of the Pre-Closing Income Tax Amount attributable to such Income Tax Return that was included on the Final Closing Statement, the Purchaser shall within five (5) Business Days following the finalization of the Final Pre-Closing Income Tax Amount hereunder (i) pay to Seller Parent the amount of such difference Buyer with respect to a ~~Conveyed Subsidiary and their Subsidiaries and~~ Straddle Period shall be appropriately adjusted to reflect any final determination (iiwhich shall include the execution of Form 870-AD or successor form) ~~pay to Purchaser Parent the amount of such difference~~ with respect to ~~Purchaser and its Subsidiaries~~Straddle Period Taxes. (vii) The Parties shall use reasonable best efforts to structure any indemnity payment, true-up payment, or payment in respect of Tax Benefits made by any Party pursuant to this Agreement (including pursuant to this Section 6.5, Section 6.6 and Article VII) and any payment made by Purchaser Parent to Purchaser pursuant to Section 2.8 or Section 2.9 in the manner set forth in Clause 10 of the Structuring Considerations Agreement. The Parties shall use reasonable best efforts to structure as a special dividend any payment made by Purchaser to Purchaser Parent pursuant to Section 2.8, Section 2.9 or this Section 6.5.

Appears in 1 contract

Sources: Stock Purchase Agreement (Express Scripts Inc)

Tax Indemnification. (a) KFC Cooperative shall indemnify the Subsidiary and each of its respective officers, directors, employees and agents and hold them harmless from (i) Subject to Section 6.5(d)(v), from and after the Closing, Seller Parent agrees to indemnify and hold harmless Purchaser and its Subsidiaries (including the Conveyed Subsidiaries and their Subsidiaries after the Closing Date) (collectively, the “Purchaser Tax Indemnified Parties”) from and against all ~~liability, without duplication,~~ liability for ~~(1)~~ Taxes of the ~~Conveyed Subsidiaries and their Subsidiaries~~ Subsidiary for ~~any~~ the Pre-~~Closing~~ Effective Date Tax ~~Period (including any Taxes payable in respect of an election under Section 965(h) of the Code)~~Period, (2ii) all liability (as a result of Treasury Regulation 1.1502-6 or otherwise) for Taxes of any ~~Seller~~ Affiliated Group or any member of any Affiliated Group and (~~other than~~ iii) all liability for reasonable legal fees and expenses attributable to any ~~Transfer~~ item in clause (i) and (ii) above. (b) The Subsidiary shall indemnify KFC Cooperative and its affiliates and each of its respective officers, directors, employees and agents and hold them harmless from (i) all liability for Taxes ~~and VAT for which Purchaser is responsible hereunder) including, Taxes~~ of KFC Cooperative related to the Subsidiary after the Pre-Effective Date Tax Period (other than Taxes ~~of the Conveyed Subsidiaries and their Subsidiaries~~described in clauses (a)(i) imposed with respect to, arising out of or relating to the Purchased Assets or the Business for a Pre-Closing Tax Period, (3) Taxes of any Person (other than the Conveyed Subsidiaries and their Subsidiaries) for a Pre-Closing Tax Period for which any Conveyed Subsidiary (or any Subsidiary thereof) is liable under Treasury Regulation Section 1.1502-6 (or a similar provision of state, local or foreign Law), or as a transferee or successor or by Contract (other than Contracts that do not relate primarily to Taxes), (4) Taxes arising out of or resulting from any breach of any covenant or agreement of Seller Parent or any of its Affiliates contained in this Agreement, (5) Taxes for a Pre-Closing Tax Period imposed on (x) any transaction effected pursuant to Section 2.3(b), (y) any settlement of any intercompany accounts of Seller Parent or its Subsidiaries pursuant to Section 6.7, or (z) any transaction or step forming part of the Seller Internal Restructurings, (6) Transfer Taxes for which Seller Parent is responsible under Section 6.5(j), (7) Taxes required to be deducted or withheld with respect to the payment of the Purchase Consideration or any amounts payable to Seller Parent pursuant to Section 2.8 or Section 2.9, including any penalties imposed on Purchaser as a result of Purchaser’s failure to deduct or withhold any such amounts that Purchaser (or a Purchaser Designated Affiliate) was permitted to withhold under Section 2.10 (in each case, subject to Purchaser’s compliance with the notice and cooperation requirements of Section 2.10 and except for any such Taxes (and any related penalties) required to be deducted or withheld solely as a result of any assignment by Purchaser or its Affiliates for which Purchaser is responsible pursuant to Section 10.3), (8) Taxes arising from any breach of any representation or warranty contained in Section 4.16(k), (9) Taxes arising as a result of any Conveyed Subsidiary or any Subsidiary of any Conveyed Subsidiary at any time ceasing to be a member of a group for the purposes of any Tax, of which group Seller Parent or any Subsidiary of Seller Parent is or was also a member and (10a)(ii) ~~any costs~~ of this Section 8) and ~~expenses, including~~ (ii) all liability for reasonable legal ~~and accounting~~ fees and ~~expenses,~~ expenses attributable to any item ~~described~~ in ~~clauses~~ clause (1i) through (9) (any such Taxes for which Seller Parent is responsible pursuant to this Section 6.5(d)(i), subject to the following proviso, “Seller Indemnified Taxes”); provided that Seller Parent shall not be required to indemnify or hold harmless any Purchaser Tax Indemnified Party from and against any liability pursuant to this Section 6.5(d)(i) for (A) Taxes attributable to any action taken after the Closing by Purchaser, any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries), or any transferee of Purchaser or any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries), other than any such action that (1) is in the ordinary course of business, (2) is expressly permitted or contemplated by this Agreement, or (3) is required to be taken in order to comply with applicable Law or as a result of a change in applicable Law (a “Purchaser Tax Act”), (B) Taxes that were reflected, accrued or reserved for in the Final Closing Statement, Final Business Working Capital, or Final Business Net Cash, (C) Income Taxes to the extent that a Conveyed Subsidiary or any Subsidiary thereof had any Tax Assets as of the close of business on the Closing Date that were available, or would have been available but for their prior utilization by Purchaser or any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries after the Closing) to offset or otherwise reduce the applicable Tax Liability in respect of such Income Taxes (except any Tax Asset reflected as an asset in the Final Closing Statement and taken into account in the calculation of the Final Business Working Capital or the Final Business Net Cash), or (D) Taxes for which Purchaser Parent is responsible under Section 6.5(d)(ii)above. (iic) Subject to Section 6.5(d)(v), from and after the Closing, Purchaser Parent shall indemnify and hold harmless the Purchaser Tax Indemnified Parties from and against all liability, without duplication, for (1) all Taxes of Purchaser Parent and its Affiliates (other than Purchaser and its Subsidiaries) for any Tax period (other than Transfer Taxes and VAT for which Seller Parent is responsible hereunder), (2) Taxes of Purchaser and its Subsidiaries (other than the Conveyed Subsidiaries and their Subsidiaries) for any Pre-Closing Tax Period, (3) Taxes of any Person for a Pre-Closing Tax Period for which Purchaser (or any Subsidiary thereof other than any Conveyed Subsidiaries and their Subsidiaries) is liable under Treasury Regulation Section 1.1502-6 (or a similar provision of state, local or foreign Law), or as a transferee or successor or by Contract (other than Contracts that do not relate primarily to Taxes), (4) Taxes arising out of or resulting from any breach of any covenant or agreement of Purchaser Parent, Purchaser or their respective Affiliates contained in this Agreement, (5) Transfer Taxes for which Purchaser Parent is responsible under Section 6.5(j), (6) Taxes arising from any breach of any representation or warranty in Section 5.17(k), (7) Taxes for a Pre-Closing Tax Period imposed on (x) any settlement of any intercompany accounts of Purchaser or any Subsidiary of Purchaser, on the one hand, and Purchaser Parent or any Subsidiary of Purchaser Parent (other than Purchaser and its Subsidiaries), on the other hand, pursuant to Section 6.7 or (y) any transaction or step forming part of the Purchaser Internal Restructurings, (8) Taxes required to be deducted or withheld with respect to any amounts payable to Purchaser Parent pursuant to Section 2.8 or Section 2.9, including any penalties imposed on Purchaser as a result of Purchaser’s failure to deduct or withhold any such amounts, (9) Taxes arising as a result of Purchaser or any Subsidiary of Purchaser (other than any Conveyed Subsidiary or a Subsidiary thereof) at any time ceasing to be a member of a group for the purposes of any Tax, of which group Purchaser Parent or any Subsidiary of Purchaser Parent (other than Purchaser or any Subsidiary of Purchaser) is or was also a member and (10) any costs and expenses, including reasonable legal and accounting fees and expenses, attributable to any item described in clauses (1) through (9) (any such Taxes for which Purchaser Parent is responsible pursuant to this Section 6.5(d)(ii), subject to the following proviso, “Purchaser Parent Indemnified Taxes”); provided that Purchaser Parent shall not be required to indemnify or hold harmless any Purchaser Tax Indemnified Party from and against any liability for (A) Taxes attributable to any action taken after the Closing by Seller Parent or any of its Affiliates, other than any such action that (1) is in the ordinary course of business, (2) is expressly permitted or contemplated by this Agreement, or (3) is required to be taken in order to comply with applicable Law or as a result of a change in applicable Law (a “Seller Tax Act”), (B) Taxes that were reflected, accrued or reserved for in the Final Closing Statement, Final Purchaser Working Capital or the Final Purchaser Net Cash, (C) Income Taxes to the extent that Purchaser or any Subsidiary thereof had any Tax Assets as of the close of business on the Closing Date that were available, or would have been available but for their prior utilization by Purchaser or any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries after the Closing), to offset or otherwise reduce the applicable Tax Liability in respect of such Income Taxes (except any Tax Asset reflected as an asset in the Final Closing Statement and taken into account in the calculation of the Final Purchaser Working Capital or the Final Purchaser Net Cash), or (D) Taxes for which Seller Parent is responsible under Section 6.5(d)(i). (iii) To the extent permitted or required by applicable Law, the taxable year of each of the Conveyed Subsidiaries and their Subsidiaries and any Subsidiary of Purchaser that includes the Closing Date shall be treated as closing on (and including) the Closing Date. Otherwise, for purposes of this Agreement, in In the case of any taxable period that includes (but does not end on) the Effective Date (each a "Straddle Period:"): (Ai) real, personal and intangible property Taxes ("Property ~~Taxes allocable~~ Taxes") of the Subsidiary attributable to the Pre-~~Closing~~ Effective Date Tax Period shall be ~~computed based upon~~ equal to the ~~ratio~~ amount of such Property Taxes for the entire Straddle Period multiplied by a fraction, the numerator of which is the number of days during the Straddle Period that are in the Pre-Effective Date Tax Period and the denominator of which is the number of days in the ~~Pre-Closing Tax Period to the number of days in the entire~~ Straddle Period; and (Bii) the Taxes of the Subsidiary (other than Property Taxes) ~~allocable~~ attributable to the Pre-~~Closing~~ Effective Date Tax Period shall be computed as if such ~~Tax~~ taxable period ended as of the close of business on the ~~Closing~~ Effective Date. KFC Cooperative's indemnity obligation in respect of taxes for a Straddle Period that are KFC Cooperative's responsibility under this Section 8 shall initially be effected by its payment to the Subsidiary of the excess of (x) such Taxes for the Pre-Effective Date ~~and~~Tax Period over (y) the amount of such Taxes paid by KFC Cooperative or any of its affiliates (other than the Subsidiary) at any time plus the amount of such Taxes paid or accrued by the Subsidiary on or prior to the Effective Date. KFC Cooperative shall initially pay such excess to the Subsidiary within five days prior to the due date of any return, report or form with respect to Straddle Period Taxes. If the amount of such Taxes paid by KFC Cooperative or any of its affiliates (other than the Subsidiary) at any time plus the amount of such Taxes paid or accrued by the Subsidiary on or prior to the Effective Date exceeds the amount payable by KFC Cooperative pursuant to the preceding sentence, the Subsidiary shall pay to KFC Cooperative the amount of such excess (a) in the case of ~~any Taxes of Conveyed Subsidiaries~~ Property Taxes, at the Effective Date and (~~and their Subsidiaries~~b) ~~and Seller Parent~~in all other cases, ~~or in the case of any Taxes of Purchaser Parent and Purchaser (and their Subsidiaries~~ within five days prior to the ~~Closing)~~due date of the return, ~~in each case attributable~~ report or form which is required to be filed with respect to the ~~ownership of any equity interest in any partnership or other “flow through” entity~~ final liability for ~~tax purposes (including of any “controlled foreign corporation,” as defined under the Code) as if the Tax period of~~ such partnership or other “flow through” entity ended as of the close of business on the Closing Date with the Taxes of such entity for the Pre-Closing Tax Period deemed to include any Taxes on the allocable income of such entity in respect of such Tax period; provided that exemptions, allowances or deductions that are calculated on an annual basis (including depreciation and amortization deductions) shall be allocated between the period ending on the Closing Date and the period beginning after the Closing Date in proportion to the number of days in each periodTaxes. (ivd) Any claim for indemnification under this Section 6.5(d) shall be made in writing upon the party from whom indemnification is sought, and shall specify in reasonable detail the basis for such claim. Any indemnity payment required The payments to be made pursuant to this Section ~~6.5(d)~~ 8 by any person with respect to Taxes shall be ~~made within thirty (30) days after the indemnified party makes written demand upon the indemnifying party, but in no case earlier than five (5) Business Days prior~~ appropriately adjusted to ~~the date on which the relevant Taxes are required~~ reflect any final determination with respect to ~~be paid to the applicable Taxing Authority~~such Taxes. (ve) ~~With respect to any Taxes suffered or incurred by any Conveyed Subsidiary (or any Subsidiary thereof) that was not wholly owned by Seller Parent (directly or indirectly) as~~ For purposes of ~~immediately prior to the Closing~~this Section 8, ~~the indemnification obligations of Seller Parent pursuant to Section 6.5(d)(i) in respect of such Taxes (or related costs and expenses) shall in no event exceed an amount equal to~~ (A) ~~the amount of such Taxes (~~"Tax" or ~~related costs~~ "Taxes" shall mean all Federal, state, local and ~~expenses) for which the Purchaser Tax Indemnified Parties would otherwise be entitled to indemnification pursuant to Section 6.5(d)~~foreign taxes, ~~as if such Conveyed Subsidiary (or any Subsidiary thereof) were wholly owned by Seller Parent~~charges, ~~multiplied by (B) the direct~~ fees, levies and indirect percentage ownership of Seller Parent of such Conveyed Subsidiary (or Subsidiary thereof) as of immediately prior to the Closing. With respect to any Taxes suffered or incurred by any Subsidiary of Purchaser Parent (including Purchaser assessments, and its Subsidiaries) that was not wholly owned by Purchaser Parent (directly or indirectly) as of immediately prior to the Closing, the indemnification obligations of Purchaser Parent pursuant to Section 6.5(d)(ii) in respect of such Taxes (or related costs and expenses) shall in no event exceed an amount equal to (A) the amount of such Taxes (or related costs and expenses) for which the Purchaser Tax Indemnified Parties would otherwise be entitled to indemnification pursuant to Section 6.5(d), as if such Subsidiary were wholly owned by Purchaser Parent, multiplied by (B) the direct and indirect percentage ownership of Purchaser Parent of such Subsidiary as of immediately prior to the Closing. (vi) Without duplication to any other ~~amounts paid pursuant to this Section 6.5: (A) Within thirty (30) days following the filing~~ governmental impositions of any ~~Income Tax Return for any Conveyed Subsidiary (~~kind whatsoever, which may be imposed, no matter how measured or any Subsidiary thereof), on the one hand, or Purchaser (or any Subsidiary thereof, other than the Conveyed Subsidiaries and their Subsidiaries), on the other hand, for any Pre-Closing Tax Period or for any Straddle Period, Seller Parent or Purchaser Parent shall (or Purchaser Parent shall cause Purchaser to) prepare a statement showing (i) the amount of Income Taxes shown as due on such filed Income Tax Return with respect to the relevant Pre-Closing Tax Period or the portion of any Straddle Period ending on and including the Closing Date (the “Final Pre-Closing Income Tax Amount”) and (ii) the amount of the Seller Accrued Income Taxes or Purchaser Accrued Income Taxes, as applicable, attributable to such Income Tax Return as reflected on the Final Closing Statement (the “Pre-Closing Income Tax Amount”) and deliver such statement to Seller Parent and Purchaser Parent, as applicable. Purchaser Parent or Seller Parent, as applicable, shall have a period of fifteen (15) Business Days to provide comments to a schedule prepared (or caused to be prepared) by Seller Parent or Purchaser Parent, respectively. If Purchaser Parent or Seller Parent, as applicable, do not provide any comments to Seller Parent or Purchaser Parent, respectively, during such period, the statement as so prepared shall be final and binding. (B) In the event the Final Pre-Closing Income Tax Amount with respect to any Income Tax Return is less than the amount of the Pre-Closing Income Tax Amount attributable to such Income Tax Return that was included on the Final Closing Statement, the Purchaser shall within five (5) Business Days following the finalization of the Final Pre-Closing Income Tax Amount hereunder (i) pay to Seller Parent the amount of such difference with respect to a Conveyed Subsidiary and their Subsidiaries and (ii) pay to Purchaser Parent the amount of such difference with respect to Purchaser and its Subsidiaries. (vii) The Parties shall use reasonable best efforts to structure any indemnity payment, true-up payment, or payment in respect of Tax Benefits made by any Party pursuant to this Agreement (including pursuant to this Section 6.5, Section 6.6 and Article VII) and any payment made by Purchaser Parent to Purchaser pursuant to Section 2.8 or Section 2.9 in the manner set forth in Clause 10 of the Structuring Considerations Agreement. The Parties shall use reasonable best efforts to structure as a special dividend any payment made by Purchaser to Purchaser Parent pursuant to Section 2.8, Section 2.9 or this Section 6.5.applied,

Appears in 1 contract

Sources: Agreement and Plan of Corporate Separation (KFC National Purchasing Cooperative Inc)

Tax Indemnification. (ia) ~~Subject to Section 6.5(d)(v)~~The Seller shall indemnify, ~~from and after the Closing~~defend, ~~Seller Parent agrees to indemnify~~ and hold harmless the Purchaser ~~and its Subsidiaries~~ Indemnified Parties (including the ~~Conveyed Subsidiaries~~ Company and ~~their Subsidiaries after the Closing Date) (collectively, the “Purchaser Tax Indemnified Parties”~~its Subsidiaries) from and against (i) any and all ~~liability, without duplication, for (1)~~ Taxes ~~of the Conveyed Subsidiaries and their Subsidiaries for~~ imposed on any Pre-Closing Tax Period (including any Taxes payable in respect of an election under Section 965(h) of the Code), (2) Taxes of any Seller (other than any Transfer Taxes and VAT for which Purchaser is responsible hereunder) including, Taxes (other than Taxes of the Conveyed Subsidiaries and their Subsidiaries) imposed with respect to, arising out of or relating to the Purchased Assets or the Business for a Pre-Closing Tax Period, (3) Taxes of any Person member (other than the ~~Conveyed Subsidiaries~~ Company, Atlantic, the Atlantic Subsidiaries, General Aviation or the General Aviation FBOs) of any affiliated, consolidated, unitary or other combined group with which the Company, Atlantic, any Atlantic Subsidiary, General Aviation or either General Aviation FBO files or has filed a Tax Return on a consolidated, unitary or other combined basis with respect to the taxable period or portion thereof beginning on the day following the Atlantic Closing Date or the General Aviation Closing Date, respectively, through the Closing Date, except to the extent such Taxes are attributable to the activities or properties of the Company, Atlantic, Atlantic Subsidiaries, General Aviation or the General Aviation FBOs (ii) any Taxes in the nature of penalties and ~~their~~ interest imposed on the Purchaser Indemnified Parties (including the Company and its Subsidiaries) ~~for a Pre-Closing Tax~~ to the extent attributable to any breach of the representations contained in Section 3.08 or covenants in Section 6.01 of this Agreement, (iii) any Taxes attributable to the Relevant Period for the entity on which such Taxes are imposed that are not Excluded Taxes and (iv) any loss, damage, liability or expense (including reasonable fees for attorneys and other outside consultants) incurred in contesting or otherwise in connection with any Taxes described in clause (i), (ii) or (iii) of this Section 6.03(a). (b) The Purchaser shall indemnify the Seller Indemnified Parties against (i) any and all Taxes attributable to the activities or property of the Company, Atlantic, the Atlantic Subsidiaries, General Aviation or the General Aviation FBOs which any ~~Conveyed Subsidiary (or any Subsidiary thereof) is~~ Seller Indemnified Party become liable ~~under~~ by reason of Treasury Regulation Section 1.1502-6 (or a any similar provision of state, local or foreign Tax Law), or as a transferee or successor or by Contract (other than Contracts that do not relate primarily to Taxes), (4) Taxes arising out of or resulting from any breach of any covenant or agreement of Seller Parent or any of its Affiliates contained in this Agreement, (5) Taxes for a Pre-Closing Tax Period imposed on (x) any transaction effected pursuant to Section 2.3(b), (y) any settlement of any intercompany accounts of Seller Parent or its Subsidiaries pursuant to Section 6.7, or (z) any transaction or step forming part of the Seller Internal Restructurings, (6) Transfer Taxes for which Seller Parent is responsible under Section 6.5(j), (7) Taxes required to be deducted or withheld with respect to the payment of the Purchase Consideration or any amounts payable to Seller Parent pursuant to Section 2.8 or Section 2.9, including any penalties imposed on Purchaser as a result of Purchaser’s failure to deduct or withhold any such amounts that Purchaser (or a Purchaser Designated Affiliate) was permitted to withhold under Section 2.10 (in each case, subject to Purchaser’s compliance with the notice and cooperation requirements of Section 2.10 and except for any such Taxes (and any related penalties) required to be deducted or withheld solely as a result of any assignment by Purchaser or its Affiliates for which Purchaser is responsible pursuant to Section 10.3), (8) Taxes arising from any breach of any representation or warranty contained in Section 4.16(k), (9) Taxes arising as a result of any Conveyed Subsidiary or any Subsidiary of any Conveyed Subsidiary at any time ceasing to be a member of a group for the purposes of any Tax, of which group Seller Parent or any Subsidiary of Seller Parent is or was also a member and (10) any costs and expenses, including reasonable legal and accounting fees and expenses, attributable to any item described in clauses (1) through (9) (any such Taxes for which Seller Parent is responsible pursuant to this Section 6.5(d)(i), subject to the following proviso, “Seller Indemnified Taxes”); provided that Seller Parent shall not be required to indemnify or hold harmless any Purchaser Tax Indemnified Party from and against any liability pursuant to this Section 6.5(d)(i) for (A) Taxes attributable to any action taken after the Closing by Purchaser, any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries), or any transferee of Purchaser or any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries), other than any such action that (1) is in the ordinary course of business, (2) is expressly permitted or contemplated by this Agreement, or (3) is required to be taken in order to comply with applicable Law or as a result of a change in applicable Law (a “Purchaser Tax Act”), (B) Taxes that were reflected, accrued or reserved for in the Final Closing Statement, Final Business Working Capital, or Final Business Net Cash, (C) Income Taxes to the extent that a Conveyed Subsidiary or any Subsidiary thereof had any Tax Assets as of the close of business on the Closing Date that were available, or would have been available but for their prior utilization by Purchaser or any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries after the Closing) to offset or otherwise reduce the applicable Tax Liability in respect of such Income Taxes (except any Tax Asset reflected as an asset in the Final Closing Statement and taken into account in the calculation of the Final Business Working Capital or the Final Business Net Cash), or (D) Taxes for which Purchaser Parent is responsible under Section 6.5(d)(ii). (ii) Subject to Section 6.5(d)(v), from and after the Closing, Purchaser Parent shall indemnify and hold harmless the Purchaser Tax Indemnified Parties from and against all liability, without duplication, for (1) all Taxes of Purchaser Parent and its Affiliates (other than Purchaser and its Subsidiaries) for any Tax period (other than Transfer Taxes and VAT for which Seller Parent is responsible hereunder), (2) Taxes of Purchaser and its Subsidiaries (other than the Conveyed Subsidiaries and their Subsidiaries) for any Pre-Closing Tax Period, (3) Taxes of any Person for a Pre-Closing Tax Period for which Purchaser (or any Subsidiary thereof other than any Conveyed Subsidiaries and their Subsidiaries) is liable under Treasury Regulation Section 1.1502-6 (or a similar provision of state, local or foreign Law), or as a transferee or successor or by Contract (other than Contracts that do not relate primarily to Taxes), (4) Taxes arising out of or resulting from any breach of any covenant or agreement of Purchaser Parent, Purchaser or their respective Affiliates contained in this Agreement, (5) Transfer Taxes for which Purchaser Parent is responsible under Section 6.5(j), (6) Taxes arising from any breach of any representation or warranty in Section 5.17(k), (7) Taxes for a Pre-Closing Tax Period imposed on (x) any settlement of any intercompany accounts of Purchaser or any Subsidiary of Purchaser, on the one hand, and Purchaser Parent or any Subsidiary of Purchaser Parent (other than Purchaser and its Subsidiaries), on the other hand, pursuant to Section 6.7 or (y) any transaction or step forming part of the Purchaser Internal Restructurings, (8) Taxes required to be deducted or withheld with respect to any amounts payable to Purchaser Parent pursuant to Section 2.8 or Section 2.9, including any penalties imposed on Purchaser as a result of Purchaser’s failure to deduct or withhold any such amounts, (9) Taxes arising as a result of Purchaser or any Subsidiary of Purchaser (other than any Conveyed Subsidiary or a Subsidiary thereof) at any time ceasing to be a member of a group for the purposes of any Tax, of which group Purchaser Parent or any Subsidiary of Purchaser Parent (other than Purchaser or any Subsidiary of Purchaser) is or was also a member and (10) any costs and expenses, including reasonable legal and accounting fees and expenses, attributable to any item described in clauses (1) through (9) (any such Taxes for which Purchaser Parent is responsible pursuant to this Section 6.5(d)(ii), subject to the following proviso, “Purchaser Parent Indemnified Taxes”); provided that Purchaser Parent shall not be required to indemnify or hold harmless any Purchaser Tax Indemnified Party from and against any liability for (A) Taxes attributable to any action taken after the Closing by Seller Parent or any of its Affiliates, other than any such action that (1) is in the ordinary course of business, (2) is expressly permitted or contemplated by this Agreement, or (3) is required to be taken in order to comply with applicable Law or as a result of a change in applicable Law (a “Seller Tax Act”), (B) Taxes that were reflected, accrued or reserved for in the Final Closing Statement, Final Purchaser Working Capital or the Final Purchaser Net Cash, (C) Income Taxes to the extent that Purchaser or any Subsidiary thereof had any Tax Assets as of the close of business on the Closing Date that were available, or would have been available but for their prior utilization by Purchaser or any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries after the Closing), to offset or otherwise reduce the applicable Tax Liability in respect of such Income Taxes (except any Tax Asset reflected as an asset in the Final Closing Statement and taken into account in the calculation of the Final Purchaser Working Capital or the Final Purchaser Net Cash), or (D) Taxes for which Seller Parent is responsible under Section 6.5(d)(i). (iii) To the extent permitted or required by applicable Law, the taxable year of each of the Conveyed Subsidiaries and their Subsidiaries and any Subsidiary of Purchaser that includes the Closing Date shall be treated as closing on (and including) the Closing Date. Otherwise, for purposes of this Agreement, in the case of any Straddle Period: (A) Property Taxes allocable to the Pre-Closing Tax Period shall be computed based upon the ratio of the number of days in the Pre-Closing Tax Period to the number of days in the entire Straddle Period; and (B) Taxes (other than Property Taxes) allocable to the Pre-Closing Tax Period shall be computed as if such Tax period ended as of the close of business on the Closing Date and, in the case of any Taxes of Conveyed Subsidiaries (and their Subsidiaries) and Seller Parent, or in the case of any Taxes of Purchaser Parent and Purchaser (and their Subsidiaries prior to the Closing), in each case attributable to the ownership of any equity interest in any partnership or other “flow through” entity for tax purposes (including of any “controlled foreign corporation,” as defined under the Code) as if the Tax period of such partnership or other “flow through” entity ended as of the close of business on the Closing Date with the Taxes of such entity for the Pre-Closing Tax Period deemed to include any Taxes on the allocable income of such entity in respect of such Tax period; provided that exemptions, allowances or deductions that are calculated on an annual basis (including depreciation and amortization deductions) shall be allocated between the period ending on the Closing Date and the period beginning after the Closing Date in proportion to the number of days in each period. (iv) Any claim for indemnification under this Section 6.5(d) shall be made in writing upon the party from whom indemnification is sought, and shall specify in reasonable detail the basis for such claim. Any indemnity payment required to be made pursuant to this Section 6.5(d) shall be made within thirty (30) days after the indemnified party makes written demand upon the indemnifying party, but in no case earlier than five (5) Business Days prior to the date on which the relevant Taxes are required to be paid to the applicable Taxing Authority. (v) With respect to any Taxes suffered or incurred by any Conveyed Subsidiary (or any Subsidiary thereof) that was not wholly owned by Seller Parent (directly or indirectly) as of immediately prior to the Closing, the indemnification obligations of Seller Parent pursuant to Section 6.5(d)(i) in respect of such Taxes (or related costs and expenses) shall in no event exceed an amount equal to (A) the amount of such Taxes (or related costs and expenses) for which the Purchaser Tax Indemnified Parties would otherwise be entitled to indemnification pursuant to Section 6.5(d), as if such Conveyed Subsidiary (or any Subsidiary thereof) were wholly owned by Seller Parent, multiplied by (B) the direct and indirect percentage ownership of Seller Parent of such Conveyed Subsidiary (or Subsidiary thereof) as of immediately prior to the Closing. With respect to any Taxes suffered or incurred by any Subsidiary of Purchaser Parent (including Purchaser and its Subsidiaries) that was not wholly owned by Purchaser Parent (directly or indirectly) as of immediately prior to the Closing, the indemnification obligations of Purchaser Parent pursuant to Section 6.5(d)(ii) in respect of such Taxes (or related costs and expenses) shall in no event exceed an amount equal to (A) the amount of such Taxes (or related costs and expenses) for which the Purchaser Tax Indemnified Parties would otherwise be entitled to indemnification pursuant to Section 6.5(d), as if such Subsidiary were wholly owned by Purchaser Parent, multiplied by (B) the direct and indirect percentage ownership of Purchaser Parent of such Subsidiary as of immediately prior to the Closing. (vi) Without duplication to any other amounts paid pursuant to this Section 6.5: (A) Within thirty (30) days following the filing of any Income Tax Return for any Conveyed Subsidiary (or any Subsidiary thereof), on the one hand, or Purchaser (or any Subsidiary thereof, other than the Conveyed Subsidiaries and their Subsidiaries), on the other hand, for any Pre-Closing Tax Period or for any Straddle Period, Seller Parent or Purchaser Parent shall (or Purchaser Parent shall cause Purchaser to) prepare a statement showing (i) the amount of Income Taxes shown as due on such filed Income Tax Return with respect to the relevant Pre-Closing Tax Period or the portion of any Straddle Period ending on and including the Closing Date (the “Final Pre-Closing Income Tax Amount”) and (ii) ~~the amount~~ any loss, damage, liability or expense (including reasonable fees for attorneys and other outside consultants) incurred in contesting or otherwise in connection with any Taxes described in clause (i) of the Seller Accrued Income Taxes or Purchaser Accrued Income Taxes, as applicable, attributable to such Income Tax Return as reflected on the Final Closing Statement (the “Pre-Closing Income Tax Amount”) and deliver such statement to Seller Parent and Purchaser Parent, as applicable. Purchaser Parent or Seller Parent, as applicable, shall have a period of fifteen (15) Business Days to provide comments to a schedule prepared (or caused to be prepared) by Seller Parent or Purchaser Parent, respectively. If Purchaser Parent or Seller Parent, as applicable, do not provide any comments to Seller Parent or Purchaser Parent, respectively, during such period, the statement as so prepared shall be final and bindingSection 6.03(a). (Bc) In The amounts payable or to be paid under this Section 6.03 (the ~~event~~ "Tax Indemnity Payments") shall be limited in aggregate amount to the ~~Final Pre-Closing Income~~ General Aviation Purchase Price with respect to Tax ~~Amount~~ Indemnity Payments arising principally out of the business of or otherwise related to General Aviation or to the Atlantic Purchase Price with respect to any ~~Income~~ Tax ~~Return is less~~ Indemnity Payment arising from any source other than ~~the amount of the Pre-Closing Income Tax Amount attributable to such Income Tax Return that was included on the Final Closing Statement, the Purchaser~~ General Aviation. (d) All Indemnity Payments shall be paid in immediately available funds within five (5) Business Days ~~following~~ after the ~~finalization~~ later of ~~the Final Pre-Closing Income Tax Amount hereunder~~ (i) ~~pay~~ receipt of a written request from the party entitled to ~~Seller Parent the amount of~~ such ~~difference with respect to a Conveyed Subsidiary and their Subsidiaries~~ Tax Indemnity Payment and (ii) ~~pay to Purchaser Parent~~ the day of payment of the amount of such difference with respect to Purchaser and its Subsidiaries. (vii) The Parties shall use reasonable best efforts to structure any indemnity payment, true-up payment, or payment in respect of Tax Benefits made by any Party pursuant to this Agreement (including pursuant to this Section 6.5, Section 6.6 and Article VII) and any payment made by Purchaser Parent to Purchaser pursuant to Section 2.8 or Section 2.9 in that is the ~~manner set forth in Clause 10~~ subject of the ~~Structuring Considerations Agreement. The Parties shall use reasonable best efforts~~ Tax Indemnity Payment by the party entitled to ~~structure as a special dividend any payment made by Purchaser to Purchaser Parent pursuant to Section 2.8, Section 2.9 or this Section 6.5~~receive such Tax Indemnity Payment.

Appears in 1 contract

Sources: Stock Purchase Agreement (Macquarie Infrastructure Assets LLC)

Tax Indemnification. (a) The Contributors hereby, jointly and severally, indemnify each Parent Indemnified Person against and agree to hold each Parent Indemnified Person harmless from any (t) Tax of any Codina Entity described in clause (i) Subject to Section 6.5(d)(v), from and after the Closing, Seller Parent agrees to indemnify and hold harmless Purchaser and its Subsidiaries (including the Conveyed Subsidiaries and their Subsidiaries after the Closing Date) (collectively, the “Purchaser Tax Indemnified Parties”) from and against all liability, without duplication, for (1) Taxes of the ~~Conveyed Subsidiaries and their Subsidiaries for any Pre-Closing~~ definition of Tax Period (including any Taxes payable in respect of an election under Section 965(h) of the Code), (2) Taxes of any Seller (other than any Transfer Taxes and VAT for which Purchaser is responsible hereunder) including, Taxes (other than Taxes of the Conveyed Subsidiaries and their Subsidiaries) imposed with respect to, arising out of or relating related to ~~the Purchased Assets or the Business for~~ a Pre-Closing Tax Period, (3u) ~~Taxes~~ Tax described in clause (ii) or (iii) of the definition of Tax, (v) Tax of any ~~Person~~ Codina Entity resulting from a breach of the provisions of Section 4.14 or 6.06, (~~other than~~ w) Tax resulting from the ~~Conveyed Subsidiaries and their Subsidiaries~~application of Section 280G of the Code to any payment made pursuant to this Agreement or to any payment made as a result of, or in connection with, any transaction contemplated by this Agreement, (x) ~~for a Pre-Closing~~ withholding Tax ~~Period for which~~ of Parent, FECI, any ~~Conveyed Subsidiary (~~Codina Entity or any ~~Subsidiary thereof~~of their Affiliates resulting from any payment or transfer pursuant to, in connection with or contemplated by the transactions described in this Agreement or the Escrow Agreement, (y) ~~is liable under Treasury Regulation~~ Tax of any Codina Entity resulting from a termination of any Tax Sharing Agreement pursuant to Section ~~1.1502-6~~ 6.06(d) and (~~or a similar provision~~ z) any liabilities, costs, expenses (including, without limitation, reasonable expenses of ~~state, local or foreign Law~~investigation and attorneys’ fees and expenses), losses, damages, assessments, settlements or ~~as a transferee or successor or by Contract (other than Contracts that do not relate primarily to Taxes), (4) Taxes~~ judgments arising out of or ~~resulting from any breach~~ incident to the imposition, assessment or assertion of any ~~covenant or agreement of Seller Parent or any of its Affiliates contained~~ Tax described in ~~this Agreement~~(u), (~~5) Taxes for a Pre-Closing Tax Period imposed on~~ v), (w), (x) ~~any transaction effected pursuant to Section 2.3(b~~or (y), (the sum of (v), (w), (x), (y) ~~any settlement of any intercompany accounts of Seller Parent or its Subsidiaries pursuant to Section 6.7, or~~ and (z) ~~any transaction or step forming part of the Seller Internal Restructurings, (6) Transfer Taxes for which Seller Parent is responsible under Section 6.5(j), (7) Taxes required~~ being referred to be deducted or withheld with respect to the payment of the Purchase Consideration or any amounts payable to Seller Parent pursuant to Section 2.8 or Section 2.9, including any penalties imposed on Purchaser herein as a result of Purchaser’s failure to deduct or withhold any such amounts that Purchaser (or a Purchaser Designated Affiliate) was permitted to withhold under Section 2.10 (in each case, subject to Purchaser’s compliance with the notice and cooperation requirements of Section 2.10 and except for any such Taxes (and any related penalties) required to be deducted or withheld solely as a result of any assignment by Purchaser or its Affiliates for which Purchaser is responsible pursuant to Section 10.3), (8) Taxes arising from any breach of any representation or warranty contained in Section 4.16(k), (9) Taxes arising as a result of any Conveyed Subsidiary or any Subsidiary of any Conveyed Subsidiary at any time ceasing to be a member of a group for the purposes of any Tax, of which group Seller Parent or any Subsidiary of Seller Parent is or was also a member and (10) any costs and expenses, including reasonable legal and accounting fees and expenses, attributable to any item described in clauses (1) through (9) (any such Taxes for which Seller Parent is responsible pursuant to this Section 6.5(d)(i), subject to the following proviso, “~~Seller Indemnified Taxes~~Tax Loss”); provided (i) that ~~Seller Parent~~ such Contributors shall ~~not be required to indemnify or hold harmless any Purchaser~~ have no liability for the payment of such Tax Indemnified Party from and against any liability pursuant to this Section 6.5(d)(i) for (A) Taxes attributable to any action taken after the Closing by Purchaser, any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries), or any transferee of Purchaser or any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries), other than any such action that (1) is in the ordinary course of business, (2) is expressly permitted or contemplated by this Agreement, or (3) is required to be taken in order to comply with applicable Law or as a result of a change in applicable Law (a “Purchaser Tax Act”), (B) Taxes that were reflected, accrued or reserved for in the Final Closing Statement, Final Business Working Capital, or Final Business Net Cash, (C) Income Taxes Loss to the extent that ~~a Conveyed Subsidiary or any Subsidiary thereof had any~~ such Tax Assets as of the close of business on the Closing Date that were available, or would have been available but for their prior utilization by Purchaser or any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries after the Closing) to offset or otherwise reduce the applicable Tax Liability in respect of such Income Taxes (except any Tax Asset Loss is reflected as ~~an asset in the Final Closing Statement and taken into account~~ a current Tax liability in the calculation of ~~the Final Business~~ Closing Working Capital or and (ii) the ~~Final Business Net Cash)~~Contributors shall have no liability for ad valorem real property Taxes in respect of periods beginning after December 31, ~~or (D) Taxes for which Purchaser Parent is responsible under Section 6.5(d)(ii)~~2005. (iib) Subject to Section 6.5(d)(v), from and after the Closing, Purchaser Parent shall indemnify and hold harmless the Purchaser Tax Indemnified Parties from and against all liability, without duplication, for (1) all Taxes of Purchaser Parent and its Affiliates (other than Purchaser and its Subsidiaries) for any Tax period (other than Transfer Taxes and VAT for which Seller Parent is responsible hereunder), (2) Taxes of Purchaser and its Subsidiaries (other than the Conveyed Subsidiaries and their Subsidiaries) for any Pre-Closing Tax Period, (3) Taxes of any Person for a Pre-Closing Tax Period for which Purchaser (or any Subsidiary thereof other than any Conveyed Subsidiaries and their Subsidiaries) is liable under Treasury Regulation Section 1.1502-6 (or a similar provision of state, local or foreign Law), or as a transferee or successor or by Contract (other than Contracts that do not relate primarily to Taxes), (4) Taxes arising out of or resulting from any breach of any covenant or agreement of Purchaser Parent, Purchaser or their respective Affiliates contained in this Agreement, (5) Transfer Taxes for which Purchaser Parent is responsible under Section 6.5(j), (6) Taxes arising from any breach of any representation or warranty in Section 5.17(k), (7) Taxes for a Pre-Closing Tax Period imposed on (x) any settlement of any intercompany accounts of Purchaser or any Subsidiary of Purchaser, on the one hand, and Purchaser Parent or any Subsidiary of Purchaser Parent (other than Purchaser and its Subsidiaries), on the other hand, pursuant to Section 6.7 or (y) any transaction or step forming part of the Purchaser Internal Restructurings, (8) Taxes required to be deducted or withheld with respect to any amounts payable to Purchaser Parent pursuant to Section 2.8 or Section 2.9, including any penalties imposed on Purchaser as a result of Purchaser’s failure to deduct or withhold any such amounts, (9) Taxes arising as a result of Purchaser or any Subsidiary of Purchaser (other than any Conveyed Subsidiary or a Subsidiary thereof) at any time ceasing to be a member of a group for the purposes of any Tax, of which group Purchaser Parent or any Subsidiary of Purchaser Parent (other than Purchaser or any Subsidiary of Purchaser) is or was also a member and (10) any costs and expenses, including reasonable legal and accounting fees and expenses, attributable to any item described in clauses (1) through (9) (any such Taxes for which Purchaser Parent is responsible pursuant to this Section 6.5(d)(ii), subject to the following proviso, “Purchaser Parent Indemnified Taxes”); provided that Purchaser Parent shall not be required to indemnify or hold harmless any Purchaser Tax Indemnified Party from and against any liability for (A) Taxes attributable to any action taken after the Closing by Seller Parent or any of its Affiliates, other than any such action that (1) is in the ordinary course of business, (2) is expressly permitted or contemplated by this Agreement, or (3) is required to be taken in order to comply with applicable Law or as a result of a change in applicable Law (a “Seller Tax Act”), (B) Taxes that were reflected, accrued or reserved for in the Final Closing Statement, Final Purchaser Working Capital or the Final Purchaser Net Cash, (C) Income Taxes to the extent that Purchaser or any Subsidiary thereof had any Tax Assets as of the close of business on the Closing Date that were available, or would have been available but for their prior utilization by Purchaser or any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries after the Closing), to offset or otherwise reduce the applicable Tax Liability in respect of such Income Taxes (except any Tax Asset reflected as an asset in the Final Closing Statement and taken into account in the calculation of the Final Purchaser Working Capital or the Final Purchaser Net Cash), or (D) Taxes for which Seller Parent is responsible under Section 6.5(d)(i). (iii) To the extent permitted or required by applicable Law, the taxable year of each of the Conveyed Subsidiaries and their Subsidiaries and any Subsidiary of Purchaser that includes the Closing Date shall be treated as closing on (and including) the Closing Date. Otherwise, for For purposes of this ~~Agreement~~Section 11.03, in the case of any ~~Straddle Period:~~ Taxes that are imposed on a periodic basis and are payable for a Tax period that includes (Abut does not end on) ~~Property Taxes allocable~~ the Closing Date, the portion of such Tax related to the ~~Pre-~~portion of such Tax period ending on and including the Closing ~~Tax Period~~ Date shall ~~be computed~~ (x) in the case of any Taxes other than gross receipts, sales or use Taxes and Taxes based upon or related to income, be deemed to be the ~~ratio~~ amount of such Tax for the entire Tax period multiplied by a fraction the numerator of which is the number of days in the ~~Pre-~~Tax period ending on and including the Closing ~~Tax Period to~~ Date and the denominator of which is the number of days in the entire ~~Straddle Period; and~~ Tax period, and (By) ~~Taxes (other than Property Taxes) allocable to the Pre-Closing Tax Period shall be computed as if such Tax period ended as of the close of business on the Closing Date and,~~ in the case of any ~~Taxes of Conveyed Subsidiaries (~~Tax based upon or related to income and ~~their Subsidiaries) and Seller Parent~~any gross receipts, sales or ~~in the case of any Taxes of Purchaser Parent and Purchaser (and their Subsidiaries prior~~ use Tax, be deemed equal to the ~~Closing)~~amount which would be payable if the relevant Tax period ended on and included the Closing Date. (c) Not later than 30 days after receipt by ▇▇. ▇▇▇▇▇▇ of written notice from Parent stating that any Tax Loss has been incurred by a Parent Indemnified Person and the amount thereof and of the indemnity payment requested, ~~in each case attributable~~ the Contributors shall discharge their obligation to indemnify the Parent Indemnified Person against such Tax Loss by paying to Parent an amount equal to the ownership of any equity interest in any partnership or other “flow through” entity for tax purposes (including of any “controlled foreign corporation,” as defined under the Code) as if the Tax period of such partnership or other “flow through” entity ended as of the close of business on the Closing Date with the Taxes of such entity for the Pre-Closing Tax Period deemed to include any Taxes on the allocable income of such entity in respect amount of such Tax ~~period; provided that exemptions~~Loss. Notwithstanding the foregoing, allowances or deductions that are calculated on an annual basis (including depreciation and amortization deductions) shall be allocated between the period ending on the Closing Date and the period beginning after the Closing Date in proportion to the number if Parent provides ▇▇. ▇▇▇▇▇▇ with written notice of a Tax Loss at least 30 days in each period. (iv) Any claim for indemnification under this Section 6.5(d) shall be made in writing upon the party from whom indemnification is sought, and shall specify in reasonable detail the basis for such claim. Any indemnity payment required to be made pursuant to this Section 6.5(d) shall be made within thirty (30) days after the indemnified party makes written demand upon the indemnifying party, but in no case earlier than five (5) Business Days prior to the date on which the relevant ~~Taxes are~~ Tax Loss is required to be paid by any Parent Indemnified Person, within that 30-day period the Contributors shall discharge their obligation to indemnify the Parent Indemnified Person against such Tax Loss by making payments to the ~~applicable~~ relevant Taxing ~~Authority. (v) With respect to any Taxes suffered~~ Authority or ~~incurred~~ Parent, as directed by ~~any Conveyed Subsidiary (or any Subsidiary thereof) that was not wholly owned by Seller Parent (directly or indirectly) as of immediately prior to the Closing~~Parent, ~~the indemnification obligations of Seller Parent pursuant to Section 6.5(d)(i)~~ in ~~respect of such Taxes (or related costs and expenses) shall in no event exceed~~ an aggregate amount equal to ~~(A)~~ the amount of such ~~Taxes~~ Tax Loss. The payment by a Parent Indemnified Person of any Tax Loss shall not relieve the Contributors of their obligation under this Section 11.03. (d) Parent agrees to give prompt notice to ▇▇. ▇▇▇▇▇▇ of any Tax Loss or ~~related costs and expenses) for which~~ the ~~Purchaser Tax Indemnified Parties would otherwise be entitled to indemnification pursuant to Section 6.5(d)~~assertion of any claim, ~~as if such Conveyed Subsidiary (~~or the commencement of any ~~Subsidiary thereof) were wholly owned by Seller Parent~~suit, ~~multiplied by (B) the direct and indirect percentage ownership of Seller Parent of such Conveyed Subsidiary (~~action or Subsidiary thereof) as of immediately prior to the Closing. With respect to any Taxes suffered or incurred by any Subsidiary of Purchaser Parent (including Purchaser and its Subsidiaries) that was not wholly owned by Purchaser Parent (directly or indirectly) as of immediately prior to the Closing, the indemnification obligations of Purchaser Parent pursuant to Section 6.5(d)(ii) proceeding in respect of which indemnity may be sought hereunder which Parent deems to be within the ambit of this Section 11.03 (specifying with reasonable particularity the basis therefor). Parent shall give ▇▇. ▇▇▇▇▇▇ such ~~Taxes~~ information with respect thereto as ▇▇. ▇▇▇▇▇▇ may reasonably request. ▇▇. ▇▇▇▇▇▇ may, at its own expense, participate in the defense of such suit, action or proceeding, it being understood that all determinations as to the ultimate conduct of such action, suit or proceeding (~~or related costs and expenses~~including the settlement thereof) shall be in no event exceed an amount equal to (A) the amount of such Taxes (or related costs and expenses) for which the Purchaser Tax Indemnified Parties would otherwise be entitled to indemnification pursuant to Section 6.5(d), as if such Subsidiary were wholly owned by Purchaser Parent~~, multiplied by (B) the direct and indirect percentage ownership of Purchaser Parent of such Subsidiary as of immediately prior to the Closing~~’s sole discretion. (vie) ~~Without duplication~~ Any claim of any Parent Indemnified Person under this Section may be made and enforced by Parent on behalf of such Parent Indemnified Person. (f) Disputes arising under Sections 6.06 and 11.03 and not resolved by mutual agreement within 30 days shall be resolved by the Settlement Accountants within five days of the date on which the need to choose the Settlement Accountants arises. The Settlement Accountants shall resolve any ~~other amounts paid~~ disputed items within 30 days of having the item referred to it pursuant to ~~this Section 6.5: (A) Within thirty (30) days following~~ such procedures as it may require. The costs, fees and expenses of the ~~filing of any Income Tax Return for any Conveyed Subsidiary (or any Subsidiary thereof)~~Settlement Accountants shall be borne equally by Parent, on the one hand, ~~or Purchaser (or any Subsidiary thereof, other than~~ and the ~~Conveyed Subsidiaries and their Subsidiaries)~~Contributors, on the other hand, for any Pre-Closing Tax Period or for any Straddle Period, Seller Parent or Purchaser Parent shall (or Purchaser Parent shall cause Purchaser to) prepare a statement showing (i) the amount of Income Taxes shown as due on such filed Income Tax Return with respect to the relevant Pre-Closing Tax Period or the portion of any Straddle Period ending on and including the Closing Date (the “Final Pre-Closing Income Tax Amount”) and (ii) the amount of the Seller Accrued Income Taxes or Purchaser Accrued Income Taxes, as applicable, attributable to such Income Tax Return as reflected on the Final Closing Statement (the “Pre-Closing Income Tax Amount”) and deliver such statement to Seller Parent and Purchaser Parent, as applicable. Purchaser Parent or Seller Parent, as applicable, shall have a period of fifteen (15) Business Days to provide comments to a schedule prepared (or caused to be prepared) by Seller Parent or Purchaser Parent, respectively. If Purchaser Parent or Seller Parent, as applicable, do not provide any comments to Seller Parent or Purchaser Parent, respectively, during such period, the statement as so prepared shall be final and bindingother. (B) In the event the Final Pre-Closing Income Tax Amount with respect to any Income Tax Return is less than the amount of the Pre-Closing Income Tax Amount attributable to such Income Tax Return that was included on the Final Closing Statement, the Purchaser shall within five (5) Business Days following the finalization of the Final Pre-Closing Income Tax Amount hereunder (i) pay to Seller Parent the amount of such difference with respect to a Conveyed Subsidiary and their Subsidiaries and (ii) pay to Purchaser Parent the amount of such difference with respect to Purchaser and its Subsidiaries. (vii) The Parties shall use reasonable best efforts to structure any indemnity payment, true-up payment, or payment in respect of Tax Benefits made by any Party pursuant to this Agreement (including pursuant to this Section 6.5, Section 6.6 and Article VII) and any payment made by Purchaser Parent to Purchaser pursuant to Section 2.8 or Section 2.9 in the manner set forth in Clause 10 of the Structuring Considerations Agreement. The Parties shall use reasonable best efforts to structure as a special dividend any payment made by Purchaser to Purchaser Parent pursuant to Section 2.8, Section 2.9 or this Section 6.5.

Appears in 1 contract

Sources: Merger Agreement (Florida East Coast Industries Inc)

Tax Indemnification. (ia) ~~Subject to Section 6.5(d)(v), from~~ The Sellers shall jointly and ~~after the Closing, Seller Parent agrees to~~ severally indemnify and hold harmless ~~Purchaser~~ the Buyers, each Business Subsidiary (except that in the case of Thomson NETg Ltd (U.K.) the parties agree that any indemnification claim shall be made exclusively to SkillSoft PLC) and ~~its Subsidiaries~~ any successors thereto or Affiliates thereof in respect of and against (x) the failure to perform any covenant or agreement set forth in this Article VIII and (y) without duplication, the following Taxes to the extent such Taxes exceed the Tax Reserves (the "Excluded Taxes"): (i) any Taxes for any Taxable period ending (or deemed pursuant to Section 8.3(b) to end) on or before the Closing Date due and payable by (x) any Buyer in respect of the Business, (y) any Business Subsidiary or (z) any Seller (for the avoidance of doubt, Taxes for any Taxable period include any penalties, interest or additions thereto, whether or not accruing in such Taxable period or in any subsequent Taxable period including the ~~Conveyed Subsidiaries and their Subsidiaries~~ periods after the Closing Date); (ii) (collectively, the “Purchaser Tax Indemnified Parties”) from and against all liability, without duplication, for (1) Taxes of the Conveyed Subsidiaries and their Subsidiaries for any Pre-Closing Tax Period (including any Taxes payable in respect of an election under Section 965(h) of the Code), (2) Taxes of any Seller (other than any Transfer Taxes and VAT for which Purchaser is responsible hereunder) including, Taxes (other than Taxes of the Conveyed Subsidiaries and their Subsidiaries) imposed with respect to, arising out of or relating to the Purchased Assets or the Business for a Pre-Closing Tax Period, (3) Taxes of any Person (other than the Conveyed Subsidiaries and their Subsidiaries) for a Pre-Closing Tax Period for which any ~~Conveyed~~ Business Subsidiary (may be liable as a member of an affiliated, consolidated or ~~any Subsidiary thereof) is liable under~~ unitary group on or before the Closing Date, including pursuant to Treasury ~~Regulation~~ Regulations Section 1.1502-6 (or a under any comparable or similar provision of state, local or foreign ~~Law)~~laws, or as a transferee or ~~successor~~ successor, or ~~by Contract~~ pursuant to any contractual obligation; (iii) any Conveyance Taxes, other than ~~Contracts~~ Irish stamp duty, arising in connection with the consummation of the transactions contemplated by this Agreement whether levied on any Buyer, any Seller, any Business Subsidiary or any other respective Affiliate, but only to the extent borne by any Buyer or any Business Subsidiary or any their respective Affiliates and only to the extent that do such Conveyance Taxes may not ~~relate primarily to Taxes),~~ be claimed back or recovered by the person bearing such Taxes or refunded thereto; (4iv) any Taxes incurred by any Business Subsidiary arising out of the elimination of inter-company items as required by Section 4.10 hereof or resulting from ~~any breach~~ the treatment of any ~~covenant or agreement of Seller Parent~~ deferred inter-company gain or any excess loss account under any provision of ~~its Affiliates contained in this Agreement, (5) Taxes for a Pre-Closing~~ foreign Tax ~~Period imposed on (x) any transaction effected pursuant~~ law corresponding or similar to the Treasury Regulations under Section ~~2.3(b), (y) any settlement of any intercompany accounts of Seller Parent or its Subsidiaries pursuant to Section 6.7, or (z) any transaction or step forming part~~ 1502 of the Seller Internal Restructurings, (6) Transfer Taxes for which Seller Parent is responsible under Section 6.5(j), (7) Taxes required to be deducted or withheld with respect to the payment of the Purchase Consideration or any amounts payable to Seller Parent pursuant to Section 2.8 or Section 2.9, including any penalties imposed on Purchaser as a result of Purchaser’s failure to deduct or withhold any such amounts that Purchaser (or a Purchaser Designated Affiliate) was permitted to withhold under Section 2.10 (Code in ~~each case, subject to Purchaser’s compliance~~ connection with the notice and cooperation requirements of Section 2.10 and except for any such Taxes (and any related penalties) required to be deducted or withheld solely as a result of any assignment by Purchaser or its Affiliates for which Purchaser is responsible pursuant to Section 10.3), (8) Taxes arising from any breach of any representation or warranty contained in Section 4.16(k), (9) Taxes arising as a result of any Conveyed Subsidiary or any Subsidiary of any Conveyed Subsidiary at any time ceasing to be a member of a group for the purposes of any Tax, of which group Seller Parent or any Subsidiary of Seller Parent is or was also a member and (10) any costs and expenses, including reasonable legal and accounting fees and expenses, attributable to any item described in clauses (1) through (9) (any such Taxes for which Seller Parent is responsible pursuant to this Section 6.5(d)(i), subject to the following proviso, “Seller Indemnified Taxes”); provided that Seller Parent shall not be required to indemnify or hold harmless any Purchaser Tax Indemnified Party from and against any liability pursuant to this Section 6.5(d)(i) for (A) Taxes attributable to any action taken after the Closing by Purchaser, any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries), or any transferee of Purchaser or any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries), other than any such action that (1) is in the ordinary course of business, (2) is expressly permitted or transactions contemplated by this Agreement; and (v) any and all liabilities, whether or not associated with a particular tax liability, arising with respect to Taxable periods ending (3or deemed pursuant to Section 8.3(b) ~~is required~~ to ~~be taken in order~~ end) on or before the Closing Date out of the failure of any Asset Seller or any Business Subsidiary to comply with ~~applicable Law~~ the laws, regulations or ~~as a result~~ other requirements of a change in applicable Law (a “Purchaser Tax Act”), (B) Taxes that were reflected, accrued or reserved for in the Final Closing Statement, Final Business Working Capital, or Final Business Net Cash, (C) Income Taxes any Governmental Entity prior to ~~the extent that a Conveyed Subsidiary or any Subsidiary thereof had any Tax Assets as of the close of business on~~ the Closing Date ~~that were available~~including, without limitation, penalties imposed for failure to file required Tax Returns or would have been available but for their prior utilization by Purchaser or any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries after the Closing) to offset or otherwise reduce the applicable Tax Liability maintain required records in respect of such Income Taxes (except any Tax Asset reflected as an asset in the Final Closing Statement and taken into account in the calculation of the Final Business Working Capital or the Final Business Net Cash), or (D) Taxes for which Purchaser Parent is responsible under Section 6.5(d)(ii)connection with transfer pricing. (iib) ~~Subject to Section 6.5(d)(v), from and after the Closing, Purchaser Parent~~ The Buyers shall indemnify and hold harmless the ~~Purchaser Tax Indemnified Parties from~~ Sellers in respect of and against ~~all liability, without duplication, for~~ (1x) all Taxes of Purchaser Parent and its Affiliates (other than Purchaser and its Subsidiaries) for any Tax period (other than Transfer Taxes and VAT for which Seller Parent is responsible hereunder), (2) Taxes of Purchaser and its Subsidiaries (other than the Conveyed Subsidiaries and their Subsidiaries) for any Pre-Closing Tax Period, (3) Taxes of any Person for a Pre-Closing Tax Period for which Purchaser (or any Subsidiary thereof other than any Conveyed Subsidiaries and their Subsidiaries) is liable under Treasury Regulation Section 1.1502-6 (or a similar provision of state, local or foreign Law), or as a transferee or successor or by Contract (other than Contracts that do not relate primarily failure to ~~Taxes), (4) Taxes arising out of or resulting from any breach of~~ perform any covenant or agreement ~~of Purchaser Parent, Purchaser or their respective Affiliates contained~~ set forth in this ~~Agreement~~Article VIII and (y) without duplication, the following Taxes: (5i) ~~Transfer~~ any and all Taxes due and payable by any Business Subsidiary for any taxable period beginning (or deemed pursuant to Section 8.3(b) to begin) after the Closing Date other than Taxes for which Purchaser Parent is responsible under Section 6.5(j), (6) Taxes arising from any breach of any representation or warranty in Section 5.17(k), (7) Taxes for a Pre-Closing Tax Period imposed on (x) any settlement of any intercompany accounts of Purchaser or any Subsidiary of Purchaser, on the ~~one hand, and Purchaser Parent or any Subsidiary of Purchaser Parent (other than Purchaser and its Subsidiaries), on the other hand,~~ Sellers are liable pursuant to Section ~~6.7 or~~ 8.2(a)(ii); (yii) the Tax Reserves; and (iii) any ~~transaction or step forming part~~ Irish stamp duty arising in connection with the consummation of the Purchaser Internal Restructurings, (8) Taxes required to be deducted or withheld with respect to any amounts payable to Purchaser Parent pursuant to Section 2.8 or Section 2.9, including any penalties imposed on Purchaser as a result of Purchaser’s failure to deduct or withhold any such amounts, (9) Taxes arising as a result of Purchaser or any Subsidiary of Purchaser (other than any Conveyed Subsidiary or a Subsidiary thereof) at any time ceasing to be a member of a group for the purposes of any Tax, of which group Purchaser Parent or any Subsidiary of Purchaser Parent (other than Purchaser or any Subsidiary of Purchaser) is or was also a member and (10) any costs and expenses, including reasonable legal and accounting fees and expenses, attributable to any item described in clauses (1) through (9) (any such Taxes for which Purchaser Parent is responsible pursuant to this Section 6.5(d)(ii), subject to the following proviso, “Purchaser Parent Indemnified Taxes”); provided that Purchaser Parent shall not be required to indemnify or hold harmless any Purchaser Tax Indemnified Party from and against any liability for (A) Taxes attributable to any action taken after the Closing by Seller Parent or any of its Affiliates, other than any such action that (1) is in the ordinary course of business, (2) is expressly permitted or transactions contemplated by this Agreement~~, or~~ . (3c) ~~is required~~ The Buyers and Thomson France agree that neither the Buyers nor NETg S.A. (France) will be authorized to be taken in order to comply with applicable Law or as a result of a change in applicable Law (a “Seller Tax Act”), (B) Taxes that were reflected, accrued or reserved for in the Final Closing Statement, Final Purchaser Working Capital or the Final Purchaser Net Cash, (C) Income Taxes to the extent that Purchaser or seek any Subsidiary thereof had any Tax Assets as of the close of business on the Closing Date that were available, or would have been available but for their prior utilization by Purchaser or any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries after the Closing), to offset or otherwise reduce the applicable Tax Liability indemnification from Thomson France in respect of ~~such Income Taxes~~ the net operating losses incurred by NETg S.A. (~~except any Tax Asset reflected as an asset in the Final Closing Statement and taken into account in the calculation of the Final Purchaser Working Capital or the Final Purchaser Net Cash), or (D~~France) Taxes for which Seller Parent is responsible under Section 6.5(d)(i). (iii) To the extent permitted or required by applicable Law, the taxable year of each of the Conveyed Subsidiaries and their Subsidiaries and any Subsidiary of Purchaser that includes the Closing Date shall be treated as closing on (and including) the Closing Date. Otherwise, for purposes of this Agreement, in the case of any Straddle Period: (A) Property Taxes allocable to the Pre-Closing Tax Period shall be computed based upon the ratio of the number of days in the Pre-Closing Tax Period to the number of days in the entire Straddle Period; and (B) Taxes (other than Property Taxes) allocable to the Pre-Closing Tax Period shall be computed as if such Tax period ended as of the close of business on the ~~Closing Date and~~tax periods closed on December 31, 2004 and December 31, 2005 and transferred to Thomson France in the case of any Taxes of Conveyed Subsidiaries (and their Subsidiaries) and Seller Parent, or in the case of any Taxes of Purchaser Parent and Purchaser (and their Subsidiaries prior to the Closing), in each case attributable to the ownership of any equity interest in any partnership or other “flow through” entity for tax purposes (including of any “controlled foreign corporation,” as defined under the Code) as if the Tax period of such partnership or other “flow through” entity ended as of the close of business on the Closing Date accordance with the ~~Taxes of such entity for the Pre~~rules applicable to French tax-Closing Tax Period deemed to include any Taxes on the allocable income of such entity in respect of such Tax period; provided that exemptions, allowances or deductions that are calculated on an annual basis (including depreciation and amortization deductions) shall be allocated between the period ending on the Closing Date and the period beginning after the Closing Date in proportion to the number of days in each periodconsolidated groups. (iv) Any claim for indemnification under this Section 6.5(d) shall be made in writing upon the party from whom indemnification is sought, and shall specify in reasonable detail the basis for such claim. Any indemnity payment required to be made pursuant to this Section 6.5(d) shall be made within thirty (30) days after the indemnified party makes written demand upon the indemnifying party, but in no case earlier than five (5) Business Days prior to the date on which the relevant Taxes are required to be paid to the applicable Taxing Authority. (v) With respect to any Taxes suffered or incurred by any Conveyed Subsidiary (or any Subsidiary thereof) that was not wholly owned by Seller Parent (directly or indirectly) as of immediately prior to the Closing, the indemnification obligations of Seller Parent pursuant to Section 6.5(d)(i) in respect of such Taxes (or related costs and expenses) shall in no event exceed an amount equal to (A) the amount of such Taxes (or related costs and expenses) for which the Purchaser Tax Indemnified Parties would otherwise be entitled to indemnification pursuant to Section 6.5(d), as if such Conveyed Subsidiary (or any Subsidiary thereof) were wholly owned by Seller Parent, multiplied by (B) the direct and indirect percentage ownership of Seller Parent of such Conveyed Subsidiary (or Subsidiary thereof) as of immediately prior to the Closing. With respect to any Taxes suffered or incurred by any Subsidiary of Purchaser Parent (including Purchaser and its Subsidiaries) that was not wholly owned by Purchaser Parent (directly or indirectly) as of immediately prior to the Closing, the indemnification obligations of Purchaser Parent pursuant to Section 6.5(d)(ii) in respect of such Taxes (or related costs and expenses) shall in no event exceed an amount equal to (A) the amount of such Taxes (or related costs and expenses) for which the Purchaser Tax Indemnified Parties would otherwise be entitled to indemnification pursuant to Section 6.5(d), as if such Subsidiary were wholly owned by Purchaser Parent, multiplied by (B) the direct and indirect percentage ownership of Purchaser Parent of such Subsidiary as of immediately prior to the Closing. (vi) Without duplication to any other amounts paid pursuant to this Section 6.5: (A) Within thirty (30) days following the filing of any Income Tax Return for any Conveyed Subsidiary (or any Subsidiary thereof), on the one hand, or Purchaser (or any Subsidiary thereof, other than the Conveyed Subsidiaries and their Subsidiaries), on the other hand, for any Pre-Closing Tax Period or for any Straddle Period, Seller Parent or Purchaser Parent shall (or Purchaser Parent shall cause Purchaser to) prepare a statement showing (i) the amount of Income Taxes shown as due on such filed Income Tax Return with respect to the relevant Pre-Closing Tax Period or the portion of any Straddle Period ending on and including the Closing Date (the “Final Pre-Closing Income Tax Amount”) and (ii) the amount of the Seller Accrued Income Taxes or Purchaser Accrued Income Taxes, as applicable, attributable to such Income Tax Return as reflected on the Final Closing Statement (the “Pre-Closing Income Tax Amount”) and deliver such statement to Seller Parent and Purchaser Parent, as applicable. Purchaser Parent or Seller Parent, as applicable, shall have a period of fifteen (15) Business Days to provide comments to a schedule prepared (or caused to be prepared) by Seller Parent or Purchaser Parent, respectively. If Purchaser Parent or Seller Parent, as applicable, do not provide any comments to Seller Parent or Purchaser Parent, respectively, during such period, the statement as so prepared shall be final and binding. (B) In the event the Final Pre-Closing Income Tax Amount with respect to any Income Tax Return is less than the amount of the Pre-Closing Income Tax Amount attributable to such Income Tax Return that was included on the Final Closing Statement, the Purchaser shall within five (5) Business Days following the finalization of the Final Pre-Closing Income Tax Amount hereunder (i) pay to Seller Parent the amount of such difference with respect to a Conveyed Subsidiary and their Subsidiaries and (ii) pay to Purchaser Parent the amount of such difference with respect to Purchaser and its Subsidiaries. (vii) The Parties shall use reasonable best efforts to structure any indemnity payment, true-up payment, or payment in respect of Tax Benefits made by any Party pursuant to this Agreement (including pursuant to this Section 6.5, Section 6.6 and Article VII) and any payment made by Purchaser Parent to Purchaser pursuant to Section 2.8 or Section 2.9 in the manner set forth in Clause 10 of the Structuring Considerations Agreement. The Parties shall use reasonable best efforts to structure as a special dividend any payment made by Purchaser to Purchaser Parent pursuant to Section 2.8, Section 2.9 or this Section 6.5.

Appears in 1 contract

Sources: Stock and Asset Purchase Agreement (Skillsoft Public Limited Co)

Tax Indemnification. (a) The Company hereby indemnifies the Buyer Indemnified Parties against, and agrees to hold each of them harmless from, any and all (i) ~~Subject to Section 6.5(d)(v)~~Income Taxes of, from and after the Closing, Seller Parent agrees to indemnify and hold harmless Purchaser and its Subsidiaries (including the Conveyed Subsidiaries and their Subsidiaries after the Closing Date) (collectively, the “Purchaser Tax Indemnified Parties”) from and against all liability, without duplication, for (1) Taxes of the Conveyed Subsidiaries and their Subsidiaries for any Pre-Closing Tax Period (including any Taxes payable in respect of an election under Section 965(h) of the Code), (2) Taxes of any Seller (other than any Transfer Taxes and VAT for which Purchaser is responsible hereunder) including, Taxes (other than Taxes of the Conveyed Subsidiaries and their Subsidiaries) imposed or with respect to, ~~arising out of or relating to~~ the Purchased Assets or the Business for a Pre-Closing Tax Period, (3) Taxes of any Person (other than the Conveyed Subsidiaries and their Subsidiaries) for a Pre-Closing Tax Period for which any Conveyed Subsidiary (or any Subsidiary thereof) is liable under Treasury Regulation Section 1.1502-6 (or a similar provision of state, local or foreign Law), or as a transferee or successor or by Contract (other than Contracts that do not relate primarily to Taxes), (4) Taxes arising out of or resulting from any breach of any covenant or agreement of Seller Parent or any of its Affiliates contained in this Agreement, (5) Taxes for a Pre-Closing Tax Period imposed on (x) any transaction effected pursuant to Section 2.3(b), (y) any settlement of any intercompany accounts of Seller Parent or its Subsidiaries pursuant to Section 6.7, or (z) any transaction or step forming part of the Seller Internal Restructurings, (6) Transfer Taxes for which Seller Parent is responsible under Section 6.5(j), (7) Taxes required to be deducted or withheld Group Companies with respect to the payment of the Purchase Consideration or any amounts payable to Seller Parent pursuant to Section 2.8 or Section 2.9, including any penalties imposed on Purchaser as a result of Purchaser’s failure to deduct or withhold any such amounts that Purchaser (or a Purchaser Designated Affiliate) was permitted to withhold under Section 2.10 (in each case, subject to Purchaser’s compliance with the notice and cooperation requirements of Section 2.10 and except for any such Taxes (and any related penalties) required to be deducted or withheld solely as a result of any assignment by Purchaser or its Affiliates for which Purchaser is responsible pursuant to Section 10.3), (8) Taxes arising from any breach of any representation or warranty contained in Section 4.16(k), (9) Taxes arising as a result of any Conveyed Subsidiary or any Subsidiary of any Conveyed Subsidiary at any time ceasing to be a member of a group for the purposes of any Tax, of which group Seller Parent or any Subsidiary of Seller Parent is or was also a member and (10) any costs and expenses, including reasonable legal and accounting fees and expenses, attributable to any item described in clauses (1) through (9) (any such Taxes for which Seller Parent is responsible pursuant to this Section 6.5(d)(i), subject to the following proviso, “Seller Indemnified Taxes”); provided that Seller Parent shall not be required to indemnify or hold harmless any Purchaser Tax Indemnified Party from and against any liability pursuant to this Section 6.5(d)(i) for (A) Taxes attributable to any action taken after the Closing by Purchaser, any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries), or any transferee of Purchaser or any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries), other than any such action that (1) is in the ordinary course of business, (2) is expressly permitted or contemplated by this Agreement, or (3) is required to be taken in order to comply with applicable Law or as a result of a change in applicable Law (a “Purchaser Tax Act”), (B) Taxes that were reflected, accrued or reserved for in the Final Closing Statement, Final Business Working Capital, or Final Business Net Cash, (C) Income Taxes to the extent that a Conveyed Subsidiary or any Subsidiary thereof had any Tax Assets as of the close of business on the Closing Date that were available, or would have been available but for their prior utilization by Purchaser or any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries after the Closing) to offset or otherwise reduce the applicable Tax Liability in respect of such Income Taxes (except any Tax Asset reflected as an asset in the Final Closing Statement and taken into account in the calculation of the Final Business Working Capital or the Final Business Net Cash), or (D) Taxes for which Purchaser Parent is responsible under Section 6.5(d)(ii). (ii) Subject to Section 6.5(d)(v), from and after the Closing, Purchaser Parent shall indemnify and hold harmless the Purchaser Tax Indemnified Parties from and against all liability, without duplication, for (1) all Taxes of Purchaser Parent and its Affiliates (other than Purchaser and its Subsidiaries) for any Tax period (other than Transfer Taxes and VAT for which Seller Parent is responsible hereunder), (2) Taxes of Purchaser and its Subsidiaries (other than the Conveyed Subsidiaries and their Subsidiaries) for any Pre-Closing Tax Period, (3ii) non-Income Taxes of, or with respect to, the Group Companies (other than such Taxes described in Section 6.05(a)(v), (vii), (ix) or (x) with respect to any Pre-Closing Tax Period, (iii) Taxes for which the Company or any of its Subsidiaries (other than the Group Companies) are primarily liable (including Taxes attributable to such companies but paid by another company under any GPA), (iv) without duplication, Taxes imposed on a Buyer Indemnified Party as a result of a breach of a (a). In the case of any ~~Person~~ Tax described in clauses (i) or (ii) of this Section 6.05(a) imposed wholly on a Non-Wholly Owned Group Company (excluding for the avoidance of doubt, any Tax that flows through to the relevant Buyer Indemnified Party and creates a liability for such Buyer Indemnified Party), the Company shall only indemnify the Buyer Indemnified Party for the amount of such Tax imposed directly on such Non-Wholly Owned Group Company attributable to a Pre-Closing Tax Period for which Purchaser (or any Subsidiary thereof other than any Conveyed Subsidiaries and their Subsidiaries) is liable under Treasury Regulation Section 1.1502-6 (or a similar provision of state, local or foreign Law), or as a transferee or successor or multiplied by Contract (other than Contracts that do not relate primarily to Taxes), (4) Taxes arising out of or resulting from any breach of any covenant or agreement of Purchaser Parent, Purchaser or their respective Affiliates contained in this Agreement, (5) Transfer Taxes for which Purchaser Parent is responsible under Section 6.5(j), (6) Taxes arising from any breach of any representation or warranty in Section 5.17(k), (7) Taxes for a Pre-Closing Tax Period imposed on (x) any settlement of any intercompany accounts of Purchaser or any Subsidiary of Purchaser, on the one hand, and Purchaser Parent or any Subsidiary of Purchaser Parent (other than Purchaser and its Subsidiaries), on the other hand, pursuant to Section 6.7 or (y) any transaction or step forming part of the Purchaser Internal Restructurings, (8) Taxes required to be deducted or withheld with respect to any amounts payable to Purchaser Parent pursuant to Section 2.8 or Section 2.9, including any penalties imposed on Purchaser as a result of Purchaser’s failure to deduct or withhold any such amounts, (9) Taxes arising as a result of Purchaser or any Subsidiary of Purchaser (other than any Conveyed Subsidiary or a Subsidiary thereof) at any time ceasing to be a member of a group for the purposes of any Tax, of which group Purchaser Parent or any Subsidiary of Purchaser Parent (other than Purchaser or any Subsidiary of Purchaser) is or was also a member and (10) any costs and expenses, including reasonable legal and accounting fees and expenses, attributable to any item described in clauses (1) through (9) (any such Taxes for which Purchaser Parent is responsible pursuant to this Section 6.5(d)(ii), subject to the following proviso, “Purchaser Parent Indemnified Taxes”); provided that Purchaser Parent shall not be required to indemnify or hold harmless any Purchaser Tax Indemnified Party from and against any liability for (A) Taxes attributable to any action taken after the Closing by Seller Parent or any of its Affiliates, other than any such action that (1) is in the ordinary course of business, (2) is expressly permitted or contemplated by this Agreement, or (3) is required to be taken in order to comply with applicable Law or as a result of a change in applicable Law (a “Seller Tax Act”), (B) Taxes that were reflected, accrued or reserved for in the Final Closing Statement, Final Purchaser Working Capital or the Final Purchaser Net Cash, (C) Income Taxes to the extent that Purchaser or any Subsidiary thereof had any Tax Assets as of the close of business on the Closing Date that were available, or would have been available but for their prior utilization by Purchaser or any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries after the Closing), to offset or otherwise reduce the applicable Tax Liability in respect Percentage Ownership of such ~~Income Taxes~~ Non-Wholly-Owned Group Company (~~except any Tax Asset reflected~~ as ~~an asset in~~ such Percentage Ownership is set forth opposite the ~~Final Closing Statement and taken into account in the calculation~~ name of ~~the Final Purchaser Working Capital or the Final Purchaser Net Cash), or (D) Taxes for which Seller Parent is responsible under Section 6.5(d)(i~~such Group Company on Schedule 1 attached hereto). (~~iii~~b) To Buyer hereby indemnifies the ~~extent permitted or required by applicable Law~~Company Indemnified Parties against, ~~the taxable year of~~ and agrees to hold each of ~~the Conveyed Subsidiaries~~ them harmless from, any and ~~their Subsidiaries and any Subsidiary of Purchaser that includes the Closing Date shall be treated as closing on~~ all Buyer Taxes. (~~and including~~c) ~~the Closing Date. Otherwise, for~~ For purposes of this Agreement, in the case of any Straddle Tax Period~~: (A) Property~~ , the portion of such Taxes ~~allocable~~ from any such Straddle Tax Period that are allocated to the Pre-Closing Tax Period ~~shall~~ will be ~~computed based upon~~ determined as follows: (i) in the ~~ratio~~ case of any real property, personal property, ad valorem and similar Taxes (collectively, “Property Taxes”), the amount of such Property Taxes attributable to the Pre-Closing Tax Period of such Straddle Tax Period will be deemed to be the amount of such Property Taxes for the entire Straddle Tax Period, multiplied by a fraction, the numerator of which is the number of days in such Straddle Tax Period ending on and including the Closing Date, and the denominator of which is the number of total days in the entire Straddle Tax Period; and (ii) in the case of any Income Taxes or any other Taxes that are not Property Taxes (including any Taxes imposed on income includible pursuant to Section 951 or 951A of the Code), the amount of any such Taxes attributable to the Pre-Closing Tax Period of such Straddle Tax Period will be computed based on the interim closing of the books as of and including the Closing Date (and for such purpose, the Tax period of any applicable pass-through entity for applicable Tax purposes shall be deemed to close at such time) and the Company’s fees and expenses incurred in connection with the transactions contemplated by this Agreement and the Restructuring shall be attributable to the Pre-Closing Tax Period to the ~~number of days in the entire Straddle Period; and (B) Taxes (other than Property Taxes) allocable to the Pre-Closing Tax Period shall~~ maximum extent as would be computed as if such Tax period ended as of the close of business on the Closing Date and, in the case of any Taxes of Conveyed Subsidiaries (and their Subsidiaries) and Seller Parent, or in the case of any Taxes of Purchaser Parent and Purchaser (and their Subsidiaries prior to the Closing), in each case attributable to the ownership of any equity interest in any partnership or other “flow through” entity for tax purposes (including of any “controlled foreign corporation,” as defined under the Code) as permitted by applicable Law if the Tax period ~~of such partnership or other “flow through” entity~~ had actually ended ~~as of the close of business~~ on the Closing Date with the Taxes of such entity for the Pre-Closing Tax Period deemed to include any Taxes on the allocable income of such entity in respect of such Tax period; provided that exemptions, allowances or deductions that are calculated on an annual basis (including depreciation and amortization deductions) shall be allocated between the period ending on the Closing Date and the period beginning after the Closing Date in proportion to the number of days in each periodDate. (ivd) ~~Any claim for~~ Subject to the terms and conditions of Section 6.07, the indemnification ~~under this~~ obligations set forth in Section ~~6.5(d~~6.05(a) and Section 6.05(b) and the representations and warranties set forth in Section 3.11(k), Section 3.11(l), Section 3.11(r) and Section 3.11(x) shall ~~be made in writing upon~~ survive the party from whom indemnification is sought, and shall specify in reasonable detail the basis for such claim. Any indemnity payment required to be made pursuant to this Section 6.5(d) shall be made within Closing until thirty (30) days after ~~the indemnified party makes written demand upon the indemnifying party, but in no case earlier than five (5) Business Days prior to the date on which the relevant Taxes are required to be paid to~~ expiration of the applicable ~~Taxing Authority~~statute of limitations (including extensions). (vi) ~~With respect~~ The Buyer Indemnified Parties shall satisfy any claim under Section 6.05(a) first from any representations and warranty insurance policy issued to ~~any Taxes suffered~~ Buyer or ~~incurred by any Conveyed Subsidiary~~ its Subsidiaries in connection with the Transaction (~~or any Subsidiary thereof) that was not wholly owned by Seller Parent (directly or indirectly) as of immediately prior~~ to the ~~Closing~~extent such policy covers such claim) and then, the indemnification obligations of Seller Parent pursuant to Section 6.5(d)(i) in respect of such Taxes (or related costs and expenses) shall in no event exceed an amount equal to (A) the amount of such Taxes (or related costs and expenses) for which the Purchaser Tax Indemnified Parties would otherwise be entitled to indemnification pursuant to Section 6.5(d), as if such Conveyed Subsidiary (or any Subsidiary thereof) were wholly owned by Seller Parent, multiplied by (B) the direct and indirect percentage ownership of Seller Parent of such Conveyed Subsidiary (or Subsidiary thereof) as of immediately prior subject to the Closing. With respect to any Taxes suffered or incurred by any Subsidiary of Purchaser Parent (including Purchaser and its Subsidiaries) that was not wholly owned by Purchaser Parent (directly or indirectly) as of immediately prior to limitations set forth in this Agreement, from the Closing, the indemnification obligations of Purchaser Parent pursuant to Section 6.5(d)(ii) in respect of such Taxes (or related costs and expenses) shall in no event exceed an amount equal to (A) the amount of such Taxes (or related costs and expenses) for which the Purchaser Tax Indemnified Parties would otherwise be entitled to indemnification pursuant to Section 6.5(d), as if such Subsidiary were wholly owned by Purchaser Parent, multiplied by (B) the direct and indirect percentage ownership of Purchaser Parent of such Subsidiary as of immediately prior to the ClosingCompany. (viii) ~~Without duplication~~ The Company shall not be required to indemnify, defend or hold harmless any ~~other amounts paid pursuant to this Section 6.5: (A) Within thirty (30) days following the filing of any Income Tax Return for any Conveyed Subsidiary (or any Subsidiary thereof), on the one hand~~Buyer Indemnified Party against, or ~~Purchaser (~~reimburse any Buyer Indemnified Party for, any Taxes described in Section 6.05(a)(ii) or ~~any Subsidiary thereof, other than the Conveyed Subsidiaries and their Subsidiaries), on the other hand, for any Pre~~non-~~Closing Tax Period or for any Straddle Period, Seller Parent or Purchaser Parent shall (or Purchaser Parent shall cause Purchaser to) prepare a statement showing (i) the amount of~~ Income Taxes ~~shown as due on such filed Income Tax Return with respect to the relevant Pre-Closing Tax Period or the portion of any Straddle Period ending on and including the Closing Date~~ described in Section 6.05(a)(iv) (~~the “Final Pre-Closing Income Tax Amount”) and (ii) the amount of the Seller Accrued Income Taxes or Purchaser Accrued Income Taxes~~together, ~~as applicable, attributable to such Income Tax Return as reflected on the Final Closing Statement (the~~ “Pre-Closing Non-Income ~~Tax Amount~~Taxes”) ~~and deliver such statement~~ until the aggregate amount of the Buyer Indemnified Parties’ Losses with respect to ~~Seller Parent and Purchaser Parent~~Pre-Closing Non-Income Taxes exceeds $500,000 (the “Tax Deductible”), ~~as applicable. Purchaser Parent or Seller Parent~~after which the Company shall be obligated for all Buyer Indemnified Parties’ Losses with respect to Pre-Closing Non-Income Taxes in excess of the Tax Deductible, ~~as applicable~~subject to the other limitations contained herein; provided, ~~shall have a period~~ however, to the extent any Tax Refunds of ~~fifteen (15) Business Days~~ Pre-Closing Non-Income Taxes are paid to provide comments to a schedule prepared (or caused to be prepared) by Seller Parent or Purchaser Parent, respectively. If Purchaser Parent or Seller Parent, as applicable, do not provide any comments to Seller Parent or Purchaser Parent, respectively, during such periodthe Company under Section 6.06, the ~~statement as so prepared~~ remaining amount of the Tax Deductible for which the Buyer Indemnified Parties have not incurred Losses with respect thereto at the time of such payment shall be ~~final~~ reduced on a dollar for dollar basis, and ~~binding~~such reduced amount shall thereafter constitute the “Tax Deductible” for all purposes of this Agreement. (B) In the event the Final Pre-Closing Income Tax Amount with respect to any Income Tax Return is less than the amount of the Pre-Closing Income Tax Amount attributable to such Income Tax Return that was included on the Final Closing Statement, the Purchaser shall within five (5) Business Days following the finalization of the Final Pre-Closing Income Tax Amount hereunder (i) pay to Seller Parent the amount of such difference with respect to a Conveyed Subsidiary and their Subsidiaries and (ii) pay to Purchaser Parent the amount of such difference with respect to Purchaser and its Subsidiaries. (viiiii) The ~~Parties~~ Company shall ~~use reasonable best efforts~~ not be required to ~~structure~~ indemnify, defend or hold harmless any ~~indemnity payment, true-up payment~~Buyer Indemnified Party against, or ~~payment in respect of Tax Benefits made by~~ reimburse any Buyer Indemnified Party ~~pursuant~~ for, any Taxes to ~~this Agreement (including pursuant to this Section 6.5, Section 6.6 and Article VII) and any payment made by Purchaser Parent to Purchaser pursuant to Section 2.8 or Section 2.9 in~~ the ~~manner set forth in Clause 10 of the Structuring Considerations Agreement. The Parties shall use reasonable best efforts to structure~~ extent such Taxes were included as a ~~special dividend any payment made by Purchaser to Purchaser Parent pursuant to Section 2.8, Section 2.9~~ liability in Final Net Working Capital or ~~this Section 6.5~~Final Net Debt.

Appears in 1 contract

Sources: Purchase and Sale Agreement (SPX FLOW, Inc.)

Tax Indemnification. (a) Seller hereby indemnifies the Buyer Indemnified Parties against and agrees to hold each of them harmless from any (i) Subject to Section 6.5(d)(v), from and after the Closing, Seller Parent agrees to indemnify and hold harmless Purchaser and its Subsidiaries (including the Conveyed Subsidiaries and their Subsidiaries after the Closing Date) (collectively, the “Purchaser Tax Indemnified Parties”) from and against all liability, without duplication, for (1) Taxes of the Conveyed Subsidiaries and their Subsidiaries for any Pre-Closing Income Tax ~~Period~~ of any of the Purchased Subsidiaries, (ii) liability for the payment of any amount of the type described in clause ‎(i) as a result of any Purchased Subsidiary being or having been before the Closing a member of a Seller Group, (iii) any Taxes arising from or related to any breach of, or inaccuracy in, the Specified Tax Representations, (iv) Pre-Closing Non-Income Tax of any of the Purchased Subsidiaries or the Business to the extent, and to the amount, not expressly accrued for on the Balance Sheet, (v) any provincial sales taxes, interest or penalties assessed against Canadian Buyer due to Canadian Seller’s failure to provide a certificate under Section 6 of the Retail Sales Tax Act (Ontario), and (vi) liabilities, costs, expenses (including reasonable expenses of investigation and attorneys’ fees and expenses), arising out of, relating to or incident to the imposition, assessment or assertion of any ~~Taxes payable~~ Tax described in ~~respect~~ clauses ‎(i) – (v) above, including those incurred in the contest in good faith in appropriate proceedings relating to the imposition, assessment or assertion of ~~an election under Section 965(h) of the Code~~any such Tax (any amount described in clause ‎(i), ‎(ii), ‎(iii), (2iv), (v) ~~Taxes~~ or (vi) above, a “Seller Indemnified Tax Loss”); provided, however, that Seller shall have no liability for the payment of any Seller Indemnified Tax Loss attributable to or resulting from a breach of Section 8.05. (~~other than~~ b) Buyer hereby indemnifies the Seller Indemnified Parties against and agrees to hold each of them harmless from (i) any ~~Transfer~~ Taxes ~~and VAT~~ that the Seller Indemnified Parties may be liable for ~~which Purchaser is responsible hereunder) including~~or incur, or become subject to, as a result of any Taxes ~~(other than Taxes of the Conveyed Subsidiaries and their Subsidiaries)~~ imposed on a Purchased Subsidiary with respect ~~to, arising out of or relating~~ to ~~the Purchased Assets or the Business for~~ a ~~Pre~~Post-Closing Tax Period, ~~(3) Taxes of any Person (~~other than ~~the Conveyed Subsidiaries and their Subsidiaries~~Taxes with respect to which Seller is obligated to indemnify Buyer Indemnified Parties pursuant to ‎Section 8.07(a); (i) for a Pre-Closing Tax Period for which any Conveyed Subsidiary (or any Subsidiary thereof) is liable under Treasury Regulation Section 1.1502-6 (or a similar provision of state, local or foreign Law), or as a transferee or successor or by Contract (other than Contracts that do not relate primarily to Taxes), (4) Taxes arising out of or resulting from any breach of ~~any~~ covenant or agreement ~~of Seller Parent or any of its Affiliates contained~~ in this ‎Article 8 made or to be performed by Buyer pursuant to this Agreement, ; (~~5) Taxes for a Pre-Closing Tax Period imposed on (x~~iii) any ~~transaction effected pursuant to Section 2.3(b)~~goods and services tax/harmonized sales tax, ~~(y) any settlement of any intercompany accounts of~~ Quebec sales tax, penalties, interest and other amounts which may be assessed against the Canadian Seller Parent or its Subsidiaries pursuant to Section 6.7, or (z) any transaction or step forming part of the Seller Internal Restructurings, (6) Transfer Taxes for which Seller Parent is responsible under Section 6.5(j), (7) Taxes required to be deducted or withheld with respect to the payment of the Purchase Consideration or any amounts payable to Seller Parent pursuant to Section 2.8 or Section 2.9, including any penalties imposed on Purchaser as a result of Purchaser’s failure to deduct or withhold any such amounts that Purchaser (or a Purchaser Designated Affiliate) was permitted to withhold under Section 2.10 (in each case, subject to Purchaser’s compliance with the ~~notice and cooperation requirements~~ transfer of ~~Section 2.10 and except~~ the Canadian Assets not being eligible for any ~~such Taxes~~ Canadian Tax Election jointly executed by the Canadian Seller and the Canadian Buyer under Part IX of the Excise Tax Act (~~and any related penalties~~Canada) ~~required to be deducted~~ or withheld solely as a result of any assignment by Purchaser or its Affiliates for which Purchaser is responsible pursuant to Section 10.3), (8) Taxes arising from any breach of any representation or warranty contained in Section 4.16(k), (9) Taxes arising as a result of any Conveyed Subsidiary or any Subsidiary of any Conveyed Subsidiary at any time ceasing to be a member of a group for an Act respecting the purposes of any Tax, of which group Seller Parent or any Subsidiary of Seller Parent is or was also a member and (10) any costs and expenses, including reasonable legal and accounting fees and expenses, attributable to any item described in clauses (1) through (9) (any such Taxes for which Seller Parent is responsible pursuant to this Section 6.5(d)(i), subject to the following proviso, “Seller Indemnified Taxes”); provided that Seller Parent shall not be required to indemnify or hold harmless any Purchaser Tax Indemnified Party from and against any liability pursuant to this Section 6.5(d)(i) for (A) Taxes attributable to any action taken after the Closing by Purchaser, any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries), or any transferee of Purchaser or any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries), other than any such action that (1) is in the ordinary course of business, (2) is expressly permitted or contemplated by this Agreement, or (3) is required to be taken in order to comply with applicable Law Quebec sales tax or as a result of ~~a change~~ the Canadian Buyer’s failure to file such elections within the prescribed time; and (iv) liabilities, costs and expenses (including reasonable expenses of investigation and attorneys’ fees and expenses) arising out of or incident to the imposition, assessment or assertion of any Tax described in ~~applicable Law~~ clause (~~a “Purchaser Tax Act”~~i), (Bii) ~~Taxes that were reflected~~and (iii), ~~accrued or reserved for~~ including those incurred in the ~~Final Closing Statement, Final Business Working Capital, or Final Business Net Cash, (C) Income Taxes~~ contest in good faith in appropriate proceedings relating to the ~~extent that a Conveyed Subsidiary~~ imposition, assessment or assertion of any ~~Subsidiary thereof had any Tax Assets as of the close of business on the Closing Date that were available~~such Tax, in each case incurred or ~~would have been available but for their prior utilization~~ suffered by ~~Purchaser~~ Seller or any of its ~~Affiliates~~ Affiliates. (c) The provisions of ‎Section 11.07 (other than ‎Section 11.07(c)), shall apply, mutatis mutandis in respect of any indemnification payment under this ‎Section 8.07. Any breach or inaccuracy, and the calculation of Damages related thereto, of any item subject to indemnification under this Article 8 should be determined without regard to any qualification contained therein relating to “Material Adverse Effect” or “materiality.” (d) If any claim, demand, audit, investigation or proceeding with respect to Taxes in respect of which indemnity may be sought pursuant to either (i) this ‎Section 8.07 or (i) ‎Section 11.02 as an Excluded Liability, or for breach or inaccuracy of a representation, warranty (including the ~~Conveyed Subsidiaries and their Subsidiaries after the Closing~~Tax Representations) ~~to offset~~ or otherwise reduce the applicable Tax Liability in respect of such Income Taxes (except any Tax Asset reflected as an asset in the Final Closing Statement and taken into account in the calculation of the Final Business Working Capital or the Final Business Net Cash), or (D) Taxes for which Purchaser Parent is responsible under Section 6.5(d)(ii). (ii) Subject to Section 6.5(d)(v), from and after the Closing, Purchaser Parent shall indemnify and hold harmless the Purchaser Tax Indemnified Parties from and against all liability, without duplication, for (1) all Taxes of Purchaser Parent and its Affiliates (other than Purchaser and its Subsidiaries) for any Tax period (other than Transfer Taxes and VAT for which Seller Parent is responsible hereunder), (2) Taxes of Purchaser and its Subsidiaries (other than the Conveyed Subsidiaries and their Subsidiaries) for any Pre-Closing Tax Period, (3) Taxes of any Person for a Pre-Closing Tax Period for which Purchaser (or any Subsidiary thereof other than any Conveyed Subsidiaries and their Subsidiaries) is liable under Treasury Regulation Section 1.1502-6 (or a similar provision of state, local or foreign Law), or as a transferee or successor or by Contract (other than Contracts that do not relate primarily to Taxes), (4) Taxes arising out of or resulting from any breach of any covenant ~~or agreement of Purchaser Parent, Purchaser or their respective Affiliates~~ contained in this Agreement, (5) Transfer Taxes for which Purchaser Parent is responsible under Section 6.5(j), (6) Taxes arising from any breach of any representation or warranty in Section 5.17(k), (7) Taxes for a Pre-Closing Tax Period imposed on (x) any settlement of any intercompany accounts of Purchaser or any Subsidiary of Purchaser, on the one hand, and Purchaser Parent or any Subsidiary of Purchaser Parent (other than Purchaser and its Subsidiaries), on the other hand, pursuant to Section 6.7 or (y) any transaction or step forming part of the Purchaser Internal Restructurings, (8) Taxes required to be deducted or withheld with respect to any amounts payable to Purchaser Parent pursuant to Section 2.8 or Section 2.9, including any penalties imposed on Purchaser as a result of Purchaser’s failure to deduct or withhold any such amounts, (9) Taxes arising as a result of Purchaser or any Subsidiary of Purchaser (other than any Conveyed Subsidiary or a Subsidiary thereof) at any time ceasing to be a member of a group for the purposes of any Tax, of which group Purchaser Parent or any Subsidiary of Purchaser Parent (other than Purchaser or any Subsidiary of Purchaser) is or was also a member and (10) any costs and expenses, including reasonable legal and accounting fees and expenses, attributable to any item described in clauses (1) through (9) ‎Article 8 (any such ~~Taxes for~~ claim or demand, a “Tax Claim”) is asserted or commenced against the party which ~~Purchaser Parent is responsible pursuant~~ would be entitled to ~~this Section 6.5(d)(ii), subject to~~ seek such indemnification (the ~~following proviso,~~ “~~Purchaser Parent~~ Potential Indemnified ~~Taxes~~Party”~~); provided that Purchaser Parent shall not be required to indemnify or hold harmless any Purchaser Tax Indemnified Party from and against any liability for (A~~) ~~Taxes attributable to any action taken after the Closing by Seller Parent~~ or any of its Affiliates, ~~other than~~ the Potential Indemnified Party shall notify the party from which such indemnification would be sought (the “Potential Indemnifying Party”) of such Tax Claim in writing within ten days of receipt of such claim, demand, audit, investigation or proceeding and shall give the Potential Indemnifying Party such information with respect thereto as the Potential Indemnifying Party may reasonably request; provided, that the failure of the Potential Indemnified Party to give notice as provided in this ‎Section 8.07(d) shall not relieve any ~~such action that (1) is in the ordinary course~~ Potential Indemnifying Party of ~~business~~its obligations under ‎Section 8.07, (2) is expressly permitted or contemplated by this Agreement, or (3) is required to be taken in order to comply with applicable Law or as a result of a change in applicable Law (a “Seller Tax Act”), (B) Taxes that were reflected, accrued or reserved for in the Final Closing Statement, Final Purchaser Working Capital or the Final Purchaser Net Cash, (C) Income Taxes except to the extent that ~~Purchaser or~~ such failure adversely prejudices the rights of any ~~Subsidiary thereof had~~ such Potential Indemnifying Party. The Potential Indemnifying Party may discharge, at any time, its indemnification obligation with respect to any Tax ~~Assets~~ Claim by paying to the Potential Indemnified Party the amount payable pursuant to this ‎Section 8.07 or ‎Section 11.02, as of the ~~close of business~~ case may be, calculated on the ~~Closing Date that were available~~date of such payment. The Potential Indemnifying Party shall have the right, at its own expense, to participate in and, upon notice to the Potential Indemnified Party, to assume the defense of any claim, suit, action, litigation or ~~would have been available but for their prior utilization by Purchaser or any of its Affiliates~~ proceeding (including ~~the Conveyed Subsidiaries and their Subsidiaries after the Closing~~any Tax audit) relating to a Tax Claim (a “Tax Controversy”), and the Potential Indemnifying Party shall not have any indemnification obligations with respect to ~~offset or otherwise reduce the applicable Tax Liability~~ any payment in respect of any Taxes arising out of a Tax Controversy with a Taxing Authority as to which it was not afforded such ~~Income Taxes~~ right. If the Potential Indemnifying Party assumes such defense, the Potential Indemnifying Party shall have the sole discretion as to the conduct of such defense and the Potential Indemnified Party shall have the right (~~except~~ but not the duty) to participate in the defense thereof and to employ counsel, at its own expense, separate from the counsel employed by the Potential Indemnifying Party. Whether or not the Potential Indemnifying Party chooses to defend or prosecute any Tax ~~Asset reflected as an asset~~ Claim, all of the parties hereto shall cooperate and shall cause their Affiliates to cooperate in the ~~Final Closing Statement and taken into account in the calculation of the Final Purchaser Working Capital~~ defense or ~~the Final Purchaser Net Cash), or (D) Taxes for which Seller Parent is responsible under Section 6.5(d)(i)~~prosecution thereof. (~~iii~~e) ~~To the extent permitted or required by applicable Law, the taxable year of each of the Conveyed Subsidiaries and their Subsidiaries and any Subsidiary of Purchaser that includes the Closing Date~~ The Potential Indemnifying Party shall not be treated as closing on (and including) the Closing Date. Otherwise, for purposes of this Agreement, in the case of any Straddle Period: (A) Property Taxes allocable to the Pre-Closing Tax Period shall be computed based upon the ratio of the number of days in the Pre-Closing Tax Period to the number of days in the entire Straddle Period; and (B) Taxes (other than Property Taxes) allocable to the Pre-Closing Tax Period shall be computed as if such Tax period ended as of the close of business on the Closing Date and, in the case of any Taxes of Conveyed Subsidiaries (and their Subsidiaries) and Seller Parent, or in the case of any Taxes of Purchaser Parent and Purchaser (and their Subsidiaries prior to the Closing), in each case attributable to the ownership of any equity interest in any partnership or other “flow through” entity for tax purposes (including of any “controlled foreign corporation,” as defined under the Code) as if the Tax period of such partnership or other “flow through” entity ended as of the close of business on the Closing Date with the Taxes of such entity for the Pre-Closing Tax Period deemed to include any Taxes on the allocable income of such entity liable in respect of ~~such~~ any Tax period; provided that exemptions, allowances or deductions that are calculated on an annual basis (including depreciation and amortization deductions) shall be allocated between the period ending on the Closing Date and the period beginning after the Closing Date in proportion to the number of days in each period. (iv) Any claim for indemnification Claim under this Section 6.5(d) shall be made in writing upon the party from whom indemnification is sought, and shall specify in reasonable detail the basis for such claim. Any indemnity payment required to be made pursuant to this Section 6.5(d) shall be made within thirty (30) days after the indemnified party makes written demand upon the indemnifying party, but in no case earlier than five (5) Business Days prior to the date on which the relevant Taxes are required to be paid to the applicable Taxing Authority. (v) With respect to any Taxes suffered ‎Section 8.07 or incurred by any Conveyed Subsidiary (or any Subsidiary thereof) that was not wholly owned by Seller Parent (directly or indirectly) as of immediately prior to the Closing, the indemnification obligations of Seller Parent pursuant to Section 6.5(d)(i) in respect of such Taxes (or related costs and expenses) shall in no event exceed an amount equal to (A) the amount of such Taxes (or related costs and expenses) for which the Purchaser Tax Indemnified Parties would otherwise be entitled to indemnification pursuant to Section 6.5(d)‎Section 11.02, as ~~if such Conveyed Subsidiary (or any Subsidiary thereof) were wholly owned by Seller Parent, multiplied by (B)~~ the direct and indirect percentage ownership of Seller Parent of such Conveyed Subsidiary (or Subsidiary thereof) as of immediately prior to the Closing. With respect to any Taxes suffered or incurred by any Subsidiary of Purchaser Parent (including Purchaser and its Subsidiaries) that was not wholly owned by Purchaser Parent (directly or indirectly) as of immediately prior to the Closing, the indemnification obligations of Purchaser Parent pursuant to Section 6.5(d)(ii) in respect of such Taxes (or related costs and expenses) shall in no event exceed an amount equal to (A) the amount of such Taxes (or related costs and expenses) for which the Purchaser Tax Indemnified Parties would otherwise be entitled to indemnification pursuant to Section 6.5(d), as if such Subsidiary were wholly owned by Purchaser Parent, multiplied by (B) the direct and indirect percentage ownership of Purchaser Parent of such Subsidiary as of immediately prior to the Closing. (vi) Without duplication to any other amounts paid pursuant to this Section 6.5: (A) Within thirty (30) days following the filing of any Income Tax Return for any Conveyed Subsidiary (or any Subsidiary thereof), on the one hand, or Purchaser (or any Subsidiary thereof, other than the Conveyed Subsidiaries and their Subsidiaries), on the other handcase may be, for any ~~Pre-Closing~~ Tax ~~Period or for any Straddle Period, Seller Parent or Purchaser Parent shall (or Purchaser Parent shall cause Purchaser to) prepare a statement showing~~ (i) the payment of which was made without the Potential Indemnifying Party’s prior written consent, unless the Potential Indemnified Party has complied with the provisions set forth in ‎Section 8.07(d) and a Final Determination of the amount of ~~Income Taxes shown as due on such filed Income~~ Tax ~~Return~~ has been made, (i) resulting from a settlement effected without the consent of the Potential Indemnifying Party, or (i) resulting from any Tax Controversy with respect to which the ~~relevant Pre-Closing Tax Period or~~ Potential Indemnified Party has not complied with the portion of any Straddle Period ending on and including the Closing Date (the “Final Pre-Closing Income Tax Amount”) and (ii) the amount of the Seller Accrued Income Taxes or Purchaser Accrued Income Taxes, as applicable, attributable to such Income Tax Return as reflected on the Final Closing Statement (the “Pre-Closing Income Tax Amount”) and deliver such statement to Seller Parent and Purchaser Parent, as applicable. Purchaser Parent or Seller Parent, as applicable, shall have a period of fifteen (15) Business Days to provide comments to a schedule prepared (or caused to be prepared) by Seller Parent or Purchaser Parent, respectively. If Purchaser Parent or Seller Parent, as applicable, do not provide any comments to Seller Parent or Purchaser Parent, respectively, during such period, the statement as so prepared shall be final and binding. (B) In the event the Final Pre-Closing Income Tax Amount with respect to any Income Tax Return is less than the amount of the Pre-Closing Income Tax Amount attributable to such Income Tax Return that was included on the Final Closing Statement, the Purchaser shall within five (5) Business Days following the finalization of the Final Pre-Closing Income Tax Amount hereunder (i) pay to Seller Parent the amount of such difference with respect to a Conveyed Subsidiary and their Subsidiaries and (ii) pay to Purchaser Parent the amount of such difference with respect to Purchaser and its Subsidiaries. (vii) The Parties shall use reasonable best efforts to structure any indemnity payment, true-up payment, or payment in respect of Tax Benefits made by any Party pursuant to this Agreement (including pursuant to this Section 6.5, Section 6.6 and Article VII) and any payment made by Purchaser Parent to Purchaser pursuant to Section 2.8 or Section 2.9 in the manner provisions set forth in Clause 10 of the Structuring Considerations Agreement. The Parties shall use reasonable best efforts to structure as a special dividend any payment made by Purchaser to Purchaser Parent pursuant to Section 2.8, Section 2.9 or this Section 6.5‎Section 8.07(d).

Appears in 1 contract

Sources: Asset and Stock Purchase Agreement (Griffon Corp)

Tax Indemnification. (i) ~~Subject to Section 6.5(d)(v), from and after the Closing,~~ Seller Parent agrees to indemnify and hold harmless Purchaser and its Subsidiaries (including the Conveyed Subsidiaries and their Subsidiaries after the Closing Date) (collectively, the “Purchaser Tax Indemnified Parties”) from and against all liability, without duplication, for (1) Taxes of the Conveyed Subsidiaries and their Subsidiaries for any Pre-Closing Tax Period (including any Taxes payable in respect of an election under Section 965(h) of the Code), (2) Taxes of any Seller (other than any Transfer Taxes and VAT for which Purchaser is responsible hereunder) including, Taxes (other than Taxes of the Conveyed Subsidiaries and their Subsidiaries) imposed with respect to, arising out of or relating to the Purchased Assets or the Business for a Pre-Closing Tax Period, (3) Taxes of any Person (other than the Conveyed Subsidiaries and their Subsidiaries) for a Pre-Closing Tax Period for which any Conveyed Subsidiary (or any Subsidiary thereof) is liable under Treasury Regulation Section 1.1502-6 (or a similar provision of state, local or foreign Law), or as a transferee or successor or by Contract (other than Contracts that do not relate primarily to Taxes), (4) Taxes arising out of or resulting from any breach of any covenant or agreement of Seller Parent or any of its Affiliates contained in this Agreement, (5) Taxes for a Pre-Closing Tax Period imposed on (x) any transaction effected pursuant to Section 2.3(b), (y) any settlement of any intercompany accounts of Seller Parent or its Subsidiaries pursuant to Section 6.7, or (z) any transaction or step forming part of the Seller Internal Restructurings, (6) Transfer Taxes for which Seller Parent is responsible under Section 6.5(j), (7) Taxes required to be deducted or withheld with respect to the payment of the Purchase Consideration or any amounts payable to Seller Parent pursuant to Section 2.8 or Section 2.9, including any penalties imposed on Purchaser as a result of Purchaser’s failure to deduct or withhold any such amounts that Purchaser (or a Purchaser Designated Affiliate) was permitted to withhold under Section 2.10 (in each case, subject to Purchaser’s compliance with the notice and cooperation requirements of Section 2.10 and except for any such Taxes (and any related penalties) required to be deducted or withheld solely as a result of any assignment by Purchaser or its Affiliates for which Purchaser is responsible pursuant to Section 10.3), (8) Taxes arising from any breach of any representation or warranty contained in Section 4.16(k), (9) Taxes arising as a result of any Conveyed Subsidiary or any Subsidiary of any Conveyed Subsidiary at any time ceasing to be a member of a group for the purposes of any Tax, of which group Seller Parent or any Subsidiary of Seller Parent is or was also a member and (10) any costs and expenses, including reasonable legal and accounting fees and expenses, attributable to any item described in clauses (1) through (9) (any such Taxes for which Seller Parent is responsible pursuant to this Section 6.5(d)(i), subject to the following proviso, “Seller Indemnified Taxes”); provided that Seller Parent shall not be required to indemnify or hold harmless any Purchaser Tax Indemnified Party from and against any liability pursuant to this Section 6.5(d)(i) for (A) Taxes attributable to any action taken after the Closing by Purchaser, any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries), or any transferee of Purchaser or any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries), other than any such action that (1) is in the ordinary course of business, (2) is expressly permitted or contemplated by this Agreement, or (3) is required to be taken in order to comply with applicable Law or as a result of a change in applicable Law (a “Purchaser Tax Act”), (B) Taxes that were reflected, accrued or reserved for in the Final Closing Statement, Final Business Working Capital, or Final Business Net Cash, (C) Income Taxes to the extent that a Conveyed Subsidiary or any Subsidiary thereof had any Tax Assets as of the close of business on the Closing Date that were available, or would have been available but for their prior utilization by Purchaser or any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries after the Closing) to offset or otherwise reduce the applicable Tax Liability in respect of such Income Taxes (except any Tax Asset reflected as an asset in the Final Closing Statement and taken into account in the calculation of the Final Business Working Capital or the Final Business Net Cash), or (D) Taxes for which Purchaser Parent is responsible under Section 6.5(d)(ii). (ii) Subject to Section 6.5(d)(v), from and after the Closing, Purchaser Parent shall indemnify and hold harmless the ~~Purchaser Tax~~ Buyer Indemnified Parties from and against any and all ~~liability~~Losses incurred, ~~without duplication~~sustained, ~~for~~ suffered or paid by such Buyer Indemnified Party arising out of or as a result of: (1A)(1) ~~all~~ Taxes of ~~Purchaser Parent and its Affiliates (other than Purchaser and its Subsidiaries)~~ the Purchased Entities for ~~any~~ all Pre-Closing Tax ~~period (other than Transfer Taxes and VAT for which Seller Parent is responsible hereunder)~~Periods, (2) Taxes ~~of Purchaser and its Subsidiaries (other than~~ imposed on the ~~Conveyed Subsidiaries and their Subsidiaries)~~ Purchased Assets for any Pre-Closing Tax Period, (3) Taxes of imposed on the Business for any ~~Person for a~~ Pre-Closing Tax Period and (4) Taxes arising out of any termination of intercompany accounts in Section 6.16 or the release set forth in Section 6.16(d), (B)(i) Taxes imposed on Seller or its Affiliates as a result of the Restructuring and the Delayed Restructuring or as a result of the transactions contemplated by the Step Plan Schedule, and (ii) Taxes described in clause (B)(i) for which ~~Purchaser~~ a Purchased Entity becomes liable (other than VAT or any ~~Subsidiary thereof~~ Transfer Taxes), (C) Transfer Taxes or VAT that the Seller is responsible for under this Section 6.8, (D) Taxes arising out of (i) any breach of any covenant made by Seller in this Section 6.8, (ii) any breach of any representation or warranty made by Seller in Section 4.8, or (iii) Seller’s or the Other Sellers’ failure to take any action required pursuant to the Step Plan Schedule, or (E) the requirement to make a deduction or withholding from any part of the Purchase Price payable for the Purchased Assets or the Purchased Shares under this Agreement or any other ~~than~~ Transaction Document for or on account of any ~~Conveyed Subsidiaries~~ Tax incurred, suffered or sustained by Seller or any of its Affiliates, and ~~their Subsidiaries~~(F) ~~is liable~~ Taxes arising under ~~Treasury Regulation~~ Section 1.1502-6 (of the Treasury Regulations or a any similar provision of state, local or foreign ~~Law~~Law by virtue of any Purchased Entity having been a member of a consolidated, combined, affiliated, unitary or other similar Tax group prior to the Closing, in each case of clauses (A) through (F), or other than Taxes as a ~~transferee~~ result of any action by Buyer or ~~successor~~ any of its Affiliates after the Closing Date or any action taken outside the ordinary course of business by ~~Contract~~ Buyer or any of its Affiliates after the Closing but on the Closing Date (other than ~~Contracts that do not relate primarily~~ (a) any action or transaction contemplated by this Agreement including actions taken pursuant to ~~Taxes)~~Section 6.16, (4b) ~~Taxes arising out~~ actions taken at the direction of Seller, (c) actions required by applicable Law (without a reasonable alternative) or ~~resulting from any breach of~~ (d) Seller’s or its Affiliates’ failure to comply with any covenant or agreement ~~of Purchaser Parent, Purchaser or their respective Affiliates contained~~ in this ~~Agreement~~Agreement or Seller’s or its Affiliates’ failure to take any action required pursuant to the Step Plan Schedule) (collectively, the “Excluded Tax Liabilities”). Notwithstanding that a claim for Taxes or Losses may fall into multiple categories of this Section 6.8(a)(i), a Buyer Indemnified Party may not recover for the same specific amount of Taxes or Losses more than one time. Notwithstanding any other provision of this Agreement and for the avoidance of doubt, the limitations in Section 9.2 shall not apply to this Section 6.8(a)(i) (other than as expressly provided in Section 9.2(c) or with respect to Section 9.2(g) or Section 9.2(h)). For the avoidance of doubt, and notwithstanding anything to the contrary herein, (5i) ~~Transfer~~ the disclosure of the Tax matters set forth on Schedule 4.8 of the Disclosure Letter shall not alter Seller’s indemnification obligations to Buyer for Taxes ~~for which Purchaser Parent is responsible under~~ in this Section ~~6.5(j~~6.8 or in Article 9 (other than with respect to a breach of a representation set forth in Section 4.8), (6ii) ~~Taxes arising~~ Section 9.3(d) shall apply to this Section 6.8(a)(i) but only with respect to Losses (including any Excluded Tax Liabilities) in excess of $2,000,000 in the aggregate (it being acknowledged that all such Losses up to $2,000,000 will be satisfied in cash or immediately available funds); (iii) Seller shall not indemnify and hold harmless the Buyer Indemnified Parties from and against any Losses incurred in a Post-Closing Tax Period; provided that the foregoing shall not apply to any Loss pursuant to clauses (A) through (F) hereof (other than under clause (D)(ii), except with respect to any breach of any representation or warranty made in ~~Section 5.17(k~~Sections 4.8(c), (7i), (l), (p), (r) ~~Taxes for a Pre-Closing Tax Period imposed on~~ and (~~x) any settlement of any intercompany accounts of Purchaser or any Subsidiary of Purchaser, on the one hand~~v)), and ~~Purchaser Parent or~~ (iv) the provisions of clauses (B) through (F) hereof shall continue to apply with respect to Delayed Transfer Closings and the immediately preceding clause (iii) shall not limit any ~~Subsidiary of Purchaser Parent~~ recovery in respect thereof. (~~other than Purchaser and its Subsidiaries), on~~ ii) Except to the ~~other hand,~~ extent subject to indemnification pursuant to Section ~~6.7~~ 6.8(a)(i) or ~~(y) any transaction or step forming part of the Purchaser Internal Restructurings~~Article 9, (8) Taxes required to be deducted or withheld with respect to any amounts payable to Purchaser Parent pursuant to Section 2.8 or Section 2.9, including any penalties imposed on Purchaser as a result of Purchaser’s failure to deduct or withhold any such amounts, (9) Taxes arising as a result of Purchaser or any Subsidiary of Purchaser (other than any Conveyed Subsidiary or a Subsidiary thereof) at any time ceasing to be a member of a group for the purposes of any Tax, of which group Purchaser Parent or any Subsidiary of Purchaser Parent (other than Purchaser or any Subsidiary of Purchaser) is or was also a member Buyer shall indemnify and (10) any costs and expenses, including reasonable legal and accounting fees and expenses, attributable to any item described in clauses (1) through (9) (any such Taxes for which Purchaser Parent is responsible pursuant to this Section 6.5(d)(ii), subject to the following proviso, “Purchaser Parent Indemnified Taxes”); provided that Purchaser Parent shall not be required to indemnify or hold harmless ~~any Purchaser Tax~~ the Seller Indemnified ~~Party~~ Parties from and against any ~~liability for~~ and all Losses incurred, sustained, suffered or paid by such Seller Indemnified Party arising out of or as a result of: (A) Taxes ~~attributable to~~ arising out of any action taken ~~after~~ outside the ~~Closing~~ ordinary course of business by ~~Seller Parent~~ Buyer or any of its ~~Affiliates~~Affiliates after the Closing but on the Closing Date, ~~other than any~~ except to the extent such action ~~that (1) is in the ordinary course of business, (2) is~~ was expressly ~~permitted or~~ contemplated by this ~~Agreement,~~ Agreement (including actions taken at the direction of Seller) or ~~(3) is~~ required ~~to be taken in order to comply with applicable Law or as a result of a change in~~ by applicable Law (without a ~~“Seller Tax Act”~~reasonable alternative), (B) Taxes ~~that were reflected~~in respect of Restricted Assets, ~~accrued or reserved for~~ Restricted Split Interests and Split Interests as described in ~~the Final Closing Statement, Final Purchaser Working Capital or the Final Purchaser Net Cash~~Section 2.6, (C) ~~Income~~ any Transfer Taxes ~~to the extent~~ or VAT that ~~Purchaser or any Subsidiary thereof had any Tax Assets as of the close of business on the Closing Date that were available, or would have been available but~~ Buyer is responsible for ~~their prior utilization by Purchaser or any of its Affiliates (including the Conveyed Subsidiaries~~ under this Section 6.8 and their Subsidiaries after the Closing), to offset or otherwise reduce the applicable Tax Liability in respect of such Income Taxes (except any Tax Asset reflected as an asset in the Final Closing Statement and taken into account in the calculation of the Final Purchaser Working Capital or the Final Purchaser Net Cash), or (D) Buyer’s or the Other Buyers’ failure to comply with any covenant or agreement in this Agreement or Buyer’s or the Other Buyers’ failure to take any action required pursuant to the Step Plan Schedule. Notwithstanding that a claim for Taxes or Losses may fall into multiple categories of this Section 6.8(a)(ii), a Seller Indemnified Party may not recover for ~~which Seller Parent is responsible under~~ the same specific amount of Taxes or Losses more than one time. Notwithstanding any other provision of this Agreement and for the avoidance of doubt, the limitations in Section ~~6.5(d)(i~~9.2 shall not apply to this Section 6.8(a)(ii) (other than as expressly provided in Section 9.2(c) or with respect to Section 9.2(g) or Section 9.2(h)). (iii) To the extent reasonably practicable (or as otherwise reasonably agreed), Seller and Buyer shall or shall cause the tax year of each Purchased Entity (including by making elections with any relevant Taxing Authority) that begins before but has not closed prior to the Closing Date to close at the end of the day on the Closing Date to the extent permitted ~~or required~~ by applicable Law, the taxable year of each of the Conveyed Subsidiaries and their Subsidiaries and any Subsidiary of Purchaser that includes the Closing Date shall be treated as closing on (and including) the Closing Date. ~~Otherwise, for purposes of this Agreement, in~~ In the case of any Taxes where an applicable Straddle ~~Period: (A) Property~~ Period is not or cannot be closed pursuant to this Section 6.8(a)(iii), the amount of Taxes allocable to the portion of the Straddle Period ending on the Closing Date (including for purposes of determining the amount of Taxes attributable to a Pre-Closing Tax Period with respect to such Straddle Period) shall be ~~computed based upon~~ deemed to be (i) in the ~~ratio~~ case of Taxes imposed on a periodic basis (such as real or personal property Taxes), the amount of such Taxes for the entire period multiplied by a fraction, the numerator of which is the number of calendar days in the ~~Pre-~~Straddle Period up through and ending on and including the Closing ~~Tax Period to~~ Date and the denominator of which is the number of calendar days in the entire relevant Straddle Period~~; and~~ , and (Bii) in the case of Taxes not described in clause (~~other than Property Taxes~~i) ~~allocable~~ (such as franchise Taxes or Taxes that are based on or related to income, receipts, payroll or specific transactions), the ~~Pre-Closing Tax Period~~ amount of any such Taxes shall be ~~computed~~ determined based upon an interim closing of the books as if such ~~Tax~~ taxable period ended as of the close of business on the Closing Date ~~and, in~~ which shall be deemed to be 11:59 pm on the ~~case of any~~ Closing Date and shall include all Taxes ~~of Conveyed Subsidiaries (and their Subsidiaries) and Seller Parent, or in~~ applicable to transactions that have been consummated during the ~~case of any Taxes of Purchaser Parent and Purchaser (and their Subsidiaries~~ period prior to ~~the Closing), in each case attributable~~ such time. With respect to ~~the ownership of~~ any ~~equity interest in any partnership or other “~~Purchased Entity that is a flow ~~through”~~ through entity for ~~tax~~ Tax purposes ~~(including of any~~ or a “controlled foreign corporation,” (as defined under the Code~~) as if the Tax period of such partnership or other “flow through” entity ended as of the close of business on the Closing Date with the Taxes of such entity for the~~ ), Pre-Closing ~~Tax Period deemed to~~ Taxes shall include any Taxes on the allocable income of such entity ~~in respect~~ determined as if the taxable year of such ~~Tax period; provided that exemptions~~flow through entity or controlled foreign corporation closed at the end of the Closing Date, ~~allowances or deductions that are calculated~~ based on an ~~annual basis (including depreciation and amortization deductions)~~ interim closing of the books method. For the avoidance of doubt, the foregoing shall be ~~allocated between the period ending on the Closing Date and the period beginning after the Closing Date in proportion~~ subject to the number of days in each period. (iv) Any claim for indemnification under this Section 6.5(d) shall be made in writing upon the party from whom indemnification is sought, and shall specify in reasonable detail the basis for such claim. Any indemnity payment required to be made pursuant to this Section 6.5(d) shall be made within thirty (30) days after the indemnified party makes written demand upon the indemnifying party, but in no case earlier than five (5) Business Days prior to the date on which the relevant Taxes are required to be paid to the applicable Taxing Authority. (v) With respect to any Taxes suffered or incurred by any Conveyed Subsidiary (or any Subsidiary thereof) that was not wholly owned by Seller Parent (directly or indirectly) as of immediately prior to the Closing, the indemnification obligations ~~of Seller Parent pursuant to Section 6.5(d)(i)~~ set forth in respect of such Taxes (or related costs and expenses) shall in no event exceed an amount equal to (A) the amount of such Taxes (or related costs and expenses) for which the Purchaser Tax Indemnified Parties would otherwise be entitled to indemnification pursuant to Section 6.5(d), as if such Conveyed Subsidiary (or any Subsidiary thereof) were wholly owned by Seller Parent, multiplied by (B) the direct and indirect percentage ownership of Seller Parent of such Conveyed Subsidiary (or Subsidiary thereof) as of immediately prior to the Closing. With respect to any Taxes suffered or incurred by any Subsidiary of Purchaser Parent (including Purchaser and its Subsidiaries) that was not wholly owned by Purchaser Parent (directly or indirectly) as of immediately prior to the Closing, the indemnification obligations of Purchaser Parent pursuant to Section 6.5(d)(ii) in respect of such Taxes (or related costs and expenses) shall in no event exceed an amount equal to (A) the amount of such Taxes (or related costs and expenses) for which the Purchaser Tax Indemnified Parties would otherwise be entitled to indemnification pursuant to Section 6.5(d), as if such Subsidiary were wholly owned by Purchaser Parent, multiplied by (B) the direct and indirect percentage ownership of Purchaser Parent of such Subsidiary as of immediately prior to the Closing. (vi) Without duplication to any other amounts paid pursuant to this Section 6.5: (A) Within thirty (30) days following the filing of any Income Tax Return for any Conveyed Subsidiary (or any Subsidiary thereof), on the one hand, or Purchaser (or any Subsidiary thereof, other than the Conveyed Subsidiaries and their Subsidiaries), on the other hand, for any Pre-Closing Tax Period or for any Straddle Period, Seller Parent or Purchaser Parent shall (or Purchaser Parent shall cause Purchaser to) prepare a statement showing (i) the amount of Income Taxes shown as due on such filed Income Tax Return with respect to the relevant Pre-Closing Tax Period or the portion of any Straddle Period ending on and including the Closing Date (the “Final Pre-Closing Income Tax Amount”Sections 6.8(a)(i) and (ii) the amount of the Seller Accrued Income Taxes or Purchaser Accrued Income Taxes, as applicable, attributable to such Income Tax Return as reflected on the Final Closing Statement (the “Pre-Closing Income Tax Amount”) and deliver such statement to Seller Parent and Purchaser Parent, as applicable. Purchaser Parent or Seller Parent, as applicable, shall have a period of fifteen (15) Business Days to provide comments to a schedule prepared (or caused to be prepared) by Seller Parent or Purchaser Parent, respectively. If Purchaser Parent or Seller Parent, as applicable, do not provide any comments to Seller Parent or Purchaser Parent, respectively, during such period, the statement as so prepared shall be final and bindingabove. (B) In the event the Final Pre-Closing Income Tax Amount with respect to any Income Tax Return is less than the amount of the Pre-Closing Income Tax Amount attributable to such Income Tax Return that was included on the Final Closing Statement, the Purchaser shall within five (5) Business Days following the finalization of the Final Pre-Closing Income Tax Amount hereunder (i) pay to Seller Parent the amount of such difference with respect to a Conveyed Subsidiary and their Subsidiaries and (ii) pay to Purchaser Parent the amount of such difference with respect to Purchaser and its Subsidiaries. (vii) The Parties shall use reasonable best efforts to structure any indemnity payment, true-up payment, or payment in respect of Tax Benefits made by any Party pursuant to this Agreement (including pursuant to this Section 6.5, Section 6.6 and Article VII) and any payment made by Purchaser Parent to Purchaser pursuant to Section 2.8 or Section 2.9 in the manner set forth in Clause 10 of the Structuring Considerations Agreement. The Parties shall use reasonable best efforts to structure as a special dividend any payment made by Purchaser to Purchaser Parent pursuant to Section 2.8, Section 2.9 or this Section 6.5.

Appears in 1 contract

Sources: Purchase Agreement (MACOM Technology Solutions Holdings, Inc.)

Tax Indemnification. (ia) ~~Subject to Section 6.5(d)(v), from~~ From and ~~after the Closing, Seller Parent agrees to indemnify and hold harmless Purchaser and its Subsidiaries (including the Conveyed Subsidiaries and their Subsidiaries~~ after the Closing Date) , subject to the limitations set forth in Section 7.05 and the provisions of Section 7.09, Sellers, jointly and severally, shall indemnify Purchaser and its Affiliates and each of their respective officers, directors, employees, stockholders, members, partners, agents and representatives and their respective successors and assigns (~~collectively,~~ the “~~Purchaser Tax Indemnified Parties~~PURCHASER INDEMNITEES”) against and hold them harmless from ~~and against~~ (i) all ~~liability, without duplication,~~ liability for ~~(1)~~ Taxes of the ~~Conveyed Subsidiaries~~ Company and ~~their~~ its Subsidiaries for ~~any Pre-Closing Tax Period (including any Taxes payable in respect of an election under Section 965(h) of~~ the Code), (2) Taxes of any Seller (other than any Transfer Taxes and VAT for which Purchaser is responsible hereunder) including, Taxes (other than Taxes of the Conveyed Subsidiaries and their Subsidiaries) imposed with respect to, arising out of or relating to the Purchased Assets or the Business for a Pre-Closing Tax Period, (3ii) all liability for Taxes of the Company and its Subsidiaries for the Straddle Period or the Post-Closing Tax Period to the extent that the relevant action which causes the Tax occurred in a Pre-Closing Period (excluding a Pre-Closing period injection of capital which results in a reduction of the tax losses carry forwards), (iii) all liability for Income Taxes of Sellers or any other Person which is or has been affiliated with Sellers (other than the Conveyed Subsidiaries and their Subsidiaries) for a Pre-Closing Tax Period for which any Conveyed Subsidiary (or any Subsidiary thereof) is liable under Treasury Regulation Section 1.1502-6 (or a similar provision of state, local or foreign Law), or as a transferee or successor or by Contract (other than Contracts that do not relate primarily to Taxes), (4) Taxes arising out of or resulting from any breach of any covenant or agreement of Seller Parent Company or any of its ~~Affiliates contained in this Agreement, (5) Taxes for a Pre-Closing Tax Period imposed on (x) any transaction effected pursuant to Section 2.3(b~~Subsidiaries), (y) any settlement of any intercompany accounts of Seller Parent or its Subsidiaries pursuant to Section 6.7, or (z) any transaction or step forming part of the Seller Internal Restructurings, (6) Transfer Taxes for which Seller Parent is responsible under Section 6.5(j), (7) Taxes required to be deducted or withheld with respect to the payment of the Purchase Consideration or any amounts payable to Seller Parent pursuant to Section 2.8 or Section 2.9, including any penalties imposed on Purchaser as a result of Purchaser’s failure to deduct or withhold any such amounts that Purchaser (or a Purchaser Designated Affiliate) was permitted to withhold under Section 2.10 (in each case, subject to Purchaser’s compliance with the notice and cooperation requirements of Section 2.10 and except for any such Taxes (and any related penalties) required to be deducted or withheld solely as a result of any assignment by Purchaser or its Affiliates for which Purchaser is responsible pursuant to Section 10.3), (8) Taxes arising from any breach of any representation or warranty contained in Section 4.16(k), (9) Taxes arising as a result of any Conveyed Subsidiary or any Subsidiary of any Conveyed Subsidiary at any time ceasing to be a member of a group for the purposes of any Tax, of which group Seller Parent or any Subsidiary of Seller Parent is or was also a member and (10iv) ~~any costs and expenses, including~~ all liability for reasonable legal ~~and accounting~~ fees and ~~expenses,~~ expenses attributable to any item ~~described~~ in clauses (1i) through (9iii) ~~(any such Taxes for which Seller Parent is responsible pursuant to this Section 6.5(d)(i)~~above. Notwithstanding the foregoing, ~~subject to the following proviso, “Seller Indemnified Taxes”); provided that Seller Parent~~ Sellers shall not ~~be required to~~ indemnify or and hold harmless ~~any~~ a Purchaser ~~Tax Indemnified Party~~ Indemnitee from ~~and against~~ any liability ~~pursuant to this Section 6.5(d)(i)~~ for ~~(A)~~ Taxes attributable to any action taken on or after the Closing Date by the Purchaser, any of its Affiliates (including the ~~Conveyed Subsidiaries and their~~ Company or any of its Subsidiaries), or any transferee of Purchaser or any of its Affiliates (~~including the Conveyed Subsidiaries and their Subsidiaries),~~ other than any such action ~~that (1) is in the ordinary course of business, (2) is~~ expressly ~~permitted~~ required by Applicable Law or ~~contemplated~~ by this Agreement~~, or (3~~) ~~is required to be taken in order to comply with applicable Law or as a result of a change in applicable Law~~ (a “PURCHASER TAX ACT”) or attributable to a breach by the Purchaser ~~Tax Act~~of its obligations under this Agreement. (b) From and after the Closing Date, subject to the limitations set forth in Section 7.05 and the provisions of Section 7.09, the Purchaser shall indemnify Sellers and their Affiliates and each of their respective officers, directors, employees, stockholders, members, partners, agents and representatives and their respective successors and assigns (the “SELLER INDEMNITEES”) against and hold them harmless from (i) all liability for Taxes of the Company and its Subsidiaries other than Taxes described in 7.01(a)(i) through (iv), (Bii) all liability for Taxes ~~that were reflected, accrued~~ attributable to a Purchaser Tax Act or ~~reserved for in~~ to a breach by the Final Closing Statement, Final Business Working Capital, or Final Business Net Cash, (C) Income Taxes to the extent that a Conveyed Subsidiary or any Subsidiary thereof had any Tax Assets as of the close of business on the Closing Date that were available, or would have been available but for their prior utilization by Purchaser ~~or any~~ of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries after the Closing) to offset or otherwise reduce the applicable Tax Liability in respect of such Income Taxes (except any Tax Asset reflected as an asset in the Final Closing Statement and taken into account in the calculation of the Final Business Working Capital or the Final Business Net Cash), or (D) Taxes for which Purchaser Parent is responsible obligations under Section 6.5(d)(ii). (ii) Subject to Section 6.5(d)(v), from and after the Closing, Purchaser Parent shall indemnify and hold harmless the Purchaser Tax Indemnified Parties from and against all liability, without duplication, for (1) all Taxes of Purchaser Parent and its Affiliates (other than Purchaser and its Subsidiaries) for any Tax period (other than Transfer Taxes and VAT for which Seller Parent is responsible hereunder), (2) Taxes of Purchaser and its Subsidiaries (other than the Conveyed Subsidiaries and their Subsidiaries) for any Pre-Closing Tax Period, (3) Taxes of any Person for a Pre-Closing Tax Period for which Purchaser (or any Subsidiary thereof other than any Conveyed Subsidiaries and their Subsidiaries) is liable under Treasury Regulation Section 1.1502-6 (or a similar provision of state, local or foreign Law), or as a transferee or successor or by Contract (other than Contracts that do not relate primarily to Taxes), (4) Taxes arising out of or resulting from any breach of any covenant or agreement of Purchaser Parent, Purchaser or their respective Affiliates contained in this Agreement, (5) Transfer Taxes for which Purchaser Parent is responsible under Section 6.5(j), (6) Taxes arising from any breach of any representation or warranty in Section 5.17(k), (7) Taxes for a Pre-Closing Tax Period imposed on (x) any settlement of any intercompany accounts of Purchaser or any Subsidiary of Purchaser, on the one hand, and Purchaser Parent or any Subsidiary of Purchaser Parent (other than Purchaser and its Subsidiaries), on the other hand, pursuant to Section 6.7 or (y) any transaction or step forming part of the Purchaser Internal Restructurings, (8) Taxes required to be deducted or withheld with respect to any amounts payable to Purchaser Parent pursuant to Section 2.8 or Section 2.9, including any penalties imposed on Purchaser as a result of Purchaser’s failure to deduct or withhold any such amounts, (9) Taxes arising as a result of Purchaser or any Subsidiary of Purchaser (other than any Conveyed Subsidiary or a Subsidiary thereof) at any time ceasing to be a member of a group for the purposes of any Tax, of which group Purchaser Parent or any Subsidiary of Purchaser Parent (other than Purchaser or any Subsidiary of Purchaser) is or was also a member and (10iii) ~~any costs and expenses, including~~ all liability for reasonable legal ~~and accounting~~ fees and ~~expenses,~~ expenses attributable to any item ~~described~~ in clauses (1) through (9) (any such Taxes for which Purchaser Parent is responsible pursuant to this Section 6.5(d)(ii), subject to the following proviso, “Purchaser Parent Indemnified Taxes”); provided that Purchaser Parent shall not be required to indemnify or hold harmless any Purchaser Tax Indemnified Party from and against any liability for (A) Taxes attributable to any action taken after the Closing by Seller Parent or any of its Affiliates, other than any such action that (1) is in the ordinary course of business, (2) is expressly permitted or contemplated by this Agreement, or (3) is required to be taken in order to comply with applicable Law or as a result of a change in applicable Law (a “Seller Tax Act”), (B) Taxes that were reflected, accrued or reserved for in the Final Closing Statement, Final Purchaser Working Capital or the Final Purchaser Net Cash, (C) Income Taxes to the extent that Purchaser or any Subsidiary thereof had any Tax Assets as of the close of business on the Closing Date that were available, or would have been available but for their prior utilization by Purchaser or any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries after the Closing), to offset or otherwise reduce the applicable Tax Liability in respect of such Income Taxes (except any Tax Asset reflected as an asset in the Final Closing Statement and taken into account in the calculation of the Final Purchaser Working Capital or the Final Purchaser Net Cash), or (D) Taxes for which Seller Parent is responsible under Section 6.5(d)(i). (iii) To the extent permitted or required by applicable Law, the taxable year of each of the Conveyed Subsidiaries and their Subsidiaries and any Subsidiary of Purchaser that includes the Closing Date shall be treated as closing on (and including) the Closing Date. Otherwise, for purposes of this Agreement, in the case of any Straddle Period: (A) Property Taxes allocable to the Pre-Closing Tax Period shall be computed based upon the ratio of the number of days in the Pre-Closing Tax Period to the number of days in the entire Straddle Period; and (B) Taxes (other than Property Taxes) allocable to the Pre-Closing Tax Period shall be computed as if such Tax period ended as of the close of business on the Closing Date and, in the case of any Taxes of Conveyed Subsidiaries (and their Subsidiaries) and Seller Parent, or in the case of any Taxes of Purchaser Parent and Purchaser (and their Subsidiaries prior to the Closing), in each case attributable to the ownership of any equity interest in any partnership or other “flow through” entity for tax purposes (including of any “controlled foreign corporation,” as defined under the Code) as if the Tax period of such partnership or other “flow through” entity ended as of the close of business on the Closing Date with the Taxes of such entity for the Pre-Closing Tax Period deemed to include any Taxes on the allocable income of such entity in respect of such Tax period; provided that exemptions, allowances or deductions that are calculated on an annual basis (including depreciation and amortization deductions) shall be allocated between the period ending on the Closing Date and the period beginning after the Closing Date in proportion to the number of days in each period. (iv) Any claim for indemnification under this Section 6.5(d) shall be made in writing upon the party from whom indemnification is sought, and shall specify in reasonable detail the basis for such claim. Any indemnity payment required to be made pursuant to this Section 6.5(d) shall be made within thirty (30) days after the indemnified party makes written demand upon the indemnifying party, but in no case earlier than five (5) Business Days prior to the date on which the relevant Taxes are required to be paid to the applicable Taxing Authority. (v) With respect to any Taxes suffered or incurred by any Conveyed Subsidiary (or any Subsidiary thereof) that was not wholly owned by Seller Parent (directly or indirectly) as of immediately prior to the Closing, the indemnification obligations of Seller Parent pursuant to Section 6.5(d)(i) in respect of such Taxes (or related costs and expenses) shall in no event exceed an amount equal to (A) the amount of such Taxes (or related costs and expenses) for which the Purchaser Tax Indemnified Parties would otherwise be entitled to indemnification pursuant to Section 6.5(d), as if such Conveyed Subsidiary (or any Subsidiary thereof) were wholly owned by Seller Parent, multiplied by (B) the direct and indirect percentage ownership of Seller Parent of such Conveyed Subsidiary (or Subsidiary thereof) as of immediately prior to the Closing. With respect to any Taxes suffered or incurred by any Subsidiary of Purchaser Parent (including Purchaser and its Subsidiaries) that was not wholly owned by Purchaser Parent (directly or indirectly) as of immediately prior to the Closing, the indemnification obligations of Purchaser Parent pursuant to Section 6.5(d)(ii) in respect of such Taxes (or related costs and expenses) shall in no event exceed an amount equal to (A) the amount of such Taxes (or related costs and expenses) for which the Purchaser Tax Indemnified Parties would otherwise be entitled to indemnification pursuant to Section 6.5(d), as if such Subsidiary were wholly owned by Purchaser Parent, multiplied by (B) the direct and indirect percentage ownership of Purchaser Parent of such Subsidiary as of immediately prior to the Closing. (vi) Without duplication to any other amounts paid pursuant to this Section 6.5: (A) Within thirty (30) days following the filing of any Income Tax Return for any Conveyed Subsidiary (or any Subsidiary thereof), on the one hand, or Purchaser (or any Subsidiary thereof, other than the Conveyed Subsidiaries and their Subsidiaries), on the other hand, for any Pre-Closing Tax Period or for any Straddle Period, Seller Parent or Purchaser Parent shall (or Purchaser Parent shall cause Purchaser to) prepare a statement showing clause (i) ~~the amount of Income Taxes shown as due on such filed Income Tax Return with respect to the relevant Pre-Closing Tax Period~~ or ~~the portion of any Straddle Period ending on and including the Closing Date (the “Final Pre-Closing Income Tax Amount”) and~~ (ii) the amount of the Seller Accrued Income Taxes or Purchaser Accrued Income Taxes, as applicable, attributable to such Income Tax Return as reflected on the Final Closing Statement (the “Pre-Closing Income Tax Amount”) and deliver such statement to Seller Parent and Purchaser Parent, as applicable. Purchaser Parent or Seller Parent, as applicable, shall have a period of fifteen (15) Business Days to provide comments to a schedule prepared (or caused to be prepared) by Seller Parent or Purchaser Parent, respectively. If Purchaser Parent or Seller Parent, as applicable, do not provide any comments to Seller Parent or Purchaser Parent, respectively, during such period, the statement as so prepared shall be final and bindingabove. (B) In the event the Final Pre-Closing Income Tax Amount with respect to any Income Tax Return is less than the amount of the Pre-Closing Income Tax Amount attributable to such Income Tax Return that was included on the Final Closing Statement, the Purchaser shall within five (5) Business Days following the finalization of the Final Pre-Closing Income Tax Amount hereunder (i) pay to Seller Parent the amount of such difference with respect to a Conveyed Subsidiary and their Subsidiaries and (ii) pay to Purchaser Parent the amount of such difference with respect to Purchaser and its Subsidiaries. (vii) The Parties shall use reasonable best efforts to structure any indemnity payment, true-up payment, or payment in respect of Tax Benefits made by any Party pursuant to this Agreement (including pursuant to this Section 6.5, Section 6.6 and Article VII) and any payment made by Purchaser Parent to Purchaser pursuant to Section 2.8 or Section 2.9 in the manner set forth in Clause 10 of the Structuring Considerations Agreement. The Parties shall use reasonable best efforts to structure as a special dividend any payment made by Purchaser to Purchaser Parent pursuant to Section 2.8, Section 2.9 or this Section 6.5.

Appears in 1 contract

Sources: Stock Purchase Agreement (Wireless Telecom Group Inc)

Tax Indemnification. (ia) ~~Subject to Section 6.5(d)(v), from and after the Closing, Seller Parent~~ CCA agrees to ~~indemnify~~ indemnify, defend and hold harmless ~~Purchaser and~~ API 2, its ~~Subsidiaries~~ affiliates (including API) and the ~~Conveyed Subsidiaries~~ successors to the foregoing (and their ~~Subsidiaries after~~ respective shareholders, officers, directors, employees and agents) against (A) all Taxes imposed on API or asserted against the properties, income or operations of API for any taxable period of API ending on or prior to the Closing ~~Date~~Date including the pre-Closing portion of any Straddle Period; (B) the Taxes described in Section 8.01 relating to the election under Code Section 338(h)(10); (~~collectively, the “Purchaser Tax Indemnified Parties”) from and against all liability, without duplication, for (1~~C) Taxes of ~~the Conveyed Subsidiaries and their Subsidiaries for any Pre-Closing Tax Period (including any Taxes payable in respect~~ another Person claimed from API as a result of an election under Section 965(h) of the Code), (2) Taxes of any Seller (other than any Transfer Taxes and VAT for which Purchaser is responsible hereunder) including, Taxes (other than Taxes of the Conveyed Subsidiaries and their Subsidiaries) imposed with respect to, arising out of or relating API being included prior to the ~~Purchased Assets~~ Closing Date in a combined, consolidated or the Business for a Pre-Closing Tax Period, (3) Taxes of any Person (other than the Conveyed Subsidiaries and their Subsidiaries) for a Pre-Closing Tax Period for which any Conveyed Subsidiary (or any Subsidiary thereof) is liable unitary tax group under Treasury ~~Regulation~~ Regulations Section 1.1502-6 (or a any similar provision of state, local or foreign Law)) or, or as a transferee or ~~successor~~ successor, by contract or ~~by Contract~~ otherwise; and (~~other than Contracts that do not relate primarily to Taxes), (4~~D) Taxes arising out of or resulting from any breach of any covenant or agreement of Seller Parent or any of its Affiliates contained in this Agreement, (5) Taxes for a Pre-Closing Tax Period imposed on (x) any transaction effected pursuant to Section 2.3(b), (y) any settlement of any intercompany accounts of Seller Parent or its Subsidiaries pursuant to Section 6.7, or (z) any transaction or step forming part of the Seller Internal Restructurings, (6) Transfer Taxes for which Seller Parent is responsible under Section 6.5(j), (7) Taxes required to be deducted or withheld with respect to the payment of the Purchase Consideration or any amounts payable to Seller Parent pursuant to Section 2.8 or Section 2.9, including any penalties imposed on Purchaser being treated as a result of Purchaser’s failure to deduct or withhold any such amounts that Purchaser (or a Purchaser Designated Affiliate) was permitted to withhold under Section 2.10 (in each case, subject to Purchaser’s compliance with the notice and cooperation requirements of Section 2.10 and except for any such Taxes (and any related penalties) required to be deducted or withheld solely as a result of any assignment by Purchaser or its Affiliates for which Purchaser is responsible pursuant to Section 10.3), (8) Taxes arising from any breach of any representation or warranty contained in Section 4.16(k), (9) Taxes arising as a result of any Conveyed Subsidiary or any Subsidiary of any Conveyed Subsidiary at any time ceasing to be a member of a group for the purposes of any Tax, of which group Seller Parent or any Subsidiary of Seller Parent is or was also a member and (10) any costs and expenses, including reasonable legal and accounting fees and expenses, attributable to any item described in clauses (1) through (9) (any such Taxes for which Seller Parent is responsible pursuant to this Section 6.5(d)(i), subject to the following proviso, “Seller Indemnified Taxes”); provided that Seller Parent shall not be required to indemnify or hold harmless any Purchaser Tax Indemnified Party from and against any liability pursuant to this Section 6.5(d)(i) for (A) Taxes attributable to any action taken after the Closing by Purchaser, any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries)group, or having been controlled by any transferee of Purchaser or any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries), other than any such action that (1) is in the ordinary course of business, (2) is expressly permitted or contemplated by this Agreement, or (3) is required to be taken in order to comply with applicable Law or as a result of a change in applicable Law (a “Purchaser Person for United Kingdom Tax Act”), (B) Taxes that were reflected, accrued or reserved for in the Final Closing Statement, Final Business Working Capital, or Final Business Net Cash, (C) Income Taxes to the extent that a Conveyed Subsidiary or any Subsidiary thereof had any Tax Assets as of the close of business on the Closing Date that were available, or would have been available but for their prior utilization by Purchaser or any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries after the Closing) to offset or otherwise reduce the applicable Tax Liability in respect of such Income Taxes (except any Tax Asset reflected as an asset in the Final Closing Statement and taken into account in the calculation of the Final Business Working Capital or the Final Business Net Cash), or (D) Taxes for which Purchaser Parent is responsible under Section 6.5(d)(ii)purposes. (iib) ~~Subject to Section 6.5(d)(v), from~~ Each of CCA and ~~after the Closing, Purchaser Parent~~ API 2 shall indemnify and hold harmless the Purchaser Tax Indemnified Parties from and against all liability, without duplication, for (1) all Taxes of Purchaser Parent and its Affiliates (other than Purchaser and its Subsidiaries) for any Tax period (other than Transfer Taxes and VAT for which Seller Parent is responsible hereunder), (2) Taxes of Purchaser and its Subsidiaries (other than the Conveyed Subsidiaries and their Subsidiaries) for any Pre-Closing Tax Period, (3) Taxes of any Person for a Pre-Closing Tax Period for which Purchaser (or any Subsidiary thereof other than any Conveyed Subsidiaries and their Subsidiaries) is liable under Treasury Regulation Section 1.1502-6 (or a similar provision of state, local or foreign Law), or as a transferee or successor or by Contract (other than Contracts that do not relate primarily to Taxes), (4) Taxes arising out of or resulting from any breach of any covenant or agreement of Purchaser Parent, Purchaser or their respective Affiliates contained in this Agreement, (5) Transfer Taxes for which Purchaser Parent is responsible under Section 6.5(j), (6) Taxes arising from any breach of any representation or warranty in Section 5.17(k), (7) Taxes for a Pre-Closing Tax Period imposed on (x) any settlement of any intercompany accounts of Purchaser or any Subsidiary of Purchaser, on the one hand, and Purchaser Parent or any Subsidiary of Purchaser Parent (other than Purchaser and its Subsidiaries), on notify the other hand, pursuant to Section 6.7 or (y) any transaction or step forming part of the Purchaser Internal Restructurings, (8) Taxes required to be deducted or withheld with respect to any amounts payable to Purchaser Parent pursuant to Section 2.8 or Section 2.9, including any penalties imposed on Purchaser as a result of Purchaser’s failure to deduct or withhold any such amounts, (9) Taxes arising as a result of Purchaser or any Subsidiary of Purchaser (other than any Conveyed Subsidiary or a Subsidiary thereof) at any time ceasing to be a member of a group for the purposes of any Tax, of which group Purchaser Parent or any Subsidiary of Purchaser Parent (other than Purchaser or any Subsidiary of Purchaser) is or was also a member and (10) any costs and expenses, including reasonable legal and accounting fees and expenses, attributable to any item described in clauses (1) through (9) (any such Taxes for which Purchaser Parent is responsible pursuant to this Section 6.5(d)(ii), subject to the following proviso, “Purchaser Parent Indemnified Taxes”); provided that Purchaser Parent shall not be required to indemnify or hold harmless any Purchaser Tax Indemnified Party from and against any liability for (A) Taxes attributable to any action taken after the Closing by Seller Parent or any of its Affiliates, other than any such action that (1) is in the ordinary course of business, (2) is expressly permitted or contemplated by this Agreement, or (3) is required to be taken in order to comply with applicable Law or as a result of a change in applicable Law (a “Seller Tax Act”), (B) Taxes that were reflected, accrued or reserved for in the Final Closing Statement, Final Purchaser Working Capital or the Final Purchaser Net Cash, (C) Income Taxes to the extent that Purchaser or any Subsidiary thereof had any Tax Assets as of the close of business on the Closing Date that were available, or would have been available but for their prior utilization by Purchaser or any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries after the Closing), to offset or otherwise reduce the applicable Tax Liability in respect of such Income Taxes (except any Tax Asset reflected as an asset in the Final Closing Statement and taken into account in the calculation of the Final Purchaser Working Capital or the Final Purchaser Net Cash), or (D) Taxes for which Seller Parent is responsible under Section 6.5(d)(i). (iii) To the extent permitted or required by applicable Law, the taxable year of each of the Conveyed Subsidiaries and their Subsidiaries and any Subsidiary of Purchaser that includes the Closing Date shall be treated as closing on (and including) the Closing Date. Otherwise, for purposes of this Agreement, in the case of any Straddle Period: (A) Property Taxes allocable to the Pre-Closing Tax Period shall be computed based upon the ratio of the number of days in the Pre-Closing Tax Period to the number of days in the entire Straddle Period; and (B) Taxes (other than Property Taxes) allocable to the Pre-Closing Tax Period shall be computed as if such Tax period ended as of the close of business on the Closing Date and, in the case of any Taxes of Conveyed Subsidiaries (and their Subsidiaries) and Seller Parent, or in the case of any Taxes of Purchaser Parent and Purchaser (and their Subsidiaries prior to the Closing), in each case attributable to the ownership of any equity interest in any partnership or other “flow through” entity for tax purposes (including of any “controlled foreign corporation,” as defined under the Code) as if the Tax period of such partnership or other “flow through” entity ended as of the close of business on the Closing Date with the Taxes of such entity for the Pre-Closing Tax Period deemed to include any Taxes on the allocable income of such entity in respect of such Tax period; provided that exemptions, allowances or deductions that are calculated on an annual basis (including depreciation and amortization deductions) shall be allocated between the period ending on the Closing Date and the period beginning after the Closing Date in proportion to the number of days in each period. (iv) Any claim for indemnification under this Section 6.5(d) shall be made party in writing upon the party from whom indemnification is sought, and shall specify in reasonable detail the basis for such claim. Any indemnity payment required to be made pursuant to this Section 6.5(d) shall be made within thirty (30) calendar days ~~after~~ of receipt of written notice of any pending or threatened Tax examination, audit or other administrative or judicial proceeding (a "TAX CONTEST") that could reasonably be expected to result in an indemnification obligation under this Section 10.05 of such other party pursuant to this Section 10.05. If the recipient of such notice of a Tax Contest fails to provide such notice to the other party, it shall not be entitled to indemnification for any Taxes arising in connection with such Tax Contest, but only to the extent, if any, that such failure or delay shall have adversely affected the indemnifying party's ability to defend against, settle, or satisfy any action, suit or proceeding against it, or any damage, loss, claim or demand for which the indemnified party ~~makes~~ is entitled to indemnification hereunder. If a Tax Contest relates to any pre-Closing period or to any Taxes for which CCA is liable in full hereunder, CCA shall at its expense control the defense and settlement of such Tax Contest. If such Tax Contest relates to any post-Closing period, API 2 shall at its own expense control the defense and settlement of such Tax Contest. Notwithstanding the foregoing CCA shall not agree to any settlement concerning Taxes for a pre-Closing period which may adversely impact API 2, API or its Subsidiaries for a post-Closing period or the Tax attributes of API or its Subsidiaries without the prior written ~~demand upon~~ consent of API 2, which consent shall not be unreasonably conditioned or withheld. The party not in control of the ~~indemnifying party~~defense shall have the right to be kept fully informed of any material developments and receive copies of all correspondence and shall have the right to observe the conduct of any Tax Contest (through attendance at meetings) at its own expense, ~~but~~ including through its own counsel and other professional experts. API 2 and CCA shall jointly represent and control API in ~~no case earlier than five~~ any Tax Contest relating to a Straddle Period, and fees and expenses related to such representation shall be paid equally by API 2 and CCA. (5c) ~~Business Days prior~~ In the event that a dispute arises between CCA and API 2 as to the ~~date on which~~ amount of Taxes or indemnification or any matter relating to Taxes attributable to API, the ~~relevant Taxes are required~~ parties shall attempt in good faith to resolve such dispute, and any agreed upon amount shall be paid to the ~~applicable Taxing Authority. (v) With respect to any Taxes suffered or incurred by any Conveyed Subsidiary (or any Subsidiary thereof) that was~~ appropriate party. If such dispute is not wholly owned by Seller Parent (directly or indirectly) as of immediately prior to the Closing, the indemnification obligations of Seller Parent pursuant to Section 6.5(d)(i) in respect of such Taxes (or related costs and expenses) shall in no event exceed an amount equal to (A) the amount of such Taxes (or related costs and expenses) for which the Purchaser Tax Indemnified Parties would otherwise be entitled to indemnification pursuant to Section 6.5(d), as if such Conveyed Subsidiary (or any Subsidiary thereof) were wholly owned by Seller Parent, multiplied by (B) the direct and indirect percentage ownership of Seller Parent of such Conveyed Subsidiary (or Subsidiary thereof) as of immediately prior to the Closing. With respect to any Taxes suffered or incurred by any Subsidiary of Purchaser Parent (including Purchaser and its Subsidiaries) that was not wholly owned by Purchaser Parent (directly or indirectly) as of immediately prior to the Closing, the indemnification obligations of Purchaser Parent pursuant to Section 6.5(d)(ii) in respect of such Taxes (or related costs and expenses) shall in no event exceed an amount equal to (A) the amount of such Taxes (or related costs and expenses) for which the Purchaser Tax Indemnified Parties would otherwise be entitled to indemnification pursuant to Section 6.5(d), as if such Subsidiary were wholly owned by Purchaser Parent, multiplied by (B) the direct and indirect percentage ownership of Purchaser Parent of such Subsidiary as of immediately prior to the Closing. (vi) Without duplication to any other amounts paid pursuant to this Section 6.5: (A) Within resolved thirty (30) calendar days ~~following~~ thereafter, the ~~filing of any Income Tax Return~~ parties shall submit the dispute to an independent accounting firm mutually chosen by API 2 and CCA for ~~any Conveyed Subsidiary (or any Subsidiary thereof)~~resolution, which resolution shall be final, conclusive and binding on the ~~one hand~~parties. Notwithstanding anything in the Agreement to the contrary, ~~or Purchaser~~ the fees and expenses of the independent account firm in resolving this dispute shall be borne equally by CCA and API 2. (~~or any Subsidiary thereof, other than~~ d) This Section 10.05 shall survive until three months after the ~~Conveyed Subsidiaries and their Subsidiaries), on~~ expiration of the ~~other hand, for any Pre-Closing Tax Period or for any Straddle Period, Seller Parent or Purchaser Parent shall (or Purchaser Parent shall cause Purchaser to) prepare a statement showing (i) the amount~~ statute of ~~Income Taxes shown as due on such filed Income Tax Return~~ limitations with respect to the ~~relevant Pre-Closing~~ applicable Tax Period or the portion of any Straddle Period ending on and including the Closing Date (the “Final Pre-Closing Income Tax Amount”) and (ii) the amount of the Seller Accrued Income Taxes or Purchaser Accrued Income Taxes, as applicable, attributable to such Income Tax Return as reflected on the Final Closing Statement (the “Pre-Closing Income Tax Amount”) and deliver such statement to Seller Parent and Purchaser Parent, as applicable. Purchaser Parent or Seller Parent, as applicable, shall have a period of fifteen (15) Business Days to provide comments to a schedule prepared (or caused to be prepared) by Seller Parent or Purchaser Parent, respectively. If Purchaser Parent or Seller Parent, as applicable, do not provide any comments to Seller Parent or Purchaser Parent, respectively, during such period, the statement as so prepared shall be final and binding. (B) In the event the Final Pre-Closing Income Tax Amount with respect to any Income Tax Return is less than the amount of the Pre-Closing Income Tax Amount attributable to such Income Tax Return that was included on the Final Closing Statement, the Purchaser shall within five (5) Business Days following the finalization of the Final Pre-Closing Income Tax Amount hereunder (i) pay to Seller Parent the amount of such difference with respect to a Conveyed Subsidiary and their Subsidiaries and (ii) pay to Purchaser Parent the amount of such difference with respect to Purchaser and its Subsidiaries. (vii) The Parties shall use reasonable best efforts to structure any indemnity payment, true-up payment, or payment in respect of Tax Benefits made by any Party pursuant to this Agreement (including ~~pursuant to this Section 6.5~~all periods of extension, ~~Section 6.6 and Article VII) and any payment made by Purchaser Parent to Purchaser pursuant to Section 2.8~~ whether automatic or Section 2.9 in the manner set forth in Clause 10 of the Structuring Considerations Agreement. The Parties shall use reasonable best efforts to structure as a special dividend any payment made by Purchaser to Purchaser Parent pursuant to Section 2.8, Section 2.9 or this Section 6.5permissive).

