Mercury Systems, Inc. v. Shareholder Representative Services, LLC

LIPEZ, Circuit Judge.

We must interpret a merger agreement in which one party agreed to indemnify the other against a purely . hypothetical tax loss. The sellers agreed to indemnify the buyer for the tax liabilities of the company being sold, except that the- tax bills- for indemnification purposes were to be calculated as if certain deductions would not be taken, when both parties knew they would be. Given that these deductions, perhaps in combination with other deductions, reduced the company’s tax liability to zero, the company’s tax prepayments and credits were refunded in their entirety,…