Contests. If any claim shall be made against any Tax Indemnitee or if any proceeding shall be commenced against any Tax Indemnitee (including a written notice of such proceeding) for any Imposition as to which the Lessee or the Guarantor may have an indemnity obligation pursuant to this Section 13.4, or if any Tax Indemnitee shall determine that any Imposition to which the Lessee or the Guarantor may have an indemnity obligation pursuant to this Section 13.4 may be payable, such Tax Indemnitee shall promptly (and in any event, within fifteen (15) Business Days) notify the Guarantor in writing (provided that failure to so notify the Guarantor within fifteen (15) Business Days shall not alter such Tax Indemnitee's rights under this Section 13.4 except to the extent such failure precludes or materially adversely affects the ability to conduct a contest of any indemnified Taxes) and shall not take any action with respect to such claim, proceeding or Imposition without the written consent of the Guarantor (such consent not to be unreasonably withheld or unreasonably delayed) for thirty (30) days after the receipt of such notice by the Guarantor; provided, however, that in the case of any such claim or proceeding, if such Tax Indemnitee shall be required by law or regulation to take action prior to the end of such thirty (30) day period, such Tax Indemnitee shall in such notice to the Guarantor, so inform the Guarantor, and such Tax Indemnitee shall not take any action with respect to such claim, proceeding or Imposition without the consent of the Guarantor (such consent not to be unreasonably withheld or unreasonably delayed) for ten (10) days after the receipt of such notice by the Guarantor unless such Tax Indemnitee shall be required by law or regulation to take action prior to the end of such ten (10) day period. The Guarantor shall be entitled for a period of thirty (30) days from receipt of such notice from such Tax Indemnitee (or such shorter period as such Tax Indemnitee has notified the Guarantor is required by law or regulation for such Tax Indemnitee to commence such contest), to request in writing that such Tax Indemnitee contest the imposition of such Tax, at the Guarantor's expense. If (x) such contest can be pursued in the name of the Guarantor or the Lessee and independently from any other proceeding involving a Tax liability of such Tax Indemnitee for which the Lessee and the Guarantor have not agreed to indemnify such Tax Indemnitee, (y) such contest must be pursued in the name of such Tax Indemnitee, but can be pursued independently from any other proceeding involving a Tax liability of such Tax Indemnitee for which the Lessee and the Guarantor have not agreed to indemnify such Tax Indemnitee or (z) such Tax Indemnitee so requests, then the Guarantor or such Lessee shall be permitted to control the contest of such claim, provided that in the case of a contest described in clause (y) if such Tax Indemnitee determines reasonably and in good faith that such contest by the Guarantor or the Lessee could have a material adverse impact on the business or operations of such Tax Indemnitee and provides a written explanation to the Guarantor of such determination, such Tax Indemnitee may elect to control or reassert control of the contest, and provided that the taking control by the Guarantor or the Lessee of any contest shall not alter the applicable Tax Indemnitee's rights to indemnification hereunder, and provided, further, that in determining the application of clauses (x) and (y) of the preceding sentence, each Tax Indemnitee shall take any and all reasonable steps to segregate claims for any Taxes for which the Lessee and the Guarantor indemnify hereunder from Taxes for which the Lessee and the Guarantor are not obligated to indemnify hereunder, so that the Guarantor can control the contest of the former. In all other claims requested to be contested by the Guarantor, such Tax Indemnitee shall control the contest of such claim, acting through counsel selected by such Tax Indemnitee and reasonably acceptable to the Guarantor. In no event shall the Guarantor be permitted to contest (or such Tax Indemnitee be required to contest) any claim, (A) if such Tax Indemnitee provides the Guarantor with a legal opinion of counsel reasonably acceptable to the Guarantor that such action, suit or proceeding involves a risk of imposition of criminal liability or will involve a material risk of the sale, forfeiture or loss of, or the creation of any Lien (other than a Permitted Lien) on the Property or any part thereof unless the Guarantor shall have posted and maintained a bond or other security reasonably satisfactory to the relevant Tax Indemnitee in respect to such risk, (B) if a Lease Event of Default has occurred and is continuing unless the Guarantor shall have posted and maintained a bond or other security reasonably satisfactory to the relevant Tax Indemnitee in respect of the Taxes subject to such claim and any and all expenses for which the Guarantor or the Lessee is responsible hereunder reasonably foreseeable in connection with the contest of such claim, (C) unless the Guarantor shall have agreed to pay and shall pay, to such Tax Indemnitee on written demand all reasonable, documented out-of-pocket costs, losses and expenses that such Tax Indemnitee may incur in connection with contesting such Imposition including all reasonable legal, accounting and investigatory fees and disbursements and (if applicable) reasonable, allocable internal overhead costs determined in accordance with normal bank operating procedures, or (D) if such contest shall involve the payment of the Tax prior to the contest, unless the Guarantor shall provide to such Tax Indemnitee an interest-free advance in an amount equal to the Imposition that such Tax Indemnitee is required to pay (with no additional net after-tax costs to such Tax Indemnitee). In addition, for contests controlled by such Tax Indemnitee and claims contested in the name of such Tax Indemnitee in a public forum, no contest shall be required: (A) unless the amount of the potential indemnity (taking into account all similar or logically related claims that have been or could be raised in any audit involving any or all such Tax Indemnitees with respect to any period for which the Guarantor or the Lessee may be liable to pay an indemnity under this Section 13.4(b)) exceeds (1) with respect to the Lessor, $25,000 and (2) with respect to any Tax Indemnitee other than the Lessor, $75,000 and (B) unless, if requested by such Tax Indemnitee, the Guarantor shall have provided to such Tax Indemnitee an opinion of counsel selected by the Guarantor (which may be in-house counsel) (except, in the case of income taxes indemnified hereunder, in which case such opinion shall be an opinion of independent tax counsel selected by the Guarantor and reasonably acceptable to such Tax Indemnitee) that a reasonable basis exists to contest such claim. In no event shall a Tax Indemnitee be required to appeal an adverse judicial determination to the United States Supreme Court. The party conducting the contest shall consult in good faith with the other party and its counsel with respect to the contest of such claim for Taxes (or claim for refund) but the decisions regarding what actions to be taken shall be made by the controlling party in its sole judgment; provided, however, that if such Tax Indemnitee is the controlling party and the Guarantor recommends the acceptance of a settlement offer made by the relevant Governmental Authority and such Tax Indemnitee rejects such settlement offer, then the amount for which a Lessee and the Guarantor will be required to indemnify such Tax Indemnitee with respect to the Taxes subject to such offer shall not exceed the amount which it would have owed if such settlement offer had been accepted provided that any Tax Indemnitee shall be entitled to reject any indemnity payment it would otherwise be entitled to hereunder if such Tax Indemnitee reasonably determines that accepting such offer would have an unindemnified impact on such Tax Indemnitee and provided further that no Tax Indemnitee may reject any such indemnity payment if the Guarantor agrees to pay to such Tax Indemnitee the amount of such unindemnified impact, as reasonably determined by such Tax Indemnitee. In addition, the controlling party shall keep the noncontrolling party reasonably informed as to the progress of the contest, and shall provide the noncontrolling party with a copy of (or appropriate excerpts from) any reports or claims issued by the relevant auditing agents or taxing authority to the controlling party thereof, in connection with such claim or the contest thereof, provided, however, that such obligation shall not obligate any Tax Indemnitee to disclose its tax returns or information or documentation unrelated to such claim or contest. Each Tax Indemnitee shall, at the expense of the Lessee and the Guarantor, supply the Lessee or the Guarantor with such information and documents reasonably requested by the Lessee or the Guarantor as are necessary or advisable for such Person to participate in any action, suit or proceeding to the extent permitted by this Section 13.4(b); provided, however, that such Tax Indemnitee shall not be required to provide to such Lessee or the Guarantor copies of its tax returns or any other information, documentation, or materials that it deems to be confidential or proprietary. Notwithstanding anything in this Section 13.4(b) to the contrary, no Tax Indemnitee shall enter into any settlement or other compromise or fail to appeal an adverse ruling with respect to any claim which is entitled to be indemnified under this Section 13.4 (and with respect to which contest is required under this Section 13.4(b)) without the prior written consent of the Guarantor, unless such Tax Indemnitee waives its right to be indemnified under this Section 13.4 with respect to such claim. Notwithstanding anything contained herein to the contrary, a Tax Indemnitee shall not be required to contest (and neither the Lessee nor the Guarantor shall be permitted to contest in any judicial forum if such contest could, in a Tax Indemnitee's reasonable judgment, be materially adverse to it) a claim with respect to the imposition of any Tax if such Tax Indemnitee shall have waived its right to indemnification under this Section 13.4 with respect to such claim (and any claim with respect to such year or any other taxable year the contest of which is precluded or materially adversely affected as a result of such waiver).
Appears in 1 contract
Contests. If any claim shall be made against any Tax Indemnitee Indemnified Party or if any proceeding shall be commenced against any Tax Indemnitee Indemnified Party (including a written notice of such proceeding) for any Imposition as to which the Lessee or the Guarantor may have an indemnity obligation pursuant to this Section 13.46.3, or if any Tax Indemnitee Indemnified Party shall determine that any Imposition with respect to which the Lessee or the Guarantor may have an indemnity obligation pursuant to this Section 13.4 6.3 may be payable, such Tax Indemnitee Indemnified Party shall promptly (and in any event, within fifteen (15) Business Days) notify the Guarantor Lessee in writing (provided PROVIDED that failure to so notify the Guarantor within fifteen (15) Business Days Lessee shall not alter such Tax IndemniteeIndemnified Party's rights under this Section 13.4 6.3 except to the extent such failure effectively precludes or materially adversely affects the ability to conduct a contest of any indemnified TaxesImpositions) and shall not take any action with respect to such claim, proceeding or Imposition without the written consent of the Guarantor Lessee (such consent not to be unreasonably withheld or unreasonably delayed) for thirty (30) 30 days after the receipt of such notice by the GuarantorLessee; providedPROVIDED, howeverHOWEVER, that in the case of any such claim or proceeding, if such Tax Indemnitee Indemnified Party shall be required by law or regulation to take action prior to the end of such thirty (30) -day period, such Tax Indemnitee Indemnified Party shall in such notice to the GuarantorLessee, so inform the Guarantor, Lessee and such Tax Indemnitee Indemnified Party shall not take any action with respect to such claim, proceeding or Imposition without the consent of the Guarantor Lessee (such consent not to be unreasonably withheld or unreasonably delayed) for ten (10) 10 days after the receipt of such notice by the Guarantor Lessee unless such Tax Indemnitee Indemnified MW 1997-1 Trust Participation Agreement Party shall be required by law or regulation to take action prior to the end of such ten (10) -day period. The Guarantor Lessee shall be entitled for a period of thirty (30) 30 days from receipt of such notice from such Tax Indemnitee Indemnified Party (or such shorter period as such Tax Indemnitee Indemnified Party has notified the Guarantor Lessee is required by law or regulation for such Tax Indemnitee Indemnified Party to commence such contest), to request in writing that such Tax Indemnitee Indemnified Party contest in good faith the imposition of such Tax, at the GuarantorLessee's expense. If (x) such contest can be pursued in the name of the Guarantor or the Lessee and independently from any other proceeding involving a Tax liability of such Tax Indemnitee Indemnified Party for which the Lessee and the Guarantor have has not agreed to indemnify such Tax IndemniteeIndemnified Party, (y) such contest must be pursued in the name of such Tax IndemniteeIndemnified Party, but can be pursued independently from any other proceeding involving a Tax liability of such Tax Indemnitee Indemnified Party for which the Lessee and the Guarantor have has not agreed to indemnify such Tax Indemnitee Indemnified Party or (z) such Tax Indemnitee Indemnified Party so requests, then the Guarantor or such Lessee shall be permitted to control the contest of such claim, provided PROVIDED that in the case of a contest described in clause (y) ), if such Tax Indemnitee Indemnified Party determines reasonably and in good faith that such contest by the Guarantor or the Lessee could have a material adverse impact on the business or operations of such Tax Indemnitee Indemnified Party and provides a written explanation to the Guarantor Lessee of such determination, such Tax Indemnitee Indemnified Party may elect to control or reassert control of the contest, and provided PROVIDED that the by taking control by of the Guarantor or contest, the Lessee acknowledges that it is responsible for the Imposition ultimately determined to be due by reason of any contest shall not alter the applicable Tax Indemnitee's rights to indemnification hereundersuch claim, and providedPROVIDED, furtherFURTHER, that in determining the application of clauses (x) and (y) of the preceding sentenceabove, each Tax Indemnitee Indemnified Party shall take any and all reasonable steps to segregate claims for any Taxes for which the Lessee and the Guarantor indemnify indemnifies hereunder from Taxes for which the Lessee and the Guarantor are is not obligated to indemnify hereunder, so that the Guarantor Lessee can control the contest of the former. In all other claims requested to be contested by the GuarantorLessee, such Tax Indemnitee Indemnified Party shall control the contest of such claim, acting through counsel selected by such Tax Indemnitee and reasonably acceptable to the GuarantorLessee. In no event shall the Guarantor Lessee be permitted to contest (or such Tax Indemnitee Indemnified Party be required to contest) any claim, (A) if such Tax Indemnitee Indemnified Party provides the Guarantor Lessee with a legal opinion of counsel reasonably acceptable to the Guarantor Lessee that such action, suit or proceeding involves a risk of imposition of criminal liability or will involve a material risk of the sale, forfeiture or loss of, or the creation of any Lien (other than a Permitted Lien) on the Property Equipment or any part thereof unless the Guarantor Lessee shall have posted and maintained a bond or other security reasonably satisfactory to the relevant Tax Indemnitee Indemnified Party in respect to such risk, (B) if a Lease an Event of Default has occurred and is continuing unless the Guarantor shall have posted and maintained a bond or other security reasonably satisfactory to the relevant Tax Indemnitee in respect of the Taxes subject to such claim and any and all expenses for which the Guarantor or the Lessee is responsible hereunder reasonably foreseeable in connection with the contest of such claimcontinuing, (C) unless the Guarantor Lessee shall have agreed to pay and shall pay, to such Tax Indemnitee Indemnified Party on written demand all reasonable, documented reasonable out-of-pocket costs, losses and expenses that such Tax Indemnitee may incur Indemnified Party actually incurs in connection with contesting such Imposition including all reasonable legal, accounting and investigatory fees and disbursements and (if applicable) reasonable, allocable internal overhead costs determined in accordance with normal bank operating proceduresdisbursements, or (D) if such contest shall involve the payment of the Tax prior to the contest, unless the Guarantor Lessee shall provide to such Tax Indemnitee Indemnified Party an interest-free advance in an amount equal to the Imposition that such Tax Indemnitee the Indemnified Party is required to pay (with no additional net after-tax costs to such Tax IndemniteeIndemnified Party). In addition, addition for Indemnified Party controlled contests controlled by such Tax Indemnitee and claims contested in the name of such Tax Indemnitee Indemnified Party in a public forum, no contest shall be required: (A) unless the amount of the potential indemnity (taking into account all similar or logically related claims that have been or could be raised in any audit involving any or all such Tax Indemnitees Indemnified Parties with respect to any period for which the Guarantor or the Lessee may be liable to MW 1997-1 Trust Participation Agreement pay an indemnity under this Section 13.4(b6.3(b)) exceeds (1) with respect to the Lessor, $25,000 and (2) with respect to any Tax Indemnitee other than the Lessor, $75,000 250,000 and (B) unless, if requested by such Tax IndemniteeIndemnified Party, the Guarantor Lessee shall have provided to such Tax Indemnitee Indemnified Party an opinion of counsel selected by the Guarantor Lessee (which may be in-house counsel) (except, in the case of income taxes Taxes indemnified hereunder, in which case such opinion shall be an opinion of independent tax counsel selected by the Guarantor such Indemnified Party and reasonably acceptable to such Tax Indemniteethe Lessee) that a reasonable basis exists to contest such claimclaim (or, in the case of an appeal of any adverse determination, an opinion of such counsel to the effect that the position asserted in such appeal will more likely than not prevail). In no event shall a Tax Indemnitee an Indemnified Party be required to appeal an adverse judicial determination to the United States Supreme Court. The party conducting controlling the contest shall consult in good faith with the other party and its counsel with respect to the contest of such claim for Taxes (or claim for refund) but the decisions regarding what actions are to be taken shall be made by the controlling party in its sole judgment; provided, howeverPROVIDED, HOWEVER, that if such Tax Indemnitee Indemnified Party is the controlling party and the Guarantor Lessee recommends the acceptance of a settlement offer made by the relevant Governmental Authority and such Tax Indemnitee Indemnified Party rejects such settlement offer, offer then the amount for which a the Lessee and the Guarantor will be required to indemnify such Tax Indemnitee Indemnified Party with respect to the Taxes subject to such offer shall not exceed the amount which it would have owed if such settlement offer had been accepted provided that any Tax Indemnitee shall be entitled to reject any indemnity payment it would otherwise be entitled to hereunder if such Tax Indemnitee reasonably determines that accepting such offer would have an unindemnified impact on such Tax Indemnitee and provided further that no Tax Indemnitee may reject any such indemnity payment if the Guarantor agrees to pay to such Tax Indemnitee the amount of such unindemnified impact, as reasonably determined by such Tax Indemniteeaccepted. In addition, the controlling party shall keep the noncontrolling non-controlling party reasonably informed as to the progress of the contest, and shall provide the noncontrolling non-controlling party with a copy of (or appropriate excerpts from) any and reports or claims issued by the relevant auditing agents or taxing authority to the controlling party thereof, in connection with such claim or the contest thereof, provided, however, that such obligation shall not obligate any Tax Indemnitee to disclose its tax returns or information or documentation unrelated to such claim or contest. Each Tax Indemnitee Indemnified Party shall, at the expense of the Lessee and the GuarantorLessee's expense, supply the Lessee or the Guarantor with such information and documents reasonably requested by the Lessee or the Guarantor as are necessary or advisable for such Person the Lessee to participate in any action, suit or proceeding to the extent permitted by this Section 13.4(b6.3(b); provided, however, that such Tax Indemnitee shall not be required to provide to such Lessee or the Guarantor copies of its tax returns or any other information, documentation, or materials that it deems to be confidential or proprietary. Notwithstanding anything in this Section 13.4(b6.3(b) to the contrary, no Tax Indemnitee Indemnified Party shall enter into any settlement or other compromise or fail to appeal an adverse ruling with respect to any claim for which is it may be entitled to be indemnified under this Section 13.4 6.3 (and with respect to which contest is required under this Section 13.4(b6.3(b)) without the prior written consent of the GuarantorLessee, unless such Tax Indemnitee Indemnified Party waives its right to be indemnified under this Section 13.4 6.3 with respect to such claim. Notwithstanding anything contained herein to the contrary, a Tax Indemnitee shall an Indemnified Party will not be required to contest (and neither the Lessee nor the Guarantor shall not be permitted to contest in any judicial forum if such contest could, in a Tax Indemnitee's reasonable judgment, be materially adverse to itcontest) a claim with respect to the imposition of any Tax if such Tax Indemnitee Indemnified Party shall have waived waive its right to indemnification under this Section 13.4 6.3 with respect to such claim (and any claim with respect to such year or any other taxable year the contest of which is precluded or materially adversely affected as a result of such waiver).
Appears in 1 contract
Contests. If Tenant shall have the right to contest, at Tenant's sole cost and expense, the amount or validity, in whole or in part, of any claim shall be made against any Tax Indemnitee or if any proceeding shall be commenced against any Tax Indemnitee (including a written notice Tax, by appropriate proceedings diligently conducted by Tenant in good faith, but only after payment of the amount of such proceeding) for any Imposition as Tax into an escrow account acceptable to Landlord, in which the Lessee event Tenant may postpone or the Guarantor may have an indemnity obligation pursuant to this Section 13.4, or if any Tax Indemnitee shall determine that any Imposition to which the Lessee or the Guarantor may have an indemnity obligation pursuant to this Section 13.4 may be payable, defer payment of such Tax Indemnitee if the right or privilege so to do is granted or sanctioned by applicable law and if the Premises shall not, by reason of such postponement or deferment, be subject or liable to lien, forfeiture or loss, and if Tenant shall promptly (commence proceedings for such contest and in any event, within fifteen (15) Business Days) notify prosecute the Guarantor in writing (provided that failure to so notify same with all due diligence and dispatch. Upon the Guarantor within fifteen (15) Business Days shall not alter such Tax Indemnitee's rights under this Section 13.4 except to the extent such failure precludes or materially adversely affects the ability to conduct a contest of any indemnified Taxes) and shall not take any action with respect to such claim, proceeding or Imposition without the written consent of the Guarantor (such consent not to be unreasonably withheld or unreasonably delayed) for thirty (30) days after the receipt termination of such notice by the Guarantor; providedproceedings, however, that in the case Tenant shall pay such amount of any such claim Tax or proceedingpart thereof as is finally determined in such proceedings, if the payment of which, pursuant to the foregoing provisions of this Section, shall have been deferred during the prosecution of such Tax Indemnitee proceedings, together with all costs, fees, interest, penalties and other liabilities in connection therewith. If Tenant fails to maintain in escrow an amount equal to all of the Taxes, penalties and interest due, alleged to be due by the taxing authority and accruing or the Term of this Lease shall be required by law terminated or regulation expire during the course of such proceedings, and if Tenant, pursuant to take action the foregoing provisions, shall have deferred payment of the contested Tax, then, unless Landlord shall instruct Tenant otherwise, Tenant shall, prior to the end of such thirty (30) day periodtermination or expiration, duly terminate such Tax Indemnitee shall in such notice proceedings and pay to the Guarantor, so inform appropriate taxing authorities the Guarantor, and such Tax Indemnitee shall not take any action with respect to such claim, proceeding or Imposition without the consent of the Guarantor (such consent not to be unreasonably withheld or unreasonably delayed) for ten (10) days after the receipt of such notice by the Guarantor unless such Tax Indemnitee shall be required by law or regulation to take action prior to the end of such ten (10) day period. The Guarantor shall be entitled for a period of thirty (30) days from receipt of such notice from such Tax Indemnitee (or such shorter period as such Tax Indemnitee has notified the Guarantor is required by law or regulation for such Tax Indemnitee to commence such contest), to request in writing that such Tax Indemnitee contest the imposition of such Tax, at the Guarantor's expense. If (x) such contest can be pursued in the name of the Guarantor or the Lessee and independently from any other proceeding involving a Tax liability full amount of such Tax Indemnitee for which the Lessee and the Guarantor have not agreed all interest and penalties attributable to indemnify such Tax Indemniteedeferred payment. Upon request by Tenant, (y) such contest must be pursued in the name of such Tax IndemniteeLandlord, but can be pursued independently from any other proceeding involving a Tax liability of such Tax Indemnitee for which the Lessee and the Guarantor have not agreed to indemnify such Tax Indemnitee or (z) such Tax Indemnitee so requests, then the Guarantor or such Lessee shall be permitted to control the contest of such claim, provided that in the case of a contest described in clause (y) if such Tax Indemnitee determines reasonably and in good faith that such contest by the Guarantor or the Lessee could have a material adverse impact on the business or operations of such Tax Indemnitee and provides a written explanation subject to the Guarantor reasonable approval of Landlord's counsel, shall execute and deliver any and all such determination, such Tax Indemnitee may elect to control documents or reassert control of the contest, instruments and provided that the taking control by the Guarantor or the Lessee of any contest shall not alter the applicable Tax Indemnitee's rights to indemnification hereunder, and provided, further, that in determining the application of clauses (x) and (y) of the preceding sentence, each Tax Indemnitee shall take any and all reasonable steps such other action as shall be necessary or proper to segregate claims for any Taxes for which permit Tenant to bring such proceedings in Tenant's name or otherwise to facilitate the Lessee and the Guarantor indemnify hereunder from Taxes for which the Lessee and the Guarantor are not obligated to indemnify hereunder, so that the Guarantor can control the contest of the former. In all other claims requested to be contested by the Guarantor, such Tax Indemnitee shall control the contest conduct of such claimproceedings by Tenant. Tenant shall, acting through within ten days after Landlord's demand, reimburse Landlord for all costs and expenses (including, without limitation, counsel selected fees) incurred by such Tax Indemnitee and reasonably acceptable to the Guarantor. In no event shall the Guarantor be permitted to contest (or such Tax Indemnitee be required to contest) any claim, (A) if such Tax Indemnitee provides the Guarantor with a legal opinion of counsel reasonably acceptable to the Guarantor that such action, suit or proceeding involves a risk of imposition of criminal liability or will involve a material risk of the sale, forfeiture or loss of, or the creation of any Lien (other than a Permitted Lien) on the Property or any part thereof unless the Guarantor shall have posted and maintained a bond or other security reasonably satisfactory to the relevant Tax Indemnitee in respect to such risk, (B) if a Lease Event of Default has occurred and is continuing unless the Guarantor shall have posted and maintained a bond or other security reasonably satisfactory to the relevant Tax Indemnitee in respect of the Taxes subject to such claim and any and all expenses for which the Guarantor or the Lessee is responsible hereunder reasonably foreseeable Landlord in connection with the contest of any such claimproceedings. Tenant shall defend, (C) unless the Guarantor shall have agreed to pay indemnify and shall paysave Landlord harmless from all other liability, to such Tax Indemnitee on written demand all reasonable, documented out-of-pocket costs, losses costs and expenses that such Tax Indemnitee may incur incurred in connection with contesting any such Imposition including all reasonable legal, accounting and investigatory fees and disbursements and (if applicable) reasonable, allocable internal overhead costs determined in accordance with normal bank operating procedures, or (D) if proceedings. Any refunds of Taxes paid by Tenant resulting from such contest shall involve the payment of the Tax prior to the contest, unless the Guarantor shall provide to such Tax Indemnitee an interest-free advance in an amount equal to the Imposition that such Tax Indemnitee is required to pay (with no additional net after-tax costs to such Tax Indemnitee). In addition, for contests controlled by such Tax Indemnitee Tenant and claims contested in the name of such Tax Indemnitee in a public forum, no contest shall be required: (A) unless the amount of the potential indemnity (taking into account all similar or logically related claims that have been or could be raised in any audit involving any or all such Tax Indemnitees with respect attributable to any period for which occurring during the Guarantor or the Lessee may be liable to pay an indemnity under this Section 13.4(b)) exceeds (1) with respect to the Lessor, $25,000 and (2) with respect to any Tax Indemnitee other than the Lessor, $75,000 and (B) unless, if requested by such Tax Indemnitee, the Guarantor shall have provided to such Tax Indemnitee an opinion of counsel selected by the Guarantor (which may be in-house counsel) (except, in the case of income taxes indemnified hereunder, in which case such opinion Term shall be an opinion of independent tax counsel selected by the Guarantor and reasonably acceptable payable to such Tax Indemnitee) that a reasonable basis exists to contest such claim. In no event shall a Tax Indemnitee be required to appeal an adverse judicial determination to the United States Supreme Court. The party conducting the contest shall consult in good faith with the other party and its counsel with respect to the contest of such claim for Taxes (or claim for refund) but the decisions regarding what actions to be taken shall be made by the controlling party in its sole judgment; provided, however, that if such Tax Indemnitee is the controlling party and the Guarantor recommends the acceptance of a settlement offer made by the relevant Governmental Authority and such Tax Indemnitee rejects such settlement offer, then the amount for which a Lessee and the Guarantor will be required to indemnify such Tax Indemnitee with respect to the Taxes subject to such offer shall not exceed the amount which it would have owed if such settlement offer had been accepted provided that any Tax Indemnitee shall be entitled to reject any indemnity payment it would otherwise be entitled to hereunder if such Tax Indemnitee reasonably determines that accepting such offer would have an unindemnified impact on such Tax Indemnitee and provided further that no Tax Indemnitee may reject any such indemnity payment if the Guarantor agrees to pay to such Tax Indemnitee the amount of such unindemnified impact, as reasonably determined by such Tax Indemnitee. In addition, the controlling party shall keep the noncontrolling party reasonably informed as to the progress of the contest, and shall provide the noncontrolling party with a copy of (or appropriate excerpts from) any reports or claims issued by the relevant auditing agents or taxing authority to the controlling party thereof, in connection with such claim or the contest thereof, provided, however, that such obligation shall not obligate any Tax Indemnitee to disclose its tax returns or information or documentation unrelated to such claim or contest. Each Tax Indemnitee shall, at the expense of the Lessee and the Guarantor, supply the Lessee or the Guarantor with such information and documents reasonably requested by the Lessee or the Guarantor as are necessary or advisable for such Person to participate in any action, suit or proceeding to the extent permitted by this Section 13.4(b); provided, however, that such Tax Indemnitee shall not be required to provide to such Lessee or the Guarantor copies of its tax returns or any other information, documentation, or materials that it deems to be confidential or proprietary. Notwithstanding anything in this Section 13.4(b) to the contrary, no Tax Indemnitee shall enter into any settlement or other compromise or fail to appeal an adverse ruling with respect to any claim which is entitled to be indemnified under this Section 13.4 (and with respect to which contest is required under this Section 13.4(b)) without the prior written consent of the Guarantor, unless such Tax Indemnitee waives its right to be indemnified under this Section 13.4 with respect to such claim. Notwithstanding anything contained herein to the contrary, a Tax Indemnitee shall not be required to contest (and neither the Lessee nor the Guarantor shall be permitted to contest in any judicial forum if such contest could, in a Tax Indemnitee's reasonable judgment, be materially adverse to it) a claim with respect to the imposition of any Tax if such Tax Indemnitee shall have waived its right to indemnification under this Section 13.4 with respect to such claim (and any claim with respect to such year or any other taxable year the contest of which is precluded or materially adversely affected as a result of such waiver)Tenant.
Appears in 1 contract
Sources: Lease Agreement (Smart Choice Automotive Group Inc)
Contests. If any claim shall be made against any Tax Indemnitee or if any proceeding shall be commenced against any Tax Indemnitee (including a written notice of such proceeding) for any Imposition as to which the Lessee or the Guarantor may have an indemnity obligation pursuant to this Section 13.426.5, or if any Tax Indemnitee shall determine that any Imposition to which the Lessee or the Guarantor may have an indemnity obligation pursuant to this Section 13.4 26.5 may be payable, such Tax Indemnitee shall promptly (and in any event, within fifteen (15) Business Days30 days) notify the Guarantor Lessee in writing (provided that failure to so notify the Guarantor Lessee within fifteen (15) Business Days 30 days shall not alter such Tax Indemnitee's rights under this Section 13.4 26.5 except to the extent such failure precludes or materially adversely affects the ability to conduct a contest of any indemnified Taxes) and shall not take any action with respect to such claim, proceeding or Imposition without the written consent of the Guarantor Lessee (such consent not to be unreasonably withheld or unreasonably delayed) for thirty (30) 30 days after the receipt of such notice by the GuarantorLessee; provided, however, that in the case of any such claim or proceeding, if such Tax Indemnitee shall be required by law or regulation to take action prior to the end of such thirty (30) -day period, such Tax Indemnitee shall in such notice to the GuarantorLessee, so inform the GuarantorLessee, and such Tax Indemnitee shall not take any action with respect to such claim, proceeding or Imposition without the consent of the Guarantor Lessee (such consent not to be unreasonably withheld or unreasonably delayed) for ten (10) 10 days after the receipt of such notice by the Guarantor Lessee unless such the Tax Indemnitee shall be required by law or regulation to take action prior to the end of such ten (10) -day period. The Guarantor Lessee shall be entitled for a period of thirty (30) 30 days from receipt of such notice from such the Tax Indemnitee (or such shorter period as such the Tax Indemnitee has notified the Guarantor Lessee is required by law or regulation for such the Tax Indemnitee to commence such contest), to request in writing that such Tax Indemnitee contest the imposition of such Tax, at the GuarantorLessee's expense. If (x) such contest can be pursued in the name of the Guarantor or the Lessee and independently from any other proceeding involving a Tax liability of such Tax Indemnitee for which the Lessee and the Guarantor have has not agreed to indemnify such Tax Indemnitee, (y) such contest must be pursued in the name of such the Tax Indemnitee, but can be pursued independently from any other proceeding involving a Tax liability of such Tax Indemnitee for which the Lessee and the Guarantor have has not agreed to indemnify such Tax Indemnitee or (z) such the Tax Indemnitee so requests, then the Guarantor or such Lessee shall be permitted to control the contest of such claim, provided that in the case of a contest described in clause (y) ), if such the Tax Indemnitee determines reasonably and in good faith that such contest by the Guarantor or the Lessee could have a material adverse impact on the business or operations of such the Tax Indemnitee and provides a written explanation to the Guarantor Lessee of such determination, such the Tax Indemnitee may elect to control or reassert control of the contest, and provided provided, that the by taking control of the contest, Lessee acknowledges that it is responsible for the Imposition ultimately determined to be due by the Guarantor or the Lessee reason of any contest shall not alter the applicable Tax Indemnitee's rights to indemnification hereundersuch claim, and provided, further, that in determining the application of clauses (x) and (y) of the preceding this sentence, each Tax Indemnitee shall take any and all reasonable steps to segregate claims for any Taxes for which the Lessee and the Guarantor indemnify indemnifies hereunder from Taxes for which the Lessee and the Guarantor are is not obligated to indemnify hereunder, so that the Guarantor Lessee can control the contest of the former. In all other claims requested to be contested by the GuarantorLessee, such the Tax Indemnitee shall control the contest of such claim, acting through counsel selected by such Tax Indemnitee and reasonably acceptable to the GuarantorLessee. In no event shall the Guarantor Lessee be permitted to contest (or such the Tax Indemnitee be required to contest) any claim, (A) if such Tax Indemnitee provides the Guarantor Lessee with a legal opinion of counsel reasonably acceptable to the Guarantor Lessee that such action, suit or proceeding involves a risk of imposition of criminal liability or will involve a material risk of the sale, forfeiture or loss of, or the creation of any Lien (other than a Permitted Lien or Lessor Lien) on the Property or any part of any thereof unless the Guarantor Lessee shall have posted and maintained a bond or other security reasonably satisfactory to the relevant Tax Indemnitee in respect to such risk, (B) if a Lease an Event of Default has occurred and is continuing unless the Guarantor Lessee shall have posted and maintained a bond or other security reasonably satisfactory to the relevant Tax Indemnitee in respect of the Taxes subject to such claim and any and all expenses for which the Guarantor or the Lessee is responsible hereunder reasonably foreseeable in connection with the contest of such claim, (C) unless the Guarantor Lessee shall have agreed to pay and shall pay, to such Tax Indemnitee on written within ten (10) Business Days after demand all reasonable, documented reasonable out-of-pocket costs, losses and expenses that such Tax Indemnitee may incur in connection with contesting such Imposition including all reasonable legal, accounting and investigatory fees and disbursements and (if applicable) reasonable, allocable internal overhead costs determined in accordance with normal bank operating proceduresdisbursements, or (D) if such contest shall involve the payment of the Tax prior to the contest, unless the Guarantor Lessee shall provide to such the Tax Indemnitee an interest-free advance in an amount equal to the Imposition that such Tax the Indemnitee is required to pay (with no additional net after-tax costs to such Tax Indemnitee). In addition, addition for contests controlled by such Tax Indemnitee controlled contests and claims contested in the name of such the Tax Indemnitee in a public forum, no contest shall be required: (A) unless the amount of the potential indemnity (taking into account all similar or logically related claims that have been or could be raised in any audit involving any or all such Tax Indemnitees with respect to any period Indemnitee for which the Guarantor or the Lessee may be liable to pay an indemnity under this Section 13.4(b26.5(b)) exceeds (1) with respect to the Lessor, $25,000 and (2) with respect to any Tax Indemnitee other than the Lessor, $75,000 500,000 and (B) unless, if requested by such the Tax Indemnitee, the Guarantor Lessee shall have provided to such the Tax Indemnitee an opinion of counsel selected by the Guarantor Lessee (which may be in-house counsel) (except, in the case of income taxes indemnified hereunder, in hereunder which case such opinion shall be an opinion of independent tax counsel selected by the Guarantor Tax Indemnitee and reasonably acceptable to such Tax Indemniteethe Lessee) that a reasonable basis exists to contest such claim. In no event shall a Tax Indemnitee be required to appeal an adverse judicial determination to the United States Supreme Court. The party conducting the contest shall consult in good faith with the other party and its counsel with respect to the contest of such claim for Taxes (or claim for refund) but the decisions regarding what actions to be taken shall be made by the controlling party in its sole judgment; judgement, provided, however, that if such the Tax Indemnitee is the controlling party and the Guarantor Lessee recommends the acceptance of a settlement offer made by the relevant Governmental Authority and such Tax Indemnitee rejects such settlement offer, offer then the amount for which a the Lessee and the Guarantor will be required to indemnify such Tax Indemnitee with respect to the Taxes subject to such offer shall not exceed the amount which it would have owed if such settlement offer had been accepted provided that any Tax Indemnitee shall be entitled to reject any indemnity payment it would otherwise be entitled to hereunder if such Tax Indemnitee reasonably determines that accepting such offer would have an unindemnified impact on such Tax Indemnitee and provided further that no Tax Indemnitee may reject any such indemnity payment if the Guarantor agrees to pay to such Tax Indemnitee the amount of such unindemnified impact, as reasonably determined by such Tax Indemniteeaccepted. In addition, the controlling party shall keep the noncontrolling party reasonably informed as to the progress of the contest, and shall provide the noncontrolling party with a copy of (or appropriate excerpts from) any reports or claims issued by the relevant auditing agents or taxing authority to the controlling party thereof, in connection with such claim or the contest thereof, provided, however, that such obligation shall not obligate any Tax Indemnitee to disclose its tax returns or information or documentation unrelated to such claim or contest. Each Tax Indemnitee shall, shall at the Lessee's expense of the Lessee and the Guarantor, supply the Lessee or the Guarantor with such information and documents reasonably requested by the Lessee or the Guarantor as are necessary or advisable for such Person the Lessee to participate in any action, suit or proceeding to the extent permitted by this Section 13.4(b26.5(b); provided, however, that such Tax Indemnitee shall not be required to provide to such Lessee or the Guarantor copies of its tax returns or any other information, documentation, or materials that it deems to be confidential or proprietary. Notwithstanding anything in this Section 13.4(b) to the contrary, no No Tax Indemnitee shall enter into any settlement or other compromise or fail to appeal an adverse ruling with respect to any claim which is entitled to be indemnified under this Section 13.4 26.5 (and with respect to which contest is required under this Section 13.4(b26.5(b)) without the prior written consent of the GuarantorLessee, unless such Tax Indemnitee waives its right to be indemnified under this Section 13.4 26.5 with respect to such claim. Notwithstanding anything contained herein to the contrary, a Tax Indemnitee shall will not be required to contest (and neither the Lessee nor the Guarantor shall not be permitted to contest in any judicial forum if such contest could, in a Tax Indemnitee's reasonable judgment, be materially adverse to itcontest) a claim with respect to the imposition of any Tax if such Tax Indemnitee shall have waived waive its right to indemnification under this Section 13.4 26.5 with respect to such claim (and any claim with respect to such year or any other taxable year the contest of which is precluded or materially adversely affected as a result of such waiver).
Appears in 1 contract
Contests. If In respect of the indemnification provided under Section 11.1(a), promptly after receipt by an Indemnitee of notice of any pending or threatened Claim, such Indemnitee shall, if a claim shall for indemnification in respect thereof is to be made against any Tax Indemnitee or if any proceeding shall be commenced against any Tax Indemnitee (including a Lessee give written notice thereof to Lessee; provided that the failure to provide such prompt notice shall not limit Lessee's obligations or prejudice any rights of such proceedingIndemnitee under Section 11.1(a) for any Imposition as with respect to which the Lessee or the Guarantor may have an indemnity obligation pursuant to this Section 13.4such Claim, or if any Tax Indemnitee shall determine that any Imposition to which the Lessee or the Guarantor may have an indemnity obligation pursuant to this Section 13.4 may be payable, such Tax Indemnitee shall promptly (and in any event, within fifteen (15) Business Days) notify the Guarantor in writing (provided that failure to so notify the Guarantor within fifteen (15) Business Days shall not alter such Tax Indemnitee's rights under this Section 13.4 except to the extent that such failure precludes or materially to provide prompt notice adversely affects Lessee's indemnification obligations hereunder. So long as no Lease Event of Default is continuing, Lessee at its own expense, may elect to assume the ability to conduct a contest of any indemnified Taxes) and shall not take any action with respect to such claim, proceeding or Imposition without the written consent of the Guarantor (such consent not to be unreasonably withheld or unreasonably delayed) for thirty (30) days after the receipt of such notice by the Guarantor; provided, however, that in the case defense of any such claim or proceedingClaim through its own counsel, if such Tax Indemnitee which shall be required by law or regulation to take action prior subject to the end reasonable approval of the Indemnitee, on behalf of the Indemnitee (with full right of subrogation to the Indemnitee's rights and defenses). Lessee must indicate its election to assume such thirty (30) day period, such Tax Indemnitee shall in such defense by written notice to the Guarantor, so inform the Guarantor, and such Tax Indemnitee shall not take any action with respect to such claim, proceeding or Imposition without the consent within 30 days following receipt of Indemnitee's notice of the Guarantor (such consent not to be unreasonably withheld Claim, or unreasonably delayed) for ten (10) days after the receipt of such notice by the Guarantor unless such Tax Indemnitee shall be required by law or regulation to take action prior to the end of such ten (10) day period. The Guarantor shall be entitled for a period of thirty (30) days from receipt of such notice from such Tax Indemnitee (or such shorter period as such Tax Indemnitee has notified the Guarantor is required by law or regulation for such Tax Indemnitee to commence such contest), to request in writing that such Tax Indemnitee contest the imposition of such Tax, at the Guarantor's expense. If (x) such contest can be pursued in the name of the Guarantor or the Lessee and independently from any other proceeding involving a Tax liability of such Tax Indemnitee for which the Lessee and the Guarantor have not agreed to indemnify such Tax Indemnitee, (y) such contest must be pursued in the name of such Tax Indemnitee, but can be pursued independently from any other proceeding involving a Tax liability of such Tax Indemnitee for which the Lessee and the Guarantor have not agreed to indemnify such Tax Indemnitee or (z) such Tax Indemnitee so requests, then the Guarantor or such Lessee shall be permitted to control the contest of such claim, provided that in the case of a contest described third party claim which requires a shorter time for response then within such shorter period as specified in clause (y) if such Tax Indemnitee determines reasonably and in good faith the Indemnitee's notice of Claim; provided that such contest by the Guarantor Indemnitee has given Lessee notice thereof. If Lessee denies liability or the Lessee could have a material adverse impact on the business or operations of such Tax Indemnitee and provides a written explanation fails to respond to the Guarantor of such determinationnotice within the time period set forth above, such Tax the Indemnitee may elect defend or compromise the Claim as it deems appropriate without prejudice to control or reassert control any of the contest, and provided that the taking control by the Guarantor or the Lessee of any contest shall not alter the applicable Tax Indemnitee's rights hereunder and with no further obligation to indemnification hereunder, and provided, further, that in determining the application of clauses (x) and (y) inform Lessee of the preceding sentencestatus of the Claim and no right of Lessee to approve or disapprove any actions taken in connection therewith by the Indemnitee. If Lessee shall have elected to assume the defense of any such Claim, each Tax then upon the request of Lessee, the Indemnitee requesting payment of indemnity under Section 11.1(a) shall take promptly furnish Lessee with copies of any and all reasonable steps records or documents pertaining to segregate claims for any Taxes for which the Lessee matter to be indemnified and, to the extent known by such Indemnitee, a reasonably detailed explanation of the circumstances giving rise to the claim of indemnification and the Guarantor indemnify hereunder from Taxes for which the Lessee and the Guarantor are not obligated to indemnify hereunder, so that the Guarantor can control the contest determination of the former. In all other claims requested to be contested by the Guarantor, such Tax Indemnitee shall control the contest of such claim, acting through counsel selected by such Tax Indemnitee and reasonably acceptable to the Guarantor. In no event shall the Guarantor be permitted to contest (or such Tax Indemnitee be required to contest) any claim, (A) if such Tax Indemnitee provides the Guarantor with a legal opinion of counsel reasonably acceptable to the Guarantor that such action, suit or proceeding involves a risk of imposition of criminal liability or will involve a material risk amount of the sale, forfeiture or loss of, or the creation requested indemnity payment. Upon payment in full to Indemnitee of any Lien (other than a Permitted Lien) on the Property or indemnity pursuant to Section 11.1(a), Lessee shall be subrogated to any part thereof unless the Guarantor shall have posted and maintained a bond or other security reasonably satisfactory to the relevant Tax Indemnitee in respect to such risk, (B) if a Lease Event right of Default has occurred and is continuing unless the Guarantor shall have posted and maintained a bond or other security reasonably satisfactory to the relevant Tax Indemnitee in respect of the Taxes subject to matter against which such claim and any and all expenses for which the Guarantor or the indemnity has been paid. If Lessee is responsible hereunder reasonably foreseeable in connection with the contest of such claim, (C) unless the Guarantor shall have agreed elected to pay and shall pay, to such Tax Indemnitee on written demand all reasonable, documented out-of-pocket costs, losses and expenses that such Tax Indemnitee may incur in connection with contesting such Imposition including all reasonable legal, accounting and investigatory fees and disbursements and (if applicable) reasonable, allocable internal overhead costs determined in accordance with normal bank operating procedures, or (D) if such contest shall involve assume the payment defense of the Tax prior to the contest, unless the Guarantor shall provide to such Tax Indemnitee an interest-free advance in an amount equal to the Imposition that such Tax Indemnitee is required to pay (with no additional net after-tax costs to such Tax Indemnitee). In addition, for contests controlled by such Tax Indemnitee and claims contested in the name of such Tax Indemnitee in a public forum, no contest shall be required: (A) unless the amount of the potential indemnity (taking into account all similar or logically related claims that have been or could be raised in any audit involving any or all such Tax Indemnitees with respect to any period for which the Guarantor or the Lessee may be liable to pay an indemnity under this Section 13.4(b)) exceeds (1) with respect to the Lessor, $25,000 and (2) with respect to any Tax Indemnitee other than the Lessor, $75,000 and (B) unless, if requested by such Tax Indemnitee, the Guarantor shall have provided to such Tax Indemnitee an opinion of counsel selected by the Guarantor (which may be in-house counsel) (except, in the case of income taxes indemnified hereunder, in which case such opinion shall be an opinion of independent tax counsel selected by the Guarantor and reasonably acceptable to such Tax Indemnitee) that a reasonable basis exists to contest such claim. In no event shall a Tax Indemnitee be required to appeal an adverse judicial determination to the United States Supreme Court. The party conducting the contest shall consult in good faith with the other party and its counsel with respect to the contest of such claim for Taxes (or claim for refund) but the decisions regarding what actions to be taken shall be made by the controlling party in its sole judgment; provided, however, that if such Tax Indemnitee is the controlling party and the Guarantor recommends the acceptance of a settlement offer made by the relevant Governmental Authority and such Tax Indemnitee rejects such settlement offer, then the amount for which a Lessee and the Guarantor will be required to indemnify such Tax Indemnitee with respect to the Taxes subject to such offer shall not exceed the amount which it would have owed if such settlement offer had been accepted provided that any Tax Indemnitee shall be entitled to reject any indemnity payment it would otherwise be entitled to hereunder if such Tax Indemnitee reasonably determines that accepting such offer would have an unindemnified impact on such Tax Indemnitee and provided further that no Tax Indemnitee may reject any such indemnity payment if Claim, upon the Guarantor agrees written request at any time and from time to pay to such Tax Indemnitee the amount time of such unindemnified impactLessee, as reasonably determined by such Tax Indemnitee. In addition, the controlling party shall keep the noncontrolling party reasonably informed as to the progress of the contest, and shall provide the noncontrolling party with a copy of (or appropriate excerpts from) any reports or claims issued by the relevant auditing agents or taxing authority to the controlling party thereof, in connection with such claim or the contest thereof, provided, however, that such obligation shall not obligate any Tax Indemnitee to disclose its tax returns or information or documentation unrelated to such claim or contest. Each Tax Indemnitee shall, at the expense of the Lessee Lessee, take such reasonable actions and the Guarantor, supply the Lessee or the Guarantor with execute such information and documents reasonably requested by the Lessee or the Guarantor as are necessary or advisable for reasonably appropriate to assist Lessee in the preservation and enforcement against third parties of Lessee's right of subrogation hereunder. The Indemnitee may employ separate counsel in any such Person to Claim and participate in any actionthe defense thereof, suit or proceeding to but the extent permitted fees and expenses of such counsel shall be at the expense of the Indemnitee unless the Indemnitee shall have been advised by this Section 13.4(b); providedits counsel that a conflict of interest exists in Lessee's counsel's representations of the Indemnitee and Lessee, howeverin which case the fees and expenses of such Indemnitee's counsel shall be for the account of Lessee. All fees and expenses shall be paid periodically as incurred. So long as no Lease Event of Default shall have occurred and be continuing, that such Tax Indemnitee Lessee shall not be required to provide to liable for any LSI Logic Corporation Lease B settlement of any such Claim effected without its consent unless Lessee or the Guarantor copies of its tax returns or any other information, documentationshall fail to, or materials that it deems elect in writing not to, assume the defense thereof in which case the Indemnitee, without waiving any rights to be confidential or proprietary. Notwithstanding anything in this Section 13.4(b) to the contraryindemnification hereunder, no Tax Indemnitee shall may defend such Claim and enter into any good faith settlement or other compromise or fail to appeal an adverse ruling with respect to any claim which is entitled to be indemnified under this Section 13.4 (and with respect to which contest is required under this Section 13.4(b)) thereof without the prior written consent of Lessee. Lessee shall not, without the Guarantorprior written consent (not to be unreasonably withheld) of the Indemnitee, effect any settlement of any such Claim unless such Tax settlement includes an unconditional release of the Indemnitee waives its right from all liabilities that are the subject of such Claim. The parties agree to be indemnified under this Section 13.4 with respect to such claim. Notwithstanding anything contained herein to the contrary, a Tax Indemnitee shall not be required to contest (and neither the Lessee nor the Guarantor shall be permitted to contest cooperate in any judicial forum if such contest could, in a Tax Indemnitee's reasonable judgment, be materially adverse to it) a claim with respect to the imposition defense or settlement of any Tax if such Tax Indemnitee shall have waived its right Claim and to indemnification under this Section 13.4 with respect give each other reasonable access to such claim (and all information relevant thereto subject to appropriate confidentiality agreements. The parties will similarly cooperate in the prosecution of any claim with respect to such year or lawsuit against any other taxable year the contest of which is precluded or materially adversely affected as a result of such waiver)third party.
Appears in 1 contract
Contests. If any claim (i) Each of Buyer and the Company shall be made against any Tax Indemnitee or if any proceeding shall be commenced against any Tax Indemnitee (including a promptly notify the other in writing upon receipt of written notice of such proceedingany pending or threatened audit, notice of deficiency, examination, assessment or any other administrative or judicial proceeding (“Audit”) which may affect any Tax liability for any Imposition as to which the Lessee or the Guarantor other may have an indemnity obligation be liable pursuant to this Section 13.44.11.
(ii) The Company shall have the sole and absolute right to (i) conduct any Audit that relates to (A) any PHH Group Tax Return or (B) any Buyer Tax Return for a complete taxable period ending on or before the Closing Date, or if (ii) employ counsel of its choice in connection therewith and (iii) settle any Tax Indemnitee shall determine that any Imposition to which the Lessee or the Guarantor such Audit on such terms as it may have an indemnity obligation pursuant to this Section 13.4 may be payable, such Tax Indemnitee shall promptly (and in any event, within fifteen (15) Business Days) notify the Guarantor in writing (determine; provided that failure to so notify the Guarantor within fifteen (15) Business Days Company shall not alter settle any such Tax Indemnitee's rights under this Section 13.4 except Audit without the prior written consent of Buyer, which consent shall not be unreasonably withheld, delayed or conditioned, if such settlement would reasonably be expected to adversely affect Buyer. If the extent such failure precludes or materially adversely affects the ability Company elects not to conduct a contest any such Audit, then (i) Buyer (A) shall diligently prosecute such Audit in good faith, (B) shall, upon reasonable request, keep the Company reasonably informed of any indemnified Taxes) and shall not take any action the status of developments with respect to such claim, proceeding or Imposition without the written consent of the Guarantor (such consent not to be unreasonably withheld or unreasonably delayed) for thirty (30) days after the receipt of such notice by the Guarantor; provided, however, that in the case of any such claim or proceeding, if such Tax Indemnitee shall be required by law or regulation to take action prior to the end of such thirty (30) day period, such Tax Indemnitee shall in such notice to the Guarantor, so inform the Guarantor, Audit and such Tax Indemnitee shall not take any action with respect to such claim, proceeding or Imposition without the consent of the Guarantor (such consent not to be unreasonably withheld or unreasonably delayed) for ten (10) days after the receipt of such notice by the Guarantor unless such Tax Indemnitee shall be required by law or regulation to take action prior to the end of such ten (10) day period. The Guarantor shall be entitled for a period of thirty (30) days from receipt of such notice from such Tax Indemnitee (or such shorter period as such Tax Indemnitee has notified the Guarantor is required by law or regulation for such Tax Indemnitee to commence such contest), to request in writing that such Tax Indemnitee contest the imposition of such Tax, at the Guarantor's expense. If (x) such contest can be pursued in the name of the Guarantor or the Lessee and independently from any other proceeding involving a Tax liability of such Tax Indemnitee for which the Lessee and the Guarantor have not agreed to indemnify such Tax Indemnitee, (y) such contest must be pursued in the name of such Tax Indemnitee, but can be pursued independently from any other proceeding involving a Tax liability of such Tax Indemnitee for which the Lessee and the Guarantor have not agreed to indemnify such Tax Indemnitee or (z) such Tax Indemnitee so requests, then the Guarantor or such Lessee shall be permitted to control the contest of such claim, provided that in the case of a contest described in clause (y) if such Tax Indemnitee determines reasonably and in good faith that such contest by the Guarantor or the Lessee could have a material adverse impact on the business or operations of such Tax Indemnitee and provides a written explanation to the Guarantor of such determination, such Tax Indemnitee may elect to control or reassert control of the contest, and provided that the taking control by the Guarantor or the Lessee of any contest shall not alter the applicable Tax Indemnitee's rights to indemnification hereunder, and provided, further, that in determining the application of clauses (x) and (y) of the preceding sentence, each Tax Indemnitee shall take any and all reasonable steps to segregate claims for any Taxes for which the Lessee and the Guarantor indemnify hereunder from Taxes for which the Lessee and the Guarantor are not obligated to indemnify hereunder, so that the Guarantor can control the contest of the former. In all other claims requested to be contested by the Guarantor, such Tax Indemnitee shall control the contest of such claim, acting through counsel selected by such Tax Indemnitee and reasonably acceptable to the Guarantor. In no event shall the Guarantor be permitted to contest (or such Tax Indemnitee be required to contest) any claim, (A) if such Tax Indemnitee provides the Guarantor with a legal opinion of counsel reasonably acceptable to the Guarantor that such action, suit or proceeding involves a risk of imposition of criminal liability or will involve a material risk of the sale, forfeiture or loss of, or the creation of any Lien (other than a Permitted Lien) on the Property or any part thereof unless the Guarantor shall have posted and maintained a bond or other security reasonably satisfactory to the relevant Tax Indemnitee in respect to such risk, (B) if a Lease Event of Default has occurred and is continuing unless the Guarantor shall have posted and maintained a bond or other security reasonably satisfactory to the relevant Tax Indemnitee in respect of the Taxes subject to such claim and any and all expenses for which the Guarantor or the Lessee is responsible hereunder reasonably foreseeable in connection with the contest of such claim, (C) unless the Guarantor shall have agreed to pay and shall pay, to such Tax Indemnitee on written demand all reasonable, documented out-of-pocket costs, losses and expenses that such Tax Indemnitee may incur in connection with contesting such Imposition including all reasonable legal, accounting and investigatory fees and disbursements and (if applicable) reasonable, allocable internal overhead costs determined in accordance with normal bank operating procedures, or (D) if such contest shall involve the payment of the Tax prior to the contest, unless the Guarantor shall provide to such Tax Indemnitee an interest-free advance in an amount equal to the Imposition that such Tax Indemnitee is required to pay (with no additional net after-tax costs to such Tax Indemnitee). In addition, for contests controlled by such Tax Indemnitee and claims contested in the name of such Tax Indemnitee in a public forum, no contest shall be required: (A) unless the amount of the potential indemnity (taking into account all similar or logically related claims that have been or could be raised in any audit involving any or all such Tax Indemnitees with respect to any period for which the Guarantor or the Lessee may be liable to pay an indemnity under this Section 13.4(b)) exceeds (1) with respect to the Lessor, $25,000 and (2) with respect to any Tax Indemnitee other than the Lessor, $75,000 and (B) unless, if requested by such Tax Indemnitee, the Guarantor shall have provided to such Tax Indemnitee an opinion of counsel selected by the Guarantor (which may be in-house counsel) (except, in the case of income taxes indemnified hereunder, in which case such opinion shall be an opinion of independent tax counsel selected by the Guarantor and reasonably acceptable to such Tax Indemnitee) that a reasonable basis exists to contest such claim. In no event shall a Tax Indemnitee be required to appeal an adverse judicial determination to the United States Supreme Court. The party conducting the contest shall consult in good faith with the other party and its counsel with respect to the contest of such claim for Taxes (or claim for refund) but the decisions regarding what actions to be taken shall be made by the controlling party in its sole judgment; provided, however, that if such Tax Indemnitee is the controlling party and the Guarantor recommends the acceptance of a settlement offer made by the relevant Governmental Authority and such Tax Indemnitee rejects such settlement offer, then the amount for which a Lessee and the Guarantor will be required to indemnify such Tax Indemnitee with respect to the Taxes subject to such offer shall not exceed the amount which it would have owed if such settlement offer had been accepted provided that any Tax Indemnitee shall be entitled to reject any indemnity payment it would otherwise be entitled to hereunder if such Tax Indemnitee reasonably determines that accepting such offer would have an unindemnified impact on such Tax Indemnitee and provided further that no Tax Indemnitee may reject settle or concede any such indemnity payment if the Guarantor agrees to pay to such Tax Indemnitee the amount of such unindemnified impact, as reasonably determined by such Tax Indemnitee. In addition, the controlling party shall keep the noncontrolling party reasonably informed as to the progress of the contest, and shall provide the noncontrolling party with a copy of (or appropriate excerpts from) any reports or claims issued by the relevant auditing agents or taxing authority to the controlling party thereof, in connection with such claim or the contest thereof, provided, however, that such obligation shall not obligate any Tax Indemnitee to disclose its tax returns or information or documentation unrelated to such claim or contest. Each Tax Indemnitee shall, at the expense of the Lessee and the Guarantor, supply the Lessee or the Guarantor with such information and documents reasonably requested by the Lessee or the Guarantor as are necessary or advisable for such Person to participate in any action, suit or proceeding to the extent permitted by this Section 13.4(b); provided, however, that such Tax Indemnitee shall not be required to provide to such Lessee or the Guarantor copies of its tax returns or any other information, documentation, or materials that it deems to be confidential or proprietary. Notwithstanding anything in this Section 13.4(b) to the contrary, no Tax Indemnitee shall enter into any settlement or other compromise or fail to appeal an adverse ruling with respect to any claim which is entitled to be indemnified under this Section 13.4 (and with respect to which contest is required under this Section 13.4(b)) Audit without the prior written consent of the Guarantor, unless such Tax Indemnitee waives its right to be indemnified under this Section 13.4 with respect to such claim. Notwithstanding anything contained herein to the contrary, a Tax Indemnitee Company (which consent shall not be required to contest unreasonably withheld, delayed or conditioned) and (ii) any reasonable third-party costs and neither the Lessee nor the Guarantor expenses incurred by Buyer shall be permitted to contest reimbursed by the Company. For the avoidance of doubt, reasonable third-party costs and expenses shall include the fees of outside counsel and/or accountants engaged by Buyer in any judicial forum if such contest could, in a Tax Indemnitee's reasonable judgment, be materially adverse to it) a claim connection with respect to the imposition of any Tax if such Tax Indemnitee shall have waived its right to indemnification an Audit described under this Section 13.4 with respect to such claim (and any claim with respect to such year or any other taxable year the contest of which is precluded or materially adversely affected as a result of such waiver).this
Appears in 1 contract
Sources: Stock Purchase Agreement (PHH Corp)
Contests. If any claim shall be made against any Tax Indemnitee or if any proceeding shall be commenced against any Tax Indemnitee (including a written notice of such proceeding) for any Imposition as to which the Lessee or the Guarantor may have an indemnity obligation pursuant to this Section 13.426.5, or if any Tax Indemnitee shall determine that any Imposition to which the Lessee or the Guarantor may have an indemnity obligation pursuant to this Section 13.4 26.5 may be payable, such Tax Indemnitee shall promptly (and in any event, within fifteen (15) Business Days30 days) notify the Guarantor Lessee in writing (provided that failure to so notify the Guarantor Lessee within fifteen (15) Business Days 30 days shall not alter such Tax Indemnitee's rights under this Section 13.4 26.5 except to the extent such failure precludes or materially adversely affects the ability to conduct a contest of any indemnified Taxes) and shall not take any action with respect to such claim, proceeding or Imposition without the written consent of the Guarantor Lessee (such consent not to be unreasonably withheld or unreasonably delayed) for thirty (30) 30 days after the receipt of such notice by the GuarantorLessee; provided, however, that in the case of any such claim or proceeding, if such Tax Indemnitee shall be required by law or regulation to take action prior to the end of such thirty (30) -day period, such Tax Indemnitee shall in such notice to the GuarantorLessee, so inform the GuarantorLessee, and such Tax Indemnitee shall not take any action with respect to such claim, proceeding or Imposition without the consent of the Guarantor Lessee (such consent not to be unreasonably withheld or unreasonably delayed) for ten (10) 10 days after the receipt of such notice by the Guarantor Lessee unless such the Tax Indemnitee shall be required by law or regulation to take action prior to the end of such ten (10) -day period. The Guarantor Lessee shall be entitled for a period of thirty (30) 30 days from receipt of such notice from such the Tax Indemnitee (or such shorter period as such the Tax Indemnitee has notified the Guarantor Lessee is required by law or regulation for such the Tax Indemnitee to commence such contest), to request in writing that such Tax Indemnitee contest the imposition of such Tax, at the GuarantorLessee's expense. If (x) such contest can be pursued in the name of the Guarantor or the Lessee and independently from any other proceeding involving a Tax liability of such Tax Indemnitee for which the Lessee and the Guarantor have has not agreed to indemnify such Tax Indemnitee, (y) such contest must be pursued in the name of such the Tax Indemnitee, but can be pursued independently from any other proceeding involving a Tax liability of such Tax Indemnitee for which the Lessee and the Guarantor have has not agreed to indemnify such Tax Indemnitee or (z) such the Tax Indemnitee so requests, then the Guarantor or such Lessee shall be permitted to control the contest of such claim, provided that in the case of a contest described in clause (y) ), if such the Tax Indemnitee determines reasonably and in good faith that such contest by the Guarantor or the Lessee could have a material adverse impact on the business or operations of such the Tax Indemnitee and provides a written explanation to the Guarantor Lessee of such determination, such the Tax Indemnitee may elect to control or reassert control of the contest, and provided provided, that the by taking control of the contest, Lessee acknowledges that it is responsible for the Imposition ultimately determined to be due by the Guarantor or the Lessee reason of any contest shall not alter the applicable Tax Indemnitee's rights to indemnification hereundersuch claim, and provided, further, that in determining the application of clauses (x) and (y) of the preceding sentence, each Tax Indemnitee shall take any and all reasonable steps to segregate claims for any Taxes for which the Lessee and the Guarantor indemnify indemnifies hereunder from Taxes for which the Lessee and the Guarantor are is not obligated to indemnify hereunder, so that the Guarantor Lessee can control the contest of the former. In all other claims requested to be contested by the Guarantor, such Tax Indemnitee shall control the contest of such claim, acting through counsel selected by such Tax Indemnitee and reasonably acceptable to the Guarantor. In no event shall the Guarantor be permitted to contest (or such Tax Indemnitee be required to contest) any claim, (A) if such Tax Indemnitee provides the Guarantor with a legal opinion of counsel reasonably acceptable to the Guarantor that such action, suit or proceeding involves a risk of imposition of criminal liability or will involve a material risk of the sale, forfeiture or loss of, or the creation of any Lien (other than a Permitted Lien) on the Property or any part thereof unless the Guarantor shall have posted and maintained a bond or other security reasonably satisfactory to the relevant Tax Indemnitee in respect to such risk, (B) if a Lease Event of Default has occurred and is continuing unless the Guarantor shall have posted and maintained a bond or other security reasonably satisfactory to the relevant Tax Indemnitee in respect of the Taxes subject to such claim and any and all expenses for which the Guarantor or the Lessee is responsible hereunder reasonably foreseeable in connection with the contest of such claim, (C) unless the Guarantor shall have agreed to pay and shall pay, to such Tax Indemnitee on written demand all reasonable, documented out-of-pocket costs, losses and expenses that such Tax Indemnitee may incur in connection with contesting such Imposition including all reasonable legal, accounting and investigatory fees and disbursements and (if applicable) reasonable, allocable internal overhead costs determined in accordance with normal bank operating procedures, or (D) if such contest shall involve the payment of the Tax prior to the contest, unless the Guarantor shall provide to such Tax Indemnitee an interest-free advance in an amount equal to the Imposition that such Tax Indemnitee is required to pay (with no additional net after-tax costs to such Tax Indemnitee). In addition, for contests controlled by such Tax Indemnitee and claims contested in the name of such Tax Indemnitee in a public forum, no contest shall be required: (A) unless the amount of the potential indemnity (taking into account all similar or logically related claims that have been or could be raised in any audit involving any or all such Tax Indemnitees with respect to any period for which the Guarantor or the Lessee may be liable to pay an indemnity under this Section 13.4(b)) exceeds (1) with respect to the Lessor, $25,000 and (2) with respect to any Tax Indemnitee other than the Lessor, $75,000 and (B) unless, if requested by such Tax Indemnitee, the Guarantor shall have provided to such Tax Indemnitee an opinion of counsel selected by the Guarantor (which may be in-house counsel) (except, in the case of income taxes indemnified hereunder, in which case such opinion shall be an opinion of independent tax counsel selected by the Guarantor and reasonably acceptable to such Tax Indemnitee) that a reasonable basis exists to contest such claim. In no event shall a Tax Indemnitee be required to appeal an adverse judicial determination to the United States Supreme Court. The party conducting the contest shall consult in good faith with the other party and its counsel with respect to the contest of such claim for Taxes (or claim for refund) but the decisions regarding what actions to be taken shall be made by the controlling party in its sole judgment; provided, however, that if such Tax Indemnitee is the controlling party and the Guarantor recommends the acceptance of a settlement offer made by the relevant Governmental Authority and such Tax Indemnitee rejects such settlement offer, then the amount for which a Lessee and the Guarantor will be required to indemnify such Tax Indemnitee with respect to the Taxes subject to such offer shall not exceed the amount which it would have owed if such settlement offer had been accepted provided that any Tax Indemnitee shall be entitled to reject any indemnity payment it would otherwise be entitled to hereunder if such Tax Indemnitee reasonably determines that accepting such offer would have an unindemnified impact on such Tax Indemnitee and provided further that no Tax Indemnitee may reject any such indemnity payment if the Guarantor agrees to pay to such Tax Indemnitee the amount of such unindemnified impact, as reasonably determined by such Tax Indemnitee. In addition, the controlling party shall keep the noncontrolling party reasonably informed as to the progress of the contest, and shall provide the noncontrolling party with a copy of (or appropriate excerpts from) any reports or claims issued by the relevant auditing agents or taxing authority to the controlling party thereof, in connection with such claim or the contest thereof, provided, however, that such obligation shall not obligate any Tax Indemnitee to disclose its tax returns or information or documentation unrelated to such claim or contest. Each Tax Indemnitee shall, at the expense of the Lessee and the Guarantor, supply the Lessee or the Guarantor with such information and documents reasonably requested by the Lessee or the Guarantor as are necessary or advisable for such Person to participate in any action, suit or proceeding to the extent permitted by this Section 13.4(b); provided, however, that such Tax Indemnitee shall not be required to provide to such Lessee or the Guarantor copies of its tax returns or any other information, documentation, or materials that it deems to be confidential or proprietary. Notwithstanding anything in this Section 13.4(b) to the contrary, no Tax Indemnitee shall enter into any settlement or other compromise or fail to appeal an adverse ruling with respect to any claim which is entitled to be indemnified under this Section 13.4 (and with respect to which contest is required under this Section 13.4(b)) without the prior written consent of the Guarantor, unless such Tax Indemnitee waives its right to be indemnified under this Section 13.4 with respect to such claim. Notwithstanding anything contained herein to the contrary, a Tax Indemnitee shall not be required to contest (and neither the Lessee nor the Guarantor shall be permitted to contest in any judicial forum if such contest could, in a Tax Indemnitee's reasonable judgment, be materially adverse to it) a claim with respect to the imposition of any Tax if such Tax Indemnitee shall have waived its right to indemnification under this Section 13.4 with respect to such claim (and any claim with respect to such year or any other taxable year the contest of which is precluded or materially adversely affected as a result of such waiver).the
Appears in 1 contract
Contests. If any claim shall be is made against a Tax Indemnitee for any Tax Indemnitee or if any proceeding shall be commenced against any Tax Indemnitee (including a written notice of such proceeding) for any Imposition as with respect to which the Lessee or the Guarantor may have has an indemnity obligation pursuant to this Section 13.4, or if any Tax Indemnitee shall determine that any Imposition to which the Lessee or the Guarantor may have an indemnity obligation pursuant to this Section 13.4 may be payable, such Tax Indemnitee shall promptly (and in any event, within fifteen (15) Business Days) notify the Guarantor in writing (provided that failure to so notify the Guarantor within fifteen (15) Business Days shall not alter such Tax Indemnitee's rights under this Section 13.4 except 9(c), Lessor shall cause Tax Indemnitee to promptly notify the extent such failure precludes or materially adversely affects the ability to conduct a contest of any indemnified Taxes) and shall not take any action with respect to such claim, proceeding or Imposition without the written consent of the Guarantor (such consent not to be unreasonably withheld or unreasonably delayed) for thirty (30) days after the receipt of such notice by the GuarantorLessee; provided, however, that the failure to so notify Lessee shall not diminish Lessee's obligations to indemnify under this Section 9(c). If reasonably requested by the Lessee in writing and provided no Event of Default shall have occurred and is continuing, Lessor, at the case sole expense of any such claim the Lessee, shall itself (or proceeding, if shall cause such Tax Indemnitee to) in good faith and diligently contest (and not settle without Lessee's written consent) or shall be required by law (or regulation to take action prior to the end of such thirty (30) day period, shall cause such Tax Indemnitee to) permit the Lessee, if desired by the Lessee, to contest in the name of the Lessee the validity, applicability or amount of such Tax. Lessor shall cause such Tax Indemnitee to contest, or shall permit the Lessee to contest by (a) resisting payment thereof if practicable, (b) not paying the same except under protest with funds advanced by Lessee on an interest-free basis, if protest is necessary and proper, and (c) if payments be made, using reasonable efforts to obtain a refund thereof in appropriate administrative and judicial proceedings; provided, however, that, in each such notice to instance, the Guarantor, so inform the Guarantor, Lessor and such Tax Indemnitee shall not take any action with respect to such claim, proceeding or Imposition without the consent of the Guarantor (such consent not to be unreasonably withheld or unreasonably delayed) for ten (10) days after the receipt of such notice by the Guarantor unless such Tax Indemnitee shall be required by law or regulation to take action prior to the end of such ten (10) day period. The Guarantor shall be entitled for a period of thirty (30) days from receipt of such notice from such Tax Indemnitee (or such shorter period as such Tax Indemnitee has notified the Guarantor is required by law or regulation for such Tax Indemnitee to commence such contest), to request in writing that such Tax Indemnitee contest the imposition of such Tax, at the Guarantor's expense. If (x) such contest can be pursued in the name of the Guarantor or the Lessee and independently from any other proceeding involving a Tax liability of such Tax Indemnitee for which the Lessee and the Guarantor have not agreed to indemnify such Tax Indemnitee, (y) such contest must be pursued in the name of such Tax Indemnitee, but can be pursued independently from any other proceeding involving a Tax liability of such Tax Indemnitee for which the Lessee and the Guarantor have not agreed to indemnify such Tax Indemnitee or (z) such Tax Indemnitee so requests, then the Guarantor or such Lessee shall be permitted to control the contest of such claim, provided that in the case of a contest described in clause (y) if such Tax Indemnitee determines reasonably and in good faith that such contest by the Guarantor or the Lessee could have a material adverse impact on the business or operations of such Tax Indemnitee and provides a written explanation to the Guarantor of such determination, such Tax Indemnitee may elect to control or reassert control of the contest, and provided that the taking control by the Guarantor or the Lessee of any contest shall not alter the applicable Tax Indemnitee's rights to indemnification hereunder, and provided, further, that in determining the application of clauses (x) and (y) of the preceding sentence, each Tax Indemnitee shall take any and all reasonable steps to segregate claims for any Taxes for which the Lessee and the Guarantor indemnify hereunder from Taxes for which the Lessee and the Guarantor are not obligated to indemnify hereunder, so that the Guarantor can control the contest of the former. In all other claims requested to be contested by the Guarantor, such Tax Indemnitee shall control the contest of such claim, acting through counsel selected by such Tax Indemnitee and reasonably acceptable to the Guarantor. In no event shall the Guarantor be permitted to contest (or such Tax Indemnitee be required to contest) undertake any claim, contest or permit the Lessee to contest unless:
(A) if such Lessee shall have provided Lessor and the Tax Indemnitee provides the Guarantor with a legal an opinion of legal counsel reasonably acceptable to Lessor and the Guarantor Tax Indemnitee to the effect that a reasonable basis exists to contest such actionclaim (provided, suit however, that no such opinion shall be necessary in order to contest such claim in meetings with auditors, revenue agents, or proceeding involves in other informal meetings with staff members of the applicable tax authority) and, prior to the commencement of any appeal of an adverse judicial decision, with an opinion of such legal counsel to the effect that a risk reasonable basis exists to appeal such adverse judicial decision (which opinions shall be obtained at Lessee's sole cost and expense); [Amended and Restated Lease Agreement]
(B) such proceedings, in the sole reasonable discretion of imposition of criminal liability or will Lessor and the Tax Indemnitee, do not involve a any material risk or danger of the sale, forfeiture or loss of, of the Aircraft or any part thereof or interest therein or the imposition of criminal penalties or sanctions against Lessor or such Tax Indemnitee or the creation of any Lien (other than a Permitted Lien) on Lien for Taxes not yet due or being, contested in good faith by appropriate proceedings, and for payment of which such reserves if any, as are required to be provided under generally accepted accounting principles have been made unless Lessee has provided to the Property or any part thereof unless the Guarantor shall have posted and maintained Tax Indemnitee a bond or other security reasonably satisfactory to the relevant Tax Indemnitee (provided that in respect to the case of criminal penalties or sanctions such risk, (B) if a Lease Event of Default has occurred and is continuing unless the Guarantor shall have posted and maintained a bond or other security reasonably shall be satisfactory to the relevant Tax Indemnitee in respect of the Taxes subject its sole discretion) to protect against such claim and any and all expenses for which the Guarantor risk or the Lessee is responsible hereunder reasonably foreseeable in connection with the contest of such claim, danger;
(C) unless in the Guarantor shall have agreed to pay and shall pay, to such Tax Indemnitee on written demand all reasonable, documented out-of-pocket costs, losses and expenses event that such Tax Indemnitee may incur in connection with contesting such Imposition including all reasonable legal, accounting and investigatory fees and disbursements and (if applicable) reasonable, allocable internal overhead costs determined in accordance with normal bank operating procedures, or (D) if such contest shall involve the payment subject matter of the Tax prior contest is of a continuing nature and has previously been decided adversely pursuant to the contest, unless contest provisions of this Section 9(c) by the Guarantor shall provide highest court to such Tax Indemnitee which an interest-free advance in an amount equal to the Imposition that such Tax Indemnitee is required to pay (with no additional net after-tax costs to such Tax Indemnitee). In addition, for contests controlled by such Tax Indemnitee and claims contested in the name of such Tax Indemnitee in a public forum, no contest shall be required: (A) unless the amount of the potential indemnity (taking into account all similar or logically related claims that have been or appeal could be raised in any audit involving any or all such Tax Indemnitees with respect to any period for which the Guarantor or the Lessee may be liable to pay an indemnity under this Section 13.4(b)) exceeds taken (1) with respect to the Lessor, $25,000 and (2) with respect to any Tax Indemnitee other than the LessorU.S. Supreme Court), $75,000 there has been a change in the law (including, without limitation, amendments to statutes or regulations, administrative rulings and (Bcourt decisions) unless, if requested by after such Tax Indemnitee, the Guarantor claim shall have provided to such been so previously decided and the Tax Indemnitee an opinion of counsel selected by the Guarantor (which may be in-house counsel) (except, in the case of income taxes indemnified hereunder, in which case such opinion shall be have received an opinion of independent tax counsel selected by the Guarantor Lessee and reasonably acceptable to such the Tax Indemnitee) , which opinion shall be obtained at the Lessee's sole expense, to the effect that, as a result of such change, it is more likely than not that a reasonable basis exists to contest such claim. In no event shall a the position which the Tax Indemnitee or the Lessee, as the case may be, had asserted in such previous contest would prevail.
(D) no Event of Default shall have occurred and be required to appeal an adverse judicial determination continuing,
(E) prior to the United States Supreme Court. The party conducting the commencement of any contest shall consult in good faith with the other party and its counsel with respect to the contest of such claim for Taxes (or claim for refund) but the decisions regarding what actions to be taken shall be made undertaken by the controlling party in its sole judgment; providedLessee or any contest undertaken by any Tax Indemnitee, however, that if the Lessee shall have delivered to such Tax Indemnitee is the controlling party and the Guarantor recommends the acceptance a written acknowledgment of a settlement offer made by the relevant Governmental Authority its obligation to indemnify fully Lessor and such Tax Indemnitee rejects to the extent that the contest is not successful;
(F) if such settlement offercontest is to be initiated by the payment of, then the amount for which a Lessee and the Guarantor will be required claiming of a refund for, such Tax, Lessee shall have advanced to indemnify such the Tax Indemnitee with respect sufficient funds (on an interest-free basis) to the Taxes subject to make such offer shall not exceed the amount which it would have owed if such settlement offer had been accepted provided that any Tax Indemnitee shall be entitled to reject any indemnity payment it would otherwise be entitled to hereunder if such Tax Indemnitee reasonably determines that accepting such offer would have an unindemnified impact on such Tax Indemnitee and provided further that no Tax Indemnitee may reject any such indemnity payment if the Guarantor agrees to pay to such Tax Indemnitee the amount of such unindemnified impact, as reasonably determined by such Tax Indemnitee. In addition, the controlling party shall keep the noncontrolling party reasonably informed as to the progress of the contest, and shall provide the noncontrolling party with a copy of (or appropriate excerpts from) any reports or claims issued by the relevant auditing agents or taxing authority to the controlling party thereof, in connection with such claim or the contest thereofpayments, provided, however, that Lessee shall indemnify such obligation Tax Indemnitee for any adverse tax consequences resulting from such advance. Lessee shall not obligate be deemed to be in default under any of the above indemnification provisions of this Section 9(c) so long as Lessee shall diligently prosecute a contest in conformity with the requirements of this Section 9(c)(vi), or in the case where the Lessor or a Tax Indemnitee shall be prosecuting such contest pursuant to disclose [Amended and Restated Lease Agreement] this Section 9(c)(vi), Lessee has fulfilled all of its tax returns obligations under this Section 9(c)(vi) with respect to such contest. Notwithstanding the foregoing, if a claim is made against a Tax Indemnitee which, if successful, would result in a Tax under circumstances which would require the Lessee to indemnify such Tax Indemnitee, such Tax Indemnitee shall be released from its responsibility to contest such claim, or information part thereof, if it agrees in writing with Lessee not to seek indemnification from Lessee in respect of the claim, or documentation unrelated such part thereof to be contested. In the event a Tax Indemnitee fails diligently to contest, or refuses to permit the Lessee to contest, a claim or part thereof which such Tax Indemnitee has the obligation to contest or to permit Lessee to contest under this Section 9(c), then Lessee shall not be obligated to indemnify such Tax Indemnitee for such claim or contest. Each such part thereof and such Tax Indemnitee shall, shall refund to Lessee any amounts paid or advanced by Lessee in connection with such Tax that were the subject of such claim (plus interest from the date payment is due at the expense of the Lessee and the Guarantor, supply the Lessee or the Guarantor with such information and documents reasonably requested rate established for refunds by the Lessee or the Guarantor as are necessary or advisable for authority imposing such Person to participate in any action, suit or proceeding to the extent permitted by this Section 13.4(bTax); provided, however, that such Tax Indemnitee this sentence shall not be required to provide to such Lessee or the Guarantor copies of its tax returns or any other information, documentation, or materials that it deems to be confidential or proprietary. Notwithstanding anything in this Section 13.4(b) to the contrary, no Tax Indemnitee shall enter into any settlement or other compromise or fail to appeal an adverse ruling with respect to any claim which is entitled to be indemnified under this Section 13.4 (and with respect to which contest is required under this Section 13.4(b)) without the prior written consent of the Guarantor, unless such Tax Indemnitee waives its right to be indemnified under this Section 13.4 with respect to such claim. Notwithstanding anything contained herein to the contrary, apply where a Tax Indemnitee shall not be required permits the Lessee to contest (and neither the Lessee nor the Guarantor shall be permitted falls to contest in any judicial forum if such contest could, in a Tax Indemnitee's reasonable judgment, be materially adverse to it) a claim with respect to the imposition of any Tax if such Tax Indemnitee shall have waived its right to indemnification under this Section 13.4 with respect to such claim (and any claim with respect to such year or any other taxable year the contest of which is precluded or materially adversely affected as a result of such waiver)diligently contest.
Appears in 1 contract
Sources: Lease Agreement (Turn Works Acquisition Iii Sub a Inc)
Contests. Lessee shall pay at the time and in the manner set out in SECTION 7.2(c) any Taxes subject to indemnification pursuant to SECTION 7.2 (a); PROVIDED, HOWEVER, that Lessee shall be under no obligation to pay any such Tax so long as the payment of such Tax is not delinquent or is being contested by a Permitted Contest. If any claim shall be is made against any Tax Indemnitee or if any proceeding shall be commenced against solely for any Tax which is subject to indemnification as provided in SECTION 7.2(a), Indemnitee shall as soon as practicable, but in no event more than 20 days after receipt of written notice, notify the Lessee and if, in the reasonable opinion of tax counsel to the Indemnitee in the case of any Tax that may reasonably be expected to exceed $5,000,000 in the aggregate, there exists a basis to contest such Tax which satisfies the requirements of ABA Formal Opinion 85-352 (and if the PROVISOS of the definition of "Permitted Contest" continue to be satisfied and so long as no Event of Default exists), the Lessee at its expense may, to the extent permitted by Applicable Law, contest such Tax; PROVIDED that in, all other circumstances, upon notice from the Lessee to such Indemnitee that there exists a basis to contest any such Tax which satisfies the requirements of ABA Formal Opinion 85-352 (as supported by an opinion of tax counsel to the Indemnitee), the Indemnitee, at the Lessee's expense, shall contest any such Tax. The Lessee shall pay all expenses incurred by the Indemnitee in contesting any such Tax (including a all reasonable attorneys' and accountants' fees), upon written notice demand by the Indemnitee. The Indemnitee shall have the right to participate in the conduct of any proceedings controlled by the Lessee and the Indemnitee shall in all events be kept informed of material developments relative to such proceedings. The Lessee shall have the right to participate in the conduct of any proceedings controlled by the Indemnitee to the extent that such participation by such Person does not interfere with the Indemnitee's control of such proceeding) contest and the Lessee shall in all events be kept informed, to the extent practicable, of material developments relative to such proceedings. The Indemnitees agree that a contested claim will not be settled or compromised without the Lessee's prior written consent (which consent shall neither be unreasonably delayed nor withheld), unless the PROVISOS of the definition of "Permitted Contest" would not continue to be satisfied. Each Indemnitee shall endeavor to settle or compromise any such contested claim in accordance with written instructions from the Lessee. The failure of an Indemnitee to timely contest a claim against it for any Imposition as Tax for which it has an obligation to which contest under this SECTION 7.2(b) shall relieve the Lessee or the Guarantor may have an indemnity obligation pursuant of its obligations to this Section 13.4, or if any Tax such Indemnitee shall determine that any Imposition to which the Lessee or the Guarantor may have an indemnity obligation pursuant to this Section 13.4 may be payable, such Tax Indemnitee shall promptly (and in any event, within fifteen (15under SECTION 7.2(a) Business Days) notify the Guarantor in writing (provided that failure to so notify the Guarantor within fifteen (15) Business Days shall not alter such Tax Indemnitee's rights under this Section 13.4 except only to the extent such failure precludes or materially adversely affects the ability to conduct a contest of any indemnified Taxes) and shall not take any action with respect to such claim, proceeding or Imposition without the written consent of the Guarantor (such consent not to be unreasonably withheld or unreasonably delayed) for thirty (30) days after the receipt of such notice by the Guarantor; provided, however, that results in the case loss of any such claim or proceedingan effective contest. If Applicable Law requires the payment of a contested Tax as a condition to its being contested, if and the Lessee chooses to contest such Tax Indemnitee shall be required by law or regulation to take action prior to direct the end of such thirty (30) day period, such Tax Indemnitee shall in such notice to the Guarantor, so inform the Guarantor, and such Tax Indemnitee shall not take any action with respect to such claim, proceeding or Imposition without the consent of the Guarantor (such consent not to be unreasonably withheld or unreasonably delayed) for ten (10) days after the receipt of such notice by the Guarantor unless such Tax Indemnitee shall be required by law or regulation to take action prior to the end of such ten (10) day period. The Guarantor shall be entitled for a period of thirty (30) days from receipt of such notice from such Tax Indemnitee (or such shorter period as such Tax Indemnitee has notified the Guarantor is required by law or regulation for such Tax Indemnitee to commence such contest), to request in writing that such Tax Indemnitee contest the imposition of such Tax, at the Guarantor's expense. If (x) such contest can be pursued in the name of the Guarantor or then the Lessee and independently from shall provide the Indemnitee with the funds to pay such Tax, as a non-interest bearing loan by the Lessee to the Indemnitee to be repaid by any other proceeding involving a Tax liability recovery of such Tax and any remaining unpaid amount to reduce the obligations to indemnify for such Tax. Lessee shall indemnify the Indemnitee on a grossed-up basis (in accordance with SECTION 7.5) for and against any adverse tax consequences of such interest-free loan. In the event that the Indemnitee receives a refund (or other like adjustment) in respect of any Tax for which the Lessee and Indemnitee has been reimbursed by Lessee, the Guarantor have not agreed to indemnify such Tax Indemnitee, (y) such contest must be pursued in the name of such Tax Indemnitee, but can be pursued independently from any other proceeding involving a Tax liability of such Tax Indemnitee for which the Lessee and the Guarantor have not agreed to indemnify such Tax Indemnitee or (z) such Tax Indemnitee so requests, then the Guarantor or such Lessee shall be permitted to control the contest of such claim, provided that in the case of a contest described in clause (y) if such Tax Indemnitee determines reasonably and in good faith that such contest by the Guarantor or the Lessee could have a material adverse impact on the business or operations of such Tax Indemnitee and provides a written explanation to the Guarantor of such determination, such Tax Indemnitee may elect to control or reassert control of the contest, and provided that the taking control by the Guarantor or the Lessee of any contest shall not alter the applicable Tax Indemnitee's rights to indemnification hereunder, and provided, further, that in determining the application of clauses (x) and (y) of the preceding sentence, each Tax Indemnitee shall take any and all reasonable steps to segregate claims for any Taxes for which the Lessee and the Guarantor indemnify hereunder from Taxes for which the Lessee and the Guarantor are not obligated to indemnify hereunder, so that the Guarantor can control the contest of the former. In all other claims requested to be contested by the Guarantor, such Tax Indemnitee shall control the contest of such claim, acting through counsel selected by such Tax Indemnitee and reasonably acceptable to the Guarantor. In no event shall the Guarantor be permitted to contest (or such Tax Indemnitee be required to contest) any claim, (A) if such Tax Indemnitee provides the Guarantor with a legal opinion of counsel reasonably acceptable to the Guarantor that such action, suit or proceeding involves a risk of imposition of criminal liability or will involve a material risk of the sale, forfeiture or loss of, or the creation of any Lien (other than a Permitted Lien) on the Property or any part thereof unless the Guarantor shall have posted and maintained a bond or other security reasonably satisfactory to the relevant Tax Indemnitee in respect to such risk, (B) if a Lease Event of Default has occurred and is continuing unless the Guarantor shall have posted and maintained a bond or other security reasonably satisfactory to the relevant Tax Indemnitee in respect of the Taxes subject to such claim and any and all expenses for which the Guarantor or the Lessee is responsible hereunder reasonably foreseeable in connection with the contest of such claim, (C) unless the Guarantor shall have agreed to pay and shall pay, to such Tax Indemnitee on written demand all reasonable, documented out-of-pocket costs, losses and expenses that such Tax Indemnitee may incur in connection with contesting such Imposition including all reasonable legal, accounting and investigatory fees and disbursements and (if applicable) reasonable, allocable internal overhead costs determined in accordance with normal bank operating procedures, or (D) if such contest shall involve the payment of the Tax prior to the contest, unless the Guarantor shall provide to such Tax Indemnitee an interest-free advance in an amount equal to the Imposition that such Tax Indemnitee is required to pay (with no additional net after-tax costs to such Tax Indemnitee). In addition, for contests controlled by such Tax Indemnitee and claims contested in the name of such Tax Indemnitee in a public forum, no contest shall be required: (A) unless the amount of the potential indemnity (taking into account all similar or logically related claims that have been or could be raised in any audit involving any or all such Tax Indemnitees with respect to any period for which the Guarantor or the Lessee may be liable to pay an indemnity under this Section 13.4(b)) exceeds (1) with respect to the Lessor, $25,000 and (2) with respect to any Tax Indemnitee other than the Lessor, $75,000 and (B) unless, if requested by such Tax Indemnitee, the Guarantor shall have provided to such Tax Indemnitee an opinion of counsel selected by the Guarantor (which may be in-house counsel) (except, in the case of income taxes indemnified hereunder, in which case such opinion shall be an opinion of independent tax counsel selected by the Guarantor and reasonably acceptable to such Tax Indemnitee) that a reasonable basis exists to contest such claim. In no event shall a Tax Indemnitee be required to appeal an adverse judicial determination to the United States Supreme Court. The party conducting the contest shall consult in good faith with the other party and its counsel with respect to the contest of such claim for Taxes (or claim for refund) but the decisions regarding what actions to be taken shall be made by the controlling party in its sole judgment; provided, however, that if such Tax Indemnitee is the controlling party and the Guarantor recommends the acceptance of a settlement offer made by the relevant Governmental Authority and such Tax Indemnitee rejects such settlement offer, then the amount for which a Lessee and the Guarantor will be required to indemnify such Tax Indemnitee with respect to the Taxes subject to such offer shall not exceed the amount which it would have owed if such settlement offer had been accepted provided that any Tax Indemnitee shall be entitled to reject any indemnity payment it would otherwise be entitled to hereunder if such Tax Indemnitee reasonably determines that accepting such offer would have an unindemnified impact on such Tax Indemnitee and provided further that no Tax Indemnitee may reject any such indemnity payment if the Guarantor agrees to pay to such Tax Indemnitee immediately remit the amount of such unindemnified impactrefund to Lessee, as reasonably determined net of all costs and expenses incurred by such Tax Indemnitee, together with any interest actually received thereon. In addition, the controlling party shall keep the noncontrolling party reasonably informed as to the progress of the contest, and shall provide the noncontrolling party with a copy of (or appropriate excerpts from) any reports or claims issued by the relevant auditing agents or taxing authority to the controlling party thereof, in connection with such claim or the contest thereof, provided, however, that such obligation shall not obligate any Tax Indemnitee to disclose its tax returns or information or documentation unrelated to such claim or contest. Each Tax Indemnitee shall, at the expense of the Lessee and the Guarantor, supply the Lessee or the Guarantor with such information and documents reasonably requested by the Lessee or the Guarantor as are necessary or advisable for such Person to participate in any action, suit or proceeding to the extent permitted by this Section 13.4(b); provided, however, that such Tax Indemnitee shall not be required to provide to such Lessee or the Guarantor copies of its tax returns or any other information, documentation, or materials that it deems to be confidential or proprietary. Notwithstanding anything in this Section 13.4(b) to the contrary, no Tax Indemnitee shall enter into any settlement or other compromise or fail to appeal an adverse ruling with respect to any claim which is entitled to be indemnified under this Section 13.4 (and with respect to which contest is required under this Section 13.4(b)) without the prior written consent of the Guarantor, unless such Tax Indemnitee waives its right to be indemnified under this Section 13.4 with respect to such claim. Notwithstanding anything contained herein to the contrary, a Tax Indemnitee shall not be required to contest (and neither the Lessee nor the Guarantor shall be permitted to contest in any judicial forum if such contest could, in a Tax Indemnitee's reasonable judgment, be materially adverse to it) a claim with respect to the imposition of any Tax if such Tax Indemnitee shall have waived its right to indemnification under this Section 13.4 with respect to such claim (and any claim with respect to such year or any other taxable year the contest of which is precluded or materially adversely affected as a result of such waiver).39 Participation Agreement
Appears in 1 contract
Contests. If any claim shall be made against any Tax Indemnitee or if any proceeding shall be commenced against any Tax Indemnitee (including a written notice of such proceeding) for any Imposition as to which the Lessee or the Guarantor may have an indemnity obligation pursuant to this Section 13.4, or if any Tax Indemnitee shall determine that any Imposition to which the Lessee or the Guarantor may have an indemnity obligation pursuant to this Section 13.4 may be payable, such Tax Indemnitee shall promptly (and in any event, within fifteen (15) Business Days) notify the Guarantor in writing (provided that failure to so notify the Guarantor within fifteen (15) Business Days shall not alter such Tax Indemnitee's rights under this Section 13.4 except to the extent such failure precludes or materially adversely affects the ability to conduct a contest of any indemnified Taxes) and shall not take any action with respect to such claim, proceeding or Imposition without the written consent of the Guarantor (such consent not to be unreasonably withheld or unreasonably delayed) for thirty (30) days after the receipt of such notice by the Guarantor; provided, however, that in the case of any such claim or proceeding, if such Tax Indemnitee shall be required by law or regulation to take action prior to the end of such thirty (30) day period, such Tax Indemnitee shall in such notice to the Guarantor, so inform the Guarantor, and such Tax Indemnitee shall not take any action with respect to such claim, proceeding or Imposition without the consent of the Guarantor (such consent not to be unreasonably withheld or unreasonably delayed) for ten (10) days after the receipt of such notice by the Guarantor unless such Tax Indemnitee shall be required by law or regulation to take action prior to the end of such ten (10) day period. The Guarantor shall be entitled for a period of thirty (30) days from receipt of such notice from such Tax Indemnitee (or such shorter period as such Tax Indemnitee has notified the Guarantor is required by law or regulation for such Tax Indemnitee to commence such contest), to request in writing that such Tax Indemnitee contest the imposition of such Tax, at the Guarantor's expense. If (x) such contest can be pursued in the name of the Guarantor or the Lessee and independently from any other proceeding involving a Tax liability of such Tax Indemnitee for which the Lessee and the Guarantor have not agreed to indemnify such Tax Indemnitee, (y) such contest must be pursued in the name of such Tax Indemnitee, but can be pursued independently from any other proceeding involving a Tax liability of such Tax Indemnitee for which the Lessee and the Guarantor have not agreed to indemnify such Tax Indemnitee or (z) such Tax Indemnitee so requests, then the Guarantor or such Lessee shall be permitted to control the contest of such claim, provided that in the case of a contest described in clause (y) if such Tax Indemnitee determines reasonably and in good faith that such contest by the Guarantor or the Lessee could have a material adverse impact on the business or operations of such Tax Indemnitee and provides a written explanation to the Guarantor of such determination, such Tax Indemnitee may elect to control or reassert control of the contest, and provided that the taking control by the Guarantor or the Lessee of any contest shall not alter the applicable Tax Indemnitee's rights to indemnification hereunder, and provided, further, that in determining the application of clauses (x) and (y) of the preceding sentence, each Tax Indemnitee shall take any and all reasonable steps to segregate claims for any Taxes for which the Lessee and the Guarantor indemnify hereunder from Taxes for which the Lessee and the Guarantor are not obligated to indemnify hereunder, so that the Guarantor can control the contest of the former. In all other claims requested to be contested by the Guarantor, such Tax Indemnitee shall control the contest of such claim, acting through counsel selected by such Tax Indemnitee and reasonably acceptable to the Guarantor. In no event shall the Guarantor be permitted to contest (or such Tax Indemnitee be required to contest) any claim, (A) if such Tax Indemnitee provides the Guarantor with a legal opinion of counsel reasonably acceptable to the Guarantor that such action, suit or proceeding involves a risk of imposition of criminal liability or will involve a material risk of the sale, forfeiture or loss of, or the creation of any Lien (other than a Permitted Lien) on the Property or any part thereof unless the Guarantor shall have posted and maintained a bond or other security reasonably satisfactory to the relevant Tax Indemnitee in respect to such risk, (B) if a Lease an Event of Default has occurred and is continuing unless the Guarantor shall have posted and maintained a bond or other security reasonably satisfactory to the relevant Tax Indemnitee in respect of the Taxes subject to such claim and any and all expenses for which the Guarantor or the Lessee is responsible hereunder reasonably foreseeable in connection with the contest of such claim, (C) unless the Guarantor shall have agreed to pay and shall pay, to such Tax Indemnitee on written demand all reasonable, documented out-of-of- pocket costs, losses and expenses that such Tax Indemnitee may incur in connection with contesting such Imposition including all reasonable legal, accounting and investigatory fees and disbursements and (if applicable) reasonable, allocable internal overhead costs determined in accordance with normal bank operating procedures, or (D) if such contest shall involve the payment of the Tax prior to the contest, unless the Guarantor shall provide to such Tax Indemnitee an interest-free advance in an amount equal to the Imposition that such Tax Indemnitee is required to pay (with no additional net after-tax costs to such Tax Indemnitee). In addition, for contests controlled by such Tax Indemnitee and claims contested in the name of such Tax Indemnitee in a public forum, no contest shall be required: (A) unless the amount of the potential indemnity (taking into account all similar or logically related claims that have been or could be raised in any audit involving any or all such Tax Indemnitees with respect to any period for which the Guarantor or the Lessee may be liable to pay an indemnity under this Section 13.4(b)) exceeds (1) with respect to the LessorLessor or the New Partners, $25,000 and (2) with respect to any Tax Indemnitee other than the LessorLessor or the New Partners, $75,000 and (B) unless, if requested by such Tax Indemnitee, the Guarantor shall have provided to such Tax Indemnitee an opinion of counsel selected by the Guarantor (which may be in-house counsel) (except, in the case of income taxes indemnified hereunder, in which case such opinion shall be an opinion of independent tax counsel selected by the Guarantor and reasonably acceptable to such Tax Indemnitee) that a reasonable basis exists to contest such claim. In no event shall a Tax Indemnitee be required to appeal an adverse judicial determination to the United States Supreme Court. The party conducting the contest shall consult in good faith with the other party and its counsel with respect to the contest of such claim for Taxes (or claim for refund) but the decisions regarding what actions to be taken shall be made by the controlling party in its sole judgment; provided, however, that if such Tax Indemnitee is the controlling party and the Guarantor recommends the acceptance of a settlement offer made by the relevant Governmental Authority and such Tax Indemnitee rejects such settlement offer, then the amount for which a Lessee and the Guarantor will be required to indemnify such Tax Indemnitee with respect to the Taxes subject to such offer shall not exceed the amount which it would have owed if such settlement offer had been accepted provided that any Tax Indemnitee shall be entitled to reject any indemnity payment it would otherwise be entitled to hereunder if such Tax Indemnitee reasonably determines that accepting such offer would have an unindemnified impact on such Tax Indemnitee and provided further that no Tax Indemnitee may reject any such indemnity payment if the Guarantor agrees to pay to such Tax Indemnitee the amount of such unindemnified impact, as reasonably determined by such Tax Indemnitee. In addition, the controlling party shall keep the noncontrolling party reasonably informed as to the progress of the contest, and shall provide the noncontrolling party with a copy of (or appropriate excerpts from) any reports or claims issued by the relevant auditing agents or taxing authority to the controlling party thereof, in connection with such claim or the contest thereof, provided, however, that such obligation shall not obligate any Tax Indemnitee to disclose its tax returns or information or documentation unrelated to such claim or contest. Each Tax Indemnitee shall, at the expense of the Lessee and the Guarantor, supply the Lessee or the Guarantor with such information and documents reasonably requested by the Lessee or the Guarantor as are necessary or advisable for such Person to participate in any action, suit or proceeding to the extent permitted by this Section 13.4(b); provided, however, that such Tax Indemnitee shall not be required to provide to such Lessee or the Guarantor copies of its tax returns or any other information, documentation, or materials that it deems to be confidential or proprietary. Notwithstanding anything in this Section 13.4(b) to the contrary, no Tax Indemnitee shall enter into any settlement or other compromise or fail to appeal an adverse ruling with respect to any claim which is entitled to be indemnified under this Section 13.4 (and with respect to which contest is required under this Section 13.4(b)13 .4(b) without the prior written consent of the Guarantor, unless such Tax Indemnitee waives its right to be indemnified under this Section 13.4 with respect to such claim. Notwithstanding anything contained herein to the contrary, a Tax Indemnitee shall not be required to contest (and neither the Lessee nor the Guarantor shall be permitted to contest in any judicial forum if such contest could, in a Tax Indemnitee's reasonable judgment, be materially adverse to it) a claim with respect to the imposition of any Tax if such Tax Indemnitee shall have waived its right to indemnification under this Section 13.4 with respect to such claim (and any claim with respect to such year or any other taxable year the contest of which is precluded or materially adversely affected as a result of such waiver).
Appears in 1 contract
Contests. (1) If any a written claim shall be is made against any Tax Indemnitee Lessor or if any proceeding shall be is commenced against any Tax Indemnitee Lessor (including a written notice of such proceeding) for any Imposition Taxes as to which the Lessee could be liable for payment or the Guarantor may have an indemnity obligation pursuant to this Section 13.4, or if any Tax Indemnitee shall determine that any Imposition to which the Lessee or the Guarantor may have an indemnity obligation pursuant to this Section 13.4 may be payablehereunder, such Tax Indemnitee Lessor shall promptly (and in any event, within fifteen (15) Business Days) notify the Guarantor give Lessee notice in writing of such claim (provided PROVIDED, HOWEVER, that the failure to so notify the Guarantor within fifteen (15) Business Days provide such notice shall not alter such Tax Indemniteeaffect Lessee's rights under this Section 13.4 except obligations hereunder to the extent Lessor unless such failure precludes or materially adversely affects the ability shall effectively preclude Lessee's right to conduct a contest of any indemnified Taxessuch claim) and shall not take any action with respect to such claim, proceeding claim or Imposition Tax without the written consent of the Guarantor (such consent not to be unreasonably withheld or unreasonably delayed) Lessee for thirty (30) days after following the receipt of such notice by the GuarantorLessee; providedPROVIDED, howeverHOWEVER, that in the case of any such claim or proceedingthat, if such Tax Indemnitee Lessor shall be required by law or regulation Law to take action prior to the end of such thirty (30) -day period, such Tax Indemnitee shall Lessor shall, in such notice to the GuarantorLessee, so inform the GuarantorLessee, and such Tax Indemnitee Lessor shall not take any no action with respect to such claim, proceeding or Imposition without the consent of the Guarantor Lessee for as long as it is legally able to do so (such consent not to be unreasonably withheld or unreasonably delayed) for ten (10) days after the receipt of such notice by the Guarantor unless such Tax Indemnitee it being understood that Lessor shall be required by law or regulation entitled to take action pay the Tax claimed and sue for a refund prior to the end of such ten 30-day period if (10i)(A) day periodt▇▇ failure to so pay the Tax would result in penalties (unless immediately reimbursed by Lessee) or (B) the failure to so pay would result in criminal penalties and (ii) Lessor uses its good faith efforts to take any action so required in connection with so paying the Tax in a manner that is the least prejudicial to the pursuit of the contest). The Guarantor In addition, Lessor shall (PROVIDED that Lessee shall have agreed to keep such information confidential other than to the extent necessary in order to contest the claim in writing in a manner reasonable satisfactory to Lessor) furnish Lessee with copies of any requests for information from any taxing authority relating to such Taxes with respect to which Lessee may be entitled for a period of required to indemnify hereunder. If requested by Lessee in writing within thirty (30) days from receipt of such notice from such Tax Indemnitee (or such shorter period as such Tax Indemnitee has notified the Guarantor is may be required by law Law after its receipt of such notice, Lessor shall, at the expense of Lessee (including all reasonable out-of-pocket costs, and reasonable in-house or regulation for such Tax Indemnitee outside attorney and accountants fees), in good faith contest (or, if permitted by applicable law, allow Lessee to commence such contest), to request in writing that such Tax Indemnitee contest through appropriate administrative and judicial proceedings the imposition validity, applicability or amount of such TaxTaxes by resisting payment thereof, at not paying the Guarantor's expensesame except under protest if protest is necessary and proper or if the payment is made, using reasonable efforts to obtain a refund thereof in an appropriate administrative and/or judicial proceeding. If requested to do so by Lessee in writing, Lessor shall appeal any adverse administrative or judicial decision, except that Lessor shall not be required to (xnor shall Lessee have the right to) such contest can be pursued pursue any appeals to the United States Supreme Court. If and to the extent Lessor by exercise of reasonable good faith efforts is able to separate the contested issue or issues (which cannot include income tax issues) from other issues arising in the name of same administrative or judicial proceeding that are unrelated to the Guarantor or transactions contemplated by the Lessee and independently from any other proceeding involving a Tax liability of such Tax Indemnitee for which the Lessee and the Guarantor have not agreed to indemnify such Tax IndemniteeOperative Documents without, (y) such contest must be pursued in the name good faith judgment of such Tax IndemniteeLessor, but can be pursued independently from any other proceeding involving a Tax liability of such Tax Indemnitee for which the materially adversely affecting it, Lessor shall permit Lessee and the Guarantor have not agreed to indemnify such Tax Indemnitee or (z) such Tax Indemnitee so requests, then the Guarantor or such Lessee shall be permitted to control the conduct of any such proceeding and shall provide to Lessee such information or data that is in such Lessor's control or possession that is reasonably necessary to conduct such contest and Lessee shall consult with the Lessor and keep it reasonably informed of the progress of such claim, provided that in contest. In the case of a contest described controlled by Lessor, Lessor shall conduct and control such contest, PROVIDED Lessor consults with Lessee in clause good faith regarding the manner of contesting such claim and shall keep Lessee reasonably informed regarding the progress of such contest but Lessor shall have ultimate control over all aspects of such contest. Lessor shall not fail to take any action expressly required by this SECTION 3(i)(D) (yincluding, without limitation, any action regarding an appeal of an adverse determination with respect to any claim) or settle or compromise any claim without the prior written consent of Lessee except as contemplated by SECTION 3(i)(D) herein.
