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

Samples: 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

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

Tax Indemnification. ~~(i) Subject to Section 6.5(d)(v)~~Company Parent shall indemnify Investor, ~~from~~ and ~~after the Closing, Seller Parent agrees to indemnify~~ each Investor Indemnitee 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 3.8; (b) any Loss attributable to any breach or violation of, or failure to fully perform, any covenant, agreement, undertaking or obligation in this Article VI; (c) 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 Company or relating to the ~~Purchased Assets or~~ Business of the ~~Business~~ Company for a all Pre-~~Closing~~ Agreement Tax ~~Period,~~ Periods; (3d) all 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 any Conveyed Subsidiary~~ Company (or any ~~Subsidiary thereof~~predecessor of the Company) is ~~liable~~ or was a member on or prior to the Initial 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~~ e) any and 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 Agreement Date. In each of the above cases, together with any documented out-of-pocket fees and expenses (~~other than Contracts that do not relate primarily to Taxes)~~including reasonable third-party attorneys’ and accountants’ fees) incurred in connection therewith. Investor shall indemnify Company Parent, and each Company Parent Indemnitee and hold them harmless from and against (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 (xi) 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, Loss attributable to any ~~item described in clauses (1) through (9) (any such Taxes for which Seller Parent is responsible pursuant~~ breach or violation of, or failure 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 Purchaserfully perform, any ~~of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries)~~covenant, agreement, undertaking 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~~ obligation 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). Article VI; (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~~ the Company or relating to the Business of the Company for all Post-Agreement Tax Periods; (~~other than Purchaser and its Subsidiaries~~iii) 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) all Taxes of any ~~Person for a Pre-Closing Tax Period for~~ member of an affiliated, consolidated, combined or unitary group of which ~~Purchaser~~ the Investor (or any ~~Subsidiary thereof other than any Conveyed Subsidiaries and their Subsidiaries~~predecessor of the Investor) is ~~liable~~ or was a member on or prior to the Initial 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~~ iv) any and 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 (other than Contracts that do not relate primarily~~ contract, relating to ~~Taxes), (4) Taxes arising out of~~ an event 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 occurring 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 Agreement Date. In each of the ~~Conveyed Subsidiaries~~ above cases, together with any documented out-of-pocket fees 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 expenses (including ~~of any “controlled foreign corporation,” as defined under the Code~~reasonable third-party attorneys’ and accountants’ fees) 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 incurred 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 periodconnection therewith. (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

Samples: Investment Agreement (Ascend Wellness Holdings, LLC), Investment Agreement (MedMen Enterprises, Inc.), Investment Agreement

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

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

Tax Indemnification. ~~(i) Subject to Section 6.5(d)(v)~~The Sellers and the Indemnifying Members shall, ~~from~~ jointly and ~~after~~ severally, indemnify the ~~Closing~~Company, ~~Seller Parent agrees to indemnify~~ Purchaser, and each Purchaser Indemnitee 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 4.24; (b) any Loss attributable to any breach or violation of, or failure to fully perform, any covenant, agreement, undertaking or obligation in this Article VII; (c) all ~~liability, without duplication, for (1)~~ Taxes of the ~~Conveyed Subsidiaries~~ Company and ~~their Subsidiaries~~ its Affiliates 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 Company (or any ~~Subsidiary thereof~~predecessor thereto) 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 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~~e) any and all 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~~ Person imposed on the Company for a Pre-Closing Tax ~~Period imposed~~ arising under the principles of transferee or successor liability or by contract or any Law, relating to an event or transaction occurring 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~~ before the Closing Date. In each of the ~~Seller Internal Restructurings~~above cases, together with any reasonable out-of-pocket fees and expenses (6including attorneys’ and accountants’ fees) ~~Transfer~~ incurred in connection therewith, the Sellers and Indemnifying Members shall jointly and severally reimburse Purchaser for any 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~~ Company that are the responsibility 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 Sellers and/or Indemnifying Members 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 7.3 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~~ payment of such Taxes by Purchaser, the ~~relevant Taxes~~ Company or any of its Affiliates are required to be ~~paid to~~ paid. Notwithstanding the ~~applicable Taxing Authority.~~ foregoing, in the case of clauses (vc), (d), and (e) 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 Closingabove, the ~~indemnification obligations of Seller Parent pursuant to Section 6.5(d)(i) in respect of such Taxes (or related costs and expenses)~~ Indemnifying Members shall ~~in no event exceed an amount equal to (A) the amount of such Taxes (or related costs and expenses)~~ not be liable 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~~ any Taxes ~~shown as due on such filed Income Tax Return with respect to the relevant Pre-Closing Tax Period~~ taken into account and included in determining Indebtedness or ~~the portion of any Straddle Period ending on and including the Closing Date (the “Final Pre-Closing Income Tax Amount”)~~ Net Working Capital and (ii) any Transfer Taxes which are the ~~amount~~ responsibility 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 bindingunder Section 7.1(b). (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

Samples: Membership Interest Purchase Agreement (Planet 13 Holdings Inc.), Membership Interest Purchase Agreement (Planet 13 Holdings Inc.), Membership Interest Purchase Agreement (Planet 13 Holdings Inc.)

Tax Indemnification. The Seller shall indemnify, exonerate and hold free and harmless each Buyer Indemnified Person from and against any Losses attributable to (a) all Taxes (or non-payment thereof) of the Company and its branches and subsidiaries, except for those Taxes that result from any transaction (or deemed transaction by way of any election or otherwise) caused by the Buyer outside the Ordinary Course of Business of the Company and occurring on the Closing Date after the event of Closing (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 for all Taxable periods ending on or before the Closing Date, and (ii) ~~(collectively,~~ the ~~“Purchaser Tax Indemnified Parties”) from and against all liability, without duplication, for (1) Taxes~~ portion of the ~~Conveyed Subsidiaries and their Subsidiaries~~ Taxable period ending on or before the Closing Date for any Taxable period that includes, but does not end, on the Closing Date (each, a “Pre-Closing Tax Period”), (b) all Pre-Closing Tax Period Taxes of any other member of the affiliated, consolidated, combined or unitary group of which the Company was 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 Legal Requirement (including ~~any~~ all Taxes ~~payable in respect of an election under Section 965(h)~~ of the ~~Code~~foreign branches and subsidiaries included in the Excluded Assets), (2c) any and all Taxes relating to Pre-Closing Tax Period of any ~~Seller~~ Person imposed on the Company in the Company’s capacity as transferee or successor to such Person, by Contractual Obligation or otherwise, and (~~other than any Transfer~~ d) all value added 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~~ transfer of assets under 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 Inventory Transfer Agreement. Nothing 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~~ 11.1 shall limit 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 Purchaserexpand upon Seller’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 Closing10. (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

Samples: Stock Purchase Agreement, Stock Purchase Agreement (Durata Therapeutics, Inc.), Stock Purchase Agreement (Durata Therapeutics, Inc.)

Tax Indemnification. (ia) ~~Subject to Section 6.5(d)(v), from~~ From and after the ~~Closing~~Closing Date, ~~Seller Parent agrees to~~ Trimble 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”)~~ AGCO from and against ~~all liability, without duplication, for~~ any Liabilities arising from or relating to: (1i) any Taxes imposed on the Company or any member of the ~~Conveyed Subsidiaries and their Subsidiaries~~ Company Group for any Pre-Closing ~~Tax Period (including any Taxes payable in respect of an election under Section 965(h) of the Code)~~Date Period, (2ii) any 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~~ member of the ~~Conveyed Subsidiaries and their Subsidiaries) imposed with respect to, arising out of~~ Company Group is or ~~relating~~ was a member on or prior to the ~~Purchased Assets~~ Closing, including pursuant to Treasury Regulations Section 1.1502-6 or ~~the Business for a Pre~~any analogous or similar state, local or non-~~Closing Tax Period~~U.S. law, (3iii) any Taxes of any Person ~~(other than~~ imposed on 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~~ member of ~~state, local or foreign Law), or~~ the Company Group for any period as a transferee or successor in respect of any transaction occurring on or prior to the Closing, by ~~Contract~~ law, contract or otherwise, (iv) any Taxes in respect of the Business Assets or the Assumed Liabilities for any Pre-Closing Date Period, (v) any breach of the representations and warranties set forth in Section 3.16, (vi) any Taxes, other than Carve-Out Transfer Taxes, arising in connection with, or resulting from, the Carve-Out Restructuring, and (vii) fifteen percent (15%) of any Transfer Taxes (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 PreCarve-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) Out Transfer Taxes ~~for which Seller Parent is responsible under Section 6.5(j), (7~~or JCA Transfer Taxes) 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 described in Section ~~4.16(k),~~ 9.7. (9b) 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 From 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~~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 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 AGCO shall indemnify and hold harmless ~~the Purchaser Tax Indemnified Parties~~ Trimble from and against ~~all liability, without duplication, for~~ any Liabilities arising from or relating to: (1i) ~~all~~ any Taxes imposed on any 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)~~ JCA Entities for any Pre-Closing ~~Tax~~ Date Period, (3ii) any Taxes of any member of an affiliated, consolidated, combined or unitary group of which any JCA Entity is or was a member on or prior to the Closing, including pursuant to Treasury Regulations Section 1.1502-6 or any analogous or similar state, local or non-U.S. law, (iii) any Taxes of any Person imposed on any of the JCA Entities 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~~ period 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~~ transaction occurring on 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, by law, contract or otherwise, (iv) any breach of the ~~indemnification obligations~~ representations and warranties set forth in Section 4.16, (v) any Taxes, other than JCA Transfer Taxes, arising in connection with, or resulting from, the JCA Contribution, and (vi) eighty-five percent (85%) of ~~Seller Parent pursuant to Section 6.5(d)(i) in respect of such~~ any Transfer Taxes (other than Carve-Out Transfer 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 thereofJCA Transfer Taxes) 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 described 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(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 Closing9.7. (vic) ~~Without duplication~~ Notwithstanding anything in this Agreement to ~~any other amounts paid pursuant to~~ the contrary, each of the rights and obligations of the Parties set forth in this Section ~~6.5:~~ 9.8 shall continue in full force and effect until the date that is sixty (~~A) Within thirty (30~~60) days following the ~~filing~~ expiration date of the applicable statute(s) of limitation relating thereto (giving effect to any extensions thereof). (d) Notwithstanding anything in this Agreement to the contrary, to the extent of any ~~Income Tax Return for~~ conflict between this Article IX and any ~~Conveyed Subsidiary (or any Subsidiary thereof), on~~ other Article of this Agreement relating to the ~~one hand, or Purchaser (or any Subsidiary thereof, other than~~ rights and obligations of 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 Parties with respect to ~~the relevant Pre-Closing Tax Period or the portion of~~ indemnification for 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~~ all matters related to Taxes, ~~as applicable~~this Article IX shall govern, ~~attributable to such Income Tax Return as reflected on~~ and, for the ~~Final Closing Statement (the “Pre-Closing Income Tax Amount”) and deliver such statement to Seller Parent and Purchaser Parent~~avoidance of doubt, ~~as applicable. Purchaser Parent or Seller Parent, as applicable,~~ Article XII 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 apply 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 claims for indemnification 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 IX except 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~~provided therein.

Appears in 3 contracts

Samples: Sale and Contribution Agreement (Trimble Inc.), Sale and Contribution Agreement (Agco Corp /De), Sale and Contribution Agreement (Agco Corp /De)

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

Samples: 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 and after~~ After the Closing, ~~Seller Parent agrees to indemnify~~ the Sellers’ Representative, on behalf of each Seller, shall indemnify, defend 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 liabilityharmless, without duplication, ~~for~~ the Purchasers’ Indemnified Parties from and against: (1i) any Taxes imposed on any of the ~~Conveyed Subsidiaries and their Subsidiaries for any Pre-Closing Tax Period (including any Taxes payable in respect~~ Target Companies by reason of being a member of an ~~election under Section 965(h) of the Code)~~affiliated, ~~(2) Taxes of any Seller (other than 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 with respect to~~unitary, ~~arising out of~~ or ~~relating to the Purchased Assets or the Business~~ combined group for a ~~Pre-~~taxable period ending on or before the 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)Date, or as a transferee or successor under any Tax allocation, sharing or assumption agreement or by ~~Contract~~ operation of Law with respect to such period, (~~other than Contracts~~ ii) any Taxes imposed on any of the Target Companies, or for which any of the Target Companies may otherwise be liable, for any taxable period ending on or before the Closing Date and, with respect to any Straddle Period, the portion of such Straddle Period ending on and including the Closing Date, (iii) any Taxes or Losses imposed on or incurred by the Purchasers’ Representative or any member of the Purchasers’ Group or any of the Target Companies arising out of or resulting from (A) any inaccuracy in or breach of any representation or warranty under Section 3.9 (Taxes) (in each case determined as to occurrence and amount without regard to any materiality, material adverse effect or similar qualifiers), provided that ~~do not relate primarily to Taxes~~the amount of such Taxes or Losses resulting from such inaccuracy or breach are in excess of USD 75,000, or (B) any breach or non-performance of any covenant or agreement in Section 5.1(a)(xi) (Conduct of the Target Business), or in this Article VII (Tax Matters), (4iv) any Taxes resulting from or relating to the Pre-Closing Reorganization Transactions or any other restructuring simultaneous with or prior to the Closing Date involving any of the Target Companies, and (v) Sellers’ portion of any Transfer Taxes as determined in Section 7.1 (Transfer Taxes). Notwithstanding anything to the contrary contained in this Agreement, the Sellers’ Representative shall have no indemnification obligation under this Section 7.6 (Tax Indemnification) to the extent any Tax or Loss giving rise to such indemnification obligation would not have arisen but for any amendment of any Tax Return or change in any Tax election or Tax method of accounting of the Target Companies by any member of the Purchasers’ Group after the Closing. (b) After the Closing, the Purchasers’ Representative, on behalf of each Purchaser, shall indemnify, defend and hold harmless, without duplication, the Sellers’ Indemnified Parties from and against: (i) except for Taxes described in Section 7.6(a) (Tax Indemnification), any Taxes imposed on any of the Target Companies or for which any of the Target Companies may otherwise be liable for any taxable period beginning after the Closing Date (and with respect to any Straddle Period, the portion of such Straddle Period beginning after the Closing Date), (ii) any Taxes or Losses imposed on or incurred by the Sellers or any of the Target Companies arising out of or resulting from any breach or non-performance of any covenant or agreement ~~of Seller Parent or any of its Affiliates contained~~ in this ~~Agreement,~~ Article VII (5Tax Matters) ~~Taxes for a Pre-Closing Tax Period imposed on~~ and (xiii) ~~any transaction effected pursuant to Section 2.3(b), (y) any settlement~~ Purchasers’ portion 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~~ as determined in Section 7.1 (Transfer Taxes). (c) If any indemnification obligation under this Section ~~6.5(j),~~ 7.6 (7Tax Indemnification) 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 arises as a result of ~~Purchaser’s failure to deduct or withhold any such amounts~~ an adjustment that ~~Purchaser~~ has the effect of reducing the amount of Tax for which the Indemnified Party would otherwise be responsible under this Section 7.6 (~~or a Purchaser Designated Affiliate) was permitted to withhold under Section 2.10 (in each case~~Tax Indemnification), ~~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~~ including 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~~ the re-allocation of any ~~representation or warranty contained in Section 4.16(k)~~item of income from one taxable period to another, (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) then the amount of such ~~Taxes (or related costs and expenses) for which the Purchaser Tax Indemnified Parties would otherwise~~ indemnification obligation shall be ~~entitled to indemnification pursuant to Section 6.5(d), as if such Conveyed Subsidiary (or any Subsidiary thereof) were wholly owned~~ reduced 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 Closingreduction in Tax. (vid) ~~Without duplication to~~ If any ~~other amounts~~ Indemnifying Party has paid ~~pursuant to~~ an amount in discharge of any claim under this Section ~~6.5:~~ 7.6 (ATax Indemnification) ~~Within thirty~~ and any member of the Indemnified Party’s Group actually receives a refund (30whether received in cash or by way of an actual reduction of Taxes otherwise payable) ~~days following~~ of the ~~filing of any Income Tax Return for any Conveyed Subsidiary (or any Subsidiary thereof)~~Taxes giving rise to such claim, 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 Purchasers’ Representative 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 ParentSellers’ Representative, as applicable, shall ~~have a period~~ procure that the relevant member of ~~fifteen (15) Business Days~~ the Indemnified Party’s Group shall, pay to ~~provide comments to a schedule prepared (~~the Sellers’ Representative or ~~caused to be prepared) by Seller Parent or Purchaser Parent, respectively. If Purchaser Parent or Seller Parent~~the Purchasers’ Representative, as applicable, ~~do not provide~~ as soon as practicable after receipt of such refund an amount equal to such refund less any ~~comments~~ reasonable costs and expenses incurred in obtaining such refund, provided, that in no case shall the amount payable under this Section 7.6(d) (Tax Indemnification) by the relevant Indemnified Party exceed the amount previously paid by the relevant Indemnifying Party to ~~Seller Parent or Purchaser Parent, respectively, during such period,~~ the ~~statement as so prepared shall be final and binding~~relevant Indemnified Party. (Be) In For the ~~event~~ avoidance of doubt, any payment of estimated Taxes, or any other prepayment of Taxes or deposit made in respect of Taxes, made by, or on behalf of or for the ~~Final Pre-~~account of, any Target Company on or before the Closing ~~Income Tax Amount with~~ Date in respect of any Taxes for a Straddle Period shall be treated as a payment by the Sellers of Taxes of such Target Company allocable to ~~any Income Tax Return is less than~~ the ~~amount~~ portion of ~~the Pre-Closing Income Tax Amount attributable to~~ such ~~Income Tax Return that was included~~ Straddle Period ending 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 SubsidiariesDate. (~~vii~~f) ~~The Parties~~ No claim for indemnification 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 to this Agreement (including pursuant to~~ under this Section ~~6.5, Section 6.6 and Article VII~~7.6 (Tax Indemnification) ~~and any payment made by Purchaser Parent to Purchaser pursuant to Section 2.8 or Section 2.9 in~~ after the ~~manner set forth in Clause 10~~ date that is ninety (90) days after the expiration of the ~~Structuring Considerations Agreement. The Parties shall use reasonable best efforts to structure as a special dividend~~ applicable statute of limitations (taking into account any ~~payment made by Purchaser to Purchaser Parent pursuant to Section 2.8, Section 2.9~~ extension or ~~this Section 6.5~~waiver thereof after the Closing).

Appears in 2 contracts

Samples: Transaction Agreement (Metlife Inc), Transaction Agreement (Banco Bilbao Vizcaya Argentaria, S.A.)

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

Samples: 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 indemnify~~ except 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 only 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~~ included in the calculation of the Final ~~Business~~ Working ~~Capital~~ Capital, the Seller shall indemnify the Purchaser, its affiliates (including the Transferred Entities) and each of their stockholders, members, partners and Representatives (the “Purchaser Indemnitees”) against and hold them harmless from any Losses arising from, relating to or ~~the Final Business Net Cash~~otherwise in respect of (i) except as provided in Section 9.01(b), ~~or (D)~~ any Taxes ~~for which Purchaser Parent is responsible under Section 6.5(d)(ii). (ii) Subject~~ imposed on the Business with respect 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) 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 that may be imposed on the Business as a ~~transferee~~ result of being a member of a consolidated, combined, unitary or ~~successor~~ similar group of corporations or ~~by Contract (~~other ~~than Contracts that do not relate primarily~~ taxpayers at any time on or prior to ~~Taxes)~~the Closing Date, (4iii) ~~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~~ the Seller is ~~responsible~~ liable under Section ~~6.5(j~~5.04(b), (6iv) any Taxes ~~arising from~~ in connection with the 338 Elections for which the Seller is liable under Section 5.05(h), (v) any breach of any representation or warranty of the Seller contained in Section ~~5.17(k), (7) Taxes for a Pre-Closing Tax Period imposed on (x) any settlement~~ 3.12 of ~~any intercompany accounts of Purchaser~~ this Agreement or ~~any Subsidiary of Purchaser, on~~ in the ~~one hand, and Purchaser Parent or any Subsidiary of Purchaser Parent (other than Purchaser and its Subsidiaries), on~~ certificate delivered by the ~~other hand,~~ Seller pursuant to Section ~~6.7 or~~ 7.02(d), and (yvi) any ~~transaction or step forming part~~ breach of any covenant of the ~~Purchaser Internal Restructurings, (8) Taxes required to be deducted or withheld with respect to any amounts payable to Purchaser Parent pursuant to~~ Seller contained in Section ~~2.8~~ 5.01(b)(xviii) or Section ~~2.9, including any penalties imposed on Purchaser as a result of Purchaser’s failure to deduct or withhold any such amounts,~~ 5.05. (9b) 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 From 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~~Closing, 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 except and only 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~~ included in the calculation of the Final Working Capital, the Purchaser ~~Working Capital~~ and the Transferred Entities shall, jointly and severally, indemnify the Seller, its affiliates and each of their stockholders, members, partners and Representatives (the “Seller Indemnitees”) and hold them harmless from any Losses arising from, relating to or otherwise in respect of (i) any Taxes imposed on the ~~Final Purchaser Net Cash)~~Business with respect to any Post-Closing Tax Period, (ii) any Taxes that may be imposed on the Business as a result of being a member of a consolidated, combined, unitary or similar group of corporations or other taxpayers at any time after the Closing Date, (Diii) any Transfer Taxes for which ~~Seller Parent~~ the Purchaser is ~~responsible~~ liable under Section ~~6.5(d)(i)~~5.04(b) and (iv) any breach by the Purchaser or any of its affiliates of any covenant contained in Section 5.05. (~~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 Taxes (“Property ~~Taxes allocable to~~ Taxes”) of the Business for the Pre-Closing Tax Period shall be ~~computed based upon the ratio of the number of days in~~ allocated to the Pre-Closing Tax Period to on a pro rata basis (based on the number of days during such taxable period elapsed on or prior to the Closing Date). If at the time of Closing, the tax rate or the assessed valuation for the year in which the ~~entire Straddle Period~~Closing occurs has not yet been fixed, Property Taxes shall be prorated based upon the tax rate and the assessed valuation established for the previous tax year; and (Bii) the Taxes of the Business (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. (ivd) ~~Any claim~~ To the extent that any indemnification provided for ~~indemnification under~~ in this Section ~~6.5(d)~~ 9.01 may overlap or conflict with any indemnification contained in Section 9.02, the Seller shall not 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, duplicate the indemnification ~~obligations of Seller Parent pursuant to~~ for the same Losses under both Section ~~6.5(d)(i) in respect of such Taxes (or related costs~~ 9.01 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 ClosingSections 9.02. (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

Samples: Purchase Agreement (Spectrum Brands, Inc.), Purchase Agreement (Salton Inc)

Tax Indemnification. ~~(i) Subject to Section 6.5(d)(v), from~~ Seller shall and ~~after the Closing, Seller Parent agrees to~~ hereby does indemnify and hold ~~harmless Purchaser~~ Buyer and ~~its Subsidiaries (including the Conveyed Subsidiaries~~ any Affiliate of Buyer and their ~~Subsidiaries after the Closing Date) (collectively~~respective officers and directors, ~~the “Purchaser Tax Indemnified Parties”)~~ harmless from and against any and all ~~liability, without duplication, for (1) Taxes~~ Damages attributable to liabilities of the ~~Conveyed Subsidiaries and their Subsidiaries~~ Company: (a) for ~~any~~ Taxes attributable to Pre-Closing Tax ~~Period~~ Periods as determined pursuant to Section 5.1, (~~including~~ b) arising from any ~~Taxes payable~~ inaccuracy in ~~respect~~ or breach of ~~an election under~~ representations or warranties set forth in Section ~~965(h)~~ 2.26 or any breach of the ~~Code)~~covenants in Section 5.1, (2c) for Taxes attributable to the Company having been a member of any ~~Seller~~ affiliated, consolidated, combined, unitary or other similar group (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 any similar provision of state, local or foreign ~~Law)~~law) prior to the Closing Date, or (d) for Taxes that are imposed by reason of the Company having liability for Taxes of another Person as a ~~transferee or successor or by Contract (other than Contracts that do not relate primarily to Taxes), (4) Taxes arising out~~ result of ~~or resulting from~~ the Company being during 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)~~ a successor or transferee of any ~~transaction effected pursuant to Section 2.3(b)~~other Person or by contract, (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)(ie) 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~~ Affiliate Transactions described in Section 4.4 or the ~~ratio~~ deemed sale of assets and liquidation of the ~~number of days in the Pre-Closing~~ Company for any applicable Tax ~~Period~~ purposes pursuant to the ~~number of days in the entire Straddle Period; and~~ Section 338(h)(10) Election, and (Bf) ~~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~~ for Seller’s proportionate share of any Taxes ~~of Conveyed Subsidiaries (and their Subsidiaries) and Seller Parent, or~~ described in ~~the case of~~ Section 5.2. With respect to 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~~9.4 arising from any inaccuracy in or breach of the representations set forth in Sections 2.26(b)(xvi) or 2.26(b)(xvii), but subject to the provisions of Section 9.3(a)(iii), Buyer shall notify Seller promptly if it becomes aware of any such inaccuracy in or breach in the above representations regardless of whether any Tax Authority or any other third party has made any assertion or taken any action with respect to such inaccuracy in or breach of such representations, and such notice shall contain all material facts relating to such inaccuracy in or breach of such representations. Seller shall review such notice and within thirty (30) days, determine, in good faith, whether remediation of such inaccuracy or breach is required, and if it determines remediation is required, shall propose to Buyer the basis upon which such inaccuracy in or breach of such representations shall be ~~made~~ remedied. Buyer shall either accept Seller’s proposal or offer an alternative proposal. If Buyer offers an alternative proposal, Seller shall either accept or reject such alternative proposal. If after negotiating in ~~writing~~ good faith, Seller and Buyer cannot agree whether remediation is required or upon the ~~party from whom indemnification is sought~~method of remediation, ~~and shall specify~~ the period in ~~reasonable detail the basis for such claim. Any indemnity payment required to~~ which a claim or action may be made pursuant to this Section ~~6.5(d)~~ 9.4 solely with respect to the matter described in the above notice shall be ~~made within~~ the applicable period of the statute of limitation plus thirty (30) days ~~after~~ notwithstanding the ~~indemnified party makes written demand upon~~ provisions of Section 9.3(a)(iii). If the ~~indemnifying party~~method of remediation has been agreed to by the parties, ~~but in no case earlier than five~~ Seller shall have primary responsibility (5with the reasonable cooperation of Buyer) ~~Business Days prior~~ for the remediation on behalf of the Company and may employ counsel and other third parties of its choice and at its expense. Seller shall keep Buyer informed as to the ~~date on which the relevant Taxes are required~~ status of such remediation and shall discuss with Buyer and Buyer’s counsel any steps to be ~~paid~~ taken in the remediation and afford Buyer and Buyer’s counsel the right and a reasonable opportunity to review and comment in advance on any document or other written agreement to be entered into on behalf of the Company. Seller shall not (a) send any communication or documents to any policyholders of the Company without the consent of Buyer or (b) enter into any agreement with respect to the ~~applicable Taxing Authority.~~ remediation without the consent of Buyer, which consent may not be unreasonably withheld or delayed (~~v) With respect~~ and it shall be deemed unreasonable to ~~any Taxes suffered or incurred by any Conveyed Subsidiary (or any Subsidiary thereof) that was not wholly owned~~ withhold such consent if such agreement is consistent with the plan of remediation agreed to by Seller ~~Parent (directly~~ and Buyer). Notwithstanding the foregoing, Buyer may, at any time and regardless of whether a method of remediation has been agreed by the parties, assume control of the process of remediating any inaccuracy in or ~~indirectly~~breach of the representations set forth in Sections 2.26(b)(xvi) as or 2.26(b)(xvii), and may take any action in connection therewith without the cooperation or consent of ~~immediately prior to~~ Seller; provided, that Buyer and 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)~~ Company 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~~ have waived any right 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 Agreement with respect to ~~the relevant Pre-Closing Tax Period~~ such inaccuracy 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 bindingbreach. (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

Samples: Stock Purchase Agreement (Protective Life Insurance Co), Stock Purchase Agreement (Torchmark 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~~) (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~~ Company Entities (on an after-tax basis) against and ~~against~~ in respect to 100% of any and all ~~liability~~Losses that result from, ~~without duplication~~arise out of, ~~for~~ or relate to, directly or indirectly (1a) ~~all~~ Taxes ~~of Purchaser Parent and its Affiliates~~ (or the non-payment thereof), other than ~~Purchaser and its Subsidiaries)~~ Income Taxes, of the Seller Entities or with respect to the assets of the Business, in each case for ~~any Tax period (other than Transfer Taxes and VAT for which Seller Parent is responsible hereunder)~~all taxable periods ending on or before the Closing Date, (2b) Income Taxes (or the non-payment thereof) of ~~Purchaser and its Subsidiaries (other than~~ the ~~Conveyed Subsidiaries and their Subsidiaries)~~ Seller Entities or with respect to the assets of the Business, in each case for ~~any Pre-Closing Tax Period~~all taxable periods ending on or before the Effective Date, (3c) Straddle Period Taxes, (d) any and all Taxes of any Person ~~for~~ imposed on 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 Seller Entity as a transferee or ~~successor~~ successor, or pursuant to the application of article 34 or 35 of the Xxxxx Xxxxxxxxxx Xxx 0000 (Invorderingswet 1990), pursuant to a contractual obligation, requirements of Law, or otherwise, and relating to the period prior to the Closing (e) any Taxes attributable to the sale, distribution, transfer or other disposition prior to the Closing of real or personal property held by ~~Contract~~ the Seller Entities, and (f) 100% of the transfer, documentary, sales, use, stamp, registration, and other such Taxes, and any conveyance fees or recording charges incurred in connection with the Transactions (other than ~~Contracts that do not relate primarily to~~ Dutch Real Estate Transfer Tax) (“Transfer Taxes)” and, ~~(4)~~ collectively with the 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 the foregoing clauses (1a) through (~~9) (any such Taxes for which Purchaser Parent is responsible pursuant to this Section 6.5(d)(ii~~d), 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~~Taxes”~~) and deliver such statement~~ ). The foregoing indemnification shall not be subject to ~~Seller Parent and Purchaser Parent~~the limitations set forth in Article 7. Notwithstanding anything in this Agreement to the contrary, 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~~ Taxes” shall not include 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 Taxes incurred: (i) ~~pay to Seller Parent~~ solely as a result of the ~~amount~~ Seller’s formation of ~~such difference with respect to~~ the Company as a ~~Conveyed~~ direct and wholly owned Subsidiary ~~and their Subsidiaries and~~ of the Seller; (ii) ~~pay~~ solely as a result of the contribution to ~~Purchaser Parent~~ the ~~amount~~ Seller by the shareholders of the Seller of all of the outstanding equity interests in ID&T Merchandise B.V., a company organized under the laws of the Netherlands; or (iii) solely as a result of the Company’s acquisition of all of ID&T Holding’s assets (including equity interests indirectly owned by ID&T Holding) and liabilities (other than ID&T Holding’s 100% interest in ID&T International) pursuant to those steps of the Reorganization that are necessary to implement such ~~difference with respect to Purchaser~~ acquisition, and ~~its Subsidiaries. (vii) The Parties~~ the Seller shall ~~use reasonable best efforts to structure any indemnity payment, true-up payment, or payment in respect of Tax Benefits made by any Party~~ have no indemnification obligation pursuant to this Agreement in respect of such Taxes. The Seller shall use (~~including pursuant~~ and shall cause ID&T Holding to ~~this Section 6.5, Section 6.6 and Article VII~~use) ~~and~~ commercially reasonable efforts to minimize any ~~payment made by Purchaser Parent~~ Tax liability to ~~Purchaser pursuant to Section 2.8 or Section 2.9 in the manner set forth in Clause 10~~ any of the ~~Structuring Considerations Agreement~~Company Entities for Taxes attributable to the termination of the Dutch fiscal unity headed by ID&T Holding. The ~~Parties shall use reasonable best efforts~~ Seller will not be obligated to ~~structure~~ indemnify the Company Entities under Section 6.1 or 6.2 to the extent that any Tax for which the Seller would otherwise be required to indemnify the Company Entities has been included in a working capital adjustment to the Total Consideration or is otherwise already reflected as ~~a special dividend any payment made by Purchaser~~ an adjustment to ~~Purchaser Parent pursuant to Section 2.8, Section 2.9 or this Section 6.5~~the Total Consideration.

Appears in 2 contracts

Samples: Stock Purchase Agreement, Stock Purchase Agreement (SFX Entertainment, INC)

Tax Indemnification. (ia) Subject to ~~Section 6.5(d)(v)~~the terms (including the limitations) set forth in this Article VI, from and after the Closing, Seller ~~Parent agrees~~ shall (without duplication with respect to any other payment made pursuant to this Agreement) indemnify Purchaser against, and hold it harmless from any Loss or Tax incurred by a Purchaser ~~and its Subsidiaries~~ Indemnitee to the extent arising out of, resulting from or relating to: (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 (1i) Taxes imposed on or payable by or on behalf of the ~~Conveyed Subsidiaries and their Subsidiaries~~ Group Companies: (A) for any Pre-Closing Tax ~~Period~~ Period; or (B) which arise as a result or in respect of the Transactions or Closing (including any ~~Taxes payable in respect~~ Tax arising as a result of ~~an election under Section 965(h)~~ a Group Company ceasing to be treated as a member of ~~the Code~~a group of companies for Tax purposes), in each case to the extent in excess of any such Taxes included as a Current Liability in the calculation of Working Capital; (2ii) 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 relating to Taxes contained in this Agreement made or to be performed by Seller ~~Parent~~ or any of its ~~Affiliates contained in this Agreement,~~ Affiliates; (5iii) Taxes ~~for~~ of 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 third party 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~~ Group Company becomes liable as a result of ~~Purchaser’s failure to deduct~~ being or ~~withhold any such amounts that Purchaser~~ having been a member of a group with (or ~~a Purchaser Designated Affiliate) was permitted to withhold under Section 2.10 (in each case, subject to Purchaser’s compliance~~ otherwise connected with ~~the notice and cooperation requirements of Section 2.10 and except~~ or associated with for any Tax purpose) such third party for Tax purposes before the Closing; (iv) Taxes ~~(and~~ of a third party for which any ~~related penalties) required to be deducted or withheld solely~~ Group Company becomes liable as a result of any ~~assignment by Purchaser~~ obligation to indemnify any other person, or ~~its Affiliates~~ any successor or transferee liability, in each case to the extent such Taxes related to an event or transaction occurring before the Closing; and (v) any Specified Tax Matter, provided that notwithstanding anything to the contrary in this Agreement, Seller shall not be liable under this Section 6.03 for ~~which Purchaser is responsible pursuant~~ any Taxes (or Losses resulting from such Taxes) to the extent any such Taxes (or Losses) (1) are described in Section ~~10.3~~6.03(b), (~~8) Taxes arising from~~ 2) are attributable to a change in applicable Law (including an increase in rates of Tax) or change in any ~~breach~~ practice of any ~~representation or warranty contained~~ Taxing Authority, in ~~Section 4.16(k)~~each case that is announced after the Closing Date, (93) ~~Taxes arising~~ arise as a result of any ~~Conveyed Subsidiary~~ action taken or ~~any Subsidiary of any Conveyed Subsidiary at any time ceasing~~ omitted 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~~ including, after the ~~Conveyed Subsidiaries and their Subsidiaries)~~Closing Date, the Group Companies) (other than any such action or omission that is (1i) is required by this Agreement, (ii) taken or omitted in the ordinary course of a Group Company’s business, (2iii) ~~is expressly permitted~~ taken or ~~contemplated by this Agreement~~omitted pursuant to a binding commitment created on or before the Closing, (iv) taken or omitted at the request of Seller or (3v) is required ~~to be taken in order to comply with~~ by applicable ~~Law~~ Law) or ~~as a result of a~~ any change ~~in applicable Law (a “Purchaser Tax Act”), (B) Taxes that were reflected, accrued or reserved for~~ after the Closing in the ~~Final~~ nature or conduct of the trade or business of any Group Company or (4) can be reduced or offset by any Tax deductions, credits or similar attributes available to the Group Companies as of the Closing ~~Statement~~and not taken into account in calculating Closing Working Capital (other than any Tax deductions, ~~Final Business Working Capital~~credits or attributes in respect of which a payment is made to Seller pursuant to Section 5.04(c) or Section 5.04(d)). (b) Subject to the terms (including the limitations) set forth in this Article VI, from and after the Closing, Purchaser shall indemnify Seller against, and hold it harmless from any Loss or ~~Final Business Net Cash, (C) Income Taxes~~ Tax incurred by a Seller Indemnitee to the extent ~~that a Conveyed Subsidiary~~ arising out of, resulting from or ~~any Subsidiary thereof had any Tax Assets as~~ relating to: (i) Taxes imposed on or payable by or on behalf of the ~~close~~ Group Companies for any Post-Closing Tax Period other than Taxes described in Section 6.03(a)(i)(B) and Section 6.03(a)(iv); (ii) Taxes resulting from any breach of ~~business on the Closing Date that were available,~~ any covenant or ~~would have been available but for their prior utilization~~ agreement relating to Taxes contained in this Agreement made or to be performed by Purchaser or any of its Affiliates (including the ~~Conveyed Subsidiaries and their Subsidiaries after~~ Group Companies solely with respect to periods following 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).~~; and (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, (5iii) 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)5.05. (~~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) real, personal and intangible property Taxes imposed on a periodic basis without regard to income, gross receipts, payroll, sales or any specific transaction or event (“Property ~~Taxes allocable to~~ Taxes”) of any Group Company for 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 calendar days during the Straddle Period that are in the Pre-Closing Tax Period to and the denominator of which is the number of all calendar days in the ~~entire~~ Straddle Period; and (Bii) Taxes of any Group Company (other than Property Taxes) ~~allocable to~~ for the Pre-Closing Tax Period shall be computed as if ~~such Tax~~ a relevant 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~~ indemnity obligation 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 Taxes to be made pursuant to this Section ~~6.5(d)~~ 6.03 shall be ~~made~~ paid within ~~thirty (30) days~~ 30 Business Days after ~~the indemnified party~~ Purchaser or Seller, as applicable, makes written demand upon the ~~indemnifying party~~other party claiming it is entitled to indemnification under this Section 6.03, 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. (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

Samples: Share Purchase Agreement, Share Purchase Agreement (Pilgrims Pride Corp)

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

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

Tax Indemnification. (i) ~~Subject to Section 6.5(d)(v)~~Xxxxxx and Seller, ~~from~~ jointly and ~~after the Closing~~severally, ~~Seller Parent agrees to~~ shall be responsible for and pay, and shall save, defend, indemnify and hold harmless ~~Purchaser~~ the Buyer Indemnified Parties from and ~~its Subsidiaries~~ against, (~~including~~ i) all Taxes with respect to the ~~Conveyed Subsidiaries and their Subsidiaries after the Closing Date) (collectively~~Units, 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 Company or the Business for any Tax year or Tax period or portion thereof ending on or before the Closing Date (such year or period or portion, 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~~ Taxes, (iii) any ~~Conveyed Subsidiary (or any Subsidiary thereof) is liable under Treasury Regulation Section 1.1502-6 (or~~ Taxes of a ~~similar provision of state, local or foreign Law), or~~ Seller Party imposed on such Seller Party as a transferee or successor or of any other Person by Contract or pursuant to any Law, (iv) any Taxes that may be due or payable or that become due and payable in connection with the sale of the Units or the consummation of the Transactions, (v) any Litigation or Loss of any kind or nature relating directly or indirectly to the Company being taxed as anything other than ~~Contracts that do not relate primarily to Taxes),~~ an S corporation within the meaning of Code Sections 1361 and 1362 beginning with the Company’s 1992 taxable year and at all times thereafter until the Effective Time; (4vi) any Taxes arising ~~out~~ under or in connection with any Company Plan in any period prior to Closing (whether or not such rights are exercised or become vested on, at or after Closing); and (vii) any breach of, or default of or ~~resulting from~~ under, any ~~breach of any covenant~~ covenant, obligation or ~~agreement~~ Liability 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 Xxxxxx 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)(ii13(e). (ii) ~~Subject to Section 6.5(d)(v)~~Buyer shall be responsible for and pay, ~~from~~ and ~~after the Closing~~shall save, ~~Purchaser Parent shall~~ defend, indemnify and hold harmless the ~~Purchaser Tax~~ Seller Indemnified Parties from and ~~against all liability~~against, ~~without duplication, for (1)~~ all Taxes ~~of Purchaser Parent and its Affiliates (other than Purchaser and its Subsidiaries)~~ with respect to the Units, the Company or the Business for any Tax year or 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 portion thereof) ~~at any time ceasing to be a member of a group for the purposes of any Tax, of which group Purchaser Parent~~ beginning on 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)Date. (iii) To In the ~~extent permitted or required by applicable Law~~event that any other provision of this Agreement conflicts with the provisions of this Section 15(g), the ~~taxable year~~ provisions of ~~each~~ this Section 15(g) will govern the rights and obligations 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 parties 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 matters addressed 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 6.515(g).

Appears in 2 contracts

Samples: Unit Purchase Agreement, Unit Purchase Agreement (Lionbridge Technologies Inc /De/)

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 Notwithstanding any other provision 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 this Agreement to the ~~Purchased Assets or the Business for a Pre-Closing Tax Period,~~ contrary: (3a) ~~Taxes of~~ If 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~~ collectively, jointly and severally, the ~~Conveyed Subsidiaries and their Subsidiaries)~~"Indemnifying Parties") takes any action prohibited by Article IV, above, or violates a representation or covenant contained in Article IV, above, or takes or fails to take any other ~~than~~ action (any such ~~action that (1~~action, failure to act or violation, a "Tainting Act") is and the Reorganization or any portion thereof fails to qualify for the Tax treatment stated in the ~~ordinary course of business, (2) is expressly permitted~~ Letter Ruling in whole or ~~contemplated by this Agreement, or (3) is required to be taken~~ in ~~order to comply with applicable Law or~~ part as a result of ~~a change in applicable Law~~ such Tainting Act, then the Indemnifying Parties shall (~~a “Purchaser Tax Act”), (B~~jointly and severally) 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~~ other Party and its Affiliates (~~other than Purchaser~~ collectively, the "Indemnified Parties") against any and ~~its Subsidiaries) for any Tax period (other than Transfer~~ all Taxes and ~~VAT for which Seller Parent is responsible hereunder), (2) Taxes of Purchaser~~ any other costs and ~~its Subsidiaries (other than~~ liabilities imposed upon or incurred by 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 Indemnified Parties as a result of ~~Purchaser’s failure~~ the Tainting Act, including any liability of the Indemnified Parties arising from Taxes imposed on shareholders of a Party to ~~deduct~~ the extent (i) any shareholder or ~~withhold~~ the IRS or other Taxing Authority successfully seeks recourse against the Indemnified Parties on account of any such ~~amounts~~Tainting Act, or (9ii) ~~Taxes arising as a result of Purchaser~~ the Indemnified Parties assume 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 otherwise incur any liability for such Taxes or other costs or liabilities of such shareholders; (Ab) ~~Taxes attributable to~~ Stratos and its Affiliates shall (jointly and severally) indemnify and hold harmless Methode and its Affiliates for any Tax imposed upon or incurred by Methode and its Affiliates as a direct or indirect result of any action taken after the ~~Closing~~ Distribution by ~~Seller Parent~~ Stratos or any of its Affiliates. In addition, if (i) the Distribution is ultimately determined to be taxable to Methode and/or Methode's shareholders other than ~~any such action that~~ (1x) is in ~~the ordinary course~~ connection with cash in lieu of ~~business, (2) is expressly permitted or contemplated by this Agreement,~~ fractional shares or (3y) ~~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~~ an action with respect to which Methode 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~~ would be required to indemnify Stratos and ~~their Subsidiaries after the Closing),~~ its Affiliates pursuant to ~~offset~~ Section 5.02(a) 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 5.04 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~~ Stratos or ~~Purchaser Accrued Income Taxes, as applicable, attributable~~ its Affiliates are not otherwise required to ~~such Income Tax Return as reflected on the Final Closing Statement (the “Pre-Closing Income Tax Amount”)~~ indemnify and ~~deliver such statement to Seller Parent~~ hold Methode 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 its Affiliates harmless with respect to ~~any Income Tax Return is less than~~ that determination under the ~~amount~~ other provisions of ~~the Pre-Closing Income Tax Amount attributable to such Income Tax Return that was included on the Final Closing Statement~~this Agreement, 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 then Stratos and its ~~Subsidiaries.~~ Affiliates will indemnify and hold Methode and its Affiliates harmless for 50% (~~vii~~fifty percent) ~~The Parties shall use reasonable best efforts to structure~~ of any ~~indemnity payment, true-up payment,~~ such Tax or ~~payment in respect of Tax Benefits made~~ other liability payable by ~~any Party pursuant to this Agreement (including pursuant to this Section 6.5, Section 6.6~~ Methode 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 its Affiliates 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~~result of that determination.

