S Taxable Year means, with respect to the Company, any taxable period (or portion thereof) during which the Company is an S corporation, including the S Short Year.
On or before March 31, 2005, the Company shall make a payment to each Stockholder equal to the excess of (i) the product of (x) the Applicable Tax Percentage and (y) the net income of the Company as determined by reference to the Companys Internal Revenue Service Form 1120S the Short S Taxable Year, over (ii) any prior distributions made to such Stockholder by the Company with respect to such net income.
If, in the course of any audit or other administrative proceeding relating to a Tax Return of a Stockholder or the Company, as the case may be, any Taxing Authority proposes any adjustment that, if determined pursuant to a Final Determination, would constitute an Adjustment for an S Taxable Year that results in a Tax Loss to the Stockholder (a Proposed Adjustment), the Stockholder, or the Company, as applicable, will provide notice of such Proposed Adjustment to the other relevant parties hereto.
In the event of either (1) an Estimate Correction Adjustment in favor of a Stockholder and/or (2) an Adjustment for an S Taxable Year that results in a Tax Loss to a Stockholder, the Company hereby agrees to pay to such Stockholder an amount equal to such Stockholders Estimate Correction Amount and/or Tax Loss, as applicable, attributable to such Estimate Correction Adjustment and/or Adjustment.
In the event of an adjustment to one or more tax returns of the Company for an S Taxable Year based on a Final Determination which results in a net increase in taxable income of a Stockholder and a corresponding adjustment to one or more tax returns of the Company for a C Taxable Year based on a Final Determination which results in a net decrease in taxable income of the Company, the Company shall pay to the Affected Stockholder an amount equal to the Adjustment Amount multiplied by the Blended Rate.