(2) Notwithstanding the foregoing, in no event shall Lessor be required to take any action (or to permit Lessee to take any action) unless and until (A) Lessee shall have agreed to pay Lessor on demand on an After-tax Basis all reasonable costs and expenses that Lessor shall incur in connection with contesting such claim, (including without limitation, all costs, expenses, losses, reasonable legal and accounting fees, disbursements, penalties, fines, additions to Tax or interest thereon), (B) if such Tax Indemnitee determines reasonably contest shall involve the payment of the claim, Lessee shall advance the amount thereof plus (to the extent indemnified hereunder) interest, penalties and in good faith additions to tax with respect thereto that are required to be paid prior to the commencement of such contest by the Guarantor or the on an interest-free basis and with no additional net after-tax cost to Lessor (and Lessor shall promptly pay to Lessee could any net realized tax benefits resulting from any imputed interest deduction arising from such interest free advance from Lessee plus any net tax benefits resulting from making any such payment), (C) Lessor shall have a material adverse impact on the business or operations of such Tax Indemnitee and provides a written explanation to the Guarantor of such determination, such Tax Indemnitee may elect to control or reassert control of the contest, and provided reasonably determined that the taking control by the Guarantor or the Lessee of any contest shall not alter the applicable Tax Indemnitee's rights to indemnification hereunder, and provided, further, that in determining the application of clauses (x) and (y) of the preceding sentence, each Tax Indemnitee shall take any and all reasonable steps to segregate claims for any Taxes for which the Lessee and the Guarantor indemnify hereunder from Taxes for which the Lessee and the Guarantor are not obligated to indemnify hereunder, so that the Guarantor can control the contest of the former. In all other claims requested action to be contested by the Guarantor, such Tax Indemnitee shall control the contest of such claim, acting through counsel selected by such Tax Indemnitee and reasonably acceptable to the Guarantor. In no event shall the Guarantor be permitted to contest (or such Tax Indemnitee be required to contest) taken will not result in any claim, (A) if such Tax Indemnitee provides the Guarantor with a legal opinion of counsel reasonably acceptable to the Guarantor that such action, suit or proceeding involves a risk of imposition of criminal liability or will involve a material risk of the saleforfeiture, forfeiture foreclosure, sale or loss of, of the Aircraft or the creation of any Lien (other than a Permitted Lien) on the Property or any part thereof (unless the Guarantor Lessee shall have posted and maintained adequately bonded such Lien or otherwise made provisions to protect the interests of Lessor in a bond or other security manner reasonably satisfactory to the relevant Tax Indemnitee Lessor in respect to such riskits sole discretion), (BD) if a Lease no Event of Default has shall have occurred and is be continuing unless at the Guarantor shall have posted and maintained a bond or other security reasonably satisfactory to the relevant Tax Indemnitee in respect of the Taxes subject to such claim and any and all expenses for which the Guarantor or the Lessee is responsible hereunder reasonably foreseeable in connection with time the contest of is begun unless Lessee has provided security for its obligations hereunder by advancing to Lessor before proceeding with such claim, (C) unless the Guarantor shall have agreed to pay and shall pay, to such Tax Indemnitee on written demand all reasonable, documented out-of-pocket costs, losses and expenses that such Tax Indemnitee may incur in connection with contesting such Imposition including all reasonable legal, accounting and investigatory fees and disbursements and (if applicable) reasonable, allocable internal overhead costs determined in accordance with normal bank operating procedures, or (D) if such contest shall involve the payment of the Tax prior to the contest, unless the Guarantor shall provide to such Tax Indemnitee an interest-free advance in an amount equal to the Imposition that such Tax Indemnitee is required to pay (with no additional net after-tax costs to such Tax Indemnitee). In addition, for contests controlled by such Tax Indemnitee and claims contested in the name of such Tax Indemnitee in a public forum, no contest shall be required: (A) unless the amount of the potential indemnity Tax being contested, plus any interest and penalties and an amount estimated in good faith by Lessor for reasonable expenses, (taking into account E) in the case of a contest that is being pursued by Lessor, the aggregate amount of the claim together with the amount of all similar or logically related claims that have been or could be raised in any audit involving with any or all such Tax Indemnitees with respect of the other Aircraft leased by Lessor to Lessee or raised in any period other audit for which the Guarantor or the Lessee may be liable to pay would have an indemnity obligation under this Section 13.4(b)SECTION 3(i)(D) exceeds is at least $50,000, and (1F) with respect if requested prior to or during the contest by Lessor, $25,000 and (2) with respect to any Tax Indemnitee other than the Lessor, $75,000 and (B) unless, if requested by such Tax Indemnitee, the Guarantor shall have provided to such Tax Indemnitee an opinion of counsel selected by the Guarantor (which may be in-house counsel) (except, in the case of income taxes indemnified hereunder, in which case such opinion shall be an opinion of independent tax counsel selected by the Guarantor Lessee and reasonably acceptable to such Tax Indemnitee) Lessor, renders to Lessor a written opinion that there is a reasonable basis exists to contest (under the standard set forth in ABA Formal Opinion 85-352 or any successor thereto) for contesting such claim. In no event the case of any contest controlled by the Lessee hereunder, Lessor (including its counsel (at Lessor's expense)) shall a Tax Indemnitee be required have the right to appeal an adverse judicial determination to the United States Supreme Court. The party conducting the contest participate in all proceedings and Lessee shall consult with Lessor in good faith with regarding the other party manner of contesting such claim and its shall keep Lessor reasonably informed regarding the progress of such contest and, if requested by Lessor, provide an opinion of tax counsel with respect selected by Lessee and reasonably acceptable to Lessor to the effect that there is a Reasonable Basis for contesting such claims. Notwithstanding the foregoing, Lessee shall not be permitted to control or conduct any contest of if such claim for contest involves Taxes (based on or claim for refund) but the decisions regarding what actions to be taken shall be made measured by the controlling party in its sole judgment; provided, howevergross or net income of Lessor and PROVIDED, that if Lessor determines in good faith that it is reasonably likely that such Tax Indemnitee is the controlling party and the Guarantor recommends the acceptance contest may have a material adverse impact on it, Lessor may retain or reassert control of a settlement offer made by the relevant Governmental Authority and such Tax Indemnitee rejects such settlement offer, then the amount for which a any contest Lessee and the Guarantor will be required to indemnify such Tax Indemnitee with respect to the Taxes subject to such offer shall not exceed the amount which it would have owed if such settlement offer had been accepted provided that any Tax Indemnitee shall be entitled to reject any indemnity payment it would otherwise be entitled permitted to hereunder if such Tax Indemnitee reasonably determines that accepting such offer would have an unindemnified impact on such Tax Indemnitee and provided further that no Tax Indemnitee may reject any such indemnity payment if the Guarantor agrees to pay to such Tax Indemnitee the amount of such unindemnified impact, as reasonably determined by such Tax Indemnitee. In addition, the controlling party shall keep the noncontrolling party reasonably informed as to the progress of the contest, and if Lessor shall provide the noncontrolling party with a copy of (or appropriate excerpts from) any reports or claims issued by the relevant auditing agents or taxing authority to the controlling party thereofrelease, in connection with such claim or the contest thereofwaive, provided, however, that such obligation shall not obligate any Tax Indemnitee to disclose its tax returns or information or documentation unrelated to such claim or contest. Each Tax Indemnitee shall, at the expense of the Lessee and the Guarantor, supply the Lessee or the Guarantor with such information and documents reasonably requested by the Lessee or the Guarantor as are necessary or advisable for such Person to participate in any action, suit or proceeding to the extent permitted by this Section 13.4(b); provided, however, that such Tax Indemnitee shall not be required to provide to such Lessee or the Guarantor copies of its tax returns or any other information, documentation, or materials that it deems to be confidential or proprietary. Notwithstanding anything in this Section 13.4(b) to the contrary, no Tax Indemnitee shall enter into any settlement or other compromise or fail to appeal an adverse ruling with respect to settle any claim which is entitled may be indemnifiable by Lessee pursuant to be indemnified under this Section 13.4 (and with respect to which contest is required under this Section 13.4(b)SECTION 3(i) without the prior written consent permission of the GuarantorLessee, unless such Tax Indemnitee waives its right Lessee's obligation to be indemnified under this Section 13.4 with respect to such claim. Notwithstanding anything contained herein to the contrary, a Tax Indemnitee shall not be required to contest (and neither the Lessee nor the Guarantor shall be permitted to contest in any judicial forum if such contest could, in a Tax Indemnitee's reasonable judgment, be materially adverse to it) a claim with respect to the imposition of any Tax if such Tax Indemnitee shall have waived its right to indemnification under this Section 13.4 indemnify Lessor with respect to such claim (and any claim the contest of which is materially prejudiced as a result of the release, waiver, compromise or settlement) shall terminate, subject to this SECTION 3(i)(D), and subject to SECTION 3(i)(C), Lessor shall repay to Lessee any amount previously paid or advanced to Lessor with respect to such year claim (but not amounts paid or advanced for costs and expenses of any contests to the extent such amounts have already been expended) plus interest at the rate that would have been payable by the relevant taxing authority with respect to a refund of such Tax.
(3) Notwithstanding anything contained in this SECTION 3(i) to the contrary, Lessor shall not be required to contest any claim if the subject matter thereof shall be of a continuing nature and shall previously have been decided adversely by a court of competent jurisdiction pursuant to the contest provisions of this SECTION 3(i)(D), unless there shall have been a change in Law (or interpretation thereof) or a change in facts after the date with respect to which such previous contest shall have been decided, and Lessor shall have received, at Lessee's expense, an opinion of independent tax counsel selected by Lessee and reasonably acceptable to Lessor to the effect that as a result of such change in Law (or interpretation thereof) or change in facts, it is more likely than not that Lessor will prevail in such contest.
(4) Nothing contained in this SECTION 3(i) shall require Lessor to contest or permit Lessee to contest a claim which it would otherwise be required to contest pursuant to this SECTION 3(i) if Lessor shall waive payment by Lessee of any amount that might otherwise be payable by Lessee under this SECTION 3(i) by way of indemnity in respect of such claim (and any other claim for Taxes with respect to any other taxable year the contest of which is effectively precluded or materially adversely affected as a result of such waiverby Lessor's declination to take action with respect to the claim).
Appears in 1 contract
Contests. If any claim shall be or claims is or are made against any Tax Indemnitee or if any proceeding shall be commenced against for any Tax which is subject to indemnification as provided in Section 7.2(a), such Indemnitee shall as soon as practicable, but in no event more than thirty (including a 30) days after receipt of formal written notice of such proceeding) for any Imposition as to which the Tax or proposed Tax, notify the Lessee or the Guarantor may have an indemnity obligation pursuant to this Section 13.4, or if any Tax Indemnitee shall determine that any Imposition to which the Lessee or the Guarantor may have an indemnity obligation pursuant to this Section 13.4 may be payable, such Tax Indemnitee shall promptly (and in any event, within fifteen (15) Business Days) notify the Guarantor in writing (provided that failure to so notify the Guarantor within fifteen (15) Business Days shall not alter such Tax Indemnitee's rights under this Section 13.4 except to the extent such failure precludes or materially adversely affects the ability to conduct a contest of any indemnified Taxes) and shall not take any action with respect to such claim, proceeding or Imposition Tax without the written consent of the Guarantor Lessee (such consent not to be unreasonably withheld withheld, conditioned or unreasonably delayed) for thirty (30) days after the receipt of such notice by the GuarantorLessee; provided, however, that in the case of any such claim or proceedingTax, if such Tax Indemnitee action shall be required by law or regulation Applicable Law to take action be taken prior to the end of such period of thirty (30) day perioddays, such Tax Indemnitee shall shall, in such notice to the GuarantorLessee, so inform the GuarantorLessee of such shorter period, and such Tax Indemnitee no action shall not take any action be taken with respect to such claim, proceeding or Imposition Tax without the consent of the Guarantor Lessee (such consent not to be unreasonably withheld withheld, conditioned or unreasonably delayed) for ten before seven (107) days after the receipt of such notice by the Guarantor unless such Tax Indemnitee shall be required by law or regulation to take action prior to before the end of such ten (10) day shorter period. The Guarantor shall be entitled for If, in the good faith opinion of the Lessee there exists a period of thirty (30) days from receipt of such notice from reasonable basis to contest such Tax Indemnitee (or such shorter period as such Tax Indemnitee has notified and if the Guarantor is required by law or regulation for such Tax Indemnitee provisos of the definition of “Permitted Contest” continue to commence such contestbe satisfied), the Lessee at its expense may, to request the extent permitted by Applicable Laws and provided that it has acknowledged in writing that such its liability for the Tax Indemnitee at issue if the contest the imposition of is not successful, contest such Tax, at the Guarantor's expense. If (x) such contest can be pursued in the name of the Guarantor or the Lessee and independently from subsequently may appeal any other proceeding involving a Tax liability of such Tax Indemnitee for which the Lessee and the Guarantor have not agreed to indemnify such Tax Indemnitee, (y) such contest must be pursued in the name of such Tax Indemnitee, but can be pursued independently from any other proceeding involving a Tax liability of such Tax Indemnitee for which the Lessee and the Guarantor have not agreed to indemnify such Tax Indemnitee or (z) such Tax Indemnitee so requests, then the Guarantor or such Lessee shall be permitted to control the contest of such claim, provided that in the case of a contest described in clause (y) if such Tax Indemnitee determines reasonably and in good faith that such contest by the Guarantor or the Lessee could have a material adverse impact on the business or operations of such Tax Indemnitee and provides a written explanation to the Guarantor of such determination, such Tax Indemnitee may elect to control or reassert control of the contest, and provided that the taking control by the Guarantor or the Lessee of any contest shall not alter the applicable Tax Indemnitee's rights to indemnification hereunder, and provided, further, that in determining the application of clauses (x) and (y) of the preceding sentence, each Tax Indemnitee shall take any and all reasonable steps to segregate claims for any Taxes for which the Lessee and the Guarantor indemnify hereunder from Taxes for which the Lessee and the Guarantor are not obligated to indemnify hereunder, so that the Guarantor can control the contest of the former. In all other claims requested to be contested by the Guarantor, such Tax Indemnitee shall control the contest of such claim, acting through counsel selected by such Tax Indemnitee and reasonably acceptable to the Guarantor. In no event shall the Guarantor be permitted to contest (or such Tax Indemnitee be required to contest) any claim, (A) if such Tax Indemnitee provides the Guarantor with a legal opinion of counsel reasonably acceptable to the Guarantor that such action, suit or proceeding involves a risk of imposition of criminal liability or will involve a material risk of the sale, forfeiture or loss of, or the creation of any Lien determination (other than a Permitted Lien) on the Property or any part thereof unless the Guarantor shall have posted and maintained a bond or other security reasonably satisfactory to the relevant Tax Indemnitee in respect to such risk, (B) if a Lease Event of Default has occurred and is continuing unless the Guarantor shall have posted and maintained a bond or other security reasonably satisfactory to the relevant Tax Indemnitee in respect of the Taxes subject to such claim and any and all expenses for which the Guarantor or the Lessee is responsible hereunder reasonably foreseeable in connection with the contest of such claim, (C) unless the Guarantor shall have agreed to pay and shall pay, to such Tax Indemnitee on written demand all reasonable, documented out-of-pocket costs, losses and expenses that such Tax Indemnitee may incur in connection with contesting such Imposition including all reasonable legal, accounting and investigatory fees and disbursements and (if applicable) reasonable, allocable internal overhead costs determined in accordance with normal bank operating procedures, or (D) if such contest shall involve the payment of the Tax prior to the contest, unless the Guarantor shall provide to such Tax Indemnitee an interest-free advance in an amount equal to the Imposition that such Tax Indemnitee is required to pay (with no additional net after-tax costs to such Tax Indemnitee). In addition, for contests controlled by such Tax Indemnitee and claims contested in the name of such Tax Indemnitee in a public forum, no contest shall be required: (A) unless the amount of the potential indemnity (taking into account all similar or logically related claims that have been or could be raised in any audit involving any or all such Tax Indemnitees with respect to any period for which the Guarantor or the Lessee may be liable to pay an indemnity under this Section 13.4(b)) exceeds (1) with respect to the Lessor, $25,000 and (2) with respect to any Tax Indemnitee other than the Lessor, $75,000 and (B) unless, if requested by such Tax Indemnitee, the Guarantor shall have provided to such Tax Indemnitee an opinion of counsel selected by the Guarantor (which may be in-house counsel) (except, in the case of income taxes indemnified hereunder, in which case such opinion shall be an opinion of independent tax counsel selected by the Guarantor and reasonably acceptable to such Tax Indemnitee) that a reasonable basis exists to contest such claim. In no event shall a Tax Indemnitee be required to appeal an adverse judicial determination to the United States Supreme Court. The party conducting ), in the contest shall consult in good faith with the other party appropriate administrative and its counsel with respect to the contest of such claim for Taxes (or claim for refund) but the decisions regarding what actions to be taken shall be made by the controlling party in its sole judgmentlegal forums; provided, howeverthat in all other circumstances, upon notice from the Lessee to such Indemnitee that if there exists a reasonable basis to contest any such Tax Indemnitee is or, in the controlling party and case of an appeal of adverse judicial determination, the Guarantor recommends the acceptance position asserted in such appeal will more likely than not prevail (in each case, as supported by an opinion of a settlement offer made by the relevant Governmental Authority and such Tax Indemnitee rejects such settlement offer, then the amount for which a Lessee and the Guarantor will be required to indemnify such Tax Indemnitee with respect tax counsel to the Taxes subject Lessee reasonably acceptable to such offer shall not exceed the amount which it would have owed if such settlement offer had been accepted provided that any Tax Indemnitee shall be entitled to reject any indemnity payment it would otherwise be entitled to hereunder if such Tax Indemnitee reasonably determines that accepting such offer would have an unindemnified impact on such Tax Indemnitee and provided further that no Tax Indemnitee may reject any such indemnity payment if the Guarantor agrees to pay to such Tax Indemnitee the amount of such unindemnified impact, as reasonably determined by such Tax Indemnitee. In addition), the controlling party shall keep the noncontrolling party reasonably informed as to the progress of the contest, and shall provide the noncontrolling party with a copy of (or appropriate excerpts from) any reports or claims issued by the relevant auditing agents or taxing authority to the controlling party thereof, in connection with such claim or the contest thereof, provided, however, that such obligation shall not obligate any Tax Indemnitee to disclose its tax returns or information or documentation unrelated to such claim or contest. Each Tax Indemnitee shallIndemnitee, at the expense Lessee’s expense, shall contest any such Tax (so long as the provisos of the definition of “Permitted Contest” continue to be satisfied and, in the case of a Tax on gross or net income, the aggregate amount of the Tax exceeds $50,000, which amount shall be verified and certified by an independent public accounting firm mutually acceptable to the Lessee and the Guarantorapplicable Indemnitee in accordance with Section 7.2(a)(v). The Lessee shall pay all out-of-pocket expenses incurred by the Indemnitee in contesting any such Tax (including, supply without limitation, all reasonable attorney’s and accountants’ fees and expenses), upon demand by the Indemnitee. The Lessee or shall have the Guarantor with right to participate in the conduct of any proceedings controlled by the Indemnitee to the extent that such information and documents reasonably requested participation by the Lessee or does not interfere with the Guarantor as are necessary or advisable for Indemnitee’s control of such Person to participate contest and the Lessee shall in any actionall events be kept informed, suit or proceeding to the extent permitted by this Section 13.4(b); providedpracticable, however, that such Tax Indemnitee shall not be required to provide of material developments relative to such Lessee or the Guarantor copies of its tax returns or any other information, documentation, or materials that it deems to be confidential or proprietary. Notwithstanding anything in this Section 13.4(b) to the contrary, no Tax Indemnitee shall enter into any settlement or other compromise or fail to appeal an adverse ruling with respect to any claim which is entitled to be indemnified under this Section 13.4 (and with respect to which contest is required under this Section 13.4(b)) without the prior written consent of the Guarantor, unless such Tax Indemnitee waives its right to be indemnified under this Section 13.4 with respect to such claim. Notwithstanding anything contained herein to the contrary, a Tax Indemnitee shall not be required to contest (and neither the Lessee nor the Guarantor shall be permitted to contest in any judicial forum if such contest could, in a Tax Indemnitee's reasonable judgment, be materially adverse to it) a claim with respect to the imposition of any Tax if such Tax Indemnitee shall have waived its right to indemnification under this Section 13.4 with respect to such claim (and any claim with respect to such year or any other taxable year the contest of which is precluded or materially adversely affected as a result of such waiver).BUSINESS.29620189.12
Appears in 1 contract
Contests. If any claim shall be made against any Tax Indemnitee or if any proceeding shall be commenced against any Tax Indemnitee (including a written notice of such proceeding) for any Imposition as to which the Lessee or the Guarantor may have an indemnity obligation pursuant to this Section 13.4, or if any Tax Indemnitee shall determine that any Imposition to for which the Lessee or the Guarantor may have an indemnity obligation pursuant to this Section 13.4 may be payable, such Tax Indemnitee shall promptly (and in any event, within fifteen twenty (1520) Business Daysdays) notify the Guarantor Lessee in writing (provided that failure to so notify the Guarantor Lessee within fifteen twenty (1520) Business Days days shall not alter such Tax Indemnitee's ’s rights under this Section 13.4 13.4, except to the extent such failure precludes or materially adversely affects the ability to conduct a contest of any indemnified Taxes) and shall not take any action with respect to such claim, proceeding or Imposition without the written consent of the Guarantor Lessee (such consent not to be unreasonably withheld or unreasonably delayed) for thirty (30) days after the receipt of such notice by the Guarantor▇▇▇▇▇▇; provided, however, that in the case of any such claim or proceeding, if such Tax Indemnitee shall be required by law or regulation to take action prior to the end of such thirty (30) day period, such Tax Indemnitee shall in such notice to the GuarantorLessee, so inform the GuarantorLessee, and such Tax Indemnitee shall not take any action with respect to such claim, proceeding or Imposition without the consent of the Guarantor Lessee (such consent not to be unreasonably withheld or unreasonably delayed) for ten (10) days after the receipt of such notice by ▇▇▇▇▇▇, unless the Guarantor unless such Tax Indemnitee shall be required by law or regulation to take action prior to the end of such ten (10) day period. The Guarantor Lessee shall be entitled for a period of thirty (30) days from receipt of such notice from such the Tax Indemnitee (or such shorter period as such the Tax Indemnitee has notified the Guarantor Lessee is required by law or regulation for such the Tax Indemnitee to commence such contest), to request in writing that such Tax Indemnitee contest the imposition of such Tax, at the Guarantor's ▇▇▇▇▇▇’s expense. If (x) such contest can be pursued in the name of the Guarantor or the Lessee ▇▇▇▇▇▇ and independently from any other proceeding involving a Tax liability of such Tax Indemnitee for which the Lessee and the Guarantor have ▇▇▇▇▇▇ has not agreed to indemnify such Tax Indemnitee, (y) such contest must be pursued in the name of such the Tax Indemnitee, but can be pursued independently from any other proceeding involving a Tax liability of such Tax Indemnitee for which the Lessee and the Guarantor have ▇▇▇▇▇▇ has not agreed to indemnify such Tax Indemnitee or (z) such the Tax Indemnitee so requests, then the Guarantor or such Lessee shall be permitted to control the contest of such claim, ; provided that in the case of a contest described in any of clause (x), (y) or (z) if such the Tax Indemnitee determines reasonably and in good faith that such contest by the Guarantor or the Lessee ▇▇▇▇▇▇ could have a material adverse impact on the business or operations of such the Tax Indemnitee and provides a written explanation to the Guarantor Lessee of such determination, such the Tax Indemnitee may elect to control or reassert control of the contest, and provided provided, that the by taking control of the contest, ▇▇▇▇▇▇ acknowledges that it is responsible for the Imposition ultimately determined to be due by the Guarantor or the Lessee reason of any contest shall not alter the applicable Tax Indemnitee's rights to indemnification hereundersuch claim, and provided, further, that in determining the application of clauses (x) and (y) of the preceding sentence, each Tax Indemnitee shall take any and all reasonable steps to segregate claims for any Taxes for which the Lessee and the Guarantor indemnify ▇▇▇▇▇▇ indemnifies hereunder from Taxes for which the Lessee and the Guarantor are ▇▇▇▇▇▇ is not obligated to indemnify hereunder, so that the Guarantor ▇▇▇▇▇▇ can control the contest of the former. In all other claims requested to be contested by ▇▇▇▇▇▇, the Guarantor, such Tax Indemnitee shall control the contest of such claim, acting through counsel selected by such Tax Indemnitee and reasonably acceptable to the Guarantor▇▇▇▇▇▇. In no event shall the Guarantor Lessee be permitted to contest (or such the Tax Indemnitee be required to contest) any claim, (A) if such Tax Indemnitee provides the Guarantor Lessee with a legal opinion of independent counsel reasonably acceptable to the Guarantor that such action, suit or proceeding involves a risk of imposition of criminal liability or will involve a material risk of the sale, forfeiture or loss of, or the creation of any Lien (other than a Permitted Lien) on the Leased Property or any part of any thereof unless the Guarantor Lessee shall have posted and maintained a bond or other security reasonably satisfactory to the relevant Tax Indemnitee in respect to such risk, (B) if a Lease an Event of Default has occurred and is continuing continuing, unless the Guarantor ▇▇▇▇▇▇ shall have posted and maintained a bond or other security reasonably satisfactory to the relevant Tax Indemnitee in respect of the Taxes subject to such claim and any and all expenses for which the Guarantor or the Lessee ▇▇▇▇▇▇ is responsible hereunder reasonably foreseeable in connection with the contest of such claim, (C) unless the Guarantor Lessee shall have agreed to pay and shall pay, pay to such Tax Indemnitee on written demand all reasonable, documented reasonable out-of-pocket costs, losses and expenses that such Tax Indemnitee may incur in connection with contesting such Imposition Imposition, including all reasonable legal, accounting and investigatory fees and disbursements and (if applicable) reasonable, allocable internal overhead costs determined in accordance with normal bank operating proceduresas well as the Impositions which are the subject of such claim to the extent the contest is unsuccessful, or (D) if such contest shall involve the payment of the Tax prior to the contest, unless the Guarantor Lessee shall provide to such the Tax Indemnitee an interest-free advance in an amount equal to the Imposition that such Tax the Indemnitee is required to pay (with no additional net after-tax costs (including Taxes) to such Tax Indemnitee). In addition, addition for contests controlled by such Tax Indemnitee controlled contests and claims contested in the name of such the Tax Indemnitee in a public forum, no contest shall be required: (A) unless the amount of the potential indemnity (taking into account all similar or logically related claims that have been or could be raised in any audit involving any or all such Tax Indemnitees with respect to any period Indemnitee for which the Guarantor or the Lessee may be liable to pay an indemnity under this Section 13.4(b)) exceeds (1) with respect to the Lessor, $25,000 and (2) with respect to any Tax Indemnitee other than the Lessor, $75,000 50,000 and (B) unless, if requested by such the Tax Indemnitee, the Guarantor ▇▇▇▇▇▇ shall have provided to such the Tax Indemnitee an opinion of counsel selected by the Guarantor ▇▇▇▇▇▇ (which may be in-house counsel) (, except, in the case of income taxes indemnified hereunder, in which case such opinion shall be an opinion that of independent tax counsel selected by the Guarantor Tax Indemnitee and reasonably acceptable to such Tax IndemniteeLessee) that a reasonable basis exists to contest such claim. In no event shall a Tax Indemnitee be required to appeal an adverse judicial determination to the United States Supreme Court. The party conducting the contest shall consult in good faith with the other party and its counsel with respect to the contest of such claim for Taxes (or claim for refund) but the decisions regarding what actions to be taken shall be made by the controlling party in its sole judgment; provided, however, that if such the Tax Indemnitee is the controlling party and the Guarantor Lessee recommends the acceptance of a settlement offer made by the relevant Governmental Authority and such Tax Indemnitee rejects such settlement offer, offer then the amount for which a Lessee and the Guarantor will be required to indemnify such Tax Indemnitee with respect to the Taxes subject to such offer shall not exceed the amount which it would have owed if such settlement offer had been accepted provided that any Tax Indemnitee shall be entitled to reject any indemnity payment it would otherwise be entitled to hereunder if such Tax Indemnitee reasonably determines that accepting such offer would have an unindemnified impact on such Tax Indemnitee and provided further that no Tax Indemnitee may reject any such indemnity payment if the Guarantor agrees to pay to such Tax Indemnitee the amount of such unindemnified impact, as reasonably determined by such Tax Indemniteeaccepted. In addition, the controlling party shall keep the noncontrolling non-controlling party reasonably informed as to the progress of the contest, and shall provide the noncontrolling non-controlling party with a copy of (or appropriate excerpts from) any reports or claims issued by the relevant auditing agents or taxing authority to the controlling party thereof, in connection with such claim or the contest thereof, provided, however, that such obligation shall not obligate any Tax Indemnitee to disclose its tax returns or information or documentation unrelated to such claim or contest. Each Tax Indemnitee shall, at the expense of the shall supply Lessee and the Guarantor, supply the Lessee or the Guarantor with such information and documents reasonably requested by the Lessee or the Guarantor ▇▇▇▇▇▇ as are necessary or advisable for such Person Lessee to participate in any action, suit or proceeding to the extent permitted by this Section 13.4(b); provided, however, that and ▇▇▇▇▇▇ shall promptly reimburse such Tax Indemnitee for the reasonable out-of-pocket expenses of supplying such information and documents. Except during the continuation of an Event of Default where Lessee and/or Guarantor shall not be required have failed to provide indemnity and, if requested by a Tax Indemnitee, collateral security, both in form, substance and in such amounts reasonably satisfactory to such Lessee or the Guarantor copies of its tax returns or any other information, documentation, or materials that it deems to be confidential or proprietary. Notwithstanding anything in this Section 13.4(b) to the contraryeach Tax Indemnitee, no Tax Indemnitee shall enter into any settlement or other compromise or fail to appeal an adverse ruling with respect to any claim which is entitled to be indemnified under this Section 13.4 (and with respect to which contest is required under this Section 13.4(b)) without the prior written consent of the GuarantorLessee, unless such Tax Indemnitee waives its right to be indemnified under this Section 13.4 with respect to such claim. Notwithstanding anything contained herein to the contrary, a Tax Indemnitee shall will not be required to contest (and neither the Lessee nor the Guarantor shall not be permitted to contest in any judicial forum if such contest could, in a Tax Indemnitee's reasonable judgment, be materially adverse to itcontest) a claim with respect to the imposition of any Tax if (i) such Tax Indemnitee shall have waived waive its right to indemnification under this Section 13.4 with respect to such claim (and any claim with respect to such year or any other taxable year year, the contest of which is precluded or materially adversely affected as a result of such waiver) or (ii) such Tax is the sole result of a claim of a continuing and consistent nature, which claim has previously been resolved against the relevant Tax Indemnitee (unless a change in law or facts has occurred since such prior adverse resolution and Lessee provides an opinion of independent tax counsel to the effect it is more likely than not that such change in law or facts will result in a favorable resolution of the claim at issue).
Appears in 1 contract
Contests. If (i) After the Closing, Buyer shall promptly notify Seller in writing of (x) any claim shall be made against correspondence from any Tax Indemnitee or if any proceeding shall be commenced against authority relating to any Tax Indemnitee Return filed by Seller pursuant to Section 5.15(b)(i) or by Buyer pursuant to Section 5.15(b)(ii) and (including a y) any written notice of such proceeding) for any Imposition as to which the Lessee a proposed assessment or the Guarantor may have claim in an indemnity obligation pursuant to this Section 13.4, audit or if any Tax Indemnitee shall determine that any Imposition to which the Lessee administrative or the Guarantor may have an indemnity obligation pursuant to this Section 13.4 may be payable, such Tax Indemnitee shall promptly (and in any event, within fifteen (15) Business Days) notify the Guarantor in writing (provided that failure to so notify the Guarantor within fifteen (15) Business Days shall not alter such Tax Indemnitee's rights under this Section 13.4 except to the extent such failure precludes or materially adversely affects the ability to conduct a contest of any indemnified Taxes) and shall not take any action with respect to such claim, proceeding or Imposition without the written consent of the Guarantor (such consent not to be unreasonably withheld or unreasonably delayed) for thirty (30) days after the receipt of such notice by the Guarantor; provided, however, that in the case of any such claim or proceeding, if such Tax Indemnitee shall be required by law or regulation to take action prior to the end of such thirty (30) day period, such Tax Indemnitee shall in such notice to the Guarantor, so inform the Guarantor, and such Tax Indemnitee shall not take any action with respect to such claim, proceeding or Imposition without the consent of the Guarantor (such consent not to be unreasonably withheld or unreasonably delayed) for ten (10) days after the receipt of such notice by the Guarantor unless such Tax Indemnitee shall be required by law or regulation to take action prior to the end of such ten (10) day period. The Guarantor shall be entitled for a period of thirty (30) days from receipt of such notice from such Tax Indemnitee (or such shorter period as such Tax Indemnitee has notified the Guarantor is required by law or regulation for such Tax Indemnitee to commence such contest), to request in writing that such Tax Indemnitee contest the imposition of such Tax, at the Guarantor's expense. If (x) such contest can be pursued in the name of the Guarantor or the Lessee and independently from any other judicial proceeding involving a Tax liability CMI, CEL or any of such Tax Indemnitee for which the Lessee and the Guarantor have not agreed to indemnify such Tax Indemnitee, their Subsidiaries (y) such contest must be pursued in the name of such Tax Indemnitee, but can be pursued independently from any other proceeding involving a Tax liability of such Tax Indemnitee for which the Lessee and the Guarantor have not agreed to indemnify such Tax Indemnitee or (z) such Tax Indemnitee so requests, then the Guarantor or such Lessee shall be permitted to control the contest of such claim, provided that in the case of a contest described in clause (y) if such Tax Indemnitee determines reasonably and in good faith that such contest by the Guarantor or the Lessee could have a material adverse impact on the business or operations of such Tax Indemnitee and provides a written explanation to the Guarantor of such determination, such Tax Indemnitee may elect to control or reassert control of the contest, and provided that the taking control by the Guarantor or the Lessee of any contest shall not alter the applicable Tax Indemnitee's rights to indemnification hereunder, and provided, further, that in determining the application of clauses (x) and (y) together, a "TAX CONTEST") which, if determined adversely to the taxpayer, would be grounds for indemnification by Seller (including any payment under Section 5.15(c)); PROVIDED, HOWEVER, that a failure to give such notice will not affect Buyer's right to indemnification (including any payment under Section 5.15(d)) hereunder except to the extent, if any, that, but for such failure, such Group Company and Seller could have avoided the Tax liability in question.
(ii) In the case of a Tax Contest that relates to a Pre-Closing Period, Seller shall have the preceding sentence, each Tax Indemnitee shall take any and all reasonable steps right at its expense to segregate claims for any Taxes for which the Lessee and the Guarantor indemnify hereunder from Taxes for which the Lessee and the Guarantor are not obligated to indemnify hereunder, so that the Guarantor can control the contest conduct of the former. In all other claims requested to be contested by the Guarantor, such Tax Indemnitee Contest; PROVIDED that (x) Seller shall control the contest of such claim, acting through counsel selected by such Tax Indemnitee and reasonably acceptable to the Guarantor. In no event shall the Guarantor be permitted to contest (or such Tax Indemnitee be required to contest) indemnify any claim, (A) if such Tax Indemnitee provides the Guarantor with a legal opinion of counsel reasonably acceptable to the Guarantor that such action, suit or proceeding involves a risk of imposition of criminal liability or will involve a material risk of the sale, forfeiture or loss of, or the creation of any Lien (other than a Permitted Lien) on the Property or any part thereof unless the Guarantor shall have posted and maintained a bond or other security reasonably satisfactory to the relevant Tax Indemnitee in respect to such risk, (B) if a Lease Event of Default has occurred and is continuing unless the Guarantor shall have posted and maintained a bond or other security reasonably satisfactory to the relevant Tax Indemnitee Group Company in respect of the Taxes subject to all third-party costs and expenses incurred by such claim and any and all expenses for which the Guarantor or the Lessee is responsible hereunder reasonably foreseeable Group Company at Seller's request in connection with the contest of such claimTax Contest, (Cy) unless the Guarantor Seller shall have agreed to pay keep Buyer informed of all material progress (and shall pay, send Buyer copies of all material correspondence relating thereto) of the Tax Contest and (z) Seller shall not enter into any compromise or agree to settle any claim pursuant to such Tax Indemnitee on written demand all reasonable, documented out-of-pocket costs, losses and expenses that such Tax Indemnitee may incur in connection with contesting such Imposition including all reasonable legal, accounting and investigatory fees and disbursements and (if applicable) reasonable, allocable internal overhead costs determined in accordance with normal bank operating procedures, or (D) if such contest shall involve the payment of the Tax prior to the contest, unless the Guarantor shall provide to such Tax Indemnitee an interest-free advance in an amount equal to the Imposition that such Tax Indemnitee is required to pay (with no additional net after-tax costs to such Tax Indemnitee). In addition, for contests controlled by such Tax Indemnitee and claims contested in the name of such Tax Indemnitee in a public forum, no contest shall be required: (A) unless the amount of the potential indemnity (taking into account all similar or logically related claims that have been or could be raised in any audit involving any or all such Tax Indemnitees Contest with respect to any period issue that recurs for which the Guarantor any Straddle Period or the Lessee may be liable to pay an indemnity under this Section 13.4(b)) exceeds (1) with respect to the Lessor, $25,000 and (2) with respect Post-Closing Period or any item resulting in a reciprocal adjustment to any Tax Indemnitee other than the Lessor, $75,000 and (B) unless, if requested by such Tax Indemnitee, the Guarantor shall have provided to such Tax Indemnitee an opinion of counsel selected by the Guarantor (which may be inStraddle Period or Post-house counsel) (except, in the case of income taxes indemnified hereunder, in which case such opinion shall be an opinion of independent tax counsel selected by the Guarantor and reasonably acceptable to such Tax Indemnitee) that a reasonable basis exists to contest such claim. In no event shall a Tax Indemnitee be required to appeal an adverse judicial determination to the United States Supreme Court. The party conducting the contest shall consult in good faith with the other party and its counsel with respect to the contest of such claim for Taxes (or claim for refund) but the decisions regarding what actions to be taken shall be made by the controlling party in its sole judgment; provided, however, that if such Tax Indemnitee is the controlling party and the Guarantor recommends the acceptance of a settlement offer made by the relevant Governmental Authority and such Tax Indemnitee rejects such settlement offer, then the amount for which a Lessee and the Guarantor will be required to indemnify such Tax Indemnitee with respect to the Taxes subject to such offer shall not exceed the amount which it would have owed if such settlement offer had been accepted provided that any Tax Indemnitee shall be entitled to reject any indemnity payment it would otherwise be entitled to hereunder if such Tax Indemnitee reasonably determines that accepting such offer would have an unindemnified impact on such Tax Indemnitee and provided further that no Tax Indemnitee may reject any such indemnity payment if the Guarantor agrees to pay to such Tax Indemnitee the amount of such unindemnified impact, as reasonably determined by such Tax Indemnitee. In addition, the controlling party shall keep the noncontrolling party reasonably informed as to the progress of the contest, and shall provide the noncontrolling party with a copy of (or appropriate excerpts from) any reports or claims issued by the relevant auditing agents or taxing authority to the controlling party thereof, in connection with such claim or the contest thereof, provided, however, that such obligation shall not obligate any Tax Indemnitee to disclose its tax returns or information or documentation unrelated to such claim or contest. Each Tax Indemnitee shall, at the expense of the Lessee and the Guarantor, supply the Lessee or the Guarantor with such information and documents reasonably requested by the Lessee or the Guarantor as are necessary or advisable for such Person to participate in any action, suit or proceeding to the extent permitted by this Section 13.4(b); provided, however, that such Tax Indemnitee shall not be required to provide to such Lessee or the Guarantor copies of its tax returns or any other information, documentation, or materials that it deems to be confidential or proprietary. Notwithstanding anything in this Section 13.4(b) to the contrary, no Tax Indemnitee shall enter into any settlement or other compromise or fail to appeal an adverse ruling with respect to any claim which is entitled to be indemnified under this Section 13.4 (and with respect to which contest is required under this Section 13.4(b)) Closing Period without the prior written consent of the GuarantorBuyer (which consent shall not be unreasonably withheld, unless conditioned or delayed). Buyer also may participate at its own expense in any such Tax Indemnitee waives Contest and, if Seller does not notify Buyer within 30 days of receiving notice of such Tax Contest pursuant to Section 5.15(e)(i) hereof of its right intent to assume the defense of such Tax Contest, Buyer may defend the same in such manner as it may deem appropriate, including, but not limited to, settling such Tax Contest after giving five days' prior written notice to Seller setting forth the terms and conditions of settlement.
(iii) In the case of a Tax Contest that relates to a Straddle Period, (x) each of Seller and Buyer may participate in the Tax Contest, and (y) the Tax Contest shall be indemnified under this Section 13.4 controlled by that party which would bear the burden of the greater portion of the adjustment (the "CONTROLLING PARTY"); PROVIDED that (a) the Controlling Party shall indemnify any Group Company in respect of all third-party costs and expenses incurred by such Group Company at the Controlling Party's request in connection with such Tax Contest, (b) the Controlling Party shall keep the other party informed of all material progress (and shall send such party copies of all material correspondence relating thereto) of the Tax Contest and (c) if Seller is the Controlling Party, Seller shall not enter into any compromise or agree to settle any claim pursuant to such Tax Contest with respect to such claim. Notwithstanding anything contained herein any issue that recurs for any Straddle Period or Post-Closing Period or any item resulting in a reciprocal adjustment to any Straddle Period or Post-Closing Period without the contrary, a Tax Indemnitee prior written consent of Buyer (which consent shall not be required to contest unreasonably withheld, conditioned or delayed). The principle set forth in clause (b) of the preceding sentence also shall govern for purposes of deciding any issue that must be decided jointly (in particular, choice of judicial forum) in situations in which separate issues are otherwise controlled hereunder by Buyer and neither Seller.
(iv) In the Lessee nor the Guarantor shall be permitted to contest in any judicial forum if such contest could, in case of a Tax Indemnitee's reasonable judgmentContest that relates to a Post-Closing Period, be materially adverse Buyer shall have the right at its expense to itcontrol the conduct of such Tax Contest.
(v) a Except as provided in paragraph (ii) above, neither Buyer nor Seller shall enter into any compromise or agree to settle any claim with respect pursuant to the imposition of any Tax if such Tax Indemnitee shall have waived its right to indemnification under this Section 13.4 with respect to such claim (and any claim with respect to Contest which would adversely affect the other party for such year or a subsequent year, or which would result in a payment under Section 5.15(d), without the written consent of the other party, which consent may not be unreasonably withheld. Buyer and Seller agree to cooperate, and Buyer agrees to cause CMI, CEL and any other taxable year of their Subsidiaries to cooperate, in the contest defense against or compromise of which is precluded or materially adversely affected as a result of such waiver)any claim in any Tax Contest.
Appears in 1 contract
Sources: Purchase and Sale Agreement (Crown Media Holdings Inc)
Contests. If any claim shall be made against any Tax Indemnitee or if any proceeding shall be commenced against any Tax Indemnitee (including a written notice of such proceeding) for any Imposition as to which the Lessee or the Guarantor reasonably may have an indemnity obligation pursuant to this Section 13.411.2, or if any Tax Indemnitee reasonably shall determine that any Imposition to for which the Lessee or the Guarantor may have an indemnity obligation pursuant to this Section 13.4 11.2 may be payable, such Tax LSI Logic Corporation Lease A Indemnitee shall promptly (and in any event, within fifteen (15) Business Days30 days) notify the Guarantor Lessee in writing (provided that failure to so notify the Guarantor Lessee within fifteen (15) Business Days 30 days shall not alter such Tax Indemnitee's rights under this Section 13.4 11.2, except to the extent such failure precludes or materially adversely affects the ability to conduct a contest of any indemnified TaxesImposition, in which case Lessee shall have no indemnification obligation hereunder to the extent such failure precludes or materially affects their ability to conduct a contest) and shall not take any action with respect to such claim, proceeding or Imposition without the written consent of the Guarantor Lessee (such consent not to be unreasonably withheld or unreasonably delayed) for thirty (30) 30 days after the receipt of such notice by the GuarantorLessee; provided, however, that in the case of any such claim or proceeding, if such Tax Indemnitee shall be required by law or regulation to take action prior to the end of such thirty (30) -day period, such Tax Indemnitee shall in such notice to the GuarantorLessee, so inform the GuarantorLessee, and such Tax Indemnitee shall not take any action with respect to such claim, proceeding or Imposition without the consent of the Guarantor Lessee (such consent not to be unreasonably withheld or unreasonably delayed) for ten (10) 10 days after the receipt of such notice by Lessee, unless the Guarantor unless such Tax Indemnitee shall be required by law or regulation to take action prior to the end of such ten (10) -day period. The Guarantor Lessee shall be entitled for a period of thirty (30) 30 days from receipt of such notice from such Tax the Indemnitee (or such shorter period as such Tax the Indemnitee has notified the Guarantor Lessee is required by law or regulation for such Tax the Indemnitee to commence such contest), to request in writing that such Tax Indemnitee contest the imposition in good faith of such TaxImposition, at the GuarantorLessee's expense. If (x) such contest can be pursued in the name of the Guarantor or the Lessee and independently from any other proceeding involving a Tax liability of such Tax Indemnitee an Imposition for which the Lessee and the Guarantor have has not agreed to indemnify such Tax Indemnitee, (y) such contest must be pursued in the name of such Tax the Indemnitee, but can be pursued independently from any other proceeding involving a Tax liability of such Tax Indemnitee an Imposition for which the Lessee and the Guarantor have has not agreed to indemnify such Tax Indemnitee or (z) such Tax the Indemnitee so requests, then the Guarantor or such Lessee shall be permitted to control the contest of such claim, provided that in the case of a contest described in any of clause (x), (y) or (z) if such Tax the Indemnitee determines reasonably and in good faith that such contest by the Guarantor or the Lessee reasonably could have a material adverse impact on the business or operations of such Tax the Indemnitee and provides a written explanation to the Guarantor Lessee of such determination, such Tax the Indemnitee may elect to control or reassert control of the contest, and provided provided, that the by taking control of the contest, Lessee acknowledges that it is responsible for the Imposition ultimately determined to be due by the Guarantor or the Lessee reason of any contest shall not alter the applicable Tax Indemnitee's rights to indemnification hereundersuch claim, and and; provided, further, that in determining the application of clauses (x) and (y) of the preceding sentence), each Tax Indemnitee shall take any and all reasonable steps to segregate claims for any Taxes Impositions for which the Lessee and the Guarantor indemnify indemnifies hereunder from Taxes Impositions for which the Lessee and the Guarantor are is not obligated to indemnify hereunder, so that the Guarantor Lessee can control the contest of the former. In all other claims requested to be contested by Lessee, the Guarantor, such Tax Indemnitee shall control the contest of such claim, acting through counsel selected by such Tax Indemnitee and reasonably acceptable to Lessee. In any contest controlled by an Indemnitee, the GuarantorIndemnitee shall conduct such contest in good faith. In no event shall the Guarantor Lessee be permitted to contest (or such Tax the Indemnitee be required to contest) any claim, claim (A) if such Tax Indemnitee provides the Guarantor Lessee with a legal opinion of independent counsel reasonably acceptable to the Guarantor that such action, suit or proceeding involves a material risk of imposition of criminal liability or will involve a material risk of the sale, forfeiture or loss of, or the creation of any Lien (other than a Permitted Lien) on the Property any Item or Items of Equipment or any part thereof or any other Lessee Collateral unless the Guarantor Lessee shall have posted and maintained a bond or other security reasonably satisfactory to the relevant Tax Indemnitee in respect to such risk, (B) if a Lease Event of Default has occurred and is continuing continuing, unless the Guarantor LSI Logic Corporation Lease A Lessee shall have posted and maintained a bond or other security reasonably satisfactory to the relevant Tax Indemnitee in respect of the Taxes Impositions subject to such claim and any and all expenses for which the Guarantor or the Lessee is responsible hereunder reasonably foreseeable in connection with the contest of such claim, (C) unless the Guarantor Lessee shall have agreed to pay and shall pay, pay to such Tax Indemnitee on written demand all reasonable, documented reasonable out-of-pocket costs, losses and expenses that such Tax Indemnitee may incur in connection with contesting such Imposition Imposition, including all reasonable legal, accounting and investigatory fees and disbursements and (if applicable) reasonable, allocable internal overhead costs determined in accordance with normal bank operating proceduresdisbursements, or (D) if such contest shall involve the payment of the Tax Impositions prior to the contest, unless the Guarantor Lessee shall provide to such Tax the Indemnitee an interest-free advance in an amount equal to the Imposition that such Tax the Indemnitee is required to pay (with no additional net after-tax costs (including Taxes) to such Tax Indemnitee). In addition, for Indemnitee-controlled contests controlled by such Tax Indemnitee and claims contested in the name of such Tax the Indemnitee in a public forum, no contest shall be required: (A) unless the amount of the potential indemnity (taking into account all similar or logically related claims that have been or could be raised in any audit involving any or all such Tax Indemnitees with respect to any period Indemnitee for which the Guarantor or the Lessee may be liable to pay an indemnity under this Section 13.4(b)11.2) exceeds (1) with respect to the Lessor, $25,000 and (2) with respect to any Tax Indemnitee other than the Lessor, $75,000 and (B) unless, if requested by such Tax the Indemnitee, the Guarantor Lessee shall have provided to such Tax the Indemnitee an opinion of counsel selected by the Guarantor (which may be in-house counsel) (except, in the case of income taxes indemnified hereunder, in which case such opinion shall be an opinion of independent tax counsel selected by the Guarantor and reasonably acceptable to such Tax Indemnitee) Lessee that a reasonable basis exists to contest such claim. In no event shall a Tax an Indemnitee be required to appeal an adverse judicial determination to the United States Supreme Court. The party conducting the contest shall consult in good faith with the other party and its counsel with respect to the contest of such claim for Taxes Impositions (or claim for refund) but the decisions regarding what actions to be taken shall be made by the controlling party in its sole judgmentjudgement; provided, however, that if the Indemnitee is the controlling party, no settlement offer with respect to such Tax claims shall be made or accepted by the Indemnitee without the prior consent of the Lessee (which consent shall not unreasonably be withheld), and; provided further, that if the Indemnitee is the controlling party and the Guarantor Lessee recommends the acceptance of a settlement offer made by the relevant Governmental Authority Agency and such Tax Indemnitee rejects such settlement offer, offer then the amount for which a Lessee and the Guarantor will be required to indemnify such Tax Indemnitee with respect to the Taxes subject to such offer shall not exceed the amount which it would have owed if such settlement offer had been accepted provided that any Tax Indemnitee shall be entitled to reject any indemnity payment it would otherwise be entitled to hereunder if such Tax Indemnitee reasonably determines that accepting such offer would have an unindemnified impact on such Tax Indemnitee and provided further that no Tax Indemnitee may reject any such indemnity payment if the Guarantor agrees to pay to such Tax Indemnitee the amount of such unindemnified impact, as reasonably determined by such Tax Indemniteeaccepted. In addition, the controlling party shall keep the noncontrolling party reasonably informed as to the progress of the contest, and shall provide the noncontrolling party with a copy of (or appropriate excerpts from) any reports or claims issued by the relevant auditing agents agent or taxing authority to the controlling party thereof, in connection with such claim or the contest thereof, provided, however, that such obligation shall not obligate any Tax Indemnitee to disclose its tax returns or information or documentation unrelated to such claim or contest. Each Tax Indemnitee shall, at the expense of the shall supply Lessee and the Guarantor, supply the Lessee or the Guarantor with such information and documents reasonably requested by the Lessee or the Guarantor as are is necessary or advisable for such Person Lessee to participate in any action, suit or proceeding to the extent permitted by this Section 13.4(b11.2(b); provided, however, that and Lessee shall promptly reimburse such Tax Indemnitee shall not be required to provide to for the reasonable out-of-pocket expenses of supplying such Lessee or the Guarantor copies of its tax returns or any other information, documentation, or materials that it deems to be confidential or proprietaryinformation and documents. Notwithstanding anything in this Section 13.4(b) to the contrary, no Tax No Indemnitee shall enter into any settlement or other compromise or fail to appeal an adverse ruling with respect to any claim which is entitled to be indemnified under this Section 13.4 11.2 (and with respect to which contest is required under this Section 13.4(b11.2(b)) without the prior written consent of the GuarantorLessee (such consent not to be unreasonably withheld), unless such Tax Indemnitee waives its right to be indemnified under this Section 13.4 11.2 with respect to such claim. Notwithstanding anything contained herein to the contrary, a Tax Indemnitee shall not be required to contest (and neither the Lessee nor the Guarantor shall be permitted to contest in any judicial forum if such contest could, in a Tax Indemnitee's reasonable judgment, be materially adverse to it) a claim with respect to the imposition of any Tax if such Tax Indemnitee shall have waived its right to indemnification under this Section 13.4 with respect to such claim (and any claim with respect to such year or any other taxable year the contest of which is precluded or materially adversely affected as a result of such waiver).
Appears in 1 contract
Contests. If any claim shall be made against any a Tax Indemnitee or if any proceeding shall be commenced against any Tax Indemnitee (including receives a written notice from any -------- taxing authority of such proceeding) a claim for any Imposition as to Tax for which the Lessee or the Guarantor Charterer may have an indemnity obligation pursuant to be liable under this Section 13.4, or if any 12.2 (a "Tax Indemnitee shall determine that any Imposition to which the Lessee or the Guarantor may have an indemnity obligation pursuant to this Section 13.4 may be payableClaim"), such Tax Indemnitee shall promptly (and in any event, within fifteen (15) Business Days) notify the Guarantor --------- Charterer promptly in writing of such Tax Claim. If requested by the Charterer in writing within twenty (provided that failure to so notify the Guarantor within fifteen (1520) Business Days shall not alter such Tax Indemnitee's rights under this Section 13.4 except to the extent such failure precludes or materially adversely affects the ability to conduct a contest of any indemnified Taxes) and shall not take any action with respect to such claim, proceeding or Imposition without the written consent of the Guarantor (such consent not to be unreasonably withheld or unreasonably delayed) for thirty (30) days after the receipt of such notice (or, if sooner, on or before the last day on which the contest of such Tax Claim can be initiated, provided that the Tax Indemnitee's notice to the Charterer discloses such date), such Tax Indemnitee shall, upon receipt of an indemnity satisfactory to it whereby the Charterer agrees to pay to such Tax Indemnitee all reasonable costs and expenses (including legal and accountants' fees and disbursements) incurred by such Tax Indemnitee in connection with contesting such Tax Claim and at the Guarantor; providedexpense of the Charterer, however, that in the case of any contest such claim or proceedingTax Claim by (1) resisting payment - thereof, if such Tax Indemnitee in its reasonable discretion shall determine such course of action to be appropriate, (2) not paying the same except under - protest, if protest is necessary and proper, and/or (3) if payment shall be required by law or regulation - made, using reasonable efforts to take action prior to the end of obtain a refund thereof in appropriate administrative and judicial proceedings. If such thirty (30) day period, such Tax Indemnitee shall in such notice to the Guarantor, so inform the Guarantor, and such Tax Indemnitee shall not take any action with respect to such claim, proceeding or Imposition without the consent contest requires payment of the Guarantor (such consent not Tax Claim as a condition precedent to be unreasonably withheld or unreasonably delayed) for ten (10) days after the receipt of such notice by the Guarantor unless such Tax Indemnitee shall be required by law or regulation to take action prior to the end of such ten (10) day period. The Guarantor shall be entitled for a period of thirty (30) days from receipt of such notice from such Tax Indemnitee (or such shorter period as such Tax Indemnitee has notified the Guarantor is required by law or regulation for such Tax Indemnitee to commence such contest), to request in writing that such Tax Indemnitee contest the imposition of such Tax, at the Guarantor's expense. If (x) such contest can be pursued in the name of the Guarantor or the Lessee and independently from any other proceeding involving a Tax liability of such Tax Indemnitee for which the Lessee and the Guarantor have not agreed to indemnify such Tax Indemnitee, (y) such contest must be pursued in the name of such Tax Indemnitee, but can be pursued independently from any other proceeding involving a Tax liability of such Tax Indemnitee for which the Lessee and the Guarantor have not agreed to indemnify such Tax Indemnitee or (z) such Tax Indemnitee so requests, then the Guarantor or such Lessee shall be permitted to control the contest of such claim, provided that in the case of a contest described in clause (y) if such Tax Indemnitee determines reasonably and in good faith that such contest by the Guarantor or the Lessee could have a material adverse impact on the business or operations of such Tax Indemnitee and provides a written explanation to the Guarantor of such determination, such Tax Indemnitee may elect to control or reassert control initiation of the contest, and provided that the taking control by the Guarantor or the Lessee of any contest Charterer shall not alter the applicable Tax Indemnitee's rights to indemnification hereunder, and provided, further, that in determining the application of clauses (x) and (y) of the preceding sentence, each Tax Indemnitee shall take any and all reasonable steps to segregate claims for any Taxes for which the Lessee and the Guarantor indemnify hereunder from Taxes for which the Lessee and the Guarantor are not obligated to indemnify hereunder, so that the Guarantor can control the contest of the former. In all other claims requested to be contested by the Guarantor, such Tax Indemnitee shall control the contest of such claim, acting through counsel selected by such Tax Indemnitee and reasonably acceptable to the Guarantor. In no event shall the Guarantor be permitted to contest (or such Tax Indemnitee be required to contest) any claim, (A) if such Tax Indemnitee provides the Guarantor with a legal opinion of counsel reasonably acceptable to the Guarantor that such action, suit or proceeding involves a risk of imposition of criminal liability or will involve a material risk of the sale, forfeiture or loss of, or the creation of any Lien (other than a Permitted Lien) on the Property or any part thereof unless the Guarantor shall have posted and maintained a bond or other security reasonably satisfactory to the relevant Tax Indemnitee in respect to such risk, (B) if a Lease Event of Default has occurred and is continuing unless the Guarantor shall have posted and maintained a bond or other security reasonably satisfactory to the relevant Tax Indemnitee in respect of the Taxes subject to such claim and any and all expenses for which the Guarantor or the Lessee is responsible hereunder reasonably foreseeable in connection with the contest of such claim, (C) unless the Guarantor shall have agreed to pay and shall pay, to such Tax Indemnitee on written demand all reasonable, documented out-of-pocket costs, losses and expenses that such Tax Indemnitee may incur in connection with contesting such Imposition including all reasonable legal, accounting and investigatory fees and disbursements and (if applicable) reasonable, allocable internal overhead costs determined in accordance with normal bank operating procedures, or (D) if such contest shall involve the payment of the Tax prior to the contest, unless the Guarantor shall provide to such Tax Indemnitee an interest-free advance in an amount equal to the Imposition that such Tax Indemnitee is required to pay (with no additional net after-tax costs to such Tax Indemnitee). In addition, for contests controlled by such Tax Indemnitee and claims contested in the name of such Tax Indemnitee in a public forum, no contest shall be required: (A) unless the amount of the potential indemnity (taking into account all similar or logically related claims that have been or could be raised in any audit involving any or all such Tax Indemnitees with respect to any period for which the Guarantor or the Lessee may be liable to pay an indemnity under this Section 13.4(b)) exceeds (1) with respect to the Lessor, $25,000 and (2) with respect to any Tax Indemnitee other than the Lessor, $75,000 and (B) unless, if requested by such Tax Indemnitee, the Guarantor shall have provided to such Tax Indemnitee an opinion of counsel selected by the Guarantor (which may be in-house counsel) (except, in the case of income taxes indemnified hereunder, in which case such opinion shall be an opinion of independent tax counsel selected by the Guarantor and reasonably acceptable to such Tax Indemnitee) that a reasonable basis exists to contest such claim. In no event shall a Tax Indemnitee be required to appeal an adverse judicial determination to the United States Supreme Court. The party conducting the contest shall consult in good faith with the other party and its counsel with respect to the contest of such claim for Taxes (or claim for refund) but the decisions regarding what actions to be taken shall be made by the controlling party in its sole judgment; provided, however, that if such Tax Indemnitee is the controlling party and the Guarantor recommends the acceptance of a settlement offer made by the relevant Governmental Authority and such Tax Indemnitee rejects such settlement offer, then the amount for which a Lessee and the Guarantor will be required to indemnify such Tax Indemnitee with respect to the Taxes subject to such offer shall not exceed the amount which it would have owed if such settlement offer had been accepted provided that any Tax Indemnitee shall be entitled to reject any indemnity payment it would otherwise be entitled to hereunder if such Tax Indemnitee reasonably determines that accepting such offer would have an unindemnified impact on such Tax Indemnitee and provided further that no Tax Indemnitee may reject any such indemnity payment if the Guarantor agrees to pay to such Tax Indemnitee the amount of such unindemnified impactTax Claim on an interest-free basis and shall indemnify the Tax Indemnitee on an After-Tax Basis for any adverse tax consequences resulting from such interest-free advance. In no event shall any Tax Indemnitee be required, as reasonably determined by or the Charterer permitted, to contest any such Tax IndemniteeClaim unless: (i) no Charter Event of - Default shall have occurred and be continuing (unless the Charterer shall have provided security reasonably satisfactory to such Tax Indemnitee securing the Charterer's performance of its obligations under this Section 12.2) and (ii) the action to -- be taken will not result in any risk of imposition of criminal penalties or any substantial danger of sale, forfeiture or loss of the Vessel or any interest therein. If requested by the Charterer and if permitted by applicable law, the Charterer may contest, at its own expense, the imposition of any Tax Claim. In additionany contest controlled by a Tax Indemnitee, such Tax Indemnitee will consult in good faith with the controlling party shall keep the noncontrolling party reasonably informed as Charterer and its counsel and submit to the progress Charterer and its counsel for review and comment, and consider in good faith any and all suggestions made with respect to, any document or other item to be submitted to a taxing authority or a court in connection with the contest and will permit the Charterer to participate in a reasonable manner in the conduct of the contest, and shall provide . Upon the noncontrolling party with a copy of (or appropriate excerpts from) any reports or claims issued by the relevant auditing agents or taxing authority to the controlling party thereof, in connection with such claim or the contest thereof, provided, however, that such obligation shall not obligate any Tax Indemnitee to disclose its tax returns or information or documentation unrelated to such claim or contest. Each Tax Indemnitee shall, at the expense written request of the Lessee and affected Tax Indemnitee, the Guarantor, supply the Lessee or the Guarantor with such information and documents reasonably requested by the Lessee or the Guarantor as are necessary or advisable for such Person to participate in any action, suit or proceeding to the extent permitted by this Section 13.4(b); provided, however, that Charterer will advise such Tax Indemnitee shall not be required of the status of any contest being conducted by the Charterer pursuant to provide to such Lessee or the Guarantor copies of its tax returns or any other information, documentation, or materials that it deems to be confidential or proprietary. Notwithstanding anything in this Section 13.4(b) to the contrary, no 12.2(e). No Tax Indemnitee shall offer, accept or enter into any a settlement or other compromise or fail to appeal an adverse ruling with respect to any claim which is entitled Tax Claim being contested pursuant to be indemnified under this Section 13.4 12.2(e), or forego or terminate any such contest, without the prior written consent of the Charterer (and with respect which consent shall not be unreasonably withheld based solely on the merits of the Tax Claim). Any refusal or failure by a Tax Indemnitee to which contest is a Tax Claim when required under this Section 13.4(b12.2(e), and any settlement or compromise or other discontinuance by a Tax Indemnitee of a contest of a Tax Claim required by this Section 12.2(e) without the prior written consent of the GuarantorCharterer when required under this Section 12.2(e), unless shall release and discharge the Charterer from any obligation to indemnify such Tax Indemnitee waives its right for such Tax Claim, and such Tax Indemnitee shall pay to be indemnified under the Charterer promptly any amounts previously paid or advanced by the Charterer pursuant to this Section 13.4 Agreement with respect to such claim. Notwithstanding anything contained herein to the contrary, a Tax Indemnitee shall not be required to contest Claim (and neither the Lessee nor the Guarantor shall be permitted to contest in any judicial forum if such contest could, in a Tax Indemnitee's reasonable judgment, be materially adverse to it) a claim other than amounts paid with respect to costs and expenses of the imposition of any Tax if such Tax Indemnitee shall have waived its right to indemnification under this Section 13.4 with respect to such claim (and any claim with respect to such year or any other taxable year the contest of which is precluded or materially adversely affected as a result of such waivercontest).
Appears in 1 contract
Sources: Participation Agreement (Mobil Corp)
Contests. If any claim shall be made against any Tax Indemnitee or if any proceeding shall be commenced against any Tax Indemnitee (including a written notice of such proceeding) for any Imposition as to which the Lessee or the Guarantor may have an indemnity obligation pursuant to this Section 13.4, or if any Tax Indemnitee shall determine that any Imposition to for which the Lessee or the Guarantor may have an indemnity obligation pursuant to this Section 13.4 may be payable, such Tax Indemnitee shall promptly (and in any event, within fifteen (15) Business Days) 30 days after a Responsible Officer of such Tax Indemnitee has actual knowledge thereof notify the Guarantor Lessee in writing (provided that failure to so notify the Guarantor Lessee within fifteen (15) Business Days 30 days after a Responsible Officer of such Tax Indemnitee has actual knowledge thereof shall not alter such Tax Indemnitee's ’s rights under this Section 13.4 13.4, except to the extent such failure precludes or materially adversely affects the ability to conduct a contest of any indemnified Taxes) and shall not take any action with respect to such claim, proceeding or Imposition without the written consent of the Guarantor Lessee (such consent not to be unreasonably withheld or unreasonably delayed) for thirty (30) 30 days after the receipt of such notice by the GuarantorLessee; provided, however, that in the case of any such claim or proceeding, if such Tax Indemnitee shall be required by law or regulation to take action prior to the end of such thirty (30) -day period, such Tax Indemnitee shall in such notice to the GuarantorLessee, so inform the GuarantorLessee, and such Tax Indemnitee shall not take any action with respect to such claim, proceeding or Imposition without the consent of the Guarantor Lessee (such consent not to be unreasonably withheld or unreasonably delayed) for ten (10) 10 days after the receipt of such notice by the Guarantor Lessee, unless such the Tax Indemnitee shall be required by law or regulation to take action prior to the end of such ten (10) -day period. The Guarantor Lessee shall be entitled for a period of thirty (30) 60 days from receipt of such notice from such the Tax Indemnitee (or such shorter period as such the Tax Indemnitee has notified the Guarantor Lessee is required by law or regulation for such the Tax Indemnitee to commence such contest), subject to request the immediately following sentence, to assume control of such contest or if such contest is of a type that must be pursued, if at all, in writing the name of such Tax Indemnitee, require that such Tax Indemnitee contest the imposition of pursue such Tax, at the Guarantor's expensecontest. If (x) such contest can be pursued in the name of the Guarantor or the Lessee and independently from any other proceeding involving a Tax liability of such Tax Indemnitee for which the Lessee and the Guarantor have has not agreed to indemnify such Tax Indemnitee, (y) such contest must be pursued in the name of such the Tax Indemnitee, but can be pursued independently from any other proceeding involving a Tax liability of such Tax Indemnitee for which the Lessee and the Guarantor have has not agreed to indemnify such Tax Indemnitee or (z) such the Tax Indemnitee so requests, then the Guarantor or such Lessee shall be permitted to control the contest of such claim, provided that in the case of a contest described in any of clause (x), (y) or (z) if such the Tax Indemnitee determines reasonably and in good faith that such contest by the Guarantor or the Lessee could have a material adverse impact effect on the business or operations of such the Tax Indemnitee and provides a written explanation to the Guarantor Lessee of such determination, such the Tax Indemnitee may elect to control or reassert control of the contest, and provided provided, that the by taking control of the contest, Lessee acknowledges that it is responsible for the Imposition ultimately determined to be due by the Guarantor or the Lessee reason of any contest shall not alter the applicable Tax Indemnitee's rights to indemnification hereundersuch claim, and provided, further, that in determining the application of clauses (x) and (y) of the preceding sentence, each Tax Indemnitee shall take any and all reasonable steps to segregate claims for any Taxes for which the Lessee and the Guarantor indemnify indemnifies hereunder from Taxes for which the Lessee and the Guarantor are is not obligated to indemnify hereunder, so that the Guarantor Lessee can control the contest of the former. In all other claims requested to be contested by the GuarantorLessee, such the Tax Indemnitee shall control the contest of such claim, acting through counsel selected by such Tax Indemnitee and of its selection reasonably acceptable to the GuarantorLessee. In no event shall the Guarantor Lessee be permitted to contest (or such the Tax Indemnitee be required to contest) any claim, (A) if such Tax Indemnitee provides the Guarantor Lessee with a legal opinion of independent counsel reasonably acceptable to the Guarantor that such action, suit or proceeding involves a risk of imposition of criminal liability or will involve a material risk of the sale, forfeiture or loss of, or the creation of any Lien (other than a Permitted Lien) on the Subject Property or any part of any thereof unless the Guarantor Lessee shall have posted and maintained a bond or other security reasonably satisfactory to the relevant Tax Indemnitee in respect to such risk, (B) if a Lease an Event of Default has occurred and is continuing continuing, unless the Guarantor Lessee shall have posted and maintained a bond or other security reasonably satisfactory to the relevant Tax Indemnitee in respect of the Taxes subject to such claim and any and all expenses for which the Guarantor or the Lessee is responsible hereunder reasonably foreseeable in connection with the contest of such claimhereunder, (C) unless the Guarantor Lessee shall have agreed to pay and shall pay, pay to such Tax Indemnitee on written demand all reasonable, documented reasonable out-of-pocket costs, losses and expenses that such Tax Indemnitee may incur in connection with contesting such Imposition Imposition, including all reasonable legal, accounting and investigatory fees and disbursements and (if applicable) reasonable, allocable internal overhead costs determined in accordance with normal bank operating proceduresas well as the Impositions which are the subject of such claim to the extent the contest is unsuccessful, or (D) if such contest shall involve the payment of the Tax prior to the contest, unless the Guarantor Lessee shall provide to such the Tax Indemnitee an interest-free advance in an amount equal to the Imposition that such Tax the Indemnitee is required to pay (with no additional net after-tax costs (including Taxes) to such Tax Indemnitee). In addition, addition for contests controlled by such Tax Indemnitee controlled contests and claims contested in the name of such the Tax Indemnitee in a public forum, no contest by a Tax Indemnitee shall be required: (A1) unless the amount of the potential indemnity (taking into account all similar or logically related claims that have been or could be raised in any audit involving any or all such Tax Indemnitees with respect to any period Indemnitee for which the Guarantor or the Lessee may be liable to pay an indemnity under this Section 13.4(b)) exceeds (1) with respect to the Lessor, $25,000 50,000 and (2) with respect to any Tax Indemnitee other than the Lessor, $75,000 and (B) unless, if requested by such the Tax Indemnitee, the Guarantor Lessee shall have provided to such the Tax Indemnitee an opinion of from counsel or a tax accountancy firm selected by the Guarantor (which may be in-house counsel) (except, in the case of income taxes indemnified hereunder, in which case such opinion shall be an opinion of independent tax counsel selected by the Guarantor Lessee and reasonably acceptable to such the Tax Indemnitee) Indemnitee confirming that a reasonable basis exists to contest such claimclaim (or in the case of an appeal of an adverse determination, an opinion of such counsel to the effect that it is more likely than not that the determination may be reversed on appeal). In no event shall a Tax Indemnitee be required to appeal an adverse judicial determination to the United States Supreme Court. The party conducting the contest shall consult in good faith with the other party and its counsel with respect to the contest of such claim for Taxes (or claim for refund) but the decisions regarding what actions to be taken shall be made by the controlling party in its sole judgment; provided, however, that if such Tax Indemnitee is the controlling party and the Guarantor recommends the acceptance of a settlement offer made by the relevant Governmental Authority and such Tax Indemnitee rejects such settlement offer, then the amount for which a Lessee and the Guarantor will be required to indemnify such Tax Indemnitee with respect to the Taxes subject to such offer shall not exceed the amount which it would have owed if such settlement offer had been accepted provided that any Tax Indemnitee shall be entitled to reject any indemnity payment it would otherwise be entitled to hereunder if such Tax Indemnitee reasonably determines that accepting such offer would have an unindemnified impact on such Tax Indemnitee and provided further that no Tax Indemnitee may reject any such indemnity payment if the Guarantor agrees to pay to such Tax Indemnitee the amount of such unindemnified impact, as reasonably determined by such Tax Indemnitee). In addition, the controlling party shall keep the noncontrolling party reasonably informed as to the progress of the contest, and shall provide the noncontrolling party with a copy of (or appropriate excerpts from) any reports or claims issued by the relevant auditing agents or taxing authority to the controlling party thereof, in connection with such claim or the contest thereof, provided, however, that such obligation shall not obligate any Tax Indemnitee to disclose its tax returns or information or documentation unrelated to such claim or contest. Each Tax Indemnitee shall, at the expense of the Lessee and the Guarantor, shall supply the Lessee or the Guarantor with such information and documents reasonably requested by the Lessee or the Guarantor as are necessary or advisable for such Person the Lessee to participate in any action, suit or proceeding to the extent permitted by this Section 13.4(b); provided, however, that and the Lessee shall promptly reimburse such Tax Indemnitee for the reasonable out-of-pocket expenses of supplying such information and documents. Except during the occurrence of an Event of Default where Lessee shall not be required have failed to provide indemnity and, if requested by an Indemnitee, collateral security, both in form, substance and in such amounts reasonably satisfactory to such Lessee or the Guarantor copies of its tax returns or any other information, documentation, or materials that it deems to be confidential or proprietary. Notwithstanding anything in this Section 13.4(b) to the contraryeach Indemnitee, no Tax Indemnitee shall enter into any settlement or other compromise or fail to appeal an adverse ruling with respect to any claim which is entitled to be indemnified under this Section 13.4 (and with respect to which contest is required under this Section 13.4(b)) without the prior written consent of the GuarantorLessee, unless such Tax Indemnitee waives its right to be indemnified under this Section 13.4 with respect to such claim. Notwithstanding anything contained herein to the contrary, a Tax Indemnitee shall will not be required to contest (and neither the Lessee nor the Guarantor shall not be permitted to contest in any judicial forum if such contest could, in a Tax Indemnitee's reasonable judgment, be materially adverse to itcontest) a claim with respect to the imposition of any Tax if (i) such Tax Indemnitee shall have waived waive its right to indemnification under this Section 13.4 with respect to such claim (and any claim with respect to such year or any other taxable year year, the contest of which is precluded or materially adversely affected as a result of such waiver) or (ii) such Tax is the sole result of a claim of a continuing and consistent nature, which claim has previously been resolved against the relevant Tax Indemnitee (unless a change in law or facts has occurred since such prior adverse resolution and Lessee provides an opinion of independent tax counsel to the effect that it is more likely than not that such change in law or facts will result in a favorable resolution of the claim at issue).
Appears in 1 contract
Contests. If any claim shall be made against any Tax Indemnitee or if any proceeding shall be commenced against any Tax Indemnitee (including a written notice of such proceeding) for any Imposition as to which the Lessee or the Guarantor may have an indemnity obligation pursuant to this Section 13.412.2, or if any Tax Indemnitee shall determine that any Imposition to which the Lessee or the Guarantor may have an indemnity obligation pursuant to this Section 13.4 12.2 may be payable, such Tax Indemnitee shall promptly (and in any eventshall, within fifteen thirty (1530) Business Days) days, notify the Guarantor Lessee in writing (provided that failure to so notify the Guarantor Lessee within fifteen thirty (1530) Business Days days shall not alter such Tax Indemnitee's rights under this Section 13.4 12.2 except to the extent such failure precludes or materially adversely affects prejudices the ability to conduct a contest of any indemnified TaxesImpositions) and shall not take any action with respect to such claim, proceeding or Imposition Impositions without the written consent of the Guarantor Lessee (such consent not to be unreasonably withheld or unreasonably delayed) for thirty sixty (3060) days after the receipt of such notice by the GuarantorLessee; provided, however, that in the case of any such claim or proceeding, if such Tax Indemnitee shall be required by law or regulation to take action prior to the end of such thirty (30) 60-day period, such Tax Indemnitee shall in such notice to the GuarantorLessee, so inform the GuarantorLessee, and such Tax Indemnitee shall not take any action with respect to such claim, proceeding or Imposition Impositions without the consent of the Guarantor Lessee (such consent not to be unreasonably withheld or unreasonably delayed) for ten (10) days after the receipt of such notice by the Guarantor Lessee unless such Tax Indemnitee shall be required by law or regulation to take action prior to the end of such ten (10) -day period; further provided that the failure of the Indemnitee to give notice referred to in this sentence shall not diminish Lessor's obligations hereunder except to the extent that such failure materially prejudices Lessee's ability to contest all or part of such Claim. The Guarantor Lessee shall be entitled for a period of thirty sixty (3060) days from receipt of such notice from such Tax Indemnitee (or such shorter period as such Tax Indemnitee has notified the Guarantor Lessee is required by law or regulation for such Tax Indemnitee to commence such contest), to request in writing that such Tax Indemnitee contest the imposition of such TaxImposition, at the GuarantorLessee's expense. If (x) such contest can be pursued in the name of the Guarantor or the Lessee and independently from any other proceeding involving a Tax liability of such Tax Indemnitee for which the Lessee and the Guarantor have has not agreed to indemnify such Tax Indemnitee, (y) such contest must be pursued in the name of such Tax Indemniteeinvolves Impositions imposed on SPC, but can be pursued independently from any other proceeding involving a Tax liability of such Tax Indemnitee for which the Lessee and the Guarantor have not agreed to indemnify such Tax Indemnitee or (z) such Tax Indemnitee so requests, then the Guarantor or such Lessee shall be permitted to control the contest of such claimclaim (including choice of counsel), provided provided, that in the case of a contest described in clause (y) if such Tax Indemnitee determines reasonably and in good faith that such contest by the Guarantor or the Lessee could have a material adverse impact on the business or operations of such Tax Indemnitee and provides a written explanation to the Guarantor of such determination, such Tax Indemnitee may elect to control or reassert taking control of the contest, and provided that the taking control by the Guarantor or the Lessee acknowledges that it is responsible for the Impositions ultimately determined to be due by reason of any contest shall not alter the applicable Tax Indemnitee's rights to indemnification hereunder, and provided, further, that in determining the application of clauses (x) and (y) of the preceding sentence, each Tax Indemnitee shall take any and all reasonable steps to segregate claims for any Taxes for which the Lessee and the Guarantor indemnify hereunder from Taxes for which the Lessee and the Guarantor are not obligated to indemnify hereunder, so that the Guarantor can control the contest of the formersuch claim. In all other claims requested to be contested by the GuarantorLessee, such Tax Indemnitee shall control the contest of such claim, acting through counsel selected by such Tax Indemnitee and reasonably acceptable to the GuarantorLessee. In no event shall the Guarantor Lessee be permitted to contest (or such Tax Indemnitee be required to contest) any claim, claim (A) if such Tax Indemnitee provides the Guarantor Lessee with a legal opinion of counsel reasonably acceptable to the Guarantor Lessee that such action, suit or proceeding involves a risk of imposition of criminal liability or will involve a material risk of the sale, forfeiture or loss of, or the creation of any Lien (other than a Permitted Lien) on the Property Interest or any part of any thereof unless the Guarantor Lessee shall have posted and maintained a bond or other security reasonably satisfactory to the relevant Tax Indemnitee in its sole discretion in respect to such risk, (B) if a Lease Event of Default has occurred and is continuing continuing, unless the Guarantor Lessee shall have posted and maintained a bond or other security reasonably satisfactory to the relevant Tax Indemnitee in its sole discretion in respect of the Taxes Impositions subject to such claim and any and all expenses for which the Guarantor or the Lessee is responsible hereunder is reasonably foreseeable in connection with the contest of such claim, (C) unless the Guarantor Lessee shall have agreed to pay and shall pay, to such Tax Indemnitee on written demand all reasonable, documented reasonable out-of-pocket costs, losses and expenses that such Tax Indemnitee may incur in connection with contesting such Imposition Impositions including all reasonable legal, accounting and investigatory fees and disbursements and (if applicable) reasonable, allocable internal overhead costs determined in accordance with normal bank operating proceduresdisbursements, or (D) if such contest shall involve the payment of the Tax Impositions prior to the contest, unless the Guarantor Lessee shall provide to such Tax Indemnitee an interest-free advance in an amount equal to the Imposition Impositions that such Tax the Indemnitee is required to pay (with no additional net after-tax costs to such Tax Indemnitee). In addition, for Indemnitee controlled contests controlled by such Tax Indemnitee and claims contested in the name of such Tax Indemnitee in a public forumIndemnitee, no contest shall be required: (A) unless the amount of the potential indemnity (taking into account all similar or logically related claims that have been or could be raised in any audit involving any or all such Tax Indemnitees Indemnitee with respect to any period for which the Guarantor or the Lessee may be liable to pay an indemnity under this Section 13.4(b12.2(b)) exceeds (1) with respect to the Lessor$20,000, $25,000 and (2) with respect to any Tax Indemnitee other than the Lessor, $75,000 and (B) unless, if requested by such Tax Indemnitee, the Guarantor Lessee shall have provided to such Tax Indemnitee an opinion of counsel selected by the Guarantor (which may be in-house counsel) Lessee and reasonably acceptable to such Indemnitee (except, in the case of income taxes indemnified hereunder, in which case such opinion shall be an opinion of independent tax counsel selected by the Guarantor such Indemnitee and reasonably acceptable to such Tax Indemniteethe Lessee) that a reasonable basis exists to contest such claimclaim (or, in the case of an appeal of an adverse determination, an opinion of such counsel to the effect that there is substantial authority for the position asserted in such appeal), and (C) Lessee shall have acknowledged in writing to the Indemnitee its obligation to pay the costs and expenses thereof and to indemnify such Indemnitee pursuant to this Section 12.2 for the Impositions subject to the proposed contest, if such contest is unsuccessful. In no event shall a Tax an Indemnitee be required to appeal an adverse judicial determination to the United States Supreme Court. In addition, an Indemnitee shall not be required to contest any claim in its name (or that of an Affiliate) if the subject matter thereof shall be of a continuing nature and shall have previously been decided adversely by a court of competent jurisdiction against such Indemnitee pursuant to the contest provisions of this Section 12.2(b), unless there shall have been a change in law (or interpretation thereof) and the Indemnitee shall have received, at the Lessee's expense, an opinion of independent tax counsel selected by the Lessee and reasonably acceptable to the Indemnitee stating that as a result of such change in law (or interpretation thereof), it is more likely than not that the Indemnitee will prevail in such contest. The party conducting the contest shall consult in good faith with the other party and its counsel with respect to the contest of such claim for Taxes (or claim for refund) Impositions but the decisions regarding what actions to be taken shall be made by the controlling party in its sole judgment; provided, however, that if such Tax Indemnitee is the controlling party and the Guarantor recommends the acceptance of a settlement offer made by the relevant Governmental Authority and such Tax Indemnitee rejects such settlement offer, then the amount for which a Lessee and the Guarantor will be required to indemnify such Tax Indemnitee with respect to the Taxes subject to such offer shall not exceed the amount which it would have owed if such settlement offer had been accepted provided that any Tax Indemnitee shall be entitled to reject any indemnity payment it would otherwise be entitled to hereunder if such Tax Indemnitee reasonably determines that accepting such offer would have an unindemnified impact on such Tax Indemnitee and provided further that no Tax Indemnitee may reject any such indemnity payment if the Guarantor agrees to pay to such Tax Indemnitee the amount of such unindemnified impact, as reasonably determined by such Tax Indemnitee. In addition, the controlling party shall keep the noncontrolling non-controlling party reasonably informed as to the progress of the contest, and shall provide the noncontrolling non-controlling party with a copy of (or appropriate excerpts from) any reports or claims issued by the relevant auditing agents or taxing authority to the controlling party thereof, in connection with such claim or the contest thereof, provided, however, that such obligation shall not obligate any Tax Indemnitee to disclose its tax returns or information or documentation unrelated to such claim or contest. Each Tax Indemnitee shall, at the expense of the Lessee and the GuarantorLessee's expense, supply the Lessee or the Guarantor with such information and documents reasonably requested by the Lessee or the Guarantor as are necessary or advisable for such Person the Lessee to participate in any action, suit or proceeding to the extent permitted by this Section 13.4(b12.2(b); provided, however, that such Tax Indemnitee shall not be required to provide to such Lessee or the Guarantor copies of its tax returns or any other information, documentation, or materials that it deems to be confidential or proprietary. Notwithstanding anything in this Section 13.4(b12.2(b) to the contrary, no Tax Indemnitee shall enter into any settlement or other compromise or fail to appeal an adverse ruling with respect to any claim which is entitled to be indemnified under this Section 13.4 12.2 (and with respect to which contest is required under this Section 13.4(b12.2(b)) without the prior written consent of the GuarantorLessee, unless such Tax Indemnitee waives its right to be indemnified under this Section 13.4 12.2 with respect to such claim. No settlement of any contest may be made by the Lessee without the Indemnitee's written consent, which consent shall not be unreasonably withheld, provided, however, such consent shall not be necessary if the settlement does not involve (i) the admission by the Indemnitee of guilt, complicity or culpability or (ii) the incurrence of any payment obligation or other civil or any criminal liability on the part of such Indemnitee. Notwithstanding anything contained herein to the contrary, a Tax an Indemnitee shall will not be required to contest (and neither the Lessee nor the Guarantor shall not be permitted to contest in any judicial forum if such contest could, in a Tax Indemnitee's reasonable judgment, be materially adverse to itcontest) a claim with respect to the imposition of any Tax if such Tax Indemnitee shall have waived waive its right to indemnification under this Section 13.4 12.2 with respect to such claim (and any claim with respect to such year or any other taxable year the contest of which is precluded or materially adversely affected as a result of such waiver).
Appears in 1 contract
Contests. (i) If any claim shall be made against any Tax Indemnitee or if any proceeding shall be commenced against any Tax Indemnitee (including Governmental Body asserts a written Claim with respect to Taxes, then the party hereto first receiving notice of such proceeding) for any Imposition as Claim promptly shall provide written notice thereof to which the Lessee or the Guarantor may have an indemnity obligation pursuant to this Section 13.4, or if any Tax Indemnitee shall determine party that any Imposition to which the Lessee or the Guarantor may have an indemnity obligation pursuant to this Section 13.4 may be payableresponsible for such Taxes under this Agreement; PROVIDED, HOWEVER, that the failure of such Tax Indemnitee shall promptly (and in any event, within fifteen (15) Business Days) notify the Guarantor in writing (provided that failure party to so notify the Guarantor within fifteen (15) Business Days give such prompt notice shall not alter such Tax Indemnitee's rights under this Section 13.4 relieve the other party of any of its obligations hereunder, except to the extent that the other party is actually prejudiced thereby. Such notice shall specify in reasonable detail the basis for such failure precludes or materially adversely affects Claim and shall include a copy of the ability to conduct a contest relevant portion of any indemnified Taxescorrespondence received from the Governmental Body.
(ii) Notwithstanding anything contained in this Agreement to the contrary, but subject to Section 2.16(e), neither GE nor Crompton shall have the right to participate in any defense, settlement or compromise of a Third Party Claim (A) that the other party is defending and (B) that relates exclusively to Taxes (other than Taxes relating to the Acquired OSi Subsidiaries to the extent such matters are otherwise addressed in Section 9.2(d)(iii)-(v)) for which the other party is responsible, without such party's express written consent.
(iii) Crompton shall have the exclusive right to control, at its own expense, any audit, examination, contest, litigation or other proceeding by or against any taxing authority (a "TAX PROCEEDING") in respect of any Acquired OSi Subsidiary for any Pre-Closing Tax Period other than a Tax Proceeding relating to a Straddle Period Return; provided, however, that Crompton shall not take settle or compromise any action with respect to such claim, proceeding or Imposition Tax 156 Proceeding if it would adversely affect such Acquired OSi Subsidiary in any Post-Closing Tax Period without the prior written consent of the Guarantor GE (such consent not to be unreasonably withheld or unreasonably delayed). For purposes of this paragraph, settling or compromising a Tax Proceeding on a basis consistent with a position previously taken on the relevant Tax return to which such proceeding relates shall not be deemed to have an adverse effect on an Acquired OSi Subsidiary in a Post-Closing Tax Period.
(iv) In the case of a Tax Proceeding relating to a Straddle Period Return of any Acquired OSi Subsidiary with respect to which Crompton could have responsibility for thirty Taxes pursuant to this Agreement, (30A) days after GE shall control, at its own expense, such Tax Proceeding and (B) Crompton shall have the receipt right (but not the obligation) to participate, at its own expense, in such Tax Proceeding. In the event Crompton elects to participate in such Tax Proceeding, (A) GE shall provide Crompton with a timely and reasonably detailed account of each phase of such notice Tax Proceeding, (B) GE shall consult with Crompton before taking any significant action in connection with such Tax Proceeding, (C) GE shall consult with Crompton and offer Crompton an opportunity to comment before submitting any written materials prepared or furnished in connection with such Tax Proceeding, (D) Crompton shall be entitled to participate in any meetings with a Governmental Body relating to such Tax Proceeding, (E) GE shall defend such Tax Proceeding diligently and in good faith as if it were the only party in interest, and (F) GE shall not settle, compromise or abandon any such Tax Proceeding without obtaining the prior written consent of Crompton, which consent shall not be unreasonably withheld or delayed. Any dispute relating to the defense, settlement or compromise of any such Tax Proceeding shall be resolved by the GuarantorIndependent Arbitrator. The Independent Arbitrator's determination shall be final and binding upon the parties and its expenses shall be borne equally by the parties.
(v) GE shall have the exclusive right to control, at its own expense, any Tax Proceeding in respect of any Acquired OSi Subsidiary other than a Tax Proceeding described in Section 9.2(d)(iii) or (iv); provided, however, that in the case of GE shall not settle or compromise any such claim or proceeding, Tax Proceeding if it would adversely affect such Acquired OSi Subsidiary for any Pre-Closing Tax Indemnitee shall be required by law or regulation to take action prior to Period for which the end relevant statute of such thirty (30) day period, such Tax Indemnitee shall in such notice to the Guarantor, so inform the Guarantor, and such Tax Indemnitee shall limitations on assessment has not take any action with respect to such claim, proceeding or Imposition yet expired without the prior written consent of the Guarantor Crompton (such consent not to be unreasonably withheld or unreasonably delayed) for ten (10) days after the receipt ). For purposes of such notice by the Guarantor unless such Tax Indemnitee shall be required by law this paragraph, settling or regulation to take action prior to the end of such ten (10) day period. The Guarantor shall be entitled for a period of thirty (30) days from receipt of such notice from such Tax Indemnitee (or such shorter period as such Tax Indemnitee has notified the Guarantor is required by law or regulation for such Tax Indemnitee to commence such contest), to request in writing that such Tax Indemnitee contest the imposition of such Tax, at the Guarantor's expense. If (x) such contest can be pursued in the name of the Guarantor or the Lessee and independently from any other proceeding involving compromising a Tax liability of such Tax Indemnitee for which the Lessee and the Guarantor have not agreed to indemnify such Tax Indemnitee, (y) such contest must be pursued in the name of such Tax Indemnitee, but can be pursued independently from any other proceeding involving Proceeding on a Tax liability of such Tax Indemnitee for which the Lessee and the Guarantor have not agreed to indemnify such Tax Indemnitee or (z) such Tax Indemnitee so requests, then the Guarantor or such Lessee shall be permitted to control the contest of such claim, provided that in the case of a contest described in clause (y) if such Tax Indemnitee determines reasonably and in good faith that such contest by the Guarantor or the Lessee could have a material adverse impact on the business or operations of such Tax Indemnitee and provides a written explanation to the Guarantor of such determination, such Tax Indemnitee may elect to control or reassert control of the contest, and provided that the taking control by the Guarantor or the Lessee of any contest shall not alter the applicable Tax Indemnitee's rights to indemnification hereunder, and provided, further, that in determining the application of clauses (x) and (y) of the preceding sentence, each Tax Indemnitee shall take any and all reasonable steps to segregate claims for any Taxes for which the Lessee and the Guarantor indemnify hereunder from Taxes for which the Lessee and the Guarantor are not obligated to indemnify hereunder, so that the Guarantor can control the contest of the former. In all other claims requested to be contested by the Guarantor, such Tax Indemnitee shall control the contest of such claim, acting through counsel selected by such Tax Indemnitee and reasonably acceptable to the Guarantor. In no event shall the Guarantor be permitted to contest (or such Tax Indemnitee be required to contest) any claim, (A) if such Tax Indemnitee provides the Guarantor basis consistent with a legal opinion of counsel reasonably acceptable to the Guarantor that such action, suit or proceeding involves a risk of imposition of criminal liability or will involve a material risk of the sale, forfeiture or loss of, or the creation of any Lien (other than a Permitted Lien) position previously taken on the Property or any part thereof unless the Guarantor shall have posted and maintained a bond or other security reasonably satisfactory to the relevant Tax Indemnitee in respect return to which such risk, (B) if a Lease Event of Default has occurred and is continuing unless the Guarantor shall have posted and maintained a bond or other security reasonably satisfactory to the relevant Tax Indemnitee in respect of the Taxes subject to such claim and any and all expenses for which the Guarantor or the Lessee is responsible hereunder reasonably foreseeable in connection with the contest of such claim, (C) unless the Guarantor shall have agreed to pay and shall pay, to such Tax Indemnitee on written demand all reasonable, documented out-of-pocket costs, losses and expenses that such Tax Indemnitee may incur in connection with contesting such Imposition including all reasonable legal, accounting and investigatory fees and disbursements and (if applicable) reasonable, allocable internal overhead costs determined in accordance with normal bank operating procedures, or (D) if such contest shall involve the payment of the Tax prior to the contest, unless the Guarantor shall provide to such Tax Indemnitee an interest-free advance in an amount equal to the Imposition that such Tax Indemnitee is required to pay (with no additional net after-tax costs to such Tax Indemnitee). In addition, for contests controlled by such Tax Indemnitee and claims contested in the name of such Tax Indemnitee in a public forum, no contest shall be required: (A) unless the amount of the potential indemnity (taking into account all similar or logically related claims that have been or could be raised in any audit involving any or all such Tax Indemnitees with respect to any period for which the Guarantor or the Lessee may be liable to pay an indemnity under this Section 13.4(b)) exceeds (1) with respect to the Lessor, $25,000 and (2) with respect to any Tax Indemnitee other than the Lessor, $75,000 and (B) unless, if requested by such Tax Indemnitee, the Guarantor shall have provided to such Tax Indemnitee an opinion of counsel selected by the Guarantor (which may be in-house counsel) (except, in the case of income taxes indemnified hereunder, in which case such opinion shall be an opinion of independent tax counsel selected by the Guarantor and reasonably acceptable to such Tax Indemnitee) that a reasonable basis exists to contest such claim. In no event shall a Tax Indemnitee be required to appeal an adverse judicial determination to the United States Supreme Court. The party conducting the contest shall consult in good faith with the other party and its counsel with respect to the contest of such claim for Taxes (or claim for refund) but the decisions regarding what actions to be taken shall be made by the controlling party in its sole judgment; provided, however, that if such Tax Indemnitee is the controlling party and the Guarantor recommends the acceptance of a settlement offer made by the relevant Governmental Authority and such Tax Indemnitee rejects such settlement offer, then the amount for which a Lessee and the Guarantor will be required to indemnify such Tax Indemnitee with respect to the Taxes subject to such offer shall not exceed the amount which it would have owed if such settlement offer had been accepted provided that any Tax Indemnitee shall be entitled to reject any indemnity payment it would otherwise be entitled to hereunder if such Tax Indemnitee reasonably determines that accepting such offer would have an unindemnified impact on such Tax Indemnitee and provided further that no Tax Indemnitee may reject any such indemnity payment if the Guarantor agrees to pay to such Tax Indemnitee the amount of such unindemnified impact, as reasonably determined by such Tax Indemnitee. In addition, the controlling party shall keep the noncontrolling party reasonably informed as to the progress of the contest, and shall provide the noncontrolling party with a copy of (or appropriate excerpts from) any reports or claims issued by the relevant auditing agents or taxing authority to the controlling party thereof, in connection with such claim or the contest thereof, provided, however, that such obligation shall not obligate any Tax Indemnitee to disclose its tax returns or information or documentation unrelated to such claim or contest. Each Tax Indemnitee shall, at the expense of the Lessee and the Guarantor, supply the Lessee or the Guarantor with such information and documents reasonably requested by the Lessee or the Guarantor as are necessary or advisable for such Person to participate in any action, suit or proceeding to the extent permitted by this Section 13.4(b); provided, however, that such Tax Indemnitee relates shall not be required deemed to provide to such Lessee or the Guarantor copies of its tax returns or any other information, documentation, or materials that it deems to be confidential or proprietary. Notwithstanding anything in this Section 13.4(b) to the contrary, no Tax Indemnitee shall enter into any settlement or other compromise or fail to appeal have an adverse ruling with respect to any claim which is entitled to be indemnified under this Section 13.4 (and with respect to which contest is required under this Section 13.4(b)) without the prior written consent of the Guarantor, unless such Tax Indemnitee waives its right to be indemnified under this Section 13.4 with respect to such claim. Notwithstanding anything contained herein to the contrary, a Tax Indemnitee shall not be required to contest (and neither the Lessee nor the Guarantor shall be permitted to contest in any judicial forum if such contest could, effect on an Acquired OSi Subsidiary in a Pre-Closing Tax Indemnitee's reasonable judgment, be materially adverse to it) a claim with respect to the imposition of any Tax if such Tax Indemnitee shall have waived its right to indemnification under this Section 13.4 with respect to such claim (and any claim with respect to such year or any other taxable year the contest of which is precluded or materially adversely affected as a result of such waiver)Period.
Appears in 1 contract
Contests. If any written claim shall be made against any Tax Indemnitee or if any proceeding shall be commenced against any Tax Indemnitee (including a written notice of such proceeding) for any Imposition Taxes as to which the Lessee or the Guarantor may have an indemnity obligation pursuant to this Section 13.4, or if any Tax Indemnitee shall determine that any Imposition to which the Lessee or the Guarantor may have an indemnity obligation pursuant to this Section 13.4 may be payable8.2, such Tax Indemnitee shall promptly (and in any event, within fifteen (15) Business Days) notify the Guarantor Lessee in writing (provided that failure to so notify the Guarantor within fifteen (15) Business Days shall not alter such Tax Indemnitee's rights under this Section 13.4 except to the extent such failure precludes or materially adversely affects the ability to conduct a contest of any indemnified Taxes) and shall not take any action with respect to such claim, proceeding claim or Imposition Tax without the written consent of the Guarantor Lessee (such consent not to be unreasonably withheld or unreasonably delayedwithheld) for thirty (30) 30 days after the receipt of such notice by the GuarantorLessee; provided, however, that that, in the case of any such claim or proceeding, if such Tax Indemnitee shall be required by law or regulation to take action prior to the end of such thirty (30) 30 day period, such Tax Indemnitee shall shall, in such notice to the GuarantorLessee, so inform the GuarantorLessee, and such Tax Indemnitee shall not take any action with respect to such claim, proceeding claim or Imposition Tax without the consent of the Guarantor Lessee (such consent not to be unreasonably withheld or unreasonably delayedwithheld) for ten (10) before 10 days after from the receipt of such notice by Lessee unless the Guarantor unless such Tax Indemnitee shall be required by law or regulation to take action prior to the end of such ten (10) 10 day period. The Guarantor failure of a Tax Indemnitee to give Lessee prompt written notice pursuant to this Section 8.2(e) of any such claim or to otherwise meet its obligations under this Section 8.2 shall not affect Lessee's obligation hereunder to the Tax Indemnitee unless such failure effectively precludes the Lessee from contesting such claim or any related claim. Provided no Special Default or Lease Event of Default shall have occurred and be entitled continuing (unless the Lessee has provided reasonably satisfactory security for its obligations in respect of a period of thirty (30) days from receipt of such notice from contest), if requested by Lessee in a written request to such Tax Indemnitee within 30 days (or such shorter period as such Tax Indemnitee has notified referred to in the Guarantor is required by law or regulation for such Tax Indemnitee proviso to commence such contestthe first sentence in this Section 8.2(e) (but in any event not less than 10 days), to request in writing that such Tax Indemnitee contest the imposition ) after its receipt of such Tax, at the Guarantor's expense. If (x) such contest can be pursued in the name of the Guarantor or the Lessee and independently from any other proceeding involving a Tax liability of such Tax Indemnitee for which the Lessee and the Guarantor have not agreed to indemnify such Tax Indemnitee, (y) such contest must be pursued in the name of such Tax Indemnitee, but can be pursued independently from any other proceeding involving a Tax liability of such Tax Indemnitee for which the Lessee and the Guarantor have not agreed to indemnify such Tax Indemnitee or (z) such Tax Indemnitee so requests, then the Guarantor or such Lessee shall be permitted to control the contest of such claim, provided that in the case of a contest described in clause (y) if such Tax Indemnitee determines reasonably and in good faith that such contest by the Guarantor or the Lessee could have a material adverse impact on the business or operations of such Tax Indemnitee and provides a written explanation to the Guarantor of such determination, such Tax Indemnitee may elect to control or reassert control of the contest, and provided that the taking control by the Guarantor or the Lessee of any contest shall not alter the applicable Tax Indemnitee's rights to indemnification hereunder, and provided, further, that in determining the application of clauses (x) and (y) of the preceding sentence, each Tax Indemnitee shall take any and all reasonable steps to segregate claims for any Taxes for which the Lessee and the Guarantor indemnify hereunder from Taxes for which the Lessee and the Guarantor are not obligated to indemnify hereunder, so that the Guarantor can control the contest of the former. In all other claims requested to be contested by the Guarantornotice, such Tax Indemnitee shall control at the expense of Lessee in good faith contest (including, without limitation, by pursuit of such claimappeals and administrative procedures) (or, acting through counsel selected if permitted by Applicable Law (and such Tax Indemnitee determines in good faith that permitting such contest to be controlled by the Lessee would not materially adversely affect such Tax Indemnitee, permit the Lessee to contest in its own name (a "Lessee-Controlled Contest")), the validity, applicability or amount of such Taxes by (i) resisting payment thereof, (ii) not paying the same except under protest, if protest shall be necessary and reasonably acceptable proper or (iii) if payment shall be made, using reasonable efforts to the Guarantor. In obtain a refund thereof in appropriate administrative and/or judicial proceedings; provided, however, that in no event shall the Guarantor be permitted to contest (or such Tax Indemnitee be required to contestcontest or permit Lessee to contest any claim for any Tax unless (u) any claimin the case of the Lessee-Controlled Contest, the Lessee shall have provided the relevant Tax Indemnitee with a written acknowledgment of its obligation to indemnify the Tax Indemnitee to the extent the contest is not successful, (Av) if Lessee shall have agreed in writing to pay such Tax Indemnitee provides the Guarantor with a legal opinion of counsel reasonably acceptable to the Guarantor and shall pay on an After-Tax Basis as incurred all reasonable costs and expenses that such actionTax Indemnitee shall incur in connection with contesting such claim (including, suit or proceeding involves a risk without limitation, all reasonable costs, expenses, legal and accounting fees and disbursements); (w) such Tax Indemnitee and the Lessor (if it is not the Tax Indemnitee) shall have reasonably determined that the action to be taken will not result in any material danger of imposition of criminal liability or will involve a material risk of the sale, forfeiture or loss of, or the creation of any Lien (other than except if Lessee shall have adequately bonded such Lien or otherwise made provision to protect the interests of such Tax Indemnitee and the Lessor in a Permitted Lienmanner reasonably satisfactory to such Tax Indemnitee and the Lessor) on the any Property or any part thereof unless the Guarantor shall have posted interest therein and maintained a bond or other security reasonably satisfactory to the relevant Tax Indemnitee in that there is no risk of criminal liability that may be imposed with respect to such risk, Tax Indemnitee; (Bx) if a Lease Event such contest shall require the payment of Default has occurred and is continuing unless the Guarantor claim, Lessee shall have posted and maintained a bond or other security reasonably satisfactory advance the amount thereof plus (to the relevant Tax Indemnitee in extent indemnified under Section 8.2(a) hereof) interest, penalties and additions to tax with respect of the Taxes subject to such claim and any and all expenses for which the Guarantor or the Lessee is responsible hereunder reasonably foreseeable in connection with the contest of such claim, (C) unless the Guarantor shall have agreed to pay and shall pay, thereto to such Tax Indemnitee on written demand all reasonable, documented out-of-pocket costs, losses and expenses that such Tax Indemnitee may incur in connection with contesting such Imposition including all reasonable legal, accounting and investigatory fees and disbursements and (if applicable) reasonable, allocable internal overhead costs determined in accordance with normal bank operating procedures, or (D) if such contest shall involve the payment of the Tax prior to the contest, unless the Guarantor shall provide to such Tax Indemnitee an interest-interest free advance in an amount equal to the Imposition that such Tax Indemnitee is required to pay basis (with no additional net after-tax costs cost to such Tax Indemnitee). In addition, for contests controlled by such Tax Indemnitee and claims contested in the name of such Tax Indemnitee in a public forum, no contest shall be required: (A) unless the amount of the potential indemnity (but taking into account all similar or logically related claims that have been or could be raised in any audit involving any or all net tax savings associated with such Tax Indemnitees with respect to any period for which advance); (y) if the Guarantor or contest is not the Lessee may be liable to pay an indemnity under this Section 13.4(b)) exceeds (1) with respect to the LessorLessee-Controlled Contest, $25,000 and (2) with respect to any Tax Indemnitee other than the Lessor, $75,000 and (B) unless, then if requested in writing by such the Tax Indemnitee, the Guarantor Tax Indemnitee shall have been provided to such Tax Indemnitee an opinion of counsel selected by the Guarantor (which may be in-house counsel) (except, in the case of income taxes indemnified hereunder, in which case such opinion shall be with an opinion of independent tax counsel selected by the Guarantor Tax Indemnitee and reasonably acceptable to such Tax Indemnitee) the Lessee, which opinion shall be furnished at Lessee's sole cost and expense, to the effect that there is a reasonable basis exists to contest for contesting such claim. In no event shall a Tax Indemnitee be required to appeal an adverse judicial determination to the United States Supreme Court. The party conducting ; and (z) if the contest shall consult in good faith with is not the other party and its counsel with respect to Lessee-Controlled Contest, the contest amount of such claim for Taxes (exceeds $37,500. Upon a final determination of such contest or claim for refund) but the decisions regarding what actions to be taken shall be made receipt of a refund by the controlling party in its sole judgment; provided, however, that if such Tax Indemnitee is the controlling party and the Guarantor recommends the acceptance of a settlement offer made by the relevant Governmental Authority and such Tax Indemnitee rejects such settlement offer, then the amount for which a Lessee and the Guarantor will be required to indemnify such Tax Indemnitee with respect to contested liability as to which an advance has been made, the Taxes subject to such offer shall not exceed the amount which it would have owed if such settlement offer had been accepted provided that any Tax Indemnitee shall (without duplicating any payment required under the other paragraphs of this Section 8.2(e)) offset such interest-free advance previously made with respect to the contested liability against the full amount then due to the Tax Indemnitee, if any, pursuant to the provisions of this Section 8.2, and either (1) the Lessee shall pay to the Tax Indemnitee, within 30 days thereafter, the excess, if any, of such full amount then due over such interest-free advance, or (2) the Tax Indemnitee shall repay to the Lessee, within 30 days thereafter, (A) any excess of such interest-free loans over such full amount then due plus (B) any further net savings of income taxes actually realized by the Tax Indemnitee as a result of any such payment; provided that this sentence shall not require any duplication of payments required under other paragraphs of this Section 8.2(e)). In the event Lessee has complied with the foregoing, the Tax Indemnitee shall not be entitled to reject settle, compromise or pay such Tax so long as the defense is being conducted in good faith. Notwithstanding anything contained in this Section 8.2, a Tax Indemnitee shall not be required to contest any indemnity payment it would otherwise be entitled claim or permit Lessee to hereunder contest any claim and may settle any contest without the consent of Lessee if such Tax Indemnitee reasonably determines (A) shall waive its right to indemnity under this Section 8.2 with respect to such claim for such Tax (and any claim made by any taxing authority with respect to other taxable periods that accepting is based, in whole or in part, upon the resolution of such offer claim, the contest of which is effectively precluded by the resolution of such claim) and (B) shall pay to Lessee any amount previously paid or advanced by Lessee pursuant to this Section 8.2 with respect to such claim for such Tax or the contest of such Tax (other than amounts described in clause (v) of the preceding paragraph). If any Tax Indemnitee or any Affiliate thereof shall receive a refund of, or receive a credit for (or would have an unindemnified impact on received such a refund or credit but for a counterclaim or other claim not indemnified by Lessee hereunder (a "deemed refund or credit")), all or any part of any Taxes indemnified, paid, reimbursed or advanced by Lessee with respect to any contest under this Section 8.2(e), such Tax Indemnitee and provided further that no shall pay to Lessee within 30 days of such receipt (or, in the case of a deemed refund or credit, within 30 days of the resolution of such contest), an amount equal to the lesser of (xx) the amount of such refund or credit or deemed refund or credit plus any net tax benefit (taking into account any Taxes incurred by such Tax Indemnitee may reject by reason of the receipt or accrual of such refund or credit or deemed refund or credit) actually realized by such Tax Indemnitee as a result of any payment by such indemnity payment if the Guarantor agrees Tax Indemnitee made pursuant to pay this sentence (including this clause (xx)) and (yy) such tax payment, reimbursement or advance by Lessee to such Tax Indemnitee the amount plus any other payment in respect of such unindemnified impact, as reasonably determined contest (other than the costs and expenses described in clause (v) of the first paragraph of this Section 8.2(e)) by Lessee to such Tax Indemnitee. In additionIndemnitee theretofore made pursuant to this Section 8.2 with respect to such contest, it being intended that such Tax Indemnitee shall retain a net tax benefit pursuant to this Section 8.2 only if Lessee shall first have been reimbursed for any payments (other than the controlling party shall keep the noncontrolling party reasonably informed as to the progress costs and expenses described in clause (v) of the contest, and shall provide the noncontrolling party with a copy first paragraph of (or appropriate excerpts fromthis Section 8.2(e)) any reports or claims issued in respect of such contest by the relevant auditing agents or taxing authority it to the controlling party thereof, in connection with such claim or the contest thereof, provided, however, that such obligation shall not obligate any Tax Indemnitee pursuant to disclose its tax returns or information or documentation unrelated to such claim or contest. Each Tax Indemnitee shall, at the expense of the Lessee and the Guarantor, supply the Lessee or the Guarantor with such information and documents reasonably requested by the Lessee or the Guarantor as are necessary or advisable for such Person to participate in any action, suit or proceeding to the extent permitted by this Section 13.4(b)8.2; provided, however, that such Tax Indemnitee shall not be obligated to make any payment to Lessee pursuant to this sentence so long as a Special Default or Lease Event of Default shall have occurred and be continuing (but any amounts required to provide be so paid shall be paid promptly following the cure of any such Special Default or Lease Event of Default). If, in addition to such Lessee refund or credit or deemed refund or credit, as the Guarantor copies of its tax returns or any other informationcase may be, documentation, or materials that it deems to be confidential or proprietary. Notwithstanding anything in this Section 13.4(b) to the contrary, no Tax Indemnitee shall enter into any settlement or other compromise or fail to appeal an adverse ruling with respect to any claim which is entitled to be indemnified under this Section 13.4 (and with respect to which contest is required under this Section 13.4(b)) without the prior written consent of the Guarantor, unless such Tax Indemnitee waives its right to be or any Affiliate thereof shall receive (or would have received but for a counterclaim or other claim not indemnified under this Section 13.4 with respect to such claim. Notwithstanding anything contained herein to the contrary, a Tax Indemnitee shall not be required to contest (and neither by the Lessee nor hereunder) an amount representing interest on the Guarantor shall be permitted to contest in any judicial forum if amount of such contest couldrefund or credit or deemed refund or credit, in a Tax Indemnitee's reasonable judgmentas the case may be, be materially adverse to it) a claim with respect to the imposition of any Tax if such Tax Indemnitee shall pay to Lessee within 30 days of such receipt or, in the case of a deemed refund or credit, within 30 days of the resolution of such contest, that proportion of such interest that shall be fairly attributable to Taxes paid, reimbursed or advanced by the Lessee prior to the receipt of such refund or credit or deemed refund or credit. If it is later determined that the Tax Indemnitee was not entitled to a refund or credit for which Lessee has made a payment to a Tax Indemnitee hereunder, the portion of the refund or credit that is disallowed, reduced, lost or recaptured shall be treated as Taxes for which the Lessee must indemnify the Tax Indemnitee, unless such disallowance, reduction, loss or recapture results from an event or circumstance described in one or more of clauses (iv), (v), (vii), (ix), (xi), or (xiv) of Section 8.2(b) hereof. Any Taxes indemnified hereunder shall be paid by the Lessee, to the extent allowed, directly to the appropriate taxing authority on or before the time, and in the manner, prescribed by applicable laws. Lessee shall provide the appropriate Tax Indemnitee with such proof of payment of such Tax as is reasonably requested by such Tax Indemnitee. Any other amount payable to a Tax Indemnitee pursuant to this Section 8.2 shall be paid within 10 days after receipt of a written demand therefor from such Tax Indemnitee accompanied by a written statement describing in reasonable detail the amount so payable, but not prior to two Business Days before the date such Tax is due. Any payments made pursuant to this Section 8.2 shall be made directly to the Tax Indemnitee entitled thereto or Lessee, as the case may be, in immediately payable funds at such bank or to such account as specified by the payee in written directions to the payor, or, if no such direction shall have waived been given, by check of the payor payable to the order of the payee and mailed to the payee by certified mail, postage prepaid at its right to indemnification address as set forth in this Agreement. Any amount payable under this Section 13.4 with respect to such claim (and any claim with respect to such year or any other taxable year 8.2 that is not paid when due shall bear interest at the contest of which is precluded or materially adversely affected as a result of such waiver)Overdue Rate.