Appears in 1 contract

Sources: Stock Purchase Agreement (Corrections Corp of America/Md)

Tax Indemnification. (ia) ~~Subject to Section 6.5(d)(v), from~~ From and ~~after the Closing, Seller Parent agrees to indemnify and hold harmless Purchaser and its Subsidiaries (including the Conveyed Subsidiaries and their Subsidiaries~~ after the Closing Date, subject to the limitations set forth in Section 7.05 and the provisions of Section 7.09, Sellers, jointly and severally, shall indemnify Purchaser and its Affiliates and each of their respective officers, directors, employees, stockholders, members, partners, agents and representatives and their respective successors and assigns (the "PURCHASER INDEMNITEES") against and hold them harmless from (~~collectively, the “Purchaser Tax Indemnified Parties”~~i) ~~from and against~~ all ~~liability, without duplication,~~ liability for ~~(1)~~ Taxes of the ~~Conveyed Subsidiaries~~ Company and ~~their~~ its Subsidiaries for ~~any Pre-Closing Tax Period (including any Taxes payable in respect of an election under Section 965(h) of~~ the Code), (2) Taxes of any Seller (other than any Transfer Taxes and VAT for which Purchaser is responsible hereunder) including, Taxes (other than Taxes of the Conveyed Subsidiaries and their Subsidiaries) imposed with respect to, arising out of or relating to the Purchased Assets or the Business for a Pre-Closing Tax Period, (3ii) all liability for Taxes of the Company and its Subsidiaries for the Straddle Period or the Post-Closing Tax Period to the extent that the relevant action which causes the Tax occurred in a Pre-Closing Period (excluding a Pre-Closing period injection of capital which results in a reduction of the tax losses carry forwards), (iii) all liability for Income Taxes of Sellers or any other Person which is or has been affiliated with Sellers (other than the Conveyed Subsidiaries and their Subsidiaries) for a Pre-Closing Tax Period for which any Conveyed Subsidiary (or any Subsidiary thereof) is liable under Treasury Regulation Section 1.1502-6 (or a similar provision of state, local or foreign Law), or as a transferee or successor or by Contract (other than Contracts that do not relate primarily to Taxes), (4) Taxes arising out of or resulting from any breach of any covenant or agreement of Seller Parent Company or any of its ~~Affiliates contained in this Agreement, (5) Taxes for a Pre-Closing Tax Period imposed on (x) any transaction effected pursuant to Section 2.3(b~~Subsidiaries), (y) any settlement of any intercompany accounts of Seller Parent or its Subsidiaries pursuant to Section 6.7, or (z) any transaction or step forming part of the Seller Internal Restructurings, (6) Transfer Taxes for which Seller Parent is responsible under Section 6.5(j), (7) Taxes required to be deducted or withheld with respect to the payment of the Purchase Consideration or any amounts payable to Seller Parent pursuant to Section 2.8 or Section 2.9, including any penalties imposed on Purchaser as a result of Purchaser’s failure to deduct or withhold any such amounts that Purchaser (or a Purchaser Designated Affiliate) was permitted to withhold under Section 2.10 (in each case, subject to Purchaser’s compliance with the notice and cooperation requirements of Section 2.10 and except for any such Taxes (and any related penalties) required to be deducted or withheld solely as a result of any assignment by Purchaser or its Affiliates for which Purchaser is responsible pursuant to Section 10.3), (8) Taxes arising from any breach of any representation or warranty contained in Section 4.16(k), (9) Taxes arising as a result of any Conveyed Subsidiary or any Subsidiary of any Conveyed Subsidiary at any time ceasing to be a member of a group for the purposes of any Tax, of which group Seller Parent or any Subsidiary of Seller Parent is or was also a member and (10iv) ~~any costs and expenses, including~~ all liability for reasonable legal ~~and accounting~~ fees and ~~expenses,~~ expenses attributable to any item ~~described~~ in clauses (1i) through (9iii) ~~(any such Taxes for which Seller Parent is responsible pursuant to this Section 6.5(d)(i)~~above. Notwithstanding the foregoing, ~~subject to the following proviso, “Seller Indemnified Taxes”); provided that Seller Parent~~ Sellers shall not ~~be required to~~ indemnify or and hold harmless ~~any~~ a Purchaser ~~Tax Indemnified Party~~ Indemnitee from ~~and against~~ any liability ~~pursuant to this Section 6.5(d)(i)~~ for ~~(A)~~ Taxes attributable to any action taken on or after the Closing Date by the Purchaser, any of its Affiliates (including the ~~Conveyed Subsidiaries and their~~ Company or any of its Subsidiaries), or any transferee of Purchaser or any of its Affiliates (~~including the Conveyed Subsidiaries and their Subsidiaries),~~ other than any such action ~~that (1) is in the ordinary course of business, (2) is~~ expressly ~~permitted~~ required by Applicable Law or ~~contemplated~~ by this Agreement~~, or (3~~) ~~is required to be taken in order to comply with applicable Law or as a result of a change in applicable Law~~ (a “"PURCHASER TAX ACT") or attributable to a breach by the Purchaser ~~Tax Act”~~of its obligations under this Agreement. (b) From and after the Closing Date, subject to the limitations set forth in Section 7.05 and the provisions of Section 7.09, the Purchaser shall indemnify Sellers and their Affiliates and each of their respective officers, directors, employees, stockholders, members, partners, agents and representatives and their respective successors and assigns (the "SELLER INDEMNITEES") against and hold them harmless from (i) all liability for Taxes of the Company and its Subsidiaries other than Taxes described in 7.01(a)(i) through (iv), (Bii) all liability for Taxes ~~that were reflected, accrued~~ attributable to a Purchaser Tax Act or ~~reserved for in~~ to a breach by the Final Closing Statement, Final Business Working Capital, or Final Business Net Cash, (C) Income Taxes to the extent that a Conveyed Subsidiary or any Subsidiary thereof had any Tax Assets as of the close of business on the Closing Date that were available, or would have been available but for their prior utilization by Purchaser ~~or any~~ of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries after the Closing) to offset or otherwise reduce the applicable Tax Liability in respect of such Income Taxes (except any Tax Asset reflected as an asset in the Final Closing Statement and taken into account in the calculation of the Final Business Working Capital or the Final Business Net Cash), or (D) Taxes for which Purchaser Parent is responsible obligations under Section 6.5(d)(ii). (ii) Subject to Section 6.5(d)(v), from and after the Closing, Purchaser Parent shall indemnify and hold harmless the Purchaser Tax Indemnified Parties from and against all liability, without duplication, for (1) all Taxes of Purchaser Parent and its Affiliates (other than Purchaser and its Subsidiaries) for any Tax period (other than Transfer Taxes and VAT for which Seller Parent is responsible hereunder), (2) Taxes of Purchaser and its Subsidiaries (other than the Conveyed Subsidiaries and their Subsidiaries) for any Pre-Closing Tax Period, (3) Taxes of any Person for a Pre-Closing Tax Period for which Purchaser (or any Subsidiary thereof other than any Conveyed Subsidiaries and their Subsidiaries) is liable under Treasury Regulation Section 1.1502-6 (or a similar provision of state, local or foreign Law), or as a transferee or successor or by Contract (other than Contracts that do not relate primarily to Taxes), (4) Taxes arising out of or resulting from any breach of any covenant or agreement of Purchaser Parent, Purchaser or their respective Affiliates contained in this Agreement, (5) Transfer Taxes for which Purchaser Parent is responsible under Section 6.5(j), (6) Taxes arising from any breach of any representation or warranty in Section 5.17(k), (7) Taxes for a Pre-Closing Tax Period imposed on (x) any settlement of any intercompany accounts of Purchaser or any Subsidiary of Purchaser, on the one hand, and Purchaser Parent or any Subsidiary of Purchaser Parent (other than Purchaser and its Subsidiaries), on the other hand, pursuant to Section 6.7 or (y) any transaction or step forming part of the Purchaser Internal Restructurings, (8) Taxes required to be deducted or withheld with respect to any amounts payable to Purchaser Parent pursuant to Section 2.8 or Section 2.9, including any penalties imposed on Purchaser as a result of Purchaser’s failure to deduct or withhold any such amounts, (9) Taxes arising as a result of Purchaser or any Subsidiary of Purchaser (other than any Conveyed Subsidiary or a Subsidiary thereof) at any time ceasing to be a member of a group for the purposes of any Tax, of which group Purchaser Parent or any Subsidiary of Purchaser Parent (other than Purchaser or any Subsidiary of Purchaser) is or was also a member and (10iii) ~~any costs and expenses, including~~ all liability for reasonable legal ~~and accounting~~ fees and ~~expenses,~~ expenses attributable to any item ~~described~~ in clauses (1) through (9) (any such Taxes for which Purchaser Parent is responsible pursuant to this Section 6.5(d)(ii), subject to the following proviso, “Purchaser Parent Indemnified Taxes”); provided that Purchaser Parent shall not be required to indemnify or hold harmless any Purchaser Tax Indemnified Party from and against any liability for (A) Taxes attributable to any action taken after the Closing by Seller Parent or any of its Affiliates, other than any such action that (1) is in the ordinary course of business, (2) is expressly permitted or contemplated by this Agreement, or (3) is required to be taken in order to comply with applicable Law or as a result of a change in applicable Law (a “Seller Tax Act”), (B) Taxes that were reflected, accrued or reserved for in the Final Closing Statement, Final Purchaser Working Capital or the Final Purchaser Net Cash, (C) Income Taxes to the extent that Purchaser or any Subsidiary thereof had any Tax Assets as of the close of business on the Closing Date that were available, or would have been available but for their prior utilization by Purchaser or any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries after the Closing), to offset or otherwise reduce the applicable Tax Liability in respect of such Income Taxes (except any Tax Asset reflected as an asset in the Final Closing Statement and taken into account in the calculation of the Final Purchaser Working Capital or the Final Purchaser Net Cash), or (D) Taxes for which Seller Parent is responsible under Section 6.5(d)(i). (iii) To the extent permitted or required by applicable Law, the taxable year of each of the Conveyed Subsidiaries and their Subsidiaries and any Subsidiary of Purchaser that includes the Closing Date shall be treated as closing on (and including) the Closing Date. Otherwise, for purposes of this Agreement, in the case of any Straddle Period: (A) Property Taxes allocable to the Pre-Closing Tax Period shall be computed based upon the ratio of the number of days in the Pre-Closing Tax Period to the number of days in the entire Straddle Period; and (B) Taxes (other than Property Taxes) allocable to the Pre-Closing Tax Period shall be computed as if such Tax period ended as of the close of business on the Closing Date and, in the case of any Taxes of Conveyed Subsidiaries (and their Subsidiaries) and Seller Parent, or in the case of any Taxes of Purchaser Parent and Purchaser (and their Subsidiaries prior to the Closing), in each case attributable to the ownership of any equity interest in any partnership or other “flow through” entity for tax purposes (including of any “controlled foreign corporation,” as defined under the Code) as if the Tax period of such partnership or other “flow through” entity ended as of the close of business on the Closing Date with the Taxes of such entity for the Pre-Closing Tax Period deemed to include any Taxes on the allocable income of such entity in respect of such Tax period; provided that exemptions, allowances or deductions that are calculated on an annual basis (including depreciation and amortization deductions) shall be allocated between the period ending on the Closing Date and the period beginning after the Closing Date in proportion to the number of days in each period. (iv) Any claim for indemnification under this Section 6.5(d) shall be made in writing upon the party from whom indemnification is sought, and shall specify in reasonable detail the basis for such claim. Any indemnity payment required to be made pursuant to this Section 6.5(d) shall be made within thirty (30) days after the indemnified party makes written demand upon the indemnifying party, but in no case earlier than five (5) Business Days prior to the date on which the relevant Taxes are required to be paid to the applicable Taxing Authority. (v) With respect to any Taxes suffered or incurred by any Conveyed Subsidiary (or any Subsidiary thereof) that was not wholly owned by Seller Parent (directly or indirectly) as of immediately prior to the Closing, the indemnification obligations of Seller Parent pursuant to Section 6.5(d)(i) in respect of such Taxes (or related costs and expenses) shall in no event exceed an amount equal to (A) the amount of such Taxes (or related costs and expenses) for which the Purchaser Tax Indemnified Parties would otherwise be entitled to indemnification pursuant to Section 6.5(d), as if such Conveyed Subsidiary (or any Subsidiary thereof) were wholly owned by Seller Parent, multiplied by (B) the direct and indirect percentage ownership of Seller Parent of such Conveyed Subsidiary (or Subsidiary thereof) as of immediately prior to the Closing. With respect to any Taxes suffered or incurred by any Subsidiary of Purchaser Parent (including Purchaser and its Subsidiaries) that was not wholly owned by Purchaser Parent (directly or indirectly) as of immediately prior to the Closing, the indemnification obligations of Purchaser Parent pursuant to Section 6.5(d)(ii) in respect of such Taxes (or related costs and expenses) shall in no event exceed an amount equal to (A) the amount of such Taxes (or related costs and expenses) for which the Purchaser Tax Indemnified Parties would otherwise be entitled to indemnification pursuant to Section 6.5(d), as if such Subsidiary were wholly owned by Purchaser Parent, multiplied by (B) the direct and indirect percentage ownership of Purchaser Parent of such Subsidiary as of immediately prior to the Closing. (vi) Without duplication to any other amounts paid pursuant to this Section 6.5: (A) Within thirty (30) days following the filing of any Income Tax Return for any Conveyed Subsidiary (or any Subsidiary thereof), on the one hand, or Purchaser (or any Subsidiary thereof, other than the Conveyed Subsidiaries and their Subsidiaries), on the other hand, for any Pre-Closing Tax Period or for any Straddle Period, Seller Parent or Purchaser Parent shall (or Purchaser Parent shall cause Purchaser to) prepare a statement showing clause (i) ~~the amount of Income Taxes shown as due on such filed Income Tax Return with respect to the relevant Pre-Closing Tax Period~~ or ~~the portion of any Straddle Period ending on and including the Closing Date (the “Final Pre-Closing Income Tax Amount”) and~~ (ii) the amount of the Seller Accrued Income Taxes or Purchaser Accrued Income Taxes, as applicable, attributable to such Income Tax Return as reflected on the Final Closing Statement (the “Pre-Closing Income Tax Amount”) and deliver such statement to Seller Parent and Purchaser Parent, as applicable. Purchaser Parent or Seller Parent, as applicable, shall have a period of fifteen (15) Business Days to provide comments to a schedule prepared (or caused to be prepared) by Seller Parent or Purchaser Parent, respectively. If Purchaser Parent or Seller Parent, as applicable, do not provide any comments to Seller Parent or Purchaser Parent, respectively, during such period, the statement as so prepared shall be final and bindingabove. (B) In the event the Final Pre-Closing Income Tax Amount with respect to any Income Tax Return is less than the amount of the Pre-Closing Income Tax Amount attributable to such Income Tax Return that was included on the Final Closing Statement, the Purchaser shall within five (5) Business Days following the finalization of the Final Pre-Closing Income Tax Amount hereunder (i) pay to Seller Parent the amount of such difference with respect to a Conveyed Subsidiary and their Subsidiaries and (ii) pay to Purchaser Parent the amount of such difference with respect to Purchaser and its Subsidiaries. (vii) The Parties shall use reasonable best efforts to structure any indemnity payment, true-up payment, or payment in respect of Tax Benefits made by any Party pursuant to this Agreement (including pursuant to this Section 6.5, Section 6.6 and Article VII) and any payment made by Purchaser Parent to Purchaser pursuant to Section 2.8 or Section 2.9 in the manner set forth in Clause 10 of the Structuring Considerations Agreement. The Parties shall use reasonable best efforts to structure as a special dividend any payment made by Purchaser to Purchaser Parent pursuant to Section 2.8, Section 2.9 or this Section 6.5.

Appears in 1 contract

Sources: Stock Purchase Agreement (Wireless Telecom Group Inc)

Tax Indemnification. (i) ~~Subject~~ Except to ~~Section 6.5(d)(v)~~the extent Taxes are reserved for on the Closing Date Balance Sheet, each Shareholder, jointly and severally, agrees to be responsible for and to indemnify and hold SFC, MSC and their Affiliates harmless from and ~~after~~ against any and all Taxes that may be imposed upon or assessed against APA, SFC and/or MSC or the ~~Closing~~assets thereof: (1) with respect to all taxes of APA for taxable periods ending on or prior to the Closing Date; (2) with respect to any and all Taxes of APA for the period allocated to the Shareholders pursuant to SECTION 8.7(a)(iv); (3) with respect to any transfer Tax liability pursuant to SECTION 8.7(c) hereof; (4) arising by reason of any breach or inaccuracy of any of the representations contained in SECTION 3.24 hereof; (5) by reason of APA being a successor-in-interest or transferee of another entity; (6) without duplication, ~~Seller Parent~~ arising as a result of the Merger; and (7) with respect to any and all Taxes of any member of an Affiliated Group on or prior to the Closing Date, by reason of the liability of APA pursuant to Treasury Regulation Section 1.1502-6(a) or any analogous or similar state, local or foreign law or regulation. (ii) The Shareholders shall also pay and shall indemnify and hold harmless SFC and MSC and their Affiliates from and against any losses, damages, liabilities, obligations, deficiencies, costs and expenses (including, without limitation, reasonable expenses and fees for attorneys and accountants) ("Related Costs") incurred in connection with the Taxes for which the Shareholders are responsible to indemnify SFC, MSC and their Affiliates pursuant to this SECTION 8.7(a) (or any asserted deficiency, claim, demand, action, suit, proceeding, judgment or assessment, including the defense or settlement thereof, relating to such Taxes) or the enforcement of this SECTION 8.7(a). (iii) SFC agrees to indemnify and hold harmless ~~Purchaser and its Subsidiaries (including~~ the Conveyed Subsidiaries and their Subsidiaries after the Closing Date) (collectively, the “Purchaser Tax Indemnified Parties”) from and against all liability, without duplication, for (1) Taxes of the Conveyed Subsidiaries and their Subsidiaries for any Pre-Closing Tax Period (including any Taxes payable in respect of an election under Section 965(h) of the Code), (2) Taxes of any Seller (other than any Transfer Taxes and VAT for which Purchaser is responsible hereunder) including, Taxes (other than Taxes of the Conveyed Subsidiaries and their Subsidiaries) imposed with respect to, arising out of or relating to the Purchased Assets or the Business for a Pre-Closing Tax Period, (3) Taxes of any Person (other than the Conveyed Subsidiaries and their Subsidiaries) for a Pre-Closing Tax Period for which any Conveyed Subsidiary (or any Subsidiary thereof) is liable under Treasury Regulation Section 1.1502-6 (or a similar provision of state, local or foreign Law), or as a transferee or successor or by Contract (other than Contracts that do not relate primarily to Taxes), (4) Taxes arising out of or resulting from any breach of any covenant or agreement of Seller Parent or any of its Affiliates contained in this Agreement, (5) Taxes for a Pre-Closing Tax Period imposed on (x) any transaction effected pursuant to Section 2.3(b), (y) any settlement of any intercompany accounts of Seller Parent or its Subsidiaries pursuant to Section 6.7, or (z) any transaction or step forming part of the Seller Internal Restructurings, (6) Transfer Taxes for which Seller Parent is responsible under Section 6.5(j), (7) Taxes required to be deducted or withheld with respect to the payment of the Purchase Consideration or any amounts payable to Seller Parent pursuant to Section 2.8 or Section 2.9, including any penalties imposed on Purchaser as a result of Purchaser’s failure to deduct or withhold any such amounts that Purchaser (or a Purchaser Designated Affiliate) was permitted to withhold under Section 2.10 (in each case, subject to Purchaser’s compliance with the notice and cooperation requirements of Section 2.10 and except for any such Taxes (and any related penalties) required to be deducted or withheld solely as a result of any assignment by Purchaser or its Affiliates for which Purchaser is responsible pursuant to Section 10.3), (8) Taxes arising from any breach of any representation or warranty contained in Section 4.16(k), (9) Taxes arising as a result of any Conveyed Subsidiary or any Subsidiary of any Conveyed Subsidiary at any time ceasing to be a member of a group for the purposes of any Tax, of which group Seller Parent or any Subsidiary of Seller Parent is or was also a member and (10) any costs and expenses, including reasonable legal and accounting fees and expenses, attributable to any item described in clauses (1) through (9) (any such Taxes for which Seller Parent is responsible pursuant to this Section 6.5(d)(i), subject to the following proviso, “Seller Indemnified Taxes”); provided that Seller Parent shall not be required to indemnify or hold harmless any Purchaser Tax Indemnified Party Shareholders from and against any ~~liability pursuant to this Section 6.5(d)(i) for~~ and all Taxes (A) ~~Taxes attributable~~ of MSC with respect to any ~~action taken~~ taxable period of MSC beginning after the Closing ~~by Purchaser, any of its Affiliates (including the Conveyed Subsidiaries~~ Date and their Subsidiaries), or any transferee of Purchaser or any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries), other than any such action that (1) is in the ordinary course of business, (2) is expressly permitted or contemplated by this Agreement, or (3) is required to be taken in order to comply with applicable Law or as a result of a change in applicable Law (a “Purchaser Tax Act”), (B) ~~Taxes that were reflected, accrued or reserved for in the Final Closing Statement, Final Business Working Capital, or Final Business Net Cash, (C) Income Taxes~~ attributable to the ~~extent that a Conveyed Subsidiary or any Subsidiary thereof had any Tax Assets~~ period allocated to SFC pursuant to SECTION 8.7(a)(iv). (iv) For federal income tax purposes, the taxable year of APA shall end as of the close of ~~business on~~ the Closing Date ~~that were available~~and, or would have been available but for their prior utilization by Purchaser or any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries after the Closing) to offset or otherwise reduce the applicable Tax Liability in respect of such Income Taxes (except any Tax Asset reflected as an asset in the Final Closing Statement and taken into account in the calculation of the Final Business Working Capital or the Final Business Net Cash), or (D) Taxes for which Purchaser Parent is responsible under Section 6.5(d)(ii). (ii) Subject to Section 6.5(d)(v), from and after the Closing, Purchaser Parent shall indemnify and hold harmless the Purchaser Tax Indemnified Parties from and against all liability, without duplication, for (1) all Taxes of Purchaser Parent and its Affiliates (other than Purchaser and its Subsidiaries) for any Tax period (other than Transfer Taxes and VAT for which Seller Parent is responsible hereunder), (2) Taxes of Purchaser and its Subsidiaries (other than the Conveyed Subsidiaries and their Subsidiaries) for any Pre-Closing Tax Period, (3) Taxes of any Person for a Pre-Closing Tax Period for which Purchaser (or any Subsidiary thereof other than any Conveyed Subsidiaries and their Subsidiaries) is liable under Treasury Regulation Section 1.1502-6 (or a similar provision of state, local or foreign Law), or as a transferee or successor or by Contract (other than Contracts that do not relate primarily to Taxes), (4) Taxes arising out of or resulting from any breach of any covenant or agreement of Purchaser Parent, Purchaser or their respective Affiliates contained in this Agreement, (5) Transfer Taxes for which Purchaser Parent is responsible under Section 6.5(j), (6) Taxes arising from any breach of any representation or warranty in Section 5.17(k), (7) Taxes for a Pre-Closing Tax Period imposed on (x) any settlement of any intercompany accounts of Purchaser or any Subsidiary of Purchaser, on the one hand, and Purchaser Parent or any Subsidiary of Purchaser Parent (other than Purchaser and its Subsidiaries), on the other hand, pursuant to Section 6.7 or (y) any transaction or step forming part of the Purchaser Internal Restructurings, (8) Taxes required to be deducted or withheld with respect to ~~any amounts payable to Purchaser Parent pursuant to Section 2.8 or Section 2.9~~all other Taxes, ~~including any penalties imposed on Purchaser as a result~~ the Shareholders and SFC will, unless prohibited by applicable law, close the taxable period of Purchaser’s failure to deduct or withhold any such amounts, (9) Taxes arising as a result of Purchaser or any Subsidiary of Purchaser (other than any Conveyed Subsidiary or a Subsidiary thereof) at any time ceasing to be a member of a group for the purposes of any Tax, of which group Purchaser Parent or any Subsidiary of Purchaser Parent (other than Purchaser or any Subsidiary of Purchaser) is or was also a member and (10) any costs and expenses, including reasonable legal and accounting fees and expenses, attributable to any item described in clauses (1) through (9) (any such Taxes for which Purchaser Parent is responsible pursuant to this Section 6.5(d)(ii), subject to the following proviso, “Purchaser Parent Indemnified Taxes”); provided that Purchaser Parent shall not be required to indemnify or hold harmless any Purchaser Tax Indemnified Party from and against any liability for (A) Taxes attributable to any action taken after the Closing by Seller Parent or any of its Affiliates, other than any such action that (1) is in the ordinary course of business, (2) is expressly permitted or contemplated by this Agreement, or (3) is required to be taken in order to comply with applicable Law or as a result of a change in applicable Law (a “Seller Tax Act”), (B) Taxes that were reflected, accrued or reserved for in the Final Closing Statement, Final Purchaser Working Capital or the Final Purchaser Net Cash, (C) Income Taxes to the extent that Purchaser or any Subsidiary thereof had any Tax Assets APA as of the close of ~~business~~ the Closing Date. Neither the Shareholders nor SFC shall take any position inconsistent with the preceding sentence on any Tax Return. In any case where applicable law does not permit APA to close its taxable year on the Closing Date or in any case in which a Tax is assessed with respect to a taxable period which includes the Closing Date (but does not end on that ~~were available, or would have been available but for their prior utilization by Purchaser or any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries after the Closing~~day), then Taxes, if any, attributable to offset or otherwise reduce the applicable Tax Liability in respect of such Income Taxes (except any Tax Asset reflected as an asset in the Final Closing Statement and taken into account in the calculation of the Final Purchaser Working Capital or the Final Purchaser Net Cash), or (D) Taxes for which Seller Parent is responsible under Section 6.5(d)(i). (iii) To the extent permitted or required by applicable Law, the taxable ~~year~~ period of ~~each of the Conveyed Subsidiaries~~ APA beginning before and ~~their Subsidiaries and any Subsidiary of Purchaser that includes~~ ending after the Closing Date shall be ~~treated as closing on~~ allocated (i) to the Shareholders for the period up to and ~~including~~including the Closing Date, and (ii) to SFC for the period subsequent to the Closing Date. ~~Otherwise, for purposes~~ Any allocation of ~~this Agreement, in~~ income or deductions required to determine any Taxes attributable to any period beginning before and ending after the ~~case of any Straddle Period: (A) Property Taxes allocable to the Pre-~~Closing ~~Tax Period~~ Date shall be ~~computed based upon the ratio~~ prepared by SFC and shall be made by means of a closing of the ~~number~~ books and records of days in the Pre-Closing Tax Period to the number of days in the entire Straddle Period; and (B) Taxes (other than Property Taxes) allocable to the Pre-Closing Tax Period shall be computed as if such Tax period ended APA as of the close of ~~business on~~ the Closing ~~Date and~~Date, in the case of any Taxes of Conveyed Subsidiaries (and their Subsidiaries) and Seller Parent, or in the case of any Taxes of Purchaser Parent and Purchaser (and their Subsidiaries prior to the Closing), in each case attributable to the ownership of any equity interest in any partnership or other “flow through” entity for tax purposes (including of any “controlled foreign corporation,” as defined under the Code) as if the Tax period of such partnership or other “flow through” entity ended as of the close of business on the Closing Date with the Taxes of such entity for the Pre-Closing Tax Period deemed to include any Taxes on the allocable income of such entity in respect of such Tax period; provided that exemptions, allowances or deductions that are calculated on an annual basis (~~including~~ including, but not limited to, depreciation and amortization deductions) shall be allocated between the period ending on the Closing Date and the period ~~beginning~~ after the Closing Date in proportion to the number of days in each such period. (ivv) If any indemnification payment under SECTION 8.7 (including, without limitation, this SECTION 8.7(a)(v)) is determined to be taxable to the party receiving such payment by any taxing authority, the paying party shall also indemnify the party receiving such payment for any Taxes incurred by reason of the receipt of such payment (taking into account any actual reduction in tax liability to the receiving party) and any Related Costs incurred by the party receiving such payment in connection with such Taxes (or any asserted deficiency, claim, demand, action, suit, proceeding, judgment or assessment, including the defense or settlement thereof, relating to such Taxes). (vi) The indemnification provided for in this SECTION 8.7 shall be the sole remedy for any claim with respect to Taxes. Any claim for indemnification under this ~~Section 6.5(d) shall~~ SECTION 8.7 may be made ~~in writing upon the party from whom indemnification is sought, and shall specify in reasonable detail the basis for such claim. Any indemnity payment required~~ at any time prior to ~~be made pursuant to this Section 6.5(d) shall be made within thirty (30)~~ 60 days after the ~~indemnified party makes written demand upon the indemnifying party, but in no case earlier than five (5) Business Days prior to the date on which the relevant Taxes are required to be paid to~~ expiration of the applicable ~~Taxing Authority. (v) With respect to any Taxes suffered or incurred by any Conveyed Subsidiary (or any Subsidiary thereof) that was not wholly owned by Seller Parent (directly or indirectly) as~~ statute of immediately prior to the Closing, the indemnification obligations of Seller Parent pursuant to Section 6.5(d)(i) in respect of such Taxes (or related costs and expenses) shall in no event exceed an amount equal to (A) the amount of such Taxes (or related costs and expenses) for which the Purchaser Tax Indemnified Parties would otherwise be entitled to indemnification pursuant to Section 6.5(d), as if such Conveyed Subsidiary (or any Subsidiary thereof) were wholly owned by Seller Parent, multiplied by (B) the direct and indirect percentage ownership of Seller Parent of such Conveyed Subsidiary (or Subsidiary thereof) as of immediately prior to the Closing. With respect to any Taxes suffered or incurred by any Subsidiary of Purchaser Parent (including Purchaser and its Subsidiaries) that was not wholly owned by Purchaser Parent (directly or indirectly) as of immediately prior to the Closing, the indemnification obligations of Purchaser Parent pursuant to Section 6.5(d)(ii) in respect of such Taxes (or related costs and expenses) shall in no event exceed an amount equal to (A) the amount of such Taxes (or related costs and expenses) for which the Purchaser Tax Indemnified Parties would otherwise be entitled to indemnification pursuant to Section 6.5(d), as if such Subsidiary were wholly owned by Purchaser Parent, multiplied by (B) the direct and indirect percentage ownership of Purchaser Parent of such Subsidiary as of immediately prior to the Closing. (vi) Without duplication to any other amounts paid pursuant to this Section 6.5: (A) Within thirty (30) days following the filing of any Income Tax Return for any Conveyed Subsidiary (or any Subsidiary thereof), on the one hand, or Purchaser (or any Subsidiary thereof, other than the Conveyed Subsidiaries and their Subsidiaries), on the other hand, for any Pre-Closing Tax Period or for any Straddle Period, Seller Parent or Purchaser Parent shall (or Purchaser Parent shall cause Purchaser to) prepare a statement showing (i) the amount of Income Taxes shown as due on such filed Income Tax Return limitation with respect to the relevant Pre-Closing Tax Period or the portion of any Straddle Period ending on and including the Closing Date (the “Final Pre-Closing Income Tax Amount”) and (ii) the amount of the Seller Accrued Income Taxes or Purchaser Accrued Income Taxes, as applicable, attributable to such Income Tax Return as reflected on the Final Closing Statement (the “Pre-Closing Income Tax Amount”) and deliver such statement to Seller Parent and Purchaser Parent, as applicable. Purchaser Parent or Seller Parent, as applicable, shall have a taxable period of fifteen (15) Business Days to provide comments to a schedule prepared (or caused to be prepared) by Seller Parent or Purchaser Parent, respectively. If Purchaser Parent or Seller Parent, as applicable, do not provide any comments to Seller Parent or Purchaser Parent, respectively, during such period, the statement as so prepared shall be final and binding. (B) In the event the Final Pre-Closing Income Tax Amount with respect to any Income Tax Return is less than the amount of the Pre-Closing Income Tax Amount attributable to such Income Tax Return that was included on the Final Closing Statement, the Purchaser shall within five (5) Business Days following the finalization of the Final Pre-Closing Income Tax Amount hereunder (i) pay to Seller Parent the amount of such difference with respect to a Conveyed Subsidiary and their Subsidiaries and (ii) pay to Purchaser Parent the amount of such difference with respect to Purchaser and its Subsidiaries. (vii) The Parties shall use reasonable best efforts to structure any indemnity payment, true-up payment, or payment in respect of Tax Benefits made by any Party pursuant to this Agreement (including ~~pursuant to this Section 6.5~~all periods of extension, ~~Section 6.6 and Article VII) and any payment made by Purchaser Parent to Purchaser pursuant to Section 2.8~~ whether automatic or Section 2.9 in the manner set forth in Clause 10 of the Structuring Considerations Agreement. The Parties shall use reasonable best efforts to structure as a special dividend any payment made by Purchaser to Purchaser Parent pursuant to Section 2.8, Section 2.9 or this Section 6.5permissive).

Appears in 1 contract

Sources: Merger Agreement (Siebert Financial Corp)

Tax Indemnification. (i) Subject to the limitations set forth in this Section ~~6.5(d)(v~~5.20(a), from and after the Principal Closing, the Seller ~~Parent~~ agrees to ~~indemnify~~ indemnify, defend, and hold harmless each Purchaser ~~and its Subsidiaries (including the Conveyed Subsidiaries and their Subsidiaries after the Closing Date) (collectively, the “Purchaser Tax~~ Indemnified ~~Parties”)~~ Person from and ~~against~~ in respect of any and all ~~liability~~Losses they may incur arising out of, ~~without duplication, for~~ relating to or resulting from: (1A) any Taxes of the ~~Conveyed Subsidiaries and their Subsidiaries~~ Transferred Entities for any Pre-Closing Tax Period; (B) all Taxes relating to the operation of the Business or the acquisition, ownership, or sale of any Transferred Asset in any Pre-Closing Tax Period (~~including any Taxes payable in respect~~ other than, for the avoidance of ~~an election under Section 965(h) of the Code)~~doubt, ~~(2) Taxes of any Seller (other than any Transfer Taxes and VAT for which Purchaser is responsible hereunder) including, Taxes (other than~~ Taxes of the ~~Conveyed Subsidiaries and their Subsidiaries) imposed with respect to, arising out of or relating to the Purchased Assets or the Business~~ Transferred Entities for ~~a Pre~~any Post-Closing Tax Period, ) (3“Retained Asset Taxes”); (C) any Taxes payable by any Transferred Entity as a result of any ~~Person~~ inclusion (~~other than~~ x) under Section 951 or Section 951A of the ~~Conveyed Subsidiaries and their Subsidiaries) for a~~ Code to the extent attributable to the Pre-Closing Tax Period ~~for~~ or (y) under Section 965 of the Code; (D) any Taxes of the Seller or any of its Affiliates or any other Person (other than a Transferred Entity) which ~~any Conveyed Subsidiary~~ is required to be paid by a Transferred Entity by reason of the Transferred Entity (or any ~~Subsidiary thereof~~predecessor of the Transferred Entity) ~~is liable under~~ having been a member of any affiliated, consolidated, combined or unitary Tax group (including but not limited to any Seller Consolidated Group) on or prior to the Applicable Closing Date, including pursuant to Treasury ~~Regulation~~ Regulations Section 1.1502-6 (or a any similar ~~provision of~~ state, ~~local~~ local, or ~~foreign~~ non-U.S. Law), or as a ~~transferee or~~ successor or transferee (including pursuant to the UK Taxation of Capital Gains ▇▇▇ ▇▇▇▇ section 179) as a result of a transaction occurring prior to the Applicable Closing; (E) any payments required to be made by ~~Contract (~~a Transferred Entity pursuant to any Tax allocation, Tax indemnity or Tax sharing agreement entered into by such Transferred Entity prior to the Principal Closing other than (x) agreements exclusively between or among the Transferred Entities and (y) customary provisions in commercial Contracts entered into in the ordinary course of business that do not relate primarily to ~~Taxes~~Taxes (such as a credit agreement or a lease), ; (4F) any Taxes ~~arising out of or~~ resulting from any breach or failure of ~~any covenant or agreement of~~ the Seller ~~Parent or~~ to perform any of its ~~Affiliates contained~~ covenants in this ~~Agreement,~~ Section 5.20; (~~5) Taxes for a Pre-Closing Tax Period imposed on (x~~G) any ~~transaction effected~~ Taxes arising from or imposed in connection with any of the transactions occurring as part of, or in connection with, the Reorganization or the settlement of intercompany accounts or other amounts owed pursuant to Section ~~2.3(b)~~5.12, ~~(y) any settlement~~ or the transfer of ~~any intercompany accounts of Seller Parent or its Subsidiaries~~ assets pursuant to Section ~~6.7, or~~ 5.8 (zother than Transfer Taxes); and (H) any ~~transaction or step forming part of~~ Transfer Taxes allocated to the Seller Internal Restructurings, (6) Transfer Taxes for which Seller Parent is responsible under Section 6.5(j), (7) Taxes required to be deducted or withheld with respect to the payment of the Purchase Consideration or any amounts payable to Seller Parent pursuant to Section 2.8 or Section 2.9, including any penalties imposed on Purchaser as a result of Purchaser’s failure to deduct or withhold any such amounts that Purchaser (or a Purchaser Designated Affiliate) was permitted to withhold under Section 2.10 (in each case, subject to Purchaser’s compliance with the notice and cooperation requirements of Section 2.10 and except for any such Taxes (and any related penalties) required to be deducted or withheld solely as a result of any assignment by Purchaser or its Affiliates for which Purchaser is responsible pursuant to Section 10.3), (8) Taxes arising from any breach of any representation or warranty contained in Section 4.16(k), (9) Taxes arising as a result of any Conveyed Subsidiary or any Subsidiary of any Conveyed Subsidiary at any time ceasing to be a member of a group for the purposes of any Tax, of which group Seller Parent or any Subsidiary of Seller Parent is or was also a member and (10) any costs and expenses, including reasonable legal and accounting fees and expenses, attributable to any item described in clauses (1) through (9) (any such Taxes for which Seller Parent is responsible pursuant to this Section 6.5(d)(i), subject to the following proviso, “Seller Indemnified Taxes”5.20(d)(i); provided that the Seller ~~Parent~~ shall not be required to pay or cause to be paid, or to indemnify or hold harmless ~~any~~ the Purchaser ~~Tax Indemnified Party~~ from and against any Taxes (1) that are described in Section 5.20(a)(ii)(B), (2) to the extent such Taxes were included as a liability ~~pursuant to this Section 6.5(d)(i~~in the calculation of Closing Working Capital or (3) ~~for (A) Taxes attributable to~~ that result from any action taken ~~after~~ by the ~~Closing by Purchaser, any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries), or any transferee of~~ Purchaser or any of its Affiliates on the Principal Closing Date but after the Principal Closing (~~including~~ including, after the ~~Conveyed Subsidiaries and their Subsidiaries~~Principal Closing, the Transferred Entities), other than ~~any such action that~~ acts (1x) is in the ordinary course of ~~business,~~ business or (2y) ~~is expressly permitted or contemplated by~~ in accordance with the terms of this Agreement, or (3) is required to be taken in order to comply with applicable Law or as a result of a change in applicable Law (a “Purchaser Tax Act”), (B) Taxes that were reflected, accrued or reserved for in the Final Closing Statement, Final Business Working Capital, or Final Business Net Cash, (C) Income Taxes to the extent that a Conveyed Subsidiary or any Subsidiary thereof had any Tax Assets as of the close of business on the Closing Date that were available, or would have been available but for their prior utilization by Purchaser or any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries after the Closing) to offset or otherwise reduce the applicable Tax Liability in respect of such Income Taxes (except any Tax Asset reflected as an asset in the Final Closing Statement and taken into account in the calculation of the Final Business Working Capital or the Final Business Net Cash), or (D) Taxes for which Purchaser Parent is responsible under Section 6.5(d)(ii). (ii) Subject to the limitations set forth in this Section ~~6.5(d)(v~~5.20(a), from and after the Principal Closing, the Purchaser ~~Parent shall indemnify~~ agrees to indemnify, defend, and hold harmless the ~~Purchaser Tax Indemnified Parties from and against all liability, without duplication, for (1) all Taxes of Purchaser Parent~~ Seller and its Affiliates (other than Purchaser and its Subsidiaries) for any Tax period (other than Transfer Taxes and VAT for which Seller Parent is responsible hereunder), (2) Taxes of Purchaser and its Subsidiaries (other than the Conveyed Subsidiaries and their Subsidiaries) for any Pre-Closing Tax Period, (3) Taxes of any Person for a Pre-Closing Tax Period for which Purchaser (or any Subsidiary thereof other than any Conveyed Subsidiaries and their Subsidiaries) is liable under Treasury Regulation Section 1.1502-6 (or a similar provision of state, local or foreign Law), or as a transferee or successor or by Contract (other than Contracts that do not relate primarily to Taxes), (4) Taxes arising out of or resulting from any breach of any covenant or agreement of Purchaser Parent, Purchaser or their respective Affiliates contained in this Agreement, (5) Transfer Taxes for which Purchaser Parent is responsible under Section 6.5(j), (6) Taxes arising from any breach of any representation or warranty in Section 5.17(k), (7) Taxes for a Pre-Closing Tax Period imposed on (x) any settlement of any intercompany accounts of Purchaser or any Subsidiary of Purchaser, on the one hand, and Purchaser Parent or any Subsidiary of Purchaser Parent (other than Purchaser and its Subsidiaries), on the other hand, pursuant to Section 6.7 or (y) any transaction or step forming part of the Purchaser Internal Restructurings, (8) Taxes required to be deducted or withheld with respect to any amounts payable to Purchaser Parent pursuant to Section 2.8 or Section 2.9, including any penalties imposed on Purchaser as a result of Purchaser’s failure to deduct or withhold any such amounts, (9) Taxes arising as a result of Purchaser or any Subsidiary of Purchaser (other than any Conveyed Subsidiary or a Subsidiary thereof) at any time ceasing to be a member of a group for the purposes of any Tax, of which group Purchaser Parent or any Subsidiary of Purchaser Parent (other than Purchaser or any Subsidiary of Purchaser) is or was also a member and (10) any costs and expenses, including reasonable legal and accounting fees and expenses, attributable to any item described in clauses (1) through (9) (any such Taxes for which Purchaser Parent is responsible pursuant to this Section 6.5(d)(ii), subject to the following proviso, “Purchaser Parent Indemnified Taxes”); provided that Purchaser Parent shall not be required to indemnify or hold harmless any Purchaser Tax Indemnified Party from and against any liability for (A) Taxes attributable to any action taken after the Closing by Seller Parent or any of its Affiliates, other than any such action that (1) is in the ordinary course of business, (2) is expressly permitted or contemplated by this Agreement, or (3) is required to be taken in order to comply with applicable Law or as a result of a change in applicable Law (a “Seller Tax Act”), (B) Taxes that were reflected, accrued or reserved for in the Final Closing Statement, Final Purchaser Working Capital or the Final Purchaser Net Cash, (C) Income Taxes to the extent that Purchaser or any Subsidiary thereof had any Tax Assets as of the close of business on the Closing Date that were available, or would have been available but for their prior utilization by Purchaser or any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries after the Closing), to offset or otherwise reduce the applicable Tax Liability in respect of ~~such Income Taxes (except~~ any ~~Tax Asset reflected as an asset in the Final Closing Statement~~ and ~~taken into account in the calculation of the Final Purchaser Working Capital~~ all Losses they may incur arising out of, relating to or the Final Purchaser Net Cash), or (D) Taxes for which Seller Parent is responsible under Section 6.5(d)(i). (iii) To the extent permitted or required by applicable Law, the taxable year of each of the Conveyed Subsidiaries and their Subsidiaries and any Subsidiary of Purchaser that includes the Closing Date shall be treated as closing on (and including) the Closing Date. Otherwise, for purposes of this Agreement, in the case of any Straddle Periodresulting from: (A) ~~Property~~ all Taxes ~~allocable~~ of any Transferred Entity, or imposed with respect to the ~~Pre~~Business or any of the Transferred Assets, for any Post-Closing Tax ~~Period shall be computed based upon the ratio~~ Period; (B) any Taxes resulting from any breach or failure of the ~~number~~ Purchaser to perform any of ~~days~~ its covenants in ~~the Pre-Closing Tax Period to the number of days in the entire Straddle Period~~this Section 5.20; and (BC) any Transfer Taxes ~~(other than Property Taxes) allocable~~ allocated to the Pre-Closing Tax Period shall be computed as if such Tax period ended as of the close of business on the Closing Date and, in the case of any Taxes of Conveyed Subsidiaries (and their Subsidiaries) and Seller Parent, or in the case of any Taxes of Purchaser Parent and Purchaser (and their Subsidiaries prior to the Closing), in each case attributable to the ownership of any equity interest in any partnership or other “flow through” entity for tax purposes (including of any “controlled foreign corporation,” as defined under the Code) as if the Tax period of such partnership or other “flow through” entity ended as of the close of business on the Closing Date with the Taxes of such entity for the Pre-Closing Tax Period deemed to include any Taxes on the allocable income of such entity in respect of such Tax period; provided that exemptions, allowances or deductions that are calculated on an annual basis (including depreciation and amortization deductions) shall be allocated between the period ending on the Closing Date and the period beginning after the Closing Date in proportion to the number of days in each period. (iv) Any claim for indemnification under this Section 6.5(d) shall be made in writing upon the party from whom indemnification is sought, and shall specify in reasonable detail the basis for such claim. Any indemnity payment required to be made pursuant to this Section 6.5(d) shall be made within thirty (30) days after the indemnified party makes written demand upon the indemnifying party, but in no case earlier than five (5) Business Days prior to the date on which the relevant Taxes are required to be paid to the applicable Taxing Authority. (v) With respect to any Taxes suffered or incurred by any Conveyed Subsidiary (or any Subsidiary thereof) that was not wholly owned by Seller Parent (directly or indirectly) as of immediately prior to the Closing, the indemnification obligations of Seller Parent pursuant to Section 6.5(d)(i) in respect of such Taxes (or related costs and expenses) shall in no event exceed an amount equal to (A) the amount of such Taxes (or related costs and expenses) for which the Purchaser Tax Indemnified Parties would otherwise be entitled to indemnification pursuant to Section 6.5(d5.20(d)(i). provided that, as if such Conveyed Subsidiary (or any Subsidiary thereof) were wholly owned by Seller Parent, multiplied by (B) the direct and indirect percentage ownership of Seller Parent of such Conveyed Subsidiary (or Subsidiary thereof) as of immediately prior notwithstanding anything to the Closing. With respect to any Taxes suffered or incurred by any Subsidiary of Purchaser Parent (including Purchaser and its Subsidiaries) that was not wholly owned by Purchaser Parent (directly or indirectly) as of immediately prior to the Closing, the indemnification obligations of Purchaser Parent pursuant to Section 6.5(d)(ii) contrary in respect of such Taxes (or related costs and expenses) shall in no event exceed an amount equal to (A) the amount of such Taxes (or related costs and expenses) for which the Purchaser Tax Indemnified Parties would otherwise be entitled to indemnification pursuant to Section 6.5(d), as if such Subsidiary were wholly owned by Purchaser Parent, multiplied by (B) the direct and indirect percentage ownership of Purchaser Parent of such Subsidiary as of immediately prior to the Closing. (vi) Without duplication to any other amounts paid pursuant to this Section 6.5: (A) Within thirty (30) days following the filing of any Income Tax Return for any Conveyed Subsidiary (or any Subsidiary thereof), on the one hand, or Purchaser (or any Subsidiary thereof, other than the Conveyed Subsidiaries and their Subsidiaries), on the other hand, for any Pre-Closing Tax Period or for any Straddle Period, Seller Parent or Purchaser Parent shall (or Purchaser Parent shall cause Purchaser to) prepare a statement showing (i) the amount of Income Taxes shown as due on such filed Income Tax Return with respect to the relevant Pre-Closing Tax Period or the portion of any Straddle Period ending on and including the Closing Date (the “Final Pre-Closing Income Tax Amount”) and (ii) the amount of the Seller Accrued Income Taxes or Purchaser Accrued Income Taxes, as applicable, attributable to such Income Tax Return as reflected on the Final Closing Statement (the “Pre-Closing Income Tax Amount”) and deliver such statement to Seller Parent and Purchaser Parent, as applicable. Purchaser Parent or Seller Parent, as applicable, shall have a period of fifteen (15) Business Days to provide comments to a schedule prepared (or caused to be prepared) by Seller Parent or Purchaser Parent, respectively. If Purchaser Parent or Seller Parent, as applicable, do not provide any comments to Seller Parent or Purchaser Parent, respectively, during such period, the statement as so prepared shall be final and binding. (B) In the event the Final Pre-Closing Income Tax Amount with respect to any Income Tax Return is less than the amount of the Pre-Closing Income Tax Amount attributable to such Income Tax Return that was included on the Final Closing StatementAgreement, the Purchaser shall within five (5) Business Days following the finalization of the Final Pre-Closing Income Tax Amount hereunder (i) pay to Seller Parent the amount of such difference with respect to a Conveyed Subsidiary and their Subsidiaries and (ii) pay to Purchaser Parent the amount of such difference with respect to Purchaser and its Subsidiaries. (vii) The Parties shall use reasonable best efforts to structure any indemnity payment, true-up payment, or payment in respect of Tax Benefits made by any Party pursuant to this Agreement (including pursuant to not be liable under this Section ~~6.5,~~ 5.20(a) for any Taxes to the extent any such Taxes are Taxes for which the Seller is responsible under Section 6.6 and Article VII) and any payment made by Purchaser Parent to Purchaser pursuant to Section 2.8 or Section 2.9 in the manner set forth in Clause 10 of the Structuring Considerations Agreement. The Parties shall use reasonable best efforts to structure as a special dividend any payment made by Purchaser to Purchaser Parent pursuant to Section 2.8, Section 2.9 or this Section 6.55.20(a)(i)(F).

Appears in 1 contract

Sources: Stock and Asset Purchase Agreement (Pitney Bowes Inc /De/)

Tax Indemnification. (i) ~~Subject to Section 6.5(d)(v)~~Pfizer shall indemnify, ~~from and after the Closing, Seller Parent agrees to indemnify~~ defend and hold ~~harmless~~ the Purchaser and its ~~Subsidiaries (including the Conveyed Subsidiaries and their Subsidiaries after the Closing Date) (collectively, the “Purchaser Tax Indemnified Parties”)~~ Affiliates harmless from and against all ~~liability, without duplication,~~ liability for ~~(1)~~ Taxes of the Conveyed Subsidiaries, their Subsidiaries and ~~their Subsidiaries~~ any Asset Selling Corporation (with respect to the Business) for any ~~Pre-~~95 104 taxable period that ends on or before the Closing ~~Tax~~ Date and the portion of any Straddle Period ending on the Closing Date, including, without limitation (~~including~~ A) all liability for any ~~Taxes payable~~ breach of Pfizer's representations and warranties contained in ~~respect of an election under Section 965(h) of the Code)~~Article V, (2B) all liability (as a result of Treasury Regulation Section 1.1502-6(a) or otherwise) for Income Taxes of Pfizer or any ~~Seller (~~other than any Transfer Taxes and VAT for which Purchaser is responsible hereunder) including, Taxes (other than Taxes of the Conveyed Subsidiaries and their Subsidiaries) imposed with respect to, arising out of or relating to the Purchased Assets or the Business for a Pre-Closing Tax Period, (3) Taxes of any Person (other than the Conveyed Subsidiaries ~~and~~ or any of their Subsidiaries) which is or has ever been affiliated with the Conveyed Subsidiaries or any of their Subsidiaries, or with whom the Conveyed Subsidiaries or any of their Subsidiaries otherwise joins or has ever joined (or is or has ever been required to join) in filing any consolidated, combined or unitary Tax Return, prior to the Closing, (C) all liability for Income Taxes arising as a ~~Pre-Closing Tax Period for which any Conveyed Subsidiary~~ result of an election under Section 338(h)(10) of the Code (or any ~~Subsidiary thereof) is liable under Treasury Regulation Section 1.1502-6 (or a~~ similar provision of state, local or foreign ~~Law)~~law) with respect to the sale or deemed sale of the shares of capital stock of Howmedica Leibinger Inc., (D) all Tax liability for Subpart F income includable in the income of Purchaser or ~~as a transferee~~ its Affiliates relating to taxable periods and attributable to transactions occurring on or ~~successor or by Contract~~ before 96 105 the Closing Date, and (~~other than Contracts that do not relate primarily~~ E) all liability for reasonable legal, accounting and appraisal fees and expense with respect to ~~Taxes~~any item described in clause (A), (4B), (C) or (D) above; provided, however, that Pfizer's indemnity obligation for Taxes ~~arising out~~ pursuant to this Section 7.4(g)(i) shall be reduced by refunds of ~~or resulting~~ Taxes (excluding carrybacks from ~~any breach of any covenant or agreement of Seller Parent~~ post-Closing Date years to the extent permitted hereunder) with respect to such periods received after the Closing Date by Purchaser or any of its Affiliates ~~contained~~ and not previously remitted to Pfizer. Notwithstanding the foregoing, and except as provided in ~~this Agreement, (5) Taxes for a Pre-Closing Tax Period imposed on (x) any transaction effected pursuant to~~ the last sentence of Section ~~2.3(b~~7.4(a)(i), Pfizer shall not indemnify, defend or hold harmless the Purchaser or any of its Affiliates from any liability for Taxes attributable (yi) to any ~~settlement of any intercompany accounts of Seller Parent or its Subsidiaries pursuant to~~ Code Section ~~6.7, or~~ 338(g) election (z) any transaction or step forming part of the Seller Internal Restructurings, (6) Transfer Taxes for which Seller Parent is responsible under Section 6.5(j), (7) Taxes required to be deducted or withheld other than with respect to ~~the payment~~ Howmedica Leibinger Inc. for which an election under Section 338(h)(10) of the ~~Purchase Consideration~~ Code will be made) or (ii) any ~~amounts payable to Seller Parent pursuant to Section 2.8~~ other action taken or ~~Section 2.9, including any penalties imposed on Purchaser as a result of Purchaser’s~~ failure to ~~deduct or withhold any such amounts that Purchaser~~ act (or which would otherwise give rise to a ~~Purchaser Designated Affiliate~~Pfizer Tax indemnity payment) was permitted to withhold under Section 2.10 (in each case, subject to Purchaser’s compliance with the notice and cooperation requirements of Section 2.10 and except for any such Taxes (and any related penalties) required to be deducted or withheld solely as a result of any assignment by Purchaser or its Affiliates for which Purchaser is responsible pursuant to Section 10.3), (8) Taxes arising from any breach of any representation or warranty contained in Section 4.16(k), (9) Taxes arising as a result of any Conveyed Subsidiary or any Subsidiary of any Conveyed Subsidiary at any time ceasing to be a member of a group for the purposes of any Tax, of which group Seller Parent or any Subsidiary of Seller Parent is or was also a member and (10) any costs and expenses, including reasonable legal and accounting fees and expenses, attributable to any item described in clauses (1) through (9) (any such Taxes for which Seller Parent is responsible pursuant to this Section 6.5(d)(i), subject to the following proviso, “Seller Indemnified Taxes”); provided that Seller Parent shall not be required to indemnify or hold harmless any Purchaser Tax Indemnified Party from and against any liability pursuant to this Section 6.5(d)(i) for (A) Taxes attributable to any action taken after the Closing by Purchaser, any of its Affiliates (including the Conveyed Subsidiaries ~~and~~ or any of their Subsidiaries), or any transferee of Purchaser or any of its Affiliates (other than any such action 97 106 expressly required or otherwise expressly contemplated by this Agreement or with the written consent of Pfizer) (a "Purchaser Tax Act") or (ii) to the extent accrued or reserved against in the Working Capital Statement. Further, Pfizer's obligation to indemnify, defend or hold harmless the Purchaser or any of its Affiliates from any liability shall terminate effective with the expiration of the applicable statute of limitations (including extensions) in respect of such liability. (ii) Purchaser shall, and shall cause the Conveyed Subsidiaries and each of their Subsidiaries to, indemnify, defend and hold Pfizer and its Affiliates harmless from and against, (A) except to the extent Pfizer is otherwise required to indemnify Purchaser for such Tax pursuant to Section 7.4(g)(i), all liability for Taxes of the Conveyed Subsidiaries and their Subsidiaries), other than any such action that (1) is in the ordinary course of business, (2) is expressly permitted or contemplated by this Agreement, or (3) is required to be taken in order to comply with applicable Law or as a result of a change in applicable Law (a “Purchaser Tax Act”), (B) all liability for Taxes ~~that were reflected, accrued or reserved for in the Final Closing Statement, Final Business Working Capital, or Final Business Net Cash~~attributable to a Purchaser Tax Act, (C) ~~Income~~ except as provided in the last sentence of Section 7.4(a)(i), all liability for Taxes ~~to the extent that a Conveyed Subsidiary or any Subsidiary thereof had any Tax Assets as~~ resulting from Purchaser making an election under Section 338(g) of the ~~close~~ Code with respect to its purchase or deemed purchase of ~~business on the Closing Date that were available, or would have been available but for their prior utilization by Purchaser or~~ any 98 107 of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries after the Closing) to offset or otherwise reduce the applicable Tax Liability in respect of such Income Taxes (except any Tax Asset reflected as an asset in the Final Closing Statement and taken into account in the calculation of the Final Business Working Capital or the Final Business Net Cash), or (D) Taxes for which Purchaser Parent is responsible under Section 6.5(d)(ii). (ii) Subject to Section 6.5(d)(v), from and after the Closing, Purchaser Parent shall indemnify and hold harmless the Purchaser Tax Indemnified Parties from and against all liability, without duplication, for (1) all Taxes of Purchaser Parent and its Affiliates (other than Purchaser and its Subsidiaries) for any Tax period (other than Transfer Taxes and VAT for which Seller Parent is responsible hereunder), (2) Taxes of Purchaser and its Subsidiaries (other than the Conveyed Subsidiaries and their Subsidiaries, other than Howmedica Leibinger Inc. for which an election under Section 338(h)(10) ~~for any Pre-Closing Tax Period~~of the Code will be made, (3D) ~~Taxes~~ all Tax liability for Subpart F income includable in the income of ~~any Person for a Pre-~~Pfizer or its Affiliates relating to taxable periods and attributable to transactions occurring after the Closing Tax Period for which Purchaser (or any Subsidiary thereof other than any Conveyed Subsidiaries and their Subsidiaries) is liable under Treasury Regulation Section 1.1502-6 (or a similar provision of state, local or foreign Law), or as a transferee or successor or by Contract (other than Contracts that do not relate primarily to Taxes), (4) Taxes arising out of or resulting from any breach of any covenant or agreement of Purchaser Parent, Purchaser or their respective Affiliates contained in this Agreement, (5) Transfer Taxes for which Purchaser Parent is responsible under Section 6.5(j), (6) Taxes arising from any breach of any representation or warranty in Section 5.17(k), (7) Taxes for a Pre-Closing Tax Period imposed on (x) any settlement of any intercompany accounts of Purchaser or any Subsidiary of Purchaser, on the one handDate, and ~~Purchaser Parent or any Subsidiary of Purchaser Parent~~ (~~other than Purchaser~~ E) all liability for reasonable legal, accounting and ~~its Subsidiaries), on the other hand, pursuant to Section 6.7 or (y) any transaction or step forming part of the Purchaser Internal Restructurings, (8) Taxes required to be deducted or withheld~~ appraisal fees and expenses with respect to any amounts payable to Purchaser Parent pursuant to Section 2.8 or Section 2.9, including any penalties imposed on Purchaser as a result of Purchaser’s failure to deduct or withhold any such amounts, (9) Taxes arising as a result of Purchaser or any Subsidiary of Purchaser (other than any Conveyed Subsidiary or a Subsidiary thereof) at any time ceasing to be a member of a group for the purposes of any Tax, of which group Purchaser Parent or any Subsidiary of Purchaser Parent (other than Purchaser or any Subsidiary of Purchaser) is or was also a member and (10) any costs and expenses, including reasonable legal and accounting fees and expenses, attributable to any item described in clauses (1) through (9) (any such Taxes for which Purchaser Parent is responsible pursuant to this Section 6.5(d)(ii), subject to the following proviso, “Purchaser Parent Indemnified Taxes”); provided that Purchaser Parent shall not be required to indemnify or hold harmless any Purchaser Tax Indemnified Party from and against any liability for clause (A) Taxes attributable to any action taken after the Closing by Seller Parent or any of its Affiliates, other than any such action that (1) is in the ordinary course of business, (2) is expressly permitted or contemplated by this Agreement, or (3) is required to be taken in order to comply with applicable Law or as a result of a change in applicable Law (a “Seller Tax Act”), (B~~) Taxes that were reflected, accrued or reserved for in the Final Closing Statement, Final Purchaser Working Capital or the Final Purchaser Net Cash~~), (C) ~~Income Taxes~~ or (D) above. Purchaser's obligation to ~~the extent that Purchaser~~ indemnify, defend or ~~any Subsidiary thereof had any Tax Assets as of the close of business on the Closing Date that were available, or would have been available but for their prior utilization by Purchaser~~ hold harmless Pfizer or any of its Affiliates from any liability shall terminate effective with the expiration of the applicable statute of limitations (including ~~the Conveyed Subsidiaries and their Subsidiaries after the Closing), to offset or otherwise reduce the applicable Tax Liability~~ extensions) in respect of such Income Taxes (except any Tax Asset reflected as an asset in the Final Closing Statement and taken into account in the calculation of the Final Purchaser Working Capital or the Final Purchaser Net Cash), or (D) Taxes for which Seller Parent is responsible under Section 6.5(d)(i)liability. (iii) To the extent permitted or required by applicable Law, the taxable year of each of the Conveyed Subsidiaries and their Subsidiaries and any Subsidiary of Purchaser that includes the Closing Date shall be treated as closing on (and including) the Closing Date. Otherwise, for purposes of this Agreement, in In the case of any Straddle Period: (A) ~~Property~~ The periodic Taxes ~~allocable to~~ of the Conveyed Subsidiaries and their Subsidiaries that are not based on income or receipts (e.g., property Taxes) for the portion of any Straddle Period ending on the Closing Date (the "Pre-Closing Tax ~~Period~~ Period") shall be computed based upon the ratio of the number of days in the Pre-Closing Tax Period to and the number of days in the entire ~~Straddle~~ Tax Period; and (B) Taxes ~~(other than Property Taxes) allocable to~~ of the Conveyed Subsidiaries and their Subsidiaries for the Pre-Closing Tax Period (other than Taxes described in Section 7.4(g)(iii)(A) above) shall be computed as if such ~~Tax~~ taxable period ended as of the close of business on the Closing ~~Date~~ Date, and, in the case of any Taxes of the Conveyed Subsidiaries ~~(and their Subsidiaries) and Seller Parent, or in the case of any Taxes of Purchaser Parent and Purchaser (~~and their Subsidiaries ~~prior to the Closing), in each case~~ attributable to the ownership by the Conveyed Subsidiaries or any of their Subsidiaries of any equity interest in any partnership or other ~~“flow through” entity for tax purposes (including of any “controlled foreign corporation,” as defined under the Code)~~ "flowthrough" entity, as if ~~the Tax~~ a taxable period of such partnership or other ~~“flow through”~~ "flowthrough" entity ended as of the close of business on the Closing Date with the Taxes of such entity for the Pre-Closing Tax Period deemed to include any Taxes on the allocable income of such entity in respect of such Tax period; provided that exemptions, allowances or deductions that are calculated on an annual basis (including depreciation and amortization deductions) shall be allocated between the period ending on the Closing Date and the period beginning after the Closing Date in proportion to the number of days in each periodDate. (iv) ~~Any claim for indemnification under this Section 6.5(d) shall be made in writing upon the party from whom indemnification is sought, and shall specify in reasonable detail the basis for such claim.~~ Any indemnity payment required to be made pursuant to this Section ~~6.5(d~~7.4(g) shall be ~~made~~ paid within thirty (30) days after the indemnified party makes written demand upon the indemnifying party, but in no case earlier than five (5) Business Days prior to the date on which the relevant Taxes are required to be paid to the applicable Taxing Authority. (v) With respect to any Taxes suffered or incurred by any Conveyed Subsidiary (or any Subsidiary thereof) that was not wholly owned by Seller Parent (directly or indirectly) as of immediately prior to the Closing, the indemnification obligations of Seller Parent pursuant to Section 6.5(d)(i) in respect of such Taxes (or related costs and expenses) shall in no event exceed an amount equal to (A) the amount of such Taxes (or related costs and expenses) for which the Purchaser Tax Indemnified Parties would otherwise be entitled to indemnification pursuant to Section 6.5(d), as if such Conveyed Subsidiary (or any Subsidiary thereof) were wholly owned by Seller Parent, multiplied by (B) the direct and indirect percentage ownership of Seller Parent of such Conveyed Subsidiary (or Subsidiary thereof) as of immediately prior to the Closing. With respect to any Taxes suffered or incurred by any Subsidiary of Purchaser Parent relevant taxing authority (including Purchaser and its Subsidiaries) that was not wholly owned by Purchaser Parent (directly or indirectly) as of immediately prior to the Closing, the indemnification obligations of Purchaser Parent pursuant to Section 6.5(d)(ii) in respect of such Taxes (or related costs and expenses) shall in no event exceed an amount equal to (A) the amount of such Taxes (or related costs and expenses) for which the Purchaser estimated Tax ~~Indemnified Parties would otherwise be entitled to indemnification pursuant to Section 6.5(d~~payments), as if such Subsidiary were wholly owned by Purchaser Parent, multiplied by (B) the direct and indirect percentage ownership of Purchaser Parent of such Subsidiary as of immediately prior to the Closing. (vi) Without duplication to any other amounts paid pursuant to this Section 6.5: (A) Within thirty (30) days following the filing of any Income Tax Return for any Conveyed Subsidiary (or any Subsidiary thereof), on the one hand, or Purchaser (or any Subsidiary thereof, other than the Conveyed Subsidiaries and their Subsidiaries), on the other hand, for any Pre-Closing Tax Period or for any Straddle Period, Seller Parent or Purchaser Parent shall (or Purchaser Parent shall cause Purchaser to) prepare a statement showing (i) the amount of Income Taxes shown as due on such filed Income Tax Return with respect to the relevant Pre-Closing Tax Period or the portion of any Straddle Period ending on and including the Closing Date (the “Final Pre-Closing Income Tax Amount”) and (ii) the amount of the Seller Accrued Income Taxes or Purchaser Accrued Income Taxes, as applicable, attributable to such Income Tax Return as reflected on the Final Closing Statement (the “Pre-Closing Income Tax Amount”) and deliver such statement to Seller Parent and Purchaser Parent, as applicable. Purchaser Parent or Seller Parent, as applicable, shall have a period of fifteen (15) Business Days to provide comments to a schedule prepared (or caused to be prepared) by Seller Parent or Purchaser Parent, respectively. If Purchaser Parent or Seller Parent, as applicable, do not provide any comments to Seller Parent or Purchaser Parent, respectively, during such period, the statement as so prepared shall be final and binding. (B) In the event the Final Pre-Closing Income Tax Amount with respect to any Income Tax Return is less than the amount of the Pre-Closing Income Tax Amount attributable to such Income Tax Return that was included on the Final Closing Statement, the Purchaser shall within five (5) Business Days following the finalization of the Final Pre-Closing Income Tax Amount hereunder (i) pay to Seller Parent the amount of such difference with respect to a Conveyed Subsidiary and their Subsidiaries and (ii) pay to Purchaser Parent the amount of such difference with respect to Purchaser and its Subsidiaries. (vii) The Parties shall use reasonable best efforts to structure any indemnity payment, true-up payment, or payment in respect of Tax Benefits made by any Party pursuant to this Agreement (including pursuant to this Section 6.5, Section 6.6 and Article VII) and any payment made by Purchaser Parent to Purchaser pursuant to Section 2.8 or Section 2.9 in the manner set forth in Clause 10 of the Structuring Considerations Agreement. The Parties shall use reasonable best efforts to structure as a special dividend any payment made by Purchaser to Purchaser Parent pursuant to Section 2.8, Section 2.9 or this Section 6.5.

Appears in 1 contract

Sources: Stock and Asset Purchase Agreement (Stryker Corp)

Tax Indemnification. (ia) ~~Subject to Section 6.5(d)(v), from~~ From and ~~after the Closing, Seller Parent agrees to indemnify and hold harmless Purchaser and its Subsidiaries (including the Conveyed Subsidiaries and their Subsidiaries~~ after the Closing Date) , Seller will indemnify, defend and hold harmless Purchaser, the Company and each of their respective directors, officers, employees, agents and representatives, and each of the heirs, executors, successors and assigns of any of the foregoing (collectively, the “Purchaser ~~Tax~~ Indemnified Parties”) from and against any and all ~~liability~~claims, ~~without duplication~~actions, ~~for (1) Taxes~~ causes of ~~the Conveyed Subsidiaries~~ action, liabilities, losses, damages, and ~~their Subsidiaries for any Pre~~reasonable out-~~Closing Tax Period (including any Taxes payable in respect of an election under Section 965(h) of the Code), (2) Taxes of any Seller (other than any Transfer Taxes~~ of-pocket expenses and ~~VAT for which Purchaser is responsible hereunder) including, Taxes (other than Taxes of the Conveyed Subsidiaries and their Subsidiaries) imposed with respect to~~costs resulting from, arising out of or relating to (i) any Taxes, but only to the ~~Purchased Assets~~ extent that such Taxes exceed the accruals for any such Taxes taken into account in calculating the Net Worth Adjustment, of or payable by the ~~Business for a~~ Company relating to (x) being included (or required to be included) on any Pre-Closing Tax ~~Period~~Return, (3y) ~~Taxes of~~ any ~~Person (other than the Conveyed Subsidiaries and their Subsidiaries) for a~~ Pre-Closing ~~Tax~~ Taxes and (z) that portion of any Straddle Period that ends on the Closing Date (calculated as set forth in Section 8.01(d) above), (ii) any Taxes for which ~~any Conveyed Subsidiary (or any Subsidiary thereof)~~ the Seller is liable under Section 8.07, and (iii) without duplication of amounts included in clauses (i) and (ii) any Taxes resulting from a breach of the representations in Section 2.12. The indemnity provided in the foregoing sentence shall include, without limitation, any Tax liability arising by reason of the Company being severally liable for any Taxes of another person pursuant to Treasury Regulation Section 1.1502-6 (or ~~a similar provision of~~ any analogous state, local or foreign ~~Law)~~Tax provision, or by contract as a transferee or ~~successor or~~ otherwise, any Tax liability incurred in connection with the transactions contemplated by ~~Contract~~ this Agreement, including Taxes resulting from the making of any elections pursuant to Code Section 338(h)(10) as provided in Section 8.06 hereof (other than ~~Contracts that do not relate primarily to Taxes~~Purchaser’s share of Taxes described in Section 8.07), ~~(4) Taxes~~ and any Tax liability arising ~~out of or resulting from any breach of any covenant or agreement of Seller Parent or any of its Affiliates contained~~ in ~~this Agreement, (5) Taxes for a Pre-Closing Tax Period imposed on (x) any transaction effected~~ connection with the payments to be made to Company employees pursuant to Section ~~2.3(b)~~4.08, ~~(y) any settlement of any intercompany accounts of Seller Parent or its Subsidiaries pursuant to~~ including, those payments funded by Purchaser as set forth in Section ~~6.7, or (z) any transaction or step forming part~~ 4.08 of the ~~Seller Internal Restructurings, (6) Transfer Taxes for which Seller Parent is responsible under Section 6.5(j), (7) Taxes required to be deducted or withheld with respect~~ Disclosure Schedule. Notwithstanding anything in this Agreement to the ~~payment~~ contrary, the Seller shall have no liability under this Agreement in respect of Taxes of the Purchase Consideration or any amounts payable to Seller Parent pursuant to Section 2.8 or Section 2.9, including any penalties imposed on Purchaser as a result of Purchaser’s failure to deduct or withhold any such amounts that Purchaser (or a Purchaser Designated Affiliate) was permitted to withhold under Section 2.10 (in each case, subject to Purchaser’s compliance with the notice and cooperation requirements of Section 2.10 and except for any such Taxes (and any related penalties) required to be deducted or withheld solely as a result of any assignment by Purchaser or its Affiliates for which Purchaser is responsible pursuant to Section 10.3), (8) Taxes arising from any breach of any representation or warranty contained in Section 4.16(k), (9) Taxes arising as a result of any Conveyed Subsidiary or any Subsidiary of any Conveyed Subsidiary at any time ceasing to be a member of a group for the purposes of any Tax, of which group Seller Parent or any Subsidiary of Seller Parent is or was also a member and (10) any costs and expenses, including reasonable legal and accounting fees and expenses, attributable Company relating to any ~~item described in clauses (1) through (9) (any such Taxes for~~ taxable year beginning after the Closing Date which Seller Parent is responsible pursuant to this Section 6.5(d)(i), subject to the following proviso, “Seller Indemnified Taxes”); provided that Seller Parent shall not be required to indemnify or hold harmless any Purchaser Tax Indemnified Party from and against any liability pursuant to this Section 6.5(d)(i) for (A) Taxes are attributable to any action ~~taken after~~ of the ~~Closing by Purchaser, any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries), or any transferee of Purchaser~~ Buyer or any of its Affiliates (~~including~~ including, without limitation, the ~~Conveyed Subsidiaries~~ Company after the Closing Date) that occurs after the Closing. (b) From and ~~their Subsidiaries)~~after the Closing Date, ~~other than any such action that (1) is in~~ Purchaser will indemnify, defend and hold harmless the ~~ordinary course~~ Seller, and each of ~~business~~its respective directors, ~~(2) is expressly permitted or contemplated by this Agreement~~officers, ~~or (3) is required to be taken in order to comply with applicable Law or as a result of a change in applicable Law (a “Purchaser Tax Act”)~~employees, ~~(B) Taxes that were reflected~~agents and representatives, accrued or reserved for in the Final Closing Statement, Final Business Working Capital, or Final Business Net Cash, (C) Income Taxes to the extent that a Conveyed Subsidiary or any Subsidiary thereof had any Tax Assets as and each of the ~~close~~ heirs, executors, successors and assigns of ~~business on~~ any of the foregoing (collectively, the “Seller Indemnified Parties”) from and against any and all claims, actions, causes of action, liabilities, losses, damages, and reasonable out-of-pocket expenses and costs resulting from, arising out of or relating to (i) any Taxes of the Company relating to (x) any tax period beginning after the Closing Date (“Post-Closing Tax Periods”) and (y) that ~~were available~~portion of any Straddle Period that begins after the Closing Date (calculated as set forth in Section 8.01(d) above), and (ii) any Taxes for which Purchaser is liable for under Section 8.07. The indemnity provided in the foregoing sentence shall include, without limitation, any Tax liability arising by reason of the Company being severally liable for any Taxes of another person pursuant to Treasury Regulation Section 1.1502-6 or ~~would~~ any analogous state, local or foreign Tax provision, by contract as a transferee or otherwise. (c) Notwithstanding anything to the contrary herein, all claims for indemnification pursuant to this Agreement by the Purchaser Indemnified Parties, including those under this Section 8.04, shall be limited solely to those amounts held by the Escrow Agent in accordance with the terms of the Escrow Agreement. (d) Notwithstanding anything in this Agreement to the contrary, the Seller shall have ~~been available but for their prior utilization by Purchaser~~ no liability under this Agreement in respect of Taxes of the Company relating to any taxable year beginning after the Closing Date which are attributable to any action of the Buyer or any of its Affiliates (~~including~~ including, without limitation, the ~~Conveyed Subsidiaries and their Subsidiaries~~ Company after the Closing Date) that occurs after the Closing) to offset or otherwise reduce the applicable Tax Liability in respect of such Income Taxes (except any Tax Asset reflected as an asset in the Final Closing Statement and taken into account in the calculation of the Final Business Working Capital or the Final Business Net Cash), or (D) Taxes for which Purchaser Parent is responsible under Section 6.5(d)(ii). (ii) Subject to Section 6.5(d)(v), from and after the Closing, Purchaser Parent shall indemnify and hold harmless the Purchaser Tax Indemnified Parties from and against all liability, without duplication, for (1) all Taxes of Purchaser Parent and its Affiliates (other than Purchaser and its Subsidiaries) for any Tax period (other than Transfer Taxes and VAT for which Seller Parent is responsible hereunder), (2) Taxes of Purchaser and its Subsidiaries (other than the Conveyed Subsidiaries and their Subsidiaries) for any Pre-Closing Tax Period, (3) Taxes of any Person for a Pre-Closing Tax Period for which Purchaser (or any Subsidiary thereof other than any Conveyed Subsidiaries and their Subsidiaries) is liable under Treasury Regulation Section 1.1502-6 (or a similar provision of state, local or foreign Law), or as a transferee or successor or by Contract (other than Contracts that do not relate primarily to Taxes), (4) Taxes arising out of or resulting from any breach of any covenant or agreement of Purchaser Parent, Purchaser or their respective Affiliates contained in this Agreement, (5) Transfer Taxes for which Purchaser Parent is responsible under Section 6.5(j), (6) Taxes arising from any breach of any representation or warranty in Section 5.17(k), (7) Taxes for a Pre-Closing Tax Period imposed on (x) any settlement of any intercompany accounts of Purchaser or any Subsidiary of Purchaser, on the one hand, and Purchaser Parent or any Subsidiary of Purchaser Parent (other than Purchaser and its Subsidiaries), on the other hand, pursuant to Section 6.7 or (y) any transaction or step forming part of the Purchaser Internal Restructurings, (8) Taxes required to be deducted or withheld with respect to any amounts payable to Purchaser Parent pursuant to Section 2.8 or Section 2.9, including any penalties imposed on Purchaser as a result of Purchaser’s failure to deduct or withhold any such amounts, (9) Taxes arising as a result of Purchaser or any Subsidiary of Purchaser (other than any Conveyed Subsidiary or a Subsidiary thereof) at any time ceasing to be a member of a group for the purposes of any Tax, of which group Purchaser Parent or any Subsidiary of Purchaser Parent (other than Purchaser or any Subsidiary of Purchaser) is or was also a member and (10) any costs and expenses, including reasonable legal and accounting fees and expenses, attributable to any item described in clauses (1) through (9) (any such Taxes for which Purchaser Parent is responsible pursuant to this Section 6.5(d)(ii), subject to the following proviso, “Purchaser Parent Indemnified Taxes”); provided that Purchaser Parent shall not be required to indemnify or hold harmless any Purchaser Tax Indemnified Party from and against any liability for (A) Taxes attributable to any action taken after the Closing by Seller Parent or any of its Affiliates, other than any such action that (1) is in the ordinary course of business, (2) is expressly permitted or contemplated by this Agreement, or (3) is required to be taken in order to comply with applicable Law or as a result of a change in applicable Law (a “Seller Tax Act”), (B) Taxes that were reflected, accrued or reserved for in the Final Closing Statement, Final Purchaser Working Capital or the Final Purchaser Net Cash, (C) Income Taxes to the extent that Purchaser or any Subsidiary thereof had any Tax Assets as of the close of business on the Closing Date that were available, or would have been available but for their prior utilization by Purchaser or any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries after the Closing), to offset or otherwise reduce the applicable Tax Liability in respect of such Income Taxes (except any Tax Asset reflected as an asset in the Final Closing Statement and taken into account in the calculation of the Final Purchaser Working Capital or the Final Purchaser Net Cash), or (D) Taxes for which Seller Parent is responsible under Section 6.5(d)(i). (iii) To the extent permitted or required by applicable Law, the taxable year of each of the Conveyed Subsidiaries and their Subsidiaries and any Subsidiary of Purchaser that includes the Closing Date shall be treated as closing on (and including) the Closing Date. Otherwise, for purposes of this Agreement, in the case of any Straddle Period: (A) Property Taxes allocable to the Pre-Closing Tax Period shall be computed based upon the ratio of the number of days in the Pre-Closing Tax Period to the number of days in the entire Straddle Period; and (B) Taxes (other than Property Taxes) allocable to the Pre-Closing Tax Period shall be computed as if such Tax period ended as of the close of business on the Closing Date and, in the case of any Taxes of Conveyed Subsidiaries (and their Subsidiaries) and Seller Parent, or in the case of any Taxes of Purchaser Parent and Purchaser (and their Subsidiaries prior to the Closing), in each case attributable to the ownership of any equity interest in any partnership or other “flow through” entity for tax purposes (including of any “controlled foreign corporation,” as defined under the Code) as if the Tax period of such partnership or other “flow through” entity ended as of the close of business on the Closing Date with the Taxes of such entity for the Pre-Closing Tax Period deemed to include any Taxes on the allocable income of such entity in respect of such Tax period; provided that exemptions, allowances or deductions that are calculated on an annual basis (including depreciation and amortization deductions) shall be allocated between the period ending on the Closing Date and the period beginning after the Closing Date in proportion to the number of days in each period. (iv) Any claim for indemnification under this Section 6.5(d) shall be made in writing upon the party from whom indemnification is sought, and shall specify in reasonable detail the basis for such claim. Any indemnity payment required to be made pursuant to this Section 6.5(d) shall be made within thirty (30) days after the indemnified party makes written demand upon the indemnifying party, but in no case earlier than five (5) Business Days prior to the date on which the relevant Taxes are required to be paid to the applicable Taxing Authority. (v) With respect to any Taxes suffered or incurred by any Conveyed Subsidiary (or any Subsidiary thereof) that was not wholly owned by Seller Parent (directly or indirectly) as of immediately prior to the Closing, the indemnification obligations of Seller Parent pursuant to Section 6.5(d)(i) in respect of such Taxes (or related costs and expenses) shall in no event exceed an amount equal to (A) the amount of such Taxes (or related costs and expenses) for which the Purchaser Tax Indemnified Parties would otherwise be entitled to indemnification pursuant to Section 6.5(d), as if such Conveyed Subsidiary (or any Subsidiary thereof) were wholly owned by Seller Parent, multiplied by (B) the direct and indirect percentage ownership of Seller Parent of such Conveyed Subsidiary (or Subsidiary thereof) as of immediately prior to the Closing. With respect to any Taxes suffered or incurred by any Subsidiary of Purchaser Parent (including Purchaser and its Subsidiaries) that was not wholly owned by Purchaser Parent (directly or indirectly) as of immediately prior to the Closing, the indemnification obligations of Purchaser Parent pursuant to Section 6.5(d)(ii) in respect of such Taxes (or related costs and expenses) shall in no event exceed an amount equal to (A) the amount of such Taxes (or related costs and expenses) for which the Purchaser Tax Indemnified Parties would otherwise be entitled to indemnification pursuant to Section 6.5(d), as if such Subsidiary were wholly owned by Purchaser Parent, multiplied by (B) the direct and indirect percentage ownership of Purchaser Parent of such Subsidiary as of immediately prior to the Closing. (vi) Without duplication to any other amounts paid pursuant to this Section 6.5: (A) Within thirty (30) days following the filing of any Income Tax Return for any Conveyed Subsidiary (or any Subsidiary thereof), on the one hand, or Purchaser (or any Subsidiary thereof, other than the Conveyed Subsidiaries and their Subsidiaries), on the other hand, for any Pre-Closing Tax Period or for any Straddle Period, Seller Parent or Purchaser Parent shall (or Purchaser Parent shall cause Purchaser to) prepare a statement showing (i) the amount of Income Taxes shown as due on such filed Income Tax Return with respect to the relevant Pre-Closing Tax Period or the portion of any Straddle Period ending on and including the Closing Date (the “Final Pre-Closing Income Tax Amount”) and (ii) the amount of the Seller Accrued Income Taxes or Purchaser Accrued Income Taxes, as applicable, attributable to such Income Tax Return as reflected on the Final Closing Statement (the “Pre-Closing Income Tax Amount”) and deliver such statement to Seller Parent and Purchaser Parent, as applicable. Purchaser Parent or Seller Parent, as applicable, shall have a period of fifteen (15) Business Days to provide comments to a schedule prepared (or caused to be prepared) by Seller Parent or Purchaser Parent, respectively. If Purchaser Parent or Seller Parent, as applicable, do not provide any comments to Seller Parent or Purchaser Parent, respectively, during such period, the statement as so prepared shall be final and binding. (B) In the event the Final Pre-Closing Income Tax Amount with respect to any Income Tax Return is less than the amount of the Pre-Closing Income Tax Amount attributable to such Income Tax Return that was included on the Final Closing Statement, the Purchaser shall within five (5) Business Days following the finalization of the Final Pre-Closing Income Tax Amount hereunder (i) pay to Seller Parent the amount of such difference with respect to a Conveyed Subsidiary and their Subsidiaries and (ii) pay to Purchaser Parent the amount of such difference with respect to Purchaser and its Subsidiaries. (vii) The Parties shall use reasonable best efforts to structure any indemnity payment, true-up payment, or payment in respect of Tax Benefits made by any Party pursuant to this Agreement (including pursuant to this Section 6.5, Section 6.6 and Article VII) and any payment made by Purchaser Parent to Purchaser pursuant to Section 2.8 or Section 2.9 in the manner set forth in Clause 10 of the Structuring Considerations Agreement. The Parties shall use reasonable best efforts to structure as a special dividend any payment made by Purchaser to Purchaser Parent pursuant to Section 2.8, Section 2.9 or this Section 6.5.

Appears in 1 contract

Sources: Stock Purchase Agreement (Danka Business Systems PLC)

Tax Indemnification. (ia) ~~Subject to Section 6.5(d)(v), from~~ From and after the ~~Closing~~Closing Date, ~~Seller Parent agrees to~~ without duplication, PMSI and each of Sellers, jointly and severally, shall indemnify and hold harmless ~~Purchaser and its Subsidiaries~~ the Acquiror, any affiliate of the Acquiror (~~including~~ including, without limitation, the ~~Conveyed~~ Transferred Subsidiaries and their affiliates and, if the Belgian Subsidiaries ~~after~~ are acquired by the Closing Date) (collectively, the “Purchaser Tax Indemnified Parties”) from and against all liability, without duplication, for (1) Taxes of the Conveyed Subsidiaries and their Subsidiaries for any Pre-Closing Tax Period (including any Taxes payable in respect of an election under Section 965(h) of the Code), (2) Taxes of any Seller (other than any Transfer Taxes and VAT for which Purchaser is responsible hereunder) including, Taxes (other than Taxes of the Conveyed Subsidiaries and their Subsidiaries) imposed with respect to, arising out of or relating to the Purchased Assets or the Business for a Pre-Closing Tax Period, (3) Taxes of any Person (other than the Conveyed Subsidiaries and their Subsidiaries) for a Pre-Closing Tax Period for which any Conveyed Subsidiary (or any Subsidiary thereof) is liable under Treasury Regulation Section 1.1502-6 (or a similar provision of state, local or foreign Law), or as a transferee or successor or by Contract (other than Contracts that do not relate primarily to Taxes), (4) Taxes arising out of or resulting from any breach of any covenant or agreement of Seller Parent Acquiror or any of its ~~Affiliates contained in this Agreement~~affiliates, (5) Taxes for a Pre-Closing Tax Period imposed on (x) any transaction effected pursuant to Section 2.3(b), (y) any settlement of any intercompany accounts of Seller Parent or its Subsidiaries pursuant to Section 6.7, or (z) any transaction or step forming part of the Seller Internal Restructurings, (6) Transfer Taxes for which Seller Parent is responsible under Section 6.5(j), (7) Taxes required to be deducted or withheld with respect to the payment of the Purchase Consideration or any amounts payable to Seller Parent pursuant to Section 2.8 or Section 2.9, including any penalties imposed on Purchaser as a result of Purchaser’s failure to deduct or withhold any such amounts that Purchaser (or a Purchaser Designated Affiliate) was permitted to withhold under Section 2.10 (in each case, subject to Purchaser’s compliance with the notice and cooperation requirements of Section 2.10 and except for any such Taxes (and any related penalties) required to be deducted or withheld solely as a result of any assignment by Purchaser or its Affiliates for which Purchaser is responsible pursuant to Section 10.3), (8) Taxes arising from any breach of any representation or warranty contained in Section 4.16(k), (9) Taxes arising as a result of any Conveyed Subsidiary or any Subsidiary of any Conveyed Subsidiary at any time ceasing to be a member of a group for the purposes of any Tax, of which group Seller Parent or any Subsidiary of Seller Parent is or was also a member and (10) any costs and expenses, including reasonable legal and accounting fees and expenses, attributable to any item described in clauses (1) through (9) (any such Taxes for which Seller Parent is responsible pursuant to this Section 6.5(d)(i), subject to the following proviso, “Seller Indemnified Taxes”); provided that Seller Parent shall not be required to indemnify or hold harmless any Purchaser Tax Indemnified Party from and against any liability pursuant to this Section 6.5(d)(i) for (A) Taxes attributable to any action taken after the Closing by Purchaser, any of its Affiliates (including the Conveyed Belgian Subsidiaries and their ~~Subsidiaries)~~affiliates) against all Taxes (including, ~~or any transferee~~ without limitation, reasonable attorneys' and accountants' fees and other reasonable out-of-pocket expenses incurred in connection therewith and all Taxes relating to the unwinding of ~~Purchaser or~~ intercompany transactions involving any of ~~its Affiliates (including~~ the ~~Conveyed~~ Transferred Subsidiaries ~~and their~~ or Belgian Subsidiaries), other than any ~~such action that~~ Taxes accrued (1) is in the ordinary course of business, (2) is expressly permitted or contemplated by this Agreement, or (3) is required to be taken in order to comply with applicable Law or as a result of a change in applicable Law (a “Purchaser Tax Act”), (B) Taxes that were reflected, accrued or reserved for in the Final Closing Statement, Final Business Working Capital, or Final Business Net Cash, (C) Income Taxes to the extent ~~that a Conveyed Subsidiary or any Subsidiary thereof had any Tax Assets as~~ of the ~~close of business~~ accrual) as a liability on the ~~Closing Date that were available~~Pro Forma Balance Sheet, imposed on or ~~would have been available but for their prior utilization~~ payable by ~~Purchaser~~ the Transferred Subsidiaries (or, if the Belgian Subsidiaries are acquired by the Acquiror or any of its ~~Affiliates~~ affiliates, the Belgian Subsidiaries) (i) with respect to any taxable period or portion thereof that ends on or before the Closing Date including ~~the Conveyed Subsidiaries and their Subsidiaries after the Closing~~any Taxes allocated to such period under Section 8.7(d) ~~to offset or otherwise reduce the applicable Tax Liability in respect of such Income Taxes~~ hereof); (~~except any Tax Asset reflected as an asset in the Final Closing Statement and taken into account in the calculation~~ ii) by reason of the ~~Final Business Working Capital~~ Transferred Subsidiaries (or, if the Belgian Subsidiaries are acquired by the Acquiror or any of its affiliates, the ~~Final Business Net Cash~~Belgian Subsidiaries) being included in any consolidated, affiliated, combined or unitary or other similar group of companies at any time on or before the Closing Date; (iii) any Damages arising out of a breach of representations and warranties contained in Section 3.1(h), ; or (Div) ~~Taxes~~ pursuant to any contract or agreement with any third party for ~~which Purchaser Parent is responsible under Section 6.5(d)(ii)~~indemnification of Taxes. (iib) ~~Subject~~ From and after the Closing Date (or, with respect to ~~Section 6.5(d)(v)~~the Belgian Subsidiaries if they are acquired by the Acquiror or any of its affiliates, from and after the ~~Closing~~date on which all right, ~~Purchaser Parent shall indemnify~~ title and ~~hold harmless~~ interest in the ~~Purchaser Tax Indemnified Parties from and against all liability~~Belgian Subsidiaries is transferred to the Acquiror or any of its affiliates (the "Belgium Closing Date")), without duplication, ~~for~~ the Acquiror shall, and shall cause the Transferred Subsidiaries (1or the Belgian Subsidiaries, as the case may be) to, indemnify PMSI and the Sellers against all Taxes ~~of Purchaser Parent~~ (including, without limitation, reasonable attorneys' and ~~its Affiliates (~~accountants' fees and other ~~than Purchaser and its Subsidiaries~~reasonable out-of-pocket expenses incurred in connection therewith) ~~for any Tax period (other than Transfer Taxes and VAT for which Seller Parent is responsible hereunder), (2) Taxes of Purchaser and its~~ imposed on the Transferred Subsidiaries (~~other than~~ or, if the ~~Conveyed~~ Belgian Subsidiaries ~~and their Subsidiaries) for any Pre-Closing Tax Period, (3) Taxes of any Person for a Pre-Closing Tax Period for which Purchaser (~~are transferred to the Acquiror or any ~~Subsidiary thereof other than any Conveyed Subsidiaries and their Subsidiaries) is liable under Treasury Regulation Section 1.1502-6 (or a similar provision~~ of state, local or foreign Law), or as a transferee or successor or by Contract (other than Contracts that do not relate primarily to Taxes), (4) Taxes arising out of or resulting from any breach of any covenant or agreement of Purchaser Parent, Purchaser or their respective Affiliates contained in this Agreement, (5) Transfer Taxes for which Purchaser Parent is responsible under Section 6.5(j), (6) Taxes arising from any breach of any representation or warranty in Section 5.17(k), (7) Taxes for a Pre-Closing Tax Period imposed on (x) any settlement of any intercompany accounts of Purchaser or any Subsidiary of Purchaserits affiliates, on the ~~one hand, and Purchaser Parent or any Subsidiary of Purchaser Parent (other than Purchaser and its~~ Belgian Subsidiaries), ~~on the other hand,~~ which Taxes are not subject to indemnification pursuant to Section ~~6.7 or~~ 8.7(a). (yc) ~~any transaction or step forming part of~~ Payment by the Purchaser Internal Restructurings, (8) Taxes required to be deducted or withheld with respect to any amounts payable to Purchaser Parent pursuant to Section 2.8 or Section 2.9, including any penalties imposed on Purchaser as a result of Purchaser’s failure to deduct or withhold any such amounts, (9) Taxes arising as a result of Purchaser or any Subsidiary of Purchaser (other than any Conveyed Subsidiary or a Subsidiary thereof) at any time ceasing to be a member of a group for the purposes indemnitor of any Tax, of which group Purchaser Parent or any Subsidiary of Purchaser Parent (other than Purchaser or any Subsidiary of Purchaser) is or was also a member and (10) any costs and expenses, including reasonable legal and accounting fees and expenses, attributable to any item described in clauses (1) through (9) (any such Taxes for which Purchaser Parent is responsible pursuant to amount due under this Section ~~6.5(d)(ii), subject~~ 8.7 shall be made within ten days following written notice by the indemnitee that payment of such amounts to the ~~following proviso~~appropriate Tax Authority is due, ~~“Purchaser Parent Indemnified Taxes”);~~ provided that ~~Purchaser Parent~~ the indemnitor shall not be required to ~~indemnify~~ make any payment earlier than five days before it is due to the appropriate Tax Authority. In the case of a Tax that is contested in accordance with the provisions of Section 8.8, payment of the Tax to the appropriate Tax Authority will not be considered to be due earlier than the date a final determination to such effect is made by the appropriate Taxing Authority or ~~hold harmless any Purchaser Tax Indemnified Party from~~ court. Final determination shall have the meaning as set forth in Section 1313(a) of the Code or the comparable provision of the appropriate foreign tax statute, regulation or law. (d) Each of PMSI, the Sellers and ~~against any liability for (A) Taxes attributable~~ the Acquiror shall, to ~~any action taken after~~ the extent permitted by applicable law and except as otherwise provided herein, elect with the relevant Taxing Authority to close the taxable period of the Transferred Subsidiaries at the end of the day on the Closing ~~by Seller Parent~~ Date (and, if the Belgian Subsidiaries are transferred to the Acquiror or any of its ~~Affiliates~~affiliates, ~~other than any such action that (1) is in~~ to close the ordinary course of business, (2) is expressly permitted or contemplated by this Agreement, or (3) is required to be taken in order to comply with applicable Law or as a result of a change in applicable Law (a “Seller Tax Act”), (B) Taxes that were reflected, accrued or reserved for in the Final Closing Statement, Final Purchaser Working Capital or the Final Purchaser Net Cash, (C) Income Taxes to the extent that Purchaser or any Subsidiary thereof had any Tax Assets as taxable period of the ~~close of business~~ Belgian Subsidiaries on the Closing Date that were available, or would have been available but for their prior utilization by Purchaser or any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries after the Closing), to offset or otherwise reduce the applicable Tax Liability in respect of such Income Taxes (except any Tax Asset reflected as an asset in the Final Closing Statement and taken into account in the calculation of the Final Purchaser Working Capital or the Final Purchaser Net Cash), or (D) Taxes for which Seller Parent is responsible under Section 6.5(d)(i). (iii) To the extent permitted or required by applicable Law, the taxable year of each of the Conveyed Subsidiaries and their Subsidiaries and any Subsidiary of Purchaser that includes the Closing Date shall be treated as closing on (and including) the Belgian Closing Date). ~~Otherwise, for~~ For purposes of this Agreement, in the case of any ~~Straddle Period:~~ Tax that is imposed on a periodic basis and is payable for a taxable period that begins before the Closing Date and ends after the Closing Date (Aor that begins before the Belgian Closing Date and ends after the Belgian Closing Date, as the case may be), the portion of such Taxes which is payable for the portion of such taxable period ending on the Closing Date (or the Belgian Closing Date, as the case may be) ~~Property Taxes allocable to the Pre-Closing Tax Period~~ shall be ~~computed based upon~~ (i) in the ~~ratio~~ case of any real or personal property Tax or similar Tax, the amount of such Tax for the entire taxable period (or, in the case of such Taxes determined on an arrears basis, the amount of such Tax for the immediately preceding period) multiplied by a fraction, the numerator of which is the number of days in the ~~Pre-~~portion of such taxable period ending on the Closing ~~Tax Period to~~ Date (or the Belgian Closing Date, as the case may be) and the denominator of which is the number of days in the entire ~~Straddle Period; and~~ taxable period and (Bii) ~~Taxes (other than Property Taxes) allocable to the Pre-Closing Tax Period shall be computed as if such Tax period ended as of the close of business on the Closing Date and,~~ in the case of any ~~Taxes~~ other Tax, on the basis of ~~Conveyed~~ the actual activities of the Transferred Subsidiaries (~~and their~~ and, if applicable, the Belgian Subsidiaries) determined from their books and ~~Seller Parent~~records as if the relevant taxable period ended on the Closing Date (or the Belgian Closing Date, as the case may be). Any credit or refund resulting from an overpayment of Taxes shall be prorated based upon the method employed in the immediately preceding sentence. In the case of any ~~Taxes of Purchaser Parent and Purchaser~~ Tax based upon or measured by capital (~~and their Subsidiaries prior~~ including net worth or long-term debt) or intangibles, any amount thereof required to be allocated under this Section 8.7(d) shall be computed by reference to the Closing), in each case attributable to the ownership of any equity interest in any partnership or other “flow through” entity for tax purposes (including of any “controlled foreign corporation,” as defined under the Code) as if the Tax period level of such ~~partnership or other “flow through” entity ended as of the close of business~~ items on the Closing Date with the Taxes of such entity for the Pre-Closing Tax Period deemed to include any Taxes on the allocable income of such entity in respect of such Tax period; provided that exemptions, allowances or deductions that are calculated on an annual basis (including depreciation and amortization deductions) shall be allocated between the period ending on the Closing Date and the period beginning after the Closing Date in proportion to the number of days in each period. (iv) Any claim for indemnification under this Section 6.5(d) shall be made in writing upon the party from whom indemnification is sought, and shall specify in reasonable detail the basis for such claim. Any indemnity payment required to be made pursuant to this Section 6.5(d) shall be made within thirty (30) days after the indemnified party makes written demand upon the indemnifying party, but in no case earlier than five (5) Business Days prior to the date on which the relevant Taxes are required to be paid to the applicable Taxing Authority. (v) With respect to any Taxes suffered or incurred by any Conveyed Subsidiary (or ~~any Subsidiary thereof) that was not wholly owned by Seller Parent (directly or indirectly) as of immediately prior to~~ the Closing, the indemnification obligations of Seller Parent pursuant to Section 6.5(d)(i) in respect of such Taxes (or related costs and expenses) shall in no event exceed an amount equal to (A) the amount of such Taxes (or related costs and expenses) for which the Purchaser Tax Indemnified Parties would otherwise be entitled to indemnification pursuant to Section 6.5(d)Belgian Closing Date, as ~~if such Conveyed Subsidiary (or any Subsidiary thereof) were wholly owned by Seller Parent, multiplied by (B)~~ the direct and indirect percentage ownership of Seller Parent of such Conveyed Subsidiary (or Subsidiary thereof) as of immediately prior to the Closing. With respect to any Taxes suffered or incurred by any Subsidiary of Purchaser Parent (including Purchaser and its Subsidiaries) that was not wholly owned by Purchaser Parent (directly or indirectly) as of immediately prior to the Closing, the indemnification obligations of Purchaser Parent pursuant to Section 6.5(d)(ii) in respect of such Taxes (or related costs and expenses) shall in no event exceed an amount equal to (A) the amount of such Taxes (or related costs and expenses) for which the Purchaser Tax Indemnified Parties would otherwise be entitled to indemnification pursuant to Section 6.5(dcase may be), as if such Subsidiary were wholly owned by Purchaser Parent, multiplied by (B) the direct and indirect percentage ownership of Purchaser Parent of such Subsidiary as of immediately prior to the Closing. (vi) Without duplication to any other amounts paid pursuant to this Section 6.5: (A) Within thirty (30) days following the filing of any Income Tax Return for any Conveyed Subsidiary (or any Subsidiary thereof), on the one hand, or Purchaser (or any Subsidiary thereof, other than the Conveyed Subsidiaries and their Subsidiaries), on the other hand, for any Pre-Closing Tax Period or for any Straddle Period, Seller Parent or Purchaser Parent shall (or Purchaser Parent shall cause Purchaser to) prepare a statement showing (i) the amount of Income Taxes shown as due on such filed Income Tax Return with respect to the relevant Pre-Closing Tax Period or the portion of any Straddle Period ending on and including the Closing Date (the “Final Pre-Closing Income Tax Amount”) and (ii) the amount of the Seller Accrued Income Taxes or Purchaser Accrued Income Taxes, as applicable, attributable to such Income Tax Return as reflected on the Final Closing Statement (the “Pre-Closing Income Tax Amount”) and deliver such statement to Seller Parent and Purchaser Parent, as applicable. Purchaser Parent or Seller Parent, as applicable, shall have a period of fifteen (15) Business Days to provide comments to a schedule prepared (or caused to be prepared) by Seller Parent or Purchaser Parent, respectively. If Purchaser Parent or Seller Parent, as applicable, do not provide any comments to Seller Parent or Purchaser Parent, respectively, during such period, the statement as so prepared shall be final and binding. (B) In the event the Final Pre-Closing Income Tax Amount with respect to any Income Tax Return is less than the amount of the Pre-Closing Income Tax Amount attributable to such Income Tax Return that was included on the Final Closing Statement, the Purchaser shall within five (5) Business Days following the finalization of the Final Pre-Closing Income Tax Amount hereunder (i) pay to Seller Parent the amount of such difference with respect to a Conveyed Subsidiary and their Subsidiaries and (ii) pay to Purchaser Parent the amount of such difference with respect to Purchaser and its Subsidiaries. (vii) The Parties shall use reasonable best efforts to structure any indemnity payment, true-up payment, or payment in respect of Tax Benefits made by any Party pursuant to this Agreement (including pursuant to this Section 6.5, Section 6.6 and Article VII) and any payment made by Purchaser Parent to Purchaser pursuant to Section 2.8 or Section 2.9 in the manner set forth in Clause 10 of the Structuring Considerations Agreement. The Parties shall use reasonable best efforts to structure as a special dividend any payment made by Purchaser to Purchaser Parent pursuant to Section 2.8, Section 2.9 or this Section 6.5.

Appears in 1 contract

Sources: Purchase Agreement (Pharmaceutical Marketing Services Inc)

Tax Indemnification. (a) Seller shall indemnify Buyer and its Affiliates (including the Company) and each of their respective officers, directors, employees, stockholders, agents and representatives and hold them harmless from (i) ~~Subject to Section 6.5(d)(v), from~~ all liability for Taxes (and ~~after the Closing, Seller Parent agrees to indemnify and hold harmless Purchaser and its Subsidiaries (including the Conveyed Subsidiaries and their Subsidiaries after the Closing Date~~any related Losses) ~~(collectively, the “Purchaser Tax Indemnified Parties”) from and against all liability, without duplication, for (1) Taxes~~ of the ~~Conveyed Subsidiaries and their Subsidiaries~~ Company for ~~any~~ the Pre-Closing Tax Period (~~including~~ which for the avoidance of doubt shall include any Taxes ~~payable in respect of an election under Section 965(h)~~ attributable to the distribution of the ~~Code~~Excluded Assets), (2ii) all liability as a result of Treasury Regulation § 1.1502 6(a) for Taxes of Seller or any other corporation which is or has been affiliated with Seller (other than ~~any Transfer Taxes and VAT for which Purchaser is responsible hereunder~~the Company) ~~including, Taxes (other than Taxes of the Conveyed Subsidiaries and their Subsidiaries) imposed with respect to, arising out of or relating to the Purchased Assets or the Business for~~ in a Pre-Closing Tax Period, (3iii) all liability for Taxes attributable to a breach by Seller of any Person (other than the Conveyed Subsidiaries and their Subsidiaries) for a Pre-Closing Tax Period for which any Conveyed Subsidiary (or any Subsidiary thereof) is liable under Treasury Regulation Section 1.1502-6 (or a similar provision of state, local or foreign Law), or as a transferee or successor or by Contract (other than Contracts that do not relate primarily to Taxes), (4) Taxes arising out of or resulting from any breach of any covenant or agreement of Seller Parent or any of its ~~Affiliates contained in~~ representations, warranties, covenants or agreements related to Taxes under this Agreement, and (5iv) Taxes for a Pre-Closing Tax Period imposed on (x) any transaction effected pursuant to Section 2.3(b), (y) any settlement of any intercompany accounts of Seller Parent or its Subsidiaries pursuant to Section 6.7, or (z) any transaction or step forming part 50% of the liability for Taxes in Section 12.04 of this Agreement. Notwithstanding the foregoing, Seller ~~Internal Restructurings~~shall not indemnify and hold harmless Buyer and its Affiliates, ~~(6) Transfer Taxes for which Seller Parent is responsible under Section 6.5(j)~~and each of their respective officers, ~~(7) Taxes required to be deducted or withheld with respect to the payment of the Purchase Consideration or any amounts payable to Seller Parent pursuant to Section 2.8 or Section 2.9~~directors, including any penalties imposed on Purchaser as a result of Purchaser’s failure to deduct or withhold any such amounts that Purchaser (or a Purchaser Designated Affiliate) was permitted to withhold under Section 2.10 (in each caseemployees and agents, subject to Purchaser’s compliance with the notice and cooperation requirements of Section 2.10 and except for any such Taxes (and any related penalties) required to be deducted or withheld solely as a result of any assignment by Purchaser or its Affiliates for which Purchaser is responsible pursuant to Section 10.3), (8) Taxes arising from any ~~breach of any representation or warranty contained in Section 4.16(k), (9)~~ liability for Taxes arising as a result of any Conveyed Subsidiary or any Subsidiary of any Conveyed Subsidiary at any time ceasing to be a member of a group for the purposes of any Tax, of which group Seller Parent or any Subsidiary of Seller Parent is or was also a member and (10) any costs and expenses, including reasonable legal and accounting fees and expenses, attributable to any ~~item described in clauses (1) through (9) (any such Taxes for which Seller Parent is responsible pursuant to this~~ election made by Buyer under Section ~~6.5(d)(i), subject to~~ 336 or 338 of the ~~following proviso, “Seller Indemnified Taxes”); provided that Seller Parent shall not be required to indemnify~~ Code or ~~hold harmless any Purchaser Tax Indemnified Party from and against any liability pursuant to this Section 6.5(d)(i) for (A) Taxes attributable to~~ any action taken after the Closing by ~~Purchaser~~Buyer, any of its Affiliates (including the ~~Conveyed Subsidiaries and their Subsidiaries~~Company), or any transferee of ~~Purchaser~~ Buyer or any of its Affiliates (~~including the Conveyed Subsidiaries and their Subsidiaries),~~ other than any such action ~~that (1) is in the ordinary course of business, (2) is~~ expressly ~~permitted~~ required by Applicable Law or ~~contemplated~~ by this Agreement~~, or (3~~) ~~is required to be taken in order to comply with applicable Law or as a result of a change in applicable Law~~ (a “~~Purchaser~~ Buyer Tax Act”~~), (B~~) ~~Taxes that were reflected, accrued~~ or ~~reserved for in the Final Closing Statement, Final Business Working Capital, or Final Business Net Cash, (C) Income Taxes~~ attributable to ~~the extent that~~ a ~~Conveyed Subsidiary or any Subsidiary thereof had any Tax Assets as of the close of business on the Closing Date that were available, or would have been available but for their prior utilization~~ breach by ~~Purchaser or any~~ Buyer of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries after the Closing) to offset or otherwise reduce the applicable Tax Liability in respect of such Income Taxes (except any Tax Asset reflected as an asset in the Final Closing Statement and taken into account in the calculation of the Final Business Working Capital or the Final Business Net Cash), or (D) Taxes for which Purchaser Parent is responsible obligations under ~~Section 6.5(d)(ii)~~this Agreement. (iib) ~~Subject to Section 6.5(d)(v)~~Buyer shall, ~~from~~ and ~~after~~ shall cause the ~~Closing~~Company to, ~~Purchaser Parent shall~~ indemnify ~~and hold harmless the Purchaser Tax Indemnified Parties from and against all liability, without duplication, for (1) all Taxes of Purchaser Parent~~ Seller and its Affiliates and each of their respective officers, directors, employees, stockholders, agents and representatives and hold them harmless from (i) all liability for Taxes of the Company for any taxable period other than Purchaser and its Subsidiaries) for any Tax period (other than Transfer Taxes and VAT for which Seller Parent is responsible hereunder), (2) Taxes of Purchaser and its Subsidiaries (other than the Conveyed Subsidiaries and their Subsidiaries) for any a Pre-Closing Tax Period, (3ii) 50% of the liability for Taxes of any Person for a Pre-Closing Tax Period for which Purchaser (or any Subsidiary thereof other than any Conveyed Subsidiaries and their Subsidiaries) is liable under Treasury Regulation Section 1.1502-6 (or a similar provision of state, local or foreign Law), or as a transferee or successor or by Contract (other than Contracts that do not relate primarily to Taxes), (4) Taxes arising out of or resulting from any breach of any covenant or agreement of Purchaser Parent, Purchaser or their respective Affiliates contained in this Agreement, (5) Transfer Taxes for which Purchaser Parent is responsible under Section 6.5(j), (6) Taxes arising from any breach of any representation or warranty in Section ~~5.17(k), (7) Taxes for a Pre-Closing Tax Period imposed on (x) any settlement~~ 12.04 of any intercompany accounts of Purchaser or any Subsidiary of Purchaser, on the one hand, and Purchaser Parent or any Subsidiary of Purchaser Parent (other than Purchaser and its Subsidiaries), on the other hand, pursuant to Section 6.7 or (y) any transaction or step forming part of the Purchaser Internal Restructurings, (8) Taxes required to be deducted or withheld with respect to any amounts payable to Purchaser Parent pursuant to Section 2.8 or Section 2.9, including any penalties imposed on Purchaser as a result of Purchaser’s failure to deduct or withhold any such amounts, (9) Taxes arising as a result of Purchaser or any Subsidiary of Purchaser (other than any Conveyed Subsidiary or a Subsidiary thereof) at any time ceasing to be a member of a group for the purposes of any Tax, of which group Purchaser Parent or any Subsidiary of Purchaser Parent (other than Purchaser or any Subsidiary of Purchaser) is or was also a member this Agreement and (10iii) any costs and expenses, including reasonable legal and accounting fees and expenses, attributable to any item described in clauses (1) through (9) (any such Taxes for which Purchaser Parent is responsible pursuant to this Section 6.5(d)(ii), subject to the following proviso, “Purchaser Parent Indemnified Taxes”); provided that Purchaser Parent shall not be required to indemnify or hold harmless any Purchaser Tax Indemnified Party from and against any all liability for ~~(A)~~ Taxes attributable to ~~any action taken after the Closing~~ a Buyer Tax Act or to a breach by ~~Seller Parent or any~~ Buyer of its ~~Affiliates, other than any such action that (1) is in the ordinary course of business, (2) is expressly permitted or contemplated by~~ obligations under this Agreement, or (3) is required to be taken in order to comply with applicable Law or as a result of a change in applicable Law (a “Seller Tax Act”), (B) Taxes that were reflected, accrued or reserved for in the Final Closing Statement, Final Purchaser Working Capital or the Final Purchaser Net Cash, (C) Income Taxes to the extent that Purchaser or any Subsidiary thereof had any Tax Assets as of the close of business on the Closing Date that were available, or would have been available but for their prior utilization by Purchaser or any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries after the Closing), to offset or otherwise reduce the applicable Tax Liability in respect of such Income Taxes (except any Tax Asset reflected as an asset in the Final Closing Statement and taken into account in the calculation of the Final Purchaser Working Capital or the Final Purchaser Net Cash), or (D) Taxes for which Seller Parent is responsible under Section 6.5(d)(i). (~~iii~~c) To the extent permitted or required by applicable Law, the taxable year of each of the Conveyed Subsidiaries and their Subsidiaries and any Subsidiary of Purchaser that includes the Closing Date shall be treated as closing on (and including) the Closing Date. Otherwise, for purposes of this Agreement, in In the case of any taxable period that includes (but does not end on) the Closing Date (a “Straddle Period:”): (Ai) real, personal and intangible property and other ad valorem Taxes (“Property ~~Taxes~~ Taxes”) of the Company allocable to the Pre-Closing Tax Period shall be ~~computed based upon~~ equal to the ~~ratio~~ amount of such Property Taxes for the entire Straddle Period multiplied by a fraction, the numerator of which is the number of days during the Straddle Period that are in the Pre-Closing Tax Period to and the denominator of which is the number of days in the ~~entire~~ Straddle Period; and (Bii) the Taxes of the Company (other than Property Taxes) allocable to the Pre-Closing Tax Period shall be computed as if such ~~Tax~~ taxable period ended as of the close of business on the Closing Date and, in the case of any Taxes of Conveyed Subsidiaries (and their Subsidiaries) and Seller Parent, or in the case of any Taxes of Purchaser Parent and Purchaser (and their Subsidiaries prior to the Closing), in each case attributable to the ownership of any equity interest in any partnership or other “flow through” entity for tax purposes (including of any “controlled foreign corporation,” as defined under the Code) as if the Tax period of such partnership or other “flow through” entity ended as of the close of business on the Closing Date with the Taxes of such entity for the Pre-Closing Tax Period deemed to include any Taxes on the allocable income of such entity in respect of such Tax period; provided that exemptions, allowances or deductions that are calculated on an annual basis (including depreciation and amortization deductions) shall be allocated between the period ending on the Closing Date and the period beginning after the Closing Date in proportion to the number of days in each periodDate. (ivd) ~~Any claim for~~ To the extent that an indemnification obligation under this Section ~~6.5(d) shall be made in writing upon the party from whom~~ 11.01 is duplicative of or overlaps with any other indemnification ~~is sought, and shall specify in reasonable detail the basis for such claim. Any indemnity payment required to be made~~ obligation pursuant to this ~~Section 6.5(d)~~ Agreement, such indemnification obligations shall be ~~made within thirty (30) days after the indemnified party makes written demand upon the indemnifying party, but in no case earlier than five (5) Business Days prior~~ read so as to ~~the date on which the relevant Taxes are required~~ allow only a single recovery and to be paid to the applicable Taxing Authority. (v) With respect to any Taxes suffered or incurred by any Conveyed Subsidiary (or any Subsidiary thereof) that was not wholly owned by Seller Parent (directly or indirectly) as of immediately prior to the Closing, the indemnification obligations of Seller Parent pursuant to Section 6.5(d)(i) in respect of such Taxes (or related costs and expenses) shall in no event exceed an amount equal to (A) the amount of such Taxes (or related costs and expenses) for which the Purchaser Tax Indemnified Parties would otherwise be entitled to indemnification pursuant to Section 6.5(d), as if such Conveyed Subsidiary (or any Subsidiary thereof) were wholly owned by Seller Parent, multiplied by (B) the direct and indirect percentage ownership of Seller Parent of such Conveyed Subsidiary (or Subsidiary thereof) as of immediately prior to the Closing. With respect to any Taxes suffered or incurred by any Subsidiary of Purchaser Parent (including Purchaser and its Subsidiaries) that was not wholly owned by Purchaser Parent (directly or indirectly) as of immediately prior to the Closing, the indemnification obligations of Purchaser Parent pursuant to Section 6.5(d)(ii) in respect of such Taxes (or related costs and expenses) shall in no event exceed an amount equal to (A) the amount of such Taxes (or related costs and expenses) for which the Purchaser Tax Indemnified Parties would otherwise be entitled to indemnification pursuant to Section 6.5(d), as if such Subsidiary were wholly owned by Purchaser Parent, multiplied by (B) the direct and indirect percentage ownership of Purchaser Parent of such Subsidiary as of immediately prior to the Closing. (vi) Without duplication to any other amounts paid pursuant to this Section 6.5: (A) Within thirty (30) days following the filing of any Income Tax Return avoid double counting for any Conveyed Subsidiary (or any Subsidiary thereof), on the one hand, or Purchaser (or any Subsidiary thereof, other than the Conveyed Subsidiaries and their Subsidiaries), on the other hand, for any Pre-Closing Tax Period or for any Straddle Period, Seller Parent or Purchaser Parent shall (or Purchaser Parent shall cause Purchaser to) prepare a statement showing (i) the amount of Income Taxes shown as due on such filed Income Tax Return with respect to the relevant Pre-Closing Tax Period or the portion of any Straddle Period ending on and including the Closing Date (the “Final Pre-Closing Income Tax Amount”) and (ii) the amount of the Seller Accrued Income Taxes or Purchaser Accrued Income Taxes, as applicable, attributable to such Income Tax Return as reflected on the Final Closing Statement (the “Pre-Closing Income Tax Amount”) and deliver such statement to Seller Parent and Purchaser Parent, as applicable. Purchaser Parent or Seller Parent, as applicable, shall have a period of fifteen (15) Business Days to provide comments to a schedule prepared (or caused to be prepared) by Seller Parent or Purchaser Parent, respectively. If Purchaser Parent or Seller Parent, as applicable, do not provide any comments to Seller Parent or Purchaser Parent, respectively, during such period, the statement as so prepared shall be final and bindingsingle indemnifiable loss. (B) In the event the Final Pre-Closing Income Tax Amount with respect to any Income Tax Return is less than the amount of the Pre-Closing Income Tax Amount attributable to such Income Tax Return that was included on the Final Closing Statement, the Purchaser shall within five (5) Business Days following the finalization of the Final Pre-Closing Income Tax Amount hereunder (i) pay to Seller Parent the amount of such difference with respect to a Conveyed Subsidiary and their Subsidiaries and (ii) pay to Purchaser Parent the amount of such difference with respect to Purchaser and its Subsidiaries. (vii) The Parties shall use reasonable best efforts to structure any indemnity payment, true-up payment, or payment in respect of Tax Benefits made by any Party pursuant to this Agreement (including pursuant to this Section 6.5, Section 6.6 and Article VII) and any payment made by Purchaser Parent to Purchaser pursuant to Section 2.8 or Section 2.9 in the manner set forth in Clause 10 of the Structuring Considerations Agreement. The Parties shall use reasonable best efforts to structure as a special dividend any payment made by Purchaser to Purchaser Parent pursuant to Section 2.8, Section 2.9 or this Section 6.5.

Appears in 1 contract

Sources: Merger Agreement (DealerTrack Holdings, Inc.)

Tax Indemnification. (a) Standard Pacific shall indemnify HON ------------------- and its Affiliates (including Panel Concepts) and hold them harmless from and against: (i) ~~Subject~~ any and all liability for Taxes (including without limitation any obligation to contribute to the payment of a Tax determined on a consolidated, combined, or unitary basis with respect to a group of corporations that includes or included Panel Concepts) of Panel Concepts for all Taxable periods ending on or before the Closing Date (the "Pre-closing Tax Period") and for the portion of ---------------------- any Taxes (including without limitation any obligation to contribute to the payment of a Tax determined on a consolidated, combined, or unitary basis with respect to a group of corporations that includes or included Panel Concepts) of Panel Concepts for any Straddle Period (as hereinafter defined) that is allocated (pursuant to Section ~~6.5(d)(v~~8.1(c)~~, from and after~~ ) to the Closing, Seller Parent agrees to indemnify and hold harmless Purchaser and its Subsidiaries (including the Conveyed Subsidiaries and their Subsidiaries after the Closing Date) (collectively, the “Purchaser Tax Indemnified Parties”) from and against all liability, without duplication, for (1) Taxes of the Conveyed Subsidiaries and their Subsidiaries for any Pre-~~Closing~~ closing Tax ~~Period (~~Period, including -------------- without limitation any and all liability for Taxes payable in respect of an election under Section 965(h) of the Code), (2) Taxes of any Seller (other than any Transfer Taxes and VAT for which Purchaser is responsible hereunder) including, Taxes (other than Taxes of the Conveyed Subsidiaries and their Subsidiaries) imposed with respect to, arising out of or relating to the ~~Purchased Assets or the Business for a~~ transactions contemplated by Section 1.6 (such liabilities collectively, ----------- "Pre-~~Closing~~ closing Tax ~~Period,~~ Liabilities"); (3ii) any and all liability (as a result of ---------------------------- Treasury Regulation (S) 1.1502-6(a) or otherwise) for Taxes of Standard Pacific or any other Person (other than ~~the Conveyed Subsidiaries and their Subsidiaries~~Panel Concepts) ~~for a Pre-Closing Tax Period for~~ which ~~any Conveyed Subsidiary~~ is or has ever been affiliated with Panel Concepts, or with whom Panel Concepts otherwise joins or has ever joined (or is or has ever been required to join) in filing any ~~Subsidiary thereof) is liable under Treasury Regulation Section 1.1502-6 (~~consolidated, combined or ~~a similar provision of state, local or foreign Law), or as a transferee or successor or by Contract (other than Contracts that do not relate primarily~~ unitary Tax Return prior to ~~Taxes)~~the Closing, (4iii) any and all liability for Conveyance Taxes; (iv) any and all liability for Taxes arising out of a breach or resulting from any breach of any covenant or agreement of Seller Parent or any of its Affiliates contained in this Agreement, (5) Taxes for a Pre-Closing Tax Period imposed on (x) any transaction effected pursuant to Section 2.3(b), (y) any settlement of any intercompany accounts of Seller Parent or its Subsidiaries pursuant to Section 6.7, or (z) any transaction or step forming part of the Seller Internal Restructurings, (6) Transfer Taxes for which Seller Parent is responsible under Section 6.5(j), (7) Taxes required to be deducted or withheld with respect to the payment of the Purchase Consideration or any amounts payable to Seller Parent pursuant to Section 2.8 or Section 2.9, including any penalties imposed on Purchaser as a result of Purchaser’s failure to deduct or withhold any such amounts that Purchaser (or a Purchaser Designated Affiliate) was permitted to withhold under Section 2.10 (in each case, subject to Purchaser’s compliance with the notice and cooperation requirements of Section 2.10 and except for any such Taxes (and any related penalties) required to be deducted or withheld solely as a result of any assignment by Purchaser or its Affiliates for which Purchaser is responsible pursuant to Section 10.3), (8) Taxes arising from any breach inaccuracy of any representation or warranty contained in Section ~~4.16(k~~3.23(h), (9i), (j), (m), (o), (p) Taxes arising as a result of any Conveyed Subsidiary or any Subsidiary of any Conveyed Subsidiary at any time ceasing to be a member of a group for the purposes of any Tax, of which group Seller Parent or any Subsidiary of Seller Parent is or was also a member and (10q); (v) any ~~costs~~ and ~~expenses~~all liability for reasonable legal, ~~including reasonable legal~~ accounting and ~~accounting~~ appraisal fees and ~~expenses, attributable~~ expenses with respect to any item described in clauses (1i), (ii), (iii) ~~through~~ or (9iv) ~~(any such~~ above; provided, however, -------- ------- that the amount of Standard Pacific's indemnity obligation for Taxes ~~for which Seller Parent is responsible~~ pursuant to this Section ~~6.5(d)(i), subject~~ 8.1(a) shall be reduced to the ~~following proviso~~extent that the aggregate reserves -------------- for Taxes (excluding deferred income Taxes) reflected on the Closing Balance Sheet exceeds the aggregate liability for Taxes for the periods covered by such reserves. Notwithstanding the foregoing, ~~“Seller Indemnified Taxes”); provided that Seller Parent~~ Standard Pacific shall not be required to indemnify or hold harmless HON or its Affiliates from or against any ~~Purchaser Tax Indemnified Party~~ liability for Taxes attributable to a breach by HON of its obligations under this Agreement. (b) HON shall indemnify Standard Pacific and its Affiliates and hold them harmless from and against (i) any liability ~~pursuant to this Section 6.5(d)(i)~~ for ~~(A)~~ Taxes ~~attributable to~~ of Panel Concepts for any ~~action taken~~ Taxable period ending after the Closing ~~by Purchaser~~Date (except with respect to a Straddle Period, ~~any of its Affiliates~~ in which case HON's indemnity will cover only Taxes (~~including the Conveyed Subsidiaries and their Subsidiaries), or any transferee of Purchaser or any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries),~~ other than ~~any such action~~ Conveyance Taxes) that ~~(1) is in the ordinary course of business~~are not Pre-closing Tax Liabilities, (2) is expressly permitted or contemplated by this Agreement, or (3) is required to be taken in order to comply with applicable Law or as a result of a change in applicable Law (a “Purchaser Tax Act”), (B) Taxes that were reflected, accrued or reserved for in the Final Closing Statement, Final Business Working Capital, or Final Business Net Cash, (C) Income Taxes to the extent that a Conveyed Subsidiary or any Subsidiary thereof had any Tax Assets as of the close of business on the Closing Date that were available, or would have been available but for their prior utilization by Purchaser or any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries after the Closing) to offset or otherwise reduce the applicable Tax Liability in respect of such Income Taxes (except any Tax Asset reflected as an asset in the Final Closing Statement and taken into account in the calculation of the Final Business Working Capital or the Final Business Net Cash), or (D) Taxes for which Purchaser Parent is responsible under Section 6.5(d)(ii). (ii) ~~Subject to Section 6.5(d)(v)~~any liability for Taxes, ~~from and after the Closing, Purchaser Parent shall indemnify and hold harmless the Purchaser Tax Indemnified Parties from and against all liability, without duplication, for~~ arising under Treas. Reg. (1S) all Taxes of Purchaser Parent and its Affiliates (other than Purchaser and its Subsidiaries) for any Tax period (other than Transfer Taxes and VAT for which Seller Parent is responsible hereunder), (2) Taxes of Purchaser and its Subsidiaries (other than the Conveyed Subsidiaries and their Subsidiaries) for any Pre-Closing Tax Period, (3) Taxes of any Person for a Pre-Closing Tax Period for which Purchaser (or any Subsidiary thereof other than any Conveyed Subsidiaries and their Subsidiaries) is liable under Treasury Regulation Section 1.1502-6 (or a any similar provision of state, local or foreign ~~Law~~law), of HON or ~~as a transferee or successor or by Contract~~ any member (other than ~~Contracts that do not relate primarily to Taxes), (4~~Panel Concepts) Taxes arising out of or resulting from any breach of any covenant or agreement of Purchaser Parent, Purchaser or their respective Affiliates contained in this Agreement, (5) Transfer Taxes for which Purchaser Parent is responsible under Section 6.5(j), (6) Taxes arising from any breach of any representation or warranty in Section 5.17(k), (7) Taxes for a Pre-Closing Tax Period imposed on (x) any settlement of any intercompany accounts of Purchaser or any Subsidiary of Purchaser, on the one hand, and Purchaser Parent or any Subsidiary of Purchaser Parent (other than Purchaser and its Subsidiaries), on the other hand, pursuant to Section 6.7 or (y) any transaction or step forming part of the ~~Purchaser Internal Restructurings~~affiliated group that includes HON. Notwithstanding the foregoing, (8) Taxes required to be deducted or withheld with respect to any amounts payable to Purchaser Parent pursuant to Section 2.8 or Section 2.9, including any penalties imposed on Purchaser as a result of Purchaser’s failure to deduct or withhold any such amounts, (9) Taxes arising as a result of Purchaser or any Subsidiary of Purchaser (other than any Conveyed Subsidiary or a Subsidiary thereof) at any time ceasing to be a member of a group for the purposes of any Tax, of which group Purchaser Parent or any Subsidiary of Purchaser Parent (other than Purchaser or any Subsidiary of Purchaser) is or was also a member and (10) any costs and expenses, including reasonable legal and accounting fees and expenses, attributable to any item described in clauses (1) through (9) (any such Taxes for which Purchaser Parent is responsible pursuant to this Section 6.5(d)(ii), subject to the following proviso, “Purchaser Parent Indemnified Taxes”); provided that Purchaser Parent HON shall not be required to indemnify or hold harmless ~~any Purchaser Tax Indemnified Party~~ Standard Pacific or its Affiliates from ~~and~~ or against any liability for ~~(A)~~ Taxes attributable to ~~any action taken after the Closing~~ a breach by ~~Seller Parent or any~~ Standard Pacific of its ~~Affiliates, other than any such action that (1) is in the ordinary course of business, (2) is expressly permitted or contemplated by~~ obligations under this Agreement~~, or~~ . (3c) ~~is required to be taken in order to comply with applicable Law or as a result~~ In the case of ~~a change in applicable Law (a “Seller Tax Act”), (B) Taxes~~ any Taxable period that were reflected, accrued or reserved for in the Final Closing Statement, Final Purchaser Working Capital or the Final Purchaser Net Cash, (C) Income Taxes to the extent that Purchaser or any Subsidiary thereof had any Tax Assets as of the close of business includes but does not end on the Closing Date ~~that were available, or would have been available but for their prior utilization by Purchaser or any of its Affiliates~~ (~~including the Conveyed Subsidiaries and their Subsidiaries after the Closing~~a "Straddle Period"), ~~to offset or otherwise reduce~~ Taxes of Panel Concepts for the ~~applicable Tax Liability in respect of such Income Taxes~~ --------------- Straddle Period (~~except any Tax Asset reflected as an asset in the Final Closing Statement and taken into account in the calculation of the Final Purchaser Working Capital or the Final Purchaser Net Cash), or (D~~i) Taxes for which Seller Parent is responsible under Section 6.5(d)(i). (iii) To the extent permitted or required by applicable Law, the taxable year of each of the Conveyed Subsidiaries and their Subsidiaries and any Subsidiary of Purchaser that includes the Closing Date shall be treated as closing on (and including) the Closing Date. Otherwise, for purposes of this Agreement, in the case of any Straddle Period: (A) Property Taxes allocable to the Pre-Closing Tax Period shall be computed based upon the ratio of the number of days in the Pre-Closing Tax Period to the number of days in the entire Straddle Period; and (B) Taxes (other than Property Taxes) allocable to the Pre-Closing Tax Period shall be computed as if Panel Concepts had not been included in a consolidated, combined or unitary Tax Return with Standard Pacific or any other corporation, but rather, as if Panel Concepts had filed a separate Tax Return on a stand-alone basis, and otherwise consistent with past practice and (ii) shall be allocated to the Pre-closing Tax Period using an interim-closing- of-the-books method assuming that such ~~Tax~~ Taxable period ended ~~as of~~ at the close of ~~business on~~ the Closing ~~Date and~~Date, ~~in the case of any Taxes of Conveyed Subsidiaries~~ except that (~~and their Subsidiaries~~X) and Seller Parent, or in the case of any Taxes of Purchaser Parent and Purchaser (and their Subsidiaries prior to the Closing), in each case attributable to the ownership of any equity interest in any partnership or other “flow through” entity for tax purposes (including of any “controlled foreign corporation,” as defined under the Code) as if the Tax period of such partnership or other “flow through” entity ended as of the close of business on the Closing Date with the Taxes of such entity for the Pre-Closing Tax Period deemed to include any Taxes on the allocable income of such entity in respect of such Tax period; provided that exemptions, allowances or deductions that are calculated on an annual basis (~~including depreciation and amortization deductions~~such as the deduction for depreciation) shall be ~~allocated between the period ending~~ apportioned on ~~the Closing Date~~ a per-diem basis and ~~the period beginning after the Closing Date in proportion to the number of days in each period.~~ (ivY) ~~Any claim for indemnification under this Section 6.5(d)~~ real property, personal property, intangibles and other similar Taxes shall be ~~made~~ allocated in ~~writing upon~~ accordance with the ~~party from whom indemnification is sought, and shall specify in reasonable detail the basis for such claim. Any indemnity payment required to be made pursuant to this~~ principles of Section ~~6.5(d~~164(d) shall be made within thirty (30) days after the indemnified party makes written demand upon the indemnifying party, but in no case earlier than five (5) Business Days prior to the date on which the relevant Taxes are required to be paid to the applicable Taxing Authority. (v) With respect to any Taxes suffered or incurred by any Conveyed Subsidiary (or any Subsidiary thereof) that was not wholly owned by Seller Parent (directly or indirectly) as of immediately prior to the Closing, the indemnification obligations of Seller Parent pursuant to Section 6.5(d)(i) in respect of such Taxes (or related costs and expenses) shall in no event exceed an amount equal to (A) the amount of such Taxes (or related costs and expenses) for which the Purchaser Tax Indemnified Parties would otherwise be entitled to indemnification pursuant to Section 6.5(d), as if such Conveyed Subsidiary (or any Subsidiary thereof) were wholly owned by Seller Parent, multiplied by (B) the direct and indirect percentage ownership of Seller Parent of such Conveyed Subsidiary (or Subsidiary thereof) as of immediately prior to the Closing. With respect to any Taxes suffered or incurred by any Subsidiary of Purchaser Parent (including Purchaser and its Subsidiaries) that was not wholly owned by Purchaser Parent (directly or indirectly) as of immediately prior to the Closing, the indemnification obligations of Purchaser Parent pursuant to Section 6.5(d)(ii) in respect of such Taxes (or related costs and expenses) shall in no event exceed an amount equal to (A) the amount of such Taxes (or related costs and expenses) for which the Purchaser Tax Indemnified Parties would otherwise be entitled to indemnification pursuant to Section 6.5(d), as if such Subsidiary were wholly owned by Purchaser Parent, multiplied by (B) the direct and indirect percentage ownership of Purchaser Parent of such Subsidiary as of immediately prior to the Closing. (vi) Without duplication to any other amounts paid pursuant to this Section 6.5: (A) Within thirty (30) days following the filing of any Income Tax Return for any Conveyed Subsidiary (or any Subsidiary thereof), on the one hand, or Purchaser (or any Subsidiary thereof, other than the Conveyed Subsidiaries and their Subsidiaries), on the other hand, for any Pre-Closing Tax Period or for any Straddle Period, Seller Parent or Purchaser Parent shall (or Purchaser Parent shall cause Purchaser to) prepare a statement showing (i) the amount of Income Taxes shown as due on such filed Income Tax Return with respect to the relevant Pre-Closing Tax Period or the portion of any Straddle Period ending on and including the Closing Date (the “Final Pre-Closing Income Tax Amount”) and (ii) the amount of the Seller Accrued Income Taxes or Purchaser Accrued Income Taxes, as applicable, attributable to such Income Tax Return as reflected on the Final Closing Statement (the “Pre-Closing Income Tax Amount”) and deliver such statement to Seller Parent and Purchaser Parent, as applicable. Purchaser Parent or Seller Parent, as applicable, shall have a period of fifteen (15) Business Days to provide comments to a schedule prepared (or caused to be prepared) by Seller Parent or Purchaser Parent, respectively. If Purchaser Parent or Seller Parent, as applicable, do not provide any comments to Seller Parent or Purchaser Parent, respectively, during such period, the statement as so prepared shall be final and bindingCode. (B) In the event the Final Pre-Closing Income Tax Amount with respect to any Income Tax Return is less than the amount of the Pre-Closing Income Tax Amount attributable to such Income Tax Return that was included on the Final Closing Statement, the Purchaser shall within five (5) Business Days following the finalization of the Final Pre-Closing Income Tax Amount hereunder (i) pay to Seller Parent the amount of such difference with respect to a Conveyed Subsidiary and their Subsidiaries and (ii) pay to Purchaser Parent the amount of such difference with respect to Purchaser and its Subsidiaries. (vii) The Parties shall use reasonable best efforts to structure any indemnity payment, true-up payment, or payment in respect of Tax Benefits made by any Party pursuant to this Agreement (including pursuant to this Section 6.5, Section 6.6 and Article VII) and any payment made by Purchaser Parent to Purchaser pursuant to Section 2.8 or Section 2.9 in the manner set forth in Clause 10 of the Structuring Considerations Agreement. The Parties shall use reasonable best efforts to structure as a special dividend any payment made by Purchaser to Purchaser Parent pursuant to Section 2.8, Section 2.9 or this Section 6.5.

Appears in 1 contract

Sources: Share Purchase Agreement (Standard Pacific Corp /De/)

Tax Indemnification. (ia) ~~Subject to Section 6.5(d)(v), from and after~~ To the ~~Closing~~extent not paid or accrued (including the payment of estimated Taxes) before Closing or reflected on the Closing Statement of Net Assets, Seller ~~Parent agrees to~~ shall indemnify ~~and hold harmless~~ Purchaser and its ~~Subsidiaries (including the Conveyed Subsidiaries~~ Affiliates and ~~their Subsidiaries after the Closing Date) (collectively, the “Purchaser Tax Indemnified Parties”)~~ hold them harmless from ~~and against~~ all ~~liability, without duplication,~~ liability for (1A) Excluded Taxes, (B) Taxes ~~of the Conveyed Subsidiaries and their Subsidiaries for~~ arising from or in connection with any ~~Pre-Closing Tax Period (including any Taxes payable in respect of an election under Section 965(h) of the Code), (2) Taxes~~ breach by Seller of any ~~Seller~~ covenant contained in this Article XIV (but only to the extent appropriate to reflect the relative fault of Seller, on the one hand, and Purchaser, on the other ~~than~~ hand); (C) Seller’s responsibility for any Transfer Taxes ~~and VAT for which Purchaser is responsible hereunder) including, Taxes (other than Taxes of the Conveyed Subsidiaries and their Subsidiaries) imposed~~ in accordance with respect to, arising out of or relating to the Purchased Assets or the Business for a Pre-Closing Tax Period, (3) Taxes of any Person (other than the Conveyed Subsidiaries and their Subsidiaries) for a Pre-Closing Tax Period for which any Conveyed Subsidiary (or any Subsidiary thereof) is liable under Treasury Regulation Section 1.1502-6 (or a similar provision of state, local or foreign Law), or as a transferee or successor or by Contract (other than Contracts that do not relate primarily to Taxes), (4) Taxes arising out of or resulting from any breach of any covenant or agreement of Seller Parent or any of its Affiliates contained in this Agreement, (5) Taxes for a Pre-Closing Tax Period imposed on (x) any transaction effected pursuant to Section 2.3(b), (y) any settlement of any intercompany accounts of Seller Parent or its Subsidiaries pursuant to Section 6.7, or (z) any transaction or step forming part of the Seller Internal Restructurings, (6) Transfer Taxes for which Seller Parent is responsible under Section 6.5(j), (7) Taxes required to be deducted or withheld with respect to the payment of the Purchase Consideration or any amounts payable to Seller Parent pursuant to Section 2.8 or Section 2.9, including any penalties imposed on Purchaser as a result of Purchaser’s failure to deduct or withhold any such amounts that Purchaser (or a Purchaser Designated Affiliate) was permitted to withhold under Section 2.10 (in each case, subject to Purchaser’s compliance with the notice and cooperation requirements of Section 2.10 and except for any such Taxes (and any related penalties) required to be deducted or withheld solely as a result of any assignment by Purchaser or its Affiliates for which Purchaser is responsible pursuant to Section 10.3), (8) Taxes arising from any breach of any representation or warranty contained in Section 4.16(k), (9) Taxes arising as a result of any Conveyed Subsidiary or any Subsidiary of any Conveyed Subsidiary at any time ceasing to be a member of a group for the purposes of any Tax, of which group Seller Parent or any Subsidiary of Seller Parent is or was also a member 14.9; and (10D) ~~any~~ all costs and expenses, including reasonable legal ~~and accounting~~ fees and expenses, attributable to any item ~~described~~ in clauses (1A) through (9C). (b) ~~(any such Taxes for which~~ Purchaser shall indemnify Seller ~~Parent is responsible pursuant to this Section 6.5(d)(i), subject to the following proviso, “Seller Indemnified Taxes”); provided that Seller Parent shall not be required to indemnify or~~ and its Affiliates and hold them harmless ~~any Purchaser Tax Indemnified Party~~ from ~~and against any~~ all liability ~~pursuant to this Section 6.5(d)(i)~~ for (A) any and all Taxes ~~attributable~~ imposed on or payable with respect to ~~any action taken after~~ the ~~Closing by Purchaser, any of its Affiliates (including~~ Acquired Company or the ~~Conveyed Subsidiaries and their Subsidiaries), or any transferee of Purchaser or any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries)~~Business, other than any such action that (1) is in the ordinary course of business, (2) is expressly permitted or contemplated by this Agreement, or (3) is required to be taken in order to comply with applicable Law or as a result of a change in applicable Law (a “Purchaser Tax Act”)Excluded Taxes, (B) Purchaser’s responsibility for any Transfer Taxes ~~that were reflected, accrued or reserved for~~ in ~~the Final Closing Statement, Final Business Working Capital, or Final Business Net Cash~~accordance with Section 14.9, (C) ~~Income~~ Taxes arising from or in connection with any breach by Purchaser of any covenant contained in this Article XIV (but only to the extent ~~that a Conveyed Subsidiary or any Subsidiary thereof had any Tax Assets as of~~ appropriate to reflect the close of business on the Closing Date that were available, or would have been available but for their prior utilization by Purchaser or any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries after the Closing) to offset or otherwise reduce the applicable Tax Liability in respect of such Income Taxes (except any Tax Asset reflected as an asset in the Final Closing Statement and taken into account in the calculation of the Final Business Working Capital or the Final Business Net Cash), or (D) Taxes for which Purchaser Parent is responsible under Section 6.5(d)(ii). (ii) Subject to Section 6.5(d)(v), from and after the Closing, Purchaser Parent shall indemnify and hold harmless the Purchaser Tax Indemnified Parties from and against all liability, without duplication, for (1) all Taxes of Purchaser Parent and its Affiliates (other than Purchaser and its Subsidiaries) for any Tax period (other than Transfer Taxes and VAT for which Seller Parent is responsible hereunder), (2) Taxes of Purchaser and its Subsidiaries (other than the Conveyed Subsidiaries and their Subsidiaries) for any Pre-Closing Tax Period, (3) Taxes of any Person for a Pre-Closing Tax Period for which Purchaser (or any Subsidiary thereof other than any Conveyed Subsidiaries and their Subsidiaries) is liable under Treasury Regulation Section 1.1502-6 (or a similar provision of state, local or foreign Law), or as a transferee or successor or by Contract (other than Contracts that do not relate primarily to Taxes), (4) Taxes arising out of or resulting from any breach of any covenant or agreement of Purchaser Parent, Purchaser or their respective Affiliates contained in this Agreement, (5) Transfer Taxes for which Purchaser Parent is responsible under Section 6.5(j), (6) Taxes arising from any breach of any representation or warranty in Section 5.17(k), (7) Taxes for a Pre-Closing Tax Period imposed on (x) any settlement of any intercompany accounts of Purchaser or any Subsidiary relative fault of Purchaser, on the one hand, and ~~Purchaser Parent or any Subsidiary of Purchaser Parent (other than Purchaser and its Subsidiaries)~~Seller, on the other hand~~, pursuant to Section 6.7 or (y~~) any transaction or step forming part of the Purchaser Internal Restructurings, (8) Taxes required to be deducted or withheld with respect to any amounts payable to Purchaser Parent pursuant to Section 2.8 or Section 2.9, including any penalties imposed on Purchaser as a result of Purchaser’s failure to deduct or withhold any such amounts, (9) Taxes arising as a result of Purchaser or any Subsidiary of Purchaser (other than any Conveyed Subsidiary or a Subsidiary thereof) at any time ceasing to be a member of a group for the purposes of any Tax, of which group Purchaser Parent or any Subsidiary of Purchaser Parent (other than Purchaser or any Subsidiary of Purchaser) is or was also a member and (10D) ~~any~~ all costs and expenses, including reasonable legal ~~and accounting~~ fees and expenses, attributable to any item ~~described~~ in clauses (1A) through (9) (any such Taxes for which Purchaser Parent is responsible pursuant to this Section 6.5(d)(ii), subject to the following proviso, “Purchaser Parent Indemnified Taxes”); provided that Purchaser Parent shall not be required to indemnify or hold harmless any Purchaser Tax Indemnified Party from and against any liability for (A) Taxes attributable to any action taken after the Closing by Seller Parent or any of its Affiliates, other than any such action that (1) is in the ordinary course of business, (2) is expressly permitted or contemplated by this Agreement, or (3) is required to be taken in order to comply with applicable Law or as a result of a change in applicable Law (a “Seller Tax Act”), (B) Taxes that were reflected, accrued or reserved for in the Final Closing Statement, Final Purchaser Working Capital or the Final Purchaser Net Cash, (C) Income Taxes to the extent that Purchaser or any Subsidiary thereof had any Tax Assets as of the close of business on the Closing Date that were available, or would have been available but for their prior utilization by Purchaser or any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries after the Closing), to offset or otherwise reduce the applicable Tax Liability in respect of such Income Taxes (except any Tax Asset reflected as an asset in the Final Closing Statement and taken into account in the calculation of the Final Purchaser Working Capital or the Final Purchaser Net Cash), or (D) Taxes for which Seller Parent is responsible under Section 6.5(d)(i). (~~iii~~c) To the extent permitted or required by applicable Law, the taxable year of each of the Conveyed Subsidiaries and their Subsidiaries and any Subsidiary of Purchaser that includes the Closing Date shall be treated as closing on (and including) the Closing Date. Otherwise, for purposes of this Agreement, in the case of any Straddle Period: (A) Property Taxes allocable to the Pre-Closing Tax Period shall be computed based upon the ratio of the number of days in the Pre-Closing Tax Period to the number of days in the entire Straddle Period; and (B) Taxes (other than Property Taxes) allocable to the Pre-Closing Tax Period shall be computed as if such Tax period ended as of the close of business on the Closing Date and, in the case of any Taxes of Conveyed Subsidiaries (and their Subsidiaries) and Seller Parent, or in the case of any Taxes of Purchaser Parent and Purchaser (and their Subsidiaries prior to the Closing), in each case attributable to the ownership of any equity interest in any partnership or other “flow through” entity for tax purposes (including of any “controlled foreign corporation,” as defined under the Code) as if the Tax period of such partnership or other “flow through” entity ended as of the close of business on the Closing Date with the Taxes of such entity for the Pre-Closing Tax Period deemed to include any Taxes on the allocable income of such entity in respect of such Tax period; provided that exemptions, allowances or deductions that are calculated on an annual basis (including depreciation and amortization deductions) shall be allocated between the period ending on the Closing Date and the period beginning after the Closing Date in proportion to the number of days in each period. (iv) Any claim for indemnification under this Section 6.5(d) shall be made in writing upon the party from whom indemnification is sought, and shall specify in reasonable detail the basis for such claim. Any indemnity payment ~~required~~ to be made pursuant to this Section ~~6.5(d)~~ 14.1 shall be ~~made within thirty~~ paid no later than the latest of (30i) ten (10) days after the indemnified party makes written demand upon the indemnifying party, ~~but in no case earlier than~~ (ii) five (5) ~~Business Days~~ days prior to the date on which the ~~relevant Taxes are~~ underlying amount is required to be paid to by the ~~applicable Taxing Authority~~indemnified party, and (iii) five (5) days after any dispute about the liability for or amount of such indemnity payment is resolved. (vd) ~~With~~ The indemnification provisions in this Section 14.1 shall survive the Closing until 90 days after the expiration of the applicable statute of limitations for the Tax giving rise to the claim for indemnification. (e) The Closing Statement of Net Assets is to reflect (i) prepaid Property Taxes as an asset and (ii) accrued Property Taxes as a liability. The parties agree that all Property Taxes imposed on or with respect to the Purchased Assets or the Acquired Company will be pro-rated as of the Closing Date and that, notwithstanding any ~~Taxes suffered or incurred~~ other provision of this Agreement, the economic burden of any such Property Tax will be borne by Seller for all Pre-Closing Tax Periods (including the portion of a Straddle Period through the Closing Date) and by Purchaser for all Post-Closing Tax Periods (including the portion of a Straddle Period after the Closing Date) . Accordingly, notwithstanding any ~~Conveyed Subsidiary~~ other provision of this Agreement, (i) if Seller or any ~~Subsidiary thereof~~of its Affiliates pays (either before or after Closing) ~~that was not wholly owned by~~ any such Property Tax with respect to a Post-Closing Tax Period, Purchaser will reimburse Seller Parent (directly or indirectly) as of immediately prior to the Closing, the indemnification obligations of Seller Parent pursuant to Section 6.5(d)(i) in respect of such Taxes (or related costs and expenses) shall in no event exceed an amount equal to (A) upon demand for the amount of such ~~Taxes~~ Property Tax to the extent it is not reflected as an asset on the Closing Statement of Net Assets; and (~~or related costs and expenses~~ii) ~~for which the~~ if Purchaser ~~Tax Indemnified Parties would otherwise be entitled to indemnification pursuant to Section 6.5(d), as if such Conveyed Subsidiary (~~or any ~~Subsidiary thereof~~of its Affiliates pays (after Closing) ~~were wholly owned by Seller Parent, multiplied by (B) the direct and indirect percentage ownership of Seller Parent of~~ any such ~~Conveyed Subsidiary (or Subsidiary thereof) as of immediately prior to the Closing. With~~ Property Tax with respect to ~~any Taxes suffered or incurred by any Subsidiary of~~ a Pre-Closing Tax Period, Seller will reimburse Purchaser Parent (including Purchaser and its Subsidiaries) that was not wholly owned by Purchaser Parent (directly or indirectly) as of immediately prior to the Closing, the indemnification obligations of Purchaser Parent pursuant to Section 6.5(d)(ii) in respect of such Taxes (or related costs and expenses) shall in no event exceed an amount equal to (A) upon demand for the amount of such ~~Taxes (or related costs and expenses) for which the Purchaser~~ Property Tax Indemnified Parties would otherwise be entitled to indemnification pursuant to Section 6.5(d), as if such Subsidiary were wholly owned by Purchaser Parent, multiplied by (B) the direct and indirect percentage ownership of Purchaser Parent of such Subsidiary as of immediately prior to the Closing. (vi) Without duplication to any other amounts paid pursuant to this Section 6.5: (A) Within thirty (30) days following the filing of any Income Tax Return for any Conveyed Subsidiary (or any Subsidiary thereof), extent it is not reflected as a liability on the one hand, or Purchaser (or any Subsidiary thereof, other than the Conveyed Subsidiaries and their Subsidiaries), on the other hand, for any Pre-Closing Tax Period or for any Straddle Period, Seller Parent or Purchaser Parent shall (or Purchaser Parent shall cause Purchaser to) prepare a statement showing (i) the amount of Income Taxes shown as due on such filed Income Tax Return with respect to the relevant Pre-Closing Tax Period or the portion of any Straddle Period ending on and including the Closing Date (the “Final Pre-Closing Income Tax Amount”) and (ii) the amount of the Seller Accrued Income Taxes or Purchaser Accrued Income Taxes, as applicable, attributable to such Income Tax Return as reflected on the Final Closing Statement ~~(the “Pre-Closing Income Tax Amount”) and deliver such statement to Seller Parent and Purchaser Parent, as applicable. Purchaser Parent or Seller Parent, as applicable, shall have a period~~ of fifteen (15) Business Days to provide comments to a schedule prepared (or caused to be prepared) by Seller Parent or Purchaser Parent, respectively. If Purchaser Parent or Seller Parent, as applicable, do not provide any comments to Seller Parent or Purchaser Parent, respectively, during such period, the statement as so prepared shall be final and bindingNet Assets. (B) In the event the Final Pre-Closing Income Tax Amount with respect to any Income Tax Return is less than the amount of the Pre-Closing Income Tax Amount attributable to such Income Tax Return that was included on the Final Closing Statement, the Purchaser shall within five (5) Business Days following the finalization of the Final Pre-Closing Income Tax Amount hereunder (i) pay to Seller Parent the amount of such difference with respect to a Conveyed Subsidiary and their Subsidiaries and (ii) pay to Purchaser Parent the amount of such difference with respect to Purchaser and its Subsidiaries. (vii) The Parties shall use reasonable best efforts to structure any indemnity payment, true-up payment, or payment in respect of Tax Benefits made by any Party pursuant to this Agreement (including pursuant to this Section 6.5, Section 6.6 and Article VII) and any payment made by Purchaser Parent to Purchaser pursuant to Section 2.8 or Section 2.9 in the manner set forth in Clause 10 of the Structuring Considerations Agreement. The Parties shall use reasonable best efforts to structure as a special dividend any payment made by Purchaser to Purchaser Parent pursuant to Section 2.8, Section 2.9 or this Section 6.5.

