Section 338 Election. Purchaser shall retain the right of making an irrevocable election under §338 of the Code and the regulations promulgated thereunder in connection with the purchase and sale of the Shares of the Subject Companies hereunder (“Section 338 Election”). The terms, conditions and procedures relating to the Section 338 Election, if made, shall be in accordance with the following: (a) If Purchaser makes a Section 338 Election for any or all of the Subject Companies, then ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ shall indemnify and hold harmless, and reimburse the Shareholders and Seller for any incremental Taxes (including any interest, penalties and or other statutory additions to Tax) that may be incurred by the Shareholders and Seller by reason of the Section 338 Election being made which computation shall be based upon the difference between: (i) the after-Tax proceeds that the Shareholders and Seller would have realized after payment of all federal, state and local Taxes attributable to their sale of stock of the Company to Purchaser in a transaction in which no Section 338 Election had been made; and (ii) the actual after-Tax proceeds realized after payment of all federal, state and local Taxes attributable to their sale of stock of the Company to Purchaser (taking into account, without limitation, the additional Tax liability resulting from and/or attributable to, the Section 338 Election, and including Tax liability resulting from the reimbursement hereunder). (b) The intent of this Section is to provide the same after-Tax proceeds to Shareholders and Seller if Purchaser makes a Section 338 Election with respect to the Subject Companies as would be realized by Shareholders and Seller if no Section 338 Election had been made, and shall be interpreted in accordance with such intent. The adjustment resulting from this Section is generally referred to herein as the “338 Tax Adjustment”. (c) The Parties agree that the Purchase Price and the liabilities of the Subject Companies (plus other relevant items) will be allocated to the assets of the Subject Companies for all purposes (including Tax and financial accounting purposes) in a manner consistent with Code §338 and §1060 and the regulations there under. Purchaser and the Subject Companies shall file all Tax Returns (including amended returns and claims for refund) and information reports in a manner consistent with such allocation. (d) Shareholders and Seller shall provide Purchaser with a schedule computing the amount of the Tax resulting from the §338 election within 20 days after the Parties agree to the allocation of the Purchase Price. In making such calculation, the highest corporate federal and state tax rates to which Shareholders and Seller, respectively, are subject shall be used and any other items of income, deduction, gain, loss, or credits of Shareholders and Seller shall be ignored. (e) Purchaser shall pay and/or reimburse the Shareholders and Seller for all reasonable professional and other fees and costs (including attorneys’, accountants and filing and similar fees) incurred by the Shareholders and/or Seller by reason of or in any way relating to the Section 338 Election being made (collectively, the “338 Costs”). Within thirty (30) days of Primary Shareholder providing with an itemization of the 338 Costs, Purchaser shall pay to the Seller the amount of the 338 Costs.
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Section 338 Election. (a) Purchaser and Sellers shall retain the right of making an irrevocable make a timely election under §338 Section 338(h)(10) of the Code and any corresponding elections under state and local tax laws (collectively, the regulations promulgated thereunder in connection “Election”) with respect to the purchase and sale of the Shares of the Subject Companies hereunder pursuant to this Agreement. Sellers shall cooperate with Purchaser to take all actions necessary and appropriate (“Section 338 Election”). The termsincluding executing and filing Form 8023 and such other forms, conditions returns, elections, schedules and procedures relating other documents as may be required) to the Section 338 Election, if made, shall be effect and preserve a timely Election in accordance with the following:
(aSection 338(h)(10) If Purchaser makes a Section 338 Election for any or all of the Subject Companies, then ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ shall indemnify Code or any successor provisions (and hold harmless, and reimburse the Shareholders and Seller for any incremental Taxes (including any interest, penalties and or other statutory additions to Tax) that may be incurred by the Shareholders and Seller by reason of the Section 338 Election being made which computation shall be based upon the difference between:
(i) the after-Tax proceeds that the Shareholders and Seller would have realized after payment of all federal, corresponding state and local Taxes attributable to their tax laws). Sellers and Purchaser shall report the sale of stock of the Company Shares pursuant to Purchaser in a transaction in which no Section 338 Election had been made; and
(ii) this Agreement consistent with the actual after-Tax proceeds realized after payment of all federalElection. Sellers shall include any income, state and local Taxes attributable to their sale of stock of the Company to Purchaser (taking into accountgain, without limitationloss, the additional Tax liability resulting from and/or attributable todeduction, the Section 338 Election, and including Tax liability or other tax item resulting from the reimbursement hereunder)Election on Seller’s Tax Returns to the extent required by applicable law including but not limited to the income deemed to arise under Section 338(h)(10) of the Code. The parties acknowledge that the obligations of Acuitrek arising under those certain software license prepayments treated by Acuitrek as deferred revenue for federal income tax purposes shall not be considered liabilities for federal income tax purposes and, as such, will not be considered a liability in computing the adjusted deemed selling price but shall, however, be reported as income by Acuitrek on its Tax Returns for the period ending with and including the Closing Date.