Appears in 2 contracts

Samples: Tax Sharing and Indemnification Agreement (Methode Electronics Inc), Tax Sharing and Indemnification Agreement (Stratos Lightwave Inc)

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

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

Tax Indemnification. The Seller Parties, jointly and severally, shall indemnify, save and hold harmless the Purchaser Indemnified Parties from and against (i) ~~Subject to Section 6.5(d)(v), from and after~~ all Taxes (or 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~~non-payment thereof) ~~(collectively, the “Purchaser Tax Indemnified Parties”) from and against all liability, without duplication, for (1) Taxes~~ of the ~~Conveyed Subsidiaries and their Subsidiaries for~~ Target Group attributable to any Pre-Closing ~~Tax~~ Period (~~including any~~ except and to the extent that such Taxes ~~payable~~ are included in ~~respect of an election under Section 965(h)~~ the calculation of the ~~Code~~Final Purchase Price), (2ii) 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~~ the Target Group 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~~ Closing Date, including pursuant to Treasury Regulation §1.1502-6 or ~~the Business for a Pre-Closing Tax Period~~any analogous or similar state, local, or foreign Law, (3iii) any and all Taxes of any Person (other than the ~~Conveyed Subsidiaries and their Subsidiaries~~Target Group) 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 imposed on the Target Group as a transferee or ~~successor or~~ successor, by Contract or pursuant to any Law, which Taxes relate to an event or transaction occurring before the Closing, (~~other than Contracts that do not relate primarily~~ iv) any Liability for Taxes allocated to ~~Taxes~~Seller pursuant to Section 6.4(c), (4v) ~~Taxes~~ any and all Liabilities arising out of, with respect to, or in connection with any “employee retention credit” payments claimed or received by a Target Group Member pursuant to Section 2301 of the CARES Act during any Pre-Closing Period (including any costs, expenses or ~~resulting from~~ Liability owed to any ~~breach~~ third party provider incurred in connection with such credit), (vi) any Tax or amount on account of Tax of a Seller or a Selling Holding Company for which the Purchaser Indemnified Parties are or may be liable for, whether by reason of any ~~covenant~~ requirement to withhold or ~~agreement of Seller Parent~~ otherwise, and incurred in connection with this Agreement or any ~~of its Affiliates contained in this~~ Ancillary Agreement, (~~5) Taxes for a Pre-Closing Tax Period imposed on (x~~vii) any ~~transaction effected pursuant to Section 2.3(b)~~and all Liabilities or Tax audits arising out of, ~~(y) any settlement of any intercompany accounts of Seller Parent or its Subsidiaries pursuant to Section 6.7~~with respect to, or ~~(z) any transaction or step forming part of~~ in connection with 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 2.9Personal Goodwill Agreement, 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)~~included therein, (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 (10viii) any ~~costs and expenses, including reasonable legal and accounting fees and expenses,~~ Losses attributable to any ~~item described~~ breach of any covenants or agreements of Sellers in ~~clauses (1) through (9) (any such Taxes for which~~ this Section 6.4. For the avoidance of doubt, the Seller ~~Parent is responsible~~ Parties’ obligations to indemnify the Purchaser Indemnified Parties pursuant to this Section ~~6.5(d)(i),~~ 6.4(k) is unconditional and not 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)limitation. (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

Samples: Equity Purchase Agreement (Universal Logistics Holdings, Inc.)

Tax Indemnification. (a) Seller, Parent and Xxxxxx Xxxxxxx hereby jointly and severally indemnify each Buyer Indemnitee against and agrees to hold it harmless from and to pay 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 (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 Group Companies 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 except for Taxes reflected on the Closing Statement, if any, (ii) Taxes of the Seller or its Affiliates, or any other Person relating to a pre-Closing Tax Period, for which ~~any Conveyed Subsidiary (or any Subsidiary thereof) is~~ the Group Companies may be liable ~~under~~ as a result of Treasury Regulation Section 1.1502-6 (or a any similar provision of ~~state, local or foreign~~ applicable Law), ) or as a transferee or ~~successor or by Contract (other than Contracts that do not relate primarily to Taxes)~~successor, (4iii) Taxes or Losses incurred or suffered by Buyer or any of its Affiliates (including, effective upon the Closing, a Group Company) arising out of a breach of any representation or ~~resulting from any~~ warranty in Section 3.14 or a breach of any covenant or agreement of Seller ~~Parent~~ or ~~any of~~ its Affiliates contained in this ~~Agreement~~Article 8, Section 2.5(e)(iii), Section 7.9(f) (5with respect to items related to Taxes only), Section 7.9(g) ~~Taxes for a Pre-Closing Tax Period imposed on~~ or Section 11.5 and (xiv) ~~any transaction effected pursuant~~ subject to Section ~~2.3(b~~8.7(e), liabilities, costs, expenses (including, without limitation, reasonable expenses of investigation and attorneys’ fees and expenses), arising out of or incident to the imposition, assessment or assertion of any Tax under items (i), (yii) ~~any settlement~~ or (iii) of this Section 8.7(a), including those incurred in the contest in good faith in appropriate proceedings relating to the imposition, assessment or assertion of any ~~intercompany accounts of Seller Parent or its Subsidiaries pursuant to Section 6.7~~such Tax, 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~~ case incurred or ~~withheld solely as a result of any assignment~~ suffered 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 PurchaserBuyer, any of its Affiliates ~~(including the Conveyed Subsidiaries and their Subsidiaries)~~or, 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 effective upon the Closing, ~~Purchaser Parent~~ the Group Companies, provided, however, that Seller shall ~~indemnify and hold harmless~~ have no liability for 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 of any ~~Person for a Pre-Closing Tax Period for which Purchaser (or any Subsidiary thereof other than any Conveyed Subsidiaries and their Subsidiaries~~amount under this Section 8.7(a) that 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 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 action described in Section ~~5.17(k), (7~~8.3(a) 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)hereof. (~~iii~~b) 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 8.7, in the case of any Taxes for a Straddle Period~~: (A) Property Taxes allocable to~~ , the portion of such Tax that shall be treated as part of the Pre-Closing Tax Period 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 (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,~~ and (y) in the case of any ~~Taxes of Conveyed Subsidiaries~~ Tax not included in clause (x) above, be deemed equal to the amount which would be payable if the relevant Tax period ended on and ~~their Subsidiaries) 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(dy) shall be made in ~~writing~~ a manner consistent with prior practice of the Group Companies. (c) If Seller’s indemnification obligation under this Section 8.7 arises in respect of an adjustment which makes allowable to Buyer, any of its Affiliates or, effective upon the ~~party~~ Closing, a Group Company, any deduction, amortization, exclusion from ~~whom indemnification~~ income or other allowance or reduction in taxable income, which would not, but for such adjustment, be allowable (an “Allowance”) then Buyer shall pay to Seller an amount equal to the actual tax benefit arising therefrom (a “Tax Benefit”) determined on a with or without basis if, as and when such Tax Benefit is ~~sought~~actually realized, including amounts realized through a reduction in Taxes due. Buyer shall pay to Seller an amount equal to the Tax Benefit (based on the actual Tax Benefit realized in respect of the Allowance to which the Tax Benefit relates), as, if, and when such Tax Benefit is actually realized. Within ten (10) days after the filing of the federal income Tax Return for or that includes a Group Company for each taxable year ending after the Closing Date (until Buyer and Seller agree in writing that no further payments in respect of the Tax Benefit are required to be made by buyer), Buyer shall ~~specify~~ provide Seller with a statement setting forth Buyer’s computation of the Tax Benefit realized in such taxable year in reasonable detail or, if appropriate, a statement that no Tax Benefit was realized in such taxable year. Buyer shall promptly provide to Seller such information as Seller may reasonably request regarding such computation. Within ten (10) days after receiving such statement, Seller shall either (i) deliver a written notice to Buyer stating that it agrees with such computation, or (ii) deliver a written notice to Buyer stating that it objects to Seller’s computation and setting forth in reasonable detail the basis for such ~~claim~~objection(s). In the event that Seller delivers such written notice of objection, Buyer and Seller shall cooperate in good faith to try to resolve such dispute. In the event that Buyer and Seller are unable to resolve any dispute within twenty (20) days after receipt of such notice from Seller, Buyer and Seller shall jointly cause the Accounting Firm to resolve the dispute within twenty (20) days. The costs, fees and expenses of the Accounting Firm shall be borne equally by Buyer and Seller. Within three (3) days after the resolution of such dispute by the parties or the Accounting Firm, or, if Seller delivers a written notice to Buyer, within three (3) days after the receipt of such notice by Buyer, Buyer shall pay to Seller the Tax Benefit as so determined. Any ~~indemnity~~ payment ~~required to be~~ not made within such time shall bear interest at the Federal Funds Rate for each day thereafter until paid. (d) Except as otherwise provided under Section 8.5(d), any payment by Seller pursuant to this Section ~~6.5(d)~~ 8.7 shall be made ~~within thirty~~ at least two (302) Business Days before the date payment of the Taxes to which such payment relates is due, or, if no Tax is due, not later than ten (10) days after ~~the indemnified party makes~~ receipt by Seller of written ~~demand~~ notice from Buyer stating any Loss that has been paid by Buyer, any of its Affiliates or, effective upon the ~~indemnifying party~~Closing, ~~but in no case earlier than five (5) Business Days prior to~~ a Group Company and the ~~date on which~~ amount thereof and of the ~~relevant Taxes are required to be paid to the applicable Taxing Authority~~indemnity payment requested. (ve) ~~With~~ If any claim, demand, suit, action, audit, litigation, proceeding for or with respect to ~~any~~ Taxes ~~suffered~~ of which indemnity may be sought against Seller 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 Affiliates pursuant to this Section ~~6.5:~~ 8.7 (Aa “Tax Claim”) ~~Within thirty~~ is asserted in writing against Buyer, any of its Affiliates or, effective upon the Closing, a Group Company, Buyer shall notify Seller of such Tax Claim within ten (3010) ~~days following the filing~~ Business Days of receipt thereof, or such earlier time if necessary in order to allow Seller to timely respond to such Tax Claim and shall give Seller such information with respect thereto as Seller may reasonably request; provided, however, that Buyer’s failure to give such prompt notice shall not relieve Seller of any ~~Income~~ of its indemnification obligations under this Section 8.7, except to the extent that Seller is actually prejudiced thereby. Seller may discharge, at any time, its indemnification obligations under this Section 8.7 by paying to Buyer the amount payable pursuant to such Tax ~~Return for~~ Claim calculated as of the date of such payment. Seller may, at its own expense, participate in and, upon notice to Buyer, assume the defense of 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 such Tax ~~Period or for any Straddle Period~~Claim. If Seller assumes such defense, Seller ~~Parent or Purchaser Parent~~ shall ~~(or Purchaser Parent shall cause Purchaser to) prepare a statement showing~~ have the sole discretion as to the conduct of such defense; provided that, (i) Buyer shall have the ~~amount of Income Taxes shown as due~~ right (but not the duty) to observe and comment on ~~such filed Income Tax Return with respect~~ the defense thereof and to employ counsel, at its own expense, separate from 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~~ counsel employed by Seller, (ii) solely if and to the ~~amount~~ extent that the settlement of such Tax Claim would reasonably be expected to have a significant adverse effect on Taxes 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 Group Companies with respect to a ~~Conveyed Subsidiary~~ Post-Closing Tax Period, the Seller or any of its Affiliates may not settle any such Tax Claim without the prior written consent of the Buyer, which consent shall not be unreasonably withheld or delayed and ~~their Subsidiaries~~ (iii) Seller shall keep Buyer informed of material developments relating to such Tax Claim. Whether or not Seller chooses to defend or prosecute any claim, all of the parties hereto shall cooperate in the defense or prosecution thereof. If the Seller elects not to assume the defense of any Tax Claim under this Section 8.7(e), then the Buyer shall have the right (but not the obligation) at its election to assume the defense of such Tax Claim, and defend or prosecute such Tax Claim (including any settlement, or compromise thereof) as the Buyer shall determine in its sole discretion. (f) Notwithstanding anything to the contrary in this Section 8.7, Buyer agrees that Seller is to have no liability for any Tax resulting from any action referred to in Section 8.3(a) of Buyer, any Affiliate of Buyer, or, after the Closing, any Group Company, and agrees to indemnify and hold harmless Seller and its Affiliates against (i) any such Tax, (ii) ~~pay to Purchaser Parent the amount~~ any Tax or Losses incurred or suffered by Seller of ~~such difference~~ any of its Affiliates, arising out of a breach of any other covenant or agreement of Buyer or its Affiliate contained in this Article 8, Section 2.5(e)(iii), Section 7.9(f) with respect to ~~Purchaser~~ items related to Taxes only), Section 7.9(g) or Section 11.5, (iii) any Tax imposed on any Group Company that is not subject to Seller’s indemnification obligation under this Section 8.7 and ~~its Subsidiaries.~~ (~~vii~~iv) ~~The Parties shall use~~ any liabilities, costs, expenses (including, without limitation, reasonable ~~best efforts to structure any indemnity payment~~expenses of investigation and attorney’s fees and expenses), ~~true-up payment~~losses, damages, assessments, settlements, or ~~payment~~ judgments arising out of an incident to the imposition, assessment or assertion of any Tax described in ~~respect~~ clause (i), (ii) or (iii) above. For purposes of ~~Tax Benefits made by any Party pursuant to this Agreement (including pursuant to~~ this Section ~~6.5~~8.7(f), ~~Section 6.6 and Article VII~~Sections 8.7(b), (d) 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~~ (e) 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~~apply mutadis mutandis.

Appears in 1 contract

Samples: Purchase Agreement (Ocwen Financial Corp)

Tax Indemnification. Subject to the limitations set forth in Section 5.9(g) below, and except as provided in Section 5.9(a) of this Agreement, the Company Securityholders shall, severally and not jointly, by offset in accordance with the terms set forth herein indemnify and defend the Indemnified Persons, and hold them harmless from and against any and all Damages attributable to (i) ~~Subject to Section 6.5(d)(v), from and after~~ all Taxes (or 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~~non-payment thereof) ~~(collectively, the “Purchaser Tax Indemnified Parties”) from and against all liability, without duplication, for (1) Taxes~~ of the ~~Conveyed Subsidiaries~~ Company and ~~their Subsidiaries~~ each Company Subsidiary for ~~any~~ all Pre-Closing Tax ~~Period~~ Periods (~~including any~~ which includes, without limitation and for the avoidance of doubt, all Taxes ~~payable in respect of an election under Section 965(h)~~ of the ~~Code~~Company and each Company Subsidiary arising or accruing up through and including the Closing Date as a result of the transactions contemplated by this Agreement or the Option Agreement, and all Taxes of the Company and each Company Subsidiary arising after the Closing Date solely to the extent resulting from any recharacterization of payments to Company Securityholders pursuant to the Option Agreement or this Agreement in consideration for their capital stock of the Company), (2ii) any liability for 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~~ each 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~~ Company Subsidiary (or any ~~Subsidiary thereof~~predecessor of the Company or any Company [*] Confidential treatment requested. 79 CONFIDENTIAL TREATMENT REQUESTED Subsidiary) is ~~liable under~~ or was a member, on or prior to the Closing Date, including pursuant to Treasury Regulation Section 1.1502-6 (or a any analogous or similar ~~provision of~~ state, local or foreign ~~Law)~~law or regulation, or (iii) all Taxes of any person imposed on any Indemnified Person 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) any settlement~~ rule or regulation as the result of ~~any intercompany accounts of Seller Parent~~ transactions 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 events occurring with respect to the ~~payment~~ Company or a Company Subsidiary on or prior to the Closing Date, (iv) all employer Taxes associated with payments in respect of Company Options, exercises of Company Options, or other transaction-related compensation arising in contemplation of, or in connection with, the transactions contemplated by this Agreement and the Option Agreement, (v) all Taxes of the ~~Purchase Consideration or~~ Company and any ~~amounts payable~~ Company Subsidiary attributable to ~~Seller Parent pursuant~~ the Divestiture, (vi) any reduction in the total amount of Company NOLs determined as of the Closing Date (prior to ~~Section 2.8 or Section 2.9~~the application of any usage limitations under the Code and its regulations) to an amount less than the difference between $[*] and the aggregate amount of income and gain recognized by the Company in connection with the Divestiture (not to exceed $[*]), ~~including~~ and any ~~penalties imposed on Purchaser~~ reduction in the actual amount of orphan drug and research and development tax credits of the Company determined as ~~a result~~ of ~~Purchaser’s failure to deduct or withhold~~ the Closing Date below $[*] (any such ~~amounts that Purchaser (~~reduction of Company NOLs or Tax credits, 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“Tax Benefit Reduction”), (~~8) Taxes arising~~ vii) any limitation on the Indemnified Persons’ ability to use Company NOLs or tax credits (an “Additional Limitation”) under Sections 382 or 383 of the Code (or analogous state income tax laws) resulting solely from ~~any~~ an “ownership change” of the Company within the meaning of Section 382(g) of the Code occurring on or prior to the Closing Date, other than (A) such a limitation resulting solely from the closing of the Merger or (B) such a limitation, if any, resulting solely from execution of the Option Agreement, and (viii) the 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)2.11 hereof. (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

Samples: Merger Agreement (Aptalis 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~~) (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 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

Samples: Asset Purchase Agreement (Apollo Investment Fund Iv Lp)

Tax Indemnification. (ia) Subject to ~~Section 6.5(d)(v)~~the terms (including the limitations) set forth in this Article VIII, from and after the Closing, Seller ~~Parent agrees~~ shall (without duplication with respect to any other payment made pursuant to this Agreement) indemnify ~~and hold harmless~~ Purchaser and its ~~Subsidiaries~~ Affiliates against, and hold them harmless from: (~~including~~ i) all Taxes attributable 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~~ Reorganization (other than ~~any~~ Transfer Taxes governed by Section 5.07(h)) and ~~VAT for which Purchaser is responsible hereunder)~~ all income or capital gains Taxes (including, for the avoidance of doubt, any Taxes ~~(other than~~ required under Announcement 7 and any similar income or capital gains Taxes imposed, directly or indirectly, in India) attributable to the sale of the ~~Conveyed Subsidiaries and their Subsidiaries~~Transferred Equity Interests to Purchaser, in each case whether imposed on Seller, Purchaser or any Group Company, directly or through withholding; (ii) ~~imposed with respect to,~~ all Taxes arising out of or relating to the ~~Purchased Assets~~ Seller Business (including the ownership 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 operation thereof~~) is liable under Treasury Regulation Section 1.1502-6 (or a similar provision of state, local or foreign Law~~), whether any such liability arises before or ~~as a transferee~~ after Closing, is known or ~~successor~~ unknown or ~~by Contract~~ is contingent or accrued; (~~other than Contracts that do not relate primarily to Taxes), (4~~iii) all 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)~~ relating to 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~~ 5.07 made 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~~ performed by 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~~Group Companies solely with respect to periods prior to the Closing)~~, other than any such action that~~ ; (1iv) ~~is in the ordinary course of business,~~ all Taxes (~~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 Treasury Regulation Section 1.1502-6 or any comparable provision of any applicable Tax Law) of any Person other than any Group Company for which any Group Company becomes liable as a ~~change~~ result of being or having been at any time before Closing, part of any consolidated, combined, affiliated, aggregated, unitary or similar group for Tax purposes or as an indemnitor, guarantor, surety or in ~~applicable Law~~ a similar capacity under any Contract; (~~a “~~v) all Transfer Taxes allocated to Seller pursuant to Section 5.07(h); and (vi) any reasonable third party legal fees and expenses resulting from the items described in clauses (i) through (v) above; provided that, notwithstanding anything to the contrary in this Agreement, Seller shall not be liable under this Section 8.03 for any such Taxes, fees or expenses to the extent such Taxes, fees or expenses (1) are described in Section 8.03(b) or (2) result from any Purchaser Tax Act”. (b) Subject to the terms (including the limitations) set forth in this Article VIII, from and after the Closing, Purchaser shall indemnify Seller and its Affiliates against, and hold them harmless from: (i) Except as set forth in Section 8.03(a), all Taxes arising out of or relating to the Business (B) including the ownership or operation thereof), whether any such liability arises before or after Closing, is known or unknown or is contingent or accrued (including any Taxes of any Seller Consolidated Group other than such Taxes that (x) were ~~reflected~~accrued and unpaid prior to the Closing with respect to (a) any taxable period for which a Tax Return was not yet due, ~~accrued or reserved~~ (b) with respect to any taxable period for in which, to the ~~Final Closing Statement~~Knowledge of Seller, ~~Final Business Working Capital~~a Tax Return is due but has not been filed, or ~~Final Business Net Cash,~~ (Cc) ~~Income~~ with respect to any taxable period for which a Tax Return has been filed but the Taxes ~~to the extent that a Conveyed Subsidiary or any Subsidiary thereof had any Tax Assets~~ shown as due thereon have not been paid as of the ~~close~~ Closing and (y) are not Designated Non-Income Consolidated Taxes); (ii) all Taxes resulting from any breach of ~~business on the Closing Date that were available,~~ any covenant or ~~would have been available but for their prior utilization~~ agreement relating to Taxes contained in Section 5.07 made or to be performed by Purchaser or any of its Affiliates (including the ~~Conveyed Subsidiaries and their Subsidiaries after~~ Group Companies but solely with respect to periods following 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 resulting from any Purchaser ~~Parent and its Affiliates~~ Tax Act; (~~other than Purchaser and its Subsidiaries~~iv) ~~for any Tax period (other than~~ all Transfer Taxes allocated to Purchaser pursuant to Section 5.07(h); and (v) any reasonable third party legal fees and ~~VAT~~ expenses resulting from the items described in clauses (i) through (v) above; provided that, notwithstanding anything to the contrary in this Agreement, for ~~which Seller Parent is responsible hereunder~~purposes of Section 8.03(b)(i), all Taxes imposed in connection with Section 965 of the Code with respect to the “Section 965 earnings amount” (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 as defined in Treasury Regulation Section ~~1.1502~~1.965-~~6 (or a similar provision~~ 1(f)(36)) 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)~~ any Group Company shall be considered 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,~~ relating to the Business. (5c) 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 For the purposes of ~~any Tax~~Section 8.03(a)(ii) and Section 8.03(b)(i), a Tax will be treated as arising out of ~~which group~~ or relating to the Seller Business or the Business, respectively, only if such Tax (i) results from items of income, gain, loss or deduction that relate primarily to such business or (ii) otherwise arises primarily from the operations of such business. It is the intention of Seller and Purchaser ~~Parent~~ that substantially all Taxes shall be treated as arising out of or ~~any Subsidiary of Purchaser Parent (other than Purchaser~~ relating to the Seller Business or ~~any Subsidiary of Purchaser)~~ the Business pursuant to the previous sentence. In the event that a Tax is ~~or was also a member and (10) any costs and expenses~~not so treated, ~~including reasonable legal and accounting fees and expenses, attributable to any item~~ such Tax shall be treated as not described in either Section 8.03(a)(ii) or Section 8.03(b)(i); provided, however, that such Tax may be treated as described in other clauses of Section 8.03(a) or (1b), as applicable. (d) ~~through (9) (any such~~ Any indemnity obligation for 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~~ 8.03 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~~ paid within 30 Business 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~~ Seller, as ~~of the close of business on the Closing Date that were available~~applicable, 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~~other party claiming it is entitled to indemnification under this Section 8.03, 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. (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

Samples: Equity Purchase Agreement (Valvoline Inc)

Tax Indemnification. (i) ~~Subject to Section 6.5(d)(v), from and after the Closing, Seller Parent agrees to~~ Carrier shall indemnify and hold harmless ~~Purchaser~~ the Company and ~~its Subsidiaries (including the Conveyed Subsidiaries and their Subsidiaries after the Closing Date) (collectively, the “Purchaser Tax Indemnified Parties”)~~ Watsco from and against all ~~liability, without duplication, for~~ Damages resulting from (1A) Taxes of Carrier or with respect to the ~~Conveyed Subsidiaries and their Subsidiaries~~ Northeast Business Contributed Assets for any Pre-Closing Tax Period (~~including~~ and, for the absence of doubt, any transferee liability for Taxes ~~payable in respect of an election under Section 965(h)~~ resulting from the transfer of the ~~Code~~Northeast Business Contributed Assets pursuant to Section 1.02), (2B) 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~~ Carrier with respect toto any taxable period pursuant to any obligation (whether legal, ~~arising out of~~ as a transferee, contractual, or ~~relating~~ otherwise) to contribute to the ~~Purchased Assets~~ payment of a Tax determined on a consolidated, combined or unitary or other group basis with respect to a group of corporations that includes or included Carrier at any time before the ~~Business for a Pre-Closing Tax Period~~Closing, ~~(3) Taxes of~~ including 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~~ such obligation arising under Treasury ~~Regulation~~ Regulations 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)~~law, (4C) ~~Taxes arising out of or resulting from~~ any breach of any ~~covenant~~ of the covenants required to be performed by Carrier under this Section 11.01, and (D) without duplication of amounts contained in (A), (B) or ~~agreement~~ (C), the failure of ~~Seller Parent~~ the representations in Section 3.18 to be true and correct, except in each case, (a) to the extent such Taxes are reflected as a liability on the final version of the Final Statement on Northeast Business Working Capital, (b) any liability for Taxes arising from any action or ~~any of~~ transaction by Watsco, its Affiliates ~~contained~~ or the Company outside of the ordinary course of business on the Closing Date after the Closing, and (c) any liability for transfer, sales, use and other similar non-income Taxes incurred in connection with the consummation of the transactions contemplated by this Agreement. (ii) Watsco and its Affiliates shall indemnify and hold harmless Company, Carrier, and Carlyle from and against all Damages resulting from (5A) Taxes of Watsco, Xxxxx, Holdings III or with respect to the Homans Business Contributed Assets for a any Pre-Closing Tax Period ~~imposed on~~ (x) and, for the absence of doubt, any ~~transaction effected~~ transferee liability for Taxes resulting from the transfer of the Homans Business Contributed Assets 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”1.04), (B) Taxes ~~that were reflected~~of Watsco, ~~accrued~~ Holdings III or ~~reserved for in the Final Closing Statement~~Xxxxx with respect to any taxable period pursuant to any obligation (whether legal, ~~Final Business Working Capital~~as a transferee, contractual, or ~~Final Business Net Cash, (C~~otherwise) ~~Income Taxes~~ to contribute to the ~~extent~~ payment of a Tax determined on a consolidated, combined or unitary or other group basis with respect to a group of corporations that ~~a Conveyed Subsidiary~~ includes or included Watsco, Holdings III or Xxxxx at 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 time before 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 including 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 such obligation arising under Treasury ~~Regulation~~ Regulations 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)~~law, (4C) ~~Taxes arising out of or resulting from~~ any breach of any ~~covenant~~ of the covenants required to be performed by Watsco under this Section 11.01, and (D) without duplication of amounts contained in (A), (B) or ~~agreement~~ (C), the failure of ~~Purchaser Parent~~the representations contained in Section 5.18 to be true and correct, ~~Purchaser or~~ except, in each case, (a) to the extent such Taxes are reflected as a liability on the final version of the Final Statement on Homans Business Working Capital, and (b) any liability for transfer, sales, use and other similar non-income Taxes incurred in connection with the contribution of the Homans Business Contributed Assets to the Company from Holdings III. (iii) Watsco shall cause the Company to indemnify and hold harmless Carrier, Carlyle, and 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~~ Watsco 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 Affiliates from ~~and against any~~ all liability for (A) Company Taxes ~~attributable~~ (such liabilities to be paid entirely by the Company in all circumstances) and (B) any ~~action taken after the Closing by Seller Parent or~~ breach of 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~~ covenants 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 availableperformed, or ~~would have been available but for their prior utilization~~ cause to be performed, 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 Company under this 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 period11.01. (iv) ~~Any claim for indemnification~~ The obligation of Carrier to indemnify under ~~this~~ Section ~~6.5(d~~11.01(a)(i) shall ~~be made~~ terminate thirty days following the expiration of the statute of limitations (giving effect to extensions thereto) 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 respect of the applicable ~~Taxing Authority~~Tax. (v) ~~With respect~~ The obligation of Watsco to ~~any Taxes suffered or incurred by any Conveyed Subsidiary~~ indemnify under Section 11.01(a)(ii) shall terminate thirty days following the expiration of the statute of limitations (~~or any Subsidiary thereof) that was not wholly owned by Seller Parent (directly or indirectly) as of immediately prior~~ giving effect to ~~the Closing, the indemnification obligations of Seller Parent pursuant to Section 6.5(d)(i~~extensions thereto) 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 Closingapplicable Tax. (vi) ~~Without duplication~~ The obligation of Watsco to ~~any other amounts paid pursuant~~ cause the Company to ~~this~~ indemnify under Section ~~6.5: (A~~11.01(a)(iii) ~~Within~~ shall terminate 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 expiration of the ~~Seller Accrued Income Taxes or Purchaser Accrued Income Taxes, as applicable, attributable~~ statute of limitations (giving effect to ~~such Income Tax Return as reflected on the Final Closing Statement (the “Pre-Closing Income Tax Amount”~~extensions thereto) 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 6.5applicable Tax.

Appears in 1 contract

Samples: Purchase and Contribution Agreement (Watsco Inc)

Tax Indemnification. The Sellers shall severally (based on each Seller's Indemnification Share), and not jointly, indemnify the Buyer Indemnitees and hold them harmless from and against any Loss attributable to (i) ~~Subject to Section 6.5(d)(v), from and after~~ all Taxes (or 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 Prenon-~~Closing Tax Period (including any Taxes payable in respect of an election under Section 965(h~~payment thereof) of the ~~Code), (2) Taxes of any Seller (other than any Transfer Taxes~~ Company for all Taxable periods ending on or before the Closing Date and ~~VAT for which Purchaser is responsible hereunder) including, Taxes (other than Taxes~~ the portion through the end of the ~~Conveyed Subsidiaries and their Subsidiaries~~Closing Date for any Taxable period that includes (but does not end on) ~~imposed with respect to, arising out of or relating to~~ the ~~Purchased Assets or the Business for a~~ Closing Date ("Pre-Closing Tax Period"), (3ii) all Taxes of any ~~Person (other than~~ member of an Affiliated Group of which 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 foregoing) is ~~liable under~~ or was a member on or prior to the Closing Date, 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), or and (iii) any and all Taxes of any Person imposed on the Company 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) any settlement of any intercompany accounts of Seller Parent or its Subsidiaries pursuant to Section 6.7~~rule, or ~~(z) any~~ regulation, which Taxes relate to an event or transaction ~~or step forming part of~~ occurring before the ~~Seller Internal Restructurings~~Closing; provided, (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 that 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 claims 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 indemnity pursuant to this Section ~~6.5(d)(i),~~ 10.04(d) shall not be subject to the ~~following proviso~~De Minimis Amount, “the Deductible Basket or the Cap; provided, further that no Seller ~~Indemnified Taxes”); provided that~~ shall be liable under Section 10.04(d) together with any amounts paid or owed by such Seller ~~Parent~~ under clause (1) of Section 10.02(a) and clause (1) of Section 10.02(b) for more than such Seller's Indemnification Share of the Overall Cap. Buyer Indemnitees shall not be ~~required~~ entitled to ~~indemnify or hold harmless any Purchaser Tax Indemnified Party from and against any liability pursuant to~~ indemnification under this Section ~~6.5(d)(i~~10.04(d) 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~~ they 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 received 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) proceeds 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 under Section ~~6.5(d~~10.02(a), 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

Samples: Stock Purchase Agreement (RathGibson Inc)

Tax Indemnification. Subject to Section 10.4 and Section 10.6, the Members shall (without duplication) indemnify and hold the Company harmless from and against any and all Losses based upon and resulting from (i) ~~Subject to Section 6.5(d)(v), from and after~~ all income Taxes of the ~~Closing, Seller Parent agrees to indemnify and hold harmless Purchaser and its Subsidiaries~~ Company Group (~~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 taxable period beginning before the Closing Date but ending on the Closing Date (a “Straddle Period”) (~~collectively,~~ to 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 extent allocated to such period under Section ~~965(h~~10.9(b)) ~~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”); (ii) all liability as a result of Treasury Regulation Section 1.1502-6 (or any similar provision of state, (3local or foreign Tax Law) for Taxes of any Person (other than the ~~Conveyed Subsidiaries and their~~ Company or its Subsidiaries) which is or has ever been a member of an affiliated, combined, unitary or similar tax group for Tax purposes with any of the Company or its Subsidiaries or with which any of the Company or its Subsidiaries otherwise joins or has ever joined (or is or has ever been required to join) in filing any consolidated, combined, unitary or aggregate Tax Return, in each case, prior to the Closing Date; (iii) the breach or inaccuracy of any Tax representation in Section 4.18, but only with respect to Taxes of 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~~ Losses in a post-Closing tax period resulting from a breach or ~~a Subsidiary thereof) at any time ceasing to be a member of a group for the purposes~~ inaccuracy of any ~~Tax~~Tax representation in Section 4.18(c), ~~of which group Purchaser Parent or~~ Section 4.18(d) and Section 4.18(e)); (iv) the failure to perform any ~~Subsidiary of Purchaser Parent (other than Purchaser or any Subsidiary of Purchaser) is or was also a member~~ covenant contained in this Agreement with respect to Taxes, and (10v) 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 (Company or any ~~Subsidiary thereof) that was not wholly owned by Seller Parent (directly or indirectly) as of immediately prior to~~ Member from 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 ClosingRestructuring. (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

Samples: Contribution Agreement

Tax Indemnification. (a) Following the Closing, Parent and Seller shall, jointly and severally, indemnify the Purchaser Indemnified Parties (including the Companies) and hold them harmless from (i) ~~Subject~~ all Liability for Taxes of Newco and AHCGC (including any obligation to ~~Section 6.5(d)(v~~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 Newco or AHCGC, and any Taxes resulting from the Elections except as provided in SECTION 6.7) for any Pre-Closing Tax Periods (determined in accordance with the methodology provided in SECTION 6.2(d)), ~~from and after the Closing~~(ii) all Liability (as a result of Regulation Section 1.1502-6(a) or otherwise) for Taxes of Parent, Seller, Canadian 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)~~ Property Taxes arising out of the ~~Conveyed Subsidiaries and their Subsidiaries~~ ownership of the Canadian Assets for any Pre-Closing Tax Period (~~including~~ determined on a per diem basis consistent with the methodology of SECTION 8.4(c)(i)) or any ~~Taxes payable in respect~~ other entity which is or has been an Affiliate of ~~an election under Section 965(h) of the Code~~Newco or AHCGC (other than Newco and AHCGC), (2iii) ~~Taxes~~ any and all Damages arising out of, resulting from or incident to any breach by Parent, Seller, or any of ~~any Seller~~ their Affiliates (other ~~than any Transfer Taxes~~ than, after the Closing, Newco and ~~VAT for which Purchaser is responsible hereunder~~AHCGC) 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~~SECTION 4.1(xxiii) or (xxiv) or ARTICLE VI, (~~5) Taxes for a Pre-Closing Tax Period imposed on (x~~iv) any ~~transaction effected pursuant to Section 2.3(b)~~and all Damages arising out of, ~~(y) any settlement of any intercompany accounts of Seller Parent~~ resulting from 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 incident 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 made by 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~~ in SECTION 2.19 without regard to any ~~item described in clauses (1) through (9) (any such Taxes for which Seller Parent is responsible pursuant~~ qualification contained therein as to ~~this Section 6.5(d)(i)~~materiality or a Material Adverse Effect, 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 and their Subsidiaries after the Closing~~i) ~~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~~iii), or and (Dv) ~~Taxes for which Purchaser Parent is responsible under Section 6.5(d)(ii). (ii) Subject to Section 6.5(d)(v), from~~ any 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 Damages arising out ~~of or~~ of, 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 incident to the breach of any representation or warranty made by Parent or Seller in ~~Section 5.17(k~~SECTION 2.19 without regard to any qualification contained therein as to materiality or Material Adverse Effect as if such representation or warranty were made on or as of the Closing Date (except in the case of any representation or warranty that by its terms is made as of a date specified therein), except to the extent that any such Damages are otherwise indemnified pursuant to the foregoing clauses (7i) - (iv). For purposes of this SECTION 8.4(a), Taxes shall include the amount of Taxes which would have been paid but for the application of any credit or net operating loss or capital loss deduction attributable to Post-Closing Tax Periods. (b) Following the Closing, Purchaser shall indemnify the Seller Indemnified Parties and hold them harmless from (i) all Liability for Taxes of Newco and AHCGC (including any obligation to contribute to the payment of a ~~Pre~~Tax determined on a consolidated, combined or unitary basis with respect to a group of corporations that includes or included one or more of Newco or AHCGC) for any Post-Closing Tax Period ~~imposed on~~ (~~x) any settlement of any intercompany accounts of Purchaser or any Subsidiary of Purchaser, on~~ determined in accordance with the ~~one hand, and Purchaser Parent or any Subsidiary of Purchaser Parent (other than Purchaser and its Subsidiaries~~methodology provided in SECTION 6.2(d), 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”), (Bii) ~~Taxes that were reflected~~any and all Damages arising out of, ~~accrued~~ resulting from or ~~reserved for in the Final Closing Statement, Final Purchaser Working Capital or the Final Purchaser Net Cash, (C) Income Taxes~~ incident to the ~~extent that~~ breach by Purchaser or of any ~~Subsidiary thereof had any Tax Assets as~~ covenant contained in ARTICLE VI of this Agreement and (iii) all Liability for Property Taxes arising out 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 ownership of the ~~Final Purchaser Working Capital or~~ Canadian Assets for any Post-Closing Tax Period (determined on a per diem basis consistent with the ~~Final Purchaser Net Cash~~methodology of SECTION 8.4(c)(i)~~, 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 the~~ ("PROPERTY TAXES") of Seller or its Affiliates for a 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 (including that portion of the Straddle Period in which any of the Assets were owned by Seller) and the denominator of which is the total number of days in the ~~entire~~ Straddle Period; and (Bii) the Taxes of Newco or AHCGC (other than Property Taxes) ~~allocable to the~~ for any Pre-Closing Tax Period shall be computed as if such ~~Tax period~~ Taxable Period ended as of the close of business on the Closing Date ~~and,~~ (which shall be the deemed the time of Closing as provided in SECTION 1.5 and which shall include the ~~case~~ tax consequences of ~~any Taxes of Conveyed Subsidiaries~~ the Share Purchase and the Elections). (~~and their Subsidiaries~~d) ~~and Seller Parent, or in the case of any Taxes of Purchaser~~ With respect to Parent and Seller's indemnity obligations in respect of Taxes for a Straddle Period, Seller shall pay to Purchaser ~~(and their Subsidiaries prior~~ an amount equal to ~~the Closing), in each case attributable~~ any such Taxes allocable 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 a Pre-Closing Tax Period ~~deemed to include any Taxes on~~ in accordance with SECTION 8.4(c) less the ~~allocable income~~ sum of (i) the amount of such ~~entity in respect~~ allocable Taxes paid by Parent or any of its Affiliates (other than Newco or AHCGC) at any time and (ii) the amount of such ~~Tax period; provided that exemptions, allowances~~ Taxes paid by Newco and AHCGC on or ~~deductions that are calculated on an annual basis (including depreciation and amortization deductions) shall be allocated between the period ending on~~ prior to the Closing Date (collectively, (i) and (ii), the ~~period beginning after the Closing Date in proportion to the number of days in each period.~~ "STRADDLE PERIOD TAX OFFSET") within ten (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 (3010) days after ~~the indemnified party makes~~ written demand ~~upon the indemnifying party,~~ thereof is made by Purchaser (but in no ~~case~~ event earlier than five (5) ~~Business Days prior to~~ days before the date on which the ~~relevant~~ Taxes for the Straddle Period are required to be paid to the ~~applicable~~ relevant 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~~ ). If the amount 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)~~ Straddle Period Tax Offset 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 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 allocable to the ~~Closing. With respect~~ Pre-Closing Tax Period within such Straddle Period, Purchaser shall pay 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 excess within ten (10) days after the Tax Return with respect to the final liability for such Taxes ~~(or related costs and expenses) for which~~ is required to be filed with the ~~Purchaser~~ relevant Taxing Authority. In the case of a Tax ~~Indemnified Parties would otherwise be entitled to indemnification pursuant to Section 6.5(d~~that is contested in accordance with the provisions of SECTION 8.4(e), ~~as if such Subsidiary were wholly owned by Purchaser Parent, multiplied by (B)~~ payment of the ~~direct and indirect percentage ownership of Purchaser Parent of such Subsidiary as of immediately prior~~ Tax to the ~~Closing~~appropriate Taxing Authority shall not be considered to be due earlier than the date a final determination to such effect is made by the appropriate Taxing Authority or court. (vii) ~~Without duplication~~ If a claim shall be made by any Taxing Authority, which, if successful, might result in an indemnity payment to a party (the "FIRST PARTY"), one of its Affiliates or any ~~other amounts paid~~ of its Representatives pursuant to this ~~Section 6.5: (A) Within~~ SECTION 8.4, the First Party shall promptly and in any event no more than thirty (30) days following the ~~filing~~ First Party's receipt of ~~any Income Tax Return for any Conveyed Subsidiary (or any Subsidiary thereof)~~such claim, ~~on the one hand, or Purchaser (or any Subsidiary thereof, other than the Conveyed Subsidiaries and their Subsidiaries), on~~ give written notice to the other ~~hand~~party (the "SECOND PARTY") of such claim (a "TAX CLAIM"); PROVIDED, ~~for~~ HOWEVER, the failure of the First Party to give such notice shall only relieve the Second Party from its indemnification obligations hereunder to the extent it is actually prejudiced by such failure. (ii) With respect to any ~~Pre-~~Tax Claim relating to a Taxable Period ending on or prior to the Closing Date, Parent shall, upon written notification to Purchaser, control all proceedings and may make all decisions taken in connection with such Tax ~~Period or for any Straddle Period~~Claim (including selection of counsel) at its own expense; PROVIDED, ~~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~~ HOWEVER, that with respect to Tax Claims the ~~relevant Pre-Closing~~ resolution of which will be binding on Newco or AHCGC in a Tax Period ~~or the portion of any Straddle Period~~ ending ~~on and including~~ after the Closing ~~Date~~ Date, then Purchaser may also participate in such proceeding at its own expense and Parent may not settle such Tax Claim without the written consent of Purchaser (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 which consent shall not be unreasonably withheld). Parent and Purchaser ~~Parent, as applicable~~shall jointly control all proceedings taken in connection with any Tax Claim relating to Taxes of Newco or AHCGC for a Straddle Period. 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 control at its own expense all proceedings 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 Claim relating to a ~~Conveyed Subsidiary~~ Taxable Period beginning after the Closing Date. 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 ~~their Subsidiaries~~ the other party shall thereupon be permitted to defend and ~~(ii) pay to Purchaser Parent the amount of~~ settle such ~~difference with respect to Purchaser and its Subsidiaries~~proceeding. (~~vii~~iii) ~~The Parties~~ Parent and Purchaser and each of their respective Affiliates shall ~~use reasonable best efforts to structure~~ reasonably cooperate with each other in contesting any ~~indemnity payment~~Tax Claim. Such cooperation shall include the retention and, 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 upon the ~~manner set forth in Clause 10~~ request of the ~~Structuring Considerations Agreement. The Parties shall use reasonable best efforts~~ party or parties controlling proceedings relating to ~~structure as~~ such Tax Claim, the provision to such party or parties of records and information which are reasonably relevant to such Tax Claim, and making employees available on a ~~special dividend~~ mutually convenient basis to provide additional information or explanation of any ~~payment made by Purchaser~~ material provided hereunder or to ~~Purchaser Parent pursuant~~ testify at proceedings relating to ~~Section 2.8, Section 2.9 or this Section 6.5~~such Tax Claim.

Appears in 1 contract

Samples: Stock Purchase Agreement (Libbey 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

Samples: Merger Agreement (Koppers Holdings Inc.)