Appears in 1 contract
Sources: Participation Agreement (American Financial Realty Trust)
Contests. If any claim shall be made against any Tax Indemnitee or if any proceeding shall be commenced against any Tax Indemnitee (including a written notice of such proceeding) for any Imposition Taxes as to which the Lessee or the Guarantor Lessees may have an indemnity obligation pursuant to this Section 13.4SECTION 7.4, or if any Tax Indemnitee shall determine that any Imposition Taxes as to which the Lessee or the Guarantor Lessees may have an indemnity obligation pursuant to this Section 13.4 SECTION 7.4 may be payable, such Tax Indemnitee shall promptly (and in any eventnotify ADESA. ADESA shall be entitled, within fifteen (15) Business Days) notify the Guarantor in writing (provided that failure at its expense, to so notify the Guarantor within fifteen (15) Business Days shall not alter such Tax Indemnitee's rights under this Section 13.4 except participate in, and, to the extent such failure precludes or materially adversely affects that ADESA desires to, assume and control the ability to conduct a contest of any indemnified Taxes) and shall not take any action with respect to such claimdefense thereof; PROVIDED, proceeding or Imposition without the written consent of the Guarantor (such consent not to be unreasonably withheld or unreasonably delayed) for thirty (30) days after the receipt of such notice by the Guarantor; provided, howeverHOWEVER, that in the case of any such claim or proceedingADESA, if such Tax Indemnitee shall be required by law or regulation to take action prior to the end of such thirty (30) day period, such Tax Indemnitee shall in such notice to the Guarantor, so inform the Guarantor, and such Tax Indemnitee shall not take any action with respect to such claim, proceeding or Imposition without the consent of the Guarantor (such consent not to be unreasonably withheld or unreasonably delayed) for ten (10) days after the receipt of such notice by the Guarantor unless such Tax Indemnitee shall be required by law or regulation to take action prior to the end of such ten (10) day period. The Guarantor shall be entitled for a period of thirty (30) days from receipt of such notice from such Tax Indemnitee (or such shorter period as such Tax Indemnitee has notified the Guarantor is required by law or regulation for such Tax Indemnitee to commence such contest), to request have acknowledged in writing that such Tax Indemnitee contest the imposition of such Tax, at the Guarantorits and each Lessee's expense. If (x) such contest can be pursued in the name of the Guarantor or the Lessee and independently from any other proceeding involving a Tax liability of such Tax Indemnitee for which the Lessee and the Guarantor have not agreed obligation to indemnify such Tax Indemnitee, (y) such contest must be pursued in the name of such Tax Indemnitee, but can be pursued independently from any other proceeding involving a Tax liability of such Tax Indemnitee for which the Lessee and the Guarantor have not agreed to fully indemnify such Tax Indemnitee or (z) such Tax Indemnitee so requests, then the Guarantor or such Lessee shall be permitted to control the contest in respect of such claim, provided that in the case of a contest described in clause (y) if such Tax Indemnitee determines reasonably and in good faith that such contest by the Guarantor or the Lessee could have a material adverse impact on the business or operations of such Tax Indemnitee and provides a written explanation to the Guarantor of such determination, such Tax Indemnitee may elect to control or reassert control of the contest, and provided that the taking control by the Guarantor or the Lessee of any contest shall not alter the applicable Tax Indemnitee's rights to indemnification hereunder, and provided, further, that in determining the application of clauses (x) and (y) of the preceding sentence, each Tax Indemnitee shall take any and all reasonable steps to segregate claims for any Taxes for which the Lessee and the Guarantor indemnify hereunder from Taxes for which the Lessee and the Guarantor are not obligated to indemnify hereunder, so that the Guarantor can control the contest of the former. In all other claims requested to be contested by the Guarantor, such Tax Indemnitee shall control the contest of such claim, acting through counsel selected by such Tax Indemnitee and reasonably acceptable to the Guarantor. In no event shall the Guarantor be permitted to contest (or such Tax Indemnitee be required to contest) any claim, (A) if such Tax Indemnitee provides the Guarantor with a legal opinion of counsel reasonably acceptable to the Guarantor that such action, suit or proceeding if the contest is unsuccessful; and, PROVIDED FURTHER, that ADESA shall not be entitled to assume and control the defense of any such action, suit or proceeding (but the Tax Indemnitee shall then contest, at the sole cost and expense of ADESA and the Lessees, on behalf of ADESA with representatives reasonably satisfactory to ADESA or a Lessee) if and to the extent that, (A) in the reasonable opinion of such Tax Indemnitee, such action, suit or proceeding (x) involves a any risk of imposition of criminal liability or any material risk of civil liability in excess of $5,000,000 on such Tax Indemnitee or (y) will involve a material risk of the sale, forfeiture or loss of, or the creation of any Lien (other than a Permitted Lien) on the any Leased Property or any part thereof unless the Guarantor ADESA or a Lessee shall have posted and maintained a bond or other security reasonably satisfactory to the relevant Tax Indemnitee Indemnitees in respect to such risk, (B) if a Lease such proceeding involves Claims not fully indemnified by the Lessees which ADESA and the Tax Indemnitee have been unable to sever from the indemnified claim(s), (C) an Event of Default has occurred and is continuing unless the Guarantor shall have posted and maintained a bond continuing, (D) such action, suit or other security reasonably satisfactory proceeding involves matters which extend beyond or are unrelated to the relevant Tax Indemnitee in respect Transaction and if determined adversely could be materially detrimental to the interests of the Taxes subject to such claim and any and all expenses for which the Guarantor or the Lessee is responsible hereunder reasonably foreseeable in connection with the contest of such claim, (C) unless the Guarantor shall have agreed to pay and shall pay, to such Tax Indemnitee on written demand all reasonable, documented out-of-pocket costs, losses and expenses that such Tax Indemnitee may incur in connection with contesting such Imposition including all reasonable legal, accounting and investigatory fees and disbursements and (if applicable) reasonable, allocable internal overhead costs determined in accordance with normal bank operating procedures, notwithstanding indemnification by the Lessees or (DE) such action, suit or proceeding involves the federal or any state income tax liability of the Tax Indemnitee. With respect to any contests controlled by a Tax Indemnitee, (i) if such contest shall involve the payment of the Tax prior relates to the contest, unless the Guarantor shall provide to such Tax Indemnitee an interest-free advance in an amount equal to the Imposition that such Tax Indemnitee is required to pay (with no additional net after-federal or any state income tax costs to such Tax Indemnitee). In addition, for contests controlled by such Tax Indemnitee and claims contested in the name liability of such Tax Indemnitee in a public forum, no contest shall be required: (A) unless the amount of the potential indemnity (taking into account all similar or logically related claims that have been or could be raised in any audit involving any or all such Tax Indemnitees with respect to any period for which the Guarantor or the Lessee may be liable to pay an indemnity under this Section 13.4(b)) exceeds (1) with respect to the Lessor, $25,000 and (2) with respect to any Tax Indemnitee other than the Lessor, $75,000 and (B) unless, if requested by such Tax Indemnitee, the Guarantor such Tax Indemnitee shall be required to conduct such contest only if ADESA shall have provided to such Tax Indemnitee an opinion of counsel selected by the Guarantor (which may be in-house counsel) (except, in the case of income taxes indemnified hereunder, in which case such opinion shall be an opinion of independent tax counsel selected by the Guarantor Tax Indemnitee and reasonably acceptable satisfactory to such Tax Indemnitee) ADESA stating that a reasonable basis exists to contest such claim. In claim or (ii) in the case of an appeal of an adverse determination of any contest relating to any Taxes, an opinion of such counsel to the effect that such appeal is more likely than not to be successful, PROVIDED, HOWEVER, such Tax Indemnitee shall in no event shall a Tax Indemnitee be required to appeal an adverse judicial determination to the United States Supreme Court. The party conducting the contest shall consult in good faith with the other party and its counsel with respect to the contest of such claim for Taxes (or claim for refund) but the decisions regarding what actions to be taken shall be made by the controlling party in its sole judgment; provided, however, that if such Tax Indemnitee is the controlling party and the Guarantor recommends the acceptance of a settlement offer made by the relevant Governmental Authority and such Tax Indemnitee rejects such settlement offer, then the amount for which a Lessee and the Guarantor will be required to indemnify such Tax Indemnitee with respect to the Taxes subject to such offer shall not exceed the amount which it would have owed if such settlement offer had been accepted provided that any Tax Indemnitee shall be entitled to reject any indemnity payment it would otherwise be entitled to hereunder if such Tax Indemnitee reasonably determines that accepting such offer would have an unindemnified impact on such Tax Indemnitee and provided further that no Tax Indemnitee may reject any such indemnity payment if the Guarantor agrees to pay to such Tax Indemnitee the amount of such unindemnified impact, as reasonably determined by such Tax Indemnitee. In addition, the controlling party shall keep the noncontrolling party reasonably informed as to the progress of the contest, and shall provide the noncontrolling party with a copy of (or appropriate excerpts from) any reports or claims issued by the relevant auditing agents or taxing authority to the controlling party thereof, in connection with such claim or the contest thereof, provided, however, that such obligation shall not obligate any Tax Indemnitee to disclose its tax returns or information or documentation unrelated to such claim or contest. Each Tax Indemnitee shall, at the expense of the Lessee and the Guarantor, supply the Lessee or the Guarantor with such information and documents reasonably requested by the Lessee or the Guarantor as are necessary or advisable for such Person to participate in any action, suit or proceeding to the extent permitted by this Section 13.4(b); provided, however, that such Tax Indemnitee shall not be required to provide to such Lessee or the Guarantor copies of a reasonable manner at its tax returns or any other information, documentation, or materials that it deems to be confidential or proprietary. Notwithstanding anything in this Section 13.4(b) to the contrary, no Tax Indemnitee shall enter into any settlement or other compromise or fail to appeal an adverse ruling with respect to any claim which is entitled to be indemnified under this Section 13.4 (own expense and with respect to which contest is required under this Section 13.4(b)) without the prior written consent of the Guarantor, unless such Tax Indemnitee waives its right to be indemnified under this Section 13.4 with respect to such claim. Notwithstanding anything contained herein to the contrary, a Tax Indemnitee shall not be required to contest (and neither the Lessee nor the Guarantor shall be permitted to contest own counsel in any judicial forum if such contest could, proceeding conducted by ADESA in a Tax Indemnitee's reasonable judgment, be materially adverse to it) a claim accordance with respect to the imposition of any Tax if such Tax Indemnitee shall have waived its right to indemnification under this Section 13.4 with respect to such claim (and any claim with respect to such year or any other taxable year the contest of which is precluded or materially adversely affected as a result of such waiver)foregoing.
Appears in 1 contract
Sources: Master Agreement (Allete Inc)
Contests. If any claim shall be made against any Tax Indemnitee or if any proceeding shall be commenced against any Tax Indemnitee (including a written notice of such proceeding) for any Imposition Taxes as to which the Lessee or the Guarantor Lessees may have an indemnity obligation pursuant to this Section 13.4SECTION 7.4, or if any Tax Indemnitee shall determine that any Imposition Taxes as to which the Lessee or the Guarantor Lessees may have an indemnity obligation pursuant to this Section 13.4 SECTION 7.4 may be payable, such Tax Indemnitee shall promptly (and in any event, within fifteen (15) Business Days) notify the Guarantor in writing (provided that failure Company. The Company shall be entitled, at its expense, to so notify the Guarantor within fifteen (15) Business Days shall not alter such Tax Indemnitee's rights under this Section 13.4 except participate in, and, to the extent that the Company desires to, assume and control the defense thereof; PROVIDED, HOWEVER, that the Company shall have acknowledged in writing its obligation to fully indemnify such failure precludes Tax Indemnitee in respect of such action, suit or materially adversely affects proceeding if the ability to conduct a contest of any indemnified Taxes) and is unsuccessful; and, PROVIDED FURTHER, that the Company shall not take any action with respect be entitled to such claim, proceeding or Imposition without assume and control the written consent of the Guarantor (such consent not to be unreasonably withheld or unreasonably delayed) for thirty (30) days after the receipt of such notice by the Guarantor; provided, however, that in the case defense of any such claim action, suit or proceeding, if such proceeding (but the Tax Indemnitee shall be required by law or regulation to take action prior to the end of such thirty (30) day period, such Tax Indemnitee shall in such notice to the Guarantor, so inform the Guarantor, and such Tax Indemnitee shall not take any action with respect to such claim, proceeding or Imposition without the consent of the Guarantor (such consent not to be unreasonably withheld or unreasonably delayed) for ten (10) days after the receipt of such notice by the Guarantor unless such Tax Indemnitee shall be required by law or regulation to take action prior to the end of such ten (10) day period. The Guarantor shall be entitled for a period of thirty (30) days from receipt of such notice from such Tax Indemnitee (or such shorter period as such Tax Indemnitee has notified the Guarantor is required by law or regulation for such Tax Indemnitee to commence such then contest), to request in writing that such Tax Indemnitee contest the imposition of such Tax, at the Guarantor's expense. If sole cost and expense of the Company, on behalf of the Company with representatives reasonably satisfactory to the Company) if and to the extent that, (xA) such contest can be pursued in the name of the Guarantor or the Lessee and independently from any other proceeding involving a Tax liability of such Tax Indemnitee for which the Lessee and the Guarantor have not agreed to indemnify such Tax Indemnitee, (y) such contest must be pursued in the name reasonable opinion of such Tax Indemnitee, but can be pursued independently from any other proceeding involving a Tax liability of such Tax Indemnitee for which the Lessee and the Guarantor have not agreed to indemnify such Tax Indemnitee or (z) such Tax Indemnitee so requests, then the Guarantor or such Lessee shall be permitted to control the contest of such claim, provided that in the case of a contest described in clause (y) if such Tax Indemnitee determines reasonably and in good faith that such contest by the Guarantor or the Lessee could have a material adverse impact on the business or operations of such Tax Indemnitee and provides a written explanation to the Guarantor of such determination, such Tax Indemnitee may elect to control or reassert control of the contest, and provided that the taking control by the Guarantor or the Lessee of any contest shall not alter the applicable Tax Indemnitee's rights to indemnification hereunder, and provided, further, that in determining the application of clauses (x) and (y) of the preceding sentence, each Tax Indemnitee shall take any and all reasonable steps to segregate claims for any Taxes for which the Lessee and the Guarantor indemnify hereunder from Taxes for which the Lessee and the Guarantor are not obligated to indemnify hereunder, so that the Guarantor can control the contest of the former. In all other claims requested to be contested by the Guarantor, such Tax Indemnitee shall control the contest of such claim, acting through counsel selected by such Tax Indemnitee and reasonably acceptable to the Guarantor. In no event shall the Guarantor be permitted to contest (or such Tax Indemnitee be required to contest) any claim, (A) if such Tax Indemnitee provides the Guarantor with a legal opinion of counsel reasonably acceptable to the Guarantor that such action, suit or proceeding involves a any meaningful risk of imposition of criminal liability or will involve a any material risk of the sale, forfeiture or loss of, or the creation of any Lien (other than a Permitted Lien) civil liability on the Property or any part thereof unless the Guarantor shall have posted and maintained a bond or other security reasonably satisfactory to the relevant such Tax Indemnitee in respect excess of $5,000,000,(B) such proceeding involves Claims not fully indemnified by the Lessees which the Company and the Tax Indemnitee have been unable to such risksever from the indemnified claim(s), (BC) if a Lease an Event of Default has occurred and is continuing unless the Guarantor shall have posted and maintained a bond continuing, (D) such action, suit or other security reasonably satisfactory proceeding involves matters which extend beyond or are unrelated to the relevant Tax Indemnitee in respect Transaction and if determined adversely could be materially detrimental to the interests of the Taxes subject to such claim and any and all expenses for which the Guarantor or the Lessee is responsible hereunder reasonably foreseeable in connection with the contest of such claim, (C) unless the Guarantor shall have agreed to pay and shall pay, to such Tax Indemnitee on written demand all reasonable, documented out-of-pocket costs, losses and expenses that such Tax Indemnitee may incur in connection with contesting such Imposition including all reasonable legal, accounting and investigatory fees and disbursements and (if applicable) reasonable, allocable internal overhead costs determined in accordance with normal bank operating procedures, notwithstanding indemnification by Lessees or (DE) such action, suit or proceeding involves the federal or any state income tax liability of the Tax Indemnitee. With respect to any contests controlled by a Tax Indemnitee, (i) if such contest shall involve the payment of the Tax prior relates to the contest, unless the Guarantor shall provide to such Tax Indemnitee an interest-free advance in an amount equal to the Imposition that such Tax Indemnitee is required to pay (with no additional net after-federal or any state income tax costs to such Tax Indemnitee). In addition, for contests controlled by such Tax Indemnitee and claims contested in the name liability of such Tax Indemnitee in a public forum, no contest shall be required: (A) unless the amount of the potential indemnity (taking into account all similar or logically related claims that have been or could be raised in any audit involving any or all such Tax Indemnitees with respect to any period for which the Guarantor or the Lessee may be liable to pay an indemnity under this Section 13.4(b)) exceeds (1) with respect to the Lessor, $25,000 and (2) with respect to any Tax Indemnitee other than the Lessor, $75,000 and (B) unless, if requested by such Tax Indemnitee, such Tax Indemnitee shall be required to conduct such contest only if the Guarantor Company shall have provided to such Tax Indemnitee an opinion of counsel selected by the Guarantor (which may be in-house counsel) (except, in the case of income taxes indemnified hereunder, in which case such opinion shall be an opinion of independent tax counsel selected by the Guarantor Tax Indemnitee and reasonably acceptable satisfactory to such Tax Indemnitee) the Company stating that a reasonable basis exists to contest such claim. In claim or (ii) in the case of an appeal of an adverse determination of any contest relating to any Taxes, an opinion of such counsel to the effect that such appeal is more likely than not to be successful, PROVIDED, HOWEVER, such Tax Indemnitee shall in no event shall a Tax Indemnitee be required to appeal an adverse judicial determination to the United States Supreme Court. The party conducting the contest shall consult in good faith with the other party and its counsel with respect to the contest of such claim for Taxes (or claim for refund) but the decisions regarding what actions to be taken shall be made by the controlling party in its sole judgment; provided, however, that if such Tax Indemnitee is the controlling party and the Guarantor recommends the acceptance of a settlement offer made by the relevant Governmental Authority and such Tax Indemnitee rejects such settlement offer, then the amount for which a Lessee and the Guarantor will be required to indemnify such Tax Indemnitee with respect to the Taxes subject to such offer shall not exceed the amount which it would have owed if such settlement offer had been accepted provided that any Tax Indemnitee shall be entitled to reject any indemnity payment it would otherwise be entitled to hereunder if such Tax Indemnitee reasonably determines that accepting such offer would have an unindemnified impact on such Tax Indemnitee and provided further that no Tax Indemnitee may reject participate in a reasonable manner at its own expense and with its own counsel in any such indemnity payment if the Guarantor agrees to pay to such Tax Indemnitee the amount of such unindemnified impact, as reasonably determined by such Tax Indemnitee. In addition, the controlling party shall keep the noncontrolling party reasonably informed as to the progress of the contest, and shall provide the noncontrolling party with a copy of (or appropriate excerpts from) any reports or claims issued proceeding conducted by the relevant auditing agents or taxing authority to Company in accordance with the controlling party thereof, in connection with such claim or the contest thereof, provided, however, that such obligation shall not obligate any Tax Indemnitee to disclose its tax returns or information or documentation unrelated to such claim or contest. Each Tax Indemnitee shall, at the expense of the Lessee and the Guarantor, supply the Lessee or the Guarantor with such information and documents reasonably requested by the Lessee or the Guarantor as are necessary or advisable for such Person to participate in any action, suit or proceeding to the extent permitted by this Section 13.4(b); provided, however, that such Tax Indemnitee shall not be required to provide to such Lessee or the Guarantor copies of its tax returns or any other information, documentation, or materials that it deems to be confidential or proprietary. Notwithstanding anything in this Section 13.4(b) to the contrary, no Tax Indemnitee shall enter into any settlement or other compromise or fail to appeal an adverse ruling with respect to any claim which is entitled to be indemnified under this Section 13.4 (and with respect to which contest is required under this Section 13.4(b)) without the prior written consent of the Guarantor, unless such Tax Indemnitee waives its right to be indemnified under this Section 13.4 with respect to such claim. Notwithstanding anything contained herein to the contrary, a Tax Indemnitee shall not be required to contest (and neither the Lessee nor the Guarantor shall be permitted to contest in any judicial forum if such contest could, in a Tax Indemnitee's reasonable judgment, be materially adverse to it) a claim with respect to the imposition of any Tax if such Tax Indemnitee shall have waived its right to indemnification under this Section 13.4 with respect to such claim (and any claim with respect to such year or any other taxable year the contest of which is precluded or materially adversely affected as a result of such waiver)foregoing.
Appears in 1 contract
Contests. If any claim shall be made against any Tax Indemnitee or if any proceeding shall be commenced against any Tax Indemnitee (including a written notice of such proceeding) for any Imposition as to which the Lessee or the Guarantor reasonably may have an indemnity obligation pursuant to this Section 13.47.2, or if any Tax Indemnitee reasonably shall determine that any Imposition to for which the Lessee or the Guarantor may have an indemnity obligation pursuant to this Section 13.4 7.2 may be payable, such Tax Indemnitee shall promptly (and in any event, within fifteen (15) Business Days30 days) notify the Guarantor Lessee in writing (provided that failure to so notify the Guarantor Lessee within fifteen (15) Business Days 30 days shall not alter such Tax Indemnitee's rights under this Section 13.4 7.2, except to the extent such failure precludes or materially adversely affects the ability to conduct a contest of any indemnified TaxesImposition, in which case Lessee shall have no indemnification obligation hereunder to the extent such failure precludes or materially affects their ability to conduct a contest) and shall not take any action with respect to such claim, proceeding or Imposition without the written consent of the Guarantor Lessee (such consent not to be unreasonably withheld or unreasonably delayed) for thirty (30) 30 days after the receipt of such notice by the GuarantorLessee; provided, however, that in the case of any such claim or proceeding, if such Tax Indemnitee shall be required by law or regulation to take action prior to the end of such thirty (30) -day period, such Tax Indemnitee shall in such notice to the GuarantorLessee, so inform the GuarantorLessee, and such Tax Indemnitee shall not take any action with respect to such claim, proceeding or Imposition without the consent of the Guarantor Lessee (such consent not to be unreasonably withheld or unreasonably delayed) for ten (10) 10 days after the receipt of such notice by Lessee, unless the Guarantor unless such Tax Indemnitee shall be required by law or regulation to take action prior to the end of such ten (10) -day period. The Guarantor Lessee shall be entitled for a period of thirty (30) 30 days from receipt of such notice from such Tax the Indemnitee (or such shorter period as such Tax the Indemnitee has notified the Guarantor Lessee is required by law or regulation for such Tax the Indemnitee to commence such contest), to request in writing that such Tax Indemnitee contest the imposition in good faith of such TaxImposition, at the GuarantorLessee's expense. If (x) such contest can be pursued in the name of the Guarantor or the Lessee and independently from any other proceeding involving a Tax liability of such Tax Indemnitee an Imposition for which the Lessee and the Guarantor have has not agreed to indemnify such Tax Indemnitee, (y) such contest must be pursued in the name of such Tax the Indemnitee, but can be pursued independently from any other proceeding involving a Tax liability of such Tax Indemnitee an Imposition for which the Lessee and the Guarantor have has not agreed to indemnify such Tax Indemnitee or (z) such Tax the Indemnitee so requests, then the Guarantor or such Lessee shall be permitted to control the contest of such claim, provided that in the case of a contest described in any of clause (x), (y) or (z) if such Tax the Indemnitee determines reasonably and in good faith that such contest by the Guarantor or the Lessee reasonably could have a material adverse impact on the business or operations of such Tax the Indemnitee and provides a written explanation to the Guarantor Lessee of such determination, such Tax the Indemnitee may elect to control or reassert control of the contest, and provided provided, that the by taking control of the contest, Lessee acknowledges that it is responsible for the Imposition ultimately determined to be due by the Guarantor or the Lessee reason of any contest shall not alter the applicable Tax Indemnitee's rights to indemnification hereundersuch claim, and provided, further, that in determining the application of clauses (x) and (y) of the preceding sentence), each Tax Indemnitee LSI Trust No. 2001-A Participation Agreement shall take any and all reasonable steps to segregate claims for any Taxes Impositions for which the Lessee and the Guarantor indemnify indemnifies hereunder from Taxes Impositions for which the Lessee and the Guarantor are is not obligated to indemnify hereunder, so that the Guarantor Lessee can control the contest of the former. In all other claims requested to be contested by Lessee, the Guarantor, such Tax Indemnitee shall control the contest of such claim, acting through counsel selected by such Tax Indemnitee and reasonably acceptable to Lessee. In any contest controlled by an Indemnitee, the GuarantorIndemnitee shall conduct such contest in good faith. In no event shall the Guarantor Lessee be permitted to contest (or such Tax the Indemnitee be required to contest) any claim, claim (A) if such Tax Indemnitee provides the Guarantor Lessee with a legal opinion of independent counsel reasonably acceptable to the Guarantor that such action, suit or proceeding involves a material risk of imposition of criminal liability or will involve a material risk of the sale, forfeiture or loss of, or the creation of any Lien (other than a Permitted Lien) on the Property any Item or Items of Equipment or any part thereof unless the Guarantor Lessee shall have posted and maintained a bond or other security reasonably satisfactory to the relevant Tax Indemnitee in respect to such risk, (B) if a Lease Event of Default has occurred and is continuing continuing, unless the Guarantor Lessee shall have posted and maintained a bond or other security reasonably satisfactory to the relevant Tax Indemnitee in respect of the Taxes Impositions subject to such claim and any and all expenses for which the Guarantor or the Lessee is responsible hereunder reasonably foreseeable in connection with the contest of such claim, (C) unless the Guarantor Lessee shall have agreed to pay and shall pay, pay to such Tax Indemnitee on written demand all reasonable, documented reasonable out-of-pocket costs, losses and expenses that such Tax Indemnitee may incur in connection with contesting such Imposition Imposition, including all reasonable legal, accounting and investigatory fees and disbursements and (if applicable) reasonable, allocable internal overhead costs determined in accordance with normal bank operating proceduresdisbursements, or (D) if such contest shall involve the payment of the Tax Impositions prior to the contest, unless the Guarantor Lessee shall provide to such Tax the Indemnitee an interest-free advance in an amount equal to the Imposition that such Tax the Indemnitee is required to pay (with no additional net after-tax costs (including Taxes) to such Tax Indemnitee). In addition, for Indemnitee-controlled contests controlled by such Tax Indemnitee and claims contested in the name of such Tax the Indemnitee in a public forum, no contest shall be required: (A) unless the amount of the potential indemnity (taking into account all similar or logically related claims that have been or could be raised in any audit involving any or all such Tax Indemnitees with respect to any period Indemnitee for which the Guarantor or the Lessee may be liable to pay an indemnity under this Section 13.4(b)7.2) exceeds (1) with respect to the Lessor, $25,000 and (2) with respect to any Tax Indemnitee other than the Lessor, $75,000 and (B) unless, if requested by such Tax the Indemnitee, the Guarantor Lessee shall have provided to such Tax the Indemnitee an opinion of counsel selected by the Guarantor (which may be in-house counsel) (except, in the case of income taxes indemnified hereunder, in which case such opinion shall be an opinion of independent tax counsel selected by the Guarantor and reasonably acceptable to such Tax Indemnitee) Lessee that a reasonable basis exists to contest such claim. In no event shall a Tax an Indemnitee be required to appeal an adverse judicial determination to the United States Supreme Court. The party conducting the contest shall consult in good faith with the other party and its counsel with respect to the contest of such claim for Taxes Impositions (or claim for refund) but the decisions regarding what actions to be taken shall be made by the controlling party in its sole judgment; judgement, provided, however, that if the Indemnitee is the controlling party, no settlement offer with respect to such Tax claims shall be made or accepted by the Indemnitee without the prior consent of the Lessee (which consent shall not unreasonably be withheld), and provided further, that if the Indemnitee is the controlling party and the Guarantor Lessee recommends the acceptance of a settlement offer made by the relevant Governmental Authority Agency and such Tax Indemnitee rejects such settlement offer, offer then the amount for which a Lessee and the Guarantor will be required to indemnify such Tax Indemnitee with respect to the Taxes subject to such offer shall not exceed the amount which it would have owed if such settlement offer had been accepted provided that any Tax Indemnitee shall be entitled to reject any indemnity payment it would otherwise be entitled to hereunder if such Tax Indemnitee reasonably determines that accepting such offer would have an unindemnified impact on such Tax Indemnitee and provided further that no Tax Indemnitee may reject any such indemnity payment if the Guarantor agrees to pay to such Tax Indemnitee the amount of such unindemnified impact, as reasonably determined by such Tax Indemniteeaccepted. In addition, the controlling party shall keep the noncontrolling party reasonably informed as to the progress of the contest, and shall provide the noncontrolling party with a copy of (or appropriate excerpts from) any reports or claims issued LSI Trust No. 2001-A Participation Agreement by the relevant auditing agents agent or taxing authority to the controlling party thereof, in connection with such claim or the contest thereof, provided, however, that such obligation shall not obligate any Tax Indemnitee to disclose its tax returns or information or documentation unrelated to such claim or contest. Each Tax Indemnitee shall, at the expense of the shall supply Lessee and the Guarantor, supply the Lessee or the Guarantor with such information and documents reasonably requested by the Lessee or the Guarantor as are is necessary or advisable for such Person Lessee to participate in any action, suit or proceeding to the extent permitted by this Section 13.4(b7.2(b); provided, however, that and Lessee shall promptly reimburse such Tax Indemnitee shall not be required to provide to for the reasonable out-of-pocket expenses of supplying such Lessee or the Guarantor copies of its tax returns or any other information, documentation, or materials that it deems to be confidential or proprietaryinformation and documents. Notwithstanding anything in this Section 13.4(b) to the contrary, no Tax No Indemnitee shall enter into any settlement or other compromise or fail to appeal an adverse ruling with respect to any claim which is entitled to be indemnified under this Section 13.4 7.2 (and with respect to which contest is required under this Section 13.4(b7.2(b)) without the prior written consent of the GuarantorLessee (such consent not to be unreasonably withheld), unless such Tax Indemnitee waives its right to be indemnified under this Section 13.4 7.2 with respect to such claim. Notwithstanding anything contained herein to the contrary, a Tax an Indemnitee shall will not be required to contest (and neither the Lessee nor the Guarantor shall not be permitted to contest in any judicial forum if such contest could, in a Tax Indemnitee's reasonable judgment, be materially adverse to itcontest) a claim with respect to the imposition of any Tax Imposition if (i) such Tax Indemnitee shall have waived waive its right to indemnification under this Section 13.4 7.2 with respect to such claim (and any claim with respect to such year or any other taxable year year, the contest of which is precluded or materially adversely affected as a result of such waiver) or (ii) such Imposition is the sole result of a claim of a continuing and consistent nature, which claim has previously been resolved against the relevant Indemnitee (unless a change in law or facts has occurred since such prior adverse resolution and Lessee provides an opinion of independent tax counsel to the effect that it is more likely than not that such change in law or facts will result in a favorable resolution of the claim at issue).
Appears in 1 contract
Contests. If any written claim shall be is made against any Tax an Indemnitee or if any proceeding shall be commenced against any Tax Indemnitee (including a written notice of such proceeding) for any Imposition as to which the Lessee or the Guarantor may have an indemnity obligation pursuant to this Section 13.4, or if any Tax Indemnitee shall determine that any Imposition to which the Lessee or the Guarantor may have an indemnity obligation pursuant to this Section 13.4 may be payable, such Tax Indemnitee shall promptly (and in any event, within fifteen (15) Business Days) notify the Guarantor in writing (provided that failure to so notify the Guarantor within fifteen (15) Business Days shall not alter such Tax Indemnitee's rights under this Section 13.4 except to the extent such failure precludes or materially adversely affects the ability to conduct a contest of any indemnified Taxes) and shall not take any action Taxes with respect to which Lessee is or may be liable for a payment or indemnity hereunder, such Indemnitee will promptly give Lessee notice in writing of such claim, proceeding or Imposition without the written consent of the Guarantor (such consent not to be unreasonably withheld or unreasonably delayed) for thirty (30) days after the receipt of such notice by the Guarantor; provided, however, that in the case such Indemnitee's failure to give notice will not relieve Lessee of any such claim or proceedingits obligations hereunder, if such Tax Indemnitee shall be required by law or regulation to take action prior except to the end of such thirty (30) day period, such Tax Indemnitee shall in extent the failure to give such notice to the Guarantor, so inform the Guarantor, and such Tax Indemnitee shall not take any action with respect to such claim, proceeding or Imposition without the consent of the Guarantor (such consent not to be unreasonably withheld or unreasonably delayed) for ten (10) days after the receipt of such notice by the Guarantor unless such Tax Indemnitee shall be required by law or regulation to take action prior to the end of such ten (10) day period. The Guarantor shall be entitled for precludes a period of thirty (30) days from receipt of such notice from such Tax Indemnitee (or such shorter period as such Tax Indemnitee has notified the Guarantor is required by law or regulation for such Tax Indemnitee to commence such contest), to request in writing that such Tax Indemnitee contest the imposition of such Tax, at the Guarantor's expense. If (x) such contest can be pursued in the name of the Guarantor or the Lessee and independently from any other proceeding involving a Tax liability of such Tax Indemnitee for which the Lessee and the Guarantor have not agreed to indemnify such Tax Indemnitee, (y) such contest must be pursued in the name of such Tax Indemnitee, but can be pursued independently from any other proceeding involving a Tax liability of such Tax Indemnitee for which the Lessee and the Guarantor have not agreed to indemnify such Tax Indemnitee or (z) such Tax Indemnitee so requests, then the Guarantor or such Lessee shall be permitted to control the contest of such claim, provided that claim in the case of manner contemplated herein. So long as (a) a contest described in clause (y) if such Tax Indemnitee determines reasonably and in good faith that such contest by the Guarantor or the Lessee could have a material adverse impact on the business or operations of such Tax Indemnitee and provides a written explanation to the Guarantor of such determination, such Tax Indemnitee may elect to control or reassert control of the contest, and provided that the taking control by the Guarantor or the Lessee of any contest shall not alter the applicable Tax Indemnitee's rights to indemnification hereunder, and provided, further, that in determining the application of clauses (x) and (y) of the preceding sentence, each Tax Indemnitee shall take any and all reasonable steps to segregate claims for any Taxes for which the Lessee and the Guarantor indemnify hereunder from Taxes for which the Lessee and the Guarantor are not obligated to indemnify hereunder, so that the Guarantor can control the contest of the former. In all other claims requested to be contested by the Guarantor, such Tax Indemnitee shall control the contest of such claim, acting through counsel selected by such Tax Indemnitee and reasonably acceptable to the Guarantor. In no event shall the Guarantor be permitted to contest (or such Tax Indemnitee be required to contest) Taxes does not involve any claim, (A) if such Tax Indemnitee provides the Guarantor with a legal opinion of counsel reasonably acceptable to the Guarantor that such action, suit or proceeding involves a risk of imposition of criminal liability or will involve a material risk danger of the sale, forfeiture or loss of, or of the creation of any Lien (other than a Permitted Lien) on the Property Aircraft or any part thereof unless the Guarantor shall have posted and maintained a bond or other security reasonably satisfactory to interest therein, (b) Lessee has provided the relevant Tax Indemnitee in respect to such risk, (B) if a Lease Event of Default has occurred and is continuing unless the Guarantor shall have posted and maintained a bond or other security reasonably satisfactory to the relevant Tax Indemnitee in respect of the Taxes subject to such claim and any and all expenses for which the Guarantor or the Lessee is responsible hereunder reasonably foreseeable in connection with the contest of such claim, (C) unless the Guarantor shall have agreed to pay and shall pay, to such Tax Indemnitee on written demand all reasonable, documented out-of-pocket costs, losses and expenses that such Tax Indemnitee may incur in connection with contesting such Imposition including all reasonable legal, accounting and investigatory fees and disbursements and (if applicable) reasonable, allocable internal overhead costs determined in accordance with normal bank operating procedures, or (D) if such contest shall involve the payment of the Tax prior to the contest, unless the Guarantor shall provide to such Tax Indemnitee an interest-free advance in an amount equal to the Imposition that such Tax Indemnitee is required to pay (with no additional net after-tax costs to such Tax Indemnitee). In addition, for contests controlled by such Tax Indemnitee and claims contested in the name of such Tax Indemnitee in a public forum, no contest shall be required: (A) unless the amount of the potential indemnity (taking into account all similar or logically related claims that have been or could be raised in any audit involving any or all such Tax Indemnitees with respect to any period for which the Guarantor or the Lessee may be liable to pay an indemnity under this Section 13.4(b)) exceeds (1) with respect to the Lessor, $25,000 and (2) with respect to any Tax Indemnitee other than the Lessor, $75,000 and (B) unless, if requested by such Tax Indemnitee, the Guarantor shall have provided to such Tax Indemnitee an opinion of counsel selected by the Guarantor (which may be in-house counsel) (except, in the case of income taxes indemnified hereunder, in which case such opinion shall be an opinion of independent tax counsel selected by the Guarantor and reasonably acceptable to such Tax Indemnitee that a meritorious basis exists for contesting such claim, (c) Lessee has made adequate reserves for such Taxes or, if required by the relevant Indemnitee, an adequate bond has been posted by Lessee, and (d) Lessee has acknowledged in writing its obligation to indemnify for such Taxes, then such Indemnitee at Lessee's written request will in good faith, with due diligence and at Lessee's sole cost and expense, contest (or, if permitted by Law, permit Lessee to contest in the name of such Indemnitee) that the validity, applicability or amount of such Taxes. If such contest is to be initiated by the payment of, and the claiming of a reasonable basis exists to contest such claim. In no event refund for, any Taxes, Lessee shall a Tax Indemnitee be required to appeal an adverse judicial determination advance to the United States Supreme Courtrelevant Indemnitee sufficient funds (on an interest-free basis) to make such pay ments and shall indemnify such Indemnitee for any tax consequences resulting from such advance of funds. The party conducting Although the contest shall relevant Indemnitee may consult in good faith with Lessee concerning the other party and its counsel with respect conduct of any contest, such Indemnitee shall control the conduct of all proceedings relating to the any such contest which is brought by or on behalf of such claim for Taxes (Indemnitee. Any contest initiated hereunder may be settled or claim for refund) but the decisions regarding what actions to be taken shall be made by the controlling party in its sole judgment; provided, however, discontinued at any time provided that if such Tax Indemnitee is the controlling party and the Guarantor recommends the acceptance of a settlement offer made by the relevant Governmental Authority and such Tax Indemnitee rejects such settlement offer, then the amount for which a Lessee and the Guarantor will be required to indemnify such Tax Indemnitee with respect to the Taxes subject to such offer shall not exceed the amount which it would have owed if such settlement offer had been accepted provided that any Tax Indemnitee shall be entitled to reject any indemnity payment it would otherwise be entitled to hereunder if such Tax Indemnitee reasonably determines that accepting such offer would have an unindemnified impact on such Tax Indemnitee and provided further that no Tax Indemnitee may reject any such indemnity payment if the Guarantor agrees to pay to such Tax Indemnitee the amount of such unindemnified impact, as reasonably determined by such Tax Indemnitee. In addition, the controlling party shall keep the noncontrolling party reasonably informed as to the progress of the contest, and shall provide the noncontrolling party with a copy of (or appropriate excerpts from) any reports or claims issued by the relevant auditing agents or taxing authority to the controlling party thereof, in connection with such claim or the contest thereof, provided, however, that such obligation shall not obligate any Tax Indemnitee to disclose its tax returns or information or documentation unrelated to such claim or contest. Each Tax Indemnitee shall, at the expense of the Lessee and the Guarantor, supply the Lessee or the Guarantor with such information and documents reasonably requested by the Lessee or the Guarantor as are necessary or advisable for such Person to participate in any action, suit or proceeding to the extent permitted by this Section 13.4(b); provided, however, that such Tax Indemnitee shall not be required to provide to such Lessee or the Guarantor copies of its tax returns or any other information, documentation, or materials that it deems to be confidential or proprietary. Notwithstanding anything in this Section 13.4(b) to the contrary, no Tax Indemnitee shall enter into any settlement or other compromise or fail to appeal an adverse ruling with respect to any claim which is entitled to be indemnified under this Section 13.4 (and with respect to which contest is required under this Section 13.4(b)) without the prior written consent of the Guarantor, unless such Tax Indemnitee waives its right to be indemnified under this Section 13.4 with respect to such claim. Notwithstanding anything contained herein to the contrary, a Tax Indemnitee shall not be required to contest (and neither the Lessee nor the Guarantor shall be permitted to contest in any judicial forum if such contest could, in a Tax Indemnitee's reasonable judgment, be materially adverse to it) a claim with respect to the imposition of any Tax if such Tax Indemnitee shall have waived its any right to indemnification under this Section 13.4 with respect to such claim (and any claim with respect to such year or any other taxable year for the contest of which is precluded or materially adversely affected as a result of such waiver)Taxes being contested.
Appears in 1 contract
Sources: Lease Agreement (Pan Am Corp /Fl/)
Contests. If (i) After the Closing, Buyer shall promptly notify Seller in writing of (x) any claim shall be made against correspondence from any Tax Indemnitee or if any proceeding shall be commenced against authority relating to any Tax Indemnitee Return filed by Seller pursuant to Section 6.11(b)(i) or by Buyer pursuant to Section 6.11(b)(ii) and (including a y) any written notice of such proceeding) for any Imposition as to which the Lessee a proposed assessment or the Guarantor may have claim in an indemnity obligation pursuant to this Section 13.4, audit or if any Tax Indemnitee shall determine that any Imposition to which the Lessee administrative or the Guarantor may have an indemnity obligation pursuant to this Section 13.4 may be payable, such Tax Indemnitee shall promptly (and in any event, within fifteen (15) Business Days) notify the Guarantor in writing (provided that failure to so notify the Guarantor within fifteen (15) Business Days shall not alter such Tax Indemnitee's rights under this Section 13.4 except to the extent such failure precludes or materially adversely affects the ability to conduct a contest of any indemnified Taxes) and shall not take any action with respect to such claim, proceeding or Imposition without the written consent of the Guarantor (such consent not to be unreasonably withheld or unreasonably delayed) for thirty (30) days after the receipt of such notice by the Guarantor; provided, however, that in the case of any such claim or proceeding, if such Tax Indemnitee shall be required by law or regulation to take action prior to the end of such thirty (30) day period, such Tax Indemnitee shall in such notice to the Guarantor, so inform the Guarantor, and such Tax Indemnitee shall not take any action with respect to such claim, proceeding or Imposition without the consent of the Guarantor (such consent not to be unreasonably withheld or unreasonably delayed) for ten (10) days after the receipt of such notice by the Guarantor unless such Tax Indemnitee shall be required by law or regulation to take action prior to the end of such ten (10) day period. The Guarantor shall be entitled for a period of thirty (30) days from receipt of such notice from such Tax Indemnitee (or such shorter period as such Tax Indemnitee has notified the Guarantor is required by law or regulation for such Tax Indemnitee to commence such contest), to request in writing that such Tax Indemnitee contest the imposition of such Tax, at the Guarantor's expense. If (x) such contest can be pursued in the name of the Guarantor or the Lessee and independently from any other judicial proceeding involving a Tax liability Company or any of such Tax Indemnitee for which the Lessee and the Guarantor have not agreed to indemnify such Tax Indemnitee, its Subsidiaries (y) such contest must be pursued in the name of such Tax Indemnitee, but can be pursued independently from any other proceeding involving a Tax liability of such Tax Indemnitee for which the Lessee and the Guarantor have not agreed to indemnify such Tax Indemnitee or (z) such Tax Indemnitee so requests, then the Guarantor or such Lessee shall be permitted to control the contest of such claim, provided that in the case of a contest described in clause (y) if such Tax Indemnitee determines reasonably and in good faith that such contest by the Guarantor or the Lessee could have a material adverse impact on the business or operations of such Tax Indemnitee and provides a written explanation to the Guarantor of such determination, such Tax Indemnitee may elect to control or reassert control of the contest, and provided that the taking control by the Guarantor or the Lessee of any contest shall not alter the applicable Tax Indemnitee's rights to indemnification hereunder, and provided, further, that in determining the application of clauses (x) and (y) together, a “Tax Contest”) which, if determined adversely to the taxpayer, would be grounds for indemnification by Seller (including any payment under Section 6.11(c)).
(ii) In the case of a Tax Contest that relates to a Pre-Closing Period, Seller shall have the preceding sentence, each Tax Indemnitee shall take any and all reasonable steps right at its expense to segregate claims for any Taxes for which the Lessee and the Guarantor indemnify hereunder from Taxes for which the Lessee and the Guarantor are not obligated to indemnify hereunder, so that the Guarantor can control the contest conduct of the former. In all other claims requested to be contested by the Guarantor, such Tax Indemnitee Contest; provided that (x) Seller shall control indemnify the contest of such claim, acting through counsel selected by such Tax Indemnitee and reasonably acceptable to the Guarantor. In no event shall the Guarantor be permitted to contest (or such Tax Indemnitee be required to contest) any claim, (A) if such Tax Indemnitee provides the Guarantor with a legal opinion of counsel reasonably acceptable to the Guarantor that such action, suit or proceeding involves a risk of imposition of criminal liability or will involve a material risk of the sale, forfeiture or loss of, or the creation of any Lien (other than a Permitted Lien) on the Property Company or any part thereof unless the Guarantor shall have posted and maintained a bond or other security reasonably satisfactory to the relevant Tax Indemnitee in respect to such risk, (B) if a Lease Event of Default has occurred and is continuing unless the Guarantor shall have posted and maintained a bond or other security reasonably satisfactory to the relevant Tax Indemnitee its Subsidiaries in respect of the Taxes subject to all third-party costs and expenses incurred by such claim and Company or any and all expenses for which the Guarantor or the Lessee is responsible hereunder reasonably foreseeable such Subsidiary at Seller’s request in connection with the contest of such claimTax Contest, (Cy) unless the Guarantor Seller shall have agreed to pay keep Buyer informed of all material progress (and shall pay, send Buyer copies of all material correspondence relating thereto) of the Tax Contest and (z) Seller shall not enter into any compromise or agree to settle any claim pursuant to such Tax Indemnitee on written demand all reasonable, documented out-of-pocket costs, losses and expenses that such Tax Indemnitee may incur in connection with contesting such Imposition including all reasonable legal, accounting and investigatory fees and disbursements and (if applicable) reasonable, allocable internal overhead costs determined in accordance with normal bank operating procedures, or (D) if such contest shall involve the payment of the Tax prior to the contest, unless the Guarantor shall provide to such Tax Indemnitee an interest-free advance in an amount equal to the Imposition that such Tax Indemnitee is required to pay (with no additional net after-tax costs to such Tax Indemnitee). In addition, for contests controlled by such Tax Indemnitee and claims contested in the name of such Tax Indemnitee in a public forum, no contest shall be required: (A) unless the amount of the potential indemnity (taking into account all similar or logically related claims that have been or could be raised in any audit involving any or all such Tax Indemnitees Contest with respect to any period issue that recurs for which the Guarantor any Straddle Period or the Lessee may be liable to pay an indemnity under this Section 13.4(b)) exceeds (1) with respect to the Lessor, $25,000 and (2) with respect Post-Closing Period or any item resulting in a reciprocal adjustment to any Tax Indemnitee other than the Lessor, $75,000 and (B) unless, if requested by such Tax Indemnitee, the Guarantor shall have provided to such Tax Indemnitee an opinion of counsel selected by the Guarantor (which may be inStraddle Period or Post-house counsel) (except, in the case of income taxes indemnified hereunder, in which case such opinion shall be an opinion of independent tax counsel selected by the Guarantor and reasonably acceptable to such Tax Indemnitee) that a reasonable basis exists to contest such claim. In no event shall a Tax Indemnitee be required to appeal an adverse judicial determination to the United States Supreme Court. The party conducting the contest shall consult in good faith with the other party and its counsel with respect to the contest of such claim for Taxes (or claim for refund) but the decisions regarding what actions to be taken shall be made by the controlling party in its sole judgment; provided, however, that if such Tax Indemnitee is the controlling party and the Guarantor recommends the acceptance of a settlement offer made by the relevant Governmental Authority and such Tax Indemnitee rejects such settlement offer, then the amount for which a Lessee and the Guarantor will be required to indemnify such Tax Indemnitee with respect to the Taxes subject to such offer shall not exceed the amount which it would have owed if such settlement offer had been accepted provided that any Tax Indemnitee shall be entitled to reject any indemnity payment it would otherwise be entitled to hereunder if such Tax Indemnitee reasonably determines that accepting such offer would have an unindemnified impact on such Tax Indemnitee and provided further that no Tax Indemnitee may reject any such indemnity payment if the Guarantor agrees to pay to such Tax Indemnitee the amount of such unindemnified impact, as reasonably determined by such Tax Indemnitee. In addition, the controlling party shall keep the noncontrolling party reasonably informed as to the progress of the contest, and shall provide the noncontrolling party with a copy of (or appropriate excerpts from) any reports or claims issued by the relevant auditing agents or taxing authority to the controlling party thereof, in connection with such claim or the contest thereof, provided, however, that such obligation shall not obligate any Tax Indemnitee to disclose its tax returns or information or documentation unrelated to such claim or contest. Each Tax Indemnitee shall, at the expense of the Lessee and the Guarantor, supply the Lessee or the Guarantor with such information and documents reasonably requested by the Lessee or the Guarantor as are necessary or advisable for such Person to participate in any action, suit or proceeding to the extent permitted by this Section 13.4(b); provided, however, that such Tax Indemnitee shall not be required to provide to such Lessee or the Guarantor copies of its tax returns or any other information, documentation, or materials that it deems to be confidential or proprietary. Notwithstanding anything in this Section 13.4(b) to the contrary, no Tax Indemnitee shall enter into any settlement or other compromise or fail to appeal an adverse ruling with respect to any claim which is entitled to be indemnified under this Section 13.4 (and with respect to which contest is required under this Section 13.4(b)) Closing Period without the prior written consent of the GuarantorBuyer (which consent shall not be unreasonably withheld, unless conditioned or delayed). Buyer also may participate at its own expense in any such Tax Indemnitee waives Contest and, if Seller does not notify Buyer in writing within 30 days of receiving notice of such Tax Contest pursuant to Section 6.11(f)(i) hereof of its right intent to assume the defense of such Tax Contest, Buyer may defend the same in such manner as it may deem appropriate, including, but not limited to, settling such Tax Contest after giving five days’ prior written notice to Seller setting forth the terms and conditions of settlement.
(iii) In the case of a Tax Contest that relates to a Straddle Period, (x) each of Seller and Buyer may participate in the Tax Contest, and (y) the Tax Contest shall be indemnified under this Section 13.4 controlled by that party which would bear the burden of the greater portion of the adjustment (the “Controlling Party”); provided that (a) the Controlling Party shall indemnify the Company or any Subsidiary in respect of all third-party costs and expenses incurred by the Company or any such Subsidiary at the Controlling Party’s request in connection with such Tax Contest, (b) the Controlling Party shall keep the other party informed of all material progress (and shall send such party copies of all material correspondence relating thereto) of the Tax Contest and (c) if Seller is the Controlling Party, Seller shall not enter into any compromise or agree to settle any claim pursuant to such Tax Contest with respect to such claim. Notwithstanding anything contained herein any issue that recurs for any Straddle Period or Post-Closing Period or any item resulting in a reciprocal adjustment to any Straddle Period or Post-Closing Period without the contrary, a Tax Indemnitee prior written consent of Buyer (which consent shall not be required to contest unreasonably withheld, conditioned or delayed). The principle set forth in clause (and neither y) of the Lessee nor preceding sentence also shall govern for purposes of deciding any issue that must be decided
(iv) In the Guarantor shall be permitted to contest in any judicial forum if such contest could, in case of a Tax Indemnitee's reasonable judgmentContest that relates to a Post-Closing Period, be materially adverse Buyer shall have the right at its expense to itcontrol the conduct of such Tax Contest.
(v) a Except as provided in paragraph (ii) above, neither Buyer nor Seller shall enter into any compromise or agree to settle any claim with respect pursuant to the imposition of any Tax if such Tax Indemnitee shall have waived its right to indemnification under this Section 13.4 with respect to such claim (and any claim with respect to Contest which would adversely affect the other party for such year or a subsequent year, or which would result in a payment under Section 6.11(d), without the written consent of the other party, which consent may not be unreasonably withheld. Buyer and Seller agree to cooperate, and Buyer agrees to cause the Company and any other taxable year of its Subsidiaries to cooperate, in the contest defense against or compromise of which is precluded or materially adversely affected as a result of such waiver)any claim in any Tax Contest.
Appears in 1 contract
Sources: Purchase and Sale Agreement (Crown Media Holdings Inc)
Contests. If any claim (i) Carrier (at Carrier’s own expense) shall be made against any Tax Indemnitee or if any proceeding shall be commenced against any Tax Indemnitee entitled to control the defense (including a written notice of such proceeding) for any Imposition as to which the Lessee or the Guarantor may have an indemnity obligation pursuant to this Section 13.4settlement, except as provided below) of any audit, litigation, proceeding, or if any other action with respect to Taxes (a “Tax Indemnitee shall determine that any Imposition Proceeding”) with respect to which the Lessee or the Guarantor may have an indemnity obligation pursuant to this a Pre-Closing Tax Period (other than a Straddle Period, Straddle Periods being governed by Section 13.4 may be payable, such Tax Indemnitee shall promptly (and in any event, within fifteen (1511.01(h)(iii) Business Daysbelow) notify the Guarantor in writing (provided that failure to so notify the Guarantor within fifteen (15) Business Days shall not alter such Tax Indemnitee's rights under this Section 13.4 except to the extent such failure precludes or materially adversely affects the ability to conduct a contest of any indemnified Taxes) and shall not take any action with respect to such claimaudit, litigation, proceeding or Imposition without the written consent of the Guarantor (such consent not to be unreasonably withheld or unreasonably delayed) for thirty (30) days after the receipt of such notice by the Guarantor; provided, however, that in the case of any such claim or proceeding, if such Tax Indemnitee shall be required by law or regulation to take other action prior relates to the end of such thirty (30) day period, such Tax Indemnitee shall in such notice to the Guarantor, so inform the Guarantor, and such Tax Indemnitee shall not take any action with respect to such claim, proceeding or Imposition without the consent of the Guarantor (such consent not to be unreasonably withheld or unreasonably delayed) for ten (10) days after the receipt of such notice by the Guarantor unless such Tax Indemnitee shall be required by law or regulation to take action prior to the end of such ten (10) day period. The Guarantor shall be entitled for a period of thirty (30) days from receipt of such notice from such Tax Indemnitee (or such shorter period as such Tax Indemnitee has notified the Guarantor is required by law or regulation for such Tax Indemnitee to commence such contest), to request in writing that such Tax Indemnitee contest the imposition of such Tax, at the Guarantor's expense. If (x) such contest can be pursued in the name of the Guarantor Company or the Lessee and independently from any other proceeding involving a Tax liability of such Tax Indemnitee for which the Lessee and the Guarantor have not agreed to indemnify such Tax Indemnitee, Northeast Business Contributed Assets (y) such contest must be pursued in the name of such Tax Indemnitee, but can be pursued independently from any other proceeding involving a Tax liability of such Tax Indemnitee for which the Lessee and the Guarantor have not agreed to indemnify such Tax Indemnitee or (z) such Tax Indemnitee so requests, then the Guarantor or such Lessee shall be permitted to control the contest of such claim, provided that in the case of a contest described in clause (y) if such Tax Indemnitee determines reasonably and in good faith that such contest by the Guarantor or the Lessee could have a material adverse impact on the business or operations of such Tax Indemnitee and provides a written explanation to the Guarantor of such determination, such Tax Indemnitee may elect to control or reassert control of the contest, and provided that the taking control by the Guarantor or the Lessee of any contest shall not alter the applicable Tax Indemnitee's rights to indemnification hereunder, and provided, further, that in determining the application of clauses (x) and (y) of the preceding sentence, each Tax Indemnitee shall take any and all reasonable steps to segregate claims for any Taxes for which the Lessee and the Guarantor indemnify hereunder from Taxes for which the Lessee and the Guarantor are not obligated to indemnify hereunder, so that the Guarantor can control the contest of the former. In all other claims requested to be contested by the Guarantor, such Tax Indemnitee shall control the contest of such claim, acting through counsel selected by such Tax Indemnitee and reasonably acceptable to the Guarantor. In no event shall the Guarantor be permitted to contest (or such Tax Indemnitee be required to contest) any claim, (A) if such Tax Indemnitee provides the Guarantor with a legal opinion of counsel reasonably acceptable to the Guarantor that such action, suit or proceeding involves a risk of imposition of criminal liability or will involve a material risk of the sale, forfeiture or loss of, or the creation of any Lien (other than a Permitted Lien) on the Property or any part thereof unless the Guarantor shall have posted and maintained a bond or other security reasonably satisfactory to the relevant Tax Indemnitee in respect to such risk, (B) if a Lease Event of Default has occurred and is continuing unless the Guarantor shall have posted and maintained a bond or other security reasonably satisfactory to the relevant Tax Indemnitee in respect of the Taxes subject to such claim and any and all expenses for which the Guarantor or the Lessee is responsible hereunder reasonably foreseeable in connection with the contest of such claim, (C) unless the Guarantor shall have agreed to pay and shall pay, to such Tax Indemnitee on written demand all reasonable, documented out“Pre-of-pocket costs, losses and expenses that such Tax Indemnitee may incur in connection with contesting such Imposition including all reasonable legal, accounting and investigatory fees and disbursements and (if applicable) reasonable, allocable internal overhead costs determined in accordance with normal bank operating procedures, or (D) if such contest shall involve the payment of the Tax prior to the contest, unless the Guarantor shall provide to such Tax Indemnitee an interest-free advance in an amount equal to the Imposition that such Tax Indemnitee is required to pay (with no additional net after-tax costs to such Tax IndemniteeClosing Northeast Business Audits”). In addition, for contests controlled by such Tax Indemnitee and claims contested in the name of such Tax Indemnitee in a public forum, no contest shall be required: (A) unless the amount of the potential indemnity (taking into account all similar or logically related claims that have been or could be raised in any audit involving any or all such Tax Indemnitees with respect to any period for which the Guarantor or the Lessee may be liable to pay an indemnity under this Section 13.4(b)) exceeds (1) with respect to the Lessor, $25,000 and (2) with respect to any Tax Indemnitee other than the Lessor, $75,000 and (B) unless, if requested by such Tax Indemnitee, the Guarantor shall have provided to such Tax Indemnitee an opinion of counsel selected by the Guarantor (which may be in-house counsel) (except, in the case of income taxes indemnified hereunder, in which case such opinion shall be an opinion of independent tax counsel selected by the Guarantor and reasonably acceptable to such Tax Indemnitee) that a reasonable basis exists to contest such claim. In no event shall a Tax Indemnitee be required to appeal an adverse judicial determination to the United States Supreme Court. The party conducting the contest shall consult in good faith with the other party and its counsel with respect to the contest of such claim for Taxes (or claim for refund) but the decisions regarding what actions to be taken shall be made by the controlling party in its sole judgment; provided, however, that if such Tax Indemnitee is the controlling party and the Guarantor recommends the acceptance of a settlement offer made by the relevant Governmental Authority and such Tax Indemnitee rejects such settlement offer, then the amount for which a Lessee and the Guarantor will be required to indemnify such Tax Indemnitee with respect to the Taxes subject to such offer shall not exceed the amount which it would have owed if such settlement offer had been accepted provided that any Tax Indemnitee shall be entitled to reject any indemnity payment it would otherwise be entitled to hereunder if such Tax Indemnitee reasonably determines that accepting such offer would have an unindemnified impact on such Tax Indemnitee and provided further that no Tax Indemnitee may reject any such indemnity payment if the Guarantor agrees to pay to such Tax Indemnitee the amount of such unindemnified impact, as reasonably determined by such Tax Indemnitee. In addition, the controlling party shall keep the noncontrolling party reasonably informed as to the progress of the contest, and shall provide the noncontrolling party with a copy of (or appropriate excerpts from) any reports or claims issued by the relevant auditing agents or taxing authority to the controlling party thereof, in connection with such claim or the contest thereof, provided, however, that such obligation Carrier shall not obligate any cause the Company to enter into a settlement that by its terms, and without Watsco’s prior written consent, binds the Company for a Post-Closing Tax Indemnitee to disclose its tax returns or information or documentation unrelated to such claim or contest. Each Tax Indemnitee shall, at the expense Period as a result of the Lessee and the Guarantor, supply the Lessee or the Guarantor with settlement of such information and documents reasonably requested by the Lessee or the Guarantor as are necessary or advisable for Pre-Closing Northeast Business Audit. The Company shall be entitled to control such Person to participate in any action, suit or proceeding Tax Proceeding (at Carrier’s expense) to the extent permitted by Carrier does not exercise its right to control a Tax Proceeding pursuant to this Section 13.4(b11.01(h)(i); provided, however, . The Parties agree that such Tax Indemnitee the Company shall not be required permitted to provide to such Lessee or the Guarantor copies of its tax returns or any other informationsettle, documentationcompromise, or materials that it deems to be confidential discharge any Pre-Closing Northeast Business Audit, or proprietary. Notwithstanding anything in this Section 13.4(b) to the contrary, no Tax Indemnitee shall enter into admit any settlement or other compromise or fail to appeal an adverse ruling liability with respect to any claim which is entitled to be indemnified under this Section 13.4 (and with respect to which contest is required under this Section 13.4(b)) thereto, without the prior written consent of Carrier.
(ii) Watsco (at Watsco’s own expense) shall be entitled to control the Guarantordefense (including as to settlement, unless except as provided below) of any Tax Proceeding with respect to a Pre-Closing Tax Period (other than a Straddle Period, Straddle Periods being governed by Section 11.01(h)(iv) below) to the extent such Tax Indemnitee waives Proceeding relates to the Homans Business Contributed Assets (“Pre-Closing Homans Business Audit”), provided, however, that Watsco shall not cause the Company to enter into a settlement that by its terms, and without Carrier’s prior written consent, binds the Company for a Post-Closing Tax Period as a result of the settlement of such Pre-Closing Homans Business Audit. The Company shall be entitled to control such Tax Proceeding (at Watsco’s expense) to the extent Watsco does not exercise its right to be indemnified under control a Tax Proceeding pursuant to this Section 13.4 with respect to such claim. Notwithstanding anything contained herein to 11.01(h)(ii).
(iii) In the contrary, case of a Tax Indemnitee shall not be required to contest (and neither the Lessee nor the Guarantor shall be permitted to contest in any judicial forum if such contest could, in Proceeding for a Tax Indemnitee's reasonable judgment, be materially adverse to it) a claim Straddle Period with respect to the imposition of any Tax Company or the Northeast Business Contributed Assets, if such Tax Indemnitee shall have waived its right Proceeding relates or could reasonably be expected to indemnification under this Section 13.4 relate to both a claim for Taxes with respect to the Company or the Northeast Business Contributed Assets (“Northeast Business Taxes”) for a Pre-Closing Tax Period and a claim for Northeast Business Taxes for a Post-Closing Tax Period, and such claim for Northeast Business Taxes for a Pre-Closing Tax Period is not separable from such claim for Northeast Business Taxes for a Post-Closing Tax Period, the Company (if the claim for Northeast Business Taxes that are for a Post-Closing Tax Period exceeds or reasonably could be expected to exceed in amount the claim for Northeast Business Taxes for a Pre-Closing Tax Period) or otherwise Carrier (Carrier or the Company, as the case may be, the “Northeast Business Tax Contest Controlling Party”), shall be entitled to control the defense of such Tax Proceeding. In such case, the other Party (the “Northeast Business Tax Contest Non-Controlling Party”) shall be entitled to participate fully (at the Northeast Business Tax Contest Non-Controlling Party’s sole expense) in the conduct of such Tax Proceeding and any the Northeast Business Tax Contest Controlling Party shall not settle, compromise, or discharge such Tax Proceeding without the consent of such Northeast Business Tax Contest Non-Controlling Party (which consent shall not be unreasonably withheld or delayed). The costs and expenses of conducting the defense of such Tax Proceeding shall be reasonably apportioned based on the relative amounts of the claim for Northeast Business Taxes for a Pre-Closing Tax Period and the claim for Northeast Business Taxes for a Post-Closing Tax Period.
(iv) In the case of a Tax Proceeding for a Straddle Period with respect to the Homans Business Contributed Assets, if such year Tax Proceeding relates or any other taxable year could reasonably be expected to relate to both a claim for Taxes with respect to the contest of which Homans Business Contributed Assets (“Homans Business Taxes”) for a Pre-Closing Tax Period and a claim for Homans Business Taxes for a Post-Closing Tax Period, and such claim for Homans Business Taxes for a Pre-Closing Tax Period is precluded not separable from such claim for Homans Business Taxes for a Post-Closing Tax Period, the Company (if the claim for Homans Business Taxes that are for a Post-Closing Tax Period exceeds or materially adversely affected reasonably could be expected to exceed in amount the claim for Homans Business Taxes for a Pre-Closing Tax Period) or otherwise Watsco (Watsco or the Company, as a result the case may be, the “Homans Business Tax Contest Controlling Party”), shall be entitled to control the defense of such waiverTax Proceeding. In such case, the other Party (the “Homans Business Tax Contest Non-Controlling Party”) shall be entitled to participate fully (at the Homans Business Tax Contest Non-Controlling Party’s sole expense) in the conduct of such Tax Proceeding and the Homans Business Tax Contest Controlling Party shall not settle, compromise, or discharge such Tax Proceeding without the consent of such Homans Business Tax Contest Non-Controlling Party (which consent shall not be unreasonably withheld or delayed). The costs and expenses of conducting the defense of such Tax Proceeding shall be reasonably apportioned based on the relative amounts of the claim for Homans Business Taxes for a Pre-Closing Tax Period and the claim for Homans Business Taxes for a Post-Closing Tax Period.
Appears in 1 contract
Contests. If Notwithstanding anything to the contrary contained in this Agreement:
(a) After the Closing Date, Purchaser shall notify Seller in writing within ten (10) days of the date a claim is made or threatened in writing by any claim Taxing Authority that, if successful, may reasonably result in an indemnity payment by Seller under Section 6.4 (a "Tax Claim"). Such notice shall be made against any Tax Indemnitee or if any proceeding shall be commenced against any Tax Indemnitee (including a written notice contain factual information describing in reasonable detail the nature and basis of such proceeding) for claim and the amount thereof, to the extent known, and shall include copies of any Imposition as notice or other document received from any Taxing Authority in respect of any such asserted Tax liability. Failure by Purchaser to which give such notice to the Lessee or Seller shall not relieve the Guarantor Seller of any liability that it may have an indemnity on account of its indemnification obligation pursuant to this Section 13.4, or if any Tax Indemnitee shall determine that any Imposition to which the Lessee or the Guarantor may have an indemnity obligation pursuant to this Section 13.4 may be payable, such Tax Indemnitee shall promptly (and in any event, within fifteen (15) Business Days) notify the Guarantor in writing (provided that failure to so notify the Guarantor within fifteen (15) Business Days shall not alter such Tax Indemnitee's rights under this Section 13.4 Article VI, except to the extent such failure precludes or that Seller is materially and adversely affects prejudiced thereby in the ability to conduct a contest of any indemnified Taxes) and shall not take any action with respect to such claim, proceeding or Imposition without the written consent of the Guarantor (such consent not to be unreasonably withheld or unreasonably delayed) for thirty (30) days after the receipt defense of such notice by the GuarantorTax Claim; provided, however, that in irrespective of whether the case of any such claim Seller is materially or proceedingadversely prejudiced, if such Tax Indemnitee shall be required by law or regulation to take action prior to the end of such thirty (30) day period, such Tax Indemnitee shall in such notice to the Guarantor, so inform the Guarantor, and such Tax Indemnitee shall not take any action with respect to such claim, proceeding or Imposition without the consent of the Guarantor (such consent not to be unreasonably withheld or unreasonably delayed) for ten (10) days after the receipt of such notice by the Guarantor unless such Tax Indemnitee shall be required by law or regulation to take action prior to the end of such ten (10) day period. The Guarantor shall be entitled for a period of thirty (30) days from receipt of such notice from such Tax Indemnitee (or such shorter period as such Tax Indemnitee has notified the Guarantor is required by law or regulation for such Tax Indemnitee to commence such contest), to request in writing that such Tax Indemnitee contest the imposition of such Tax, at the Guarantor's expense. If (x) such contest can be pursued in the name of the Guarantor or the Lessee and independently from any other proceeding involving a Tax liability of such Tax Indemnitee for which the Lessee and the Guarantor have not agreed to indemnify such Tax Indemnitee, (y) such contest must be pursued in the name of such Tax Indemnitee, but can be pursued independently from any other proceeding involving a Tax liability of such Tax Indemnitee for which the Lessee and the Guarantor have not agreed to indemnify such Tax Indemnitee or (z) such Tax Indemnitee so requests, then the Guarantor or such Lessee Seller shall be permitted to control the contest reduce any liability Seller may have on account of such claim, provided that in the case of a contest described in clause (y) if such Tax Indemnitee determines reasonably and in good faith that such contest its indemnification obligation under this Article VI by the Guarantor or the Lessee could have a material adverse impact on the business or operations amount of such Tax Indemnitee and provides a written explanation to the Guarantor of such determinationits actual, such Tax Indemnitee may elect to control or reassert control of the contest, and provided that the taking control by the Guarantor or the Lessee of any contest shall not alter the applicable Tax Indemnitee's rights to indemnification hereunder, and provided, further, that in determining the application of clauses (x) and (y) of the preceding sentence, each Tax Indemnitee shall take any and all reasonable steps to segregate claims for any Taxes for which the Lessee and the Guarantor indemnify hereunder from Taxes for which the Lessee and the Guarantor are not obligated to indemnify hereunder, so that the Guarantor can control the contest of the former. In all other claims requested to be contested by the Guarantor, such Tax Indemnitee shall control the contest of such claim, acting through counsel selected by such Tax Indemnitee and reasonably acceptable to the Guarantor. In no event shall the Guarantor be permitted to contest (or such Tax Indemnitee be required to contest) any claim, (A) if such Tax Indemnitee provides the Guarantor with a legal opinion of counsel reasonably acceptable to the Guarantor that such action, suit or proceeding involves a risk of imposition of criminal liability or will involve a material risk of the sale, forfeiture or loss of, or the creation of any Lien (other than a Permitted Lien) on the Property or any part thereof unless the Guarantor shall have posted and maintained a bond or other security reasonably satisfactory to the relevant Tax Indemnitee in respect to such risk, (B) if a Lease Event of Default has occurred and is continuing unless the Guarantor shall have posted and maintained a bond or other security reasonably satisfactory to the relevant Tax Indemnitee in respect of the Taxes subject to such claim and any and all expenses for which the Guarantor or the Lessee is responsible hereunder reasonably foreseeable in connection with the contest of such claim, (C) unless the Guarantor shall have agreed to pay and shall pay, to such Tax Indemnitee on written demand all reasonable, documented out-of-pocket costsmonetary damages that are caused by the Purchaser's failure to timely give the notice required pursuant to this Section 6.7(a).
(b) Seller will have the right, losses and expenses at its option, upon timely notice to Purchaser, to assume at its own expense control of any audit or other defense of any Tax Claim (other than a Tax Claim relating solely to Taxes of RSA SLISI for a Straddle Period, which as described below, the parties shall jointly control) with its own counsel, provided that Seller's notice acknowledges Seller's indemnification liability for such claim. Seller's right to control a Tax Claim will be limited to issues in respect of which amounts in dispute would be paid by Seller or for which Seller would be liable pursuant to Section 6.4. Costs of defending or contesting such Tax Indemnitee may incur in connection with contesting such Imposition including all reasonable legal, accounting and investigatory fees and disbursements and (if applicable) reasonable, allocable internal overhead costs determined in accordance with normal bank operating procedures, or (D) if such contest shall involve the payment of Claims are to be borne by Seller unless the Tax prior Claim relates to a Straddle Period, in which event such costs shall be fairly apportioned as described below. Purchaser and RSA SLISI at their own expense each shall cooperate with Seller in contesting any Tax Claim, which cooperation shall include the contestretention and, unless upon Seller's request, the Guarantor shall provide provision of records and information that are reasonably relevant to such Tax Indemnitee an interest-free advance in an amount equal Claim and making employees available on a mutually convenient basis to provide additional information or explanation of any material provided hereunder. Notwithstanding the foregoing, Seller shall neither consent nor agree to the Imposition that such settlement of any Tax Indemnitee is required to pay (with no additional net after-tax costs to such Tax Indemnitee). In addition, for contests controlled by such Tax Indemnitee and claims contested in the name of such Tax Indemnitee in a public forum, no contest shall be required: (A) unless the amount of the potential indemnity (taking into account all similar or logically related claims that have been or could be raised in any audit involving any or all such Tax Indemnitees Claim with respect to any period for which the Guarantor or the Lessee may be liable to pay an indemnity under this Section 13.4(b)) exceeds (1) with respect to the Lessor, $25,000 and (2) with respect to any Tax Indemnitee other than the Lessor, $75,000 and (B) unless, if requested by such Tax Indemnitee, the Guarantor shall have provided to such Tax Indemnitee an opinion of counsel selected by the Guarantor (which may be in-house counsel) (except, in the case of income taxes indemnified hereunder, in which case such opinion shall be an opinion of independent tax counsel selected by the Guarantor and reasonably acceptable to such Tax Indemnitee) that a reasonable basis exists to contest such claim. In no event shall a Tax Indemnitee be required to appeal an adverse judicial determination to the United States Supreme Court. The party conducting the contest shall consult in good faith with the other party and its counsel with respect to the contest of such claim liability for Taxes that may affect the liability for any state, federal or foreign income tax of RSA SLISI or any affiliated group (or claim for refundas defined in section 1504(a) but the decisions regarding what actions to be taken shall be made by the controlling party in its sole judgment; provided, however, that if such Tax Indemnitee is the controlling party and the Guarantor recommends the acceptance of a settlement offer made by the relevant Governmental Authority and such Tax Indemnitee rejects such settlement offer, then the amount for which a Lessee and the Guarantor will be required to indemnify such Tax Indemnitee with respect to the Taxes subject to such offer shall not exceed the amount which it would have owed if such settlement offer had been accepted provided that any Tax Indemnitee shall be entitled to reject any indemnity payment it would otherwise be entitled to hereunder if such Tax Indemnitee reasonably determines that accepting such offer would have an unindemnified impact on such Tax Indemnitee and provided further that no Tax Indemnitee may reject any such indemnity payment if the Guarantor agrees to pay to such Tax Indemnitee the amount of such unindemnified impact, as reasonably determined by such Tax Indemnitee. In addition, the controlling party shall keep the noncontrolling party reasonably informed as to the progress of the contest, and shall provide the noncontrolling party with Code) of which RSA SLISI is a copy of (or appropriate excerpts from) member for any reports or claims issued by the relevant auditing agents or taxing authority to the controlling party thereof, in connection with such claim or the contest thereof, provided, however, that such obligation shall not obligate any Post-Closing Tax Indemnitee to disclose its tax returns or information or documentation unrelated to such claim or contest. Each Tax Indemnitee shall, at the expense of the Lessee and the Guarantor, supply the Lessee or the Guarantor with such information and documents reasonably requested by the Lessee or the Guarantor as are necessary or advisable for such Person to participate in any action, suit or proceeding to the extent permitted by this Section 13.4(b); provided, however, that such Tax Indemnitee shall not be required to provide to such Lessee or the Guarantor copies of its tax returns or any other information, documentation, or materials that it deems to be confidential or proprietary. Notwithstanding anything in this Section 13.4(b) to the contrary, no Tax Indemnitee shall enter into any settlement or other compromise or fail to appeal an adverse ruling with respect to any claim which is entitled to be indemnified under this Section 13.4 (and with respect to which contest is required under this Section 13.4(b)) Period without the prior written consent of the GuarantorPurchaser, unless such Tax Indemnitee waives its right to be indemnified under this Section 13.4 with respect to such claim. Notwithstanding anything contained herein to the contrary, a Tax Indemnitee which consent shall not be required to contest (unreasonably withheld, conditioned or delayed, and neither Seller, nor any Affiliate of Seller, shall file an amended Tax Return that may increase the Lessee nor liability for Taxes of RSA SLISI for any Post-Closing Tax Period without the Guarantor prior written consent of Purchaser, which consent shall not be unreasonably withheld, conditioned or delayed. Purchaser and Seller shall jointly control all proceedings taken in connection with any Tax Claims relating solely to a Straddle Period of RSA SLISI and each party shall bear its own out-of-pocket costs and expenses of the contest and all joint costs and expenses of the contest shall be permitted to contest borne in any judicial forum if such contest could, in a the same ratio as the applicable proposed Tax Indemnitee's reasonable judgment, would be materially adverse to it) a claim with respect to the imposition of any Tax if such Tax Indemnitee shall have waived its right to indemnification under this Section 13.4 with respect to such claim (and any claim with respect to such year or any other taxable year the contest of which is precluded or materially adversely affected as a result of such waiver)allocated.
Appears in 1 contract
Contests. If any claim shall be made against any Tax Indemnitee or if any proceeding shall be commenced against any Tax Indemnitee (including a written notice of such proceeding) for any Imposition as to which the Lessee or the Guarantor may have an indemnity obligation pursuant to this Section 13.414.5(a), or if any Tax Indemnitee shall determine that any Imposition as to which the Lessee or the Guarantor may have an indemnity obligation pursuant to this Section 13.4 14.5(a) may be payable, such Tax Indemnitee shall promptly (and in any event, within fifteen (15) Business Days) notify the Guarantor Lessee in writing (provided that failure to so notify the Guarantor within fifteen (15) Business Days shall not alter such Tax Indemnitee's rights under this Section 13.4 except to the extent such failure precludes or materially adversely affects the ability to conduct a contest of any indemnified Taxes) and shall not take any action with respect to such claim, proceeding or Imposition without the written consent of the Guarantor Lessee (such consent not to be unreasonably withheld or unreasonably delayed) for thirty (30) days after the receipt of such notice by the GuarantorLessee; provided, however, that in the case of any such claim or proceeding, if such Tax Indemnitee shall be required by law or regulation to take action prior to the end of such thirty (30) day 30)-day period, such Tax Indemnitee shall in such notice to the GuarantorLessee, so inform the GuarantorLessee, and such Tax Indemnitee shall not take any action with respect to such claim, proceeding or Imposition without the consent of the Guarantor Lessee (such consent not to be unreasonably withheld or unreasonably delayed) for ten (10) days after the receipt of such notice by Lessee unless the Guarantor unless such Tax Indemnitee shall be required by law or regulation to take action prior to the end of such ten (10) day 10)-day period. The Guarantor Lessee shall be entitled for a period of thirty (30) days from receipt of such notice from such the Tax Indemnitee (or such shorter period as such the Tax Indemnitee has notified the Guarantor Lessee is required by law or regulation for such the Tax Indemnitee to commence such contest), ) to request in writing that such Tax Indemnitee contest the imposition of such Tax, at the Guarantor's expense. If (x) and Lessee's joint and several expense and the Tax Indemnitee shall, at the joint and several expense of Guarantor and Lessee, in good faith conduct and control such contest can be pursued in (including, without limitation, by pursuit of appeals) related to the name of the Guarantor validity, applicability or the Lessee and independently from any other proceeding involving a Tax liability amount of such Tax Indemnitee for which the Lessee and the Guarantor have not agreed to indemnify such Tax IndemniteeImpositions (provided, however, that (yA) if such contest must be pursued in the name of such Tax Indemnitee, but involves a tax other than a tax on net income and can be pursued independently from any other proceeding involving a Tax tax liability of such Tax Indemnitee, the Tax Indemnitee, at Lessee's request, shall allow Guarantor or Lessee to conduct and control such contest and (B) in the case of any contest, the Tax Indemnitee for which may request Guarantor or Lessee to conduct and control such contest) by, in the sole discretion of the Person conducting and controlling such contest, (l) resisting payment thereof, (2) not paying the same except under protest, if protest is necessary and proper, (3) if the payment be made, using reasonable efforts to obtain a refund thereof in appropriate administrative and judicial proceedings, or (4) taking such other action as is reasonably requested by Guarantor or Lessee from time to time. The party controlling any contest shall consult in good faith with the non-controlling party and shall keep the Guarantor have not agreed noncontrolling party reasonably informed as to indemnify the conduct of such contest; provided that, all decisions ultimately shall be made in the sole discretion of the controlling party. The parties agree that a Tax Indemnitee may at any time decline to take further action with respect to the contest of any Imposition and may settle such contest if such Tax Indemnitee shall waive its rights to any indemnity from Lessee that otherwise would be payable in respect of such claim (and any future claim by any taxing authority, the contest of which is precluded by reason of such resolution of such claim) and shall pay to Lessee any amount previously paid or (z) advanced by Lessee pursuant to this Section 14.5 by way of indemnification or advance for the payment of an Imposition other than expenses of such contest. Notwithstanding the foregoing provisions of this Section 14.5, a Tax Indemnitee so requests, then the shall not be required to take any action and neither Guarantor or such nor Lessee shall be permitted to control contest any Impositions in its own name or that of the contest of such claim, provided that in the case of a contest described in clause (y) if such Tax Indemnitee determines reasonably and in good faith that such contest by the Guarantor or the Lessee could have a material adverse impact on the business or operations of such Tax Indemnitee and provides a written explanation to the Guarantor of such determination, such Tax Indemnitee may elect to control or reassert control of the contest, and provided that the taking control by the Guarantor or the Lessee of any contest shall not alter the applicable Tax Indemnitee's rights to indemnification hereunder, and provided, further, that in determining the application of clauses (x) and (y) of the preceding sentence, each Tax Indemnitee shall take any and all reasonable steps to segregate claims for any Taxes for which the Lessee and the Guarantor indemnify hereunder from Taxes for which the Lessee and the Guarantor are not obligated to indemnify hereunder, so that the Guarantor can control the contest of the former. In all other claims requested to be contested by the Guarantor, such Tax Indemnitee shall control the contest of such claim, acting through counsel selected by such Tax Indemnitee and reasonably acceptable to the Guarantor. In no event shall the Guarantor be permitted to contest (or such Tax Indemnitee be required to contest) any claim, unless (A) if such Tax Indemnitee provides the Guarantor with a legal opinion of counsel reasonably acceptable to the Guarantor that such action, suit or proceeding involves a risk of imposition of criminal liability or will involve a material risk of the sale, forfeiture or loss of, or the creation of any Lien (other than a Permitted Lien) on the Property or any part thereof unless the Guarantor shall have posted and maintained a bond or other security reasonably satisfactory to the relevant Tax Indemnitee in respect to such risk, (B) if a Lease Event of Default has occurred and is continuing unless the Guarantor shall have posted and maintained a bond or other security reasonably satisfactory to the relevant Tax Indemnitee in respect of the Taxes subject to such claim and any and all expenses for which the Guarantor or the Lessee is responsible hereunder reasonably foreseeable in connection with the contest of such claim, (C) unless the Guarantor shall have agreed to pay and shall pay, pay to such Tax Indemnitee on written demand and on an After Tax Basis all reasonable, documented out-of-pocket reasonable costs, losses and expenses that such Tax Indemnitee may incur actually incurs in connection with contesting such Imposition including Impositions, including, without limitation, all reasonable legal, accounting and investigatory fees and disbursements and disbursements, (if applicableB) reasonableTax Indemnitee shall have reasonably determined that the action to be taken will not result in any material danger of sale, allocable internal overhead costs determined in accordance with normal bank operating proceduresforfeiture or loss of any Property, or any part thereof or interest therein, will not interfere with the payment of Rent, and will not result in risk of criminal liability, (DC) if such contest shall involve the payment of the Tax Imposition prior to the contest, unless the Guarantor Lessee shall provide to such the Tax Indemnitee an interest-free advance in an amount equal to the Imposition that such the Tax Indemnitee is required to pay (with no additional net after-tax costs cost to such Tax Indemnitee). In addition, for contests controlled by such Tax Indemnitee and claims contested (D) in the case of a claim that must be pursued in the name of such a Tax Indemnitee in a public forum(or an Affiliate thereof), no contest shall be required: (A) unless the amount of the potential indemnity (taking into account all similar or logically related claims that have been or could be raised in any audit involving any or all such Tax Indemnitees with respect to any period for which the Guarantor or the Lessee may be liable to pay an indemnity under this Section 13.4(b)) exceeds (1) with respect to the Lessor, $25,000 and (2) with respect to any Tax Indemnitee other than the Lessor, $75,000 and (B) unless, if requested by such Tax Indemnitee, the Guarantor shall have provided to such Tax Indemnitee an opinion of counsel selected by the Guarantor (which may be in-house counsel) (except, in the case of income taxes indemnified hereunder, in which case such opinion shall be an opinion of independent tax counsel selected by the Guarantor Lessee and reasonably acceptable satisfactory to such Tax Indemnitee) Indemnitee stating that a reasonable basis exists to contest such claim. In no event shall a Tax Indemnitee be required to claim (or, in the case of an appeal of an adverse judicial determination determination, an opinion of such counsel to the United States Supreme Court. The party conducting effect that the contest position asserted in such appeal will more likely than not prevail) and (E) no Event of Default hereunder shall consult in good faith with the other party have occurred and its counsel with respect to the contest of such claim for Taxes (or claim for refund) but the decisions regarding what actions to be taken shall be made by the controlling party in its sole judgment; provided, however, that if such Tax Indemnitee is the controlling party and the Guarantor recommends the acceptance of a settlement offer made by the relevant Governmental Authority and such Tax Indemnitee rejects such settlement offer, then the amount for which a Lessee and the Guarantor will be required to indemnify such Tax Indemnitee with respect to the Taxes subject to such offer shall not exceed the amount which it would have owed if such settlement offer had been accepted provided that any Tax Indemnitee shall be entitled to reject any indemnity payment it would otherwise be entitled to hereunder if such Tax Indemnitee reasonably determines that accepting such offer would have an unindemnified impact on such Tax Indemnitee and provided further that no Tax Indemnitee may reject any such indemnity payment if the Guarantor agrees to pay to such Tax Indemnitee the amount of such unindemnified impact, as reasonably determined by such Tax Indemnitee. In addition, the controlling party shall keep the noncontrolling party reasonably informed as to the progress of the contest, and shall provide the noncontrolling party with a copy of (or appropriate excerpts from) any reports or claims issued by the relevant auditing agents or taxing authority to the controlling party thereof, in connection with such claim or the contest thereof, provided, however, that such obligation shall not obligate any Tax Indemnitee to disclose its tax returns or information or documentation unrelated to such claim or contestcontinuing. Each Tax Indemnitee shall, shall at the Lessee's expense of the supply Lessee and the Guarantor, supply the Lessee or the Guarantor with such information and documents reasonably requested by the Lessee or the Guarantor as are in such Tax Indemnitee's possession and as are necessary or advisable for such Person Lessee to participate in any action, suit or proceeding to the extent permitted by this Section 13.4(b14.5(b); providedprovided that, however, that such Tax Indemnitee shall not be required to provide to such Lessee or the Guarantor copies of disclose its tax returns or any other information, documentation, or materials that it deems return to be confidential or proprietary. Notwithstanding anything in this Section 13.4(b) Lessee to the contraryextent that the information deemed necessary or desirable by Lessee contained therein is otherwise made available to the Lessee in a form which will not hinder Lessee's contest of such action, no Tax Indemnitee shall enter into any settlement suit or other compromise or fail to appeal an adverse ruling with respect to any claim which is entitled to be indemnified under this Section 13.4 (and with respect to which contest is required under this Section 13.4(b)) without the prior written consent of the Guarantor, unless such Tax Indemnitee waives its right to be indemnified under this Section 13.4 with respect to such claimproceeding. Notwithstanding anything contained herein to the contrary, a Tax Indemnitee shall will not be required to contest (and neither the Lessee nor the Guarantor shall be permitted to contest in any judicial forum if such contest could, in a Tax Indemnitee's reasonable judgment, be materially adverse to it) a claim with respect to the imposition of any Tax if such Tax Indemnitee shall have waived waive its right to indemnification under this Section 13.4 14.5 with respect to such claim (and any related claim with respect to such year or any other taxable year years the contest of which is precluded or otherwise materially adversely affected as a result of such waiver).
Appears in 1 contract
Contests. (a) If any claim shall be made against any Taxing Authority asserts an Income Tax Indemnitee or if any proceeding shall be commenced against any Tax Indemnitee (including a written Claim, then the party hereto first receiving notice of such proceeding) for any Imposition as to which the Lessee or the Guarantor may have an indemnity obligation pursuant to this Section 13.4, or if any Income Tax Indemnitee Claim promptly shall determine that any Imposition to which the Lessee or the Guarantor may have an indemnity obligation pursuant to this Section 13.4 may be payable, such Tax Indemnitee shall promptly (and in any event, within fifteen (15) Business Days) notify the Guarantor in writing (provided that failure to so notify the Guarantor within fifteen (15) Business Days shall not alter such Tax Indemnitee's rights under this Section 13.4 except provide written notice thereof to the extent such failure precludes other party or materially adversely affects the ability to conduct a contest of any indemnified Taxes) and shall not take any action with respect to such claim, proceeding or Imposition without the written consent of the Guarantor (such consent not to be unreasonably withheld or unreasonably delayed) for thirty (30) days after the receipt of such notice by the Guarantorparties hereto; provided, however, that in the case failure of such party to give such prompt notice shall not relieve the other party of any such claim or proceedingof its obligations under this Article VIII, if such Tax Indemnitee shall be required by law or regulation to take action prior except to the end extent that the other party is actually prejudiced thereby. Such notice shall specify in reasonable detail the basis for such Income Tax Claim and shall include a copy of such thirty the relevant portion of any correspondence received from the Taxing Authority.
(30b) day periodSellers shall, such Tax Indemnitee shall in such upon written notice to Buyer, have the Guarantor, so inform the Guarantor, and such Tax Indemnitee shall not take any action with respect right to such claim, proceeding or Imposition without the consent of the Guarantor (such consent not to be unreasonably withheld or unreasonably delayed) for ten (10) days after the receipt of such notice by the Guarantor unless such Tax Indemnitee shall be required by law or regulation to take action prior to the end of such ten (10) day period. The Guarantor shall be entitled for a period of thirty (30) days from receipt of such notice from such Tax Indemnitee (or such shorter period as such Tax Indemnitee has notified the Guarantor is required by law or regulation for such Tax Indemnitee to commence such contest), to request in writing that such Tax Indemnitee contest the imposition of such Taxcontrol, at the Guarantor's their own expense. If (x) such contest can be pursued in the name of the Guarantor , any audit, examination, contest, litigation or the Lessee and independently from any other proceeding involving by or against any Taxing Authority (a “Tax liability of such Tax Indemnitee for which the Lessee and the Guarantor have not agreed to indemnify such Tax Indemnitee, (yProceeding”) such contest must be pursued in the name of such Tax Indemnitee, but can be pursued independently from any other proceeding involving a Tax liability of such Tax Indemnitee for which the Lessee and the Guarantor have not agreed to indemnify such Tax Indemnitee or (z) such Tax Indemnitee so requests, then the Guarantor or such Lessee shall be permitted to control the contest of such claim, provided that in the case of a contest described in clause (y) if such Tax Indemnitee determines reasonably and in good faith that such contest by the Guarantor or the Lessee could have a material adverse impact on the business or operations of such Tax Indemnitee and provides a written explanation to the Guarantor of such determination, such Tax Indemnitee may elect to control or reassert control of the contest, and provided that the taking control by the Guarantor or the Lessee of any contest shall not alter the applicable Tax Indemnitee's rights to indemnification hereunder, and provided, further, that in determining the application of clauses (x) and (y) of the preceding sentence, each Tax Indemnitee shall take any and all reasonable steps to segregate claims for any Taxes for which the Lessee and the Guarantor indemnify hereunder from Taxes for which the Lessee and the Guarantor are not obligated to indemnify hereunder, so that the Guarantor can control the contest of the former. In all other claims requested to be contested by the Guarantor, such Tax Indemnitee shall control the contest of such claim, acting through counsel selected by such Tax Indemnitee and reasonably acceptable to the Guarantor. In no event shall the Guarantor be permitted to contest (or such Tax Indemnitee be required to contest) any claim, (A) if such Tax Indemnitee provides the Guarantor with a legal opinion of counsel reasonably acceptable to the Guarantor that such action, suit or proceeding involves a risk of imposition of criminal liability or will involve a material risk of the sale, forfeiture or loss of, or the creation of any Lien (other than a Permitted Lien) on the Property or any part thereof unless the Guarantor shall have posted and maintained a bond or other security reasonably satisfactory to the relevant Tax Indemnitee in respect to such risk, (B) if a Lease Event of Default has occurred and is continuing unless the Guarantor shall have posted and maintained a bond or other security reasonably satisfactory to the relevant Tax Indemnitee in respect of the Taxes subject to such claim and Company or any and all expenses Company Subsidiary for which any taxable period that ends on or before the Guarantor or the Lessee is responsible hereunder reasonably foreseeable in connection with the contest of such claim, (C) unless the Guarantor shall have agreed to pay and shall pay, to such Tax Indemnitee on written demand all reasonable, documented out-of-pocket costs, losses and expenses that such Tax Indemnitee may incur in connection with contesting such Imposition including all reasonable legal, accounting and investigatory fees and disbursements and (if applicable) reasonable, allocable internal overhead costs determined in accordance with normal bank operating procedures, or (D) if such contest shall involve the payment of the Tax prior to the contest, unless the Guarantor shall provide to such Tax Indemnitee an interest-free advance in an amount equal to the Imposition that such Tax Indemnitee is required to pay (with no additional net after-tax costs to such Tax Indemnitee). In addition, for contests controlled by such Tax Indemnitee and claims contested in the name of such Tax Indemnitee in a public forum, no contest shall be required: (A) unless the amount of the potential indemnity (taking into account all similar or logically related claims that have been or could be raised in any audit involving any or all such Tax Indemnitees with respect to any period for which the Guarantor or the Lessee may be liable to pay an indemnity under this Section 13.4(b)) exceeds (1) with respect to the Lessor, $25,000 and (2) with respect to any Tax Indemnitee other than the Lessor, $75,000 and (B) unless, if requested by such Tax Indemnitee, the Guarantor shall have provided to such Tax Indemnitee an opinion of counsel selected by the Guarantor (which may be in-house counsel) (except, in the case of income taxes indemnified hereunder, in which case such opinion shall be an opinion of independent tax counsel selected by the Guarantor and reasonably acceptable to such Tax Indemnitee) that a reasonable basis exists to contest such claim. In no event shall a Tax Indemnitee be required to appeal an adverse judicial determination to the United States Supreme Court. The party conducting the contest shall consult in good faith with the other party and its counsel with respect to the contest of such claim for Taxes (or claim for refund) but the decisions regarding what actions to be taken shall be made by the controlling party in its sole judgmentClosing Date; provided, however, that if such Tax Indemnitee is action could have an adverse impact on Buyer, any Affiliate of Buyer or the controlling party Company or any Company Subsidiary, (i) Sellers shall provide Buyer with a timely and the Guarantor recommends the acceptance reasonably detailed account of a settlement offer made by the relevant Governmental Authority and each phase of such Tax Indemnitee rejects such settlement offerProceeding, then the amount for which a Lessee and the Guarantor will be required to indemnify (ii) Sellers shall consult with Buyer before taking any significant action in connection with such Tax Indemnitee Proceeding, (iii) Sellers shall consult with respect Buyer and offer Buyer an opportunity to comment before submitting any written materials prepared or furnished in connection with such Tax Proceeding, (iv) Sellers shall defend such Tax Proceeding diligently and in good faith as if they were the Taxes subject to only party in interest in connection with such offer shall not exceed the amount which it would have owed if such settlement offer had been accepted provided that any Tax Indemnitee Proceeding, (v) Buyer (or an Affiliate of Buyer) shall be entitled to reject any indemnity payment it would otherwise be entitled to hereunder if participate, at its own expense, in such Tax Indemnitee reasonably determines that accepting such offer would have an unindemnified impact on such Tax Indemnitee Proceeding and provided further that no Tax Indemnitee may reject receive copies of any such indemnity payment if the Guarantor agrees to pay written materials relating to such Tax Indemnitee Proceeding received from the amount of such unindemnified impactrelevant Taxing Authority, as reasonably determined by and (vi) Sellers shall not settle, compromise or abandon any such Tax Indemnitee. Proceeding without obtaining the prior written consent of Buyer, which consent shall not be unreasonably withheld, conditioned or delayed.
(c) In additionthe case of a Tax Proceeding for a Straddle Period of the Company or any Company Subsidiary, the controlling party Controlling Party shall keep have the noncontrolling party reasonably informed as right to the progress of the contest, and shall provide the noncontrolling party with a copy of (or appropriate excerpts from) any reports or claims issued by the relevant auditing agents or taxing authority to the controlling party thereof, in connection with such claim or the contest thereof, provided, however, that such obligation shall not obligate any Tax Indemnitee to disclose its tax returns or information or documentation unrelated to such claim or contest. Each Tax Indemnitee shallcontrol, at the expense of the Lessee and the Guarantorits own expense, supply the Lessee or the Guarantor with such information and documents reasonably requested by the Lessee or the Guarantor as are necessary or advisable for such Person to participate in any action, suit or proceeding to the extent permitted by this Section 13.4(b)Tax Proceeding; provided, however, that (i) the Controlling Party shall provide the Non-Controlling Party with a timely and reasonably detailed account of each phase of such Tax Indemnitee Proceeding, (ii) the Controlling Party shall consult with the Non-Controlling Party before taking any significant action in connection with such Tax Proceeding, (iii) the Controlling Party shall consult with the Non-Controlling Party and offer the Non-Controlling Party an opportunity to comment before submitting any written materials prepared or furnished in connection with such Tax Proceeding, (iv) the Controlling Party shall defend such Tax Proceeding diligently and in good faith as if it were the only party in interest in connection with such Tax Proceeding, (v) the Non-Controlling Party shall be entitled to participate in such Tax Proceeding, at its own expense, if such Tax Proceeding could have an adverse impact on the Non-Controlling Party or any of its Affiliates and (vi) the Controlling Party shall not settle, compromise or abandon any such Tax Proceeding without obtaining the prior written consent, which consent shall not be required to provide to unreasonably withheld, conditioned or delayed, of the Non-Controlling Party if such Lessee settlement, compromise or abandonment could have an adverse impact on the Guarantor copies Non-Controlling Party or any of its tax returns Affiliates. “Controlling Party” means whichever of Sellers or any other informationBuyer is reasonably expected to bear the greater Tax liability in connection with a Straddle Period Tax Proceeding, documentation, and “Non-Controlling Party” means whichever of Sellers or materials that it deems to be confidential or proprietary. Notwithstanding anything in this Section 13.4(b) to Buyer is not the contrary, no Tax Indemnitee shall enter into any settlement or other compromise or fail to appeal an adverse ruling with respect to any claim which is entitled to be indemnified under this Section 13.4 (and with respect to which contest is required under this Section 13.4(b)) without the prior written consent of the Guarantor, unless such Tax Indemnitee waives its right to be indemnified under this Section 13.4 Controlling Party with respect to such claim. Notwithstanding anything contained herein to the contrary, a Straddle Period Tax Indemnitee shall not be required to contest (and neither the Lessee nor the Guarantor shall be permitted to contest in any judicial forum if such contest could, in a Tax Indemnitee's reasonable judgment, be materially adverse to it) a claim with respect to the imposition of any Tax if such Tax Indemnitee shall have waived its right to indemnification under this Section 13.4 with respect to such claim (and any claim with respect to such year or any other taxable year the contest of which is precluded or materially adversely affected as a result of such waiver)Proceeding.