(b) The intent Purchaser hereby covenants that the transaction contemplated herein is a “qualified stock purchase” within the meaning of this Section is to provide the same after-Tax proceeds to Shareholders and Seller if Purchaser makes a Section 338 Election with respect to of the Subject Companies as would be realized by Shareholders and Seller if no Section 338 Election had been madeCode. Sellers shall pay any state, and shall be interpreted in accordance with such intent. The adjustment local or foreign income Tax imposed on Acuitrek’s gain resulting from this Section is generally referred to herein as the “338 Tax Adjustment”Election.
(c) The Parties agree that the Purchase Price and the liabilities of Acuitrek (which the Subject Companies (plus other relevant itemsparties agree are in the approximate amount of $110,000) will be allocated to the assets of Acuitrek in accordance with the Subject Companies following: (i) accounts receivable shall be deemed to have a fair market value equal to their face amount (less allowance for all purposes doubtful accounts), (ii) fixed assets and other assets (other than start-up costs) shall be deemed to have a fair market value equal to their adjusted basis for federal income tax purposes, (iii) start-up costs shall be deemed to have no value, and (iv) the balance of the Purchase Price including Tax liabilities shall be allocated solely to software goodwill and financial accounting purposesgoing concern value. In connection with the Election, Sellers shall provide to Purchaser a schedule, which shall be subject to approval by Purchaser (not to be unreasonably delayed or withheld) in a manner consistent with Code §338 and §1060 and which sets forth the regulations there underallocation (the “Acquisition Allocation Schedule”) of the Purchase Price among the assets of Acuitrek pursuant to the previous sentence. The Purchaser and Sellers shall be jointly responsible for the Subject Companies preparation and filing of all Election forms in accordance with the Acquisition Allocation Schedule and subject to the Code. The allocation on the Acquisition Allocation Schedule shall file all Tax Returns be made in accordance with Section 338 of the Code and any applicable Treasury Regulations. The parties hereto shall take no position inconsistent with the Acquisition Allocation Schedule. Sellers make no representation or express or implied warranty regarding the accuracy of the Purchase Price allocation to be contained in the Acquisition Allocation Schedule. Sellers shall have no indemnification obligation to the Purchaser for any additional taxes paid or to be paid by Purchaser (including amended returns and claims for refundor tax benefits not obtained by Purchaser) and information reports in as a manner consistent with such allocationresult of any adjustments to the Acquisition Allocation Schedule made by any federal, state or local taxing authority upon audit.
(d) Shareholders and Seller shall provide Purchaser with a schedule computing the amount of the Tax resulting from the §338 election within 20 days after the Parties agree to the allocation of the Purchase Price. In making such calculation, the highest corporate federal and state tax rates to which Shareholders and Seller, respectively, are subject shall be used and any other items of income, deduction, gain, loss, or credits of Shareholders and Seller shall be ignored.
(e) Purchaser shall pay and/or reimburse the Shareholders and Seller for all reasonable professional and other fees and costs (including attorneys’, accountants not be required to join with Sellers in executing and filing Form 8023 and similar fees) incurred such other forms, returns, elections, schedules and documents as may by required for the Shareholders and/or Seller by reason of or in any way relating Election, until Purchaser has received and approved the Acquisition Allocation Schedule pursuant to the Section 338 Election being made (collectively, the “338 Costs”8.1(c). Within thirty (30) days of Primary Shareholder providing with an itemization of the 338 Costs, Purchaser shall pay to the Seller the amount of the 338 Costs.
