Contests. If a written claim is made by any taxing authority against a Tax Indemnitee for any Taxes with respect to which the Lessee may be required to indemnify against hereunder or if a Tax Indemnitee shall determine that any tax to which the Lessee may have an indemnity obligation hereunder may be payable (a "Tax Claim"), then such Tax Indemnitee shall give the Lessee written notice of such Tax Claim promptly (but in any event within twenty (20) days after its receipt of the written Tax Claim or its determination, as applicable), and shall furnish Lessee with copies of such Tax Claim and all other writings received from the taxing authority to the extent relating to such claim (but failure to so notify the Lessee shall not relieve the Lessee of its obligations hereunder except to the extent that it effectively precludes the ability of the Lessee to conduct a contest of the Tax Claim). The Tax Indemnitee shall not pay such Tax Claim until at least thirty (30) days after providing the Lessee with such written notice, unless (a) the Tax Indemnitee is required to do so by law or regulation or the failure to pay such Tax Claim could result in a material adverse financial, legal or other consequence to the Tax Indemnitee and (b) in the written notice described above, the Tax Indemnitee has notified the Lessee of such requirement or such material adverse consequence (such notice however shall not require the disclosure of the Tax Indemnitee's confidential information, as determined in the sole discretion of such Tax Indemnitiee, or the Tax Indemnitee's tax returns, books, or records). If the Lessee shall so request within 30 days after receipt of such notice (or such shorter period as is reasonably specified by the Tax Indemnitee if any contest of the Tax must be commenced prior to the expiration of 30 days), then such Tax Indemnitee shall in good faith at Lessee's sole expense contest such Tax or permit the Lessee to contest such Tax, as such Tax Indemnitee shall elect; provided, however, that to the extent (i) the contest involves only Taxes constituting property taxes, sales taxes, or use taxes, (ii) the contest does not involve any taxes that the Lessee is not required to indemnify the Tax Indemnitee or taxes and other issues relating to a Tax Indemnitee that are unrelated to the transactions contemplated by the Operative Agreements, (iii) the contest can be pursued in the name of the Lessee and independently from any other proceeding involving a Tax Claim of a Tax Indemnitee for which Lessee has not agreed in writing to indemnify such Tax Indemnitee, and (iv) no Equity Insufficiency Circumstance exists, such contest shall be undertaken by the Lessee at the Lessee's sole expense and the after-tax costs of the Lessor, the Owner Participant, or other Tax Indemnitee shall be reimbursed by the Lessee. Notwithstanding the preceding sentence, if (a) such contest would involve any other type of Tax, any taxes that the Lessee is not required to indemnify the Tax Indemnitee or taxes and other issues relating to a Tax Indemnitee which are unrelated to the transactions contemplated by the Operative Agreements, (b) the Tax Indemnitee determines that such contest conducted by the Lessee could have a material adverse impact on such Tax Indemnitee's business or operations or involve risk of the imposition of criminal liability on a Tax Indemnitee, or (c) an Equity Insufficiency Circumstance exists, then such Tax Indemnitee may, in its sole discretion, control such contest (including selecting the forum for such contest, and determining whether any such contest shall be conducted by (i) paying such Tax under protest or (ii) resisting payment of such Tax or (iii) paying such Tax and seeking a refund thereof; provided, however, that at such Tax Indemnitee's option, such contest shall be conducted by the Lessee in the name of such Tax Indemnitee). In no event shall such Tax Indemnitee be required or the Lessee be permitted to contest any Tax for which the Lessee is obligated to indemnify pursuant to this Section 7.1 unless: (i) the Lessee shall have acknowledged in writing (x) that it is solely responsible for any Indemnified Tax resulting from any contest under its control, (y) its liability to such Tax Indemnitee for all reasonable out of pocket costs, losses and expenses that the Tax Indemnitees may incur in connection with contesting the Indemnified Tax (including, but not limited to, any reasonable legal, accounting and investigatory fees and disbursements), and (z) its liability for an indemnity payment pursuant to this Section 7.1 as a result of such claim if and to the extent such Tax Indemnitee or the Lessee, as the case may be, shall not prevail in the contest of such claim; provided, however, that the Lessee shall not be required to indemnify for such Taxes to the extent the results of the contest clearly demonstrate that the Tax is not an Indemnified Tax unless the Lessee's conduct of the contest materially prejudiced the Tax Indemnitee; (ii) such Tax Indemnitee shall have received the opinion of independent tax counsel selected by the Tax Indemnitee and reasonably satisfactory to the Lessee and furnished at the Lessee's sole expense, opining that a reasonable basis exists for contesting such claim or, in the event of an appeal of an adverse court or administrative agency decision, that as a result of a change in law or fact it is more likely than not that an appellate court or an administrative agency or decision making body with appellate jurisdiction, as the case may be, will reverse or substantially modify the adverse determination; (iii) the Lessee shall have agreed to pay such Tax Indemnitee on demand (and at no after tax costs to the Lessor, the Owner Participant and any Tax Indemnitee) all reasonable costs and expenses that such Tax Indemnitee may incur in connection with contesting such claim (including, without limitation, all reasonable legal and accounting fees and disbursements); (iv) no Lease Default described in Section 14(a), 14(b), 14(c), 14(g) or 14(h) of the Lease or a Lease Event of Default shall have occurred and shall have been continuing, unless the Tax Indemnitee in its sole discretion exercised in good faith allows the Lessee to post a satisfactory bond or other security that does not involve a possibility of a Lien on the Equipment or any portion thereof or on any interest therein, and which bond or other security will be for an amount equal to the sum of (I) the costs of such contest (as reasonably estimated by such Tax Indemnitee in good faith) and the Taxes which may be required to be indemnified and (II) if such Lease Default or Lease Event of Default involves a payment obligation under an Operative Agreement that is currently not paid in full, the unpaid amount of such obligation, plus the present value of the amounts not yet due pursuant to such obligation; (v) such Tax Indemnitee shall have determined that the action to be taken will not result in any risk of sale, forfeiture or loss of, or the creation of any Lien, or the Lessee shall have or otherwise made a provision to protect the interest of such Tax Indemnitee (in a manner satisfactory to such Tax Indemnitee in its sole discretion), on the Equipment or any portion thereof or any interest therein; (vi) the amount of such claims alone, or, if the subject matter thereof shall be of a continuing or recurring nature, when aggregated with substantially identical potential claims with respect to the transactions contemplated by the Operative Agreements shall be at least $25,000; (vii) if such contest shall be conducted in a manner requiring the payment or deposit of the claim, the Lessee shall have paid the amount required (and at no after-tax costs to the Lessor, the Owner Participant or other Tax Indemnitee); and (viii) there is no risk of imposition of criminal liability or penalties. The Lessee shall cooperate with the Tax Indemnitee in good faith with respect to any contest controlled and conducted by the Tax Indemnitee and the Tax Indemnitee in good faith shall consult with the Lessee regarding the conduct of such contest. A Tax Indemnitee shall not be required to pursue an appeal to the U.S. Supreme Court or the highest court in Canada or Mexico. The Tax Indemnitee shall cooperate with respect to any contest controlled and conducted by the Lessee and the Lessee shall consult with the Tax Indemnitee regarding the conduct of such contest. Notwithstanding anything to the contrary contained in this Section 7.1, no Tax Indemnitee shall be required to contest any claim if the subject matter thereof shall be of a continuing or recurring nature and shall have previously been adversely decided to the Tax Indemnitee pursuant to the contest provisions of this Section 7.1 unless there shall have been a change in the law (including, without limitation, amendments to statutes or regulations, administrative rulings (excluding private letter rulings and other rulings or materials that may not be relied upon by such Tax Indemnitee as precedent) or court decisions in the applicable jurisdiction) enacted, promulgated or effective after such claim shall have been so previously decided, and such Tax Indemnitee shall have received an opinion of independent tax counsel selected by the Tax Indemnitee and reasonably satisfactory to the Lessee, furnished at the Lessee's sole expense, to the effect that such change is favorable to the position which such Tax Indemnitee or the Lessee, as the case may be, had asserted in such previous contest and as a result of such change, it is more likely than not that the Tax Indemnitee will prevail or, in the event of an appeal of an adverse court or administrative agency decision, that it is more likely than not that an appellate court or an administrative agency tribunal or decision making body with appellate jurisdiction, as the case may be, will reverse or substantially modify the adverse determination. Notwithstanding anything contained in this Section 7.1, a Tax Indemnitee will not be required to contest the imposition of any Tax and shall be permitted to settle or compromise any claim without the Lessee's consent if such Tax Indemnitee (A) shall waive its right to indemnity under this Section 7.1 with respect to such Tax (and any claim the outcome of which is determined based upon the outcome of such claim) and (B) shall pay to the Lessee any amount previously paid or advanced by the Lessee pursuant to this Section 7.1 with respect to such Tax Claim, less any reasonable costs and expenses of the Tax Indemnitee prior to such payment in respect of such Tax Claim.
Appears in 6 contracts
Sources: Participation Agreement (Trinity Industries Inc), Participation Agreement (Trinity Industries Inc), Participation Agreement (Trinity Industries Inc)
Contests. If a written claim is made against an Indemnitee or if any proceeding is commenced against an Indemnitee (including a written notice of such proceeding) for Taxes as to which Lessee could be liable for payment or indemnity hereunder, or if an Indemnitee makes a determination that a Tax is due for which Lessee could have an indemnity obligation hereunder, such Indemnitee shall promptly give Lessee notice in writing of such claim (provided, however, that the failure to provide such notice shall not affect Lessee's obligations hereunder to the Owner Participant unless such failure shall materially adversely affect the right to contest such claim) and shall not take any action with respect to such claim or Tax without the consent of Lessee for 30 days following the receipt of such notice by Lessee; provided, however, that, if such Indemnitee shall be required by law to take action prior to the end of such 30-day period, such Indemnitee shall, in such notice to Lessee, so inform Lessee, and such Indemnitee shall take no action for as long as it is legally able to do so (it being understood that an Indemnitee shall be entitled to pay the Tax claimed and ▇▇▇ for a refund prior to the end of such 30-day period if (A)(I) the failure to so pay the Tax would result in substantial penalties (unless immediately reimbursed by Lessee) and the act of paying the Tax would not prejudice the right to contest or (II) the failure to so pay would result in criminal penalties and (B) such Indemnitee shall act in connection with paying the Tax in the manner that is the least prejudicial to the pursuit of the contest). In addition, such Indemnitee shall (provided that Lessee shall have agreed to 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 against a Tax Indemnitee for any relating to such Taxes with respect to which the Lessee may be required to indemnify against hereunder or if a Tax Indemnitee shall determine that any tax to which the hereunder. If requested by Lessee may have an indemnity obligation hereunder may be payable (a "Tax Claim"), then such Tax Indemnitee shall give the Lessee written notice of such Tax Claim promptly (but in any event writing within twenty (20) 30 days after its receipt of such notice, such Indemnitee shall, at the written Tax Claim or its determination, as applicableexpense of Lessee (including all reasonable out-of-pocket costs and reasonable attorney and accountants fees), in good faith contest (or, if permitted by applicable law, allow Lessee to contest) through appropriate administrative and shall furnish Lessee with copies judicial proceedings the validity, applicability or amount of such Tax Claim Taxes by (X) resisting payment thereof, (Y) not paying the same except under protest if protest is necessary and all other writings received from proper or (Z) if the taxing authority payment is made, using reasonable efforts to the extent relating to such claim (but failure to so notify the Lessee shall not relieve the Lessee of its obligations hereunder except to the extent that it effectively precludes the ability of the Lessee to conduct obtain a contest of the Tax Claim)refund thereof in an appropriate administrative and/or judicial proceeding. The Tax Indemnitee shall not pay such Tax Claim until at least thirty (30) days after providing the Lessee with such written notice, unless (a) the Tax Indemnitee is required If requested to do so by law Lessee, the Indemnitee shall appeal any adverse administrative or regulation or judicial decision, except that the failure Indemnitee shall not be required to pay such Tax Claim could result in a material adverse financial, legal or other consequence pursue any appeals to the Tax Indemnitee and (b) in the written notice described above, the Tax Indemnitee has notified the Lessee of such requirement or such material adverse consequence (such notice however shall not require the disclosure of the Tax Indemnitee's confidential information, as determined in the sole discretion of such Tax Indemnitiee, or the Tax Indemnitee's tax returns, books, or records)United States Supreme Court. If the Lessee shall so request within 30 days after receipt of such notice (or such shorter period as is reasonably specified by the Tax Indemnitee if any contest of the Tax must be commenced prior to the expiration of 30 days), then such Tax Indemnitee shall in good faith at Lessee's sole expense contest such Tax or permit the Lessee to contest such Tax, as such Tax Indemnitee shall elect; provided, however, that and to the extent (i) the contest involves only Taxes constituting property taxes, sales taxes, Indemnitee is able to separate the contested issue or use taxes, (ii) the contest does not involve any taxes that the Lessee is not required to indemnify the Tax Indemnitee or taxes and issues from other issues relating to a Tax Indemnitee arising in the same administrative or judicial proceeding that are unrelated to the transactions contemplated by the Operative AgreementsDocuments without, (iii) the contest can be pursued in the name 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 and independently from any other proceeding involving a Tax Claim 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 Tax Indemnitee for which Lessee has not agreed in writing to indemnify such Tax contest controlled by an Indemnitee, and (iv) no Equity Insufficiency Circumstance exists, such contest shall be undertaken by the Lessee at the Lessee's sole expense and the after-tax costs of the Lessor, the Owner Participant, or other Tax Indemnitee shall be reimbursed by consult with Lessee in good faith regarding the Lessee. Notwithstanding manner of contesting such claim and shall keep Lessee reasonably informed regarding the preceding sentence, if (a) such contest would involve any other type progress of Tax, any taxes that the Lessee is not required to indemnify the Tax Indemnitee or taxes and other issues relating to a Tax Indemnitee which are unrelated to the transactions contemplated by the Operative Agreements, (b) the Tax Indemnitee determines that such contest conducted by the Lessee could have a material adverse impact on such Tax Indemnitee's business or operations or involve risk of the imposition of criminal liability on a Tax Indemnitee, or (c) an Equity Insufficiency Circumstance exists, then such Tax Indemnitee may, in its sole discretion, control such contest (including selecting the forum for such contest, and determining whether . An Indemnitee shall not fail to take any such contest shall be conducted action expressly required by (i) paying such Tax under protest or (ii) resisting payment of such Tax or (iii) paying such Tax and seeking a refund thereof; provided, however, that at such Tax Indemnitee's option, such contest shall be conducted by the Lessee in the name of such Tax Indemnitee). In no event shall such Tax Indemnitee be required or the Lessee be permitted to contest any Tax for which the Lessee is obligated to indemnify pursuant to this Section 7.1 unless: (i6(b)(iv) the Lessee shall have acknowledged in writing (x) that it is solely responsible for any Indemnified Tax resulting from any contest under its control, (y) its liability to such Tax Indemnitee for all reasonable out of pocket costs, losses and expenses that the Tax Indemnitees may incur in connection with contesting the Indemnified Tax (including, but not limited towithout limitation, any reasonable legal, accounting and investigatory fees and disbursements), and (z) its liability for an indemnity payment pursuant to this Section 7.1 as a result of such claim if and to the extent such Tax Indemnitee or the Lessee, as the case may be, shall not prevail in the contest of such claim; provided, however, that the Lessee shall not be required to indemnify for such Taxes to the extent the results of the contest clearly demonstrate that the Tax is not an Indemnified Tax unless the Lessee's conduct of the contest materially prejudiced the Tax Indemnitee; (ii) such Tax Indemnitee shall have received the opinion of independent tax counsel selected by the Tax Indemnitee and reasonably satisfactory to the Lessee and furnished at the Lessee's sole expense, opining that a reasonable basis exists for contesting such claim or, in the event of an action regarding any appeal of an adverse court determination with respect to any claim) or administrative agency decisionsettle or compromise any claim without the prior written consent of Lessee (except as contemplated by this Section 6(b)(iv)). Notwithstanding the foregoing, that as a result of a change in law no event shall an Indemnitee be required to pursue any contest (or fact it is more likely than not that an appellate court or an administrative agency or decision making body with appellate jurisdiction, as the case may be, will reverse or substantially modify the adverse determination; to permit Lessee to pursue any contest) unless (iiiA) the Lessee shall have agreed to pay such Tax Indemnitee on demand (and at no after tax costs to the Lessor, the Owner Participant and any Tax Indemnitee) all reasonable out-of-pocket costs and expenses reasonable attorney and accountants fees that such Tax Indemnitee may shall incur in connection with contesting such claim claim, (including, without limitation, all reasonable legal and accounting fees and disbursements); (ivB) no Lease Default described in Section 14(a), 14(b), 14(c), 14(g) or 14(h) if such contest shall involve the payment of the Lease or a Lease Event of Default claim, Lessee shall have occurred and shall have been continuing, unless advance the Tax Indemnitee in its sole discretion exercised in good faith allows the Lessee to post a satisfactory bond or other security that does not involve a possibility of a Lien on the Equipment or any portion amount thereof or on any interest therein, and which bond or other security will be for an amount equal plus (to the sum of (Iextent indemnified hereunder) interest, penalties and additions to tax with respect thereto that are required to be paid prior to the costs commencement of such contest (as reasonably estimated by such Tax Indemnitee in good faith) on an interest-free basis and the Taxes which may be required to be indemnified and (II) if such Lease Default or Lease Event of Default involves a payment obligation under an Operative Agreement that is currently not paid in full, the unpaid amount of such obligation, plus the present value of the amounts not yet due pursuant with no additional net after-tax cost to such obligation; Indemnitee (vand 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 Tax Indemnitee shall have reasonably determined that the action to be taken will not result in any material risk of saleforfeiture, forfeiture sale or loss of, or of the creation of any Lien, or the Aircraft (unless Lessee shall have or otherwise made a provision provisions to protect the interest interests of any such Tax Indemnitee Indemnitee), (in a manner satisfactory 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 its obligations hereunder by advancing to such Tax Indemnitee in its sole discretion)before proceeding with such contest, on the Equipment or any portion thereof or any interest therein; (vi) the amount of the Tax being contested, plus any interest and penalties and an amount estimated in good faith by such Indemnitee for reasonable expenses, and (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 alone, orthat have been or could be raised with any or all of the other Aircraft leased by the Owner Participant to Lessee or raised in any other audit for which Lessee would have an indemnity obligation under this Section 6(b)(iv)) is at least $3,000. Notwithstanding the foregoing, if any Indemnitee shall release, waive, compromise or settle any claim which may be indemnifiable by Lessee pursuant to this Section 6(b) without the subject matter thereof shall be written permission of a continuing or recurring natureLessee, when aggregated with substantially identical potential claims Lessee's obligation to indemnify such Indemnitee with respect to the transactions contemplated by the Operative Agreements shall be at least $25,000; (vii) if such contest shall be conducted in a manner requiring the payment or deposit of the claim, the Lessee shall have paid the amount required claim (and at no after-tax costs all directly related claims and claims based on the outcome of such claim) shall terminate, subject to the Lessorthis Section 6(b)(iv), the Owner Participant and subject to Section 6(b)(iii), such Indemnitee shall repay to Lessee any amount previously paid or other Tax Indemnitee); and (viii) there is no risk of imposition of criminal liability or penalties. The Lessee shall cooperate with the Tax advanced to such Indemnitee in good faith with respect to any contest controlled and conducted such claim, plus interest at the rate that would have been payable by the Tax Indemnitee and the Tax Indemnitee in good faith shall consult with the Lessee regarding the conduct of such contest. A Tax Indemnitee shall not be required to pursue an appeal to the U.S. Supreme Court or the highest court in Canada or Mexico. The Tax Indemnitee shall cooperate relevant taxing authority with respect to any contest controlled and conducted by the Lessee and the Lessee shall consult with the Tax Indemnitee regarding the conduct a refund of such contest. Notwithstanding anything to the contrary contained in this Section 7.1, no Tax Indemnitee shall be required to contest any claim if the subject matter thereof shall be of a continuing or recurring nature and shall have previously been adversely decided to the Tax Indemnitee pursuant to the contest provisions of this Section 7.1 unless there shall have been a change in the law (including, without limitation, amendments to statutes or regulations, administrative rulings (excluding private letter rulings and other rulings or materials that may not be relied upon by such Tax Indemnitee as precedent) or court decisions in the applicable jurisdiction) enacted, promulgated or effective after such claim shall have been so previously decided, and such Tax Indemnitee shall have received an opinion of independent tax counsel selected by the Tax Indemnitee and reasonably satisfactory to the Lessee, furnished at the Lessee's sole expense, to the effect that such change is favorable to the position which such Tax Indemnitee or the Lessee, as the case may be, had asserted in such previous contest and as a result of such change, it is more likely than not that the Tax Indemnitee will prevail or, in the event of an appeal of an adverse court or administrative agency decision, that it is more likely than not that an appellate court or an administrative agency tribunal or decision making body with appellate jurisdiction, as the case may be, will reverse or substantially modify the adverse determinationTax. Notwithstanding anything contained in this Section 7.16(b), a Tax an Indemnitee will not be required to contest the imposition of any Tax and shall be permitted to settle or compromise any claim without the Lessee's consent if such Tax Indemnitee (A) shall waive its right to indemnity under this Section 7.1 6(b), with respect to such Tax (and any directly related claim and any claim the outcome of which is determined based upon the outcome of such claim) and (B) shall pay to the Lessee any amount previously paid or advanced by the Lessee pursuant to this Section 7.1 6(b) with respect to such Tax ClaimTax, less any reasonable costs and expenses of plus interest at the Tax Indemnitee prior rate that would have been payable by the relevant taxing authority with respect to such payment in respect a refund of such Tax ClaimTax.
Appears in 5 contracts
Sources: Participation Agreement (Us Airways Inc), Participation Agreement (Us Airways Inc), Participation Agreement (Us Airways Inc)
Contests. If a written claim is made by any taxing authority against a Tax Indemnitee for any Taxes with respect to which the Lessee may be required to indemnify against hereunder is liable for a payment or if a Tax Indemnitee shall determine that any tax to which the Lessee may have an indemnity obligation hereunder may be payable (a "Tax Claim")under this Lease, then such Tax Indemnitee shall will promptly give the Lessee written notice in writing of such Tax Claim promptly (but in any event within twenty (20) days after its receipt of the written Tax Claim or its determinationclaim; PROVIDED, as applicable)HOWEVER, and shall furnish Lessee with copies of that such Tax Claim and all other writings received from the taxing authority to the extent relating to such claim (but Indemnitee's failure to so notify the Lessee shall give notice will not relieve the Lessee of its obligations hereunder except to the extent that it such failure actually or effectively precludes (i) results in the ability imposition of penalties or interest by the applicable taxation authority or (ii) has a material adverse impact upon Lessee's right to contest such Taxes in accordance with this Section 1.03. So long as (i) a contest of such Taxes does not involve any material danger of the sale, forfeiture, seizure or loss of the Aircraft or any interest therein (except if the Lessee shall have adequately bonded any Lien that results in such risk or otherwise made adequate provision to protect the interests of the Tax Indemnitees), (ii) adequate reserves have been provided for such Taxes by Lessee or, if required by applicable law, an adequate bond has been posted, (iii) in the event the Tax Indemnitee decides after consultation with the Lessee to conduct a contest of pay the Tax Claim). The prior to the contest, the Lessee shall have provided to the Tax Indemnitee shall not pay such an interest-free advance in an amount equal to the Tax Claim until at least thirty (30) days after providing the Lessee with such written notice, unless (a) which the Tax Indemnitee is required to do so by law or regulation or the failure to pay such Tax Claim could result in a material adverse financial, legal or other consequence to the Tax Indemnitee and (b) in the written notice described above, the Tax Indemnitee has notified the Lessee of such requirement or such material adverse consequence (such notice however shall not require the disclosure of the Tax Indemnitee's confidential information, as determined in the sole discretion of such Tax Indemnitiee, or the Tax Indemnitee's tax returns, books, or records). If the Lessee shall so request within 30 days after receipt of such notice (or such shorter period as is reasonably specified by the Tax Indemnitee if any contest of the Tax must be commenced prior to the expiration of 30 days), then such Tax Indemnitee shall in good faith at Lessee's sole expense contest such Tax or permit the Lessee to contest such Tax, as such Tax Indemnitee shall elect; provided, however, that to the extent (i) the contest involves only Taxes constituting property taxes, sales taxes, or use taxes, (ii) the contest does not involve any taxes that the Lessee is not required to indemnify the Tax Indemnitee or taxes and other issues relating to a Tax Indemnitee that are unrelated to the transactions contemplated by the Operative Agreements, (iii) the contest can be pursued in the name of the Lessee and independently from any other proceeding involving a Tax Claim of a Tax Indemnitee for which Lessee has not agreed in writing to indemnify such Tax Indemniteepay, and (iv) no Equity Insufficiency Circumstance exists, such contest shall be undertaken by the Lessee at the Lessee's sole expense and the after-tax costs Event of the Lessor, the Owner Participant, or other Tax Indemnitee shall be reimbursed by the Lessee. Notwithstanding the preceding sentence, if Default described in clauses (a) such contest would involve any other type of Tax, any taxes that the Lessee is not required to indemnify the Tax Indemnitee or taxes and other issues relating to a Tax Indemnitee which are unrelated to the transactions contemplated by the Operative Agreements), (b) the Tax Indemnitee determines that such contest conducted by the Lessee could have a material adverse impact on such Tax Indemnitee's business or operations or involve risk of the imposition of criminal liability on a Tax Indemnitee), (g), (h), (i), or (cj) an Equity Insufficiency Circumstance existsof Section 17.01 of the Lease shall have occurred and be continuing, then such Tax Indemnitee mayat Lessee's written request will in good faith, in its sole discretion, control such contest with due diligence and at Lessee's expense (including selecting paying the forum for such contest, reasonable legal and determining whether any such contest shall be conducted by (i) paying such Tax under protest or (ii) resisting payment of such Tax or (iii) paying such Tax and seeking a refund thereof; provided, however, that at such Tax Indemnitee's option, such contest shall be conducted by the Lessee in the name accounting fees of such Tax Indemnitee). In no event shall such Tax Indemnitee be required , contest (or the permit Lessee be permitted to contest any Tax for which its own name if permitted by applicable Law or in the Lessee is obligated to indemnify pursuant to this Section 7.1 unless: (i) the Lessee shall have acknowledged in writing (x) that it is solely responsible for any Indemnified Tax resulting from any contest under its control, (y) its liability to such Tax Indemnitee for all reasonable out of pocket costs, losses name and expenses that the Tax Indemnitees may incur in connection with contesting the Indemnified Tax (including, but not limited to, any reasonable legal, accounting and investigatory fees and disbursements), and (z) its liability for an indemnity payment pursuant to this Section 7.1 as a result on behalf of such claim if and to the extent such Tax Indemnitee or the Lessee, as the case may be, shall not prevail in the contest of such claim; provided, however, that the Lessee shall not be required to indemnify for such Taxes to the extent the results of the contest clearly demonstrate that the Tax is not an Indemnified Tax unless the Lessee's conduct of the contest materially prejudiced the Tax Indemnitee; (ii) such Tax Indemnitee shall have received the opinion of independent tax counsel selected by the Tax Indemnitee and reasonably satisfactory to the Lessee and furnished at the Lessee's sole expense, opining that a reasonable basis exists for contesting such claim or, in the event of an appeal of an adverse court or administrative agency decision, that as a result of a change in law or fact it is more likely than not that an appellate court or an administrative agency or decision making body with appellate jurisdiction, as the case may be, will reverse or substantially modify the adverse determination; (iii) the Lessee shall have agreed to pay such Tax Indemnitee on demand (and at no after tax costs to the Lessor, the Owner Participant and any Tax Indemnitee) all reasonable costs and expenses that such Tax Indemnitee may incur in connection with contesting such claim (includingthe validity, without limitation, all reasonable legal and accounting fees and disbursements); (iv) no Lease Default described in Section 14(a), 14(b), 14(c), 14(g) applicability or 14(h) of the Lease or a Lease Event of Default shall have occurred and shall have been continuing, unless the Tax Indemnitee in its sole discretion exercised in good faith allows the Lessee to post a satisfactory bond or other security that does not involve a possibility of a Lien on the Equipment or any portion thereof or on any interest therein, and which bond or other security will be for an amount equal to the sum of (I) the costs of such contest (as reasonably estimated by such Tax Indemnitee in good faith) and the Taxes which may be required to be indemnified and (II) if such Lease Default or Lease Event of Default involves a payment obligation under an Operative Agreement that is currently not paid in full, the unpaid amount of such obligation, plus the present value of the amounts not yet due pursuant to such obligation; (v) such Tax Indemnitee shall have determined that the action to be taken will not result in any risk of sale, forfeiture or loss of, or the creation of any Lien, or the Lessee shall have or otherwise made a provision to protect the interest of such Tax Indemnitee (in a manner satisfactory to such Tax Indemnitee in its sole discretion), on the Equipment or any portion thereof or any interest therein; (vi) the amount of such claims alone, or, if the subject matter thereof shall be of a continuing or recurring nature, when aggregated with substantially identical potential claims with respect to the transactions contemplated by the Operative Agreements shall be at least $25,000; (vii) if such contest shall be conducted in a manner requiring the payment or deposit of the claim, the Lessee shall have paid the amount required (and at no after-tax costs to the Lessor, the Owner Participant or other Tax Indemnitee); and (viii) there is no risk of imposition of criminal liability or penalties. The Lessee shall cooperate with the Tax Indemnitee in good faith with respect to any contest controlled and conducted by the Tax Indemnitee and the Tax Indemnitee in good faith shall consult with the Lessee regarding the conduct of such contest. A Tax Indemnitee shall not be required to pursue an appeal to the U.S. Supreme Court or the highest court in Canada or Mexico. The Tax Indemnitee shall cooperate with respect to any contest controlled and conducted by the Lessee and the Lessee shall consult with the Tax Indemnitee regarding the conduct of such contest. Notwithstanding anything to the contrary contained in this Section 7.1, no Tax Indemnitee shall be required to contest any claim if the subject matter thereof shall be of a continuing or recurring nature and shall have previously been adversely decided to the Tax Indemnitee pursuant to the contest provisions of this Section 7.1 unless there shall have been a change in the law (including, without limitation, amendments to statutes or regulations, administrative rulings (excluding private letter rulings and other rulings or materials that may not be relied upon by such Tax Indemnitee as precedent) or court decisions in the applicable jurisdiction) enacted, promulgated or effective after such claim shall have been so previously decided, and such Tax Indemnitee shall have received an opinion of independent tax counsel selected by the Tax Indemnitee and reasonably satisfactory to the Lessee, furnished at the Lessee's sole expense, to the effect that such change is favorable to the position which such Tax Indemnitee or the Lessee, as the case may be, had asserted in such previous contest and as a result of such change, it is more likely than not that the Tax Indemnitee will prevail or, in the event of an appeal of an adverse court or administrative agency decision, that it is more likely than not that an appellate court or an administrative agency tribunal or decision making body with appellate jurisdiction, as the case may be, will reverse or substantially modify the adverse determination. Notwithstanding anything contained in this Section 7.1, a Tax Indemnitee will not be required to contest the imposition of any Tax and shall be permitted to settle or compromise any claim without the Lessee's consent if such Tax Indemnitee (A) shall waive its right to indemnity under this Section 7.1 with respect to such Tax (and any claim the outcome of which is determined based upon the outcome of such claim) and (B) shall pay to the Lessee any amount previously paid or advanced by the Lessee pursuant to this Section 7.1 with respect to such Tax Claim, less any reasonable costs and expenses of the Tax Indemnitee prior to such payment in respect of such Tax ClaimTaxes.
Appears in 3 contracts
Sources: Aircraft Purchase Agreement (Republic Airways Holdings Inc), Aircraft Purchase Agreement (Republic Airways Holdings Inc), Aircraft Purchase Agreement (Republic Airways Holdings Inc)
Contests. If a written claim is made by any taxing authority against a Tax Indemnitee for any Taxes with respect to which the Lessee may be required to indemnify against hereunder or if a Tax Indemnitee shall determine that any tax to which the Lessee may have an indemnity obligation hereunder may be payable (a "Tax Claim"), then such Tax Indemnitee shall give the Lessee written notice of such Tax Claim promptly (but in any event within twenty (20) days after its receipt of the written Tax Claim or its determination, as applicable), and shall furnish Lessee with copies of such Tax Claim and all other writings received from the taxing authority to the extent relating to such claim (but failure to so notify the Lessee shall not relieve the Lessee of its obligations hereunder except to the extent that it effectively precludes the ability of the Lessee to conduct a contest of the Tax Claim). The Tax Indemnitee shall not pay such Tax Claim until at least thirty (30) days after providing the Lessee with such written notice, unless (a) the Tax Indemnitee is required to do so by law or regulation or the failure to pay such Tax Claim could result in a material adverse financial, legal or other consequence to the Tax Indemnitee and (b) in the written notice described above, the Tax Indemnitee has notified the Lessee of such requirement or such material adverse consequence (such notice however shall not require the disclosure of the Tax Indemnitee's confidential information, as determined in the sole discretion of such Tax IndemnitieeIndemnitee, or the Tax Indemnitee's tax returns, books, or records). If the Lessee shall so request within 30 days after receipt of such notice (or such shorter period as is reasonably specified by the Tax Indemnitee if any contest of the Tax must be commenced prior to the expiration of 30 days), then such Tax Indemnitee shall in good faith at Lessee's sole expense contest such Tax or permit the Lessee to contest such Tax, as such Tax Indemnitee shall elect; provided, however, that to the extent (i) the contest involves only Taxes constituting property taxes, sales taxes, or use taxes, (ii) the contest does not involve any taxes that the Lessee is not required to indemnify the Tax Indemnitee or taxes and other issues relating to a Tax Indemnitee that are unrelated to the transactions contemplated by the Operative Agreements, (iii) the contest can be pursued in the name of the Lessee and independently from any other proceeding involving a Tax Claim of a Tax Indemnitee for which Lessee has not agreed in writing to indemnify such Tax Indemnitee, and (iv) no Equity Insufficiency Circumstance exists, such contest shall be undertaken by the Lessee at the Lessee's sole expense and the after-tax costs of the Lessor, the Owner Participant, or other Tax Indemnitee shall be reimbursed by the Lessee. Notwithstanding the preceding sentence, if (a) such contest would involve any other type of Tax, any taxes that the Lessee is not required to indemnify the Tax Indemnitee or taxes and other issues relating to a Tax Indemnitee which are unrelated to the transactions contemplated by the Operative Agreements, (b) the Tax Indemnitee determines that such contest conducted by the Lessee could have a material adverse impact on such Tax Indemnitee's business or operations or involve risk of the imposition of criminal liability on a Tax Indemnitee, or (c) an Equity Insufficiency Circumstance exists, then such Tax Indemnitee may, in its sole discretion, control such contest (including selecting the forum for such contest, and determining whether any such contest shall be conducted by (i) paying such Tax under protest or (ii) resisting payment of such Tax or (iii) paying such Tax and seeking a refund thereof; provided, however, that at such Tax Indemnitee's option, such contest shall be conducted by the Lessee in the name of such Tax Indemnitee). In no event shall such Tax Indemnitee be required or the Lessee be permitted to contest any Tax for which the Lessee is obligated to indemnify pursuant to this Section 7.1 unless: (i) the Lessee shall have acknowledged in writing (x) that it is solely responsible for any Indemnified Tax resulting from any contest under its control, (y) its liability to such Tax Indemnitee for all reasonable out of pocket costs, losses and expenses that the Tax Indemnitees may incur in connection with contesting the Indemnified Tax (including, but not limited to, any reasonable legal, accounting and investigatory fees and disbursements), and (z) its liability for an indemnity payment pursuant to this Section 7.1 as a result of such claim if and to the extent such Tax Indemnitee or the Lessee, as the case may be, shall not prevail in the contest of such claim; provided, however, that the Lessee shall not be required to indemnify for such Taxes to the extent the results of the contest clearly demonstrate that the Tax is not an Indemnified Tax unless the Lessee's conduct of the contest materially prejudiced the Tax Indemnitee; (ii) such Tax Indemnitee shall have received the opinion of independent tax counsel selected by the Tax Indemnitee and reasonably satisfactory to the Lessee and furnished at the Lessee's sole expense, opining that a reasonable basis exists for contesting such claim or, in the event of an appeal of an adverse court or administrative agency decision, that as a result of a change in law or fact it is more likely than not that an appellate court or an administrative agency or decision making body with appellate jurisdiction, as the case may be, will reverse or substantially modify the adverse determination; (iii) the Lessee shall have agreed to pay such Tax Indemnitee on demand (and at no after tax costs to the Lessor, the Owner Participant and any Tax Indemnitee) all reasonable costs and expenses that such Tax Indemnitee may incur in connection with contesting such claim (including, without limitation, all reasonable legal and accounting fees and disbursements); (iv) no Lease Default described in Section 14(a), 14(b), 14(c), 14(g) or 14(h) of the Lease or a Lease Event of Default shall have occurred and shall have been continuing, unless the Tax Indemnitee in its sole discretion exercised in good faith allows the Lessee to post a satisfactory bond or other security that does not involve a possibility of a Lien on the Equipment or any portion thereof or on any interest therein, and which bond or other security will be for an amount equal to the sum of (I) the costs of such contest (as reasonably estimated by such Tax Indemnitee in good faith) and the Taxes which may be required to be indemnified and (II) if such Lease Default or Lease Event of Default involves a payment obligation under an Operative Agreement that is currently not paid in full, the unpaid amount of such obligation, plus the present value of the amounts not yet due pursuant to such obligation; (v) such Tax Indemnitee shall have determined that the action to be taken will not result in any risk of sale, forfeiture or loss of, or the creation of any Lien, or the Lessee shall have or otherwise made a provision to protect the interest of such Tax Indemnitee (in a manner satisfactory to such Tax Indemnitee in its sole discretion), on the Equipment or any portion thereof or any interest therein; (vi) the amount of such claims alone, or, if the subject matter thereof shall be of a continuing or recurring nature, when aggregated with substantially identical potential claims with respect to the transactions contemplated by the Operative Agreements shall be at least $25,000; (vii) if such contest shall be conducted in a manner requiring the payment or deposit of the claim, the Lessee shall have paid the amount required (and at no after-tax costs to the Lessor, the Owner Participant or other Tax Indemnitee); and (viii) there is no risk of imposition of criminal liability or penalties. The Lessee shall cooperate with the Tax Indemnitee in good faith with respect to any contest controlled and conducted by the Tax Indemnitee and the Tax Indemnitee in good faith shall consult with the Lessee regarding the conduct of such contest. A Tax Indemnitee shall not be required to pursue an appeal to the U.S. Supreme Court or the highest court in Canada or Mexico. The Tax Indemnitee shall cooperate with respect to any contest controlled and conducted by the Lessee and the Lessee shall consult with the Tax Indemnitee regarding the conduct of such contest. Notwithstanding anything to the contrary contained in this Section 7.1, no Tax Indemnitee shall be required to contest any claim if the subject matter thereof shall be of a continuing or recurring nature and shall have previously been adversely decided to the Tax Indemnitee pursuant to the contest provisions of this Section 7.1 unless there shall have been a change in the law (including, without limitation, amendments to statutes or regulations, administrative rulings (excluding private letter rulings and other rulings or materials that may not be relied upon by such Tax Indemnitee as precedent) or court decisions in the applicable jurisdiction) enacted, promulgated or effective after such claim shall have been so previously decided, and such Tax Indemnitee shall have received an opinion of independent tax counsel selected by the Tax Indemnitee and reasonably satisfactory to the Lessee, furnished at the Lessee's sole expense, to the effect that such change is favorable to the position which such Tax Indemnitee or the Lessee, as the case may be, had asserted in such previous contest and as a result of such change, it is more likely than not that the Tax Indemnitee will prevail or, in the event of an appeal of an adverse court or administrative agency decision, that it is more likely than not that an appellate court or an administrative agency tribunal or decision making body with appellate jurisdiction, as the case may be, will reverse or substantially modify the adverse determination. Notwithstanding anything contained in this Section 7.1, a Tax Indemnitee will not be required to contest the imposition of any Tax and shall be permitted to settle or compromise any claim without the Lessee's consent if such Tax Indemnitee (A) shall waive its right to indemnity under this Section 7.1 with respect to such Tax (and any claim the outcome of which is determined based upon the outcome of such claim) and (B) shall pay to the Lessee any amount previously paid or advanced by the Lessee pursuant to this Section 7.1 with respect to such Tax Claim, less any reasonable costs and expenses of the Tax Indemnitee prior to such payment in respect of such Tax Claim.
Appears in 2 contracts
Sources: Participation Agreement (Trinity Industries Inc), Participation Agreement (Trinity Industries 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 claim is made by any taxing authority against a Tax Indemnitee notice of such proceeding) for any Taxes with respect to which the Lessee may be required to indemnify against hereunder or if a Tax Indemnitee shall determine that any tax Imposition as to which the Lessee may have an indemnity obligation hereunder pursuant to this Section 13.5, or if any Tax Indemnitee shall determine that any Imposition to which the Lessee may have an indemnity obligation pursuant to this Section 13.5 may be payable (a "Tax Claim")payable, then such Tax Indemnitee shall give promptly (and in any event, within thirty (30) days) notify the Lessee written notice of such Tax Claim promptly in writing (but in any event within twenty (20) days after its receipt of the written Tax Claim or its determination, as applicable), and shall furnish Lessee with copies of such Tax Claim and all other writings received from the taxing authority to the extent relating to such claim (but provided that failure to so notify the Lessee within thirty (30) days shall not relieve the Lessee of its obligations hereunder alter such Tax Indemnitee's rights under this Section 13.5 except to the extent that it effectively such failure precludes or materially adversely affects the ability of the Lessee to conduct a contest of the Tax Claim). The Tax Indemnitee any Impositions) and shall not pay take any action with respect to such Tax Claim until at least claim, proceeding or Imposition without the written consent of the Lessee (such consent not to be unreasonably withheld or unreasonably delayed) for thirty (30) days after providing the Lessee with receipt of such written noticenotice by the Lessee; provided, unless (a) however, that in the case of any such claim or proceeding, if such Tax Indemnitee is shall be required to do so by law or regulation or to take action prior to the failure to pay end of such thirty (30) day period, such Tax Claim could result Indemnitee shall in a material adverse financial, legal or other consequence such notice to the Lessee, so inform the Lessee and such Tax Indemnitee and shall not take any action with respect to such claim, proceeding or Imposition without the consent of the Lessee (bsuch consent not to be unreasonably withheld or unreasonably delayed) in for 10 days after the written receipt of such notice described above, by the 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 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 Lessee of such requirement is required by law or such material adverse consequence (such notice however shall not require the disclosure of the Tax Indemnitee's confidential information, as determined in the sole discretion of such Tax Indemnitiee, or the Tax Indemnitee's tax returns, books, or records). If the Lessee shall so request within 30 days after receipt of such notice (or such shorter period as is reasonably specified by the Tax Indemnitee if any contest of the Tax must be commenced prior to the expiration of 30 days), then regulation for such Tax Indemnitee shall to commence such contest), to request in good faith at Lessee's sole expense contest writing that such Tax or permit Indemnitee contest the Lessee to contest imposition of such Tax, as at the Lessee's expense. If (x) such Tax Indemnitee shall elect; provided, however, that to the extent (i) the contest involves only Taxes constituting property taxes, sales taxes, or use taxes, (ii) the contest does not involve any taxes that the Lessee is not required to indemnify the Tax Indemnitee or taxes and other issues relating to a Tax Indemnitee that are unrelated to the transactions contemplated by the Operative Agreements, (iii) the contest can be pursued in the name of the Lessee and independently from any other proceeding involving a Tax Claim liability of a such Tax Indemnitee for which the Lessee has not agreed in writing to indemnify such Tax Indemnitee, and (iv) no Equity Insufficiency Circumstance exists, such contest shall be undertaken by the Lessee at the Lessee's sole expense and the after-tax costs of the Lessor, the Owner Participant, or other Tax Indemnitee shall be reimbursed by the Lessee. Notwithstanding the preceding sentence, if (ay) such contest would involve must be pursued in the name of such Tax Indemnitee, but can be pursued independently from any other type proceeding involving a Tax liability of Tax, any taxes that such Tax Indemnitee for which the Lessee is has not required agreed to indemnify the such Tax Indemnitee or taxes and other issues relating to a (z) such Tax Indemnitee which are unrelated so requests, then the Lessee shall be permitted to control the transactions contemplated by contest of such claim, provided that in the Operative Agreementscase of a contest described in clause (y), (b) the if such Tax Indemnitee determines reasonably and in good faith that such contest conducted by the Lessee could have a material adverse impact on such Tax Indemnitee's the business or operations or involve risk of the imposition of criminal liability on a Tax Indemnitee, or (c) an Equity Insufficiency Circumstance exists, then such Tax Indemnitee mayand provides a written explanation to the Lessee of such determination, in its sole discretion, such Tax Indemnitee may elect to control such contest (including selecting or reassert control of the forum for such contest, and provided that by taking control of the contest, the Lessee acknowledges that it is responsible for the Imposition ultimately determined to be due by reason of such claim, and provided, further, that in determining whether the application of clauses (x) and (y) above, each Tax Indemnitee shall take any such and all reasonable steps to segregate claims for any Taxes for which the Lessee indemnifies hereunder from Taxes for which the Lessee is not obligated to indemnify hereunder, so that the Lessee can control the contest shall of the former. In all other claims requested to be conducted contested by (i) paying the Lessee, such Tax under protest or (ii) resisting payment Indemnitee shall control the contest of such Tax or (iii) paying such Tax and seeking a refund thereof; providedclaim, however, that at such Tax Indemnitee's option, such contest shall be conducted by acting through counsel reasonably acceptable to the Lessee in the name of such Tax Indemnitee)Lessee. In no event shall such Tax Indemnitee be required or the Lessee be permitted to contest (or such Tax Indemnitee required to contest) any claim, (A) if such Tax for which Indemnitee provides the Lessee is obligated with a legal opinion of counsel reasonably acceptable to indemnify pursuant the 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, with respect to this Section 7.1 unless: (i) civil liability only, the Lessee shall have acknowledged agreed in writing (x) that it is solely to be responsible for any Indemnified Tax resulting from any contest under its controlsuch risk, (yB) its liability to such Tax Indemnitee for all reasonable out if an Event of pocket costsDefault has occurred and is continuing, losses and expenses that the Tax Indemnitees may incur in connection with contesting the Indemnified Tax (including, but not limited to, any reasonable legal, accounting and investigatory fees and disbursements), and (zC) its liability for an indemnity payment pursuant to this Section 7.1 as a result of such claim if and to the extent such Tax Indemnitee or the Lessee, as the case may be, shall not prevail in the contest of such claim; provided, however, that the Lessee shall not be required to indemnify for such Taxes to the extent the results of the contest clearly demonstrate that the Tax is not an Indemnified Tax unless the Lessee's conduct of the contest materially prejudiced the Tax Indemnitee; (ii) such Tax Indemnitee shall have received the opinion of independent tax counsel selected by the Tax Indemnitee and reasonably satisfactory to the Lessee and furnished at the Lessee's sole expense, opining that a reasonable basis exists for contesting such claim or, in the event of an appeal of an adverse court or administrative agency decision, that as a result of a change in law or fact it is more likely than not that an appellate court or an administrative agency or decision making body with appellate jurisdiction, as the case may be, will reverse or substantially modify the adverse determination; (iii) the Lessee shall have agreed to pay and shall pay, to such Tax Indemnitee on demand (and at no after tax costs to the Lessor, the Owner Participant and any Tax Indemnitee) all reasonable costs out-of-pocket costs, losses and expenses that such Tax Indemnitee may incur in connection with contesting such claim (including, without limitation, Imposition including all reasonable legal legal, accounting and accounting investigatory fees and disbursements); , or (ivD) no Lease Default described in Section 14(a), 14(b), 14(c), 14(g) or 14(h) if such contest shall involve the payment of the Lease or a Lease Event of Default shall have occurred and shall have been continuingTax prior to the contest, unless the Lessee shall provide to such Tax Indemnitee an interest-free advance in its sole discretion exercised in good faith allows the Lessee to post a satisfactory bond or other security that does not involve a possibility of a Lien on the Equipment or any portion thereof or on any interest therein, and which bond or other security will be for an amount equal to the sum Imposition that the Indemnitee is required to pay (with no additional net after-tax costs to such Tax Indemnitee). In addition for Tax Indemnitee controlled contests and claims contested in the name of (I) the costs of such contest (as reasonably estimated by such Tax Indemnitee in good faitha public forum, no contest shall be required: (A) and the Taxes which may be required to be indemnified and (II) if such Lease Default or Lease Event of Default involves a payment obligation under an Operative Agreement that is currently not paid in full, the unpaid amount of such obligation, plus the present value of the amounts not yet due pursuant to such obligation; (v) such Tax Indemnitee shall have determined that the action to be taken will not result in any risk of sale, forfeiture or loss of, or the creation of any Lien, or the Lessee shall have or otherwise made a provision to protect the interest of such Tax Indemnitee (in a manner satisfactory to such Tax Indemnitee in its sole discretion), on the Equipment or any portion thereof or any interest therein; (vi) 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 claims alone, or, if the subject matter thereof shall be of a continuing or recurring nature, when aggregated with substantially identical potential claims Tax Indemnitees with respect to any period for which the transactions contemplated Lessee may be liable to pay an indemnity under this Section 13.5(b)) exceeds $100,000 and (B) unless, if requested by the Operative Agreements shall be at least $25,000; (vii) if such contest shall be conducted in a manner requiring the payment or deposit of the claimTax Indemnitee, the Lessee shall have paid provided to such Tax Indemnitee an opinion of counsel selected by the amount Lessee (which may be in-house counsel) that a reasonable basis exists to contest such claim. In no event shall a Tax Indemnitee be required (and at no after-tax costs to appeal an adverse judicial determination to the Lessor, the Owner Participant or other Tax Indemnitee); and (viii) there is no risk of imposition of criminal liability or penaltiesUnited States Supreme Court. The Lessee party conducting the contest shall cooperate with the Tax Indemnitee consult in good faith with the other party and its counsel with respect to any the contest controlled and conducted 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 Lessee recommends the acceptance of a settlement offer made by the relevant Governmental Authority and such Tax Indemnitee in good faith shall consult with rejects such settlement offer then the amount for which the Lessee regarding the conduct of such contest. A Tax Indemnitee shall not will be required to pursue an appeal to the U.S. Supreme Court or the highest court in Canada or Mexico. The indemnify such Tax Indemnitee shall cooperate with respect to any the Taxes subject to such offer shall not exceed the amount which it would have owed if such settlement offer had been accepted. In addition, the controlling party shall keep the 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) 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 controlled thereof. Each Tax Indemnitee shall, at the Lessee's expense, supply the Lessee with such information and conducted documents reasonably requested by the Lessee and as are necessary or advisable for the Lessee shall consult with to participate in any action, suit or proceeding to the Tax Indemnitee regarding the conduct of such contestextent permitted by this Section 13.5(b). Notwithstanding anything to the contrary contained in this Section 7.113.5(b) to the contrary, no Tax Indemnitee shall be required enter into any settlement or other compromise or fail to contest appeal an adverse ruling with respect to any claim if which is entitled to be indemnified under this Section 13.5 (and with respect to which contest is required under this Section 13.5(b)) without the subject matter thereof shall be prior written consent of a continuing or recurring nature and shall have previously been adversely decided to the Lessee, unless such Tax Indemnitee waives its right to be indemnified under this Section 13.5 with respect to such claim pursuant to the contest provisions of this Section 7.1 unless there shall have been a change in the law (including, without limitation, amendments to statutes or regulations, administrative rulings (excluding private letter rulings and other rulings or materials that may not be relied upon by such Tax Indemnitee as precedent) or court decisions in the applicable jurisdiction) enacted, promulgated or effective after such claim shall have been so previously decided, and such Tax Indemnitee shall have received an opinion of independent tax counsel selected by the Tax Indemnitee and reasonably satisfactory to the Lessee, furnished at the Lessee's sole expense, to the effect that such change is favorable to the position which such Tax Indemnitee or the Lessee, as the case may be, had asserted in such previous contest and as a result of such change, it is more likely than not that the Tax Indemnitee will prevail or, in the event of an appeal of an adverse court or administrative agency decision, that it is more likely than not that an appellate court or an administrative agency tribunal or decision making body with appellate jurisdiction, as the case may be, will reverse or substantially modify the adverse determinationnext paragraph. Notwithstanding anything contained in this Section 7.1herein to the contrary, a Tax Indemnitee will not be required to contest or continue to contest (and the Lessee shall not be permitted to contest or continue to contest) a claim with respect to the imposition of any Tax and shall be permitted to settle or compromise any claim without the Lessee's consent if such Tax Indemnitee (A) shall waive its right to indemnity indemnification under this Section 7.1 13.5 with respect to such Tax claim (and any claim the outcome of which is determined based upon the outcome of such claim) and (B) shall pay to the Lessee any amount previously paid or advanced by the Lessee pursuant to this Section 7.1 with respect to such Tax Claim, less year or any reasonable costs and expenses other taxable year the contest of the Tax Indemnitee prior to such payment in respect which is materially adversely affected as a result of such Tax Claimwaiver) and returns to the Lessee all amounts previously advanced to the Indemnitee with respect to the contest of such claim.
Appears in 2 contracts
Sources: Participation Agreement (Mondavi Robert Corp), Participation Agreement (Mondavi Robert Corp)
Contests. If a written claim is made by any taxing authority against a Tax Indemnitee for any Taxes with respect to which the Lessee may be required to indemnify against hereunder or if a Tax Indemnitee shall determine that any tax to which the Lessee may have an indemnity obligation hereunder may be payable (a "Tax Claim"), then such Tax Indemnitee shall give the Lessee written notice of such Tax Claim promptly (but in any event within twenty (20) days days) after its receipt of the written Tax Claim or its determination, as applicable)receipt, and shall furnish Lessee with copies of such Tax Claim and all other writings received from the taxing authority to the extent relating to such claim (but failure to so notify the Lessee shall not relieve the Lessee of its obligations hereunder except only to the extent that it effectively precludes the ability of the Lessee to conduct a contest of the Tax Claimclaim). The Tax Indemnitee shall not pay such Tax Claim until at least thirty (30) days after providing the Lessee with such written notice, unless (a) the Tax Indemnitee is required to do so by law or regulation or the failure to pay such Tax Claim could result in a material adverse financial, legal or other consequence to the Tax Indemnitee and (b) in the written notice described above, the Tax Indemnitee has notified the Lessee of such requirement or such material adverse consequence (such notice however shall not require the disclosure of the Tax Indemnitee's confidential information, as determined in the sole discretion of such Tax Indemnitiee, or the Tax Indemnitee's tax returns, books, or records)requirement. If the Lessee shall so request within 30 days after receipt of such notice (or such shorter period as is reasonably specified by the Tax Indemnitee if any contest of the Tax must be commenced prior to the expiration of 30 days)notice, then such Tax Indemnitee shall in good faith at Lessee's sole expense contest such Tax or permit the Lessee to contest such Tax, as such Tax Indemnitee shall elect; provided, however, that to the extent (i) the contest involves only Taxes constituting property taxes, sales taxes, or use taxes, (ii) the contest taxes and does not involve any taxes that the Lessee is not required to indemnify the Tax Indemnitee or taxes and other issues relating to a Tax Indemnitee that which are unrelated to the transactions contemplated by the Operative Agreements, (iii) the contest can be pursued in the name of the Lessee Agreements and independently from any other proceeding involving a Tax Claim of a Tax Indemnitee for which Lessee has not agreed in writing to indemnify such Tax Indemnitee, and (iv) if no Equity Insufficiency Circumstance exists, such contest shall be undertaken by the Lessee at the Lessee's sole expense and the at no-after-tax costs of cost to the Lessor, Lessor or the Owner Participant, or other Tax Indemnitee shall be reimbursed by the Lessee. Notwithstanding the preceding sentence, but if (a) such contest would involve any other type of Tax, Tax or any taxes that the Lessee is not required to indemnify the Tax Indemnitee or taxes and other issues relating to a Tax Indemnitee which are 61 Participation Agreement (TRLI 2001-1B) unrelated to the transactions contemplated by the Operative Agreements, (b) the Tax Indemnitee determines that such contest conducted by the Lessee could have a material adverse impact on such Tax Indemnitee's business Agreements or operations or involve risk of the imposition of criminal liability on a Tax Indemnitee, or (c) if an Equity Insufficiency Circumstance exists, then such Tax Indemnitee may, in its sole discretion, control such contest (including selecting the forum for such contest, and determining whether any such contest shall be conducted by (i) paying such Tax under protest or (ii) resisting payment of such Tax or (iii) paying such Tax and seeking a refund thereof; provided, further, however, that at such Tax Indemnitee's option, such contest shall be conducted by the Lessee in the name of such Tax Indemnitee). In no event shall such Tax Indemnitee be required or the Lessee be permitted to contest any Tax for which the Lessee is obligated to indemnify pursuant to this Section 7.1 unless: (i) the Lessee shall have acknowledged in writing (x) that it is solely responsible for any Indemnified Tax resulting from any contest under its control, (y) its liability to such Tax Indemnitee for all reasonable out of pocket costs, losses and expenses that the Tax Indemnitees may incur in connection with contesting the Indemnified Tax (including, but not limited to, any reasonable legal, accounting and investigatory fees and disbursements), and (z) its liability for an indemnity payment pursuant to this Section 7.1 as a result of such claim if and to the extent such Tax Indemnitee or the Lessee, as the case may be, shall not prevail in the contest of such claim; provided, however, that the Lessee shall not be required to indemnify for such Taxes to the extent the results of the contest clearly and unambiguously demonstrate that the Tax is not an Indemnified Tax unless the Lessee's conduct of the contest materially prejudiced the Tax Indemniteeindemnified Tax; (ii) such Tax Indemnitee shall have received the opinion of independent tax counsel selected by the Tax Indemnitee and reasonably satisfactory to the Lessee and furnished at the Lessee's sole expense, opining to the effect that a reasonable basis exists for contesting such claim or, in the event of an appeal of an adverse a court or administrative agency decision, that as a result of a change in law or fact it is more likely than not that an appellate court or an administrative agency or decision making body with appellate jurisdiction, as the case may be, will reverse or substantially modify the adverse determination; (iii) the Lessee shall have agreed to pay such Tax Indemnitee on demand (and at no after after-tax costs to the Lessor, Lessor and the Owner Participant and any Tax IndemniteeParticipant) all reasonable costs and expenses that such Tax Indemnitee may incur in connection with contesting such claim (including, without limitation, all costs, expenses, reasonable legal and accounting fees fees, disbursements, penalties, interest and disbursementsadditions to the Tax); (iv) no Lease Default described in Section 14(a), 14(b), 14(c), 14(g) or 14(h) of the Lease or a Lease Event of Default shall have occurred and shall have been continuing, unless the Tax Indemnitee in its sole discretion exercised in good faith allows the Lessee to post shall have posted a satisfactory bond or other security that does not involve a possibility of a Lien on the Equipment or any portion thereof or on any interest therein, and which bond or other security will be for an amount equal with respect to the sum of (I) the costs of such contest (as reasonably estimated by such Tax Indemnitee in good faith) and the Taxes which may be required to be indemnified and (II) if such Lease Default or Lease Event of Default involves a payment obligation under an Operative Agreement that is currently not paid in full, the unpaid amount of such obligation, plus the present value of the amounts not yet due pursuant to such obligationindemnified; (v) such Tax Indemnitee shall have determined that the action to be taken will not result in any risk substantial danger of sale, forfeiture or loss of, or the creation of any Lien, or the Lessee shall have or otherwise made a provision to protect the interest of such Tax Indemnitee (in a manner satisfactory to such Tax Indemnitee in its sole discretionIndemnitee), on the Equipment or any portion thereof or any interest therein; (vi) the amount of such claims alone, or, if the subject matter thereof shall be of a continuing or recurring nature, when aggregated with substantially identical potential claims with respect to the transactions contemplated by the Operative Agreements shall be (A) at least $25,0005,000 in the event of a Lessee controlled contest, or (B) $25,000 in the event of a Tax Indemnitee controlled contest; and (vii) if such contest shall be conducted in a manner requiring the payment or deposit of the claim, the Lessee shall have paid the amount required (and at no after-tax costs to the Lessor, Lessor and the Owner Participant or other Tax IndemniteeParticipant); and (viii) there is no risk of imposition of criminal liability or penalties. The Lessee shall cooperate with the Tax Indemnitee in good faith with respect to any contest controlled and conducted by the Tax Indemnitee and the Tax Indemnitee in good faith shall consult with the Lessee regarding the conduct of such contest. A Tax Indemnitee shall not be required to pursue an appeal to the U.S. Supreme Court or the highest court in Canada or Mexico. The Tax Indemnitee shall cooperate with respect to any contest controlled and conducted by 62 Participation Agreement (TRLI 2001-1B) the Lessee and the Lessee shall consult with the Tax Indemnitee regarding the conduct of such contest. Notwithstanding anything to the contrary contained in this Section 7.1, no Tax Indemnitee shall be required to contest any claim if the subject matter thereof shall be of a continuing or recurring nature and shall have previously been adversely decided to the Tax Indemnitee pursuant to the contest provisions of this Section 7.1 unless there shall have been a change in the law (including, without limitation, amendments to statutes or regulations, administrative rulings (excluding private letter rulings and other rulings or materials that may not be relied upon by such Tax Indemnitee as precedent) or court decisions in the applicable jurisdictiondecisions) enacted, promulgated or effective after such claim shall have been so previously decided, and such Tax Indemnitee shall have received an opinion of independent tax counsel selected by the Tax Indemnitee and reasonably satisfactory to the Lessee, furnished at the Lessee's sole expense, to the effect that such change is favorable to the position which such Tax Indemnitee or the Lessee, as the case may be, had asserted in such previous contest and as a result of such change, it there is more likely than not that the Tax Indemnitee will prevail or, in the event of an appeal of an adverse court or administrative agency decision, that it is more likely than not that an appellate court or an administrative agency tribunal or decision making body with appellate jurisdiction, as the case may be, will reverse or substantially modify the adverse determinationa reasonable basis to contest such claim. Notwithstanding anything contained in this Section 7.1, a Tax Indemnitee will not be required to contest the imposition of any Tax and shall be permitted to settle or compromise any claim without the Lessee's consent if such Tax Indemnitee (A) shall waive its right to indemnity under this Section 7.1 with respect to such Tax (and any directly related claim and any claim the outcome of which is determined based upon the outcome of such claim) and (B) shall pay to the Lessee any amount previously paid or advanced by the Lessee pursuant to this Section 7.1 with respect to such Tax ClaimTax, less any reasonable costs and expenses of plus interest at the Tax Indemnitee prior rate that would have been payable by the relevant taxing authority with respect to such payment in respect a refund of such Tax ClaimTax.
Appears in 2 contracts
Sources: Participation Agreement (Trinity Industries Inc), Participation Agreement (Trinity Industries Inc)
Contests. If any claim shall be made against any Indemnitee or if any proceeding shall be commenced against any Indemnitee (including a written claim is made by any taxing authority against a Tax Indemnitee notice of such proceeding) for any Taxes with respect to which the Lessee may be required to indemnify against hereunder or if a Tax Indemnitee shall determine that any tax Imposition as to which the Lessee may have an indemnity obligation hereunder pursuant to this Section 26.4, or if any Indemnitee shall reasonably determine that any Imposition to which the Lessee may have an indemnity obligation pursuant to this Section 26.4 may be payable (a "Tax Claim")payable, then such Tax Indemnitee shall give promptly (and in any event, within thirty (30) days) notify the Lessee written notice of such Tax Claim promptly in writing (but in any event within twenty (20) days after its receipt of the written Tax Claim or its determination, as applicable), and shall furnish Lessee with copies of such Tax Claim and all other writings received from the taxing authority to the extent relating to such claim (but provided that failure to so notify the Lessee within thirty (30) days shall not relieve the Lessee of its obligations hereunder alter such Indemnitee's rights under this Section 26.4 except to the extent that it effectively such failure precludes or materially adversely affects the ability of the Lessee to conduct a contest of the Tax Claim). The Tax Indemnitee any indemnified Taxes) and shall not pay take any action with respect to such Tax Claim until at least claim, proceeding or Imposition without the written consent of the Lessee (such consent not to be unreasonably withheld or unreasonably delayed) for thirty (30) days after providing the Lessee with receipt of such written noticenotice by the Lessee; provided, unless (a) however, that in the Tax case of any such claim or proceeding, if such Indemnitee is shall be required to do so by law or regulation or the failure to pay such Tax Claim could result in a material adverse financial, legal or other consequence take action prior to the Tax end of such 30-day period, such Indemnitee shall in such notice to the Lessee, so inform the Lessee, and (b) in such Indemnitee shall not take any action with respect to such claim, proceeding or Imposition without the written notice described above, the Tax Indemnitee has notified consent of the Lessee of such requirement or such material adverse consequence (such notice however shall consent not require the disclosure of the Tax Indemnitee's confidential information, as determined in the sole discretion of such Tax Indemnitiee, to be unreasonably withheld or the Tax Indemnitee's tax returns, books, or records). If the Lessee shall so request within 30 unreasonably delayed) for ten (10) days after the receipt of such notice by the Lessee unless the Indemnitee shall be required by law or regulation to take action prior to the end of such 10-day period. The Lessee shall be entitled for a period of thirty (30) days from receipt of such notice from the Indemnitee (or such shorter period as the Indemnitee has notified the Lessee is reasonably specified required by law or regulation for the Tax Indemnitee if any contest of the Tax must be commenced prior to the expiration of 30 dayscommence such contest), then to request in writing that such Tax Indemnitee shall in good faith at Lessee's sole expense contest such Tax or permit the Lessee to contest imposition of such Tax, as at the Lessee's expense. If (x) such Tax Indemnitee shall elect; provided, however, that to the extent (i) the contest involves only Taxes constituting property taxes, sales taxes, or use taxes, (ii) the contest does not involve any taxes that the Lessee is not required to indemnify the Tax Indemnitee or taxes and other issues relating to a Tax Indemnitee that are unrelated to the transactions contemplated by the Operative Agreements, (iii) the contest can be pursued in the name of the Lessee and independently from any other proceeding involving a Tax Claim liability of a Tax such Indemnitee for which the Lessee has not agreed in writing to indemnify such Tax Indemnitee, and (iv) no Equity Insufficiency Circumstance exists, such contest shall be undertaken by the Lessee at the Lessee's sole expense and the after-tax costs of the Lessor, the Owner Participant, or other Tax Indemnitee shall be reimbursed by the Lessee. Notwithstanding the preceding sentence, if (ay) such contest would involve must be pursued in the name of the Indemnitee, but can be pursued independently from any other type proceeding involving a Tax liability of Tax, any taxes that such Indemnitee for which the Lessee is has not required agreed to indemnify the Tax such Indemnitee or taxes and other issues relating to a Tax Indemnitee which are unrelated to the transactions contemplated by the Operative Agreements, (bz) the Tax Indemnitee so requests, then the Lessee shall be permitted to control the contest of such claim, provided that in the case of a contest described in clause (y), if the Indemnitee determines in good faith that such contest conducted by the Lessee could have a material adverse impact on such Tax Indemnitee's the business or operations or involve risk of the imposition Indemnitee and provides a written explanation to the Lessee of criminal liability on a Tax Indemniteesuch determination, the Indemnitee may elect to control or (c) an Equity Insufficiency Circumstance exists, then such Tax Indemnitee may, in its sole discretion, reassert control such contest (including selecting of the forum for such contest, and determining whether any such contest shall provided, that by taking control of the contest, Lessee acknowledges that it is responsible for the Imposition ultimately determined to be conducted due by (i) paying such Tax under protest or (ii) resisting payment reason of such Tax or (iii) paying such Tax claim, and seeking a refund thereof; provided, howeverfurther, that at such Tax Indemnitee's optionin determining the application of clauses (x) and (y) of the preceding sentence, such each Indemnitee shall take any and all reasonable steps to segregate claims for any Taxes for which the Lessee indemnifies hereunder from Taxes for which the Lessee is not obligated to indemnify hereunder, so that the Lessee can control the contest shall of the former. In all other claims requested to be conducted contested by the Lessee in Lessee, the name Indemnitee shall control the contest of such Tax Indemnitee)claim, acting through counsel reasonably acceptable to the Lessee. In no event shall such Tax Indemnitee be required or the Lessee be permitted to contest (or the Indemnitee required to contest) any Tax for which claim, (A) if such Indemnitee provides the Lessee is obligated to indemnify pursuant to this Section 7.1 unless: (i) the Lessee shall have acknowledged in writing (x) that it is solely responsible for any Indemnified Tax resulting from any contest under its control, (y) its liability to such Tax Indemnitee for all reasonable out of pocket costs, losses and expenses that the Tax Indemnitees may incur in connection with contesting the Indemnified Tax (including, but not limited to, any reasonable legal, accounting and investigatory fees and disbursements), and (z) its liability for an indemnity payment pursuant to this Section 7.1 as a result of such claim if and to the extent such Tax Indemnitee or the Lessee, as the case may be, shall not prevail in the contest of such claim; provided, however, that the Lessee shall not be required to indemnify for such Taxes to the extent the results of the contest clearly demonstrate that the Tax is not an Indemnified Tax unless the Lessee's conduct of the contest materially prejudiced the Tax Indemnitee; (ii) such Tax Indemnitee shall have received the legal opinion of independent tax counsel selected by the Tax Indemnitee and reasonably satisfactory acceptable to the Lessee and furnished at the Lessee's sole expense, opining that a reasonable basis exists for contesting such claim or, in the event of an appeal of an adverse court or administrative agency decision, that as a result of a change in law or fact it is more likely than not that an appellate court or an administrative agency or decision making body with appellate jurisdiction, as the case may be, will reverse or substantially modify the adverse determination; (iii) the Lessee shall have agreed to pay such Tax Indemnitee on demand (and at no after tax costs to the Lessor, the Owner Participant and any Tax Indemnitee) all reasonable costs and expenses that such Tax Indemnitee may incur in connection with contesting such claim (includingaction, without limitation, all reasonable legal and accounting fees and disbursements); (iv) no Lease Default described in Section 14(a), 14(b), 14(c), 14(g) suit or 14(h) proceeding involves a risk of imposition of criminal liability or will involve a material risk of the Lease or a Lease Event of Default shall have occurred and shall have been continuing, unless the Tax Indemnitee in its sole discretion exercised in good faith allows the Lessee to post a satisfactory bond or other security that does not involve a possibility of a Lien on the Equipment or any portion thereof or on any interest therein, and which bond or other security will be for an amount equal to the sum of (I) the costs of such contest (as reasonably estimated by such Tax Indemnitee in good faith) and the Taxes which may be required to be indemnified and (II) if such Lease Default or Lease Event of Default involves a payment obligation under an Operative Agreement that is currently not paid in full, the unpaid amount of such obligation, plus the present value of the amounts not yet due pursuant to such obligation; (v) such Tax Indemnitee shall have determined that the action to be taken will not result in any risk of sale, forfeiture or loss of, or the creation of any Lien (other than a Permitted Lien, ) on any Leased Asset or any part of any thereof unless the Lessee shall have posted and maintained a bond or otherwise made other security satisfactory to the relevant Indemnitee in respect to such risk, (B) if an Event of Default has occurred and is continuing under Section 20.1(a), (f) or (g) unless the Lessee shall have posted and maintained a provision bond or other security satisfactory to protect the interest relevant Indemnitee in respect of the Taxes subject to such claim and any and all expenses for which the Lessee is responsible hereunder reasonably foreseeable in connection with the contest of such Tax Indemnitee claim, (in a manner satisfactory C) unless the Lessee shall have agreed to pay and shall pay, to such Tax Indemnitee on demand all reasonable out-of-pocket costs, losses and expenses that such Indemnitee may incur in its sole discretion)connection with contesting such Imposition including all reasonable legal, on the Equipment accounting and investigatory fees and disbursements, or any portion thereof or any interest therein; (vi) the amount of such claims alone, or, if the subject matter thereof shall be of a continuing or recurring nature, when aggregated with substantially identical potential claims with respect to the transactions contemplated by the Operative Agreements shall be at least $25,000; (viiD) if such contest shall be conducted involve the payment of the Tax prior to the contest, unless the Lessee shall provide to the Indemnitee an interest-free advance in an amount equal to the Imposition that the Indemnitee is required to pay (with no additional net after-tax costs to such Indemnitee). In addition, for Indemnitee controlled contests and claims contested in the name of the Indemnitee in a manner requiring public forum, no contest shall be required: (A) unless the payment or deposit amount of the claimpotential indemnity (taking into account all similar or logically related claims that have been or could be raised in any audit involving such Indemnitee for which the Lessee may be liable to pay an indemnity under this Section 26.4(b)) exceeds $50,000 and (B) unless, if requested by the Indemnitee, the Lessee shall have paid the amount required (and at no after-tax costs provided to the Lessor, the Owner Participant or other Tax Indemnitee); and (viii) there is no risk Indemnitee an opinion of imposition of criminal liability or penalties. The Lessee shall cooperate with the Tax Indemnitee in good faith with respect to any contest controlled and conducted by the Tax Indemnitee and the Tax Indemnitee in good faith shall consult with the Lessee regarding the conduct of such contest. A Tax Indemnitee shall not be required to pursue an appeal to the U.S. Supreme Court or the highest court in Canada or Mexico. The Tax Indemnitee shall cooperate with respect to any contest controlled and conducted counsel selected by the Lessee and (which may be in-house counsel) (except, in the Lessee shall consult with the Tax Indemnitee regarding the conduct case of such contest. Notwithstanding anything to the contrary contained in this Section 7.1, no Tax Indemnitee income taxes indemnified hereunder which shall be required to contest any claim if the subject matter thereof shall be of a continuing or recurring nature and shall have previously been adversely decided to the Tax Indemnitee pursuant to the contest provisions of this Section 7.1 unless there shall have been a change in the law (including, without limitation, amendments to statutes or regulations, administrative rulings (excluding private letter rulings and other rulings or materials that may not be relied upon by such Tax Indemnitee as precedent) or court decisions in the applicable jurisdiction) enacted, promulgated or effective after such claim shall have been so previously decided, and such Tax Indemnitee shall have received an opinion of independent tax counsel selected by the Tax Indemnitee and reasonably satisfactory acceptable to the Lessee) that a reasonable basis exists to contest such claim. In no event shall 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 (or claim for refund) but the decisions regarding what actions are to be taken shall be made by the controlling party in its sole judgement, furnished provided, however, that if the Indemnitee is the controlling party and the Lessee recommends the acceptance of a settlement offer made by the relevant Governmental Authority and such Indemnitee rejects such settlement offer then the amount for which the Lessee will be required to indemnify such 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. 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. Each Indemnitee shall at the Lessee's sole expenseexpense supply the Lessee with such information and documents reasonably requested by the Lessee as are necessary or advisable for the Lessee to participate in any action, suit or proceeding to the effect that such change extent permitted by this Section 26.4(b). No Indemnitee shall enter into any settlement or other compromise or fail to appeal an adverse ruling with respect to any claim which is favorable entitled to be indemnified under this Section 26.4 (and with respect to which contest is required under this Section 26.4(b)) without the position which such Tax Indemnitee or prior written consent of the Lessee, as the case may be, had asserted in unless such previous contest and as a result of Indemnitee waives its right to be indemnified under this Section 26.4 with respect to such change, it is more likely than not that the Tax Indemnitee will prevail or, in the event of an appeal of an adverse court or administrative agency decision, that it is more likely than not that an appellate court or an administrative agency tribunal or decision making body with appellate jurisdiction, as the case may be, will reverse or substantially modify the adverse determinationclaim. Notwithstanding anything contained in this Section 7.1herein to the contrary, a Tax an Indemnitee will not be required to contest (and the Lessee shall not be permitted to contest) a claim with respect to the imposition of any Tax and shall be permitted to settle or compromise any claim without the Lessee's consent if such Tax Indemnitee (A) shall waive its right to indemnity indemnification under this Section 7.1 26.4 with respect to such Tax claim (and any claim the outcome of which is determined based upon the outcome of such claim) and (B) shall pay to the Lessee any amount previously paid or advanced by the Lessee pursuant to this Section 7.1 with respect to such Tax Claim, less year or any reasonable costs and expenses other taxable year the contest of the Tax Indemnitee prior to such payment in respect which is materially adversely affected as a result of such Tax Claimwaiver).