Appears in 1 contract
Sources: Securities Purchase Agreement (Friedman Billings Ramsey Group Inc)
Contests. If any claim shall be made against any Tax Indemnitee or if any proceeding shall be commenced against any Tax Indemnitee (including a written notice of such proceeding) for any Imposition as to which the Lessee or the Guarantor may have an indemnity obligation pursuant to this Section 13.413.5, or if any Tax Indemnitee shall determine that any Imposition to which the Lessee or the Guarantor may have an indemnity obligation pursuant to this Section 13.4 13.5 may be payable, such Tax Indemnitee shall promptly within thirty (and in any event, within fifteen (1530) Business Days) days notify the Guarantor Lessee in writing (provided provided, that failure to so notify the Guarantor Lessee within fifteen thirty (1530) Business Days days shall not alter such Tax Indemnitee's ’s rights under this Section 13.4 13.5 except to the extent such failure precludes or materially adversely affects the ability to conduct a contest of any indemnified TaxesImpositions) and shall not take any action with respect to such claim, proceeding or Imposition without the written consent of the Guarantor Lessee (such consent not to be unreasonably withheld or unreasonably delayed) for thirty (30) days after the receipt of such notice by the GuarantorLessee; provided, however, that in the case of any such claim or proceeding, if such Tax Indemnitee shall be required by law or regulation Applicable Law to take action prior to the end of such thirty (30) day period, such Tax Indemnitee shall in such notice to the GuarantorLessee, so inform the GuarantorLessee, and such Tax Indemnitee shall not take any action with respect to such claim, proceeding or Imposition without the consent of the Guarantor Lessee (such consent not to be unreasonably withheld or unreasonably delayed) for ten (10) days after the receipt of such notice by the Guarantor Lessee unless such Tax Indemnitee shall be required by law Applicable Law or regulation to take action prior to the end of such ten (10) day period, provided, further, however, that the failure of the Tax Indemnitee to give notice referred to in this sentence shall not diminish Lessee’s obligations hereunder except to the extent that such failure precludes Lessee from contesting such claim. The Guarantor Lessee shall be entitled for a period of thirty (30) days from receipt of such notice from such Tax Indemnitee (or such shorter period as such Tax Indemnitee has notified the Guarantor Lessee is required by law or regulation Applicable Law for such Tax Indemnitee to commence such contest), ) to request in writing that such Tax Indemnitee contest the imposition of such Tax, at the Guarantor's Lessee’s sole cost and expense. If (xi) such contest can be pursued in the name of the Guarantor or the Lessee and independently from any other proceeding involving a Tax liability of such Tax Indemnitee for which the Lessee and the Guarantor have has not agreed to indemnify such Tax Indemnitee, (yii) such contest must be pursued in the name of such Tax Indemnitee, but can be pursued independently from any other proceeding involving a Tax liability of such Tax Indemnitee for which the Lessee and the Guarantor have has not agreed to indemnify such Tax Indemnitee or (ziii) such Tax Indemnitee so requests, then the Guarantor or such Lessee shall be permitted to control the contest of such claim, provided provided, that in the case of a contest described in clause (y) ii), if such Tax Indemnitee reasonably determines reasonably and in good faith that such contest by the Guarantor or the Lessee could have a material an adverse impact on the business or operations of such Tax Indemnitee and provides a written explanation to the Guarantor of such determinationIndemnitee, such Tax Indemnitee may elect to control or reassert control of the contest, and provided provided, that the by taking control by of the Guarantor or contest, the Lessee acknowledges that it is responsible for the Imposition ultimately determined to be due by reason of any contest shall not alter the applicable Tax Indemnitee's rights to indemnification hereunder, and provided, further, that in determining the application of clauses (x) and (y) of the preceding sentence, each Tax Indemnitee shall take any and all reasonable steps to segregate claims for any Taxes for which the Lessee and the Guarantor indemnify hereunder from Taxes for which the Lessee and the Guarantor are not obligated to indemnify hereunder, so that the Guarantor can control the contest of the formersuch claim. In all other claims requested to be contested by the GuarantorLessee, such Tax Indemnitee shall control the contest of such claim, acting through counsel selected by such Tax Indemnitee and reasonably acceptable to the GuarantorLessee. In no event shall the Guarantor Lessee be permitted to contest (or such Tax Indemnitee be required to contest) any claim, claim (A) if such Tax Indemnitee provides the Guarantor Lessee with a legal opinion of counsel reasonably acceptable to the Guarantor Lessee that such action, suit or proceeding involves a risk of imposition of criminal liability or will could involve a material risk of the sale, forfeiture or loss of, or the creation of any Lien (other than a Permitted LienProperty Lien of the type described in clause (a), (b), (g) or (h) of the definition thereof) on the Property or any part of any thereof unless the Guarantor Lessee shall have posted and maintained a bond or other security reasonably satisfactory to the relevant Tax Indemnitee in respect to such risk, (B) if a Lease Event of Default has occurred and is continuing unless the Guarantor Lessee shall have posted and maintained a bond or other security reasonably satisfactory to the relevant Tax Indemnitee in its sole discretion in respect of the Taxes subject to such claim and any and all expenses for which the Guarantor or the Lessee is responsible hereunder reasonably foreseeable in connection with the contest of such claim, (C) unless the Guarantor Lessee shall have agreed to pay and shall pay, to such Tax Indemnitee on written demand all reasonable, documented reasonable out-of-pocket costs, losses and expenses that such Tax Indemnitee may incur in connection with contesting such Imposition including all reasonable legal, accounting and investigatory fees and disbursements and (if applicable) reasonable, allocable internal overhead costs determined in accordance with normal bank operating proceduresdisbursements, or (D) if such contest shall involve the payment of the Tax prior to the contest, unless the Guarantor Lessee shall provide to such Tax Indemnitee an interest-free advance in an amount equal to the Imposition that such the Tax Indemnitee is required to pay (with no additional net after-tax costs to such Tax Indemnitee). In addition, for contests controlled by such Tax Indemnitee controlled contests and claims contested in the name of such Tax Indemnitee in a public forum, no contest shall be requiredrequired unless: (A) unless the amount of the potential indemnity (taking into account all similar or logically related claims that have been or could be raised in any audit involving any or all such Tax Indemnitees Indemnitee with respect to any period for which the Guarantor or the Lessee may be liable to pay an indemnity under this Section 13.4(b13.5(b)) exceeds (1) with respect to the Lessor$50,000, $25,000 and (2) with respect to any Tax Indemnitee other than the Lessor, $75,000 and (B) unless, if requested by such Tax Indemnitee, the Guarantor Lessee shall have provided to such Tax Indemnitee an opinion of counsel selected by the Guarantor (which may be in-house counsel) Lessee (except, in the case of income taxes indemnified hereunder, in which case such opinion shall be an opinion of independent tax counsel selected by the Guarantor such Tax Indemnitee and reasonably acceptable to such Tax Indemniteethe Lessee) that a reasonable basis exists to contest such claimclaim (or, in the case of an appeal of an adverse determination, an opinion of such counsel to the effect that there is substantial authority for the position asserted in such appeal) and (C) Lessee shall have acknowledged in writing to the Tax Indemnitee its obligation to pay the costs and expenses thereof and to indemnify such Tax Indemnitee pursuant to this Section 13.5 for the Taxes subject to the proposed contest, if such contest is unsuccessful. In no event shall a Tax Indemnitee be required to appeal an adverse judicial determination to the United States Supreme Court. In addition, a Tax Indemnitee shall not be required to contest any claim in its name (or that of an Affiliate) if the subject matter thereof shall be of a continuing nature and shall have previously been decided adversely by a court of competent jurisdiction pursuant to the contest provisions of this Section 13.5(b), unless there shall have been a Change in Law and the Tax Indemnitee shall have received, at the Lessee’s expense, an opinion of independent tax counsel selected by the Lessee and reasonably acceptable to the Tax Indemnitee stating that, as a result of such Change in Law, it is more likely than not that the Tax Indemnitee will prevail in such contest. The party conducting the contest shall consult in good faith with the other party and its counsel with respect to the contest of such claim for Taxes (or claim for refund) but Taxes, provided, however, that the decisions regarding what actions to be taken shall be made by the controlling party in its sole judgment; provided, however, that if such Tax Indemnitee is the controlling party and the Guarantor recommends the acceptance of a settlement offer made by the relevant Governmental Authority and such Tax Indemnitee rejects such settlement offer, then the amount for which a Lessee and the Guarantor will be required to indemnify such Tax Indemnitee with respect to the Taxes subject to such offer shall not exceed the amount which it would have owed if such settlement offer had been accepted provided that any Tax Indemnitee shall be entitled to reject any indemnity payment it would otherwise be entitled to hereunder if such Tax Indemnitee reasonably determines that accepting such offer would have an unindemnified impact on such Tax Indemnitee and provided further that no Tax Indemnitee may reject any such indemnity payment if the Guarantor agrees to pay to such Tax Indemnitee the amount of such unindemnified impact, as reasonably determined by such Tax Indemnitee. In addition, the controlling party shall keep the noncontrolling non-controlling party reasonably informed as to the progress of the contest, and shall provide the noncontrolling non-controlling party with a copy of (or appropriate excerpts from) any reports or claims issued by the relevant auditing agents or taxing authority to the controlling party thereof, in connection with such claim or the contest thereof, provided, however, that such obligation shall not obligate any Tax Indemnitee to disclose its tax returns or information or documentation unrelated to such claim or contest. Each Tax Indemnitee shall, at the expense of the Lessee Lessee’s sole cost and the Guarantorexpense, supply the Lessee or the Guarantor with such information and documents reasonably requested by the Lessee or the Guarantor as are necessary or advisable for such Person the Lessee to participate in any action, suit or proceeding to the extent permitted by this Section 13.4(b13.5(b); provided, however, that such Tax Indemnitee shall not be required to provide to such the Lessee or the Guarantor copies of (i) any information, documentation or materials that it reasonably deems to be confidential or proprietary or (ii) its tax returns or any other information, documentation, documentation or materials that it deems to be confidential or proprietaryin respect of such Tax Indemnitee’s financial position. Notwithstanding anything in this Section 13.4(b13.5(b) to the contrary, no Tax Indemnitee shall enter into any settlement or other compromise or fail to appeal an adverse ruling with respect to any claim which is entitled to be indemnified under this Section 13.4 13.5 (and with respect to which contest is required under this Section 13.4(b13.5(b)) without the prior written consent of the GuarantorLessee, unless such Tax Indemnitee waives its right to be indemnified under this Section 13.4 13.5 with respect to such claim. No settlement of any contest may be made by the Lessee without the Tax Indemnitee’s written consent (which consent shall not be unreasonably withheld). Notwithstanding anything contained herein to the contrary, a Tax Indemnitee shall will not be required to contest (and neither the Lessee nor the Guarantor shall not be permitted to contest in any judicial forum if such contest could, in a Tax Indemnitee's reasonable judgment, be materially adverse to itcontest) a claim with respect to the imposition of any Tax if such Tax Indemnitee shall have waived waive its right to indemnification under this Section 13.4 13.5 with respect to such claim (and any claim with respect to such year or any other taxable year the contest of which is precluded or materially adversely affected as a result of such waiver).
Appears in 1 contract
Contests. (a) If any claim shall be made against Taxing Authority asserts a Tax Claim in respect of the Company or any Tax Indemnitee or if any proceeding shall be commenced against any Tax Indemnitee (including a written of its Subsidiaries, then the party hereto first receiving notice of such proceeding) for any Imposition as to which the Lessee or the Guarantor may have an indemnity obligation pursuant to this Section 13.4, or if any Tax Indemnitee Claim promptly shall determine that any Imposition to which the Lessee or the Guarantor may have an indemnity obligation pursuant to this Section 13.4 may be payable, such Tax Indemnitee shall promptly (and in any event, within fifteen (15) Business Days) notify the Guarantor in writing (provided that failure to so notify the Guarantor within fifteen (15) Business Days shall not alter such Tax Indemnitee's rights under this Section 13.4 except provide written notice thereof to the extent such failure precludes other party or materially adversely affects the ability to conduct a contest of any indemnified Taxes) and shall not take any action with respect to such claim, proceeding or Imposition without the written consent of the Guarantor (such consent not to be unreasonably withheld or unreasonably delayed) for thirty (30) days after the receipt of such notice by the Guarantorparties hereto; provided, however, that in the case failure of such party to give such prompt notice shall not relieve the other party of any such claim or proceedingof its obligations under this Article VII, if such Tax Indemnitee shall be required by law or regulation to take action prior except to the end of such thirty (30) day period, such Tax Indemnitee extent that the other party is actually prejudiced thereby. Such notice shall specify in such notice to reasonable detail the Guarantor, so inform the Guarantor, and such Tax Indemnitee shall not take any action with respect to such claim, proceeding or Imposition without the consent of the Guarantor (such consent not to be unreasonably withheld or unreasonably delayed) for ten (10) days after the receipt of such notice by the Guarantor unless such Tax Indemnitee shall be required by law or regulation to take action prior to the end of such ten (10) day period. The Guarantor shall be entitled for a period of thirty (30) days from receipt of such notice from such Tax Indemnitee (or such shorter period as such Tax Indemnitee has notified the Guarantor is required by law or regulation basis for such Tax Indemnitee Claim and shall include a copy of the relevant portion of any correspondence received from the Taxing Authority.
(b) Seller shall have the exclusive right to commence such contest), to request in writing that such Tax Indemnitee contest the imposition of such Taxcontrol, at the Guarantor's its own expense. If (x) such contest can be pursued in the name of the Guarantor , any audit, examination, contest, litigation or the Lessee and independently from any other proceeding involving by or against any Taxing Authority (a “Tax liability of such Tax Indemnitee for which the Lessee and the Guarantor have not agreed to indemnify such Tax Indemnitee, (yProceeding”) such contest must be pursued in the name of such Tax Indemnitee, but can be pursued independently from any other proceeding involving a Tax liability of such Tax Indemnitee for which the Lessee and the Guarantor have not agreed to indemnify such Tax Indemnitee or (z) such Tax Indemnitee so requests, then the Guarantor or such Lessee shall be permitted to control the contest of such claim, provided that in the case of a contest described in clause (y) if such Tax Indemnitee determines reasonably and in good faith that such contest by the Guarantor or the Lessee could have a material adverse impact on the business or operations of such Tax Indemnitee and provides a written explanation to the Guarantor of such determination, such Tax Indemnitee may elect to control or reassert control of the contest, and provided that the taking control by the Guarantor or the Lessee of any contest shall not alter the applicable Tax Indemnitee's rights to indemnification hereunder, and provided, further, that in determining the application of clauses (x) and (y) of the preceding sentence, each Tax Indemnitee shall take any and all reasonable steps to segregate claims for any Taxes for which the Lessee and the Guarantor indemnify hereunder from Taxes for which the Lessee and the Guarantor are not obligated to indemnify hereunder, so that the Guarantor can control the contest of the former. In all other claims requested to be contested by the Guarantor, such Tax Indemnitee shall control the contest of such claim, acting through counsel selected by such Tax Indemnitee and reasonably acceptable to the Guarantor. In no event shall the Guarantor be permitted to contest (or such Tax Indemnitee be required to contest) any claim, (A) if such Tax Indemnitee provides the Guarantor with a legal opinion of counsel reasonably acceptable to the Guarantor that such action, suit or proceeding involves a risk of imposition of criminal liability or will involve a material risk of the sale, forfeiture or loss of, or the creation of any Lien (other than a Permitted Lien) on the Property or any part thereof unless the Guarantor shall have posted and maintained a bond or other security reasonably satisfactory to the relevant Tax Indemnitee in respect to such risk, (B) if a Lease Event of Default has occurred and is continuing unless the Guarantor shall have posted and maintained a bond or other security reasonably satisfactory to the relevant Tax Indemnitee in respect of the Taxes subject to such claim and Company or any and all expenses of its Subsidiaries for which any taxable period that ends on or before the Guarantor or the Lessee is responsible hereunder reasonably foreseeable in connection with the contest of such claimClosing Date; provided, (C) unless the Guarantor shall have agreed to pay and shall payhowever, to such Tax Indemnitee on written demand all reasonable, documented out-of-pocket costs, losses and expenses that such Tax Indemnitee may incur in connection with contesting such Imposition including all reasonable legal, accounting and investigatory fees and disbursements and (if applicable) reasonable, allocable internal overhead costs determined in accordance with normal bank operating procedures, or (D) if such contest shall involve the payment of the Tax prior to the contest, unless the Guarantor shall provide to such Tax Indemnitee an interest-free advance in an amount equal to the Imposition that such Tax Indemnitee is required to pay (with no additional net after-tax costs to such Tax Indemnitee). In addition, for contests controlled by such Tax Indemnitee and claims contested in the name of such Tax Indemnitee in a public forum, no contest shall be required: (A) unless the amount of the potential indemnity (taking into account all similar or logically related claims that have been or could be raised in any audit involving any or all such Tax Indemnitees with respect to any period for which the Guarantor or the Lessee may be liable to pay an indemnity under this Section 13.4(b)) exceeds (1) with respect to the Lessor, $25,000 and (2) with respect to any Tax Indemnitee other than Proceeding solely in respect of the LessorCompany or any of its Subsidiaries that would reasonably be expected to have an adverse impact that is material on Buyer and its Affiliates including the Company and its Subsidiaries after Closing, $75,000 and (B) unless, if requested by Seller shall consult with Buyer before taking any significant action in connection with such Tax Indemnitee, the Guarantor shall have provided to such Tax Indemnitee an opinion of counsel selected by the Guarantor Proceeding.
(which may be in-house counselc) (except, in In the case of income taxes indemnified hereundera Tax Proceeding for a Straddle Period of the Company or any of its Subsidiaries, in which case Buyer shall have the right to control, at its own expense, such opinion Tax Proceeding; provided, however, that (i) Buyer shall be an opinion of independent tax counsel selected by the Guarantor provide Seller with a timely and reasonably acceptable to detailed account of each phase of such Tax IndemniteeProceeding, (ii) that a reasonable basis exists to contest such claim. In no event shall a Tax Indemnitee be required to appeal an adverse judicial determination to the United States Supreme Court. The party conducting the contest Buyer shall consult with Seller before taking any significant action in connection with such Tax Proceeding, (iii) Buyer shall defend such Tax Proceeding diligently and in good faith as if it were the only party in interest in connection with the other party and its counsel with respect to the contest of such claim for Taxes Tax Proceeding, (or claim for refundiv) but the decisions regarding what actions to be taken Seller shall be made by entitled to participate in such Tax Proceeding, at its own expense, and (v) Buyer shall not settle, compromise or abandon any such Tax Proceeding without obtaining the controlling party prior written consent of Seller, which consent shall not be unreasonably withheld, conditioned or delayed.
(d) Buyer shall have the exclusive right to control, at its own expense, any Tax Proceeding involving the Company or any of its Subsidiaries (other than any Tax Proceeding described in its sole judgmentSection 7.6(b) or (c)); provided, however, that if such Tax Indemnitee is the controlling party and the Guarantor recommends the acceptance of a settlement offer made by the relevant Governmental Authority and such Tax Indemnitee rejects such settlement offer, then the amount for which a Lessee and the Guarantor will Proceeding would reasonably be required expected to indemnify such Tax Indemnitee with respect to the Taxes subject to such offer shall not exceed the amount which it would have owed if such settlement offer had been accepted provided that any Tax Indemnitee shall be entitled to reject any indemnity payment it would otherwise be entitled to hereunder if such Tax Indemnitee reasonably determines that accepting such offer would have an unindemnified impact adverse effect on such Tax Indemnitee and provided further Seller or any of its Affiliates that no Tax Indemnitee may reject is material Buyer shall consult with Seller before taking any such indemnity payment if the Guarantor agrees to pay to such Tax Indemnitee the amount of such unindemnified impact, as reasonably determined by such Tax Indemnitee. In addition, the controlling party shall keep the noncontrolling party reasonably informed as to the progress of the contest, and shall provide the noncontrolling party with a copy of (or appropriate excerpts from) any reports or claims issued by the relevant auditing agents or taxing authority to the controlling party thereof, significant action in connection with such claim or the contest thereof, provided, however, that such obligation shall not obligate any Tax Indemnitee to disclose its tax returns or information or documentation unrelated to such claim or contest. Each Tax Indemnitee shall, at the expense of the Lessee and the Guarantor, supply the Lessee or the Guarantor with such information and documents reasonably requested by the Lessee or the Guarantor as are necessary or advisable for such Person to participate in any action, suit or proceeding to the extent permitted by this Section 13.4(b); provided, however, that such Tax Indemnitee shall not be required to provide to such Lessee or the Guarantor copies of its tax returns or any other information, documentation, or materials that it deems to be confidential or proprietary. Notwithstanding anything in this Section 13.4(b) to the contrary, no Tax Indemnitee shall enter into any settlement or other compromise or fail to appeal an adverse ruling with respect to any claim which is entitled to be indemnified under this Section 13.4 (and with respect to which contest is required under this Section 13.4(b)) without the prior written consent of the Guarantor, unless such Tax Indemnitee waives its right to be indemnified under this Section 13.4 with respect to such claim. Notwithstanding anything contained herein to the contrary, a Tax Indemnitee shall not be required to contest (and neither the Lessee nor the Guarantor shall be permitted to contest in any judicial forum if such contest could, in a Tax Indemnitee's reasonable judgment, be materially adverse to it) a claim with respect to the imposition of any Tax if such Tax Indemnitee shall have waived its right to indemnification under this Section 13.4 with respect to such claim (and any claim with respect to such year or any other taxable year the contest of which is precluded or materially adversely affected as a result of such waiver)Proceeding.
Appears in 1 contract
Sources: Stock Purchase Agreement (PNC Financial Services Group Inc)
Contests. If (a) Nothing in this Agreement shall be construed to prevent UpREIT from contesting, as the Tax Matters Partner in accordance with the Partnership Agreement as part of the unified audit of the Partnership, any claim shall involving a UpREIT item that, if successful, would result in an Income Inclusion (a "Partnership Level Issue").
(b) If UpREIT contests a Partnership Level Issue that, if successful, would result in an Income Inclusion, UpREIT's liability for indemnification under Section 4 hereof shall, at UpREIT's election, be made against any Tax Indemnitee or if any proceeding shall be commenced against any Tax Indemnitee (including a written notice of such proceeding) for any Imposition as to which the Lessee or the Guarantor may have an indemnity obligation pursuant to this Section 13.4, or if any Tax Indemnitee shall determine that any Imposition to which the Lessee or the Guarantor may have an indemnity obligation pursuant to this Section 13.4 may be payable, such Tax Indemnitee shall promptly (and in any event, within fifteen (15) Business Days) notify the Guarantor in writing (provided that failure to so notify the Guarantor within fifteen (15) Business Days shall not alter such Tax Indemnitee's rights under this Section 13.4 except to the extent such failure precludes or materially adversely affects the ability to conduct a contest of any indemnified Taxes) and shall not take any action with respect to such claim, proceeding or Imposition without the written consent of the Guarantor (such consent not to be unreasonably withheld or unreasonably delayed) for deferred until thirty (30) days after the receipt a Final Determination of such notice by the Guarantor; providedHadesman Indemnitee's federal income tax liability in respect of an Income Inclusion.
(c) If any audit or proceeding involving an indemnifiable adjustment is being conducted in a proceeding involving such Hadesman Indemnitee, however, that in the case of any such claim or proceeding, if such Tax Indemnitee shall which cannot be required by law or regulation to take action prior transferred to the end UpREIT as a partnership item (a "Hadesman Level Issue"), such Hadesman Indemnitee hereby agrees (i) promptly to notify UpREIT in writing of such thirty adjustment (30) day period, and the failure of such Tax Hadesman Indemnitee to so notify UpREIT shall in such notice preclude any indemnity hereunder to the Guarantor, so inform the Guarantorextent UpREIT's right to effect its contest rights hereunder has been precluded by such failure), and such Tax Indemnitee shall not take any action with respect (ii) upon UpREIT's delivery to such claim, proceeding or Imposition without the consent of the Guarantor (such consent not to be unreasonably withheld or unreasonably delayed) for ten (10) days after the receipt of such notice by the Guarantor unless such Tax Indemnitee shall be required by law or regulation to take action prior to the end of such ten (10) day period. The Guarantor shall be entitled for a period of thirty (30) days from receipt of such notice from such Tax Indemnitee (or such shorter period as such Tax Indemnitee has notified the Guarantor is required by law or regulation for such Tax Indemnitee to commence such contest), to request in writing that such Tax Indemnitee contest the imposition of such Tax, at the Guarantor's expense. If (x) such contest can be pursued in the name of the Guarantor or the Lessee and independently from any other proceeding involving a Tax liability of such Tax Indemnitee for which the Lessee and the Guarantor have not agreed to indemnify such Tax Indemnitee, (y) such contest must be pursued in the name of such Tax Indemnitee, but can be pursued independently from any other proceeding involving a Tax liability of such Tax Indemnitee for which the Lessee and the Guarantor have not agreed to indemnify such Tax Indemnitee or (z) such Tax Indemnitee so requests, then the Guarantor or such Lessee shall be permitted to control the contest of such claim, provided that in the case Hadesman of a contest described in clause (y) if such Tax Indemnitee determines reasonably and in good faith that such contest by the Guarantor or the Lessee could have a material adverse impact on the business or operations of such Tax Indemnitee and provides a written explanation to the Guarantor of such determination, such Tax Indemnitee may elect to control or reassert control of the contest, and provided that the taking control by the Guarantor or the Lessee of any contest shall not alter the applicable Tax Indemnitee's rights to indemnification hereunder, and provided, further, that in determining the application of clauses (x) and (y) of the preceding sentence, each Tax Indemnitee shall take any and all reasonable steps to segregate claims for any Taxes for which the Lessee and the Guarantor indemnify hereunder from Taxes for which the Lessee and the Guarantor are not obligated to indemnify hereunder, so that the Guarantor can control the contest of the former. In all other claims requested to be contested by the Guarantor, such Tax Indemnitee shall control the contest of such claim, acting through counsel selected by such Tax Indemnitee and reasonably acceptable to the Guarantor. In no event shall the Guarantor be permitted to contest (or such Tax Indemnitee be required to contest) any claim, (A) if such Tax Indemnitee provides the Guarantor with a legal opinion of nationally recognized tax counsel reasonably acceptable to the Guarantor that such action, suit or proceeding involves a risk of imposition of criminal liability or will involve a material risk of the sale, forfeiture or loss of, or the creation of any Lien Hadesman Indemnitee (other than a Permitted Lien"Tax Counsel") on the Property or any part thereof unless the Guarantor shall have posted and maintained a bond or other security reasonably satisfactory to the relevant Tax Indemnitee in respect to such risk, (B) if effect that there is a Lease Event Realistic Possibility of Default has occurred and is continuing unless the Guarantor shall have posted and maintained a bond or other security reasonably satisfactory to the relevant Tax Indemnitee in respect of the Taxes subject to such claim and any and all expenses for which the Guarantor or the Lessee is responsible hereunder reasonably foreseeable in connection with the contest of such claim, (C) unless the Guarantor shall have agreed to pay and shall pay, to such Tax Indemnitee on written demand all reasonable, documented out-of-pocket costs, losses and expenses that such Tax Indemnitee may incur in connection with contesting such Imposition including all reasonable legal, accounting and investigatory fees and disbursements and (if applicable) reasonable, allocable internal overhead costs determined in accordance with normal bank operating procedures, or (D) if such contest shall involve the payment of the Tax prior to the Success upon contest, unless such Hadesman Indemnitee will contest that adjustment by filing a protest and administrative appeal and prosecuting the Guarantor shall provide to such Tax Indemnitee an interest-free advance in an amount equal to the Imposition that such Tax Indemnitee is required to pay (with no additional net after-tax costs to such Tax Indemnitee). In addition, for contests controlled by such Tax Indemnitee and claims contested in the name of such Tax Indemnitee in a public forum, no contest shall be required: (A) unless the amount of the potential indemnity (taking into account all similar or logically related claims that have been or could be raised in any audit involving any or all such Tax Indemnitees with respect to any period for which the Guarantor or the Lessee may be liable to pay an indemnity under this Section 13.4(b)) exceeds (1) with respect to the Lessor, $25,000 and (2) with respect to any Tax Indemnitee other than the Lessor, $75,000 and (B) unless, if requested by such Tax Indemnitee, the Guarantor shall have provided to such Tax Indemnitee an opinion of counsel selected by the Guarantor (which may be in-house counsel) (except, in the case of income taxes indemnified hereunder, in which case such opinion shall be an opinion of independent tax counsel selected by the Guarantor and reasonably acceptable to such Tax Indemnitee) that a reasonable basis exists to contest such claim. In no event shall a Tax Indemnitee be required to appeal an adverse judicial determination to the United States Supreme Court. The party conducting the contest shall consult same in good faith with the other party and its counsel with respect to the contest of such claim for Taxes (or claim for refund) but the decisions regarding what actions to be taken shall be made by the controlling party in its sole judgment; provided, however, that if such Tax Indemnitee is the controlling party and the Guarantor recommends the acceptance of a settlement offer made by the relevant Governmental Authority and such Tax Indemnitee rejects such settlement offer, then the amount for which a Lessee and the Guarantor will be required to indemnify such Tax Indemnitee with respect to the Taxes subject to such offer shall not exceed the amount which it would have owed if such settlement offer had been accepted provided that any Tax Indemnitee shall be entitled to reject any indemnity payment it would otherwise be entitled to hereunder if such Tax Indemnitee reasonably determines that accepting such offer would have an unindemnified impact on such Tax Indemnitee and provided further that no Tax Indemnitee may reject any such indemnity payment if the Guarantor agrees to pay to such Tax Indemnitee the amount of such unindemnified impact, as reasonably determined by such Tax Indemnitee. In addition, the controlling party shall keep the noncontrolling party reasonably informed as to the progress of the contest, and shall provide the noncontrolling party with a copy of (or appropriate excerpts from) any reports or claims issued by the relevant auditing agents or taxing authority to the controlling party thereof, in connection with such claim or the contest thereof, provided, however, that such obligation shall not obligate any Tax Indemnitee to disclose its tax returns or information or documentation unrelated to such claim or contest. Each Tax Indemnitee shall, at the expense of the Lessee and the Guarantor, supply the Lessee or the Guarantor with such information and documents reasonably requested by the Lessee or the Guarantor as are necessary or advisable for such Person to participate in any action, suit or proceeding to the extent permitted by this Section 13.4(b)faith; provided, however, that such Tax Hadesman Indemnitee shall will not be required obligated to provide to pursue an administrative appeal if such Lessee Hadesman Indemnitee instead pursues relief in Tax Court or a court having refund jurisdiction.
(d) If, within 30 days following the Guarantor copies failure of its tax returns or any other information, documentation, or materials that it deems to be confidential or proprietary. Notwithstanding anything in this Section 13.4(b) to the contrary, no Tax Indemnitee shall enter into any settlement or other compromise or fail to appeal an adverse ruling such administrative proceedings with respect to any claim which a Hadesman Level Issue, UpREIT delivers to Hadesman Indemnitee written opinion of Tax Counsel to the effect that there is entitled a Realistic Possibility of Success if the proposed adjustment is presented to be indemnified under this Section 13.4 a court for resolution, then such Hadesman Indemnitee will contest the proposed adjustment in good faith in the Tax Court or by paying the tax (and with respect to which contest is required under this Section 13.4(b)any applicable interest and penalties) without and suing for refund in the prior written consent Court of the GuarantorFederal Claims or appropriate Federal District Court. If, unless within 30 days following a final adverse decision of such Tax Indemnitee waives its right to be indemnified under this Section 13.4 court with respect to such claim. Notwithstanding anything contained herein Hadesman Level Issue, UpREIT delivers to such Hadesman Indemnitee a written opinion of Tax Counsel to the contraryeffect that it is more likely than not that such decision would be reversed on appeal, then such Hadesman Indemnitee will appeal such decision to the appropriate Federal Court of Appeals. With respect to any of the above-described proceedings, such Hadesman Indemnitee will keep UpREIT and its counsel informed as to the progress of such proceedings, give UpREIT and its counsel the opportunity to review and comment in advance on all written submissions and filings relevant to indemnifiable issues (after making appropriate redactions to preserve the confidentiality of the such Hadesman Indemnitee return as to other issues), and consider in good faith any suggestions made by UpREIT or its counsel.
(e) Such Hadesman Indemnitee shall present any settlement offer provided to such Hadesman Indemnitee pursuant to a Hadesman Level Issue to UpREIT. If UpREIT recommends acceptance of a settlement offer of a Hadesman Level Issue or if the Tax Matters Partner recommends acceptance of a settlement offer in respect of a Partnership Level Issue, but such Hadesman Indemnitee declines to accept such offer in writing within 30 days (if such Hadesman Indemnitee does not respond within 30 days, such lack of response shall be treated as acceptance of UpREIT's or the Tax Matters Partner's recommendation, respectively), (1) the obligation of UpREIT to make indemnity payments as the result of any such contest or proceedings shall not thereafter exceed the obligation that it would have had if such contest had been settled or proceeding terminated on the basis recommended by UpREIT or the Tax Matters Partner, as applicable, and (2) in the case of a Hadesman Level Issue, UpREIT shall have no further liability for costs or other expenses in respect of such contest.
(f) Notwithstanding the foregoing, such Hadesman Indemnitee will have no obligation to contest any action with respect to a Hadesman Level Issue (i) unless such items could give rise to a federal income tax liability (disregarding other items in the assessment and considering effects in future years) in excess of $25,000, (ii) without UpREIT paying when due, reasonable third-party costs and out-of-pocket expenses including reasonable legal, witness and accounting fees and other expenses and, in the case of proceedings before the Court of Federal Claims or Federal District Court, the amount of tax (and any applicable interest and penalties) for which refund is claimed, and (iii) to the extent such Hadesman Indemnitee waives in writing UpREIT's obligation to indemnify such Hadesman Indemnitee for such items, in which case all third-party costs and out-of-pocket expenses described in clause (ii) thereafter incurred and all taxes would be paid by such Hadesman Indemnitee.
(g) such Hadesman Indemnitee shall not settle any such Hadesman Level Issue without UpREIT's consent; provided that such Hadesman Indemnitee shall not be required to contest (any proposed adjustment and neither the Lessee nor the Guarantor shall be permitted to contest in may settle any judicial forum such proposed adjustment if such contest could, in a Tax Indemnitee's reasonable judgment, be materially adverse to it) a claim with respect to the imposition of any Tax if such Tax Hadesman Indemnitee shall have waived waive its right to indemnification indemnity under this Section 13.4 Agreement with respect to such claim adjustment and any Income Inclusion that results from such adjustment and, in the case of proceedings before the Court of Federal Claims or Federal District Court, shall pay to UpREIT the amount of tax (and any claim applicable interest and penalties) previously paid or advanced by UpREIT with respect to such year adjustment or any other taxable year the contest of which is precluded such adjustment under Section 6(f), plus interest at the rate under Code Section 6621(a)(2) computed from the time such amounts were paid or materially adversely affected as advanced by UpREIT.
(h) Within thirty (30) days after a result Final Determination of the liability of such waiverHadesman Indemnitee in respect of a Hadesman Level Issue, UpREIT and each Hadesman Indemnitee agree to pay each other, as applicable, the net amount of (i) the payment owed by the UpREIT to such Hadesman Indemnitee of any indemnification hereunder, not theretofore paid resulting from the outcome of such contest, and (ii) in the case of proceedings before the Court of Federal Claims or Federal District Court, the repayment owed by such Hadesman Indemnitee to UpREIT of the amount of tax (and any applicable interest and penalties) previously paid or advanced by UpREIT with respect to such adjustment or the contest of such adjustment under Section 6(f), together with any interest received by or credited to such Hadesman Indemnitee that is attributable to such advance.
Appears in 1 contract
Sources: Tax Indemnification Agreement (Prime Group Realty Trust)
Contests. If any claim shall be made against any Tax Indemnitee or if any proceeding shall be commenced against any Tax Indemnitee (including a the Owner Participant receives written notice of such proceeding) for any Imposition a claim by the IRS which, if sustained, would result in a Tax Loss requiring the payment of an indemnity by the Facility Lessee in excess of $50,000 as to which the Lessee or Facility Interest, then the Guarantor may have an indemnity obligation pursuant to this Section 13.4, or if any Tax Indemnitee Owner Participant shall determine that any Imposition to which the Lessee or the Guarantor may have an indemnity obligation pursuant to this Section 13.4 may be payable, such Tax Indemnitee shall promptly (and in any event, within fifteen (15) Business Days) notify the Guarantor Facility Lessee in writing (provided of such claim within 20 days after receipt and, in the event that failure there are less than 20 days in which to respond to such claim, the Owner Participant agrees to request an extension of time to contest such claim so notify that the Guarantor within fifteen (15) Business Days shall period remaining to initiate such contest is not alter such Tax Indemniteeless than 20 days from the date of the Owner Participant's rights under this Section 13.4 except notice to the extent Facility Lessee of such failure precludes or materially adversely affects claim, and the ability Owner Participant agrees to conduct take such action in contesting such claim as the Facility Lessee shall request from time to time, including, but not limited to, (i) all administrative appeals, proceedings, hearings and conferences with respect to the claim, (ii) seeking a contest of any indemnified Taxes) and shall not take any action judicial determination with respect to such claimclaim and (iii) the appeal of any adverse judicial determination with respect to such claim (but not to the U.S. Supreme Court), proceeding provided that:
(a) No Lease Event of Default shall have occurred and be continuing;
(b) the Owner Participant shall not have received prior to the time before which a response to such claim is due a written opinion, from independent tax counsel, selected by the Owner Participant and reasonably acceptable to the Facility Lessee, setting forth in reasonable detail the facts and analysis upon which such opinion is based (a copy of which is delivered to the Facility Lessee as soon as practicable after receipt), to the effect that, with respect to any initial contest, there is not a Reasonable Basis for such contest, (or Imposition it is not "more likely than not" in the case of an appeal of adverse judicial determination);
(c) the Facility Lessee shall have agreed to pay, on an After-Tax Basis, all reasonable costs and expenses incurred by the Owner Participant in connection with any contest, including, without limitation, all reasonable legal and other documented out-of-pocket expenses, and shall have provided the written consent Owner Participant with adequate assurances for the payment thereof; and
(d) the Facility Lessee shall have acknowledged in writing its liability to indemnify the Owner Participant in respect of the Guarantor (such consent claim if the contest is Conemaugh Tax Indemnity Agreement not to be unreasonably withheld or unreasonably delayed) for thirty (30) days after the receipt of such notice by the Guarantorsuccessful; provided, however, that such acknowledgment of liability will not be binding if the contest is resolved on a clearly articulated basis which establishes that the Facility Lessee is not liable to the Owner Participant. Subject to the foregoing, the Owner Participant may forego any and all administrative appeals, proceedings, hearings and conferences with the IRS in the case respect of any such claim or proceedingand may, if such Tax Indemnitee shall be required by law or regulation to take action prior to at its sole option, contest the end of such thirty (30) day period, such Tax Indemnitee shall claim in such notice to the Guarantor, so inform the Guarantor, and such Tax Indemnitee shall not take any action with respect to such claim, proceeding or Imposition without the consent of the Guarantor (such consent not to be unreasonably withheld or unreasonably delayed) for ten (10) days after the receipt of such notice permissible forum selected by the Guarantor unless such Tax Indemnitee shall be required by law or regulation to take action prior to the end of such ten (10) day period. The Guarantor shall be entitled for a period of thirty (30) days from receipt of such notice from such Tax Indemnitee (or such shorter period as such Tax Indemnitee has notified the Guarantor is required by law or regulation for such Tax Indemnitee to commence such contest)Owner Participant, to request in writing that such Tax Indemnitee contest the imposition of such Taxconsidering, at the Guarantor's expense. If (x) such contest can be pursued in the name of the Guarantor or the Lessee and independently from any other proceeding involving a Tax liability of such Tax Indemnitee for which the Lessee and the Guarantor have not agreed to indemnify such Tax Indemniteehowever, (y) such contest must be pursued in the name of such Tax Indemnitee, but can be pursued independently from any other proceeding involving a Tax liability of such Tax Indemnitee for which the Lessee and the Guarantor have not agreed to indemnify such Tax Indemnitee or (z) such Tax Indemnitee so requests, then the Guarantor or such Lessee shall be permitted to control the contest of such claim, provided that in the case of a contest described in clause (y) if such Tax Indemnitee determines reasonably and in good faith that such requests as the Facility Lessee and its counsel shall make concerning the prudent manner in which to contest by such claim. The Owner Participant may, at its sole option, either pay the Guarantor tax claimed and sue ▇▇▇ a refund or contest the claim in any permissible forum, considering in good faith, however, such requests as the Facility Lessee could have and its counsel shall make concerning the most appropriate forum in which to proceed and other related matters. If the Owner Participant chooses to pay the tax claimed and sue ▇▇▇ a material adverse impact on refund, the business or operations of such Tax Indemnitee and provides a written explanation Facility Lessee shall advance to the Guarantor of such determinationOwner Participant, such Tax Indemnitee may elect to control or reassert control of the contest, and provided that the taking control by the Guarantor or the Lessee of any contest shall not alter the applicable Tax Indemnitee's rights to indemnification hereunder, and provided, further, that in determining the application of clauses (x) and (y) of the preceding sentence, each Tax Indemnitee shall take any and all reasonable steps to segregate claims for any Taxes for which the Lessee and the Guarantor indemnify hereunder from Taxes for which the Lessee and the Guarantor are not obligated to indemnify hereunder, so that the Guarantor can control the contest of the former. In all other claims requested to be contested by the Guarantor, such Tax Indemnitee shall control the contest of such claim, acting through counsel selected by such Tax Indemnitee and reasonably acceptable to the Guarantor. In no event shall the Guarantor be permitted to contest (or such Tax Indemnitee be required to contest) any claim, (A) if such Tax Indemnitee provides the Guarantor with a legal opinion of counsel reasonably acceptable to the Guarantor that such action, suit or proceeding involves a risk of imposition of criminal liability or will involve a material risk of the sale, forfeiture or loss of, or the creation of any Lien (other than a Permitted Lien) on the Property or any part thereof unless the Guarantor shall have posted and maintained a bond or other security reasonably satisfactory to the relevant Tax Indemnitee in respect to such risk, (B) if a Lease Event of Default has occurred and is continuing unless the Guarantor shall have posted and maintained a bond or other security reasonably satisfactory to the relevant Tax Indemnitee in respect of the Taxes subject to such claim and any and all expenses for which the Guarantor or the Lessee is responsible hereunder reasonably foreseeable in connection with the contest of such claim, (C) unless the Guarantor shall have agreed to pay and shall pay, to such Tax Indemnitee on written demand all reasonable, documented out-of-pocket costs, losses and expenses that such Tax Indemnitee may incur in connection with contesting such Imposition including all reasonable legal, accounting and investigatory fees and disbursements and (if applicable) reasonable, allocable internal overhead costs determined in accordance with normal bank operating procedures, or (D) if such contest shall involve the payment of the Tax prior to the contest, unless the Guarantor shall provide to such Tax Indemnitee an interest-free advance in an amount equal to the Imposition that such Tax Indemnitee is required to pay (basis and with no additional net after-tax costs cost to the Owner Participant, sufficient funds to pay the tax and any interest, penalties and additions to tax payable with respect thereto (to the extent such Tax Indemniteeamount is indemnified-against by the Facility Lessee). In additionThe Owner Participant shall not settle any claim without the Facility Lessee's consent; provided, for contests controlled by that the Owner Participant shall not be required to contest any proposed adjustment and may settle any such Tax Indemnitee and claims contested in proposed adjustment if, (i) the name of such Tax Indemnitee in a public forum, no contest Owner Participant shall be required: (A) unless the amount of the potential waive its right to indemnity (taking into account all similar or logically related claims that have been or could be raised in any audit involving any or all such Tax Indemnitees with respect to such adjustment and shall pay to the Facility Lessee any period for which amount previously paid or advanced by the Guarantor or the Facility Lessee may be liable to pay an indemnity under this Section 13.4(b)) exceeds (1) with respect to such adjustment or the Lessor, $25,000 and contest of such adjustment (2) with respect to any Tax Indemnitee other than amounts paid or advanced pursuant to the LessorFacility Lessee's obligations to pay the costs of the contest), $75,000 and or (Bii) unlessthe subject of such contest has previously been resolved in a Final Determination for a prior taxable year adversely to the Owner Participant, if requested by such Tax Indemnitee, unless the Guarantor Facility Lessee shall have provided to such Tax Indemnitee an opinion of counsel selected by the Guarantor (which may be in-house counsel) (except, in the case of income taxes indemnified hereunder, in which case such opinion shall be Owner Participant with an opinion of independent tax counsel counsel, selected by the Guarantor Facility Lessee and reasonably acceptable satisfactory to the Owner Participant, setting forth in reasonable detail the facts and analysis upon which such opinion is based (a copy of which is delivered to the Owner Participant), that as a result of a Tax IndemniteeLaw Change or a change in fact, the prior Final Determination is no longer determinative of the issue. The Owner Participant (i) that a shall not make payment of any claim for at least 30 days after giving written notice of such claim to the Facility Lessee if such Conemaugh Tax Indemnity Agreement forbearance is permitted by law and shall inform the Facility Lessee in reasonable detail of the nature and extent of and purported basis exists (to contest the extent of the Owner Participant's knowledge thereof) for such claim. In no event , (ii) shall a Tax Indemnitee be required use good faith efforts to appeal an adverse judicial determination to the United States Supreme Court. The party conducting the contest shall consult with and consider in good faith with the other party Facility Lessee's and its counsel with respect to counsel's suggestions regarding the contest conduct of such claim for Taxes contest (or claim for refund) but the decisions regarding what actions to be taken manner in which such contest is conducted shall be made determined in all respects by the controlling party Owner Participant in its sole judgment; provided, however, that if such Tax Indemnitee is the controlling party discretion) and the Guarantor recommends the acceptance of a settlement offer made by the relevant Governmental Authority and such Tax Indemnitee rejects such settlement offer, then the amount for which a Lessee and the Guarantor will be required to indemnify such Tax Indemnitee with respect to the Taxes subject to such offer shall not exceed the amount which it would have owed if such settlement offer had been accepted provided that any Tax Indemnitee shall be entitled to reject any indemnity payment it would otherwise be entitled to hereunder if such Tax Indemnitee reasonably determines that accepting such offer would have an unindemnified impact on such Tax Indemnitee and provided further that no Tax Indemnitee may reject any such indemnity payment if the Guarantor agrees to pay to such Tax Indemnitee the amount of such unindemnified impact, as reasonably determined by such Tax Indemnitee. In addition, the controlling party shall keep the noncontrolling party Facility Lessee reasonably informed as to the progress of the such contest, and (iii) shall provide the noncontrolling party Facility Lessee and its counsel with a copy copies of any correspondence (or appropriate excerpts fromthereof relating to the adjustment or the contest of such adjustment) any reports or claims issued excerpts of other written material received by the relevant auditing agents or taxing authority to the controlling party thereof, Owner Participant in connection with such claim or the contest thereof, provided, however, that such obligation and shall not obligate any Tax Indemnitee to disclose its tax returns or information or documentation unrelated to such claim or contest. Each Tax Indemnitee shall, at the expense of the Lessee and the Guarantor, supply the Lessee or the Guarantor with such information and documents reasonably requested by the Lessee or the Guarantor as are necessary or advisable for such Person to participate in any action, suit or proceeding provide to the extent permitted by this Section 13.4(b); provided, however, that such Tax Indemnitee shall not be required Facility Lessee for comment within a reasonable period of time prior to provide to such Lessee or the Guarantor copies of its tax returns or any other information, documentation, or submission written materials that it deems to be confidential or proprietary. Notwithstanding anything in this Section 13.4(b) to the contrary, no Tax Indemnitee shall enter into any settlement or other compromise or fail to appeal an adverse ruling with respect to any claim which is entitled to be indemnified under this Section 13.4 (and with respect to which contest is required under this Section 13.4(b)) without the prior written consent of the Guarantor, unless such Tax Indemnitee waives its right to be indemnified under this Section 13.4 with respect to such claim. Notwithstanding anything contained herein to the contrary, a Tax Indemnitee shall not be required to contest (and neither the Lessee nor the Guarantor shall be permitted to contest in any judicial forum if such contest could, in a Tax Indemnitee's reasonable judgment, be materially adverse to it) a claim with respect to the imposition of any Tax if such Tax Indemnitee shall have waived its right claim submitted to indemnification under this Section 13.4 the IRS, the courts or administrative tribunals or bodies involved with respect to the issues for which the Facility Lessee is liable for an indemnity hereunder (it being understood that the Facility Lessee shall not be permitted to review any portions of such claim (documents or submissions that relate to issues unrelated to the transactions contemplated by the Operative Documents). The Facility Lessee and any claim its counsel shall maintain confidentiality with respect to all such year information.
(a) the Facility Lessee shall pay to the Owner Participant any excess of the full amount due hereunder over the amount of any advances previously made by the Facility Lessee and applied against the Facility Lessee's indemnity obligation as aforesaid or (b) the Owner Participant shall repay to the Facility Lessee any other taxable year the contest of which is precluded or materially adversely affected as a result excess of such waiver)advances over such full amount due hereunder, together with any interest received by the Owner Participant that is properly attributable to such excess amount of such advances during the period such advances were outstanding, and, if the Facility Conemaugh Tax Indemnity Agreement Lessee shall have indemnified the Owner Participant with respect to the adverse tax consequences of any advances or payments hereunder, the amount of any tax savings resulting from any payment pursuant to this sentence.
Appears in 1 contract
Sources: Tax Indemnity Agreement (Reliant Energy Mid Atlantic Power Services Inc)
Contests. (a) If any claim an adjustment shall be made against proposed by the IRS in writing that, if sustained, would result in a Loss for which Old Dominion could be required to indemnify the Owner Participant under this Agreement, the Owner Participant agrees promptly to notify Old Dominion in writing of such proposed adjustment; PROVIDED, HOWEVER, that any failure to provide such notice shall not relieve Old Dominion of any obligation to indemnify the Owner Participant hereunder unless such failure effectively precludes the initiation or continuation of the contest of such adjustment. If (i) within 30 days after receipt of such notice Old Dominion shall request in writing that the Owner Participant contest such proposed adjustment and (ii) the Owner Participant shall have received, at the commencement of the contest and before each level of judicial proceeding, an opinion of Independent Tax Indemnitee Counsel, to the effect that there is a Reasonable Basis for contesting the proposed adjustment (and, in the case of an appeal from an adverse judicial determination, an opinion from such counsel to the effect that it is more likely than not) that such adverse determination will be reversed or if substantially modified upon appeal in a manner favorable to the taxpayer) (which opinions (a) will be furnished at Old Dominion's expense, and (b) the Owner Participant will assist in good faith and with diligence in promptly procuring), the Owner Participant shall contest such proposed adjustment; PROVIDED, HOWEVER, that the Owner Participant may, in its sole discretion, either pay the tax proposed and ▇▇▇ for a refund or contest the proposed adjustment in any proceeding permissible forum considering, however, in good faith such requests as Old Dominion may make concerning the most appropriate forum in which to proceed. Notwithstanding the foregoing, the Owner Participant shall not be required to pursue any such contest unless (v) Old Dominion shall have agreed in writing to pay and shall be commenced against paying on demand all reasonable costs and expenses that the Owner Participant shall incur in connection with contesting such proposed adjustment, including, without limitation, reasonable attorneys', accountants' and investigatory fees and disbursements; (w) the proposed adjustment that could result in a payment by Old Dominion (if a lump-sum amount were to be paid pursuant to Section 4(b)(2) hereof) in connection with such proposed adjustment, taking into account the amount of all similar and logically related adjustments with respect to the transactions contemplated by the Operative Documents that could be raised in an audit of any Tax Indemnitee other taxable year of the Owner Participant (including any future taxable year) not barred by the statute of limitations shall be at least $100,000 and at least $250,000 with respect to any judicial appeal; (x) no Event of Default shall have occurred and be continuing; and (y) if the Owner Participant shall determine to pay the tax proposed and ▇▇▇ for a refund, Old Dominion shall advance to the Owner Participant on an interest-free basis and with no additional net after-tax cost to the Owner Participant sufficient funds to pay the tax and interest, penalties and additions to tax payable with respect thereto (to the extent such amount is indemnified against pursuant to Section 4 hereof (an "Advance")); and PROVIDED, HOWEVER, that the Owner Participant shall not be required to pursue any appeal to the United States Supreme Court.
(b) In connection with any proposed adjustment described in Section 6(a) hereof, the Owner Participant shall not make payment of such proposed adjustment for at least 30 days after the giving of written notice of such proceeding) for any Imposition as proposed adjustment to which Old Dominion (except that if the Lessee or the Guarantor may have an indemnity obligation pursuant to this Section 13.4, or if any Tax Indemnitee shall determine that any Imposition to which the Lessee or the Guarantor may have an indemnity obligation pursuant to this Section 13.4 may be payable, such Tax Indemnitee shall promptly (and in any event, within fifteen (15) Business Days) notify the Guarantor in writing (provided that failure to so notify the Guarantor within fifteen (15) Business Days shall not alter such Tax Indemnitee's rights under this Section 13.4 except to the extent such failure precludes or materially adversely affects the ability to conduct a contest of any indemnified Taxes) and shall not take any action with respect to such claim, proceeding or Imposition without the written consent of the Guarantor (such consent not to be unreasonably withheld or unreasonably delayed) for thirty (30) days after the receipt of such notice by the Guarantor; provided, however, that in the case of any such claim or proceeding, if such Tax Indemnitee Owner Participant shall be required by law or regulation to take action with respect to any such adjustment prior to the end of such thirty (30) -day period, such Tax Indemnitee shall the Owner Participant shall, in such notice to the GuarantorOld Dominion, so inform the GuarantorOld Dominion, and such Tax Indemnitee the Owner Participant shall not take any action with respect to such claim, proceeding or Imposition adjustment without the consent of the Guarantor Old Dominion (such consent not unreasonably to be unreasonably withheld or unreasonably delayedwithheld) for ten (10) days after before the receipt of such notice by date on which the Guarantor unless such Tax Indemnitee Owner Participant shall be required by law or regulation to take action prior action). Notwithstanding anything herein to the end of such ten (10) day period. The Guarantor contrary, the Owner Participant shall be entitled for a period of thirty (30) days from receipt of such notice from such Tax Indemnitee (or such shorter period as such Tax Indemnitee has notified the Guarantor is required by law or regulation for such Tax Indemnitee to commence such contest), to request in writing that such Tax Indemnitee contest the imposition of such Tax, at the Guarantor's expense. If (x) such contest can be pursued in the name of the Guarantor or the Lessee and independently from any other proceeding involving a Tax liability of such Tax Indemnitee for which the Lessee and the Guarantor have not agreed to indemnify such Tax Indemnitee, (y) such contest must be pursued in the name of such Tax Indemnitee, but can be pursued independently from any other proceeding involving a Tax liability of such Tax Indemnitee for which the Lessee and the Guarantor have not agreed to indemnify such Tax Indemnitee or (z) such Tax Indemnitee so requests, then the Guarantor or such Lessee shall be permitted to full control the contest of such claim, provided that in the case of a contest described in clause (y) if such Tax Indemnitee determines reasonably and in good faith that such contest by the Guarantor or the Lessee could have a material adverse impact on the business or operations of such Tax Indemnitee and provides a written explanation to the Guarantor of such determination, such Tax Indemnitee may elect to control or reassert control of the contest, and provided that the taking control by the Guarantor or the Lessee of over any contest pursuant to this Section 6 and shall not alter determine in its sole discretion the applicable Tax Indemnitee's rights to indemnification hereunder, and provided, further, that in determining the application nature of clauses (x) and (y) of the preceding sentence, each Tax Indemnitee shall take any and all reasonable steps to segregate claims for any Taxes for which the Lessee and the Guarantor indemnify hereunder from Taxes for which the Lessee and the Guarantor are not obligated to indemnify hereunder, so that the Guarantor can control the contest of the former. In all other claims requested actions to be contested by the Guarantor, such Tax Indemnitee shall control the contest of such claim, acting through counsel selected by such Tax Indemnitee and reasonably acceptable to the Guarantor. In no event shall the Guarantor be permitted to contest (or such Tax Indemnitee be required to contest) any claim, (A) if such Tax Indemnitee provides the Guarantor with a legal opinion of counsel reasonably acceptable to the Guarantor that such action, suit or proceeding involves a risk of imposition of criminal liability or will involve a material risk of the sale, forfeiture or loss of, or the creation of any Lien (other than a Permitted Lien) on the Property or any part thereof unless the Guarantor shall have posted and maintained a bond or other security reasonably satisfactory to the relevant Tax Indemnitee in respect to such risk, (B) if a Lease Event of Default has occurred and is continuing unless the Guarantor shall have posted and maintained a bond or other security reasonably satisfactory to the relevant Tax Indemnitee in respect of the Taxes subject to such claim and any and all expenses for which the Guarantor or the Lessee is responsible hereunder reasonably foreseeable taken in connection with any contest including the right to pursue or forego any administrative proceedings; PROVIDED, HOWEVER, that the Owner Participant shall contest such claim at the administrative level if the failure to do so would preclude the availability of such claimall judicial remedies; and PROVIDED, (C) unless the Guarantor shall have agreed to pay and shall pay, to such Tax Indemnitee on written demand all reasonable, documented out-of-pocket costs, losses and expenses that such Tax Indemnitee may incur in connection with contesting such Imposition including all reasonable legal, accounting and investigatory fees and disbursements and (if applicable) reasonable, allocable internal overhead costs determined in accordance with normal bank operating procedures, or (D) if such contest shall involve the payment of the Tax prior to the contest, unless the Guarantor shall provide to such Tax Indemnitee an interest-free advance in an amount equal to the Imposition that such Tax Indemnitee is required to pay (with no additional net after-tax costs to such Tax Indemnitee). In addition, for contests controlled by such Tax Indemnitee and claims contested in the name of such Tax Indemnitee in a public forum, no contest shall be required: (A) unless the amount of the potential indemnity (taking into account all similar or logically related claims that have been or could be raised in any audit involving any or all such Tax Indemnitees with respect to any period for which the Guarantor or the Lessee may be liable to pay an indemnity under this Section 13.4(b)) exceeds (1) with respect to the Lessor, $25,000 and (2) with respect to any Tax Indemnitee other than the Lessor, $75,000 and (B) unless, if requested by such Tax IndemniteeFURTHER, the Guarantor shall have provided to such Tax Indemnitee an opinion of counsel selected by the Guarantor (which may be in-house counsel) (except, in the case of income taxes indemnified hereunder, in which case such opinion shall be an opinion of independent tax counsel selected by the Guarantor and reasonably acceptable to such Tax Indemnitee) that a reasonable basis exists to contest such claim. In no event shall a Tax Indemnitee be required to appeal an adverse judicial determination to the United States Supreme Court. The party conducting the contest Owner Participant shall consult in good faith with the other party Old Dominion and its counsel with respect to in the contest of any claim and shall keep such claim for Taxes (or claim for refund) but counsel reasonably informed regarding such contest. Nothing contained in this Section 6 shall require the decisions regarding what actions Owner Participant to be taken shall be made by the controlling party in its sole judgment; provided, however, contest a proposed adjustment that if such Tax Indemnitee is the controlling party and the Guarantor recommends the acceptance of a settlement offer made by the relevant Governmental Authority and such Tax Indemnitee rejects such settlement offer, then the amount for which a Lessee and the Guarantor will be required to indemnify such Tax Indemnitee with respect to the Taxes subject to such offer shall not exceed the amount which it would have owed if such settlement offer had been accepted provided that any Tax Indemnitee shall be entitled to reject any indemnity payment it would otherwise be entitled required to hereunder if such Tax Indemnitee reasonably determines that accepting such offer would have an unindemnified impact on such Tax Indemnitee and provided further that no Tax Indemnitee may reject any such indemnity payment contest pursuant to this Section 6 if the Guarantor agrees Owner Participant (i) waives the payment by Old Dominion of any amount that might otherwise be payable by Old Dominion under this Agreement by way of indemnity in respect of such proposed adjustment and (ii) pays to pay to such Tax Indemnitee the Old Dominion any amount of such unindemnified impacttaxes, as reasonably determined interest, penalties and additions to tax previously paid or advanced by such Tax Indemnitee. In addition, the controlling party shall keep the noncontrolling party reasonably informed as Old Dominion pursuant to the progress of the contest, and shall provide the noncontrolling party with a copy of (or appropriate excerpts from) any reports or claims issued by the relevant auditing agents or taxing authority to the controlling party thereof, in connection with such claim or the contest thereof, provided, however, that such obligation shall not obligate any Tax Indemnitee to disclose its tax returns or information or documentation unrelated to such claim or contest. Each Tax Indemnitee shall, at the expense of the Lessee and the Guarantor, supply the Lessee or the Guarantor with such information and documents reasonably requested by the Lessee or the Guarantor as are necessary or advisable for such Person to participate in any action, suit or proceeding to the extent permitted by this Section 13.4(b); provided, however, that such Tax Indemnitee shall not be required to provide to such Lessee or the Guarantor copies of its tax returns or any other information, documentation, or materials that it deems to be confidential or proprietary. Notwithstanding anything in this Section 13.4(b) to the contrary, no Tax Indemnitee shall enter into any settlement or other compromise or fail to appeal an adverse ruling with respect to any claim which is entitled to be indemnified under this Section 13.4 (and with respect to which contest is required under this Section 13.4(b)) without the prior written consent of the Guarantor, unless such Tax Indemnitee waives its right to be indemnified under this Section 13.4 Agreement with respect to such claim. Notwithstanding anything contained herein proposed adjustment, plus interest on such amounts at the IRS rate for refunds, payable from the date of payment by Old Dominion to the contraryOwner Participant of such amounts to (but excluding) the date of repayment of such amounts by the Owner Participant to Old Dominion; PROVIDED, HOWEVER, that if the Owner Participant settles a Tax Indemnitee shall not be required to proposed adjustment such that Old Dominion is precluded as a matter of law from initiating or continuing a contest (and neither the Lessee nor the Guarantor shall be permitted to contest in any judicial forum if such contest could, in a Tax Indemnitee's reasonable judgment, be materially adverse to it) a claim with respect to the imposition hereunder of any Tax if such Tax Indemnitee shall have waived its right to indemnification under this Section 13.4 with respect to such claim (and any claim with respect to such year or adjustment for any other taxable year period, the Owner Participant shall be deemed to have waived the payment by Old Dominion under this Agreement of any indemnity amounts in respect of such other adjustment.
(c) If Old Dominion shall have requested the Owner Participant to contest a proposed adjustment as above provided and shall have duly complied with all the terms of which is precluded or materially adversely affected this Section 6, Old Dominion's liability for indemnification due under Section 4 hereof shall, at Old Dominion's election (except for amounts provided for under Section 6(a) hereof), be deferred until Final Determination of the liability of the Owner Participant. At such time, Old Dominion shall become obligated for the payment of any indemnification due under Section 4 hereof resulting from the outcome of such contest. Upon payment in full by Old Dominion of any indemnity amounts due under this Agreement, the Owner Participant shall become obligated to refund to Old Dominion an amount equal to any amount received as a refund of income taxes by the Owner Participant or credited to the Owner Participant (including any refund or credit that would have been received but for a counterclaim or other claim not indemnified by Old Dominion hereunder) that is fairly attributable to advances or indemnity payments made by Old Dominion under this Agreement, together with any interest received (or that would have been received) by the Owner Participant on such refund (after reduction by any tax incurred by Owner Participant by reason of the receipt or accrual of such interest), plus an amount equal to any tax benefit realized by the Owner Participant as the result of the payment contemplated by this sentence. Such obligations of the Owner Participant and Old Dominion will first be set off against each other, and any difference owing by either party shall be paid within 30 days after such waiver)Final Determination but not prior to the date determined in accordance with Section 4(b) hereof.
Appears in 1 contract
Sources: Tax Indemnity Agreement (Old Dominion Electric Cooperative)
Contests. If any claim shall be made against any Tax Indemnitee Indemnified Party or if any proceeding shall be commenced against any Tax Indemnitee Indemnified Party (including a written notice of such proceeding) for any Imposition as to which the Lessee or the Guarantor may have an indemnity obligation pursuant to this Section 13.46.3, or if any Tax Indemnitee Indemnified Party shall determine that any Imposition with respect to which the Lessee or the Guarantor may have an indemnity obligation pursuant to this Section 13.4 6.3 may be payable, such Tax Indemnitee Indemnified Party shall promptly (and in any event, within fifteen (15) Business Days) notify the Guarantor Lessee in writing (provided that failure to so notify the Guarantor within fifteen (15) Business Days Lessee shall not alter such Tax IndemniteeIndemnified Party's rights under this Section 13.4 6.3 except to the extent such failure effectively precludes or materially adversely affects the ability to conduct a contest of any indemnified TaxesImpositions) and shall not take any action with respect to such claim, proceeding or Imposition without the written consent of the Guarantor Lessee (such consent not to be unreasonably withheld or unreasonably delayed) for thirty (30) 30 days after the receipt of such notice by the GuarantorLessee; provided, however, that in the case of any such claim or proceeding, if such Tax Indemnitee Indemnified Party shall be required by law or regulation to take action prior to the end of such thirty (30) -day period, such Tax Indemnitee Indemnified Party shall in such notice to the GuarantorLessee, so inform the Guarantor, Lessee and such Tax Indemnitee Indemnified Party shall not take any action with respect to such claim, proceeding or Imposition without the consent of the Guarantor Lessee (such consent not to be unreasonably withheld or unreasonably delayed) for ten (10) 10 days after the receipt of such notice by the Guarantor Lessee unless such Tax Indemnitee Indemnified Party shall be required by law or regulation to take action prior to the end of such ten (10) -day period. The Guarantor Lessee shall be entitled for a period of thirty (30) 30 days from receipt of such notice from such Tax Indemnitee Indemnified Party (or such shorter period as such Tax Indemnitee Indemnified Party has notified the Guarantor Lessee is required by law or regulation for such Tax Indemnitee Indemnified Party to commence such contest), to request in writing that such Tax Indemnitee Indemnified Party contest in good faith the imposition of such Tax, at the GuarantorLessee's expense. If (xa) such contest can be pursued in the name of the Guarantor or the Lessee and independently from any other proceeding involving a Tax liability of such Tax Indemnitee Indemnified Party for which the Lessee and the Guarantor have has not agreed to indemnify such Tax IndemniteeIndemnified Party, (yb) such contest must be pursued in the name of such Tax IndemniteeIndemnified Party, but can be pursued independently from any other proceeding involving a Tax liability of such Tax Indemnitee Indemnified Party for which the Lessee and the Guarantor have has not agreed to indemnify such Tax Indemnitee Indemnified Party or (zc) such Tax Indemnitee Indemnified Party so requests, then the Guarantor or such Lessee shall be permitted to control the contest of such claim, acting through counsel reasonably acceptable to the Indemnified Party, provided that in the case of a contest described in clause (y) b), if such Tax Indemnitee Indemnified Party determines reasonably and in good faith that such contest by the Guarantor or the Lessee could have a material adverse impact on the business or operations of such Tax Indemnitee Indemnified Party and provides a written explanation to the Guarantor Lessee of such determination, such Tax Indemnitee Indemnified Party may elect to control or reassert control of the contest, and provided that the by taking control by of the Guarantor or contest, the Lessee acknowledges that it is responsible for the Imposition ultimately determined to be due by reason of any contest shall not alter the applicable Tax Indemnitee's rights to indemnification hereundersuch claim, and provided, further, that in determining the application of clauses (xa) and (yb) of the preceding sentenceabove, each Tax Indemnitee Indemnified Party shall take any and all reasonable steps to segregate claims for any Taxes for which the Lessee and the Guarantor indemnify indemnifies hereunder from Taxes for which the Lessee and the Guarantor are is not obligated to indemnify hereunder, so that the Guarantor Lessee can control the contest of the former. In all other claims requested to be contested by the GuarantorLessee, such Tax Indemnitee Indemnified Party shall control the contest of such claim, acting through counsel selected by such Tax Indemnitee and reasonably acceptable to the GuarantorLessee. In no event shall the Guarantor Lessee be permitted to contest (or such Tax Indemnitee Indemnified Party be required to contest) any claim, (Aa) if such Tax Indemnitee Indemnified Party provides the Guarantor Lessee with a legal opinion of counsel reasonably acceptable to the Guarantor Lessee that such action, suit or proceeding involves a risk of imposition of criminal liability or will involve a material risk of the sale, forfeiture or loss of, or the creation of any Lien (other than a Permitted Lien) on the Property Equipment or any part thereof unless the Guarantor Lessee shall have posted and maintained a bond or other security reasonably satisfactory to the relevant Tax Indemnitee Indemnified Party in respect to such risk, (Bb) if a Lease Default or an Event of Default has occurred and is continuing unless the Guarantor shall have posted and maintained a bond or other security reasonably satisfactory to the relevant Tax Indemnitee in respect of the Taxes subject to such claim and any and all expenses for which the Guarantor or the Lessee is responsible hereunder reasonably foreseeable in connection with the contest of such claimcontinuing, (Cc) unless the Guarantor Lessee shall have provided to such Indemnified Party an opinion of counsel reasonably acceptable to such Indemnified Party to the effect that such contest will, more likely than not, be successful, and unless the Lessee shall have agreed to pay and shall pay, to such Tax Indemnitee Indemnified Party on written demand all reasonable, documented reasonable out-of-pocket costs, losses and expenses that such Tax Indemnitee may incur Indemnified Party actually incurs in connection with contesting such Imposition including all reasonable in-house and outside legal, accounting accounting, administrative and investigatory fees and disbursements and (if applicable) reasonable, allocable internal overhead costs determined in accordance with normal bank operating proceduresdisbursements, or (Dd) if such contest shall involve unless the Lessee makes full payment of the Tax prior to the contest, unless the Guarantor shall provide to such Tax Indemnitee an interest-free advance in an amount equal to the Imposition that such Tax Indemnitee is required to pay (with no additional net after-tax costs to such Tax Indemnitee). In addition, addition for Indemnified Party controlled contests controlled by such Tax Indemnitee and claims contested in the name of such Tax Indemnitee Indemnified Party in a public forum, no contest shall be required: (Aa) unless the amount of the potential indemnity (taking into account all similar or logically related claims that have been or could be raised in any audit involving any or all such Tax Indemnitees Indemnified Parties with respect to any period for which the Guarantor or the Lessee may be liable to pay an indemnity under this Section 13.4(b6.3(b)) exceeds (1) with respect to the Lessor, $25,000 250,000 and (2) with respect to any Tax Indemnitee other than the Lessor, $75,000 and (Bb) unless, if requested by such Tax IndemniteeIndemnified Party, the Guarantor Lessee shall have provided to such Tax Indemnitee Indemnified Party an opinion of counsel selected by the Guarantor Lessee (which may counsel must be in-house counselreasonably acceptable to such Indemnified Party) (except, in the case of income taxes Taxes indemnified hereunder, in which case such opinion shall be an opinion of independent tax counsel selected by the Guarantor such Indemnified Party and reasonably acceptable to such Tax Indemniteethe Lessee) that a reasonable basis exists to contest such claimclaim (or, in the case of an appeal of any adverse determination, an opinion of such counsel to the effect that the position asserted in such appeal will more likely than not prevail). In no event shall a Tax Indemnitee an Indemnified Party be required to appeal an adverse judicial determination to the United States Supreme Court. The party conducting controlling the contest shall consult in good faith with the other party and its counsel with respect to the contest of such claim for Taxes (or claim for refund) but the decisions regarding what actions are to be taken shall be made by the controlling party in its sole judgment; , provided, however, that if such Tax Indemnitee Indemnified Party is the controlling party and the Guarantor Lessee recommends the acceptance of a settlement offer made by the relevant Governmental Authority and such Tax Indemnitee Indemnified Party rejects such settlement offer, offer then the amount for which a the Lessee and the Guarantor will be required to indemnify such Tax Indemnitee Indemnified Party with respect to the Taxes subject to such offer shall not exceed the amount which it would have owed if such settlement offer had been accepted provided that any Tax Indemnitee shall be entitled to reject any indemnity payment it would otherwise be entitled to hereunder if such Tax Indemnitee reasonably determines that accepting such offer would have an unindemnified impact on such Tax Indemnitee and provided further that no Tax Indemnitee may reject any such indemnity payment if the Guarantor agrees to pay to such Tax Indemnitee the amount of such unindemnified impact, as reasonably determined by such Tax Indemniteeaccepted. In addition, the controlling party shall keep the noncontrolling non-controlling party reasonably informed as to the progress of the contest, and shall provide the noncontrolling non-controlling party with a copy of (or appropriate excerpts from) any and reports or claims issued by the relevant auditing agents or taxing authority to the controlling party thereof, in connection with such claim or the contest thereof, provided, however, that such obligation shall not obligate any Tax Indemnitee to disclose its tax returns or information or documentation unrelated to such claim or contest. Each Tax Indemnitee Indemnified Party shall, at the expense of the Lessee and the GuarantorLessee's expense, supply the Lessee or the Guarantor with such information and documents documents, in such Indemnified Party's possession (but not tax returns, documentation related thereto or in violation of a privilege or duty of confidentiality), reasonably requested by the Lessee or the Guarantor as are necessary or advisable for such Person the Lessee to participate in any action, suit or proceeding to the extent permitted by this Section 13.4(b6.3(b); provided, however, that such Tax Indemnitee shall not be required to provide to such Lessee or the Guarantor copies of its tax returns or any other information, documentation, or materials that it deems to be confidential or proprietary. Notwithstanding anything in this Section 13.4(b6.3(b) to the contrary, no Tax Indemnitee Indemnified Party shall enter into any settlement or other compromise or fail to appeal an adverse ruling with respect to any claim for which is it may be entitled to be indemnified under this Section 13.4 6.3 (and with respect to which contest is required under this Section 13.4(b6.3(b)) without the prior written consent of the GuarantorLessee, unless such Tax Indemnitee Indemnified Party waives its right to be indemnified under this Section 13.4 6.3 with respect to such claim. Notwithstanding anything contained herein to the contrary, a Tax Indemnitee shall an Indemnified Party will not be required to contest (and neither the Lessee nor the Guarantor shall not be permitted to contest in any judicial forum if such contest could, in a Tax Indemnitee's reasonable judgment, be materially adverse to itcontest) a claim with respect to the imposition of any Tax if such Tax Indemnitee Indemnified Party shall have waived waive its right to indemnification under this Section 13.4 6.3 with respect to such claim (and any claim with respect to such year or any other taxable year the contest of which is precluded or materially adversely affected as a result of such waiver).
Appears in 1 contract
Contests. If After the Closing Date, Parent shall promptly notify the Representative of the receipt of any claim shall be made against any Tax Indemnitee or if any proceeding shall be commenced against any Tax Indemnitee (including a written notice by the Surviving Corporation, Parent or any of such proceeding) for Parent’s affiliates which involves the assertion of any Imposition as to which the Lessee claim, or the Guarantor may have commencement of any Action, in respect of which an indemnity obligation may be sought by Parent pursuant to this Section 13.4Article VIII (a “Tax Claim”); provided, or if any Tax Indemnitee shall determine that any Imposition to which the Lessee or the Guarantor may have an indemnity obligation pursuant to this Section 13.4 may be payable, such Tax Indemnitee shall promptly (and in any event, within fifteen (15) Business Days) notify the Guarantor in writing (provided that failure to so notify the Guarantor within fifteen (15) Business Days comply with this provision shall not alter such Tax Indemnitee's rights under this Section 13.4 affect Parent’s right to indemnification hereunder, except to the extent the Sellers shall have been materially prejudiced by such failure precludes or materially adversely affects the ability to conduct a contest of any indemnified Taxes) and shall not take any action with respect to such claim, proceeding or Imposition without the written consent of the Guarantor (such consent not to be unreasonably withheld or unreasonably delayed) for thirty (30) days after the receipt of such notice by the Guarantor; provided, however, that in the case of any such claim or proceeding, if such Tax Indemnitee shall be required by law or regulation to take action prior to the end of such thirty (30) day period, such Tax Indemnitee shall in such notice to the Guarantor, so inform the Guarantor, and such Tax Indemnitee shall not take any action with respect to such claim, proceeding or Imposition without the consent of the Guarantor (such consent not to be unreasonably withheld or unreasonably delayed) for ten (10) days after the receipt of such notice by the Guarantor unless such Tax Indemnitee shall be required by law or regulation to take action prior to the end of such ten (10) day periodfailure. The Guarantor Representative shall be entitled for a period (at the Sellers’ expense) to participate and, at its option, take control of thirty the defense of any pending or threatened Tax Claim, in whole or in part (30) days from receipt of such notice from such Tax Indemnitee (or such shorter period as such Tax Indemnitee has notified the Guarantor is required by law or regulation for such Tax Indemnitee to commence such contestincluding any resulting litigation), and to request in writing that such Tax Indemnitee contest the imposition employ counsel of such Tax, its choice at the Guarantor's its expense. If (x) the Representative elects to assume the defense of a Tax Claim, the Representative shall keep Parent reasonably informed of all material developments relating to such contest can be pursued Tax Claim, and shall allow Parent sufficient notice and opportunity to participate in the name Tax Claim to the extent of the Guarantor any claims for Taxes for which Parent (or the Lessee and independently from Company or any other proceeding Subsidiary) may be liable. Neither Parent nor the Representative shall settle or compromise (or cause to be settled or compromised) a matter involving a Tax liability of such Tax Indemnitee claim for which the Lessee and the Guarantor have not agreed to indemnify such Tax Indemnitee, (y) such contest must be pursued in the name of such Tax Indemnitee, but can be pursued independently from any other proceeding involving a Tax liability of such Tax Indemnitee for which the Lessee and the Guarantor have not agreed to indemnify such Tax Indemnitee or (z) such Tax Indemnitee so requests, then the Guarantor or such Lessee shall be permitted to control the contest of such claim, provided that in the case of a contest described in clause (y) if such Tax Indemnitee determines reasonably and in good faith that such contest by the Guarantor or the Lessee could have a material adverse impact on the business or operations of such Tax Indemnitee and provides a written explanation to the Guarantor of such determination, such Tax Indemnitee may elect to control or reassert control of the contest, and provided that the taking control by the Guarantor or the Lessee of any contest shall not alter the applicable Tax Indemnitee's rights to indemnification hereunder, and provided, further, that in determining the application of clauses (x) and (y) of the preceding sentence, each Tax Indemnitee shall take any and all reasonable steps to segregate claims for any Taxes for which the Lessee and the Guarantor indemnify hereunder from Taxes for which the Lessee and the Guarantor are not obligated to indemnify hereunder, so that the Guarantor can control the contest of the former. In all other claims requested to be contested by the Guarantor, such Tax Indemnitee shall control the contest of such claim, acting through counsel selected by such Tax Indemnitee and reasonably acceptable to the Guarantor. In no event shall the Guarantor be permitted to contest (or such Tax Indemnitee be required to contest) any claim, (A) if such Tax Indemnitee provides the Guarantor with a legal opinion of counsel reasonably acceptable to the Guarantor that such action, suit or proceeding involves a risk of imposition of criminal liability or will involve a material risk of the sale, forfeiture or loss of, or the creation of any Lien (other than a Permitted Lien) on the Property or any part thereof unless the Guarantor shall have posted and maintained a bond or other security reasonably satisfactory to the relevant Tax Indemnitee in respect to such risk, (B) if a Lease Event of Default has occurred and is continuing unless the Guarantor shall have posted and maintained a bond or other security reasonably satisfactory to the relevant Tax Indemnitee in respect of the Taxes subject to such claim and any and all expenses for which the Guarantor or the Lessee is responsible hereunder reasonably foreseeable in connection with the contest of such claim, (C) unless the Guarantor shall have agreed to pay and shall pay, to such Tax Indemnitee on written demand all reasonable, documented out-of-pocket costs, losses and expenses that such Tax Indemnitee may incur in connection with contesting such Imposition including all reasonable legal, accounting and investigatory fees and disbursements and (if applicable) reasonable, allocable internal overhead costs determined in accordance with normal bank operating procedures, or (D) if such contest shall involve the payment of the Tax prior to the contest, unless the Guarantor shall provide to such Tax Indemnitee an interest-free advance in an amount equal to the Imposition that such Tax Indemnitee is required to pay (with no additional net after-tax costs to such Tax Indemnitee). In addition, for contests controlled by such Tax Indemnitee and claims contested in the name of such Tax Indemnitee in a public forum, no contest shall be required: (A) unless the amount of the potential indemnity (taking into account all similar or logically related claims that have been or could be raised in any audit involving any or all such Tax Indemnitees with respect to any period for which the Guarantor or the Lessee party may be liable to pay an indemnity under this Section 13.4(b)) exceeds (1) with respect to the Lessor, $25,000 and (2) with respect to any Tax Indemnitee other than the Lessor, $75,000 and (B) unless, if requested by such Tax Indemnitee, the Guarantor shall have provided to such Tax Indemnitee an opinion of counsel selected by the Guarantor (which may be in-house counsel) (except, in the case of income taxes indemnified hereunder, in which case such opinion shall be an opinion of independent tax counsel selected by the Guarantor and reasonably acceptable to such Tax Indemnitee) that a reasonable basis exists to contest such claim. In no event shall a Tax Indemnitee be required to appeal an adverse judicial determination to the United States Supreme Court. The party conducting the contest shall consult in good faith with the other party and its counsel with respect to the contest of such claim for Taxes (or claim for refund) but the decisions regarding what actions to be taken shall be made by the controlling party in its sole judgment; provided, however, that if such Tax Indemnitee is the controlling party and the Guarantor recommends the acceptance of a settlement offer made by the relevant Governmental Authority and such Tax Indemnitee rejects such settlement offer, then the amount for which a Lessee and the Guarantor will be required to indemnify such Tax Indemnitee with respect to the Taxes subject to such offer shall not exceed the amount which it would have owed if such settlement offer had been accepted provided that any Tax Indemnitee shall be entitled to reject any indemnity payment it would otherwise be entitled to hereunder if such Tax Indemnitee reasonably determines that accepting such offer would have an unindemnified impact on such Tax Indemnitee and provided further that no Tax Indemnitee may reject any such indemnity payment if the Guarantor agrees to pay to such Tax Indemnitee the amount of such unindemnified impact, as reasonably determined by such Tax Indemnitee. In addition, the controlling party shall keep the noncontrolling party reasonably informed as to the progress of the contest, and shall provide the noncontrolling party with a copy of (or appropriate excerpts from) any reports or claims issued by the relevant auditing agents or taxing authority to the controlling party thereof, in connection with such claim or the contest thereof, provided, however, that such obligation shall not obligate any Tax Indemnitee to disclose its tax returns or information or documentation unrelated to such claim or contest. Each Tax Indemnitee shall, at the expense of the Lessee and the Guarantor, supply the Lessee or the Guarantor with such information and documents reasonably requested by the Lessee or the Guarantor as are necessary or advisable for such Person to participate in any action, suit or proceeding to the extent permitted by this Section 13.4(b); provided, however, that such Tax Indemnitee shall not be required to provide to such Lessee or the Guarantor copies of its tax returns or any other information, documentation, or materials that it deems to be confidential or proprietary. Notwithstanding anything in this Section 13.4(b) to the contrary, no Tax Indemnitee shall enter into any settlement or other compromise or fail to appeal an adverse ruling with respect to any claim which is entitled to be indemnified under this Section 13.4 (and with respect to which contest is required under this Section 13.4(b)) Agreement without the prior written consent of the Guarantorsuch other party, which consent shall not be unreasonably delayed, conditioned or withheld, unless such Tax Indemnitee Parent or the Representative, as the case may be, waives its the right to be indemnified under for the issue being conceded or settled. To the extent the Representative elects to control a Tax Claim pursuant to this Section 13.4 with 7.3, the Representative shall use (and shall cause the Sellers and their affiliates to use) its commercially reasonable efforts to separate from any such Tax Claim any item in respect of which an indemnity is not sought by Parent pursuant to such claim. Notwithstanding anything contained herein Article VIII, and to permit, to the contrarygreatest extent possible, a Tax Indemnitee shall not be required Parent to contest (and neither the Lessee nor the Guarantor shall be permitted to contest in any judicial forum if such contest could, in a Tax Indemnitee's reasonable judgment, be materially adverse to it) a claim with respect to the imposition of any Tax if such Tax Indemnitee shall have waived its right to indemnification under this Section 13.4 with respect to such claim (and any claim with respect to such year or any other taxable year control the contest of which is precluded or materially adversely affected as a result of any such waiver)item.
Appears in 1 contract
Sources: Merger Agreement (Ennis, Inc.)
Contests. If any claim shall be made against any Tax Indemnitee or if any proceeding shall be commenced against any Tax Indemnitee (including a written notice of such proceeding) for any Imposition as to which the Lessee or the Guarantor may have an indemnity obligation pursuant to this Section 13.413.5, or if any Tax Indemnitee shall determine that any Imposition to which the Lessee or the Guarantor may have an indemnity obligation pursuant to this Section 13.4 13.5 may be payable, such Tax Indemnitee shall promptly (and in any event, within fifteen (15) Business Days30 days) notify the Guarantor Lessee in writing (provided that failure to so notify the Guarantor Lessee within fifteen (15) Business Days 30 days shall not alter such Tax Indemnitee's rights under this Section 13.4 13.5 except to the extent such failure precludes or materially adversely affects the ability to conduct a contest of any indemnified Taxes) and shall not take any action with respect to such claim, proceeding or Imposition without the written consent of the Guarantor Lessee (such consent not to be unreasonably withheld or unreasonably delayed) for thirty (30) 30 days after the receipt of such notice by the GuarantorLessee; provided, however, that in the case of any such claim or proceeding, if such Tax Indemnitee shall be required by law or regulation to take action prior to the end of such thirty (30) -day period, such Tax Indemnitee shall in such notice to the GuarantorLessee, so inform the GuarantorLessee, and such Tax Indemnitee shall not take any action with respect to such claim, proceeding or Imposition without the consent of the Guarantor Lessee (such consent not to be unreasonably withheld or unreasonably delayed) for ten (10) 10 days after the receipt of such notice by the Guarantor Lessee unless such Tax Indemnitee shall be required by law or regulation to take action prior to the end of such ten (10) -day period. The Guarantor Lessee shall be entitled for a period of thirty (30) 30 days from receipt of such notice from such Tax Indemnitee (or such shorter period as such Tax Indemnitee has notified the Guarantor Lessee is required by law or regulation for such Tax Indemnitee to commence such contest), to request in writing that such Tax Indemnitee contest the imposition of such Tax, at the GuarantorLessee's expense. If (x) such contest can be pursued in the name of the Guarantor or the Lessee and independently from any other proceeding involving a Tax liability of such Tax Indemnitee for which the Lessee and the Guarantor have has not agreed to indemnify such Tax Indemnitee, (y) such contest must be pursued in the name of such Tax Indemnitee, but can be pursued independently from any other proceeding involving a Tax liability of such Tax Indemnitee for which the Lessee and the Guarantor have has not agreed to indemnify such Tax Indemnitee or (z) such Tax Indemnitee so requests, then the Guarantor or such Lessee shall be permitted to control the contest of such claim, provided that in the case of a contest described in clause (y) ), if such Tax Indemnitee determines reasonably and in good faith that such contest by the Guarantor or the Lessee could have a material adverse impact on the business or operations of such Tax Indemnitee and provides a written explanation to the Guarantor Lessee of such determination, such Tax Indemnitee may elect to control or reassert control of the contest, and provided provided, that the by taking control by of the Guarantor or contest, the Lessee acknowledges that it is responsible for the Imposition ultimately determined to be due by reason of any contest shall not alter the applicable Tax Indemnitee's rights to indemnification hereundersuch claim, and provided, further, that in determining the application of clauses (x) and (y) of the preceding sentence, each Tax Indemnitee shall take any and all reasonable steps to segregate claims for any Taxes for which the Lessee and the Guarantor indemnify indemnifies hereunder from Taxes for which the Lessee and the Guarantor are is not obligated to indemnify hereunder, so that the Guarantor Lessee can control the contest of the former. In all other claims requested to be contested by the GuarantorLessee, such Tax Indemnitee shall control the contest of such claim, acting through counsel selected by such Tax Indemnitee and reasonably acceptable to the GuarantorLessee. In no event shall the Guarantor Lessee be permitted to contest (or such Tax Indemnitee be required to contest) any claim, (A) if such Tax Indemnitee provides the Guarantor Lessee with a legal opinion of counsel reasonably acceptable to the Guarantor Lessee that such action, suit or proceeding involves a risk of imposition of criminal liability or will involve a material risk of the sale, forfeiture or loss of, or the creation of any Lien (other than a Permitted Lien) on the any Property or any part of any thereof unless the Guarantor Lessee shall have posted and maintained a bond or other security reasonably satisfactory to the relevant Tax Indemnitee in respect to such risk, (B) if a Lease an Event of Default has occurred and is continuing unless the Guarantor Lessee shall have posted and maintained a bond or other security reasonably satisfactory to the relevant Tax Indemnitee in respect of the Taxes subject to such claim and any and all expenses for which the Guarantor or the Lessee is responsible hereunder reasonably foreseeable in connection with the contest of such claim, (C) unless the Guarantor Lessee shall have agreed to pay and shall pay, to such Tax Indemnitee on written demand all reasonable, documented reasonable out-of-pocket costs, losses and expenses that such Tax Indemnitee may incur in connection with contesting such Imposition including all reasonable legal, accounting and investigatory fees and disbursements and (if applicable) reasonable, allocable internal overhead costs determined in accordance with normal bank operating proceduresdisbursements, or (D) if such contest shall involve the payment of the Tax prior to the contest, unless the Guarantor Lessee shall provide to such Tax Indemnitee an interest-free advance in an amount equal to the Imposition that such Tax the Indemnitee is required to pay (with no additional net after-tax costs to such Tax Indemnitee). In addition, addition for contests controlled by such Tax Indemnitee controlled contests and claims contested in the name of such Tax Indemnitee in a public forum, no contest shall be required: (A) unless the amount of the potential indemnity (taking into account all similar or logically related claims that have been or could be raised in any audit involving any or all such Tax Indemnitees Indemnitee with respect to any period for which the Guarantor or the Lessee may be liable to pay an indemnity under this Section 13.4(b13.5(b)) exceeds (1) with respect to the Lessor, $25,000 and (2) with respect to any Tax Indemnitee other than the Lessor, $75,000 and or (B) unless, if requested by such Tax Indemnitee, the Guarantor Lessee shall have provided to such Tax Indemnitee an opinion of counsel selected by the Guarantor Lessee (which may be in-house counsel) (except, in the case of income taxes indemnified hereunder, in hereunder which case such opinion shall be an opinion of independent tax counsel selected by the Guarantor such Tax Indemnitee and reasonably acceptable to such Tax Indemniteethe Lessee) that a reasonable basis exists to contest such claim. In no event shall a Tax Indemnitee be required to appeal an adverse judicial determination to the United States Supreme Court. The party conducting the contest shall consult in good faith with the other party and its counsel with respect to the contest of such claim for Taxes (or claim for refund) but the decisions regarding what actions to be taken shall be made by the controlling party in its sole judgment; judgement, provided, however, that if such Tax Indemnitee is the controlling party and the Guarantor Lessee recommends the acceptance of a settlement offer made by the relevant Governmental Authority and such Tax Indemnitee rejects such settlement offer, offer then the amount for which a the Lessee and the Guarantor will be required to indemnify such Tax Indemnitee with respect to the Taxes subject to such offer shall not exceed the amount which it would have owed if such -50- 52 Participation Agreement settlement offer had been accepted provided that any Tax Indemnitee shall be entitled to reject any indemnity payment it would otherwise be entitled to hereunder if such Tax Indemnitee reasonably determines that accepting such offer would have an unindemnified impact on such Tax Indemnitee and provided further that no Tax Indemnitee may reject any such indemnity payment if the Guarantor agrees to pay to such Tax Indemnitee the amount of such unindemnified impact, as reasonably determined by such Tax Indemniteeaccepted. In addition, the controlling party shall keep the noncontrolling party reasonably informed as to the progress of the contest, and shall provide the noncontrolling party with a copy of (or appropriate excerpts from) any reports or claims issued by the relevant auditing agents or taxing authority to the controlling party thereof, in connection with such claim or the contest thereof, provided, however, that such obligation shall not obligate any Tax Indemnitee to disclose its tax returns or information or documentation unrelated to such claim or contest. Each Tax Indemnitee shall, shall at the Lessee's expense of the Lessee and the Guarantor, supply the Lessee or the Guarantor with such information and documents reasonably requested by the Lessee or the Guarantor as are necessary or advisable for such Person the Lessee to participate in any action, suit or proceeding to the extent permitted by this Section 13.4(b13.5(b); provided, however, that such Tax Indemnitee shall not be required to provide to such Lessee or the Guarantor copies of its tax returns or any other information, documentation, or materials that it deems to be confidential or proprietary. Notwithstanding anything in this Section 13.4(b13.5(b) to the contrary, no Tax Indemnitee shall enter into any settlement or other compromise or fail to appeal an adverse ruling with respect to any claim which is entitled to be indemnified under this Section 13.4 13.5 (and with respect to which contest is required under this Section 13.4(b13.5(b)) without the prior written consent of the GuarantorLessee, unless such Tax Indemnitee waives its right to be indemnified under this Section 13.4 13.5 with respect to such claim. Notwithstanding anything contained herein to the contrary, a Tax Indemnitee shall will not be required to contest (and neither the Lessee nor the Guarantor shall not be permitted to contest in any judicial forum if such contest could, in a Tax Indemnitee's reasonable judgment, be materially adverse to itcontest) a claim with respect to the imposition of any Tax if such Tax Indemnitee shall have waived waive its right to indemnification from Lessee under this Section 13.4 13.5 with respect to such claim (and any claim with respect to such year or any other taxable year the contest of which is precluded or materially adversely affected as a result of such waiver).
Appears in 1 contract
Contests. If In respect of the indemnification provided under Section 7.1(a), promptly after receipt by an Indemnitee of notice of any pending or threatened Claim, such Indemnitee shall, if a claim shall for indemnification in respect thereof is to be made against Lessee give written notice thereof to Lessee. So long as no Lease Event of Default is continuing, Lessee at its own expense, may elect to assume the defense of any Tax Indemnitee or if any proceeding such Claim through its own counsel, which shall be commenced against any Tax subject to the reasonable approval of the Indemnitee, on behalf of the Indemnitee (including a written notice with full right of such proceeding) for any Imposition as subrogation to which the Lessee or the Guarantor may have an indemnity obligation pursuant to this Section 13.4, or if any Tax Indemnitee shall determine that any Imposition to which the Lessee or the Guarantor may have an indemnity obligation pursuant to this Section 13.4 may be payable, such Tax Indemnitee shall promptly (and in any event, within fifteen (15) Business Days) notify the Guarantor in writing (provided that failure to so notify the Guarantor within fifteen (15) Business Days shall not alter such Tax Indemnitee's rights under this Section 13.4 except and defenses). Lessee must indicate its election to the extent assume such failure precludes or materially adversely affects the ability to conduct a contest of any indemnified Taxes) and shall not take any action with respect to such claim, proceeding or Imposition without the defense by written consent of the Guarantor (such consent not to be unreasonably withheld or unreasonably delayed) for thirty (30) days after the receipt of such notice by the Guarantor; provided, however, that in the case of any such claim or proceeding, if such Tax Indemnitee shall be required by law or regulation to take action prior to the end of such thirty (30) day period, such Tax Indemnitee shall in such notice to the Guarantor, so inform the Guarantor, and such Tax Indemnitee shall not take any action with respect to such claim, proceeding or Imposition without the consent within 30 days following receipt of Indemnitee's notice of the Guarantor (such consent not to be unreasonably withheld Claim, or unreasonably delayed) for ten (10) days after the receipt of such notice by the Guarantor unless such Tax Indemnitee shall be required by law or regulation to take action prior to the end of such ten (10) day period. The Guarantor shall be entitled for a period of thirty (30) days from receipt of such notice from such Tax Indemnitee (or such shorter period as such Tax Indemnitee has notified the Guarantor is required by law or regulation for such Tax Indemnitee to commence such contest), to request in writing that such Tax Indemnitee contest the imposition of such Tax, at the Guarantor's expense. If (x) such contest can be pursued in the name of the Guarantor or the Lessee and independently from any other proceeding involving a Tax liability of such Tax Indemnitee for which the Lessee and the Guarantor have not agreed to indemnify such Tax Indemnitee, (y) such contest must be pursued in the name of such Tax Indemnitee, but can be pursued independently from any other proceeding involving a Tax liability of such Tax Indemnitee for which the Lessee and the Guarantor have not agreed to indemnify such Tax Indemnitee or (z) such Tax Indemnitee so requests, then the Guarantor or such Lessee shall be permitted to control the contest of such claim, provided that in the case of a contest described third party claim which requires a shorter time for response then within such shorter period as specified in clause (y) if such Tax Indemnitee determines reasonably and in good faith the Indemnitee's notice of Claim; provided that such contest by the Guarantor Indemnitee has given Lessee notice thereof. If Lessee denies liability or the Lessee could have a material adverse impact on the business or operations of such Tax Indemnitee and provides a written explanation fails to respond to the Guarantor of such determinationnotice within the time period set forth above, such Tax the Indemnitee may elect defend or compromise the Claim as it deems appropriate without prejudice to control or reassert control any of the contest, and provided that the taking control by the Guarantor or the Lessee of any contest shall not alter the applicable Tax Indemnitee's rights hereunder and with no further obligation to indemnification hereunder, and provided, further, that in determining the application of clauses (x) and (y) inform Lessee of the preceding sentencestatus of the Claim and no right of Lessee to approve or disapprove any actions taken in connection therewith by the Indemnitee. If Lessee shall have elected to assume the defense of any such Claim, each Tax then upon the request of Lessee, the Indemnitee requesting payment of indemnity under Section 7.1(a) shall take promptly furnish Lessee with copies of any and all reasonable steps records or documents pertaining to segregate claims for any Taxes for which the Lessee matter to be indemnified and, to the extent known by such Indemnitee, a reasonably LSI Trust No. 2001-A Participation Agreement detailed explanation of the circumstances giving rise to the claim of indemnification and the Guarantor indemnify hereunder from Taxes for which the Lessee and the Guarantor are not obligated to indemnify hereunder, so that the Guarantor can control the contest determination of the former. In all other claims requested to be contested by the Guarantor, such Tax Indemnitee shall control the contest of such claim, acting through counsel selected by such Tax Indemnitee and reasonably acceptable to the Guarantor. In no event shall the Guarantor be permitted to contest (or such Tax Indemnitee be required to contest) any claim, (A) if such Tax Indemnitee provides the Guarantor with a legal opinion of counsel reasonably acceptable to the Guarantor that such action, suit or proceeding involves a risk of imposition of criminal liability or will involve a material risk amount of the sale, forfeiture or loss of, or the creation requested indemnity payment. Upon payment in full to Indemnitee of any Lien (other than a Permitted Lien) on the Property or indemnity pursuant to Section 7.1(a), Lessee shall be subrogated to any part thereof unless the Guarantor shall have posted and maintained a bond or other security reasonably satisfactory to the relevant Tax Indemnitee in respect to such risk, (B) if a Lease Event right of Default has occurred and is continuing unless the Guarantor shall have posted and maintained a bond or other security reasonably satisfactory to the relevant Tax Indemnitee in respect of the Taxes subject to matter against which such claim and any and all expenses for which the Guarantor or the indemnity has been paid. If Lessee is responsible hereunder reasonably foreseeable in connection with the contest of such claim, (C) unless the Guarantor shall have agreed elected to pay and shall pay, to such Tax Indemnitee on written demand all reasonable, documented out-of-pocket costs, losses and expenses that such Tax Indemnitee may incur in connection with contesting such Imposition including all reasonable legal, accounting and investigatory fees and disbursements and (if applicable) reasonable, allocable internal overhead costs determined in accordance with normal bank operating procedures, or (D) if such contest shall involve assume the payment defense of the Tax prior to the contest, unless the Guarantor shall provide to such Tax Indemnitee an interest-free advance in an amount equal to the Imposition that such Tax Indemnitee is required to pay (with no additional net after-tax costs to such Tax Indemnitee). In addition, for contests controlled by such Tax Indemnitee and claims contested in the name of such Tax Indemnitee in a public forum, no contest shall be required: (A) unless the amount of the potential indemnity (taking into account all similar or logically related claims that have been or could be raised in any audit involving any or all such Tax Indemnitees with respect to any period for which the Guarantor or the Lessee may be liable to pay an indemnity under this Section 13.4(b)) exceeds (1) with respect to the Lessor, $25,000 and (2) with respect to any Tax Indemnitee other than the Lessor, $75,000 and (B) unless, if requested by such Tax Indemnitee, the Guarantor shall have provided to such Tax Indemnitee an opinion of counsel selected by the Guarantor (which may be in-house counsel) (except, in the case of income taxes indemnified hereunder, in which case such opinion shall be an opinion of independent tax counsel selected by the Guarantor and reasonably acceptable to such Tax Indemnitee) that a reasonable basis exists to contest such claim. In no event shall a Tax Indemnitee be required to appeal an adverse judicial determination to the United States Supreme Court. The party conducting the contest shall consult in good faith with the other party and its counsel with respect to the contest of such claim for Taxes (or claim for refund) but the decisions regarding what actions to be taken shall be made by the controlling party in its sole judgment; provided, however, that if such Tax Indemnitee is the controlling party and the Guarantor recommends the acceptance of a settlement offer made by the relevant Governmental Authority and such Tax Indemnitee rejects such settlement offer, then the amount for which a Lessee and the Guarantor will be required to indemnify such Tax Indemnitee with respect to the Taxes subject to such offer shall not exceed the amount which it would have owed if such settlement offer had been accepted provided that any Tax Indemnitee shall be entitled to reject any indemnity payment it would otherwise be entitled to hereunder if such Tax Indemnitee reasonably determines that accepting such offer would have an unindemnified impact on such Tax Indemnitee and provided further that no Tax Indemnitee may reject any such indemnity payment if Claim, upon the Guarantor agrees written request at any time and from time to pay to such Tax Indemnitee the amount time of such unindemnified impactLessee, as reasonably determined by such Tax Indemnitee. In addition, the controlling party shall keep the noncontrolling party reasonably informed as to the progress of the contest, and shall provide the noncontrolling party with a copy of (or appropriate excerpts from) any reports or claims issued by the relevant auditing agents or taxing authority to the controlling party thereof, in connection with such claim or the contest thereof, provided, however, that such obligation shall not obligate any Tax Indemnitee to disclose its tax returns or information or documentation unrelated to such claim or contest. Each Tax Indemnitee shall, at the expense of the Lessee Lessee, take such reasonable actions and the Guarantor, supply the Lessee or the Guarantor with execute such information and documents reasonably requested by the Lessee or the Guarantor as are necessary or advisable for reasonably appropriate to assist Lessee in the preservation and enforcement against third parties of Lessee's right of subrogation hereunder. The Indemnitee may employ separate counsel in any such Person to Claim and participate in any actionthe defense thereof, suit or proceeding to but the extent permitted fees and expenses of such counsel shall be at the expense of the Indemnitee unless the Indemnitee shall have been advised by this Section 13.4(b); providedits counsel that a conflict of interest exists in Lessee's counsel's representations of the Indemnitee and Lessee, howeverin which case the fees and expenses of such Indemnitee's counsel shall be for the account of Lessee. All fees and expenses shall be paid periodically as incurred. So long as no Lease Event of Default shall have occurred and be continuing, that such Tax Indemnitee Lessee shall not be required to provide to liable for any settlement of any such Claim effected without its consent unless Lessee or the Guarantor copies of its tax returns or any other information, documentationshall fail to, or materials that it deems elect in writing not to, assume the defense thereof in which case the Indemnitee, without waiving any rights to be confidential or proprietary. Notwithstanding anything in this Section 13.4(b) to the contraryindemnification hereunder, no Tax Indemnitee shall may defend such Claim and enter into any good faith settlement or other compromise or fail to appeal an adverse ruling with respect to any claim which is entitled to be indemnified under this Section 13.4 (and with respect to which contest is required under this Section 13.4(b)) thereof without the prior written consent of Lessee. Lessee shall not, without the Guarantorprior written consent (not to be unreasonably withheld) of the Indemnitee, effect any settlement of any such Claim unless such Tax settlement includes an unconditional release of the Indemnitee waives its right from all liabilities that are the subject of such Claim. The parties agree to be indemnified under this Section 13.4 with respect to such claim. Notwithstanding anything contained herein to the contrary, a Tax Indemnitee shall not be required to contest (and neither the Lessee nor the Guarantor shall be permitted to contest cooperate in any judicial forum if such contest could, in a Tax Indemnitee's reasonable judgment, be materially adverse to it) a claim with respect to the imposition defense or settlement of any Tax if such Tax Indemnitee shall have waived its right Claim and to indemnification under this Section 13.4 with respect give each other reasonable access to such claim (and all information relevant thereto subject to appropriate confidentiality agreements. The parties will similarly cooperate in the prosecution of any claim with respect to such year or lawsuit against any other taxable year the contest of which is precluded or materially adversely affected as a result of such waiver)third party.