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Section 338 Election. Purchaser shall retain Buyer reserves the right of making to make an irrevocable election under §338 Section 338(g) of the Code and the regulations promulgated thereunder in connection with the purchase and sale of the Shares of the Subject Companies hereunder (“"Section 338 Election”) with respect to each Acquired Entity and Seller Parties agree to provide whatever assistance reasonably required by Buyer to determine whether such election may be made. Notwithstanding anything in this Agreement to the contrary, if any Section 338 Election is made, Buyer shall indemnify and hold harmless the Sellers and shall pay the amount, if any, that the Adjusted Seller Taxes exceed the Base Seller Taxes (“Additional Taxes”). The terms“Adjusted Seller Taxes” is defined herein as the aggregate amount of Taxes that Sellers, conditions the Acquired Entities and procedures relating their Subsidiaries are required to pay or otherwise be responsible for paying or indemnifying Buyer under this Agreement (but for this indemnification for Additional Taxes) if a Section 338 Election is made, including any additional Taxes resulting from Buyer’s indemnification or payment to Sellers Parties pursuant to this Section 4.12. The “Base Seller Taxes” is defined as the aggregate amount of Taxes that Sellers the Acquired Entities and their Subsidiaries would have paid or otherwise been responsible for paying or indemnifying Buyer under this Agreement if Buyer did not elect to make a Section 338 Election. For the avoidance of doubt, the definitions of Adjusted Seller Taxes and Base Seller Taxes shall take into consideration only such Taxes from recognized gains, revenues or losses directly resulting from engaging in the Transactions with a Section 338 Election (i.e. sale of the underlying assets) or without a Section 338 Election (i.e. sale of the Shares), as the case may be, and shall not take into consideration and shall otherwise ignore any post-acquisition Tax benefits that may be derived or lost by any of the Acquired Entities or their Subsidiaries as a result of the Transactions with or without any Section 338 Election, if madeincluding, shall be in accordance with the following:
(a) If Purchaser makes a Section 338 Election for any or all of the Subject Companies, then ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ shall indemnify and hold harmless, and reimburse the Shareholders and Seller for any incremental Taxes (including any interest, penalties and or other statutory additions to Tax) that may be incurred by the Shareholders and Seller by reason of the Section 338 Election being made which computation shall be based upon the difference between:
(i) the after-Tax proceeds that the Shareholders and Seller would have realized after payment of all federal, state and local Taxes attributable to their sale of stock of the Company to Purchaser in a transaction in which no Section 338 Election had been made; and
(ii) the actual after-Tax proceeds realized after payment of all federal, state and local Taxes attributable to their sale of stock of the Company to Purchaser (taking into account, without limitation, the additional Tax liability resulting from and/or attributable but not limited to, the Section 338 Electionany increased, and including Tax liability resulting from the reimbursement hereunderlost or reduced deductions (through depreciation, amortization or otherwise).
(b) The intent of this Section is to provide the same after-Tax proceeds to Shareholders and Seller if Purchaser makes a Section 338 Election with respect to the Subject Companies as would be realized by Shareholders and Seller if no Section 338 Election had been made, and shall be interpreted in accordance with such intent. The adjustment resulting from this Section is generally referred to herein gains or losses, as the “338 Tax Adjustment”.
(c) The Parties agree that case may be, from any stepped-up or retained basis in the Purchase Price and the liabilities of the Subject Companies (plus other relevant items) will be allocated to the underlying assets of the Subject Companies for all purposes (including Tax and financial accounting purposes) in a manner consistent with Code §338 and §1060 and the regulations there under. Purchaser and the Subject Companies shall file all Tax Returns (including amended returns and claims for refund) and information reports in a manner consistent with any such allocationentities.
(d) Shareholders and Seller shall provide Purchaser with a schedule computing the amount of the Tax resulting from the §338 election within 20 days after the Parties agree to the allocation of the Purchase Price. In making such calculation, the highest corporate federal and state tax rates to which Shareholders and Seller, respectively, are subject shall be used and any other items of income, deduction, gain, loss, or credits of Shareholders and Seller shall be ignored.
(e) Purchaser shall pay and/or reimburse the Shareholders and Seller for all reasonable professional and other fees and costs (including attorneys’, accountants and filing and similar fees) incurred by the Shareholders and/or Seller by reason of or in any way relating to the Section 338 Election being made (collectively, the “338 Costs”). Within thirty (30) days of Primary Shareholder providing with an itemization of the 338 Costs, Purchaser shall pay to the Seller the amount of the 338 Costs.
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Section 338 Election. Purchaser (i) Buyer and Seller shall retain the right of making jointly make, or cause to be made, an irrevocable election under §Section 338(h)(10) of the Code and any related U.S. state or local elections and shall deliver to the other duly executed forms, if required, to effectuate said election for federal, state and/or local Tax purposes, with respect to the Company.