Appears in 1 contract

Sources: Stock and Asset Purchase Agreement (Dana Corp)

Tax Indemnification. (ia) ~~Subject to Section 6.5(d)(v), from~~ From and ~~after the Closing, Seller Parent agrees to indemnify and hold harmless Purchaser and its Subsidiaries (including the Conveyed Subsidiaries and their Subsidiaries~~ after the Closing Date, Seller shall indemnify the Purchaser Indemnified Persons against and hold them harmless from any Losses arising from, relating to or otherwise in respect of, except as provided in Section 11.07(b), (i) ~~(collectively,~~ any Taxes imposed on the ~~“Purchaser Tax Indemnified Parties”) from and against all liability, without duplication, for (1) Taxes of~~ Business or the ~~Conveyed Subsidiaries and their Subsidiaries for~~ Transferred Entities with respect to any Pre-Closing Tax Period (including ~~any Taxes payable in respect of an election under Section 965(h)~~ as a result of the ~~Code~~Pre-Closing Restructuring), (2ii) any Taxes that are Retained Liabilities hereunder, (iii) any Taxes imposed on a Transferred Entity (including any Taxes imposed under Treasury Regulations Section 1.1502-6 or any corresponding provision of state, local or non-U.S. Tax Law) as a result of its inclusion with Seller, any ~~Seller~~ Subsidiary Transferor or any other Person (other than a Transferred Entity) in a consolidated, combined or unitary Tax group, for any Transfer Taxes and VAT for which Purchaser is responsible hereunder) including, Taxes (other than Taxes of the Conveyed Subsidiaries and their Subsidiaries) imposed with respect to, arising out of or relating to the Purchased Assets or the Business for a Pre-Closing Tax Period, (3iv) any Taxes ~~of any Person (other than the Conveyed Subsidiaries and their Subsidiaries) for a Pre-Closing Tax Period~~ for which ~~any Conveyed Subsidiary (~~a Transferred Entity, Purchaser or any ~~Subsidiary thereof)~~ Affiliate of Purchaser is liable ~~under Treasury Regulation Section 1.1502-6 (or a similar provision of state, local or foreign Law), or~~ as a transferee or successor or by Contract (other than Contracts that do not primarily relate ~~primarily~~ to Taxes), ~~(4)~~ in each case, to the extent such Taxes ~~arising out~~ are attributable to the operation of the Business or ~~resulting from any breach~~ ownership of ~~any covenant or agreement of Seller Parent or any of its Affiliates contained in this Agreement~~the Transferred Assets prior to the Closing, (5v) any Taxes attributable to any “subpart F income” (including any increase thereto under Section 965 of the Code) required to be included in income in a Post-Closing Tax Period solely to the extent such subpart F income is attributable to income or earnings of a Transferred Entity for a Pre-Closing Tax Period ~~imposed on~~ (~~x) any transaction effected pursuant to~~ determined in accordance with the principles set forth in Section ~~2.3(b~~8.03(a)), (y) any settlement of any intercompany accounts of Seller Parent or its Subsidiaries pursuant to Section 6.7, or (z) any transaction or step forming part of the Seller Internal Restructurings, (6) Transfer Taxes for which Seller Parent is responsible under Section 6.5(j), (7) Taxes required to be deducted or withheld with respect to the payment of the Purchase Consideration or any amounts payable to Seller Parent pursuant to Section 2.8 or Section 2.9, including any penalties imposed on Purchaser as a result of Purchaser’s failure to deduct or withhold but excluding any such ~~amounts~~ inclusion that Purchaser (or a Purchaser Designated Affiliate) was permitted to withhold under Section 2.10 (in each case, subject to Purchaser’s compliance with the notice and cooperation requirements of Section 2.10 and except for any such Taxes (and any related penalties) required to be deducted or withheld solely as a result of any assignment by Purchaser or its Affiliates for which Purchaser is responsible pursuant to Section 10.3), (8) Taxes arising from any breach of any representation or warranty contained in Section 4.16(k), (9) Taxes arising as a result of any Conveyed Subsidiary or any Subsidiary of any Conveyed Subsidiary at any time ceasing to be a member of a group for the purposes of any Tax, of which group Seller Parent or any Subsidiary of Seller Parent is or was also a member and (10) any costs and expenses, including reasonable legal and accounting fees and expenses, attributable to any item described in clauses (1) through (9) (any such Taxes for which Seller Parent is responsible pursuant to this Section 6.5(d)(i), subject to the following proviso, “Seller Indemnified Taxes”); provided that Seller Parent shall not be required to indemnify or hold harmless any Purchaser Tax Indemnified Party from and against any liability pursuant to this Section 6.5(d)(i) for (A) Taxes attributable to any action actions taken after the Closing by Purchaser, any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries), or any transferee of Purchaser or any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries), other than any such action that (1) is in the ordinary course of business, (2) is expressly permitted or contemplated by this Agreement, or (3) is required to be taken in order to comply with applicable Law or as a result of a change in applicable Law (a “Purchaser Tax Act”), (B) Taxes that were reflected, accrued or reserved for in the Final Closing Statement, Final Business Working Capital, or Final Business Net Cash, (C) Income Taxes to the extent that a Conveyed Subsidiary or any Subsidiary thereof had any Tax Assets as of the close of business on the Closing Date that were available, or would have been available but for their prior utilization by Purchaser or any of its Affiliates ~~(including the Conveyed Subsidiaries and their Subsidiaries~~ after the Closing, and (vi) any Taxes attributable to ~~offset~~ any breach or violation of any of Seller’s representations set forth in Section 4.15. (b) From and after the Closing Date, Purchaser and the Transferred Entities shall, jointly and severally, indemnify the Seller Indemnified Persons and hold them harmless from any Losses arising from, relating to or otherwise ~~reduce the applicable Tax Liability~~ in respect of (i) any Taxes imposed on the Transferred Assets, the Business or the Transferred Entities (other than, for the avoidance of doubt, as contemplated by Section 11.01(a)(vi)) with respect to any Post-Closing Tax Period, except to the extent such ~~Income~~ Taxes are attributable to a breach of any representation set forth in Section 4.15(k) or Section 4.15(l) or any inaccuracy in Section 4.15(h) of the Seller Disclosure Letter (~~except~~ as such Section of the Seller Disclosure Letter may be revised pursuant to Section 8.06(c)), (ii) any ~~Tax Asset reflected as an asset in the Final Closing Statement and~~ Taxes taken into account in the ~~calculation of the Final Business Working Capital or the Final Business Net Cash), or (D) Taxes for which Purchaser Parent is responsible under~~ adjustment described in Section 6.5(d)(ii). (ii) Subject to Section 6.5(d)(v), from and after the Closing, Purchaser Parent shall indemnify and hold harmless the Purchaser Tax Indemnified Parties from and against all liability, without duplication, for (1) all Taxes of Purchaser Parent and its Affiliates (other than Purchaser and its Subsidiaries) for any Tax period (other than Transfer Taxes and VAT for which Seller Parent is responsible hereunder)2.04, (2iii) any Taxes of Purchaser and its Subsidiaries (other than the Conveyed Subsidiaries and their Subsidiaries) for any Pre-Closing Tax Period, (3) Taxes of any Person for a Pre-Closing Tax Period for which Purchaser (or any Subsidiary thereof other than any Conveyed Subsidiaries and their Subsidiaries) is liable under Treasury Regulation Section 1.1502-6 (or a similar provision of state, local or foreign Law), or as a transferee or successor or by Contract (other than Contracts that do not relate primarily attributable to ~~Taxes), (4) Taxes arising out of or resulting from~~ any breach or nonperformance of Purchaser’s obligations pursuant to Article VIII, and (iv) any ~~covenant or agreement of Purchaser Parent, Purchaser or their respective Affiliates contained in this Agreement, (5)~~ Transfer Taxes for which Purchaser ~~Parent~~ is ~~responsible~~ liable under Section ~~6.5(j)~~8.01, (6) Taxes arising from any breach of any representation or warranty in Section 5.17(k), (7) Taxes for a Pre-Closing Tax Period imposed on (x) any settlement of any intercompany accounts of Purchaser or any Subsidiary of Purchaser, on the one hand, and Purchaser Parent or any Subsidiary of Purchaser Parent (other than Purchaser and its Subsidiaries), on the other hand, pursuant to Section 6.7 or (y) any transaction or step forming part of the Purchaser Internal Restructurings, (8) Taxes required to be deducted or withheld with respect to any amounts payable to Purchaser Parent pursuant to Section 2.8 or Section 2.9, including any penalties imposed on Purchaser as a result of Purchaser’s failure to deduct or withhold any such amounts, (9) Taxes arising as a result of Purchaser or any Subsidiary of Purchaser (other than any Conveyed Subsidiary or a Subsidiary thereof) at any time ceasing to be a member of a group for the purposes of any Tax, of which group Purchaser Parent or any Subsidiary of Purchaser Parent (other than Purchaser or any Subsidiary of Purchaser) is or was also a member and (10) any costs and expenses, including reasonable legal and accounting fees and expenses, attributable to any item described in clauses (1) through (9) (any such Taxes for which Purchaser Parent is responsible pursuant to provided that this Section ~~6.5(d)(ii), subject to the following proviso, “Purchaser Parent Indemnified Taxes”); provided that Purchaser Parent~~ 11.07(b) shall not be ~~required to indemnify or hold harmless~~ construed as limiting any Purchaser Tax Indemnified Party from and against any liability for (A) Taxes attributable to any action taken after the Closing by Seller Parent or any of its Affiliates, other than any such action that (1) is indemnity set forth in the ordinary course of business, (2) is expressly permitted or contemplated by this Agreement, or (3) is required to be taken in order to comply with applicable Law or as a result of a change in applicable Law (a “Seller Tax Act”), (B) Taxes that were reflected, accrued or reserved for in the Final Closing Statement, Final Purchaser Working Capital or the Final Purchaser Net Cash, (C) Income Taxes to the extent that Purchaser or any Subsidiary thereof had any Tax Assets as of the close of business on the Closing Date that were available, or would have been available but for their prior utilization by Purchaser or any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries after the Closing), to offset or otherwise reduce the applicable Tax Liability in respect of such Income Taxes (except any Tax Asset reflected as an asset in the Final Closing Statement and taken into account in the calculation of the Final Purchaser Working Capital or the Final Purchaser Net Cash), or (D) Taxes for which Seller Parent is responsible under Section 6.5(d)(i). (iii) To the extent permitted or required by applicable Law, the taxable year of each of the Conveyed Subsidiaries and their Subsidiaries and any Subsidiary of Purchaser that includes the Closing Date shall be treated as closing on (and including) the Closing Date. Otherwise, for purposes of this Agreement, in the case of any Straddle Period: (A) Property Taxes allocable to the Pre-Closing Tax Period shall be computed based upon the ratio of the number of days in the Pre-Closing Tax Period to the number of days in the entire Straddle Period; and (B) Taxes (other than Property Taxes) allocable to the Pre-Closing Tax Period shall be computed as if such Tax period ended as of the close of business on the Closing Date and, in the case of any Taxes of Conveyed Subsidiaries (and their Subsidiaries) and Seller Parent, or in the case of any Taxes of Purchaser Parent and Purchaser (and their Subsidiaries prior to the Closing), in each case attributable to the ownership of any equity interest in any partnership or other “flow through” entity for tax purposes (including of any “controlled foreign corporation,” as defined under the Code) as if the Tax period of such partnership or other “flow through” entity ended as of the close of business on the Closing Date with the Taxes of such entity for the Pre-Closing Tax Period deemed to include any Taxes on the allocable income of such entity in respect of such Tax period; provided that exemptions, allowances or deductions that are calculated on an annual basis (including depreciation and amortization deductions) shall be allocated between the period ending on the Closing Date and the period beginning after the Closing Date in proportion to the number of days in each period. (iv) Any claim for indemnification under this Section 6.5(d) shall be made in writing upon the party from whom indemnification is sought, and shall specify in reasonable detail the basis for such claim. Any indemnity payment required to be made pursuant to this Section 6.5(d) shall be made within thirty (30) days after the indemnified party makes written demand upon the indemnifying party, but in no case earlier than five (5) Business Days prior to the date on which the relevant Taxes are required to be paid to the applicable Taxing Authority. clause (v) ~~With respect to any Taxes suffered or incurred by any Conveyed Subsidiary (or any Subsidiary thereof~~of Section 11.07(a) ~~that was not wholly owned by Seller Parent (directly or indirectly) as of immediately prior to the Closing, the indemnification obligations of Seller Parent pursuant to~~ and Section ~~6.5(d)(i) in respect of such Taxes (or related costs and expenses~~11.07(b)(i) shall not be construed as limiting any indemnity set forth in no event exceed an amount equal to (A) the amount of such Taxes (or related costs and expenses) for which the Purchaser Tax Indemnified Parties would otherwise be entitled to indemnification pursuant to Section 6.5(d), as if such Conveyed Subsidiary (or any Subsidiary thereof) were wholly owned by Seller Parent, multiplied by (B) the direct and indirect percentage ownership of Seller Parent of such Conveyed Subsidiary (or Subsidiary thereof) as of immediately prior to the Closing. With respect to any Taxes suffered or incurred by any Subsidiary of Purchaser Parent (including Purchaser and its Subsidiaries) that was not wholly owned by Purchaser Parent (directly or indirectly) as of immediately prior to the Closing, the indemnification obligations of Purchaser Parent pursuant to Section 6.5(d)(ii) in respect of such Taxes (or related costs and expenses) shall in no event exceed an amount equal to (A) the amount of such Taxes (or related costs and expenses) for which the Purchaser Tax Indemnified Parties would otherwise be entitled to indemnification pursuant to Section 6.5(d), as if such Subsidiary were wholly owned by Purchaser Parent, multiplied by (B) the direct and indirect percentage ownership of Purchaser Parent of such Subsidiary as of immediately prior to the Closing. (vi) Without duplication to any other amounts paid pursuant to this Section 6.5: (A) Within thirty (30) days following the filing of any Income Tax Return for any Conveyed Subsidiary (or any Subsidiary thereof), on the one hand, or Purchaser (or any Subsidiary thereof, other than the Conveyed Subsidiaries and their Subsidiaries), on the other hand, for any Pre-Closing Tax Period or for any Straddle Period, Seller Parent or Purchaser Parent shall (or Purchaser Parent shall cause Purchaser to) prepare a statement showing (i) the amount of Income Taxes shown as due on such filed Income Tax Return with respect to the relevant Pre-Closing Tax Period or the portion of any Straddle Period ending on and including the Closing Date (the “Final Pre-Closing Income Tax Amount”) and (ii) the amount of the Seller Accrued Income Taxes or Purchaser Accrued Income Taxes, as applicable, attributable to such Income Tax Return as reflected on the Final Closing Statement (the “Pre-Closing Income Tax Amount”) and deliver such statement to Seller Parent and Purchaser Parent, as applicable. Purchaser Parent or Seller Parent, as applicable, shall have a period of fifteen (15) Business Days to provide comments to a schedule prepared (or caused to be prepared) by Seller Parent or Purchaser Parent, respectively. If Purchaser Parent or Seller Parent, as applicable, do not provide any comments to Seller Parent or Purchaser Parent, respectively, during such period, the statement as so prepared shall be final and binding. (B) In the event the Final Pre-Closing Income Tax Amount with respect to any Income Tax Return is less than the amount of the Pre-Closing Income Tax Amount attributable to such Income Tax Return that was included on the Final Closing Statement, the Purchaser shall within five (5) Business Days following the finalization of the Final Pre-Closing Income Tax Amount hereunder (i) pay to Seller Parent the amount of such difference with respect to a Conveyed Subsidiary and their Subsidiaries and (ii) pay to Purchaser Parent the amount of such difference with respect to Purchaser and its Subsidiaries. clause (vii) ~~The Parties shall use reasonable best efforts to structure any indemnity payment, true-up payment, or payment in respect~~ of ~~Tax Benefits made by any Party pursuant to this Agreement (including pursuant to this~~ Section 6.5, Section 6.6 and Article VII) and any payment made by Purchaser Parent to Purchaser pursuant to Section 2.8 or Section 2.9 in the manner set forth in Clause 10 of the Structuring Considerations Agreement. The Parties shall use reasonable best efforts to structure as a special dividend any payment made by Purchaser to Purchaser Parent pursuant to Section 2.8, Section 2.9 or this Section 6.511.07(a).

Appears in 1 contract

Sources: Acquisition Agreement (Energizer Holdings, Inc.)

Tax Indemnification. (i) ~~Subject to Section 6.5(d)(v), from and after the Closing,~~ The Seller ~~Parent agrees to~~ shall indemnify and hold ~~harmless Purchaser~~ the Buyer and its ~~Subsidiaries~~ affiliates harmless from (~~including the Conveyed Subsidiaries and their Subsidiaries after the Closing Date~~A) ~~(collectively, the “Purchaser Tax Indemnified Parties”) from and against~~ all ~~liability, without duplication,~~ liability for ~~(1)~~ Taxes of the ~~Conveyed~~ Sold Companies, the Subsidiaries and ~~their Subsidiaries for~~ the Venture Entities with regard to any ~~Pre-~~and all taxable periods of such Persons and Seller ending on or before the Closing ~~Tax Period (including any Taxes payable in respect of an election under Section 965(h) of~~ Date and the ~~Code), (2) Taxes~~ portion ending on the Closing Date of any ~~Seller~~ taxable period that includes (~~other than any Transfer Taxes and VAT for which Purchaser is responsible hereunder~~but does not end on) ~~including, Taxes~~ such day (~~other than Taxes of~~ the ~~Conveyed Subsidiaries and their Subsidiaries) imposed with respect to, arising out of or relating to the Purchased Assets or the Business for a~~ “Pre-Closing Tax Period”), (3B) all Taxes arising out of or related to a breach of any ~~Person~~ of the representations and warranties set forth in Section 3.12 of this Agreement, and (~~other than the Conveyed Subsidiaries and their Subsidiaries~~C) ~~for~~ all liability (as a ~~Pre~~result of Treasury Regulation §1.1502-~~Closing Tax Period for which any Conveyed Subsidiary (~~6(a), or any ~~Subsidiary thereof) is liable under Treasury Regulation Section 1.1502-6 (or a~~ similar provision of state, local or foreign ~~Law),~~ law) for Taxes of the Seller or ~~as a transferee or successor or by Contract~~ any other person (other than ~~Contracts~~ the Sold Companies, the Subsidiaries or the Venture Entities) which is or has been affiliated with any of the Sold Companies, the Subsidiaries or the Venture Entities prior to Closing (including with regard to any audit of Seller which commences in 2003); provided, however, that do the Seller shall not ~~relate primarily~~ have any obligation under this Section 6.6(a)(i) to ~~Taxes~~indemnify the Buyer and its affiliates with respect to any of the Venture Entities (including, without limitation, with respect to a breach of representation contained in Section 3.12 as to such Venture Entity) for Taxes in excess of the Buyer’s share therein based on the Buyer’s percentage ownership interest in such Venture Entity. (ii) With respect to a taxable period which begins before and ends after the Closing Date (a “Straddle Period”), ~~(4)~~ the portion of such Taxes ~~arising out of or resulting from any breach of any covenant or agreement of Seller Parent or any of its Affiliates contained in this Agreement, (5) Taxes for a~~ attributable to the Pre-Closing Tax Period imposed on (x) any transaction effected pursuant to Section 2.3(b), (y) any settlement of any intercompany accounts of Seller Parent or its Subsidiaries pursuant to Section 6.7, or (z) any transaction or step forming part of shall be calculated as though the Seller Internal Restructurings, (6) Transfer Taxes for which Seller Parent is responsible under Section 6.5(j), (7) Taxes required to be deducted or withheld with respect to the payment of the Purchase Consideration or any amounts payable to Seller Parent pursuant to Section 2.8 or Section 2.9, including any penalties imposed on Purchaser as a result of Purchaser’s failure to deduct or withhold any such amounts that Purchaser (or a Purchaser Designated Affiliate) was permitted to withhold under Section 2.10 (in each case, subject to Purchaser’s compliance with the notice and cooperation requirements of Section 2.10 and except for any such Taxes (and any related penalties) required to be deducted or withheld solely as a result of any assignment by Purchaser or its Affiliates for which Purchaser is responsible pursuant to Section 10.3), (8) Taxes arising from any breach of any representation or warranty contained in Section 4.16(k), (9) Taxes arising as a result of any Conveyed Subsidiary or any Subsidiary of any Conveyed Subsidiary at any time ceasing to be a member of a group for the purposes of any Tax, of which group Seller Parent or any Subsidiary of Seller Parent is or was also a member and (10) any costs and expenses, including reasonable legal and accounting fees and expenses, attributable to any item described in clauses (1) through (9) (any such Taxes for which Seller Parent is responsible pursuant to this Section 6.5(d)(i), subject to the following proviso, “Seller Indemnified Taxes”); provided that Seller Parent shall not be required to indemnify or hold harmless any Purchaser Tax Indemnified Party from and against any liability pursuant to this Section 6.5(d)(i) for (A) Taxes attributable to any action taken after the Closing by Purchaser, any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries), or any transferee of Purchaser or any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries), other than any such action that (1) is in the ordinary course of business, (2) is expressly permitted or contemplated by this Agreement, or (3) is required to be taken in order to comply with applicable Law or as a result of a change in applicable Law (a “Purchaser Tax Act”), (B) Taxes that were reflected, accrued or reserved for in the Final Closing Statement, Final Business Working Capital, or Final Business Net Cash, (C) Income Taxes to the extent that a Conveyed Subsidiary or any Subsidiary thereof had any Tax Assets tax year terminated as of the close of business on the Closing ~~Date~~ Date; provided, however, that were available, or would have been available but for their prior utilization by Purchaser or any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries after the Closing) to offset or otherwise reduce the applicable Tax Liability in respect of such Income Taxes (except any Tax Asset reflected as an asset in the Final Closing Statement and taken into account in the calculation of the Final Business Working Capital or the Final Business Net Cash), or (D) Taxes for which Purchaser Parent is responsible under Section 6.5(d)(ii). (ii) Subject to Section 6.5(d)(v), from and after the Closing, Purchaser Parent shall indemnify and hold harmless the Purchaser Tax Indemnified Parties from and against all liability, without duplication, for (1) all Taxes of Purchaser Parent and its Affiliates (other than Purchaser and its Subsidiaries) for any Tax period (other than Transfer Taxes and VAT for which Seller Parent is responsible hereunder), (2) Taxes of Purchaser and its Subsidiaries (other than the Conveyed Subsidiaries and their Subsidiaries) for any Pre-Closing Tax Period, (3) Taxes of any Person for a Pre-Closing Tax Period for which Purchaser (or any Subsidiary thereof other than any Conveyed Subsidiaries and their Subsidiaries) is liable under Treasury Regulation Section 1.1502-6 (or a similar provision of state, local or foreign Law), or as a transferee or successor or by Contract (other than Contracts that do not relate primarily to Taxes), (4) Taxes arising out of or resulting from any breach of any covenant or agreement of Purchaser Parent, Purchaser or their respective Affiliates contained in this Agreement, (5) Transfer Taxes for which Purchaser Parent is responsible under Section 6.5(j), (6) Taxes arising from any breach of any representation or warranty in Section 5.17(k), (7) Taxes for a Pre-Closing Tax Period imposed on (x) any settlement of any intercompany accounts of Purchaser or any Subsidiary of Purchaser, on the one hand, and Purchaser Parent or any Subsidiary of Purchaser Parent (other than Purchaser and its Subsidiaries), on the other hand, pursuant to Section 6.7 or (y) any transaction or step forming part of the Purchaser Internal Restructurings, (8) Taxes required to be deducted or withheld with respect to any amounts payable to Purchaser Parent pursuant to Section 2.8 or Section 2.9, including any penalties imposed on Purchaser as a result of Purchaser’s failure to deduct or withhold any such amounts, (9) Taxes arising as a result of Purchaser or any Subsidiary of Purchaser (other than any Conveyed Subsidiary or a Subsidiary thereof) at any time ceasing to be a member of a group for the purposes of any Tax, of which group Purchaser Parent or any Subsidiary of Purchaser Parent (other than Purchaser or any Subsidiary of Purchaser) is or was also a member and (10) any costs and expenses, including reasonable legal and accounting fees and expenses, attributable to any item described in clauses (1) through (9) (any such Taxes for which Purchaser Parent is responsible pursuant to this Section 6.5(d)(ii), subject to the following proviso, “Purchaser Parent Indemnified Taxes”); provided that Purchaser Parent shall not be required to indemnify or hold harmless any Purchaser Tax Indemnified Party from and against any liability for (A) Taxes attributable to any action taken after the Closing by Seller Parent or any of its Affiliates, other than any such action that (1) is in the ordinary course of business, (2) is expressly permitted or contemplated by this Agreement, or (3) is required to be taken in order to comply with applicable Law or as a result of a change in applicable Law (a “Seller Tax Act”), (B) Taxes that were reflected, accrued or reserved for in the Final Closing Statement, Final Purchaser Working Capital or the Final Purchaser Net Cash, (C) Income Taxes to the extent that Purchaser or any Subsidiary thereof had any Tax Assets as of the close of business on the Closing Date that were available, or would have been available but for their prior utilization by Purchaser or any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries after the Closing), to offset or otherwise reduce the applicable Tax Liability in respect of such Income Taxes (except any Tax Asset reflected as an asset in the Final Closing Statement and taken into account in the calculation of the Final Purchaser Working Capital or the Final Purchaser Net Cash), or (D) Taxes for which Seller Parent is responsible under Section 6.5(d)(i). (iii) To the extent permitted or required by applicable Law, the taxable year of each of the Conveyed Subsidiaries and their Subsidiaries and any Subsidiary of Purchaser that includes the Closing Date shall be treated as closing on (and including) the Closing Date. Otherwise, for purposes of this Agreement, in the case of ~~any Straddle Period: (A) Property~~ a Tax not based on income, receipts, proceeds, profits or similar items, such Taxes ~~allocable~~ shall be equal to the ~~Pre-Closing~~ amount of Tax ~~Period~~ for the taxable period multiplied by a fraction, the numerator of which shall be ~~computed based upon~~ the ~~ratio~~ number of days from the beginning of the taxable period through the Closing Date and the denominator of which shall be the number of days in the Pre-Closing Tax Period to the number of days in the entire Straddle Period; and (B) Taxes (other than Property Taxes) allocable to the Pre-Closing Tax Period shall be computed as if such Tax period ended as of the close of business on the Closing Date and, in the case of any Taxes of Conveyed Subsidiaries (and their Subsidiaries) and Seller Parent, or in the case of any Taxes of Purchaser Parent and Purchaser (and their Subsidiaries prior to the Closing), in each case attributable to the ownership of any equity interest in any partnership or other “flow through” entity for tax purposes (including of any “controlled foreign corporation,” as defined under the Code) as if the Tax period of such partnership or other “flow through” entity ended as of the close of business on the Closing Date with the Taxes of such entity for the Pre-Closing Tax Period deemed to include any Taxes on the allocable income of such entity in respect of such Tax period; provided that exemptions, allowances or deductions that are calculated on an annual basis (including depreciation and amortization deductions) shall be allocated between the period ending on the Closing Date and the period beginning after the Closing Date in proportion to the number of days in each taxable period. (ivb) ~~Any claim~~ The Buyer and its affiliates shall indemnify the Seller and its affiliates for ~~indemnification under this Section 6.5(d) shall be made in writing upon~~ the party from whom indemnification is sought, and shall specify in reasonable detail the basis for such claim. Any indemnity payment required to be made pursuant to this Section 6.5(d) shall be made within thirty (30) days after the indemnified party makes written demand upon the indemnifying party, but in no case earlier than five (5) Business Days prior to the date on which the relevant Taxes are required to be paid to the applicable Taxing Authority. (v) With respect to amount of any Taxes ~~suffered or~~ incurred by ~~any Conveyed Subsidiary (or any Subsidiary thereof)~~ the Seller and its affiliates resulting from the consummation of the Restructuring Transactions that ~~was not wholly owned by Seller Parent (directly or indirectly) as~~ are in excess of immediately prior to the Closing, the indemnification obligations of Seller Parent pursuant to Section 6.5(d)(i) in respect of such Taxes (or related costs and expenses) shall in no event exceed an amount equal to (A) the amount of such Taxes ~~(or related costs~~ that would have been borne by the Seller and ~~expenses) for which the Purchaser Tax Indemnified Parties would otherwise be entitled to indemnification~~ its affiliates pursuant to ~~Section 6.5(d), as if such Conveyed Subsidiary (or any Subsidiary thereof) were wholly owned by Seller Parent, multiplied by (B)~~ the direct and indirect percentage ownership of Seller Parent of such Conveyed Subsidiary (or Subsidiary thereof) as of immediately prior to the Closing. With respect to any Taxes suffered or incurred by any Subsidiary of Purchaser Parent (including Purchaser and its Subsidiaries) that was not wholly owned by Purchaser Parent (directly or indirectly) as of immediately prior to the Closing, the indemnification obligations of Purchaser Parent pursuant to Section 6.5(d)(ii) in respect of such Taxes (or related costs and expenses) shall in no event exceed an amount equal to (A) the amount of such Taxes (or related costs and expenses) for which the Purchaser Tax Indemnified Parties would otherwise be entitled to indemnification pursuant to Section 6.5(d), as if such Subsidiary were wholly owned by Purchaser Parent, multiplied by (B) the direct and indirect percentage ownership of Purchaser Parent of such Subsidiary as of immediately prior to the Closing. (vi) Without duplication to any other amounts paid pursuant to this Section 6.5: (A) Within thirty (30) days following the filing of any Income Tax Return for any Conveyed Subsidiary (or any Subsidiary thereof), on the one hand, or Purchaser (or any Subsidiary thereof, other than the Conveyed Subsidiaries and their Subsidiaries), on the other hand, for any Pre-Closing Tax Period or for any Straddle Period, Seller Parent or Purchaser Parent shall (or Purchaser Parent shall cause Purchaser to) prepare a statement showing (i) the amount of Income Taxes shown as due on such filed Income Tax Return with respect to the relevant Pre-Closing Tax Period or the portion of any Straddle Period ending on and including the Closing Date (the “Final Pre-Closing Income Tax Amount”) and (ii) the amount terms of the ~~Seller Accrued Income Taxes or Purchaser Accrued Income Taxes, as applicable, attributable to such Income Tax Return as reflected on~~ Original Stock Purchase Agreement if the ~~Final Closing Statement (~~transactions contemplated by the “Pre-Closing Income Tax Amount”) and deliver such statement to Seller Parent and Purchaser Parent, as applicable. Purchaser Parent or Seller Parent, as applicable, shall have a period of fifteen (15) Business Days to provide comments to a schedule prepared (or caused to be prepared) by Seller Parent or Purchaser Parent, respectively. If Purchaser Parent or Seller Parent, as applicable, do not provide any comments to Seller Parent or Purchaser Parent, respectively, during such period, the statement as so prepared shall be final and binding. (B) In the event the Final Pre-Closing Income Tax Amount with respect to any Income Tax Return is less than the amount of the Pre-Closing Income Tax Amount attributable to such Income Tax Return that was included on the Final Closing Statement, the Purchaser shall within five (5) Business Days following the finalization of the Final Pre-Closing Income Tax Amount hereunder (i) pay to Seller Parent the amount of such difference with respect to a Conveyed Subsidiary and their Subsidiaries and (ii) pay to Purchaser Parent the amount of such difference with respect to Purchaser and its Subsidiaries. (vii) The Parties shall use reasonable best efforts to structure any indemnity payment, true-up payment, or payment in respect of Tax Benefits made by any Party pursuant to this Original Stock Purchase Agreement (including without limitation the Buyer Elections, as defined in the Original Stock Purchase Agreement) had been consummated in a timely manner in accordance with the terms of such agreement. Notwithstanding anything in the foregoing to the contrary, the Buyer and its affiliates shall indemnify the Seller and its affiliates for the full amount of any Taxes in the nature of Transfer Taxes resulting from the consummation of the Restructuring Transactions that would not have been imposed if the Restructuring Transactions had not been undertaken, including, without limitation, the full amount of any stamp tax imposed on the transfer of Applied Industrial Materials (UK) Ltd. pursuant to this Section 6.5, Section 6.6 and Article VII) and any payment made by Purchaser Parent to Purchaser pursuant to Section 2.8 or Section 2.9 in the manner set forth in Clause 10 of the Structuring Considerations Agreement. The Parties shall use reasonable best efforts to structure as a special dividend any payment made by Purchaser to Purchaser Parent pursuant to Section 2.8, Section 2.9 or this Section 6.5Schedule 6.2.

Appears in 1 contract

Sources: Purchase Agreement and Plan of Merger (Walter Industries Inc /New/)

Tax Indemnification. (ia) ~~Subject to Section 6.5(d)(v), from and after~~ Following the Closing, Seller ~~Parent agrees to~~ shall indemnify ~~and hold harmless~~ Purchaser and its ~~Subsidiaries~~ Affiliates (including the ~~Conveyed Subsidiaries~~ Acquired Companies) and ~~their Subsidiaries after the Closing Date~~hold them harmless from: (i) ~~(collectively, the “Purchaser Tax Indemnified Parties”) from and against~~ all ~~liability, without duplication,~~ Liability for ~~(1)~~ Taxes of the ~~Conveyed Subsidiaries~~ Acquired Companies and ~~their Subsidiaries~~ for Taxes related to the Acquired Assets for any Pre-Closing Tax ~~Period~~ Period; (ii) all Liability for Taxes whenever arising out of actions taken pursuant to Section 6.09 or Section 6.10 or with respect to any distribution of property, receivables or cash made by any Acquired Company to Seller or any of its Subsidiaries prior to the Closing, including with respect to any resulting subpart F income; (iii) all Liability for Taxes ~~payable in respect of an election under Section 965(h)~~ as a result of the ~~Code),~~ sale of the Shares and the Acquired Assets and the 338(h)(10) Elections; (2iv) all Liability (as a result of Treasury Regulations Section 1.1502-6(a) or otherwise) for Taxes of any ~~Seller (other than~~ Person that is or was a member of any ~~Transfer Taxes and VAT for~~ affiliated, consolidated, combined or unitary group of which ~~Purchaser is responsible hereunder) including, Taxes (other than Taxes~~ any of the ~~Conveyed Subsidiaries and their Subsidiaries) imposed with respect to, arising out of~~ Acquired Companies is or ~~relating to the Purchased Assets or the Business for~~ was a member during any Pre-Closing Tax Period, ; (3v) Taxes of any Person (other than the Conveyed Subsidiaries and their Subsidiaries) for a Pre-Closing Tax Period for which any Conveyed Subsidiary (or any Subsidiary thereof) is liable under Treasury Regulation Section 1.1502-6 (or a similar provision of state, local or foreign Law), or as a transferee or successor or by Contract (other than Contracts that do not relate primarily to Taxes), (4) Taxes arising out of or resulting from any breach ~~of any covenant or agreement of~~ by Seller ~~Parent~~ or any of its Affiliates ~~contained~~ (other than, after the Closing, the Acquired Companies) of any representation set forth in ~~this Agreement,~~ Section 3.17 (5determined without regard to any Material Adverse Effect or materiality qualifiers) ~~Taxes for a Pre-Closing Tax Period imposed on (x)~~ or in any ~~transaction effected~~ certificate delivered pursuant to Section ~~2.3(b~~7.05 or any covenant contained in Article VII (other than any covenant contained in Section 7.09), ; (yvi) ~~any settlement of any intercompany accounts of Seller Parent~~ all Liability for Taxes realized by Purchaser or its ~~Subsidiaries pursuant to Section 6.7, or~~ Affiliates (zincluding after the Interim Date the Acquired Companies) any transaction or step forming part of the Seller Internal Restructurings, (6) Transfer Taxes for which Seller Parent is responsible under Section 6.5(j), (7) Taxes required to be deducted or withheld with respect to the payment of the Purchase Consideration or any amounts payable to Seller Parent pursuant to Section 2.8 or Section 2.9, including any penalties imposed on Purchaser as in a result of Purchaser’s failure to deduct or withhold any such amounts that Purchaser (or a Purchaser Designated Affiliate) was permitted to withhold under Section 2.10 (in each case, subject to Purchaser’s compliance with the notice and cooperation requirements of Section 2.10 and except for any such Taxes (and any related penalties) required to be deducted or withheld solely Post-Interim Date Tax Period as a result of any ~~assignment by~~ corresponding offsetting adjustment to any Taxes with respect to which Seller has indemnified Purchaser under Section 9.04 (subject to Section 9.07) in any audit, examination, suit, contest or other Tax proceeding of Seller or its Affiliates for which Purchaser is responsible pursuant to Section 10.3), (8) Taxes arising from any breach of any representation or warranty contained in Section 4.16(k), (9) Taxes arising as a result of any Conveyed Subsidiary or any Subsidiary of any Conveyed Subsidiary at any time ceasing to be a member of a group for the purposes of any Tax, of which group Seller Parent or any Subsidiary of Seller Parent is or was also a member Affiliates; and (10vii) ~~any costs and expenses, including~~ all Liability for reasonable legal ~~and accounting~~ fees and ~~expenses,~~ expenses attributable to any item ~~described~~ in clauses (1i) through (9vi). Notwithstanding the foregoing, Seller shall not have any indemnification obligation for (i) any Liability for Taxes attributable solely to a breach by Purchaser or any of its Affiliates (including, after the Closing, the Acquired Companies) of any ~~such Taxes for which Seller Parent is responsible pursuant to this~~ covenant contained in Article VII (other than any covenant contained in Section ~~6.5(d)(i), subject to the following proviso, “Seller Indemnified Taxes”~~7.09); ~~provided that Seller Parent shall not be required to indemnify or hold harmless~~ and (ii) any ~~Purchaser Tax Indemnified Party from and against any liability pursuant to this Section 6.5(d)(i)~~ Liability for ~~(A)~~ Taxes attributable to any action taken after the Closing by Purchaser, any of its Affiliates (including the ~~Conveyed Subsidiaries and their Subsidiaries),~~ Acquired Companies) or any transferee of Purchaser or any of its Affiliates (~~including the Conveyed Subsidiaries and their Subsidiaries),~~ other than any such action ~~that (1) is~~ expressly required by or permitted by this Agreement or any action taken, or any Liability for Taxes incurred, in the ordinary course of ~~business~~the Warner Businesses) (each, ~~(2) is expressly permitted or contemplated by this Agreement, or (3) is required to be taken in order to comply with applicable Law or as a result of a change in applicable Law (~~a “Purchaser Tax Act”). (b) Following the Closing, Purchaser shall, and shall cause each of the Acquired Companies to, indemnify Seller and its Affiliates and hold them harmless from: (Bi) all Liability for Taxes ~~that were reflected, accrued or reserved~~ of the Acquired Companies and for ~~in the Final Closing Statement, Final Business Working Capital, or Final Business Net Cash, (C) Income~~ Taxes related to the ~~extent that a Conveyed Subsidiary or~~ Acquired Assets for any ~~Subsidiary thereof had~~ Post-Closing Tax Period; (ii) all Liability for Taxes described in Section 9.07; (iii) any ~~Tax Assets as of the close of business on the Closing Date that were available, or would have been available but for their prior utilization~~ breach by Purchaser or any of its Affiliates (including the ~~Conveyed Subsidiaries~~ Acquired Companies) of any covenant contained in Article VII (other than any covenant contained in Section 7.09) or any Purchaser Tax Act; and ~~their Subsidiaries after the Closing~~(iv) all Liability for reasonable legal fees and expenses attributable to ~~offset or otherwise reduce the applicable Tax Liability~~ any item in ~~respect of such Income Taxes~~ clauses (~~except any Tax Asset reflected as an asset in the Final Closing Statement and taken into account in the calculation of the Final Business Working Capital or the Final Business Net Cash), or~~ i) through (~~D) Taxes for which Purchaser Parent is responsible under Section 6.5(d)(ii~~iii). (iic) Subject to Section ~~6.5(d)(v~~9.05(b), from and after the Closing, Purchaser Parent shall indemnify and hold harmless the Purchaser Tax Indemnified Parties from and against all liability, without duplication, for (1) all Taxes of Purchaser Parent and its Affiliates (other than Purchaser and its Subsidiaries) for any Tax period (other than Transfer Taxes and VAT for which Seller Parent is responsible hereunder), (2) Taxes of Purchaser and its Subsidiaries (other than the Conveyed Subsidiaries and their Subsidiaries) for any Pre-Closing Tax Period, (3) Taxes of any Person for a Pre-Closing Tax Period for which Purchaser (or any Subsidiary thereof other than any Conveyed Subsidiaries and their Subsidiaries) is liable under Treasury Regulation Section 1.1502-6 (or a similar provision of state, local or foreign Law), or as a transferee or successor or by Contract (other than Contracts that do not relate primarily to Taxes), (4) Taxes arising out of or resulting from any breach of any covenant or agreement of Purchaser Parent, Purchaser or their respective Affiliates contained in this Agreement, (5) Transfer Taxes for which Purchaser Parent is responsible under Section 6.5(j), (6) Taxes arising from any breach of any representation or warranty in Section 5.17(k), (7) Taxes for a Pre-Closing Tax Period imposed on (x) any settlement of any intercompany accounts of Purchaser or any Subsidiary of Purchaser, on the one hand, and Purchaser Parent or any Subsidiary of Purchaser Parent (other than Purchaser and its Subsidiaries), on the other hand, pursuant to Section 6.7 or (y) any transaction or step forming part of the Purchaser Internal Restructurings, (8) Taxes required to be deducted or withheld with respect to any amounts payable to Purchaser Parent pursuant to Section 2.8 or Section 2.9, including any penalties imposed on Purchaser as a result of Purchaser’s failure to deduct or withhold any such amounts, (9) Taxes arising as a result of Purchaser or any Subsidiary of Purchaser (other than any Conveyed Subsidiary or a Subsidiary thereof) at any time ceasing to be a member of a group for the purposes of any Tax, of which group Purchaser Parent or any Subsidiary of Purchaser Parent (other than Purchaser or any Subsidiary of Purchaser) is or was also a member and (10) any costs and expenses, including reasonable legal and accounting fees and expenses, attributable to any item described in clauses (1) through (9) (any such Taxes for which Purchaser Parent is responsible pursuant to this Section 6.5(d)(ii), subject to the following proviso, “Purchaser Parent Indemnified Taxes”); provided that Purchaser Parent shall not be required to indemnify or hold harmless any Purchaser Tax Indemnified Party from and against any liability for (A) Taxes attributable to any action taken after the Closing by Seller Parent or any of its Affiliates, other than any such action that (1) is in the ordinary course of business, (2) is expressly permitted or contemplated by this Agreement, or (3) is required to be taken in order to comply with applicable Law or as a result of a change in applicable Law (a “Seller Tax Act”), (B) Taxes that were reflected, accrued or reserved for in the Final Closing Statement, Final Purchaser Working Capital or the Final Purchaser Net Cash, (C) Income Taxes to the extent that Purchaser or any Subsidiary thereof had any Tax Assets as of the close of business on the Closing Date that were available, or would have been available but for their prior utilization by Purchaser or any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries after the Closing), to offset or otherwise reduce the applicable Tax Liability in respect of such Income Taxes (except any Tax Asset reflected as an asset in the Final Closing Statement and taken into account in the calculation of the Final Purchaser Working Capital or the Final Purchaser Net Cash), or (D) Taxes for which Seller Parent is responsible under Section 6.5(d)(i). (iii) To the extent permitted or required by applicable Law, the taxable year of each of the Conveyed Subsidiaries and their Subsidiaries and any Subsidiary of Purchaser that includes the Closing Date shall be treated as closing on (and including) the Closing Date. Otherwise, for purposes of this Agreement, in the case of any Straddle Period: (A) Property Taxes allocable to the Pre-Closing Tax Period shall be computed based upon the ratio of the number of days in the Pre-Closing Tax Period to the number of days in the entire Straddle Period; and (B) Taxes (other than Property Taxes) allocable to the Pre-Closing Tax Period shall be computed as if such Tax period ended as of the close of business on the Closing Date and, in the case of any Taxes of Conveyed Subsidiaries (and their Subsidiaries) and Seller Parent, or in the case of any Taxes of Purchaser Parent and Purchaser (and their Subsidiaries prior to the Closing), in each case attributable to the ownership of any equity interest in any partnership or other “flow through” entity for tax purposes (including of any “controlled foreign corporation,” as defined under the Code) as if the Tax period of such partnership or other “flow through” entity ended as of the close of business on the Closing Date with the Taxes of such entity for the Pre-Closing Tax Period deemed to include any Taxes on the allocable income of such entity in respect of such Tax period; provided that exemptions, allowances or deductions that are calculated on an annual basis (including depreciation and amortization deductions) shall be allocated between the period ending on the Closing Date and the period beginning after the Closing Date in proportion to the number of days in each period. (iv) Any claim for indemnification under this Section 6.5(d) shall be made in writing upon the party from whom indemnification is sought, and shall specify in reasonable detail the basis for such claim. Any indemnity payment ~~required~~ to be made ~~pursuant to this Section 6.5(d)~~ hereunder shall be ~~made~~ paid within ~~thirty (30)~~ 10 days after the ~~indemnified party~~ Indemnified Party makes written demand upon the ~~indemnifying party~~Indemnifying Party, but in no case earlier than five ~~(5) Business Days~~ business days prior to the date on which the relevant Taxes (including any estimated Tax payments), which Taxes shall be determined, in the case of Seller, without regard to any available Tax attributes (e.g., net operating losses) and, in the case of Purchaser, after taking into account any other available Tax attributes, are required to be paid to the ~~applicable~~ relevant Taxing Authority~~. (v) With~~ . To the extent indemnity is sought with respect to a particular Tax for a Pre-Closing Tax Period, estimated payments with respect to such Tax made by or on behalf of any ~~Taxes suffered~~ of the Acquired Companies on or ~~incurred by any Conveyed Subsidiary (or any Subsidiary thereof) that was not wholly owned by Seller Parent (directly or indirectly) as of immediately~~ prior to the ~~Closing, the indemnification obligations of Seller Parent pursuant~~ Closing Date shall be credited to ~~Section 6.5(d)(i)~~ any indemnity obligation in respect of such ~~Taxes (or related costs and expenses) shall in no event exceed an amount equal to (A)~~ Tax for the ~~amount of~~ Pre-Closing Tax Period; provided such ~~Taxes (or related costs and expenses)~~ estimated payments actually reduce the Liability for which the Purchaser Tax Indemnified Parties would otherwise be entitled to indemnification pursuant to Section 6.5(d), as if such Conveyed Subsidiary (or any Subsidiary thereof) were wholly owned by Seller Parent, multiplied by (B) the direct and indirect percentage ownership of Seller Parent of such Conveyed Subsidiary (or Subsidiary thereof) as of immediately prior to the Closing. With respect to any Taxes suffered or incurred by any Subsidiary of Purchaser Parent (including Purchaser and its Subsidiaries) that was not wholly owned by Purchaser Parent (directly or indirectly) as of immediately prior to the Closing, the indemnification obligations of Purchaser Parent pursuant to Section 6.5(d)(ii) in respect of such Taxes (or related costs and expenses) shall in no event exceed an amount equal to (A) the amount of such Taxes (or related costs and expenses) for which the Purchaser Tax Indemnified Parties would otherwise be entitled to indemnification pursuant to Section 6.5(d), as if such Subsidiary were wholly owned by Purchaser Parent, multiplied by (B) the direct and indirect percentage ownership of Purchaser Parent of such Subsidiary as of immediately prior to the ClosingTaxes. (vid) ~~Without duplication to any other amounts paid pursuant to this Section 6.5: (A) Within thirty (30) days following~~ In the ~~filing~~ case of any ~~Income~~ Straddle Interim Period or Straddle Period, as the case may be, (i) real, personal and intangible property Taxes (“Property Taxes”) shall be apportioned between the Pre-Interim Date Tax ~~Return for any Conveyed Subsidiary (~~Period and the Post-Interim Date Tax Period or ~~any Subsidiary thereof), on~~ the ~~one hand, or Purchaser (or any Subsidiary thereof, other than the Conveyed Subsidiaries and their Subsidiaries), on the other hand, for any~~ Pre-Closing Tax Period ~~or for any Straddle~~ and the Post-Closing Tax Period, ~~Seller Parent~~ as the case may be, on a daily pro-rata basis and (ii) all Taxes other than Property Taxes shall be apportioned between the Pre-Interim Date Tax Period and the Post-Interim Date Tax Period or ~~Purchaser Parent shall (or Purchaser Parent shall cause Purchaser to) prepare a statement showing (i)~~ the ~~amount of Income Taxes shown as due on such filed Income Tax Return with respect to the relevant~~ Pre-Closing Tax Period or and the ~~portion of any Straddle Period ending on and including the Closing Date (the “Final Pre~~Post-Closing ~~Income~~ Tax ~~Amount”) and (ii)~~ Period, as the ~~amount~~ case may be, on a closing of the Seller Accrued Income Taxes or Purchaser Accrued Income Taxes, as applicable, attributable to such Income Tax Return as reflected on the Final Closing Statement (the “Pre-Closing Income Tax Amount”) and deliver such statement to Seller Parent and Purchaser Parent, as applicable. Purchaser Parent or Seller Parent, as applicable, shall have a period of fifteen (15) Business Days to provide comments to a schedule prepared (or caused to be prepared) by Seller Parent or Purchaser Parent, respectively. If Purchaser Parent or Seller Parent, as applicable, do not provide any comments to Seller Parent or Purchaser Parent, respectively, during such period, the statement as so prepared shall be final and bindingbooks basis. (Be) ~~In the event the Final Pre-Closing Income Tax Amount with respect to any Income Tax Return is less than the amount~~ Reasonably promptly after a party becomes aware of the ~~Pre-Closing Income~~ existence of a Tax ~~Amount attributable~~ issue that may give rise to an indemnification claim under this Section 9.04 (a “Tax Controversy”) by it against the other party, the Indemnified Party shall notify the Indemnifying Party of the Tax issue, and thereafter shall promptly forward to the Indemnifying Party copies of notices and communications with a Taxing Authority relating to such ~~Income~~ Tax ~~Return~~ Controversy; provided, however, that ~~was included on~~ the ~~Final Closing Statement~~failure to forward such notices and communications to the Indemnifying Party shall not release the Indemnifying Party from any of its obligations under this Section 9.04 except to the extent (and only to the extent) the Indemnifying Party is actually and materially prejudiced by such failure. Except as provided in this Section 9.04(e), the ~~Purchaser shall within five~~ Indemnifying Party may elect to control, and may elect, at its sole cost and expense, to have sole discretion in handling, settling or contesting any audit inquiry, information request, audit proceeding, suit, contest or any other action (5a “Tax Proceeding”) ~~Business Days following the finalization of the Final Pre-Closing Income Tax Amount hereunder (i) pay to Seller Parent the amount of such difference~~ with respect to a ~~Conveyed Subsidiary~~ Tax Controversy for which it would be required to indemnify the other party if it acknowledges in writing that it has sole Liability for any Taxes that might arise therefrom or in connection therewith and ~~their Subsidiaries and (ii) pay~~ such as will not materially increase the unindemnified Liabilities for Taxes of the Indemnified Party; provided, however, that the Indemnifying Party shall keep the other party reasonably informed about such Tax Proceedings. Except as provided in this Section 9.04(e), if the Indemnifying Party does not elect to ~~Purchaser Parent the amount of such difference~~ control a Tax Proceeding with respect to ~~Purchaser and its Subsidiaries. (vii) The Parties shall use reasonable best efforts to structure any indemnity payment, true-up payment, or payment in respect of~~ a Tax ~~Benefits made by any Party pursuant to this Agreement (including~~ Controversy pursuant to this Section ~~6.5~~9.04(e), ~~Section 6.6~~ the Indemnified Party shall have sole discretion in handling, settling or contesting such Tax Proceeding (at the cost and ~~Article VII) and any payment made by Purchaser Parent~~ expense, to ~~Purchaser pursuant to Section 2.8 or Section 2.9 in~~ the ~~manner set forth in Clause 10~~ extent reasonable, of the ~~Structuring Considerations Agreement~~Indemnifying Party). The ~~Parties~~ Indemnifying Party shall ~~use reasonable best efforts~~ not settle any Tax proceeding with respect to ~~structure as~~ a ~~special dividend~~ Tax Controversy on a basis that would materially adversely affect the Indemnified Party without obtaining the Indemnified Party’s written consent, which consent shall not be unreasonably withheld. The Indemnified Party shall not settle any ~~payment made~~ Tax Controversy without obtaining the Indemnifying Party’s written consent, which shall not be unreasonably withheld. Any out-of-pocket expenses incurred by ~~Purchaser~~ the Indemnified Party in handling, settling or contesting a Tax Controversy that the Indemnifying Party has elected to ~~Purchaser Parent pursuant to Section 2.8, Section 2.9 or~~ control under this Section ~~6.5~~9.04 shall be borne by the Indemnified Party. Seller and Purchaser shall jointly control, and shall each have the right to participate in all activities and strategic decisions with respect to, any Tax Proceedings for which each party would be required to indemnify the other party with respect to one or more Tax issues. Seller may assume sole control of any such Tax proceeding for any Straddle Period if it acknowledges in writing that it has sole Liability for any Taxes that might arise in such proceeding. (f) The indemnification provisions in this Agreement relating to Taxes shall survive the Closing until 90 days after the expiration of the applicable statute of limitations (giving effect to any waiver, mitigation or extension thereof).

Appears in 1 contract

Sources: Purchase Agreement (CPP/Belwin, Inc)

Tax Indemnification. (i) ~~Subject to Section 6.5(d)(v)~~The Selling Shareholders shall, ~~from~~ jointly and ~~after~~ severally, indemnify the ~~Closing~~Buyer, ~~Seller Parent agrees to indemnify and hold harmless Purchaser~~ the Surviving Corporation and its Subsidiaries and Buyer’s Affiliates (~~including~~ each a “Buyer Tax Indemnified Party”) for (A) all Taxes of or imposed on the ~~Conveyed Subsidiaries and their Subsidiaries after~~ Company or any Subsidiary of the Company for all Taxable Periods ending on or prior to the Closing ~~Date)~~ Date and the portion of the Taxable Period through the end of the Closing Date (~~collectively~~any such period, ~~the~~ a “~~Purchaser Tax Indemnified Parties~~Pre-Closing Period”) ~~from~~ and ~~against all liability~~for the pre-Closing portion of any Straddle Period, specifically including, without ~~duplication~~limitation, ~~for~~ any Taxes imposed under Code Sections 1374 or 1375 (1) and any state or local statutes that are comparable or equivalent to Code Sections 1374 or 1375), all Taxes ~~of the Conveyed Subsidiaries and their Subsidiaries~~ for any Pre-Closing ~~Tax~~ Period ~~(including~~ or the pre-Closing portion of any Straddle Period that are attributable to the Section 338(h)(10) Election, all Taxes ~~payable in respect of an election under Section 965(h)~~ that are attributable to a breach of the ~~Code~~representations set forth in Sections 3.9(h) through 3.9(l), and any state Taxes that are required to be paid by the Company or any Subsidiary of the Company on behalf of the Selling Shareholders on a composite or other Tax Return to the extent that a Buyer Tax Indemnified Party has not otherwise received payment of such Taxes from the Selling Shareholders or been reimbursed by the Selling Shareholders for such Taxes; (2B) all Taxes of any ~~Seller (other than~~ member of an affiliated, consolidated, combined or unitary group of which the Company or any ~~Transfer Taxes and VAT for which Purchaser is responsible hereunder) including, Taxes (other than Taxes~~ Subsidiary of the ~~Conveyed Subsidiaries and their Subsidiaries~~Company (or any predecessor of any of them) ~~imposed with respect to, arising out of~~ is or ~~relating~~ was a member on or prior to the ~~Purchased Assets~~ Closing Date, including pursuant to Treasury Regulations Section 1.1502-6 or ~~the Business for a Pre-Closing Tax Period,~~ any analogous or similar Law; (3C) all Taxes of any Person (~~other than~~ including the ~~Conveyed Subsidiaries and their Subsidiaries~~Selling Shareholders) ~~for a Pre-Closing Tax Period for which~~ imposed on any ~~Conveyed Subsidiary (~~of the Company or any Subsidiary ~~thereof) is liable under Treasury Regulation Section 1.1502-6 (or a similar provision~~ of ~~state, local or foreign Law), or~~ the Company as a transferee or ~~successor~~ successor, by contract or ~~by Contract~~ pursuant to Law for any Pre-Closing Period or Straddle Period; (~~other than Contracts that do not relate primarily~~ D) the Selling Shareholders’ portion of any Transfer Taxes as contemplated pursuant to ~~Taxes~~Section 6.1(f), ; and (4E) ~~Taxes arising out of or resulting from any~~ and the breach of any representation, warranty, covenant or agreement related to Taxes set forth in Section 3.9 of ~~Seller Parent or~~ this Agreement to the extent are not otherwise covered by clauses (A)-(D) of this Section 6.1(a)(i). The Selling Shareholders shall pay the Buyer Tax Indemnified Parties for any ~~of its Affiliates contained in this Agreement, (5)~~ Taxes for a Pre-Closing Tax Period imposed on (x) any transaction effected pursuant to Section 2.3(b), (y) any settlement of any intercompany accounts of Seller Parent or its Subsidiaries pursuant to Section 6.7, or (z) any transaction or step forming part of the Seller Internal Restructurings, (6) Transfer Taxes for which Seller Parent is responsible under Section 6.5(j), (7) Taxes required to be deducted or withheld with respect to the payment of the Purchase Consideration or any amounts payable to Seller Parent pursuant to Section 2.8 or Section 2.9, including any penalties imposed on Purchaser as a result of Purchaser’s failure to deduct or withhold any such amounts that Purchaser (or a Purchaser Designated Affiliate) was permitted to withhold under Section 2.10 (in each case, subject to Purchaser’s compliance with the notice and cooperation requirements of Section 2.10 and except for any such Taxes (and any related penalties) required to be deducted or withheld solely as a result of any assignment by Purchaser or its Affiliates for which Purchaser is responsible pursuant to Section 10.3), (8) Taxes arising from any breach of any representation or warranty contained in Section 4.16(k), (9) Taxes arising as a result of any Conveyed Subsidiary Company or any Subsidiary of ~~any Conveyed Subsidiary at any time ceasing to be a member~~ the Company that are the responsibility of ~~a group for~~ the purposes of any Tax, of which group Seller Parent or any Subsidiary of Seller Parent is or was also a member and (10) any costs and expenses, including reasonable legal and accounting fees and expenses, attributable to any item described in clauses (1) through (9) (any such Taxes for which Seller Parent is responsible Selling Shareholders pursuant to this Section ~~6.5(d)(i),~~ 6.1 by wire transfer of immediately available funds to such account designated in writing by a Buyer Tax Indemnified Party upon the later of (i) two (2) days following notice by a Buyer Tax Indemnified Party that an amount for Taxes is or will be due and (ii) two (2) days before such amount is due to a taxing authority. The indemnification obligations of the Selling Shareholders set forth in this Section 6.1 shall survive indefinitely and shall not be subject to the ~~following proviso~~Indemnification Deductible or the Cap. For purposes of this Section 6.1, ~~“Seller Indemnified Taxes”); provided that Seller Parent~~ Taxes shall ~~not be required to indemnify~~ include all Losses incurred or ~~hold harmless any Purchaser~~ sustained by a Buyer Tax Indemnified Party ~~from~~ in connection with the investigation, defense or prosecution of any such claim or any action or proceeding between a Buyer Tax Indemnified Party and ~~against~~ the Selling Shareholders or any ~~liability pursuant to~~ third party (including any taxing authority). In the event there is a conflict between any provision of this Section ~~6.5(d)(i) for (A) Taxes attributable to any action taken after~~ 6.1 and Article 8, the ~~Closing by Purchaser, any~~ provisions in this Section 6.1 shall control. The provisions of ~~its Affiliates (including~~ this Section 6.1 set forth the Conveyed Subsidiaries and their Subsidiaries), or any transferee of Purchaser or any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries), other than any such action that (1) is in the ordinary course of business, (2) is expressly permitted or contemplated by this Agreement, or (3) is required to be taken in order to comply with applicable Law or as a result of a change in applicable Law (a “Purchaser Tax Act”), (B) Taxes that were reflected, accrued or reserved for in the Final Closing Statement, Final Business Working Capital, or Final Business Net Cash, (C) Income Taxes to the extent that a Conveyed Subsidiary or any Subsidiary thereof had any Tax Assets as exclusive indemnification obligations of the close of business on the Closing Date that were available, or would have been available but for their prior utilization by Purchaser or any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries after the Closing) Selling Shareholders with respect to offset or otherwise reduce the applicable Tax Liability in respect of such Income Taxes (except any Tax Asset reflected as an asset in the Final Closing Statement and taken into account in the calculation of the Final Business Working Capital or the Final Business Net Cash), or (D) Taxes for which Purchaser Parent is responsible under Section 6.5(d)(ii)Taxes. (ii) ~~Subject to~~ Invalid Section ~~6.5(d)(v~~338(h)(10), from and after the Closing, Purchaser Parent shall indemnify and hold harmless the Purchaser Tax Indemnified Parties from and against all liability, without duplication, for (1) all Taxes of Purchaser Parent and its Affiliates (other than Purchaser and its Subsidiaries) for any Tax period (other than Transfer Taxes and VAT for which Seller Parent is responsible hereunder), (2) Taxes of Purchaser and its Subsidiaries (other than the Conveyed Subsidiaries and their Subsidiaries) for any Pre-Closing Tax Period, (3) Taxes of any Person for a Pre-Closing Tax Period for which Purchaser (or any Subsidiary thereof other than any Conveyed Subsidiaries and their Subsidiaries) is liable under Treasury Regulation Section 1.1502-6 (or a similar provision of state, local or foreign Law), or as a transferee or successor or by Contract (other than Contracts that do not relate primarily to Taxes), (4) Taxes arising out of or resulting from any breach of any covenant or agreement of Purchaser Parent, Purchaser or their respective Affiliates contained in this Agreement, (5) Transfer Taxes for which Purchaser Parent is responsible under Section 6.5(j), (6) Taxes arising from any breach of any representation or warranty in Section 5.17(k), (7) Taxes for a Pre-Closing Tax Period imposed on (x) any settlement of any intercompany accounts of Purchaser or any Subsidiary of Purchaser, on the one hand, and Purchaser Parent or any Subsidiary of Purchaser Parent (other than Purchaser and its Subsidiaries), on the other hand, pursuant to Section 6.7 or (y) any transaction or step forming part of the Purchaser Internal Restructurings, (8) Taxes required to be deducted or withheld with respect to any amounts payable to Purchaser Parent pursuant to Section 2.8 or Section 2.9, including any penalties imposed on Purchaser as a result of Purchaser’s failure to deduct or withhold any such amounts, (9) Taxes arising as a result of Purchaser or any Subsidiary of Purchaser (other than any Conveyed Subsidiary or a Subsidiary thereof) at any time ceasing to be a member of a group for the purposes of any Tax, of which group Purchaser Parent or any Subsidiary of Purchaser Parent (other than Purchaser or any Subsidiary of Purchaser) is or was also a member and (10) any costs and expenses, including reasonable legal and accounting fees and expenses, attributable to any item described in clauses (1) through (9) (any such Taxes for which Purchaser Parent is responsible pursuant to this Section 6.5(d)(ii), subject to the following proviso, “Purchaser Parent Indemnified Taxes”); provided that Purchaser Parent shall not be required to indemnify or hold harmless any Purchaser Tax Indemnified Party from and against any liability for (A) Taxes attributable to any action taken after the Closing by Seller Parent or any of its Affiliates, other than any such action that (1) is in the ordinary course of business, (2) is expressly permitted or contemplated by this Agreement, or (3) is required to be taken in order to comply with applicable Law or as a result of a change in applicable Law (a “Seller Tax Act”), (B) Taxes that were reflected, accrued or reserved for in the Final Closing Statement, Final Purchaser Working Capital or the Final Purchaser Net Cash, (C) Income Taxes to the extent that Purchaser or any Subsidiary thereof had any Tax Assets as of the close of business on the Closing Date that were available, or would have been available but for their prior utilization by Purchaser or any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries after the Closing), to offset or otherwise reduce the applicable Tax Liability in respect of such Income Taxes (except any Tax Asset reflected as an asset in the Final Closing Statement and taken into account in the calculation of the Final Purchaser Working Capital or the Final Purchaser Net Cash), or (D) Taxes for which Seller Parent is responsible under Section 6.5(d)(i). (iii) To the extent permitted or required by applicable Law, the taxable year of each of the Conveyed Subsidiaries and their Subsidiaries and any Subsidiary of Purchaser that includes the Closing Date shall be treated as closing on (and including) the Closing Date. Otherwise, for purposes of this Agreement, in the case of any Straddle Period: (A) Property Taxes allocable to the Pre-Closing Tax Period shall be computed based upon the ratio of the number of days in the Pre-Closing Tax Period to the number of days in the entire Straddle Period; and (B) Taxes (other than Property Taxes) allocable to the Pre-Closing Tax Period shall be computed as if such Tax period ended as of the close of business on the Closing Date and, in the case of any Taxes of Conveyed Subsidiaries (and their Subsidiaries) and Seller Parent, or in the case of any Taxes of Purchaser Parent and Purchaser (and their Subsidiaries prior to the Closing), in each case attributable to the ownership of any equity interest in any partnership or other “flow through” entity for tax purposes (including of any “controlled foreign corporation,” as defined under the Code) as if the Tax period of such partnership or other “flow through” entity ended as of the close of business on the Closing Date with the Taxes of such entity for the Pre-Closing Tax Period deemed to include any Taxes on the allocable income of such entity in respect of such Tax period; provided that exemptions, allowances or deductions that are calculated on an annual basis (including depreciation and amortization deductions) shall be allocated between the period ending on the Closing Date and the period beginning after the Closing Date in proportion to the number of days in each period. (iv) Any claim for indemnification under this Section 6.5(d) shall be made in writing upon the party from whom indemnification is sought, and shall specify in reasonable detail the basis for such claim. Any indemnity payment required to be made pursuant to this Section 6.5(d) shall be made within thirty (30) days after the indemnified party makes written demand upon the indemnifying party, but in no case earlier than five (5) Business Days prior to the date on which the relevant Taxes are required to be paid to the applicable Taxing Authority. (v) With respect to any Taxes suffered or incurred by any Conveyed Subsidiary (or any Subsidiary thereof) that was not wholly owned by Seller Parent (directly or indirectly) as of immediately prior to the Closing, the indemnification obligations of Seller Parent pursuant to Section 6.5(d)(i) in respect of such Taxes (or related costs and expenses) shall in no event exceed an amount equal to (A) the amount of such Taxes (or related costs and expenses) for which the Purchaser Tax Indemnified Parties would otherwise be entitled to indemnification pursuant to Section 6.5(d), as if such Conveyed Subsidiary (or any Subsidiary thereof) were wholly owned by Seller Parent, multiplied by (B) the direct and indirect percentage ownership of Seller Parent of such Conveyed Subsidiary (or Subsidiary thereof) as of immediately prior to the Closing. With respect to any Taxes suffered or incurred by any Subsidiary of Purchaser Parent (including Purchaser and its Subsidiaries) that was not wholly owned by Purchaser Parent (directly or indirectly) as of immediately prior to the Closing, the indemnification obligations of Purchaser Parent pursuant to Section 6.5(d)(ii) in respect of such Taxes (or related costs and expenses) shall in no event exceed an amount equal to (A) the amount of such Taxes (or related costs and expenses) for which the Purchaser Tax Indemnified Parties would otherwise be entitled to indemnification pursuant to Section 6.5(d), as if such Subsidiary were wholly owned by Purchaser Parent, multiplied by (B) the direct and indirect percentage ownership of Purchaser Parent of such Subsidiary as of immediately prior to the Closing. (vi) Without duplication to any other amounts paid pursuant to this Section 6.5: (A) Within thirty (30) days following the filing of any Income Tax Return for any Conveyed Subsidiary (or any Subsidiary thereof), on the one hand, or Purchaser (or any Subsidiary thereof, other than the Conveyed Subsidiaries and their Subsidiaries), on the other hand, for any Pre-Closing Tax Period or for any Straddle Period, Seller Parent or Purchaser Parent shall (or Purchaser Parent shall cause Purchaser to) prepare a statement showing (i) the amount of Income Taxes shown as due on such filed Income Tax Return with respect to the relevant Pre-Closing Tax Period or the portion of any Straddle Period ending on and including the Closing Date (the “Final Pre-Closing Income Tax Amount”) and (ii) the amount of the Seller Accrued Income Taxes or Purchaser Accrued Income Taxes, as applicable, attributable to such Income Tax Return as reflected on the Final Closing Statement (the “Pre-Closing Income Tax Amount”) and deliver such statement to Seller Parent and Purchaser Parent, as applicable. Purchaser Parent or Seller Parent, as applicable, shall have a period of fifteen (15) Business Days to provide comments to a schedule prepared (or caused to be prepared) by Seller Parent or Purchaser Parent, respectively. If Purchaser Parent or Seller Parent, as applicable, do not provide any comments to Seller Parent or Purchaser Parent, respectively, during such period, the statement as so prepared shall be final and binding. (B) In the event the Final Pre-Closing Income Tax Amount with respect to any Income Tax Return is less than the amount of the Pre-Closing Income Tax Amount attributable to such Income Tax Return that was included on the Final Closing Statement, the Purchaser shall within five (5) Business Days following the finalization of the Final Pre-Closing Income Tax Amount hereunder (i) pay to Seller Parent the amount of such difference with respect to a Conveyed Subsidiary and their Subsidiaries and (ii) pay to Purchaser Parent the amount of such difference with respect to Purchaser and its Subsidiaries. (vii) The Parties shall use reasonable best efforts to structure any indemnity payment, true-up payment, or payment in respect of Tax Benefits made by any Party pursuant to this Agreement (including pursuant to this Section 6.5, Section 6.6 and Article VII) and any payment made by Purchaser Parent to Purchaser pursuant to Section 2.8 or Section 2.9 in the manner set forth in Clause 10 of the Structuring Considerations Agreement. The Parties shall use reasonable best efforts to structure as a special dividend any payment made by Purchaser to Purchaser Parent pursuant to Section 2.8, Section 2.9 or this Section 6.5.

Appears in 1 contract

Sources: Merger Agreement (Koppers Holdings Inc.)

Tax Indemnification. (ia) Subject to the limitations set forth in Section ~~6.5(d)(v)~~7.05, from and after the ~~Closing~~Closing Date, Seller ~~Parent agrees to~~ shall indemnify ~~and hold harmless~~ Purchaser and its ~~Subsidiaries~~ affiliates and each of their respective officers, directors, employees, stockholders, agents and representatives (~~including~~ the ~~Conveyed Subsidiaries~~ "Purchaser Indemnitees") against and ~~their Subsidiaries after the Closing Date~~hold them harmless from (i) ~~(collectively, the “Purchaser Tax Indemnified Parties”) from and against~~ all ~~liability, without duplication,~~ liability for ~~(1)~~ Income Taxes of the ~~Conveyed Subsidiaries~~ Acquired Company and ~~their Subsidiaries~~ its subsidiaries for ~~any Pre-Closing Tax Period (including any Taxes payable in respect of an election under Section 965(h) of~~ the Code), (2) Taxes of any Seller (other than any Transfer Taxes and VAT for which Purchaser is responsible hereunder) including, Taxes (other than Taxes of the Conveyed Subsidiaries and their Subsidiaries) imposed with respect to, arising out of or relating to the Purchased Assets or the Business for a Pre-Closing Tax Period, (3ii) ~~Taxes~~ all liability as a result of ~~any Person (other than the Conveyed Subsidiaries and their Subsidiaries~~Treasury Regulation § 1.1502-6(a) ~~for a Pre-Closing Tax Period for which any Conveyed Subsidiary~~ (or any ~~Subsidiary thereof) is liable under Treasury Regulation Section 1.1502-6 (or a~~ similar provision of state, local or foreign ~~Law~~law) for Income Taxes resulting from the Acquired Company or one of its subsidiaries being a member of a consolidated group on or before the Closing Date, (iii) all liability for Taxes arising from any Tax sharing agreement that is required to have been terminated pursuant to Section 4.07(g), excluding any Tax sharing agreement between only the Acquired Company (or any of its subsidiaries as of the Closing) and any of its subsidiaries as of the Closing, or other contractual agreement to which the Acquired Company or one of its subsidiaries was a party prior to the Closing Date, (iv) all liability of the Acquired Company and its subsidiaries for Taxes of any other person as transferee or successor or by ~~Contract (other than Contracts that do not relate primarily to Taxes)~~contract or otherwise, (4v) ~~Taxes arising out of or resulting from any breach of any covenant or agreement of Seller Parent or any of its Affiliates contained in this Agreement, (5) Taxes~~ all liability for a Pre-Closing Tax Period imposed on (x) any transaction effected pursuant to Section 2.3(b), (y) any settlement of any intercompany accounts of Seller Parent or its Subsidiaries pursuant to Section 6.7, or (z) any transaction or step forming part of the Seller Internal Restructurings, (6) Transfer Taxes for which Seller Parent is responsible under Section 6.5(j), (7) Taxes required to be deducted or withheld with respect to the payment of the Purchase Consideration or any amounts payable to Seller Parent pursuant to Section 2.8 or Section 2.9, including any penalties imposed on Purchaser as a result of Purchaser’s failure to deduct or withhold any such amounts that Purchaser (or a Purchaser Designated Affiliate) was permitted to withhold under Section 2.10 (in each case, subject to Purchaser’s compliance with the notice and cooperation requirements of Section 2.10 and except for any such Taxes (and any related penalties) required to be deducted or withheld solely as a result of any assignment by Purchaser or its Affiliates for which Purchaser is responsible pursuant to Section 10.3), (8) Taxes arising from any breach of any representation or warranty contained in Section 4.16(k), (9) Taxes arising as a result of (A) the Section 338(h)(10) elections and any ~~Conveyed Subsidiary~~ comparable elections made under state or local Tax law described in Section 4.07 (i) or (B) any restructuring, reorganization, divestiture, merger or acquisition undertaken by Seller, the Acquired Company or any ~~Subsidiary~~ of ~~any Conveyed Subsidiary at any time ceasing~~ its subsidiaries, on or prior to ~~be a member~~ the Closing Date, in contemplation of ~~a group for~~ the ~~purposes of any Tax~~transactions described in this Agreement, ~~of which group Seller Parent or any Subsidiary of Seller Parent is or was also a member~~ including the transactions contemplated in Schedule 4.18 and (10vi) ~~any costs and expenses, including~~ all liability for reasonable legal ~~and accounting~~ fees and expenses, interest, penalties and additions to Tax attributable to any item ~~described~~ in ~~clauses~~ clause (~~1) through (9) (any such Taxes for which Seller Parent is responsible pursuant to this Section 6.5(d)(i~~i), ~~subject to~~ (ii), (iii), (iv) or (v) above. Notwithstanding the ~~following proviso~~foregoing, “Seller ~~Indemnified Taxes”); provided that Seller Parent~~ shall not ~~be required to~~ indemnify or and hold harmless any Purchaser ~~Tax Indemnified Party~~ Indemnitee under this Section 7.01(a) from ~~and against~~ any liability ~~pursuant to this Section 6.5(d)(i)~~ for ~~(A)~~ Taxes attributable to any action taken on or after the Closing Date by Purchaser, any of its ~~Affiliates~~ affiliates (including the ~~Conveyed Subsidiaries and their Subsidiaries~~Acquired Company or any of its subsidiaries as of the Closing), or any transferee of Purchaser or any of its ~~Affiliates~~ affiliates (~~including the Conveyed Subsidiaries and their Subsidiaries),~~ other than any ~~such~~ action ~~that (1) is in the ordinary course of business, (2) is~~ expressly ~~permitted or contemplated~~ required by this Agreement, permitted by this Agreement unless (in the case of actions not expressly permitted by this Agreement) it could reasonably be expected that such action would result in an increase in the amount of Taxes for which indemnification by Seller would otherwise be required pursuant to this Section 7.01(a), or (3expressly required by Applicable Law) ~~is required to be taken in order to comply with applicable Law or as a result of a change in applicable Law~~ (a “"Purchaser Tax Act”)") or attributable to a breach by Purchaser of its obligations under this Agreement. (b) From and after the Closing Date, Purchaser shall indemnify Seller and its affiliates and each of their respective officers, directors, employees, stockholders, agents and representatives (Bthe "Seller Indemnitees") against and hold them harmless from (i) all liability of Seller following the Closing Date for Taxes ~~that were reflected, accrued or reserved for in the Final Closing Statement, Final Business Working Capital, or Final Business Net Cash, (C)~~ other than Income Taxes of the Acquired Company and its subsidiaries for all taxable periods whether ending before, on or after the Closing Date, except to the extent ~~that a Conveyed Subsidiary or any Subsidiary thereof had any Tax Assets as of the close of business on the Closing Date that were available~~provided in Section 7.02, ~~or would have been available but~~ and for their prior utilization by Purchaser or any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries after the Closing) to offset or otherwise reduce the applicable Tax Liability in respect of such Income Taxes (except any Tax Asset reflected as an asset in the Final Closing Statement and taken into account in the calculation of the Final Business Working Capital or the Final Business Net Cash), or (D) Taxes for which Purchaser Parent is responsible under Section 6.5(d)(ii). (ii) Subject to Section 6.5(d)(v), from and after the Closing, Purchaser Parent shall indemnify and hold harmless the Purchaser Tax Indemnified Parties from and against all liability, without duplication, for (1) all Taxes of Purchaser Parent and its Affiliates (other than Purchaser and its Subsidiaries) for any Tax period (other than Transfer Taxes and VAT for which Seller Parent is responsible hereunder), (2) Taxes of Purchaser and its Subsidiaries (other than the Conveyed Subsidiaries and their Subsidiaries) for any PrePost-Closing Tax Period, (3ii) all liability of Seller for Taxes attributable to a Purchaser Tax Act or to a breach by Purchaser of ~~any Person for a Pre-Closing Tax Period for which Purchaser (or any Subsidiary thereof other than any Conveyed Subsidiaries and their Subsidiaries) is liable~~ its obligations under Treasury Regulation Section 1.1502-6 (or a similar provision of state, local or foreign Law), or as a transferee or successor or by Contract (other than Contracts that do not relate primarily to Taxes), (4) Taxes arising out of or resulting from any breach of any covenant or agreement of Purchaser Parent, Purchaser or their respective Affiliates contained in this Agreement, (5iii) ~~Transfer Taxes~~ all liability for which Purchaser Parent is responsible under Section 6.5(j), (6) Taxes arising from any breach of any representation or warranty in Section 5.17(k), (7) Taxes for a Pre-Closing Tax Period imposed on (x) any settlement of any intercompany accounts of Purchaser or any Subsidiary of Purchaser, on the one hand, and Purchaser Parent or any Subsidiary of Purchaser Parent (other than Purchaser and its Subsidiaries), on the other hand, pursuant to Section 6.7 or (y) any transaction or step forming part of the Purchaser Internal Restructurings, (8) Taxes required to be deducted or withheld with respect to any amounts payable to Purchaser Parent pursuant to Section 2.8 or Section 2.9, including any penalties imposed on Purchaser as a result of Purchaser’s failure to deduct or withhold any such amounts, (9) Taxes arising as a result of ~~Purchaser or any Subsidiary~~ the Section 338(g) elections made pursuant to Section 4.07(i), (iv) all liability for Taxes arising as a result of ~~Purchaser (other than any Conveyed Subsidiary or~~ the separate closings for subsidiaries of the Acquired Company incorporated in non-U.S. jurisdictions pursuant to Section 1.01 that would not have arisen as a ~~Subsidiary thereof) at any time ceasing to be a member~~ result of ~~a group~~ the transactions provided for ~~the purposes of any Tax, of which group Purchaser Parent or any Subsidiary of Purchaser Parent (other than Purchaser or any Subsidiary of Purchaser) is or was also a member~~ in this Agreement but for such separate closings and (10v) ~~any costs and expenses, including~~ all liability for reasonable legal ~~and accounting~~ fees and ~~expenses,~~ expenses attributable to any item ~~described~~ in ~~clauses~~ clause (1) through (9) (any such Taxes for which Purchaser Parent is responsible pursuant to this Section 6.5(d)(ii), subject to the following proviso, “Purchaser Parent Indemnified Taxes”); provided that Purchaser Parent shall not be required to indemnify or hold harmless any Purchaser Tax Indemnified Party from and against any liability for (A) Taxes attributable to any action taken after the Closing by Seller Parent or any of its Affiliates, other than any such action that (1) is in the ordinary course of business, (2) is expressly permitted or contemplated by this Agreement, or (3) is required to be taken in order to comply with applicable Law or as a result of a change in applicable Law (a “Seller Tax Act”i), (~~B) Taxes that were reflected, accrued or reserved for in the Final Closing Statement, Final Purchaser Working Capital or the Final Purchaser Net Cash~~ii), (Ciii) Income Taxes to the extent that Purchaser or any Subsidiary thereof had any Tax Assets as of the close of business on the Closing Date that were available, or would have been available but for their prior utilization by Purchaser or any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries after the Closing), to offset or otherwise reduce the applicable Tax Liability in respect of such Income Taxes (except any Tax Asset reflected as an asset in the Final Closing Statement and taken into account in the calculation of the Final Purchaser Working Capital or the Final Purchaser Net Cash), or (Div) above. (c) Taxes for which Seller Parent is responsible under Section 6.5(d)(i). (iii) To the extent permitted or required by applicable Law, the taxable year of each of the Conveyed Subsidiaries and their Subsidiaries and any Subsidiary of Purchaser that includes the Closing Date Straddle Periods shall be ~~treated as closing on (and including) the Closing Date. Otherwise, for purposes of this Agreement, in the case of any Straddle Period: (A) Property Taxes allocable~~ allocated to the Pre-Closing Tax Period ~~shall be computed based upon~~ and the ~~ratio of the number of days in the Pre~~Post-Closing Tax Period in accordance with the principles of Section 4.07(b)(ii). (d) Responsibility for Taxes arising as a result of the separate closings for subsidiaries of the Acquired Company incorporated in non-U.S. jurisdictions pursuant to Section 1.01 that would have arisen as a result of the ~~number of days~~ transactions provided for in this Agreement even in the entire Straddle Period; and (B) Taxes (other than Property Taxes) allocable to the Pre-Closing Tax Period shall be computed as if such Tax period ended as of the close of business on the Closing Date and, in the case of any Taxes of Conveyed Subsidiaries (and their Subsidiaries) and Seller Parent, or in the case of any Taxes of Purchaser Parent and Purchaser (and their Subsidiaries prior to the Closing), in each case attributable to the ownership of any equity interest in any partnership or other “flow through” entity for tax purposes (including of any “controlled foreign corporation,” as defined under the Code) as if the Tax period absence of such partnership or other “flow through” entity ended as of the close of business on the Closing Date with the Taxes of such entity for the Pre-Closing Tax Period deemed to include any Taxes on the allocable income of such entity in respect of such Tax period; provided that exemptions, allowances or deductions that are calculated on an annual basis (including depreciation and amortization deductions) separate closings shall be allocated between the period ending on the Closing Date and the period beginning after the Closing Date in proportion to the number of days in each period. (iv) Any claim for indemnification under this Section 6.5(d) shall be made in writing upon the party from whom indemnification is sought, and shall specify in reasonable detail the basis for such claim. Any indemnity payment required to be made pursuant to this Section 6.5(d) shall be made within thirty (30) days after the indemnified party makes written demand upon the indemnifying party, but in no case earlier than five (5) Business Days prior to the date on which the relevant Taxes are required to be paid to the applicable Taxing Authority. (v) With respect to any Taxes suffered or incurred by any Conveyed Subsidiary (or any Subsidiary thereof) that was not wholly owned by Seller Parent (directly or indirectly) as of immediately prior to the Closing, the indemnification obligations of Seller Parent pursuant to Section 6.5(d)(i) in respect of such Taxes (or related costs and expenses) shall in no event exceed an amount equal to (A) the amount of such Taxes (or related costs and expenses) for which the Purchaser Tax Indemnified Parties would otherwise be entitled to indemnification pursuant to Section 6.5(d), as if such Conveyed Subsidiary (or any Subsidiary thereof) were wholly owned by Seller Parent, multiplied by (B) the direct and indirect percentage ownership of Seller Parent of such Conveyed Subsidiary (or Subsidiary thereof) as of immediately prior to the Closing. With respect to any Taxes suffered or incurred by any Subsidiary of Purchaser Parent (including Purchaser and ~~its Subsidiaries~~Seller under Sections 7.01, 7.02 and 4.07(c) ~~that was~~ hereof as though such separate closings had not wholly owned by Purchaser Parent (directly or indirectly) as of immediately prior to the Closing, the indemnification obligations of Purchaser Parent pursuant to Section 6.5(d)(ii) in respect of such Taxes (or related costs and expenses) shall in no event exceed an amount equal to (A) the amount of such Taxes (or related costs and expenses) for which the Purchaser Tax Indemnified Parties would otherwise be entitled to indemnification pursuant to Section 6.5(d), as if such Subsidiary were wholly owned by Purchaser Parent, multiplied by (B) the direct and indirect percentage ownership of Purchaser Parent of such Subsidiary as of immediately prior to the Closingoccurred. (vi) Without duplication to any other amounts paid pursuant to this Section 6.5: (A) Within thirty (30) days following the filing of any Income Tax Return for any Conveyed Subsidiary (or any Subsidiary thereof), on the one hand, or Purchaser (or any Subsidiary thereof, other than the Conveyed Subsidiaries and their Subsidiaries), on the other hand, for any Pre-Closing Tax Period or for any Straddle Period, Seller Parent or Purchaser Parent shall (or Purchaser Parent shall cause Purchaser to) prepare a statement showing (i) the amount of Income Taxes shown as due on such filed Income Tax Return with respect to the relevant Pre-Closing Tax Period or the portion of any Straddle Period ending on and including the Closing Date (the “Final Pre-Closing Income Tax Amount”) and (ii) the amount of the Seller Accrued Income Taxes or Purchaser Accrued Income Taxes, as applicable, attributable to such Income Tax Return as reflected on the Final Closing Statement (the “Pre-Closing Income Tax Amount”) and deliver such statement to Seller Parent and Purchaser Parent, as applicable. Purchaser Parent or Seller Parent, as applicable, shall have a period of fifteen (15) Business Days to provide comments to a schedule prepared (or caused to be prepared) by Seller Parent or Purchaser Parent, respectively. If Purchaser Parent or Seller Parent, as applicable, do not provide any comments to Seller Parent or Purchaser Parent, respectively, during such period, the statement as so prepared shall be final and binding. (B) In the event the Final Pre-Closing Income Tax Amount with respect to any Income Tax Return is less than the amount of the Pre-Closing Income Tax Amount attributable to such Income Tax Return that was included on the Final Closing Statement, the Purchaser shall within five (5) Business Days following the finalization of the Final Pre-Closing Income Tax Amount hereunder (i) pay to Seller Parent the amount of such difference with respect to a Conveyed Subsidiary and their Subsidiaries and (ii) pay to Purchaser Parent the amount of such difference with respect to Purchaser and its Subsidiaries. (vii) The Parties shall use reasonable best efforts to structure any indemnity payment, true-up payment, or payment in respect of Tax Benefits made by any Party pursuant to this Agreement (including pursuant to this Section 6.5, Section 6.6 and Article VII) and any payment made by Purchaser Parent to Purchaser pursuant to Section 2.8 or Section 2.9 in the manner set forth in Clause 10 of the Structuring Considerations Agreement. The Parties shall use reasonable best efforts to structure as a special dividend any payment made by Purchaser to Purchaser Parent pursuant to Section 2.8, Section 2.9 or this Section 6.5.

Appears in 1 contract

Sources: Stock Purchase Agreement (Milacron Inc)

Tax Indemnification. (i) ~~Subject to Section 6.5(d)(v)~~The Selling Stockholders hereby agree, ~~from~~ jointly and ~~after the Closing~~severally, ~~Seller Parent agrees~~ to indemnify and hold the Purchaser Indemnified Parties harmless from and against, and to pay to the Purchaser Indemnified Parties the amount of any and ~~its Subsidiaries~~ all Losses in respect of (~~including~~ A) except as provided in Section 8.6(j)(iv), all Taxes of the ~~Conveyed Subsidiaries and their Subsidiaries after~~ Company (or any predecessor thereof) (1) for any taxable period ending on or before the Closing Date~~) (collectively~~, ~~the “Purchaser Tax Indemnified Parties”) from~~ and against all liability, without duplication, for (1) Taxes of the Conveyed Subsidiaries and their Subsidiaries for any Pre-Closing Tax Period (including any Taxes payable in respect of an election under Section 965(h) of the Code), (2) ~~Taxes~~ for the portion of any Seller (other than any Transfer Taxes and VAT for which Purchaser is responsible hereunder) including, Taxes (other than Taxes of the Conveyed Subsidiaries and their Subsidiaries) imposed with respect to, arising out of or relating to the Purchased Assets or the Business for a Pre-Closing Tax Period, (3) Taxes of any Person (other than the Conveyed Subsidiaries and their Subsidiaries) for a Pre-Closing Tax Straddle Period for which any Conveyed Subsidiary (or any Subsidiary thereof) is liable under Treasury Regulation Section 1.1502-6 (or a similar provision of state, local or foreign Law), or as a transferee or successor or by Contract (other than Contracts that do not relate primarily to Taxes), (4) Taxes arising out of or resulting from any breach of any covenant or agreement of Seller Parent or any of its Affiliates contained in this Agreement, (5) Taxes for a Pre-Closing Tax Period imposed on (x) any transaction effected pursuant to Section 2.3(b), (y) any settlement of any intercompany accounts of Seller Parent or its Subsidiaries pursuant to Section 6.7, or (z) any transaction or step forming part of the Seller Internal Restructurings, (6) Transfer Taxes for which Seller Parent is responsible under Section 6.5(j), (7) Taxes required to be deducted or withheld with respect to the payment of the Purchase Consideration or any amounts payable to Seller Parent pursuant to Section 2.8 or Section 2.9, including any penalties imposed on Purchaser as a result of Purchaser’s failure to deduct or withhold any such amounts that Purchaser (or a Purchaser Designated Affiliate) was permitted to withhold under Section 2.10 (in each case, subject to Purchaser’s compliance with the notice and cooperation requirements of Section 2.10 and except for any such Taxes (and any related penalties) required to be deducted or withheld solely as a result of any assignment by Purchaser or its Affiliates for which Purchaser is responsible pursuant to Section 10.3), (8) Taxes arising from any breach of any representation or warranty contained in Section 4.16(k), (9) Taxes arising as a result of any Conveyed Subsidiary or any Subsidiary of any Conveyed Subsidiary ending at any time ceasing to be a member of a group for the purposes of any Tax, of which group Seller Parent or any Subsidiary of Seller Parent is or was also a member and (10) any costs and expenses, including reasonable legal and accounting fees and expenses, attributable to any item described in clauses (1) through (9) (any such Taxes for which Seller Parent is responsible pursuant to this Section 6.5(d)(i), subject to the following proviso, “Seller Indemnified Taxes”); provided that Seller Parent shall not be required to indemnify or hold harmless any Purchaser Tax Indemnified Party from and against any liability pursuant to this Section 6.5(d)(i) for (A) Taxes attributable to any action taken after the Closing by Purchaser, any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries), or any transferee of Purchaser or any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries), other than any such action that (1) is in the ordinary course of business, (2) is expressly permitted or contemplated by this Agreement, or (3) is required to be taken in order to comply with applicable Law or as a result of a change in applicable Law (a “Purchaser Tax Act”), (B) Taxes that were reflected, accrued or reserved for in the Final Closing Statement, Final Business Working Capital, or Final Business Net Cash, (C) Income Taxes to the extent that a Conveyed Subsidiary or any Subsidiary thereof had any Tax Assets as of the close of business on the Closing Date ~~that were available, or would have been available but for their prior utilization by Purchaser or~~ (determined as provided in Section 8.6(c)); (B) any ~~of its Affiliates (including the Conveyed Subsidiaries~~ and their Subsidiaries after the Closing) to offset or otherwise reduce the applicable Tax Liability in respect of such Income Taxes (except any Tax Asset reflected as an asset in the Final Closing Statement and taken into account in the calculation of the Final Business Working Capital or the Final Business Net Cash), or (D) Taxes for which Purchaser Parent is responsible under Section 6.5(d)(ii). (ii) Subject to Section 6.5(d)(v), from and after the Closing, Purchaser Parent shall indemnify and hold harmless the Purchaser Tax Indemnified Parties from and against all liability, without duplication, for (1) all Taxes imposed on any member of ~~Purchaser Parent and its Affiliates (other than Purchaser and its Subsidiaries) for any Tax period (other than Transfer Taxes and VAT for~~ a consolidated, combined or unitary group of which ~~Seller Parent is responsible hereunder), (2) Taxes of Purchaser and its Subsidiaries (other than~~ the ~~Conveyed Subsidiaries and their Subsidiaries) for any Pre-Closing Tax Period, (3) Taxes of any Person for a Pre-Closing Tax Period for which Purchaser~~ Company (or any ~~Subsidiary thereof other than any Conveyed Subsidiaries and their Subsidiaries~~predecessor thereof) is ~~liable under~~ or was a member on or prior to the Closing Date by reason of the liability of the Company (or any predecessor thereof), pursuant to Treasury Regulation Section 1.1502-6 6(a) (or a any predecessor or successor thereof or any analogous or similar provision of under state, local or foreign Law)~~, or as a transferee or successor or by Contract~~ ; and (other than Contracts that do not relate primarily to Taxes), (4) Taxes arising out of or resulting from any breach of any covenant or agreement of Purchaser Parent, Purchaser or their respective Affiliates contained in this Agreement, (5) Transfer Taxes for which Purchaser Parent is responsible under Section 6.5(j), (6) Taxes arising from any breach of any representation or warranty in Section 5.17(k), (7) Taxes for a Pre-Closing Tax Period imposed on (xC) any ~~settlement of~~ failure by the Selling Stockholders to timely pay any intercompany accounts of Purchaser or any Subsidiary of Purchaser, on the one hand, and Purchaser Parent or any Subsidiary of Purchaser Parent (other than Purchaser and its Subsidiaries), on the other hand, pursuant to Section 6.7 or (y) any transaction or step forming part of the Purchaser Internal Restructurings, (8) Taxes required to be ~~deducted or withheld with respect to any amounts payable to Purchaser Parent~~ borne by the Selling Stockholders pursuant to Section ~~2.8 or Section 2.9~~8.6(f); provided, ~~including~~ however, that in the case of any ~~penalties imposed on Purchaser as a result~~ of ~~Purchaser’s failure to deduct or withhold any such~~ the foregoing amounts, ~~(9) Taxes arising as a result of Purchaser or any Subsidiary of Purchaser (other than any Conveyed Subsidiary or a Subsidiary thereof) at any time ceasing to~~ the Selling Stockholders shall be a member of a group for the purposes of any Tax, of which group Purchaser Parent or any Subsidiary of Purchaser Parent (other than Purchaser or any Subsidiary of Purchaser) is or was also a member and (10) any costs and expenses, including reasonable legal and accounting fees and expenses, attributable to any item described in clauses (1) through (9) (any such Taxes for which Purchaser Parent is responsible pursuant to this Section 6.5(d)(ii), subject to the following proviso, “Purchaser Parent Indemnified Taxes”); provided that Purchaser Parent shall not be required to indemnify or hold harmless any Purchaser Tax Indemnified Party from and against any liability for (A) Taxes attributable to any action taken after the Closing by Seller Parent or any of its Affiliates, other than any such action that (1) is in the ordinary course of business, (2) is expressly permitted or contemplated by this Agreement, or (3) is required to be taken in order to comply with applicable Law or as a result of a change in applicable Law (a “Seller Tax Act”), (B) Taxes that were reflected, accrued or reserved for in the Final Closing Statement, Final Purchaser Working Capital or the Final Purchaser Net Cash, (C) Income Taxes liable only to the extent ~~that Purchaser or~~ such Taxes exceed the amount, if any, reserved for such Taxes (excluding any ~~Subsidiary thereof had any~~ reserve for deferred Taxes established to reflect timing differences between book and Tax ~~Assets as~~ income) on the face of the ~~close of business on the~~ Closing ~~Date that were available, or would have been available but for their prior utilization by Purchaser or~~ Balance Sheet (rather than in any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries after the Closing), to offset or otherwise reduce the applicable Tax Liability in respect of such Income Taxes (except any Tax Asset reflected as an asset in the Final Closing Statement notes thereto) and taken into account in determining the ~~calculation of~~ adjustment to the ~~Final~~ Purchase Price pursuant to Section 2.4. (ii) Purchaser ~~Working Capital or~~ agrees to indemnify and hold the ~~Final Purchaser Net Cash), or~~ Selling Stockholders harmless from and against (DA) any and all Taxes for which ~~Seller Parent is responsible~~ the Selling Stockholders are not liable under Section 6.5(d)(i). (iii) To the extent permitted or required by applicable Law, the taxable year of each of the Conveyed Subsidiaries and their Subsidiaries and any Subsidiary of Purchaser that includes the Closing Date shall be treated as closing on (and including) the Closing Date. Otherwise, for purposes of this Agreement, in the case of any Straddle Period: (A) Property Taxes allocable to the Pre-Closing Tax Period shall be computed based upon the ratio of the number of days in the Pre-Closing Tax Period to the number of days in the entire Straddle Period; and (B) Taxes (other than Property Taxes) allocable to the Pre-Closing Tax Period shall be computed as if such Tax period ended as of the close of business on the Closing Date and, in the case of any Taxes of Conveyed Subsidiaries (and their Subsidiaries) and Seller Parent, or in the case of any Taxes of Purchaser Parent and Purchaser (and their Subsidiaries prior to the Closing), in each case attributable to the ownership of any equity interest in any partnership or other “flow through” entity for tax purposes (including of any “controlled foreign corporation,” as defined under the Code) as if the Tax period of such partnership or other “flow through” entity ended as of the close of business on the Closing Date with the Taxes of such entity for the Pre-Closing Tax Period deemed to include any Taxes on the allocable income of such entity in respect of such Tax period; provided that exemptions, allowances or deductions that are calculated on an annual basis (including depreciation and amortization deductions) shall be allocated between the period ending on the Closing Date and the period beginning after the Closing Date in proportion to the number of days in each period. (iv) Any claim for indemnification under this Section 6.5(d) shall be made in writing upon the party from whom indemnification is sought, and shall specify in reasonable detail the basis for such claim. Any indemnity payment required to be made pursuant to this Section 6.5(d) shall be made within thirty (30) days after the indemnified party makes written demand upon the indemnifying party, but in no case earlier than five (5) Business Days prior to the date on which the relevant Taxes are required to be paid to the applicable Taxing Authority. (v) With respect to any Taxes suffered or incurred by any Conveyed Subsidiary (or any Subsidiary thereof) that was not wholly owned by Seller Parent (directly or indirectly) as of immediately prior to the Closing, the indemnification obligations of Seller Parent pursuant to Section 6.5(d)(i) in respect of such Taxes (or related costs and expenses) shall in no event exceed an amount equal to (A) the amount of such Taxes (or related costs and expenses) for which the Purchaser Tax Indemnified Parties would otherwise be entitled to indemnification pursuant to Section 6.5(d), as if such Conveyed Subsidiary (or any Subsidiary thereof) were wholly owned by Seller Parent, multiplied by (B) the ~~direct and indirect percentage ownership of Seller Parent of such Conveyed Subsidiary (or Subsidiary thereof) as of immediately prior~~ reimbursement amount referred to the Closing. With respect to any Taxes suffered or incurred by any Subsidiary of Purchaser Parent (including Purchaser and its Subsidiaries) that was not wholly owned by Purchaser Parent (directly or indirectly) as of immediately prior to the Closing, the indemnification obligations of Purchaser Parent pursuant to in Section 6.5(d)(ii) in respect of such Taxes (or related costs and expenses) shall in no event exceed an amount equal to (A) the amount of such Taxes (or related costs and expenses) for which the Purchaser Tax Indemnified Parties would otherwise be entitled to indemnification pursuant to Section 6.5(d8.6(j)(iii), as if such Subsidiary were wholly owned by Purchaser Parent, multiplied by (B) the direct and indirect percentage ownership of Purchaser Parent of such Subsidiary as of immediately prior to the Closing. (vi) Without duplication to any other amounts paid pursuant to this Section 6.5: (A) Within thirty (30) days following the filing of any Income Tax Return for any Conveyed Subsidiary (or any Subsidiary thereof), on the one hand, or Purchaser (or any Subsidiary thereof, other than the Conveyed Subsidiaries and their Subsidiaries), on the other hand, for any Pre-Closing Tax Period or for any Straddle Period, Seller Parent or Purchaser Parent shall (or Purchaser Parent shall cause Purchaser to) prepare a statement showing (i) the amount of Income Taxes shown as due on such filed Income Tax Return with respect to the relevant Pre-Closing Tax Period or the portion of any Straddle Period ending on and including the Closing Date (the “Final Pre-Closing Income Tax Amount”) and (ii) the amount of the Seller Accrued Income Taxes or Purchaser Accrued Income Taxes, as applicable, attributable to such Income Tax Return as reflected on the Final Closing Statement (the “Pre-Closing Income Tax Amount”) and deliver such statement to Seller Parent and Purchaser Parent, as applicable. Purchaser Parent or Seller Parent, as applicable, shall have a period of fifteen (15) Business Days to provide comments to a schedule prepared (or caused to be prepared) by Seller Parent or Purchaser Parent, respectively. If Purchaser Parent or Seller Parent, as applicable, do not provide any comments to Seller Parent or Purchaser Parent, respectively, during such period, the statement as so prepared shall be final and binding. (B) In the event the Final Pre-Closing Income Tax Amount with respect to any Income Tax Return is less than the amount of the Pre-Closing Income Tax Amount attributable to such Income Tax Return that was included on the Final Closing Statement, the Purchaser shall within five (5) Business Days following the finalization of the Final Pre-Closing Income Tax Amount hereunder (i) pay to Seller Parent the amount of such difference with respect to a Conveyed Subsidiary and their Subsidiaries and (ii) pay to Purchaser Parent the amount of such difference with respect to Purchaser and its Subsidiaries. (vii) The Parties shall use reasonable best efforts to structure any indemnity payment, true-up payment, or payment in respect of Tax Benefits made by any Party pursuant to this Agreement (including pursuant to this Section 6.5, Section 6.6 and Article VII) and any payment made by Purchaser Parent to Purchaser pursuant to Section 2.8 or Section 2.9 in the manner set forth in Clause 10 of the Structuring Considerations Agreement. The Parties shall use reasonable best efforts to structure as a special dividend any payment made by Purchaser to Purchaser Parent pursuant to Section 2.8, Section 2.9 or this Section 6.5.

Appears in 1 contract

Sources: Stock Purchase Agreement (American Public Education Inc)

Tax Indemnification. (ia) ~~Subject to Section 6.5(d)(v), from~~ From and after the Closing, Seller ~~Parent agrees~~ shall pay or cause to be paid, and shall indemnify Buyer and ~~hold harmless Purchaser and~~ each of its ~~Subsidiaries~~ Affiliates (including the ~~Conveyed Subsidiaries and their Subsidiaries~~ Acquired Companies after the Closing Date) (collectively, the “~~Purchaser~~ Buyer Tax Indemnified Parties”) ~~from~~ and ~~against all liability, without duplication, for (1) Taxes of~~ hold the Conveyed Subsidiaries and their Subsidiaries for any Pre-Closing Tax Period (including any Taxes payable in respect of an election under Section 965(h) of the Code), (2) Taxes of any Seller (other than any Transfer Taxes and VAT for which Purchaser is responsible hereunder) including, Taxes (other than Taxes of the Conveyed Subsidiaries and their Subsidiaries) imposed with respect to, arising out of or relating to the Purchased Assets or the Business for a Pre-Closing Tax Period, (3) Taxes of any Person (other than the Conveyed Subsidiaries and their Subsidiaries) for a Pre-Closing Tax Period for which any Conveyed Subsidiary (or any Subsidiary thereof) is liable under Treasury Regulation Section 1.1502-6 (or a similar provision of state, local or foreign Law), or as a transferee or successor or by Contract (other than Contracts that do not relate primarily to Taxes), (4) Taxes arising out of or resulting from any breach of any covenant or agreement of Seller Parent or any of its Affiliates contained in this Agreement, (5) Taxes for a Pre-Closing Tax Period imposed on (x) any transaction effected pursuant to Section 2.3(b), (y) any settlement of any intercompany accounts of Seller Parent or its Subsidiaries pursuant to Section 6.7, or (z) any transaction or step forming part of the Seller Internal Restructurings, (6) Transfer Taxes for which Seller Parent is responsible under Section 6.5(j), (7) Taxes required to be deducted or withheld with respect to the payment of the Purchase Consideration or any amounts payable to Seller Parent pursuant to Section 2.8 or Section 2.9, including any penalties imposed on Purchaser as a result of Purchaser’s failure to deduct or withhold any such amounts that Purchaser (or a Purchaser Designated Affiliate) was permitted to withhold under Section 2.10 (in each case, subject to Purchaser’s compliance with the notice and cooperation requirements of Section 2.10 and except for any such Taxes (and any related penalties) required to be deducted or withheld solely as a result of any assignment by Purchaser or its Affiliates for which Purchaser is responsible pursuant to Section 10.3), (8) Taxes arising from any breach of any representation or warranty contained in Section 4.16(k), (9) Taxes arising as a result of any Conveyed Subsidiary or any Subsidiary of any Conveyed Subsidiary at any time ceasing to be a member of a group for the purposes of any Tax, of which group Seller Parent or any Subsidiary of Seller Parent is or was also a member and (10) any costs and expenses, including reasonable legal and accounting fees and expenses, attributable to any item described in clauses (1) through (9) (any such Taxes for which Seller Parent is responsible pursuant to this Section 6.5(d)(i), subject to the following proviso, “Seller Indemnified Taxes”); provided that Seller Parent shall not be required to indemnify or hold harmless any Purchaser Buyer Tax Indemnified ~~Party~~ Parties harmless from and against any liability pursuant to this Section 6.5(d)(i) for (A) Taxes attributable to any action taken after the Closing by Purchaser, any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries), or any transferee of Purchaser or any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries), other than any such action that (1) is in the ordinary course of business, (2) is expressly permitted or contemplated by this Agreement, or (3) is required to be taken in order to comply with applicable Law or as a result of a change in applicable Law (a “Purchaser Tax Act”), (B) Taxes that were reflected, accrued or reserved for in the Final Closing Statement, Final Business Working Capital, or Final Business Net Cash, (C) Income Taxes Losses to the extent ~~that a Conveyed Subsidiary or~~ related to (i) any ~~Subsidiary thereof had any Tax Assets as of the close of business~~ Taxes imposed on the Closing Date that were available, or would have been available but for their prior utilization by Purchaser or any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries after the Closing) to offset or otherwise reduce the applicable Tax Liability in respect of such Income Taxes (except any Tax Asset reflected as an asset in the Final Closing Statement and taken into account in the calculation of the Final Business Working Capital or the Final Business Net Cash), or (D) Taxes for which Purchaser Parent is responsible under Section 6.5(d)(ii). (ii) Subject to Section 6.5(d)(v), from and after the Closing, Purchaser Parent shall indemnify and hold harmless the Purchaser Tax Indemnified Parties from and against all liability, without duplication, for (1) all Taxes of Purchaser Parent and its Affiliates (other than Purchaser and its Subsidiaries) for any Tax period (other than Transfer Taxes and VAT for which Seller Parent is responsible hereunder), (2) Taxes of Purchaser and its Subsidiaries (other than the Conveyed Subsidiaries and their Subsidiaries) Acquired Companies for any Pre-Closing Tax Period, (3ii) any Taxes of any Person for a Pre-Closing Tax Period for which Purchaser (or any Subsidiary thereof other than any Conveyed Subsidiaries and their Subsidiaries) is liable under Treasury Regulation Section 1.1502-6 (or a similar provision of state, local or foreign Law), or as a transferee or successor or by Contract (other than Contracts that do not relate primarily to Taxes), (4) Taxes arising out of or resulting from any breach of any covenant or agreement of Purchaser Parent, Purchaser or their respective Affiliates contained in this Agreement, (5) Transfer Taxes for which Purchaser Parent is responsible under Section 6.5(j), (6) Taxes arising from any breach of any representation or warranty in Section 5.17(k), (7) Taxes for a Pre-Closing Tax Period imposed on (x) any settlement of any intercompany accounts of Purchaser or any Subsidiary of Purchaser, on the one hand, and Purchaser Parent or any Subsidiary of Purchaser Parent (other than Purchaser and its Subsidiaries), on the other hand, pursuant to Section 6.7 or (y) any transaction or step forming part of the Purchaser Internal Restructurings, (8) Taxes required to be deducted or withheld with respect to any amounts payable to Purchaser Parent pursuant to Section 2.8 or Section 2.9, including any penalties imposed on Purchaser as a result of Purchaser’s failure to deduct or withhold any such amounts, (9) Taxes arising as a result of Purchaser or any Subsidiary of Purchaser (other than any Conveyed Subsidiary or a Subsidiary thereof) at any time ceasing to be a member of a group for the purposes of any Tax, of which group Purchaser Parent or any Subsidiary of Purchaser Parent (other than Purchaser or any Subsidiary of Purchaser) is or was also a member and (10) any costs and expenses, including reasonable legal and accounting fees and expenses, attributable to any item described in clauses (1) through (9) (any such Taxes for which Purchaser Parent is responsible pursuant to this Section 6.5(d)(ii), subject to the following proviso, “Purchaser Parent Indemnified Taxes”); provided that Purchaser Parent shall not be required to indemnify or hold harmless any Purchaser Tax Indemnified Party from and against any liability for (A) Taxes attributable to any action taken after the Closing by Seller Parent or any of its Affiliates, other than any such action that (1) is in the ordinary course of business, (2) is expressly permitted or contemplated by this Agreement, or (3) is required to be taken in order to comply with applicable Law or as a result of a change in applicable Law (a “Seller Tax Act”), (B) Taxes that were reflected, accrued or reserved for in the Final Closing Statement, Final Purchaser Working Capital or the Final Purchaser Net Cash, (C) Income Taxes to the extent that Purchaser or any Subsidiary thereof had any Tax Assets as of the close of business on the Closing Date that were available, or would have been available but for their prior utilization by Purchaser or any of its Affiliates (~~including~~ other than the ~~Conveyed Subsidiaries~~ Acquired Companies) for which an Acquired Company is liable pursuant to Treasury Regulations Section 1.1502-6 or any similar provision of state, provincial, local or foreign Applicable Law with respect to Taxes and ~~their Subsidiaries after the Closing),~~ (iii) any liability for Taxes attributable to ~~offset~~ any failure by Seller or ~~otherwise reduce the applicable Tax Liability in respect~~ any of ~~such Income Taxes (except~~ its Affiliates to comply with any ~~Tax Asset reflected as an asset in the Final Closing Statement and taken into account in the calculation~~ of the ~~Final Purchaser Working Capital~~ covenants or agreements of Seller under Section 6.1(a)(xii) and Article 9, except, in each case, for any Taxes for which Buyer is responsible pursuant to Section 9.1(b)(ii) and Section 9.1(b)(iii) (the ~~Final Purchaser Net Cash), or (D)~~ Taxes for which Seller ~~Parent~~ is ~~responsible under~~ required to indemnify Buyer pursuant to this Section ~~6.5(d)(i~~9.1(a), the “Seller Indemnified Taxes”). (~~iii~~b) To From and after the Closing, Buyer shall pay or cause to be paid, and shall indemnify Seller and each of its Affiliates (collectively, the “Seller Tax Indemnified Parties”) and hold the Seller Tax Indemnified Parties harmless from and against any Losses to the extent ~~permitted or required by applicable Law,~~ related to (i) any Taxes imposed on the ~~taxable year of each of the Conveyed Subsidiaries and their Subsidiaries and~~ Acquired Companies for any Subsidiary of Purchaser that includes the Closing Date shall be treated as closing on (and including) the Closing Date. Otherwise, for purposes of this Agreement, in the case of any Straddle Period: (A) Property Taxes allocable to the PrePost-Closing Tax Period ~~shall be computed based upon the ratio~~ unless such Tax arises as a result of any failure by Seller or any of its Affiliates to comply with any of the ~~number~~ covenants or agreements contained in Section 6.1(a)(xii) and Article 9, (ii) any Taxes arising from any action or transaction by Buyer, the Acquired Companies or their respective Affiliates outside the Ordinary Course of days in the Pre-Closing Tax Period to the number of days in the entire Straddle Period; and (B) Taxes (other than Property Taxes) allocable to the Pre-Closing Tax Period shall be computed as if such Tax period ended as of the close of business Business on the Closing Date and, in the case of any Taxes of Conveyed Subsidiaries (and their Subsidiaries) and Seller Parent, or in the case of any Taxes of Purchaser Parent and Purchaser (and their Subsidiaries prior to the Closing), in each case attributable to the ownership of any equity interest in any partnership or other “flow through” entity for tax purposes (including of any “controlled foreign corporation,” as defined under the Code) as if the Tax period of such partnership or other “flow through” entity ended as of the close of business on the Closing Date with the Taxes of such entity for the Pre-Closing Tax Period deemed to include any Taxes on the allocable income of such entity in respect of such Tax period; provided that exemptions, allowances or deductions that are calculated on an annual basis (including depreciation and amortization deductions) shall be allocated between the period ending on the Closing Date and the period beginning after the Closing ~~Date~~ and (iii) any liability for Taxes attributable to any failure by Buyer to comply with any of the covenants or agreements of Buyer or any of its Affiliates contained in ~~proportion to the number of days in each period~~Article 9. (ivc) ~~Any claim for indemnification under this Section 6.5(d) shall be made in writing upon the party from whom indemnification is sought, and shall specify in reasonable detail the basis for such claim.~~ Any indemnity payment required to be made pursuant to this Section ~~6.5(d)~~ 9.1 or otherwise pursuant to this Article 9 shall be made within thirty (30) days after the ~~indemnified party~~ applicable Indemnified Party makes written demand upon the ~~indemnifying party~~applicable Indemnifying Party, but in no case earlier than five (5) ~~Business Days~~ days prior to the date on which the relevant Taxes or other amounts are required to be paid to the applicable Taxing Authority~~. (v) With respect to~~ ; provided that, for the avoidance of doubt, in the case of any ~~Taxes suffered or incurred by any Conveyed Subsidiary (or any Subsidiary thereof) that was~~ Tax Claim, payment shall not ~~wholly owned by Seller Parent (directly or indirectly) as of immediately prior to~~ be required until the ~~Closing, the indemnification obligations of Seller Parent pursuant to Section 6.5(d)(i) in respect~~ resolution of such ~~Taxes (or related costs and expenses) shall in no event exceed an amount equal to (A) the amount of such Taxes (or related costs and expenses) for which the Purchaser~~ Tax Indemnified Parties would otherwise be entitled to indemnification pursuant to Section 6.5(d), as if such Conveyed Subsidiary (or any Subsidiary thereof) were wholly owned by Seller Parent, multiplied by (B) the direct and indirect percentage ownership of Seller Parent of such Conveyed Subsidiary (or Subsidiary thereof) as of immediately prior to the Closing. With respect to any Taxes suffered or incurred by any Subsidiary of Purchaser Parent (including Purchaser and its Subsidiaries) that was not wholly owned by Purchaser Parent (directly or indirectly) as of immediately prior to the Closing, the indemnification obligations of Purchaser Parent pursuant to Section 6.5(d)(ii) in respect of such Taxes (or related costs and expenses) shall in no event exceed an amount equal to (A) the amount of such Taxes (or related costs and expenses) for which the Purchaser Tax Indemnified Parties would otherwise be entitled to indemnification pursuant to Section 6.5(d), as if such Subsidiary were wholly owned by Purchaser Parent, multiplied by (B) the direct and indirect percentage ownership of Purchaser Parent of such Subsidiary as of immediately prior to the ClosingProceeding. (vi) Without duplication to any other amounts paid pursuant to this Section 6.5: (A) Within thirty (30) days following the filing of any Income Tax Return for any Conveyed Subsidiary (or any Subsidiary thereof), on the one hand, or Purchaser (or any Subsidiary thereof, other than the Conveyed Subsidiaries and their Subsidiaries), on the other hand, for any Pre-Closing Tax Period or for any Straddle Period, Seller Parent or Purchaser Parent shall (or Purchaser Parent shall cause Purchaser to) prepare a statement showing (i) the amount of Income Taxes shown as due on such filed Income Tax Return with respect to the relevant Pre-Closing Tax Period or the portion of any Straddle Period ending on and including the Closing Date (the “Final Pre-Closing Income Tax Amount”) and (ii) the amount of the Seller Accrued Income Taxes or Purchaser Accrued Income Taxes, as applicable, attributable to such Income Tax Return as reflected on the Final Closing Statement (the “Pre-Closing Income Tax Amount”) and deliver such statement to Seller Parent and Purchaser Parent, as applicable. Purchaser Parent or Seller Parent, as applicable, shall have a period of fifteen (15) Business Days to provide comments to a schedule prepared (or caused to be prepared) by Seller Parent or Purchaser Parent, respectively. If Purchaser Parent or Seller Parent, as applicable, do not provide any comments to Seller Parent or Purchaser Parent, respectively, during such period, the statement as so prepared shall be final and binding. (B) In the event the Final Pre-Closing Income Tax Amount with respect to any Income Tax Return is less than the amount of the Pre-Closing Income Tax Amount attributable to such Income Tax Return that was included on the Final Closing Statement, the Purchaser shall within five (5) Business Days following the finalization of the Final Pre-Closing Income Tax Amount hereunder (i) pay to Seller Parent the amount of such difference with respect to a Conveyed Subsidiary and their Subsidiaries and (ii) pay to Purchaser Parent the amount of such difference with respect to Purchaser and its Subsidiaries. (vii) The Parties shall use reasonable best efforts to structure any indemnity payment, true-up payment, or payment in respect of Tax Benefits made by any Party pursuant to this Agreement (including pursuant to this Section 6.5, Section 6.6 and Article VII) and any payment made by Purchaser Parent to Purchaser pursuant to Section 2.8 or Section 2.9 in the manner set forth in Clause 10 of the Structuring Considerations Agreement. The Parties shall use reasonable best efforts to structure as a special dividend any payment made by Purchaser to Purchaser Parent pursuant to Section 2.8, Section 2.9 or this Section 6.5.

Appears in 1 contract

Sources: Stock Purchase Agreement (Victory Capital Holdings, Inc.)

Tax Indemnification. (i) ~~Subject to Section 6.5(d)(v)~~The Securityholders shall indemnify Parent, ~~from~~ the Surviving Company, their respective Affiliates and ~~after~~ the ~~Closing~~directors, ~~Seller Parent agrees to indemnify~~ officers, employees, stockholders, agents, representatives, successors and ~~hold harmless Purchaser and its Subsidiaries (including the Conveyed Subsidiaries and their Subsidiaries after the Closing Date)~~ assigns of each such Person (collectively, the “~~Purchaser Tax~~ Parent Indemnified Parties”~~) from and against all liability~~), ~~without duplication~~on a several basis, in each case, for ~~(1) Taxes~~ such Securityholder’s Pro Rata Indemnification Percentage, of any and all Losses actually incurred or suffered by any of the ~~Conveyed Subsidiaries and their Subsidiaries for any Pre-Closing Tax Period (including any Taxes payable in respect of an election under Section 965(h) of the Code)~~Parent Indemnified Parties, ~~(2) Taxes of any Seller (other than any Transfer Taxes and VAT for which Purchaser is responsible hereunder) including~~directly or indirectly, ~~Taxes (other than Taxes of the Conveyed Subsidiaries and their Subsidiaries) imposed with respect to~~as a result of, relating to or arising out of or ~~relating~~ constituting any Excluded Taxes. Indemnification payments pursuant to this Section 8.03(b) shall be payable (A) in the ~~Purchased Assets or the Business~~ case of Taxes shown to be due on Tax Returns for a Pre-Closing ~~Tax Period, (3) Taxes of any Person (other than the Conveyed Subsidiaries and their Subsidiaries) for a Pre-Closing Tax~~ Period ~~for which any Conveyed Subsidiary (or any Subsidiary thereof) is liable under Treasury Regulation Section 1.1502-6 (~~or a ~~similar provision of state, local or foreign Law~~Straddle Period to be filed in accordance with Section 8.03(a), or as a transferee or successor or by Contract (other than Contracts that do not relate primarily to Taxes), (4) Taxes arising out of or resulting from any breach of any covenant or agreement of Seller Parent or any of its Affiliates contained in this Agreement, five (5) ~~Taxes for a Pre-Closing Tax Period imposed on~~ Business Days before such payment is due to the appropriate Governmental Entity and (~~x) any transaction effected pursuant to Section 2.3(b~~B), ~~(y) any settlement~~ in the case of ~~any intercompany accounts of Seller Parent~~ all other Excluded Taxes, the date a final determination to such effect is made by the appropriate Governmental Entity or ~~its Subsidiaries pursuant to Section 6.7~~court, or if earlier, the date such Taxes are actually due, payable or paid to the appropriate Governmental Entity (~~z) any transaction or step forming part~~ it being understood, for the avoidance of doubt, that in the ~~Seller Internal Restructurings,~~ case of clause (~~6) Transfer Taxes for which Seller Parent is responsible under Section 6.5(j~~B), ~~(7) Taxes required to be deducted~~ a Tax is not due or ~~withheld with respect to the payment of the Purchase Consideration or any amounts~~ payable to Seller Parent pursuant to Section 2.8 or Section 2.9, including any penalties imposed on Purchaser as a result of Purchaser’s failure to deduct or withhold any such amounts that Purchaser (or a Purchaser Designated Affiliate) was permitted to withhold under Section 2.10 (in each case, subject to Purchaser’s compliance with the notice and cooperation requirements of Section 2.10 and except for any such Taxes (and any related penalties) required to be deducted or withheld solely as a result of any assignment by Purchaser or its Affiliates for which Purchaser is responsible pursuant to Section 10.3), (8) Taxes arising from any breach of any representation or warranty contained in Section 4.16(k), (9) Taxes arising as a result of any Conveyed Subsidiary or any Subsidiary of any Conveyed Subsidiary at any time ceasing to be a member of a group for the purposes of any Tax, of which group Seller Parent or any Subsidiary of Seller Parent is or was also a member and (10) any costs and expenses, including reasonable legal and accounting fees and expenses, attributable to any item described in clauses (1) through (9) (any such Taxes for which Seller Parent is responsible pursuant to this Section 6.5(d)(i), subject to the following proviso, “Seller Indemnified Taxes”); provided that Seller Parent shall not be required to indemnify or hold harmless any Purchaser Tax Indemnified Party from and against any liability pursuant to this Section 6.5(d)(i) for (A) Taxes attributable to any action taken after the Closing by Purchaser, any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries), or any transferee of Purchaser or any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries), other than any such action that (1) is in the ordinary course of business, (2) is expressly permitted or contemplated by this Agreement, or (3) is required to be taken in order to comply with applicable Law or as a result of a change in applicable Law (a “Purchaser Tax Act”), (B) Taxes that were reflected, accrued or reserved for in the Final Closing Statement, Final Business Working Capital, or Final Business Net Cash, (C) Income Taxes to the extent that ~~a Conveyed Subsidiary or any Subsidiary thereof had any~~ such Tax ~~Assets as of~~ may be contested prior to payment by the ~~close of business on~~ means selected by the Closing Date that were available, or would have been available but for their prior utilization by Purchaser or any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries after the Closing) party entitled to ~~offset or otherwise reduce the applicable Tax Liability in respect of~~ control such Income Taxes (except any Tax Asset reflected as an asset in the Final Closing Statement and taken into account in the calculation of the Final Business Working Capital or the Final Business Net Cash), or (D) Taxes for which Purchaser Parent is responsible under Section 6.5(d)(iicontest). (ii) ~~Subject~~ The right of the Parent Indemnified Parties to indemnification (A) pursuant to Section ~~6.5(d)(v), from and after~~ 8.03(b)(i) pursuant to clause (f) of the ~~Closing, Purchaser Parent~~ definition of Excluded Taxes shall ~~indemnify and hold harmless the Purchaser Tax Indemnified Parties from and against all liability, without duplication, for (1) all~~ not include Taxes of ~~Purchaser Parent~~ any Group Company that are properly allocable to any Post-Closing Period and ~~its Affiliates~~ that result from a breach of the representations and warranties contained in Section 3.10 (other than ~~Purchaser~~ Sections 3.10(k) or 3.10(n)), provided, that, with respect to a breach of the representation contained in clause (iii) of Section 3.10(k), only to the extent that the prepaid amount resulted in an actual increase of the Final Base Purchase Price (taking into account any cash received with respect to the prepaid amount and ~~its Subsidiaries)~~ liability for ~~any Tax period (other than Transfer Taxes and VAT for which Seller Parent is responsible hereunder~~deferred revenue related to such prepaid amount taken into account in Debt)), (2B) pursuant to Section 8.03(b)(i) shall not include Taxes of ~~Purchaser~~ any Group Company actually taken into account in Debt, to the extent resulting in an actual reduction of the Final Base Purchase Price, and (C) shall not include Taxes that result from and that would not have properly been imposed on the Company or any of its Subsidiaries but for an election made by Parent under Section 338 of the Code with respect to the transactions contemplated by this Agreement or any other transaction occurring on the Closing Date after the Closing at the direction of Parent and not expressly provided for and permitted by this Agreement. (~~other than~~ iii) If an adjustment to Taxes for the ~~Conveyed Subsidiaries and their Subsidiaries) for any~~ Pre-Closing Period that results in an Excluded Tax ~~Period, (3) Taxes of any Person for a Pre-Closing Tax Period~~ for which Purchaser (or any Subsidiary thereof other than any Conveyed Subsidiaries and their Subsidiaries) is liable under Treasury Regulation Section 1.1502-6 (or a similar provision of state, local or foreign Law), or as a transferee or successor or by Contract (other than Contracts that do not relate primarily to Taxes), (4) Taxes arising out of or resulting from any breach of any covenant or agreement of Purchaser Parent, Purchaser or their respective Affiliates contained in this Agreement, (5) Transfer Taxes for which Purchaser the Parent is responsible under Section 6.5(j), (6) Taxes arising from any breach of any representation or warranty in Section 5.17(k), (7) Taxes for a Pre-Closing Tax Period imposed on (x) any settlement of any intercompany accounts of Purchaser or any Subsidiary of Purchaser, on the one hand, and Purchaser Parent or any Subsidiary of Purchaser Parent (other than Purchaser and its Subsidiaries), on the other hand, Indemnified Parties are actually indemnified pursuant to Section ~~6.7 or (y~~8.03(b)(i) ~~any transaction or step forming part of the Purchaser Internal Restructurings, (8)~~ also results in an actual reduction in cash Taxes required to be deducted or withheld with respect to any amounts payable to Purchaser Parent pursuant to Section 2.8 or Section 2.9, including any penalties imposed on Purchaser as a result of Purchaser’s failure to deduct or withhold any such amounts, (9) Taxes arising as a result of Purchaser or any Subsidiary of Purchaser (other than any Conveyed Subsidiary or a Subsidiary thereof) at any time ceasing to be a member of a group for the purposes of any Tax, of which group Purchaser Parent or any Subsidiary of Purchaser Parent (other than Purchaser or any Subsidiary of Purchaser) is or was also a member and (10) any costs and expenses, including reasonable legal and accounting fees and expenses, attributable to any item described in clauses (1) through (9) (any such Taxes for which Purchaser Parent is responsible pursuant to this Section 6.5(d)(ii), subject to the following proviso, “Purchaser Parent Indemnified Taxes”); provided Post-Closing Period that ~~Purchaser Parent shall not~~ would otherwise be ~~required to indemnify or hold harmless any Purchaser Tax Indemnified Party from and against any liability for (A) Taxes attributable to any action taken after the Closing~~ payable by ~~Seller~~ Parent or any of its Affiliates, determined on a “with and without” basis, and for the avoidance of doubt, other than ~~any such action that (1) is in the ordinary course of business, (2) is expressly permitted or contemplated by this Agreement, or (3) is required to be taken in order to comply with applicable Law or~~ as a result of ~~a change in applicable Law (a “Seller~~ any adjustment to Tax ~~Act”)~~basis, (Bthen the amount of such indemnification shall be reduced by the amount of such reduction of Tax, provided that this Section 8.03(b)(iii) shall not apply to any such reduction of Tax realized following the date that is the one year anniversary after the Closing Date. In the event such reduction of Taxes ~~that were reflected~~payable is subsequently reduced or disallowed, ~~accrued or reserved for in~~ the ~~Final Closing Statement, Final Purchaser Working Capital or the Final Purchaser Net Cash, (C) Income~~ amount of Taxes to the extent reduced or disallowed (the “Disallowed Taxes”) shall constitute indemnifiable Excluded Taxes pursuant to Section 8.03(b), provided, however, that ~~Purchaser~~ (A) to the extent such amounts are reduced or ~~any Subsidiary thereof had any Tax Assets as~~ disallowed before the date of payment of the ~~close~~ Additional Consideration or the Adjusted Earn-Out Amount, respectively, the amount of ~~business on~~ the ~~Closing Date that were available,~~ Disallowed Taxes shall be set off against the Additional Consideration or ~~would have been available but for their prior utilization by Purchaser or any of its Affiliates~~ the Earn-Out (including the ~~Conveyed Subsidiaries and their Subsidiaries after the Closing~~Unpaid Aditi Earn-Out, if applicable), ~~to offset or otherwise reduce the~~ as applicable ~~Tax Liability in respect of such Income Taxes (except any Tax Asset reflected as an asset in the Final Closing Statement~~ and taken into account in the calculation of the Final Purchaser Working Capital or the Final Purchaser Net Cash), or (D) Taxes for which Seller Parent is responsible under Section 6.5(d)(i). (iii) To the extent permitted or required by applicable Law, the taxable year of each of the Conveyed Subsidiaries and their Subsidiaries and any Subsidiary of Purchaser that includes the Closing Date shall be treated as closing on (and including) the Closing Date. Otherwise, for purposes of this Agreement, in the case of any Straddle Period: (A) Property Taxes allocable to the Pre-Closing Tax Period shall be computed based upon the ratio of the number of days in the Pre-Closing Tax Period to the number of days in the entire Straddle Period; and (B) ~~Taxes (other than Property Taxes) allocable~~ otherwise, the amount that would otherwise be released to the ~~Pre-Closing Tax Period~~ Securityholders under the provisions of Section 8.04 or under Article X shall be ~~computed as if such Tax period ended as of~~ reduced by the ~~close of business on the Closing Date and, in the case of any~~ Disallowed Taxes ~~of Conveyed Subsidiaries (~~and ~~their Subsidiaries) and Seller~~ shall instead be released to Parent, or in the case of any Taxes of Purchaser Parent and Purchaser (and their Subsidiaries prior to the Closing), in each case attributable to the ownership of any equity interest in any partnership or other “flow through” entity for tax purposes (including of any “controlled foreign corporation,” as defined under the Code) as if the Tax period of such partnership or other “flow through” entity ended as of the close of business on the Closing Date with the Taxes of such entity for the Pre-Closing Tax Period deemed to include any Taxes on the allocable income of such entity in respect of such Tax period; provided that exemptions, allowances or deductions that are calculated on an annual basis (including depreciation and amortization deductions) shall be allocated between the period ending on the Closing Date and the period beginning after the Closing Date in proportion to the number of days in each period. (iv) ~~Any claim for~~ The right of the Parent Indemnified Parties to indemnification under ~~this~~ Section ~~6.5(d~~8.03(b) shall be made in writing upon the party from whom indemnification is sought, and shall specify in reasonable detail the basis for such claim. Any indemnity payment required to be made pursuant to this Section 6.5(d) shall be made within thirty (30) days after the indemnified party makes written demand upon the indemnifying party, but in no case earlier than five (5) Business Days prior to the date on which the relevant Taxes are required to be paid to the applicable Taxing Authority. (v) With respect to any Taxes suffered or incurred by any Conveyed Subsidiary (or any Subsidiary thereof) that was not wholly owned by Seller Parent (directly or indirectly) as of immediately prior to the Closing, the indemnification obligations of Seller Parent pursuant to Section 6.5(d)(i) in respect of such Taxes (or related costs and expenses) shall in no event exceed an amount equal to (A) survive the amount of such Taxes (or related costs and expenses) for which the Purchaser Tax Indemnified Parties would otherwise be entitled to indemnification pursuant to Section 6.5(d), as if such Conveyed Subsidiary (or any Subsidiary thereof) were wholly owned by Seller Parent, multiplied by (B) the direct and indirect percentage ownership of Seller Parent of such Conveyed Subsidiary (or Subsidiary thereof) as of immediately prior to the Closing. With respect to any Taxes suffered or incurred by any Subsidiary of Purchaser Parent (including Purchaser and its Subsidiaries) that was not wholly owned by Purchaser Parent (directly or indirectly) as of immediately prior to the Closing, the indemnification obligations of Purchaser Parent pursuant to Section 6.5(d)(ii) in respect of such Taxes (or related costs and expenses) shall in no event exceed an amount equal to (A) the amount of such Taxes (or related costs and expenses) for which the Purchaser Tax Indemnified Parties would otherwise be entitled to indemnification pursuant to Section 6.5(d), as if such Subsidiary were wholly owned by Purchaser Parent, multiplied by (B) the direct and indirect percentage ownership of Purchaser Parent of such Subsidiary as of immediately prior to the Closing. (vi) Without duplication to any other amounts paid pursuant to this Section 6.5: (A) Within thirty (30) days following the filing of any Income Tax Return for any Conveyed Subsidiary (or any Subsidiary thereof), on the one hand, or Purchaser (or any Subsidiary thereof, other than the Conveyed Subsidiaries and their Subsidiaries), on the other hand, for any Pre-Closing Tax Period or for any Straddle Period, Seller Parent or Purchaser Parent shall (or Purchaser Parent shall cause Purchaser to) prepare a statement showing (i) the amount of Income Taxes shown as due on such filed Income Tax Return with respect to the relevant Pre-Closing Tax Period or the portion of any Straddle Period ending on and including the Closing Date (the “Final Pre-Closing Income Tax Amount”) and (ii) the amount consummation of the Seller Accrued Income Taxes or Purchaser Accrued Income Taxes, as applicable, attributable to such Income Tax Return as reflected on the Final Closing Statement (the “Pre-Closing Income Tax Amount”) and deliver such statement to Seller Parent and Purchaser Parent, as applicable. Purchaser Parent or Seller Parent, as applicable, shall have a period of fifteen (15) Business Days to provide comments to a schedule prepared (or caused to be prepared) by Seller Parent or Purchaser Parent, respectively. If Purchaser Parent or Seller Parent, as applicable, do not provide any comments to Seller Parent or Purchaser Parent, respectively, during such period, the statement as so prepared shall be final and binding. (B) In the event the Final Pre-Closing Income Tax Amount with respect to any Income Tax Return is less than the amount of the Pre-Closing Income Tax Amount attributable to such Income Tax Return that was included on the Final Closing Statement, the Purchaser shall within five (5) Business Days following the finalization of the Final Pre-Closing Income Tax Amount hereunder (i) pay to Seller Parent the amount of such difference with respect to a Conveyed Subsidiary and their Subsidiaries and (ii) pay to Purchaser Parent the amount of such difference with respect to Purchaser and its Subsidiaries. (vii) The Parties shall use reasonable best efforts to structure any indemnity payment, true-up payment, or payment in respect of Tax Benefits made by any Party pursuant to this Agreement (including pursuant to this Section 6.5, Section 6.6 and Article VII) and any payment made by Purchaser Parent to Purchaser pursuant to Section 2.8 or Section 2.9 transactions contemplated hereby in the manner set forth in ~~Clause 10~~ the proviso set forth in Section 10.02(c), (B) be subject to clause (y) of the ~~Structuring Considerations Agreement. The Parties~~ definition of “Parent Cap” contained in the proviso contained in Section 10.02(a), (C) be recoverable in the manner set forth in Section 10.04(c) and (D) each Parent Indemnified Party shall use commercially reasonable ~~best~~ efforts to ~~structure~~ seek to recover from the shareholders of Aditi Technologies Private Limited any Excluded Taxes imposed on Aditi Technologies Private Limited for which indemnification would be sought under this Section 8.03 after becoming aware of any event which would reasonably be expected to give rise thereto; provided, that, (x) no amounts that would otherwise be released to the Securityholders as a ~~special dividend~~ result of such recovery shall be released until such amounts are actually recovered by Parent, and the amount so released shall be reduced by the amount of any costs of such recovery, (y) Parent shall have the exclusive right to control any such efforts to recover Excluded Taxes and (z) the obligation of the Parent Indemnified Parties pursuant to this Section 8.03(b)(iv)(D) shall not prevent the release and payment ~~made by Purchaser~~ of any amounts to ~~Purchaser Parent~~ a Governmental Entity. Except as set forth in the above provisions of this Section 8.03(b)(iv), claims for indemnification with respect to Taxes (other than claims in respect of the representations and warranties set forth in Section 3.14 or claims pursuant to Section ~~2.8~~5.08, which claims shall be governed by Article X, and other than claims for indemnification pursuant to Section ~~2.9 or~~ 10.02(a)(ix)), shall be governed exclusively by this Section ~~6.5~~8.03 and Section 8.04, and the provisions of Article X shall not apply; provided, that claims for indemnification for a breach of the representations and warranties contained in Section 3.10(n) shall be indemnifiable pursuant to and in accordance with the provisions of Section 10.01, 10.02(a), 10.02(c) and 10.04(a), 10.04(b), 10.04(c), 10.04(e), 10.04(f), 10.04(g), 10.04(h) and 10.06 (and the other provisions of Article X shall not apply).