Appears in 1 contract
Contests. (1) If any a written claim shall be is made against any Tax Indemnitee Lessor or if any proceeding shall be is commenced against any Tax Indemnitee Lessor (including a written notice of such proceeding) for any Imposition Taxes as to which the Lessee could be liable for payment or the Guarantor may have an indemnity obligation pursuant to this Section 13.4, or if any Tax Indemnitee shall determine that any Imposition to which the Lessee or the Guarantor may have an indemnity obligation pursuant to this Section 13.4 may be payablehereunder, such Tax Indemnitee Lessor shall promptly (and in any event, within fifteen (15) Business Days) notify the Guarantor give Lessee notice in writing of such claim (provided PROVIDED, HOWEVER, that the failure to so notify the Guarantor within fifteen (15) Business Days provide such notice shall not alter such Tax Indemniteeaffect Lessee's rights under this Section 13.4 except obligations hereunder to the extent Lessor unless such failure precludes or materially adversely affects the ability shall effectively preclude Lessee's right to conduct a contest of any indemnified Taxessuch claim) and shall not take any action with respect to such claim, proceeding claim or Imposition Tax without the written consent of the Guarantor (such consent not to be unreasonably withheld or unreasonably delayed) Lessee for thirty (30) days after following the receipt of such notice by the GuarantorLessee; providedPROVIDED, howeverHOWEVER, that in the case of any such claim or proceedingthat, if such Tax Indemnitee Lessor shall be required by law or regulation Law to take action prior to the end of such thirty (30) -day period, such Tax Indemnitee shall Lessor shall, in such notice to the GuarantorLessee, so inform the GuarantorLessee, and such Tax Indemnitee Lessor shall not take any no action with respect to such claim, proceeding or Imposition without the consent of the Guarantor Lessee for as long as it is legally able to do so (such consent not to be unreasonably withheld or unreasonably delayed) for ten (10) days after the receipt of such notice by the Guarantor unless such Tax Indemnitee it being understood that Lessor shall be required by law or regulation entitled to take action pay the Tax claimed and sue for a refund prior to the end of such ten 30-day period if (10i) day period(A) ▇he failure to so pay the Tax would result in penalties (unless immediately reimbursed by Lessee) or (B) the failure to so pay would result in criminal penalties and (ii) Lessor uses its good faith efforts to take any action so required in connection with so paying the Tax in a manner that is the least prejudicial to the pursuit of the contest). The Guarantor In addition, Lessor shall (PROVIDED that Lessee shall have agreed to keep such information confidential other than to the extent necessary in order to contest the claim in writing in a manner reasonable satisfactory to Lessor) furnish Lessee with copies of any requests for information from any taxing authority relating to such Taxes with respect to which Lessee may be entitled for a period of required to indemnify hereunder. If requested by Lessee in writing within thirty (30) days from receipt of such notice from such Tax Indemnitee (or such shorter period as such Tax Indemnitee has notified the Guarantor is may be required by law or regulation for such Tax Indemnitee to commence such contest), to request in writing that such Tax Indemnitee contest the imposition Law after its receipt of such Taxnotice, Lessor shall, at the Guarantor's expense. If expense of Lessee (x) such contest can be pursued in the name of the Guarantor or the Lessee and independently from any other proceeding involving a Tax liability of such Tax Indemnitee for which the Lessee and the Guarantor have not agreed to indemnify such Tax Indemnitee, (y) such contest must be pursued in the name of such Tax Indemnitee, but can be pursued independently from any other proceeding involving a Tax liability of such Tax Indemnitee for which the Lessee and the Guarantor have not agreed to indemnify such Tax Indemnitee or (z) such Tax Indemnitee so requests, then the Guarantor or such Lessee shall be permitted to control the contest of such claim, provided that in the case of a contest described in clause (y) if such Tax Indemnitee determines reasonably and in good faith that such contest by the Guarantor or the Lessee could have a material adverse impact on the business or operations of such Tax Indemnitee and provides a written explanation to the Guarantor of such determination, such Tax Indemnitee may elect to control or reassert control of the contest, and provided that the taking control by the Guarantor or the Lessee of any contest shall not alter the applicable Tax Indemnitee's rights to indemnification hereunder, and provided, further, that in determining the application of clauses (x) and (y) of the preceding sentence, each Tax Indemnitee shall take any and including all reasonable steps to segregate claims for any Taxes for which the Lessee and the Guarantor indemnify hereunder from Taxes for which the Lessee and the Guarantor are not obligated to indemnify hereunder, so that the Guarantor can control the contest of the former. In all other claims requested to be contested by the Guarantor, such Tax Indemnitee shall control the contest of such claim, acting through counsel selected by such Tax Indemnitee and reasonably acceptable to the Guarantor. In no event shall the Guarantor be permitted to contest (or such Tax Indemnitee be required to contest) any claim, (A) if such Tax Indemnitee provides the Guarantor with a legal opinion of counsel reasonably acceptable to the Guarantor that such action, suit or proceeding involves a risk of imposition of criminal liability or will involve a material risk of the sale, forfeiture or loss of, or the creation of any Lien (other than a Permitted Lien) on the Property or any part thereof unless the Guarantor shall have posted and maintained a bond or other security reasonably satisfactory to the relevant Tax Indemnitee in respect to such risk, (B) if a Lease Event of Default has occurred and is continuing unless the Guarantor shall have posted and maintained a bond or other security reasonably satisfactory to the relevant Tax Indemnitee in respect of the Taxes subject to such claim and any and all expenses for which the Guarantor or the Lessee is responsible hereunder reasonably foreseeable in connection with the contest of such claim, (C) unless the Guarantor shall have agreed to pay and shall pay, to such Tax Indemnitee on written demand all reasonable, documented out-of-pocket costs, losses and expenses that such Tax Indemnitee may incur in connection with contesting such Imposition including all reasonable legal, accounting and investigatory fees and disbursements and (if applicable) reasonable, allocable internal overhead costs determined in accordance with normal bank operating procedures, or (D) if such contest shall involve the payment of the Tax prior to the contest, unless the Guarantor shall provide to such Tax Indemnitee an interest-free advance in an amount equal to the Imposition that such Tax Indemnitee is required to pay (with no additional net after-tax costs to such Tax Indemnitee). In addition, for contests controlled by such Tax Indemnitee and claims contested in the name of such Tax Indemnitee in a public forum, no contest shall be required: (A) unless the amount of the potential indemnity (taking into account all similar or logically related claims that have been or could be raised in any audit involving any or all such Tax Indemnitees with respect to any period for which the Guarantor or the Lessee may be liable to pay an indemnity under this Section 13.4(b)) exceeds (1) with respect to the Lessor, $25,000 and (2) with respect to any Tax Indemnitee other than the Lessor, $75,000 and (B) unless, if requested by such Tax Indemnitee, the Guarantor shall have provided to such Tax Indemnitee an opinion of counsel selected by the Guarantor (which may be in-house counsel) (exceptor outside attorney and accountants fees), in the case of income taxes indemnified hereunder, in which case such opinion shall be an opinion of independent tax counsel selected by the Guarantor and reasonably acceptable to such Tax Indemnitee) that a reasonable basis exists to contest such claim. In no event shall a Tax Indemnitee be required to appeal an adverse judicial determination to the United States Supreme Court. The party conducting the contest shall consult in good faith with contest (or, if permitted by applicable law, allow Lessee to contest), through appropriate administrative and judicial proceedings the other party and its counsel with respect to the contest of such claim for Taxes (validity, applicability or claim for refund) but the decisions regarding what actions to be taken shall be made by the controlling party in its sole judgment; provided, however, that if such Tax Indemnitee is the controlling party and the Guarantor recommends the acceptance of a settlement offer made by the relevant Governmental Authority and such Tax Indemnitee rejects such settlement offer, then the amount for which a Lessee and the Guarantor will be required to indemnify such Tax Indemnitee with respect to the Taxes subject to such offer shall not exceed the amount which it would have owed if such settlement offer had been accepted provided that any Tax Indemnitee shall be entitled to reject any indemnity payment it would otherwise be entitled to hereunder if such Tax Indemnitee reasonably determines that accepting such offer would have an unindemnified impact on such Tax Indemnitee and provided further that no Tax Indemnitee may reject any such indemnity payment if the Guarantor agrees to pay to such Tax Indemnitee the amount of such unindemnified impact, as reasonably determined Taxes by such Tax Indemnitee. In addition, the controlling party shall keep the noncontrolling party reasonably informed as to the progress of the contest, and shall provide the noncontrolling party with a copy of (or appropriate excerpts from) any reports or claims issued by the relevant auditing agents or taxing authority to the controlling party resisting payment thereof, not paying the same except under protest if protest is necessary and proper or if the payment is made, using reasonable efforts to obtain a refund thereof in connection with such claim or the contest thereof, provided, however, that such obligation shall not obligate any Tax Indemnitee to disclose its tax returns or information or documentation unrelated to such claim or contest. Each Tax Indemnitee shall, at the expense of the Lessee and the Guarantor, supply the Lessee or the Guarantor with such information and documents reasonably requested by the Lessee or the Guarantor as are necessary or advisable for such Person to participate in any action, suit or proceeding to the extent permitted by this Section 13.4(b); provided, however, that such Tax Indemnitee shall not be required to provide to such Lessee or the Guarantor copies of its tax returns or any other information, documentation, or materials that it deems to be confidential or proprietary. Notwithstanding anything in this Section 13.4(b) to the contrary, no Tax Indemnitee shall enter into any settlement or other compromise or fail to appeal an adverse ruling with respect to any claim which is entitled to be indemnified under this Section 13.4 (and with respect to which contest is required under this Section 13.4(b)) without the prior written consent of the Guarantor, unless such Tax Indemnitee waives its right to be indemnified under this Section 13.4 with respect to such claim. Notwithstanding anything contained herein to the contrary, a Tax Indemnitee shall not be required to contest (and neither the Lessee nor the Guarantor shall be permitted to contest in any judicial forum if such contest could, in a Tax Indemnitee's reasonable judgment, be materially adverse to it) a claim with respect to the imposition of any Tax if such Tax Indemnitee shall have waived its right to indemnification under this Section 13.4 with respect to such claim (and any claim with respect to such year or any other taxable year the contest of which is precluded or materially adversely affected as a result of such waiver).appropriate administrative and/or judicial
Appears in 1 contract
Contests. If any claim shall be made against any Tax Indemnitee or if any proceeding shall be commenced against any Tax Indemnitee (including a written notice of such proceeding) for any Imposition Taxes as to which the Lessee or the Guarantor may have an indemnity obligation pursuant to this Section 13.4SECTION 8.1, or if any Tax Indemnitee shall determine that any Imposition Taxes as to which the Lessee or the Guarantor may have an indemnity obligation pursuant to this Section 13.4 SECTION 8.1 may be payable, such Tax Indemnitee shall promptly (and in any event, within fifteen (15) Business Days) notify the Guarantor in writing (provided that failure to so notify the Guarantor within fifteen (15) Business Days shall not alter such Tax Indemnitee's rights under this Section 13.4 except to the extent such failure precludes or materially adversely affects the ability to conduct a contest of any indemnified Taxes) and shall not take any action with respect to such claim, proceeding or Imposition without the written consent of the Guarantor (such consent not to be unreasonably withheld or unreasonably delayed) for thirty (30) days after the receipt of such notice by the Guarantor; provided, however, that in the case of any such claim or proceeding, if such Tax Indemnitee shall be required by law or regulation to take action prior to the end of such thirty (30) day period, such Tax Indemnitee shall in such notice to the Guarantor, so inform the Guarantor, and such Tax Indemnitee shall not take any action with respect to such claim, proceeding or Imposition without the consent of the Guarantor (such consent not to be unreasonably withheld or unreasonably delayed) for ten (10) days after the receipt of such notice by the Guarantor unless such Tax Indemnitee shall be required by law or regulation to take action prior to the end of such ten (10) day periodLessee. The Guarantor shall be entitled for a period of thirty (30) days from receipt of such notice from such Tax Indemnitee (or such shorter period as such Tax Indemnitee has notified the Guarantor is required by law or regulation for such Tax Indemnitee to commence such contest), to request in writing that such Tax Indemnitee contest the imposition of such Tax, at the Guarantor's expense. If (x) such contest can be pursued in the name of the Guarantor or the Lessee and independently from any other proceeding involving a Tax liability of such Tax Indemnitee for which the Lessee and the Guarantor have not agreed to indemnify such Tax Indemnitee, (y) such contest must be pursued in the name of such Tax Indemnitee, but can be pursued independently from any other proceeding involving a Tax liability of such Tax Indemnitee for which the Lessee and the Guarantor have not agreed to indemnify such Tax Indemnitee or (z) such Tax Indemnitee so requests, then the Guarantor or such Lessee shall be permitted to control the contest of such claimentitled, provided that in the case of a contest described in clause (y) if such Tax Indemnitee determines reasonably and in good faith that such contest by the Guarantor or the Lessee could have a material adverse impact on the business or operations of such Tax Indemnitee and provides a written explanation to the Guarantor of such determination, such Tax Indemnitee may elect to control or reassert control of the contest, and provided that the taking control by the Guarantor or the Lessee of any contest shall not alter the applicable Tax Indemnitee's rights to indemnification hereunder, and provided, further, that in determining the application of clauses (x) and (y) of the preceding sentence, each Tax Indemnitee shall take any and all reasonable steps to segregate claims for any Taxes for which the Lessee and the Guarantor indemnify hereunder from Taxes for which the Lessee and the Guarantor are not obligated to indemnify hereunder, so that the Guarantor can control the contest of the former. In all other claims requested to be contested by the Guarantor, such Tax Indemnitee shall control the contest of such claimat its expense, acting through counsel selected by such Tax Indemnitee and reasonably acceptable to such Indemnitee, to participate in, and, to the Guarantor. In no event extent that Lessee desires to, assume and control the defense thereof; PROVIDED, HOWEVER, that Lessee shall not be entitled to assume and control the Guarantor be permitted defense of any such action, suit or proceeding if and to contest (or such Tax Indemnitee be required to contest) any claim, the extent that (A) if Lessee is not able to provide such Tax Indemnitee provides the Guarantor with a legal opinion of counsel reasonably acceptable to the Guarantor such Indemnitee that such action, suit or proceeding involves does not involve (x) a risk of imposition of criminal liability or (y) any material risk of material civil liability on such Indemnitee and will not involve a material risk of the sale, forfeiture or loss of, or the creation of any Lien (other than a Permitted LienEncumbrance) on the Property Equipment, the Trust Estate or any part thereof unless thereof, unless, in the Guarantor case of this CLAUSE (y), Lessee contemporaneously with such opinion shall have posted and maintained a bond or other security reasonably satisfactory to the relevant Tax Indemnitee in respect to such risk, (B) if the control of such action, suit or proceeding would involve a bona fide conflict of interest, (C) such proceeding involves Claims not fully indemnified by Lessee which Lessee and the Indemnitee have been unable to sever from the indemnified claim(s), (D) a Default or Lease Event of Default has occurred and is continuing unless the Guarantor shall have posted and maintained a bond or other security reasonably satisfactory to the relevant Tax Indemnitee in respect of the Taxes subject to such claim and any and all expenses for which the Guarantor or the Lessee is responsible hereunder reasonably foreseeable in connection with the contest of such claimcontinuing, (CE) unless the Guarantor shall have agreed to pay and shall pay, to such Tax Indemnitee on written demand all reasonable, documented out-of-pocket costs, losses and expenses that such Tax Indemnitee may incur in connection with contesting such Imposition including all reasonable legal, accounting and investigatory fees and disbursements and (if applicable) reasonable, allocable internal overhead costs determined in accordance with normal bank operating procedures, or (D) if such contest shall involve the payment of the Tax prior to the contest, unless the Guarantor shall provide to such Tax Indemnitee an interest-free advance in an amount equal to the Imposition that such Tax Indemnitee is required to pay (with no additional net after-tax costs to such Tax Indemnitee). In addition, for contests controlled by such Tax Indemnitee and claims contested in the name of such Tax Indemnitee in a public forum, no contest shall be required: (A) unless the amount of the potential indemnity (taking into account all similar or logically related claims that have been or could be raised in any audit involving any or all such Tax Indemnitees with respect to any period for which the Guarantor or the Lessee may be liable to pay an indemnity under this Section 13.4(b)) exceeds (1) with respect to the Lessor, $25,000 and (2) with respect to any Tax Indemnitee other than the Lessor, $75,000 and (B) unless, if requested by such Tax Indemnitee, the Guarantor shall have provided to such Tax Indemnitee an opinion of counsel selected by the Guarantor (which may be in-house counsel) (except, in the case of income taxes indemnified hereunder, in which case such opinion shall be an opinion of independent tax counsel selected by the Guarantor and reasonably acceptable to such Tax Indemnitee) that a reasonable basis exists to contest such claim. In no event shall a Tax Indemnitee be required to appeal an adverse judicial determination to the United States Supreme Court. The party conducting the contest shall consult in good faith with the other party and its counsel with respect to the contest of such claim for Taxes (or claim for refund) but the decisions regarding what actions to be taken shall be made by the controlling party in its sole judgment; provided, however, that if such Tax Indemnitee is the controlling party and the Guarantor recommends the acceptance of a settlement offer made by the relevant Governmental Authority and such Tax Indemnitee rejects such settlement offer, then the amount for which a Lessee and the Guarantor will be required to indemnify such Tax Indemnitee with respect to the Taxes subject to such offer shall not exceed the amount which it would have owed if such settlement offer had been accepted provided that any Tax Indemnitee shall be entitled to reject any indemnity payment it would otherwise be entitled to hereunder if such Tax Indemnitee reasonably determines that accepting such offer would have an unindemnified impact on such Tax Indemnitee and provided further that no Tax Indemnitee may reject any such indemnity payment if the Guarantor agrees to pay to such Tax Indemnitee the amount of such unindemnified impact, as reasonably determined by such Tax Indemnitee. In addition, the controlling party shall keep the noncontrolling party reasonably informed as to the progress of the contest, and shall provide the noncontrolling party with a copy of (or appropriate excerpts from) any reports or claims issued by the relevant auditing agents or taxing authority to the controlling party thereof, in connection with such claim or the contest thereof, provided, however, that such obligation shall not obligate any Tax Indemnitee to disclose its tax returns or information or documentation unrelated to such claim or contest. Each Tax Indemnitee shall, at the expense of the Lessee and the Guarantor, supply the Lessee or the Guarantor with such information and documents reasonably requested by the Lessee or the Guarantor as are necessary or advisable for such Person to participate in any action, suit or proceeding involves matters which extend beyond or are unrelated to the extent permitted transaction contemplated by this Section 13.4(b); provided, however, that the Operative Documents and if determined adversely could be materially detrimental to the interests of such Tax Indemnitee notwithstanding indemnification by Lessee or (F) Lessee shall not be required have acknowledged in writing its obligation to provide to indemnify fully such Lessee Indemnitee in respect of such action, suit or the Guarantor copies of proceeding. The Indemnitee may participate in a reasonable manner at its tax returns or any other information, documentation, or materials that it deems to be confidential or proprietary. Notwithstanding anything in this Section 13.4(b) to the contrary, no Tax Indemnitee shall enter into any settlement or other compromise or fail to appeal an adverse ruling with respect to any claim which is entitled to be indemnified under this Section 13.4 (own expense and with respect to which contest is required under this Section 13.4(b)) without the prior written consent of the Guarantor, unless such Tax Indemnitee waives its right to be indemnified under this Section 13.4 with respect to such claim. Notwithstanding anything contained herein to the contrary, a Tax Indemnitee shall not be required to contest (and neither the Lessee nor the Guarantor shall be permitted to contest own counsel in any judicial forum if such contest could, proceeding conducted by Lessee in a Tax Indemnitee's reasonable judgment, be materially adverse to it) a claim accordance with respect to the imposition of any Tax if such Tax Indemnitee shall have waived its right to indemnification under this Section 13.4 with respect to such claim (and any claim with respect to such year or any other taxable year the contest of which is precluded or materially adversely affected as a result of such waiver)foregoing.
Appears in 1 contract
Contests. If any claim (a) After the Closing, the Purchaser shall be made against reasonably promptly after becoming aware notify the Seller in writing of the commencement of any Tax Indemnitee audit or administrative or judicial proceeding and shall also separately notify the Seller in writing of any demand or claim on the Purchaser or the Company which, if determined adversely to the taxpayer or after the lapse of time would be grounds for indemnification by the Seller under this Article VII. Such notice shall contain factual information (to the extent known to the Purchaser or the Company) describing the asserted Tax liability in reasonable detail and shall include copies of any proceeding shall be commenced against notice or other document received from any taxing authority in respect of any such asserted Tax Indemnitee (including a written liability. If the Purchaser fails to give the Seller reasonably prompt notice of such proceedingan asserted Tax liability as required by this Section 7.04, then (i) if the Seller is precluded by the failure to give reasonably prompt notice from contesting the asserted Tax liability in both the administrative and judicial forums, then the Seller shall not have any obligation to indemnify for any Imposition as loss or damage arising out of such asserted Tax liability, and (ii) if the Seller is not so precluded from contesting but such failure to give reasonably prompt notice results in an actual detriment to the Seller, then any amount which the Lessee or Seller is otherwise required to pay the Guarantor may have an indemnity obligation Purchaser pursuant to this Section 13.4Article VII with respect to such liability shall be reduced by the amount of such detriment.
(b) The Seller, promptly after receiving notice, may elect to direct, through counsel of its own choosing and at its own expense, any audit, claim for refund and administrative or judicial proceeding involving any asserted liability with respect to which indemnity may be sought against the Seller under this Article VII (any such audit, claim for refund or proceeding relating to an asserted Tax liability are referred to herein collectively as a "CONTEST"). If the Seller elects to direct the Contest of an asserted Tax liability, the Purchaser shall cooperate in all reasonable respects and shall cause the Company or its successor to cooperate in all reasonable respects, at the Seller's expense, in each phase of such Contest. If the Seller does not either reasonably promptly give notice to direct the Contest or commence the direction of the Contest or if any Tax Indemnitee shall determine that any Imposition it contests its obligation to which indemnify under Section 7.01, the Lessee Purchaser or the Guarantor Company may have an indemnity obligation pursuant to this Section 13.4 may be payablepay, compromise or contest, at its own expense, such Tax Indemnitee asserted liability without waiving any of its rights to indemnification hereunder. However, in such case, neither the Purchaser nor the Company may settle or compromise any asserted liability over the objection of the Seller; PROVIDED, HOWEVER, that the Seller's consent to settlement or compromise shall promptly (and in not be unreasonably withheld or delayed. In any event, within fifteen each of the Purchaser (15or the Company) Business Daysand the Seller may participate, at their own expense, in the Contest. If the Seller chooses to direct the Contest, the Purchaser shall promptly empower and shall cause the Company or its successor promptly to empower (by power of attorney and such other documentation as may be appropriate) notify such representatives of the Guarantor Seller as it may designate to represent the Purchaser or the Company or its successor in writing (provided the Contest insofar as the Contest involves an asserted Tax liability for which the Seller would be liable under this Article VII, PROVIDED that failure to so notify the Guarantor within fifteen (15) Business Days Seller shall not, without the Purchaser's consent, which shall not alter be unreasonably withheld or delayed, (x) agree to any settlement with respect to any Tax if such settlement would likely materially adversely affect the future Tax Indemnitee's rights under this Section 13.4 except liability of the Purchaser or the Company for any periods ending after the Reference Date other than through the use of losses or credits arising in periods or portions thereof ending on or prior to the extent Reference Date or (y) agree to any settlement of such failure precludes claim or materially adversely affects cease to defend against such claim if, pursuant to or as a result of such settlement or cessation, injunctive or other equitable relief would be imposed against the ability Purchaser or the Company. If, with respect to conduct any proposed settlement referred to in clause (x) of the previous sentence, the Seller proposes in good faith to settle a claim, suit, action or proceeding with respect to any Tax, which settlement offer is accepted by the relevant taxing authority, the Purchaser may elect to continue to contest such claim, suit, action or proceeding; PROVIDED that notwithstanding how such matter is ultimately settled or decided, the liability of any indemnified Taxes) and shall not take any action the Seller with respect to such claim, suit, action or proceeding or Imposition without shall be no greater than the written consent of amount which would have been payable if the Guarantor Purchaser had consented to the settlement proposed by the Seller.
(such consent not c) The Purchaser shall have the sole obligation and right to be unreasonably withheld or unreasonably delayed) direct, at its own expense, a Contest regarding any Tax Return relating to the Company for thirty (30) days any taxable period commencing after the receipt of such notice by the Guarantor; provided, however, that in the case of any such claim or proceeding, if such Tax Indemnitee shall be required by law or regulation to take action prior to the end of such thirty (30) day period, such Tax Indemnitee shall in such notice to the Guarantor, so inform the Guarantor, and such Tax Indemnitee shall not take any action with respect to such claim, proceeding or Imposition without the consent of the Guarantor (such consent not to be unreasonably withheld or unreasonably delayed) for ten (10) days after the receipt of such notice by the Guarantor unless such Tax Indemnitee shall be required by law or regulation to take action prior to the end of such ten (10) day period. The Guarantor shall be entitled for a period of thirty (30) days from receipt of such notice from such Tax Indemnitee Reference Date (or such shorter period as such Tax Indemnitee has notified the Guarantor is required by law or regulation for such Tax Indemnitee to commence such contest), to request in writing that such Tax Indemnitee contest the imposition of such Tax, at the Guarantor's expense. If (x) such contest can be pursued in the name of the Guarantor or the Lessee and independently from any other proceeding involving a Tax liability of such Tax Indemnitee for which the Lessee and the Guarantor have not agreed to indemnify such Tax Indemnitee, (y) such contest must be pursued in the name of such Tax Indemnitee, but can be pursued independently from any other proceeding involving a Tax liability of such Tax Indemnitee for which the Lessee and the Guarantor have not agreed to indemnify such Tax Indemnitee or (z) such Tax Indemnitee so requests, then the Guarantor or such Lessee shall be permitted to control the contest of such claim, provided that Closing Date in the case of a contest described in clause (y) if such Tax Indemnitee determines reasonably and in good faith that such contest by the Guarantor Return which is filed on a combined, consolidated, unitary or the Lessee could have a material adverse impact on the business or operations of such Tax Indemnitee and provides a written explanation to the Guarantor of such determinationsimilar basis); PROVIDED, such Tax Indemnitee may elect to control or reassert control of the contestHOWEVER, and provided that the taking control by Purchaser shall advise and consult with the Guarantor or Seller regarding the Lessee status of any contest shall not alter such Contest that involves the applicable Tax Indemnitee's rights to indemnification hereunder, and provided, further, that in determining the application of clauses (x) and (y) of the preceding sentence, each Tax Indemnitee shall take any and all reasonable steps to segregate claims for any Taxes for which the Lessee and the Guarantor indemnify hereunder from Taxes for which the Lessee and the Guarantor are not obligated to indemnify hereunder, so that the Guarantor can control the contest of the former. In all other claims requested to be contested by the Guarantor, such Tax Indemnitee shall control the contest of such claim, acting through counsel selected by such Tax Indemnitee and reasonably acceptable to the Guarantor. In no event shall the Guarantor be permitted to contest (or such Tax Indemnitee be required to contest) any claim, (A) if such Tax Indemnitee provides the Guarantor with a legal opinion of counsel reasonably acceptable to the Guarantor that such action, suit or proceeding involves a risk of imposition of criminal liability or will involve a material risk of the sale, forfeiture or loss of, or the creation of any Lien (other than a Permitted Lien) on the Property or any part thereof unless the Guarantor shall have posted and maintained a bond or other security reasonably satisfactory to the relevant Tax Indemnitee in respect to such risk, (B) if a Lease Event of Default has occurred and is continuing unless the Guarantor shall have posted and maintained a bond or other security reasonably satisfactory to the relevant Tax Indemnitee in respect of the Taxes subject to such claim and any and all expenses for which the Guarantor or the Lessee is responsible hereunder reasonably foreseeable in connection with the contest of such claim, (C) unless the Guarantor shall have agreed to pay and shall pay, to such Tax Indemnitee on written demand all reasonable, documented out-of-pocket costs, losses and expenses that such Tax Indemnitee may incur in connection with contesting such Imposition including all reasonable legal, accounting and investigatory fees and disbursements and (if applicable) reasonable, allocable internal overhead costs determined in accordance with normal bank operating procedures, or (D) if such contest shall involve the payment of the Tax prior to the contest, unless the Guarantor shall provide to such Tax Indemnitee an interest-free advance in an amount equal to the Imposition that such Tax Indemnitee is required to pay (with no additional net after-tax costs to such Tax Indemnitee). In addition, for contests controlled by such Tax Indemnitee and claims contested in the name of such Tax Indemnitee in a public forum, no contest shall be required: (A) unless the amount of the potential indemnity (taking into account all similar or logically related claims that have been or could be raised in any audit involving any or all such Tax Indemnitees with respect to any period for which the Guarantor or the Lessee may be liable to pay an indemnity under this Section 13.4(b)) exceeds (1) with respect to the Lessor, $25,000 and (2) with respect to any Tax Indemnitee other than the Lessor, $75,000 and (B) unless, if requested by such Tax Indemnitee, the Guarantor shall have provided to such Tax Indemnitee an opinion of counsel selected by the Guarantor (which may be in-house counsel) (except, in the case of income taxes indemnified hereunder, in which case such opinion shall be an opinion of independent tax counsel selected by the Guarantor and reasonably acceptable to such Tax Indemnitee) that a reasonable basis exists to contest such claim. In no event shall a Tax Indemnitee be required to appeal an adverse judicial determination to the United States Supreme Court. The party conducting the contest shall consult in good faith with the other party and its counsel with respect to the contest of such claim for Taxes (or claim for refund) but the decisions regarding what actions to be taken shall be made by the controlling party in its sole judgment; provided, however, that if such Tax Indemnitee is the controlling party and the Guarantor recommends the acceptance of a settlement offer made by the relevant Governmental Authority and such Tax Indemnitee rejects such settlement offer, then the amount for which a Lessee and the Guarantor will be required to indemnify such Tax Indemnitee with respect to the Taxes subject to such offer shall not exceed the amount which it would have owed if such settlement offer had been accepted provided that any Tax Indemnitee shall be entitled to reject any indemnity payment it would otherwise be entitled to hereunder if such Tax Indemnitee reasonably determines that accepting such offer would have an unindemnified impact on such Tax Indemnitee Company and provided further that no Tax Indemnitee may reject any such indemnity payment if the Guarantor agrees to pay to such Tax Indemnitee the amount of such unindemnified impactthat, as reasonably determined by such Tax Indemnitee. In addition, the controlling party shall keep the noncontrolling party reasonably informed as to the progress of the contest, and shall provide the noncontrolling party with a copy of (or appropriate excerpts from) any reports or claims issued by the relevant auditing agents or taxing authority to the controlling party thereof, in connection with such claim or the contest thereof, provided, however, that such obligation shall not obligate any Tax Indemnitee to disclose its tax returns or information or documentation unrelated to such claim or contest. Each Tax Indemnitee shall, at the expense of the Lessee and the Guarantor, supply the Lessee or the Guarantor with such information and documents reasonably requested by the Lessee or the Guarantor as are necessary or advisable for such Person to participate in any action, suit or proceeding to the extent permitted by this Section 13.4(b); provided, however, that such Tax Indemnitee shall not be required to provide to such Lessee or the Guarantor copies of its tax returns or any other information, documentation, or materials that it deems to be confidential or proprietary. Notwithstanding anything in this Section 13.4(b) to the contrary, no Tax Indemnitee shall enter into any settlement or other compromise or fail to appeal an adverse ruling with respect to any claim which is entitled to be indemnified under this Section 13.4 (and with respect to which contest is required under this Section 13.4(b)) without the prior written consent of the Guarantor, unless such Tax Indemnitee waives its right to be indemnified under this Section 13.4 with respect to such claim. Notwithstanding anything contained herein to the contrary, a Tax Indemnitee Seller (which shall not be required to contest unreasonably withheld or delayed), and except as provided in Section 7.04(b), the Purchaser shall not (and neither i) make any election, change any annual accounting period or adopt or change any accounting method if any such election, adoption or change would have the Lessee nor effect of increasing the Guarantor shall be permitted to contest tax liability of the Seller in any judicial forum tax period or portion thereof ending on or before the Reference Date, or (ii) file any amended return, enter into any closing agreement, settle any tax claim or assessment relating to the Company, surrender any right to claim a refund of Taxes, consent to any extension or waiver of the limitation period applicable to any tax claim or assessment relating to the Company or take any action, if any such contest couldamendment, agreement, settlement, surrender, consent or other action would have the effect of increasing the tax liability of the Seller in any tax period or portion thereof ending on or before the Reference Date (or the Closing Date in the case of a Tax Indemnitee's reasonable judgmentReturn which is filed on a combined, be materially adverse to it) a claim with respect consolidated, unitary or similar basis), except to the imposition of extent the Seller is to be fully indemnified by the Purchaser against any Tax if such Tax Indemnitee shall have waived its right to indemnification increase under this Section 13.4 with respect to such claim (and any claim with respect to such year 7.05 or any other taxable year the contest of which is precluded or materially adversely affected as a result of such waiver)otherwise.
Appears in 1 contract
Sources: Stock Purchase Agreement (White Mountains Insurance Group Inc)
Contests. If any claim shall be made against any Tax Indemnitee or if any proceeding shall be commenced against any Tax Indemnitee (including a written notice of such proceeding) for any Imposition as to which the Lessee or the Guarantor may have an indemnity obligation pursuant to this Section 13.4, or if any Tax Indemnitee shall determine that any Imposition to for which the Lessee or the Guarantor may have an indemnity obligation pursuant to this Section 13.4 may be payable, such Tax Indemnitee shall promptly (and in any event, within fifteen (15) Business Days) 30 days after a Responsible Officer of such Tax Indemnitee has actual knowledge thereof notify the Guarantor Lessee in writing (provided that failure to so notify the Guarantor Lessee within fifteen (15) Business Days 30 days after a Responsible Officer of such Tax Indemnitee has actual knowledge thereof shall not alter such Tax Indemnitee's ’s rights under this Section 13.4 13.4, except to the extent such failure precludes or materially adversely affects the ability to conduct a contest of any indemnified Taxes) and shall not take any action with respect to such claim, proceeding or Imposition without the written consent of the Guarantor Lessee (such consent not to be unreasonably withheld or unreasonably delayed) for thirty (30) 30 days after the receipt of such notice by the GuarantorLessee; provided, however, that in the case of any such claim or proceeding, if such Tax Indemnitee shall be required by law or regulation to take action prior to the end of such thirty (30) -day period, such Tax Indemnitee shall in such notice to the GuarantorLessee, so inform the GuarantorLessee, and such Tax Indemnitee shall not take any action with respect to such claim, proceeding or Imposition without the consent of the Guarantor Lessee (such consent not to be unreasonably withheld or unreasonably delayed) for ten (10) 10 days after the receipt of such notice by the Guarantor Lessee, unless such the Tax Indemnitee shall be required by law or regulation to take action prior to the end of such ten (10) -day period. The Guarantor Lessee shall be entitled for a period of thirty (30) 60 days from receipt of such notice from such the Tax Indemnitee (or such shorter period as such the Tax Indemnitee has notified the Guarantor Lessee is required by law or regulation for such the Tax Indemnitee to commence such contest), subject to request the immediately following sentence, to assume control of such contest or if such contest is of a type that must be pursued, if at all, in writing the name of such Tax Indemnitee, require that such Tax Indemnitee contest the imposition of pursue such Tax, at the Guarantor's expensecontest. If (x) such contest can be pursued in the name of the Guarantor or the Lessee and independently from any other proceeding involving a Tax liability of such Tax Indemnitee for which the Lessee and the Guarantor have has not agreed to indemnify such Tax Indemnitee, (y) such contest must be pursued in the name of such the Tax Indemnitee, but can be pursued independently from any other proceeding involving a Tax liability of such Tax Indemnitee for which the Lessee and the Guarantor have has not agreed to indemnify such Tax Indemnitee or (z) such the Tax Indemnitee so requests, then the Guarantor or such Lessee shall be permitted to control the contest of such claim, provided that in the case of a contest described in any of clause (x), (y) or (z) if such the Tax Indemnitee determines reasonably and in good faith that such contest by the Guarantor or the Lessee could have a material adverse impact effect on the business or operations of such the Tax Indemnitee and provides a written explanation to the Guarantor Lessee of such determination, such the Tax Indemnitee may elect to control or reassert control of the contest, and provided provided, that the by taking control of the contest, Lessee acknowledges that it is responsible for the Imposition ultimately determined to be due by the Guarantor or the Lessee reason of any contest shall not alter the applicable Tax Indemnitee's rights to indemnification hereundersuch claim, and provided, further, that in determining the application of clauses (x) and (y) of the preceding sentence, each Tax Indemnitee shall take any and all reasonable steps to segregate claims for any Taxes for which the Lessee and the Guarantor indemnify indemnifies hereunder from Taxes for which the Lessee and the Guarantor are is not obligated to indemnify hereunder, so that the Guarantor Lessee can control the contest of the former. In all other claims requested to be contested by the GuarantorLessee, such the Tax Indemnitee shall control the contest of such claim, acting through counsel selected by such Tax Indemnitee and of its selection reasonably acceptable to the GuarantorLessee. In no event shall the Guarantor Lessee be permitted to contest (or such the Tax Indemnitee be required to contest) any claim, (A) if such Tax Indemnitee provides the Guarantor Lessee with a legal opinion of independent counsel reasonably acceptable to the Guarantor that such action, suit or proceeding involves a risk of imposition of criminal liability or will involve a material risk of the sale, forfeiture or loss of, or the creation of any Lien (other than a Permitted Lien) on the Property Subject Property, the CSC Sublease, any Fifth Floor Sublease or any part of any thereof unless the Guarantor Lessee shall have posted and maintained a bond or other security reasonably satisfactory to the relevant Tax Indemnitee in respect to such risk, (B) if a Lease an Event of Default has occurred and is continuing continuing, unless the Guarantor Lessee shall have posted and maintained a bond or other security reasonably satisfactory to the relevant Tax Indemnitee in respect of the Taxes subject to such claim and any and all expenses for which the Guarantor or the Lessee is responsible hereunder reasonably foreseeable in connection with the contest of such claimhereunder, (C) unless the Guarantor Lessee shall have agreed to pay and shall pay, pay to such Tax Indemnitee on written demand all reasonable, documented reasonable out-of-pocket costs, losses and expenses that such Tax Indemnitee may incur in connection with contesting such Imposition Imposition, including all reasonable legal, accounting and investigatory fees and disbursements and (if applicable) reasonable, allocable internal overhead costs determined in accordance with normal bank operating proceduresas well as the Impositions which are the subject of such claim to the extent the contest is unsuccessful, or (D) if such contest shall involve the payment of the Tax prior to the contest, unless the Guarantor Lessee shall provide to such the Tax Indemnitee an interest-free advance in an amount equal to the Imposition that such Tax the Indemnitee is required to pay (with no additional net after-tax costs (including Taxes) to such Tax Indemnitee). In addition, addition for contests controlled by such Tax Indemnitee controlled contests and claims contested in the name of such the Tax Indemnitee in a public forum, no contest by a Tax Indemnitee shall be required: (A1) unless the amount of the potential indemnity (taking into account all similar or logically related claims that have been or could be raised in any audit involving any or all such Tax Indemnitees with respect to any period Indemnitee for which the Guarantor or the Lessee may be liable to pay an indemnity under this Section 13.4(b)) exceeds (1) with respect to the Lessor, $25,000 50,000 and (2) with respect to any Tax Indemnitee other than the Lessor, $75,000 and (B) unless, if requested by such the Tax Indemnitee, the Guarantor Lessee shall have provided to such the Tax Indemnitee an opinion of from counsel or a tax accountancy firm selected by the Guarantor (which may be in-house counsel) (except, in the case of income taxes indemnified hereunder, in which case such opinion shall be an opinion of independent tax counsel selected by the Guarantor Lessee and reasonably acceptable to such the Tax Indemnitee) Indemnitee confirming that a reasonable basis exists to contest such claimclaim (or in the case of an appeal of an adverse determination, an opinion of such counsel to the effect that it is more likely than not that the determination may be reversed on appeal). In no event shall a Tax Indemnitee be required to appeal an adverse judicial determination to the United States Supreme Court. The party conducting the contest shall consult in good faith with the other party and its counsel with respect to the contest of such claim for Taxes (or claim for refund) but the decisions regarding what actions to be taken shall be made by the controlling party in its sole judgment; provided, however, that if such Tax Indemnitee is the controlling party and the Guarantor recommends the acceptance of a settlement offer made by the relevant Governmental Authority and such Tax Indemnitee rejects such settlement offer, then the amount for which a Lessee and the Guarantor will be required to indemnify such Tax Indemnitee with respect to the Taxes subject to such offer shall not exceed the amount which it would have owed if such settlement offer had been accepted provided that any Tax Indemnitee shall be entitled to reject any indemnity payment it would otherwise be entitled to hereunder if such Tax Indemnitee reasonably determines that accepting such offer would have an unindemnified impact on such Tax Indemnitee and provided further that no Tax Indemnitee may reject any such indemnity payment if the Guarantor agrees to pay to such Tax Indemnitee the amount of such unindemnified impact, as reasonably determined by such Tax Indemnitee). In addition, the controlling party shall keep the noncontrolling party reasonably informed as to the progress of the contest, and shall provide the noncontrolling party with a copy of (or appropriate excerpts from) any reports or claims issued by the relevant auditing agents or taxing authority to the controlling party thereof, in connection with such claim or the contest thereof, provided, however, that such obligation shall not obligate any Tax Indemnitee to disclose its tax returns or information or documentation unrelated to such claim or contest. Each Tax Indemnitee shall, at the expense of the Lessee and the Guarantor, shall supply the Lessee or the Guarantor with such information and documents reasonably requested by the Lessee or the Guarantor as are necessary or advisable for such Person the Lessee to participate in any action, suit or proceeding to the extent permitted by this Section 13.4(b); provided, however, that and the Lessee shall promptly reimburse such Tax Indemnitee for the reasonable out-of-pocket expenses of supplying such information and documents. Except during the occurrence of an Event of Default where Lessee shall not be required have failed to provide indemnity and, if requested by an Indemnitee, collateral security, both in form, substance and in such amounts reasonably satisfactory to such Lessee or the Guarantor copies of its tax returns or any other information, documentation, or materials that it deems to be confidential or proprietary. Notwithstanding anything in this Section 13.4(b) to the contraryeach Indemnitee, no Tax Indemnitee shall enter into any settlement or other compromise or fail to appeal an adverse ruling with respect to any claim which is entitled to be indemnified under this Section 13.4 (and with respect to which contest is required under this Section 13.4(b)) without the prior written consent of the GuarantorLessee, unless such Tax Indemnitee waives its right to be indemnified under this Section 13.4 with respect to such claim. Notwithstanding anything contained herein to the contrary, a Tax Indemnitee shall will not be required to contest (and neither the Lessee nor the Guarantor shall not be permitted to contest in any judicial forum if such contest could, in a Tax Indemnitee's reasonable judgment, be materially adverse to itcontest) a claim with respect to the imposition of any Tax if (i) such Tax Indemnitee shall have waived waive its right to indemnification under this Section 13.4 with respect to such claim (and any claim with respect to such year or any other taxable year year, the contest of which is precluded or materially adversely affected as a result of such waiver) or (ii) such Tax is the sole result of a claim of a continuing and consistent nature, which claim has previously been resolved against the relevant Tax Indemnitee (unless a change in law or facts has occurred since such prior adverse resolution and Lessee provides an opinion of independent tax counsel to the effect that it is more likely than not that such change in law or facts will result in a favorable resolution of the claim at issue).
Appears in 1 contract
Contests. If any a written claim shall be is made against any Tax an Indemnitee or if any proceeding shall be is commenced against any Tax an Indemnitee (including a written notice of such proceeding) for any Imposition Taxes as to which the Lessee could be liable for payment or the Guarantor may indemnity hereunder, or if an Indemnitee makes a determination that a Tax is due for which Lessee could have an indemnity obligation pursuant to this Section 13.4, or if any Tax Indemnitee shall determine that any Imposition to which the Lessee or the Guarantor may have an indemnity obligation pursuant to this Section 13.4 may be payablehereunder, such Tax Indemnitee shall promptly (and in any event, within fifteen (15) Business Days) notify the Guarantor give Lessee notice in writing of such claim (provided provided, however, that the failure to so notify the Guarantor within fifteen (15) Business Days provide such notice shall not alter such Tax Indemniteeaffect Lessee's rights under this Section 13.4 except obligations hereunder to the extent Owner Participant unless such failure precludes or shall materially adversely affects affect the ability right to conduct a contest of any indemnified Taxessuch claim) and shall not take any action with respect to such claim, proceeding claim or Imposition Tax without the written consent of the Guarantor (such consent not to be unreasonably withheld or unreasonably delayed) Lessee for thirty (30) 30 days after following the receipt of such notice by the GuarantorLessee; provided, however, that in the case of any such claim or proceedingthat, if such Tax Indemnitee shall be required by law or regulation to take action prior to the end of such thirty (30) -day period, such Tax Indemnitee shall shall, in such notice to the GuarantorLessee, so inform the GuarantorLessee, and such Tax Indemnitee shall not take any no action with respect for as long as it is legally able to such claim, proceeding or Imposition without the consent of the Guarantor do so (such consent not to be unreasonably withheld or unreasonably delayed) for ten (10) days after the receipt of such notice by the Guarantor unless such Tax it being understood that an Indemnitee shall be required by law or regulation entitled to take action pay the Tax claimed and ▇▇▇ for a refund prior to the end of such ten 30-day period if (10A)(I) day period. The Guarantor shall be entitled for a period the failure to so pay the Tax would result in substantial penalties (unless immediately reimbursed by Lessee) and the act of thirty paying the Tax would not prejudice the right to contest or (30II) days from receipt of such notice from such Tax Indemnitee the failure to so pay would result in criminal penalties and (or such shorter period as such Tax Indemnitee has notified the Guarantor is required by law or regulation for such Tax Indemnitee to commence such contest), to request in writing that such Tax Indemnitee contest the imposition of such Tax, at the Guarantor's expense. If (xB) such contest can be pursued Indemnitee shall act in connection with paying the Tax in the name of manner that is the Guarantor or the Lessee and independently from any other proceeding involving a Tax liability of such Tax Indemnitee for which the Lessee and the Guarantor have not agreed to indemnify such Tax Indemnitee, (y) such contest must be pursued in the name of such Tax Indemnitee, but can be pursued independently from any other proceeding involving a Tax liability of such Tax Indemnitee for which the Lessee and the Guarantor have not agreed to indemnify such Tax Indemnitee or (z) such Tax Indemnitee so requests, then the Guarantor or such Lessee shall be permitted to control the contest of such claim, provided that in the case of a contest described in clause (y) if such Tax Indemnitee determines reasonably and in good faith that such contest by the Guarantor or the Lessee could have a material adverse impact on the business or operations of such Tax Indemnitee and provides a written explanation least prejudicial to the Guarantor of such determination, such Tax Indemnitee may elect to control or reassert control pursuit of the contest). In addition, and such Indemnitee shall (provided that the taking control by the Guarantor or the Lessee of any contest shall not alter the applicable Tax Indemnitee's rights to indemnification hereunder, and provided, further, that in determining the application of clauses (x) and (y) of the preceding sentence, each Tax Indemnitee shall take any and all reasonable steps to segregate claims for any Taxes for which the Lessee and the Guarantor indemnify hereunder from Taxes for which the Lessee and the Guarantor are not obligated to indemnify hereunder, so that the Guarantor can control the contest of the former. In all other claims requested to be contested by the Guarantor, such Tax Indemnitee shall control the contest of such claim, acting through counsel selected by such Tax Indemnitee and reasonably acceptable to the Guarantor. In no event shall the Guarantor be permitted to contest (or such Tax Indemnitee be required to contest) any claim, (A) if such Tax Indemnitee provides the Guarantor with a legal opinion of counsel reasonably acceptable to the Guarantor that such action, suit or proceeding involves a risk of imposition of criminal liability or will involve a material risk of the sale, forfeiture or loss of, or the creation of any Lien (other than a Permitted Lien) on the Property or any part thereof unless the Guarantor shall have posted and maintained a bond or other security reasonably satisfactory to the relevant Tax Indemnitee in respect to such risk, (B) if a Lease Event of Default has occurred and is continuing unless the Guarantor shall have posted and maintained a bond or other security reasonably satisfactory to the relevant Tax Indemnitee in respect of the Taxes subject to such claim and any and all expenses for which the Guarantor or the Lessee is responsible hereunder reasonably foreseeable in connection with the contest of such claim, (C) unless the Guarantor shall have agreed to pay and shall pay, keep such information confidential other than to the extent necessary in order to contest the claim) furnish Lessee with copies of any requests for information from any taxing authority relating to such Tax Taxes with respect to which Lessee may be required to indemnify hereunder. If requested by Lessee in writing within 30 days after its receipt of such notice, such Indemnitee on written demand shall, at the expense of Lessee (including all reasonable, documented reasonable out-of-pocket costs, losses in-house attorney fees and expenses outside attorney and accountants fees), in good faith contest (or, if permitted by applicable law, allow Lessee to contest, but not if such contest involves issues unrelated to the transactions contemplated by the Operative Documents that cannot be severed from issues related to such indemnifiable Taxes by good faith diligent efforts) through appropriate administrative and judicial proceedings the validity, applicability or amount of such Taxes by (X) resisting payment thereof, (Y) not paying the same except under protest if protest is necessary and proper or (Z) if the payment is made, using reasonable efforts to obtain a refund thereof in an appropriate administrative and/or judicial proceeding. If requested to do so by Lessee in writing, the Indemnitee shall appeal any adverse administrative or judicial decision, except that the Indemnitee shall not be required to pursue any appeals to the United States Supreme Court. If and to the extent the Indemnitee is able to separate the contested issue or issues from other issues arising in the same administrative or judicial proceeding that are unrelated to the transactions contemplated by the Operative Documents without, in the good faith judgment of such Indemnitee, adversely affecting such Indemnitee, such Indemnitee shall permit Lessee to control the conduct of any such proceeding and shall provide to Lessee such information or data that is in such Indemnitee's control or possession that is reasonably necessary to conduct such contest. In the case of a contest controlled by an Indemnitee, such Indemnitee shall consult with Lessee in good faith regarding the manner of contesting such claim and shall keep Lessee reasonably informed regarding the progress of such contest. An Indemnitee shall not fail to take any action expressly required by this Section 6(b)(iv) (including, without limitation, any action regarding any appeal of an adverse determination with respect to any claim) or settle or compromise any claim without the prior written consent of Lessee (except as contemplated by this Section 6(b)(iv)). Notwithstanding the foregoing, in no event shall an Indemnitee be required to pursue any contest (or to permit Lessee to pursue any contest) unless (A) Lessee shall have agreed to pay such Indemnitee on demand all reasonable out-of-pocket costs, in-house attorney fees and outside attorney and accountants fees that such Tax Indemnitee may shall incur in connection with contesting such Imposition including all reasonable legalclaim, accounting and investigatory fees and disbursements and (if applicable) reasonable, allocable internal overhead costs determined in accordance with normal bank operating procedures, or (DB) if such contest shall involve the payment of the Tax claim, Lessee shall advance the amount thereof plus (to the extent indemnified hereunder) interest, penalties and additions to tax with respect thereto that are required to be paid prior to the contest, unless the Guarantor shall provide to commencement of such Tax Indemnitee contest on an interest-free advance in an amount equal to the Imposition that such Tax Indemnitee is required to pay (basis and with no additional net after-after- tax costs cost to such Tax Indemnitee (and such Indemnitee shall promptly pay to Lessee any net realized tax benefits resulting from any imputed interest deduction arising from such interest free advance from Lessee plus any tax benefits resulting from making any such payment), (C) such Indemnitee shall have reasonably determined that the action to be taken will not result in any material risk of forfeiture, sale or loss of the Aircraft (unless Lessee shall have made provisions to protect the interests of any such Indemnitee). In addition, (D) no Lease Event of Default shall have occurred and be continuing at the time the contest is begun unless Lessee has provided security for contests controlled its obligations hereunder by advancing to such Tax Indemnitee and claims contested in the name of before proceeding with such Tax Indemnitee in a public forumcontest, no contest shall be required: (A) unless the amount of the potential indemnity Tax being contested, plus any interest and penalties and an amount estimated in good faith by such Indemnitee for reasonable expenses, (taking into account E) in the case of a contest that is being pursued by an Indemnitee, the aggregate amount of the claim (together with the amount of all similar or logically related claims that have been or could be raised in any audit involving with any or all such Tax Indemnitees with respect of the other Aircraft leased by the Owner Participant to Lessee or raised in any period other audit for which the Guarantor or the Lessee may be liable to pay would have an indemnity obligation under this Section 13.4(b6(b)(iv)) exceeds (1) with respect to the Lessor, is at least $25,000 50,000 and (2F) with respect to any Tax Indemnitee other than the Lessor, $75,000 and (B) unless, if requested prior to or during the contest by such Tax the Indemnitee, the Guarantor shall have provided to such Tax Indemnitee an opinion of counsel selected by the Guarantor (which may be in-house counsel) (except, in the case of income taxes indemnified hereunder, in which case such opinion shall be an opinion of independent tax counsel selected by the Guarantor Lessee and reasonably acceptable to such Tax the Indemnitee) , renders to the Indemnitee a written opinion that there is a reasonable basis exists to contest such claim. In no event shall a Tax Indemnitee be required to appeal an adverse judicial determination to (under the United States Supreme Court. The party conducting the contest shall consult standard set forth in good faith with the other party and its counsel with respect to the contest of such claim for Taxes (or claim for refund) but the decisions regarding what actions to be taken shall be made by the controlling party in its sole judgment; provided, however, that if such Tax Indemnitee is the controlling party and the Guarantor recommends the acceptance of a settlement offer made by the relevant Governmental Authority and such Tax Indemnitee rejects such settlement offer, then the amount for which a Lessee and the Guarantor will be required to indemnify such Tax Indemnitee with respect to the Taxes subject to such offer shall not exceed the amount which it would have owed if such settlement offer had been accepted provided that any Tax Indemnitee shall be entitled to reject any indemnity payment it would otherwise be entitled to hereunder if such Tax Indemnitee reasonably determines that accepting such offer would have an unindemnified impact on such Tax Indemnitee and provided further that no Tax Indemnitee may reject any such indemnity payment if the Guarantor agrees to pay to such Tax Indemnitee the amount of such unindemnified impact, as reasonably determined by such Tax Indemnitee. In addition, the controlling party shall keep the noncontrolling party reasonably informed as to the progress of the contest, and shall provide the noncontrolling party with a copy of (or appropriate excerpts from) any reports or claims issued by the relevant auditing agents or taxing authority to the controlling party thereof, in connection with such claim or the contest thereof, provided, however, that such obligation shall not obligate any Tax Indemnitee to disclose its tax returns or information or documentation unrelated to such claim or contest. Each Tax Indemnitee shall, at the expense of the Lessee and the Guarantor, supply the Lessee or the Guarantor with such information and documents reasonably requested by the Lessee or the Guarantor as are necessary or advisable for such Person to participate in any action, suit or proceeding to the extent permitted by this Section 13.4(b); provided, however, that such Tax Indemnitee shall not be required to provide to such Lessee or the Guarantor copies of its tax returns ABA Formal Opinion 85-352 or any other information, documentation, or materials that it deems to be confidential or proprietary. Notwithstanding anything in this Section 13.4(bsuccessor thereto) to the contrary, no Tax Indemnitee shall enter into any settlement or other compromise or fail to appeal an adverse ruling with respect to any claim which is entitled to be indemnified under this Section 13.4 (and with respect to which contest is required under this Section 13.4(b)) without the prior written consent of the Guarantor, unless such Tax Indemnitee waives its right to be indemnified under this Section 13.4 with respect to for contesting such claim. Notwithstanding anything contained herein to the contraryforegoing, a Tax Indemnitee (X) Lessee shall not be required to contest (and neither the Lessee nor the Guarantor shall be permitted to contest in any judicial forum the name of the Indemnitee if such contest couldinvolves Taxes based on or measured by the gross or net income of the Indemnitee and, provided, that if the Indemnitee determines in good faith that it is reasonably likely that such contest may have a Tax material adverse impact on the Indemnitee's reasonable judgment, be materially adverse to it) a claim with respect to the imposition such Indemnitee may retain or reassert control of any Tax contest Lessee would otherwise be permitted to contest, and (Y) if such Tax any Indemnitee shall have waived its right release, waive, compromise or settle any claim which may be indemnifiable by Lessee pursuant to indemnification under this Section 13.4 6(b) without the written permission of Lessee, Lessee's obligation to indemnify such Indemnitee with respect to such claim (and any claim with respect to such year or any other taxable year the contest of which is precluded or materially adversely affected prejudiced as a result of the release, waiver, compromise or settlement) shall terminate, subject to this Section 6(b)(iv), and subject to Section 6(b)(iii), such waiver)Indemnitee shall repay to Lessee any amount previously paid or advanced to such Indemnitee with respect to such claim, plus interest at the rate that would have been payable by the relevant taxing authority with respect to a refund of such Tax.
Appears in 1 contract
Contests. If (i) After the Closing, each party shall promptly notify the other party of any demand, claim or notice of the commencement of a Tax Proceeding received with respect to Taxes for which OpCo or Buyer is liable pursuant to this Agreement; provided, however, that a party’s failure to give such notice will not affect the other party’s rights to indemnification under this Section 6.1 except to the extent that the other party is materially prejudiced thereby. Such notice shall be made against contain factual information (to the extent known) describing the asserted Tax liability and shall include copies of the relevant portion of any notice or other document received from any Tax Indemnitee Authority or if any proceeding other Person in respect of any such asserted Tax liability.
(ii) At OpCo’s request and expense, Buyer shall contest (or cause to be commenced against contested) any asserted Pre-Closing Tax Indemnitee (including a written notice of such proceeding) Period Tax liability for any Imposition as to which the Lessee or the Guarantor OpCo may have an indemnity obligation pursuant to this under Section 13.46.1(a)(i). If OpCo so elects, or if OpCo shall control the conduct, through counsel of its own choosing and at its own expense, of any Tax Indemnitee shall determine that Proceeding involving any Imposition to which the Lessee or the Guarantor may have an indemnity obligation pursuant to this Section 13.4 may be payable, such asserted Pre-Closing Tax Indemnitee shall promptly (and in any event, within fifteen (15) Business Days) notify the Guarantor in writing (provided that failure to so notify the Guarantor within fifteen (15) Business Days shall not alter such Period Tax Indemnitee's rights under this Section 13.4 except to the extent such failure precludes or materially adversely affects the ability to conduct a contest of any indemnified Taxes) and shall not take any action liability with respect to the Company and/or its Subsidiaries relating to Pre-Closing Tax Period Taxes for which OpCo is liable pursuant to Section 6.1(a)(i); provided that Buyer and its Affiliates shall have the right to participate in such claimTax Proceeding, proceeding including through counsel of their choosing, at their own expense. OpCo shall keep Buyer fully informed on a timely basis of all matters relating to any Tax Proceeding controlled by OpCo hereunder. OpCo shall not accept any proposed adjustment or Imposition enter into any settlement or agreement in compromise regarding any Tax Proceeding controlled by OpCo without the consent of Buyer, which consent shall not be unreasonably withheld, conditioned or delayed.
(iii) In the case of a Tax Proceeding that relates to a Straddle Period, Buyer shall control the conduct of such Tax Proceeding, but OpCo shall have the right to participate in such Tax Proceeding at its own expense; provided that Buyer shall not accept any proposed adjustment or enter into any settlement or agreement in compromise regarding any such Tax Proceeding without OpCo’s prior written consent of the Guarantor (such consent not to be unreasonably withheld withheld, conditioned or unreasonably delayed). Buyer shall keep OpCo fully informed on a timely basis of all matters relating to any Tax Proceeding controlled by Buyer hereunder.
(iv) for thirty (30) days after the receipt of such notice Payment by the Guarantor; provided, however, that in the case OpCo of any such claim or proceeding, if such Tax Indemnitee amount due under Section 6.1(a)(i) shall be required by law or regulation to take action prior to the end of such thirty (30) day period, such Tax Indemnitee shall in such notice to the Guarantor, so inform the Guarantor, and such Tax Indemnitee shall not take any action with respect to such claim, proceeding or Imposition without the consent of the Guarantor (such consent not to be unreasonably withheld or unreasonably delayed) for made within ten (10) days after the receipt following written notice by Buyer that payment of such notice by the Guarantor unless such Tax Indemnitee shall be required by law or regulation to take action prior amounts to the end of such ten (10) day period. The Guarantor shall be entitled for a period of thirty (30) days from receipt of such notice from such appropriate Tax Indemnitee (Authority or such shorter period as such Tax Indemnitee has notified the Guarantor other applicable third party is required by law or regulation for such Tax Indemnitee to commence such contest), to request in writing that such Tax Indemnitee contest the imposition of such Tax, at the Guarantor's expense. If (x) such contest can be pursued in the name of the Guarantor or the Lessee and independently from any other proceeding involving a Tax liability of such Tax Indemnitee for which the Lessee and the Guarantor have not agreed to indemnify such Tax Indemnitee, (y) such contest must be pursued in the name of such Tax Indemnitee, but can be pursued independently from any other proceeding involving a Tax liability of such Tax Indemnitee for which the Lessee and the Guarantor have not agreed to indemnify such Tax Indemnitee or (z) such Tax Indemnitee so requests, then the Guarantor or such Lessee shall be permitted to control the contest of such claim, due; provided that in the case of a contest described in clause (y) if such Tax Indemnitee determines reasonably and in good faith that such contest by the Guarantor or the Lessee could have a material adverse impact on the business or operations of such Tax Indemnitee and provides a written explanation to the Guarantor of such determination, such Tax Indemnitee may elect to control or reassert control of the contest, and provided that the taking control by the Guarantor or the Lessee of any contest shall not alter the applicable Tax Indemnitee's rights to indemnification hereunder, and provided, further, that in determining the application of clauses (x) and (y) of the preceding sentence, each Tax Indemnitee shall take any and all reasonable steps to segregate claims for any Taxes for which the Lessee and the Guarantor indemnify hereunder from Taxes for which the Lessee and the Guarantor are not obligated to indemnify hereunder, so that the Guarantor can control the contest of the former. In all other claims requested to be contested by the Guarantor, such Tax Indemnitee shall control the contest of such claim, acting through counsel selected by such Tax Indemnitee and reasonably acceptable to the Guarantor. In no event shall the Guarantor be permitted to contest (or such Tax Indemnitee be required to contest) any claim, (A) if such Tax Indemnitee provides the Guarantor with a legal opinion of counsel reasonably acceptable to the Guarantor that such action, suit or proceeding involves a risk of imposition of criminal liability or will involve a material risk of the sale, forfeiture or loss of, or the creation of any Lien (other than a Permitted Lien) on the Property or any part thereof unless the Guarantor shall have posted and maintained a bond or other security reasonably satisfactory to the relevant Tax Indemnitee in respect to such risk, (B) if a Lease Event of Default has occurred and is continuing unless the Guarantor shall have posted and maintained a bond or other security reasonably satisfactory to the relevant Tax Indemnitee in respect of the Taxes subject to such claim and any and all expenses for which the Guarantor or the Lessee is responsible hereunder reasonably foreseeable in connection with the contest of such claim, (C) unless the Guarantor shall have agreed to pay and shall pay, to such Tax Indemnitee on written demand all reasonable, documented out-of-pocket costs, losses and expenses that such Tax Indemnitee may incur in connection with contesting such Imposition including all reasonable legal, accounting and investigatory fees and disbursements and (if applicable) reasonable, allocable internal overhead costs determined in accordance with normal bank operating procedures, or (D) if such contest shall involve the payment of the Tax prior to the contest, unless the Guarantor shall provide to such Tax Indemnitee an interest-free advance in an amount equal to the Imposition that such Tax Indemnitee is required to pay (with no additional net after-tax costs to such Tax Indemnitee). In addition, for contests controlled by such Tax Indemnitee and claims contested in the name of such Tax Indemnitee in a public forum, no contest shall be required: (A) unless the amount of the potential indemnity (taking into account all similar or logically related claims that have been or could be raised in any audit involving any or all such Tax Indemnitees with respect to any period for which the Guarantor or the Lessee may be liable to pay an indemnity under this Section 13.4(b)) exceeds (1) with respect to the Lessor, $25,000 and (2) with respect to any Tax Indemnitee other than the Lessor, $75,000 and (B) unless, if requested by such Tax Indemnitee, the Guarantor shall have provided to such Tax Indemnitee an opinion of counsel selected by the Guarantor (which may be in-house counsel) (except, in the case of income taxes indemnified hereunder, in which case such opinion shall be an opinion of independent tax counsel selected by the Guarantor and reasonably acceptable to such Tax Indemnitee) that a reasonable basis exists to contest such claim. In no event shall a Tax Indemnitee be required to appeal an adverse judicial determination to the United States Supreme Court. The party conducting the contest shall consult in good faith with the other party and its counsel with respect to the contest of such claim for Taxes (or claim for refund) but the decisions regarding what actions to be taken shall be made by the controlling party in its sole judgment; provided, however, that if such Tax Indemnitee is the controlling party and the Guarantor recommends the acceptance of a settlement offer made by the relevant Governmental Authority and such Tax Indemnitee rejects such settlement offer, then the amount for which a Lessee and the Guarantor will be required to indemnify such Tax Indemnitee with respect to the Taxes subject to such offer shall not exceed the amount which it would have owed if such settlement offer had been accepted provided that any Tax Indemnitee shall be entitled to reject any indemnity payment it would otherwise be entitled to hereunder if such Tax Indemnitee reasonably determines that accepting such offer would have an unindemnified impact on such Tax Indemnitee and provided further that no Tax Indemnitee may reject any such indemnity payment if the Guarantor agrees to pay to such Tax Indemnitee the amount of such unindemnified impact, as reasonably determined by such Tax Indemnitee. In addition, the controlling party shall keep the noncontrolling party reasonably informed as to the progress of the contest, and shall provide the noncontrolling party with a copy of (or appropriate excerpts from) any reports or claims issued by the relevant auditing agents or taxing authority to the controlling party thereof, in connection with such claim or the contest thereof, provided, however, that such obligation shall not obligate any Tax Indemnitee to disclose its tax returns or information or documentation unrelated to such claim or contest. Each Tax Indemnitee shall, at the expense of the Lessee and the Guarantor, supply the Lessee or the Guarantor with such information and documents reasonably requested by the Lessee or the Guarantor as are necessary or advisable for such Person to participate in any action, suit or proceeding to the extent permitted by this Section 13.4(b); provided, however, that such Tax Indemnitee OpCo shall not be required to provide to such Lessee or the Guarantor copies of its tax returns or make any other information, documentation, or materials that payment earlier than ten (10) days before it deems to be confidential or proprietary. Notwithstanding anything in this Section 13.4(b) is due to the contrary, no appropriate Tax Indemnitee Authority or applicable third party. Payment by Buyer of any amount due under Section 6.1(a)(ii) shall enter into any settlement be made within ten (10) days following written notice by OpCo that payment of such amounts to the appropriate Tax Authority or other compromise or fail to appeal an adverse ruling with respect to any claim which applicable third party is entitled to be indemnified under this Section 13.4 (and with respect to which contest is required under this Section 13.4(b)) without the prior written consent of the Guarantor, unless such Tax Indemnitee waives its right to be indemnified under this Section 13.4 with respect to such claim. Notwithstanding anything contained herein to the contrary, a Tax Indemnitee due; provided that Buyer shall not be required to contest make any payment earlier than ten (and neither 10) days before it is due to the Lessee nor appropriate Tax Authority or applicable third party. In the Guarantor shall be permitted to contest in any judicial forum if such contest could, in case of a Tax Indemnitee's reasonable judgmentthat is contested in accordance with the provisions of this Section 6.1(d), payment of such contested Tax will not be materially adverse considered due earlier than the date a “final determination” to it) such effect is made by such Tax Authority. For this purpose, a claim “final determination” shall mean a settlement, compromise, or other agreement with the relevant Tax Authority, a deficiency notice with respect to which the imposition period for filing a petition with the Tax court or the relevant state, local or foreign tribunal has expired or a decision of any Tax if such Tax Indemnitee shall have waived its right court of competent jurisdiction that is not subject to indemnification under this Section 13.4 with respect appeal or as to such claim (and any claim with respect to such year or any other taxable year which the contest of which is precluded or materially adversely affected as a result of such waiver)time for appeal has expired.
Appears in 1 contract
Sources: Equity Purchase Agreement (Health Care Reit Inc /De/)
Contests. If (i) The ▇▇▇▇▇ Representative and its duly appointed representatives shall have the authority to control any claim shall be made audit or examination by any taxing authority, and contest, resolve and defend against any Tax Indemnitee or if any proceeding shall be commenced against any Tax Indemnitee (including a written assessment for additional Taxes, notice of such proceeding) Tax deficiency or other adjustment of Taxes of or relating to any liability of ▇▇▇▇▇ and its subsidiaries for all ▇▇▇▇▇ Pre-Closing Periods; PROVIDED, HOWEVER, that neither the ▇▇▇▇▇ Representative nor any Imposition as to duly appointed representative of the ▇▇▇▇▇ Representative shall, without the prior consent of UbiquiTel Parent, which the Lessee or the Guarantor may have an indemnity obligation pursuant to this Section 13.4, or if any Tax Indemnitee shall determine that any Imposition to which the Lessee or the Guarantor may have an indemnity obligation pursuant to this Section 13.4 may be payable, such Tax Indemnitee shall promptly (and in any event, within fifteen (15) Business Days) notify the Guarantor in writing (provided that failure to so notify the Guarantor within fifteen (15) Business Days consent shall not alter such Tax Indemnitee's rights under this Section 13.4 except to the extent such failure precludes or materially adversely affects the ability to conduct a contest be unreasonably withheld, enter into any settlement of any indemnified Taxes) and shall not take contest or otherwise compromise any action with respect to such claim, proceeding or Imposition without the written consent of the Guarantor (such consent not to be unreasonably withheld or unreasonably delayed) for thirty (30) days after the receipt of such notice by the Guarantor; provided, however, issue that in the case of any such claim or proceeding, if such Tax Indemnitee shall be required by law or regulation to take action prior to the end of such thirty (30) day period, such Tax Indemnitee shall in such notice to the Guarantor, so inform the Guarantor, and such Tax Indemnitee shall not take any action with respect to such claim, proceeding or Imposition without the consent of the Guarantor (such consent not to be unreasonably withheld or unreasonably delayed) for ten (10) days after the receipt of such notice by the Guarantor unless such Tax Indemnitee shall be required by law or regulation to take action prior to the end of such ten (10) day period. The Guarantor shall be entitled for a period of thirty (30) days from receipt of such notice from such Tax Indemnitee (or such shorter period as such Tax Indemnitee has notified the Guarantor is required by law or regulation for such Tax Indemnitee to commence such contest), to request in writing that such Tax Indemnitee contest the imposition of such Tax, at the Guarantor's expense. If (x) such contest can be pursued in the name of the Guarantor or the Lessee and independently from any other proceeding involving a Tax liability of such Tax Indemnitee for which the Lessee and the Guarantor have not agreed to indemnify such Tax Indemnitee, (y) such contest must be pursued in the name of such Tax Indemnitee, but can be pursued independently from any other proceeding involving a Tax liability of such Tax Indemnitee for which the Lessee and the Guarantor have not agreed to indemnify such Tax Indemnitee or (z) such Tax Indemnitee so requests, then the Guarantor or such Lessee shall be permitted to control the contest of such claim, provided that in the case of a contest described in clause (y) if such Tax Indemnitee determines reasonably and in good faith that such contest by the Guarantor or the Lessee could would have a material adverse impact effect on the business Tax benefits of UbiquiTel Parent or operations of such Tax Indemnitee ▇▇▇▇▇ or any subsidiary for taxable years ending after the Closing Date. UbiquiTel Parent and provides a written explanation to its duly appointed Representatives shall have the Guarantor of such determination, such Tax Indemnitee may elect exclusive authority to control or reassert control of the contest, and provided that the taking control by the Guarantor or the Lessee of any contest shall not alter the applicable Tax Indemnitee's rights to indemnification hereunder, and provided, further, that in determining the application of clauses (x) and (y) of the preceding sentence, each Tax Indemnitee shall take any and all reasonable steps to segregate claims for any Taxes for which the Lessee and the Guarantor indemnify hereunder from Taxes for which the Lessee and the Guarantor are not obligated to indemnify hereunder, so that the Guarantor can control the contest of the former. In all other claims requested to be contested by the Guarantor, such Tax Indemnitee shall control the contest of such claim, acting through counsel selected by such Tax Indemnitee and reasonably acceptable to the Guarantor. In no event shall the Guarantor be permitted to contest (or such Tax Indemnitee be required to contest) any claim, (A) if such Tax Indemnitee provides the Guarantor with a legal opinion of counsel reasonably acceptable to the Guarantor that such action, suit or proceeding involves a risk of imposition of criminal liability or will involve a material risk of the sale, forfeiture or loss of, or the creation of any Lien (other than a Permitted Lien) on the Property or any part thereof unless the Guarantor shall have posted and maintained a bond or other security reasonably satisfactory to the relevant Tax Indemnitee in respect to such risk, (B) if a Lease Event of Default has occurred and is continuing unless the Guarantor shall have posted and maintained a bond or other security reasonably satisfactory to the relevant Tax Indemnitee in respect of the Taxes subject to such claim and any and all expenses for which the Guarantor or the Lessee is responsible hereunder reasonably foreseeable in connection with the contest of such claim, (C) unless the Guarantor shall have agreed to pay and shall pay, to such Tax Indemnitee on written demand all reasonable, documented out-of-pocket costs, losses and expenses that such Tax Indemnitee may incur in connection with contesting such Imposition including all reasonable legal, accounting and investigatory fees and disbursements and (if applicable) reasonable, allocable internal overhead costs determined in accordance with normal bank operating procedures, or (D) if such contest shall involve the payment of the Tax prior to the contest, unless the Guarantor shall provide to such Tax Indemnitee an interest-free advance in an amount equal to the Imposition that such Tax Indemnitee is required to pay (with no additional net after-tax costs to such Tax Indemnitee). In addition, for contests controlled by such Tax Indemnitee and claims contested in the name of such Tax Indemnitee in a public forum, no contest shall be required: (A) unless the amount of the potential indemnity (taking into account all similar or logically related claims that have been or could be raised in any audit involving or examination by any or all such Tax Indemnitees with respect to taxing authority, initiate any period for which the Guarantor or the Lessee may be liable to pay an indemnity under this Section 13.4(b)) exceeds (1) with respect to the Lessor, $25,000 and (2) with respect to any Tax Indemnitee other than the Lessor, $75,000 and (B) unless, if requested by such Tax Indemnitee, the Guarantor shall have provided to such Tax Indemnitee an opinion of counsel selected by the Guarantor (which may be in-house counsel) (except, in the case of income taxes indemnified hereunder, in which case such opinion shall be an opinion of independent tax counsel selected by the Guarantor and reasonably acceptable to such Tax Indemnitee) that a reasonable basis exists to contest such claim. In no event shall a Tax Indemnitee be required to appeal an adverse judicial determination to the United States Supreme Court. The party conducting the contest shall consult in good faith with the other party and its counsel with respect to the contest of such claim for Taxes (or claim for refund) but , amend any Tax Return and contest, resolve and defend against any assessment for additional Taxes, notice of Tax deficiency or other adjustment of Taxes of or relating to any liability of ▇▇▇▇▇ and its subsidiaries for Taxes for any taxable year or other taxable period ending after the decisions regarding what actions to be taken shall be made by Closing Date (the controlling party in its sole judgment"POST-CLOSING PERIODS"); providedPROVIDED, howeverHOWEVER, that if such Tax Indemnitee is the controlling party and the Guarantor recommends the acceptance (a) none of a settlement offer made by the relevant Governmental Authority and such Tax Indemnitee rejects such settlement offerUbiquiTel Parent, then the amount for which a Lessee and the Guarantor will be required to indemnify such Tax Indemnitee with respect to the Taxes subject to such offer shall not exceed the amount which it would have owed if such settlement offer had been accepted provided that ▇▇▇▇▇, its subsidiaries nor any Tax Indemnitee shall be entitled to reject any indemnity payment it would otherwise be entitled to hereunder if such Tax Indemnitee reasonably determines that accepting such offer would have an unindemnified impact on such Tax Indemnitee and provided further that no Tax Indemnitee may reject any such indemnity payment if the Guarantor agrees to pay to such Tax Indemnitee the amount of such unindemnified impact, as reasonably determined by such Tax Indemnitee. In addition, the controlling party shall keep the noncontrolling party reasonably informed as to the progress of the contest, and shall provide the noncontrolling party with a copy of (or appropriate excerpts from) any reports or claims issued by the relevant auditing agents or taxing authority to the controlling party thereof, in connection with such claim or the contest thereof, provided, however, that such obligation shall not obligate any Tax Indemnitee to disclose its tax returns or information or documentation unrelated to such claim or contest. Each Tax Indemnitee their duly appointed representatives shall, at the expense of the Lessee and the Guarantor, supply the Lessee or the Guarantor with such information and documents reasonably requested by the Lessee or the Guarantor as are necessary or advisable for such Person to participate in any action, suit or proceeding to the extent permitted by this Section 13.4(b); provided, however, that such Tax Indemnitee shall not be required to provide to such Lessee or the Guarantor copies of its tax returns or any other information, documentation, or materials that it deems to be confidential or proprietary. Notwithstanding anything in this Section 13.4(b) to the contrary, no Tax Indemnitee shall enter into any settlement or other compromise or fail to appeal an adverse ruling with respect to any claim which is entitled to be indemnified under this Section 13.4 (and with respect to which contest is required under this Section 13.4(b)) without the prior written consent of the Guarantor▇▇▇▇▇ Representative, unless such Tax Indemnitee waives enter into any settlement of any contest or otherwise compromise any issue that adversely affects the liability of the ▇▇▇▇▇ Stockholders for any ▇▇▇▇▇ Pre-Closing Period Taxes, and (b) none of UbiquiTel Parent, ▇▇▇▇▇, its right to be indemnified subsidiaries nor any of their duly appointed representatives shall, without the prior consent of the ▇▇▇▇▇ Representative, enter into any settlement of any contest or otherwise compromise any issue that would require payment by the Controlling ▇▇▇▇▇ Stockholders (as defined herein) of any amount under this Section 13.4 with respect to such claim. Notwithstanding anything contained herein to the contrary, a Tax Indemnitee shall not be required to contest (and neither the Lessee nor the Guarantor shall be permitted to contest in any judicial forum if such contest could, in a Tax Indemnitee's reasonable judgment, be materially adverse to it) a claim with respect to the imposition of any Tax if such Tax Indemnitee Agreement unless UbiquiTel Parent shall have waived or caused to be waived for itself and ▇▇▇▇▇ and its subsidiaries any right to indemnification under this Section 13.4 with respect to such claim (and any claim with respect to such year or any other taxable year for Taxes from the contest of which is precluded or materially adversely affected as a result of such waiver)Controlling ▇▇▇▇▇ Stockholders.
Appears in 1 contract
Contests. If (a) Nothing in this Agreement shall be construed to prevent UpREIT from contesting, through its Tax Matters Partner in accordance with the Partnership Agreement as part of the unified audit of the UpREIT, any claim shall be made against any Tax Indemnitee or if any proceeding shall be commenced against any Tax Indemnitee (including a written notice of such proceeding) for any Imposition as to which the Lessee or the Guarantor may have an indemnity obligation pursuant to this Section 13.4, or if any Tax Indemnitee shall determine that any Imposition to which the Lessee or the Guarantor may have an indemnity obligation pursuant to this Section 13.4 may be payable, such Tax Indemnitee shall promptly (and in any event, within fifteen (15) Business Days) notify the Guarantor in writing (provided that failure to so notify the Guarantor within fifteen (15) Business Days shall not alter such Tax Indemnitee's rights under this Section 13.4 except to the extent such failure precludes or materially adversely affects the ability to conduct a contest respect of any indemnified Taxes) and shall not take any action with respect to such claim, proceeding or Imposition without the written consent "partnership" item of the Guarantor UpREIT that, if successful, would result in an Income Inclusion (such consent not to a "Partnership Level Issue").
(b) If UpREIT contests a Partnership Level Issue that, if successful, would result in an Income Inclusion, UpREIT's liability for indemnification under Section 4 hereof (other than reasonable costs and expenses described in Section 6(f) of the Agreement) shall, at UpREIT's election, be unreasonably withheld or unreasonably delayed) for deferred until thirty (30) days after the receipt a Final Determination of such notice by the Guarantor; provided▇▇▇▇▇ Indemnitee's federal income tax liability in respect of an Income Inclusion.
(c) If any audit or proceeding involving an indemnifiable adjustment is being conducted in a proceeding involving such ▇▇▇▇▇ Indemnitee, however, that in the case of any such claim or proceeding, if such Tax Indemnitee shall which cannot be required by law or regulation to take action prior transferred to the end UpREIT as a partnership item (a "▇▇▇▇▇ Level Issue"), such ▇▇▇▇▇ Indemnitee hereby agrees (i) promptly to notify UpREIT in writing of such thirty adjustment (30) day period, and the failure of such Tax ▇▇▇▇▇ Indemnitee to so notify UpREIT shall in such notice preclude any indemnity hereunder to the Guarantor, so inform the Guarantorextent UpREIT's right to effect its contest rights hereunder has been precluded by such failure), and such Tax Indemnitee shall not take any action with respect (ii) upon UpREIT's delivery to such claim, proceeding or Imposition without the consent of the Guarantor (such consent not to be unreasonably withheld or unreasonably delayed) for ten (10) days after the receipt of such notice by the Guarantor unless such Tax Indemnitee shall be required by law or regulation to take action prior to the end of such ten (10) day period. The Guarantor shall be entitled for a period of thirty (30) days from receipt of such notice from such Tax Indemnitee (or such shorter period as such Tax Indemnitee has notified the Guarantor is required by law or regulation for such Tax Indemnitee to commence such contest), to request in writing that such Tax Indemnitee contest the imposition of such Tax, at the Guarantor's expense. If (x) such contest can be pursued in the name of the Guarantor or the Lessee and independently from any other proceeding involving a Tax liability of such Tax Indemnitee for which the Lessee and the Guarantor have not agreed to indemnify such Tax Indemnitee, (y) such contest must be pursued in the name of such Tax Indemnitee, but can be pursued independently from any other proceeding involving a Tax liability of such Tax Indemnitee for which the Lessee and the Guarantor have not agreed to indemnify such Tax Indemnitee or (z) such Tax Indemnitee so requests, then the Guarantor or such Lessee shall be permitted to control the contest of such claim, provided that in the case of a contest described in clause (y) if such Tax Indemnitee determines reasonably and in good faith that such contest by the Guarantor or the Lessee could have a material adverse impact on the business or operations of such Tax Indemnitee and provides a written explanation to the Guarantor of such determination, such Tax Indemnitee may elect to control or reassert control of the contest, and provided that the taking control by the Guarantor or the Lessee of any contest shall not alter the applicable Tax Indemnitee's rights to indemnification hereunder, and provided, further, that in determining the application of clauses (x) and (y) of the preceding sentence, each Tax Indemnitee shall take any and all reasonable steps to segregate claims for any Taxes for which the Lessee and the Guarantor indemnify hereunder from Taxes for which the Lessee and the Guarantor are not obligated to indemnify hereunder, so that the Guarantor can control the contest of the former. In all other claims requested to be contested by the Guarantor, such Tax Indemnitee shall control the contest of such claim, acting through counsel selected by such Tax Indemnitee and reasonably acceptable to the Guarantor. In no event shall the Guarantor be permitted to contest (or such Tax Indemnitee be required to contest) any claim, (A) if such Tax Indemnitee provides the Guarantor with a legal opinion of nationally recognized tax counsel reasonably acceptable to the Guarantor that such action, suit or proceeding involves a risk of imposition of criminal liability or will involve a material risk of the sale, forfeiture or loss of, or the creation of any Lien ▇▇▇▇▇ Indemnitee (other than a Permitted Lien"Tax Counsel") on the Property or any part thereof unless the Guarantor shall have posted and maintained a bond or other security reasonably satisfactory to the relevant Tax Indemnitee in respect to such risk, (B) if effect that there is a Lease Event Realistic Possibility of Default has occurred and is continuing unless the Guarantor shall have posted and maintained a bond or other security reasonably satisfactory to the relevant Tax Indemnitee in respect of the Taxes subject to such claim and any and all expenses for which the Guarantor or the Lessee is responsible hereunder reasonably foreseeable in connection with the Success upon contest of such claim▇▇▇▇▇ Level Issue, (C) unless such ▇▇▇▇▇ Indemnitee will contest that adjustment by filing a protest and administrative appeal and prosecuting the Guarantor shall have agreed to pay and shall pay, to such Tax Indemnitee on written demand all reasonable, documented out-of-pocket costs, losses and expenses that such Tax Indemnitee may incur in connection with contesting such Imposition including all reasonable legal, accounting and investigatory fees and disbursements and (if applicable) reasonable, allocable internal overhead costs determined in accordance with normal bank operating procedures, or (D) if such contest shall involve the payment of the Tax prior to the contest, unless the Guarantor shall provide to such Tax Indemnitee an interest-free advance in an amount equal to the Imposition that such Tax Indemnitee is required to pay (with no additional net after-tax costs to such Tax Indemnitee). In addition, for contests controlled by such Tax Indemnitee and claims contested in the name of such Tax Indemnitee in a public forum, no contest shall be required: (A) unless the amount of the potential indemnity (taking into account all similar or logically related claims that have been or could be raised in any audit involving any or all such Tax Indemnitees with respect to any period for which the Guarantor or the Lessee may be liable to pay an indemnity under this Section 13.4(b)) exceeds (1) with respect to the Lessor, $25,000 and (2) with respect to any Tax Indemnitee other than the Lessor, $75,000 and (B) unless, if requested by such Tax Indemnitee, the Guarantor shall have provided to such Tax Indemnitee an opinion of counsel selected by the Guarantor (which may be in-house counsel) (except, in the case of income taxes indemnified hereunder, in which case such opinion shall be an opinion of independent tax counsel selected by the Guarantor and reasonably acceptable to such Tax Indemnitee) that a reasonable basis exists to contest such claim. In no event shall a Tax Indemnitee be required to appeal an adverse judicial determination to the United States Supreme Court. The party conducting the contest shall consult same in good faith with the other party and its counsel with respect to the contest of such claim for Taxes (or claim for refund) but the decisions regarding what actions to be taken shall be made by the controlling party in its sole judgment; provided, however, that if such Tax Indemnitee is the controlling party and the Guarantor recommends the acceptance of a settlement offer made by the relevant Governmental Authority and such Tax Indemnitee rejects such settlement offer, then the amount for which a Lessee and the Guarantor will be required to indemnify such Tax Indemnitee with respect to the Taxes subject to such offer shall not exceed the amount which it would have owed if such settlement offer had been accepted provided that any Tax Indemnitee shall be entitled to reject any indemnity payment it would otherwise be entitled to hereunder if such Tax Indemnitee reasonably determines that accepting such offer would have an unindemnified impact on such Tax Indemnitee and provided further that no Tax Indemnitee may reject any such indemnity payment if the Guarantor agrees to pay to such Tax Indemnitee the amount of such unindemnified impact, as reasonably determined by such Tax Indemnitee. In addition, the controlling party shall keep the noncontrolling party reasonably informed as to the progress of the contest, and shall provide the noncontrolling party with a copy of (or appropriate excerpts from) any reports or claims issued by the relevant auditing agents or taxing authority to the controlling party thereof, in connection with such claim or the contest thereof, provided, however, that such obligation shall not obligate any Tax Indemnitee to disclose its tax returns or information or documentation unrelated to such claim or contest. Each Tax Indemnitee shall, at the expense of the Lessee and the Guarantor, supply the Lessee or the Guarantor with such information and documents reasonably requested by the Lessee or the Guarantor as are necessary or advisable for such Person to participate in any action, suit or proceeding to the extent permitted by this Section 13.4(b)faith; provided, however, that such Tax ▇▇▇▇▇ Indemnitee shall will not be required obligated to provide to pursue an administrative appeal if such Lessee ▇▇▇▇▇ Indemnitee instead pursues relief in Tax Court or a court having refund jurisdiction.
(d) If , within 30 days following the Guarantor copies failure of its tax returns or any other information, documentation, or materials that it deems to be confidential or proprietary. Notwithstanding anything in this Section 13.4(b) to the contrary, no Tax Indemnitee shall enter into any settlement or other compromise or fail to appeal an adverse ruling such administrative proceedings with respect to any claim which a ▇▇▇▇▇ Level Issue, UpREIT delivers to a ▇▇▇▇▇ Indemnitee a written opinion of Tax Counsel to the effect that there is entitled a Realistic Possibility of Success if the proposed adjustment is presented to be indemnified under this Section 13.4 a court for resolution, then such ▇▇▇▇▇ Indemnitee will contest the proposed adjustment in good faith in the Tax Court or by paying the tax (and with respect to which contest is required under this Section 13.4(b)any applicable interest and penalties) without and suing for refund in the prior written consent Court of the GuarantorFederal Claims or appropriate Federal District Court. If, unless within 30 days following a final adverse decision of such Tax Indemnitee waives its right to be indemnified under this Section 13.4 court with respect to such claim. Notwithstanding anything contained herein ▇▇▇▇▇ Level Issue, UpREIT delivers to such ▇▇▇▇▇ Indemnitee a written opinion of Tax Counsel to the contraryeffect that it is more likely than not that such decision would be reversed on appeal, then such ▇▇▇▇▇ Indemnitee will appeal such decision to the appropriate Federal Court of Appeals. With respect to any of the above-described proceedings, such ▇▇▇▇▇ Indemnitee will keep UpREIT and its counsel informed as to the progress of such proceedings, give UpREIT and its counsel the opportunity to review and comment in advance on all written submissions and filings relevant to indemnifiable issues (after making appropriate redactions to preserve the confidentiality of the such ▇▇▇▇▇ Indemnitee return as to other issues), and consider in good faith any suggestions made by UpREIT or its counsel.
(e) Such ▇▇▇▇▇ Indemnitee shall present any settlement offer provided to such ▇▇▇▇▇ Indemnitee pursuant to a ▇▇▇▇▇ Level Issue to UpREIT. If UpREIT recommends acceptance of a settlement offer of a ▇▇▇▇▇ Level Issue or if the Tax Matters Partner recommends acceptance of a settlement offer in respect of a Partnership Level Issue, but such ▇▇▇▇▇ Indemnitee declines to accept such offer in writing within 30 days (if such ▇▇▇▇▇ Indemnitee does not respond within 30 days, such lack of response shall be treated as acceptance of UpREIT's or the Tax Matters Partner's recommendation, respectively), (1) the obligation of UpREIT to make indemnity payments as the result of any such contest or proceedings shall not thereafter exceed the obligation that it would have had if such contest had been settled or proceeding terminated on the basis recommended by UpREIT or the Tax Matters Partner, as applicable, and (2) in the case of a ▇▇▇▇▇ Level Issue, UpREIT shall have no further liability for costs or other expenses in respect of such contest.
(f) Notwithstanding the foregoing, such ▇▇▇▇▇ Indemnitee will have no obligation to contest any action with respect to a ▇▇▇▇▇ Level Issue (i) unless such items could give rise to a federal income tax liability (disregarding other items in the assessment and considering effects in future years) in excess of $10,000, (ii) without UpREIT paying when due, reasonable third-party costs and out-of-pocket expenses including reasonable legal, witness and accounting fees and other expenses and, in the case of proceedings before the Court of Federal Claims or Federal District Court, the amount of tax (and any applicable interest and penalties) for which refund is claimed, and (iii) to the extent such ▇▇▇▇▇ Indemnitee waives in writing UpREIT's obligation to indemnify such ▇▇▇▇▇ Indemnitee for such items, in which case all third-party costs and out-of-pocket expenses described in clause (ii) thereafter incurred and all taxes would be paid by such ▇▇▇▇▇ Indemnitee.
(g) such ▇▇▇▇▇ Indemnitee shall not settle any such ▇▇▇▇▇ Level Issue without UpREIT's consent; provided that such ▇▇▇▇▇ Indemnitee shall not be required to contest (any proposed adjustment and neither the Lessee nor the Guarantor shall be permitted to contest in may settle any judicial forum such proposed adjustment if such contest could, in a Tax Indemnitee's reasonable judgment, be materially adverse to it) a claim with respect to the imposition of any Tax if such Tax ▇▇▇▇▇ Indemnitee shall have waived waive its right to indemnification indemnity under this Section 13.4 Agreement with respect to such claim adjustment and any Income Inclusion that results from such adjustment and, in the case of proceedings before the Court of Federal Claims or Federal District Court, shall pay to UpREIT the amount of tax (and any claim applicable interest and penalties) previously paid or advanced by UpREIT with respect to such year adjustment or any other taxable year the contest of which is precluded such adjustment under Section 6(f), plus interest at the rate per annum equal to the weighted average cost of debt capital to the UpREIT, computed from the time such amounts were paid or materially adversely affected as advanced by UpREIT.
(h) Within thirty (30) days after a result Final Determination of the liability of such waiver).▇▇▇▇▇ Indemnitee in respect of a ▇▇▇▇▇ Level Issue, UpREIT and each Indemnitee agree to pay each other, as applicable, the net amount of (i) the payment owed by the UpREIT to such ▇▇▇▇▇ Indemnitee of any indemnification hereunder, not theretofore paid resulting from the outcome of such contest, and
Appears in 1 contract
Sources: Tax Indemnification Agreement (Prime Group Realty Trust)
Contests. If Whenever any claim taxing authority asserts a claim, makes an assessment, or otherwise disputes the amount of Taxes owed by any Company or Company Subsidiary for which Sellers are or may be liable under this Agreement, Buyer shall be made against any Tax Indemnitee or if any proceeding shall be commenced against any Tax Indemnitee (including a written notice promptly upon learning of such proceeding) for claim inform Sellers, and Sellers shall have the right to control any Imposition as resulting proceedings and to which the Lessee determine whether and when to settle any such claim, assessment or the Guarantor may have an indemnity obligation pursuant to this Section 13.4, or if any Tax Indemnitee shall determine that any Imposition to which the Lessee or the Guarantor may have an indemnity obligation pursuant to this Section 13.4 may be payable, such Tax Indemnitee shall promptly (and in any event, within fifteen (15) Business Days) notify the Guarantor in writing (provided that failure to so notify the Guarantor within fifteen (15) Business Days shall not alter such Tax Indemnitee's rights under this Section 13.4 except dispute to the extent such failure precludes proceedings or determinations would materially adversely affects affect the ability to conduct a contest amount of any indemnified Taxes) and Taxes for which Sellers are liable under this Agreement; PROVIDED, that Sellers shall not take enter into any action with respect such settlement without the consent of Buyer, which consent shall not be unreasonably withheld, if such settlement could affect the amount of Taxes for which Buyer is liable under this Agreement. Whenever any Taxing Authority asserts a claim, makes an assessment or otherwise disputes the amount of Taxes for which Buyer is liable under this Agreement, Sellers shall promptly upon learning of such claim inform Buyer, and Buyer shall have the right to control any resulting proceedings and to determine whether and when to settle any such claim, proceeding assessment or Imposition without dispute to the written consent extent such proceedings would materially affect the amount of the Guarantor (such consent not to be unreasonably withheld or unreasonably delayed) Taxes for thirty (30) days after the receipt of such notice by the Guarantorwhich Buyer is liable under this Agreement; provided, howeverPROVIDED, that in the case of Buyer shall not enter into any such claim or proceeding, if such Tax Indemnitee shall be required by law or regulation to take action prior to the end of such thirty (30) day period, such Tax Indemnitee shall in such notice to the Guarantor, so inform the Guarantor, and such Tax Indemnitee shall not take any action with respect to such claim, proceeding or Imposition settlement without the consent of the Guarantor (such affected Seller, which consent shall not to be unreasonably withheld or unreasonably delayed) withheld, if such settlement could affect the amount of Taxes for ten (10) days after the receipt of such notice by the Guarantor unless such Tax Indemnitee shall be required by law or regulation to take action prior which Sellers are liable under this Agreement. With respect to the end Worldwide Companies and the Subsidiaries of such ten (10) day period. The Guarantor shall be entitled the Worldwide Companies, for a period of thirty (30) days from receipt six years after the Worldwide Closing, and, with respect to Compass Australia and the Australian Business, for a period of six years after the Australia Closing, and, if at the expiration thereof any tax audit or judicial proceeding is in progress or the applicable statute of limitations has been extended in writing, for such notice from such Tax Indemnitee (or such shorter longer period as such Tax Indemnitee tax audit or judicial proceeding is in progress or such statutory period has notified been agreed to be extended, Buyer shall, and shall cause the Guarantor is required by law or regulation for such Tax Indemnitee Companies and Company Subsidiaries to commence such contest)maintain and make available to Lend Lease U.S. and the Sellers, to on the reasonable request in writing that such Tax Indemnitee contest the imposition of such Tax, at the Guarantor's expense. If (x) such contest can be pursued in the name of the Guarantor Lend Lease U.S. or the Lessee and independently from any other proceeding involving a Tax liability Sellers, copies of such Tax Indemnitee for which the Lessee and the Guarantor have not agreed to indemnify such Tax Indemnitee, (y) such contest must be pursued in the name of such Tax Indemnitee, but can be pursued independently from any other proceeding involving a Tax liability of such Tax Indemnitee for which the Lessee and the Guarantor have not agreed to indemnify such Tax Indemnitee or (z) such Tax Indemnitee so requests, then the Guarantor or such Lessee shall be permitted to control the contest of such claim, provided that in the case of a contest described in clause (y) if such Tax Indemnitee determines reasonably and in good faith that such contest by the Guarantor or the Lessee could have a material adverse impact on the business or operations of such Tax Indemnitee and provides a written explanation to the Guarantor of such determination, such Tax Indemnitee may elect to control or reassert control of the contest, and provided that the taking control by the Guarantor or the Lessee of any contest shall not alter the applicable Tax Indemnitee's rights to indemnification hereunder, and provided, further, that in determining the application of clauses (x) and (y) of the preceding sentence, each Tax Indemnitee shall take any and all reasonable steps information, working papers, books and records used in the preparation of or relating to segregate claims for any Taxes for which the Lessee and the Guarantor indemnify hereunder from Taxes for which the Lessee and the Guarantor are not obligated to indemnify hereunder, so that the Guarantor can control the contest Tax Returns of each of the formerCompanies and Company Subsidiaries. In all other claims requested to be contested by After such period, Buyer, the Guarantor, such Tax Indemnitee shall control the contest Companies and Company Subsidiaries may dispose of such claim, acting through counsel selected by such Tax Indemnitee and reasonably acceptable to the Guarantor. In no event shall the Guarantor be permitted to contest (or such Tax Indemnitee be required to contest) any claim, (A) if such Tax Indemnitee provides the Guarantor with a legal opinion of counsel reasonably acceptable to the Guarantor that such action, suit or proceeding involves a risk of imposition of criminal liability or will involve a material risk of the sale, forfeiture or loss of, or the creation of any Lien (other than a Permitted Lien) on the Property or any part thereof unless the Guarantor shall have posted and maintained a bond or other security reasonably satisfactory to the relevant Tax Indemnitee in respect to such risk, (B) if a Lease Event of Default has occurred and is continuing unless the Guarantor shall have posted and maintained a bond or other security reasonably satisfactory to the relevant Tax Indemnitee in respect of the Taxes subject to such claim and any and all expenses for which the Guarantor or the Lessee is responsible hereunder reasonably foreseeable in connection with the contest of such claim, (C) unless the Guarantor shall have agreed to pay and shall pay, to such Tax Indemnitee on written demand all reasonable, documented out-of-pocket costs, losses and expenses that such Tax Indemnitee may incur in connection with contesting such Imposition including all reasonable legal, accounting and investigatory fees and disbursements and (if applicable) reasonable, allocable internal overhead costs determined in accordance with normal bank operating procedures, or (D) if such contest shall involve the payment of the Tax prior to the contest, unless the Guarantor shall provide to such Tax Indemnitee an interest-free advance in an amount equal to the Imposition that such Tax Indemnitee is required to pay (with no additional net after-tax costs to such Tax Indemnitee). In addition, for contests controlled by such Tax Indemnitee and claims contested in the name of such Tax Indemnitee in a public forum, no contest shall be required: (A) unless the amount of the potential indemnity (taking into account all similar or logically related claims that have been or could be raised in any audit involving any or all such Tax Indemnitees with respect to any period for which the Guarantor or the Lessee may be liable to pay an indemnity under this Section 13.4(b)) exceeds (1) with respect to the Lessor, $25,000 and (2) with respect to any Tax Indemnitee other than the Lessor, $75,000 and (B) unless, if requested by such Tax Indemnitee, the Guarantor shall have provided to such Tax Indemnitee an opinion of counsel selected by the Guarantor (which may be in-house counsel) (except, in the case of income taxes indemnified hereunder, in which case such opinion shall be an opinion of independent tax counsel selected by the Guarantor and reasonably acceptable to such Tax Indemnitee) that a reasonable basis exists to contest such claim. In no event shall a Tax Indemnitee be required to appeal an adverse judicial determination to the United States Supreme Court. The party conducting the contest shall consult in good faith with the other party and its counsel with respect to the contest of such claim for Taxes (or claim for refund) but the decisions regarding what actions to be taken shall be made by the controlling party in its sole judgment; provided, however, that if such Tax Indemnitee is the controlling party and the Guarantor recommends the acceptance of a settlement offer made by the relevant Governmental Authority and such Tax Indemnitee rejects such settlement offer, then the amount for which a Lessee and the Guarantor will be required to indemnify such Tax Indemnitee with respect to the Taxes subject to such offer shall not exceed the amount which it would have owed if such settlement offer had been accepted provided that any Tax Indemnitee shall be entitled to reject any indemnity payment it would otherwise be entitled to hereunder if such Tax Indemnitee reasonably determines that accepting such offer would have an unindemnified impact on such Tax Indemnitee and provided further that no Tax Indemnitee may reject any such indemnity payment if the Guarantor agrees to pay to such Tax Indemnitee the amount of such unindemnified impact, as reasonably determined by such Tax Indemnitee. In addition, the controlling party shall keep the noncontrolling party reasonably informed as to the progress of the contest, and shall provide the noncontrolling party with a copy of (or appropriate excerpts from) any reports or claims issued by the relevant auditing agents or taxing authority to the controlling party thereof, in connection with such claim or the contest thereof, provided, however, that such obligation shall not obligate any Tax Indemnitee to disclose its tax returns or information or documentation unrelated to such claim or contest. Each Tax Indemnitee shall, at the expense of the Lessee and the Guarantor, supply the Lessee or the Guarantor with such information and documents reasonably requested by the Lessee or the Guarantor as are necessary or advisable for such Person to participate in any action, suit or proceeding to the extent permitted by this Section 13.4(b); provided, however, that such Tax Indemnitee shall not be required to provide to such Lessee or the Guarantor copies of its tax returns or any other information, documentationworking papers, or materials that it deems to be confidential or proprietary. Notwithstanding anything in this Section 13.4(b) to the contrary, no Tax Indemnitee shall enter into any settlement or other compromise or fail to appeal an adverse ruling with respect to any claim which is entitled to be indemnified under this Section 13.4 (books and with respect to which contest is required under this Section 13.4(b)) without the prior written consent of the Guarantor, unless such Tax Indemnitee waives its right to be indemnified under this Section 13.4 with respect to such claim. Notwithstanding anything contained herein to the contrary, a Tax Indemnitee shall not be required to contest (and neither the Lessee nor the Guarantor shall be permitted to contest in any judicial forum if such contest could, in a Tax Indemnitee's reasonable judgment, be materially adverse to it) a claim with respect to the imposition of any Tax if such Tax Indemnitee shall have waived its right to indemnification under this Section 13.4 with respect to such claim (and any claim with respect to such year or any other taxable year the contest of which is precluded or materially adversely affected as a result of such waiver)records.
Appears in 1 contract
Contests. If In respect of the indemnification provided under Section 7.1(a), promptly after receipt by an Indemnitee of notice of any pending or threatened Claim, such Indemnitee shall, if a claim shall for indemnification in respect thereof is to be made against any Tax Indemnitee or if any proceeding shall be commenced against any Tax Indemnitee (including a written the Lessee, give notice of such proceeding) for any Imposition as to which the Lessee or the Guarantor may have an indemnity obligation pursuant to this Section 13.4, or if any Tax Indemnitee shall determine that any Imposition to which the Lessee or the Guarantor may have an indemnity obligation pursuant to this Section 13.4 may be payable, such Tax Indemnitee shall promptly (and in any event, within fifteen (15) Business Days) notify the Guarantor in writing (provided that failure to so notify the Guarantor within fifteen (15) Business Days shall not alter such Tax Indemnitee's rights under this Section 13.4 except thereof to the extent such failure precludes or materially adversely affects Lessee. So long as no Event of Default is continuing, the ability Lessee, at its own expense, may elect to conduct a contest of any indemnified Taxes) and shall not take any action with respect to such claim, proceeding or Imposition without assume the written consent of the Guarantor (such consent not to be unreasonably withheld or unreasonably delayed) for thirty (30) days after the receipt of such notice by the Guarantor; provided, however, that in the case defense of any such claim or proceedingClaim through its own counsel, if such Tax Indemnitee which shall be required by law or regulation to take action prior subject to the end reasonable approval of the Indemnitee, on behalf of the Indemnitee (with full right of subrogation to the Indemnitee’s rights and defenses). The Lessee must indicate its election to assume such thirty (30) day period, such Tax Indemnitee shall in such defense by written notice to the Guarantor, so inform the Guarantor, and such Tax Indemnitee shall not take any action with respect to such claim, proceeding or Imposition without the consent within forty-five (45) days following receipt of Indemnitee’s notice of the Guarantor (such consent not to be unreasonably withheld Claim, or unreasonably delayed) for ten (10) days after the receipt of such notice by the Guarantor unless such Tax Indemnitee shall be required by law or regulation to take action prior to the end of such ten (10) day period. The Guarantor shall be entitled for a period of thirty (30) days from receipt of such notice from such Tax Indemnitee (or such shorter period as such Tax Indemnitee has notified the Guarantor is required by law or regulation for such Tax Indemnitee to commence such contest), to request in writing that such Tax Indemnitee contest the imposition of such Tax, at the Guarantor's expense. If (x) such contest can be pursued in the name of the Guarantor or the Lessee and independently from any other proceeding involving a Tax liability of such Tax Indemnitee for which the Lessee and the Guarantor have not agreed to indemnify such Tax Indemnitee, (y) such contest must be pursued in the name of such Tax Indemnitee, but can be pursued independently from any other proceeding involving a Tax liability of such Tax Indemnitee for which the Lessee and the Guarantor have not agreed to indemnify such Tax Indemnitee or (z) such Tax Indemnitee so requests, then the Guarantor or such Lessee shall be permitted to control the contest of such claim, provided that in the case of a contest described third-party claim which requires a shorter time for response then within such shorter period as specified in clause (y) if such Tax Indemnitee determines reasonably and in good faith the Indemnitee’s notice of Claim; provided that such contest by the Guarantor or Indemnitee has given the Lessee could have a material adverse impact on notice thereof. If the business Lessee denies liability or operations of such Tax Indemnitee and provides a written explanation fails to respond to the Guarantor of such determinationnotice within the time period set forth above, such Tax the Indemnitee may elect defend or compromise the Claim as it deems appropriate without prejudice to control or reassert control any of Indemnitee’s rights hereunder. If the Lessee shall have elected to assume the defense of any such Claim, then upon the request of the contestLessee, and provided that the taking control by the Guarantor or Indemnitee requesting payment of indemnity under Section 7.1(a) shall promptly furnish the Lessee with copies of any contest shall not alter records or documents pertaining to the applicable Tax matter to be indemnified and, to the extent known by such Indemnitee's rights to indemnification hereunder, and provided, further, that in determining the application of clauses (x) and (y) a reasonably detailed explanation of the preceding sentencecircumstances giving rise to the claim of indemnification and the determination of the amount of the requested indemnity payment. Upon payment in full to Indemnitee of any indemnity pursuant to Section 7.1(a), each Tax Indemnitee shall take any and all reasonable steps to segregate claims for any Taxes for which the Lessee and the Guarantor indemnify hereunder from Taxes for which the Lessee and the Guarantor are not obligated shall be subrogated to indemnify hereunder, so that the Guarantor can control the contest any right of the former. In all other claims requested to be contested by the Guarantor, such Tax Indemnitee shall control the contest of such claim, acting through counsel selected by such Tax Indemnitee and reasonably acceptable to the Guarantor. In no event shall the Guarantor be permitted to contest (or such Tax Indemnitee be required to contest) any claim, (A) if such Tax Indemnitee provides the Guarantor with a legal opinion of counsel reasonably acceptable to the Guarantor that such action, suit or proceeding involves a risk of imposition of criminal liability or will involve a material risk of the sale, forfeiture or loss of, or the creation of any Lien (other than a Permitted Lien) on the Property or any part thereof unless the Guarantor shall have posted and maintained a bond or other security reasonably satisfactory to the relevant Tax Indemnitee in respect to such risk, (B) if a Lease Event of Default has occurred and is continuing unless the Guarantor shall have posted and maintained a bond or other security reasonably satisfactory to the relevant Tax Indemnitee in respect of the Taxes subject to matter against which such claim and any and all expenses for which the Guarantor or indemnity has been paid. If the Lessee is responsible hereunder reasonably foreseeable in connection with the contest of such claim, (C) unless the Guarantor shall have agreed elected to pay assume the defense of any such Claim, upon the written request at any time and shall pay, from time to such Tax Indemnitee on written demand all reasonable, documented out-of-pocket costs, losses and expenses that such Tax Indemnitee may incur in connection with contesting such Imposition including all reasonable legal, accounting and investigatory fees and disbursements and (if applicable) reasonable, allocable internal overhead costs determined in accordance with normal bank operating procedures, or (D) if such contest shall involve the payment time of the Tax prior to the contestLessee, unless the Guarantor shall provide to such Tax Indemnitee an interest-free advance in an amount equal to the Imposition that such Tax Indemnitee is required to pay (with no additional net after-tax costs to such Tax Indemnitee). In addition, for contests controlled by such Tax Indemnitee and claims contested in the name of such Tax Indemnitee in a public forum, no contest shall be required: (A) unless the amount of the potential indemnity (taking into account all similar or logically related claims that have been or could be raised in any audit involving any or all such Tax Indemnitees with respect to any period for which the Guarantor or the Lessee may be liable to pay an indemnity under this Section 13.4(b)) exceeds (1) with respect to the Lessor, $25,000 and (2) with respect to any Tax Indemnitee other than the Lessor, $75,000 and (B) unless, if requested by such Tax Indemnitee, the Guarantor shall have provided to such Tax Indemnitee an opinion of counsel selected by the Guarantor (which may be in-house counsel) (except, in the case of income taxes indemnified hereunder, in which case such opinion shall be an opinion of independent tax counsel selected by the Guarantor and reasonably acceptable to such Tax Indemnitee) that a reasonable basis exists to contest such claim. In no event shall a Tax Indemnitee be required to appeal an adverse judicial determination to the United States Supreme Court. The party conducting the contest shall consult in good faith with the other party and its counsel with respect to the contest of such claim for Taxes (or claim for refund) but the decisions regarding what actions to be taken shall be made by the controlling party in its sole judgment; provided, however, that if such Tax Indemnitee is the controlling party and the Guarantor recommends the acceptance of a settlement offer made by the relevant Governmental Authority and such Tax Indemnitee rejects such settlement offer, then the amount for which a Lessee and the Guarantor will be required to indemnify such Tax Indemnitee with respect to the Taxes subject to such offer shall not exceed the amount which it would have owed if such settlement offer had been accepted provided that any Tax Indemnitee shall be entitled to reject any indemnity payment it would otherwise be entitled to hereunder if such Tax Indemnitee reasonably determines that accepting such offer would have an unindemnified impact on such Tax Indemnitee and provided further that no Tax Indemnitee may reject any such indemnity payment if the Guarantor agrees to pay to such Tax Indemnitee the amount of such unindemnified impact, as reasonably determined by such Tax Indemnitee. In addition, the controlling party shall keep the noncontrolling party reasonably informed as to the progress of the contest, and shall provide the noncontrolling party with a copy of (or appropriate excerpts from) any reports or claims issued by the relevant auditing agents or taxing authority to the controlling party thereof, in connection with such claim or the contest thereof, provided, however, that such obligation shall not obligate any Tax Indemnitee to disclose its tax returns or information or documentation unrelated to such claim or contest. Each Tax Indemnitee shall, at the expense of the Lessee Lessee, take such reasonable actions and the Guarantor, supply the Lessee or the Guarantor with execute such information and documents reasonably requested by the Lessee or the Guarantor as are necessary or advisable for reasonably appropriate to assist the Lessee in the preservation and enforcement against third parties of the Lessee’s right of subrogation hereunder. The Indemnitee may employ separate counsel in any such Person to Claim and participate in any actionthe defense thereof, suit but the fees and expenses of such counsel shall be at the expense of the Indemnitee unless the Indemnitee and the Lessee shall have been advised by counsel that there exists a conflict of interest in such counsel’s representation of the Indemnitee and the Lessee in which case the fees and expenses of such separate counsel shall be for the account of the Lessee. All fees and expenses shall be paid periodically as incurred. So long as no Default or proceeding to Event of Default shall be continuing, the extent permitted by this Section 13.4(b); provided, however, that such Tax Indemnitee Lessee shall not be required to provide to liable for any settlement of any such Claim effected without its consent unless the Lessee or the Guarantor copies of its tax returns or any other information, documentationshall fail to, or materials that it deems elect in writing not to, assume the defense thereof in which case the Indemnitee, without waiving any rights to be confidential or proprietary. Notwithstanding anything in this Section 13.4(b) to the contraryindemnification hereunder, no Tax Indemnitee shall may defend such Claim and enter into any good faith settlement or other compromise or fail to appeal an adverse ruling with respect to any claim which is entitled to be indemnified under this Section 13.4 (and with respect to which contest is required under this Section 13.4(b)) thereof without the prior written consent of the GuarantorLessee. The Lessee shall not, without the prior written consent (not to be unreasonably withheld) of the Indemnitee, effect any settlement of any such Claim unless such Tax settlement includes an unconditional release of the Indemnitee waives its right from all liabilities that are the subject of such Claim. The parties agree to be indemnified under this Section 13.4 with respect to such claim. Notwithstanding anything contained herein to the contrary, a Tax Indemnitee shall not be required to contest (and neither the Lessee nor the Guarantor shall be permitted to contest cooperate in any judicial forum if such contest could, in a Tax Indemnitee's reasonable judgment, be materially adverse to it) a claim with respect to the imposition defense or settlement of any Tax if such Tax Indemnitee shall have waived its right Claim and to indemnification under this Section 13.4 with respect give each other reasonable access to such claim (and all information relevant thereto subject to appropriate confidentiality agreements. The parties will similarly cooperate in the prosecution of any claim with respect to such year or lawsuit against any other taxable year the contest of which is precluded or materially adversely affected as a result of such waiver)third party.