(ii) Seller shall prepare and deliver to Buyer copies of IRS Form 8883 and a schedule allocating the Purchase Price among the assets of the Company and the Transferred Assets (the “Purchase Price Allocation Schedule”) within 90 days after the Closing Date. The Purchase Price Allocation Schedule and any other form or document prepared or provided by Seller pursuant to this Section 7.07(f)(ii) shall be reasonable and shall be prepared in good faith in accordance with Section 338 of the Code and the regulations promulgated thereunder in connection with the purchase and sale Section 1060 of the Shares Code and the Treasury Regulations thereunder or applicable state Tax Law. Seller and Buyer agree to consult and resolve in good faith any issue arising as a result of the Subject Companies hereunder (“Section 338 Election”). The termsPurchase Price Allocation Schedule and the IRS Form 8883, conditions and procedures relating to mutually consent to the Section 338 Electionfiling as promptly as possible of IRS Form 8883, if madeand any applicable state or local filings, shall be in accordance with the following:
(a) If Purchaser makes a Section 338 Election for any or all of the Subject Companies, then ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ shall indemnify and hold harmless, and reimburse the Shareholders and Seller for any incremental Taxes (including any interest, penalties and or other statutory additions to Tax) that may be incurred agreement reached by the Shareholders and Seller by reason of the Section 338 Election being made which computation shall be based upon the difference between:
(i) the after-Tax proceeds that the Shareholders and Seller would have realized after payment of all federal, state and local Taxes attributable to their sale of stock of the Company to Purchaser in a transaction in which no Section 338 Election had been made; and
(ii) the actual after-Tax proceeds realized after payment of all federal, state and local Taxes attributable to their sale of stock of the Company to Purchaser (taking into account, without limitation, the additional Tax liability resulting from and/or attributable to, the Section 338 Election, and including Tax liability resulting from the reimbursement hereunder)Parties.
(biii) The intent In the event Seller and Buyer are unable to resolve any dispute within 30 calendar days following the delivery of this the copies of such IRS Form 8883 and Purchase Price Allocation Schedule to Buyer, Seller and Buyer shall submit the dispute to the Tax Matters Accounting Arbitrator consistent with the procedures for engaging such party as described in Section is to provide the same after-Tax proceeds to Shareholders and Seller if Purchaser makes a Section 338 Election 7.07(a)(ii), including with respect to the Subject Companies as would be realized by Shareholders division of fees.
(iv) Seller and Seller Buyer agree to file, and cause their respective Affiliates to file, all U.S. Tax Returns (if no any) in accordance with the Section 338 Election had been made338(h)(10) election and, if there is a mutually agreed upon Purchase Price Allocation Schedule, such schedule, and shall be interpreted neither take any position contrary thereto (unless and to the extent required to do so pursuant to a determination (as defined in accordance with such intent. The adjustment resulting from this Section is generally referred to herein as the “338 Tax Adjustment”.
(c1313(a) The Parties agree that the Purchase Price and the liabilities of the Subject Companies (plus other relevant itemsCode or any similar U.S. state or local Tax provision)) will be allocated to the assets of the Subject Companies for all purposes (including Tax and financial accounting purposes) in a manner consistent with Code §338 and §1060 and the regulations there under. Purchaser and the Subject Companies shall file all Tax Returns (including amended returns and claims for refund) and information reports in a manner consistent with such allocation.
(d) Shareholders and Seller shall provide Purchaser with a schedule computing the amount of the Tax resulting from the §338 election within 20 days after the Parties agree to the allocation of the Purchase Price. In making such calculation, the highest corporate federal and state tax rates to which Shareholders and Seller, respectively, are subject shall be used and nor modify or revoke any other items of income, deduction, gain, loss, or credits of Shareholders and Seller shall be ignored.
(e) Purchaser shall pay and/or reimburse the Shareholders and Seller for all reasonable professional and other fees and costs (including attorneys’, accountants and filing and similar fees) incurred by the Shareholders and/or Seller by reason of or in any way relating to the Section 338 Election being made (collectively, the “338 Costs”338(h)(10). Within thirty (30) days of Primary Shareholder providing with an itemization of the 338 Costs, Purchaser shall pay to the Seller the amount of the 338 Costs.
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Section 338 Election. Purchaser shall retain the right of making an irrevocable election under §338 338(g) of the Code and the regulations promulgated thereunder in connection with the purchase and sale of the Shares of the Subject Companies hereunder (“Section 338 338(g) Election”). The terms, conditions and procedures relating to the Section 338 338(g) Election, if made, shall be in accordance with the following:
(a) If Purchaser makes Purchasers make a Section 338 338(g) Election for any or all of the Subject Companies, then ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ Purchasers shall indemnify and hold harmless, and reimburse the Shareholders and Seller Sellers for any incremental Taxes (including any interest, penalties and or other statutory additions to Tax) that may be incurred by the Shareholders and Seller Sellers by reason of the Section 338 338(g) Election being made which computation shall be based upon the difference between:
(i) the after-Tax proceeds that the Shareholders and Seller Sellers would have realized after payment of all federal, state and local Taxes attributable to their sale of stock of the Company to Purchaser in a transaction in which no Section 338 338(g) Election had been made; and
(ii) the actual after-Tax proceeds realized after payment of all federal, state and local Taxes attributable to their sale of stock of the Company to Purchaser (taking into account, without limitation, the additional Tax liability resulting from and/or attributable to, the Section 338 338(g) Election, and including Tax liability resulting from the reimbursement hereunder).