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 Not withstanding any other provision 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 ------------------- this Agreement to the ~~Purchased Assets or the Business for a Pre-Closing Tax Period,~~ contrary: (3a) ~~Taxes of~~ If 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~~ collectively, jointly and severally, the ~~Conveyed Subsidiaries and their Subsidiaries)~~"Indemnifying Parties") takes any action prohibited by Article IV, above, or violates a representation or covenant contained in Article IV, above, or takes or fails to take any other ~~than~~ action (any such ~~action that (1~~action, failure to act or violation, a "Tainting Act") is and the Reorganization or any portion thereof fails to qualify for the Tax treatment stated in the ~~ordinary course of business, (2) is expressly permitted~~ Letter Ruling in whole or ~~contemplated by this Agreement, or (3) is required to be taken~~ in ~~order to comply with applicable Law or~~ part as a result of ~~a change in applicable Law~~ such Tainting Act, then the Indemnifying Parties shall (~~a “Purchaser Tax Act”), (B~~jointly and severally) 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 each of the ~~Purchaser Tax~~ other Parties and their Affiliates (collectively, the "Indemnified Parties") against any and all Taxes and any other costs and liabilities imposed upon or incurred by the 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~~ the Tainting Act, including any liability of the Indemnified Parties arising from Taxes imposed on shareholders of a Party to ~~deduct~~ the extent any shareholder or ~~withhold~~ the IRS or other Taxing Authority successfully seeks recourse against the Indemnified Parties on account of any such ~~amounts~~Tainting Act, or any liability for such Taxes or other costs or liabilities that the Indemnified Parties may assume or otherwise incur; (9b) ~~Taxes arising~~ Each Spinco and its Affiliates shall (jointly and severally) indemnify and hold harmless Columbia/HCA and its Affiliates for any Tax imposed upon or incurred by Columbia/HCA and its Affiliates 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~~ Distributions by ~~Seller Parent~~ such Spinco 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

Samples: Tax Sharing and Indemnification Agreement (Triad Hospitals Inc)

Tax Indemnification. (ia) Subject to the terms and conditions of Section ~~6.5(d)(v)~~10.4(a) and this Section 11.1, from and after the ~~Closing~~Closing Date, Seller ~~Parent agrees to indemnify~~ shall indemnify, defend, 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 any and all ~~liability, without duplication,~~ Losses incurred or suffered by the Buyer Indemnified Parties for (1i) any Taxes (or the non-payment thereof) of the ~~Conveyed Subsidiaries and their~~ Company or any of its Subsidiaries for any Pre-Closing Tax Period (~~including any Taxes payable~~ determined in ~~respect of an election under~~ accordance with Section ~~965(h) of the Code~~11.1(b)), (2ii) 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~~ of ~~the Conveyed~~ its 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~~predecessor of the Company or any of its Subsidiaries) is ~~liable under~~ or was a member on or prior to the Closing Date, including pursuant to Treasury Regulation Section 1.1502-6 (or a any 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~~Law in any jurisdiction), (4iii) any Taxes ~~arising out~~ or other costs (including the loss of or ~~resulting from~~ reduction in Tax benefits or Tax attributes) imposed on or incurred by the Company, any of its Subsidiaries, or the Buyer Indemnified Parties as a result of the breach or inaccuracy of any representation or warranty set forth in Section 4.8 for which a Tax Claim Notice is provided to Seller at any time prior to the fifth (5th) anniversary of the Closing Date (it being understood and agreed that the provisions of Section 10.4(b) shall apply mutatis mutandis to the indemnification provided for under this clause (iii)), and (iv) the breach or nonperformance of any covenant or agreement on the part 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 Company set forth in Section ~~4.16(k~~6.1(n), (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 . Any indemnification 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)(i11.1(a) 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~~Period shall not apply to the extent such Taxes are taken into account in calculating Final Working Capital. In the event that any indemnification claim under this Section 11.1(a) ~~Taxes of any Person for~~ relates 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 by Contract (other than Contracts that do not relate primarily to Taxes), (4) Taxes arising out loss of or ~~resulting from any breach~~ reduction in a Tax benefit or Tax attribute, Seller shall be obligated to pay Buyer in respect of ~~any covenant~~ such loss 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, reduction only when 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~~ such loss or ~~any Subsidiary thereof had any~~ reduction actually increases Buyer’s tax liability or actually reduces Buyer’s 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)refund. (~~iii~~b) 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, in the case of any Straddle Period: (Ai) ~~Property~~ the Taxes ~~allocable~~ of the Company and each of its Subsidiaries that are imposed on a periodic basis and not based on income or receipts (e.g., property taxes) attributable to the Pre-Closing Tax Period shall be ~~computed based upon~~ equal to the ~~ratio~~ product of such Taxes attributable to the entire Straddle Period and a fraction, the numerator of which is the number of days in such Straddle Period that elapsed through the ~~Pre-~~Closing ~~Tax Period to~~ Date and the denominator of which is the number of days in such Straddle Period; provided, however, that, if the ~~entire~~ amount of periodic Taxes imposed for such Straddle Period reflects different rates of Tax imposed for different periods within such Straddle Period, the formula described in the preceding clause shall be applied separately with respect to each such period within the Straddle Period; and (Bii) the Taxes of the Company and its Subsidiary (other than ~~Property Taxes~~those described in clause (i)) ~~allocable~~ 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~~Date. (c) Notwithstanding any other provision of this Agreement, in calculating the ~~case of any~~ Taxes ~~of Conveyed Subsidiaries (and their Subsidiaries) and~~ for which Seller ~~Parent, or in the case of any Taxes of Purchaser Parent and Purchaser (and their Subsidiaries prior~~ is responsible pursuant to ~~the Closing~~Section 11.1(a), ~~in each case attributable to the ownership~~ any items 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 income and gain that arise after 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 that are not in the ~~period beginning after~~ ordinary course of business of the Company and its Subsidiaries shall be deemed to arise on the day immediately succeeding the Closing ~~Date in proportion to the number of days in each period~~Date. (ivd) ~~Any claim~~ All claims for indemnification made under this ~~Section 6.5(d)~~ ARTICLE XI shall be made in ~~writing upon~~ accordance with the ~~party~~ following procedures. Buyer shall give prompt written notification to Seller (a “Tax Claim Notice”) of any pending or threatened federal, state, local or foreign income or franchise tax audits or assessments which audits or assessments identify a potential Tax liability of the Company or any of its Subsidiaries (it being understood that the mere commencement of a Tax audit is not by itself sufficient basis for a Tax Claim Notice) for which Seller would be required to indemnify Buyer pursuant to Section 11.1(a), provided, however, that the failure to provide such notice shall not release Seller from ~~whom indemnification~~ any obligations under this ARTICLE XI except to the extent Seller is ~~sought, and~~ materially prejudiced by such failure. Such Tax Claim Notice shall ~~specify~~ include (i) a description in reasonable detail (to the extent known by such Buyer Indemnified Party) of the facts constituting the basis for such ~~claim~~claim and the amount of the Losses claimed, if known and quantifiable, (ii) a statement that such Buyer Indemnified Party is entitled to indemnification under this ARTICLE XI and a reasonable explanation of the basis therefor and (iii) a demand for payment in the amount of Losses set forth in the Tax Claim Notice. Seller shall have the right to assume control of the defense of any tax audit or administrative or court proceeding relating to any claim for Taxes for which Seller would be required to indemnify Buyer pursuant to Section 11.1(a) and to employ counsel of its choice, provided that Seller shall provide written notice to the Buyer and such Buyer Indemnified Party of its intention to undertake such representation within 30 days after delivery of such Tax Claim Notice. If Seller does not assume control of such defense, Buyer shall control such defense. The party not controlling such defense may participate therein at its own expense; provided that if Seller assumes control of such defense and Buyer reasonably concludes, based on advice from counsel, that the Buyer Indemnified Party and Seller have conflicting interests with respect to such tax audit or administrative or court proceeding, the reasonable fees and expenses of counsel to such Buyer Indemnified Party solely in connection therewith shall be considered “Losses” for purposes of this Agreement; provided, however, that in no event shall Seller be responsible for the fees and expenses of more than one (1) counsel for all Buyer Indemnified Parties. The party controlling such defense shall keep the other party advised of the status of such tax audit or administrative or court proceeding and the defense thereof and shall consider recommendations made by the other party with respect thereto. Similarly, in the event Seller does not exercise its right to conduct the defense against any such tax audit or administrative or court proceeding, Seller shall cooperate with Buyer in such defense and make available to the Buyer Indemnified Party, all such witnesses, records, materials and information in Seller’s possession or under Seller’s control relating thereto as is reasonably required by the Buyer Indemnified Party. Seller shall not be entitled to settle, either administratively or after the commencement of litigation, any claim for Taxes to the extent such settlement would adversely affect the liability for Taxes of the Buyer, the Company or any Subsidiary for any Post-Closing Tax Period to any extent (including, but not limited to, the imposition of income tax deficiencies, the reduction of asset basis or cost adjustments, the lengthening of any amortization or depreciation periods, the denial of amortization or depreciation deductions, or the reduction of loss or credit carryforwards) without the prior written consent of Buyer, which consent shall not be unreasonably withheld, conditioned or delayed. Such consent shall not be necessary to the extent that Seller has indemnified the Buyer against the effects of any such settlement. None of the Buyer, the Company, or any of its Subsidiaries shall agree to any settlement of a tax audit or administrative or court proceeding that is the subject of a Tax Claim Notice without the prior written consent of Seller, which consent shall not be unreasonably withheld. (e) Any indemnity payment ~~required~~ payable by Seller to ~~be made~~ Buyer pursuant to this Section ~~6.5(d)~~ 11.1 shall be ~~made~~ paid within thirty ~~(30)~~ days after the ~~indemnified~~ Buyer’s written request therefor (or, if later, ten days prior to the date such Tax is required to be paid), provided that such request shall be accompanied by a copy of the applicable Tax Return or a final audit determination and a statement reflecting the calculation of the amount for which the Seller is liable. Within thirty days following the receipt of a request for any indemnity payment hereunder, together with a computation by the Buyer of the indemnity amount payable hereunder, the Seller shall either (i) pay such amount in immediately available funds in the manner designated by the Buyer or (ii) if such amount is payable with respect to a Tax Return filed pursuant to Section 11.2(a) or (b) (other than Straddle Period Returns), request in writing the Accountant to determine whether such computation and amount are correct. After each party ~~makes written demand~~ has had the opportunity to consult with the Accountant, upon receipt thereof, the ~~indemnifying party~~Buyer shall deliver to the Seller a statement from the Accountant setting forth the determination by the Accountant of such computation and the amount payable hereunder as an indemnity. The determination by the Accountant in conformity with the provisions of this Agreement shall be final, ~~but in no case earlier than~~ conclusive and binding on the parties hereto. Within five (5) Business Days ~~prior~~ after delivery to the ~~date on which~~ Seller of the ~~relevant Taxes are required to be paid~~ statement of determination by the Accountant of such amount, the Seller shall pay such amount in immediately available funds to the ~~applicable Taxing Authority. (v) With respect to any Taxes suffered or incurred~~ Buyer in the manner designated by ~~any Conveyed Subsidiary (or any Subsidiary thereof) that was not wholly owned by Seller Parent (directly or indirectly) as of immediately prior~~ the Buyer. Notwithstanding anything to the ~~Closing~~contrary in this Agreement, any amounts payable by 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 ARTICLE XI shall be paid, at the election of the Buyer, out of the Indemnity Escrow Fund in accordance with Section ~~6.5: (A) Within thirty (30) days following~~ 2.7, and in the ~~filing of any Income Tax Return for any Conveyed Subsidiary (or any Subsidiary thereof)~~event Buyer so elects, ~~on the one hand, or Purchaser (or any Subsidiary thereof, other than the Conveyed Subsidiaries~~ Buyer 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~~ deliver joint written instructions to the ~~relevant Pre-Closing Tax Period or~~ Escrow Agent instructing the ~~portion of~~ Escrow Agent to deliver to Buyer 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 amounts so ~~prepared shall be final and binding~~owing. (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

Samples: Stock Purchase Agreement (Endo Pharmaceuticals Holdings Inc)

Tax Indemnification. (iA) ~~Subject~~ Notwithstanding anything to ~~Section 6.5(d)(v)~~the contrary in this Agreement, after the Subsequent Closing Date applicable to C Israel Shares, Sellers shall indemnify C Israel or Buyer and hold them harmless from and ~~after~~ against any loss, claim, liability, expense or other damage attributable to all (I) Taxes (or the ~~Closing, Seller Parent agrees to indemnify and hold harmless Purchaser and~~ non-payment thereof) of C Israel or any of 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~~ determined in ~~respect of an election under~~ accordance with Section ~~965(h~~7.09(c)(ii)(B) ~~of the Code~~hereof), (2) ~~Taxes~~ arising from the breach or inaccuracy of any ~~Seller~~ representation or warranty set forth in Section 5.13(i) hereof (it being agreed that for purposes of this Section 7.09(c)(ii)(A) the representations and warranties set forth in Section 5.13(i) shall not be deemed to be qualified by any references therein to "materiality"), or (3) the breach or nonperformance of any covenant or agreement on the part of Sellers or the Company set forth in Sections 7.01(l) and 7.01(m); (II) any liability for the payment of any amount of a type described in clause (I) arising as a result of being or having been a member of any consolidated, combined, unitary or other ~~than~~ group or being or having been included or required to be included in any ~~Transfer~~ Tax Return related thereto; (III) any liability for the payment of any amount of a type described in clause (I) or clause (II) as a result of any obligation to which C Israel or any of its Subsidiaries was or is a party on or prior to the Subsequent Closing Date applicable to the C Israel Shares to indemnify or otherwise assume or succeed to the liability of any other Person; and (IV) 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~~ to a reassessment by a taxing authority of ~~or relating~~ Taxes attributable to a Post-Closing Tax Period to the ~~Purchased Assets~~ extent that Sellers or ~~the Business for~~ their Subsidiaries or Affiliates becomes entitled to any corresponding deduction, loss, relief, allowance, exemption, set-off, right to repayment or credit in relation to Taxes attributable to 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 For purposes of this Agreement, in the case of any Straddle Period: (AI) ~~Property~~ the Taxes ~~allocable~~ of C Israel and its Subsidiaries that are imposed on a periodic basis and not based on income or receipts (e.g., property taxes) attributable to the Pre-Closing Tax Period shall be ~~computed based upon~~ equal to the ~~ratio~~ product of such Taxes attributable to the entire Tax period and a fraction, the numerator of which is the number of days in such period that elapsed through the ~~Pre-~~Subsequent Closing ~~Tax Period~~ Date applicable to the C Israel Shares and the denominator of which is the number of days in such Tax period; provided, however, that, if the ~~entire Straddle Period~~amount of periodic Taxes imposed for such Tax period reflects different rates of Tax imposed for different periods within such Tax period, the formula described in the preceding clause shall be applied separately with respect to each such period within the Tax period; and (BII) the Taxes of C Israel and its Subsidiaries (other than ~~Property Taxes~~those described in clause (I)) ~~allocable~~ attributable to the Pre-Closing Tax Period shall be equal to the amount computed as if such Tax period ended as of the close of ~~business on~~ the Subsequent 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~~ applicable 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 periodC Israel Shares. (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

Samples: Asset Purchase Agreement (Oppenheimer Holdings Inc)

Tax Indemnification. (ia) ~~Subject to Section 6.5(d)(v), from~~ From and after the Closing, the Seller ~~Parent agrees to~~ shall indemnify ~~and hold harmless Purchaser and~~ the Purchaser, its ~~Subsidiaries~~ affiliates (including the ~~Conveyed Subsidiaries~~ Transferred Entities) and each of their ~~Subsidiaries after the Closing Date)~~ stockholders, members, partners, directors, officers, employees, agents, advisors and representatives (~~collectively,~~ the “Purchaser ~~Tax Indemnified Parties~~Indemnitees”) against and hold them harmless from ~~and against all liability~~any Losses arising from, ~~without duplication, for (1) Taxes of the Conveyed Subsidiaries and their Subsidiaries for any Pre-Closing Tax Period (including any Taxes payable~~ relating to or otherwise in respect of ~~an election under~~ (i) except as provided in Section ~~965(h) of the Code~~9.0 1(b), ~~(2)~~ any 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~~ on 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, (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 that may be imposed on the Business as a ~~transferee~~ result of being a member of a consolidated, combined, unitary or ~~successor~~ similar group of corporations or ~~by Contract~~ other taxpayers at any time on or prior to the Closing Date and (~~other than Contracts that do not relate primarily to Taxes), (4~~iii) ~~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~~ the Seller is ~~responsible~~ liable under Section ~~6.5(j~~5.04(b) (b) From and after the Closing, the Purchaser and the Transferred Entities shall, jointly and severally, indemnify the Seller, its affiliates and each of their stockholders, members, partners, directors, officers, employees, agents and representatives (6the “Seller Indemnitees”) ~~Taxes arising~~ and hold them harmless from any ~~breach~~ Losses arising from, relating to or otherwise in respect of (i) 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 Business with respect to any ~~amounts payable to Purchaser Parent pursuant to Section 2.8 or Section 2.9~~Post-Closing Tax Period, ~~including~~ (ii) any ~~penalties~~ Taxes that may be imposed on ~~Purchaser~~ the Business 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 being a member of a consolidated, combined, unitary or similar group ~~for~~ of corporations or other taxpayers at any time after the ~~purposes of any Tax~~Closing Date, ~~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~~iii) any ~~costs and expenses, including reasonable legal and accounting fees and expenses, attributable to any item described in clauses (1) through (9) (any such~~ Transfer Taxes for which the Purchaser ~~Parent~~ is ~~responsible pursuant to this~~ liable under 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”5.04(b), (Biv) 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~~ liability resulting from an election by the Purchaser under Section 338(g) of the ~~close of business on~~ Code as contemplated by Section 5.07 and (v) any breach 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~~ affiliates of any covenant contained in Sections 5.05, 5.06 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)5.07. (~~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 Taxes (“Property ~~Taxes allocable to~~ Taxes”) of the Business for the Pre-Closing Tax Period shall be ~~computed based upon the ratio of the number of days in~~ allocated to the Pre-Closing Tax Period to on a pro rata basis (based on the number of days during such taxable period elapsed on or prior to the Closing Date). If at the time of Closing, the tax rate or the assessed valuation for the year in which the ~~entire Straddle Period~~Closing occurs has not yet been fixed, Property Taxes shall be prorated based upon the tax rate and the assessed valuation established for the previous tax year; and (Bii) the Taxes of the Business (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. (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

Samples: Purchase Agreement (Global Brass & Copper Holdings, Inc.)

Tax Indemnification. ~~(i) Subject to Section 6.5(d)(v)~~Sellers shall jointly and severally indemnify the Company, ~~from~~ Buyer, and ~~after the Closing, Seller Parent agrees to indemnify~~ each Buyer Indemnitee 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 3.12; (b) any Loss attributable to any breach or violation of, or failure to fully perform, any covenant, agreement, undertaking or obligation in this ARTICLE VI; (c) all ~~liability, without duplication, for (1)~~ Taxes of the ~~Conveyed Subsidiaries and their Subsidiaries~~ Company or relating to the Company 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 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~~ e) any and 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. Sellers shall reimburse Buyer for any Taxes of the Company that ~~do not relate primarily~~ are the responsibility of Sellers pursuant to ~~Taxes), (4)~~ this Section 6.3 within twenty Business Days after payment of such Taxes ~~arising out of~~ by Buyer or ~~resulting~~ the Company. Buyer shall indemnify the Sellers and hold them harmless 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~~ and against (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, Loss attributable to any ~~item described in clauses (1) through (9) (any such Taxes for which Seller Parent is responsible pursuant~~ breach or violation of, or failure 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 Purchaserfully perform, any ~~of its Affiliates~~ covenant, agreement, undertaking or obligation in this ARTICLE IV; and (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 (1y) all Taxes of ~~Purchaser Parent and its Affiliates (other than Purchaser and its Subsidiaries)~~ the Company or relating to the 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 Preall Post-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)Periods. (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

Samples: Membership Interest Purchase Agreement (Tattooed Chef, Inc.)

Tax Indemnification. (ia) ~~Subject to Section 6.5(d)(v), from and after~~ Seller shall indemnify the ~~Closing, Seller Parent agrees to indemnify~~ Purchaser Indemnified Parties 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 ~~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~~ Loss 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, kind or character arising out of or in any manner incident, 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 (1i) 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~~the non-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 payment thereof) ~~at any time ceasing~~ of Seller and the Seller Subsidiaries for all Taxable periods ending on or 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 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~~ such Straddle Period ending on and including the Closing Date (~~the~~ “~~Final~~ Pre-Closing ~~Income~~ Tax ~~Amount~~Period”) ), and (ii) all Taxes of any member of an affiliated, consolidated, combined or unitary group of which Seller or the ~~amount~~ Seller Subsidiaries (or any predecessor of any of the foregoing) is or was a member on or prior to the Closing Date solely as a result of Treasury Regulation §1.1502-6 or any analogous or similar state, local, or foreign law or regulation, provided, however, that Seller shall not indemnify any of the Purchaser Indemnified Parties or hold any of them harmless from or against, (I) any Taxes that result from any actual or deemed election under Section 338 of the Code or any similar provisions of state, local or foreign law in connection with or as a result of the purchase of the Shares or that result from Purchaser, any Affiliates of Purchaser, Seller or either of the Seller ~~Accrued Income~~ Subsidiaries engaging in any activity or transaction that would cause the transactions contemplated by this Agreement to be treated as a purchase or sale of assets of the Seller Subsidiaries for federal, state, local or other Tax purposes, and (II) any Taxes imposed on either of the Seller Subsidiaries or ~~Purchaser Accrued Income Taxes,~~ for which either of the Seller Subsidiaries may otherwise be liable as ~~applicable, attributable to such Income Tax Return as reflected~~ a result of transactions occurring on the ~~Final~~ Closing ~~Statement~~ Date that are properly allocable (based on, among other relevant factors, factors set forth in Treasury Regulation §1.1502-76(b)(1)(ii)(B)) to the ~~“Pre-~~portion of the Closing ~~Income Tax Amount”~~Date after the Closing (Taxes described in clauses (I) and ~~deliver such statement to Seller Parent and Purchaser Parent~~(II) of this proviso, ~~as applicable~~hereinafter “Excluded Taxes”). Purchaser ~~Parent or~~ and Seller ~~Parent~~agree that, 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~~ transaction described in clause (II) of the preceding sentence, Purchaser and Seller and all persons related to Purchaser and Seller under Code §267(b) immediately after the Closing shall treat the transaction for all federal income Tax purposes (in accordance with Treasury Regulation §1.1502-76(b)(1)(ii)(B)), and (to the extent permitted) for other income Tax purposes, as occurring at the beginning of the day following the Closing Date. Seller shall be entitled to any refund of (or credit for) Taxes allocable to any Pre-Closing ~~Income~~ Tax ~~Amount attributable to such Income Tax Return that was included on the Final Closing Statement, the~~ Period. (b) Purchaser shall ~~within five~~ indemnify, defend and hold harmless the Seller Indemnified Parties from, against and with respect to, any Loss of any kind or character, arising out of or in any manner incident, relating or attributable to, (5A) ~~Business Days following the finalization~~ all Taxes of the ~~Final Pre-~~Seller Subsidiaries, or for which the Seller Subsidiaries may otherwise be liable, for any taxable year or period that begins after the Closing ~~Income Tax Amount hereunder (i) pay to Seller Parent the amount of such difference~~ Date and, with respect to ~~a Conveyed Subsidiary and their Subsidiaries~~ any Straddle Period, the portion of such Straddle Period beginning after the Closing Date 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.B)

Appears in 1 contract

Samples: Asset Purchase Agreement (Integrated Alarm Services Group Inc)

Tax Indemnification. Subject to the limitations set forth in Section 5.9(g) below, and except as provided in Section 5.9(a) of this Agreement, the Company Securityholders shall, severally and not jointly, by offset in accordance with the terms set forth herein indemnify and defend the Indemnified Persons, and hold them harmless from and against any and all Damages attributable to (i) ~~Subject to Section 6.5(d)(v), from and after~~ all Taxes (or 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~~non-payment thereof) ~~(collectively, the “Purchaser Tax Indemnified Parties”) from and against all liability, without duplication, for (1) Taxes~~ of the ~~Conveyed Subsidiaries~~ Company and ~~their Subsidiaries~~ each Company Subsidiary for ~~any~~ all Pre-Closing Tax ~~Period~~ Periods (~~including any~~ which includes, without limitation and for the avoidance of doubt, all Taxes ~~payable in respect of an election under Section 965(h)~~ of the ~~Code~~Company and each Company Subsidiary arising or accruing up through and including the Closing Date as a result of the transactions contemplated by this Agreement or the Option Agreement, and all Taxes of the Company and each Company Subsidiary arising after the Closing Date solely to the extent resulting from any recharacterization of payments to Company Securityholders pursuant to the Option Agreement or this Agreement in consideration for their capital stock of the Company), (2ii) any liability for 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~~ each 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~~ Company Subsidiary (or any ~~Subsidiary thereof~~predecessor of the Company or any Company Subsidiary) is ~~liable under~~ or was a member, on or prior to the Closing Date, including pursuant to Treasury Regulation Section 1.1502-6 (or a any analogous or similar ~~provision of~~ state, local or foreign ~~Law)~~law or regulation, or (iii) all Taxes of any person imposed on any Indemnified Person 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) any settlement~~ rule or regulation as the result of ~~any intercompany accounts of Seller Parent~~ transactions 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 events occurring with respect to the ~~payment~~ Company or a Company Subsidiary on or prior to the Closing Date, (iv) all employer Taxes associated with payments in respect of Company Options, exercises of Company Options, or other transaction-related compensation arising in contemplation of, or in connection with, the transactions contemplated by this Agreement and the Option Agreement, (v) all Taxes of the ~~Purchase Consideration or~~ Company and any ~~amounts payable~~ Company Subsidiary attributable to ~~Seller Parent pursuant~~ the Divestiture, (vi) any reduction in the total amount of Company NOLs determined as of the Closing Date (prior to ~~Section 2.8 or Section 2.9~~the application of any usage limitations under the Code and its regulations) to an amount less than the difference between $[*] and the aggregate amount of income and gain recognized by the Company in connection with the Divestiture (not to exceed $[*]), ~~including~~ and any ~~penalties imposed on Purchaser~~ reduction in the actual amount of orphan drug and research and development tax credits of the Company determined as ~~a result~~ * Confidential treatment requested. of ~~Purchaser’s failure to deduct or withhold~~ the Closing Date below $[*] (any such ~~amounts that Purchaser (~~reduction of Company NOLs or Tax credits, 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“Tax Benefit Reduction”), (~~8) Taxes arising~~ vii) any limitation on the Indemnified Persons’ ability to use Company NOLs or tax credits (an “Additional Limitation”) under Sections 382 or 383 of the Code (or analogous state income tax laws) resulting solely from ~~any~~ an “ownership change” of the Company within the meaning of Section 382(g) of the Code occurring on or prior to the Closing Date, other than (A) such a limitation resulting solely from the closing of the Merger or (B) such a limitation, if any, resulting solely from execution of the Option Agreement, and (viii) the 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)2.11 hereof. (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

Samples: Merger Agreement (Aptalis Pharma Inc)

Tax Indemnification. (ia) Subject to the provisions of Section ~~6.5(d)(v), from and after the Closing~~11.08, Seller ~~Parent agrees to~~ shall be solely liable for, shall pay and shall protect, defend, indemnify and hold harmless ~~Purchaser and its Subsidiaries (including~~ the ~~Conveyed Subsidiaries~~ Company, Dxxxx, Buyer and their ~~Subsidiaries after the Closing Date) (collectively, the “Purchaser Tax Indemnified Parties”)~~ respective Affiliates from and against ~~all liability, without duplication, for~~ the following Taxes and Losses: (1i) Taxes (and related Losses) imposed on or relating to the Company or Dxxxx (or the Assets or operations of the ~~Conveyed Subsidiaries and their Subsidiaries for~~ Company or Dxxxx) that arise out of, relate to or are otherwise attributable to any Pre-Closing Tax Period; (ii) any Tax (or related Loss) imposed pursuant to Treasury Regulation section 1.1502-6 or any similar provision of foreign, state or local law as a result of the Company or Dxxxx having filed a Tax Return with any other Person on a consolidated, combined, unitary or similar basis or having been a member of any such group in a Pre-Closing Tax Period (including any liability for Taxes ~~payable~~ resulting from an “intercompany transaction” in respect of ~~an election under Section 965(h~~which gain was deferred pursuant to Treasury Regulation section 1.1502-13(a)(2) 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 (~~predecessor thereof or a any analogous or similar provision of under state, local or foreign Law)); (iii) all Taxes and Losses (including any Taxes that may be imposed on the holder of any Insurance Contracts or Annuity Contracts) incurred by Buyer, any Affiliate of Buyer, the Company or ~~as a transferee or successor or by Contract (other than Contracts that do not relate primarily to Taxes)~~Dxxxx resulting from, ~~(4) Taxes~~ arising out of or based upon an inaccuracy or breach by Seller, the Company or Dxxxx of any representation or warranty made herein (as if made on the Closing Date); (iv) all Taxes and Losses incurred by Buyer, any Affiliate of Buyer, the Company or Dxxxx resulting ~~from any~~ from, arising out of or based upon a breach by Seller, Company or Dxxxx of any covenant or agreement ~~of Seller Parent~~ contained or ~~any of its Affiliates contained~~ provided in this ~~Agreement~~Agreement or the Ancillary Agreements; (v) any Taxes incurred by the Company or Dxxxx as a transferee, successor or by contract (5including without limitation any Tax Sharing Agreements) ~~Taxes for~~ that relate to a transaction or agreement entered into by the Company or Dxxxx in a Pre-Closing Tax ~~Period~~ Period; (vi) all Taxes and related Losses 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 relate 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~~Agreement and the Ancillary Agreements, ~~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~~ any other transaction 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 occurs 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~~ or any transaction that is undertaken at the direction or for the benefit of Seller (including without limitation, any such Taxes relating to Buyer’s acquisition of the Surplus Debentures or assumption of the obligations assumed pursuant to Section 2.02(a)(ii)); and (vii) Seller’s allocable portion of Transfer Taxes as provided in Section 6.05 (items (i) – (vii) being referred to as a “Tax Loss”). Except as provided above, Buyer shall be solely liable for, shall pay and shall protect, defend, 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)~~ Seller for any other Taxes that are imposed on the Company or Dxxxx in a Post-Closing 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 Period. The term “Pre-Closing Tax Period~~, (3) Taxes of any Person for a Pre-Closing Tax Period for which Purchaser (~~” shall mean all taxable periods or ~~any Subsidiary~~ portions 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 commenced 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 end on or before the ~~period beginning after~~ end of the Closing ~~Date in proportion to the number of days in each period~~Date. (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

Samples: Stock and Asset Purchase Agreement (Standard Management Corp)

Tax Indemnification. (ia) ~~Subject to Section 6.5(d)(v), from~~ From and after the Closing, Seller ~~Parent agrees~~ shall (without duplication with any other payment made pursuant to this Agreement) be liable for, and shall indemnify each Purchaser Indemnitee (without duplication) against and hold it harmless ~~Purchaser and its Subsidiaries~~ from any Losses to the extent arising or resulting from any Taxes (~~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~~ Company or the Company Subsidiary attributable to any Pre-Closing Tax Period and (~~including~~ ii) for which the Company and/or the Company Subsidiary are secondarily liable as a result of having been a member of an affiliated, consolidated, combined, unitary or aggregate group of Seller or any affiliate of Seller; provided that any such Taxes have not been treated as a liability in the calculation of the Closing Working Capital; provided, further, that notwithstanding anything to the contrary in this Agreement, Seller shall not be liable under this Section 6.03 to the extent any such Taxes are attributable to a change in applicable Law or a change in any published practice of any Taxing Authority that becomes effective after the Closing Date. For the avoidance of doubt, any Taxes ~~payable in respect~~ arising to the Company or the Company Subsidiary under section 179 TCGA 1992 (company ceasing to be member of ~~an election under Section 965(h)~~ group), sections 344 and 345 of the ~~Code~~Corporation Tax Act 2009 ("CTA 2009") (transferee leaving the group after replacing transferor as party to loan relationship), section 631 CTA 2009 (~~2) Taxes~~ transferee leaving the group after replacing transferor as party to derivative contract), section 780 CTA 2009 (company ceasing to be a member of ~~any Seller (other than any Transfer Taxes and VAT for which Purchaser is responsible hereunder) including~~group), ~~Taxes (other than Taxes~~ paragraph 3 of Schedule 10 of the ~~Conveyed Subsidiaries~~ Finance Act 2003 ("FA 2003") (withdrawal of group relief) and ~~their Subsidiaries~~paragraph 9 of Schedule 10 FA 2003 (withdrawal of reconstruction or acquisition relief) ~~imposed with respect to, arising out~~ as a result of ~~or relating~~ the transfer of the Shares by the Seller shall be treated as being attributable 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). (iib) ~~Subject to Section 6.5(d)(v), from~~ From and after the Closing, Purchaser ~~Parent~~ shall be liable for, and shall indemnify each Seller Indemnitee (without duplication) against and hold it harmless from any Losses to the ~~Purchaser Tax Indemnified Parties~~ extent arising or resulting from ~~and against all liability, without duplication, for (1) all~~ Taxes of ~~Purchaser Parent and its Affiliates~~ the Company or the Company Subsidiary attributable to: (~~other than Purchaser and its Subsidiaries~~i) ~~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, ; (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 (xii) any ~~settlement of any intercompany accounts of Purchaser~~ transactions occurring on 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~~ 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 “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; and (iii) ~~To the extent permitted or required~~ any breach by ~~applicable Law, the taxable year~~ Purchaser 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 its obligations under this Agreement~~, in~~ . (c) In the case of any Straddle Period: (Ai) real, personal and intangible property Taxes ("Property ~~Taxes allocable to~~ Taxes") of the Company or the Company Subsidiary for 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 calendar days during the Straddle Period that are in the Pre-Closing Tax Period to and the denominator of which is the number of all calendar days in the ~~entire~~ Straddle Period; and (Bii) Taxes of the Company or the Company Subsidiary (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 day preceding 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~~ indemnity obligation 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 Taxes to be made pursuant to this Section ~~6.5(d)~~ 6.03 shall be ~~made~~ paid within ~~thirty (30)~~ 30 business days after ~~the indemnified party~~ any Purchaser Indemnitee or Seller Indemnitee claiming it is entitled to indemnification under this Section 6.03 makes written demand upon the ~~indemnifying~~ other party, but in no case earlier than five ~~(5) Business Days~~ business days prior to the date on which the relevant Taxes are required to be paid to the ~~applicable~~ relevant 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

Samples: Share Purchase Agreement (Avon Products Inc)

Tax Indemnification. (ia) ~~Subject to Section 6.5(d)(v)~~MLIM Parent 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~~ BlackRock Indemnified ~~Parties”)~~ 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~~), (2v) ~~Taxes of~~ any ~~Seller (other than any Transfer~~ and all Taxes and ~~VAT for which Purchaser is responsible hereunder) including,~~ Losses related to Taxes ~~(other than Taxes of the Conveyed Subsidiaries and their Subsidiaries) imposed with respect to, arising out~~ of or relating to the ~~Purchased Assets~~ ownership, operation or conduct of MLIM Business Entities or the ~~Business~~ Assets for ~~a Pre-Closing~~ any Tax ~~Period~~year or portion thereof ending on or prior to the MLIM Contribution, (3w) any and all United Kingdom Taxes ~~of any Person~~ and Losses related to United Kingdom Taxes (~~other than the Conveyed Subsidiaries and their Subsidiaries~~i) for which a ~~Pre-Closing Tax Period for which any Conveyed Subsidiary (or any Subsidiary thereof)~~ UK Company is secondarily 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 having 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~~ purpose prior to 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~~ the provision of non-cash benefits prior to Closing to employees, (x) any and all Taxes and Losses relating to Taxes arising out of (i) any breach of or any ~~Subsidiary of Purchaser~~ inaccuracy in any representation or warranty (~~other than~~ without giving effect to any ~~Conveyed Subsidiary~~ qualifiers or ~~a Subsidiary thereof~~exceptions relating to knowledge, materiality or MLIM Material Adverse Effect) at including the representations and warranties contained in Exhibit 3.20 or (ii) any ~~time ceasing to be a member~~ breach 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 covenant relating 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 made by ~~Seller~~ MLIM Parent or any of its Affiliates, ~~other than~~ (y) any ~~such action~~ and all Taxes and Losses relating to Taxes of or relating to the MLIM Transferors, the MLIM Business Entities or the Assets 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~~ directly arise as a result of ~~a change in applicable Law~~ entering into this Agreement or Closing other than Transfer Taxes for which BlackRock is liable pursuant to Section 8.7, or (~~a “Seller Tax Act”), (B~~z) ~~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~~ failure on the ~~Closing Date that were available, or would have been available but for their prior utilization by Purchaser~~ part of MLIM Parent or any of its Affiliates ~~(including~~ to comply with the ~~Conveyed Subsidiaries and their Subsidiaries after~~ DCL recapture provisions set forth in Treasury Regulation Section 1.1503-2(g)(2)(vii) with respect to the ~~Closing)~~DCLs of the UK Entities, provided that MLIM Parent shall have no liability under Section 8.1(a) in relation to any Taxes or Losses related to United Kingdom Taxes, in either case of the UK Companies, to ~~offset~~ the extent that such Taxes or ~~otherwise reduce the applicable Tax Liability in respect of such Income Taxes~~ Losses (~~except any Tax Asset reflected as an asset~~ i) were provided for in the ~~Final Closing Statement and~~ Accounts of the UK Companies or were otherwise taken into account in determining the ~~calculation of~~ consideration payable for the ~~Final Purchaser Working Capital or the Final Purchaser Net Cash)~~MLIM Contribution, or (Dii) ~~Taxes~~ arise as a result of post Closing changes in law (excluding, for ~~which Seller Parent is responsible under Section 6.5(d)(i~~the avoidance of doubt, any judicial decision). , generally published concession or practice of any Governmental Authority having retrospective effect, or (iii) ~~To the extent permitted~~ are penalties 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~~ interest which arise as ~~closing on (and including) the Closing Date. Otherwise, for purposes of this Agreement, in the case~~ a result of any ~~Straddle Period: (A) Property Taxes allocable to the Pre-Closing Tax Period shall be computed based upon the ratio~~ unreasonable delay or default by a Black- 85 Table 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.Contents