Appears in 2 contracts
Sources: Master Lease and Security Agreement (Rite Aid Corp), Master Lease and Security Agreement (Rite Aid Corp)
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 claim is made by any taxing authority against a Tax Indemnitee notice of such proceeding) for any Taxes with respect as to which the Lessee may be required to indemnify against hereunder or if a Tax Indemnitee shall determine that any tax to which the Lessee may have an indemnity obligation hereunder may be payable (a "Tax Claim")pursuant to Section 19.2, then such Tax Indemnitee shall give the promptly notify Lessee written notice of such Tax Claim promptly (but in any event within twenty (20) days after its receipt of the written Tax Claim or its determination, as applicable), writing and shall furnish Lessee not take any action with copies of such Tax Claim and all other writings received from the taxing authority to the extent relating respect to such claim (but failure to so notify or Tax without the consent of Lessee shall not relieve the Lessee of its obligations hereunder except to the extent that it effectively precludes the ability of the Lessee to conduct a contest of the Tax Claim). The Tax Indemnitee shall not pay such Tax Claim until at least for thirty (30) days after providing sending such notice to Lessee; provided that, in the Lessee with case of any such written noticeclaim or proceeding, unless (a) the if such Tax Indemnitee is shall be required to do so by law or regulation or to take action prior to the failure to pay end of such 30-day period, such Tax Claim could result Indemnitee shall, in a material adverse financialsuch notice to Lessee, legal or other consequence to the so inform Lessee, and such Tax Indemnitee and (b) in the written notice described above, the Tax Indemnitee has notified the Lessee of such requirement or such material adverse consequence (such notice however shall not require take any action with respect to such claim or Tax without the disclosure consent of Lessee (not to be unreasonably withheld) before ten (10) days from the Tax Indemnitee's confidential information, as determined in the sole discretion of such Tax Indemnitiee, or the Tax Indemnitee's tax returns, books, or records). If the Lessee shall so request within 30 days after receipt of such notice by Lessee unless the Tax Indemnitee shall be required by law or regulation to take action prior to the end of such 10 day period provided, that failure to so notify Lessee shall not affect Lessee’s obligations to indemnify hereunder except to the extent of any resultant harm suffered by Lessee. If requested by Lessee in a written request to such Tax Indemnitee within thirty (30) days (or such shorter period as is reasonably specified by referred to in the Tax Indemnitee if any contest of the Tax must be commenced prior proviso to the expiration of 30 first sentence in this Section 19.2(e) specified in such notice (but in any event not less than 10 days)) after its receipt of such notice, then such Tax Indemnitee shall in good faith at Lessee's sole expense contest such Tax or permit the Lessee to contest such Taxitself or, as such Tax Indemnitee shall elect; provided, however, that to the extent (i) the contest involves only Taxes constituting property taxes, sales taxes, or use taxes, (ii) the contest does not involve any taxes that the Lessee is not required to indemnify the Tax Indemnitee or taxes and other issues relating to a Tax Indemnitee that are unrelated to the transactions contemplated by the Operative Agreements, (iii) the contest can be pursued in the name of the Lessee and independently from any other proceeding involving a Tax Claim of a Tax Indemnitee for which Lessee has not agreed in writing to indemnify such Tax Indemnitee, and (iv) no Equity Insufficiency Circumstance exists, such contest shall be undertaken by the Lessee at the Lessee's sole expense and the after-tax costs of the Lessor, the Owner Participant, or other Tax Indemnitee shall be reimbursed by the Lessee. Notwithstanding the preceding sentence, if (a) such contest would involve any other type of Tax, any taxes that the Lessee is not required to indemnify the Tax Indemnitee or taxes and other issues relating to a Tax Indemnitee which are unrelated to the transactions contemplated by the Operative Agreements, (b) the Tax Indemnitee determines that such contest conducted by the Lessee could have a material adverse impact on such Tax Indemnitee's business or operations or involve risk of the imposition of criminal liability on a Tax Indemnitee, or (c) an Equity Insufficiency Circumstance exists, then such Tax Indemnitee may, in its sole discretion, control such contest (including selecting the forum for such contest, and determining whether any such contest shall be conducted by (i) paying such Tax under protest or (ii) resisting payment of such Tax or (iii) paying such Tax and seeking a refund thereof; provided, however, that at such Tax Indemnitee's option’s request, the Lessee shall, in good faith contest (including, without limitation, by pursuit of appeals and administrative procedures), the validity, applicability or amount of such contest indemnified Taxes by (A) resisting payment thereof, (B) not paying the same except under protest (which protest must be pursued using reasonable efforts in appropriate administrative and/or judicial proceedings) if protest shall be conducted by the Lessee necessary and proper or (C) if payment shall be made, using reasonable efforts to obtain a refund thereof in the name of such Tax Indemnitee). In appropriate administrative and/or judicial proceedings; provided that in no event shall such Tax Indemnitee be required or the Lessee be permitted to contest any claim for any Tax unless (1) the amount at issue (taking into account all similar and logically related claims with respect to the transactions contemplated by the Operative Documents that have been or could have been raised in an audit by the taxing authority in question for any other taxable period with respect to which an assessment of a tax deficiency is not barred by a statute or limitations, including, without limitations, such claims that may arise in future periods) exceeds $25,000, (2) the Tax that is the subject of such contest is a Tax for which the Lessee is obligated to indemnify pursuant to this Section 7.1 unless: may have an indemnity obligation hereunder; (i3) the Lessee shall have acknowledged in writing (x) that it is solely responsible for any Indemnified Tax resulting from any contest under its control, (y) its liability agreed to pay such Tax Indemnitee for and shall pay on an After-Tax Basis as incurred all reasonable out of pocket costs, losses costs and expenses that the such Tax Indemnitees may Indemnitee shall incur in connection with contesting the Indemnified Tax such claim (including, but not limited towithout limitation, any all reasonable legalcosts, expenses, legal and accounting and investigatory fees and disbursements); (4) the action to be taken will not result in any material danger of an imminent sale, forfeiture or loss of, or the creation of any Lien (other than a Permitted Lien) against the Property and (z) its that there is no risk that criminal or punitive civil liability for an indemnity payment pursuant may be imposed with respect to this Section 7.1 as a result of such claim if and to the extent such Tax Indemnitee (other than any liability for any interest, penalties or additions to tax that may be assessed with respect to the LesseeTaxes that are the subject of such contest and as to which clauses (2) and (3) of this paragraph apply); (5) if such contest shall involve payment of the claim, as Lessee shall advance the amount thereof plus interest, penalties and additions to tax with respect thereto to such Tax Indemnitee on an interest-free basis (with no additional net after tax cost to such Tax Indemnitee and without taking into account any net tax savings associated with such advance); (6) no Lease Event of Default under this Lease shall have occurred and be continuing (it being agreed that in such case, the Tax Indemnitee shall consult in good faith with Lessee to determine whether Lessee can provide to the Tax Indemnitee reasonably satisfactory security to cover its indemnity obligations with respect to amounts to be contested and its obligations under the foregoing clause (5) of this proviso, in which case, such Lease Event of Default shall not deprive Lessee of its contest rights hereunder); and (7) in the case may be, shall not prevail of a contest which must be contested in the name of the Tax Indemnitee, prior to initiating the contest of such claim; provided, however, that the Lessee shall not be required to indemnify for such Taxes to the extent the results of the contest clearly demonstrate that have furnished the Tax is not Indemnitee with an Indemnified Tax unless the Lessee's conduct of the contest materially prejudiced the Tax Indemnitee; (ii) such Tax Indemnitee shall have received the opinion of an independent tax counsel advisor selected by the Lessee and reasonably acceptable to the Tax Indemnitee and reasonably satisfactory (“Tax Counsel”) to the Lessee and furnished at the Lessee's sole expense, opining effect that a reasonable basis exists for contesting such contest. In no event shall the Tax Indemnitee be required to contest any claim if the subject matter of such claim or, in shall be of a continuing nature and shall have previously been the event of an appeal subject of an adverse court or administrative agency decisionfinal determination under the contest provisions of this Section 19.2(e) after exercise by the Lessee of its rights pursuant to this Section 19.2, unless the Lessee shall have delivered to such Tax Indemnitee an opinion of Tax Counsel to the effect that as a result of a change in law or fact it is more likely than not that an appellate court or an administrative agency or decision making body with appellate jurisdiction, as the case may be, will reverse or substantially modify the adverse determination; (iii) the Lessee shall have agreed to pay such Tax Indemnitee on demand (and at no after tax costs to will prevail in the Lessor, the Owner Participant and any Tax Indemnitee) all reasonable costs and expenses that contest of such claim. The relevant Tax Indemnitee may incur in connection with contesting such claim (including, without limitation, all reasonable legal and accounting fees and disbursements); (iv) no Lease Default described in Section 14(a), 14(b), 14(c), 14(g) or 14(h) of the Lease or a Lease Event of Default shall have occurred and shall have been continuing, control any contest unless the Tax Indemnitee requests that the Lessee control such contest or declines in writing to control such contest. The party conducting the contest (“Controlling Party”) shall consult in good faith with the other party (“Noncontrolling 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 discretion judgment (exercised in good faith allows faith). In addition, the Lessee Controlling Party shall keep the Noncontrolling Party reasonably informed as to post the progress of the contest, and shall provide the Noncontrolling Party with a satisfactory bond copy of (or other security that does not involve a possibility of a Lien on appropriate excerpts from) any reports or claims issued by the Equipment relevant auditing agents or taxing authority to the Controlling Party or any portion thereof Affiliate thereof, in connection with such claim or on any interest thereinthe contest thereof. The Controlling Party shall be responsible for the selection of counsel, which counsel must be reasonably satisfactory to the Noncontrolling Party. If the lessee is the Controlling Party, the Controlling Party shall permit the Noncontrolling Party’s counsel to be present at all meetings (to the extent permitted by law, and which bond or the Controlling Party shall execute any necessary consents and take such other security will be for an amount equal to the sum of (I) the costs of such contest (actions as reasonably estimated by such Tax Indemnitee in good faith) and the Taxes which may be required to be indemnified and (II) if such Lease Default permit the Noncontrolling Party or Lease Event of Default involves a payment obligation under an Operative Agreement that is currently not paid in full, the unpaid amount of such obligation, plus the present value of the amounts not yet due pursuant to such obligation; (v) such Tax Indemnitee shall have determined that the action its counsel to be taken will not result present). Notwithstanding anything contained in any risk of salethis Section 19.2, forfeiture or loss of, or the creation of any Lien, or the Lessee shall have or otherwise made a provision to protect the interest of such Tax Indemnitee (in a manner satisfactory to such Tax Indemnitee in its sole discretion), on the Equipment or any portion thereof or any interest therein; (vi) the amount of such claims alone, or, if the subject matter thereof shall be of a continuing or recurring nature, when aggregated with substantially identical potential claims with respect to the transactions contemplated by the Operative Agreements shall be at least $25,000; (vii) if such contest shall be conducted in a manner requiring the payment or deposit of the claim, the Lessee shall have paid the amount required (and at no after-tax costs to the Lessor, the Owner Participant or other Tax Indemnitee); and (viii) there is no risk of imposition of criminal liability or penalties. The Lessee shall cooperate with the Tax Indemnitee in good faith with respect to any contest controlled and conducted by the Tax Indemnitee and the Tax Indemnitee in good faith shall consult with the Lessee regarding the conduct of such contest. A Tax Indemnitee shall not be required to pursue an appeal to the U.S. Supreme Court or the highest court in Canada or Mexico. The Tax Indemnitee shall cooperate with respect to any contest controlled and conducted by the Lessee and the Lessee shall consult with the Tax Indemnitee regarding the conduct of such contest. Notwithstanding anything to the contrary contained in this Section 7.1, no Tax Indemnitee shall be required to contest any claim if the subject matter thereof shall be of a continuing or recurring nature and shall have previously been adversely decided to the Tax Indemnitee pursuant to the may settle any contest provisions of this Section 7.1 unless there shall have been a change in the law (including, without limitation, amendments to statutes or regulations, administrative rulings (excluding private letter rulings and other rulings or materials that may not be relied upon by such Tax Indemnitee as precedent) or court decisions in the applicable jurisdiction) enacted, promulgated or effective after such claim shall have been so previously decided, and such Tax Indemnitee shall have received an opinion of independent tax counsel selected by the Tax Indemnitee and reasonably satisfactory to the Lessee, furnished at the Lessee's sole expense, to the effect that such change is favorable to the position which such Tax Indemnitee or the Lessee, as the case may be, had asserted in such previous contest and as a result of such change, it is more likely than not that the Tax Indemnitee will prevail or, in the event of an appeal of an adverse court or administrative agency decision, that it is more likely than not that an appellate court or an administrative agency tribunal or decision making body with appellate jurisdiction, as the case may be, will reverse or substantially modify the adverse determination. Notwithstanding anything contained in this Section 7.1, a Tax Indemnitee will not be required to contest the imposition of any Tax and shall be permitted to settle or compromise any claim without the Lessee's consent of Lessee if such Tax Indemnitee (A) shall waive its right to indemnity under this Section 7.1 19.2 with respect to such claim for such Tax (and any claim made by any taxing authority with respect to other taxable periods that is based upon the outcome resolution of such claim, or the contest of which is determined based upon materially prejudiced by the outcome resolution of such claim) ), and (B) shall pay to the Lessee any amount of Tax previously paid or advanced by the Lessee pursuant to this Section 7.1 19.2 with respect to such Tax Claim, less any reasonable claim other than the costs and expenses of the contest of such claim paid by the Lessee, together with interest thereon at the underpayment rate, as defined in Section 6621 of the Code. Notwithstanding any of the foregoing in this Section 19.2(e), Lessee may, at any time and with notice to any Tax Indemnitee, contest the property or ad valorem Taxes for which the Lessee has an obligation to indemnify any Tax Indemnitee prior hereunder, provided Lessee complies with the contest provisions of Section 8.6 hereof. Each Tax Indemnitee shall, upon the Lessee’s reasonable request, execute any necessary consents and take such other actions as reasonably may be required to permit Lessee to conduct any such contest. If any Tax Indemnitee or any Affiliate thereof shall obtain a refund (including by way of credit) of all or any part of any Tax with respect to which the Lessee shall have paid on behalf of such Tax Indemnitee or reimbursed such Tax Indemnitee, then such Tax Indemnitee shall, so long as no Lease Event of Default shall have occurred and be continuing, pay to the Lessee any such refund (including any applicable interest received with respect to such refund or that would have been received with respect to such refund but for a counterclaim or other claim not indemnified by Lessee hereunder) plus any tax savings realized by such Tax Indemnitee as a result of a payment pursuant to this sentence (it being understood that the calculation of such tax savings shall take into account any additional income Taxes incurred by such Tax Indemnitee as a result of the receipt or accrual of such refund). A Tax Indemnitee shall not be obligated pursuant to this Section 19.2(e) to make a payment (i) before such time as the Lessee shall have made all payments then due under the Operative Documents and any Lease Event of Default that shall have occurred shall no longer be continuing or (ii) in excess of the amounts paid by Lessee to such Tax Indemnitee pursuant to this Section 19.2(e) in respect of the Taxes giving rise to such tax savings (minus any amounts previously paid to Lessee by such Tax ClaimIndemnitee pursuant to this Section 19.2(e) plus any applicable interest that would have been received with respect to such refund but for a counterclaim or other claim not indemnified by Lessee hereunder), provided that any such amounts not paid to Lessee pursuant to the limitation contained in clause (ii) of this sentence shall be carried forward to reduce, pro tanto, any future amounts that may become payable by the Lessee to such Tax Indemnitee pursuant to this Section 19.2(e) in respect of the Taxes giving rise to such tax savings. The disallowance, loss, recapture or reduction of any credit, refund or other tax savings with respect to which a Tax Indemnitee has made a payment to the Lessee under this Section 19.2(e) shall be treated as a Tax for which the Lessee is obligated to indemnify such Tax Indemnitee hereunder, without regard to the exclusions set forth in Section 19.2(b). The Tax Indemnitee shall make any payments to the Lessee under this Section 19.2(e) within ten (10) days of the receipt of such refund.
Appears in 2 contracts
Sources: Lease Agreement (Vistra Energy Corp), Lease Agreement (Vistra Energy Corp)
Contests. If a written claim is made against an Indemnitee or if any proceeding is commenced against an Indemnitee (including a written notice of such proceeding) for Taxes as to which Lessee could be liable for payment or indemnity hereunder, or if an Indemnitee makes a determination that a Tax is due for which Lessee could have an indemnity obligation hereunder, such Indemnitee shall promptly give Lessee notice in writing of such claim (provided, however, that the failure to provide such notice shall not affect Lessee's obligations hereunder to the Owner Participant unless such failure shall materially adversely affect the right to contest such claim) and shall not take any action with respect to such claim or Tax without the consent of Lessee for 30 days following the receipt of such notice by Lessee; provided, however, that, if such Indemnitee shall be required by law to take action prior to the end of such 30-day period, such Indemnitee shall, in such notice to Lessee, so inform Lessee, and such Indemnitee shall take no action for as long as it is legally able to do so (it being understood that an Indemnitee shall be entitled to pay the Tax claimed and ▇▇▇ for a refund prior to the end of such 30-day period if (A)(I) the failure to so pay the Tax would result in substantial penalties (unless immediately reimbursed by Lessee) and the act of paying the Tax would not prejudice the right to contest or (II) the failure to so pay would result in criminal penalties and (B) such Indemnitee shall act in connection with paying the Tax in the manner that is the least prejudicial to the pursuit of the contest). In addition, such Indemnitee shall (provided that Lessee shall have agreed to 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 against a Tax Indemnitee for any relating to such Taxes with respect to which the Lessee may be required to indemnify against hereunder or if a Tax Indemnitee shall determine that any tax to which the hereunder. If requested by Lessee may have an indemnity obligation hereunder may be payable (a "Tax Claim"), then such Tax Indemnitee shall give the Lessee written notice of such Tax Claim promptly (but in any event writing within twenty (20) 30 days after its receipt of such notice, such Indemnitee shall, at the written Tax Claim or its determinationexpense of Lessee (including all reasonable out-of-pocket costs, as applicablein-house attorney fees and 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 shall furnish Lessee with copies judicial proceedings the validity, applicability or amount of such Tax Claim Taxes by (X) resisting payment thereof, (Y) not paying the same except under protest if protest is necessary and all other writings received from proper or (Z) if the taxing authority payment is made, using reasonable efforts to the extent relating to such claim (but failure to so notify the Lessee shall not relieve the Lessee of its obligations hereunder except to the extent that it effectively precludes the ability of the Lessee to conduct obtain a contest of the Tax Claim)refund thereof in an appropriate administrative and/or judicial proceeding. The Tax Indemnitee shall not pay such Tax Claim until at least thirty (30) days after providing the Lessee with such written notice, unless (a) the Tax Indemnitee is required If requested to do so by law Lessee in writing, the Indemnitee shall appeal any adverse administrative or regulation or judicial decision, except that the failure Indemnitee shall not be required to pay such Tax Claim could result in a material adverse financial, legal or other consequence pursue any appeals to the Tax Indemnitee and (b) in the written notice described above, the Tax Indemnitee has notified the Lessee of such requirement or such material adverse consequence (such notice however shall not require the disclosure of the Tax Indemnitee's confidential information, as determined in the sole discretion of such Tax Indemnitiee, or the Tax Indemnitee's tax returns, books, or records)United States Supreme Court. If the Lessee shall so request within 30 days after receipt of such notice (or such shorter period as is reasonably specified by the Tax Indemnitee if any contest of the Tax must be commenced prior to the expiration of 30 days), then such Tax Indemnitee shall in good faith at Lessee's sole expense contest such Tax or permit the Lessee to contest such Tax, as such Tax Indemnitee shall elect; provided, however, that and to the extent (i) the contest involves only Taxes constituting property taxes, sales taxes, Indemnitee is able to separate the contested issue or use taxes, (ii) the contest does not involve any taxes that the Lessee is not required to indemnify the Tax Indemnitee or taxes and issues from other issues relating to a Tax Indemnitee arising in the same administrative or judicial proceeding that are unrelated to the transactions contemplated by the Operative AgreementsDocuments without, (iii) the contest can be pursued in the name 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 and independently from any other proceeding involving a Tax Claim 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 Tax Indemnitee for which Lessee has not agreed in writing to indemnify such Tax contest controlled by an Indemnitee, and (iv) no Equity Insufficiency Circumstance exists, such contest shall be undertaken by the Lessee at the Lessee's sole expense and the after-tax costs of the Lessor, the Owner Participant, or other Tax Indemnitee shall be reimbursed by consult with Lessee in good faith regarding the Lessee. Notwithstanding manner of contesting such claim and shall keep Lessee reasonably informed regarding the preceding sentence, if (a) such contest would involve any other type progress of Tax, any taxes that the Lessee is not required to indemnify the Tax Indemnitee or taxes and other issues relating to a Tax Indemnitee which are unrelated to the transactions contemplated by the Operative Agreements, (b) the Tax Indemnitee determines that such contest conducted by the Lessee could have a material adverse impact on such Tax Indemnitee's business or operations or involve risk of the imposition of criminal liability on a Tax Indemnitee, or (c) an Equity Insufficiency Circumstance exists, then such Tax Indemnitee may, in its sole discretion, control such contest (including selecting the forum for such contest, and determining whether . An Indemnitee shall not fail to take any such contest shall be conducted action expressly required by (i) paying such Tax under protest or (ii) resisting payment of such Tax or (iii) paying such Tax and seeking a refund thereof; provided, however, that at such Tax Indemnitee's option, such contest shall be conducted by the Lessee in the name of such Tax Indemnitee). In no event shall such Tax Indemnitee be required or the Lessee be permitted to contest any Tax for which the Lessee is obligated to indemnify pursuant to this Section 7.1 unless: (i6(b)(iv) the Lessee shall have acknowledged in writing (x) that it is solely responsible for any Indemnified Tax resulting from any contest under its control, (y) its liability to such Tax Indemnitee for all reasonable out of pocket costs, losses and expenses that the Tax Indemnitees may incur in connection with contesting the Indemnified Tax (including, but not limited towithout limitation, any reasonable legal, accounting and investigatory fees and disbursements), and (z) its liability for an indemnity payment pursuant to this Section 7.1 as a result of such claim if and to the extent such Tax Indemnitee or the Lessee, as the case may be, shall not prevail in the contest of such claim; provided, however, that the Lessee shall not be required to indemnify for such Taxes to the extent the results of the contest clearly demonstrate that the Tax is not an Indemnified Tax unless the Lessee's conduct of the contest materially prejudiced the Tax Indemnitee; (ii) such Tax Indemnitee shall have received the opinion of independent tax counsel selected by the Tax Indemnitee and reasonably satisfactory to the Lessee and furnished at the Lessee's sole expense, opining that a reasonable basis exists for contesting such claim or, in the event of an action regarding any appeal of an adverse court determination with respect to any claim) or administrative agency decisionsettle or compromise any claim without the prior written consent of Lessee (except as contemplated by this Section 6(b)(iv)). Notwithstanding the foregoing, that as a result of a change in law no event shall an Indemnitee be required to pursue any contest (or fact it is more likely than not that an appellate court or an administrative agency or decision making body with appellate jurisdiction, as the case may be, will reverse or substantially modify the adverse determination; to permit Lessee to pursue any contest) unless (iiiA) the Lessee shall have agreed to pay such Tax Indemnitee on demand (and at no after tax costs to the Lessor, the Owner Participant and any Tax Indemnitee) all reasonable costs out-of-pocket costs, in- house attorney fees and expenses outside attorney and accountants fees that such Tax Indemnitee may shall incur in connection with contesting such claim claim, (including, without limitation, all reasonable legal and accounting fees and disbursements); (ivB) no Lease Default described in Section 14(a), 14(b), 14(c), 14(g) or 14(h) if such contest shall involve the payment of the Lease or a Lease Event of Default claim, Lessee shall have occurred and shall have been continuing, unless advance the Tax Indemnitee in its sole discretion exercised in good faith allows the Lessee to post a satisfactory bond or other security that does not involve a possibility of a Lien on the Equipment or any portion amount thereof or on any interest therein, and which bond or other security will be for an amount equal plus (to the sum of (Iextent indemnified hereunder) interest, penalties and additions to tax with respect thereto that are required to be paid prior to the costs commencement of such contest (as reasonably estimated by such Tax Indemnitee in good faith) on an interest-free basis and the Taxes which may be required to be indemnified and (II) if such Lease Default or Lease Event of Default involves a payment obligation under an Operative Agreement that is currently not paid in full, the unpaid amount of such obligation, plus the present value of the amounts not yet due pursuant with no additional net after-tax cost to such obligation; Indemnitee (vand 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 Tax Indemnitee shall have reasonably determined that the action to be taken will not result in any material risk of saleforfeiture, forfeiture sale or loss of, or of the creation of any Lien, or the Aircraft (unless Lessee shall have or otherwise made a provision provisions to protect the interest interests of any such Tax Indemnitee Indemnitee), (in a manner satisfactory 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 its obligations hereunder by advancing to such Tax Indemnitee in its sole discretion)before proceeding with such contest, on the Equipment or any portion thereof or any interest therein; (vi) the amount of the Tax being contested, plus any interest and penalties and an amount estimated in good faith by such claims aloneIndemnitee for reasonable expenses, or, if (E) in the subject matter thereof shall be case of a continuing contest that is being pursued by an Indemnitee, the aggregate amount of the claim (together with the amount of all related claims that have been or recurring nature, when aggregated could be raised with substantially identical potential claims with respect to any or all of the transactions contemplated other Aircraft leased by the Operative Agreements shall be Owner Participant to Lessee or raised in any other audit for which Lessee would have an indemnity obligation under this Section 6(b)(iv)) is at least $25,000; 50,000 and (viiF) if such requested prior to or during the contest shall be conducted in a manner requiring the payment or deposit of the claim, the Lessee shall have paid the amount required (and at no after-tax costs to the Lessor, the Owner Participant or other Tax Indemnitee); and (viii) there is no risk of imposition of criminal liability or penalties. The Lessee shall cooperate with the Tax Indemnitee in good faith with respect to any contest controlled and conducted by the Tax Indemnitee and the Tax Indemnitee in good faith shall consult with the Lessee regarding the conduct of such contest. A Tax Indemnitee shall not be required to pursue an appeal to the U.S. Supreme Court or the highest court in Canada or Mexico. The Tax Indemnitee shall cooperate with respect to any contest controlled and conducted by the Lessee and the Lessee shall consult with the Tax Indemnitee regarding the conduct of such contest. Notwithstanding anything to the contrary contained in this Section 7.1Indemnitee, no Tax Indemnitee shall be required to contest any claim if the subject matter thereof shall be of a continuing or recurring nature and shall have previously been adversely decided to the Tax Indemnitee pursuant to the contest provisions of this Section 7.1 unless there shall have been a change in the law (including, without limitation, amendments to statutes or regulations, administrative rulings (excluding private letter rulings and other rulings or materials that may not be relied upon by such Tax Indemnitee as precedent) or court decisions in the applicable jurisdiction) enacted, promulgated or effective after such claim shall have been so previously decided, and such Tax Indemnitee shall have received an opinion of independent tax counsel selected by the Tax Indemnitee Lessee and reasonably satisfactory acceptable to the LesseeIndemnitee, furnished at the Lessee's sole expense, renders to the effect Indemnitee a written opinion that there is a reasonable basis (under the standard set forth in ABA Formal Opinion 85-352 or any successor thereto) for contesting such change is favorable claim. Notwithstanding the foregoing, (X) Lessee shall not be permitted to the position which such Tax Indemnitee or the Lessee, as the case may be, had asserted in such previous contest and as a result of such change, it is more likely than not that the Tax Indemnitee will prevail or, in the event name of an appeal the Indemnitee if such contest involves Taxes based on or measured by the gross or net income of an adverse court or administrative agency decisionthe Indemnitee and, provided, that if the Indemnitee determines in good faith that it is more reasonably likely than not that an appellate court such contest may have a material adverse impact on the Indemnitee, such Indemnitee may retain or an administrative agency tribunal or decision making body with appellate jurisdiction, as the case may be, will reverse or substantially modify the adverse determination. Notwithstanding anything contained in this Section 7.1, a Tax Indemnitee will not be required to contest the imposition reassert control of any Tax and shall contest Lessee would otherwise be permitted to contest, and (Y) if any Indemnitee shall release, waive, compromise or settle or compromise any claim which may be indemnifiable by Lessee pursuant to this Section 6(b) without the written permission of Lessee, Lessee's consent if obligation to indemnify such Tax Indemnitee (A) shall waive its right to indemnity under this Section 7.1 with respect to such Tax claim (and any claim the outcome contest of which is determined based upon materially prejudiced as a result of the outcome of such claim) and (Brelease, waiver, compromise or settlement) shall pay terminate, subject to the this Section 6(b)(iv), and subject to Section 6(b)(iii), such Indemnitee shall repay to Lessee any amount previously paid or advanced by the Lessee pursuant to this Section 7.1 such Indemnitee with respect to such Tax Claimclaim, less any reasonable costs and expenses of plus interest at the Tax Indemnitee prior rate that would have been payable by the relevant taxing authority with respect to such payment in respect a refund of such Tax ClaimTax.
Appears in 2 contracts
Sources: Participation Agreement (Us Airways Inc), Participation Agreement (Us Airways 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 claim is made by any taxing authority against a Tax Indemnitee notice of such proceeding) for any Taxes with respect to which the Lessee may be required to indemnify against hereunder or if a Tax Indemnitee shall determine that any tax Imposition as to which the Lessee may have an indemnity obligation hereunder pursuant to this Section 13.4, or if any Tax Indemnitee shall determine that any Imposition for which the Lessee may have an indemnity obligation pursuant to this Section 13.4 may be payable (a "Tax Claim")payable, then such Tax Indemnitee shall give promptly (and in any event, within twenty (20) days) notify the Lessee written notice of such Tax Claim promptly in writing (but in any event provided that failure to so notify the Lessee within twenty (20) days after its receipt of the written Tax Claim or its determination, as applicable), and shall furnish Lessee with copies of not alter such Tax Claim and all other writings received from the taxing authority to the extent relating to such claim (but failure to so notify the Lessee shall not relieve the Lessee of its obligations hereunder Indemnitee’s rights under this Section 13.4, except to the extent that it effectively such failure precludes or materially adversely affects the ability of the Lessee to conduct a contest of the Tax Claim). The Tax Indemnitee any indemnified Taxes) and shall not pay take any action with respect to such Tax Claim until at least claim, proceeding or Imposition without the written consent of the Lessee (such consent not to be unreasonably withheld or unreasonably delayed) for thirty (30) days after providing the Lessee with receipt of such written noticenotice by the Lessee; provided, unless (a) however, that in the case of any such claim or proceeding, if such Tax Indemnitee is shall be required to do so by law or regulation or to take action prior to the failure to pay end of such thirty (30) day period, such Tax Claim could result Indemnitee shall in a material adverse financialsuch notice to the Lessee, legal so inform the Lessee, and such Tax Indemnitee shall not take any action with respect to such claim, proceeding or other consequence Imposition without the consent of the Lessee (such consent not to be unreasonably withheld or unreasonably delayed) for ten (10) days after the receipt of such notice by the Lessee, unless the Tax Indemnitee and shall be required by law or regulation to take action prior to the end of such ten (b10) in day period. The Lessee shall be entitled for a period of thirty (30) days from receipt of such notice from the written notice described above, Tax Indemnitee (or such shorter period as the Tax Indemnitee has notified the Lessee of such requirement is required by law or such material adverse consequence (such notice however shall not require the disclosure of the Tax Indemnitee's confidential information, as determined in the sole discretion of such Tax Indemnitiee, or the Tax Indemnitee's tax returns, books, or records). If the Lessee shall so request within 30 days after receipt of such notice (or such shorter period as is reasonably specified by regulation for the Tax Indemnitee if any contest of the Tax must be commenced prior to the expiration of 30 dayscommence such contest), then to request in writing that such Tax Indemnitee shall in good faith at Lessee's sole expense contest such Tax or permit the Lessee to contest imposition of such Tax, as at the Lessee’s expense. If (x) such Tax Indemnitee shall elect; provided, however, that to the extent (i) the contest involves only Taxes constituting property taxes, sales taxes, or use taxes, (ii) the contest does not involve any taxes that the Lessee is not required to indemnify the Tax Indemnitee or taxes and other issues relating to a Tax Indemnitee that are unrelated to the transactions contemplated by the Operative Agreements, (iii) the contest can be pursued in the name of the Lessee and independently from any other proceeding involving a Tax Claim liability of a such Tax Indemnitee for which the Lessee has not agreed in writing to indemnify such Tax Indemnitee, and (iv) no Equity Insufficiency Circumstance exists, such contest shall be undertaken by the Lessee at the Lessee's sole expense and the after-tax costs of the Lessor, the Owner Participant, or other Tax Indemnitee shall be reimbursed by the Lessee. Notwithstanding the preceding sentence, if (ay) such contest would involve must be pursued in the name of the Tax Indemnitee, but can be pursued independently from any other type proceeding involving a Tax liability of Tax, any taxes that such Tax Indemnitee for which the Lessee is has not required agreed to indemnify the such Tax Indemnitee or taxes and other issues relating to a Tax Indemnitee which are unrelated to the transactions contemplated by the Operative Agreements, (bz) the Tax Indemnitee so requests, then the 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 the Tax Indemnitee determines in good faith that such contest conducted by the Lessee could have a material adverse impact on such Tax Indemnitee's the business or operations or involve risk of the imposition of criminal liability on a Tax Indemnitee, or (c) an Equity Insufficiency Circumstance exists, then such Tax Indemnitee mayand provides a written explanation to the Lessee of such determination, in its sole discretion, the Tax Indemnitee may elect to control such contest (including selecting or reassert control of the forum for such contest, and determining whether any such contest shall provided, that by taking control of the contest, Lessee acknowledges that it is responsible for the Imposition ultimately determined to be conducted due by (i) paying such Tax under protest or (ii) resisting payment reason of such Tax or (iii) paying such Tax claim, and seeking a refund thereof; provided, howeverfurther, that at such in determining the application of clauses (x) and (y) of the preceding sentence, each Tax Indemnitee's optionIndemnitee shall take any and all reasonable steps to segregate claims for any Taxes for which the Lessee indemnifies hereunder from Taxes for which the Lessee is not obligated to indemnify hereunder, such so that the Lessee can control the contest shall of the former. In all other claims requested to be conducted contested by the Lessee in Lessee, the name Tax Indemnitee shall control the contest of such Tax Indemnitee)claim, acting through counsel reasonably acceptable to the Lessee. In no event shall such Tax Indemnitee be required or the Lessee be permitted to contest (or the Tax Indemnitee required to contest) any claim, (A) if such Tax Indemnitee provides the Lessee with a legal opinion of independent counsel 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 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 an Event of Default has occurred and is continuing, unless the 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 Lessee is obligated to indemnify pursuant to this Section 7.1 unless: (i) the Lessee shall have acknowledged in writing (x) that it is solely responsible for any Indemnified Tax resulting from any contest under its control, (y) its liability to such Tax Indemnitee for all reasonable out of pocket costs, losses and expenses that the Tax Indemnitees may incur hereunder reasonably foreseeable in connection with contesting the Indemnified Tax (including, but not limited to, any reasonable legal, accounting and investigatory fees and disbursements), and (z) its liability for an indemnity payment pursuant to this Section 7.1 as a result of such claim if and to the extent such Tax Indemnitee or the Lessee, as the case may be, shall not prevail in the contest of such claim; provided, however, that the Lessee shall not be required to indemnify for such Taxes to the extent the results of the contest clearly demonstrate that the Tax is not an Indemnified Tax (C) unless the Lessee's conduct of the contest materially prejudiced the Tax Indemnitee; (ii) such Tax Indemnitee shall have received the opinion of independent tax counsel selected by the Tax Indemnitee and reasonably satisfactory to the Lessee and furnished at the Lessee's sole expense, opining that a reasonable basis exists for contesting such claim or, in the event of an appeal of an adverse court or administrative agency decision, that as a result of a change in law or fact it is more likely than not that an appellate court or an administrative agency or decision making body with appellate jurisdiction, as the case may be, will reverse or substantially modify the adverse determination; (iii) the Lessee shall have agreed to pay and shall pay to such Tax Indemnitee on demand (and at no after tax costs to the Lessor, the Owner Participant and any Tax Indemnitee) all reasonable costs out-of-pocket costs, losses and expenses that such Tax Indemnitee may incur in connection with contesting such claim (includingImposition, without limitation, including all reasonable legal legal, accounting and accounting investigatory fees and disbursements); disbursements as well as the Impositions which are the subject of such claim to the extent the contest is unsuccessful, or (ivD) no Lease Default described in Section 14(a), 14(b), 14(c), 14(g) or 14(h) if such contest shall involve the payment of the Lease or a Lease Event of Default shall have occurred and shall have been continuingTax prior to the contest, unless the Lessee shall provide to the Tax Indemnitee an interest-free advance in its sole discretion exercised in good faith allows the Lessee to post a satisfactory bond or other security that does not involve a possibility of a Lien on the Equipment or any portion thereof or on any interest therein, and which bond or other security will be for an amount equal to the sum Imposition that the 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 and claims contested in the name of the Tax Indemnitee in a public forum, no contest shall be required: (IA) unless the costs amount of such contest the potential indemnity (as reasonably estimated by taking into account all similar or logically related claims that have been or could be raised in any audit involving such Tax Indemnitee in good faith) and for which the Taxes which Lessee may be required liable to be indemnified pay an indemnity under this Section 13.4(b)) exceeds $50,000 and (IIB) if such Lease Default or Lease Event of Default involves a payment obligation under an Operative Agreement that is currently not paid in full, the unpaid amount of such obligation, plus the present value of the amounts not yet due pursuant to such obligation; (v) such Tax Indemnitee shall have determined that the action to be taken will not result in any risk of sale, forfeiture or loss of, or the creation of any Lien, or the Lessee shall have or otherwise made a provision to protect the interest of such Tax Indemnitee (in a manner satisfactory to such Tax Indemnitee in its sole discretion), on the Equipment or any portion thereof or any interest therein; (vi) the amount of such claims alone, orunless, if the subject matter thereof shall be of a continuing or recurring nature, when aggregated with substantially identical potential claims with respect to the transactions contemplated requested by the Operative Agreements shall be at least $25,000; (vii) if such contest shall be conducted in a manner requiring the payment or deposit of the claimTax Indemnitee, the Lessee shall have paid the amount required (and at no after-tax costs to the Lessor, the Owner Participant or other Tax Indemnitee); and (viii) there is no risk of imposition of criminal liability or penalties. The Lessee shall cooperate with the Tax Indemnitee in good faith with respect to any contest controlled and conducted by the Tax Indemnitee and the Tax Indemnitee in good faith shall consult with the Lessee regarding the conduct of such contest. A Tax Indemnitee shall not be required to pursue an appeal to the U.S. Supreme Court or the highest court in Canada or Mexico. The Tax Indemnitee shall cooperate with respect to any contest controlled and conducted by the Lessee and the Lessee shall consult with the Tax Indemnitee regarding the conduct of such contest. Notwithstanding anything to the contrary contained in this Section 7.1, no Tax Indemnitee shall be required to contest any claim if the subject matter thereof shall be of a continuing or recurring nature and shall have previously been adversely decided provided to the Tax Indemnitee pursuant to an opinion of counsel selected by the contest provisions of this Section 7.1 unless there shall have been a change Lessee (which may be in-house counsel, except, in the law (includingcase of income taxes indemnified hereunder, without limitation, amendments to statutes or regulations, administrative rulings (excluding private letter rulings and other rulings or materials which opinion shall be that may not be relied upon by such Tax Indemnitee as precedent) or court decisions in the applicable jurisdiction) enacted, promulgated or effective after such claim shall have been so previously decided, and such Tax Indemnitee shall have received an opinion of independent tax counsel selected by the Tax Indemnitee and reasonably satisfactory acceptable to the Lessee, furnished at the Lessee's sole expense, ) 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 effect that such change is favorable 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 position which 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 the Tax Indemnitee is the controlling party and the Lessee 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 the Lessee 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. In addition, the controlling party shall keep the non-controlling party reasonably informed as to the progress of the contest, and shall provide the 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. Each Tax Indemnitee shall supply the Lessee with such information and documents reasonably requested by the Lessee as are necessary or advisable for the Lessee to participate in any action, suit or proceeding to the extent permitted by this Section 13.4(b), and the Lessee shall promptly reimburse such 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 and/or the Guarantors shall 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 each 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 Lessee, as the case may be, had asserted in unless such previous contest and as a result of such change, it is more likely than not that the Tax Indemnitee will prevail or, in the event of an appeal of an adverse court or administrative agency decision, that it is more likely than not that an appellate court or an administrative agency tribunal or decision making body waives its right to be indemnified under this Section 13.4 with appellate jurisdiction, as the case may be, will reverse or substantially modify the adverse determinationrespect to such claim. Notwithstanding anything contained in this Section 7.1herein to the contrary, a Tax Indemnitee will not be required to contest (and the Lessee shall not be permitted to contest) a claim with respect to the imposition of any Tax and shall be permitted to settle or compromise any claim without the Lessee's consent if (i) such Tax Indemnitee (A) shall waive its right to indemnity indemnification under this Section 7.1 13.4 with respect to such Tax claim (and any claim the outcome of which is determined based upon the outcome of such claim) and (B) shall pay to the Lessee any amount previously paid or advanced by the Lessee pursuant to this Section 7.1 with respect to such year or any other taxable year, the contest of which is materially adversely affected as a result of such waiver) or (ii) such Tax Claimis the sole result of a claim of a continuing and consistent nature, less any reasonable costs 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 expenses 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 Tax Indemnitee prior to such payment in respect of such Tax Claimclaim at issue).
Appears in 2 contracts
Sources: Participation Agreement (Regeneron Pharmaceuticals Inc), Participation Agreement (Regeneron Pharmaceuticals Inc)
Contests. If a written claim is made by any taxing authority against a Tax Indemnitee for any Taxes with respect to which the Lessee may be required to indemnify against hereunder or if a Tax Indemnitee shall determine that any tax to which the Lessee may have an indemnity obligation hereunder may be payable (a "Tax Claim"), then such Tax Indemnitee Parent shall give the Lessee prompt written notice of such Tax Claim promptly to Holdings and Member Representative (but and in any event all events, within twenty (20) days after its of the receipt thereof) of the receipt of any written notice by the written Tax Claim Surviving Companies, Parent or its determinationany of Parent’s Affiliates (including, as applicablewithout limitation, the other Holdings Entities), and shall furnish Lessee with copies which involves the assertion of such Tax Claim and all other writings received from any claim, or the taxing authority to the extent commencement of any Action relating to such Taxes in respect of which an indemnification claim may be made by any Parent Indemnitee pursuant to this Agreement (but a “Tax Claim”); provided, that failure to so notify the Lessee comply with such notice provision shall not relieve the Lessee of its obligations hereunder affect Parent’s right to indemnification hereunder, except to the extent that it effectively precludes Holdings and the ability Parent Share Recipients are materially prejudiced thereby. Holdings or Member Representative shall control the contest or resolution of any Tax Claim relating to any income Tax Returns of any Holdings Entity for periods that end on or before the Lessee Closing Date (other than a Tax Claim relating to conduct 280E and which also relates to one or more income Tax Return(s) of Parent or one or more of Parent’s Affiliates, a contest of the “Combined Tax Claim”). The Tax Indemnitee shall not pay such Tax Claim until at least thirty (30) days after providing the Lessee with such written notice, unless (a) the Tax Indemnitee is required to do so by law or regulation or the failure to pay such Tax Claim could result in a material adverse financial, legal or other consequence to the Tax Indemnitee and (b) in the written notice described above, the Tax Indemnitee has notified the Lessee of such requirement or such material adverse consequence (such notice however shall not require the disclosure of the Tax Indemnitee's confidential information, as determined in the sole discretion of such Tax Indemnitiee, or the Tax Indemnitee's tax returns, books, or records). If the Lessee shall so request within 30 days after receipt of such notice (or such shorter period as is reasonably specified by the Tax Indemnitee if any contest of the Tax must be commenced prior to the expiration of 30 days), then such Tax Indemnitee shall in good faith at Lessee's sole expense contest such Tax or permit the Lessee to contest such Tax, as such Tax Indemnitee shall elect; provided, however, that to the extent (i) the contest involves only Taxes constituting property taxesMember Representative or Holdings, sales taxesas applicable, or use taxesshall provide Parent copies of all written correspondence related to such Tax Claim and otherwise keep Parent apprised of all material developments with respect to any Tax Claim, (ii) Holdings or Member Representative shall obtain the contest does prior written consent of Parent (which consent shall not involve be unreasonably withheld, conditioned or delayed) before entering into any taxes that the Lessee is not required settlement of a claim or ceasing to indemnify the Tax Indemnitee or taxes defend such claim, and other issues relating to a Tax Indemnitee that are unrelated to the transactions contemplated by the Operative Agreements, (iii) Parent shall be entitled to participate in the defense of such claim and to employ counsel of its choice for such purpose, the fees and expenses of which separate counsel shall be borne solely by Parent. Parent shall control the contest can be pursued in the name or resolution of the Lessee and independently from any other proceeding involving a Tax Claim of including, without limitation, a Combined Tax Indemnitee for which Lessee has not agreed in writing to indemnify such Tax Indemnitee, and (iv) no Equity Insufficiency Circumstance exists, such contest shall be undertaken by the Lessee at the Lessee's sole expense and the after-tax costs of the Lessor, the Owner Participant, or other Tax Indemnitee shall be reimbursed by the Lessee. Notwithstanding the preceding sentence, if (a) such contest would involve any other type of Tax, any taxes that the Lessee is not required to indemnify the Tax Indemnitee or taxes and other issues relating to a Tax Indemnitee which are unrelated to the transactions contemplated by the Operative Agreements, (b) the Tax Indemnitee determines that such contest conducted by the Lessee could have a material adverse impact on such Tax Indemnitee's business or operations or involve risk of the imposition of criminal liability on a Tax Indemnitee, or (c) an Equity Insufficiency Circumstance exists, then such Tax Indemnitee may, in its sole discretion, control such contest (including selecting the forum for such contest, and determining whether any such contest shall be conducted by (i) paying such Tax under protest or (ii) resisting payment of such Tax or (iii) paying such Tax and seeking a refund thereofClaim; provided, however, that at such Tax Indemnitee's option, such contest shall be conducted by the Lessee in the name of such Tax Indemnitee). In no event shall such Tax Indemnitee be required or the Lessee be permitted to contest any Tax for which the Lessee is obligated to indemnify pursuant to this Section 7.1 unless: (i) the Lessee Parent shall have acknowledged in writing (x) that it is solely responsible for any Indemnified Tax resulting from any contest under its control, (y) its liability provide Member Representative copies of all written correspondence related to such Tax Indemnitee for Claim and otherwise keep Member Representative apprised of all reasonable out of pocket costs, losses and expenses that the Tax Indemnitees may incur in connection with contesting the Indemnified Tax (including, but not limited to, any reasonable legal, accounting and investigatory fees and disbursements), and (z) its liability for an indemnity payment pursuant to this Section 7.1 as a result of such claim if and to the extent such Tax Indemnitee or the Lessee, as the case may be, shall not prevail in the contest of such claim; provided, however, that the Lessee shall not be required to indemnify for such Taxes to the extent the results of the contest clearly demonstrate that the Tax is not an Indemnified Tax unless the Lessee's conduct of the contest materially prejudiced the Tax Indemnitee; (ii) such Tax Indemnitee shall have received the opinion of independent tax counsel selected by the Tax Indemnitee and reasonably satisfactory to the Lessee and furnished at the Lessee's sole expense, opining that a reasonable basis exists for contesting such claim or, in the event of an appeal of an adverse court or administrative agency decision, that as a result of a change in law or fact it is more likely than not that an appellate court or an administrative agency or decision making body with appellate jurisdiction, as the case may be, will reverse or substantially modify the adverse determination; (iii) the Lessee shall have agreed to pay such Tax Indemnitee on demand (and at no after tax costs to the Lessor, the Owner Participant and any Tax Indemnitee) all reasonable costs and expenses that such Tax Indemnitee may incur in connection with contesting such claim (including, without limitation, all reasonable legal and accounting fees and disbursements); (iv) no Lease Default described in Section 14(a), 14(b), 14(c), 14(g) or 14(h) of the Lease or a Lease Event of Default shall have occurred and shall have been continuing, unless the Tax Indemnitee in its sole discretion exercised in good faith allows the Lessee to post a satisfactory bond or other security that does not involve a possibility of a Lien on the Equipment or any portion thereof or on any interest therein, and which bond or other security will be for an amount equal to the sum of (I) the costs of such contest (as reasonably estimated by such Tax Indemnitee in good faith) and the Taxes which may be required to be indemnified and (II) if such Lease Default or Lease Event of Default involves a payment obligation under an Operative Agreement that is currently not paid in full, the unpaid amount of such obligation, plus the present value of the amounts not yet due pursuant to such obligation; (v) such Tax Indemnitee shall have determined that the action to be taken will not result in any risk of sale, forfeiture or loss of, or the creation of any Lien, or the Lessee shall have or otherwise made a provision to protect the interest of such Tax Indemnitee (in a manner satisfactory to such Tax Indemnitee in its sole discretion), on the Equipment or any portion thereof or any interest therein; (vi) the amount of such claims alone, or, if the subject matter thereof shall be of a continuing or recurring nature, when aggregated with substantially identical potential claims with respect to the transactions contemplated by the Operative Agreements shall be at least $25,000; (vii) if such contest shall be conducted in a manner requiring the payment or deposit of the claim, the Lessee shall have paid the amount required (and at no after-tax costs to the Lessor, the Owner Participant or other Tax Indemnitee); and (viii) there is no risk of imposition of criminal liability or penalties. The Lessee shall cooperate with the Tax Indemnitee in good faith material developments with respect to any contest controlled and conducted by Tax Claim, (ii) Parent shall obtain the Tax Indemnitee and the Tax Indemnitee in good faith shall consult with the Lessee regarding the conduct prior written consent of such contest. A Tax Indemnitee Member Representative (which consent shall not be required unreasonably withheld, conditioned or delayed) before entering into any settlement of a claim or ceasing to pursue an appeal defend such claim, and (iii) Holdings or Member Representative shall be entitled to participate in the U.S. Supreme Court or the highest court in Canada or Mexico. The Tax Indemnitee shall cooperate with respect to any contest controlled and conducted by the Lessee and the Lessee shall consult with the Tax Indemnitee regarding the conduct defense of such contest. Notwithstanding anything claim and to employ counsel of its choice for such purpose, the contrary contained in this Section 7.1, no Tax Indemnitee shall be required to contest any claim if the subject matter thereof shall be of a continuing or recurring nature and shall have previously been adversely decided to the Tax Indemnitee pursuant to the contest provisions of this Section 7.1 unless there shall have been a change in the law (including, without limitation, amendments to statutes or regulations, administrative rulings (excluding private letter rulings and other rulings or materials that may not be relied upon by such Tax Indemnitee as precedent) or court decisions in the applicable jurisdiction) enacted, promulgated or effective after such claim shall have been so previously decided, and such Tax Indemnitee shall have received an opinion of independent tax counsel selected by the Tax Indemnitee and reasonably satisfactory to the Lessee, furnished at the Lessee's sole expense, to the effect that such change is favorable to the position which such Tax Indemnitee or the Lessee, as the case may be, had asserted in such previous contest and as a result of such change, it is more likely than not that the Tax Indemnitee will prevail or, in the event of an appeal of an adverse court or administrative agency decision, that it is more likely than not that an appellate court or an administrative agency tribunal or decision making body with appellate jurisdiction, as the case may be, will reverse or substantially modify the adverse determination. Notwithstanding anything contained in this Section 7.1, a Tax Indemnitee will not be required to contest the imposition of any Tax and shall be permitted to settle or compromise any claim without the Lessee's consent if such Tax Indemnitee (A) shall waive its right to indemnity under this Section 7.1 with respect to such Tax (and any claim the outcome of which is determined based upon the outcome of such claim) and (B) shall pay to the Lessee any amount previously paid or advanced by the Lessee pursuant to this Section 7.1 with respect to such Tax Claim, less any reasonable costs fees and expenses of the Tax Indemnitee prior to such payment in respect of such Tax Claimwhich separate counsel shall be borne solely by Holdings.