(b) The intent of this Section is to provide the same after-Tax proceeds to Shareholders and Seller Sellers if Purchaser makes Purchasers make a Section 338 338(g) Election with respect to the Subject Companies as would be realized by Shareholders and Seller Sellers if no Section 338 338(g) Election had been made, and shall be interpreted in accordance with such intent. The adjustment resulting from this Section is generally referred to herein as the “338 Tax Adjustment”.
(c) The Parties agree that the Purchase Price and the liabilities of the Subject Companies (plus other relevant items) will be allocated to the assets of the Subject Companies for all purposes (including Tax and financial accounting purposes) in a manner consistent with Code §338 and §1060 and the regulations there under. Purchaser Purchasers and the Subject Companies shall file all Tax Returns (including amended returns and claims for refund) and information reports in a manner consistent with such allocation.
(d) Shareholders and Seller Sellers shall provide Purchaser Purchasers with a schedule computing the amount of the Tax resulting from the §338 election within 20 days after the Parties agree to the allocation of the Purchase Price. In making such calculation, the highest corporate federal and state tax rates to which Shareholders and Seller, respectively, are Seller is subject shall be used and any other items of income, deduction, gain, loss, or credits of Shareholders and Seller Sellers shall be ignored.
(e) Purchaser Purchasers shall pay and/or reimburse the Shareholders and Seller Sellers for all reasonable professional and other fees and costs (including attorneys’', accountants and filing and similar fees) incurred by the Shareholders and/or Seller Sellers by reason of or in any way relating to the Section 338 Election being made (collectively, the “338 Costs”). Within thirty (30) days of Primary Shareholder Seller's Representative providing with an itemization of the 338 Costs, Primary Purchaser shall pay to the Seller Sellers the amount of the 338 Costs.
Appears in 1 contract
Section 338 Election. Purchaser shall retain Buyer reserves the right of making to make an irrevocable election under §338 Section 338(g) of the Code and the regulations promulgated thereunder in connection with the purchase and sale of the Shares of the Subject Companies hereunder (“Section 338 Election”) with respect to each Acquired Entity and Seller Parties agree to provide whatever assistance reasonably required by Buyer to determine whether such election may be made. Notwithstanding anything in this Agreement to the contrary, if any Section 338 Election is made, Buyer shall indemnify and hold harmless the Sellers and shall pay the amount, if any, that the Adjusted Seller Taxes exceed the Base Seller Taxes (“Additional Taxes”). The terms“Adjusted Seller Taxes” is defined herein as the aggregate amount of Taxes that Sellers, conditions the Acquired Entities and procedures relating their Subsidiaries are required to pay or otherwise be responsible for paying or indemnifying Buyer under this Agreement (but for this indemnification for Additional Taxes) if a Section 338 Election is made, including any additional Taxes resulting from Buyer’s indemnification or payment to Sellers Parties pursuant to this Section 4.12. The “Base Seller Taxes” is defined as the aggregate amount of Taxes that Sellers the Acquired Entities and their Subsidiaries would have paid or otherwise been responsible for paying or indemnifying Buyer under this Agreement if Buyer did not elect to make a Section 338 Election. For the avoidance of doubt, the definitions of Adjusted Seller Taxes and Base Seller Taxes shall take into consideration only such Taxes from recognized gains, revenues or losses directly resulting from engaging in the Transactions with a Section 338 Election (i.e. sale of the underlying assets) or without a Section 338 Election (i.e. sale of the Shares), as the case may be, and shall not take into consideration and shall otherwise ignore any post-acquisition Tax benefits that may be derived or lost by any of the Acquired Entities or their Subsidiaries as a result of the Transactions with or without any Section 338 Election, if madeincluding, shall be in accordance with the following:
(a) If Purchaser makes a Section 338 Election for any or all of the Subject Companies, then ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ shall indemnify and hold harmless, and reimburse the Shareholders and Seller for any incremental Taxes (including any interest, penalties and or other statutory additions to Tax) that may be incurred by the Shareholders and Seller by reason of the Section 338 Election being made which computation shall be based upon the difference between:
(i) the after-Tax proceeds that the Shareholders and Seller would have realized after payment of all federal, state and local Taxes attributable to their sale of stock of the Company to Purchaser in a transaction in which no Section 338 Election had been made; and
(ii) the actual after-Tax proceeds realized after payment of all federal, state and local Taxes attributable to their sale of stock of the Company to Purchaser (taking into account, without limitation, the additional Tax liability resulting from and/or attributable but not limited to, the Section 338 Electionany increased, and including Tax liability resulting from the reimbursement hereunderlost or reduced deductions (through depreciation, amortization or otherwise).