Appears in 1 contract
Contests. If (a) After the Closing, the Purchaser shall promptly notify the Sellers in writing of any written notice of a proposed assessment or claim shall in an audit or administrative or judicial proceeding of the Purchaser or of any of the Company and the Subsidiaries which, if determined adversely to the taxpayer, would be grounds for indemnification under this Article VI; PROVIDED, HOWEVER, that a failure to give such notice will not affect the Purchaser's right to indemnification under this Article VI except to the extent, if any, that, but for such failure, the Sellers could have avoided all or a portion of the Tax liability in question.
(b) In the case of an audit or administrative or judicial proceeding that relates to periods ending on or before the Closing Date, provided that the Sellers acknowledge in writing their liability under this Agreement to hold the Purchaser, the Company and the Subsidiaries harmless against the full amount of any adjustment which may be made as a result of such audit or proceeding that relates to periods ending on or before the Closing Date (or, in the case of any taxable year that includes the Closing Date, against an adjustment allocable under Section 6.01(b) to the portion of such year ending on or before the Closing Date), the Sellers shall have the right at their expense to participate in and control the conduct of such audit or proceeding but only to the extent that such audit or proceeding relates solely to a potential adjustment for which the Sellers have acknowledged their liability; the Purchaser also may participate in any Tax Indemnitee such audit or proceeding and, if the Sellers does not assume the defense of any such audit or proceeding, the Purchaser may defend the same in such manner as it may deem appropriate, including, but not limited to, settling such audit or proceeding after giving five days' prior written notice to the Sellers setting forth the terms and conditions of settlement. In the event that issues relating to a potential adjustment for which the Sellers have acknowledged their liability are required to be dealt with in the same proceeding as separate issues relating to a potential adjustment for which the Purchaser would be liable, the Purchaser shall have the right, at its expense, to control the audit or proceeding with respect to the latter issues.
(c) With respect to issues relating to a potential adjustment for which both the Sellers (as evidenced by their acknowledgment under this Section 6.04) and the Purchaser or the Company or any Subsidiary could be liable, (i) each party may participate in the audit or proceeding, and (ii) the audit or proceeding shall be commenced against controlled by that party which would bear the burden of the greater portion of the sum of the adjustment and any corresponding adjustments that may reasonably be anticipated for future Tax periods. The principle set forth in the immediately preceding sentence shall govern also for purposes of deciding any issue that must be decided jointly (including, without limitation, choice of judicial forum) in situations in which separate issues are otherwise controlled under this Article VI by the Purchaser and the Sellers.
(d) Neither the Purchaser nor the Sellers shall enter into any compromise or agree to settle any claim pursuant to any Tax Indemnitee (including audit or proceeding which would adversely affect the other party for such year or a written notice of such proceeding) for any Imposition as to which the Lessee or the Guarantor may have an indemnity obligation pursuant to this Section 13.4, or if any Tax Indemnitee shall determine that any Imposition to which the Lessee or the Guarantor may have an indemnity obligation pursuant to this Section 13.4 may be payable, such Tax Indemnitee shall promptly (and in any event, within fifteen (15) Business Days) notify the Guarantor in writing (provided that failure to so notify the Guarantor within fifteen (15) Business Days shall not alter such Tax Indemnitee's rights under this Section 13.4 except to the extent such failure precludes or materially adversely affects the ability to conduct a contest of any indemnified Taxes) and shall not take any action with respect to such claim, proceeding or Imposition subsequent year without the written consent of the Guarantor (such other party, which consent may not to be unreasonably withheld or unreasonably delayed) for thirty (30) days after withheld. The Purchaser and the receipt of such notice by Sellers agree to cooperate, and the Guarantor; providedPurchaser agrees to cause the Company and the Subsidiaries to cooperate, however, that in the case defense against or compromise of any such claim or proceeding, if such Tax Indemnitee shall be required by law or regulation to take action prior to the end of such thirty (30) day period, such Tax Indemnitee shall in such notice to the Guarantor, so inform the Guarantor, and such Tax Indemnitee shall not take any action with respect to such claim, proceeding or Imposition without the consent of the Guarantor (such consent not to be unreasonably withheld or unreasonably delayed) for ten (10) days after the receipt of such notice by the Guarantor unless such Tax Indemnitee shall be required by law or regulation to take action prior to the end of such ten (10) day period. The Guarantor shall be entitled for a period of thirty (30) days from receipt of such notice from such Tax Indemnitee (or such shorter period as such Tax Indemnitee has notified the Guarantor is required by law or regulation for such Tax Indemnitee to commence such contest), to request in writing that such Tax Indemnitee contest the imposition of such Tax, at the Guarantor's expense. If (x) such contest can be pursued in the name of the Guarantor or the Lessee and independently from any other proceeding involving a Tax liability of such Tax Indemnitee for which the Lessee and the Guarantor have not agreed to indemnify such Tax Indemnitee, (y) such contest must be pursued in the name of such Tax Indemnitee, but can be pursued independently from any other proceeding involving a Tax liability of such Tax Indemnitee for which the Lessee and the Guarantor have not agreed to indemnify such Tax Indemnitee or (z) such Tax Indemnitee so requests, then the Guarantor or such Lessee shall be permitted to control the contest of such claim, provided that in the case of a contest described in clause (y) if such Tax Indemnitee determines reasonably and in good faith that such contest by the Guarantor or the Lessee could have a material adverse impact on the business or operations of such Tax Indemnitee and provides a written explanation to the Guarantor of such determination, such Tax Indemnitee may elect to control or reassert control of the contest, and provided that the taking control by the Guarantor or the Lessee of any contest shall not alter the applicable Tax Indemnitee's rights to indemnification hereunder, and provided, further, that in determining the application of clauses (x) and (y) of the preceding sentence, each Tax Indemnitee shall take any and all reasonable steps to segregate claims for any Taxes for which the Lessee and the Guarantor indemnify hereunder from Taxes for which the Lessee and the Guarantor are not obligated to indemnify hereunder, so that the Guarantor can control the contest of the former. In all other claims requested to be contested by the Guarantor, such Tax Indemnitee shall control the contest of such claim, acting through counsel selected by such Tax Indemnitee and reasonably acceptable to the Guarantor. In no event shall the Guarantor be permitted to contest (or such Tax Indemnitee be required to contest) any claim, (A) if such Tax Indemnitee provides the Guarantor with a legal opinion of counsel reasonably acceptable to the Guarantor that such action, suit or proceeding involves a risk of imposition of criminal liability or will involve a material risk of the sale, forfeiture or loss of, or the creation of any Lien (other than a Permitted Lien) on the Property or any part thereof unless the Guarantor shall have posted and maintained a bond or other security reasonably satisfactory to the relevant Tax Indemnitee in respect to such risk, (B) if a Lease Event of Default has occurred and is continuing unless the Guarantor shall have posted and maintained a bond or other security reasonably satisfactory to the relevant Tax Indemnitee in respect of the Taxes subject to such claim and any and all expenses for which the Guarantor or the Lessee is responsible hereunder reasonably foreseeable in connection with the contest of such claim, (C) unless the Guarantor shall have agreed to pay and shall pay, to such Tax Indemnitee on written demand all reasonable, documented out-of-pocket costs, losses and expenses that such Tax Indemnitee may incur in connection with contesting such Imposition including all reasonable legal, accounting and investigatory fees and disbursements and (if applicable) reasonable, allocable internal overhead costs determined in accordance with normal bank operating procedures, or (D) if such contest shall involve the payment of the Tax prior to the contest, unless the Guarantor shall provide to such Tax Indemnitee an interest-free advance in an amount equal to the Imposition that such Tax Indemnitee is required to pay (with no additional net after-tax costs to such Tax Indemnitee). In addition, for contests controlled by such Tax Indemnitee and claims contested in the name of such Tax Indemnitee in a public forum, no contest shall be required: (A) unless the amount of the potential indemnity (taking into account all similar or logically related claims that have been or could be raised in any audit involving any or all such Tax Indemnitees with respect to any period for which the Guarantor or the Lessee may be liable to pay an indemnity under this Section 13.4(b)) exceeds (1) with respect to the Lessor, $25,000 and (2) with respect to any Tax Indemnitee other than the Lessor, $75,000 and (B) unless, if requested by such Tax Indemnitee, the Guarantor shall have provided to such Tax Indemnitee an opinion of counsel selected by the Guarantor (which may be in-house counsel) (except, in the case of income taxes indemnified hereunder, in which case such opinion shall be an opinion of independent tax counsel selected by the Guarantor and reasonably acceptable to such Tax Indemnitee) that a reasonable basis exists to contest such claim. In no event shall a Tax Indemnitee be required to appeal an adverse judicial determination to the United States Supreme Court. The party conducting the contest shall consult in good faith with the other party and its counsel with respect to the contest of such claim for Taxes (or claim for refund) but the decisions regarding what actions to be taken shall be made by the controlling party in its sole judgment; provided, however, that if such Tax Indemnitee is the controlling party and the Guarantor recommends the acceptance of a settlement offer made by the relevant Governmental Authority and such Tax Indemnitee rejects such settlement offer, then the amount for which a Lessee and the Guarantor will be required to indemnify such Tax Indemnitee with respect to the Taxes subject to such offer shall not exceed the amount which it would have owed if such settlement offer had been accepted provided that any Tax Indemnitee shall be entitled to reject any indemnity payment it would otherwise be entitled to hereunder if such Tax Indemnitee reasonably determines that accepting such offer would have an unindemnified impact on such Tax Indemnitee and provided further that no Tax Indemnitee may reject any such indemnity payment if the Guarantor agrees to pay to such Tax Indemnitee the amount of such unindemnified impact, as reasonably determined by such Tax Indemnitee. In addition, the controlling party shall keep the noncontrolling party reasonably informed as to the progress of the contest, and shall provide the noncontrolling party with a copy of (or appropriate excerpts from) any reports or claims issued by the relevant auditing agents or taxing authority to the controlling party thereof, in connection with such claim or the contest thereof, provided, however, that such obligation shall not obligate any Tax Indemnitee to disclose its tax returns or information or documentation unrelated to such claim or contest. Each Tax Indemnitee shall, at the expense of the Lessee and the Guarantor, supply the Lessee or the Guarantor with such information and documents reasonably requested by the Lessee or the Guarantor as are necessary or advisable for such Person to participate in any action, suit or proceeding to the extent permitted by this Section 13.4(b); provided, however, that such Tax Indemnitee shall not be required to provide to such Lessee or the Guarantor copies of its tax returns or any other information, documentation, or materials that it deems to be confidential or proprietary. Notwithstanding anything in this Section 13.4(b) to the contrary, no Tax Indemnitee shall enter into any settlement or other compromise or fail to appeal an adverse ruling with respect to any claim which is entitled to be indemnified under this Section 13.4 (and with respect to which contest is required under this Section 13.4(b)) without the prior written consent of the Guarantor, unless such Tax Indemnitee waives its right to be indemnified under this Section 13.4 with respect to such claim. Notwithstanding anything contained herein to the contrary, a Tax Indemnitee shall not be required to contest (and neither the Lessee nor the Guarantor shall be permitted to contest in any judicial forum if such contest could, in a Tax Indemnitee's reasonable judgment, be materially adverse to it) a claim with respect to the imposition of any Tax if such Tax Indemnitee shall have waived its right to indemnification under this Section 13.4 with respect to such claim (and any claim with respect to such year or any other taxable year the contest of which is precluded or materially adversely affected as a result of such waiver)proceeding.
Appears in 1 contract
Contests. If Upon receipt by Buyer or any claim shall Affiliate of Buyer of any notice of any Audit with respect to Excluded Taxes or any other Taxes for which the Sellers may be made against liable hereunder (any such Audit, a "TAX MATTER"), Buyer will notify the Sellers of any such Tax Indemnitee or if any proceeding shall be commenced against any Matter within (x) three Business Days if, under applicable Law, the written response to such Tax Indemnitee (including a written Matter is required within 20 days after the receipt by Buyer of such notice of such proceedingTax Matter, and (y) ten calendar days in all other cases. The Sellers may, at their expense, participate in and, upon notice to Buyer, assume the defense of any such Tax Matter. Upon receipt of such notice from Sellers, Buyer will grant to Sellers a special and limited power of attorney in favor of Sellers, duly authenticated by a Mexican notary public, for any Imposition as lawsuits and collections to which the Lessee permit Sellers to properly defend or the Guarantor may have an indemnity obligation contest such Tax Matter. No delay in or failure by Buyer to give notice of such Tax Matter or to deliver such power of attorney pursuant to this Section 13.48.3(d) will alter or relieve the Sellers of their obligation to indemnify Buyer, or if any Tax Indemnitee shall determine that any Imposition to which the Lessee or the Guarantor may have an indemnity obligation pursuant to this Section 13.4 may be payable, such Tax Indemnitee shall promptly (and in any event, within fifteen (15) Business Days) notify the Guarantor in writing (provided that failure to so notify the Guarantor within fifteen (15) Business Days shall not alter such Tax Indemnitee's rights under this Section 13.4 except to the extent that the Sellers are prejudiced thereby or are prevented or in any way restricted from being able to assume the defense of such failure precludes or materially adversely affects Tax Matter. If the ability to conduct a contest of any indemnified Taxes) and shall not take any action Sellers assume such defense, the Sellers will have the authority, with respect to such claimany Tax Matter, proceeding or Imposition without to represent the written consent interests of the Guarantor (applicable Purchased Subsidiary before the relevant Taxing Authority and will have the right to control the defense, compromise or other resolution of any such consent not Tax Matter, including responding to be unreasonably withheld inquiries and contesting, defending against and resolving any assessment for additional Taxes or unreasonably delayed) for thirty (30) days after the receipt notice of Tax deficiency or other adjustment of Taxes of, or relating to, such notice by the GuarantorTax Matter; provided, however, that in the case of any such claim or proceeding, if such Tax Indemnitee shall be required by law or regulation to take action prior to the end of such thirty (30) day period, such Tax Indemnitee shall in such notice to the Guarantor, so inform the Guarantor, and such Tax Indemnitee shall Sellers will not take any action with respect to such claim, proceeding or Imposition without the consent of the Guarantor (such consent not to be unreasonably withheld or unreasonably delayed) for ten (10) days after the receipt of such notice by the Guarantor unless such Tax Indemnitee shall be required by law or regulation to take action prior to the end of such ten (10) day period. The Guarantor shall be entitled for a period of thirty (30) days from receipt of such notice from such Tax Indemnitee (or such shorter period as such Tax Indemnitee has notified the Guarantor is required by law or regulation for such Tax Indemnitee to commence such contest), to request in writing that such Tax Indemnitee contest the imposition of such Tax, at the Guarantor's expense. If (x) such contest can be pursued in the name of the Guarantor or the Lessee and independently from any other proceeding involving a Tax liability of such Tax Indemnitee for which the Lessee and the Guarantor have not agreed to indemnify such Tax Indemnitee, (y) such contest must be pursued in the name of such Tax Indemnitee, but can be pursued independently from any other proceeding involving a Tax liability of such Tax Indemnitee for which the Lessee and the Guarantor have not agreed to indemnify such Tax Indemnitee or (z) such Tax Indemnitee so requests, then the Guarantor or such Lessee shall be permitted to control the contest of such claim, provided that in the case of a contest described in clause (y) if such Tax Indemnitee determines reasonably and in good faith that such contest by the Guarantor or the Lessee could have a material adverse impact on the business or operations of such Tax Indemnitee and provides a written explanation to the Guarantor of such determination, such Tax Indemnitee may elect to control or reassert control of the contest, and provided that the taking control by the Guarantor or the Lessee of any contest shall not alter the applicable Tax Indemnitee's rights to indemnification hereunder, and provided, further, that in determining the application of clauses (x) and (y) of the preceding sentence, each Tax Indemnitee shall take any and all reasonable steps to segregate claims for any Taxes for which the Lessee and the Guarantor indemnify hereunder from Taxes for which the Lessee and the Guarantor are not obligated to indemnify hereunder, so that the Guarantor can control the contest of the former. In all other claims requested to be contested by the Guarantor, such Tax Indemnitee shall control the contest of such claim, acting through counsel selected by such Tax Indemnitee and reasonably acceptable to the Guarantor. In no event shall the Guarantor be permitted to contest (or such Tax Indemnitee be required to contest) any claim, (A) if such Tax Indemnitee provides the Guarantor with a legal opinion of counsel reasonably acceptable to the Guarantor that such action, suit or proceeding involves a risk of imposition of criminal liability or will involve a material risk of the sale, forfeiture or loss of, or the creation of any Lien (other than a Permitted Lien) on the Property or any part thereof unless the Guarantor shall have posted and maintained a bond or other security reasonably satisfactory to the relevant Tax Indemnitee in respect to such risk, (B) if a Lease Event of Default has occurred and is continuing unless the Guarantor shall have posted and maintained a bond or other security reasonably satisfactory to the relevant Tax Indemnitee in respect of the Taxes subject to such claim and any and all expenses for which the Guarantor or the Lessee is responsible hereunder reasonably foreseeable in connection with the contest of such claim, (C) unless the Guarantor shall have agreed to pay and shall pay, to such Tax Indemnitee on written demand all reasonable, documented out-of-pocket costs, losses and expenses that such Tax Indemnitee may incur in connection with contesting such Imposition including all reasonable legal, accounting and investigatory fees and disbursements and (if applicable) reasonable, allocable internal overhead costs determined in accordance with normal bank operating procedures, or (D) if such contest shall involve the payment of the Tax prior to the contest, unless the Guarantor shall provide to such Tax Indemnitee an interest-free advance in an amount equal to the Imposition that such Tax Indemnitee is required to pay (with no additional net after-tax costs to such Tax Indemnitee). In addition, for contests controlled by such Tax Indemnitee and claims contested in the name of such Tax Indemnitee in a public forum, no contest shall be required: (A) unless the amount of the potential indemnity (taking into account all similar or logically related claims that have been or could be raised in any audit involving any or all such Tax Indemnitees with respect to any period for which the Guarantor or the Lessee may be liable to pay an indemnity under this Section 13.4(b)) exceeds (1) with respect to the Lessor, $25,000 and (2) with respect to any Tax Indemnitee other than the Lessor, $75,000 and (B) unless, if requested by such Tax Indemnitee, the Guarantor shall have provided to such Tax Indemnitee an opinion of counsel selected by the Guarantor (which may be in-house counsel) (except, in the case of income taxes indemnified hereunder, in which case such opinion shall be an opinion of independent tax counsel selected by the Guarantor and reasonably acceptable to such Tax Indemnitee) that a reasonable basis exists to contest such claim. In no event shall a Tax Indemnitee be required to appeal an adverse judicial determination to the United States Supreme Court. The party conducting the contest shall consult in good faith with the other party and its counsel with respect to the contest of such claim for Taxes (or claim for refund) but the decisions regarding what actions to be taken shall be made by the controlling party in its sole judgment; provided, however, that if such Tax Indemnitee is the controlling party and the Guarantor recommends the acceptance of a settlement offer made by the relevant Governmental Authority and such Tax Indemnitee rejects such settlement offer, then the amount for which a Lessee and the Guarantor will be required to indemnify such Tax Indemnitee with respect to the Taxes subject to such offer shall not exceed the amount which it would have owed if such settlement offer had been accepted provided that any Tax Indemnitee shall be entitled to reject any indemnity payment it would otherwise be entitled to hereunder if such Tax Indemnitee reasonably determines that accepting such offer would have an unindemnified impact on such Tax Indemnitee and provided further that no Tax Indemnitee may reject any such indemnity payment if the Guarantor agrees to pay to such Tax Indemnitee the amount of such unindemnified impact, as reasonably determined by such Tax Indemnitee. In addition, the controlling party shall keep the noncontrolling party reasonably informed as to the progress of the contest, and shall provide the noncontrolling party with a copy of (or appropriate excerpts from) any reports or claims issued by the relevant auditing agents or taxing authority to the controlling party thereof, in connection with such claim or the contest thereof, provided, however, that such obligation shall not obligate any Tax Indemnitee to disclose its tax returns or information or documentation unrelated to such claim or contest. Each Tax Indemnitee shall, at the expense of the Lessee and the Guarantor, supply the Lessee or the Guarantor with such information and documents reasonably requested by the Lessee or the Guarantor as are necessary or advisable for such Person to participate in any action, suit or proceeding to the extent permitted by this Section 13.4(b); provided, however, that such Tax Indemnitee shall not be required to provide to such Lessee or the Guarantor copies of its tax returns or any other information, documentation, or materials that it deems to be confidential or proprietary. Notwithstanding anything in this Section 13.4(b) to the contrary, no Tax Indemnitee shall enter into any settlement of or other otherwise compromise any such Tax Matter to the extent that it could reasonably be expected to adversely affect the Tax liability of any Purchased Subsidiary for a period (or fail to appeal an adverse ruling with respect to any claim which is entitled to be indemnified under this Section 13.4 (and with respect to which contest is required under this Section 13.4(b)portion thereof) beginning after the Closing Date without the prior written consent of the GuarantorBuyer, unless such Tax Indemnitee waives its right to be indemnified under this Section 13.4 with respect to such claim. Notwithstanding anything contained herein to the contrary, a Tax Indemnitee which consent shall not be required unreasonably withheld. Buyer has the right (but not the duty) to contest (participate in the defense of such Tax Matter and neither to employ counsel, at its own expense, separate from the Lessee nor counsel employed by the Guarantor shall be permitted Sellers. If Buyer elects to contest participate in any judicial forum if such contest could, in a Tax Indemnitee's reasonable judgment, be materially adverse to it) a claim with respect to the imposition defense of any Tax if Matter, then (i) Buyer shall be entitled to (A) without in any way limiting or affecting Sellers' right to assume the defense of such Tax Indemnitee Matter, participate fully in the conduct of such Tax Matter, including participating in all conferences and attending all meetings with the relevant authorities, and (B) consult with the Sellers, at its own expense, regarding any such Tax Matter, and Sellers shall have waived its right to indemnification under this Section 13.4 consider in good faith any suggestions made by Buyer, (ii) the Sellers shall provide Buyer with respect a copy of all documents (or portions thereof) relating to such claim Tax Matter and (and iii) the Sellers will not enter into any claim settlement of or otherwise compromise any such Tax Matter to the extent that it could reasonably be expected to adversely affect the Tax liability of any Purchased Subsidiary for a period (or portion thereof) beginning after the Closing Date without the prior written consent of Buyer, which consent shall not be unreasonably withheld. The Sellers will allow Buyer to consult with respect to Sellers regarding the conduct of or positions taken in any such year or any other taxable year the contest of which is precluded or materially adversely affected as a result of such waiver)proceeding.
Appears in 1 contract
Contests. If Notwithstanding anything to the contrary contained in this Agreement:
(a) After the Closing Date, Purchaser shall notify Seller in writing within ten (10) days of the date a claim is made or threatened in writing by any claim Taxing Authority that, if successful, may reasonably be expected to result in an indemnity payment by Seller under Section 10.4 (a "Tax Claim"). Such notice shall be made against any Tax Indemnitee or if any proceeding shall be commenced against any Tax Indemnitee (including a written notice contain factual information describing in reasonable detail the nature and basis of such proceeding) for claim and the amount thereof, to the extent known, and shall include copies of any Imposition as notice or other document received from any Taxing Authority in respect of any such asserted Tax liability. Failure by Purchaser to which give such notice to the Lessee or Seller shall not relieve the Guarantor Seller of any liability that it may have an indemnity on account of its indemnification obligation pursuant to this Section 13.4, or if any Tax Indemnitee shall determine that any Imposition to which the Lessee or the Guarantor may have an indemnity obligation pursuant to this Section 13.4 may be payable, such Tax Indemnitee shall promptly (and in any event, within fifteen (15) Business Days) notify the Guarantor in writing (provided that failure to so notify the Guarantor within fifteen (15) Business Days shall not alter such Tax Indemnitee's rights under this Section 13.4 Article X, except to the extent such failure precludes or that the Seller is materially and adversely affects prejudiced thereby in the ability to conduct a contest of any indemnified Taxes) and shall not take any action with respect to such claim, proceeding or Imposition without the written consent of the Guarantor (such consent not to be unreasonably withheld or unreasonably delayed) for thirty (30) days after the receipt defense of such notice by the GuarantorTax Claim; provided, however, that in irrespective of whether the case Seller is materially or adversely prejudiced, Seller may reduce any liability Seller may have on account of any such claim or proceeding, if such Tax Indemnitee shall be required by law or regulation to take action prior to the end of such thirty (30) day period, such Tax Indemnitee shall in such notice to the Guarantor, so inform the Guarantor, and such Tax Indemnitee shall not take any action with respect to such claim, proceeding or Imposition without the consent of the Guarantor (such consent not to be unreasonably withheld or unreasonably delayed) for ten (10) days after the receipt of such notice its indemnification obligation under this Article X by the Guarantor unless such Tax Indemnitee shall be required by law or regulation to take action prior to the end amount of such ten (10) day period. The Guarantor shall be entitled for a period of thirty (30) days from receipt of such notice from such Tax Indemnitee (or such shorter period as such Tax Indemnitee has notified the Guarantor is required by law or regulation for such Tax Indemnitee to commence such contest)its actual, to request in writing that such Tax Indemnitee contest the imposition of such Tax, at the Guarantor's expense. If (x) such contest can be pursued in the name of the Guarantor or the Lessee and independently from any other proceeding involving a Tax liability of such Tax Indemnitee for which the Lessee and the Guarantor have not agreed to indemnify such Tax Indemnitee, (y) such contest must be pursued in the name of such Tax Indemnitee, but can be pursued independently from any other proceeding involving a Tax liability of such Tax Indemnitee for which the Lessee and the Guarantor have not agreed to indemnify such Tax Indemnitee or (z) such Tax Indemnitee so requests, then the Guarantor or such Lessee shall be permitted to control the contest of such claim, provided that in the case of a contest described in clause (y) if such Tax Indemnitee determines reasonably and in good faith that such contest by the Guarantor or the Lessee could have a material adverse impact on the business or operations of such Tax Indemnitee and provides a written explanation to the Guarantor of such determination, such Tax Indemnitee may elect to control or reassert control of the contest, and provided that the taking control by the Guarantor or the Lessee of any contest shall not alter the applicable Tax Indemnitee's rights to indemnification hereunder, and provided, further, that in determining the application of clauses (x) and (y) of the preceding sentence, each Tax Indemnitee shall take any and all reasonable steps to segregate claims for any Taxes for which the Lessee and the Guarantor indemnify hereunder from Taxes for which the Lessee and the Guarantor are not obligated to indemnify hereunder, so that the Guarantor can control the contest of the former. In all other claims requested to be contested by the Guarantor, such Tax Indemnitee shall control the contest of such claim, acting through counsel selected by such Tax Indemnitee and reasonably acceptable to the Guarantor. In no event shall the Guarantor be permitted to contest (or such Tax Indemnitee be required to contest) any claim, (A) if such Tax Indemnitee provides the Guarantor with a legal opinion of counsel reasonably acceptable to the Guarantor that such action, suit or proceeding involves a risk of imposition of criminal liability or will involve a material risk of the sale, forfeiture or loss of, or the creation of any Lien (other than a Permitted Lien) on the Property or any part thereof unless the Guarantor shall have posted and maintained a bond or other security reasonably satisfactory to the relevant Tax Indemnitee in respect to such risk, (B) if a Lease Event of Default has occurred and is continuing unless the Guarantor shall have posted and maintained a bond or other security reasonably satisfactory to the relevant Tax Indemnitee in respect of the Taxes subject to such claim and any and all expenses for which the Guarantor or the Lessee is responsible hereunder reasonably foreseeable in connection with the contest of such claim, (C) unless the Guarantor shall have agreed to pay and shall pay, to such Tax Indemnitee on written demand all reasonable, documented out-of-pocket costsmonetary damages that are caused by the Purchaser's failure to timely give the notice required pursuant to this Section 10.7(a).
(b) Seller will have the right, losses and expenses at its option, upon timely notice to Purchaser, to assume at its own expense control of any audit or other defense of any Tax Claim (other than a Tax Claim relating solely to Taxes of the Company for a Straddle Period, which as described below, the parties shall jointly control) with its own counsel, provided that Seller's notice acknowledges Seller's indemnification liability for such claim. Seller's right to control a Tax Claim will be limited to issues in respect of which amounts in dispute would be paid by Seller or for which Seller would be liable pursuant to Section 10.4. Costs of defending or contesting such Tax Indemnitee may incur in connection with contesting such Imposition including all reasonable legal, accounting and investigatory fees and disbursements and (if applicable) reasonable, allocable internal overhead costs determined in accordance with normal bank operating procedures, or (D) if such contest shall involve the payment of Claims are to be borne by Seller unless the Tax prior Claim relates to a Straddle Period, in which event such costs shall be fairly apportioned as described below. Purchaser and the contestCompany at their own expense each shall cooperate with Seller in contesting any Tax Claim, unless which cooperation shall include the Guarantor shall provide retention and, upon Seller's request, the provision of records and information that are reasonably relevant to such Tax Indemnitee an interest-free advance in an amount equal Claim and making employees available on a mutually convenient basis to provide additional information or explanation of any material provided hereunder. Notwithstanding the foregoing, Seller shall neither consent nor agree to the Imposition that such settlement of any Tax Indemnitee is required to pay (with no additional net after-tax costs to such Tax Indemnitee). In addition, for contests controlled by such Tax Indemnitee and claims contested in the name of such Tax Indemnitee in a public forum, no contest shall be required: (A) unless the amount of the potential indemnity (taking into account all similar or logically related claims that have been or could be raised in any audit involving any or all such Tax Indemnitees Claim with respect to any period liability for Taxes that may affect the liability for any state, federal or foreign income tax of the Company or any affiliated group (as defined in section 1504(a) of the Code) of which the Guarantor or the Lessee may be liable to pay an indemnity under this Section 13.4(b)) exceeds (1) with respect to the Lessor, $25,000 and (2) with respect to Company is a member for any Post-Closing Tax Indemnitee other than the Lessor, $75,000 and (B) unless, if requested by such Tax Indemnitee, the Guarantor shall have provided to such Tax Indemnitee an opinion of counsel selected by the Guarantor (which may be in-house counsel) (except, in the case of income taxes indemnified hereunder, in which case such opinion shall be an opinion of independent tax counsel selected by the Guarantor and reasonably acceptable to such Tax Indemnitee) that a reasonable basis exists to contest such claim. In no event shall a Tax Indemnitee be required to appeal an adverse judicial determination to the United States Supreme Court. The party conducting the contest shall consult in good faith with the other party and its counsel with respect to the contest of such claim for Taxes (or claim for refund) but the decisions regarding what actions to be taken shall be made by the controlling party in its sole judgment; provided, however, that if such Tax Indemnitee is the controlling party and the Guarantor recommends the acceptance of a settlement offer made by the relevant Governmental Authority and such Tax Indemnitee rejects such settlement offer, then the amount for which a Lessee and the Guarantor will be required to indemnify such Tax Indemnitee with respect to the Taxes subject to such offer shall not exceed the amount which it would have owed if such settlement offer had been accepted provided that any Tax Indemnitee shall be entitled to reject any indemnity payment it would otherwise be entitled to hereunder if such Tax Indemnitee reasonably determines that accepting such offer would have an unindemnified impact on such Tax Indemnitee and provided further that no Tax Indemnitee may reject any such indemnity payment if the Guarantor agrees to pay to such Tax Indemnitee the amount of such unindemnified impact, as reasonably determined by such Tax Indemnitee. In addition, the controlling party shall keep the noncontrolling party reasonably informed as to the progress of the contest, and shall provide the noncontrolling party with a copy of (or appropriate excerpts from) any reports or claims issued by the relevant auditing agents or taxing authority to the controlling party thereof, in connection with such claim or the contest thereof, provided, however, that such obligation shall not obligate any Tax Indemnitee to disclose its tax returns or information or documentation unrelated to such claim or contest. Each Tax Indemnitee shall, at the expense of the Lessee and the Guarantor, supply the Lessee or the Guarantor with such information and documents reasonably requested by the Lessee or the Guarantor as are necessary or advisable for such Person to participate in any action, suit or proceeding to the extent permitted by this Section 13.4(b); provided, however, that such Tax Indemnitee shall not be required to provide to such Lessee or the Guarantor copies of its tax returns or any other information, documentation, or materials that it deems to be confidential or proprietary. Notwithstanding anything in this Section 13.4(b) to the contrary, no Tax Indemnitee shall enter into any settlement or other compromise or fail to appeal an adverse ruling with respect to any claim which is entitled to be indemnified under this Section 13.4 (and with respect to which contest is required under this Section 13.4(b)) Period without the prior written consent of the GuarantorPurchaser, unless such Tax Indemnitee waives its right to be indemnified under this Section 13.4 with respect to such claim. Notwithstanding anything contained herein to the contrary, a Tax Indemnitee which consent shall not be required to contest (unreasonably withheld, conditioned or delayed, and neither Seller, nor any Affiliate of Seller, shall file an amended Tax Return that may increase the Lessee nor liability for Taxes of the Guarantor Company for any Post-Closing Tax Period without the prior written consent of Purchaser, which consent shall not be unreasonably withheld, conditioned or delayed. Purchaser and Seller shall jointly control all proceedings taken in connection with any Tax Claims relating solely to a Straddle Period of the Company and each party shall bear its own out-of-pocket costs and expenses of the contest and all joint costs and expenses of the contest shall be permitted to contest borne in any judicial forum if such contest could, in a the same ratio as the applicable proposed Tax Indemnitee's reasonable judgment, would be materially adverse to it) a claim with respect to the imposition of any Tax if such Tax Indemnitee shall have waived its right to indemnification under this Section 13.4 with respect to such claim (and any claim with respect to such year or any other taxable year the contest of which is precluded or materially adversely affected as a result of such waiver)allocated.
Appears in 1 contract
Contests. If (a) Nothing in this Agreement shall be construed to prevent UpREIT from contesting, through its Tax Matters Partner in accordance with the Partnership Agreement as part of the unified audit of the UpREIT, any claim shall be made against any Tax Indemnitee or if any proceeding shall be commenced against any Tax Indemnitee (including a written notice of such proceeding) for any Imposition as to which the Lessee or the Guarantor may have an indemnity obligation pursuant to this Section 13.4, or if any Tax Indemnitee shall determine that any Imposition to which the Lessee or the Guarantor may have an indemnity obligation pursuant to this Section 13.4 may be payable, such Tax Indemnitee shall promptly (and in any event, within fifteen (15) Business Days) notify the Guarantor in writing (provided that failure to so notify the Guarantor within fifteen (15) Business Days shall not alter such Tax Indemnitee's rights under this Section 13.4 except to the extent such failure precludes or materially adversely affects the ability to conduct a contest respect of any indemnified Taxes) and shall not take any action with respect to such claim, proceeding or Imposition without the written consent "partnership" item of the Guarantor UpREIT that, if successful, would result in an Income Inclusion (such consent not to a "Partnership Level Issue").
(b) If UpREIT contests a Partnership Level Issue that, if successful, would result in an Income Inclusion, UpREIT's liability for indemnification under Section 4 hereof (other than reasonable costs and expenses described in Section 6(f) of the Agreement) shall, at UpREIT's election, be unreasonably withheld or unreasonably delayed) for deferred until thirty (30) days after the receipt a Final Determination of such notice by the Guarantor; provided▇▇▇▇▇ Indemnitee's federal income tax liability in respect of an Income Inclusion.
(c) If any audit or proceeding involving an indemnifiable adjustment is being conducted in a proceeding involving such ▇▇▇▇▇ Indemnitee, however, that in the case of any such claim or proceeding, if such Tax Indemnitee shall which cannot be required by law or regulation to take action prior transferred to the end UpREIT as a partnership item (a "▇▇▇▇▇ Level Issue"), such ▇▇▇▇▇ Indemnitee hereby agrees (i) promptly to notify UpREIT in writing of such thirty adjustment (30) day period, and the failure of such Tax ▇▇▇▇▇ Indemnitee to so notify UpREIT shall in such notice preclude any indemnity hereunder to the Guarantor, so inform the Guarantorextent UpREIT's right to effect its contest rights hereunder has been precluded by such failure), and such Tax Indemnitee shall not take any action with respect (ii) upon UpREIT's delivery to such claim, proceeding or Imposition without the consent of the Guarantor (such consent not to be unreasonably withheld or unreasonably delayed) for ten (10) days after the receipt of such notice by the Guarantor unless such Tax Indemnitee shall be required by law or regulation to take action prior to the end of such ten (10) day period. The Guarantor shall be entitled for a period of thirty (30) days from receipt of such notice from such Tax Indemnitee (or such shorter period as such Tax Indemnitee has notified the Guarantor is required by law or regulation for such Tax Indemnitee to commence such contest), to request in writing that such Tax Indemnitee contest the imposition of such Tax, at the Guarantor's expense. If (x) such contest can be pursued in the name of the Guarantor or the Lessee and independently from any other proceeding involving a Tax liability of such Tax Indemnitee for which the Lessee and the Guarantor have not agreed to indemnify such Tax Indemnitee, (y) such contest must be pursued in the name of such Tax Indemnitee, but can be pursued independently from any other proceeding involving a Tax liability of such Tax Indemnitee for which the Lessee and the Guarantor have not agreed to indemnify such Tax Indemnitee or (z) such Tax Indemnitee so requests, then the Guarantor or such Lessee shall be permitted to control the contest of such claim, provided that in the case of a contest described in clause (y) if such Tax Indemnitee determines reasonably and in good faith that such contest by the Guarantor or the Lessee could have a material adverse impact on the business or operations of such Tax Indemnitee and provides a written explanation to the Guarantor of such determination, such Tax Indemnitee may elect to control or reassert control of the contest, and provided that the taking control by the Guarantor or the Lessee of any contest shall not alter the applicable Tax Indemnitee's rights to indemnification hereunder, and provided, further, that in determining the application of clauses (x) and (y) of the preceding sentence, each Tax Indemnitee shall take any and all reasonable steps to segregate claims for any Taxes for which the Lessee and the Guarantor indemnify hereunder from Taxes for which the Lessee and the Guarantor are not obligated to indemnify hereunder, so that the Guarantor can control the contest of the former. In all other claims requested to be contested by the Guarantor, such Tax Indemnitee shall control the contest of such claim, acting through counsel selected by such Tax Indemnitee and reasonably acceptable to the Guarantor. In no event shall the Guarantor be permitted to contest (or such Tax Indemnitee be required to contest) any claim, (A) if such Tax Indemnitee provides the Guarantor with a legal opinion of nationally recognized tax counsel reasonably acceptable to the Guarantor that such action, suit or proceeding involves a risk of imposition of criminal liability or will involve a material risk of the sale, forfeiture or loss of, or the creation of any Lien ▇▇▇▇▇ Indemnitee (other than a Permitted Lien"Tax Counsel") on the Property or any part thereof unless the Guarantor shall have posted and maintained a bond or other security reasonably satisfactory to the relevant Tax Indemnitee in respect to such risk, (B) if effect that there is a Lease Event Realistic Possibility of Default has occurred and is continuing unless the Guarantor shall have posted and maintained a bond or other security reasonably satisfactory to the relevant Tax Indemnitee in respect of the Taxes subject to such claim and any and all expenses for which the Guarantor or the Lessee is responsible hereunder reasonably foreseeable in connection with the Success upon contest of such claim▇▇▇▇▇ Level Issue, (C) unless such ▇▇▇▇▇ Indemnitee will contest that adjustment by filing a protest and administrative appeal and prosecuting the Guarantor shall have agreed to pay and shall pay, to such Tax Indemnitee on written demand all reasonable, documented out-of-pocket costs, losses and expenses that such Tax Indemnitee may incur in connection with contesting such Imposition including all reasonable legal, accounting and investigatory fees and disbursements and (if applicable) reasonable, allocable internal overhead costs determined in accordance with normal bank operating procedures, or (D) if such contest shall involve the payment of the Tax prior to the contest, unless the Guarantor shall provide to such Tax Indemnitee an interest-free advance in an amount equal to the Imposition that such Tax Indemnitee is required to pay (with no additional net after-tax costs to such Tax Indemnitee). In addition, for contests controlled by such Tax Indemnitee and claims contested in the name of such Tax Indemnitee in a public forum, no contest shall be required: (A) unless the amount of the potential indemnity (taking into account all similar or logically related claims that have been or could be raised in any audit involving any or all such Tax Indemnitees with respect to any period for which the Guarantor or the Lessee may be liable to pay an indemnity under this Section 13.4(b)) exceeds (1) with respect to the Lessor, $25,000 and (2) with respect to any Tax Indemnitee other than the Lessor, $75,000 and (B) unless, if requested by such Tax Indemnitee, the Guarantor shall have provided to such Tax Indemnitee an opinion of counsel selected by the Guarantor (which may be in-house counsel) (except, in the case of income taxes indemnified hereunder, in which case such opinion shall be an opinion of independent tax counsel selected by the Guarantor and reasonably acceptable to such Tax Indemnitee) that a reasonable basis exists to contest such claim. In no event shall a Tax Indemnitee be required to appeal an adverse judicial determination to the United States Supreme Court. The party conducting the contest shall consult same in good faith with the other party and its counsel with respect to the contest of such claim for Taxes (or claim for refund) but the decisions regarding what actions to be taken shall be made by the controlling party in its sole judgment; provided, however, that if such Tax Indemnitee is the controlling party and the Guarantor recommends the acceptance of a settlement offer made by the relevant Governmental Authority and such Tax Indemnitee rejects such settlement offer, then the amount for which a Lessee and the Guarantor will be required to indemnify such Tax Indemnitee with respect to the Taxes subject to such offer shall not exceed the amount which it would have owed if such settlement offer had been accepted provided that any Tax Indemnitee shall be entitled to reject any indemnity payment it would otherwise be entitled to hereunder if such Tax Indemnitee reasonably determines that accepting such offer would have an unindemnified impact on such Tax Indemnitee and provided further that no Tax Indemnitee may reject any such indemnity payment if the Guarantor agrees to pay to such Tax Indemnitee the amount of such unindemnified impact, as reasonably determined by such Tax Indemnitee. In addition, the controlling party shall keep the noncontrolling party reasonably informed as to the progress of the contest, and shall provide the noncontrolling party with a copy of (or appropriate excerpts from) any reports or claims issued by the relevant auditing agents or taxing authority to the controlling party thereof, in connection with such claim or the contest thereof, provided, however, that such obligation shall not obligate any Tax Indemnitee to disclose its tax returns or information or documentation unrelated to such claim or contest. Each Tax Indemnitee shall, at the expense of the Lessee and the Guarantor, supply the Lessee or the Guarantor with such information and documents reasonably requested by the Lessee or the Guarantor as are necessary or advisable for such Person to participate in any action, suit or proceeding to the extent permitted by this Section 13.4(b)faith; provided, however, that such Tax ▇▇▇▇▇ Indemnitee shall will not be required obligated to provide to pursue an administrative appeal if such Lessee ▇▇▇▇▇ Indemnitee instead pursues relief in Tax Court or a court having refund jurisdiction.
(d) If, within 30 days following the Guarantor copies failure of its tax returns or any other information, documentation, or materials that it deems to be confidential or proprietary. Notwithstanding anything in this Section 13.4(b) to the contrary, no Tax Indemnitee shall enter into any settlement or other compromise or fail to appeal an adverse ruling such administrative proceedings with respect to any claim which a ▇▇▇▇▇ Level Issue, UpREIT delivers to a ▇▇▇▇▇ Indemnitee a written opinion of Tax Counsel to the effect that there is entitled a Realistic Possibility of Success if the proposed adjustment is presented to be indemnified under this Section 13.4 a court for resolution, then such ▇▇▇▇▇ Indemnitee will contest the proposed adjustment in good faith in the Tax Court or by paying the tax (and with respect to which contest is required under this Section 13.4(b)any applicable interest and penalties) without and suing for refund in the prior written consent Court of the GuarantorFederal Claims or appropriate Federal District Court. If, unless within 30 days following a final adverse decision of such Tax Indemnitee waives its right to be indemnified under this Section 13.4 court with respect to such claim. Notwithstanding anything contained herein ▇▇▇▇▇ Level Issue, UpREIT delivers to such ▇▇▇▇▇ Indemnitee a written opinion of Tax Counsel to the contraryeffect that it is more likely than not that such decision would be reversed on appeal, then such ▇▇▇▇▇ Indemnitee will appeal such decision to the appropriate Federal Court of Appeals. With respect to any of the above-described proceedings, such ▇▇▇▇▇ Indemnitee will keep UpREIT and its counsel informed as to the progress of such proceedings, give UpREIT and its counsel the opportunity to review and comment in advance on all written submissions and filings relevant to indemnifiable issues (after making appropriate redactions to preserve the confidentiality of the such ▇▇▇▇▇ Indemnitee return as to other issues), and consider in good faith any suggestions made by UpREIT or its counsel.
(e) Such ▇▇▇▇▇ Indemnitee shall present any settlement offer provided to such ▇▇▇▇▇ Indemnitee pursuant to a ▇▇▇▇▇ Level Issue to UpREIT. If UpREIT recommends acceptance of a settlement offer of a ▇▇▇▇▇ Level Issue or if the Tax Matters Partner recommends acceptance of a settlement offer in respect of a Partnership Level Issue, but such ▇▇▇▇▇ Indemnitee declines to accept such offer in writing within 30 days (if such ▇▇▇▇▇ Indemnitee does not respond within 30 days, such lack of response shall be treated as acceptance of UpREIT's or the Tax Matters Partner's recommendation, respectively), (1) the obligation of UpREIT to make indemnity payments as the result of any such contest or proceedings shall not thereafter exceed the obligation that it would have had if such contest had been settled or proceeding terminated on the basis recommended by UpREIT or the Tax Matters Partner, as applicable, and (2) in the case of a ▇▇▇▇▇ Level Issue, UpREIT shall have no further liability for costs or other expenses in respect of such contest.
(f) Notwithstanding the foregoing, such ▇▇▇▇▇ Indemnitee will have no obligation to contest any action with respect to a ▇▇▇▇▇ Level Issue (i) unless such items could give rise to a federal income tax liability (disregarding other items in the assessment and considering effects in future years) in excess of $ __________ , (ii) without UpREIT paying when due, reasonable third-party costs and out-of-pocket expenses including reasonable legal, witness and accounting fees and other expenses and, in the case of proceedings before the Court of Federal Claims or Federal District Court, the amount of tax (and any applicable interest and penalties) for which refund is claimed, and (iii) to the extent such ▇▇▇▇▇ Indemnitee waives in writing UpREIT's obligation to indemnify such ▇▇▇▇▇ Indemnitee for such items, in which case all third-party costs and out-of-pocket expenses described in clause (ii) thereafter incurred and all taxes would be paid by such ▇▇▇▇▇ Indemnitee.
(g) such ▇▇▇▇▇ Indemnitee shall not settle any such ▇▇▇▇▇ Level Issue without UpREIT's consent; provided that such ▇▇▇▇▇ Indemnitee shall not be required to contest (any proposed adjustment and neither the Lessee nor the Guarantor shall be permitted to contest in may settle any judicial forum such proposed adjustment if such contest could, in a Tax Indemnitee's reasonable judgment, be materially adverse to it) a claim with respect to the imposition of any Tax if such Tax ▇▇▇▇▇ Indemnitee shall have waived waive its right to indemnification indemnity under this Section 13.4 Agreement with respect to such claim adjustment and any Income Inclusion that results from such adjustment and, in the case of proceedings before the Court of Federal Claims or Federal District Court, shall pay to UpREIT the amount of tax (and any claim applicable interest and penalties) previously paid or advanced by UpREIT with respect to such year adjustment or any other taxable year the contest of which is precluded such adjustment under Section 6(f), plus interest at ___% computed from the time such amounts were paid or materially adversely affected as advanced by UpREIT.
(h) Within thirty (30) days after a result Final Determination of the liability of such waiver▇▇▇▇▇ Indemnitee in respect of a ▇▇▇▇▇ Level Issue, UpREIT and each Indemnitee agree to pay each other, as applicable, the net amount of (i) the payment owed by the UpREIT to such ▇▇▇▇▇ Indemnitee of any indemnification hereunder, not theretofore paid resulting from the outcome of such contest, and (ii) in the case of proceedings before the Court of Federal Claims or Federal District Court, the repayment owed by such ▇▇▇▇▇ Indemnitee to UpREIT of the amount of tax (and any applicable interest and penalties) previously paid or advanced by UpREIT with respect to such adjustment or the contest of such adjustment under Section 6(f), together with any interest received by or credited to such ▇▇▇▇▇ Indemnitee that is attributable to such advance.
Appears in 1 contract
Contests. If any claim shall be made against any Tax Indemnitee or if any proceeding shall be commenced against any Tax Indemnitee (including a written notice of such proceeding) for any Imposition as to which the Lessee or the Guarantor may have an indemnity obligation pursuant to this Section 13.426.5, or if any Tax Indemnitee shall determine that any Imposition to which the Lessee or the Guarantor may have an indemnity obligation pursuant to this Section 13.4 26.5 may be payable, such Tax Indemnitee shall promptly (and in any event, within fifteen (15) Business Days30 days) notify the Guarantor Lessee in writing (provided that failure to so notify the Guarantor Lessee within fifteen (15) Business Days 30 days shall not alter such Tax Indemnitee's rights under this Section 13.4 26.5 except to the extent such failure precludes or materially adversely affects the ability to conduct a contest of any indemnified Taxes) and shall not take any action with respect to such claim, proceeding or Imposition without the written consent of the Guarantor Lessee (such consent not to be unreasonably withheld or unreasonably delayed) for thirty (30) 30 days after the receipt of such notice by the GuarantorLessee; provided, however, that in the case of any such claim or proceeding, if such Tax Indemnitee shall be required by law or regulation to take action prior to the end of such thirty (30) -day period, such Tax Indemnitee shall in such notice to the GuarantorLessee, so inform the GuarantorLessee, and such Tax Indemnitee shall not take any action with respect to such claim, proceeding or Imposition without the consent of the Guarantor Lessee (such consent not to be unreasonably withheld or unreasonably delayed) for ten (10) 10 days after the receipt of such notice by the Guarantor Lessee unless such the Tax Indemnitee shall be required by law or regulation to take action prior to the end of such ten (10) -day period. The Guarantor Lessee shall be entitled for a period of thirty (30) 30 days from receipt of such notice from such the Tax Indemnitee (or such shorter period as such the Tax Indemnitee has notified the Guarantor Lessee is required by law or regulation for such the Tax Indemnitee to commence such contest), to request in writing that such Tax Indemnitee contest the imposition of such Tax, at the GuarantorLessee's expense. If (x) such contest can be pursued in the name of the Guarantor or the Lessee and independently from any other proceeding involving a Tax liability of such Tax Indemnitee for which the Lessee and the Guarantor have has not agreed to indemnify such Tax Indemnitee, (y) such contest must be pursued in the name of such the Tax Indemnitee, but can be pursued independently from any other proceeding involving a Tax liability of such Tax Indemnitee for which the Lessee and the Guarantor have has not agreed to indemnify such Tax Indemnitee or (z) such the Tax Indemnitee so requests, then the Guarantor or such Lessee shall be permitted to control the contest of such claim, provided that in the case of a contest described in clause (y) ), if such the Tax Indemnitee determines reasonably and in good faith that such contest by the Guarantor or the Lessee could have a material adverse impact on the business or operations of such the Tax Indemnitee and provides a written explanation to the Guarantor Lessee of such determination, such the Tax Indemnitee may elect to control or reassert control of the contest, and provided provided, that the by taking control of the contest, Lessee acknowledges that it is responsible for the Imposition ultimately determined to be due by the Guarantor or the Lessee reason of any contest shall not alter the applicable Tax Indemnitee's rights to indemnification hereundersuch claim, and provided, further, that in determining the application of clauses (x) and (y) of the preceding sentence, each Tax Indemnitee shall take any and all reasonable steps to segregate claims for any Taxes for which the Lessee and the Guarantor indemnify indemnifies hereunder from Taxes for which the Lessee and the Guarantor are is not obligated to indemnify hereunder, so that the Guarantor Lessee can control the contest of the former. In all other claims requested to be contested by the GuarantorLessee, such the Tax Indemnitee shall control the contest of such claim, acting through counsel selected by such Tax Indemnitee and reasonably acceptable to the GuarantorLessee. In no event shall the Guarantor Lessee be permitted to contest (or such the Tax Indemnitee be required to contest) any claim, (A) if such Tax Indemnitee provides the Guarantor Lessee with a legal opinion of counsel reasonably acceptable to the Guarantor Lessee that such action, suit or proceeding involves a risk of imposition of criminal liability or will involve a material risk of the sale, forfeiture or loss of, or the creation of any Lien (other than a Permitted Lien or Lessor Lien) on the Property or any part of any thereof unless the Guarantor Lessee shall have posted and maintained a bond or other security reasonably satisfactory to the relevant Tax Indemnitee in respect to such risk, (B) if a Lease an Event of Default has occurred and is continuing unless the Guarantor Lessee shall have posted and maintained a bond or other security reasonably satisfactory to the relevant Tax Indemnitee in respect of the Taxes subject to such claim and any and all expenses for which the Guarantor or the Lessee is responsible hereunder reasonably foreseeable in connection with the contest of such claim, (C) unless the Guarantor Lessee shall have agreed to pay and shall pay, to such Tax Indemnitee on written within ten (10) Business Days after demand all reasonable, documented reasonable out-of-pocket costs, losses and expenses that such Tax Indemnitee may incur in connection with contesting such Imposition including all reasonable legal, accounting and investigatory fees and disbursements and (if applicable) reasonable, allocable internal overhead costs determined in accordance with normal bank operating proceduresdisbursements, or (D) if such contest shall involve the payment of the Tax prior to the contest, unless the Guarantor Lessee shall provide to such the Tax Indemnitee an interest-free advance in an amount equal to the Imposition that such Tax the Indemnitee is required to pay (with no additional net after-tax costs to such Tax Indemnitee). In addition, addition for contests controlled by such Tax Indemnitee controlled contests and claims contested in the name of such the Tax Indemnitee in a public forum, no contest shall be required: (A) unless the amount of the potential indemnity (taking into account all similar or logically related claims that have been or could be raised in any audit involving any or all such Tax Indemnitees with respect to any period Indemnitee for which the Guarantor or the Lessee may be liable to pay an indemnity under this Section 13.4(b26.5(b)) exceeds (1) with respect to the Lessor, $25,000 and (2) with respect to any Tax Indemnitee other than the Lessor, $75,000 500,000 and (B) unless, if requested by such the Tax Indemnitee, the Guarantor Lessee shall have provided to such the Tax Indemnitee an opinion of counsel selected by the Guarantor Lessee (which may be in-in- house counsel) (except, in the case of income taxes indemnified hereunder, in hereunder which case such opinion shall be an opinion of independent tax counsel selected by the Guarantor Tax Indemnitee and reasonably acceptable to such Tax Indemniteethe Lessee) that a reasonable basis exists to contest such claim. In no event shall a Tax Indemnitee be required to appeal an adverse judicial determination to the United States Supreme Court. The party conducting the contest shall consult in good faith with the other party and its counsel with respect to the contest of such claim for Taxes (or claim for refund) but the decisions regarding what actions to be taken shall be made by the controlling party in its sole judgment; judgement, provided, however, that if such the Tax Indemnitee is the controlling party and the Guarantor Lessee recommends the acceptance of a settlement offer made by the relevant Governmental Authority and such Tax Indemnitee rejects such settlement offer, offer then the amount for which a the Lessee and the Guarantor will be required to indemnify such Tax Indemnitee with respect to the Taxes subject to such offer shall not exceed the amount which it would have owed if such settlement offer had been accepted provided that any Tax Indemnitee shall be entitled to reject any indemnity payment it would otherwise be entitled to hereunder if such Tax Indemnitee reasonably determines that accepting such offer would have an unindemnified impact on such Tax Indemnitee and provided further that no Tax Indemnitee may reject any such indemnity payment if the Guarantor agrees to pay to such Tax Indemnitee the amount of such unindemnified impact, as reasonably determined by such Tax Indemniteeaccepted. In addition, the controlling party shall keep the noncontrolling party reasonably informed as to the progress of the contest, and shall provide the noncontrolling party with a copy of (or appropriate excerpts from) any reports or claims issued by the relevant auditing agents or taxing authority to the controlling party thereof, in connection with such claim or the contest thereof, provided, however, that such obligation shall not obligate any Tax Indemnitee to disclose its tax returns or information or documentation unrelated to such claim or contest. Each Tax Indemnitee shall, shall at the Lessee's expense of the Lessee and the Guarantor, supply the Lessee or the Guarantor with such information and documents reasonably requested by the Lessee or the Guarantor as are necessary or advisable for such Person the Lessee to participate in any action, suit or proceeding to the extent permitted by this Section 13.4(b26.5(b); provided, however, that such Tax Indemnitee shall not be required to provide to such Lessee or the Guarantor copies of its tax returns or any other information, documentation, or materials that it deems to be confidential or proprietary. Notwithstanding anything in this Section 13.4(b) to the contrary, no No Tax Indemnitee shall enter into any settlement or other compromise or fail to appeal an adverse ruling with respect to any claim which is entitled to be indemnified under this Section 13.4 26.5 (and with respect to which contest is required under this Section 13.4(b26.5(b)) without the prior written consent of the GuarantorLessee, unless such Tax Indemnitee waives its right to be indemnified under this Section 13.4 26.5 with respect to such claim. Notwithstanding anything contained herein to the contrary, a Tax Indemnitee shall will not be required to contest (and neither the Lessee nor the Guarantor shall not be permitted to contest in any judicial forum if such contest could, in a Tax Indemnitee's reasonable judgment, be materially adverse to itcontest) a claim with respect to the imposition of any Tax if such Tax Indemnitee shall have waived waive its right to indemnification under this Section 13.4 26.5 with respect to such claim (and any claim with respect to such year or any other taxable year the contest of which is precluded or materially adversely affected as a result of such waiver).
Appears in 1 contract
Contests. If The Sellers and their duly appointed representatives shall have the exclusive authority to control any claim shall be made against audit or examination by any Tax Indemnitee or if any proceeding shall be commenced against any Tax Indemnitee (including a written notice of such proceeding) for any Imposition as to which the Lessee or the Guarantor may have an indemnity obligation pursuant to this Section 13.4, or if any Tax Indemnitee shall determine that any Imposition to which the Lessee or the Guarantor may have an indemnity obligation pursuant to this Section 13.4 may be payable, such Tax Indemnitee shall promptly (and in any event, within fifteen (15) Business Days) notify the Guarantor in writing (provided that failure to so notify the Guarantor within fifteen (15) Business Days shall not alter such Tax Indemnitee's rights under this Section 13.4 except to the extent such failure precludes or materially adversely affects the ability to conduct a contest of any indemnified Taxes) and shall not take any action with respect to such claim, proceeding or Imposition without the written consent of the Guarantor (such consent not to be unreasonably withheld or unreasonably delayed) for thirty (30) days after the receipt of such notice by the Guarantor; provided, however, that in the case of any such claim or proceeding, if such Tax Indemnitee shall be required by law or regulation to take action prior to the end of such thirty (30) day period, such Tax Indemnitee shall in such notice to the Guarantor, so inform the Guarantor, and such Tax Indemnitee shall not take any action with respect to such claim, proceeding or Imposition without the consent of the Guarantor (such consent not to be unreasonably withheld or unreasonably delayed) for ten (10) days after the receipt of such notice by the Guarantor unless such Tax Indemnitee shall be required by law or regulation to take action prior to the end of such ten (10) day period. The Guarantor shall be entitled for a period of thirty (30) days from receipt of such notice from such Tax Indemnitee (or such shorter period as such Tax Indemnitee has notified the Guarantor is required by law or regulation for such Tax Indemnitee to commence such contest)taxing authority, to request in writing that such Tax Indemnitee contest the imposition of such Tax, at the Guarantor's expense. If (x) such contest can be pursued in the name of the Guarantor or the Lessee and independently from initiate any other proceeding involving a Tax liability of such Tax Indemnitee for which the Lessee and the Guarantor have not agreed to indemnify such Tax Indemnitee, (y) such contest must be pursued in the name of such Tax Indemnitee, but can be pursued independently from any other proceeding involving a Tax liability of such Tax Indemnitee for which the Lessee and the Guarantor have not agreed to indemnify such Tax Indemnitee or (z) such Tax Indemnitee so requests, then the Guarantor or such Lessee shall be permitted to control the contest of such claim, provided that in the case of a contest described in clause (y) if such Tax Indemnitee determines reasonably and in good faith that such contest by the Guarantor or the Lessee could have a material adverse impact on the business or operations of such Tax Indemnitee and provides a written explanation to the Guarantor of such determination, such Tax Indemnitee may elect to control or reassert control of the contest, and provided that the taking control by the Guarantor or the Lessee of any contest shall not alter the applicable Tax Indemnitee's rights to indemnification hereunder, and provided, further, that in determining the application of clauses (x) and (y) of the preceding sentence, each Tax Indemnitee shall take any and all reasonable steps to segregate claims for any Taxes for which the Lessee and the Guarantor indemnify hereunder from Taxes for which the Lessee and the Guarantor are not obligated to indemnify hereunder, so that the Guarantor can control the contest of the former. In all other claims requested to be contested by the Guarantor, such Tax Indemnitee shall control the contest of such claim, acting through counsel selected by such Tax Indemnitee and reasonably acceptable to the Guarantor. In no event shall the Guarantor be permitted to contest (or such Tax Indemnitee be required to contest) any claim, (A) if such Tax Indemnitee provides the Guarantor with a legal opinion of counsel reasonably acceptable to the Guarantor that such action, suit or proceeding involves a risk of imposition of criminal liability or will involve a material risk of the sale, forfeiture or loss of, or the creation of any Lien (other than a Permitted Lien) on the Property or any part thereof unless the Guarantor shall have posted and maintained a bond or other security reasonably satisfactory to the relevant Tax Indemnitee in respect to such risk, (B) if a Lease Event of Default has occurred and is continuing unless the Guarantor shall have posted and maintained a bond or other security reasonably satisfactory to the relevant Tax Indemnitee in respect of the Taxes subject to such claim and any and all expenses for which the Guarantor or the Lessee is responsible hereunder reasonably foreseeable in connection with the contest of such claim, (C) unless the Guarantor shall have agreed to pay and shall pay, to such Tax Indemnitee on written demand all reasonable, documented out-of-pocket costs, losses and expenses that such Tax Indemnitee may incur in connection with contesting such Imposition including all reasonable legal, accounting and investigatory fees and disbursements and (if applicable) reasonable, allocable internal overhead costs determined in accordance with normal bank operating procedures, or (D) if such contest shall involve the payment of the Tax prior to the contest, unless the Guarantor shall provide to such Tax Indemnitee an interest-free advance in an amount equal to the Imposition that such Tax Indemnitee is required to pay (with no additional net after-tax costs to such Tax Indemnitee). In addition, for contests controlled by such Tax Indemnitee and claims contested in the name of such Tax Indemnitee in a public forum, no contest shall be required: (A) unless the amount of the potential indemnity (taking into account all similar or logically related claims that have been or could be raised in any audit involving any or all such Tax Indemnitees with respect to any period for which the Guarantor or the Lessee may be liable to pay an indemnity under this Section 13.4(b)) exceeds (1) with respect to the Lessor, $25,000 and (2) with respect to any Tax Indemnitee other than the Lessor, $75,000 and (B) unless, if requested by such Tax Indemnitee, the Guarantor shall have provided to such Tax Indemnitee an opinion of counsel selected by the Guarantor (which may be in-house counsel) (except, in the case of income taxes indemnified hereunder, in which case such opinion shall be an opinion of independent tax counsel selected by the Guarantor and reasonably acceptable to such Tax Indemnitee) that a reasonable basis exists to contest such claim. In no event shall a Tax Indemnitee be required to appeal an adverse judicial determination to the United States Supreme Court. The party conducting the contest shall consult in good faith with the other party and its counsel with respect to the contest of such claim for Taxes (or claim for refund) but , to amend any Tax return and to contest, resolve and defend against any assessment for additional Taxes, notice of Tax deficiency or other adjustment of Taxes of or relating to any liability of the decisions regarding what actions to be taken shall be made by the controlling party in Target or its sole judgmentSubsidiaries for Taxes reflected on any Tax returns covering any Pre-Closing Periods; providedPROVIDED, howeverHOWEVER, that if such Tax Indemnitee is (a) neither the controlling party and the Guarantor recommends the acceptance Sellers nor any of a settlement offer made by the relevant Governmental Authority and such Tax Indemnitee rejects such settlement offer, then the amount for which a Lessee and the Guarantor will be required to indemnify such Tax Indemnitee with respect to the Taxes subject to such offer shall not exceed the amount which it would have owed if such settlement offer had been accepted provided that any Tax Indemnitee shall be entitled to reject any indemnity payment it would otherwise be entitled to hereunder if such Tax Indemnitee reasonably determines that accepting such offer would have an unindemnified impact on such Tax Indemnitee and provided further that no Tax Indemnitee may reject any such indemnity payment if the Guarantor agrees to pay to such Tax Indemnitee the amount of such unindemnified impact, as reasonably determined by such Tax Indemnitee. In addition, the controlling party shall keep the noncontrolling party reasonably informed as to the progress of the contest, and shall provide the noncontrolling party with a copy of (or appropriate excerpts from) any reports or claims issued by the relevant auditing agents or taxing authority to the controlling party thereof, in connection with such claim or the contest thereof, provided, however, that such obligation shall not obligate any Tax Indemnitee to disclose its tax returns or information or documentation unrelated to such claim or contest. Each Tax Indemnitee their duly appointed representatives shall, at the expense of the Lessee and the Guarantor, supply the Lessee or the Guarantor with such information and documents reasonably requested by the Lessee or the Guarantor as are necessary or advisable for such Person to participate in any action, suit or proceeding to the extent permitted by this Section 13.4(b); provided, however, that such Tax Indemnitee shall not be required to provide to such Lessee or the Guarantor copies of its tax returns or any other information, documentation, or materials that it deems to be confidential or proprietary. Notwithstanding anything in this Section 13.4(b) to the contrary, no Tax Indemnitee shall enter into any settlement or other compromise or fail to appeal an adverse ruling with respect to any claim which is entitled to be indemnified under this Section 13.4 (and with respect to which contest is required under this Section 13.4(b)) without the prior written consent of the GuarantorBuyer, which consent shall not be unreasonably withheld, file any claim for refund, amend any Tax return or enter into any settlement of any contest or otherwise compromise any issue that affects or may affect the Tax liability of the Buyer or any of its Affiliates for any Tax period beginning after the Closing Date (a "POST-CLOSING PERIOD") or any portion of an Overlap Period beginning after the Closing Date, and (b) neither the Sellers nor any of their duly appointed representatives shall, without the prior consent of the Buyer, which consent shall not unreasonably be withheld, enter into any settlement of any contest or otherwise compromise any issue that would increase any liability accruals for Taxes as of the Closing Date or would otherwise require payment by the Buyer of any amount under Section 9.3 unless the Sellers shall have agreed to indemnify the Buyer for payment of such Taxes. Buyer and its duly appointed representatives shall have the exclusive authority to control any audit or other proceeding relating to Taxes for any taxable year or other taxable period ending after the Closing Date; PROVIDED, HOWEVER, that (a) neither Buyer, the Target nor any of their duly appointed representatives shall, without the prior written consent of the Sellers, which consent shall not be unreasonably withheld, enter into any settlement of any contest or otherwise compromise any issue that affects or may affect the Tax liability of the Sellers or any of their affiliates for any Pre-Closing Period or any portion of the Overlap Period ending on the Closing Date, and (b) neither Buyer, the Target nor any of their duly appointed representatives shall, without the prior consent of the Sellers, which consent shall not unreasonably be withheld, enter into any settlement of any contest or otherwise compromise any issue that would reduce any liability accruals for Taxes as of the Closing Date or would otherwise require payment by the Sellers of any amount under Section 9.3 unless Buyer shall have waived or caused to be waived for itself and the Target any right to indemnification for Taxes from the Sellers. The Sellers shall be entitled to any Tax refund relating to the Target and its Subsidiaries to the extent such Tax refund relates to any Pre-Closing Period or any portion of the Overlap Period ending on the Closing Date, unless such Tax Indemnitee waives its right to be indemnified under this Section 13.4 with respect to such claim. Notwithstanding anything contained herein to refund has been recorded as an Asset on the contrary, a Tax Indemnitee shall not be required to contest (and neither the Lessee nor the Guarantor Closing Balance Sheet in which case Buyer shall be permitted to contest in any judicial forum if such contest could, in a Tax Indemnitee's reasonable judgment, be materially adverse to it) a claim with respect to the imposition of any Tax if such Tax Indemnitee shall have waived its right to indemnification under this Section 13.4 with respect to such claim (and any claim with respect to such year or any other taxable year the contest of which is precluded or materially adversely affected as a result of such waiver)entitled thereto.
Appears in 1 contract
Contests. If any claim shall be or claims is or are made against any Tax Indemnitee or if any proceeding shall be commenced against for any Tax which is subject to indemnification as provided in Section 7.2(a), such Indemnitee shall as soon as practicable, but in no event more than thirty (including a 30) days after receipt of formal written notice of such proceeding) for any Imposition as to which the Tax or proposed Tax, notify the Lessee or the Guarantor may have an indemnity obligation pursuant to this Section 13.4, or if any Tax Indemnitee shall determine that any Imposition to which the Lessee or the Guarantor may have an indemnity obligation pursuant to this Section 13.4 may be payable, such Tax Indemnitee shall promptly (and in any event, within fifteen (15) Business Days) notify the Guarantor in writing (provided that failure to so notify the Guarantor within fifteen (15) Business Days shall not alter such Tax Indemnitee's rights under this Section 13.4 except to the extent such failure precludes or materially adversely affects the ability to conduct a contest of any indemnified Taxes) and shall not take any action with respect to such claim, proceeding or Imposition Tax without the written consent of the Guarantor Lessee (such consent not to be unreasonably withheld withheld, conditioned or unreasonably delayed) for thirty (30) days after the receipt of such notice by the GuarantorLessee; provided, however, that in the case of any such claim or proceedingTax, if such Tax Indemnitee action shall be required by law or regulation Applicable Law to take action be taken prior to the end of such period of thirty (30) day perioddays, such Tax Indemnitee shall shall, in such notice to the GuarantorLessee, so inform the GuarantorLessee of such shorter period, and such Tax Indemnitee no action shall not take any action be taken with respect to such claim, proceeding or Imposition Tax without the consent of the Guarantor Lessee (such consent not to be unreasonably withheld withheld, conditioned or unreasonably delayed) for ten before seven (107) days after the receipt of such notice by the Guarantor unless such Tax Indemnitee shall be required by law or regulation to take action prior to before the end of such ten (10) day shorter period. The Guarantor shall be entitled for If, in the good faith opinion of the Lessee there exists a period of thirty (30) days from receipt of such notice from reasonable basis to contest such Tax Indemnitee (or such shorter period as such Tax Indemnitee has notified and if the Guarantor is required by law or regulation for such Tax Indemnitee provisos of the definition of “Permitted Contest” continue to commence such contestbe satisfied), the Lessee at its expense may, to request the extent permitted by Applicable Laws and provided that it has acknowledged in writing that such its liability for the Tax Indemnitee at issue if the contest the imposition of is not successful, contest such Tax, at the Guarantor's expense. If (x) such contest can be pursued in the name of the Guarantor or the Lessee and independently from subsequently may appeal any other proceeding involving a Tax liability of such Tax Indemnitee for which the Lessee and the Guarantor have not agreed to indemnify such Tax Indemnitee, (y) such contest must be pursued in the name of such Tax Indemnitee, but can be pursued independently from any other proceeding involving a Tax liability of such Tax Indemnitee for which the Lessee and the Guarantor have not agreed to indemnify such Tax Indemnitee or (z) such Tax Indemnitee so requests, then the Guarantor or such Lessee shall be permitted to control the contest of such claim, provided that in the case of a contest described in clause (y) if such Tax Indemnitee determines reasonably and in good faith that such contest by the Guarantor or the Lessee could have a material adverse impact on the business or operations of such Tax Indemnitee and provides a written explanation to the Guarantor of such determination, such Tax Indemnitee may elect to control or reassert control of the contest, and provided that the taking control by the Guarantor or the Lessee of any contest shall not alter the applicable Tax Indemnitee's rights to indemnification hereunder, and provided, further, that in determining the application of clauses (x) and (y) of the preceding sentence, each Tax Indemnitee shall take any and all reasonable steps to segregate claims for any Taxes for which the Lessee and the Guarantor indemnify hereunder from Taxes for which the Lessee and the Guarantor are not obligated to indemnify hereunder, so that the Guarantor can control the contest of the former. In all other claims requested to be contested by the Guarantor, such Tax Indemnitee shall control the contest of such claim, acting through counsel selected by such Tax Indemnitee and reasonably acceptable to the Guarantor. In no event shall the Guarantor be permitted to contest (or such Tax Indemnitee be required to contest) any claim, (A) if such Tax Indemnitee provides the Guarantor with a legal opinion of counsel reasonably acceptable to the Guarantor that such action, suit or proceeding involves a risk of imposition of criminal liability or will involve a material risk of the sale, forfeiture or loss of, or the creation of any Lien determination (other than a Permitted Lien) on the Property or any part thereof unless the Guarantor shall have posted and maintained a bond or other security reasonably satisfactory to the relevant Tax Indemnitee in respect to such risk, (B) if a Lease Event of Default has occurred and is continuing unless the Guarantor shall have posted and maintained a bond or other security reasonably satisfactory to the relevant Tax Indemnitee in respect of the Taxes subject to such claim and any and all expenses for which the Guarantor or the Lessee is responsible hereunder reasonably foreseeable in connection with the contest of such claim, (C) unless the Guarantor shall have agreed to pay and shall pay, to such Tax Indemnitee on written demand all reasonable, documented out-of-pocket costs, losses and expenses that such Tax Indemnitee may incur in connection with contesting such Imposition including all reasonable legal, accounting and investigatory fees and disbursements and (if applicable) reasonable, allocable internal overhead costs determined in accordance with normal bank operating procedures, or (D) if such contest shall involve the payment of the Tax prior to the contest, unless the Guarantor shall provide to such Tax Indemnitee an interest-free advance in an amount equal to the Imposition that such Tax Indemnitee is required to pay (with no additional net after-tax costs to such Tax Indemnitee). In addition, for contests controlled by such Tax Indemnitee and claims contested in the name of such Tax Indemnitee in a public forum, no contest shall be required: (A) unless the amount of the potential indemnity (taking into account all similar or logically related claims that have been or could be raised in any audit involving any or all such Tax Indemnitees with respect to any period for which the Guarantor or the Lessee may be liable to pay an indemnity under this Section 13.4(b)) exceeds (1) with respect to the Lessor, $25,000 and (2) with respect to any Tax Indemnitee other than the Lessor, $75,000 and (B) unless, if requested by such Tax Indemnitee, the Guarantor shall have provided to such Tax Indemnitee an opinion of counsel selected by the Guarantor (which may be in-house counsel) (except, in the case of income taxes indemnified hereunder, in which case such opinion shall be an opinion of independent tax counsel selected by the Guarantor and reasonably acceptable to such Tax Indemnitee) that a reasonable basis exists to contest such claim. In no event shall a Tax Indemnitee be required to appeal an adverse judicial determination to the United States Supreme Court. The party conducting ), in the contest shall consult in good faith with the other party appropriate administrative and its counsel with respect to the contest of such claim for Taxes (or claim for refund) but the decisions regarding what actions to be taken shall be made by the controlling party in its sole judgmentlegal forums; provided, howeverthat in all other circumstances, upon notice from the Lessee to such Indemnitee that if there exists a reasonable basis to contest any such Tax Indemnitee is or, in the controlling party and case of an appeal of adverse judicial determination, the Guarantor recommends the acceptance position asserted in such appeal will more likely than not prevail (in each case, as supported by an opinion of a settlement offer made by the relevant Governmental Authority and such Tax Indemnitee rejects such settlement offer, then the amount for which a Lessee and the Guarantor will be required to indemnify such Tax Indemnitee with respect tax counsel to the Taxes subject Lessee reasonably acceptable to such offer shall not exceed the amount which it would have owed if such settlement offer had been accepted provided that any Tax Indemnitee shall be entitled to reject any indemnity payment it would otherwise be entitled to hereunder if such Tax Indemnitee reasonably determines that accepting such offer would have an unindemnified impact on such Tax Indemnitee and provided further that no Tax Indemnitee may reject any such indemnity payment if the Guarantor agrees to pay to such Tax Indemnitee the amount of such unindemnified impact, as reasonably determined by such Tax Indemnitee. In addition), the controlling party shall keep the noncontrolling party reasonably informed as to the progress of the contest, and shall provide the noncontrolling party with a copy of (or appropriate excerpts from) any reports or claims issued by the relevant auditing agents or taxing authority to the controlling party thereof, in connection with such claim or the contest thereof, provided, however, that such obligation shall not obligate any Tax Indemnitee to disclose its tax returns or information or documentation unrelated to such claim or contest. Each Tax Indemnitee shallIndemnitee, at the expense Lessee’s expense, shall contest any such Tax (so long as the provisos of the definition of “Permitted Contest” continue to be satisfied and, in the case of a Tax on gross or net income, the aggregate amount of the Tax exceeds $50,000, which amount shall be verified and certified by an independent public accounting firm mutually acceptable to the Lessee and the Guarantorapplicable Indemnitee in accordance with Section 7.2(a)(v). The Lessee shall pay all out-of-pocket expenses incurred by the Indemnitee in contesting any such Tax (including, supply without limitation, all reasonable attorney’s and accountants’ fees and expenses), upon demand by the Indemnitee. The Lessee or shall have the Guarantor with right to participate in the conduct of any proceedings controlled by the Indemnitee to the extent that such information and documents reasonably requested participation by the Lessee or does not interfere with the Guarantor as are necessary or advisable for Indemnitee’s control of such Person to participate contest and the Lessee shall in any actionall events be kept informed, suit or proceeding to the extent permitted by this Section 13.4(b); providedpracticable, however, that such Tax Indemnitee shall not be required of material developments relative to provide to such Lessee or the Guarantor copies of its tax returns or any other information, documentation, or materials that it deems to be confidential or proprietary. Notwithstanding anything in this Section 13.4(b) to the contrary, no Tax Indemnitee shall enter into any settlement or other compromise or fail to appeal an adverse ruling with respect to any claim which is entitled to be indemnified under this Section 13.4 (and with respect to which contest is required under this Section 13.4(b)) without the prior written consent of the Guarantor, unless such Tax Indemnitee waives its right to be indemnified under this Section 13.4 with respect to such claim. Notwithstanding anything contained herein to the contrary, a Tax Indemnitee shall not be required to contest (and neither the Lessee nor the Guarantor shall be permitted to contest in any judicial forum if such contest could, in a Tax Indemnitee's reasonable judgment, be materially adverse to it) a claim with respect to the imposition of any Tax if such Tax Indemnitee shall have waived its right to indemnification under this Section 13.4 with respect to such claim (and any claim with respect to such year or any other taxable year the contest of which is precluded or materially adversely affected as a result of such waiver).such
Appears in 1 contract
Contests. If In respect of the indemnification provided under Section 7.1(a) or Section 7.8, promptly after receipt by an Indemnitee of notice of any pending or threatened Claim, such Indemnitee shall, if a claim shall in respect thereof is to be made against Lessee, give notice thereof to Lessee. So long as no Lease Event of Default is continuing, Lessee, at its own expense, may elect to assume the defense of any Tax Indemnitee or if any proceeding such Claim through its own counsel, which shall be commenced against any Tax subject to the reasonable approval of the Required Participants, on behalf of the Indemnitee (including a written notice with full right of such proceeding) for any Imposition as subrogation to which the Lessee or the Guarantor may have an indemnity obligation pursuant to this Section 13.4, or if any Tax Indemnitee shall determine that any Imposition to which the Lessee or the Guarantor may have an indemnity obligation pursuant to this Section 13.4 may be payable, such Tax Indemnitee shall promptly (and in any event, within fifteen (15) Business Days) notify the Guarantor in writing (provided that failure to so notify the Guarantor within fifteen (15) Business Days shall not alter such Tax Indemnitee's rights under this Section 13.4 except and defenses). Lessee must indicate its election to the extent assume such failure precludes or materially adversely affects the ability to conduct a contest of any indemnified Taxes) and shall not take any action with respect to such claim, proceeding or Imposition without the defense by written consent of the Guarantor (such consent not to be unreasonably withheld or unreasonably delayed) for thirty (30) days after the receipt of such notice by the Guarantor; provided, however, that in the case of any such claim or proceeding, if such Tax Indemnitee shall be required by law or regulation to take action prior to the end of such thirty (30) day period, such Tax Indemnitee shall in such notice to the Guarantor, so inform the Guarantor, and such Tax Indemnitee shall not take any action with respect to such claim, proceeding or Imposition without the consent within 90 days following receipt of Indemnitee's notice of the Guarantor (such consent not to be unreasonably withheld Claim, or unreasonably delayed) for ten (10) days after the receipt of such notice by the Guarantor unless such Tax Indemnitee shall be required by law or regulation to take action prior to the end of such ten (10) day period. The Guarantor shall be entitled for a period of thirty (30) days from receipt of such notice from such Tax Indemnitee (or such shorter period as such Tax Indemnitee has notified the Guarantor is required by law or regulation for such Tax Indemnitee to commence such contest), to request in writing that such Tax Indemnitee contest the imposition of such Tax, at the Guarantor's expense. If (x) such contest can be pursued in the name of the Guarantor or the Lessee and independently from any other proceeding involving a Tax liability of such Tax Indemnitee for which the Lessee and the Guarantor have not agreed to indemnify such Tax Indemnitee, (y) such contest must be pursued in the name of such Tax Indemnitee, but can be pursued independently from any other proceeding involving a Tax liability of such Tax Indemnitee for which the Lessee and the Guarantor have not agreed to indemnify such Tax Indemnitee or (z) such Tax Indemnitee so requests, then the Guarantor or such Lessee shall be permitted to control the contest of such claim, provided that in the case of a contest described third party claim which requires a shorter time for response then within such shorter period as specified in clause (y) if such Tax Indemnitee determines reasonably and in good faith the Indemnitee's notice of Claim provided that such contest by the Guarantor Indemnitee has given Lessee notice thereof. If Lessee denies liability or the Lessee could have a material adverse impact on the business or operations of such Tax Indemnitee and provides a written explanation fails to respond to the Guarantor of such determinationnotice within the time period set forth above, such Tax the Indemnitee may elect defend or compromise the Claim as it deems appropriate without prejudice to control or reassert control any of the contest, and provided that the taking control by the Guarantor or the Lessee of any contest shall not alter the applicable Tax Indemnitee's rights hereunder and with no further obligation to indemnification hereunder, and provided, further, that in determining the application of clauses (x) and (y) inform Lessee of the preceding sentencestatus of the Claim and no right of Lessee to approve or disapprove any actions taken in connection therewith by the Indemnitee. If Lessee shall have elected to assume the defense of any such Claim, each Tax then upon the request of Lessee, the Indemnitee requesting payment of indemnity under Section 7.1(a) or Section 7.8 shall take promptly furnish Lessee with copies of any and all reasonable steps records or documents pertaining to segregate claims for any Taxes for which the Lessee matter to be indemnified and, to the extent known by such Indemnitee, a reasonably detailed explanation of the circumstances giving rise to the claim of indemnification and the Guarantor indemnify hereunder from Taxes for which the Lessee and the Guarantor are not obligated to indemnify hereunder, so that the Guarantor can control the contest determination of the former. In all other claims requested to be contested by the Guarantor, such Tax Indemnitee shall control the contest of such claim, acting through counsel selected by such Tax Indemnitee and reasonably acceptable to the Guarantor. In no event shall the Guarantor be permitted to contest (or such Tax Indemnitee be required to contest) any claim, (A) if such Tax Indemnitee provides the Guarantor with a legal opinion of counsel reasonably acceptable to the Guarantor that such action, suit or proceeding involves a risk of imposition of criminal liability or will involve a material risk amount of the sale, forfeiture or loss of, or the creation requested indemnity payment. Upon payment in full to Indemnitee of any Lien (other than a Permitted Lienindemnity pursuant to Section 7.1(a) on the Property or Section 7.8, Lessee shall be subrogated to any part thereof unless the Guarantor shall have posted and maintained a bond or other security reasonably satisfactory to the relevant Tax Indemnitee in respect to such risk, (B) if a Lease Event right of Default has occurred and is continuing unless the Guarantor shall have posted and maintained a bond or other security reasonably satisfactory to the relevant Tax Indemnitee in respect of the Taxes subject to matter against which such claim and any and all expenses for which the Guarantor or the indemnity has been paid. If Lessee is responsible hereunder reasonably foreseeable in connection with the contest of such claim, (C) unless the Guarantor shall have agreed elected to pay and shall pay, to such Tax Indemnitee on written demand all reasonable, documented out-of-pocket costs, losses and expenses that such Tax Indemnitee may incur in connection with contesting such Imposition including all reasonable legal, accounting and investigatory fees and disbursements and (if applicable) reasonable, allocable internal overhead costs determined in accordance with normal bank operating procedures, or (D) if such contest shall involve assume the payment defense of the Tax prior to the contest, unless the Guarantor shall provide to such Tax Indemnitee an interest-free advance in an amount equal to the Imposition that such Tax Indemnitee is required to pay (with no additional net after-tax costs to such Tax Indemnitee). In addition, for contests controlled by such Tax Indemnitee and claims contested in the name of such Tax Indemnitee in a public forum, no contest shall be required: (A) unless the amount of the potential indemnity (taking into account all similar or logically related claims that have been or could be raised in any audit involving any or all such Tax Indemnitees with respect to any period for which the Guarantor or the Lessee may be liable to pay an indemnity under this Section 13.4(b)) exceeds (1) with respect to the Lessor, $25,000 and (2) with respect to any Tax Indemnitee other than the Lessor, $75,000 and (B) unless, if requested by such Tax Indemnitee, the Guarantor shall have provided to such Tax Indemnitee an opinion of counsel selected by the Guarantor (which may be in-house counsel) (except, in the case of income taxes indemnified hereunder, in which case such opinion shall be an opinion of independent tax counsel selected by the Guarantor and reasonably acceptable to such Tax Indemnitee) that a reasonable basis exists to contest such claim. In no event shall a Tax Indemnitee be required to appeal an adverse judicial determination to the United States Supreme Court. The party conducting the contest shall consult in good faith with the other party and its counsel with respect to the contest of such claim for Taxes (or claim for refund) but the decisions regarding what actions to be taken shall be made by the controlling party in its sole judgment; provided, however, that if such Tax Indemnitee is the controlling party and the Guarantor recommends the acceptance of a settlement offer made by the relevant Governmental Authority and such Tax Indemnitee rejects such settlement offer, then the amount for which a Lessee and the Guarantor will be required to indemnify such Tax Indemnitee with respect to the Taxes subject to such offer shall not exceed the amount which it would have owed if such settlement offer had been accepted provided that any Tax Indemnitee shall be entitled to reject any indemnity payment it would otherwise be entitled to hereunder if such Tax Indemnitee reasonably determines that accepting such offer would have an unindemnified impact on such Tax Indemnitee and provided further that no Tax Indemnitee may reject any such indemnity payment if Claim, upon the Guarantor agrees written request at any time and from time to pay to such Tax Indemnitee the amount time of such unindemnified impactLessee, as reasonably determined by such Tax Indemnitee. In addition, the controlling party shall keep the noncontrolling party reasonably informed as to the progress of the contest, and shall provide the noncontrolling party with a copy of (or appropriate excerpts from) any reports or claims issued by the relevant auditing agents or taxing authority to the controlling party thereof, in connection with such claim or the contest thereof, provided, however, that such obligation shall not obligate any Tax Indemnitee to disclose its tax returns or information or documentation unrelated to such claim or contest. Each Tax Indemnitee shall, at the expense of the Lessee Lessee, take such reasonable actions and the Guarantor, supply the Lessee or the Guarantor with execute such information and documents reasonably requested by the Lessee or the Guarantor as are necessary or advisable for reasonably appropriate to assist Lessee in the preservation and enforcement against third parties of Lessee's right of subrogation hereunder. The Indemnitee may employ separate counsel at its expense in any such Person to Claim and participate in any actionthe defense thereof, suit or proceeding to but the extent permitted fees and expenses of such counsel shall be at the expense of the Indemnitee unless the Indemnitee shall have been advised by this Section 13.4(b); providedits counsel that there exists a conflict of interest in such counsel's representation of the Indemnitee and the Lessee, it being understood, however, that Lessee shall not, in connection with any one action or separate but substantially similar or related actions in the same jurisdiction arising out of the same general allegations or circumstances, be liable for the reasonable fees and expenses of more than one separate firm of attorneys (in addition to any local counsel) for the Indemnitees, and such Tax Indemnitee firm shall be designated in writing by the Indemnitees. All fees and expenses shall be paid periodically as incurred. Lessee shall not be required liable for any settlement of any such Claim effected without its consent unless Lessee shall elect in writing not to provide assume the defense thereof in which case the Indemnitee, without waiving any rights to indemnification hereunder, may defend such Lessee or the Guarantor copies of its tax returns or any other information, documentation, or materials that it deems to be confidential or proprietary. Notwithstanding anything in this Section 13.4(b) to the contrary, no Tax Indemnitee shall Claim and enter into any good faith settlement or other compromise or fail to appeal an adverse ruling with respect to any claim which is entitled to be indemnified under this Section 13.4 (and with respect to which contest is required under this Section 13.4(b)) thereof without the prior written consent of Lessee. Lessee shall not, without the Guarantorprior written consent (not to be unreasonably withheld) of the Indemnitee, effect any settlement of any such Claim unless such Tax settlement includes an unconditional release of the Indemnitee waives its right from all liabilities that are the subject of such Claim. The parties agree to be indemnified under this Section 13.4 with respect to such claim. Notwithstanding anything contained herein to the contrary, a Tax Indemnitee shall not be required to contest (and neither the Lessee nor the Guarantor shall be permitted to contest cooperate in any judicial forum if such contest could, in a Tax Indemnitee's reasonable judgment, be materially adverse to it) a claim with respect to the imposition defense or settlement of any Tax if such Tax Indemnitee shall have waived its right Claim and to indemnification under this Section 13.4 with respect give each other reasonable access to such claim (and all information relevant thereto subject to appropriate confidentiality agreements. The parties will similarly cooperate in the prosecution of any claim with respect to such year or lawsuit against any other taxable year the contest of which is precluded or materially adversely affected as a result of such waiver)third party.
Appears in 1 contract
Contests. If any claim shall be made against any Tax Indemnitee or if any proceeding shall be commenced against any Tax Indemnitee (including a written notice of such proceeding) for any Imposition as to which the Lessee or the Guarantor may have an indemnity obligation pursuant to this Section 13.426.5, or if any Tax Indemnitee shall determine that any Imposition to which the Lessee or the Guarantor may have an indemnity obligation pursuant to this Section 13.4 26.5 may be payable, such Tax Indemnitee shall promptly (and in any event, within fifteen (15) Business Days30 days) notify the Guarantor Lessee in writing (provided that failure to so notify the Guarantor Lessee within fifteen (15) Business Days 30 days shall not alter such Tax Indemnitee's rights under this Section 13.4 26.5 except to the extent such failure precludes or materially adversely affects the ability to conduct a contest of any indemnified Taxes) and shall not take any action with respect to such claim, proceeding or Imposition without the written consent of the Guarantor Lessee (such consent not to be unreasonably withheld or unreasonably delayed) for thirty (30) 30 days after the receipt of such notice by the GuarantorLessee; provided, however, that in the case of any such claim or proceeding, if such Tax Indemnitee shall be required by law or regulation to take action prior to the end of such thirty (30) -day period, such Tax Indemnitee shall in such notice to the GuarantorLessee, so inform the GuarantorLessee, and such Tax Indemnitee shall not take any action with respect to such claim, proceeding or Imposition without the consent of the Guarantor Lessee (such consent not to be unreasonably withheld or unreasonably delayed) for ten (10) 10 days after the receipt of such notice by the Guarantor Lessee unless such the Tax Indemnitee shall be required by law or regulation to take action prior to the end of such ten (10) -day period. The Guarantor Lessee shall be entitled for a period of thirty (30) 30 days from receipt of such notice from such the Tax Indemnitee (or such shorter period as such the Tax Indemnitee has notified the Guarantor Lessee is required by law or regulation for such the Tax Indemnitee to commence such contest), to request in writing that such Tax Indemnitee contest the imposition of such Tax, at the GuarantorLessee's expense. If (x) such contest can be pursued in the name of the Guarantor or the Lessee and independently from any other proceeding involving a Tax liability of such Tax Indemnitee for which the Lessee and the Guarantor have has not agreed to indemnify such Tax Indemnitee, (y) such contest must be pursued in the name of such the Tax Indemnitee, but can be pursued independently from any other proceeding involving a Tax liability of such Tax Indemnitee for which the Lessee and the Guarantor have has not agreed to indemnify such Tax Indemnitee or (z) such the Tax Indemnitee so requests, then the Guarantor or such Lessee shall be permitted to control the contest of such claim, provided that in the case of a contest described in clause (y) ), if such the Tax Indemnitee determines reasonably and in good faith that such contest by the Guarantor or the Lessee could have a material adverse impact on the business or operations of such the Tax Indemnitee and provides a written explanation to the Guarantor Lessee of such determination, such the Tax Indemnitee may elect to control or reassert control of the contest, and provided provided, that the by taking control of the contest, Lessee acknowledges that it is responsible for the Imposition ultimately determined to be due by the Guarantor or the Lessee reason of any contest shall not alter the applicable Tax Indemnitee's rights to indemnification hereundersuch claim, and provided, further, that in determining the application of clauses (x) and (y) of the preceding this sentence, each Tax Indemnitee shall take any and all reasonable steps to segregate claims for any Taxes for which the Lessee and the Guarantor indemnify indemnifies hereunder from Taxes for which the Lessee and the Guarantor are is not obligated to indemnify hereunder, so that the Guarantor Lessee can control the contest of the former. In all other claims requested to be contested by the GuarantorLessee, such the Tax Indemnitee shall control the contest of such claim, acting through counsel selected by such Tax Indemnitee and reasonably acceptable to the GuarantorLessee. In no event shall the Guarantor Lessee be permitted to contest (or such the Tax Indemnitee be required to contest) any claim, (A) if such Tax Indemnitee provides the Guarantor Lessee with a legal opinion of counsel reasonably acceptable to the Guarantor Lessee that such action, suit or proceeding involves a risk of imposition of criminal liability or will involve a material risk of the sale, forfeiture or loss of, or the creation of any Lien (other than a Permitted Lien or Lessor Lien) on the Property or any part of any thereof unless the Guarantor Lessee shall have posted and maintained a bond or other security reasonably satisfactory to the relevant Tax Indemnitee in respect to such risk, (B) if a Lease an Event of Default has occurred and is continuing unless the Guarantor Lessee shall have posted and maintained a bond or other security reasonably satisfactory to the relevant Tax Indemnitee in respect of the Taxes subject to such claim and any and all expenses for which the Guarantor or the Lessee is responsible hereunder reasonably foreseeable in connection with the contest of such claim, (C) unless the Guarantor Lessee shall have agreed to pay and shall pay, to such Tax Indemnitee on written within ten (10) Business Days after demand all reasonable, documented reasonable out-of-pocket costs, losses and expenses that such Tax Indemnitee may incur in connection with contesting such Imposition including all reasonable legal, accounting and investigatory fees and disbursements and (if applicable) reasonable, allocable internal overhead costs determined in accordance with normal bank operating proceduresdisbursements, or (D) if such contest shall involve the payment of the Tax prior to the contest, unless the Guarantor Lessee shall provide to such the Tax Indemnitee an interest-free advance in an amount equal to the Imposition that such Tax the Indemnitee is required to pay (with no additional net after-tax costs to such Tax Indemnitee). In addition, addition for contests controlled by such Tax Indemnitee controlled contests and claims contested in the name of such the Tax Indemnitee in a public forum, no contest shall be required: (A) unless the amount of the potential indemnity (taking into account all similar or logically related claims that have been or could be raised in any audit involving any or all such Tax Indemnitees with respect to any period Indemnitee for which the Guarantor or the Lessee may be liable to pay an indemnity under this Section 13.4(b26.5(b)) exceeds (1) with respect to the Lessor, $25,000 and (2) with respect to any Tax Indemnitee other than the Lessor, $75,000 500,000 and (B) unless, if requested by such the Tax Indemnitee, the Guarantor Lessee shall have provided to such the Tax Indemnitee an opinion of counsel selected by the Guarantor Lessee (which may be in-house counsel) (except, in the case of income taxes indemnified hereunder, in hereunder which case such opinion shall be an opinion of independent tax counsel selected by the Guarantor Tax Indemnitee and reasonably acceptable to such Tax Indemniteethe Lessee) that a reasonable basis exists to contest such claim. In no event shall a Tax Indemnitee be required to appeal an adverse judicial determination to the United States Supreme Court. The party conducting the contest shall consult in good faith with the other party and its counsel with respect to the contest of such claim for Taxes (or claim for refund) but the decisions regarding what actions to be taken shall be made by the controlling party in its sole judgment; judgement, provided, however, that if such the Tax Indemnitee is the controlling party and the Guarantor Lessee recommends the acceptance of a settlement offer made by the relevant Governmental Authority and such Tax Indemnitee rejects such settlement offer, offer then the amount for which a the Lessee and the Guarantor will be required to indemnify such Tax Indemnitee with respect to the Taxes subject to such offer shall not exceed the amount which it would have owed if such settlement offer had been accepted provided that any Tax Indemnitee shall be entitled to reject any indemnity payment it would otherwise be entitled to hereunder if such Tax Indemnitee reasonably determines that accepting such offer would have an unindemnified impact on such Tax Indemnitee and provided further that no Tax Indemnitee may reject any such indemnity payment if the Guarantor agrees to pay to such Tax Indemnitee the amount of such unindemnified impact, as reasonably determined by such Tax Indemniteeaccepted. In addition, the controlling party shall keep the noncontrolling party reasonably informed as to the progress of the contest, and shall provide the noncontrolling party with a copy of (or appropriate excerpts from) any reports or claims issued by the relevant auditing agents or taxing authority to the controlling party thereof, in connection with such claim or the contest thereof, provided, however, that such obligation shall not obligate any Tax Indemnitee to disclose its tax returns or information or documentation unrelated to such claim or contest. Each Tax Indemnitee shall, shall at the Lessee's expense of the Lessee and the Guarantor, supply the Lessee or the Guarantor with such information and documents reasonably requested by the Lessee or the Guarantor as are necessary or advisable for such Person the Lessee to participate in any action, suit or proceeding to the extent permitted by this Section 13.4(b26.5(b); provided, however, that such Tax Indemnitee shall not be required to provide to such Lessee or the Guarantor copies of its tax returns or any other information, documentation, or materials that it deems to be confidential or proprietary. Notwithstanding anything in this Section 13.4(b) to the contrary, no No Tax Indemnitee shall enter into any settlement or other compromise or fail to appeal an adverse ruling with respect to any claim which is entitled to be indemnified under this Section 13.4 26.5 (and with respect to which contest is required under this Section 13.4(b26.5(b)) without the prior written consent of the GuarantorLessee, unless such Tax Indemnitee waives its right to be indemnified under this Section 13.4 26.5 with respect to such claim. Notwithstanding anything contained herein to the contrary, a Tax Indemnitee shall will not be required to contest (and neither the Lessee nor the Guarantor shall not be permitted to contest in any judicial forum if such contest could, in a Tax Indemnitee's reasonable judgment, be materially adverse to itcontest) a claim with respect to the imposition of any Tax if such Tax Indemnitee shall have waived waive its right to indemnification under this Section 13.4 with respect to such claim (and any claim with respect to such year or any other taxable year the contest of which is precluded or materially adversely affected as a result of such waiver).this
Appears in 1 contract
Contests. If any claim shall be made against any Tax Indemnitee or if any proceeding shall be commenced against any Tax Indemnitee (including a written notice Subject to the rights of such proceeding) for any Imposition as to which the Lessee or the Guarantor may have an indemnity obligation insurers under policies of -------- insurance maintained pursuant to this Section 13.416 of the Charter, the Charterer shall have the right, at its sole cost and expense, to investigate, and the right in its sole discretion to defend or if compromise, any Tax Indemnitee shall determine that any Imposition to Claim for which the Lessee or the Guarantor may have an indemnity obligation pursuant to this Section 13.4 may be payable, such Tax Indemnitee shall promptly (and in any event, within fifteen (15) Business Days) notify the Guarantor in writing (provided that failure to so notify the Guarantor within fifteen (15) Business Days shall not alter such Tax Indemnitee's rights indemnification is sought under this Section 13.4 except 13.1, and the Indemnitee shall cooperate, at the Charterer's expense, with all reasonable requests of the Charterer in connection therewith. The Charterer will provide the Indemnitee with such information not within the control of such Indemnitee, as is in the Charterer's control or is reasonably available to the extent Charterer, which such failure precludes or materially adversely affects the ability to conduct a contest of any indemnified Taxes) Indemnitee may reasonably request and shall not take any action otherwise cooperate with such Indemnitee so as to enable such Indemnitee to fulfill its obligations under this Section 13.