Appears in 2 contracts
Sources: Merger Agreement (Vireo Growth Inc.), Merger Agreement (Vireo Growth 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 claim is made by any taxing authority against a Tax Indemnitee notice of such proceeding) for any Taxes with respect to which the Lessee may be required to indemnify against hereunder or if a Tax Indemnitee shall determine that any tax Imposition as to which the Lessee may have an indemnity obligation hereunder pursuant to this Section ------- 26.5, or if any Tax Indemnitee shall determine that any Imposition to which ---- the Lessee may have an indemnity obligation pursuant to this Section 26.5 ------------ may be payable (a "Tax Claim")payable, then such Tax Indemnitee shall give promptly (and in any event, within 30 days) notify the Lessee written notice of such Tax Claim promptly in writing (but in any event within twenty (20) days after its receipt of the written Tax Claim or its determination, as applicable), and shall furnish Lessee with copies of such Tax Claim and all other writings received from the taxing authority to the extent relating to such claim (but provided that failure to so -------- notify the Lessee within 30 days shall not relieve the Lessee of its obligations hereunder alter such Tax Indemnitee's rights under this Section 26.5 except to the extent that it effectively such failure precludes ------------ or materially adversely affects the ability of the Lessee 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 Lessee (such consent not to be unreasonably withheld or unreasonably delayed) for 30 days after the receipt of such notice by the Lessee; provided, however, -------- ------- that in the case of any such claim or proceeding, if such Tax Claim). The Indemnitee shall be required by law or regulation to take action prior to the end of such 30-day period, such Tax Indemnitee shall in such notice to the Lessee, so inform the Lessee, and such Tax Indemnitee shall not pay take any action with respect to such Tax Claim until at least thirty claim, proceeding or Imposition without the consent of the Lessee (30such consent not to be unreasonably withheld or unreasonably delayed) for 10 days after providing the receipt of such notice by the Lessee with such written notice, unless (a) the Tax Indemnitee is shall be required to do so by law or regulation or to take action prior to the failure to pay end of such Tax Claim could result in 10-day period. The Lessee shall be entitled for a material adverse financial, legal or other consequence to period of 30 days from receipt of such notice from the Tax Indemnitee and (b) in the written notice described above, or such shorter period as the Tax Indemnitee has notified the Lessee of such requirement is required by law or such material adverse consequence (such notice however shall not require the disclosure of the Tax Indemnitee's confidential information, as determined in the sole discretion of such Tax Indemnitiee, or the Tax Indemnitee's tax returns, books, or records). If the Lessee shall so request within 30 days after receipt of such notice (or such shorter period as is reasonably specified by regulation for the Tax Indemnitee if any contest of the Tax must be commenced prior to the expiration of 30 dayscommence such contest), then to request in writing that such Tax Indemnitee shall in good faith at Lessee's sole expense contest such Tax or permit the Lessee to contest imposition of such Tax, as at the Lessee's expense. If (x) such Tax Indemnitee shall elect; provided, however, that to the extent (i) the contest involves only Taxes constituting property taxes, sales taxes, or use taxes, (ii) the contest does not involve any taxes that the Lessee is not required to indemnify the Tax Indemnitee or taxes and other issues relating to a Tax Indemnitee that are unrelated to the transactions contemplated by the Operative Agreements, (iii) the contest can be pursued in the name of the Lessee and independently from any other proceeding involving a Tax Claim liability of a such Tax Indemnitee for which the Lessee has not agreed in writing to indemnify such Tax Indemnitee, and (iv) no Equity Insufficiency Circumstance exists, such contest shall be undertaken by the Lessee at the Lessee's sole expense and the after-tax costs of the Lessor, the Owner Participant, or other Tax Indemnitee shall be reimbursed by the Lessee. Notwithstanding the preceding sentence, if (ay) such contest would involve must be pursued in the name of the Tax Indemnitee, but can be pursued independently from any other type proceeding involving a Tax liability of Tax, any taxes that such Tax Indemnitee for which the Lessee is has not required agreed to indemnify the such Tax Indemnitee or taxes and other issues relating to a Tax Indemnitee which are unrelated to the transactions contemplated by the Operative Agreements, (bz) the Tax Indemnitee so requests, then the Lessee shall be permitted to control the contest of such claim, provided that in the case of a contest described in clause (y), if -------- ---------- the Tax Indemnitee determines in good faith that such contest conducted by the Lessee could have a material adverse impact on such Tax Indemnitee's the business or operations or involve risk of the imposition of criminal liability on a Tax Indemnitee, or (c) an Equity Insufficiency Circumstance exists, then such Tax Indemnitee mayand provides a written explanation to the Lessee of such determination, in its sole discretion, the Tax Indemnitee may elect to control such contest (including selecting or reassert control of the forum for such contest, and determining whether any such contest shall provided, that by taking control of the contest, Lessee -------- acknowledges that it is responsible for the Imposition ultimately determined to be conducted due by (i) paying such Tax under protest or (ii) resisting payment reason of such Tax or (iii) paying such Tax claim, and seeking a refund thereof; provided, howeverfurther, that at such -------- ------- in determining the application of clauses (x) and (y) of the preceding ----------- --- sentence, each Tax Indemnitee's optionIndemnitee shall take any and all reasonable steps to segregate claims for any Taxes for which the Lessee indemnifies hereunder from Taxes for which the Lessee is not obligated to indemnify hereunder, such so that the Lessee can control the contest shall of the former. In all other claims requested to be conducted contested by the Lessee in Lessee, the name Tax Indemnitee shall control the contest of such Tax Indemnitee)claim, acting through counsel reasonably acceptable to the Lessee. In no event shall such Tax Indemnitee be required or the Lessee be permitted to contest (or the Tax Indemnitee required to contest) any claim, (A) if such Tax Indemnitee provides the Lessee with a legal opinion of counsel reasonably acceptable to the 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 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 an Event of Default has occurred and is continuing unless the 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 Lessee is obligated to indemnify pursuant to this Section 7.1 unless: (i) the Lessee shall have acknowledged in writing (x) that it is solely responsible for any Indemnified Tax resulting from any contest under its control, (y) its liability to such Tax Indemnitee for all reasonable out of pocket costs, losses and expenses that the Tax Indemnitees may incur hereunder reasonably foreseeable in connection with contesting the Indemnified Tax (including, but not limited to, any reasonable legal, accounting and investigatory fees and disbursements), and (z) its liability for an indemnity payment pursuant to this Section 7.1 as a result of such claim if and to the extent such Tax Indemnitee or the Lessee, as the case may be, shall not prevail in the contest of such claim; provided, however, that the Lessee shall not be required to indemnify for such Taxes to the extent the results of the contest clearly demonstrate that the Tax is not an Indemnified Tax (C) unless the Lessee's conduct of the contest materially prejudiced the Tax Indemnitee; (ii) such Tax Indemnitee shall have received the opinion of independent tax counsel selected by the Tax Indemnitee and reasonably satisfactory to the Lessee and furnished at the Lessee's sole expense, opining that a reasonable basis exists for contesting such claim or, in the event of an appeal of an adverse court or administrative agency decision, that as a result of a change in law or fact it is more likely than not that an appellate court or an administrative agency or decision making body with appellate jurisdiction, as the case may be, will reverse or substantially modify the adverse determination; (iii) the Lessee shall have agreed to pay and shall pay, to such Tax Indemnitee on within ten (10) Business Days after demand (and at no after tax costs to the Lessor, the Owner Participant and any Tax Indemnitee) all reasonable costs out-of-pocket costs, losses and expenses that such Tax Indemnitee may incur in connection with contesting such claim (including, without limitation, Imposition including all reasonable legal legal, accounting and accounting investigatory fees and disbursements); , or (ivD) no Lease Default described in Section 14(a), 14(b), 14(c), 14(g) or 14(h) if such contest shall involve the payment of the Lease or a Lease Event of Default shall have occurred and shall have been continuingTax prior to the contest, unless the Lessee shall provide to the Tax Indemnitee an interest-free advance in its sole discretion exercised in good faith allows the Lessee to post a satisfactory bond or other security that does not involve a possibility of a Lien on the Equipment or any portion thereof or on any interest therein, and which bond or other security will be for an amount equal to the sum Imposition that the Indemnitee is required to pay (with no additional net after-tax costs to such Tax Indemnitee). In addition for Tax Indemnitee controlled contests and claims contested in the name of the Tax Indemnitee in a public forum, no contest shall be required: (IA) unless the costs amount of such contest the potential indemnity (as reasonably estimated by taking into account all similar or logically related claims that have been or could be raised in any audit involving such Tax Indemnitee in good faith) and for which the Taxes which Lessee may be required liable to be indemnified pay an indemnity under this Section ------- 26.5(b)) exceeds $500,000 and (IIB) if such Lease Default or Lease Event of Default involves a payment obligation under an Operative Agreement that is currently not paid in full, the unpaid amount of such obligation, plus the present value of the amounts not yet due pursuant to such obligation; (v) such Tax Indemnitee shall have determined that the action to be taken will not result in any risk of sale, forfeiture or loss of, or the creation of any Lien, or the Lessee shall have or otherwise made a provision to protect the interest of such Tax Indemnitee (in a manner satisfactory to such Tax Indemnitee in its sole discretion), on the Equipment or any portion thereof or any interest therein; (vi) the amount of such claims alone, orunless, if the subject matter thereof shall be of a continuing or recurring nature, when aggregated with substantially identical potential claims with respect to the transactions contemplated requested by the Operative Agreements shall be at least $25,000; (vii) if such contest shall be conducted in a manner requiring the payment or deposit of the claimTax ------- Indemnitee, the Lessee shall have paid the amount required (and at no after-tax costs to the Lessor, the Owner Participant or other Tax Indemnitee); and (viii) there is no risk of imposition of criminal liability or penalties. The Lessee shall cooperate with the Tax Indemnitee in good faith with respect to any contest controlled and conducted by the Tax Indemnitee and the Tax Indemnitee in good faith shall consult with the Lessee regarding the conduct of such contest. A Tax Indemnitee shall not be required to pursue an appeal to the U.S. Supreme Court or the highest court in Canada or Mexico. The Tax Indemnitee shall cooperate with respect to any contest controlled and conducted by the Lessee and the Lessee shall consult with the Tax Indemnitee regarding the conduct of such contest. Notwithstanding anything to the contrary contained in this Section 7.1, no Tax Indemnitee shall be required to contest any claim if the subject matter thereof shall be of a continuing or recurring nature and shall have previously been adversely decided provided to the Tax Indemnitee pursuant to an opinion of counsel selected by the contest provisions of this Section 7.1 unless there shall have been a change Lessee (which may be in-house counsel) (except, in the law (including, without limitation, amendments to statutes or regulations, administrative rulings (excluding private letter rulings and other rulings or materials that may not case of income taxes indemnified hereunder which shall be relied upon by such Tax Indemnitee as precedent) or court decisions in the applicable jurisdiction) enacted, promulgated or effective after such claim shall have been so previously decided, and such Tax Indemnitee shall have received an opinion of independent tax counsel selected by the Tax Indemnitee and reasonably satisfactory acceptable to the 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 judgement, furnished provided, however, that if the Tax Indemnitee is the controlling party and -------- ------- the Lessee 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 the Lessee 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. 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. Each Tax Indemnitee shall at the Lessee's sole expenseexpense supply the Lessee with such information and documents reasonably requested by the Lessee as are necessary or advisable for the Lessee to participate in any action, suit or proceeding to the effect that such change is favorable extent permitted by this Section 26.5(b). No Tax --------------- Indemnitee shall enter into any settlement or other compromise or fail to the position which such Tax Indemnitee or the Lessee, as the case may be, had asserted in such previous contest and as a result of such change, it is more likely than not that the Tax Indemnitee will prevail or, in the event of an appeal of an adverse court or administrative agency decision, that it is more likely than not that an appellate court or an administrative agency tribunal or decision making body ruling with appellate jurisdiction, as the case may be, will reverse or substantially modify the adverse determination. Notwithstanding anything contained in this Section 7.1, a Tax Indemnitee will not be required respect to contest the imposition of any Tax and shall be permitted to settle or compromise any claim without the Lessee's consent if such Tax Indemnitee (A) shall waive its right which is entitled to indemnity be indemnified under this Section 7.1 26.5 (and with respect to such Tax (and any claim the outcome of which contest is determined based upon the outcome of such claim) and (B) shall pay to the Lessee any amount previously paid or advanced by the Lessee pursuant to ------------ required under this Section 7.1 with respect to such Tax Claim, less any reasonable costs and expenses of 26.5(b)) without the Tax Indemnitee prior to such payment in respect of such Tax Claim.---------------
Appears in 2 contracts
Sources: Lease (Brookdale Living Communities Inc), Lease (Brookdale Living Communities 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 claim is made by any taxing authority against a Tax Indemnitee notice of such proceeding) for any Taxes with respect to which the Lessee may be required to indemnify against hereunder or if a Tax Indemnitee shall determine that any tax Imposition as to which the Lessee may have an indemnity obligation hereunder pursuant to this Section 26.5, or if any Tax Indemnitee shall determine that any Imposition to which the Lessee may have an indemnity obligation pursuant to this Section 26.5 may be payable (a "Tax Claim")payable, then such Tax Indemnitee shall give promptly (and in any event, within 30 days) notify the Lessee written notice of such Tax Claim promptly in writing (but in any event within twenty (20) days after its receipt of the written Tax Claim or its determination, as applicable), and shall furnish Lessee with copies of such Tax Claim and all other writings received from the taxing authority to the extent relating to such claim (but provided that failure to so notify the Lessee within 30 days shall not relieve the Lessee of its obligations hereunder alter such Tax Indemnitee's rights under this Section 26.5 except to the extent that it effectively such failure precludes or materially adversely affects the ability of the Lessee 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 Lessee (such consent not to be unreasonably withheld or unreasonably delayed) for 30 days after the receipt of such notice by the Lessee; provided, however, that in the case of any such claim or proceeding, if such Tax Claim). The Indemnitee shall be required by law or regulation to take action prior to the end of such 30-day period, such Tax Indemnitee shall in such notice to the Lessee, so inform the Lessee, and such Tax Indemnitee shall not pay take any action with respect to such Tax Claim until at least thirty claim, proceeding or Imposition without the consent of the Lessee (30such consent not to be unreasonably withheld or unreasonably delayed) for 10 days after providing the receipt of such notice by the Lessee with such written notice, unless (a) the Tax Indemnitee is shall be required to do so by law or regulation or to take action prior to the failure to pay end of such Tax Claim could result in 10-day period. The Lessee shall be entitled for a material adverse financial, legal or other consequence to period of 30 days from receipt of such notice from the Tax Indemnitee and (b) in the written notice described above, or such shorter period as the Tax Indemnitee has notified the Lessee of such requirement is required by law or such material adverse consequence (such notice however shall not require the disclosure of the Tax Indemnitee's confidential information, as determined in the sole discretion of such Tax Indemnitiee, or the Tax Indemnitee's tax returns, books, or records). If the Lessee shall so request within 30 days after receipt of such notice (or such shorter period as is reasonably specified by regulation for the Tax Indemnitee if any contest of the Tax must be commenced prior to the expiration of 30 dayscommence such contest), then to request in writing that such Tax Indemnitee shall in good faith at Lessee's sole expense contest such Tax or permit the Lessee to contest imposition of such Tax, as at the Lessee's expense. If (x) such Tax Indemnitee shall elect; provided, however, that to the extent (i) the contest involves only Taxes constituting property taxes, sales taxes, or use taxes, (ii) the contest does not involve any taxes that the Lessee is not required to indemnify the Tax Indemnitee or taxes and other issues relating to a Tax Indemnitee that are unrelated to the transactions contemplated by the Operative Agreements, (iii) the contest can be pursued in the name of the Lessee and independently from any other proceeding involving a Tax Claim liability of a such Tax Indemnitee for which the Lessee has not agreed in writing to indemnify such Tax Indemnitee, and (iv) no Equity Insufficiency Circumstance exists, such contest shall be undertaken by the Lessee at the Lessee's sole expense and the after-tax costs of the Lessor, the Owner Participant, or other Tax Indemnitee shall be reimbursed by the Lessee. Notwithstanding the preceding sentence, if (ay) such contest would involve must be pursued in the name of the Tax Indemnitee, but can be pursued independently from any other type proceeding involving a Tax liability of Tax, any taxes that such Tax Indemnitee for which the Lessee is has not required agreed to indemnify the such Tax Indemnitee or taxes and other issues relating to a Tax Indemnitee which are unrelated to the transactions contemplated by the Operative Agreements, (bz) the Tax Indemnitee so requests, then the Lessee shall be permitted to control the contest of such claim, provided that in the case of a contest described in clause (y), if the Tax Indemnitee determines in good faith that such contest conducted by the Lessee could have a material adverse impact on such Tax Indemnitee's the business or operations or involve risk of the imposition of criminal liability on a Tax Indemnitee, or (c) an Equity Insufficiency Circumstance exists, then such Tax Indemnitee mayand provides a written explanation to the Lessee of such determination, in its sole discretion, the Tax Indemnitee may elect to control such contest (including selecting or reassert control of the forum for such contest, and determining whether any such contest shall provided, that by taking control of the contest, Lessee acknowledges that it is responsible for the Imposition ultimately determined to be conducted due by (i) paying such Tax under protest or (ii) resisting payment reason of such Tax or (iii) paying such Tax claim, and seeking a refund thereof; provided, howeverfurther, that at such in determining the application of clauses (x) and (y) of the preceding sentence, each Tax Indemnitee's optionIndemnitee shall take any and all reasonable steps to segregate claims for any Taxes for which the Lessee indemnifies hereunder from Taxes for which the Lessee is not obligated to indemnify hereunder, such so that the Lessee can control the contest shall of the former. In all other claims requested to be conducted contested by the Lessee in Lessee, the name Tax Indemnitee shall control the contest of such Tax Indemnitee)claim, acting through counsel reasonably acceptable to the Lessee. In no event shall such Tax Indemnitee be required or the Lessee be permitted to contest (or the Tax Indemnitee required to contest) any claim, (A) if such Tax Indemnitee provides the Lessee with a legal opinion of counsel reasonably acceptable to the 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 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 an Event of Default has occurred and is continuing unless the 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 Lessee is obligated to indemnify pursuant to this Section 7.1 unless: (i) the Lessee shall have acknowledged in writing (x) that it is solely responsible for any Indemnified Tax resulting from any contest under its control, (y) its liability to such Tax Indemnitee for all reasonable out of pocket costs, losses and expenses that the Tax Indemnitees may incur hereunder reasonably foreseeable in connection with contesting the Indemnified Tax (including, but not limited to, any reasonable legal, accounting and investigatory fees and disbursements), and (z) its liability for an indemnity payment pursuant to this Section 7.1 as a result of such claim if and to the extent such Tax Indemnitee or the Lessee, as the case may be, shall not prevail in the contest of such claim; provided, however, that the Lessee shall not be required to indemnify for such Taxes to the extent the results of the contest clearly demonstrate that the Tax is not an Indemnified Tax (C) unless the Lessee's conduct of the contest materially prejudiced the Tax Indemnitee; (ii) such Tax Indemnitee shall have received the opinion of independent tax counsel selected by the Tax Indemnitee and reasonably satisfactory to the Lessee and furnished at the Lessee's sole expense, opining that a reasonable basis exists for contesting such claim or, in the event of an appeal of an adverse court or administrative agency decision, that as a result of a change in law or fact it is more likely than not that an appellate court or an administrative agency or decision making body with appellate jurisdiction, as the case may be, will reverse or substantially modify the adverse determination; (iii) the Lessee shall have agreed to pay and shall pay, to such Tax Indemnitee on within ten (10) Business Days after demand (and at no after tax costs to the Lessor, the Owner Participant and any Tax Indemnitee) all reasonable costs out-of-pocket costs, losses and expenses that such Tax Indemnitee may incur in connection with contesting such claim (including, without limitation, Imposition including all reasonable legal legal, accounting and accounting investigatory fees and disbursements); , or (ivD) no Lease Default described in Section 14(a), 14(b), 14(c), 14(g) or 14(h) if such contest shall involve the payment of the Lease or a Lease Event of Default shall have occurred and shall have been continuingTax prior to the contest, unless the Lessee shall provide to the Tax Indemnitee an interest-free advance in its sole discretion exercised in good faith allows the Lessee to post a satisfactory bond or other security that does not involve a possibility of a Lien on the Equipment or any portion thereof or on any interest therein, and which bond or other security will be for an amount equal to the sum Imposition that the Indemnitee is required to pay (with no additional net after-tax costs to such Tax Indemnitee). In addition for Tax Indemnitee controlled contests and claims contested in the name of the Tax Indemnitee in a public forum, no contest shall be required: (IA) unless the costs amount of such contest the potential indemnity (as reasonably estimated by taking into account all similar or logically related claims that have been or could be raised in any audit involving such Tax Indemnitee in good faith) and for which the Taxes which Lessee may be required liable to be indemnified pay an indemnity under this Section 26.5(b)) exceeds $500,000 and (IIB) if such Lease Default or Lease Event of Default involves a payment obligation under an Operative Agreement that is currently not paid in full, the unpaid amount of such obligation, plus the present value of the amounts not yet due pursuant to such obligation; (v) such Tax Indemnitee shall have determined that the action to be taken will not result in any risk of sale, forfeiture or loss of, or the creation of any Lien, or the Lessee shall have or otherwise made a provision to protect the interest of such Tax Indemnitee (in a manner satisfactory to such Tax Indemnitee in its sole discretion), on the Equipment or any portion thereof or any interest therein; (vi) the amount of such claims alone, orunless, if the subject matter thereof shall be of a continuing or recurring nature, when aggregated with substantially identical potential claims with respect to the transactions contemplated requested by the Operative Agreements shall be at least $25,000; (vii) if such contest shall be conducted in a manner requiring the payment or deposit of the claimTax Indemnitee, the Lessee shall have paid the amount required (and at no after-tax costs to the Lessor, the Owner Participant or other Tax Indemnitee); and (viii) there is no risk of imposition of criminal liability or penalties. The Lessee shall cooperate with the Tax Indemnitee in good faith with respect to any contest controlled and conducted by the Tax Indemnitee and the Tax Indemnitee in good faith shall consult with the Lessee regarding the conduct of such contest. A Tax Indemnitee shall not be required to pursue an appeal to the U.S. Supreme Court or the highest court in Canada or Mexico. The Tax Indemnitee shall cooperate with respect to any contest controlled and conducted by the Lessee and the Lessee shall consult with the Tax Indemnitee regarding the conduct of such contest. Notwithstanding anything to the contrary contained in this Section 7.1, no Tax Indemnitee shall be required to contest any claim if the subject matter thereof shall be of a continuing or recurring nature and shall have previously been adversely decided provided to the Tax Indemnitee pursuant to an opinion of counsel selected by the contest provisions of this Section 7.1 unless there shall have been a change Lessee (which may be in-house counsel) (except, in the law (including, without limitation, amendments to statutes or regulations, administrative rulings (excluding private letter rulings and other rulings or materials that may not case of income taxes indemnified hereunder which shall be relied upon by such Tax Indemnitee as precedent) or court decisions in the applicable jurisdiction) enacted, promulgated or effective after such claim shall have been so previously decided, and such Tax Indemnitee shall have received an opinion of independent tax counsel selected by the Tax Indemnitee and reasonably satisfactory acceptable to the 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 judgement, furnished provided, however, that if the Tax Indemnitee is the controlling party and the Lessee 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 the Lessee 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. 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. Each Tax Indemnitee shall at the Lessee's sole expenseexpense supply the Lessee with such information and documents reasonably requested by the Lessee as are necessary or advisable for the Lessee to participate in any action, suit or proceeding to the effect that such change extent permitted by this Section 26.5(b). 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 favorable entitled to be indemnified under this Section 26.5 (and with respect to which contest is required under this Section 26.5(b)) without the position which prior written consent of the Lessee, unless such Tax Indemnitee or the Lessee, as the case may be, had asserted in waives its right to be indemnified under this Section 26.5 with respect to such previous contest and as a result of such change, it is more likely than not that the Tax Indemnitee will prevail or, in the event of an appeal of an adverse court or administrative agency decision, that it is more likely than not that an appellate court or an administrative agency tribunal or decision making body with appellate jurisdiction, as the case may be, will reverse or substantially modify the adverse determinationclaim. Notwithstanding anything contained in this Section 7.1herein to the contrary, a Tax Indemnitee will not be required to contest (and the Lessee shall not be permitted to contest) a claim with respect to the imposition of any Tax and shall be permitted to settle or compromise any claim without the Lessee's consent if such Tax Indemnitee (A) shall waive its right to indemnity indemnification under this Section 7.1 26.5 with respect to such Tax claim (and any claim the outcome of which is determined based upon the outcome of such claim) and (B) shall pay to the Lessee any amount previously paid or advanced by the Lessee pursuant to this Section 7.1 with respect to such Tax Claim, less year or any reasonable costs and expenses other taxable year the contest of the Tax Indemnitee prior to such payment in respect which is materially adversely affected as a result of such Tax Claimwaiver).
Appears in 2 contracts
Sources: Lease (Brookdale Living Communities Inc), Lease Agreement (Brookdale Living Communities Inc)
Contests. If a taxing authority makes a written claim is made by any taxing authority against a Tax an Indemnitee for any Taxes Tax with respect to which the Lessee may be is required to indemnify against hereunder or if a Tax hereunder, such Indemnitee shall determine that any tax to which the Lessee may have an indemnity obligation hereunder may be payable (a "Tax Claim"), then such Tax Indemnitee shall promptly give the Lessee written notice of such Tax Claim promptly (but in any event within twenty (20) days after its receipt of the written Tax Claim or its determination, as applicable), and shall furnish Lessee with copies of such Tax Claim and all other writings received from the taxing authority to the extent relating to such claim (but claim. An Indemnitee's failure to so notify the provide such notice to Lessee shall not relieve the Lessee of its diminish Lessee's obligations or such Indemnitee's rights hereunder except to the extent that it effectively such failure precludes the ability of the Lessee to conduct a contest of the Tax Claim). The Tax Indemnitee shall not pay Lessee's and such Tax Claim until at least thirty (30) days after providing the Lessee with such written notice, unless (a) the Tax Indemnitee is required to do so by law or regulation or the failure to pay such Tax Claim could result in a material adverse financial, legal or other consequence to the Tax Indemnitee and (b) in the written notice described above, the Tax Indemnitee has notified the Lessee of such requirement or such material adverse consequence (such notice however shall not require the disclosure of the Tax Indemnitee's confidential information, as determined in the sole discretion of such Tax Indemnitiee, or the Tax Indemnitee's tax returns, books, or records). If the Lessee shall so request within 30 days after receipt of such notice (or such shorter period as is reasonably specified by the Tax Indemnitee if any contest of the Tax must be commenced prior to the expiration of 30 days), then such Tax Indemnitee shall in good faith at Lessee's sole expense contest such Tax or permit the Lessee ability to contest such Tax. If Lessee promptly (and, as in any event, within 15 days of receipt of notice from the Indemnitee) requests the Indemnitee to do so, the Indemnitee shall, at Lessee's expense, contest (or, at the Indemnitee's option, require Lessee to contest in Lessee's name, if permitted by law) the validity, applicability or amount of any such Tax. The Indemnitee shall determine in its sole discretion the forum in which the contest of such Tax Indemnitee shall elect; provided, however, that to the extent be pursued and whether such contest shall be by (i) the contest involves only Taxes constituting property taxesresisting payment thereof, sales taxes, or use taxesif lawful and practicable, (ii) not paying the contest does not involve any taxes that the Lessee same except under protest, if protest is not required to indemnify the Tax Indemnitee necessary or taxes advisable and other issues relating to a Tax Indemnitee that are unrelated to the transactions contemplated by the Operative Agreementsproper, or (iii) if the contest can be pursued payment is made, using reasonable efforts to obtain a refund thereof in appropriate administrative and judicial proceedings. If the name of the Lessee and independently from any other proceeding involving a Tax Claim of a Tax Indemnitee for which Lessee has not agreed in writing to indemnify such Tax Indemnitee, and (iv) no Equity Insufficiency Circumstance exists, such contest shall be undertaken by the Lessee at the Lessee's sole expense and the after-tax costs of the Lessor, the Owner Participant, or other Tax Indemnitee shall be reimbursed by the Lessee. Notwithstanding the preceding sentence, if (a) such contest would involve any other type of Tax, any taxes that the Lessee is not required to indemnify the Tax Indemnitee or taxes and other issues relating to a Tax Indemnitee which are unrelated to the transactions contemplated by the Operative Agreements, (b) the Tax Indemnitee determines that such contest conducted shall be by the Lessee could have a material adverse impact on such Tax Indemnitee's business or operations or involve risk manner described in either of the imposition of criminal liability on a Tax Indemnitee, or (c) an Equity Insufficiency Circumstance exists, then such Tax Indemnitee may, in its sole discretion, control such contest (including selecting the forum for such contest, and determining whether any such contest shall be conducted by (i) paying such Tax under protest or clauses (ii) resisting payment of such Tax or (iii) paying above, Lessee shall advance sufficient funds on an after-tax, interest-free basis to the Indemnitee to make the payment required. If an Indemnitee contests the validity, applicability or amount of any Tax hereunder, Lessee shall have the right to participate in such contest at its own expense, including the right to attend governmental or judicial conferences concerning such claim for Tax and seeking a refund thereof; providedthe right to review and advise the Indemnitee as to all material written submissions to any governmental or other authority relating to the Tax for which indemnification is sought. Notwithstanding the foregoing, however, that at such Tax Indemnitee's option, such contest the Indemnitee shall be conducted by the Lessee in the name of such Tax Indemnitee). In no event shall such Tax Indemnitee only be required or the to contest (and Lessee shall only be permitted to contest contest) any Tax for which the Lessee is obligated to indemnify pursuant to this Section 7.1 unless: if (iA) the Lessee shall have acknowledged in writing (x) that it is solely responsible for any Indemnified Tax resulting from any contest under its control, (y) its liability to such Tax Indemnitee for all reasonable out of pocket costs, losses and expenses that the Tax Indemnitees may incur in connection with contesting the Indemnified Tax (including, but not limited to, any reasonable legal, accounting and investigatory fees and disbursements), and (z) its liability for an indemnity payment pursuant to this Section 7.1 as a result of such claim if and to the extent such Tax Indemnitee or the Lessee, as the case may be, shall not prevail in the contest of such claim; provided, however, that the Lessee shall not be required to indemnify for such Taxes to the extent the results of the contest clearly demonstrate that the Tax is not an Indemnified Tax unless the Lessee's conduct of the contest materially prejudiced the Tax Indemnitee; (ii) such Tax Indemnitee shall have received the opinion of independent tax counsel selected by the Tax Indemnitee and reasonably satisfactory to is of the Lessee and furnished at the Lessee's sole expense, opining opinion that there is a reasonable basis exists for contesting such claim or, the matter in the event of an appeal of an adverse court or administrative agency decision, that as a result of a change in law or fact it is more likely than not that an appellate court or an administrative agency or decision making body with appellate jurisdiction, as the case may be, will reverse or substantially modify the adverse determinationquestion; (iiiB) Lessee has acknowledged in writing its liability to indemnify the Indemnitee with respect to the Tax in question; (C) Lessee shall pay (and shall acknowledge in writing Lessee's liability to pay) the Lessee shall have agreed to pay such Tax Indemnitee on demand (and at no after tax costs to the Lessor, the Owner Participant and any Tax Indemnitee) for all reasonable costs and expenses that incurred by such Tax Indemnitee may incur in connection with contesting such claim (including, without limitation, all costs, expenses, losses, reasonable legal and accounting fees (including fees associated with the Indemnitee's consultation with independent tax counsel as described herein), disbursements, penalties, interest and disbursementsadditions to tax); (ivD) no Lease Default described in Section 14(a), 14(b), 14(c), 14(g) or 14(h) the issue shall not be the same as an issue previously contested hereunder and decided adversely unless independent tax counsel selected by the Indemnitee is of the Lease or a Lease Event of Default shall have occurred and shall have been continuing, unless opinion that the Tax Indemnitee in its sole discretion exercised in good faith allows the Lessee to post a satisfactory bond or other security that does not involve a possibility of a Lien on the Equipment or any portion thereof or on any interest thereinapplicable law has changed, and which bond or other security will be for an amount equal to the sum of (I) the costs of such contest (as reasonably estimated by such Tax Indemnitee in good faith) and the Taxes which may be required to be indemnified and (II) if such Lease Default or Lease Event of Default involves a payment obligation under an Operative Agreement that is currently not paid in full, the unpaid amount of such obligation, plus the present value of the amounts not yet due pursuant to such obligation; (v) such Tax Indemnitee shall have determined that the action to be taken will not result in any risk of sale, forfeiture or loss of, or the creation of any Lien, or the Lessee shall have or otherwise made a provision to protect the interest of such Tax Indemnitee (in a manner satisfactory to such Tax Indemnitee in its sole discretion), on the Equipment or any portion thereof or any interest therein; (viE) the amount of such claims alone, or, if the subject matter thereof shall be of a continuing or recurring nature, when aggregated with substantially identical potential claims with respect to the transactions contemplated by the Operative Agreements shall be Tax at least issue exceeds $25,000; (vii) if such contest shall be conducted in a manner requiring the payment or deposit of the claim, the Lessee shall have paid the amount required (and at no after-tax costs to the Lessor, the Owner Participant or other Tax Indemnitee); and (viii) there is no risk of imposition of criminal liability or penalties. The Lessee shall cooperate with the Tax Indemnitee in good faith with respect to any contest controlled and conducted by the Tax Indemnitee and the Tax Indemnitee in good faith shall consult with the Lessee regarding the conduct of such contest. A Tax Indemnitee shall not be required to pursue an appeal to the U.S. Supreme Court or the highest court in Canada or Mexico. The Tax Indemnitee shall cooperate with respect to any contest controlled and conducted by the Lessee and the Lessee shall consult with the Tax Indemnitee regarding the conduct of such contest. Notwithstanding anything to the contrary contained in this Section 7.1, no Tax Indemnitee shall be required to contest any claim if the subject matter thereof shall be of a continuing or recurring nature and shall have previously been adversely decided to the Tax Indemnitee pursuant to the contest provisions of this Section 7.1 judicial decision unless there shall have been a change in the law (including, without limitation, amendments to statutes or regulations, administrative rulings (excluding private letter rulings and other rulings or materials that may not be relied upon by such Tax Indemnitee as precedent) or court decisions in the applicable jurisdiction) enacted, promulgated or effective after such claim shall have been so previously decided, and such Tax Indemnitee shall have received it receives an opinion of independent tax counsel selected by the Tax such Indemnitee and reasonably satisfactory to the Lessee, furnished at the Lessee's sole expense, to the effect that such change is favorable to the position which such Tax Indemnitee or the Lessee, as the case may be, had asserted in such previous contest and as a result of such change, it is more likely than not that the Tax Indemnitee will prevail or, in the event of an appeal of an adverse court or administrative agency decision, that it is more likely than not that an appellate court such appeal would be successful. Under no circumstances shall the Indemnitee be required to appeal a decision to or an administrative agency tribunal or decision making body with appellate jurisdiction, as request a hearing by the case may be, will reverse or substantially modify the adverse determinationUnited States Supreme Court. Notwithstanding anything contained Nothing in this Section 7.112.5 shall require any Indemnitee to contest, or permit Lessee to contest, a Tax Indemnitee will not be required claim with respect to contest the imposition of any Tax and shall be permitted to settle or compromise any claim without the Lessee's consent if such Tax Indemnitee (A) shall waive its right to indemnity indemnification under this Section 7.1 12.3 with respect to such Tax (and any claim the outcome of which is determined based upon the outcome of such claim) and (B) shall pay to the Lessee any amount previously paid or advanced by the Lessee pursuant to this Section 7.1 with respect to such Tax Claim, less any reasonable costs and expenses of the Tax Indemnitee prior to such payment in respect of such Tax Claim.
Appears in 2 contracts
Sources: Aircraft Lease Agreement (Republic Airways Holdings Inc), Aircraft Lease Agreement (Republic Airways Holdings Inc)
Contests. If a written claim is made by any taxing authority against a Tax Indemnitee for any Taxes with respect to which the Lessee may be required to indemnify against hereunder or if a Tax Indemnitee shall determine that any tax to which the Lessee may have an indemnity obligation hereunder may be payable (a "Tax Claim"), then such Tax Indemnitee shall give the Lessee written notice of such Tax Claim promptly (but in any event within twenty (20) days days) after its receipt of the written Tax Claim or its determination, as applicable)receipt, and shall furnish Lessee with copies of such Tax Claim and all other writings received from the taxing authority to the extent relating to such claim (but failure to so notify the Lessee shall not relieve the Lessee of its obligations hereunder except only to the extent that it effectively precludes the ability of the Lessee to conduct a contest of the Tax Claimclaim). The Tax Indemnitee shall not pay such Tax Claim until at least thirty (30) days after providing the Lessee with such written notice, unless (a) the Tax Indemnitee is required to do so by law or regulation or the failure to pay such Tax Claim could result in a material adverse financial, legal or other consequence to the Tax Indemnitee and (b) in the written notice described above, the Tax Indemnitee has notified the Lessee of such requirement or such material adverse consequence (such notice however shall not require the disclosure of the Tax Indemnitee's confidential information, as determined in the sole discretion of such Tax Indemnitiee, or the Tax Indemnitee's tax returns, books, or records)requirement. If the Lessee shall so request within 30 days after receipt of such notice (or such shorter period as is reasonably specified by the Tax Indemnitee if any contest of the Tax must be commenced prior to the expiration of 30 days)notice, then such Tax Indemnitee shall in good faith at Lessee's sole expense contest such Tax or permit the Lessee to contest such Tax, as such Tax Indemnitee shall elect; provided, however, that to the extent (i) the contest involves only Taxes constituting property taxes, sales taxes, or use taxes, (ii) the contest taxes and does not involve any taxes that the Lessee is not required to indemnify the Tax Indemnitee or taxes and other issues relating to a Tax Indemnitee that which are unrelated to the transactions contemplated by the Operative Agreements, (iii) the contest can be pursued in the name of the Lessee Agreements and independently from any other proceeding involving a Tax Claim of a Tax Indemnitee for which Lessee has not agreed in writing to indemnify such Tax Indemnitee, and (iv) if no Equity Insufficiency Circumstance exists, such contest shall be undertaken by the Lessee at the Lessee's sole expense and the at no-after-tax costs of cost to the Lessor, Lessor or the Owner Participant, or other Tax Indemnitee shall be reimbursed by the Lessee. Notwithstanding the preceding sentence, but if (a) such contest would involve any other type of Tax, Tax or any taxes that the Lessee is not required to indemnify the Tax Indemnitee or taxes and other issues relating to a Tax Indemnitee which are unrelated to the transactions contemplated by the Operative Agreements, (b) the Tax Indemnitee determines that such contest conducted by the Lessee could have a material adverse impact on such Tax Indemnitee's business Agreements or operations or involve risk of the imposition of criminal liability on a Tax Indemnitee, or (c) if an Equity Insufficiency Circumstance exists, then such Tax Indemnitee may, in its sole discretion, control such contest (including selecting the forum for such contest, and determining whether any such contest shall be conducted by (i) paying such Tax under protest or (ii) resisting payment of such Tax or (iii) paying such Tax and seeking a refund thereof; provided, further, however, that at such Tax Indemnitee's option, such contest shall be conducted by the Lessee in the name of such Tax Indemnitee). In no event shall such Tax Indemnitee be required or the Lessee be permitted to contest any Tax for which the Lessee is obligated to indemnify pursuant to this Section 7.1 unless: (i) the Lessee shall have acknowledged in writing (x) that it is solely responsible for any Indemnified Tax resulting from any contest under its control, (y) its liability to such Tax Indemnitee for all reasonable out of pocket costs, losses and expenses that the Tax Indemnitees may incur in connection with contesting the Indemnified Tax (including, but not limited to, any reasonable legal, accounting and investigatory fees and disbursements), and (z) its liability for an indemnity payment pursuant to this Section 7.1 as a result of such claim if and to the extent such Tax Indemnitee or the Lessee, as the case may be, shall not prevail in the contest of such claim; provided, however, that the Lessee shall not be required to indemnify for such Taxes to the extent the results of the contest clearly and unambiguously demonstrate that the Tax is not an Indemnified Tax unless the Lessee's conduct of the contest materially prejudiced the Tax Indemniteeindemnified Tax; (ii) such Tax Indemnitee shall have received the opinion of independent tax counsel selected by the Tax Indemnitee and reasonably satisfactory to the Lessee and furnished at the Lessee's sole expense, opining to the effect that a reasonable basis exists for contesting such claim or, in the event of an appeal of an adverse a court or administrative agency decision, that as a result of a change in law or fact it is more likely than not that an appellate court or an administrative agency or decision making body with appellate jurisdiction, as the case may be, will reverse or substantially modify the adverse determination; (iii) the Lessee shall have agreed to pay such Tax Indemnitee on demand (and at no after tax costs to the Lessor, the Owner Participant and any Tax Indemnitee) all reasonable costs and expenses that such Tax Indemnitee may incur in connection with contesting such claim (including, without limitation, all reasonable legal and accounting fees and disbursements); (iv) no Lease Default described in Section 14(a), 14(b), 14(c), 14(g) or 14(h) of the Lease or a Lease Event of Default shall have occurred and shall have been continuing, unless the Tax Indemnitee in its sole discretion exercised in good faith allows the Lessee to post a satisfactory bond or other security that does not involve a possibility of a Lien on the Equipment or any portion thereof or on any interest therein, and which bond or other security will be for an amount equal to the sum of (I) the costs of such contest (as reasonably estimated by such Tax Indemnitee in good faith) and the Taxes which may be required to be indemnified and (II) if such Lease Default or Lease Event of Default involves a payment obligation under an Operative Agreement that is currently not paid in full, the unpaid amount of such obligation, plus the present value of the amounts not yet due pursuant to such obligation; (v) such Tax Indemnitee shall have determined that the action to be taken will not result in any risk of sale, forfeiture or loss of, or the creation of any Lien, or the Lessee shall have or otherwise made a provision to protect the interest of such Tax Indemnitee (in a manner satisfactory to such Tax Indemnitee in its sole discretion), on the Equipment or any portion thereof or any interest therein; (vi) the amount of such claims alone, or, if the subject matter thereof shall be of a continuing or recurring nature, when aggregated with substantially identical potential claims with respect to the transactions contemplated by the Operative Agreements shall be at least $25,000; (vii) if such contest shall be conducted in a manner requiring the payment or deposit of the claim, the Lessee shall have paid the amount required (and at no after-tax costs to the Lessor, the Owner Participant or other Tax IndemniteeParticipation Agreement (TRLI 2001-1C); and (viii) there is no risk of imposition of criminal liability or penalties. The Lessee shall cooperate with the Tax Indemnitee in good faith with respect to any contest controlled and conducted by the Tax Indemnitee and the Tax Indemnitee in good faith shall consult with the Lessee regarding the conduct of such contest. A Tax Indemnitee shall not be required to pursue an appeal to the U.S. Supreme Court or the highest court in Canada or Mexico. The Tax Indemnitee shall cooperate with respect to any contest controlled and conducted by the Lessee and the Lessee shall consult with the Tax Indemnitee regarding the conduct of such contest. Notwithstanding anything to the contrary contained in this Section 7.1, no Tax Indemnitee shall be required to contest any claim if the subject matter thereof shall be of a continuing or recurring nature and shall have previously been adversely decided to the Tax Indemnitee pursuant to the contest provisions of this Section 7.1 unless there shall have been a change in the law (including, without limitation, amendments to statutes or regulations, administrative rulings (excluding private letter rulings and other rulings or materials that may not be relied upon by such Tax Indemnitee as precedent) or court decisions in the applicable jurisdiction) enacted, promulgated or effective after such claim shall have been so previously decided, and such Tax Indemnitee shall have received an opinion of independent tax counsel selected by the Tax Indemnitee and reasonably satisfactory to the Lessee, furnished at the Lessee's sole expense, to the effect that such change is favorable to the position which such Tax Indemnitee or the Lessee, as the case may be, had asserted in such previous contest and as a result of such change, it is more likely than not that the Tax Indemnitee will prevail or, in the event of an appeal of an adverse court or administrative agency decision, that it is more likely than not that an appellate court or an administrative agency tribunal or decision making body with appellate jurisdiction, as the case may be, will reverse or substantially modify the adverse determination. Notwithstanding anything contained in this Section 7.1, a Tax Indemnitee will not be required to contest the imposition of any Tax and shall be permitted to settle or compromise any claim without the Lessee's consent if such Tax Indemnitee (A) shall waive its right to indemnity under this Section 7.1 with respect to such Tax (and any claim the outcome of which is determined based upon the outcome of such claim) and (B) shall pay to the Lessee any amount previously paid or advanced by the Lessee pursuant to this Section 7.1 with respect to such Tax Claim, less any reasonable costs and expenses of the Tax Indemnitee prior to such payment in respect of such Tax Claim.
Appears in 2 contracts
Sources: Participation Agreement (Trinity Industries Inc), Participation Agreement (Trinity Industries Inc)
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 claim is made by any taxing authority against a Tax Indemnitee notice of such proceeding) for any Taxes with respect as to which the Lessee may be required to indemnify against hereunder or if a Tax Indemnitee shall determine that any tax to which the Lessee may have an indemnity obligation hereunder may be payable (a "Tax Claim")pursuant to Section 19.2, then such Tax Indemnitee shall give the promptly notify Lessee in writing together with all documentation received from a taxing authority. If requested by Lessee in a written notice of request to such Tax Claim promptly Indemnitee within thirty (but in any event within twenty (2030) days after its receipt of the written Tax Claim or its determination, as applicable), and shall furnish Lessee with copies of such Tax Claim and all other writings received from the taxing authority to the extent relating to such claim (but failure to so notify the Lessee shall not relieve the Lessee of its obligations hereunder except to the extent that it effectively precludes the ability of the Lessee to conduct a contest of the Tax Claim). The Tax Indemnitee shall not pay such Tax Claim until at least thirty (30) days after providing the Lessee with such written notice, unless (a) the Tax Indemnitee is required to do so by law or regulation or the failure to pay such Tax Claim could result in a material adverse financial, legal or other consequence to the Tax Indemnitee and (b) in the written notice described above, the Tax Indemnitee has notified the Lessee of such requirement or such material adverse consequence (such notice however shall not require the disclosure of the Tax Indemnitee's confidential information, as determined in the sole discretion of such Tax Indemnitiee, or the Tax Indemnitee's tax returns, books, or records). If the Lessee shall so request within 30 days after receipt of such notice (or such shorter period as is reasonably specified by the Tax Indemnitee if any contest of the Tax must be commenced prior to the expiration of 30 days), then such Tax Indemnitee shall permit Lessee to in good faith at Lessee's sole expense contest such Tax or permit the Lessee to contest such Tax, as such Tax Indemnitee shall elect; provided, however, that to the extent (i) control the contest involves only Taxes constituting property taxes, sales taxes, or use taxes, (ii) the contest does not involve any taxes that the Lessee is not required to indemnify the Tax Indemnitee or taxes and other issues relating to a Tax Indemnitee that are unrelated to the transactions contemplated by the Operative Agreements, (iii) the contest can be pursued in the name of the Lessee and independently from any other proceeding involving a Tax Claim of a Tax Indemnitee for which Lessee has not agreed in writing to indemnify such Tax Indemnitee, and (iv) no Equity Insufficiency Circumstance exists, such contest shall be undertaken by the Lessee at the Lessee's sole expense and the after-tax costs of the Lessor, the Owner Participant, or other Tax Indemnitee shall be reimbursed by the Lessee. Notwithstanding the preceding sentence, if (a) such contest would involve any other type of Tax, any taxes that the Lessee is not required to indemnify the Tax Indemnitee or taxes and other issues relating to a Tax Indemnitee which are unrelated to the transactions contemplated by the Operative Agreements, (b) the Tax Indemnitee determines that such contest conducted by the Lessee could have a material adverse impact on such Tax Indemnitee's business or operations or involve risk of the imposition of criminal liability on a Tax Indemnitee, or (c) an Equity Insufficiency Circumstance exists, then such Tax Indemnitee may, in its sole discretion, control such contest (including selecting the forum for such contest, and determining whether any such contest shall be conducted by (i) paying such Tax under protest or (ii) resisting payment of such Tax or (iii) paying such Tax and seeking a refund thereof; provided, however, that at such Tax Indemnitee's option, such contest shall be conducted by the Lessee in the name of such Tax Indemnitee). In no event shall such Tax Indemnitee be required or the Lessee be permitted to contest any Tax for which the Lessee is obligated to indemnify pursuant to this Section 7.1 unless: (i) the Lessee shall have acknowledged in writing (x) that it is solely responsible for any Indemnified Tax resulting from any contest under its control, (y) its liability to such Tax Indemnitee for all reasonable out of pocket costs, losses and expenses that the Tax Indemnitees may incur in connection with contesting the Indemnified Tax (including, but not limited to, any reasonable legal, accounting and investigatory fees and disbursements), and (z) its liability for an indemnity payment pursuant to this Section 7.1 as a result of such claim if and to the extent such Tax Indemnitee or the Lessee, as the case may be, shall not prevail in the contest of such claim; provided, however, that the Lessee shall not be required to indemnify for such Taxes to the extent the results of the contest clearly demonstrate that the Tax is not an Indemnified Tax unless the Lessee's conduct of the contest materially prejudiced the Tax Indemnitee; (ii) such Tax Indemnitee shall have received the opinion of independent tax counsel selected by the Tax Indemnitee and reasonably satisfactory to the Lessee and furnished at the Lessee's sole expense, opining that a reasonable basis exists for contesting such claim or, in the event of an appeal of an adverse court or administrative agency decision, that as a result of a change in law or fact it is more likely than not that an appellate court or an administrative agency or decision making body with appellate jurisdiction, as the case may be, will reverse or substantially modify the adverse determination; (iii) the Lessee shall have agreed to pay such Tax Indemnitee on demand (and at no after tax costs to the Lessor, the Owner Participant and any Tax Indemnitee) all reasonable costs and expenses that such Tax Indemnitee may incur in connection with contesting such claim (including, without limitation, all reasonable legal by pursuit of appeals and accounting fees and disbursements); (ivadministrative procedures) no Lease Default described except if the Tax in Section 14(a), 14(b), 14(c), 14(g) issue from such claim or 14(h) any set of the Lease similar or a Lease Event of Default shall have occurred and shall have been continuing, unless related claims is less than $10,000 in which case the Tax Indemnitee in its sole discretion exercised may in good faith allows control the contest or elect to have Lessee to post a satisfactory bond or other security that does not involve a possibility of a Lien on control the Equipment or any portion thereof or on any interest thereinsame. If Lessee controls the contest, and which bond or other security will be for an amount equal to the sum of (I) the costs of such contest (as reasonably estimated by such Tax Indemnitee in good faith) and the Taxes which may be required to be indemnified and (II) if such Lease Default or Lease Event of Default involves a payment obligation under an Operative Agreement that is currently not paid in full, the unpaid amount of such obligation, plus the present value of the amounts not yet due pursuant to such obligation; (v) such Tax Indemnitee shall have determined that the action provide to be taken will not result Lessee and its representatives a power of attorney in any risk of sale, forfeiture or loss of, or the creation of any Lien, or the form reasonably satisfactory to Lessee shall have or otherwise made a provision and such other documentation as Lessee may reasonably request to protect the interest pursue such contest on behalf of such Tax Indemnitee (Indemnitee. Lessee shall consult in a manner satisfactory to such good faith with the Tax Indemnitee in its sole discretion), on the Equipment or any portion thereof or any interest therein; (vi) the amount of such claims alone, or, if the subject matter thereof shall be of a continuing or recurring nature, when aggregated with substantially identical potential claims with respect to the transactions contemplated by contest of such claim but the Operative Agreements decisions regarding what actions to be taken shall be at least $25,000; (vii) if such contest shall be conducted made by Lessee in a manner requiring the payment or deposit of the claimits sole judgment. In addition, the Lessee shall have paid the amount required (and at no after-tax costs to the Lessor, the Owner Participant or other Tax Indemnitee); and (viii) there is no risk of imposition of criminal liability or penalties. The Lessee shall cooperate with keep the Tax Indemnitee in good faith with respect reasonably informed as to any contest controlled the progress of the contest, and conducted by shall provide the Tax Indemnitee and with a copy of (or appropriate excerpts from) any reports or claims issued by the Tax Indemnitee relevant auditing agents or taxing authority in good faith shall consult connection with such claim or the Lessee regarding the conduct of such contest. A contest thereof Notwithstanding anything contained in this Section 19.2, a Tax Indemnitee shall not be required to pursue an appeal to the U.S. Supreme Court contest any claim or the highest court in Canada or Mexico. The Tax Indemnitee shall cooperate with respect to any contest controlled and conducted by the permit Lessee and the Lessee shall consult with the Tax Indemnitee regarding the conduct of such contest. Notwithstanding anything to the contrary contained in this Section 7.1, no Tax Indemnitee shall be required to contest any claim if the subject matter thereof shall be of a continuing or recurring nature and shall have previously been adversely decided to the Tax Indemnitee pursuant to the may settle any contest provisions of this Section 7.1 unless there shall have been a change in the law (including, without limitation, amendments to statutes or regulations, administrative rulings (excluding private letter rulings and other rulings or materials that may not be relied upon by such Tax Indemnitee as precedent) or court decisions in the applicable jurisdiction) enacted, promulgated or effective after such claim shall have been so previously decided, and such Tax Indemnitee shall have received an opinion of independent tax counsel selected by the Tax Indemnitee and reasonably satisfactory to the Lessee, furnished at the Lessee's sole expense, to the effect that such change is favorable to the position which such Tax Indemnitee or the Lessee, as the case may be, had asserted in such previous contest and as a result of such change, it is more likely than not that the Tax Indemnitee will prevail or, in the event of an appeal of an adverse court or administrative agency decision, that it is more likely than not that an appellate court or an administrative agency tribunal or decision making body with appellate jurisdiction, as the case may be, will reverse or substantially modify the adverse determination. Notwithstanding anything contained in this Section 7.1, a Tax Indemnitee will not be required to contest the imposition of any Tax and shall be permitted to settle or compromise any claim without the Lessee's consent of Lessee if such Tax Indemnitee (A) shall waive its right to indemnity under this Section 7.1 19.2 with respect to such Tax (and any claim the outcome of which is determined based upon the outcome of for such claim) Tax, and (B) shall pay to the Lessee any amount of Tax previously paid or advanced by the Lessee pursuant to this Section 7.1 with respect to such Tax Claim, less any reasonable 19.2 other than the costs and expenses of the contest of such claim paid by the Lessee, together with interest thereon at the underpayment rate, as defined in Section 6621 of the Code. Notwithstanding any of the foregoing in this Section 19.2(e), Lessee may, at any time and with notice to the Lessor, contest the property taxes, ad valorem taxes and other Impositions for which the Lessee has an obligation to indemnify any Tax Indemnitee prior hereunder. Each Tax Indemnitee shall, upon the Lessee's request provide to Lessee and its representatives a power of attorney in form reasonably satisfactory to Lessee and such payment in other documentation as Lessee may reasonably request to permit Lessee to conduct any such contest. If any Tax Indemnitee or any Affiliate thereof shall obtain a refund (including by way of credit) of all or any part of any Tax with respect to which the Lessee shall have paid on behalf of such Tax ClaimIndemnitee or reimbursed such Tax Indemnitee, then such Tax Indemnitee shall, so long as no Lease Event of Default shall have occurred and be continuing, pay to the Lessee any such refund (including any applicable interest received with respect to such refund or that would have been received with respect to such refund but for a counterclaim or other claim not indemnified by Lessee hereunder) plus any tax savings realized by such Tax Indemnitee as a result of a payment pursuant to this sentence (it being understood that the calculation of such tax savings shall take into account any additional income taxes incurred by such Tax Indemnitee as a result of the receipt or accrual of such refund). The Tax Indemnitee shall make any payments to the Lessee under this Section l9.2 within ten (10) days of the receipt of such refund.
Appears in 1 contract
Sources: Lease Agreement (Griffin Capital Essential Asset REIT II, 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 claim is made by any taxing authority against a Tax Indemnitee notice of such proceeding) for any Taxes with respect Imposition as to which the Lessee may be required have an indemnity obligation pursuant to indemnify against hereunder this SECTION 13.5, or if a any Tax Indemnitee shall determine that any tax to Imposition for which the Lessee may have an indemnity obligation hereunder pursuant to this SECTION 13.5 may be payable (a "Tax Claim")payable, then such Tax Indemnitee shall give the Lessee written notice of such Tax Claim promptly (but and in any event event, within twenty thirty (2030) days after its receipt of the written Tax Claim or its determination, as applicable), and shall furnish days) notify Lessee with copies of such Tax Claim and all other writings received from the taxing authority to the extent relating to such claim in writing (but PROVIDED that failure to so notify the Lessee within thirty (30) days shall not relieve the Lessee of its obligations hereunder alter such Tax Indemnitee's rights under this SECTION 13.5, except to the extent that it effectively such failure precludes or materially adversely affects the ability of the Lessee to conduct a contest of the Tax Claim). The Tax Indemnitee any indemnified Taxes) and shall not pay take any action with respect to such Tax Claim until at least claim, proceeding or Imposition without the written consent of Lessee (such consent not to be unreasonably withheld or unreasonably delayed) for thirty (30) days after providing the Lessee with receipt of such written noticenotice by Lessee; PROVIDED, unless (a) HOWEVER, that in the case of any such claim or proceeding, if such Tax Indemnitee is shall be required to do so by law or regulation or to take action prior to the failure to pay end of such 30-day period, such Tax Claim could result Indemnitee shall in a material adverse financialsuch notice to Lessee, legal or other consequence to the so inform Lessee, and such Tax Indemnitee and (b) in shall not take any action with respect to such claim, proceeding or Imposition without the written notice described above, the Tax Indemnitee has notified the consent of Lessee of such requirement or such material adverse consequence (such notice however shall consent not require the disclosure of the Tax Indemnitee's confidential information, as determined in the sole discretion of such Tax Indemnitiee, to be unreasonably withheld or the Tax Indemnitee's tax returns, books, or records). If the Lessee shall so request within 30 unreasonably delayed) for ten (10) days after the receipt of such notice by Lessee, unless the Tax Indemnitee shall be required by law or regulation to take action prior to the end of such 10-day period, in which case Tax Indemnitee shall promptly notify Lessee. Lessee shall be entitled for a period of thirty (30) days from receipt of such notice from the Tax Indemnitee (or such shorter period as the Indemnitee has notified Lessee is reasonably specified required by law or regulation for the Tax Indemnitee if any contest of the Tax must be commenced prior to the expiration of 30 dayscommence such contest), then to request in writing that such Tax Indemnitee shall in good faith contest such Imposition, at Lessee's sole expense contest expense. If (x) such Tax or permit the Lessee to contest such Tax, as such Tax Indemnitee shall elect; provided, however, that to the extent (i) the contest involves only Taxes constituting property taxes, sales taxes, or use taxes, (ii) the contest does not involve any taxes that the Lessee is not required to indemnify the Tax Indemnitee or taxes and other issues relating to a Tax Indemnitee that are unrelated to the transactions contemplated by the Operative Agreements, (iii) the contest can be pursued in the name of the Lessee and independently from any other proceeding involving a Tax Claim of a Tax Indemnitee an Imposition for which Lessee has not agreed in writing to indemnify such Tax Indemnitee, (y) such contest must be pursued in the name of the Tax Indemnitee, but can be pursued independently from any other proceeding involving an Imposition for which Lessee has not agreed to indemnify such Tax Indemnitee or (z) the Tax Indemnitee so requests, then Lessee shall be permitted to control the contest of such claim PROVIDED, that in order to take control of the contest, Lessee must first acknowledge in writing its obligation to indemnify for the Imposition which is the subject of the contest if the outcome thereof is adverse, and PROVIDED, FURTHER, that in determining the application of CLAUSES (x) and (ivy) no Equity Insufficiency Circumstance exists, such contest shall be undertaken by the Lessee at the Lessee's sole expense and the after-tax costs of the Lessor, the Owner Participant, or other Tax Indemnitee shall be reimbursed by the Lessee. Notwithstanding the preceding sentence, if (a) such contest would involve each Tax Indemnitee shall take any other type of Tax, and all reasonable steps to segregate claims for any taxes that the Taxes for which Lessee indemnifies hereunder from Taxes Lessee is not required obligated to indemnify hereunder, so that Lessee can control the contest of the former. In all other claims requested to be contested by Lessee, the Tax Indemnitee or taxes and other issues relating to a Tax Indemnitee which are unrelated to shall control the transactions contemplated by the Operative Agreements, (b) the Tax Indemnitee determines that such contest conducted by the Lessee could have a material adverse impact on such Tax Indemnitee's business or operations or involve risk of the imposition of criminal liability on a Tax Indemnitee, or (c) an Equity Insufficiency Circumstance exists, then such Tax Indemnitee may, in its sole discretion, control such contest (including selecting the forum for such contest, and determining whether any such contest shall be conducted by (i) paying such Tax under protest or (ii) resisting payment of such Tax or (iii) paying such Tax and seeking a refund thereof; providedclaim, however, that at such Tax Indemnitee's option, such contest shall be conducted by the Lessee in the name of such Tax Indemnitee)acting through counsel reasonably acceptable to Lessee. In no event shall such Tax Indemnitee be required or the Lessee be permitted to contest (or the Tax Indemnitee required to contest) any claim (A) if such Tax for which Indemnitee provides Lessee with a legal opinion of independent counsel that such action, suit or proceeding involves a material risk of imposition of criminal liability or will involve a material risk of the Lessee is obligated to indemnify pursuant to this Section 7.1 unless: sale, forfeiture or loss of, or the creation of any Lien (iother than a Permitted Lien) on the Leased Property or any part thereof unless Lessee shall have acknowledged posted and maintained a bond or other security reasonably satisfactory to the relevant Tax Indemnitee in writing (x) that it is solely responsible for any Indemnified Tax resulting from any contest under its controlrespect to such risk, (yB) its liability if an Event of Default has occurred and is continuing, unless Lessee shall have posted and maintained a bond or other security reasonably satisfactory to the relevant Tax Indemnitee in respect of the Impositions subject to such Tax Indemnitee claim and all expenses for all reasonable out of pocket costs, losses and expenses that the Tax Indemnitees may incur which Lessee is responsible hereunder reasonably foreseeable in connection with contesting the Indemnified Tax (including, but not limited to, any reasonable legal, accounting and investigatory fees and disbursements), and (z) its liability for an indemnity payment pursuant to this Section 7.1 as a result of such claim if and to the extent such Tax Indemnitee or the Lessee, as the case may be, shall not prevail in the contest of such claim; provided, however, that the Lessee shall not be required to indemnify for such Taxes to the extent the results of the contest clearly demonstrate that the Tax is not an Indemnified Tax (C) unless the Lessee's conduct of the contest materially prejudiced the Tax Indemnitee; (ii) such Tax Indemnitee shall have received the opinion of independent tax counsel selected by the Tax Indemnitee and reasonably satisfactory to the Lessee and furnished at the Lessee's sole expense, opining that a reasonable basis exists for contesting such claim or, in the event of an appeal of an adverse court or administrative agency decision, that as a result of a change in law or fact it is more likely than not that an appellate court or an administrative agency or decision making body with appellate jurisdiction, as the case may be, will reverse or substantially modify the adverse determination; (iii) the Lessee shall have agreed to pay and shall pay to such Tax Indemnitee on demand (and at no after tax costs to the Lessor, the Owner Participant and any Tax Indemnitee) all reasonable costs out-of-pocket costs, losses and expenses that such Tax Indemnitee may incur in connection with contesting such claim (includingImposition, without limitation, including all reasonable legal legal, accounting and accounting investigatory fees and disbursements); , or (ivD) no Lease Default described in Section 14(a), 14(b), 14(c), 14(g) or 14(h) if such contest shall involve the payment of the Lease or a Lease Event of Default shall have occurred and shall have been continuingImpositions prior to the contest, unless Lessee shall provide to the Tax Indemnitee an interest-free advance in its sole discretion exercised in good faith allows the Lessee to post a satisfactory bond or other security that does not involve a possibility of a Lien on the Equipment or any portion thereof or on any interest therein, and which bond or other security will be for an amount equal to the sum of (I) Imposition that the costs of such contest (as reasonably estimated by such Tax Indemnitee in good faith) and the Taxes which may be is required to be indemnified and pay (II) if such Lease Default or Lease Event of Default involves a payment obligation under an Operative Agreement that is currently not paid in full, the unpaid amount of such obligation, plus the present value of the amounts not yet due pursuant to such obligation; (v) such Tax Indemnitee shall have determined that the action to be taken will not result in any risk of sale, forfeiture or loss of, or the creation of any Lien, or the Lessee shall have or otherwise made a provision to protect the interest of such Tax Indemnitee (in a manner satisfactory to such Tax Indemnitee in its sole discretion), on the Equipment or any portion thereof or any interest therein; (vi) the amount of such claims alone, or, if the subject matter thereof shall be of a continuing or recurring nature, when aggregated with substantially identical potential claims with respect to the transactions contemplated by the Operative Agreements shall be at least $25,000; (vii) if such contest shall be conducted in a manner requiring the payment or deposit of the claim, the Lessee shall have paid the amount required (and at no additional net after-tax costs (including Taxes) to the Lessor, the Owner Participant or other such Tax Indemnitee); . In addition, for Tax Indemnitee-controlled contests and (viii) there is no risk claims contested in the name of imposition of criminal liability or penalties. The Lessee shall cooperate with the Tax Indemnitee in good faith with respect a public forum, no contest shall be required: (A) 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 such Indemnitee for which Lessee may be liable to any contest controlled pay an indemnity under this SECTION 13.5) exceeds $50,000 and conducted (B) unless, if requested by the Tax Indemnitee and the Tax Indemnitee in good faith Indemnitee, Lessee shall consult with the Lessee regarding the conduct of such contest. A Tax Indemnitee shall not be required to pursue an appeal have provided to the U.S. Supreme Court or Indemnitee an opinion of counsel selected by Lessee (which may be in-house counsel, except that in the highest court in Canada or Mexico. The Tax Indemnitee shall cooperate with respect to any contest controlled and conducted by the Lessee and the Lessee shall consult with the Tax Indemnitee regarding the conduct case of income taxes indemnified hereunder such contest. Notwithstanding anything to the contrary contained in this Section 7.1, no Tax Indemnitee opinion shall be required to contest any claim if the subject matter thereof shall be of a continuing or recurring nature and shall have previously been adversely decided to the Tax Indemnitee pursuant to the contest provisions of this Section 7.1 unless there shall have been a change in the law (including, without limitation, amendments to statutes or regulations, administrative rulings (excluding private letter rulings and other rulings or materials that may not be relied upon by such Tax Indemnitee as precedent) or court decisions in the applicable jurisdiction) enacted, promulgated or effective after such claim shall have been so previously decided, and such Tax Indemnitee shall have received an opinion of independent tax counsel selected by the Tax Indemnitee and reasonably satisfactory acceptable to 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 Lessee, furnished at United States Supreme Court. The party conducting the Lessee's sole expense, contest shall consult in good faith with the other party and its counsel with respect to the effect contest of such claim for 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, HOWEVER, that such change if the Tax Indemnitee is favorable to the position which controlling party and Lessee 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 Lessee 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. 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 agent or taxing authority to the controlling party thereof, in connection with such claim or the Lessee, as the case may be, had asserted in such previous contest and as a result of such change, it is more likely than not that the thereof. Each Tax Indemnitee will prevail orshall supply Lessee with such information and documents reasonably requested by Lessee as are necessary or advisable for Lessee to participate in any action, in suit or proceeding to the event extent permitted by this SECTION 13.5(b), 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 have occurred and be continuing, no Tax Indemnitee shall enter into any settlement or other compromise or fail to appeal of an adverse court or administrative agency decisionruling with respect to any claim which is entitled to be indemnified under this SECTION 13.5 (and with respect to which contest is required under this SECTION 13.5(b)) without the prior written consent of Lessee (such consent not to be unreasonably withheld), that it is more likely than not that an appellate court or an administrative agency tribunal or decision making body unless such Tax Indemnitee waives its right to be indemnified under this SECTION 13.5 with appellate jurisdiction, as the case may be, will reverse or substantially modify the adverse determinationrespect to such claim. Notwithstanding anything contained in this Section 7.1herein to the contrary, a Tax Indemnitee will not be required to contest the imposition of any Tax (and Lessee shall not be permitted to settle or compromise contest) a claim with respect to any claim without the Lessee's consent Imposition if (i) such Tax Indemnitee (A) shall waive its right to indemnity indemnification under this Section 7.1 SECTION 13.5 with respect to such Tax claim (and any claim the outcome of which is determined based upon the outcome of such claim) and (B) shall pay to the Lessee any amount previously paid or advanced by the Lessee pursuant to this Section 7.1 with respect to such year or any other taxable year, the contest of which is 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 Claim, less any reasonable costs Indemnitee (unless a change in law or facts has occurred since such prior adverse resolution and expenses 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 Tax Indemnitee prior to such payment in respect of such Tax Claimclaim at issue).
Appears in 1 contract
Contests. If a In the event Purchaser, Sellers or Tax Parent receives written claim is made by notice of any taxing authority against a Tax Indemnitee for any Taxes with respect to which the Lessee may be required to indemnify against hereunder examination, claim, settlement, proposed adjustment, administrative or if a Tax Indemnitee shall determine that any tax to which the Lessee may have an indemnity obligation hereunder may be payable judicial proceeding, or other matter (a "Tax Claim")) related to any Pre-Closing Taxes, then such Transfer Taxes or Overlap Period Taxes, Purchaser, Sellers or Tax Indemnitee shall give the Lessee written notice of such Tax Claim promptly (but in any event within twenty (20) days after its receipt of the written Tax Claim or its determination, as applicable), and shall furnish Lessee with copies of such Tax Claim and all other writings received from the taxing authority to the extent relating to such claim (but failure to so notify the Lessee shall not relieve the Lessee of its obligations hereunder except to the extent that it effectively precludes the ability of the Lessee to conduct a contest of the Tax Claim). The Tax Indemnitee shall not pay such Tax Claim until at least thirty (30) days after providing the Lessee with such written notice, unless (a) the Tax Indemnitee is required to do so by law or regulation or the failure to pay such Tax Claim could result in a material adverse financial, legal or other consequence to the Tax Indemnitee and (b) in the written notice described above, the Tax Indemnitee has notified the Lessee of such requirement or such material adverse consequence (such notice however shall not require the disclosure of the Tax Indemnitee's confidential information, as determined in the sole discretion of such Tax Indemnitiee, or the Tax Indemnitee's tax returns, books, or records). If the Lessee shall so request within 30 days after receipt of such notice (or such shorter period as is reasonably specified by the Tax Indemnitee if any contest of the Tax must be commenced prior to the expiration of 30 days), then such Tax Indemnitee shall in good faith at Lessee's sole expense contest such Tax or permit the Lessee to contest such Tax, as such Tax Indemnitee shall elect; provided, however, that to the extent (i) the contest involves only Taxes constituting property taxes, sales taxes, or use taxes, (ii) the contest does not involve any taxes that the Lessee is not required to indemnify the Tax Indemnitee or taxes and other issues relating to a Tax Indemnitee that are unrelated to the transactions contemplated by the Operative Agreements, (iii) the contest can be pursued in the name of the Lessee and independently from any other proceeding involving a Tax Claim of a Tax Indemnitee for which Lessee has not agreed in writing to indemnify such Tax Indemnitee, and (iv) no Equity Insufficiency Circumstance exists, such contest shall be undertaken by the Lessee at the Lessee's sole expense and the after-tax costs of the Lessor, the Owner Participant, or other Tax Indemnitee shall be reimbursed by the Lessee. Notwithstanding the preceding sentence, if (a) such contest would involve any other type of Tax, any taxes that the Lessee is not required to indemnify the Tax Indemnitee or taxes and other issues relating to a Tax Indemnitee which are unrelated to the transactions contemplated by the Operative Agreements, (b) the Tax Indemnitee determines that such contest conducted by the Lessee could have a material adverse impact on such Tax Indemnitee's business or operations or involve risk of the imposition of criminal liability on a Tax Indemnitee, or (c) an Equity Insufficiency Circumstance exists, then such Tax Indemnitee may, in its sole discretion, control such contest (including selecting the forum for such contest, and determining whether any such contest shall be conducted by (i) paying such Tax under protest or (ii) resisting payment of such Tax or (iii) paying such Tax and seeking a refund thereof; provided, however, that at such Tax Indemnitee's option, such contest shall be conducted by the Lessee in the name of such Tax Indemnitee). In no event shall such Tax Indemnitee be required or the Lessee be permitted to contest any Tax for which the Lessee is obligated to indemnify pursuant to this Section 7.1 unless: (i) the Lessee shall have acknowledged in writing (x) that it is solely responsible for any Indemnified Tax resulting from any contest under its control, (y) its liability to such Tax Indemnitee for all reasonable out of pocket costs, losses and expenses that the Tax Indemnitees may incur in connection with contesting the Indemnified Tax (including, but not limited to, any reasonable legal, accounting and investigatory fees and disbursements), and (z) its liability for an indemnity payment pursuant to this Section 7.1 as a result of such claim if and to the extent such Tax Indemnitee or the LesseeParent, as the case may be, shall not prevail notify the other Parties in the contest writing as soon as reasonably practical (but in no event more than ten (10) Business Days) after receipt of such claim; providednotice. If either Seller or Tax Parent notify Purchaser in writing within thirty (30) Business Days following receipt of such written notice they intend to exercise their rights pursuant to this Section 8.7, howeverthey shall be entitled to control the defense, that prosecution, settlement or compromise of such Tax Claim, at their own expense. Purchaser shall take such action in contesting such Tax Claim as Sellers or Tax Parent shall reasonably request from time to time, including the Lessee selection of counsel and experts and execution of powers of attorney. Purchaser shall not make any payments of such Tax Claim for at least thirty (30) days (or such shorter period as may be required by applicable Law) after giving the notice required by this Section 8.7, shall give the Sellers and Tax Parent any information requested relating to indemnify for such Taxes Tax Claim, shall give any Tax Authority any information requested by Sellers or Tax Parent relating to such Tax Claim, and otherwise shall cooperate with and make internal resources available to the extent the results of the contest clearly demonstrate that the Sellers and Tax is not an Indemnified Tax unless the Lessee's conduct of the contest materially prejudiced the Tax Indemnitee; (ii) such Tax Indemnitee shall have received the opinion of independent tax counsel selected by the Tax Indemnitee and reasonably satisfactory to the Lessee and furnished at the Lessee's sole expense, opining that a reasonable basis exists for contesting such claim or, in the event of an appeal of an adverse court or administrative agency decision, that as a result of a change in law or fact it is more likely than not that an appellate court or an administrative agency or decision making body with appellate jurisdiction, as the case may be, will reverse or substantially modify the adverse determination; (iii) the Lessee shall have agreed to pay such Tax Indemnitee on demand (and at no after tax costs to the Lessor, the Owner Participant and any Tax Indemnitee) all reasonable costs and expenses that such Tax Indemnitee may incur in connection with contesting such claim (including, without limitation, all reasonable legal and accounting fees and disbursements); (iv) no Lease Default described in Section 14(a), 14(b), 14(c), 14(g) or 14(h) of the Lease or a Lease Event of Default shall have occurred and shall have been continuing, unless the Tax Indemnitee in its sole discretion exercised Parent in good faith allows the Lessee in order to post effectively contest any such Tax Claim. Purchaser shall not settle or otherwise compromise any such Tax Claim with any Taxing Authority or prosecute such contest to a satisfactory bond determination in court or other security that does not involve a possibility tribunal or initial or appellate jurisdiction unless instructed to do so by the Sellers or Tax Parent. Any of a Lien on the Equipment Sellers or Tax Parent may settle or otherwise compromise any portion thereof or on any interest therein, and which bond or other security will be for an amount equal to the sum of (I) the costs of such contest (as reasonably estimated by such Tax Indemnitee in good faith) and the Taxes which may be required to be indemnified and (II) Claim without Purchaser's prior written consent, except that if such Lease Default or Lease Event of Default involves a payment obligation under an Operative Agreement that is currently not paid in full, the unpaid amount of such obligation, plus the present value of the amounts not yet due pursuant to such obligation; (v) such Tax Indemnitee shall have determined that the action to be taken will not result in any risk of sale, forfeiture or loss of, or the creation of any Lien, or the Lessee shall have or otherwise made a provision to protect the interest of such Tax Indemnitee (in a manner satisfactory to such Tax Indemnitee in its sole discretion), on the Equipment or any portion thereof or any interest therein; (vi) the amount of such claims alone, or, if the subject matter thereof shall be of a continuing or recurring nature, when aggregated with substantially identical potential claims with respect to the transactions contemplated by the Operative Agreements shall be at least $25,000; (vii) if such contest shall be conducted in a manner requiring the payment or deposit of the claim, the Lessee shall have paid the amount required (and at no after-tax costs to the Lessor, the Owner Participant or other Tax Indemnitee); and (viii) there is no risk of imposition of criminal liability or penalties. The Lessee shall cooperate with the Tax Indemnitee in good faith with respect to any contest controlled and conducted by the Tax Indemnitee and the Tax Indemnitee in good faith shall consult with the Lessee regarding the conduct of such contest. A Tax Indemnitee shall not be required to pursue an appeal to the U.S. Supreme Court or the highest court in Canada or Mexico. The Tax Indemnitee shall cooperate with respect to any contest controlled and conducted by the Lessee and the Lessee shall consult with the Tax Indemnitee regarding the conduct of such contest. Notwithstanding anything to the contrary contained in this Section 7.1, no Tax Indemnitee shall be required to contest any claim if the subject matter thereof shall be of a continuing or recurring nature and shall have previously been adversely decided to the Tax Indemnitee pursuant to the contest provisions of this Section 7.1 unless there shall have been a change in the law (including, without limitation, amendments to statutes or regulations, administrative rulings (excluding private letter rulings and other rulings or materials that may not be relied upon by such Tax Indemnitee as precedent) or court decisions in the applicable jurisdiction) enacted, promulgated or effective after such claim shall have been so previously decided, and such Tax Indemnitee shall have received an opinion of independent tax counsel selected by the Tax Indemnitee and reasonably satisfactory to the Lessee, furnished at the Lessee's sole expense, to the effect that such change is favorable to the position which such Tax Indemnitee or the Lessee, as the case may be, had asserted in such previous contest and as a result of such changesettlement or compromise the Taxes payable by Purchaser would be materially increased, it is more likely than not that the none of Sellers or Tax Indemnitee will prevail or, in the event of an appeal of an adverse court or administrative agency decision, that it is more likely than not that an appellate court or an administrative agency tribunal or decision making body with appellate jurisdiction, as the case Parent may be, will reverse or substantially modify the adverse determination. Notwithstanding anything contained in this Section 7.1, a Tax Indemnitee will not be required to contest the imposition of any Tax and shall be permitted to settle or compromise such matter without Purchaser's prior written consent, which consent shall not be unreasonably withheld. In connection with any claim without the Lessee's consent if such Tax Indemnitee (A) shall waive its right to indemnity under this Section 7.1 proceeding taken with respect to such Tax matters, (i) Sellers and any claim the outcome Duke America shall keep Purchaser informed of which is determined based upon the outcome of all material developments and events relating to such claim) matters if involving a material liability for Taxes and (Bii) Purchaser shall pay have the right, at its sole expense, to the Lessee participate in any amount previously paid or advanced such proceedings. Purchaser shall cooperate with Sellers and Tax Parent by the Lessee pursuant giving them and their representatives, on prior reasonable notice, reasonable access and cooperation during normal business hours to this Section 7.1 with respect all information, books and records pertaining to such Tax ClaimTransfer Taxes, less any reasonable costs Pre-Closing Taxes and expenses of the Tax Indemnitee prior to such payment in respect of such Tax ClaimOverlap Period Taxes.