(b) The intent of this Section is to provide the same after-Tax proceeds to Shareholders and Seller if Purchaser makes a Section 338 Election with respect to the Subject Companies as would be realized by Shareholders and Seller if no Section 338 Election had been made, and shall be interpreted in accordance with such intent. The adjustment resulting from this Section is generally referred to herein gains or losses, as the “338 Tax Adjustment”.
(c) The Parties agree that case may be, from any stepped-up or retained basis in the Purchase Price and the liabilities of the Subject Companies (plus other relevant items) will be allocated to the underlying assets of the Subject Companies for all purposes (including Tax and financial accounting purposes) in a manner consistent with Code §338 and §1060 and the regulations there under. Purchaser and the Subject Companies shall file all Tax Returns (including amended returns and claims for refund) and information reports in a manner consistent with any such allocationentities.
(d) Shareholders and Seller shall provide Purchaser with a schedule computing the amount of the Tax resulting from the §338 election within 20 days after the Parties agree to the allocation of the Purchase Price. In making such calculation, the highest corporate federal and state tax rates to which Shareholders and Seller, respectively, are subject shall be used and any other items of income, deduction, gain, loss, or credits of Shareholders and Seller shall be ignored.
(e) Purchaser shall pay and/or reimburse the Shareholders and Seller for all reasonable professional and other fees and costs (including attorneys’, accountants and filing and similar fees) incurred by the Shareholders and/or Seller by reason of or in any way relating to the Section 338 Election being made (collectively, the “338 Costs”). Within thirty (30) days of Primary Shareholder providing with an itemization of the 338 Costs, Purchaser shall pay to the Seller the amount of the 338 Costs.
Appears in 1 contract
Section 338 Election. The Purchaser and the Seller shall retain the right of making an irrevocable election duly and -------------------- timely make simultaneous joint elections under §338 Section 338(h)(10) of the Code and the regulations promulgated thereunder in connection with the purchase Treasury regulation 1.338(h)(10) -1(d) and sale under any comparable provisions of the Shares of the Subject Companies hereunder (“Section 338 Election”). The terms, conditions and procedures relating to the Section 338 Election, if made, shall be in accordance with the following:
(a) If Purchaser makes a Section 338 Election for any or all of the Subject Companies, then ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ shall indemnify and hold harmless, and reimburse the Shareholders and Seller for any incremental Taxes (including any interest, penalties and or other statutory additions to Tax) that may be incurred by the Shareholders and Seller by reason of the Section 338 Election being made which computation shall be based upon the difference between:
(i) the after-Tax proceeds that the Shareholders and Seller would have realized after payment of all federal, applicable state and local Taxes attributable to their sale of stock of the Company to Purchaser in a transaction in which no Section 338 Election had been made; and
(iitax laws) the actual after-Tax proceeds realized after payment of all federal, state and local Taxes attributable to their sale of stock of the Company to Purchaser (taking into account, without limitation, the additional Tax liability resulting from and/or attributable to, the Section 338 Election, and including Tax liability resulting from the reimbursement hereunder).
(b) The intent of this Section is to provide the same after-Tax proceeds to Shareholders and Seller if Purchaser makes a Section 338 Election with respect to the Subject Companies purchase of the Shares. The parties understand and agree that, as would a result of such elections, the purchase of the Shares will be realized by Shareholders and Seller treated for U.S. federal income tax purposes as if no Section 338 Election the Company had been madesold all of its respective assets in a single transaction on the Closing Date, and with the result that the tax consequences of such "deemed sale" of assets shall be interpreted required to be included in the final Federal S corporation income tax return of the Company. Allocation of the Purchase Price (and other amounts) among such assets shall be made at the Purchaser's discretion. In addition, all forms and other documents (and accompanying schedules thereto, including schedules reflecting the allocation of the purchase price to such assets) required to be filed in order to make such elections shall be prepared by the Seller and approved by the Purchaser. The Purchaser shall file all such executed forms with the applicable tax authorities. The Purchaser and the Seller agree to act in accordance with such intent. The adjustment resulting from this Section is generally referred to herein as the “338 Tax Adjustment”.
(c) The Parties agree that the Purchase Price and the liabilities of the Subject Companies (plus other relevant items) will be allocated to the assets of the Subject Companies allocations for all purposes (including all Tax and financial accounting purposes) in a manner consistent with Code §338 and §1060 and ). Notwithstanding the regulations there under. Purchaser and the Subject Companies shall file all Tax Returns (including amended returns and claims for refund) and information reports in a manner consistent with such allocation.