Appears in 1 contract

Sources: Merger Agreement (Harman International Industries Inc /De/)

Tax Indemnification. (ia) ~~Subject to Section 6.5(d)(v), from~~ From and after the Closing, Seller ~~Parent agrees to~~ and Parent, jointly and severally, shall indemnify ~~and hold harmless Purchaser and~~ Purchaser, its ~~Subsidiaries~~ affiliates (including the ~~Conveyed Subsidiaries~~ Company and the Subsidiaries) and each of their ~~Subsidiaries after the Closing Date)~~ respective officers, directors, employees, stockholders, agents and representatives (~~collectively,~~ the “Purchaser ~~Tax Indemnified Parties~~Indemnitees”) against and hold them harmless from ~~and against~~ (i) all ~~liability, without duplication,~~ liability for ~~(1)~~ Taxes of the ~~Conveyed Subsidiaries and their~~ Company and/or any of its Subsidiaries for ~~any~~ Pre-Closing Tax ~~Period~~ Periods; (~~including any Taxes payable in respect of an election under Section 965(h~~ii) ~~of the Code), (2)~~ all liability for Taxes of any ~~Seller~~ member of an affiliated, consolidated, combined or unitary group of which the Company or any of its Subsidiaries is or was a member (other than the Company or its Subsidiaries) on or prior to the Closing Date pursuant to Treasury Regulation § 1.1502-6 or any ~~Transfer Taxes and VAT~~ comparable provision of state, local, or foreign law or regulation; (iii) all liability for ~~which Purchaser is responsible hereunder) including, Taxes (other than~~ Taxes of the ~~Conveyed~~ Company and/or any of its Subsidiaries ~~and their Subsidiaries~~(A) ~~imposed with respect to, arising out of or relating to the Purchased Assets or the Business~~ for a Pre-Closing Tax Period, (3) Taxes of any Person (other than the Conveyed Subsidiaries and their Subsidiaries) for a Pre-Closing Tax Period for which any Conveyed Subsidiary (or any Subsidiary thereof) is liable under Treasury Regulation Section 1.1502-6 (or a similar provision of state, local or foreign Law), or as a transferee or successor or by Contract (other than Contracts that do not relate primarily to Taxes), (4) Taxes arising out of or resulting from any breach of any covenant or agreement of Seller Parent or any of its Affiliates contained in this Agreement, (5) Taxes for a Pre-Closing Tax Period imposed on (x) any transaction effected pursuant to Section 2.3(b), (y) any settlement of any intercompany accounts of Seller Parent or its Subsidiaries pursuant to Section 6.7, or (z) any transaction or step forming part of the Seller Internal Restructurings, (6) Transfer Taxes for which Seller Parent is responsible under Section 6.5(j), (7) Taxes required to be deducted or withheld with respect to the payment of the Purchase Consideration or any amounts payable to Seller Parent pursuant to Section 2.8 or Section 2.9, including any penalties imposed on Purchaser as a result of Purchaser’s failure to deduct or withhold any such amounts that Purchaser (or a Purchaser Designated Affiliate) was permitted to withhold under Section 2.10 (in each case, subject to Purchaser’s compliance with the notice and cooperation requirements of Section 2.10 and except for any such Taxes (and any related penalties) required to be deducted or withheld solely Periods as a result of any ~~assignment by Purchaser or its Affiliates for which Purchaser is responsible pursuant to~~ breach of the representations and warranties set forth in Section ~~10.3)~~3.12, (~~8) Taxes arising from any breach of any representation or warranty contained in Section 4.16(k), (9~~B) ~~Taxes arising~~ for Post-Closing Tax Periods as a result of any ~~Conveyed~~ breach of the representations and warranties set forth in Section 3.12(l) or (C) for any taxable period as a result of any breach by Seller or Parent of any covenant relating to Taxes; (iv) all liability for Taxes allocated to Seller as provided in Section 5.06(b); (v) all liability for Taxes with respect to any Subsidiary that is a controlled foreign corporation (within the meaning of Section 957(a) of the Code) imposed on Purchaser and its affiliates (including the Company or any ~~Subsidiary~~ Subsidiary) under Section 951 of ~~any Conveyed Subsidiary at any time ceasing to be a member of a group~~ the Code for the ~~purposes~~ portion of the Straddle Period ending on the Closing Date, such amount determined in the manner described in Section 5.08(b)(ii); (vi) all liability for Taxes of the Company and/or any ~~Tax,~~ of ~~which group~~ its Subsidiaries for Post-Closing Tax Periods attributable to a Seller Tax Act or all liability for Taxes of the Company and/or any of its Subsidiaries for any taxable period attributable to a failure to comply by Parent or ~~any Subsidiary of~~ Seller ~~Parent is or was also a member~~ with its obligations under this Agreement; and (10vii) ~~any costs and expenses, including~~ all liability for reasonable legal ~~and accounting~~ fees and ~~expenses,~~ out-of-pocket expenses attributable to any item ~~described~~ in clauses (1i) through (9vi) above (~~any such Taxes for which Seller Parent is responsible~~ collectively, “Indemnified Tax Liabilities”). Notwithstanding the foregoing, (i) there shall be no indemnification obligation under this Section 9.01(a) to the extent that it would duplicate recovery pursuant to any other indemnification provision of this Agreement, including this Section ~~6.5(d)(i~~9.01(a), ~~subject to the following proviso, “~~and (ii) neither Seller ~~Indemnified Taxes”); provided that Seller~~ nor Parent shall ~~not be required to~~ indemnify or and hold harmless any Purchaser ~~Tax Indemnified Party~~ Indemnitee from ~~and against~~ any liability ~~pursuant to this Section 6.5(d)(i)~~ for ~~(A)~~ Taxes attributable to any action increasing the amount indemnified against by Seller and Parent hereunder (including any election by Purchaser or its affiliates (including the Company or any Subsidiary) made or deemed made under Section 338 of the Code with respect to the Company or any Subsidiary) taken after the Closing by Purchaser, any of its ~~Affiliates~~ affiliates (including the ~~Conveyed Subsidiaries and their Subsidiaries~~Company or any Subsidiary), or any transferee of Purchaser or any of its ~~Affiliates~~ affiliates (~~including the Conveyed Subsidiaries and their Subsidiaries),~~ other than any such action ~~that (1) is in the ordinary course of business, (2) is expressly permitted~~ required by Applicable Law or required or contemplated by this Agreement~~, or (3~~) ~~is required to be taken in order to comply with applicable Law or as a result of a change in applicable Law~~ (a “Purchaser Tax Act”)) or attributable to a breach by Purchaser of its obligations under this Agreement, ~~(B) Taxes that were reflected~~but in each case, ~~accrued or reserved for in the Final Closing Statement, Final Business Working Capital, or Final Business Net Cash, (C) Income Taxes~~ only to the extent ~~that~~ the amount indemnified against by Seller and Parent increases as a Conveyed Subsidiary or any Subsidiary thereof had any Tax Assets as of the close of business on the Closing Date that were available, or would have been available but for their prior utilization by Purchaser or any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries after the Closing) to offset or otherwise reduce the applicable Tax Liability in respect result of such ~~Income Taxes (except any~~ Purchaser Tax ~~Asset reflected as an asset in the Final Closing Statement and taken into account in the calculation of the Final Business Working Capital~~ Act or ~~the Final Business Net Cash), or (D) Taxes for which Purchaser Parent is responsible under Section 6.5(d)(ii)~~such breach. (iib) ~~Subject to Section 6.5(d)(v)~~Except as otherwise provided in this Agreement, from and after the Closing, Purchaser ~~Parent~~ and the Company, jointly and severally, shall indemnify Seller and its affiliates and each of their respective officers, directors, employees, stockholders, agents and representatives (the “Seller Indemnitees”) and hold them harmless ~~the Purchaser Tax Indemnified Parties~~ from ~~and against all liability, without duplication, for~~ (1i) all liability for Taxes of ~~Purchaser Parent and~~ the Company and/or any of its ~~Affiliates (other than Purchaser and its Subsidiaries)~~ Subsidiaries for any Post-Closing Tax ~~period~~ Period; (~~other than Transfer Taxes and VAT~~ ii) all liability for ~~which Seller Parent is responsible hereunder), (2)~~ Taxes of ~~Purchaser and~~ the Company and/or any of its Subsidiaries ~~(other than the Conveyed Subsidiaries and their Subsidiaries)~~ for ~~any~~ Pre-Closing Tax ~~Period, (3)~~ Periods attributable to a Purchaser Tax Act or all liability for Taxes of the Company and/or any ~~Person~~ of its Subsidiaries for any taxable period attributable to a ~~Pre-Closing Tax Period for which~~ failure to comply by Purchaser ~~(or any Subsidiary thereof other than any Conveyed Subsidiaries and their Subsidiaries) is liable~~ with its obligations under Treasury Regulation Section 1.1502-6 (or a similar provision of state, local or foreign Law), or as a transferee or successor or by Contract (other than Contracts that do not relate primarily to Taxes), (4) Taxes arising out of or resulting from any breach of any covenant or agreement of Purchaser Parent, Purchaser or their respective Affiliates contained in this Agreement, ; (5iii) ~~Transfer~~ all liability for Taxes for which Purchaser Parent is responsible under Section 6.5(j), (6) Taxes arising from any breach of any representation or warranty in Section 5.17(k), (7) Taxes for a Pre-Closing Tax Period imposed on (x) any settlement of any intercompany accounts of Purchaser or any Subsidiary of Purchaser, on the one hand, and Purchaser Parent or any Subsidiary of Purchaser Parent (other than Purchaser and its Subsidiaries), on the other hand, pursuant to Section 6.7 or (y) any transaction or step forming part of the ~~Purchaser Internal Restructurings, (8) Taxes required to be deducted or withheld with respect to~~ Company and/or any ~~amounts payable to Purchaser Parent pursuant to Section 2.8 or Section 2.9, including~~ of its Subsidiaries for any ~~penalties imposed on Purchaser~~ taxable period as a result of ~~Purchaser’s failure to deduct or withhold~~ any ~~such amounts, (9) Taxes arising as a result of~~ breach by Purchaser ~~or any Subsidiary of Purchaser (other than any Conveyed Subsidiary or a Subsidiary thereof) at any time ceasing to be a member of a group for the purposes~~ of any ~~Tax, of which group~~ covenant relating to Taxes; (iv) all liability for Taxes allocated to Purchaser ~~Parent or any Subsidiary of Purchaser Parent (other than Purchaser or any Subsidiary of Purchaser) is or was also a member~~ as provided in Section 5.06(b); and (10v) ~~any costs and expenses, including~~ all liability for reasonable legal ~~and accounting~~ fees and ~~expenses,~~ out-of-pocket expenses attributable to any item ~~described~~ in ~~clauses~~ clause (1i) through (9) (any such Taxes for which Purchaser Parent is responsible pursuant to this Section 6.5(d)(ii), subject to the following proviso, “Purchaser Parent Indemnified Taxes”); provided that Purchaser Parent shall not be required to indemnify or hold harmless any Purchaser Tax Indemnified Party from and against any liability for (A) Taxes attributable to any action taken after the Closing by Seller Parent or any of its Affiliates, other than any such action that (1) is in the ordinary course of business, (2) is expressly permitted or contemplated by this Agreement, or (3) is required to be taken in order to comply with applicable Law or as a result of a change in applicable Law (a “Seller Tax Act”), (B) Taxes that were reflected, accrued or reserved for in the Final Closing Statement, Final Purchaser Working Capital or the Final Purchaser Net Cash, (C) Income Taxes to the extent that Purchaser or any Subsidiary thereof had any Tax Assets as of the close of business on the Closing Date that were available, or would have been available but for their prior utilization by Purchaser or any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries after the Closing), to offset or otherwise reduce the applicable Tax Liability in respect of such Income Taxes (except any Tax Asset reflected as an asset in the Final Closing Statement and taken into account in the calculation of the Final Purchaser Working Capital or the Final Purchaser Net Cash), or (D) Taxes for which Seller Parent is responsible under Section 6.5(d)(i). (iii) To the extent permitted or required by applicable Law, the taxable year of each of the Conveyed Subsidiaries and their Subsidiaries and any Subsidiary of Purchaser that includes the Closing Date shall be treated as closing on (and including) the Closing Date. Otherwise, for purposes of this Agreement, in the case of any Straddle Period: (A) Property Taxes allocable to the Pre-Closing Tax Period shall be computed based upon the ratio of the number of days in the Pre-Closing Tax Period to the number of days in the entire Straddle Period; and (B) Taxes (other than Property Taxes) allocable to the Pre-Closing Tax Period shall be computed as if such Tax period ended as of the close of business on the Closing Date and, in the case of any Taxes of Conveyed Subsidiaries (and their Subsidiaries) and Seller Parent, or in the case of any Taxes of Purchaser Parent and Purchaser (and their Subsidiaries prior to the Closing), in each case attributable to the ownership of any equity interest in any partnership or other “flow through” entity for tax purposes (including of any “controlled foreign corporation,” as defined under the Code) as if the Tax period of such partnership or other “flow through” entity ended as of the close of business on the Closing Date with the Taxes of such entity for the Pre-Closing Tax Period deemed to include any Taxes on the allocable income of such entity in respect of such Tax period; provided that exemptions, allowances or deductions that are calculated on an annual basis (including depreciation and amortization deductions) shall be allocated between the period ending on the Closing Date and the period beginning after the Closing Date in proportion to the number of days in each period. (iv) ~~Any claim for indemnification under this Section 6.5(d) shall be made in writing upon~~ above. Notwithstanding the party from whom indemnification is sought, and shall specify in reasonable detail the basis for such claim. Any indemnity payment required to be made pursuant to this Section 6.5(d) shall be made within thirty (30) days after the indemnified party makes written demand upon the indemnifying party, but in no case earlier than five (5) Business Days prior to the date on which the relevant Taxes are required to be paid to the applicable Taxing Authority. (v) With respect to any Taxes suffered or incurred by any Conveyed Subsidiary (or any Subsidiary thereof) that was not wholly owned by Seller Parent (directly or indirectly) as of immediately prior to the Closing, the indemnification obligations of Seller Parent pursuant to Section 6.5(d)(i) in respect of such Taxes (or related costs and expenses) shall in no event exceed an amount equal to (A) the amount of such Taxes (or related costs and expenses) for which the Purchaser Tax Indemnified Parties would otherwise be entitled to indemnification pursuant to Section 6.5(d), as if such Conveyed Subsidiary (or any Subsidiary thereof) were wholly owned by Seller Parent, multiplied by (B) the direct and indirect percentage ownership of Seller Parent of such Conveyed Subsidiary (or Subsidiary thereof) as of immediately prior to the Closing. With respect to any Taxes suffered or incurred by any Subsidiary of Purchaser Parent (including Purchaser and its Subsidiaries) that was not wholly owned by Purchaser Parent (directly or indirectly) as of immediately prior to the Closing, the indemnification obligations of Purchaser Parent pursuant to Section 6.5(d)(ii) in respect of such Taxes (or related costs and expenses) shall in no event exceed an amount equal to (A) the amount of such Taxes (or related costs and expenses) for which the Purchaser Tax Indemnified Parties would otherwise be entitled to indemnification pursuant to Section 6.5(d), as if such Subsidiary were wholly owned by Purchaser Parent, multiplied by (B) the direct and indirect percentage ownership of Purchaser Parent of such Subsidiary as of immediately prior to the Closing. (vi) Without duplication to any other amounts paid pursuant to this Section 6.5: (A) Within thirty (30) days following the filing of any Income Tax Return for any Conveyed Subsidiary (or any Subsidiary thereof), on the one hand, or Purchaser (or any Subsidiary thereof, other than the Conveyed Subsidiaries and their Subsidiaries), on the other hand, for any Pre-Closing Tax Period or for any Straddle Period, Seller Parent or Purchaser Parent shall (or Purchaser Parent shall cause Purchaser to) prepare a statement showing (i) the amount of Income Taxes shown as due on such filed Income Tax Return with respect to the relevant Pre-Closing Tax Period or the portion of any Straddle Period ending on and including the Closing Date (the “Final Pre-Closing Income Tax Amount”) and (ii) the amount of the Seller Accrued Income Taxes or Purchaser Accrued Income Taxes, as applicable, attributable to such Income Tax Return as reflected on the Final Closing Statement (the “Pre-Closing Income Tax Amount”) and deliver such statement to Seller Parent and Purchaser Parent, as applicable. Purchaser Parent or Seller Parent, as applicable, shall have a period of fifteen (15) Business Days to provide comments to a schedule prepared (or caused to be prepared) by Seller Parent or Purchaser Parent, respectively. If Purchaser Parent or Seller Parent, as applicable, do not provide any comments to Seller Parent or Purchaser Parent, respectively, during such period, the statement as so prepared shall be final and binding. (B) In the event the Final Pre-Closing Income Tax Amount with respect to any Income Tax Return is less than the amount of the Pre-Closing Income Tax Amount attributable to such Income Tax Return that was included on the Final Closing Statement, the Purchaser shall within five (5) Business Days following the finalization of the Final Pre-Closing Income Tax Amount hereunder (i) pay to Seller Parent the amount of such difference with respect to a Conveyed Subsidiary and their Subsidiaries and (ii) pay to Purchaser Parent the amount of such difference with respect to Purchaser and its Subsidiaries. (vii) The Parties shall use reasonable best efforts to structure any indemnity payment, true-up payment, or payment in respect of Tax Benefits made by any Party pursuant to this Agreement (including pursuant to this Section 6.5, Section 6.6 and Article VII) and any payment made by Purchaser Parent to Purchaser pursuant to Section 2.8 or Section 2.9 in the manner set forth in Clause 10 of the Structuring Considerations Agreement. The Parties shall use reasonable best efforts to structure as a special dividend any payment made by Purchaser to Purchaser Parent pursuant to Section 2.8, Section 2.9 or this Section 6.5.foregoing,

Appears in 1 contract

Sources: Stock Purchase Agreement (Brinks Co)

Tax Indemnification. ~~(i) Subject to Section 6.5(d)(v), from~~ The Crowns jointly and ~~after the Closing, Seller Parent agrees to~~ severally shall ------------------- indemnify and hold harmless ~~Purchaser~~ Buyer, CAC I, CAC II, Network and ~~its Subsidiaries (including the Conveyed Subsidiaries~~ Mobile and their ~~Subsidiaries after~~ respective affiliates from (i) all liability for Taxes of Network, Mobile or the Crown Communications Business for all taxable period ending on or before the Closing ~~Date~~Date and the portion of any taxable period ending on the Closing Date where the taxable period includes (but does not end on) the Closing Date (~~collectively,~~ the ~~“Purchaser~~ "Tax Indemnified Parties”) from and against all liability, without duplication, for (1) Taxes of the Conveyed Subsidiaries and their Subsidiaries for any Pre-Closing Tax Period (including any Taxes payable in respect of an election under Section 965(h) of the CodeIndemnification Period"), (2ii) (A) all liability (as a result of Treasury -------------------------- Regulation (S) 1.1502-6(a) or otherwise) for Taxes of any ~~Seller (~~person other than Network or Mobile which is or has ever been affiliated with Network or Mobile or with whom Network or Mobile has ever joined (or has ever been required to join) in filing any ~~Transfer Taxes and VAT for which Purchaser is responsible hereunder) including~~consolidated, ~~Taxes (other than Taxes of the Conveyed Subsidiaries and their Subsidiaries) imposed~~ combined, unitary or aggregate return, or with respect toto which Network, ~~arising out~~ Mobile or the Crown Communications Business is a transferee or a successor, (iii) any loss, liability, claim, damage or expense attributable to any breach of any warranty or representation contained in Section 5.23 (relating to the Purchased Assets or the Business for a Pre-Closing Tax Period, (3) Taxes of any Person (other than the Conveyed Subsidiaries and their Subsidiaries) for a Pre-Closing Tax Period for which any Conveyed Subsidiary (or any Subsidiary thereof) is liable under Treasury Regulation Section 1.1502-6 (or a similar provision of state, local or foreign LawTaxes), or ~~as a transferee or successor or~~ any breach by ~~Contract~~ the Crown Parties of any covenant contained in this Article 13 (~~other than Contracts that do not relate primarily~~ relating to Taxes), (4iv) all liability for Taxes arising ~~out of~~ (directly or ~~resulting from any breach of any covenant or agreement of Seller Parent or any of its Affiliates contained in this Agreement, (5~~indirectly) Taxes for a Pre-Closing Tax Period imposed on (x) any transaction effected pursuant to Section 2.3(b), (y) any settlement of any intercompany accounts of Seller Parent or its Subsidiaries pursuant to Section 6.7, or (z) any transaction or step forming part of the Seller Internal Restructurings, (6) Transfer Taxes for which Seller Parent is responsible under Section 6.5(j), (7) Taxes required to be deducted or withheld with respect to the payment of the Purchase Consideration or any amounts payable to Seller Parent pursuant to Section 2.8 or Section 2.9, including any penalties imposed on Purchaser as a result of ~~Purchaser’s failure~~ or otherwise attributable to ~~deduct~~ the sale of the Crown Communications Business, the Mergers or ~~withhold~~ otherwise in connection with this Agreement or the transactions contemplated hereby, other than any ~~such amounts that Purchaser (or a Purchaser Designated Affiliate) was permitted~~ transfer taxes to ~~withhold under Section 2.10 (in each case, subject to Purchaser’s compliance with~~ the ~~notice and cooperation requirements of Section 2.10 and except for any such Taxes (and any related penalties) required to be deducted or withheld solely as a result of any assignment~~ extent assumed by ~~Purchaser or its Affiliates for which Purchaser is responsible~~ Buyer pursuant to Section ~~10.3)~~13.5, (8) Taxes arising from any breach of any representation or warranty contained in Section 4.16(k), (9) Taxes arising as a result of any Conveyed Subsidiary or any Subsidiary of any Conveyed Subsidiary at any time ceasing to be a member of a group for the purposes of any Tax, of which group Seller Parent or any Subsidiary of Seller Parent is or was also a member and (10v) ~~any costs and expenses~~all liability for reasonable legal, ~~including reasonable legal and accounting~~ accounting, appraisal, consulting or similar fees and ~~expenses,~~ expenses attributable to any item ~~described~~ in clauses (1i) through (9iv) (any such Taxes for which Seller Parent is responsible pursuant to this Section 6.5(d)(i), subject to the following proviso, “Seller Indemnified Taxes”); provided that Seller Parent shall not be required to indemnify or hold harmless any Purchaser Tax Indemnified Party from and against any liability pursuant to this Section 6.5(d)(i) for (A) Taxes attributable to any action taken after the Closing by Purchaser, any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries), or any transferee of Purchaser or any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries), other than any such action that (1) is in the ordinary course of business, (2) is expressly permitted or contemplated by this Agreement, or (3) is required to be taken in order to comply with applicable Law or as a result of a change in applicable Law (a “Purchaser Tax Act”), (B) Taxes that were reflected, accrued or reserved for in the Final Closing Statement, Final Business Working Capital, or Final Business Net Cash, (C) Income Taxes to the extent that a Conveyed Subsidiary or any Subsidiary thereof had any Tax Assets as of the close of business on the Closing Date that were available, or would have been available but for their prior utilization by Purchaser or any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries after the Closing) to offset or otherwise reduce the applicable Tax Liability in respect of such Income Taxes (except any Tax Asset reflected as an asset in the Final Closing Statement and taken into account in the calculation of the Final Business Working Capital or the Final Business Net Cash), or (D) Taxes for which Purchaser Parent is responsible under Section 6.5(d)(ii). (ii) Subject to Section 6.5(d)(v), from and after the Closing, Purchaser Parent shall indemnify and hold harmless the Purchaser Tax Indemnified Parties from and against all liability, without duplication, for (1) all Taxes of Purchaser Parent and its Affiliates (other than Purchaser and its Subsidiaries) for any Tax period (other than Transfer Taxes and VAT for which Seller Parent is responsible hereunder), (2) Taxes of Purchaser and its Subsidiaries (other than the Conveyed Subsidiaries and their Subsidiaries) for any Pre-Closing Tax Period, (3) Taxes of any Person for a Pre-Closing Tax Period for which Purchaser (or any Subsidiary thereof other than any Conveyed Subsidiaries and their Subsidiaries) is liable under Treasury Regulation Section 1.1502-6 (or a similar provision of state, local or foreign Law), or as a transferee or successor or by Contract (other than Contracts that do not relate primarily to Taxes), (4) Taxes arising out of or resulting from any breach of any covenant or agreement of Purchaser Parent, Purchaser or their respective Affiliates contained in this Agreement, (5) Transfer Taxes for which Purchaser Parent is responsible under Section 6.5(j), (6) Taxes arising from any breach of any representation or warranty in Section 5.17(k), (7) Taxes for a Pre-Closing Tax Period imposed on (x) any settlement of any intercompany accounts of Purchaser or any Subsidiary of Purchaser, on the one hand, and Purchaser Parent or any Subsidiary of Purchaser Parent (other than Purchaser and its Subsidiaries), on the other hand, pursuant to Section 6.7 or (y) any transaction or step forming part of the Purchaser Internal Restructurings, (8) Taxes required to be deducted or withheld with respect to any amounts payable to Purchaser Parent pursuant to Section 2.8 or Section 2.9, including any penalties imposed on Purchaser as a result of Purchaser’s failure to deduct or withhold any such amounts, (9) Taxes arising as a result of Purchaser or any Subsidiary of Purchaser (other than any Conveyed Subsidiary or a Subsidiary thereof) at any time ceasing to be a member of a group for the purposes of any Tax, of which group Purchaser Parent or any Subsidiary of Purchaser Parent (other than Purchaser or any Subsidiary of Purchaser) is or was also a member and (10) any costs and expenses, including reasonable legal and accounting fees and expenses, attributable to any item described in clauses (1) through (9) (any such Taxes for which Purchaser Parent is responsible pursuant to this Section 6.5(d)(ii), subject to the following proviso, “Purchaser Parent Indemnified Taxes”); provided that Purchaser Parent shall not be required to indemnify or hold harmless any Purchaser Tax Indemnified Party from and against any liability for (A) Taxes attributable to any action taken after the Closing by Seller Parent or any of its Affiliates, other than any such action that (1) is in the ordinary course of business, (2) is expressly permitted or contemplated by this Agreement, or (3) is required to be taken in order to comply with applicable Law or as a result of a change in applicable Law (a “Seller Tax Act”), (B) Taxes that were reflected, accrued or reserved for in the Final Closing Statement, Final Purchaser Working Capital or the Final Purchaser Net Cash, (C) Income Taxes to the extent that Purchaser or any Subsidiary thereof had any Tax Assets as of the close of business on the Closing Date that were available, or would have been available but for their prior utilization by Purchaser or any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries after the Closing), to offset or otherwise reduce the applicable Tax Liability in respect of such Income Taxes (except any Tax Asset reflected as an asset in the Final Closing Statement and taken into account in the calculation of the Final Purchaser Working Capital or the Final Purchaser Net Cash), or (D) Taxes for which Seller Parent is responsible under Section 6.5(d)(i). (iii) To the extent permitted or required by applicable Law, the taxable year of each of the Conveyed Subsidiaries and their Subsidiaries and any Subsidiary of Purchaser that includes the Closing Date shall be treated as closing on (and including) the Closing Dateabove. ~~Otherwise, for purposes of this Agreement, in~~ In the case of any taxable period that includes (but does not end on) the Closing Date (a "Straddle Period:"): --------------- (Ai) real, personal and intangible property Taxes ("Property ~~Taxes allocable to~~ Taxes") -------------- of Network, Mobile or the ~~Pre-Closing Tax~~ Crown Communications Business for the Straddle Period shall be ~~computed based upon~~ equal to the ~~ratio~~ amount of such property Taxes for the entire Straddle Period multiplied by a fraction, the numerator of which is the number of days during the Straddle Period that are in the Pre-Closing Tax Period to and the denominator of which is the number of days in the entire Straddle Period; and (Bii) the Taxes of Network, Mobile or the Crown Communications Business (other than ~~Property~~ property Taxes) ~~allocable to~~ for the Pre-Closing Tax Period shall be computed as if such ~~Tax~~ taxable period ended as of the close of business on the Closing Date and, in the case of any Taxes of Conveyed Subsidiaries (and their Subsidiaries) and Seller Parent, or in the case of any Taxes of Purchaser Parent and Purchaser (and their Subsidiaries prior to the Closing), in each case attributable to the ownership of any equity interest in any partnership or other “flow through” entity for tax purposes (including of any “controlled foreign corporation,” as defined under the Code) as if the Tax period of such partnership or other “flow through” entity ended as of the close of business on the Closing Date with the Taxes of such entity for the Pre-Closing Tax Period deemed to include any Taxes on the allocable income of such entity in respect of such Tax period; provided that exemptions, allowances or deductions that are calculated on an annual basis (including depreciation and amortization deductions) shall be allocated between the period ending on the Closing Date and the period beginning after the Closing Date in proportion to the number of days in each periodDate. (iv) Any claim for indemnification under this Section 6.5(d) shall be made in writing upon the party from whom indemnification is sought, and shall specify in reasonable detail the basis for such claim. Any indemnity payment required to be made pursuant to this Section 6.5(d) shall be made within thirty (30) days after the indemnified party makes written demand upon the indemnifying party, but in no case earlier than five (5) Business Days prior to the date on which the relevant Taxes are required to be paid to the applicable Taxing Authority. (v) With respect to any Taxes suffered or incurred by any Conveyed Subsidiary (or any Subsidiary thereof) that was not wholly owned by Seller Parent (directly or indirectly) as of immediately prior to the Closing, the indemnification obligations of Seller Parent pursuant to Section 6.5(d)(i) in respect of such Taxes (or related costs and expenses) shall in no event exceed an amount equal to (A) the amount of such Taxes (or related costs and expenses) for which the Purchaser Tax Indemnified Parties would otherwise be entitled to indemnification pursuant to Section 6.5(d), as if such Conveyed Subsidiary (or any Subsidiary thereof) were wholly owned by Seller Parent, multiplied by (B) the direct and indirect percentage ownership of Seller Parent of such Conveyed Subsidiary (or Subsidiary thereof) as of immediately prior to the Closing. With respect to any Taxes suffered or incurred by any Subsidiary of Purchaser Parent (including Purchaser and its Subsidiaries) that was not wholly owned by Purchaser Parent (directly or indirectly) as of immediately prior to the Closing, the indemnification obligations of Purchaser Parent pursuant to Section 6.5(d)(ii) in respect of such Taxes (or related costs and expenses) shall in no event exceed an amount equal to (A) the amount of such Taxes (or related costs and expenses) for which the Purchaser Tax Indemnified Parties would otherwise be entitled to indemnification pursuant to Section 6.5(d), as if such Subsidiary were wholly owned by Purchaser Parent, multiplied by (B) the direct and indirect percentage ownership of Purchaser Parent of such Subsidiary as of immediately prior to the Closing. (vi) Without duplication to any other amounts paid pursuant to this Section 6.5: (A) Within thirty (30) days following the filing of any Income Tax Return for any Conveyed Subsidiary (or any Subsidiary thereof), on the one hand, or Purchaser (or any Subsidiary thereof, other than the Conveyed Subsidiaries and their Subsidiaries), on the other hand, for any Pre-Closing Tax Period or for any Straddle Period, Seller Parent or Purchaser Parent shall (or Purchaser Parent shall cause Purchaser to) prepare a statement showing (i) the amount of Income Taxes shown as due on such filed Income Tax Return with respect to the relevant Pre-Closing Tax Period or the portion of any Straddle Period ending on and including the Closing Date (the “Final Pre-Closing Income Tax Amount”) and (ii) the amount of the Seller Accrued Income Taxes or Purchaser Accrued Income Taxes, as applicable, attributable to such Income Tax Return as reflected on the Final Closing Statement (the “Pre-Closing Income Tax Amount”) and deliver such statement to Seller Parent and Purchaser Parent, as applicable. Purchaser Parent or Seller Parent, as applicable, shall have a period of fifteen (15) Business Days to provide comments to a schedule prepared (or caused to be prepared) by Seller Parent or Purchaser Parent, respectively. If Purchaser Parent or Seller Parent, as applicable, do not provide any comments to Seller Parent or Purchaser Parent, respectively, during such period, the statement as so prepared shall be final and binding. (B) In the event the Final Pre-Closing Income Tax Amount with respect to any Income Tax Return is less than the amount of the Pre-Closing Income Tax Amount attributable to such Income Tax Return that was included on the Final Closing Statement, the Purchaser shall within five (5) Business Days following the finalization of the Final Pre-Closing Income Tax Amount hereunder (i) pay to Seller Parent the amount of such difference with respect to a Conveyed Subsidiary and their Subsidiaries and (ii) pay to Purchaser Parent the amount of such difference with respect to Purchaser and its Subsidiaries. (vii) The Parties shall use reasonable best efforts to structure any indemnity payment, true-up payment, or payment in respect of Tax Benefits made by any Party pursuant to this Agreement (including pursuant to this Section 6.5, Section 6.6 and Article VII) and any payment made by Purchaser Parent to Purchaser pursuant to Section 2.8 or Section 2.9 in the manner set forth in Clause 10 of the Structuring Considerations Agreement. The Parties shall use reasonable best efforts to structure as a special dividend any payment made by Purchaser to Purchaser Parent pursuant to Section 2.8, Section 2.9 or this Section 6.5.

Appears in 1 contract

Sources: Asset Purchase and Merger Agreement (Crown Castle International Corp)

Tax Indemnification. (ia) ~~Subject to Section 6.5(d)(v), from~~ From and after the Closing, Seller ~~Parent agrees to~~ will indemnify the Purchaser Indemnified Parties against and hold them harmless ~~Purchaser and its Subsidiaries~~ from (~~including the Conveyed Subsidiaries and their Subsidiaries after the Closing Date~~i) ~~(collectively, the “Purchaser Tax Indemnified Parties”) from and against~~ all ~~liability, without duplication,~~ liability for ~~(1)~~ Taxes of the ~~Conveyed~~ Company and the Subsidiaries ~~and their Subsidiaries for~~ or any ~~Pre-Closing Tax Period (including any Taxes payable in respect~~ affiliated group of ~~an election under Section 965(h) of~~ which the Code), (2) Taxes of any Seller (other than any Transfer Taxes and VAT for which Purchaser is responsible hereunder) including, Taxes (other than Taxes of the Conveyed Subsidiaries and their Subsidiaries) imposed with respect to, arising out of or relating to the Purchased Assets or the Business for a Pre-Closing Tax Period, (3) Taxes of any Person (other than the Conveyed Subsidiaries and their Subsidiaries) for a Pre-Closing Tax Period for which any Conveyed Subsidiary (Company or any Subsidiary thereof) is liable under Treasury Regulation Section 1.1502-6 (or a similar provision of state, local or foreign Law), or as a transferee or successor or by Contract (other than Contracts that do not relate primarily to Taxes), (4) Taxes arising out of or resulting from any breach of any covenant or agreement of Seller Parent or any of its Affiliates contained in this Agreement, (5) Taxes for a Pre-Closing Tax Period imposed on (x) any transaction effected pursuant to Section 2.3(b), (y) any settlement of any intercompany accounts of Seller Parent or its Subsidiaries pursuant to Section 6.7, or (z) any transaction or step forming part of the Seller Internal Restructurings, (6) Transfer Taxes for which Seller Parent is responsible under Section 6.5(j), (7) Taxes required to be deducted or withheld with respect to the payment of the Purchase Consideration or any amounts payable to Seller Parent pursuant to Section 2.8 or Section 2.9, including any penalties imposed on Purchaser as a result of Purchaser’s failure to deduct or withhold any such amounts that Purchaser (or a Purchaser Designated Affiliate) was permitted to withhold under Section 2.10 (in each case, subject to Purchaser’s compliance with the notice and cooperation requirements of Section 2.10 and except for any such Taxes (and any related penalties) required to be deducted or withheld solely as a result of any assignment by Purchaser or its Affiliates for which Purchaser is responsible pursuant to Section 10.3), (8) Taxes arising from any breach of any representation or warranty contained in Section 4.16(k), (9) Taxes arising as a result of any Conveyed Subsidiary or any Subsidiary of any Conveyed Subsidiary at any time ceasing to be has ever been a member of a group for the purposes of any Tax, of which group Seller Parent or any Subsidiary of Seller Parent is or was also a member and (10) any costs and expenses, including reasonable legal and accounting fees and expenses, attributable to any item described in clauses (1) through (9) (any such Taxes for which Seller Parent is responsible pursuant to this Section 6.5(d)(i), subject to the following proviso, “Seller Indemnified Taxes”); provided that Seller Parent shall not be required to indemnify or hold harmless any Purchaser Tax Indemnified Party from and against any liability pursuant to this Section 6.5(d)(i) for (A) Taxes attributable to any action taken after the Closing by Purchaser, any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries), or any transferee of Purchaser or any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries), other than any such action that (1) is in the ordinary course of business, (2) is expressly permitted or contemplated by this Agreement, or (3) is required to be taken in order to comply with applicable Law or as a result of a change in applicable Law (a “Purchaser Tax Act”), (B) Taxes that were reflected, accrued or reserved for in the Final Closing Statement, Final Business Working Capital, or Final Business Net Cash, (C) Income Taxes to the extent that a Conveyed Subsidiary or any Subsidiary thereof had any Tax Assets as of the close of business on the Closing Date that were available, or would have been available but for their prior utilization by Purchaser or any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries after the Closing) to offset or otherwise reduce the applicable Tax Liability in respect of such Income Taxes (except any Tax Asset reflected as an asset in the Final Closing Statement and taken into account in the calculation of the Final Business Working Capital or the Final Business Net Cash), or (D) Taxes for which Purchaser Parent is responsible under Section 6.5(d)(ii). (ii) Subject to Section 6.5(d)(v), from and after the Closing, Purchaser Parent shall indemnify and hold harmless the Purchaser Tax Indemnified Parties from and against all liability, without duplication, for (1) all Taxes of Purchaser Parent and its Affiliates (other than Purchaser and its Subsidiaries) for any Tax period (other than Transfer Taxes and VAT for which Seller Parent is responsible hereunder), (2) Taxes of Purchaser and its Subsidiaries (other than the Conveyed Subsidiaries and their Subsidiaries) for any Pre-Closing Tax Period, (3) Taxes of any Person for a Pre-Closing Tax Period for which Purchaser (or any Subsidiary thereof other than any Conveyed Subsidiaries and their Subsidiaries) is liable under Treasury Regulation Section 1.1502-6 (or a similar provision of state, local or foreign Law), or as a transferee or successor or by Contract (other than Contracts that do not relate primarily to Taxes), (4) Taxes arising out of or resulting from any breach of any covenant or agreement of Purchaser Parent, Purchaser or their respective Affiliates contained in this Agreement, (5) Transfer Taxes for which Purchaser Parent is responsible under Section 6.5(j), (6) Taxes arising from any breach of any representation or warranty in Section 5.17(k), (7) Taxes for a Pre-Closing Tax Period imposed on (x) any settlement of any intercompany accounts of Purchaser or any Subsidiary of Purchaser, on the one hand, and Purchaser Parent or any Subsidiary of Purchaser Parent (other than Purchaser and its Subsidiaries), on the other hand, pursuant to Section 6.7 or (y) any transaction or step forming part of the Purchaser Internal Restructurings, (8) Taxes required to be deducted or withheld with respect to any amounts payable to Purchaser Parent pursuant to Section 2.8 or Section 2.9, including any penalties imposed on Purchaser as a result of Purchaser’s failure to deduct or withhold any such amounts, (9) Taxes arising as a result of Purchaser or any Subsidiary of Purchaser (other than any Conveyed Subsidiary or a Subsidiary thereof) at any time ceasing to be a member of a group for the purposes of any Tax, of which group Purchaser Parent or any Subsidiary of Purchaser Parent (other than Purchaser or any Subsidiary of Purchaser) is or was also a member and (10) any costs and expenses, including reasonable legal and accounting fees and expenses, attributable to any item described in clauses (1) through (9) (any such Taxes for which Purchaser Parent is responsible pursuant to this Section 6.5(d)(ii), subject to the following proviso, “Purchaser Parent Indemnified Taxes”); provided that Purchaser Parent shall not be required to indemnify or hold harmless any Purchaser Tax Indemnified Party from and against any liability for (A) Taxes attributable to any action taken after the Closing by Seller Parent or any of its Affiliates, other than any such action that (1) is in the ordinary course of business, (2) is expressly permitted or contemplated by this Agreement, or (3) is required to be taken in order to comply with applicable Law or as a result of a change in applicable Law (a “Seller Tax Act”), (B) Taxes that were reflected, accrued or reserved for in the Final Closing Statement, Final Purchaser Working Capital or the Final Purchaser Net Cash, (C) Income Taxes to the extent that Purchaser or any Subsidiary thereof had any Tax Assets as of the close of business on the Closing Date that were available, or would have been available but for their prior utilization by Purchaser or any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries after the Closing), to offset or otherwise reduce the applicable Tax Liability in respect of such Income Taxes (except any Tax Asset reflected as an asset in the Final Closing Statement and taken into account in the calculation of the Final Purchaser Working Capital or the Final Purchaser Net Cash), or (D) Taxes for which Seller Parent is responsible under Section 6.5(d)(i). (iii) To the extent permitted or required by applicable Law, the taxable year of each of the Conveyed Subsidiaries and their Subsidiaries and any Subsidiary of Purchaser that includes the Closing Date shall be treated as closing on (and including) the Closing Date. Otherwise, for purposes of this Agreement, in the case of any Straddle Period: (A) Property Taxes allocable to the Pre-Closing Tax Period shall be computed based upon the ratio of the number of days in the Pre-Closing Tax Period to the number of days in the entire Straddle Period; and (B) Taxes (other than Property Taxes) allocable to the Pre-Closing Tax Period shall be computed as if such Tax period ended as of the close of business on the Closing Date and, in the case of any Taxes of Conveyed Subsidiaries (and their Subsidiaries) and Seller Parent, or in the case of any Taxes of Purchaser Parent and Purchaser (and their Subsidiaries prior to the Closing), in each case attributable to the ownership of any equity interest in any partnership or other “flow through” entity for tax purposes (including of any “controlled foreign corporation,” as defined under the Code) as if the Tax period of such partnership or other “flow through” entity ended as of the close of business on the Closing Date with the Taxes of such entity for the Pre-Closing Tax Period ~~deemed~~ or the Pre-Closing Straddle Period, (ii) subject to ~~include~~ Section 7.02(c), all liability for Taxes as a result of the Purchase, including all liability for Taxes arising from any ~~Taxes on~~ 338(h)(10) Election, (iii) any breach by the ~~allocable income~~ Company, the Subsidiaries or any affiliated group of ~~such entity~~ which the Company or any Subsidiary has ever been a member of any representation set forth in ~~respect of such Tax period~~Section 2.09 (determined without regard to any Material Adverse Effect or materiality qualifiers) or any certificate delivered pursuant to Section 1.03(c)(xii), any covenant in Section 4.01(h) or any covenant in Article VII; ~~provided that exemptions, allowances or deductions that are calculated on an annual basis (including depreciation~~ and ~~amortization deductions) shall be allocated between the period ending on the Closing Date and the period beginning after the Closing Date in proportion to the number of days in each period.~~ (iv) ~~Any claim~~ all liability for ~~indemnification under this Section 6.5(d~~reasonable accounting and legal fees and expenses attributable to any item in clauses (i) ~~shall be made~~ through (iii). Notwithstanding anything to the contrary in ~~writing upon~~ the ~~party from whom indemnification is sought~~foregoing, ~~and shall specify in reasonable detail the basis for such claim. Any~~ any indemnity payment ~~required to be made~~ payable pursuant to this Section 6.5(d) shall be made within thirty (30) days after the indemnified party makes written demand upon the indemnifying party, but in no case earlier than five (5) Business Days prior to the date on which the relevant Taxes are required to be paid to the applicable Taxing Authority. (v) With respect to any Taxes suffered or incurred by any Conveyed Subsidiary (or any Subsidiary thereof) that was not wholly owned by Seller Parent (directly or indirectly) as of immediately prior to the Closing, the indemnification obligations of Seller Parent pursuant to Section 6.5(d)(i7.04(a) in respect of ~~such~~ Non-Income Taxes (or related costs and expenses) shall in no event exceed an amount equal to (A) the amount of such Taxes (or related costs and expenses) for which the Purchaser Tax Indemnified Parties would otherwise be entitled to indemnification pursuant to Section 6.5(d), as if such Conveyed Subsidiary (or any Subsidiary thereof) were wholly owned by Seller Parent, multiplied by (B) the direct and indirect percentage ownership of Seller Parent of such Conveyed Subsidiary (or Subsidiary thereof) as of immediately prior to the Closing. With respect to any Taxes suffered or incurred by any Subsidiary of Purchaser Parent (including Purchaser and its Subsidiaries) that was not wholly owned by Purchaser Parent (directly or indirectly) as of immediately prior to the Closing, the indemnification obligations of Purchaser Parent pursuant to Section 6.5(d)(ii) in respect of such Taxes (or related costs and expenses) shall in no event exceed an amount equal to (A) the amount of such Taxes (or related costs and expenses) for which the Purchaser Tax Indemnified Parties would otherwise be entitled to indemnification pursuant to Section 6.5(d), as if such Subsidiary were wholly owned by Purchaser Parent, multiplied by (B) the direct and indirect percentage ownership of Purchaser Parent of such Subsidiary as of immediately prior to the Closing. (vi) Without duplication to any other amounts paid pursuant to this Section 6.5: (A) Within thirty (30) days following the filing of any Income Tax Return for any Conveyed Subsidiary (or any Subsidiary thereof), on the one hand, or Purchaser (or any Subsidiary thereof, other than the Conveyed Subsidiaries and their Subsidiaries), on the other hand, for any Pre-Closing Tax Period or ~~for any~~ Pre-Closing Straddle ~~Period~~Period shall only be payable as a Covered Loss pursuant to Section 11.05(a). (b) From and after the Closing, Purchaser will indemnify the Seller ~~Parent or Purchaser Parent shall (or Purchaser Parent shall cause Purchaser to) prepare a statement showing~~ Indemnified Parties and hold them harmless from (i) all liability for Taxes of the ~~amount of Income Taxes shown as due on such filed Income Tax Return with respect to~~ Company and the ~~relevant Pre~~Subsidiaries for any Post-Closing Tax Period or ~~the portion of any Straddle Period ending on and including the Closing Date (the “Final Pre~~Post-Closing ~~Income Tax Amount”) and~~ Straddle Period, (ii) pursuant to Section 7.02(c), 50% of the amount of any Transfer Taxes, (iii) any breach by the ~~Seller Accrued Income Taxes~~ Company, the Subsidiaries or Purchaser ~~Accrued Income Taxes~~of any covenant in Article VII, ~~as applicable,~~ and (iv) all liability for reasonable legal fees and expenses attributable to such Income Tax Return as reflected on the Final Closing Statement (the “Pre-Closing Income Tax Amount”) and deliver such statement to Seller Parent and Purchaser Parent, as applicable. Purchaser Parent or Seller Parent, as applicable, shall have a period of fifteen (15) Business Days to provide comments to a schedule prepared (or caused to be prepared) by Seller Parent or Purchaser Parent, respectively. If Purchaser Parent or Seller Parent, as applicable, do not provide any comments to Seller Parent or Purchaser Parent, respectively, during such period, the statement as so prepared shall be final and binding. (B) In the event the Final Pre-Closing Income Tax Amount with respect to any Income Tax Return is less than the amount of the Pre-Closing Income Tax Amount attributable to such Income Tax Return that was included on the Final Closing Statement, the Purchaser shall within five (5) Business Days following the finalization of the Final Pre-Closing Income Tax Amount hereunder item in clauses (i) ~~pay to Seller Parent the amount of such difference with respect to a Conveyed Subsidiary and their Subsidiaries and~~ or (~~ii) pay to Purchaser Parent the amount of such difference with respect to Purchaser and its Subsidiaries~~iii). (vii) The Parties shall use reasonable best efforts to structure any indemnity payment, true-up payment, or payment in respect of Tax Benefits made by any Party pursuant to this Agreement (including pursuant to this Section 6.5, Section 6.6 and Article VII) and any payment made by Purchaser Parent to Purchaser pursuant to Section 2.8 or Section 2.9 in the manner set forth in Clause 10 of the Structuring Considerations Agreement. The Parties shall use reasonable best efforts to structure as a special dividend any payment made by Purchaser to Purchaser Parent pursuant to Section 2.8, Section 2.9 or this Section 6.5.

Appears in 1 contract

Sources: Stock Purchase Agreement (H&r Block Inc)

Tax Indemnification. (a) Seller agrees that Buyer is to have no liability for any (i) Subject to Section 6.5(d)(v), from and after the Closing, Seller Parent agrees to indemnify and hold harmless Purchaser and its Subsidiaries (including the Conveyed Subsidiaries and their Subsidiaries after the Closing Date) (collectively, the “Purchaser Tax ~~Indemnified Parties”) from and against all liability, without duplication, for (1) Taxes~~ of the ~~Conveyed Subsidiaries and their Subsidiaries for~~ Company or any ~~Pre-Closing Tax Period (including any Taxes payable in respect of an election under Section 965(h)~~ of the ~~Code), (2) Taxes of any Seller (~~other than any Transfer Taxes and VAT for which Purchaser is responsible hereunder) including, Taxes (other than Taxes of the Conveyed Subsidiaries and their Subsidiaries) imposed with respect to, arising out of or relating Transferred Entities related to ~~the Purchased Assets or the Business for~~ a Pre-Closing Tax Period, (3ii) ~~Taxes~~ liability for the payment of any ~~Person~~ amount of the type described in clause (~~other than~~ i) as a result of being or having been before the ~~Conveyed~~ Closing a member of an affiliated, consolidated, combined or unitary group for Taxes (including the Seller Group), (iii) Tax arising from a breach by Seller of any covenant or agreement contained in ‎Article 8, (iv) any Taxes (net of any related foreign Tax credits actually used by the Transferred Entities) attributable to amounts includable in income under Subpart F of the Code that is attributable to the income and operations of the Foreign Subsidiaries ~~and their Subsidiaries) for~~ during a Pre-Closing Tax ~~Period for~~ Period, which shall be determined by assuming that the Tax years of the Foreign Subsidiaries closed on the Closing Date, and (v) ISS Foreign Loan Taxes, and Seller agrees to indemnify, defend and hold harmless each Buyer Tax Indemnified Party against any ~~Conveyed Subsidiary~~ such Tax (together with any interest, penalty, addition to Tax or any Subsidiary thereof) is liable under Treasury Regulation Section 1.1502-6 (or a similar provision of state, local or foreign Law), or as a transferee or successor or by Contract (other than Contracts that do not relate primarily to Taxesadditional amount), (4any Tax described in (i), (ii), (iii), (iv) ~~Taxes~~ and (v), a “Seller Indemnified Tax”) and (vi) any costs and expenses (including reasonable expenses of investigation and attorneys’ fees and expenses), arising out of or incident to the imposition, defense, assessment or assertion of any Seller Indemnified Tax (any amount described in (i), (ii), (iii), (iv), (v) or (vi), a “Seller Indemnified Tax Loss”); provided that Seller shall have no liability for the payment of any Seller Indemnified Tax Loss (w) attributable to or resulting from any action described in ‎Section 8.01(a), including an election made by Buyer under Section 338 of the Code or any comparable provision of Applicable Law with respect to the transactions contemplated by this Agreement, (x) for which Buyer is otherwise required to indemnify Seller under ‎Section 8.05(b), (y) to the extent that such Seller Indemnified Tax Loss is reflected in the calculation of Closing Working Capital or (z) in respect of ISS Foreign Loan Taxes (I) in excess of $ 2,000,000, or (II) for any Tax year beginning on or after January 1, 2020 (each of (w), (x), (y) and (z), a “Seller Indemnified Tax Loss Limitation”). (b) Buyer agrees that Seller is to have no liability for (i) any Tax resulting from the breach of any covenant or agreement ~~of Seller Parent~~ made or ~~any of its Affiliates~~ to be performed by Buyer contained in this ~~Agreement,~~ ‎Article 8 or (5ii) any Taxes of Buyer or any Transferred Entity for a ~~Pre~~Post-Closing Tax Period ~~imposed on~~ (x) other than any ~~transaction effected pursuant to Section 2.3(b),~~ Taxes (y) ~~any settlement of any intercompany accounts of Seller Parent or its Subsidiaries pursuant to~~ described in ‎Section 8.05(a)(iii) through Section ~~6.7~~8.05(a)(v), or (z) resulting from a misrepresentation or breach of a Post-Closing Tax Representation), and Buyer agrees to indemnify and hold harmless each Seller Tax Indemnified Party against any ~~transaction~~ such Tax (together with any interest, penalty, addition to Tax or ~~step forming part~~ additional amount) (any Tax described in (i) or (ii), a “Buyer Indemnified Tax”), and (iii) any costs and expenses (including, without limitation, reasonable expenses of investigation and attorneys’ fees and expenses) arising out of or incident to the ~~Seller Internal Restructurings~~imposition, assessment or assertion of any Buyer Indemnified Tax (~~6) Transfer Taxes for which Seller Parent is responsible under Section 6.5(j~~any amount described in (i), (7ii) ~~Taxes required~~ or (iii), a “Buyer Indemnified Tax Loss”). (c) The amount of any indemnification payment made under this ‎Section 8.05 by the party making an indemnification payment under ‎Section 8.05 (the “Tax Indemnifying Party”) shall be net of any Tax Savings realized by the party receiving such payment (the “Tax Indemnified Party”) arising from the incurrence of the event giving rise to ~~be deducted~~ such payment or ~~withheld~~ payment of any indemnification payment with respect thereto. For purposes hereof, “Tax Savings” means, with respect to any event for which an indemnification payment is made under ‎Section 8.05, an amount by which the ~~payment~~ net Tax liability of the ~~Purchase Consideration~~ Tax Indemnified Party (or ~~any amounts payable to Seller Parent pursuant to Section 2.8~~ a group filing a Tax Return that includes such Tax Indemnified Party) is actually reduced in, or ~~Section 2.9~~prior to, ~~including any penalties imposed on Purchaser~~ the year the Indemnified Tax Loss is incurred as a result of ~~Purchaser’s failure to deduct~~ the Indemnified Tax Loss or ~~withhold any such amounts~~ the amount of Tax refund that Purchaser (or a Purchaser Designated Affiliate) was permitted to withhold under Section 2.10 (in each case, subject to Purchaser’s compliance with the notice and cooperation requirements of Section 2.10 and except for any such Taxes (and any related penalties) required to be deducted or withheld solely is generated as a result of such Indemnified Tax Loss in, or prior to, the year the Indemnified Tax Loss is incurred, and any ~~assignment by Purchaser~~ related interest received from the applicable Taxing Authority in, or ~~its Affiliates for which Purchaser~~ prior to, the year the Indemnified Tax Loss is responsible pursuant to Section 10.3), (8) Taxes arising from any breach of any representation or warranty contained in Section 4.16(k), (9) Taxes arising as a result of any Conveyed Subsidiary or any Subsidiary of any Conveyed Subsidiary at any time ceasing to be a member of a group for incurred. If the purposes of any Tax, of which group Seller Parent or any Subsidiary of Seller Parent is or was also a member and (10) any costs and expenses, including reasonable legal and accounting fees and expenses, attributable to any item described in clauses (1) through (9) (any such Taxes for which Seller Parent is responsible pursuant to this Section 6.5(d)(i), subject to the following proviso, “Seller Indemnified Taxes”); provided that Seller Parent shall not be required to indemnify or hold harmless any Purchaser Tax Indemnified Party ~~from and against~~ receives any ~~liability pursuant~~ net Tax Savings subsequent to ~~this Section 6.5(d)(i) for (A) Taxes attributable to any action taken after~~ an indemnification payment by the ~~Closing by Purchaser~~Tax Indemnifying Party, any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries), or any transferee of Purchaser or any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries), other than any then such action that (1) is in the ordinary course of business, (2) is expressly permitted or contemplated by this Agreement, or (3) is required to be taken in order to comply with applicable Law or as a result of a change in applicable Law (a “Purchaser Tax Act”), (B) Taxes that were reflected, accrued or reserved for in the Final Closing Statement, Final Business Working Capital, or Final Business Net Cash, (C) Income Taxes to the extent that a Conveyed Subsidiary or any Subsidiary thereof had any Tax Assets as of the close of business on the Closing Date that were available, or would have been available but for their prior utilization by Purchaser or any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries after the Closing) to offset or otherwise reduce the applicable Tax Liability in respect of such Income Taxes (except any Tax Asset reflected as an asset in the Final Closing Statement and taken into account in the calculation of the Final Business Working Capital or the Final Business Net Cash), or (D) Taxes for which Purchaser Parent is responsible under Section 6.5(d)(ii). (ii) Subject to Section 6.5(d)(v), from and after the Closing, Purchaser Parent shall indemnify and hold harmless the Purchaser Tax Indemnified Parties from and against all liability, without duplication, for (1) all Taxes of Purchaser Parent and its Affiliates (other than Purchaser and its Subsidiaries) for any Tax period (other than Transfer Taxes and VAT for which Seller Parent is responsible hereunder), (2) Taxes of Purchaser and its Subsidiaries (other than the Conveyed Subsidiaries and their Subsidiaries) for any Pre-Closing Tax Period, (3) Taxes of any Person for a Pre-Closing Tax Period for which Purchaser (or any Subsidiary thereof other than any Conveyed Subsidiaries and their Subsidiaries) is liable under Treasury Regulation Section 1.1502-6 (or a similar provision of state, local or foreign Law), or as a transferee or successor or by Contract (other than Contracts that do not relate primarily to Taxes), (4) Taxes arising out of or resulting from any breach of any covenant or agreement of Purchaser Parent, Purchaser or their respective Affiliates contained in this Agreement, (5) Transfer Taxes for which Purchaser Parent is responsible under Section 6.5(j), (6) Taxes arising from any breach of any representation or warranty in Section 5.17(k), (7) Taxes for a Pre-Closing Tax Period imposed on (x) any settlement of any intercompany accounts of Purchaser or any Subsidiary of Purchaser, on the one hand, and Purchaser Parent or any Subsidiary of Purchaser Parent (other than Purchaser and its Subsidiaries), on the other hand, pursuant to Section 6.7 or (y) any transaction or step forming part of the Purchaser Internal Restructurings, (8) Taxes required to be deducted or withheld with respect to any amounts payable to Purchaser Parent pursuant to Section 2.8 or Section 2.9, including any penalties imposed on Purchaser as a result of Purchaser’s failure to deduct or withhold any such amounts, (9) Taxes arising as a result of Purchaser or any Subsidiary of Purchaser (other than any Conveyed Subsidiary or a Subsidiary thereof) at any time ceasing to be a member of a group for the purposes of any Tax, of which group Purchaser Parent or any Subsidiary of Purchaser Parent (other than Purchaser or any Subsidiary of Purchaser) is or was also a member and (10) any costs and expenses, including reasonable legal and accounting fees and expenses, attributable to any item described in clauses (1) through (9) (any such Taxes for which Purchaser Parent is responsible pursuant to this Section 6.5(d)(ii), subject to the following proviso, “Purchaser Parent Indemnified Taxes”); provided that Purchaser Parent shall not be required to indemnify or hold harmless any Purchaser Tax Indemnified Party from and against any liability for (A) Taxes attributable to any action taken after the Closing by Seller Parent or any of its Affiliates, other than any such action that (1) is in the ordinary course of business, (2) is expressly permitted or contemplated by this Agreement, or (3) is required to be taken in order to comply with applicable Law or as a result of a change in applicable Law (a “Seller Tax Act”), (B) Taxes that were reflected, accrued or reserved for in the Final Closing Statement, Final Purchaser Working Capital or the Final Purchaser Net Cash, (C) Income Taxes shall pay to the ~~extent that Purchaser or any Subsidiary thereof had any~~ Tax Assets as of the close of business on the Closing Date that were available, or would have been available but for their prior utilization by Purchaser or any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries after the Closing), to offset or otherwise reduce the applicable Tax Liability in respect of such Income Taxes (except any Tax Asset reflected as an asset in the Final Closing Statement and taken into account in the calculation of the Final Purchaser Working Capital or the Final Purchaser Net Cash), or (D) Taxes for which Seller Parent is responsible under Section 6.5(d)(i). (iii) To the extent permitted or required by applicable Law, the taxable year of each of the Conveyed Subsidiaries and their Subsidiaries and any Subsidiary of Purchaser that includes the Closing Date shall be treated as closing on (and including) the Closing Date. Otherwise, for purposes of this Agreement, in the case of any Straddle Period: (A) Property Taxes allocable to the Pre-Closing Tax Period shall be computed based upon the ratio of the number of days in the Pre-Closing Tax Period to the number of days in the entire Straddle Period; and (B) Taxes (other than Property Taxes) allocable to the Pre-Closing Tax Period shall be computed as if such Tax period ended as of the close of business on the Closing Date and, in the case of any Taxes of Conveyed Subsidiaries (and their Subsidiaries) and Seller Parent, or in the case of any Taxes of Purchaser Parent and Purchaser (and their Subsidiaries prior to the Closing), in each case attributable to the ownership of any equity interest in any partnership or other “flow through” entity for tax purposes (including of any “controlled foreign corporation,” as defined under the Code) as if the Tax period of such partnership or other “flow through” entity ended as of the close of business on the Closing Date with the Taxes of such entity for the Pre-Closing Tax Period deemed to include any Taxes on the allocable income of such entity in respect of such Tax period; provided that exemptions, allowances or deductions that are calculated on an annual basis (including depreciation and amortization deductions) shall be allocated between the period ending on the Closing Date and the period beginning after the Closing Date in proportion to the number of days in each period. (iv) Any claim for indemnification under this Section 6.5(d) shall be made in writing upon the party from whom indemnification is sought, and shall specify in reasonable detail the basis for such claim. Any indemnity payment required to be made pursuant to this Section 6.5(d) shall be made within thirty (30) days after the indemnified party makes written demand upon the indemnifying party, but in no case earlier than five (5) Business Days prior to the date on which the relevant Taxes are required to be paid to the applicable Taxing Authority. (v) With respect to any Taxes suffered or incurred by any Conveyed Subsidiary (or any Subsidiary thereof) that was not wholly owned by Seller Parent (directly or indirectly) as of immediately prior to the Closing, the indemnification obligations of Seller Parent pursuant to Section 6.5(d)(i) in respect of such Taxes (or related costs and expenses) shall in no event exceed an amount equal to (A) Indemnifying Party the amount of such ~~Taxes (or related costs and expenses) for which~~ net Tax Savings up the ~~Purchaser~~ amount received by the Tax Indemnified ~~Parties would otherwise be entitled to indemnification pursuant to Section 6.5(d)~~Party, ~~as if such Conveyed Subsidiary (or~~ net of any Subsidiary thereof) were wholly owned by Seller Parent, multiplied by (B) the direct and indirect percentage ownership of Seller Parent of such Conveyed Subsidiary (or Subsidiary thereof) as of immediately prior to the Closing. With respect to any Taxes suffered or expenses incurred by any Subsidiary of Purchaser Parent (including Purchaser and its Subsidiaries) that was not wholly owned by Purchaser Parent (directly or indirectly) as of immediately prior to the Closing, the indemnification obligations of Purchaser Parent pursuant to Section 6.5(d)(ii) in respect of such ~~Taxes (or related costs and expenses) shall in no event exceed an amount equal to (A) the amount of such Taxes (or related costs and expenses) for which the Purchaser~~ Tax Indemnified ~~Parties would otherwise be entitled to indemnification pursuant to Section 6.5(d), as if~~ Party in collecting such ~~Subsidiary were wholly owned by Purchaser Parent, multiplied by (B) the direct and indirect percentage ownership of Purchaser Parent of such Subsidiary as of immediately prior to the Closing~~amount. (vi) Without duplication to any other amounts paid pursuant to this Section 6.5: (A) Within thirty (30) days following the filing of any Income Tax Return for any Conveyed Subsidiary (or any Subsidiary thereof), on the one hand, or Purchaser (or any Subsidiary thereof, other than the Conveyed Subsidiaries and their Subsidiaries), on the other hand, for any Pre-Closing Tax Period or for any Straddle Period, Seller Parent or Purchaser Parent shall (or Purchaser Parent shall cause Purchaser to) prepare a statement showing (i) the amount of Income Taxes shown as due on such filed Income Tax Return with respect to the relevant Pre-Closing Tax Period or the portion of any Straddle Period ending on and including the Closing Date (the “Final Pre-Closing Income Tax Amount”) and (ii) the amount of the Seller Accrued Income Taxes or Purchaser Accrued Income Taxes, as applicable, attributable to such Income Tax Return as reflected on the Final Closing Statement (the “Pre-Closing Income Tax Amount”) and deliver such statement to Seller Parent and Purchaser Parent, as applicable. Purchaser Parent or Seller Parent, as applicable, shall have a period of fifteen (15) Business Days to provide comments to a schedule prepared (or caused to be prepared) by Seller Parent or Purchaser Parent, respectively. If Purchaser Parent or Seller Parent, as applicable, do not provide any comments to Seller Parent or Purchaser Parent, respectively, during such period, the statement as so prepared shall be final and binding. (B) In the event the Final Pre-Closing Income Tax Amount with respect to any Income Tax Return is less than the amount of the Pre-Closing Income Tax Amount attributable to such Income Tax Return that was included on the Final Closing Statement, the Purchaser shall within five (5) Business Days following the finalization of the Final Pre-Closing Income Tax Amount hereunder (i) pay to Seller Parent the amount of such difference with respect to a Conveyed Subsidiary and their Subsidiaries and (ii) pay to Purchaser Parent the amount of such difference with respect to Purchaser and its Subsidiaries. (vii) The Parties shall use reasonable best efforts to structure any indemnity payment, true-up payment, or payment in respect of Tax Benefits made by any Party pursuant to this Agreement (including pursuant to this Section 6.5, Section 6.6 and Article VII) and any payment made by Purchaser Parent to Purchaser pursuant to Section 2.8 or Section 2.9 in the manner set forth in Clause 10 of the Structuring Considerations Agreement. The Parties shall use reasonable best efforts to structure as a special dividend any payment made by Purchaser to Purchaser Parent pursuant to Section 2.8, Section 2.9 or this Section 6.5.

Appears in 1 contract

Sources: Stock Purchase Agreement (MSCI Inc.)

Tax Indemnification. Independent, and without duplication of the indemnification provisions set forth in Article IX of this Agreement: (ia) ~~Subject to Section 6.5(d)(v)~~Seller shall indemnify Buyer, the Company and the Company's subsidiaries and hold them harmless from and after the Closing, Seller Parent agrees to indemnify and hold harmless Purchaser and its Subsidiaries (including the Conveyed Subsidiaries and their Subsidiaries after the Closing Date) (collectively, the “Purchaser Tax Indemnified Parties”) from and against all liabilityagainst, without duplication, (i) all liability for all Taxes (1except as provided in paragraph (b) ~~Taxes~~ of ~~the Conveyed Subsidiaries and their Subsidiaries for any Pre-Closing Tax Period (including any Taxes payable in respect of an election under~~ this Section ~~965(h~~6.1) of the ~~Code), (2) Taxes~~ Company and its subsidiaries for all taxable periods ending on or before the Closing Date and the portion ending on the Closing Date of any ~~Seller~~ taxable period that includes (~~other than any Transfer Taxes and VAT for which Purchaser is responsible hereunder~~but does not end on) ~~including, Taxes~~ the Closing Date (~~other than Taxes of the Conveyed Subsidiaries and their Subsidiaries) imposed with respect to, arising out of or relating to the Purchased Assets or the Business for a~~ "Pre-Closing Tax Period"), (3ii) all liability for Taxes resulting from a valid, timely and effective elec- tion under Section 338(h)(10) of the Code and Section 1.338(h)(10)-1 of the Treasury Regulations and any comparable election under state or local tax law with respect to the Company and the subsidiaries set forth in Section 6.1 of the Disclosure Schedule (collectively, the "Election"), as contemplated by Section 6.3 hereof, (iii) any and all liability for Taxes of any ~~Person (other than~~ member of an affiliated, consolidated, combined or unitary group of which the ~~Conveyed Subsidiaries and their Subsidiaries) for a Pre-Closing Tax Period for which~~ Company or any ~~Conveyed Subsidiary~~ of its subsidiaries (or any ~~Subsidiary thereof~~predecessor of any of the foregoing) is ~~liable under~~ or was a member on or prior to the Closing Date, including by reason of the liability of the Company or any of its subsidiaries (or any predecessor of any of the foregoing) pursuant to Treasury Regulation Section 1.1502-6 (or a any analogous or similar ~~provision of~~ state, local or foreign ~~Law)~~law or regulation, (iv) any payments required to be made after the Closing Date under any Tax sharing, Tax indemnity, Tax allocation or similar contracts (whether or not written) to which the Company was obligated, or was a party, on or prior to the Closing Date, and (v) all liability for Taxes of any person (other than the Company and its subsidiaries) imposed on the Company or any of its subsidiaries as a transferee or ~~successor~~ successor, by contract or pursuant to any law, rule or regulation, which Taxes relate to an event or transaction occurring before the Closing; PROVIDED, HOWEVER, that in the case of clauses (i), (ii), (iii), (iv) and (v) above, Seller shall be liable only to the extent that such Taxes are in excess of the amount, if any, reserved for such Taxes on the Closing Statement of Company Business Net Worth. Subject to the specific allocation of expenses set forth in Article VI and any provision relating to expenses to be borne by ~~Contract~~ Buyer set forth in this Article VI, Seller shall indemnify Buyer, the Company and the Company's subsidiaries for Losses (~~other than Contracts~~ as defined in Section 9.2) incurred in defense of any Tax Claim that is initiated by any Taxing Authority against the Buyer, the Company or the Company's subsidiaries that relates to liabilities for Taxes described in clauses (i), (ii), (iii), (iv) and (v) above. (b) Buyer shall, and shall cause the Company to, indemnify Seller and its affiliates and hold them harmless from and against all liability for Taxes of Company or any of its subsidiaries for any taxable period ending after the Closing Date (except to the extent such taxable period began before the Closing Date, in which case Buyer's indemnity will cover only that portion of any such Taxes that do not relate ~~primarily~~ to ~~Taxes~~the Pre-Closing Tax Period). (c) In the case of any taxable period that includes (but does not end on) the Closing Date (a "Straddle Period"), ~~(4)~~ the Taxes ~~arising out~~ of ~~or resulting from any breach of any covenant or agreement of Seller Parent or any of~~ the Company and its ~~Affiliates contained in this Agreement, (5) Taxes~~ subsidiaries for a the Pre-Closing Tax Period ~~imposed~~ shall be determined based on (x) any transaction effected pursuant to Section 2.3(b), (y) any settlement of any intercompany accounts of Seller Parent or its Subsidiaries pursuant to Section 6.7, or (z) any transaction or step forming part an interim closing of the Seller Internal Restructurings, (6) Transfer Taxes for which Seller Parent is responsible under Section 6.5(j), (7) Taxes required to be deducted or withheld with respect to the payment of the Purchase Consideration or any amounts payable to Seller Parent pursuant to Section 2.8 or Section 2.9, including any penalties imposed on Purchaser as a result of Purchaser’s failure to deduct or withhold any such amounts that Purchaser (or a Purchaser Designated Affiliate) was permitted to withhold under Section 2.10 (in each case, subject to Purchaser’s compliance with the notice and cooperation requirements of Section 2.10 and except for any such Taxes (and any related penalties) required to be deducted or withheld solely as a result of any assignment by Purchaser or its Affiliates for which Purchaser is responsible pursuant to Section 10.3), (8) Taxes arising from any breach of any representation or warranty contained in Section 4.16(k), (9) Taxes arising as a result of any Conveyed Subsidiary or any Subsidiary of any Conveyed Subsidiary at any time ceasing to be a member of a group for the purposes of any Tax, of which group Seller Parent or any Subsidiary of Seller Parent is or was also a member and (10) any costs and expenses, including reasonable legal and accounting fees and expenses, attributable to any item described in clauses (1) through (9) (any such Taxes for which Seller Parent is responsible pursuant to this Section 6.5(d)(i), subject to the following proviso, “Seller Indemnified Taxes”); provided that Seller Parent shall not be required to indemnify or hold harmless any Purchaser Tax Indemnified Party from and against any liability pursuant to this Section 6.5(d)(i) for (A) Taxes attributable to any action taken after the Closing by Purchaser, any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries), or any transferee of Purchaser or any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries), other than any such action that (1) is in the ordinary course of business, (2) is expressly permitted or contemplated by this Agreement, or (3) is required to be taken in order to comply with applicable Law or as a result of a change in applicable Law (a “Purchaser Tax Act”), (B) Taxes that were reflected, accrued or reserved for in the Final Closing Statement, Final Business Working Capital, or Final Business Net Cash, (C) Income Taxes to the extent that a Conveyed Subsidiary or any Subsidiary thereof had any Tax Assets books as of the close of business on the Closing Date ~~that were available~~(and for such purpose, the taxable period of any partnership or ~~would have been available but for their prior utilization by Purchaser~~ other pass-through entity in which the Company or any ~~of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries after the Closing)~~ subsidiary holds a beneficial interest shall be deemed to ~~offset or otherwise reduce the applicable Tax Liability in respect of~~ terminate at such ~~Income Taxes (except any Tax Asset reflected as an asset in the Final Closing Statement and taken into account in the calculation of the Final Business Working Capital or the Final Business Net Cash~~time), ~~or (D) Taxes for which Purchaser Parent is responsible under Section 6.5(d)(ii). (ii) Subject to Section 6.5(d)(v), from and after~~ except that the ~~Closing, Purchaser Parent shall indemnify and hold harmless the Purchaser Tax Indemnified Parties from and against all liability, without duplication, for (1) all Taxes~~ amount of Purchaser Parent and its Affiliates (other than Purchaser and its Subsidiaries) for any Tax period (other than Transfer Taxes and VAT for which Seller Parent is responsible hereunder), (2) Taxes of Purchaser and its Subsidiaries (other than the Conveyed Subsidiaries and their Subsidiaries) for any Pre-Closing Tax Period, (3) Taxes of any Person for a Pre-Closing Tax Period for which Purchaser (or any Subsidiary thereof other than any Conveyed Subsidiaries and their Subsidiaries) is liable under Treasury Regulation Section 1.1502-6 (or a similar provision of state, local or foreign Law), or as a transferee or successor or by Contract (other than Contracts that do not relate primarily to Taxes), (4) Taxes arising out of or resulting from any breach of any covenant or agreement of Purchaser Parent, Purchaser or their respective Affiliates contained in this Agreement, (5) Transfer Taxes for which Purchaser Parent is responsible under Section 6.5(j), (6) Taxes arising from any breach of any representation or warranty in Section 5.17(k), (7) Taxes for a Pre-Closing Tax Period imposed on (x) any settlement of any intercompany accounts of Purchaser or any Subsidiary of Purchaser, on the one hand, and Purchaser Parent or any Subsidiary of Purchaser Parent (other than Purchaser and its Subsidiaries), on the other hand, pursuant to Section 6.7 or (y) any transaction or step forming part of the Purchaser Internal Restructurings, (8) Taxes required to be deducted or withheld with respect to any amounts payable to Purchaser Parent pursuant to Section 2.8 or Section 2.9, including any penalties imposed on Purchaser as a result of Purchaser’s failure to deduct or withhold any such amounts, (9) Taxes arising as a result of Purchaser or any Subsidiary of Purchaser (other than any Conveyed Subsidiary or a Subsidiary thereof) at any time ceasing to be a member of a group for the purposes of any Tax, of which group Purchaser Parent or any Subsidiary of Purchaser Parent (other than Purchaser or any Subsidiary of Purchaser) is or was also a member and (10) any costs and expenses, including reasonable legal and accounting fees and expenses, attributable to any item described in clauses (1) through (9) (any such Taxes ~~for which Purchaser Parent is responsible pursuant to this Section 6.5(d)(ii), subject~~ that are imposed on a periodic basis and are not based on or measured by income or receipts shall be 77 determined by reference to the following proviso, “Purchaser Parent Indemnified Taxes”); provided that Purchaser Parent shall not be required to indemnify or hold harmless any Purchaser Tax Indemnified Party from and against any liability for (A) Taxes attributable to any action taken after the Closing by Seller Parent or any of its Affiliates, other than any such action that (1) is in the ordinary course of business, (2) is expressly permitted or contemplated by this Agreement, or (3) is required to be taken in order to comply with applicable Law or as a result of a change in applicable Law (a “Seller Tax Act”), (B) Taxes that were reflected, accrued or reserved for in the Final Closing Statement, Final Purchaser Working Capital or the Final Purchaser Net Cash, (C) Income Taxes to the extent that Purchaser or any Subsidiary thereof had any Tax Assets as of the close of business on the Closing Date that were available, or would have been available but for their prior utilization by Purchaser or any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries after the Closing), to offset or otherwise reduce the applicable Tax Liability in respect of such Income Taxes (except any Tax Asset reflected as an asset in the Final Closing Statement and taken into account in the calculation of the Final Purchaser Working Capital or the Final Purchaser Net Cash), or (D) Taxes for which Seller Parent is responsible under Section 6.5(d)(i). (iii) To the extent permitted or required by applicable Law, the taxable year of each of the Conveyed Subsidiaries and their Subsidiaries and any Subsidiary of Purchaser that includes the Closing Date shall be treated as closing on (and including) the Closing Date. Otherwise, for purposes of this Agreement, in the case of any Straddle Period: (A) Property Taxes allocable to the Pre-Closing Tax Period shall be computed based upon the ratio of the relative number of days in the ~~Pre~~pre-Closing ~~Tax Period to the number~~ and post-Closing portions of ~~days in the entire~~ such Straddle Period~~; and (B) Taxes (other than Property Taxes) allocable~~ . All determinations necessary to effect the Pre-Closing Tax Period shall be computed as if such Tax period ended as of the close of business on the Closing Date and, in the case of any Taxes of Conveyed Subsidiaries (and their Subsidiaries) and Seller Parent, or in the case of any Taxes of Purchaser Parent and Purchaser (and their Subsidiaries prior to the Closing), in each case attributable to the ownership of any equity interest in any partnership or other “flow through” entity for tax purposes (including of any “controlled foreign corporation,” as defined under the Code) as if the Tax period of such partnership or other “flow through” entity ended as of the close of business on the Closing Date with the Taxes of such entity for the Pre-Closing Tax Period deemed to include any Taxes on the allocable income of such entity in respect of such Tax period; provided that exemptions, allowances or deductions that are calculated on an annual basis (including depreciation and amortization deductions) shall be allocated between the period ending on the Closing Date and the period beginning after the Closing Date in proportion to the number of days in each period. (iv) Any claim for indemnification under this Section 6.5(d) foregoing allocations shall be made in ~~writing upon~~ a manner consistent with prior practice of the party from whom indemnification is sought, and shall specify in reasonable detail the basis for such claim. Any indemnity payment required to be made pursuant to this Section 6.5(d) shall be made within thirty (30) days after the indemnified party makes written demand upon the indemnifying party, but in no case earlier than five (5) Business Days prior to the date on which the relevant Taxes are required to be paid to the applicable Taxing Authority. (v) With respect to any Taxes suffered or incurred by any Conveyed Subsidiary (or any Subsidiary thereof) that was not wholly owned by Seller Parent (directly or indirectly) as of immediately prior to the Closing, the indemnification obligations of Seller Parent pursuant to Section 6.5(d)(i) in respect of such Taxes (or related costs and expenses) shall in no event exceed an amount equal to (A) the amount of such Taxes (or related costs and expenses) for which the Purchaser Tax Indemnified Parties would otherwise be entitled to indemnification pursuant to Section 6.5(d), as if such Conveyed Subsidiary (or any Subsidiary thereof) were wholly owned by Seller Parent, multiplied by (B) the direct and indirect percentage ownership of Seller Parent of such Conveyed Subsidiary (or Subsidiary thereof) as of immediately prior to the Closing. With respect to any Taxes suffered or incurred by any Subsidiary of Purchaser Parent (including Purchaser Company and its Subsidiaries) that was not wholly owned by Purchaser Parent (directly or indirectly) as of immediately prior to the Closing, the indemnification obligations of Purchaser Parent pursuant to Section 6.5(d)(ii) in respect of such Taxes (or related costs and expenses) shall in no event exceed an amount equal to (A) the amount of such Taxes (or related costs and expenses) for which the Purchaser Tax Indemnified Parties would otherwise be entitled to indemnification pursuant to Section 6.5(d), as if such Subsidiary were wholly owned by Purchaser Parent, multiplied by (B) the direct and indirect percentage ownership of Purchaser Parent of such Subsidiary as of immediately prior to the Closingsubsidiaries. (vi) Without duplication to any other amounts paid pursuant to this Section 6.5: (A) Within thirty (30) days following the filing of any Income Tax Return for any Conveyed Subsidiary (or any Subsidiary thereof), on the one hand, or Purchaser (or any Subsidiary thereof, other than the Conveyed Subsidiaries and their Subsidiaries), on the other hand, for any Pre-Closing Tax Period or for any Straddle Period, Seller Parent or Purchaser Parent shall (or Purchaser Parent shall cause Purchaser to) prepare a statement showing (i) the amount of Income Taxes shown as due on such filed Income Tax Return with respect to the relevant Pre-Closing Tax Period or the portion of any Straddle Period ending on and including the Closing Date (the “Final Pre-Closing Income Tax Amount”) and (ii) the amount of the Seller Accrued Income Taxes or Purchaser Accrued Income Taxes, as applicable, attributable to such Income Tax Return as reflected on the Final Closing Statement (the “Pre-Closing Income Tax Amount”) and deliver such statement to Seller Parent and Purchaser Parent, as applicable. Purchaser Parent or Seller Parent, as applicable, shall have a period of fifteen (15) Business Days to provide comments to a schedule prepared (or caused to be prepared) by Seller Parent or Purchaser Parent, respectively. If Purchaser Parent or Seller Parent, as applicable, do not provide any comments to Seller Parent or Purchaser Parent, respectively, during such period, the statement as so prepared shall be final and binding. (B) In the event the Final Pre-Closing Income Tax Amount with respect to any Income Tax Return is less than the amount of the Pre-Closing Income Tax Amount attributable to such Income Tax Return that was included on the Final Closing Statement, the Purchaser shall within five (5) Business Days following the finalization of the Final Pre-Closing Income Tax Amount hereunder (i) pay to Seller Parent the amount of such difference with respect to a Conveyed Subsidiary and their Subsidiaries and (ii) pay to Purchaser Parent the amount of such difference with respect to Purchaser and its Subsidiaries. (vii) The Parties shall use reasonable best efforts to structure any indemnity payment, true-up payment, or payment in respect of Tax Benefits made by any Party pursuant to this Agreement (including pursuant to this Section 6.5, Section 6.6 and Article VII) and any payment made by Purchaser Parent to Purchaser pursuant to Section 2.8 or Section 2.9 in the manner set forth in Clause 10 of the Structuring Considerations Agreement. The Parties shall use reasonable best efforts to structure as a special dividend any payment made by Purchaser to Purchaser Parent pursuant to Section 2.8, Section 2.9 or this Section 6.5.

Appears in 1 contract

Sources: Stock Purchase Agreement (Coleman Co Inc)

Tax Indemnification. (ia) ~~Subject to Section 6.5(d)(v), from~~ From and ~~after the Closing, Seller Parent agrees to indemnify and hold harmless Purchaser and its Subsidiaries (including the Conveyed Subsidiaries and their Subsidiaries~~ after the Closing Date~~) (collectively~~, Sylvan shall be liable for and shall indemnify and hold the “Purchaser ~~Tax~~ Indemnified ~~Parties”)~~ Persons harmless from and against all ~~liability~~losses, ~~without duplication~~liabilities, ~~for~~ damages, judgments, settlements and expenses (~~1) Taxes~~ including interest and penalties recovered by a third party with respect thereto and reasonable attorneys’ fees and expenses and reasonable accountants’ fees and expenses incurred in the investigation or defense of any of the ~~Conveyed~~ same or in asserting, preserving or enforcing any of the rights of Purchaser arising under Article VIII) imposed on, sustained, incurred or suffered by the Purchaser Indemnified Persons (including, upon the Closing, the Target Subsidiaries), directly or indirectly, by reason of or resulting from any and all Taxes imposed upon the Target Subsidiaries ~~and their Subsidiaries for~~ or in respect of the Targeted Businesses with respect or pursuant to (i) any taxable period ending on or before the Closing Date (a “Pre-Closing ~~Tax Period (including any Taxes payable in respect of an election under Section 965(h) of the Code~~Period”), (2ii) ~~Taxes of~~ any ~~Seller~~ taxable period beginning before the Closing Date and ending after the Closing Date (~~other than any Transfer Taxes and VAT for which Purchaser is responsible hereunder) including~~a “Straddle Period”), ~~Taxes (other than Taxes of the Conveyed Subsidiaries and their Subsidiaries) imposed~~ but only with respect ~~to, arising out of or relating~~ to the ~~Purchased Assets or~~ portion of such Straddle Period ending on and including the ~~Business for~~ Closing Date and in the manner provided in Section 8.1(c) hereof (such portion, a “Pre-Closing ~~Tax~~ Straddle Period”), (3iii) ~~Taxes of any Person (other than the Conveyed Subsidiaries and their Subsidiaries) for a Pre-Closing Tax Period for which any Conveyed Subsidiary (or any Subsidiary thereof) is liable under~~ Treasury Regulation Section 1.1502-6 (or ~~a similar~~ any comparable provision of under state, local or foreign ~~Law),~~ law or as a transferee or successor or by Contract (other than Contracts that do not relate primarily to Taxes), (4) Taxes arising out of or resulting from any breach of any covenant or agreement of Seller Parent or any of its Affiliates contained in this Agreement, (5) Taxes for a Pre-Closing Tax Period imposed on (x) any transaction effected pursuant to Section 2.3(b), (y) any settlement of any intercompany accounts of Seller Parent or its Subsidiaries pursuant to Section 6.7, or (z) any transaction or step forming part of the Seller Internal Restructurings, (6) Transfer Taxes for which Seller Parent is responsible under Section 6.5(j), (7) Taxes required to be deducted or withheld with respect to the payment of the Purchase Consideration or any amounts payable to Seller Parent pursuant to Section 2.8 or Section 2.9, including any penalties imposed on Purchaser as a result of Purchaser’s failure to deduct or withhold any such amounts that Purchaser (or a Purchaser Designated Affiliate) was permitted to withhold under Section 2.10 (in each case, subject to Purchaser’s compliance with the notice and cooperation requirements of Section 2.10 and except for any such Taxes (and any related penalties) required to be deducted or withheld solely as a result of any assignment by Purchaser or its Affiliates for which Purchaser is responsible pursuant to Section 10.3), (8) Taxes arising from any breach of any representation or warranty contained in Section 4.16(k), (9) Taxes arising as a result of any Conveyed Subsidiary or any Subsidiary of any Conveyed Subsidiary at any time ceasing to be a member regulation imposing several liability upon members of a ~~group for the purposes of any Tax~~consolidated, ~~of which group Seller Parent~~ combined, affiliated or any Subsidiary of Seller Parent is or was also a member and (10) any costs and expenses, including reasonable legal and accounting fees and expenses, attributable to any item described in clauses (1) through (9) (any such Taxes for which Seller Parent is responsible pursuant to this Section 6.5(d)(i), subject to the following proviso, “Seller Indemnified Taxes”); provided that Seller Parent shall not be required to indemnify or hold harmless any Purchaser Tax Indemnified Party from and against any liability pursuant to this Section 6.5(d)(i) for (A) Taxes attributable to any action taken after the Closing by Purchaser, any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries), or any transferee of Purchaser or any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries), other than any such action that (1) is in the ordinary course of business, (2) is expressly permitted or contemplated by this Agreement, or (3) is required to be taken in order to comply with applicable Law or as a result of a change in applicable Law (a “Purchaser Tax Act”), (B) Taxes that were reflected, accrued or reserved for in the Final Closing Statement, Final Business Working Capital, or Final Business Net Cash, (C) Income Taxes to the extent that a Conveyed Subsidiary or any Subsidiary thereof had any Tax Assets as of the close of business on the Closing Date that were available, or would have been available but for their prior utilization by Purchaser or any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries after the Closing) to offset or otherwise reduce the applicable Tax Liability in respect of such Income Taxes (except any Tax Asset reflected as an asset in the Final Closing Statement and taken into account in the calculation of the Final Business Working Capital or the Final Business Net Cash), or (D) Taxes for which Purchaser Parent is responsible under Section 6.5(d)(ii). (ii) Subject to Section 6.5(d)(v), from and after the Closing, Purchaser Parent shall indemnify and hold harmless the Purchaser Tax Indemnified Parties from and against all liability, without duplication, for (1) all Taxes of Purchaser Parent and its Affiliates (other than Purchaser and its Subsidiaries) for any Tax period (other than Transfer Taxes and VAT for which Seller Parent is responsible hereunder), (2) Taxes of Purchaser and its Subsidiaries (other than the Conveyed Subsidiaries and their Subsidiariesunitary group) for any Pre-Closing ~~Tax~~ Period, (3iv) a breach or inaccuracy in any representation contained in Section 3.22 of this Agreement; provided, that indemnification pursuant to this clause (iv) shall be subject to the limits contained in Section 9.1(d)(ii), Section 9.1(d)(iii), Section 9.2 and Section 9.5, (v) breaches of any covenant of the Sellers set forth in this Article VIII, Section 1.5 or Section 5.10(c) or (vi) Taxes other than Transfer Taxes attributable to the Sellers and arising from the Transactions. (b) From and after the Closing Date, the Purchaser shall be liable for and shall indemnify and hold the Sellers and their Affiliates harmless from and against all losses, liabilities, damages, judgments, settlements and expenses (including Table of Contents interest and penalties recovered by a third party with respect thereto and reasonable attorneys’ fees and expenses and reasonable accountants’ fees and expenses incurred in the investigation or defense of any ~~Person for a Pre-Closing Tax Period for which Purchaser (~~of the same or in asserting, preserving or enforcing any ~~Subsidiary thereof other than any Conveyed Subsidiaries and~~ of the rights of the Sellers arising under Article VIII) imposed on, sustained, incurred or suffered by the Sellers or their ~~Subsidiaries) is liable under Treasury Regulation Section 1.1502-6 (~~Affiliates, directly or ~~a similar provision of state~~indirectly, ~~local or foreign Law), or as a transferee or successor or~~ by ~~Contract (other than Contracts that do not relate primarily to Taxes), (4) Taxes arising out~~ reason of or resulting from any ~~breach~~ and all Taxes imposed upon the Target Subsidiaries or in respect of the Targeted Businesses with respect or pursuant to (i) any ~~covenant or agreement of Purchaser Parent, Purchaser or their respective Affiliates contained in this Agreement,~~ taxable period beginning after the Closing Date (~~5) Transfer Taxes for which Purchaser Parent is responsible under Section 6.5(j~~a “Post-Closing Period”), (~~6) Taxes arising from any breach of any representation or warranty in Section 5.17(k), (7) Taxes for a Pre-Closing Tax Period imposed on (x~~ii) any ~~settlement of any intercompany accounts of Purchaser or any Subsidiary of Purchaser~~Straddle Period, on the one hand, and Purchaser Parent or any Subsidiary of Purchaser Parent (other than Purchaser and its Subsidiaries), on the other hand, pursuant to Section 6.7 or (y) any transaction or step forming part of the Purchaser Internal Restructurings, (8) Taxes required to be deducted or withheld but only with respect to ~~any amounts payable to Purchaser Parent pursuant to Section 2.8 or Section 2.9, including any penalties imposed on Purchaser as a result~~ the portion of ~~Purchaser’s failure to deduct or withhold any~~ such ~~amounts, (9) Taxes arising as a result of Purchaser or any Subsidiary of Purchaser (other than any Conveyed Subsidiary or a Subsidiary thereof) at any time ceasing to be a member of a group for~~ Straddle Period beginning the purposes of any Tax, of which group Purchaser Parent or any Subsidiary of Purchaser Parent (other than Purchaser or any Subsidiary of Purchaser) is or was also a member and (10) any costs and expenses, including reasonable legal and accounting fees and expenses, attributable to any item described in clauses (1) through (9) (any such Taxes for which Purchaser Parent is responsible pursuant to this Section 6.5(d)(ii), subject to the following proviso, “Purchaser Parent Indemnified Taxes”); provided that Purchaser Parent shall not be required to indemnify or hold harmless any Purchaser Tax Indemnified Party from and against any liability for (A) Taxes attributable to any action taken day after the Closing ~~by Seller Parent or any of its Affiliates, other than any such action that (1) is~~ Date and in the ~~ordinary course of business~~manner provided in Section 8.1(c) hereof (such portion, a “Post-Closing Straddle Period”) and (2iii) ~~is expressly permitted or contemplated by this Agreement, or (3) is required to be taken in order to comply with applicable Law or~~ Taxes imposed as a result of a ~~change~~ breach of any covenant of Purchaser set forth in ~~applicable Law~~ this Article VIII or Section 1.5. (c) For purposes of calculating the Taxes imposed which relate to a ~~“Seller Tax Act”)~~Straddle Period and must be allocated between a Pre-Closing Straddle Period and a Post-Closing Straddle Period, ~~(B)~~ the portion of such Taxes ~~that were reflected, accrued or reserved for in the Final Closing Statement, Final Purchaser Working Capital or the Final Purchaser Net Cash, (C) Income Taxes~~ related to the ~~extent that Purchaser or any Subsidiary thereof had any Tax Assets as~~ portion of ~~the close of business~~ such Straddle Period ending on the Closing Date ~~that were available, or would have been available but for their prior utilization by Purchaser or any of its Affiliates~~ shall (including the Conveyed Subsidiaries and their Subsidiaries after the Closing), to offset or otherwise reduce the applicable Tax Liability in respect of such Income Taxes (except any Tax Asset reflected as an asset in the Final Closing Statement and taken into account in the calculation of the Final Purchaser Working Capital or the Final Purchaser Net Cash), or (Di) Taxes for which Seller Parent is responsible under Section 6.5(d)(i). (iii) To the extent permitted or required by applicable Law, the taxable year of each of the Conveyed Subsidiaries and their Subsidiaries and any Subsidiary of Purchaser that includes the Closing Date shall be treated as closing on (and including) the Closing Date. Otherwise, for purposes of this Agreement, in the case of any ~~Straddle Period: (A) Property~~ Taxes ~~allocable to the Pre-Closing Tax Period shall be computed~~ other than Taxes based upon or related to income, sales, gross receipts, premiums, wages, capital expenditures or expenses, be deemed to be the ~~ratio~~ amount of such Tax for the entire Straddle Period multiplied by a fraction the numerator of which is the number of days in the ~~Pre-~~Straddle Period ending on the Closing ~~Tax Period to~~ Date and the denominator of which is the number of days in the entire Straddle Period~~; and~~ , and (Bii) ~~Taxes (other than Property Taxes) allocable to the Pre-Closing Tax Period shall be computed as if such Tax period ended as of the close of business on the Closing Date and,~~ in the case of any Taxes ~~of Conveyed Subsidiaries (and their Subsidiaries) and Seller Parent~~based upon or related to income, sales, gross receipts, premiums, wages, capital expenditures or ~~in the case of any Taxes of Purchaser Parent and Purchaser (and their Subsidiaries prior~~ expenses, be deemed to be equal to the Closing), in each case attributable to the ownership of any equity interest in any partnership or other “flow through” entity for tax purposes (including of any “controlled foreign corporation,” as defined under the Code) as amount which would be payable if the ~~Tax period of such partnership or other “flow through” entity~~ Straddle Period ended ~~as of the close of business~~ on and included the Closing Date with the Taxes of such entity for the Pre-Closing Tax Period deemed to include any Taxes on the allocable income of such entity in respect of such Tax period; provided that exemptions, allowances or deductions that are calculated on an annual basis (including depreciation and amortization deductions) shall be allocated between the period ending on the Closing Date and the period beginning after the Closing Date in proportion to the number of days in each periodDate. (iv) Any claim for indemnification under this Section 6.5(d) shall be made in writing upon the party from whom indemnification is sought, and shall specify in reasonable detail the basis for such claim. Any indemnity payment required to be made pursuant to this Section 6.5(d) shall be made within thirty (30) days after the indemnified party makes written demand upon the indemnifying party, but in no case earlier than five (5) Business Days prior to the date on which the relevant Taxes are required to be paid to the applicable Taxing Authority. (v) With respect to any Taxes suffered or incurred by any Conveyed Subsidiary (or any Subsidiary thereof) that was not wholly owned by Seller Parent (directly or indirectly) as of immediately prior to the Closing, the indemnification obligations of Seller Parent pursuant to Section 6.5(d)(i) in respect of such Taxes (or related costs and expenses) shall in no event exceed an amount equal to (A) the amount of such Taxes (or related costs and expenses) for which the Purchaser Tax Indemnified Parties would otherwise be entitled to indemnification pursuant to Section 6.5(d), as if such Conveyed Subsidiary (or any Subsidiary thereof) were wholly owned by Seller Parent, multiplied by (B) the direct and indirect percentage ownership of Seller Parent of such Conveyed Subsidiary (or Subsidiary thereof) as of immediately prior to the Closing. With respect to any Taxes suffered or incurred by any Subsidiary of Purchaser Parent (including Purchaser and its Subsidiaries) that was not wholly owned by Purchaser Parent (directly or indirectly) as of immediately prior to the Closing, the indemnification obligations of Purchaser Parent pursuant to Section 6.5(d)(ii) in respect of such Taxes (or related costs and expenses) shall in no event exceed an amount equal to (A) the amount of such Taxes (or related costs and expenses) for which the Purchaser Tax Indemnified Parties would otherwise be entitled to indemnification pursuant to Section 6.5(d), as if such Subsidiary were wholly owned by Purchaser Parent, multiplied by (B) the direct and indirect percentage ownership of Purchaser Parent of such Subsidiary as of immediately prior to the Closing. (vi) Without duplication to any other amounts paid pursuant to this Section 6.5: (A) Within thirty (30) days following the filing of any Income Tax Return for any Conveyed Subsidiary (or any Subsidiary thereof), on the one hand, or Purchaser (or any Subsidiary thereof, other than the Conveyed Subsidiaries and their Subsidiaries), on the other hand, for any Pre-Closing Tax Period or for any Straddle Period, Seller Parent or Purchaser Parent shall (or Purchaser Parent shall cause Purchaser to) prepare a statement showing (i) the amount of Income Taxes shown as due on such filed Income Tax Return with respect to the relevant Pre-Closing Tax Period or the portion of any Straddle Period ending on and including the Closing Date (the “Final Pre-Closing Income Tax Amount”) and (ii) the amount of the Seller Accrued Income Taxes or Purchaser Accrued Income Taxes, as applicable, attributable to such Income Tax Return as reflected on the Final Closing Statement (the “Pre-Closing Income Tax Amount”) and deliver such statement to Seller Parent and Purchaser Parent, as applicable. Purchaser Parent or Seller Parent, as applicable, shall have a period of fifteen (15) Business Days to provide comments to a schedule prepared (or caused to be prepared) by Seller Parent or Purchaser Parent, respectively. If Purchaser Parent or Seller Parent, as applicable, do not provide any comments to Seller Parent or Purchaser Parent, respectively, during such period, the statement as so prepared shall be final and binding. (B) In the event the Final Pre-Closing Income Tax Amount with respect to any Income Tax Return is less than the amount of the Pre-Closing Income Tax Amount attributable to such Income Tax Return that was included on the Final Closing Statement, the Purchaser shall within five (5) Business Days following the finalization of the Final Pre-Closing Income Tax Amount hereunder (i) pay to Seller Parent the amount of such difference with respect to a Conveyed Subsidiary and their Subsidiaries and (ii) pay to Purchaser Parent the amount of such difference with respect to Purchaser and its Subsidiaries. (vii) The Parties shall use reasonable best efforts to structure any indemnity payment, true-up payment, or payment in respect of Tax Benefits made by any Party pursuant to this Agreement (including pursuant to this Section 6.5, Section 6.6 and Article VII) and any payment made by Purchaser Parent to Purchaser pursuant to Section 2.8 or Section 2.9 in the manner set forth in Clause 10 of the Structuring Considerations Agreement. The Parties shall use reasonable best efforts to structure as a special dividend any payment made by Purchaser to Purchaser Parent pursuant to Section 2.8, Section 2.9 or this Section 6.5.

Appears in 1 contract

Sources: Asset Purchase Agreement (Educate Inc)

Tax Indemnification. ~~(i) Subject to Section 6.5(d)(v)~~The Sellers shall be liable for, ~~from~~ and ~~after the Closing, Seller Parent agrees to~~ shall indemnify and hold the Purchasers and the Subsidiaries harmless ~~Purchaser and its~~ against (without taking into account any of the limitations elsewhere in this Agreement): (a) All income Taxes imposed on any member of any affiliated group that includes Sellers with which any of the Subsidiaries files or filed a Tax Return on a consolidated, combined or unitary basis for a taxable year (~~including the Conveyed Subsidiaries and their Subsidiaries after~~ of a Subsidiary) beginning before the Closing ~~Date) (collectively, the “Purchaser Tax Indemnified Parties”) from~~ Date and against all liability, without duplication, for (1) Taxes of the Conveyed Subsidiaries and their Subsidiaries for any Pre-Closing Tax Period (including any Taxes payable in respect of an election under Section 965(h) of the Code), (2) Taxes of any Seller (other than any Transfer Taxes and VAT for which Purchaser is responsible hereunder) including, Taxes (other than Taxes of the Conveyed Subsidiaries and their Subsidiaries) imposed with respect to, arising out of or relating to the Purchased Assets or the Business for a Pre-Closing Tax Period, (3) Taxes of any Person (other than the Conveyed Subsidiaries and their Subsidiaries) for a Pre-Closing Tax Period for which any ~~Conveyed Subsidiary (or any Subsidiary thereof)~~ of the Subsidiaries is liable ~~under Treasury Regulation Section~~ pursuant to Treas. Reg. 1.1502-6 (or a ~~similar~~ comparable provision of state, local or foreign Law), or as a transferee or successor or by Contract (other than Contracts that do not relate primarily to Taxes), (4) Taxes arising out of or resulting from any breach of any covenant or agreement of Seller Parent or any of its Affiliates contained in this Agreement, (5) Taxes for a Pre-Closing Tax Period imposed on (x) any transaction effected pursuant to Section 2.3(b), (y) any settlement of any intercompany accounts of Seller Parent or its Subsidiaries pursuant to Section 6.7, or (z) any transaction or step forming part of the Seller Internal Restructurings, (6) Transfer Taxes for which Seller Parent is responsible under Section 6.5(j), (7) Taxes required to be deducted or withheld with respect to the payment of the Purchase Consideration or any amounts payable to Seller Parent pursuant to Section 2.8 or Section 2.9, including any penalties imposed on Purchaser as a result of Purchaser’s failure to deduct or withhold any such amounts that Purchaser (or a Purchaser Designated Affiliate) was permitted to withhold under Section 2.10 (in each case, subject to Purchaser’s compliance with the notice and cooperation requirements of Section 2.10 and except for any such Taxes (and any related penalties) required to be deducted or withheld solely as a result of ~~any assignment by Purchaser~~ its inclusion in such a consolidated, combined or ~~its Affiliates for which Purchaser is responsible pursuant to Section 10.3),~~ unitary Tax Return; (~~8) Taxes arising from any breach of any representation or warranty contained in Section 4.16(k), (9~~b) Taxes arising as a result of any Conveyed Subsidiary or any Subsidiary of any Conveyed Subsidiary at any time ceasing to be a member of a group for the purposes of any Tax, of which group Seller Parent or any Subsidiary of Seller Parent is or was also a member and (10) any costs and expenses, including reasonable legal and accounting fees and expenses, attributable to any item described in clauses (1) through (9) (any such Taxes for which Seller Parent is responsible pursuant to this Section 6.5(d)(i), subject to the following proviso, “Seller Indemnified Taxes”); provided that Seller Parent shall not be required to indemnify or hold harmless any Purchaser Tax Indemnified Party from and against any liability pursuant to this Section 6.5(d)(i) for (A) Taxes attributable to any action taken after the Closing by Purchaser, any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries), or any transferee of Purchaser or any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries), other than any such action that (1) is in the ordinary course of business, (2) is expressly permitted or contemplated by this Agreement, or (3) is required to be taken in order to comply with applicable Law or as a result of a change in applicable Law (a “Purchaser Tax Act”), (B) Taxes that were reflected, accrued or reserved for in the Final Closing Statement, Final Business Working Capital, or Final Business Net Cash, (C) Income Taxes Except to the extent ~~that a Conveyed Subsidiary or any Subsidiary thereof had any Tax Assets as of the close of business on the Closing Date that~~ such Taxes were available, or would have been available but for their prior utilization by Purchaser or any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries after the Closing) to offset or otherwise reduce the applicable Tax Liability in respect of such Income Taxes (except any Tax Asset reflected as an asset in the Final Closing Statement and taken into account in the ~~calculation~~ final determination of Current Liabilities, Taxes imposed on any of the ~~Final Business Working Capital or the Final Business Net Cash)~~Subsidiaries (including, but not limited to, as a transferee, successor, by contract, or otherwise) with respect to taxable periods ending on or before the Deposit Date; and with respect to any Straddle Period, Taxes imposed on any of the Subsidiaries (Dincluding, but not limited to, as a transferee, successor, by contract, or otherwise) ~~Taxes for~~ which ~~Purchaser Parent is responsible under~~ are allocable, pursuant to Section ~~6.5(d)(ii).~~9.04, to the portion of such period ending on the Deposit Date; (iic) Subject to Section 6.5(d)(v), from and after the Closing, Purchaser Parent shall indemnify and hold harmless the Purchaser Tax Indemnified Parties from and against all liability, without duplication, for (1) all Taxes of Purchaser Parent and its Affiliates (other than Purchaser and its Subsidiaries) for any Tax period (other than Transfer Taxes and VAT for which Seller Parent is responsible hereunder), (2) Taxes of Purchaser and its Subsidiaries (other than the Conveyed Subsidiaries and their Subsidiaries) for any Pre-Closing Tax Period, (3) Taxes of any Person for a Pre-Closing Tax Period for which Purchaser (or any Subsidiary thereof other than any Conveyed Subsidiaries and their Subsidiaries) is liable under Treasury Regulation Section 1.1502-6 (or a similar provision of state, local or foreign Law), or as a transferee or successor or by Contract (other than Contracts that do not relate primarily to Taxes), (4) Taxes arising out Any breach of or ~~resulting from any breach of any covenant or agreement of Purchaser Parent, Purchaser or their respective Affiliates contained~~ inaccuracy in ~~this Agreement, (5) Transfer Taxes for which Purchaser Parent is responsible under Section 6.5(j), (6) Taxes arising from any breach of~~ any representation or warranty on the part of the Subsidiaries or the Sellers contained in ~~Section 5.17(k)~~this Agreement or the Schedules hereto or in any other Ancillary Agreement or any certificates required by the terms hereof to be delivered by Sellers to the extent related to Taxes or Tax Returns; and (d) All fees, ~~(7) Taxes for~~ costs and expenses incurred by the Purchasers or a ~~Pre-Closing Tax Period imposed on (x) any settlement~~ Subsidiary in connection with the determination or resolution of any ~~intercompany accounts of Purchaser or~~ Taxes (but not in connection with reviewing any ~~Subsidiary of Purchaser, on the one hand, and Purchaser Parent or any Subsidiary of Purchaser Parent (other than Purchaser and its Subsidiaries), on the other hand,~~ Tax Return provided to BAC for pursuant to Section ~~6.7 or (y~~9.03(a)) ~~any transaction or step forming part~~ that are the responsibility of the ~~Purchaser Internal Restructurings~~Sellers under this Section 9.07, including without limitation for attorneys, accountants and experts. The indemnification provisions of this Section 9.07 are the exclusive indemnification provisions with respect to Taxes and Tax matters and, except as specifically referenced in Article 7 (~~8) Taxes required~~ e.g., with respect to ~~be deducted or withheld~~ survival of Tax representations and warranties), Article 7 shall not apply with respect to any ~~amounts payable to Purchaser Parent pursuant to Section 2.8 or Section 2.9, including any penalties imposed on Purchaser as a result~~ Taxes and Tax matters that are the subject of Purchaser’s failure to deduct or withhold any such amounts, (9) Taxes arising as a result of Purchaser or any Subsidiary of Purchaser (other than any Conveyed Subsidiary or a Subsidiary thereof) at any time ceasing to be a member of a group for the purposes of any Tax, of which group Purchaser Parent or any Subsidiary of Purchaser Parent (other than Purchaser or any Subsidiary of Purchaser) is or was also a member and (10) any costs and expenses, including reasonable legal and accounting fees and expenses, attributable to any item described in clauses (1) through (9) (any such Taxes for which Purchaser Parent is responsible pursuant to this Section 6.5(d)(ii), subject to the following proviso, “Purchaser Parent Indemnified Taxes”); provided that Purchaser Parent shall not be required to indemnify or hold harmless any Purchaser Tax Indemnified Party from and against any liability for (A) Taxes attributable to any action taken after the Closing by Seller Parent or any of its Affiliates, other than any such action that (1) is in the ordinary course of business, (2) is expressly permitted or contemplated by this Agreement, or (3) is required to be taken in order to comply with applicable Law or as a result of a change in applicable Law (a “Seller Tax Act”), (B) Taxes that were reflected, accrued or reserved for in the Final Closing Statement, Final Purchaser Working Capital or the Final Purchaser Net Cash, (C) Income Taxes to the extent that Purchaser or any Subsidiary thereof had any Tax Assets as of the close of business on the Closing Date that were available, or would have been available but for their prior utilization by Purchaser or any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries after the Closing), to offset or otherwise reduce the applicable Tax Liability in respect of such Income Taxes (except any Tax Asset reflected as an asset in the Final Closing Statement and taken into account in the calculation of the Final Purchaser Working Capital or the Final Purchaser Net Cash), or (D) Taxes for which Seller Parent is responsible under Section 6.5(d)(i)9.07. (iii) To the extent permitted or required by applicable Law, the taxable year of each of the Conveyed Subsidiaries and their Subsidiaries and any Subsidiary of Purchaser that includes the Closing Date shall be treated as closing on (and including) the Closing Date. Otherwise, for purposes of this Agreement, in the case of any Straddle Period: (A) Property Taxes allocable to the Pre-Closing Tax Period shall be computed based upon the ratio of the number of days in the Pre-Closing Tax Period to the number of days in the entire Straddle Period; and (B) Taxes (other than Property Taxes) allocable to the Pre-Closing Tax Period shall be computed as if such Tax period ended as of the close of business on the Closing Date and, in the case of any Taxes of Conveyed Subsidiaries (and their Subsidiaries) and Seller Parent, or in the case of any Taxes of Purchaser Parent and Purchaser (and their Subsidiaries prior to the Closing), in each case attributable to the ownership of any equity interest in any partnership or other “flow through” entity for tax purposes (including of any “controlled foreign corporation,” as defined under the Code) as if the Tax period of such partnership or other “flow through” entity ended as of the close of business on the Closing Date with the Taxes of such entity for the Pre-Closing Tax Period deemed to include any Taxes on the allocable income of such entity in respect of such Tax period; provided that exemptions, allowances or deductions that are calculated on an annual basis (including depreciation and amortization deductions) shall be allocated between the period ending on the Closing Date and the period beginning after the Closing Date in proportion to the number of days in each period. (iv) Any claim for indemnification under this Section 6.5(d) shall be made in writing upon the party from whom indemnification is sought, and shall specify in reasonable detail the basis for such claim. Any indemnity payment required to be made pursuant to this Section 6.5(d) shall be made within thirty (30) days after the indemnified party makes written demand upon the indemnifying party, but in no case earlier than five (5) Business Days prior to the date on which the relevant Taxes are required to be paid to the applicable Taxing Authority. (v) With respect to any Taxes suffered or incurred by any Conveyed Subsidiary (or any Subsidiary thereof) that was not wholly owned by Seller Parent (directly or indirectly) as of immediately prior to the Closing, the indemnification obligations of Seller Parent pursuant to Section 6.5(d)(i) in respect of such Taxes (or related costs and expenses) shall in no event exceed an amount equal to (A) the amount of such Taxes (or related costs and expenses) for which the Purchaser Tax Indemnified Parties would otherwise be entitled to indemnification pursuant to Section 6.5(d), as if such Conveyed Subsidiary (or any Subsidiary thereof) were wholly owned by Seller Parent, multiplied by (B) the direct and indirect percentage ownership of Seller Parent of such Conveyed Subsidiary (or Subsidiary thereof) as of immediately prior to the Closing. With respect to any Taxes suffered or incurred by any Subsidiary of Purchaser Parent (including Purchaser and its Subsidiaries) that was not wholly owned by Purchaser Parent (directly or indirectly) as of immediately prior to the Closing, the indemnification obligations of Purchaser Parent pursuant to Section 6.5(d)(ii) in respect of such Taxes (or related costs and expenses) shall in no event exceed an amount equal to (A) the amount of such Taxes (or related costs and expenses) for which the Purchaser Tax Indemnified Parties would otherwise be entitled to indemnification pursuant to Section 6.5(d), as if such Subsidiary were wholly owned by Purchaser Parent, multiplied by (B) the direct and indirect percentage ownership of Purchaser Parent of such Subsidiary as of immediately prior to the Closing. (vi) Without duplication to any other amounts paid pursuant to this Section 6.5: (A) Within thirty (30) days following the filing of any Income Tax Return for any Conveyed Subsidiary (or any Subsidiary thereof), on the one hand, or Purchaser (or any Subsidiary thereof, other than the Conveyed Subsidiaries and their Subsidiaries), on the other hand, for any Pre-Closing Tax Period or for any Straddle Period, Seller Parent or Purchaser Parent shall (or Purchaser Parent shall cause Purchaser to) prepare a statement showing (i) the amount of Income Taxes shown as due on such filed Income Tax Return with respect to the relevant Pre-Closing Tax Period or the portion of any Straddle Period ending on and including the Closing Date (the “Final Pre-Closing Income Tax Amount”) and (ii) the amount of the Seller Accrued Income Taxes or Purchaser Accrued Income Taxes, as applicable, attributable to such Income Tax Return as reflected on the Final Closing Statement (the “Pre-Closing Income Tax Amount”) and deliver such statement to Seller Parent and Purchaser Parent, as applicable. Purchaser Parent or Seller Parent, as applicable, shall have a period of fifteen (15) Business Days to provide comments to a schedule prepared (or caused to be prepared) by Seller Parent or Purchaser Parent, respectively. If Purchaser Parent or Seller Parent, as applicable, do not provide any comments to Seller Parent or Purchaser Parent, respectively, during such period, the statement as so prepared shall be final and binding. (B) In the event the Final Pre-Closing Income Tax Amount with respect to any Income Tax Return is less than the amount of the Pre-Closing Income Tax Amount attributable to such Income Tax Return that was included on the Final Closing Statement, the Purchaser shall within five (5) Business Days following the finalization of the Final Pre-Closing Income Tax Amount hereunder (i) pay to Seller Parent the amount of such difference with respect to a Conveyed Subsidiary and their Subsidiaries and (ii) pay to Purchaser Parent the amount of such difference with respect to Purchaser and its Subsidiaries. (vii) The Parties shall use reasonable best efforts to structure any indemnity payment, true-up payment, or payment in respect of Tax Benefits made by any Party pursuant to this Agreement (including pursuant to this Section 6.5, Section 6.6 and Article VII) and any payment made by Purchaser Parent to Purchaser pursuant to Section 2.8 or Section 2.9 in the manner set forth in Clause 10 of the Structuring Considerations Agreement. The Parties shall use reasonable best efforts to structure as a special dividend any payment made by Purchaser to Purchaser Parent pursuant to Section 2.8, Section 2.9 or this Section 6.5.

Appears in 1 contract

Sources: Stock Purchase Agreement (Gibraltar Industries, Inc.)

Tax Indemnification. (a) Notwithstanding any limitations set forth in Article 11, which shall not apply to this Article 8 except as expressly stated in Section 8.12(c), Seller hereby indemnifies Buyer Indemnified Parties against and agrees to hold each of them harmless from any (i) Subject to Section 6.5(d)(v), from and after the Closing, Seller Parent agrees to indemnify and hold harmless Purchaser and its Subsidiaries (including the Conveyed Subsidiaries and their Subsidiaries after the Closing Date) (collectively, the “Purchaser Tax Indemnified Parties”) from and against all liability, without duplication, for (1) Taxes of the Conveyed Subsidiaries and their Subsidiaries for any Pre-Closing Tax ~~Period~~ of any of the Transferred Subsidiaries, (ii) amount of the type described in clause (i) of the definition of “Tax” as a result of any Transferred Subsidiary being or having been before the Closing a member of a Seller Group, (iii) Taxes arising from the pre-Closing restructuring steps completed by Seller and its Affiliates, including the Carve-Out Plan activities or the Cash Repatriation Plan activities, and including any ~~Taxes payable~~ direct or indirect capital gains taxes (for example, in respect of ~~an election under Section 965(h) of the Code~~Bulletin 7 or similar Applicable Laws in India), (2iv) Taxes of any Seller (other than any Transfer Taxes and VAT for which Purchaser is responsible hereunder) including, Taxes (other than Taxes of the Conveyed Subsidiaries and their Subsidiaries) imposed with respect to, arising out of or relating to the Purchased Assets or the Business for a Pre-Closing Tax Period, (3) Taxes of any Person (other than the Conveyed Subsidiaries and their Subsidiaries) for a Pre-Closing Tax Period for which any Conveyed Subsidiary (or any Subsidiary thereof) is liable under Treasury Regulation Section 1.1502-6 (or a similar provision of state, local or foreign Law), or as a transferee or successor or by Contract (other than Contracts that do not relate primarily to Taxes), (4) Taxes arising out of or resulting from any breach of any covenant or agreement of Seller Parent or any of its Affiliates contained in this Agreement, (5) Taxes for a Pre-Closing Tax Period imposed on (x) any transaction effected pursuant related to Section 2.3(b), (y) any settlement of any intercompany accounts of Seller Parent or its Subsidiaries pursuant to Section 6.7, or (z) any transaction or step forming part of the Seller Internal Restructurings, (6) Transfer Taxes for which Seller Parent is responsible under Section 6.5(j), (7) Taxes required to be deducted or withheld with respect to the payment of the Purchase Consideration or any amounts payable to Seller Parent pursuant to Section 2.8 or Section 2.9, including any penalties imposed on Purchaser as a result of Purchaser’s failure to deduct or withhold any such amounts that Purchaser (or a Purchaser Designated Affiliate) was permitted to withhold under Section 2.10 (in each case, subject to Purchaser’s compliance with the notice and cooperation requirements of Section 2.10 and except for any such Taxes (and any related penalties) required to be deducted or withheld solely as a result of any assignment by Purchaser or its Affiliates for which Purchaser is responsible pursuant to Section 10.3), (8) Taxes arising from any breach of any representation or warranty ~~contained~~ made in ~~Section 4.16(k), (9)~~ this Article 8 and any Taxes ~~arising as a result of~~ in any Conveyed Subsidiary or any Subsidiary of any Conveyed Subsidiary at any time ceasing to be a member of a group for the purposes of any Tax, of which group Seller Parent or any Subsidiary of Seller Parent is or was also a member and (10) any costs and expenses, including reasonable legal and accounting fees and expenses, attributable to any item described in clauses (1) through (9) (any such Taxes for which Seller Parent is responsible pursuant to this Section 6.5(d)(i), subject to the following proviso, “Seller Indemnified Taxes”); provided that Seller Parent shall not be required to indemnify or hold harmless any Purchaser Tax Indemnified Party from and against any liability pursuant to this Section 6.5(d)(i) for (A) Taxes attributable to any action taken after the Closing by Purchaser, any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries), or any transferee of Purchaser or any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries), other than any such action that (1) is in the ordinary course of business, (2) is expressly permitted or contemplated by this Agreement, or (3) is required to be taken in order to comply with applicable Law or as a result of a change in applicable Law (a “Purchaser Tax Act”), (B) Taxes that were reflected, accrued or reserved for in the Final Closing Statement, Final Business Working Capital, or Final Business Net Cash, (C) Income Taxes to the extent that a Conveyed Subsidiary or any Subsidiary thereof had any Tax Assets as of the close of business on the Closing Date that were available, or would have been available but for their prior utilization by Purchaser or any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries after the Closing) to offset or otherwise reduce the applicable Tax Liability in respect of such Income Taxes (except any Tax Asset reflected as an asset in the Final Closing Statement and taken into account in the calculation of the Final Business Working Capital or the Final Business Net Cash), or (D) Taxes for which Purchaser Parent is responsible under Section 6.5(d)(ii). (ii) Subject to Section 6.5(d)(v), from and after the Closing, Purchaser Parent shall indemnify and hold harmless the Purchaser Tax Indemnified Parties from and against all liability, without duplication, for (1) all Taxes of Purchaser Parent and its Affiliates (other than Purchaser and its Subsidiaries) for any Tax period (other than Transfer Taxes and VAT for which Seller Parent is responsible hereunder), (2) Taxes of Purchaser and its Subsidiaries (other than the Conveyed Subsidiaries and their Subsidiaries) for any Pre-Closing Tax Period, (3) Taxes of any Person for a PrePost-Closing Tax Period for which Purchaser (or any Subsidiary thereof other than any Conveyed Subsidiaries and their Subsidiaries) is liable under Treasury Regulation Section 1.1502-6 (or a similar provision of state, local or foreign Law), or as a transferee or successor or by Contract (other than Contracts that do not relate primarily to Taxes), (4) Taxes arising out of or resulting from any breach of any covenant or agreement of Purchaser Parent, Purchaser or their respective Affiliates contained in this Agreement, (5) Transfer Taxes for which Purchaser Parent is responsible under Section 6.5(j), (6) Taxes arising from related to any breach of any representation or warranty made in Section ~~5.17(k~~8.01(k), (7v) Taxes attributable to or arising from any amounts or items required to be taken into account by any Buyer Indemnified Party under Code Section 481 or any similar provision of local or foreign law resulting from or attributable to any change in method of accounting made by Seller or its Affiliates prior to the Closing, including without limitation those items set forth in Section 8.01(k), (vi) breach or default of Seller and its Affiliates in performing any of the provisions of this Article 8 and (vii) liabilities, costs, expenses (including reasonable expenses of investigation and attorneys’ and tax advisors’ fees and expenses), arising out of or incident to the imposition, assessment or assertion of any Tax described in the foregoing clauses of this Section 8.12(a), including those incurred in the contest in good faith in appropriate proceedings relating to the imposition, assessment or assertion of any such Tax (each of the items under clauses (i) through (vii), a “Tax Loss”), in each case incurred or suffered by Buyer or any of its Affiliates or, effective upon Closing, the Transferred Subsidiaries; provided, however, that Seller shall have no liability for the payment of any Tax Loss attributable to or resulting from any action or prohibited action described in Section 8.09 or Section 8.14, including an election made or deemed made by Buyer under Section 338(g) of the Code or any comparable provision of Applicable Law. No indemnification shall be provided under this Section 8.12(a) or otherwise for any Tax Claim (as defined below) as to which Buyer provides notice to Seller after the date that is ninety days following the expiration of any applicable statute of limitations (as it may be extended or tolled, including by agreement). (b) Buyer hereby indemnifies Seller and its Affiliates (other than in respect of a Seller Affiliate in its capacity as a stockholder of Parent, to the extent applicable) against and agrees to hold each of them harmless from (i) any Tax of the Transferred Subsidiaries that is not a Pre-Closing Tax Period imposed on (x) any settlement of any intercompany accounts of Purchaser or any Subsidiary of Purchaser, on the one hand, and Purchaser Parent or any Subsidiary of Purchaser Parent (other than Purchaser and its Subsidiaries), on the other hand, subject to indemnification by Seller pursuant to Section ~~6.7 or~~ 8.12(a), (yii) any ~~transaction~~ Tax of Seller or ~~step forming part~~ any Affiliate of ~~the Purchaser Internal Restructurings~~Seller attributable to or resulting from Parent’s failure to comply with any of its obligations under Section 8.07, (~~8) Taxes required~~ iii) any Tax of Seller or any Affiliate of Seller attributable to ~~be deducted~~ or ~~withheld with respect to~~ resulting from any ~~amounts payable to Purchaser Parent pursuant to~~ action or prohibited action described in Section ~~2.8~~ 8.09 or Section ~~2.9~~8.14, ~~including~~ (iv) any ~~penalties imposed on Purchaser~~ goods and services tax/harmonized sales tax, Quebec sales tax, penalties, interest and other amounts which may be assessed against the Canadian Seller as a result of ~~Purchaser’s failure to deduct~~ the transfer of the Canadian Assets not being eligible for any Canadian Tax Election jointly executed by the Canadian Seller and the Buyer under Part IX of the Excise Tax Act (Canada) or ~~withhold any such amounts, (9) Taxes arising~~ an Act respecting the Quebec sales tax or as a result of ~~Purchaser or any Subsidiary of Purchaser (other than any Conveyed Subsidiary or a Subsidiary thereof) at any~~ the Buyer’s failure to file such elections within the prescribed time ceasing to be a member of a group for the purposes of any Tax, of which group Purchaser Parent or any Subsidiary of Purchaser Parent (other than Purchaser or any Subsidiary of Purchaser) is or was also a member and (10v) ~~any~~ liabilities, costs and ~~expenses,~~ expenses (including reasonable ~~legal~~ expenses of investigation and ~~accounting~~ attorneys’ and tax advisors’ fees and expenses) arising out of or incident to the imposition, ~~attributable to~~ assessment or assertion of any ~~item~~ Tax described in clauses (1i) - (v), including those #88639600v31 incurred in the contest in good faith in appropriate proceedings relating to the imposition, assessment or assertion of any such Tax, in each case incurred or suffered by Seller or any of its Affiliates; provided that no indemnification shall be provided under this Section 8.12(b) or otherwise for any Tax Claim as to which Seller provides notice to Buyer after the date that is ninety days following the expiration of any applicable statute of limitations (as it may be extended or tolled, including by agreement). (c) The provisions of Section 11.06(a) through Section 11.06(e) shall apply, mutatis mutandis in respect of any indemnification payment under this Section 8.12. (9d) If any claim or demand for Taxes in respect of which indemnity may be sought pursuant to (i) Section 8.12(a) or Section 8.12(b) or (ii) Section 11.02 for breach of a representation, warranty or covenant contained in this Article 8 (any such ~~Taxes for~~ claim or demand, a “Tax Claim”) is asserted in writing against the party which ~~Purchaser Parent is responsible pursuant~~ would be entitled to ~~this Section 6.5(d)(ii), subject to~~ seek such indemnification (the ~~following proviso,~~ “~~Purchaser Parent~~ Potential Indemnified ~~Taxes~~Party”~~); provided that Purchaser Parent shall not be required to indemnify or hold harmless any Purchaser Tax Indemnified Party from and against any liability for (A~~) ~~Taxes attributable to any action taken after the Closing by Seller Parent~~ or any of its Affiliates, ~~other than~~ the Potential Indemnified Party shall notify the party from which such indemnification would be sought (the “Potential Indemnifying Party”) of such Tax Claim in writing within twenty (20) days of receipt thereof, and shall give the Potential Indemnifying Party such information with respect thereto as the Potential Indemnifying Party may reasonably request; provided, that the failure of the Potential Indemnifying Party to give notice as provided in this Section 8.12(d) shall not relieve any ~~such action that (1) is in the ordinary course~~ Potential Indemnifying Party of ~~business~~its obligations under Section 8.12, (2) is expressly permitted or contemplated by this Agreement, or (3) is required to be taken in order to comply with applicable Law or as a result of a change in applicable Law (a “Seller Tax Act”), (B) Taxes that were reflected, accrued or reserved for in the Final Closing Statement, Final Purchaser Working Capital or the Final Purchaser Net Cash, (C) Income Taxes except to the extent that ~~Purchaser or~~ such failure adversely prejudices the rights of any ~~Subsidiary thereof had~~ such Potential Indemnifying Party. The Potential Indemnifying Party may discharge, at any time, its indemnification obligation with respect to any Tax ~~Assets~~ Claim by paying to the Potential Indemnified Party the amount payable pursuant to this Section 8.12 or Section 11.02, as the case may be, calculated on the date of such payment. The Potential Indemnifying Party shall have the right, at its own expense, to participate in and, upon notice to the Potential Indemnified Party, to assume the defense of any claim, suit, action, litigation or proceeding (including any Tax audit) relating to a Tax Claim (a “Tax Controversy”), and the Potential Indemnifying Party shall not have any indemnification obligations with respect to any payment in respect of any Taxes arising out of a Tax Controversy with a Taxing Authority as to which it was not afforded such right. If the Potential Indemnifying Party assumes such defense, the Potential Indemnifying Party shall have the sole discretion as to the conduct of such defense and the Potential Indemnified Party shall have the right (but not the duty) to participate in the defense thereof and to employ counsel, at its own expense, separate from the counsel employed by the Potential Indemnifying Party. Whether or not the Potential Indemnifying Party chooses to defend or prosecute any Tax Claim, all of the ~~close~~ parties hereto shall cooperate and shall cause their Affiliates to cooperate in the defense or prosecution thereof. (e) The Potential Indemnifying Party shall not be liable in respect of ~~business on~~ any Tax Claim under this Section 8.12 or Section 11.02, as the ~~Closing Date that were available~~case may be, for any Tax (i) the payment of which was made without the Potential Indemnifying Party’s prior written consent, unless the Potential Indemnified Party has complied with the provisions set forth in Section 8.12(d) and a Final Determination of the amount of Tax has been made, (ii) resulting from a settlement effected without the consent of the Potential Indemnifying Party, or ~~would have been available but for their prior utilization by Purchaser or~~ (iii) resulting from any Tax Controversy with respect to which the Potential Indemnified Party has not complied with the provisions set forth in Section 8.12(d). #88639600v31 (f) Notwithstanding any other provision of this Agreement, neither Seller nor any of its Affiliates (~~including~~ other than the ~~Conveyed Subsidiaries and their Subsidiaries after the Closing), to offset or otherwise reduce the applicable Tax Liability in respect~~ Transferred Subsidiaries) shall have any liability for any Taxes of ~~such Income Taxes (except~~ any ~~Tax Asset reflected as an asset in the Final Closing Statement and~~ Transferred Subsidiary that were taken into account in ~~the calculation of the Final Purchaser~~ calculating Modified Net Working Capital ~~or the Final Purchaser Net Cash), or (D) Taxes for which Seller Parent is responsible under Section 6.5(d)(i)~~Value. (iii) To the extent permitted or required by applicable Law, the taxable year of each of the Conveyed Subsidiaries and their Subsidiaries and any Subsidiary of Purchaser that includes the Closing Date shall be treated as closing on (and including) the Closing Date. Otherwise, for purposes of this Agreement, in the case of any Straddle Period: (A) Property Taxes allocable to the Pre-Closing Tax Period shall be computed based upon the ratio of the number of days in the Pre-Closing Tax Period to the number of days in the entire Straddle Period; and (B) Taxes (other than Property Taxes) allocable to the Pre-Closing Tax Period shall be computed as if such Tax period ended as of the close of business on the Closing Date and, in the case of any Taxes of Conveyed Subsidiaries (and their Subsidiaries) and Seller Parent, or in the case of any Taxes of Purchaser Parent and Purchaser (and their Subsidiaries prior to the Closing), in each case attributable to the ownership of any equity interest in any partnership or other “flow through” entity for tax purposes (including of any “controlled foreign corporation,” as defined under the Code) as if the Tax period of such partnership or other “flow through” entity ended as of the close of business on the Closing Date with the Taxes of such entity for the Pre-Closing Tax Period deemed to include any Taxes on the allocable income of such entity in respect of such Tax period; provided that exemptions, allowances or deductions that are calculated on an annual basis (including depreciation and amortization deductions) shall be allocated between the period ending on the Closing Date and the period beginning after the Closing Date in proportion to the number of days in each period. (iv) Any claim for indemnification under this Section 6.5(d) shall be made in writing upon the party from whom indemnification is sought, and shall specify in reasonable detail the basis for such claim. Any indemnity payment required to be made pursuant to this Section 6.5(d) shall be made within thirty (30) days after the indemnified party makes written demand upon the indemnifying party, but in no case earlier than five (5) Business Days prior to the date on which the relevant Taxes are required to be paid to the applicable Taxing Authority. (v) With respect to any Taxes suffered or incurred by any Conveyed Subsidiary (or any Subsidiary thereof) that was not wholly owned by Seller Parent (directly or indirectly) as of immediately prior to the Closing, the indemnification obligations of Seller Parent pursuant to Section 6.5(d)(i) in respect of such Taxes (or related costs and expenses) shall in no event exceed an amount equal to (A) the amount of such Taxes (or related costs and expenses) for which the Purchaser Tax Indemnified Parties would otherwise be entitled to indemnification pursuant to Section 6.5(d), as if such Conveyed Subsidiary (or any Subsidiary thereof) were wholly owned by Seller Parent, multiplied by (B) the direct and indirect percentage ownership of Seller Parent of such Conveyed Subsidiary (or Subsidiary thereof) as of immediately prior to the Closing. With respect to any Taxes suffered or incurred by any Subsidiary of Purchaser Parent (including Purchaser and its Subsidiaries) that was not wholly owned by Purchaser Parent (directly or indirectly) as of immediately prior to the Closing, the indemnification obligations of Purchaser Parent pursuant to Section 6.5(d)(ii) in respect of such Taxes (or related costs and expenses) shall in no event exceed an amount equal to (A) the amount of such Taxes (or related costs and expenses) for which the Purchaser Tax Indemnified Parties would otherwise be entitled to indemnification pursuant to Section 6.5(d), as if such Subsidiary were wholly owned by Purchaser Parent, multiplied by (B) the direct and indirect percentage ownership of Purchaser Parent of such Subsidiary as of immediately prior to the Closing. (vi) Without duplication to any other amounts paid pursuant to this Section 6.5: (A) Within thirty (30) days following the filing of any Income Tax Return for any Conveyed Subsidiary (or any Subsidiary thereof), on the one hand, or Purchaser (or any Subsidiary thereof, other than the Conveyed Subsidiaries and their Subsidiaries), on the other hand, for any Pre-Closing Tax Period or for any Straddle Period, Seller Parent or Purchaser Parent shall (or Purchaser Parent shall cause Purchaser to) prepare a statement showing (i) the amount of Income Taxes shown as due on such filed Income Tax Return with respect to the relevant Pre-Closing Tax Period or the portion of any Straddle Period ending on and including the Closing Date (the “Final Pre-Closing Income Tax Amount”) and (ii) the amount of the Seller Accrued Income Taxes or Purchaser Accrued Income Taxes, as applicable, attributable to such Income Tax Return as reflected on the Final Closing Statement (the “Pre-Closing Income Tax Amount”) and deliver such statement to Seller Parent and Purchaser Parent, as applicable. Purchaser Parent or Seller Parent, as applicable, shall have a period of fifteen (15) Business Days to provide comments to a schedule prepared (or caused to be prepared) by Seller Parent or Purchaser Parent, respectively. If Purchaser Parent or Seller Parent, as applicable, do not provide any comments to Seller Parent or Purchaser Parent, respectively, during such period, the statement as so prepared shall be final and binding. (B) In the event the Final Pre-Closing Income Tax Amount with respect to any Income Tax Return is less than the amount of the Pre-Closing Income Tax Amount attributable to such Income Tax Return that was included on the Final Closing Statement, the Purchaser shall within five (5) Business Days following the finalization of the Final Pre-Closing Income Tax Amount hereunder (i) pay to Seller Parent the amount of such difference with respect to a Conveyed Subsidiary and their Subsidiaries and (ii) pay to Purchaser Parent the amount of such difference with respect to Purchaser and its Subsidiaries. (vii) The Parties shall use reasonable best efforts to structure any indemnity payment, true-up payment, or payment in respect of Tax Benefits made by any Party pursuant to this Agreement (including pursuant to this Section 6.5, Section 6.6 and Article VII) and any payment made by Purchaser Parent to Purchaser pursuant to Section 2.8 or Section 2.9 in the manner set forth in Clause 10 of the Structuring Considerations Agreement. The Parties shall use reasonable best efforts to structure as a special dividend any payment made by Purchaser to Purchaser Parent pursuant to Section 2.8, Section 2.9 or this Section 6.5.

Appears in 1 contract

Sources: Transaction Agreement (Emerson Electric Co)

Tax Indemnification. 9.6.1.1 Sellers hereby agree to jointly and severally indemnify Purchaser Indemnified Parties and defend and hold them harmless from all Losses based upon, related to or resulting from (i) ~~Subject~~ any liability for Excluded Taxes, (ii) the failure of any representation or warranty of Sellers contained in Section 4.11 to be true and correct, (iii) any liability for Transfer Taxes imposed on Sellers pursuant to Section ~~6.5(d)(v~~10.2, and (iv) any liability for Taxes that arises in connection with netting Final Intercompany Receivables and Final Intercompany Payables pursuant to section 2.2.2.3 of this Agreement (e.g., as a result of the deemed distribution of cash or the deemed distribution of Intercompany Receivables from any Company or Subsidiary to Purchaser or its Affiliates, including each Company and Subsidiary) that is not included in the calculation of Final Netting Tax Amount provided in the case of (i) and (ii), ~~from~~ except to the extent Taxes are taken into account in the calculation of the Final Purchase Price pursuant to Section 2.2. Taxes as used in clause (iv) above shall be determined without regard to reference to any reduction in Taxes attributable to any Tax asset (e.g., any item of loss or credit or any carryforward of any loss or credit) of Purchaser or its Affiliates other than any foreign Tax credit attributable to netting Final Intercompany Receivables and ~~after~~ Final Intercompany Payables pursuant to section 2.2.2.3 of this Agreement. Notwithstanding the ~~Closing~~foregoing, ~~Seller Parent agrees to~~ Sellers shall not indemnify and hold harmless Purchaser ~~and its Subsidiaries (including the Conveyed Subsidiaries and their Subsidiaries after the Closing Date) (collectively, the “Purchaser Tax~~ Indemnified Parties”) from and against all liability, without duplication, for (1) Taxes of the Conveyed Subsidiaries and their Subsidiaries for any Pre-Closing Tax Period (including any Taxes payable in respect of an election under Section 965(h) of the Code), (2) Taxes of any Seller (other than any Transfer Taxes and VAT for which Purchaser is responsible hereunder) including, Taxes (other than Taxes of the Conveyed Subsidiaries and their Subsidiaries) imposed with respect to, arising out of or relating to the Purchased Assets or the Business for a Pre-Closing Tax Period, (3) Taxes of any Person (other than the Conveyed Subsidiaries and their Subsidiaries) for a Pre-Closing Tax Period for which any Conveyed Subsidiary (or any Subsidiary thereof) is liable under Treasury Regulation Section 1.1502-6 (or a similar provision of state, local or foreign Law), or as a transferee or successor or by Contract (other than Contracts that do not relate primarily to Taxes), (4) Taxes arising out of or resulting Parties from any ~~breach of any covenant or agreement of Seller Parent or any of its Affiliates contained in this Agreement, (5) Taxes~~ liability for a Pre-Closing Tax Period imposed on (x) any transaction effected pursuant to Section 2.3(b), (y) any settlement of any intercompany accounts of Seller Parent or its Subsidiaries pursuant to Section 6.7, or (z) any transaction or step forming part of the Seller Internal Restructurings, (6) Transfer Taxes for which Seller Parent is responsible under Section 6.5(j), (7) Taxes required to be deducted or withheld with respect to the payment of the Purchase Consideration or any amounts payable to Seller Parent pursuant to Section 2.8 or Section 2.9, including any penalties imposed on Purchaser as a result of Purchaser’s failure to deduct or withhold any such amounts that Purchaser (or a Purchaser Designated Affiliate) was permitted to withhold under Section 2.10 (in each case, subject to Purchaser’s compliance with the notice and cooperation requirements of Section 2.10 and except for any such Taxes (and any related penalties) required to be deducted or withheld solely as a result of any assignment by Purchaser or its Affiliates for which Purchaser is responsible pursuant to Section 10.3), (8) Taxes arising from any breach of any representation or warranty contained in Section 4.16(k), (9) Taxes arising as a result of any Conveyed Subsidiary or any Subsidiary of any Conveyed Subsidiary at any time ceasing to be a member of a group for the purposes of any Tax, of which group Seller Parent or any Subsidiary of Seller Parent is or was also a member and (10) any costs and expenses, including reasonable legal and accounting fees and expenses, attributable to any item described in clauses (1) through (9) (any such Taxes for which Seller Parent is responsible pursuant to this Section 6.5(d)(i), subject to the following proviso, “Seller Indemnified Taxes”); provided that Seller Parent shall not be required to indemnify or hold harmless any Purchaser Tax Indemnified Party from and against any liability pursuant to this Section 6.5(d)(i) for (A) Taxes attributable to any action taken not in the ordinary course of business after the Closing on the Closing Date or after the Closing Date by Purchaser, any of its Affiliates (including the ~~Conveyed Subsidiaries~~ Companies and ~~their~~ the Subsidiaries), ) or any transferee of Purchaser or any of its Affiliates (~~including the Conveyed Subsidiaries and their Subsidiaries),~~ other than any such action ~~that (1) is in the ordinary course of business, (2) is~~ expressly ~~permitted or contemplated~~ required by ~~this Agreement, or (3) is required to be taken in order to comply with~~ applicable Law or ~~as a result~~ by this Agreement including, without limitation, those required pursuant to Section 2.2.2.3 of ~~a change in applicable Law~~ this Agreement.) (a “"PURCHASER TAX ACT") or attributable to a breach by Purchaser of its obligations under this Agreement. 9.6.1.2 Purchaser shall, and shall cause the Companies and Subsidiaries to, indemnify Sellers and their Affiliates and each of their respective officers, directors, employees, stockholders, agents, successors or assigns and representatives and defend and hold them harmless from all Losses based upon, related to or resulting from (i) any liability for Taxes of the Companies and the Subsidiaries for any taxable period ending after the Closing Date (except to the extent such taxable period began before the Closing Date, in which case Purchaser's indemnity will cover only that portion of any such Taxes that are not for the Pre-Closing Tax ~~Act”~~Period), (Bii) any liability for Transfer Taxes imposed on Purchaser pursuant to Section 10.2, (iii) any liability for Taxes that were reflected, accrued or reserved for in the Final Closing Statement, Final Business Working Capital, or Final Business Net Cash, (C) Income Taxes to the extent that a Conveyed Subsidiary or any Subsidiary thereof had any Tax Assets as of the close of business on the Closing Date that were available, or would have been available but for their prior utilization by Purchaser or any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries after the Closing) to offset or otherwise reduce the applicable Tax Liability in respect of such Income Taxes (except any Tax Asset reflected as an asset in the Final Closing Statement and are taken into account in the calculation of the Final Business Working Capital or the Final Business Net Cash), or (D) Taxes for which Purchaser Parent is responsible under Section 6.5(d)(ii). (ii) Subject to Section 6.5(d)(v), from and after the Closing, Purchaser Parent shall indemnify and hold harmless the Purchaser Tax Indemnified Parties from and against all liability, without duplication, for (1) all Taxes of Purchaser Parent and its Affiliates (other than Purchaser and its Subsidiaries) for any Tax period (other than Transfer Taxes and VAT for which Seller Parent is responsible hereunder), (2) Taxes of Purchaser and its Subsidiaries (other than the Conveyed Subsidiaries and their Subsidiaries) for any Pre-Closing Tax Period, (3) Taxes of any Person for a Pre-Closing Tax Period for which Purchaser (or any Subsidiary thereof other than any Conveyed Subsidiaries and their Subsidiaries) is liable under Treasury Regulation Section 1.1502-6 (or a similar provision of state, local or foreign Law), or as a transferee or successor or by Contract (other than Contracts that do not relate primarily to Taxes), (4) Taxes arising out of or resulting from any breach of any covenant or agreement of Purchaser Parent, Purchaser or their respective Affiliates contained in this Agreement, (5) Transfer Taxes for which Purchaser Parent is responsible under Section 6.5(j), (6) Taxes arising from any breach of any representation or warranty in Section 5.17(k), (7) Taxes for a Pre-Closing Tax Period imposed on (x) any settlement of any intercompany accounts of Purchaser or any Subsidiary of Purchaser, on the one hand, and Purchaser Parent or any Subsidiary of Purchaser Parent (other than Purchaser and its Subsidiaries), on the other hand, Purchase Price pursuant to Section ~~6.7 or (y) any transaction or step forming part of the Purchaser Internal Restructurings~~2.2, (8) Taxes required to be deducted or withheld with respect to any amounts payable to Purchaser Parent pursuant to Section 2.8 or Section 2.9, including any penalties imposed on Purchaser as a result of Purchaser’s failure to deduct or withhold any such amounts, (9) Taxes arising as a result of Purchaser or any Subsidiary of Purchaser (other than any Conveyed Subsidiary or a Subsidiary thereof) at any time ceasing to be a member of a group for the purposes of any Tax, of which group Purchaser Parent or any Subsidiary of Purchaser Parent (other than Purchaser or any Subsidiary of Purchaser) is or was also a member and (10iv) any costs and expenses, including reasonable legal and accounting fees and expenses, attributable to any item described in clauses (1) through (9) (any such Taxes for which Purchaser Parent is responsible pursuant to this Section 6.5(d)(ii), subject to the following proviso, “Purchaser Parent Indemnified Taxes”); provided that Purchaser Parent shall not be required to indemnify or hold harmless any Purchaser Tax Indemnified Party from and against any liability for ~~(A)~~ Taxes attributable to ~~any action taken after the Closing~~ a Purchaser Tax Act or to a breach by ~~Seller Parent or any~~ Purchaser of its ~~Affiliates, other than any such action that (1) is in the ordinary course of business, (2) is expressly permitted or contemplated by~~ obligations under this Agreement, or (3) is required to be taken in order to comply with applicable Law or as a result of a change in applicable Law (a “Seller Tax Act”), (B) Taxes that were reflected, accrued or reserved for in the Final Closing Statement, Final Purchaser Working Capital or the Final Purchaser Net Cash, (C) Income Taxes to the extent that Purchaser or any Subsidiary thereof had any Tax Assets as of the close of business on the Closing Date that were available, or would have been available but for their prior utilization by Purchaser or any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries after the Closing), to offset or otherwise reduce the applicable Tax Liability in respect of such Income Taxes (except any Tax Asset reflected as an asset in the Final Closing Statement and taken into account in the calculation of the Final Purchaser Working Capital or the Final Purchaser Net Cash), or (D) Taxes for which Seller Parent is responsible under Section 6.5(d)(i). (iii) To the extent permitted or required by applicable Law, the taxable year of each of the Conveyed Subsidiaries and their Subsidiaries and any Subsidiary of Purchaser that includes the Closing Date shall be treated as closing on (and including) the Closing Date. Otherwise, for purposes of this Agreement, in 9.6.1.3 In the case of any ~~Straddle Period:~~taxable period that includes (but does not end on) the Closing Date (a "STRADDLE PERIOD"): 9.6.1.3.1 real, personal and intangible property Taxes (A"PROPERTY TAXES") ~~Property Taxes~~ of the Companies and Subsidiaries allocable to the Pre-Closing Tax Period shall be ~~computed based upon~~ equal to the ~~ratio~~ amount of such Property Taxes for the entire Straddle Period multiplied by a fraction, the numerator of which is the number of days during the Straddle Period that are in the Pre-Closing Tax Period to and the denominator of which is the number of days in the ~~entire~~ Straddle Period; and ~~(B)~~ 9.6.1.3.2 the Taxes (other than Property Taxes) of the Companies or the Subsidiaries allocable to the Pre-Closing Tax Period shall be computed as if such ~~Tax~~ taxable period ended as of the close of business on the Closing ~~Date and~~Date, in the case of any Taxes of Conveyed Subsidiaries (and their Subsidiaries) and Seller Parent, or in the case of any Taxes of Purchaser Parent and Purchaser (and their Subsidiaries prior to the Closing), in each case attributable to the ownership of any equity interest in any partnership or other “flow through” entity for tax purposes (including of any “controlled foreign corporation,” as defined under the Code) as if the Tax period of such partnership or other “flow through” entity ended as of the close of business on the Closing Date with the Taxes of such entity for the Pre-Closing Tax Period deemed to include any Taxes on the allocable income of such entity in respect of such Tax period; provided that exemptions, allowances or deductions that are calculated on an annual basis (~~including~~ including, but not limited to, depreciation and amortization deductions) shall be allocated between the period ending on the Closing Date and the period ~~beginning~~ after the Closing Date in proportion to the number of days in each period. (iv) Any claim for indemnification under this Section 6.5(d) shall be made in writing upon the party from whom indemnification is sought, and shall specify in reasonable detail the basis for such claim. Any indemnity payment required to be made pursuant to this Section 6.5(d) shall be made within thirty (30) days after the indemnified party makes written demand upon the indemnifying party, but in no case earlier than five (5) Business Days prior to the date on which the relevant Taxes are required to be paid to the applicable Taxing Authority. (v) With respect to any Taxes suffered or incurred by any Conveyed Subsidiary (or any Subsidiary thereof) that was not wholly owned by Seller Parent (directly or indirectly) as of immediately prior to the Closing, the indemnification obligations of Seller Parent pursuant to Section 6.5(d)(i) in respect of such Taxes (or related costs and expenses) shall in no event exceed an amount equal to (A) the amount of such Taxes (or related costs and expenses) for which the Purchaser Tax Indemnified Parties would otherwise be entitled to indemnification pursuant to Section 6.5(d), as if such Conveyed Subsidiary (or any Subsidiary thereof) were wholly owned by Seller Parent, multiplied by (B) the direct and indirect percentage ownership of Seller Parent of such Conveyed Subsidiary (or Subsidiary thereof) as of immediately prior to the Closing. With respect to any Taxes suffered or incurred by any Subsidiary of Purchaser Parent (including Purchaser and its Subsidiaries) that was not wholly owned by Purchaser Parent (directly or indirectly) as of immediately prior to the Closing, the indemnification obligations of Purchaser Parent pursuant to Section 6.5(d)(ii) in respect of such Taxes (or related costs and expenses) shall in no event exceed an amount equal to (A) the amount of such Taxes (or related costs and expenses) for which the Purchaser Tax Indemnified Parties would otherwise be entitled to indemnification pursuant to Section 6.5(d), as if such Subsidiary were wholly owned by Purchaser Parent, multiplied by (B) the direct and indirect percentage ownership of Purchaser Parent of such Subsidiary as of immediately prior to the Closing. (vi) Without duplication to any other amounts paid pursuant to this Section 6.5: (A) Within thirty (30) days following the filing of any Income Tax Return for any Conveyed Subsidiary (or any Subsidiary thereof), on the one hand, or Purchaser (or any Subsidiary thereof, other than the Conveyed Subsidiaries and their Subsidiaries), on the other hand, for any Pre-Closing Tax Period or for any Straddle Period, Seller Parent or Purchaser Parent shall (or Purchaser Parent shall cause Purchaser to) prepare a statement showing (i) the amount of Income Taxes shown as due on such filed Income Tax Return with respect to the relevant Pre-Closing Tax Period or the portion of any Straddle Period ending on and including the Closing Date (the “Final Pre-Closing Income Tax Amount”) and (ii) the amount of the Seller Accrued Income Taxes or Purchaser Accrued Income Taxes, as applicable, attributable to such Income Tax Return as reflected on the Final Closing Statement (the “Pre-Closing Income Tax Amount”) and deliver such statement to Seller Parent and Purchaser Parent, as applicable. Purchaser Parent or Seller Parent, as applicable, shall have a period of fifteen (15) Business Days to provide comments to a schedule prepared (or caused to be prepared) by Seller Parent or Purchaser Parent, respectively. If Purchaser Parent or Seller Parent, as applicable, do not provide any comments to Seller Parent or Purchaser Parent, respectively, during such period, the statement as so prepared shall be final and binding. (B) In the event the Final Pre-Closing Income Tax Amount with respect to any Income Tax Return is less than the amount of the Pre-Closing Income Tax Amount attributable to such Income Tax Return that was included on the Final Closing Statement, the Purchaser shall within five (5) Business Days following the finalization of the Final Pre-Closing Income Tax Amount hereunder (i) pay to Seller Parent the amount of such difference with respect to a Conveyed Subsidiary and their Subsidiaries and (ii) pay to Purchaser Parent the amount of such difference with respect to Purchaser and its Subsidiaries. (vii) The Parties shall use reasonable best efforts to structure any indemnity payment, true-up payment, or payment in respect of Tax Benefits made by any Party pursuant to this Agreement (including pursuant to this Section 6.5, Section 6.6 and Article VII) and any payment made by Purchaser Parent to Purchaser pursuant to Section 2.8 or Section 2.9 in the manner set forth in Clause 10 of the Structuring Considerations Agreement. The Parties shall use reasonable best efforts to structure as a special dividend any payment made by Purchaser to Purchaser Parent pursuant to Section 2.8, Section 2.9 or this Section 6.5.

Appears in 1 contract

Sources: Stock Purchase Agreement (Winfred Berg Licensco Inc)

Tax Indemnification. (i) ~~Subject to Section 6.5(d)(v)~~Seller shall indemnify Buyer and its affiliates (including each Company) and each of their respective officers, ~~from~~ directors, employees and ~~after the Closing, Seller Parent agrees to indemnify~~ agents and hold them harmless ~~Purchaser and its Subsidiaries~~ from (~~including the Conveyed Subsidiaries and their Subsidiaries after the Closing Date~~A) ~~(collectively, the “Purchaser Tax Indemnified Parties”) from and against~~ all ~~liability, without duplication,~~ liability for ~~(1) Taxes of the Conveyed Subsidiaries and their Subsidiaries for any Pre-Closing Tax Period (including any Taxes payable in respect of an election under Section 965(h) of the Code), (2)~~ Taxes of any ~~Seller (other than any Transfer Taxes and VAT~~ Company for ~~which Purchaser is responsible hereunder) including, Taxes (other than Taxes of~~ the ~~Conveyed Subsidiaries and their Subsidiaries) imposed with respect to, arising out of or relating to the Purchased Assets or the Business for a~~ Pre-Closing Tax Period, (3B) all liability (as a result of Treasury Regulation 1.1502-6 or otherwise) for Taxes of Seller, any ~~Person~~ Affiliated Group or any member of any Affiliated Group, (C) all liability for federal, state, and local income taxes resulting from the Section 338(h)(10) election (or any comparable election under state or local Tax law) contemplated by Section 10(a) of this Agreement (other than state and local income taxes arising out of a failure of any state or local jurisdiction to treat a Section 338(h)(10) election in the ~~Conveyed Subsidiaries and their Subsidiaries)~~ same manner as such election is treated for a Pre-Closing Tax Period for which any Conveyed Subsidiary (or any Subsidiary thereof) is liable under Treasury Regulation Section 1.1502-6 (or a similar provision of state, local or foreign Law), or as a transferee or successor or by Contract (other than Contracts that do not relate primarily to Taxesfederal purposes), (4D) Taxes arising out of or resulting from any breach of any covenant or agreement of Seller Parent or any of its Affiliates contained in this Agreement, (5) Taxes for a Pre-Closing Tax Period imposed on (x) any transaction effected pursuant to Section 2.3(b), (y) any settlement of any intercompany accounts of Seller Parent or its Subsidiaries pursuant to Section 6.7, or (z) any transaction or step forming part Seller's share of the ~~Seller Internal Restructurings, (6) Transfer~~ Taxes for which ~~Seller Parent~~ it is responsible under Section ~~6.5(j)~~10(i) hereof, (7) Taxes required to be deducted or withheld with respect to the payment of the Purchase Consideration or any amounts payable to Seller Parent pursuant to Section 2.8 or Section 2.9, including any penalties imposed on Purchaser as a result of Purchaser’s failure to deduct or withhold any such amounts that Purchaser (or a Purchaser Designated Affiliate) was permitted to withhold under Section 2.10 (in each case, subject to Purchaser’s compliance with the notice and cooperation requirements of Section 2.10 and except for any such Taxes (and any related penalties) required to be deducted or withheld solely as a result of any assignment by Purchaser or its Affiliates for which Purchaser is responsible pursuant to Section 10.3), (8) Taxes arising from any breach of any representation or warranty contained in Section 4.16(k), (9) Taxes arising as a result of any Conveyed Subsidiary or any Subsidiary of any Conveyed Subsidiary at any time ceasing to be a member of a group for the purposes of any Tax, of which group Seller Parent or any Subsidiary of Seller Parent is or was also a member and (10E) ~~any costs and expenses, including~~ all liability for reasonable legal ~~and accounting~~ fees and ~~expenses,~~ expenses attributable to any item ~~described~~ in clauses (1) through (9) (any such Taxes for which Seller Parent is responsible pursuant to this Section 6.5(d)(i), subject to the following proviso, “Seller Indemnified Taxes”); provided that Seller Parent shall not be required to indemnify or hold harmless any Purchaser Tax Indemnified Party from and against any liability pursuant to this Section 6.5(d)(i) for clause (A) Taxes attributable to any action taken after the Closing by Purchaser, any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries), or any transferee of Purchaser or any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries), other than any such action that (1) is in the ordinary course of business, (2) is expressly permitted or contemplated by this Agreement, or (3) is required to be taken in order to comply with applicable Law or as a result of a change in applicable Law (a “Purchaser Tax Act”), (B~~) Taxes that were reflected, accrued or reserved for in the Final Closing Statement, Final Business Working Capital, or Final Business Net Cash~~), (C) Income Taxes to the extent that a Conveyed Subsidiary or any Subsidiary thereof had any Tax Assets as of the close of business on the Closing Date that were available, or would have been available but for their prior utilization by Purchaser or any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries after the Closing) to offset or otherwise reduce the applicable Tax Liability in respect of such Income Taxes (except any Tax Asset reflected as an asset in the Final Closing Statement and taken into account in the calculation of the Final Business Working Capital or the Final Business Net Cash), or (D) ~~Taxes for which Purchaser Parent is responsible under Section 6.5(d)(ii)~~above. (ii) ~~Subject to Section 6.5(d)(v)~~Buyer shall, ~~from~~ and ~~after the Closing~~shall cause each Company to, ~~Purchaser Parent shall~~ indemnify Seller and its affiliates and each of their respective officers, directors, employees and agents and hold them harmless ~~the Purchaser Tax Indemnified Parties~~ from ~~and against all liability, without duplication, for~~ (1A) all liability for Taxes of ~~Purchaser Parent and its Affiliates~~ each such Company (other than ~~Purchaser and its Subsidiaries) for any Tax period~~ Taxes described in clauses (~~other than Transfer Taxes and VAT for which Seller Parent is responsible hereunder~~i)(A), (2) Taxes of Purchaser and its Subsidiaries (other than the Conveyed Subsidiaries and their Subsidiaries) for any Pre-Closing Tax Period, (3) Taxes of any Person for a Pre-Closing Tax Period for which Purchaser (or any Subsidiary thereof other than any Conveyed Subsidiaries and their Subsidiaries) is liable under Treasury Regulation Section 1.1502-6 (or a similar provision of state, local or foreign Law), or as a transferee or successor or by Contract (other than Contracts that do not relate primarily to Taxesi)(B), (4i)(C) ~~Taxes arising out~~ or (i)(D) of ~~or resulting from any breach~~ this Section 9(a)) (B) Buyer's share of ~~any covenant or agreement of Purchaser Parent, Purchaser or their respective Affiliates contained in this Agreement, (5) Transfer~~ the Taxes for which ~~Purchaser Parent~~ it is responsible under Section ~~6.5(j), (6~~10(i) Taxes arising from any breach of any representation or warranty in Section 5.17(k), (7) Taxes for a Pre-Closing Tax Period imposed on (x) any settlement of any intercompany accounts of Purchaser or any Subsidiary of Purchaser, on the one handhereof, and ~~Purchaser Parent or any Subsidiary of Purchaser Parent~~ (~~other than Purchaser and its Subsidiaries), on the other hand, pursuant to Section 6.7 or (y~~C) any transaction or step forming part of the Purchaser Internal Restructurings, (8) Taxes required to be deducted or withheld with respect to any amounts payable to Purchaser Parent pursuant to Section 2.8 or Section 2.9, including any penalties imposed on Purchaser as a result of Purchaser’s failure to deduct or withhold any such amounts, (9) Taxes arising as a result of Purchaser or any Subsidiary of Purchaser (other than any Conveyed Subsidiary or a Subsidiary thereof) at any time ceasing to be a member of a group all liability for the purposes of any Tax, of which group Purchaser Parent or any Subsidiary of Purchaser Parent (other than Purchaser or any Subsidiary of Purchaser) is or was also a member and (10) any costs and expenses, including reasonable legal ~~and accounting~~ fees and ~~expenses,~~ expenses attributable to any item ~~described~~ in clauses (1) through (9) (any such Taxes for which Purchaser Parent is responsible pursuant to this Section 6.5(d)(ii), subject to the following proviso, “Purchaser Parent Indemnified Taxes”); provided that Purchaser Parent shall not be required to indemnify or hold harmless any Purchaser Tax Indemnified Party from and against any liability for clause (A) ~~Taxes attributable to any action taken after the Closing by Seller Parent~~ or any of its Affiliates, other than any such action that (1) is in the ordinary course of business, (2) is expressly permitted or contemplated by this Agreement, or (3) is required to be taken in order to comply with applicable Law or as a result of a change in applicable Law (a “Seller Tax Act”), (B) Taxes that were reflected, accrued or reserved for in the Final Closing Statement, Final Purchaser Working Capital or the Final Purchaser Net Cash, (C) Income Taxes to the extent that Purchaser or any Subsidiary thereof had any Tax Assets as of the close of business on the Closing Date that were available, or would have been available but for their prior utilization by Purchaser or any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries after the Closing), to offset or otherwise reduce the applicable Tax Liability in respect of such Income Taxes (except any Tax Asset reflected as an asset in the Final Closing Statement and taken into account in the calculation of the Final Purchaser Working Capital or the Final Purchaser Net Cash), or (D) Taxes for which Seller Parent is responsible under Section 6.5(d)(i)above. (iii) To the extent permitted or required by applicable Law, the taxable year of each of the Conveyed Subsidiaries and their Subsidiaries and any Subsidiary of Purchaser that includes the Closing Date shall be treated as closing on (and including) the Closing Date. Otherwise, for purposes of this Agreement, in In the case of any taxable period that includes (but does not end on) the Closing Date (each a "Straddle Period:"): (A) ~~Property~~ real, personal and intangible property Taxes ~~allocable~~ not reflected in the Companies Combined Net Working Capital as adjusted pursuant to Section 1(d)("Property Taxes") of any Company attributable to the Pre-Closing Tax Period shall be ~~computed based upon~~ equal to the ~~ratio~~ amount of such Property Taxes for the entire Straddle Period multiplied by a fraction, the numerator of which is the number of days during the Straddle Period that are in the Pre-Closing Tax Period to and the denominator of which is the number of days in the ~~entire~~ Straddle Period; and (B) the Taxes of any Company (other than Property ~~Taxes~~Taxes and severance Tax) ~~allocable~~ not reflected in the Companies Combined Net Working Capital as adjusted pursuant to Section 1(d) attributable to the Pre-Closing Tax Period shall be computed as if such ~~Tax~~ taxable period ended as of the close of business on the Closing ~~Date and,~~ Date. Seller's indemnity obligation in respect of Taxes for a Straddle Period not reflected in the ~~case of any Taxes of Conveyed Subsidiaries (and their Subsidiaries~~Companies Combined Net Working Capital as adjusted pursuant to Section 1(d) ~~and Seller Parent, or in the case of any Taxes of Purchaser Parent and Purchaser (and their Subsidiaries prior~~ shall initially be effected by its payment to the Closing), in each case attributable to the ownership of any equity interest in any partnership or other “flow through” entity for tax purposes (including of any “controlled foreign corporation,” as defined under the Code) as if the Tax period of such partnership or other “flow through” entity ended as Buyer of the ~~close~~ excess of ~~business on the Closing Date with the~~ (x) such Taxes ~~of such entity~~ for the Pre-Closing Tax Period ~~deemed to include any Taxes on~~ over (y) the ~~allocable income~~ amount of such ~~entity in respect~~ Taxes paid by Seller or any of its affiliates (other than any Company) at any time plus the amount of such ~~Tax period; provided that exemptions~~Taxes paid or accrued by any Company on or prior to the Closing Date. Seller shall initially pay such excess to Buyer within five days prior to the due date of any return, ~~allowances~~ report or ~~deductions that are calculated~~ form with respect to Straddle Period Taxes. If the amount of such Taxes paid by Seller or any of its affiliates (other than any Company) at any time plus the amount of such Taxes paid or accrued by any Company on ~~an annual basis (including depreciation and amortization deductions) shall be allocated between the period ending on~~ or prior to the Closing Date ~~and~~ exceeds the ~~period beginning after~~ amount payable by Seller pursuant to the preceding sentence, Buyer shall pay to Seller the amount of such excess (a) in the case of Property Taxes, at the Closing ~~Date~~ (the "Closing Tax Adjustment Amount") and (b) in ~~proportion~~ all other cases, within five days prior to the ~~number~~ due date of ~~days in each period. (iv) Any claim for indemnification under this Section 6.5(d) shall be made in writing upon~~ the ~~party from whom indemnification is sought~~return, ~~and shall specify in reasonable detail~~ report or form with respect to the ~~basis~~ final liability for such ~~claim~~Taxes is required to be filed. ~~Any indemnity payment required~~ The payments to be made pursuant to this Section 6.5(d) shall be made within thirty (30) days after the indemnified party makes written demand upon the indemnifying party, but in no case earlier than five (5) Business Days prior to the date on which the relevant Taxes are required to be paid to the applicable Taxing Authority. (v) With respect to any Taxes suffered or incurred by any Conveyed Subsidiary (or any Subsidiary thereof) that was not wholly owned paragraph by Seller ~~Parent (directly~~ or indirectly) as of immediately prior to the Closing, the indemnification obligations of Seller Parent pursuant to Section 6.5(d)(i) in respect of such Taxes (or related costs and expenses) shall in no event exceed an amount equal to (A) the amount of such Taxes (or related costs and expenses) for which the Purchaser Tax Indemnified Parties would otherwise be entitled to indemnification pursuant to Section 6.5(d), as if such Conveyed Subsidiary (or any Subsidiary thereof) were wholly owned by Seller Parent, multiplied by (B) the direct and indirect percentage ownership of Seller Parent of such Conveyed Subsidiary (or Subsidiary thereof) as of immediately prior to the Closing. With respect to any Taxes suffered or incurred by any Subsidiary of Purchaser Parent (including Purchaser and its Subsidiaries) that was not wholly owned by Purchaser Parent (directly or indirectly) as of immediately prior to the Closing, the indemnification obligations of Purchaser Parent pursuant to Section 6.5(d)(ii) in respect of such Taxes (or related costs and expenses) shall in no event exceed an amount equal to (A) the amount of such Taxes (or related costs and expenses) for which the Purchaser Tax Indemnified Parties would otherwise be entitled to indemnification pursuant to Section 6.5(d), as if such Subsidiary were wholly owned by Purchaser Parent, multiplied by (B) the direct and indirect percentage ownership of Purchaser Parent of such Subsidiary as of immediately prior to the Closing. (vi) Without duplication to any other amounts paid pursuant to this Section 6.5: (A) Within thirty (30) days following the filing of any Income Tax Return for any Conveyed Subsidiary (or any Subsidiary thereof), on the one hand, or Purchaser (or any Subsidiary thereof, other than the Conveyed Subsidiaries and their Subsidiaries), on the other hand, for any Pre-Closing Tax Period or for any Straddle Period, Seller Parent or Purchaser Parent shall (or Purchaser Parent shall cause Purchaser to) prepare a statement showing (i) the amount of Income Taxes shown as due on such filed Income Tax Return with respect to the relevant Pre-Closing Tax Period or the portion of any Straddle Period ending on and including the Closing Date (the “Final Pre-Closing Income Tax Amount”) and (ii) the amount of the Seller Accrued Income Taxes or Purchaser Accrued Income Taxes, as applicable, attributable to such Income Tax Return as reflected on the Final Closing Statement (the “Pre-Closing Income Tax Amount”) and deliver such statement to Seller Parent and Purchaser Parent, as applicable. Purchaser Parent or Seller Parent, as applicable, shall have a period of fifteen (15) Business Days to provide comments to a schedule prepared (or caused to be prepared) by Seller Parent or Purchaser Parent, respectively. If Purchaser Parent or Seller Parent, as applicable, do not provide any comments to Seller Parent or Purchaser Parent, respectively, during such period, the statement as so prepared shall be final and binding. (B) In the event the Final Pre-Closing Income Tax Amount with respect to any Income Tax Return is less than the amount of the Pre-Closing Income Tax Amount attributable to such Income Tax Return that was included on the Final Closing Statement, the Purchaser shall within five (5) Business Days following the finalization of the Final Pre-Closing Income Tax Amount hereunder (i) pay to Seller Parent the amount of such difference Buyer with respect to a ~~Conveyed Subsidiary and their Subsidiaries and~~ Straddle Period shall be appropriately adjusted to reflect any final determination (iiwhich shall include the execution of Form 870-AD or successor form) ~~pay to Purchaser Parent the amount of such difference~~ with respect to ~~Purchaser and its Subsidiaries~~Straddle Period Taxes. (vii) The Parties shall use reasonable best efforts to structure any indemnity payment, true-up payment, or payment in respect of Tax Benefits made by any Party pursuant to this Agreement (including pursuant to this Section 6.5, Section 6.6 and Article VII) and any payment made by Purchaser Parent to Purchaser pursuant to Section 2.8 or Section 2.9 in the manner set forth in Clause 10 of the Structuring Considerations Agreement. The Parties shall use reasonable best efforts to structure as a special dividend any payment made by Purchaser to Purchaser Parent pursuant to Section 2.8, Section 2.9 or this Section 6.5.