Appears in 1 contract

Samples: Transaction Agreement and Plan of Merger

Tax Indemnification. (ia) ~~Subject to Section 6.5(d)(v~~Upon the terms and conditions of this Agreement, if the Closing occurs, the Sellers (each, a “Seller Tax Indemnifying Party), ~~from~~ jointly and ~~after the Closing~~severally, ~~Seller Parent agrees~~ shall pay or cause to be paid, and shall indemnify each Purchaser Tax Indemnified Party and agree to protect, save and hold ~~harmless~~ each Business Subsidiary, Purchaser and ~~its Subsidiaries~~ their respective Affiliates and the stockholders, members, general partners, limited partners, officers, directors, and employees of each of them (~~including~~ in each case, other than the ~~Conveyed Subsidiaries and their Subsidiaries after the Closing Date~~Sellers) (~~collectively~~any such person entitled to indemnification hereunder, ~~the~~ a “Purchaser Tax Indemnified ~~Parties~~Party”) harmless from and against any and all ~~liability~~liabilities, costs, expenses (including, without ~~duplication~~limitation, ~~for (1) Taxes~~ reasonable expenses of ~~the Conveyed Subsidiaries~~ investigation 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~~reasonable attorneys’ fees and expenses), ~~(2) Taxes of any Seller (other than any Transfer Taxes and VAT for which Purchaser is responsible hereunder) including~~losses, ~~Taxes (other than Taxes of the Conveyed Subsidiaries and their Subsidiaries) imposed with respect to~~damages, assessments, settlements or judgments arising out of or ~~relating~~ incident to (including costs incurred in the ~~Purchased Assets~~ good faith contest of the imposition, assessment or assertion of): (i) all Taxes of the Business ~~for~~ Subsidiaries allocable to a Pre-Closing ~~Tax~~ Period; (ii) all Taxes of the Sellers or of a Relevant Group that includes a Business Subsidiary and ARM or an Affiliate of ARM that is not a Business Subsidiary, (3iii) all Taxes allocable to a Pre-Closing Period of any Relevant Group that includes only Business Subsidiaries, (iv) all Taxes relating to the Business or the Business 1-NY/2171027.1 56 Assets for any period or portion of a period ending on or prior to the Closing Date, (v) all Taxes of any Person ~~(other than the Conveyed Subsidiaries and their Subsidiaries) for a Pre-Closing Tax Period~~ for which ~~any Conveyed~~ a Business Subsidiary ~~(or any Subsidiary thereof)~~ is liable (W) under Treasury ~~Regulation~~ Regulations Section 1.1502-6 of the Treasury Regulations (or a any similar provision of state, local or foreign Law)) with respect to a consolidated, combined, unitary or similar Tax group of which such Business Subsidiary, or a predecessor thereof, was a member prior to the Closing Date or on the Closing Date prior to the Closing, (X) as a transferee or successor by operation of Law, where such Business Subsidiary became a transferee or successor simultaneous with (if the transaction giving rise to such transferee or successor liability was arranged by ~~Contract (other than Contracts that do not relate primarily~~ a Seller) or prior to ~~Taxes)~~the Closing, (4Y) by contract, where such contract was entered into simultaneous with (if the entry into such contract was arranged by a Seller ) or prior to the Closing or (Z) otherwise, where such Business Subsidiary’s liability is the result of circumstances prior to the Closing, (vi) all Taxes ~~arising out of or~~ resulting from a Permitted Section 338 Election, an Announced Restructuring Action or an Other Transaction Restructuring Action, (vii) a failure of a representation or warranty set forth in Section 4.11 hereof, or a Tax-related representation or warranty of a Seller set forth in Annex B, to be true on the date hereof or on the Closing Date (as determined without regard to any qualifiers contained in such representation or warranty or in the introductory language to Section 4.11 relating to knowledge or materiality, whether expressed by reference to “Knowledge,” “material” or “Business Material Adverse Effect” or otherwise) or a breach of ~~any~~ a covenant or agreement ~~of Seller Parent~~ set forth in Section 6.05(c) or ~~any of its Affiliates contained~~ 6.20 hereof or a Tax-related covenant or agreement set forth in ~~this Agreement~~Annex C, (5viii) ~~Taxes for~~ the failure of any Relevant Group, Business Subsidiary or Asset Seller to timely file or provide to any Person or to otherwise comply with any requirements relating to a ~~Pre-Closing~~ Tax ~~Period imposed on~~ Return, which failure, in the case of a Business Subsidiary or a Relevant Group that includes only Business Subsidiaries, occurs prior to the Closing, (xix) 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~~ Sellers are 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~~ 12.07 hereof, (x) the remitting to a governmental authority or ~~Section 2.9~~other appropriate person of amounts withheld by a Business Subsidiary from a payment prior to the Closing, ~~including~~ where (a) the liability to so remit was not treated as a Current Liability actually taken into account in determining Final Working Capital and (b) the amount withheld and retained was not actually excluded from being treated as a Current Asset in determining Final Working Capital, (xi) any ~~penalties imposed on~~ liability of a Purchaser for Taxes of another Person as a result of ~~Purchaser’s failure~~ the transfers provided for herein (including any liability with respect 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~~ failure to comply with any bulk sales or ~~its Affiliates for which Purchaser is responsible pursuant to Section 10.3~~similar Law of any Governmental Authority), (~~8) Taxes arising from~~ xii) any ~~breach~~ failure of Sellers to comply with the provisions of this Article XII and (xiii) any ~~representation or warranty contained in Section 4.16(k), (9) Taxes arising~~ liability imposed on Purchasers as a result of ~~any Conveyed Subsidiary~~ making payments under Article III hereof to ARM, rather than to ARMCo or ~~any Subsidiary of any Conveyed Subsidiary at any time ceasing to be a member of a group for~~ another Seller. Notwithstanding the ~~purposes of any Tax~~foregoing, ~~of which group~~ the Seller ~~Parent or any Subsidiary of Seller Parent is or was also a member and (10) any costs and expenses~~Tax Indemnifying Parties will not indemnify, 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 defend or hold harmless any Purchaser Tax Indemnified Party ~~from and against any liability pursuant to this Section 6.5(d)(i)~~ for (A1) Taxes attributable to any action of a Business Subsidiary or Purchaser taken on the Closing Date simultaneous with or after the ~~Closing by Purchaser~~Closing, ~~any~~ that is (i) outside the Ordinary Course of ~~its Affiliates~~ Business, (~~including~~ ii) neither provided for in this Agreement (with actions provided for in this Agreement including, without limitation, (a) such acts as may be undertaken to comply with the ~~Conveyed Subsidiaries and their Subsidiaries~~covenants set forth in Section 6.20 hereof, (b) the termination of Tax sharing agreements or arrangements as provided for in Section 12.04(e), ~~or any transferee of~~ (c) the actions provided for in Section 6.14 and 6.15, (d) all Restructuring Actions and (e) such actions as Purchaser and Seller may agree with respect to after signing, and (iii) not arranged by Sellers or any of ~~its~~ their Affiliates (~~including the Conveyed Subsidiaries and their Subsidiaries)~~an action described in this sentence, 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”), (B2) Taxes ~~that were reflected~~arising from the sale by ArvinMeritor Emissions Technologies GmbH of ArvinMeritor Emissions Technologies Kft pursuant to this Agreement and the distribution by ArvinMeritor Emissions Technologies GmbH, ~~accrued or reserved for~~ in connection with the ~~Final Closing Statement~~Closing, ~~Final Business Working Capital~~of the proceeds of such sale as a distribution in respect of its shares, ~~or Final Business Net Cash, (C) Income Taxes~~ except to the extent that such Taxes result from a ~~Conveyed Subsidiary~~ failure of a representation 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 warranty set forth 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 CashSection 4.11(hh), ~~or (D) Taxes for which Purchaser Parent is responsible under Section 6.5(d)(ii).~~ (ii) ~~Subject~~ or (jj) to be true or a breach of the covenant set forth in 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~~6.20(f) 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 Periodhereof, (3) Taxes arising from the distribution by ArvinMeritor Emissions Technologies GmbH, in connection with the Closing, of ~~any Person~~ proceeds from a securitization arranged as part of Purchaser’s direct or indirect financing of acquisitions provided for herein, except to the extent that such Taxes result from a ~~Pre-Closing Tax Period for which Purchaser (~~failure of a representation or ~~any Subsidiary thereof other than any Conveyed Subsidiaries and their Subsidiaries) is liable under Treasury Regulation~~ warranty set forth 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~~4.11(hh), (4ii) ~~Taxes arising out of~~ or ~~resulting from any~~ (jj) to be true or a breach of ~~any~~ the 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)~~6.20(f) hereof, (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 (104) any costs ~~and expenses, including reasonable legal and accounting fees and expenses, attributable to any~~ of contesting an item described in ~~clauses (1) through (9) (any~~ the preceding sentence incurred at the direction of a Purchaser or a Purchaser Affiliate after a Seller Tax Indemnifying Party has agreed to pay the full amount of 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 Affiliatesitem without further contest, other than any such ~~action that~~ costs associated with the making of such payment or the termination of the related proceeding. (1b) ~~is in~~ Upon the ~~ordinary course~~ terms and conditions of ~~business, (2) is expressly permitted or contemplated by~~ this Agreement, if the Closing occurs, Purchasers and, following the Closing, the Business Subsidiaries, jointly and severally, shall pay or ~~(3) is required~~ cause to be ~~taken~~ paid, and shall indemnify each Seller Tax Indemnitee and agree to protect, save and hold each Seller and their respective Affiliates, stockholders, members, general partners, limited partners, officers, directors, and employees (any such person entitled to indemnification hereunder, a “Seller Tax Indemnitee”) harmless from and against any and all liabilities, costs, expenses (including, without limitation, reasonable expenses of investigation and reasonable attorneys’ fees and expenses), losses, damages, assessments, settlements or judgments arising out of or incident to (including costs 1-NY/2171027.1 57 incurred in ~~order~~ the good faith contest of the imposition, assessment or assertion of): (i) all Taxes of the Business Subsidiaries allocable to ~~comply with applicable Law~~ a Post-Closing Period or imposed 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~~ operation of the Business Assets or the ~~Final Purchaser Net Cash~~Business following the Closing, ~~(C) Income Taxes~~ except, in each case, 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 Sellers are 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) indemnify in respect of such Taxes pursuant to this Article XII, (~~or related costs and expenses~~ii) ~~shall~~ all Taxes attributable to any Purchaser Tax Act, (iii) any Transfer Taxes for which Purchasers are responsible under Section 12.07 hereof, (iv) any aggregate net increase in ~~no event exceed an amount equal to (A) the amount of such~~ Taxes (~~or related costs and expenses~~over what they would have been had the shares in Zeuna Starker Srl been acquired instead) ~~for which~~ resulting from the ~~Purchaser Tax Indemnified Parties would otherwise be entitled to indemnification pursuant to~~ making of the election provided in Section ~~6.5(d~~6.20(b), ~~as if such Conveyed Subsidiary~~ (or v) any ~~Subsidiary thereof~~aggregate net increase in Taxes (over what they would have been had this Agreement provided for a purchase of the German Minority Interests at the Closing) ~~were wholly owned by Seller Parent, multiplied by (B)~~ from the ~~direct~~ use of the put and ~~indirect percentage ownership of Seller Parent of such Conveyed Subsidiary (or Subsidiary thereof) as of immediately prior~~ call options with respect to the ~~Closing. With respect~~ German Minority Interests, (vi) Taxes resulting from business restructuring actions 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 be undertaken at ArvinMeritor Emissions Technologies, S.A. following the Closing, other than any such Taxes as may be imposed on a Seller or a Seller Affiliate, (vii) any aggregate net increase in Taxes (over what they would have been had the shares of ArvinMeritor Emissions Technologies GmbH been acquired under this Agreement while ArvinMeritor Emissions Technologies GmbH still held the interests in ArvinMeritor Emissions Technologies Kft) resulting from the sale provided for herein of the interests in ArvinMeritor Emissions Technologies Kft, provided that for purposes of determining such excess, any Taxes related to the sale provided for herein of the interests in ArvinMeritor Emissions Technologies Kft attributable to a failure of a representation or warranty set forth in Section 4.11(hh), (ii) or (jj) to be true or a breach of the covenant set forth in Section 6.20(f) hereof shall be disregarded and (viii) any Taxes arising from the distribution by ArvinMeritor Emissions Technologies GmbH in connection with the Closing of proceeds of a securitization arranged as part of Purchaser’s direct or indirect financing of acquisitions provided for herein, except any such Taxes attributable to a failure of a representation or warranty set forth in Section 4.11(hh), (ii) or (jj) to be true or a breach of the covenant set forth in Section 6.20(f) hereof; provided that the aggregate net Taxes indemnified hereunder under each of clause (iv), (v), (vi), (vii) and (viii) hereof, in each case, may not exceed the aggregate net increase in Taxes described in such clause to the Seller Tax Indemnitees (so that effects on different Seller Tax Indemnitees are netted on an aggregate basis). Notwithstanding the foregoing, Purchasers and the Business Subsidiaries shall not indemnify a Seller Tax Indemnitee (a) for any item which a Seller Indemnifying Party has an indemnification ~~obligations of Purchaser Parent pursuant to Section 6.5(d)(ii~~obligation under this Article XII, (b) in respect of any Tax liability of a Joint Venture or a Subsidiary of a Joint Venture, (c) for any costs of contesting an item described in clause (i), (ii) or (iii) incurred at the direction of a Seller, a Seller Tax Indemnitee or an Affiliate of either a Seller or a Seller Tax Indemnitee after a Purchaser or Business Subsidiary has agreed to pay the full amount of such item without further contest, other than any such costs associated with the making of such payment or the termination of the related proceeding or (d) for any Tax arising from a Announced Restructuring Action or an Other Transaction Restructuring Action. (c) Notwithstanding any other provision of this Agreement to the contrary: (a) this Article XII together with Section 3.04 shall govern all matters relating to Taxes or which are otherwise addressed herein, (b) the obligations of the parties set forth in this Article XII shall not be subject to the terms of Article XIV (other than Sections 14.04 and 14.05; provided, however, that (x) the provisions of Section 14.05(a) relating to adjustment for Tax effects shall not apply to payments pursuant to Sxxxxxx 00.00, Xxxxxxx 00.00(x)(x), (xx), (xxx), (xx) or ~~related costs~~ (ix), Section 12.02(b)(i) or (iii), Section 12.06 or Section 12.07 and ~~expenses~~(y) ~~shall~~ in no event ~~exceed an amount equal to (A) the amount of such Taxes (or related costs and expenses)~~ shall any adjustment for ~~which the Purchaser~~ Tax ~~Indemnified Parties would otherwise be entitled to indemnification~~ effects pursuant to the provisions of Section ~~6.5(d)~~14.05(a) take into account, 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 an indemnity claim under Section 12.02(a)(vi) any Tax benefits to the ~~relevant Pre-Closing Tax Period~~ Purchasers or any of their Affiliates arising from a Permitted Section 338 Election or the ~~portion~~ Transaction Restructurings (including, without limitation, the making of any ~~Straddle Period ending on and including~~ “check the ~~Closing Date (~~box” elections in connection with the ~~“Final Pre-Closing Income Tax Amount”) and (ii) the amount~~ provisions 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 applicableSection 6.20 hereof). 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~~ of 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 inconsistency between this ~~Agreement (including pursuant to this Section 6.5, Section 6.6~~ Article XII 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~~ XIV, this Article XII 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~~control.

Appears in 1 contract

Samples: Purchase Agreement (Arvinmeritor Inc)

Tax Indemnification. ~~(i) Subject to Section 6.5(d)(v)~~Sellers shall indemnify the Company, ~~from~~ Buyer, and ~~after the Closing, Seller Parent agrees to indemnify~~ each Buyer Indemnitee 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 3.22; (b) any Loss attributable to any breach or violation of, or failure to fully perform, any covenant, agreement, undertaking or obligation in ARTICLE VI; (c) all ~~liability, without duplication, for (1)~~ Taxes of the ~~Conveyed Subsidiaries and their Subsidiaries~~ Company or any Subsidiary or relating to the business of the Company or any Subsidiary 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~~ 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 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~~predecessor of the Company or any Subsidiary) 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 (e) any and all Taxes of any person imposed on the Company or ~~a similar provision~~ any Subsidiary arising under the principles of ~~state, local or foreign Law), or as a~~ 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 that do not relate primarily to Taxes), (4~~including attorneys’ and accountants’ fees) incurred in connection therewith. Sellers shall reimburse Buyer for any Taxes ~~arising out~~ of ~~or resulting from any breach of any covenant or agreement of Seller Parent~~ the Company or any Subsidiary that are the responsibility of ~~its Affiliates contained~~ Sellers pursuant to this Section 6.03 within ten Business Days after payment of such Taxes by Buyer or the Company or any Subsidiary. Notwithstanding the foregoing or anything else to the contrary in this Agreement, it is understood and agreed that Sellers shall not be obligated to indemnify Buyer in respect of (5i) accrued and unpaid property Taxes ~~for a Pre-Closing Tax Period imposed on~~ consistent with past practice in respect of restaurant locations (~~x) any transaction effected pursuant to Section 2.3(b)~~whether open or closed, (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 and whether 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 Prepre-Closing ~~Tax Period, (3) Taxes of any Person for a Pre~~or post-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”periods) and (ii) ~~the amount of the Seller Accrued Income~~ accrued and unpaid payroll 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 consistent 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.past practice

Appears in 1 contract

Samples: Membership Interest Purchase Agreement (Fat Brands, Inc)

Tax Indemnification. ~~(i) Subject~~ The Signing Stockholders 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 Owners Indemnified Parties harmless ~~Purchaser~~ from and ~~its~~ against, and pay to the Owners Indemnified Parties the amount of any and all Losses in respect of (i) all Taxes of the Company and the Subsidiaries (~~including the Conveyed Subsidiaries and their Subsidiaries after~~ or any predecessor thereof) (A) 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 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~~ portion of any ~~Subsidiary thereof had any Tax Assets as of~~ Straddle Period ending at the close of business on the Closing Date (determined as provided in Section 9.6(c)), but only to the extent 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~~ are not included in the ~~Final Closing Statement and taken into account~~ Company’s liability for Taxes in ~~the calculation~~ accordance with GAAP as 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 Date; (ii) ~~Subject to Section 6.5(d)(v), from~~ any 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~~ a consolidated, combined or unitary group of which the Company or 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 Subsidiary (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 Subsidiary (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~~ ; (~~other than Contracts that do not relate primarily to Taxes), (4~~iii) ~~Taxes arising out of or resulting from any breach~~ the failure of any of the representations and warranties contained in Section 5.10 to be true and correct in all material respects or the failure of the Signing Stockholders or the Company (prior to Closing) to perform any covenant ~~or agreement of Purchaser Parent, Purchaser or their respective Affiliates~~ contained in this ~~Agreement,~~ Agreement required by this Agreement to be performed by the Signing Stockholders or the Company (5prior to Closing) ~~Transfer Taxes for which Purchaser Parent is responsible under Section 6.5(j),~~ with respect to Taxes; (~~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~~iv) any ~~settlement of~~ failure by the Signing 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) all Taxes required to be ~~deducted or withheld with respect to any amounts payable to Purchaser Parent~~ borne by the Signing Stockholders pursuant to Section ~~2.8 or Section 2.9, including~~ 9.6(e); and (v) any ~~penalties imposed on Purchaser~~ Tax liability arising out of the triggering of an ELA 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 disposition 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 stock of the ~~Final Purchaser Working Capital or~~ Agency and 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~~ liquidation 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 periodPlantation. (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

Samples: Merger Agreement (Fortegra Financial Corp)

Tax Indemnification. Notwithstanding anything in this Agreement to the contrary: (ia) ~~Subject to Section 6.5(d)(v)~~To the extent of the contents of the Escrow Fund available for distribution in accordance with the terms hereof and the Escrow Agreement, from and after the Closing, ~~Seller Parent agrees to indemnify~~ the REIT Indemnified Parties shall be indemnified, saved and ~~hold~~ held 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~~ Service Providers with respect to all Pre-Closing Tax Periods (which will be deemed Damages), (ii) all liability for Taxes of any person with whom any of the Service Providers, or their ~~Subsidiaries~~ Affiliates or any predecessor or affiliate thereof joins or has ever joined in filing any affiliated, consolidated, combined or unitary Tax Return (or any Inland Group Combined Return) for any Pre-Closing Tax Period and (~~including~~ iii) any ~~Taxes payable~~ and all Damages with respect to the breaches of representations and warranties set forth in ~~respect of an election under~~ Section ~~965(h) of~~ 4.6 and the ~~Code~~covenants set forth in Sections 5.1(c)(ii), 5.1(m), and 6.10. (2b) ~~Taxes of any Seller~~ IREIC shall indemnify, defend and hold harmless the REIT Indemnified Parties from (~~other than any Transfer Taxes and VAT~~ i) all liability for ~~which Purchaser is responsible hereunder) including, Taxes (other than~~ Taxes of the ~~Conveyed Subsidiaries and their Subsidiaries) imposed~~ Advisor with respect ~~to, arising out of or relating~~ to ~~the Purchased Assets or the Business for a~~ all Pre-Closing Tax ~~Period~~Periods (which will be deemed Damages), (3ii) all liability for Taxes of any ~~Person (other than~~ person with whom any of the ~~Conveyed Subsidiaries and~~ Advisor, or their ~~Subsidiaries) for a Pre-Closing~~ Affiliates or any predecessor or affiliate thereof joins or has ever joined in filing any affiliated, consolidated, combined or unitary Tax ~~Period for which any Conveyed Subsidiary~~ Return (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 SubsidiariesInland Group Combined Return) 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~~ any 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 all Damages with respect to the ~~relevant Pre-Closing Tax Period or the portion~~ breaches of ~~any Straddle Period ending on~~ representations 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 warranties 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 Advisor set forth in ~~Clause 10 of~~ Section 4.6 and 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~~covenants set forth in Sections 5.1(c)(ii), ~~Section 2.9 or this Section 6.5~~5.1(m), and 6.

Appears in 1 contract

Samples: Merger Agreement (Inland Retail Real Estate Trust 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

Samples: Merger Agreement (Deerfield Capital Corp.)

Tax Indemnification. ~~(i) Subject to Section 6.5(d)(v),~~ Seller shall indemnify the Buyer Indemnified Parties and hold them harmless from and ~~after the Closing~~against, 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~~ Loss 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 tokind or character, arising out of or in any manner incident, 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 (1i) all Taxes (or the non-payment thereof) 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 the Company 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 (~~all Taxable periods ending on 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 (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~~ such Straddle Period ending on and including the Closing Date (~~the “Final Pre~~"PRE-~~Closing Income Tax Amount”)~~ CLOSING TAX PERIOD"), and (ii) all Taxes of any member of an affiliated, consolidated, combined or unitary group of which the ~~amount~~ Company or any of its Subsidiaries (or any predecessor of any of the foregoing) is or was a member prior to the Closing Date solely as a result of Treasury Regulation ss.1.1502-6 or any analogous or similar state, local, or foreign law or regulation, PROVIDED, HOWEVER, that Seller ~~Accrued Income~~ shall not indemnify any of the Buyer Indemnified Parties or hold any of them harmless from or against, (I) any Taxes shown as a liability or ~~Purchaser Accrued Income Taxes, as applicable, attributable to such Income Tax Return as reflected~~ reserve on the Final Closing ~~Statement~~ Date Statement, (II) any Taxes that result from any actual or deemed election under Section 338 of the ~~“Pre-Closing Income Tax Amount”) and deliver such statement to Seller Parent and Purchaser Parent~~Code or any similar provisions of state, local or foreign law in connection with or as ~~applicable. Purchaser Parent~~ a result of the purchase of the Shares or ~~Seller Parent~~the deemed purchase of shares of any Subsidiary or that result from Buyer, ~~as applicable~~any Affiliates of Buyer, ~~shall have a period~~ the Company or any of ~~fifteen (15) Business Days to provide comments to a schedule prepared (~~its Subsidiaries engaging in any activity or ~~caused~~ transaction that would cause the transactions contemplated by this Agreement to be ~~prepared~~treated as a 42. purchase or sale of assets of the Company or any of its Subsidiaries for federal, state, local or other Tax purposes, and (III) by any Taxes imposed on the Company or any Subsidiary or for which the Company or any Subsidiary may otherwise be liable as a result of transactions occurring on the Closing Date that are properly allocable (based on, among other relevant factors, factors set forth in Treasury Regulation ss.1.1502-76(b)(1)(ii)(B)) to the portion of the Closing Date after the Closing (Taxes described in this proviso, hereinafter "EXCLUDED TAXES"). Buyer and Seller ~~Parent or Purchaser Parent~~agree that, 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~~ transaction described in clause (III) of the preceding sentence, the Company and all persons related to the Company under Code ss.267(b) immediately after the Closing shall treat the transaction for all federal income Tax purposes (in accordance with Treasury Regulation ss.1.1502-76(b)(1)(ii)(B)), and (to the extent permitted) for other income Tax purposes, as occurring at the beginning of the day following the Closing Date. Seller shall be entitled to any refund of (or credit for) Taxes allocable to any Pre-Closing ~~Income~~ Tax ~~Amount attributable to~~ Period in excess of any receivable for such ~~Income Tax Return that was included~~ Taxes shown as an asset on the Final Closing Date 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

Samples: Stock Purchase Agreement (Integrated Alarm Services Group 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 Acquiror and ~~hold harmless Purchaser and~~ each of its ~~Subsidiaries~~ Affiliates (including the ~~Conveyed Subsidiaries and their Subsidiaries~~ Company after the Closing Date) (collectively, the “~~Purchaser~~ Acquiror Tax Indemnified Parties”) and hold the Acquiror Tax Indemnified Parties harmless from and ~~against all liability~~against, without duplication, ~~for~~ (1i) ~~Taxes of the Conveyed Subsidiaries and their Subsidiaries for any Pre-Closing Tax Period (including~~ any Taxes ~~payable~~ imposed on 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 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) Company for any Pre-Closing Tax Period, (3ii) any Taxes imposed on or with respect to the Parent or any of its respective Affiliates, (iii) any Taxes of any ~~Person~~ other person (including Parent or any of its Affiliates (other than the Company)) for a any Pre-Closing Tax Period for which ~~Purchaser (or any Subsidiary thereof other than any Conveyed Subsidiaries and their Subsidiaries)~~ the Company is liable ~~under~~ pursuant to Treasury ~~Regulation~~ Regulations Section 1.1502-6 (or a any similar provision of state, provincial, local or foreign Law), or as a transferee or ~~successor~~ successor, by contract, assumption, operation of law or ~~by Contract (other than Contracts that do not relate primarily to Taxes)~~otherwise, (4iv) ~~Taxes~~ any Losses arising ~~out of~~ or resulting from a breach of any of the representations or warranties contained in Section 3.17 (without regard to any materiality limitation set forth therein or any disclosed exception thereto) or any of the covenants in Section 5.1(b)(xx) or Article 8, (v) any Taxes resulting from, attributable to, or arising in connection with any breach of any covenant or agreement ~~of Purchaser Parent~~of, ~~Purchaser~~ or ~~their respective Affiliates contained~~ any inaccuracy in ~~this Agreement, (5) Transfer Taxes for which Purchaser Parent is responsible under Section 6.5(j), (6) Taxes arising from any~~ or breach of any representation or warranty of, Parent, Member or the Company or any of their Affiliates contained in ~~Section 5.17(k~~this Agreement (without regard to any materiality limitation set forth therein or any disclosed exception thereto), (7vi) any Taxes for which Parent is responsible under Section 8.3, (vii) payment of any Tax as a result of any obligation to indemnify any other Person or as a result of any obligation under any agreement or arrangement entered into by the Company on or prior to the Closing Date, (viii) any withholding Taxes imposed on Acquiror, Merger Sub or any their Affiliates resulting from the transactions contemplated by this Agreement and the Earnout Agreement to the extent not withheld pursuant to Section 2.10, and (ix) reasonable costs for the preparation and filing of any Tax Return required to be filed by or with respect to the Company for a Pre-Closing Tax ~~Period imposed on (x)~~ Period; provided that Parent and Member shall not be required to pay or cause to be paid, or to indemnify or hold harmless the Acquiror Tax Indemnified Parties from and against any ~~settlement~~ Taxes to the extent such Taxes were included as a liability in the calculation of ~~any intercompany accounts of Purchaser~~ Closing Working Capital or ~~any Subsidiary of Purchaser,~~ Closing Indebtedness on the ~~one hand, and Purchaser Parent or any Subsidiary of Purchaser Parent~~ Closing Statement (~~other than Purchaser and its Subsidiaries), on the other hand,~~ as adjusted pursuant to Section ~~6.7~~ 2.6(c)) (amounts for which Parent or ~~(y) any transaction or step forming part of the Purchaser Internal Restructurings, (8) Taxes~~ Member is 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 indemnify Acquiror pursuant to this Section ~~6.5(d)(ii)~~8.1, ~~subject to~~ the ~~following proviso,~~ “~~Purchaser~~ Parent Indemnified Taxes”)~~; provided that Purchaser~~ . Notwithstanding the foregoing, Parent Indemnified Taxes shall not ~~be required to indemnify or hold harmless any Purchaser Tax Indemnified Party from and against any liability for~~ include (A) any Taxes ~~attributable to any action taken after the Closing~~ resulting from a breach by ~~Seller Parent~~ Acquiror or ~~any~~ its Affiliates 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) any 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~~ resulting from any ~~Subsidiary thereof had any Tax Assets as of the close of business~~ transactions 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)~~Closing outside the ordinary course. For the avoidance of doubt, ~~to offset~~ Taxes imposed on or ~~otherwise reduce the applicable Tax Liability~~ in respect of ~~such Income Taxes (except~~ the Company for 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~~ taking into account 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~~ taxable period ~~ended as of the close of business on~~ that includes the Closing Date ~~and~~all income Tax deductions (to the extent at least “more likely than not” deductible by the Company in such taxable period) that result from or are attributable to expenses, fees or payments that are made by the Member or its Affiliate in connection with the transactions contemplated by this Agreement, including all such expenses, fees or payments that are included in the ~~case~~ calculation of the Final Merger Consideration. Parent’s obligation to pay or cause to be paid any ~~Taxes of Conveyed Subsidiaries~~ amount under this Section 8.1(a)(ii), (~~and their Subsidiaries~~iv)-(vii) 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 deductionsix) shall be ~~allocated between the period ending on the Closing Date and the period beginning after the Closing Date in proportion~~ limited 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) amounts for which ~~the Purchaser Tax Indemnified Parties~~ Acquiror or its Affiliate 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 Closingliable. (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

Samples: Merger Agreement (Sunnova Energy International Inc.)

Tax Indemnification. Except to the extent treated as a liability in the calculation of Working Capital, Sellers shall (iseverally, but not jointly, based on each Seller’s Pro Rata Share) ~~Subject to Section 6.5(d)(v)~~indemnify Parent, ~~from~~ the Surviving Company, and ~~after the Closing, Seller Parent agrees to indemnify~~ each Purchaser Indemnitee 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, without duplication, for (1)~~ income Taxes of the ~~Conveyed Subsidiaries and their Subsidiaries~~ Group Companies or relating to the business of the Group Companies for ~~any~~ all Pre-Closing Tax ~~Period~~ Periods; (~~including any Taxes payable in respect of an election under Section 965(h~~b) ~~of the Code), (2)~~ all income 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~~ Group Company (or any ~~Subsidiary thereof~~predecessor of a Group 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 ~~a similar provision~~ any comparable provisions of foreign, state, or local ~~or foreign~~ Law~~), or as~~ ; (c) all income Taxes of any person imposed on a Group Company arising under the principles of transferee or successor liability or by Contract (other than ~~Contracts~~ a Contract entered into in the Ordinary Course of Business that do does not primarily relate ~~primarily~~ to Taxes), relating to an event or transaction occurring before the Closing Date, and (4d) all Taxes arising ~~out of or resulting~~ from ~~any breach of any covenant or agreement of Seller Parent or any of its Affiliates contained~~ the transactions contemplated by this Agreement and incurred by a Group Company (except to the extent otherwise set forth 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, excluding, for the avoidance of doubt, all Transfer Taxes. In each of the above cases, Sellers shall (3severally, but not jointly, based on each Seller’s Pro Rata Share) reimburse Parent for 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 the Group Companies that are the responsibility 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 Sellers pursuant to this Section ~~6.5(d)(ii~~8.10 within sixty (60) Business Days after Parent or the Surviving Company provides written notice to the Representative of the payment of such Taxes, which notice shall set forth the amount and type of such Taxes with reasonable specificity, and certified evidence of payment thereof. The limitations on indemnification set forth in Section 9.4, including the limitations set forth in Section 9.4(a) and Section 9.4(b), ~~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 apply 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 Authority8.10 mutatis mutandis. (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

Samples: Merger Agreement (Tyler Technologies 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

Samples: Asset Purchase Agreement (Educate Inc)

Tax Indemnification. (ia) ~~Subject to Section 6.5(d)(v), from~~ From and after the ~~Closing, Seller Parent agrees~~ Closing and subject to ~~indemnify~~ the applicable limitations contained in Section 12.2 and ~~hold harmless Purchaser and its Subsidiaries (including the Conveyed Subsidiaries and their Subsidiaries after the Closing Date) (collectively~~this Article XIII, the “Purchaser ~~Tax~~ Indemnified ~~Parties”) from~~ Parties shall be indemnified and held harmless, to the fullest extent permitted by applicable Law, from, against ~~all liability, without duplication, for~~ and in respect of any Damages to the extent actually incurred by the Purchaser Indemnified Parties and arising out of or as a result of any of the following: (1i) Taxes of the ~~Conveyed Subsidiaries and their Subsidiaries~~ Group Companies for ~~any~~ periods or portions thereof ending on or before the Closing Date (“Pre-Closing ~~Tax Period (including~~ Taxes”) or imposed on 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 Group Company 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 any similar ~~provision of~~ or corresponding federal, state, provincial, local or foreign ~~Law)~~Law with respect to the full taxable period that includes the Closing Date, by reason of such Group Company being, or ceasing to be, a member of any consolidated group including Seller or included in a consolidated or combined return of Seller; (ii) Taxes imposed on a Purchaser Indemnified Party as a ~~transferee~~ result of any breach of, or ~~successor~~ inaccuracy in, any representation or ~~by Contract~~ warranty set forth in Section 4.4; or (~~other than Contracts that do not relate primarily to Taxes), (4~~iii) ~~Taxes arising out of or resulting from~~ any breach of ~~any~~ or failure to perform a covenant or agreement of ~~Seller Parent or any~~ the Company set forth in Section 7.8. (b) For the avoidance of ~~its Affiliates contained~~ doubt, the obligation to indemnify for Taxes pursuant to Section 13.1(a) shall not require a duplicate payment of Tax amounts that have already been taken into account as current liabilities in the determination of Net Working Capital. Furthermore, notwithstanding anything to the contrary in this Agreement, ~~(5) Taxes~~ for ~~a Pre-Closing Tax Period imposed on (x) any transaction effected~~ purposes of determining Damages actually incurred by the Purchaser Indemnified Parties pursuant to ~~Section 2.3(b)~~this Article XIII, (yi) ~~any settlement~~ the loss of any ~~intercompany accounts~~ Tax asset or Tax attribute (or for the avoidance of ~~Seller Parent or its Subsidiaries pursuant to Section 6.7~~doubt, ~~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 increased Tax liability incurred by Purchaser as a result of ~~Purchaser’s failure to deduct~~ the loss of such Tax assets 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 10.3Tax attributes), (8) ii) Taxes ~~arising from any~~ (other than Taxes attributable to a breach of any representation or and warranty ~~contained~~ in Section ~~4.16(k~~4.14(o)~~, (9~~) to the extent such 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, are attributable to ~~any item described in clauses~~ a Tax period (1or portion thereof) 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 beginning on 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 Date, and (iii) Taxes that result from transactions or actions taken by Purchaser, Purchaser Sub or any of ~~its~~ their respective Affiliates (including for the ~~Conveyed Subsidiaries and their Subsidiaries)~~avoidance of doubt, ~~or any transferee of Purchaser or any of its Affiliates (including~~ the ~~Conveyed Subsidiaries and their Subsidiaries), other than any such action~~ Group Companies) after the Closing that ~~(1) is in the ordinary course of business, (2) is expressly permitted or~~ are not 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”)~~each case, (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 periodDamages. (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

Samples: Share Purchase Agreement (Cott Corp /Cn/)

Tax Indemnification. (ia) ~~Subject to Section 6.5(d)(v), from and after~~ After the Closing, ~~Seller Parent agrees to indemnify~~ Sellers shall be liable for and ~~hold harmless Purchaser~~ pay, 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 Sellers shall indemnify and hold harmless ~~the Purchaser Tax Indemnified Parties~~ Buyer and its Affiliates from and ~~against~~ against, any and all ~~liability, without duplication, for~~ Loss due to: (1i) ~~all~~ any Taxes imposed on or with respect to Sellers or any of ~~Purchaser Parent and its~~ their respective Affiliates (other than ~~Purchaser and its Subsidiaries) for any Tax period (other than Transfer Taxes and VAT~~ the Millennium Inorganic Companies), or for which ~~Seller Parent is responsible hereunder), (2) Taxes~~ Sellers or any of ~~Purchaser and its Subsidiaries~~ their respective Affiliates (other than the ~~Conveyed Subsidiaries and their Subsidiaries~~Millennium Inorganic 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 may otherwise 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 expensesliable, attributable to any ~~item described in clauses~~ and all taxable years or periods (~~1) through (9) (~~excluding any ~~such~~ United States Income Taxes ~~for which Purchaser Parent is responsible~~ of the Sellers or their Affiliates with respect to the Millennium Inorganic Companies pursuant to ~~this Section 6.5(d)(ii), subject to~~ Sections 951 through 964 of 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 Code attributable to ~~any action taken after the Closing by Seller Parent~~ transactions or ~~any~~ other activities of ~~its Affiliates, other than any such action that (1) is in the ordinary course of business, (2) is expressly permitted~~ Buyer 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~~ entered into or occurring after the Closing)~~, to offset~~ ; (ii) any Taxes imposed on or ~~otherwise reduce the applicable Tax Liability in~~ with 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 Millennium Inorganic Companies 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~~ resulting from any ~~Straddle Period, Seller Parent or Purchaser Parent shall (or Purchaser Parent shall cause Purchaser to) prepare~~ transaction in 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 (excluding Taxes attributable to transactions or other activities of Buyer or its Affiliates entered into or occurring after the ~~portion~~ Closing on the Closing Date that are not expressly contemplated by this Agreement, to the extent such transactions or activities are not entered into or do not occur in the ordinary course of business); (iii) any Income Taxes for which the Millennium Inorganic Companies may be liable as a result of having been a member of any ~~Straddle Period ending on and including~~ Seller Company Group before the Closing Date (including United States Income Taxes for which the ~~“Final Pre~~Millennium Inorganic Companies are or may be liable pursuant to Section 1.1502-~~Closing~~ 6 of the Treasury Regulations or similar provisions of state or local Law as a result of having been a member of any Seller Company Group, and any United States Income ~~Tax Amount”)~~ Taxes resulting from any of the Millennium Inorganic Companies ceasing to be a member of any Seller Company Group, as the case may be); and (iiiv) any Taxes resulting from a breach of Sellers’ representations and warranties in Section 4.17; provided, however, that Sellers shall not be liable for or pay, and shall not indemnify or hold Buyer and its Affiliates harmless from or against, any Loss (w) due to VAT Accruals or any Taxes that are included in the determination of the amount of ~~the Seller Accrued Income Taxes or Purchaser Accrued Income Taxes~~Closing Date Net Working Capital, ~~as applicable, attributable to such Income Tax Return as reflected on the Final Closing Statement~~ (~~the “Pre-Closing Income Tax Amount”~~x) 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~~ Millennium Inorganic Chemicals do Brazil S.A. in excess 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~~ 72% of ~~the Final Pre-Closing Income Tax Amount hereunder (i) pay to Seller Parent~~ the amount of such ~~difference with respect~~ Loss, (y) arising from a failure by Buyer to ~~a Conveyed Subsidiary and their Subsidiaries and (ii) pay~~ take any reasonable actions requested by Sellers after Closing to ~~Purchaser Parent~~ minimize the amount of such ~~difference~~ Loss (with ~~respect~~ Sellers to ~~Purchaser~~ reimburse Buyer for any net out of pocket costs to Buyer and its ~~Subsidiaries.~~ Affiliates of taking such actions) or (~~vii~~z) ~~The Parties shall use reasonable best efforts~~ to ~~structure~~ the extent such Loss does not exceed the present value of any ~~indemnity payment~~credit, ~~true-up payment~~offset, deduction or ~~payment in respect of Tax Benefits made by any Party pursuant~~ similar item 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~~ which Buyer or ~~Section 2.9 in the manner set forth in Clause 10~~ its Affiliates are entitled as a result of the ~~Structuring Considerations Agreement. The Parties shall use reasonable best efforts~~ Loss (for example, to ~~structure as~~ the extent the Loss arises from a ~~special dividend any payment made by Purchaser to Purchaser Parent pursuant to Section 2.8, Section 2.9~~ deduction being disallowed for one tax period and allowed in a later tax period or ~~this Section 6.5~~periods).

Appears in 1 contract

Samples: Sale and Purchase Agreement (Lyondell Chemical Co)

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

Samples: Merger Agreement (Deerfield Capital Corp.)

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) (A) all liability for Taxes of Network, Mobile or the Crown Communications Business for all taxable periods ending on or before the Closing Date and the portion of any taxable period as of the Closing Date where the taxable period includes (but does not end on) the Closing Date; (B) all liability for Taxes of the Crown Communications Business incurred with respect to a Section 1.6 Asset, for all taxable periods ending on or before the date such Section 1.6 Asset is transferred, and the portion of any taxable period which includes (but does not end on) such date; and (C) all liability for Taxes of the Crown Communications Business arising out of the ownership, operation or transfer of any Section 1.6 Asset that is transferred to BANM or BellSouth (clauses (A), (B) and (C), 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 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 a result of ~~immediately prior~~ or otherwise attributable to the ~~Closing~~sale of the Crown Communications Business, the ~~indemnification obligations of Seller Parent~~ Mergers or otherwise in connection with this Agreement or the transactions contemplated hereby, other than any transfer taxes to the extent assumed by Buyer pursuant to Section ~~6.5(d)(i~~13.5, and (v) ~~in respect of such Taxes (~~all liability for reasonable legal, accounting, appraisal, consulting or ~~related costs~~ similar fees 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 expenses attributable 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) item 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 clauses (i) through (iv) above. In 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~~ case of any ~~Straddle Period ending on and including~~ taxable period that includes (but does not end on) 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~~or, 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~~ Section 1.6 Asset, the date such Section 1.6 Asset is transferred to the Buyer) (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.~~"Straddle Period"): ---------------

Appears in 1 contract

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

Tax Indemnification. (a) The Sellers shall indemnify the Buyer and the Company and hold the Buyer and the Company 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 Closing Date) (collectively, the “Purchaser Tax Indemnified Parties”) from and against all liability, without duplication, any liability for ~~(1)~~ Taxes of the ~~Conveyed Subsidiaries and their Subsidiaries~~ Company 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 any Taxes payable~~ determined in ~~respect of an election under~~ accordance with Section ~~965(h) of the Code~~5.3.4(c)), (2ii) 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) unpaid Taxes of any Person (other than the ~~Conveyed Subsidiaries and their Subsidiaries~~Company) ~~for a Pre~~(A) under Treasury Regulation section 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, provincial, local or foreign ~~Law),~~ law) for Taxes of the Sellers or ~~as a transferee or successor or by Contract~~ any other Person (other than ~~Contracts that do not relate primarily~~ the Company) which is or has ever been affiliated with the Company, or with whom the Company otherwise join or have ever joined (or are or have ever been required to ~~Taxes)~~join) in filing any consolidated, ~~(4) Taxes arising out of~~ combined or ~~resulting from any breach of any covenant or agreement of Seller Parent or any of its Affiliates contained in this Agreement~~unitary Tax Return, ~~(5) Taxes for a Pre-Closing Tax Period imposed on (x) any transaction effected pursuant~~ prior to ~~Section 2.3(b), (y) any settlement of any intercompany accounts of Seller Parent or its Subsidiaries pursuant to Section 6.7~~the Closing, or (zB) 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~~ successor, by Contract, or ~~withhold any such amounts that Purchaser (or a Purchaser Designated Affiliate) was permitted to withhold under Section 2.10 (~~otherwise, in each case, ~~subject to Purchaser’s compliance with the notice and cooperation requirements~~ for purposes of ~~Section 2.10 and except for any such Taxes~~ this clause (~~and any related penalties~~ii) ~~required to be deducted or withheld solely~~ as a result of any ~~assignment~~ such affiliation, succession, Contract or other arrangement that existed on or prior to the Closing; and (iii) all liability for Taxes for any breach of the Sellers’ representations and warranties contained in Section 3.14 or 3.15(k) with respect to the Company (subject to the last sentence of this Section 5.3.4(a)); and (iv) all liability for any breach of the Sellers’ covenants and agreements in Sections 2.2.2(g) and 5.3 relating to Taxes. Notwithstanding the foregoing, the Sellers shall not indemnify, defend or hold harmless the Buyer or the Company from any liability for (1) Taxes that are attributable to any action taken (including without limitation any election or position taken on or with respect to a Tax Return filed after the Closing Date by ~~Purchaser~~ the Buyer) or ~~its Affiliates~~ failure to act (which would otherwise give rise to the Sellers indemnity payment) that (i) is made after the Closing by the Buyer, or any transferee of the Buyer, (ii) Buyer does not reasonably believe is required by Law and (iii) is not either made at the request or direction of the Sellers or expressly contemplated by this Agreement (a “Buyer Tax Act”), (2) Taxes that are accrued as liabilities or reserved against on the Financial Statements, or (3) Taxes that (i) are accrued as liabilities or reserved against consistent with past practice on the Company’s interim financial statements for ~~which Purchaser is responsible~~ the period beginning on January 1, 2007 and ending on the Closing Date and (ii) arise in the ordinary course of business. (b) Buyer shall, and shall cause the Company to, indemnify the Sellers and hold the Sellers harmless from and against, (i) except to the extent the Sellers are otherwise required to indemnify the Buyer or the Company for such Tax pursuant to Section ~~10.3~~5.3.4(a), all liability for Taxes of the Company; (8) ii) all liability for Taxes ~~arising from~~ attributable to the Buyer Tax Act, and any ~~breach of any representation or warranty contained in Section 4.16(k), (9)~~ additional Taxes arising as a result of ~~any Conveyed Subsidiary or any Subsidiary~~ a reduction in the amount of ~~any Conveyed Subsidiary at any time ceasing~~ tax credits that are available 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~~ Sellers (computed as if the Sellers could have fully utilized all available tax credits) and (10iii) all liability for any ~~costs~~ breach of the Buyer’s covenants and ~~expenses~~agreements in Sections 5.2, ~~including reasonable legal~~ 5.3 and ~~accounting fees~~ 5.4 relating to Taxes; and ~~expenses, attributable~~ Damages with respect 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~~ (ii) or (iii) above. The Buyer’s obligation to ~~the following proviso~~indemnify, ~~“Seller Indemnified Taxes”); provided that Seller Parent shall not be required to indemnify~~ defend or hold harmless ~~any Purchaser Tax Indemnified Party~~ the Sellers from ~~and against~~ any liability ~~pursuant to this Section 6.5(d)(i) for (A) Taxes attributable to any action taken after~~ shall continue in full force and effect until the ~~Closing by Purchaser, any~~ expiration of ~~its Affiliates~~ the applicable statute of limitations (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 (1extensions) 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)liability. (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 Straddle Period: (Ai) ~~Property~~ The periodic Taxes ~~allocable to~~ of the Company 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 (Bii) Taxes ~~(other than Property Taxes) allocable to~~ of the Company for the Pre-Closing Tax Period (other than Taxes described in Section 5.3.4(c)(i) 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 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 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)~~ 5.3.4 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)~~ 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). (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 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 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 5.3.4 shall ~~(or Purchaser Parent shall cause Purchaser to) prepare a statement showing (i) the amount of Income Taxes shown~~ be treated as ~~due on such filed Income Tax Return with respect~~ an adjustment 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 TaxesPurchase Price, 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) unless otherwise required 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 bindingapplicable Law. (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

Samples: Stock Purchase Agreement (Preformed Line Products Co)

Tax Indemnification. (ia) ~~Subject to Section 6.5(d)(v), from~~ From and after the ~~Closing~~Closing Date (or, ~~Seller Parent agrees~~ if applicable and solely with respect to the Brazil Business, the Deferred Brazil Closing Date), Trimble 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”)~~ AGCO from and against ~~all liability, without duplication, for~~ any Liabilities arising from or relating to: (1i) any Taxes imposed on the Company or any member of the ~~Conveyed Subsidiaries and their Subsidiaries~~ Company Group for any Pre-Closing ~~Tax Period (including any Taxes payable in respect of an election under Section 965(h) of the Code)~~Date Period, (2ii) any 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~~ member of the ~~Conveyed Subsidiaries~~ Company Group is or was a member on or prior to the Closing (or, if applicable and ~~their Subsidiaries) imposed~~ solely with respect ~~to, arising out of or relating~~ to the ~~Purchased Assets~~ Brazil Business, the Deferred Brazil Closing), including pursuant to Treasury Regulations Section 1.1502-6 or ~~the Business for a Pre~~any analogous or similar state, local or non-~~Closing Tax Period~~U.S. law, (3iii) any Taxes of any Person ~~(other than~~ imposed on 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~~ member of ~~state, local or foreign Law), or~~ the Company Group for any period 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~~ in respect of any ~~covenant~~ transaction occurring on or ~~agreement of Seller Parent or any of its Affiliates contained in this Agreement~~prior to the Closing (or, (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 if applicable and solely with respect to the ~~payment~~ Brazil Business, the Deferred Brazil Closing), by law, contract or otherwise, (iv) any Taxes in respect of the ~~Purchase Consideration~~ Business Assets 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~~ Assumed Liabilities 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)Pre-Closing Date Period, (~~8) Taxes arising from~~ v) any breach of ~~any representation or warranty contained~~ the representations and warranties set forth in Section ~~4.16(k)~~3.16, (9vi) ~~Taxes~~ any Taxes, other than Carve-Out Transfer Taxes, arising ~~as a result~~ in connection with, or resulting from, the Carve-Out Restructuring, and (vii) fifteen percent (15%) of any ~~Conveyed Subsidiary~~ Transfer Taxes (other than Carve-Out Transfer Taxes 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 (10JCA Transfer Taxes) ~~any costs and expenses, including reasonable legal and accounting fees and expenses, attributable to any item~~ as described in ~~clauses~~ Section 9.7. (1b) 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 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~~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 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 AGCO shall indemnify and hold harmless ~~the Purchaser Tax Indemnified Parties~~ Trimble from and against ~~all liability, without duplication, for~~ any Liabilities arising from or relating to: (1i) ~~all~~ any Taxes imposed on any 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)~~ JCA Entities for any Pre-Closing ~~Tax~~ Date Period, (3ii) any Taxes of any member of an affiliated, consolidated, combined or unitary group of which any JCA Entity is or was a member on or prior to the Closing, including pursuant to Treasury Regulations Section 1.1502-6 or any analogous or similar state, local or non-U.S. law, (iii) any Taxes of any Person imposed on any of the JCA Entities 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~~ period 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~~ transaction occurring on 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, by law, contract or otherwise, (iv) any breach of the ~~indemnification~~ representations and warranties set forth in Section 4.16, (v) any Taxes, other than JCA Transfer Taxes, arising in connection with, or resulting from, the JCA Contribution, and (vi) eighty-five percent (85%) of any Transfer Taxes (other than Carve-Out Transfer Taxes or JCA Transfer Taxes) as described in Section 9.7. (c) Notwithstanding anything in this Agreement to the contrary, each of the rights and obligations of ~~Seller Parent pursuant~~ the Parties set forth in this Section 9.8 shall continue in full force and effect until the date that is sixty (60) days following the expiration date of the applicable statute(s) of limitation relating thereto (giving effect to ~~Section 6.5(d)(i~~any extensions thereof). (d) Notwithstanding anything in this Agreement to the contrary, to the extent of any conflict between this Article IX and any other Article of this Agreement relating to the rights and obligations of the Parties with 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~~ for any and all matters related to ~~Section 6.5(d)~~Taxes, ~~as if such Conveyed Subsidiary (or any Subsidiary thereof) were wholly owned by Seller Parent~~this Article IX shall govern, ~~multiplied by (B)~~ and, for the ~~direct and indirect percentage ownership~~ avoidance of ~~Seller Parent of such Conveyed Subsidiary (or Subsidiary thereof) as of immediately prior to the Closing. With~~ doubt, Article XII shall not apply 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 claims for 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 9.8 except 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 bindingprovided therein. (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

Samples: Sale and Contribution Agreement (Trimble Inc.)