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 in respect thereof is to be made against Lessee by such Indemnitee, give notice thereof to Lessee. So long as no Lease Event of Default is continuing, the Lessee, at its own expense, may elect to assume the defense of any such Claim through its own counsel, which shall be subject to the reasonable approval of the Administrative Agent, on behalf of the Indemnitee (with full right of subrogation to the Indemnitee's rights and defenses). Notwithstanding any of the foregoing to the contrary, the Lessee shall not be entitled to assume the defense of any Claim if such proceedings in the good faith opinion of the Indemnitee could entail any risk of criminal liability or unindemnified civil liability. Lessee shall indicate its election to assume such defense by written claim is made by any taxing authority against a Tax notice to the Indemnitee; provided that prior to Lessee's assuming such defense Lessee shall acknowledge in writing to such Indemnitee its obligation to fully indemnify such Indemnitee for any Taxes with respect such Claim by written notice to the Indemnitee within 30 days following receipt of Indemnitee's notice of the Claim, or in the case of a third party claim which requires a shorter time for response then within such shorter period. If Lessee admits liability but elects not to assume the Lessee may be required to indemnify against hereunder or if a Tax defense thereof, such Indemnitee shall determine that defend such Claim (with Lessee paying the reasonable cost of such defense). If Lessee denies liability or fails to respond to the notice within the time period set forth above, the Indemnitee may defend or compromise the Claim as it deems appropriate without prejudice to any tax of Indemnitee's rights hereunder and with no further obligation to which inform Lessee of the status of the Claim (unless requested in writing as to the then status of such Claim) and no right of Lessee may to approve or disapprove any actions taken in connection therewith by the Indemnitee. If Lessee shall have an indemnity obligation hereunder may be payable (a "Tax elected to assume the defense of any such Claim"), then such Tax upon the request of Lessee, the Indemnitee requesting payment of indemnity under Section 7.1(a) shall give the Lessee written notice of such Tax Claim promptly (but in any event within twenty (20) days after its receipt of the written Tax Claim or its determination, as applicable), and shall furnish Lessee with copies of such Tax Claim and all other writings received from any records or documents pertaining to the taxing authority matter to be indemnified and, to the extent relating to known by such claim (but failure to so notify Indemnitee, a reasonably detailed explanation of the Lessee shall not relieve the Lessee of its obligations hereunder except circumstances giving rise to the extent that it effectively precludes the ability claim of the Lessee to conduct a contest of the Tax Claim). The Tax Indemnitee shall not pay such Tax Claim until at least thirty (30) days after providing the Lessee with such written notice, unless (a) the Tax Indemnitee is required to do so by law or regulation or the failure to pay such Tax Claim could result in a material adverse financial, legal or other consequence to the Tax Indemnitee and (b) in the written notice described above, the Tax Indemnitee has notified the Lessee of such requirement or such material adverse consequence (such notice however shall not require the disclosure of the Tax Indemnitee's confidential information, as determined in the sole discretion of such Tax Indemnitiee, or the Tax Indemnitee's tax returns, books, or records). If the Lessee shall so request within 30 days after receipt of such notice (or such shorter period as is reasonably specified by the Tax Indemnitee if any contest of the Tax must be commenced prior to the expiration of 30 days), then such Tax Indemnitee shall in good faith at Lessee's sole expense contest such Tax or permit the Lessee to contest such Tax, as such Tax Indemnitee shall elect; provided, however, that to the extent (i) the contest involves only Taxes constituting property taxes, sales taxes, or use taxes, (ii) the contest does not involve any taxes that the Lessee is not required to indemnify the Tax Indemnitee or taxes and other issues relating to a Tax Indemnitee that are unrelated to the transactions contemplated by the Operative Agreements, (iii) the contest can be pursued in the name of the Lessee and independently from any other proceeding involving a Tax Claim of a Tax Indemnitee for which Lessee has not agreed in writing to indemnify such Tax Indemnitee, and (iv) no Equity Insufficiency Circumstance exists, such contest shall be undertaken by the Lessee at the Lessee's sole expense indemnification and the after-tax costs determination of the Lessor, the Owner Participant, or other Tax Indemnitee shall be reimbursed by the Lessee. Notwithstanding the preceding sentence, if (a) such contest would involve any other type of Tax, any taxes that the Lessee is not required to indemnify the Tax Indemnitee or taxes and other issues relating to a Tax Indemnitee which are unrelated to the transactions contemplated by the Operative Agreements, (b) the Tax Indemnitee determines that such contest conducted by the Lessee could have a material adverse impact on such Tax Indemnitee's business or operations or involve risk of the imposition of criminal liability on a Tax Indemnitee, or (c) an Equity Insufficiency Circumstance exists, then such Tax Indemnitee may, in its sole discretion, control such contest (including selecting the forum for such contest, and determining whether any such contest shall be conducted by (i) paying such Tax under protest or (ii) resisting payment of such Tax or (iii) paying such Tax and seeking a refund thereof; provided, however, that at such Tax Indemnitee's option, such contest shall be conducted by the Lessee in the name of such Tax Indemnitee). In no event shall such Tax Indemnitee be required or the Lessee be permitted to contest any Tax for which the Lessee is obligated to indemnify pursuant to this Section 7.1 unless: (i) the Lessee shall have acknowledged in writing (x) that it is solely responsible for any Indemnified Tax resulting from any contest under its control, (y) its liability to such Tax Indemnitee for all reasonable out of pocket costs, losses and expenses that the Tax Indemnitees may incur in connection with contesting the Indemnified Tax (including, but not limited to, any reasonable legal, accounting and investigatory fees and disbursements), and (z) its liability for an indemnity payment pursuant to this Section 7.1 as a result of such claim if and to the extent such Tax Indemnitee or the Lessee, as the case may be, shall not prevail in the contest of such claim; provided, however, that the Lessee shall not be required to indemnify for such Taxes to the extent the results of the contest clearly demonstrate that the Tax is not an Indemnified Tax unless the Lessee's conduct of the contest materially prejudiced the Tax Indemnitee; (ii) such Tax Indemnitee shall have received the opinion of independent tax counsel selected by the Tax Indemnitee and reasonably satisfactory to the Lessee and furnished at the Lessee's sole expense, opining that a reasonable basis exists for contesting such claim or, in the event of an appeal of an adverse court or administrative agency decision, that as a result of a change in law or fact it is more likely than not that an appellate court or an administrative agency or decision making body with appellate jurisdiction, as the case may be, will reverse or substantially modify the adverse determination; (iii) the Lessee shall have agreed to pay such Tax Indemnitee on demand (and at no after tax costs to the Lessor, the Owner Participant and any Tax Indemnitee) all reasonable costs and expenses that such Tax Indemnitee may incur in connection with contesting such claim (including, without limitation, all reasonable legal and accounting fees and disbursements); (iv) no Lease Default described in Section 14(a), 14(b), 14(c), 14(g) or 14(h) of the Lease or a Lease Event of Default shall have occurred and shall have been continuing, unless the Tax Indemnitee in its sole discretion exercised in good faith allows the Lessee to post a satisfactory bond or other security that does not involve a possibility of a Lien on the Equipment or any portion thereof or on any interest therein, and which bond or other security will be for an amount equal to the sum of (I) the costs of such contest (as reasonably estimated by such Tax Indemnitee in good faith) and the Taxes which may be required to be indemnified and (II) if such Lease Default or Lease Event of Default involves a payment obligation under an Operative Agreement that is currently not paid in full, the unpaid amount of such obligation, plus the present value of the amounts not yet due pursuant to such obligation; (v) such Tax Indemnitee shall have determined that the action to be taken will not result in any risk of sale, forfeiture or loss of, or the creation of any Lien, or the Lessee shall have or otherwise made a provision to protect the interest of such Tax Indemnitee (in a manner satisfactory to such Tax Indemnitee in its sole discretion), on the Equipment or any portion thereof or any interest therein; (vi) the amount of such claims alone, or, if the subject matter thereof shall be requested indemnity payment. Upon payment in full to Indemnitee of a continuing or recurring nature, when aggregated with substantially identical potential claims with respect any indemnity pursuant to the transactions contemplated by the Operative Agreements shall be at least $25,000; (vii) if such contest shall be conducted in a manner requiring the payment or deposit of the claimSection 7.1(a), the Lessee shall be subrogated to any right of Indemnitee in respect of the matter against which such indemnity has been paid. If Lessee shall have paid elected to assume the amount required (defense of any such Claim, upon the written request at any time and from time to time of Lessee, Indemnitee shall, at no after-tax costs the expense of Lessee, take such reasonable actions and execute such documents as are necessary or reasonably appropriate to assist Lessee in the Lessor, the Owner Participant or other Tax Indemnitee); preservation and (viii) there is no risk enforcement against third parties of imposition Lessee's right of criminal liability or penaltiessubrogation hereunder. The Indemnitee may employ separate counsel in any such Claim in which Lessee shall cooperate with have elected to assume the Tax Indemnitee defense and participate in good faith with respect to any contest controlled the defense thereof, but the fees and conducted by the Tax Indemnitee and the Tax Indemnitee in good faith shall consult with the Lessee regarding the conduct expenses of such contest. A Tax Indemnitee shall not be required to pursue an appeal to the U.S. Supreme Court or the highest court in Canada or Mexico. The Tax Indemnitee shall cooperate with respect to any contest controlled and conducted by the Lessee and the Lessee shall consult with the Tax Indemnitee regarding the conduct of such contest. Notwithstanding anything to the contrary contained in this Section 7.1, no Tax Indemnitee counsel shall be required to contest any claim if at the subject matter thereof shall be expense of a continuing or recurring nature and shall have previously been adversely decided to the Tax Indemnitee pursuant to unless the contest provisions of this Section 7.1 unless there Indemnitee shall have been advised in writing by its counsel that there exists a change conflict of interest in such counsel's representation of the law (including, without limitation, amendments to statutes or regulations, administrative rulings (excluding private letter rulings and other rulings or materials that may not be relied upon by such Tax Indemnitee as precedent) or court decisions in the applicable jurisdiction) enacted, promulgated or effective after such claim shall have been so previously decided, and such Tax Indemnitee shall have received an opinion of independent tax counsel selected by the Tax Indemnitee and reasonably satisfactory to the Lessee, furnished at the Lessee's sole expense, to the effect that such change is favorable to the position which such Tax Indemnitee or the Lessee, as the case may be, had asserted in such previous contest and as a result of such change, it is more likely than not that the Tax Indemnitee will prevail or, in the event of an appeal of an adverse court or administrative agency decision, that it is more likely than not that an appellate court or an administrative agency tribunal or decision making body with appellate jurisdiction, as the case may be, will reverse or substantially modify the adverse determination. Notwithstanding anything contained in this Section 7.1, a Tax Indemnitee will not be required to contest the imposition of any Tax and shall be permitted to settle or compromise any claim without the Lessee's consent if such Tax Indemnitee (A) shall waive its right to indemnity under this Section 7.1 with respect to such Tax (and any claim the outcome of which is determined based upon the outcome of such claim) and (B) shall pay to the Lessee any amount previously paid or advanced by the Lessee pursuant to this Section 7.1 with respect to such Tax Claim, less any reasonable costs All fees and expenses of such contests shall be paid periodically as incurred. Lessee shall not, without the Tax prior written consent (not to be unreasonably withheld) of the Indemnitee, effect any settlement of any such Claim unless such settlement includes an unconditional release of the Indemnitee prior to such payment in respect from all liabilities that are the subject of such Tax Claim. The parties agree to cooperate in any defense or settlement of any such Claim and to give each other reasonable access to all information relevant thereto subject to appropriate confidentiality agreements. The parties will similarly cooperate in the prosecution of any claim or lawsuit against any third party.
Appears in 1 contract
Contests. If a written claim is made by any taxing authority against a Tax Indemnitee receives a written notice from any -------- taxing authority of a claim for any Taxes with respect to Tax for which the Lessee Charterer may be required to indemnify against hereunder or if a Tax Indemnitee shall determine that any tax to which the Lessee may have an indemnity obligation hereunder may be payable liable under this Section 12.2 (a "Tax Claim"), then such Tax Indemnitee shall give notify the Lessee written notice --------- Charterer promptly in writing of such Tax Claim promptly (but Claim. If requested by the Charterer in any event writing within twenty (20) days after its receipt of the written Tax Claim or its determination, as applicable), and shall furnish Lessee with copies of such Tax Claim and all other writings received from the taxing authority to the extent relating to such claim (but failure to so notify the Lessee shall not relieve the Lessee of its obligations hereunder except to the extent that it effectively precludes the ability of the Lessee to conduct a contest of the Tax Claim). The Tax Indemnitee shall not pay such Tax Claim until at least thirty (30) days after providing the Lessee with such written notice, unless (a) the Tax Indemnitee is required to do so by law or regulation or the failure to pay such Tax Claim could result in a material adverse financial, legal or other consequence to the Tax Indemnitee and (b) in the written notice described above, the Tax Indemnitee has notified the Lessee of such requirement or such material adverse consequence (such notice however shall not require the disclosure of the Tax Indemnitee's confidential information, as determined in the sole discretion of such Tax Indemnitiee, or the Tax Indemnitee's tax returns, books, or records). If the Lessee shall so request within 30 days Business Days after receipt of such notice (or, if sooner, on or before the last day on which the contest of such shorter period as is reasonably specified by 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 expense of the Charterer, contest such Tax Claim by (1) resisting payment - thereof, if any 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 - made, using reasonable efforts to obtain a refund thereof in appropriate administrative and judicial proceedings. If such contest requires payment of the Tax must be commenced prior Claim as a condition precedent to initiation of the expiration of 30 days)contest, then the Charterer shall advance to such Tax Indemnitee shall in good faith at Lessee's sole expense contest the amount of such Tax or permit the Lessee to contest such Tax, as such Tax Indemnitee Claim on an interest-free basis and shall elect; provided, however, that to the extent (i) the contest involves only Taxes constituting property taxes, sales taxes, or use taxes, (ii) the contest does not involve any taxes that the Lessee is not required to indemnify the Tax Indemnitee or taxes and other issues relating to a on an After-Tax Indemnitee that are unrelated to the transactions contemplated by the Operative Agreements, (iii) the contest can be pursued in the name of the Lessee and independently Basis for any adverse tax consequences resulting from any other proceeding involving a Tax Claim of a Tax Indemnitee for which Lessee has not agreed in writing to indemnify such Tax Indemnitee, and (iv) no Equity Insufficiency Circumstance exists, such contest shall be undertaken by the Lessee at the Lessee's sole expense and the afterinterest-tax costs of the Lessor, the Owner Participant, or other Tax Indemnitee shall be reimbursed by the Lessee. Notwithstanding the preceding sentence, if (a) such contest would involve any other type of Tax, any taxes that the Lessee is not required to indemnify the Tax Indemnitee or taxes and other issues relating to a Tax Indemnitee which are unrelated to the transactions contemplated by the Operative Agreements, (b) the Tax Indemnitee determines that such contest conducted by the Lessee could have a material adverse impact on such Tax Indemnitee's business or operations or involve risk of the imposition of criminal liability on a Tax Indemnitee, or (c) an Equity Insufficiency Circumstance exists, then such Tax Indemnitee may, in its sole discretion, control such contest (including selecting the forum for such contest, and determining whether any such contest shall be conducted by (i) paying such Tax under protest or (ii) resisting payment of such Tax or (iii) paying such Tax and seeking a refund thereof; provided, however, that at such Tax Indemnitee's option, such contest shall be conducted by the Lessee in the name of such Tax Indemnitee)free advance. In no event shall such any Tax Indemnitee be required required, or the Lessee be permitted Charterer permitted, to contest any such Tax for which the Lessee is obligated to indemnify pursuant to this Section 7.1 Claim unless: (i) the Lessee shall have acknowledged in writing (x) that it is solely responsible for any Indemnified Tax resulting from any contest under its control, (y) its liability to such Tax Indemnitee for all reasonable out of pocket costs, losses and expenses that the Tax Indemnitees may incur in connection with contesting the Indemnified Tax (including, but not limited to, any reasonable legal, accounting and investigatory fees and disbursements), and (z) its liability for an indemnity payment pursuant to this Section 7.1 as a result of such claim if and to the extent such Tax Indemnitee or the Lessee, as the case may be, shall not prevail in the contest of such claim; provided, however, that the Lessee shall not be required to indemnify for such Taxes to the extent the results of the contest clearly demonstrate that the Tax is not an Indemnified Tax unless the Lessee's conduct of the contest materially prejudiced the Tax Indemnitee; (ii) such Tax Indemnitee shall have received the opinion of independent tax counsel selected by the Tax Indemnitee and reasonably satisfactory to the Lessee and furnished at the Lessee's sole expense, opining that a reasonable basis exists for contesting such claim or, in the event of an appeal of an adverse court or administrative agency decision, that as a result of a change in law or fact it is more likely than not that an appellate court or an administrative agency or decision making body with appellate jurisdiction, as the case may be, will reverse or substantially modify the adverse determination; (iii) the Lessee shall have agreed to pay such Tax Indemnitee on demand (and at no after tax costs to the Lessor, the Owner Participant and any Tax Indemnitee) all reasonable costs and expenses that such Tax Indemnitee may incur in connection with contesting such claim (including, without limitation, all reasonable legal and accounting fees and disbursements); (iv) no Lease Default described in Section 14(a), 14(b), 14(c), 14(g) or 14(h) of the Lease or a Lease Charter Event of - Default shall have occurred and be continuing (unless the Charterer shall have been continuing, unless the Tax Indemnitee in its sole discretion exercised in good faith allows the Lessee provided security reasonably satisfactory to post a satisfactory bond or other security that does not involve a possibility of a Lien on the Equipment or any portion thereof or on any interest therein, and which bond or other security will be for an amount equal to the sum of (I) the costs of such contest (as reasonably estimated by such Tax Indemnitee in good faithsecuring the Charterer's performance of its obligations under this Section 12.2) and the Taxes which may be required to be indemnified and (IIii) if such Lease Default or Lease Event of Default involves a payment obligation under an Operative Agreement that is currently not paid in full, the unpaid amount of such obligation, plus the present value of the amounts not yet due pursuant to such obligation; (v) such Tax Indemnitee shall have determined that 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, or of the creation of any Lien, or the Lessee shall have or otherwise made a provision to protect the interest of such Tax Indemnitee (in a manner satisfactory to such Tax Indemnitee in its sole discretion), on the Equipment or any portion thereof Vessel or any interest therein; (vi) the amount of such claims alone, or, if the subject matter thereof shall be of a continuing or recurring nature, when aggregated with substantially identical potential claims with respect to the transactions contemplated . If requested by the Operative Agreements shall be at least $25,000; (vii) Charterer and if such contest shall be conducted in a manner requiring the payment or deposit of the claimpermitted by applicable law, the Lessee shall have paid the amount required (and Charterer may contest, at no after-tax costs to the Lessorits own expense, the Owner Participant or other imposition of any Tax Claim. In any contest controlled by a Tax Indemnitee); and (viii) there is no risk of imposition of criminal liability or penalties. The Lessee shall cooperate with the , such Tax Indemnitee will consult in good faith with the Charterer and its counsel and submit to the 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. Upon the written request of the affected Tax Indemnitee, the Charterer will advise such Tax Indemnitee of the status of any contest controlled and being conducted by the Tax Indemnitee and the Tax Indemnitee in good faith shall consult with the Lessee regarding the conduct of such contestCharterer pursuant to this Section 12.2(e). A No Tax Indemnitee shall not be required to pursue an appeal to the U.S. Supreme Court offer, accept or the highest court in Canada enter into a settlement or Mexico. The Tax Indemnitee shall cooperate other compromise with respect to any contest controlled and conducted by Tax Claim being contested pursuant to this Section 12.2(e), or forego or terminate any such contest, without the Lessee and prior written consent of the Lessee Charterer (which consent shall consult with not be unreasonably withheld based solely on the merits of the Tax Claim). Any refusal or failure by a Tax Indemnitee regarding the conduct of such contest. Notwithstanding anything to the contrary contained in contest a Tax Claim when required under this Section 7.112.2(e), no and any settlement or compromise or other discontinuance by a Tax Indemnitee shall be required to contest any claim if the subject matter thereof shall be of a continuing or recurring nature and shall have previously been adversely decided to the contest of a Tax Indemnitee pursuant to the contest provisions of Claim required by this Section 7.1 unless there 12.2(e) without the prior written consent of the Charterer when required under this Section 12.2(e), shall have been a change in release and discharge the law (including, without limitation, amendments Charterer from any obligation to statutes or regulations, administrative rulings (excluding private letter rulings and other rulings or materials that may not be relied upon by indemnify such Tax Indemnitee as precedent) or court decisions in the applicable jurisdiction) enacted, promulgated or effective after for such claim shall have been so previously decidedTax Claim, and such Tax Indemnitee shall have received an opinion of independent tax counsel selected by the Tax Indemnitee and reasonably satisfactory to the Lessee, furnished at the Lessee's sole expense, to the effect that such change is favorable to the position which such Tax Indemnitee or the Lessee, as the case may be, had asserted in such previous contest and as a result of such change, it is more likely than not that the Tax Indemnitee will prevail or, in the event of an appeal of an adverse court or administrative agency decision, that it is more likely than not that an appellate court or an administrative agency tribunal or decision making body with appellate jurisdiction, as the case may be, will reverse or substantially modify the adverse determination. Notwithstanding anything contained in this Section 7.1, a Tax Indemnitee will not be required to contest the imposition of any Tax and shall be permitted to settle or compromise any claim without the Lessee's consent if such Tax Indemnitee (A) shall waive its right to indemnity under this Section 7.1 with respect to such Tax (and any claim the outcome of which is determined based upon the outcome of such claim) and (B) shall pay to the Lessee Charterer promptly any amount amounts previously paid or advanced by the Lessee Charterer pursuant to this Section 7.1 Agreement with respect to such Tax Claim, less any reasonable Claim (other than amounts paid with respect to costs and expenses of the Tax Indemnitee prior to such payment in respect of such Tax Claimcontest).
Appears in 1 contract
Sources: Participation Agreement (Mobil Corp)
Contests. If a written claim is made by any taxing authority against a Tax Indemnitee for any Taxes with respect (a) Each party hereto entitled to which the Lessee may be required indemnification pursuant to indemnify against hereunder Section 8.4 or if a Tax Indemnitee shall determine that any tax to which the Lessee may have an indemnity obligation hereunder may be payable Section 8.5 (a "“Tax Claim"), then such Tax Indemnitee shall Indemnified Person”) agrees to give the Lessee written notice to the indemnifying Person (the “Tax Indemnitor”) of any written notice received by the Tax Indemnified Person or an Affiliate of such Tax Claim promptly Indemnified Person (but including, in the case where the Purchaser is the Tax Indemnified Person, the Acquired Companies) which involves the assertion of any event claim, or the commencement of any audit, suit, action or proceeding (collectively, a “Tax Claim”) in respect of which indemnity may be sought within twenty ten (2010) days after its Business Days of such receipt or such earlier time as would allow the Tax Indemnitor to timely respond to such Tax Claim. Notwithstanding the foregoing, no delay or deficiency on the part of the written Tax Claim or its determination, as applicable), and shall furnish Lessee with copies of such Indemnified Person in so notifying the Tax Claim and all other writings received from the taxing authority to the extent relating to such claim (but failure to so notify the Lessee shall not Indemnitor will relieve the Lessee Tax Indemnitor of its obligations hereunder any Liability or obligation under this Agreement except to the extent that it effectively precludes the Tax Indemnitor’s ability to defend such claim has been materially prejudiced as a result of the Lessee delay or other deficiency. The Tax Indemnified Person will give the Tax Indemnitor such information with respect to conduct a contest the Tax Claim as the Tax Indemnitor may reasonably request. Such written notice shall describe in reasonable detail the facts constituting the basis for such Tax Indemnitor’s interests in such Tax Claim, the nature of the relief sought, and the amount of the claimed Losses (including Taxes).
(b) The Tax Indemnitor may, at its own expense, participate in and, upon notice to the Tax Indemnified Person, assume control of the defense of any Tax Claim for which it is the Tax Indemnitor. If the Tax Indemnitor assumes control, it will have the right to control the defense of the Tax Claim). The Tax Indemnitee shall not pay such Tax Claim until at least thirty (30) days after providing the Lessee with such written notice, unless (a) the Tax Indemnitee is required to do so by law or regulation or the failure to pay such Tax Claim could result in a material adverse financial, legal or other consequence to the Tax Indemnitee and (b) in the written notice described above, the Tax Indemnitee has notified the Lessee of such requirement or such material adverse consequence (such notice however shall not require the disclosure of the Tax Indemnitee's confidential information, as determined in the sole discretion of such Tax Indemnitiee, or the Tax Indemnitee's tax returns, books, or records). If the Lessee shall so request within 30 days after receipt of such notice (or such shorter period as is reasonably specified by the Tax Indemnitee if any contest of the Tax must be commenced prior to the expiration of 30 days), then such Tax Indemnitee shall in good faith at Lessee's sole expense contest such Tax or permit the Lessee to contest such Tax, as such Tax Indemnitee shall elect; provided, however, that to the extent (i) the contest involves only Taxes constituting property taxes, sales taxes, or use taxes, (ii) the contest does not involve any taxes that the Lessee is not required to indemnify the Tax Indemnitee or taxes and other issues relating to a Tax Indemnitee that are unrelated to the transactions contemplated by the Operative Agreements, (iii) the contest can be pursued in the name of the Lessee and independently from any other proceeding involving a Tax Claim of a Tax Indemnitee for which Lessee has not agreed in writing to indemnify such Tax Indemnitee, and (iv) no Equity Insufficiency Circumstance exists, such contest shall be undertaken by the Lessee at the Lessee's sole expense and the after-tax costs of the Lessor, the Owner Participant, or other Tax Indemnitee shall be reimbursed by the Lessee. Notwithstanding the preceding sentence, if (a) such contest would involve any other type of Tax, any taxes that the Lessee is not required to indemnify the Tax Indemnitee or taxes and other issues relating to a Tax Indemnitee which are unrelated to the transactions contemplated by the Operative Agreements, (b) the Tax Indemnitee determines that such contest conducted by the Lessee could have a material adverse impact on such Tax Indemnitee's business or operations or involve risk of the imposition of criminal liability on a Tax Indemnitee, or (c) an Equity Insufficiency Circumstance exists, then such Tax Indemnitee may, in its sole discretion, control such contest (including selecting the forum for such contest, and determining whether any such contest shall be conducted by (i) paying such Tax under protest or (ii) resisting payment of such Tax or (iii) paying such Tax and seeking a refund thereof; provided, however, that at such Tax Indemnitee's option, such contest shall be conducted by the Lessee in the name of such Tax Indemnitee). In no event shall such Tax Indemnitee be required or the Lessee be permitted to contest any Tax for which the Lessee is obligated to indemnify pursuant to this Section 7.1 unless: (i) the Lessee shall have acknowledged in writing (x) that it is solely responsible for any Indemnified Tax resulting from any contest under its control, (y) its liability to such Tax Indemnitee for all reasonable out of pocket costs, losses and expenses that the Tax Indemnitees may incur in connection with contesting the Indemnified Tax (including, but not limited to, any reasonable legal, accounting and investigatory fees and disbursements), and (z) its liability for an indemnity payment pursuant to this Section 7.1 as a result of such claim if and to the extent such Tax Indemnitee or the Lessee, as the case may be, shall not prevail in the contest of such claim; provided, however, that the Lessee Tax Indemnitor shall not concede or settle any such Tax Claim without the prior written consent of the Purchaser, which consent shall not be unreasonably withheld, conditioned or delayed. In no case will a Tax Indemnified Person settle or otherwise compromise a Tax Claim without the Tax Indemnitor’s prior written consent, which consent shall not be unreasonably withheld, conditioned or delayed. The Tax Indemnified Person, at its expense, shall be entitled to fully participate in all proceedings, meetings and calls, and receive copies of all communications with respect to any Tax Claims controlled by Seller.
(c) If a Tax Claim potentially involves some Taxes for Pre-Closing Tax Periods for which Seller would be required to indemnify the Purchaser pursuant to Section 8.4 and other Taxes for Pre-Closing Tax Periods for which Seller would not be required to indemnify the Purchaser, then, for such Taxes to the extent the results purposes of the contest clearly demonstrate that this Section 8.7 only, Seller will be the Tax is not an Indemnified Tax unless Indemnitor and the Lessee's conduct of the contest materially prejudiced Purchaser will be the Tax Indemnitee; (ii) such Indemnified Person as to those Tax Indemnitee shall have received the opinion of independent tax counsel selected by the Tax Indemnitee and reasonably satisfactory to the Lessee and furnished at the Lessee's sole expense, opining that a reasonable basis exists Claims for contesting such claim or, in the event of an appeal of an adverse court or administrative agency decision, that as a result of a change in law or fact it which Seller is more likely than not that an appellate court or an administrative agency or decision making body with appellate jurisdiction, as the case may be, will reverse or substantially modify the adverse determination; (iii) the Lessee shall have agreed to pay such Tax Indemnitee on demand (and at no after tax costs to the Lessor, the Owner Participant and any Tax Indemnitee) all reasonable costs and expenses that such Tax Indemnitee may incur in connection with contesting such claim (including, without limitation, all reasonable legal and accounting fees and disbursements); (iv) no Lease Default described in Section 14(a), 14(b), 14(c), 14(g) or 14(h) of the Lease or a Lease Event of Default shall have occurred and shall have been continuing, unless the Tax Indemnitee in its sole discretion exercised in good faith allows the Lessee to post a satisfactory bond or other security that does not involve a possibility of a Lien on the Equipment or any portion thereof or on any interest therein, and which bond or other security will be for an amount equal to the sum of (I) the costs of such contest (as reasonably estimated by such Tax Indemnitee in good faith) and the Taxes which may be required to be indemnified and (II) if such Lease Default or Lease Event of Default involves a payment obligation under an Operative Agreement that is currently not paid in full, the unpaid amount of such obligation, plus the present value of the amounts not yet due exclusively liable pursuant to such obligation; (v) such Tax Indemnitee shall have determined that the action to be taken will not result in any risk of saleSection 8.4 and, forfeiture or loss of, or the creation of any Lien, or the Lessee shall have or otherwise made a provision to protect the interest of such Tax Indemnitee (in a manner satisfactory to such Tax Indemnitee in its sole discretion), on the Equipment or any portion thereof or any interest therein; (vi) the amount of such claims alone, or, if the subject matter thereof shall be of a continuing or recurring nature, when aggregated with substantially identical potential claims with respect to the transactions contemplated by the Operative Agreements shall be at least $25,000; (vii) if such contest shall be conducted in a manner requiring the payment or deposit of the claim, the Lessee shall have paid the amount required (and at no after-tax costs to the Lessor, the Owner Participant or other Tax Indemnitee); and (viii) there is no risk of imposition of criminal liability or penalties. The Lessee shall cooperate with the Tax Indemnitee in good faith with respect to any contest controlled and conducted by the Tax Indemnitee Claims, Seller and the Tax Indemnitee in good faith Purchaser shall consult with jointly control the Lessee regarding the conduct of such contest. A Tax Indemnitee shall not be required to pursue an appeal to the U.S. Supreme Court or the highest court in Canada or Mexico. The Tax Indemnitee shall cooperate with respect to any contest controlled and conducted by the Lessee and the Lessee shall consult with the Tax Indemnitee regarding the conduct of such contest. Notwithstanding anything to the contrary contained in this Section 7.1, no Tax Indemnitee shall be required to contest any claim if the subject matter thereof shall be of a continuing or recurring nature and shall have previously been adversely decided to the Tax Indemnitee pursuant to the contest provisions of this Section 7.1 unless there shall have been a change in the law (including, without limitation, amendments to statutes or regulations, administrative rulings (excluding private letter rulings and other rulings or materials that may not be relied upon by such Tax Indemnitee as precedent) or court decisions in the applicable jurisdiction) enacted, promulgated or effective after such claim shall have been so previously decided, and such Tax Indemnitee shall have received an opinion of independent tax counsel selected by the Tax Indemnitee and reasonably satisfactory to the Lessee, furnished at the Lessee's sole expense, to the effect that such change is favorable to the position which such Tax Indemnitee or the Lessee, as the case may be, had asserted in such previous contest and as a result of such change, it is more likely than not that the Tax Indemnitee will prevail or, in the event of an appeal of an adverse court or administrative agency decision, that it is more likely than not that an appellate court or an administrative agency tribunal or decision making body with appellate jurisdiction, as the case may be, will reverse or substantially modify the adverse determination. Notwithstanding anything contained in this Section 7.1, a Tax Indemnitee will not be required to contest the imposition of any Tax and shall be permitted to settle or compromise any claim without the Lessee's consent if such Tax Indemnitee (A) shall waive its right to indemnity under this Section 7.1 with respect to such Tax (and any claim the outcome of which is determined based upon the outcome of such claim) and (B) shall pay to the Lessee any amount previously paid or advanced by the Lessee pursuant to this Section 7.1 with respect to such Tax Claim, less any reasonable costs and expenses of the Tax Indemnitee prior to such payment in respect defense of such Tax Claim.
(d) The Tax Indemnitor may discharge, at any time, its indemnity obligations by paying the Tax Indemnified Person the amount of the applicable indemnifiable Loss, calculated on the date of such payment.
(e) Notwithstanding any provision to the contrary herein, the Seller shall have sole control over, and the Purchaser shall have no right to control or participate in, any Tax Claim relating to a consolidated, combined, unitary, affiliated or similar Tax or Tax Return that includes Parent or any Subsidiary of Parent.
Appears in 1 contract
Sources: Stock Purchase Agreement (Volt Information Sciences, 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 claim is made by any taxing authority against a Tax Indemnitee notice of such proceeding) for any Taxes with respect to which the Lessee may be required to indemnify against hereunder or if a Tax Indemnitee shall determine that any tax Imposition as to which the Lessee may have an indemnity obligation hereunder pursuant to this Section 13.4, or if any Tax Indemnitee shall determine that any Imposition for which the Lessee may have an indemnity obligation pursuant to this Section 13.4 may be payable (a "Tax Claim")payable, then such Tax Indemnitee shall give promptly (and in any event, within twenty (20) days) notify the Lessee written notice of such Tax Claim promptly in writing (but in any event provided that failure to so notify the Lessee within twenty (20) days after its receipt of the written Tax Claim or its determination, as applicable), and shall furnish Lessee with copies of not alter such Tax Claim and all other writings received from the taxing authority to the extent relating to such claim (but failure to so notify the Lessee shall not relieve the Lessee of its obligations hereunder Indemnitee’s rights under this Section 13.4, except to the extent that it effectively such failure precludes or materially adversely affects the ability of the Lessee to conduct a contest of the Tax Claim). The Tax Indemnitee any indemnified Taxes) and shall not pay take any action with respect to such Tax Claim until at least claim, proceeding or Imposition without the written consent of the Lessee (such consent not to be unreasonably withheld or unreasonably delayed) for thirty (30) days after providing the Lessee with receipt of such written noticenotice by the Lessee; provided, unless (a) however, that in the case of any such claim or proceeding, if such Tax Indemnitee is shall be required to do so by law or regulation or to take action prior to the failure to pay end of such thirty (30) day period, such Tax Claim could result Indemnitee shall in a material adverse financialsuch notice to the Lessee, legal so inform the Lessee, and such Tax Indemnitee shall not take any action with respect to such claim, proceeding or other consequence Imposition without the consent of the Lessee (such consent not to be unreasonably withheld or unreasonably delayed) for ten (10) days after the receipt of such notice by the Lessee, unless the Tax Indemnitee and shall be required by law or regulation to take action prior to the end of such ten (b10) in day period. The Lessee shall be entitled for a period of thirty (30) days from receipt of such notice from the written notice described above, Tax Indemnitee (or such shorter period as the Tax Indemnitee has notified the Lessee of such requirement is required by law or such material adverse consequence (such notice however shall not require the disclosure of the Tax Indemnitee's confidential information, as determined in the sole discretion of such Tax Indemnitiee, or the Tax Indemnitee's tax returns, books, or records). If the Lessee shall so request within 30 days after receipt of such notice (or such shorter period as is reasonably specified by regulation for the Tax Indemnitee if any contest of the Tax must be commenced prior to the expiration of 30 dayscommence such contest), then to request in writing that such Tax Indemnitee shall in good faith at Lessee's sole expense contest such Tax or permit the Lessee to contest imposition of such Tax, as at the Lessee’s expense. If (x) such Tax Indemnitee shall elect; provided, however, that to the extent (i) the contest involves only Taxes constituting property taxes, sales taxes, or use taxes, (ii) the contest does not involve any taxes that the Lessee is not required to indemnify the Tax Indemnitee or taxes and other issues relating to a Tax Indemnitee that are unrelated to the transactions contemplated by the Operative Agreements, (iii) the contest can be pursued in the name of the Lessee and independently from any other proceeding involving a Tax Claim liability of a such Tax Indemnitee for which the Lessee has not agreed in writing to indemnify such Tax Indemnitee, and (iv) no Equity Insufficiency Circumstance exists, such contest shall be undertaken by the Lessee at the Lessee's sole expense and the after-tax costs of the Lessor, the Owner Participant, or other Tax Indemnitee shall be reimbursed by the Lessee. Notwithstanding the preceding sentence, if (ay) such contest would involve must be pursued in the name of the Tax Indemnitee, but can be pursued independently from any other type proceeding involving a Tax liability of Tax, any taxes that such Tax Indemnitee for which the Lessee is has not required agreed to indemnify the such Tax Indemnitee or taxes and other issues relating to a Tax Indemnitee which are unrelated to the transactions contemplated by the Operative Agreements, (bz) the Tax Indemnitee so requests, then the 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) above, if the Tax Indemnitee determines in good faith that such contest conducted by the Lessee could have a material adverse impact on such Tax Indemnitee's the business or operations or involve risk of the imposition of criminal liability on a Tax Indemnitee, or (c) an Equity Insufficiency Circumstance exists, then such Tax Indemnitee mayand provides a written explanation to the Lessee of such determination, in its sole discretion, the Tax Indemnitee may elect to control such contest (including selecting or reassert control of the forum for such contest, and determining whether any such contest shall provided, that by taking control of the contest, Lessee acknowledges that it is responsible for the Imposition ultimately determined to be conducted due by (i) paying such Tax under protest or (ii) resisting payment reason of such Tax or (iii) paying such Tax claim, and seeking a refund thereof; provided, howeverfurther, that at such in determining the application of clauses (x) and (y) of this sentence, each Tax Indemnitee's optionIndemnitee shall take any and all reasonable steps to segregate claims for any Taxes for which the Lessee indemnifies hereunder from Taxes for which the Lessee is not obligated to indemnify hereunder, such so that the Lessee can control the contest shall of the former. In all other claims requested to be conducted contested by the Lessee in Lessee, the name Tax Indemnitee shall control the contest of such Tax Indemnitee)claim, acting through counsel reasonably acceptable to the Lessee. In no event shall such Tax Indemnitee be required or the Lessee be permitted to contest (or the Tax Indemnitee required to contest) any claim, (A) if such Tax Indemnitee provides the Lessee with a legal opinion of independent counsel 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 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 an Event of Default has occurred and is continuing, unless the 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 Lessee is obligated to indemnify pursuant to this Section 7.1 unless: (i) the Lessee shall have acknowledged in writing (x) that it is solely responsible for any Indemnified Tax resulting from any contest under its control, (y) its liability to such Tax Indemnitee for all reasonable out of pocket costs, losses and expenses that the Tax Indemnitees may incur hereunder reasonably foreseeable in connection with contesting the Indemnified Tax (including, but not limited to, any reasonable legal, accounting and investigatory fees and disbursements), and (z) its liability for an indemnity payment pursuant to this Section 7.1 as a result of such claim if and to the extent such Tax Indemnitee or the Lessee, as the case may be, shall not prevail in the contest of such claim; provided, however, that the Lessee shall not be required to indemnify for such Taxes to the extent the results of the contest clearly demonstrate that the Tax is not an Indemnified Tax (C) unless the Lessee's conduct of the contest materially prejudiced the Tax Indemnitee; (ii) such Tax Indemnitee shall have received the opinion of independent tax counsel selected by the Tax Indemnitee and reasonably satisfactory to the Lessee and furnished at the Lessee's sole expense, opining that a reasonable basis exists for contesting such claim or, in the event of an appeal of an adverse court or administrative agency decision, that as a result of a change in law or fact it is more likely than not that an appellate court or an administrative agency or decision making body with appellate jurisdiction, as the case may be, will reverse or substantially modify the adverse determination; (iii) the Lessee shall have agreed to pay and shall pay to such Tax Indemnitee on demand (and at no after tax costs to the Lessor, the Owner Participant and any Tax Indemnitee) all reasonable costs out-of-pocket costs, losses and expenses that such Tax Indemnitee may incur in connection with contesting such claim (includingImposition, without limitation, including all reasonable legal legal, accounting and accounting investigatory fees and disbursements); disbursements as well as the Impositions which are the subject of such claim to the extent the contest is unsuccessful, or (ivD) no Lease Default described in Section 14(a), 14(b), 14(c), 14(g) or 14(h) if such contest shall involve the payment of the Lease or a Lease Event of Default shall have occurred and shall have been continuingTax prior to the contest, unless the Lessee shall provide to the Tax Indemnitee an interest-free advance in its sole discretion exercised in good faith allows the Lessee to post a satisfactory bond or other security that does not involve a possibility of a Lien on the Equipment or any portion thereof or on any interest therein, and which bond or other security will be for an amount equal to the sum Imposition that the 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 and claims contested in the name of the Tax Indemnitee in a public forum, no contest shall be required: (IA) unless the costs amount of such contest the potential indemnity (as reasonably estimated by taking into account all similar or logically related claims that have been or could be raised in any audit involving such Tax Indemnitee in good faith) and for which the Taxes which Lessee may be required liable to be indemnified pay an indemnity under this Section 13.4(b)) exceeds $50,000 and (IIB) if such Lease Default or Lease Event of Default involves a payment obligation under an Operative Agreement that is currently not paid in full, the unpaid amount of such obligation, plus the present value of the amounts not yet due pursuant to such obligation; (v) such Tax Indemnitee shall have determined that the action to be taken will not result in any risk of sale, forfeiture or loss of, or the creation of any Lien, or the Lessee shall have or otherwise made a provision to protect the interest of such Tax Indemnitee (in a manner satisfactory to such Tax Indemnitee in its sole discretion), on the Equipment or any portion thereof or any interest therein; (vi) the amount of such claims alone, orunless, if the subject matter thereof shall be of a continuing or recurring nature, when aggregated with substantially identical potential claims with respect to the transactions contemplated requested by the Operative Agreements shall be at least $25,000; (vii) if such contest shall be conducted in a manner requiring the payment or deposit of the claimTax Indemnitee, the Lessee shall have paid the amount required (and at no after-tax costs to the Lessor, the Owner Participant or other Tax Indemnitee); and (viii) there is no risk of imposition of criminal liability or penalties. The Lessee shall cooperate with the Tax Indemnitee in good faith with respect to any contest controlled and conducted by the Tax Indemnitee and the Tax Indemnitee in good faith shall consult with the Lessee regarding the conduct of such contest. A Tax Indemnitee shall not be required to pursue an appeal to the U.S. Supreme Court or the highest court in Canada or Mexico. The Tax Indemnitee shall cooperate with respect to any contest controlled and conducted by the Lessee and the Lessee shall consult with the Tax Indemnitee regarding the conduct of such contest. Notwithstanding anything to the contrary contained in this Section 7.1, no Tax Indemnitee shall be required to contest any claim if the subject matter thereof shall be of a continuing or recurring nature and shall have previously been adversely decided provided to the Tax Indemnitee pursuant to an opinion of counsel selected by the contest provisions of this Section 7.1 unless there shall have been a change Lessee (which may be in-house counsel, except, in the law (includingcase of income taxes indemnified hereunder, without limitation, amendments to statutes or regulations, administrative rulings (excluding private letter rulings and other rulings or materials which opinion shall be that may not be relied upon by such Tax Indemnitee as precedent) or court decisions in the applicable jurisdiction) enacted, promulgated or effective after such claim shall have been so previously decided, and such Tax Indemnitee shall have received an opinion of independent tax counsel selected by the Tax Indemnitee and reasonably satisfactory acceptable to the Lessee, furnished at the Lessee's sole expense, ) 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 effect that such change is favorable 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 position which 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 the Tax Indemnitee is the controlling party and the Lessee 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 the Lessee 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. In addition, the controlling party shall keep the non-controlling party reasonably informed as to the progress of the contest, and shall provide the 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. Each Tax Indemnitee shall supply the Lessee with such information and documents reasonably requested by the Lessee as are necessary or advisable for the Lessee to participate in any action, suit or proceeding to the extent permitted by this Section 13.4(b), and the Lessee shall promptly reimburse such 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 and/or the Guarantors shall 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 each 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 Lessee, as the case may be, had asserted in unless such previous contest and as a result of such change, it is more likely than not that the Tax Indemnitee will prevail or, in the event of an appeal of an adverse court or administrative agency decision, that it is more likely than not that an appellate court or an administrative agency tribunal or decision making body waives its right to be indemnified under this Section 13.4 with appellate jurisdiction, as the case may be, will reverse or substantially modify the adverse determinationrespect to such claim. Notwithstanding anything contained in this Section 7.1herein to the contrary, a Tax Indemnitee will not be required to contest (and the Lessee shall not be permitted to contest) a claim with respect to the imposition of any Tax and shall be permitted to settle or compromise any claim without the Lessee's consent if (i) such Tax Indemnitee (A) shall waive its right to indemnity indemnification under this Section 7.1 13.4 with respect to such Tax claim (and any claim the outcome of which is determined based upon the outcome of such claim) and (B) shall pay to the Lessee any amount previously paid or advanced by the Lessee pursuant to this Section 7.1 with respect to such year or any other taxable year, the contest of which is materially adversely affected as a result of such waiver) or (ii) such Tax Claimis the sole result of a claim of a continuing and consistent nature, less any reasonable costs 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 expenses 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 Tax Indemnitee prior to such payment in respect of such Tax Claimclaim at issue).
Appears in 1 contract
Sources: Participation Agreement (Regeneron Pharmaceuticals, Inc.)
Contests. If any Claim in respect of an Imposition shall be made against any Tax Indemnitee or if any proceeding shall be commenced against any Tax Indemnitee (including a written claim is made by any taxing authority against a Tax Indemnitee for any Taxes with respect to which the Lessee may be required to indemnify against hereunder or if a Tax Indemnitee shall determine that any tax notice of such proceeding) as to which the Lessee may have an indemnity obligation hereunder pursuant to this Section 13.5, or if any Tax Indemnitee shall determine that any Imposition to which the Lessee may have an indemnity obligation pursuant to this Section 13.5 may be payable (a "Tax Claim")payable, then such Tax Indemnitee shall give promptly (and in any event, within thirty (30) days) notify the Lessee written notice of such Tax Claim promptly in writing (but in any event within twenty (20) days after its receipt of the written Tax Claim or its determination, as applicable), and shall furnish Lessee with copies of such Tax Claim and all other writings received from the taxing authority to the extent relating to such claim (but provided that failure to so notify the Lessee within thirty (30) days shall not relieve the Lessee of its obligations hereunder alter such Tax Indemnitee's rights under this Section 13.5 except to the extent that it effectively such failure precludes or prejudices the ability to contest such Imposition) and shall not take any action with respect to such Claim, proceeding or Imposition without the written consent of the Lessee (such consent not to conduct a contest of the Tax Claim). The Tax Indemnitee shall not pay such Tax Claim until at least be unreasonably withheld or unreasonably delayed) for thirty (30) days after providing the Lessee with receipt of such written noticenotice by the Lessee; provided, unless (a) however, that in the case of any such Claim or proceeding, if such Tax Indemnitee is shall be required to do so by law or regulation or to take action prior to the failure to pay end of such thirty (30) day period, such Tax Claim could result Indemnitee shall, in a material adverse financial, legal or other consequence such notice to the Lessee, so inform the Lessee and such Tax Indemnitee and shall not take any action with respect to such Claim, proceeding or Imposition without the consent of the Lessee (bsuch consent not to be unreasonably withheld or unreasonably delayed) in for ten (10) days after the written receipt of such notice described above, by the Lessee unless such Tax Indemnitee shall be required by law or regulation to take action prior to the end of such ten (lO) day period. The 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 Lessee of such requirement is required by law or such material adverse consequence (such notice however shall not require the disclosure of the Tax Indemnitee's confidential information, as determined in the sole discretion of such Tax Indemnitiee, or the Tax Indemnitee's tax returns, books, or records). If the Lessee shall so request within 30 days after receipt of such notice (or such shorter period as is reasonably specified by the Tax Indemnitee if any contest of the Tax must be commenced prior to the expiration of 30 days), then regulation for such Tax Indemnitee shall to commence such contest), to request in good faith at Lessee's sole expense contest such Tax or permit the Lessee to contest such Tax, as writing that such Tax Indemnitee shall elect; provided, however, that to contest the extent Imposition at the Lessee's expense. If (ix) the contest involves only Taxes constituting property taxes, sales taxes, or use taxes, (ii) the contest does not involve any taxes that the Lessee is not required to indemnify the Tax Indemnitee or taxes and other issues relating to a Tax Indemnitee that are unrelated to the transactions contemplated by the Operative Agreements, (iii) the such contest can be pursued in the name of the Lessee and independently from any other proceeding involving a Tax Claim liability of a such Tax Indemnitee for which the Lessee has not agreed in writing to indemnify such Tax Indemnitee, and (iv) no Equity Insufficiency Circumstance exists, such contest shall be undertaken by the Lessee at the Lessee's sole expense and the after-tax costs of the Lessor, the Owner Participant, or other Tax Indemnitee shall be reimbursed by the Lessee. Notwithstanding the preceding sentence, if (ay) such contest would involve must be pursued in the name of such Tax Indemnitee, but can be pursued independently from any other type proceeding involving a Tax liability of Tax, any taxes that such Tax Indemnitee for which the Lessee is has not required agreed to indemnify the such Tax Indemnitee or taxes and other issues relating to a (z) such Tax Indemnitee which are unrelated so requests, then the Lessee shall have the right to control the transactions contemplated by contest of such Claim, provided that in the Operative Agreementscase of a contest described in clause (y), (b) the if such Tax Indemnitee determines obtains and provides the Lessee with the reasonable good faith opinion of such Tax Indemnitee's counsel that such contest conducted by the Lessee could have a material adverse impact on such Tax Indemnitee's the business or operations or involve risk of the imposition of criminal liability on a Tax Indemnitee, or (c) an Equity Insufficiency Circumstance exists, then such Tax Indemnitee may, in its sole discretion, control such contest (including selecting the forum for such contest, and determining whether any such contest shall be conducted by (i) paying such Tax under protest or (ii) resisting payment of such Tax or (iii) paying such Tax and seeking a refund thereof; provided, however, that at such Tax Indemnitee's option, such contest shall be conducted by the Lessee in the name of such Tax Indemnitee), including an explanation to the Lessee of such determination, such Tax Indemnitee may elect to control or reassert control of the contest, and provided that by taking control of the contest, the Lessee acknowledges that it is responsible for the Imposition ultimately determined to be due by reason of such Claim, and provided, further, that in determining the application of clauses (x) and (y) above, each Tax Indemnitee shall take any and all reasonable steps to segregate Claims for any Taxes for which the Lessee indemnifies hereunder from Taxes for which the Lessee is not obligated to indemnify hereunder, so that the Lessee can control the contest of the former. In all other Claims requested to be contested by the Lessee, such Tax Indemnitee shall control the contest of such Claim, acting through counsel reasonably acceptable to the Lessee. In no event shall such Tax Indemnitee be required or the Lessee be permitted to contest (or such Tax Indemnitee required to contest) any Claim, (A) if such Tax for which Indemnitee provides the Lessee is obligated with a legal opinion of counsel reasonably acceptable to indemnify pursuant to this Section 7.1 unless: the Lessee that such action, suit or proceeding involves a reasonable 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 (iother than a Permitted Lien) on any Property or any part thereof unless the Lessee shall have acknowledged in writing (x) that it is solely responsible for any Indemnified Tax resulting from any contest under its control, (y) its liability to such Tax Indemnitee for all reasonable out of pocket costs, losses posted and expenses that the Tax Indemnitees may incur in connection with contesting the Indemnified Tax (including, but not limited to, any reasonable legal, accounting and investigatory fees and disbursements), and (z) its liability for an indemnity payment pursuant to this Section 7.1 as maintained a result of such claim if and to the extent such Tax Indemnitee bond or the Lessee, as the case may be, shall not prevail in the contest of such claim; provided, however, that the Lessee shall not be required to indemnify for such Taxes to the extent the results of the contest clearly demonstrate that the Tax is not an Indemnified Tax unless the Lessee's conduct of the contest materially prejudiced the Tax Indemnitee; (ii) such Tax Indemnitee shall have received the opinion of independent tax counsel selected by the Tax Indemnitee and other security reasonably satisfactory to the Lessee relevant Tax Indemnitee in respect to such risk, (B) if an Event of Default has occurred and furnished at the Lessee's sole expenseis continuing, opining that a reasonable basis exists for contesting such claim or, in the event of an appeal of an adverse court or administrative agency decision, that as a result of a change in law or fact it is more likely than not that an appellate court or an administrative agency or decision making body with appellate jurisdiction, as the case may be, will reverse or substantially modify the adverse determination; (iiiC) unless the Lessee shall have agreed to pay and shall pay, to such Tax Indemnitee on demand (and at no after tax costs to the Lessor, the Owner Participant and any Tax Indemnitee) all reasonable costs out-of-pocket costs, losses and expenses that such Tax Indemnitee may incur in connection with contesting such claim (including, without limitation, Imposition including all reasonable legal legal, accounting and accounting investigatory fees and disbursements); , or (ivD) no Lease Default described in Section 14(a), 14(b), 14(c), 14(g) or 14(h) if such contest shall involve the payment of the Lease or a Lease Event of Default shall have occurred and shall have been continuingTax prior to the contest, unless the Lessee shall provide to such Tax Indemnitee an interest-free advance in its sole discretion exercised in good faith allows the Lessee to post a satisfactory bond or other security that does not involve a possibility of a Lien on the Equipment or any portion thereof or on any interest therein, and which bond or other security will be for an amount equal to the sum Imposition that the Indemnitee is required to pay (with no additional net after-tax costs to such Tax Indemnitee). In addition for Tax Indemnitee controlled contests and Claims contested in the name of (I) the costs of such contest (as reasonably estimated by such Tax Indemnitee in good faitha public forum, no contest shall be required: (A) and the Taxes which may be required to be indemnified and (II) if such Lease Default or Lease Event of Default involves a payment obligation under an Operative Agreement that is currently not paid in full, the unpaid amount of such obligation, plus the present value of the amounts not yet due pursuant to such obligation; (v) such Tax Indemnitee shall have determined that the action to be taken will not result in any risk of sale, forfeiture or loss of, or the creation of any Lien, or the Lessee shall have or otherwise made a provision to protect the interest of such Tax Indemnitee (in a manner satisfactory to such Tax Indemnitee in its sole discretion), on the Equipment or any portion thereof or any interest therein; (vi) 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 claims alone, or, if the subject matter thereof shall be of a continuing or recurring nature, when aggregated with substantially identical potential claims Tax Indemnitees with respect to any period for which the transactions contemplated Lessee may be liable to pay an indemnity under this Sec 13.5(b)) exceeds $250,000 and (B) unless, if requested by the Operative Agreements shall be at least $25,000; (vii) if such contest shall be conducted in a manner requiring the payment or deposit of the claimTax Indemnitee, the Lessee shall have paid the amount required (and at no after-tax costs provided to the Lessor, the Owner Participant or other Tax Indemnitee); and (viii) there is no risk of imposition of criminal liability or penalties. The Lessee shall cooperate with the such Tax Indemnitee in good faith with respect to any contest controlled and conducted by the Tax Indemnitee and the Tax Indemnitee in good faith shall consult with the Lessee regarding the conduct an opinion of such contest. A Tax Indemnitee shall not be required to pursue an appeal to the U.S. Supreme Court or the highest court in Canada or Mexico. The Tax Indemnitee shall cooperate with respect to any contest controlled and conducted counsel selected by the Lessee and (which may be in-house counsel) (except, in the Lessee shall consult with the Tax Indemnitee regarding the conduct case of income taxes indemnified hereunder, in which case such contest. Notwithstanding anything to the contrary contained in this Section 7.1, no Tax Indemnitee opinion shall be required to contest any claim if the subject matter thereof shall be of a continuing or recurring nature and shall have previously been adversely decided to the Tax Indemnitee pursuant to the contest provisions of this Section 7.1 unless there shall have been a change in the law (including, without limitation, amendments to statutes or regulations, administrative rulings (excluding private letter rulings and other rulings or materials that may not be relied upon by such Tax Indemnitee as precedent) or court decisions in the applicable jurisdiction) enacted, promulgated or effective after such claim shall have been so previously decided, and such Tax Indemnitee shall have received an opinion of independent tax counsel selected by the such Tax Indemnitee and reasonably satisfactory acceptable to the 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, furnished provided, however, that if such Tax Indemnitee is the controlling party and the Lessee 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 the Lessee 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. In addition, the controlling party shall keep the non-controlling party reasonably informed as to the progress of the contest, and shall provide the non-controlling party with a copy of (or appropriate excerpts from) 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. Each Tax Indemnitee shall, at the Lessee's sole expense, supply the Lessee with such information and documents reasonably requested by the Lessee as are necessary or advisable for the Lessee to participate in any action, suit or proceeding to the effect that such change is favorable extent permitted by this Section 13.5(b). Notwithstanding anything in this Section 13.5(b) to the position 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 13.5 (and with respect to which contest is required under this Section 13.5(b)) without the prior written consent of the Lessee, unless such Tax Indemnitee or the Lessee, as the case may be, had asserted in waives its right to be indemnified under this Section 13.5 with respect to such previous contest and as a result of such change, it is more likely than not that the Tax Indemnitee will prevail or, in the event of an appeal of an adverse court or administrative agency decision, that it is more likely than not that an appellate court or an administrative agency tribunal or decision making body with appellate jurisdiction, as the case may be, will reverse or substantially modify the adverse determinationClaim. Notwithstanding anything contained in this Section 7.1herein to the contrary, a Tax Indemnitee will not be required to contest (and the Lessee shall not be permitted to contest) a Claim with respect to the imposition of any Tax and shall be permitted to settle or compromise any claim without the Lessee's consent if such Tax Indemnitee (A) shall waive its right to indemnity indemnification under this Section 7.1 13.5 with respect to such Tax Claim (and any claim the outcome of which is determined based upon the outcome of such claim) and (B) shall pay to the Lessee any amount previously paid or advanced by the Lessee pursuant to this Section 7.1 Claim with respect to such Tax Claim, less year or any reasonable costs and expenses other taxable year the contest of the Tax Indemnitee prior to such payment in respect which is materially adversely affected as a result of such Tax Claimwaiver).
Appears in 1 contract
Sources: Participation Agreement (Alumax Inc)
Contests. If a any written claim is made by against any taxing authority Indemnitee or if any proceeding is commenced against a Tax any Indemnitee for any Taxes with respect as to which the Lessee Borrower may be required have indemnity obligation pursuant to indemnify against hereunder or if a Tax Section 9.02(a), such Indemnitee shall determine that any tax to which the Lessee may have an indemnity obligation hereunder may be payable (a "Tax Claim"), then such Tax Indemnitee shall give the Lessee written notice notify Borrower of such Tax Claim promptly (but in any event claim within twenty (20) days after its receipt of the written Tax Claim or its determination, as applicable), and shall furnish Lessee with copies of such Tax Claim and all other writings received from the taxing authority to the extent relating to such claim (but failure to so notify the Lessee shall not relieve the Lessee of its obligations hereunder except to the extent that it effectively precludes the ability of the Lessee to conduct a contest of the Tax Claim). The Tax Indemnitee shall not pay such Tax Claim until at least thirty (30) days after providing the Lessee with such written notice, unless (a) the Tax Indemnitee is required to do so by law or regulation or the failure to pay such Tax Claim could result in a material adverse financial, legal or other consequence to the Tax Indemnitee and (b) in the written receives notice described above, the Tax Indemnitee has notified the Lessee of such requirement claim or such material adverse consequence (such notice however shall not require the disclosure of the Tax Indemnitee's confidential information, as determined in the sole discretion of such Tax Indemnitiee, or the Tax Indemnitee's tax returns, books, or records). If the Lessee shall so request within 30 days after receipt of such notice (or such shorter period as is reasonably specified by the Tax Indemnitee if any contest of the Tax must be commenced prior to the expiration of 30 days), then such Tax Indemnitee shall in good faith at Lessee's sole expense contest such Tax or permit the Lessee to contest such Tax, as such Tax Indemnitee shall electproceeding; provided, however, that failure to provide such notice to Borrower shall not affect the obligation of Borrower to provide indemnity hereunder with respect to the Taxes that are the subject of such claim or proceeding unless and except to the extent that (i) the contest involves only Taxes constituting property taxes, sales taxessuch failure (whether by adversely affecting a counterclaim or defense, or use taxes, (iiotherwise) increases the contest does not involve any taxes that the Lessee is not required to indemnify the Tax Indemnitee or taxes and other issues relating to a Tax Indemnitee that are unrelated to the transactions contemplated by the Operative Agreements, (iii) the contest can be pursued amount for which Borrower would have been liable in the name absence of the Lessee and independently from any other proceeding involving a Tax Claim of a Tax Indemnitee for which Lessee has not agreed in writing to indemnify such Tax Indemniteefailure, and (iv) no Equity Insufficiency Circumstance exists, such contest shall be undertaken by the Lessee at the Lessee's sole expense and the after-tax costs of the Lessor, the Owner Participant, or other Tax Indemnitee shall be reimbursed by the Lessee. Notwithstanding the preceding sentence, if (a) such contest would involve any other type of Tax, any taxes that the Lessee is not required to indemnify the Tax Indemnitee or taxes and other issues relating to a Tax Indemnitee which are unrelated to the transactions contemplated by the Operative Agreements, (b) the Tax Indemnitee determines that such contest conducted by the Lessee could have a material adverse impact on such Tax Indemnitee's business or operations or involve risk of the imposition of criminal liability on a Tax Indemnitee, or (c) an Equity Insufficiency Circumstance exists, then such Tax Indemnitee may, in its sole discretion, control such contest (including selecting the forum for such contest, and determining whether any such contest shall be conducted by (i) paying such Tax under protest or (ii) such failure results in the imposition of, or an increase in the amount of, any penalties, interest, or additions to Tax related to the Tax which is the subject of such claim or proceeding. Upon Borrower’s timely written request, the Indemnitee shall, in good faith, with due diligence, and at Borrower’s expense, contest the validity, applicability, or amount of such Taxes by, in such Indemnitee’s discretion after consultation with Borrower, (aa) resisting payment of thereof, (bb) not paying the same except under protest, if protest is necessary and
(a) reasonably satisfactory to such Tax or (iii) paying such Tax and seeking a refund thereofIndemnitee; provided, however, that at such Tax Indemnitee's option, such contest shall be conducted by the Lessee in the name of such Tax Indemnitee). In no event shall such Tax Indemnitee be required or the Lessee be permitted to contest any Tax for which the Lessee is obligated to indemnify pursuant to this Section 7.1 unless: (i) the Lessee shall have acknowledged in writing (x) that it is solely responsible for any Indemnified Tax resulting from any contest under its control, (y) its liability if the Indemnitee decides after consultation with Borrower to such Tax Indemnitee for all reasonable out of pocket costs, losses and expenses that pay the Tax Indemnitees may incur in connection with contesting the Indemnified Tax (including, but not limited to, any reasonable legal, accounting and investigatory fees and disbursements), and (z) its liability for an indemnity payment pursuant to this Section 7.1 as a result of such claim if and prior to the extent such Tax Indemnitee or the Lesseecontest, as the case may be, Borrower shall not prevail in the contest of such claim; provided, however, that the Lessee shall not be required to indemnify for such Taxes provide to the extent the results of the contest clearly demonstrate that the Tax is not Indemnitee an Indemnified Tax unless the Lessee's conduct of the contest materially prejudiced the Tax Indemnitee; (ii) such Tax Indemnitee shall have received the opinion of independent tax counsel selected by the Tax Indemnitee and reasonably satisfactory to the Lessee and furnished at the Lessee's sole expense, opining that a reasonable basis exists for contesting such claim or, interest-free advance in the event of an appeal of an adverse court or administrative agency decision, that as a result of a change in law or fact it is more likely than not that an appellate court or an administrative agency or decision making body with appellate jurisdiction, as the case may be, will reverse or substantially modify the adverse determination; (iii) the Lessee shall have agreed to pay such Tax Indemnitee on demand (and at no after tax costs to the Lessor, the Owner Participant and any Tax Indemnitee) all reasonable costs and expenses that such Tax Indemnitee may incur in connection with contesting such claim (including, without limitation, all reasonable legal and accounting fees and disbursements); (iv) no Lease Default described in Section 14(a), 14(b), 14(c), 14(g) or 14(h) of the Lease or a Lease Event of Default shall have occurred and shall have been continuing, unless the Tax Indemnitee in its sole discretion exercised in good faith allows the Lessee to post a satisfactory bond or other security that does not involve a possibility of a Lien on the Equipment or any portion thereof or on any interest therein, and which bond or other security will be for an amount equal to the sum of Tax which the Indemnitee is required to pay and shall, in such case, pay any additional amount required to hold such Indemnitee harmless against any adverse Tax consequences arising from such advance (I) the costs of and if such contest (as reasonably estimated by such Tax Indemnitee in good faith) and the Taxes which may be required to be indemnified and (II) if such Lease Default or Lease Event of Default involves a payment obligation under an Operative Agreement that is currently not paid in fullfinally determined adversely, the unpaid amount of such obligation, plus advance shall be applied against Borrower’s obligation to indemnify the present value Indemnitee against the Tax which is the subject of the amounts not yet due pursuant to such obligationcontest); and (vz) such Tax Indemnitee shall have determined that the action to be taken will not result in involve any risk of criminal liability on the Indemnitee or of a sale, forfeiture forfeiture, or loss ofof any Engine Kit, or the creation of any LienLien other than Liens for the Taxes being contested unless Borrower posts a bond or other security reasonably satisfactory to the Indemnitee in respect to such risk (other than in the case of a risk of criminal liability). Any contest required pursuant to the preceding paragraph shall be conducted by Borrower in the name of Borrower, if permitted by law, with respect to (i) any claim which involves only Taxes or claims for which Borrower is required to indemnify hereunder, or the Lessee (ii) any claim which can be segregated and contested separately without material adverse unindemnified consequences for such Indemnitee, provided, Borrower shall have acknowledged in writing its obligation to indemnify the applicable Indemnitee with respect to such contest without regard to the exclusions in Section 9.02(a)(i) through (xi). Any other contest shall be at the control and discretion of the Indemnitee. If Borrower satisfies the conditions imposed on it in this Section 9.02(b) and an Indemnitee nevertheless fails to contest and refuses to permit Borrower to contest under and as and to the extent required by this Section 9.02(b), then Borrower shall not be obligated to indemnify such Indemnitee for such claim or otherwise made for any other claim for which a provision to protect the interest successful contest is adversely affected in any material respect because of such Tax failure to contest or to permit a contest. In addition, the Indemnitee (in shall not settle, concede, or compromise any contest without Borrower’s prior written consent unless the Indemnitee forgoes its right to be indemnified for such claim, and any such settlement, concession, or compromise without the prior written consent of Borrower shall constitute a manner satisfactory waiver of such Indemnitee’s rights to indemnification hereunder with respect to such Tax claim and any other related claim for which a successful contest is adversely affected in any material respect because of such settlement, concession, or compromise. If the settlement proposal of a claim is acceptable to the Indemnitee in its sole discretion)but is unacceptable to Borrower, on Borrower shall inform such Indemnitee of the Equipment or any portion thereof or any interest thereinamount for which Borrower would be willing to settle such claim and such Indemnitee may accept the settlement proposal; (vi) provided, that the amount of such claims alone, or, if the subject matter thereof shall be of a continuing or recurring nature, when aggregated with substantially identical potential claims with respect to the transactions contemplated by the Operative Agreements shall be at least $25,000; (vii) if such contest shall be conducted in a manner requiring the any indemnity payment or deposit of the claim, the Lessee shall have paid the amount required (and at no after-tax costs to the Lessor, the Owner Participant or other Tax Indemnitee); and (viii) there is no risk of imposition of criminal liability or penalties. The Lessee shall cooperate with the Tax Indemnitee in good faith with respect to any contest controlled and conducted by the Tax Indemnitee and the Tax Indemnitee in good faith shall consult with the Lessee regarding the conduct of such contest. A Tax Indemnitee shall not be required to pursue an appeal to the U.S. Supreme Court or the highest court in Canada or Mexico. The Tax Indemnitee shall cooperate with respect to any contest controlled and conducted by the Lessee and the Lessee shall consult with the Tax Indemnitee regarding the conduct of such contest. Notwithstanding anything to the contrary contained in this Section 7.1, no Tax Indemnitee which Borrower shall be required to contest any claim if the subject matter thereof shall be pay to such Indemnitee under Section 9.02(a) in respect of a continuing or recurring nature and shall have previously been adversely decided to the Tax Indemnitee pursuant to the contest provisions of this Section 7.1 unless there shall have been a change in the law (including, without limitation, amendments to statutes or regulations, administrative rulings (excluding private letter rulings and other rulings or materials that may not be relied upon by such Tax Indemnitee as precedent) or court decisions in the applicable jurisdiction) enacted, promulgated or effective after such claim shall not exceed the amount for which Borrower would have been so willing to settle such claim. Such Indemnitee shall promptly return such portion of any amounts (including any “gross up” paid thereon, but excluding the expense of contest), previously decidedadvanced by Borrower for the payment of the Taxes which were the subject of the contest, as exceeds the amount to which Borrower did not withhold its consent. If Borrower notifies such Indemnitee that the settlement proposal is unacceptable to Borrower, the Indemnitee shall treat such notification as Borrower’s request that such Indemnitee contest such claim for Taxes, in which case Borrower’s and such Tax Indemnitee Indemnitee’s rights and obligations with respect to such taxes shall have received an opinion of independent tax counsel selected by the Tax Indemnitee and reasonably satisfactory to the Lessee, furnished at the Lessee's sole expense, to the effect that such change is favorable to the position which such Tax Indemnitee or the Lessee, be as the case may be, had asserted in such previous contest and as a result of such change, it is more likely than not that the Tax Indemnitee will prevail or, in the event of an appeal of an adverse court or administrative agency decision, that it is more likely than not that an appellate court or an administrative agency tribunal or decision making body with appellate jurisdiction, as the case may be, will reverse or substantially modify the adverse determination. Notwithstanding anything contained provided in this Section 7.1, a Tax 9.02(b) without regard to the settlement proposal. An Indemnitee will not be required to contest appeal any decision to the imposition United States Supreme Court or any similar court in a jurisdiction outside the United States. If any Indemnitee actually obtains a refund (or would have actually received such a refund but for offset by matters not indemnifiable by Borrower under Section 9.02(a)) of all or any part of any Tax paid or reimbursed by Borrower, such Indemnitee shall promptly pay to Borrower the amount equal to the lesser of (x) the amount of such refund (or the amount of such offset) plus any interest thereon (less any Taxes imposed on such Indemnitee with respect to such interest) received from the relevant taxing authority (or which would have been received with respect to the amount of such an offset) plus the amount of any Tax benefits realized by such Indemnitee as a result of such payment (and net of any net Tax detriment resulting from the receipt of the refund and interest on the refund (after giving effect to such Indemnitee’s obligations to make payments to Borrower under this sentence)), and (y) the sum of (i) such Tax payment by Borrower to such Indemnitee plus (ii) any interest received by such Indemnitee with respect to such refund or offset plus (iii) any other payment other than the expenses of the contest by Borrower to such Indemnitee theretofore made (and not theretofore repaid to Borrower) pursuant to this Section 9.02(b), it being intended that such Indemnitee shall be permitted entitled to settle or compromise any claim without the Lessee's consent if such Tax Indemnitee (A) shall waive its right a net tax benefit pursuant to indemnity under this Section 7.1 9.02(b) only if Borrower has been reimbursed for any payments by it to such Indemnitee pursuant to this Section 9.02(b); provided, (a) such amount shall not be payable before such time as Borrower shall have made all payments or indemnities then due and owing to such Indemnitee by Borrower pursuant to the Basic Documents, (b) no Specified Default shall exist, and (c) the amount of such payment by the Indemnitee with respect to a Tax paid or indemnified by Borrower hereunder, together with all payments previously made to Borrower by the Indemnitee with respect to such Tax, shall not exceed the aggregate amount paid by Borrower to the Indemnitee with respect to such Tax pursuant to Section 9.02(a) other than the expenses of the contest. Any subsequent loss or disallowance of such refund (and as a result of a redetermination of the claim giving rise to such refund by any claim the outcome taxing authority or as a result of which is determined based upon the outcome of a judicial proceeding with respect to such claim) or tax benefit shall be treated as a Tax subject to indemnification under Section 9.02(a) without regard to the exclusions in Section 9.02(a) and (B) the provisions of this Section 9.02(b). If an Indemnitee receives an award of attorneys’ fees in a contest for which Borrower has paid an allocable portion of the contest expenses, such Indemnitee shall pay to Borrower that portion of the Lessee award that is directly related to the issues contested with respect to a Tax indemnified under this Section 9.02, taking into account the rules applicable to obtaining such an award and any amount previously paid decision of the court in making such award. Nothing in this Section 9.02 shall require any Indemnitee to contest or advanced by permit the Lessee contest of a claim which it would otherwise be required to contest pursuant to this Section 7.1 9.02 if such Indemnitee waives payment by Borrower of (x) any amount that might otherwise be payable by Borrower under this Section 9.02 by way of indemnity in respect of such claim, and (y) any other amount that might otherwise be payable by Borrower by way of indemnification in respect of any other claim for which a successful contest is adversely affected in any material respect because of such failure to contest. In such event, such Indemnitee shall reimburse Borrower for all amounts paid by or on behalf of Borrower with respect to such Tax Claim, less any reasonable costs and non-contested claim other than the expenses of the Tax Indemnitee prior to such payment in respect of such Tax Claimcontest.