Appears in 1 contract

Sources: Stock Purchase Agreement (Addington Resources Inc)

Tax Indemnification. (ia) ~~Subject to Section 6.5(d)(v), from~~ From and after the ~~Closing, Seller Parent agrees to indemnify and hold harmless Purchaser and its Subsidiaries (including the Conveyed Subsidiaries and their Subsidiaries after the~~ Applicable Closing Date~~) (collectively~~, ~~the “Purchaser Tax Indemnified Parties”) from~~ and ~~against all liability,~~ without duplication, for (1) Taxes of the Conveyed Subsidiaries and their Subsidiaries for any Pre-Closing Tax Period (including any Taxes payable in respect of an election under Section 965(h) of the Code), (2) Taxes of any Seller (other than any Transfer Taxes and VAT for which Purchaser is responsible hereunder) including, Taxes (other than Taxes of the Conveyed Subsidiaries and their Subsidiaries) imposed with respect to, arising out of or relating to the Purchased Assets or the Business for a Pre-Closing Tax Period, (3) Taxes of any Person (other than the Conveyed Subsidiaries and their Subsidiaries) for a Pre-Closing Tax Period for which any Conveyed Subsidiary (or any Subsidiary thereof) is liable under Treasury Regulation Section 1.1502-6 (or a similar provision of state, local or foreign Law), or as a transferee or successor or by Contract (other than Contracts that do not relate primarily to Taxes), (4) Taxes arising out of or resulting from any breach of any covenant or agreement of Seller Parent or any of its Affiliates contained in this Agreement, (5) Taxes for a Pre-Closing Tax Period imposed on (x) any transaction effected pursuant to Section 2.3(b), (y) any settlement of any intercompany accounts of Seller Parent or its Subsidiaries pursuant to Section 6.7, or (z) any transaction or step forming part of the Seller Internal Restructurings, (6) Transfer Taxes for which Seller Parent is responsible under Section 6.5(j), (7) Taxes required to be deducted or withheld with respect to the payment of the Purchase Consideration or any amounts payable to Seller Parent pursuant to Section 2.8 or Section 2.9, including any penalties imposed on Purchaser as a result of Purchaser’s failure to deduct or withhold any such amounts that Purchaser (or a Purchaser Designated Affiliate) was permitted to withhold under Section 2.10 (in each case, subject to Purchaser’s compliance with the notice and cooperation requirements of Section 2.10 and except for any such Taxes (and any related penalties) required to be deducted or withheld solely as a result of any assignment by Purchaser or its Affiliates for which Purchaser is responsible pursuant to Section 10.3), (8) Taxes arising from any breach of any representation or warranty contained in Section 4.16(k), (9) Taxes arising as a result of any Conveyed Subsidiary or any Subsidiary of any Conveyed Subsidiary at any time ceasing to be a member of a group for the purposes of any Tax, of which group Seller Parent or any Subsidiary of Seller Parent is or was also a member and (10) any costs and expenses, including reasonable legal and accounting fees and expenses, attributable to any item described in clauses (1) through (9) (any such Taxes for which Seller Parent is responsible pursuant to this Section 6.5(d)(i), subject to the following proviso, “Seller Indemnified Taxes”); provided that Seller Parent shall not be required to indemnify or hold harmless any Purchaser Tax Indemnified Party from and against any liability pursuant to this Section 6.5(d)(i) for (A) Taxes attributable to any action taken after the Closing by Purchaser, any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries), or any transferee of Purchaser or any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries), other than any such action that (1) is in the ordinary course of business, (2) is expressly permitted or contemplated by this Agreement, or (3) is required to be taken in order to comply with applicable Law or as a result of a change in applicable Law (a “Purchaser Tax Act”), (B) Taxes that were reflected, accrued or reserved for in the Final Closing Statement, Final Business Working Capital, or Final Business Net Cash, (C) Income Taxes to the extent that a Conveyed Subsidiary or any Subsidiary thereof had any Tax Assets as of the close of business on the Closing Date that were available, or would have been available but for their prior utilization by Purchaser or any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries after the Closing) to offset or otherwise reduce the applicable Tax Liability in respect of such Income Taxes (except any Tax Asset reflected as an asset in the Final Closing Statement and taken into account in the calculation of the Final Business Working Capital or the Final Business Net Cash), or (D) Taxes for which Purchaser Parent is responsible under Section 6.5(d)(ii). (ii) Subject to Section 6.5(d)(v), from and after the Closing, Purchaser Parent LivaNova shall indemnify and hold harmless the Purchaser ~~Tax Indemnified Parties~~ Indemnitees from and against any and all ~~liability, without duplication,~~ Losses for (1i) Taxes attributable to the ownership and operation of the Transferred Assets or the Business attributable to all Pre-Closing Tax Periods, (ii) Taxes of ~~Purchaser Parent and~~ the Transferred Subsidiaries attributable to all Pre-Closing Tax Periods, (iii) Taxes imposed on LivaNova or any of its ~~Affiliates~~ affiliates (~~other than Purchaser and its~~ not including the Transferred Subsidiaries) for any ~~Tax~~ taxable period except to the extent such Taxes are attributable solely to (~~other than Transfer Taxes and VAT for which Seller Parent is responsible hereunder)~~A) Purchaser’s ownership or operation of the Transferred Subsidiaries, the Transferred Assets or the Business or (2B) ~~Taxes~~ items of ~~Purchaser and its~~ income of the Transferred Subsidiaries ~~(other than the Conveyed Subsidiaries and their Subsidiaries) for any Pre~~arising in a Post-Closing Tax Period, (3iv) any breach by ▇▇▇▇▇▇▇▇ or any of its affiliates of the representations and warranties contained in Section 3.14 or of any covenant or agreement contained in Sections 1.05 and 9.06 and this Article X (other than a breach by a Transferred Subsidiary following the Applicable Closing Date), (v) Taxes of ~~any Person for a Pre-Closing Tax Period for which Purchaser~~ another person (~~or any Subsidiary thereof~~ other than ~~any Conveyed Subsidiaries and their Subsidiaries~~a Transferred Subsidiary) ~~is liable under Treasury Regulation Section 1.1502-6~~ imposed on a Transferred Subsidiary (~~or a similar provision of state, local or foreign Law), or~~ A) as a transferee or successor due to transactions occurring on or ~~by Contract~~ prior to the Applicable Closing, (B) as a result of contracts or agreements entered into (other than ~~Contracts that do~~ commercial contracts entered into in the ordinary course of business the primary subject matter of which is not ~~relate primarily~~ Taxes)on or prior to ~~Taxes~~the Applicable Closing, or (C) as a result of such Transferred Subsidiary being included in any fiscal unity or consolidated, affiliated, combined, unitary or similar group at any time prior to the Applicable Closing Date, (vi) Transfer Taxes imposed on LivaNova pursuant to Section 10.01(b), (4vii) all liability for VAT imposed on LivaNova or any Seller pursuant to Section 10.02(i) and (viii) all Taxes ~~arising out~~ (other than Transfer Taxes addressed in Section 10.01(b)) and VAT addressed in Section 10.02(i)) imposed in connection with the Restructuring, in each case, to the extent such liability for Taxes is not included in the determination of ~~or resulting~~ Net Working Capital as finally determined hereunder. Notwithstanding the foregoing, ▇▇▇▇▇▇▇▇ shall not have any obligations under this Section 10.03(a) for any liability for Taxes that results from any breach of any ~~covenant~~ covenants or ~~agreement~~ agreements of Purchaser ~~Parent~~or its affiliates under this Agreement. (b) From and after the Applicable Closing Date, and without duplication, Purchaser shall indemnify and hold harmless the Seller Indemnitees from and against (i) all liability for Taxes attributable to the ownership and operation of the Transferred Assets, the Transferred Subsidiaries or ~~their respective Affiliates contained in this Agreement, (5) Transfer Taxes~~ the Business for ~~which Purchaser Parent is responsible under Section 6.5(j), (6) Taxes arising from any breach of any representation or warranty in Section 5.17(k), (7) Taxes for a Pre~~all Post-Closing Tax ~~Period imposed on (x) any settlement of any intercompany accounts of Purchaser or any Subsidiary of Purchaser, on the one hand, and Purchaser Parent or any Subsidiary of Purchaser Parent~~ Periods (other than Purchaser and its Subsidiaries), on the other hand, pursuant to Section 6.7 or (y) any transaction or step forming part of the Purchaser Internal Restructurings, (8) Taxes required to be deducted or withheld with respect to any amounts payable to Purchaser Parent pursuant to Section 2.8 or Section 2.9, including any penalties imposed on Purchaser as a result of Purchaser’s failure to deduct or withhold any such ~~amounts, (9) Taxes~~ amounts arising as a result of ~~Purchaser~~ a breach of the representations contained in Sections 3.14(a)(viii), 3.14(a)(ix), 3.14(a)(x)), or 3.14(d) and any ~~Subsidiary of Purchaser (~~other than any Conveyed Subsidiary or a Subsidiary thereof) at any time ceasing to be a member of a group for the purposes of any Tax, of which group Purchaser Parent or any Subsidiary of Purchaser Parent (other than Purchaser or any Subsidiary of Purchaser) is or was also a member and (10) any costs and expenses, including reasonable legal and accounting fees and expenses, attributable to any item described in clauses (1) through (9) (any such Taxes for which Purchaser Parent is responsible amounts that are properly indemnifiable by ▇▇▇▇▇▇▇▇ pursuant to ~~this~~ Section ~~6.5(d)(ii~~10.03(a), subject to the following proviso, “Purchaser Parent Indemnified Taxes”); provided that Purchaser Parent shall not be required to indemnify or hold harmless any Purchaser Tax Indemnified Party from and against any liability for (A) Taxes attributable to any action taken after the Closing by Seller Parent or any of its Affiliates, other than any such action that (1) is in the ordinary course of business, (2) is expressly permitted or contemplated by this Agreement, or (3) is required to be taken in order to comply with applicable Law or as a result of a change in applicable Law (a “Seller Tax Act”), (Bii) ~~Taxes that were reflected, accrued or reserved for in the Final Closing Statement, Final Purchaser Working Capital or the Final Purchaser Net Cash, (C) Income Taxes to the extent that Purchaser or~~ any ~~Subsidiary thereof had any Tax Assets as of the close of business on the Closing Date that were available, or would have been available but for their prior utilization~~ breach by Purchaser or any of its ~~Affiliates~~ affiliates of any of any covenants or agreements in Sections 1.05 and 9.06 and this Article X (~~including the Conveyed Subsidiaries and their Subsidiaries after~~ other than a breach by a Transferred Subsidiary on or before the Closing), (iii) all liability for Transfer Taxes imposed on Purchaser pursuant to ~~offset~~ Section 10.01(b) and (iv) all liability for VAT imposed on Purchaser pursuant to Section 10.02(i). Notwithstanding the foregoing, Purchaser shall not have any obligations under this Section 10.03(b) for any liability for Taxes that results from any breach of any covenants or ~~otherwise reduce the applicable Tax Liability in respect~~ agreements of ~~such Income Taxes (except any Tax Asset reflected as an asset in the Final Closing Statement and taken into account in the calculation of the Final Purchaser Working Capital~~ LivaNova or ~~the Final Purchaser Net Cash), or (D) Taxes for which Seller Parent is responsible~~ its affiliates under ~~Section 6.5(d)(i)~~this Agreement. (~~iii~~c) To the extent permitted or required by applicable Law, the taxable year of each of the Conveyed Subsidiaries and their Subsidiaries and any Subsidiary of Purchaser that includes the Closing Date shall be treated as closing on (and including) the Closing Date. Otherwise, for purposes of this Agreement, in In the case of any Straddle Period~~: (A) Property~~ , Taxes ~~allocable~~ shall be allocated to the Pre-Closing Tax Period in accordance with Section 10.01(b)(iii). (d) Notwithstanding any other provision in this Agreement, Purchaser Indemnitees shall ~~be computed based upon~~ not have any right to indemnification (i) under Section 10.03(a)(i) or Section 10.03(a)(iv) from and against any Taxes of any person that are attributable to the ~~ratio of the number of days in the Pre~~Post-Closing Tax Period ~~to the number of days in the entire Straddle Period; and (B) Taxes~~ (other than ~~Property Taxes~~with respect to a breach of the representations contained in Sections 3.14(a)(viii), 3.14(a)(ix) ~~allocable~~ 3.14(a)(x) or 3.14(d)) or (ii) under this Section 10.03 due to the unavailability in any Post-Closing Tax Period of any net operating losses, credits or other Tax attributes otherwise attributable to the Pre-Closing Tax Period shall be computed as if such Tax period ended as of the close of business on the Closing Date and, in the case of any Taxes of Conveyed Subsidiaries (and their Subsidiaries) and Seller Parent, or in the case of any Taxes of Purchaser Parent and Purchaser (and their Subsidiaries prior to the Closing), in each case attributable to the ownership of any equity interest in any partnership or other “flow through” entity for tax purposes (including of any “controlled foreign corporation,” as defined under the Code) as if the Tax period of such partnership or other “flow through” entity ended as of the close of business on the Closing Date with the Taxes of such entity for the Pre-Closing Tax Period deemed to include any Taxes on the allocable income of such entity in respect of such Tax period; provided that exemptions, allowances or deductions that are calculated on an annual basis (including depreciation and amortization deductions) shall be allocated between the period ending on the Closing Date and the period beginning after the Closing Date in proportion to the number of days in each periodPeriod. (ive) ~~Any claim for indemnification under this Section 6.5(d) shall be made in writing upon~~ None of Purchaser, the ~~party from whom indemnification is sought~~Transferred Subsidiaries or any affiliate of Purchaser shall, ~~and shall specify in reasonable detail~~ without the ~~basis for~~ prior written consent of LivaNova (such ~~claim. Any indemnity payment required~~ consent not to be ~~made pursuant to~~ unreasonably withheld, conditioned, or delayed) engage in any transaction (other than any transactions expressly contemplated by this ~~Section 6.5(d~~Agreement, the Ancillary Agreements, or the Restructuring Plan) ~~shall be made within thirty (30) days~~ on the Initial Closing Date but after the ~~indemnified party makes written demand upon~~ Initial Closing that is outside the ~~indemnifying party, but in no case earlier than five (5) Business Days prior to the date on which the relevant Taxes are required to be paid to the applicable Taxing Authority~~ordinary course of business. (v) With respect to any Taxes suffered or incurred by any Conveyed Subsidiary (or any Subsidiary thereof) that was not wholly owned by Seller Parent (directly or indirectly) as of immediately prior to the Closing, the indemnification obligations of Seller Parent pursuant to Section 6.5(d)(i) in respect of such Taxes (or related costs and expenses) shall in no event exceed an amount equal to (A) the amount of such Taxes (or related costs and expenses) for which the Purchaser Tax Indemnified Parties would otherwise be entitled to indemnification pursuant to Section 6.5(d), as if such Conveyed Subsidiary (or any Subsidiary thereof) were wholly owned by Seller Parent, multiplied by (B) the direct and indirect percentage ownership of Seller Parent of such Conveyed Subsidiary (or Subsidiary thereof) as of immediately prior to the Closing. With respect to any Taxes suffered or incurred by any Subsidiary of Purchaser Parent (including Purchaser and its Subsidiaries) that was not wholly owned by Purchaser Parent (directly or indirectly) as of immediately prior to the Closing, the indemnification obligations of Purchaser Parent pursuant to Section 6.5(d)(ii) in respect of such Taxes (or related costs and expenses) shall in no event exceed an amount equal to (A) the amount of such Taxes (or related costs and expenses) for which the Purchaser Tax Indemnified Parties would otherwise be entitled to indemnification pursuant to Section 6.5(d), as if such Subsidiary were wholly owned by Purchaser Parent, multiplied by (B) the direct and indirect percentage ownership of Purchaser Parent of such Subsidiary as of immediately prior to the Closing. (vi) Without duplication to any other amounts paid pursuant to this Section 6.5: (A) Within thirty (30) days following the filing of any Income Tax Return for any Conveyed Subsidiary (or any Subsidiary thereof), on the one hand, or Purchaser (or any Subsidiary thereof, other than the Conveyed Subsidiaries and their Subsidiaries), on the other hand, for any Pre-Closing Tax Period or for any Straddle Period, Seller Parent or Purchaser Parent shall (or Purchaser Parent shall cause Purchaser to) prepare a statement showing (i) the amount of Income Taxes shown as due on such filed Income Tax Return with respect to the relevant Pre-Closing Tax Period or the portion of any Straddle Period ending on and including the Closing Date (the “Final Pre-Closing Income Tax Amount”) and (ii) the amount of the Seller Accrued Income Taxes or Purchaser Accrued Income Taxes, as applicable, attributable to such Income Tax Return as reflected on the Final Closing Statement (the “Pre-Closing Income Tax Amount”) and deliver such statement to Seller Parent and Purchaser Parent, as applicable. Purchaser Parent or Seller Parent, as applicable, shall have a period of fifteen (15) Business Days to provide comments to a schedule prepared (or caused to be prepared) by Seller Parent or Purchaser Parent, respectively. If Purchaser Parent or Seller Parent, as applicable, do not provide any comments to Seller Parent or Purchaser Parent, respectively, during such period, the statement as so prepared shall be final and binding. (B) In the event the Final Pre-Closing Income Tax Amount with respect to any Income Tax Return is less than the amount of the Pre-Closing Income Tax Amount attributable to such Income Tax Return that was included on the Final Closing Statement, the Purchaser shall within five (5) Business Days following the finalization of the Final Pre-Closing Income Tax Amount hereunder (i) pay to Seller Parent the amount of such difference with respect to a Conveyed Subsidiary and their Subsidiaries and (ii) pay to Purchaser Parent the amount of such difference with respect to Purchaser and its Subsidiaries. (vii) The Parties shall use reasonable best efforts to structure any indemnity payment, true-up payment, or payment in respect of Tax Benefits made by any Party pursuant to this Agreement (including pursuant to this Section 6.5, Section 6.6 and Article VII) and any payment made by Purchaser Parent to Purchaser pursuant to Section 2.8 or Section 2.9 in the manner set forth in Clause 10 of the Structuring Considerations Agreement. The Parties shall use reasonable best efforts to structure as a special dividend any payment made by Purchaser to Purchaser Parent pursuant to Section 2.8, Section 2.9 or this Section 6.5.

Appears in 1 contract

Sources: Stock and Asset Purchase Agreement (LivaNova PLC)

Tax Indemnification. (a) Except as provided in this Article 12, Seller agrees that the following shall constitute Retained Liabilities for all purposes under this Agreement: (i) ~~Subject to Section 6.5(d)(v), from and after~~ any liability for Taxes imposed on Company or any of the ~~Closing, Seller Parent agrees to indemnify and hold harmless Purchaser and its~~ Subsidiaries ~~(including the Conveyed Subsidiaries and their Subsidiaries after~~ for any taxable period ending on or before the Closing Date, and for the portion of any Straddle Period (as defined below) ending on the Closing Date (~~collectively, the “Purchaser Tax Indemnified Parties”~~a "PRE-CLOSING TAX PERIOD"); (ii) ~~from and against all liability, without duplication, for (1)~~ any Taxes imposed on Company or any of the ~~Conveyed~~ Subsidiaries ~~and their Subsidiaries for any Pre-Closing Tax Period~~ as members of the "affiliated group" (~~including any Taxes payable in respect~~ within the meaning of ~~an election under~~ Section ~~965(h~~1504(a) of the Code) of which Seller (or any predecessor or successor) is the common parent that arises under Treasury Regulation Section 1.1502-6(a) and any similar provisions under state or local law including Company or any of the Subsidiaries as members in a "unitary business" as that term has been defined in U.S. Supreme Court jurisprudence; (iii) the breach by Seller or the failure by Seller to perform (or cause to be performed) any of the covenants contained in this Article 12 or Section 7.4(y); (iv) all Transfer Taxes for which Seller is liable pursuant to Section 2.7; and (v) reasonable attorneys' fees, reasonable accountants' fees and out-of-pocket expenses incurred by Buyer in the investigation or defense of any claim arising under Sections 12.2(a)(i)-(iv) or in asserting, preserving or enforcing any of the rights of Buyer arising under Article 10 relating to this Article 12, except as otherwise provided in Section 12.4(b), ~~(2) Taxes~~ provided, however, that the amount of any Seller (other than any Transfer Taxes and VAT for which Purchaser is responsible hereunder) including, Taxes (other than Taxes of the Conveyed Subsidiaries and their Subsidiaries) imposed with respect to, arising out of or indemnification under Article 10 relating to the ~~Purchased Assets~~ matters set forth in this Article 12, and the determination or Retained Liabilities, shall not include any accruals and related reserves for Taxes included in the ~~Business~~ final determination of the Actual Working Capital. (b) Except as provided in Section 2.7, Buyer agrees that the following shall constitute Assumed Liabilities for all purposes under this Agreement: (i) any Taxes imposed on Buyer, Company and the Subsidiaries for all taxable periods ending after the Closing Date (except with respect to a Straddle Period, in which case Buyer will be responsible only for that portion of any Taxes that do not relate to a Pre-Closing Tax Period, except to the extent that such Taxes have been included in the final determination of Actual Working Capital) (3"POST-CLOSING TAX PERIOD"); (ii) any Transfer Taxes for which the Buyer may be liable pursuant to Section 2.7; (iii) any liability for Taxes attributable to a breach by Buyer of its obligations under this Agreement; and (iv) reasonable attorneys' fees, reasonable accountants' fees and out-of-pocket expenses incurred by Seller in the investigation or defense of any ~~Person~~ claim arising under Sections 12.2(b)(i)-(iii) or in asserting, preserving or enforcing any of the rights of Seller arising under Article 10 relating to this Article 12, except as otherwise provided in Section 12.4(b). (~~other than~~ c) To the ~~Conveyed Subsidiaries and their Subsidiaries~~extent that an obligation of one party pursuant to this Section 12.2 may overlap with another obligation of such party pursuant to this Section 12.2, the party entitled to indemnification under Article 10 relating to such obligations shall be limited to only one of such indemnification payments. (d) Whenever in accordance with this Article 12 Buyer shall be required to pay Seller an amount in respect of liabilities for a Taxes for Post-Closing Tax Periods or Seller shall be required to pay Buyer an amount in respect of liabilities for Taxes for Pre-Closing Tax ~~Period for which any Conveyed Subsidiary (~~Periods, such payments shall be made the later of 10 days after requested or any Subsidiary thereof) is liable under Treasury Regulation Section 1.1502-6 (or a similar provision of state, local or foreign Law), or as a transferee or successor or by Contract (other than Contracts that do not relate primarily to Taxes), (4) Taxes arising out of or resulting from any breach of any covenant or agreement of Seller Parent or any of its Affiliates contained in this Agreement, (5) Taxes for a Pre-Closing Tax Period imposed on (x) any transaction effected pursuant to Section 2.3(b), (y) any settlement of any intercompany accounts of Seller Parent or its Subsidiaries pursuant to Section 6.7, or (z) any transaction or step forming part of 10 days before the Seller Internal Restructurings, (6) Transfer Taxes for which Seller Parent is responsible under Section 6.5(j), (7) Taxes required to be deducted or withheld with respect to the payment of the Purchase Consideration or any amounts payable to Seller Parent pursuant to Section 2.8 or Section 2.9, including any penalties imposed on Purchaser as a result of Purchaser’s failure to deduct or withhold any such amounts that Purchaser (or a Purchaser Designated Affiliate) was permitted to withhold under Section 2.10 (in each case, subject to Purchaser’s compliance with the notice and cooperation requirements of Section 2.10 and except for any such Taxes (and any related penalties) required to be deducted or withheld solely as a result of any assignment by Purchaser or its Affiliates for which Purchaser is responsible pursuant to Section 10.3), (8) Taxes arising from any breach of any representation or warranty contained in Section 4.16(k), (9) Taxes arising as a result of any Conveyed Subsidiary or any Subsidiary of any Conveyed Subsidiary at any time ceasing to be a member of a group for the purposes of any Tax, of which group Seller Parent or any Subsidiary of Seller Parent is or was also a member and (10) any costs and expenses, including reasonable legal and accounting fees and expenses, attributable to any item described in clauses (1) through (9) (any such Taxes for which Seller Parent is responsible pursuant to this Section 6.5(d)(i), subject to the following proviso, “Seller Indemnified Taxes”); provided that Seller Parent shall not be required to indemnify or hold harmless any Purchaser Tax Indemnified Party from and against any liability pursuant to this Section 6.5(d)(i) for (A) Taxes attributable to any action taken after the Closing by Purchaser, any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries), or any transferee of Purchaser or any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries), other than any such action that (1) is in the ordinary course of business, (2) is expressly permitted or contemplated by this Agreement, or (3) requesting party is required to ~~be taken in order to comply with applicable Law or as a result of a change in applicable Law (a “Purchaser~~ pay the related Tax Act”), (B) Taxes that were reflected, accrued or reserved for in the Final Closing Statement, Final Business Working Capital, or Final Business Net Cash, (C) Income Taxes to the extent that a Conveyed Subsidiary or any Subsidiary thereof had any Tax Assets as of the close of business on the Closing Date that were available, or would have been available but for their prior utilization by Purchaser or any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries after the Closing) to offset or otherwise reduce the applicable Tax Liability in respect of such Income Taxes (except any Tax Asset reflected as an asset in the Final Closing Statement and taken into account in the calculation of the Final Business Working Capital or the Final Business Net Cash), or (D) Taxes for which Purchaser Parent is responsible under Section 6.5(d)(ii)liability. (ii) Subject to Section 6.5(d)(v), from and after the Closing, Purchaser Parent shall indemnify and hold harmless the Purchaser Tax Indemnified Parties from and against all liability, without duplication, for (1) all Taxes of Purchaser Parent and its Affiliates (other than Purchaser and its Subsidiaries) for any Tax period (other than Transfer Taxes and VAT for which Seller Parent is responsible hereunder), (2) Taxes of Purchaser and its Subsidiaries (other than the Conveyed Subsidiaries and their Subsidiaries) for any Pre-Closing Tax Period, (3) Taxes of any Person for a Pre-Closing Tax Period for which Purchaser (or any Subsidiary thereof other than any Conveyed Subsidiaries and their Subsidiaries) is liable under Treasury Regulation Section 1.1502-6 (or a similar provision of state, local or foreign Law), or as a transferee or successor or by Contract (other than Contracts that do not relate primarily to Taxes), (4) Taxes arising out of or resulting from any breach of any covenant or agreement of Purchaser Parent, Purchaser or their respective Affiliates contained in this Agreement, (5) Transfer Taxes for which Purchaser Parent is responsible under Section 6.5(j), (6) Taxes arising from any breach of any representation or warranty in Section 5.17(k), (7) Taxes for a Pre-Closing Tax Period imposed on (x) any settlement of any intercompany accounts of Purchaser or any Subsidiary of Purchaser, on the one hand, and Purchaser Parent or any Subsidiary of Purchaser Parent (other than Purchaser and its Subsidiaries), on the other hand, pursuant to Section 6.7 or (y) any transaction or step forming part of the Purchaser Internal Restructurings, (8) Taxes required to be deducted or withheld with respect to any amounts payable to Purchaser Parent pursuant to Section 2.8 or Section 2.9, including any penalties imposed on Purchaser as a result of Purchaser’s failure to deduct or withhold any such amounts, (9) Taxes arising as a result of Purchaser or any Subsidiary of Purchaser (other than any Conveyed Subsidiary or a Subsidiary thereof) at any time ceasing to be a member of a group for the purposes of any Tax, of which group Purchaser Parent or any Subsidiary of Purchaser Parent (other than Purchaser or any Subsidiary of Purchaser) is or was also a member and (10) any costs and expenses, including reasonable legal and accounting fees and expenses, attributable to any item described in clauses (1) through (9) (any such Taxes for which Purchaser Parent is responsible pursuant to this Section 6.5(d)(ii), subject to the following proviso, “Purchaser Parent Indemnified Taxes”); provided that Purchaser Parent shall not be required to indemnify or hold harmless any Purchaser Tax Indemnified Party from and against any liability for (A) Taxes attributable to any action taken after the Closing by Seller Parent or any of its Affiliates, other than any such action that (1) is in the ordinary course of business, (2) is expressly permitted or contemplated by this Agreement, or (3) is required to be taken in order to comply with applicable Law or as a result of a change in applicable Law (a “Seller Tax Act”), (B) Taxes that were reflected, accrued or reserved for in the Final Closing Statement, Final Purchaser Working Capital or the Final Purchaser Net Cash, (C) Income Taxes to the extent that Purchaser or any Subsidiary thereof had any Tax Assets as of the close of business on the Closing Date that were available, or would have been available but for their prior utilization by Purchaser or any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries after the Closing), to offset or otherwise reduce the applicable Tax Liability in respect of such Income Taxes (except any Tax Asset reflected as an asset in the Final Closing Statement and taken into account in the calculation of the Final Purchaser Working Capital or the Final Purchaser Net Cash), or (D) Taxes for which Seller Parent is responsible under Section 6.5(d)(i). (iii) To the extent permitted or required by applicable Law, the taxable year of each of the Conveyed Subsidiaries and their Subsidiaries and any Subsidiary of Purchaser that includes the Closing Date shall be treated as closing on (and including) the Closing Date. Otherwise, for purposes of this Agreement, in the case of any Straddle Period: (A) Property Taxes allocable to the Pre-Closing Tax Period shall be computed based upon the ratio of the number of days in the Pre-Closing Tax Period to the number of days in the entire Straddle Period; and (B) Taxes (other than Property Taxes) allocable to the Pre-Closing Tax Period shall be computed as if such Tax period ended as of the close of business on the Closing Date and, in the case of any Taxes of Conveyed Subsidiaries (and their Subsidiaries) and Seller Parent, or in the case of any Taxes of Purchaser Parent and Purchaser (and their Subsidiaries prior to the Closing), in each case attributable to the ownership of any equity interest in any partnership or other “flow through” entity for tax purposes (including of any “controlled foreign corporation,” as defined under the Code) as if the Tax period of such partnership or other “flow through” entity ended as of the close of business on the Closing Date with the Taxes of such entity for the Pre-Closing Tax Period deemed to include any Taxes on the allocable income of such entity in respect of such Tax period; provided that exemptions, allowances or deductions that are calculated on an annual basis (including depreciation and amortization deductions) shall be allocated between the period ending on the Closing Date and the period beginning after the Closing Date in proportion to the number of days in each period. (iv) Any claim for indemnification under this Section 6.5(d) shall be made in writing upon the party from whom indemnification is sought, and shall specify in reasonable detail the basis for such claim. Any indemnity payment required to be made pursuant to this Section 6.5(d) shall be made within thirty (30) days after the indemnified party makes written demand upon the indemnifying party, but in no case earlier than five (5) Business Days prior to the date on which the relevant Taxes are required to be paid to the applicable Taxing Authority. (v) With respect to any Taxes suffered or incurred by any Conveyed Subsidiary (or any Subsidiary thereof) that was not wholly owned by Seller Parent (directly or indirectly) as of immediately prior to the Closing, the indemnification obligations of Seller Parent pursuant to Section 6.5(d)(i) in respect of such Taxes (or related costs and expenses) shall in no event exceed an amount equal to (A) the amount of such Taxes (or related costs and expenses) for which the Purchaser Tax Indemnified Parties would otherwise be entitled to indemnification pursuant to Section 6.5(d), as if such Conveyed Subsidiary (or any Subsidiary thereof) were wholly owned by Seller Parent, multiplied by (B) the direct and indirect percentage ownership of Seller Parent of such Conveyed Subsidiary (or Subsidiary thereof) as of immediately prior to the Closing. With respect to any Taxes suffered or incurred by any Subsidiary of Purchaser Parent (including Purchaser and its Subsidiaries) that was not wholly owned by Purchaser Parent (directly or indirectly) as of immediately prior to the Closing, the indemnification obligations of Purchaser Parent pursuant to Section 6.5(d)(ii) in respect of such Taxes (or related costs and expenses) shall in no event exceed an amount equal to (A) the amount of such Taxes (or related costs and expenses) for which the Purchaser Tax Indemnified Parties would otherwise be entitled to indemnification pursuant to Section 6.5(d), as if such Subsidiary were wholly owned by Purchaser Parent, multiplied by (B) the direct and indirect percentage ownership of Purchaser Parent of such Subsidiary as of immediately prior to the Closing. (vi) Without duplication to any other amounts paid pursuant to this Section 6.5: (A) Within thirty (30) days following the filing of any Income Tax Return for any Conveyed Subsidiary (or any Subsidiary thereof), on the one hand, or Purchaser (or any Subsidiary thereof, other than the Conveyed Subsidiaries and their Subsidiaries), on the other hand, for any Pre-Closing Tax Period or for any Straddle Period, Seller Parent or Purchaser Parent shall (or Purchaser Parent shall cause Purchaser to) prepare a statement showing (i) the amount of Income Taxes shown as due on such filed Income Tax Return with respect to the relevant Pre-Closing Tax Period or the portion of any Straddle Period ending on and including the Closing Date (the “Final Pre-Closing Income Tax Amount”) and (ii) the amount of the Seller Accrued Income Taxes or Purchaser Accrued Income Taxes, as applicable, attributable to such Income Tax Return as reflected on the Final Closing Statement (the “Pre-Closing Income Tax Amount”) and deliver such statement to Seller Parent and Purchaser Parent, as applicable. Purchaser Parent or Seller Parent, as applicable, shall have a period of fifteen (15) Business Days to provide comments to a schedule prepared (or caused to be prepared) by Seller Parent or Purchaser Parent, respectively. If Purchaser Parent or Seller Parent, as applicable, do not provide any comments to Seller Parent or Purchaser Parent, respectively, during such period, the statement as so prepared shall be final and binding. (B) In the event the Final Pre-Closing Income Tax Amount with respect to any Income Tax Return is less than the amount of the Pre-Closing Income Tax Amount attributable to such Income Tax Return that was included on the Final Closing Statement, the Purchaser shall within five (5) Business Days following the finalization of the Final Pre-Closing Income Tax Amount hereunder (i) pay to Seller Parent the amount of such difference with respect to a Conveyed Subsidiary and their Subsidiaries and (ii) pay to Purchaser Parent the amount of such difference with respect to Purchaser and its Subsidiaries. (vii) The Parties shall use reasonable best efforts to structure any indemnity payment, true-up payment, or payment in respect of Tax Benefits made by any Party pursuant to this Agreement (including pursuant to this Section 6.5, Section 6.6 and Article VII) and any payment made by Purchaser Parent to Purchaser pursuant to Section 2.8 or Section 2.9 in the manner set forth in Clause 10 of the Structuring Considerations Agreement. The Parties shall use reasonable best efforts to structure as a special dividend any payment made by Purchaser to Purchaser Parent pursuant to Section 2.8, Section 2.9 or this Section 6.5.

Appears in 1 contract

Sources: Stock Purchase Agreement (Granite Broadcasting Corp)

Tax Indemnification. ~~(i)~~ Subject to Section ~~6.5(d)(v~~9.04(c) and excluding all Excluded Taxes, Stockholders shall, severally and not jointly (in accordance with their Pro Rata Shares), ~~from and after~~ indemnify the ~~Closing, Seller~~ Parent ~~agrees to indemnify~~ Indemnitees and hold them harmless ~~Purchaser and its Subsidiaries (including the Conveyed Subsidiaries and their Subsidiaries after the Closing Date) (collectively, the “Purchaser Tax Indemnified Parties”)~~ from and against (a) all ~~liability~~Taxes required to be withheld by the Company as a result of the distributions or other payments contemplated by Section 2.02(b) hereof; (b) all Taxes of any Company Entity for all Pre-Closing Tax Periods (including any income Taxes attributable to 280E which are, in the aggregate, in excess of the 280E Tax Reserve without duplication thereof, but subject, without duplication, ~~for~~ to Section 6.10); (1c) ~~Taxes of the Conveyed Subsidiaries and their Subsidiaries for any Pre-Closing Tax Period (including any Taxes payable in respect of an election under Section 965(h) of the Code), (2)~~ all Taxes of any ~~Seller (other than any Transfer Taxes and VAT for~~ member of an affiliated, consolidated, combined or unitary group of which Purchaser is responsible hereunder) including, Taxes (other than Taxes of the Conveyed Subsidiaries and their Subsidiaries) imposed with respect to, arising out of or relating to the Purchased Assets or the Business for a Pre-Closing Tax Period, (3) Taxes of any Person (other than the Conveyed Subsidiaries and their Subsidiaries) for a Pre-Closing Tax Period for which any Conveyed Subsidiary such Company Entity (or any ~~Subsidiary thereof~~predecessor of such Company Entity) is ~~liable~~ or was a member on or prior to the Closing Date by reason of a liability under Treasury Regulation Section 1.1502-6 or any comparable provisions of foreign, state or local Law; (~~or a similar provision~~ d) any and all Taxes of ~~state, local or foreign Law), or as a~~ any person imposed on any Company Entity arising under the principles of transferee or successor liability or by ~~Contract~~ contract, in each case relating to an event or transaction occurring before the Closing Date; and (~~other than Contracts that do not relate primarily to Taxes), (4~~e) all Taxes ~~arising out of or~~ resulting from ~~any breach~~ the Company’s failure to deliver the certificate and required notice, properly completed and executed, as contemplated by Section 2.03(a)(vi) hereof (collectively, “Indemnified Taxes”). In each of ~~any covenant~~ the above cases, the term “Taxes” shall include Losses arising from or ~~agreement~~ relating to such Taxes including the non-payment thereof. Further, in each of ~~Seller Parent or any~~ the above cases, at the election of ~~its Affiliates contained in this Agreement~~the Stockholder Representative for and on behalf of the Stockholders, within ten (510) Business Days after payment of such Indemnified Taxes ~~for a Pre-Closing Tax Period imposed on (x) any transaction effected pursuant to Section 2.3(b), (y) any settlement of any intercompany accounts of Seller~~ by Parent or its ~~Subsidiaries pursuant~~ Affiliates, Stockholder Representative shall either: (A) direct Parent or the Surviving Corporation to ~~Section 6.7~~release to Parent, ~~or (z) any transaction or step forming part~~ from the Stockholder Representative Expense Fund, an amount of cash equal to such Indemnified Taxes that are the responsibility of the Seller Internal Restructurings, (6) Transfer Taxes for which Seller Parent is responsible under Section 6.5(j), (7) Taxes required to be deducted or withheld with respect to the payment of the Purchase Consideration or any amounts payable to Seller Parent pursuant to Section 2.8 or Section 2.9, including any penalties imposed on Purchaser as a result of Purchaser’s failure to deduct or withhold any such amounts that Purchaser (or a Purchaser Designated Affiliate) was permitted to withhold under Section 2.10 (in each case, subject to Purchaser’s compliance with the notice and cooperation requirements of Section 2.10 and except for any such Taxes (and any related penalties) required to be deducted or withheld solely as a result of any assignment by Purchaser or its Affiliates for which Purchaser is responsible pursuant to Section 10.3), (8) Taxes arising from any breach of any representation or warranty contained in Section 4.16(k), (9) Taxes arising as a result of any Conveyed Subsidiary or any Subsidiary of any Conveyed Subsidiary at any time ceasing to be a member of a group for the purposes of any Tax, of which group Seller Parent or any Subsidiary of Seller Parent is or was also a member and (10) any costs and expenses, including reasonable legal and accounting fees and expenses, attributable to any item described in clauses (1) through (9) (any such Taxes for which Seller Parent is responsible Stockholders pursuant to this Section ~~6.5(d)(i)~~6.03, ~~subject~~ with any excess of the amount of Indemnified Taxes over the amount of such release from the Stockholder Representative Expense Fund to be paid, at the election of Stockholder Representative, by (I) directing the Escrow Agent to release to Parent an aggregate number of Escrow Shares (rounded up to the ~~following proviso, “Seller Indemnified Taxes”); provided that Seller Parent shall not be required~~ nearest whole number) equal to ~~indemnify or hold harmless any Purchaser Tax Indemnified Party from and against any liability pursuant to this Section 6.5(d)(i) for (A) Taxes attributable to any action taken after~~ the ~~Closing by Purchaser, any~~ quotient of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries), or any transferee of Purchaser or any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries), other than any such action that (1) is the Canadian dollar equivalent (based on the average exchange rate posted by the Bank of Canada as of the end of each trading day during the period described in the ~~ordinary course~~ following clause (2)) of ~~business~~the excess Indemnified Taxes, divided by (2) ~~is expressly permitted or contemplated~~ the 20-day volume weighted average price of the Parent Shares ending on the day prior to such release on the Exchange, as reported by ~~this Agreement~~Bloomberg Finance L.P., or (3II) ~~is required~~ Stockholders to ~~be taken~~ Parent in ~~order to comply with applicable Law~~ cash in immediately available funds in the amount of their respective Pro Rata Shares thereof, severally and not jointly; or ~~as a result of a change in applicable Law (a “Purchaser Tax Act”),~~ (B) ~~Taxes that were reflected, accrued or reserved for in~~ direct the ~~Final Closing Statement, Final Business Working Capital, or Final Business Net Cash,~~ Escrow Agent to release to Parent an aggregate number of Escrow Shares (~~C) Income Taxes~~ rounded up to the ~~extent that a Conveyed Subsidiary or any Subsidiary thereof had any Tax Assets~~ nearest whole number) in an amount of such Indemnified Taxes equal to the quotient of (I) the Canadian dollar equivalent (based on the average exchange rate posted by the Bank of Canada as of the ~~close~~ end of ~~business~~ each trading day during the period described in the following clause (II)) of such Indemnified Taxes, divided by (II) the 20-day volume weighted average price of the Parent Shares ending on the ~~Closing Date~~ day prior to such release on the Exchange, as reported by Bloomberg Finance L.P.; provided, that ~~were available, or would have been available but for their prior utilization by Purchaser or any of its Affiliates~~ (~~including~~ i) if the ~~Conveyed Subsidiaries and their Subsidiaries after~~ Stockholder Representative elects cash payment under the ~~Closing) to offset or otherwise reduce the applicable Tax Liability in respect of such Income Taxes~~ foregoing clause (~~except any Tax Asset reflected as an asset in the Final Closing Statement and taken into account in the calculation of the Final Business Working Capital or the Final Business Net Cash~~A)(II), and any Stockholder does not pay any such excess Indemnified Taxes owed pursuant thereto within 30 days thereafter, such Stockholder shall, at the option of Parent, have such amounts settled in Escrow Shares pursuant to the foregoing clause (A)(I) (or if the Escrow Shares are not sufficient, in accordance with the following clause (~~D) Taxes for which Purchaser Parent is responsible under Section 6.5(d)(ii~~ii). ), and (ii) ~~Subject to Section 6.5(d)(v), from and after~~ in the ~~Closing, Purchaser Parent shall indemnify and hold harmless~~ event the Purchaser Tax Indemnified Parties from and against all liability, without duplication, for (1) all Taxes of Purchaser Parent and its Affiliates (other than Purchaser and its Subsidiaries) for any Tax period (other than Transfer Taxes and VAT for which Seller Parent is responsible hereunder), (2) Taxes of Purchaser and its Subsidiaries (other than the Conveyed Subsidiaries and their Subsidiaries) for any Pre-Closing Tax Period, (3) Taxes of any Person for a Pre-Closing Tax Period for which Purchaser (or any Subsidiary thereof other than any Conveyed Subsidiaries and their Subsidiaries) is liable under Treasury Regulation Section 1.1502-6 (or a similar provision of state, local or foreign Law), or as a transferee or successor or by Contract (other than Contracts that do not relate primarily to Taxes), (4) Taxes arising out of or resulting from any breach of any covenant or agreement of Purchaser Parent, Purchaser or their respective Affiliates contained Stockholder Representative chooses settlement in this Agreement, (5) Transfer Taxes for which Purchaser Parent is responsible under Section 6.5(j), (6) Taxes arising from any breach of any representation or warranty in Section 5.17(k), (7) Taxes for a Pre-Closing Tax Period imposed on (x) any settlement of any intercompany accounts of Purchaser or any Subsidiary of Purchaser, on the one hand, and Purchaser Parent or any Subsidiary of Purchaser Parent (other than Purchaser and its Subsidiaries), on the other hand, Escrow Shares pursuant to ~~Section 6.7 or (y) any transaction or step forming part of~~ the Purchaser Internal Restructurings, (8) Taxes required to be deducted or withheld with respect to any amounts payable to Purchaser Parent pursuant to Section 2.8 or Section 2.9, including any penalties imposed on Purchaser as a result of Purchaser’s failure to deduct or withhold any such amounts, (9) Taxes arising as a result of Purchaser or any Subsidiary of Purchaser (other than any Conveyed Subsidiary or a Subsidiary thereof) at any time ceasing to be a member of a group for the purposes of any Tax, of which group Purchaser Parent or any Subsidiary of Purchaser Parent (other than Purchaser or any Subsidiary of Purchaser) is or was also a member and (10) any costs and expenses, including reasonable legal and accounting fees and expenses, attributable to any item described in foregoing clauses (1A)(I) through (9) (any such Taxes for which Purchaser Parent is responsible pursuant to this Section 6.5(d)(ii), subject to the following proviso, “Purchaser Parent Indemnified Taxes”); provided that Purchaser Parent shall not be required to indemnify or hold harmless any Purchaser Tax Indemnified Party from and against any liability for (A) Taxes attributable to any action taken after the Closing by Seller Parent or any of its Affiliates, other than any such action that (1) is in the ordinary course of business, (2) is expressly permitted or contemplated by this Agreement, or (3) is required to be taken in order to comply with applicable Law or as a result of a change in applicable Law (a “Seller Tax Act”), (B) ~~Taxes that were reflected, accrued or reserved for in~~ but the ~~Final Closing Statement, Final Purchaser Working Capital or the Final Purchaser Net Cash, (C) Income Taxes to the extent that Purchaser or any Subsidiary thereof had any Tax Assets as~~ amount of the close of business on the Closing Date that were available, or would have been available but for their prior utilization by Purchaser or any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries after the Closing), to offset or otherwise reduce the applicable Tax Liability in respect of such Income Indemnified Taxes (~~except any Tax Asset reflected as an asset in the Final Closing Statement and taken into account in the calculation~~ or amount of the Final Purchaser Working Capital or the Final Purchaser Net Cash), or (D) Taxes for which Seller Parent is responsible under Section 6.5(d)(i). (iii) To the extent permitted or required by applicable Law, the taxable year of each of the Conveyed Subsidiaries and their Subsidiaries and any Subsidiary of Purchaser that includes the Closing Date shall be treated as closing on (and including) the Closing Date. Otherwise, for purposes of this Agreementexcess Indemnified Taxes, in the case of ~~any Straddle Period:~~ the foregoing clause (AA)(I)) ~~Property Taxes allocable~~ are in excess of the Escrow Shares, the Stockholders shall transfer to Parent a number of Parent Shares (rounded up to the nearest whole share) equal to the quotient of (I) the Canadian dollar equivalent (based on the average exchange rate posted by the Bank of Canada as of the end of each trading day during the period described in the following clause (II)) of such remaining excess Indemnified Taxes, divided by (II) the 20-day volume weighted average price of the Parent Shares ending on the day prior to such release on the Exchange), as reported by Bloomberg Finance L.P., in accordance with their respective Pro Rata Shares, severally and not jointly. Notwithstanding the foregoing, any claim for indemnification by the Parent Indemnitees pursuant to Section 6.03 for Indemnified Taxes, Section 9.02(a) for any breach of a representation contained in Section 3.22, or Section 9.02(b) for any breach of a covenant, undertaking, agreement or obligation contained in this Article VI, in each case, other than those arising out of or related to 280E for Pre-Closing Tax ~~Period shall be computed based upon the ratio of the number of days in the Pre-Closing Tax Period~~ Periods, to the ~~number of days~~ extent asserted in ~~the entire Straddle Period; and~~ good faith with reasonable specificity (~~B) Taxes (other than Property Taxes) allocable~~ to the ~~Pre-Closing Tax Period shall be computed as if~~ extent known at such ~~Tax period ended as of the close of business on the Closing Date and, in the case of any Taxes of Conveyed Subsidiaries (and their Subsidiaries~~time) and ~~Seller Parent,~~ in writing by notice from the Indemnified Party to the Indemnifying Party on or ~~in the case of any Taxes of Purchaser Parent and Purchaser (and their Subsidiaries~~ prior to the ~~Closing), in each case attributable to~~ applicable expiration date of the ~~ownership of any equity interest in any partnership or other “flow through” entity for tax purposes (including of any “controlled foreign corporation,” as defined under~~ applicable survival period shall not thereafter be barred by the ~~Code) as if the Tax period~~ expiration of such ~~partnership or other “flow through” entity ended as of the close of business on the Closing Date with the Taxes of~~ survival period and such entity for the Pre-Closing Tax Period deemed to include any Taxes on the allocable income of such entity in respect of such Tax period; provided that exemptions, allowances or deductions that are calculated on an annual basis (including depreciation and amortization deductions) claims shall ~~be allocated between the period ending on the Closing Date and the period beginning after the Closing Date in proportion to the number of days in each period~~survive until finally resolved. (iv) Any claim for indemnification under this Section 6.5(d) shall be made in writing upon the party from whom indemnification is sought, and shall specify in reasonable detail the basis for such claim. Any indemnity payment required to be made pursuant to this Section 6.5(d) shall be made within thirty (30) days after the indemnified party makes written demand upon the indemnifying party, but in no case earlier than five (5) Business Days prior to the date on which the relevant Taxes are required to be paid to the applicable Taxing Authority. (v) With respect to any Taxes suffered or incurred by any Conveyed Subsidiary (or any Subsidiary thereof) that was not wholly owned by Seller Parent (directly or indirectly) as of immediately prior to the Closing, the indemnification obligations of Seller Parent pursuant to Section 6.5(d)(i) in respect of such Taxes (or related costs and expenses) shall in no event exceed an amount equal to (A) the amount of such Taxes (or related costs and expenses) for which the Purchaser Tax Indemnified Parties would otherwise be entitled to indemnification pursuant to Section 6.5(d), as if such Conveyed Subsidiary (or any Subsidiary thereof) were wholly owned by Seller Parent, multiplied by (B) the direct and indirect percentage ownership of Seller Parent of such Conveyed Subsidiary (or Subsidiary thereof) as of immediately prior to the Closing. With respect to any Taxes suffered or incurred by any Subsidiary of Purchaser Parent (including Purchaser and its Subsidiaries) that was not wholly owned by Purchaser Parent (directly or indirectly) as of immediately prior to the Closing, the indemnification obligations of Purchaser Parent pursuant to Section 6.5(d)(ii) in respect of such Taxes (or related costs and expenses) shall in no event exceed an amount equal to (A) the amount of such Taxes (or related costs and expenses) for which the Purchaser Tax Indemnified Parties would otherwise be entitled to indemnification pursuant to Section 6.5(d), as if such Subsidiary were wholly owned by Purchaser Parent, multiplied by (B) the direct and indirect percentage ownership of Purchaser Parent of such Subsidiary as of immediately prior to the Closing. (vi) Without duplication to any other amounts paid pursuant to this Section 6.5: (A) Within thirty (30) days following the filing of any Income Tax Return for any Conveyed Subsidiary (or any Subsidiary thereof), on the one hand, or Purchaser (or any Subsidiary thereof, other than the Conveyed Subsidiaries and their Subsidiaries), on the other hand, for any Pre-Closing Tax Period or for any Straddle Period, Seller Parent or Purchaser Parent shall (or Purchaser Parent shall cause Purchaser to) prepare a statement showing (i) the amount of Income Taxes shown as due on such filed Income Tax Return with respect to the relevant Pre-Closing Tax Period or the portion of any Straddle Period ending on and including the Closing Date (the “Final Pre-Closing Income Tax Amount”) and (ii) the amount of the Seller Accrued Income Taxes or Purchaser Accrued Income Taxes, as applicable, attributable to such Income Tax Return as reflected on the Final Closing Statement (the “Pre-Closing Income Tax Amount”) and deliver such statement to Seller Parent and Purchaser Parent, as applicable. Purchaser Parent or Seller Parent, as applicable, shall have a period of fifteen (15) Business Days to provide comments to a schedule prepared (or caused to be prepared) by Seller Parent or Purchaser Parent, respectively. If Purchaser Parent or Seller Parent, as applicable, do not provide any comments to Seller Parent or Purchaser Parent, respectively, during such period, the statement as so prepared shall be final and binding. (B) In the event the Final Pre-Closing Income Tax Amount with respect to any Income Tax Return is less than the amount of the Pre-Closing Income Tax Amount attributable to such Income Tax Return that was included on the Final Closing Statement, the Purchaser shall within five (5) Business Days following the finalization of the Final Pre-Closing Income Tax Amount hereunder (i) pay to Seller Parent the amount of such difference with respect to a Conveyed Subsidiary and their Subsidiaries and (ii) pay to Purchaser Parent the amount of such difference with respect to Purchaser and its Subsidiaries. (vii) The Parties shall use reasonable best efforts to structure any indemnity payment, true-up payment, or payment in respect of Tax Benefits made by any Party pursuant to this Agreement (including pursuant to this Section 6.5, Section 6.6 and Article VII) and any payment made by Purchaser Parent to Purchaser pursuant to Section 2.8 or Section 2.9 in the manner set forth in Clause 10 of the Structuring Considerations Agreement. The Parties shall use reasonable best efforts to structure as a special dividend any payment made by Purchaser to Purchaser Parent pursuant to Section 2.8, Section 2.9 or this Section 6.5.

Appears in 1 contract

Sources: Merger Agreement (Vireo Growth Inc.)

Tax Indemnification. (i) Subject to ~~Section 6.5(d)(v~~Sections 7.1(a)(ii) through (a)(iv), ~~from and after~~ the ~~Closing, Seller Parent~~ Company Stockholder agrees to indemnify and hold the Parent Indemnified Parties harmless ~~Purchaser~~ from and ~~its~~ against, and pay to the Parent Indemnified Parties, the amount of any and all Losses (without duplication) in respect of (A) all Taxes of the Company and the Subsidiaries (~~including the Conveyed Subsidiaries and their Subsidiaries after the Closing Date~~or any predecessor thereof) ~~(collectively, the “Purchaser Tax Indemnified Parties”) from and against all liability, without duplication,~~ for (1) ~~Taxes of~~ any taxable period ending on or before the ~~Conveyed Subsidiaries~~ Closing Date and ~~their Subsidiaries for any Pre-Closing Tax Period (including any Taxes payable in respect of an election under Section 965(h) of the Code),~~ (2) ~~Taxes~~ the portion of any ~~Seller~~ Straddle Period ending on the Closing Date (~~other than~~ determined as provided in Section 7.1(c)); (B) all Taxes imposed on any ~~Transfer Taxes and VAT for~~ member of a consolidated, combined or unitary group of which ~~Purchaser is responsible hereunder) including, Taxes (other than Taxes of~~ the ~~Conveyed Subsidiaries and their Subsidiaries) imposed with respect to, arising out of~~ Company or ~~relating to the Purchased Assets or the Business for a Pre-Closing Tax Period, (3) Taxes of~~ any ~~Person (other than the Conveyed Subsidiaries and their Subsidiaries) for a Pre-Closing Tax Period for which any Conveyed~~ Subsidiary (or any ~~Subsidiary~~ predecessor thereof) is ~~liable under~~ or was a member on or prior to the Closing Date, by reason of the liability of the Company or any Subsidiary (or any predecessor thereof), pursuant to Treasury Regulation Section 1.1502-6 (or a any predecessor or successor thereof or any analogous or similar provision of under state, local or foreign Law); (C) the failure of any of the representations and warranties contained in Section 3.15, ~~or as a transferee or successor or by Contract (~~other than ~~Contracts that do not relate primarily to Taxes~~Section 3.15(k), to be true and correct in all respects (4determined without regard to any qualification related to materiality contained therein); (D) ~~Taxes arising out of or resulting from any breach of~~ the failure to perform any covenant on the part of the Company Stockholder or ~~agreement of Seller Parent~~ (prior to the Closing) the Company or any of its ~~Affiliates~~ Subsidiaries contained in this ~~Agreement,~~ Agreement with respect to Taxes (~~5) Taxes for a Pre-Closing Tax Period imposed on~~ determined without regard to any qualification related to materiality contained therein); and (xE) any ~~transaction effected pursuant~~ failure by the Company Stockholder to Section 2.3(b), (y) any settlement of any intercompany accounts of Seller Parent or its Subsidiaries pursuant to Section 6.7, or (z) any transaction or step forming part of the Seller Internal Restructurings, (6) Transfer Taxes for which Seller Parent is responsible under Section 6.5(j), (7) timely and fully pay all Taxes required to be ~~deducted or withheld with respect to~~ borne by the ~~payment of the Purchase Consideration or any amounts payable to Seller Parent~~ Company Stockholder pursuant to Section ~~2.8 or Section 2.9~~7.3, ~~including any penalties imposed on Purchaser as a result of Purchaser’s failure~~ except to ~~deduct or withhold~~ the extent any such ~~amounts that Purchaser (or a Purchaser Designated Affiliate) was permitted to withhold under Section 2.10~~ Loss (in ~~each case, subject to Purchaser’s compliance with the notice and cooperation requirements~~ any of ~~Section 2.10 and except for any such Taxes~~ (and any related penalties) required to be deducted or withheld solely as a result of any assignment by Purchaser or its Affiliates for which Purchaser is responsible pursuant to Section 10.3), (8) Taxes arising from any breach of any representation or warranty contained in Section 4.16(k), (9) Taxes arising as a result of any Conveyed Subsidiary or any Subsidiary of any Conveyed Subsidiary at any time ceasing to be a member of a group for the purposes of any Tax, of which group Seller Parent or any Subsidiary of Seller Parent is or was also a member and (10) any costs and expenses, including reasonable legal and accounting fees and expenses, attributable to any item described in clauses (1A) through (9E)) (any such Taxes for which Seller Parent is responsible pursuant to this Section 6.5(d)(i), subject to the following proviso, “Seller Indemnified Taxes”); provided that Seller Parent shall not be required to indemnify or hold harmless any Purchaser Tax Indemnified Party from and against any liability pursuant to this Section 6.5(d)(i) for (A) Taxes attributable to any action taken after the Closing by Purchaser, any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries), or any transferee of Purchaser or any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries), other than any such action that (1) is in the ordinary course of business, (2) is expressly permitted or contemplated by this Agreement, or (3) is required to be taken in order to comply with applicable Law or was included as a result of a change in applicable Law (a “Purchaser Tax Act”), (B) Taxes that were reflected, accrued or reserved for in the Final Closing Statement, Final Business Working Capital, or Final Business Net Cash, (C) Income Taxes to the extent that a Conveyed Subsidiary or any Subsidiary thereof had any Tax Assets as of the close of business on the Closing Date that were available, or would have been available but for their prior utilization by Purchaser or any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries after the Closing) to offset or otherwise reduce the applicable Tax Liability in respect of such Income Taxes (except any Tax Asset reflected as an asset in the Final Closing Statement and taken into account liability in the calculation of the ~~Final Business Working Capital or the Final Business Net Cash), or (D) Taxes for which Purchaser Parent is responsible under Section 6.5(d)(ii)~~Closing Cash Amount. (ii) ~~Subject~~ In the event that the representation and warranty contained in Section 3.15(k) fails to be true and correct in all respects, then the Company Stockholder shall pay to Parent the lesser of (A) the dollar amount by which the Company’s actual net operating loss carryforward as of December 31, 2010 for United States federal income tax purposes is less than $19,400,000, divided by 2.5, and (B) $7,500,000; provided however, that indemnification shall not be provided under this Section ~~6.5(d)(v), from and after~~ 7.1(a)(ii) for any amount of the ~~Closing, Purchaser~~ Company’s net operating loss carryforward (as reduced by the amount of such carryforward that the Company utilizes with respect to the taxable year ending on the Closing Date) that is not reported by Parent ~~shall indemnify and hold harmless the Purchaser~~ as a net operating loss carryforward deduction on its United States federal income Tax ~~Indemnified Parties from and against all liability, without duplication, for (1) all Taxes of Purchaser Parent and its Affiliates~~ Returns (other than ~~Purchaser and its Subsidiaries) for any~~ due to the good faith resolution of a Tax period (other than Transfer Taxes and VAT for which Seller Parent is responsible hereunder), (2) Taxes of Purchaser and its Subsidiaries (other than the Conveyed Subsidiaries and their Subsidiaries) for any Pre-Closing Tax Period, (3) Taxes of any Person for a Pre-Closing Tax Period for which Purchaser (or any Subsidiary thereof other than any Conveyed Subsidiaries and their Subsidiaries) is liable under Treasury Regulation Section 1.1502-6 (or a similar provision of state, local or foreign Law), or as a transferee or successor or by Contract (other than Contracts that do not relate primarily to Taxes), (4) Taxes arising out of or resulting from any breach of any covenant or agreement of Purchaser Parent, Purchaser or their respective Affiliates contained contest in accordance with this Agreement, (5) Transfer Taxes for which Purchaser Parent is responsible under Section 6.5(j), (6) Taxes arising from any breach of any representation or warranty in Section 5.17(k), (7) Taxes for a Pre-Closing Tax Period imposed on (x) any settlement of any intercompany accounts of Purchaser or any Subsidiary of Purchaser, on the one hand, and Purchaser Parent or any Subsidiary of Purchaser Parent (other than Purchaser and its Subsidiaries), on the other hand, pursuant to Section 6.7 or (y) any transaction or step forming part of the Purchaser Internal Restructurings, (8) Taxes required to be deducted or withheld with respect to any amounts payable to Purchaser Parent pursuant to Section 2.8 or Section 2.9, including any penalties imposed on Purchaser as a result of Purchaser’s failure to deduct or withhold any such amounts, (9) Taxes arising as a result of Purchaser or any Subsidiary of Purchaser (other than any Conveyed Subsidiary or a Subsidiary thereof) at any time ceasing to be a member of a group for the purposes of any Tax, of which group Purchaser Parent or any Subsidiary of Purchaser Parent (other than Purchaser or any Subsidiary of Purchaser) is or was also a member and (10) any costs and expenses, including reasonable legal and accounting fees and expenses, attributable to any item described in clauses (1) through (9) (any such Taxes for which Purchaser Parent is responsible pursuant to this Section 6.5(d)(ii), subject to the following proviso, “Purchaser Parent Indemnified Taxes”); provided that Purchaser Parent shall not be required to indemnify or hold harmless any Purchaser Tax Indemnified Party from and against any liability for (A) Taxes attributable to any action taken after the Closing by Seller Parent or any of its Affiliates, other than any such action that (1) is in the ordinary course of business, (2) is expressly permitted or contemplated by this Agreement, or (3) is required to be taken in order to comply with applicable Law or as a result of a change in applicable Law (a “Seller Tax Act”), (B) Taxes that were reflected, accrued or reserved for in the Final Closing Statement, Final Purchaser Working Capital or the Final Purchaser Net Cash, (C) Income Taxes to the extent that Purchaser or any Subsidiary thereof had any Tax Assets as of the close of business on the Closing Date that were available, or would have been available but for their prior utilization by Purchaser or any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries after the Closing), to offset or otherwise reduce the applicable Tax Liability in respect of such Income Taxes (except any Tax Asset reflected as an asset in the Final Closing Statement and taken into account in the calculation of the Final Purchaser Working Capital or the Final Purchaser Net Cash), or (D) Taxes for which Seller Parent is responsible under Section 6.5(d)(i). (iii) To Any Losses for which indemnification otherwise would be available under Section 7.1(a)(i)(C) for a breach of Section 3.15(l) or under Section 7.1(a)(ii) shall be reduced by the ~~extent permitted or required~~ amount of any Tax benefits recognized by ~~applicable Law~~Parent, the Company or any of its Subsidiaries as a result of incurring such Losses, including, but not limited to, any refunds of Taxes previously paid and the fair market value of any present or future reductions in Tax (including, but not limited to, reductions in Tax resulting from net operating loss carryforwards that are deductible in subsequent taxable ~~year~~ periods and/or other timing differences). The fair market value of ~~each of the Conveyed Subsidiaries and their Subsidiaries and~~ any ~~Subsidiary of Purchaser that includes the Closing Date~~ such Tax benefits shall be ~~treated~~ determined initially by mutual agreement between Parent and the Company Stockholder, cooperating in good faith (the “Initial Value”). On or before each December 31 following the date on which a payment (whether by wire transfer, offset or otherwise) made by the Company Stockholder pursuant to Section 7.1(a) is reduced by an Initial Value pursuant to this Section 7.1(a)(iii), Parent and the Company Stockholder shall each be permitted to deliver a notice of adjustment to the other party pursuant to which the notifying party shall request an adjustment to the Initial Value and shall certify the changes in facts and/or assumptions that support such an adjustment. Parent and the Company Stockholder shall cooperate in good faith to resolve any such notice of adjustment within twenty (20) days after the notified party’s receipt thereof. Any notice of adjustment not resolved within such twenty (20)-day period shall be resolved by the Arbitration Firm in accordance with Section 7.5. In the event that an adjustment is agreed to by Parent and the Company Stockholder (or determined pursuant to Section 7.5), the Initial Value shall be increased or decreased as ~~closing on~~ applicable. Within ten (~~and including~~10) ~~the Closing Date. Otherwise~~days following any such adjustment to an Initial Value, ~~for purposes of this Agreement, in the case of any Straddle Period:~~ (A) ~~Property Taxes allocable~~ if the Initial Value is increased as a result of the adjustment, then Parent shall pay to the ~~Pre-Closing Tax Period shall be computed based upon the ratio of the number of days in the Pre-Closing Tax Period~~ Company Stockholder an amount equal to ~~the number of days in the entire Straddle Period; and~~ such increase, and (B) ~~Taxes (other than Property Taxes) allocable to~~ if the ~~Pre-Closing Tax Period shall be computed~~ Initial Value is decreased as ~~if such Tax period ended as~~ a result of the ~~close of business on~~ adjustment, then the ~~Closing Date and, in the case of~~ Company Stockholder shall pay to Parent an amount equal to such decrease. Notwithstanding any Taxes of Conveyed Subsidiaries (and their Subsidiaries) and Seller Parent, or in the case of any Taxes of Purchaser Parent and Purchaser (and their Subsidiaries prior to the Closing), in each case attributable to the ownership of any equity interest in any partnership or other “flow through” entity for tax purposes (including of any “controlled foreign corporation,” as defined under the Code) as if the Tax period of such partnership or other “flow through” entity ended as of the ~~close~~ foregoing, no notice of ~~business on the Closing Date with the Taxes of such entity for the Pre-Closing Tax Period deemed~~ adjustment may be delivered pursuant to ~~include~~ this Section 7.1(a)(iii) at any ~~Taxes on the allocable income of such entity in respect of such Tax period; provided that exemptions~~time after December 31, ~~allowances or deductions that are calculated on an annual basis (including depreciation and amortization deductions)~~ 2017. Except as set forth above, Section 7.5 shall ~~be allocated between the period ending on the Closing Date and the period beginning after the Closing Date in proportion~~ not apply to ~~the number of days in each period~~any dispute arising under this Section 7.1(a)(iii). (iv) ~~Any claim for indemnification under this~~ Except as set forth in Section 6.5(d) shall be made in writing upon the party from whom indemnification is sought, and shall specify in reasonable detail the basis for such claim. Any indemnity payment required to be made pursuant to this Section 6.5(d) shall be made within thirty (30) days after the indemnified party makes written demand upon the indemnifying party, but in no case earlier than five (5) Business Days prior to the date on which the relevant Taxes are required to be paid to the applicable Taxing Authority. (v) With respect to any Taxes suffered or incurred by any Conveyed Subsidiary (or any Subsidiary thereof) that was not wholly owned by Seller Parent (directly or indirectly) as of immediately prior to the Closing7.3, the ~~indemnification obligations of Seller~~ Parent pursuant to Section 6.5(d)(i) in respect of such Taxes (or related costs and expenses) shall in no event exceed an amount equal to (A) the amount of such Taxes (or related costs and expenses) for which the Purchaser Tax Indemnified Parties ~~would otherwise~~ shall not be entitled to any indemnification pursuant to Section 6.5(d), as if such Conveyed Subsidiary (or any Subsidiary thereof) were wholly owned by Seller Parent, multiplied by (B) the direct and indirect percentage ownership of Seller Parent of such Conveyed Subsidiary (or Subsidiary thereof) as of immediately prior to the Closing. With respect to any Taxes suffered or incurred by any Subsidiary of Purchaser Parent (including Purchaser and its Subsidiaries) that was not wholly owned by Purchaser Parent (directly or indirectly) as of immediately prior to the Closing, the indemnification obligations of Purchaser Parent pursuant to Section 6.5(d)(ii) in respect of such Taxes (or related costs and expenses) shall in no event exceed an amount equal to (A) the amount of such Taxes (or related costs and expenses7.1(a) for ~~which~~ any income Taxes that are triggered by the Purchaser Tax Indemnified Parties would otherwise be entitled to indemnification pursuant to Section 6.5(d), as if such Subsidiary were wholly owned by Purchaser Parent, multiplied by (B) the direct and indirect percentage ownership of Purchaser Parent of such Subsidiary as of immediately prior to the ClosingIntegrated Merger. (vi) Without duplication to any other amounts paid pursuant to this Section 6.5: (A) Within thirty (30) days following the filing of any Income Tax Return for any Conveyed Subsidiary (or any Subsidiary thereof), on the one hand, or Purchaser (or any Subsidiary thereof, other than the Conveyed Subsidiaries and their Subsidiaries), on the other hand, for any Pre-Closing Tax Period or for any Straddle Period, Seller Parent or Purchaser Parent shall (or Purchaser Parent shall cause Purchaser to) prepare a statement showing (i) the amount of Income Taxes shown as due on such filed Income Tax Return with respect to the relevant Pre-Closing Tax Period or the portion of any Straddle Period ending on and including the Closing Date (the “Final Pre-Closing Income Tax Amount”) and (ii) the amount of the Seller Accrued Income Taxes or Purchaser Accrued Income Taxes, as applicable, attributable to such Income Tax Return as reflected on the Final Closing Statement (the “Pre-Closing Income Tax Amount”) and deliver such statement to Seller Parent and Purchaser Parent, as applicable. Purchaser Parent or Seller Parent, as applicable, shall have a period of fifteen (15) Business Days to provide comments to a schedule prepared (or caused to be prepared) by Seller Parent or Purchaser Parent, respectively. If Purchaser Parent or Seller Parent, as applicable, do not provide any comments to Seller Parent or Purchaser Parent, respectively, during such period, the statement as so prepared shall be final and binding. (B) In the event the Final Pre-Closing Income Tax Amount with respect to any Income Tax Return is less than the amount of the Pre-Closing Income Tax Amount attributable to such Income Tax Return that was included on the Final Closing Statement, the Purchaser shall within five (5) Business Days following the finalization of the Final Pre-Closing Income Tax Amount hereunder (i) pay to Seller Parent the amount of such difference with respect to a Conveyed Subsidiary and their Subsidiaries and (ii) pay to Purchaser Parent the amount of such difference with respect to Purchaser and its Subsidiaries. (vii) The Parties shall use reasonable best efforts to structure any indemnity payment, true-up payment, or payment in respect of Tax Benefits made by any Party pursuant to this Agreement (including pursuant to this Section 6.5, Section 6.6 and Article VII) and any payment made by Purchaser Parent to Purchaser pursuant to Section 2.8 or Section 2.9 in the manner set forth in Clause 10 of the Structuring Considerations Agreement. The Parties shall use reasonable best efforts to structure as a special dividend any payment made by Purchaser to Purchaser Parent pursuant to Section 2.8, Section 2.9 or this Section 6.5.

Appears in 1 contract

Sources: Merger Agreement (Deerfield Capital Corp.)

Tax Indemnification. (ia) ~~Subject to Section 6.5(d)(v), from~~ From and after the Closing, ~~Seller Parent agrees to~~ each Seller, jointly and severally with the other Sellers, shall be liable for and shall indemnify ~~and hold harmless Purchaser and~~ the Purchaser, its ~~Subsidiaries~~ Affiliates (including the ~~Conveyed Subsidiaries~~ Company) and each of their ~~Subsidiaries after the Closing Date)~~ respective officers, directors, employees, stockholders, agents and representatives (~~collectively,~~ the “Purchaser ~~Tax Indemnified Parties~~Indemnitees”) against and hold them harmless from ~~and against~~ (i) all ~~liability, without duplication,~~ liability for ~~(1)~~ Taxes of the ~~Conveyed Subsidiaries and their Subsidiaries~~ Company for ~~any Pre-Closing Tax Period (including any Taxes payable in respect of an election under Section 965(h) of~~ the Code), (2) Taxes of any Seller (other than any Transfer Taxes and VAT for which Purchaser is responsible hereunder) including, Taxes (other than Taxes of the Conveyed Subsidiaries and their Subsidiaries) imposed with respect to, arising out of or relating to the Purchased Assets or the Business for a Pre-Closing Tax Period, (3ii) Taxes of any Person (other than the Conveyed Subsidiaries and their Subsidiaries) for a Pre-Closing Tax Period for which any Conveyed Subsidiary (or any Subsidiary thereof) is liable under Treasury Regulation Section 1.1502-6 (or a similar provision of state, local or foreign Law), or as a transferee or successor or by Contract (other than Contracts that do not relate primarily to Taxes), (4) Taxes arising out of or all liability resulting from ~~any~~ a breach of any covenant or agreement of Seller Parent or any of its Affiliates contained in this Agreement, (5) Taxes for a Pre-Closing Tax Period imposed on (x) any transaction effected pursuant to Section 2.3(b), (y) any settlement of any intercompany accounts of Seller Parent or its Subsidiaries pursuant to Section 6.7, or (z) any transaction or step forming part of the Seller Internal Restructurings, (6) Transfer Taxes for which Seller Parent is responsible under Section 6.5(j), (7) Taxes required to be deducted or withheld with respect to the payment of the Purchase Consideration or any amounts payable to Seller Parent pursuant to Section 2.8 or Section 2.9, including any penalties imposed on Purchaser as a result of Purchaser’s failure to deduct or withhold any such amounts that Purchaser (or a Purchaser Designated Affiliate) was permitted to withhold under Section 2.10 (in each case, subject to Purchaser’s compliance with the notice Sellers’ representations and cooperation requirements of Section 2.10 and except for any such Taxes (and any related penalties) required to be deducted or withheld solely as a result of any assignment by Purchaser or its Affiliates for which Purchaser is responsible pursuant to Section 10.3), (8) Taxes arising from any breach of any representation or warranty warranties contained in Section 4.16(k), (9) Taxes arising as a result of any Conveyed Subsidiary or any Subsidiary of any Conveyed Subsidiary at any time ceasing to be a member of a group for the purposes of any Tax, of which group Seller Parent or any Subsidiary of Seller Parent is or was also a member 3.13 hereof and (10iii) ~~any costs and expenses, including~~ all liability for reasonable legal ~~and accounting~~ fees and ~~expenses,~~ expenses for any item attributable to any item ~~described~~ in ~~clauses~~ clause (1i) ~~through~~ and (9ii) (any such Taxes for which Seller Parent is responsible pursuant to this Section 6.5(d)(i), subject to the following proviso, “Seller Indemnified Taxes”); provided that Seller Parent shall not be required to indemnify or hold harmless any Purchaser Tax Indemnified Party from and against any liability pursuant to this Section 6.5(d)(i) for (A) Taxes attributable to any action taken after the Closing by Purchaser, any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries), or any transferee of Purchaser or any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries), other than any such action that (1) is in the ordinary course of business, (2) is expressly permitted or contemplated by this Agreement, or (3) is required to be taken in order to comply with applicable Law or as a result of a change in applicable Law (a “Purchaser Tax Act”), (B) Taxes that were reflected, accrued or reserved for in the Final Closing Statement, Final Business Working Capital, or Final Business Net Cash, (C) Income Taxes to the extent that a Conveyed Subsidiary or any Subsidiary thereof had any Tax Assets as of the close of business on the Closing Date that were available, or would have been available but for their prior utilization by Purchaser or any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries after the Closing) to offset or otherwise reduce the applicable Tax Liability in respect of such Income Taxes (except any Tax Asset reflected as an asset in the Final Closing Statement and taken into account in the calculation of the Final Business Working Capital or the Final Business Net Cash), or (D) Taxes for which Purchaser Parent is responsible under Section 6.5(d)(ii)above. (iib) ~~Subject to Section 6.5(d)(v), from and after~~ For purposes of determining the Closing, Purchaser Parent shall indemnify and hold harmless the Purchaser Tax Indemnified Parties from and against all liability, without duplication, for (1) all Taxes of Purchaser Parent and its Affiliates (other than Purchaser and its Subsidiaries) for any Tax period (other than Transfer Taxes and VAT for which Seller Parent is responsible hereunder), (2) Taxes of Purchaser and its Subsidiaries (other than the Conveyed Subsidiaries and their Subsidiaries) for any Pre-Closing Tax Period, (3) Taxes of any Person for a Pre-Closing Tax Period for which Purchaser (or any Subsidiary thereof other than any Conveyed Subsidiaries and their Subsidiaries) is liable under Treasury Regulation Section 1.1502-6 (or a similar provision of state, local or foreign Law), or as a transferee or successor or by Contract (other than Contracts that do not relate primarily to Taxes), (4) Taxes arising out of or resulting from any breach of any covenant or agreement of Purchaser Parent, Purchaser or their respective Affiliates contained in this Agreement, (5) Transfer Taxes for which Purchaser Parent is responsible under Section 6.5(j), (6) Taxes arising from any breach of any representation or warranty in Section 5.17(k), (7) Taxes for a Pre-Closing Tax Period imposed on (x) any settlement of any intercompany accounts of Purchaser or any Subsidiary of Purchaser, on the one hand, and Purchaser Parent or any Subsidiary of Purchaser Parent (other than Purchaser and its Subsidiaries), on the other hand, Sellers’ indemnity obligation pursuant to Section ~~6.7 or (y~~8.1(a) any transaction or step forming part of the Purchaser Internal Restructurings, (8) Taxes required to be deducted or withheld with respect to any amounts payable to Purchaser Parent pursuant to Section 2.8 or Section 2.9, including any penalties imposed on Purchaser as a result of Purchaser’s failure to deduct or withhold any such amounts, (9) Taxes arising as a result of Purchaser or any Subsidiary of Purchaser (other than any Conveyed Subsidiary or a Subsidiary thereof) at any time ceasing to be a member of a group for the purposes of any Tax, of which group Purchaser Parent or any Subsidiary of Purchaser Parent (other than Purchaser or any Subsidiary of Purchaser) is or was also a member and (10) any costs and expenses, including reasonable legal and accounting fees and expenses, attributable to any item described in clauses (1) through (9) (any such Taxes for which Purchaser Parent is responsible pursuant to this Section 6.5(d)(ii), subject to the following proviso, “Purchaser Parent Indemnified Taxes”); provided that Purchaser Parent shall not be required to indemnify or hold harmless any Purchaser Tax Indemnified Party from and against any liability for (A) Taxes attributable to any action taken after the Closing by Seller Parent or any of its Affiliates, other than any such action that (1) is in the ordinary course of business, (2) is expressly permitted or contemplated by this Agreement, or (3) is required to be taken in order to comply with applicable Law or as a result of a change in applicable Law (a “Seller Tax Act”), (B) Taxes that were reflected, accrued or reserved for in the Final Closing Statement, Final Purchaser Working Capital or the Final Purchaser Net Cash, (C) Income Taxes to the extent that Purchaser or any Subsidiary thereof had any Tax Assets as of the close of business on the Closing Date that were available, or would have been available but for their prior utilization by Purchaser or any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries after the Closing), to offset or otherwise reduce the applicable Tax Liability in respect of such Income Taxes (except any Tax Asset reflected as an asset in the Final Closing Statement and taken into account in the calculation of the Final Purchaser Working Capital or the Final Purchaser Net Cash), or (D) Taxes for which Seller Parent is responsible under Section 6.5(d)(i). (iii) To the extent permitted or required by applicable Law, the taxable year of each of the Conveyed Subsidiaries and their Subsidiaries and any Subsidiary of Purchaser that includes the Closing Date shall be treated as closing on (and including) the Closing Date. Otherwise, for purposes of this Agreementhereof, in the case of any taxable period that includes (but does not end on) the Closing Date (a “Straddle Period:”): (Ai) real, personal and intangible property Taxes (“Property ~~Taxes allocable to~~ Taxes”) of the Company and its Subsidiaries for the Pre-Closing Tax Period shall ~~be computed based upon~~ equal the ~~ratio~~ amount of such Property Taxes for the entire Straddle Period multiplied by a fraction, the numerator of which is the number of days during the Straddle Period that are in the Pre-Closing Tax Period to and the denominator of which is the number of days in the ~~entire~~ Straddle Period; and (Bii) the Taxes of the Company and its Subsidiaries (other than Property Taxes) ~~allocable to~~ for the Pre-Closing Tax Period shall be computed as if such ~~Tax~~ taxable period ended as of the close of business on the Closing Date and, in the case of any Taxes of Conveyed Subsidiaries (and their Subsidiaries) and Seller Parent, or in the case of any Taxes of Purchaser Parent and Purchaser (and their Subsidiaries prior to the Closing), in each case attributable to the ownership of any equity interest in any partnership or other “flow through” entity for tax purposes (including of any “controlled foreign corporation,” as defined under the Code) as if the Tax period of such partnership or other “flow through” entity ended as of the close of business on the Closing Date with the Taxes of such entity for the Pre-Closing Tax Period deemed to include any Taxes on the allocable income of such entity in respect of such Tax period; provided that exemptions, allowances or deductions that are calculated on an annual basis (including depreciation and amortization deductions) shall be allocated between the period ending on the Closing Date and the period beginning after the Closing Date in proportion to the number of days in each periodDate. (ivc) ~~Any claim~~ Unless the Sellers’ Representative, acting as agent for ~~indemnification~~ the Sellers notifies the Purchaser, within 20 Business Days following the Sellers’ Representative’s receipt of demand for payment that the Sellers’ Representative disputes its liability to a Purchaser Indemnitee under this Section ~~6.5(d) shall be made in writing upon the party from whom indemnification is sought~~8.1, ~~and shall specify in reasonable detail the basis for such claim. Any~~ any indemnity payment ~~required~~ to be made ~~pursuant to~~ under this Section ~~6.5(d)~~ 8.1 shall be ~~made~~ paid within ~~thirty (30) days~~ 20 Business Days after the ~~indemnified party~~ Purchaser Indemnitee makes written demand upon the ~~indemnifying party~~Sellers’ Representative, but in no case earlier than five ~~(5)~~ Business Days prior to the date on which the relevant Taxes are required to be paid to the ~~applicable~~ relevant Taxing ~~Authority~~Authority (including as estimated Tax payments). (vd) ~~With respect to~~ This Section 8.1 shall constitute the Purchaser’s and each Seller’s exclusive remedy for any ~~Taxes~~ Loss suffered or incurred ~~by any Conveyed Subsidiary (or any Subsidiary thereof) that was not wholly owned by Seller Parent (directly or indirectly) as of immediately prior~~ to the ~~Closing~~extent arising from, ~~the indemnification obligations of Seller Parent pursuant~~ relating to ~~Section 6.5(d)(i)~~ or, otherwise in respect of such Taxes (or related costs and expenses) shall in no event exceed an amount equal to (A) the amount of such Taxes (or related costs and expenses) for which the Purchaser Tax Indemnified Parties would otherwise be entitled to indemnification pursuant to Section 6.5(d), as if such Conveyed Subsidiary (or any Subsidiary thereof) were wholly owned by Seller Parent, multiplied by (B) the direct and indirect percentage ownership of Seller Parent of such Conveyed Subsidiary (or Subsidiary thereof) as of immediately prior to the Closing. With respect to any Taxes suffered or incurred by any Subsidiary of Purchaser Parent (including Purchaser and its Subsidiaries) that was not wholly owned by Purchaser Parent (directly or indirectly) as of immediately prior to the Closing, the indemnification obligations of Purchaser Parent pursuant to Section 6.5(d)(ii) in respect of such Taxes (or related costs and expenses) shall in no event exceed an amount equal to (A) the amount of such Taxes (or related costs and expenses) for which the Purchaser Tax Indemnified Parties would otherwise be entitled to indemnification pursuant to Section 6.5(d), as if such Subsidiary were wholly owned by Purchaser Parent, multiplied by (B) the direct and indirect percentage ownership of Purchaser Parent of such Subsidiary as of immediately prior to the ClosingTaxes. (vi) Without duplication to any other amounts paid pursuant to this Section 6.5: (A) Within thirty (30) days following the filing of any Income Tax Return for any Conveyed Subsidiary (or any Subsidiary thereof), on the one hand, or Purchaser (or any Subsidiary thereof, other than the Conveyed Subsidiaries and their Subsidiaries), on the other hand, for any Pre-Closing Tax Period or for any Straddle Period, Seller Parent or Purchaser Parent shall (or Purchaser Parent shall cause Purchaser to) prepare a statement showing (i) the amount of Income Taxes shown as due on such filed Income Tax Return with respect to the relevant Pre-Closing Tax Period or the portion of any Straddle Period ending on and including the Closing Date (the “Final Pre-Closing Income Tax Amount”) and (ii) the amount of the Seller Accrued Income Taxes or Purchaser Accrued Income Taxes, as applicable, attributable to such Income Tax Return as reflected on the Final Closing Statement (the “Pre-Closing Income Tax Amount”) and deliver such statement to Seller Parent and Purchaser Parent, as applicable. Purchaser Parent or Seller Parent, as applicable, shall have a period of fifteen (15) Business Days to provide comments to a schedule prepared (or caused to be prepared) by Seller Parent or Purchaser Parent, respectively. If Purchaser Parent or Seller Parent, as applicable, do not provide any comments to Seller Parent or Purchaser Parent, respectively, during such period, the statement as so prepared shall be final and binding. (B) In the event the Final Pre-Closing Income Tax Amount with respect to any Income Tax Return is less than the amount of the Pre-Closing Income Tax Amount attributable to such Income Tax Return that was included on the Final Closing Statement, the Purchaser shall within five (5) Business Days following the finalization of the Final Pre-Closing Income Tax Amount hereunder (i) pay to Seller Parent the amount of such difference with respect to a Conveyed Subsidiary and their Subsidiaries and (ii) pay to Purchaser Parent the amount of such difference with respect to Purchaser and its Subsidiaries. (vii) The Parties shall use reasonable best efforts to structure any indemnity payment, true-up payment, or payment in respect of Tax Benefits made by any Party pursuant to this Agreement (including pursuant to this Section 6.5, Section 6.6 and Article VII) and any payment made by Purchaser Parent to Purchaser pursuant to Section 2.8 or Section 2.9 in the manner set forth in Clause 10 of the Structuring Considerations Agreement. The Parties shall use reasonable best efforts to structure as a special dividend any payment made by Purchaser to Purchaser Parent pursuant to Section 2.8, Section 2.9 or this Section 6.5.

Appears in 1 contract

Sources: Purchase Agreement (Victory Acquisition Corp)

Tax Indemnification. (ia) ~~Subject to Section 6.5(d)(v), from~~ From and after the ~~Closing, Seller Parent agrees to indemnify and hold harmless Purchaser and its Subsidiaries (including the Conveyed Subsidiaries and their Subsidiaries after the~~ Applicable Closing Date~~) (collectively~~, ~~the “Purchaser Tax Indemnified Parties”) from~~ and ~~against all liability,~~ without duplication, for (1) Taxes of the Conveyed Subsidiaries and their Subsidiaries for any Pre-Closing Tax Period (including any Taxes payable in respect of an election under Section 965(h) of the Code), (2) Taxes of any Seller (other than any Transfer Taxes and VAT for which Purchaser is responsible hereunder) including, Taxes (other than Taxes of the Conveyed Subsidiaries and their Subsidiaries) imposed with respect to, arising out of or relating to the Purchased Assets or the Business for a Pre-Closing Tax Period, (3) Taxes of any Person (other than the Conveyed Subsidiaries and their Subsidiaries) for a Pre-Closing Tax Period for which any Conveyed Subsidiary (or any Subsidiary thereof) is liable under Treasury Regulation Section 1.1502-6 (or a similar provision of state, local or foreign Law), or as a transferee or successor or by Contract (other than Contracts that do not relate primarily to Taxes), (4) Taxes arising out of or resulting from any breach of any covenant or agreement of Seller Parent or any of its Affiliates contained in this Agreement, (5) Taxes for a Pre-Closing Tax Period imposed on (x) any transaction effected pursuant to Section 2.3(b), (y) any settlement of any intercompany accounts of Seller Parent or its Subsidiaries pursuant to Section 6.7, or (z) any transaction or step forming part of the Seller Internal Restructurings, (6) Transfer Taxes for which Seller Parent is responsible under Section 6.5(j), (7) Taxes required to be deducted or withheld with respect to the payment of the Purchase Consideration or any amounts payable to Seller Parent pursuant to Section 2.8 or Section 2.9, including any penalties imposed on Purchaser as a result of Purchaser’s failure to deduct or withhold any such amounts that Purchaser (or a Purchaser Designated Affiliate) was permitted to withhold under Section 2.10 (in each case, subject to Purchaser’s compliance with the notice and cooperation requirements of Section 2.10 and except for any such Taxes (and any related penalties) required to be deducted or withheld solely as a result of any assignment by Purchaser or its Affiliates for which Purchaser is responsible pursuant to Section 10.3), (8) Taxes arising from any breach of any representation or warranty contained in Section 4.16(k), (9) Taxes arising as a result of any Conveyed Subsidiary or any Subsidiary of any Conveyed Subsidiary at any time ceasing to be a member of a group for the purposes of any Tax, of which group Seller Parent or any Subsidiary of Seller Parent is or was also a member and (10) any costs and expenses, including reasonable legal and accounting fees and expenses, attributable to any item described in clauses (1) through (9) (any such Taxes for which Seller Parent is responsible pursuant to this Section 6.5(d)(i), subject to the following proviso, “Seller Indemnified Taxes”); provided that Seller Parent shall not be required to indemnify or hold harmless any Purchaser Tax Indemnified Party from and against any liability pursuant to this Section 6.5(d)(i) for (A) Taxes attributable to any action taken after the Closing by Purchaser, any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries), or any transferee of Purchaser or any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries), other than any such action that (1) is in the ordinary course of business, (2) is expressly permitted or contemplated by this Agreement, or (3) is required to be taken in order to comply with applicable Law or as a result of a change in applicable Law (a “Purchaser Tax Act”), (B) Taxes that were reflected, accrued or reserved for in the Final Closing Statement, Final Business Working Capital, or Final Business Net Cash, (C) Income Taxes to the extent that a Conveyed Subsidiary or any Subsidiary thereof had any Tax Assets as of the close of business on the Closing Date that were available, or would have been available but for their prior utilization by Purchaser or any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries after the Closing) to offset or otherwise reduce the applicable Tax Liability in respect of such Income Taxes (except any Tax Asset reflected as an asset in the Final Closing Statement and taken into account in the calculation of the Final Business Working Capital or the Final Business Net Cash), or (D) Taxes for which Purchaser Parent is responsible under Section 6.5(d)(ii). (ii) Subject to Section 6.5(d)(v), from and after the Closing, Purchaser Parent LivaNova shall indemnify and hold harmless the Purchaser ~~Tax Indemnified Parties~~ Indemnitees from and against any and all ~~liability, without duplication,~~ Losses for (1i) Taxes attributable to the ownership and operation of the Transferred Assets or the Business attributable to all Pre-Closing Tax Periods, (ii) Taxes of ~~Purchaser Parent and~~ the Transferred Subsidiaries attributable to all Pre-Closing Tax Periods, (iii) Taxes imposed on LivaNova or any of its ~~Affiliates~~ affiliates (~~other than Purchaser and its~~ not including the Transferred Subsidiaries) for any ~~Tax~~ taxable period except to the extent such Taxes are attributable solely to (~~other than Transfer Taxes and VAT for which Seller Parent is responsible hereunder)~~A) Purchaser’s ownership or operation of the Transferred Subsidiaries, the Transferred Assets or the Business or (2B) ~~Taxes~~ items of ~~Purchaser and its~~ income of the Transferred Subsidiaries ~~(other than the Conveyed Subsidiaries and their Subsidiaries) for any Pre~~arising in a Post-Closing Tax Period, (3iv) any breach by LivaNova or any of its affiliates of the representations and warranties contained in Section 3.14 or of any covenant or agreement contained in Sections 1.05 and 9.06 and this Article X (other than a breach by a Transferred Subsidiary following the Applicable Closing Date), (v) Taxes of ~~any Person for a Pre-Closing Tax Period for which Purchaser~~ another person (~~or any Subsidiary thereof~~ other than ~~any Conveyed Subsidiaries and their Subsidiaries~~a Transferred Subsidiary) ~~is liable under Treasury Regulation Section 1.1502-6~~ imposed on a Transferred Subsidiary (~~or a similar provision of state, local or foreign Law), or~~ A) as a transferee or successor due to transactions occurring on or ~~by Contract~~ prior to the Applicable Closing, (B) as a result of contracts or agreements entered into (other than ~~Contracts that do~~ commercial contracts entered into in the ordinary course of business the primary subject matter of which is not ~~relate primarily~~ Taxes)on or prior to ~~Taxes~~the Applicable Closing, or (C) as a result of such Transferred Subsidiary being included in any fiscal unity or consolidated, affiliated, combined, unitary or similar group at any time prior to the Applicable Closing Date, (vi) Transfer Taxes imposed on LivaNova pursuant to Section 10.01(b), (4vii) all liability for VAT imposed on LivaNova or any Seller pursuant to Section 10.02(i) and (viii) all Taxes ~~arising out~~ (other than Transfer Taxes addressed in Section 10.01(b)) and VAT addressed in Section 10.02(i)) imposed in connection with the Restructuring, in each case, to the extent such liability for Taxes is not included in the determination of ~~or resulting~~ Net Working Capital as finally determined hereunder. Notwithstanding the foregoing, LivaNova shall not have any obligations under this Section 10.03(a) for any liability for Taxes that results from any breach of any ~~covenant~~ covenants or ~~agreement~~ agreements of Purchaser ~~Parent~~or its affiliates under this Agreement. (b) From and after the Applicable Closing Date, and without duplication, Purchaser shall indemnify and hold harmless the Seller Indemnitees from and against (i) all liability for Taxes attributable to the ownership and operation of the Transferred Assets, the Transferred Subsidiaries or ~~their respective Affiliates contained in this Agreement, (5) Transfer Taxes~~ the Business for ~~which Purchaser Parent is responsible under Section 6.5(j), (6) Taxes arising from any breach of any representation or warranty in Section 5.17(k), (7) Taxes for a Pre~~all Post-Closing Tax ~~Period imposed on (x) any settlement of any intercompany accounts of Purchaser or any Subsidiary of Purchaser, on the one hand, and Purchaser Parent or any Subsidiary of Purchaser Parent~~ Periods (other than Purchaser and its Subsidiaries), on the other hand, pursuant to Section 6.7 or (y) any transaction or step forming part of the Purchaser Internal Restructurings, (8) Taxes required to be deducted or withheld with respect to any amounts payable to Purchaser Parent pursuant to Section 2.8 or Section 2.9, including any penalties imposed on Purchaser as a result of Purchaser’s failure to deduct or withhold any such ~~amounts, (9) Taxes~~ amounts arising as a result of ~~Purchaser~~ a breach of the representations contained in Sections 3.14(a)(viii), 3.14(a)(ix), 3.14(a)(x)), or 3.14(d) and any ~~Subsidiary of Purchaser (~~other than any Conveyed Subsidiary or a Subsidiary thereof) at any time ceasing to be a member of a group for the purposes of any Tax, of which group Purchaser Parent or any Subsidiary of Purchaser Parent (other than Purchaser or any Subsidiary of Purchaser) is or was also a member and (10) any costs and expenses, including reasonable legal and accounting fees and expenses, attributable to any item described in clauses (1) through (9) (any such Taxes for which Purchaser Parent is responsible amounts that are properly indemnifiable by LivaNova pursuant to ~~this~~ Section ~~6.5(d)(ii~~10.03(a), subject to the following proviso, “Purchaser Parent Indemnified Taxes”); provided that Purchaser Parent shall not be required to indemnify or hold harmless any Purchaser Tax Indemnified Party from and against any liability for (A) Taxes attributable to any action taken after the Closing by Seller Parent or any of its Affiliates, other than any such action that (1) is in the ordinary course of business, (2) is expressly permitted or contemplated by this Agreement, or (3) is required to be taken in order to comply with applicable Law or as a result of a change in applicable Law (a “Seller Tax Act”), (Bii) ~~Taxes that were reflected, accrued or reserved for in the Final Closing Statement, Final Purchaser Working Capital or the Final Purchaser Net Cash, (C) Income Taxes to the extent that Purchaser or~~ any ~~Subsidiary thereof had any Tax Assets as of the close of business on the Closing Date that were available, or would have been available but for their prior utilization~~ breach by Purchaser or any of its ~~Affiliates~~ affiliates of any of any covenants or agreements in Sections 1.05 and 9.06 and this Article X (~~including the Conveyed Subsidiaries and their Subsidiaries after~~ other than a breach by a Transferred Subsidiary on or before the Closing), (iii) all liability for Transfer Taxes imposed on Purchaser pursuant to ~~offset~~ Section 10.01(b) and (iv) all liability for VAT imposed on Purchaser pursuant to Section 10.02(i). Notwithstanding the foregoing, Purchaser shall not have any obligations under this Section 10.03(b) for any liability for Taxes that results from any breach of any covenants or ~~otherwise reduce the applicable Tax Liability in respect~~ agreements of ~~such Income Taxes (except any Tax Asset reflected as an asset in the Final Closing Statement and taken into account in the calculation of the Final Purchaser Working Capital~~ LivaNova or ~~the Final Purchaser Net Cash), or (D) Taxes for which Seller Parent is responsible~~ its affiliates under ~~Section 6.5(d)(i)~~this Agreement. (~~iii~~c) To the extent permitted or required by applicable Law, the taxable year of each of the Conveyed Subsidiaries and their Subsidiaries and any Subsidiary of Purchaser that includes the Closing Date shall be treated as closing on (and including) the Closing Date. Otherwise, for purposes of this Agreement, in In the case of any Straddle Period~~: (A) Property~~ , Taxes ~~allocable~~ shall be allocated to the Pre-Closing Tax Period in accordance with Section 10.01(b)(iii). (d) Notwithstanding any other provision in this Agreement, Purchaser Indemnitees shall ~~be computed based upon~~ not have any right to indemnification (i) under Section 10.03(a)(i) or Section 10.03(a)(iv) from and against any Taxes of any person that are attributable to the ~~ratio of the number of days in the Pre~~Post-Closing Tax Period ~~to the number of days in the entire Straddle Period; and (B) Taxes~~ (other than ~~Property Taxes~~with respect to a breach of the representations contained in Sections 3.14(a)(viii), 3.14(a)(ix) ~~allocable~~ 3.14(a)(x) or 3.14(d)) or (ii) under this Section 10.03 due to the unavailability in any Post-Closing Tax Period of any net operating losses, credits or other Tax attributes otherwise attributable to the Pre-Closing Tax Period shall be computed as if such Tax period ended as of the close of business on the Closing Date and, in the case of any Taxes of Conveyed Subsidiaries (and their Subsidiaries) and Seller Parent, or in the case of any Taxes of Purchaser Parent and Purchaser (and their Subsidiaries prior to the Closing), in each case attributable to the ownership of any equity interest in any partnership or other “flow through” entity for tax purposes (including of any “controlled foreign corporation,” as defined under the Code) as if the Tax period of such partnership or other “flow through” entity ended as of the close of business on the Closing Date with the Taxes of such entity for the Pre-Closing Tax Period deemed to include any Taxes on the allocable income of such entity in respect of such Tax period; provided that exemptions, allowances or deductions that are calculated on an annual basis (including depreciation and amortization deductions) shall be allocated between the period ending on the Closing Date and the period beginning after the Closing Date in proportion to the number of days in each periodPeriod. (ive) ~~Any claim for indemnification under this Section 6.5(d) shall be made in writing upon~~ None of Purchaser, the ~~party from whom indemnification is sought~~Transferred Subsidiaries or any affiliate of Purchaser shall, ~~and shall specify in reasonable detail~~ without the ~~basis for~~ prior written consent of LivaNova (such ~~claim. Any indemnity payment required~~ consent not to be ~~made pursuant to~~ unreasonably withheld, conditioned, or delayed) engage in any transaction (other than any transactions expressly contemplated by this ~~Section 6.5(d~~Agreement, the Ancillary Agreements, or the Restructuring Plan) ~~shall be made within thirty (30) days~~ on the Initial Closing Date but after the ~~indemnified party makes written demand upon~~ Initial Closing that is outside the ~~indemnifying party, but in no case earlier than five (5) Business Days prior to the date on which the relevant Taxes are required to be paid to the applicable Taxing Authority~~ordinary course of business. (v) With respect to any Taxes suffered or incurred by any Conveyed Subsidiary (or any Subsidiary thereof) that was not wholly owned by Seller Parent (directly or indirectly) as of immediately prior to the Closing, the indemnification obligations of Seller Parent pursuant to Section 6.5(d)(i) in respect of such Taxes (or related costs and expenses) shall in no event exceed an amount equal to (A) the amount of such Taxes (or related costs and expenses) for which the Purchaser Tax Indemnified Parties would otherwise be entitled to indemnification pursuant to Section 6.5(d), as if such Conveyed Subsidiary (or any Subsidiary thereof) were wholly owned by Seller Parent, multiplied by (B) the direct and indirect percentage ownership of Seller Parent of such Conveyed Subsidiary (or Subsidiary thereof) as of immediately prior to the Closing. With respect to any Taxes suffered or incurred by any Subsidiary of Purchaser Parent (including Purchaser and its Subsidiaries) that was not wholly owned by Purchaser Parent (directly or indirectly) as of immediately prior to the Closing, the indemnification obligations of Purchaser Parent pursuant to Section 6.5(d)(ii) in respect of such Taxes (or related costs and expenses) shall in no event exceed an amount equal to (A) the amount of such Taxes (or related costs and expenses) for which the Purchaser Tax Indemnified Parties would otherwise be entitled to indemnification pursuant to Section 6.5(d), as if such Subsidiary were wholly owned by Purchaser Parent, multiplied by (B) the direct and indirect percentage ownership of Purchaser Parent of such Subsidiary as of immediately prior to the Closing. (vi) Without duplication to any other amounts paid pursuant to this Section 6.5: (A) Within thirty (30) days following the filing of any Income Tax Return for any Conveyed Subsidiary (or any Subsidiary thereof), on the one hand, or Purchaser (or any Subsidiary thereof, other than the Conveyed Subsidiaries and their Subsidiaries), on the other hand, for any Pre-Closing Tax Period or for any Straddle Period, Seller Parent or Purchaser Parent shall (or Purchaser Parent shall cause Purchaser to) prepare a statement showing (i) the amount of Income Taxes shown as due on such filed Income Tax Return with respect to the relevant Pre-Closing Tax Period or the portion of any Straddle Period ending on and including the Closing Date (the “Final Pre-Closing Income Tax Amount”) and (ii) the amount of the Seller Accrued Income Taxes or Purchaser Accrued Income Taxes, as applicable, attributable to such Income Tax Return as reflected on the Final Closing Statement (the “Pre-Closing Income Tax Amount”) and deliver such statement to Seller Parent and Purchaser Parent, as applicable. Purchaser Parent or Seller Parent, as applicable, shall have a period of fifteen (15) Business Days to provide comments to a schedule prepared (or caused to be prepared) by Seller Parent or Purchaser Parent, respectively. If Purchaser Parent or Seller Parent, as applicable, do not provide any comments to Seller Parent or Purchaser Parent, respectively, during such period, the statement as so prepared shall be final and binding. (B) In the event the Final Pre-Closing Income Tax Amount with respect to any Income Tax Return is less than the amount of the Pre-Closing Income Tax Amount attributable to such Income Tax Return that was included on the Final Closing Statement, the Purchaser shall within five (5) Business Days following the finalization of the Final Pre-Closing Income Tax Amount hereunder (i) pay to Seller Parent the amount of such difference with respect to a Conveyed Subsidiary and their Subsidiaries and (ii) pay to Purchaser Parent the amount of such difference with respect to Purchaser and its Subsidiaries. (vii) The Parties shall use reasonable best efforts to structure any indemnity payment, true-up payment, or payment in respect of Tax Benefits made by any Party pursuant to this Agreement (including pursuant to this Section 6.5, Section 6.6 and Article VII) and any payment made by Purchaser Parent to Purchaser pursuant to Section 2.8 or Section 2.9 in the manner set forth in Clause 10 of the Structuring Considerations Agreement. The Parties shall use reasonable best efforts to structure as a special dividend any payment made by Purchaser to Purchaser Parent pursuant to Section 2.8, Section 2.9 or this Section 6.5.

Appears in 1 contract

Sources: Stock and Asset Purchase Agreement (LivaNova PLC)

Tax Indemnification. The Shareholder shall indemnify the Buyer and its affiliates including the Company and its Subsidiaries, and hold them harmless from (i) ~~Subject to~~ all liability for Taxes (as defined in this Section ~~6.5(d)(v~~15(a)~~, from and after~~ ) of the ~~Closing, Seller Parent agrees to indemnify and hold harmless Purchaser~~ Company and its Subsidiaries (~~including~~ including, without limitation, those entities which the ~~Conveyed~~ Company controls as a result of an irrevocable assignment of voting rights), not otherwise specifically required to be paid by the Company and its Subsidiaries ~~and their Subsidiaries after~~ as contemplated by Section 16, for all taxable periods ending on or before the Closing ~~Date) (collectively,~~ Date and for the ~~“Purchaser Tax Indemnified Parties”) from and against all liability, without duplication, for (1) Taxes~~ portion of the ~~Conveyed Subsidiaries and their Subsidiaries for any Pre-Closing Tax~~ Straddle Period (~~including any Taxes payable~~ as defined in ~~respect of an election under~~ this Section ~~965(h~~15(a)) of ending on the ~~Code), (2) Taxes~~ Closing Date of any ~~Seller~~ taxable period that includes (~~other than any Transfer Taxes and VAT for which Purchaser is responsible hereunder~~but does not end on) ~~including, Taxes~~ such day (~~other than Taxes of~~ the ~~Conveyed Subsidiaries and their Subsidiaries) imposed with respect to, arising out of or relating to the Purchased Assets or the Business for a~~ "Pre-Closing Tax Period"), (3ii) all liability (as a result of Treasury Regulation ss. 1.1502-6(a) or otherwise) for Taxes of the Shareholder or any ~~Person~~ other corporation which is or has been affiliated with the Company or any of its Subsidiaries, (~~other than~~ iii) all liability for Taxes resulting from the ~~Conveyed Subsidiaries~~ Section 338(g) and ~~their Subsidiaries~~338(h)(10) ~~for a Pre-Closing Tax Period for which any Conveyed Subsidiary~~ elections (or any ~~Subsidiary thereof) is liable~~ comparable elections under ~~Treasury Regulation Section 1.1502-6 (or a similar provision of~~ any state, local or foreign ~~Law), or as a transferee or successor or~~ tax laws) contemplated by ~~Contract (other than Contracts that do not relate primarily to Taxes~~Section 16(d), (4iv) all liability for Taxes ~~arising out of or~~ resulting from any breach of any covenant or agreement of Seller Parent or any of its Affiliates contained in this Agreement, (5) Taxes for a Pre-Closing Tax Period imposed on (x) any transaction effected pursuant to Section 2.3(b), (y) any settlement of any intercompany accounts of Seller Parent or its Subsidiaries pursuant to Section 6.7, or (z) any transaction or step forming part of the Seller Internal Restructurings, (6) Transfer Taxes for which Seller Parent is responsible under Section 6.5(j), (7) Taxes required to be deducted or withheld with respect transactions occurring prior to the payment of the Purchase Consideration or any amounts payable to Seller Parent pursuant to Section 2.8 or Section 2.9, including any penalties imposed on Purchaser as a result of Purchaser’s failure to deduct or withhold any such amounts that Purchaser (or a Purchaser Designated Affiliate) was permitted to withhold under Section 2.10 (in each case, subject to Purchaser’s compliance with the notice and cooperation requirements of Section 2.10 and except for any such Taxes (and any related penalties) required to be deducted or withheld solely as a result of any assignment by Purchaser or its Affiliates for which Purchaser is responsible pursuant to Section 10.3), (8) Taxes arising from any breach of any representation or warranty contained in Section 4.16(k), (9) Taxes arising as a result of any Conveyed Subsidiary or any Subsidiary of any Conveyed Subsidiary at any time ceasing to be a member of a group for the purposes of any Tax, of which group Seller Parent or any Subsidiary of Seller Parent is or was also a member and (10) any costs and expenses, including reasonable legal and accounting fees and expenses, attributable to any item described in clauses (1) through (9) (any such Taxes for which Seller Parent is responsible pursuant to this Section 6.5(d)(i), subject to the following proviso, “Seller Indemnified Taxes”); provided that Seller Parent shall not be required to indemnify or hold harmless any Purchaser Tax Indemnified Party from and against any liability pursuant to this Section 6.5(d)(i) for (A) Taxes attributable to any action taken after the Closing by Purchaser, any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries), or any transferee of Purchaser or any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries), other than any such action that (1) is in the ordinary course of business, (2) is expressly permitted or contemplated by this Agreement, or (3) is required to be taken in order to comply with applicable Law Date or as a result of ~~a change in applicable Law~~ the transactions contemplated by this Agreement including, without limitation, liability under Treasury Regulations ss. 1.1502-13, (~~a “Purchaser Tax Act”~~v) all liability for Taxes arising from the distribution permitted by Section 7(b)(i), (Bvi) all transfer, documentary, sales, use, stamp, registration and other such Taxes that were reflected, accrued or reserved for in the Final Closing Statement, Final Business Working Capital, or Final Business Net Cash, (C) Income Taxes to the extent that a Conveyed Subsidiary or any Subsidiary thereof had any Tax Assets as of the close of business on the Closing Date that were available, or would have been available but for their prior utilization by Purchaser or any of its Affiliates and fees (including ~~the Conveyed Subsidiaries~~ any penalties and ~~their Subsidiaries after the Closing~~interest) ~~to offset or otherwise reduce the applicable Tax Liability~~ incurred in respect of such Income Taxes (except any Tax Asset reflected as an asset in the Final Closing Statement and taken into account in the calculation of the Final Business Working Capital or the Final Business Net Cash), or (D) Taxes for which Purchaser Parent is responsible under Section 6.5(d)(ii). (ii) Subject to Section 6.5(d)(v), from and after the Closing, Purchaser Parent shall indemnify and hold harmless the Purchaser Tax Indemnified Parties from and against all liability, without duplication, for (1) all Taxes of Purchaser Parent and its Affiliates (other than Purchaser and its Subsidiaries) for any Tax period (other than Transfer Taxes and VAT for which Seller Parent is responsible hereunder), (2) Taxes of Purchaser and its Subsidiaries (other than the Conveyed Subsidiaries and their Subsidiaries) for any Pre-Closing Tax Period, (3) Taxes of any Person for a Pre-Closing Tax Period for which Purchaser (or any Subsidiary thereof other than any Conveyed Subsidiaries and their Subsidiaries) is liable under Treasury Regulation Section 1.1502-6 (or a similar provision of state, local or foreign Law), or as a transferee or successor or by Contract (other than Contracts that do not relate primarily to Taxes), (4) Taxes arising out of or resulting from any breach of any covenant or agreement of Purchaser Parent, Purchaser or their respective Affiliates contained in connection with this Agreement, (5) Transfer Taxes for which Purchaser Parent is responsible under Section 6.5(j), (6) Taxes arising from any breach of any representation or warranty in Section 5.17(k), (7) Taxes for a Pre-Closing Tax Period imposed on (x) any settlement of any intercompany accounts of Purchaser or any Subsidiary of Purchaser, on the one hand, and Purchaser Parent or any Subsidiary of Purchaser Parent (other than Purchaser and its Subsidiaries), on the other hand, pursuant to Section 6.7 or (y) any transaction or step forming part of the Purchaser Internal Restructurings, (8) Taxes required to be deducted or withheld with respect to any amounts payable to Purchaser Parent pursuant to Section 2.8 or Section 2.9, including any penalties imposed on Purchaser as a result of Purchaser’s failure to deduct or withhold any such amounts, (9) Taxes arising as a result of Purchaser or any Subsidiary of Purchaser (other than any Conveyed Subsidiary or a Subsidiary thereof) at any time ceasing to be a member of a group for the purposes of any Tax, of which group Purchaser Parent or any Subsidiary of Purchaser Parent (other than Purchaser or any Subsidiary of Purchaser) is or was also a member and (10vii) ~~any costs and expenses, including~~ all liability for reasonable ~~legal and accounting~~ professional fees and ~~expenses,~~ expenses and any related interest and penalties attributable to any item ~~described~~ in ~~clauses~~ clause (~~1) through (9) (any such Taxes for which Purchaser Parent is responsible pursuant to this Section 6.5(d)(ii~~i), ~~subject to~~ (ii), (iii), (iv), (v) and (vi) above. The Buyer shall, and shall cause the ~~following proviso~~Company and its Subsidiaries to, ~~“Purchaser Parent Indemnified Taxes”); provided that Purchaser Parent shall not be required to~~ indemnify or the Shareholder and its affiliates and hold them harmless ~~any Purchaser Tax Indemnified Party~~ from ~~and against any~~ (i) all liability for ~~(A)~~ Taxes ~~attributable to~~ of the Company for any ~~action taken~~ taxable period ending after the Closing ~~by Seller Parent or any of its Affiliates, other than any such action that~~ Date (1) is in the ordinary course of business, (2) is expressly permitted or contemplated by this Agreement, or (3) is required to be taken in order to comply with applicable Law or as a result of a change in applicable Law (a “Seller Tax Act”), (B) Taxes that were reflected, accrued or reserved for in the Final Closing Statement, Final Purchaser Working Capital or the Final Purchaser Net Cash, (C) Income Taxes except to the extent that Purchaser or any Subsidiary thereof had any Tax Assets as of the close of business on the Closing Date that were available, or would have been available but for their prior utilization by Purchaser or any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries after the Closing), to offset or otherwise reduce the applicable Tax Liability in respect of such Income Taxes (except any Tax Asset reflected as an asset in the Final Closing Statement and taken into account in the calculation of the Final Purchaser Working Capital or the Final Purchaser Net Cash), or (D) Taxes for which Seller Parent is responsible under Section 6.5(d)(i). (iii) To the extent permitted or required by applicable Law, the taxable ~~year of each of the Conveyed Subsidiaries and their Subsidiaries and any Subsidiary of Purchaser that includes the Closing Date shall be treated as closing on (and including)~~ period began before the Closing Date~~. Otherwise, for purposes of this Agreement~~, in which case the ~~case~~ Buyer's indemnity will cover only that portion of ~~any Straddle Period: (A) Property~~ such Taxes ~~allocable~~ that are not attributable to the Pre-Closing Tax ~~Period shall be computed based upon~~ Period), (ii) all liability for a breach by the ~~ratio~~ Buyer of ~~the number~~ its obligations under this Agreement, and (iii) all liability for reasonable professional fees and expenses and any related interest and penalties attributable to any item in clause (i) or (ii) above. For purposes of ~~days in the Pre-Closing Tax Period to the number~~ this Section 15 and Section 16, "Tax" means any federal, state, local or foreign income, gross receipts, license, payroll, employment, excise, severance, stamp, occupation, premium, windfall profits, environmental, customs, duties, capital stock, franchise, profits, withholding, social security (or similar), unemployment, disability, real property, personal property, sales, use, transfer, registration, value added, alternative or add on minimum, estimated or other tax of ~~days in the entire~~ any kind whatsoever, including any interest, penalty, or addition thereto, whether disputed or not, and "Straddle Period~~; and (B) Taxes (other than Property Taxes) allocable to the Pre-Closing Tax Period shall be computed as if such Tax~~ " means any taxable period ~~ended as of the close of business~~ that includes but does not end on the Closing Date and, in the case of any Taxes of Conveyed Subsidiaries (and their Subsidiaries) and Seller Parent, or in the case of any Taxes of Purchaser Parent and Purchaser (and their Subsidiaries prior to the Closing), in each case attributable to the ownership of any equity interest in any partnership or other “flow through” entity for tax purposes (including of any “controlled foreign corporation,” as defined under the Code) as if the Tax period of such partnership or other “flow through” entity ended as of the close of business on the Closing Date with the Taxes of such entity for the Pre-Closing Tax Period deemed to include any Taxes on the allocable income of such entity in respect of such Tax period; provided that exemptions, allowances or deductions that are calculated on an annual basis (including depreciation and amortization deductions) shall be allocated between the period ending on the Closing Date and the period beginning after the Closing Date in proportion to the number of days in each periodDate. (iv) Any claim for indemnification under this Section 6.5(d) shall be made in writing upon the party from whom indemnification is sought, and shall specify in reasonable detail the basis for such claim. Any indemnity payment required to be made pursuant to this Section 6.5(d) shall be made within thirty (30) days after the indemnified party makes written demand upon the indemnifying party, but in no case earlier than five (5) Business Days prior to the date on which the relevant Taxes are required to be paid to the applicable Taxing Authority. (v) With respect to any Taxes suffered or incurred by any Conveyed Subsidiary (or any Subsidiary thereof) that was not wholly owned by Seller Parent (directly or indirectly) as of immediately prior to the Closing, the indemnification obligations of Seller Parent pursuant to Section 6.5(d)(i) in respect of such Taxes (or related costs and expenses) shall in no event exceed an amount equal to (A) the amount of such Taxes (or related costs and expenses) for which the Purchaser Tax Indemnified Parties would otherwise be entitled to indemnification pursuant to Section 6.5(d), as if such Conveyed Subsidiary (or any Subsidiary thereof) were wholly owned by Seller Parent, multiplied by (B) the direct and indirect percentage ownership of Seller Parent of such Conveyed Subsidiary (or Subsidiary thereof) as of immediately prior to the Closing. With respect to any Taxes suffered or incurred by any Subsidiary of Purchaser Parent (including Purchaser and its Subsidiaries) that was not wholly owned by Purchaser Parent (directly or indirectly) as of immediately prior to the Closing, the indemnification obligations of Purchaser Parent pursuant to Section 6.5(d)(ii) in respect of such Taxes (or related costs and expenses) shall in no event exceed an amount equal to (A) the amount of such Taxes (or related costs and expenses) for which the Purchaser Tax Indemnified Parties would otherwise be entitled to indemnification pursuant to Section 6.5(d), as if such Subsidiary were wholly owned by Purchaser Parent, multiplied by (B) the direct and indirect percentage ownership of Purchaser Parent of such Subsidiary as of immediately prior to the Closing. (vi) Without duplication to any other amounts paid pursuant to this Section 6.5: (A) Within thirty (30) days following the filing of any Income Tax Return for any Conveyed Subsidiary (or any Subsidiary thereof), on the one hand, or Purchaser (or any Subsidiary thereof, other than the Conveyed Subsidiaries and their Subsidiaries), on the other hand, for any Pre-Closing Tax Period or for any Straddle Period, Seller Parent or Purchaser Parent shall (or Purchaser Parent shall cause Purchaser to) prepare a statement showing (i) the amount of Income Taxes shown as due on such filed Income Tax Return with respect to the relevant Pre-Closing Tax Period or the portion of any Straddle Period ending on and including the Closing Date (the “Final Pre-Closing Income Tax Amount”) and (ii) the amount of the Seller Accrued Income Taxes or Purchaser Accrued Income Taxes, as applicable, attributable to such Income Tax Return as reflected on the Final Closing Statement (the “Pre-Closing Income Tax Amount”) and deliver such statement to Seller Parent and Purchaser Parent, as applicable. Purchaser Parent or Seller Parent, as applicable, shall have a period of fifteen (15) Business Days to provide comments to a schedule prepared (or caused to be prepared) by Seller Parent or Purchaser Parent, respectively. If Purchaser Parent or Seller Parent, as applicable, do not provide any comments to Seller Parent or Purchaser Parent, respectively, during such period, the statement as so prepared shall be final and binding. (B) In the event the Final Pre-Closing Income Tax Amount with respect to any Income Tax Return is less than the amount of the Pre-Closing Income Tax Amount attributable to such Income Tax Return that was included on the Final Closing Statement, the Purchaser shall within five (5) Business Days following the finalization of the Final Pre-Closing Income Tax Amount hereunder (i) pay to Seller Parent the amount of such difference with respect to a Conveyed Subsidiary and their Subsidiaries and (ii) pay to Purchaser Parent the amount of such difference with respect to Purchaser and its Subsidiaries. (vii) The Parties shall use reasonable best efforts to structure any indemnity payment, true-up payment, or payment in respect of Tax Benefits made by any Party pursuant to this Agreement (including pursuant to this Section 6.5, Section 6.6 and Article VII) and any payment made by Purchaser Parent to Purchaser pursuant to Section 2.8 or Section 2.9 in the manner set forth in Clause 10 of the Structuring Considerations Agreement. The Parties shall use reasonable best efforts to structure as a special dividend any payment made by Purchaser to Purchaser Parent pursuant to Section 2.8, Section 2.9 or this Section 6.5.

Appears in 1 contract

Sources: Stock Purchase Agreement (Kinnard Investments Inc)

Tax Indemnification. ~~(i) Subject to Section 6.5(d)(v)~~Seller shall indemnify, ~~from and after the Closing~~defend, ~~Seller Parent agrees to indemnify~~ and hold harmless Purchaser ~~and its Subsidiaries (including the Conveyed Subsidiaries and their Subsidiaries after the Closing Date) (collectively, the “Purchaser Tax Indemnified Parties”)~~ from and against any and all ~~liability, without duplication, for~~ Damages for: (1i) Transfer Taxes required to be paid by Seller pursuant to this Agreement; (ii) Taxes of or imposed upon the ~~Conveyed Subsidiaries and their Subsidiaries for~~ Acquired Entities with respect to any Pre-Closing ~~Tax~~ Periods, and for any Straddle Periods but only with respect to the portion of such Straddle Period ending on the Closing Date and as determined in the manner provided in Section 6.7 of this Agreement; (~~including~~ iii) Taxes imposed on any ~~Taxes payable in respect~~ member of an ~~election under Section 965(h)~~ affiliated, consolidated, combined or unitary group of which any of the Code), (2) Taxes of any Seller (other than any Transfer Taxes and VAT for which Purchaser is responsible hereunder) including, Taxes (other than Taxes of the Conveyed Subsidiaries and their Subsidiaries) imposed with respect to, arising out of or relating to the Purchased Assets or the Business for a Pre-Closing Tax Period, (3) Taxes of any Person (other than the Conveyed Subsidiaries and their Subsidiaries) for a Pre-Closing Tax Period for which any Conveyed Subsidiary Acquired Entities (or any ~~Subsidiary thereof~~predecessor of any Acquired Entity) is ~~liable~~ or was a member on or prior to the Closing Date, including under Treasury ~~Regulation~~ Regulations Section 1.1502-6 (~~or a similar provision~~ and corresponding provisions of state, ~~local~~ local, or foreign Law), for any taxable period ending on or before, or that includes, the Closing Date, or as a transferee or ~~successor or by Contract (other than Contracts that do not relate primarily to Taxes)~~successor, (4) Taxes arising out of or resulting from any breach of any covenant or agreement of Seller Parent or any of its Affiliates contained in this Agreement, (5) Taxes for a Pre-Closing Tax Period imposed on (x) any transaction effected pursuant to ~~Section 2.3(b), (y)~~ any settlement of any intercompany accounts of Seller Parent or its Subsidiaries pursuant to Section 6.7, or (z) any transaction or step forming part of the Seller Internal Restructurings, (6) Transfer Taxes for which Seller Parent is responsible under Section 6.5(j), (7) Taxes required to be deducted or withheld with respect to the payment of the Purchase Consideration or any amounts payable to Seller Parent pursuant to Section 2.8 or Section 2.9, including any penalties imposed on Purchaser as a result of Purchaser’s failure to deduct or withhold any such amounts that Purchaser (or a Purchaser Designated Affiliate) was permitted to withhold under Section 2.10 (in each case, subject to Purchaser’s compliance with the notice and cooperation requirements of Section 2.10 and except for any such Taxes (and any related penalties) required to be deducted or withheld solely as a result of any assignment by Purchaser or its Affiliates for which Purchaser is responsible pursuant to Section 10.3), (8) Taxes arising from any breach of any representation or warranty contained in Section 4.16(k), (9) Taxes arising as a result of any Conveyed Subsidiary or any Subsidiary of any Conveyed Subsidiary at any time ceasing to be a member of a group for the purposes of any Tax, of which group Seller Parent or any Subsidiary of Seller Parent is or was also a member and (10) any costs and expenses, including reasonable legal and accounting fees and expenses, attributable to any item described in clauses (1) through (9) (any such Taxes for which Seller Parent is responsible pursuant to this Section 6.5(d)(i), subject to the following proviso, “Seller Indemnified Taxes”); provided that Seller Parent shall not be required to indemnify or hold harmless any Purchaser Tax Indemnified Party from and against any liability pursuant to this Section 6.5(d)(i) for (A) Taxes attributable to any action taken after the Closing by Purchaser, any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries), or any transferee of Purchaser or any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries), other than any such action that (1) is in the ordinary course of business, (2) is expressly permitted or contemplated by this Indemnification Agreement, or ~~(3) is required to be taken in order to comply with applicable Law~~ similar contract or ~~as a result of a change in applicable Law (a “Purchaser Tax Act”), (B) Taxes that were reflected, accrued or reserved for in the Final Closing Statement, Final Business Working Capital~~arrangement, or Final Business Net Cash, (C) Income Taxes to the extent that a Conveyed Subsidiary or any Subsidiary thereof had any Tax Assets as of the close of business on the Closing Date that were available, or would have been available but for their prior utilization by Purchaser or any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries after the Closing) to offset or otherwise reduce the applicable Tax Liability in respect of such Income Taxes (except any Tax Asset reflected as an asset in the Final Closing Statement and taken into account in the calculation of the Final Business Working Capital or the Final Business Net Cash), or (D) Taxes for which Purchaser Parent is responsible under Section 6.5(d)(ii). (ii) Subject to Section 6.5(d)(v), from and after the Closing, Purchaser Parent shall indemnify and hold harmless the Purchaser Tax Indemnified Parties from and against all liability, without duplication, for (1) all Taxes of Purchaser Parent and its Affiliates (other than Purchaser and its Subsidiaries) for any Tax period (other than Transfer Taxes and VAT for which Seller Parent is responsible hereunder), (2) Taxes of Purchaser and its Subsidiaries (other than the Conveyed Subsidiaries and their Subsidiaries) for any Pre-Closing Tax Period, (3) Taxes of any Person for a Pre-Closing Tax Period for which Purchaser (or any Subsidiary thereof other than any Conveyed Subsidiaries and their Subsidiaries) is liable under Treasury Regulation Section 1.1502-6 (or a similar provision of state, local or foreign Law), or as a transferee or successor or by Contract (other than Contracts that do not relate primarily to Taxes), (4) Taxes arising out of or resulting from any breach of any covenant or agreement of Purchaser Parent, Purchaser or their respective Affiliates contained in this Agreement, (5) Transfer Taxes for which Purchaser Parent is responsible under Section 6.5(j), (6) Taxes arising from any breach of any representation or warranty in Section 5.17(k), (7) Taxes for a Pre-Closing Tax Period imposed on (x) any settlement of any intercompany accounts of Purchaser or any Subsidiary of Purchaser, on the one hand, and Purchaser Parent or any Subsidiary of Purchaser Parent (other than Purchaser and its Subsidiaries), on the other hand, pursuant to Section 6.7 or (y) any transaction or step forming part of the Purchaser Internal Restructurings, (8) Taxes required to be deducted or withheld with respect to any amounts payable to Purchaser Parent pursuant to Section 2.8 or Section 2.9, including any penalties imposed on Purchaser as a result of Purchaser’s failure to deduct or withhold any such amounts, (9) Taxes arising as a result of Purchaser or any Subsidiary of Purchaser (other than any Conveyed Subsidiary or a Subsidiary thereof) at any time ceasing to be a member of a group for the purposes of any Tax, of which group Purchaser Parent or any Subsidiary of Purchaser Parent (other than Purchaser or any Subsidiary of Purchaser) is or was also a member and (10) any costs and expenses, including reasonable legal and accounting fees and expenses, attributable to any item described in clauses (1) through (9) (any such Taxes for which Purchaser Parent is responsible pursuant to this Section 6.5(d)(ii), subject to the following proviso, “Purchaser Parent Indemnified Taxes”)otherwise; provided that Purchaser Parent shall not be required to indemnify or hold harmless any Purchaser Tax Indemnified Party from and against any liability for (A) Taxes attributable to any action taken after the Closing by Seller Parent or any of its Affiliates, other than any such action that (1) is in the ordinary course of business, (2) is expressly permitted or contemplated by this Agreement, or (3) is required to be taken in order to comply with applicable Law or as a result of a change in applicable Law (a “Seller Tax Act”), (B) Taxes that were reflected, accrued or reserved for in the Final Closing Statement, Final Purchaser Working Capital or the Final Purchaser Net Cash, (C) Income Taxes to the extent that Purchaser or any Subsidiary thereof had any Tax Assets as of the close of business on the Closing Date that were available, or would have been available but for their prior utilization by Purchaser or any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries after the Closing), to offset or otherwise reduce the applicable Tax Liability in respect of such Income Taxes (except any Tax Asset reflected as an asset in the Final Closing Statement and taken into account in the calculation of the Final Purchaser Working Capital or the Final Purchaser Net Cash), or (D) Taxes for which Seller Parent is responsible under Section 6.5(d)(i). (iii) To the extent permitted or required by applicable Law, the taxable year of each of the Conveyed Subsidiaries and their Subsidiaries and any Subsidiary of Purchaser that includes the Closing Date shall be treated as closing on (and including) the Closing Date. Otherwise, for purposes of this Agreement, in the case of any Straddle Period: (A) Property Taxes allocable to the Pre-Closing Tax Period shall be computed based upon the ratio of the number of days in the Pre-Closing Tax Period to the number of days in the entire Straddle Period; and (B) Taxes (other than Property Taxes) allocable to the Pre-Closing Tax Period shall be computed as if such Tax period ended as of the close of business on the Closing Date and, in the case of any Taxes of Conveyed Subsidiaries (and their Subsidiaries) and Seller Parent, or in the case of any Taxes of Purchaser Parent and Purchaser (and their Subsidiaries prior to the Closing), in each case attributable to the ownership of any equity interest in any partnership or other “flow through” entity for tax purposes (including of any “controlled foreign corporation,” as defined under the Code) as if the Tax period of such partnership or other “flow through” entity ended as of the close of business on the Closing Date with the Taxes of such entity for the Pre-Closing Tax Period deemed to include any Taxes on the allocable income of such entity in respect of such Tax period; provided that exemptions, allowances or deductions that are calculated on an annual basis (including depreciation and amortization deductions) shall be allocated between the period ending on the Closing Date and the period beginning after the Closing Date in proportion to the number of days in each period. (iv) Any claim for indemnification under this Section 6.5(d) shall be made in writing upon the party from whom indemnification is sought, and shall specify in reasonable detail the basis for such claim. Any indemnity payment required to be made pursuant to this Section 6.5(d) shall be made within thirty (30) days after the indemnified party makes written demand upon the indemnifying party, but in no case earlier than five (5) Business Days prior to the date Taxes imposed on which the relevant Taxes are required to be paid to the applicable Taxing Authority. (v) With respect to any Taxes suffered or incurred by any Conveyed Subsidiary (or any Subsidiary thereof) that was not wholly owned by Seller Parent (directly or indirectly) as of immediately prior to the Closing, the indemnification obligations of Seller Parent pursuant to Section 6.5(d)(i) in respect of such Taxes (or related ~~costs and expenses) shall in no event exceed an amount equal~~ or attributable to (A) the ~~amount~~ Excluded Assets, (B) the Excluded Subsidiaries, (C) the Excluded Subsidiaries Sale Transaction or (D) the deduction of the Tender Offer Expenses to the extent that the disallowance of such ~~Taxes (or related costs and expenses) for~~ deduction of the Tender Offer Expenses results in a Tax with respect to which ~~the~~ Purchaser ~~Tax Indemnified Parties would otherwise be~~ is entitled to indemnification pursuant to clause (ii) of this Section ~~6.5(d~~6.8 (it being understood that this part (D) is intentionally duplicative of such clause (ii)~~, as if such Conveyed Subsidiary~~ ); (or v) any ~~Subsidiary thereof) were wholly owned~~ breach by Seller ~~Parent, multiplied by (B)~~ of any of the ~~direct~~ covenants and ~~indirect percentage ownership~~ obligations contained in Section 6.7 of Seller Parent of such Conveyed Subsidiary (or Subsidiary thereof) as of immediately prior to the Closing. With respect to any Taxes suffered or incurred by any Subsidiary of Purchaser Parent (including Purchaser this Agreement; and its Subsidiaries) that was not wholly owned by Purchaser Parent (directly or indirectly) as of immediately prior to the Closing, the indemnification obligations of Purchaser Parent pursuant to Section 6.5(d)(ii) in respect of such Taxes (or related costs and expenses) shall in no event exceed an amount equal to (A) the amount of such Taxes (or related costs and expenses) for which the Purchaser Tax Indemnified Parties would otherwise be entitled to indemnification pursuant to Section 6.5(d), as if such Subsidiary were wholly owned by Purchaser Parent, multiplied by (B) the direct and indirect percentage ownership of Purchaser Parent of such Subsidiary as of immediately prior to the Closing. (vi) ~~Without duplication~~ the breach or inaccuracy of the representations and warranties set forth in Section 3.14 of this Agreement. All amounts payable or to ~~any other amounts~~ be paid ~~pursuant to~~ under this Section 6.5: (A) Within thirty (30) days following the filing of any Income Tax Return for any Conveyed Subsidiary (or any Subsidiary thereof), on the one hand, or Purchaser (or any Subsidiary thereof, other than the Conveyed Subsidiaries and their Subsidiaries), on the other hand, for any Pre-Closing Tax Period or for any Straddle Period, Seller Parent or Purchaser Parent 6.8 shall (or Purchaser Parent shall cause Purchaser to) prepare a statement showing (i) the amount of Income Taxes shown as due on such filed Income Tax Return with respect to the relevant Pre-Closing Tax Period or the portion of any Straddle Period ending on and including the Closing Date (the “Final Pre-Closing Income Tax Amount”) and (ii) the amount of the Seller Accrued Income Taxes or Purchaser Accrued Income Taxes, as applicable, attributable to such Income Tax Return as reflected on the Final Closing Statement (the “Pre-Closing Income Tax Amount”) and deliver such statement to Seller Parent and Purchaser Parent, as applicable. Purchaser Parent or Seller Parent, as applicable, shall have a period of fifteen (15) Business Days to provide comments to a schedule prepared (or caused to be ~~prepared)~~ paid by Seller Parent or Purchaser Parent, respectively. If Purchaser Parent or Seller Parent, as applicable, do not provide any comments to Seller Parent or Purchaser Parent, respectively, during such period, the statement as so prepared shall be final and binding. (B) In the event the Final Pre-Closing Income Tax Amount with respect to any Income Tax Return is less than the amount of the Pre-Closing Income Tax Amount attributable to such Income Tax Return that was included on the Final Closing Statement, the Purchaser shall in immediately available funds within five (5) Business Days ~~following~~ after the ~~finalization~~ receipt of ~~the Final Pre-Closing Income Tax Amount hereunder (i) pay~~ a written request from Purchaser. The parties hereto agree to Seller Parent the amount of such difference with respect to a Conveyed Subsidiary and their Subsidiaries and (ii) pay to Purchaser Parent the amount of such difference with respect to Purchaser and its Subsidiaries. (vii) The Parties shall use reasonable best efforts to structure treat any ~~indemnity payment, true-up payment, or~~ payment ~~in respect of Tax Benefits~~ made ~~by any Party pursuant to this Agreement (including~~ pursuant to this Section ~~6.5, Section 6.6~~ 6.8 and Article ~~VII) and any payment made by Purchaser Parent~~ IX as an adjustment to ~~Purchaser pursuant to Section 2.8 or Section 2.9~~ the Purchase Price for all Tax purposes, except as required under applicable Law. In no event shall the indemnities provided for in the manner set forth in Clause 10 of the Structuring Considerations Agreement. The Parties shall use reasonable best efforts to structure as a special dividend any payment made by Purchaser to Purchaser Parent pursuant to Section 2.8, Section 2.9 or this Section ~~6.5~~6.8 be subject to the provisions of Article IX of this Agreement.

Appears in 1 contract

Sources: Stock Purchase Agreement (Psychiatric Solutions Inc)

Tax Indemnification. (a) Except to the extent treated as a liability in the calculation of Closing Working Capital, Seller shall indemnify the Company, Buyer, and each Buyer Indemnitee and hold them harmless from and against (i) Subject to Section 6.5(d)(v), from and after the Closing, Seller Parent agrees to indemnify and hold harmless Purchaser and its Subsidiaries (including the Conveyed Subsidiaries and their Subsidiaries after the all Pre-Closing ~~Date) (collectively, the “Purchaser Tax Indemnified Parties”) from and against all liability, without duplication, for (1)~~ Taxes of the ~~Conveyed Subsidiaries and their Subsidiaries for any Pre-Closing Tax Period~~ Company; (~~including any Taxes payable in respect of an election under Section 965(h~~ii) ~~of the Code), (2)~~ all Taxes of any ~~Seller (other than any Transfer Taxes and VAT for~~ member of an affiliated, consolidated, combined or unitary group of which ~~Purchaser is responsible hereunder) including, Taxes (other than Taxes of~~ the Conveyed Subsidiaries and their Subsidiaries) imposed with respect to, arising out of or relating to the Purchased Assets or the Business for a Pre-Closing Tax Period, (3) Taxes of any Person (other than the Conveyed Subsidiaries and their Subsidiaries) for a Pre-Closing Tax Period for which any Conveyed Subsidiary Company (or any ~~Subsidiary thereof~~predecessor of the Company) is ~~liable~~ or was a member on or prior to the Closing Date by reason of a liability under Treasury Regulation Section 1.1502-6 or any comparable provisions of foreign, state or local Law; and (~~or a similar provision~~ iii) all Taxes of ~~state, local or foreign Law), or as a~~ any person imposed on the Company arising under the principles of transferee or successor liability or by ~~Contract~~ contract, relating to an event or transaction occurring before the Closing Date. In each of the above cases, together with any out-of-pocket fees and expenses (~~other than Contracts~~ including attorneys’ and accountants’ fees) incurred in connection therewith; provided however, that ~~do not relate primarily to Taxes), (4) Taxes arising out of or resulting from any breach~~ in the case of any ~~covenant or agreement~~ out-of-pocket fees and expenses (including attorneys’ and accountants’ fees) incurred in connection with Pre-Closing Taxes, Seller shall only indemnify Buyer for the fees and expenses (including attorneys’ and accountants’ fees) of ~~Seller Parent or any~~ Buyer that relate to Pre-Closing Taxes of ~~its Affiliates contained in this Agreement, (5) Taxes for~~ a Pre-Closing Tax ~~Period imposed on (x)~~ Period. Seller shall reimburse Buyer for any ~~transaction effected pursuant to Section 2.3(b), (y) any settlement~~ Taxes of ~~any intercompany accounts~~ the Company that are the responsibility of Seller Parent or its Subsidiaries pursuant to Section 6.7, or (z) any transaction or step forming part of the Seller Internal Restructurings, (6) Transfer Taxes for which Seller Parent is responsible under Section 6.5(j), (7) Taxes required to be deducted or withheld with respect to the payment of the Purchase Consideration or any amounts payable to Seller Parent pursuant to Section 2.8 or Section 2.9, including any penalties imposed on Purchaser as a result of Purchaser’s failure to deduct or withhold any such amounts that Purchaser (or a Purchaser Designated Affiliate) was permitted to withhold under Section 2.10 (in each case, subject to Purchaser’s compliance with the notice and cooperation requirements of Section 2.10 and except for any such Taxes (and any related penalties) required to be deducted or withheld solely as a result of any assignment by Purchaser or its Affiliates for which Purchaser is responsible pursuant to Section 10.3), (8) Taxes arising from any breach of any representation or warranty contained in Section 4.16(k), (9) Taxes arising as a result of any Conveyed Subsidiary or any Subsidiary of any Conveyed Subsidiary at any time ceasing to be a member of a group for the purposes of any Tax, of which group Seller Parent or any Subsidiary of Seller Parent is or was also a member and (10) any costs and expenses, including reasonable legal and accounting fees and expenses, attributable to any item described in clauses (1) through (9) (any such Taxes for which Seller Parent is responsible pursuant to this Section ~~6.5(d)(i), subject to~~ 6.03(a) within ten (10) Business Days after payment of such Taxes by Buyer or the ~~following proviso, “~~Company. (b) Buyer shall indemnify each Seller ~~Indemnified Taxes”); provided that Seller Parent shall not be required to indemnify or~~ Indemnitee and hold them harmless ~~any Purchaser Tax Indemnified Party~~ from and against ~~any liability~~ (i) all Post-Closing Taxes of the Company; (ii) all Taxes for which the Buyer is liable pursuant to ~~this~~ Section ~~6.5(d)(i~~6.01(c) ~~for~~ and (Aiii) Taxes attributable to any action taken after the Closing by Purchaser, any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries), or any transferee of Purchaser or any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries), other than any such action that ~~(1) is in the ordinary course of business, (2) is expressly permitted or contemplated by this Agreement, or (3) is required to be taken in order to comply with applicable Law or~~ arise as a result of a ~~change in applicable Law (a “Purchaser Tax Act”)~~voluntary transaction, ~~(B) Taxes that were reflected, accrued~~ action or ~~reserved for in~~ omission carried out or effected by the ~~Final Closing Statement, Final Business Working Capital, or Final Business Net Cash, (C) Income Taxes to the extent that a Conveyed Subsidiary~~ Buyer or any ~~Subsidiary thereof had any Tax Assets as~~ of the ~~close of business~~ Buyer’s Affiliates (including the Company) at any time after the Closing on the Closing Date, provided, however, that Seller shall remain liable for Taxes attributable to such transactions, actions or omissions that are carried out or effected on the Closing Date ~~that were available, or would have been available but for their prior utilization by Purchaser or any~~ under a legally binding commitment of ~~its Affiliates (including~~ the ~~Conveyed Subsidiaries and their Subsidiaries after~~ Company created before the Closing) to offset or otherwise reduce the applicable Tax Liability in respect of such Income Taxes (except any Tax Asset reflected as an asset in the Final Closing Statement and taken into account in the calculation of the Final Business Working Capital or the Final Business Net Cash), or (D) Taxes for which Purchaser Parent is responsible under Section 6.5(d)(ii). (ii) Subject to Section 6.5(d)(v), from and after the Closing, Purchaser Parent shall indemnify and hold harmless the Purchaser Tax Indemnified Parties from and against all liability, without duplication, for (1) all Taxes of Purchaser Parent and its Affiliates (other than Purchaser and its Subsidiaries) for any Tax period (other than Transfer Taxes and VAT for which Seller Parent is responsible hereunder), (2) Taxes of Purchaser and its Subsidiaries (other than the Conveyed Subsidiaries and their Subsidiaries) for any Pre-Closing Tax Period, (3) Taxes of any Person for a Pre-Closing Tax Period for which Purchaser (or any Subsidiary thereof other than any Conveyed Subsidiaries and their Subsidiaries) is liable under Treasury Regulation Section 1.1502-6 (or a similar provision of state, local or foreign Law), or as a transferee or successor or by Contract (other than Contracts that do not relate primarily to Taxes), (4) Taxes arising out of or resulting from any breach of any covenant or agreement of Purchaser Parent, Purchaser or their respective Affiliates contained in this Agreement, (5) Transfer Taxes for which Purchaser Parent is responsible under Section 6.5(j), (6) Taxes arising from any breach of any representation or warranty in Section 5.17(k), (7) Taxes for a Pre-Closing Tax Period imposed on (x) any settlement of any intercompany accounts of Purchaser or any Subsidiary of Purchaser, on the one hand, and Purchaser Parent or any Subsidiary of Purchaser Parent (other than Purchaser and its Subsidiaries), on the other hand, pursuant to Section 6.7 or (y) any transaction or step forming part of the Purchaser Internal Restructurings, (8) Taxes required to be deducted or withheld with respect to any amounts payable to Purchaser Parent pursuant to Section 2.8 or Section 2.9, including any penalties imposed on Purchaser as a result of Purchaser’s failure to deduct or withhold any such amounts, (9) Taxes arising as a result of Purchaser or any Subsidiary of Purchaser (other than any Conveyed Subsidiary or a Subsidiary thereof) at any time ceasing to be a member of a group for the purposes of any Tax, of which group Purchaser Parent or any Subsidiary of Purchaser Parent (other than Purchaser or any Subsidiary of Purchaser) is or was also a member and (10) any costs and expenses, including reasonable legal and accounting fees and expenses, attributable to any item described in clauses (1) through (9) (any such Taxes for which Purchaser Parent is responsible pursuant to this Section 6.5(d)(ii), subject to the following proviso, “Purchaser Parent Indemnified Taxes”); provided that Purchaser Parent shall not be required to indemnify or hold harmless any Purchaser Tax Indemnified Party from and against any liability for (A) Taxes attributable to any action taken after the Closing by Seller Parent or any of its Affiliates, other than any such action that (1) is in the ordinary course of business, (2) is expressly permitted or contemplated by this Agreement, or (3) is required to be taken in order to comply with applicable Law or as a result of a change in applicable Law (a “Seller Tax Act”), (B) Taxes that were reflected, accrued or reserved for in the Final Closing Statement, Final Purchaser Working Capital or the Final Purchaser Net Cash, (C) Income Taxes to the extent that Purchaser or any Subsidiary thereof had any Tax Assets as of the close of business on the Closing Date that were available, or would have been available but for their prior utilization by Purchaser or any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries after the Closing), to offset or otherwise reduce the applicable Tax Liability in respect of such Income Taxes (except any Tax Asset reflected as an asset in the Final Closing Statement and taken into account in the calculation of the Final Purchaser Working Capital or the Final Purchaser Net Cash), or (D) Taxes for which Seller Parent is responsible under Section 6.5(d)(i). (iii) To the extent permitted or required by applicable Law, the taxable year of . In each of the ~~Conveyed Subsidiaries~~ above cases, together with any out-of-pocket fees and ~~their Subsidiaries~~ expenses (including attorneys’ and ~~any Subsidiary of Purchaser~~ accountants’ fees) incurred in connection therewith; provided however, that ~~includes the Closing Date shall be treated as closing on (and including) the Closing Date. Otherwise, for purposes of this Agreement,~~ in the case of any ~~Straddle Period:~~ out-of-pocket fees and expenses (Aincluding attorneys’ and accountants’ fees) ~~Property~~ incurred in connection with Post-Closing Taxes, Buyer shall only indemnify Seller for the fees and expenses (including attorneys’ and accountants’ fees) of Seller that relate to Post-Closing Taxes ~~allocable to the Pre~~of a Post-Closing Tax ~~Period~~ Period. Buyer shall be computed based upon the ratio of the number of days in the Pre-Closing Tax Period to the number of days in the entire Straddle Period; and (B) Taxes (other than Property Taxes) allocable to the Pre-Closing Tax Period shall be computed as if such Tax period ended as of the close of business on the Closing Date and, in the case of reimburse Seller for any Taxes of ~~Conveyed Subsidiaries (and their Subsidiaries) and Seller Parent, or in~~ the case of any Taxes of Purchaser Parent and Purchaser (and their Subsidiaries prior to the Closing), in each case attributable to the ownership of any equity interest in any partnership or other “flow through” entity for tax purposes (including of any “controlled foreign corporation,” as defined under the Code) as if the Tax period of such partnership or other “flow through” entity ended as of the close of business on the Closing Date with the Taxes of such entity for the Pre-Closing Tax Period deemed to include any Taxes on the allocable income of such entity in respect of such Tax period; provided that exemptions, allowances or deductions Company that are ~~calculated on an annual basis (including depreciation and amortization deductions) shall be allocated between~~ the ~~period ending on the Closing Date and the period beginning after the Closing Date in proportion to the number~~ responsibility of days in each period. (iv) Any claim for indemnification under this Section 6.5(d) shall be made in writing upon the party from whom indemnification is sought, and shall specify in reasonable detail the basis for such claim. Any indemnity payment required to be made Buyer pursuant to this Section ~~6.5(d~~6.03(b) ~~shall be made~~ within ~~thirty~~ ten (~~30) days after the indemnified party makes written demand upon the indemnifying party, but in no case earlier than five (5~~10) Business Days prior to the date on which the relevant Taxes are required to be paid to the applicable Taxing Authority. (v) With respect to any Taxes suffered or incurred by any Conveyed Subsidiary (or any Subsidiary thereof) that was not wholly owned by Seller Parent (directly or indirectly) as of immediately prior to the Closing, the indemnification obligations of Seller Parent pursuant to Section 6.5(d)(i) in respect after payment of such Taxes (or related costs and expenses) shall in no event exceed an amount equal to (A) the amount of such Taxes (or related costs and expenses) for which the Purchaser Tax Indemnified Parties would otherwise be entitled to indemnification pursuant to Section 6.5(d), as if such Conveyed Subsidiary (or any Subsidiary thereof) were wholly owned by Seller Parent, multiplied by (B) the direct and indirect percentage ownership of Seller Parent of such Conveyed Subsidiary (or Subsidiary thereof) as of immediately prior to the Closing. With respect to any Taxes suffered or incurred by any Subsidiary of Purchaser Parent (including Purchaser and its Subsidiaries) that was not wholly owned by Purchaser Parent (directly or indirectly) as of immediately prior to the Closing, the indemnification obligations of Purchaser Parent pursuant to Section 6.5(d)(ii) in respect of such Taxes (or related costs and expenses) shall in no event exceed an amount equal to (A) the amount of such Taxes (or related costs and expenses) for which the Purchaser Tax Indemnified Parties would otherwise be entitled to indemnification pursuant to Section 6.5(d), as if such Subsidiary were wholly owned by Purchaser Parent, multiplied by (B) the direct and indirect percentage ownership of Purchaser Parent of such Subsidiary as of immediately prior to the ClosingSeller. (vi) Without duplication to any other amounts paid pursuant to this Section 6.5: (A) Within thirty (30) days following the filing of any Income Tax Return for any Conveyed Subsidiary (or any Subsidiary thereof), on the one hand, or Purchaser (or any Subsidiary thereof, other than the Conveyed Subsidiaries and their Subsidiaries), on the other hand, for any Pre-Closing Tax Period or for any Straddle Period, Seller Parent or Purchaser Parent shall (or Purchaser Parent shall cause Purchaser to) prepare a statement showing (i) the amount of Income Taxes shown as due on such filed Income Tax Return with respect to the relevant Pre-Closing Tax Period or the portion of any Straddle Period ending on and including the Closing Date (the “Final Pre-Closing Income Tax Amount”) and (ii) the amount of the Seller Accrued Income Taxes or Purchaser Accrued Income Taxes, as applicable, attributable to such Income Tax Return as reflected on the Final Closing Statement (the “Pre-Closing Income Tax Amount”) and deliver such statement to Seller Parent and Purchaser Parent, as applicable. Purchaser Parent or Seller Parent, as applicable, shall have a period of fifteen (15) Business Days to provide comments to a schedule prepared (or caused to be prepared) by Seller Parent or Purchaser Parent, respectively. If Purchaser Parent or Seller Parent, as applicable, do not provide any comments to Seller Parent or Purchaser Parent, respectively, during such period, the statement as so prepared shall be final and binding. (B) In the event the Final Pre-Closing Income Tax Amount with respect to any Income Tax Return is less than the amount of the Pre-Closing Income Tax Amount attributable to such Income Tax Return that was included on the Final Closing Statement, the Purchaser shall within five (5) Business Days following the finalization of the Final Pre-Closing Income Tax Amount hereunder (i) pay to Seller Parent the amount of such difference with respect to a Conveyed Subsidiary and their Subsidiaries and (ii) pay to Purchaser Parent the amount of such difference with respect to Purchaser and its Subsidiaries. (vii) The Parties shall use reasonable best efforts to structure any indemnity payment, true-up payment, or payment in respect of Tax Benefits made by any Party pursuant to this Agreement (including pursuant to this Section 6.5, Section 6.6 and Article VII) and any payment made by Purchaser Parent to Purchaser pursuant to Section 2.8 or Section 2.9 in the manner set forth in Clause 10 of the Structuring Considerations Agreement. The Parties shall use reasonable best efforts to structure as a special dividend any payment made by Purchaser to Purchaser Parent pursuant to Section 2.8, Section 2.9 or this Section 6.5.