1. Where the Charterer or the insurers under a policy of insurance maintained by the Charterer undertake the defense of an Indemnitee with respect to such claima Claim, proceeding no additional legal fees or Imposition without the written consent of the Guarantor (such consent not to be unreasonably withheld or unreasonably delayed) for thirty (30) days after the receipt expenses of such notice by the Guarantor; provided, however, that in the case of any such claim or proceeding, if such Tax Indemnitee shall be required by law or regulation to take action prior to the end of such thirty (30) day period, such Tax Indemnitee shall in such notice to the Guarantor, so inform the Guarantor, and such Tax Indemnitee shall not take any action with respect to such claim, proceeding or Imposition without the consent of the Guarantor (such consent not to be unreasonably withheld or unreasonably delayed) for ten (10) days after the receipt of such notice by the Guarantor unless such Tax Indemnitee shall be required by law or regulation to take action prior to the end of such ten (10) day period. The Guarantor shall be entitled for a period of thirty (30) days from receipt of such notice from such Tax Indemnitee (or such shorter period as such Tax Indemnitee has notified the Guarantor is required by law or regulation for such Tax Indemnitee to commence such contest), to request in writing that such Tax Indemnitee contest the imposition of such Tax, at the Guarantor's expense. If (x) such contest can be pursued in the name of the Guarantor or the Lessee and independently from any other proceeding involving a Tax liability of such Tax Indemnitee for which the Lessee and the Guarantor have not agreed to indemnify such Tax Indemnitee, (y) such contest must be pursued in the name of such Tax Indemnitee, but can be pursued independently from any other proceeding involving a Tax liability of such Tax Indemnitee for which the Lessee and the Guarantor have not agreed to indemnify such Tax Indemnitee or (z) such Tax Indemnitee so requests, then the Guarantor or such Lessee shall be permitted to control the contest of such claim, provided that in the case of a contest described in clause (y) if such Tax Indemnitee determines reasonably and in good faith that such contest by the Guarantor or the Lessee could have a material adverse impact on the business or operations of such Tax Indemnitee and provides a written explanation to the Guarantor of such determination, such Tax Indemnitee may elect to control or reassert control of the contest, and provided that the taking control by the Guarantor or the Lessee of any contest shall not alter the applicable Tax Indemnitee's rights to indemnification hereunder, and provided, further, that in determining the application of clauses (x) and (y) of the preceding sentence, each Tax Indemnitee shall take any and all reasonable steps to segregate claims for any Taxes for which the Lessee and the Guarantor indemnify hereunder from Taxes for which the Lessee and the Guarantor are not obligated to indemnify hereunder, so that the Guarantor can control the contest of the former. In all other claims requested to be contested by the Guarantor, such Tax Indemnitee shall control the contest of such claim, acting through counsel selected by such Tax Indemnitee and reasonably acceptable to the Guarantor. In no event shall the Guarantor be permitted to contest (or such Tax Indemnitee be required to contest) any claim, (A) if such Tax Indemnitee provides the Guarantor with a legal opinion of counsel reasonably acceptable to the Guarantor that such action, suit or proceeding involves a risk of imposition of criminal liability or will involve a material risk of the sale, forfeiture or loss of, or the creation of any Lien (other than a Permitted Lien) on the Property or any part thereof unless the Guarantor shall have posted and maintained a bond or other security reasonably satisfactory to the relevant Tax Indemnitee in respect to such risk, (B) if a Lease Event of Default has occurred and is continuing unless the Guarantor shall have posted and maintained a bond or other security reasonably satisfactory to the relevant Tax Indemnitee in respect of the Taxes subject to such claim and any and all expenses for which the Guarantor or the Lessee is responsible hereunder reasonably foreseeable in connection with the contest of such claim, (C) unless the Guarantor shall have agreed to pay and shall pay, to such Tax Indemnitee on written demand all reasonable, documented out-of-pocket costs, losses and expenses that such Tax Indemnitee may incur in connection with contesting such Imposition including all reasonable legal, accounting and investigatory fees and disbursements and (if applicable) reasonable, allocable internal overhead costs determined in accordance with normal bank operating procedures, or (D) if such contest shall involve the payment of the Tax prior to the contest, unless the Guarantor shall provide to such Tax Indemnitee an interest-free advance in an amount equal to the Imposition that such Tax Indemnitee is required to pay (with no additional net after-tax costs to such Tax Indemnitee). In addition, for contests controlled by such Tax Indemnitee and claims contested in the name of such Tax Indemnitee in a public forum, no contest shall be required: (A) unless the amount of the potential indemnity (taking into account all similar or logically related claims that have been or could be raised in any audit involving any or all such Tax Indemnitees with respect to any period for which the Guarantor or the Lessee may be liable to pay an indemnity under this Section 13.4(b)) exceeds (1) with respect to the Lessor, $25,000 and (2) with respect to any Tax Indemnitee other than the Lessor, $75,000 and (B) unless, if requested by such Tax Indemnitee, the Guarantor shall have provided to such Tax Indemnitee an opinion of counsel selected by the Guarantor (which may be in-house counsel) (except, in the case of income taxes indemnified hereunder, in which case such opinion shall be an opinion of independent tax counsel selected by the Guarantor and reasonably acceptable to such Tax Indemnitee) that a reasonable basis exists to contest such claim. In no event shall a Tax Indemnitee be required to appeal an adverse judicial determination to the United States Supreme Court. The party conducting the contest shall consult in good faith with the other party and its counsel with respect to the contest defense of such claim for Taxes (or claim for refund) but the decisions regarding what actions to be taken shall be made by indemnified hereunder unless such fees or expenses were incurred at the controlling party in its sole judgmentrequest of the Charterer or such insurers; provided, however, that if such Tax Indemnitee is (i) in the controlling party and the Guarantor recommends the acceptance written opinion of a settlement offer made by the relevant Governmental Authority and such Tax Indemnitee rejects such settlement offer, then the amount for which a Lessee and the Guarantor will be required to indemnify such Tax Indemnitee with respect to the Taxes subject counsel to such offer shall not exceed the amount which -------- ------- Indemnitee an actual or potential material conflict of interest exists where it would have owed if is advisable for such settlement offer had Indemnitee to be represented by separate counsel or (ii) such Indemnitee has been accepted provided that any Tax Indemnitee shall be entitled to reject any indemnity payment it would indicted or otherwise be entitled to hereunder if such Tax Indemnitee reasonably determines that accepting such offer would have an unindemnified impact on such Tax Indemnitee and provided further that no Tax Indemnitee may reject any such indemnity payment if the Guarantor agrees to pay to such Tax Indemnitee the amount of such unindemnified impact, as reasonably determined by such Tax Indemnitee. In addition, the controlling party shall keep the noncontrolling party reasonably informed as to the progress of the contest, and shall provide the noncontrolling party with charged in a copy of (or appropriate excerpts from) any reports or claims issued by the relevant auditing agents or taxing authority to the controlling party thereof, criminal complaint in connection with a Claim not excluded by Section 13.1(a) and such claim or Indemnitee informs the contest thereof, provided, however, Charterer that such obligation Indemnitee desires to be represented by separate counsel, the reasonable fees and expenses of such separate counsel shall be borne by the Charterer. Subject to the requirements of any policy of insurance, an Indemnitee may participate at its own expense in any judicial proceeding controlled by the Charterer pursuant to the preceding provisions; provided that such party's participation -------- does not, in the reasonable opinion of the independent counsel appointed by the Charterer or its insurers to conduct such proceedings, significantly interfere with such control; and such participation shall not obligate any Tax Indemnitee to disclose its tax returns or information or documentation unrelated to such claim or contest. Each Tax Indemnitee shall, at the expense constitute a waiver of the Lessee and right to receive the Guarantor, supply the Lessee or the Guarantor with such information and documents reasonably requested by the Lessee or the Guarantor as are necessary or advisable for such Person to participate indemnification provided in any action, suit or proceeding to the extent permitted by this Section 13.4(b); provided, however, that such Tax Indemnitee shall not be required to provide to such Lessee or the Guarantor copies of its tax returns or any other information, documentation, or materials that it deems to be confidential or proprietary13.1. Notwithstanding anything in this Section 13.4(b) to the contrarycontrary contained herein, no Tax Indemnitee (x) the Charterer shall enter into not under any settlement or other compromise or fail to appeal an adverse ruling with respect to any claim which is entitled to circumstances be indemnified under this Section 13.4 liable for the fees and expenses of more than one counsel for each of (i) the Owner Participant, the Owner Trustees and the Owner Trust (and with respect to which contest is required under this Section 13.4(btheir respective successors and permitted assigns, agents and servants) and (ii) the Loan Participants and the Indenture Trustee (and their respective successors and permitted assigns, agents and servants), and (y) during the continuance of a specified Charter Event of Default, the Charterer ------------------------ shall not compromise any Claim without the prior written consent of the Guarantorapplicable Indemnitee, unless such Tax Indemnitee waives its right consent not to be indemnified under this Section 13.4 with respect to such claim. Notwithstanding anything contained herein to the contrary, a Tax Indemnitee shall not be required to contest (and neither the Lessee nor the Guarantor shall be permitted to contest in any judicial forum if such contest could, in a Tax Indemnitee's reasonable judgment, be materially adverse to it) a claim with respect to the imposition of any Tax if such Tax Indemnitee shall have waived its right to indemnification under this Section 13.4 with respect to such claim (and any claim with respect to such year or any other taxable year the contest of which is precluded or materially adversely affected as a result of such waiver)unreasonably withheld.
Appears in 1 contract
Sources: Participation Agreement (Mobil Corp)
Contests. If any claim (a) After the Closing, the Purchaser shall be made against reasonably promptly after becoming aware thereof notify the Seller in writing of the commencement of any Tax Indemnitee audit or administrative or judicial proceeding and shall also separately notify the Seller in writing of any demand or claim on the Purchaser which, if determined adversely to the taxpayer or after the lapse of time would be grounds for indemnification by the Seller under this Article VII. Such notice shall contain factual information (to the extent known to the Purchaser) describing the asserted Tax liability in reasonable detail and shall include copies of any proceeding shall be commenced against notice or other document received from any taxing authority in respect of any such asserted Tax Indemnitee (including a written liability. If the Purchaser fails to give the Seller reasonably prompt notice of such proceedingan asserted Tax liability as required by this Section 7.04, then (i) if the Seller is precluded by the failure to give reasonably prompt notice from contesting the asserted Tax liability in both the administrative and judicial forums, then the Seller shall not have any obligation to indemnify for any Imposition as loss or damage arising out of such asserted Tax liability, and (ii) if the Seller is not so precluded from contesting but such failure to give reasonably prompt notice results in an actual detriment to the Seller, then any amount which the Lessee or Seller is otherwise required to pay the Guarantor may have an indemnity obligation Purchaser pursuant to this Section 13.4Article VII with respect to such liability shall be reduced by the amount of such detriment.
(b) The Seller, promptly after receiving notice, may elect to direct, through counsel of its own choosing and at its own expense, any audit, claim for refund and administrative or judicial proceeding involving any asserted liability with respect to which indemnity may be sought against the Seller under this Article VII (any such audit, claim for refund or proceeding relating to an asserted Tax liability are referred to herein collectively as a "CONTEST"). If the Seller elects to direct the Contest of an asserted Tax liability, the Purchaser shall cooperate in all reasonable respects, at the Seller's expense, in each phase of such Contest. If the Seller does not either reasonably promptly give notice to direct the Contest or commence the direction of the Contest or if any Tax Indemnitee shall determine that any Imposition it contests its obligation to which indemnify under Section 7.01, the Lessee Purchaser may pay, compromise or the Guarantor may have an indemnity obligation pursuant to this Section 13.4 may be payablecontest, at its own expense, such Tax Indemnitee asserted liability without waiving any of its rights to indemnification hereunder. However, in such case, the Purchaser may not settle or compromise any asserted liability over the objection of the Seller; PROVIDED, HOWEVER, that the Seller's consent to settlement or compromise shall promptly (and in not be unreasonably withheld or delayed. In any event, within fifteen each of the Purchaser and the Seller may participate, at their own expense, in the Contest. If the Seller chooses to direct the Contest, the Purchaser shall promptly empower (15by power of attorney and such other documentation as may be appropriate) Business Days) notify such representatives of the Guarantor Seller as Seller may designate to represent the Purchaser or its successor in writing (provided that failure to so notify the Guarantor within fifteen (15) Business Days shall not alter such Contest insofar as the Contest involves an asserted Tax Indemnitee's rights liability for which the Seller would be liable under this Section 13.4 except Article VII. If, with respect to any proposed settlement referred to in clause (x) of the extent previous sentence, the Seller proposes in good faith to settle a claim, suit, action or proceeding with respect to any Tax, which settlement offer is accepted by the relevant taxing authority, the Purchaser may elect to continue to contest such failure precludes claim, suit, action or materially adversely affects proceeding; PROVIDED that notwithstanding how such matter is ultimately settled or decided, the ability to conduct a contest liability of any indemnified Taxes) and shall not take any action the Seller with respect to such claim, suit, action or proceeding or Imposition without shall be no greater than the written consent of amount which would have been payable if the Guarantor Purchaser had consented to the settlement proposed by the Seller.
(such consent not c) The Purchaser shall have the sole obligation and right to be unreasonably withheld or unreasonably delayed) direct, at its own expense, a Contest regarding any Tax Return for thirty (30) days any taxable period commencing after the receipt of such notice by the Guarantor; provided, however, that in the case of any such claim or proceeding, if such Tax Indemnitee shall be required by law or regulation to take action prior to the end of such thirty (30) day period, such Tax Indemnitee shall in such notice to the Guarantor, so inform the Guarantor, and such Tax Indemnitee shall not take any action with respect to such claim, proceeding or Imposition without the consent of the Guarantor (such consent not to be unreasonably withheld or unreasonably delayed) for ten (10) days after the receipt of such notice by the Guarantor unless such Tax Indemnitee shall be required by law or regulation to take action prior to the end of such ten (10) day period. The Guarantor shall be entitled for a period of thirty (30) days from receipt of such notice from such Tax Indemnitee (or such shorter period as such Tax Indemnitee has notified the Guarantor is required by law or regulation for such Tax Indemnitee to commence such contest), to request in writing that such Tax Indemnitee contest the imposition of such Tax, at the Guarantor's expense. If (x) such contest can be pursued in the name of the Guarantor or the Lessee and independently from any other proceeding involving a Tax liability of such Tax Indemnitee for which the Lessee and the Guarantor have not agreed to indemnify such Tax Indemnitee, (y) such contest must be pursued in the name of such Tax Indemnitee, but can be pursued independently from any other proceeding involving a Tax liability of such Tax Indemnitee for which the Lessee and the Guarantor have not agreed to indemnify such Tax Indemnitee or (z) such Tax Indemnitee so requests, then the Guarantor or such Lessee shall be permitted to control the contest of such claim, provided that Closing Date in the case of a contest described in clause (y) if such Tax Indemnitee determines reasonably and in good faith that such contest by Return which is filed on a combined, consolidated, unitary or similar basis with the Guarantor or the Lessee could have a material adverse impact on the business or operations of such Tax Indemnitee and provides a written explanation to the Guarantor of such determinationPurchaser; PROVIDED, such Tax Indemnitee may elect to control or reassert control of the contestHOWEVER, and provided that the taking control by Purchaser shall advise and consult with the Guarantor or Seller regarding the Lessee status of any contest shall not alter the applicable such Contest that involves an asserted Tax Indemnitee's rights to indemnification hereunder, and provided, further, that in determining the application of clauses (x) and (y) of the preceding sentence, each Tax Indemnitee shall take any and all reasonable steps to segregate claims for any Taxes liability for which the Lessee and the Guarantor indemnify hereunder from Taxes for which the Lessee and the Guarantor are not obligated to indemnify hereunder, so that the Guarantor can control the contest of the former. In all other claims requested to be contested by the Guarantor, such Tax Indemnitee shall control the contest of such claim, acting through counsel selected by such Tax Indemnitee and reasonably acceptable to the Guarantor. In no event shall the Guarantor be permitted to contest (or such Tax Indemnitee be required to contest) any claim, (A) if such Tax Indemnitee provides the Guarantor with a legal opinion of counsel reasonably acceptable to the Guarantor that such action, suit or proceeding involves a risk of imposition of criminal liability or will involve a material risk of the sale, forfeiture or loss of, or the creation of any Lien (other than a Permitted Lien) on the Property or any part thereof unless the Guarantor shall have posted and maintained a bond or other security reasonably satisfactory to the relevant Tax Indemnitee in respect to such risk, (B) if a Lease Event of Default has occurred and is continuing unless the Guarantor shall have posted and maintained a bond or other security reasonably satisfactory to the relevant Tax Indemnitee in respect of the Taxes subject to such claim and any and all expenses for which the Guarantor or the Lessee is responsible hereunder reasonably foreseeable in connection with the contest of such claim, (C) unless the Guarantor shall have agreed to pay and shall pay, to such Tax Indemnitee on written demand all reasonable, documented out-of-pocket costs, losses and expenses that such Tax Indemnitee may incur in connection with contesting such Imposition including all reasonable legal, accounting and investigatory fees and disbursements and (if applicable) reasonable, allocable internal overhead costs determined in accordance with normal bank operating procedures, or (D) if such contest shall involve the payment of the Tax prior to the contest, unless the Guarantor shall provide to such Tax Indemnitee an interest-free advance in an amount equal to the Imposition that such Tax Indemnitee is required to pay (with no additional net after-tax costs to such Tax Indemnitee). In addition, for contests controlled by such Tax Indemnitee and claims contested in the name of such Tax Indemnitee in a public forum, no contest shall be required: (A) unless the amount of the potential indemnity (taking into account all similar or logically related claims that have been or could be raised in any audit involving any or all such Tax Indemnitees with respect to any period for which the Guarantor or the Lessee may Seller would be liable to pay an indemnity under this Section 13.4(b)) exceeds (1) with respect to the LessorArticle VII and PROVIDED, $25,000 and (2) with respect to any Tax Indemnitee other than the LessorFURTHER, $75,000 and (B) unlessthat, if requested by such Tax IndemniteePurchaser shall not, the Guarantor shall have provided to such Tax Indemnitee an opinion of counsel selected by the Guarantor (which may be in-house counsel) (except, in the case of income taxes indemnified hereunder, in which case such opinion shall be an opinion of independent tax counsel selected by the Guarantor and reasonably acceptable to such Tax Indemnitee) that a reasonable basis exists to contest such claim. In no event shall a Tax Indemnitee be required to appeal an adverse judicial determination to the United States Supreme Court. The party conducting the contest shall consult in good faith with the other party and its counsel with respect to the contest of such claim for Taxes (or claim for refund) but the decisions regarding what actions to be taken shall be made by the controlling party in its sole judgment; provided, however, that if such Tax Indemnitee is the controlling party and the Guarantor recommends the acceptance of a settlement offer made by the relevant Governmental Authority and such Tax Indemnitee rejects such settlement offer, then the amount for which a Lessee and the Guarantor will be required to indemnify such Tax Indemnitee with respect to the Taxes subject to such offer shall not exceed the amount which it would have owed if such settlement offer had been accepted provided that any Tax Indemnitee shall be entitled to reject any indemnity payment it would otherwise be entitled to hereunder if such Tax Indemnitee reasonably determines that accepting such offer would have an unindemnified impact on such Tax Indemnitee and provided further that no Tax Indemnitee may reject any such indemnity payment if the Guarantor agrees to pay to such Tax Indemnitee the amount of such unindemnified impact, as reasonably determined by such Tax Indemnitee. In addition, the controlling party shall keep the noncontrolling party reasonably informed as to the progress of the contest, and shall provide the noncontrolling party with a copy of (or appropriate excerpts from) any reports or claims issued by the relevant auditing agents or taxing authority to the controlling party thereof, in connection with such claim or the contest thereof, provided, however, that such obligation shall not obligate any Tax Indemnitee to disclose its tax returns or information or documentation unrelated to such claim or contest. Each Tax Indemnitee shall, at the expense of the Lessee and the Guarantor, supply the Lessee or the Guarantor with such information and documents reasonably requested by the Lessee or the Guarantor as are necessary or advisable for such Person to participate in any action, suit or proceeding to the extent permitted by this Section 13.4(b); provided, however, that such Tax Indemnitee shall not be required to provide to such Lessee or the Guarantor copies of its tax returns or any other information, documentation, or materials that it deems to be confidential or proprietary. Notwithstanding anything in this Section 13.4(b) to the contrary, no Tax Indemnitee shall enter into any settlement or other compromise or fail to appeal an adverse ruling with respect to any claim which is entitled to be indemnified under this Section 13.4 (and with respect to which contest is required under this Section 13.4(b)) without the prior written consent of the Guarantor, unless such Tax Indemnitee waives its right to be indemnified under this Section 13.4 with respect to such claim. Notwithstanding anything contained herein to the contrary, a Tax Indemnitee Seller (which shall not be required to contest (and neither the Lessee nor the Guarantor shall be permitted to contest in unreasonably withheld or delayed) settle any judicial forum if such contest could, in a Tax Indemnitee's reasonable judgment, be materially adverse to it) a claim with respect to the imposition of any Tax if such Tax Indemnitee shall have waived its right to indemnification under this Section 13.4 with respect to such claim (and any claim with respect to such year or any other taxable year the contest of which is precluded or materially adversely affected as a result of such waiver)contest.
Appears in 1 contract
Sources: Asset Purchase Agreement (White Mountains Insurance Group LTD)
Contests. If any claim shall be made against any Tax Indemnitee or if any proceeding shall be commenced against any Tax Indemnitee (including a written notice of such proceeding) for any Imposition as to which the Lessee or the Guarantor may have an indemnity obligation pursuant to this Section 13.4SECTION 12.5, or if any Tax Indemnitee shall determine that any Imposition to for which the Lessee or the Guarantor may have an indemnity obligation pursuant to this Section 13.4 SECTION 12.5 may be payable, such Tax Indemnitee shall promptly (and in any event, within fifteen thirty (1530) Business Daysdays) notify the Guarantor Lessee in writing (provided PROVIDED that failure to so notify the Guarantor Lessee within fifteen thirty (1530) Business Days days shall not alter such Tax Indemnitee's rights under this Section 13.4 SECTION 12.5, except to the extent such failure precludes or materially adversely affects the ability to conduct a contest of any indemnified Taxes) and shall not take any action with respect to such claim, proceeding or Imposition without the written consent of the Guarantor Lessee (such consent not to be unreasonably withheld or unreasonably delayed) for thirty (30) days after the receipt of such notice by the GuarantorLessee; providedPROVIDED, howeverHOWEVER, that in the case of any such claim or proceeding, if such Tax Indemnitee shall be required by law or regulation to take action prior to the end of such thirty (30) -day period, such Tax Indemnitee shall in such notice to the GuarantorLessee, so inform the GuarantorLessee, and such Tax Indemnitee shall not take any action with respect to such claim, proceeding or Imposition without the consent of the Guarantor Lessee (such consent not to be unreasonably withheld or unreasonably delayed) for ten (10) days after the receipt of such notice by Lessee, unless the Guarantor unless such Tax Indemnitee shall be required by law or regulation to take action prior to the end of such ten (10) -day period, in which case Tax Indemnitee shall promptly notify Lessee. The Guarantor Lessee shall be entitled for a period of thirty (30) days from receipt of such notice from such the Tax Indemnitee (or such shorter period as such Tax the Indemnitee has notified the Guarantor Lessee is required by law or regulation for such the Tax Indemnitee to commence such contest), to request in writing that such Tax Indemnitee contest the imposition of such TaxImposition, at the GuarantorLessee's expense. If (x) such contest can be pursued in the name of the Guarantor or the Lessee and independently from any other proceeding involving a Tax liability of such Tax Indemnitee an Imposition for which the Lessee and the Guarantor have has not agreed to indemnify such Tax Indemnitee, (y) such contest must be pursued in the name of such the Tax Indemnitee, but can be pursued independently from any other proceeding involving a Tax liability of such Tax Indemnitee an Imposition for which the Lessee and the Guarantor have has not agreed to indemnify such Tax Indemnitee or (z) such the Tax Indemnitee so requests, then the Guarantor or such Lessee shall be permitted to control the contest of such claimclaim PROVIDED, provided that in the case of a contest described in clause (y) if such Tax Indemnitee determines reasonably and in good faith that such contest by the Guarantor or the Lessee could have a material adverse impact on the business or operations of such Tax Indemnitee and provides a written explanation order to the Guarantor of such determination, such Tax Indemnitee may elect to control or reassert take control of the contest, and provided that Lessee must first acknowledge in writing its obligation to indemnify for the taking control by Imposition which is the Guarantor or subject of the Lessee of any contest shall not alter if the applicable Tax Indemnitee's rights to indemnification hereunderoutcome thereof is adverse, and providedPROVIDED, furtherFURTHER, that in determining the application of clauses CLAUSES (x) and (y) of the preceding sentence, each Tax Indemnitee shall take any and all reasonable steps to segregate claims for any Taxes for which the Lessee and the Guarantor indemnify indemnifies hereunder from Taxes for which the Lessee and the Guarantor are is not obligated to indemnify hereunder, so that the Guarantor Lessee can control the contest of the former. In all other claims requested to be contested by Lessee, the Guarantor, such Tax Indemnitee shall control the contest of such claim, acting through counsel selected by such Tax Indemnitee and reasonably acceptable to the GuarantorLessee. In no event shall the Guarantor Lessee be permitted to contest (or such the Tax Indemnitee be required to contest) any claim, claim (A) if such Tax Indemnitee provides the Guarantor Lessee with a legal opinion of independent counsel reasonably acceptable to the Guarantor that such action, suit or proceeding involves a material risk of imposition of criminal liability or will involve a material risk of the sale, forfeiture or loss of, or the creation of any Lien (other than a Permitted Lien) on the Leased Property or any part thereof unless the Guarantor Lessee shall have posted and maintained a bond or other security reasonably satisfactory to the relevant Tax Indemnitee in respect to such risk, (B) if a Lease an Event of Default has occurred and is continuing continuing, unless the Guarantor Lessee shall have posted and maintained a bond or other security reasonably satisfactory to the relevant Tax Indemnitee in respect of the Taxes Impositions subject to such claim and any and all expenses for which the Guarantor or the Lessee is responsible hereunder reasonably foreseeable in connection with the contest of such claim, (C) unless the Guarantor Lessee shall have agreed to pay and shall pay, pay to such Tax Indemnitee on written demand all reasonable, documented reasonable out-of-pocket costs, losses and expenses that such Tax Indemnitee may incur in connection with contesting such Imposition Imposition, including all reasonable legal, accounting and investigatory fees and disbursements and (if applicable) reasonable, allocable internal overhead costs determined in accordance with normal bank operating proceduresdisbursements, or (D) if such contest shall involve the payment of the Tax Impositions prior to the contest, unless the Guarantor Lessee shall provide to such the Tax Indemnitee an interest-free advance in an amount equal to the Imposition that such the Tax Indemnitee is required to pay (with no additional net after-tax costs (including Taxes) to such Tax Indemnitee). In addition, for Tax Indemnitee-controlled contests controlled by such Tax Indemnitee and claims contested in the name of such the Tax Indemnitee in a public forum, no contest shall be required: (A) unless unless, in the case of an income tax, the amount of the potential indemnity (taking into account all similar or logically related claims that have been or could be raised in any audit involving any or all such Tax Indemnitees with respect to any period Indemnitee for which the Guarantor or the Lessee may be liable to pay an indemnity under this Section 13.4(b)SECTION 12.5) exceeds (1) with respect to the Lessor, $25,000 and (2) with respect to any Tax Indemnitee other than the Lessor, $75,000 50,000 and (B) unless, if requested by such the Tax Indemnitee, the Guarantor Lessee shall have provided to such Tax the Indemnitee an opinion of counsel selected by the Guarantor Lessee (which may be in-house counsel) (except, except that in the case of income taxes indemnified hereunder, in which case hereunder such opinion shall be an opinion that of independent tax counsel selected by the Guarantor Tax Indemnitee and reasonably acceptable to such Tax IndemniteeLessee) that a reasonable basis exists to contest such claim. In no event shall a Tax Indemnitee be required to appeal an adverse judicial determination to the United States Supreme Court. The party conducting the contest shall consult in good faith with the other party and its counsel with respect to the contest of such claim for Taxes Impositions (or claim for refund) but the decisions regarding what actions to be taken shall be made by the controlling party in its sole judgment; provided, howeverPROVIDED, HOWEVER, that if such the Tax Indemnitee is the controlling party and the Guarantor Lessee recommends the acceptance of a settlement offer made by the relevant Governmental Authority and such Tax Indemnitee rejects such settlement offer, offer then the amount for which a Lessee and the Guarantor will be required to indemnify such Tax Indemnitee with respect to the Taxes subject to such offer shall not exceed the amount which it would have owed if such settlement offer had been accepted provided that any Tax Indemnitee shall be entitled to reject any indemnity payment it would otherwise be entitled to hereunder if such Tax Indemnitee reasonably determines that accepting such offer would have an unindemnified impact on such Tax Indemnitee and provided further that no Tax Indemnitee may reject any such indemnity payment if the Guarantor agrees to pay to such Tax Indemnitee the amount of such unindemnified impact, as reasonably determined by such Tax Indemniteeaccepted. In addition, the controlling party shall keep the noncontrolling party reasonably informed as to the progress of the contest, and shall provide the noncontrolling party with a copy of (or appropriate excerpts from) any reports or claims issued by the relevant auditing agents agent or taxing authority to the controlling party thereof, in connection with such claim or the contest thereof, provided, however, that such obligation shall not obligate any Tax Indemnitee to disclose its tax returns or information or documentation unrelated to such claim or contest. Each Tax Indemnitee shall, at the expense of the shall supply Lessee and the Guarantor, supply the Lessee or the Guarantor with such information and documents reasonably requested by the Lessee or the Guarantor as are necessary or advisable for such Person Lessee to participate in any action, suit or proceeding to the extent permitted by this Section 13.4(bSECTION 12.5(b); provided, however, that and Lessee shall promptly reimburse such Tax Indemnitee for the reasonable out-of-pocket expenses of supplying such information and documents. Unless an Event of Default shall not have occurred and be required to provide to such Lessee or the Guarantor copies of its tax returns or any other information, documentation, or materials that it deems to be confidential or proprietary. Notwithstanding anything in this Section 13.4(b) to the contrarycontinuing, no Tax Indemnitee shall enter into any settlement or other compromise or fail to appeal an adverse ruling with respect to any claim which is entitled to be indemnified under this Section 13.4 SECTION 12.5 (and with respect to which contest is required under this Section 13.4(bSECTION 12.5(b)) without the prior written consent of the GuarantorLessee (such consent not to be unreasonably withheld), unless such Tax Indemnitee waives its right to be indemnified under this Section 13.4 SECTION 12.5 with respect to such claim. Notwithstanding anything contained herein to the contrary, a Tax Indemnitee shall will not be required to contest (and neither the Lessee nor the Guarantor shall not be permitted to contest in any judicial forum if such contest could, in a Tax Indemnitee's reasonable judgment, be materially adverse to itcontest) a claim with respect to the imposition of any Tax Imposition if (i) such Tax Indemnitee shall have waived waive its right to indemnification under this Section 13.4 SECTION 12.5 with respect to such claim (and any claim with respect to such year or any other taxable year year, the contest of which is precluded or materially adversely affected as a result of such waiver) or (ii) such Imposition is the sole result of a claim of a continuing and consistent nature, which claim has previously been resolved against the relevant Tax Indemnitee (unless a change in law or facts has occurred since such prior adverse resolution and Lessee provides an opinion of independent tax counsel to the effect that it is more likely than not that such change in law or facts will result in a favorable resolution of the claim at issue).
Appears in 1 contract
Contests. If Newco Sub agrees to give written notice to the Remington Holders of the receipt of any claim shall be made against written notice by any Tax Indemnitee or if any proceeding shall be commenced against any Tax Indemnitee (including a Company Party, and the Remington Holders agree to give to Newco Sub written notice of such proceeding) for the receipt of any Imposition as to which written notice by them, that involves the Lessee assertion of any claim, or the Guarantor may have an indemnity obligation pursuant to this Section 13.4, or if any Tax Indemnitee shall determine that any Imposition to which the Lessee or the Guarantor may have an indemnity obligation pursuant to this Section 13.4 may be payable, such Tax Indemnitee shall promptly (and in any event, within fifteen (15) Business Days) notify the Guarantor in writing (provided that failure to so notify the Guarantor within fifteen (15) Business Days shall not alter such Tax Indemnitee's rights under this Section 13.4 except to the extent such failure precludes or materially adversely affects the ability to conduct a contest commencement of any indemnified Taxes) and shall not take any action Action, with respect to such claimthe Target Companies which could result in a breach of a representation or warranty in Section 3.21 or relates to any Pre-Closing Tax Period of any Target Company (including, for the avoidance of doubt, any partnership-level proceeding or Imposition without claim related to an IRS Form 1065 of the Target for an applicable period but excluding any partner-level proceeding or claim of any Remington Holder) (a “Tax Claim”). The Remington Holders will have the right (but not the obligation) to control the contest or resolution of any Tax Claim; provided, that (a) the Remington Holders will have provided written notice to Newco Sub of its intention to control such Tax Claim, and (b) the Remington Holders will obtain the prior written consent of the Guarantor Target (such which consent will not to be unreasonably withheld or unreasonably delayed) for thirty (30) days after the receipt of such notice by the Guarantor; provided, however, that in the case of before entering into any such claim settlement or proceeding, if such Tax Indemnitee shall be required by law or regulation to take action prior to the end of such thirty (30) day period, such Tax Indemnitee shall in such notice to the Guarantor, so inform the Guarantor, and such Tax Indemnitee shall not take any action with respect to such claim, proceeding or Imposition without the consent of the Guarantor (such consent not to be unreasonably withheld or unreasonably delayed) for ten (10) days after the receipt of such notice by the Guarantor unless such Tax Indemnitee shall be required by law or regulation to take action prior to the end of such ten (10) day period. The Guarantor shall be entitled for a period of thirty (30) days from receipt of such notice from such Tax Indemnitee (or such shorter period as such Tax Indemnitee has notified the Guarantor is required by law or regulation for such Tax Indemnitee to commence such contest), to request in writing that such Tax Indemnitee contest the imposition of such Tax, at the Guarantor's expense. If (x) such contest can be pursued in the name of the Guarantor or the Lessee and independently from any other proceeding involving a Tax liability concession of such Tax Indemnitee for which Claim if such settlement or concession could reasonably be expected to adversely impact the Lessee and the Guarantor have not agreed to indemnify such Tax Indemnitee, (y) such contest must be pursued in the name of such Tax Indemnitee, but can be pursued independently from any other proceeding involving a Tax liability of such Newco Sub, the Target or their Affiliates for Taxes for any Post-Closing Tax Indemnitee for which the Lessee and the Guarantor have not agreed to indemnify such Tax Indemnitee or (z) such Tax Indemnitee so requests, then the Guarantor or such Lessee shall be permitted to control the contest of such claim, provided that in the case of a contest described in clause (y) if such Tax Indemnitee determines reasonably and in good faith that such contest by the Guarantor or the Lessee could have a material adverse impact on the business or operations of such Tax Indemnitee and provides a written explanation to the Guarantor of such determination, such Tax Indemnitee may elect to control or reassert control of the contest, and provided that the taking control by the Guarantor or the Lessee of any contest shall not alter the applicable Tax Indemnitee's rights to indemnification hereunder, and Period; provided, further, that Newco Sub will be entitled to participate in determining the application defense of clauses (x) such Tax Contest and (y) to employ counsel of its choice for such purpose, the preceding sentencefees and expenses of which separate counsel will be borne by Newco Sub. To the extent the Remington Holders do not control a Tax Claim, each the Company Parties may defend against such Tax Indemnitee shall take any and all reasonable steps to segregate claims for any Taxes for which the Lessee and the Guarantor indemnify hereunder from Taxes for which the Lessee and the Guarantor are not obligated to indemnify hereunder, so Claim; provided that the Guarantor can control Remington Holders will be entitled to participate in the contest defense of such Tax Claim and to employ counsels of their choice for such purpose, the former. In all other claims requested to fees and expenses of which separate counsel will be contested borne by the Guarantor, such Tax Indemnitee shall control the contest of such claim, acting through counsel selected by such Tax Indemnitee and reasonably acceptable to the Guarantor. In no event shall the Guarantor be permitted to contest (or such Tax Indemnitee be required to contest) any claim, (A) if such Tax Indemnitee provides the Guarantor with a legal opinion of counsel reasonably acceptable to the Guarantor that such action, suit or proceeding involves a risk of imposition of criminal liability or will involve a material risk of the sale, forfeiture or loss of, or the creation of any Lien (other than a Permitted Lien) on the Property or any part thereof unless the Guarantor shall have posted and maintained a bond or other security reasonably satisfactory to the relevant Tax Indemnitee in respect to such risk, (B) if a Lease Event of Default has occurred and is continuing unless the Guarantor shall have posted and maintained a bond or other security reasonably satisfactory to the relevant Tax Indemnitee in respect of the Taxes subject to such claim and any and all expenses for which the Guarantor or the Lessee is responsible hereunder reasonably foreseeable in connection with the contest of such claim, (C) unless the Guarantor shall have agreed to pay and shall pay, to such Tax Indemnitee on written demand all reasonable, documented out-of-pocket costs, losses and expenses respective Remington Holders; provided further that such Tax Indemnitee Claim may incur in connection with contesting such Imposition including all reasonable legal, accounting and investigatory fees and disbursements and (if applicable) reasonable, allocable internal overhead costs determined in accordance with normal bank operating procedures, or (D) if such contest shall involve the payment of the Tax prior to the contest, unless the Guarantor shall provide to such Tax Indemnitee an interest-free advance in an amount equal to the Imposition that such Tax Indemnitee is required to pay (with no additional net after-tax costs to such Tax Indemnitee). In addition, for contests controlled by such Tax Indemnitee and claims contested in the name of such Tax Indemnitee in a public forum, no contest shall be required: (A) unless the amount of the potential indemnity (taking into account all similar or logically related claims that have been or could be raised in any audit involving any or all such Tax Indemnitees with respect to any period for which the Guarantor or the Lessee may be liable to pay an indemnity under this Section 13.4(b)) exceeds (1) with respect to the Lessor, $25,000 and (2) with respect to any Tax Indemnitee other than the Lessor, $75,000 and (B) unless, if requested by such Tax Indemnitee, the Guarantor shall have provided to such Tax Indemnitee an opinion of counsel selected by the Guarantor (which may be in-house counsel) (except, in the case of income taxes indemnified hereunder, in which case such opinion shall be an opinion of independent tax counsel selected by the Guarantor and reasonably acceptable to such Tax Indemnitee) that a reasonable basis exists to contest such claim. In no event shall a Tax Indemnitee be required to appeal an adverse judicial determination to the United States Supreme Court. The party conducting the contest shall consult in good faith with the other party and its counsel with respect to the contest of such claim for Taxes (or claim for refund) but the decisions regarding what actions to be taken shall be made by the controlling party in its sole judgment; provided, however, that if such Tax Indemnitee is the controlling party and the Guarantor recommends the acceptance of a settlement offer made by the relevant Governmental Authority and such Tax Indemnitee rejects such settlement offer, then the amount for which a Lessee and the Guarantor will be required to indemnify such Tax Indemnitee with respect to the Taxes subject to such offer shall not exceed the amount which it would have owed if such settlement offer had been accepted provided that any Tax Indemnitee shall be entitled to reject any indemnity payment it would otherwise be entitled to hereunder if such Tax Indemnitee reasonably determines that accepting such offer would have an unindemnified impact on such Tax Indemnitee and provided further that no Tax Indemnitee may reject any such indemnity payment if the Guarantor agrees to pay to such Tax Indemnitee the amount of such unindemnified impact, as reasonably determined by such Tax Indemnitee. In addition, the controlling party shall keep the noncontrolling party reasonably informed as to the progress of the contest, and shall provide the noncontrolling party with a copy of (or appropriate excerpts from) any reports or claims issued by the relevant auditing agents or taxing authority to the controlling party thereof, in connection with such claim or the contest thereof, provided, however, that such obligation shall not obligate any Tax Indemnitee to disclose its tax returns or information or documentation unrelated to such claim or contest. Each Tax Indemnitee shall, at the expense of the Lessee and the Guarantor, supply the Lessee or the Guarantor with such information and documents reasonably requested by the Lessee or the Guarantor as are necessary or advisable for such Person to participate in any action, suit or proceeding to the extent permitted by this Section 13.4(b); provided, however, that such Tax Indemnitee shall not be required to provide to such Lessee settled or the Guarantor copies of its tax returns or any other information, documentation, or materials that it deems to be confidential or proprietary. Notwithstanding anything in this Section 13.4(b) to the contrary, no Tax Indemnitee shall enter into any settlement or other compromise or fail to appeal an adverse ruling with respect to any claim which is entitled to be indemnified under this Section 13.4 (and with respect to which contest is required under this Section 13.4(b)) conceded without the prior written consent of the GuarantorRemington Holders, unless such Tax Indemnitee waives its right to which consent will not be indemnified under unreasonably withheld or delayed. In the event of a conflict between this Section 13.4 with respect to such claim. Notwithstanding anything contained herein to the contrary7.05 and any other section of this Agreement, a Tax Indemnitee shall not be required to contest (and neither the Lessee nor the Guarantor shall be permitted to contest in any judicial forum if such contest could, in a Tax Indemnitee's reasonable judgment, be materially adverse to it) a claim this Section 7.05 will govern with respect to the imposition control of any Tax if such Tax Indemnitee shall have waived its right to indemnification under this Section 13.4 with respect to such claim (and any claim with respect to such year or any other taxable year the contest of which is precluded or materially adversely affected as a result of such waiver)Claims.
Appears in 1 contract
Sources: Acquisition Agreement (Ashford Inc)
Contests. If any claim shall be made against any Tax Indemnitee or if any proceeding shall be commenced against any Tax Indemnitee (including a written notice of such proceeding) for any Imposition as to which the Lessee or the Guarantor may have an indemnity obligation pursuant to this Section 13.413.5, or if any Tax Indemnitee shall determine that any Imposition to which the Lessee or the Guarantor may have an indemnity obligation pursuant to this Section 13.4 13.5 may be payable, such Tax Indemnitee shall promptly (and in any event, within fifteen (15) Business Days20 days) notify the Guarantor Lessee in writing (provided that failure to so notify the Guarantor Lessee within fifteen (15) Business Days 20 days shall not alter such Tax Indemnitee's rights under this Section 13.4 13.5 except to the extent such failure precludes or materially adversely affects the ability to conduct a contest of any indemnified Taxes) and shall not take any action with respect to such claim, proceeding or Imposition without the written consent of the Guarantor Lessee (such consent not to be unreasonably withheld or unreasonably delayed) for thirty (30) 30 days after the receipt of such notice by the GuarantorLessee; provided, however, that in the case of any such claim or proceeding, if such Tax Indemnitee shall be required by law or regulation to take action prior to the end of such thirty (30) -day period, such Tax Indemnitee shall in such notice to the GuarantorLessee, so inform the GuarantorLessee, and such Tax Indemnitee shall not take any action with respect to such claim, proceeding or Imposition without the consent of the Guarantor Lessee (such consent not to be unreasonably withheld or unreasonably delayed) for ten (10) 10 days after the receipt of such notice by the Guarantor Lessee unless such the Tax Indemnitee shall be required by law or regulation to take action prior to the end of such ten (10) -day period. The Guarantor Lessee shall be entitled for a period of thirty (30) 30 days from receipt of such notice from such the Tax Indemnitee (or such shorter period as such the Tax Indemnitee has notified the Guarantor Lessee is required by law or regulation for such the Tax Indemnitee to commence such contest), to request in writing that such Tax Indemnitee contest the imposition of such Tax, at the GuarantorLessee's expense. If (x) such contest can be pursued in the name of the Guarantor or the Lessee and independently from any other proceeding involving a Tax liability of such Tax Indemnitee for which the Lessee and the Guarantor have has not agreed to indemnify such Tax Indemnitee, (y) such contest must be pursued in the name of such the Tax Indemnitee, but can be pursued independently from any other proceeding involving a Tax liability of such Tax Indemnitee for which the Lessee and the Guarantor have has not agreed to indemnify such Tax Indemnitee or (z) such the Tax Indemnitee so requests, then the Guarantor or such Lessee shall be permitted to control the contest of such claim, provided that in the case of a contest described in clause (y) ), if such the Tax Indemnitee determines reasonably and in good faith that such contest by the Guarantor or the Lessee could have a material adverse impact on the business or operations of such the Tax Indemnitee and provides a written explanation to the Guarantor Lessee of such determination, such the Tax Indemnitee may elect to control or reassert control of the contest, and provided provided, that the by taking control of the contest, Lessee acknowledges that it is responsible for the Imposition ultimately determined to be due by the Guarantor or the Lessee reason of any contest shall not alter the applicable Tax Indemnitee's rights to indemnification hereundersuch claim, and provided, further, that in determining the application of clauses (x) and (y) of the preceding sentence, each Tax Indemnitee shall take any and all reasonable steps to segregate claims for any Taxes for which the Lessee and the Guarantor indemnify indemnifies hereunder from Taxes for which the Lessee and the Guarantor are is not obligated to indemnify hereunder, so that the Guarantor Lessee can control the contest of the former. In all other claims requested to be contested by the GuarantorLessee, such the Tax Indemnitee shall control the contest of such claim, acting through counsel selected by such Tax Indemnitee and reasonably acceptable to the GuarantorLessee. In no event shall the Guarantor Lessee be permitted to contest (or such the Tax Indemnitee be required to contest) any claim, (A) if such Tax Indemnitee provides the Guarantor Lessee with a legal opinion of independent counsel reasonably acceptable to the Guarantor that such action, suit or proceeding involves a material risk of imposition of criminal liability or will involve a material risk of the sale, forfeiture or loss of, or the creation of any Lien (other than a Permitted Lien) on the Property or any part of any thereof unless the Guarantor Lessee shall have posted and maintained a bond or other security reasonably satisfactory to the relevant Tax Indemnitee in respect to such risk, (B) if a Lease an Event of Default has occurred and is continuing unless the Guarantor Lessee shall have posted and maintained a bond or other security reasonably satisfactory to the relevant Tax Indemnitee in respect of the Taxes subject to such claim and any and all expenses for which the Guarantor or the Lessee is responsible hereunder reasonably foreseeable in connection with the contest of such claim, (C) unless the Guarantor Lessee shall have agreed to pay and shall pay, to such Tax Indemnitee on written demand all reasonable, documented reasonable out-of-pocket costs, losses and expenses that such Tax Indemnitee may incur in connection with contesting such Imposition including all reasonable legal, accounting and investigatory fees and disbursements and (if applicable) reasonable, allocable internal overhead costs determined in accordance with normal bank operating proceduresdisbursements, or (D) if such contest shall involve the payment of the Tax prior to the contest, unless the Guarantor Lessee shall provide to such the Tax Indemnitee an interest-free advance in an amount equal to the Imposition that such Tax the Indemnitee is required to pay (with no additional net after-tax costs to such Tax Indemnitee). In addition, addition for contests controlled by such Tax Indemnitee controlled contests and claims contested in the name of such the Tax Indemnitee in a public forum, no contest shall be required: (A) unless the amount of the potential indemnity (taking into account all similar or logically related claims that have been or could be raised in any audit involving any or all such Tax Indemnitees with respect to any period Indemnitee for which the Guarantor or the Lessee may be liable to pay an indemnity under this Section 13.4(b13.5(b)) exceeds (1) with respect to the Lessor, $25,000 and (2) with respect to any Tax Indemnitee other than the Lessor, $75,000 500,000 and (B) unless, if requested by such the Tax Indemnitee, the Guarantor Lessee shall have provided to such the Tax Indemnitee an opinion of counsel selected by the Guarantor Lessee (which may be in-house counsel) (except, in the case of income taxes indemnified hereunder, in hereunder which case such opinion shall be an opinion of independent tax counsel selected by the Guarantor Tax Indemnitee and reasonably acceptable to such Tax Indemniteethe Lessee) that a reasonable basis exists to contest such claim. In no event shall a Tax Indemnitee be required to appeal an adverse judicial determination to the United States Supreme Court. The party conducting the contest shall consult in good faith with the other party and its counsel with respect to the contest of such claim for Taxes (or claim for refund) but the decisions regarding what actions to be taken shall be made by the controlling party in its sole judgment; judgement, provided, however, that if such the Tax Indemnitee is the controlling party and the Guarantor Lessee recommends the acceptance of a settlement offer made by the relevant Governmental Authority and such Tax Indemnitee rejects such settlement offer, offer then the amount for which a the Lessee and the Guarantor will be required to indemnify such Tax Indemnitee with respect to the Taxes subject to such offer shall not exceed the amount which it would have owed if such settlement offer had been accepted provided that any Tax Indemnitee shall be entitled to reject any indemnity payment it would otherwise be entitled to hereunder if such Tax Indemnitee reasonably determines that accepting such offer would have an unindemnified impact on such Tax Indemnitee and provided further that no Tax Indemnitee may reject any such indemnity payment if the Guarantor agrees to pay to such Tax Indemnitee the amount of such unindemnified impact, as reasonably determined by such Tax Indemniteeaccepted. In addition, the controlling party shall keep the noncontrolling party reasonably informed as to the progress of the contest, and shall provide the noncontrolling party with a copy of (or appropriate excerpts from) any reports or claims issued by the relevant auditing agents or taxing authority to the controlling party thereof, in connection with such claim or the contest thereof, provided, however, that such obligation shall not obligate any Tax Indemnitee to disclose its tax returns or information or documentation unrelated to such claim or contest. Each Tax Indemnitee shall, at the expense of the Lessee and the Guarantor, shall supply the Lessee or the Guarantor with such information and documents reasonably requested by the Lessee or the Guarantor as are necessary or advisable for such Person the Lessee to participate in any action, suit or proceeding to the extent permitted by this Section 13.4(b13.5(b); provided, however, that and the Lessee shall promptly reimburse such Tax Indemnitee shall not be required to provide to for the reasonable out-of-pocket expenses of supplying such Lessee or the Guarantor copies of its tax returns or any other information, documentation, or materials that it deems to be confidential or proprietaryinformation and documents. Notwithstanding anything in this Section 13.4(b) to the contrary, no No Tax Indemnitee shall enter into any settlement or other compromise or fail to appeal an adverse ruling with respect to any claim which is entitled to be indemnified under this Section 13.4 13.5 (and with respect to which contest is required under this Section 13.4(b13.5(b)) without the prior written consent of the GuarantorLessee, unless such Tax Indemnitee waives its right to be indemnified under this Section 13.4 13.5 with respect to such claim. Notwithstanding anything contained herein to the contrary, a Tax Indemnitee shall will not be required to contest (and neither the Lessee nor the Guarantor shall not be permitted to contest in any judicial forum if such contest could, in a Tax Indemnitee's reasonable judgment, be materially adverse to itcontest) a claim with respect to the -52- Participation Agreement 57 imposition of any Tax if such Tax Indemnitee shall have waived waive its right to indemnification under this Section 13.4 13.5 with respect to such claim (and any claim with respect to such year or any other taxable year the contest of which is precluded or materially adversely affected as a result of such waiver).
Appears in 1 contract
Contests. If any claim shall be made against any Tax Indemnitee or if any proceeding shall be commenced against any Tax Indemnitee (including a written notice of such proceeding) for any Imposition as to which the Lessee or the Guarantor may have an indemnity obligation pursuant to this Section 13.412.5, or if any Tax Indemnitee shall determine that any Imposition to for which the Lessee or the Guarantor may have an indemnity obligation pursuant to this Section 13.4 12.5 may be payable, such Tax Indemnitee shall promptly (and in any event, within fifteen (15) Business Days30 days) notify the Guarantor Lessee in writing (provided that failure to so notify the Guarantor Lessee within fifteen (15) Business Days 30 days shall not alter such Tax Indemnitee's rights under this Section 13.4 12.5, except to the extent such failure precludes or materially adversely affects the ability to conduct a contest of any indemnified TaxesImposition) and shall not take any action with respect to such claim, proceeding or Imposition without the written consent of the Guarantor Lessee (such consent not to be unreasonably withheld or unreasonably delayed) for thirty (30) 30 days after the receipt of such notice by the GuarantorLessee; provided, however, that in the case of any such claim or proceeding, if such Tax Indemnitee shall be required by law or regulation to take action prior to the end of such thirty (30) -day period, such Tax Indemnitee shall in such notice to the GuarantorLessee, so inform the GuarantorLessee, and such Tax Indemnitee shall not take any action with respect to such claim, proceeding or Imposition without the consent of the Guarantor Lessee (such consent not to be unreasonably withheld or unreasonably delayed) for ten (10) 10 days after the receipt of such notice by Lessee, unless the Guarantor unless such Tax Indemnitee shall be required by law or regulation to take action prior to the end of such ten (10) -day period. The Guarantor Lessee shall be entitled for a period of thirty (30) 30 days from receipt of such notice from such Tax the Indemnitee (or such shorter period as such Tax the Indemnitee has notified the Guarantor Lessee is required by law or regulation for such Tax the Indemnitee to commence such contest), to request in writing that such Tax Indemnitee contest the imposition of such TaxImposition, at the GuarantorLessee's expense. If (x) such contest can be pursued in the name of the Guarantor or the Lessee and independently from any other proceeding involving a Tax liability of such Tax Indemnitee an Imposition for which the Lessee and the Guarantor have has not agreed to indemnify such Tax Indemnitee, (y) such contest must be pursued in the name of such Tax the Indemnitee, but can be pursued independently from any other proceeding involving a Tax liability of such Tax Indemnitee an Imposition for which the Lessee and the Guarantor have has not agreed to indemnify such Tax Indemnitee or (z) such Tax the Indemnitee so requests, then the Guarantor or such Lessee shall be permitted to control the contest of such claim, provided that in the case of a contest described in any of clause (x), (y) or (z) if such Tax the Indemnitee determines reasonably and in good faith that such contest by the Guarantor or the Lessee could have a material adverse impact on the business or operations of such Tax the Indemnitee and provides a written explanation to the Guarantor Lessee of such determination, such Tax the Indemnitee may elect to control or reassert control of the contest, and provided provided, that the by taking control of the contest, Lessee acknowledges that it is responsible for the Imposition ultimately determined to be due by the Guarantor or the Lessee reason of any contest shall not alter the applicable Tax Indemnitee's rights to indemnification hereundersuch claim, and provided, further, that in determining the application of clauses (x) and (y) of the preceding sentence, each Tax Indemnitee shall take any and all reasonable steps to segregate claims for any Taxes Impositions for which the Lessee and the Guarantor indemnify indemnifies hereunder from Taxes Impositions for which the Lessee and the Guarantor are is not obligated to indemnify hereunder, so that the Guarantor Lessee can control the contest of the former. In all other claims requested to be contested by Lessee, the Guarantor, such Tax Indemnitee shall control the contest of such claim, acting through counsel selected by such Tax Indemnitee and reasonably acceptable to the GuarantorLessee. In no event shall the Guarantor Lessee be permitted to contest (or such Tax the Indemnitee be required to contest) any claim, claim (A) if such Tax Indemnitee provides the Guarantor Lessee with a legal opinion of independent counsel reasonably acceptable to the Guarantor that such action, suit or proceeding involves a material risk of imposition of criminal liability or will involve a material risk of the sale, forfeiture or loss of, or the creation of any Lien (other than a Permitted Lien) on the Property Premises or any part of any thereof unless the Guarantor Lessee shall have posted and maintained a bond or other security reasonably satisfactory to the relevant Tax Indemnitee in respect to such risk, (B) if a Lease an Event of Default has occurred and is continuing continuing, unless the Guarantor Lessee shall have posted and maintained a bond or other security reasonably satisfactory to the relevant Tax Indemnitee in respect of the Taxes Impositions subject to such claim and any and all expenses for which the Guarantor or the Lessee is responsible hereunder reasonably foreseeable in connection with the contest of such claim, (C) unless the Guarantor Lessee shall have agreed to pay and shall pay, pay to such Tax Indemnitee on written demand all reasonable, documented reasonable out-of-pocket costs, losses and expenses that such Tax Indemnitee may incur in connection with contesting such Imposition Imposition, including all reasonable legal, accounting and investigatory fees and disbursements and (if applicable) reasonable, allocable internal overhead costs determined in accordance with normal bank operating proceduresdisbursements, or (D) if such contest shall involve the payment of the Tax Impositions prior to the contest, unless the Guarantor Lessee shall provide to such Tax the Indemnitee an interest-free advance in an amount equal to the Imposition that such Tax the Indemnitee is required to pay (with no additional net after-tax costs (including Taxes) to such Tax Indemnitee). In addition, for Indemnitee-controlled contests controlled by such Tax Indemnitee and claims contested in the name of such Tax the Indemnitee in a public forum, no contest shall be required: (A) unless the amount of the potential indemnity (taking into account all similar or logically related claims that have been or could be raised in any audit involving any or all such Tax Indemnitees with respect to any period Indemnitee for which the Guarantor or the Lessee may be liable to pay an indemnity under this Section 13.4(b)) 12.5 exceeds (1) with respect to the Lessor, $25,000 and (2) with respect to any Tax Indemnitee other than the Lessor, $75,000 50,000 and (B) unless, if requested by such Tax the Indemnitee, the Guarantor Lessee shall have provided to such Tax the Indemnitee an opinion of counsel selected by the Guarantor Lessee (which may be in-house counsel) (except, in the case of income taxes indemnified hereunder, in which case such opinion shall be an opinion of independent tax counsel selected by the Guarantor and reasonably acceptable to such Tax Indemnitee) that a reasonable basis exists to contest such claim. In no event shall a Tax an Indemnitee be required to appeal an adverse judicial determination to the United States Supreme Court. The party conducting the contest shall consult in good faith with the other party and its counsel with respect to the contest of such claim for Taxes Impositions (or claim for refund) but the decisions regarding what actions to be taken shall be made by the controlling party in its sole judgment; judgement, provided, however, that if such Tax the Indemnitee is the controlling party and the Guarantor Lessee recommends the acceptance of a settlement offer made by the relevant Governmental Authority and such Tax Indemnitee rejects such settlement offer, offer then the amount for which a Lessee and the Guarantor will be required to indemnify such Tax Indemnitee with respect to the Taxes subject to such offer shall not exceed the amount which it would have owed if such settlement offer had been accepted provided that any Tax Indemnitee shall be entitled to reject any indemnity payment it would otherwise be entitled to hereunder if such Tax Indemnitee reasonably determines that accepting such offer would have an unindemnified impact on such Tax Indemnitee and provided further that no Tax Indemnitee may reject any such indemnity payment if the Guarantor agrees to pay to such Tax Indemnitee the amount of such unindemnified impact, as reasonably determined by such Tax Indemniteeaccepted. In addition, the controlling party shall keep the noncontrolling party reasonably informed as to the progress of the contest, and shall provide the noncontrolling party with a copy of (or appropriate excerpts from) any reports or claims issued by the relevant auditing agents agent or taxing authority to the controlling party thereof, in connection with such claim or the contest thereof, provided, however, that such obligation shall not obligate any Tax Indemnitee to disclose its tax returns or information or documentation unrelated to such claim or contest. Each Tax Indemnitee shall, at the expense of the shall supply Lessee and the Guarantor, supply the Lessee or the Guarantor with such information and documents reasonably requested by the Lessee or the Guarantor as are necessary or advisable for such Person Lessee to participate in any action, suit or proceeding to the extent permitted by this Section 13.4(b12.5(b); provided, however, that and Lessee shall promptly reimburse such Tax Indemnitee shall not be required to provide to for the reasonable out-of-pocket expenses of supplying such Lessee or the Guarantor copies of its tax returns or any other information, documentation, or materials that it deems to be confidential or proprietaryinformation and documents. Notwithstanding anything in this Section 13.4(b) to the contrary, no Tax No Indemnitee shall enter into any settlement or other compromise or fail to appeal an adverse ruling with respect to any claim which is entitled to be indemnified under this Section 13.4 12.5 (and with respect to which contest is required under this Section 13.4(b12.5(b)) without the prior written consent of the GuarantorLessee (such consent not to be unreasonably withheld), unless such Tax Indemnitee waives its right to be indemnified under this Section 13.4 12.5 with respect to such claim. Notwithstanding anything contained herein to the contrary, a Tax an Indemnitee shall will not be required to contest (and neither the Lessee nor the Guarantor shall not be permitted to contest in any judicial forum if such contest could, in a Tax Indemnitee's reasonable judgment, be materially adverse to itcontest) a claim with respect to the imposition of any Tax Imposition if (i) such Tax Indemnitee shall have waived waive its right to indemnification under this Section 13.4 12.5 with respect to such claim (and any claim with respect to such year or any other taxable year year, the contest of which is precluded or materially adversely affected as a result of such waiver) or (ii) such Imposition is the sole result of a claim of a continuing and consistent nature, which claim has previously been resolved against the relevant Indemnitee (unless a change in law or facts has occurred since such prior adverse resolution and Lessee provides an opinion of independent tax counsel to the effect that it is more likely than not that such change in law or facts will result in a favorable resolution of the claim at issue).
Appears in 1 contract
Sources: Participation Agreement (Adc Telecommunications Inc)
Contests. If any claim shall be made against any Tax Indemnitee or if any proceeding shall be commenced against any Tax Indemnitee (including a written notice of such proceeding) for any Imposition Taxes as to which the Lessee or the Guarantor Lessees may have an indemnity obligation pursuant to this Section 13.47.4, or if any Tax Indemnitee shall determine that any Imposition Taxes as to which the Lessee or the Guarantor Lessees may have an indemnity obligation pursuant to this Section 13.4 7.4 may be payable, such Tax Indemnitee shall promptly (and in any eventnotify Concord. Concord shall be entitled, within fifteen (15) Business Days) notify the Guarantor in writing (provided that failure at its expense, to so notify the Guarantor within fifteen (15) Business Days shall not alter such Tax Indemnitee's rights under this Section 13.4 except participate in, and, to the extent such failure precludes or materially adversely affects that Concord desires to, assume and control the ability to conduct a contest of any indemnified Taxes) and shall not take any action with respect to such claim, proceeding or Imposition without the written consent of the Guarantor (such consent not to be unreasonably withheld or unreasonably delayed) for thirty (30) days after the receipt of such notice by the Guarantordefense thereof; provided, however, that in the case of any such claim or proceeding, if such Tax Indemnitee Concord shall be required by law or regulation to take action prior to the end of such thirty (30) day period, such Tax Indemnitee shall in such notice to the Guarantor, so inform the Guarantor, and such Tax Indemnitee shall not take any action with respect to such claim, proceeding or Imposition without the consent of the Guarantor (such consent not to be unreasonably withheld or unreasonably delayed) for ten (10) days after the receipt of such notice by the Guarantor unless such Tax Indemnitee shall be required by law or regulation to take action prior to the end of such ten (10) day period. The Guarantor shall be entitled for a period of thirty (30) days from receipt of such notice from such Tax Indemnitee (or such shorter period as such Tax Indemnitee has notified the Guarantor is required by law or regulation for such Tax Indemnitee to commence such contest), to request have acknowledged in writing that such Tax Indemnitee contest the imposition of such Tax, at the Guarantor's expense. If (x) such contest can be pursued in the name of the Guarantor or the Lessee its and independently from any other proceeding involving a Tax liability of such Tax Indemnitee for which the Lessee and the Guarantor have not agreed each Lessee’s obligation to indemnify such Tax Indemnitee, (y) such contest must be pursued in the name of such Tax Indemnitee, but can be pursued independently from any other proceeding involving a Tax liability of such Tax Indemnitee for which the Lessee and the Guarantor have not agreed to fully indemnify such Tax Indemnitee or (z) such Tax Indemnitee so requests, then the Guarantor or such Lessee shall be permitted to control the contest in respect of such claim, provided that in the case of a contest described in clause (y) if such Tax Indemnitee determines reasonably and in good faith that such contest by the Guarantor or the Lessee could have a material adverse impact on the business or operations of such Tax Indemnitee and provides a written explanation to the Guarantor of such determination, such Tax Indemnitee may elect to control or reassert control of the contest, and provided that the taking control by the Guarantor or the Lessee of any contest shall not alter the applicable Tax Indemnitee's rights to indemnification hereunder, and provided, further, that in determining the application of clauses (x) and (y) of the preceding sentence, each Tax Indemnitee shall take any and all reasonable steps to segregate claims for any Taxes for which the Lessee and the Guarantor indemnify hereunder from Taxes for which the Lessee and the Guarantor are not obligated to indemnify hereunder, so that the Guarantor can control the contest of the former. In all other claims requested to be contested by the Guarantor, such Tax Indemnitee shall control the contest of such claim, acting through counsel selected by such Tax Indemnitee and reasonably acceptable to the Guarantor. In no event shall the Guarantor be permitted to contest (or such Tax Indemnitee be required to contest) any claim, (A) if such Tax Indemnitee provides the Guarantor with a legal opinion of counsel reasonably acceptable to the Guarantor that such action, suit or proceeding if the contest is unsuccessful; and, provided further, that Concord shall not be entitled to assume and control the defense of any such action, suit or proceeding (but the Tax Indemnitee shall then contest, at the sole cost and expense of Concord and such other Lessees, on behalf of Concord with representatives reasonably satisfactory to Concord) if and to the extent that, (A) in the reasonable opinion of such Tax Indemnitee, such action, suit or proceeding (x) involves a any meaningful risk of imposition of criminal liability or any material risk of material civil liability on such Tax Indemnitee or (y) will involve a material risk of the sale, forfeiture or loss of, or the creation of any Lien (other than a Permitted Lien) on the any Leased Property or any part thereof unless the Guarantor a Lessee shall have posted and maintained a bond or other security reasonably satisfactory to the relevant Tax Indemnitee Indemnitees in respect to such risk, (B) if a Lease such proceeding involves Claims not fully indemnified by the Lessees which Concord and the Tax Indemnitee have been unable to sever from the indemnified claim(s), (C) an Event of Default has occurred and is continuing unless the Guarantor shall have posted and maintained a bond continuing, (D) such action, suit or other security reasonably satisfactory proceeding involves matters which extend beyond or are unrelated to the relevant Tax Indemnitee in respect Transaction and if determined adversely could be materially detrimental to the interests of the Taxes subject to such claim and any and all expenses for which the Guarantor or the Lessee is responsible hereunder reasonably foreseeable in connection with the contest of such claim, (C) unless the Guarantor shall have agreed to pay and shall pay, to such Tax Indemnitee on written demand all reasonablenotwithstanding indemnification by the Lessees or (E) such action, documented out-of-pocket costs, losses and expenses that such suit or proceeding involves the federal or any state income tax liability of the Tax Indemnitee may incur in connection with contesting such Imposition including all reasonable legalnot indemnified by the Lessees. With respect to any contests controlled by a Tax Indemnitee, accounting and investigatory fees and disbursements and (if applicable) reasonable, allocable internal overhead costs determined in accordance with normal bank operating procedures, or (Di) if such contest shall involve the payment of the Tax prior relates to the contest, unless the Guarantor shall provide to such Tax Indemnitee an interest-free advance in an amount equal to the Imposition that such Tax Indemnitee is required to pay (with no additional net after-federal or any state income tax costs to such Tax Indemnitee). In addition, for contests controlled by such Tax Indemnitee and claims contested in the name liability of such Tax Indemnitee in a public forum, no contest shall be required: (A) unless the amount of the potential indemnity (taking into account all similar or logically related claims that have been or could be raised in any audit involving any or all such Tax Indemnitees with respect to any period for which the Guarantor or the Lessee may be liable to pay an indemnity under this Section 13.4(b)) exceeds (1) with respect to the Lessor, $25,000 and (2) with respect to any Tax Indemnitee other than the Lessor, $75,000 and (B) unless, if requested by such Tax Indemnitee, the Guarantor such Tax Indemnitee shall be required to conduct such contest only if Concord shall have provided to such Tax Indemnitee an opinion of counsel selected by the Guarantor (which may be in-house counsel) (except, in the case of income taxes indemnified hereunder, in which case such opinion shall be an opinion of independent tax counsel selected by the Guarantor Tax Indemnitee and reasonably acceptable satisfactory to such Tax Indemnitee) Concord stating that a reasonable basis exists to contest such claim. In claim or (ii) in the case of an appeal of an adverse determination of any contest relating to any Taxes, an opinion of such counsel to the effect that such appeal is more likely than not to be successful, provided, however, such Tax Indemnitee shall in no event shall a Tax Indemnitee be required to appeal an adverse judicial determination to the United States Supreme Court. The party conducting the contest shall consult in good faith with the other party and its counsel with respect to the contest of such claim for Taxes (or claim for refund) but the decisions regarding what actions to be taken shall be made by the controlling party in its sole judgment; provided, however, that if such Tax Indemnitee is the controlling party and the Guarantor recommends the acceptance of a settlement offer made by the relevant Governmental Authority and such Tax Indemnitee rejects such settlement offer, then the amount for which a Lessee and the Guarantor will be required to indemnify such Tax Indemnitee with respect to the Taxes subject to such offer shall not exceed the amount which it would have owed if such settlement offer had been accepted provided that any Tax Indemnitee shall be entitled to reject any indemnity payment it would otherwise be entitled to hereunder if such Tax Indemnitee reasonably determines that accepting such offer would have an unindemnified impact on such Tax Indemnitee and provided further that no Tax Indemnitee may reject participate in a reasonable manner at its own expense and with its own counsel in any such indemnity payment if proceeding conducted by Concord in accordance with the Guarantor agrees to pay to such Tax Indemnitee the amount of such unindemnified impact, as reasonably determined by such Tax Indemnitee. In addition, the controlling party shall keep the noncontrolling party reasonably informed as to the progress of the contest, and shall provide the noncontrolling party with a copy of (or appropriate excerpts from) any reports or claims issued by the relevant auditing agents or taxing authority to the controlling party thereof, in connection with such claim or the contest thereof, provided, however, that such obligation shall not obligate any Tax Indemnitee to disclose its tax returns or information or documentation unrelated to such claim or contestforegoing. Each Tax Indemnitee shall, at the expense of the Lessee and the GuarantorLessees’ expense, supply the Lessee or the Guarantor Concord with such information and documents in such Tax Indemnitee’s possession as are reasonably requested by the Lessee or the Guarantor as Concord and are necessary or advisable for such Person Concord to participate in any action, suit or proceeding to the extent permitted by this Section 13.4(b); provided, however, that such Tax Indemnitee 7.4. Unless an Event of Default shall not have occurred and be required to provide to such Lessee or the Guarantor copies of its tax returns or any other information, documentation, or materials that it deems to be confidential or proprietary. Notwithstanding anything in this Section 13.4(b) to the contrarycontinuing, no Tax Indemnitee shall enter into any settlement or other compromise or fail to appeal an adverse ruling with respect to any claim Claim which is entitled to be indemnified under this Section 13.4 (and with respect to which contest is required under this Section 13.4(b)) 7.4 without the prior written consent of the GuarantorConcord, which consent shall not be unreasonably withheld, unless such Tax Indemnitee waives its right to be indemnified under this Section 13.4 7.4 with respect to such claimClaim. Notwithstanding anything contained herein to the contrary, (i) a Tax Indemnitee shall will not be required to contest (and neither the no Lessee nor the Guarantor shall be permitted to contest in any judicial forum if such contest could, in a Tax Indemnitee's reasonable judgment, be materially adverse to itexcept on its own behalf) a claim with respect to the imposition of any Tax if such Tax Indemnitee shall have waived waive its right to indemnification under this Section 13.4 7.4 with respect to such claim (and any related claim with respect to such year or any other taxable year years the contest of which is precluded or materially adversely affected as a result of such waiver)) and (ii) no Tax Indemnitee shall be required to contest any claim if the subject matter thereof shall be of a continuing nature and shall have previously been decided adversely, unless Concord shall have provided to such Tax Indemnitee an opinion of Tax Indemnitee’s counsel selected by the Tax Indemnitee and reasonably satisfactory to Concord stating that a reasonable basis exists to contest such claim in light of such adverse decision. Each Tax Indemnitee and Concord shall consult in good faith with each other regarding the conduct of such contest controlled by either.
Appears in 1 contract
Sources: Master Agreement (Concord Efs Inc)
Contests. Lessee shall pay on or before the time or times prescribed by law any Taxes that Lessee is liable for hereunder. If any claim shall be or claims is or are made against any Tax Indemnitee or if any proceeding shall be commenced against for any Tax which is subject to indemnification as provided in Section 7.2(a), Indemnitee (including a shall as soon as practicable, but in no event more than 30 days after receipt of formal written notice of the Tax or proposed Tax, notify the Lessee. If requested by Lessee in writing within 30 days of Lessee's receipt of such proceedingnotice from the Indemnitee, such Indemnitee shall contest (including all judicial appeals other than to the United States Supreme Court), at the expense of Lessee, in the name of such Indemnitee (or such Indemnitee, in its sole discretion, may require Lessee, if permitted by Applicable Laws and Regulations, to contest in the name of Lessee or such Indemnitee) the validity, applicability or amount of such Tax; provided that such contest shall be required only if (i) in the reasonable opinion of Lessee and its tax counsel reasonably acceptable to such Indemnitee, there exists a reasonable basis, within the meaning of ABA Formal Opinion No. 85-352, to contest such Tax, (ii) no Lease Event of Default has occurred and is continuing, (iii) Lessee has acknowledged in writing its liability for the Tax at issue to the extent the contest is not successful, (iv) the contest will not result in a risk of criminal liability of an Indemnitee or a material risk of sale, loss or forfeiture of the Aircraft or any part thereof or interest therein, (v) the amount of the Tax exceeds $25,000, and (vi) Lessee pays all reasonable expenses incurred by the Indemnitee in contesting any such Tax (including, without limitation, all reasonable attorneys' and accountants' fees), upon demand by the Indemnitee. Lessee shall have the right to participate in the conduct of any proceedings controlled by the Indemnitee to the extent that such participation by such Person does not interfere with the Indemnitee's control of such contest and Lessee shall in all events be kept informed, to the extent practicable, of material developments relative to such proceedings. The Indemnitee shall have the right to participate in the conduct of any proceedings controlled by Lessee to the extent that such participation by such Person does not interfere with Lessee's control of such contest, and the Indemnitee shall in all events be kept informed, to the extent practicable, of material developments relative to such proceedings. The Indemnitees agree that a contested claim for which Lessee would be required to make a reimbursement payment hereunder will not be settled or compromised without Lessee's good faith prior written consent unless the Indemnitee waives its right to indemnification hereunder and repays the Taxes advanced by Lessee as a non-interest bearing loan by Lessee to such Indemnitee (as provided below) with interest at the Overdue Rate from the date of payment until receipt thereof by Lessee. Indemnitee shall endeavor to settle or compromise any such contested claim in accordance with written instructions received from the Lessee; provided, that (x) Lessee on or before the date the Indemnitee executes a settlement or compromise pays the contested Tax to the extent agreed upon or makes an indemnification payment to the Indemnitee in an amount acceptable to the Indemnitee; and (y) the settlement or compromise does not, in the reasonable opinion of the Indemnitee, adversely affect the right of the Certificate Trustee or such Indemnitee to receive Rent or the Lease Balance or any other payment pursuant to the Operative Documents, or involve a material risk of sale, forfeiture or loss of any Aircraft or any interest therein. The failure of an Indemnitee to contest timely a claim against it for any Imposition as Tax which is subject to indemnification under Section 7.2(a) and for which the it has an obligation to Lessee or the Guarantor may have an indemnity obligation pursuant to this Section 13.4, or if any Tax Indemnitee shall determine that any Imposition to which the Lessee or the Guarantor may have an indemnity obligation pursuant to this Section 13.4 may be payable, such Tax Indemnitee shall promptly (and in any event, within fifteen (15) Business Days) notify the Guarantor in writing (provided that failure to so notify the Guarantor within fifteen (15) Business Days shall not alter such Tax Indemnitee's rights contest under this Section 13.4 except 7.2(b) in the manner required by Applicable Laws and Regulations where Lessee has timely requested that such Indemnitee contest such claim shall relieve Lessee of its obligations to such Indemnitee under Section 7.2(a) with respect to such claim only to the extent such failure precludes results in the loss of an effective contest. If Applicable Laws and Regulations require the payment of a contested Tax as a condition to, or materially adversely affects regardless of, its being contested (or if the ability Indemnitee controls such contest and decides to conduct pursue such contest by paying the Tax and seeking a refund thereof), and Lessee chooses to contest such Tax or to direct the Indemnitee to contest such Tax in accordance with this Section, then Lessee shall provide the Indemnitee with the funds to pay such Tax, such provision of funds to be deemed a non-interest bearing loan by Lessee to the Indemnitee to be repaid by any recovery of such Tax from such contest and remaining unpaid amount not recovered to offset Lessee's obligation to indemnify the Indemnitee for such Tax. Lessee shall indemnify the Indemnitee on an After-Tax Basis in accordance with Section 7.7 for and against any adverse consequences of any indemnified Taxessuch interest-free loan. In the event that the Indemnitee receives a refund (or like adjustment) and in respect of any Tax for which the Indemnitee has been reimbursed by Lessee, the Indemnitee shall not take any action with respect to such claim, proceeding or Imposition without promptly remit the written consent of the Guarantor (such consent not to be unreasonably withheld or unreasonably delayed) for thirty (30) days after the receipt amount of such notice refund (or like adjustment), plus any interest received thereon, to Lessee, net of all reasonable costs and expenses incurred by the Guarantorsuch Indemnitee in connection therewith; provided, however, that in the case of any such claim or proceeding, if such Tax Indemnitee shall be required by law or regulation to take action prior to the end of such thirty (30) day period, such Tax Indemnitee shall in such notice to the Guarantor, so inform the Guarantor, and such Tax Indemnitee shall not take be required to remit any action amount pursuant to this sentence in excess of the amounts previously paid by Lessee to, or on behalf of, such Indemnitee with respect to such claimTax pursuant to this Section 7, proceeding or Imposition without the consent of the Guarantor (such consent not to be unreasonably withheld or unreasonably delayed) for ten (10) days after the receipt of such notice by the Guarantor unless such Tax Indemnitee shall be required by law or regulation to take action prior to the end of such ten (10) day period. The Guarantor shall be entitled for a period of thirty (30) days from receipt of such notice from such Tax Indemnitee (or such shorter period as such Tax Indemnitee has notified the Guarantor is required by law or regulation for such Tax Indemnitee to commence such contest), to request in writing that such Tax Indemnitee contest the imposition of such Tax, at the Guarantor's expense. If (x) such contest can be pursued in the name of the Guarantor or the Lessee and independently from plus any other proceeding involving a Tax liability of such Tax Indemnitee for which the Lessee and the Guarantor have not agreed to indemnify such Tax Indemnitee, (y) such contest must be pursued in the name of such Tax Indemnitee, but can be pursued independently from any other proceeding involving a Tax liability of such Tax Indemnitee for which the Lessee and the Guarantor have not agreed to indemnify such Tax Indemnitee or (z) such Tax Indemnitee so requests, then the Guarantor or such Lessee shall be permitted to control the contest of such claim, provided that in the case of a contest described in clause (y) if such Tax Indemnitee determines reasonably and in good faith that such contest by the Guarantor or the Lessee could have a material adverse impact on the business or operations of such Tax Indemnitee and provides a written explanation to the Guarantor of such determination, such Tax Indemnitee may elect to control or reassert control of the contest, and provided that the taking control by the Guarantor or the Lessee of any contest shall not alter the applicable Tax Indemnitee's rights to indemnification hereunder, and interest received thereon; provided, further, that in determining the application of clauses (x) and (y) of the preceding sentence, each Tax Indemnitee shall take any and all reasonable steps to segregate claims for any Taxes for which the Lessee and the Guarantor indemnify hereunder from Taxes for which the Lessee and the Guarantor are not obligated to indemnify hereunder, so that the Guarantor can control the contest of the former. In all other claims requested to be contested by the Guarantor, such Tax Indemnitee shall control the contest of such claim, acting through counsel selected by such Tax Indemnitee and reasonably acceptable to the Guarantor. In no event shall the Guarantor be permitted to contest (or such Tax Indemnitee be required to contest) remit any claim, (A) if such Tax Indemnitee provides the Guarantor with a legal opinion of counsel reasonably acceptable amount pursuant to the Guarantor that such action, suit or proceeding involves a risk of imposition of criminal liability or will involve a material risk of the sale, forfeiture or loss of, or the creation of any Lien (other than a Permitted Lien) on the Property or any part thereof unless the Guarantor shall have posted and maintained a bond or other security reasonably satisfactory to the relevant Tax Indemnitee in respect to such risk, (B) if this sentence for so long as a Lease Event of Default has occurred and is continuing unless the Guarantor shall have posted and maintained a bond or other security reasonably satisfactory to the relevant Tax Indemnitee in respect of the Taxes subject to such claim and any and all expenses for which the Guarantor or the Lessee is responsible hereunder reasonably foreseeable in connection with the contest of such claim, (C) unless the Guarantor shall have agreed to pay and shall pay, to such Tax Indemnitee on written demand all reasonable, documented out-of-pocket costs, losses and expenses that such Tax Indemnitee may incur in connection with contesting such Imposition including all reasonable legal, accounting and investigatory fees and disbursements and (if applicable) reasonable, allocable internal overhead costs determined in accordance with normal bank operating procedures, or (D) if such contest shall involve the payment of the Tax prior to the contest, unless the Guarantor shall provide to such Tax Indemnitee an interest-free advance in an amount equal to the Imposition that such Tax Indemnitee is required to pay (with no additional net after-tax costs to such Tax Indemnitee). In addition, for contests controlled by such Tax Indemnitee and claims contested in the name of such Tax Indemnitee in a public forum, no contest shall be required: (A) unless the amount of the potential indemnity (taking into account all similar or logically related claims that have been or could be raised in any audit involving any or all such Tax Indemnitees with respect to any period for which the Guarantor or the Lessee may be liable to pay an indemnity under this Section 13.4(b)) exceeds (1) with respect to the Lessor, $25,000 and (2) with respect to any Tax Indemnitee other than the Lessor, $75,000 and (B) unless, if requested by such Tax Indemnitee, the Guarantor shall have provided to such Tax Indemnitee an opinion of counsel selected by the Guarantor (which may be in-house counsel) (except, in the case of income taxes indemnified hereunder, in which case such opinion shall be an opinion of independent tax counsel selected by the Guarantor and reasonably acceptable to such Tax Indemnitee) that a reasonable basis exists to contest such claim. In no event shall a Tax Indemnitee be required to appeal an adverse judicial determination to the United States Supreme Court. The party conducting the contest shall consult in good faith with the other party and its counsel with respect to the contest of such claim for Taxes (or claim for refund) but the decisions regarding what actions to be taken shall be made by the controlling party in its sole judgment; provided, however, that if such Tax Indemnitee is the controlling party and the Guarantor recommends the acceptance of a settlement offer made by the relevant Governmental Authority and such Tax Indemnitee rejects such settlement offer, then the amount for which a Lessee and the Guarantor will be required to indemnify such Tax Indemnitee with respect to the Taxes subject to such offer shall not exceed the amount which it would have owed if such settlement offer had been accepted provided that any Tax Indemnitee shall be entitled to reject any indemnity payment it would otherwise be entitled to hereunder if such Tax Indemnitee reasonably determines that accepting such offer would have an unindemnified impact on such Tax Indemnitee and provided further that no Tax Indemnitee may reject any such indemnity payment if the Guarantor agrees to pay to such Tax Indemnitee the amount of such unindemnified impact, as reasonably determined by such Tax Indemnitee. In addition, the controlling party shall keep the noncontrolling party reasonably informed as to the progress of the contest, and shall provide the noncontrolling party with a copy of (or appropriate excerpts from) any reports or claims issued by the relevant auditing agents or taxing authority to the controlling party thereof, in connection with such claim or the contest thereof, provided, however, that such obligation shall not obligate any Tax Indemnitee to disclose its tax returns or information or documentation unrelated to such claim or contest. Each Tax Indemnitee shall, at the expense of the Lessee and the Guarantor, supply the Lessee or the Guarantor with such information and documents reasonably requested by the Lessee or the Guarantor as are necessary or advisable for such Person to participate in any action, suit or proceeding to the extent permitted by this Section 13.4(b); provided, however, that such Tax Indemnitee shall not be required to provide to such Lessee or the Guarantor copies of its tax returns or any other information, documentation, or materials that it deems to be confidential or proprietary. Notwithstanding anything in this Section 13.4(b) to the contrary, no Tax Indemnitee shall enter into any settlement or other compromise or fail to appeal an adverse ruling with respect to any claim which is entitled to be indemnified under this Section 13.4 (and with respect to which contest is required under this Section 13.4(b)) without the prior written consent of the Guarantor, unless such Tax Indemnitee waives its right to be indemnified under this Section 13.4 with respect to such claim. Notwithstanding anything contained herein to the contrary, a Tax Indemnitee shall not be required to contest (and neither the Lessee nor the Guarantor shall be permitted to contest in any judicial forum if such contest could, in a Tax Indemnitee's reasonable judgment, be materially adverse to it) a claim with respect to the imposition of any Tax if such Tax Indemnitee shall have waived its right to indemnification under this Section 13.4 with respect to such claim (and any claim with respect to such year or any other taxable year the contest of which is precluded or materially adversely affected as a result of such waiver)continuing.
Appears in 1 contract
Contests. If any claim (a) In the case of an audit or administrative or judicial proceeding that relates to periods ending on or before the Closing Date or for which the Purchaser may seek indemnity from the Sellers, the Sellers shall be made against any Tax Indemnitee or if any proceeding shall be commenced against any Tax Indemnitee (including a written notice have the right, at their expense, to participate in and control the conduct of such proceeding) audit or proceeding but only to the extent that such audit or proceeding relates to a potential adjustment for which the Sellers have acknowledged the Sellers' liability and the issue underlying the potential adjustment does not recur for any Imposition period ending subsequent to the Closing Date. The Sellers shall keep the Purchaser fully informed of the progress of any such audit or proceeding and, if it appears in the sole discretion of the Purchaser, that such audit or proceeding may reasonably be expected to adversely affect the Purchaser or the Company, the Purchaser also may participate in any such audit or proceeding. If the Sellers do not assume the defense of any such audit or proceeding promptly, the Purchaser may defend and settle the same (for the Sellers' account and at the Sellers' expense) in such manner as it may deem appropriate. In the event that a potential adjustment as to which the Lessee or Sellers would be liable is present in the Guarantor may have an indemnity obligation pursuant to this Section 13.4, or if any Tax Indemnitee shall determine that any Imposition to same proceeding as a potential adjustment for which the Lessee Purchaser would be liable, the Purchaser shall have the right, at its expense, to control the audit or the Guarantor may have an indemnity obligation pursuant to this Section 13.4 may be payable, such Tax Indemnitee shall promptly (and in any event, within fifteen (15) Business Days) notify the Guarantor in writing (provided that failure to so notify the Guarantor within fifteen (15) Business Days shall not alter such Tax Indemnitee's rights under this Section 13.4 except to the extent such failure precludes or materially adversely affects the ability to conduct a contest of any indemnified Taxes) and shall not take any action proceeding with respect to the latter potential adjustment.
(b) With respect to a potential adjustment for which both the Sellers and the Purchaser or the Company could be liable, or which involves an issue that recurs for any period ending after the Closing Date (whether or not the subject of audit at such claimtime), (i) both the Purchaser and the Sellers may participate in the audit or proceeding, each at its own expense, and (ii) the audit or proceeding shall be controlled by that party which would bear the burden of the greater portion of the dollar amount of the adjustment and any corresponding adjustments that may reasonably be anticipated for future Tax periods. The principle set forth in the preceding sentence shall govern also for purposes of deciding any issue that must be decided jointly (in particular, choice of judicial forum) in circumstances in which separate issues are otherwise controlled hereunder by the Purchaser and the Sellers.
(c) Except as provided in Section 8.4(a) above, neither the Purchaser nor the Sellers shall enter into any compromise or Imposition agree to settle any claim pursuant to any Tax audit or proceeding which would adversely affect the other party, or result in a material benefit to that party, for such year or a subsequent year without the written consent of the Guarantor (such other party, which consent may not to be unreasonably withheld or unreasonably delayed) for thirty (30) days after the receipt of such notice by the Guarantor; provided, however, that in the case of any such claim or proceeding, if such Tax Indemnitee shall be required by law or regulation to take action prior to the end of such thirty (30) day period, such Tax Indemnitee shall in such notice to the Guarantor, so inform the Guarantor, and such Tax Indemnitee shall not take any action with respect to such claim, proceeding or Imposition without the consent of the Guarantor (such consent not to be unreasonably withheld or unreasonably delayed) for ten (10) days after the receipt of such notice by the Guarantor unless such Tax Indemnitee shall be required by law or regulation to take action prior to the end of such ten (10) day period. The Guarantor shall be entitled for a period of thirty (30) days from receipt of such notice from such Tax Indemnitee (or such shorter period as such Tax Indemnitee has notified the Guarantor is required by law or regulation for such Tax Indemnitee to commence such contest), to request in writing that such Tax Indemnitee contest the imposition of such Tax, at the Guarantor's expense. If (x) such contest can be pursued in the name of the Guarantor or the Lessee and independently from any other proceeding involving a Tax liability of such Tax Indemnitee for which the Lessee and the Guarantor have not agreed to indemnify such Tax Indemnitee, (y) such contest must be pursued in the name of such Tax Indemnitee, but can be pursued independently from any other proceeding involving a Tax liability of such Tax Indemnitee for which the Lessee and the Guarantor have not agreed to indemnify such Tax Indemnitee or (z) such Tax Indemnitee so requests, then the Guarantor or such Lessee shall be permitted to control the contest of such claim, provided that in the case of a contest described in clause (y) if such Tax Indemnitee determines reasonably and in good faith that such contest by the Guarantor or the Lessee could have a material adverse impact on the business or operations of such Tax Indemnitee and provides a written explanation to the Guarantor of such determination, such Tax Indemnitee may elect to control or reassert control of the contest, and provided that the taking control by the Guarantor or the Lessee of any contest shall not alter the applicable Tax Indemnitee's rights to indemnification hereunder, and provided, further, that in determining the application of clauses (x) and (y) of the preceding sentence, each Tax Indemnitee shall take any and all reasonable steps to segregate claims for any Taxes for which the Lessee and the Guarantor indemnify hereunder from Taxes for which the Lessee and the Guarantor are not obligated to indemnify hereunder, so that the Guarantor can control the contest of the former. In all other claims requested to be contested by the Guarantor, such Tax Indemnitee shall control the contest of such claim, acting through counsel selected by such Tax Indemnitee and reasonably acceptable to the Guarantor. In no event shall the Guarantor be permitted to contest (or such Tax Indemnitee be required to contest) any claim, (A) if such Tax Indemnitee provides the Guarantor with a legal opinion of counsel reasonably acceptable to the Guarantor that such action, suit or proceeding involves a risk of imposition of criminal liability or will involve a material risk of the sale, forfeiture or loss of, or the creation of any Lien (other than a Permitted Lien) on the Property or any part thereof unless the Guarantor shall have posted and maintained a bond or other security reasonably satisfactory to the relevant Tax Indemnitee in respect to such risk, (B) if a Lease Event of Default has occurred and is continuing unless the Guarantor shall have posted and maintained a bond or other security reasonably satisfactory to the relevant Tax Indemnitee in respect of the Taxes subject to such claim and any and all expenses for which the Guarantor or the Lessee is responsible hereunder reasonably foreseeable in connection with the contest of such claim, (C) unless the Guarantor shall have agreed to pay and shall pay, to such Tax Indemnitee on written demand all reasonable, documented out-of-pocket costs, losses and expenses that such Tax Indemnitee may incur in connection with contesting such Imposition including all reasonable legal, accounting and investigatory fees and disbursements and (if applicable) reasonable, allocable internal overhead costs determined in accordance with normal bank operating procedures, or (D) if such contest shall involve the payment of the Tax prior to the contest, unless the Guarantor shall provide to such Tax Indemnitee an interest-free advance in an amount equal to the Imposition that such Tax Indemnitee is required to pay (with no additional net after-tax costs to such Tax Indemnitee). In addition, for contests controlled by such Tax Indemnitee and claims contested in the name of such Tax Indemnitee in a public forum, no contest shall be required: (A) unless the amount of the potential indemnity (taking into account all similar or logically related claims that have been or could be raised in any audit involving any or all such Tax Indemnitees with respect to any period for which the Guarantor or the Lessee may be liable to pay an indemnity under this Section 13.4(b)) exceeds (1) with respect to the Lessor, $25,000 and (2) with respect to any Tax Indemnitee other than the Lessor, $75,000 and (B) unless, if requested by such Tax Indemnitee, the Guarantor shall have provided to such Tax Indemnitee an opinion of counsel selected by the Guarantor (which may be in-house counsel) (except, in the case of income taxes indemnified hereunder, in which case such opinion shall be an opinion of independent tax counsel selected by the Guarantor and reasonably acceptable to such Tax Indemnitee) that a reasonable basis exists to contest such claim. In no event shall a Tax Indemnitee be required to appeal an adverse judicial determination to the United States Supreme Court. The party conducting the contest shall consult in good faith with the other party and its counsel with respect to the contest of such claim for Taxes (or claim for refund) but the decisions regarding what actions to be taken shall be made by the controlling party in its sole judgment; provided, however, that if such Tax Indemnitee is the controlling party and the Guarantor recommends the acceptance of a settlement offer made by the relevant Governmental Authority and such Tax Indemnitee rejects such settlement offer, then the amount for which a Lessee and the Guarantor will be required to indemnify such Tax Indemnitee with respect to the Taxes subject to such offer shall not exceed the amount which it would have owed if such settlement offer had been accepted provided that any Tax Indemnitee shall be entitled to reject any indemnity payment it would otherwise be entitled to hereunder if such Tax Indemnitee reasonably determines that accepting such offer would have an unindemnified impact on such Tax Indemnitee and provided further that no Tax Indemnitee may reject any such indemnity payment if the Guarantor agrees to pay to such Tax Indemnitee the amount of such unindemnified impact, as reasonably determined by such Tax Indemnitee. In addition, the controlling party shall keep the noncontrolling party reasonably informed as to the progress of the contest, and shall provide the noncontrolling party with a copy of (or appropriate excerpts from) any reports or claims issued by the relevant auditing agents or taxing authority to the controlling party thereof, in connection with such claim or the contest thereof, provided, however, that such obligation shall not obligate any Tax Indemnitee to disclose its tax returns or information or documentation unrelated to such claim or contest. Each Tax Indemnitee shall, at the expense of the Lessee and the Guarantor, supply the Lessee or the Guarantor with such information and documents reasonably requested by the Lessee or the Guarantor as are necessary or advisable for such Person to participate in any action, suit or proceeding to the extent permitted by this Section 13.4(b); provided, however, that such Tax Indemnitee shall not be required to provide to such Lessee or the Guarantor copies of its tax returns or any other information, documentation, or materials that it deems to be confidential or proprietary. Notwithstanding anything in this Section 13.4(b) to the contrary, no Tax Indemnitee shall enter into any settlement or other compromise or fail to appeal an adverse ruling with respect to any claim which is entitled to be indemnified under this Section 13.4 (and with respect to which contest is required under this Section 13.4(b)) without the prior written consent of the Guarantor, unless such Tax Indemnitee waives its right to be indemnified under this Section 13.4 with respect to such claim. Notwithstanding anything contained herein to the contrary, a Tax Indemnitee shall not be required to contest (and neither the Lessee nor the Guarantor shall be permitted to contest in any judicial forum if such contest could, in a Tax Indemnitee's reasonable judgment, be materially adverse to it) a claim with respect to the imposition of any Tax if such Tax Indemnitee shall have waived its right to indemnification under this Section 13.4 with respect to such claim (and any claim with respect to such year or any other taxable year the contest of which is precluded or materially adversely affected as a result of such waiver).
Appears in 1 contract
Contests. If In respect of the indemnification provided under Section 11.1(a), promptly after receipt by an Indemnitee of notice of any pending or threatened Claim, such Indemnitee shall, if a claim shall for indemnification in respect thereof is to be made against any Tax Indemnitee or if any proceeding shall be commenced against any Tax Indemnitee (including a Lessee give written notice thereof to Lessee; provided that the failure to provide such prompt notice shall not limit Lessee's obligations or prejudice any rights of such proceedingIndemnitee under Section 11.1(a) for any Imposition as with respect to which the Lessee or the Guarantor may have an indemnity obligation pursuant to this Section 13.4such Claim, or if any Tax Indemnitee shall determine that any Imposition to which the Lessee or the Guarantor may have an indemnity obligation pursuant to this Section 13.4 may be payable, such Tax Indemnitee shall promptly (and in any event, within fifteen (15) Business Days) notify the Guarantor in writing (provided that failure to so notify the Guarantor within fifteen (15) Business Days shall not alter such Tax Indemnitee's rights under this Section 13.4 except to the extent that such failure precludes or materially to provide prompt notice adversely affects Lessee's indemnification obligations hereunder. So long as no Lease Event of Default is continuing, Lessee at its own expense, may elect to assume the ability to conduct a contest of any indemnified Taxes) and shall not take any action with respect to such claim, proceeding or Imposition without the written consent of the Guarantor (such consent not to be unreasonably withheld or unreasonably delayed) for thirty (30) days after the receipt of such notice by the Guarantor; provided, however, that in the case defense of any such claim or proceedingClaim through its own counsel, if such Tax Indemnitee which shall be required by law or regulation to take action prior subject to the end reasonable approval of the Indemnitee, on behalf of the Indemnitee (with full right of subrogation to the Indemnitee's rights and defenses). Lessee must indicate its election to assume such thirty (30) day period, such Tax Indemnitee shall in such defense by written notice to the Guarantor, so inform the Guarantor, and such Tax Indemnitee shall not take any action with respect to such claim, proceeding or Imposition without the consent within 30 days following receipt of Indemnitee's notice of the Guarantor (such consent not to be unreasonably withheld Claim, or unreasonably delayed) for ten (10) days after the receipt of such notice by the Guarantor unless such Tax Indemnitee shall be required by law or regulation to take action prior to the end of such ten (10) day period. The Guarantor shall be entitled for a period of thirty (30) days from receipt of such notice from such Tax Indemnitee (or such shorter period as such Tax Indemnitee has notified the Guarantor is required by law or regulation for such Tax Indemnitee to commence such contest), to request in writing that such Tax Indemnitee contest the imposition of such Tax, at the Guarantor's expense. If (x) such contest can be pursued in the name of the Guarantor or the Lessee and independently from any other proceeding involving a Tax liability of such Tax Indemnitee for which the Lessee and the Guarantor have not agreed to indemnify such Tax Indemnitee, (y) such contest must be pursued in the name of such Tax Indemnitee, but can be pursued independently from any other proceeding involving a Tax liability of such Tax Indemnitee for which the Lessee and the Guarantor have not agreed to indemnify such Tax Indemnitee or (z) such Tax Indemnitee so requests, then the Guarantor or such Lessee shall be permitted to control the contest of such claim, provided that in the case of a contest described third party claim which requires a shorter time for response then within such shorter period as specified in clause (y) if such Tax Indemnitee determines reasonably and in good faith the Indemnitee's notice of Claim; provided that such contest by the Guarantor Indemnitee has given Lessee notice thereof. If Lessee denies liability or the Lessee could have a material adverse impact on the business or operations of such Tax Indemnitee and provides a written explanation fails to respond to the Guarantor of such determinationnotice within the time period set forth above, such Tax the Indemnitee may elect defend or compromise the Claim as it deems appropriate without prejudice to control or reassert control any of the contest, and provided that the taking control by the Guarantor or the Lessee of any contest shall not alter the applicable Tax Indemnitee's rights hereunder and with no further obligation to indemnification hereunder, and provided, further, that in determining the application of clauses (x) and (y) inform Lessee of the preceding sentencestatus of the Claim and no right of Lessee to approve or disapprove any actions taken in connection therewith by the Indemnitee. If Lessee shall have elected to assume the defense of any such Claim, each Tax then upon the request of Lessee, the Indemnitee requesting payment of indemnity under Section 11.1(a) shall take promptly furnish Lessee with copies of any and all reasonable steps records or documents pertaining to segregate claims for any Taxes for which the Lessee matter to be indemnified and, to the extent known by such Indemnitee, a reasonably detailed explanation of the circumstances giving rise to the claim of indemnification and the Guarantor indemnify hereunder from Taxes for which the Lessee and the Guarantor are not obligated to indemnify hereunder, so that the Guarantor can control the contest determination of the former. In all other claims requested to be contested by the Guarantor, such Tax Indemnitee shall control the contest of such claim, acting through counsel selected by such Tax Indemnitee and reasonably acceptable to the Guarantor. In no event shall the Guarantor be permitted to contest (or such Tax Indemnitee be required to contest) any claim, (A) if such Tax Indemnitee provides the Guarantor with a legal opinion of counsel reasonably acceptable to the Guarantor that such action, suit or proceeding involves a risk of imposition of criminal liability or will involve a material risk amount of the sale, forfeiture or loss of, or the creation requested indemnity payment. Upon payment in full to Indemnitee of any Lien (other than a Permitted Lien) on the Property or indemnity pursuant to Section 11.1(a), Lessee shall be subrogated to any part thereof unless the Guarantor shall have posted and maintained a bond or other security reasonably satisfactory to the relevant Tax Indemnitee in respect to such risk, (B) if a Lease Event right of Default has occurred and is continuing unless the Guarantor shall have posted and maintained a bond or other security reasonably satisfactory to the relevant Tax Indemnitee in respect of the Taxes subject to matter against which such claim and any and all expenses for which the Guarantor or the indemnity has been paid. If Lessee is responsible hereunder reasonably foreseeable in connection with the contest of such claim, (C) unless the Guarantor shall have agreed elected to pay and shall pay, to such Tax Indemnitee on written demand all reasonable, documented out-of-pocket costs, losses and expenses that such Tax Indemnitee may incur in connection with contesting such Imposition including all reasonable legal, accounting and investigatory fees and disbursements and (if applicable) reasonable, allocable internal overhead costs determined in accordance with normal bank operating procedures, or (D) if such contest shall involve assume the payment defense of the Tax prior to the contest, unless the Guarantor shall provide to such Tax Indemnitee an interest-free advance in an amount equal to the Imposition that such Tax Indemnitee is required to pay (with no additional net after-tax costs to such Tax Indemnitee). In addition, for contests controlled by such Tax Indemnitee and claims contested in the name of such Tax Indemnitee in a public forum, no contest shall be required: (A) unless the amount of the potential indemnity (taking into account all similar or logically related claims that have been or could be raised in any audit involving any or all such Tax Indemnitees with respect to any period for which the Guarantor or the Lessee may be liable to pay an indemnity under this Section 13.4(b)) exceeds (1) with respect to the Lessor, $25,000 and (2) with respect to any Tax Indemnitee other than the Lessor, $75,000 and (B) unless, if requested by such Tax Indemnitee, the Guarantor shall have provided to such Tax Indemnitee an opinion of counsel selected by the Guarantor (which may be in-house counsel) (except, in the case of income taxes indemnified hereunder, in which case such opinion shall be an opinion of independent tax counsel selected by the Guarantor and reasonably acceptable to such Tax Indemnitee) that a reasonable basis exists to contest such claim. In no event shall a Tax Indemnitee be required to appeal an adverse judicial determination to the United States Supreme Court. The party conducting the contest shall consult in good faith with the other party and its counsel with respect to the contest of such claim for Taxes (or claim for refund) but the decisions regarding what actions to be taken shall be made by the controlling party in its sole judgment; provided, however, that if such Tax Indemnitee is the controlling party and the Guarantor recommends the acceptance of a settlement offer made by the relevant Governmental Authority and such Tax Indemnitee rejects such settlement offer, then the amount for which a Lessee and the Guarantor will be required to indemnify such Tax Indemnitee with respect to the Taxes subject to such offer shall not exceed the amount which it would have owed if such settlement offer had been accepted provided that any Tax Indemnitee shall be entitled to reject any indemnity payment it would otherwise be entitled to hereunder if such Tax Indemnitee reasonably determines that accepting such offer would have an unindemnified impact on such Tax Indemnitee and provided further that no Tax Indemnitee may reject any such indemnity payment if Claim, upon the Guarantor agrees written request at any time and from time to pay to such Tax Indemnitee the amount time of such unindemnified impactLessee, as reasonably determined by such Tax Indemnitee. In addition, the controlling party shall keep the noncontrolling party reasonably informed as to the progress of the contest, and shall provide the noncontrolling party with a copy of (or appropriate excerpts from) any reports or claims issued by the relevant auditing agents or taxing authority to the controlling party thereof, in connection with such claim or the contest thereof, provided, however, that such obligation shall not obligate any Tax Indemnitee to disclose its tax returns or information or documentation unrelated to such claim or contest. Each Tax Indemnitee shall, at the expense of the Lessee Lessee, take such reasonable actions and the Guarantor, supply the Lessee or the Guarantor with execute such information and documents reasonably requested by the Lessee or the Guarantor as are necessary or advisable for reasonably appropriate to assist Lessee in the preservation and enforcement against third parties of Lessee's right of subrogation hereunder. The Indemnitee may employ separate counsel in any such Person to Claim and participate in any actionthe defense thereof, suit or proceeding to but the extent permitted fees and expenses of such counsel shall be at the expense of the Indemnitee unless the Indemnitee shall have been advised by this Section 13.4(b); providedits counsel that a conflict of interest exists in Lessee's counsel's representations of the Indemnitee and Lessee, howeverin which case the fees and expenses of such Indemnitee's counsel shall be for the account of Lessee. All fees and expenses shall be paid periodically as incurred. So long as no Lease Event of Default shall have occurred and be continuing, that such Tax Indemnitee Lessee shall not be required to provide to liable for any LSI Logic Corporation Lease A settlement of any such Claim effected without its consent unless Lessee or the Guarantor copies of its tax returns or any other information, documentationshall fail to, or materials that it deems elect in writing not to, assume the defense thereof in which case the Indemnitee, without waiving any rights to be confidential or proprietary. Notwithstanding anything in this Section 13.4(b) to the contraryindemnification hereunder, no Tax Indemnitee shall may defend such Claim and enter into any good faith settlement or other compromise or fail to appeal an adverse ruling with respect to any claim which is entitled to be indemnified under this Section 13.4 (and with respect to which contest is required under this Section 13.4(b)) thereof without the prior written consent of Lessee. Lessee shall not, without the Guarantorprior written consent (not to be unreasonably withheld) of the Indemnitee, effect any settlement of any such Claim unless such Tax settlement includes an unconditional release of the Indemnitee waives its right from all liabilities that are the subject of such Claim. The parties agree to be indemnified under this Section 13.4 with respect to such claim. Notwithstanding anything contained herein to the contrary, a Tax Indemnitee shall not be required to contest (and neither the Lessee nor the Guarantor shall be permitted to contest cooperate in any judicial forum if such contest could, in a Tax Indemnitee's reasonable judgment, be materially adverse to it) a claim with respect to the imposition defense or settlement of any Tax if such Tax Indemnitee shall have waived its right Claim and to indemnification under this Section 13.4 with respect give each other reasonable access to such claim (and all information relevant thereto subject to appropriate confidentiality agreements. The parties will similarly cooperate in the prosecution of any claim with respect to such year or lawsuit against any other taxable year the contest of which is precluded or materially adversely affected as a result of such waiver)third party.