Tax Indemnification. ~~(i) Subject to Section 6.5(d)(v)~~The Sellers, ~~from~~ jointly and ~~after the Closing~~severally, 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~~ Buyer 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 Damages arising out of or ~~resulting from any breach of any covenant~~ relating to: (a) all Taxes imposed on the Company Group or ~~agreement of Purchaser Parent, Purchaser or their respective Affiliates contained in this Agreement, (5) Transfer Taxes~~ for which ~~Purchaser Parent~~ the Company Group 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~~ liable for a all Pre-Closing ~~Tax Period imposed on (x) any settlement of any intercompany accounts of Purchaser or any Subsidiary of Purchaser, on the one hand~~Periods, 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~~ such Straddle Period ending on and including the Closing Date (as apportioned pursuant to Section 10.1(c)), including any such Taxes the payment of which is extended, deferred or delayed under the CARES Act or otherwise as a result of COVID 19 or any COVID 19 Measures; (b) (i) all Liabilities for Taxes imposed on any member of the Company Group as a result of having been a member of any U.S. federal “~~Final Pre~~affiliated group” (as defined in Section 1504 of the Code) or state, local or foreign combined, unitary or analogous group in each case of which any member of the Company Group is or was a member on or prior to the Closing Date pursuant to Treasury Regulations Section 1.1502-~~Closing Income Tax Amount”)~~ 6 or analogous state, local or foreign law and (ii) ~~the amount~~ all liabilities for Taxes of any Person (other than a member of the ~~Seller Accrued Income~~ Company Group) imposed on any member of the Company Group as a transferee or successor, by contract or pursuant to any law, rule or regulation, which Taxes relate to an event or ~~Purchaser Accrued Income Taxes, as applicable, attributable to such Income Tax Return as reflected on~~ transaction occurring before 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.Closing; (Bc) ~~In the event the Final Pre~~Taxes resulting from any inaccuracy or breach of a representation or warranty set forth in Section 3.10; and (d) reasonable and necessary out-~~Closing Income Tax Amount with respect to any Income Tax Return is less than the amount~~ of-pocket expenses for advisors 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~~ Buyer resulting from a breach of any obligation of the ~~Final Pre-Closing Income Tax Amount hereunder~~ Sellers set forth in this Article 10; provided, however, that the Sellers shall not be responsible for and shall not indemnify Buyer for (i) ~~pay to Seller Parent~~ the ~~amount~~ Buyer’s portion of ~~such difference with respect to a Conveyed Subsidiary and their Subsidiaries and~~ any Transfer Taxes described in Section 10.3, (ii) ~~pay~~ an amount equal to ~~Purchaser Parent~~ the aggregate 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~~Liability for Taxes included in the calculation of Finally Determined Closing Indebtedness or Finally Determined Net Working Capital, or ~~payment in respect of Tax Benefits made by~~ (iii) any ~~Party pursuant~~ Taxes attributable to ~~this Agreement (including pursuant to this Section 6.5, Section 6.6~~ any transaction occurring after the Closing on the Closing Date and ~~Article VII) and any payment made by Purchaser Parent to Purchaser pursuant to Section 2.8 or Section 2.9~~ that is not in the ~~manner set forth in Clause 10~~ ordinary course of business 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 6.5members of the Company Group.

Appears in 1 contract

Samples: Securities Purchase Agreement (Hydrofarm Holdings Group, Inc.)

Tax Indemnification. The Sellers shall severally (based on each Seller's Indemnification Share), and not jointly, indemnify the Buyer Indemnitees and hold them harmless from and against any Loss 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 Group of which the Company or any Subsidiary (or any predecessor of the foregoing) is or was a member on or prior to the Closing Date, including pursuant to Treasury Regulation SS.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~~ imposed on 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~~ 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) any settlement of any intercompany accounts of Seller Parent or its Subsidiaries pursuant to Section 6.7~~rule, or ~~(z) any~~ regulation, which Taxes relate to an event or transaction ~~or step forming part of~~ occurring 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 Closing; provided that 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 claims 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 indemnity pursuant to this Section ~~6.5(d)(i),~~ 10.06(d) shall not be 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 DeMinimis Amount 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~~ Deductible Basket; 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 provided further that no 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 liable under this Section ~~6.5(d~~10.06(d) ~~shall be made in writing upon the party from whom~~ (together with any indemnification ~~is sought,~~ claim amounts owing by such Seller under Section 10.02(a) 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 expenses10.02(b)) 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 more 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~~ the Actual Purchase Price and ~~including~~ the ~~Closing Date (the “Final Pre-Closing Income Tax Amount”) and (ii) the amount~~ portion of the ~~Seller Accrued Income Taxes or Purchaser Accrued Income Taxes~~Contingent Payment and Second Contingent Payment, ~~as applicable~~if any, ~~attributable to~~ received by 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 bindingSeller. (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

Samples: Stock Purchase Agreement (RathGibson Inc)

Tax Indemnification. Each Shareholder shall jointly and severally indemnify HAI, Buyer, and each Affiliate of Buyer and hold them harmless from and against (i) ~~Subject to Section 6.5(d)(v), from and after~~ all Taxes (or the ~~Closing, Seller Parent agrees to indemnify and hold harmless Purchaser~~ non-payment thereof) of HAI and its ~~Subsidiaries (including the Conveyed Subsidiaries and their Subsidiaries after~~ subsidiaries 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) any and all Taxes of any ~~Person~~ member of an affiliated, consolidated, combined, or unitary group of which HAI 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 §1.1502-6 or any analogous or similar state, local, or non-U.S. law or regulation, and (iii) any and all Taxes of any person (other than ~~the Conveyed Subsidiaries and their Subsidiaries~~HAI) 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 imposed on HAI as a transferee or ~~successor~~ successor, by contract or ~~by Contract~~ 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 (~~other than Contracts that do not relate primarily to Taxes~~i), (4ii) and (iii) above, the Shareholders shall be liable only to the extent that such Taxes ~~arising out of or resulting from any breach of any covenant or agreement of Seller Parent or any of its Affiliates contained~~ are 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 excess of the ~~Seller Internal Restructurings~~amount, ~~(6) Transfer Taxes~~ if any, reserved 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 (excluding any reserve for deferred Taxes established to reflect timing differences between book and Tax income) on the face of the Financial Statements (rather than in any ~~related penalties~~notes thereto) ~~required to be deducted or withheld solely as a result~~ and taken into account in determining Closing Working Capital. In the event that any liability of ~~any assignment by Purchaser or its Affiliates for which Purchaser~~ Shareholder 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 established 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)(i10.3(a) 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 Purchasercustomer’s failure to ~~deduct~~ properly satisfy a Tax obligation, Buyer shall discuss with the Shareholders the possibility of collecting such tax liability from such customer. The Shareholders shall reimburse Buyer for any Taxes of HAI or ~~withhold any such amounts, (9) Taxes arising as a result~~ its Subsidiaries that are the responsibility 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 Shareholders 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 (A10.3(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 within 15 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 payment of such Taxes (by Buyer 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 ClosingHAI. (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

Samples: Purchase Agreement (Mediware Information Systems Inc)

Tax Indemnification. (ia) ~~Subject~~ The Seller will be responsible for, will pay or cause to ~~Section 6.5(d)(v)~~be paid, ~~from~~ and ~~after the Closing, Seller Parent agrees to~~ will indemnify and hold harmless ~~Purchaser~~ the Buyer from and ~~its Subsidiaries~~ against, any and all Damages for or in respect of each of the following: (~~including the Conveyed Subsidiaries~~ i) any and ~~their Subsidiaries after~~ all Taxes finally determined to be due with respect to any taxable period of any Company (or any predecessor) ending on or before the Closing Date, except to the extent of current accruals for Taxes in the Balance Sheet; (ii) ~~(collectively, the “Purchaser Tax Indemnified Parties”)~~ any and all Taxes finally determined to be due 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~~ member of an ~~election under Section 965(h) of the Code)~~affiliated, ~~(2) Taxes of any Seller~~ consolidated, combined, or unitary group (other than any ~~Transfer Taxes and VAT for~~ Company) of which ~~Purchaser~~ any Company (or any predecessor) 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, (3) Taxes of any Person (other than the Conveyed Subsidiaries and their Subsidiaries) for a Pre-Closing Tax Period~~ Date for which any ~~Conveyed Subsidiary (or any Subsidiary thereof)~~ Company is liable ~~under~~ pursuant to Treasury Regulation Section 1.1502-~~6 (~~6(a) or a any analogous or similar ~~provision of~~ state, local or foreign Law); (iii) any breach by any Company or the Seller of any representation, warranty, or ~~as a transferee~~ covenant contained in Section 3.11 or ~~successor or by Contract~~ Section 5.1(b) hereof; (~~other than Contracts that do not relate primarily to Taxes), (4~~iv) ~~Taxes arising out of or resulting from~~ any breach by the Seller of any representation, warranty or covenant ~~or agreement of Seller Parent or any of its Affiliates~~ contained in this ~~Agreement~~Section 8.4; and (v) any Election Taxes specified in Section 9.3(b) hereof. (b) The Buyer will promptly notify the Seller of the commencement of any claim, audit, examination, or other proposed change or adjustment by any taxing authority concerning any Tax or other Damages covered by Section 8.4(a) hereof (5"Tax Claim"). The Seller and the Buyer shall jointly control the defense and settlement of any Tax audit or administrative or court proceeding relating to a claim made with respect to taxable periods of any Company ending on or prior to the Closing Date, and each party (including Buyer) shall cooperate with the other parties at its own expense and keep all other parties fully informed with respect thereto, including furnishing copies of all communications with any taxing authority relating to such proceeding, and there shall be no settlement or closing or other agreement with respect thereto without the consent of the other parties, which consent will not be unreasonably withheld. If Buyer or Company fails to consent to a settlement which is acceptable to Seller, Buyer shall take over the defense of such proceeding at its sole expense and the liability of Seller hereunder shall be limited to the lesser of the Settlement amount which was acceptable to Seller but to which Buyer and/or Company did not consent and the final liability. The Seller shall promptly notify the Buyer if it decides not to participate in the defense or settlement of any such Tax audit or administrative or court proceeding and the Buyer thereupon shall be permitted to defend and settle such Tax audit or proceeding. (c) The Seller will promptly notify the Buyer of the commencement of any claim, audit, examination, or other proposed change or adjustment by any taxing authority which may affect the Liability of any Company for Taxes and the Seller shall keep the Buyer duly informed of the progress thereof. (d) Tax Returns shall be prepared in a manner consistent with past practices. The Seller shall be responsible for a filing all Tax Returns required to be filed by or on behalf of any Company, or with respect to its assets and operations, for the Pre-Closing Period, and each Company shall, and the Buyer shall cause each Company to, cooperate in all respects with Seller with respect to preparation and filing such Tax ~~Period imposed on (x) any transaction effected pursuant~~ Returns including, without limitation, providing Seller with executed copies thereof for filing if such Tax Returns are due subsequent 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~~ Closing Date. The Buyer shall be responsible for ~~which Seller Parent is responsible under Section 6.5(j), (7) Taxes~~ filing all Tax Returns required to be ~~deducted~~ filed by or ~~withheld~~ on behalf of each Company, or 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~~its assets and operations, 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~~ taxable periods 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 commence after the Closing ~~by Purchaser, any~~ Date. (e) For purposes 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, if, for any Taxes, whether federal, state or local, a taxable period of any Company does not terminate on the date of the Closing (~~3) is required to be taken in order to comply with applicable Law or as~~ such non-terminating period, a ~~result of a change in applicable Law (a “Purchaser Tax Act”~~"Straddle Period"), ~~(B) Taxes that were reflected~~the parties shall, ~~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~~ permitted by applicable law, elect with the relevant taxing authority to treat the Pre-Closing Period portion of such Straddle Period for all purposes as a ~~Conveyed Subsidiary or any Subsidiary thereof had any Tax Assets~~ short taxable period ending as of the close of ~~business on~~ the date of 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~~ short taxable period shall be treated 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~~ purposes 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~~ . In 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 case where applicable law does not permit such an election to be ~~deducted or withheld with respect to any amounts payable to Purchaser Parent pursuant to Section 2.8 or Section 2.9~~made, 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. Otherwisethen, for purposes of this Agreement, in Taxes for the ~~case of any~~ entire Straddle ~~Period: (A) Property Taxes allocable~~ Period shall be allocated to the Pre-Closing ~~Tax~~ Period ~~shall be computed based upon the ratio~~ using an "interim closing of the ~~number~~ books" method, assuming that such Straddle Period ended at the close of ~~days in~~ the date of the Closing and treating such Straddle Period as a Pre-Closing ~~Tax~~ Period ~~to the number~~ for purposes 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 andthis Agreement, 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 except that exemptions, allowances or and 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 and the period beginning after the Closing Date in proportion~~ a per-diem basis. 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 for such claim. Any indemnity payment any Tax Return required to be ~~made~~ filed by any Company for a Straddle Period, the Buyer shall prepare such Tax Return and shall provide the Seller with (i) a copy of such Straddle Period Return, which shall have been prepared in accordance with prior practices of such Company and (ii) a statement setting forth the amount of Tax that is allocable (net of current accruals for Taxes in the Balance Sheet) to the Seller pursuant to this Section ~~6.5(d~~8.4(e) (the "Statement") at least 30 business days prior to the due date for filing of such Tax Return (including extensions). The Statement shall ~~be made within thirty~~ provide (30with reasonable specificity) the bases on which such Taxes were allocable to the Seller, including computation of Taxes reflected in such Straddle Period Return. Within fifteen business days after the ~~indemnified party makes~~ Seller's receipt of the Statement, the Seller will provide the Buyer with written ~~demand upon~~ notice indicating whether the ~~indemnifying party~~Seller agrees or disagrees with the Statement, ~~but~~ including Seller's computation and bases of disputed allocations and Taxes. If the Seller notifies the Buyer in ~~no case earlier~~ writing of agreement with the Statement or if the Seller fails to deliver such written notice within such fifteen-day period, then not later than five business days before the due date for payment of Taxes with respect to such Straddle Period Return, the Seller shall pay to the relevant Company (~~5) Business Days~~ unless such Company had established an adequate reserve prior to ~~the date on which the relevant Taxes are required to be paid to the applicable Taxing Authority. (v~~Closing) 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 the Taxes shown on the Statement that are allocable to the Seller pursuant to this Section 8.4(e). In the event the Seller provides written notice to the Buyer of any disagreement with the Statement, or with the computation of Taxes reflected on such Straddle Period Return, setting forth (Awith reasonable specificity) the bases therefor, the parties will negotiate in good faith to resolve such disagreement. If the parties are able to resolve such disagreement within five business days after the Buyer's receipt of notice of disagreement, then the Taxes allocable to the Seller will be adjusted accordingly and the Seller shall pay such amount to such Company no later than five business days before the due date for the payment of Taxes with respect to such Tax Return. In the event the parties are unable to resolve any disagreement within five business days following each the Buyer's receipt of notice of disagreement, the parties shall jointly request the Settlement Auditor to resolve any issue in dispute as promptly as possible and shall cooperate with the Settlement Auditor to resolve such disagreement. If the Settlement Auditor is unable to make a determination with respect to any disputed issue within five business days prior to the due date (including extensions) for the filing of the Tax Return in question, then the Buyer shall file such Tax Return on the due date (including extensions) therefor, and shall pay the amount of tax shown as due on such Tax Return, without such determination having been made. Notwithstanding the filing of such Tax Return, the Settlement Auditor shall make a determination with respect to any disputed issue, and the amount of Taxes that are allocated to the Seller pursuant to Section 8.4(e) hereof shall be as determined by the Settlement Auditor. The fees and expenses of the Settlement Auditor shall be paid one-half by the Buyer and one-half by the Seller. In the case of a dispute, (~~or related costs~~ i) the Seller shall pay to such Company not later than five business days before the due date for the payment of Taxes with respect to such Tax Return, the amount of Taxes as to which there is no disagreement and ~~expenses~~(ii) ~~for which~~ the ~~Purchaser Tax Indemnified Parties would otherwise be entitled~~ Seller shall pay to the Buyer not later than five business days after notice to the Seller of resolution thereof, any remaining amounts allocable to the Seller as shown in such notice. No payment pursuant to this Section 8.4(e) will affect the Buyer's right to indemnification pursuant to Section ~~6.5(d), as if such Conveyed Subsidiary (or any Subsidiary thereof~~8.4(a) 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) hereof should the amount of ~~such~~ Taxes as ultimately determined (on audit or ~~related costs and expenses~~otherwise) for the periods covered by such Tax Returns and which are the ~~Purchaser Tax Indemnified Parties would otherwise be entitled to indemnification pursuant to Section 6.5(d),~~ responsibility of the Seller 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~~ provided herein or as ~~of immediately prior to the Closing. (vi) Without duplication to any other amounts paid~~ determined 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~~8.4(e), 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) exceed the amount of ~~Income Taxes shown~~ the Seller's payment under this Section 8.4(e). Seller may apply for a refund of any amounts paid by it pursuant to this Section 8.4(e) which it has disputed as ~~due on~~ set forth in this Section 8.4(e), and the Buyer and Company shall reasonably cooperate in all respects with Seller with respect to such ~~filed Income~~ refund claim including, without limitation, providing Seller with appropriate, non-exclusive, power of attorney. (f) The Seller and each Company will provide (and Buyer will cause each Company so to provide) to each other full access, at any reasonable time and from time to time, at the business location at which the books and records are maintained, after the Closing Date, to such Tax ~~Return~~ data of each Company as the Seller or the Buyer or any Company, as the case may be, may from time to time reasonably request and will furnish, and request the independent accountants and legal counsel of the Seller, the Buyer or any Company to furnish to the Seller, Buyer or Company, as the case may be, such additional Tax and other information and documents in the possession of such Persons as the Seller, Buyer or any Company may from time to time reasonably request. (g) Any claim for indemnity hereunder may be made at any time prior to sixty days after the expiration of the applicable Tax statute of limitations 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

Samples: Acquisition Agreement (Healthplan Services Corp)

Tax Indemnification. (ia) Subject to ~~Section 6.5(d)(v)~~the terms (including the limitations) set forth in this Article VIII, from and after the Closing, Seller ~~Parent agrees~~ shall (without duplication with respect to any other payment made pursuant to this Agreement) indemnify ~~and hold harmless~~ Purchaser and its ~~Subsidiaries~~ Affiliates against, and hold them harmless from, any Losses suffered or incurred by Purchaser and its Affiliates to the extent arising or resulting 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~~ any Group Company for any Pre-Closing Tax ~~Period~~ Period; (~~including any~~ ii) all 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)~~ relating to 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~~ 5.07 made 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~~ performed by 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~~Group Companies solely with respect to periods prior to the Closing)~~, other than any such action that~~ ; (1iii) ~~is in the ordinary course of business,~~ all Taxes (~~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 Treasury Regulation Section 1.1502-6 or any comparable provision of any applicable Tax Law) of any Person other than any Group Company for which any Group Company becomes liable as a ~~change~~ result of being or having been, at any time before Closing, part of any consolidated, combined, affiliated, aggregated, unitary or similar group for Tax purposes; (iv) all Taxes of any Person other than a Group Company from which any Group Company is or becomes liable as a transferee or successor, or by contract, where such transferee, successor or contractual liability results from a transaction or event occurring prior to the Closing; and (v) all Transfer Taxes allocated to Seller pursuant to Section 5.08; provided that, notwithstanding anything to the contrary in ~~applicable Law~~ this Agreement, Seller shall not be liable under this Section 8.03 for any such Taxes, fees or expenses to the extent such Taxes, fees or expenses (~~a “~~1) are described in Section 8.03(b) or (2) result from any Purchaser Tax Act”). (b) Subject to the terms (including the limitations) set forth in this Article VIII, ~~(B) Taxes that were reflected~~from and after the Closing, ~~accrued~~ Purchaser shall indemnify Seller and its Affiliates against, and hold them harmless from, any Losses suffered or ~~reserved for in the Final Closing Statement, Final Business Working Capital, or Final Business Net Cash, (C) Income Taxes~~ incurred by Seller and its Affiliates to the extent ~~that a Conveyed Subsidiary~~ arising or resulting from: (i) all Taxes of any ~~Subsidiary thereof had~~ Group Company for any Post-Closing Tax ~~Assets as~~ Period; (ii) all Taxes resulting from any breach of ~~the close of business on the Closing Date that were available,~~ any covenant or ~~would have been available but for their prior utilization~~ agreement relating to Taxes contained in Section 5.07 made or to be performed 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 Group Companies but solely 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 periods 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~~ all Taxes resulting from any ~~Subsidiary of~~ Purchaser ~~that includes the Closing Date shall be treated as closing on~~ Tax Act; and (~~and including~~iv) ~~the Closing Date. Otherwise, for purposes of this Agreement, in~~ all Transfer Taxes allocated to Purchaser pursuant to Section 5.08. (c) In the case of any Straddle Period: (Ai) ~~Property~~ Taxes ~~allocable~~ imposed on a periodic basis (such as real, personal and intangible property taxes) for any Pre-Closing Tax Period shall be equal to the amount of such 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 and the denominator of which is the number of days in the Straddle Period; and (ii) Taxes (other than Taxes described in clause (i) above) for any 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~~ (Bx) ~~Taxes (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,~~ and (y) 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~~ 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 analogous provision of state, local or foreign Law), as if the ~~Tax~~ taxable period of such ~~partnership or other~~ partnership, “~~flow through~~flowthrough” entity or “controlled foreign corporation” ended as of the close of business on the Closing ~~Date with~~ Date; provided, that Taxes attributable to an inclusion under Section 951A of the ~~Taxes of such entity~~ Code 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~~ computed pursuant to Section 8.03(c) of 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~~Seller Disclosure Letter. (ivd) Any ~~claim~~ indemnity obligation 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 Taxes pursuant to this Section ~~6.5(d)~~ 8.03 shall be ~~made~~ paid within ~~thirty (30) days~~ 30 Business Days after ~~the indemnified party~~ Purchaser or Seller, as applicable, makes written demand upon the ~~indemnifying party~~other party claiming it is entitled to indemnification under this Section 8.03, 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. (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

Samples: Equity Purchase Agreement (Brunswick Corp)

Tax Indemnification. (i) ~~Subject to Section 6.5(d)(v)~~The Stockholders, jointly and severally, will indemnify the Company and Buyer 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, ~~for~~ any loss, claim, Liability, expense, or other damage attributable to (1A) all Taxes (or the non-payment thereof) of the ~~Conveyed Subsidiaries and their Subsidiaries~~ Company for any Pre-Closing 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~~ Relevant Group of which the Company (~~other than~~ or any ~~Transfer Taxes and VAT for which Purchaser is responsible hereunder) including, Taxes (other than Taxes~~ predecessor of the ~~Conveyed Subsidiaries and their Subsidiaries~~Company) ~~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 Section 1.1502-6 of the Treasury Regulations or ~~the Business for a Pre~~any analogous or similar state, local, or non-~~Closing Tax Period,~~ U.S. Law or regulation; (3C) any and all Taxes of any Person (other than the ~~Conveyed Subsidiaries and their Subsidiaries~~Company) 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 imposed on the Company as a transferee or ~~successor~~ successor, by Contract, pursuant to any law, rule, or ~~by Contract~~ regulation, or otherwise; (D) any employment or other ~~than Contracts that do not relate primarily to Taxes), (4)~~ Taxes ~~arising out of~~ on any payment for or ~~resulting from any breach~~ in respect 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~~ Options which are cancelled pursuant to Section ~~2.3(b),~~ 1.03; and (yE) any ~~settlement~~ Tax imposed on the Company due to the Company’s not being regarded as an S corporation by the State of New Jersey for any ~~intercompany accounts~~ period of ~~Seller Parent or its Subsidiaries pursuant~~ time prior to the Closing including, without limitation, any Tax imposed on the Company under any provision of New Jersey law which is comparable to Section ~~6.7, or (z) any transaction or step forming part~~ 1374 of the ~~Seller Internal Restructurings,~~ Code (~~6) Transfer Taxes for which Seller Parent is responsible~~ it being acknowledged that any Tax under Section ~~6.5(j), (7) Taxes required to be deducted or withheld with respect to the payment~~ 1374 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)Code, or any ~~transferee~~ comparable provision of ~~Purchaser~~ any state or ~~any~~ local Law, on the deemed sale 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 assets of the ~~close of business on~~ Company resulting from 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 ClosingSection 338(h)(10) 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)(iiElection shall be Sellers’ responsibility). (ii) ~~Subject~~ The Stockholders shall not be liable for Taxes under Section 7.01(a)(i) above to ~~Section 6.5(d)(v), from and after~~ the extent that such Taxes are taken into account in Closing Indebtedness or the Net Working Capital at Closing, ~~Purchaser Parent shall indemnify and hold harmless~~ and, thus, are accounted for in the ~~Purchaser Tax Indemnified Parties from and against all liability~~Purchase Price. Furthermore, ~~without duplication, for (1) all Taxes of Purchaser Parent and its Affiliates (other than Purchaser and its Subsidiaries) for~~ notwithstanding 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~~ provisions 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 arising out of or resulting from any breach of any covenant or agreement of Purchaser Parent, Purchaser or their respective Affiliates contained contrary 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 the Stockholders shall have no obligation to indemnify the Company 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 Buyer against any ~~liability for~~ Losses consisting of or relating to Taxes resulting from (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~~ outside the ordinary course of ~~business, (2) is expressly permitted or contemplated by this Agreement~~business taken by, or ~~(3) is required to be taken in order to comply with applicable Law~~ under the direction of, the Buyer on or ~~as a result of a change in applicable Law (a “Seller Tax Act”),~~ after the Closing Date and (B) any Taxes ~~that were reflected, accrued~~ or ~~reserved for in the Final Closing Statement, Final Purchaser Working Capital or the Final Purchaser Net Cash,~~ fees imposed under Section 7.01(f) and (C) ~~Income Taxes to the extent that Purchaser or~~ any ~~Subsidiary thereof had any Tax Assets as~~ breach by Buyer of ~~the close~~ Article VII 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)this Agreement. (iii) To The Stockholders will pay to Buyer the ~~extent permitted or required by applicable Law,~~ amount of any Taxes which are the ~~taxable year of each~~ responsibility of the ~~Conveyed Subsidiaries and their Subsidiaries and any Subsidiary~~ Stockholders pursuant to this Section 7.01(a) within ten (10) Business Days before the later 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~~ the date such Taxes ~~allocable to~~ are payable by Buyer or 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~~ Company and (B) ~~Taxes (other than Property Taxes) allocable to~~ Buyer’s demand for such payment from 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 Stockholders. The indemnification under this Section ~~6.5(d~~7.01(a) shall ~~be made in writing upon the party from whom indemnification is sought,~~ survive indefinitely and shall ~~specify in reasonable detail the basis for such claim. Any indemnity payment required to~~ not 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 subject to the ~~date on which the relevant Taxes are required to be paid to the applicable Taxing Authority~~Basket or Cap. (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

Samples: Stock Purchase Agreement (Diplomat Pharmacy, Inc.)

Tax Indemnification. (a) Each Seller and SG Corporation, on a joint and several basis together with each other Seller, agrees to indemnify Buyer and its Affiliates (including the Companies and Subsidiaries) against and agrees to hold them harmless from any liability for (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)Excluded Taxes, (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), (4ii) Taxes arising ~~out of~~ from or ~~resulting from~~ in connection with any breach by Sellers or Seller Representative of any covenant ~~or agreement of Seller Parent or any of its Affiliates~~ contained in this Agreement, (5iii) Transfer Taxes ~~for a Pre-Closing Tax Period imposed on (x) any transaction effected~~ to the extent required to be borne by Sellers pursuant to Section ~~2.3(b~~9.03(f), and (iv) all costs and expenses (including, without limitation, reasonable expenses of investigation and attorneys’ fees and expenses), arising out of or incident to the imposition, assessment or assertion of any such Tax, in each case incurred or suffered by Buyer, any of its Affiliates or, effective upon the Closing, any Company or Subsidiary (the sum of (i), (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(jii), (7iii) ~~Taxes required~~ and (iv) 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 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~~Loss”); provided that no 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 the payment of any Loss (A) ~~Taxes~~ to the extent such Loss is attributable to or resulting from any ~~action taken after the Closing~~ breach 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~~ of the ~~Conveyed Subsidiaries~~ covenant set forth in Section 9.09 hereof and ~~their Subsidiaries), other than any~~ would not have arisen but for 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”)breach, (B) ~~Taxes that were reflected, accrued~~ to the extent a specific reserve or ~~reserved~~ liability for such Loss was reflected in ~~the~~ Final ~~Closing Statement, Final Business~~ Working Capital, or ~~Final Business Net Cash,~~ (C) ~~Income Taxes~~ described in clauses (i), (ii) and (iv) of this Section 9.06(a) unless the aggregate amount of all Losses with respect to the matters described in clauses (i), (ii) and (iv) of this Section 9.06(a) exceeds $50,000, and then only 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)excess. (iib) ~~Subject~~ Buyer agrees to ~~Section 6.5(d)(v), from~~ indemnify Sellers and ~~after the Closing, Purchaser Parent shall indemnify~~ their Affiliates and hold them harmless ~~the Purchaser Tax Indemnified Parties~~ from ~~and against~~ all ~~liability, without duplication,~~ 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), (2i) Taxes of ~~Purchaser~~ the Companies and ~~its~~ the Subsidiaries ~~(other than the Conveyed Subsidiaries and their Subsidiaries)~~ for ~~any Pre~~Post-Closing Tax ~~Period~~Periods, (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), (4ii) Taxes arising ~~out of~~ from or ~~resulting from~~ in connection with any breach by Buyer of any covenant ~~or agreement of Purchaser Parent, Purchaser or their respective Affiliates~~ contained in this Agreement, (5iii) 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 borne 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 Buyer 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(d9.03(f), 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.and

Appears in 1 contract

Samples: Stock Purchase Agreement (Meadwestvaco Corp)

Tax Indemnification. (ia) ~~Subject to Section 6.5(d)(v)~~MLIM Parent 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~~ BlackRock Indemnified ~~Parties”)~~ 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~~), (2v) ~~Taxes of~~ any ~~Seller (other than any Transfer~~ and all Taxes and ~~VAT for which Purchaser is responsible hereunder) including,~~ Losses related to Taxes ~~(other than Taxes of the Conveyed Subsidiaries and their Subsidiaries) imposed with respect to, arising out~~ of or relating to the ~~Purchased Assets~~ ownership, operation or conduct of MLIM Business Entities or the ~~Business~~ Assets for ~~a Pre-Closing~~ any Tax ~~Period~~year or portion thereof ending on or prior to the MLIM Contribution, (3w) any and all United Kingdom Taxes ~~of any Person~~ and Losses related to United Kingdom Taxes (~~other than the Conveyed Subsidiaries and their Subsidiaries~~i) for which a ~~Pre-Closing Tax Period for which any Conveyed Subsidiary (or any Subsidiary thereof)~~ UK Company is secondarily 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 having 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~~ purpose prior to 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~~ the provision of non-cash benefits prior to Closing to employees, (x) any and all Taxes and Losses relating to Taxes arising out of (i) any breach of or any ~~Subsidiary of Purchaser~~ inaccuracy in any representation or warranty (~~other than~~ without giving effect to any ~~Conveyed Subsidiary~~ qualifiers or ~~a Subsidiary thereof~~exceptions relating to knowledge, materiality or MLIM Material Adverse Effect) at including the representations and warranties contained in Exhibit 3.20 or (ii) any ~~time ceasing to be a member~~ breach 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 covenant relating 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 made by ~~Seller~~ MLIM Parent or any of its Affiliates, ~~other than~~ (y) any ~~such action~~ and all Taxes and Losses relating to Taxes of or relating to the MLIM Transferors, the MLIM Business Entities or the Assets 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~~ directly arise as a result of ~~a change in applicable Law~~ entering into this Agreement or Closing other than Transfer Taxes for which BlackRock is liable pursuant to Section 8.7, or (~~a “Seller Tax Act”), (B~~z) ~~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~~ failure on the ~~Closing Date that were available, or would have been available but for their prior utilization by Purchaser~~ part of MLIM Parent or any of its Affiliates ~~(including~~ to comply with the ~~Conveyed Subsidiaries and their Subsidiaries after~~ DCL recapture provisions set forth in Treasury Regulation Section 1.1503-2(g)(2)(vii) with respect to the ~~Closing)~~DCLs of the UK Entities, provided that MLIM Parent shall have no liability under Section 8.1(a) in relation to any Taxes or Losses related to United Kingdom Taxes, in either case of the UK Companies, to ~~offset~~ the extent that such Taxes or ~~otherwise reduce the applicable Tax Liability in respect of such Income Taxes~~ Losses (~~except any Tax Asset reflected as an asset~~ i) were provided for in the ~~Final Closing Statement and~~ Accounts of the UK Companies or were otherwise taken into account in determining the ~~calculation of~~ consideration payable for the ~~Final Purchaser Working Capital or the Final Purchaser Net Cash)~~MLIM Contribution, or (Dii) arise as a result of post Closing changes in law (excluding, for the avoidance of doubt, any judicial decision), generally published concession or practice of any Governmental Authority having retrospective effect, or (iii) are penalties or interest which arise as a result of any unreasonable delay or default by a BlackRock Party or UK Company post Closing, or (iv) arise as a result of an act by a BlackRock Party or UK Company post Closing which the UK Company was not legally bound, as at Closing, to take, is outside the ordinary course of its business, was not requested in writing by MLIM Parent and which the BlackRock Party or the UK Company knew or ought reasonably to have known would give rise to such Taxes ~~for which Seller Parent is responsible under~~ or Losses and provided, further, that notwithstanding anything in this Agreement to the contrary, no payment shall be due with respect to any Taxes or Losses related to Taxes relating to DCLs existing at or prior to the MLIM Contribution until there has been a "determination" (within the meaning of Section ~~6.5(d)(i)~~1313(a) of the Code or any similar state, local or foreign Tax provision) with respect to the relevant Taxes. (~~iii~~b) To In the ~~extent permitted or required by applicable Law~~event of a breach of the covenant in section 5.10(f), the ~~taxable year~~ amount of ~~each~~ indemnification payable to the BlackRock Indemnified Parties shall not exceed the amount equal to the product of (i) the Tax loss or deduction recognized by MLIM Parent and its Affiliates as a result of any transaction or series of transactions occurring after the date hereof and on or prior to the MLIM Contribution resulting in a reduction in the aggregate adjusted tax basis of the ~~Conveyed Subsidiaries~~ 197 Intangibles and ~~their Subsidiaries and any Subsidiary of Purchaser that includes~~ (ii) 40%. (c) All amounts payable or to be paid under this Section 8.1 (the ~~Closing Date~~ "Tax Indemnity Payments") shall be ~~treated as closing on~~ paid in immediately available funds within five (5) Business Days after the later of (i) receipt of a written request from the party entitled to such Tax Indemnity Payment and ~~including~~(ii) the ~~Closing Date~~day of payment of the amount that is the subject of the Tax Indemnity Payment by the party entitled to receive the Tax Indemnity Payment. ~~Otherwise~~Any late payments shall accrue interest at the Specified Rate. All indemnification payments pursuant to this Article VIII shall be made on an After-Tax Basis. "After-Tax Basis" shall mean, for purposes of this Agreement, in the ~~case~~ amount otherwise due under this Article VIII increased by such additional amount as necessary so that the aggregate payment, net of ~~any Straddle Period: (A) Property Taxes allocable~~ Tax liability to the ~~Pre-Closing Tax Period shall be computed based upon the ratio of the number of days in the Pre-Closing Tax Period~~ party entitled to payment is equal to the ~~number of days in~~ amount due under this Article VIII without taking into account Taxes incurred by the ~~entire Straddle Period; and (B) Taxes (other than Property Taxes) allocable~~ party entitled to ~~the Pre-Closing Tax Period shall be computed as if such Tax period ended as of the close of business~~ payment on the ~~Closing Date and, in the case~~ receipt of ~~any Taxes~~ such payment. For purposes 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 determining 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 liability 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~~indemnification payment received under this Article VIII, the ~~Purchaser~~ parties shall ~~within five (5) Business Days following~~ assume that the ~~finalization of the Final Pre-Closing Income~~ party entitled to payment's combined effective 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 Subsidiariesrate is 40%. (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

Samples: Transaction Agreement and Plan of Merger (Blackrock Inc /Ny)

Tax Indemnification. (ia) ~~Subject to Section 6.5(d)(v), from~~ From and after the Closing, the Seller ~~Parent agrees to~~ shall indemnify ~~and hold harmless Purchaser and~~ the Purchaser, its ~~Subsidiaries~~ affiliates (including the ~~Conveyed Subsidiaries~~ Transferred Entities) and each of their ~~Subsidiaries after the Closing Date)~~ stockholders, members, partners, directors, officers, employees, agents, advisors and representatives (~~collectively,~~ the “Purchaser ~~Tax Indemnified Parties~~Indemnitees”) against and hold them harmless from ~~and against all liability~~any Losses arising from, ~~without duplication, for (1) Taxes of the Conveyed Subsidiaries and their Subsidiaries for any Pre-Closing Tax Period (including any Taxes payable~~ relating to or otherwise in respect of ~~an election under~~ (i) except as provided in Section ~~965(h) of the Code~~9.01(b), ~~(2)~~ any 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~~ on 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, (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 that may be imposed on the Business as a ~~transferee~~ result of being a member of a consolidated, combined, unitary or ~~successor~~ similar group of corporations or ~~by Contract~~ other taxpayers at any time on or prior to the Closing Date and (~~other than Contracts that do not relate primarily to Taxes), (4~~iii) ~~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~~ the Seller is ~~responsible~~ liable under Section ~~6.5(j~~5.04(b). (b) From and after the Closing, the Purchaser and the Transferred Entities shall, jointly and severally, indemnify the Seller, its affiliates and each of their stockholders, members, partners, directors, officers, employees, agents and representatives (6the “Seller Indemnitees”) ~~Taxes arising~~ and hold them harmless from any ~~breach~~ Losses arising from, relating to or otherwise in respect of (i) 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 Business with respect to any ~~amounts payable to Purchaser Parent pursuant to Section 2.8 or Section 2.9~~Post-Closing Tax Period, ~~including~~ (ii) any ~~penalties~~ Taxes that may be imposed on ~~Purchaser~~ the Business 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 being a member of a consolidated, combined, unitary or similar group ~~for~~ of corporations or other taxpayers at any time after the ~~purposes of any Tax~~Closing Date, ~~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~~iii) any ~~costs and expenses, including reasonable legal and accounting fees and expenses, attributable to any item described in clauses (1) through (9) (any such~~ Transfer Taxes for which the Purchaser ~~Parent~~ is ~~responsible pursuant to this~~ liable under 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”5.04(b), (Biv) 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~~ liability resulting from an election by the Purchaser under Section 338(g) of the ~~close of business on~~ Code as contemplated by Section 5.07 and (v) any breach 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), 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 affiliates 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~~ covenant contained 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 andSections 5.05, ~~in the case of any Taxes of Conveyed Subsidiaries (~~5.06 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 period5.07. (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

Samples: Purchase Agreement (Olin Corp)

Tax Indemnification. Except to the extent taken into account in the calculation of Final Net Operating Assets and without duplication, Parent hereby indemnifies the Buyer Indemnitees against, and agrees to hold each of them harmless from, any and all (i) ~~Subject to~~ Income Taxes (or the non-payment thereof) shown as due on any Tax Return filed in accordance with Section ~~6.5(d)(v~~6.01(a), ~~from and after the Closing~~U.S. federal Income Taxes or Significant Other Income Taxes, ~~Seller Parent agrees to indemnify and hold harmless Purchaser and its Subsidiaries (including the Conveyed Subsidiaries and their Subsidiaries after the Closing Date) (collectively~~in each case, ~~the “Purchaser Tax Indemnified Parties”) from and against all liability, without duplication, for (1) Taxes~~ of the ~~Conveyed Subsidiaries and their Subsidiaries~~ IPG Entities 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)~~ such Taxes of any ~~Seller~~ member of an affiliated, consolidated, combined or unitary group of which the IPG Entities (~~other than~~ or any ~~Transfer Taxes and VAT for which Purchaser is responsible hereunder) including, Taxes (other than Taxes~~ predecessor of any of the ~~Conveyed Subsidiaries and their Subsidiaries~~foregoing) ~~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 Regulation Section 1.1502-6 or any analogous or similar state, local, or non-U.S. law or regulation, (ii) reasonable costs and expenses associated with amending (if such amendment is at the ~~Business~~ request of the Parent) and defending (subject to Section 6.06) any Tax Return for a any Pre-Closing Tax Period, (3iii) Taxes of Parent, the Sellers or any ~~Person~~ of their respective Affiliates (other than the ~~Conveyed Subsidiaries and their Subsidiaries) for a Pre-Closing Tax Period for which any Conveyed Subsidiary~~ IPG Entities); (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), (4iv) Taxes that directly result from the Reorganization (“Reorganization Taxes”); (v) Taxes to the extent arising out of or resulting from any breach by Parent or the Sellers of any covenant ~~or agreement of Seller Parent or any of its Affiliates~~ contained in this ~~Agreement,~~ Article VI other than the covenants contained in the foregoing clauses (5i) through (iv) immediately above; (vi) 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~~ extent arising out of ~~the Purchase Consideration~~ or ~~any amounts payable~~ related 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~~3.14 and Section 3.13(g) and (h), ~~(9)~~ except to the extent such Taxes ~~arising as a result of any Conveyed Subsidiary or any Subsidiary of any Conveyed Subsidiary at any time ceasing~~ are otherwise indemnified pursuant 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 foregoing clauses (1i) through (9v) immediately above; and (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 vii) amounts assessed by a Governmental Authority 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) IPG Entity for any Pre-Closing Tax Period as a result of such IPG Entity’s failure to remit required amounts in accordance with applicable escheat or unclaimed property Law; provided, however, that for purposes of this Section 6.05(a), Taxes shall include the amount of Taxes that would have been paid but for the application of any credit or loss deduction attributable to any Post-Closing Tax Period. Notwithstanding the foregoing, Parent shall have no Liability for any Taxes that are imposed on any IPG Entity, Parent, the Sellers, or any of their respective Affiliates, to the extent arising out of or resulting from any breach by Buyer of any covenant contained in Section 6.03 or any violations of the conditions of the tax rulings disclosed in Schedule 3.14(c) after the Closing Date (3) collectively, “Buyer Taxes”); provided, however, that Buyer Taxes shall not include, and Parent shall remain liable for, any Taxes imposed on any IPG Entity, Parent, the Sellers, or any of their respective Affiliates, where the actions taken or elections made by Buyer or any of its Affiliates are required by applicable Law and consented to by Parent. Notwithstanding anything to the contrary in this Agreement, except with respect to Reorganization Taxes, Parent shall not indemnify the Buyer Indemnitees for Taxes of any ~~Person~~ IPG Entity for any Post-Closing Tax Period, including Taxes resulting from the reduction in the carry forward from Tax attribute generated in a Pre-Closing Tax ~~Period for which Purchaser~~ Period, unless such Taxes result from (A) adjustments under Section 481 of the Code (or any ~~Subsidiary thereof other than any Conveyed Subsidiaries and their Subsidiaries) is liable under Treasury Regulation Section 1.1502-6 (~~corresponding or a similar provision of state, local or foreign Income 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~~ a 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 the 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 Cash3.14(i), or (DB) ~~Taxes for which Seller Parent is responsible under~~ inclusions pursuant to Section ~~6.5(d)(i). (iii~~108(i) ~~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 Code (or any ~~Subsidiary thereof) that was not wholly owned by Seller Parent (directly~~ corresponding or ~~indirectly) as~~ similar provision of ~~immediately prior to the Closing~~state, ~~the indemnification obligations of Seller Parent pursuant to Section 6.5(d)(i) in respect of such Taxes (~~local 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 foreign 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 toLaw) ~~prepare~~ resulting from 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 breach 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 bindingrepresentation in Section 3.14(i)(vi). (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