Appears in 1 contract

Sources: Stock Purchase Agreement (Nuverra Environmental Solutions, Inc.)

Tax Indemnification. ~~(i) Subject to Section 6.5(d)(v)~~The Seller and the Selling Partners will be solely responsible for and will, ~~from~~ jointly and ~~after the Closing~~severally, ~~Seller Parent agrees to indemnify~~ indemnify, defend, and hold ~~harmless Purchaser and its Subsidiaries (including~~ harmless, each of the ~~Conveyed Subsidiaries and their Subsidiaries after the Closing Date) (collectively, the “Purchaser Tax Indemnified Parties”)~~ Buyer Indemnitees from and against (a) any Loss attributable to any breach of or inaccuracy in any representation or warranty made in Section 5.21; (b) any Loss attributable to any breach or violation of, or failure to fully perform, any covenant, agreement, undertaking or obligation in this Section 7.08; (c) all ~~liability~~Taxes of Seller, ~~without duplication~~any of Seller’s Affiliates, Selling Partners or Taxes relating to the Business or the Purchased Assets, for ~~(1) Taxes of the Conveyed Subsidiaries and their Subsidiaries for any~~ all Pre-Closing Tax ~~Period~~ Periods (including any Taxes payable in respect of an election under Section 965(h) of the Code), (2) Taxes of any Seller (other than any Transfer Taxes and VAT for which Purchaser is responsible hereunder) including, Taxes (other than Taxes of the Conveyed Subsidiaries and their Subsidiaries) imposed with respect to, arising out of or relating to the Purchased Assets or the Business for a Pre-Closing Tax Period, (3) Taxes of any Person (other than the Conveyed Subsidiaries and their Subsidiaries) for a Pre-Closing Tax Period for which any Conveyed Subsidiary (or any Subsidiary thereof) is liable under Treasury Regulation Section 1.1502-6 (or a similar provision of state, local or foreign Law), or as a transferee or successor or by Contract (other than Contracts that do not relate primarily to Taxes), (4) Taxes arising out of or resulting from any breach of any covenant or agreement of Seller Parent or any of its Affiliates contained in this Agreement, (5) Taxes for a Pre-Closing Tax Period imposed on (x) any transaction effected pursuant to Section 2.3(b), (y) any settlement of any intercompany accounts of Seller Parent or its Subsidiaries pursuant to Section 6.7, or (z) any transaction or step forming part of the Seller Internal Restructurings, (6) Transfer Taxes for which Seller Parent is responsible under Section 6.5(j), (7) Taxes required to be deducted or withheld with respect to the payment of the Purchase Consideration or any amounts payable to Seller Parent pursuant to Section 2.8 or Section 2.9, including any penalties imposed on Purchaser as a result of Purchaser’s failure to deduct or withhold any such amounts that Purchaser (or a Purchaser Designated Affiliate) was permitted to withhold under Section 2.10 (in each case, subject to Purchaser’s compliance with the notice and cooperation requirements of Section 2.10 and except for any such Taxes (and any related penalties) required to be deducted or withheld solely as a result of any assignment by Purchaser or its Affiliates for which Purchaser is responsible pursuant to Section 10.3), (8) Taxes arising from any breach of any representation or warranty contained in Section 4.16(k), (9) Taxes arising as a result of any Conveyed Subsidiary or any Subsidiary of any Conveyed Subsidiary at any time ceasing to be a member of a group for the purposes of any Tax, of which group Seller Parent or any Subsidiary of Seller Parent is or was also a member and (10) any costs and expenses, including reasonable legal and accounting fees and expenses, attributable to any item described in clauses (1) through (9) (any such Taxes for which Seller Parent is responsible pursuant to this Section 6.5(d)(i), subject to the following proviso, “Seller Indemnified Taxes”); provided that Seller Parent shall not be required to indemnify or hold harmless any Purchaser Tax Indemnified Party from and against any liability pursuant to this Section 6.5(d)(i) for (A) Taxes attributable to any action taken after the Closing by Purchaser, any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries), or any transferee of Purchaser or any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries), other than any such action that (1) is in the ordinary course of business, (2) is expressly permitted or contemplated by this Agreement, or (3) is required to be taken in order to comply with applicable Law or as a result of a change in applicable Law (a “Purchaser Tax Act”), (B) Taxes that were reflected, accrued or reserved for in the Final Closing Statement, Final Business Working Capital, or Final Business Net Cash, (C) Income Taxes to the extent that a Conveyed Subsidiary or any Subsidiary thereof had any Tax Assets as of the close of business on the Closing Date that were available, or would have been available but for their prior utilization by Purchaser or any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries after the Closing) to offset or otherwise reduce the applicable Tax Liability in respect of such Income Taxes (except any Tax Asset reflected as an asset in the Final Closing Statement and taken into account in the calculation of the Final Business Working Capital or the Final Business Net Cash), or (D) Taxes for which Purchaser Parent is responsible under Section 6.5(d)(ii). (ii) Subject to Section 6.5(d)(v), from and after the Closing, Purchaser Parent shall indemnify and hold harmless the Purchaser Tax Indemnified Parties from and against all liability, without duplication, for (1) all Taxes of Purchaser Parent and its Affiliates (other than Purchaser and its Subsidiaries) for any Tax period (other than Transfer Taxes and VAT for which Seller Parent is responsible hereunder), (2) Taxes of Purchaser and its Subsidiaries (other than the Conveyed Subsidiaries and their Subsidiaries) for any Pre-Closing Tax Period, (3) Taxes of any Person for a Pre-Closing Tax Period for which Purchaser (or any Subsidiary thereof other than any Conveyed Subsidiaries and their Subsidiaries) is liable under Treasury Regulation Section 1.1502-6 (or a similar provision of state, local or foreign Law), or as a transferee or successor or by Contract (other than Contracts that do not relate primarily allocated to Taxes), (4) Taxes arising out of or resulting from any breach of any covenant or agreement of Purchaser Parent, Purchaser or their respective Affiliates contained in this Agreement, (5) Transfer Taxes for which Purchaser Parent is responsible under Section 6.5(j), (6) Taxes arising from any breach of any representation or warranty in Section 5.17(k), (7) Taxes for a Pre-Closing Tax Period imposed on (x) any settlement of any intercompany accounts of Purchaser or any Subsidiary of Purchaser, on the one hand, and Purchaser Parent or any Subsidiary of Purchaser Parent (other than Purchaser and its Subsidiaries), on the other hand, pursuant to Section 6.7 or (y) any transaction or step forming part of the Purchaser Internal Restructurings, (8) Taxes required to be deducted or withheld with respect to any amounts payable to Purchaser Parent pursuant to Section 2.8 or Section 2.9, including any penalties imposed on Purchaser as a result of Purchaser’s failure to deduct or withhold any such amounts, (9) Taxes arising as a result of Purchaser or any Subsidiary of Purchaser (other than any Conveyed Subsidiary or a Subsidiary thereof) at any time ceasing to be a member of a group for the purposes of any Tax, of which group Purchaser Parent or any Subsidiary of Purchaser Parent (other than Purchaser or any Subsidiary of Purchaser) is or was also a member and (10) any costs and expenses, including reasonable legal and accounting fees and expenses, attributable to any item described in clauses (1) through (9) (any such Taxes for which Purchaser Parent is responsible pursuant to this Section 6.5(d)(ii), subject to the following proviso, “Purchaser Parent Indemnified Taxes”); provided that Purchaser Parent shall not be required to indemnify or hold harmless any Purchaser Tax Indemnified Party from and against any liability for (A) Taxes attributable to any action taken after the Closing by Seller Parent or any of its Affiliates, other than any such action that (1) is in the ordinary course of business, (2) is expressly permitted or contemplated by this Agreement, or (3) is required to be taken in order to comply with applicable Law or as a result of a change in applicable Law (a “Seller Tax Act”), (B) Taxes that were reflected, accrued or reserved for in the Final Closing Statement, Final Purchaser Working Capital or the Final Purchaser Net Cash, (C) Income Taxes to the extent that Purchaser or any Subsidiary thereof had any Tax Assets as of the close of business on the Closing Date that were available, or would have been available but for their prior utilization by Purchaser or any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries after the Closing), to offset or otherwise reduce the applicable Tax Liability in respect of such Income Taxes (except any Tax Asset reflected as an asset in the Final Closing Statement and taken into account in the calculation of the Final Purchaser Working Capital or the Final Purchaser Net Cash), or (D) Taxes for which Seller Parent is responsible under Section 6.5(d)(i). (iii) To the extent permitted or required by applicable Law, the taxable year of each of the Conveyed Subsidiaries and their Subsidiaries and any Subsidiary of Purchaser that includes the Closing Date shall be treated as closing on (and including) the Closing Date. Otherwise, for purposes of this Agreement, in the case of any Straddle Period: (A) Property Taxes allocable to the Pre-Closing Tax Period shall be computed based upon the ratio of the number of days in the Pre-Closing Tax Period to the number of days in the entire Straddle Period; and (B) Taxes (other than Property Taxes) allocable to the Pre-Closing Tax Period shall be computed as if such Tax period ended as of the close of business on the Closing Date and, in the case of any Taxes of Conveyed Subsidiaries (and their Subsidiaries) and Seller Parent, or in the case of any Taxes of Purchaser Parent and Purchaser (and their Subsidiaries prior to the Closing), in each case attributable to the ownership of any equity interest in any partnership or other “flow through” entity for tax purposes (including of any “controlled foreign corporation,” as defined under the Code) as if the Tax period of such partnership or other “flow through” entity ended as of the close of business on the Closing Date with the Taxes of such entity for the Pre-Closing Tax Period deemed to include any Taxes on the allocable income of such entity in respect of such Tax period; provided that exemptions, allowances or deductions that are calculated on an annual basis (including depreciation and amortization deductions) shall be allocated between the period ending on the Closing Date and the period beginning after the Closing Date in proportion to the number of days in each period. (iv) Any claim for indemnification under this Section 6.5(d) shall be made in writing upon the party from whom indemnification is sought, and shall specify in reasonable detail the basis for such claim. Any indemnity payment required to be made pursuant to this Section 6.5(d) shall be made within thirty (30) days after the indemnified party makes written demand upon the indemnifying party, but in no case earlier than five (5) Business Days prior to the date on which the relevant Taxes are required to be paid to the applicable Taxing Authority. (v) With respect to any Taxes suffered or incurred by any Conveyed Subsidiary (or any Subsidiary thereof) that was not wholly owned by Seller Parent (directly or indirectly) as of immediately prior to the Closing, the indemnification obligations of Seller Parent pursuant to Section 6.5(d)(i) in respect of such Taxes (or related costs and expenses) shall in no event exceed an amount equal to (A) the amount of such Taxes (or related costs and expenses) for which the Purchaser Tax Indemnified Parties would otherwise be entitled to indemnification pursuant to Section 6.5(d), as if such Conveyed Subsidiary (or any Subsidiary thereof) were wholly owned by Seller Parent, multiplied by (B) the direct and indirect percentage ownership of Seller Parent of such Conveyed Subsidiary (or Subsidiary thereof) as of immediately prior to the Closing. With respect to any Taxes suffered or incurred by any Subsidiary of Purchaser Parent (including Purchaser and its Subsidiaries) that was not wholly owned by Purchaser Parent (directly or indirectly) as of immediately prior to the Closing, the indemnification obligations of Purchaser Parent pursuant to Section 6.5(d)(ii) in respect of such Taxes (or related costs and expenses) shall in no event exceed an amount equal to (A) the amount of such Taxes (or related costs and expenses) for which the Purchaser Tax Indemnified Parties would otherwise be entitled to indemnification pursuant to Section 6.5(d), as if such Subsidiary were wholly owned by Purchaser Parent, multiplied by (B) the direct and indirect percentage ownership of Purchaser Parent of such Subsidiary as of immediately prior to the Closing. (vi) Without duplication to any other amounts paid pursuant to this Section 6.5: (A) Within thirty (30) days following the filing of any Income Tax Return for any Conveyed Subsidiary (or any Subsidiary thereof), on the one hand, or Purchaser (or any Subsidiary thereof, other than the Conveyed Subsidiaries and their Subsidiaries), on the other hand, for any Pre-Closing Tax Period or for any Straddle Period, Seller Parent or Purchaser Parent shall (or Purchaser Parent shall cause Purchaser to) prepare a statement showing (i) the amount of Income Taxes shown as due on such filed Income Tax Return with respect to the relevant Pre-Closing Tax Period or the portion of ~~any~~ a Straddle Tax Period ending on and including the Closing Date pursuant to Section 7.08(f)); (d) all Taxes of any member of an affiliated, consolidated, combined or unitary group of which Seller is or was a member on or prior to the ~~“Final~~ Closing Date by reason of a Liability under Treasury Regulation Section 1.1502-6 or any comparable provisions of foreign, state or local Law; (e) any and all Taxes of any Person imposed on Seller arising under the principles of transferee or successor liability or by Contract, relating to an event or transaction occurring during a Pre-Closing ~~Income~~ Tax ~~Amount”~~Period; (f) all Taxes imposed on Seller under Section 1374 of the Code, including any such Taxes resulting from the sale of the Purchased Assets under Section 2.01; (g) all Taxes imposed on Seller under Section 1375 of the Code; and (iih) ~~the amount~~ all Taxes that arise out of the ~~Seller Accrued Income~~ transactions contemplated hereby, excluding Transfer Taxes or Purchaser Accrued Income Taxes, as applicable, attributable to such Income Tax Return as reflected on the Final Closing Statement (the “Pre-Closing Income Tax Amount”) and deliver such statement to Seller Parent and Purchaser Parent, as applicable. Purchaser Parent or Seller Parent, as applicable, shall have a period of fifteen (15) Business Days to provide comments to a schedule prepared (or caused to be prepared) payable by Seller Parent or Purchaser Parent, respectively. If Purchaser Parent or Seller Parent, as applicable, do not provide any comments to Seller Parent or Purchaser Parent, respectively, during such period, the statement as so prepared shall be final and binding. (B) In the event the Final Pre-Closing Income Tax Amount with respect to any Income Tax Return is less than the amount Buyer under Section 7.08(e)); in each of the ~~Pre~~above cases, together with any out-~~Closing Income Tax Amount attributable~~ of-pocket fees and expenses (including attorneys’ and accountants’ fees) incurred in connection therewith. Seller shall reimburse Buyer for any Taxes that are the responsibility of Seller pursuant to ~~such Income Tax Return that was included on the Final Closing Statement, the Purchaser shall~~ this Section 7.08(a) within five (5) Business Days ~~following~~ after payment of such Taxes or out-of-pocket fees or expenses by Buyer or any Buyer Indemnitee. Provided, the ~~finalization of the Final Pre-Closing Income Tax Amount hereunder (i) pay to Seller Parent~~ foregoing shall not negate or limit Buyer’s liability for the amount of such difference with respect to a Conveyed Subsidiary and their Subsidiaries and (ii) pay to Purchaser Parent the amount of such difference with respect to Purchaser and its Subsidiaries. (vii) The Parties shall use reasonable best efforts to structure any indemnity payment, true-up payment, or payment in respect of Tax Benefits made by any Party pursuant to this Agreement (including pursuant to this Section 6.5, Section 6.6 and Article VII) and any payment made by Purchaser Parent to Purchaser pursuant to Section 2.8 or Section 2.9 Taxes that are included in the ~~manner set forth in Clause 10~~ calculation of the Structuring Considerations Agreement. The Parties shall use reasonable best efforts to structure as a special dividend any payment made by Purchaser to Purchaser Parent pursuant to Section 2.8, Section 2.9 or this Section 6.5Final Working Capital.

Appears in 1 contract

Sources: Asset Purchase Agreement (Hillman Companies Inc)

Tax Indemnification. Westinghouse shall indemnify Buyer, its affiliates (including the Sold Subsidiaries) and each of their respec tive officers, directors, employees, stockholders, agents and representatives against and hold them harmless from (i) Subject to Section 6.5(d)(v), from and after the Closing, Seller Parent agrees to indemnify and hold harmless Purchaser and its Subsidiaries (including the Conveyed Subsidiaries and their Subsidiaries after the Closing Date) (collectively, the “Purchaser Tax Indemnified Parties”) from and against all ~~liability, without duplication,~~ liability for ~~(1)~~ Income Taxes of the ~~Conveyed Subsidiaries and their~~ Sold Subsidiaries for ~~any Pre-Closing Tax Period (including any Taxes payable in respect of an election under Section 965(h) of~~ the Code), (2) Taxes of any Seller (other than any Transfer Taxes and VAT for which Purchaser is responsible hereunder) including, Taxes (other than Taxes of the Conveyed Subsidiaries and their Subsidiaries) imposed with respect to, arising out of or relating to the Purchased Assets or the Business for a Pre-Closing Tax Period, (3ii) all liability (as a result of Treasury Regulation 1.1502-6(a) or otherwise) for Taxes of Westinghouse or any ~~Person~~ other corporation which is or has been affiliated with Westinghouse (other than the ~~Conveyed Subsidiaries~~ Sold Subsidiaries), (iii) all liability for Income Taxes resulting from the Section 338(g) and ~~their Subsidiaries~~338(h)(10) ~~for a Pre-Closing Tax Period for which any Conveyed Subsidiary~~ elections (or any ~~Subsidiary thereof~~comparable elections under state or local Tax law) ~~is liable under Treasury Regulation~~ contemplated by Section ~~1.1502-6~~ 12(a) of this Agreement for domestic Sold Subsidiaries (~~or a similar provision of state, local or foreign Law), or as a transferee or successor or by Contract (other than Contracts that do not relate primarily to Taxes~~excluding Thermo Puerto Rico), (4iv) all liability for Taxes attributable to a breach by Westinghouse of its obligations under this Agreement, (v) all liability for Taxes attributable to a breach of the representations and warranties contained in Section 4(h)(iii), (vi) all liability for Taxes attributable to a breach of the representations and warranties contained in Section 4(h)(vii) to the extent that such breach causes Buyer not to obtain tax benefits described in such Section that Buyer would have received in the absence of such breach (or, if less, the benefits that Seller currently receives) and (vii) all liability for Taxes arising out of any intercompany transactions, restructurings or ~~resulting from any breach~~ reorganizations of ~~any covenant or agreement~~ Thermo Ireland and related Irish corporations occurring before the Closing Date which were not part of ~~Seller Parent or any of its Affiliates contained in~~ the transactions contemplated by this ~~Agreement,~~ Agreement (~~5) Taxes for a Pre-Closing Tax Period imposed on~~ "Irish Reorganization Taxes"). Notwithstanding the foregoing clauses (~~x) any transaction effected pursuant to Section 2.3(b~~a)(i), (yii) ~~any settlement of any intercompany accounts of Seller Parent or its Subsidiaries pursuant to Section 6.7,~~ or (~~z) any transaction or step forming part of the Seller Internal Restructurings, (6) Transfer Taxes for which Seller Parent is responsible under Section 6.5(j~~iii), (7) Taxes required to be deducted or withheld with respect to the payment of the Purchase Consideration or any amounts payable to Seller Parent pursuant to Section 2.8 or Section 2.9, including any penalties imposed on Purchaser as a result of Purchaser’s failure to deduct or withhold any such amounts that Purchaser (or a Purchaser Designated Affiliate) was permitted to withhold under Section 2.10 (in each case, subject to Purchaser’s compliance with the notice and cooperation requirements of Section 2.10 and except for any such Taxes (and any related penalties) required to be deducted or withheld solely as a result of any assignment by Purchaser or its Affiliates for which Purchaser is responsible pursuant to Section 10.3), (8) Taxes arising from any breach of any representation or warranty contained in Section 4.16(k), (9) Taxes arising as a result of any Conveyed Subsidiary or any Subsidiary of any Conveyed Subsidiary at any time ceasing to be a member of a group for the purposes of any Tax, of which group Seller Parent or any Subsidiary of Seller Parent is or was also a member and (10) any costs and expenses, including reasonable legal and accounting fees and expenses, attributable to any item described in clauses (1) through (9) (any such Taxes for which Seller Parent is responsible pursuant to this Section 6.5(d)(i), subject to the following proviso, “Seller Indemnified Taxes”); provided that Seller Parent Westinghouse shall not be required to indemnify or hold harmless any Purchaser Tax Indemnified Party from and against any liability pursuant to this Section 6.5(d)(i) for (A) Taxes attributable to any action taken after the Closing by Purchaser, any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries), or any transferee of Purchaser or any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries), other than any such action that (1) is in the ordinary course of business, (2) is expressly permitted or contemplated by this Agreement, or (3) is required to be taken in order to comply with applicable Law or as a result of a change in applicable Law (a “Purchaser Tax Act”), (B) Taxes that were reflected, accrued or reserved for in the Final Closing Statement, Final Business Working Capital, or Final Business Net Cash, (C) Income Taxes to the extent that a Conveyed Subsidiary or any Subsidiary thereof had any Tax Assets as of the close of business on the Closing Date that were available, or would have been available but for their prior utilization by Purchaser or any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries after the Closing) to offset or otherwise reduce the applicable Tax Liability in respect of such Income Taxes (except any Tax Asset reflected as an asset in the Final Closing Statement and taken into account in the calculation of the Final Business Working Capital or the Final Business Net Cash), or (D) Taxes for which Purchaser Parent is responsible under Section 6.5(d)(ii). (ii) Subject to Section 6.5(d)(v), from and after the Closing, Purchaser Parent shall indemnify and hold harmless Buyer and its affiliates and each of their respective officers, directors, employees, stockholders, agents and representatives and Buyer shall, and shall cause the ~~Purchaser Tax Indemnified Parties~~ Sold Subsidiaries to, indemnify Westinghouse, its affiliates and each of their respective officers, directors, employees, stockholders, agents and representatives against and hold them harmless from ~~and against all liability, without duplication, for~~ (1i) all liability for Taxes of ~~Purchaser Parent and its Affiliates (other than Purchaser and its Subsidiaries)~~ the Sold Subsidiaries for ~~any Tax period (other than Transfer Taxes and VAT for which Seller Parent is responsible hereunder), (2) Taxes of Purchaser and its Subsidiaries (other than~~ the ~~Conveyed Subsidiaries and their Subsidiaries) for any Pre~~Post-Closing Tax Period, (3ii) ~~Taxes of any Person~~ all liability for a Pre-Closing Tax Period for which Purchaser (or any Subsidiary thereof other than any Conveyed Subsidiaries and their Subsidiaries) is liable under Treasury Regulation Section 1.1502-6 (or a similar provision of state, local or foreign Law), or as a transferee or successor or by Contract (other than Contracts that do not relate primarily to Taxes), (4) Taxes arising out of or resulting from any breach of any covenant or agreement of Purchaser Parent, Purchaser or their respective Affiliates contained in this Agreement, (5) Transfer Taxes for which Purchaser Parent is responsible under Section 6.5(j), (6) Taxes arising from Buyer's 338(g) election, if any, for foreign Sold Subsidiaries (including Thermo Puerto Rico) but excluding any ~~breach of any representation or warranty in Section 5.17(k), (7~~protective 338(g) Taxes for a Pre-Closing Tax Period imposed on (x) any settlement of any intercompany accounts of Purchaser or any Subsidiary of Purchaser, on the one hand, and Purchaser Parent or any Subsidiary of Purchaser Parent (other than Purchaser and its Subsidiaries), on the other hand, election pursuant to Section ~~6.7 or (y~~12(j) any transaction or step forming part of the Purchaser Internal Restructurings, (8) Taxes required to be deducted or withheld with respect to any amounts payable to Purchaser Parent pursuant to Section 2.8 or Section 2.9, including any penalties imposed on Purchaser as a result of Purchaser’s failure to deduct or withhold any such amounts, (9) Taxes arising as a result of Purchaser or any Subsidiary of Purchaser (other than any Conveyed Subsidiary or a Subsidiary thereof) at any time ceasing to be a member of a group for the purposes of any Tax, of which group Purchaser Parent or any Subsidiary of Purchaser Parent (other than Purchaser or any Subsidiary of Purchaser) is or was also a member and (10iii) any costs and expenses, including reasonable legal and accounting fees and expenses, attributable to any item described in clauses (1) through (9) (any such Taxes for which Purchaser Parent is responsible pursuant to this Section 6.5(d)(ii), subject to the following proviso, “Purchaser Parent Indemnified Taxes”); provided that Purchaser Parent shall not be required to indemnify or hold harmless any Purchaser Tax Indemnified Party from and against any all liability for ~~(A)~~ Taxes attributable to ~~any action taken after the Closing~~ a breach by ~~Seller Parent or any~~ Buyer of its ~~Affiliates, other than any such action that (1) is in the ordinary course of business, (2) is expressly permitted or contemplated by~~ obligations under this Agreement, or (3) is required to be taken in order to comply with applicable Law or as a result of a change in applicable Law (a “Seller Tax Act”), (B) Taxes that were reflected, accrued or reserved for in the Final Closing Statement, Final Purchaser Working Capital or the Final Purchaser Net Cash, (C) Income Taxes to the extent that Purchaser or any Subsidiary thereof had any Tax Assets as of the close of business on the Closing Date that were available, or would have been available but for their prior utilization by Purchaser or any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries after the Closing), to offset or otherwise reduce the applicable Tax Liability in respect of such Income Taxes (except any Tax Asset reflected as an asset in the Final Closing Statement and taken into account in the calculation of the Final Purchaser Working Capital or the Final Purchaser Net Cash), or (D) Taxes for which Seller Parent is responsible under Section 6.5(d)(i). (iii) To the extent permitted or required by applicable Law, the taxable year of each of the Conveyed Subsidiaries and their Subsidiaries and any Subsidiary of Purchaser that includes the Closing Date shall be treated as closing on (and including) the Closing Date. ~~Otherwise, for purposes of this Agreement, in~~ In the case of any taxable period that begins before and ends after the Closing Date (a "Straddle Period:"): (Ai) ~~Property~~ the Income Taxes ~~allocable to the Pre-Closing Tax Period shall be computed based upon the ratio~~ of the ~~number of days in the Pre-Closing Tax Period to the number of days in the entire Straddle Period; and (B) Taxes (other than Property Taxes) allocable to~~ Sold Subsidiaries for the Pre-Closing Tax Period shall be computed as if such ~~Tax~~ taxable period ended as of the close of business on the Closing ~~Date~~ Date; and, (ii) any Income Taxes of the Sold Subsidiaries not allocated to the Pre-Closing Tax Period under clause (i) of this sentence shall be allocated to the Post-Closing Tax Period. To the extent not susceptible to allocation under the methodology described in the ~~case~~ preceding sentence, such Straddle Period Taxes shall be apportioned on the basis of ~~any~~ elapsed days. Westinghouse's indemnity obligation in respect of Income Taxes ~~of Conveyed Subsidiaries (and their Subsidiaries) and Seller Parent, or in the case of any Taxes of Purchaser Parent and Purchaser (and their Subsidiaries prior~~ for a Straddle Period shall initially be effected by its payment to the Closing), in each case attributable to the ownership of any equity interest in any partnership or other “flow through” entity for tax purposes (including of any “controlled foreign corporation,” as defined under the Code) as if the Tax period of such partnership or other “flow through” entity ended as Buyer of the ~~close~~ excess of ~~business on the Closing Date with the~~ (x) such Income Taxes ~~of such entity~~ for the Pre-Closing Tax Period ~~deemed to include any Taxes on~~ over (y) the ~~allocable income~~ amount of such ~~entity in respect~~ Income Taxes paid by Westinghouse or any of its affiliates (other than the Sold Subsidiaries) at any time plus the amount of such ~~Tax period; provided that exemptions~~Income Taxes paid by any of the Sold Subsi diaries on or prior to the Closing Date. Westinghouse shall initially pay such excess to Buyer within 30 days after the return, ~~allowances~~ report or ~~deductions that are calculated~~ form with respect to the final liability for such Income Taxes is required to be filed (or, if later, is actually filed). If the amount of such Income Taxes paid by Westinghouse or any of its affiliates (other than the Sold Subsidiaries) at any time plus the amount of such Income Taxes paid by any of the Sold Subsidiaries on ~~an annual basis (including depreciation and amortization deductions) shall be allocated between the period ending on~~ or prior to the Closing Date ~~and~~ exceeds the ~~period beginning~~ amount payable by Westinghouse pursuant to the preceding sentence, Buyer shall pay to Westinghouse the amount of such excess within 30 days after the ~~Closing Date in proportion~~ return, report or form with respect to the number of days in each period. (iv) Any claim for indemnification under this Section 6.5(d) shall be made in writing upon the party from whom indemnification is sought, and shall specify in reasonable detail the basis final liability for such ~~claim~~Income Taxes is required to be filed (or, if later, is actually filed). ~~Any indemnity payment required~~ The payments to be made pursuant to this Section 6.5(d) shall be made within thirty (30) days after the indemnified party makes written demand upon the indemnifying party, but in no case earlier than five (5) Business Days prior to the date on which the relevant Taxes are required to be paid to the applicable Taxing Authority. (v) With respect to any Taxes suffered paragraph by Westinghouse or incurred by any Conveyed Subsidiary (or any Subsidiary thereof) that was not wholly owned by Seller Parent (directly or indirectly) as of immediately prior to the Closing, the indemnification obligations of Seller Parent pursuant to Section 6.5(d)(i) in respect of such Taxes (or related costs and expenses) shall in no event exceed an amount equal to (A) the amount of such Taxes (or related costs and expenses) for which the Purchaser Tax Indemnified Parties would otherwise be entitled to indemnification pursuant to Section 6.5(d), as if such Conveyed Subsidiary (or any Subsidiary thereof) were wholly owned by Seller Parent, multiplied by (B) the direct and indirect percentage ownership of Seller Parent of such Conveyed Subsidiary (or Subsidiary thereof) as of immediately prior to the Closing. With respect to any Taxes suffered or incurred by any Subsidiary of Purchaser Parent (including Purchaser and its Subsidiaries) that was not wholly owned by Purchaser Parent (directly or indirectly) as of immediately prior to the Closing, the indemnification obligations of Purchaser Parent pursuant to Section 6.5(d)(ii) in respect of such Taxes (or related costs and expenses) shall in no event exceed an amount equal to (A) the amount of such Taxes (or related costs and expenses) for which the Purchaser Tax Indemnified Parties would otherwise be entitled to indemnification pursuant to Section 6.5(d), as if such Subsidiary were wholly owned by Purchaser Parent, multiplied by (B) the direct and indirect percentage ownership of Purchaser Parent of such Subsidiary as of immediately prior to the Closing. (vi) Without duplication to any other amounts paid pursuant to this Section 6.5: (A) Within thirty (30) days following the filing of any Income Tax Return for any Conveyed Subsidiary (or any Subsidiary thereof), on the one hand, or Purchaser (or any Subsidiary thereof, other than the Conveyed Subsidiaries and their Subsidiaries), on the other hand, for any Pre-Closing Tax Period or for any Straddle Period, Seller Parent or Purchaser Parent shall (or Purchaser Parent shall cause Purchaser to) prepare a statement showing (i) the amount of Income Taxes shown as due on such filed Income Tax Return with respect to the relevant Pre-Closing Tax Period or the portion of any Straddle Period ending on and including the Closing Date (the “Final Pre-Closing Income Tax Amount”) and (ii) the amount of the Seller Accrued Income Taxes or Purchaser Accrued Income Taxes, as applicable, attributable to such Income Tax Return as reflected on the Final Closing Statement (the “Pre-Closing Income Tax Amount”) and deliver such statement to Seller Parent and Purchaser Parent, as applicable. Purchaser Parent or Seller Parent, as applicable, shall have a period of fifteen (15) Business Days to provide comments to a schedule prepared (or caused to be prepared) by Seller Parent or Purchaser Parent, respectively. If Purchaser Parent or Seller Parent, as applicable, do not provide any comments to Seller Parent or Purchaser Parent, respectively, during such period, the statement as so prepared shall be final and binding. (B) In the event the Final Pre-Closing Income Tax Amount with respect to any Income Tax Return is less than the amount of the Pre-Closing Income Tax Amount attributable to such Income Tax Return that was included on the Final Closing Statement, the Purchaser shall within five (5) Business Days following the finalization of the Final Pre-Closing Income Tax Amount hereunder (i) pay to Seller Parent the amount of such difference Buyer with respect to a ~~Conveyed Subsidiary and their Subsidiaries and~~ Straddle Period shall be appropriately adjusted to reflect any final determination (iiwhich shall include the execution of Form 870-AD or successor form) ~~pay to Purchaser Parent the amount of such difference~~ with respect to ~~Purchaser and its Subsidiaries~~Income Taxes for such Straddle Period. (vii) The Parties shall use reasonable best efforts to structure any indemnity payment, true-up payment, or payment in respect of Tax Benefits made by any Party pursuant to this Agreement (including pursuant to this Section 6.5, Section 6.6 and Article VII) and any payment made by Purchaser Parent to Purchaser pursuant to Section 2.8 or Section 2.9 in the manner set forth in Clause 10 of the Structuring Considerations Agreement. The Parties shall use reasonable best efforts to structure as a special dividend any payment made by Purchaser to Purchaser Parent pursuant to Section 2.8, Section 2.9 or this Section 6.5.

Appears in 1 contract

Sources: Stock Purchase Agreement (Ingersoll Rand Co)

Tax Indemnification. (i) ~~Subject to Section 6.5(d)(v)~~The Purchaser shall indemnify, ~~from~~ defend and hold harmless the Seller and its Affiliates, at any time after the Closing, Seller Parent agrees to indemnify and hold harmless Purchaser and its Subsidiaries (including the Conveyed Subsidiaries and their Subsidiaries after the Closing Date) (collectively, the “Purchaser Tax Indemnified Parties”) from and against all liability, without duplication, for (1) Taxes of the Conveyed Subsidiaries and their Subsidiaries for any Pre-Closing Tax Period (including any Taxes payable in respect of an election under Section 965(h) of the Code), (2) Taxes of any Seller (other than any Transfer Taxes and VAT for which Purchaser is responsible hereunder) including, Taxes (other than Taxes of the Conveyed Subsidiaries and their Subsidiaries) imposed with respect to, arising out of or relating to the Purchased Assets or the Business for a Pre-Closing Tax Period, (3) Taxes of any Person (other than the Conveyed Subsidiaries and their Subsidiaries) for a Pre-Closing Tax Period for which any Conveyed Subsidiary (or any Subsidiary thereof) is liable under Treasury Regulation Section 1.1502-6 (or a similar provision of state, local or foreign Law), or as a transferee or successor or by Contract (other than Contracts that do not relate primarily to Taxes), (4) Taxes arising out of or resulting from any breach of any covenant or agreement of Seller Parent or any of its Affiliates contained in this Agreement, (5) Taxes for a Pre-Closing Tax Period imposed on (x) any transaction effected pursuant to Section 2.3(b), (y) any settlement of any intercompany accounts of Seller Parent or its Subsidiaries pursuant to Section 6.7, or (z) any transaction or step forming part of the Seller Internal Restructurings, (6) Transfer Taxes for which Seller Parent is responsible under Section 6.5(j), (7) Taxes required to be deducted or withheld with respect to the payment of the Purchase Consideration or any amounts payable to Seller Parent pursuant to Section 2.8 or Section 2.9, including any penalties imposed on Purchaser as a result of Purchaser’s failure to deduct or withhold any such amounts that Purchaser (or a Purchaser Designated Affiliate) was permitted to withhold under Section 2.10 (in each case, subject to Purchaser’s compliance with the notice and cooperation requirements of Section 2.10 and except for any such Taxes (and any related penalties) required to be deducted or withheld solely as a result of any assignment by Purchaser or its Affiliates for which Purchaser is responsible pursuant to Section 10.3), (8) Taxes arising from any breach of any representation or warranty contained in Section 4.16(k), (9) Taxes arising as a result of any Conveyed Subsidiary or any Subsidiary of any Conveyed Subsidiary at any time ceasing to be a member of a group for the purposes of any Tax, of which group Seller Parent or any Subsidiary of Seller Parent is or was also a member and (10) any costs and expenses, including reasonable legal and accounting fees and expenses, attributable to any item described in clauses (1) through (9) (any such Taxes for which Seller Parent is responsible pursuant to this Section 6.5(d)(i), subject to the following proviso, “Seller Indemnified Taxes”); provided that Seller Parent shall not be required to indemnify or hold harmless any Purchaser Tax Indemnified Party from and against any liability ~~pursuant to this Section 6.5(d)(i)~~ for ~~(A)~~ Taxes ~~attributable to~~ of ATI and SCS for any ~~action taken~~ taxable period ending after the Closing Date, including any Taxes resulting solely from a transaction undertaken by ~~Purchaser, any of~~ the Purchaser or its Affiliates ~~(including~~ with respect to ATI or SCS after the ~~Conveyed Subsidiaries and their Subsidiaries), or any transferee of Purchaser or any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries), other than any such action~~ Closing that ~~(1) is in the ordinary course of business, (2) is expressly permitted or~~ are not otherwise contemplated by this Agreement, ~~or (3) is required to be taken~~ except for Straddle Periods, in ~~order to comply with applicable Law or as a result~~ which case the Purchaser's indemnity will cover only that portion of ~~a change in applicable Law (a “Purchaser Tax Act”), (B)~~ any such Taxes that ~~were reflected, accrued or reserved for in the Final Closing Statement, Final Business Working Capital, or Final Business Net Cash, (C) Income Taxes~~ is not attributable to the ~~extent that a Conveyed Subsidiary or any Subsidiary thereof had any Tax Assets as of the close of business on the~~ Pre-Closing Date that were available, or would have been available but for their prior utilization by Purchaser or any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries after the Closing) to offset or otherwise reduce the applicable Tax Liability in respect of such Income Taxes (except any Tax Asset reflected as an asset in the Final Closing Statement and taken into account in the calculation of the Final Business Working Capital or the Final Business Net Cash), or (D) Taxes for which Purchaser Parent is responsible under Section 6.5(d)(ii)Period. (ii) ~~Subject to Section 6.5(d)(v)~~The Seller shall indemnify, ~~from and after the Closing, Purchaser Parent shall indemnify~~ defend and hold harmless the Purchaser ~~Tax Indemnified Parties from and against all liability, without duplication, for (1) all Taxes of Purchaser Parent~~ and its ~~Affiliates (other than Purchaser and its Subsidiaries) for any Tax period (other than Transfer Taxes and VAT for which Seller Parent is responsible hereunder)~~Affiliates, (2) Taxes of Purchaser and its Subsidiaries (other than the Conveyed Subsidiaries and their Subsidiaries) for any Pre-Closing Tax Period, (3) Taxes of any Person for a Pre-Closing Tax Period for which Purchaser (or any Subsidiary thereof other than any Conveyed Subsidiaries and their Subsidiaries) is liable under Treasury Regulation Section 1.1502-6 (or a similar provision of state, local or foreign Law), or as a transferee or successor or by Contract (other than Contracts that do not relate primarily to Taxes), (4) Taxes arising out of or resulting from any breach of any covenant or agreement of Purchaser Parent, Purchaser or their respective Affiliates contained in this Agreement, (5) Transfer Taxes for which Purchaser Parent is responsible under Section 6.5(j), (6) Taxes arising from any breach of any representation or warranty in Section 5.17(k), (7) Taxes for a Pre-Closing Tax Period imposed on (x) any settlement of any intercompany accounts of Purchaser or any Subsidiary of Purchaser, on the one hand, and Purchaser Parent or any Subsidiary of Purchaser Parent (other than Purchaser and its Subsidiaries), on the other hand, pursuant to Section 6.7 or (y) any transaction or step forming part of the Purchaser Internal Restructurings, (8) Taxes required to be deducted or withheld with respect to any amounts payable to Purchaser Parent pursuant to Section 2.8 or Section 2.9, including any penalties imposed on Purchaser as a result of Purchaser’s failure to deduct or withhold any such amounts, (9) Taxes arising as a result of Purchaser or any Subsidiary of Purchaser (other than any Conveyed Subsidiary or a Subsidiary thereof) at any time ~~ceasing to be a member of a group for~~ after the ~~purposes of any Tax~~Closing, of which group Purchaser Parent or any Subsidiary of Purchaser Parent (other than Purchaser or any Subsidiary of Purchaser) is or was also a member and (10) any costs and expenses, including reasonable legal and accounting fees and expenses, attributable to any item described in clauses (1) through (9) (any such Taxes for which Purchaser Parent is responsible pursuant to this Section 6.5(d)(ii), subject to the following proviso, “Purchaser Parent Indemnified Taxes”); provided that Purchaser Parent shall not be required to indemnify or hold harmless any Purchaser Tax Indemnified Party from and against any liability for (A) Taxes of ATI and SCS, except as provided in Section 6.8(d)(vii) of the Agreement, for the Pre-Closing Period (including the portion of any Straddle Period ending on the Closing Date), including any Damages resulting from the distribution of the Retained Assets to the Seller pursuant to Section 2.6 hereof; and (B) Damages attributable to ~~any action taken after the Closing by Seller Parent or any of its Affiliates, other than any such action that~~ (1) is any breach of the representation contained in ~~the ordinary course of business,~~ Section 4.20 or (2) ~~is expressly permitted~~ the failure of the Seller (or ~~contemplated by this Agreement, or (3~~any member of the affiliated group that includes the Seller) ~~is required to be taken in order~~ to comply with ~~applicable Law or as a result of a change~~ Seller's obligations in applicable Law (a “Seller Tax Act”), (B) Taxes that were reflected, accrued or reserved for in the Final Closing Statement, Final Purchaser Working Capital or the Final Purchaser Net Cash, (C) Income Taxes to the extent that Purchaser or any Subsidiary thereof had any Tax Assets as of the close of business on the Closing Date that were available, or would have been available but for their prior utilization by Purchaser or any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries after the Closing), to offset or otherwise reduce the applicable Tax Liability in respect of such Income Taxes (except any Tax Asset reflected as an asset in the Final Closing Statement and taken into account in the calculation of the Final Purchaser Working Capital or the Final Purchaser Net Cash), or (D) Taxes for which Seller Parent is responsible under Section ~~6.5(d)(i~~6.8(b). (iii) To In determining the ~~extent permitted or required by applicable Law, the taxable year of each~~ responsibility of the ~~Conveyed Subsidiaries~~ Seller and ~~their Subsidiaries and~~ the Purchaser for Taxes attributable to any ~~Subsidiary of Purchaser that includes the Closing Date~~ Straddle Period, Taxes based upon or related to gross or net income or receipts shall be ~~treated~~ apportioned on the basis of an interim closing of the books as ~~closing on (and including)~~ of the Closing Date~~. Otherwise~~, ~~for purposes of this Agreement, in the case of~~ and all other Taxes attributable to any Straddle ~~Period: (A) Property Taxes allocable to the Pre-Closing Tax~~ Period shall be computed based upon the ratio of the number of days in the Pre-Closing Tax Period to the number of days in the entire Straddle Period; and (B) Taxes (other than Property Taxes) allocable to the Pre-Closing Tax Period shall be computed as if such Tax period ended as of the close of business prorated on the Closing Date and, in the case of any Taxes of Conveyed Subsidiaries (and their Subsidiaries) and Seller Parent, or in the case of any Taxes of Purchaser Parent and Purchaser (and their Subsidiaries prior to the Closing), in each case attributable to the ownership of any equity interest in any partnership or other “flow through” entity for tax purposes (including of any “controlled foreign corporation,” as defined under the Code) as if the Tax period of such partnership or other “flow through” entity ended as of the close of business on the Closing Date with the Taxes of such entity for the Pre-Closing Tax Period deemed to include any Taxes on the allocable income of such entity in respect of such Tax period; provided that exemptions, allowances or deductions that are calculated on an annual basis (including depreciation and amortization deductions) shall be allocated between the period ending on the Closing Date and the period beginning after the Closing Date in proportion to the number of days in each perioda daily basis. (iv) ~~Any~~ If a claim for ~~indemnification under this Section 6.5(d)~~ Taxes shall be made by any taxing authority in ~~writing upon the party from whom indemnification is sought~~writing, ~~and shall specify~~ which, if successful, might result in ~~reasonable detail the basis for such claim. Any~~ an indemnity payment ~~required to be made~~ pursuant to this Section ~~6.5(d~~6.8, the party seeking indemnification (the "Tax Indemnified Party") shall ~~be made~~ promptly notify the other party (the "Tax Indemnifying Party") in writing of such claim (a "Tax Claim") within ~~thirty (30) days after~~ a reasonably sufficient period of time to allow the ~~indemnified party makes written demand upon~~ Tax Indemnifying Party effectively to contest such Tax Claim, and in reasonable detail to apprise the ~~indemnifying party~~Tax Indemnifying Party of the nature of the Tax Claim, ~~but in no case earlier than five (5) Business Days prior~~ and provide copies of all correspondence and documents received by it from the relevant taxing authority. Failure to give prompt notice of a Tax Claim hereunder shall affect the Tax Indemnifying Party's obligation under this Section to the ~~date on which~~ extent that the ~~relevant Taxes are required~~ Tax Indemnifying Party is prejudiced by such failure to ~~be paid to the applicable Taxing Authority~~give prompt notice. (v) With respect to any ~~Taxes suffered or incurred by any Conveyed Subsidiary (or any Subsidiary thereof) that was not wholly owned by Seller Parent (directly or indirectly) as of immediately prior~~ Tax Claim which might result in an indemnity payment to the ~~Closing~~Purchaser pursuant to this Section 6.8(f), the party potentially liable for such indemnification ~~obligations~~ shall control all proceedings taken in connection with such Tax Claim and, without limiting the foregoing, may in its sole discretion and at its sole expense pursue or forego any and all administrative appeals, proceedings, hearings and conferences with any taxing authority with respect thereto, and may, in its sole discretion, either pay the Tax claimed and ▇▇▇ for a refund where applicable law permits such refund suits or contest such Tax Claim. The Tax Indemnified Party shall not under any circumstances settle or otherwise compromise any Tax Claim referred to in the preceding sentence without the Tax Indemnifying Party's prior written consent. In connection with any proceeding taken in connection with such Tax Claim, each party shall keep the other informed of ~~Seller Parent pursuant~~ all material developments and events relating to ~~Section 6.5(d)(i)~~ such Tax Claim if involving a material liability for Taxes. Each party shall cooperate with the other in ~~respect~~ contesting such Tax Claim, which cooperation shall include, without limitation, the retention and the provision of records and information which are reasonably relevant to such Tax Claim, and making employees available to provide additional information or explanation of any material provided hereunder or to testify at proceedings relating to such Tax Claim, provided that no charges shall be incurred for the services of such Taxes (or related costs and expenses) shall in no event exceed an amount equal to (A) the amount of such Taxes (or related costs and expenses) for which the Purchaser Tax Indemnified Parties would otherwise be entitled to indemnification pursuant to Section 6.5(d), as if such Conveyed Subsidiary (or any Subsidiary thereof) were wholly owned by Seller Parent, multiplied by (B) the direct and indirect percentage ownership of Seller Parent of such Conveyed Subsidiary (or Subsidiary thereof) as of immediately prior to the Closing. With respect to any Taxes suffered or incurred by any Subsidiary of Purchaser Parent (including Purchaser and its Subsidiaries) that was not wholly owned by Purchaser Parent (directly or indirectly) as of immediately prior to the Closing, the indemnification obligations of Purchaser Parent pursuant to Section 6.5(d)(ii) in respect of such Taxes (or related costs and expenses) shall in no event exceed an amount equal to (A) the amount of such Taxes (or related costs and expenses) for which the Purchaser Tax Indemnified Parties would otherwise be entitled to indemnification pursuant to Section 6.5(d), as if such Subsidiary were wholly owned by Purchaser Parent, multiplied by (B) the direct and indirect percentage ownership of Purchaser Parent of such Subsidiary as of immediately prior to the Closingemployees. (vi) ~~Without duplication~~ The Seller and the Purchaser shall jointly control, at each party's own cost and expense, all proceedings taken in connection with any Tax Claim relating solely to ~~any other amounts paid pursuant~~ Taxes attributable to this Section 6.5: (A) Within thirty (30) days following the filing of any Income Tax Return for any Conveyed Subsidiary (or any Subsidiary thereof), on the one hand, or Purchaser (or any Subsidiary thereof, other than the Conveyed Subsidiaries and their Subsidiaries), on the other hand, for any Pre-Closing Tax Period or for any a Straddle Period, Seller Parent or Purchaser Parent shall (or Purchaser Parent shall cause Purchaser to) prepare a statement showing (i) the amount of Income Taxes shown as due on such filed Income Tax Return with respect to the relevant Pre-Closing Tax Period or the portion of any Straddle Period ending on and ~~including the Closing Date (the “Final Pre-Closing Income Tax Amount”) and (ii) the amount of~~ neither the Seller Accrued Income Taxes or Purchaser Accrued Income Taxes, as applicable, attributable to such Income Tax Return as reflected on the Final Closing Statement (the “Pre-Closing Income Tax Amount”) and deliver such statement to Seller Parent and Purchaser Parent, as applicable. Purchaser Parent or Seller Parent, as applicable, shall have a period of fifteen (15) Business Days to provide comments to a schedule prepared (or caused to be prepared) by Seller Parent or Purchaser Parent, respectively. If Purchaser Parent or Seller Parent, as applicable, do not provide any comments to Seller Parent or Purchaser Parent, respectively, during such period, the statement as so prepared shall be final and binding. (B) In the event the Final Pre-Closing Income Tax Amount with respect to any Income Tax Return is less than the amount of the Pre-Closing Income Tax Amount attributable to such Income Tax Return that was included on the Final Closing Statement, nor the Purchaser shall ~~within five (5) Business Days following~~ settle a Tax Claim relating to such Straddle Period Taxes without the ~~finalization~~ prior written consent of the Final Pre-Closing Income Tax Amount hereunder (i) pay to Seller Parent the amount of such difference with respect to a Conveyed Subsidiary and their Subsidiaries and (ii) pay to Purchaser Parent the amount of such difference with respect to Purchaser and its Subsidiariesother party, which consent shall not be unreasonably withheld. (vii) The ~~Parties~~ amount of any Taxes payable under this Section 6.8 shall ~~use reasonable best efforts~~ be net of any tax benefit actually realized therefrom. (viii) All matters relating in any manner to ~~structure~~ Tax indemnification obligations and payment of Taxes shall be governed exclusively by this Section 6.8; provided, however, that any indemnity payment, true-up payment, or payment in respect of Tax Benefits made by any Party pursuant to this Agreement (including pursuant to this Section 6.5, Section 6.6 and Article VII) and any payment made by Purchaser Parent to Purchaser pursuant relating to Section ~~2.8 or Section 2.9 in~~ 6.8(f)(ii)(B) shall be subject to the ~~manner~~ limitations on liability set forth in ~~Clause 10~~ Section 9.2. (ix) The representations, warranties, covenants and agreements contained in this Section 6.8 shall survive until the expiration of the ~~Structuring Considerations Agreement~~applicable statute of limitations (including extensions). ~~The Parties shall use reasonable best efforts to structure as a special dividend any payment made by Purchaser to Purchaser Parent pursuant to Section 2.8, Section 2.9 or this Section 6.5.~~ARTICLE VII

Appears in 1 contract

Sources: Stock Purchase Agreement (Eschelon Telecom of California, Inc.)

Tax Indemnification. (a) The Seller shall indemnify, defend and hold harmless (on an after tax basis and net of any directly related tax credit or deduction that the Purchaser Indemnified Persons actually obtain) the Purchaser Indemnified Persons from, and without any duplication, any (1) Tax of Newco described in clause (i) Subject to Section 6.5(d)(v), from and after the Closing, Seller Parent agrees to indemnify and hold harmless Purchaser and its Subsidiaries (including the Conveyed Subsidiaries and their Subsidiaries after the Closing Date) (collectively, the “Purchaser Tax Indemnified Parties”) from and against all liability, without duplication, for (1) Taxes of the ~~Conveyed Subsidiaries and their Subsidiaries for any~~ definition of Taxes related to the Pre-Closing Tax ~~Period (including any Taxes payable in respect of an election under Section 965(h) of the Code)~~Period, (2) Tax described in clause (ii) and (iii) of the definition of Tax, provided, that notwithstanding anything to the contrary in this Section 9.8(a)(1) or (a)(2), the Seller in no event shall be obligated to indemnify, defend or hold harmless any Purchaser Indemnified Party for any Taxes of Newco for any ~~Seller~~ tax period to the extent such Taxes arise solely from or as a result of any action taken by Newco (or by any Purchaser Indemnified Person or Affiliate with respect to Newco) post-Closing including, without limitation, any elections or changes in the legal structure of Newco, (3) Tax of Newco resulting from the breach of the provision of Sections 3.8 or 5.13(a), (4) Taxes attributable to the first three-months as of and after the Closing Date during which Newco Employees are employed by Newco, including any Taxes resulting from the Consulting Agreement, in each case other than ~~any Transfer Taxes and VAT for which Purchaser is responsible hereunder) including~~as a result of, ~~Taxes (other than Taxes~~ or arising out of the ~~Conveyed Subsidiaries~~ failure of the Purchaser and ~~their Subsidiaries) imposed~~ its Affiliates to comply with the requirements set forth in Schedule 9.8, but only to the extent such Taxes exceed the funds held by Newco on the Closing Date with respect toto such matters, and (5) Losses arising out of or ~~relating~~ incident to the ~~Purchased Assets~~ imposition, assessment or assertion of any Tax described in (1)-(4). (b) The Purchaser shall indemnify, defend and hold harmless (on an after tax basis and net of any directly related tax credit or deduction that the ~~Business for~~ Seller Indemnified Persons actually obtain) the Seller from any Taxes (1) imposed on Newco solely as a result of any action by the Purchaser or its Affiliates (or by Newco after the Closing), including but not limited to Taxes resulting from such action (i) occurring on the Closing Date after the Closing that is not in the ordinary course of business, (ii) occurring after the Closing Date or (iii) occurring during a Pre-Closing Tax Period, (32) ~~Taxes~~ resulting from the breach of ~~any Person (other than the Conveyed Subsidiaries and their Subsidiaries) for a Pre-Closing Tax Period for which any Conveyed Subsidiary (or any Subsidiary thereof) is liable under Treasury Regulation~~ Section ~~1.1502-6 (or a similar provision of state, local or foreign Law~~5.13(d), or ~~as a transferee~~ (3) imposed on Newco with respect to any taxable period or ~~successor~~ portion thereof that begins after the Closing Date; except to the extent that such Taxes above are subject to indemnification by the Seller pursuant to Section 9.8(a)(1)-(5) above. (c) The Purchaser shall indemnify, defend and hold harmless (on an after tax basis and net of any directly related tax credit or ~~by Contract~~ deduction that the Seller actually obtains) the Seller from any Taxes not subject to indemnification pursuant to paragraph (~~other than Contracts that do not relate primarily to Taxes~~a), including but not limited to Taxes (41) ~~Taxes arising out of or~~ resulting from any ~~breach of any covenant or agreement of Seller Parent or any of its Affiliates contained in this Agreement,~~ transaction (5i) ~~Taxes for a Pre-~~occurring on the Closing Tax Period imposed on (x) any transaction effected pursuant to Section 2.3(b), (y) any settlement of any intercompany accounts of Seller Parent or its Subsidiaries pursuant to Section 6.7, or (z) any transaction or step forming part of the Seller Internal Restructurings, (6) Transfer Taxes for which Seller Parent is responsible under Section 6.5(j), (7) Taxes required to be deducted or withheld with respect to the payment of the Purchase Consideration or any amounts payable to Seller Parent pursuant to Section 2.8 or Section 2.9, including any penalties imposed on Purchaser as a result of Purchaser’s failure to deduct or withhold any such amounts that Purchaser (or a Purchaser Designated Affiliate) was permitted to withhold under Section 2.10 (in each case, subject to Purchaser’s compliance with the notice and cooperation requirements of Section 2.10 and except for any such Taxes (and any related penalties) required to be deducted or withheld solely as a result of any assignment by Purchaser or its Affiliates for which Purchaser is responsible pursuant to Section 10.3), (8) Taxes arising from any breach of any representation or warranty contained in Section 4.16(k), (9) Taxes arising as a result of any Conveyed Subsidiary or any Subsidiary of any Conveyed Subsidiary at any time ceasing to be a member of a group for the purposes of any Tax, of which group Seller Parent or any Subsidiary of Seller Parent is or was also a member and (10) any costs and expenses, including reasonable legal and accounting fees and expenses, attributable to any item described in clauses (1) through (9) (any such Taxes for which Seller Parent is responsible pursuant to this Section 6.5(d)(i), subject to the following proviso, “Seller Indemnified Taxes”); provided that Seller Parent shall not be required to indemnify or hold harmless any Purchaser Tax Indemnified Party from and against any liability pursuant to this Section 6.5(d)(i) for (A) Taxes attributable to any action taken Date after the Closing by Purchaser, any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries), or any transferee of Purchaser or any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries), other than any such action that ~~(1)~~ is not in the ordinary course of business, (2ii) is expressly permitted or contemplated by this Agreement, or (3) is required to be taken in order to comply with applicable Law or as a result of a change in applicable Law (a “Purchaser Tax Act”), (B) Taxes that were reflected, accrued or reserved for in the Final Closing Statement, Final Business Working Capital, or Final Business Net Cash, (C) Income Taxes to the extent that a Conveyed Subsidiary or any Subsidiary thereof had any Tax Assets as of the close of business on occurring after the Closing Date that were available, or would have been available but for their prior utilization by Purchaser or any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries after the Closing) to offset or otherwise reduce the applicable Tax Liability in respect of such Income Taxes (except any Tax Asset reflected as an asset in the Final Closing Statement and taken into account in the calculation of the Final Business Working Capital or the Final Business Net Cash), or (Diii) Taxes for which Purchaser Parent is responsible under Section 6.5(d)(ii). (ii) Subject to Section 6.5(d)(v), from and after the Closing, Purchaser Parent shall indemnify and hold harmless the Purchaser Tax Indemnified Parties from and against all liability, without duplication, for (1) all Taxes of Purchaser Parent and its Affiliates (other than Purchaser and its Subsidiaries) for any Tax period (other than Transfer Taxes and VAT for which Seller Parent is responsible hereunder), (2) Taxes of Purchaser and its Subsidiaries (other than the Conveyed Subsidiaries and their Subsidiaries) for any Pre-Closing Tax Period, (3) Taxes of any Person for occurring during a Pre-Closing Tax Period ~~for which~~ as a result of any action by the Purchaser or by the Seller at the direction of the Purchaser (or including, without limitation, any ~~Subsidiary thereof other than any Conveyed Subsidiaries and their Subsidiaries) is liable under Treasury Regulation Section 1.1502-6 (or a similar provision of state~~Taxes resulting from, ~~local or foreign Law), or as a transferee or successor or by Contract (other than Contracts that do not relate primarily to Taxes), (4) Taxes~~ arising out of or ~~resulting from~~ due to any ~~breach~~ action or election taken by the Seller at the request or direction of ~~any covenant~~ the Purchaser) or ~~agreement of Purchaser Parent, Purchaser or their respective Affiliates contained in this Agreement,~~ (52) Transfer Taxes for which Purchaser Parent is responsible under Section 6.5(j), (6) Taxes arising from any breach of any representation or warranty in Section 5.17(k), (7) Taxes for a Pre-Closing Tax Period imposed on (x) any settlement of any intercompany accounts of Purchaser or any Subsidiary of Purchaser, on the one hand, and Purchaser Parent or any Subsidiary of Purchaser Parent (other than Purchaser and its Subsidiaries), on the other hand, pursuant to Section 6.7 or (y) any transaction or step forming part of the Purchaser Internal Restructurings, (8) Taxes required to be deducted or withheld Newco with respect to any ~~amounts payable to Purchaser Parent pursuant to Section 2.8~~ taxable period or Section 2.9, including any penalties imposed on Purchaser as a result of Purchaser’s failure to deduct or withhold any such amounts, (9) Taxes arising as a result of Purchaser or any Subsidiary of Purchaser (other than any Conveyed Subsidiary or a Subsidiary thereof) at any time ceasing to be a member of a group for the purposes of any Tax, of which group Purchaser Parent or any Subsidiary of Purchaser Parent (other than Purchaser or any Subsidiary of Purchaser) is or was also a member and (10) any costs and expenses, including reasonable legal and accounting fees and expenses, attributable to any item described in clauses (1) through (9) (any such Taxes for which Purchaser Parent is responsible pursuant to this Section 6.5(d)(ii), subject to the following proviso, “Purchaser Parent Indemnified Taxes”); provided portion thereof that ~~Purchaser Parent shall not be required to indemnify or hold harmless any Purchaser Tax Indemnified Party from and against any liability for (A) Taxes attributable to any action taken~~ begins after the Closing by Seller Parent or any of its Affiliates, other than any such action that (1) is in the ordinary course of business, (2) is expressly permitted or contemplated by this Agreement, or (3) is required to be taken in order to comply with applicable Law or as a result of a change in applicable Law (a “Seller Tax Act”), (B) Taxes that were reflected, accrued or reserved for in the Final Closing Statement, Final Purchaser Working Capital or the Final Purchaser Net Cash, (C) Income Taxes to the extent that Purchaser or any Subsidiary thereof had any Tax Assets as of the close of business on the Closing Date that were available, or would have been available but for their prior utilization by Purchaser or any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries after the Closing), to offset or otherwise reduce the applicable Tax Liability in respect of such Income Taxes (except any Tax Asset reflected as an asset in the Final Closing Statement and taken into account in the calculation of the Final Purchaser Working Capital or the Final Purchaser Net Cash), or (D) Taxes for which Seller Parent is responsible under Section 6.5(d)(i)Date. (~~iii~~d) To the extent permitted or required by applicable Law, the taxable year of each of the Conveyed Subsidiaries and their Subsidiaries and any Subsidiary of Purchaser that includes the Closing Date shall be treated as closing on (and including) the Closing Date. Otherwise, for For purposes of this ~~Agreement~~Section, in the case of ~~any Straddle Period:~~ Taxes that are imposed on a periodic basis and are payable for a Tax period that includes (Abut does not end on) ~~Property Taxes allocable~~ the Closing Date, the portion of such Tax related to the ~~Pre-~~portion of such Tax period ending on and including the Closing ~~Tax Period~~ Date shall ~~be computed~~ (1) in the case of any Taxes other than gross receipts, sales or use Taxes and Taxes based upon or related to income, be deemed to be the ~~ratio~~ amount of such Tax for the entire Tax period multiplied by a fraction the numerator of which is the number of days in the ~~Pre-~~Tax period ending on and including the Closing ~~Tax Period to~~ Date and the denominator of which is the number of days in the entire ~~Straddle Period; and~~ Tax period, and (B2) ~~Taxes (other than Property Taxes) allocable to the Pre-Closing Tax Period shall be computed as if such Tax period ended as of the close of business on the Closing Date and,~~ in the case of any ~~Taxes of Conveyed Subsidiaries (~~Tax based upon or related to income and ~~their Subsidiaries)~~ any gross receipts, sales or use Tax, be deemed equal to the amount which would be payable if the relevant Tax period ended on and ~~Seller Parent, or~~ included the Closing Date. All determinations necessary to give effect to the allocation set forth in the ~~case of any Taxes of Purchaser Parent and Purchaser~~ foregoing clause (and their Subsidiaries prior to the Closing), in each case attributable to the ownership of any equity interest in any partnership or other “flow through” entity for tax purposes (including of any “controlled foreign corporation,” as defined under the Code) as if the Tax period of such partnership or other “flow through” entity ended as of the close of business on the Closing Date with the Taxes of such entity for the Pre-Closing Tax Period deemed to include any Taxes on the allocable income of such entity in respect of such Tax period; provided that exemptions, allowances or deductions that are calculated on an annual basis (including depreciation and amortization deductions) shall be allocated between the period ending on the Closing Date and the period beginning after the Closing Date in proportion to the number of days in each period. (iv) Any claim for indemnification under this Section 6.5(d2) shall be made in writing upon the party from whom indemnification is sought, and shall specify in reasonable detail the basis for such claim. Any indemnity payment required to be made pursuant to this Section 6.5(d) shall be made within thirty (30) days after the indemnified party makes written demand upon the indemnifying party, but in no case earlier than five (5) Business Days a manner consistent with prior ~~to the date on which the relevant Taxes are required to be paid to the applicable Taxing Authority~~practice of Newco. (v) With respect to any Taxes suffered or incurred by any Conveyed Subsidiary (or any Subsidiary thereof) that was not wholly owned by Seller Parent (directly or indirectly) as of immediately prior to the Closing, the indemnification obligations of Seller Parent pursuant to Section 6.5(d)(i) in respect of such Taxes (or related costs and expenses) shall in no event exceed an amount equal to (A) the amount of such Taxes (or related costs and expenses) for which the Purchaser Tax Indemnified Parties would otherwise be entitled to indemnification pursuant to Section 6.5(d), as if such Conveyed Subsidiary (or any Subsidiary thereof) were wholly owned by Seller Parent, multiplied by (B) the direct and indirect percentage ownership of Seller Parent of such Conveyed Subsidiary (or Subsidiary thereof) as of immediately prior to the Closing. With respect to any Taxes suffered or incurred by any Subsidiary of Purchaser Parent (including Purchaser and its Subsidiaries) that was not wholly owned by Purchaser Parent (directly or indirectly) as of immediately prior to the Closing, the indemnification obligations of Purchaser Parent pursuant to Section 6.5(d)(ii) in respect of such Taxes (or related costs and expenses) shall in no event exceed an amount equal to (A) the amount of such Taxes (or related costs and expenses) for which the Purchaser Tax Indemnified Parties would otherwise be entitled to indemnification pursuant to Section 6.5(d), as if such Subsidiary were wholly owned by Purchaser Parent, multiplied by (B) the direct and indirect percentage ownership of Purchaser Parent of such Subsidiary as of immediately prior to the Closing. (vi) Without duplication to any other amounts paid pursuant to this Section 6.5: (A) Within thirty (30) days following the filing of any Income Tax Return for any Conveyed Subsidiary (or any Subsidiary thereof), on the one hand, or Purchaser (or any Subsidiary thereof, other than the Conveyed Subsidiaries and their Subsidiaries), on the other hand, for any Pre-Closing Tax Period or for any Straddle Period, Seller Parent or Purchaser Parent shall (or Purchaser Parent shall cause Purchaser to) prepare a statement showing (i) the amount of Income Taxes shown as due on such filed Income Tax Return with respect to the relevant Pre-Closing Tax Period or the portion of any Straddle Period ending on and including the Closing Date (the “Final Pre-Closing Income Tax Amount”) and (ii) the amount of the Seller Accrued Income Taxes or Purchaser Accrued Income Taxes, as applicable, attributable to such Income Tax Return as reflected on the Final Closing Statement (the “Pre-Closing Income Tax Amount”) and deliver such statement to Seller Parent and Purchaser Parent, as applicable. Purchaser Parent or Seller Parent, as applicable, shall have a period of fifteen (15) Business Days to provide comments to a schedule prepared (or caused to be prepared) by Seller Parent or Purchaser Parent, respectively. If Purchaser Parent or Seller Parent, as applicable, do not provide any comments to Seller Parent or Purchaser Parent, respectively, during such period, the statement as so prepared shall be final and binding. (B) In the event the Final Pre-Closing Income Tax Amount with respect to any Income Tax Return is less than the amount of the Pre-Closing Income Tax Amount attributable to such Income Tax Return that was included on the Final Closing Statement, the Purchaser shall within five (5) Business Days following the finalization of the Final Pre-Closing Income Tax Amount hereunder (i) pay to Seller Parent the amount of such difference with respect to a Conveyed Subsidiary and their Subsidiaries and (ii) pay to Purchaser Parent the amount of such difference with respect to Purchaser and its Subsidiaries. (vii) The Parties shall use reasonable best efforts to structure any indemnity payment, true-up payment, or payment in respect of Tax Benefits made by any Party pursuant to this Agreement (including pursuant to this Section 6.5, Section 6.6 and Article VII) and any payment made by Purchaser Parent to Purchaser pursuant to Section 2.8 or Section 2.9 in the manner set forth in Clause 10 of the Structuring Considerations Agreement. The Parties shall use reasonable best efforts to structure as a special dividend any payment made by Purchaser to Purchaser Parent pursuant to Section 2.8, Section 2.9 or this Section 6.5.

Appears in 1 contract

Sources: Share Purchase Agreement (Medicis Pharmaceutical Corp)

Tax Indemnification. (ia) ~~Subject to Section 6.5(d)(v), from~~ From and ~~after the Closing, Seller Parent agrees to indemnify and hold harmless Purchaser and its Subsidiaries (including the Conveyed Subsidiaries and their Subsidiaries~~ after the Closing Date~~) (collectively~~, ~~the “Purchaser~~ Sellers shall pay or cause to be paid, and jointly and severally shall indemnify each Buyer Tax ~~Indemnified Parties”)~~ Indemnitee and protect, save and hold each Buyer Tax Indemnitee harmless from and against ~~all liability, without duplication, for (1) Taxes of the Conveyed Subsidiaries and their Subsidiaries for~~ any Pre-Closing Tax Period (including any Taxes payable in respect of an election under Section 965(h) of the Code), (2) Taxes of any Seller (other than any Transfer Taxes and VAT for which Purchaser is responsible hereunder) including, Taxes (other than Taxes of the Conveyed Subsidiaries and their Subsidiaries) imposed with respect toAdverse Consequences resulting from, arising out of of, relating to, in the nature of, or caused by: (i) any Tax imposed upon or relating to any Temple-Inland Party for any period (whether before or after the ~~Purchased Assets or the Business for a Pre-~~Closing Date), including any such Tax ~~Period, (3) Taxes of any Person (other than the Conveyed Subsidiaries and their Subsidiaries) for a Pre-Closing Tax Period~~ for which ~~any Conveyed~~ a Westvaco Party or a Purchased Subsidiary may be liable (~~or any Subsidiary thereof~~w) ~~is liable~~ under ~~Treasury Regulation~~ Section 1.1502-6 of the Treasury regulations (or a any similar provision of state, local or foreign ~~Law~~law), or (x) as a transferee or ~~successor~~ successor, (y) by contract or ~~by Contract~~ (z) otherwise, to the extent such Tax is not reflected in the reserve for income Tax liability (rather than any reserve for deferred Taxes established to reflect timing differences between book and Tax income) shown on the Final Closing Working Capital; (ii) any Tax (other than ~~Contracts that do not relate primarily~~ those Taxes described in Section 9.11(a)(i)) imposed upon or relating to ~~Taxes)~~any Purchased Subsidiary, ~~(4) Taxes arising out of or resulting from any breach of any covenant or agreement of Seller Parent~~ the Business or any ~~of its Affiliates contained in this Agreement, (5) Taxes~~ Business Asset for ~~a Pre-Closing Tax Period imposed on~~ (x) any ~~transaction effected pursuant to Section 2.3(b),~~ Pre-Closing Period and (y) any ~~settlement of any intercompany accounts of Seller~~ actions or transactions undertaken by Temple- Inland Parent or ~~its Subsidiaries pursuant to Section 6.7, or (z) any transaction or step forming part of the~~ Seller Internal Restructurings, (6) Transfer Taxes for which Seller Parent is responsible under Section 6.5(j), (7) Taxes required to be deducted or withheld with respect to the payment of the Purchase Consideration or any amounts payable to Seller Parent pursuant to Section 2.8 or Section 2.9, including any penalties imposed on Purchaser as a result of Purchaser’s failure to deduct or withhold any such amounts that Purchaser (or a Purchaser Designated Affiliate) was permitted to withhold under Section 2.10 (in each case, subject to Purchaser’s compliance with the notice and cooperation requirements of Section 2.10 and except for any such Taxes (and any related penalties) required to be deducted or withheld solely as a result of any assignment by Purchaser or its Affiliates for which Purchaser is responsible pursuant to Section 10.3), (8) Taxes arising from any breach of any representation or warranty contained in Section 4.16(k), (9) Taxes arising as a result of any Conveyed Subsidiary or any Subsidiary of any Conveyed Subsidiary at any time ceasing to be a member of a group for the purposes of any Tax, of which group Seller Parent or any Subsidiary of Seller Parent is or was also a member and (10) any costs and expenses, including reasonable legal and accounting fees and expenses, attributable to any item described in clauses (1) through (9) (any such Taxes for which Seller Parent is responsible pursuant to this Section 6.5(d)(i), subject to the following proviso, “Seller Indemnified Taxes”); provided that Seller Parent shall not be required to indemnify or hold harmless any Purchaser Tax Indemnified Party from and against any liability pursuant to this Section 6.5(d)(i) for (A) Taxes attributable to any action taken after the Closing by Purchaser, any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries), or any transferee of Purchaser or any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries), other than any such action that (1) is in the ordinary course of business, (2) is expressly permitted or contemplated by this Agreement, or (3) is required to be taken in order to comply with applicable Law or as a result of a change in applicable Law (a “Purchaser Tax Act”), (B) Taxes that were reflected, accrued or reserved for in the Final Closing Statement, Final Business Working Capital, or Final Business Net Cash, (C) Income Taxes to the extent that a Conveyed Subsidiary or any Subsidiary thereof had any Tax Assets as of the close of business occurring on the Closing Date ~~that were available, or would have been available but for their prior utilization by Purchaser or any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries~~ after the Closing; and (iii) ~~to offset or otherwise reduce the applicable Tax Liability in respect of such Income Taxes (except~~ any Tax Asset reflected as an asset in the Final Closing Statement and taken into account in the calculation of the Final Business Working Capital or the Final Business Net Cash), or (D) Taxes for which Purchaser Parent is responsible under Section 6.5(d)(ii). (ii) Subject to Section 6.5(d)(v), from and after the Closing, Purchaser Parent shall indemnify and hold harmless the Purchaser Tax Indemnified Parties from and against all liability, without duplication, for (1) all Taxes of Purchaser Parent and its Affiliates (other than Purchaser and its Subsidiaries) for any Tax period (other than Transfer Taxes and VAT for which Seller Parent is responsible hereunder), (2) Taxes of Purchaser and its Subsidiaries (other than the ~~Conveyed Subsidiaries~~ Taxes described in Section 9.11(a)(i) and ~~their Subsidiaries~~(a)(ii)) for any Pre-Closing Tax Period, (3) Taxes of any Person for a Pre-Closing Tax Period for which Purchaser (or any Subsidiary thereof other than any Conveyed Subsidiaries and their Subsidiaries) is liable under Treasury Regulation Section 1.1502-6 (or a similar provision of state, local or foreign Law), or as a transferee or successor or by Contract (other than Contracts that do not relate primarily to Taxes), (4) Taxes arising out of or resulting from any breach of any covenant or agreement of Purchaser Parent, Purchaser or their respective Affiliates contained in this Agreement, (5) Transfer Taxes for which Purchaser Parent is responsible under Section 6.5(j), (6) Taxes arising from any a breach of any representation ~~or warranty~~ contained in Section ~~5.17(k), (7) Taxes~~ 5.24 provided that Buyer makes a written claim for ~~a Pre-Closing Tax Period imposed on (x)~~ indemnification against any ~~settlement~~ of ~~any intercompany accounts of Purchaser or any Subsidiary of Purchaser, on~~ the ~~one hand, and Purchaser Parent or any Subsidiary of Purchaser Parent (other than Purchaser and its Subsidiaries), on the other hand,~~ Sellers pursuant to Section ~~6.7~~ 15.1 within the survival period contained in Section 9.2. (b) From and after the Closing Date, Buyer shall pay or ~~(y) any transaction or step forming part of the Purchaser Internal Restructurings, (8) Taxes required~~ cause to be ~~deducted or withheld with respect to any amounts payable to Purchaser Parent pursuant to Section 2.8 or Section 2.9~~paid, ~~including any penalties imposed on Purchaser as a result of Purchaser’s failure to deduct or withhold any such amounts~~and jointly and severally shall indemnify each Seller Tax Indemnitee and protect, (9) Taxes arising as a result of Purchaser or any Subsidiary of Purchaser (other than any Conveyed Subsidiary or a Subsidiary thereof) at any time ceasing to be a member of a group for the purposes of any Tax, of which group Purchaser Parent or any Subsidiary of Purchaser Parent (other than Purchaser or any Subsidiary of Purchaser) is or was also a member save and (10) any costs and expenses, including reasonable legal and accounting fees and expenses, attributable to any item described in clauses (1) through (9) (any such Taxes for which Purchaser Parent is responsible pursuant to this Section 6.5(d)(ii), subject to the following proviso, “Purchaser Parent Indemnified Taxes”); provided that Purchaser Parent shall not be required to indemnify or hold each Seller Tax Indemnitee harmless ~~any Purchaser Tax Indemnified Party~~ from and against Adverse Consequences relating to, except as provided in Section 9.11(a), any ~~liability~~ Tax imposed upon or relating to the Purchased Subsidiaries for any Post-Closing Period. (Ac) ~~Taxes attributable~~ Buyer agrees to indemnify Sellers for any ~~action taken after~~ Adverse Consequences the ~~Closing~~ Sellers shall suffer resulting from any additional Tax imposed upon Sellers resulting from any actions or transactions undertaken by ~~Seller Parent~~ Buyer or any of ~~its Affiliates, other than any such action that (1) is~~ the Purchased Subsidiaries not in the ordinary course of business, (2) is expressly permitted or contemplated by this Agreement, or (3) is required to be taken in order to comply with applicable Law or as a result of a change in applicable Law (a “Seller Tax Act”), (B) Taxes that were reflected, accrued or reserved for in the Final Closing Statement, Final Purchaser Working Capital or the Final Purchaser Net Cash, (C) Income Taxes to the extent that Purchaser or any Subsidiary thereof had any Tax Assets as of the close of business occurring on the Closing Date ~~that were available, or would have been available but for their prior utilization by Purchaser or any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries~~ after the Closing), to offset or otherwise reduce the applicable Tax Liability in respect of such Income Taxes (except any Tax Asset reflected as an asset in the Final Closing Statement and taken into account in the calculation Buyer's purchase of the Final Purchaser Working Capital or the Final Purchaser Net Cash), or (D) Taxes for which Seller Parent is responsible under Section 6.5(d)(i). (iii) To the extent permitted or required by applicable Law, the taxable year of each stock of the Conveyed Subsidiaries and their Subsidiaries and any Subsidiary of Purchaser that includes the Closing Date shall be treated as closing on (and including) the Closing Date. Otherwise, for purposes of this Agreement, in the case of any Straddle Period: (A) Property Taxes allocable to the Pre-Closing Tax Period shall be computed based upon the ratio of the number of days in the Pre-Closing Tax Period to the number of days in the entire Straddle Period; and (B) Taxes (other than Property Taxes) allocable to the Pre-Closing Tax Period shall be computed as if such Tax period ended as of the close of business on the Closing Date and, in the case of any Taxes of Conveyed Subsidiaries (and their Subsidiaries) and Seller Parent, or in the case of any Taxes of Purchaser Parent and Purchaser (and their Subsidiaries prior to the Closing), in each case attributable to the ownership of any equity interest in any partnership or other “flow through” entity for tax purposes (including of any “controlled foreign corporation,” as defined under the Code) as if the Tax period of such partnership or other “flow through” entity ended as of the close of business on the Closing Date with the Taxes of such entity for the Pre-Closing Tax Period deemed to include any Taxes on the allocable income of such entity in respect of such Tax period; provided that exemptions, allowances or deductions that are calculated on an annual basis (including depreciation and amortization deductions) shall be allocated between the period ending on the Closing Date and the period beginning after the Closing Date in proportion to the number of days in each period. (iv) Any claim for indemnification under this Section 6.5(d) shall be made in writing upon the party from whom indemnification is sought, and shall specify in reasonable detail the basis for such claim. Any indemnity payment required to be made pursuant to this Section 6.5(d) shall be made within thirty (30) days after the indemnified party makes written demand upon the indemnifying party, but in no case earlier than five (5) Business Days prior to the date on which the relevant Taxes are required to be paid to the applicable Taxing Authority. (v) With respect to any Taxes suffered or incurred by any Conveyed Subsidiary (or any Subsidiary thereof) that was not wholly owned by Seller Parent (directly or indirectly) as of immediately prior to the Closing, the indemnification obligations of Seller Parent pursuant to Section 6.5(d)(i) in respect of such Taxes (or related costs and expenses) shall in no event exceed an amount equal to (A) the amount of such Taxes (or related costs and expenses) for which the Purchaser Tax Indemnified Parties would otherwise be entitled to indemnification pursuant to Section 6.5(d), as if such Conveyed Subsidiary (or any Subsidiary thereof) were wholly owned by Seller Parent, multiplied by (B) the direct and indirect percentage ownership of Seller Parent of such Conveyed Subsidiary (or Subsidiary thereof) as of immediately prior to the Closing. With respect to any Taxes suffered or incurred by any Subsidiary of Purchaser Parent (including Purchaser and its Subsidiaries) that was not wholly owned by Purchaser Parent (directly or indirectly) as of immediately prior to the Closing, the indemnification obligations of Purchaser Parent pursuant to Section 6.5(d)(ii) in respect of such Taxes (or related costs and expenses) shall in no event exceed an amount equal to (A) the amount of such Taxes (or related costs and expenses) for which the Purchaser Tax Indemnified Parties would otherwise be entitled to indemnification pursuant to Section 6.5(d), as if such Subsidiary were wholly owned by Purchaser Parent, multiplied by (B) the direct and indirect percentage ownership of Purchaser Parent of such Subsidiary as of immediately prior to the Closing. (vi) Without duplication to any other amounts paid pursuant to this Section 6.5: (A) Within thirty (30) days following the filing of any Income Tax Return for any Conveyed Subsidiary (or any Subsidiary thereof), on the one hand, or Purchaser (or any Subsidiary thereof, other than the Conveyed Subsidiaries and their Subsidiaries), on the other hand, for any Pre-Closing Tax Period or for any Straddle Period, Seller Parent or Purchaser Parent shall (or Purchaser Parent shall cause Purchaser to) prepare a statement showing (i) the amount of Income Taxes shown as due on such filed Income Tax Return with respect to the relevant Pre-Closing Tax Period or the portion of any Straddle Period ending on and including the Closing Date (the “Final Pre-Closing Income Tax Amount”) and (ii) the amount of the Seller Accrued Income Taxes or Purchaser Accrued Income Taxes, as applicable, attributable to such Income Tax Return as reflected on the Final Closing Statement (the “Pre-Closing Income Tax Amount”) and deliver such statement to Seller Parent and Purchaser Parent, as applicable. Purchaser Parent or Seller Parent, as applicable, shall have a period of fifteen (15) Business Days to provide comments to a schedule prepared (or caused to be prepared) by Seller Parent or Purchaser Parent, respectively. If Purchaser Parent or Seller Parent, as applicable, do not provide any comments to Seller Parent or Purchaser Parent, respectively, during such period, the statement as so prepared shall be final and binding. (B) In the event the Final Pre-Closing Income Tax Amount with respect to any Income Tax Return is less than the amount of the Pre-Closing Income Tax Amount attributable to such Income Tax Return that was included on the Final Closing Statement, the Purchaser shall within five (5) Business Days following the finalization of the Final Pre-Closing Income Tax Amount hereunder (i) pay to Seller Parent the amount of such difference with respect to a Conveyed Subsidiary and their Subsidiaries and (ii) pay to Purchaser Parent the amount of such difference with respect to Purchaser and its Purchased Subsidiaries. (~~vii~~d) ~~The Parties~~ Payment in full of any amount due from Sellers or Buyer under this Section 9.11 shall ~~use reasonable best efforts to structure any indemnity payment, true-up payment, or payment in respect of Tax Benefits~~ be made by ~~any Party pursuant~~ such Person to ~~this Agreement (including pursuant to this Section 6.5, Section 6.6 and Article VII) and any~~ the affected Tax Indemnitee in immediately available funds at least two Business Days before the date payment ~~made by Purchaser Parent to Purchaser pursuant to Section 2.8 or Section 2.9 in the manner set forth in Clause 10~~ of the ~~Structuring Considerations Agreement. The Parties shall use reasonable best efforts~~ Taxes to ~~structure as a special dividend any~~ which such payment relates is due, or, if no Tax is payable, within fifteen days after written demand is made ~~by Purchaser to Purchaser Parent pursuant to Section 2.8, Section 2.9 or this Section 6.5~~for such payment.

Appears in 1 contract

Sources: Asset Purchase Agreement (Temple Inland Inc)

Tax Indemnification. (i) ~~Subject to Section 6.5(d)(v)~~Pfizer shall indemnify, ~~from and after the Closing, Seller Parent agrees to indemnify~~ defend and hold ~~harmless~~ Purchaser and its ~~Subsidiaries~~ Affiliates (including the Conveyed ~~Subsidiaries and their Subsidiaries after the Closing Date~~Companies) ~~(collectively, the “Purchaser Tax Indemnified Parties”)~~ harmless from and against all ~~liability~~Losses arising from (A) all Liability for Taxes of the Conveyed Companies or with respect to the Purchased Assets for any Pre-Closing Period, ~~without duplication, for~~ (B) all Liability from any breach of Pfizer’s representations and warranties contained in Section 6.16 to the extent such Liability relates to (1) Taxes of the Conveyed ~~Subsidiaries and their Subsidiaries~~ Companies or the Purchased Assets for any Pre-Closing ~~Tax~~ Period ~~(including any Taxes payable in respect of an election under Section 965(h) of the Code),~~ and (2) ~~Taxes~~ in the case of ~~any Seller (other than any Transfer Taxes~~ Pharmacia Groningen B.V., corporate income tax and ~~VAT~~ value-added tax for ~~which Purchaser is responsible hereunder) including, Taxes (other than Taxes of~~ the ~~Conveyed Subsidiaries and their Subsidiaries) imposed with respect to, arising out of or relating to the Purchased Assets or the Business for a~~ Pre-Closing Period of the fiscal unity to which it belonged during such period; (C) all Liability (as a result of Treasury Regulation Section 1.1502-6(a) and any analogous provisions of foreign laws including the Dutch Tax ~~Period~~Collection Act (“Invorderingswet 1990”) or otherwise) for Income Taxes and, ~~(3) Taxes~~ with respect to the Netherlands, for all Taxes, of Pfizer or any other Person (other than the Conveyed ~~Subsidiaries~~ Companies) which is or has ever been affiliated with the Conveyed Companies, or with whom the Conveyed Companies otherwise join or have ever joined (or are or have ever been required to join) in filing any consolidated, combined or unitary domestic or foreign Tax Return, prior to the Closing; (D) any and ~~their Subsidiaries)~~ all Taxes relating to any bulk sale or bulk transfer laws or similar laws with respect to the Asset Selling Corporations for a Pre-Closing ~~Tax Period~~ Period; (E) any other claim for which any Conveyed Subsidiary (or any Subsidiary thereof) is liable under Treasury Regulation Section 1.1502-6 (or a similar provision of state, local or foreign Law), or as a transferee or successor or by Contract (other than Contracts that do not relate primarily to Taxes), (4) Taxes arising out of or resulting from any breach of any covenant or agreement of Seller Parent or any of its Affiliates contained in this Agreement, (5) Taxes for a Pre-Closing ~~Tax~~ Period imposed on (x) any transaction effected pursuant to Section 2.3(b), (y) any settlement of any intercompany accounts of Seller Parent or its Subsidiaries pursuant to Section 6.7, or (z) any transaction or step forming part of the Seller Internal Restructurings, (6) Transfer Taxes for which ~~Seller Parent~~ Pharmacia Groningen B.V. is ~~responsible under Section 6.5(j)~~held secondarily liable for Taxes and for which another Person is primarily liable; and (F) all Liability for any breach of Pfizer’s covenants in Sections 8.02(k) and 8.04 relating to Taxes; provided, however, that (7i) ~~Taxes required~~ to ~~be deducted or withheld~~ the extent such Losses are with respect to ~~the payment of the Purchase Consideration or any amounts payable to Seller Parent pursuant to Section 2.8 or Section 2.9~~legal, including any penalties imposed on Purchaser as a result of Purchaser’s failure to deduct or withhold any such amounts that Purchaser (or a Purchaser Designated Affiliate) was permitted to withhold under Section 2.10 (in each case, subject to Purchaser’s compliance with the notice accounting and cooperation requirements of Section 2.10 and except for any such Taxes (and any related penalties) required to be deducted or withheld solely as a result of any assignment by Purchaser or its Affiliates for which Purchaser is responsible pursuant to Section 10.3), (8) Taxes arising from any breach of any representation or warranty contained in Section 4.16(k), (9) Taxes arising as a result of any Conveyed Subsidiary or any Subsidiary of any Conveyed Subsidiary at any time ceasing to be a member of a group for the purposes of any Tax, of which group Seller Parent or any Subsidiary of Seller Parent is or was also a member and (10) any costs and expenses, including reasonable legal and accounting appraisal fees and expenses, ~~attributable to any item described in clauses~~ such amounts must be reasonable, (1ii) ~~through (9) (any such~~ Pfizer’s indemnity obligation for Taxes ~~for which Seller Parent is responsible~~ pursuant to this Section ~~6.5(d)(i), subject to the following proviso, “Seller Indemnified Taxes”); provided that Seller Parent~~ 8.04(g)(i) shall ~~not~~ be ~~required to indemnify or hold harmless any Purchaser Tax Indemnified Party~~ reduced by refunds of Taxes (excluding carrybacks from ~~and against any liability pursuant to this Section 6.5(d)(i) for (A) Taxes attributable to any action taken after the~~ post-Closing by Purchaser, any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries), or any transferee of Purchaser or any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries), other than any such action that (1) is in the ordinary course of business, (2) is expressly permitted or contemplated by this Agreement, or (3) is required to be taken in order to comply with applicable Law or as a result of a change in applicable Law (a “Purchaser Tax Act”), (B) Taxes that were reflected, accrued or reserved for in the Final Closing Statement, Final Business Working Capital, or Final Business Net Cash, (C) Income Taxes Date years to the extent permitted hereunder) with respect to such periods that ~~a Conveyed Subsidiary~~ end on or ~~any Subsidiary thereof had any Tax Assets as of the close of business on~~ before the Closing Date that ~~were available, or would have been available but for their prior utilization~~ are received after the Closing Date by Purchaser or any of its Affiliates and not previously remitted to Pfizer and (iii) in the event that the Healon Business Drop Down has not been completed on or before the Closing, any Liability for Taxes related to the Healon Business Drop Down shall be regarded as being for a Pre-Closing Period. Notwithstanding anything to the contrary in Section 8.04(g), Pfizer shall not indemnify, defend or hold harmless Purchaser or any of its Affiliates from any Losses arising from any liability for Taxes that are (a) attributable to any Purchaser Tax Act; or (b) to the extent of any net operating or capital loss carryforwards of the Conveyed Companies directly reduce such liability for such Taxes or (c) incurred by virtue of a change in the use of any property of a Conveyed Company resulting in an obligation to adjust value-added Taxes if such change is made after the Closing Date. Furthermore, Pfizer’s obligation to indemnify, defend and hold harmless Purchaser and its Affiliates from Losses as set forth in Section 8.04(g) shall terminate effective 60 days after the expiration of the applicable statute of limitations (including extensions) in respect of such Losses; provided, further, with respect to a Tax Claim for which a claim for indemnification under Section 8.04(g) has been made by Purchaser or its Affiliates (including the Conveyed ~~Subsidiaries and their Subsidiaries after~~ Companies), with reasonable specificity, by written notice given under Section 8.04(i)(A), Pfizer’s indemnification obligation shall continue until the ~~Closing) to offset or otherwise reduce the applicable Tax Liability in respect~~ date of a final determination of such ~~Income Taxes (except any~~ Tax Asset reflected as an asset in the Final Closing Statement and taken into account in the calculation of the Final Business Working Capital or the Final Business Net Cash), or (D) Taxes for which Purchaser Parent is responsible under Section 6.5(d)(ii)Claim. (ii) ~~Subject to Section 6.5(d)(v)~~Purchaser shall, ~~from~~ and ~~after~~ shall cause the ~~Closing~~Conveyed Companies to, ~~Purchaser Parent shall indemnify~~ indemnify, defend and hold Pfizer and its Affiliates harmless ~~the Purchaser Tax Indemnified Parties~~ from and against all ~~liability, without duplication,~~ Losses arising from: (A) any Liability for ~~(1) all~~ Taxes of Purchaser Parent and its Affiliates (other than Purchaser and its Subsidiaries) for any Tax period (other than Transfer Taxes and VAT for which Seller Parent is responsible hereunder), (2) Taxes of Purchaser and its Subsidiaries (other than the Conveyed ~~Subsidiaries~~ Companies except to the extent Pfizer is otherwise required to indemnify Purchaser for such Tax pursuant to Section 8.04(g)(i); (B) any Liability for Taxes that is attributable to a Purchaser Tax Act; and ~~their Subsidiaries~~(C) any Liability for any Pre-Closing Tax Period, (3) Taxes of any Person for a Pre-Closing Tax Period for which Purchaser (or any Subsidiary thereof other than any Conveyed Subsidiaries and their Subsidiaries) is liable under Treasury Regulation Section 1.1502-6 (or a similar provision of state, local or foreign Law), or as a transferee or successor or by Contract (other than Contracts that do not relate primarily to Taxes), (4) Taxes arising out of or resulting from any breach of ~~any covenant or agreement of Purchaser Parent, Purchaser or their respective Affiliates contained~~ Purchaser’s covenants in this ~~Agreement~~Section 8.04 relating to Taxes; provided, however, that (5i) ~~Transfer~~ Purchaser’s indemnity obligation for Taxes for which Purchaser Parent is responsible under Section 6.5(j), (6) Taxes arising from any breach of any representation or warranty in Section 5.17(k), (7) Taxes for a Pre-Closing Tax Period imposed on (x) any settlement of any intercompany accounts of Purchaser or any Subsidiary of Purchaser, on the one hand, and Purchaser Parent or any Subsidiary of Purchaser Parent (other than Purchaser and its Subsidiaries), on the other hand, pursuant to ~~Section 6.7 or~~ clauses (yB) and (C) shall include any transaction or step forming part of the Purchaser Internal Restructurings, (8) Taxes required to be deducted or withheld with respect to any amounts payable to Purchaser Parent pursuant to Section 2.8 or Section 2.9, including any penalties imposed on Purchaser as a result of Purchaser’s failure to deduct or withhold any such amounts, (9) additional Taxes arising as a result of a reduction in the amount of foreign tax credits that are available to Pfizer (computed as if Pfizer could have fully utilized all available foreign tax credits), (ii) the Purchaser ~~or any Subsidiary~~ indemnity obligation with respect to clause (B) shall cease to apply with respect to Purchaser Tax Acts (1) relating to Healon AB occurring after the 3rd anniversary of ~~Purchaser (other than any Conveyed Subsidiary or a Subsidiary thereof) at any time ceasing to be a member of a group for~~ the ~~purposes of any Tax, of which group Purchaser Parent or any Subsidiary of Purchaser Parent (other than Purchaser or any Subsidiary of Purchaser) is or was also a member~~ Closing Date and (102) ~~any costs~~ relating to Pharmacia Groningen B.V. occurring after the 5th anniversary of the Closing Date and ~~expenses~~(iii) to the extent such Losses are with respect to legal, ~~including reasonable legal~~ accounting and ~~accounting~~ appraisal fees and expenses, ~~attributable~~ such amounts must be reasonable. Purchaser’s obligation to ~~any item described in clauses (1) through (9) (~~indemnify, defend and hold harmless Pfizer and its Affiliates from any such ~~Taxes for which Purchaser Parent is responsible pursuant to this Section 6.5(d)(ii), subject to the following proviso, “Purchaser Parent Indemnified Taxes”); provided that Purchaser Parent~~ Loss shall ~~not be required to indemnify or hold harmless any Purchaser Tax Indemnified Party from and against any liability for (A) Taxes attributable to any action taken~~ terminate effective 60 days after the Closing by Seller Parent or any of its Affiliates, other than any such action that (1) is in the ordinary course of business, (2) is expressly permitted or contemplated by this Agreement, or (3) is required to be taken in order to comply with applicable Law or as a result of a change in applicable Law (a “Seller Tax Act”), (B) Taxes that were reflected, accrued or reserved for in the Final Closing Statement, Final Purchaser Working Capital or the Final Purchaser Net Cash, (C) Income Taxes to the extent that Purchaser or any Subsidiary thereof had any Tax Assets as expiration of the ~~close~~ applicable statute of ~~business on the Closing Date that were available, or would have been available but for their prior utilization by Purchaser or any of its Affiliates~~ limitations (including ~~the Conveyed Subsidiaries and their Subsidiaries after the Closing), to offset or otherwise reduce the applicable Tax Liability~~ extensions) in respect of such ~~Income Taxes (except any~~ Losses; provided, further, with respect to a Tax ~~Asset reflected as an asset in the Final Closing Statement and taken into account in the calculation of the Final Purchaser Working Capital~~ Claim for which a claim for indemnification under Section 8.04(g) has been made by Pfizer or ~~the Final Purchaser Net Cash~~its Affiliates, with reasonable specificity, by written notice given under Section 8.04(i)(A), ~~or (D) Taxes for which Seller Parent is responsible under Section 6.5(d)(i)~~Purchaser’s indemnification obligation shall continue until the date of a final determination of such Tax Claim. (iii) To the extent permitted or required by applicable Law, the taxable year of each of the Conveyed Subsidiaries and their Subsidiaries and any Subsidiary of Purchaser that includes the Closing Date shall be treated as closing on (and including) the Closing Date. Otherwise, for purposes of this Agreement, in In the case of any Straddle Period: (A) ~~Property~~ The periodic Taxes ~~allocable~~ of the Conveyed Companies or with respect to the Purchased Assets that are not based on income or receipts (e.g., property Taxes) for the portion of any Straddle Period ending on the Closing Date (the “Pre-Closing Tax ~~Period~~ Period”) shall be computed based upon the ratio of the number of days in the Pre-Closing Tax Period to and the number of days in the entire ~~Straddle Period~~Tax period; and (B) Taxes ~~(other than Property Taxes) allocable~~ of the Conveyed Companies or with respect to the Purchased Assets for the Pre-Closing Tax Period (other than Taxes described in Section 8.04(g)(iii)(A) above) shall be computed as if such ~~Tax~~ taxable period ended as of the close of business on the Closing Date and, in the case of any Taxes of the Conveyed ~~Subsidiaries (and their Subsidiaries) and Seller Parent, or in the case of any Taxes of Purchaser Parent and Purchaser (and their Subsidiaries prior to the Closing), in each case~~ Companies attributable to the ownership by the Conveyed Companies of any equity interest in any partnership or other “~~flow through~~flowthrough” ~~entity for tax purposes (including of any “controlled foreign corporation,” as defined under the Code)~~ entity, as if ~~the Tax~~ a taxable period of such partnership or other “~~flow through~~flowthrough” entity ended as of the close of business on the Closing Date with the Taxes of such entity for the Pre-Closing Tax Period deemed to include any Taxes on the allocable income of such entity in respect of such Tax period; provided that exemptions, allowances or deductions that are calculated on an annual basis (including depreciation and amortization deductions) shall be allocated between the period ending on the Closing Date and the period beginning after the Closing Date in proportion to the number of days in each periodDate. (iv) ~~Any claim for indemnification under this Section 6.5(d) shall be made in writing upon the party from whom indemnification is sought, and shall specify in reasonable detail the basis for such claim.~~ Any indemnity payment required to be made pursuant to this Section ~~6.5(d~~8.04(g) shall be made within ~~thirty (30)~~ 30 days after the indemnified party makes written demand upon the indemnifying party, but in no case earlier than ~~five (5)~~ 5 Business Days prior to the date on which the relevant Taxes are required to be paid to the ~~applicable Taxing Authority~~relevant taxing authority (including estimated Tax payments); provided that any indemnity payment for Taxes that are with respect to non-Income Taxes and are required to be filed by Purchaser on a separate Tax Return basis for any Tax period ending on or before the Closing Date shall be made within 10 days after the Purchaser or its Affiliates makes written demand upon Pfizer, but in no case earlier than 5 Business Days prior to the date on which such Taxes are required to be paid to the relevant taxing authorities. (v) With respect to any Taxes suffered or incurred by any Conveyed Subsidiary (or any Subsidiary thereof) that was not wholly owned by Seller Parent (directly or indirectly) as of immediately prior to the Closing, the indemnification obligations of Seller Parent pursuant to Section 6.5(d)(i) in respect of such Taxes (or related costs and expenses) shall in no event exceed an amount equal to (A) the amount of such Taxes (or related costs and expenses) for which the Purchaser Tax Indemnified Parties would otherwise be entitled to indemnification pursuant to Section 6.5(d), as if such Conveyed Subsidiary (or any Subsidiary thereof) were wholly owned by Seller Parent, multiplied by (B) the direct and indirect percentage ownership of Seller Parent of such Conveyed Subsidiary (or Subsidiary thereof) as of immediately prior to the Closing. With respect to any Taxes suffered or incurred by any Subsidiary of Purchaser Parent (including Purchaser and its Subsidiaries) that was not wholly owned by Purchaser Parent (directly or indirectly) as of immediately prior to the Closing, the indemnification obligations of Purchaser Parent pursuant to Section 6.5(d)(ii) in respect of such Taxes (or related costs and expenses) shall in no event exceed an amount equal to (A) the amount of such Taxes (or related costs and expenses) for which the Purchaser Tax Indemnified Parties would otherwise be entitled to indemnification pursuant to Section 6.5(d), as if such Subsidiary were wholly owned by Purchaser Parent, multiplied by (B) the direct and indirect percentage ownership of Purchaser Parent of such Subsidiary as of immediately prior to the Closing. (vi) Without duplication to any other amounts paid Any indemnity payment made pursuant to this Section ~~6.5: (A) Within thirty (30) days following~~ 8.04 shall be treated as an adjustment to the ~~filing of any Income Tax Return~~ price paid by Purchaser for ~~any~~ the relevant Conveyed ~~Subsidiary (~~Company or ~~any Subsidiary thereof)~~the Purchased Assets, on as the ~~one hand, or Purchaser (or any Subsidiary thereof, other than the Conveyed Subsidiaries and their Subsidiaries), on the other hand~~case may be, for ~~any Pre-Closing~~ Tax ~~Period or for any Straddle Period~~purposes, ~~Seller Parent or Purchaser Parent shall (or Purchaser Parent shall cause Purchaser to) prepare~~ unless a ~~statement showing (i) the amount of Income Taxes shown as due on such filed Income Tax Return~~ final determination with respect to the ~~relevant Pre-Closing Tax Period~~ indemnified party or ~~the portion~~ any of any Straddle Period ending on and including the Closing Date (the “Final Pre-Closing Income Tax Amount”) and (ii) the amount of the Seller Accrued Income Taxes or Purchaser Accrued Income Taxes, as applicable, attributable to its Affiliates causes such Income Tax Return as reflected on the Final Closing Statement (the “Pre-Closing Income Tax Amount”) and deliver such statement to Seller Parent and Purchaser Parent, as applicable. Purchaser Parent or Seller Parent, as applicable, shall have a period of fifteen (15) Business Days to provide comments to a schedule prepared (or caused payment to be ~~prepared) by Seller Parent or Purchaser Parent, respectively. If Purchaser Parent or Seller Parent,~~ treated other than as ~~applicable, do not provide any comments~~ an adjustment to ~~Seller Parent or Purchaser Parent, respectively, during such period,~~ the ~~statement as so prepared shall be final and binding~~purchase price for Tax purposes. (B) In the event the Final Pre-Closing Income Tax Amount with respect to any Income Tax Return is less than the amount of the Pre-Closing Income Tax Amount attributable to such Income Tax Return that was included on the Final Closing Statement, the Purchaser shall within five (5) Business Days following the finalization of the Final Pre-Closing Income Tax Amount hereunder (i) pay to Seller Parent the amount of such difference with respect to a Conveyed Subsidiary and their Subsidiaries and (ii) pay to Purchaser Parent the amount of such difference with respect to Purchaser and its Subsidiaries. (vii) The Parties shall use reasonable best efforts to structure any indemnity payment, true-up payment, or payment in respect of Tax Benefits made by any Party pursuant to this Agreement (including pursuant to this Section 6.5, Section 6.6 and Article VII) and any payment made by Purchaser Parent to Purchaser pursuant to Section 2.8 or Section 2.9 in the manner set forth in Clause 10 of the Structuring Considerations Agreement. The Parties shall use reasonable best efforts to structure as a special dividend any payment made by Purchaser to Purchaser Parent pursuant to Section 2.8, Section 2.9 or this Section 6.5.

Appears in 1 contract

Sources: Stock and Asset Purchase Agreement (Advanced Medical Optics Inc)

Tax Indemnification. (ia) ~~Subject to Section 6.5(d)(v), from~~ From and after the Closing, ~~Seller Parent agrees to~~ P&G shall indemnify and hold harmless Purchaser and its ~~Subsidiaries~~ Affiliates (including the ~~Conveyed Subsidiaries~~ Transferred Subsidiaries) and each of their ~~Subsidiaries after the Closing Date)~~ respective officers, directors, employees, stockholders, agents and representatives, successors and assignees (~~collectively,~~ the “Purchaser ~~Tax Indemnified Parties~~Indemnitees”) from and against (x) (i) all ~~liability, without duplication,~~ Liability for ~~(1)~~ Taxes of the ~~Conveyed Subsidiaries and their~~ Transferred Subsidiaries for any Pre-Closing Tax Period (~~including~~ including, for the avoidance of doubt, any Taxes ~~payable~~ arising in ~~respect of an election under Section 965(h) of the Code), (2) Taxes of any Seller (other than any Transfer Taxes and VAT~~ a Post-Closing Tax Period that are attributable to taxable income for which ~~Purchaser is responsible hereunder) including~~a Transferred Subsidiary recognized a permanent economic benefit (such as, ~~Taxes (other than Taxes~~ the receipt of ~~the Conveyed Subsidiaries and their Subsidiaries) imposed with respect to, arising out of or relating to the Purchased Assets~~ cash or the ~~Business for~~ equivalent thereof) without Tax liability in a Pre-Closing Tax Period), (3ii) all Liability of the Transferred Subsidiaries for Taxes of ~~any Person~~ P&G or its Affiliates (other than another Transferred Subsidiary) as a result of the ~~Conveyed Subsidiaries and their Subsidiaries) for a Pre-Closing Tax Period for which any Conveyed Subsidiary (or any Subsidiary thereof) is liable under~~ application of Treasury Regulation ~~Section~~ § 1.1502-6 (or a any similar provision of state, local or foreign ~~Law)~~law with respect to any Pre-Closing Tax Period, (iii) all Liability for Section 338(h)(10) Taxes, (iv) all Liability of Purchaser or ~~as a transferee~~ the Transferred Subsidiaries (or ~~successor~~ any successors thereto) for breach by P&G of any provision in Section 3.19 or ~~by Contract~~ Section 5.14, (v) all Liability for Taxes of P&G or its Affiliates (other than ~~Contracts that do not relate primarily to Taxes~~the Transferred Subsidiaries), other than Taxes described in Section 9.01(b), and (4vi) all Liability for Transfer Taxes ~~arising out~~ for which P&G is liable pursuant to Section 5.14(l) (provided, however, that P&G shall have no liability under this Section 9.01 for the German tax claim described in Section 3.19(b) of the P&G Disclosure Letter to the extent such liability is satisfied in the manner described in Schedule 5.07(b)) (collectively, “Indemnified Taxes”) and (y) all losses, damages, liabilities, and expenses (including reasonable third-party legal fees and expenses in connection with any audit, investigation, administrative proceeding or ~~resulting~~ prosecution whether involving a third party claim or other action or a claim solely between the parties hereto) related to Indemnified Taxes (together with Indemnified Taxes, “Tax Losses”). Notwithstanding the foregoing, P&G shall not indemnify and hold harmless any Purchaser Indemnitee from any Tax Losses to the extent directly attributable to a breach by Purchaser of Section 5.14(c) hereof or of any other obligation under this Agreement. The parties acknowledge and agree that this Section 9.01 shall be the exclusive provision relating to indemnification for Liabilities relating to Taxes or for any breach of the representations and warranties of P&G contained in Section 3.19 and, for the avoidance of doubt, Sections 9.05, 9.06 and 9.10 shall not apply for purposes of this Section 9.01. (b) From and after the Closing, Purchaser and the Transferred Subsidiaries, jointly and severally, shall indemnify and hold harmless P&G and its Affiliates and each of their respective officers, directors, employees, stockholders, agents and representatives, successors and assignees (the “P&G Indemnitees”) from and against (x)(i) all Liability for Taxes of the Transferred Subsidiaries for any ~~covenant~~ Post-Closing Tax Period, (ii) all Liability for Taxes of P&G or ~~agreement~~ its Affiliates (or any successors thereto) resulting from breach by Purchaser of ~~Seller Parent~~ Section 5.14(a) or Section 5.14(c) or any of its ~~Affiliates contained~~ other covenants or agreements in this Agreement, and (5iii) all Liability for Transfer Taxes for which Purchaser is liable pursuant to Section 5.14(l); and (y) all losses, damages, liabilities, and expenses (including reasonable third-party legal fees and expenses in connection with any audit, investigation, administrative proceeding or prosecution whether involving a third party claim or other action or a claim solely between the parties hereto) related to Taxes described in this Section 9.01(b). (c) The amount of any Taxes based on or measured by income or receipts of the Transferred Subsidiaries for the Pre-Closing Tax Period ~~imposed~~ shall be determined based on (x) any transaction effected pursuant to Section 2.3(b), (y) any settlement of any intercompany accounts of Seller Parent or its Subsidiaries pursuant to Section 6.7, or (z) any transaction or step forming part an interim closing of the Seller Internal Restructurings, (6) Transfer Taxes for which Seller Parent is responsible under Section 6.5(j), (7) Taxes required to be deducted or withheld with respect to the payment of the Purchase Consideration or any amounts payable to Seller Parent pursuant to Section 2.8 or Section 2.9, including any penalties imposed on Purchaser as a result of Purchaser’s failure to deduct or withhold any such amounts that Purchaser (or a Purchaser Designated Affiliate) was permitted to withhold under Section 2.10 (in each case, subject to Purchaser’s compliance with the notice and cooperation requirements of Section 2.10 and except for any such Taxes (and any related penalties) required to be deducted or withheld solely as a result of any assignment by Purchaser or its Affiliates for which Purchaser is responsible pursuant to Section 10.3), (8) Taxes arising from any breach of any representation or warranty contained in Section 4.16(k), (9) Taxes arising as a result of any Conveyed Subsidiary or any Subsidiary of any Conveyed Subsidiary at any time ceasing to be a member of a group for the purposes of any Tax, of which group Seller Parent or any Subsidiary of Seller Parent is or was also a member and (10) any costs and expenses, including reasonable legal and accounting fees and expenses, attributable to any item described in clauses (1) through (9) (any such Taxes for which Seller Parent is responsible pursuant to this Section 6.5(d)(i), subject to the following proviso, “Seller Indemnified Taxes”); provided that Seller Parent shall not be required to indemnify or hold harmless any Purchaser Tax Indemnified Party from and against any liability pursuant to this Section 6.5(d)(i) for (A) Taxes attributable to any action taken after the Closing by Purchaser, any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries), or any transferee of Purchaser or any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries), other than any such action that (1) is in the ordinary course of business, (2) is expressly permitted or contemplated by this Agreement, or (3) is required to be taken in order to comply with applicable Law or as a result of a change in applicable Law (a “Purchaser Tax Act”), (B) Taxes that were reflected, accrued or reserved for in the Final Closing Statement, Final Business Working Capital, or Final Business Net Cash, (C) Income Taxes to the extent that a Conveyed Subsidiary or any Subsidiary thereof had any Tax Assets books as of the close of business on the Closing Date ~~that were available, or would have been available but~~ (and for their prior utilization by Purchaser or any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries after the Closing) to offset or otherwise reduce the applicable Tax Liability in respect of such Income Taxes (except any Tax Asset reflected as an asset in the Final Closing Statement and taken into account in the calculation of the Final Business Working Capital or the Final Business Net Cash), or (D) Taxes for which Purchaser Parent is responsible under Section 6.5(d)(ii). (ii) Subject to Section 6.5(d)(v), from and after the Closing, Purchaser Parent shall indemnify and hold harmless the Purchaser Tax Indemnified Parties from and against all liability, without duplication, for (1) all Taxes of Purchaser Parent and its Affiliates (other than Purchaser and its Subsidiaries) for any Tax period (other than Transfer Taxes and VAT for which Seller Parent is responsible hereunder), (2) Taxes of Purchaser and its Subsidiaries (other than the Conveyed Subsidiaries and their Subsidiaries) for any Pre-Closing Tax Period, (3) Taxes of any Person for a Pre-Closing Tax Period for which Purchaser (or any Subsidiary thereof other than any Conveyed Subsidiaries and their Subsidiaries) is liable under Treasury Regulation Section 1.1502-6 (or a similar provision of state, local or foreign Law), or as a transferee or successor or by Contract (other than Contracts that do not relate primarily to Taxes), (4) Taxes arising out of or resulting from any breach of any covenant or agreement of Purchaser Parent, Purchaser or their respective Affiliates contained in this Agreement, (5) Transfer Taxes for which Purchaser Parent is responsible under Section 6.5(j), (6) Taxes arising from any breach of any representation or warranty in Section 5.17(k), (7) Taxes for a Pre-Closing Tax Period imposed on (x) any settlement of any intercompany accounts of Purchaser or any Subsidiary of Purchaser, on the one hand, and Purchaser Parent or any Subsidiary of Purchaser Parent (other than Purchaser and its Subsidiaries), on the other hand, pursuant to Section 6.7 or (y) any transaction or step forming part of the Purchaser Internal Restructurings, (8) Taxes required to be deducted or withheld with respect to any amounts payable to Purchaser Parent pursuant to Section 2.8 or Section 2.9, including any penalties imposed on Purchaser as a result of Purchaser’s failure to deduct or withhold any such amounts, (9) Taxes arising as a result of Purchaser or any Subsidiary of Purchaser (other than any Conveyed Subsidiary or a Subsidiary thereof) at any time ceasing to be a member of a group for the purposes of any Tax, of which group Purchaser Parent or any Subsidiary of Purchaser Parent (other than Purchaser or any Subsidiary of Purchaser) is or was also a member and (10) any costs and expenses, including reasonable legal and accounting fees and expenses, attributable to any item described in clauses (1) through (9) (any such Taxes for which Purchaser Parent is responsible pursuant to this Section 6.5(d)(ii), subject to the following proviso, “Purchaser Parent Indemnified Taxes”); provided that Purchaser Parent shall not be required to indemnify or hold harmless any Purchaser Tax Indemnified Party from and against any liability for (A) Taxes attributable to any action taken after the Closing by Seller Parent or any of its Affiliates, other than any such action that (1) is in the ordinary course of business, (2) is expressly permitted or contemplated by this Agreement, or (3) is required to be taken in order to comply with applicable Law or as a result of a change in applicable Law (a “Seller Tax Act”), (B) Taxes that were reflected, accrued or reserved for in the Final Closing Statement, Final Purchaser Working Capital or the Final Purchaser Net Cash, (C) Income Taxes to the extent that Purchaser or any Subsidiary thereof had any Tax Assets as of the close of business on the Closing Date that were available, or would have been available but for their prior utilization by Purchaser or any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries after the Closing), to offset or otherwise reduce the applicable Tax Liability in respect of such Income Taxes (except any Tax Asset reflected as an asset in the Final Closing Statement and taken into account in the calculation of the Final Purchaser Working Capital or the Final Purchaser Net Cash), or (D) Taxes for which Seller Parent is responsible under Section 6.5(d)(i). (iii) To the extent permitted or required by applicable Lawpurpose, the taxable ~~year~~ period of ~~each~~ any partnership or other pass-through entity in which a Transferred Subsidiaries holds a beneficial interest shall be deemed to terminate at such time) and the amount of other Taxes of the ~~Conveyed~~ Transferred Subsidiaries ~~and their Subsidiaries and any Subsidiary of Purchaser~~ for a Straddle Period that ~~includes the Closing Date shall be treated as closing on (and including) the Closing Date. Otherwise, for purposes of this Agreement, in the case of any Straddle Period: (A) Property Taxes allocable~~ relates to the Pre-Closing Tax Period shall be ~~computed based upon~~ deemed to be the ~~ratio~~ amount of such Tax for the entire taxable period multiplied by a fraction the numerator of which is the number of days in the Pre-Closing Tax Period to the number of days in the entire Straddle Period; and (B) Taxes (other than Property Taxes) allocable to the Pre-Closing Tax Period shall be computed as if such Tax period ended as of the close of business on the Closing Date and, in the case of any Taxes of Conveyed Subsidiaries (and their Subsidiaries) and Seller Parent, or in the case of any Taxes of Purchaser Parent and Purchaser (and their Subsidiaries prior to the Closing), in each case attributable to the ownership of any equity interest in any partnership or other “flow through” entity for tax purposes (including of any “controlled foreign corporation,” as defined under the Code) as if the Tax period of such partnership or other “flow through” entity ended as of the close of business on the Closing Date with the Taxes of such entity for the Pre-Closing Tax Period deemed to include any Taxes on the allocable income of such entity in respect of such Tax period; provided that exemptions, allowances or deductions that are calculated on an annual basis (including depreciation and amortization deductions) shall be allocated between the period ending on the Closing Date and the ~~period beginning after the Closing Date in proportion to~~ denominator of which is the number of days in ~~each period~~such Straddle Period. (ivd) ~~Any claim for indemnification under~~ Notwithstanding anything in this Agreement to the contrary, the provisions of Section 3.19, Section 5.14 and this Section ~~6.5(d)~~ 9.01 shall ~~be made in writing upon~~ survive for the party from whom indemnification is sought, and shall specify in reasonable detail the basis for such claim. Any indemnity payment required to be made pursuant to this Section 6.5(d) shall be made within thirty full period of all applicable statutes of limitations (30) days after the indemnified party makes written demand upon the indemnifying party, but in no case earlier than five (5) Business Days prior to the date on which the relevant Taxes are required to be paid to the applicable Taxing Authority. (v) With respect giving effect to any ~~Taxes suffered~~ waiver, mitigation or incurred by any Conveyed Subsidiary (or any Subsidiary thereof) that was not wholly owned by Seller Parent (directly or indirectly) as of immediately prior to the Closing, the indemnification obligations of Seller Parent pursuant to Section 6.5(d)(i) in respect of such Taxes (or related costs and expenses) shall in no event exceed an amount equal to (A) the amount of such Taxes (or related costs and expenses) for which the Purchaser Tax Indemnified Parties would otherwise be entitled to indemnification pursuant to Section 6.5(d), as if such Conveyed Subsidiary (or any Subsidiary thereof) were wholly owned by Seller Parent, multiplied by (B) the direct and indirect percentage ownership of Seller Parent of such Conveyed Subsidiary (or Subsidiary thereof) as of immediately prior to the Closing. With respect to any Taxes suffered or incurred by any Subsidiary of Purchaser Parent (including Purchaser and its Subsidiaries) that was not wholly owned by Purchaser Parent (directly or indirectly) as of immediately prior to the Closing, the indemnification obligations of Purchaser Parent pursuant to Section 6.5(d)(ii) in respect of such Taxes (or related costs and expenses) shall in no event exceed an amount equal to (A) the amount of such Taxes (or related costs and expenses) for which the Purchaser Tax Indemnified Parties would otherwise be entitled to indemnification pursuant to Section 6.5(d), as if such Subsidiary were wholly owned by Purchaser Parent, multiplied by (B) the direct and indirect percentage ownership of Purchaser Parent of such Subsidiary as of immediately prior to the Closing. (vi) Without duplication to any other amounts paid pursuant to this Section 6.5: (A) Within thirty (30) days following the filing of any Income Tax Return for any Conveyed Subsidiary (or any Subsidiary extension thereof), on the one hand, or Purchaser (or any Subsidiary thereof, other than the Conveyed Subsidiaries and their Subsidiaries), on the other hand, for any Pre-Closing Tax Period or for any Straddle Period, Seller Parent or Purchaser Parent shall (or Purchaser Parent shall cause Purchaser to) prepare a statement showing (i) the amount of Income Taxes shown as due on such filed Income Tax Return with respect to the relevant Pre-Closing Tax Period or the portion of any Straddle Period ending on and including the Closing Date (the “Final Pre-Closing Income Tax Amount”) and (ii) the amount of the Seller Accrued Income Taxes or Purchaser Accrued Income Taxes, as applicable, attributable to such Income Tax Return as reflected on the Final Closing Statement (the “Pre-Closing Income Tax Amount”) and deliver such statement to Seller Parent and Purchaser Parent, as applicable. Purchaser Parent or Seller Parent, as applicable, shall have a period of fifteen (15) Business Days to provide comments to a schedule prepared (or caused to be prepared) by Seller Parent or Purchaser Parent, respectively. If Purchaser Parent or Seller Parent, as applicable, do not provide any comments to Seller Parent or Purchaser Parent, respectively, during such period, the statement as so prepared shall be final and binding. (B) In the event the Final Pre-Closing Income Tax Amount with respect to any Income Tax Return is less than the amount of the Pre-Closing Income Tax Amount attributable to such Income Tax Return that was included on the Final Closing Statement, the Purchaser shall within five (5) Business Days following the finalization of the Final Pre-Closing Income Tax Amount hereunder (i) pay to Seller Parent the amount of such difference with respect to a Conveyed Subsidiary and their Subsidiaries and (ii) pay to Purchaser Parent the amount of such difference with respect to Purchaser and its Subsidiaries. (vii) The Parties shall use reasonable best efforts to structure any indemnity payment, true-up payment, or payment in respect of Tax Benefits made by any Party pursuant to this Agreement (including pursuant to this Section 6.5, Section 6.6 and Article VII) and any payment made by Purchaser Parent to Purchaser pursuant to Section 2.8 or Section 2.9 in the manner set forth in Clause 10 of the Structuring Considerations Agreement. The Parties shall use reasonable best efforts to structure as a special dividend any payment made by Purchaser to Purchaser Parent pursuant to Section 2.8, Section 2.9 or this Section 6.5.

Appears in 1 contract

Sources: Purchase Agreement (Warner Chilcott PLC)

Tax Indemnification. (i) ~~Subject to Section 6.5(d)(v), from~~ From and ~~after the Closing, Seller Parent agrees to indemnify and hold harmless Purchaser and its Subsidiaries (including the Conveyed Subsidiaries and their Subsidiaries~~ after the Closing Date, Seller shall indemnify Buyer against and hold harmless from any and all liabilities, losses, damages, claims, costs, expenses, interest, awards, judgments and penalties (including reasonable fees for outside counsel, independent accountants and other outside consultants but exclusive of any fees or expenses related to in-house counsel, accountants or other employees) suffered or incurred by Buyer, the companies constituting the Purchased Equity Interests or their Subsidiaries, or any Affiliate of any of the foregoing, exclusive of any consequential or punitive damages, and decreased by any tax benefit realized by Buyer, the companies constituting the Purchased Equity Interests or their Subsidiaries, or any Affiliate of any of the foregoing, and increased by any tax liability of Buyer or such other persons or Affiliates arising from the receipt of any indemnification payment made pursuant to this Section 5.3 (each a “Tax Loss” and collectively, the “~~Purchaser~~ Tax ~~Indemnified Parties~~Losses”) ~~from and against all liability, without duplication, for~~ arising out of (1A) Taxes of the ~~Conveyed Subsidiaries~~ companies constituting the Purchased Equity Interests and their Subsidiaries at the Closing Date for ~~any~~ periods or portions thereof ending on or before the Closing Date (“Pre-Closing ~~Tax Period (including~~ Taxes”), except for the amount of any Taxes ~~payable~~ accrued and included as a liability in ~~respect~~ the computation of ~~an election under Section 965(h) of the Code),~~ Closing Date Working Capital; (2B) Taxes of any ~~Seller (other than~~ member of an affiliated, consolidated, combined or unitary group of which any ~~Transfer Taxes and VAT for which Purchaser is responsible hereunder) including, Taxes (other than Taxes~~ of the ~~Conveyed~~ companies constituting the Purchased Equity Interests or their Subsidiaries ~~and their Subsidiaries) imposed with respect to, arising out of~~ at the Closing Date is or ~~relating~~ was a member on or prior to the ~~Purchased Assets or the Business for a Pre-~~Closing ~~Tax Period, (3) Taxes~~ Date by reason of ~~any Person (other than the Conveyed Subsidiaries and their Subsidiaries) for a Pre-Closing Tax Period for which any Conveyed Subsidiary (or any Subsidiary thereof) is liable~~ liability under Treasury Regulation ~~Section~~ §1.1502-~~6 (~~6, Treasury Regulation §1.1502-78 or ~~a similar~~ comparable provision of ~~state~~foreign, state or local ~~or foreign Law), or as a transferee or successor or by Contract~~ law; (~~other than Contracts that do not relate primarily to Taxes), (4~~C) Taxes arising out of ~~or resulting from~~ any ~~breach~~ transactions contemplated by this Agreement (including transactions contemplated by Sections 2.1(b)(i), 5.14 (exclusive of Transfer Taxes to be paid by Buyer pursuant thereto and Section 5.3(c)(v)), 5.15 and 5.16); and (D) Taxes arising out of the Section 338(h)(10) Election (as provided in Section 5.3(e) below). The amount of any ~~covenant or agreement of Seller Parent or~~ indemnification payable by Sellers hereunder shall be reduced by any of its Affiliates contained in this Agreement, (5) Taxes for a Pre-Closing Tax Period imposed on (x) any transaction effected pursuant to Section 2.3(b), (y) any settlement of any intercompany accounts of Seller Parent or its Subsidiaries pursuant to Section 6.7, or (z) any transaction or step forming part of the Seller Internal Restructurings, (6) Transfer Taxes for which Seller Parent is responsible under Section 6.5(j), (7) Taxes required to be deducted or withheld with respect to the payment of the Purchase Consideration or any amounts payable to Seller Parent pursuant to Section 2.8 or Section 2.9, including any penalties imposed on Purchaser Adverse Consequences suffered by Sellers as a result of ~~Purchaser~~Buyer’s failure to deduct or withhold any such amounts that Purchaser (or a Purchaser Designated Affiliate) was permitted to withhold under Section 2.10 (in each case, subject to Purchaser’s compliance with the notice and cooperation requirements of Section 2.10 and except for any such Taxes (and any related penalties) required to be deducted or withheld solely as a result of any assignment by Purchaser or its Affiliates for which Purchaser is responsible pursuant to Section 10.3), (8) Taxes arising from any breach of ~~any representation or warranty contained~~ the audit and contest procedures described in Section 4.16(k), (9) Taxes arising as a result of any Conveyed Subsidiary or any Subsidiary of any Conveyed Subsidiary at any time ceasing to be a member of a group for the purposes of any Tax, of which group Seller Parent or any Subsidiary of Seller Parent is or was also a member and (10) any costs and expenses, including reasonable legal and accounting fees and expenses, attributable to any item described in clauses (1) through (9) (any such Taxes for which Seller Parent is responsible pursuant to this Section 6.5(d)(i), subject to the following proviso, “Seller Indemnified Taxes”); provided that Seller Parent shall not be required to indemnify or hold harmless any Purchaser Tax Indemnified Party from and against any liability pursuant to this Section 6.5(d)(i) for (A) Taxes attributable to any action taken after the Closing by Purchaser, any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries), or any transferee of Purchaser or any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries), other than any such action that (1) is in the ordinary course of business, (2) is expressly permitted or contemplated by this Agreement, or (3) is required to be taken in order to comply with applicable Law or as a result of a change in applicable Law (a “Purchaser Tax Act”), (B) Taxes that were reflected, accrued or reserved for in the Final Closing Statement, Final Business Working Capital, or Final Business Net Cash, (C) Income Taxes to the extent that a Conveyed Subsidiary or any Subsidiary thereof had any Tax Assets as of the close of business on the Closing Date that were available, or would have been available but for their prior utilization by Purchaser or any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries after the Closing) to offset or otherwise reduce the applicable Tax Liability in respect of such Income Taxes (except any Tax Asset reflected as an asset in the Final Closing Statement and taken into account in the calculation of the Final Business Working Capital or the Final Business Net Cash), or (D) Taxes for which Purchaser Parent is responsible under Section 6.5(d)(ii5.3(c)(iii). (ii) Subject to Section 6.5(d)(v), from and after the Closing, Purchaser Parent shall indemnify and hold harmless the Purchaser Tax Indemnified Parties from and against all liability, without duplication, for (1) all Taxes of Purchaser Parent and its Affiliates (other than Purchaser and its Subsidiaries) for any Tax period (other than Transfer Taxes and VAT for which Seller Parent is responsible hereunder), (2) Taxes of Purchaser and its Subsidiaries (other than the Conveyed Subsidiaries and their Subsidiaries) for any Pre-Closing Tax Period, (3) Taxes Payment by an indemnitor of any Person for a Pre-Closing Tax Period for which Purchaser (or any Subsidiary thereof other than any Conveyed Subsidiaries and their Subsidiaries) is liable under Treasury Regulation Section 1.1502-6 (or a similar provision of state, local or foreign Law), or as a transferee or successor or by Contract (other than Contracts that do not relate primarily amount due to Taxes), (4) Taxes arising out of or resulting from any breach of any covenant or agreement of Purchaser Parent, Purchaser or their respective Affiliates contained in this Agreement, (5) Transfer Taxes for which Purchaser Parent is responsible an indemnitee under Section ~~6.5(j), (6~~5.3(a) ~~Taxes arising from any breach~~ of any representation or warranty in Section 5.17(k), (7) Taxes for a Pre-Closing Tax Period imposed on (x) any settlement of any intercompany accounts of Purchaser or any Subsidiary of Purchaser, on the one hand, and Purchaser Parent or any Subsidiary of Purchaser Parent (other than Purchaser and its Subsidiaries), on the other hand, pursuant to Section 6.7 or (y) any transaction or step forming part of the Purchaser Internal Restructurings, (8) Taxes required to this Agreement shall be deducted or withheld with respect to any amounts payable to Purchaser Parent pursuant to Section 2.8 or Section 2.9, including any penalties imposed on Purchaser as a result of Purchaser’s failure to deduct or withhold any such amounts, (9) Taxes arising as a result of Purchaser or any Subsidiary of Purchaser (other than any Conveyed Subsidiary or a Subsidiary thereof) at any time ceasing to be a member of a group for the purposes of any Tax, of which group Purchaser Parent or any Subsidiary of Purchaser Parent (other than Purchaser or any Subsidiary of Purchaser) is or was also a member and made within ten (10) ~~any costs and expenses, including reasonable legal and accounting fees and expenses, attributable to any item described in clauses (1) through (9) (any~~ days following written notice by the indemnitee that payment of such ~~Taxes for which Purchaser Parent is responsible pursuant to this Section 6.5(d)(ii), subject~~ amounts to the ~~following proviso~~appropriate Governmental Authority or other applicable third party is due by the indemnitee, ~~“Purchaser Parent Indemnified Taxes”);~~ provided that ~~Purchaser Parent~~ the indemnitor shall not be required to ~~indemnify or hold harmless~~ make any Purchaser Tax Indemnified Party from and against any liability for (A) Taxes attributable to any action taken after the Closing by Seller Parent or any of its Affiliates, other than any such action that (1) is in the ordinary course of business, (2) is expressly permitted or contemplated by this Agreement, or (3) is required to be taken in order to comply with applicable Law or as a result of a change in applicable Law (a “Seller Tax Act”), (B) Taxes that were reflected, accrued or reserved for in the Final Closing Statement, Final Purchaser Working Capital or the Final Purchaser Net Cash, (C) Income Taxes to the extent that Purchaser or any Subsidiary thereof had any Tax Assets as of the close of business on the Closing Date that were available, or would have been available but for their prior utilization by Purchaser or any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries after the Closing), to offset or otherwise reduce the applicable Tax Liability in respect of such Income Taxes (except any Tax Asset reflected as an asset in the Final Closing Statement and taken into account in the calculation of the Final Purchaser Working Capital or the Final Purchaser Net Cash), or (D) Taxes for which Seller Parent is responsible under Section 6.5(d)(i). (iii) To the extent permitted or required by applicable Law, the taxable year of each of the Conveyed Subsidiaries and their Subsidiaries and any Subsidiary of Purchaser that includes the Closing Date shall be treated as closing on (and including) the Closing Date. Otherwise, for purposes of this Agreement, in the case of any Straddle Period: (A) Property Taxes allocable to the Pre-Closing Tax Period shall be computed based upon the ratio of the number of days in the Pre-Closing Tax Period to the number of days in the entire Straddle Period; and (B) Taxes (other than Property Taxes) allocable to the Pre-Closing Tax Period shall be computed as if such Tax period ended as of the close of business on the Closing Date and, in the case of any Taxes of Conveyed Subsidiaries (and their Subsidiaries) and Seller Parent, or in the case of any Taxes of Purchaser Parent and Purchaser (and their Subsidiaries prior to the Closing), in each case attributable to the ownership of any equity interest in any partnership or other “flow through” entity for tax purposes (including of any “controlled foreign corporation,” as defined under the Code) as if the Tax period of such partnership or other “flow through” entity ended as of the close of business on the Closing Date with the Taxes of such entity for the Pre-Closing Tax Period deemed to include any Taxes on the allocable income of such entity in respect of such Tax period; provided that exemptions, allowances or deductions that are calculated on an annual basis (including depreciation and amortization deductions) shall be allocated between the period ending on the Closing Date and the period beginning after the Closing Date in proportion to the number of days in each period. (iv) Any claim for indemnification under this Section 6.5(d) shall be made in writing upon the party from whom indemnification is sought, and shall specify in reasonable detail the basis for such claim. Any indemnity payment ~~required to be made pursuant to this Section 6.5(d) shall be made within thirty (30) days after the indemnified party makes written demand upon the indemnifying party, but in no case~~ earlier than five (5) Business Days ~~prior~~ before it is due to the ~~date on which the relevant Taxes are~~ appropriate Governmental Authority or applicable third party. (iii) All amounts required to be paid to the applicable Taxing Authority. (v) With respect to any Taxes suffered or incurred by any Conveyed Subsidiary (or any Subsidiary thereof) that was not wholly owned by Seller Parent (directly or indirectly) as of immediately prior to the Closing, the indemnification obligations of Seller Parent pursuant to Section 6.5(d)(i) in respect of such Taxes (or related costs and expenses) shall in no event exceed an amount equal to (A) the amount of such Taxes (or related costs and expenses) for which the Purchaser Tax Indemnified Parties would otherwise be entitled to indemnification pursuant to Section 6.5(d), as if such Conveyed Subsidiary (or any Subsidiary thereof) were wholly owned by Seller Parent, multiplied by (B) the direct and indirect percentage ownership of Seller Parent of such Conveyed Subsidiary (or Subsidiary thereof) as of immediately prior to the Closing. With respect to any Taxes suffered or incurred by any Subsidiary of Purchaser Parent (including Purchaser and its Subsidiaries) that was not wholly owned by Purchaser Parent (directly or indirectly) as of immediately prior to the Closing, the indemnification obligations of Purchaser Parent pursuant to Section 6.5(d)(ii) in respect of such Taxes (or related costs and expenses) shall in no event exceed an amount equal to (A) the amount of such Taxes (or related costs and expenses) for which the Purchaser Tax Indemnified Parties would otherwise be entitled to indemnification pursuant to Section 6.5(d), as if such Subsidiary were wholly owned by Purchaser Parent, multiplied by (B) the direct and indirect percentage ownership of Purchaser Parent of such Subsidiary as of immediately prior to the Closing. (vi) Without duplication to any other amounts paid pursuant to this Section ~~6.5: (A~~5.3(a) Within thirty (30) days following the filing of any Income Tax Return for any Conveyed Subsidiary (or any Subsidiary thereof), on the one hand, or Purchaser (or any Subsidiary thereof, other than the Conveyed Subsidiaries and their Subsidiaries), on the other hand, for any Pre-Closing Tax Period or for any Straddle Period, Seller Parent or Purchaser Parent shall (or Purchaser Parent shall cause Purchaser to) prepare a statement showing (i) the amount of Income Taxes shown as due on such filed Income Tax Return with respect to the relevant Pre-Closing Tax Period or the portion of any Straddle Period ending on and including the Closing Date (the “Final Pre-Closing Income Tax Amount”) and (ii) the amount of the Seller Accrued Income Taxes or Purchaser Accrued Income Taxes, as applicable, attributable to such Income Tax Return as reflected on the Final Closing Statement (the “Pre-Closing Income Tax Amount”) and deliver such statement to Seller Parent and Purchaser Parent, as applicable. Purchaser Parent or Seller Parent, as applicable, shall have a period of fifteen (15) Business Days to provide comments be paid promptly in immediately available funds by wire transfer to a ~~schedule prepared (or caused to be prepared)~~ bank account designated by ~~Seller Parent or Purchaser Parent, respectively~~the indemnified party. If Purchaser Parent or Seller Parent, as applicable, do not provide any comments to Seller Parent or Purchaser Parent, respectively, during such period, the statement as so prepared shall be final and binding. (B) In the event the Final Pre-Closing Income Tax Amount with respect to any Income Tax Return is less than the amount of the Pre-Closing Income Tax Amount attributable to such Income Tax Return that was included on the Final Closing Statement, the Purchaser shall within five (5) Business Days following the finalization of the Final Pre-Closing Income Tax Amount hereunder (i) pay to Seller Parent the amount of such difference with respect to a Conveyed Subsidiary and their Subsidiaries and (ii) pay to Purchaser Parent the amount of such difference with respect to Purchaser and its Subsidiaries. (vii) The Parties shall use reasonable best efforts to structure any indemnity payment, true-up payment, or payment in respect of Tax Benefits made by any Party pursuant to this Agreement (including Any payments required pursuant to this Section ~~6.5,~~ 5.3 that are not made within the time period specified in this Section ~~6.6~~ shall bear interest at a rate and ~~Article VII) and any payment made by Purchaser Parent to Purchaser pursuant to Section 2.8 or Section 2.9~~ in the manner ~~set forth~~ provided in ~~Clause 10~~ the Code for interest on underpayments of the Structuring Considerations Agreement. The Parties shall use reasonable best efforts to structure as a special dividend any payment made by Purchaser to Purchaser Parent pursuant to Section 2.8, Section 2.9 or this Section 6.5federal income tax.

Appears in 1 contract

Sources: Acquisition Agreement (Adc Telecommunications Inc)

Tax Indemnification. (ia) ~~Subject to Section 6.5(d)(v), from~~ From and after the Closing, ~~Seller Parent agrees to~~ UCB shall indemnify and hold harmless the Purchaser ~~and its Subsidiaries (including the Conveyed Subsidiaries and their Subsidiaries after the Closing Date) (collectively, the “Purchaser Tax Indemnified Parties”)~~ Indemnitees from and against (i) all ~~liability, without duplication,~~ liability for ~~(1)~~ Taxes of ~~the Conveyed Subsidiaries and their Subsidiaries for any Pre-Closing Tax Period (including any Taxes payable~~ or in respect of ~~an election under Section 965(h) of~~ the ~~Code), (2) Taxes of any Seller (other than any Transfer Taxes and VAT~~ Transferred Subsidiary or KI for ~~which Purchaser is responsible hereunder) including, Taxes (other than Taxes of~~ the ~~Conveyed Subsidiaries and their Subsidiaries) imposed with respect to, arising out of or relating to the Purchased Assets or the Business for a~~ Pre-Closing Tax Period, together with any interest, penalty or additions to Tax accruing after the Closing Date on such Taxes, (3ii) all liability of the Transferred Subsidiary or KI for Taxes arising as a result of ~~any Person (other than the Conveyed Subsidiaries and their Subsidiaries) for a Pre-Closing Tax Period for which any Conveyed Subsidiary (or any Subsidiary thereof) is liable under~~ Treasury Regulation ~~Section~~ § 1.1502-6 (or a any similar provision of state, local or foreign ~~Law)~~law, (iii) all liability of the Transferred Subsidiary or ~~as a~~ KI for Taxes that are imposed by reason of the Transferred Subsidiary or KI having liability for Taxes of another person arising under principles of transferee or successor liability or by ~~Contract (other than Contracts that do not relate primarily~~ contract as a result of activities or transactions taking place prior to ~~Taxes)~~the Closing, (4iv) all liability for Taxes ~~arising out~~ of the Purchaser, the Transferred Subsidiary, KI, any of their affiliates or ~~resulting from~~ their respective subsidiaries (or any successors thereto) for any inaccuracy in or breach of any Tax representation, warranty, covenant or agreement of made by the Seller ~~Parent or any of its Affiliates contained~~ Parties in this Agreement, (5v) all liability for Taxes of or in respect of the Transferred Subsidiary as a result of UCB’s excluding the Transferred Subsidiary from any unitary Tax Returns pursuant to the proviso in Section 10.02(a) (the “Section 10.02(a) Proviso”), and (vi) all liability for ~~a Pre~~reasonable legal fees and expenses attributable to any item in clause (i) through (v) above. (i) From and after the Closing, Purchaser shall indemnify and hold harmless the Seller Indemnitees from and against all liability for Taxes of the Transferred Subsidiary or KI for any Post-Closing Tax Period ~~imposed on~~ (xincluding reasonable legal fees and expenses) ~~any transaction effected pursuant~~ to the extent UCB is not required to pay indemnification therefor under Section ~~2.3(b)~~10.03(a) and (ii) Purchaser shall pay to UCB Holdings, ~~(y) any settlement of any intercompany accounts of Seller Parent or its Subsidiaries pursuant to Section 6.7~~Inc., ~~or (z) any transaction or step forming part~~ upon UCB Holdings, Inc.’s making a claim therefor as provided herein, 50% of the ~~Seller Internal Restructurings~~excess, ~~(6) Transfer Taxes~~ if any, of the income taxes for which ~~Seller Parent is responsible under Section 6.5(j)~~UCB Holdings, ~~(7) Taxes required to be deducted~~ Inc., UMI or ~~withheld with respect to~~ the payment of the Purchase Consideration or any amounts payable to Seller Parent pursuant to Section 2.8 or Section 2.9, including any penalties imposed on Purchaser as a result of Purchaser’s failure to deduct or withhold any such amounts that Purchaser (or a Purchaser Designated Affiliate) was permitted to withhold under Section 2.10 (in each case, subject to Purchaser’s compliance with the notice and cooperation requirements of Section 2.10 and except for any such Taxes (and any related penalties) required to be deducted or withheld solely Transferred Subsidiary are liable as a result of any ~~assignment~~ valid Elections made with respect to the sale of the Transferred Share contemplated by ~~Purchaser or its Affiliates~~ this Agreement over the income taxes for which ~~Purchaser is responsible pursuant to Section 10.3)~~UCB Holdings, ~~(8) Taxes arising from any breach of any representation~~ Inc., UMI or ~~warranty contained in Section 4.16(k), (9) Taxes arising as a result of any Conveyed~~ the Transferred Subsidiary or any Subsidiary of any Conveyed Subsidiary at any time ceasing to be a member of a group for the purposes of any Tax, of which group Seller Parent or any Subsidiary of Seller Parent is or was also a member and (10) any costs and expenses, including reasonable legal and accounting fees and expenses, attributable to any item described in clauses (1) through (9) (any such Taxes for which Seller Parent is responsible pursuant to this Section 6.5(d)(i), subject would have been liable with respect to the ~~following proviso~~sale of the Transferred Share contemplated by this Agreement had no such Elections been made, ~~“Seller Indemnified Taxes”);~~ provided that ~~Seller Parent~~ Purchaser shall not be required to ~~indemnify or hold harmless~~ pay any ~~Purchaser Tax Indemnified Party from and against~~ amount in respect of any liability pursuant to this Section 6.5(d)(i) for (A) Taxes attributable to any action taken after the Closing by Purchaser, any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries), or any transferee of Purchaser or any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries), other than any such action that (1) is increase in the ~~ordinary course of business, (2) is expressly permitted or contemplated by this Agreement, or (3) is required to be taken in order to comply with applicable Law or~~ liability for Taxes as a result of ~~a change~~ UCB’s excluding the Transferred Subsidiary from any unitary Tax Returns pursuant to the Section 10.02(a) Proviso, and provided, further, that the maximum amount for which Purchaser shall be liable under this Section 10.03(b)(ii) shall not exceed $35 million in ~~applicable Law (a “Purchaser Tax Act”~~the aggregate. In connection with any claim by UCB Holdings, Inc. under Section 10.03(b)(ii), UCB Holdings, Inc. shall provide Purchaser with reasonably detailed documentary evidence and computations supporting any such claim. The parties shall negotiate in good faith to resolve any dispute concerning any such claim, and Purchaser shall make the payment required under Section 10.03(b)(ii) promptly following the furnishing of such supporting information or promptly following resolution of any such dispute, as the case may be. (Bc) For purposes of this Section 10.03, any liability for Taxes ~~that were reflected, accrued or reserved for~~ attributable to a Straddle Period shall be apportioned between the portion of such period ending on the Closing Date and the portion beginning on the day after the Closing Date (a) in the ~~Final Closing Statement~~case of real and personal property Taxes, ~~Final Business Working Capital~~by apportioning such Taxes on a per diem basis and (b) in the case of all other Taxes, ~~or Final Business Net Cash, (C) Income Taxes to~~ on the ~~extent that~~ basis of a ~~Conveyed Subsidiary or any Subsidiary thereof had any Tax Assets~~ closing of the books as of the close of business on the Closing Date that were available, or would have been available but for their prior utilization by Purchaser or any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries after the Closing) to offset or otherwise reduce the applicable Tax Liability in respect of such Income Taxes (except any Tax Asset reflected as an asset in the Final Closing Statement and taken into account in the calculation of the Final Business Working Capital or the Final Business Net Cash), or (D) Taxes for which Purchaser Parent is responsible under Section 6.5(d)(ii). (ii) Subject to Section 6.5(d)(v), from and after the Closing, Purchaser Parent shall indemnify and hold harmless the Purchaser Tax Indemnified Parties from and against all liability, without duplication, for (1) all Taxes of Purchaser Parent and its Affiliates (other than Purchaser and its Subsidiaries) for any Tax period (other than Transfer Taxes and VAT for which Seller Parent is responsible hereunder), (2) Taxes of Purchaser and its Subsidiaries (other than the Conveyed Subsidiaries and their Subsidiaries) for any Pre-Closing Tax Period, (3) Taxes of any Person for a Pre-Closing Tax Period for which Purchaser (or any Subsidiary thereof other than any Conveyed Subsidiaries and their Subsidiaries) is liable under Treasury Regulation Section 1.1502-6 (or a similar provision of state, local or foreign Law), or as a transferee or successor or by Contract (other than Contracts that do not relate primarily to Taxes), (4) Taxes arising out of or resulting from any breach of any covenant or agreement of Purchaser Parent, Purchaser or their respective Affiliates contained in this Agreement, (5) Transfer Taxes for which Purchaser Parent is responsible under Section 6.5(j), (6) Taxes arising from any breach of any representation or warranty in Section 5.17(k), (7) Taxes for a Pre-Closing Tax Period imposed on (x) any settlement of any intercompany accounts of Purchaser or any Subsidiary of Purchaser, on the one hand, and Purchaser Parent or any Subsidiary of Purchaser Parent (other than Purchaser and its Subsidiaries), on the other hand, pursuant to Section 6.7 or (y) any transaction or step forming part of the Purchaser Internal Restructurings, (8) Taxes required to be deducted or withheld with respect to any amounts payable to Purchaser Parent pursuant to Section 2.8 or Section 2.9, including any penalties imposed on Purchaser as a result of Purchaser’s failure to deduct or withhold any such amounts, (9) Taxes arising as a result of Purchaser or any Subsidiary of Purchaser (other than any Conveyed Subsidiary or a Subsidiary thereof) at any time ceasing to be a member of a group for the purposes of any Tax, of which group Purchaser Parent or any Subsidiary of Purchaser Parent (other than Purchaser or any Subsidiary of Purchaser) is or was also a member and (10) any costs and expenses, including reasonable legal and accounting fees and expenses, attributable to any item described in clauses (1) through (9) (any such Taxes for which Purchaser Parent is responsible pursuant to this Section 6.5(d)(ii), subject to the following proviso, “Purchaser Parent Indemnified Taxes”); provided that Purchaser Parent shall not be required to indemnify or hold harmless any Purchaser Tax Indemnified Party from and against any liability for (A) Taxes attributable to any action taken after the Closing by Seller Parent or any of its Affiliates, other than any such action that (1) is in the ordinary course of business, (2) is expressly permitted or contemplated by this Agreement, or (3) is required to be taken in order to comply with applicable Law or as a result of a change in applicable Law (a “Seller Tax Act”), (B) Taxes that were reflected, accrued or reserved for in the Final Closing Statement, Final Purchaser Working Capital or the Final Purchaser Net Cash, (C) Income Taxes to the extent that Purchaser or any Subsidiary thereof had any Tax Assets as of the close of business on the Closing Date that were available, or would have been available but for their prior utilization by Purchaser or any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries after the Closing), to offset or otherwise reduce the applicable Tax Liability in respect of such Income Taxes (except any Tax Asset reflected as an asset in the Final Closing Statement and taken into account in the calculation of the Final Purchaser Working Capital or the Final Purchaser Net Cash), or (D) Taxes for which Seller Parent is responsible under Section 6.5(d)(i). (iii) To the extent permitted or required by applicable Law, the taxable year of each of the Conveyed Subsidiaries and their Subsidiaries and any Subsidiary of Purchaser that includes the Closing Date shall be treated as closing on (and including) the Closing Date. Otherwise, for purposes of this Agreement, in the case of any Straddle Period: (A) Property Taxes allocable to the Pre-Closing Tax Period shall be computed based upon the ratio of the number of days in the Pre-Closing Tax Period to the number of days in the entire Straddle Period; and (B) Taxes (other than Property Taxes) allocable to the Pre-Closing Tax Period shall be computed as if such Tax period ended as of the close of business on the Closing Date and, in the case of any Taxes of Conveyed Subsidiaries (and their Subsidiaries) and Seller Parent, or in the case of any Taxes of Purchaser Parent and Purchaser (and their Subsidiaries prior to the Closing), in each case attributable to the ownership of any equity interest in any partnership or other “flow through” entity for tax purposes (including of any “controlled foreign corporation,” as defined under the Code) as if the Tax period of such partnership or other “flow through” entity ended as of the close of business on the Closing Date with the Taxes of such entity for the Pre-Closing Tax Period deemed to include any Taxes on the allocable income of such entity in respect of such Tax period; provided that exemptions, allowances or deductions that are calculated on an annual basis ~~(including depreciation and amortization deductions)~~ shall be ~~allocated between~~ apportioned on a per diem basis. For the ~~period ending on the Closing Date and the period beginning after the Closing Date in proportion to the number~~ avoidance of ~~days in each period. (iv) Any claim~~ doubt, for ~~indemnification under~~ purposes of this Section ~~6.5(d) shall be made~~ 10.03, in ~~writing upon~~ the party from whom indemnification is sought, and shall specify in reasonable detail the basis for such claim. Any indemnity payment required to be made pursuant to this Section 6.5(d) shall be made within thirty (30) days after the indemnified party makes written demand upon the indemnifying party, but in no case earlier than five (5) Business Days prior to the date on which the relevant Taxes are required to be paid to the applicable Taxing Authority. (v) With respect to any Taxes suffered or incurred by any Conveyed Subsidiary (or any Subsidiary thereof) that was not wholly owned by Seller Parent (directly or indirectly) as of immediately prior to the Closing, the indemnification obligations of Seller Parent pursuant to Section 6.5(d)(i) in respect of such Taxes (or related costs and expenses) shall in no event exceed an amount equal to (A) the amount of such Taxes (or related costs and expenses) for which the Purchaser Tax Indemnified Parties would otherwise be entitled to indemnification pursuant to Section 6.5(d), as if such Conveyed Subsidiary (or any Subsidiary thereof) were wholly owned by Seller Parent, multiplied by (B) the direct and indirect percentage ownership of Seller Parent of such Conveyed Subsidiary (or Subsidiary thereof) as of immediately prior to the Closing. With respect to any Taxes suffered or incurred by any Subsidiary of Purchaser Parent (including Purchaser and its Subsidiaries) that was not wholly owned by Purchaser Parent (directly or indirectly) as of immediately prior to the Closing, the indemnification obligations of Purchaser Parent pursuant to Section 6.5(d)(ii) in respect of such Taxes (or related costs and expenses) shall in no event exceed an amount equal to (A) the amount of such Taxes (or related costs and expenses) for which the Purchaser Tax Indemnified Parties would otherwise be entitled to indemnification pursuant to Section 6.5(d), as if such Subsidiary were wholly owned by Purchaser Parent, multiplied by (B) the direct and indirect percentage ownership of Purchaser Parent of such Subsidiary as of immediately prior to the Closing. (vi) Without duplication to any other amounts paid pursuant to this Section 6.5: (A) Within thirty (30) days following the filing of any Income Taxes attributable to the ownership of an entity that is taxed as a partnership or of any other entity that is treated as a “flow-through” entity for Tax ~~Return for any Conveyed Subsidiary (or any Subsidiary thereof)~~purposes, on the ~~one hand, or Purchaser (or any Subsidiary thereof, other than~~ portion of such Income Taxes that relates to the ~~Conveyed Subsidiaries and their Subsidiaries), on the other hand, for any~~ Pre-Closing Tax Period ~~or for any Straddle Period, Seller Parent or Purchaser Parent~~ shall ~~(or Purchaser Parent shall cause Purchaser to) prepare a statement showing (i)~~ be deemed to be the amount ~~of Income Taxes shown as due on such filed Income Tax Return with respect to~~ that would be payable if the relevant ~~Pre~~Tax period of such “flow-~~Closing Tax Period or the portion of any Straddle Period ending~~ through” entity ended on ~~and including~~ the Closing Date (the “Final Pre-Closing Income Tax Amount”) and (ii) the amount of the Seller Accrued Income Taxes or Purchaser Accrued Income Taxes, as applicable, attributable to such Income Tax Return as reflected on the Final Closing Statement (the “Pre-Closing Income Tax Amount”) and deliver such statement to Seller Parent and Purchaser Parent, as applicable. Purchaser Parent or Seller Parent, as applicable, shall have a period of fifteen (15) Business Days to provide comments to a schedule prepared (or caused to be prepared) by Seller Parent or Purchaser Parent, respectively. If Purchaser Parent or Seller Parent, as applicable, do not provide any comments to Seller Parent or Purchaser Parent, respectively, during such period, the statement as so prepared shall be final and bindingDate. (Bd) In Notwithstanding any other provision of this Agreement and for the ~~event the Final Pre-Closing Income Tax Amount with respect to any Income Tax Return is less than the amount~~ avoidance of ~~the Pre-Closing Income Tax Amount attributable to such Income Tax Return that was included on the Final Closing Statement~~doubt, the ~~Purchaser~~ limitations in Section 9.04 shall within five (5) Business Days following the finalization of the Final Pre-Closing Income Tax Amount hereunder (i) pay to Seller Parent the amount of such difference with respect to a Conveyed Subsidiary and their Subsidiaries and (ii) pay to Purchaser Parent the amount of such difference with respect to Purchaser and its Subsidiaries. (vii) The Parties shall use reasonable best efforts to structure any indemnity payment, true-up payment, or payment in respect of Tax Benefits made by any Party pursuant to this Agreement (including pursuant not apply to this Section 6.5, Section 6.6 and Article VII) and any payment made by Purchaser Parent to Purchaser pursuant to Section 2.8 or Section 2.9 in the manner set forth in Clause 10 of the Structuring Considerations Agreement. The Parties shall use reasonable best efforts to structure as a special dividend any payment made by Purchaser to Purchaser Parent pursuant to Section 2.8, Section 2.9 or this Section 6.510.03.