Appears in 1 contract
Contests. Lessee shall pay (provided that during the Construction Period Lessee shall request an Advance, the proceeds of which shall be used to pay) on or before the time or times set forth in Section 9.2(c) all Taxes indemnifiable by Lessee under Section 9.2(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 a written any claim or claims is or are made by against any taxing authority against a Tax Indemnitee for any Taxes with respect Tax which is subject to which the Lessee may be required to indemnify against hereunder or if a Tax Indemnitee shall determine that any tax to which the Lessee may have an indemnity obligation hereunder may be payable (a "Tax Claim"indemnification as provided in Section 9.2(a), then such Tax Indemnitee shall give the Lessee written notice of such Tax Claim promptly (shall, as soon as practicable, but in any no event within more than twenty (20) days after its receipt of formal written notice of the written Tax Claim or its determinationproposed Tax, as applicable)notify Lessee; provided, and shall furnish Lessee with copies of such Tax Claim and all other writings received from however, that the taxing authority to the extent relating to such claim (but failure to so notify the Lessee give such notice shall not relieve the Lessee of its limit Lessee's obligations hereunder under Section 9.2(a) except to the extent that it effectively such failure precludes or materially adversely affects the ability of the Lessee to conduct a contest of the Tax Claim)any indemnifiable Taxes. The Tax Indemnitee shall not pay take any action with respect to such Tax Claim until at least thirty claim, proceeding or Imposition without the written consent of the Lessee (30such consent not to be unreasonably withheld or unreasonably delayed) for 30 days after providing the Lessee with receipt of such written noticenotice by the Lessee; provided, unless (a) however, that in the Tax case of any such claim or proceeding, if such Indemnitee is shall be required to do so by law or regulation or the failure to pay such Tax Claim could result in a material adverse financial, legal or other consequence take action prior to the end of such 30-day period, such Indemnitee shall in such notice to the Lessee, so inform the Lessee, and such Indemnitee shall not take any action with respect to such claim, proceeding or Tax Indemnitee and (b) in without the written notice described above, the Tax Indemnitee has notified consent of the Lessee of such requirement or such material adverse consequence (such notice however shall consent not require the disclosure of the Tax Indemnitee's confidential information, as determined in the sole discretion of such Tax Indemnitiee, to be unreasonably withheld or the Tax Indemnitee's tax returns, books, or records). If the Lessee shall so request within 30 unreasonably delayed) for 10 days after the receipt of such notice by the Lessee, unless the Indemnitee shall be required by law or regulation to take action prior to the end of such 10-day period. The Lessee shall be entitled for a period of 30 days from receipt of such notice from the Indemnitee (or such shorter period as the Indemnitee has notified the Lessee is reasonably specified required by law or regulation for the Tax Indemnitee if any contest of the Tax must be commenced prior to the expiration of 30 dayscommence such contest), then to request in writing that such Tax Indemnitee shall in good faith at Lessee's sole expense contest such Tax or permit the Lessee to contest the imposition of such, at the Lessee's expense. If (x) such Tax, as such Tax Indemnitee shall elect; provided, however, that to the extent (i) the contest involves only Taxes constituting property taxes, sales taxes, or use taxes, (ii) the contest does not involve any taxes that the Lessee is not required to indemnify the Tax Indemnitee or taxes and other issues relating to a Tax Indemnitee that are unrelated to the transactions contemplated by the Operative Agreements, (iii) the contest can be pursued in the name of the Lessee and independently from any other proceeding involving a Tax Claim liability of a Tax such Indemnitee for which the Lessee has not agreed in writing to indemnify such Tax Indemnitee, and (iv) no Equity Insufficiency Circumstance exists, such contest shall be undertaken by the Lessee at the Lessee's sole expense and the after-tax costs of the Lessor, the Owner Participant, or other Tax Indemnitee shall be reimbursed by the Lessee. Notwithstanding the preceding sentence, if (ay) such contest would involve must be pursued in the name of the Indemnitee, but can be pursued independently from any other type proceeding involving a Tax liability of Tax, any taxes that such Indemnitee for which the Lessee is has not required agreed to indemnify the Tax such Indemnitee or taxes and other issues relating (z) the Indemnitee so requests, then the Lessee shall be permitted to control the contest of such claim, provided that in the case of a Tax Indemnitee which are unrelated to the transactions contemplated by the Operative Agreementscontest described in any of clause (x), (by) the Tax Indemnitee determines that or (z), if such contest conducted by the Lessee could have a material adverse impact on such Tax Indemnitee's the business or operations or involve risk of the imposition of criminal liability on a Tax Indemnitee, or (c) an Equity Insufficiency Circumstance exists, then such Tax Indemnitee may, in its sole discretion, control such contest (including selecting and Indemnitee provides notice to the forum for such contest, and determining whether any such contest shall be conducted by (i) paying such Tax under protest or (ii) resisting payment Lessee of such Tax determination, the Indemnitee may elect to control or (iii) paying such Tax and seeking a refund thereof; provided, however, that at such Tax Indemnitee's option, such contest shall reassert control of the contest. In all other claims requested to be conducted contested by the Lessee in Lessee, the name Indemnitee shall control the contest of such Tax Indemnitee)claim, acting through counsel reasonably acceptable to the Lessee. In no event shall such Tax Indemnitee be required or the Lessee be permitted to contest (or the Indemnitee required to contest) any Tax for which claim, (A) if such Indemnitee provides the Lessee is obligated to indemnify pursuant to this Section 7.1 unless: (i) the Lessee shall have acknowledged in writing (x) that it is solely responsible for any Indemnified Tax resulting from any contest under its control, (y) its liability to such Tax Indemnitee for all reasonable out of pocket costs, losses and expenses that the Tax Indemnitees may incur in connection with contesting the Indemnified Tax (including, but not limited to, any reasonable legal, accounting and investigatory fees and disbursements), and (z) its liability for an indemnity payment pursuant to this Section 7.1 as a result of such claim if and to the extent such Tax Indemnitee or the Lessee, as the case may be, shall not prevail in the contest of such claim; provided, however, that the Lessee shall not be required to indemnify for such Taxes to the extent the results of the contest clearly demonstrate that the Tax is not an Indemnified Tax unless the Lessee's conduct of the contest materially prejudiced the Tax Indemnitee; (ii) such Tax Indemnitee shall have received the legal opinion of independent tax counsel selected by the Tax Indemnitee and reasonably satisfactory to the Lessee and furnished at the Lessee's sole expense, opining that a reasonable basis exists for contesting such claim or, in the event of an appeal of an adverse court or administrative agency decision, that as a result of a change in law or fact it is more likely than not that an appellate court or an administrative agency or decision making body with appellate jurisdiction, as the case may be, will reverse or substantially modify the adverse determination; (iii) the Lessee shall have agreed to pay such Tax Indemnitee on demand (and at no after tax costs to the Lessor, the Owner Participant and any Tax Indemnitee) all reasonable costs and expenses that such Tax Indemnitee may incur in connection with contesting such claim (includingaction, without limitation, all reasonable legal and accounting fees and disbursements); (iv) no Lease Default described in Section 14(a), 14(b), 14(c), 14(g) suit or 14(h) proceeding involves a risk of imposition of criminal liability or will involve a meaningful risk of the Lease or a Lease Event of Default shall have occurred and shall have been continuing, unless the Tax Indemnitee in its sole discretion exercised in good faith allows the Lessee to post a satisfactory bond or other security that does not involve a possibility of a Lien on the Equipment or any portion thereof or on any interest therein, and which bond or other security will be for an amount equal to the sum of (I) the costs of such contest (as reasonably estimated by such Tax Indemnitee in good faith) and the Taxes which may be required to be indemnified and (II) if such Lease Default or Lease Event of Default involves a payment obligation under an Operative Agreement that is currently not paid in full, the unpaid amount of such obligation, plus the present value of the amounts not yet due pursuant to such obligation; (v) such Tax Indemnitee shall have determined that the action to be taken will not result in any risk of 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, or unless the Lessee shall have posted and maintained a bond or otherwise made other security reasonably satisfactory to the relevant Indemnitee in respect to such risk, (B) if an Event of Default has occurred and is continuing, unless the Lessee shall have posted and maintained a provision bond or other security reasonably satisfactory to protect the interest relevant Indemnitee in respect of the Taxes subject to such claim and any and all expenses for which the Lessee is responsible hereunder reasonably foreseeable in connection with the contest of such Tax Indemnitee claim, (in a manner satisfactory C) unless the Lessee shall have agreed to pay and shall pay (provided that during the Construction Period Lessee shall request an Advance, the proceeds of which shall be used to pay) to such Tax Indemnitee on demand all reasonable out-of-pocket costs, losses and expenses that such Indemnitee may incur in its sole discretion)connection with contesting such imposition, on including all reasonable legal, accounting and investigatory fees and disbursements as well as the Equipment or any portion thereof or any interest therein; (vi) impositions which are the amount subject of such claims alone, or, if the subject matter thereof shall be of a continuing or recurring nature, when aggregated with substantially identical potential claims with respect claim to the transactions contemplated by extent the Operative Agreements shall be at least $25,000; contest is unsuccessful, or (viiD) if such contest shall be conducted involve the payment of the Tax prior to the contest, unless the Lessee shall provide to the Indemnitee an interest-free advance in an amount equal to the Imposition that the Indemnitee is required to pay (with no additional net after-tax costs (including Taxes) but taking into account any net tax savings associated with such advance to such Indemnitee). In addition, for Indemnitee controlled contests and claims contested in the name of the Indemnitee in a manner requiring public forum, no contest shall be required: (A) unless the payment or deposit amount of the claimpotential indemnity (taking into account all similar or logically related claims that have been or could be raised in any audit involving such Indemnitee for which the Lessee may be liable to pay an indemnity under this Section 9.2) exceeds $100,000 and (B) unless, if requested by the Indemnitee, the Lessee shall have paid the amount required (and at no after-tax costs provided to the Lessor, the Owner Participant or other Tax Indemnitee); and (viii) there is no risk of imposition of criminal liability or penalties. The Lessee shall cooperate with the Tax Indemnitee in good faith with respect to any contest controlled and conducted by the Tax Indemnitee and the Tax Indemnitee in good faith shall consult with the Lessee regarding the conduct of such contest. A Tax Indemnitee shall not be required to pursue an appeal to the U.S. Supreme Court or the highest court in Canada or Mexico. The Tax Indemnitee shall cooperate with respect to any contest controlled and conducted by the Lessee and the Lessee shall consult with the Tax Indemnitee regarding the conduct of such contest. Notwithstanding anything to the contrary contained in this Section 7.1, no Tax Indemnitee shall be required to contest any claim if the subject matter thereof shall be of a continuing or recurring nature and shall have previously been adversely decided to the Tax Indemnitee pursuant to the contest provisions of this Section 7.1 unless there shall have been a change in the law (including, without limitation, amendments to statutes or regulations, administrative rulings (excluding private letter rulings and other rulings or materials that may not be relied upon by such Tax Indemnitee as precedent) or court decisions in the applicable jurisdiction) enacted, promulgated or effective after such claim shall have been so previously decided, and such Tax Indemnitee shall have received an opinion of independent tax counsel selected by the Tax Indemnitee and reasonably satisfactory acceptable to the Lessee) that a reasonable basis exists to contest such claim. In no event shall 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 (or claim for refund) but the decisions regarding what actions to be taken shall be made by the controlling party in its sole judgement, furnished at provided, however, that if the Lessee's Indemnitee is the controlling party and the Lessee recommends the acceptance of a settlement offer made by the relevant Authority and such Indemnitee rejects such settlement offer, then the amount for which the Lessee will be required to indemnify such 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. In addition, the controlling party shall keep the non-controlling party reasonably informed as to the progress of the contest, and shall provide the 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. Each Indemnitee shall supply the Lessee with such information and documents reasonably requested by the Lessee as are necessary or advisable for the Lessee to participate in any action, suit or proceeding to the extent permitted by this Section 9.2(b), and the Lessee shall promptly reimburse such Indemnitee for the reasonable out-of-pocket expenses of supplying such information and documents. Notwithstanding anything contained herein to the contrary, an Indemnitee will not be required to contest (and the Lessee shall not be permitted to contest) a claim with respect to the imposition of any Tax if (i) such Indemnitee shall waive its right to indemnification under this Section 9.2 with respect to such claim and shall pay to Lessee any amount previously paid or advanced by Lessee pursuant to this Section 9.2 or (ii) such Tax is the sole expenseresult 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 reasonably acceptable to such Indemnitee to the effect that such change is favorable to the position which such Tax Indemnitee or the Lessee, as the case may be, had asserted in such previous contest and as a result of such change, it is more likely than not that the Tax Indemnitee will prevail or, in the event of an appeal of an adverse court or administrative agency decision, that it is more likely than not that an appellate court such change in law or an administrative agency tribunal or decision making body with appellate jurisdiction, as the case may be, facts will reverse or substantially modify the adverse determination. Notwithstanding anything contained result in this Section 7.1, a Tax Indemnitee will not be required to contest the imposition of any Tax and shall be permitted to settle or compromise any claim without the Lessee's consent if such Tax Indemnitee (A) shall waive its right to indemnity under this Section 7.1 with respect to such Tax (and any claim the outcome of which is determined based upon the outcome of such claim) and (B) shall pay to the Lessee any amount previously paid or advanced by the Lessee pursuant to this Section 7.1 with respect to such Tax Claim, less any reasonable costs and expenses favorable resolution of the Tax Indemnitee prior to such payment in respect of such Tax Claimclaim at issue).
Appears in 1 contract
Contests. If any claim shall be made against any Indemnitee or -------- if any proceeding shall be commenced against any Indemnitee (including a written claim is made by any taxing authority against a Tax Indemnitee notice of such proceeding) for any Taxes with respect to which the Lessee may be required to indemnify against hereunder or if a Tax Indemnitee shall determine that any tax Imposition as to which the Lessee may have an indemnity obligation hereunder pursuant to this Section 27.3, or if any Indemnitee shall determine that any Imposition to which the Lessee may have an indemnity obligation pursuant to this Section 27.3 may be payable payable, such Indemnitee shall, within thirty (a "Tax Claim")30) days, then such Tax Indemnitee shall give notify the Lessee written notice of such Tax Claim promptly in writing (but in any event within twenty (20) days after its receipt of the written Tax Claim or its determination, as applicable), and shall furnish Lessee with copies of such Tax Claim and all other writings received from the taxing authority to the extent relating to such claim (but provided that failure to so notify the Lessee within thirty (30) days shall not relieve the Lessee of its obligations hereunder alter such Indemnitee's rights under this Section 27.3 except to the extent that it effectively such failure precludes the ability of the Lessee to conduct a contest of the Tax Claim). The Tax Indemnitee any indemnified Taxes) and shall not pay take any action with respect to such Tax Claim until at least claim, proceeding or Impositions without the written consent of the Lessee (such consent not to be unreasonably withheld or unreasonably delayed) for thirty (30) days after providing the Lessee with receipt of such written noticenotice by the Lessee; provided, unless (a) however, that in the Tax case of any such claim or proceeding, -------- ------- if such Indemnitee is shall be required to do so by law or regulation or the failure to pay such Tax Claim could result in a material adverse financial, legal or other consequence take action prior to the Tax end of such 30-day period, such Indemnitee shall in such notice to the Lessee, so inform the Lessee, and (b) in such Indemnitee shall not take any action with respect to such claim, proceeding or Impositions without the written notice described above, the Tax Indemnitee has notified consent of the Lessee of such requirement or such material adverse consequence (such notice however shall consent not require the disclosure of the Tax Indemnitee's confidential information, as determined in the sole discretion of such Tax Indemnitiee, to be unreasonably withheld or the Tax Indemnitee's tax returns, books, or records). If the Lessee shall so request within 30 unreasonably delayed) for ten (10) days after the receipt of such notice by the Lessee unless such Indemnitee shall be required by law or regulation to take action prior to the end of such 10-day period. The Lessee shall be entitled for a period of sixty (60) days from receipt of such notice from such Indemnitee (or such shorter period as such Indemnitee has notified the Lessee is reasonably specified required by the Tax law or regulation for such Indemnitee if any contest of the Tax must be commenced prior to the expiration of 30 dayscommence such contest), then to request in writing that such Tax Indemnitee shall in good faith at Lessee's sole expense contest such Tax or permit the Lessee to contest imposition of such Tax, as at the Lessee's expense. If (x) such Tax Indemnitee shall elect; provided, however, that to the extent (i) the contest involves only Taxes constituting property taxes, sales taxes, or use taxes, (ii) the contest does not involve any taxes that the Lessee is not required to indemnify the Tax Indemnitee or taxes and other issues relating to a Tax Indemnitee that are unrelated to the transactions contemplated by the Operative Agreements, (iii) the contest can be pursued in the name of the Lessee and independently from any other proceeding involving a Tax Claim liability of a Tax such Indemnitee for which the Lessee has not agreed in writing to indemnify such Tax IndemniteeIndemnitee or (y) such Indemnitee so requests, and (iv) no Equity Insufficiency Circumstance exists, such contest then the Lessee shall be undertaken permitted to control the contest of such claim, provided, that by taking control of the contest, the Lessee at acknowledges that it is responsible for the Lessee's sole expense and the after-tax costs Impositions ultimately determined to be due by reason of the Lessor, the Owner Participant, or such claim. In all other Tax Indemnitee shall claims requested to be reimbursed contested by the Lessee. Notwithstanding , such Indemnitee shall control the preceding sentencecontest of such claim, if (a) such contest would involve any other type of Tax, any taxes that the Lessee is not required to indemnify the Tax Indemnitee or taxes and other issues relating to a Tax Indemnitee which are unrelated acting through counsel reasonably acceptable to the transactions contemplated by the Operative Agreements, (b) the Tax Indemnitee determines that such contest conducted by the Lessee could have a material adverse impact on such Tax Indemnitee's business or operations or involve risk of the imposition of criminal liability on a Tax Indemnitee, or (c) an Equity Insufficiency Circumstance exists, then such Tax Indemnitee may, in its sole discretion, control such contest (including selecting the forum for such contest, and determining whether any such contest shall be conducted by (i) paying such Tax under protest or (ii) resisting payment of such Tax or (iii) paying such Tax and seeking a refund thereof; provided, however, that at such Tax Indemnitee's option, such contest shall be conducted by the Lessee in the name of such Tax Indemnitee)Lessee. In no event shall such Tax Indemnitee be required or the Lessee be permitted to contest (or such Indemnitee required to contest) any Tax for which claim (A) if such Indemnitee provides the Lessee is obligated to indemnify pursuant to this Section 7.1 unless: (i) the Lessee shall have acknowledged in writing (x) that it is solely responsible for any Indemnified Tax resulting from any contest under its control, (y) its liability to such Tax Indemnitee for all reasonable out of pocket costs, losses and expenses that the Tax Indemnitees may incur in connection with contesting the Indemnified Tax (including, but not limited to, any reasonable legal, accounting and investigatory fees and disbursements), and (z) its liability for an indemnity payment pursuant to this Section 7.1 as a result of such claim if and to the extent such Tax Indemnitee or the Lessee, as the case may be, shall not prevail in the contest of such claim; provided, however, that the Lessee shall not be required to indemnify for such Taxes to the extent the results of the contest clearly demonstrate that the Tax is not an Indemnified Tax unless the Lessee's conduct of the contest materially prejudiced the Tax Indemnitee; (ii) such Tax Indemnitee shall have received the legal opinion of independent tax counsel selected by the Tax Indemnitee and reasonably satisfactory acceptable to the Lessee and furnished at the Lessee's sole expense, opining that a reasonable basis exists for contesting such claim or, in the event of an appeal of an adverse court or administrative agency decision, that as a result of a change in law or fact it is more likely than not that an appellate court or an administrative agency or decision making body with appellate jurisdiction, as the case may be, will reverse or substantially modify the adverse determination; (iii) the Lessee shall have agreed to pay such Tax Indemnitee on demand (and at no after tax costs to the Lessor, the Owner Participant and any Tax Indemnitee) all reasonable costs and expenses that such Tax Indemnitee may incur in connection with contesting such claim (includingaction, without limitation, all reasonable legal and accounting fees and disbursements); (iv) no Lease Default described in Section 14(a), 14(b), 14(c), 14(g) suit or 14(h) proceeding involves a risk of imposition of criminal liability or will involve a material risk of the Lease or a Lease Event of Default shall have occurred and shall have been continuing, unless the Tax Indemnitee in its sole discretion exercised in good faith allows the Lessee to post a satisfactory bond or other security that does not involve a possibility of a Lien on the Equipment or any portion thereof or on any interest therein, and which bond or other security will be for an amount equal to the sum of (I) the costs of such contest (as reasonably estimated by such Tax Indemnitee in good faith) and the Taxes which may be required to be indemnified and (II) if such Lease Default or Lease Event of Default involves a payment obligation under an Operative Agreement that is currently not paid in full, the unpaid amount of such obligation, plus the present value of the amounts not yet due pursuant to such obligation; (v) such Tax Indemnitee shall have determined that the action to be taken will not result in any risk of sale, forfeiture or loss of, or the creation of any Lien (other than a Permitted Property Lien, ) on the Property or any part of any thereof unless the Lessee shall have posted and maintained a bond or otherwise made a provision to protect the interest of such Tax Indemnitee (in a manner other security satisfactory to such Tax the relevant Indemnitee in its sole discretiondiscretion in respect to such risk, (B) if a Lease Event of Default has occurred and is continuing, unless the Lessee shall have posted and maintained a bond or other security satisfactory to the relevant Indemnitee in its sole discretion in respect of the Taxes subject to such claim and any and all expenses for which the Lessee is responsible hereunder is reasonably foreseeable in connection with the contest of such claim, (C) unless the Lessee shall have agreed to pay and shall pay, to such Indemnitee on demand all reasonable out-of-pocket costs, losses and expenses that such Indemnitee may incur in connection with contesting such Impositions including all reasonable legal, accounting and investigatory fees and disbursements, or (D) if such contest shall involve the payment of the Tax prior to the contest, unless the Lessee shall provide to such Indemnitee an interest-free advance in an amount equal to the Impositions that the Indemnitee is required to pay (with no additional net after-tax costs to such Indemnitee). In addition, on for Indemnitee controlled contests and claims contested in the Equipment or any portion thereof or any interest therein; name of such Indemnitee in a public forum, no contest shall be required: (viA) 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 such claims aloneIndemnitee with respect to any period for which the Lessee may be liable to pay an indemnity under this Section 27.3(b)) exceeds $100,000 and (B) unless, if requested by such Indemnitee, the Lessee shall have provided to such Indemnitee an opinion of counsel selected by the 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 such Indemnitee and reasonably acceptable to the Lessee) that a reasonable basis exists to contest such claim (or, in the case of an appeal of an adverse determination, and opinion of such counsel to the effect that there is substantial authority for the position asserted in such appeal). In no event shall 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 or recurring nature, when aggregated with substantially identical potential claims with respect to the transactions contemplated by the Operative Agreements shall be at least $25,000; (vii) if such contest shall be conducted in a manner requiring the payment or deposit of the claim, the Lessee shall have paid the amount required (and at no after-tax costs to the Lessor, the Owner Participant or other Tax Indemnitee); and (viii) there is no risk of imposition of criminal liability or penalties. The Lessee shall cooperate with the Tax Indemnitee in good faith with respect to any contest controlled and conducted by the Tax Indemnitee and the Tax Indemnitee in good faith shall consult with the Lessee regarding the conduct of such contest. A Tax Indemnitee shall not be required to pursue an appeal to the U.S. Supreme Court or the highest court in Canada or Mexico. The Tax Indemnitee shall cooperate with respect to any contest controlled and conducted by the Lessee and the Lessee shall consult with the Tax Indemnitee regarding the conduct of such contest. Notwithstanding anything to the contrary contained in this Section 7.1, no Tax Indemnitee shall be required to contest any claim if the subject matter thereof shall be of a continuing or recurring nature and shall have previously been decided adversely decided to the Tax Indemnitee by a court of competent jurisdiction pursuant to the contest provisions of this Section 7.1 27.3(b), unless there shall have been a change in the law (including, without limitation, amendments to statutes or regulations, administrative rulings (excluding private letter rulings interpretation thereof) and other rulings or materials that may not be relied upon by such Tax Indemnitee as precedent) or court decisions in the applicable jurisdiction) enacted, promulgated or effective after such claim shall have been so previously decided, and such Tax Indemnitee shall have received received, at the Lessee's expense, an opinion of independent tax counsel selected by the Tax Indemnitee Lessee and reasonably satisfactory acceptable to the Lessee, furnished at the Lessee's sole expense, to the effect Indemnitee stating that such change is favorable to the position which such Tax Indemnitee or the Lessee, as the case may be, had asserted in such previous contest and as a result of such changechange in law (or interpretation thereof), it is more likely than not that the Tax Indemnitee will prevail orin 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 but the decisions regarding what actions to be taken shall be made by the controlling party in its sole judgement. 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 event of an contest thereof. Each Indemnitee shall, at the Lessee's expense, supply the Lessee with such information and documents reasonably requested by the Lessee as are necessary or advisable for the Lessee to participate in any action, suit or proceeding to the extent permitted by this Section 27.3(b). Notwithstanding anything in this Section 27.3(b) to the contrary, no Indemnitee shall enter into any settlement or other compromise or fail to appeal of an adverse court or administrative agency decisionruling with respect to any claim which is entitled to be indemnified under this Section 27.3 (and with respect to which contest is required under this Section 27.3(b)) without the prior written consent of the Lessee, that it is more likely than unless such Indemnitee waives its right to be indemnified under this Section 27.3 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 that an appellate court or an administrative agency tribunal or decision making body with appellate jurisdiction, as the case may be, will reverse or substantially modify the adverse determinationbe unreasonably withheld. Notwithstanding anything contained in this Section 7.1herein to the contrary, a Tax Indemnitee will not be required to contest (and the Lessee shall not be permitted to contest) a claim with respect to the imposition of any Tax and shall be permitted to settle or compromise any claim without the Lessee's consent if such Tax Indemnitee (A) shall waive its right to indemnity indemnification under this Section 7.1 27.3 with respect to such Tax claim (and any claim the outcome of which is determined based upon the outcome of such claim) and (B) shall pay to the Lessee any amount previously paid or advanced by the Lessee pursuant to this Section 7.1 with respect to such Tax Claim, less year or any reasonable costs and expenses other taxable year the contest of the Tax Indemnitee prior to such payment in respect which is materially adversely affected as a result of such Tax Claimwaiver).
Appears in 1 contract
Sources: Lease Agreement (Palm Inc)
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 claim is made by any taxing authority against a Tax Indemnitee notice of such proceeding) for any Taxes with respect to which the Lessee may be required to indemnify against hereunder or if a Tax Indemnitee shall determine that any tax as to which the Lessee may have an indemnity obligation hereunder may be payable (a "Tax Claim")pursuant to this Section 8.2, then such Tax Indemnitee shall give promptly notify the Lessee in writing and shall not take any action with respect to such claim or Tax without the consent of Lessee (such consent not to be unreasonably withheld) for 30 days after the receipt of such notice by Lessee; 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 30 day period, such Tax Indemnitee shall, in such notice to Lessee, so inform Lessee, and such Tax Indemnitee shall not take any action with respect to such claim or Tax without the consent of Lessee (not to be unreasonably withheld) before 10 days from the receipt of such notice by Lessee unless the Tax Indemnitee shall be required by law or regulation to take action prior to the end of such 10 day period. The 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 continuing (unless the Lessee has provided reasonably satisfactory security for its obligations in respect of a contest), if requested by Lessee in a written request to such Tax Claim promptly Indemnitee within 30 days (or such shorter period referred to in the proviso to the first sentence in this Section 8.2(e) (but in any event within twenty (20not less than 10 days)) days after its receipt of the written Tax Claim or its determination, as applicable), and shall furnish Lessee with copies of such Tax Claim and all other writings received from the taxing authority to the extent relating to such claim (but failure to so notify the Lessee shall not relieve the Lessee of its obligations hereunder except to the extent that it effectively precludes the ability of the Lessee to conduct a contest of the Tax Claim). The Tax Indemnitee shall not pay such Tax Claim until at least thirty (30) days after providing the Lessee with such written notice, unless (a) the Tax Indemnitee is required to do so by law or regulation or the failure to pay such Tax Claim could result in a material adverse financial, legal or other consequence to the Tax Indemnitee and (b) in the written notice described above, the Tax Indemnitee has notified the Lessee of such requirement or such material adverse consequence (such notice however shall not require the disclosure of the Tax Indemnitee's confidential information, as determined in the sole discretion of such Tax Indemnitiee, or the Tax Indemnitee's tax returns, books, or records). If the Lessee shall so request within 30 days after receipt of such notice (or such shorter period as is reasonably specified by the Tax Indemnitee if any contest of the Tax must be commenced prior to the expiration of 30 days), then such Tax Indemnitee shall at the expense of Lessee in good faith at Lessee's sole expense contest (including, without limitation, by pursuit of appeals and administrative procedures) (or, if permitted by Applicable Law (and such Tax or 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 TaxTaxes by (i) resisting payment thereof, as such Tax Indemnitee (ii) not paying the same except under protest, if protest shall electbe necessary and proper or (iii) if payment shall be made, using reasonable efforts to obtain a refund thereof in appropriate administrative and/or judicial proceedings; provided, however, that to the extent (i) the contest involves only Taxes constituting property taxes, sales taxes, or use taxes, (ii) the contest does not involve any taxes that the Lessee is not required to indemnify the Tax Indemnitee or taxes and other issues relating to a Tax Indemnitee that are unrelated to the transactions contemplated by the Operative Agreements, (iii) the contest can be pursued in the name of the Lessee and independently from any other proceeding involving a Tax Claim of a Tax Indemnitee for which Lessee has not agreed in writing to indemnify such Tax Indemnitee, and (iv) no Equity Insufficiency Circumstance exists, such contest shall be undertaken by the Lessee at the Lessee's sole expense and the after-tax costs of the Lessor, the Owner Participant, or other Tax Indemnitee shall be reimbursed by the Lessee. Notwithstanding the preceding sentence, if (a) such contest would involve any other type of Tax, any taxes that the Lessee is not required to indemnify the Tax Indemnitee or taxes and other issues relating to a Tax Indemnitee which are unrelated to the transactions contemplated by the Operative Agreements, (b) the Tax Indemnitee determines that such contest conducted by the Lessee could have a material adverse impact on such Tax Indemnitee's business or operations or involve risk of the imposition of criminal liability on a Tax Indemnitee, or (c) an Equity Insufficiency Circumstance exists, then such Tax Indemnitee may, in its sole discretion, control such contest (including selecting the forum for such contest, and determining whether any such contest shall be conducted by (i) paying such Tax under protest or (ii) resisting payment of such Tax or (iii) paying such Tax and seeking a refund thereof; provided, however, that at such Tax Indemnitee's option, such contest shall be conducted by the Lessee in the name of such Tax Indemnitee). In no event shall such Tax Indemnitee be required to contest or the permit Lessee be permitted to contest any claim for any Tax for which unless (u) in the Lessee is obligated to indemnify pursuant to this Section 7.1 unless: (i) case of the Lessee-Controlled Contest, the Lessee shall have acknowledged in writing (x) that it is solely responsible for any Indemnified Tax resulting from any contest under its control, (y) its liability to such provided the relevant Tax Indemnitee for all reasonable out with a written acknowledgment of pocket costs, losses and expenses that its obligation to indemnify the Tax Indemnitees may incur in connection with contesting the Indemnified Tax (including, but not limited to, any reasonable legal, accounting and investigatory fees and disbursements), and (z) its liability for an indemnity payment pursuant to this Section 7.1 as a result of such claim if and to the extent such Tax Indemnitee or the Lessee, as the case may be, shall not prevail in the contest of such claim; provided, however, that the Lessee shall not be required to indemnify for such Taxes to the extent the results of the contest clearly demonstrate that the Tax is not an Indemnified Tax unless the Lessee's conduct of the contest materially prejudiced the Tax Indemnitee; successful, (iiv) such Tax Indemnitee shall have received the opinion of independent tax counsel selected by the Tax Indemnitee and reasonably satisfactory to the Lessee and furnished at the Lessee's sole expense, opining that a reasonable basis exists for contesting such claim or, in the event of an appeal of an adverse court or administrative agency decision, that as a result of a change in law or fact it is more likely than not that an appellate court or an administrative agency or decision making body with appellate jurisdiction, as the case may be, will reverse or substantially modify the adverse determination; (iii) the Lessee shall have agreed in writing to pay such Tax Indemnitee and shall pay on demand (and at no after tax costs to the Lessor, the Owner Participant and any an After-Tax Indemnitee) Basis as incurred all reasonable costs and expenses that such Tax Indemnitee may shall incur in connection with contesting such claim (including, without limitation, all reasonable costs, expenses, legal and accounting fees and disbursements); (iv) no Lease Default described in Section 14(a), 14(b), 14(c), 14(g) or 14(h) of the Lease or a Lease Event of Default shall have occurred and shall have been continuing, unless the Tax Indemnitee in its sole discretion exercised in good faith allows the Lessee to post a satisfactory bond or other security that does not involve a possibility of a Lien on the Equipment or any portion thereof or on any interest therein, and which bond or other security will be for an amount equal to the sum of (I) the costs of such contest (as reasonably estimated by such Tax Indemnitee in good faith) and the Taxes which may be required to be indemnified and (II) if such Lease Default or Lease Event of Default involves a payment obligation under an Operative Agreement that is currently not paid in full, the unpaid amount of such obligation, plus the present value of the amounts not yet due pursuant to such obligation; (vw) 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 risk material danger of sale, forfeiture or loss of, or the creation of any Lien, or the Lien (except if Lessee shall have adequately bonded such Lien or otherwise made a provision to protect the interest interests of such Tax Indemnitee (and the Lessor in a manner reasonably satisfactory to such Tax Indemnitee in its sole discretion), and the Lessor) on the Equipment or any portion thereof Property or any interest therein; (vi) the amount therein and that there is no risk of such claims alone, or, if the subject matter thereof shall criminal liability that may be of a continuing or recurring nature, when aggregated with substantially identical potential claims imposed with respect to the transactions contemplated by the Operative Agreements shall be at least $25,000such Tax Indemnitee; (viix) if such contest shall be conducted in a manner requiring require the payment or deposit of the claim, the Lessee shall have paid advance the amount required thereof plus (to the extent indemnified under Section 8.2(a) hereof) interest, penalties and at additions to tax with respect thereto to such Tax Indemnitee on an interest free basis (with no additional net after-tax costs cost to the Lessor, the Owner Participant or other such Tax IndemniteeIndemnitee but taking into account any net tax savings associated with such advance); and (viiiy) there if the contest is no risk of imposition of criminal liability or penalties. The Lessee shall cooperate with not the Tax Indemnitee Lessee-Controlled Contest, then if requested in good faith with respect to any contest controlled and conducted writing by the Tax Indemnitee and Indemnitee, the Tax Indemnitee in good faith shall consult with the Lessee regarding the conduct of such contest. A Tax Indemnitee shall not be required to pursue an appeal to the U.S. Supreme Court or the highest court in Canada or Mexico. The Tax Indemnitee shall cooperate with respect to any contest controlled and conducted by the Lessee and the Lessee shall consult with the Tax Indemnitee regarding the conduct of such contest. Notwithstanding anything to the contrary contained in this Section 7.1, no Tax Indemnitee shall be required to contest any claim if the subject matter thereof shall be of a continuing or recurring nature and shall have previously been adversely decided to the Tax Indemnitee pursuant to the contest provisions of this Section 7.1 unless there shall have been a change in the law (including, without limitation, amendments to statutes or regulations, administrative rulings (excluding private letter rulings and other rulings or materials that may not be relied upon by such Tax Indemnitee as precedent) or court decisions in the applicable jurisdiction) enacted, promulgated or effective after such claim shall have been so previously decided, and such Tax Indemnitee shall have received been provided with an opinion of independent tax counsel selected by the Tax Indemnitee and reasonably satisfactory acceptable to the Lessee, which opinion shall be furnished at the Lessee's sole cost and expense, to the effect that there is a reasonable basis for contesting such change claim; and (z) if the contest is favorable not the Lessee-Controlled Contest, the amount of such claim exceeds $37,500. Upon a final determination of such contest or the receipt of a refund by the Tax Indemnitee with respect to contested liability as to which an advance has been made, the 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 position which 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 or shall repay to the Lessee, as 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 case may be, had asserted in such previous contest and Tax Indemnitee as a result of any such changepayment; 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, it is more likely than not that the Tax Indemnitee will prevail orshall not be entitled to settle, in the event of an appeal of an adverse court compromise or administrative agency decision, that it is more likely than not that an appellate court or an administrative agency tribunal or decision making body with appellate jurisdiction, pay such Tax so long as the case may be, will reverse or substantially modify the adverse determinationdefense is being conducted in good faith. Notwithstanding anything contained in this Section 7.18.2, a Tax Indemnitee will shall not be required to contest the imposition of any Tax and shall be permitted to settle or compromise any claim or permit Lessee to contest any claim and may settle any contest without the Lessee's consent of Lessee if such Tax Indemnitee (A) shall waive its right to indemnity under this Section 7.1 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 is based, in whole or in part, upon the outcome resolution of such claim, the contest of which is determined based upon effectively precluded by the outcome resolution of such claim) and (B) shall pay to the Lessee any amount previously paid or advanced by the Lessee pursuant to this Section 7.1 8.2 with respect to such claim for such Tax Claim, less any reasonable costs and expenses or the contest of such Tax (other than amounts described in clause (v) of the preceding paragraph). If any Tax Indemnitee prior or any Affiliate thereof shall receive a refund of, or receive a credit for (or would have 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 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 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 Tax Indemnitee made pursuant to this sentence (including this clause (xx)) and (yy) such tax payment, reimbursement or advance by Lessee to such Tax Indemnitee plus any other payment in respect of such 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 ClaimIndemnitee 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 costs and expenses described in clause (v) of the first paragraph of this Section 8.2(e)) in respect of such contest by it to such Tax Indemnitee pursuant to this Section 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 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 refund or credit or deemed refund or credit, as the case may be, such Tax Indemnitee or any Affiliate thereof shall receive (or would have received but for a counterclaim or other claim not indemnified by the Lessee hereunder) an amount representing interest on the amount of such refund or credit or deemed refund or credit, as the case may be, 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 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 address as set forth in this Agreement. Any amount payable under this Section 8.2 that is not paid when due shall bear interest at the Overdue Rate.
Appears in 1 contract
Sources: Participation Agreement (American Financial Realty Trust)
Contests. If a written claim for payment is made by any taxing authority against a Tax an Indemnitee for any Taxes with respect to which the Lessee may be required liable for indemnity pursuant to indemnify against hereunder or if a Tax Indemnitee shall determine that any tax to which the Lessee may have an indemnity obligation hereunder may be payable this Section 7.4 (a "Tax Claim"), then such Tax Indemnitee shall give the Lessee written notice of such Tax Claim promptly (but in any event within twenty (20) days after its receipt of the written Tax Claim or its determination, as applicable)receipt, and shall furnish Lessee with copies of such Tax Claim and all other writings received from the taxing authority to the extent relating to such claim (but failure to so notify the Lessee shall not relieve the Lessee of its obligations hereunder except to the extent that it effectively precludes the ability of the Lessee to conduct a contest of the Tax Claim)claim. The Tax Indemnitee shall not pay such Tax Claim until at least thirty (30) days after providing the Lessee with such written notice, unless (a) the Tax Indemnitee is required to do so by law or regulation or regulation. Subject to the failure conditions set forth in the following paragraph, Lessee shall be entitled to pay such contest (acting through counsel selected by Lessee and reasonably acceptable to the Indemnitee), and control the contest of, any Tax Claim could result in a material adverse financial, legal or other consequence to the Tax Indemnitee and (b) in the written notice described above, the Tax Indemnitee has notified the Lessee of such requirement or such material adverse consequence (such notice however shall not require the disclosure of the Tax Indemnitee's confidential information, as determined in the sole discretion of such Tax Indemnitiee, or the Tax Indemnitee's tax returns, books, or records). If the Lessee shall so request within 30 days after receipt of such notice (or such shorter period as is reasonably specified by the Tax Indemnitee if any contest of the Tax must be commenced prior to the expiration of 30 days), then such Tax Indemnitee shall in good faith at Lessee's sole expense contest such Tax or permit the Lessee to contest such Tax, as such Tax Indemnitee shall elect; provided, however, that to the extent (i) the contest involves only Taxes constituting property taxes, sales taxes, or use taxes, of the Tax Claim may be pursued in the name of Lessee; (ii) the contest does not involve any taxes that the Lessee is not required to indemnify of the Tax Indemnitee or taxes and other issues relating to a Tax Indemnitee that are unrelated to the transactions contemplated by the Operative Agreements, (iii) the contest can Claim must be pursued in the name of the Lessee and Indemnitee but can be pursued independently from any other proceeding involving a Tax Claim tax liability of a Tax such Indemnitee for which Lessee has not agreed in writing to indemnify such Tax Indemnitee, and (iv) no Equity Insufficiency Circumstance exists, such contest shall be undertaken by the Lessee at the Lessee's sole expense and the after-tax costs of the Lessor, the Owner Participant, or other Tax Indemnitee shall be reimbursed by the Lessee. Notwithstanding the preceding sentence, if (a) such contest would involve any other type of Tax, any taxes that the Lessee is not required to indemnify the Tax Indemnitee or taxes and other issues relating to a Tax Indemnitee which are unrelated to the transactions contemplated by the Operative Agreements, (b) the Tax Indemnitee determines that such contest conducted by the Lessee could have a material adverse impact on such Tax Indemnitee's business or operations or involve risk of the imposition of criminal liability on a Tax Indemnitee, or (c) an Equity Insufficiency Circumstance exists, then such Tax Indemnitee may, in its sole discretion, control such contest (including selecting the forum for such contest, and determining whether any such contest shall be conducted by (i) paying such Tax under protest or (ii) resisting payment of such Tax responsible or (iii) paying the Indemnitee requests that Lessee control such contest. In the case of all other Tax and seeking a refund thereof; providedClaims, however, that at such Tax Indemnitee's option, such contest shall be conducted by subject to the Lessee conditions set forth in the name of such following paragraph, the Indemnitee shall contest the Tax Indemnitee). In no event shall such Tax Indemnitee be required or the Lessee be permitted to contest any Tax for which the Lessee is obligated to indemnify pursuant to this Section 7.1 unless: (i) the Claim if Lessee shall have acknowledged in writing (x) that it is solely responsible for any Indemnified Tax resulting from any contest under its control, (y) its liability to such Tax Indemnitee for all reasonable out of pocket costs, losses and expenses request that the Tax Indemnitees may incur in connection with contesting the Indemnified Tax (including, but not limited to, any reasonable legal, accounting and investigatory fees and disbursements)be contested, and the following rules shall apply with respect to such contest:
(z1) its liability for an indemnity payment pursuant to this Section 7.1 as a result of such claim if and to the extent such Tax Indemnitee or the Lessee, as the case may be, shall not prevail in control the contest of such claim; provided, however, that the Lessee shall not be required to indemnify for such Taxes Tax Claim in good faith taking into account any and all tax consequences to the extent the results of the contest clearly demonstrate that the Tax is not an Indemnified Tax unless the Lessee's conduct of the contest materially prejudiced the Tax Indemnitee; (ii) such Tax Indemnitee shall have received the opinion of independent tax counsel selected by the Tax Indemnitee and reasonably satisfactory to the Lessee and furnished at the Lessee's sole expense, opining that a reasonable basis exists for contesting such claim or, in the event of an appeal of an adverse court or administrative agency decision, that as a result of a change in law or fact it is more likely than not that an appellate court or an administrative agency or decision making body with appellate jurisdiction, as the case may be, will reverse or substantially modify the adverse determination; (iii) the Lessee shall have agreed to pay such Tax Indemnitee on demand (and at no after tax costs to the Lessor, the Owner Participant and any Tax Indemnitee) all reasonable costs and expenses that such Tax Indemnitee may incur in connection with contesting such claim (including, without limitation, all those associated with a recharacterization of the transaction contemplated by the Operative Documents by any taxing authority (acting through counsel selected by the Indemnitee and reasonably acceptable to Lessee), and
(2) the Indemnitee shall not otherwise settle, compromise or abandon such contest without Lessee's prior written consent except as provided in the concluding paragraph to this Section 7.4(b). In either case, the party conducting such contest shall consult with and keep reasonably informed the other party and its designated counsel with respect to such Tax Claim, shall provide the other party with copies of any reports or claims issued by the relevant auditing agents or taxing authority as well as related portions of tax returns, and shall consider and consult in good faith with the other party regarding any request, including but not limited to requests (a) to resist payment of Taxes if practical and (b) not to pay such Taxes except under protest if protest is necessary and proper (but the decisions regarding what actions are to be taken shall be made by the controlling party in its sole judgment). Notwithstanding the foregoing, no contest with respect to a Tax Claim shall be required or permitted and Lessee shall be required to pay the applicable Taxes without contest, unless:
(1) within thirty (30) days after notice by the Indemnitee to Lessee of such Tax Claim, Lessee shall request in writing to the Indemnitee that such Tax Claim be contested; provided that if a shorter period is required for taking action with respect to such Tax Claim and the Indemnitee notifies Lessee of such requirement, Lessee shall use reasonable legal and accounting fees and disbursements); efforts to request such contest within such shorter period,
(iv2) no Lease Default described in Section 14(a), 14(b), 14(c), 14(g) or 14(h) of the Lease or a Lease Event of Default shall have has occurred and shall have been is continuing, unless the Tax Indemnitee in its sole discretion exercised in good faith allows the Lessee to post a satisfactory bond or other security that does not involve a possibility of a Lien on the Equipment or any portion thereof or on any interest therein, and which bond or other security will be for an amount equal to the sum of ,
(I3) the costs of such contest (as reasonably estimated by such Tax Indemnitee in good faith) and the Taxes which may be required to be indemnified and (II) if such Lease Default or Lease Event of Default involves a payment obligation under an Operative Agreement that there is currently not paid in full, the unpaid amount of such obligation, plus the present value of the amounts not yet due pursuant to such obligation; (v) such Tax Indemnitee shall have determined that the action to be taken will not result in any no risk of sale, forfeiture or loss of, or the creation of any Lien, or a Lien on Lessee's interest in the Lessee shall have or otherwise made Leased Property as a provision to protect the interest result of such Tax Indemnitee Claim (in other than a manner Permitted Lien); provided that this clause (3) shall not apply if Lessee posts security satisfactory to such Tax the Indemnitee in its sole discretion), or the Tax is fully paid in either manner specified in clause (5) below,
(4) there is no risk of imposition of any criminal penalties,
(5) if such contest involves payment of such Tax, Lessee shall either advance to the Indemnitee on the Equipment or any portion thereof or any interest therein; (vi) an interest-free basis, and with no after-tax cost to such Indemnitee, the amount of the Tax (a "Tax Advance") or pay such claims aloneIndemnitee the amount payable by Lessee pursuant to this Section 7.4 with respect to such Tax,
(6) Lessee agrees to pay (and pay on demand) and with no after-tax cost to such Indemnitee, oral1 reasonable costs, if losses and expenses incurred by the subject matter thereof shall be Indemnitee in connection with the contest of such claim (including all reasonable legal, accounting and investigatory fees and disbursements),
(7) the Indemnitee has been provided at Lessee's sole expense with an opinion, reasonably acceptable to such Indemnitee, of independent tax counsel of recognized standing selected by Lessee and reasonably acceptable to the Indemnitee to the effect that there is a continuing or recurring naturereasonable basis for contesting such Tax Claim,
(8) the amount of Taxes in controversy, when aggregated with substantially identical potential claims taking into account the amount of all similar and logically related Taxes with respect to the transactions contemplated by the Operative Agreements shall Documents that could be at least raised in any other year (including any future year) not barred by the statute of limitations, exceeds $25,000; 150,000,
(vii9) if such contest shall be conducted in a manner requiring the payment or deposit of the claim, the Lessee shall have paid acknowledge in writing their liability to indemnify the amount required (and at no after-tax costs to Indemnitee hereunder in respect of such claim if the Lessorcontest is not successful, provided that if the Owner Participant or other Tax Indemnitee); and (viii) there is no risk of imposition of criminal liability or penalties. The Lessee shall cooperate with the Tax Indemnitee was in good faith with respect to any contest controlled and conducted by the Tax Indemnitee and the Tax Indemnitee in good faith shall consult with the Lessee regarding the conduct control of such contest. A Tax Indemnitee , such acknowledgment of liability shall not be binding if the contest is resolved on a clearly articulated basis that establishes that Lessee would not have been required to pursue an indemnify the Indemnitee in the absence of such acknowledgment, and
(10) in the case of a judicial appeal, no appeal to the U.S. Supreme Court shall be required of the Indemnitee or the highest court in Canada or Mexico. The Tax Indemnitee shall cooperate with respect to any contest controlled and conducted be permitted by the Lessee and the Lessee shall consult with the Tax Indemnitee regarding the conduct of such contestLessee. Notwithstanding anything to the contrary contained in this Section 7.17.4, no Tax the Indemnitee shall be required at any time may elect to contest decline to take any claim if the subject matter thereof shall be of a continuing action or recurring nature and shall have previously been adversely decided any further action with respect to the Tax Indemnitee pursuant to the contest provisions of this Section 7.1 unless there shall have been a change in the law (including, without limitation, amendments to statutes or regulations, administrative rulings (excluding private letter rulings and other rulings or materials that may not be relied upon by such Tax Indemnitee as precedent) or court decisions in the applicable jurisdiction) enacted, promulgated or effective after such claim shall have been so previously decided, and such Tax Indemnitee shall have received an opinion of independent tax counsel selected by the Tax Indemnitee and reasonably satisfactory to the Lessee, furnished at the Lessee's sole expense, to the effect that such change is favorable to the position which such Tax Indemnitee or the Lessee, as the case may be, had asserted in such previous contest and as a result of such change, it is more likely than not that the Tax Indemnitee will prevail or, in the event of an appeal of an adverse court or administrative agency decision, that it is more likely than not that an appellate court or an administrative agency tribunal or decision making body with appellate jurisdiction, as the case may be, will reverse or substantially modify the adverse determination. Notwithstanding anything contained in this Section 7.1, a Tax Indemnitee will not be required to contest the imposition of any Tax Claim and shall be permitted to may in its sole discretion settle or compromise any claim without the Lessee's consent if such Tax Indemnitee (A) shall waive its right to indemnity under this Section 7.1 contest with respect to such Tax Claim without Lessee's consent if the Indemnitee:
(and 1) waives its right to any claim the outcome of which is determined based upon the outcome of such claim) and (B) shall pay to the Lessee any amount previously paid or advanced indemnity payment by the Lessee pursuant to this Section 7.1 with respect to such Tax Claim, less any reasonable costs and expenses of the Tax Indemnitee prior to such payment 7.4 in respect of such Tax Claim (and any other claim for Taxes with respect to any other taxable year and/or with respect to any other claim, the contest of which is effectively precluded by the Indemnitee's declination to take action with respect to the Tax Claim), and
(2) promptly repays to Lessee any Tax Advance and any amount paid to such Indemnitee under this Section 7.4 in respect of such Taxes, but not any costs or expenses with respect to any such contest. Except as provided in the preceding sentence, any such waiver shall be without prejudice to the rights of the Indemnitee with respect to any other Tax Claim.
Appears in 1 contract
Contests. If a written claim is made by (i) After the Closing Date, Purchaser and Seller each shall notify the other party in writing within ten (10) days of the commencement of any taxing authority against a Tax Indemnitee for any Audit affecting the Taxes of or with respect to which the Lessee may Companies or the Subsidiaries that, if determined adversely to the taxpayer (the “Tax Indemnified Party”) or after the lapse of time would be required to indemnify against hereunder or if grounds for indemnification under Section 5.4(b) by the other party (the “Tax Indemnifying Party” and a Tax Indemnitee shall determine that any tax to which the Lessee may have an indemnity obligation hereunder may be payable (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 Taxing Authority in respect of any such asserted Tax liability. Failure to give such notification shall not affect the indemnification provided in Section 5.4(b), then such Tax Indemnitee shall give the Lessee written notice of such Tax Claim promptly (but in any event within twenty (20) days after its receipt of the written Tax Claim or its determination, as applicable), and shall furnish Lessee with copies of such Tax Claim and all other writings received from the taxing authority to the extent relating to such claim (but failure to so notify the Lessee shall not relieve the Lessee of its obligations hereunder except to the extent that it effectively precludes the ability of the Lessee to conduct a contest of the Tax ClaimIndemnifying Party shall have been prejudiced as a result of such failure (except that the Tax Indemnifying Party shall not be liable for any expenses incurred during the period in which the Tax Indemnified Party failed to give such notice). The Thereafter, the Tax Indemnitee Indemnified Party shall not pay such deliver to the Tax Claim until at least thirty Indemnifying Party, as promptly as possible but in no event later than ten (3010) days after providing the Lessee with such written notice, unless (a) the Tax Indemnitee is required to do so Indemnified Party’s receipt thereof, copies of all relevant notices and documents (including court papers) received by law or regulation or the failure to pay such Tax Indemnified Party.
(ii) In the case of a Tax Claim could result in a material adverse financialrelating to any Tax period ending on or before the Closing Date, legal or other consequence Seller shall have the right, at its expense, to control the Tax Indemnitee and (b) in the written notice described above, the Tax Indemnitee has notified the Lessee of such requirement or such material adverse consequence (such notice however shall not require the disclosure of the Tax Indemnitee's confidential information, as determined in the sole discretion conduct of such Tax Indemnitiee, or the Tax Indemnitee's tax returns, books, or records). If the Lessee shall so request within 30 days after receipt of such notice (or such shorter period as is reasonably specified by the Tax Indemnitee if any contest of the Tax must be commenced prior to the expiration of 30 days), then such Tax Indemnitee shall in good faith at Lessee's sole expense contest such Tax or permit the Lessee to contest such Tax, as such Tax Indemnitee shall electClaim; provided, however, that to the extent (iA) the contest involves only Taxes constituting property taxes, sales taxes, or use taxes, (ii) the contest does not involve any taxes that the Lessee is not required to indemnify the Tax Indemnitee or taxes and other issues relating to a Tax Indemnitee that are unrelated to the transactions contemplated by the Operative Agreements, (iii) the contest can be pursued in the name of the Lessee and independently from any other proceeding involving a Tax Claim of a Tax Indemnitee for which Lessee has not agreed in writing to indemnify such Tax Indemnitee, and (iv) no Equity Insufficiency Circumstance exists, such contest Seller shall be undertaken by the Lessee at the Lessee's sole expense and the after-tax costs of the Lessor, the Owner Participant, or other Tax Indemnitee shall be reimbursed by the Lessee. Notwithstanding the preceding sentence, if (a) such contest would involve any other type of Tax, any taxes that the Lessee is not required to indemnify the Tax Indemnitee or taxes and other issues relating to a Tax Indemnitee which are unrelated to the transactions contemplated by the Operative Agreements, (b) the Tax Indemnitee determines that such contest conducted by the Lessee could have a material adverse impact on such Tax Indemnitee's business or operations or involve risk of the imposition of criminal liability on a Tax Indemnitee, or (c) an Equity Insufficiency Circumstance exists, then such Tax Indemnitee may, in its sole discretion, control such contest (including selecting the forum for such contest, and determining whether any such contest shall be conducted by (i) paying such Tax under protest or (ii) resisting payment of such Tax or (iii) paying such Tax and seeking a refund thereof; provided, however, that at such Tax Indemnitee's option, such contest shall be conducted by the Lessee in the name of such Tax Indemnitee). In no event shall such Tax Indemnitee be required or the Lessee be permitted to contest any Tax for which the Lessee is obligated to indemnify pursuant to this Section 7.1 unless: (i) the Lessee shall have acknowledged in writing (x) that it is solely responsible for any Indemnified Tax resulting from any contest under its control, (y) its liability to such Tax Indemnitee for all reasonable out of pocket costs, losses and expenses that the Tax Indemnitees may incur in connection with contesting the Indemnified Tax (including, but not limited to, any reasonable legal, accounting and investigatory fees and disbursements), and (z) its liability for an indemnity payment pursuant to this Section 7.1 as a result of such claim if and to the extent such Tax Indemnitee or the Lessee, as the case may be, shall not prevail in the contest of such claim; provided, however, that the Lessee shall not be required to indemnify for such Taxes to the extent the results of the contest clearly demonstrate that the Tax is not an Indemnified Tax unless the Lessee's conduct of the contest materially prejudiced the Tax Indemnitee; (ii) such Tax Indemnitee shall have received the opinion of independent tax counsel selected by the Tax Indemnitee and reasonably satisfactory to the Lessee and furnished at the Lessee's sole expense, opining that a reasonable basis exists for contesting such claim or, in the event of an appeal of an adverse court or administrative agency decision, that as a result of a change in law or fact it is more likely than not that an appellate court or an administrative agency or decision making body with appellate jurisdiction, as the case may be, will reverse or substantially modify the adverse determination; (iii) the Lessee shall have agreed to pay such Tax Indemnitee on demand (and at no after tax costs to the Lessor, the Owner Participant and any Tax Indemnitee) all reasonable costs and expenses that such Tax Indemnitee may incur in connection with contesting such claim (including, without limitation, all reasonable legal and accounting fees and disbursements); (iv) no Lease Default described in Section 14(a), 14(b), 14(c), 14(g) or 14(h) of the Lease or a Lease Event of Default shall have occurred and shall have been continuing, unless the Tax Indemnitee in its sole discretion exercised in good faith allows the Lessee to post a satisfactory bond or other security that does not involve a possibility of a Lien on the Equipment or any portion thereof or on any interest therein, and which bond or other security will be for an amount equal to the sum of (I) the costs of such contest (as reasonably estimated by such Tax Indemnitee in good faith) and the Taxes which may be required to be indemnified and (II) if such Lease Default or Lease Event of Default involves a payment obligation under an Operative Agreement that is currently not paid in full, the unpaid amount of such obligation, plus the present value of the amounts not yet due pursuant to such obligation; (v) such Tax Indemnitee shall have determined that the action to be taken will not result in any risk of sale, forfeiture or loss of, or the creation of any Lien, or the Lessee shall have or otherwise made a provision to protect the interest of such Tax Indemnitee (in a manner satisfactory to such Tax Indemnitee in its sole discretion), on the Equipment or any portion thereof or any interest therein; (vi) the amount of such claims alone, or, if the subject matter thereof shall be of a continuing or recurring nature, when aggregated with substantially identical potential claims keep Purchaser fully informed with respect to the transactions contemplated by the Operative Agreements shall be at least $25,000; (vii) if status of such contest shall be conducted in a manner requiring the payment or deposit of the claim, the Lessee shall have paid the amount required (Tax Claim and at no after-tax costs to the Lessor, the Owner Participant or other Tax Indemnitee); and (viii) there is no risk of imposition of criminal liability or penalties. The Lessee shall cooperate with the Tax Indemnitee in good faith with respect to any contest controlled and conducted by the Tax Indemnitee and the Tax Indemnitee in good faith shall consult with the Lessee regarding the conduct of Purchaser upon Purchaser’s reasonable request for such contest. A Tax Indemnitee shall not be required consultation from time to pursue an appeal to the U.S. Supreme Court or the highest court in Canada or Mexico. The Tax Indemnitee shall cooperate with respect to any contest controlled and conducted by the Lessee and the Lessee shall consult with the Tax Indemnitee regarding the conduct of such contest. Notwithstanding anything to the contrary contained in this Section 7.1, no Tax Indemnitee shall be required to contest any claim if the subject matter thereof shall be of a continuing or recurring nature and shall have previously been adversely decided to the Tax Indemnitee pursuant to the contest provisions of this Section 7.1 unless there shall have been a change in the law (including, without limitation, amendments to statutes or regulations, administrative rulings (excluding private letter rulings and other rulings or materials that may not be relied upon by such Tax Indemnitee as precedent) or court decisions in the applicable jurisdiction) enacted, promulgated or effective after such claim shall have been so previously decided, and such Tax Indemnitee shall have received an opinion of independent tax counsel selected by the Tax Indemnitee and reasonably satisfactory to the Lessee, furnished at the Lessee's sole expense, to the effect that such change is favorable to the position which such Tax Indemnitee or the Lessee, as the case may be, had asserted in such previous contest and as a result of such change, it is more likely than not that the Tax Indemnitee will prevail or, in the event of an appeal of an adverse court or administrative agency decision, that it is more likely than not that an appellate court or an administrative agency tribunal or decision making body with appellate jurisdiction, as the case may be, will reverse or substantially modify the adverse determination. Notwithstanding anything contained in this Section 7.1, a Tax Indemnitee will not be required to contest the imposition of any Tax and shall be permitted to settle or compromise any claim without the Lessee's consent if such Tax Indemnitee (A) shall waive its right to indemnity under this Section 7.1 with respect to such Tax (and any claim the outcome of which is determined based upon the outcome of such claim) and (B) shall pay to the Lessee any amount previously paid or advanced by the Lessee pursuant to this Section 7.1 time with respect to such Tax Claim, less (B) Seller shall not agree or consent to any reasonable costs and expenses of item or matter with respect to any such Tax Claim that could reasonably be expected to adversely impact, or increase the Tax Indemnitee liability of, Purchaser, the Company or any Subsidiary after the Closing Date, without the prior written consent of Purchaser, which consent shall not be unreasonably withheld or delayed, and (C) if Seller does not exercise its right to control the conduct of such payment Tax Claim pursuant to this Section 5.4(d)(ii) in respect a reasonable and timely manner, then Purchaser may control the conduct of such Tax Claim.
(iii) In the case of a Tax Claim relating to any Straddle Period, Purchaser shall have the right, at its expense, to control the conduct of such Tax Claim; provided, that (A) Purchaser shall keep Seller fully informed with respect to the status of such Tax Claim and consult with Seller upon Seller’s reasonable request for such consultation from time to time with respect to such Tax Claim and (B) if such Tax Claim could result in an increase in Tax liability for which Seller would be liable, Seller may, at its expense, jointly participate with Purchaser in the conduct of such Tax Claim, and (C) if Purchaser does not exercise its right to control the conduct of a Tax Claim pursuant to this Section 5.4(d)(iii), then Seller may control the conduct of such Tax Claim.
(iv) For the avoidance of doubt, the contest procedures related to any Tax Claim (other than any contest procedures governed by Section 5.15, which shall be governed by Section 5.15) shall be governed by this Section 5.4 and not Section 8.2(a), Section 8.2(b) or Section 8.3.
Appears in 1 contract
Contests. If any claim shall be made against any Indemnitee or if any proceeding shall be commenced against any Indemnitee (including a written claim is made by any taxing authority against a Tax Indemnitee notice of such proceeding) for any Taxes with respect Imposition as to which the Lessee reasonably may be required have an indemnity obligation pursuant to indemnify against hereunder this Section 11.2, or if a Tax any Indemnitee reasonably shall determine that any tax to Imposition for which the Lessee may have an indemnity obligation hereunder pursuant to this Section 11.2 may be payable (a "Tax Claim")payable, then such Tax LSI Logic Corporation Lease A Indemnitee shall give the Lessee written notice of such Tax Claim promptly (but and in any event event, within twenty 30 days) notify Lessee in writing (20) days after its receipt of the written Tax Claim or its determination, as applicable), and shall furnish Lessee with copies of such Tax Claim and all other writings received from the taxing authority to the extent relating to such claim (but provided that failure to so notify the Lessee within 30 days shall not relieve the Lessee of its obligations hereunder alter such Indemnitee's rights under this Section 11.2, except to the extent that it effectively such failure precludes or materially adversely affects the ability of the Lessee to conduct a contest of any indemnified Imposition, in which case Lessee shall have no indemnification obligation hereunder to the Tax Claim). The Tax 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 Lessee (such consent not to be unreasonably withheld or unreasonably delayed) for 30 days after the receipt of such notice by Lessee; provided, however, that in the case of any such claim or proceeding, if such Indemnitee shall not pay such Tax Claim until at least thirty (30) days after providing the Lessee with such written notice, unless (a) the Tax Indemnitee is be required to do so by law or regulation or the failure to pay such Tax Claim could result in a material adverse financial, legal or other consequence take action prior to the Tax Indemnitee and (b) in the written notice described above, the Tax Indemnitee has notified the Lessee end of such requirement 30-day period, such Indemnitee shall in such notice to Lessee, so inform Lessee, and such Indemnitee shall not take any action with respect to such claim, proceeding or such material adverse consequence Imposition without the consent of Lessee (such notice however shall consent not require the disclosure of the Tax Indemnitee's confidential information, as determined in the sole discretion of such Tax Indemnitiee, to be unreasonably withheld or the Tax Indemnitee's tax returns, books, or records). If the Lessee shall so request within 30 unreasonably delayed) for 10 days after the receipt of such notice by Lessee, unless the Indemnitee shall be required by law or regulation to take action prior to the end of such 10-day period. Lessee shall be entitled for a period of 30 days from receipt of such notice from the Indemnitee (or such shorter period as the Indemnitee has notified Lessee is reasonably specified required by law or regulation for the Tax Indemnitee if any contest of the Tax must be commenced prior to the expiration of 30 dayscommence such contest), then to request in writing that such Tax Indemnitee shall contest in good faith of such Imposition, at Lessee's sole expense contest expense. If (x) such Tax or permit the Lessee to contest such Tax, as such Tax Indemnitee shall elect; provided, however, that to the extent (i) the contest involves only Taxes constituting property taxes, sales taxes, or use taxes, (ii) the contest does not involve any taxes that the Lessee is not required to indemnify the Tax Indemnitee or taxes and other issues relating to a Tax Indemnitee that are unrelated to the transactions contemplated by the Operative Agreements, (iii) the contest can be pursued in the name of the Lessee and independently from any other proceeding involving a Tax Claim of a Tax Indemnitee an Imposition for which Lessee has not agreed in writing to indemnify such Tax Indemnitee, and (iv) no Equity Insufficiency Circumstance exists, such contest shall be undertaken by the Lessee at the Lessee's sole expense and the after-tax costs of the Lessor, the Owner Participant, or other Tax Indemnitee shall be reimbursed by the Lessee. Notwithstanding the preceding sentence, if (ay) such contest would involve must be pursued in the name of the Indemnitee, but can be pursued independently from any other type of Tax, any taxes that the proceeding involving an Imposition for which Lessee is has not required agreed to indemnify the Tax such Indemnitee or taxes and other issues relating (z) the Indemnitee so requests, then Lessee shall be permitted to control the contest of such claim, provided that in the case of a Tax Indemnitee which are unrelated to the transactions contemplated by the Operative Agreementscontest described in any of clause (x), (by) or (z) if the Tax Indemnitee determines in good faith that such contest conducted by the Lessee reasonably could have a material adverse impact on such Tax Indemnitee's the business or operations or involve risk of the imposition Indemnitee and provides a written explanation to Lessee of criminal liability on a Tax Indemniteesuch determination, the Indemnitee may elect to control or (c) an Equity Insufficiency Circumstance exists, then such Tax Indemnitee may, in its sole discretion, reassert control such contest (including selecting of the forum for such contest, and determining whether any such contest shall provided, that by taking control of the contest, Lessee acknowledges that it is responsible for the Imposition ultimately determined to be conducted due by (i) paying such Tax under protest or (ii) resisting payment reason of such Tax or (iii) paying such Tax and seeking a refund thereofclaim, and; provided, howeverfurther, that at in determining the application of clauses (x) and (y), each Indemnitee shall take any and all reasonable steps to segregate claims for any Impositions for which Lessee indemnifies hereunder from Impositions for which Lessee is not obligated to indemnify hereunder, so that Lessee can control the contest of the former. In all other claims requested to be contested by Lessee, the Indemnitee shall control the contest of such Tax claim, acting through counsel reasonably acceptable to Lessee. In any contest controlled by an Indemnitee's option, the Indemnitee shall conduct such contest shall be conducted by the Lessee in the name of such Tax Indemnitee)good faith. In no event shall such Tax Indemnitee be required or the Lessee be permitted to contest any Tax for which the Lessee is obligated to indemnify pursuant to this Section 7.1 unless: (i) the Lessee shall have acknowledged in writing (x) that it is solely responsible for any Indemnified Tax resulting from any contest under its control, (y) its liability to such Tax Indemnitee for all reasonable out of pocket costs, losses and expenses that the Tax Indemnitees may incur in connection with contesting the Indemnified Tax (including, but not limited to, any reasonable legal, accounting and investigatory fees and disbursements), and (z) its liability for an indemnity payment pursuant to this Section 7.1 as a result of such claim if and to the extent such Tax Indemnitee or the Lessee, as the case may be, shall not prevail in the contest of such claim; provided, however, that the Lessee shall not be Indemnitee required to indemnify for contest) any claim (A) if such Taxes to the extent the results of the contest clearly demonstrate that the Tax is not an Indemnified Tax unless the Lessee's conduct of the contest materially prejudiced the Tax Indemnitee; (ii) such Tax Indemnitee shall have received the provides Lessee with a legal opinion of independent tax counsel selected by the Tax Indemnitee and reasonably satisfactory to the Lessee and furnished at the Lessee's sole expense, opining that a reasonable basis exists for contesting such claim or, in the event of an appeal of an adverse court or administrative agency decision, that as a result of a change in law or fact it is more likely than not that an appellate court or an administrative agency or decision making body with appellate jurisdiction, as the case may be, will reverse or substantially modify the adverse determination; (iii) the Lessee shall have agreed to pay such Tax Indemnitee on demand (and at no after tax costs to the Lessor, the Owner Participant and any Tax Indemnitee) all reasonable costs and expenses that such Tax Indemnitee may incur in connection with contesting such claim (includingaction, without limitation, all reasonable legal and accounting fees and disbursements); (iv) no Lease Default described in Section 14(a), 14(b), 14(c), 14(g) suit or 14(h) proceeding involves a material risk of imposition of criminal liability or will involve a material risk of the Lease or a Lease Event of Default shall have occurred and shall have been continuing, unless the Tax Indemnitee in its sole discretion exercised in good faith allows the Lessee to post a satisfactory bond or other security that does not involve a possibility of a Lien on the Equipment or any portion thereof or on any interest therein, and which bond or other security will be for an amount equal to the sum of (I) the costs of such contest (as reasonably estimated by such Tax Indemnitee in good faith) and the Taxes which may be required to be indemnified and (II) if such Lease Default or Lease Event of Default involves a payment obligation under an Operative Agreement that is currently not paid in full, the unpaid amount of such obligation, plus the present value of the amounts not yet due pursuant to such obligation; (v) such Tax Indemnitee shall have determined that the action to be taken will not result in any risk of sale, forfeiture or loss of, or the creation of any Lien (other than a Permitted Lien, ) on any Item or the Items of Equipment or any part thereof or any other Lessee Collateral unless Lessee shall have posted and maintained a bond or otherwise made other security reasonably satisfactory to the relevant Indemnitee in respect to such risk, (B) if a provision Lease Event of Default has occurred and is continuing, unless LSI Logic Corporation Lease A Lessee shall have posted and maintained a bond or other security reasonably satisfactory to protect the interest relevant Indemnitee in respect of the Impositions subject to such claim and any and all expenses for which Lessee is responsible hereunder reasonably foreseeable in connection with the contest of such Tax Indemnitee claim, (in a manner satisfactory C) unless Lessee shall have agreed to pay and shall pay to such Tax Indemnitee on demand all reasonable out-of-pocket costs, losses and expenses that such Indemnitee may incur in its sole discretion)connection with contesting such Imposition, on the Equipment including all reasonable legal, accounting and investigatory fees and disbursements, or any portion thereof or any interest therein; (vi) the amount of such claims alone, or, if the subject matter thereof shall be of a continuing or recurring nature, when aggregated with substantially identical potential claims with respect to the transactions contemplated by the Operative Agreements shall be at least $25,000; (viiD) if such contest shall be conducted involve the payment of the Impositions prior to the contest, unless Lessee shall provide to the Indemnitee an interest-free advance in an amount equal to the Imposition that the Indemnitee is required to pay (with no additional net after-tax costs (including Taxes) to such Indemnitee). In addition, for Indemnitee-controlled contests and claims contested in the name of the Indemnitee in a manner requiring public forum, no contest shall be required: (A) unless the payment or deposit amount of the claimpotential indemnity (taking into account all similar or logically related claims that have been or could be raised in any audit involving such Indemnitee for which Lessee may be liable to pay an indemnity under this Section 11.2) exceeds $75,000 and (B) unless, if requested by the Indemnitee, the Lessee shall have paid the amount required (and at no after-tax costs provided to the Lessor, Indemnitee an opinion of counsel selected by Lessee that a reasonable basis exists to contest such claim. In no event shall an Indemnitee be required to appeal an adverse judicial determination to the Owner Participant or other Tax Indemnitee); and (viii) there is no risk of imposition of criminal liability or penaltiesUnited States Supreme Court. The Lessee party conducting the contest shall cooperate with the Tax Indemnitee consult in good faith with the other party and its counsel with respect to any the contest controlled and conducted of such claim for Impositions (or claim for refund) but the decisions regarding what actions to be taken shall be made by the Tax controlling party in its sole judgement; provided, however, that if the Indemnitee and is the Tax controlling party, no settlement offer with respect to such claims shall be made or accepted by the Indemnitee in good faith shall consult with without the prior consent of the Lessee regarding the conduct of such contest. A Tax Indemnitee (which consent shall not unreasonably be withheld), and; provided further, that if the Indemnitee is the controlling party and Lessee recommends the acceptance of a settlement offer made by the relevant Governmental Agency and such Indemnitee rejects such settlement offer then the amount for which Lessee will be required to pursue an appeal indemnify such Indemnitee with respect to the U.S. Supreme Court Taxes subject to such offer shall not exceed the amount which it would have owed if such settlement offer had been accepted. 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 agent or taxing authority to the controlling party thereof, in connection with such claim or the highest court in Canada or Mexicocontest thereof. The Tax Each Indemnitee shall cooperate supply Lessee with such information and documents reasonably requested by Lessee as is necessary or advisable for Lessee to participate in any action, suit or proceeding to the extent permitted by this Section 11.2(b), and Lessee shall promptly reimburse such Indemnitee for the reasonable out-of-pocket expenses of supplying such information and documents. No Indemnitee shall enter into any settlement or other compromise or fail to appeal an adverse ruling with respect to any contest controlled and conducted by the Lessee and the Lessee shall consult with the Tax Indemnitee regarding the conduct of such contest. Notwithstanding anything claim which is entitled to the contrary contained in be indemnified under this Section 7.1, no Tax Indemnitee shall be 11.2 (and with respect to which contest is required to contest any claim if the subject matter thereof shall be of a continuing or recurring nature and shall have previously been adversely decided to the Tax Indemnitee pursuant to the contest provisions of under this Section 7.1 unless there shall have been a change in the law (including, without limitation, amendments to statutes or regulations, administrative rulings (excluding private letter rulings and other rulings or materials that may not be relied upon by such Tax Indemnitee as precedent11.2(b)) or court decisions in the applicable jurisdiction) enacted, promulgated or effective after such claim shall have been so previously decided, and such Tax Indemnitee shall have received an opinion of independent tax counsel selected by the Tax Indemnitee and reasonably satisfactory to the Lessee, furnished at the Lessee's sole expense, to the effect that such change is favorable to the position which such Tax Indemnitee or the Lessee, as the case may be, had asserted in such previous contest and as a result of such change, it is more likely than not that the Tax Indemnitee will prevail or, in the event of an appeal of an adverse court or administrative agency decision, that it is more likely than not that an appellate court or an administrative agency tribunal or decision making body with appellate jurisdiction, as the case may be, will reverse or substantially modify the adverse determination. Notwithstanding anything contained in this Section 7.1, a Tax Indemnitee will not be required to contest the imposition of any Tax and shall be permitted to settle or compromise any claim without the Lessee's prior written consent if of Lessee (such Tax consent not to be unreasonably withheld), unless such Indemnitee (A) shall waive waives its right to indemnity be indemnified under this Section 7.1 11.2 with respect to such Tax (and any claim the outcome of which is determined based upon the outcome of such claim) and (B) shall pay to the Lessee any amount previously paid or advanced by the Lessee pursuant to this Section 7.1 with respect to such Tax Claim, less any reasonable costs and expenses of the Tax Indemnitee prior to such payment in respect of such Tax Claim.