Samples: Stock Purchase Agreement (Illinois Tool Works 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

Samples: Stock Purchase Agreement (Psychiatric Solutions Inc)

Tax Indemnification. (ia) ~~Subject to Section 6.5(d)(v), from~~ From and after the Closing, except to the extent treated as a liability in the calculation of Closing Working Capital, each of the Xxxxxx Seller ~~Parent agrees~~ Parties, jointly and severally as among such Xxxxxx Seller Parties up to the Xxxxxx Seller Parties’ applicable Seller Indemnity Percentage of any such Losses, and each of the Xxxxx Seller Parties and the Xxxxx Additional Parties, jointly and severally as among such Xxxxx Seller Parties and Xxxxx Additional Parties up to the Xxxxx Seller Parties’ applicable Seller Indemnity Percentage of any such Losses, shall indemnify the Company, Purchaser and each Purchaser Indemnified Person 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 3.21 (Tax Matters); (b) any Loss attributable to any breach or violation of, or failure to fully perform, any covenant, agreement, undertaking or obligation by Sellers in this Article 7; (c) all ~~liability, without duplication, for (1)~~ Taxes of the ~~Conveyed Subsidiaries and their Subsidiaries~~ Company or relating to the business or assets of the Company for ~~any~~ all Pre-Closing Tax ~~Period (including any Taxes payable~~ Periods, except to the extent accrued and taken into account in ~~respect of an election under Section 965(h)~~ the determination of the ~~Code),~~ final Closing Net Working Capital; (2d) 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 to, arising out of or relating to the Purchased Assets or the Business for a Pre-Closing Tax Period, (3) Taxes of owing by any Person (other than the ~~Conveyed Subsidiaries and their Subsidiaries~~Company) for ~~a Pre-~~which the Company may be liable where the liability of the Company for such Taxes is attributable to an event or transaction occurring on or before the Closing ~~Tax Period for~~ Date, including, without limitation, in respect of any Taxes payable by the Sellers; (e) all Taxes of any member of an affiliated, consolidated, combined or unitary group of which ~~any Conveyed Subsidiary~~ the 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 successor or comparable provisions of foreign, state or local Law; (~~or a similar provision~~ f) any and 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; and (~~other than Contracts that do not relate primarily to Taxes), (4~~g) ~~Taxes arising out of or~~ any Losses resulting from any ~~breach~~ action of ~~any covenant or agreement of Seller Parent~~ Sellers or any of ~~its~~ their respective Affiliates ~~contained in this Agreement, (5) Taxes for a Pre-Closing Tax Period imposed on (x)~~ or Representatives at 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~~time, or ~~(z)~~ any ~~transaction or step forming part~~ action 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 Company or its Affiliates ~~for which Purchaser is responsible pursuant~~ prior to the Closing, in violation of Section ~~10.3~~7.1(a); in each of the above cases in clauses (a) through (g), together with any out-of-pocket fees and expenses (~~8) Taxes arising from any breach~~ including attorneys’ and accountants’ fees) incurred in connection therewith or in enforcing its rights hereunder. For purposes of ~~any representation or warranty contained~~ clarity, it is expressly understood and agreed by the Parties that in ~~Section 4.16(k), (9) Taxes arising~~ no event shall the liability of the Xxxxxx Seller Parties as a ~~result~~ group, the liability of the Fidelity Charitable Gift Fund, or the liability of the Xxxxx Seller Parties as a group, for any ~~Conveyed Subsidiary~~ Taxes or Losses of Purchaser Indemnified Persons under this Section 7.3 exceed their respective Seller Indemnity Percentage of such Taxes or Losses. (b) Purchaser shall indemnify each Seller and each Seller Indemnified Person and hold them harmless from and against 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, Loss attributable to any ~~item described~~ breach or violation of, or failure to fully perform, any covenant, agreement, undertaking or obligation by Purchaser in ~~clauses~~ this Article 7. (1c) ~~through (9) (~~The Xxxxxx Seller Parties, jointly and severally as among such Xxxxxx Seller Parties up to the Xxxxxx Seller Parties’ applicable Seller Indemnity Percentage, and the Xxxxx Seller Parties and the Xxxxx Additional Parties, jointly and severally as among such Xxxxx Seller Parties and Xxxxx Additional Parties up to the Xxxxx Seller Parties’ applicable Seller Indemnity Percentage, shall reimburse Purchaser for any ~~such~~ Taxes ~~for which Seller Parent is responsible~~ of the Company that are the responsibility of the Sellers 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)(i7.3 within ten (10) ~~for (A)~~ Business Days after payment of such 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 the Company, net of 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 amounts that were accrued and taken into account in respect of such Taxes in the ~~calculation~~ determination of the ~~Final~~ final Closing Net Working Capital. Should any of such Sellers not make full payment of any such obligations under this Section 7.3(c) within such ten (10) Business ~~Working Capital or~~ Day period: (i) any amount payable under this Section 7.3 shall accrue interest from the ~~Final~~ expiration of such ten (10) Business ~~Net Cash)~~Day Period to and including the date such payment is made at a rate per annum equal to five (5%) per annum. Such interest shall be calculated daily on the basis of a 365 day year and the actual number of days elapsed, ~~or (D) Taxes for which Purchaser Parent is responsible under Section 6.5(d)(ii).~~without compounding; (ii) ~~Subject~~ Purchaser may, at Purchaser’s option and with written notice to ~~Section 6.5(d)(v)~~such Sellers and the Seller Representative, ~~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~~ satisfy such payment obligation of ~~Purchaser Parent and its Affiliates (other than Purchaser and its Subsidiaries) for any Tax period (other than Transfer Taxes and VAT for which~~ a 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~~ the Indemnification Escrow Deposit 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 accordance with 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~~ terms of the ~~Purchaser Internal Restructurings,~~ Escrow Agreement (~~8) Taxes required to be deducted or withheld with respect~~ subject to any ~~amounts payable~~ obligation of such Sellers under the Escrow Agreement to ~~Purchaser Parent pursuant to Section 2.8 or Section 2.9, including~~ restore 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 portion 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 ClosingIndemnification Escrow Deposit so disbursed), 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 Purchaser may, at Purchaser’s option and with written notice to such Sellers and the ~~extent permitted or required by applicable Law~~Seller Representative, ~~the taxable year~~ satisfy such payment obligation of ~~each~~ any of the ~~Conveyed Subsidiaries and their Subsidiaries and any Subsidiary of Purchaser that includes~~ Sellers by offset against the ~~Closing Date shall be treated as closing on (and including) the Closing Date. Otherwise, for purposes of this Agreement, in the case~~ portion of any ~~Straddle Period: (A) Property Taxes allocable~~ Earn-Out Payment that is then due or subsequently becomes due 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~~such Seller under Section 2.6; and (Biv) ~~Taxes (other than Property Taxes) allocable to~~ the ~~Pre-Closing Tax Period~~ foregoing remedies shall be ~~computed as if such Tax period ended as of the close of business on the Closing Date and,~~ in ~~the case~~ addition to and not in limitation of any ~~Taxes of Conveyed Subsidiaries (and their Subsidiaries) and Seller Parent,~~ other rights or remedies to which Purchaser is or may be entitled at law 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~~ any exhibits hereto) or otherwise, including without limitation under Section 9.7 of 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

Samples: Stock Purchase Agreement (Compass Group Diversified Holdings LLC)

Tax Indemnification. (ia) ~~Subject to Section 6.5(d)(v)~~Seller shall indemnify each Group Company, ~~from~~ Buyer and ~~after the Closing, Seller Parent agrees to indemnify~~ each Buyer Indemnitee 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 3.21 or Section 4.06; (b) any Loss attributable to any breach or violation of, or failure to fully perform, any covenant, agreement, undertaking or obligation in Article VII; (c) all ~~liability, without duplication, for (1) Taxes of the Conveyed Subsidiaries and their Subsidiaries for any~~ Pre-Closing ~~Tax Period~~ Taxes; (~~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 which Purchaser is responsible hereunder) including~~member of an affiliated, ~~Taxes (other than Taxes~~ consolidated, combined or unitary group 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~~ Group Company (or any ~~Subsidiary thereof~~predecessor of any Group 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; (~~or a similar provision~~ e) any and all Taxes of ~~state, local or foreign Law), or as a~~ any Person imposed on any Group 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; and (~~other than Contracts that do not relate primarily to Taxes), (4~~f) any and all Taxes ~~arising out of or resulting from any breach~~ of any ~~covenant or agreement of Seller Parent~~ Person imposed on any Group Company, Buyer or any ~~of its Affiliates contained in this Agreement~~Buyer Indemnitee arising from or related to the Reorganization; provided, ~~(5) Taxes for a Pre-Closing Tax Period imposed on (x) any transaction effected~~ however, that Losses pursuant to this Section ~~2.3(b), (y~~7.03(a) shall not include any ~~settlement of any intercompany accounts of Seller Parent~~ Loss suffered by Buyer 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 Company as a result of ~~Purchaser’s~~ the 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~~ of the ~~notice and cooperation requirements~~ purchase of ~~Section 2.10 and except for any such Taxes (and any related penalties) required~~ the Company stock by Buyer to be ~~deducted or withheld solely~~ treated as ~~a result~~ the purchase of ~~any assignment by Purchaser or its Affiliates~~ the Company assets for ~~which Purchaser is responsible~~ federal and state income tax purposes pursuant to Section ~~10.3~~1361 of the Code, including any Loss attributable to the failure of the transaction to result in a step up in basis of the Company assets for federal and state income tax purposes; provided, however, that in the case of clauses (c), (~~8) Taxes arising from any breach of any representation or warranty contained in Section 4.16(k~~d), (9e) and (f) above, Seller shall not be liable for any Taxes ~~arising~~ treated as a ~~result~~ Liability in the calculation of Net Working Capital or reflected in the amount of accruals for Taxes (excluding reserves for deferred Taxes) included on the Interim Balance Statement, as such accruals are adjusted for the passage of time through the Closing Date in accordance with past custom and practice of the Group Companies. In each of the above cases, together with any out-of-pocket fees and expenses (including attorneys’ and accountants’ fees) incurred in connection therewith. Seller shall reimburse Buyer for any Taxes of any ~~Conveyed Subsidiary or any Subsidiary of any Conveyed Subsidiary at any time ceasing to be a member of a group for~~ Group Company that are the ~~purposes of any Tax, of which group Seller Parent or any Subsidiary~~ responsibility 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)~~7.03 within ten (10) Business Days after payment of such Taxes by Buyer or such Group Company. (b) Buyer shall, ~~subject to the following proviso~~without duplication, “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 pursuant to this Section 6.5(d)(i) for (A) Taxes~~ Loss attributable to any ~~action taken after the Closing by Purchaser~~breach or violation of, or failure to fully perform, any of covenant, agreement, undertaking or obligation in this Article VII in accordance with 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)terms. (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 The indemnifications provided 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 7.03 shall not be ~~required to indemnify or hold harmless any Purchaser Tax Indemnified Party from and against any liability for (A) Taxes attributable~~ subject to any ~~action taken after the Closing by Seller Parent or any of its Affiliates~~baskets, ~~other than any such action that (1) is in the ordinary course of business~~caps, ~~(2) is expressly permitted or contemplated by this Agreement~~thresholds, 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 limitations 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 6.5Article IX.

Appears in 1 contract

Samples: Share Purchase Agreement (Us Concrete Inc)

Tax Indemnification. ~~(i) Subject~~ Except to ~~Section 6.5(d)(v), from and after~~ the ~~Closing~~extent treated as a liability in the calculation of Closing Working Capital, Seller ~~Parent agrees to~~ Parties, jointly and severally, shall indemnify the Company, Buyer, and each Buyer Indemnitee 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 3.20; (b) any Loss attributable to any breach or violation of, or failure to fully perform, any covenant, agreement, undertaking or obligation in ARTICLE VIII; (c) all ~~liability, without duplication, for (1)~~ Taxes of the ~~Conveyed Subsidiaries and their Subsidiaries~~ Company or relating to the business of the Company for ~~any~~ all Pre-Closing Tax ~~Period (~~Periods, including ~~any Taxes payable in respect of an election under Section 965(h)~~ as a result of the ~~Code),~~ Section 338(h)(10) Election; (2d) 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; (~~or a similar provision~~ e) any and 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; (~~other than Contracts that do not relate primarily to Taxes), (4~~f) all Taxes ~~arising out of or~~ incurred by Company resulting from any ~~breach~~ “Imputed Underpayment” under Code Section 6225(b) (or any similar state tax statute) payable by DP-NXA related to any adjustment in the amount of any ~~covenant~~ item of the income, gain, loss, deduction, or ~~agreement~~ credit of ~~Seller Parent~~ DP-NXA (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~~ the distributive share of any ~~intercompany accounts~~ Member 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 SubsidiariesDP-NXA thereof) for any Pre-Closing Tax Period; and (g) all Taxes and any Loss incurred by the Company and/or Buyer attributable to the failure of DP-NXA to timely file an election under Code Section 754 and Treasury Regulations Section 1.754 pursuant to DP-NXA’s agreement to make such election (as further described in Section 9.02(n), below). In each of the above cases, together with any out-of-pocket fees and expenses (3including attorneys’ and accountants’ fees) incurred in connection therewith. Sellers shall reimburse Buyer for 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 the Company that are the responsibility 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 Sellers 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 8.03 within ten (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 (510) 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 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 Buyer 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 bindingCompany. (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

Samples: Membership Interest Purchase Agreement (Gse Systems Inc)

Tax Indemnification. (ia) ~~Subject~~ Seller will be responsible for, will pay or cause to ~~Section 6.5(d)(v)~~be paid, ~~from~~ and ~~after the Closing, Seller Parent agrees to~~ will 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~~ against, any and all ~~liability, without duplication,~~ Damages 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~~each of the following: (i) any and all Taxes with respect to any taxable period (or portions thereof) 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 Company (or any ~~Subsidiary thereof~~predecessor) ~~is liable under~~ ending on or before the Closing Date (including, without limitation, any liability for Taxes incurred as a result of the Section 338(h)(10) Election as described in Section 12.2 hereof or as a result of any dividends described in Section 5.7 hereof, or resulting from an acceleration of an "intercompany transaction," within the meaning of Treasury Regulation Section 1.1502-6 13(d) (or a any analogous or similar provision of under state, local or foreign ~~Law~~law or any predecessor provision or regulation), that occurred on or ~~as a transferee~~ before the Closing Date), but only to the extent such Taxes were not accrued by the Company in the Closing Balance Sheet; (ii) any and all Taxes of any member of an affiliated, consolidated, combined, or ~~successor or by Contract~~ unitary group including the Affiliated Group (other than ~~Contracts that do not relate primarily~~ the Company) of which the Company (or any predecessor) is or was a member on or prior to ~~Taxes)~~the Closing Date by reason of the liability of the Company pursuant to Treasury Regulation Section 1.1502-6(a) or any analogous or similar state, local or foreign law; and (4iii) ~~Taxes arising out of or resulting from~~ any breach by Seller of any ~~covenant~~ representation, warranty, covenant, or agreement ~~of Seller Parent or any of its Affiliates~~ contained in ~~this Agreement~~Section 3.11, Section 10.5, Section 12.1, or Section 12.2 hereof. (5b) The Company will promptly notify Seller of the commencement of any claim, audit, examination, or other proposed change or adjustment by any taxing authority concerning any Taxes ~~for a Pre-Closing~~ or other Damages covered by Section 10.5(a) hereof ("Tax ~~Period imposed on (x) any transaction effected pursuant to Section 2.3(b~~Claim")~~, (y) any~~ . Seller shall control the defense and settlement of any ~~intercompany accounts~~ Tax audit or administrative or court proceeding relating to taxable periods of the Company ending on or prior to the Closing Date, provided, however, that if the results of any such Tax audit or administrative or court proceeding could reasonably be expected to be material to Purchaser or the Company, then Seller ~~Parent~~ and Purchaser shall jointly control the defense and settlement of any such Tax audit or ~~its Subsidiaries pursuant~~ proceeding. Seller shall promptly notify the Company if it decides not to ~~Section 6.7~~participate in the defense or settlement of any such Tax audit or administrative or court proceeding and the Company thereupon shall be permitted to defend and settle such Tax audit or proceeding. Seller will promptly notify the Company of the commencement of any claim, audit, examination, or ~~(z)~~ other proposed change or adjustment by any ~~transaction or step forming part~~ taxing authority which may affect the liability of the Company for Taxes and Seller ~~Internal Restructurings~~shall keep the Company duly informed of the progress thereof. (c) The Seller shall be responsible for, ~~(6) Transfer Taxes for which Seller Parent is responsible under Section 6.5(j), (7) Taxes required~~ 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 each case, subject to Purchaser’s compliance with the notice and ~~cooperation requirements of Section 2.10~~ shall indemnify 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~~ and the Company from and against any liability ~~pursuant~~ arising under any Tax sharing, Tax indemnity, Tax allocation or other similar contract to ~~this Section 6.5(d)(i) for (A) Taxes attributable to any action taken after~~ which the ~~Closing by Purchaser~~Company, any ~~of its Affiliates (including~~ predecessor to the ~~Conveyed Subsidiaries and their Subsidiaries),~~ Company 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 transferor to the ~~extent that~~ Company is a ~~Conveyed Subsidiary~~ party 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)obligated thereunder, in each case ~~attributable~~ on or prior 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 ~~indemnification under this Section 6.5(d) shall~~ indemnity hereunder 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)~~ sixty 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~~ Tax 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 limitations with respect to the relevant ~~Pre-Closing Tax Period~~ taxable period (including all periods of extension, whether automatic 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 bindingpermissive). (Be) In Seller shall have no liability for indemnification for any Damages under this Section 10.5 until and unless 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 cumulative total of such ~~difference with respect to a Conveyed Subsidiary and their Subsidiaries and (ii) pay~~ Damages exceeds in the aggregate $2,000, it being understood that if such threshold for Damages is reached, Seller shall be liable to Purchaser ~~Parent the amount of such difference with respect to Purchaser and its Subsidiaries~~for all Damages. (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

Samples: Stock Purchase Agreement (Life Re Corp)

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

Samples: Stock Purchase Agreement (Brinks Co)

Tax Indemnification. ~~(i) Subject to Section 6.5(d)(v)~~The Transferors shall, ~~from~~ on a joint and ~~after~~ several basis, indemnify the ~~Closing~~Group Companies, ~~Seller Parent agrees to indemnify~~ Acquiror, and each Acquiror Indemnitee 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 5.20; (b) any Loss attributable to any breach or violation of, or failure to fully perform, any covenant, agreement, undertaking or obligation in this Article 8; (c) all ~~liability, without duplication, for (1)~~ Taxes of the ~~Conveyed Subsidiaries and their Subsidiaries~~ Group Companies or relating to the business of the Group Companies 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 which Purchaser is responsible hereunder) including~~member of an affiliated, ~~Taxes (other than Taxes~~ consolidated, combined or unitary group 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~~ Group Company (or any ~~Subsidiary thereof~~predecessor of any Group 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~~ e) any and all Taxes of ~~state, local or foreign Law), or as a~~ any Person imposed on any Group 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 that do not relate primarily to Taxes)~~including attorneys’ and accountants’ fees) incurred in connection therewith. The Transferors shall, ~~(4)~~ on a joint and several basis, reimburse Acquiror for any 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 Group Company 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 Transferors 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 8.3 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 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 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 (by Acquiror 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 ClosingGroup Company. ~~With respect to any Taxes suffered or incurred by any Subsidiary of Purchaser Parent (including Purchaser and its Subsidiaries)~~ Each Acquiror Indemnitee that ~~was~~ is 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 party to this Agreement ~~(including pursuant to~~ shall be an express third party beneficiary of this Section ~~6.5, Section 6.6 and Article VII) and any payment made by Purchaser Parent~~ 8.3 with the right to ~~Purchaser pursuant to Section 2.8 or Section 2.9 in~~ directly enforce 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 6.5provisions thereof.

Appears in 1 contract

Samples: Stock Acquisition Agreement (Optimus Healthcare Services, Inc.)

Tax Indemnification. Each Seller shall jointly and severally indemnify each of the Group Companies and their Subsidiaries, Buyer, and each Buyer Affiliate and hold them harmless from and against any loss, claim, liability, expense, or other damage attributable to (i) ~~Subject to Section 6.5(d)(v), from and after~~ all Taxes (or 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~~non-payment thereof) ~~(collectively, the “Purchaser Tax Indemnified Parties”) from and against all liability, without duplication, for (1) Taxes~~ of each of the ~~Conveyed Subsidiaries~~ Group Companies and their Subsidiaries for all taxable periods ending on or before the Closing Date and the portion through the end of the Closing Date for any taxable period that includes (but does not end on) the Closing Date (“Pre-Closing Tax ~~Period (including~~ Period”); provided, however, Sellers shall have no liability for any Taxes ~~payable in respect~~ of ~~an election under Section 965(h) of~~ CCHCI and its Subsidiaries for the ~~Code)~~taxable period beginning on January 1, 2007 and ending on the Closing Date, and any subsequent taxable periods, (2ii) all Taxes of any ~~Seller~~ member of an affiliated, consolidated, combined or unitary group of which any of the Group Companies or any of their 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 §1.1502-6 or any analogous or similar state, local, or foreign law or regulation, and (iii) any and all Taxes of any person (other than any ~~Transfer Taxes and VAT for which Purchaser is responsible hereunder) including, Taxes (other than Taxes~~ of the ~~Conveyed Subsidiaries~~ Group Companies and their Subsidiaries) imposed ~~with respect to, arising out~~ on any 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 (Group Companies or any ~~Subsidiary thereof) is liable under Treasury Regulation Section 1.1502-6 (or a similar provision~~ of ~~state, local or foreign Law), or~~ their 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, ~~(y) any settlement of any intercompany accounts of Seller Parent or its Subsidiaries pursuant to Section 6.7~~rule, or ~~(z) any~~ regulation, which Taxes relate to an event or transaction ~~or step forming part of~~ occurring before the ~~Seller Internal Restructurings, (6) Transfer Taxes for which Seller Parent is responsible under~~ Closing. This Section ~~6.5(j), (7) Taxes required to~~ 9.4 shall 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~~ provisions of Sections 8.4 through 8.9 and shall be subject to the liability limitations in Section 8.3(a) but 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 basket provisions 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~~8.3(f). (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

Samples: Stock Purchase Agreement (North Pointe Holdings Corp)

Tax Indemnification. (ia) Subject to ~~Section 6.5(d)(v)~~the terms (including the limitations) set forth in this Article VIII, from and after the Closing, Seller ~~Parent agrees~~ shall (without duplication with respect to any other payment made pursuant to this Agreement) indemnify ~~and hold harmless~~ Purchaser and its ~~Subsidiaries~~ Affiliates against, and hold them harmless 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 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~~ transactions described in Section 5.15(a), and all income Taxes of Seller and any of its Affiliates arising out of the sale of the Transferred Equity Interests to Purchaser pursuant to this Agreement; (ii) (A) all Taxes of Seller and any of its Affiliates (other than a Group Company), except for Taxes that result in any Business ~~for a Pre-Closing~~ Tax ~~Period~~Audit Amount becoming positive, and (3B) all Taxes of any ~~Person (other than~~ Group Company to the ~~Conveyed Subsidiaries and their Subsidiaries) for a Pre-Closing Tax Period for which~~ extent arising or resulting from 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 liability arising out of or relating to the Seller Business (including the ownership or operation thereof), whether any such liability arises before or after Closing, is known or unknown or is contingent or accrued; (iii) all Taxes resulting from any breach of any covenant or agreement ~~of Seller Parent or any of its Affiliates contained in this Agreement, (5)~~ relating to 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~~ 5.07 made 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~~ performed by 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~~Group Companies solely with respect to periods prior to the Closing)~~, other than any such action that~~ ; (1iv) ~~is in the ordinary course of business,~~ all Taxes (~~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 Treasury Regulation Section 1.1502-6 or any comparable provision of any applicable Tax Law) of (A) Seller or any of its Affiliates (other than any Group Company) or (B) Xxxxxx Biomet Holdings, Inc. or any of its Affiliates, in each case, for which any Group Company becomes liable as a ~~change~~ result of being or having been at any time before Closing, part of any consolidated, combined, affiliated, aggregated, unitary or similar group for Tax purposes; (v) all Transfer Taxes allocated to Seller pursuant to Section 5.07(h); and (vi) any reasonable third party legal fees and expenses resulting from the items described in ~~applicable Law~~ clauses (~~a “~~i) through (v) above; provided that, notwithstanding anything to the contrary in this Agreement, Seller shall not be liable under this Section 8.03 for any such Taxes, fees, expenses or amounts to the extent such Taxes, fees or expenses or amounts (1) are described in Section 8.03(b) or (2) result from any Purchaser Tax Act”. (b) Subject to the terms (including the limitations) set forth in this Article VIII, from and after the Closing, Purchaser shall indemnify Seller and its Affiliates against, and hold them harmless from: (i) all Taxes arising out of or relating to the Business (including the ownership or operation thereof), whether any such liability arises before or after the Closing, is known or unknown or is contingent or accrued; (Bii) any Business Tax Audit Amount that is positive; (iii) all Taxes ~~that were reflected, accrued~~ resulting from any breach of any covenant or ~~reserved for~~ agreement relating to Taxes contained in ~~the Final Closing Statement, Final Business Working Capital,~~ Section 5.07 made 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 be performed by Purchaser or any of its Affiliates (including the ~~Conveyed Subsidiaries and their Subsidiaries after~~ Group Companies but solely with respect to periods following 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 (1iv) all Taxes resulting from any Purchaser Tax Act; (v) all Transfer Taxes allocated to Purchaser pursuant to Section 5.07(h); and (vi) any reasonable third party legal fees and expenses resulting from the items described in clauses (i) through (v) above; provided that, notwithstanding anything to the contrary in this Agreement, Purchaser shall not be liable under Sections 8.03(b)(i), 8.03(b)(ii) and 8.03(b)(vi) (in the case of ~~Purchaser Parent~~ Section 8.03(b)(vi), to the extent resulting from items described in Sections 8.03(b)(i) and ~~its Affiliates (other than Purchaser and its Subsidiaries~~8.03(b)(ii)) for any ~~Tax period~~ such Taxes, fees, expenses or amounts (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 (whether 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~~relating to the Business) 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~~ to the extent Seller is entitled to be indemnified by Xxxxxx Biomet Holdings, Inc. for such Taxes, fees or expenses or amounts pursuant to the Distribution Agreements or (92) ~~(any~~ to the extent such Taxes ~~for which Purchaser Parent is responsible pursuant to this Section 6.5(d)(ii)~~are Taxes of Xxxxxx Biomet Holdings, 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 Inc. 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 “for which 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~~ become liable as a result of being or having been at any time before Closing), ~~to offset~~ part of any consolidated, combined, affiliated, aggregated, unitary or ~~otherwise reduce the applicable~~ similar group for Tax ~~Liability in respect~~ purposes of ~~such Income Taxes (except~~ Xxxxxx Biomet Holdings, Inc. or 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)~~its Affiliates. (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. (ivc) Any ~~claim~~ indemnity obligation 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 Taxes pursuant to this Section ~~6.5(d)~~ 8.03 shall be ~~made~~ paid within ~~thirty (30) days~~ 30 Business Days after ~~the indemnified party~~ Purchaser or Seller, as applicable, makes written demand upon the ~~indemnifying party~~other party claiming it is entitled to indemnification under this Section 8.03, 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. (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

Samples: Equity Purchase Agreement (ZimVie Inc.)

Tax Indemnification. ~~(i) Subject~~ The Kali Shareholders hereby, jointly and severally, agree to ~~Section 6.5(d)(v)~~defend, ~~from and after the Closing, Seller Parent agrees to~~ indemnify and hold harmless ~~Purchaser~~ Kali, PRI and ~~its Subsidiaries~~ their respective directors, officers, shareholders, xxxnts, Affiliates, successors and permitted assigns, from and against, and shall pay and reimburse the foregoing Persons for, any and all losses, liabilities, claims, obligations, penalties, damages, costs and expenses (including all attorneys' fees and disbursements and other costs reasonably incurred or sustained by an Indemnitee (as defined in Section 11.3 hereof) in connection with the ~~Conveyed Subsidiaries~~ investigation, defense or prosecution of any such claim or any action or proceeding between the Indemnitee and ~~their Subsidiaries after~~ the ~~Closing Date~~Indemnifying Party (as defined in Section 11.3 hereof) or between the Indemnitee and any third party or otherwise), whether or not involving a third-party claim (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"Losses"), (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, relating to or arising out of (i) all Taxes of Kali due for all taxable periods ending on or ~~relating~~ prior to the ~~Purchased Assets or~~ Closing Date and the ~~Business~~ portion of the taxable period through the end of the Closing Date for a any taxable period that includes (but does not end on) the Closing Date (the "Pre-Closing Tax Period"); (ii) all Taxes of any member of an affiliated, consolidated, combined or unitary group of which Kali (3or any predecessor) 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 Law; and (iii) all Taxes of any Person (other than ~~the Conveyed Subsidiaries and their Subsidiaries~~Kali) 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 imposed on Kali as a transferee or ~~successor~~ successor, by contract or ~~by Contract (other than Contracts~~ xxxsuant to Law. Xxx Kali Shareholders shall, jointly and severally, reimburse PRI for any Taxes of Kali 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 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 Kali Shareholders 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 7.1 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 days after payment 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~~Taxes by PRI or Kali. (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

Samples: Stock Purchase Agreement (Pharmaceutical Resources 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~~ Xxxxxxxx, 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

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

Tax Indemnification. ~~(i) Subject~~ Sellers agree to ~~Section 6.5(d)(v)~~indemnify, ~~from and after the Closing, Seller Parent agrees to indemnify~~ defend and hold Purchaser Indemnitees 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~~Losses suffered, ~~without duplication~~incurred or paid, ~~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)~~directly or indirectly, (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 toby them as a result of, arising out of or ~~relating~~ related to: (i) all Taxes, losses, claims and expenses resulting from, arising out of, or incurred with respect to, any claims that may be asserted by any party based on, attributable to, or resulting from the failure of any representation or warranty made pursuant to Section 3.12 to be true and correct in all respects as of the date of this Agreement and as of the Closing Date; (ii) all Taxes imposed on, asserted against or attributable to the ~~Purchased Assets~~ properties, income or operations of any member of the ~~Business~~ Company Group, or any Taxes for a which any member of the Company Group is otherwise liable, for all Pre-Closing Tax ~~Period~~Periods; (iii) any Taxes imposed on a member of the Company Group by reason of such Person having been a member of any affiliated, consolidated, combined or unitary group for purposes of filing Returns or paying Taxes (other than such a group consisting solely of members of the Company Group) prior to the Closing, (3iv) any and all Taxes of any Person imposed on any member of the Company Group for any period as a transferee or successor, by Law, or contract (other than a Commercial Tax Agreement), in each case, in respect of a transaction occurring on or before the ~~Conveyed Subsidiaries~~ Closing, (v) fifty percent (50%) of all Transfer Taxes, and ~~their Subsidiaries~~(vi) ~~for~~ without duplication of other indemnities hereunder, any penalties, interest, additions to Tax or other similar items with respect any period to the extent relating to Taxes with respect to 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 Overlap Period 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 are 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~~ Tax benefits related to the Informal Contribution, being challenged or otherwise unavailable, and any reasonable out-of-pocket expenses incurred by any Purchaser or Indemnitee in connection with any Tax Matter to the extent such expenses are incurred with respect to the Informal Contribution in a tax period ended prior to Closing, except to the extent such Taxes, losses, claims and expenses described in the preceding clauses (i) through (vi) (a) were taken into account in calculating Final Closing Indebtedness, (b) are attributable to Taxes of Purchaser, its Affiliates ~~for which Purchaser is responsible pursuant~~ (other than the Group Company) or any direct or indirect beneficial owners thereof or attributable to ~~Section 10.3), (8)~~ Taxes ~~arising from any breach~~ of ~~any representation or warranty contained in Section 4.16(k), (9) Taxes arising~~ the Company Group as a result of ~~any Conveyed Subsidiary~~ an election under Section 338 of the Code, or (c) resulted from the failure to comply with Section 6.6(f) by Purchaser, the Company Group or any ~~Subsidiary~~ Affiliate thereof, it being understood that any action undertaken by Purchaser, the Company Group or any Affiliate thereof in connection with a Tax Matter that is at the direction or request of ~~any Conveyed Subsidiary at any time ceasing~~ Sellers’ Representative pursuant to Section 6.6(e)(i) shall be considered to be ~~a member of a group~~ consented to by Sellers’ Representative 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 (9Section 6.6(f) (~~any~~ all such ~~Taxes~~ Taxes, losses, claims and expenses that the Sellers are liable for ~~which Seller Parent is responsible pursuant to~~ under this Section ~~6.5(d)(i~~6.6(c), ~~subject to the following proviso,~~ “~~Seller~~ Indemnified Taxes”)~~; provided that Seller Parent shall not be required~~ . Notwithstanding anything set forth herein 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~~contrary, neither CAV nor any of its Affiliates (will have any liability with respect to Indemnified Taxes to the extent arising out of or in connection with the CoCo Bonds, including without limitation, their issuance, existence or tax accounting treatment and the ~~Conveyed Subsidiaries and their Subsidiaries), or any transferee of Purchaser or any of its Affiliates (including~~ transactions related to 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~~ CoCo Bonds contemplated by this Agreement, or which such liability will be borne jointly and severally by the Sellers other than CAV on a pro rata basis in accordance with their respective Purchase Price Adjustment Percentages (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 calculated without taking into account in the ~~calculation~~ Purchase Price Adjustment Percentage 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~~CAV). (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

Samples: Share Purchase Agreement (Abacus Life, 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

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

Tax Indemnification. (ia) ~~Subject to Section 6.5(d)(v), from~~ From and after the Closing, ~~Seller Parent agrees to indemnify~~ Globe shall indemnify, defend and hold harmless ~~Purchaser and its Subsidiaries (including~~ the ~~Conveyed Subsidiaries and their Subsidiaries after the Closing Date) (collectively, the “Purchaser Tax~~ DCC Indemnified ~~Parties”)~~ Persons from and against and in respect of all ~~liability, without duplication, for (1) Taxes~~ Losses incurred by any of the ~~Conveyed Subsidiaries~~ DCC Indemnified Persons, whether or not involving a Third Party claim, which are caused by, arise from or are related to (i) all Taxes (or the non-payment thereof) of the Brazilian Entities, WV Alloys, Alloy JV and ~~their Subsidiaries~~ the Alloy Business for any Pre-Closing Tax Period (~~including any Taxes payable~~ determined in ~~respect of an election under~~ accordance with Section ~~965(h~~10.1(c) ~~of the Code~~hereof), (2ii) ~~Taxes~~ the breach or inaccuracy of any ~~Seller~~ representation or warranty set forth in Section 4.12 hereof (~~other than~~ it being agreed that for purposes of this Section 10.1(a)(ii) the representations and warranties set forth in Section 4.12 shall not be deemed to be qualified by any ~~Transfer~~ references therein to “materiality”), (iii) the breach or nonperformance of any covenant or agreement set forth in Section 6.1(b)(xvi), (iv) all Taxes ~~and VAT for which Purchaser is responsible hereunder)~~ imposed on any member of any consolidated, combined, affiliated or unitary group (including, without limitation any Taxes ~~(other than Taxes of the Conveyed 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 any 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~~ with which 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 the Subject Entities files 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) has filed for any Pre-Closing Tax ~~Period~~Period a Tax Return on a consolidated, combined, unitary or affiliated basis and (3v) ~~Taxes of~~ all payments made by the Subject Entities to any ~~Person for a Pre-Closing Tax Period for which Purchaser (~~Governmental Authority 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, Person pursuant to ~~Section 6.7~~ any Tax sharing, Tax indemnification or ~~(y)~~ Tax allocation agreement or arrangement to which 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) Subject Entities 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 party on or prior to the ~~following proviso, “Purchaser Parent Indemnified Taxes”); provided that Purchaser Parent~~ Closing Date. (b) In no event shall ~~not be required~~ Globe’s aggregate obligations to indemnify ~~or hold harmless any Purchaser~~ the DCC Indemnified Persons for Losses covered by Section 10.1(a) relating to the Brazilian Entities exceed the Brazilian 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~~Cap, other than any ~~such action that (~~Losses which are caused by, arise from or are related to, Tax Liabilities of the Brazilian Entities for any Tax period or portion thereof beginning on or after January 1~~) is in~~ , 2009, and ending on or before the ~~ordinary course~~ Closing Date, which are not properly reflected on the Closing Date Brazilian Net Working Capital Statement, which shall not be subject to the Brazilian Tax Cap and shall not, for the avoidance of ~~business~~doubt, ~~(2) is expressly permitted or contemplated by this Agreement, or (3) is required to~~ be taken into account in ~~order~~ determining whether the Brazilian Tax Cap has been reached. Notwithstanding anything herein to ~~comply with applicable Law~~ the contrary, Globe shall not have any indemnification obligations pursuant to this Article X or ~~as a result of a change in applicable Law (a “Seller Tax Act”), (B) Taxes that were reflected, accrued or reserved~~ have any responsibility for ~~in the Final Closing Statement, Final Purchaser Working Capital or the Final Purchaser Net Cash, (C) Income~~ any Losses relating to Taxes to the extent ~~that Purchaser~~ an adequate reserve for such specific Losses or ~~any Subsidiary thereof had any~~ a Tax ~~Assets as of the close of business~~ liability with respect to such specific Losses in each case reasonably apparent 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 face was included in the calculation of the ~~Final Purchaser~~ Closing Alloy Net Working Capital or the ~~Final Purchaser~~ Closing Brazilian Net ~~Cash)~~Working Capital, as applicable. For the avoidance of doubt, (i) a reserve for any Liability for interim Taxes or for other matters shall not excuse Globe’s indemnification obligations with respect to such matters in excess of such reserve amounts and (Dii) ~~Taxes for which Seller Parent~~ the Brazilian Tax Cap is ~~responsible under Section 6.5(d)(i)~~in addition to (and not limited by) the Purchase Price Cap. (~~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, in the case of any Straddle Period: (Ai) ~~Property~~ the Taxes ~~allocable~~ of the Subject Entities that are imposed on a periodic basis and not based on income or receipts (e.g., property taxes) attributable to the Pre-Closing Tax Period shall be ~~computed based upon~~ equal to the ~~ratio~~ product of such Taxes attributable to the entire Tax period and a fraction, the numerator of which is the number of days in such period that elapsed through the ~~Pre-~~Closing ~~Tax Period to~~ Date and the denominator of which is the number of days in such Tax period; provided, however, that, if the ~~entire Straddle Period~~amount of periodic Taxes imposed for such Tax period reflects different rates of Tax imposed for different periods within such Tax period, the formula described in the preceding clause shall be applied separately with respect to each such period within the Tax period; and (Bii) the Taxes of the Subject Entities (other than ~~Property Taxes~~those described in clause (i)) ~~allocable~~ attributable to the Pre-Closing Tax Period shall be equal to the amount 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 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

Samples: Purchase Agreement (Globe Specialty Metals Inc)

Tax Indemnification. (i) Subject to ~~Section 6.5(d)(v)~~the other limitations in this Article VII, Xxxxx Holdings shall indemnify each of the other Parties and hold each of them harmless from and ~~after the Closing~~against, ~~Seller Parent agrees~~ any Loss attributable 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) any and all Taxes imposed on Xxxxx Holdings or any of the ~~Conveyed Subsidiaries and their Subsidiaries~~ Xxxxx Companies or for which Xxxxx Holdings or any of the Xxxxx Companies may otherwise be liable for any Pre-Closing Date 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 (determined in accordance with Section 7.01(b)), (2) all Taxes of any member (other than an Xxxxx Company) of an affiliated, consolidated, combined or unitary group of which any Xxxxx Company (or any predecessor) is or was a member on or prior to the ~~“Final~~ Closing Date, and (3) any and all Taxes of any Person (other than any Xxxxx Company) imposed on any Xxxxx Company as a transferee or successor, by Contract or pursuant to any Law, which Taxes relate to an event, transaction or relationship occurring or existing before the Closing; provided that this Section 7.01(a)(i) shall not apply to any amounts actually taken into account in determining Working Capital with respect to the Xxxxx Companies or the Xxxxx Net Indebtedness Amount pursuant to Section 3.02. (ii) Subject to the other limitations in this Article VII, Flowco Production Solutions shall indemnify each of the other Parties and hold each of them harmless from and against, any Loss attributable to (1) any and all Taxes imposed on Flowco Production Solutions or any of the Flowco Companies or for which Flowco Production Solutions or any of the Flowco Companies may otherwise be liable for any Pre-Closing ~~Income~~ Date Tax ~~Amount”~~Period and for the portion of any Straddle Period ending on the Closing Date (determined in accordance with Section 7.01(b)), (2) all Taxes of any member (other than a Flowco Company) of an affiliated, consolidated, combined or unitary group of which any Flowco Company (or any predecessor) is or was a member on or prior to the Closing Date, and (ii3) any and all Taxes of any Person (other than any Flowco Company) imposed on any Flowco Company as a transferee or successor, by Contract or pursuant to any Law, which Taxes relate to an event, transaction or relationship occurring or existing before the ~~amount~~ Closing; provided that this Section 7.01(a)(ii) shall not apply to any amounts actually taken into account in determining Working Capital with respect to the Flowco Companies or the Flowco Net Indebtedness Amount pursuant to Section 3.02. (iii) Subject to the other limitations in this Article VII, Flogistix Holdings shall indemnify each of the ~~Seller Accrued Income Taxes or Purchaser Accrued Income Taxes~~other Parties and hold each of them harmless from and against, ~~as applicable,~~ any Loss attributable to ~~such Income Tax Return as reflected~~ (1) any and all Taxes imposed on Flogistix Holdings or any of the ~~Final Closing Statement (~~Flogistix Companies or for which Flogistix Holdings or any of the “Flogistix Companies may otherwise be liable for any Pre-Closing ~~Income~~ Date Tax ~~Amount”~~Period and for the portion of any Straddle Period ending on the Closing Date (determined in accordance with Section 7.01(b)), (2) ~~and deliver such statement to Seller Parent and Purchaser Parent~~all Taxes of any member (other than a Flogistix Company) of an affiliated, ~~as applicable. Purchaser Parent~~ consolidated, combined or ~~Seller Parent, as applicable, shall have a period~~ unitary group of ~~fifteen (15) Business Days to provide comments to a schedule prepared~~ which any Flogistix Company (or ~~caused~~ any predecessor) is or was a member on or prior to ~~be prepared~~the Closing Date, and (3) any and all Taxes of any Person (other than any Flogistix Company) imposed on any Flogistix Company as a transferee or successor, by ~~Seller Parent~~ Contract or ~~Purchaser Parent~~pursuant to any Law, ~~respectively. If Purchaser Parent~~ which Taxes relate to an event, transaction or ~~Seller Parent, as applicable, do~~ relationship occurring or existing before the Closing; provided that this Section 7.01(a)(iii) shall not ~~provide~~ apply to 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~~ amounts actually taken into account in determining Working Capital with respect to ~~any Income Tax Return is less than~~ the ~~amount of~~ Flogistix Companies or the ~~Pre-Closing Income Tax~~ Flogistix Net Indebtedness 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 6.53.02.

Appears in 1 contract

Samples: Contribution Agreement (Flowco Holdings Inc.)