Appears in 1 contract

Sources: Stock Purchase Agreement (Lannett Co Inc)

Tax Indemnification. (a) Following the Closing, Bord▇▇ ▇▇▇ll indemnify MergerCo and its affiliates (including the Decorative Products Companies) and each of their respective officers, directors, employees, agents and other representatives and hold them harmless from (i) ~~Subject~~ all liability for income Taxes (other than any liability for UK national income taxes for 1997 and any portion of 1998 prior to ~~Section 6.5(d)(v), from and after~~ the Closing~~, Seller Parent agrees to indemnify and hold harmless Purchaser and its Subsidiaries (including~~ ) of the ~~Conveyed Subsidiaries and their Subsidiaries after the Closing Date) (collectively, the “Purchaser Tax Indemnified Parties”) from and against all liability, without duplication~~Decorative Products Companies, for ~~(1) Taxes of the Conveyed Subsidiaries and their Subsidiaries for any~~ a Pre-Closing Tax Period (~~including any Taxes payable in respect of an election under Section 965(h) of the Code~~as defined below), (2ii) all liability as a result of Treasury Regulation Section 1.1502-6(a) for U.S. federal income Taxes of Bord▇▇ ▇▇ any ~~Seller (~~of its affiliates or any other ~~than any Transfer Taxes~~ entity which is or has been affiliated with the Decorative Products Companies and ~~VAT for which Purchaser is responsible hereunder) including, Taxes (other than Taxes of the Conveyed Subsidiaries and their Subsidiaries) imposed with respect to, arising out of or~~ BCL relating to ~~the Purchased Assets or the Business for~~ a Pre-Closing Tax Period, (3iii) ~~Taxes of any Person (other than the Conveyed Subsidiaries and their Subsidiaries)~~ all liability for a Pre-Closing Tax Period for which any Conveyed Subsidiary (or any Subsidiary thereof) is liable under Treasury Regulation Section 1.1502-6 (or a similar provision of state, local or foreign Law), or as a transferee or successor or by Contract (other than Contracts that do not relate primarily to Taxes), (4) Taxes arising out of or resulting from any breach of any covenant or agreement of Seller Parent or any of its Affiliates contained in this Agreement, (5) Taxes for a Pre-Closing Tax Period imposed on (x) any transaction effected pursuant to Section 2.3(b), (y) any settlement of any intercompany accounts of Seller Parent or its Subsidiaries pursuant to Section 6.7, or (z) any transaction or step forming part of the Seller Internal Restructurings, (6) Transfer Taxes for which Seller Parent is responsible under Section 6.5(j), (7) Taxes required to be deducted or withheld with respect to the payment of the Purchase Consideration or any amounts payable to Seller Parent pursuant to Section 2.8 or Section 2.9, including any penalties imposed on Purchaser as a result of Purchaser’s failure to deduct or withhold any such amounts that Purchaser (or a Purchaser Designated Affiliate) was permitted to withhold under Section 2.10 (in each case, subject to Purchaser’s compliance with the notice and cooperation requirements of Section 2.10 and except for any such Taxes (and any related penalties) required to be deducted or withheld solely as a result of any assignment by Purchaser or its Affiliates for which Purchaser is responsible pursuant to Section 10.3), (8) Taxes arising from any breach of any representation or warranty contained in Section 4.16(k), (9) Taxes arising as a result of any Conveyed Subsidiary or any Subsidiary of any Conveyed Subsidiary at any time ceasing to be a member of a group for the purposes of any Tax, of which group Seller Parent or any Subsidiary of Seller Parent is or was also a member and (10) any costs and expenses, including reasonable legal and accounting fees and expenses, attributable to any item described in clauses (1) through (9) (any such Taxes for which Seller Parent is responsible pursuant to this Section 6.5(d)(i), subject to the following proviso, “Seller Indemnified Taxes”); provided that Seller Parent shall not be required to indemnify or hold harmless any Purchaser Tax Indemnified Party from and against any liability pursuant to this Section 6.5(d)(i) for (A) Taxes attributable to ~~any action~~ actions taken after the Closing by ~~Purchaser,~~ Bord▇▇ ▇▇ any of its ~~Affiliates~~ affiliates (~~including the Conveyed Subsidiaries and their Subsidiaries), or any transferee of Purchaser or any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries),~~ other than the Decorative Products Companies) or attributable to a breach by Bord▇▇ ▇▇ any ~~such action that~~ covenant contained in Section 12.2 and (1iv) ~~is in~~ all liability for U.K. national income taxes of the ~~ordinary course~~ Decorative Products Companies for 1997 and any portion of business, (2) is expressly permitted or contemplated by this Agreement, or (3) is required to be taken in order to comply with applicable Law or as a result of a change in applicable Law (a “Purchaser Tax Act”), (B) Taxes that were reflected, accrued or reserved for in the Final Closing Statement, Final Business Working Capital, or Final Business Net Cash, (C) Income Taxes 1998 prior to the ~~extent that a Conveyed Subsidiary or any Subsidiary thereof had any Tax Assets as~~ Closing in excess of $7,957,000. Notwithstanding the ~~close of business on the Closing Date that were available~~foregoing, or would have been available but for their prior utilization by Purchaser or any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries after the Closing) to offset or otherwise reduce the applicable Tax Liability in respect of such Income Taxes (except any Tax Asset reflected as an asset in the Final Closing Statement and taken into account in the calculation of the Final Business Working Capital or the Final Business Net Cash), or (D) Taxes for which Purchaser Parent is responsible under Section 6.5(d)(ii). (ii) Subject to Section 6.5(d)(v), from and after the Closing, Purchaser Parent shall Bord▇▇ ▇▇▇ll not indemnify and hold harmless ~~the Purchaser Tax Indemnified Parties~~ any of MergerCo, its affiliates or their respective officers, directors, employees and agents from ~~and against all liability, without duplication,~~ any liability for Taxes attributable to (1) all Taxes of Purchaser Parent and its Affiliates (other than Purchaser and its Subsidiaries) for any Tax period (other than Transfer Taxes and VAT for which Seller Parent is responsible hereunder), (2i) Taxes of ~~Purchaser and its Subsidiaries (other than~~ the ~~Conveyed Subsidiaries and their Subsidiaries)~~ Decorative Products Companies for any Pre-Closing Tax Period, (3) Taxes of any Person for a Pre-Closing Tax Period for which Purchaser (or any Subsidiary thereof other than any Conveyed Subsidiaries and their Subsidiaries) is liable under Treasury Regulation Section 1.1502-6 (or a similar provision of state, local or foreign Law), or as a transferee or successor or by Contract (other than Contracts that do not relate primarily to Taxes), (4) Taxes arising out of or resulting from any breach of any covenant or agreement of Purchaser Parent, Purchaser or their respective Affiliates contained in this Agreement, (5) Transfer Taxes for which Purchaser Parent is responsible under Section 6.5(j), (6) Taxes arising from any breach of any representation or warranty in Section 5.17(k), (7) Taxes for a Pre-Closing Tax Period imposed on (x) any settlement of any intercompany accounts of Purchaser or any Subsidiary of Purchaser, on the one hand, and Purchaser Parent or any Subsidiary of Purchaser Parent (other than Purchaser and its Subsidiaries), on the other hand, pursuant to Section 6.7 or (y) any transaction or step forming part of the Purchaser Internal Restructurings, (8) Taxes required to be deducted or withheld with respect to any amounts payable to Purchaser Parent pursuant to Section 2.8 or Section 2.9, including any penalties imposed on Purchaser as a result of Purchaser’s failure to deduct or withhold any such amounts, (9) Taxes arising as a result of Purchaser or any Subsidiary of Purchaser (other than any Conveyed Subsidiary or a Subsidiary thereof) at any time ceasing to be a member of a group for the purposes of any Tax, of which group Purchaser Parent or any Subsidiary of Purchaser Parent (other than Purchaser or any Subsidiary of Purchaser) is or was also a member and (10) any costs and expenses, including reasonable legal and accounting fees and expenses, attributable to any item described in clauses (1) through (9) (any such Taxes for which Purchaser Parent is responsible pursuant to this Section 6.5(d)(ii), subject to the following proviso, “Purchaser Parent Indemnified Taxes”); provided that Purchaser Parent shall not be required to indemnify or hold harmless any Purchaser Tax Indemnified Party from and against any liability for (A) Taxes attributable to any action taken after the Closing by Seller Parent or any of its Affiliates, other than any such action that (1) is in the ordinary course of business, (2) is expressly permitted or contemplated by this Agreement, or (3) is required to be taken in order to comply with applicable Law or as a result of a change in applicable Law (a “Seller Tax Act”), (B) Taxes that were reflected, accrued or reserved for in the Final Closing Statement, Final Purchaser Working Capital or the Final Purchaser Net Cash, (C) Income Taxes to the extent that Purchaser or any Subsidiary thereof had any Tax Assets as of the close of business on the Closing Date that were available, or would have been available but for their prior utilization by Purchaser or any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries after the Closing), to offset or otherwise reduce the applicable Tax Liability in respect of such Income Taxes (except any Tax Asset reflected as an asset in the Final Closing Statement and taken into account in the calculation of the Final Purchaser Working Capital or the Final Purchaser Net Cash), or (D) Taxes for which Seller Parent is responsible under Section 6.5(d)(i). (iii) To the extent permitted or required by applicable Law, the taxable year of each of the Conveyed Subsidiaries and their Subsidiaries and any Subsidiary of Purchaser that includes the Closing Date shall be treated as closing on (and including) the Closing Date. Otherwise, for purposes of this Agreement, in the case of any Straddle Period: (A) Property Taxes allocable to the Pre-Closing Tax Period shall be computed based upon the ratio of the number of days in the Pre-Closing Tax Period to the ~~number~~ extent of ~~days~~ the accrual, if any, established therefor and reflected as Balance Sheet Indebtedness or as a current liability in the ~~entire Straddle Period; and~~ calculation of Closing Working Capital or (Bii) ~~Taxes~~ any action taken after the Closing by MergerCo, any of its affiliates (including the Decorative Products Companies), or any transferee of MergerCo or any of its affiliates (other than ~~Property Taxes~~any such action expressly required by applicable law or by this Agreement) ~~allocable to the Pre-Closing~~ (a "MergerCo Tax Period shall be computed as if such Tax period ended as of the close of business on the Closing Date and, in the case of any Taxes of Conveyed Subsidiaries (and their Subsidiaries) and Seller Parent, or in the case of any Taxes of Purchaser Parent and Purchaser (and their Subsidiaries prior to the Closing), in each case attributable to the ownership of any equity interest in any partnership or other “flow through” entity for tax purposes (including of any “controlled foreign corporation,” as defined under the Code) as if the Tax period of such partnership or other “flow through” entity ended as of the close of business on the Closing Date with the Taxes of such entity for the Pre-Closing Tax Period deemed to include any Taxes on the allocable income of such entity in respect of such Tax period; provided that exemptions, allowances or deductions that are calculated on an annual basis (including depreciation and amortization deductions) shall be allocated between the period ending on the Closing Date and the period beginning after the Closing Date in proportion to the number of days in each period. (iv) Any claim for indemnification under this Section 6.5(d) shall be made in writing upon the party from whom indemnification is sought, and shall specify in reasonable detail the basis for such claim. Any indemnity payment required to be made pursuant to this Section 6.5(d) shall be made within thirty (30) days after the indemnified party makes written demand upon the indemnifying party, but in no case earlier than five (5) Business Days prior to the date on which the relevant Taxes are required to be paid to the applicable Taxing Authority. (v) With respect to any Taxes suffered or incurred by any Conveyed Subsidiary (or any Subsidiary thereof) that was not wholly owned by Seller Parent (directly or indirectly) as of immediately prior to the Closing, the indemnification obligations of Seller Parent pursuant to Section 6.5(d)(i) in respect of such Taxes (or related costs and expenses) shall in no event exceed an amount equal to (A) the amount of such Taxes (or related costs and expenses) for which the Purchaser Tax Indemnified Parties would otherwise be entitled to indemnification pursuant to Section 6.5(d), as if such Conveyed Subsidiary (or any Subsidiary thereof) were wholly owned by Seller Parent, multiplied by (B) the direct and indirect percentage ownership of Seller Parent of such Conveyed Subsidiary (or Subsidiary thereof) as of immediately prior to the Closing. With respect to any Taxes suffered or incurred by any Subsidiary of Purchaser Parent (including Purchaser and its Subsidiaries) that was not wholly owned by Purchaser Parent (directly or indirectly) as of immediately prior to the Closing, the indemnification obligations of Purchaser Parent pursuant to Section 6.5(d)(ii) in respect of such Taxes (or related costs and expenses) shall in no event exceed an amount equal to (A) the amount of such Taxes (or related costs and expenses) for which the Purchaser Tax Indemnified Parties would otherwise be entitled to indemnification pursuant to Section 6.5(d), as if such Subsidiary were wholly owned by Purchaser Parent, multiplied by (B) the direct and indirect percentage ownership of Purchaser Parent of such Subsidiary as of immediately prior to the Closing. (vi) Without duplication to any other amounts paid pursuant to this Section 6.5: (A) Within thirty (30) days following the filing of any Income Tax Return for any Conveyed Subsidiary (or any Subsidiary thereof), on the one hand, or Purchaser (or any Subsidiary thereof, other than the Conveyed Subsidiaries and their Subsidiaries), on the other hand, for any Pre-Closing Tax Period or for any Straddle Period, Seller Parent or Purchaser Parent shall (or Purchaser Parent shall cause Purchaser to) prepare a statement showing (i) the amount of Income Taxes shown as due on such filed Income Tax Return with respect to the relevant Pre-Closing Tax Period or the portion of any Straddle Period ending on and including the Closing Date (the “Final Pre-Closing Income Tax Amount”) and (ii) the amount of the Seller Accrued Income Taxes or Purchaser Accrued Income Taxes, as applicable, attributable to such Income Tax Return as reflected on the Final Closing Statement (the “Pre-Closing Income Tax Amount”) and deliver such statement to Seller Parent and Purchaser Parent, as applicable. Purchaser Parent or Seller Parent, as applicable, shall have a period of fifteen (15) Business Days to provide comments to a schedule prepared (or caused to be prepared) by Seller Parent or Purchaser Parent, respectively. If Purchaser Parent or Seller Parent, as applicable, do not provide any comments to Seller Parent or Purchaser Parent, respectively, during such period, the statement as so prepared shall be final and binding. (B) In the event the Final Pre-Closing Income Tax Amount with respect to any Income Tax Return is less than the amount of the Pre-Closing Income Tax Amount attributable to such Income Tax Return that was included on the Final Closing Statement, the Purchaser shall within five (5) Business Days following the finalization of the Final Pre-Closing Income Tax Amount hereunder (i) pay to Seller Parent the amount of such difference with respect to a Conveyed Subsidiary and their Subsidiaries and (ii) pay to Purchaser Parent the amount of such difference with respect to Purchaser and its Subsidiaries. (vii) The Parties shall use reasonable best efforts to structure any indemnity payment, true-up payment, or payment in respect of Tax Benefits made by any Party pursuant to this Agreement (including pursuant to this Section 6.5, Section 6.6 and Article VII) and any payment made by Purchaser Parent to Purchaser pursuant to Section 2.8 or Section 2.9 in the manner set forth in Clause 10 of the Structuring Considerations Agreement. The Parties shall use reasonable best efforts to structure as a special dividend any payment made by Purchaser to Purchaser Parent pursuant to Section 2.8, Section 2.9 or this Section 6.5.104

Appears in 1 contract

Sources: Recapitalization Agreement (Borden Inc)

Tax Indemnification. (ia) ~~Subject to Section 6.5(d)(v), from~~ From and ~~after the Closing, Seller Parent agrees to indemnify and hold harmless Purchaser and its Subsidiaries (including the Conveyed Subsidiaries and their Subsidiaries~~ after the Closing Date~~) (collectively~~, Sylvan shall be liable for and shall indemnify and hold the “Purchaser ~~Tax~~ Indemnified ~~Parties”)~~ Persons harmless from and against all ~~liability~~losses, ~~without duplication~~liabilities, ~~for~~ damages, judgments, settlements and expenses (~~1) Taxes~~ including interest and penalties recovered by a third party with respect thereto and reasonable attorneys' fees and expenses and reasonable accountants' fees and expenses incurred in the investigation or defense of any of the ~~Conveyed~~ same or in asserting, preserving or enforcing any of the rights of Purchaser arising under Article VIII) imposed on, sustained, incurred or suffered by the Purchaser Indemnified Persons (including, upon the Closing, the Target Subsidiaries), directly or indirectly, by reason of or resulting from any and all Taxes imposed upon the Target Subsidiaries ~~and their Subsidiaries for any Pre-Closing Tax Period (including any Taxes payable~~ or in respect of ~~an election under Section 965(h~~the Targeted Businesses with respect or pursuant to (i) of any taxable period ending on or before the ~~Code~~Closing Date (a "PRE-CLOSING PERIOD"), (2ii) ~~Taxes of~~ any ~~Seller~~ taxable period beginning before the Closing Date and ending after the Closing Date (~~other than any Transfer Taxes and VAT for which Purchaser is responsible hereunder) including~~a "STRADDLE PERIOD"), ~~Taxes (other than Taxes of the Conveyed Subsidiaries and their Subsidiaries) imposed~~ but only with respect ~~to, arising out of or relating~~ to the ~~Purchased Assets or~~ portion of such Straddle Period ending on and including the ~~Business for~~ Closing Date and in the manner provided in Section 8.1(c) hereof (such portion, a ~~Pre~~"PRE-~~Closing Tax Period~~CLOSING STRADDLE PERIOD"), (3iii) ~~Taxes of any Person (other than the Conveyed Subsidiaries and their Subsidiaries) for a Pre-Closing Tax Period for which any Conveyed Subsidiary (or any Subsidiary thereof) is liable under~~ Treasury Regulation Section 1.1502-6 (or ~~a similar~~ any comparable provision of under state, local or foreign ~~Law),~~ law or as a transferee or successor or by Contract (other than Contracts that do not relate primarily to Taxes), (4) Taxes arising out of or resulting from any breach of any covenant or agreement of Seller Parent or any of its Affiliates contained in this Agreement, (5) Taxes for a Pre-Closing Tax Period imposed on (x) any transaction effected pursuant to Section 2.3(b), (y) any settlement of any intercompany accounts of Seller Parent or its Subsidiaries pursuant to Section 6.7, or (z) any transaction or step forming part of the Seller Internal Restructurings, (6) Transfer Taxes for which Seller Parent is responsible under Section 6.5(j), (7) Taxes required to be deducted or withheld with respect to the payment of the Purchase Consideration or any amounts payable to Seller Parent pursuant to Section 2.8 or Section 2.9, including any penalties imposed on Purchaser as a result of Purchaser’s failure to deduct or withhold any such amounts that Purchaser (or a Purchaser Designated Affiliate) was permitted to withhold under Section 2.10 (in each case, subject to Purchaser’s compliance with the notice and cooperation requirements of Section 2.10 and except for any such Taxes (and any related penalties) required to be deducted or withheld solely as a result of any assignment by Purchaser or its Affiliates for which Purchaser is responsible pursuant to Section 10.3), (8) Taxes arising from any breach of any representation or warranty contained in Section 4.16(k), (9) Taxes arising as a result of any Conveyed Subsidiary or any Subsidiary of any Conveyed Subsidiary at any time ceasing to be a member regulation imposing several liability upon members of a ~~group for the purposes of any Tax~~consolidated, ~~of which group Seller Parent~~ combined, affiliated or any Subsidiary of Seller Parent is or was also a member and (10) any costs and expenses, including reasonable legal and accounting fees and expenses, attributable to any item described in clauses (1) through (9) (any such Taxes for which Seller Parent is responsible pursuant to this Section 6.5(d)(i), subject to the following proviso, “Seller Indemnified Taxes”); provided that Seller Parent shall not be required to indemnify or hold harmless any Purchaser Tax Indemnified Party from and against any liability pursuant to this Section 6.5(d)(i) for (A) Taxes attributable to any action taken after the Closing by Purchaser, any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries), or any transferee of Purchaser or any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries), other than any such action that (1) is in the ordinary course of business, (2) is expressly permitted or contemplated by this Agreement, or (3) is required to be taken in order to comply with applicable Law or as a result of a change in applicable Law (a “Purchaser Tax Act”), (B) Taxes that were reflected, accrued or reserved for in the Final Closing Statement, Final Business Working Capital, or Final Business Net Cash, (C) Income Taxes to the extent that a Conveyed Subsidiary or any Subsidiary thereof had any Tax Assets as of the close of business on the Closing Date that were available, or would have been available but for their prior utilization by Purchaser or any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries after the Closing) to offset or otherwise reduce the applicable Tax Liability in respect of such Income Taxes (except any Tax Asset reflected as an asset in the Final Closing Statement and taken into account in the calculation of the Final Business Working Capital or the Final Business Net Cash), or (D) Taxes for which Purchaser Parent is responsible under Section 6.5(d)(ii). (ii) Subject to Section 6.5(d)(v), from and after the Closing, Purchaser Parent shall indemnify and hold harmless the Purchaser Tax Indemnified Parties from and against all liability, without duplication, for (1) all Taxes of Purchaser Parent and its Affiliates (other than Purchaser and its Subsidiaries) for any Tax period (other than Transfer Taxes and VAT for which Seller Parent is responsible hereunder), (2) Taxes of Purchaser and its Subsidiaries (other than the Conveyed Subsidiaries and their Subsidiariesunitary group) for any Pre-Closing ~~Tax~~ Period, (3iv) a breach or inaccuracy in any representation contained in Section 3.22 of this Agreement; PROVIDED, that indemnification pursuant to this clause (iv) shall be subject to the limits contained in Section 9.1(d)(ii), Section 9.1(d)(iii), Section 9.2 and Section 9.5, (v) breaches of any covenant of the Sellers set forth in this Article VIII, Section 1.5 or Section 5.10(c) or (vi) Taxes other than Transfer Taxes attributable to the Sellers and arising from the Transactions. (b) From and after the Closing Date, the Purchaser shall be liable for and shall indemnify and hold the Sellers and their Affiliates harmless from and against all losses, liabilities, damages, judgments, settlements and expenses (including interest and penalties recovered by a third party with respect thereto and reasonable attorneys' fees and expenses and reasonable accountants' fees and expenses incurred in the investigation or defense of any ~~Person for a Pre-Closing Tax Period for which Purchaser (~~of the same or in asserting, preserving or enforcing any ~~Subsidiary thereof other than any Conveyed Subsidiaries and~~ of the rights of the Sellers arising under Article VIII) imposed on, sustained, incurred or suffered by the Sellers or their ~~Subsidiaries) is liable under Treasury Regulation Section 1.1502-6 (~~Affiliates, directly or ~~a similar provision of state~~indirectly, ~~local or foreign Law), or as a transferee or successor or~~ by ~~Contract (other than Contracts that do not relate primarily to Taxes), (4) Taxes arising out~~ reason of or resulting from any ~~breach~~ and all Taxes imposed upon the Target Subsidiaries or in respect of the Targeted Businesses with respect or pursuant to (i) any ~~covenant or agreement of Purchaser Parent, Purchaser or their respective Affiliates contained in this Agreement,~~ taxable period beginning after the Closing Date (~~5) Transfer Taxes for which Purchaser Parent is responsible under Section 6.5(j~~a "POST-CLOSING PERIOD"), (~~6) Taxes arising from any breach of any representation or warranty in Section 5.17(k), (7) Taxes for a Pre-Closing Tax Period imposed on (x~~ii) any ~~settlement of any intercompany accounts of Purchaser or any Subsidiary of Purchaser~~Straddle Period, on the one hand, and Purchaser Parent or any Subsidiary of Purchaser Parent (other than Purchaser and its Subsidiaries), on the other hand, pursuant to Section 6.7 or (y) any transaction or step forming part of the Purchaser Internal Restructurings, (8) Taxes required to be deducted or withheld but only with respect to ~~any amounts payable to Purchaser Parent pursuant to Section 2.8 or Section 2.9, including any penalties imposed on Purchaser as a result~~ the portion of ~~Purchaser’s failure to deduct or withhold any~~ such ~~amounts, (9) Taxes arising as a result of Purchaser or any Subsidiary of Purchaser (other than any Conveyed Subsidiary or a Subsidiary thereof) at any time ceasing to be a member of a group for~~ Straddle Period beginning the purposes of any Tax, of which group Purchaser Parent or any Subsidiary of Purchaser Parent (other than Purchaser or any Subsidiary of Purchaser) is or was also a member and (10) any costs and expenses, including reasonable legal and accounting fees and expenses, attributable to any item described in clauses (1) through (9) (any such Taxes for which Purchaser Parent is responsible pursuant to this Section 6.5(d)(ii), subject to the following proviso, “Purchaser Parent Indemnified Taxes”); provided that Purchaser Parent shall not be required to indemnify or hold harmless any Purchaser Tax Indemnified Party from and against any liability for (A) Taxes attributable to any action taken day after the Closing ~~by Seller Parent or any of its Affiliates, other than any such action that (1) is~~ Date and in the ~~ordinary course of business~~manner provided in Section 8.1(c) hereof (such portion, a "POST-CLOSING STRADDLE PERIOD") and (2iii) ~~is expressly permitted or contemplated by this Agreement, or (3) is required to be taken in order to comply with applicable Law or~~ Taxes imposed as a result of a ~~change~~ breach of any covenant of Purchaser set forth in ~~applicable Law~~ this Article VIII or Section 1.5. (c) For purposes of calculating the Taxes imposed which relate to a ~~“Seller Tax Act”)~~Straddle Period and must be allocated between a Pre-Closing Straddle Period and a Post-Closing Straddle Period, ~~(B)~~ the portion of such Taxes ~~that were reflected, accrued or reserved for in the Final Closing Statement, Final Purchaser Working Capital or the Final Purchaser Net Cash, (C) Income Taxes~~ related to the ~~extent that Purchaser or any Subsidiary thereof had any Tax Assets as~~ portion of ~~the close of business~~ such Straddle Period ending on the Closing Date ~~that were available, or would have been available but for their prior utilization by Purchaser or any of its Affiliates~~ shall (including the Conveyed Subsidiaries and their Subsidiaries after the Closing), to offset or otherwise reduce the applicable Tax Liability in respect of such Income Taxes (except any Tax Asset reflected as an asset in the Final Closing Statement and taken into account in the calculation of the Final Purchaser Working Capital or the Final Purchaser Net Cash), or (Di) Taxes for which Seller Parent is responsible under Section 6.5(d)(i). (iii) To the extent permitted or required by applicable Law, the taxable year of each of the Conveyed Subsidiaries and their Subsidiaries and any Subsidiary of Purchaser that includes the Closing Date shall be treated as closing on (and including) the Closing Date. Otherwise, for purposes of this Agreement, in the case of any ~~Straddle Period: (A) Property~~ Taxes ~~allocable to the Pre-Closing Tax Period shall be computed~~ other than Taxes based upon or related to income, sales, gross receipts, premiums, wages, capital expenditures or expenses, be deemed to be the ~~ratio~~ amount of such Tax for the entire Straddle Period multiplied by a fraction the numerator of which is the number of days in the ~~Pre-~~Straddle Period ending on the Closing ~~Tax Period to~~ Date and the denominator of which is the number of days in the entire Straddle Period~~; and~~ , and (Bii) ~~Taxes (other than Property Taxes) allocable to the Pre-Closing Tax Period shall be computed as if such Tax period ended as of the close of business on the Closing Date and,~~ in the case of any Taxes ~~of Conveyed Subsidiaries (and their Subsidiaries) and Seller Parent~~based upon or related to income, sales, gross receipts, premiums, wages, capital expenditures or ~~in the case of any Taxes of Purchaser Parent and Purchaser (and their Subsidiaries prior~~ expenses, be deemed to be equal to the Closing), in each case attributable to the ownership of any equity interest in any partnership or other “flow through” entity for tax purposes (including of any “controlled foreign corporation,” as defined under the Code) as amount which would be payable if the ~~Tax period of such partnership or other “flow through” entity~~ Straddle Period ended ~~as of the close of business~~ on and included the Closing Date with the Taxes of such entity for the Pre-Closing Tax Period deemed to include any Taxes on the allocable income of such entity in respect of such Tax period; provided that exemptions, allowances or deductions that are calculated on an annual basis (including depreciation and amortization deductions) shall be allocated between the period ending on the Closing Date and the period beginning after the Closing Date in proportion to the number of days in each periodDate. (iv) Any claim for indemnification under this Section 6.5(d) shall be made in writing upon the party from whom indemnification is sought, and shall specify in reasonable detail the basis for such claim. Any indemnity payment required to be made pursuant to this Section 6.5(d) shall be made within thirty (30) days after the indemnified party makes written demand upon the indemnifying party, but in no case earlier than five (5) Business Days prior to the date on which the relevant Taxes are required to be paid to the applicable Taxing Authority. (v) With respect to any Taxes suffered or incurred by any Conveyed Subsidiary (or any Subsidiary thereof) that was not wholly owned by Seller Parent (directly or indirectly) as of immediately prior to the Closing, the indemnification obligations of Seller Parent pursuant to Section 6.5(d)(i) in respect of such Taxes (or related costs and expenses) shall in no event exceed an amount equal to (A) the amount of such Taxes (or related costs and expenses) for which the Purchaser Tax Indemnified Parties would otherwise be entitled to indemnification pursuant to Section 6.5(d), as if such Conveyed Subsidiary (or any Subsidiary thereof) were wholly owned by Seller Parent, multiplied by (B) the direct and indirect percentage ownership of Seller Parent of such Conveyed Subsidiary (or Subsidiary thereof) as of immediately prior to the Closing. With respect to any Taxes suffered or incurred by any Subsidiary of Purchaser Parent (including Purchaser and its Subsidiaries) that was not wholly owned by Purchaser Parent (directly or indirectly) as of immediately prior to the Closing, the indemnification obligations of Purchaser Parent pursuant to Section 6.5(d)(ii) in respect of such Taxes (or related costs and expenses) shall in no event exceed an amount equal to (A) the amount of such Taxes (or related costs and expenses) for which the Purchaser Tax Indemnified Parties would otherwise be entitled to indemnification pursuant to Section 6.5(d), as if such Subsidiary were wholly owned by Purchaser Parent, multiplied by (B) the direct and indirect percentage ownership of Purchaser Parent of such Subsidiary as of immediately prior to the Closing. (vi) Without duplication to any other amounts paid pursuant to this Section 6.5: (A) Within thirty (30) days following the filing of any Income Tax Return for any Conveyed Subsidiary (or any Subsidiary thereof), on the one hand, or Purchaser (or any Subsidiary thereof, other than the Conveyed Subsidiaries and their Subsidiaries), on the other hand, for any Pre-Closing Tax Period or for any Straddle Period, Seller Parent or Purchaser Parent shall (or Purchaser Parent shall cause Purchaser to) prepare a statement showing (i) the amount of Income Taxes shown as due on such filed Income Tax Return with respect to the relevant Pre-Closing Tax Period or the portion of any Straddle Period ending on and including the Closing Date (the “Final Pre-Closing Income Tax Amount”) and (ii) the amount of the Seller Accrued Income Taxes or Purchaser Accrued Income Taxes, as applicable, attributable to such Income Tax Return as reflected on the Final Closing Statement (the “Pre-Closing Income Tax Amount”) and deliver such statement to Seller Parent and Purchaser Parent, as applicable. Purchaser Parent or Seller Parent, as applicable, shall have a period of fifteen (15) Business Days to provide comments to a schedule prepared (or caused to be prepared) by Seller Parent or Purchaser Parent, respectively. If Purchaser Parent or Seller Parent, as applicable, do not provide any comments to Seller Parent or Purchaser Parent, respectively, during such period, the statement as so prepared shall be final and binding. (B) In the event the Final Pre-Closing Income Tax Amount with respect to any Income Tax Return is less than the amount of the Pre-Closing Income Tax Amount attributable to such Income Tax Return that was included on the Final Closing Statement, the Purchaser shall within five (5) Business Days following the finalization of the Final Pre-Closing Income Tax Amount hereunder (i) pay to Seller Parent the amount of such difference with respect to a Conveyed Subsidiary and their Subsidiaries and (ii) pay to Purchaser Parent the amount of such difference with respect to Purchaser and its Subsidiaries. (vii) The Parties shall use reasonable best efforts to structure any indemnity payment, true-up payment, or payment in respect of Tax Benefits made by any Party pursuant to this Agreement (including pursuant to this Section 6.5, Section 6.6 and Article VII) and any payment made by Purchaser Parent to Purchaser pursuant to Section 2.8 or Section 2.9 in the manner set forth in Clause 10 of the Structuring Considerations Agreement. The Parties shall use reasonable best efforts to structure as a special dividend any payment made by Purchaser to Purchaser Parent pursuant to Section 2.8, Section 2.9 or this Section 6.5.

Appears in 1 contract

Sources: Asset Purchase Agreement (Sylvan Learning Systems Inc)

Tax Indemnification. (i) ~~Subject to Section 6.5(d)(v)~~Seller shall indemnify Buyer and its affiliates (including each Company) and each of their respective officers, ~~from~~ directors, employees and ~~after the Closing, Seller Parent agrees to indemnify~~ agents and hold them harmless ~~Purchaser and its Subsidiaries~~ from (~~including the Conveyed Subsidiaries and their Subsidiaries after the Closing Date~~A) ~~(collectively, the “Purchaser Tax Indemnified Parties”) from and against~~ all ~~liability, without duplication,~~ liability for ~~(1) Taxes of the Conveyed Subsidiaries and their Subsidiaries for any Pre-Closing Tax Period (including any Taxes payable in respect of an election under Section 965(h) of the Code), (2)~~ Taxes of any ~~Seller (other than any Transfer Taxes and VAT~~ Company for ~~which Purchaser is responsible hereunder) including, Taxes (other than Taxes of~~ the ~~Conveyed Subsidiaries and their Subsidiaries) imposed with respect to, arising out of or relating to the Purchased Assets or the Business for a~~ Pre-Closing Tax Period, (3B) all liability (as a result of Treasury Regulation ss. 1.1502-6 or otherwise) for Taxes of Seller, any ~~Person~~ Affiliated Group or any member of any Affiliated Group, (C) all liability for federal, state, and local income taxes resulting from the Section 338(h)(10) election (or any comparable election under state or local Tax law) contemplated by Section 10(a) of this Agreement (other than state and local income taxes arising out of a failure of any state or local jurisdiction to treat a Section 338(h)(10) election in the ~~Conveyed Subsidiaries and their Subsidiaries)~~ same manner as such election is treated for a Pre-Closing Tax Period for which any Conveyed Subsidiary (or any Subsidiary thereof) is liable under Treasury Regulation Section 1.1502-6 (or a similar provision of state, local or foreign Law), or as a transferee or successor or by Contract (other than Contracts that do not relate primarily to Taxesfederal purposes), (4D) Taxes arising out of or resulting from any breach of any covenant or agreement of Seller Parent or any of its Affiliates contained in this Agreement, (5) Taxes for a Pre-Closing Tax Period imposed on (x) any transaction effected pursuant to Section 2.3(b), (y) any settlement of any intercompany accounts of Seller Parent or its Subsidiaries pursuant to Section 6.7, or (z) any transaction or step forming part Seller's share of the ~~Seller Internal Restructurings, (6) Transfer~~ Taxes for which ~~Seller Parent~~ it is responsible under Section ~~6.5(j)~~10(i) hereof, (7) Taxes required to be deducted or withheld with respect to the payment of the Purchase Consideration or any amounts payable to Seller Parent pursuant to Section 2.8 or Section 2.9, including any penalties imposed on Purchaser as a result of Purchaser’s failure to deduct or withhold any such amounts that Purchaser (or a Purchaser Designated Affiliate) was permitted to withhold under Section 2.10 (in each case, subject to Purchaser’s compliance with the notice and cooperation requirements of Section 2.10 and except for any such Taxes (and any related penalties) required to be deducted or withheld solely as a result of any assignment by Purchaser or its Affiliates for which Purchaser is responsible pursuant to Section 10.3), (8) Taxes arising from any breach of any representation or warranty contained in Section 4.16(k), (9) Taxes arising as a result of any Conveyed Subsidiary or any Subsidiary of any Conveyed Subsidiary at any time ceasing to be a member of a group for the purposes of any Tax, of which group Seller Parent or any Subsidiary of Seller Parent is or was also a member and (10E) ~~any costs and expenses, including~~ all liability for reasonable legal ~~and accounting~~ fees and ~~expenses,~~ expenses attributable to any item ~~described~~ in clauses (1) through (9) (any such Taxes for which Seller Parent is responsible pursuant to this Section 6.5(d)(i), subject to the following proviso, “Seller Indemnified Taxes”); provided that Seller Parent shall not be required to indemnify or hold harmless any Purchaser Tax Indemnified Party from and against any liability pursuant to this Section 6.5(d)(i) for clause (A) Taxes attributable to any action taken after the Closing by Purchaser, any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries), or any transferee of Purchaser or any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries), other than any such action that (1) is in the ordinary course of business, (2) is expressly permitted or contemplated by this Agreement, or (3) is required to be taken in order to comply with applicable Law or as a result of a change in applicable Law (a “Purchaser Tax Act”), (B~~) Taxes that were reflected, accrued or reserved for in the Final Closing Statement, Final Business Working Capital, or Final Business Net Cash~~), (C) Income Taxes to the extent that a Conveyed Subsidiary or any Subsidiary thereof had any Tax Assets as of the close of business on the Closing Date that were available, or would have been available but for their prior utilization by Purchaser or any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries after the Closing) to offset or otherwise reduce the applicable Tax Liability in respect of such Income Taxes (except any Tax Asset reflected as an asset in the Final Closing Statement and taken into account in the calculation of the Final Business Working Capital or the Final Business Net Cash), or (D) ~~Taxes for which Purchaser Parent is responsible under Section 6.5(d)(ii)~~above. (ii) ~~Subject to Section 6.5(d)(v)~~Buyer shall, ~~from~~ and ~~after the Closing~~shall cause each Company to, ~~Purchaser Parent shall~~ indemnify Seller and its affiliates and each of their respective officers, directors, employees and agents and hold them harmless ~~the Purchaser Tax Indemnified Parties~~ from ~~and against all liability, without duplication, for~~ (1A) all liability for Taxes of ~~Purchaser Parent and its Affiliates~~ each such Company (other than ~~Purchaser and its Subsidiaries) for any Tax period~~ Taxes described in clauses (~~other than Transfer Taxes and VAT for which Seller Parent is responsible hereunder~~i)(A), (2) Taxes of Purchaser and its Subsidiaries (other than the Conveyed Subsidiaries and their Subsidiaries) for any Pre-Closing Tax Period, (3) Taxes of any Person for a Pre-Closing Tax Period for which Purchaser (or any Subsidiary thereof other than any Conveyed Subsidiaries and their Subsidiaries) is liable under Treasury Regulation Section 1.1502-6 (or a similar provision of state, local or foreign Law), or as a transferee or successor or by Contract (other than Contracts that do not relate primarily to Taxesi)(B), (4i)(C) ~~Taxes arising out~~ or (i)(D) of ~~or resulting from any breach~~ this Section 9(a)) (B) Buyer's share of ~~any covenant or agreement of Purchaser Parent, Purchaser or their respective Affiliates contained in this Agreement, (5) Transfer~~ the Taxes for which ~~Purchaser Parent~~ it is responsible under Section ~~6.5(j), (6~~10(i) Taxes arising from any breach of any representation or warranty in Section 5.17(k), (7) Taxes for a Pre-Closing Tax Period imposed on (x) any settlement of any intercompany accounts of Purchaser or any Subsidiary of Purchaser, on the one handhereof, and ~~Purchaser Parent or any Subsidiary of Purchaser Parent~~ (~~other than Purchaser and its Subsidiaries), on the other hand, pursuant to Section 6.7 or (y~~C) any transaction or step forming part of the Purchaser Internal Restructurings, (8) Taxes required to be deducted or withheld with respect to any amounts payable to Purchaser Parent pursuant to Section 2.8 or Section 2.9, including any penalties imposed on Purchaser as a result of Purchaser’s failure to deduct or withhold any such amounts, (9) Taxes arising as a result of Purchaser or any Subsidiary of Purchaser (other than any Conveyed Subsidiary or a Subsidiary thereof) at any time ceasing to be a member of a group all liability for the purposes of any Tax, of which group Purchaser Parent or any Subsidiary of Purchaser Parent (other than Purchaser or any Subsidiary of Purchaser) is or was also a member and (10) any costs and expenses, including reasonable legal ~~and accounting~~ fees and ~~expenses,~~ expenses attributable to any item ~~described~~ in clauses (1) through (9) (any such Taxes for which Purchaser Parent is responsible pursuant to this Section 6.5(d)(ii), subject to the following proviso, “Purchaser Parent Indemnified Taxes”); provided that Purchaser Parent shall not be required to indemnify or hold harmless any Purchaser Tax Indemnified Party from and against any liability for clause (A) ~~Taxes attributable to any action taken after the Closing by Seller Parent~~ or any of its Affiliates, other than any such action that (1) is in the ordinary course of business, (2) is expressly permitted or contemplated by this Agreement, or (3) is required to be taken in order to comply with applicable Law or as a result of a change in applicable Law (a “Seller Tax Act”), (B) Taxes that were reflected, accrued or reserved for in the Final Closing Statement, Final Purchaser Working Capital or the Final Purchaser Net Cash, (C) Income Taxes to the extent that Purchaser or any Subsidiary thereof had any Tax Assets as of the close of business on the Closing Date that were available, or would have been available but for their prior utilization by Purchaser or any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries after the Closing), to offset or otherwise reduce the applicable Tax Liability in respect of such Income Taxes (except any Tax Asset reflected as an asset in the Final Closing Statement and taken into account in the calculation of the Final Purchaser Working Capital or the Final Purchaser Net Cash), or (D) Taxes for which Seller Parent is responsible under Section 6.5(d)(i)above. (iii) To the extent permitted or required by applicable Law, the taxable year of each of the Conveyed Subsidiaries and their Subsidiaries and any Subsidiary of Purchaser that includes the Closing Date shall be treated as closing on (and including) the Closing Date. Otherwise, for purposes of this Agreement, in In the case of any taxable period that includes (but does not end on) the Closing Date (each a "Straddle Period:"): (A) ~~Property~~ real, personal and intangible property Taxes ~~allocable~~ not reflected in the Companies Combined Net Working Capital as adjusted pursuant to Section 1(d)("Property Taxes") of any Company attributable to the Pre-Closing Tax Period shall be ~~computed based upon~~ equal to the ~~ratio~~ amount of such Property Taxes for the entire Straddle Period multiplied by a fraction, the numerator of which is the number of days during the Straddle Period that are in the Pre-Closing Tax Period to and the denominator of which is the number of days in the ~~entire~~ Straddle Period; and (B) the Taxes of any Company (other than Property ~~Taxes~~Taxes and severance Tax) ~~allocable~~ not reflected in the Companies Combined Net Working Capital as adjusted pursuant to Section 1(d) attributable to the Pre-Closing Tax Period shall be computed as if such ~~Tax~~ taxable period ended as of the close of business on the Closing ~~Date and,~~ Date. Seller's indemnity obligation in respect of Taxes for a Straddle Period not reflected in the ~~case of any Taxes of Conveyed Subsidiaries (and their Subsidiaries~~Companies Combined Net Working Capital as adjusted pursuant to Section 1(d) ~~and Seller Parent, or in the case of any Taxes of Purchaser Parent and Purchaser (and their Subsidiaries prior~~ shall initially be effected by its payment to the Closing), in each case attributable to the ownership of any equity interest in any partnership or other “flow through” entity for tax purposes (including of any “controlled foreign corporation,” as defined under the Code) as if the Tax period of such partnership or other “flow through” entity ended as Buyer of the ~~close~~ excess of ~~business on the Closing Date with the~~ (x) such Taxes ~~of such entity~~ for the Pre-Closing Tax Period ~~deemed to include any Taxes on~~ over (y) the ~~allocable income~~ amount of such ~~entity in respect~~ Taxes paid by Seller or any of its affiliates (other than any Company) at any time plus the amount of such ~~Tax period; provided that exemptions~~Taxes paid or accrued by any Company on or prior to the Closing Date. Seller shall initially pay such excess to Buyer within five days prior to the due date of any return, ~~allowances~~ report or ~~deductions that are calculated~~ form with respect to Straddle Period Taxes. If the amount of such Taxes paid by Seller or any of its affiliates (other than any Company) at any time plus the amount of such Taxes paid or accrued by any Company on ~~an annual basis (including depreciation and amortization deductions) shall be allocated between the period ending on~~ or prior to the Closing Date ~~and~~ exceeds the ~~period beginning after~~ amount payable by Seller pursuant to the preceding sentence, Buyer shall pay to Seller the amount of such excess (a) in the case of Property Taxes, at the Closing ~~Date~~ (the "Closing Tax Adjustment Amount") and (b) in ~~proportion~~ all other cases, within five days prior to the ~~number~~ due date of ~~days in each period. (iv) Any claim for indemnification under this Section 6.5(d) shall be made in writing upon~~ the ~~party from whom indemnification is sought~~return, ~~and shall specify in reasonable detail~~ report or form with respect to the ~~basis~~ final liability for such ~~claim~~Taxes is required to be filed. ~~Any indemnity payment required~~ The payments to be made pursuant to this Section 6.5(d) shall be made within thirty (30) days after the indemnified party makes written demand upon the indemnifying party, but in no case earlier than five (5) Business Days prior to the date on which the relevant Taxes are required to be paid to the applicable Taxing Authority. (v) With respect to any Taxes suffered or incurred by any Conveyed Subsidiary (or any Subsidiary thereof) that was not wholly owned paragraph by Seller ~~Parent (directly~~ or indirectly) as of immediately prior to the Closing, the indemnification obligations of Seller Parent pursuant to Section 6.5(d)(i) in respect of such Taxes (or related costs and expenses) shall in no event exceed an amount equal to (A) the amount of such Taxes (or related costs and expenses) for which the Purchaser Tax Indemnified Parties would otherwise be entitled to indemnification pursuant to Section 6.5(d), as if such Conveyed Subsidiary (or any Subsidiary thereof) were wholly owned by Seller Parent, multiplied by (B) the direct and indirect percentage ownership of Seller Parent of such Conveyed Subsidiary (or Subsidiary thereof) as of immediately prior to the Closing. With respect to any Taxes suffered or incurred by any Subsidiary of Purchaser Parent (including Purchaser and its Subsidiaries) that was not wholly owned by Purchaser Parent (directly or indirectly) as of immediately prior to the Closing, the indemnification obligations of Purchaser Parent pursuant to Section 6.5(d)(ii) in respect of such Taxes (or related costs and expenses) shall in no event exceed an amount equal to (A) the amount of such Taxes (or related costs and expenses) for which the Purchaser Tax Indemnified Parties would otherwise be entitled to indemnification pursuant to Section 6.5(d), as if such Subsidiary were wholly owned by Purchaser Parent, multiplied by (B) the direct and indirect percentage ownership of Purchaser Parent of such Subsidiary as of immediately prior to the Closing. (vi) Without duplication to any other amounts paid pursuant to this Section 6.5: (A) Within thirty (30) days following the filing of any Income Tax Return for any Conveyed Subsidiary (or any Subsidiary thereof), on the one hand, or Purchaser (or any Subsidiary thereof, other than the Conveyed Subsidiaries and their Subsidiaries), on the other hand, for any Pre-Closing Tax Period or for any Straddle Period, Seller Parent or Purchaser Parent shall (or Purchaser Parent shall cause Purchaser to) prepare a statement showing (i) the amount of Income Taxes shown as due on such filed Income Tax Return with respect to the relevant Pre-Closing Tax Period or the portion of any Straddle Period ending on and including the Closing Date (the “Final Pre-Closing Income Tax Amount”) and (ii) the amount of the Seller Accrued Income Taxes or Purchaser Accrued Income Taxes, as applicable, attributable to such Income Tax Return as reflected on the Final Closing Statement (the “Pre-Closing Income Tax Amount”) and deliver such statement to Seller Parent and Purchaser Parent, as applicable. Purchaser Parent or Seller Parent, as applicable, shall have a period of fifteen (15) Business Days to provide comments to a schedule prepared (or caused to be prepared) by Seller Parent or Purchaser Parent, respectively. If Purchaser Parent or Seller Parent, as applicable, do not provide any comments to Seller Parent or Purchaser Parent, respectively, during such period, the statement as so prepared shall be final and binding. (B) In the event the Final Pre-Closing Income Tax Amount with respect to any Income Tax Return is less than the amount of the Pre-Closing Income Tax Amount attributable to such Income Tax Return that was included on the Final Closing Statement, the Purchaser shall within five (5) Business Days following the finalization of the Final Pre-Closing Income Tax Amount hereunder (i) pay to Seller Parent the amount of such difference Buyer with respect to a ~~Conveyed Subsidiary and their Subsidiaries and~~ Straddle Period shall be appropriately adjusted to reflect any final determination (iiwhich shall include the execution of Form 870-AD or successor form) ~~pay to Purchaser Parent the amount of such difference~~ with respect to ~~Purchaser and its Subsidiaries~~Straddle Period Taxes. (vii) The Parties shall use reasonable best efforts to structure any indemnity payment, true-up payment, or payment in respect of Tax Benefits made by any Party pursuant to this Agreement (including pursuant to this Section 6.5, Section 6.6 and Article VII) and any payment made by Purchaser Parent to Purchaser pursuant to Section 2.8 or Section 2.9 in the manner set forth in Clause 10 of the Structuring Considerations Agreement. The Parties shall use reasonable best efforts to structure as a special dividend any payment made by Purchaser to Purchaser Parent pursuant to Section 2.8, Section 2.9 or this Section 6.5.

Appears in 1 contract

Sources: Stock Purchase Agreement (Leslie Resources Inc)

Tax Indemnification. Subject to the provisions of this Section 5.8, Seller shall indemnify the Buyer Indemnified Parties from and against: (x) any Adverse Consequences (as defined in Section 9.2(a) below) caused by, arising out of, resulting from or otherwise related to any of the following: (i) ~~Subject to Section 6.5(d)(v), from and after~~ all Taxes that are imposed on the Closing, Seller Parent agrees to indemnify and hold harmless Purchaser and its Subsidiaries (including the Conveyed Subsidiaries and their Subsidiaries after the Closing Date) (collectively, the “Purchaser Tax Indemnified Parties”) from and against all liability, without duplication, for (1) Taxes of the Conveyed Subsidiaries and their Subsidiaries for any Pre-Closing Tax Period (including any Taxes payable in respect of an election under Section 965(h) of the Code), (2) Taxes of any Seller (other than any Transfer Taxes and VAT for which Purchaser is responsible hereunder) including, Taxes (other than Taxes of the Conveyed Subsidiaries and their Subsidiaries) imposed with respect to, arising out of or relating to the Purchased Assets or the Business for a Pre-Closing Tax Period, (3) Taxes of any Person (other than the Conveyed Subsidiaries and their Subsidiaries) for a Pre-Closing Tax Period for which any Conveyed Subsidiary (or any Subsidiary thereof) is liable under Treasury Regulation Section 1.1502-6 (or a similar provision of state, local or foreign Law), or as a transferee or successor or by Contract (other than Contracts that do not relate primarily to Taxes), (4) Taxes arising out of or resulting from any breach of any covenant or agreement of Seller Parent Company or any of its Affiliates contained in this Agreement, (5) Taxes for a Pre-Closing Tax Period imposed on (x) any transaction effected pursuant to Section 2.3(b), (y) any settlement of any intercompany accounts of Seller Parent or its Subsidiaries pursuant to Section 6.7, or (z) any transaction or step forming part of the Seller Internal Restructurings, (6) Transfer Taxes for which Seller Parent is responsible under Section 6.5(j), (7) Taxes required to be deducted or withheld with respect to the payment of the Purchase Consideration or any amounts payable to Seller Parent pursuant to Section 2.8 or Section 2.9, including any penalties imposed on Purchaser as a result of Purchaser’s failure to deduct or withhold any such amounts that Purchaser (or a Purchaser Designated Affiliate) was permitted to withhold under Section 2.10 (in each case, subject to Purchaser’s compliance with the notice and cooperation requirements of Section 2.10 and except for any ~~such Taxes (and any related penalties) required to be deducted~~ taxable period ending on or withheld solely as a result of any assignment by Purchaser or its Affiliates for which Purchaser is responsible pursuant to Section 10.3), (8) Taxes arising from any breach of any representation or warranty contained in Section 4.16(k), (9) Taxes arising as a result of any Conveyed Subsidiary or any Subsidiary of any Conveyed Subsidiary at any time ceasing to be a member of a group for the purposes of any Tax, of which group Seller Parent or any Subsidiary of Seller Parent is or was also a member and (10) any costs and expenses, including reasonable legal and accounting fees and expenses, attributable to any item described in clauses (1) through (9) (any such Taxes for which Seller Parent is responsible pursuant to this Section 6.5(d)(i), subject to the following proviso, “Seller Indemnified Taxes”); provided that Seller Parent shall not be required to indemnify or hold harmless any Purchaser Tax Indemnified Party from and against any liability pursuant to this Section 6.5(d)(i) for (A) Taxes attributable to any action taken after the Closing by Purchaser, any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries), or any transferee of Purchaser or any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries), other than any such action that (1) is in the ordinary course of business, (2) is expressly permitted or contemplated by this Agreement, or (3) is required to be taken in order to comply with applicable Law or as a result of a change in applicable Law (a “Purchaser Tax Act”), (B) Taxes that were reflected, accrued or reserved for in the Final Closing Statement, Final Business Working Capital, or Final Business Net Cash, (C) Income Taxes to the extent that a Conveyed Subsidiary or any Subsidiary thereof had any Tax Assets as of the close of business on the Closing Date that were available, or would have been available but for their prior utilization by Purchaser or any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries after the Closing) to offset or otherwise reduce the applicable Tax Liability in respect of such Income Taxes (except any Tax Asset reflected as an asset in the Final Closing Statement and taken into account in the calculation of the Final Business Working Capital or the Final Business Net Cash), or (D) Taxes for which Purchaser Parent is responsible under Section 6.5(d)(ii). (ii) Subject to Section 6.5(d)(v), from and after the Closing, Purchaser Parent shall indemnify and hold harmless the Purchaser Tax Indemnified Parties from and against all liability, without duplication, for (1) all Taxes of Purchaser Parent and its Affiliates (other than Purchaser and its Subsidiaries) for any Tax period (other than Transfer Taxes and VAT for which Seller Parent is responsible hereunder), (2) Taxes of Purchaser and its Subsidiaries (other than the Conveyed Subsidiaries and their Subsidiaries) for any Pre-Closing Tax Period, (3) Taxes of any Person for a Pre-Closing Tax Period for which Purchaser (or any Subsidiary thereof other than any Conveyed Subsidiaries and their Subsidiaries) is liable under Treasury Regulation Section 1.1502-6 (or a similar provision of state, local or foreign Law), or as a transferee or successor or by Contract (other than Contracts that do not relate primarily to Taxes), (4) Taxes arising out of or resulting from any breach of any covenant or agreement of Purchaser Parent, Purchaser or their respective Affiliates contained in this Agreement, (5) Transfer Taxes for which Purchaser Parent is responsible under Section 6.5(j), (6) Taxes arising from any breach of any representation or warranty in Section 5.17(k), (7) Taxes for a Pre-Closing Tax Period imposed on (x) any settlement of any intercompany accounts of Purchaser or any Subsidiary of Purchaser, on the one hand, and Purchaser Parent or any Subsidiary of Purchaser Parent (other than Purchaser and its Subsidiaries), on the other hand, pursuant to Section 6.7 or (y) any transaction or step forming part of the Purchaser Internal Restructurings, (8) Taxes required to be deducted or withheld with respect to any amounts payable to Purchaser Parent pursuant to Section 2.8 or Section 2.9, including any penalties imposed on Purchaser as a result of Purchaser’s failure to deduct or withhold any such amounts, (9) Taxes arising as a result of Purchaser or any Subsidiary of Purchaser (other than any Conveyed Subsidiary or a Subsidiary thereof) at any time ceasing to be a member of a group for the purposes of any Tax, of which group Purchaser Parent or any Subsidiary of Purchaser Parent (other than Purchaser or any Subsidiary of Purchaser) is or was also a member and (10) any costs and expenses, including reasonable legal and accounting fees and expenses, attributable to any item described in clauses (1) through (9) (any such Taxes for which Purchaser Parent is responsible pursuant to this Section 6.5(d)(ii), subject to the following proviso, “Purchaser Parent Indemnified Taxes”); provided that Purchaser Parent shall not be required to indemnify or hold harmless any Purchaser Tax Indemnified Party from and against any liability for (A) Taxes attributable to any action taken after the Closing by Seller Parent or any of its Affiliates, other than any such action that (1) is in the ordinary course of business, (2) is expressly permitted or contemplated by this Agreement, or (3) is required to be taken in order to comply with applicable Law or as a result of a change in applicable Law (a “Seller Tax Act”), (B) Taxes that were reflected, accrued or reserved for in the Final Closing Statement, Final Purchaser Working Capital or the Final Purchaser Net Cash, (C) Income Taxes to the extent that Purchaser or any Subsidiary thereof had any Tax Assets as of the close of business on the Closing Date that were available, or would have been available but for their prior utilization by Purchaser or any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries after the Closing), to offset or otherwise reduce the applicable Tax Liability in respect of such Income Taxes (except any Tax Asset reflected as an asset in the Final Closing Statement and taken into account in the calculation of the Final Purchaser Working Capital or the Final Purchaser Net Cash), or (D) Taxes for which Seller Parent is responsible under Section 6.5(d)(i). (iii) To the extent permitted or required by applicable Law, the taxable year of each of the Conveyed Subsidiaries and their Subsidiaries and any Subsidiary of Purchaser that includes the Closing Date shall be treated as closing on (and including) the Closing Date. Otherwise, for purposes of this Agreement, in the case of any Straddle Period: (A) Property Taxes allocable to the Pre-Closing Tax Period shall be computed based upon the ratio of the number of days in the Pre-Closing Tax Period to the number of days in the entire Straddle Period; and (B) Taxes (other than Property Taxes) allocable to the Pre-Closing Tax Period shall be computed as if such Tax period ended as of the close of business on before the Closing Date and, in the case of any Taxes of Conveyed Subsidiaries (and their Subsidiaries) and Seller Parent, or in the case of any Taxes of Purchaser Parent and Purchaser (and their Subsidiaries prior to the Closing), in each case attributable to the ownership of any equity interest in any partnership or other “flow through” entity for tax purposes (including of any “controlled foreign corporation,” as defined under the Code) as if the Tax period of such partnership or other “flow through” entity ended as of the close of business on the Closing Date with the Taxes of such entity for the Pre-Closing Tax Period deemed to include any Taxes on the allocable income of such entity in respect of such Tax period; provided that exemptions, allowances or deductions that are calculated on an annual basis (including depreciation and amortization deductions) shall be allocated between the period ending on the Closing Date and the period beginning after the Closing Date in proportion to the number of days in each period. (iv) Any claim for indemnification under this Section 6.5(d) shall be made in writing upon the party from whom indemnification is sought, and shall specify in reasonable detail the basis for such claim. Any indemnity payment required to be made pursuant to this Section 6.5(d) shall be made within thirty (30) days after the indemnified party makes written demand upon the indemnifying party, but in no case earlier than five (5) Business Days prior to the date on which the relevant Taxes are required to be paid to the applicable Taxing Authority. (v) With respect to any ~~Taxes suffered or incurred by any Conveyed Subsidiary~~ Straddle Period (~~or any Subsidiary thereof) that was not wholly owned by Seller Parent (directly or indirectly)~~ as of immediately prior to the Closing, the indemnification obligations of Seller Parent pursuant to Section 6.5(d)(i) in respect of such Taxes (or related costs and expenses) shall in no event exceed an amount equal to (A) the amount of such Taxes (or related costs and expenses) for which the Purchaser Tax Indemnified Parties would otherwise be entitled to indemnification pursuant to Section 6.5(ddefined below), as if such Conveyed Subsidiary (or any Subsidiary thereof) were wholly owned by Seller Parent, multiplied by (B) the direct and indirect percentage ownership of Seller Parent of such Conveyed Subsidiary (or Subsidiary thereof) as of immediately prior to the Closing. With respect to any Taxes suffered or incurred by any Subsidiary of Purchaser Parent (including Purchaser and its Subsidiaries) that was not wholly owned by Purchaser Parent (directly or indirectly) as of immediately prior to the Closing, the indemnification obligations of Purchaser Parent pursuant to Section 6.5(d)(ii) in respect of such Taxes (or related costs and expenses) shall in no event exceed an amount equal to (A) the amount of such Taxes (or related costs and expenses) for which the Purchaser Tax Indemnified Parties would otherwise be entitled to indemnification pursuant to Section 6.5(d), as if such Subsidiary were wholly owned by Purchaser Parent, multiplied by (B) the direct and indirect percentage ownership of Purchaser Parent of such Subsidiary as of immediately prior to the Closing. (vi) Without duplication to any other amounts paid pursuant to this Section 6.5: (A) Within thirty (30) days following the filing of any Income Tax Return for any Conveyed Subsidiary (or any Subsidiary thereof), on the one hand, or Purchaser (or any Subsidiary thereof, other than the Conveyed Subsidiaries and their Subsidiaries), on the other hand, for any Pre-Closing Tax Period or for any Straddle Period, Seller Parent or Purchaser Parent shall (or Purchaser Parent shall cause Purchaser to) prepare a statement showing (i) the amount of Income Taxes shown as due on such filed Income Tax Return with respect to the relevant Pre-Closing Tax Period or the portion of ~~any~~ such Straddle Period ending on and including the Closing Date (the “Final Pre-Closing Income Tax Amount”) and (ii) the amount of the Seller Accrued Income Taxes or Purchaser Accrued Income Taxes, as applicable, attributable to such Income Tax Return as reflected on the Final Closing Statement (the “Pre-Closing ~~Income~~ Tax ~~Amount~~Period”), (ii) ~~and deliver~~ all Taxes of any member (other than the Company or any of its Subsidiaries) of an affiliated, consolidated, combined or unitary group of which the Company or any of its Subsidiaries was a member on or prior to the Closing Date, including pursuant to Treasury Regulation Section 1.1502-6, (iii) all Taxes caused by, arising out of, resulting from or otherwise related to Seller’s breach of the covenant contained in Section 5.18(iv) hereof, (iv) all Taxes attributable to any amounts required to be included under Code Section 951 in the gross income of the Company or any of its Subsidiaries to the extent such ~~statement to Seller Parent and Purchaser Parent, as applicable. Purchaser Parent or Seller Parent, as applicable, shall have a period of fifteen (15) Business Days to provide comments~~ amount would be allocable to a schedule prepared (or caused to be prepared) by Seller Parent or Purchaser Parent, respectively. If Purchaser Parent or Seller Parent, as applicable, do not provide any comments to Seller Parent or Purchaser Parent, respectively, during such period, the statement as so prepared shall be final and binding. (B) In the event the Final Pre-Closing ~~Income~~ Tax ~~Amount with respect~~ Period if the taxable year of each entity of which the Company or any of its Subsidiaries is a “United States Shareholder” (as defined in Code Section 951(b) ended on the Closing Date and (v) all Taxes of any person (other than the Company or any of its Subsidiaries) imposed on the Company or any of its Subsidiaries as a transferee or successor, by contract or pursuant to any ~~Income Tax Return is less than~~ law, rule or regulation, which Taxes relate to an event or transaction occurring before the ~~amount~~ Closing; and (y) any Adverse Consequences (including Taxes) for which any Buyer Indemnified Party becomes liable as a result of the ~~Pre-Closing Income Tax Amount~~ breach of any representation or warranty made by the Company in Section 2.8 of this Agreement without giving effect to any Material Adverse Effect qualifier contained therein; provided, however, that notwithstanding anything to the contrary in this Agreement, Seller shall not have any liability to any Buyer Indemnified Party for any Taxes and Adverse Consequences attributable to Taxes, to the extent such Income Tax Return that was included on the Final Closing Statement, the Purchaser shall within five (5) Business Days following the finalization of the Final Pre-Closing Income Tax Amount hereunder (i) pay Taxes and Adverse Consequences relate to Seller Parent the amount of such difference with respect to a Conveyed Subsidiary and their Subsidiaries and (ii) pay to Purchaser Parent the amount of such difference with respect to Purchaser and its SubsidiariesPower Transmission Industries de Brazil or Mecanica F▇▇▇ ▇. (vii) The Parties shall use reasonable best efforts to structure any indemnity payment, true-up payment, or payment in respect of Tax Benefits made by any Party pursuant to this Agreement (including pursuant to this Section 6.5, Section 6.6 and Article VII) and any payment made by Purchaser Parent to Purchaser pursuant to Section 2.8 or Section 2.9 in the manner set forth in Clause 10 of the Structuring Considerations Agreement▇. ~~The Parties shall use reasonable best efforts to structure as a special dividend any payment made by Purchaser to Purchaser Parent pursuant to Section 2.8, Section 2.9 or this Section 6.5.~~de C.V.

Appears in 1 contract

Sources: Stock Purchase Agreement (Rexnord Corp)

Tax Indemnification. (i) ~~Subject to Section 6.5(d)(v)~~The Existing Member shall indemnify HDA, the Company and their affiliates and hold them harmless from and after the Closing, Seller Parent agrees to indemnify and hold harmless Purchaser and its Subsidiaries (including the Conveyed Subsidiaries and their Subsidiaries after the Closing Date) (collectively, the “Purchaser Tax Indemnified Parties”) from and against all liability, without duplication, for against: (1) any and all liabilities for Taxes (including without limitation any obligation to contribute to the payment of a Tax determined on a consolidated, combined, or unitary basis with respect to a group of corporations that includes or included the Company) of the ~~Conveyed Subsidiaries~~ Company for all taxable periods ending on or before the Closing Date (the "Pre-Closing Tax Period") and ~~their Subsidiaries~~ for the portion of any Taxes (including without limitation any obligation to contribute to the payment of a Tax determined on a consolidated, combined, or unitary basis with respect to a group of corporations that includes or included the Company) of the Company for any Straddle Period (as hereinafter defined) that is allocated (pursuant to Section 5.2(a)(iii)) to the Pre-Closing Tax Period (~~including any Taxes payable in respect of an election under Section 965(h) of the Code)~~such liabilities collectively, (2) Taxes of any Seller (other than any Transfer Taxes and VAT for which Purchaser is responsible hereunder) including, Taxes (other than Taxes of the Conveyed Subsidiaries and their Subsidiaries) imposed with respect to, arising out of or relating to the Purchased Assets or the Business for a "Pre-Closing Tax ~~Period,~~ Liabilities"); (2) one-half of any and all liabilities for Conveyance Taxes; (3) ~~Taxes of~~ any ~~Person (other than the Conveyed Subsidiaries~~ and ~~their Subsidiaries)~~ all liabilities for a Pre-Closing Tax Period for which any Conveyed Subsidiary (or any Subsidiary thereof) is liable under Treasury Regulation Section 1.1502-6 (or a similar provision of state, local or foreign Law), or as a transferee or successor or by Contract (other than Contracts that do not relate primarily to Taxes), (4) Taxes arising out of a breach or resulting from any breach of any covenant or agreement of Seller Parent or any of its Affiliates contained in this Agreement, (5) Taxes for a Pre-Closing Tax Period imposed on (x) any transaction effected pursuant to Section 2.3(b), (y) any settlement of any intercompany accounts of Seller Parent or its Subsidiaries pursuant to Section 6.7, or (z) any transaction or step forming part of the Seller Internal Restructurings, (6) Transfer Taxes for which Seller Parent is responsible under Section 6.5(j), (7) Taxes required to be deducted or withheld with respect to the payment of the Purchase Consideration or any amounts payable to Seller Parent pursuant to Section 2.8 or Section 2.9, including any penalties imposed on Purchaser as a result of Purchaser’s failure to deduct or withhold any such amounts that Purchaser (or a Purchaser Designated Affiliate) was permitted to withhold under Section 2.10 (in each case, subject to Purchaser’s compliance with the notice and cooperation requirements of Section 2.10 and except for any such Taxes (and any related penalties) required to be deducted or withheld solely as a result of any assignment by Purchaser or its Affiliates for which Purchaser is responsible pursuant to Section 10.3), (8) Taxes arising from any breach inaccuracy of any representation or warranty contained in Section ~~4.16(k),~~ 3.11; (94) ~~Taxes arising~~ any liability (as a result of ~~any Conveyed Subsidiary~~ Treas. Reg. (S) 1.1502-6(a) or otherwise) for income Taxes of the Existing Member or any ~~Subsidiary of any Conveyed Subsidiary at any time ceasing to be a member of a group for~~ other person (other than the ~~purposes of any Tax, of which group Seller Parent or any Subsidiary of Seller Parent~~ Company) that is or ~~was also a member~~ has ever been affiliated with the Company, or with whom the Company otherwise joins or has ever joined (or is or has ever been required to join) in filing any consolidated, combined or unitary Tax Return prior to the Closing; and (105) any ~~costs~~ and ~~expenses~~all liability for reasonable legal, ~~including reasonable legal~~ accounting and ~~accounting~~ appraisal fees and ~~expenses, attributable~~ expenses with respect to any item described in clauses (1), (2) ~~through~~ or (~~9) (any such~~ 4); provided, however, that the amount of the -------- ------- Existing Member's indemnity obligation for Taxes ~~for which Seller Parent is responsible~~ pursuant to this Section ~~6.5(d)(i), subject~~ 5.2(a)(i) shall be reduced to the ~~following proviso~~extent that the aggregate reserves for Taxes (excluding deferred income taxes) reflected on the Closing Balance Sheet exceeds the aggregate liability for Taxes for the Pre-Closing Tax Period not paid prior to the close thereof. Notwithstanding the foregoing, ~~“Seller Indemnified Taxes”); provided that Seller Parent~~ the Existing Member shall not be required to indemnify or hold harmless ~~any Purchaser Tax Indemnified Party~~ HDA, the Company and their affiliates from ~~and~~ or against any liability ~~pursuant to this Section 6.5(d)(i)~~ for ~~(A)~~ Taxes attributable to ~~any action taken after the Closing~~ a breach by ~~Purchaser, any~~ HDA of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries), or any transferee of Purchaser or any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries), other than any such action that (1) is in the ordinary course of business, (2) is expressly permitted or contemplated by obligations under this Agreement, or (3) is required to be taken in order to comply with applicable Law or as a result of a change in applicable Law (a “Purchaser Tax Act”), (B) Taxes that were reflected, accrued or reserved for in the Final Closing Statement, Final Business Working Capital, or Final Business Net Cash, (C) Income Taxes to the extent that a Conveyed Subsidiary or any Subsidiary thereof had any Tax Assets as of the close of business on the Closing Date that were available, or would have been available but for their prior utilization by Purchaser or any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries after the Closing) to offset or otherwise reduce the applicable Tax Liability in respect of such Income Taxes (except any Tax Asset reflected as an asset in the Final Closing Statement and taken into account in the calculation of the Final Business Working Capital or the Final Business Net Cash), or (D) Taxes for which Purchaser Parent is responsible under Section 6.5(d)(ii). (ii) ~~Subject to Section 6.5(d)(v), from~~ HDA shall defend and ~~after~~ indemnify the ~~Closing, Purchaser Parent shall indemnify~~ Existing Member and hold him harmless ~~the Purchaser Tax Indemnified Parties~~ from and against ~~all liability, without duplication, for~~ (1) ~~all~~ any liability for Taxes of ~~Purchaser Parent and its Affiliates (other than Purchaser and its Subsidiaries)~~ the Company for any ~~Tax~~ taxable period ending after the Closing Date (~~other than Transfer~~ except with respect to a Straddle Period, in which case HDA's indemnity will cover only Taxes ~~and VAT for which Seller Parent is responsible hereunder), (2) Taxes of Purchaser and its Subsidiaries (other than the Conveyed Subsidiaries and their Subsidiaries) for any~~ that are not Pre-Closing Tax ~~Period,~~ Liabilities); (2) one-half of any and all liabilities for Conveyance Taxes; and (3) ~~Taxes of~~ any ~~Person~~ and all liability for ~~a Pre-Closing Tax Period for which Purchaser (or any Subsidiary thereof other than any Conveyed Subsidiaries~~ reasonable legal, accounting and their Subsidiaries) is liable under Treasury Regulation Section 1.1502-6 (or a similar provision of state, local or foreign Law), or as a transferee or successor or by Contract (other than Contracts that do not relate primarily to Taxes), (4) Taxes arising out of or resulting from any breach of any covenant or agreement of Purchaser Parent, Purchaser or their respective Affiliates contained in this Agreement, (5) Transfer Taxes for which Purchaser Parent is responsible under Section 6.5(j), (6) Taxes arising from any breach of any representation or warranty in Section 5.17(k), (7) Taxes for a Pre-Closing Tax Period imposed on (x) any settlement of any intercompany accounts of Purchaser or any Subsidiary of Purchaser, on the one hand, appraisal fees and Purchaser Parent or any Subsidiary of Purchaser Parent (other than Purchaser and its Subsidiaries), on the other hand, pursuant to Section 6.7 or (y) any transaction or step forming part of the Purchaser Internal Restructurings, (8) Taxes required to be deducted or withheld expenses with respect to any amounts payable to Purchaser Parent pursuant to Section 2.8 or Section 2.9, including any penalties imposed on Purchaser as a result of Purchaser’s failure to deduct or withhold any such amounts, (9) Taxes arising as a result of Purchaser or any Subsidiary of Purchaser (other than any Conveyed Subsidiary or a Subsidiary thereof) at any time ceasing to be a member of a group for the purposes of any Tax, of which group Purchaser Parent or any Subsidiary of Purchaser Parent (other than Purchaser or any Subsidiary of Purchaser) is or was also a member and (10) any costs and expenses, including reasonable legal and accounting fees and expenses, attributable to any item described in clauses (1~~) through (9) (any such Taxes for which Purchaser Parent is responsible pursuant to this Section 6.5(d)(ii~~), subject to the following proviso, “Purchaser Parent Indemnified Taxes”); provided that Purchaser Parent shall not be required to indemnify or hold harmless any Purchaser Tax Indemnified Party from and against any liability for (A) Taxes attributable to any action taken after the Closing by Seller Parent or any of its Affiliates, other than any such action that (1) is in the ordinary course of business, (2) is expressly permitted or contemplated by this Agreement, or (3) is required to be taken in order to comply with applicable Law or as a result of a change in applicable Law (a “Seller Tax Act”), (B) Taxes that were reflected, accrued or reserved for in the Final Closing Statement, Final Purchaser Working Capital or the Final Purchaser Net Cash, (C) Income Taxes to the extent that Purchaser or any Subsidiary thereof had any Tax Assets as of the close of business on the Closing Date that were available, or would have been available but for their prior utilization by Purchaser or any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries after the Closing), to offset or otherwise reduce the applicable Tax Liability in respect of such Income Taxes (except any Tax Asset reflected as an asset in the Final Closing Statement and taken into account in the calculation of the Final Purchaser Working Capital or the Final Purchaser Net Cash), or (D) Taxes for which Seller Parent is responsible under Section 6.5(d)(i). (iii) To the extent permitted or required by applicable Law, the taxable year of each of the Conveyed Subsidiaries and their Subsidiaries and any Subsidiary of Purchaser that includes the Closing Date shall be treated as closing on (and including) the Closing Date. Otherwise, for purposes of this Agreement, in the case of any Straddle Period: (A) Property Taxes allocable to the Pre-Closing Tax Period shall be computed based upon the ratio of the number of days in the Pre-Closing Tax Period to the number of days in the entire Straddle Period; and (B) Taxes (other than Property Taxes) allocable to the Pre-Closing Tax Period shall be computed as if such Tax period ended as of the close of business on the Closing Date and, in the case of any Taxes of Conveyed Subsidiaries (and their Subsidiaries) and Seller Parent, or in the case of any Taxes of Purchaser Parent and Purchaser (and their Subsidiaries prior to the Closing), in each case attributable to the ownership of any equity interest in any partnership or other “flow through” entity for tax purposes (including of any “controlled foreign corporation,” as defined under the Code) as if the Tax period of such partnership or other “flow through” entity ended as of the close of business on the Closing Date with the Taxes of such entity for the Pre-Closing Tax Period deemed to include any Taxes on the allocable income of such entity in respect of such Tax period; provided that exemptions, allowances or deductions that are calculated on an annual basis (including depreciation and amortization deductions) shall be allocated between the period ending on the Closing Date and the period beginning after the Closing Date in proportion to the number of days in each period. (iv) Any claim for indemnification under this Section 6.5(d) shall be made in writing upon the party from whom indemnification is sought, and shall specify in reasonable detail the basis for such claim. Any indemnity payment required to be made pursuant to this Section 6.5(d) shall be made within thirty (30) days after the indemnified party makes written demand upon the indemnifying party, but in no case earlier than five (5) Business Days prior to the date on which the relevant Taxes are required to be paid to the applicable Taxing Authority. (v) With respect to any Taxes suffered or incurred by any Conveyed Subsidiary (or any Subsidiary thereof) that was not wholly owned by Seller Parent (directly or indirectly) as of immediately prior to the Closing, the indemnification obligations of Seller Parent pursuant to Section 6.5(d)(i) in respect of such Taxes (or related costs and expenses) shall in no event exceed an amount equal to (A) the amount of such Taxes (or related costs and expenses) for which the Purchaser Tax Indemnified Parties would otherwise be entitled to indemnification pursuant to Section 6.5(d), as if such Conveyed Subsidiary (or any Subsidiary thereof) were wholly owned by Seller Parent, multiplied by (B) the direct and indirect percentage ownership of Seller Parent of such Conveyed Subsidiary (or Subsidiary thereof) as of immediately prior to the Closing. With respect to any Taxes suffered or incurred by any Subsidiary of Purchaser Parent (including Purchaser and its Subsidiaries) that was not wholly owned by Purchaser Parent (directly or indirectly) as of immediately prior to the Closing, the indemnification obligations of Purchaser Parent pursuant to Section 6.5(d)(ii) in respect of such Taxes (or related costs and expenses) shall in no event exceed an amount equal to (A) the amount of such Taxes (or related costs and expenses) for which the Purchaser Tax Indemnified Parties would otherwise be entitled to indemnification pursuant to Section 6.5(d), as if such Subsidiary were wholly owned by Purchaser Parent, multiplied by (B) the direct and indirect percentage ownership of Purchaser Parent of such Subsidiary as of immediately prior to the Closing. (vi) Without duplication to any other amounts paid pursuant to this Section 6.5: (A) Within thirty (30) days following the filing of any Income Tax Return for any Conveyed Subsidiary (or any Subsidiary thereof), on the one hand, or Purchaser (or any Subsidiary thereof, other than the Conveyed Subsidiaries and their Subsidiaries), on the other hand, for any Pre-Closing Tax Period or for any Straddle Period, Seller Parent or Purchaser Parent shall (or Purchaser Parent shall cause Purchaser to) prepare a statement showing (i) the amount of Income Taxes shown as due on such filed Income Tax Return with respect to the relevant Pre-Closing Tax Period or the portion of any Straddle Period ending on and including the Closing Date (the “Final Pre-Closing Income Tax Amount”) and (ii) the amount of the Seller Accrued Income Taxes or Purchaser Accrued Income Taxes, as applicable, attributable to such Income Tax Return as reflected on the Final Closing Statement (the “Pre-Closing Income Tax Amount”) and deliver such statement to Seller Parent and Purchaser Parent, as applicable. Purchaser Parent or Seller Parent, as applicable, shall have a period of fifteen (15) Business Days to provide comments to a schedule prepared (or caused to be prepared) by Seller Parent or Purchaser Parent, respectively. If Purchaser Parent or Seller Parent, as applicable, do not provide any comments to Seller Parent or Purchaser Parent, respectively, during such period, the statement as so prepared shall be final and binding. (B) In the event the Final Pre-Closing Income Tax Amount with respect to any Income Tax Return is less than the amount of the Pre-Closing Income Tax Amount attributable to such Income Tax Return that was included on the Final Closing Statement, the Purchaser shall within five (5) Business Days following the finalization of the Final Pre-Closing Income Tax Amount hereunder (i) pay to Seller Parent the amount of such difference with respect to a Conveyed Subsidiary and their Subsidiaries and (ii) pay to Purchaser Parent the amount of such difference with respect to Purchaser and its Subsidiaries. (vii) The Parties shall use reasonable best efforts to structure any indemnity payment, true-up payment, or payment in respect of Tax Benefits made by any Party pursuant to this Agreement (including pursuant to this Section 6.5, Section 6.6 and Article VII) and any payment made by Purchaser Parent to Purchaser pursuant to Section 2.8 or Section 2.9 in the manner set forth in Clause 10 of the Structuring Considerations Agreement. The Parties shall use reasonable best efforts to structure as a special dividend any payment made by Purchaser to Purchaser Parent pursuant to Section 2.8, Section 2.9 or this Section 6.5.

Appears in 1 contract

Sources: Purchase Agreement (Superior Trucks & Auto Supply Inc)

Tax Indemnification. (i) Subject to Section ~~6.5(d)(v~~7.2(a)(ii), ~~from and after the Closing, Seller~~ Parent agrees to indemnify and hold the Company Stockholder harmless ~~Purchaser~~ from and against, and pay to the Company Stockholder, the amount of any and all Losses (without duplication) in respect of (A) all Taxes of Parent and its Subsidiaries (~~including the Conveyed Subsidiaries and their Subsidiaries after the Closing Date~~or any predecessor thereof) ~~(collectively, the “Purchaser Tax Indemnified Parties”) from and against all liability, without duplication,~~ for (1) ~~Taxes of~~ any taxable period ending on or before the ~~Conveyed Subsidiaries~~ Closing Date and ~~their Subsidiaries for any Pre-Closing Tax Period (including any Taxes payable in respect of an election under Section 965(h) of the Code),~~ (2) ~~Taxes~~ the portion of any ~~Seller~~ Straddle Period ending on the Closing Date (~~other than~~ determined as provided in Section 7.1(c)); (B) all Taxes imposed on any ~~Transfer Taxes and VAT for~~ member of a consolidated, combined or unitary group of which ~~Purchaser is responsible hereunder) including, Taxes (other than Taxes of the Conveyed Subsidiaries and their Subsidiaries) imposed with respect to, arising out of~~ Parent or ~~relating to the Purchased Assets or the Business for a Pre-Closing Tax Period, (3) Taxes of~~ any ~~Person (other than the Conveyed Subsidiaries and their Subsidiaries) for a Pre-Closing Tax Period for which any Conveyed~~ Subsidiary (or any ~~Subsidiary~~ predecessor thereof) (but excluding the Company and any of its Subsidiaries) is ~~liable under~~ or was a member on or prior to the Closing Date for any taxable period or portion thereof described in clause (A) above, by reason of the liability of Parent or any Subsidiary (or any predecessor thereof), pursuant to Treasury Regulation Section 1.1502-6 (or a any predecessor or successor thereof or any analogous or similar provision of under state, local or foreign Law)~~, or as a transferee or successor or by Contract~~ ; (~~other than Contracts that do not relate primarily to Taxes), (4~~C) ~~Taxes arising out of or resulting from any breach~~ the failure of any of the representations and warranties contained in Section 4.15 to be true and correct in all respects (determined without regard to any qualification related to materiality contained therein); (D) the failure to perform any covenant on the part of Parent or ~~agreement of Seller Parent~~ (following the Closing) the Company or any of its ~~Affiliates~~ Subsidiaries contained in this ~~Agreement,~~ Agreement with respect to Taxes (~~5) Taxes for a Pre-Closing Tax Period imposed on~~ determined without regard to any qualification related to materiality contained therein); and (xE) any ~~transaction effected pursuant~~ failure by Parent to Section 2.3(b), (y) any settlement of any intercompany accounts of Seller Parent or its Subsidiaries pursuant to Section 6.7, or (z) any transaction or step forming part of the Seller Internal Restructurings, (6) Transfer Taxes for which Seller Parent is responsible under Section 6.5(j), (7) timely and fully pay all Taxes required to be ~~deducted or withheld with respect to the payment of the Purchase Consideration or any amounts payable to Seller~~ borne by Parent pursuant to Section 2.8 or Section 2.9, including any penalties imposed on Purchaser as a result of Purchaser’s failure to deduct or withhold any such amounts that Purchaser (or a Purchaser Designated Affiliate) was permitted to withhold under Section 2.10 (in each case, subject to Purchaser’s compliance with the notice and cooperation requirements of Section 2.10 and except for any such Taxes (and any related penalties) required to be deducted or withheld solely as a result of any assignment by Purchaser or its Affiliates for which Purchaser is responsible pursuant to Section 10.3), (8) Taxes arising from any breach of any representation or warranty contained in Section 4.16(k), (9) Taxes arising as a result of any Conveyed Subsidiary or any Subsidiary of any Conveyed Subsidiary at any time ceasing to be a member of a group for the purposes of any Tax, of which group Seller Parent or any Subsidiary of Seller Parent is or was also a member and (10) any costs and expenses, including reasonable legal and accounting fees and expenses, attributable to any item described in clauses (1) through (9) (any such Taxes for which Seller Parent is responsible pursuant to this Section 6.5(d)(i), subject to the following proviso, “Seller Indemnified Taxes”); provided that Seller Parent shall not be required to indemnify or hold harmless any Purchaser Tax Indemnified Party from and against any liability pursuant to this Section 6.5(d)(i) for (A) Taxes attributable to any action taken after the Closing by Purchaser, any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries), or any transferee of Purchaser or any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries), other than any such action that (1) is in the ordinary course of business, (2) is expressly permitted or contemplated by this Agreement, or (3) is required to be taken in order to comply with applicable Law or as a result of a change in applicable Law (a “Purchaser Tax Act”), (B) Taxes that were reflected, accrued or reserved for in the Final Closing Statement, Final Business Working Capital, or Final Business Net Cash, (C) Income Taxes to the extent that a Conveyed Subsidiary or any Subsidiary thereof had any Tax Assets as of the close of business on the Closing Date that were available, or would have been available but for their prior utilization by Purchaser or any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries after the Closing) to offset or otherwise reduce the applicable Tax Liability in respect of such Income Taxes (except any Tax Asset reflected as an asset in the Final Closing Statement and taken into account in the calculation of the Final Business Working Capital or the Final Business Net Cash), or (D) Taxes for which Purchaser Parent is responsible under Section 6.5(d)(ii)7.3. (ii) Subject to Section 6.5(d)(v), from and after the Closing, Purchaser Parent shall indemnify and hold harmless the Purchaser Tax Indemnified Parties from and against all liability, without duplication, for (1) all Taxes of Purchaser Parent and its Affiliates (other than Purchaser and its Subsidiaries) for any Tax period (other than Transfer Taxes and VAT for which Seller Parent is responsible hereunder), (2) Taxes of Purchaser and its Subsidiaries (other than the Conveyed Subsidiaries and their Subsidiaries) for any Pre-Closing Tax Period, (3) Taxes of any Person for a Pre-Closing Tax Period for which Purchaser (or any Subsidiary thereof other than any Conveyed Subsidiaries and their Subsidiaries) is liable under Treasury Regulation Section 1.1502-6 (or a similar provision of state, local or foreign Law), or Except as a transferee or successor or by Contract (other than Contracts that do not relate primarily to Taxes), (4) Taxes arising out of or resulting from any breach of any covenant or agreement of Purchaser Parent, Purchaser or their respective Affiliates contained in this Agreement, (5) Transfer Taxes for which Purchaser Parent is responsible under Section 6.5(j), (6) Taxes arising from any breach of any representation or warranty set forth in Section ~~5.17(k)~~7.3, ~~(7) Taxes for a Pre-Closing Tax Period imposed on (x) any settlement of any intercompany accounts of Purchaser or any Subsidiary of Purchaser, on~~ the one hand, and Purchaser Parent or any Subsidiary of Purchaser Parent (other than Purchaser and its Subsidiaries), on the other hand, pursuant to Section 6.7 or (y) any transaction or step forming part of the Purchaser Internal Restructurings, (8) Taxes required to be deducted or withheld with respect to any amounts payable to Purchaser Parent pursuant to Section 2.8 or Section 2.9, including any penalties imposed on Purchaser as a result of Purchaser’s failure to deduct or withhold any such amounts, (9) Taxes arising as a result of Purchaser or any Subsidiary of Purchaser (other than any Conveyed Subsidiary or a Subsidiary thereof) at any time ceasing to be a member of a group for the purposes of any Tax, of which group Purchaser Parent or any Subsidiary of Purchaser Parent (other than Purchaser or any Subsidiary of Purchaser) is or was also a member and (10) any costs and expenses, including reasonable legal and accounting fees and expenses, attributable to any item described in clauses (1) through (9) (any such Taxes for which Purchaser Parent is responsible pursuant to this Section 6.5(d)(ii), subject to the following proviso, “Purchaser Parent Indemnified Taxes”); provided that Purchaser Parent Company Stockholder shall not be ~~required to indemnify or hold harmless any Purchaser Tax Indemnified Party from and against any liability for (A) Taxes attributable~~ entitled to any action taken after the Closing by Seller Parent or any of its Affiliates, other than any such action that (1) is in the ordinary course of business, (2) is expressly permitted or contemplated by this Agreement, or (3) is required to be taken in order to comply with applicable Law or as a result of a change in applicable Law (a “Seller Tax Act”), (B) Taxes that were reflected, accrued or reserved for in the Final Closing Statement, Final Purchaser Working Capital or the Final Purchaser Net Cash, (C) Income Taxes to the extent that Purchaser or any Subsidiary thereof had any Tax Assets as of the close of business on the Closing Date that were available, or would have been available but for their prior utilization by Purchaser or any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries after the Closing), to offset or otherwise reduce the applicable Tax Liability in respect of such Income Taxes (except any Tax Asset reflected as an asset in the Final Closing Statement and taken into account in the calculation of the Final Purchaser Working Capital or the Final Purchaser Net Cash), or (D) Taxes for which Seller Parent is responsible under Section 6.5(d)(i). (iii) To the extent permitted or required by applicable Law, the taxable year of each of the Conveyed Subsidiaries and their Subsidiaries and any Subsidiary of Purchaser that includes the Closing Date shall be treated as closing on (and including) the Closing Date. Otherwise, for purposes of this Agreement, in the case of any Straddle Period: (A) Property Taxes allocable to the Pre-Closing Tax Period shall be computed based upon the ratio of the number of days in the Pre-Closing Tax Period to the number of days in the entire Straddle Period; and (B) Taxes (other than Property Taxes) allocable to the Pre-Closing Tax Period shall be computed as if such Tax period ended as of the close of business on the Closing Date and, in the case of any Taxes of Conveyed Subsidiaries (and their Subsidiaries) and Seller Parent, or in the case of any Taxes of Purchaser Parent and Purchaser (and their Subsidiaries prior to the Closing), in each case attributable to the ownership of any equity interest in any partnership or other “flow through” entity for tax purposes (including of any “controlled foreign corporation,” as defined under the Code) as if the Tax period of such partnership or other “flow through” entity ended as of the close of business on the Closing Date with the Taxes of such entity for the Pre-Closing Tax Period deemed to include any Taxes on the allocable income of such entity in respect of such Tax period; provided that exemptions, allowances or deductions that are calculated on an annual basis (including depreciation and amortization deductions) shall be allocated between the period ending on the Closing Date and the period beginning after the Closing Date in proportion to the number of days in each period. (iv) Any claim for indemnification under this Section 6.5(d) shall be made in writing upon the party from whom indemnification is sought, and shall specify in reasonable detail the basis for such claim. Any indemnity payment required to be made pursuant to this Section 6.5(d) shall be made within thirty (30) days after the indemnified party makes written demand upon the indemnifying party, but in no case earlier than five (5) Business Days prior to the date on which the relevant Taxes are required to be paid to the applicable Taxing Authority. (v) With respect to any Taxes suffered or incurred by any Conveyed Subsidiary (or any Subsidiary thereof) that was not wholly owned by Seller Parent (directly or indirectly) as of immediately prior to the Closing, the indemnification obligations of Seller Parent pursuant to Section 6.5(d)(i) in respect of such Taxes (or related costs and expenses) shall in no event exceed an amount equal to (A) the amount of such Taxes (or related costs and expenses) for which the Purchaser Tax Indemnified Parties would otherwise be entitled to indemnification pursuant to Section 6.5(d), as if such Conveyed Subsidiary (or any Subsidiary thereof) were wholly owned by Seller Parent, multiplied by (B) the direct and indirect percentage ownership of Seller Parent of such Conveyed Subsidiary (or Subsidiary thereof) as of immediately prior to the Closing. With respect to any Taxes suffered or incurred by any Subsidiary of Purchaser Parent (including Purchaser and its Subsidiaries) that was not wholly owned by Purchaser Parent (directly or indirectly) as of immediately prior to the Closing, the indemnification obligations of Purchaser Parent pursuant to Section 6.5(d)(ii) in respect of such Taxes (or related costs and expenses) shall in no event exceed an amount equal to (A) the amount of such Taxes (or related costs and expenses7.2(a)(i) for ~~which~~ any income Taxes that are triggered by the Purchaser Tax Indemnified Parties would otherwise be entitled to indemnification pursuant to Section 6.5(d), as if such Subsidiary were wholly owned by Purchaser Parent, multiplied by (B) the direct and indirect percentage ownership of Purchaser Parent of such Subsidiary as of immediately prior to the ClosingIntegrated Merger. (vi) Without duplication to any other amounts paid pursuant to this Section 6.5: (A) Within thirty (30) days following the filing of any Income Tax Return for any Conveyed Subsidiary (or any Subsidiary thereof), on the one hand, or Purchaser (or any Subsidiary thereof, other than the Conveyed Subsidiaries and their Subsidiaries), on the other hand, for any Pre-Closing Tax Period or for any Straddle Period, Seller Parent or Purchaser Parent shall (or Purchaser Parent shall cause Purchaser to) prepare a statement showing (i) the amount of Income Taxes shown as due on such filed Income Tax Return with respect to the relevant Pre-Closing Tax Period or the portion of any Straddle Period ending on and including the Closing Date (the “Final Pre-Closing Income Tax Amount”) and (ii) the amount of the Seller Accrued Income Taxes or Purchaser Accrued Income Taxes, as applicable, attributable to such Income Tax Return as reflected on the Final Closing Statement (the “Pre-Closing Income Tax Amount”) and deliver such statement to Seller Parent and Purchaser Parent, as applicable. Purchaser Parent or Seller Parent, as applicable, shall have a period of fifteen (15) Business Days to provide comments to a schedule prepared (or caused to be prepared) by Seller Parent or Purchaser Parent, respectively. If Purchaser Parent or Seller Parent, as applicable, do not provide any comments to Seller Parent or Purchaser Parent, respectively, during such period, the statement as so prepared shall be final and binding. (B) In the event the Final Pre-Closing Income Tax Amount with respect to any Income Tax Return is less than the amount of the Pre-Closing Income Tax Amount attributable to such Income Tax Return that was included on the Final Closing Statement, the Purchaser shall within five (5) Business Days following the finalization of the Final Pre-Closing Income Tax Amount hereunder (i) pay to Seller Parent the amount of such difference with respect to a Conveyed Subsidiary and their Subsidiaries and (ii) pay to Purchaser Parent the amount of such difference with respect to Purchaser and its Subsidiaries. (vii) The Parties shall use reasonable best efforts to structure any indemnity payment, true-up payment, or payment in respect of Tax Benefits made by any Party pursuant to this Agreement (including pursuant to this Section 6.5, Section 6.6 and Article VII) and any payment made by Purchaser Parent to Purchaser pursuant to Section 2.8 or Section 2.9 in the manner set forth in Clause 10 of the Structuring Considerations Agreement. The Parties shall use reasonable best efforts to structure as a special dividend any payment made by Purchaser to Purchaser Parent pursuant to Section 2.8, Section 2.9 or this Section 6.5.

Appears in 1 contract

Sources: Merger Agreement (Deerfield Capital Corp.)

Tax Indemnification. (ia) ~~Subject to Section 6.5(d)(v), from~~ From and ~~after the Closing, Seller Parent agrees to indemnify and hold harmless Purchaser and its Subsidiaries (including the Conveyed Subsidiaries and their Subsidiaries~~ after the Closing Date, Parent and Seller, jointly and severally, shall indemnify Purchaser and its affiliates and each of their respective officers, directors, employees, stockholders, members, partners, agents and representatives and their respective successors and assigns (the "PURCHASER INDEMNITEES") against and hold them harmless from (~~collectively, the “Purchaser Tax Indemnified Parties”~~i) ~~from and against~~ all ~~liability, without duplication,~~ liability for ~~(1)~~ Taxes of the ~~Conveyed Subsidiaries~~ Company and ~~their Subsidiaries~~ its subsidiaries for ~~any Pre-Closing Tax Period (including any Taxes payable in respect of an election under Section 965(h) of~~ the Code), (2) Taxes of any Seller (other than any Transfer Taxes and VAT for which Purchaser is responsible hereunder) including, Taxes (other than Taxes of the Conveyed Subsidiaries and their Subsidiaries) imposed with respect to, arising out of or relating to the Purchased Assets or the Business for a Pre-Closing Tax Period, (3ii) ~~Taxes~~ all liability (as a result of ~~any Person (other than the Conveyed Subsidiaries and their Subsidiaries~~Treasury Regulation ss. 1.1502-6(a) ~~for a Pre-Closing Tax Period for which any Conveyed Subsidiary~~ (or any ~~Subsidiary thereof) is liable under Treasury Regulation Section 1.1502-6 (or a~~ similar provision of state, local or foreign ~~Law~~law), ) for Income Taxes of Parent and Seller or ~~as a transferee~~ any other corporation which is or ~~successor or by Contract~~ has been affiliated with Parent and Seller (other than ~~Contracts that do not relate primarily to Taxes), (4) Taxes arising out of or resulting from any breach of any covenant or agreement of Seller Parent~~ the Company or any of its ~~Affiliates contained in this Agreement, (5) Taxes for a Pre-Closing Tax Period imposed on (x) any transaction effected pursuant to Section 2.3(b~~subsidiaries), (yiii) any settlement of any intercompany accounts of Seller Parent or its Subsidiaries pursuant to Section 6.7, or (z) any transaction or step forming part of the Seller Internal Restructurings, (6) Transfer all liability for Taxes ~~for which Seller Parent is responsible under Section 6.5(j), (7) Taxes required to be deducted or withheld with respect~~ related to the payment of the Purchase Consideration or any amounts payable to Seller Parent pursuant to Section 2.8 or Section 2.9, including any penalties imposed on Purchaser as a result of Purchaser’s failure to deduct or withhold any such amounts that Purchaser (or a Purchaser Designated Affiliate) was permitted to withhold under Section 2.10 (in each case, subject to Purchaser’s compliance with the notice and cooperation requirements of Section 2.10 and except for any such Taxes (and any related penalties) required to be deducted or withheld solely as a result of any assignment by Purchaser or its Affiliates for which Purchaser is responsible pursuant to Section 10.3), (8) Taxes arising from any breach of any representation or warranty contained in Section 4.16(k), (9) Taxes arising as a result of any Conveyed Subsidiary or any Subsidiary of any Conveyed Subsidiary at any time ceasing to be a member of a group for the purposes of any Tax, of which group Seller Parent or any Subsidiary of Seller Parent is or was also a member Excluded Assets and (10iv) ~~any costs and expenses, including~~ all liability for reasonable legal ~~and accounting~~ fees and ~~expenses,~~ expenses attributable to any item ~~described~~ in ~~clauses~~ clause (~~1) through (9) (any such Taxes for which Seller Parent is responsible pursuant to this Section 6.5(d)(i~~i), ~~subject to~~ (ii) or (iii) above. Notwithstanding the ~~following proviso~~foregoing, “Parent and Seller ~~Indemnified Taxes”); provided that Seller Parent~~ shall not ~~be required to~~ indemnify or and hold harmless any Purchaser ~~Tax Indemnified Party~~ Indemnitee from ~~and against~~ any liability ~~pursuant to this Section 6.5(d)(i)~~ for ~~(A)~~ Taxes attributable to any action taken on or after the Closing Date by Purchaser, any of its ~~Affiliates~~ affiliates (including the ~~Conveyed Subsidiaries and their Subsidiaries~~Company or any of its subsidiaries), or any transferee of Purchaser or any of its ~~Affiliates~~ affiliates (~~including the Conveyed Subsidiaries and their Subsidiaries),~~ other than any such action ~~that (1) is in the ordinary course of business, (2) is~~ expressly ~~permitted~~ required by Applicable Law or ~~contemplated~~ by this Agreement~~, or (3~~) ~~is required to be taken in order to comply with applicable Law or as a result of a change in applicable Law~~ (a “"PURCHASER TAX ACT") or attributable to a breach by Purchaser ~~Tax Act”~~of its obligations under this Agreement. (b) From and after the Closing Date, Purchaser shall indemnify Parent, Seller and their affiliates and each of their respective officers, directors, employees, stockholders, members, partners, agents and representatives and their respective successors and assigns (the "SELLER INDEMNITEES") against and hold them harmless from (i) all liability for Taxes of the Company and its subsidiaries for all taxable periods whether ending before, on or after the Closing Date other than Taxes described in 7.01(a)(i) through (iii), (Bii) all liability for Taxes ~~that were reflected, accrued~~ attributable to a Purchaser Tax Act or ~~reserved for in the Final Closing Statement, Final Business Working Capital, or Final Business Net Cash, (C) Income Taxes~~ to ~~the extent that~~ a ~~Conveyed Subsidiary or any Subsidiary thereof had any Tax Assets as of the close of business on the Closing Date that were available, or would have been available but for their prior utilization~~ breach by Purchaser ~~or any~~ of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries after the Closing) to offset or otherwise reduce the applicable Tax Liability in respect of such Income Taxes (except any Tax Asset reflected as an asset in the Final Closing Statement and taken into account in the calculation of the Final Business Working Capital or the Final Business Net Cash), or (D) Taxes for which Purchaser Parent is responsible obligations under Section 6.5(d)(ii). (ii) Subject to Section 6.5(d)(v), from and after the Closing, Purchaser Parent shall indemnify and hold harmless the Purchaser Tax Indemnified Parties from and against all liability, without duplication, for (1) all Taxes of Purchaser Parent and its Affiliates (other than Purchaser and its Subsidiaries) for any Tax period (other than Transfer Taxes and VAT for which Seller Parent is responsible hereunder), (2) Taxes of Purchaser and its Subsidiaries (other than the Conveyed Subsidiaries and their Subsidiaries) for any Pre-Closing Tax Period, (3) Taxes of any Person for a Pre-Closing Tax Period for which Purchaser (or any Subsidiary thereof other than any Conveyed Subsidiaries and their Subsidiaries) is liable under Treasury Regulation Section 1.1502-6 (or a similar provision of state, local or foreign Law), or as a transferee or successor or by Contract (other than Contracts that do not relate primarily to Taxes), (4) Taxes arising out of or resulting from any breach of any covenant or agreement of Purchaser Parent, Purchaser or their respective Affiliates contained in this Agreement, (5) Transfer Taxes for which Purchaser Parent is responsible under Section 6.5(j), (6) Taxes arising from any breach of any representation or warranty in Section 5.17(k), (7) Taxes for a Pre-Closing Tax Period imposed on (x) any settlement of any intercompany accounts of Purchaser or any Subsidiary of Purchaser, on the one hand, and Purchaser Parent or any Subsidiary of Purchaser Parent (other than Purchaser and its Subsidiaries), on the other hand, pursuant to Section 6.7 or (y) any transaction or step forming part of the Purchaser Internal Restructurings, (8) Taxes required to be deducted or withheld with respect to any amounts payable to Purchaser Parent pursuant to Section 2.8 or Section 2.9, including any penalties imposed on Purchaser as a result of Purchaser’s failure to deduct or withhold any such amounts, (9) Taxes arising as a result of Purchaser or any Subsidiary of Purchaser (other than any Conveyed Subsidiary or a Subsidiary thereof) at any time ceasing to be a member of a group for the purposes of any Tax, of which group Purchaser Parent or any Subsidiary of Purchaser Parent (other than Purchaser or any Subsidiary of Purchaser) is or was also a member and (10iii) ~~any costs and expenses, including~~ all liability for reasonable legal ~~and accounting~~ fees and ~~expenses,~~ expenses attributable to any item ~~described~~ in clauses (1) through (9) (any such Taxes for which Purchaser Parent is responsible pursuant to this Section 6.5(d)(ii), subject to the following proviso, “Purchaser Parent Indemnified Taxes”); provided that Purchaser Parent shall not be required to indemnify or hold harmless any Purchaser Tax Indemnified Party from and against any liability for (A) Taxes attributable to any action taken after the Closing by Seller Parent or any of its Affiliates, other than any such action that (1) is in the ordinary course of business, (2) is expressly permitted or contemplated by this Agreement, or (3) is required to be taken in order to comply with applicable Law or as a result of a change in applicable Law (a “Seller Tax Act”), (B) Taxes that were reflected, accrued or reserved for in the Final Closing Statement, Final Purchaser Working Capital or the Final Purchaser Net Cash, (C) Income Taxes to the extent that Purchaser or any Subsidiary thereof had any Tax Assets as of the close of business on the Closing Date that were available, or would have been available but for their prior utilization by Purchaser or any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries after the Closing), to offset or otherwise reduce the applicable Tax Liability in respect of such Income Taxes (except any Tax Asset reflected as an asset in the Final Closing Statement and taken into account in the calculation of the Final Purchaser Working Capital or the Final Purchaser Net Cash), or (D) Taxes for which Seller Parent is responsible under Section 6.5(d)(i). (iii) To the extent permitted or required by applicable Law, the taxable year of each of the Conveyed Subsidiaries and their Subsidiaries and any Subsidiary of Purchaser that includes the Closing Date shall be treated as closing on (and including) the Closing Date. Otherwise, for purposes of this Agreement, in the case of any Straddle Period: (A) Property Taxes allocable to the Pre-Closing Tax Period shall be computed based upon the ratio of the number of days in the Pre-Closing Tax Period to the number of days in the entire Straddle Period; and (B) Taxes (other than Property Taxes) allocable to the Pre-Closing Tax Period shall be computed as if such Tax period ended as of the close of business on the Closing Date and, in the case of any Taxes of Conveyed Subsidiaries (and their Subsidiaries) and Seller Parent, or in the case of any Taxes of Purchaser Parent and Purchaser (and their Subsidiaries prior to the Closing), in each case attributable to the ownership of any equity interest in any partnership or other “flow through” entity for tax purposes (including of any “controlled foreign corporation,” as defined under the Code) as if the Tax period of such partnership or other “flow through” entity ended as of the close of business on the Closing Date with the Taxes of such entity for the Pre-Closing Tax Period deemed to include any Taxes on the allocable income of such entity in respect of such Tax period; provided that exemptions, allowances or deductions that are calculated on an annual basis (including depreciation and amortization deductions) shall be allocated between the period ending on the Closing Date and the period beginning after the Closing Date in proportion to the number of days in each period. (iv) Any claim for indemnification under this Section 6.5(d) shall be made in writing upon the party from whom indemnification is sought, and shall specify in reasonable detail the basis for such claim. Any indemnity payment required to be made pursuant to this Section 6.5(d) shall be made within thirty (30) days after the indemnified party makes written demand upon the indemnifying party, but in no case earlier than five (5) Business Days prior to the date on which the relevant Taxes are required to be paid to the applicable Taxing Authority. (v) With respect to any Taxes suffered or incurred by any Conveyed Subsidiary (or any Subsidiary thereof) that was not wholly owned by Seller Parent (directly or indirectly) as of immediately prior to the Closing, the indemnification obligations of Seller Parent pursuant to Section 6.5(d)(i) in respect of such Taxes (or related costs and expenses) shall in no event exceed an amount equal to (A) the amount of such Taxes (or related costs and expenses) for which the Purchaser Tax Indemnified Parties would otherwise be entitled to indemnification pursuant to Section 6.5(d), as if such Conveyed Subsidiary (or any Subsidiary thereof) were wholly owned by Seller Parent, multiplied by (B) the direct and indirect percentage ownership of Seller Parent of such Conveyed Subsidiary (or Subsidiary thereof) as of immediately prior to the Closing. With respect to any Taxes suffered or incurred by any Subsidiary of Purchaser Parent (including Purchaser and its Subsidiaries) that was not wholly owned by Purchaser Parent (directly or indirectly) as of immediately prior to the Closing, the indemnification obligations of Purchaser Parent pursuant to Section 6.5(d)(ii) in respect of such Taxes (or related costs and expenses) shall in no event exceed an amount equal to (A) the amount of such Taxes (or related costs and expenses) for which the Purchaser Tax Indemnified Parties would otherwise be entitled to indemnification pursuant to Section 6.5(d), as if such Subsidiary were wholly owned by Purchaser Parent, multiplied by (B) the direct and indirect percentage ownership of Purchaser Parent of such Subsidiary as of immediately prior to the Closing. (vi) Without duplication to any other amounts paid pursuant to this Section 6.5: (A) Within thirty (30) days following the filing of any Income Tax Return for any Conveyed Subsidiary (or any Subsidiary thereof), on the one hand, or Purchaser (or any Subsidiary thereof, other than the Conveyed Subsidiaries and their Subsidiaries), on the other hand, for any Pre-Closing Tax Period or for any Straddle Period, Seller Parent or Purchaser Parent shall (or Purchaser Parent shall cause Purchaser to) prepare a statement showing clause (i) ~~the amount of Income Taxes shown as due on such filed Income Tax Return with respect to the relevant Pre-Closing Tax Period~~ or ~~the portion of any Straddle Period ending on and including the Closing Date (the “Final Pre-Closing Income Tax Amount”) and~~ (ii) the amount of the Seller Accrued Income Taxes or Purchaser Accrued Income Taxes, as applicable, attributable to such Income Tax Return as reflected on the Final Closing Statement (the “Pre-Closing Income Tax Amount”) and deliver such statement to Seller Parent and Purchaser Parent, as applicable. Purchaser Parent or Seller Parent, as applicable, shall have a period of fifteen (15) Business Days to provide comments to a schedule prepared (or caused to be prepared) by Seller Parent or Purchaser Parent, respectively. If Purchaser Parent or Seller Parent, as applicable, do not provide any comments to Seller Parent or Purchaser Parent, respectively, during such period, the statement as so prepared shall be final and bindingabove. (B) In the event the Final Pre-Closing Income Tax Amount with respect to any Income Tax Return is less than the amount of the Pre-Closing Income Tax Amount attributable to such Income Tax Return that was included on the Final Closing Statement, the Purchaser shall within five (5) Business Days following the finalization of the Final Pre-Closing Income Tax Amount hereunder (i) pay to Seller Parent the amount of such difference with respect to a Conveyed Subsidiary and their Subsidiaries and (ii) pay to Purchaser Parent the amount of such difference with respect to Purchaser and its Subsidiaries. (vii) The Parties shall use reasonable best efforts to structure any indemnity payment, true-up payment, or payment in respect of Tax Benefits made by any Party pursuant to this Agreement (including pursuant to this Section 6.5, Section 6.6 and Article VII) and any payment made by Purchaser Parent to Purchaser pursuant to Section 2.8 or Section 2.9 in the manner set forth in Clause 10 of the Structuring Considerations Agreement. The Parties shall use reasonable best efforts to structure as a special dividend any payment made by Purchaser to Purchaser Parent pursuant to Section 2.8, Section 2.9 or this Section 6.5.

Appears in 1 contract

Sources: Stock Purchase Agreement (Primedia Co Inc)

Tax Indemnification. 110 (i) ~~Subject to Section 6.5(d)(v)~~Pfizer shall indemnify, ~~from and after the Closing, Seller Parent agrees to indemnify~~ defend and hold ~~harmless~~ the Purchaser and its ~~Subsidiaries (including the Conveyed Subsidiaries and their Subsidiaries after the Closing Date) (collectively, the “Purchaser Tax Indemnified Parties”)~~ Affiliates harmless from and against all ~~liability, without duplication,~~ liability for ~~(1)~~ Taxes of the Conveyed Subsidiaries, their Subsidiaries and ~~their Subsidiaries~~ any Asset Selling Corporation (with respect to the Business) for any ~~Pre-~~taxable period that ends on or before the Closing ~~Tax~~ Date and the portion of any Straddle Period ending on the Closing Date, including, without limitation (~~including~~ A) all liability for any ~~Taxes payable~~ breach of Pfizer's representations and warranties contained in ~~respect of an election under Section 965(h) of the Code)~~Article V, (2B) all liability (as a result of Treasury Regulation Section 1.1502-6(a) or otherwise) for Income Taxes of Pfizer or any ~~Seller (~~other than any Transfer Taxes and VAT for which Purchaser is responsible hereunder) including, Taxes (other than Taxes of the Conveyed Subsidiaries and their Subsidiaries) imposed with respect to, arising out of or relating to the Purchased Assets or the Business for a Pre-Closing Tax Period, (3) Taxes of any Person (other than the Conveyed Subsidiaries ~~and~~ or any of their Subsidiaries) which is or has ever been affiliated with the Conveyed Subsidiaries or any of their Subsidiaries, or with whom the Conveyed Subsidiaries or any of their Subsidiaries otherwise joins or has ever joined (or is or has ever been required to join) in filing any consolidated, combined or unitary Tax Return, prior to the Closing, (C) all liability for Income Taxes arising as a ~~Pre-Closing Tax Period for which any Conveyed Subsidiary~~ result of an election under Section 338(h)(10) of the Code (or any ~~Subsidiary thereof) is liable under Treasury Regulation Section 1.1502-6 (or a~~ similar provision of state, local or foreign ~~Law)~~law) with 111 respect to the sale or deemed sale of the shares of capital stock of Howmedica Leibinger Inc., (D) all Tax liability for Subpart F income includable in the income of Purchaser or ~~as a transferee~~ its Affiliates relating to taxable periods and attributable to transactions occurring on or ~~successor or by Contract~~ before the Closing Date, and (~~other than Contracts that do not relate primarily~~ E) all liability for reasonable legal, accounting and appraisal fees and expense with respect to ~~Taxes~~any item described in clause (A), (4B), (C) or (D) above; provided, however, that Pfizer's indemnity obligation for Taxes ~~arising out~~ pursuant to this Section 7.4(g)(i) shall be reduced by refunds of ~~or resulting~~ Taxes (excluding carrybacks from ~~any breach of any covenant or agreement of Seller Parent~~ post-Closing Date years to the extent permitted hereunder) with respect to such periods received after the Closing Date by Purchaser or any of its Affiliates ~~contained~~ and not previously remitted to Pfizer. Notwithstanding the foregoing, and except as provided in ~~this Agreement, (5) Taxes for a Pre-Closing Tax Period imposed on (x) any transaction effected pursuant to~~ the last sentence of Section ~~2.3(b~~7.4(a)(i), Pfizer shall not indemnify, defend or hold harmless the Purchaser or any of its Affiliates from any liability for Taxes attributable (yi) to any ~~settlement of any intercompany accounts of Seller Parent or its Subsidiaries pursuant to~~ Code Section ~~6.7, or~~ 338(g) election (z) any transaction or step forming part of the Seller Internal Restructurings, (6) Transfer Taxes for which Seller Parent is responsible under Section 6.5(j), (7) Taxes required to be deducted or withheld other than with respect to ~~the payment~~ Howmedica Leibinger Inc. for which an election under Section 338(h)(10) of the ~~Purchase Consideration~~ Code will be made) or (ii) 112 any ~~amounts payable to Seller Parent pursuant to Section 2.8~~ other action taken or ~~Section 2.9, including any penalties imposed on Purchaser as a result of Purchaser’s~~ failure to ~~deduct or withhold any such amounts that Purchaser~~ act (or which would otherwise give rise to a ~~Purchaser Designated Affiliate~~Pfizer Tax indemnity payment) was permitted to withhold under Section 2.10 (in each case, subject to Purchaser’s compliance with the notice and cooperation requirements of Section 2.10 and except for any such Taxes (and any related penalties) required to be deducted or withheld solely as a result of any assignment by Purchaser or its Affiliates for which Purchaser is responsible pursuant to Section 10.3), (8) Taxes arising from any breach of any representation or warranty contained in Section 4.16(k), (9) Taxes arising as a result of any Conveyed Subsidiary or any Subsidiary of any Conveyed Subsidiary at any time ceasing to be a member of a group for the purposes of any Tax, of which group Seller Parent or any Subsidiary of Seller Parent is or was also a member and (10) any costs and expenses, including reasonable legal and accounting fees and expenses, attributable to any item described in clauses (1) through (9) (any such Taxes for which Seller Parent is responsible pursuant to this Section 6.5(d)(i), subject to the following proviso, “Seller Indemnified Taxes”); provided that Seller Parent shall not be required to indemnify or hold harmless any Purchaser Tax Indemnified Party from and against any liability pursuant to this Section 6.5(d)(i) for (A) Taxes attributable to any action taken after the Closing by Purchaser, any of its Affiliates (including the Conveyed Subsidiaries ~~and~~ or any of their Subsidiaries), or any transferee of Purchaser or any of its Affiliates (~~including the Conveyed Subsidiaries and their Subsidiaries),~~ other than any such action ~~that (1) is in the ordinary course of business, (2) is~~ expressly ~~permitted~~ required or otherwise expressly contemplated by this ~~Agreement,~~ Agreement or (3with the written consent of Pfizer) ~~is required to be taken in order to comply with applicable Law or as a result of a change in applicable Law~~ (a “"Purchaser Tax Act~~”),~~ ") or (Bii) ~~Taxes that were reflected,~~ to the extent accrued or reserved ~~for~~ against in the ~~Final Closing~~ Working Capital Statement. Further, ~~Final Business Working Capital~~Pfizer's obligation to indemnify, defend or ~~Final Business Net Cash, (C) Income Taxes to~~ hold harmless the extent that a Conveyed Subsidiary or any Subsidiary thereof had any Tax Assets as of the close of business on the Closing Date that were available, or would have been available but for their prior utilization by Purchaser or any of its Affiliates from any liability shall terminate effective with the expiration of the applicable statute of limitations (including the Conveyed Subsidiaries and their Subsidiaries after the Closing) to offset or otherwise reduce the applicable Tax Liability in respect of such Income Taxes (except any Tax Asset reflected as an asset in the Final Closing Statement and taken into account in the calculation of the Final Business Working Capital or the Final Business Net Cash), or (D) Taxes for which Purchaser Parent is responsible under Section 6.5(d)(ii). (ii) Subject to Section 6.5(d)(v), from and after the Closing, Purchaser Parent shall indemnify and hold harmless the Purchaser Tax Indemnified Parties from and against all liability, without duplication, for (1) all Taxes of Purchaser Parent and its Affiliates (other than Purchaser and its Subsidiaries) for any Tax period (other than Transfer Taxes and VAT for which Seller Parent is responsible hereunder), (2) Taxes of Purchaser and its Subsidiaries (other than the Conveyed Subsidiaries and their Subsidiaries) for any Pre-Closing Tax Period, (3) Taxes of any Person for a Pre-Closing Tax Period for which Purchaser (or any Subsidiary thereof other than any Conveyed Subsidiaries and their Subsidiaries) is liable under Treasury Regulation Section 1.1502-6 (or a similar provision of state, local or foreign Law), or as a transferee or successor or by Contract (other than Contracts that do not relate primarily to Taxes), (4) Taxes arising out of or resulting from any breach of any covenant or agreement of Purchaser Parent, Purchaser or their respective Affiliates contained in this Agreement, (5) Transfer Taxes for which Purchaser Parent is responsible under Section 6.5(j), (6) Taxes arising from any breach of any representation or warranty in Section 5.17(k), (7) Taxes for a Pre-Closing Tax Period imposed on (x) any settlement of any intercompany accounts of Purchaser or any Subsidiary of Purchaser, on the one hand, and Purchaser Parent or any Subsidiary of Purchaser Parent (other than Purchaser and its Subsidiaries), on the other hand, pursuant to Section 6.7 or (y) any transaction or step forming part of the Purchaser Internal Restructurings, (8) Taxes required to be deducted or withheld with respect to any amounts payable to Purchaser Parent pursuant to Section 2.8 or Section 2.9, including any penalties imposed on Purchaser as a result of Purchaser’s failure to deduct or withhold any such amounts, (9) Taxes arising as a result of Purchaser or any Subsidiary of Purchaser (other than any Conveyed Subsidiary or a Subsidiary thereof) at any time ceasing to be a member of a group for the purposes of any Tax, of which group Purchaser Parent or any Subsidiary of Purchaser Parent (other than Purchaser or any Subsidiary of Purchaser) is or was also a member and (10) any costs and expenses, including reasonable legal and accounting fees and expenses, attributable to any item described in clauses (1) through (9) (any such Taxes for which Purchaser Parent is responsible pursuant to this Section 6.5(d)(ii), subject to the following proviso, “Purchaser Parent Indemnified Taxes”); provided that Purchaser Parent shall not be required to indemnify or hold harmless any Purchaser Tax Indemnified Party from and against any liability for (A) Taxes attributable to any action taken after the Closing by Seller Parent or any of its Affiliates, other than any such action that (1) is in the ordinary course of business, (2) is expressly permitted or contemplated by this Agreement, or (3) is required to be taken in order to comply with applicable Law or as a result of a change in applicable Law (a “Seller Tax Act”), (B) Taxes that were reflected, accrued or reserved for in the Final Closing Statement, Final Purchaser Working Capital or the Final Purchaser Net Cash, (C) Income Taxes to the extent that Purchaser or any Subsidiary thereof had any Tax Assets as of the close of business on the Closing Date that were available, or would have been available but for their prior utilization by Purchaser or any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries after the Closing), to offset or otherwise reduce the applicable Tax Liability in respect of such Income Taxes (except any Tax Asset reflected as an asset in the Final Closing Statement and taken into account in the calculation of the Final Purchaser Working Capital or the Final Purchaser Net Cash), or (D) Taxes for which Seller Parent is responsible under Section 6.5(d)(i). (iii) To the extent permitted or required by applicable Law, the taxable year of each of the Conveyed Subsidiaries and their Subsidiaries and any Subsidiary of Purchaser that includes the Closing Date shall be treated as closing on (and including) the Closing Date. Otherwise, for purposes of this Agreement, in the case of any Straddle Period: (A) Property Taxes allocable to the Pre-Closing Tax Period shall be computed based upon the ratio of the number of days in the Pre-Closing Tax Period to the number of days in the entire Straddle Period; and (B) Taxes (other than Property Taxes) allocable to the Pre-Closing Tax Period shall be computed as if such Tax period ended as of the close of business on the Closing Date and, in the case of any Taxes of Conveyed Subsidiaries (and their Subsidiaries) and Seller Parent, or in the case of any Taxes of Purchaser Parent and Purchaser (and their Subsidiaries prior to the Closing), in each case attributable to the ownership of any equity interest in any partnership or other “flow through” entity for tax purposes (including of any “controlled foreign corporation,” as defined under the Code) as if the Tax period of such partnership or other “flow through” entity ended as of the close of business on the Closing Date with the Taxes of such entity for the Pre-Closing Tax Period deemed to include any Taxes on the allocable income of such entity in respect of such Tax period; provided that exemptions, allowances or deductions that are calculated on an annual basis (including depreciation and amortization deductions) shall be allocated between the period ending on the Closing Date and the period beginning after the Closing Date in proportion to the number of days in each period. (iv) Any claim for indemnification under this Section 6.5(d) shall be made in writing upon the party from whom indemnification is sought, and shall specify in reasonable detail the basis for such claim. Any indemnity payment required to be made pursuant to this Section 6.5(d) shall be made within thirty (30) days after the indemnified party makes written demand upon the indemnifying party, but in no case earlier than five (5) Business Days prior to the date on which the relevant Taxes are required to be paid to the applicable Taxing Authority. (v) With respect to any Taxes suffered or incurred by any Conveyed Subsidiary (or any Subsidiary thereof) that was not wholly owned by Seller Parent (directly or indirectly) as of immediately prior to the Closing, the indemnification obligations of Seller Parent pursuant to Section 6.5(d)(iextensions) in respect of such Taxes (or related costs and expenses) shall in no event exceed an amount equal to (A) the amount of such Taxes (or related costs and expenses) for which the Purchaser Tax Indemnified Parties would otherwise be entitled to indemnification pursuant to Section 6.5(d), as if such Conveyed Subsidiary (or any Subsidiary thereof) were wholly owned by Seller Parent, multiplied by (B) the direct and indirect percentage ownership of Seller Parent of such Conveyed Subsidiary (or Subsidiary thereof) as of immediately prior to the Closing. With respect to any Taxes suffered or incurred by any Subsidiary of Purchaser Parent (including Purchaser and its Subsidiaries) that was not wholly owned by Purchaser Parent (directly or indirectly) as of immediately prior to the Closing, the indemnification obligations of Purchaser Parent pursuant to Section 6.5(d)(ii) in respect of such Taxes (or related costs and expenses) shall in no event exceed an amount equal to (A) the amount of such Taxes (or related costs and expenses) for which the Purchaser Tax Indemnified Parties would otherwise be entitled to indemnification pursuant to Section 6.5(d), as if such Subsidiary were wholly owned by Purchaser Parent, multiplied by (B) the direct and indirect percentage ownership of Purchaser Parent of such Subsidiary as of immediately prior to the Closingliability. (vi) Without duplication to any other amounts paid pursuant to this Section 6.5: (A) Within thirty (30) days following the filing of any Income Tax Return for any Conveyed Subsidiary (or any Subsidiary thereof), on the one hand, or Purchaser (or any Subsidiary thereof, other than the Conveyed Subsidiaries and their Subsidiaries), on the other hand, for any Pre-Closing Tax Period or for any Straddle Period, Seller Parent or Purchaser Parent shall (or Purchaser Parent shall cause Purchaser to) prepare a statement showing (i) the amount of Income Taxes shown as due on such filed Income Tax Return with respect to the relevant Pre-Closing Tax Period or the portion of any Straddle Period ending on and including the Closing Date (the “Final Pre-Closing Income Tax Amount”) and (ii) the amount of the Seller Accrued Income Taxes or Purchaser Accrued Income Taxes, as applicable, attributable to such Income Tax Return as reflected on the Final Closing Statement (the “Pre-Closing Income Tax Amount”) and deliver such statement to Seller Parent and Purchaser Parent, as applicable. Purchaser Parent or Seller Parent, as applicable, shall have a period of fifteen (15) Business Days to provide comments to a schedule prepared (or caused to be prepared) by Seller Parent or Purchaser Parent, respectively. If Purchaser Parent or Seller Parent, as applicable, do not provide any comments to Seller Parent or Purchaser Parent, respectively, during such period, the statement as so prepared shall be final and binding. (B) In the event the Final Pre-Closing Income Tax Amount with respect to any Income Tax Return is less than the amount of the Pre-Closing Income Tax Amount attributable to such Income Tax Return that was included on the Final Closing Statement, the Purchaser shall within five (5) Business Days following the finalization of the Final Pre-Closing Income Tax Amount hereunder (i) pay to Seller Parent the amount of such difference with respect to a Conveyed Subsidiary and their Subsidiaries and (ii) pay to Purchaser Parent the amount of such difference with respect to Purchaser and its Subsidiaries. (vii) The Parties shall use reasonable best efforts to structure any indemnity payment, true-up payment, or payment in respect of Tax Benefits made by any Party pursuant to this Agreement (including pursuant to this Section 6.5, Section 6.6 and Article VII) and any payment made by Purchaser Parent to Purchaser pursuant to Section 2.8 or Section 2.9 in the manner set forth in Clause 10 of the Structuring Considerations Agreement. The Parties shall use reasonable best efforts to structure as a special dividend any payment made by Purchaser to Purchaser Parent pursuant to Section 2.8, Section 2.9 or this Section 6.5.

Appears in 1 contract

Sources: Stock and Asset Purchase Agreement (Pfizer Inc)

Tax Indemnification. (a) Each of Comcast, Cox, and GE -------------------- (each, in such capacity, a "MergerIndemnitor") shall indemnify the Company, its ---------------- affiliates and each of their respective officers, directors, employees, stockholders, agents and representatives against and hold them harmless from (i) Subject to Section 6.5(d)(v), from and after the Closing, Seller Parent agrees to indemnify and hold harmless Purchaser and its Subsidiaries (including the Conveyed Subsidiaries and their Subsidiaries after the Closing Date) (collectively, the “Purchaser Tax Indemnified Parties”) from and against all ~~liability, without duplication,~~ liability for ~~(1)~~ Covered Taxes of the ~~Conveyed Subsidiaries and their Subsidiaries~~ MergerIndemnitor's Subsidiary for ~~any Pre-Closing Tax Period (including any Taxes payable in respect of an election under Section 965(h) of~~ the Code), (2) Taxes of any Seller (other than any Transfer Taxes and VAT for which Purchaser is responsible hereunder) including, Taxes (other than Taxes of the Conveyed Subsidiaries and their Subsidiaries) imposed with respect to, arising out of or relating to the Purchased Assets or the Business for a Pre-Closing Tax Period, (3ii) ~~Taxes of any Person~~ all liability (other than the Conveyed Subsidiaries and their Subsidiaries) for a Pre-Closing Tax Period for which any Conveyed Subsidiary (or any Subsidiary thereof) is liable under Treasury Regulation Section 1.1502-6 (or a similar provision of state, local or foreign Law), or as a transferee or successor or by Contract (other than Contracts that do not relate primarily to Taxes), (4) Taxes arising out of or resulting from any breach of any covenant or agreement of Seller Parent or any of its Affiliates contained in this Agreement, (5) Taxes for a Pre-Closing Tax Period imposed on (x) any transaction effected pursuant to Section 2.3(b), (y) any settlement of any intercompany accounts of Seller Parent or its Subsidiaries pursuant to Section 6.7, or (z) any transaction or step forming part of the Seller Internal Restructurings, (6) Transfer Taxes for which Seller Parent is responsible under Section 6.5(j), (7) Taxes required to be deducted or withheld with respect to the payment of the Purchase Consideration or any amounts payable to Seller Parent pursuant to Section 2.8 or Section 2.9, including any penalties imposed on Purchaser as a result of ~~Purchaser’s~~ Treasury Regulation (S) 1.1502-6(a) or otherwise) for Covered Taxes of any corporation which, prior to the Closing, was affiliated with the MergerIndemnitor's Subsidiary or with which the MergerIndemnitor's Subsidiary, prior to the Closing, otherwise filed a consolidated, combined, unitary or aggregate Tax return, (iii) all liability for Covered Taxes resulting from the merger of the MergerIndemnitor's Subsidiary with and into the Company failing to qualify under either (I) Section 351(a) of the Code coupled with a deemed liquidation of the MergerIndemnitor's Subsidiary under Section 332 of the Code or (II) Section 368(a) of the Code, (except, in either such case, if and to the extent any failure to deduct or withhold any such amounts that Purchaser (or a Purchaser Designated Affiliate) was permitted to withhold under Section 2.10 (in each case, subject to Purchaser’s compliance with the notice and cooperation requirements of Section 2.10 and except for any such Taxes (and any related penalties) required to be deducted or withheld solely as a result of any assignment by Purchaser or its Affiliates for which Purchaser is responsible pursuant to Section 10.3), (8) Taxes arising from any breach of any representation or warranty contained in Section 4.16(k), (9) Taxes arising as a result of any Conveyed Subsidiary or any Subsidiary of any Conveyed Subsidiary at any time ceasing to be a member of a group for the purposes of any Tax, of which group Seller Parent or any Subsidiary of Seller Parent is or was also a member and (10) any costs and expenses, including reasonable legal and accounting fees and expenses, attributable to any item described in clauses (1) through (9) (any such Taxes for which Seller Parent is responsible pursuant to this Section 6.5(d)(i), subject to the following proviso, “Seller Indemnified Taxes”); provided that Seller Parent shall not be required to indemnify or hold harmless any Purchaser Tax Indemnified Party from and against any liability pursuant to this Section 6.5(d)(i) for (A) Taxes so qualify attributable to any action taken after the Closing by ~~Purchaser, any of its Affiliates (including~~ the ~~Conveyed Subsidiaries and their Subsidiaries), or any transferee of Purchaser~~ Company or any of its ~~Affiliates (including the Conveyed Subsidiaries and their Subsidiaries)~~subsidiaries, other than any such action ~~that (1) is in the ordinary course of business, (2) is~~ expressly ~~permitted~~ required or contemplated by this Agreement~~, or (3) is required to be taken in order to comply with applicable Law or as a result of a change in applicable Law (a “Purchaser Tax Act”~~), and (Biv) ~~Taxes that were reflected~~all liability for any reasonable legal, ~~accrued~~ accounting, appraisal, consulting or ~~reserved for in the Final Closing Statement, Final Business Working Capital, or Final Business Net Cash, (C) Income Taxes~~ similar fees and expenses relating to the extent that a Conveyed Subsidiary or any Subsidiary thereof had any Tax Assets as of the close of business on the Closing Date that were available, or would have been available but for their prior utilization by Purchaser or any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries after the Closing) to offset or otherwise reduce the applicable Tax Liability in respect of such Income Taxes (except any Tax Asset reflected as an asset in the Final Closing Statement and taken into account in the calculation of the Final Business Working Capital or the Final Business Net Cash), or (D) Taxes for which Purchaser Parent is responsible under Section 6.5(d)(ii)foregoing. (iib) ~~Subject to Section 6.5(d)(v)~~Each of MediaOne, ~~from~~ ▇▇▇▇▇▇▇▇, and ~~after the Closing~~TWE (each, ~~Purchaser Parent~~ in such capacity, a "ContributionIndemnitor") shall indemnify the Company, its affiliates and each ----------------------- of their respective officers, directors, employees, stockholders, agents and representatives against and hold them harmless from (i) in the ~~Purchaser Tax Indemnified Parties from and against all liability, without duplication, for (1) all Taxes~~ case of ~~Purchaser Parent and its Affiliates~~ a transfer of assets (other than ~~Purchaser and its Subsidiaries~~stock of a corporation) to the Company by such ContributionIndemnitor, all liability for ~~any Tax period (other than Transfer~~ Covered Taxes ~~and VAT for which Seller Parent is responsible hereunder), (2) Taxes~~ attributable to the operation or ownership of ~~Purchaser and its Subsidiaries (other than~~ such assets during the ~~Conveyed Subsidiaries and their Subsidiaries) for any~~ Pre-Closing Tax Period, (3ii) in the case of a transfer of stock of a corporation (a "Contributed Corporation") ----------------------- to the Company by such ContributionIndemnitor, all liability for Covered Taxes of ~~any Person~~ the Contributed Corporation for a the Pre-Closing Tax Period for which Purchaser (or any Subsidiary thereof other than any Conveyed Subsidiaries and their Subsidiaries) is liable under Treasury Regulation Section 1.1502-6 (or a similar provision of state, local or foreign Law), or as a transferee or successor or by Contract (other than Contracts that do not relate primarily to Taxes)Period, (4iii) ~~Taxes arising out~~ in the case of ~~or resulting from any breach of any covenant or agreement of Purchaser Parent~~a Contributed Corporation, ~~Purchaser or their respective Affiliates contained in this Agreement,~~ all liability (5) Transfer Taxes for which Purchaser Parent is responsible under Section 6.5(j), (6) Taxes arising from any breach of any representation or warranty in Section 5.17(k), (7) Taxes for a Pre-Closing Tax Period imposed on (x) any settlement of any intercompany accounts of Purchaser or any Subsidiary of Purchaser, on the one hand, and Purchaser Parent or any Subsidiary of Purchaser Parent (other than Purchaser and its Subsidiaries), on the other hand, pursuant to Section 6.7 or (y) any transaction or step forming part of the Purchaser Internal Restructurings, (8) Taxes required to be deducted or withheld with respect to any amounts payable to Purchaser Parent pursuant to Section 2.8 or Section 2.9, including any penalties imposed on Purchaser as a result of ~~Purchaser’s failure to deduct~~ Treasury Regulation (S)1.1502-6(a) or ~~withhold any such amounts, (9~~otherwise) for Covered Taxes ~~arising as a result of Purchaser or any Subsidiary of Purchaser (other than any Conveyed Subsidiary or a Subsidiary thereof) at any time ceasing to be a member of a group for the purposes~~ of any ~~Tax~~corporation which, of prior to the Closing, was affiliated with the Contributed Corporation or with which ~~group Purchaser Parent~~ the Contributed Corporation, prior to the Closing, otherwise filed a consolidated, combined, unitary or ~~any Subsidiary of Purchaser Parent (other than Purchaser or any Subsidiary of Purchaser) is or was also a member~~ aggregate Tax return, and (10iv) all liability for any ~~costs and expenses~~reasonable legal, ~~including reasonable legal and accounting~~ accounting, appraisal, consulting or similar fees and ~~expenses, attributable to any item described in clauses (1) through (9) (any such Taxes for which Purchaser Parent is responsible pursuant to this Section 6.5(d)(ii), subject~~ expenses relating to the ~~following proviso~~foregoing. (c) Notwithstanding the foregoing, ~~“Purchaser Parent Indemnified Taxes”); provided that Purchaser Parent~~ each MergerIndemnitor and ContributionIndemnitor (together, each an "Indemnitor") shall not be required to ---------- indemnify or and hold harmless ~~any Purchaser Tax Indemnified Party from~~ the Company and its affiliates and each of their respective officers, directors, employees, stockholders, agents and representatives, and the Company shall indemnify each Indemnitor, its affiliates and each of their respective officers, directors, employees, stockholders, agents, and representatives against ~~any~~ and hold them harmless from, (i) all liability for Covered Taxes of the Company for the Post-Closing Tax Period, (Aii) all liability for Covered Taxes resulting from the merger of the MergerIndemnitor's Subsidiary with and into the Company failing to qualify under Section 368(a) of the Code if and to the extent such failure is attributable to any action taken after the Closing by ~~Seller Parent~~ the Company or any of its ~~Affiliates,~~ subsidiaries (other than any such action ~~that (1) is in the ordinary course of business, (2) is~~ expressly ~~permitted~~ required or contemplated by this Agreement), and (iii) all liability for any reasonable legal, accounting, appraisal, consulting or similar fees and expenses relating to the foregoing. (3d) If a MergerIndemnitor is required to ~~be taken in order~~ make an indemnity payment pursuant to ~~comply with applicable Law or~~ clause (iii) of Section 7.13(a) by virtue of a merger failing to qualify under Section 368(a) of the Code and, as a result of ~~a change in applicable Law (a “Seller Tax Act”)~~such failure, ~~(B) Taxes that were reflected, accrued or reserved for in~~ the Final Closing Statement, Final Purchaser Working Capital or the Final Purchaser Net Cash, (C) Income Taxes to the extent that Purchaser or any Subsidiary thereof had any Tax Assets as of the close of business on the Closing Date that were available, or would have been available but for their prior utilization by Purchaser Company or any of its ~~Affiliates (including the Conveyed Subsidiaries and their Subsidiaries after the Closing), to offset or otherwise reduce the applicable Tax Liability~~ subsidiaries actually realizes a tax benefit in respect of such Income Taxes (except any Tax Asset reflected as an asset in the Final Closing Statement and taken into account in the calculation of the Final Purchaser Working Capital or the Final Purchaser Net Cash), or (D) Taxes for which Seller Parent is responsible under Section 6.5(d)(i). (iii) To the extent permitted or required by applicable Law, the taxable year of each of the Conveyed Subsidiaries and their Subsidiaries and any Subsidiary of Purchaser that includes the Closing Date shall be treated as closing on (and including) the Closing Date. Otherwise, for purposes of this Agreement, in the case of any Straddle Period: (A) Property Taxes allocable to the Pre-a Post- Closing Tax Period ~~shall be computed based upon~~ (including by virtue of an increase in the ~~ratio~~ tax basis of the ~~number of days~~ assets acquired in the ~~Pre-Closing Tax Period~~ merger to the number of days in the entire Straddle Period; and (B) Taxes (other than Property Taxes) allocable to the Pre-Closing Tax Period shall be computed as if such Tax period ended as of the close of business on the Closing Date and, in the case of any Taxes of Conveyed Subsidiaries (and their Subsidiaries) and Seller Parent, or in the case of any Taxes of Purchaser Parent and Purchaser (and their Subsidiaries prior to the Closingfair market value), ~~in each case attributable~~ then the Company shall pay to the ownership of any equity interest in any partnership or other “flow through” entity for tax purposes (including of any “controlled foreign corporation,” as defined under the Code) as if the Tax period of such partnership or other “flow through” entity ended as of the close of business on the Closing Date with the Taxes of such entity for the Pre-Closing Tax Period deemed to include any Taxes on the allocable income of such entity in respect of such Tax period; provided that exemptions, allowances or deductions that are calculated on an annual basis (including depreciation and amortization deductions) shall be allocated between the period ending on the Closing Date and the period beginning after the Closing Date in proportion to the number of days in each period. (iv) Any claim for indemnification under this Section 6.5(d) shall be made in writing upon the party from whom indemnification is sought, and shall specify in reasonable detail the basis for such claim. Any indemnity payment required to be made pursuant to this Section 6.5(d) shall be made within thirty (30) days after the indemnified party makes written demand upon the indemnifying party, but in no case earlier than five (5) Business Days prior to the date on which the relevant Taxes are required to be paid to the applicable Taxing Authority. (v) With respect to any Taxes suffered or incurred by any Conveyed Subsidiary (or any Subsidiary thereof) that was not wholly owned by Seller Parent (directly or indirectly) as of immediately prior to the Closing, the indemnification obligations of Seller Parent pursuant to Section 6.5(d)(i) in respect of such Taxes (or related costs and expenses) shall in no event exceed an amount equal to (A) MergerIndemnitor the amount of such ~~Taxes~~ tax benefit within ten days of having actually realized such benefit (~~or related costs and expenses) for which~~ including at the ~~Purchaser~~ time estimated Tax ~~Indemnified Parties would otherwise be entitled to indemnification pursuant to Section 6.5(d~~payments are due). For this purpose, ~~as if such Conveyed Subsidiary (~~the Company or any ~~Subsidiary thereof) were wholly owned by Seller Parent, multiplied by (B) the direct and indirect percentage ownership~~ of ~~Seller Parent of such Conveyed Subsidiary (or Subsidiary thereof) as of immediately prior~~ its subsidiaries shall be deemed to actually realize a tax benefit to the ~~Closing. With respect to any Taxes suffered or incurred by any Subsidiary of Purchaser Parent (including Purchaser~~ extent, and ~~its Subsidiaries) that was not wholly owned by Purchaser Parent (directly or indirectly) as of immediately prior to the Closing~~at such time as, the indemnification obligations of Purchaser Parent pursuant to Section 6.5(d)(ii) in respect of such Taxes (or related costs and expenses) shall in no event exceed an amount equal to (A) the amount of such Taxes (or related costs and expenses) for which the Purchaser Tax Indemnified Parties would otherwise be entitled to indemnification pursuant to Section 6.5(d), as if such Subsidiary were wholly owned by Purchaser Parent, multiplied by (B) the direct and indirect percentage ownership of Purchaser Parent of such Subsidiary as of immediately prior to the Closing. (vi) Without duplication to any other amounts paid pursuant to this Section 6.5: (A) Within thirty (30) days following the filing of any Income Tax Return for any Conveyed Subsidiary (or any Subsidiary thereof), on the one hand, or Purchaser (or any Subsidiary thereof, other than the Conveyed Subsidiaries and their Subsidiaries), on the other hand, for any Pre-Closing Tax Period or for any Straddle Period, Seller Parent or Purchaser Parent shall (or Purchaser Parent shall cause Purchaser to) prepare a statement showing (i) the amount of Income Taxes shown as due on such filed Income Tax Return with respect to the relevant Pre-Closing Tax Period or the portion of any Straddle Period ending on and including the Closing Date (the “Final Pre-Closing Income Tax Amount”) and (ii) the amount of the ~~Seller Accrued Income Taxes~~ Tax payable by the Company or ~~Purchaser Accrued Income Taxes, as applicable, attributable to~~ such ~~Income Tax Return as reflected on~~ subsidiary for the Final Closing Statement (the “Pre-Closing Income Tax Amount”) and deliver such statement to Seller Parent and Purchaser Parent, as applicable. Purchaser Parent or Seller Parent, as applicable, shall have a relevant taxable period of fifteen (15) Business Days to provide comments to a schedule prepared (or caused to be prepared) by Seller Parent or Purchaser Parent, respectively. If Purchaser Parent or Seller Parent, as applicable, do not provide any comments to Seller Parent or Purchaser Parent, respectively, during such period, the statement as so prepared shall be final and binding. (B) In the event the Final Pre-Closing Income Tax Amount with respect to any Income Tax Return is ~~less than~~ reduced below the amount of Tax that the ~~Pre-Closing Income Tax Amount attributable~~ Company or such subsidiary would otherwise have been required to pay for such ~~Income Tax Return that was included on~~ taxable period at such time if the ~~Final Closing Statement, the Purchaser shall within five (5~~merger had qualified under Section 368(a) ~~Business Days following the finalization~~ of the Final Pre-Closing Income Tax Amount hereunder (i) pay to Seller Parent the amount of such difference with respect to a Conveyed Subsidiary and their Subsidiaries and (ii) pay to Purchaser Parent the amount of such difference with respect to Purchaser and its SubsidiariesCode. (vii) The Parties shall use reasonable best efforts to structure any indemnity payment, true-up payment, or payment in respect of Tax Benefits made by any Party pursuant to this Agreement (including pursuant to this Section 6.5, Section 6.6 and Article VII) and any payment made by Purchaser Parent to Purchaser pursuant to Section 2.8 or Section 2.9 in the manner set forth in Clause 10 of the Structuring Considerations Agreement. The Parties shall use reasonable best efforts to structure as a special dividend any payment made by Purchaser to Purchaser Parent pursuant to Section 2.8, Section 2.9 or this Section 6.5.

