Income Taxes of the Company in such Taxable period
resulting therefrom but only up to an amount equal to the reduction in the
Closing Date Tax Accrual under Section 3.12(b) above resulting from taking into
account such Transaction Payments) and (2) Seller shall not be liable for the
matters set forth on Schedule 11.1(a).
The indemnification under this
Section 11.1 shall not be subject to the indemnification deductible and limit
set forth in Section 10 or elsewhere in this Agreement.
Seller's
indemnification obligation with respect to any Pre-Closing Tax Period shall end
when the applicable statutes of limitation with respect to the liabilities in
question expire (after giving effect to any extensions or waivers thereof ),
plus ninety (90) days.
Seller shall reimburse Buyer for any Taxes which are the
responsibility of Seller pursuant to this Section 11.1 at least 5 days prior to
payment of such Taxes by Buyer or the Company.
(B)
IN THE CASE OF ANY TAXABLE PERIOD THAT INCLUDES (BUT DOES NOT END ON)
THE CLOSING DATE (A "STRADDLE PERIOD"), THE AMOUNT OF ANY TAXES BASED ON OR
MEASURED BY INCOME OR RECEIPTS FOR THE PRE-CLOSING TAX PERIOD SHALL BE
DETERMINED BASED ON AN INTERIM CLOSING OF THE BOOKS AS OF THE CLOSE OF BUSINESS
ON THE CLOSING DATE (AND FOR SUCH PURPOSE, THE TAXABLE PERIOD OF ANY PARTNERSHIP
OR OTHER PASS-THROUGH ENTITY IN WHICH THE COMPANY HOLDS A BENEFICIAL INTEREST
SHALL BE DEEMED TO TERMINATE AT SUCH TIME) AND THE AMOUNT OF OTHER TAXES FOR A
STRADDLE PERIOD WHICH RELATES TO THE PRE-CLOSING TAX PERIOD SHALL BE DEEMED TO
BE THE AMOUNT OF SUCH TAX FOR THE ENTIRE TAXABLE PERIOD MULTIPLIED BY A FRACTION
THE NUMERATOR OF WHICH IS THE NUMBER OF DAYS IN THE TAXABLE PERIOD ENDING ON THE
CLOSING DATE AND THE DENOMINATOR OF WHICH IS THE NUMBER OF DAYS IN SUCH STRADDLE
PERIOD.
FOR THE AVOIDANCE OF DOUBT, NEITHER THE SHORT TAXABLE PERIOD OF NMATRIX
INC. FOR FEDERAL INCOME TAX PURPOSES ENDING ON THE CLOSING DATE NOR THE SHORT
TAXABLE PERIOD OF NMATRIX INC. BEGINNING ON THE DAY FOLLOWING THE CLOSING DATE
SHALL BE CONSIDERED A STRADDLE PERIOD.
(C)
IF, AS A RESULT OF ANY ACTION, SUIT, INVESTIGATION, AUDIT, CLAIM,
ASSESSMENT OR AMENDED TAX RETURN, THERE IS ANY CHANGE AFTER THE CLOSING DATE IN
AN ITEM OF INCOME, GAIN, LOSS, DEDUCTION OR CREDIT THAT RESULTS IN AN INCREASE
IN A TAX LIABILITY FOR WHICH SELLER IS OTHERWISE LIABLE PURSUANT TO
SECTION 11.1(A), AND SUCH CHANGE RESULTS IN AN ACTUAL DECREASE IN THE CASH TAX
LIABILITY OF THE BUYER FOR THE THEN CURRENT TAX PERIOD OF THE BUYER, THE COMPANY
OR ANY AFFILIATE OR SUCCESSOR THEREOF, SELLER SHALL NOT BE LIABLE PURSUANT TO
SECTION 11.1(A) WITH RESPECT TO SUCH INCREASE TO THE EXTENT OF SUCH CASH
DECREASE (AND, TO THE EXTENT SUCH INCREASE IN TAX LIABILITY IS PAID TO A TAXING
AUTHORITY BY SELLER OR ANY AFFILIATE THEREOF, BUYER SHALL PAY SELLER AN AMOUNT
EQUAL TO SUCH CASH DECREASE.
(D)
BUYER SHALL NOT