Tax Indemnification. Except to the extent taken into account in the calculation of Final Net Operating Assets and without duplication, Parent hereby indemnifies the Buyer Indemnitees against, and agrees to hold each of them harmless from, any and all (i) ~~Subject to~~ Income Taxes (or the non-payment thereof) shown as due on any Tax Return filed in accordance with Section ~~6.5(d)(v~~6.01(a), ~~from and after the Closing~~U.S. federal Income Taxes or Significant Other Income Taxes, ~~Seller Parent agrees to indemnify and hold harmless Purchaser and its Subsidiaries (including the Conveyed Subsidiaries and their Subsidiaries after the Closing Date) (collectively~~in each case, ~~the “Purchaser Tax Indemnified Parties”) from and against all liability, without duplication, for (1) Taxes~~ of the ~~Conveyed Subsidiaries and their Subsidiaries~~ IPG Entities 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)~~ such Taxes of any ~~Seller~~ member of an affiliated, consolidated, combined or unitary group of which the IPG Entities (~~other than~~ or any ~~Transfer Taxes and VAT for which Purchaser is responsible hereunder) including, Taxes (other than Taxes~~ predecessor of any of the ~~Conveyed Subsidiaries and their Subsidiaries~~foregoing) ~~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 Regulation Section 1.1502-6 or any analogous or similar state, local, or non-U.S. law or regulation, (ii) reasonable costs and expenses associated with amending (if such amendment is at the ~~Business~~ request of the Parent) and defending (subject to Section 6.06) any Tax Return for a any Pre-Closing Tax Period, (3iii) Taxes of Parent, the Sellers or any ~~Person~~ of their respective Affiliates (other than the ~~Conveyed Subsidiaries and their Subsidiaries) for a Pre-Closing Tax Period for which any Conveyed Subsidiary~~ IPG Entities); (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), (4iv) Taxes that directly result from the Reorganization (“Reorganization Taxes”); (v) Taxes to the extent arising out of or resulting from any breach by Parent or the Sellers of any covenant ~~or agreement of Seller Parent or any of its Affiliates~~ contained in this ~~Agreement,~~ Article VI other than the covenants contained in the foregoing clauses (5i) through (iv) immediately above; (vi) 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~~ extent arising out of ~~the Purchase Consideration~~ or ~~any amounts payable~~ related 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.Section

Appears in 1 contract

Samples: Stock Purchase Agreement

Tax Indemnification. Except as provided in Section 13(e), Seller shall indemnify Buyer and its affiliates (including the Companies and the Subsidiaries) and each of their respective officers, directors, employees, stockholders, agents and representatives and hold them harmless from all liability (except as reflected on the Closing Date Balance Sheet) (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~~ Companies and ~~their~~ the 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) for Taxes of Seller or any ~~Person~~ other corporation (as a result of Treasury Regulation 'SS' 1.1502-6(a) or otherwise) which is or has been affiliated with Seller (other than the ~~Conveyed Subsidiaries and their~~ Companies or any of the Subsidiaries), (iii) for ~~a Pre-Closing Tax Period for which any Conveyed Subsidiary~~ Taxes resulting from the Section 338(g) and 338(h)(10) elections (or any ~~Subsidiary thereof~~comparable elections under state or local Tax law) ~~is liable under Treasury Regulation~~ contemplated by Section ~~1.1502-6 (or a similar provision~~ 12(a) 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, (5iv) for 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 any pre-Closing period resulting from 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 (Companies 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 Subsidiaries ceasing to be ~~a member~~ included in the consolidated Federal income Tax return filed by Seller including, without limitation, any Taxes attributable to the restoration of a ~~group~~ "deferred intercompany transaction" within the meaning of Treasury Regulations Section 1.1502-13(a)(2) and the recognition of excess loss accounts, (v) for Taxes imposed on the ~~purposes of any Tax, of which group Seller Parent~~ Companies or any ~~Subsidiary of Seller Parent is~~ Subsidiaries directly or ~~was also a member~~ indirectly arising out of, resulting from, or attributable to any transaction contemplated by this Agreement to be performed by Seller, the Companies or any Subsidiaries on or prior to the Closing Date, including but not limited to the Section 338(h)(10) election and the Xxxxxxx Distribution, and (10vi) ~~any costs and expenses, including~~ for reasonable legal ~~and accounting~~ fees and ~~expenses,~~ expenses for any 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~~ Buyer and its affiliates, and each of their respective officers, directors, employees and agents, 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~~ affiliates (including any of the ~~Conveyed Subsidiaries and their~~ Companies or Subsidiaries), or any transferee of ~~Purchaser~~ Buyer 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~~ "Buyer Tax Act”)") or attributable to a breach by Buyer of its obligations under this Agreement. Buyer shall, and shall cause the Companies and the Subsidiaries to, indemnify Seller and its affiliates and each of their respective officers, directors, employees, stockholders, agents and representatives and hold them harmless from (Bi) all liability for Taxes ~~that were reflected, accrued or reserved~~ of the Companies and the Subsidiaries for in any taxable period ending after the ~~Final~~ Closing ~~Statement, Final Business Working Capital, or Final Business Net Cash,~~ Date (~~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~~ such taxable period began before the Closing ~~Date~~ Date, in which case Buyer's indemnity will cover only that ~~were available, or would have been available but~~ portion of any such Taxes that are not 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), (4ii) all liability for Taxes ~~arising out~~ attributable to a Buyer Tax Act or to a breach by Buyer 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, (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~~ 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 (3ii) 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) ~~Property~~ real, personal and intangible property Taxes ~~allocable to~~ ("property Taxes") of the Companies and the Subsidiaries for 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 Companies and the Subsidiaries (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,~~ Date. Seller's indemnity obligation in ~~the case~~ respect 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~~ 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 Taxes ~~of such entity~~ for the Pre-Closing Tax Period ~~deemed to include any Taxes on~~ over (y) the ~~allocable income~~ sum of (i) the amount of such ~~entity in respect~~ Taxes paid by Seller or any of its affiliates (other than any of the Companies or the Subsidiaries) at any time, (ii) the amount of such ~~Tax period; provided that exemptions, allowances~~ Taxes paid by the Companies or ~~deductions that are calculated~~ the Subsidiaries on ~~an annual basis~~ or prior to the Closing Date and (~~including depreciation and amortization deductions~~iii) ~~shall be allocated between~~ the ~~period ending~~ amount of such Taxes reflected as a liability on the Closing Date ~~and~~ Balance Sheet. Seller shall initially pay such excess to Buyer within 30 days after the ~~period beginning after~~ return, report or form with respect to the final liability for such Taxes is required to be filed (or, if later, is actually filed). If the sum of (i) the amount of such Taxes paid by Seller or any of its affiliates (other than any of the Companies or the Subsidiaries) at any time, (ii) the amount of such Taxes paid by any of the Companies or the Subsidiaries on or prior to the Closing Date ~~in proportion~~ and (iii) the amount of such Taxes reflected as a liability on the Closing Date Balance Sheet exceeds the amount payable by Seller pursuant to the ~~number~~ preceding sentence, Buyer shall pay to Seller the amount of ~~days in each period. (iv) Any claim for indemnification under this Section 6.5(d) shall be made in writing upon~~ such excess to the ~~party from whom indemnification is sought, and shall specify in reasonable detail the basis~~ extent it exceeds any receivable for such ~~claim~~Taxes recorded on the Closing Date Balance Sheet within 30 days after the return, report or form with respect to the final liability for such 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

Samples: Stock Purchase Agreement (Frontier Insurance Group Inc)

Tax Indemnification. (a) Except to the extent taken into account as a current liability in the Final Net Working Capital, Seller hereby indemnifies the Buyer Indemnified Parties against, and agrees to hold each of them harmless from, any and all Losses resulting from or arising out of (i) ~~Subject to Section 6.5(d)(v), from~~ any 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 or attributable to the ~~Conveyed Subsidiaries~~ Transferred Entities and ~~their Subsidiaries for~~ the JV Entities with respect to any Pre-Closing Tax Period (~~including~~ as determined in the manner set forth in Section 6.06(c) with respect to any ~~Taxes payable in respect of an election~~ Straddle Tax Period) or arising from any inclusions under Section ~~965(h)~~ 965 of the Code), (2ii) any and all Taxes of or attributable to Seller, any ~~Seller~~ of its Subsidiaries (other than the Transferred Entities and the JV Entities), any ~~Transfer~~ Asset Seller or any Seller Group, (iii) any and all Taxes ~~and VAT for which Purchaser is responsible hereunder) including~~resulting from, ~~Taxes (other than Taxes of the Conveyed Subsidiaries and their Subsidiaries) imposed with respect~~ relating to, arising out of or ~~relating~~ attributable to (A) the ~~Purchased~~ Retained Businesses or the Retained Assets, (B) the Transferred Assets or the Business ~~for a Pre-Closing Tax Period, (3) Taxes of~~ with respect to any ~~Person (other than the Conveyed Subsidiaries and their Subsidiaries) for a~~ Pre-Closing Tax Period ~~for~~ (as determined in the manner set forth in Section 6.06(c) with respect to any Straddle Period), or (C) the payment of the Closing Date Indebtedness or the payment of any of Seller’s fees and expenses incurred in connection with the transactions contemplated by this Agreement, (iv) without prejudice to Section 6.02(a), Taxes, including Transfer Taxes, arising from or in connection with the Reorganization, (v) Taxes of any member of an affiliated, combined, consolidated or unitary group of which any ~~Conveyed Subsidiary (~~Transferred Entity or ~~any Subsidiary thereof)~~ JV Entity is ~~liable under~~ or was a member prior to the Closing, including pursuant to Treasury Regulation Section 1.1502-6 (or a any analogous or similar provision of under any state, local or ~~foreign~~ non-U.S. Law), (vi) Taxes of any Person imposed on any Transferred Entity or JV Entity as a successor-in-interest or transferee, by contract or pursuant to any Law, which Taxes relate to an event or transaction occurring prior to the Closing, (vii) any breach of, or ~~as a transferee or successor or by Contract (other than Contracts that do not relate primarily~~ failure to ~~Taxes)~~perform, ~~(4) Taxes arising out of or resulting from any breach of~~ any covenant or ~~agreement~~ obligation of Seller ~~Parent or any of its Affiliates~~ contained in Section 2.14 or this ~~Agreement~~ARTICLE VI, (~~5) Taxes for a Pre-Closing Tax Period imposed on (x~~viii) any ~~transaction effected pursuant~~ and all Taxes imposed as a result of the transactions described in Treasury Regulations Section 1.338-1(a)(1) that are deemed to occur as a result of the Section ~~2.3(b),~~ 338(g) Elections and (yix) 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~~ and all Taxes for which Seller ~~Parent is responsible under Section 6.5(j), (7) Taxes required~~ has agreed to ~~be deducted or withheld with respect to~~ indemnify the ~~payment of the Purchase Consideration or any amounts payable to Seller Parent~~ Buyer Indemnified Parties 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~~ 2.14 (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 provisocollectively, “Seller ~~Indemnified~~ Taxes”); ~~provided~~ provided, however, 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~~ Losses attributable to any ~~action taken after the Closing by Purchaser~~Taxes arising from any breach of, or failure to perform, any covenant or obligation of ~~its Affiliates~~ Buyer contained in this ARTICLE VI. (~~including~~ b) Buyer hereby indemnifies the ~~Conveyed Subsidiaries~~ Seller Indemnified Parties against, and ~~their Subsidiaries)~~agrees to hold each of them harmless from, any and all Losses resulting from or arising out of (i) any breach of, or failure to perform, any ~~transferee~~ covenant or obligation of ~~Purchaser~~ Buyer contained in Section 2.14 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~~this ARTICLE VI, (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 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) all Taxes for which ~~Purchaser Parent is responsible under Section 6.5(d)(ii). (ii) Subject~~ Buyer has agreed to indemnify the Seller Indemnified Parties pursuant to Section ~~6.5(d)(v)~~2.14, ~~from~~ and ~~after the Closing, Purchaser Parent shall indemnify~~ (iii) any and ~~hold harmless the Purchaser Tax Indemnified Parties from and against all liability, without duplication, for (1)~~ all Taxes of ~~Purchaser Parent~~ the Transferred Entities and ~~its Affiliates (other than Purchaser~~ JV Entities, and ~~its Subsidiaries) for~~ any ~~Tax period (other than Transfer~~ and all Taxes ~~and VAT for which Seller Parent is responsible hereunder)~~resulting from, ~~(2) Taxes~~ relating to, arising out of ~~Purchaser and its Subsidiaries (other than~~ or attributable to the ~~Conveyed Subsidiaries and their Subsidiaries) for any Pre~~Transferred Assets or the Business, in each case, with respect to a Post-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 Seller 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~~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, 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 (“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 Period, multiplied by a fraction, the numerator of which is the number of days in such Straddle 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, 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 Seller’s fees and expenses incurred in connection with the transactions contemplated by this Agreement and the Reorganization shall be attributed 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 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 periodmaximum extent permitted by applicable Law. (ivd) ~~Any~~ The Buyer Indemnified Parties shall satisfy any claim ~~for indemnification~~ under ~~this~~ Section ~~6.5(d~~6.06(a) ~~shall be made in writing upon~~ first from the ~~party from whom indemnification is sought, and shall specify in reasonable detail~~ R&W Policy (to the ~~basis for~~ extent such policy covers 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~~and then, ~~but in no case earlier than five (5) Business Days prior~~ subject 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 limitations in 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”5.28(c) and (~~ii) the amount of the Seller Accrued Income Taxes or Purchaser Accrued Income Taxes~~d), 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 bindingfrom Seller. (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

Samples: Stock and Asset Purchase Agreement (Jacobs Engineering Group Inc /De/)

Tax Indemnification. ~~(i) Subject~~ 13.4.1. Leavxxx xxxl be responsible for, will pay or cause to ~~Section 6.5(d)(v)~~be paid, ~~from~~ and ~~after the Closing, Seller Parent agrees to~~ will indemnify 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”)~~ Indemnity from and ~~against~~ against, any and all ~~liability, without duplication,~~ Losses 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)~~ each of the ~~Code),~~ following: (2i) any and 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 to, arising out of or relating to operations of the ~~Purchased Assets~~ Business or other business or operations of, transactions involving, and distributions made by or to, Leavxxx, Xxb or any other member of an Affiliated Group, or the assets of any of them, with respect to any taxable period (or portions thereof) of the Business ~~for a Pre-~~or Sub (or any predecessor) ending on or before the Closing ~~Tax Period,~~ Date; (3ii) any and all Taxes of any ~~Person~~ member (other than ~~the Conveyed Subsidiaries and their Subsidiaries~~Leavxxx xx Sub) ~~for a Pre-Closing Tax Period for~~ of an affiliated, consolidated, combined, or unitary group of which ~~any Conveyed Subsidiary~~ Leavxxx xx Sub (or any ~~Subsidiary thereof~~predecessor) is ~~liable under~~ or was a member on or prior to the Closing Date by reason of the liability of Leavxxx xx Sub pursuant to Treasury Regulation Section 1.1502-~~6 (~~6(a) or a any analogous or similar ~~provision of~~ state, local or foreign Law); (iii) Taxes asserted against any person for which any Purchaser Indemnity is liable under any agreement entered into by Leavxxx xx Sub prior to the Closing to indemnify such person; and (iv) any breach by Leavxxx xx any representation, warranty, covenant, 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~~Sections 4.8 or 13.4; provided, however, that Leavxxx xxxll not be liable for or obligated to indemnify any Purchaser Indemnity for any Losses or Taxes to the extent such Taxes (5A) ~~Taxes for a Pre-Closing Tax Period imposed on (x) any transaction effected pursuant to~~ result from an election or deemed election by Purchaser 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~~ 338 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~~ code with respect to ~~the payment of the Purchase Consideration~~ Sub (or any ~~amounts payable to Seller Parent pursuant to Section 2.8~~ analogous provision under any state, local 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”foreign tax law), (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 arise as a result of ~~Purchaser’s failure to deduct~~ the business, operations or ~~withhold any such amounts, (9) Taxes arising as a result~~ transactions of Purchaser or Sub after the Closing; (C) are reflected as liabilities or accruals in the Closing Statement or; (D) are payable by Purchaser pursuant to Section 6.9.4. 13.4.2. Purchaser agrees to pay, and to indemnify Leavxxx xx respect of, and hold Leavxxx xxxmless from and against, any ~~Subsidiary~~ and all Losses for or in respect of ~~Purchaser~~ Taxes incurred by, imposed upon, or assessed against Leavxxx xx any affiliate of Leavxxx (other than ~~any Conveyed Subsidiary or a Subsidiary thereof~~Sub) ~~at any time ceasing~~ (i) relating 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~~ business and operations 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, Business 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 Sub after the Closing Date ~~in proportion~~ or (ii) to the ~~number of days~~ extent reflected as a liability in ~~each period~~the Closing Statement. ~~(iv) Any claim for indemnification under this Section 6.5(d) shall be made in writing upon~~ 13.4.3. Purchaser will promptly notify Leavxxx xx the ~~party from whom indemnification is sought~~commencement of any claim, 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 partyaudit, ~~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~~ examination, or other proposed change or adjustment by an taxing authority concerning any Taxes ~~suffered~~ or ~~incurred~~ other Losses covered by ~~any Conveyed Subsidiary~~ Section 13.4.1 (~~or any Subsidiary thereof) that was not wholly owned by Seller Parent (directly or indirectly) as of immediately prior to~~ "Tax Claim"). Leavxxx xxxll control the ~~Closing, the indemnification obligations of Seller Parent pursuant to Section 6.5(d)(i) in respect of such Taxes (or related costs~~ defense 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 settlement of any ~~Income~~ Tax ~~Return for any Conveyed Subsidiary (~~audit or ~~any Subsidiary thereof), on the one hand,~~ administrative 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 court proceeding relating to (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.Consolidated Returns

Appears in 1 contract

Samples: Purchase and Sale Agreement (Chase Industries Inc)

Tax Indemnification. (a) Seller shall indemnify, defend and hold harmless the Buyer Group 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 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~~ Company Group (or the non-payment thereof) with respect to all periods ending on or prior to January 31, 2008 (a “Pre-~~Closing Tax Period (including any Taxes payable in respect of an election under Section 965(h) of the Code~~Lock-Box Period”), (2ii) ~~Taxes of any Seller (other than any Transfer Taxes and VAT for which Purchaser is responsible hereunder) including, Taxes (other than~~ all Taxes of the ~~Conveyed Subsidiaries and their Subsidiaries~~Company Group (or the non-payment thereof) ~~imposed~~ with respect toto any period beginning before January 31, ~~arising out of or relating to the Purchased Assets or the Business for~~ 2008 and ending after January 31, 2008 (a ~~Pre-Closing Tax~~ “Straddle 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 but only with respect to the ~~payment~~ portion of ~~the Purchase Consideration or~~ such period up to and including January 31, 2008 (such portion, a “Lock-Box Partial Period”), and (iii) without duplication of any amounts payable ~~to Seller Parent pursuant to~~ under Section ~~2.8~~ 9.1(c), all Taxes of the Company Group (or ~~Section 2.9, including any penalties imposed on Purchaser~~ the non-payment thereof) or of the Buyer Group payable 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~~ set forth in Section ~~4.16(k~~3.11 (Tax Matters), (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 the close of business on the Closing Date that were available, or would~~ such Taxes 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 Parties’ mutual determination and calculation of the ~~Final Business Working Capital~~ Purchase Price as set forth in Schedule A4; provided, that Seller shall have no liability to the Buyer Group under this Section 9.7(a) or any other provision of this Agreement for any Taxes attributable to any actions outside of the ~~Final Business Net Cash),~~ ordinary course of business taken by or with respect to any member of the Company Group after the Closing (~~D) Taxes for which Purchaser Parent is responsible~~ including the making of any election under Section ~~6.5(d)(ii~~338 of the Code). For the avoidance of doubt, Section 9.3(a) and Section 9.3(b) shall not apply to indemnification for Taxes or for breaches of the representations and warranties set forth in Section 3.11 (Tax Matters). (iib) ~~Subject to Section 6.5(d)(v), from and after~~ In the ~~Closing, Purchaser Parent shall indemnify and hold harmless the Purchaser Tax Indemnified Parties from and against all liability, without duplication, for (1) all~~ case of 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) 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 are payable with respect to any ~~amounts payable to Purchaser Parent pursuant to Section 2.8 or Section 2.9~~Straddle Period, ~~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 the purposes of any Tax, of which group Purchaser Parent or any Subsidiary of Purchaser Parent (other than Purchaser or any Subsidiary of Purchaser) Tax that 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 a Lock-Box Partial Period 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).be: (~~iii~~i) 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 income Taxes or any ~~Straddle~~ other Taxes resulting from, or imposed on, sales, receipts, uses, transfers or assignments of property or other assets, payments or accruals to other Persons (including, without limitation, wages), or any other similar transaction or transactions, the amount that would be payable for the Lock-Box Partial Period if the Company Group filed a separate Tax Return with respect to such Taxes solely for the Lock-Box Partial Period:; and (Aii) ~~Property Taxes allocable~~ in the case of all other Taxes, an amount equal to the ~~Pre-Closing Tax~~ amount of Taxes for the entire Straddle Period ~~shall be computed based upon~~ multiplied by a fraction the ~~ratio~~ numerator of which is the number of calendar days in the ~~Pre~~Lock-~~Closing Tax~~ Box Partial Period to and the denominator of which is the number of calendar days in the entire Straddle Period~~; and~~ . For purposes of clause (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 Closingi), ~~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 item determined on an annual or periodic basis (including amortization and depreciation deductions and ~~amortization deductions~~the effects of graduated rates) shall be allocated ~~between~~ to the Lock-Box Partial Period based on the relative number of calendar days in such period as compared to the number of calendar days in the entire Straddle Period. (c) Any Tax refunds, amounts credited against Taxes in lieu of such Tax refunds, or indemnity payments pursuant to Article 9 of the Contribution Agreement that are received by any member of the Buyer Group relating to Taxes of any member of the Company Group (i) for a Pre-Lock-Box Period or Lock-Box Partial Period or (ii) for which Seller is liable pursuant to this Agreement (other than to the extent any such refund or credit arises from the carryback of a net operating loss) shall be for the account of Seller (without offset or reduction) except to the extent such refund or credit was taken into account in the Parties’ mutual determination and calculation of the Purchase Price, and Buyer shall pay over to Seller (without offset or reduction) any such Tax refund or indemnity payment or the amount of any such credit within two (2) Business Days after receipt thereof or entitlement thereto. For the avoidance of doubt, the procedures set forth in Section 9.4 shall not apply to this Section 9.7(c). (d) Buyer shall file or cause to be filed all Tax Returns of all members of the Company Group required to be filed after the Closing Date, which Tax Returns, to the extent they relate to periods or portions thereof ending on or prior to the Closing Date (each, a “Pre-Closing Period”), shall be timely filed, and ~~the period~~ shall timely pay or cause to be timely paid all Taxes shown to be due on such Tax Returns. Buyer shall also timely pay or cause to be timely paid all Taxes due with respect to periods or portions thereof beginning after the Closing Date ~~in proportion~~ to any Canadian taxing authority with respect to any member of the ~~number of days in each period. (iv) Any claim for indemnification~~ Company Group. In the event Seller is liable under this ~~Section 6.5(d) shall be made~~ Agreement for Taxes due at the time of filing any Tax Return described 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~~9.7(d), Seller shall pay the amount of such liability to Buyer two (2) ~~shall be made within thirty~~ Business Days after Seller’s receipt of written request therefor by Buyer or at least three (~~30) days after the indemnified party makes written demand upon the indemnifying party, but in no case earlier than five (5~~3) Business Days prior to the ~~date on which~~ filing of 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 ClosingTax Return, 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 Closingwhichever is later. With respect to any ~~Taxes suffered or incurred~~ Tax Return required to be filed 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 Buyer pursuant to this Section ~~6.5:~~ 9.7(d) for which Seller has any liability for Taxes due (~~A) Within~~ including pursuant to its indemnity obligations under Section 9.7(a)), a copy of such Tax Return shall be submitted by Buyer to Seller for review at least thirty (30) days ~~following~~ prior to the due date (including extensions) for filing such Tax Return, and Buyer shall make such necessary or advisable revisions to such Tax Return as are reasonably requested by Seller. Seller’s consent to the filing of ~~any Income~~ such Tax Return shall be presumed if Seller fails to respond to Buyer within fifteen (15) days following Buyer’s submission of such Tax Return to Seller for review. Buyer and Seller shall use their respective best efforts to resolve any ~~Conveyed Subsidiary~~ disagreement regarding such Tax Return prior to the due date for filing thereof. Any disagreement regarding such Tax Return which is not resolved prior to the due date for the filing thereof shall be promptly resolved by a nationally recognized independent accounting firm mutually acceptable to Buyer and Seller, whose determination of the issue on which there is disagreement shall be final and binding on Buyer and Seller. If the independent accounting firm is unable to make a determination with respect to the issue on which there is disagreement by the due date for the filing of the Tax Return in question, then such Tax Return shall be filed on the due date therefor in a manner consistent with Buyer’s positions and such Tax Return shall be amended to the extent necessary to reflect the independent accounting firm’s determination. Upon resolution or determination of such issue, there shall be made a payment, if necessary, between Buyer and Seller in order to take into account the results of such resolution or determination. The fees and expenses of such accounting firm shall be borne equally by Buyer and Seller. (e) Buyer and Seller shall reasonably cooperate, and shall cause their respective affiliates, officers, directors, employees, and agents to cooperate, in preparing and filing all Tax Returns, including maintaining and making available to each other all records necessary in connection with Taxes and in resolving all disputes and audits or other examinations relating to Taxes with respect to all Tax periods. Seller shall cooperate with Buyer to provide any information that Buyer reasonably requests to allow Buyer to comply with Section 6043A of the Code or any ~~Subsidiary thereof), on~~ other information reporting requirements under the ~~one hand,~~ Code or ~~Purchaser~~ other applicable Law. (or f) Buyer and Seller agree to give prompt notice to each other of any ~~Subsidiary thereof, other than~~ proposed adjustment to Taxes of the ~~Conveyed Subsidiaries and their Subsidiaries), on the other hand,~~ Company Group for any Pre-Closing ~~Tax Period~~ Period. Notwithstanding anything to the contrary in Section 9.4, Buyer shall control any examinations, investigations, audits or ~~for~~ other proceedings in respect of 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 or Taxes involving the Company Group (a “Tax Contest”), provided that Buyer shall not settle or otherwise resolve any Tax Contest 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~~ Taxes for which 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 could 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 liable pursuant to this Section ~~6.5~~9.7 without the consent of Seller, such consent not to be unreasonably withheld. All costs, fees and expenses paid to third parties in the course of any Tax Contest relating to any Pre-Closing Period shall be borne by the parties in the same ratio as the ratio in which, pursuant to the terms of this Agreement, the parties would share the responsibility for payment of the Taxes asserted by the Governmental Authority in such claim or assessment if such claim or assessment were sustained in its entirety. (g) The Company’s representations and warranties in Section ~~6.6 and Article VII~~3.11 (Tax Matters) and ~~any payment made by Purchaser Parent to Purchaser pursuant to Section 2.8 or Section 2.9 in~~ the ~~manner~~ obligations of the Parties 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~~9.7 shall remain in effect for the applicable statute of limitations (after giving effect to any waivers or extensions thereof), plus sixty (60) days.

Appears in 1 contract

Samples: Purchase Agreement (G Iii Apparel Group LTD /De/)

Tax Indemnification. ~~(i) Subject~~ Except to ~~Section 6.5(d)(v)~~the extent taken into account in determining the Final Working Capital, ~~from~~ Sellers hereby agree, jointly and ~~after the Closing~~severally, ~~Seller Parent agrees~~ to be liable for and to indemnify and hold ~~harmless Purchaser~~ Buyer and its ~~Subsidiaries~~ Affiliates (including the ~~Conveyed Subsidiaries~~ Companies) and their ~~Subsidiaries after the Closing Date)~~ respective stockholders, officers, directors, employees, agents and assigns (collectively, the “~~Purchaser Tax~~ Buyer Indemnified Parties”) harmless from and ~~against~~ against, and pay to the Buyer Indemnified Parties the amount of, any and all ~~liability~~losses or damages resulting from, ~~without duplication~~arising out of, 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 incurred with respect to, ~~arising out~~ any claims that may be asserted by any party, based on, attributable to, or resulting from (i) all Taxes of or ~~relating~~ with respect to the Companies (or any predecessors thereof) or attributable 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~~ for any ~~action taken after~~ taxable period ending on or before 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”)Date, (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~~ Straddle Tax ~~Assets as of~~ 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 6(e)(iv) and Section 6(e)(v)) and for ~~their prior utilization~~ the avoidance of doubt including any trade Tax (Gewerbesteuer) triggered on the level of Infraserv due to the transactions contemplated by ~~Purchaser or~~ this Agreement; and (C) for any ~~of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries~~ taxable period ending after the ~~Closing~~Closing Date to the extent additional VAT is levied based upon Section 1 para. 1a 3rd sentence, Sections 15(a) ~~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~~ 17 of the ~~Final Business Working Capital~~ German VAT Act and is related to supplies made or received prior to the ~~Final Business Net Cash), or (D) Taxes for which Purchaser Parent is responsible under Section 6.5(d)(ii).~~ Closing 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 failure of any ~~Person for a Pre-Closing Tax Period for which Purchaser~~ of the representations and warranties contained in Section 3(m) to be true and correct (determined without regard to any qualification related to materiality contained therein) 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 the 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 in this ~~Agreement,~~ Agreement with respect to Taxes; (5iii) ~~Transfer Taxes~~ any Seller Taxes; and (iv) any liability or obligation provided for ~~which Purchaser Parent is responsible~~ under Section ~~6.5(j)~~75, 73 of the German General Tax Code (6Abgabenordnung) ~~Taxes arising from any breach~~ or Section 1 (para. 1a of ~~any representation or warranty in Section 5.17(k), (7~~the German VAT Act) ~~Taxes for a Pre-Closing Tax Period imposed on (x) any settlement of any intercompany accounts of Purchaser~~ or any ~~Subsidiary~~ similar provision which relates to Taxes incurred by Sellers or the Companies in a taxable period or portion thereof ending on or prior to the Closing Date. By way of ~~Purchaser~~clarification, 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~~ losses 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~~ damages 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~~ out 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~~ matter that constitutes both 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 breach of a ~~change in applicable Law (a “Seller Tax Act”)~~representation or warranty and an Excluded Liability, (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 such losses 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 damages shall be treated as ~~closing on (~~an Excluded Liability and ~~including)~~ Sellers’ indemnification obligation hereunder shall not require Sellers to indemnify 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 Buyer 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)~~ against the ~~direct~~ same losses 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 Closingdamages twice. (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

Samples: Purchase Agreement (Celanese CORP)

Tax Indemnification. In addition to the indemnification obligations in ARTICLE 9 (~~i) Subject to Section 6.5(d)(v~~but without duplication), ~~from and after~~ each Member will, on a pro- rata basis according to the ~~Closing~~aggregate consideration received by such Member, ~~Seller Parent agrees to indemnify~~ indemnify, exonerate and hold free and harmless ~~Purchaser~~ each Buyer Indemnified Person from, against 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)~~ any and all Losses, whether or not involving a Third Party Claim incurred or suffered by the Buyer Indemnified Persons or 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 tothem as a result of, arising out of or directly or indirectly relating ~~to the Purchased Assets~~ to: (a) all Taxes (or the ~~Business~~ non-payment thereof) of the Company for a all taxable periods ending on or before the Closing Date and the portion through the end of the Closing Date for any Tax period that includes (but does not end on) the Closing Date (“Pre-Closing Tax Period”), (3b) all Taxes of any ~~Person (other than~~ member of an affiliated, consolidated, combined or unitary group of which the ~~Conveyed Subsidiaries and their Subsidiaries) for~~ Company is or was a ~~Pre-~~member on or prior to the Closing ~~Tax Period for which any Conveyed Subsidiary (or any Subsidiary thereof) is liable under~~ Date, including pursuant to Treasury Regulation Section 1.1502-6 or any analogous or similar Legal Requirement, (c) any and all Taxes of any Person imposed on the Company as a result of any tax sharing agreement, arrangement, or ~~a similar provision of state, local or foreign Law),~~ understanding or as a transferee or ~~successor~~ successor, by contract, or ~~by Contract~~ otherwise (~~other than Contracts that do not relate primarily~~ with respect to ~~Taxes~~transactions, actions or events occurring on or before the Closing), (4d) ~~Taxes arising out of or resulting from~~ any breach of, or inaccuracy in, any representation or warranty made by the Company or a Member in this Agreement relating to Taxes, or (e) any breach or violation of any covenant or agreement ~~of Seller Parent~~ by the Company or a Member in or pursuant to this Agreement or any ~~of its Affiliates contained in this Agreement~~Ancillary Agreement relating to Taxes; provided, however, that (5A) the Members will be liable for 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~~ 10.1 above only to the ~~following proviso~~extent such Taxes exceed the amount, ~~“Seller Indemnified Taxes”);~~ if any, reserved for such Taxes on the final Working Capital statement and reflected in the final purchase price as determined for tax purposes and (B) no Member will be liable for any Taxes attributable for actions taken by the Buyer or the Company after the Effective Time, provided ~~that Seller Parent shall~~ such actions are not ~~be required~~ in the Ordinary Course of Business and not otherwise contemplated by this Agreement . For the avoidance of doubt, no provision under ARTICLE 9 will limit the obligations of the Members with respect to ~~indemnify or hold harmless~~ any ~~Purchaser~~ Tax ~~Indemnified Party from and against any liability~~ Indemnity Claims brought pursuant to this ~~Section 6.5(d)(i) for~~ ARTICLE 10. In addition to the indemnification obligations in ARTICLE 9 (~~A) Taxes attributable to any action taken after the Closing by Purchaser, any of its Affiliates (including the Conveyed Subsidiaries and their Subsidiaries~~but without duplication), the Buyer will indemnify, exonerate and hold free and harmless each Member from, against and in respect of any and all Losses, whether or ~~any transferee of Purchaser~~ not involving a Third Party Claim incurred or suffered by such Member 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 them as a result ~~of a change in applicable Law (a “Purchaser Tax Act”)~~of, (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~~ directly or indirectly relating to any breach or violation of any covenant or agreement ~~of Purchaser Parent, Purchaser~~ by the Buyer in 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~~ or any Ancillary Agreement relating 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 6.5Taxes.

Appears in 1 contract

Samples: Merger Agreement (Wright Medical Group Inc)

Tax Indemnification. ~~(i) Subject to Section 6.5(d)(v)~~The Sellers shall, ~~from~~ jointly and ~~after the Closing~~severally, ~~Seller Parent agrees to indemnify~~ indemnify, defend and hold harmless ~~Purchaser~~ Reuters and ~~its~~ their Subsidiaries (including the ~~Conveyed Subsidiaries~~ Purchased Subsidiaries), and their ~~Subsidiaries after~~ respective Affiliates and Representatives from and against any and all Damages in respect of (i) all Taxes of the Business Entities (A) for any taxable period ending on or before the Closing Date, and (B) for the portion of any Straddle Period ending at the close of business 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 determined as provided in ~~respect of an election under~~ Section ~~965(h) of the Code~~6.9.4 hereof), (2ii) all Taxes imposed on any member of a Consolidated Group of which any ~~Seller (other than any Transfer Taxes and VAT for which Purchaser~~ Business Entity is ~~responsible hereunder) including, Taxes (other than Taxes~~ or was a member on or prior to the Closing Date by reason of the ~~Conveyed Subsidiaries and their Subsidiaries) imposed with respect to, arising out~~ liability of ~~or relating~~ such Business Entity 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 6(a) (or a any predecessor or successor thereof or any analogous or similar provision of under state, local or foreign Law), (iii) the failure of any of the representations and warranties contained in Section 3.8 to be true and correct in all respects (determined without regard to any qualification related to materiality contained therein) or ~~as a transferee~~ the failure to perform any covenant contained in this Agreement or ~~successor or by Contract (other than Contracts that do not relate primarily~~ Ancillary Agreement with respect to Taxes), (4iv) any failure by the Sellers to timely pay any Taxes required to be borne by the Sellers pursuant to Section 6.9.6, and (v) any Taxes resulting from, 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,~~ based on the Section 338(h)(10) Elections (~~5) Taxes for a Pre-Closing Tax Period imposed on (x) any transaction effected pursuant to Section 2.3(b~~as defined below), (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~~ in excess of the ~~notice and cooperation requirements~~ amount of ~~Section 2.10 and except for any~~ such Taxes ~~(and any related penalties) required to be deducted or withheld solely~~ taken into account as a ~~result of any assignment by Purchaser or its Affiliates for which Purchaser is responsible pursuant~~ current Back to ~~Section 10.3)~~Contents liability in computing the Final Working Capital. Reuters shall indemnify, (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 defend 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~~ Sellers and their Affiliates 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 all Damages 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 (1i) all Taxes of ~~Purchaser Parent and its Affiliates~~ the Purchased Subsidiaries (~~other than Purchaser and its Subsidiaries~~A) 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~~ following the Closing Date (~~the “Final Pre-Closing Income Tax Amount”) and~~ determined as provided in Section 6.9.4 hereof), (ii) all Taxes relating to the ~~amount~~ Transferred Assets for any periods of time following the ~~Seller Accrued Income Taxes~~ Closing Date, (iii) the failure to perform any covenant contained in this Agreement 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 an Ancillary Agreement with respect to Taxes, including the covenant set forth in Section 6.9.14 hereof, (iv) any ~~Income Tax Return is less than~~ failure by the ~~amount of~~ Purchasers to timely pay any Taxes required to be borne by the ~~Pre-Closing Income Tax Amount attributable~~ Purchasers pursuant to ~~such Income Tax Return that was included on the Final Closing Statement~~Section 6.9.6, ~~the Purchaser shall within five~~ and (5v) ~~Business Days following the finalization of the Final Pre-Closing Income Tax Amount hereunder (i) pay to Seller Parent the amount of such difference~~ any Taxes with respect to ~~a Conveyed Subsidiary and their~~ the Purchased Subsidiaries ~~and (ii) pay to Purchaser Parent~~ or the ~~amount~~ Transferred Assets arising on the Closing Date but after the Closing for transactions or actions taken by the Purchasers after the Closing but on the Closing Date that are outside the Ordinary Course of ~~such difference with respect to Purchaser and its Subsidiaries~~Business. (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

Samples: Stock and Asset Purchase Agreement (Reuters Group PLC /Adr/)

Tax Indemnification. Except to the extent treated as a liability in the calculation of Closing Working Capital, the Indemnifying Holders shall, severally (~~i) Subject to Section 6.5(d)(v~~in accordance with their Pro Rata Shares and not jointly), ~~from and after the Closing, Seller Parent agrees to~~ indemnify and defend the Company, Parent, and each Parent Indemnitee 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 3.22; (b) any Loss attributable to any breach or violation of, or failure to fully perform, any covenant, agreement, undertaking or obligation in Article VI; (c) all ~~liability, without duplication, for (1)~~ Taxes of the ~~Conveyed Subsidiaries and their Subsidiaries~~ Target Company Group 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~~ 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~~ member 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 Target Company Group (or any ~~Subsidiary~~ predecessor thereof) 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 (e) any and all Taxes of any person imposed by any Governmental Authority on the Target Company Group arising under the principles of transferee or successor liability or by contract, relating to an event or transaction occurring before the Closing Date, in each case, without duplication, together with any out-of-pocket fees and expenses (including attorneys’ and accountants’ fees) incurred in connection therewith. Notwithstanding anything in this Agreement to the contrary, the Indemnifying Holders shall not be liable for Taxes of Parent, the Surviving Corporation or any of their Subsidiaries or Affiliates for or attributable to taxable periods (or portions thereof) beginning after the Closing Date (other than pursuant to a ~~similar provision~~ breach of ~~state~~Section 3.08(y), ~~local or foreign Law~~3.22(g), 3.22(h), 3.22(i), 3.22(k), 3.22(l), 3.22(m), 3.22(n), 3.22(n), 3.22(o), 3.22(p), or ~~as a transferee or successor or by Contract (other than Contracts that do not relate primarily to Taxes~~3.22(q)), (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 actions taken on the ~~notice~~ Closing Date 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~~ that are outside 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~~the continuation of conduct with respect to Taxes after the Closing Date or regarding the amount, value or condition of, or ~~(3) is required to be taken~~ any limitations on the use of, any net operating loss, carryforward, basis 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 Capitalassets, or ~~Final Business Net Cash~~other Tax attributes after the Closing Date. Further, ~~(C) Income Taxes~~ the Indemnifying Holders shall have no liability to indemnify any Parent Indemnitee, pursuant to this Section 6.03 or Article VIII, for any liability related to Unclaimed Property Laws or Unfiled State Tax Returns. Notwithstanding anything to the contrary herein, no indemnification shall be payable pursuant to this Section 6.03 in respect of any Losses 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 liability in respect of such ~~Income Taxes (except any Tax Asset~~ Losses has been reflected as ~~an asset~~ a Current Liability in the ~~Final Closing Statement and taken into account in the calculation~~ computation of the ~~Final Business~~ Closing Working Capital or the ~~Final Business Net Cash)~~calculation of Closing Indebtedness, 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 including 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 Unclaimed Property Laws 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 Unfiled State 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)Returns. (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

Samples: Merger Agreement (Meridian Bioscience Inc)

Tax Indemnification. (ia) ~~Subject to Section 6.5(d)(v), from and after the Closing,~~ The 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”) from~~ Company, and any successors thereto or Affiliates thereof in respect of and against ~~all liability~~(i) Damages resulting from, relating to, or constituting any failure to perform any covenant or agreement set forth in this Article V, and (ii) without duplication, ~~for~~ the following Taxes to the extent such Taxes exceed the Tax Reserves: (1A) Any Taxes ~~of the Conveyed Subsidiaries and their Subsidiaries~~ for any ~~Pre-~~taxable period ending (or deemed pursuant to Section 5.3(b) to end) on or before the Closing ~~Tax Period~~ Date due and payable by the Company; and (~~including~~ B) Any Taxes for any ~~Taxes payable in respect of an election under~~ taxable period ending (or deemed pursuant to Section ~~965(h~~5.3(b) of to end) on or before the ~~Code), (2) Taxes of any Seller (other than any Transfer Taxes and VAT~~ Closing 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~~ Company has 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~~ 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 (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)contractual obligation. (iib) ~~Subject to Section 6.5(d)(v), from and after the Closing, Purchaser Parent~~ The Buyer shall indemnify and hold harmless the ~~Purchaser Tax Indemnified Parties from~~ Seller in respect of and against ~~all liability, without duplication, for~~ (1i) 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, (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 handArticle V, and ~~Purchaser Parent or any Subsidiary of Purchaser Parent~~ (~~other than Purchaser and its Subsidiaries)~~ii) without duplication, 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~~ Any and all Taxes ~~allocable~~ due and payable by the Company for any taxable period beginning (or deemed pursuant to Section 5.3(b) to begin) after the ~~Pre~~Closing Date; (B) 50% of any transfer, sales, use, stamp, conveyance, value added, recording, registration, documentary, filing and other non-~~Closing Tax Period shall be computed based upon~~ income Taxes and administrative fees (including, without limitation, notary fees) arising in connection with the ~~ratio~~ consummation of the ~~number~~ transactions contemplated by this Agreement whether levied on the Buyer, the Seller, the Company, or any of ~~days in the Pre-Closing~~ their respective Affiliates; (C) The Tax ~~Period to the number of days in the entire Straddle Period~~Reserves; and (BD) Any and all 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~~ acts 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 omissions of the ~~close of business on~~ Buyer or 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 Buyer's Affiliates occurring from 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

Samples: Purchase and Sale Agreement (Endwave Corp)