Appears in 1 contract
Contests. If a written claim is made by any taxing authority against a Tax Indemnitee for any Taxes with respect to which the Lessee may be required to indemnify against hereunder or if a Tax Indemnitee shall determine that any tax to which the Lessee may have an indemnity obligation hereunder may be payable (a "Tax Claim"), then such Tax Indemnitee shall give the Lessee written notice of such Tax Claim promptly (but in any event within twenty (20) days after its receipt of the written Tax Claim or its determination, as applicable), and shall furnish Lessee with copies of such Tax Claim and all other writings received from the taxing authority to the extent relating to such claim (but failure to so notify the Lessee shall not relieve the Lessee of its obligations hereunder except to the extent that it effectively precludes the ability of the Lessee to conduct a contest of the Tax Claim). The Tax Indemnitee shall not pay such Tax Claim until at least thirty (30) days after providing the Lessee with such written notice, unless (a) the Tax Indemnitee is required to do so by law or regulation or the failure to pay such Tax Claim could result in a material adverse financial, legal or other consequence to the Tax Indemnitee and (b) in the written notice described above, the Tax Indemnitee has notified the Lessee of such requirement or such material adverse consequence (such notice however shall not require the disclosure of the Tax Indemnitee's confidential information, as determined in the sole discretion of such Tax Indemnitiee, or the Tax Indemnitee's tax returns, books, or records). If the Lessee shall so request within 30 days after receipt of such notice (or such shorter period as is reasonably specified by the Tax Indemnitee if any contest of the Tax must be commenced prior to the expiration of 30 days), then such Tax Indemnitee shall in good faith at Lessee's sole expense contest such Tax or permit the Lessee to contest such Tax, as such Tax Indemnitee shall elect; provided, however, that to the extent (i) the contest involves only Taxes constituting property taxes, sales taxes, or use taxes, (ii) the contest does not involve any taxes that the Lessee is not required to indemnify the Tax Indemnitee or taxes and other issues relating to a Tax Indemnitee that are unrelated to the transactions contemplated by the Operative Agreements, (iii) the contest can be pursued in the name of the Lessee and independently from any other proceeding involving a Tax Claim of a Tax Indemnitee for which Lessee has not agreed in writing to indemnify such Tax Indemnitee, and (iv) no Equity Insufficiency Circumstance exists, such contest shall be undertaken by the Lessee at the Lessee's sole expense and the after-tax costs of the Lessor, the Owner Participant, or other Tax Indemnitee shall be reimbursed by the Lessee. Notwithstanding the preceding sentence, if (a) such contest would involve any other type of Tax, any taxes that the Lessee is not required to indemnify the Tax Indemnitee or taxes and other issues relating to a Tax Indemnitee which are unrelated to the transactions contemplated by the Operative Agreements, (b) the Tax Indemnitee determines that such contest conducted by the Lessee could have a material adverse impact on such Tax Indemnitee's business or operations or involve risk of the imposition of criminal liability on a Tax Indemnitee, or (c) an Equity Insufficiency Circumstance exists, then such Tax Indemnitee may, in its sole discretion, control such contest (including selecting the forum for such contest, and determining whether any such contest shall be conducted by (i) paying such Tax under protest or (ii) resisting payment of such Tax or (iii) paying such Tax and seeking a refund thereof; provided, however, that at such Tax Indemnitee's option, such contest shall be conducted by the Lessee in the name of such Tax Indemnitee). In no event shall such Tax Indemnitee be required or the Lessee be permitted to contest any Tax for which the Lessee is obligated to indemnify pursuant to this Section 7.1 unless: (i) the Lessee shall have acknowledged in writing (x) that it is solely responsible for any Indemnified Tax resulting from any contest under its control, (y) its liability to such Tax Indemnitee for all reasonable out of pocket costs, losses and expenses that the Tax Indemnitees may incur in connection with contesting the Indemnified Tax (including, but not limited to, any reasonable legal, accounting and investigatory fees and disbursements), and (z) its liability for an indemnity payment pursuant to this Section 7.1 as a result of such claim if and to the extent such Tax Indemnitee or the Lessee, as the case may be, shall not prevail in the contest of such claim; provided, however, that the Lessee shall not be required to indemnify for such Taxes to the extent the results of the contest clearly demonstrate that the Tax is not an Indemnified Tax unless the Lessee's conduct of the contest materially prejudiced the Tax Indemnitee; (ii) such Tax Indemnitee shall have received the opinion of independent tax counsel selected by the Tax Indemnitee and reasonably satisfactory to the Lessee and furnished at the Lessee's sole expense, opining that a reasonable basis exists for contesting such claim or, in the event of an appeal of an adverse court or administrative agency decision, that as a result of a change in law or fact it is more likely than not that an appellate court or an administrative agency or decision making body with appellate jurisdiction, as the case may be, will reverse or substantially modify the adverse determination; (iii) the Lessee shall have agreed to pay such Tax Indemnitee on demand (and at no after tax costs to the Lessor, the Owner Participant and any Tax Indemnitee) all reasonable costs and expenses that such Tax Indemnitee may incur in connection with contesting such claim (including, without limitation, all reasonable legal and accounting fees and disbursements); (iv) no Lease Default described in Section 14(a), 14(b), 14(c), 14(g) or 14(h) of the Lease or a Lease Event of Default shall have occurred and shall have been continuing, unless the Tax Indemnitee in its sole discretion exercised in good faith allows the Lessee to post a satisfactory bond or other security that does not involve a possibility of a Lien on the Equipment or any portion thereof or on any interest therein, and which bond or other security will be for an amount equal to the sum of (I) the costs of such contest (as reasonably estimated by such Tax Indemnitee in good faith) and the Taxes which may be required to be indemnified and (II) if such Lease Default or Lease Event of Default involves a payment obligation under an Operative Agreement that is currently not paid in full, the unpaid amount of such obligation, plus the present value of the amounts not yet due pursuant to such obligation; (v) such Tax Indemnitee shall have determined that the action to be taken will not result in any risk of sale, forfeiture or loss of, or the creation of any Lien, or the Lessee shall have or otherwise made a provision to protect the interest of such Tax Indemnitee (in a manner satisfactory to such Tax Indemnitee in its sole discretion), on the Equipment or any portion thereof or any interest therein; (vi) the amount of such claims alone, or, if the subject matter thereof shall be of a continuing or recurring nature, when aggregated with substantially identical potential claims with respect to the transactions contemplated by the Operative Agreements shall be at least $25,000; (vii) if such contest shall be conducted in a manner requiring the payment or deposit of the claim, the Lessee shall have paid the amount required (and at no after-tax costs to the Lessor, the Owner Participant or other Tax Indemnitee); and (viii) there is no risk of imposition of criminal liability or penalties. The Lessee shall cooperate with the Tax Indemnitee in good faith with respect to any contest controlled and conducted by the Tax Indemnitee and the Tax Indemnitee in good faith shall consult with the Lessee regarding the conduct of such contest. A Tax Indemnitee shall not be required to pursue an appeal to the U.S. Supreme Court or the highest court in Canada or Mexico. The Tax Indemnitee shall cooperate with respect to any contest controlled and conducted by the Lessee and the Lessee shall consult with the Tax Indemnitee regarding the conduct of such contest. Notwithstanding anything to the contrary contained in this Section 7.1, no Tax Indemnitee shall be required to contest any claim if the subject matter thereof shall be of a continuing or recurring nature and shall have previously been adversely decided to the Tax Indemnitee pursuant to the contest provisions of this Section 7.1 unless there shall have been a change in the law (including, without limitation, amendments to statutes or regulations, administrative rulings (excluding private letter rulings and other rulings or materials that may not be relied upon by such Tax Indemnitee as precedent) or court decisions in the applicable jurisdiction) enacted, promulgated or effective after such claim shall have been so previously decided, and such Tax Indemnitee shall have received an opinion of independent tax counsel selected by the Tax Indemnitee and reasonably satisfactory to the Lessee, furnished at the Lessee's sole expense, to the effect that such change is favorable to the position which such Tax Indemnitee or the Lessee, as the case may be, had asserted in such previous contest and as a result of such change, it is more likely than not that the Tax Indemnitee will prevail or, in the event of an appeal of an adverse court or administrative agency decision, that it is more likely than not that an appellate court or an administrative agency tribunal or decision making body with appellate jurisdiction, as the case may be, will reverse or substantially modify the adverse determination. Notwithstanding anything contained in this Section 7.1, a Tax Indemnitee will not be required to contest the imposition of any Tax and shall be permitted to settle or compromise any claim without the Lessee's consent if such Tax Indemnitee (A) shall waive its right to indemnity under this Section 7.1 with respect to such Tax (and any claim the outcome of which is determined based upon the outcome of such claim) and (B) shall pay to the Lessee any amount previously paid or advanced by the Lessee pursuant to this Section 7.1 with respect to such Tax Claim, less any reasonable costs and expenses of the Tax Indemnitee prior to such payment in respect of such Tax Claim.;
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 claim is made by any taxing authority against a Tax Indemnitee notice of such proceeding) for any Taxes with respect Imposition as to which the Lessee Representative may be required have an indemnity obligation pursuant to indemnify against hereunder this Section 13.5, or if a any Tax Indemnitee shall determine that any tax Imposition to which the Lessee Representative may have an indemnity obligation hereunder pursuant to this Section 13.5 may be payable (a "Tax Claim")payable, then such Tax Indemnitee shall give the Lessee written notice of such Tax Claim promptly (but and in any event event, within twenty 30 days) notify the Representative in writing (20) days after its receipt of the written Tax Claim or its determination, as applicable), and shall furnish Lessee with copies of such Tax Claim and all other writings received from the taxing authority to the extent relating to such claim (but provided that failure to so notify the Lessee Representative within 30 days shall not relieve the Lessee of its obligations hereunder alter such Tax Indemnitee's rights under this Section 13.5 except to the extent that it effectively such failure precludes or materially adversely affects the ability of the Lessee to conduct a contest of any Impositions) and shall not take any action with respect to such claim, proceeding or Imposition without the written consent of the Representative (such consent not to be unreasonably withheld or unreasonably delayed) for 30 days after the receipt of such notice by the Representative; provided, however, that in the case of any such claim or proceeding, if such Tax Claim). The Indemnitee shall be required by law or regulation to take action prior to the end of such 30-day period, such Tax Indemnitee shall in such notice to the Representative, so inform the Representative and such Tax Indemnitee shall not pay take any action with respect to such claim, proceeding or Imposition without the consent of the Representative (such consent not to be unreasonably withheld or unreasonably delayed) for 10 days after the receipt of such notice by the Representative unless such Tax Claim until at least thirty (30) days after providing the Lessee with such written notice, unless (a) the Tax Indemnitee is shall be required to do so by law or regulation or to take action prior to the failure to pay end of such 10-day period. The Representative shall be entitled for a period of 30 days from receipt of such notice from such Tax Claim could result in a material adverse financial, legal Indemnitee (or other consequence to the Tax Indemnitee and (b) in the written notice described above, the such shorter period as such Tax Indemnitee has notified the Lessee of such requirement is required by law or such material adverse consequence (such notice however shall not require the disclosure of the Tax Indemnitee's confidential information, as determined in the sole discretion of such Tax Indemnitiee, or the Tax Indemnitee's tax returns, books, or records). If the Lessee shall so request within 30 days after receipt of such notice (or such shorter period as is reasonably specified by the Tax Indemnitee if any contest of the Tax must be commenced prior to the expiration of 30 days), then regulation for such Tax Indemnitee shall to commence such contest), to request in good faith at Lessee's sole expense contest writing that such Tax or permit Indemnitee contest the Lessee to contest imposition of such Tax, as at the Representative's expense. If (x) such Tax Indemnitee shall elect; provided, however, that to the extent (i) the contest involves only Taxes constituting property taxes, sales taxes, or use taxes, (ii) the contest does not involve any taxes that the Lessee is not required to indemnify the Tax Indemnitee or taxes and other issues relating to a Tax Indemnitee that are unrelated to the transactions contemplated by the Operative Agreements, (iii) the contest can be pursued in the name of the Lessee Representative and independently from any other proceeding involving a Tax Claim of a Tax Indemnitee for which Lessee has not agreed in writing to indemnify such Tax Indemnitee, and (iv) no Equity Insufficiency Circumstance exists, such contest shall be undertaken by the Lessee at the Lessee's sole expense and the after-tax costs of the Lessor, the Owner Participant, or other Tax Indemnitee shall be reimbursed by the Lessee. Notwithstanding the preceding sentence, if (a) such contest would involve any other type of Tax, any taxes that the Lessee is not required to indemnify the Tax Indemnitee or taxes and other issues relating to a Tax Indemnitee which are unrelated to the transactions contemplated by the Operative Agreements, (b) the Tax Indemnitee determines that such contest conducted by the Lessee could have a material adverse impact on such Tax Indemnitee's business or operations or involve risk of the imposition of criminal liability on a Tax Indemnitee, or (c) an Equity Insufficiency Circumstance exists, then such Tax Indemnitee may, in its sole discretion, control such contest (including selecting the forum for such contest, and determining whether any such contest shall be conducted by (i) paying such Tax under protest or (ii) resisting payment of such Tax or (iii) paying such Tax and seeking a refund thereof; provided, however, that at such Tax Indemnitee's option, such contest shall be conducted by the Lessee in the name of such Tax Indemnitee). In no event shall such Tax Indemnitee be required or the Lessee be permitted to contest any Tax for which the Lessee is obligated to indemnify pursuant to this Section 7.1 unless: (i) the Lessee shall have acknowledged in writing (x) that it is solely responsible for any Indemnified Tax resulting from any contest under its control, (y) its liability to such Tax Indemnitee for all reasonable out of pocket costs, losses and expenses that the Tax Indemnitees may incur in connection with contesting the Indemnified Tax (including, but not limited to, any reasonable legal, accounting and investigatory fees and disbursements), and (z) its liability for an indemnity payment pursuant to this Section 7.1 as a result of such claim if and to the extent such Tax Indemnitee or the Lessee, as the case may be, shall not prevail in the contest of such claim; provided, however, that the Lessee shall not be required to indemnify for such Taxes to the extent the results of the contest clearly demonstrate that the Tax is not an Indemnified Tax unless the Lessee's conduct of the contest materially prejudiced the Tax Indemnitee; (ii) such Tax Indemnitee shall have received the opinion of independent tax counsel selected by the Tax Indemnitee and reasonably satisfactory to the Lessee and furnished at the Lessee's sole expense, opining that a reasonable basis exists for contesting such claim or, in the event of an appeal of an adverse court or administrative agency decision, that as a result of a change in law or fact it is more likely than not that an appellate court or an administrative agency or decision making body with appellate jurisdiction, as the case may be, will reverse or substantially modify the adverse determination; (iii) the Lessee shall have agreed to pay such Tax Indemnitee on demand (and at no after tax costs to the Lessor, the Owner Participant and any Tax Indemnitee) all reasonable costs and expenses that such Tax Indemnitee may incur in connection with contesting such claim (including, without limitation, all reasonable legal and accounting fees and disbursements); (iv) no Lease Default described in Section 14(a), 14(b), 14(c), 14(g) or 14(h) of the Lease or a Lease Event of Default shall have occurred and shall have been continuing, unless the Tax Indemnitee in its sole discretion exercised in good faith allows the Lessee to post a satisfactory bond or other security that does not involve a possibility of a Lien on the Equipment or any portion thereof or on any interest therein, and which bond or other security will be for an amount equal to the sum of (I) the costs of such contest (as reasonably estimated by such Tax Indemnitee in good faith) and the Taxes which may be required to be indemnified and (II) if such Lease Default or Lease Event of Default involves a payment obligation under an Operative Agreement that is currently not paid in full, the unpaid amount of such obligation, plus the present value of the amounts not yet due pursuant to such obligation; (v) such Tax Indemnitee shall have determined that the action to be taken will not result in any risk of sale, forfeiture or loss of, or the creation of any Lien, or the Lessee shall have or otherwise made a provision to protect the interest of such Tax Indemnitee (in a manner satisfactory to such Tax Indemnitee in its sole discretion), on the Equipment or any portion thereof or any interest therein; (vi) the amount of such claims alone, or, if the subject matter thereof shall be of a continuing or recurring nature, when aggregated with substantially identical potential claims with respect to the transactions contemplated by the Operative Agreements shall be at least $25,000; (vii) if such contest shall be conducted in a manner requiring the payment or deposit of the claim, the Lessee shall have paid the amount required (and at no after-tax costs to the Lessor, the Owner Participant or other Tax Indemnitee); and (viii) there is no risk of imposition of criminal liability or penalties. The Lessee shall cooperate with the Tax Indemnitee in good faith with respect to any contest controlled and conducted by the Tax Indemnitee and the Tax Indemnitee in good faith shall consult with the Lessee regarding the conduct of such contest. A Tax Indemnitee shall not be required to pursue an appeal to the U.S. Supreme Court or the highest court in Canada or Mexico. The Tax Indemnitee shall cooperate with respect to any contest controlled and conducted by the Lessee and the Lessee shall consult with the Tax Indemnitee regarding the conduct of such contest. Notwithstanding anything to the contrary contained in this Section 7.1, no Tax Indemnitee shall be required to contest any claim if the subject matter thereof shall be of a continuing or recurring nature and shall have previously been adversely decided to the Tax Indemnitee pursuant to the contest provisions of this Section 7.1 unless there shall have been a change in the law (including, without limitation, amendments to statutes or regulations, administrative rulings (excluding private letter rulings and other rulings or materials that may not be relied upon by such Tax Indemnitee as precedent) or court decisions in the applicable jurisdiction) enacted, promulgated or effective after such claim shall have been so previously decided, and such Tax Indemnitee shall have received an opinion of independent tax counsel selected by the Tax Indemnitee and reasonably satisfactory to the Lessee, furnished at the Lessee's sole expense, to the effect that such change is favorable to the position which such Tax Indemnitee or the Lessee, as the case may be, had asserted in such previous contest and as a result of such change, it is more likely than not that the Tax Indemnitee will prevail or, in the event of an appeal of an adverse court or administrative agency decision, that it is more likely than not that an appellate court or an administrative agency tribunal or decision making body with appellate jurisdiction, as the case may be, will reverse or substantially modify the adverse determination. Notwithstanding anything contained in this Section 7.1, a Tax Indemnitee will not be required to contest the imposition of any Tax and shall be permitted to settle or compromise any claim without the Lessee's consent if such Tax Indemnitee (A) shall waive its right to indemnity under this Section 7.1 with respect to such Tax (and any claim the outcome of which is determined based upon the outcome of such claim) and (B) shall pay to the Lessee any amount previously paid or advanced by the Lessee pursuant to this Section 7.1 with respect to such Tax Claim, less any reasonable costs and expenses of the Tax Indemnitee prior to such payment in respect of such Tax Claim.
Appears in 1 contract
Sources: Participation Agreement (Beverly Enterprises Inc /De/)
Contests. If a written claim is made by any taxing authority against a Tax Indemnitee for any Taxes with (i) With respect to any federal or state combined, unitary or consolidated Pre-Closing Tax Return, Starwood and its duly appointed representatives shall have the sole right, at its expense, to supervise or otherwise coordinate any examination process and to negotiate, resolve, settle or contest any asserted Tax deficiencies or assert and prosecute any claims for refund. The foregoing notwithstanding, without the express written consent of ESI, which the Lessee may be required to indemnify against hereunder or if a Tax Indemnitee shall determine that any tax to which the Lessee may have an indemnity obligation hereunder may be payable (a "Tax Claim"), then such Tax Indemnitee shall give the Lessee written notice of such Tax Claim promptly (but in any event within twenty (20) days after its receipt of the written Tax Claim or its determination, as applicable), and shall furnish Lessee with copies of such Tax Claim and all other writings received from the taxing authority to the extent relating to such claim (but failure to so notify the Lessee consent shall not relieve be unreasonably withheld or delayed, Starwood shall not file any amended Tax Return, settle any Tax claim or assessment, or surrender any right to claim a refund of Tax, if such action could have the Lessee effect of increasing ESI Tax Liabilities.
(ii) With respect to any other Tax Return of ESI, ESI and its obligations hereunder except duly appointed representative shall have the sole right, at its expense, to the extent that it effectively precludes the ability of the Lessee supervise or otherwise coordinate any examination process and to conduct a negotiate, resolve, settle or contest of the any asserted Tax Claim)deficiencies or assert and prosecute any claims for refund. The Tax Indemnitee foregoing notwithstanding, without the express written consent of Starwood, which consent shall not pay such Tax Claim until at least thirty (30) days after providing the Lessee with such written noticebe unreasonably withheld or delayed, unless (a) the Tax Indemnitee is required to do so by law or regulation or the failure to pay such Tax Claim could result in a material adverse financial, legal or other consequence to the Tax Indemnitee and (b) in the written notice described above, the Tax Indemnitee has notified the Lessee of such requirement or such material adverse consequence (such notice however ESI shall not require the disclosure of the file any amended Tax Indemnitee's confidential informationReturn, as determined in the sole discretion of such settle any Tax Indemnitieeclaim or assessment, or surrender any right to claim a refund of Tax, if such action could have the effect of increasing Starwood Tax Indemnitee's tax returnsLiabilities.
(iii) Each party hereto shall, books, or records). If the Lessee shall so request within 30 days after receipt of such notice (or such shorter period unless action is required sooner, then as is reasonably specified by soon as practicable), notify the Tax Indemnitee if any contest other of the Tax must be commenced prior to the expiration assertion of 30 days), then such Tax Indemnitee shall in good faith at Lessee's sole expense contest such Tax or permit the Lessee to contest such Tax, as such Tax Indemnitee shall elect; provided, however, that to the extent (i) the contest involves only Taxes constituting property taxes, sales taxes, or use taxes, (ii) the contest does not involve any taxes that the Lessee is not required to indemnify the Tax Indemnitee or taxes and other issues relating to a Tax Indemnitee that are unrelated to the transactions contemplated by the Operative Agreements, (iii) the contest can be pursued in the name of the Lessee and independently from any other proceeding involving a Tax Claim of a Tax Indemnitee for which Lessee has not agreed in writing to indemnify such Tax Indemnitee, and (iv) no Equity Insufficiency Circumstance exists, such contest shall be undertaken by the Lessee at the Lessee's sole expense and the after-tax costs of the Lessor, the Owner Participant, or other Tax Indemnitee shall be reimbursed by the Lessee. Notwithstanding the preceding sentence, if (a) such contest would involve any other type of Tax, any taxes that the Lessee is not required to indemnify the Tax Indemnitee or taxes and other issues relating to a Tax Indemnitee which are unrelated to the transactions contemplated by the Operative Agreements, (b) the Tax Indemnitee determines that such contest conducted by the Lessee could have a material adverse impact on such Tax Indemnitee's business or operations or involve risk of the imposition of criminal liability on a Tax Indemnitee, or (c) an Equity Insufficiency Circumstance exists, then such Tax Indemnitee may, in its sole discretion, control such contest (including selecting the forum for such contest, and determining whether any such contest shall be conducted by (i) paying such Tax under protest or (ii) resisting payment of such Tax or (iii) paying such Tax and seeking a refund thereof; provided, however, that at such Tax Indemnitee's option, such contest shall be conducted by the Lessee in the name of such Tax Indemnitee). In no event shall such Tax Indemnitee be required claim or the Lessee be permitted to contest any Tax for which the Lessee is obligated to indemnify pursuant to this Section 7.1 unless: (i) the Lessee shall have acknowledged in writing (x) that it is solely responsible for any Indemnified Tax resulting from any contest under its control, (y) its liability to such Tax Indemnitee for all reasonable out of pocket costs, losses and expenses that the Tax Indemnitees may incur in connection with contesting the Indemnified Tax (including, but not limited to, any reasonable legal, accounting and investigatory fees and disbursements), and (z) its liability for an indemnity payment pursuant to this Section 7.1 as a result of such claim if and to the extent such Tax Indemnitee or the Lessee, as the case may be, shall not prevail in the contest of such claim; provided, however, that the Lessee shall not be required to indemnify for such Taxes to the extent the results of the contest clearly demonstrate that the Tax is not an Indemnified Tax unless the Lessee's conduct of the contest materially prejudiced the Tax Indemnitee; (ii) such Tax Indemnitee shall have received the opinion of independent tax counsel selected by the Tax Indemnitee and reasonably satisfactory to the Lessee and furnished at the Lessee's sole expense, opining that a reasonable basis exists for contesting such claim or, in the event of an appeal of an adverse court or administrative agency decision, that as a result of a change in law or fact it is more likely than not that an appellate court or an administrative agency or decision making body with appellate jurisdiction, as the case may be, will reverse or substantially modify the adverse determination; (iii) the Lessee shall have agreed to pay such Tax Indemnitee on demand (and at no after tax costs to the Lessor, the Owner Participant and any Tax Indemnitee) all reasonable costs and expenses that such Tax Indemnitee may incur in connection with contesting such claim (including, without limitation, all reasonable legal and accounting fees and disbursements); (iv) no Lease Default described in Section 14(a), 14(b), 14(c), 14(g) or 14(h) of the Lease or a Lease Event of Default shall have occurred and shall have been continuing, unless the Tax Indemnitee in its sole discretion exercised in good faith allows the Lessee to post a satisfactory bond or other security that does not involve a possibility of a Lien on the Equipment or any portion thereof or on any interest therein, and which bond or other security will be for an amount equal to the sum of (I) the costs of such contest (as reasonably estimated by such Tax Indemnitee in good faith) and the Taxes which may be required to be indemnified and (II) if such Lease Default or Lease Event of Default involves a payment obligation under an Operative Agreement that is currently not paid in full, the unpaid amount of such obligation, plus the present value of the amounts not yet due pursuant to such obligation; (v) such Tax Indemnitee shall have determined that the action to be taken will not result in any risk of sale, forfeiture or loss of, or the creation commencement of any Liensuit, action, proceeding, investigation or the Lessee shall have or otherwise made a provision to protect the interest of such Tax Indemnitee (in a manner satisfactory to such Tax Indemnitee in its sole discretion), on the Equipment or any portion thereof or any interest therein; (vi) the amount of such claims alone, or, if the subject matter thereof shall be of a continuing or recurring nature, when aggregated with substantially identical potential claims with respect to the transactions contemplated by the Operative Agreements shall be at least $25,000; (vii) if such contest shall be conducted in a manner requiring the payment or deposit of the claim, the Lessee shall have paid the amount required (and at no after-tax costs to the Lessor, the Owner Participant or other Tax Indemnitee); and (viii) there is no risk of imposition of criminal liability or penalties. The Lessee shall cooperate with the Tax Indemnitee in good faith audit with respect to any contest controlled Tax Return that may affect ESI Tax Liabilities or Starwood Tax Liabilities, and conducted by shall provide the Tax Indemnitee and the Tax Indemnitee in good faith shall consult other party with the Lessee regarding the conduct copies (subject to deletion of nonrelevant information) of all correspondence relating to such contest. A Tax Indemnitee shall not be required to pursue an appeal to the U.S. Supreme Court or the highest court in Canada or Mexico. The Tax Indemnitee shall cooperate with respect to any contest controlled and conducted by the Lessee and the Lessee shall consult with the Tax Indemnitee regarding the conduct of such contest. Notwithstanding anything to the contrary contained in this Section 7.1, no Tax Indemnitee shall be required to contest any claim if the subject matter thereof shall be of a continuing or recurring nature and shall have previously been adversely decided to the Tax Indemnitee pursuant to the contest provisions of this Section 7.1 unless there shall have been a change in the law (including, without limitation, amendments to statutes or regulations, administrative rulings (excluding private letter rulings and other rulings or materials that may not be relied upon by such Tax Indemnitee as precedent) or court decisions in the applicable jurisdiction) enacted, promulgated or effective after such claim shall have been so previously decided, and such Tax Indemnitee shall have received an opinion of independent tax counsel selected by the Tax Indemnitee and reasonably satisfactory to the Lessee, furnished at the Lessee's sole expense, to the effect that such change is favorable to the position which such Tax Indemnitee or the Lessee, as the case may be, had asserted in such previous contest and as a result of such change, it is more likely than not that the Tax Indemnitee will prevail or, in the event of an appeal of an adverse court or administrative agency decision, that it is more likely than not that an appellate court or an administrative agency tribunal or decision making body with appellate jurisdiction, as the case may be, will reverse or substantially modify the adverse determination. Notwithstanding anything contained in this Section 7.1, a Tax Indemnitee will not be required to contest the imposition of any Tax and shall be permitted to settle or compromise any claim without the Lessee's consent if such Tax Indemnitee (A) shall waive its right to indemnity under this Section 7.1 with respect to such Tax (and any claim the outcome of which is determined based upon the outcome of such claim) and (B) shall pay to the Lessee any amount previously paid or advanced by the Lessee pursuant to this Section 7.1 with respect to such Tax Claim, less any reasonable costs and expenses of the Tax Indemnitee prior to such payment in respect of such Tax Claim.
Appears in 1 contract
Sources: Income Tax Sharing Agreement (Itt Educational Services 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 claim is made by any taxing authority against a Tax Indemnitee notice of such proceeding) for any Taxes with respect to which the Lessee may be required to indemnify against hereunder or if a Tax Indemnitee shall determine that any tax Imposition as to which the Lessee may have an indemnity obligation hereunder pursuant to this Section 14.4, or if any Tax Indemnitee shall determine that any Imposition to which the Lessee may have an indemnity obligation pursuant to this Section 14.4 may be payable (a "Tax Claim")payable, then such Tax Indemnitee shall give promptly (and in any event, within twenty (20) days) notify the Lessee written notice of such Tax Claim promptly in writing (but in any event provided that failure to so notify the Lessee within twenty (20) days after its receipt of the written Tax Claim or its determination, as applicable), and shall furnish Lessee with copies of not alter such Tax Claim and all other writings received from the taxing authority to the extent relating to such claim (but failure to so notify the Lessee shall not relieve the Lessee of its obligations hereunder Indemnitee's rights under this Section 14.4 except to the extent that it effectively such failure precludes or materially adversely affects the ability of the Lessee to conduct a contest of the Tax Claim). The Tax Indemnitee any indemnified Imposition) and shall not pay take any action with respect to such Tax Claim until at least claim, proceeding or Imposition without the written consent of the Lessee (such consent not to be unreasonably withheld, conditioned or delayed) for thirty (30) days after providing the Lessee with receipt of such written noticenotice by the Lessee; provided, unless (a) however, that in the case of any such claim or proceeding, if such Tax Indemnitee is shall be required to do so by law or regulation or to take action prior to the failure to pay end of such thirty (30) day period, such Tax Claim could result in a material adverse financialIndemnitee shall immediately notify the Lessee, legal and such Tax Indemnitee shall not take any action with respect to such claim, proceeding or other consequence Imposition without the consent of the Lessee (such consent not to be unreasonably withheld, conditioned or delayed) for ten (10) days after the receipt of such notice by the Lessee unless such Tax Indemnitee shall be required by law or regulation to take action prior to the end of such 10-day period. The Lessee shall be entitled for a period of thirty (30) days from receipt of such notice from such Tax Indemnitee and (b) in the written notice described above, the or such shorter period as such Tax Indemnitee has notified the Lessee of such requirement is required by law or such material adverse consequence (such notice however shall not require the disclosure of the Tax Indemnitee's confidential information, as determined in the sole discretion of such Tax Indemnitiee, or the Tax Indemnitee's tax returns, books, or records). If the Lessee shall so request within 30 days after receipt of such notice (or such shorter period as is reasonably specified by the Tax Indemnitee if any contest of the Tax must be commenced prior to the expiration of 30 days), then regulation for such Tax Indemnitee shall to commence such contest), to request in good faith at Lessee's sole expense contest writing that such Tax or Indemnitee contest, or, subject to the next succeeding sentence that such Tax Indemnitee permit the Lessee to contest contest, such TaxImposition, as in either case at the Lessee's expense. If (x) such Tax Indemnitee shall elect; provided, however, that to the extent (i) the contest involves only Taxes constituting property taxes, sales taxes, or use taxes, (ii) the contest does not involve any taxes that the Lessee is not required to indemnify the Tax Indemnitee or taxes and other issues relating to a Tax Indemnitee that are unrelated to the transactions contemplated by the Operative Agreements, (iii) the contest can be pursued in the name of the Lessee and independently from any other proceeding involving a Tax Claim liability of a such Tax Indemnitee for which the Lessee has not agreed in writing to indemnify such Tax Indemnitee, and (iv) no Equity Insufficiency Circumstance exists, such contest shall be undertaken by the Lessee at the Lessee's sole expense and the after-tax costs of the Lessor, the Owner Participant, or other Tax Indemnitee shall be reimbursed by the Lessee. Notwithstanding the preceding sentence, if (ay) such contest would involve must be pursued in the name of such Tax Indemnitee, but can be pursued independently from any other type proceeding involving a liability of Tax, any taxes that such Tax Indemnitee for which the Lessee is has not required agreed to indemnify the such Tax Indemnitee or taxes and other issues relating to a (z) such Tax Indemnitee which are unrelated so requests, then the Lessee shall be permitted to control the transactions contemplated by contest of such claim, provided that in the Operative Agreementscase of a contest described in clause (y), (b) the Tax Indemnitee determines that if such contest conducted by the Lessee could have a material adverse impact on the business or operations of such Tax Indemnitee and such Tax Indemnitee provides a written explanation to the Lessee of such determination, such Tax Indemnitee may elect to control or reassert control of the contest, 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 Imposition for which the Lessee indemnifies hereunder from Impositions for which the Lessee is not obligated to indemnify hereunder, so that the Lessee can control the contest of the former. In all other claims requested to be contested by the Lessee, such Tax Indemnitee shall control the contest of such claim, acting through counsel reasonably acceptable to the Lessee. In no event shall the Lessee be permitted to contest (or such Tax Indemnitee be required to contest) any claim (A) if an Event of Default has occurred and is continuing unless the Lessee shall have posted and maintained a bond or other security satisfactory to the relevant Tax Indemnitee in respect of the Impositions subject to such claim and any and all expenses for which the Lessee is responsible hereunder that are reasonably foreseeable in connection with the contest of such claim, or (B) if such contest shall involve the payment of the Imposition prior to the contest, unless the Lessee shall provide to such Tax Indemnitee an interest-free advance in an amount equal to the Imposition that the Tax Indemnitee is required to pay (with no additional net after-tax costs to such Tax Indemnitee's business or operations or involve risk of the imposition of criminal liability on a Tax Indemnitee, or (c) an Equity Insufficiency Circumstance exists, then such ). In addition for Tax Indemnitee may, in its sole discretion, control such contest (including selecting the forum for such contest, controlled contests and determining whether any such contest shall be conducted by (i) paying such Tax under protest or (ii) resisting payment of such Tax or (iii) paying such Tax and seeking a refund thereof; provided, however, that at such Tax Indemnitee's option, such contest shall be conducted by the Lessee claims contested in the name of such Tax Indemnitee). In Indemnitee in a public forum, no event 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 such Tax Indemnitee be required or the Lessee be permitted with respect to contest any Tax period for which the Lessee is obligated may be liable to indemnify pursuant to pay an indemnity under this Section 7.1 unless: (i14.4(b)) the Lessee shall have acknowledged in writing (x) that it is solely responsible for any Indemnified Tax resulting from any contest under its control, (y) its liability to such Tax Indemnitee for all reasonable out of pocket costs, losses and expenses that the Tax Indemnitees may incur in connection with contesting the Indemnified Tax (including, but not limited to, any reasonable legal, accounting and investigatory fees and disbursements), exceeds $15,000 and (zB) its liability for an indemnity payment pursuant to this Section 7.1 as a result of such claim unless, if and to the extent such Tax Indemnitee or the Lessee, as the case may be, shall not prevail in the contest of such claim; provided, however, that the Lessee shall not be required to indemnify for such Taxes to the extent the results of the contest clearly demonstrate that the Tax is not an Indemnified Tax unless the Lessee's conduct of the contest materially prejudiced the Tax Indemnitee; (ii) such Tax Indemnitee shall have received the opinion of independent tax counsel selected by the Tax Indemnitee and reasonably satisfactory to the Lessee and furnished at the Lessee's sole expense, opining that a reasonable basis exists for contesting such claim or, in the event of an appeal of an adverse court or administrative agency decision, that as a result of a change in law or fact it is more likely than not that an appellate court or an administrative agency or decision making body with appellate jurisdiction, as the case may be, will reverse or substantially modify the adverse determination; (iii) the Lessee shall have agreed to pay such Tax Indemnitee on demand (and at no after tax costs to the Lessor, the Owner Participant and any Tax Indemnitee) all reasonable costs and expenses that such Tax Indemnitee may incur in connection with contesting such claim (including, without limitation, all reasonable legal and accounting fees and disbursements); (iv) no Lease Default described in Section 14(a), 14(b), 14(c), 14(g) or 14(h) of the Lease or a Lease Event of Default shall have occurred and shall have been continuing, unless the Tax Indemnitee in its sole discretion exercised in good faith allows the Lessee to post a satisfactory bond or other security that does not involve a possibility of a Lien on the Equipment or any portion thereof or on any interest therein, and which bond or other security will be for an amount equal to the sum of (I) the costs of such contest (as reasonably estimated requested by such Tax Indemnitee in good faith) and the Taxes which may be required to be indemnified and (II) if such Lease Default or Lease Event of Default involves a payment obligation under an Operative Agreement that is currently not paid in full, the unpaid amount of such obligation, plus the present value of the amounts not yet due pursuant to such obligation; (v) such Tax Indemnitee shall have determined that the action to be taken will not result in any risk of sale, forfeiture or loss of, or the creation of any Lien, or the Lessee shall have or otherwise made a provision to protect the interest of such Tax Indemnitee (in a manner satisfactory to such Tax Indemnitee in its sole discretion), on the Equipment or any portion thereof or any interest therein; (vi) the amount of such claims alone, or, if the subject matter thereof shall be of a continuing or recurring nature, when aggregated with substantially identical potential claims with respect to the transactions contemplated by the Operative Agreements shall be at least $25,000; (vii) if such contest shall be conducted in a manner requiring the payment or deposit of the claimIndemnitee, the Lessee shall have paid the amount required (and at no after-tax costs provided to the Lessor, the Owner Participant or other Tax Indemnitee); and (viii) there is no risk of imposition of criminal liability or penalties. The Lessee shall cooperate with the such Tax Indemnitee in good faith with respect to any contest controlled and conducted by the Tax Indemnitee and the Tax Indemnitee in good faith shall consult with the Lessee regarding the conduct an opinion of such contest. A Tax Indemnitee shall not be required to pursue an appeal to the U.S. Supreme Court or the highest court in Canada or Mexico. The Tax Indemnitee shall cooperate with respect to any contest controlled and conducted counsel selected by the Lessee and (which may be in-house counsel) (except, in the Lessee shall consult with the Tax Indemnitee regarding the conduct case of income taxes indemnified hereunder, in which case such contest. Notwithstanding anything to the contrary contained in this Section 7.1, no Tax Indemnitee opinion shall be required to contest any claim if the subject matter thereof shall be of a continuing or recurring nature and shall have previously been adversely decided to the Tax Indemnitee pursuant to the contest provisions of this Section 7.1 unless there shall have been a change in the law (including, without limitation, amendments to statutes or regulations, administrative rulings (excluding private letter rulings and other rulings or materials that may not be relied upon by such Tax Indemnitee as precedent) or court decisions in the applicable jurisdiction) enacted, promulgated or effective after such claim shall have been so previously decided, and such Tax Indemnitee shall have received an opinion of independent tax counsel selected by the such Tax Indemnitee and reasonably satisfactory acceptable to the 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 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, furnished provided, however, that if such Tax Indemnitee is the controlling party and the Lessee 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 the Lessee 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. 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. Each Tax Indemnitee shall, at the Lessee's sole expense, supply the Lessee with such information and documents reasonably requested by the Lessee as are necessary or advisable for the Lessee to participate in any action, suit or proceeding to the effect extent permitted by this Section 14.4(b); provided, however, that such change is favorable to the position which such Tax Indemnitee shall not be required to provide to the Lessee copies of its tax returns or any documentation or materials that it deems to be confidential or proprietary. Notwithstanding anything in this Section 14.4(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 14.4 (and with respect to which contest is required under this Section 14.4(b)) without the prior written consent of the Lessee, as the case may be, had asserted in unless such previous contest and as a result of such change, it is more likely than not that the Tax Indemnitee will prevail or, in waives its right to be indemnified under this Section 14.4 with respect to such claim and pays to the event of an appeal of an adverse court Lessee any amount previously paid or administrative agency decision, that it is more likely than not that an appellate court or an administrative agency tribunal or decision making body advanced by Lessee pursuant to this Section 14.4 with appellate jurisdiction, as the case may be, will reverse or substantially modify the adverse determinationrespect to such claim. Notwithstanding anything contained in this Section 7.1herein to the contrary, a Tax Indemnitee will not be required to contest (and the Lessee shall not be permitted to contest) a claim with respect to the imposition of any Tax and shall be permitted to settle or compromise any claim without the Lessee's consent Imposition if such Tax Indemnitee (A) shall waive its right to indemnity indemnification under this Section 7.1 14.4 with respect to such Tax claim (and any claim the outcome of which is determined based upon the outcome of such claim) and (B) shall pay to the Lessee any amount previously paid or advanced by the Lessee pursuant to this Section 7.1 with respect to such Tax Claim, less year or any reasonable costs and expenses other taxable year the contest of the Tax Indemnitee prior to such payment in respect which is materially adversely affected as a result of such Tax Claimwaiver).
Appears in 1 contract
Sources: Lease Agreement (Weirton Steel 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 claim is made by any taxing authority against a Tax Indemnitee notice of such proceeding) for any Taxes with respect to which the Lessee may be required to indemnify against hereunder or if a Tax Indemnitee shall determine that any tax Imposition as to which the Lessee may have an indemnity obligation hereunder pursuant to this Section 13.4, or if any Tax Indemnitee shall determine that any Imposition for which the Lessee may have an indemnity obligation pursuant to this Section 13.4 may be payable (a "Tax Claim")payable, then such Tax Indemnitee shall give promptly (and in any event, within 15 days) notify the Lessee written notice of such Tax Claim promptly in writing (but in any event within twenty (20) days after its receipt of the written Tax Claim or its determination, as applicable), and shall furnish Lessee with copies of such Tax Claim and all other writings received from the taxing authority to the extent relating to such claim (but provided that failure to so notify the Lessee within 15 days shall not relieve the Lessee of its obligations hereunder alter such Tax Indemnitee's rights under this Section 13.4, except to the extent that it such failure effectively precludes the ability of the Lessee 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 Lessee (such consent not to be unreasonably withheld or unreasonably delayed) for 30 days after the receipt of such notice by the Lessee; provided, however, that in the case of any such claim or proceeding, if such Tax Claim). The Indemnitee shall be required by law or regulation to take action prior to the end of such 30-day period, such Tax Indemnitee shall in such notice to the Lessee, so inform the Lessee, and such Tax Indemnitee shall not pay take any action with respect to such Tax Claim until at least thirty claim, proceeding or Imposition without the consent of the Lessee (30such consent not to be unreasonably withheld or unreasonably delayed) for 10 days after providing the Lessee with receipt of such written noticenotice by the Lessee, unless (a) the Tax Indemnitee is shall be required to do so by law or regulation or to take action prior to the failure to pay end of such Tax Claim could result in 10-day period. The Lessee shall be entitled for a material adverse financial, legal or other consequence to period of 30 days from receipt of such notice from the Tax Indemnitee and (b) in the written notice described above, or such shorter period as the Tax Indemnitee has notified the Lessee of such requirement is required by law or such material adverse consequence (such notice however shall not require the disclosure of the Tax Indemnitee's confidential information, as determined in the sole discretion of such Tax Indemnitiee, or the Tax Indemnitee's tax returns, books, or records). If the Lessee shall so request within 30 days after receipt of such notice (or such shorter period as is reasonably specified by regulation for the Tax Indemnitee if any contest of the Tax must be commenced prior to the expiration of 30 dayscommence such contest), then to request in writing that such Tax Indemnitee shall in good faith contest such Impositions, at the Lessee's sole expense contest expense. If (x) such Tax or permit the Lessee to contest such Tax, as such Tax Indemnitee shall elect; provided, however, that to the extent (i) the contest involves only Taxes constituting property taxes, sales taxes, or use taxes, (ii) the contest does not involve any taxes that the Lessee is not required to indemnify the Tax Indemnitee or taxes and other issues relating to a Tax Indemnitee that are unrelated to the transactions contemplated by the Operative Agreements, (iii) the contest can be pursued in the name of the Lessee and independently from any other proceeding involving a Tax Claim liability of a such Tax Indemnitee for which the Lessee has not agreed in writing to indemnify such Tax Indemnitee, and (iv) no Equity Insufficiency Circumstance exists, such contest shall be undertaken by the Lessee at the Lessee's sole expense and the after-tax costs of the Lessor, the Owner Participant, or other Tax Indemnitee shall be reimbursed by the Lessee. Notwithstanding the preceding sentence, if (ay) such contest would involve must be pursued in the name of the Tax Indemnitee, but can be pursued independently from any other type proceeding involving a Tax liability of Tax, any taxes that such Tax Indemnitee for which the Lessee is has not required agreed to indemnify the such Tax Indemnitee or taxes and other issues relating to a Tax Indemnitee which are unrelated to the transactions contemplated by the Operative Agreements, (bz) the Tax Indemnitee so requests, then the 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 the Tax Indemnitee determines in good faith that such contest conducted by the Lessee could is reasonably likely to have a material adverse impact on such Tax Indemnitee's the business or operations or involve risk of the imposition of criminal liability on a Tax Indemnitee, or (c) an Equity Insufficiency Circumstance exists, then such Tax Indemnitee mayand provides a written explanation to the Lessee of such determination, in its sole discretion, the Tax Indemnitee may elect to control such contest (including selecting or reassert control of the forum for such contest, and provided, further, that in determining whether the application of clauses (x) and (y) of this sentence, each Tax Indemnitee shall take any such and all reasonable steps to segregate claims for any Impositions for which the Lessee indemnifies hereunder from Taxes for which the Lessee is not obligated to indemnify hereunder, so that the Lessee can control the contest of the former. In all other claims requested to be contested by the Lessee, the Tax Indemnitee shall be conducted by (i) paying such Tax under protest or (ii) resisting payment control the contest of such Tax or (iii) paying such Tax and seeking a refund thereof; providedclaim, however, that at such Tax Indemnitee's option, such contest shall be conducted by acting through counsel reasonably acceptable to the Lessee in the name of such Tax Indemnitee)Lessee. In no event shall such Tax Indemnitee be required or the Lessee be permitted to contest (or the Tax Indemnitee required to contest) any claim, (A) if such Tax Indemnitee provides the Lessee with a legal opinion of independent counsel 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 any Asset or any part of any thereof unless the 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 an Event of Default has occurred and is continuing, unless the Lessee shall have posted and maintained a bond or other security reasonably satisfactory to the relevant Tax Indemnitee in respect of the Impositions subject to such claim and any and all expenses for which the Lessee is obligated to indemnify pursuant to this Section 7.1 unless: (i) the Lessee shall have acknowledged in writing (x) that it is solely responsible for any Indemnified Tax resulting from any contest under its control, (y) its liability to such Tax Indemnitee for all reasonable out of pocket costs, losses and expenses that the Tax Indemnitees may incur hereunder reasonably foreseeable in connection with contesting the Indemnified Tax (including, but not limited to, any reasonable legal, accounting and investigatory fees and disbursements), and (z) its liability for an indemnity payment pursuant to this Section 7.1 as a result of such claim if and to the extent such Tax Indemnitee or the Lessee, as the case may be, shall not prevail in the contest of such claim; , (C) unless the Lessee shall have provided the Tax Indemnitee with a written acknowledgement of liability if the contest shall prove unsuccessful (provided, however, that the Lessee such acknowledgement shall not be required to indemnify for such Taxes to the extent the results of binding if the contest clearly demonstrate is finally resolved on a basis from which it can be established that the Tax is Lessee would not an Indemnified Tax unless the Lessee's conduct of the contest materially prejudiced the Tax Indemnitee; (ii) such Tax Indemnitee shall have received the opinion of independent tax counsel selected by been liable to the Tax Indemnitee and reasonably satisfactory to the Lessee and furnished at the Lessee's sole expense, opining that a reasonable basis exists for contesting such claim or, an indemnity in the event absence of an appeal of an adverse court or administrative agency decisionsuch acknowledgment), that as a result of a change in law or fact it is more likely than not that an appellate court or an administrative agency or decision making body with appellate jurisdiction, as the case may be, will reverse or substantially modify the adverse determination; (iiiD) unless the Lessee shall have agreed to pay and shall pay (provided, that prior to the Applicable Base Term Commencement Date for such Facility or Equipment Group and pursuant to the terms and conditions in this Participation Agreement relating to Advances, Lessee shall request an Advance the proceeds of which shall be used to pay) to such Tax Indemnitee on demand (and at no after tax costs to the Lessor, the Owner Participant and any Tax Indemnitee) all reasonable costs out-of-pocket costs, losses and expenses that such Tax Indemnitee may incur in connection with contesting such claim (includingImposition, without limitation, including all reasonable legal legal, accounting and accounting investigatory fees and disbursements); disbursements as well as the Impositions which are the subject of such claim to the extent the contest is unsuccessful, or (ivE) no Lease Default described in Section 14(a), 14(b), 14(c), 14(g) or 14(h) if such contest shall involve the payment of the Lease or a Lease Event of Default shall have occurred and shall have been continuingImpositions prior to the contest, unless the Lessee shall provide to the Tax Indemnitee an interest-free advance in its sole discretion exercised in good faith allows the Lessee to post a satisfactory bond or other security that does not involve a possibility of a Lien on the Equipment or any portion thereof or on any interest therein, and which bond or other security will be for an amount equal to the sum Imposition that the 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, no contest shall be required: (A) unless the amount of the potential indemnity (I) the costs of such contest (as reasonably estimated by taking into account all similar or logically related claims that have been or could be raised in any audit involving such Tax Indemnitee in good faith) and for which the Taxes which Lessee may be required liable to be indemnified pay an indemnity under this Section 13.4(b)) exceeds $25,000 and (IIB) if such Lease Default or Lease Event of Default involves a payment obligation under an Operative Agreement that is currently not paid in full, the unpaid amount of such obligation, plus the present value of the amounts not yet due pursuant to such obligation; (v) such Tax Indemnitee shall have determined that the action to be taken will not result in any risk of sale, forfeiture or loss of, or the creation of any Lien, or the Lessee shall have or otherwise made a provision to protect the interest of such Tax Indemnitee (in a manner satisfactory to such Tax Indemnitee in its sole discretion), on the Equipment or any portion thereof or any interest therein; (vi) the amount of such claims alone, orunless, if the subject matter thereof shall be of a continuing or recurring nature, when aggregated with substantially identical potential claims with respect to the transactions contemplated requested by the Operative Agreements shall be at least $25,000; (vii) if such contest shall be conducted in a manner requiring the payment or deposit of the claimTax Indemnitee, the Lessee shall have paid the amount required (and at no after-tax costs to the Lessor, the Owner Participant or other Tax Indemnitee); and (viii) there is no risk of imposition of criminal liability or penalties. The Lessee shall cooperate with the Tax Indemnitee in good faith with respect to any contest controlled and conducted by the Tax Indemnitee and the Tax Indemnitee in good faith shall consult with the Lessee regarding the conduct of such contest. A Tax Indemnitee shall not be required to pursue an appeal to the U.S. Supreme Court or the highest court in Canada or Mexico. The Tax Indemnitee shall cooperate with respect to any contest controlled and conducted by the Lessee and the Lessee shall consult with the Tax Indemnitee regarding the conduct of such contest. Notwithstanding anything to the contrary contained in this Section 7.1, no Tax Indemnitee shall be required to contest any claim if the subject matter thereof shall be of a continuing or recurring nature and shall have previously been adversely decided provided to the Tax Indemnitee pursuant to an opinion of counsel selected by the contest provisions of this Section 7.1 unless there shall have been a change Lessee (which may be in-house counsel, except, in the law (includingcase of income taxes indemnified hereunder, without limitation, amendments to statutes or regulations, administrative rulings (excluding private letter rulings and other rulings or materials which opinion shall be that may not be relied upon by such Tax Indemnitee as precedent) or court decisions in the applicable jurisdiction) enacted, promulgated or effective after such claim shall have been so previously decided, and such Tax Indemnitee shall have received an opinion of independent tax counsel selected by the Tax Indemnitee and reasonably satisfactory acceptable to the Lessee, furnished at the Lessee's sole expense, ) 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 effect that such change is favorable 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 position which contest of such claim for 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, however, that if the Tax Indemnitee is the controlling party and the Lessee 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 the Lessee will be required to indemnify such Tax Indemnitee with respect to the Impositions subject to such offer shall not exceed the amount which it would have owed if such settlement offer had been accepted. 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. Each Tax Indemnitee shall supply the Lessee with such information and documents reasonably requested by the Lessee as are necessary or advisable for the Lessee to participate in any action, suit or proceeding to the extent permitted by this Section 13.4(b), and the Lessee shall promptly reimburse such 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 and the Guarantors shall have failed to provide indemnity and, if requested by an Indemnitee, collateral security, both in form, substance and in such amounts reasonably satisfactory to each 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 Lessee, as the case may be, had asserted in unless such previous contest and as a result of such change, it is more likely than not that the Tax Indemnitee will prevail or, in the event of an appeal of an adverse court or administrative agency decision, that it is more likely than not that an appellate court or an administrative agency tribunal or decision making body waives its right to be indemnified under this Section 13.4 with appellate jurisdiction, as the case may be, will reverse or substantially modify the adverse determinationrespect to such claim. Notwithstanding anything contained in this Section 7.1herein to the contrary, a Tax Indemnitee will not be required to contest (and the imposition of any Tax and Lessee shall not be permitted to settle or compromise contest) a claim with respect to any claim without the Lessee's consent Imposition if (i) such Tax Indemnitee (A) shall waive its right to indemnity indemnification under this Section 7.1 13.4 with respect to such Tax claim (and any claim the outcome of which is determined based upon the outcome of such claim) and (B) shall pay to the Lessee any amount previously paid or advanced by the Lessee pursuant to this Section 7.1 with respect to such year or any other taxable year, the contest of which is 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 Claim, less any reasonable costs Indemnitee (unless a change in law or facts has occurred since such prior adverse resolution and expenses 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 Tax Indemnitee prior to such payment in respect of such Tax Claimclaim at issue).
