Common use of Distributing Co Clause in Contracts

Distributing Co. Liability. Except as otherwise provided in this Section 2.5, Distributing Co. shall be liable for, and shall indemnify and hold harmless the Controlled Group from and against, any liability for the following: (i) any sales and use, documentary, recording or stamp Tax imposed on the transfer of property to a member of the Distributing Group occurring solely pursuant to the Transactions; (ii) any Federal Income Tax or State Income Tax resulting from any income or gain recognized by Distributing Co. or a Subsidiary (as determined or identified on or before the Distribution Closing Date) as a result of a Distribution failing to qualify for tax-free treatment pursuant to Section 355 of the Code and related provisions; (iii) any Federal Income Tax or State Income Tax (other than a Tax described in subparagraph (ii) above) resulting from the Transactions; provided, however, that Distributing Co. shall not be liable for, and shall not be obligated to indemnify and hold harmless the Controlled Group from and against liability for any Tax described in clauses (ii) and (iii) above to the extent it arises as a result of Controlled Co.'s, or any member of the Controlled Group engaging in any Prohibited Action as defined in Section 11. Except as otherwise provided in this Section 2.5(a), any Tax resulting from, or arising by reason of, the Transactions shall be paid by the member of the Distributing Group or Controlled Group, as the case may be, on which the legal incidence of the Tax is imposed and which has the primary legal liability for such Tax. Notwithstanding anything in this Section 2.5 to the contrary, any Tax from item (vi) in the "Proposed Transaction" as contained in the Letter Ruling shall be paid by Distributing Co.