Tax Indemnification. (a) Except to the extent taken into account as a current liability in the Final Net Working Capital, Seller hereby indemnifies the Buyer Indemnified Parties against, and agrees to hold each of them harmless from, any and all Losses resulting from or arising out of (i) ~~Subject to Section 6.5(d)(v), from~~ any 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 or attributable to the ~~Conveyed Subsidiaries~~ Transferred Entities and ~~their Subsidiaries for~~ the JV Entities with respect to any Pre-Closing Tax Period (~~including~~ as determined in the manner set forth in Section 6.06(c) with respect to any ~~Taxes payable in respect of an election~~ Straddle Tax Period) or arising from any inclusions under Section ~~965(h)~~ 965 of the Code), (2ii) any and all Taxes of or attributable to Seller, any ~~Seller~~ of its Subsidiaries (other than the Transferred Entities and the JV Entities), any ~~Transfer~~ Asset Seller or any Seller Group, (iii) any and all Taxes ~~and VAT for which Purchaser is responsible hereunder) including~~resulting from, ~~Taxes (other than Taxes of the Conveyed Subsidiaries and their Subsidiaries) imposed with respect~~ relating to, arising out of or ~~relating~~ attributable to (A) the ~~Purchased~~ Retained Businesses or the Retained Assets, (B) the Transferred Assets or the Business ~~for a Pre-Closing Tax Period, (3) Taxes of~~ with respect to any ~~Person (other than the Conveyed Subsidiaries and their Subsidiaries) for a~~ Pre-Closing Tax Period ~~for~~ (as determined in the manner set forth in Section 6.06(c) with respect to any Straddle Period), or (C) the payment of the Closing Date Indebtedness or the payment of any of Seller’s fees and expenses incurred in connection with the transactions contemplated by this Agreement, (iv) without prejudice to Section 6.02(a), Taxes, including Transfer Taxes, arising from or in connection with the Reorganization, (v) Taxes of any member of an affiliated, combined, consolidated or unitary group of which any ~~Conveyed Subsidiary (~~Transferred Entity or ~~any Subsidiary thereof)~~ JV Entity is ~~liable under~~ or was a member prior to the Closing, including pursuant to Treasury Regulation Section 1.1502-6 (or a any analogous or similar provision of under any state, local or ~~foreign~~ non-U.S. Law), (vi) Taxes of any Person imposed on any Transferred Entity or JV Entity as a successor-in-interest or transferee, by contract or pursuant to any Law, which Taxes relate to an event or transaction occurring prior to the Closing, and (vii) any breach of, or ~~as a transferee or successor or by Contract (other than Contracts that do not relate primarily~~ failure to ~~Taxes)~~perform, ~~(4) Taxes arising out of or resulting from any breach of~~ any covenant or ~~agreement~~ obligation of Seller ~~Parent or any of its Affiliates~~ contained in this ~~Agreement,~~ ARTICLE VI (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 provisocollectively, “Seller ~~Indemnified~~ Taxes”); ~~provided~~ provided, however, 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~~ Losses attributable to any ~~action taken after the Closing by Purchaser~~Taxes arising from any breach of, or failure to perform, any covenant or obligation 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 Buyer contained 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)ARTICLE VI. (b) Buyer hereby indemnifies the Seller Indemnified Parties against, and agrees to hold each of them harmless from, any and all Losses resulting from or arising out of (i) any breach of, or failure to perform, any covenant or obligation of Buyer contained in this ARTICLE VI and (ii) ~~Subject to Section 6.5(d)(v), from~~ any 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~~ the Transferred Entities and ~~its Affiliates (other than Purchaser~~ JV Entities, and ~~its Subsidiaries) for~~ any ~~Tax period (other than Transfer~~ and all Taxes ~~and VAT for which Seller Parent is responsible hereunder)~~resulting from, ~~(2) Taxes~~ relating to, arising out of ~~Purchaser and its Subsidiaries (other than~~ or attributable to the ~~Conveyed Subsidiaries and their Subsidiaries) for any Pre~~Transferred Assets or the Business, in each case, with respect to a Post-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 Seller 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~~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, 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 (“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 Period, multiplied by a fraction, the numerator of which is the number of days in such Straddle 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, 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 Seller’s fees and expenses incurred in connection with the transactions contemplated by this Agreement and the Reorganization shall be attributed 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 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 periodmaximum extent permitted by applicable Law. (ivd) ~~Any~~ The Buyer Indemnified Parties shall satisfy any claim ~~for indemnification~~ under ~~this~~ Section ~~6.5(d~~6.06(a) ~~shall be made in writing upon~~ first from the ~~party from whom indemnification is sought, and shall specify in reasonable detail~~ R&W Policy (to the ~~basis for~~ extent such policy covers 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~~and then, ~~but in no case earlier than five (5) Business Days prior~~ subject 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 limitations in 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”5.28(c) and (~~ii) the amount of the Seller Accrued Income Taxes or Purchaser Accrued Income Taxes~~d), 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 bindingfrom Seller. (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

Samples: Stock and Asset Purchase Agreement (Jacobs Engineering Group Inc /De/)

Tax Indemnification. (ia) ~~Subject to Section 6.5(d)(v), from~~ From and after the ~~Closing~~Closing Date (or, ~~Seller Parent agrees~~ if applicable and solely with respect to the Brazil Business, the Deferred Brazil Closing Date), Trimble 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”)~~ AGCO from and against ~~all liability, without duplication, for~~ any Liabilities arising from or relating to: (1i) any Taxes imposed on the Company or any member of the ~~Conveyed Subsidiaries and their Subsidiaries~~ Company Group for any Pre-Closing ~~Tax Period (including any Taxes payable in respect of an election under Section 965(h) of the Code)~~Date Period, (2ii) any 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~~ member of the ~~Conveyed Subsidiaries~~ Company Group is or was a member on or prior to the Closing (or, if applicable and ~~their Subsidiaries) imposed~~ solely with respect ~~to, arising out of or relating~~ to the ~~Purchased Assets~~ Brazil Business, the Deferred Brazil Closing), including pursuant to Treasury Regulations Section 1.1502-6 or ~~the Business for a Pre~~any analogous or similar state, local or non-~~Closing Tax Period~~U.S. law, (3iii) any Taxes of any Person ~~(other than~~ imposed on 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~~ member of ~~state, local or foreign Law), or~~ the Company Group for any period 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~~ in respect of any ~~covenant~~ transaction occurring on or ~~agreement of Seller Parent or any of its Affiliates contained in this Agreement~~prior to the Closing (or, (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 if applicable and solely with respect to the ~~payment~~ Brazil Business, the Deferred Brazil Closing), by law, contract or otherwise, (iv) any Taxes in respect of the ~~Purchase Consideration~~ Business Assets 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~~ Assumed Liabilities 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)Pre-Closing Date Period, (~~8) Taxes arising from~~ v) any breach of ~~any representation or warranty contained~~ the representations and warranties set forth in Section ~~4.16(k)~~3.16, (9vi) ~~Taxes~~ any Taxes, other than Carve-Out Transfer Taxes, arising ~~as a result~~ in connection with, or resulting from, the Carve-Out Restructuring, and (vii) fifteen percent (15%) of any ~~Conveyed Subsidiary~~ Transfer Taxes (other than Carve-Out Transfer Taxes 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 (10JCA Transfer Taxes) ~~any costs and expenses, including reasonable legal and accounting fees and expenses, attributable to any item~~ as described in ~~clauses~~ Section 9.7. (1b) 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 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~~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 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 AGCO shall indemnify and hold harmless ~~the Purchaser Tax Indemnified Parties~~ Trimble from and against ~~all liability, without duplication, for~~ any Liabilities arising from or relating to: (1i) ~~all~~ any Taxes imposed on any 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)~~ JCA Entities for any Pre-Closing ~~Tax~~ Date Period, (3ii) any Taxes of any member of an affiliated, consolidated, combined or unitary group of which any JCA Entity is or was a member on or prior to the Closing, including pursuant to Treasury Regulations Section 1.1502-6 or any analogous or similar state, local or non-U.S. law, (iii) any Taxes of any Person imposed on any of the JCA Entities 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~~ period 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~~ transaction occurring on 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, by law, contract or otherwise, (iv) any breach of the ~~indemnification obligations of Seller Parent pursuant to~~ representations and warranties set forth in Section ~~6.5(d)(i~~4.16, (v) any Taxes, other than JCA Transfer Taxes, arising in ~~respect of such Taxes (~~connection with, 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 Closingresulting from, the ~~indemnification obligations of Purchaser Parent pursuant to Section 6.5(d)(ii) in respect of such Taxes (or related costs~~ JCA Contribution, 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~~ eighty-five percent (85%) of any Transfer Taxes (other than Carve-Out Transfer Taxes or JCA Transfer Taxes) as described in Section 9.7. (c) Notwithstanding anything in this Agreement to ~~any other amounts paid pursuant to~~ the contrary, each of the rights and obligations of the Parties set forth in this Section ~~6.5:~~ 9.8 shall continue in full force and effect until the date that is sixty (~~A) Within thirty (30~~60) days following the ~~filing~~ expiration date of the applicable statute(s) of limitation relating thereto (giving effect to any ~~Income Tax Return for any Conveyed Subsidiary (or any Subsidiary~~ extensions 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

Samples: Sale and Contribution Agreement (Agco Corp /De)

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

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

Tax Indemnification. Notwithstanding anything in this Agreement to the contrary: (ia) ~~Subject to Section 6.5(d)(v)~~To the extent of aggregate value of the IWEST Shares issued in connection with this Agreement, from and after the Closing, ~~Seller Parent agrees to indemnify~~ IREIC and ~~hold harmless Purchaser~~ the Agent shall jointly and ~~its Subsidiaries (including the Conveyed Subsidiaries and their Subsidiaries after the Closing Date) (collectively~~severally indemnify, 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 save and hold harmless the ~~Purchaser Tax~~ IWEST Indemnified Parties from and against any and all ~~liability~~Damages that arise out of, ~~without duplication~~result from, ~~for~~ or are incident 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~~ the Service Providers with respect to all Pre-Closing Tax Periods, (~~other than~~ ii) Taxes of any person with whom any of the ~~Conveyed Subsidiaries and~~ Service Providers, or their ~~Subsidiaries~~Affiliates or any predecessor or affiliate thereof joins or has ever joined in filing any affiliated, consolidated, combined or unitary Tax Return (or any TIGI Combined Return) for any Pre-Closing Tax Period, (3iii) any real property transfer or gains Tax, use Tax, stamp Tax, stock transfer Tax or other similar Tax imposed on the transactions contemplated by this Agreement and (iv) the breaches of representations and warranties set forth in Section 4.6 and the covenants set forth in Sections 5.1(c)(ii), 5.1(m), and 6.9, in each case without regard to any materiality qualifications. (b) After the Closing Date, IWEST shall indemnify, save and hold harmless the Stockholder Indemnified Parties from and against: (i) all liability for Taxes of any ~~Person~~ Surviving Corporation for ~~a Pre~~any Post-Closing Tax ~~Period for which Purchaser~~ Period; and (or ii) 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 IWEST of any covenant ~~or agreement of Purchaser Parent, Purchaser or their respective Affiliates~~ contained in ~~this Agreement~~Section 6.9, (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 without regard to any ~~amounts payable~~ materiality qualifications. (c) The Indemnified Parties shall not have any right 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 indemnification 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 9.5 to the extent that ~~Purchaser~~ the Indemnifying Parties’ liability for Taxes 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 Damages is less than $100,000 in the ~~Final Closing Statement and taken into account in the calculation~~ aggregate. For avoidance 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 Lawdoubt, the ~~taxable year of each of the Conveyed Subsidiaries and their Subsidiaries and any Subsidiary of Purchaser that includes the Closing Date~~ limitations set forth in Section 9.3 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~~ not apply 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 Authority9.5. (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

Samples: Merger Agreement (Inland Western Retail Real Estate Trust Inc)

Tax Indemnification. Seller shall indemnify the Company, Buyer, and each Buyer Indemnitee (ias defined in Section 9.1) ~~Subject to Section 6.5(d)(v),~~ and hold them harmless from and ~~after the Closing~~against (a) any loss, ~~Seller Parent agrees to indemnify and hold harmless Purchaser and its Subsidiaries (including the Conveyed Subsidiaries and their Subsidiaries after the Closing Date)~~ damage, liability, deficiency, Action, judgment, interest, award, penalty, fine, cost or expense of whatever kind (collectively, including reasonable attorneys' fees and the cost of enforcing any right to indemnification under this Agreement, “~~Purchaser Tax Indemnified Parties~~Losses”) ~~from and against~~ attributable to any breach of or inaccuracy in any representation or warranty made in Section 4.20; (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; (c) all ~~liability, without duplication, for (1)~~ Taxes of the ~~Conveyed Subsidiaries and their Subsidiaries~~ Company or relating to the business of the Company for ~~any~~ all Pre-Closing Tax ~~Period~~ Periods (~~including any~~ as defined above) except those Taxes ~~payable~~ set out in ~~respect of an election under Section 965(h~~the Disclosure Schedule; (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 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 ~~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 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 reasonable attorneys' and accountants' fees) incurred in connection therewith, Seller shall reimburse Buyer for any Taxes of the Company that ~~do not relate primarily to Taxes), (4) Taxes arising out of or resulting from any breach of any covenant or agreement~~ are the responsibility 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)~~7.4 within ten business days after payment of such Taxes by Buyer or the Company and provision of such documentation by Buyer in connection therewith, ~~subject to the following proviso~~provided, “however, Seller ~~Indemnified Taxes”); provided that Seller Parent~~ shall ~~not be required to indemnify or hold harmless~~ have no liability for 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~~ paid 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 Buyer to the extent ~~that~~ Seller is prejudiced by Buyer not providing Seller with a ~~Conveyed Subsidiary or any Subsidiary thereof had any Tax Assets as of the close of business on the Closing Date that were available~~commercially reasonable opportunity to evaluate, defend, dispute, 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 negotiate 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~~ (it being agreed 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~~ advance written ~~demand upon the indemnifying party~~notice of any claims for Taxes shall be a sufficient, 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~~not necessarily minimum, notice period). (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

Samples: Stock Purchase Agreement (I-Minerals Inc)

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, the Seller shall indemnify and defend the Buyer, the Company and the Subsidiaries (and their Affiliates, successors and assigns) (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~~Losses and damages suffered or incurred (each a “Tax Loss” and collectively, ~~without duplication, for~~ the “Tax Losses”) arising out of or otherwise in respect of (1i) Taxes of the ~~Conveyed Subsidiaries and their~~ Company or its Subsidiaries for ~~any Pre-~~taxable periods ending on or before the Closing ~~Tax Period (including~~ Date, or with respect to a Straddle Period, the portion of any Taxes ~~payable in respect of an election~~ allocable under Section ~~965(h) of~~ 5 for the ~~Code)~~period ending on the Closing Date, ~~(2) Taxes of any Seller (other than any Transfer Taxes and VAT for which Purchaser is responsible hereunder)~~ including, for the avoidance of doubt, any Taxes ~~(other than Taxes of the Conveyed Subsidiaries and their Subsidiaries) imposed with respect to~~based upon, arising out of or ~~relating~~ otherwise in respect of any transaction occurring at or prior to the ~~Purchased Assets~~ Closing, including a transfer by any of the Companies of any asset (including any asset described in Section 5.8(e), 5.8(g) or 5.8(h) or the ~~Business for a Pre-Closing Tax Period, (3) Taxes of any Person (other than the Conveyed Subsidiaries and their~~ Excluded 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~~Pre-Closing Taxes”), ; and (Bii) Taxes ~~that were reflected~~of any member of an affiliated, ~~accrued~~ consolidated, combined or ~~reserved for in~~ unitary group of which 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 Company or any of its ~~Affiliates (including~~ Subsidiaries is or was a member on or prior to the ~~Conveyed Subsidiaries and their Subsidiaries after the Closing) to offset or otherwise reduce the applicable Tax Liability in respect~~ Closing Date by reason 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 liability under Treasury Regulation ~~Section~~ §1.1502-6 (or ~~a similar~~ comparable provision of ~~state~~foreign, 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 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~~Annex, ~~in the case of any Straddle Period: (A) Property Taxes allocable~~ references 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“Closing” shall, 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-~~Xxxxxxxxxx Subsidiaries and the Dade Subsidiaries, mean the Xxxxxxxxxx Closing ~~Tax Period or~~ and the ~~portion of any Straddle Period ending on~~ Dade Closing, respectively, and ~~including the Closing Date (~~references to 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, Date” 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 bindingcorresponding meaning. (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

Samples: Share Purchase Agreement (Covanta Holding Corp)

Tax Indemnification. (ia) ~~Subject to Section 6.5(d)(v)~~MLIM Parent 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~~ BlackRock Indemnified ~~Parties”)~~ 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~~), (2v) ~~Taxes of~~ any ~~Seller (other than any Transfer~~ and all Taxes and ~~VAT for which Purchaser is responsible hereunder) including,~~ Losses related to Taxes ~~(other than Taxes of the Conveyed Subsidiaries and their Subsidiaries) imposed with respect to, arising out~~ of or relating to the ~~Purchased Assets~~ ownership, operation or conduct of MLIM Business Entities or the ~~Business~~ Assets for ~~a Pre-Closing~~ any Tax ~~Period~~year or portion thereof ending on or prior to the MLIM Contribution, (3w) any and all United Kingdom Taxes ~~of any Person~~ and Losses related to United Kingdom Taxes (~~other than the Conveyed Subsidiaries and their Subsidiaries~~i) for which a ~~Pre-Closing Tax Period for which any Conveyed Subsidiary (or any Subsidiary thereof)~~ UK Company is secondarily 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 having 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~~ purpose prior to 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~~ the provision of non-cash benefits prior to Closing to employees, (x) any and all Taxes and Losses relating to Taxes arising out of (i) any breach of or any ~~Subsidiary of Purchaser~~ inaccuracy in any representation or warranty (~~other than~~ without giving effect to any ~~Conveyed Subsidiary~~ qualifiers or ~~a Subsidiary thereof~~exceptions relating to knowledge, materiality or MLIM Material Adverse Effect) at including the representations and warranties contained in Exhibit 3.20 or (ii) any ~~time ceasing to be a member~~ breach 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 covenant relating 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 made by ~~Seller~~ MLIM Parent or any of its Affiliates, ~~other than~~ (y) any ~~such action~~ and all Taxes and Losses relating to Taxes of or relating to the MLIM Transferors, the MLIM Business Entities or the Assets 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~~ directly arise as a result of ~~a change in applicable Law~~ entering into this Agreement or Closing other than Transfer Taxes for which BlackRock is liable pursuant to Section 8.7, or (~~a “Seller Tax Act”), (B~~z) ~~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~~ failure on the ~~Closing Date that were available, or would have been available but for their prior utilization by Purchaser~~ part of MLIM Parent or any of its Affiliates ~~(including~~ to comply with the ~~Conveyed Subsidiaries and their Subsidiaries after~~ DCL recapture provisions set forth in Treasury Regulation Section 1.1503-2(g)(2)(vii) with respect to the ~~Closing)~~DCLs of the UK Entities, provided that MLIM Parent shall have no liability under Section 8.1(a) in relation to any Taxes or Losses related to United Kingdom Taxes, in either case of the UK Companies, to ~~offset~~ the extent that such Taxes or ~~otherwise reduce the applicable Tax Liability in respect of such Income Taxes~~ Losses (~~except any Tax Asset reflected as an asset~~ i) were provided for in the ~~Final Closing Statement and~~ Accounts of the UK Companies or were otherwise taken into account in determining the ~~calculation of~~ consideration payable for the ~~Final Purchaser Working Capital or the Final Purchaser Net Cash)~~MLIM Contribution, or (Dii) arise as a result of post Closing changes in law (excluding, for the avoidance of doubt, any judicial decision), generally published concession or practice of any Governmental Authority having retrospective effect, or (iii) are penalties or interest which arise as a result of any unreasonable delay or default by a Black- Table of Contents Rock Party or UK Company post Closing, or (iv) arise as a result of an act by a BlackRock Party or UK Company post Closing which the UK Company was not legally bound, as at Closing, to take, is outside the ordinary course of its business, was not requested in writing by MLIM Parent and which the BlackRock Party or the UK Company knew or ought reasonably to have known would give rise to such Taxes ~~for which Seller Parent is responsible under~~ or Losses and provided, further, that notwithstanding anything in this Agreement to the contrary, no payment shall be due with respect to any Taxes or Losses related to Taxes relating to DCLs existing at or prior to the MLIM Contribution until there has been a “determination” (within the meaning of Section ~~6.5(d)(i)~~1313(a) of the Code or any similar state, local or foreign Tax provision) with respect to the relevant Taxes. (~~iii~~b) To In the ~~extent permitted or required by applicable Law~~event of a breach of the covenant in section 5.10(f), the ~~taxable year~~ amount of ~~each~~ indemnification payable to the BlackRock Indemnified Parties shall not exceed the amount equal to the product of (i) the Tax loss or deduction recognized by MLIM Parent and its Affiliates as a result of any transaction or series of transactions occurring after the date hereof and on or prior to the MLIM Contribution resulting in a reduction in the aggregate adjusted tax basis of the ~~Conveyed Subsidiaries~~ 197 Intangibles and ~~their Subsidiaries and any Subsidiary of Purchaser that includes~~ (ii) 40%. (c) All amounts payable or to be paid under this Section 8.1 (the ~~Closing Date~~ “Tax Indemnity Payments”) shall be ~~treated as closing on~~ paid in immediately available funds within five (5) Business Days after the later of (i) receipt of a written request from the party entitled to such Tax Indemnity Payment and ~~including~~(ii) the ~~Closing Date~~day of payment of the amount that is the subject of the Tax Indemnity Payment by the party entitled to receive the Tax Indemnity Payment. ~~Otherwise~~Any late payments shall accrue interest at the Specified Rate. All indemnification payments pursuant to this Article VIII shall be made on an After-Tax Basis. “After-Tax Basis” shall mean, for purposes of this Agreement, in the ~~case~~ amount otherwise due under this Article VIII increased by such additional amount as necessary so that the aggregate payment, net of ~~any Straddle Period: (A) Property Taxes allocable~~ Tax liability to the ~~Pre-Closing Tax Period shall be computed based upon the ratio of the number of days in the Pre-Closing Tax Period~~ party entitled to payment is equal to the ~~number of days in~~ amount due under this Article VIII without taking into account Taxes incurred by the ~~entire Straddle Period; and (B) Taxes (other than Property Taxes) allocable~~ party entitled to ~~the Pre-Closing Tax Period shall be computed as if such Tax period ended as of the close of business~~ payment on the ~~Closing Date and, in the case~~ receipt of ~~any Taxes~~ such payment. For purposes 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 determining 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 liability 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~~indemnification payment received under this Article VIII, the ~~Purchaser~~ parties shall ~~within five (5) Business Days following~~ assume that the ~~finalization of the Final Pre-Closing Income~~ party entitled to payment’s combined effective 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 Subsidiariesrate is 40%. (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

Samples: Transaction Agreement and Plan of Merger (Merrill Lynch & Co Inc)

Tax Indemnification. (i) ~~Subject to Section 6.5(d)(v), from~~ The Seller shall indemnify the Company and ~~after~~ the ~~Closing, Seller Parent agrees to indemnify~~ Buyer 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 (i) any Loss attributable to any breach of or inaccuracy in any representation or warranty made in Section 4.19; (ii) any Loss attributable to any breach or violation of, or failure to fully perform, any covenant, agreement, undertaking or obligation in Article 6; (iii) all ~~liability, without duplication, for (1) Taxes of the Conveyed Subsidiaries and their Subsidiaries for any~~ Pre-Closing ~~Tax Period~~ Taxes (~~including~~ which for the avoidance of doubt shall include any ~~Taxes payable in respect of an election under Section 965(h~~penalties and/or interest attributable thereto); (iv) ~~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~~ v) any and 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, the Seller shall reimburse the Buyer for any Taxes of the Company 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 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 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)(i6.1(n)(i) ~~for~~ within ten (A10) ~~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 earlier 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 the ~~Final Closing Statement and taken into account in the calculation of the Final Business Working Capital~~ Buyer or the ~~Final Business Net Cash),~~ Company or ~~(D) Taxes for which Purchaser Parent is responsible under Section 6.5(d)(ii)~~a determination by a taxing authority. (ii) ~~Subject to Section 6.5(d)(v), from and after the Closing, Purchaser Parent~~ The Buyer shall indemnify the Seller Parties and hold them harmless ~~the Purchaser Tax Indemnified Parties~~ from and against (a) any Loss attributable to any breach or violation of, or failure to fully perform, any covenant, agreement, undertaking or obligation in Article 6; (b) all ~~liability, without duplication, for~~ Post-Closing Taxes; (1c) 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~~ member of an affiliated, 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 of the Company) ~~is liable~~ may become a member after 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~~ e) any and 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 (other than Contracts that do not relate primarily~~ contract, relating to ~~Taxes), (4) Taxes arising out of~~ an event 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-transaction occurring after the 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 Date. In each of the ~~Purchaser Internal Restructurings~~above cases, ~~(8) Taxes required to be deducted or withheld~~ together 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 out-of-pocket fees and ~~expenses~~expenses (including attorneys’ and accountants’ fees) incurred in connection therewith, ~~attributable to~~ the Buyer shall reimburse the Seller Parties for any ~~item described in clauses (1) through (9) (any such~~ Taxes ~~for which Purchaser Parent is responsible~~ of the Company that are the responsibility of the Buyer 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 6.1(n)(ii) within ten (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 (510) Business Days ~~prior to~~ after the ~~date on which~~ earlier of 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 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 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~~ Parties 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~~ determination by 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 bindingtaxing authority. (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

Samples: Stock Purchase Agreement (Malachite Innovations, Inc.)

Tax Indemnification. ~~(i) Subject~~ Each Principal Securityholder other than the Stockholder Representative hereby severally and not jointly agrees, and the Stockholder Representative hereby jointly and severally agrees, to ~~Section 6.5(d)(v), from~~ be liable for and ~~after the Closing, Seller Parent agrees~~ to indemnify and hold the Parent 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~~ against, and pay to the Parent Indemnified Parties the amount of any and all ~~liability, without duplication, for (1) Taxes of the Conveyed Subsidiaries and their Subsidiaries for any Pre-Closing Tax Period (including any Taxes payable~~ Losses 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 (1i) all Taxes of ~~Purchaser Parent~~ or imposed against the Company and ~~its Affiliates~~ the Company Subsidiaries (~~other than Purchaser and its Subsidiaries~~or any predecessor thereof) (A) for any ~~Tax~~ taxable period ~~(other than Transfer Taxes and VAT for which Seller Parent is responsible hereunder), (2) Taxes of Purchaser and its Subsidiaries (other than~~ ending on or before 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 handDate, 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~~ in each case determined as provided in Section 10.3); (ii) any and all Taxes imposed on any member of a consolidated, combined or unitary group of which the ~~amount~~ Company or any Company Subsidiary (or any predecessor thereof) is or was a member on or prior to the Closing Date, by reason of the ~~Seller Accrued Income Taxes~~ liability of the Company 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 any Company Subsidiary (or ~~caused~~ any predecessor thereof), pursuant to Treasury Regulation Section 1.1502-6(a) (or any predecessor or successor thereof or any analogous or similar provision under state, local or foreign Law); and (iii) the failure of any of the representations and warranties contained in Section 4.10 to be ~~prepared~~true and correct in all respects (determined without regard to any qualification related to materiality contained therein) ~~by Seller Parent~~ or ~~Purchaser Parent, respectively. If Purchaser Parent or Seller Parent, as applicable, do not provide~~ the failure to perform 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~~ covenant contained in this Agreement with respect to Taxes. To the extent that any ~~Income Tax Return~~ claim by Parent for indemnification hereunder is ~~less than~~ satisfied by the ~~amount of the Pre-Closing Income Tax Amount attributable to such Income Tax Return that was included on the Final Closing Statement~~Working Capital adjustment, ~~the Purchaser~~ there 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 be no duplicative recovery under 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 6.510.1.

Appears in 1 contract

Samples: Merger Agreement (Gentiva Health Services Inc)

Tax Indemnification. (a) Each Principal Stockholder shall jointly and severally indemnify the Buyer Indemnified Parties and hold them harmless from and against any Loss attributable to (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~~(or the non-payment thereof) of the ~~Code), (2) Taxes of any Seller (other than any Transfer Taxes~~ Company for all the taxable periods ending on or before the Closing Date and ~~VAT for which Purchaser is responsible hereunder) including, Taxes (other than Taxes~~ the portion through the end of the ~~Conveyed Subsidiaries and their Subsidiaries~~Closing Date for any taxable period that includes (but does not end on) ~~imposed with respect to, arising out of or relating to~~ the ~~Purchased Assets or the Business for a~~ Closing Date (“Pre-Closing Tax Period”), (3ii) any and all Taxes of any Person (other than the ~~Conveyed Subsidiaries~~ Company) imposed on the Company as a transferee or successor, by contract or pursuant to any law, rule or regulations, which Taxes relate to an event or transaction occurring on or before the Closing, (iii) any and ~~their Subsidiaries~~all Taxes of any member of an affiliated, consolidated, combined, or unitary group of which the Company or a Company Subsidiary is or was a member on or prior to the Closing Date, including pursuant to Treasury Regulations Section 1.1502-6 or any analogous or similar state, local, provincial or foreign law or regulation, and (iv) the failure of any of the representations and warranties contained in Section 3.12 to be true and correct in all respects (determined without regard to any qualification related to materiality contained therein) or the failure to perform any covenant contained in this Agreement with respect to Taxes, provided, however, that in the case of clauses (i), (ii), (iii) and (iv) above, Principal Stockholders shall be liable only to the extent that such Taxes exceed the amount, if any, that has been accrued for such Taxes (excluding any accrual for deferred Taxes) on the face of the Closing Balance Sheet (rather than in any notes thereto) and taken into account in determining the Working Capital Adjustment provided in Section 2.6, and provided, further, that the maximum aggregate liability of the Principal Stockholders under Sections 6.3 and 6.7 shall not exceed the sum of (x) the amount of the Working Capital Indemnity Amount, if any, and (y) 50% of the amount of the aggregate Merger Consideration received by the Stockholders. (b) Buyer agrees to pay over to the Escrow Agent, or if there is a separate Paying Agent, to such Paying Agent, for payment to the Stockholders the amount of any Tax Benefits from a Pre-Closing Tax Period ~~for which~~ actually realized by the Buyer, any ~~Conveyed Subsidiary (~~Affiliate of the Buyer or any ~~Subsidiary thereof) is liable~~ successor or transferee of any of the foregoing from the Taxes giving rise to the applicable indemnification claim under ~~Treasury Regulation~~ this Section ~~1.1502-6~~ 6.7.1 (~~or a similar provision of state, local or foreign Law~~“Indemnified Tax Item”), ~~or as~~ provided that such Tax Benefit is actually realized by any such Person. Such Person shall be considered to have actually realized a ~~transferee or successor or by Contract (other than Contracts that do not relate primarily to Taxes), (4) Taxes arising out~~ Tax Benefit only upon the receipt of ~~or resulting~~ a cash refund 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 or upon a credit from a Pre-Closing Tax Period against a tax obligation that would otherwise be imposed ~~on (x) any transaction effected pursuant~~ in a Post-Closing Tax Period. The Buyer shall pay to ~~Section 2.3(b), (y) any settlement of any intercompany accounts of Seller Parent or its Subsidiaries pursuant to Section 6.7~~the Escrow Agent, or ~~(z) any transaction or step forming part of~~ if there is a separate Paying Agent, to such Paying Agent, for payment to the ~~Seller Internal Restructurings~~Stockholders the Tax Benefit promptly after the Tax Benefit is actually realized, ~~(6) Transfer Taxes for which Seller Parent is responsible under Section 6.5(j)~~provided, ~~(7) Taxes required to~~ however, that such payment will not be ~~deducted or withheld with respect~~ made prior to the payment of the ~~Purchase Consideration~~ applicable indemnification payment under this Section 6.7.1 in respect of the applicable Indemnified Tax Item by the Buyer Indemnifying Party. If all 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 portion of any ~~assignment~~ Tax Benefit is subsequently disallowed, the Buyer Indemnifying Party shall, upon receipt of written notice of such disallowance, repay to the Buyer Indemnified Party the amount disallowed, provided that the Buyer Indemnified Party will have the same obligations, and the Buyer Indemnifying Party will have the same rights, with respect to a proposed disallowance of a Tax Benefit as are prescribed for Tax Claims in Section 6.7.6. (c) [Intentionally Omitted] (d) Any indemnification amount payable by ~~Purchaser or its Affiliates for which Purchaser is responsible pursuant~~ any Person under this Section 6.7.1 to ~~Section 10.3)~~any Buyer Indemnified Party shall be offset against, ~~(8) Taxes arising from any breach~~ and reduced by, the amount 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 Tax Benefits actually realized by such ~~Taxes for which Seller Parent is responsible pursuant to this Section 6.5(d)(i), subject to the following proviso, “Seller~~ Buyer Indemnified ~~Taxes”); provided that Seller Parent~~ Party. The Stockholders shall not be ~~required~~ entitled to ~~indemnify or hold harmless any Purchaser~~ duplicate Tax ~~Indemnified Party from and against any liability pursuant to~~ Benefits under this Section ~~6.5(d)(i~~6.7.1(d) and under Section 6.7.1(b). Subject to the Buyer’s judgment as set forth in the next sentence, for purposes of Section 6.7.1 and Section 6.3.12 hereof, Buyer shall (~~A) Taxes attributable to any action taken after the Closing by Purchaser, any~~ and shall cause each of its Affiliates (including the ~~Conveyed Subsidiaries and their Subsidiaries), or any transferee of Purchaser or any of~~ Company) to) use its ~~Affiliates (including the Conveyed Subsidiaries and their Subsidiaries), other than any~~ respective commercially reasonable efforts to take all appropriate actions reasonably necessary to realize all such ~~action~~ Tax Benefits that ~~(1) is in the ordinary course of business, (2) is expressly permitted or contemplated by this Agreement, or (3) is required to~~ may 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 . Buyer shall not be required to ~~indemnify or hold harmless any Purchaser Tax Indemnified Party from and against any liability for (A) Taxes attributable~~ take the actions required by the immediately preceding sentence to ~~any action taken after the Closing by Seller Parent or any of its Affiliates, other than~~ realize any such ~~action~~ Tax Benefit if Buyer determines in its reasonable business judgment that ~~(1)~~ it is in not advisable to pursue such Tax Benefit, provided such judgment shall be made without regard to the ~~ordinary course~~ availability of ~~business~~indemnification by the Buyer Indemnifying Parties. The Stockholders shall be responsible for any costs associated with filing any amended Tax Return and pursuing any claim necessary to obtain a Tax Benefit, (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~~ the costs are incremental and would not have otherwise been incurred by the Buyer, whether 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 not 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,~~ Benefit is actually realized 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 periodsubsequently disallowed. (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

Samples: Merger Agreement (ICF International, Inc.)

Tax Indemnification. (a) Except as otherwise provided in this Article VII, PGH and PMH shall indemnify GEFA, its Affiliates, and the PGH Subsidiaries (each a "GEFA INDEMNITEE") against and agrees to hold each GEFA Indemnitee 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 any 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 PGH Subsidiary related to ~~the Purchased Assets or the Business for~~ a Pre-Closing Tax Period; (ii) any Tax imposed on any PGH Subsidiary as a result of being or having been before the Second Closing Date a member of an affiliated, ~~(3) Taxes of any Person (other than the Conveyed Subsidiaries and their Subsidiaries) for a Pre-Closing Tax Period for which any Conveyed Subsidiary (~~consolidated, combined, unitary or ~~any Subsidiary thereof) is liable under Treasury Regulation Section 1.1502-6 (~~similar group, or a ~~similar provision of state, local~~ party to any agreement or ~~foreign Law), or~~ arrangement; (iii) any amount payable as a ~~transferee~~ result of being party to any Tax Sharing Agreement 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 any amount of the ~~Purchase Consideration~~ type described in clause (i) 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~~ii) 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 above as a result of any ~~assignment by Purchaser~~ existing express or ~~its Affiliates~~ implied obligation (including, but not limited to, an indemnification obligation); (iv) if any of the Section 338 Elections provided for ~~which Purchaser is responsible~~ in Section 7.7 are made, any Taxes attributable to the deemed sale of assets or other deemed transactions pursuant to ~~Section 10.3)~~any such elections; (v) any increase in Taxes (for any taxable period, including a Post-Closing Tax Period) resulting from adjustments to or changes in Tax items relating to any of the PGH Subsidiaries for any taxable period ending on or before the Second Closing Date, whether such adjustments or changes are voluntarily made or are required by a Taxing Authority; (~~8) Taxes arising from~~ vi) the breach of any representation, warranty or covenant in this Article VII (for this purpose, the breach of any representation or warranty ~~contained in~~ shall be determined without regard to any qualification as to materiality); (vii) any liability (including any Costs, within 119 127 the meaning of Section ~~4.16(k~~10.2(a), (9associated therewith) ~~Taxes arising as a result of~~ resulting from any ~~Conveyed Subsidiary or~~ representation made by 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 PGH Group or any of its ~~Affiliates~~ agents to any purchaser of group increasing whole life insurance policies guaranteeing or warranting the anticipated Tax benefits of owning such insurance contracts, including, but not limited to, the availability of any interest deduction under Sections 163 and 264(a)(3) of the Code for any policy indebtedness; and (~~including~~ viii) any Costs (within the ~~Conveyed Subsidiaries and their Subsidiaries~~meaning of Section 10.2(a)~~, other than any such action that (1~~) ~~is in the ordinary course~~ arising out 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 incident to the ~~extent that a Conveyed Subsidiary~~ imposition, assessment or ~~any Subsidiary thereof had~~ assertion of any Tax ~~Assets~~ or increase in Tax or breach described in this Section 7.6(a); provided, however, that there shall be no duplicative recovery hereunder. GEFA agrees to cooperate as of reasonably requested with PGH and PMH in preparing to defend against 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 imposition of such ~~Income~~ Taxes ~~(except~~ by 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)Taxing Authority. (iib) ~~Subject to Section 6.5(d)(v), from and after the Closing, Purchaser Parent~~ GEFA shall indemnify ~~and hold harmless the Purchaser Tax Indemnified Parties from and against all liability, without duplication, for (1) all Taxes of Purchaser Parent~~ PGH and its Affiliates (other than ~~Purchaser and its~~ the PGH Subsidiaries) ~~for~~ from and against and hold them harmless from 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~~PGH Subsidiary relating to a Post-Closing Tax Period, except as otherwise provided in Section 7.6(a). PGH agrees to cooperate as reasonably requested with GEFA in preparing to defend against the imposition of such Taxes by any Taxing Authority. (3c) Any payment required to be made under the terms of this Section 7.6 shall be made not later than ten (10) days after receipt by the indemnifying party of written notice from the party to be indemnified stating that any loss has been incurred by the party to be indemnified and the amount thereof and of the indemnity payment requested. (d) Following the Second Closing Date, PGH shall control the conduct of all stages of any Tax Proceeding with respect to Taxes for which PGH could be held liable pursuant to Section 7.4(a) or Section 7.6(a); provided, however, that (i) GEFA shall have the right to 120 128 participate, at its own expense, in any such Tax Proceeding and (ii) GEFA shall control the conduct of all stages of any Tax Proceeding relating to Taxes of any ~~Person~~ PGH Subsidiary that may be subject to indemnification under this Article VII for Tax periods beginning before and ending after the Second Closing Date. GEFA shall furnish, or shall cause a ~~Pre-Closing Tax Period for which Purchaser (~~PGH Subsidiary to furnish, as the case may be, PGH with powers of attorney, or any ~~Subsidiary thereof~~ other ~~than~~ document or authorization necessary or appropriate to enable PGH to exercise the control provided PGH in this Section 7.6(d). GEFA shall control the conduct of all other Tax Proceedings with respect to the Tax liability of the PGH Subsidiaries. Subject to such control: (i) With respect to any ~~Conveyed Subsidiaries and their Subsidiaries~~Tax Proceeding that PGH controls, PGH (X) ~~is liable under Treasury Regulation Section 1.1502-6 (~~shall give prompt written notice to GEFA of any Tax adjustment proposed in writing with respect to the assets or ~~a similar provision~~ activities 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)~~any PGH Subsidiary, (4Y) ~~Taxes arising out~~ upon GEFA's reasonable request shall discuss with GEFA and GEFA's Tax advisors the position that it intends to take regarding any issue concerning such assets or activities, and (Z) shall not, and shall not permit any of its Affiliates to, accept any proposed adjustment or ~~resulting from~~ enter into any ~~breach~~ settlement or agreement in compromise of any ~~covenant~~ proposed adjustment that would have a PGH Material Adverse Effect or ~~agreement of Purchaser Parent, Purchaser or their respective Affiliates contained~~ that would result in ~~this Agreement, (5) Transfer~~ material Taxes for which ~~Purchaser Parent~~ GEFA is responsible under Section ~~6.5(j), (6~~7.6(b) ~~Taxes arising from any breach of any representation~~ hereof 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~~ that purports to bind GEFA or any PGH 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~~ Tax period ending after the Second Closing Date without the express written consent of GEFA, which consent shall not be unreasonably withheld or ~~Section 2.9~~delayed, ~~including any penalties imposed on Purchaser as a result of Purchaser’s failure to deduct or withhold any such amounts~~and 121 129 (ii) GEFA (X) shall, (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 within ten (10) Business Days from its receipt of any ~~costs and expenses~~written notice of any pending or threatened Tax Proceeding with respect to which indemnification may be sought against PGH under this Article VII, ~~including reasonable legal and accounting fees and expenses~~provide written notice to PGH thereof, ~~attributable~~ (Y) with respect to any ~~item~~ Tax Proceeding controlled by GEFA, shall afford PGH and its Tax advisors a reasonable opportunity to participate (at PGH's expense) in the conduct of any Tax Proceeding regarding a proposed adjustment described in ~~clauses~~ clause (1X) ~~through~~ above including, without limitation, the right to participate in conferences with Taxing Authorities and submit pertinent material in support of PGH's position, and (9Z) (shall not, and shall not permit any ~~such Taxes~~ of its Affiliates to, accept any proposed adjustment or enter into any settlement or agreement in compromise that would result in a claim for indemnification against PGH pursuant to this Article VII without PGH's express written consent, which ~~Purchaser Parent~~ shall not be unreasonably withheld or delayed. PGH may elect to forego control of any Tax Proceeding that it is ~~responsible~~ entitled to control pursuant to this Section ~~6.5(d)(ii~~7.6(d), and shall promptly notify GEFA if PGH elects to forego such control. In that event, GEFA shall control the conduct of such Tax Proceeding, subject to the ~~following proviso~~requirements of clause (ii) above, ~~“Purchaser Parent Indemnified Taxes”); provided that Purchaser Parent~~ and PGH shall fully cooperate with GEFA, including, but not ~~be required~~ limited to ~~indemnify~~ providing any necessary powers of attorney authorizing GEFA (or ~~hold harmless any Purchaser Tax Indemnified Party from~~ its designee) to control and ~~against any liability for (A) Taxes attributable to any~~ take action ~~taken after the Closing by Seller Parent or any of its Affiliates, other than any~~ in connection with 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).defense. 122 130 (~~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 shall be treated as closing on (and including) the Closing Date. Otherwise, for For purposes of this ~~Agreement~~Article VII, in the case of any ~~Straddle Period:~~ Taxes that are payable for a Tax period that includes (Abut does not end on) ~~Property Taxes allocable~~ the Second Closing Date, the portion of such Tax related to the ~~Pre-~~portion of such Tax period ending on and including the Second Closing Date shall (i) in the case of any Taxes that are periodic and fixed in amount (for example, real or personal property taxes), be deemed to be the amount of such Tax ~~Period shall be computed based upon~~ for the ~~ratio~~ 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 Second Closing ~~Tax Period to~~ Date and the denominator of which is the number of days in the entire ~~Straddle Period; and~~ Tax 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 all other Taxes, be deemed equal to the amount which would be payable if the relevant Tax period ended on and included the Second Closing Date. The allocations of Taxes pursuant to the preceding sentence shall be made first without taking into account any ~~Taxes of Conveyed Subsidiaries (~~Tax credits, and ~~their Subsidiaries) and Seller Parent, or~~ credits with respect to any such Tax shall then be allocated in the ~~case~~ same proportion as such Tax between the portion 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 and including the Second Closing Date and the ~~period beginning after~~ remainder of the ~~Closing Date in proportion~~ entire Tax period. All determinations necessary to give effect 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~~ PGH Subsidiaries, unless otherwise required by Law or agreed by PGH and GEFA. In the case of an interest in an entity that is ~~sought~~a pass-through entity for Tax purposes, ~~and~~ items shall ~~specify in reasonable detail~~ be deemed to flow through on a daily basis rather than at the ~~basis for such claim.~~ close of the entity's Tax year. (f) Any ~~indemnity~~ payment required to be made ~~pursuant to~~ by GEFA or PGH under this ~~Section 6.5(d)~~ Article VII that is not made when due as provided herein shall ~~be made within thirty (30) days after~~ bear interest at the ~~indemnified party makes written demand upon~~ Prime Rate for each day following the ~~indemnifying party, but in no case earlier than five (5) Business Days prior to~~ due date until the date on which ~~the relevant Taxes are required to be paid~~ payment thereof is duly mailed or electronically transmitted 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 party entitled 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 receipt 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

Samples: Stock Purchase and Exchange Agreement (Phoenix Companies Inc/De)

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

Samples: Stock Purchase Agreement (Milacron Inc)

Common use of Tax Indemnification Clause in Contracts