Appears in 1 contract
Sources: Participation Agreement (PPL Electric Utilities 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 claim is made by any taxing authority against a Tax Indemnitee notice of such proceeding) for any Taxes with respect to which the Lessee may be required to indemnify against hereunder or if a Tax Indemnitee shall determine that any tax Imposition as to which the Lessee may have an indemnity obligation hereunder pursuant to this Section 26.5, or if any Tax Indemnitee shall determine that any Imposition to which the Lessee may have an indemnity obligation pursuant to this Section 26.5 may be payable (a "Tax Claim")payable, then such Tax Indemnitee shall give promptly (and in any event, within 30 days) notify the Lessee written notice of such Tax Claim promptly in writing (but in any event within twenty (20) days after its receipt of the written Tax Claim or its determination, as applicable), and shall furnish Lessee with copies of such Tax Claim and all other writings received from the taxing authority to the extent relating to such claim (but provided that failure to so notify the Lessee within 30 days shall not relieve the Lessee of its obligations hereunder alter such Tax Indemnitee's rights under this Section 26.5 except to the extent that it effectively such failure precludes or materially adversely affects the ability of the Lessee 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 Lessee (such consent not to be unreasonably withheld or unreasonably delayed) for 30 days after the receipt of such notice by the Lessee; provided, however, that in the case of any such claim or proceeding, if such Tax Claim). The Indemnitee shall be required by law or regulation to take action prior to the end of such 30-day period, such Tax Indemnitee shall in such notice to the Lessee, so inform the Lessee, and such Tax Indemnitee shall not pay take any action with respect to such Tax Claim until at least thirty claim, proceeding or Imposition without the consent of the Lessee (30such consent not to be unreasonably withheld or unreasonably delayed) for 10 days after providing the receipt of such notice by the Lessee with such written notice, unless (a) the Tax Indemnitee is shall be required to do so by law or regulation or to take action prior to the failure to pay end of such Tax Claim could result in 10-day period. The Lessee shall be entitled for a material adverse financial, legal or other consequence to period of 30 days from receipt of such notice from the Tax Indemnitee and (b) in the written notice described above, or such shorter period as the Tax Indemnitee has notified the Lessee of such requirement is required by law or such material adverse consequence (such notice however shall not require the disclosure of the Tax Indemnitee's confidential information, as determined in the sole discretion of such Tax Indemnitiee, or the Tax Indemnitee's tax returns, books, or records). If the Lessee shall so request within 30 days after receipt of such notice (or such shorter period as is reasonably specified by regulation for the Tax Indemnitee if any contest of the Tax must be commenced prior to the expiration of 30 dayscommence such contest), then to request in writing that such Tax Indemnitee shall in good faith at Lessee's sole expense contest such Tax or permit the Lessee to contest imposition of such Tax, as at the Lessee's expense. If (x) such Tax Indemnitee shall elect; provided, however, that to the extent (i) the contest involves only Taxes constituting property taxes, sales taxes, or use taxes, (ii) the contest does not involve any taxes that the Lessee is not required to indemnify the Tax Indemnitee or taxes and other issues relating to a Tax Indemnitee that are unrelated to the transactions contemplated by the Operative Agreements, (iii) the contest can be pursued in the name of the Lessee and independently from any other proceeding involving a Tax Claim liability of a such Tax Indemnitee for which the Lessee has not agreed in writing to indemnify such Tax Indemnitee, and (iv) no Equity Insufficiency Circumstance exists, such contest shall be undertaken by the Lessee at the Lessee's sole expense and the after-tax costs of the Lessor, the Owner Participant, or other Tax Indemnitee shall be reimbursed by the Lessee. Notwithstanding the preceding sentence, if (ay) such contest would involve must be pursued in the name of the Tax Indemnitee, but can be pursued independently from any other type proceeding involving a Tax liability of Tax, any taxes that such Tax Indemnitee for which the Lessee is has not required agreed to indemnify the such Tax Indemnitee or taxes and other issues relating to a Tax Indemnitee which are unrelated to the transactions contemplated by the Operative Agreements, (bz) the Tax Indemnitee so requests, then the Lessee shall be permitted to control the contest of such claim, provided that in the case of a contest described in clause (y), if the Tax Indemnitee determines in good faith that such contest conducted by the Lessee could have a material adverse impact on such Tax Indemnitee's the business or operations or involve risk of the imposition of criminal liability on a Tax Indemnitee, or (c) an Equity Insufficiency Circumstance exists, then such Tax Indemnitee mayand provides a written explanation to the Lessee of such determination, in its sole discretion, the Tax Indemnitee may elect to control such contest (including selecting or reassert control of the forum for such contest, and determining whether any such contest shall provided, that by taking control of the contest, Lessee acknowledges that it is responsible for the Imposition ultimately determined to be conducted due by (i) paying such Tax under protest or (ii) resisting payment reason of such Tax or (iii) paying such Tax claim, and seeking a refund thereof; provided, howeverfurther, that at such in determining the application of clauses (x) and (y) of the preceding sentence, each Tax Indemnitee's option, such contest Indemnitee shall be conducted by take any and all reasonable steps to segregate claims for any Taxes for which the Lessee in the name of such Tax Indemnitee). In no event shall such Tax Indemnitee be required or the Lessee be permitted to contest any Tax indemnifies hereunder from Taxes for which the Lessee is not obligated to indemnify pursuant to this Section 7.1 unless: (i) hereunder, so that the Lessee shall have acknowledged in writing (x) that it is solely responsible for any Indemnified Tax resulting from any contest under its control, (y) its liability to such Tax Indemnitee for all reasonable out of pocket costs, losses and expenses that the Tax Indemnitees may incur in connection with contesting the Indemnified Tax (including, but not limited to, any reasonable legal, accounting and investigatory fees and disbursements), and (z) its liability for an indemnity payment pursuant to this Section 7.1 as a result of such claim if and to the extent such Tax Indemnitee or the Lessee, as the case may be, shall not prevail in can control the contest of such claim; provided, however, that the Lessee shall not be required to indemnify for such Taxes to the extent the results of the contest clearly demonstrate that the Tax is not an Indemnified Tax unless the Lessee's conduct of the contest materially prejudiced the Tax Indemnitee; (ii) such Tax Indemnitee shall have received the opinion of independent tax counsel selected by the Tax Indemnitee and reasonably satisfactory to the Lessee and furnished at the Lessee's sole expense, opining that a reasonable basis exists for contesting such claim or, in the event of an appeal of an adverse court or administrative agency decision, that as a result of a change in law or fact it is more likely than not that an appellate court or an administrative agency or decision making body with appellate jurisdiction, as the case may be, will reverse or substantially modify the adverse determination; (iii) the Lessee shall have agreed to pay such Tax Indemnitee on demand (and at no after tax costs to the Lessor, the Owner Participant and any Tax Indemnitee) all reasonable costs and expenses that such Tax Indemnitee may incur in connection with contesting such claim (including, without limitation, all reasonable legal and accounting fees and disbursements); (iv) no Lease Default described in Section 14(a), 14(b), 14(c), 14(g) or 14(h) of the Lease or a Lease Event of Default shall have occurred and shall have been continuing, unless the Tax Indemnitee in its sole discretion exercised in good faith allows the Lessee to post a satisfactory bond or other security that does not involve a possibility of a Lien on the Equipment or any portion thereof or on any interest therein, and which bond or other security will be for an amount equal to the sum of (I) the costs of such contest (as reasonably estimated by such Tax Indemnitee in good faith) and the Taxes which may be required to be indemnified and (II) if such Lease Default or Lease Event of Default involves a payment obligation under an Operative Agreement that is currently not paid in full, the unpaid amount of such obligation, plus the present value of the amounts not yet due pursuant to such obligation; (v) such Tax Indemnitee shall have determined that the action to be taken will not result in any risk of sale, forfeiture or loss of, or the creation of any Lien, or the Lessee shall have or otherwise made a provision to protect the interest of such Tax Indemnitee (in a manner satisfactory to such Tax Indemnitee in its sole discretion), on the Equipment or any portion thereof or any interest therein; (vi) the amount of such claims alone, or, if the subject matter thereof shall be of a continuing or recurring nature, when aggregated with substantially identical potential claims with respect to the transactions contemplated by the Operative Agreements shall be at least $25,000; (vii) if such contest shall be conducted in a manner requiring the payment or deposit of the claim, the Lessee shall have paid the amount required (and at no after-tax costs to the Lessor, the Owner Participant or other Tax Indemnitee); and (viii) there is no risk of imposition of criminal liability or penalties. The Lessee shall cooperate with the Tax Indemnitee in good faith with respect to any contest controlled and conducted by the Tax Indemnitee and the Tax Indemnitee in good faith shall consult with the Lessee regarding the conduct of such contest. A Tax Indemnitee shall not be required to pursue an appeal to the U.S. Supreme Court or the highest court in Canada or Mexico. The Tax Indemnitee shall cooperate with respect to any contest controlled and conducted by the Lessee and the Lessee shall consult with the Tax Indemnitee regarding the conduct of such contest. Notwithstanding anything to the contrary contained in this Section 7.1, no Tax Indemnitee shall be required to contest any claim if the subject matter thereof shall be of a continuing or recurring nature and shall have previously been adversely decided to the Tax Indemnitee pursuant to the contest provisions of this Section 7.1 unless there shall have been a change in the law (including, without limitation, amendments to statutes or regulations, administrative rulings (excluding private letter rulings and other rulings or materials that may not be relied upon by such Tax Indemnitee as precedent) or court decisions in the applicable jurisdiction) enacted, promulgated or effective after such claim shall have been so previously decided, and such Tax Indemnitee shall have received an opinion of independent tax counsel selected by the Tax Indemnitee and reasonably satisfactory to the Lessee, furnished at the Lessee's sole expense, to the effect that such change is favorable to the position which such Tax Indemnitee or the Lessee, as the case may be, had asserted in such previous contest and as a result of such change, it is more likely than not that the Tax Indemnitee will prevail or, in the event of an appeal of an adverse court or administrative agency decision, that it is more likely than not that an appellate court or an administrative agency tribunal or decision making body with appellate jurisdiction, as the case may be, will reverse or substantially modify the adverse determination. Notwithstanding anything contained in this Section 7.1, a Tax Indemnitee will not be required to contest the imposition of any Tax and shall be permitted to settle or compromise any claim without the Lessee's consent if such Tax Indemnitee (A) shall waive its right to indemnity under this Section 7.1 with respect to such Tax (and any claim the outcome of which is determined based upon the outcome of such claim) and (B) shall pay to the Lessee any amount previously paid or advanced by the Lessee pursuant to this Section 7.1 with respect to such Tax Claim, less any reasonable costs and expenses of the Tax Indemnitee prior to such payment in respect of such Tax Claim.the
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 claim is made by any taxing authority against a Tax Indemnitee notice of such proceeding) for any Taxes with respect as to which the Lessee may be required to indemnify against hereunder or if a Tax Indemnitee shall determine that any tax to which the Lessee may have an indemnity obligation hereunder may be payable (a "Tax Claim")pursuant to Section 19.02, then such Tax Indemnitee shall give promptly notify Lessee in writing and shall not take any action with respect to such claim or Tax without the consent of Lessee written notice of such Tax Claim promptly for thirty (but in any event within twenty (2030) days after its receipt sending such notice to Lessee; provided 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 written end of such 30-day period, such Tax Claim or its determinationIndemnitee shall, as applicable)in such notice to Lessee, so inform Lessee, and shall furnish Lessee with copies of such Tax Claim and all other writings received from the taxing authority to the extent relating Indemnitee shall not take any action with respect to such claim or Tax without the consent of Lessee (but not to be unreasonably withheld) before ten (10) days from the receipt of such notice by Lessee unless the Tax Indemnitee shall be required by law or regulation to take action prior to the end of such 10 day period; provided, that failure to so notify the Lessee shall not relieve the Lessee of its affect Lessee's obligations to indemnify hereunder except to the extent that it effectively precludes the ability of the Lessee is precluded from any contest and actually and materially harmed thereby. If requested by Lessee in a written request to conduct a contest of the Tax Claim). The such Tax Indemnitee shall not pay such Tax Claim until at least within thirty (30) days after providing the Lessee with such written notice, unless (a) the Tax Indemnitee is required to do so by law or regulation or the failure to pay such Tax Claim could result in a material adverse financial, legal or other consequence to the Tax Indemnitee and (b) in the written notice described above, the Tax Indemnitee has notified the Lessee of such requirement or such material adverse consequence (such notice however shall not require the disclosure of the Tax Indemnitee's confidential information, as determined in the sole discretion of such Tax Indemnitiee, or the Tax Indemnitee's tax returns, books, or records). If the Lessee shall so request within 30 days after receipt of such notice (or such shorter period as is reasonably specified by referred to in the Tax Indemnitee if any contest of the Tax must be commenced prior proviso to the expiration first sentence in this Section 19.02(e)) after its receipt of 30 days)such notice, then such Tax Indemnitee (i) in the case of a Tax which may be contested independently (without joinder, contribution or otherwise) from any Tax that is not subject to indemnification by the Lessee, shall permit Lessee to in good faith at Lessee's sole expense contest such Tax or permit the Lessee to contest such Tax, as such Tax Indemnitee shall elect; provided, however, that to the extent (i) the contest involves only Taxes constituting property taxes, sales taxes, or use taxes, (ii) the contest does not involve any taxes that the Lessee is not required to indemnify the Tax Indemnitee or taxes and other issues relating to a Tax Indemnitee that are unrelated to the transactions contemplated by the Operative Agreements, (iii) the contest can be pursued in the name of the Lessee and independently from any other proceeding involving a Tax Claim of a Tax Indemnitee for which Lessee has not agreed in writing to indemnify such Tax Indemnitee, and (iv) no Equity Insufficiency Circumstance exists, such contest shall be undertaken by the Lessee at the Lessee's sole expense and the after-tax costs of the Lessor, the Owner Participant, or other Tax Indemnitee shall be reimbursed by the Lessee. Notwithstanding the preceding sentence, if (a) such contest would involve any other type of Tax, any taxes that the Lessee is not required to indemnify the Tax Indemnitee or taxes and other issues relating to a Tax Indemnitee which are unrelated to the transactions contemplated by the Operative Agreements, (b) the Tax Indemnitee determines that such contest conducted by the Lessee could have a material adverse impact on such Tax Indemnitee's business or operations or involve risk of the imposition of criminal liability on a Tax Indemnitee, or (c) an Equity Insufficiency Circumstance exists, then such Tax Indemnitee may, in its sole discretion, control such contest (including selecting the forum for such contestincluding, without limitation, by pursuit of appeals and determining whether administrative procedures) (any such contest shall be conducted by (i) paying such Tax under protest a "Lessee-Controlled Contest"), or (ii) resisting payment of such Tax in the case or (iii) paying such Tax and seeking a refund thereof; providedcontest which is not a Lessee-Controlled Contest shall itself or, however, that at such Tax Indemnitee's optionrequest, the Lessee shall, in good faith contest (including, without limitation, by pursuit of appeals and administrative procedures), the validity, applicability or amount of such contest Indemnified Taxes (A) by resisting payment thereof, (B) by not paying the same except under protest (which protest must be pursued using reasonable efforts in appropriate administrative and/or judicial proceedings) if protest shall be conducted necessary and proper or (C) if payment shall be made, by the Lessee using reasonable efforts to obtain a refund thereof in the name of such Tax Indemnitee). In appropriate administrative and/or judicial proceedings; provided that in no event shall such Tax Indemnitee be required or the Lessee be permitted to contest any Tax for which the Lessee is obligated to indemnify pursuant to this Section 7.1 unless: (i) the Lessee shall have acknowledged in writing (x) that it is solely responsible for any Indemnified Tax resulting from any contest under its control, (y) its liability to such Tax Indemnitee for all reasonable out of pocket costs, losses and expenses that the Tax Indemnitees may incur in connection with contesting the Indemnified Tax (including, but not limited to, any reasonable legal, accounting and investigatory fees and disbursements), and (z) its liability for an indemnity payment pursuant to this Section 7.1 as a result of such claim if and to the extent such Tax Indemnitee or the Lessee, as the case may be, shall not prevail in the contest of such claim; provided, however, that the Lessee shall not be required to indemnify for such Taxes to the extent the results of the contest clearly demonstrate that the Tax is not an Indemnified Tax unless the Lessee's conduct of the contest materially prejudiced the Tax Indemnitee; (ii) such Tax Indemnitee shall have received the opinion of independent tax counsel selected by the Tax Indemnitee and reasonably satisfactory to the Lessee and furnished at the Lessee's sole expense, opining that a reasonable basis exists for contesting such claim or, in the event of an appeal of an adverse court or administrative agency decision, that as a result of a change in law or fact it is more likely than not that an appellate court or an administrative agency or decision making body with appellate jurisdiction, as the case may be, will reverse or substantially modify the adverse determination; (iii) the Lessee shall have agreed to pay such Tax Indemnitee on demand (and at no after tax costs to the Lessor, the Owner Participant and any Tax Indemnitee) all reasonable costs and expenses that such Tax Indemnitee may incur in connection with contesting such claim (including, without limitation, all reasonable legal and accounting fees and disbursements); (iv) no Lease Default described in Section 14(a), 14(b), 14(c), 14(g) or 14(h) of the Lease or a Lease Event of Default shall have occurred and shall have been continuing, unless the Tax Indemnitee in its sole discretion exercised in good faith allows the Lessee to post a satisfactory bond or other security that does not involve a possibility of a Lien on the Equipment or any portion thereof or on any interest therein, and which bond or other security will be for an amount equal to the sum of (I) the costs of such contest (as reasonably estimated by such Tax Indemnitee in good faith) and the Taxes which may be required to be indemnified and (II) if such Lease Default or Lease Event of Default involves a payment obligation under an Operative Agreement that is currently not paid in full, the unpaid amount of such obligation, plus the present value of the amounts not yet due pursuant to such obligation; (v) such Tax Indemnitee shall have determined that the action to be taken will not result in any risk of sale, forfeiture or loss of, or the creation of any Lien, or the Lessee shall have or otherwise made a provision to protect the interest of such Tax Indemnitee (in a manner satisfactory to such Tax Indemnitee in its sole discretion), on the Equipment or any portion thereof or any interest therein; (vi) the amount of such claims alone, or, if the subject matter thereof shall be of a continuing or recurring nature, when aggregated with substantially identical potential claims with respect to the transactions contemplated by the Operative Agreements shall be at least $25,000; (vii) if such contest shall be conducted in a manner requiring the payment or deposit of the claim, the Lessee shall have paid the amount required (and at no after-tax costs to the Lessor, the Owner Participant or other Tax Indemnitee); and (viii) there is no risk of imposition of criminal liability or penalties. The Lessee shall cooperate with the Tax Indemnitee in good faith with respect to any contest controlled and conducted by the Tax Indemnitee and the Tax Indemnitee in good faith shall consult with the Lessee regarding the conduct of such contest. A Tax Indemnitee shall not be required to pursue an appeal to the U.S. Supreme Court or the highest court in Canada or Mexico. The Tax Indemnitee shall cooperate with respect to any contest controlled and conducted by the Lessee and the Lessee shall consult with the Tax Indemnitee regarding the conduct of such contest. Notwithstanding anything to the contrary contained in this Section 7.1, no Tax Indemnitee shall be required to contest any claim if the subject matter thereof shall be of a continuing or recurring nature and shall have previously been adversely decided to the for any Tax Indemnitee pursuant to the contest provisions of this Section 7.1 unless there shall have been a change in the law (including, without limitation, amendments to statutes or regulations, administrative rulings (excluding private letter rulings and other rulings or materials that may not be relied upon by such Tax Indemnitee as precedent1) or court decisions in the applicable jurisdiction) enacted, promulgated or effective after such claim shall have been so previously decided, and such Tax Indemnitee shall have received an opinion of independent tax counsel selected by the Tax Indemnitee and reasonably satisfactory to the Lessee, furnished at the Lessee's sole expense, to the effect that such change is favorable to the position which such Tax Indemnitee or the Lessee, as the case may be, had asserted in such previous contest and as a result of such change, it is more likely than not that the Tax Indemnitee will prevail or, in the event of an appeal of an adverse court or administrative agency decision, that it is more likely than not that an appellate court or an administrative agency tribunal or decision making body with appellate jurisdiction, as the case may be, will reverse or substantially modify the adverse determination. Notwithstanding anything contained in this Section 7.1, a Tax Indemnitee will not be required to contest the imposition of any Tax and shall be permitted to settle or compromise any claim without the Lessee's consent if such Tax Indemnitee (A) shall waive its right to indemnity under this Section 7.1 with respect to such Tax (and any claim the outcome of which is determined based upon the outcome of such claim) and (B) shall pay to the Lessee any amount previously paid or advanced by the Lessee pursuant to this Section 7.1 with respect to such Tax Claim, less any reasonable costs and expenses of the Tax Indemnitee prior to such payment in respect of such Tax Claim.-Controlled Contest;
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Contests. If a written claim is made by any taxing authority against a Tax Indemnitee for any Taxes with respect to which the Lessee may be required to indemnify against hereunder or if a Tax Indemnitee shall determine that any tax to which the Lessee may have an indemnity obligation hereunder may be payable (a "Tax Claim"), then such Tax Indemnitee shall give the Lessee written notice of such Tax Claim promptly (but in any event within twenty (20) days days) after its receipt of the written Tax Claim or its determination, as applicable)receipt, and shall furnish Lessee with copies of such Tax Claim and all other writings received from the taxing authority to the extent relating to such claim (but failure to so notify the Lessee shall not relieve the Lessee of its obligations hereunder except only to the extent that it effectively precludes the ability of the Lessee to conduct a contest of the Tax Claimclaim). The Tax Indemnitee shall not pay such Tax Claim until at least thirty (30) days after providing the Lessee with such written notice, unless (a) the Tax Indemnitee is required to do so by law or regulation or the failure to pay such Tax Claim could result in a material adverse financial, legal or other consequence to the Tax Indemnitee and (b) in the written notice described above, the Tax Indemnitee has notified the Lessee of such requirement or such material adverse consequence (such notice however shall not require the disclosure of the Tax Indemnitee's confidential information, as determined in the sole discretion of such Tax Indemnitiee, or the Tax Indemnitee's tax returns, books, or records)requirement. If the Lessee shall so request within 30 days after receipt of such notice (or such shorter period as is reasonably specified by the Tax Indemnitee if any contest of the Tax must be commenced prior to the expiration of 30 days)notice, then such Tax Indemnitee shall in good faith at Lessee's sole expense contest such Tax or permit the Lessee to contest such Tax, as such Tax Indemnitee shall elect; provided, however, that to the extent (i) the contest involves only Taxes constituting property taxes, sales taxes, or use taxes, (ii) the contest taxes and does not involve any taxes that the Lessee is not required to indemnify the Tax Indemnitee or taxes and other issues relating to a Tax Indemnitee that which are unrelated to the transactions contemplated by the Operative Agreements, (iii) the contest can be pursued in the name of the Lessee Agreements and independently from any other proceeding involving a Tax Claim of a Tax Indemnitee for which Lessee has not agreed in writing to indemnify such Tax Indemnitee, and (iv) if no Equity Insufficiency Circumstance exists, such contest shall be undertaken by the Lessee at the Lessee's sole expense and the at no-after-tax costs of cost to the Lessor, Lessor or the Owner Participant, or other Tax Indemnitee shall be reimbursed by the Lessee. Notwithstanding the preceding sentence, but if (a) such contest would involve any other type of Tax, Tax or any taxes that the Lessee is not required to indemnify the Tax Indemnitee or taxes and other issues relating to a Tax Indemnitee which are unrelated to the transactions contemplated by the Operative Agreements, (b) the Tax Indemnitee determines that such contest conducted by the Lessee could have a material adverse impact on such Tax Indemnitee's business Agreements or operations or involve risk of the imposition of criminal liability on a Tax Indemnitee, or (c) if an Equity Insufficiency Circumstance exists, then such Tax Indemnitee may, in its sole discretion, control such contest (including selecting the forum for such contest, and determining whether any such contest shall be conducted by (i) paying such Tax under protest or (ii) resisting payment of such Tax or (iii) paying such Tax and seeking a refund thereof; provided, further, however, that at such Tax Indemnitee's option, such contest shall be conducted by the Lessee in the name of such Tax Indemnitee). In no event shall such Tax Indemnitee be required or the Lessee be permitted to contest any Tax for which the Lessee is obligated to indemnify pursuant to this Section 7.1 unless: (i) the Lessee shall have acknowledged in writing (x) that it is solely responsible for any Indemnified Tax resulting from any contest under its control, (y) its liability to such Tax Indemnitee for all reasonable out of pocket costs, losses and expenses that the Tax Indemnitees may incur in connection with contesting the Indemnified Tax (including, but not limited to, any reasonable legal, accounting and investigatory fees and disbursements), and (z) its liability for an indemnity payment pursuant to this Section 7.1 as a result of such claim if and to the extent such Tax Indemnitee or the Lessee, as the case may be, shall not prevail in the contest of such claim; provided, however, that the Lessee shall not be required to indemnify for such Taxes to the extent the results of the contest clearly and unambiguously demonstrate that the Tax is not an Indemnified Tax unless the Lessee's conduct of the contest materially prejudiced the Tax Indemniteeindemnified Tax; (ii) such Tax Indemnitee shall have received the opinion of independent tax counsel selected by the Tax Indemnitee and reasonably satisfactory to the Lessee and furnished at the Lessee's sole expense, opining to the effect that a reasonable basis exists for contesting such claim or, in the event of an appeal of an adverse a court or administrative agency decision, that as a result of a change in law or fact it is more likely than not that an appellate court or an administrative agency or decision making body with appellate jurisdiction, as the case may be, will reverse or substantially modify the adverse determination; (iii) the Lessee shall have agreed to pay such Tax Indemnitee on demand (and at no after tax costs to the Lessor, the Owner Participant and any Tax Indemnitee) all reasonable costs and expenses that such Tax Indemnitee may incur in connection with contesting such claim (including, without limitation, all reasonable legal and accounting fees and disbursements); (iv) no Lease Default described in Section 14(a), 14(b), 14(c), 14(g) or 14(h) of the Lease or a Lease Event of Default shall have occurred and shall have been continuing, unless the Tax Indemnitee in its sole discretion exercised in good faith allows the Lessee to post a satisfactory bond or other security that does not involve a possibility of a Lien on the Equipment or any portion thereof or on any interest therein, and which bond or other security will be for an amount equal to the sum of (I) the costs of such contest (as reasonably estimated by such Tax Indemnitee in good faith) and the Taxes which may be required to be indemnified and (II) if such Lease Default or Lease Event of Default involves a payment obligation under an Operative Agreement that is currently not paid in full, the unpaid amount of such obligation, plus the present value of the amounts not yet due pursuant to such obligation; (v) such Tax Indemnitee shall have determined that the action to be taken will not result in any risk of sale, forfeiture or loss of, or the creation of any Lien, or the Lessee shall have or otherwise made a provision to protect the interest of such Tax Indemnitee (in a manner satisfactory to such Tax Indemnitee in its sole discretion), on the Equipment or any portion thereof or any interest therein; (vi) the amount of such claims alone, or, if the subject matter thereof shall be of a continuing or recurring nature, when aggregated with substantially identical potential claims with respect to the transactions contemplated by the Operative Agreements shall be at least $25,000; (vii) if such contest shall be conducted in a manner requiring the payment or deposit of the claim, the Lessee shall have paid the amount required (and at no after-tax costs to the Lessor, the Owner Participant or other Tax Indemnitee); and (viii) there is no risk of imposition of criminal liability or penalties. The Lessee shall cooperate with the Tax Indemnitee in good faith with respect to any contest controlled and conducted by the Tax Indemnitee and the Tax Indemnitee in good faith shall consult with the Lessee regarding the conduct of such contest. A Tax Indemnitee shall not be required to pursue an appeal to the U.S. Supreme Court or the highest court in Canada or Mexico. The Tax Indemnitee shall cooperate with respect to any contest controlled and conducted by the Lessee and the Lessee shall consult with the Tax Indemnitee regarding the conduct of such contest. Notwithstanding anything to the contrary contained in this Section 7.1, no Tax Indemnitee shall be required to contest any claim if the subject matter thereof shall be of a continuing or recurring nature and shall have previously been adversely decided to the Tax Indemnitee pursuant to the contest provisions of this Section 7.1 unless there shall have been a change in the law (including, without limitation, amendments to statutes or regulations, administrative rulings (excluding private letter rulings and other rulings or materials that may not be relied upon by such Tax Indemnitee as precedent) or court decisions in the applicable jurisdiction) enacted, promulgated or effective after such claim shall have been so previously decided, and such Tax Indemnitee shall have received an opinion of independent tax counsel selected by the Tax Indemnitee and reasonably satisfactory to the Lessee, furnished at the Lessee's sole expense, to the effect that such change is favorable to the position which such Tax Indemnitee or the Lessee, as the case may be, had asserted in such previous contest and as a result of such change, it is more likely than not that the Tax Indemnitee will prevail or, in the event of an appeal of an adverse court or administrative agency decision, that it is more likely than not that an appellate court or an administrative agency tribunal or decision making body with appellate jurisdiction, as the case may be, will reverse or substantially modify the adverse determination. Notwithstanding anything contained in this Section 7.1, a Tax Indemnitee will not be required to contest the imposition of any Tax and shall be permitted to settle or compromise any claim without the Lessee's consent if such Tax Indemnitee (A) shall waive its right to indemnity under this Section 7.1 with respect to such Tax (and any claim the outcome of which is determined based upon the outcome of such claim) and (B) shall pay to the Lessee any amount previously paid or advanced by the Lessee pursuant to this Section 7.1 with respect to such Tax Claim, less any reasonable costs and expenses of the Tax Indemnitee prior to such payment in respect of such Tax Claim.;
Appears in 1 contract
Contests. If a written claim is made by any taxing authority against a Tax Indemnitee for any Taxes with respect to which the Lessee may be required to indemnify against hereunder or if a Tax Indemnitee shall determine that any tax to which the Lessee may have an indemnity obligation hereunder may be payable (a "Tax Claim"), then such Tax Indemnitee shall give the Lessee written notice of such Tax Claim promptly (but in any event within twenty (20) days days) after its receipt of the written Tax Claim or its determination, as applicable)receipt, and shall furnish Lessee with copies of such Tax Claim and all other writings received from the taxing authority to the extent relating to such claim (but failure to so notify the Lessee shall not relieve the Lessee of its obligations hereunder except only to the extent that it effectively precludes the ability of the Lessee to conduct a contest of the Tax Claimclaim). The Tax Indemnitee shall not pay such Tax Claim until at least thirty (30) days after providing the Lessee with such written notice, unless (a) the Tax Indemnitee is required to do so by law or regulation or the failure to pay such Tax Claim could result in a material adverse financial, legal or other consequence to the Tax Indemnitee and (b) in the written notice described above, the Tax Indemnitee has notified the Lessee of such requirement or such material adverse consequence (such notice however shall not require the disclosure of the Tax Indemnitee's confidential information, as determined in the sole discretion of such Tax Indemnitiee, or the Tax Indemnitee's tax returns, books, or records)requirement. If the Lessee shall so request within 30 days after receipt of such notice (or such shorter period as is reasonably specified by the Tax Indemnitee if any contest of the Tax must be commenced prior to the expiration of 30 days)notice, then such Tax Indemnitee shall in good faith at Lessee's sole expense contest such Tax or permit the Lessee to contest such Tax, as such Tax Indemnitee shall elect; provided, however, that to the extent (i) the contest involves only Taxes constituting property taxes, sales taxes, or use taxes, (ii) the contest taxes and does not involve any taxes that the Lessee is not required to indemnify the Tax Indemnitee or taxes and other issues relating to a Tax Indemnitee that which are unrelated to the transactions contemplated by the Operative Agreements, (iii) the contest can be pursued in the name of the Lessee Agreements and independently from any other proceeding involving a Tax Claim of a Tax Indemnitee for which Lessee has not agreed in writing to indemnify such Tax Indemnitee, and (iv) if no Equity Insufficiency Circumstance exists, such contest shall be undertaken by the Lessee at the Lessee's sole expense and the at no-after-tax costs of cost to the Lessor, Lessor or the Owner Participant, or other Tax Indemnitee shall be reimbursed by the Lessee. Notwithstanding the preceding sentence, but if (a) such contest would involve any other type of Tax, Tax or any taxes that the Lessee is not required to indemnify the Tax Indemnitee or taxes and other issues relating to a Tax Indemnitee which are 61 Participation Agreement (TRLI 2001-1B) unrelated to the transactions contemplated by the Operative Agreements, (b) the Tax Indemnitee determines that such contest conducted by the Lessee could have a material adverse impact on such Tax Indemnitee's business Agreements or operations or involve risk of the imposition of criminal liability on a Tax Indemnitee, or (c) if an Equity Insufficiency Circumstance exists, then such Tax Indemnitee may, in its sole discretion, control such contest (including selecting the forum for such contest, and determining whether any such contest shall be conducted by (i) paying such Tax under protest or (ii) resisting payment of such Tax or (iii) paying such Tax and seeking a refund thereof; provided, further, however, that at such Tax Indemnitee's option, such contest shall be conducted by the Lessee in the name of such Tax Indemnitee). In no event shall such Tax Indemnitee be required or the Lessee be permitted to contest any Tax for which the Lessee is obligated to indemnify pursuant to this Section 7.1 unless: (i) the Lessee shall have acknowledged in writing (x) that it is solely responsible for any Indemnified Tax resulting from any contest under its control, (y) its liability to such Tax Indemnitee for all reasonable out of pocket costs, losses and expenses that the Tax Indemnitees may incur in connection with contesting the Indemnified Tax (including, but not limited to, any reasonable legal, accounting and investigatory fees and disbursements), and (z) its liability for an indemnity payment pursuant to this Section 7.1 as a result of such claim if and to the extent such Tax Indemnitee or the Lessee, as the case may be, shall not prevail in the contest of such claim; provided, however, that the Lessee shall not be required to indemnify for such Taxes to the extent the results of the contest clearly and unambiguously demonstrate that the Tax is not an Indemnified Tax unless the Lessee's conduct of the contest materially prejudiced the Tax Indemniteeindemnified Tax; (ii) such Tax Indemnitee shall have received the opinion of independent tax counsel selected by the Tax Indemnitee and reasonably satisfactory to the Lessee and furnished at the Lessee's sole expense, opining to the effect that a reasonable basis exists for contesting such claim or, in the event of an appeal of an adverse a court or administrative agency decision, that as a result of a change in law or fact it is more likely than not that an appellate court or an administrative agency or decision making body with appellate jurisdiction, as the case may be, will reverse or substantially modify the adverse determination; (iii) the Lessee shall have agreed to pay such Tax Indemnitee on demand (and at no after after-tax costs to the Lessor, Lessor and the Owner Participant and any Tax IndemniteeParticipant) all reasonable costs and expenses that such Tax Indemnitee may incur in connection with contesting such claim (including, without limitation, all costs, expenses, reasonable legal and accounting fees fees, disbursements, penalties, interest and disbursements); (iv) no Lease Default described in Section 14(a), 14(b), 14(c), 14(g) or 14(h) of the Lease or a Lease Event of Default shall have occurred and shall have been continuing, unless the Tax Indemnitee in its sole discretion exercised in good faith allows the Lessee to post a satisfactory bond or other security that does not involve a possibility of a Lien on the Equipment or any portion thereof or on any interest therein, and which bond or other security will be for an amount equal additions to the sum of (I) the costs of such contest (as reasonably estimated by such Tax Indemnitee in good faith) and the Taxes which may be required to be indemnified and (II) if such Lease Default or Lease Event of Default involves a payment obligation under an Operative Agreement that is currently not paid in full, the unpaid amount of such obligation, plus the present value of the amounts not yet due pursuant to such obligation; (v) such Tax Indemnitee shall have determined that the action to be taken will not result in any risk of sale, forfeiture or loss of, or the creation of any Lien, or the Lessee shall have or otherwise made a provision to protect the interest of such Tax Indemnitee (in a manner satisfactory to such Tax Indemnitee in its sole discretionTax), on the Equipment or any portion thereof or any interest therein; (vi) the amount of such claims alone, or, if the subject matter thereof shall be of a continuing or recurring nature, when aggregated with substantially identical potential claims with respect to the transactions contemplated by the Operative Agreements shall be at least $25,000; (vii) if such contest shall be conducted in a manner requiring the payment or deposit of the claim, the Lessee shall have paid the amount required (and at no after-tax costs to the Lessor, the Owner Participant or other Tax Indemnitee); and (viii) there is no risk of imposition of criminal liability or penalties. The Lessee shall cooperate with the Tax Indemnitee in good faith with respect to any contest controlled and conducted by the Tax Indemnitee and the Tax Indemnitee in good faith shall consult with the Lessee regarding the conduct of such contest. A Tax Indemnitee shall not be required to pursue an appeal to the U.S. Supreme Court or the highest court in Canada or Mexico. The Tax Indemnitee shall cooperate with respect to any contest controlled and conducted by the Lessee and the Lessee shall consult with the Tax Indemnitee regarding the conduct of such contest. Notwithstanding anything to the contrary contained in this Section 7.1, no Tax Indemnitee shall be required to contest any claim if the subject matter thereof shall be of a continuing or recurring nature and shall have previously been adversely decided to the Tax Indemnitee pursuant to the contest provisions of this Section 7.1 unless there shall have been a change in the law (including, without limitation, amendments to statutes or regulations, administrative rulings (excluding private letter rulings and other rulings or materials that may not be relied upon by such Tax Indemnitee as precedent) or court decisions in the applicable jurisdiction) enacted, promulgated or effective after such claim shall have been so previously decided, and such Tax Indemnitee shall have received an opinion of independent tax counsel selected by the Tax Indemnitee and reasonably satisfactory to the Lessee, furnished at the Lessee's sole expense, to the effect that such change is favorable to the position which such Tax Indemnitee or the Lessee, as the case may be, had asserted in such previous contest and as a result of such change, it is more likely than not that the Tax Indemnitee will prevail or, in the event of an appeal of an adverse court or administrative agency decision, that it is more likely than not that an appellate court or an administrative agency tribunal or decision making body with appellate jurisdiction, as the case may be, will reverse or substantially modify the adverse determination. Notwithstanding anything contained in this Section 7.1, a Tax Indemnitee will not be required to contest the imposition of any Tax and shall be permitted to settle or compromise any claim without the Lessee's consent if such Tax Indemnitee (A) shall waive its right to indemnity under this Section 7.1 with respect to such Tax (and any claim the outcome of which is determined based upon the outcome of such claim) and (B) shall pay to the Lessee any amount previously paid or advanced by the Lessee pursuant to this Section 7.1 with respect to such Tax Claim, less any reasonable costs and expenses of the Tax Indemnitee prior to such payment in respect of such Tax Claim.;
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 claim is made by any taxing authority against a Tax Indemnitee notice of such proceeding) for any Taxes with respect to which the Lessee may be required to indemnify against hereunder or if a Tax Indemnitee shall determine that any tax Imposition as to which the Lessee may have an indemnity obligation hereunder pursuant to this Section 13.4, or if any Tax Indemnitee shall determine that any Imposition for which the Lessee may have an indemnity obligation pursuant to this Section 13.4 may be payable (a "Tax Claim")payable, then such Tax Indemnitee shall give the Lessee written notice promptly and in any event, within 30 days after a Responsible Officer of such Tax Claim promptly (but Indemnitee has actual knowledge thereof notify the Lessee in any event within twenty (20) days after its receipt of the written Tax Claim or its determination, as applicable), and shall furnish Lessee with copies of such Tax Claim and all other writings received from the taxing authority to the extent relating to such claim (but writing provided that failure to so notify the Lessee within 30 days after a Responsible Officer of such Tax Indemnitee has actual knowledge thereof shall not relieve the Lessee of its obligations hereunder alter such Tax Indemnitee’s rights under this Section 13.4, except to the extent that it effectively such failure precludes or materially adversely affects the ability of the Lessee 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 Lessee (such consent not to be unreasonably withheld or unreasonably delayed) for 30 days after the receipt of such notice by the Lessee; provided, however, that in the case of any such claim or proceeding, if such Tax Claim). The Indemnitee shall be required by law or regulation to take action prior to the end of such 30-day period, such Tax Indemnitee shall in such notice to the Lessee, so inform the Lessee, and such Tax Indemnitee shall not pay take any action with respect to such Tax Claim until at least thirty claim, proceeding or Imposition without the consent of the Lessee (30such consent not to be unreasonably withheld or unreasonably delayed) for 10 days after providing the Lessee with receipt of such written noticenotice by the Lessee, unless (a) the Tax Indemnitee is shall be required to do so by law or regulation or to take action prior to the failure to pay end of such Tax Claim could result in 10-day period. The Lessee shall be entitled for a material adverse financial, legal or other consequence to period of 60 days from receipt of such notice from the Tax Indemnitee and (b) in the written notice described above, or such shorter period as the Tax Indemnitee has notified the Lessee is required by law or regulation for the Tax Indemnitee to commence such contest), subject to the immediately following sentence, to assume control of such requirement contest or if such material adverse consequence (such notice however shall not require the disclosure contest is of the Tax Indemnitee's confidential informationa type that must be pursued, as determined if at all, in the sole discretion name of such Tax IndemnitieeIndemnitee, or the Tax Indemnitee's tax returns, books, or records). If the Lessee shall so request within 30 days after receipt of such notice (or such shorter period as is reasonably specified by the Tax Indemnitee if any contest of the Tax must be commenced prior to the expiration of 30 days), then require that such Tax Indemnitee shall in good faith at Lessee's sole expense contest pursue such Tax or permit the Lessee to contest contest. If (x) such Tax, as such Tax Indemnitee shall elect; provided, however, that to the extent (i) the contest involves only Taxes constituting property taxes, sales taxes, or use taxes, (ii) the contest does not involve any taxes that the Lessee is not required to indemnify the Tax Indemnitee or taxes and other issues relating to a Tax Indemnitee that are unrelated to the transactions contemplated by the Operative Agreements, (iii) the contest can be pursued in the name of the Lessee and independently from any other proceeding involving a Tax Claim liability of a such Tax Indemnitee for which the Lessee has not agreed in writing to indemnify such Tax Indemnitee, and (iv) no Equity Insufficiency Circumstance exists, such contest shall be undertaken by the Lessee at the Lessee's sole expense and the after-tax costs of the Lessor, the Owner Participant, or other Tax Indemnitee shall be reimbursed by the Lessee. Notwithstanding the preceding sentence, if (ay) such contest would involve must be pursued in the name of the Tax Indemnitee, but can be pursued independently from any other type proceeding involving a Tax liability of Tax, any taxes that such Tax Indemnitee for which the Lessee is has not required agreed to indemnify the such Tax Indemnitee or taxes and other issues relating to a Tax Indemnitee which are unrelated to the transactions contemplated by the Operative Agreements, (bz) the Tax Indemnitee so requests, then the 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 the Tax Indemnitee determines reasonably and in good faith that such contest conducted by the Lessee could have a material adverse impact effect on such Tax Indemnitee's the business or operations or involve risk of the imposition of criminal liability on a Tax Indemnitee, or (c) an Equity Insufficiency Circumstance exists, then such Tax Indemnitee mayand provides a written explanation to the Lessee of such determination, in its sole discretion, the Tax Indemnitee may elect to control such contest (including selecting or reassert control of the forum for such contest, and determining whether any such contest shall provided, that by taking control of the contest, Lessee acknowledges that it is responsible for the Imposition ultimately determined to be conducted due by (i) paying such Tax under protest or (ii) resisting payment reason of such Tax or (iii) paying such Tax claim, and seeking a refund thereof; provided, howeverfurther, that at such in determining the application of clauses (x) and (y) of the preceding sentence, each Tax Indemnitee's optionIndemnitee shall take any and all reasonable steps to segregate claims for any Taxes for which the Lessee indemnifies hereunder from Taxes for which the Lessee is not obligated to indemnify hereunder, such so that the Lessee can control the contest shall of the former. In all other claims requested to be conducted contested by the Lessee in Lessee, the name Tax Indemnitee shall control the contest of such Tax Indemnitee)claim, acting through counsel of its selection reasonably acceptable to the Lessee. In no event shall such Tax Indemnitee be required or the Lessee be permitted to contest (or the Tax Indemnitee required to contest) any claim, (A) if such Tax for which Indemnitee provides the Lessee is obligated to indemnify pursuant to this Section 7.1 unless: with a legal opinion of independent counsel 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 (iother than a Permitted Lien) on the Subject Property or any part of any thereof unless the Lessee shall have acknowledged in writing (x) that it is solely responsible for any Indemnified Tax resulting from any contest under its control, (y) its liability to such Tax Indemnitee for all reasonable out of pocket costs, losses posted and expenses that the Tax Indemnitees may incur in connection with contesting the Indemnified Tax (including, but not limited to, any reasonable legal, accounting and investigatory fees and disbursements), and (z) its liability for an indemnity payment pursuant to this Section 7.1 as maintained a result of such claim if and to the extent such Tax Indemnitee bond or the Lessee, as the case may be, shall not prevail in the contest of such claim; provided, however, that the Lessee shall not be required to indemnify for such Taxes to the extent the results of the contest clearly demonstrate that the Tax is not an Indemnified Tax unless the Lessee's conduct of the contest materially prejudiced the Tax Indemnitee; (ii) such Tax Indemnitee shall have received the opinion of independent tax counsel selected by the Tax Indemnitee and other security reasonably satisfactory to the relevant Tax Indemnitee in respect to such risk, (B) if an Event of Default has occurred and is continuing, unless the Lessee shall have posted and furnished at maintained a bond or other security satisfactory to the Lessee's sole expense, opining that a reasonable basis exists for contesting relevant Tax Indemnitee in respect of the Taxes subject to such claim orand any and all expenses for which Lessee is responsible hereunder, in the event of an appeal of an adverse court or administrative agency decision, that as a result of a change in law or fact it is more likely than not that an appellate court or an administrative agency or decision making body with appellate jurisdiction, as the case may be, will reverse or substantially modify the adverse determination; (iiiC) unless the Lessee shall have agreed to pay and shall pay to such Tax Indemnitee on demand (and at no after tax costs to the Lessor, the Owner Participant and any Tax Indemnitee) all reasonable costs out-of-pocket costs, losses and expenses that such Tax Indemnitee may incur in connection with contesting such claim (includingImposition, without limitation, including all reasonable legal legal, accounting and accounting investigatory fees and disbursements); disbursements as well as the Impositions which are the subject of such claim to the extent the contest is unsuccessful, or (ivD) no Lease Default described in Section 14(a), 14(b), 14(c), 14(g) or 14(h) if such contest shall involve the payment of the Lease or a Lease Event of Default shall have occurred and shall have been continuingTax prior to the contest, unless the Lessee shall provide to the Tax Indemnitee an interest-free advance in its sole discretion exercised in good faith allows the Lessee to post a satisfactory bond or other security that does not involve a possibility of a Lien on the Equipment or any portion thereof or on any interest therein, and which bond or other security will be for an amount equal to the sum Imposition that the 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 and claims contested in the name of the Tax Indemnitee in a public forum, no contest by a Tax Indemnitee shall be required: (I1) unless the costs amount of such contest the potential indemnity (as reasonably estimated by taking into account all similar or logically related claims that have been or could be raised in any audit involving such Tax Indemnitee in good faith) and for which the Taxes which Lessee may be required liable to be indemnified pay an indemnity under this Section 13.4(b)) exceeds $50,000 and (II2) if such Lease Default or Lease Event of Default involves a payment obligation under an Operative Agreement that is currently not paid in full, the unpaid amount of such obligation, plus the present value of the amounts not yet due pursuant to such obligation; (v) such Tax Indemnitee shall have determined that the action to be taken will not result in any risk of sale, forfeiture or loss of, or the creation of any Lien, or the Lessee shall have or otherwise made a provision to protect the interest of such Tax Indemnitee (in a manner satisfactory to such Tax Indemnitee in its sole discretion), on the Equipment or any portion thereof or any interest therein; (vi) the amount of such claims alone, orunless, if the subject matter thereof shall be of a continuing or recurring nature, when aggregated with substantially identical potential claims with respect to the transactions contemplated requested by the Operative Agreements shall be at least $25,000; (vii) if such contest shall be conducted in a manner requiring the payment or deposit of the claimTax Indemnitee, the Lessee shall have paid the amount required (and at no after-tax costs provided to the Lessor, the Owner Participant or other Tax Indemnitee); and (viii) there is no risk of imposition of criminal liability or penalties. The Lessee shall cooperate with the Tax Indemnitee in good faith with respect to any contest controlled and conducted by the Tax Indemnitee and the Tax Indemnitee in good faith shall consult with the Lessee regarding the conduct of such contest. A Tax Indemnitee shall not be required to pursue an appeal to the U.S. Supreme Court opinion from counsel or the highest court in Canada or Mexico. The Tax Indemnitee shall cooperate with respect to any contest controlled and conducted a tax accountancy firm selected by the Lessee and the Lessee shall consult with the Tax Indemnitee regarding the conduct of such contest. Notwithstanding anything to the contrary contained in this Section 7.1, no Tax Indemnitee shall be required to contest any claim if the subject matter thereof shall be of a continuing or recurring nature and shall have previously been adversely decided reasonably acceptable to the Tax Indemnitee pursuant confirming that a reasonable basis exists to the contest provisions of this Section 7.1 unless there shall have been a change such claim (or in the law (includingcase of an appeal of an adverse determination, without limitation, amendments to statutes or regulations, administrative rulings (excluding private letter rulings and other rulings or materials that may not be relied upon by such Tax Indemnitee as precedent) or court decisions in the applicable jurisdiction) enacted, promulgated or effective after such claim shall have been so previously decided, and such Tax Indemnitee shall have received an opinion of independent tax such counsel selected by the Tax Indemnitee and reasonably satisfactory to the Lessee, furnished at the Lessee's sole expense, to the effect that such change is favorable to the position which such Tax Indemnitee or the Lessee, as the case may be, had asserted in such previous contest and as a result of such change, it is more likely than not that the determination may be reversed on appeal). In no event shall a Tax Indemnitee will prevail orbe 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). 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 event contest thereof. Each Tax Indemnitee shall supply the Lessee with such information and documents reasonably requested by the Lessee as are necessary or advisable for the Lessee to participate in any action, suit or proceeding to the extent permitted by this Section 13.4(b), and the Lessee shall promptly reimburse such 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 have failed to provide indemnity and, if requested by an Indemnitee, collateral security, both in form, substance and in such amounts reasonably satisfactory to each Indemnitee, no Tax Indemnitee shall enter into any settlement or other compromise or fail to appeal of an adverse court or administrative agency decisionruling 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 Lessee, that it is more likely than not that an appellate court or an administrative agency tribunal or decision making body unless such Tax Indemnitee waives its right to be indemnified under this Section 13.4 with appellate jurisdiction, as the case may be, will reverse or substantially modify the adverse determinationrespect to such claim. Notwithstanding anything contained in this Section 7.1herein to the contrary, a Tax Indemnitee will not be required to contest (and the Lessee shall not be permitted to contest) a claim with respect to the imposition of any Tax and shall be permitted to settle or compromise any claim without the Lessee's consent if (i) such Tax Indemnitee (A) shall waive its right to indemnity indemnification under this Section 7.1 13.4 with respect to such Tax claim (and any claim the outcome of which is determined based upon the outcome of such claim) and (B) shall pay to the Lessee any amount previously paid or advanced by the Lessee pursuant to this Section 7.1 with respect to such year or any other taxable year, the contest of which is materially adversely affected as a result of such waiver) or (ii) such Tax Claimis the sole result of a claim of a continuing and consistent nature, less any reasonable costs 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 expenses 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 Tax Indemnitee prior to such payment in respect of such Tax Claimclaim 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 claim is made by any taxing authority against a Tax Indemnitee notice of such proceeding) for any Taxes with respect Imposition as to which the Lessee may be required have an indemnity obligation pursuant to indemnify against hereunder this Section 13.4, or if a any Tax Indemnitee shall determine that any tax to Imposition for which the Lessee may have an indemnity obligation hereunder pursuant to this Section 13.4 may be payable (a "Tax Claim")payable, then such Tax Indemnitee shall give the Lessee written notice of such Tax Claim promptly (but and in any event event, within twenty (20) days) notify Lessee in writing (provided that failure to so notify Lessee within twenty (20) days after its receipt of the written Tax Claim or its determination, as applicable), and shall furnish Lessee with copies of not alter such Tax Claim and all other writings received from the taxing authority to the extent relating to such claim (but failure to so notify the Lessee shall not relieve the Lessee of its obligations hereunder Indemnitee’s rights under this Section 13.4, except to the extent that it effectively such failure precludes or materially adversely affects the ability of the Lessee to conduct a contest of the Tax Claim). The Tax Indemnitee any indemnified Taxes) and shall not pay take any action with respect to such Tax Claim until at least claim, proceeding or Imposition without the written consent of Lessee (such consent not to be unreasonably withheld or unreasonably delayed) for thirty (30) days after providing the Lessee with receipt of such written noticenotice by Lessee; provided, unless (a) however, that in the case of any such claim or proceeding, if such Tax Indemnitee is shall be required to do so by law or regulation or to take action prior to the failure to pay end of such thirty (30) day period, such Tax Claim could result Indemnitee shall in a material adverse financialsuch notice to Lessee, legal or other consequence to the so inform Lessee, and such Tax Indemnitee and (b) in shall not take any action with respect to such claim, proceeding or Imposition without the written notice described above, the Tax Indemnitee has notified the consent of Lessee of such requirement or such material adverse consequence (such notice however shall consent not require the disclosure of the Tax Indemnitee's confidential information, as determined in the sole discretion of such Tax Indemnitiee, to be unreasonably withheld or the Tax Indemnitee's tax returns, books, or records). If the Lessee shall so request within 30 unreasonably delayed) for ten (10) days after the receipt of such notice by Lessee, unless the Tax Indemnitee shall be required by law or regulation to take action prior to the end of such ten (10) day period. Lessee shall be entitled for a period of thirty (30) days from receipt of such notice from the Tax Indemnitee (or such shorter period as is reasonably specified by the Tax Indemnitee if any contest of has notified Lessee is required by law or regulation for the Tax must be commenced prior Indemnitee to the expiration of 30 dayscommence such contest), then to request in writing that such Tax Indemnitee shall in good faith at Lessee's sole expense contest such Tax or permit the Lessee to contest imposition of such Tax, as at Lessee’s expense. If (x) such Tax Indemnitee shall elect; provided, however, that to the extent (i) the contest involves only Taxes constituting property taxes, sales taxes, or use taxes, (ii) the contest does not involve any taxes that the Lessee is not required to indemnify the Tax Indemnitee or taxes and other issues relating to a Tax Indemnitee that are unrelated to the transactions contemplated by the Operative Agreements, (iii) the contest can be pursued in the name of the Lessee and independently from any other proceeding involving a Tax Claim liability of a such Tax Indemnitee for which Lessee has not agreed in writing to indemnify such Tax Indemnitee, and (iv) no Equity Insufficiency Circumstance exists, such contest shall be undertaken by the Lessee at the Lessee's sole expense and the after-tax costs of the Lessor, the Owner Participant, or other Tax Indemnitee shall be reimbursed by the Lessee. Notwithstanding the preceding sentence, if (ay) such contest would involve must be pursued in the name of the Tax Indemnitee, but can be pursued independently from any other type proceeding involving a Tax liability of Tax, any taxes that the such Tax Indemnitee for which Lessee is has not required agreed to indemnify the such Tax Indemnitee or taxes and other issues relating to a Tax Indemnitee which are unrelated to the transactions contemplated by the Operative Agreements, (bz) the Tax Indemnitee so requests, then 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 the Tax Indemnitee determines in good faith that such contest conducted by the Lessee could have a material adverse impact on such Tax Indemnitee's the business or operations or involve risk of the imposition of criminal liability on a Tax Indemnitee, or (c) an Equity Insufficiency Circumstance exists, then such Tax Indemnitee mayand provides a written explanation to Lessee of such determination, in its sole discretion, the Tax Indemnitee may elect to control such contest (including selecting or reassert control of the forum for such contest, and determining whether any such contest shall provided, that by taking control of the contest, Lessee acknowledges that it is responsible for the Imposition ultimately determined to be conducted due by (i) paying such Tax under protest or (ii) resisting payment reason of such Tax or (iii) paying such Tax claim, and seeking a refund thereof; provided, howeverfurther, that at such in determining the application of clauses (x) and (y) of the preceding sentence, each Tax Indemnitee's optionIndemnitee shall take any and all reasonable steps to segregate claims for any Taxes for which Lessee indemnifies hereunder from Taxes for which Lessee is not obligated to indemnify hereunder, such so that Lessee can control the contest of the former. In all other claims requested to be contested by Lessee, the Tax Indemnitee shall be conducted by control the Lessee in the name contest of such Tax Indemnitee)claim, acting through counsel reasonably acceptable to Lessee. In no event shall such Tax Indemnitee be required or the Lessee be permitted to contest (or the Tax Indemnitee required to contest) any claim, (A) if such Tax for which Indemnitee provides Lessee with a legal opinion of independent counsel that such action, suit or proceeding involves a risk of imposition of criminal liability or will involve a material risk of the Lessee is obligated to indemnify pursuant to this Section 7.1 unless: sale, forfeiture or loss of, or the creation of any Lien (iother than a Permitted Lien) on the Leased Property or any part of any thereof unless Lessee shall have acknowledged posted and maintained a bond or other security reasonably satisfactory to the relevant Tax Indemnitee in writing (x) that it is solely responsible for any Indemnified Tax resulting from any contest under its controlrespect to such risk, (yB) its liability if an Event of Default is continuing, unless 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 Tax Indemnitee claim and any and all expenses for all reasonable out of pocket costs, losses and expenses that the Tax Indemnitees may incur which Lessee is responsible hereunder reasonably foreseeable in connection with contesting the Indemnified Tax (including, but not limited to, any reasonable legal, accounting and investigatory fees and disbursements), and (z) its liability for an indemnity payment pursuant to this Section 7.1 as a result of such claim if and to the extent such Tax Indemnitee or the Lessee, as the case may be, shall not prevail in the contest of such claim; provided, however, that the Lessee shall not be required to indemnify for such Taxes to the extent the results of the contest clearly demonstrate that the Tax is not an Indemnified Tax (C) unless the Lessee's conduct of the contest materially prejudiced the Tax Indemnitee; (ii) such Tax Indemnitee shall have received the opinion of independent tax counsel selected by the Tax Indemnitee and reasonably satisfactory to the Lessee and furnished at the Lessee's sole expense, opining that a reasonable basis exists for contesting such claim or, in the event of an appeal of an adverse court or administrative agency decision, that as a result of a change in law or fact it is more likely than not that an appellate court or an administrative agency or decision making body with appellate jurisdiction, as the case may be, will reverse or substantially modify the adverse determination; (iii) the Lessee shall have agreed to pay and shall pay (provided, that prior to the Base Term Commencement Date and pursuant to the terms and conditions in this Participation Agreement relating to Advances, Lessee shall request an Advance the proceeds of which shall be used to pay) to such Tax Indemnitee on demand (and at no after tax costs to the Lessor, the Owner Participant and any Tax Indemnitee) all reasonable costs out‑of‑pocket costs, losses and expenses that such Tax Indemnitee may incur in connection with contesting such claim (includingImposition, without limitation, including all reasonable legal legal, accounting and accounting investigatory fees and disbursements); disbursements as well as the Impositions which are the subject of such claim to the extent the contest is unsuccessful, or (ivD) no Lease Default described in Section 14(a), 14(b), 14(c), 14(g) or 14(h) if such contest shall involve the payment of the Lease or a Lease Event of Default shall have occurred and shall have been continuingTax prior to the contest, unless Lessee shall provide to the Tax Indemnitee an interest‑free advance in its sole discretion exercised in good faith allows the Lessee to post a satisfactory bond or other security that does not involve a possibility of a Lien on the Equipment or any portion thereof or on any interest therein, and which bond or other security will be for an amount equal to the sum of (I) Imposition that the costs of such contest (as reasonably estimated by such Tax Indemnitee in good faith) and the Taxes which may be is required to be indemnified and pay (IIwith no additional net after‑tax costs (including Taxes) if such Lease Default or Lease Event of Default involves a payment obligation under an Operative Agreement that is currently not paid in full, the unpaid amount of such obligation, plus the present value of the amounts not yet due pursuant to such obligation; (v) such Tax Indemnitee shall have determined that the action to be taken will not result in any risk of sale, forfeiture or loss of, or the creation of any Lien, or the Lessee shall have or otherwise made a provision to protect the interest of such Tax Indemnitee (in a manner satisfactory to such Tax Indemnitee in its sole discretion), on the Equipment or any portion thereof or any interest therein; (vi) the amount of such claims alone, or, if the subject matter thereof shall be of a continuing or recurring nature, when aggregated with substantially identical potential claims with respect to the transactions contemplated by the Operative Agreements shall be at least $25,000; (vii) if such contest shall be conducted in a manner requiring the payment or deposit of the claim, the Lessee shall have paid the amount required (and at no after-tax costs to the Lessor, the Owner Participant or other Tax Indemnitee); . In addition for Tax Indemnitee controlled contests and (viii) there is no risk claims contested in the name of imposition of criminal liability or penalties. The Lessee shall cooperate with the Tax Indemnitee in good faith with respect 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 such Tax Indemnitee for which Lessee may be liable to any contest controlled pay an indemnity under this Section 13.4(b)) exceeds $50,000 and conducted (B) unless, if requested by the Tax Indemnitee and the Tax Indemnitee in good faith shall consult with the Lessee regarding the conduct of such contest. A Tax Indemnitee shall not be required to pursue an appeal to the U.S. Supreme Court or the highest court in Canada or Mexico. The Tax Indemnitee shall cooperate with respect to any contest controlled and conducted by the Lessee and the Indemnitee, Lessee shall consult with the Tax Indemnitee regarding the conduct of such contest. Notwithstanding anything to the contrary contained in this Section 7.1, no Tax Indemnitee shall be required to contest any claim if the subject matter thereof shall be of a continuing or recurring nature and shall have previously been adversely decided provided to the Tax Indemnitee pursuant to the contest provisions an opinion of this Section 7.1 unless there shall have been a change counsel selected by Lessee (which may be in‑house counsel, except, in the law (includingcase of income taxes indemnified hereunder, without limitation, amendments to statutes or regulations, administrative rulings (excluding private letter rulings and other rulings or materials which opinion shall be that may not be relied upon by such Tax Indemnitee as precedent) or court decisions in the applicable jurisdiction) enacted, promulgated or effective after such claim shall have been so previously decided, and such Tax Indemnitee shall have received an opinion of independent tax counsel selected by the Tax Indemnitee and reasonably satisfactory acceptable to 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 Lessee, furnished at United States Supreme Court. The party conducting the Lessee's sole expense, contest shall consult in good faith with the other party and its counsel with respect to the effect 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 such change if the Tax Indemnitee is favorable to the position which controlling party and Lessee 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 Lessee 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. In addition, the controlling party shall keep the non‑controlling party reasonably informed as to the progress of the contest, and shall provide the 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. Each Tax Indemnitee shall supply Lessee with such information and documents reasonably requested by Lessee as are necessary or advisable for Lessee to participate in any action, suit or proceeding to the extent permitted by this Section 13.4(b), and Lessee shall promptly reimburse such 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 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 each 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 Lessee, as the case may be, had asserted in unless such previous contest and as a result of such change, it is more likely than not that the Tax Indemnitee will prevail or, in the event of an appeal of an adverse court or administrative agency decision, that it is more likely than not that an appellate court or an administrative agency tribunal or decision making body waives its right to be indemnified under this Section 13.4 with appellate jurisdiction, as the case may be, will reverse or substantially modify the adverse determinationrespect to such claim. Notwithstanding anything contained in this Section 7.1herein to the contrary, a Tax Indemnitee will not be required to contest (and Lessee shall not be permitted to contest) a claim with respect to the imposition of any Tax and shall be permitted to settle or compromise any claim without the Lessee's consent if (i) such Tax Indemnitee (A) shall waive its right to indemnity indemnification under this Section 7.1 13.4 with respect to such Tax claim (and any claim the outcome of which is determined based upon the outcome of such claim) and (B) shall pay to the Lessee any amount previously paid or advanced by the Lessee pursuant to this Section 7.1 with respect to such year or any other taxable year, the contest of which is materially adversely affected as a result of such waiver) or (ii) such Tax Claimis the sole result of a claim of a continuing and consistent nature, less any reasonable costs 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 expenses 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 Tax Indemnitee prior to such payment in respect of such Tax Claimclaim at issue).
Appears in 1 contract
Contests. The Lessee shall pay (provided that during the Construction Period the Construction Agent shall request an Advance, the proceeds of which shall be used to pay) on or before the time or times set forth in Section 9.2(c) all Taxes indemnifiable by the Lessee under Section 9.2(a); provided, however, that the 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 which is being conducted pursuant to the provisions of this Section 9.2(b). If a any written claim Claim or Claims is or are made by against any taxing authority against a Tax Indemnitee for any Taxes with respect Tax which is subject to which the Lessee may be required to indemnify against hereunder indemnification as provided in Section 9.2(a) or if a any Tax Indemnitee shall determine that any tax Taxes as to which the Lessee may have an indemnity obligation hereunder pursuant to this Section 9.2 may be payable (a "Tax Claim")payable, then such Tax Indemnitee shall give the Lessee shall, as soon as practicable, but in no event more than thirty (30) days after receipt of formal written notice of such the Tax Claim promptly (but in any event within twenty (20) days after its receipt of or proposed Tax, notify the written Tax Claim or its determinationLessee; provided, as applicable)however, and shall furnish Lessee with copies of such Tax Claim and all other writings received from that the taxing authority to the extent relating to such claim (but failure to so notify the Lessee give such notice shall not relieve limit the Lessee of its Lessee's obligations hereunder under Section 9.2(a) except to the extent that it such failure effectively precludes the ability of the Lessee to conduct a contest of the Tax Claim)any indemnifiable Taxes. The Tax Indemnitee shall not pay take any action with respect to such Claim, proceeding or Tax without the written consent of the Lessee (such consent not to be unreasonably withheld or unreasonably delayed) for 30 days after the receipt of such notice by the Lessee; provided, however, that in the case of any such Claim or proceeding, if such Tax Claim until at least thirty (30) days after providing the Lessee with such written notice, unless (a) the Tax Indemnitee is shall be required to do so by law or regulation or to take action prior to the failure to pay end of such 30-day period, such Tax Claim could result Indemnitee shall in a material adverse financialsuch notice to the Lessee, legal so inform the Lessee, and such Tax Indemnitee shall not take any action with respect to such Claim, proceeding or other consequence Tax without the consent of the Lessee (such consent not to be unreasonably withheld or unreasonably delayed) for 10 days after the receipt of such notice by the Lessee, unless the Tax Indemnitee and shall be required by law or regulation to take action prior to the end of such 10-day period. The Lessee shall be entitled for a period of 30 days from receipt of such notice from the Tax Indemnitee (b) in the written notice described above, or such shorter period as the Tax Indemnitee has notified the Lessee of such requirement is required by law or such material adverse consequence (such notice however shall not require the disclosure of the Tax Indemnitee's confidential information, as determined in the sole discretion of such Tax Indemnitiee, or the Tax Indemnitee's tax returns, books, or records). If the Lessee shall so request within 30 days after receipt of such notice (or such shorter period as is reasonably specified by regulation for the Tax Indemnitee if any contest of the Tax must be commenced prior to the expiration of 30 dayscommence such contest), then to request in writing that such Tax Indemnitee shall in good faith at Lessee's sole expense contest such Tax or permit the Lessee to contest the imposition of such Tax, as at the Lessee's sole cost and expense. If (x) such Tax Indemnitee shall elect; provided, however, that to the extent (i) the contest involves only Taxes constituting property taxes, sales taxes, or use taxes, (ii) the contest does not involve any taxes that the Lessee is not required to indemnify the Tax Indemnitee or taxes and other issues relating to a Tax Indemnitee that are unrelated to the transactions contemplated by the Operative Agreements, (iii) the contest can be pursued in the name of the Lessee and independently from any other proceeding involving a Tax Claim liability of a such Tax Indemnitee for which the Lessee has not agreed in writing to indemnify such Tax Indemnitee, and (iv) no Equity Insufficiency Circumstance exists, such contest shall be undertaken by the Lessee at the Lessee's sole expense and the after-tax costs of the Lessor, the Owner Participant, or other Tax Indemnitee shall be reimbursed by the Lessee. Notwithstanding the preceding sentence, if (ay) such contest would involve must be pursued in the name of the Tax Indemnitee, but can be pursued independently from any other type proceeding involving a Tax liability of Tax, any taxes that such Tax Indemnitee for which the Lessee is has not required agreed to indemnify the such Tax Indemnitee or taxes and other issues relating to a Tax Indemnitee which are unrelated to the transactions contemplated by the Operative Agreements, (bz) the Tax Indemnitee so requests, then the 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 Indemnitee reasonably determines that such contest conducted by the Lessee could have a material an adverse impact on such Tax Indemnitee's the business or operations or involve risk of the imposition of criminal liability on a Tax Indemnitee, or (c) an Equity Insufficiency Circumstance exists, then such Tax Indemnitee may, in its sole discretion, control such contest (including selecting and Tax Indemnitee provides notice to the forum for such contest, and determining whether any such contest shall be conducted by (i) paying such Tax under protest or (ii) resisting payment Lessee of such determination, the Tax Indemnitee may elect to control or (iii) paying such Tax and seeking a refund thereof; provided, however, that at such Tax Indemnitee's option, such contest shall reassert control of the contest. In all other Claims requested to be conducted contested by the Lessee in Lessee, the name Tax Indemnitee shall control the contest of such Tax Indemnitee)Claim, acting through counsel reasonably acceptable to the Lessee. In no event shall such Tax Indemnitee be required or the Lessee be permitted to contest (or the Tax Indemnitee required to contest) any Claim, (A) if such Tax Indemnitee provides the Lessee with a legal opinion of independent counsel that such action, suit or proceeding involves a risk of imposition of criminal liability or will involve a meaningful risk of the sale, forfeiture or loss of, or the creation of any Lien (other than a Permitted Lien) on the Facility or any part thereof, unless the 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 an Event of Default has occurred and is continuing, unless the 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 Lessee is obligated to indemnify pursuant to this Section 7.1 unless: (i) the Lessee shall have acknowledged in writing (x) that it is solely responsible for any Indemnified Tax resulting from any contest under its control, (y) its liability to such Tax Indemnitee for all reasonable out of pocket costs, losses and expenses that the Tax Indemnitees may incur hereunder reasonably foreseeable in connection with contesting the Indemnified Tax (including, but not limited to, any reasonable legal, accounting and investigatory fees and disbursements), and (z) its liability for an indemnity payment pursuant to this Section 7.1 as a result of such claim if and to the extent such Tax Indemnitee or the Lessee, as the case may be, shall not prevail in the contest of such claim; providedClaim, however, that the Lessee shall not be required to indemnify for such Taxes to the extent the results of the contest clearly demonstrate that the Tax is not an Indemnified Tax (C) unless the Lessee's conduct of the contest materially prejudiced the Tax Indemnitee; (ii) such Tax Indemnitee shall have received the opinion of independent tax counsel selected by the Tax Indemnitee and reasonably satisfactory to the Lessee and furnished at the Lessee's sole expense, opining that a reasonable basis exists for contesting such claim or, in the event of an appeal of an adverse court or administrative agency decision, that as a result of a change in law or fact it is more likely than not that an appellate court or an administrative agency or decision making body with appellate jurisdiction, as the case may be, will reverse or substantially modify the adverse determination; (iii) the Lessee shall have agreed to pay and shall pay (provided that during the Construction Period the Construction Agent shall request an Advance, the proceeds of which shall be used to pay) to such Tax Indemnitee on demand (and at no after tax costs to the Lessor, the Owner Participant and any Tax Indemnitee) all reasonable costs out-of-pocket costs, losses and expenses that such Tax Indemnitee may incur in connection with contesting such claim (includingimposition, without limitation, including all reasonable legal legal, accounting and accounting investigatory fees and disbursements); disbursements as well as the impositions which are the subject of such Claim to the extent the contest is unsuccessful, or (ivD) no Lease Default described in Section 14(a), 14(b), 14(c), 14(g) or 14(h) if such contest shall involve the payment of the Lease or a Lease Event of Default shall have occurred and shall have been continuingTax prior to the contest, unless the Lessee shall provide to the Tax Indemnitee an interest-free advance in its sole discretion exercised in good faith allows the Lessee to post a satisfactory bond or other security that does not involve a possibility of a Lien on the Equipment or any portion thereof or on any interest therein, and which bond or other security will be for an amount equal to the sum Tax that the Tax Indemnitee is required to pay (with no additional net after-Tax costs (including Taxes) but taking into account any net Tax savings associated with such advance to such Tax Indemnitee). In addition, for Tax Indemnitee controlled contests and Claims contested in the name of the Tax Indemnitee in a public forum, no contest shall be required: (IA) unless the costs amount of such contest the potential indemnity (as reasonably estimated by taking into account all similar or logically related Claims that have been or could be raised in any audit involving such Tax Indemnitee in good faith) and for which the Taxes which Lessee may be required liable to be indemnified pay an indemnity under this Section 9.2) exceeds $100,000 and (IIB) if such Lease Default or Lease Event of Default involves a payment obligation under an Operative Agreement that is currently not paid in full, the unpaid amount of such obligation, plus the present value of the amounts not yet due pursuant to such obligation; (v) such Tax Indemnitee shall have determined that the action to be taken will not result in any risk of sale, forfeiture or loss of, or the creation of any Lien, or the Lessee shall have or otherwise made a provision to protect the interest of such Tax Indemnitee (in a manner satisfactory to such Tax Indemnitee in its sole discretion), on the Equipment or any portion thereof or any interest therein; (vi) the amount of such claims alone, orunless, if the subject matter thereof shall be of a continuing or recurring nature, when aggregated with substantially identical potential claims with respect to the transactions contemplated requested by the Operative Agreements shall be at least $25,000; (vii) if such contest shall be conducted in a manner requiring the payment or deposit of the claimTax Indemnitee, the Lessee shall have paid the amount required (and at no after-tax costs to the Lessor, the Owner Participant or other Tax Indemnitee); and (viii) there is no risk of imposition of criminal liability or penalties. The Lessee shall cooperate with the Tax Indemnitee in good faith with respect to any contest controlled and conducted by the Tax Indemnitee and the Tax Indemnitee in good faith shall consult with the Lessee regarding the conduct of such contest. A Tax Indemnitee shall not be required to pursue an appeal to the U.S. Supreme Court or the highest court in Canada or Mexico. The Tax Indemnitee shall cooperate with respect to any contest controlled and conducted by the Lessee and the Lessee shall consult with the Tax Indemnitee regarding the conduct of such contest. Notwithstanding anything to the contrary contained in this Section 7.1, no Tax Indemnitee shall be required to contest any claim if the subject matter thereof shall be of a continuing or recurring nature and shall have previously been adversely decided provided to the Tax Indemnitee pursuant to the contest provisions of this Section 7.1 unless there shall have been a change in the law (including, without limitation, amendments to statutes or regulations, administrative rulings (excluding private letter rulings and other rulings or materials that may not be relied upon by such Tax Indemnitee as precedent) or court decisions in the applicable jurisdiction) enacted, promulgated or effective after such claim shall have been so previously decided, and such Tax Indemnitee shall have received an opinion of independent tax Tax counsel selected by the Tax Indemnitee and reasonably satisfactory acceptable to the Lessee, furnished at ) that there is a "realistic possibility of success" for such contest under Applicable Laws and the Lessee's sole expense, to the effect that such change is favorable to the position which such Tax Indemnitee or the Lessee, as the case may be, had asserted in such previous contest and as a result standards of such change, it is more likely than not that the Tax Indemnitee will prevail ABA Formal Opinion 85-352 or, in the event of an appeal case of an adverse court or administrative agency decisionjudicial determination, that a substantial likelihood exists for a reversal or substantial modification of such decision 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 the Tax Indemnitee is the controlling party and the Lessee 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 the Lessee will be required to indemnify such Tax Indemnitee with respect to the Taxes subject to such offer shall not exceed the amount which it is more likely than not that an appellate court would have owed if such settlement offer had been accepted. In addition, the controlling party shall keep the non-controlling party reasonably informed as to the progress of the contest, and shall provide the non-controlling party with a copy of (or an administrative agency tribunal appropriate excerpts from) any reports or decision making body Claims issued by the relevant auditing agents or Taxing authority to the controlling party thereof, in connection with appellate jurisdictionsuch Claim or the contest thereof. Each Tax Indemnitee shall supply the Lessee with such information and documents within such Tax Indemnitee's possession reasonably requested by the Lessee as are necessary or advisable for the Lessee to participate in any action, as suit or proceeding to the case may beextent permitted by this Section 9.2(b), will reverse or substantially modify and the adverse determinationLessee shall promptly reimburse such Tax Indemnitee for the reasonable out-of-pocket expenses of supplying such information and documents. Notwithstanding anything contained in this Section 7.1herein to the contrary, a Tax Indemnitee will not be required to contest (and the Lessee shall not be permitted to contest) a Claim with respect to the imposition of any Tax and shall be permitted to settle or compromise any claim without the Lessee's consent if (i) such Tax Indemnitee (A) shall waive its right to indemnity indemnification under this Section 7.1 9.2 with respect to such Tax (Claim and any claim the outcome of which is determined based upon the outcome of such claim) and (B) shall pay to the Lessee any amount previously paid or advanced by the Lessee pursuant to this Section 7.1 with respect 9.2 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 the Lessee provides, at the Lessee's expense, an opinion of independent Tax counsel reasonably acceptable to such Tax Claim, less any reasonable costs and expenses Indemnitee 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 Tax Indemnitee prior to such payment in respect of such Tax ClaimClaim at issue).