(d) Shareholders and Seller shall provide Purchaser with a schedule computing the amount provisions of the Tax resulting from the §338 election within 20 days after the Parties agree to the allocation of the Purchase Price. In making such calculationSection 12.2.1, the highest corporate federal and state tax rates to which Shareholders and Seller, respectively, are subject Purchaser shall be used and any other items of income, deduction, gain, loss, or credits of Shareholders and Seller shall be ignored.
(e) Purchaser shall pay and/or reimburse responsible for the Shareholders and Seller for all reasonable professional and other fees and costs (including attorneys’, accountants and filing and similar fees) additional Taxes incurred by the Shareholders Seller and/or the Company as a result of such elections on a "grossed up" basis, so that such elections will result in no net increase in Seller's Tax Liability arising from his sale of the Shares. The Purchaser shall also reimburse the Seller for reasonable professional fees on a grossed up basis, if applicable, incurred by reason of or in any way relating Seller related to the Section 338 Election being election. All such payments shall be made (collectively, the “338 Costs”). Within thirty (30) days of Primary Shareholder providing with an itemization by Purchaser to Seller when requested by Seller upon completion of the 338 Costs, work performed or when the Taxes become due to allow Seller to make payment when due. The Purchaser shall pay to the will indemnify Seller the amount of the 338 Costsfor any Damages incurred by Seller if such elections are challenged.
Appears in 1 contract
Section 338 Election. Purchaser shall retain the right of making an irrevocable election under §338 338(g) of the Code and the regulations promulgated thereunder in connection with the purchase and sale of the Shares of the Subject Companies hereunder (“Section 338 338(g) Election”). The terms, conditions and procedures relating to the Section 338 338(g) Election, if made, shall be in accordance with the following:
(a) If Purchaser makes Purchasers make a Section 338 338(g) Election for any or all of the Subject Companies, then ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ Purchasers shall indemnify and hold harmless, and reimburse the Shareholders and Seller Sellers for any incremental Taxes (including any interest, penalties and or other statutory additions to Tax) that may be incurred by the Shareholders and Seller Sellers by reason of the Section 338 338(g) Election being made which computation shall be based upon the difference between:
(i) the after-Tax proceeds that the Shareholders and Seller Sellers would have realized after payment of all federal, state and local Taxes attributable to their sale of stock of the Company to Purchaser in a transaction in which no Section 338 338(g) Election had been made; and
(ii) the actual after-Tax proceeds realized after payment of all federal, state and local Taxes attributable to their sale of stock of the Company to Purchaser (taking into account, without limitation, the additional Tax liability resulting from and/or attributable to, the Section 338 338(g) Election, and including Tax liability resulting from the reimbursement hereunder).
(b) The intent of this Section is to provide the same after-Tax proceeds to Shareholders and Seller Sellers if Purchaser makes Purchasers make a Section 338 338(g) Election with respect to the Subject Companies as would be realized by Shareholders and Seller Sellers if no Section 338 338(g) Election had been made, and shall be interpreted in accordance with such intent. The adjustment resulting from this Section is generally referred to herein as the “338 Tax Adjustment”.
(c) The Parties agree that the Purchase Price and the liabilities of the Subject Companies (plus other relevant items) will be allocated to the assets of the Subject Companies for all purposes (including Tax and financial accounting purposes) in a manner consistent with Code §338 and §1060 and the regulations there under. Purchaser Purchasers and the Subject Companies shall file all Tax Returns (including amended returns and claims for refund) and information reports in a manner consistent with such allocation.
(d) Shareholders and Seller Sellers shall provide Purchaser Purchasers with a schedule computing the amount of the Tax resulting from the §338 election within 20 days after the Parties agree to the allocation of the Purchase Price. In making such calculation, the highest corporate federal and state tax rates to which Shareholders and Seller, respectively, are Seller is subject shall be used and any other items of income, deduction, gain, loss, or credits of Shareholders and Seller Sellers shall be ignored.
(e) Purchaser Purchasers shall pay and/or reimburse the Shareholders and Seller Sellers for all reasonable professional and other fees and costs (including attorneys’, accountants and filing and similar fees) incurred by the Shareholders and/or Seller Sellers by reason of or in any way relating to the Section 338 Election being made (collectively, the “338 Costs”). Within thirty (30) days of Primary Shareholder Seller’s Representative providing with an itemization of the 338 Costs, Primary Purchaser shall pay to the Seller Sellers the amount of the 338 Costs.