Appears in 1 contract

Sources: Merger and Contribution Agreement (Cox Communications Inc /De/)

Tax Indemnification. (i) ~~Subject to Section 6.5(d)(v)~~Seller shall be responsible for, ~~from~~ and ~~after the Closing, Seller Parent agrees to~~ shall indemnify ~~and hold harmless Purchaser and its Subsidiaries (including the Conveyed Subsidiaries and their Subsidiaries after the Closing Date) (collectively~~Buyer, the ~~“Purchaser Tax Indemnified Parties”~~Company, and Affiliates thereof for, any Damages attributable to (a) ~~from and against all liability, without duplication, for (1) Taxes of the Conveyed Subsidiaries and their Subsidiaries for any~~ Pre-Closing ~~Tax Period (including any Taxes payable in respect of an election under Section 965(h) of the Code)~~Taxes, (2b) Taxes of any ~~Seller (other than~~ member of an affiliated, consolidated, combined or unitary group of which any ~~Transfer Taxes and VAT for which Purchaser~~ Acquired Company is ~~responsible hereunder) including, Taxes (other than Taxes of the Conveyed Subsidiaries and their Subsidiaries) imposed with respect to, arising out of~~ or ~~relating~~ was a member on or prior to the ~~Purchased Assets or the Business for a Pre-~~Closing ~~Tax Period~~Date, ~~(3) Taxes of any Person (other than the Conveyed Subsidiaries and their Subsidiaries) for a Pre-Closing Tax Period for which any Conveyed Subsidiary (or any Subsidiary thereof) is liable under~~ including pursuant to Treasury Regulation Section 1.1502-6 (or a any analogous or similar ~~provision of~~ state, ~~local~~ local, or foreign ~~Law~~law or regulation, (c) except for amounts payable under the Orbitz Tax Agreement, which shall be exclusively governed by the provisions of clause (ii) of this Section 4.15(g), ~~or as a transferee or successor or by Contract (other than Contracts that do not relate primarily to Taxes), (4)~~ all Taxes ~~arising out of or resulting from any breach~~ of any ~~covenant~~ person imposed on any Acquired Company or ~~agreement of Seller Parent~~ any other liability imposed under any Tax sharing, Tax indemnity, Tax allocation or similar contracts (whether or not written) to which the Company or any of its Affiliates contained in this Agreement, (5) Taxes for a Pre-Closing Tax Period imposed on (x) any transaction effected pursuant to Section 2.3(b), (y) any settlement of any intercompany accounts of Seller Parent or its Subsidiaries ~~pursuant to Section 6.7~~was obligated, or ~~(z) any transaction~~ was a party, on or ~~step forming part of the Seller Internal Restructurings, (6) Transfer Taxes for which Seller Parent is responsible under Section 6.5(j), (7) Taxes required to be deducted or withheld with respect~~ prior to the ~~payment of the Purchase Consideration~~ Closing Date, and (d) notwithstanding Section 7.4, any loss, liability, claim, damage or ~~any amounts payable~~ expense attributable to Seller Parent pursuant to Section 2.8 or Section 2.9, including any penalties imposed on Purchaser as a result of Purchaser’s failure to deduct or withhold any such amounts that Purchaser (or a Purchaser Designated Affiliate) was permitted to withhold under Section 2.10 (in each case, subject to Purchaser’s compliance with the notice and cooperation requirements of Section 2.10 and except for any such Taxes (and any related penalties) required to be deducted or withheld solely as a result of any assignment by Purchaser or its Affiliates for which Purchaser is responsible pursuant to Section 10.3), (8) Taxes arising from any breach of any representation or warranty contained in Section ~~4.16(k~~3.2(l)(v), (9Section 3.2(l)(vii) ~~Taxes arising as a result of any Conveyed Subsidiary~~ or any Subsidiary of any Conveyed Subsidiary at any time ceasing to be a member of a group for the purposes of any Tax, of which group Seller Parent or any Subsidiary of Seller Parent is or was also a member and (10) any costs and expenses, including reasonable legal and accounting fees and expenses, attributable to any item described in clauses (1) through (9) (any such Taxes for which Seller Parent is responsible pursuant to this Section 6.5(d)(i), subject to the following proviso, “Seller Indemnified Taxes”); provided that Seller Parent shall not be required to indemnify or hold harmless any Purchaser Tax Indemnified Party from and against any liability pursuant to this Section 6.5(d)(i) for (A) Taxes attributable to any action taken after the Closing by Purchaser, any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries), or any transferee of Purchaser or any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries), other than any such action that (1) is in the ordinary course of business, (2) is expressly permitted or contemplated by this Agreement, or (3) is required to be taken in order to comply with applicable Law or as a result of a change in applicable Law (a “Purchaser Tax Act”), (B) Taxes that were reflected, accrued or reserved for in the Final Closing Statement, Final Business Working Capital, or Final Business Net Cash, (C) Income Taxes to the extent that a Conveyed Subsidiary or any Subsidiary thereof had any Tax Assets as of the close of business on the Closing Date that were available, or would have been available but for their prior utilization by Purchaser or any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries after the Closing) to offset or otherwise reduce the applicable Tax Liability in respect of such Income Taxes (except any Tax Asset reflected as an asset in the Final Closing Statement and taken into account in the calculation of the Final Business Working Capital or the Final Business Net Cash), or (D) Taxes for which Purchaser Parent is responsible under Section 6.5(d)(ii3.2(l)(viii). (ii) ~~Subject~~ Seller shall be responsible for, and shall indemnify Buyer, the Company, and Affiliates thereof for, any Damages attributable to ~~Section 6.5(d)(v)~~any liability or obligation under the Tax Agreement dated as of November 25, ~~from~~ 2003, by and among Orbitz, Inc., American Airlines, Inc., Continental Airlines, Inc., Omicron Reservations Management, Inc., Northwest Airlines, Inc., and UAL Loyalty Services, Inc. (the “Orbitz Tax Agreement”) that relates to a payment required to be made to any Airline (as defined in the Orbitz Tax Agreement) under the Orbitz Tax Agreement after the ~~Closing, Purchaser Parent shall indemnify and hold harmless~~ Closing Date to the ~~Purchaser Tax Indemnified Parties from and against all liability, without duplication, for~~ extent that such payment is attributable to (1) ~~all Taxes~~ Actually Realized Tax Benefits (as defined in the Orbitz Tax Agreement) that are realized by Seller, Realogy, Wyndham, or any Affiliate of ~~Purchaser Parent and its Affiliates (other than Purchaser and its Subsidiaries) for~~ any ~~Tax period (other than Transfer Taxes and VAT for which Seller Parent is responsible hereunder), (2) Taxes~~ of ~~Purchaser and its Subsidiaries~~ the foregoing (other than the ~~Conveyed Subsidiaries and their Subsidiaries~~Acquired Companies), regardless of when realized; or (2) ~~for any Pre~~Realized Tax Benefits (as defined in the Orbitz Tax Agreement) that are realized by the Acquired Companies to the extent that such Actually Realized Tax Benefits are not realized in a Post-Closing Tax Period, . (3iii) Buyer shall be responsible for and shall indemnify Seller and its Affiliates for any Damages attributable to Section 338 Taxes and any Extraordinary Transaction Taxes. (iv) Except in the case of any Person for a Pre-Closing Tax Period for which Purchaser (or any Subsidiary thereof other than any Conveyed Subsidiaries and their Subsidiaries) is liable under Treasury Regulation Section 1.1502-6 (or a similar provision of state, local or foreign Law), or as a transferee or successor or by Contract (other than Contracts that do not relate primarily to Taxes), (4) Taxes arising out of or resulting from any breach of any covenant or agreement of Purchaser Parent, Purchaser or their respective Affiliates contained in this Agreement, (5) Transfer Taxes for which Purchaser Parent is responsible under Section 6.5(j), (6) Taxes arising from any breach of any representation or warranty in Section 5.17(k), (7) Taxes for a Pre-Closing Tax Period imposed on (x) any settlement of any intercompany accounts of Purchaser or any Subsidiary of Purchaser, on the one hand, and Purchaser Parent or any Subsidiary of Purchaser Parent (other than Purchaser and its Subsidiaries), on the other hand, pursuant to Section 6.7 or (y) any transaction or step forming part of the Purchaser Internal Restructurings, (8) Taxes required to be deducted or withheld Acquired Company with respect to ~~any~~ which a Section 338(h)(10) Election is made, in calculating amounts payable to Purchaser Parent pursuant to Section 2.8 or Section 2.9, including any penalties imposed on Purchaser as a result of Purchaser’s failure to deduct or withhold any such amounts, (9) Taxes arising as a result of Purchaser or any Subsidiary of Purchaser (other than any Conveyed Subsidiary or a Subsidiary thereof) at any time ceasing to be a member of a group for the purposes of any Tax, of which group Purchaser Parent or any Subsidiary of Purchaser Parent (other than Purchaser or any Subsidiary of Purchaser) is or was also a member and (10) any costs and expenses, including reasonable legal and accounting fees and expenses, attributable to any item described in clauses (1) through (9) (any such Taxes for which Purchaser Parent is responsible pursuant to this Section ~~6.5(d)(ii~~4.15(g), ~~subject~~ with respect to liabilities or indemnified amounts for any Acquired Company such amounts shall be determined without duplication and computed net of any Tax Benefit Actually Realized by any payee or its Affiliate; provided, however, that if a Tax Benefit attributable to an amount paid pursuant to this Section 4.15(g) is Actually Realized after the payment date of such amount paid the party realizing such Tax Benefit shall promptly pay it to the ~~following proviso~~other party; provided, ~~“Purchaser Parent Indemnified Taxes”); provided~~ further, that Purchaser Parent shall not be required to indemnify or hold harmless any Purchaser Tax Indemnified Party from and against any liability for (A) Taxes attributable to any action taken after the Closing by Seller Parent or any of its Affiliates, other than any such action that (1) is in the ~~ordinary course of business, (2)~~ event a Tax Benefit is ~~expressly permitted or contemplated by this Agreement, or (3) is required to be taken in order to comply with applicable Law or~~ reduced as a result of a ~~change~~ determination by any Governmental Entity in ~~applicable Law (~~a “Seller Tax Act”), (B) Taxes that were reflected, accrued or reserved for in the Final Closing Statement, Final Purchaser Working Capital or the Final Purchaser Net Cash, (C) Income Taxes to the extent that Purchaser or any Subsidiary thereof had any Tax Assets as of the close of business on the Closing Date that were available, or would have been available but for their prior utilization by Purchaser or any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries after the Closing), to offset or otherwise reduce the applicable Tax Liability in respect of such Income Taxes (except any Tax Asset reflected as an asset in the Final Closing Statement and taken into account in the calculation of the Final Purchaser Working Capital or the Final Purchaser Net Cash), or (D) Taxes for which Seller Parent is responsible under Section 6.5(d)(i). (iii) To the extent permitted or required by applicable Lawlater year, the ~~taxable year of each of the Conveyed Subsidiaries and their Subsidiaries and any Subsidiary of Purchaser that includes the Closing Date~~ indemnified party shall be ~~treated as closing on (and including)~~ reimbursed by the ~~Closing Date~~indemnifying party for such reduction. ~~Otherwise, for purposes~~ The determination of ~~this Agreement, in the case of any Straddle Period: (A) Property Taxes allocable to the Pre-Closing~~ whether there has been a Tax Period shall be computed based upon the ratio of the number of days in the Pre-Closing Tax Period to the number of days in the entire Straddle Period; and (B) Taxes (other than Property Taxes) allocable to the Pre-Closing Tax Period shall be computed as if such Tax period ended as of the close of business on the Closing Date and, in the case of any Taxes of Conveyed Subsidiaries (and their Subsidiaries) and Seller Parent, or in the case of any Taxes of Purchaser Parent and Purchaser (and their Subsidiaries prior to the Closing), in each case attributable to the ownership of any equity interest in any partnership or other “flow through” entity for tax purposes (including of any “controlled foreign corporation,” as defined under the Code) as if the Tax period of such partnership or other “flow through” entity ended as of the close of business on the Closing Date with the Taxes of such entity for the Pre-Closing Tax Period deemed to include any Taxes on the allocable income of such entity in respect of such Tax period; provided that exemptions, allowances or deductions that are calculated on an annual basis (including depreciation and amortization deductions) shall be allocated between the period ending on the Closing Date and the period beginning after the Closing Date in proportion to the number of days in each period. (iv) Any claim for indemnification under this Section 6.5(d) Benefit shall be made ~~in writing upon~~ solely at the ~~party from whom indemnification is sought~~indemnified party’s good faith discretion. In computing the amount of any such Tax Benefit, ~~and shall specify in reasonable detail the basis for such claim. Any indemnity payment required to be made pursuant to this Section 6.5(d) shall be made within thirty (30) days after~~ the indemnified party ~~makes written demand upon~~ shall be deemed to recognize all other items of loss, deduction or credit before recognizing any item arising from the indemnifying party, but in no case earlier than five (5) Business Days prior to the date on which the relevant Taxes are required to be paid to the applicable Taxing Authority. (v) With respect to any Taxes suffered or incurred by any Conveyed Subsidiary (or any Subsidiary thereof) that was not wholly owned by Seller Parent (directly or indirectly) as of immediately prior to the Closing, the indemnification obligations of Seller Parent pursuant to Section 6.5(d)(i) in respect of such Taxes (or related costs and expenses) shall in no event exceed an amount equal to (A) the amount of such Taxes (or related costs and expenses) for which the Purchaser Tax Indemnified Parties would otherwise be entitled to indemnification pursuant to Section 6.5(d), as if such Conveyed Subsidiary (or any Subsidiary thereof) were wholly owned by Seller Parent, multiplied by (B) the direct and indirect percentage ownership of Seller Parent of such Conveyed Subsidiary (or Subsidiary thereof) as of immediately prior to the Closing. With respect to any Taxes suffered or incurred by any Subsidiary of Purchaser Parent (including Purchaser and its Subsidiaries) that was not wholly owned by Purchaser Parent (directly or indirectly) as of immediately prior to the Closing, the indemnification obligations of Purchaser Parent pursuant to Section 6.5(d)(ii) in respect of such Taxes (or related costs and expenses) shall in no event exceed an amount equal to (A) the amount of such Taxes (or related costs and expenses) for which the Purchaser Tax Indemnified Parties would otherwise be entitled to indemnification pursuant to Section 6.5(d), as if such Subsidiary were wholly owned by Purchaser Parent, multiplied by (B) the direct and indirect percentage ownership of Purchaser Parent of such Subsidiary as of immediately prior to the Closing. (vi) Without duplication to any other amounts paid pursuant to this Section 6.5: (A) Within thirty (30) days following the filing payment of any Income Tax Return for any Conveyed Subsidiary (or any Subsidiary thereof), on the one hand, or Purchaser (or any Subsidiary thereof, other than the Conveyed Subsidiaries and their Subsidiaries), on the other hand, for any Pre-Closing Tax Period or for any Straddle Period, Seller Parent or Purchaser Parent shall (or Purchaser Parent shall cause Purchaser to) prepare a statement showing (i) the amount of Income Taxes shown as due on such filed Income Tax Return with respect to the relevant Pre-Closing Tax Period or the portion of any Straddle Period ending on and including the Closing Date (the “Final Pre-Closing Income Tax Amount”) and (ii) the amount of the Seller Accrued Income Taxes or Purchaser Accrued Income Taxes, as applicable, attributable to such Income Tax Return as reflected on the Final Closing Statement (the “Pre-Closing Income Tax Amount”) and deliver such statement to Seller Parent and Purchaser Parent, as applicable. Purchaser Parent or Seller Parent, as applicable, shall have a period of fifteen (15) Business Days to provide comments to a schedule prepared (or caused to be prepared) by Seller Parent or Purchaser Parent, respectively. If Purchaser Parent or Seller Parent, as applicable, do not provide any comments to Seller Parent or Purchaser Parent, respectively, during such period, the statement as so prepared shall be final and bindingindemnified Tax. (B) In the event the Final Pre-Closing Income Tax Amount with respect to any Income Tax Return is less than the amount of the Pre-Closing Income Tax Amount attributable to such Income Tax Return that was included on the Final Closing Statement, the Purchaser shall within five (5) Business Days following the finalization of the Final Pre-Closing Income Tax Amount hereunder (i) pay to Seller Parent the amount of such difference with respect to a Conveyed Subsidiary and their Subsidiaries and (ii) pay to Purchaser Parent the amount of such difference with respect to Purchaser and its Subsidiaries. (vii) The Parties shall use reasonable best efforts to structure any indemnity payment, true-up payment, or payment in respect of Tax Benefits made by any Party pursuant to this Agreement (including pursuant to this Section 6.5, Section 6.6 and Article VII) and any payment made by Purchaser Parent to Purchaser pursuant to Section 2.8 or Section 2.9 in the manner set forth in Clause 10 of the Structuring Considerations Agreement. The Parties shall use reasonable best efforts to structure as a special dividend any payment made by Purchaser to Purchaser Parent pursuant to Section 2.8, Section 2.9 or this Section 6.5.

Appears in 1 contract

Sources: Purchase Agreement (Cendant Corp)

Tax Indemnification. (ia) ~~Subject to Section 6.5(d)(v), from and after~~ Following the Closing, ~~Seller Parent agrees to indemnify~~ GC, on behalf of itself, (in the case of a liability regarding IPC Inc. and ~~hold harmless Purchaser~~ its Subsidiaries or IPC Trading Systems and its Subsidiaries (if any)) shall indemnify the Buyer and its Affiliates (including ~~the Conveyed~~ IPC Inc. and its Subsidiaries and IPC Trading Systems and its Subsidiaries (if any)) and each of their ~~Subsidiaries after~~ respective officers, directors, employees, agents and other representatives and hold them harmless from (i) any breach on the ~~Closing Date~~part of GC of any representation or warranty contained in Section 5.11 hereof, (ii) ~~(collectively, the “Purchaser Tax Indemnified Parties”) from and against~~ all ~~liability, without duplication,~~ liability for ~~(1)~~ Taxes of ~~the Conveyed~~ IPC Inc. and its Subsidiaries and ~~their~~ of IPC Trading Systems and its Subsidiaries (if any) for ~~any~~ all Pre-Closing Tax ~~Period~~ Periods (including any liability for Taxes ~~payable in respect of an election under Section 965(h) of~~ arising from the ~~Code~~IXnet Restructuring Actions prior to the Closing), and (2iii) ~~Taxes~~ all liability (as a result of ~~any Seller~~ Treasury Regulation (~~other than any Transfer Taxes and VAT for which Purchaser is responsible hereunder~~S) ~~including, Taxes (other than Taxes of the Conveyed Subsidiaries and their Subsidiaries~~1.1502-6(a) imposed with respect to, arising out of or relating to the Purchased Assets or the Business for a Pre-Closing Tax Period, (3) Taxes of any Person (other than the Conveyed Subsidiaries and their Subsidiaries) for a Pre-Closing Tax Period for which any Conveyed Subsidiary (or any ~~Subsidiary thereof) is liable under Treasury Regulation Section 1.1502-6 (or a~~ similar provision of state, local or foreign ~~Law), or as a transferee or successor or by Contract (other than Contracts that do not relate primarily to Taxes), (4~~law) for Taxes ~~arising out~~ of ~~or resulting from any breach of any covenant or agreement of Seller Parent~~ GC North America or any of its Affiliates ~~contained in this Agreement,~~ or any other entity which is or has been affiliated with IPC Inc. and its Subsidiaries (5other than IPC Inc. and its Subsidiaries) or for the Taxes ~~for a Pre-Closing Tax Period imposed on (x) any transaction effected pursuant to Section 2.3(b), (y) any settlement~~ of any ~~intercompany accounts~~ Person for which IPC Inc. or any of ~~Seller Parent or~~ its Subsidiaries ~~pursuant to Section 6.7, or (z) any transaction or step forming part of the Seller Internal Restructurings, (6) Transfer Taxes for which Seller Parent~~ is responsible under Section 6.5(j), (7) Taxes required to be deducted or withheld with respect to the payment of the Purchase Consideration or any amounts payable to Seller Parent pursuant to Section 2.8 or Section 2.9, including any penalties imposed on Purchaser liable as a result of ~~Purchaser’s failure to deduct~~ being a transferee or ~~withhold any such amounts that Purchaser (~~successor, by contract or ~~a Purchaser Designated Affiliate) was permitted to withhold under Section 2.10~~ otherwise. Following the Closing, Asia GC, on behalf of itself and Saturn, on behalf of itself (in each ~~case, subject to Purchaser’s compliance with~~ case regarding a liability of IPC Trading Systems and its Subsidiaries (if any)) shall indemnify the ~~notice~~ Buyer and ~~cooperation requirements of Section 2.10 and except for any such Taxes (and any related penalties) required to be deducted or withheld solely as a result of any assignment by Purchaser or~~ its Affiliates ~~for which Purchaser is responsible pursuant to Section 10.3~~(including IPC Trading Systems and its Subsidiaries (if any)) and each of their respective officers, directors, employees, agents and other representatives and hold them harmless from (~~8) Taxes arising from~~ i) any breach on the part of Asia GC or Saturn, as the case may be, of any representation or warranty contained in Section ~~4.16(k)~~5.11 hereof, (9ii) all liability for Taxes ~~arising~~ of IPC Trading Systems and its Subsidiaries (if any) for all Pre-Closing Tax Periods and (iii) all liability (as a result of ~~any Conveyed Subsidiary~~ Treasury Regulation (S) 1.1502-6(a) or any Subsidiary of any Conveyed Subsidiary at any time ceasing to be a member of a group for the purposes of any Tax, of which group Seller Parent or any Subsidiary of Seller Parent is or was also a member and (10) any costs and expenses, including reasonable legal and accounting fees and expenses, attributable to any item described in clauses (1) through (9) (any such Taxes for which Seller Parent is responsible pursuant to this Section 6.5(d)(i), subject to the following proviso, “Seller Indemnified Taxes”); provided that Seller Parent shall not be required to indemnify or hold harmless any Purchaser Tax Indemnified Party from and against any liability pursuant to this Section 6.5(d)(i) for (A) Taxes attributable to any action taken after the Closing by Purchaser, any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries), or any transferee of Purchaser or any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries), other than any such action that (1) is in the ordinary course of business, (2) is expressly permitted or contemplated by this Agreement, or (3) is required to be taken in order to comply with applicable Law or as a result of a change in applicable Law (a “Purchaser Tax Act”), (B) Taxes that were reflected, accrued or reserved for in the Final Closing Statement, Final Business Working Capital, or Final Business Net Cash, (C) Income Taxes to the extent that a Conveyed Subsidiary or any Subsidiary thereof had any Tax Assets as of the close of business on the Closing Date that were available, or would have been available but for their prior utilization by Purchaser or any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries after the Closing) to offset or otherwise reduce the applicable Tax Liability in respect of such Income Taxes (except any Tax Asset reflected as an asset in the Final Closing Statement and taken into account in the calculation of the Final Business Working Capital or the Final Business Net Cash), or (D) Taxes for which Purchaser Parent is responsible under Section 6.5(d)(ii). (ii) Subject to Section 6.5(d)(v), from and after the Closing, Purchaser Parent shall indemnify and hold harmless the Purchaser Tax Indemnified Parties from and against all liability, without duplication, for (1) all Taxes of Purchaser Parent and its Affiliates (other than Purchaser and its Subsidiaries) for any Tax period (other than Transfer Taxes and VAT for which Seller Parent is responsible hereunder), (2) Taxes of Purchaser and its Subsidiaries (other than the Conveyed Subsidiaries and their Subsidiaries) for any Pre-Closing Tax Period, (3) Taxes of any Person for a Pre-Closing Tax Period for which Purchaser (or any Subsidiary thereof other than any Conveyed Subsidiaries and their Subsidiaries) is liable under Treasury Regulation Section 1.1502-6 (or a similar provision of state, local or foreign ~~Law~~law) for Taxes of Saturn or any of its Affiliates or any other entity which is or has been affiliated with IPC Trading Systems (other than IPC Trading Systems and its Subsidiaries (if any), ) or for the Taxes of any Person for which IPC Trading Systems and its Subsidiaries (if any) is liable as a result of being a transferee or ~~successor~~ successor, by contract or ~~by Contract (other than Contracts that do not relate primarily to Taxes)~~otherwise. Following the Closing, GC North America, on behalf of itself, (4in the case of a liability regarding IPC Inc. and its Subsidiaries) ~~Taxes arising out~~ shall indemnify the Buyer and its Affiliates (including IPC Inc. and its Subsidiaries) and each of ~~or resulting~~ their respective officers, directors, employees, agents and other representatives and hold them harmless from (i) any breach on the part of any covenant or agreement of Purchaser Parent, Purchaser or their respective Affiliates contained in this Agreement, (5) Transfer Taxes for which Purchaser Parent is responsible under Section 6.5(j), (6) Taxes arising from any breach GC North America of any representation or warranty contained in Section ~~5.17(k)~~5.11 hereof, (7ii) all liability for Taxes of IPC Inc. and its Subsidiaries for a all Pre-Closing Tax ~~Period imposed on~~ Periods (x) any settlement of any intercompany accounts of Purchaser or any Subsidiary of Purchaser, on the one hand, and Purchaser Parent or any Subsidiary of Purchaser Parent (other than Purchaser and its Subsidiaries), on the other hand, pursuant to Section 6.7 or (y) any transaction or step forming part of the Purchaser Internal Restructurings, (8) Taxes required to be deducted or withheld with respect to any amounts payable to Purchaser Parent pursuant to Section 2.8 or Section 2.9, including any penalties imposed on Purchaser as a result of Purchaser’s failure to deduct or withhold any such amounts, (9) Taxes arising as a result of Purchaser or any Subsidiary of Purchaser (other than any Conveyed Subsidiary or a Subsidiary thereof) at any time ceasing to be a member of a group for the purposes of any Tax, of which group Purchaser Parent or any Subsidiary of Purchaser Parent (other than Purchaser or any Subsidiary of Purchaser) is or was also a member and (10) any costs and expenses, including reasonable legal and accounting fees and expenses, attributable to any item described in clauses (1) through (9) (any such Taxes for which Purchaser Parent is responsible pursuant to this Section 6.5(d)(ii), subject to the following proviso, “Purchaser Parent Indemnified Taxes”); provided that Purchaser Parent shall not be required to indemnify or hold harmless any Purchaser Tax Indemnified Party from and against any liability for ~~(A)~~ Taxes ~~attributable to any action taken after~~ arising from the Closing by Seller Parent or any of its Affiliates, other than any such action that (1) is in the ordinary course of business, (2) is expressly permitted or contemplated by this Agreement, or (3) is required to be taken in order to comply with applicable Law or as a result of a change in applicable Law (a “Seller Tax Act”), (B) Taxes that were reflected, accrued or reserved for in the Final Closing Statement, Final Purchaser Working Capital or the Final Purchaser Net Cash, (C) Income Taxes to the extent that Purchaser or any Subsidiary thereof had any Tax Assets as of the close of business on the Closing Date that were available, or would have been available but for their prior utilization by Purchaser or any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries after the Closing), to offset or otherwise reduce the applicable Tax Liability in respect of such Income Taxes (except any Tax Asset reflected as an asset in the Final Closing Statement and taken into account in the calculation of the Final Purchaser Working Capital or the Final Purchaser Net Cash), or (D) Taxes for which Seller Parent is responsible under Section 6.5(d)(i). (iii) To the extent permitted or required by applicable Law, the taxable year of each of the Conveyed Subsidiaries and their Subsidiaries and any Subsidiary of Purchaser that includes the Closing Date shall be treated as closing on (and including) the Closing Date. Otherwise, for purposes of this Agreement, in the case of any Straddle Period: (A) Property Taxes allocable to the Pre-Closing Tax Period shall be computed based upon the ratio of the number of days in the Pre-Closing Tax Period to the number of days in the entire Straddle Period; and (B) Taxes (other than Property Taxes) allocable to the Pre-Closing Tax Period shall be computed as if such Tax period ended as of the close of business on the Closing Date and, in the case of any Taxes of Conveyed Subsidiaries (and their Subsidiaries) and Seller Parent, or in the case of any Taxes of Purchaser Parent and Purchaser (and their Subsidiaries IXnet Restructuring Actions prior to the Closing), ~~in each case attributable to the ownership~~ and (iii) all liability (as a result of Treasury Regulation (S) 1.1502-6(a) or any ~~equity interest in any partnership~~ similar provision of state, local or ~~other “flow through” entity~~ foreign law) for tax purposes (including of any “controlled foreign corporation,” as defined under the Code) as if the Tax period of such partnership or other “flow through” entity ended as of the close of business on the Closing Date with the Taxes of such entity for the Pre-Closing Tax Period deemed to include any Taxes on the allocable income of such entity in respect of such Tax period; provided that exemptions, allowances or deductions that are calculated on an annual basis (including depreciation and amortization deductions) shall be allocated between the period ending on the Closing Date and the period beginning after the Closing Date in proportion to the number of days in each period. (iv) Any claim for indemnification under this Section 6.5(d) shall be made in writing upon the party from whom indemnification is sought, and shall specify in reasonable detail the basis for such claim. Any indemnity payment required to be made pursuant to this Section 6.5(d) shall be made within thirty (30) days after the indemnified party makes written demand upon the indemnifying party, but in no case earlier than five (5) Business Days prior to the date on which the relevant Taxes are required to be paid to the applicable Taxing Authority. (v) With respect to any Taxes suffered or incurred by any Conveyed Subsidiary (GC North America or any ~~Subsidiary thereof) that was not wholly owned by Seller Parent (directly or indirectly) as~~ of immediately prior to the Closing, the indemnification obligations of Seller Parent pursuant to Section 6.5(d)(i) in respect of such Taxes (or related costs and expenses) shall in no event exceed an amount equal to (A) the amount of such Taxes (or related costs and expenses) for which the Purchaser Tax Indemnified Parties would otherwise be entitled to indemnification pursuant to Section 6.5(d), as if such Conveyed Subsidiary (its Affiliates or any ~~Subsidiary thereof) were wholly owned by Seller Parent, multiplied by~~ other entity which is or has been affiliated with IPC Inc. and its Subsidiaries (B) the direct and indirect percentage ownership of Seller Parent of such Conveyed Subsidiary (or Subsidiary thereof) as of immediately prior to the Closing. With respect to any Taxes suffered or incurred by any Subsidiary of Purchaser Parent (including Purchaser other than IPC Inc. and its Subsidiaries) ~~that was not wholly owned by Purchaser Parent (directly~~ or ~~indirectly) as~~ for the Taxes of immediately prior to the Closing, the indemnification obligations of Purchaser Parent pursuant to Section 6.5(d)(ii) in respect of such Taxes (or related costs and expenses) shall in no event exceed an amount equal to (A) the amount of such Taxes (or related costs and expenses) any Person for which the Purchaser Tax Indemnified Parties would otherwise be entitled to indemnification pursuant to Section 6.5(d), as if such Subsidiary were wholly owned by Purchaser Parent, multiplied by (B) the direct and indirect percentage ownership of Purchaser Parent of such Subsidiary as of immediately prior to the Closing. (vi) Without duplication to any other amounts paid pursuant to this Section 6.5: (A) Within thirty (30) days following the filing of any Income Tax Return for any Conveyed Subsidiary (IPC Inc. or any ~~Subsidiary thereof), on the one hand, or Purchaser (or any Subsidiary thereof, other than the Conveyed~~ of its Subsidiaries and their Subsidiaries), on the other hand, for any Pre-Closing Tax Period or for any Straddle Period, Seller Parent or Purchaser Parent shall (or Purchaser Parent shall cause Purchaser to) prepare a statement showing (i) the amount of Income Taxes shown as due on such filed Income Tax Return with respect to the relevant Pre-Closing Tax Period or the portion of any Straddle Period ending on and including the Closing Date (the “Final Pre-Closing Income Tax Amount”) and (ii) the amount of the Seller Accrued Income Taxes or Purchaser Accrued Income Taxes, as applicable, attributable to such Income Tax Return as reflected on the Final Closing Statement (the “Pre-Closing Income Tax Amount”) and deliver such statement to Seller Parent and Purchaser Parent, as applicable. Purchaser Parent or Seller Parent, as applicable, shall have a period of fifteen (15) Business Days to provide comments to a schedule prepared (or caused to be prepared) by Seller Parent or Purchaser Parent, respectively. If Purchaser Parent or Seller Parent, as applicable, do not provide any comments to Seller Parent or Purchaser Parent, respectively, during such period, the statement as so prepared shall be final and binding. (B) In the event the Final Pre-Closing Income Tax Amount with respect to any Income Tax Return is less than the amount of the Pre-Closing Income Tax Amount attributable to such Income Tax Return that was included on the Final Closing Statement, the Purchaser shall within five (5) Business Days following the finalization of the Final Pre-Closing Income Tax Amount hereunder (i) pay to Seller Parent the amount of such difference with respect to a Conveyed Subsidiary and their Subsidiaries and (ii) pay to Purchaser Parent the amount of such difference with respect to Purchaser and its Subsidiaries. (vii) The Parties shall use reasonable best efforts to structure any indemnity payment, true-up payment, or payment in respect of Tax Benefits made by any Party pursuant to this Agreement (including pursuant to this Section 6.5, Section 6.6 and Article VII) and any payment made by Purchaser Parent to Purchaser pursuant to Section 2.8 or Section 2.9 in the manner set forth in Clause 10 of the Structuring Considerations Agreement. The Parties shall use reasonable best efforts to structure liable as a ~~special dividend any payment made~~ result of being a transferee or successor, by ~~Purchaser to Purchaser Parent pursuant to Section 2.8, Section 2.9~~ contract or ~~this Section 6.5~~otherwise.

Appears in 1 contract

Sources: Purchase Agreement (Global Crossing LTD)

Tax Indemnification. (a) The Indemnifying Stockholders who are holders of record of Class A Common on the date of this Agreement shall jointly and severally, and the Limited Indemnifying Stockholders shall severally, indemnify the Buyer in respect of, and hold it harmless against (x) Damages resulting from, relating to, or constituting a breach of any representation contained in Section 2.9, or the failure to perform any covenant or agreement set forth in this Article VII, and (z) without duplication, the following Taxes excluding any amounts accrued on the Most Recent Balance Sheet relating to a penalty assessed by the Internal Revenue Service for the Company’s failure to sign a Form 5500 for the 12-month period ended December 31, 2000: (i) ~~Subject~~ Any Taxes for any taxable period ending (or deemed pursuant to Section ~~6.5(d)(v), from and after the Closing, Seller Parent agrees~~ 7.3(b) to ~~indemnify and hold harmless Purchaser and its Subsidiaries (including the Conveyed Subsidiaries and their Subsidiaries after~~ end) on or before the Closing ~~Date~~Date due and payable by the Company or any Subsidiary; (ii) ~~(collectively, the “Purchaser Tax Indemnified Parties”) from and against all liability, without duplication, for (1)~~ Any Taxes ~~of the Conveyed Subsidiaries and their Subsidiaries~~ for any ~~Pre-~~taxable period ending (or deemed pursuant to Section 7.3(b) to end) on or before the Closing ~~Tax Period (including any Taxes payable in respect of an election under Section 965(h) of the Code), (2) Taxes of any Seller (other than any Transfer Taxes and VAT~~ Date for which ~~Purchaser is responsible hereunder) including, Taxes (other than Taxes of~~ the Conveyed Subsidiaries and their Subsidiaries) imposed with respect to, arising out of or relating to the Purchased Assets or the Business for a Pre-Closing Tax Period, (3) Taxes of any Person (other than the Conveyed Subsidiaries and their Subsidiaries) for a Pre-Closing Tax Period for which any Conveyed Subsidiary (Company or any Subsidiary ~~thereof) is liable~~ has any liability under Treasury ~~Regulation~~ Regulations Section 1.1502-6 (or a under any comparable or similar provision of state, local or foreign ~~Law)~~laws, or as a transferee or ~~successor~~ successor, or ~~by Contract~~ pursuant to any contractual obligation; and (iii) Any transfer, sales, use, stamp, conveyance, value added, recording, registration, documentary, filing and other ~~than Contracts that do not relate primarily to Taxes~~Taxes and administrative fees (including, without limitation, notary fees), arising in connection with the consummation of the transactions contemplated by this Agreement whether levied on the Buyer, the Company, the Transitory Subsidiary, the Surviving Corporation, any Subsidiary or any of their respective Affiliates. (4b) ~~Taxes arising out~~ The Buyer shall indemnify and hold harmless the Indemnifying Stockholders in respect of ~~or resulting from any breach of~~ and against (x) the failure to perform any covenant or agreement ~~of Seller Parent~~ set forth in this Article VII, and (y) all Taxes due and payable by the Surviving Corporation or any ~~of its Affiliates contained in this Agreement,~~ Subsidiary for any taxable period beginning (~~5) Taxes for a Pre-Closing Tax Period imposed on (x) any transaction effected~~ or deemed pursuant to Section ~~2.3(b)~~7.3(b) to begin) after the Closing Date. (c) Buyer shall not file, and shall not cause the Surviving Corporation to file, without the Indemnifying Stockholders’ consent, (yX) any ~~settlement~~ amendment to any Tax Return of the Company for any ~~intercompany accounts of Seller Parent~~ taxable period ending on or ~~its Subsidiaries pursuant~~ prior to ~~Section 6.7~~the Closing Date which (i) is substantially different than the position taken in such previously filed Tax Return, or (zii) ~~any transaction or step forming part of the Seller Internal Restructurings, (6) Transfer Taxes~~ would result in a claim for ~~which Seller Parent is responsible~~ indemnification under this Section ~~6.5(j), (7) Taxes required to be deducted or withheld with respect~~ 7.2 except in each case to the ~~payment of the Purchase Consideration~~ extent that such amendment is required by law or ~~any amounts payable to Seller Parent pursuant to Section 2.8 or Section 2.9, including any penalties imposed on Purchaser~~ as a result of ~~Purchaser’s failure to deduct or withhold~~ a Tax Audit; and (Y) any such amounts that Purchaser (or a Purchaser Designated Affiliate) was permitted to withhold under Section 2.10 (in each case, subject to Purchaser’s compliance with the notice and cooperation requirements of Section 2.10 and except Tax Return for any ~~such Taxes (~~taxable period ending on or prior to the Closing Date in any jurisdiction for which the Company and any ~~related penalties~~Subsidiary did not file such a Tax Return based on the opinion of Tax counsel that it did not have a filing obligation for that Tax Return. (d) ~~required~~ Notwithstanding anything herein to the contrary, in no event shall the Indemnifying Stockholders be ~~deducted or withheld solely as a result of any assignment by Purchaser or its Affiliates~~ obligated to indemnify the Buyer for ~~which Purchaser is responsible pursuant to Section 10.3), (8) Taxes arising from any breach of any representation or warranty contained in Section 4.16(k), (9)~~ Taxes arising as a result of ~~any Conveyed Subsidiary or any Subsidiary~~ the failure of ~~any Conveyed Subsidiary at any time ceasing~~ the Merger to be a member of a group for the purposes of any Tax, of which group Seller Parent or any Subsidiary of Seller Parent is or was also a member and (10) any costs and expenses, including reasonable legal and accounting fees and expenses, attributable to any item described in clauses (1) through (9) (any such Taxes for which Seller Parent is responsible pursuant to this Section 6.5(d)(i), subject to the following proviso, “Seller Indemnified Taxes”); provided that Seller Parent shall not be required to indemnify or hold harmless any Purchaser Tax Indemnified Party from and against any liability pursuant to this Section 6.5(d)(i) for (A) Taxes attributable to any action taken after the Closing by Purchaser, any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries), or any transferee of Purchaser or any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries), other than any such action that (1) is in the ordinary course of business, (2) is expressly permitted or contemplated by this Agreement, or (3) is required to be taken in order to comply with applicable Law or qualify as a ~~result~~ reorganization under Section 368(a) of ~~a change in applicable Law (a “Purchaser Tax Act”), (B) Taxes that were reflected, accrued or reserved for in~~ the ~~Final Closing Statement, Final Business Working Capital, or Final Business Net Cash, (C) Income Taxes~~ Code to the extent that such failure was caused by a ~~Conveyed Subsidiary~~ breach by the Buyer (or ~~any Subsidiary thereof had any Tax Assets as of~~ the ~~close of business on~~ Surviving Corporation after the Closing ~~Date that were available, or would have been available but for their prior utilization by Purchaser or any~~ Date) of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries after the Closing) to offset or otherwise reduce the applicable Tax Liability in respect of such Income Taxes (except any Tax Asset reflected as an asset in the Final Closing Statement and taken into account in the calculation of the Final Business Working Capital or the Final Business Net Cash), or (D) Taxes for which Purchaser Parent is responsible under Section ~~6.5(d)(ii)~~4.16. (iie) ~~Subject~~ Notwithstanding anything herein to ~~Section 6.5(d)(v)~~the contrary, ~~from and after~~ the ~~Closing, Purchaser Parent shall indemnify and hold harmless the Purchaser Tax Indemnified Parties from and against all liability, without duplication, for (1) all Taxes~~ amount of ~~Purchaser Parent and its Affiliates (other than Purchaser and its Subsidiaries) for any Tax period (other than Transfer~~ Taxes and ~~VAT~~ Damages for which ~~Seller Parent~~ the Buyer is ~~responsible hereunder), (2~~entitled to indemnification under Section 7.2(a) ~~Taxes of Purchaser and its Subsidiaries (other than the Conveyed Subsidiaries and their Subsidiaries) for~~ shall be determined without regard to any ~~Pre-Closing Tax Period, (3) Taxes of any Person for a Pre-Closing Tax Period for which Purchaser~~ net operating losses (or ~~any Subsidiary thereof other than any Conveyed Subsidiaries and their Subsidiaries) is liable~~ corresponding concepts under ~~Treasury Regulation Section 1.1502-6 (or a similar provision of~~ state, local or foreign ~~Law)~~Tax law) that the Company or its Subsidiaries may have had available but that were not utilized in any taxable period ending (or deemed pursuant to Section 7.3(b) to end) prior to the Closing Date unless otherwise agreed to by the Parties. (f) For purposes of this Article VII, ~~or as a transferee or successor or by Contract (other than Contracts that do not relate primarily to Taxes)~~Article VI, ~~(4) Taxes arising out of or resulting from any breach of any covenant or agreement of Purchaser Parent, Purchaser or their respective Affiliates contained in this~~ the Escrow Agreement, ~~(5) Transfer~~ and the Tax Escrow Agreement, any Taxes for which ~~Purchaser Parent~~ a Party is ~~responsible~~ entitled to indemnification under Section ~~6.5(j), (6~~7.2(a) ~~Taxes arising from any breach of any representation~~ or warranty in Section 5.17(k), (7) Taxes for a Pre-Closing Tax Period imposed on (x) any settlement of any intercompany accounts of Purchaser or any Subsidiary of Purchaser, on the one hand, and Purchaser Parent or any Subsidiary of Purchaser Parent (other than Purchaser and its Subsidiaries), on the other hand, pursuant to Section 6.7 or (y) any transaction or step forming part of the Purchaser Internal Restructurings, (8) Taxes required to be deducted or withheld with respect to any amounts payable to Purchaser Parent pursuant to Section 2.8 or Section 2.9, including any penalties imposed on Purchaser as a result of Purchaser’s failure to deduct or withhold any such amounts, (9) Taxes arising as a result of Purchaser or any Subsidiary of Purchaser (other than any Conveyed Subsidiary or a Subsidiary thereof) at any time ceasing to be a member of a group for the purposes of any Tax, of which group Purchaser Parent or any Subsidiary of Purchaser Parent (other than Purchaser or any Subsidiary of Purchaser) is or was also a member and (10) any costs and expenses, including reasonable legal and accounting fees and expenses, attributable to any item described in clauses (1) through (9) (any such Taxes for which Purchaser Parent is responsible pursuant to this Section 6.5(d)(ii), subject to the following proviso, “Purchaser Parent Indemnified Taxes”); provided that Purchaser Parent shall not be required to indemnify or hold harmless any Purchaser Tax Indemnified Party from and against any liability for (A) Taxes attributable to any action taken after the Closing by Seller Parent or any of its Affiliates, other than any such action that (1) is in the ordinary course of business, (2) is expressly permitted or contemplated by this Agreement, or (3) is required to be taken in order to comply with applicable Law or as a result of a change in applicable Law (a “Seller Tax Act”), (B) Taxes that were reflected, accrued or reserved for in the Final Closing Statement, Final Purchaser Working Capital or the Final Purchaser Net Cash, (C) Income Taxes to the extent that Purchaser or any Subsidiary thereof had any Tax Assets as of the close of business on the Closing Date that were available, or would have been available but for their prior utilization by Purchaser or any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries after the Closing), to offset or otherwise reduce the applicable Tax Liability in respect of such Income Taxes (except any Tax Asset reflected as an asset in the Final Closing Statement and taken into account in the calculation of the Final Purchaser Working Capital or the Final Purchaser Net Cash), or (D) Taxes for which Seller Parent is responsible under Section 6.5(d)(i). (iii) To the extent permitted or required by applicable Law, the taxable year of each of the Conveyed Subsidiaries and their Subsidiaries and any Subsidiary of Purchaser that includes the Closing Date shall be treated as closing on (and including) the Closing Date. Otherwise, for purposes of this Agreement, in the case of any Straddle Period: (A) Property Taxes allocable to the Pre-Closing Tax Period shall be computed based upon the ratio of the number of days in the Pre-Closing Tax Period to the number of days in the entire Straddle Period; and (B) Taxes (other than Property Taxes) allocable to the Pre-Closing Tax Period shall be computed as if such Tax period ended as of the close of business on the Closing Date and, in the case of any Taxes of Conveyed Subsidiaries (and their Subsidiaries) and Seller Parent, or in the case of any Taxes of Purchaser Parent and Purchaser (and their Subsidiaries prior to the Closing), in each case attributable to the ownership of any equity interest in any partnership or other “flow through” entity for tax purposes (including of any “controlled foreign corporation,” as defined under the Code) as if the Tax period of such partnership or other “flow through” entity ended as of the close of business on the Closing Date with the Taxes of such entity for the Pre-Closing Tax Period deemed to include any Taxes on the allocable income of such entity in respect of such Tax period; provided that exemptions, allowances or deductions that are calculated on an annual basis (including depreciation and amortization deductions7.2(b) shall be ~~allocated between the period ending on the Closing Date and the period beginning after the Closing Date in proportion to the number of days in each period~~considered Damages. (iv) Any claim for indemnification under this Section 6.5(d) shall be made in writing upon the party from whom indemnification is sought, and shall specify in reasonable detail the basis for such claim. Any indemnity payment required to be made pursuant to this Section 6.5(d) shall be made within thirty (30) days after the indemnified party makes written demand upon the indemnifying party, but in no case earlier than five (5) Business Days prior to the date on which the relevant Taxes are required to be paid to the applicable Taxing Authority. (v) With respect to any Taxes suffered or incurred by any Conveyed Subsidiary (or any Subsidiary thereof) that was not wholly owned by Seller Parent (directly or indirectly) as of immediately prior to the Closing, the indemnification obligations of Seller Parent pursuant to Section 6.5(d)(i) in respect of such Taxes (or related costs and expenses) shall in no event exceed an amount equal to (A) the amount of such Taxes (or related costs and expenses) for which the Purchaser Tax Indemnified Parties would otherwise be entitled to indemnification pursuant to Section 6.5(d), as if such Conveyed Subsidiary (or any Subsidiary thereof) were wholly owned by Seller Parent, multiplied by (B) the direct and indirect percentage ownership of Seller Parent of such Conveyed Subsidiary (or Subsidiary thereof) as of immediately prior to the Closing. With respect to any Taxes suffered or incurred by any Subsidiary of Purchaser Parent (including Purchaser and its Subsidiaries) that was not wholly owned by Purchaser Parent (directly or indirectly) as of immediately prior to the Closing, the indemnification obligations of Purchaser Parent pursuant to Section 6.5(d)(ii) in respect of such Taxes (or related costs and expenses) shall in no event exceed an amount equal to (A) the amount of such Taxes (or related costs and expenses) for which the Purchaser Tax Indemnified Parties would otherwise be entitled to indemnification pursuant to Section 6.5(d), as if such Subsidiary were wholly owned by Purchaser Parent, multiplied by (B) the direct and indirect percentage ownership of Purchaser Parent of such Subsidiary as of immediately prior to the Closing. (vi) Without duplication to any other amounts paid pursuant to this Section 6.5: (A) Within thirty (30) days following the filing of any Income Tax Return for any Conveyed Subsidiary (or any Subsidiary thereof), on the one hand, or Purchaser (or any Subsidiary thereof, other than the Conveyed Subsidiaries and their Subsidiaries), on the other hand, for any Pre-Closing Tax Period or for any Straddle Period, Seller Parent or Purchaser Parent shall (or Purchaser Parent shall cause Purchaser to) prepare a statement showing (i) the amount of Income Taxes shown as due on such filed Income Tax Return with respect to the relevant Pre-Closing Tax Period or the portion of any Straddle Period ending on and including the Closing Date (the “Final Pre-Closing Income Tax Amount”) and (ii) the amount of the Seller Accrued Income Taxes or Purchaser Accrued Income Taxes, as applicable, attributable to such Income Tax Return as reflected on the Final Closing Statement (the “Pre-Closing Income Tax Amount”) and deliver such statement to Seller Parent and Purchaser Parent, as applicable. Purchaser Parent or Seller Parent, as applicable, shall have a period of fifteen (15) Business Days to provide comments to a schedule prepared (or caused to be prepared) by Seller Parent or Purchaser Parent, respectively. If Purchaser Parent or Seller Parent, as applicable, do not provide any comments to Seller Parent or Purchaser Parent, respectively, during such period, the statement as so prepared shall be final and binding. (B) In the event the Final Pre-Closing Income Tax Amount with respect to any Income Tax Return is less than the amount of the Pre-Closing Income Tax Amount attributable to such Income Tax Return that was included on the Final Closing Statement, the Purchaser shall within five (5) Business Days following the finalization of the Final Pre-Closing Income Tax Amount hereunder (i) pay to Seller Parent the amount of such difference with respect to a Conveyed Subsidiary and their Subsidiaries and (ii) pay to Purchaser Parent the amount of such difference with respect to Purchaser and its Subsidiaries. (vii) The Parties shall use reasonable best efforts to structure any indemnity payment, true-up payment, or payment in respect of Tax Benefits made by any Party pursuant to this Agreement (including pursuant to this Section 6.5, Section 6.6 and Article VII) and any payment made by Purchaser Parent to Purchaser pursuant to Section 2.8 or Section 2.9 in the manner set forth in Clause 10 of the Structuring Considerations Agreement. The Parties shall use reasonable best efforts to structure as a special dividend any payment made by Purchaser to Purchaser Parent pursuant to Section 2.8, Section 2.9 or this Section 6.5.

Appears in 1 contract

Sources: Merger Agreement (Bottomline Technologies Inc /De/)

Tax Indemnification. (ia) Subject to ~~Section 6.5(d)(v)~~the terms and conditions of this Article VII, from and after the Closing, ~~Seller Parent agrees to indemnify~~ Gurcke shall indemnify, save and hold harmless Purchaser ~~and its Subsidiaries (including the Conveyed Subsidiaries and their Subsidiaries after the Closing Date) (collectively, the “Purchaser Tax Indemnified Parties”)~~ from and against (i) all ~~liability, without duplication,~~ liability for ~~(1)~~ Taxes of the ~~Conveyed Subsidiaries and their Subsidiaries~~ Subject Company (other than Excluded Taxes) for ~~any~~ all Pre-Closing Tax ~~Period~~ Periods (~~including~~ as shall be evidenced by any ~~Taxes payable~~ Tax Return prepared by Purchaser in ~~respect of an election under~~ accordance with Section ~~965(h~~4.09(a) and any additional documentation reasonably requested by Sellers) except to the extent of the ~~Code), (2)~~ amount of such Taxes ~~of any Seller (other than any Transfer Taxes and VAT for which Purchaser is responsible hereunder) including, Taxes (other than Taxes of~~ paid by the ~~Conveyed Subsidiaries and their Subsidiaries) imposed with respect to, arising out of~~ Subject Company at or ~~relating~~ prior to the ~~Purchased Assets~~ Effective Time, or ~~the Business for a Pre-Closing Tax Period, (3) Taxes~~ by Sellers or any of ~~any Person~~ their Affiliates (other than the ~~Conveyed Subsidiaries~~ Subject Company) at any time; and ~~their Subsidiaries~~(ii) ~~for a Pre-Closing Tax Period for which~~ any Conveyed Subsidiary (or any Subsidiary thereof) is liable under Treasury Regulation Section 1.1502-6 (or a similar provision of state, local or foreign Law), or as a transferee or successor or by Contract (other than Contracts that do not relate primarily to Taxes), (4) Taxes arising out ~~of or~~ of, resulting from or incident to any breach by Sellers of any covenant contained in Sections 4.09 or ~~agreement of Seller Parent or any of its Affiliates contained~~ 7.04. Notwithstanding anything to the contrary in this Agreement, ~~(5) Taxes~~ Sellers shall not be liable for ~~a Pre-Closing Tax Period imposed on~~ or pay for (x) any ~~transaction effected pursuant to Section 2.3(b)~~Taxes (collectively, “Excluded Taxes”) that are imposed on the Subject Company as a result of actions taken or elections made by Purchaser or the Subject Company after the Effective Time, or (y) any ~~settlement of any intercompany accounts of Seller Parent or its Subsidiaries~~ Taxes subject to indemnification by Purchaser pursuant to ~~Section 6.7,~~ Sections 7.04(b)(i) or (z) any transaction or step forming part of the Seller Internal Restructurings, (6) Transfer Taxes for which Seller Parent is responsible under Section 6.5(j), (7) Taxes required to be deducted or withheld with respect to the payment of the Purchase Consideration or any amounts payable to Seller Parent pursuant to Section 2.8 or Section 2.9, including any penalties imposed on Purchaser as a result of Purchaser’s failure to deduct or withhold any such amounts that Purchaser (or a Purchaser Designated Affiliate) was permitted to withhold under Section 2.10 (in each case, subject to Purchaser’s compliance with the notice and cooperation requirements of Section 2.10 and except for any such Taxes (and any related penalties) required to be deducted or withheld solely as a result of any assignment by Purchaser or its Affiliates for which Purchaser is responsible pursuant to Section 10.3), (8) Taxes arising from any breach of any representation or warranty contained in Section 4.16(k), (9) Taxes arising as a result of any Conveyed Subsidiary or any Subsidiary of any Conveyed Subsidiary at any time ceasing to be a member of a group for the purposes of any Tax, of which group Seller Parent or any Subsidiary of Seller Parent is or was also a member and (10) any costs and expenses, including reasonable legal and accounting fees and expenses, attributable to any item described in clauses (1) through (9) (any such Taxes for which Seller Parent is responsible pursuant to this Section 6.5(d)(i), subject to the following proviso, “Seller Indemnified Taxes”); provided that Seller Parent shall not be required to indemnify or hold harmless any Purchaser Tax Indemnified Party from and against any liability pursuant to this Section 6.5(d)(i) for (A) Taxes attributable to any action taken after the Closing by Purchaser, any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries), or any transferee of Purchaser or any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries), other than any such action that (1) is in the ordinary course of business, (2) is expressly permitted or contemplated by this Agreement, or (3) is required to be taken in order to comply with applicable Law or as a result of a change in applicable Law (a “Purchaser Tax Act”), (B) Taxes that were reflected, accrued or reserved for in the Final Closing Statement, Final Business Working Capital, or Final Business Net Cash, (C) Income Taxes to the extent that a Conveyed Subsidiary or any Subsidiary thereof had any Tax Assets as of the close of business on the Closing Date that were available, or would have been available but for their prior utilization by Purchaser or any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries after the Closing) to offset or otherwise reduce the applicable Tax Liability in respect of such Income Taxes (except any Tax Asset reflected as an asset in the Final Closing Statement and taken into account in the calculation of the Final Business Working Capital or the Final Business Net Cash), or (D) Taxes for which Purchaser Parent is responsible under Section 6.5(d)(ii7.04(b)(ii). (iib) Subject to ~~Section 6.5(d)(v)~~the terms and conditions of this Article VII, from and after the Closing, Purchaser ~~Parent~~ shall ~~indemnify~~ indemnify, save and hold harmless the ~~Purchaser Tax~~ Seller Indemnified Parties from and against ~~all liability, without duplication, for~~ (1i) all liability for Taxes of ~~Purchaser Parent and its Affiliates (other than Purchaser and its Subsidiaries)~~ the Subject Company for any Tax period (other than Transfer Taxes and VAT for which Seller Parent is responsible hereunder), (2) Taxes of Purchaser and its Subsidiaries (other than the Conveyed Subsidiaries and their Subsidiaries) for any PrePost-Closing Tax Period, ; (3ii) ~~Taxes of~~ any Person for a Pre-Closing Tax Period for which Purchaser (or any Subsidiary thereof other than any Conveyed Subsidiaries and their Subsidiaries) is liable under Treasury Regulation Section 1.1502-6 (or a similar provision of state, local or foreign Law), or as a transferee or successor or by Contract (other than Contracts that do not relate primarily to Taxes), (4) Taxes arising out ~~of or~~ of, resulting from ~~any~~ or incident to the breach by Purchaser of any covenant ~~or agreement of Purchaser Parent, Purchaser or their respective Affiliates~~ contained in ~~this Agreement, (5) Transfer Taxes for which Purchaser Parent is responsible under Section 6.5(j), (6) Taxes arising from any breach of any representation~~ Sections 4.09 or warranty in Section 5.17(k), (7) Taxes for a Pre-Closing Tax Period imposed on (x) any settlement of any intercompany accounts of Purchaser or any Subsidiary of Purchaser, on the one hand, and Purchaser Parent or any Subsidiary of Purchaser Parent (other than Purchaser and its Subsidiaries), on the other hand, pursuant to Section 6.7 or (y) any transaction or step forming part of the Purchaser Internal Restructurings, (8) Taxes required to be deducted or withheld with respect to any amounts payable to Purchaser Parent pursuant to Section 2.8 or Section 2.9, including any penalties imposed on Purchaser as a result of Purchaser’s failure to deduct or withhold any such amounts, (9) Taxes arising as a result of Purchaser or any Subsidiary of Purchaser (other than any Conveyed Subsidiary or a Subsidiary thereof) at any time ceasing to be a member of a group for the purposes of any Tax, of which group Purchaser Parent or any Subsidiary of Purchaser Parent (other than Purchaser or any Subsidiary of Purchaser) is or was also a member 7.04; and (10iii) any costs and expenses, including reasonable legal and accounting fees and expenses, attributable to any item described in clauses (1) through (9) (any such Taxes for which Purchaser Parent is responsible pursuant to this Section 6.5(d)(ii), subject to the following proviso, “Purchaser Parent Indemnified Excluded Taxes”); provided that Purchaser Parent shall not be required to indemnify or hold harmless any Purchaser Tax Indemnified Party from and against any liability for (A) Taxes attributable to any action taken after the Closing by Seller Parent or any of its Affiliates, other than any such action that (1) is in the ordinary course of business, (2) is expressly permitted or contemplated by this Agreement, or (3) is required to be taken in order to comply with applicable Law or as a result of a change in applicable Law (a “Seller Tax Act”), (B) Taxes that were reflected, accrued or reserved for in the Final Closing Statement, Final Purchaser Working Capital or the Final Purchaser Net Cash, (C) Income Taxes to the extent that Purchaser or any Subsidiary thereof had any Tax Assets as of the close of business on the Closing Date that were available, or would have been available but for their prior utilization by Purchaser or any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries after the Closing), to offset or otherwise reduce the applicable Tax Liability in respect of such Income Taxes (except any Tax Asset reflected as an asset in the Final Closing Statement and taken into account in the calculation of the Final Purchaser Working Capital or the Final Purchaser Net Cash), or (D) Taxes for which Seller Parent is responsible under Section 6.5(d)(i). (~~iii~~c) To the extent permitted or required by applicable Law, the taxable year of each of the Conveyed Subsidiaries and their Subsidiaries and any Subsidiary of Purchaser that includes the Closing Date shall be treated as closing on (and including) the Closing Date. Otherwise, for purposes of this Agreement, in In the case of any Straddle Period: (Ai) ~~Property~~ real, personal and intangible property Taxes ~~allocable to~~ and any other Taxes levied on a per diem basis (“Per Diem Taxes”) of the Subject Company for a Pre-Closing Tax Period shall be ~~computed based upon~~ equal to the ~~ratio~~ amount of such Per Diem Taxes for the entire Straddle Period multiplied by a fraction, the numerator of which is the number of days during the Straddle Period that are in the Pre-Closing Tax Period to and the denominator of which is the total number of days in the ~~entire~~ Straddle Period; and (Bii) the Taxes of the Subject Company (other than ~~Property~~ Per Diem Taxes or Excluded Taxes) ~~allocable to the~~ for any Pre-Closing Tax Period shall be computed as if such Tax period ended as of the close of business on the Closing Date and, in the case of any Taxes of Conveyed Subsidiaries (and their Subsidiaries) and Seller Parent, or in the case of any Taxes of Purchaser Parent and Purchaser (and their Subsidiaries prior to the Closing), in each case attributable to the ownership of any equity interest in any partnership or other “flow through” entity for tax purposes (including of any “controlled foreign corporation,” as defined under the Code) as if the Tax period of such partnership or other “flow through” entity ended as of the close of business on the Closing Date with the Taxes of such entity for the Pre-Closing Tax Period ~~deemed to include any Taxes on~~ ended as of the allocable income of such entity in respect of such Tax period; provided that exemptions, allowances or deductions that are calculated on an annual basis (including depreciation and amortization deductions) shall be allocated between the period ending on the Closing Date and the period beginning after the Closing Date in proportion to the number of days in each periodEffective Time. (ivd) ~~Any~~ If a claim ~~for indemnification under this Section 6.5(d)~~ shall be made by, or an audit, investigation, litigation or other Proceeding is conducted by or with, any Governmental Authority with respect to Taxes, which, if successful, might result in ~~writing upon the party from whom indemnification is sought, and shall specify in reasonable detail the basis for such claim. Any~~ an indemnity payment ~~required~~ to ~~be made~~ a Person pursuant to this Section ~~6.5(d~~7.04 (a “Tax Claim”), the notice provisions set forth in Section 7.05 shall apply. (e) With respect to any Tax Claim relating to a Tax Period ending on or prior to the Effective Time, Gurcke shall control all proceedings and may make all decisions taken in connection with such Tax Claim (including selection of counsel) at his own expense; provided, however, that Purchaser may participate in proceedings and decisions to the extent they involve Excluded Taxes. Gurcke and Purchaser shall jointly control all proceedings taken in connection with any Tax Claim relating to Taxes of the Subject Company for a Straddle Period, each paying its own expenses. Purchaser shall control at its own expense all proceedings with respect to any Tax Claim relating to a Tax Period beginning after the Effective Time. A Party shall promptly notify the other Party if it decides not to control the defense or settlement of any Tax Claim which it is entitled to control pursuant to this Agreement, and the other Party shall thereupon be permitted to defend and settle such Proceeding at its own expense. (f) Gurcke’s indemnity obligation in respect of Taxes for a Pre-Closing Tax Period pursuant to Section 7.04(a)(i) shall be ~~made~~ effected by its payment to Purchaser of such amount within ~~thirty~~ ten (3010) days after the ~~indemnified party makes written demand upon the indemnifying party,~~ determinations required by Section 7.04(a)(i) are completed (but ~~in no case~~ not earlier than five (5) ~~Business Days~~ days prior to the date on which Taxes for the relevant ~~Taxes~~ Tax Period are required to be paid to the ~~applicable Taxing~~ relevant Governmental Authority~~. (v) With respect to~~ ). If the amount of any such Taxes ~~suffered or incurred~~ paid by ~~any Conveyed Subsidiary (~~Sellers or any ~~Subsidiary thereof~~of their Affiliates (other than the Subject Company) that was not wholly owned by Seller Parent (directly or indirectly) as of immediately prior to the Closing, the indemnification obligations of Seller Parent pursuant to Section 6.5(d)(i) in respect of such Taxes (or related costs and expenses) shall in no event exceed an amount equal to (A) at any time plus the amount of such Taxes (paid by the Subject Company at or related costs and expenses) for which the Purchaser Tax Indemnified Parties would otherwise be entitled to indemnification pursuant to Section 6.5(d), as if such Conveyed Subsidiary (or any Subsidiary thereof) were wholly owned by Seller Parent, multiplied by (B) the direct and indirect percentage ownership of Seller Parent of such Conveyed Subsidiary (or Subsidiary thereof) as of immediately prior to the Closing. With respect to any Taxes suffered or incurred by any Subsidiary of Purchaser Parent (including Purchaser and its Subsidiaries) that was not wholly owned by Purchaser Parent (directly or indirectly) as of immediately prior to the Closing, the indemnification obligations of Purchaser Parent pursuant to Section 6.5(d)(ii) in respect of such Taxes (or related costs and expenses) shall in no event exceed an amount equal to (A) Effective Time exceeds the amount of such Taxes ~~(or related costs and expenses)~~ for ~~which~~ the Purchaser Tax Indemnified Parties would otherwise be entitled to indemnification pursuant to Section 6.5(d), as if such Subsidiary were wholly owned by Purchaser Parent, multiplied by (B) the direct and indirect percentage ownership of Purchaser Parent of such Subsidiary as of immediately prior to the Closing. (vi) Without duplication to any other amounts paid pursuant to this Section 6.5: (A) Within thirty (30) days following the filing of any Income Tax Return for any Conveyed Subsidiary (or any Subsidiary thereof), on the one hand, or Purchaser (or any Subsidiary thereof, other than the Conveyed Subsidiaries and their Subsidiaries), on the other hand, for any Pre-Closing Tax ~~Period or for any Straddle~~ Period, ~~Seller Parent or~~ Purchaser ~~Parent~~ shall ~~(or Purchaser Parent shall cause Purchaser to) prepare a statement showing (i)~~ pay to Sellers the amount of ~~Income Taxes shown as due on~~ such ~~filed Income~~ excess within ten (10) days after the Tax Return with respect to the final liability for such Taxes is required to be filed with the relevant ~~Pre-Closing~~ Governmental Authority. In the case of a Tax ~~Period or~~ that is contested in accordance with the ~~portion~~ provisions of ~~any Straddle Period ending on and including the Closing Date (the “Final Pre-Closing Income Tax Amount”) and (ii) the amount~~ Section 7.04(e), payment of the ~~Seller Accrued Income Taxes or Purchaser Accrued Income Taxes, as applicable, attributable~~ Tax to the appropriate Governmental Authority shall not be considered to be due earlier than the date a final determination to such Income Tax Return as reflected on the Final Closing Statement (the “Pre-Closing Income Tax Amount”) and deliver such statement to Seller Parent and Purchaser Parent, as applicable. Purchaser Parent or Seller Parent, as applicable, shall have a period of fifteen (15) Business Days to provide comments to a schedule prepared (or caused to be prepared) by Seller Parent or Purchaser Parent, respectively. If Purchaser Parent or Seller Parent, as applicable, do not provide any comments to Seller Parent or Purchaser Parent, respectively, during such period, the statement as so prepared shall be final and binding. (B) In the event the Final Pre-Closing Income Tax Amount with respect to any Income Tax Return effect is less than the amount of the Pre-Closing Income Tax Amount attributable to such Income Tax Return that was included on the Final Closing Statement, the Purchaser shall within five (5) Business Days following the finalization of the Final Pre-Closing Income Tax Amount hereunder (i) pay to Seller Parent the amount of such difference with respect to a Conveyed Subsidiary and their Subsidiaries and (ii) pay to Purchaser Parent the amount of such difference with respect to Purchaser and its Subsidiaries. (vii) The Parties shall use reasonable best efforts to structure any indemnity payment, true-up payment, or payment in respect of Tax Benefits made by ~~any Party pursuant to this Agreement (including pursuant to this Section 6.5, Section 6.6 and Article VII) and any payment made by Purchaser Parent to Purchaser pursuant to Section 2.8~~ the appropriate Governmental Authority or Section 2.9 in the manner set forth in Clause 10 of the Structuring Considerations Agreement. The Parties shall use reasonable best efforts to structure as a special dividend any payment made by Purchaser to Purchaser Parent pursuant to Section 2.8, Section 2.9 or this Section 6.5court.

Appears in 1 contract

Sources: Share Purchase Agreement (General Finance CORP)

Tax Indemnification. ~~(i) Subject to Section 6.5(d)(v)~~The Stockholders shall, ~~from~~ jointly and ~~after the Closing~~severally, ~~Seller Parent agrees to~~ indemnify Purchaser Indemnitees and hold them harmless ~~Purchaser and its Subsidiaries (including the Conveyed Subsidiaries and their Subsidiaries after the Closing Date) (collectively, the “Purchaser Tax Indemnified Parties”)~~ from and against (a) any Loss attributable to any breach of or inaccuracy in any representation or warranty made in Section 4.15; (b) any Loss attributable to any breach or violation of, or failure to fully perform, any covenant, agreement, undertaking, or obligation in this Section 8.05; (c) all ~~liability, without duplication, for (1)~~ Taxes of Marquis, the ~~Conveyed Subsidiaries and their Subsidiaries~~ Stockholders or relating to the Business for ~~any~~ all Pre-Closing Tax ~~Period~~ Periods; (~~including any Taxes payable in respect of an election under Section 965(h~~d) ~~of the Code), (2)~~ all Taxes of any ~~Seller (other than any Transfer Taxes and VAT for~~ member of an affiliated, consolidated, combined, or unitary group of which Purchaser is responsible hereunder) including, Taxes (other than Taxes of the Conveyed Subsidiaries and their Subsidiaries) imposed with respect to, arising out of or relating to the Purchased Assets or the Business for a Pre-Closing Tax Period, (3) Taxes of any Person (other than the Conveyed Subsidiaries and their Subsidiaries) for a Pre-Closing Tax Period for which any Conveyed Subsidiary Marquis (or any ~~Subsidiary thereof~~predecessor of Marquis) is ~~liable~~ or was a member on or prior to the Closing Date by reason of a liability under Treasury Regulation Section 1.1502-6 (or ~~a similar provision~~ any comparable provisions of foreign, state, or local ~~or foreign~~ Law~~), or as a~~ ; and (e) any and all Taxes of any Person imposed on Marquis arising under the principles of transferee or successor liability or by ~~Contract~~ Contract, relating to an event or transaction occurring before the Closing Date; in each of the above cases, together with any out-of-pocket fees and expenses (~~other than Contracts~~ including reasonable attorneys’ and accountants’ fees) incurred in connection therewith. The Stockholders shall reimburse Purchaser for any Taxes of Marquis that ~~do not relate primarily to Taxes), (4) Taxes arising out of or resulting from any breach~~ are the responsibility of any covenant or agreement of Seller Parent or any of its Affiliates contained in this Agreement, (5) Taxes for a Pre-Closing Tax Period imposed on (x) any transaction effected pursuant to Section 2.3(b), (y) any settlement of any intercompany accounts of Seller Parent or its Subsidiaries pursuant to Section 6.7, or (z) any transaction or step forming part of the Seller Internal Restructurings, (6) Transfer Taxes for which Seller Parent is responsible under Section 6.5(j), (7) Taxes required to be deducted or withheld with respect to the payment of the Purchase Consideration or any amounts payable to Seller Parent pursuant to Section 2.8 or Section 2.9, including any penalties imposed on Purchaser as a result of Purchaser’s failure to deduct or withhold any such amounts that Purchaser (or a Purchaser Designated Affiliate) was permitted to withhold under Section 2.10 (in each case, subject to Purchaser’s compliance with the notice and cooperation requirements of Section 2.10 and except for any such Taxes (and any related penalties) required to be deducted or withheld solely as a result of any assignment by Purchaser or its Affiliates for which Purchaser is responsible pursuant to Section 10.3), (8) Taxes arising from any breach of any representation or warranty contained in Section 4.16(k), (9) Taxes arising as a result of any Conveyed Subsidiary or any Subsidiary of any Conveyed Subsidiary at any time ceasing to be a member of a group for the purposes of any Tax, of which group Seller Parent or any Subsidiary of Seller Parent is or was also a member and (10) any costs and expenses, including reasonable legal and accounting fees and expenses, attributable to any item described in clauses (1) through (9) (any such Taxes for which Seller Parent is responsible Stockholder pursuant to this Section 6.5(d)(i), subject to the following proviso, “Seller Indemnified Taxes”); provided that Seller Parent shall not be required to indemnify or hold harmless any Purchaser Tax Indemnified Party from and against any liability pursuant to this Section 6.5(d)(i) for (A) Taxes attributable to any action taken after the Closing by Purchaser, any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries), or any transferee of Purchaser or any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries), other than any such action that (1) is in the ordinary course of business, (2) is expressly permitted or contemplated by this Agreement, or (3) is required to be taken in order to comply with applicable Law or as a result of a change in applicable Law (a “Purchaser Tax Act”), (B) Taxes that were reflected, accrued or reserved for in the Final Closing Statement, Final Business Working Capital, or Final Business Net Cash, (C) Income Taxes to the extent that a Conveyed Subsidiary or any Subsidiary thereof had any Tax Assets as of the close of business on the Closing Date that were available, or would have been available but for their prior utilization by Purchaser or any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries after the Closing) to offset or otherwise reduce the applicable Tax Liability in respect of such Income Taxes (except any Tax Asset reflected as an asset in the Final Closing Statement and taken into account in the calculation of the Final Business Working Capital or the Final Business Net Cash), or (D) Taxes for which Purchaser Parent is responsible under Section 6.5(d)(ii). (ii) Subject to Section 6.5(d)(v), from and after the Closing, Purchaser Parent shall indemnify and hold harmless the Purchaser Tax Indemnified Parties from and against all liability, without duplication, for (1) all Taxes of Purchaser Parent and its Affiliates (other than Purchaser and its Subsidiaries) for any Tax period (other than Transfer Taxes and VAT for which Seller Parent is responsible hereunder), (2) Taxes of Purchaser and its Subsidiaries (other than the Conveyed Subsidiaries and their Subsidiaries) for any Pre-Closing Tax Period, (3) Taxes of any Person for a Pre-Closing Tax Period for which Purchaser (or any Subsidiary thereof other than any Conveyed Subsidiaries and their Subsidiaries) is liable under Treasury Regulation Section 1.1502-6 (or a similar provision of state, local or foreign Law), or as a transferee or successor or by Contract (other than Contracts that do not relate primarily to Taxes), (4) Taxes arising out of or resulting from any breach of any covenant or agreement of Purchaser Parent, Purchaser or their respective Affiliates contained in this Agreement, (5) Transfer Taxes for which Purchaser Parent is responsible under Section 6.5(j), (6) Taxes arising from any breach of any representation or warranty in Section 5.17(k), (7) Taxes for a Pre-Closing Tax Period imposed on (x) any settlement of any intercompany accounts of Purchaser or any Subsidiary of Purchaser, on the one hand, and Purchaser Parent or any Subsidiary of Purchaser Parent (other than Purchaser and its Subsidiaries), on the other hand, pursuant to Section 6.7 or (y) any transaction or step forming part of the Purchaser Internal Restructurings, (8) Taxes required to be deducted or withheld with respect to any amounts payable to Purchaser Parent pursuant to Section 2.8 or Section 2.9, including any penalties imposed on Purchaser as a result of Purchaser’s failure to deduct or withhold any such amounts, (9) Taxes arising as a result of Purchaser or any Subsidiary of Purchaser (other than any Conveyed Subsidiary or a Subsidiary thereof) at any time ceasing to be a member of a group for the purposes of any Tax, of which group Purchaser Parent or any Subsidiary of Purchaser Parent (other than Purchaser or any Subsidiary of Purchaser) is or was also a member and (10) any costs and expenses, including reasonable legal and accounting fees and expenses, attributable to any item described in clauses (1) through (9) (any such Taxes for which Purchaser Parent is responsible pursuant to this Section 6.5(d)(ii), subject to the following proviso, “Purchaser Parent Indemnified Taxes”); provided that Purchaser Parent shall not be required to indemnify or hold harmless any Purchaser Tax Indemnified Party from and against any liability for (A) Taxes attributable to any action taken after the Closing by Seller Parent or any of its Affiliates, other than any such action that (1) is in the ordinary course of business, (2) is expressly permitted or contemplated by this Agreement, or (3) is required to be taken in order to comply with applicable Law or as a result of a change in applicable Law (a “Seller Tax Act”), (B) Taxes that were reflected, accrued or reserved for in the Final Closing Statement, Final Purchaser Working Capital or the Final Purchaser Net Cash, (C) Income Taxes to the extent that Purchaser or any Subsidiary thereof had any Tax Assets as of the close of business on the Closing Date that were available, or would have been available but for their prior utilization by Purchaser or any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries after the Closing), to offset or otherwise reduce the applicable Tax Liability in respect of such Income Taxes (except any Tax Asset reflected as an asset in the Final Closing Statement and taken into account in the calculation of the Final Purchaser Working Capital or the Final Purchaser Net Cash), or (D) Taxes for which Seller Parent is responsible under Section 6.5(d)(i). (iii) To the extent permitted or required by applicable Law, the taxable year of each of the Conveyed Subsidiaries and their Subsidiaries and any Subsidiary of Purchaser that includes the Closing Date shall be treated as closing on (and including) the Closing Date. Otherwise, for purposes of this Agreement, in the case of any Straddle Period: (A) Property Taxes allocable to the Pre-Closing Tax Period shall be computed based upon the ratio of the number of days in the Pre-Closing Tax Period to the number of days in the entire Straddle Period; and (B) Taxes (other than Property Taxes) allocable to the Pre-Closing Tax Period shall be computed as if such Tax period ended as of the close of business on the Closing Date and, in the case of any Taxes of Conveyed Subsidiaries (and their Subsidiaries) and Seller Parent, or in the case of any Taxes of Purchaser Parent and Purchaser (and their Subsidiaries prior to the Closing), in each case attributable to the ownership of any equity interest in any partnership or other “flow through” entity for tax purposes (including of any “controlled foreign corporation,” as defined under the Code) as if the Tax period of such partnership or other “flow through” entity ended as of the close of business on the Closing Date with the Taxes of such entity for the Pre-Closing Tax Period deemed to include any Taxes on the allocable income of such entity in respect of such Tax period; provided that exemptions, allowances or deductions that are calculated on an annual basis (including depreciation and amortization deductions) shall be allocated between the period ending on the Closing Date and the period beginning after the Closing Date in proportion to the number of days in each period. (iv) Any claim for indemnification under this Section 6.5(d) shall be made in writing upon the party from whom indemnification is sought, and shall specify in reasonable detail the basis for such claim. Any indemnity payment required to be made pursuant to this Section 6.5(d) shall be made within thirty (30) days after the indemnified party makes written demand upon the indemnifying party, but in no case earlier than five (5) Business Days prior to the date on which the relevant Taxes are required to be paid to the applicable Taxing Authority. (v) With respect to any Taxes suffered or incurred by any Conveyed Subsidiary (or any Subsidiary thereof) that was not wholly owned by Seller Parent (directly or indirectly) as of immediately prior to the Closing, the indemnification obligations of Seller Parent pursuant to Section 6.5(d)(i) in respect of such Taxes (or related costs and expenses) shall in no event exceed an amount equal to (A) the amount of such Taxes (or related costs and expenses) for which the Purchaser Tax Indemnified Parties would otherwise be entitled to indemnification pursuant to Section 6.5(d), as if such Conveyed Subsidiary (or any Subsidiary thereof) were wholly owned by Seller Parent, multiplied by (B) the direct and indirect percentage ownership of Seller Parent of such Conveyed Subsidiary (or Subsidiary thereof) as of immediately prior to the Closing. With respect to any Taxes suffered or incurred by any Subsidiary of Purchaser Parent (including Purchaser and its Subsidiaries) that was not wholly owned by Purchaser Parent (directly or indirectly) as of immediately prior to the Closing, the indemnification obligations of Purchaser Parent pursuant to Section 6.5(d)(ii) in respect of such Taxes (or related costs and expenses) shall in no event exceed an amount equal to (A) the amount of such Taxes (or related costs and expenses) for which the Purchaser Tax Indemnified Parties would otherwise be entitled to indemnification pursuant to Section 6.5(d), as if such Subsidiary were wholly owned by Purchaser Parent, multiplied by (B) the direct and indirect percentage ownership of Purchaser Parent of such Subsidiary as of immediately prior to the Closing. (vi) Without duplication to any other amounts paid pursuant to this Section 6.5: (A) Within thirty (30) days following the filing of any Income Tax Return for any Conveyed Subsidiary (or any Subsidiary thereof), on the one hand, or Purchaser (or any Subsidiary thereof, other than the Conveyed Subsidiaries and their Subsidiaries), on the other hand, for any Pre-Closing Tax Period or for any Straddle Period, Seller Parent or Purchaser Parent shall (or Purchaser Parent shall cause Purchaser to) prepare a statement showing (i) the amount of Income Taxes shown as due on such filed Income Tax Return with respect to the relevant Pre-Closing Tax Period or the portion of any Straddle Period ending on and including the Closing Date (the “Final Pre-Closing Income Tax Amount”) and (ii) the amount of the Seller Accrued Income Taxes or Purchaser Accrued Income Taxes, as applicable, attributable to such Income Tax Return as reflected on the Final Closing Statement (the “Pre-Closing Income Tax Amount”) and deliver such statement to Seller Parent and Purchaser Parent, as applicable. Purchaser Parent or Seller Parent, as applicable, shall have a period of fifteen (15) Business Days to provide comments to a schedule prepared (or caused to be prepared) by Seller Parent or Purchaser Parent, respectively. If Purchaser Parent or Seller Parent, as applicable, do not provide any comments to Seller Parent or Purchaser Parent, respectively, during such period, the statement as so prepared shall be final and binding. (B) In the event the Final Pre-Closing Income Tax Amount with respect to any Income Tax Return is less than the amount of the Pre-Closing Income Tax Amount attributable to such Income Tax Return that was included on the Final Closing Statement, the Purchaser shall 8.05 within five (5) Business Days ~~following the finalization of the Final Pre-Closing Income Tax Amount hereunder (i) pay to Seller Parent the amount~~ after payment of such ~~difference with respect~~ Taxes by any Purchaser Indemnitee. Purchaser agrees to ~~a Conveyed Subsidiary and their Subsidiaries and (ii) pay~~ give written notice to ~~Purchaser Parent~~ the ~~amount~~ Stockholders’ Representative promptly upon the receipt of ~~such difference with respect to Purchaser and its Subsidiaries. (vii) The Parties shall use reasonable best efforts to structure~~ any ~~indemnity payment~~written notice by Marquis, ~~true-up payment~~Purchaser, or ~~payment~~ any of Purchaser’s Affiliates that involves the assertion of any claim, or the commencement of any Proceeding, in respect of ~~Tax Benefits made~~ which an indemnity may be sought by ~~any Party pursuant to this Agreement (including~~ Purchaser pursuant to this Section ~~6.5~~8.05 (a “Tax Claim”); provided, ~~Section 6.6~~ that failure to comply with this provision shall not relieve the Stockholders of their indemnification obligations, except and ~~Article VII~~only to the extent that the Stockholders forfeit rights or defenses by reason of such failure. Purchaser shall control the contest or resolution of any Tax Claim; provided, however, that Purchaser shall obtain the prior written consent of the Stockholders’ Representative (which consent shall not be unreasonably withheld, delayed, denied, or conditioned) ~~and~~ before entering into any ~~payment made by Purchaser Parent~~ settlement of a Tax Claim or ceasing to ~~Purchaser pursuant~~ defend such Tax Claim; and, provided, further, that the Stockholders’ Representative shall be entitled to ~~Section 2.8 or Section 2.9~~ participate in the ~~manner set forth in Clause 10~~ defense of such Tax Claim and to employ counsel of his choice for such purpose, the ~~Structuring Considerations Agreement. The Parties~~ fees and expenses of which separate counsel shall ~~use reasonable best efforts to structure as a special dividend any payment made~~ be borne solely by ~~Purchaser to Purchaser Parent pursuant to Section 2.8, Section 2.9 or this Section 6.5~~the Stockholders.

Appears in 1 contract

Sources: Purchase Agreement (LIVE VENTURES Inc)

Tax Indemnification. (ia) ~~Subject to Section 6.5(d)(v)~~The Protego Partners shall, ~~from and after the Closing~~severally but not jointly, ~~Seller Parent agrees to~~ indemnify and hold harmless ~~Purchaser~~ the Partnership Indemnitees from: (i) any and ~~its Subsidiaries (including the Conveyed Subsidiaries and their Subsidiaries after the Closing Date) (collectively, the “Purchaser Tax Indemnified Parties”) from and against~~ all ~~liability, without duplication,~~ liability for ~~(1)~~ Taxes of any of the ~~Conveyed Subsidiaries and their Subsidiaries for~~ Protego Entities (or any predecessors) with respect to all Pre-Closing Tax ~~Period (including any Taxes payable in respect of an election under Section 965(h) of the Code), (2) Taxes of any Seller (other than any Transfer Taxes~~ Periods and ~~VAT for which Purchaser is responsible hereunder) including, Taxes (other than Taxes of the Conveyed Subsidiaries and their Subsidiaries) imposed~~ with respect ~~to, arising out of or relating~~ to ~~the Purchased Assets or the Business for a Pre-Closing Tax~~ any Straddle Period, for the portion thereof ending on the Closing Date; (3ii) ~~Taxes of~~ any ~~Person (other than the Conveyed Subsidiaries and their Subsidiaries) for a Pre-Closing Tax Period for which any Conveyed Subsidiary (~~loss, liability, claim, damage or any Subsidiary thereof) is liable under Treasury Regulation Section 1.1502-6 (or a similar provision of state, local or foreign Law), or as a transferee or successor or by Contract (other than Contracts that do not relate primarily expense attributable to ~~Taxes), (4) Taxes arising out of or resulting from~~ any breach of ~~any covenant or agreement of Seller Parent or any of its Affiliates contained in this Agreement,~~ (5A) Taxes for a Pre-Closing Tax Period imposed on (x) any transaction effected pursuant to Section 2.3(b), (y) any settlement of any intercompany accounts of Seller Parent or its Subsidiaries pursuant to Section 6.7, or (z) any transaction or step forming part of the Seller Internal Restructurings, (6) Transfer Taxes for which Seller Parent is responsible under Section 6.5(j), (7) Taxes required to be deducted or withheld with respect to the payment of the Purchase Consideration or any amounts payable to Seller Parent pursuant to Section 2.8 or Section 2.9, including any penalties imposed on Purchaser as a result of Purchaser’s failure to deduct or withhold any such amounts that Purchaser (or a Purchaser Designated Affiliate) was permitted to withhold under Section 2.10 (in each case, subject to Purchaser’s compliance with the notice and cooperation requirements of Section 2.10 and except for any such Taxes (and any related penalties) required to be deducted or withheld solely as a result of any assignment by Purchaser or its Affiliates for which Purchaser is responsible pursuant to Section 10.3), (8) Taxes arising from any breach of any representation or warranty contained in Section ~~4.16(k~~3.1.7 (relating to Taxes) or (B) any covenant set forth in Section 4.1.1(k), ; (9iii) all liability for Taxes of any of the Protego Entities arising (directly or indirectly) as a result of the transactions contemplated under Section 2.1.3, other than any ~~Conveyed Subsidiary~~ Taxes relating to the transformation of the applicable Protego Entities to SRLs and the elections to treat those entities for U.S. tax purposes in the manner described in Section 2.1.3(a); and (iv) all liability for reasonable costs and expenses (including reasonable attorneys’ fees and disbursements) incurred by the Partnership Indemnitees in connection with any action, suit, proceeding, demand, assessment or judgment incident to any ~~Subsidiary~~ of the matters indemnified against in this Section 7.4. Notwithstanding anything herein to the contrary, with respect to any ~~Conveyed Subsidiary at any time ceasing~~ claim under Section 7.4(a), (x) no indemnity obligation shall arise with respect to ~~be a member~~ Taxes that are taken into account in determining net income of ~~a group~~ the Protego Entities for the purposes of computing the Protego Distribution Amount other than any ~~Tax~~deferred Taxes established to reflect timing differences between book and tax basis in assets and liabilities, (y) the Protego Partners, collectively, shall not be liable for any Losses unless and until the total of all Losses with respect thereto exceeds One Hundred Thousand Dollars ($100,000) (the “Tax Indemnity Basket”), at which ~~group Seller Parent~~ time the Partnership Indemnitees will be entitled to indemnification for Losses exceeding the Tax Indemnity Basket, and (z) each of the Protego Partners shall only be liable under this Agreement, and the Partnership shall only have the right to seek indemnification under this Agreement from any Protego Partner, to the extent of such Protego Partner’s pro rata share of such indemnification obligation which is specified in Annex F. (b) The Evercore Partners shall, severally but not jointly, indemnify and hold harmless the Partnership Indemnitees from: (i) any and all liability for Taxes of any of the Evercore Entities (or any ~~Subsidiary of Seller Parent is or was also a member~~ predecessors) with respect to all Pre-Closing Tax Periods and with respect to any Straddle Period, for the portion thereof ending on the Closing Date; (10ii) any ~~costs and expenses~~loss, ~~including reasonable legal and accounting fees and expenses~~liability, claim, damage or expense attributable to any item described in clauses (1) through (9) (any such Taxes for which Seller Parent is responsible pursuant to this Section 6.5(d)(i), subject to the following proviso, “Seller Indemnified Taxes”); provided that Seller Parent shall not be required to indemnify or hold harmless any Purchaser Tax Indemnified Party from and against any liability pursuant to this Section 6.5(d)(i) for breach of (A) any representation or warranty contained in Section 3.2.7 (relating to Taxes) or (B) any covenant set forth in Section 4.2.1(k); (iii) all liability for Taxes ~~attributable to any action taken after the Closing by Purchaser,~~ of any of ~~its Affiliates~~ the Evercore Entities arising (~~including the Conveyed Subsidiaries and their Subsidiaries),~~ directly or ~~any transferee of Purchaser or any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries), other than any such action that (1~~indirectly) ~~is in the ordinary course of business, (2) is expressly permitted or contemplated by this Agreement, or (3) is required to be taken in order to comply with applicable Law or~~ as a result of ~~a change~~ the transactions contemplated by 2.1.2; and (iv) all liability for reasonable costs and expenses (including reasonable attorneys’ fees and disbursements) incurred by the Partnership Indemnitees in ~~applicable Law (a “Purchaser Tax Act”~~connection with any action, suit, proceeding, demand, assessment or judgment incident to any of the matters indemnified against in this Section 7.4. Notwithstanding anything herein to the contrary, with respect to any claim for Losses under Section 7.4(b), (Bx) ~~Taxes that were reflected~~the Evercore Partners, ~~accrued or reserved~~ collectively, shall not be liable for in any Losses unless and until the ~~Final Closing Statement~~total of all Losses with respect thereto exceeds the Tax Indemnity Basket, ~~Final Business Working Capital~~at which time the Partnership Indemnitees will be entitled to indemnification for Losses exceeding the Tax Indemnity Basket and (y) each of the Evercore Partners shall only be liable under this Agreement, ~~or Final Business Net Cash~~and the Partnership shall only have the right to seek indemnification under this Agreement from any Evercore Partner, ~~(C) Income Taxes~~ to the extent ~~that~~ of such Evercore Partner’s pro rata share of such indemnification obligation which is specified in Annex G. (c) Notwithstanding any provision in this Agreement to the contrary, the obligations of a ~~Conveyed Subsidiary or any Subsidiary thereof had any Tax Assets as of~~ party to indemnify and hold harmless another party pursuant to Sections 7.4 and 7.5 shall terminate at the close of business on the ~~Closing Date that were available, or would have been available but for their prior utilization by Purchaser or any~~ 90th day following the expiration of ~~its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries after the Closing) to offset or otherwise reduce~~ the applicable statute of limitations with respect to the Tax ~~Liability~~ liabilities in ~~respect of such Income Taxes~~ question (~~except~~ giving effect to any ~~Tax Asset reflected as an asset in the Final Closing Statement and taken into account in the calculation of the Final Business Working Capital~~ waiver, mitigation or ~~the Final Business Net Cash), or (D) Taxes for which Purchaser Parent is responsible under Section 6.5(d)(ii~~extension thereof). (iid) Subject to Section 6.5(d)(v), from and after the Closing, Purchaser Parent shall indemnify and hold harmless the Purchaser Tax Indemnified Parties from and against all liability, without duplication, for (1) all Taxes of Purchaser Parent and its Affiliates (other than Purchaser and its Subsidiaries) for any Tax period (other than Transfer Taxes and VAT for which Seller Parent is responsible hereunder), (2) Taxes of Purchaser and its Subsidiaries (other than the Conveyed Subsidiaries and their Subsidiaries) for any Pre-Closing Tax Period, (3) Taxes of any Person for a Pre-Closing Tax Period for which Purchaser (or any Subsidiary thereof other than any Conveyed Subsidiaries and their Subsidiaries) is liable under Treasury Regulation Section 1.1502-6 (or a similar provision of state, local or foreign Law), or as a transferee or successor or by Contract (other than Contracts that do not relate primarily to Taxes), (4) Taxes arising out of or resulting from any breach of any covenant or agreement of Purchaser Parent, Purchaser or their respective Affiliates contained in this Agreement, (5) Transfer Taxes for which Purchaser Parent is responsible under Section 6.5(j), (6) Taxes arising from any breach of any representation or warranty in Section 5.17(k), (7) Taxes for a Pre-Closing Tax Period imposed on (x) any settlement of any intercompany accounts of Purchaser or any Subsidiary of Purchaser, on the one hand, and Purchaser Parent or any Subsidiary of Purchaser Parent (other than Purchaser and its Subsidiaries), on the other hand, pursuant to Section 6.7 or (y) any transaction or step forming part of the Purchaser Internal Restructurings, (8) Taxes required to be deducted or withheld with respect to any amounts payable to Purchaser Parent pursuant to Section 2.8 or Section 2.9, including any penalties imposed on Purchaser as a result of Purchaser’s failure to deduct or withhold any such amounts, (9) Taxes arising as a result of Purchaser or any Subsidiary of Purchaser (other than any Conveyed Subsidiary or a Subsidiary thereof) at any time ceasing to be a member of a group for the purposes of any Tax, of which group Purchaser Parent or any Subsidiary of Purchaser Parent (other than Purchaser or any Subsidiary of Purchaser) is or was also a member and (10) any costs and expenses, including reasonable legal and accounting fees and expenses, attributable to any item described in clauses (1) through (9) (any such Taxes for which Purchaser Parent is responsible pursuant to this Section 6.5(d)(ii), subject to the following proviso, “Purchaser Parent Indemnified Taxes”); provided that Purchaser Parent shall not be required to indemnify or hold harmless any Purchaser Tax Indemnified Party from and against any liability for (A) Taxes attributable to any action taken after the Closing by Seller Parent or any of its Affiliates, other than any such action that (1) is in the ordinary course of business, (2) is expressly permitted or contemplated by this Agreement, or (3) is required to be taken in order to comply with applicable Law or as a result of a change in applicable Law (a “Seller Tax Act”), (B) Taxes that were reflected, accrued or reserved for in the Final Closing Statement, Final Purchaser Working Capital or the Final Purchaser Net Cash, (C) Income Taxes to the extent that Purchaser or any Subsidiary thereof had any Tax Assets as of the close of business on the Closing Date that were available, or would have been available but for their prior utilization by Purchaser or any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries after the Closing), to offset or otherwise reduce the applicable Tax Liability in respect of such Income Taxes (except any Tax Asset reflected as an asset in the Final Closing Statement and taken into account in the calculation of the Final Purchaser Working Capital or the Final Purchaser Net Cash), or (D) Taxes for which Seller Parent is responsible under Section 6.5(d)(i). (iii) To the extent permitted or required by applicable Law, the taxable year of each of the Conveyed Subsidiaries and their Subsidiaries and any Subsidiary of Purchaser that includes the Closing Date shall be treated as closing on (and including) the Closing Date. Otherwise, for purposes of this Agreement, in In the case of any Straddle Period~~: (A) Property~~ , the amount of Taxes allocable to the ~~Pre-~~portion of the Straddle Period ending on the Closing ~~Tax Period~~ Date shall be ~~computed based upon~~ deemed to be: (i) in the ~~ratio~~ case of Taxes imposed on a periodic basis (including, real or personal property Taxes), the amount of such Taxes for the entire period (or, in the case of such Taxes determined on an arrears basis, the amount of such Taxes for the immediately preceding period) multiplied by a fraction, the numerator of which is the number of calendar days in the ~~Pre-~~Straddle Period ending on and including the Closing ~~Tax Period to~~ Date and the denominator of which is the number of calendar days in the entire relevant Straddle Period; and (Bii) in the case of Taxes not described in clause (i) above (including franchise Taxes, Taxes that are based upon or related to income or receipts, and Taxes that are based upon occupancy or imposed in connection with any sale or other ~~than Property Taxes) allocable to~~ transfer or assignment of property (whether real or personal or tangible or intangible)), the ~~Pre-Closing Tax Period~~ amount of any such Taxes shall be ~~computed~~ determined as if such ~~Tax~~ taxable period ended as of the close of business on the Closing Date and, in the case of any Taxes of Conveyed Subsidiaries (and their Subsidiaries) and Seller Parent, or in the case of any Taxes of Purchaser Parent and Purchaser (and their Subsidiaries prior to the Closing), in each case attributable to the ownership of any equity interest in any partnership or other “flow through” entity for tax purposes (including of any “controlled foreign corporation,” as defined under the Code) as if the Tax period of such partnership or other “flow through” entity ended as of the close of business on the Closing Date with the Taxes of such entity for the Pre-Closing Tax Period deemed to include any Taxes on the allocable income of such entity in respect of such Tax period; provided that exemptions, allowances or deductions that are calculated on an annual basis (including depreciation and amortization deductions) shall be allocated between the period ending on the Closing Date and the period beginning after the Closing Date in proportion to the number of days in each periodDate. (ive) ~~Any claim for indemnification under this Section 6.5(d) shall be made in writing upon~~ Notwithstanding anything herein to the ~~party from whom indemnification is sought~~contrary, ~~and shall specify in reasonable detail the basis for such claim. Any~~ all indemnity ~~payment required~~ payments to be made pursuant to this Section ~~6.5(d)~~ 7.4 shall be made ~~within thirty (30) days after the indemnified party makes written demand upon the indemnifying party, but~~ in no case earlier than five (5) Business Days prior to the date on which the relevant Taxes are required to be paid to the applicable Taxing Authority. (v) With respect to any Taxes suffered or incurred by any Conveyed Subsidiary (or any Subsidiary thereof) that was not wholly owned by Seller Parent (directly or indirectly) as of immediately prior to the Closing, the indemnification obligations of Seller Parent pursuant to accordance with Section 6.5(d)(i) in respect of such Taxes (or related costs and expenses) shall in no event exceed an amount equal to (A) the amount of such Taxes (or related costs and expenses) for which the Purchaser Tax Indemnified Parties would otherwise be entitled to indemnification pursuant to Section 6.5(d), as if such Conveyed Subsidiary (or any Subsidiary thereof) were wholly owned by Seller Parent, multiplied by (B) the direct and indirect percentage ownership of Seller Parent of such Conveyed Subsidiary (or Subsidiary thereof) as of immediately prior to the Closing. With respect to any Taxes suffered or incurred by any Subsidiary of Purchaser Parent (including Purchaser and its Subsidiaries) that was not wholly owned by Purchaser Parent (directly or indirectly) as of immediately prior to the Closing, the indemnification obligations of Purchaser Parent pursuant to Section 6.5(d)(ii) in respect of such Taxes (or related costs and expenses) shall in no event exceed an amount equal to (A) the amount of such Taxes (or related costs and expenses) for which the Purchaser Tax Indemnified Parties would otherwise be entitled to indemnification pursuant to Section 6.5(d), as if such Subsidiary were wholly owned by Purchaser Parent, multiplied by (B) the direct and indirect percentage ownership of Purchaser Parent of such Subsidiary as of immediately prior to the Closing. (vi) Without duplication to any other amounts paid pursuant to this Section 6.5: (A) Within thirty (30) days following the filing of any Income Tax Return for any Conveyed Subsidiary (or any Subsidiary thereof), on the one hand, or Purchaser (or any Subsidiary thereof, other than the Conveyed Subsidiaries and their Subsidiaries), on the other hand, for any Pre-Closing Tax Period or for any Straddle Period, Seller Parent or Purchaser Parent shall (or Purchaser Parent shall cause Purchaser to) prepare a statement showing (i) the amount of Income Taxes shown as due on such filed Income Tax Return with respect to the relevant Pre-Closing Tax Period or the portion of any Straddle Period ending on and including the Closing Date (the “Final Pre-Closing Income Tax Amount”6.7(a) and (ii) the amount of the Seller Accrued Income Taxes or Purchaser Accrued Income Taxes, as applicable, attributable to such Income Tax Return as reflected on the Final Closing Statement (the “Pre-Closing Income Tax Amount”) and deliver such statement to Seller Parent and Purchaser Parent, as applicable. Purchaser Parent or Seller Parent, as applicable, shall have a period of fifteen (15) Business Days to provide comments to a schedule prepared (or caused to be prepared) by Seller Parent or Purchaser Parent, respectively. If Purchaser Parent or Seller Parent, as applicable, do not provide any comments to Seller Parent or Purchaser Parent, respectively, during such period, the statement as so prepared shall be final and bindingb). (B) In the event the Final Pre-Closing Income Tax Amount with respect to any Income Tax Return is less than the amount of the Pre-Closing Income Tax Amount attributable to such Income Tax Return that was included on the Final Closing Statement, the Purchaser shall within five (5) Business Days following the finalization of the Final Pre-Closing Income Tax Amount hereunder (i) pay to Seller Parent the amount of such difference with respect to a Conveyed Subsidiary and their Subsidiaries and (ii) pay to Purchaser Parent the amount of such difference with respect to Purchaser and its Subsidiaries. (vii) The Parties shall use reasonable best efforts to structure any indemnity payment, true-up payment, or payment in respect of Tax Benefits made by any Party pursuant to this Agreement (including pursuant to this Section 6.5, Section 6.6 and Article VII) and any payment made by Purchaser Parent to Purchaser pursuant to Section 2.8 or Section 2.9 in the manner set forth in Clause 10 of the Structuring Considerations Agreement. The Parties shall use reasonable best efforts to structure as a special dividend any payment made by Purchaser to Purchaser Parent pursuant to Section 2.8, Section 2.9 or this Section 6.5.

Appears in 1 contract

Sources: Contribution and Sale Agreement (Evercore Partners Inc.)

Tax Indemnification. (i) ~~Subject to Section 6.5(d)(v), from~~ 7-Eleven shall be liable for and ~~after the Closing, Seller Parent agrees to~~ shall indemnify and hold harmless ~~Purchaser and its Subsidiaries (including the Conveyed Subsidiaries and their Subsidiaries after the Closing Date) (collectively, the “Purchaser Tax Indemnified Parties”)~~ Buyer from and ~~against all liability~~against, without duplication, (A) all Taxes imposed on the Seller Parties for any taxable period, including all Taxes arising out of the consummation of the transactions contemplated by this Agreement, (B) all Taxes with respect to the Business or Assets (1) ~~Taxes of the Conveyed Subsidiaries and their Subsidiaries~~ for any Pre-Closing ~~Tax~~ Period and (~~including~~ 2) with respect to any Straddle Period, for the portion of such Straddle Period up to the applicable Closing Date, calculated in accordance with Section 4.2(d) (other than real estate Taxes ~~payable in respect of an election under~~ for which the Seller Parties are responsible pursuant to Section ~~965(h~~1.7(a) ~~of the Code~~and for which Buyer has received a credit), (2C) all Taxes of any Seller (other than any Transfer Taxes and VAT for which Purchaser is responsible hereunder) including, Taxes (other than Taxes of the Conveyed Subsidiaries and their Subsidiaries) imposed with respect toresulting from, arising out of or ~~relating to the Purchased Assets~~ in connection with any breach or ~~the Business for a Pre-Closing Tax Period, (3) Taxes~~ inaccuracy of any ~~Person (other than~~ of the ~~Conveyed Subsidiaries~~ representations and ~~their Subsidiaries) for a Pre-Closing Tax Period for which any Conveyed Subsidiary (or any Subsidiary thereof) is liable under Treasury Regulation~~ warranties of the Seller Parties in Section ~~1.1502-6 (or a similar provision of state, local or foreign Law), or as a transferee or successor or by Contract (other than Contracts that do not relate primarily to Taxes~~2.1(e), (4D) all Taxes resulting from, arising out of or ~~resulting from~~ attributable to any breach by the Seller Parties of ~~any~~ a covenant ~~or agreement of Seller Parent or any of its Affiliates contained~~ in this ~~Agreement,~~ Agreement related to Taxes (5) Taxes for a Pre-Closing Tax Period imposed on (x) any transaction effected pursuant to Section 2.3(b), (y) any settlement of any intercompany accounts of Seller Parent or its Subsidiaries pursuant to Section 6.7, or (z) any transaction or step forming part of including the Seller ~~Internal Restructurings, (6)~~ Parties’ failure to pay Transfer Taxes for which Seller Parent is responsible under Section 6.5(j), (7) Taxes required to be deducted or withheld with respect to the payment of the Purchase Consideration or any amounts payable to Seller Parent pursuant to Section 2.8 or Section 2.9, including any penalties imposed on Purchaser as a result of Purchaser’s failure to deduct or withhold any such amounts that Purchaser (or a Purchaser Designated Affiliate) was permitted to withhold under Section 2.10 (in each case, subject to Purchaser’s compliance with the notice and cooperation requirements of Section 2.10 and except for any such Taxes (and any related penalties) required to be deducted or withheld solely as a result of any assignment by Purchaser or its Affiliates for which Purchaser it is responsible pursuant to Section ~~10.3~~4.2(e)), (8) E) any Taxes deferred in a Pre-Closing Period pursuant to the Coronavirus Aid, Relief, and Economic Security Act (CARES) or any other Law enacted in response to the COVID-19 pandemic, and (F) any Losses arising ~~from any breach~~ out of any ~~representation or warranty contained in Section 4.16(k), (9)~~ Taxes arising as a result of any Conveyed Subsidiary or any Subsidiary of any Conveyed Subsidiary at any time ceasing to be a member of a group for the purposes of any Tax, of which group Seller Parent or any Subsidiary of Seller Parent is or was also a member and (10) any costs and expenses, including reasonable legal and accounting fees and expenses, attributable to any item described in clauses (1A)-(E) of this Section 4.2(a)(i); provided, however, that, 7-Eleven shall not have any responsibility in respect of any Taxes resulting from, arising out of or in connection with any breach or inaccuracy of any of the representations and warranties of the Seller Parties in Section 2.1(e) (other than the representation and warranties set forth in Section 2.1(e)(vii)) to the extent such Taxes are attributable to any Tax period (or portion thereof, as calculated in accordance with Section 4.2(d)) beginning on the applicable Closing Date ((i) through (9vi) ~~(any such Taxes for which Seller Parent is responsible pursuant to this Section 6.5(d)(i), subject to the following proviso~~collectively, “Seller ~~Indemnified~~ Taxes”); provided that Seller Parent shall not be required to indemnify or hold harmless any Purchaser Tax Indemnified Party from and against any liability pursuant to this Section 6.5(d)(i) for (A) Taxes attributable to any action taken after the Closing by Purchaser, any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries), or any transferee of Purchaser or any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries), other than any such action that (1) is in the ordinary course of business, (2) is expressly permitted or contemplated by this Agreement, or (3) is required to be taken in order to comply with applicable Law or as a result of a change in applicable Law (a “Purchaser Tax Act”), (B) Taxes that were reflected, accrued or reserved for in the Final Closing Statement, Final Business Working Capital, or Final Business Net Cash, (C) Income Taxes to the extent that a Conveyed Subsidiary or any Subsidiary thereof had any Tax Assets as of the close of business on the Closing Date that were available, or would have been available but for their prior utilization by Purchaser or any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries after the Closing) to offset or otherwise reduce the applicable Tax Liability in respect of such Income Taxes (except any Tax Asset reflected as an asset in the Final Closing Statement and taken into account in the calculation of the Final Business Working Capital or the Final Business Net Cash), or (D) Taxes for which Purchaser Parent is responsible under Section 6.5(d)(ii). (ii) ~~Subject~~ Buyer shall be liable for, shall pay (or cause to ~~Section 6.5(d)(v), from~~ be paid) and ~~after the Closing, Purchaser Parent~~ shall indemnify and hold harmless the ~~Purchaser Tax Indemnified~~ Seller Parties from and ~~against all liability~~against, without duplication, ~~for~~ (A) all Taxes relating to the Business, the Assets or the Assumed Liabilities, (1) ~~all Taxes of Purchaser Parent and its Affiliates (other than Purchaser and its Subsidiaries)~~ for any ~~Tax period~~ Post-Closing Period and (~~other than Transfer Taxes and VAT~~ 2) with respect to any Straddle Period, for ~~which Seller Parent is responsible hereunder~~the portion of such Straddle Period beginning after the Closing Date, calculated in accordance with Section 4.2(d), (2) Taxes of Purchaser and its Subsidiaries (other than the Conveyed Subsidiaries and their Subsidiaries) for any Pre-Closing Tax Period, (3) Taxes of any Person for a Pre-Closing Tax Period for which Purchaser (or any Subsidiary thereof other than any Conveyed Subsidiaries and their Subsidiaries) is liable under Treasury Regulation Section 1.1502-6 (or a similar provision of state, local or foreign Law), or as a transferee or successor or by Contract (other than Contracts that do not relate primarily to Taxes), (4) Taxes arising out of or resulting from any breach of any covenant or agreement of Purchaser Parent, Purchaser or their respective Affiliates contained in this Agreement, (5B) Transfer Taxes for which Purchaser Parent is responsible under Section 6.5(j), (6) Taxes arising from any breach of any representation or warranty in Section 5.17(k), (7) Taxes for a Pre-Closing Tax Period imposed on (x) any settlement of any intercompany accounts of Purchaser or any Subsidiary of Purchaser, on the one hand, and Purchaser Parent or any Subsidiary of Purchaser Parent (other than Purchaser and its Subsidiaries), on the other hand, pursuant to Section 6.7 or (y) any transaction or step forming part of the Purchaser Internal Restructurings, (8) Taxes required to be deducted or withheld with respect to any amounts payable to Purchaser Parent pursuant to Section 2.8 or Section 2.9, including any penalties imposed on Purchaser as a result of Purchaser’s failure to deduct or withhold any such amounts, (9) Taxes arising as a result of Purchaser or any Subsidiary of Purchaser (other than any Conveyed Subsidiary or a Subsidiary thereof) at any time ceasing to be a member of a group for the purposes of any Tax, of which group Purchaser Parent or any Subsidiary of Purchaser Parent (other than Purchaser or any Subsidiary of Purchaser) is or was also a member and (10) any costs and expenses, including reasonable legal and accounting fees and expenses, attributable to any item described in clauses (1) through (9) (any such Taxes for which Purchaser Parent Buyer is responsible pursuant to ~~this~~ Section ~~6.5(d)(ii~~4.2(e), ~~subject to the following proviso~~and (C) all Taxes resulting from, ~~“Purchaser Parent Indemnified Taxes”); provided that Purchaser Parent shall not be required to indemnify~~ arising out of or ~~hold harmless any Purchaser Tax Indemnified Party from and against any liability for (A) Taxes~~ attributable to any ~~action taken after the Closing~~ breach by Seller Parent or any of its Affiliates, other than any such action that (1) is in the ordinary course of business, (2) is expressly permitted or contemplated by this Agreement, or (3) is required to be taken in order to comply with applicable Law or as a result Buyer of a ~~change~~ covenant in applicable Law (a “Seller Tax Act”), (B) Taxes that were reflected, accrued or reserved for in the Final Closing Statement, Final Purchaser Working Capital or the Final Purchaser Net Cash, (C) Income Taxes this Agreement related to the extent that Purchaser or any Subsidiary thereof had any Tax Assets as of the close of business on the Closing Date that were available, or would have been available but for their prior utilization by Purchaser or any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries after the Closing), to offset or otherwise reduce the applicable Tax Liability in respect of such Income Taxes (except any Tax Asset reflected as an asset in the Final Closing Statement and taken into account in the calculation of the Final Purchaser Working Capital or the Final Purchaser Net Cash), or (D) Taxes for which Seller Parent is responsible under Section 6.5(d)(i). (iii) To the extent permitted or required by applicable Law, the taxable year of each of the Conveyed Subsidiaries and their Subsidiaries and any Subsidiary of Purchaser that includes the Closing Date shall be treated as closing on (and including) the Closing Date. Otherwise, for purposes of this Agreement, in the case of any Straddle Period: (A) Property Taxes allocable to the Pre-Closing Tax Period shall be computed based upon the ratio of the number of days in the Pre-Closing Tax Period to the number of days in the entire Straddle Period; and (B) Taxes (other than Property Taxes) allocable to the Pre-Closing Tax Period shall be computed as if such Tax period ended as of the close of business on the Closing Date and, in the case of any Taxes of Conveyed Subsidiaries (and their Subsidiaries) and Seller Parent, or in the case of any Taxes of Purchaser Parent and Purchaser (and their Subsidiaries prior to the Closing), in each case attributable to the ownership of any equity interest in any partnership or other “flow through” entity for tax purposes (including of any “controlled foreign corporation,” as defined under the Code) as if the Tax period of such partnership or other “flow through” entity ended as of the close of business on the Closing Date with the Taxes of such entity for the Pre-Closing Tax Period deemed to include any Taxes on the allocable income of such entity in respect of such Tax period; provided that exemptions, allowances or deductions that are calculated on an annual basis (including depreciation and amortization deductions) shall be allocated between the period ending on the Closing Date and the period beginning after the Closing Date in proportion to the number of days in each period. (iv) Any claim for indemnification under this Section 6.5(d) shall be made in writing upon the party from whom indemnification is sought, and shall specify in reasonable detail the basis for such claim. Any indemnity payment required to be made pursuant to this Section 6.5(d) shall be made within thirty (30) days after the indemnified party makes written demand upon the indemnifying party, but in no case earlier than five (5) Business Days prior to the date on which the relevant Taxes are required to be paid to the applicable Taxing Authority. (v) With respect to any Taxes suffered or incurred by any Conveyed Subsidiary (or any Subsidiary thereof) that was not wholly owned by Seller Parent (directly or indirectly) as of immediately prior to the Closing, the indemnification obligations of Seller Parent pursuant to Section 6.5(d)(i) in respect of such Taxes (or related costs and expenses) shall in no event exceed an amount equal to (A) the amount of such Taxes (or related costs and expenses) for which the Purchaser Tax Indemnified Parties would otherwise be entitled to indemnification pursuant to Section 6.5(d), as if such Conveyed Subsidiary (or any Subsidiary thereof) were wholly owned by Seller Parent, multiplied by (B) the direct and indirect percentage ownership of Seller Parent of such Conveyed Subsidiary (or Subsidiary thereof) as of immediately prior to the Closing. With respect to any Taxes suffered or incurred by any Subsidiary of Purchaser Parent (including Purchaser and its Subsidiaries) that was not wholly owned by Purchaser Parent (directly or indirectly) as of immediately prior to the Closing, the indemnification obligations of Purchaser Parent pursuant to Section 6.5(d)(ii) in respect of such Taxes (or related costs and expenses) shall in no event exceed an amount equal to (A) the amount of such Taxes (or related costs and expenses) for which the Purchaser Tax Indemnified Parties would otherwise be entitled to indemnification pursuant to Section 6.5(d), as if such Subsidiary were wholly owned by Purchaser Parent, multiplied by (B) the direct and indirect percentage ownership of Purchaser Parent of such Subsidiary as of immediately prior to the Closing. (vi) Without duplication to any other amounts paid pursuant to this Section 6.5: (A) Within thirty (30) days following the filing of any Income Tax Return for any Conveyed Subsidiary (or any Subsidiary thereof), on the one hand, or Purchaser (or any Subsidiary thereof, other than ~~the Conveyed Subsidiaries and their Subsidiaries), on the other hand, for any Pre-Closing Tax Period or for any Straddle Period,~~ Seller Parent or Purchaser Parent shall (or Purchaser Parent shall cause Purchaser to) prepare a statement showing (i) the amount of Income Taxes shown as due on such filed Income Tax Return with respect to the relevant Pre-Closing Tax Period or the portion of any Straddle Period ending on and including the Closing Date (the “Final Pre-Closing Income Tax Amount”) and (ii) the amount of the Seller Accrued Income Taxes or Purchaser Accrued Income Taxes, as applicable, attributable to such Income Tax Return as reflected on the Final Closing Statement (the “Pre-Closing Income Tax Amount”) and deliver such statement to Seller Parent and Purchaser Parent, as applicable. Purchaser Parent or Seller Parent, as applicable, shall have a period of fifteen (15) Business Days to provide comments to a schedule prepared (or caused to be prepared) by Seller Parent or Purchaser Parent, respectively. If Purchaser Parent or Seller Parent, as applicable, do not provide any comments to Seller Parent or Purchaser Parent, respectively, during such period, the statement as so prepared shall be final and binding. (B) In the event the Final Pre-Closing Income Tax Amount with respect to any Income Tax Return is less than the amount of the Pre-Closing Income Tax Amount attributable to such Income Tax Return that was included on the Final Closing Statement, the Purchaser shall within five (5) Business Days following the finalization of the Final Pre-Closing Income Tax Amount hereunder (i) pay to Seller Parent the amount of such difference with respect to a Conveyed Subsidiary and their Subsidiaries and (ii) pay to Purchaser Parent the amount of such difference with respect to Purchaser and its Subsidiaries. (vii) The Parties shall use reasonable best efforts to structure any indemnity payment, true-up payment, or payment in respect of Tax Benefits made by any Party pursuant to this Agreement (including pursuant to this Section 6.5, Section 6.6 and Article VII) and any payment made by Purchaser Parent to Purchaser pursuant to Section 2.8 or Section 2.9 in the manner set forth in Clause 10 of the Structuring Considerations Agreement. The Parties shall use reasonable best efforts to structure as a special dividend any payment made by Purchaser to Purchaser Parent pursuant to Section 2.8, Section 2.9 or this Section 6.5.

Appears in 1 contract

Sources: Asset Purchase Agreement (CrossAmerica Partners LP)

Tax Indemnification. (i) ~~Subject~~ The Seller and the Parent shall indemnify the Purchaser, each DMS Shares Company and each DMS Subsidiary, in each case to the extent not accrued for as Taxes payable (other than as deferred Taxes) on the Closing Date Balance Sheets (adjusted appropriately for any payment of excess accrued current Taxes payable pursuant to Section ~~6.5(d)(v~~4.6(d)(v) and adjusted to the extent such accrued Taxes previously offset amounts otherwise payable by the Seller and/or the Parent in connection with Section 4.6(d)(iv) and this Section 4.6(g), from and after the Closing, Seller Parent agrees to indemnify and hold harmless Purchaser and its Subsidiaries (including the Conveyed Subsidiaries and their Subsidiaries after the Closing Date) (collectively, the “Purchaser Tax Indemnified Parties”) from and against ~~all liability, without duplication, for~~ (1A) any Taxes ~~of the Conveyed Subsidiaries and their Subsidiaries~~ for any Pre-Closing Tax Period ~~(including~~ resulting from, arising out of, relating to or caused by any ~~Taxes payable in respect~~ liability or obligation of ~~an election under Section 965(h) of the Code), (2)~~ any DMS Tax Company or DMS Subsidiary for Taxes of any ~~Seller (~~person other than ~~any Transfer Taxes~~ a DMS Tax Company or DMS Subsidiary and ~~VAT for which Purchaser is responsible hereunder~~all losses, claims, liabilities, costs and expenses (including without limitation reasonable expenses of investigation and reasonable attorneys' fees and disbursements) ~~including,~~ ("Losses") relating to such Taxes (~~other than Taxes of the Conveyed Subsidiaries and their Subsidiaries~~1) imposed with respect to, arising out of or relating to the Purchased Assets or the Business for a Pre-Closing Tax Period, (3) Taxes of any Person (other than the Conveyed Subsidiaries and their Subsidiaries) for a Pre-Closing Tax Period for which any Conveyed Subsidiary (or any Subsidiary thereof) is liable under Treasury Regulation Section 1.1502-6 (or a any similar provision of state, local or foreign Law), or (2) as a transferee or ~~successor~~ successor, (3) by contract, or ~~by Contract~~ (~~other than Contracts that do not relate primarily~~ 4) otherwise, (B) any U.S. federal, state or local income Tax attributable solely to ~~Taxes~~the deemed sale of assets resulting from the Section 338 Elections (as defined in Section 4.6(j)(i)), (4C) ~~Taxes arising out of or resulting from~~ any breach of any covenant ~~or agreement of Seller Parent or any of its Affiliates contained~~ in this ~~Agreement~~Section 4.6, (5) Taxes for a Pre-Closing Tax Period imposed on (x) any transaction effected pursuant to Section 2.3(b), (y) any settlement of any intercompany accounts of Seller Parent or its Subsidiaries pursuant to Section 6.7, or (z) any transaction or step forming part of the Seller Internal Restructurings, (6) Transfer Taxes for which Seller Parent is responsible under Section 6.5(j), (7) Taxes required to be deducted or withheld with respect to the payment of the Purchase Consideration or any amounts payable to Seller Parent pursuant to Section 2.8 or Section 2.9, including any penalties imposed on Purchaser as a result of Purchaser’s failure to deduct or withhold any such amounts that Purchaser (or a Purchaser Designated Affiliate) was permitted to withhold under Section 2.10 (in each case, subject to Purchaser’s compliance with the notice and cooperation requirements of Section 2.10 and except for any such Taxes (and any related penalties) required to be deducted or withheld solely as a result of any assignment by Purchaser or its Affiliates for which Purchaser is responsible pursuant to Section 10.3), (8) Taxes arising from any breach of any representation or warranty contained in Section 4.16(k), (9) Taxes arising as a result of any Conveyed Subsidiary or any Subsidiary of any Conveyed Subsidiary at any time ceasing to be a member of a group for the purposes of any Tax, of which group Seller Parent or any Subsidiary of Seller Parent is or was also a member and (10) any costs and expenses, including reasonable legal and accounting fees and expenses, attributable to any item described in clauses (1) through (9) (any such Taxes for which Seller Parent is responsible pursuant to this Section 6.5(d)(i), subject to the following proviso, “Seller Indemnified Taxes”); provided that Seller Parent shall not be required to indemnify or hold harmless any Purchaser Tax Indemnified Party from and against any liability pursuant to this Section 6.5(d)(i) for (A) Taxes attributable to any action taken after the Closing by Purchaser, any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries), or any transferee of Purchaser or any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries), other than any such action that (1) is in the ordinary course of business, (2) is expressly permitted or contemplated by this Agreement, or (3) is required to be taken in order to comply with applicable Law or as a result of a change in applicable Law (a “Purchaser Tax Act”), (B) Taxes that were reflected, accrued or reserved for in the Final Closing Statement, Final Business Working Capital, or Final Business Net Cash, (C) Income Taxes to the extent that a Conveyed Subsidiary or any Subsidiary thereof had any Tax Assets as of the close of business on the Closing Date that were available, or would have been available but for their prior utilization by Purchaser or any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries after the Closing) to offset or otherwise reduce the applicable Tax Liability in respect of such Income Taxes (except any Tax Asset reflected as an asset in the Final Closing Statement and taken into account in the calculation of the Final Business Working Capital or the Final Business Net Cash), or (D) Taxes for which Purchaser Parent is responsible under Section 6.5(d)(ii). (ii) Subject to Section 6.5(d)(v), from and after the Closing, Purchaser Parent shall indemnify and hold harmless the Purchaser Tax Indemnified Parties from and against all liability, without duplication, for (1) all Taxes of Purchaser Parent and its Affiliates (other than Purchaser and its Subsidiaries) for any ~~Tax period (other than Transfer~~ Taxes and ~~VAT for which Seller Parent is responsible hereunder), (2)~~ any Losses relating to such Taxes ~~of Purchaser and its Subsidiaries (other than the Conveyed Subsidiaries and their Subsidiaries)~~ imposed on any DMS Tax Company or DMS Subsidiary for any Pre-Closing Tax Period, and (3E) any Taxes and any Losses relating to such Taxes attributable to the JCPIIG Assets or the Other Assets for any Pre-Closing Tax Period. The Seller's and the Parent's indemnification obligation under this Section 4.6(g)(i) with respect to any Tax resulting from any audit, proceeding or action subject to Section 4.6(f) the defense of which the Seller was not allowed to assume in contravention of Section 4.6(f) shall be discharged to the extent of any ~~Person for~~ material adverse effect to the Seller and/or the Parent resulting therefrom. The Seller and/or the Parent shall discharge its obligation to indemnify the Purchaser against such Pre-Closing Tax Period Tax by paying to the Purchaser, any DMS Shares Company or any DMS Subsidiary, as the Purchaser may direct, an amount equal to the amount of such Tax or Loss relating to such Tax; provided, however, that if the Purchaser provides the Seller with written notice of a Pre-Closing Tax Period for which Purchaser (or any Subsidiary thereof other than any Conveyed Subsidiaries and their Subsidiaries) is liable under Treasury Regulation Section 1.1502-6 (or a similar provision of state, local or foreign Law), or as a transferee or successor or by Contract (other than Contracts that do not relate primarily to Taxes), (4) Taxes arising out of or resulting from any breach of any covenant or agreement of Purchaser Parent, Purchaser or their respective Affiliates contained in this Agreement, (5) Transfer Taxes for which Purchaser Parent is responsible under Section 6.5(j), (6) Taxes arising from any breach of any representation or warranty in Section 5.17(k), (7) Taxes for a Pre-Closing Tax Period imposed on (x) any settlement of any intercompany accounts of Purchaser or any Subsidiary of Purchaser, on the one hand, and Purchaser Parent or any Subsidiary of Purchaser Parent (other than Purchaser and its Subsidiaries), on the other hand, pursuant to Section 6.7 or (y) any transaction or step forming part of the Purchaser Internal Restructurings, (8) Taxes required to be deducted or withheld with respect to any amounts payable to Purchaser Parent pursuant to Section 2.8 or Section 2.9, including any penalties imposed on Purchaser as a result of Purchaser’s failure to deduct or withhold any such amounts, (9) Taxes arising as a result of Purchaser or any Subsidiary of Purchaser (other than any Conveyed Subsidiary or a Subsidiary thereof) at any time ceasing to be a member of a group for the purposes of any Tax, of which group Purchaser Parent or any Subsidiary of Purchaser Parent (other than Purchaser or any Subsidiary of Purchaser) is or was also a member and (10) any costs and expenses, including reasonable legal and accounting fees and expenses, attributable to any item described in clauses (1) through (9) (any such Taxes for which Purchaser Parent is responsible pursuant to this Section 6.5(d)(ii), subject to the following proviso, “Purchaser Parent Indemnified Taxes”); provided that Purchaser Parent shall not be required to indemnify or hold harmless any Purchaser Tax Indemnified Party from and against any liability for (A) Taxes attributable to any action taken after the Closing by Seller Parent or any of its Affiliates, other than any such action that (1) is in the ordinary course of business, (2) is expressly permitted or contemplated by this Agreement, or (3) is required to be taken in order to comply with applicable Law or as a result of a change in applicable Law (a “Seller Tax Act”), (B) Taxes that were reflected, accrued or reserved for in the Final Closing Statement, Final Purchaser Working Capital or the Final Purchaser Net Cash, (C) Income Taxes to the extent that Purchaser or any Subsidiary thereof had any Tax Assets as of the close of business on the Closing Date that were available, or would have been available but for their prior utilization by Purchaser or any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries after the Closing), to offset or otherwise reduce the applicable Tax Liability in respect of such Income Taxes (except any Tax Asset reflected as an asset in the Final Closing Statement and taken into account in the calculation of the Final Purchaser Working Capital or the Final Purchaser Net Cash), or (D) Taxes for which Seller Parent is responsible under Section 6.5(d)(i). (iii) To the extent permitted or required by applicable Law, the taxable year of each of the Conveyed Subsidiaries and their Subsidiaries and any Subsidiary of Purchaser that includes the Closing Date shall be treated as closing on (and including) the Closing Date. Otherwise, for purposes of this Agreement, in the case of any Straddle Period: (A) Property Taxes allocable to the Pre-Closing Tax Period shall be computed based upon the ratio of the number of least 30 days in the Pre-Closing Tax Period to the number of days in the entire Straddle Period; and (B) Taxes (other than Property Taxes) allocable to the Pre-Closing Tax Period shall be computed as if such Tax period ended as of the close of business on the Closing Date and, in the case of any Taxes of Conveyed Subsidiaries (and their Subsidiaries) and Seller Parent, or in the case of any Taxes of Purchaser Parent and Purchaser (and their Subsidiaries prior to the Closing), in each case attributable to the ownership of any equity interest in any partnership or other “flow through” entity for tax purposes (including of any “controlled foreign corporation,” as defined under the Code) as if the Tax period of such partnership or other “flow through” entity ended as of the close of business on the Closing Date with the Taxes of such entity for the Pre-Closing Tax Period deemed to include any Taxes on the allocable income of such entity in respect of such Tax period; provided that exemptions, allowances or deductions that are calculated on an annual basis (including depreciation and amortization deductions) shall be allocated between the period ending on the Closing Date and the period beginning after the Closing Date in proportion to the number of days in each period. (iv) Any claim for indemnification under this Section 6.5(d) shall be made in writing upon the party from whom indemnification is sought, and shall specify in reasonable detail the basis for such claim. Any indemnity payment required to be made pursuant to this Section 6.5(d) shall be made within thirty (30) days after the indemnified party makes written demand upon the indemnifying party, but in no case earlier than five (5) Business Days prior to the date on which the relevant ~~Taxes are~~ Tax is required to be paid by the Purchaser or the applicable DMS Shares Company or DMS Subsidiary, the Seller and/or the Parent shall, if and to the ~~applicable Taxing Authority. (v) With respect~~ extent that it is liable for such Tax hereunder, discharge its obligation to ~~any Taxes suffered or incurred~~ indemnify the Purchaser against such Tax by any Conveyed Subsidiary (or any Subsidiary thereof) that was not wholly owned by Seller Parent (directly or indirectly) as of immediately prior to the Closing, the indemnification obligations of Seller Parent pursuant to Section 6.5(d)(i) in respect of such Taxes (or related costs and expenses) shall in no event exceed timely paying an amount equal to ~~(A)~~ the amount of such ~~Taxes (or related costs~~ Tax to the relevant Taxing Authority and ~~expenses) for which~~ by timely providing the Purchaser ~~Tax Indemnified Parties would otherwise be entitled~~ with proof of such payment. (ii) The Purchaser shall indemnify the Seller and any of its Affiliates (other than any DMS Shares Company or DMS Subsidiary) from and against (A) any Taxes and any Losses relating to ~~indemnification pursuant to Section 6.5(d), as if~~ such ~~Conveyed Subsidiary (~~Taxes [paid by the Seller or any Seller Affiliate (other than a DMS Shares Company or DMS Subsidiary)] imposed on the Purchaser, any DMS Shares Company, any DMS Subsidiary ~~thereof) were wholly owned by Seller Parent~~or any Affiliate of the Purchaser for any Post-Closing Tax Period, ~~multiplied by~~ (B) ~~the direct~~ any Taxes and ~~indirect percentage ownership of Seller Parent of~~ any Losses relating to such ~~Conveyed Subsidiary (or Subsidiary thereof) as of immediately prior~~ Taxes with respect to the ~~Closing. With respect to~~ DMS Shares Companies, DMS Subsidiaries, the JCPIIG Assets or the Other Assets arising from a transaction not in the ordinary course of business occurring on the Closing Date after the Purchaser's purchase of the Shares, (C) any Taxes ~~suffered~~ and any Losses relating to such Taxes resulting from a Section 338(g) Election subject to Section 4.6(m) of this Agreement, (D) any breach of any covenant in this Section 4.6 by the Purchaser or ~~incurred by~~ any ~~Subsidiary~~ of ~~Purchaser Parent~~ its Affiliates, and (~~including Purchaser~~ E) any Taxes and ~~its Subsidiaries) that was not wholly owned by Purchaser Parent (directly or indirectly) as of immediately prior~~ any Losses relating to such Taxes attributable to the ~~Closing,~~ JCPIIG Assets or the ~~indemnification obligations of~~ Other Assets for any Post- Closing Tax Period. The Purchaser ~~Parent pursuant~~ shall discharge its obligation to ~~Section 6.5(d)(ii) in respect of~~ indemnify the Seller against such ~~Taxes (or related costs and expenses) shall in no event exceed~~ Post-Closing Tax Period Tax by paying to the Seller an amount equal to ~~(A)~~ the amount of such ~~Taxes (or related costs and expenses) for which~~ Tax; provided, however, that if the Seller provides the Purchaser Tax Indemnified Parties would otherwise be entitled to indemnification pursuant to Section 6.5(d), as if such Subsidiary were wholly owned by Purchaser Parent, multiplied by (B) the direct and indirect percentage ownership with written notice of Purchaser Parent of such Subsidiary as of immediately prior to the Closing. (vi) Without duplication to any other amounts paid pursuant to this Section 6.5: (A) Within thirty (30) days following the filing of any Income Tax Return for any Conveyed Subsidiary (or any Subsidiary thereof), on the one hand, or Purchaser (or any Subsidiary thereof, other than the Conveyed Subsidiaries and their Subsidiaries), on the other hand, for any Prea Post-Closing Tax Period or for any Straddle Period, Seller Parent or Purchaser Parent shall (or Purchaser Parent shall cause Purchaser to) prepare a statement showing (i) the amount of Income Taxes shown as due on such filed Income Tax ~~Return with respect~~ at least 30 days prior to the date on which the relevant ~~Pre-Closing~~ Tax Period or the portion of any Straddle Period ending on and including the Closing Date (the “Final Pre-Closing Income Tax Amount”) and (ii) the amount of the Seller Accrued Income Taxes or Purchaser Accrued Income Taxes, as applicable, attributable to such Income Tax Return as reflected on the Final Closing Statement (the “Pre-Closing Income Tax Amount”) and deliver such statement to Seller Parent and Purchaser Parent, as applicable. Purchaser Parent or Seller Parent, as applicable, shall have a period of fifteen (15) Business Days to provide comments to a schedule prepared (or caused is required to be ~~prepared)~~ paid by Seller Parent or Purchaser Parent, respectively. If Purchaser Parent or Seller Parent, as applicable, do not provide any comments to Seller Parent or Purchaser Parent, respectively, during such period, the statement as so prepared shall be final and binding. (B) In the event the Final Pre-Closing Income Tax Amount with respect to any Income Tax Return is less than the amount of the Pre-Closing Income Tax Amount attributable to such Income Tax Return that was included on the Final Closing StatementSeller, the Purchaser ~~shall within five (5) Business Days following~~ shall, if and to the ~~finalization of~~ extent that it is liable for such Tax hereunder, discharge its obligation to indemnify the ~~Final Pre-Closing Income~~ Seller against such Tax ~~Amount hereunder (i) pay~~ by timely paying an amount equal to ~~Seller Parent~~ the amount of such ~~difference~~ Tax to the relevant Taxing Authority and by timely providing the Seller with ~~respect to a Conveyed Subsidiary and their Subsidiaries and (ii) pay to Purchaser Parent the amount~~ proof of such ~~difference with respect to Purchaser and its Subsidiaries~~payment. (vii) The Parties shall use reasonable best efforts to structure any indemnity payment, true-up payment, or payment in respect of Tax Benefits made by any Party pursuant to this Agreement (including pursuant to this Section 6.5, Section 6.6 and Article VII) and any payment made by Purchaser Parent to Purchaser pursuant to Section 2.8 or Section 2.9 in the manner set forth in Clause 10 of the Structuring Considerations Agreement. The Parties shall use reasonable best efforts to structure as a special dividend any payment made by Purchaser to Purchaser Parent pursuant to Section 2.8, Section 2.9 or this Section 6.5.

Appears in 1 contract

Sources: Stock Purchase Agreement (Penney J C Co Inc)

Tax Indemnification. (ia) ~~Subject to Section 6.5(d)(v), from~~ From and ~~after the Closing, Seller Parent agrees to indemnify and hold harmless Purchaser and its Subsidiaries (including the Conveyed Subsidiaries and their Subsidiaries~~ after the Closing Date, Seller shall indemnify the Purchaser Indemnified Persons against and hold them harmless from any Losses arising from, relating to or otherwise in respect of, except as provided in Section 11.07(b), (i) ~~(collectively,~~ any Taxes imposed on the ~~“Purchaser Tax Indemnified Parties”) from and against all liability, without duplication, for (1) Taxes of~~ Business or the ~~Conveyed Subsidiaries and their Subsidiaries for~~ Transferred Entities with respect to any Pre-Closing Tax Period (including ~~any Taxes payable in respect of an election under Section 965(h)~~ as a result of the ~~Code~~Pre-Closing Restructuring), (2ii) any Taxes that are Retained Liabilities hereunder, (iii) any Taxes imposed on a Transferred Entity (including any Taxes imposed under Treasury Regulations Section 1.1502-6 or any corresponding provision of state, local or non-U.S. Tax Law) as a result of its inclusion with Seller, any ~~Seller~~ Subsidiary Transferor or any other Person (other than a Transferred Entity) in a consolidated, combined or unitary Tax group, for any Transfer Taxes and VAT for which Purchaser is responsible hereunder) including, Taxes (other than Taxes of the Conveyed Subsidiaries and their Subsidiaries) imposed with respect to, arising out of or relating to the Purchased Assets or the Business for a Pre-Closing Tax Period, (3iv) any Taxes ~~of any Person (other than the Conveyed Subsidiaries and their Subsidiaries) for a Pre-Closing Tax Period~~ for which ~~any Conveyed Subsidiary (~~a Transferred Entity, Purchaser or any ~~Subsidiary thereof)~~ Affiliate of Purchaser is liable ~~under Treasury Regulation Section 1.1502-6 (or a similar provision of state, local or foreign Law), or~~ as a transferee or successor or by Contract (other than Contracts that do not primarily relate ~~primarily~~ to Taxes), ~~(4)~~ in each case, to the extent such Taxes ~~arising out~~ are attributable to the operation of the Business or ~~resulting from any breach~~ ownership of ~~any covenant or agreement of Seller Parent or any of its Affiliates contained in this Agreement~~the Transferred Assets prior to the Closing, (5v) any Taxes attributable to any “subpart F income” (including any increase thereto under Section 965 of the Code) required to be included in income in a Post-Closing Tax Period solely to the extent such subpart F income is attributable to income or earnings of a Transferred Entity for a Pre-Closing Tax Period ~~imposed on~~ (~~x) any transaction effected pursuant to~~ determined in accordance with the principles set forth in Section ~~2.3(b~~8.03(a)), (y) any settlement of any intercompany accounts of Seller Parent or its Subsidiaries pursuant to Section 6.7, or (z) any transaction or step forming part of the Seller Internal Restructurings, (6) Transfer Taxes for which Seller Parent is responsible under Section 6.5(j), (7) Taxes required to be deducted or withheld with respect to the payment of the Purchase Consideration or any amounts payable to Seller Parent pursuant to Section 2.8 or Section 2.9, including any penalties imposed on Purchaser as a result of Purchaser’s failure to deduct or withhold but excluding any such ~~amounts~~ inclusion that Purchaser (or a Purchaser Designated Affiliate) was permitted to withhold under Section 2.10 (in each case, subject to Purchaser’s compliance with the notice and cooperation requirements of Section 2.10 and except for any such Taxes (and any related penalties) required to be deducted or withheld solely as a result of any assignment by Purchaser or its Affiliates for which Purchaser is responsible pursuant to Section 10.3), (8) Taxes arising from any breach of any representation or warranty contained in Section 4.16(k), (9) Taxes arising as a result of any Conveyed Subsidiary or any Subsidiary of any Conveyed Subsidiary at any time ceasing to be a member of a group for the purposes of any Tax, of which group Seller Parent or any Subsidiary of Seller Parent is or was also a member and (10) any costs and expenses, including reasonable legal and accounting fees and expenses, attributable to any item described in clauses (1) through (9) (any such Taxes for which Seller Parent is responsible pursuant to this Section 6.5(d)(i), subject to the following proviso, “Seller Indemnified Taxes”); provided that Seller Parent shall not be required to indemnify or hold harmless any Purchaser Tax Indemnified Party from and against any liability pursuant to this Section 6.5(d)(i) for (A) Taxes attributable to any action actions taken after the Closing by Purchaser, any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries), or any transferee of Purchaser or any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries), other than any such action that (1) is in the ordinary course of business, (2) is expressly permitted or contemplated by this Agreement, or (3) is required to be taken in order to comply with applicable Law or as a result of a change in applicable Law (a “Purchaser Tax Act”), (B) Taxes that were reflected, accrued or reserved for in the Final Closing Statement, Final Business Working Capital, or Final Business Net Cash, (C) Income Taxes to the extent that a Conveyed Subsidiary or any Subsidiary thereof had any Tax Assets as of the close of business on the Closing Date that were available, or would have been available but for their prior utilization by Purchaser or any of its Affiliates ~~(including the Conveyed Subsidiaries and their Subsidiaries~~ after the Closing, and (vi) any Taxes attributable to ~~offset~~ any breach or violation of any of Seller’s representations set forth in Section 4.15. (b) From and after the Closing Date, Purchaser and the Transferred Entities shall, jointly and severally, indemnify the Seller Indemnified Persons and hold them harmless from any Losses arising from, relating to or otherwise ~~reduce the applicable Tax Liability~~ in respect of (i) any Taxes imposed on the Transferred Assets, the Business or the Transferred Entities (other than, for the avoidance of doubt, as contemplated by Section 11.01(a)(vi)) with respect to any Post-Closing Tax Period, except to the extent such ~~Income~~ Taxes are attributable to a breach of any representation set forth in Section 4.15(k) or Section 4.15(l) or any inaccuracy in Section 4.15(h) of the Seller Disclosure Letter (~~except~~ as such Section of the Seller Disclosure Letter may be revised pursuant to Section 8.06(c)), (ii) any ~~Tax Asset reflected as an asset in the Final Closing Statement and~~ Taxes taken into account in the ~~calculation~~ adjustment described in Section 2.04, (iii) any Taxes attributable to any breach or nonperformance of ~~the Final Business Working Capital or the Final Business Net Cash)~~Purchaser’s obligations pursuant to Article VIII, or and (Div) any Transfer Taxes for which Purchaser ~~Parent~~ is ~~responsible~~ liable under Section ~~6.5(d)(ii~~8.01, provided that this Section 11.07(b) shall not be construed as limiting any indemnity set forth in clause (v) of Section 11.07(a) and Section 11.07(b)(i) shall not be construed as limiting any indemnity set forth in clause (vii) of Section 11.07(a). (c) Procedures Relating to Tax Controversies. (i) Promptly after a party (the “Tax Indemnified Party”) becomes aware of the existence of a Tax Proceeding that may give rise to an indemnification claim under this Section 11.07 (a “Tax Controversy”) by it against the other party (the “Tax Indemnifying Party”), the Tax Indemnified Party shall notify the Tax Indemnifying Party of the Tax issue and thereafter shall promptly forward to the Tax Indemnifying Party copies of the relevant portion of any notice or other document received from any Tax Authority and communications with any Tax Authority relating to such Tax Controversy; provided, however, that a failure to give such notice will not affect such other party’s rights to indemnification under this Article XI, except to the extent that such party is actually prejudiced thereby. (ii) ~~Subject to Section 6.5(d)(v)~~After the Closing Date, ~~from and after~~ Seller shall control the ~~Closing~~conduct, ~~Purchaser Parent shall indemnify and hold harmless the Purchaser Tax Indemnified Parties from and against all liability~~through counsel of its own choosing, ~~without duplication, for (1) all Taxes~~ of ~~Purchaser Parent and its Affiliates (other than Purchaser and its Subsidiaries) for~~ any Tax ~~period (other than Transfer Taxes and VAT for which Seller Parent is responsible hereunder), (2) Taxes~~ Controversy with respect to any of ~~Purchaser and its Subsidiaries (other than~~ the ~~Conveyed Subsidiaries and their Subsidiaries) for~~ Transferred Entities or the Transferred Assets with respect to any Pre-Closing Tax ~~Period, (3) Taxes of~~ Periods to the extent such Tax Controversy could reasonably be expected to result in any Person for a Pre-Closing Tax Period for which Purchaser (or any Subsidiary thereof other than any Conveyed Subsidiaries and their Subsidiaries) is liable under Treasury Regulation Section 1.1502-6 (or a similar provision of state, local or foreign Law), or as a transferee or successor or by Contract (other than Contracts that do not relate primarily to Taxes), (4) Taxes arising out of or resulting from any breach of any covenant or agreement of Purchaser Parent, Purchaser or their respective Affiliates contained in this Agreement, (5) Transfer Taxes for which Purchaser Parent is responsible under Section 6.5(j), (6) Taxes arising from any breach of any representation or warranty in Section 5.17(k), (7) Taxes for a Pre-Closing Tax Period imposed on (x) any settlement of any intercompany accounts of Purchaser or any Subsidiary of Purchaser, on the one hand, and Purchaser Parent or any Subsidiary of Purchaser Parent (other than Purchaser and its Subsidiaries), on the other hand, indemnification obligations pursuant to Section ~~6.7 or (y) any transaction or step forming part~~ 11.07(a), provided, however, that, except in the case of ~~the Purchaser Internal Restructurings, (8) Taxes required to be deducted or withheld~~ a Tax Controversy with respect to ~~any amounts payable to Purchaser Parent pursuant to Section 2.8 or Section 2.9~~a Combined Tax Return, including any penalties imposed on Purchaser as a result of Purchaser’s failure to deduct or withhold any such amounts, (9) Taxes arising as a result of Purchaser or any Subsidiary of Purchaser (other than any Conveyed Subsidiary or a Subsidiary thereof) at any time ceasing to be a member of a group for the purposes of any Tax, of which group Purchaser Parent or any Subsidiary of Purchaser Parent (other than Purchaser or any Subsidiary of Purchaser) is or was also a member and (10) any costs and expenses, including reasonable legal and accounting fees and expenses, attributable to any item described in clauses (1) through (9) (any such Taxes for which Purchaser Parent is responsible pursuant to this Section 6.5(d)(ii), subject to the following proviso, “Purchaser Parent Indemnified Taxes”); provided that Purchaser Parent shall not be required to indemnify or hold harmless any Purchaser Tax Indemnified Party from and against any liability for (A) ~~Taxes attributable~~ Purchaser shall have the right to ~~any action taken after the Closing by Seller Parent or any of~~ participate in such Tax Controversy at its Affiliates, other than any such action that (1) is in the ordinary course of business, (2) is expressly permitted or contemplated by this Agreement, or (3) is required to be taken in order to comply with applicable Law or as a result of a change in applicable Law (a “Seller Tax Act”)own expense, (B) ~~Taxes~~ Seller shall not settle, compromise and/or concede any portion of such Tax Controversy that ~~were reflected~~is reasonably expected to result in material adverse tax consequences to Purchaser without obtaining Purchaser’s written consent, ~~accrued~~ which consent shall not be unreasonably withheld, delayed or ~~reserved for in the Final Closing Statement~~conditioned, ~~Final Purchaser Working Capital or the Final Purchaser Net Cash,~~ and (C) ~~Income Taxes~~ Seller shall keep Purchaser reasonably informed as to the ~~extent that Purchaser~~ progress of any such Tax Controversy and shall consider in good faith any written comments or ~~any Subsidiary thereof had any Tax Assets as of the close of business on the Closing Date that were available, or would have been available but for their prior utilization~~ suggestions provided by Purchaser ~~or any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries after the Closing), to offset or otherwise reduce the applicable~~ regarding such Tax Liability in respect of such Income Taxes (except any Tax Asset reflected as an asset in the Final Closing Statement and taken into account in the calculation of the Final Purchaser Working Capital or the Final Purchaser Net Cash), or (D) Taxes for which Seller Parent is responsible under Section 6.5(d)(i)Controversy. (iii) To the extent ~~permitted~~ that any provision in this Section 11.07(c) may overlap or ~~required by applicable Law~~conflict with any provision contained in Section 11.02, the ~~taxable year~~ provisions of ~~each of the Conveyed Subsidiaries and their Subsidiaries and any Subsidiary of Purchaser that includes the Closing Date~~ this Section 11.07(c) shall ~~be treated as closing on~~ govern. (~~and including~~d) ~~the Closing Date. Otherwise, for~~ For purposes of this ~~Agreement~~Section 11.07, all Losses in respect of Taxes shall be reduced by (i) any indemnity, contribution or other similar payment actually paid to Purchaser or any Purchaser Indemnified Person by any third party with respect to such Loss, and (ii) an amount equal to any net reduction of income Taxes of Purchaser or any Purchaser Indemnified Person attributable to a Tax benefit actually realized in the ~~case~~ year of such loss or the immediately succeeding two (2) taxable years as a direct result of such Loss, determined on a “with and without” basis. (e) Seller’s indemnity obligations under this Section 11.07 shall survive until the date that is sixty (60) days from the date of the expiration of the applicable statute of limitation (including all periods of extension, whether automatic or permissive), and such indemnity obligations shall not be subject to any of the limitations set forth in Section 11.01(b). (f) In no event shall the Purchaser Indemnified Persons be entitled to recover, any Loss attributable to Taxes of any ~~Straddle Period:~~ of the Transferred Entities (Ai) ~~Property Taxes allocable to the~~ for any taxable period that is not a Pre-Closing Tax ~~Period shall be computed based upon~~ Period, except to the ~~ratio~~ extent such Taxes are attributable to a breach of any representation set forth in Section 4.15(k) or Section 4.15(l) or any inaccuracy in Section 4.15(h) of the ~~number of days in the Pre-Closing Tax Period to the number of days in the entire Straddle Period; and~~ Seller Disclosure Letter (~~B) Taxes (other than Property Taxes) allocable to the Pre-Closing Tax Period shall be computed~~ as if such ~~Tax period ended as~~ Section of the ~~close~~ Seller Disclosure Letter may be revised pursuant to Section 8.06(c)), (ii) as a result of ~~business~~ any transaction occurring on the Closing Date and, in the case of any Taxes of Conveyed Subsidiaries (and their Subsidiaries) and Seller Parent, or in the case of any Taxes of Purchaser Parent and Purchaser (and their Subsidiaries prior to the Closing), in each case attributable to the ownership of any equity interest in any partnership or other “flow through” entity for tax purposes (including of any “controlled foreign corporation,” as defined under the Code) as if the Tax period of such partnership or other “flow through” entity ended as of the close of business on the Closing Date with the Taxes of such entity for the Pre-Closing Tax Period deemed to include any Taxes on the allocable income of such entity in respect of such Tax period; provided that exemptions, allowances or deductions that are calculated on an annual basis (including depreciation and amortization deductions) shall be allocated between the period ending on the Closing Date and the period beginning after the Closing ~~Date in proportion to~~ outside the ~~number~~ ordinary course of ~~days in each period.~~ business, (iv) Any claim for indemnification under this Section 6.5(d) shall be made in writing upon the party from whom indemnification is sought, and shall specify in reasonable detail the basis for such claim. Any indemnity payment required to be made pursuant to this Section 6.5(d) shall be made within thirty (30) days after the indemnified party makes written demand upon the indemnifying party, but in no case earlier than five (5) Business Days prior to the date on which the relevant Taxes are required to be paid to the applicable Taxing Authority. (v) With respect to any Taxes suffered or incurred by any Conveyed Subsidiary (or any Subsidiary thereof) that was not wholly owned by Seller Parent (directly or indirectlyiii) as a result of immediately prior to the Closing, the indemnification obligations of Seller Parent pursuant to Section 6.5(d)(i) in respect of such Taxes (or related costs and expenses) shall in no event exceed an amount equal to (A) the amount of such Taxes (or related costs and expenses) for which the Purchaser Tax Indemnified Parties would otherwise be entitled to indemnification pursuant to Section 6.5(d), as if such Conveyed Subsidiary (or any Subsidiary thereof) were wholly owned by Seller Parent, multiplied by (B) the direct and indirect percentage ownership of Seller Parent of such Conveyed Subsidiary (or Subsidiary thereof) as of immediately prior to the Closing. With respect to any Taxes suffered or incurred by any Subsidiary of Purchaser Parent (including Purchaser and its Subsidiaries) that was not wholly owned by Purchaser Parent (directly or indirectly) as of immediately prior to the Closing, the indemnification obligations of Purchaser Parent pursuant to Section 6.5(d)(ii) in respect of such Taxes (or related costs and expenses) shall in no event exceed an amount equal to (A) the amount of such Taxes (or related costs and expenses) for which the Purchaser Tax Indemnified Parties would otherwise be entitled to indemnification pursuant to Section 6.5(d), as if such Subsidiary were wholly owned by Purchaser Parent, multiplied by (B) the direct and indirect percentage ownership of Purchaser Parent of such Subsidiary as of immediately prior to the Closing. (vi) Without duplication to any other amounts paid pursuant to this Section 6.5: (A) Within thirty (30) days following the filing of any Income Tax Return for any Conveyed Subsidiary (or any Subsidiary thereof), on the one hand, or Purchaser (or any Subsidiary thereof, other than the Conveyed Subsidiaries and their Subsidiaries), on the other hand, for any Pre-Closing Tax Period or for any Straddle Period, Seller Parent or Purchaser Parent shall (or Purchaser Parent shall cause Purchaser to) prepare a statement showing (i) the amount of Income Taxes shown as due on such filed Income Tax Return with respect to the relevant Pre-Closing Tax Period or the portion of any Straddle Period ending on and including the Closing Date (the “Final Pre-Closing Income Tax Amount”) and (ii) the amount Purchaser’s financing of the Seller Accrued Income Taxes or Purchaser Accrued Income Taxes, as applicable, attributable to such Income Tax Return as reflected on the Final Closing Statement (the “Pre-Closing Income Tax Amount”) and deliver such statement to Seller Parent and Purchaser Parent, as applicable. Purchaser Parent or Seller Parent, as applicable, shall have a period of fifteen (15) Business Days to provide comments to a schedule prepared (or caused to be prepared) by Seller Parent or Purchaser Parent, respectively. If Purchaser Parent or Seller Parent, as applicable, do not provide any comments to Seller Parent or Purchaser Parent, respectively, during such period, the statement as so prepared shall be final and binding. (B) In the event the Final Pre-Closing Income Tax Amount with respect to any Income Tax Return is less than the amount of the Pre-Closing Income Tax Amount attributable to such Income Tax Return that was included on the Final Closing Statement, the Purchaser shall within five (5) Business Days following the finalization of the Final Pre-Closing Income Tax Amount hereunder (i) pay to Seller Parent the amount of such difference with respect to a Conveyed Subsidiary and their Subsidiaries and (ii) pay to Purchaser Parent the amount of such difference with respect to Purchaser and its Subsidiaries. (vii) The Parties shall use reasonable best efforts to structure any indemnity payment, true-up payment, or payment transactions provided for in ~~respect of Tax Benefits made by any Party pursuant to~~ this Agreement (including pursuant to this Section 6.5, Section 6.6 and Article VII) and any payment made by Purchaser Parent to Purchaser pursuant to Section 2.8 or Section 2.9 in the manner set forth in Clause 10 of the Structuring Considerations Agreement~~. The Parties shall use reasonable best efforts to structure as a special dividend any payment made by Purchaser to Purchaser Parent pursuant to Section 2.8, Section 2.9 or this Section 6.5.~~,

Appears in 1 contract

Sources: Acquisition Agreement (SB/RH Holdings, LLC)

Common use of Tax Indemnification Clause in Contracts