Common use of Contested Taxes Clause in Contracts

Contested Taxes. MLC Group, Inc. has not filed certain property tax filings on behalf of its lessees although it may have the obligation to do so in certain cases. Since the leases are triple net leases, MLC may only be responsible for penalties, if such penalties are not reimbursable under the leases. To date, MLC has paid a nominal amount of penalties, but MLC is aware of certain leases which it may owe penalties on. The MLC in good faith reasonably believes that such penalties, if assessed, would not be in excess of $100,000 or cause a Material Adverse Effect. MLC is appealing a sales tax assessment of $247,219.68 including penalties and interest in the Commonwealth of Pennsylvania relating to the termination of certain leases in 1997. The MLC had received the tax refund from the Pennsylvania Board of Appeals which was subsequently reversed upon a sales tax audit.