Appears in 1 contract
Contests. If The following requirements shall apply to any claim shall appeal, objection or contest to any tax or assessment permitted to be made against any Tax Indemnitee by Lessee under this Lease: the contest, opposition, or if any proceeding shall objection must be commenced against any Tax Indemnitee (including a filed before the tax, assessment, or other charge at which it is directed becomes delinquent and written notice of the contest, opposition, or objection must be given to Lessor before the date the tax, assessment, or other charge becomes delinquent. No such proceedingcontest, opposition, or objection shall be continued or maintained after the date the tax, assessment, or other charge at which it is directed becomes delinquent unless Lessee has met one of the following conditions: (i) paid such tax, assessment, or other charge under protest prior to its becoming delinquent; or (ii) obtained and maintained a stay of all proceedings for any Imposition as enforcement and collection of the tax, assessment, or other charge by posting such bond or other matter required by law for such a stay; or (iii) delivered to which Lessor a good and sufficient undertaking in a form reasonably acceptable to Lessor in an amount equal to one hundred twenty-five percent (125%) of the Lessee or the Guarantor amount in controversy (inclusive of fines, interests, penalties, costs, and other expenses that may have an indemnity obligation pursuant accrued or been imposed thereon) and issued by a surety company authorized to this Section 13.4issue undertakings in California, conditioned on the payment by Lessee of the tax, assessment, or if charge together with any Tax Indemnitee shall determine fines, interest, penalties, costs, and expenses that any Imposition to which the Lessee or the Guarantor may have an indemnity obligation pursuant to this Section 13.4 may be payable, such Tax Indemnitee shall promptly (and in any event, accrued or been imposed thereon within fifteen (15) Business Days) notify the Guarantor in writing (provided that failure to so notify the Guarantor within fifteen (15) Business Days shall not alter such Tax Indemnitee's rights under this Section 13.4 except to the extent such failure precludes or materially adversely affects the ability to conduct a contest of any indemnified Taxes) and shall not take any action with respect to such claim, proceeding or Imposition without the written consent of the Guarantor (such consent not to be unreasonably withheld or unreasonably delayed) for thirty (30) days after the receipt final determination of such notice by the Guarantor; providedLessee’s contest, howeveropposition, that in the case of any such claim or proceeding, if such Tax Indemnitee shall be required by law or regulation to take action prior to the end of such thirty (30) day period, such Tax Indemnitee shall in such notice to the Guarantor, so inform the Guarantor, and such Tax Indemnitee shall not take any action with respect objection to such claimtax, proceeding or Imposition without the consent of the Guarantor (such consent not to be unreasonably withheld or unreasonably delayed) for ten (10) days after the receipt of such notice by the Guarantor unless such Tax Indemnitee shall be required by law or regulation to take action prior to the end of such ten (10) day period. The Guarantor shall be entitled for a period of thirty (30) days from receipt of such notice from such Tax Indemnitee (or such shorter period as such Tax Indemnitee has notified the Guarantor is required by law or regulation for such Tax Indemnitee to commence such contest), to request in writing that such Tax Indemnitee contest the imposition of such Tax, at the Guarantor's expense. If (x) such contest can be pursued in the name of the Guarantor or the Lessee and independently from any other proceeding involving a Tax liability of such Tax Indemnitee for which the Lessee and the Guarantor have not agreed to indemnify such Tax Indemnitee, (y) such contest must be pursued in the name of such Tax Indemnitee, but can be pursued independently from any other proceeding involving a Tax liability of such Tax Indemnitee for which the Lessee and the Guarantor have not agreed to indemnify such Tax Indemnitee or (z) such Tax Indemnitee so requests, then the Guarantor or such Lessee shall be permitted to control the contest of such claim, provided that in the case of a contest described in clause (y) if such Tax Indemnitee determines reasonably and in good faith that such contest by the Guarantor or the Lessee could have a material adverse impact on the business or operations of such Tax Indemnitee and provides a written explanation to the Guarantor of such determination, such Tax Indemnitee may elect to control or reassert control of the contest, and provided that the taking control by the Guarantor or the Lessee of any contest shall not alter the applicable Tax Indemnitee's rights to indemnification hereunder, and provided, further, that in determining the application of clauses (x) and (y) of the preceding sentence, each Tax Indemnitee shall take any and all reasonable steps to segregate claims for any Taxes for which the Lessee and the Guarantor indemnify hereunder from Taxes for which the Lessee and the Guarantor are not obligated to indemnify hereunder, so that the Guarantor can control the contest of the former. In all other claims requested to be contested by the Guarantor, such Tax Indemnitee shall control the contest of such claim, acting through counsel selected by such Tax Indemnitee and reasonably acceptable to the Guarantor. In no event shall the Guarantor be permitted to contest (or such Tax Indemnitee be required to contest) any claim, (A) if such Tax Indemnitee provides the Guarantor with a legal opinion of counsel reasonably acceptable to the Guarantor that such action, suit or proceeding involves a risk of imposition of criminal liability or will involve a material risk of the sale, forfeiture or loss ofassessment, or the creation of any Lien (other than a Permitted Lien) on the Property or any part thereof unless the Guarantor shall have posted and maintained a bond or other security reasonably satisfactory to the relevant Tax Indemnitee in respect to such risk, (B) if a Lease Event of Default has occurred and is continuing unless the Guarantor shall have posted and maintained a bond or other security reasonably satisfactory to the relevant Tax Indemnitee in respect of the Taxes subject to such claim and any and all expenses for which the Guarantor or the Lessee is responsible hereunder reasonably foreseeable in connection with the contest of such claim, (C) unless the Guarantor shall have agreed to pay and shall pay, to such Tax Indemnitee on written demand all reasonable, documented out-of-pocket costs, losses and expenses that such Tax Indemnitee may incur in connection with contesting such Imposition including all reasonable legal, accounting and investigatory fees and disbursements and (if applicable) reasonable, allocable internal overhead costs determined in accordance with normal bank operating procedures, or (D) if such contest shall involve the payment of the Tax prior to the contest, unless the Guarantor shall provide to such Tax Indemnitee an interest-free advance in an amount equal to the Imposition that such Tax Indemnitee is required to pay (with no additional net after-tax costs to such Tax Indemnitee)charge. In addition, for contests controlled by such Tax Indemnitee and claims contested in the name of such Tax Indemnitee in a public forum, no contest shall be required: (A) unless the amount of the potential indemnity (taking into account all similar or logically related claims that have been or could be raised in any audit involving any or all such Tax Indemnitees with respect to any period for which the Guarantor or the Lessee may be liable to pay an indemnity under this Section 13.4(b)) exceeds (1) with respect to the Lessor, $25,000 and (2) with respect to any Tax Indemnitee other than the Lessor, $75,000 and (B) unless, if requested by such Tax Indemnitee, the Guarantor shall have provided to such Tax Indemnitee an opinion of counsel selected by the Guarantor (which may be in-house counsel) (except, in the case of income taxes indemnified hereunder, in which case such opinion shall be an opinion of independent tax counsel selected by the Guarantor and reasonably acceptable to such Tax Indemnitee) that a reasonable basis exists to contest such claim. In no event shall a Tax Indemnitee be required to appeal an adverse judicial determination to the United States Supreme Court. The party conducting the contest shall consult in good faith with the other party and its counsel with respect to the contest of such claim for Taxes (or claim for refund) but the decisions regarding what actions to be taken shall be made by the controlling party in its sole judgment; provided, however, that if such Tax Indemnitee is the controlling party and the Guarantor recommends the acceptance of a settlement offer made by the relevant Governmental Authority and such Tax Indemnitee rejects such settlement offer, then the amount for which a Lessee and the Guarantor will be required to indemnify such Tax Indemnitee with respect to the Taxes subject to such offer shall not exceed the amount which it would have owed if such settlement offer had been accepted provided that any Tax Indemnitee shall be entitled to reject any indemnity payment it would otherwise be entitled to hereunder if such Tax Indemnitee reasonably determines that accepting such offer would have an unindemnified impact on such Tax Indemnitee and provided further that no Tax Indemnitee may reject any such indemnity payment if the Guarantor agrees to pay to such Tax Indemnitee the amount of such unindemnified impact, as reasonably determined by such Tax Indemnitee. In addition, the controlling party shall keep the noncontrolling party reasonably informed as to the progress of the contest, and shall provide the noncontrolling party with a copy of (or appropriate excerpts from) any reports or claims issued by the relevant auditing agents or taxing authority to the controlling party thereof, in connection with such claim or the contest thereof, provided, however, that such obligation shall not obligate any Tax Indemnitee to disclose its tax returns or information or documentation unrelated to such claim or contest. Each Tax Indemnitee shall, at the expense of the Lessee and the Guarantor, supply the Lessee or the Guarantor with such information and documents reasonably requested by the Lessee or the Guarantor as are necessary or advisable for such Person to participate in any action, suit or proceeding to the extent permitted by this Section 13.4(b); provided, however, that such Tax Indemnitee Lessor shall not be required to provide to such join in any proceedings or contest brought by Lessee unless the provisions of any law requires the proceeding or contest be brought by or in the Guarantor copies name of its tax returns Lessor or any other informationsuccessor in interest of the Site. In that case, documentation, Lessor shall join in the proceeding or materials that contest or permit it deems to be confidential or proprietary. Notwithstanding anything brought in this Section 13.4(b) to the contrary, no Tax Indemnitee Lessor’s name but such action shall enter into any settlement be without cost or other compromise or fail liability to appeal an adverse ruling with respect Lessor and Lessee agrees to any claim which is entitled pay to be indemnified under this Section 13.4 (and with respect to which contest is required under this Section 13.4(b)) without the prior written consent of the Guarantor, unless such Tax Indemnitee waives its right to be indemnified under this Section 13.4 with respect to such claim. Notwithstanding anything contained herein to the contrary, a Tax Indemnitee shall not be required to contest (and neither the Lessee nor the Guarantor shall be permitted to contest Lessor all costs incurred by Lessor in any judicial forum if such contest could, in a Tax Indemnitee's reasonable judgment, be materially adverse to it) a claim with respect to the imposition of any Tax if such Tax Indemnitee shall have waived its right to indemnification under this Section 13.4 with respect to such claim (and any claim with respect to such year or any other taxable year the contest of which is precluded or materially adversely affected as a result of such waiver)connection therewith.
Appears in 1 contract
Sources: Billboard Site Lease
Contests. If any claim shall be made against any Tax Indemnitee or if any proceeding shall be commenced against any Tax Indemnitee (including a written notice of such proceeding) for any Imposition as to which the Lessee or the Guarantor may have an indemnity obligation pursuant to this Section 13.4SECTION 13.5, or if any Tax Indemnitee shall determine that any Imposition to which the Lessee or the Guarantor may have an indemnity obligation pursuant to this Section 13.4 SECTION 13.5 may be payable, such Tax Indemnitee shall promptly (and in any event, within fifteen (15) Business Days30 days) notify the Guarantor Lessee in writing (provided PROVIDED that failure to so notify the Guarantor Lessee within fifteen (15) Business Days 30 days shall not alter such Tax Indemnitee's rights under this Section 13.4 SECTION 13.5 except to the extent such failure precludes or materially adversely affects the ability to conduct a contest of any indemnified Taxes) and shall not take any action with respect to such claim, proceeding or Imposition without the written consent of the Guarantor Lessee (such consent not to be unreasonably withheld or unreasonably delayed) for thirty (30) 30 days after the receipt of such notice by the GuarantorLessee; providedPROVIDED, howeverHOWEVER, that in the case of any such claim or proceeding, if such Tax Indemnitee shall be required by law or regulation to take action prior to the end of such thirty (30) -day period, such Tax Indemnitee shall in such notice to the GuarantorLessee, so inform the GuarantorLessee, and such Tax Indemnitee shall not take any action with respect to such claim, proceeding or Imposition without the consent of the Guarantor Lessee (such consent not to be unreasonably withheld or unreasonably delayed) for ten (10) 10 days after the receipt of such notice by the Guarantor Lessee unless such Tax Indemnitee shall be required by law or regulation to take action prior to the end of such ten (10) -day period. The Guarantor Lessee shall be entitled for a period of thirty (30) 30 days from receipt of such notice from such Tax Indemnitee (or such shorter period as such Tax Indemnitee has notified the Guarantor Lessee is required by law or regulation for such Tax Indemnitee to commence such contest), to request in writing that such Tax Indemnitee contest the imposition of such Tax, at the GuarantorLessee's expense. If (x) such contest can be pursued in the name of the Guarantor or the Lessee and independently from any other proceeding involving a Tax liability of such Tax Indemnitee for which the Lessee and the Guarantor have has not agreed to indemnify such Tax Indemnitee, (y) such contest must be pursued in the name of such Tax Indemnitee, but can be pursued independently from any other proceeding involving a Tax liability of such Tax Indemnitee for which the Lessee and the Guarantor have has not agreed to indemnify such Tax Indemnitee or (z) such Tax Indemnitee so requests, then the Guarantor or such Lessee shall be permitted to control the contest of such claim, provided PROVIDED that in the case of a contest described in clause CLAUSE (y) ), if such Tax Indemnitee determines reasonably and in good faith that such contest by the Guarantor or the Lessee could have a material adverse impact on the business or operations of such Tax Indemnitee and provides a written explanation to the Guarantor Lessee of such determination, such Tax Indemnitee may elect to control or reassert control of the contest, and provided PROVIDED, that the by taking control by of the Guarantor or contest, the Lessee acknowledges that it is responsible for the Imposition ultimately determined to be due by reason of any contest shall not alter the applicable Tax Indemnitee's rights to indemnification hereundersuch claim, and providedPROVIDED, furtherFURTHER, that in determining the application of clauses CLAUSES (x) and (y) of the preceding sentence, each Tax Indemnitee shall take any and all reasonable steps to segregate claims for any Taxes for which the Lessee and the Guarantor indemnify indemnifies hereunder from Taxes for which the Lessee and the Guarantor are is not obligated to indemnify hereunder, so that the Guarantor Lessee can control the contest of the former. In all other claims requested to be contested by the GuarantorLessee, such Tax Indemnitee shall control the contest of such claim, acting through counsel selected by such Tax Indemnitee and reasonably acceptable to the GuarantorLessee. In no event shall the Guarantor Lessee be permitted to contest (or such Tax Indemnitee be required to contest) any claim, (A) if such Tax Indemnitee provides the Guarantor Lessee with a legal opinion of counsel reasonably acceptable to the Guarantor Lessee that such action, suit or proceeding involves a risk of imposition of criminal liability or will involve a material risk of the sale, forfeiture or loss of, or the creation of any Lien (other than a Permitted Lien) on the any Property or any part of any thereof unless the Guarantor Lessee shall have posted and maintained a bond or other security reasonably satisfactory to the relevant Tax Indemnitee in respect to such risk, (B) if a Lease an Event of Default has occurred and is continuing unless the Guarantor Lessee shall have posted and maintained a bond or other security reasonably satisfactory to the relevant Tax Indemnitee in respect of the Taxes subject to such claim and any and all expenses for which the Guarantor or the Lessee is responsible hereunder reasonably foreseeable in connection with the contest of such claim, (C) unless the Guarantor Lessee shall have agreed to pay and shall pay, to such Tax Indemnitee on written demand all reasonable, documented reasonable out-of-pocket costs, losses and expenses that such Tax Indemnitee may incur in connection with contesting such Imposition including all reasonable legal, accounting and investigatory fees and disbursements and (if applicable) reasonable, allocable internal overhead costs determined in accordance with normal bank operating proceduresdisbursements, or (D) if such contest shall involve the payment of the Tax prior to the contest, unless the Guarantor Lessee shall provide to such Tax Indemnitee an interest-free advance in an amount equal to the Imposition that such Tax the Indemnitee is required to pay (with no additional net after-tax costs to such Tax Indemnitee). In addition, addition for contests controlled by such Tax Indemnitee controlled contests and claims contested in the name of such Tax Indemnitee in a public forum, no contest shall be required: (A) unless the amount of the potential indemnity (taking into account all similar or logically related claims that have been or could be raised in any audit involving any or all such Tax Indemnitees Indemnitee with respect to any period for which the Guarantor or the Lessee may be liable to pay an indemnity under this Section 13.4(bSECTION 13.5(b)) exceeds (1) with respect to the Lessor, $25,000 and (2) with respect to any Tax Indemnitee other than the Lessor, $75,000 and or (B) unless, if requested by such Tax Indemnitee, the Guarantor Lessee shall have provided to such Tax Indemnitee an opinion of counsel selected by the Guarantor Lessee (which may be in-house counsel) (except, in the case of income taxes indemnified hereunder, in hereunder which case such opinion shall be an opinion of independent tax counsel selected by the Guarantor such Tax Indemnitee and reasonably acceptable to such Tax Indemniteethe Lessee) that a reasonable basis exists to contest such claim. In no event shall a Tax Indemnitee be required to appeal an adverse judicial determination to the United States Supreme Court. The party conducting the contest shall consult in good faith with the other party and its counsel with respect to the contest of such claim for Taxes (or claim for refund) but the decisions regarding what actions to be taken shall be made by the controlling party in its sole judgment; providedjudgement, howeverPROVIDED, HOWEVER, that if such Tax Indemnitee is the controlling party and the Guarantor Lessee recommends the acceptance of a settlement offer made by the relevant Governmental Authority and such Tax Indemnitee rejects such settlement offer, offer then the amount for which a the Lessee and the Guarantor will be required to indemnify such Tax Indemnitee with respect to the Taxes subject to such offer shall not exceed the amount which it would have owed if such settlement offer had been accepted provided that any Tax Indemnitee shall be entitled to reject any indemnity payment it would otherwise be entitled to hereunder if such Tax Indemnitee reasonably determines that accepting such offer would have an unindemnified impact on such Tax Indemnitee and provided further that no Tax Indemnitee may reject any such indemnity payment if the Guarantor agrees to pay to such Tax Indemnitee the amount of such unindemnified impact, as reasonably determined by such Tax Indemniteeaccepted. In addition, the controlling party shall keep the noncontrolling party reasonably informed as to the progress of the contest, and shall provide the noncontrolling party with a copy of (or appropriate excerpts from) any reports or claims issued by the relevant auditing agents or taxing authority to the controlling party thereof, in connection with such claim or the contest thereof, provided, however, that such obligation shall not obligate any Tax Indemnitee to disclose its tax returns or information or documentation unrelated to such claim or contest. Each Tax Indemnitee shall, shall at the Lessee's expense of the Lessee and the Guarantor, supply the Lessee or the Guarantor with such information and documents reasonably requested by the Lessee or the Guarantor as are necessary or advisable for such Person the Lessee to participate in any action, suit or proceeding to the extent permitted by this Section 13.4(bSECTION 13.5(b); provided, however, that such Tax Indemnitee shall not be required to provide to such Lessee or the Guarantor copies of its tax returns or any other information, documentation, or materials that it deems to be confidential or proprietary. Notwithstanding anything in this Section 13.4(bSECTION 13.5(b) to the contrary, no Tax Indemnitee shall enter into any settlement or other compromise or fail to appeal an adverse ruling with respect to any claim which is entitled to be indemnified under this Section 13.4 SECTION 13.5 (and with respect to which contest is required under this Section 13.4(bSECTION 13.5(b)) without the prior written consent of the GuarantorLessee, unless such Tax Indemnitee waives its right to be indemnified under this Section 13.4 SECTION 13.5 with respect to such claim. Notwithstanding anything contained herein to the contrary, a Tax Indemnitee shall will not be required to contest (and neither the Lessee nor the Guarantor shall not be permitted to contest in any judicial forum if such contest could, in a Tax Indemnitee's reasonable judgment, be materially adverse to itcontest) a claim with respect to the imposition of any Tax if such Tax Indemnitee shall have waived waive its right to indemnification from Lessee under this Section 13.4 SECTION 13.5 with respect to such claim (and any claim with respect to such year or any other taxable year the contest of which is precluded or materially adversely affected as a result of such waiver).
Appears in 1 contract
Contests. If any claim (i) Seller (at Seller’s own expense) shall be made against any Tax Indemnitee or if any proceeding shall be commenced against any Tax Indemnitee entitled to control the defense (including a written notice of such proceeding) for any Imposition as to which the Lessee or the Guarantor may have an indemnity obligation pursuant to this Section 13.4settlement, except as provided below) of any audit, litigation, proceeding, or if any other action with respect to Taxes (a “Tax Indemnitee shall determine that any Imposition Proceeding”) with respect to which the Lessee or the Guarantor may have an indemnity obligation pursuant to this a Pre-Closing Tax Period (other than a Straddle Period, Straddle Periods being governed by Section 13.4 may be payable, such Tax Indemnitee shall promptly (and in any event, within fifteen (158.02(i)(iii) Business Daysbelow) notify the Guarantor in writing (provided that failure to so notify the Guarantor within fifteen (15) Business Days shall not alter such Tax Indemnitee's rights under this Section 13.4 except to the extent such failure precludes or materially adversely affects the ability to conduct a contest of any indemnified Taxes) and shall not take any action with respect to such claimaudit, litigation, proceeding or Imposition without the written consent of the Guarantor (such consent not to be unreasonably withheld or unreasonably delayed) for thirty (30) days after the receipt of such notice by the Guarantor; provided, however, that in the case of any such claim or proceeding, if such Tax Indemnitee shall be required by law or regulation to take other action prior relates to the end of such thirty (30) day period, such Tax Indemnitee shall in such notice to the Guarantor, so inform the Guarantor, and such Tax Indemnitee shall not take any action with respect to such claim, proceeding or Imposition without the consent of the Guarantor (such consent not to be unreasonably withheld or unreasonably delayed) for ten (10) days after the receipt of such notice by the Guarantor unless such Tax Indemnitee shall be required by law or regulation to take action prior to the end of such ten (10) day period. The Guarantor shall be entitled for a period of thirty (30) days from receipt of such notice from such Tax Indemnitee (or such shorter period as such Tax Indemnitee has notified the Guarantor is required by law or regulation for such Tax Indemnitee to commence such contest), to request in writing that such Tax Indemnitee contest the imposition of such Tax, at the Guarantor's expense. If (x) such contest can be pursued in the name of the Guarantor or the Lessee and independently from any other proceeding involving a Tax liability of such Tax Indemnitee for which the Lessee and the Guarantor have not agreed to indemnify such Tax Indemnitee, (y) such contest must be pursued in the name of such Tax Indemnitee, but can be pursued independently from any other proceeding involving a Tax liability of such Tax Indemnitee for which the Lessee and the Guarantor have not agreed to indemnify such Tax Indemnitee or (z) such Tax Indemnitee so requests, then the Guarantor or such Lessee shall be permitted to control the contest of such claim, provided that in the case of a contest described in clause (y) if such Tax Indemnitee determines reasonably and in good faith that such contest by the Guarantor or the Lessee could have a material adverse impact on the business or operations of such Tax Indemnitee and provides a written explanation to the Guarantor of such determination, such Tax Indemnitee may elect to control or reassert control of the contest, and provided that the taking control by the Guarantor or the Lessee of any contest shall not alter the applicable Tax Indemnitee's rights to indemnification hereunder, and provided, further, that in determining the application of clauses (x) and (y) of the preceding sentence, each Tax Indemnitee shall take any and all reasonable steps to segregate claims for any Taxes for which the Lessee and the Guarantor indemnify hereunder from Taxes for which the Lessee and the Guarantor are not obligated to indemnify hereunder, so that the Guarantor can control the contest of the former. In all other claims requested to be contested by the Guarantor, such Tax Indemnitee shall control the contest of such claim, acting through counsel selected by such Tax Indemnitee and reasonably acceptable to the Guarantor. In no event shall the Guarantor be permitted to contest (or such Tax Indemnitee be required to contest) any claim, (A) if such Tax Indemnitee provides the Guarantor with a legal opinion of counsel reasonably acceptable to the Guarantor that such action, suit or proceeding involves a risk of imposition of criminal liability or will involve a material risk of the sale, forfeiture or loss of, or the creation of any Lien (other than a Permitted Lien) on the Property Company or any part thereof unless the Guarantor shall have posted and maintained a bond or other security reasonably satisfactory to the relevant Tax Indemnitee in respect to such risk, of its Subsidiaries (B) if a Lease Event of Default has occurred and is continuing unless the Guarantor shall have posted and maintained a bond or other security reasonably satisfactory to the relevant Tax Indemnitee in respect of the Taxes subject to such claim and any and all expenses for which the Guarantor or the Lessee is responsible hereunder reasonably foreseeable in connection with the contest of such claim, (C) unless the Guarantor shall have agreed to pay and shall pay, to such Tax Indemnitee on written demand all reasonable, documented out“Pre-of-pocket costs, losses and expenses that such Tax Indemnitee may incur in connection with contesting such Imposition including all reasonable legal, accounting and investigatory fees and disbursements and (if applicable) reasonable, allocable internal overhead costs determined in accordance with normal bank operating procedures, or (D) if such contest shall involve the payment of the Tax prior to the contest, unless the Guarantor shall provide to such Tax Indemnitee an interest-free advance in an amount equal to the Imposition that such Tax Indemnitee is required to pay (with no additional net after-tax costs to such Tax IndemniteeClosing Audits”). In addition, for contests controlled by such Tax Indemnitee and claims contested in the name of such Tax Indemnitee in a public forum, no contest shall be required: (A) unless the amount of the potential indemnity (taking into account all similar or logically related claims that have been or could be raised in any audit involving any or all such Tax Indemnitees with respect to any period for which the Guarantor or the Lessee may be liable to pay an indemnity under this Section 13.4(b)) exceeds (1) with respect to the Lessor, $25,000 and (2) with respect to any Tax Indemnitee other than the Lessor, $75,000 and (B) unless, if requested by such Tax Indemnitee, the Guarantor shall have provided to such Tax Indemnitee an opinion of counsel selected by the Guarantor (which may be in-house counsel) (except, in the case of income taxes indemnified hereunder, in which case such opinion shall be an opinion of independent tax counsel selected by the Guarantor and reasonably acceptable to such Tax Indemnitee) that a reasonable basis exists to contest such claim. In no event shall a Tax Indemnitee be required to appeal an adverse judicial determination to the United States Supreme Court. The party conducting the contest shall consult in good faith with the other party and its counsel with respect to the contest of such claim for Taxes (or claim for refund) but the decisions regarding what actions to be taken shall be made by the controlling party in its sole judgment; provided, however, that if such Tax Indemnitee is the controlling party and the Guarantor recommends the acceptance of a settlement offer made by the relevant Governmental Authority and such Tax Indemnitee rejects such settlement offer, then the amount for which a Lessee and the Guarantor will be required to indemnify such Tax Indemnitee with respect to the Taxes subject to such offer shall not exceed the amount which it would have owed if such settlement offer had been accepted provided that any Tax Indemnitee shall be entitled to reject any indemnity payment it would otherwise be entitled to hereunder if such Tax Indemnitee reasonably determines that accepting such offer would have an unindemnified impact on such Tax Indemnitee and provided further that no Tax Indemnitee may reject any such indemnity payment if the Guarantor agrees to pay to such Tax Indemnitee the amount of such unindemnified impact, as reasonably determined by such Tax Indemnitee. In addition, the controlling party shall keep the noncontrolling party reasonably informed as to the progress of the contest, and shall provide the noncontrolling party with a copy of (or appropriate excerpts from) any reports or claims issued by the relevant auditing agents or taxing authority to the controlling party thereof, in connection with such claim or the contest thereof, provided, however, that such obligation Seller shall not obligate cause the Company or any of its Subsidiaries to enter into a settlement that by its terms, and without Buyer’s prior written consent, binds the Company or any of its Subsidiaries for a Post-Closing Tax Indemnitee to disclose its tax returns or information or documentation unrelated to such claim or contest. Each Tax Indemnitee shall, at the expense Period as a result of the Lessee and the Guarantor, supply the Lessee or the Guarantor with settlement of such information and documents reasonably requested by the Lessee or the Guarantor as are necessary or advisable for Pre-Closing Audit. The Company shall be entitled to control such Person to participate in any action, suit or proceeding Tax Proceeding (at Seller’s expense) to the extent permitted by Seller does not exercise its right to control a Tax Proceeding pursuant to this Section 13.4(b8.02(i)(i); provided. The Parties agree that neither the Company nor any Subsidiary shall be permitted to settle, however, that such Tax Indemnitee shall not be required to provide to such Lessee or the Guarantor copies of its tax returns or any other information, documentationcompromise, or materials that it deems to be confidential discharge any Pre-Closing Audit, or proprietary. Notwithstanding anything in this Section 13.4(b) to the contrary, no Tax Indemnitee shall enter into admit any settlement or other compromise or fail to appeal an adverse ruling liability with respect to any claim which is entitled to be indemnified under this Section 13.4 (and with respect to which contest is required under this Section 13.4(b)) thereto, without the prior written consent of Seller.
(ii) Notwithstanding Section 8.02(i)(i), Buyer (at Buyer’s own expense) shall be entitled to control the Guarantordefense (including as to settlement, unless except as provided below) of any Tax Proceeding with respect to a Pre-Closing Tax Period (other than a Straddle Period, Straddle Periods being governed by Section 8.02(i)(iv) below) to the extent such Tax Indemnitee waives Proceeding relates to the Comfort Products Contributed Assets (“Pre-Closing Comfort Products Audit”), provided, however, that Buyer shall not cause the Company or any of its Subsidiaries to enter into a settlement that by its terms, and without Seller’s prior written consent, binds the Company or any its Subsidiaries for a Post-Closing Tax Period as a result of the settlement of such Pre-Closing Comfort Products Audit. The Company shall be entitled to control such Tax Proceeding (at Buyer’s expense) to the extent Buyer does not exercise its right to be indemnified under control a Tax Proceeding pursuant to this Section 13.4 with respect to such claim. Notwithstanding anything contained herein to 8.02(i)(ii).
(iii) In the contrary, case of a Tax Indemnitee Proceeding for a Straddle Period, if such Tax Proceeding relates or could reasonably be expected to relate to both a claim for Company Taxes for a Pre-Closing Tax Period and a claim for Company Taxes for a Post-Closing Tax Period, and such claim for Company Taxes for a Pre-Closing Tax Period is not separable from such claim for Company Taxes for a Post-Closing Tax Period, the Company (if the claim for Company Taxes that are for a Post-Closing Tax Period exceeds or reasonably could be expected to exceed in amount the claim for Company Taxes for a Pre-Closing Tax Period) or otherwise Seller (Seller or the Company, as the case may be, the “Tax Contest Controlling Party”), shall be entitled to control the defense of such Tax Proceeding. In such case, the other Party (the “Tax Contest Non-Controlling Party”) shall be entitled to participate fully (at the Tax Contest Non-Controlling Party’s sole expense) in the conduct of such Tax Proceeding and the Tax Contest Controlling Party shall not settle, compromise, or discharge such Tax Proceeding without the consent of such Tax Contest Non-Controlling Party (which consent shall not be required to contest (unreasonably withheld or delayed). The costs and neither expenses of conducting the Lessee nor the Guarantor defense of such Tax Proceeding shall be permitted to contest in any judicial forum if such contest couldreasonably apportioned based on the relative amounts of the claim for Company Taxes for a Pre-Closing Tax Period and the claim for Company Taxes for a Post-Closing Tax Period.
(iv) Notwithstanding Section 8.02(i)(iii), in the case of a Tax Indemnitee's reasonable judgment, be materially adverse to it) Proceeding for a claim Straddle Period with respect to the imposition of any Tax Comfort Products Contributed Assets, if such Tax Indemnitee shall have waived its right Proceeding relates or could reasonably be expected to indemnification under this Section 13.4 relate to both a claim for Taxes with respect to the Comfort Products Contributed Assets (“Comfort Products Taxes”) for a Pre-Closing Tax Period and a claim for Comfort Products Taxes for a Post-Closing Tax Period, and such claim for Comfort Products Taxes for a Pre-Closing Tax Period is not separable from such claim for Comfort Products Taxes for a Post-Closing Tax Period, the Company (and any if the claim with respect for Comfort Products Taxes that are for a Post-Closing Tax Period exceeds or reasonably could be expected to such year exceed in amount the claim for Comfort Products Taxes for a Pre-Closing Tax Period) or any other taxable year otherwise Buyer (Buyer or the contest of which is precluded or materially adversely affected Company, as a result the case may be, the “Comfort Products Tax Contest Controlling Party”), shall be entitled to control the defense of such waiverTax Proceeding. In such case, the other Party (the “Comfort Products Tax Contest Non-Controlling Party”) shall be entitled to participate fully (at the Comfort Products Tax Contest Non-Controlling Party’s sole expense) in the conduct of such Tax Proceeding and the Comfort Products Tax Contest Controlling Party shall not settle, compromise, or discharge such Tax Proceeding without the consent of such Comfort Products Tax Contest Non-Controlling Party (which consent shall not be unreasonably withheld or delayed). The costs and expenses of conducting the defense of such Tax Proceeding shall be reasonably apportioned based on the relative amounts of the claim for Comfort Products Taxes for a Pre-Closing Tax Period and the claim for Comfort Products Taxes for a Post-Closing Tax Period.
Appears in 1 contract
Contests. If any claim shall be made against any Tax Indemnitee or if any proceeding shall be commenced against any Tax Indemnitee (including a written notice of such proceeding) for any Imposition as to which the Lessee or the Guarantor may have an indemnity obligation pursuant to this Section 13.413.5, or if any Tax Indemnitee shall determine that any Imposition to which the Lessee or the Guarantor may have an indemnity obligation pursuant to this Section 13.4 13.5 may be payable, such Tax Indemnitee shall promptly (and in any event, within fifteen thirty (1530) Business Daysdays) notify the Guarantor Lessee in writing (provided that failure to so notify the Guarantor Lessee within fifteen thirty (1530) Business Days days shall not alter such Tax Indemnitee's ’s rights under this Section 13.4 13.5 except to the extent such failure precludes or materially adversely affects the ability to conduct a contest of any indemnified TaxesImpositions) and shall not take any action with respect to such claim, proceeding or Imposition without the written consent of the Guarantor Lessee (such consent not to be unreasonably withheld or unreasonably delayed) for thirty (30) days after the receipt of such notice by the GuarantorLessee; provided, however, that in the case of any such claim or proceeding, if such Tax Indemnitee shall be required by law or regulation to take action prior to the end of such thirty (30) day period, such Tax Indemnitee shall in such notice to the GuarantorLessee, so inform the Guarantor, Lessee and such Tax Indemnitee shall not take any action with respect to such claim, proceeding or Imposition without the consent of the Guarantor Lessee (such consent not to be unreasonably withheld or unreasonably delayed) for ten (10) 10 days after the receipt of such notice by the Guarantor Lessee unless such Tax Indemnitee shall be required by law or regulation to take action prior to the end of such ten (10) day period. The Guarantor Lessee shall be entitled for a period of thirty (30) days from receipt of such notice from such Tax Indemnitee (or such shorter period as such Tax Indemnitee has notified the Guarantor Lessee is required by law or regulation for such Tax Indemnitee to commence such contest), to request in writing that such Tax Indemnitee contest the imposition of such Tax, at the Guarantor's Lessee’s expense. If (x) such contest can be pursued in the name of the Guarantor or the Lessee and independently from any other proceeding involving a Tax liability of such Tax Indemnitee for which the Lessee and the Guarantor have has not agreed to indemnify such Tax Indemnitee, (y) such contest must be pursued in the name of such Tax Indemnitee, but can be pursued independently from any other proceeding involving a Tax liability of such Tax Indemnitee for which the Lessee and the Guarantor have has not agreed to indemnify such Tax Indemnitee or (z) such Tax Indemnitee so requests, then the Guarantor or such Lessee shall be permitted to control the contest of such claim, provided that in the case of a contest described in clause (y) ), if such Tax Indemnitee determines reasonably and in good faith that such contest by the Guarantor or the Lessee could have a material adverse impact on the business or operations of such Tax Indemnitee and provides a written explanation to the Guarantor Lessee of such determination, such Tax Indemnitee may elect to control or reassert control of the contest, and provided that the by taking control by of the Guarantor or contest, the Lessee acknowledges that it is responsible for the Imposition ultimately determined to be due by reason of any contest shall not alter the applicable Tax Indemnitee's rights to indemnification hereundersuch claim, and provided, further, that in determining the application of clauses (x) and (y) of the preceding sentenceabove, each Tax Indemnitee shall take any and all reasonable steps to segregate claims for any Taxes for which the Lessee and the Guarantor indemnify indemnifies hereunder from Taxes for which the Lessee and the Guarantor are is not obligated to indemnify hereunder, so that the Guarantor Lessee can control the Tandem Health Care of Ohio, Inc. Participation Agreement contest of the former. In all other claims requested to be contested by the GuarantorLessee, such Tax Indemnitee shall control the contest of such claim, acting through counsel selected by such Tax Indemnitee and reasonably acceptable to the GuarantorLessee. In no event shall the Guarantor Lessee be permitted to contest (or such Tax Indemnitee be required to contest) any claim, (A) if such Tax Indemnitee provides the Guarantor Lessee with a legal opinion of counsel reasonably acceptable to the Guarantor Lessee that such action, action suit or proceeding involves a risk of imposition of criminal liability or material civil liability on such Tax Indemnitee or will involve a material risk of the sale, forfeiture or loss of, or the creation of any Lien (other than a Permitted Property Lien) on the Property Properties or any other Lessee Collateral or any part thereof unless unless, with respect to civil liability only, the Guarantor Lessee shall have agreed in writing to be responsible for such risk or shall have posted and maintained a bond or other security reasonably against such risk satisfactory to the relevant Tax Indemnitee in respect to such riskIndemnitee, (B) if a Lease an Event of Default under the Lease has occurred and is continuing unless the Guarantor shall have posted and maintained a bond or other security reasonably satisfactory to the relevant Tax Indemnitee in respect of the Taxes subject to such claim and any and all expenses for which the Guarantor or the Lessee is responsible hereunder reasonably foreseeable in connection with the contest of such claimcontinuing, (C) unless the Guarantor Lessee shall have agreed to pay and shall pay, to such Tax Indemnitee on written demand all reasonable, documented reasonable out-of-pocket costs, losses and expenses that such Tax Indemnitee may incur in connection with contesting such Imposition including all reasonable legal, accounting and investigatory fees and disbursements and (if applicable) reasonable, allocable internal overhead costs determined in accordance with normal bank operating proceduresdisbursements, or (D) if such contest shall involve the payment of the Tax prior to the contest, unless the Guarantor Lessee shall provide to such Tax Indemnitee an interest-free advance in an amount equal to the Imposition that such Tax the Indemnitee is required to pay (with no additional net after-tax costs to such Tax Indemnitee). In addition, addition for contests controlled by such Tax Indemnitee controlled contests and claims contested in the name of such Tax Indemnitee in a public forum, no contest shall be required: (A) unless the amount of the potential indemnity (taking into account all similar or logically related claims that have been or could be raised in any audit involving any or all such Tax Indemnitees with respect to any period for which the Guarantor or the Lessee may be liable to pay an indemnity under this Section 13.4(b13.5(b)) exceeds (1) with respect to the Lessor, $25,000 and (2) with respect to any Tax Indemnitee other than the Lessor, $75,000 100,000 and (B) unless, if requested by such Tax Indemnitee, the Guarantor Lessee shall have provided to such Tax Indemnitee an opinion of counsel selected by the Guarantor Lessee (which may be in-house counsel) (except, in the case of income taxes indemnified hereunder, in which case such opinion shall be an opinion of independent tax counsel selected by the Guarantor and reasonably acceptable to such Tax Indemnitee) that a reasonable basis exists to contest such claim. In no event shall a Tax Indemnitee be required to appeal an adverse judicial determination to the United States Supreme Court. The party conducting the contest shall consult in good faith with the other party and its counsel with respect to the contest of such claim for Taxes (or claim for refund) but the decisions regarding what actions are to be taken shall be made by the controlling party in its sole judgment; , provided, however, that if such Tax Indemnitee is the controlling party and the Guarantor Lessee recommends the acceptance of a settlement offer made by the relevant Governmental Authority and such Tax Indemnitee rejects such settlement offer, offer then the amount for which a the Lessee and the Guarantor will be required to indemnify such Tax Indemnitee with respect to the Taxes subject to such offer shall not exceed the amount which it would have owed if such settlement offer had been accepted provided that any Tax Indemnitee shall be entitled to reject any indemnity payment it would otherwise be entitled to hereunder if such Tax Indemnitee reasonably determines that accepting such offer would have an unindemnified impact on such Tax Indemnitee and provided further that no Tax Indemnitee may reject any such indemnity payment if the Guarantor agrees to pay to such Tax Indemnitee the amount of such unindemnified impact, as reasonably determined by such Tax Indemniteeaccepted. In addition, the controlling party shall keep the noncontrolling non-controlling party reasonably informed as to the progress of the contest, and shall provide the noncontrolling party with a copy of (or appropriate excerpts from) any and reports or claims issued by the relevant auditing agents or taxing authority to the controlling party thereof, in connection with such claim or the contest thereof, provided, however, that such obligation shall not obligate any Tax Indemnitee to disclose its tax returns or information or documentation unrelated to such claim or contest. Each Tax Indemnitee shall, at the expense of the Lessee Lessee’s expense, cooperate with and the Guarantor, supply the Lessee or the Guarantor with such information and documents reasonably requested by the Lessee or the Guarantor as are necessary or advisable for such Person the Lessee to participate in any action, suit or proceeding to the extent permitted by this Section 13.4(b13.5(b); provided, however, that such Tax Indemnitee shall not be required to provide to such Lessee or the Guarantor copies of its tax returns or any other information, documentation, or materials that it deems to be confidential or proprietary. Notwithstanding anything in this Section 13.4(b13.5(b) to the Tandem Health Care of Ohio, Inc. Participation Agreement contrary, no Tax Indemnitee shall enter into any settlement or other compromise or fail to appeal an adverse ruling with respect to any claim which is entitled to be indemnified under this Section 13.4 13.5 (and with respect to which contest is required under this Section 13.4(b13.5(b)) without the prior written consent of the GuarantorLessee, unless such Tax Indemnitee waives its right to be indemnified under this Section 13.4 13.5 with respect to such claimclaim pursuant to the next paragraph. Notwithstanding anything contained herein to the contrary, a Tax Indemnitee shall will not be required to contest or continue to contest (and neither the Lessee nor the Guarantor shall not be permitted to contest in any judicial forum if such contest could, in a Tax Indemnitee's reasonable judgment, be materially adverse or continue to itcontest) a claim with respect to the imposition of any Tax if such Tax Indemnitee shall have waived waive its right to indemnification under this Section 13.4 13.5 with respect to such claim (and any claim with respect to such year or any other taxable year the contest of which is precluded or materially adversely affected as a result of such waiver)) and returns to the Lessee all amounts previously advanced to the Indemnitee with respect to the contest of such claim.
Appears in 1 contract
Contests. If Buyer agrees to give written notice to Sellers upon receipt of any claim written notice relating to the assertion of any claim, or the commencement of any Proceeding by a Governmental Authority in respect of Taxes for which the Sellers may be liable pursuant to §9(a) (each, a “Tax Claim”); provided, that any failure or delay in giving such notice shall be made against not affect Buyer’s right to indemnification hereunder, unless the failure or delay in giving such notice results in a bar or forfeiture of the right or privilege to contest, protest or appeal the Tax Claim. In such event, Buyer will have no right to indemnification of the Tax Claim. With respect to any Tax Indemnitee Claim relating to a Pre-Closing Tax Period, the Sellers may assume and control all proceedings taken in connection with such Tax Claim; provided, however, the Sellers shall consult with Buyer in the negotiation and settlement of any such Tax Claim and Sellers shall not, without the written consent of Buyer, settle or if any proceeding shall be commenced against compromise any Tax Indemnitee (including Claim in a written notice of such proceeding) for any Imposition as manner that would reasonably be expected to which the Lessee or the Guarantor may have an indemnity obligation pursuant to this Section 13.4, or if a Material Adverse Effect on any Tax Indemnitee shall determine that any Imposition to which period of Company ending after the Lessee or the Guarantor may have an indemnity obligation pursuant to this Section 13.4 may be payable, such Closing Date. All other Tax Indemnitee shall promptly (and in any event, within fifteen (15) Business Days) notify the Guarantor in writing (provided that failure to so notify the Guarantor within fifteen (15) Business Days shall not alter such Tax Indemnitee's rights under this Section 13.4 except to the extent such failure precludes or materially adversely affects the ability to conduct a contest of any indemnified Taxes) and shall not take any action Claims with respect to such claimCompany shall be controlled by Buyer; provided, proceeding or Imposition however, Buyer shall consult with the Sellers in the negotiation and settlement of any post-Closing Tax period (including any Straddle Period) Tax Claim and Buyer shall not, without the written consent of the Guarantor (such Sellers, which consent shall not to be unreasonably withheld withheld, settle or unreasonably delayed) for thirty (30) days after the receipt of such notice by the Guarantor; provided, however, that in the case of compromise any such claim or proceeding, if such Tax Indemnitee shall be required by law or regulation to take action prior to the end of such thirty (30) day period, such Tax Indemnitee shall Claim in such notice to the Guarantor, so inform the Guarantor, and such Tax Indemnitee shall not take any action with respect to such claim, proceeding or Imposition without the consent of the Guarantor (such consent not to be unreasonably withheld or unreasonably delayed) for ten (10) days after the receipt of such notice by the Guarantor unless such Tax Indemnitee shall be required by law or regulation to take action prior to the end of such ten (10) day period. The Guarantor shall be entitled for a period of thirty (30) days from receipt of such notice from such Tax Indemnitee (or such shorter period as such Tax Indemnitee has notified the Guarantor is required by law or regulation for such Tax Indemnitee to commence such contest), to request in writing manner that such Tax Indemnitee contest the imposition of such Tax, at the Guarantor's expense. If (x) such contest can be pursued in the name of the Guarantor or the Lessee and independently from any other proceeding involving a Tax liability of such Tax Indemnitee for which the Lessee and the Guarantor have not agreed to indemnify such Tax Indemnitee, (y) such contest must be pursued in the name of such Tax Indemnitee, but can be pursued independently from any other proceeding involving a Tax liability of such Tax Indemnitee for which the Lessee and the Guarantor have not agreed to indemnify such Tax Indemnitee or (z) such Tax Indemnitee so requests, then the Guarantor or such Lessee shall be permitted to control the contest of such claim, provided that in the case of a contest described in clause (y) if such Tax Indemnitee determines reasonably and in good faith that such contest by the Guarantor or the Lessee could have a any material adverse impact on the business or operations of such Tax Indemnitee and provides a written explanation to the Guarantor of such determination, such Tax Indemnitee may elect to control or reassert control of the contest, and provided that the taking control by the Guarantor or the Lessee of any contest shall not alter the applicable Tax Indemnitee's rights to Sellers’ indemnification obligations hereunder, and provided, further, that in determining the application of clauses (x) and (y) of the preceding sentence, each Tax Indemnitee shall take any and all reasonable steps to segregate claims for any Taxes for which the Lessee and the Guarantor indemnify hereunder from Taxes for which the Lessee and the Guarantor are not obligated to indemnify hereunder, so that the Guarantor can control the contest of the former. In all other claims requested to be contested by the Guarantor, such Tax Indemnitee shall control the contest of such claim, acting through counsel selected by such Tax Indemnitee and reasonably acceptable to the Guarantor. In no event shall the Guarantor be permitted to contest (or such Tax Indemnitee be required to contest) any claim, (A) if such Tax Indemnitee provides the Guarantor with a legal opinion of counsel reasonably acceptable to the Guarantor that such action, suit or proceeding involves a risk of imposition of criminal liability or will involve a material risk of the sale, forfeiture or loss of, or the creation of any Lien (other than a Permitted Lien) on the Property or any part thereof unless the Guarantor shall have posted and maintained a bond or other security reasonably satisfactory to the relevant Tax Indemnitee in respect to such risk, (B) if a Lease Event of Default has occurred and is continuing unless the Guarantor shall have posted and maintained a bond or other security reasonably satisfactory to the relevant Tax Indemnitee in respect of the Taxes subject to such claim and any and all expenses for which the Guarantor or the Lessee is responsible hereunder reasonably foreseeable in connection with the contest of such claim, (C) unless the Guarantor shall have agreed to pay and shall pay, to such Tax Indemnitee on written demand all reasonable, documented out-of-pocket costs, losses and expenses that such Tax Indemnitee may incur in connection with contesting such Imposition including all reasonable legal, accounting and investigatory fees and disbursements and (if applicable) reasonable, allocable internal overhead costs determined in accordance with normal bank operating procedures, or (D) if such contest shall involve the payment of the Tax prior to the contest, unless the Guarantor shall provide to such Tax Indemnitee an interest-free advance in an amount equal to the Imposition that such Tax Indemnitee is required to pay (with no additional net after-tax costs to such Tax Indemnitee). In addition, for contests controlled by such Tax Indemnitee and claims contested in the name of such Tax Indemnitee in a public forum, no contest shall be required: (A) unless the amount of the potential indemnity (taking into account all similar or logically related claims that have been or could be raised in any audit involving any or all such Tax Indemnitees with respect to any period for which the Guarantor or the Lessee may be liable to pay an indemnity under this Section 13.4(b)) exceeds (1) with respect to the Lessor, $25,000 and (2) with respect to any Tax Indemnitee other than the Lessor, $75,000 and (B) unless, if requested by such Tax Indemnitee, the Guarantor shall have provided to such Tax Indemnitee an opinion of counsel selected by the Guarantor (which may be in-house counsel) (except, in the case of income taxes indemnified hereunder, in which case such opinion shall be an opinion of independent tax counsel selected by the Guarantor and reasonably acceptable to such Tax Indemnitee) that a reasonable basis exists to contest such claim. In no event shall a Tax Indemnitee be required to appeal an adverse judicial determination to the United States Supreme Court. The party conducting the contest shall consult in good faith with the other party and its counsel with respect to the contest of such claim for Taxes (or claim for refund) but the decisions regarding what actions to be taken shall be made by the controlling party in its sole judgment; provided, however, that if such Tax Indemnitee is the controlling party and the Guarantor recommends the acceptance of a settlement offer made by the relevant Governmental Authority and such Tax Indemnitee rejects such settlement offer, then the amount for which a Lessee and the Guarantor will be required to indemnify such Tax Indemnitee with respect to the Taxes subject to such offer shall not exceed the amount which it would have owed if such settlement offer had been accepted provided that any Tax Indemnitee shall be entitled to reject any indemnity payment it would otherwise be entitled to hereunder if such Tax Indemnitee reasonably determines that accepting such offer would have an unindemnified impact on such Tax Indemnitee and provided further that no Tax Indemnitee may reject any such indemnity payment if the Guarantor agrees to pay to such Tax Indemnitee the amount of such unindemnified impact, as reasonably determined by such Tax Indemnitee. In addition, the controlling party shall keep the noncontrolling party reasonably informed as to the progress of the contest, and shall provide the noncontrolling party with a copy of (or appropriate excerpts from) any reports or claims issued by the relevant auditing agents or taxing authority to the controlling party thereof, in connection with such claim or the contest thereof, provided, however, that such obligation shall not obligate any Tax Indemnitee to disclose its tax returns or information or documentation unrelated to such claim or contest. Each Tax Indemnitee shall, at the expense of the Lessee and the Guarantor, supply the Lessee or the Guarantor with such information and documents reasonably requested by the Lessee or the Guarantor as are necessary or advisable for such Person to participate in any action, suit or proceeding to the extent permitted by this Section 13.4(b); provided, however, that such Tax Indemnitee shall not be required to provide to such Lessee or the Guarantor copies of its tax returns or any other information, documentation, or materials that it deems to be confidential or proprietary. Notwithstanding anything in this Section 13.4(b) to the contrary, no Tax Indemnitee shall enter into any settlement or other compromise or fail to appeal an adverse ruling with respect to any claim which is entitled to be indemnified under this Section 13.4 (and with respect to which contest is required under this Section 13.4(b)) without the prior written consent of the Guarantor, unless such Tax Indemnitee waives its right to be indemnified under this Section 13.4 with respect to such claim. Notwithstanding anything contained herein to the contrary, a Tax Indemnitee shall not be required to contest (and neither the Lessee nor the Guarantor shall be permitted to contest in any judicial forum if such contest could, in a Tax Indemnitee's reasonable judgment, be materially adverse to it) a claim with respect to the imposition of any Tax if such Tax Indemnitee shall have waived its right to indemnification under this Section 13.4 with respect to such claim (and any claim with respect to such year or any other taxable year the contest of which is precluded or materially adversely affected as a result of such waiver).
Appears in 1 contract
Contests. If any claim (i) After the Cut-off Date, Seller and Buyer each shall be made against notify the other party in writing within ten (10) days of the commencement of any Tax Indemnitee audit or administrative or judicial proceeding affecting the Taxes of any of the Entities that, if any proceeding shall determined adversely to the taxpayer (the "Tax Indemnified Party") or after the lapse of time would be commenced against any Tax Indemnitee (including a written notice of such proceeding) grounds for any Imposition as to which the Lessee or the Guarantor may have an indemnity obligation pursuant to this Section 13.4, or if any Tax Indemnitee shall determine that any Imposition to which the Lessee or the Guarantor may have an indemnity obligation pursuant to this Section 13.4 may be payable, such Tax Indemnitee shall promptly (and in any event, within fifteen (15) Business Days) notify the Guarantor in writing (provided that failure to so notify the Guarantor within fifteen (15) Business Days shall not alter such Tax Indemnitee's rights indemnification under this Section 13.4 5.4 by the other party (the "Tax Indemnifying Party" and a "Tax Claim"). Such notice shall contain factual information describing any asserted Tax liability in reasonable detail and shall include copies of any notice or other document received from any Tax authority in respect of any such asserted Tax liability. Failure to give such notification shall not affect the indemnification provided in this Section 5.4 except to the extent the Tax Indemnifying Party shall have been prejudiced as a result of such failure precludes or materially adversely affects (except that the ability to conduct a contest of any indemnified Taxes) and Tax Indemnifying Party shall not take be liable for any action with respect expenses incurred during the period in which the Tax Indemnified Party failed to give such claimnotice). Thereafter, proceeding or Imposition without the written consent of the Guarantor (such consent not to be unreasonably withheld or unreasonably delayed) for thirty (30) days after the receipt of such notice by the Guarantor; provided, however, that in the case of any such claim or proceeding, if such Tax Indemnitee Indemnified Party shall be required by law or regulation to take action prior deliver to the end of such thirty (30) day periodTax Indemnifying Party, such Tax Indemnitee shall as promptly as possible but in such notice to the Guarantor, so inform the Guarantor, and such Tax Indemnitee shall not take any action with respect to such claim, proceeding or Imposition without the consent of the Guarantor (such consent not to be unreasonably withheld or unreasonably delayed) for no event later than ten (10) days after the Tax Indemnified Party's receipt thereof, copies of such notice all relevant notices and documents (including court papers) received by the Guarantor unless such Tax Indemnitee Indemnified Party.
(ii) In the case of an audit or administrative or judicial proceeding involving any asserted liability for Taxes relating to any Taxable years or periods ending on or before the Cut-off Date or any Straddle Period, Seller shall be required by law or regulation to take action prior to have the end of such ten (10) day period. The Guarantor shall be entitled for a period of thirty (30) days from receipt of such notice from such Tax Indemnitee (or such shorter period as such Tax Indemnitee has notified the Guarantor is required by law or regulation for such Tax Indemnitee to commence such contest), to request in writing that such Tax Indemnitee contest the imposition of such Taxright, at the Guarantor's its expense. If (x) such contest can be pursued in the name of the Guarantor or the Lessee and independently from any other proceeding involving a Tax liability of such Tax Indemnitee for which the Lessee and the Guarantor have not agreed to indemnify such Tax Indemnitee, (y) such contest must be pursued in the name of such Tax Indemnitee, but can be pursued independently from any other proceeding involving a Tax liability of such Tax Indemnitee for which the Lessee and the Guarantor have not agreed to indemnify such Tax Indemnitee or (z) such Tax Indemnitee so requests, then the Guarantor or such Lessee shall be permitted to control the contest conduct of such claim, provided that in the case of a contest described in clause (y) if such Tax Indemnitee determines reasonably and in good faith that such contest by the Guarantor audit or the Lessee could have a material adverse impact on the business or operations of such Tax Indemnitee and provides a written explanation to the Guarantor of such determination, such Tax Indemnitee may elect to control or reassert control of the contest, and provided that the taking control by the Guarantor or the Lessee of any contest shall not alter the applicable Tax Indemnitee's rights to indemnification hereunder, and provided, further, that in determining the application of clauses (x) and (y) of the preceding sentence, each Tax Indemnitee shall take any and all reasonable steps to segregate claims for any Taxes for which the Lessee and the Guarantor indemnify hereunder from Taxes for which the Lessee and the Guarantor are not obligated to indemnify hereunder, so that the Guarantor can control the contest of the former. In all other claims requested to be contested by the Guarantor, such Tax Indemnitee shall control the contest of such claim, acting through counsel selected by such Tax Indemnitee and reasonably acceptable to the Guarantor. In no event shall the Guarantor be permitted to contest (or such Tax Indemnitee be required to contest) any claim, (A) if such Tax Indemnitee provides the Guarantor with a legal opinion of counsel reasonably acceptable to the Guarantor that such action, suit or proceeding involves a risk of imposition of criminal liability or will involve a material risk of the sale, forfeiture or loss of, or the creation of any Lien (other than a Permitted Lien) on the Property or any part thereof unless the Guarantor shall have posted and maintained a bond or other security reasonably satisfactory to the relevant Tax Indemnitee in respect to such risk, (B) if a Lease Event of Default has occurred and is continuing unless the Guarantor shall have posted and maintained a bond or other security reasonably satisfactory to the relevant Tax Indemnitee in respect of the Taxes subject to such claim and any and all expenses for which the Guarantor or the Lessee is responsible hereunder reasonably foreseeable in connection with the contest of such claim, (C) unless the Guarantor shall have agreed to pay and shall pay, to such Tax Indemnitee on written demand all reasonable, documented out-of-pocket costs, losses and expenses that such Tax Indemnitee may incur in connection with contesting such Imposition including all reasonable legal, accounting and investigatory fees and disbursements and (if applicable) reasonable, allocable internal overhead costs determined in accordance with normal bank operating procedures, or (D) if such contest shall involve the payment of the Tax prior to the contest, unless the Guarantor shall provide to such Tax Indemnitee an interest-free advance in an amount equal to the Imposition that such Tax Indemnitee is required to pay (with no additional net after-tax costs to such Tax Indemnitee). In addition, for contests controlled by such Tax Indemnitee and claims contested in the name of such Tax Indemnitee in a public forum, no contest shall be required: (A) unless the amount of the potential indemnity (taking into account all similar or logically related claims that have been or could be raised in any audit involving any or all such Tax Indemnitees with respect to any period for which the Guarantor or the Lessee may be liable to pay an indemnity under this Section 13.4(b)) exceeds (1) with respect to the Lessor, $25,000 and (2) with respect to any Tax Indemnitee other than the Lessor, $75,000 and (B) unless, if requested by such Tax Indemnitee, the Guarantor shall have provided to such Tax Indemnitee an opinion of counsel selected by the Guarantor (which may be in-house counsel) (except, in the case of income taxes indemnified hereunder, in which case such opinion shall be an opinion of independent tax counsel selected by the Guarantor and reasonably acceptable to such Tax Indemnitee) that a reasonable basis exists to contest such claim. In no event shall a Tax Indemnitee be required to appeal an adverse judicial determination to the United States Supreme Court. The party conducting the contest shall consult in good faith with the other party and its counsel with respect to the contest of such claim for Taxes (or claim for refund) but the decisions regarding what actions to be taken shall be made by the controlling party in its sole judgmentproceeding; provided, however, that if such Tax Indemnitee is the controlling party and the Guarantor recommends the acceptance of a settlement offer made by the relevant Governmental Authority and such Tax Indemnitee rejects such settlement offer(A) with respect to Straddle Periods, then the amount for which a Lessee and the Guarantor will be required to indemnify such Tax Indemnitee Seller shall keep Buyer reasonably informed with respect to the Taxes subject to such offer shall not exceed the amount which it would have owed if such settlement offer had been accepted provided that any Tax Indemnitee shall be entitled to reject any indemnity payment it would otherwise be entitled to hereunder if such Tax Indemnitee reasonably determines that accepting such offer would have an unindemnified impact on such Tax Indemnitee and provided further that no Tax Indemnitee may reject any such indemnity payment if the Guarantor agrees to pay to such Tax Indemnitee the amount status of such unindemnified impact, as reasonably determined by such Tax Indemnitee. In addition, the controlling party shall keep the noncontrolling party reasonably informed as to the progress of the contest, and shall provide the noncontrolling party with a copy of (or appropriate excerpts from) any reports or claims issued by the relevant auditing agents or taxing authority to the controlling party thereof, in connection with such claim or the contest thereof, provided, however, that such obligation shall not obligate any Tax Indemnitee to disclose its tax returns or information or documentation unrelated to such claim or contest. Each Tax Indemnitee shall, at the expense of the Lessee and the Guarantor, supply the Lessee or the Guarantor with such information and documents reasonably requested by the Lessee or the Guarantor as are necessary or advisable for such Person to participate in any action, suit audit or proceeding to the extent permitted by this Section 13.4(b); provided, however, that such Tax Indemnitee shall not be required to and provide to such Lessee or the Guarantor Buyer with copies of its tax returns or any other information, documentation, or materials that it deems to be confidential or proprietary. Notwithstanding anything in this Section 13.4(b) to the contrary, no Tax Indemnitee shall enter into any settlement or other compromise or fail to appeal an adverse ruling with respect to any claim which is entitled to be indemnified under this Section 13.4 (and with respect to which contest is required under this Section 13.4(b)) without the prior all written consent of the Guarantor, unless such Tax Indemnitee waives its right to be indemnified under this Section 13.4 correspondence with respect to such claim. Notwithstanding anything contained herein to the contrary, audit or proceeding in a Tax Indemnitee shall not be required to contest timely manner and (and neither the Lessee nor the Guarantor shall be permitted to contest in any judicial forum B) if such contest could, audit or proceeding would be reasonably expected to result in a material increase in Tax Indemnitee's reasonable judgment, liability of the Entities for which Buyer would be materially adverse to it) a claim with respect to the imposition of any Tax if such Tax Indemnitee shall have waived its right to indemnification liable under this Section 13.4 5.6, Buyer may participate in the conduct of such audit or proceeding at its own expense.
(iii) In the case of an audit or administrative or judicial proceeding involving any asserted liability for Taxes relating to any Taxable years or periods beginning after the Cut-off Date, Buyer shall have the right, at its expense, to control the conduct of such audit or proceeding.
(iv) Buyer and Seller shall reasonably cooperate in connection with respect any Tax Claim, and such cooperation shall include the provision to the Tax Indemnifying Party of records and information which are reasonably relevant to such claim (Tax Claim and making employees available on a mutually convenient basis to provide additional information and explanation of any claim with respect to such year or any other taxable year the contest of which is precluded or materially adversely affected as a result of such waiver)material provided hereunder.
Appears in 1 contract
Sources: Agreement of Purchase and Sale (Consumers Energy Co)
Contests. If any claim shall be made against any Tax Indemnitee or if any proceeding shall be commenced against any Tax Indemnitee (including a a) Buyer agrees to give prompt written notice to Seller Representative of such proceeding) for the receipt of any Imposition as to written notice by the Company, Buyer or any of Buyer’s Affiliates which involves the Lessee assertion of any claim, or the Guarantor may have commencement of any Action, in respect of which an indemnity obligation may be sought by any Buyer Indemnitee pursuant to this Section 13.4Article VII (a “Tax Claim”); provided, or if any Tax Indemnitee shall determine that any Imposition to which the Lessee or the Guarantor may have an indemnity obligation pursuant to this Section 13.4 may be payable, such Tax Indemnitee shall promptly (and in any event, within fifteen (15) Business Days) notify the Guarantor in writing (provided that failure to so notify comply with this provision shall not affect a Buyer Indemnitee’s right to indemnification hereunder except to the Guarantor within extent the defense of the Claim is prejudiced thereby.
(b) Within fifteen (15) Business Days shall not alter such after receipt by Seller Representative of a notice respecting a Tax Indemnitee's rights under this Section 13.4 except Claim, the Seller Representative may elect, so long as Sellers have an obligation to the extent such failure precludes or materially adversely affects the ability to conduct a contest of any indemnified Taxes) and shall not take any action indemnify Buyer Indemnitees hereunder with respect to such claimTax Claim, by written notice to Buyer, to contest the Tax Claim in the name of the Company. If Seller Representative so elects, Sellers shall be solely responsible for the defense of the item or items at issue to the extent it relates to a Pre-Closing Tax Period, except that (a) the Seller Representative will keep Buyer informed with respect to the commencement, status and nature of any such proceeding, and will reasonably cooperate with Buyer and consult with Buyer regarding the conduct of or positions taken in any such proceedings in the event the settlement would create a Tax liability on part of Buyer, and (b) Sellers will not enter into any settlement or otherwise compromise any such proceeding or Imposition without the prior written consent of the Guarantor Buyer (such consent not to be unreasonably withheld withheld, conditioned or unreasonably delayed) for thirty (30) days after if such settlement would have the receipt effect of such notice by materially increasing the Guarantor; provided, however, that Tax liability or materially reducing any Tax asset of the Company in the case respect of any such claim or proceedingPost-Closing Tax Period. Buyer will cause the Company to reasonably cooperate, if such Tax Indemnitee shall be required by law or regulation to take action prior to the end of such thirty (30) day period, such Tax Indemnitee shall in such notice to the Guarantor, so inform the Guarantor, and such Tax Indemnitee shall not take any action with respect to such claim, proceeding or Imposition without the consent of the Guarantor (such consent not to be unreasonably withheld or unreasonably delayed) for ten (10) days after the receipt of such notice by the Guarantor unless such Tax Indemnitee shall be required by law or regulation to take action prior to the end of such ten (10) day period. The Guarantor shall be entitled for a period of thirty (30) days from receipt of such notice from such Tax Indemnitee (or such shorter period as such Tax Indemnitee has notified the Guarantor is required by law or regulation for such Tax Indemnitee to commence such contest), to request in writing that such Tax Indemnitee contest the imposition of such Tax, at the Guarantor's expense. If (x) such contest can be pursued in the name of the Guarantor or the Lessee and independently from any other proceeding involving a Tax liability of such Tax Indemnitee for which the Lessee and the Guarantor have not agreed to indemnify such Tax Indemnitee, (y) such contest must be pursued in the name of such Tax Indemnitee, but can be pursued independently from any other proceeding involving a Tax liability of such Tax Indemnitee for which the Lessee and the Guarantor have not agreed to indemnify such Tax Indemnitee or (z) such Tax Indemnitee so requests, then the Guarantor or such Lessee shall be permitted to control the contest of such claim, provided that in the case of a contest described in clause (y) if such Tax Indemnitee determines reasonably Claim by making relevant documents and in good faith that such contest by the Guarantor or the Lessee could have a material adverse impact on the business or operations of such Tax Indemnitee and provides a written explanation employees available to the Guarantor of such determination, such Tax Indemnitee may elect to control or reassert control of the contestSellers and/or Seller Representative, and provided that to execute such documents (including powers of attorney) as may be reasonably necessary to allow Sellers and/or Seller Representative to conduct the taking control by the Guarantor or the Lessee of any contest shall not alter the applicable Tax Indemnitee's rights to indemnification hereunder, and provided, further, that in determining the application of clauses defense.
(xc) and (y) of the preceding sentence, each Tax Indemnitee shall take any and all reasonable steps to segregate claims for any Taxes for which the Lessee and the Guarantor indemnify hereunder from Taxes for which the Lessee and the Guarantor are not obligated to indemnify hereunder, so that the Guarantor can control the contest of the former. In all other claims requested to be contested by the Guarantor, such Tax Indemnitee shall control the contest of such claim, acting through counsel selected by such Tax Indemnitee and reasonably acceptable to the Guarantor. In no event shall the Guarantor be permitted to contest (or such Tax Indemnitee be required to contest) any claim, (A) if such Tax Indemnitee provides the Guarantor with a legal opinion of counsel reasonably acceptable to the Guarantor that such action, suit or proceeding involves a risk of imposition of criminal liability or will involve a material risk of the sale, forfeiture or loss of, or the creation of any Lien (other than a Permitted Lien) on the Property or any part thereof unless the Guarantor shall have posted and maintained a bond or other security reasonably satisfactory to the relevant Tax Indemnitee in respect to such risk, (B) if a Lease Event of Default has occurred and is continuing unless the Guarantor shall have posted and maintained a bond or other security reasonably satisfactory to the relevant Tax Indemnitee in respect of the Taxes subject to such claim and any and all expenses for which the Guarantor or the Lessee is responsible hereunder reasonably foreseeable in connection with the contest of such claim, (C) unless the Guarantor shall have agreed to pay and shall pay, to such Tax Indemnitee on written demand all reasonable, documented out-of-pocket costs, losses and expenses that such Tax Indemnitee may incur in connection with contesting such Imposition including all reasonable legal, accounting and investigatory fees and disbursements and (if applicable) reasonable, allocable internal overhead costs determined in accordance with normal bank operating procedures, or (D) if such contest shall involve the payment of the Tax prior to the contest, unless the Guarantor shall provide to such Tax Indemnitee an interest-free advance in an amount equal to the Imposition that such Tax Indemnitee is required to pay (with no additional net after-tax costs to such Tax Indemnitee). In addition, for contests controlled by such Tax Indemnitee and claims contested in the name of such Tax Indemnitee in a public forum, no contest shall be required: (A) unless the amount of the potential indemnity (taking into account all similar or logically related claims that have been or could be raised in any audit involving any or all such Tax Indemnitees with With respect to any period other Tax Claim, including a Tax Claim related to a Straddle Period and a Tax Claim that the Seller does not elect to control, Buyer shall have sole responsibility for which the Guarantor defense of the item or items at issue provided (a) Sellers will have the Lessee may be liable right (but not the duty) to pay an indemnity under this Section 13.4(b)participate in the defense of such proceeding and to employ counsel, at their own expense, separate from counsel employed by Buyer, (b) exceeds (1) Buyer will keep Sellers informed with respect to the Lessorcommencement, $25,000 status and nature of any such proceeding, and will reasonably cooperate with Sellers and consult with them regarding the conduct of or positions taken in any such proceeding, and (2c) with respect to any Tax Indemnitee other than the Lessor, $75,000 and (B) unless, if requested by such Tax Indemnitee, the Guarantor shall have provided to such Tax Indemnitee an opinion of counsel selected by the Guarantor (which may be in-house counsel) (except, in the case of income taxes indemnified hereunder, in which case such opinion shall be an opinion of independent tax counsel selected by the Guarantor and reasonably acceptable to such Tax Indemnitee) that a reasonable basis exists to contest such claim. In no event shall a Tax Indemnitee be required to appeal an adverse judicial determination to the United States Supreme Court. The party conducting the contest shall consult in good faith with the other party and its counsel with respect to the contest of such claim for Taxes (or claim for refund) but the decisions regarding what actions to be taken shall be made by the controlling party in its sole judgment; provided, however, that if such Tax Indemnitee is the controlling party and the Guarantor recommends the acceptance of a settlement offer made by the relevant Governmental Authority and such Tax Indemnitee rejects such settlement offer, then the amount for which a Lessee and the Guarantor Buyer will be required to indemnify such Tax Indemnitee with respect to the Taxes subject to such offer shall not exceed the amount which it would have owed if such settlement offer had been accepted provided that any Tax Indemnitee shall be entitled to reject any indemnity payment it would otherwise be entitled to hereunder if such Tax Indemnitee reasonably determines that accepting such offer would have an unindemnified impact on such Tax Indemnitee and provided further that no Tax Indemnitee may reject any such indemnity payment if the Guarantor agrees to pay to such Tax Indemnitee the amount of such unindemnified impact, as reasonably determined by such Tax Indemnitee. In addition, the controlling party shall keep the noncontrolling party reasonably informed as to the progress of the contest, and shall provide the noncontrolling party with a copy of (or appropriate excerpts from) any reports or claims issued by the relevant auditing agents or taxing authority to the controlling party thereof, in connection with such claim or the contest thereof, provided, however, that such obligation shall not obligate any Tax Indemnitee to disclose its tax returns or information or documentation unrelated to such claim or contest. Each Tax Indemnitee shall, at the expense of the Lessee and the Guarantor, supply the Lessee or the Guarantor with such information and documents reasonably requested by the Lessee or the Guarantor as are necessary or advisable for such Person to participate in any action, suit or proceeding to the extent permitted by this Section 13.4(b); provided, however, that such Tax Indemnitee shall not be required to provide to such Lessee or the Guarantor copies of its tax returns or any other information, documentation, or materials that it deems to be confidential or proprietary. Notwithstanding anything in this Section 13.4(b) to the contrary, no Tax Indemnitee shall enter into any settlement or other otherwise compromise or fail to appeal an adverse ruling with respect to any claim which is entitled to be indemnified under this Section 13.4 (and with respect to which contest is required under this Section 13.4(b)) such proceeding without the prior written consent of the Guarantor, unless such Tax Indemnitee waives its right Seller Representative if Sellers would be obligated to be indemnified under this Section 13.4 pay or indemnify with respect to such claim. Notwithstanding anything contained herein to the contrary, a Tax Indemnitee shall under this Agreement, which consent will not be required to contest (and neither the Lessee nor the Guarantor shall be permitted to contest in any judicial forum if such contest couldunreasonably withheld, in a Tax Indemnitee's reasonable judgment, be materially adverse to it) a claim with respect to the imposition of any Tax if such Tax Indemnitee shall have waived its right to indemnification under this Section 13.4 with respect to such claim (and any claim with respect to such year conditioned or any other taxable year the contest of which is precluded or materially adversely affected as a result of such waiver)delayed.
Appears in 1 contract
Contests. If any claim shall be made against any Tax Indemnitee or if any proceeding shall be commenced against any Tax Indemnitee (including a written notice of such proceeding) for any Imposition as to which the Lessee or the Guarantor may have an indemnity obligation pursuant to this Section 13.426.5, or if any Tax Indemnitee shall determine that any Imposition as to which the Lessee or the Guarantor may have an indemnity obligation pursuant to this Section 13.4 26.5 may be payable, such Tax Indemnitee shall promptly (and in any event, within fifteen (15) Business Days30 days) notify the Guarantor Lessee in writing (provided that failure to so notify the Guarantor Lessee within fifteen (15) Business Days 30 days shall not alter such Tax Indemnitee's rights under this Section 13.4 26.5 except to the extent such failure precludes or materially adversely affects the ability to conduct a contest of any indemnified Taxes) and shall not take any action with respect to such claim, proceeding or Imposition without the written consent of the Guarantor Lessee (such consent not to be unreasonably withheld or unreasonably delayed) for thirty (30) 30 days after the receipt of such notice by the GuarantorLessee; provided, however, that in the case of any such claim or proceeding, if such Tax Indemnitee shall be required by law or regulation to take action prior to the end of such thirty (30) -day period, such Tax Indemnitee shall in such notice to the GuarantorLessee, so inform the GuarantorLessee, and such Tax Indemnitee shall not take any action with respect to such claim, proceeding or Imposition without the consent of the Guarantor Lessee (such consent not to be unreasonably withheld or unreasonably delayed) for ten (10) 10 days after the receipt of such notice by the Guarantor Lessee unless such the Tax Indemnitee shall be required by law or regulation to take action prior to the end of such ten (10) -day period. The Guarantor Lessee shall be entitled for a period of thirty (30) 30 days from receipt of such notice from such the Tax Indemnitee (or such shorter period as such the Tax Indemnitee has notified the Guarantor Lessee is required by law or regulation for such the Tax Indemnitee to commence such contest), to request in writing that such Tax Indemnitee contest the imposition of such TaxImposition, at the GuarantorLessee's expense. If (x) such contest can be pursued in the name of the Guarantor or the Lessee and independently from any other proceeding involving a Tax liability of such Tax Indemnitee for which the Lessee and the Guarantor have has not agreed to indemnify such Tax Indemnitee, (y) such contest must be pursued in the name of such the Tax Indemnitee, but can be pursued independently from any other proceeding involving a Tax liability of such Tax Indemnitee for which the Lessee and the Guarantor have has not agreed to indemnify such Tax Indemnitee or (z) such the Tax Indemnitee so requests, then the Guarantor or such Lessee shall be permitted to control the contest of such claim, provided that in the case of a contest described in clause (y) ), if such the Tax Indemnitee determines reasonably and in good faith that such contest by the Guarantor or the Lessee could have a material adverse impact on the business or operations of such the Tax Indemnitee and provides a written explanation to the Guarantor Lessee of such determination, such the Tax Indemnitee may elect to control or reassert control of the contest, and provided provided, that the by taking control of the contest, Lessee acknowledges that it is responsible for the Imposition ultimately determined to be due by the Guarantor or the Lessee reason of any contest shall not alter the applicable Tax Indemnitee's rights to indemnification hereundersuch claim, and provided, further, that in determining the application of clauses (x) and (y) of the preceding sentence, each Tax Indemnitee shall take any and all reasonable steps to segregate claims for any Taxes for which the Lessee and the Guarantor indemnify indemnifies hereunder from Taxes for which the Lessee and the Guarantor are is not obligated to indemnify hereunder, so that the Guarantor Lessee can control the contest of the former. In all other claims requested to be contested by the GuarantorLessee, such the Tax Indemnitee shall control the contest of such claim, acting through counsel selected by such Tax Indemnitee and reasonably acceptable to the GuarantorLessee. In no event shall the Guarantor Lessee be permitted to contest (or such the Tax Indemnitee be required to contest) any claim, (A) if such Tax Indemnitee provides the Guarantor Lessee with a legal opinion of counsel reasonably acceptable to the Guarantor Lessee that such action, suit or proceeding involves a risk of imposition of criminal liability or will involve a material risk of the sale, forfeiture or loss of, or the creation of any Lien (other than a Permitted Lien) on the Property or any part thereof unless the Guarantor Lessee shall have posted and maintained a bond or other security reasonably satisfactory to the relevant Tax Indemnitee in respect to such risk, (B) if a Lease an Event of Default has occurred and is continuing unless the Guarantor Lessee shall have posted and maintained a bond or other security reasonably satisfactory to the relevant Tax Indemnitee in respect of the Taxes subject to such claim and any and all expenses for which the Guarantor or the Lessee is responsible hereunder reasonably foreseeable in connection with the contest of such claim, (C) unless the Guarantor Lessee shall have agreed to pay and shall pay, to such Tax Indemnitee on written demand all reasonable, documented reasonable out-of-pocket costs, losses and expenses that such Tax Indemnitee may incur in connection with contesting such Imposition including all reasonable legal, accounting and investigatory fees and disbursements and (if applicable) reasonable, allocable internal overhead costs determined in accordance with normal bank operating proceduresdisbursements, or (D) if such contest shall involve the payment of the Tax prior to the contest, unless the Guarantor Lessee shall provide to such the Tax Indemnitee an interest-free advance in an amount equal to the Imposition that such Tax the Indemnitee is required to pay (with no additional net after-tax costs to such Tax Indemnitee). In addition, addition for contests controlled by such Tax Indemnitee controlled contests and claims contested in the name of such the Tax Indemnitee in a public forum, no contest shall be required: (A) unless the amount of the potential indemnity (taking into account all similar or logically related claims that have been or could be raised in any audit involving any or all such Tax Indemnitees with respect to any period Indemnitee for which the Guarantor or the Lessee may be liable to pay an indemnity under this Section 13.4(b26.5(b)) exceeds (1) with respect to the Lessor, $25,000 and (2) with respect to any Tax Indemnitee other than the Lessor, $75,000 500,000 and (B) unless, if requested by such the Tax Indemnitee, the Guarantor Lessee shall have provided to such the Tax Indemnitee an opinion of counsel selected by the Guarantor Lessee (which may be in-house counsel) (except, in the case of income taxes indemnified hereunder, in hereunder which case such opinion shall be an opinion of independent tax counsel selected by the Guarantor Tax Indemnitee and reasonably acceptable to such Tax Indemniteethe Lessee) that a reasonable basis exists to contest such claim. In no event shall a Tax Indemnitee be required to appeal an adverse judicial determination to the United States Supreme Court. The party conducting the contest shall consult in good faith with the other party and its counsel with respect to the contest of such claim for Taxes (or claim for refund) but the decisions regarding what actions to be taken shall be made by the controlling party in its sole judgment; judgement, provided, however, that if such the Tax Indemnitee is the controlling party and the Guarantor Lessee recommends the acceptance of a settlement offer made by the relevant Governmental Authority and such Tax Indemnitee rejects such settlement offer, offer then the amount for which a the Lessee and the Guarantor will be required to indemnify such Tax Indemnitee with respect to the Taxes subject to such offer shall not exceed the amount which it would have owed if such settlement offer had been accepted provided that any Tax Indemnitee shall be entitled to reject any indemnity payment it would otherwise be entitled to hereunder if such Tax Indemnitee reasonably determines that accepting such offer would have an unindemnified impact on such Tax Indemnitee and provided further that no Tax Indemnitee may reject any such indemnity payment if the Guarantor agrees to pay to such Tax Indemnitee the amount of such unindemnified impact, as reasonably determined by such Tax Indemniteeaccepted. In addition, the controlling party shall keep the noncontrolling party reasonably informed as to the progress of the contest, and shall provide the noncontrolling party with a copy of (or appropriate excerpts from) any reports or claims issued by the relevant auditing agents or taxing authority to the controlling party thereof, in connection with such claim or the contest thereof, provided, however, that such obligation shall not obligate any Tax Indemnitee to disclose its tax returns or information or documentation unrelated to such claim or contest. Each Tax Indemnitee shall, shall at the Lessee's expense of the Lessee and the Guarantor, supply the Lessee or the Guarantor with such information and documents reasonably requested by the Lessee or the Guarantor as are necessary or advisable for such Person the Lessee to participate in any action, suit or proceeding to the extent permitted by this Section 13.4(b26.5(b); provided, however, that such Tax Indemnitee shall not be required to provide to such Lessee or the Guarantor copies of its tax returns or any other information, documentation, or materials that it deems to be confidential or proprietary. Notwithstanding anything in this Section 13.4(b) to the contrary, no No Tax Indemnitee shall enter into any settlement or other compromise or fail to appeal an adverse ruling with respect to any claim which is entitled to be indemnified under this Section 13.4 26.5 (and with respect to which contest is required under this Section 13.4(b26.5(b)) without the prior written consent of the GuarantorLessee, unless such Tax Indemnitee waives its right to be indemnified under this Section 13.4 26.5 with respect to such claim. Notwithstanding anything contained herein to the contrary, a Tax Indemnitee shall will not be required to contest (and neither the Lessee nor the Guarantor shall not be permitted to contest in any judicial forum if such contest could, in a Tax Indemnitee's reasonable judgment, be materially adverse to itcontest) a claim with respect to the imposition of any Tax if such Tax Indemnitee shall have waived waive its right to indemnification under this Section 13.4 26.5 with respect to such claim (and any claim with respect to such year or any other taxable year the contest of which is precluded or materially adversely affected as a result of such waiver), unless the failure to contest such claim -55- 57 would, in the reasonable judgement of the Lessee, have an adverse effect on the Lessee (except for such effect which is not material), in which case such claim may be contested at the request and expense of the Lessee, with such claim remaining subject to the indemnification provided hereunder.
Appears in 1 contract
Sources: Lease and Security Agreement (Alternative Living Services Inc)
Contests. If any claim (i) After the Cut-off Date, Seller and Buyer each shall be made against notify the other party in writing within ten (10) days of the commencement of any Tax Indemnitee audit or administrative or judicial proceeding affecting the Taxes of any of the Entities that, if any proceeding shall determined adversely to the taxpayer (the “Tax Indemnified Party”) or after the lapse of time would be commenced against any Tax Indemnitee (including a written notice of such proceeding) grounds for any Imposition as to which the Lessee or the Guarantor may have an indemnity obligation pursuant to this Section 13.4, or if any Tax Indemnitee shall determine that any Imposition to which the Lessee or the Guarantor may have an indemnity obligation pursuant to this Section 13.4 may be payable, such Tax Indemnitee shall promptly (and in any event, within fifteen (15) Business Days) notify the Guarantor in writing (provided that failure to so notify the Guarantor within fifteen (15) Business Days shall not alter such Tax Indemnitee's rights indemnification under this Section 13.4 5.4 by the other party (the “Tax Indemnifying Party” and a “Tax Claim”). Such notice shall contain factual information describing any asserted Tax liability in reasonable detail and shall include copies of any notice or other document received from any Tax authority in respect of any such asserted Tax liability. Failure to give such notification shall not affect the indemnification provided in this Section 5.4 except to the extent the Tax Indemnifying Party shall have been prejudiced as a result of such failure precludes or materially adversely affects (except that the ability to conduct a contest of any indemnified Taxes) and Tax Indemnifying Party shall not take be liable for any action with respect expenses incurred during the period in which the Tax Indemnified Party failed to give such claimnotice). Thereafter, proceeding or Imposition without the written consent of the Guarantor (such consent not to be unreasonably withheld or unreasonably delayed) for thirty (30) days after the receipt of such notice by the Guarantor; provided, however, that in the case of any such claim or proceeding, if such Tax Indemnitee Indemnified Party shall be required by law or regulation to take action prior deliver to the end of such thirty (30) day periodTax Indemnifying Party, such Tax Indemnitee shall as promptly as possible but in such notice to the Guarantor, so inform the Guarantor, and such Tax Indemnitee shall not take any action with respect to such claim, proceeding or Imposition without the consent of the Guarantor (such consent not to be unreasonably withheld or unreasonably delayed) for no event later than ten (10) days after the Tax Indemnified Party’s receipt thereof, copies of such notice all relevant notices and documents (including court papers) received by the Guarantor unless such Tax Indemnitee Indemnified Party.
(ii) In the case of an audit or administrative or judicial proceeding involving any asserted liability for Taxes relating to any Taxable years or periods ending on or before the Cut-off Date or any Straddle Period, Seller shall be required by law or regulation to take action prior to have the end of such ten (10) day period. The Guarantor shall be entitled for a period of thirty (30) days from receipt of such notice from such Tax Indemnitee (or such shorter period as such Tax Indemnitee has notified the Guarantor is required by law or regulation for such Tax Indemnitee to commence such contest), to request in writing that such Tax Indemnitee contest the imposition of such Taxright, at the Guarantor's its expense. If (x) such contest can be pursued in the name of the Guarantor or the Lessee and independently from any other proceeding involving a Tax liability of such Tax Indemnitee for which the Lessee and the Guarantor have not agreed to indemnify such Tax Indemnitee, (y) such contest must be pursued in the name of such Tax Indemnitee, but can be pursued independently from any other proceeding involving a Tax liability of such Tax Indemnitee for which the Lessee and the Guarantor have not agreed to indemnify such Tax Indemnitee or (z) such Tax Indemnitee so requests, then the Guarantor or such Lessee shall be permitted to control the contest conduct of such claim, provided that in the case of a contest described in clause (y) if such Tax Indemnitee determines reasonably and in good faith that such contest by the Guarantor audit or the Lessee could have a material adverse impact on the business or operations of such Tax Indemnitee and provides a written explanation to the Guarantor of such determination, such Tax Indemnitee may elect to control or reassert control of the contest, and provided that the taking control by the Guarantor or the Lessee of any contest shall not alter the applicable Tax Indemnitee's rights to indemnification hereunder, and provided, further, that in determining the application of clauses (x) and (y) of the preceding sentence, each Tax Indemnitee shall take any and all reasonable steps to segregate claims for any Taxes for which the Lessee and the Guarantor indemnify hereunder from Taxes for which the Lessee and the Guarantor are not obligated to indemnify hereunder, so that the Guarantor can control the contest of the former. In all other claims requested to be contested by the Guarantor, such Tax Indemnitee shall control the contest of such claim, acting through counsel selected by such Tax Indemnitee and reasonably acceptable to the Guarantor. In no event shall the Guarantor be permitted to contest (or such Tax Indemnitee be required to contest) any claim, (A) if such Tax Indemnitee provides the Guarantor with a legal opinion of counsel reasonably acceptable to the Guarantor that such action, suit or proceeding involves a risk of imposition of criminal liability or will involve a material risk of the sale, forfeiture or loss of, or the creation of any Lien (other than a Permitted Lien) on the Property or any part thereof unless the Guarantor shall have posted and maintained a bond or other security reasonably satisfactory to the relevant Tax Indemnitee in respect to such risk, (B) if a Lease Event of Default has occurred and is continuing unless the Guarantor shall have posted and maintained a bond or other security reasonably satisfactory to the relevant Tax Indemnitee in respect of the Taxes subject to such claim and any and all expenses for which the Guarantor or the Lessee is responsible hereunder reasonably foreseeable in connection with the contest of such claim, (C) unless the Guarantor shall have agreed to pay and shall pay, to such Tax Indemnitee on written demand all reasonable, documented out-of-pocket costs, losses and expenses that such Tax Indemnitee may incur in connection with contesting such Imposition including all reasonable legal, accounting and investigatory fees and disbursements and (if applicable) reasonable, allocable internal overhead costs determined in accordance with normal bank operating procedures, or (D) if such contest shall involve the payment of the Tax prior to the contest, unless the Guarantor shall provide to such Tax Indemnitee an interest-free advance in an amount equal to the Imposition that such Tax Indemnitee is required to pay (with no additional net after-tax costs to such Tax Indemnitee). In addition, for contests controlled by such Tax Indemnitee and claims contested in the name of such Tax Indemnitee in a public forum, no contest shall be required: (A) unless the amount of the potential indemnity (taking into account all similar or logically related claims that have been or could be raised in any audit involving any or all such Tax Indemnitees with respect to any period for which the Guarantor or the Lessee may be liable to pay an indemnity under this Section 13.4(b)) exceeds (1) with respect to the Lessor, $25,000 and (2) with respect to any Tax Indemnitee other than the Lessor, $75,000 and (B) unless, if requested by such Tax Indemnitee, the Guarantor shall have provided to such Tax Indemnitee an opinion of counsel selected by the Guarantor (which may be in-house counsel) (except, in the case of income taxes indemnified hereunder, in which case such opinion shall be an opinion of independent tax counsel selected by the Guarantor and reasonably acceptable to such Tax Indemnitee) that a reasonable basis exists to contest such claim. In no event shall a Tax Indemnitee be required to appeal an adverse judicial determination to the United States Supreme Court. The party conducting the contest shall consult in good faith with the other party and its counsel with respect to the contest of such claim for Taxes (or claim for refund) but the decisions regarding what actions to be taken shall be made by the controlling party in its sole judgmentproceeding; provided, however, that if such Tax Indemnitee is the controlling party and the Guarantor recommends the acceptance of a settlement offer made by the relevant Governmental Authority and such Tax Indemnitee rejects such settlement offer(A) with respect to Straddle Periods, then the amount for which a Lessee and the Guarantor will be required to indemnify such Tax Indemnitee Seller shall keep Buyer reasonably informed with respect to the Taxes subject to such offer shall not exceed the amount which it would have owed if such settlement offer had been accepted provided that any Tax Indemnitee shall be entitled to reject any indemnity payment it would otherwise be entitled to hereunder if such Tax Indemnitee reasonably determines that accepting such offer would have an unindemnified impact on such Tax Indemnitee and provided further that no Tax Indemnitee may reject any such indemnity payment if the Guarantor agrees to pay to such Tax Indemnitee the amount status of such unindemnified impact, as reasonably determined by such Tax Indemnitee. In addition, the controlling party shall keep the noncontrolling party reasonably informed as to the progress of the contest, and shall provide the noncontrolling party with a copy of (or appropriate excerpts from) any reports or claims issued by the relevant auditing agents or taxing authority to the controlling party thereof, in connection with such claim or the contest thereof, provided, however, that such obligation shall not obligate any Tax Indemnitee to disclose its tax returns or information or documentation unrelated to such claim or contest. Each Tax Indemnitee shall, at the expense of the Lessee and the Guarantor, supply the Lessee or the Guarantor with such information and documents reasonably requested by the Lessee or the Guarantor as are necessary or advisable for such Person to participate in any action, suit audit or proceeding to the extent permitted by this Section 13.4(b); provided, however, that such Tax Indemnitee shall not be required to and provide to such Lessee or the Guarantor Buyer with copies of its tax returns or any other information, documentation, or materials that it deems to be confidential or proprietary. Notwithstanding anything in this Section 13.4(b) to the contrary, no Tax Indemnitee shall enter into any settlement or other compromise or fail to appeal an adverse ruling with respect to any claim which is entitled to be indemnified under this Section 13.4 (and with respect to which contest is required under this Section 13.4(b)) without the prior all written consent of the Guarantor, unless such Tax Indemnitee waives its right to be indemnified under this Section 13.4 correspondence with respect to such claim. Notwithstanding anything contained herein to the contrary, audit or proceeding in a Tax Indemnitee shall not be required to contest timely manner and (and neither the Lessee nor the Guarantor shall be permitted to contest in any judicial forum B) if such contest could, audit or proceeding would be reasonably expected to result in a material increase in Tax Indemnitee's reasonable judgment, liability of the Entities for which Buyer would be materially adverse to it) a claim with respect to the imposition of any Tax if such Tax Indemnitee shall have waived its right to indemnification liable under this Section 13.4 5.6, Buyer may participate in the conduct of such audit or proceeding at its own expense.
(iii) In the case of an audit or administrative or judicial proceeding involving any asserted liability for Taxes relating to any Taxable years or periods beginning after the Cut-off Date, Buyer shall have the right, at its expense, to control the conduct of such audit or proceeding.
(iv) Buyer and Seller shall reasonably cooperate in connection with respect any Tax Claim, and such cooperation shall include the provision to the Tax Indemnifying Party of records and information which are reasonably relevant to such claim (Tax Claim and making employees available on a mutually convenient basis to provide additional information and explanation of any claim with respect to such year or any other taxable year the contest of which is precluded or materially adversely affected as a result of such waiver)material provided hereunder.
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Contests. If (a) Nothing in this Agreement shall be construed to prevent UpREIT from contesting, as the Tax Matters Partner in accordance with the Partnership Agreement as part of the unified audit of the Partnership, any claim shall involving a UpREIT item that, if successful, would result in an Income Inclusion (a "Partnership Level Issue").
(b) If UpREIT contests a Partnership Level Issue that, if successful, would result in an Income Inclusion, UpREIT's liability for indemnification under Section 4 hereof shall, at UpREIT's election, be made against any Tax Indemnitee or if any proceeding shall be commenced against any Tax Indemnitee (including a written notice of such proceeding) for any Imposition as to which the Lessee or the Guarantor may have an indemnity obligation pursuant to this Section 13.4, or if any Tax Indemnitee shall determine that any Imposition to which the Lessee or the Guarantor may have an indemnity obligation pursuant to this Section 13.4 may be payable, such Tax Indemnitee shall promptly (and in any event, within fifteen (15) Business Days) notify the Guarantor in writing (provided that failure to so notify the Guarantor within fifteen (15) Business Days shall not alter such Tax Indemnitee's rights under this Section 13.4 except to the extent such failure precludes or materially adversely affects the ability to conduct a contest of any indemnified Taxes) and shall not take any action with respect to such claim, proceeding or Imposition without the written consent of the Guarantor (such consent not to be unreasonably withheld or unreasonably delayed) for deferred until thirty (30) days after the receipt a Final Determination of such notice by the Guarantor; providedHadesman Indemnitee's federal income tax liability in respect of an Income Inclusion.
(c) If any audit or proceeding involving an indemnifiable adjustment is being conducted in a proceeding involving such Hadesman Indemnitee, however, that in the case of any such claim or proceeding, if such Tax Indemnitee shall which cannot be required by law or regulation to take action prior transferred to the end UpREIT as a partnership item (a "Hadesman Level Issue"), such Hadesman Indemnitee hereby agrees (i) promptly to notify UpREIT in writing of such thirty adjustment (30) day period, and the failure of such Tax Hadesman Indemnitee to so notify UpREIT shall in such notice preclude any indemnity hereunder to the Guarantor, so inform the Guarantorextent UpREIT's right to effect its contest rights hereunder has been precluded by such failure), and such Tax Indemnitee shall not take any action with respect (ii) upon UpREIT's delivery to such claim, proceeding or Imposition without the consent of the Guarantor (such consent not to be unreasonably withheld or unreasonably delayed) for ten (10) days after the receipt of such notice by the Guarantor unless such Tax Indemnitee shall be required by law or regulation to take action prior to the end of such ten (10) day period. The Guarantor shall be entitled for a period of thirty (30) days from receipt of such notice from such Tax Indemnitee (or such shorter period as such Tax Indemnitee has notified the Guarantor is required by law or regulation for such Tax Indemnitee to commence such contest), to request in writing that such Tax Indemnitee contest the imposition of such Tax, at the Guarantor's expense. If (x) such contest can be pursued in the name of the Guarantor or the Lessee and independently from any other proceeding involving a Tax liability of such Tax Indemnitee for which the Lessee and the Guarantor have not agreed to indemnify such Tax Indemnitee, (y) such contest must be pursued in the name of such Tax Indemnitee, but can be pursued independently from any other proceeding involving a Tax liability of such Tax Indemnitee for which the Lessee and the Guarantor have not agreed to indemnify such Tax Indemnitee or (z) such Tax Indemnitee so requests, then the Guarantor or such Lessee shall be permitted to control the contest of such claim, provided that in the case Hadesman of a contest described in clause (y) if such Tax Indemnitee determines reasonably and in good faith that such contest by the Guarantor or the Lessee could have a material adverse impact on the business or operations of such Tax Indemnitee and provides a written explanation to the Guarantor of such determination, such Tax Indemnitee may elect to control or reassert control of the contest, and provided that the taking control by the Guarantor or the Lessee of any contest shall not alter the applicable Tax Indemnitee's rights to indemnification hereunder, and provided, further, that in determining the application of clauses (x) and (y) of the preceding sentence, each Tax Indemnitee shall take any and all reasonable steps to segregate claims for any Taxes for which the Lessee and the Guarantor indemnify hereunder from Taxes for which the Lessee and the Guarantor are not obligated to indemnify hereunder, so that the Guarantor can control the contest of the former. In all other claims requested to be contested by the Guarantor, such Tax Indemnitee shall control the contest of such claim, acting through counsel selected by such Tax Indemnitee and reasonably acceptable to the Guarantor. In no event shall the Guarantor be permitted to contest (or such Tax Indemnitee be required to contest) any claim, (A) if such Tax Indemnitee provides the Guarantor with a legal opinion of nationally recognized tax counsel reasonably acceptable to the Guarantor that such action, suit or proceeding involves a risk of imposition of criminal liability or will involve a material risk of the sale, forfeiture or loss of, or the creation of any Lien Hadesman Indemnitee (other than a Permitted Lien"Tax Counsel") on the Property or any part thereof unless the Guarantor shall have posted and maintained a bond or other security reasonably satisfactory to the relevant Tax Indemnitee in respect to such risk, (B) if effect that there is a Lease Event Realistic Possibility of Default has occurred and is continuing unless the Guarantor shall have posted and maintained a bond or other security reasonably satisfactory to the relevant Tax Indemnitee in respect of the Taxes subject to such claim and any and all expenses for which the Guarantor or the Lessee is responsible hereunder reasonably foreseeable in connection with the contest of such claim, (C) unless the Guarantor shall have agreed to pay and shall pay, to such Tax Indemnitee on written demand all reasonable, documented out-of-pocket costs, losses and expenses that such Tax Indemnitee may incur in connection with contesting such Imposition including all reasonable legal, accounting and investigatory fees and disbursements and (if applicable) reasonable, allocable internal overhead costs determined in accordance with normal bank operating procedures, or (D) if such contest shall involve the payment of the Tax prior to the Success upon contest, unless such Hadesman Indemnitee will contest that adjustment by filing a protest and administrative appeal and prosecuting the Guarantor shall provide to such Tax Indemnitee an interest-free advance in an amount equal to the Imposition that such Tax Indemnitee is required to pay (with no additional net after-tax costs to such Tax Indemnitee). In addition, for contests controlled by such Tax Indemnitee and claims contested in the name of such Tax Indemnitee in a public forum, no contest shall be required: (A) unless the amount of the potential indemnity (taking into account all similar or logically related claims that have been or could be raised in any audit involving any or all such Tax Indemnitees with respect to any period for which the Guarantor or the Lessee may be liable to pay an indemnity under this Section 13.4(b)) exceeds (1) with respect to the Lessor, $25,000 and (2) with respect to any Tax Indemnitee other than the Lessor, $75,000 and (B) unless, if requested by such Tax Indemnitee, the Guarantor shall have provided to such Tax Indemnitee an opinion of counsel selected by the Guarantor (which may be in-house counsel) (except, in the case of income taxes indemnified hereunder, in which case such opinion shall be an opinion of independent tax counsel selected by the Guarantor and reasonably acceptable to such Tax Indemnitee) that a reasonable basis exists to contest such claim. In no event shall a Tax Indemnitee be required to appeal an adverse judicial determination to the United States Supreme Court. The party conducting the contest shall consult same in good faith with the other party and its counsel with respect to the contest of such claim for Taxes (or claim for refund) but the decisions regarding what actions to be taken shall be made by the controlling party in its sole judgment; provided, however, that if such Tax Indemnitee is the controlling party and the Guarantor recommends the acceptance of a settlement offer made by the relevant Governmental Authority and such Tax Indemnitee rejects such settlement offer, then the amount for which a Lessee and the Guarantor will be required to indemnify such Tax Indemnitee with respect to the Taxes subject to such offer shall not exceed the amount which it would have owed if such settlement offer had been accepted provided that any Tax Indemnitee shall be entitled to reject any indemnity payment it would otherwise be entitled to hereunder if such Tax Indemnitee reasonably determines that accepting such offer would have an unindemnified impact on such Tax Indemnitee and provided further that no Tax Indemnitee may reject any such indemnity payment if the Guarantor agrees to pay to such Tax Indemnitee the amount of such unindemnified impact, as reasonably determined by such Tax Indemnitee. In addition, the controlling party shall keep the noncontrolling party reasonably informed as to the progress of the contest, and shall provide the noncontrolling party with a copy of (or appropriate excerpts from) any reports or claims issued by the relevant auditing agents or taxing authority to the controlling party thereof, in connection with such claim or the contest thereof, provided, however, that such obligation shall not obligate any Tax Indemnitee to disclose its tax returns or information or documentation unrelated to such claim or contest. Each Tax Indemnitee shall, at the expense of the Lessee and the Guarantor, supply the Lessee or the Guarantor with such information and documents reasonably requested by the Lessee or the Guarantor as are necessary or advisable for such Person to participate in any action, suit or proceeding to the extent permitted by this Section 13.4(b)faith; provided, however, that such Tax Hadesman Indemnitee shall will not be required obligated to provide to pursue an administrative appeal if such Lessee Hadesman Indemnitee instead pursues relief in Tax Court or a court having refund jurisdiction.
(d) If, within 30 days following the Guarantor copies failure of its tax returns or any other information, documentation, or materials that it deems to be confidential or proprietary. Notwithstanding anything in this Section 13.4(b) to the contrary, no Tax Indemnitee shall enter into any settlement or other compromise or fail to appeal an adverse ruling such administrative proceedings with respect to any claim which a Hadesman Level Issue, UpREIT delivers to Hadesman Indemnitee written opinion of Tax Counsel to the effect that there is entitled a Realistic Possibility of Success if the proposed adjustment is presented to be indemnified under this Section 13.4 a court for resolution, then such Hadesman Indemnitee will contest the proposed adjustment in good faith in the Tax Court or by paying the tax (and with respect to which contest is required under this Section 13.4(b)any applicable interest and penalties) without and suing for refund in the prior written consent Court of the GuarantorFederal Claims or appropriate Federal District Court. If, unless within 30 days following a final adverse decision of such Tax Indemnitee waives its right to be indemnified under this Section 13.4 court with respect to such claim. Notwithstanding anything contained herein Hadesman Level Issue, UpREIT delivers to such Hadesman Indemnitee a written opinion of Tax Counsel to the contraryeffect that it is more likely than not that such decision would be reversed on appeal, then such Hadesman Indemnitee will appeal such decision to the appropriate Federal Court of Appeals. With respect to any of the above-described proceedings, such Hadesman Indemnitee will keep UpREIT and its counsel informed as to the progress of such proceedings, give UpREIT and its counsel the opportunity to review and comment in advance on all written submissions and filings relevant to indemnifiable issues (after making appropriate redactions to preserve the confidentiality of the such Hadesman Indemnitee return as to other issues), and consider in good faith any suggestions made by UpREIT or its counsel.
(e) Such Hadesman Indemnitee shall present any settlement offer provided to such Hadesman Indemnitee pursuant to a Hadesman Level Issue to UpREIT. If UpREIT recommends acceptance of a settlement offer of a Hadesman Level Issue or if the Tax Matters Partner recommends acceptance of a settlement offer in respect of a Partnership Level Issue, but such Hadesman Indemnitee declines to accept such offer in writing within 30 days (if such Hadesman Indemnitee does not respond within 30 days, such lack of response shall be treated as acceptance of UpREIT's or the Tax Matters Partner's recommendation, respectively), (1) the obligation of UpREIT to make indemnity payments as the result of any such contest or proceedings shall not thereafter exceed the obligation that it would have had if such contest had been settled or proceeding terminated on the basis recommended by UpREIT or the Tax Matters Partner, as applicable, and (2) in the case of a Hadesman Level Issue, UpREIT shall have no further liability for costs or other expenses in respect of such contest.
(f) Notwithstanding the foregoing, such Hadesman Indemnitee will have no obligation to contest any action with respect to a Hadesman Level Issue (i) unless such items could give rise to a federal income tax liability (disregarding other items in the assessment and considering effects in future years) in excess of $25,000, (ii) without UpREIT paying when due, reasonable third-party costs and out-of-pocket expenses including reasonable legal, witness and accounting fees and other expenses and, in the case of proceedings before the Court of Federal Claims or Federal District Court, the amount of tax (and any applicable interest and penalties) for which refund is claimed, and (iii) to the extent such Hadesman Indemnitee waives in writing UpREIT's obligation to indemnify such Hadesman Indemnitee for such items, in which case all third- party costs and out-of-pocket expenses described in clause (ii) thereafter incurred and all taxes would be paid by such Hadesman Indemnitee.
(g) such Hadesman Indemnitee shall not settle any such Hadesman Level Issue without UpREIT's consent; provided that such Hadesman Indemnitee shall not be required to contest (any proposed adjustment and neither the Lessee nor the Guarantor shall be permitted to contest in may settle any judicial forum such proposed adjustment if such contest could, in a Tax Indemnitee's reasonable judgment, be materially adverse to it) a claim with respect to the imposition of any Tax if such Tax Hadesman Indemnitee shall have waived waive its right to indemnification indemnity under this Section 13.4 Agreement with respect to such claim adjustment and any Income Inclusion that results from such adjustment and, in the case of proceedings before the Court of Federal Claims or Federal District Court, shall pay to UpREIT the amount of tax (and any claim applicable interest and penalties) previously paid or advanced by UpREIT with respect to such year adjustment or any other taxable year the contest of which is precluded such adjustment under Section 6(f), plus interest at ___% computed from the time such amounts were paid or materially adversely affected as advanced by UpREIT.
(h) Within thirty (30) days after a result Final Determination of the liability of such waiverHadesman Indemnitee in respect of a Hadesman Level Issue, UpREIT and each Hadesman Indemnitee agree to pay each other, as applicable, the net amount of (i) the payment owed by the UpREIT to such Hadesman Indemnitee of any indemnification hereunder, not theretofore paid resulting from the outcome of such contest, and (ii) in the case of proceedings before the Court of Federal Claims or Federal District Court, the repayment owed by such Hadesman Indemnitee to UpREIT of the amount of tax (and any applicable interest and penalties) previously paid or advanced by UpREIT with respect to such adjustment or the contest of such adjustment under Section 6(f), together with any interest received by or credited to such Hadesman Indemnitee that is attributable to such advance.
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Sources: Tax Indemnification Agreement (Prime Group Realty Trust)