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Section 338 Election. Purchaser shall retain Sellers acknowledge that Buyer will have the right of making option to make an irrevocable election under §Section 338 of the Code with respect to the transactions contemplated by this Agreement. If Buyer exercises its option to make such election, Buyer will indemnify and the regulations promulgated thereunder hold harmless each Seller from and against any additional Taxes (including Taxes paid as a result of such indemnification) paid by such Seller in connection with the purchase and sale respect of the acquisition of such Seller’s Shares as a result of Buyer’s determination to make such election (the Subject Companies hereunder (“Section 338 ElectionAdditional Taxes”). The termsPromptly after Buyer’s determination to make such election, conditions Buyer shall deliver to Sellers its calculation of Additional Taxes. If Sellers object to Buyer’s calculation of Additional Taxes, Buyer shall promptly meet with Sellers and procedures relating endeavor to reach agreement on the calculation of Additional Taxes within 30 days after Sellers’ receipt of Buyer’s calculation. Any such agreement or objection by Sellers shall be determined by a vote of the majority of the Shares, with such numbers to be determined by reference to the Section 338 Electiondate that is immediately prior to the date of this Agreement. If at any time Sellers and Buyer agree in writing on the calculation of Additional Taxes, such calculation shall automatically be final and conclusive. If Sellers and Buyer disagree on the amount of Additional Taxes, and are unable to reach agreement on the amount of Additional Taxes within such 30 days, Buyer and Sellers shall immediately retain an independent certified public accounting firm, mutually selected and who has not provided material services to Buyer, the Target or any Seller during the previous two years, to resolve the dispute on the calculation of Additional Taxes as soon as reasonably possible. The resolution of all open issues on the calculation of Additional Taxes by such independent certified public accounting firm shall be final and binding on Sellers and Buyer. All fees and disbursements of such independent certified public accounting firm shall be paid by the party found by such independent certified public accounting firm to be in the greatest error with respect to their position on the calculation of Additional Taxes or, if madeno such finding is made by such independent certified public accounting firm, shall paid evenly by the Buyer, on the one hand, and Sellers, on the other, with such amounts from Sellers to be paid pro rata in accordance with the following:
(a) If Purchaser makes a Section 338 Election for any or all of the Subject Companies, then ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ shall indemnify and hold harmless, and reimburse the Shareholders and Seller for any incremental Taxes (including any interest, penalties and or other statutory additions to Tax) that may be incurred by the Shareholders and Seller by reason of the Section 338 Election being made which computation shall be based upon the difference between:
(i) the after-Tax proceeds that the Shareholders and Seller would have realized after payment of all federal, state and local Taxes attributable to their sale of stock of the Company to Purchaser in a transaction in which no Section 338 Election had been made; and
(ii) the actual after-Tax proceeds realized after payment of all federal, state and local Taxes attributable to their sale of stock of the Company to Purchaser (taking into account, without limitation, the additional Tax liability resulting from and/or attributable to, the Section 338 Election, and including Tax liability resulting from the reimbursement hereunderallocations set forth on Schedule 1.5(b).
(b) The intent of this Section is to provide the same after-Tax proceeds to Shareholders and Seller if Purchaser makes a Section 338 Election with respect to the Subject Companies as would be realized by Shareholders and Seller if no Section 338 Election had been made, and shall be interpreted in accordance with such intent. The adjustment resulting from this Section is generally referred to herein as the “338 Tax Adjustment”.
(c) The Parties agree that the Purchase Price and the liabilities of the Subject Companies (plus other relevant items) will be allocated to the assets of the Subject Companies for all purposes (including Tax and financial accounting purposes) in a manner consistent with Code §338 and §1060 and the regulations there under. Purchaser and the Subject Companies shall file all Tax Returns (including amended returns and claims for refund) and information reports in a manner consistent with such allocation.
(d) Shareholders and Seller shall provide Purchaser with a schedule computing the amount of the Tax resulting from the §338 election within 20 days after the Parties agree to the allocation of the Purchase Price. In making such calculation, the highest corporate federal and state tax rates to which Shareholders and Seller, respectively, are subject shall be used and any other items of income, deduction, gain, loss, or credits of Shareholders and Seller shall be ignored.
(e) Purchaser shall pay and/or reimburse the Shareholders and Seller for all reasonable professional and other fees and costs (including attorneys’, accountants and filing and similar fees) incurred by the Shareholders and/or Seller by reason of or in any way relating to the Section 338 Election being made (collectively, the “338 Costs”). Within thirty (30) days of Primary Shareholder providing with an itemization of the 338 Costs, Purchaser shall pay to the Seller the amount of the 338 Costs.
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