Appears in 1 contract
Sources: Participation Agreement, Lease Agreement and Construction Agency Agreement (Ross Stores 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 claim is made by any taxing authority against a Tax Indemnitee notice of such proceeding) for any Taxes with respect Imposition as to which the Lessee Agent may be required have an indemnity obligation pursuant to indemnify against hereunder this Section 13.5, or if a any Tax Indemnitee shall determine that any tax Imposition to which the Lessee Agent may have an indemnity obligation hereunder pursuant to this Section 13.5 may be payable (a "Tax Claim")payable, then such Tax Indemnitee shall give promptly (and in any event, within thirty (30) days) notify the Lessee written notice of such Tax Claim promptly Agent in writing (but in any event within twenty (20) days after its receipt of the written Tax Claim or its determination, as applicable), and shall furnish Lessee with copies of such Tax Claim and all other writings received from the taxing authority to the extent relating to such claim (but provided that failure to so notify the Lessee Agent within thirty (30) days shall not relieve the Lessee of its obligations hereunder alter such Tax Indemnitee's rights under this Section 13.5 except to the extent that it effectively such failure precludes or materially adversely affects the ability of the Lessee to conduct a contest of the Tax Claim). The Tax Indemnitee any Impositions) and shall not pay take any action with respect to such Tax Claim until at least claim, proceeding or Imposition without the written consent of the Lessee Agent (such consent not to be unreasonably withheld or unreasonably delayed) for thirty (30) days after providing the receipt of such notice by the Lessee with Agent; provided, however, that in the case of any such written noticeclaim or proceeding, unless (a) the if such Tax Indemnitee is shall be required to do so by law or regulation or to take action prior to the failure to pay end of such thirty (30) day period, such Tax Claim could result Indemnitee shall in a material adverse financial, legal or other consequence such notice to the Lessee Agent, so inform the Lessee and such Tax Indemnitee and shall not take any action with respect to such claim, proceeding or Imposition without the consent of the Lessee Agent (bsuch consent not to be unreasonably withheld or unreasonably delayed) in for 10 days after the written receipt of such notice described above, by the Lessee Agent 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 Lessee Agent 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 Lessee of such requirement Agent is required by law or such material adverse consequence (such notice however shall not require the disclosure of the Tax Indemnitee's confidential information, as determined in the sole discretion of such Tax Indemnitiee, or the Tax Indemnitee's tax returns, books, or records). If the Lessee shall so request within 30 days after receipt of such notice (or such shorter period as is reasonably specified by the Tax Indemnitee if any contest of the Tax must be commenced prior to the expiration of 30 days), then regulation for such Tax Indemnitee shall to commence such contest), to request in good faith at Lessee's sole expense contest writing that such Tax or permit Indemnitee contest the Lessee to contest imposition of such Tax, as such Tax Indemnitee shall elect; provided, however, that to the extent (i) the contest involves only Taxes constituting property taxes, sales taxes, or use taxes, (ii) the contest does not involve any taxes that at the Lessee is not required to indemnify the Tax Indemnitee or taxes and other issues relating to a Tax Indemnitee that are unrelated to the transactions contemplated by the Operative Agreements, Agent's expense. If (iiix) the such contest can be pursued in the name of the Lessee Agent and independently from any other proceeding involving a Tax Claim liability of a such Tax Indemnitee for which the Lessee Agent has not agreed in writing to indemnify such Tax Indemnitee, and (ivy) no Equity Insufficiency Circumstance exists, 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 Agent has not agreed to indemnify such Tax Indemnitee or (z) such Tax Indemnitee so requests, then the Lessee Agent shall be undertaken 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 Lessee at the Lessee's sole expense and the after-tax costs of the Lessor, the Owner Participant, or other Tax Indemnitee shall be reimbursed by the Lessee. Notwithstanding the preceding sentence, if (a) such contest would involve any other type of Tax, any taxes that the Lessee is not required to indemnify the Tax Indemnitee or taxes and other issues relating to a Tax Indemnitee which are unrelated to the transactions contemplated by the Operative Agreements, (b) the Tax Indemnitee determines that such contest conducted by the Lessee Agent could have a material adverse impact on such Tax Indemnitee's the business or operations or involve risk of the imposition of criminal liability on a Tax Indemnitee, or (c) an Equity Insufficiency Circumstance exists, then such Tax Indemnitee mayand provides a written explanation to the Lessee Agent of such determination, in its sole discretion, such Tax Indemnitee may elect to control such contest (including selecting or reassert control of the forum for such contest, and determining whether any such contest shall provided that by taking control of the contest, the Lessee Agent acknowledges that it is responsible for the Imposition ultimately determined to be conducted due by (i) paying such Tax under protest or (ii) resisting payment reason of such Tax or (iii) paying such Tax claim, and seeking a refund thereof; provided, howeverfurther, that at such in determining the application of clauses (x) and (y) above, each Tax Indemnitee's optionIndemnitee shall take any and all reasonable steps to segregate claims for any Taxes for which the Lessee Agent indemnifies hereunder from Taxes for which the Lessee Agent is not obligated to indemnify hereunder, such so that the Lessee Agent can control the contest shall of the former. In all other claims requested to be conducted contested by the Lessee in Agent, such Tax Indemnitee shall control the name contest of such Tax Indemnitee)claim, acting through counsel reasonably acceptable to the Lessee Agent. In no event shall such Tax Indemnitee be required or the Lessee Agent be permitted to contest any Tax for which the Lessee is obligated to indemnify pursuant to this Section 7.1 unless: (i) the Lessee shall have acknowledged in writing (x) that it is solely responsible for any Indemnified Tax resulting from any contest under its control, (y) its liability to or such Tax Indemnitee for all reasonable out of pocket costsrequired to contest) any claim, losses and expenses that the Tax Indemnitees may incur in connection with contesting the Indemnified Tax (including, but not limited to, any reasonable legal, accounting and investigatory fees and disbursements), and (zA) its liability for an indemnity payment pursuant to this Section 7.1 as a result of such claim if and to the extent such Tax Indemnitee or the Lessee, as the case may be, shall not prevail in the contest of such claim; provided, however, that provides the Lessee shall not be required to indemnify for such Taxes to the extent the results of the contest clearly demonstrate that the Tax is not an Indemnified Tax unless the Lessee's conduct of the contest materially prejudiced the Tax Indemnitee; (ii) such Tax Indemnitee shall have received the Agent with a legal opinion of independent tax counsel selected by the Tax Indemnitee and reasonably satisfactory acceptable to the Lessee and furnished at Agent that such action, suit or proceeding involves a risk of imposition of criminal liability or will involve a material risk of the Lessee's sole expensesale, opining that forfeiture or loss of, or the creation of any Lien (other than a reasonable basis exists for contesting such claim orPermitted Lien) on the Property or any part thereof unless, in the event of an appeal of an adverse court or administrative agency decisionwith respect to civil liability only, that as a result of a change in law or fact it is more likely than not that an appellate court or an administrative agency or decision making body with appellate jurisdiction, as the case may be, will reverse or substantially modify the adverse determination; (iii) the Lessee Agent shall have agreed in writing to be responsible for such risk, (B) if an Event of Default has occurred and is continuing, (C) unless the Lessee Agent shall have agreed to pay and shall pay, to such Tax Indemnitee on demand (and at no after tax costs to the Lessor, the Owner Participant and any Tax Indemnitee) all reasonable costs out-of-pocket costs, losses and expenses that such Tax Indemnitee may incur in connection with contesting such claim (including, without limitation, Imposition including all reasonable legal legal, accounting and accounting investigatory fees and disbursements); , or (ivD) no Lease Default described in Section 14(a), 14(b), 14(c), 14(g) or 14(h) if such contest shall involve the payment of the Lease or a Lease Event of Default shall have occurred and shall have been continuingTax prior to the contest, unless the Lessee Agent shall provide to such Tax Indemnitee an interest-free advance in its sole discretion exercised in good faith allows the Lessee to post a satisfactory bond or other security that does not involve a possibility of a Lien on the Equipment or any portion thereof or on any interest therein, and which bond or other security will be for an amount equal to the sum of (I) Imposition that the costs of such contest (as reasonably estimated by such Tax Indemnitee in good faith) and the Taxes which may be is required to be indemnified and pay (II) if such Lease Default or Lease Event of Default involves a payment obligation under an Operative Agreement that is currently not paid in full, the unpaid amount of such obligation, plus the present value of the amounts not yet due pursuant to such obligation; (v) such Tax Indemnitee shall have determined that the action to be taken will not result in any risk of sale, forfeiture or loss of, or the creation of any Lien, or the Lessee shall have or otherwise made a provision to protect the interest of such Tax Indemnitee (in a manner satisfactory to such Tax Indemnitee in its sole discretion), on the Equipment or any portion thereof or any interest therein; (vi) the amount of such claims alone, or, if the subject matter thereof shall be of a continuing or recurring nature, when aggregated with substantially identical potential claims with respect to the transactions contemplated by the Operative Agreements shall be at least $25,000; (vii) if such contest shall be conducted in a manner requiring the payment or deposit of the claim, the Lessee shall have paid the amount required (and at no additional net after-tax costs to the Lessor, the Owner Participant or other such Tax Indemnitee); . In addition for 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 Lessee Agent may be liable to pay an indemnity under this Section 13.5(b)) exceeds $100,000 and (viiiB) there is unless, if requested by such Tax Indemnitee, the Lessee Agent shall have provided to such Tax Indemnitee an opinion of counsel selected by the Lessee Agent (which may be in-house counsel) that a reasonable basis exists to contest such claim. In no risk of imposition of criminal liability or penaltiesevent shall a Tax Indemnitee be required to appeal an adverse judicial determination to the United States Supreme Court. The Lessee party conducting the contest shall cooperate with the Tax Indemnitee consult in good faith with the other party and its counsel with respect to any the contest controlled and conducted 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 Lessee Agent recommends the acceptance of a settlement offer made by the relevant Governmental Authority and such Tax Indemnitee in good faith shall consult with rejects such settlement offer then the amount for which the Lessee regarding the conduct of such contest. A Tax Indemnitee shall not will be required to pursue an appeal to the U.S. Supreme Court or the highest court in Canada or Mexico. The indemnify such Tax Indemnitee shall cooperate with respect to any the Taxes subject to such offer shall not exceed the amount which it would have owed if such settlement offer had been accepted. In addition, the controlling party shall keep the 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) 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 controlled thereof. Each Tax Indemnitee shall, at the Lessee's expense, supply the Lessee Agent with such information and conducted documents reasonably requested by the Lessee and Agent as are necessary or advisable for the Lessee shall consult with Agent to participate in any action, suit or proceeding to the Tax Indemnitee regarding the conduct of such contestextent permitted by this Section 13.5(b). Notwithstanding anything to the contrary contained in this Section 7.113.5(b) to the contrary, no Tax Indemnitee shall be required enter into any settlement or other compromise or fail to contest appeal an adverse ruling with respect to any claim if which is entitled to be indemnified under this Section 13.5 (and with respect to which contest is required under this Section 13.5(b)) without the subject matter thereof shall be prior written consent of a continuing or recurring nature and shall have previously been adversely decided to the Lessee Agent, unless such Tax Indemnitee waives its right to be indemnified under this Section 13.5 with respect to such claim pursuant to the contest provisions of this Section 7.1 unless there shall have been a change in the law (including, without limitation, amendments to statutes or regulations, administrative rulings (excluding private letter rulings and other rulings or materials that may not be relied upon by such Tax Indemnitee as precedent) or court decisions in the applicable jurisdiction) enacted, promulgated or effective after such claim shall have been so previously decided, and such Tax Indemnitee shall have received an opinion of independent tax counsel selected by the Tax Indemnitee and reasonably satisfactory to the Lessee, furnished at the Lessee's sole expense, to the effect that such change is favorable to the position which such Tax Indemnitee or the Lessee, as the case may be, had asserted in such previous contest and as a result of such change, it is more likely than not that the Tax Indemnitee will prevail or, in the event of an appeal of an adverse court or administrative agency decision, that it is more likely than not that an appellate court or an administrative agency tribunal or decision making body with appellate jurisdiction, as the case may be, will reverse or substantially modify the adverse determinationnext paragraph. Notwithstanding anything contained in this Section 7.1herein to the contrary, a Tax Indemnitee will not be required to contest or continue to contest (and the Lessee Agent shall not be permitted to contest or continue to contest) a claim with respect to the imposition of any Tax and shall be permitted to settle or compromise any claim without the Lessee's consent if such Tax Indemnitee (A) shall waive its right to indemnity indemnification under this Section 7.1 13.5 with respect to such Tax claim (and any claim the outcome of which is determined based upon the outcome of such claim) and (B) shall pay to the Lessee any amount previously paid or advanced by the Lessee pursuant to this Section 7.1 with respect to such Tax Claim, less year or any reasonable costs and expenses other taxable year the contest of the Tax Indemnitee prior to such payment in respect which is materially adversely affected as a result of such Tax Claimwaiver) and returns to the Lessee Agent all amounts previously advanced to the Indemnitee with respect to the contest of such claim.
Appears in 1 contract
Contests. If (a) After the Closing, the Purchaser shall promptly notify Covance in writing of any written notice or any communication from the IRS or other Tax authority, in the context of an audit, examination, request for information or otherwise, of any matter that could give rise to a written claim is made by any taxing authority against a Tax Indemnitee for any Taxes with respect to which the Lessee may be required to indemnify against hereunder or if a Tax Indemnitee shall determine that any tax to which the Lessee may have an indemnity obligation hereunder may be payable right of indemnification under Article VIII (a "Tax Claim"). Such notice of a Tax Claim shall state the nature of the claim, then amount indemnified against, if known, and the method of computing such amount. If notice of a Tax Claim is not given promptly after receipt of such communication by the Purchaser, or in reasonable detail to inform Covance of the nature of the Tax Claim, in each case taking into account the facts and circumstances with respect to such Tax Indemnitee Claim, Covance shall give the Lessee written notice of such Tax Claim promptly (but in any event within twenty (20) days after its receipt of the written Tax Claim or its determination, as applicable), and shall furnish Lessee with copies of such Tax Claim and all other writings received from the taxing authority not be liable to the extent relating to such claim (Purchaser, but failure to so notify the Lessee shall not relieve the Lessee of its obligations hereunder except only to the extent that it effectively precludes Covance's position is actually prejudiced as a result of such failure to so promptly notify or inform.
(b) In the ability case of a Tax Claim that relates to one or more Pre-Closing Tax Periods, Covance shall have the Lessee right, at its own expense, to participate in and control the conduct a contest of the Tax Claim). The Tax Indemnitee shall not pay all proceedings in connection with such Tax Claim until at least thirty (30) days after providing the Lessee including selection of counsel). Covance shall not admit any liability with such written noticerespect to, unless (a) the Tax Indemnitee is required to do so by law or regulation settle, compromise or the failure to pay discharge, such Tax Claim could result in a material adverse financialwithout Purchaser's prior written consent, legal or other consequence to the Tax Indemnitee and (b) in the written notice described above, the Tax Indemnitee has notified the Lessee of such requirement or such material adverse consequence (such notice however which consent shall not require the disclosure of the Tax Indemnitee's confidential information, as determined in the sole discretion of such Tax Indemnitiee, or the Tax Indemnitee's tax returns, books, or records)be unreasonably withheld. If the Lessee shall so request within 30 days after receipt of such notice (or such shorter period as is reasonably specified by the Tax Indemnitee if any contest of the Tax must be commenced prior to the expiration of 30 days), then such Tax Indemnitee shall in good faith at Lessee's sole expense contest such Tax or permit the Lessee to contest such Tax, as such Tax Indemnitee shall elect; provided, however, that to the extent (i) the contest involves only Taxes constituting property taxes, sales taxes, or use taxes, (ii) the contest Covance does not involve any taxes that the Lessee is not required to indemnify the Tax Indemnitee or taxes and other issues relating to a Tax Indemnitee that are unrelated to the transactions contemplated by the Operative Agreements, (iii) the contest can be pursued in the name of the Lessee and independently from any other proceeding involving a Tax Claim of a Tax Indemnitee for which Lessee has not agreed in writing to indemnify such Tax Indemnitee, and (iv) no Equity Insufficiency Circumstance exists, such contest shall be undertaken by the Lessee at the Lessee's sole expense and the after-tax costs of the Lessor, the Owner Participant, or other Tax Indemnitee shall be reimbursed by the Lessee. Notwithstanding the preceding sentence, if (a) such contest would involve any other type of Tax, any taxes that the Lessee is not required to indemnify the Tax Indemnitee or taxes and other issues relating to a Tax Indemnitee which are unrelated to the transactions contemplated by the Operative Agreements, (b) the Tax Indemnitee determines that such contest conducted by the Lessee could have a material adverse impact on such Tax Indemnitee's business or operations or involve risk of the imposition of criminal liability on a Tax Indemnitee, or (c) an Equity Insufficiency Circumstance exists, then such Tax Indemnitee may, in its sole discretion, control such contest (including selecting the forum for such contest, and determining whether any such contest shall be conducted by (i) paying such Tax under protest or (ii) resisting payment of such Tax or (iii) paying such Tax and seeking a refund thereof; provided, however, that at such Tax Indemnitee's option, such contest shall be conducted by the Lessee in the name of such Tax Indemnitee). In no event shall such Tax Indemnitee be required or the Lessee be permitted elect to contest any Tax for which such audit or proceeding, the Lessee is obligated to indemnify pursuant to this Section 7.1 unless: (i) Purchaser may defend the Lessee shall have acknowledged same in writing (x) that such manner as it is solely responsible for any Indemnified Tax resulting from any contest under its controlmay deem appropriate, (y) its liability to such Tax Indemnitee for all reasonable out of pocket costs, losses and expenses that the Tax Indemnitees may incur in connection with contesting the Indemnified Tax (including, but not limited to, settling such audit or proceeding after giving five days' prior written notice to Covance setting forth the terms and conditions of settlement, and, if Covance does not so elect, Covance shall reimburse the Purchaser for all reasonable out-of-pocket expenses (including reasonable attorney and accountant fees) in connection with contesting any reasonable legal, accounting and investigatory fees and disbursements), and (z) its liability for an indemnity payment pursuant to this Section 7.1 as a result proposed disallowance of such claim if and the Company NOL to the extent such proposed disallowance would cause the Company NOL to be less than $49.5 million.
(c) With respect to issues included in a Tax Indemnitee Claim relating to a potential adjustment for which both Covance and the Purchaser could be liable, (i) each party may participate in the audit or proceeding, and (ii) the Lesseeaudit or proceeding shall be controlled by that party which would bear the burden of the greater portion of the sum of the adjustment. The principle set forth in the preceding sentence shall govern also for purposes of deciding any issue that must be decided jointly (in particular, as choice of judicial forum) in situations in which separate issues are otherwise jointly controlled under this Article VIII by the case may bePurchaser and Covance. Neither party shall admit any liability with respect to, or settle, compromise or discharge, such Tax issues or claim without the other party's prior written consent, which consent shall not prevail be unreasonably withheld.
(d) Notwithstanding Section 8.06(c) hereof, with respect to any proposed disallowance of the Company NOL for any Post-Closing Tax Period indemnified against by Covance under Section 8.01(b)(ii) (an "NOL Tax Claim"), the Purchaser will contest such NOL Tax Claim in good faith, and will not take any action with respect to such contest and NOL Tax Claim without the contest consent of Covance (which shall not be unreasonably withheld) for a 30-day period after delivery of notice of such claimNOL Tax Claim to Covance; provided, however, that (i) within 25 days after Covance has been notified in writing by the Lessee shall not be required to indemnify for such Taxes to the extent the results Purchaser of the contest clearly demonstrate NOL Tax Claim, Covance shall request in writing that the such NOL Tax is not an Indemnified Tax unless the Lessee's conduct of the contest materially prejudiced the Tax IndemniteeClaim be contested; and (ii) the conduct of such Tax Indemnitee contest shall have received remain within the opinion control of the Purchaser and its counsel (who shall be independent tax counsel of national reputation, selected by the Tax Indemnitee Purchaser and reasonably satisfactory to Covance); provided further that, without limiting the Lessee and furnished at right of the Lessee's sole expense, opining that a reasonable basis exists for contesting such claim or, in the event of an appeal of an adverse court or administrative agency decision, that as a result of a change in law or fact it is more likely than not that an appellate court or an administrative agency or decision making body with appellate jurisdiction, as the case may be, will reverse or substantially modify the adverse determination; (iii) the Lessee shall have agreed Purchaser to pay such control any NOL Tax Indemnitee on demand (and at no after tax costs to the LessorClaim contest, the Owner Participant and Purchaser shall consult in good faith with Covance with respect to any Tax Indemnitee) all reasonable costs and expenses that Proceeding related to such NOL Tax Indemnitee may incur in connection with contesting such claim (Claim, including, without limitation, all reasonable legal and accounting fees and disbursements); (iv) no Lease Default described in Section 14(a), 14(b), 14(c), 14(g) or 14(h) keeping Covance informed of the Lease or a Lease Event of Default shall have occurred and shall have been continuing, unless the Tax Indemnitee in its sole discretion exercised in good faith allows the Lessee to post a satisfactory bond or other security that does not involve a possibility of a Lien on the Equipment or any portion thereof or on any interest therein, and which bond or other security will be for an amount equal to the sum of (I) the costs of such contest (as reasonably estimated by such Tax Indemnitee in good faith) and the Taxes which may be required to be indemnified and (II) if such Lease Default or Lease Event of Default involves a payment obligation under an Operative Agreement that is currently not paid in full, the unpaid amount of such obligation, plus the present value of the amounts not yet due pursuant to such obligation; (v) such Tax Indemnitee shall have determined that the action to be taken will not result in any risk of sale, forfeiture or loss of, or the creation of any Lien, or the Lessee shall have or otherwise made a provision to protect the interest of such Tax Indemnitee (in a manner satisfactory to such Tax Indemnitee in its sole discretion), on the Equipment or any portion thereof or any interest therein; (vi) the amount of such claims alone, or, if the subject matter thereof shall be of a continuing or recurring nature, when aggregated with substantially identical potential claims with respect to the transactions contemplated by the Operative Agreements shall be at least $25,000; (vii) if such contest shall be conducted in a manner requiring the payment or deposit of the claim, the Lessee shall have paid the amount required (and at no after-tax costs to the Lessor, the Owner Participant or other Tax Indemnitee); and (viii) there is no risk of imposition of criminal liability or penalties. The Lessee shall cooperate with the Tax Indemnitee in good faith with respect to any contest controlled and conducted by the Tax Indemnitee and the Tax Indemnitee in good faith shall consult with the Lessee regarding the conduct of such contest. A Tax Indemnitee shall not be required to pursue an appeal to the U.S. Supreme Court or the highest court in Canada or Mexico. The Tax Indemnitee shall cooperate with respect to any contest controlled and conducted by the Lessee and the Lessee shall consult with the Tax Indemnitee regarding the conduct of such contest. Notwithstanding anything to the contrary contained in this Section 7.1, no Tax Indemnitee shall be required to contest any claim if the subject matter thereof shall be of a continuing or recurring nature and shall have previously been adversely decided to the Tax Indemnitee pursuant to the contest provisions of this Section 7.1 unless there shall have been a change in the law (including, without limitation, amendments to statutes or regulations, administrative rulings (excluding private letter rulings and other rulings or materials that may not be relied upon by such Tax Indemnitee as precedent) or court decisions in the applicable jurisdiction) enacted, promulgated or effective after such claim shall have been so previously decided, and such Tax Indemnitee shall have received an opinion of independent tax counsel selected by the Tax Indemnitee and reasonably satisfactory to the Lessee, furnished at the Lessee's sole expense, to the effect that such change is favorable to the position which such Tax Indemnitee or the Lessee, as the case may be, had asserted in such previous contest and as a result of such change, it is more likely than not that the Tax Indemnitee will prevail or, in the event of an appeal of an adverse court or administrative agency decision, that it is more likely than not that an appellate court or an administrative agency tribunal or decision making body with appellate jurisdiction, as the case may be, will reverse or substantially modify the adverse determination. Notwithstanding anything contained in this Section 7.1, a Tax Indemnitee will not be required to contest the imposition of any Tax and shall be permitted to settle or compromise any claim without the Lessee's consent if such Tax Indemnitee (A) shall waive its right to indemnity under this Section 7.1 material developments with respect to such Tax (and any claim Proceeding on a timely basis, providing Covance with the outcome of which is determined based upon the outcome of such claim) and (B) shall pay to the Lessee any amount previously paid Purchaser's material written submissions or advanced by the Lessee pursuant to this Section 7.1 replies with respect to such Tax Proceeding prior to filing thereof with such authority or with the relevant court, and copies of documents actually filed in such Tax Proceeding, and considering in good faith the comments and views of Covance with respect to the conduct of such Tax Proceeding.
(e) Covance shall reimburse Purchaser for all reasonable out-of-pocket expenses (including attorney and accountant fees) of contesting an NOL Tax Claim as such expenses are incurred and the Purchaser delivers materials to Covance evidencing such expenses. The Purchaser shall not admit any liability with respect to, or settle, compromise or discharge, any NOL Tax Claim without Covance's prior written consent, which consent shall not be unreasonably withheld. Covance shall advance to Purchaser sufficient funds for Purchaser to pay any Tax contested in any Tax Proceeding pertaining to any portion of the Company NOL in which the Tax contested must be paid prior to, or upon commencement of such Tax Proceeding. Following a Final Determination of an NOL Tax Claim, less the Purchaser shall refund to Covance any reasonable costs and expenses amounts advanced for this purpose (together with any related amounts of the Tax Indemnitee prior interest received) that are in excess of amounts finally determined to such payment be due by Covance in respect of such NOL Tax ClaimClaim under this Agreement.
Appears in 1 contract
Contests. If a written claim is made by any taxing authority against a Tax Indemnitee for any Taxes with respect to which the Lessee may be required to indemnify against hereunder or if a Tax Indemnitee shall determine that any tax to which the Lessee may have an indemnity obligation hereunder may be payable (a "Tax Claim"), then such Tax Indemnitee shall give the Lessee written notice of such Tax Claim promptly (but in any event within twenty (20) days after its receipt of the written Tax Claim or its determination, as applicable), and shall furnish Lessee with copies of such Tax Claim and all other writings received from the taxing authority to the extent relating to such claim (but failure to so notify the Lessee shall not relieve the Lessee of its obligations hereunder except to the extent that it effectively precludes the ability of the Lessee to conduct a contest of the Tax Claim). The Tax Indemnitee shall not pay such Tax Claim until at least thirty (30) days after providing the Lessee with such written notice, unless (a) the Tax Indemnitee is required to do so by law or regulation or the failure to pay such Tax Claim could result in a material adverse financial, legal or other consequence to the Tax Indemnitee and (b) in the written notice described above, the Tax Indemnitee has notified the Lessee of such requirement or such material adverse consequence (such notice however shall not require the disclosure of the Tax Indemnitee's confidential information, as determined in the sole discretion of such Tax Indemnitiee, or the Tax Indemnitee's tax returns, books, or records). If the Lessee shall so request within 30 days after receipt of such notice (or such shorter period as is reasonably specified by the Tax Indemnitee if any contest of the Tax must be commenced prior to the expiration of 30 days), then such Tax Indemnitee shall in good faith at Lessee's sole expense contest such Tax or permit the Lessee to contest such Tax, as such Tax Indemnitee shall elect; provided, however, that to the extent (i) the contest involves only Taxes constituting property taxes, sales taxes, or use taxes, (ii) the contest does not involve any taxes that the Lessee is not required to indemnify the Tax Indemnitee or taxes and other issues relating to a Tax Indemnitee that are unrelated to the transactions contemplated by the Operative Agreements, (iii) the contest can be pursued in the name of the Lessee and independently from any other proceeding involving a Tax Claim of a Tax Indemnitee for which Lessee has not agreed in writing to indemnify such Tax Indemnitee, and (iv) no Equity Insufficiency Circumstance exists, such contest shall be undertaken by the Lessee at the Lessee's sole expense and the after-tax costs of the Lessor, the Owner Participant, or other Tax Indemnitee shall be reimbursed by the Lessee. Notwithstanding the preceding sentence, if (a) such contest would involve any other type of Tax, any taxes that the Lessee is not required to indemnify the Tax Indemnitee or taxes and other issues relating to a Tax Indemnitee which are unrelated to the transactions contemplated by the Operative Agreements, (b) the Tax Indemnitee determines that such contest conducted by the Lessee could have a material adverse impact on such Tax Indemnitee's business or operations or involve risk of the imposition of criminal liability on a Tax Indemnitee, or (c) an Equity Insufficiency Circumstance exists, then such Tax Indemnitee may, in its sole discretion, control such contest (including selecting the forum for such contest, and determining whether any such contest shall be conducted by (i) paying such Tax under protest or (ii) resisting payment of such Tax or (iii) paying such Tax and seeking a refund thereof; provided, however, that at such Tax Indemnitee's option, such contest shall be conducted by the Lessee in the name of such Tax Indemnitee). In no event shall such Tax Indemnitee be required or the Lessee be permitted to contest any Tax for which the Lessee is obligated to indemnify pursuant to this Section 7.1 unless: (i) the Lessee shall have acknowledged in writing (x) that it is solely responsible for any Indemnified Tax resulting from any contest under its control, (y) its liability to such Tax Indemnitee for all reasonable out of pocket costs, losses and expenses that the Tax Indemnitees may incur in connection with contesting the Indemnified Tax (including, but not limited to, any reasonable legal, accounting and investigatory fees and disbursements), and (z) its liability for an indemnity payment pursuant to this Section 7.1 as a result of such claim if and to the extent such Tax Indemnitee or the Lessee, as the case may be, shall not prevail in the contest of such claim; provided, however, that the Lessee shall not be required to indemnify for such Taxes to the extent the results of the contest clearly demonstrate that the Tax is not an Indemnified Tax unless the Lessee's conduct of the contest materially prejudiced the Tax Indemnitee; (ii) such Tax Indemnitee shall have received the opinion of independent tax counsel selected by the Tax Indemnitee and reasonably satisfactory to the Lessee and furnished at the Lessee's sole expense, opining that a reasonable basis exists for contesting such claim or, in the event of an appeal of an adverse court or administrative agency decision, that as a result of a change in law or fact it is more likely than not that an appellate court or an administrative agency or decision making body with appellate jurisdiction, as the case may be, will reverse or substantially modify the adverse determination; (iii) the Lessee shall have agreed to pay such Tax Indemnitee on demand (and at no after tax costs to the Lessor, the Owner Participant and any Tax Indemnitee) all reasonable costs and expenses that such Tax Indemnitee may incur in connection with contesting such claim (including, without limitation, all reasonable legal and accounting fees and disbursements); (iv) no Lease Default described in Section 14(a), 14(b), 14(c), 14(g) or 14(h) of the Lease or a Lease Event of Default shall have occurred and shall have been continuing, unless the Tax Indemnitee in its sole discretion exercised in good faith allows the Lessee to post a satisfactory bond or other security that does not involve a possibility of a Lien on the Equipment or any portion thereof or on any interest therein, and which bond or other security will be for an amount equal to the sum of (I) the costs of such contest (as reasonably estimated by such Tax Indemnitee in good faith) and the Taxes which may be required to be indemnified and (II) if such Lease Default or Lease Event of Default involves a payment obligation under an Operative Agreement that is currently not paid in full, the unpaid amount of such obligation, plus the present value of the amounts not yet due pursuant to such obligation; (v) such Tax Indemnitee shall have determined that the action to be taken will not result in any risk of sale, forfeiture or loss of, or the creation of any Lien, or the Lessee shall have or otherwise made a provision to protect the interest of such Tax Indemnitee (in a manner satisfactory to such Tax Indemnitee in its sole discretion), on the Equipment or any portion thereof or any interest therein; (vi) the amount of such claims alone, or, if the subject matter thereof shall be of a continuing or recurring nature, when aggregated with substantially identical potential claims with respect to the transactions contemplated by the Operative Agreements shall be at least $25,000; (vii) if such contest shall be conducted in a manner requiring the payment or deposit of the claim, the Lessee shall have paid the amount required (and at no after-tax costs to the Lessor, the Owner Participant or other Tax Indemnitee); and (viii) there is no risk of imposition of criminal liability or penalties. The Lessee shall cooperate with the Tax Indemnitee in good faith with respect to any contest controlled and conducted by the Tax Indemnitee and the Tax Indemnitee in good faith shall consult with the Lessee regarding the conduct of such contest. A Tax Indemnitee shall not be required to pursue an appeal to the U.S. Supreme Court or the highest court in Canada or Mexico. The Tax Indemnitee shall cooperate with respect to any contest controlled and conducted by the Lessee and the Lessee shall consult with the Tax Indemnitee regarding the conduct of such contest. Notwithstanding anything to the contrary contained in this Section 7.1, no Tax Indemnitee shall be required to contest any claim if the subject matter thereof shall be of a continuing or recurring nature and shall have previously been adversely decided to the Tax Indemnitee pursuant to the contest provisions of this Section 7.1 unless there shall have been a change in the law (including, without limitation, amendments to statutes or regulations, administrative rulings (excluding private letter rulings and other rulings or materials that may not be relied upon by such Tax Indemnitee as precedent) or court decisions in the applicable jurisdiction) enacted, promulgated or effective after such claim shall have been so previously decided, and such Tax Indemnitee shall have received an opinion of independent tax counsel selected by the Tax Indemnitee and reasonably satisfactory to the Lessee, furnished at the Lessee's sole expense, to the effect that such change is favorable to the position which such Tax Indemnitee or the Lessee, as the case may be, had asserted in such previous contest and as a result of such change, it is more likely than not that the Tax Indemnitee will prevail or, in the event of an appeal of an adverse court or administrative agency decision, that it is more likely than not that an appellate court or an administrative agency tribunal or decision making body with appellate jurisdiction, as the case may be, will reverse or substantially modify the adverse determination. Notwithstanding anything contained in this Section 7.1, a Tax Indemnitee will not be required to contest the imposition of any Tax and shall be permitted to settle or compromise any claim without the Lessee's consent if such Tax Indemnitee (A) shall waive its right to indemnity under this Section 7.1 with respect to such Tax (and any claim the outcome of which is determined based upon the outcome of such claim) and (B) shall pay to the Lessee any amount previously paid or advanced by the Lessee pursuant to this Section 7.1 with respect to such Tax Claim, less any reasonable costs and expenses of the Tax Indemnitee prior to such payment in respect of such Tax Claim.Tax
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 claim is made by any taxing authority against a Tax Indemnitee notice of such proceeding) for any Taxes with respect to which the Lessee may be required to indemnify against hereunder or if a Tax Indemnitee shall determine that any tax Imposition as to which the Lessee may have an indemnity obligation hereunder pursuant to this Section 13.4, or if any Tax Indemnitee shall determine that any Imposition for which the Lessee may have an indemnity obligation pursuant to this Section 13.4 may be payable (a "Tax Claim")payable, then such Tax Indemnitee shall give promptly (and in any event, within twenty (20) days) notify the Lessee written notice of such Tax Claim promptly in writing (but in any event provided that failure to so notify the Lessee within twenty (20) days after its receipt of the written Tax Claim or its determination, as applicable), and shall furnish Lessee with copies of not alter such Tax Claim and all other writings received from the taxing authority to the extent relating to such claim (but failure to so notify the Lessee shall not relieve the Lessee of its obligations hereunder Indemnitee’s rights under this Section 13.4, except to the extent that it effectively such failure precludes or materially adversely affects the ability of the Lessee to conduct a contest of the Tax Claim). The Tax Indemnitee any indemnified Taxes) and shall not pay take any action with respect to such Tax Claim until at least claim, proceeding or Imposition without the written consent of the Lessee (such consent not to be unreasonably withheld or unreasonably delayed) for thirty (30) days after providing the Lessee with receipt of such written noticenotice by the Lessee; provided, unless (a) however, that in the case of any such claim or proceeding, if such Tax Indemnitee is shall be required to do so by law or regulation or to take action prior to the failure to pay end of such thirty (30) day period, such Tax Claim could result Indemnitee shall in a material adverse financialsuch notice to the Lessee, legal so inform the Lessee, and such Tax Indemnitee shall not take any action with respect to such claim, proceeding or other consequence Imposition without the consent of the Lessee (such consent not to be unreasonably withheld or unreasonably delayed) for ten (10) days after the receipt of such notice by the Lessee, unless the Tax Indemnitee and shall be required by law or regulation to take action prior to the end of such ten (b10) in day period. The Lessee shall be entitled for a period of thirty (30) days from receipt of such notice from the written notice described above, Tax Indemnitee (or such shorter period as the Tax Indemnitee has notified the Lessee of such requirement is required by law or such material adverse consequence (such notice however shall not require the disclosure of the Tax Indemnitee's confidential information, as determined in the sole discretion of such Tax Indemnitiee, or the Tax Indemnitee's tax returns, books, or records). If the Lessee shall so request within 30 days after receipt of such notice (or such shorter period as is reasonably specified by regulation for the Tax Indemnitee if any contest of the Tax must be commenced prior to the expiration of 30 dayscommence such contest), then to request in writing that such Tax Indemnitee shall in good faith at Lessee's sole expense contest such Tax or permit the Lessee to contest imposition of such Tax, as at the Lessee’s expense. If (x) such Tax Indemnitee shall elect; provided, however, that to the extent (i) the contest involves only Taxes constituting property taxes, sales taxes, or use taxes, (ii) the contest does not involve any taxes that the Lessee is not required to indemnify the Tax Indemnitee or taxes and other issues relating to a Tax Indemnitee that are unrelated to the transactions contemplated by the Operative Agreements, (iii) the contest can be pursued in the name of the Lessee and independently from any other proceeding involving a Tax Claim liability of a such Tax Indemnitee for which the Lessee has not agreed in writing to indemnify such Tax Indemnitee, and (iv) no Equity Insufficiency Circumstance exists, such contest shall be undertaken by the Lessee at the Lessee's sole expense and the after-tax costs of the Lessor, the Owner Participant, or other Tax Indemnitee shall be reimbursed by the Lessee. Notwithstanding the preceding sentence, if (ay) such contest would involve must be pursued in the name of the Tax Indemnitee, but can be pursued independently from any other type proceeding involving a Tax liability of Tax, any taxes that such Tax Indemnitee for which the Lessee is has not required agreed to indemnify the such Tax Indemnitee or taxes and other issues relating to a Tax Indemnitee which are unrelated to the transactions contemplated by the Operative Agreements, (bz) the Tax Indemnitee so requests, then the 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) above, if the Tax Indemnitee determines in good faith that such contest conducted by the Lessee could would have a material adverse impact on such Tax Indemnitee's the business or operations or involve risk of the imposition of criminal liability on a Tax Indemnitee, or (c) an Equity Insufficiency Circumstance exists, then such Tax Indemnitee mayand provides a written explanation to the Lessee of such determination, in its sole discretion, the Tax Indemnitee may elect to control such contest (including selecting or reassert control of the forum for such contest, and determining whether any such contest shall provided, that by taking control of the contest, L▇▇▇▇▇ acknowledges that it is responsible for the Imposition ultimately determined to be conducted due by (i) paying such Tax under protest or (ii) resisting payment reason of such Tax or (iii) paying such Tax claim, and seeking a refund thereof; provided, howeverfurther, that at such in determining the application of clauses (x) and (y) of this sentence, each Tax Indemnitee's optionIndemnitee shall take any and all reasonable steps to segregate claims for any Taxes for which the Lessee indemnifies hereunder from Taxes for which the Lessee is not obligated to indemnify hereunder, such so that the Lessee can control the contest shall of the former. In all other claims requested to be conducted contested by the Lessee in Lessee, the name Tax Indemnitee shall control the contest of such Tax Indemnitee)claim, acting through counsel reasonably acceptable to the Lessee. In no event shall such Tax Indemnitee be required or the Lessee be permitted to contest (or the Tax Indemnitee required to contest) any claim, (A) if such Tax Indemnitee provides the Lessee with a legal opinion of independent counsel 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 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 an Event of Default has occurred and is continuing, unless the 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 Lessee is obligated to indemnify pursuant to this Section 7.1 unless: (i) the Lessee shall have acknowledged in writing (x) that it is solely responsible for any Indemnified Tax resulting from any contest under its control, (y) its liability to such Tax Indemnitee for all reasonable out of pocket costs, losses and expenses that the Tax Indemnitees may incur hereunder reasonably foreseeable in connection with contesting the Indemnified Tax (including, but not limited to, any reasonable legal, accounting and investigatory fees and disbursements), and (z) its liability for an indemnity payment pursuant to this Section 7.1 as a result of such claim if and to the extent such Tax Indemnitee or the Lessee, as the case may be, shall not prevail in the contest of such claim; provided, however, that the Lessee shall not be required to indemnify for such Taxes to the extent the results of the contest clearly demonstrate that the Tax is not an Indemnified Tax (C) unless the Lessee's conduct of the contest materially prejudiced the Tax Indemnitee; (ii) such Tax Indemnitee shall have received the opinion of independent tax counsel selected by the Tax Indemnitee and reasonably satisfactory to the Lessee and furnished at the Lessee's sole expense, opining that a reasonable basis exists for contesting such claim or, in the event of an appeal of an adverse court or administrative agency decision, that as a result of a change in law or fact it is more likely than not that an appellate court or an administrative agency or decision making body with appellate jurisdiction, as the case may be, will reverse or substantially modify the adverse determination; (iii) the Lessee shall have agreed to pay and shall pay to such Tax Indemnitee on demand (and at no after tax costs to the Lessor, the Owner Participant and any Tax Indemnitee) all reasonable costs out-of-pocket costs, losses and expenses that such Tax Indemnitee may incur in connection with contesting such claim (includingImposition, without limitation, including all reasonable legal legal, accounting and accounting investigatory fees and disbursements); disbursements as well as the Impositions which are the subject of such claim to the extent the contest is unsuccessful, or (ivD) no Lease Default described in Section 14(a), 14(b), 14(c), 14(g) or 14(h) if such contest shall involve the payment of the Lease or a Lease Event of Default shall have occurred and shall have been continuingTax prior to the contest, unless the Lessee shall provide to the Tax Indemnitee an interest-free advance in its sole discretion exercised in good faith allows the Lessee to post a satisfactory bond or other security that does not involve a possibility of a Lien on the Equipment or any portion thereof or on any interest therein, and which bond or other security will be for an amount equal to the sum Imposition that the 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 and claims contested in the name of the Tax Indemnitee in a public forum, no contest shall be required: (IA) unless the costs amount of such contest the potential indemnity (as reasonably estimated by taking into account all similar or logically related claims that have been or could be raised in any audit involving such Tax Indemnitee in good faith) and for which the Taxes which Lessee may be required liable to be indemnified pay an indemnity under this Section 13.4(b)) exceeds $50,000 and (IIB) if such Lease Default or Lease Event of Default involves a payment obligation under an Operative Agreement that is currently not paid in full, the unpaid amount of such obligation, plus the present value of the amounts not yet due pursuant to such obligation; (v) such Tax Indemnitee shall have determined that the action to be taken will not result in any risk of sale, forfeiture or loss of, or the creation of any Lien, or the Lessee shall have or otherwise made a provision to protect the interest of such Tax Indemnitee (in a manner satisfactory to such Tax Indemnitee in its sole discretion), on the Equipment or any portion thereof or any interest therein; (vi) the amount of such claims alone, orunless, if the subject matter thereof shall be of a continuing or recurring nature, when aggregated with substantially identical potential claims with respect to the transactions contemplated requested by the Operative Agreements shall be at least $25,000; (vii) if such contest shall be conducted in a manner requiring the payment or deposit of the claimTax Indemnitee, the Lessee shall have paid the amount required (and at no after-tax costs to the Lessor, the Owner Participant or other Tax Indemnitee); and (viii) there is no risk of imposition of criminal liability or penalties. The Lessee shall cooperate with the Tax Indemnitee in good faith with respect to any contest controlled and conducted by the Tax Indemnitee and the Tax Indemnitee in good faith shall consult with the Lessee regarding the conduct of such contest. A Tax Indemnitee shall not be required to pursue an appeal to the U.S. Supreme Court or the highest court in Canada or Mexico. The Tax Indemnitee shall cooperate with respect to any contest controlled and conducted by the Lessee and the Lessee shall consult with the Tax Indemnitee regarding the conduct of such contest. Notwithstanding anything to the contrary contained in this Section 7.1, no Tax Indemnitee shall be required to contest any claim if the subject matter thereof shall be of a continuing or recurring nature and shall have previously been adversely decided provided to the Tax Indemnitee pursuant to an opinion of counsel selected by the contest provisions of this Section 7.1 unless there shall have been a change Lessee (which may be in-house counsel, except, in the law (includingcase of income taxes indemnified hereunder, without limitation, amendments to statutes or regulations, administrative rulings (excluding private letter rulings and other rulings or materials which opinion shall be that may not be relied upon by such Tax Indemnitee as precedent) or court decisions in the applicable jurisdiction) enacted, promulgated or effective after such claim shall have been so previously decided, and such Tax Indemnitee shall have received an opinion of independent tax counsel selected by the Tax Indemnitee and reasonably satisfactory acceptable to the Lessee, furnished at the Lessee's sole expense, ) 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 effect that such change is favorable 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 position which 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 the Tax Indemnitee is the controlling party and the Lessee 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 the Lessee 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. In addition, the controlling party shall keep the non-controlling party reasonably informed as to the progress of the contest, and shall provide the 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. Each Tax Indemnitee shall supply the Lessee with such information and documents reasonably requested by the Lessee as are necessary or advisable for the Lessee to participate in any action, suit or proceeding to the extent permitted by this Section 13.4(b), and the Lessee shall promptly reimburse such 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 and/or the Guarantors shall 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 each 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 Lessee, as the case may be, had asserted in unless such previous contest and as a result of such change, it is more likely than not that the Tax Indemnitee will prevail or, in the event of an appeal of an adverse court or administrative agency decision, that it is more likely than not that an appellate court or an administrative agency tribunal or decision making body waives its right to be indemnified under this Section 13.4 with appellate jurisdiction, as the case may be, will reverse or substantially modify the adverse determinationrespect to such claim. Notwithstanding anything contained in this Section 7.1herein to the contrary, a Tax Indemnitee will not be required to contest (and the Lessee shall not be permitted to contest) a claim with respect to the imposition of any Tax and shall be permitted to settle or compromise any claim without the Lessee's consent if (i) such Tax Indemnitee (A) shall waive its right to indemnity indemnification under this Section 7.1 13.4 with respect to such Tax claim (and any claim the outcome of which is determined based upon the outcome of such claim) and (B) shall pay to the Lessee any amount previously paid or advanced by the Lessee pursuant to this Section 7.1 with respect to such year or any other taxable year, the contest of which is materially adversely affected as a result of such waiver) or (ii) such Tax Claimis the sole result of a claim of a continuing and consistent nature, less any reasonable costs 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 expenses 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 Tax Indemnitee prior to such payment in respect of such Tax Claimclaim at issue).
Appears in 1 contract
Sources: Participation Agreement (Regeneron Pharmaceuticals, Inc.)
Contests. If a written claim is made by any taxing authority against a Tax Indemnitee for any Taxes Except as otherwise provided in Section 12.1 of the Master Lease with respect to which the Lessee may Property Taxes, if any claim shall be required to indemnify made against hereunder any Tax Indemnitee or if a any proceeding shall be commenced against any Tax Indemnitee shall determine that (including a written notice of such proceeding) for any tax Imposition as to which the Lessee Lessees may have an indemnity obligation hereunder pursuant to this Section 13.5, or if any Tax Indemnitee shall receive notice that any Imposition to which the Lessees may have an indemnity obligation pursuant to this Section 13.5 may be payable (a "Tax Claim")payable, then such Tax Indemnitee shall give the Lessee written notice of such Tax Claim promptly (but and, in any event event, within twenty (2030 days) days after its receipt of notify the written Tax Claim or its determinationCompany, as applicable)agent for the Lessees, and shall furnish Lessee with copies of such Tax Claim and all other writings received from the taxing authority to the extent relating to such claim in writing (but provided that failure to so promptly notify the Lessee Company within 30 days shall not relieve the Lessee of its obligations hereunder alter such Tax Indemnitee's rights under this Section 13.5 except to the extent that it effectively such failure precludes or materially adversely affects the ability of the Lessee 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 Company, as agent for the Lessees, (such consent not to be unreasonably withheld or unreasonably delayed) for 30 days after the receipt of such notice by the Company or thereafter if the applicable Lessee has commenced to take appropriate action; provided, however, that in the case of any such claim or proceeding, if such Tax Claim). The Indemnitee shall be required by law or regulation to take action prior to the end of such 30-day period, such Tax Indemnitee shall in such notice to the applicable Lessee, so inform the Company, as agent for the Lessees, and such Tax Indemnitee shall not pay take any action with respect to such claim, proceeding or Imposition without the consent of the Company, as agent for the Lessees, (such consent not to be unreasonably withheld or unreasonably delayed) for 10 days after the receipt of such notice by the Company or thereafter if the applicable Lessee has commenced to take appropriate action, unless such Tax Claim until at least thirty (30) days after providing the Lessee with such written notice, unless (a) the Tax Indemnitee is shall be required to do so by law or regulation or the failure to pay such Tax Claim could result in a material adverse financial, legal or other consequence take action prior to the Tax Indemnitee and (b) in the written notice described above, the Tax Indemnitee has notified the Lessee end of such requirement or such material adverse consequence (such notice however 10-day period. The Company shall not require the disclosure be entitled for a period of the Tax Indemnitee's confidential information, as determined in the sole discretion of such Tax Indemnitiee, or the Tax Indemnitee's tax returns, books, or records). If the Lessee shall so request within 30 days after from receipt of such notice from such Tax Indemnitee (or such shorter period as is reasonably specified by the Tax Indemnitee if any contest of the Tax must be commenced prior to the expiration of 30 days), then such Tax Indemnitee shall in good faith at Lessee's sole expense contest has notified the Lessees is required by law or regulation for such Tax or permit Indemnitee to commence such contest), to request in writing that such Tax Indemnitee contest the Lessee to contest imposition of such Tax, as at the expense of the applicable Lessee. If (x) such Tax Indemnitee shall elect; provided, however, that to the extent (i) the contest involves only Taxes constituting property taxes, sales taxes, or use taxes, (ii) the contest does not involve any taxes that the Lessee is not required to indemnify the Tax Indemnitee or taxes and other issues relating to a Tax Indemnitee that are unrelated to the transactions contemplated by the Operative Agreements, (iii) the contest can be pursued in the name of the applicable Lessee and independently from any other proceeding involving a Tax Claim liability of a such Tax Indemnitee for which the applicable Lessee has not agreed in writing to indemnify such Tax Indemnitee, and (iv) no Equity Insufficiency Circumstance exists, such contest shall be undertaken by the Lessee at the Lessee's sole expense and the after-tax costs of the Lessor, the Owner Participant, or other Tax Indemnitee shall be reimbursed by the Lessee. Notwithstanding the preceding sentence, if (ay) such contest would involve must be pursued in the name of such Tax Indemnitee, but can be pursued independently from any other type proceeding involving a Tax liability of Tax, any taxes that such Tax Indemnitee for which the applicable Lessee is has not required agreed to indemnify the such Tax Indemnitee or taxes and other issues relating to a (z) such Tax Indemnitee which are unrelated so requests, then the applicable Lessee shall be permitted to control the transactions contemplated by contest of such claim, provided that in the Operative Agreementscase of a contest described in clause (y), (b) the if such Tax Indemnitee determines reasonably and in good faith that such contest conducted by the applicable Lessee could have a material adverse impact on such Tax Indemnitee's the business or operations or involve risk of the imposition of criminal liability on a Tax Indemnitee, or (c) an Equity Insufficiency Circumstance exists, then such Tax Indemnitee mayand provides a written explanation to such Lessee of such determination, in its sole discretion, such Tax Indemnitee may elect to control such contest (including selecting or reassert control of the forum for such contest, and provided, that by taking control of the contest, the applicable Lessee acknowledges that it is responsible for the Imposition ultimately determined to be due by reason of such claim, and provided, further, that in determining whether the application of clauses (x) and (y) above, each Tax Indemnitee shall take any such and all reasonable steps to segregate claims for any Taxes for which the applicable Lessee indemnifies hereunder from Taxes for which the applicable Lessee is not obligated to indemnify hereunder, so that the applicable Lessee can control the contest shall of the former. In all other claims requested to be conducted contested by (i) paying the Company, as agent for the Lessees, such Tax under protest or (ii) resisting payment Indemnitee shall control the contest of such Tax or (iii) paying such Tax and seeking a refund thereof; providedclaim, howeveracting through counsel reasonably acceptable to the Company, that at such Tax Indemnitee's option, such contest shall be conducted by as agent for the Lessee in the name of such Tax Indemnitee)Lessees. In no event shall such Tax Indemnitee be required or the applicable Lessee be permitted to contest (or such Tax Indemnitee required to contest) any claim, (A) if such Tax Indemnitee provides the applicable Lessee with a legal opinion of counsel reasonably acceptable to the applicable Lessee 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 any Property or any part of any thereof unless the applicable Lessee shall have posted and maintained a bond or other security satisfactory to the relevant Tax Indemnitee in respect to such risk, (B) if an Event of Default has occurred and is continuing unless the applicable Lessee shall have posted and maintained a bond or other security satisfactory to the relevant Tax Indemnitee in respect of the Taxes subject to such claim and any and all expenses for which the applicable Lessee is obligated to indemnify pursuant to this Section 7.1 unless: (i) the Lessee shall have acknowledged in writing (x) that it is solely responsible for any Indemnified Tax resulting from any contest under its control, (y) its liability to such Tax Indemnitee for all reasonable out of pocket costs, losses and expenses that the Tax Indemnitees may incur hereunder reasonably foreseeable in connection with contesting the Indemnified Tax (including, but not limited to, any reasonable legal, accounting and investigatory fees and disbursements), and (z) its liability for an indemnity payment pursuant to this Section 7.1 as a result of such claim if and to the extent such Tax Indemnitee or the Lessee, as the case may be, shall not prevail in the contest of such claim; provided, however, that the Lessee shall not be required to indemnify for such Taxes to the extent the results of the contest clearly demonstrate that the Tax is not an Indemnified Tax (C) unless the Lessee's conduct of the contest materially prejudiced the Tax Indemnitee; (ii) such Tax Indemnitee shall have received the opinion of independent tax counsel selected by the Tax Indemnitee and reasonably satisfactory to the Lessee and furnished at the Lessee's sole expense, opining that a reasonable basis exists for contesting such claim or, in the event of an appeal of an adverse court or administrative agency decision, that as a result of a change in law or fact it is more likely than not that an appellate court or an administrative agency or decision making body with appellate jurisdiction, as the case may be, will reverse or substantially modify the adverse determination; (iii) the applicable Lessee shall have agreed to pay and shall pay, to such Tax Indemnitee on demand (and at no after tax costs to the Lessor, the Owner Participant and any Tax Indemnitee) all reasonable costs out-of-pocket costs, losses and expenses that such Tax Indemnitee may incur in connection with contesting such claim (including, without limitation, Imposition including all reasonable legal legal, accounting and accounting investigatory fees and disbursements); , or (ivD) no Lease Default described in Section 14(a), 14(b), 14(c), 14(g) or 14(h) if such contest shall involve the payment of the Lease or a Lease Event of Default shall have occurred and shall have been continuingTax prior to the contest, unless the applicable Lessee shall provide to such Tax Indemnitee an interest-free advance in its sole discretion exercised in good faith allows the Lessee to post a satisfactory bond or other security that does not involve a possibility of a Lien on the Equipment or any portion thereof or on any interest therein, and which bond or other security will be for an amount equal to the sum of (I) Imposition that the costs of such contest (as reasonably estimated by such Tax Indemnitee in good faith) and the Taxes which may be is required to be indemnified and pay (II) if such Lease Default or Lease Event of Default involves a payment obligation under an Operative Agreement that is currently not paid in full, the unpaid amount of such obligation, plus the present value of the amounts not yet due pursuant to such obligation; (v) such Tax Indemnitee shall have determined that the action to be taken will not result in any risk of sale, forfeiture or loss of, or the creation of any Lien, or the Lessee shall have or otherwise made a provision to protect the interest of such Tax Indemnitee (in a manner satisfactory to such Tax Indemnitee in its sole discretion), on the Equipment or any portion thereof or any interest therein; (vi) the amount of such claims alone, or, if the subject matter thereof shall be of a continuing or recurring nature, when aggregated with substantially identical potential claims with respect to the transactions contemplated by the Operative Agreements shall be at least $25,000; (vii) if such contest shall be conducted in a manner requiring the payment or deposit of the claim, the Lessee shall have paid the amount required (and at no additional net after-tax costs to the Lessor, the Owner Participant or other such Tax Indemnitee); . In addition for Tax Indemnitee controlled contests and (viii) there is no risk claims contested in the name of imposition of criminal liability or penalties. The Lessee shall cooperate with the such Tax Indemnitee in good faith 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 such Tax Indemnitee with respect to any contest controlled and conducted by period for which the Tax Indemnitee and the Tax Indemnitee in good faith shall consult with the applicable Lessee regarding the conduct of such contest. A Tax Indemnitee shall not may be required liable to pursue pay an appeal to the U.S. Supreme Court or the highest court in Canada or Mexico. The Tax Indemnitee shall cooperate with respect to any contest controlled and conducted by the Lessee and the Lessee shall consult with the Tax Indemnitee regarding the conduct of such contest. Notwithstanding anything to the contrary contained in indemnity under this Section 7.113.5(b)) exceeds $25,000 and (B) unless, no Tax Indemnitee shall be required to contest any claim if the subject matter thereof shall be of a continuing or recurring nature and shall have previously been adversely decided to the Tax Indemnitee pursuant to the contest provisions of this Section 7.1 unless there shall have been a change in the law (including, without limitation, amendments to statutes or regulations, administrative rulings (excluding private letter rulings and other rulings or materials that may not be relied upon requested by such Tax Indemnitee as precedent) or court decisions in Indemnitee, the applicable jurisdiction) enacted, promulgated or effective after such claim Lessee shall have been so previously decided, and provided to such Tax Indemnitee an opinion of counsel selected by the Company (which may be in-house counsel) (except, in the case of income taxes indemnified hereunder which shall have received be an opinion of independent tax counsel selected by the such Tax Indemnitee and reasonably satisfactory acceptable to the applicable Lessee, furnished at the Lessee's sole expense, ) 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 effect that such change is favorable 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 position which 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 judgement, provided, however, that if such Tax Indemnitee is the controlling party and the applicable Lessee 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 the applicable Lessee 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. 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. Each Tax Indemnitee shall at the applicable Lessee's expense supply the applicable Lessee with such information and documents reasonably requested by the Company as are necessary or advisable for the applicable Lessee to participate in any action, suit or proceeding to the extent permitted by this Section 13.5(b). Notwithstanding anything in this Section 13.5(b) to the contrary, no Tax Indemnitee shall enter into any settlement or other compromise or fail to appeal an adverse ruling (which appeal has been requested in writing by the applicable Lessee) with respect to any claim which may be entitled to be indemnified under this Section 13.5 without the prior written consent of the applicable Lessee, as the case may besuch entering into of a settlement or compromise, had asserted in or such previous contest and as failure to appeal, without such consent, shall constitute a result waiver of all rights to indemnification under this Section 13.5 with respect to such change, it is more likely than not that the Tax Indemnitee will prevail or, in the event of an appeal of an adverse court or administrative agency decision, that it is more likely than not that an appellate court or an administrative agency tribunal or decision making body with appellate jurisdiction, as the case may be, will reverse or substantially modify the adverse determinationclaim. Notwithstanding anything contained in this Section 7.1herein to the contrary, a Tax Indemnitee will not be required to contest (and the applicable Lessee shall not be permitted to contest) a claim with respect to the imposition of any Tax and shall be permitted to settle or compromise any claim without the Lessee's consent if such Tax Indemnitee (A) shall waive in writing, in a form acceptable to the Lessees, its right to indemnity indemnification under this Section 7.1 13.5 with respect to such Tax claim (and any claim the outcome of which is determined based upon the outcome of such claim) and (B) shall pay to the Lessee any amount previously paid or advanced by the Lessee pursuant to this Section 7.1 with respect to such Tax Claim, less year or any reasonable costs and expenses other taxable year the contest of the Tax Indemnitee prior to such payment in respect which is materially adversely affected as a result of such Tax Claimwaiver).
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 claim is made by any taxing authority against a Tax Indemnitee notice of such proceeding) for any Taxes with respect to which the Lessee may be required to indemnify against hereunder or if a Tax Indemnitee shall determine that any tax Imposition as to which the Lessee may have an indemnity obligation hereunder pursuant to this Section 13.4, or if any Tax Indemnitee shall determine that any Imposition for which the Lessee may have an indemnity obligation pursuant to this Section 13.4 may be payable (a "Tax Claim")payable, then such Tax Indemnitee shall give promptly (and in any event, within twenty (20) days) notify the Lessee written notice of such Tax Claim promptly in writing (but in any event provided that failure to so notify the Lessee within twenty (20) days after its receipt of the written Tax Claim or its determination, as applicable), and shall furnish Lessee with copies of not alter such Tax Claim and all other writings received from the taxing authority to the extent relating to such claim (but failure to so notify the Lessee shall not relieve the Lessee of its obligations hereunder Indemnitee’s rights under this Section 13.4, except to the extent that it effectively such failure precludes or materially adversely affects the ability of the Lessee to conduct a contest of the Tax Claim). The Tax Indemnitee any indemnified Taxes) and shall not pay take any action with respect to such Tax Claim until at least claim, proceeding or Imposition without the written consent of the Lessee (such consent not to be unreasonably withheld or unreasonably delayed) for thirty (30) days after providing the Lessee with receipt of such written noticenotice by the Lessee; provided, unless (a) however, that in the case of any such claim or proceeding, if such Tax Indemnitee is shall be required to do so by law or regulation or to take action prior to the failure to pay end of such thirty (30) day period, such Tax Claim could result Indemnitee shall in a material adverse financialsuch notice to the Lessee, legal so inform the Lessee, and such Tax Indemnitee shall not take any action with respect to such claim, proceeding or other consequence Imposition without the consent of the Lessee (such consent not to be unreasonably withheld or unreasonably delayed) for ten (10) days after the receipt of such notice by the Lessee, unless the Tax Indemnitee and shall be required by law or regulation to take action prior to the end of such ten (b10) in day period. Lessee shall be entitled for a period of thirty (30) days from receipt of such notice from the written notice described above, Tax Indemnitee (or such shorter period as the Tax Indemnitee has notified the Lessee of such requirement is required by law or such material adverse consequence (such notice however shall not require the disclosure of the Tax Indemnitee's confidential information, as determined in the sole discretion of such Tax Indemnitiee, or the Tax Indemnitee's tax returns, books, or records). If the Lessee shall so request within 30 days after receipt of such notice (or such shorter period as is reasonably specified by regulation for the Tax Indemnitee if any contest of the Tax must be commenced prior to the expiration of 30 dayscommence such contest), then to request in writing that such Tax Indemnitee shall in good faith at Lessee's sole expense contest such Tax or permit the Lessee to contest imposition of such Tax, as at the Lessee’s expense. If (x) such Tax Indemnitee shall elect; provided, however, that to the extent (i) the contest involves only Taxes constituting property taxes, sales taxes, or use taxes, (ii) the contest does not involve any taxes that the Lessee is not required to indemnify the Tax Indemnitee or taxes and other issues relating to a Tax Indemnitee that are unrelated to the transactions contemplated by the Operative Agreements, (iii) the contest can be pursued in the name of the Lessee and independently from any other proceeding involving a Tax Claim liability of a such Tax Indemnitee for which the Lessee has not agreed in writing to indemnify such Tax Indemnitee, and (iv) no Equity Insufficiency Circumstance exists, such contest shall be undertaken by the Lessee at the Lessee's sole expense and the after-tax costs of the Lessor, the Owner Participant, or other Tax Indemnitee shall be reimbursed by the Lessee. Notwithstanding the preceding sentence, if (ay) such contest would involve must be pursued in the name of the Tax Indemnitee, but can be pursued independently from any other type proceeding involving a Tax liability of Tax, any taxes that such Tax Indemnitee for which the Lessee is has not required agreed to indemnify the such Tax Indemnitee or taxes and other issues relating to a Tax Indemnitee which are unrelated to the transactions contemplated by the Operative Agreements, (bz) the Tax Indemnitee so requests, then the 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 the Tax Indemnitee determines in good faith that such contest conducted by the Lessee could have a material adverse impact on such Tax Indemnitee's the business or operations or involve risk of the imposition of criminal liability on a Tax Indemnitee, or (c) an Equity Insufficiency Circumstance exists, then such Tax Indemnitee mayand provides a written explanation to the Lessee of such determination, in its sole discretion, the Tax Indemnitee may elect to control such contest (including selecting or reassert control of the forum for such contest, and determining whether any such contest shall provided, that by taking control of the contest, ▇▇▇▇▇▇ acknowledges that it is responsible for the Imposition ultimately determined to be conducted due by (i) paying such Tax under protest or (ii) resisting payment reason of such Tax or (iii) paying such Tax claim, and seeking a refund thereof; provided, howeverfurther, that at such in determining the application of clauses (x) and (y) of the preceding sentence, each Tax Indemnitee's optionIndemnitee shall take any and all reasonable steps to segregate claims for any Taxes for which the Lessee indemnifies hereunder from Taxes for which the Lessee is not obligated to indemnify Table of Contents ▇▇▇▇▇▇▇▇▇, such so that the Lessee can control the contest shall of the former. In all other claims requested to be conducted contested by the Lessee in Lessee, the name Tax Indemnitee shall control the contest of such Tax Indemnitee)claim, acting through counsel reasonably acceptable to the Lessee. In no event shall such Tax Indemnitee be required or the Lessee be permitted to contest (or the Tax Indemnitee required to contest) any claim, (A) if such Tax Indemnitee provides the Lessee with a legal opinion of independent counsel 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 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 an Event of Default has occurred and is continuing, unless the 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 Lessee is obligated to indemnify pursuant to this Section 7.1 unless: (i) the Lessee shall have acknowledged in writing (x) that it is solely responsible for any Indemnified Tax resulting from any contest under its control, (y) its liability to such Tax Indemnitee for all reasonable out of pocket costs, losses and expenses that the Tax Indemnitees may incur hereunder reasonably foreseeable in connection with contesting the Indemnified Tax (including, but not limited to, any reasonable legal, accounting and investigatory fees and disbursements), and (z) its liability for an indemnity payment pursuant to this Section 7.1 as a result of such claim if and to the extent such Tax Indemnitee or the Lessee, as the case may be, shall not prevail in the contest of such claim; provided, however, that the Lessee shall not be required to indemnify for such Taxes to the extent the results of the contest clearly demonstrate that the Tax is not an Indemnified Tax (C) unless the Lessee's conduct of the contest materially prejudiced the Tax Indemnitee; (ii) such Tax Indemnitee shall have received the opinion of independent tax counsel selected by the Tax Indemnitee and reasonably satisfactory to the Lessee and furnished at the Lessee's sole expense, opining that a reasonable basis exists for contesting such claim or, in the event of an appeal of an adverse court or administrative agency decision, that as a result of a change in law or fact it is more likely than not that an appellate court or an administrative agency or decision making body with appellate jurisdiction, as the case may be, will reverse or substantially modify the adverse determination; (iii) the Lessee shall have agreed to pay and shall pay (provided, that prior to the Base Term Commencement Date and pursuant to the terms and conditions in this Transaction Agreement relating to Advances, Lessee shall request an Advance the proceeds of which shall be used to pay) to such Tax Indemnitee on demand (and at no after tax costs to the Lessor, the Owner Participant and any Tax Indemnitee) all reasonable costs out-of-pocket costs, losses and expenses that such Tax Indemnitee may incur in connection with contesting such claim (includingImposition, without limitation, including all reasonable legal legal, accounting and accounting investigatory fees and disbursements); disbursements as well as the Impositions which are the subject of such claim to the extent the contest is unsuccessful, or (ivD) no Lease Default described in Section 14(a), 14(b), 14(c), 14(g) or 14(h) if such contest shall involve the payment of the Lease or a Lease Event of Default shall have occurred and shall have been continuingTax prior to the contest, unless the Lessee shall provide to the Tax Indemnitee an interest-free advance in its sole discretion exercised in good faith allows the Lessee to post a satisfactory bond or other security that does not involve a possibility of a Lien on the Equipment or any portion thereof or on any interest therein, and which bond or other security will be for an amount equal to the sum Imposition that the 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 and claims contested in the name of the Tax Indemnitee in a public forum, no contest shall be required: (IA) unless the costs amount of such contest the potential indemnity (as reasonably estimated by taking into account all similar or logically related claims that have been or could be raised in any audit involving such Tax Indemnitee in good faith) and for which the Taxes which Lessee may be required liable to be indemnified pay an indemnity under this Section 13.4(b)) exceeds $50,000 and (IIB) if such Lease Default or Lease Event of Default involves a payment obligation under an Operative Agreement that is currently not paid in full, the unpaid amount of such obligation, plus the present value of the amounts not yet due pursuant to such obligation; (v) such Tax Indemnitee shall have determined that the action to be taken will not result in any risk of sale, forfeiture or loss of, or the creation of any Lien, or the Lessee shall have or otherwise made a provision to protect the interest of such Tax Indemnitee (in a manner satisfactory to such Tax Indemnitee in its sole discretion), on the Equipment or any portion thereof or any interest therein; (vi) the amount of such claims alone, orunless, if the subject matter thereof shall be of a continuing or recurring nature, when aggregated with substantially identical potential claims with respect to the transactions contemplated requested by the Operative Agreements shall be at least $25,000; (vii) if such contest shall be conducted in a manner requiring the payment or deposit of the claimTax Indemnitee, the Lessee shall have paid the amount required (and at no after-tax costs to the Lessor, the Owner Participant or other Tax Indemnitee); and (viii) there is no risk of imposition of criminal liability or penalties. The Lessee shall cooperate with the Tax Indemnitee in good faith with respect to any contest controlled and conducted by the Tax Indemnitee and the Tax Indemnitee in good faith shall consult with the Lessee regarding the conduct of such contest. A Tax Indemnitee shall not be required to pursue an appeal to the U.S. Supreme Court or the highest court in Canada or Mexico. The Tax Indemnitee shall cooperate with respect to any contest controlled and conducted by the Lessee and the Lessee shall consult with the Tax Indemnitee regarding the conduct of such contest. Notwithstanding anything to the contrary contained in this Section 7.1, no Tax Indemnitee shall be required to contest any claim if the subject matter thereof shall be of a continuing or recurring nature and shall have previously been adversely decided provided to the Tax Indemnitee pursuant to an opinion of counsel selected by the contest provisions of this Section 7.1 unless there shall have been a change Lessee (which may be in-house counsel, except, in the law (includingcase of income taxes indemnified hereunder, without limitation, amendments to statutes or regulations, administrative rulings (excluding private letter rulings and other rulings or materials which opinion shall be that may not be relied upon by such Tax Indemnitee as precedent) or court decisions in the applicable jurisdiction) enacted, promulgated or effective after such claim shall have been so previously decided, and such Tax Indemnitee shall have received an opinion of independent tax counsel selected by the Tax Indemnitee and reasonably satisfactory acceptable to the Lessee, furnished at the Lessee's sole expense, ) 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 effect that such change is favorable 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 position which 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 the Tax Indemnitee is the controlling party and the Lessee 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 the Lessee 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. In addition, the controlling party shall keep the non-controlling party reasonably informed as to the progress of the contest, and shall provide the non-controlling party with a copy of (or appropriate excerpts from) Table of Contents 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. Each Tax Indemnitee shall supply the Lessee with such information and documents reasonably requested by the Lessee as are necessary or advisable for the Lessee to participate in any action, suit or proceeding to the extent permitted by this Section 13.4(b), and the Lessee shall promptly reimburse such Indemnitee for the reasonable out-of-pocket expenses of supplying such information and documents. Except during the occurrence and continuance of an Event of Default where Lessee and/or Parent Guarantor shall 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 each 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 Lessee, as the case may be, had asserted in unless such previous contest and as a result of such change, it is more likely than not that the Tax Indemnitee will prevail or, in the event of an appeal of an adverse court or administrative agency decision, that it is more likely than not that an appellate court or an administrative agency tribunal or decision making body waives its right to be indemnified under this Section 13.4 with appellate jurisdiction, as the case may be, will reverse or substantially modify the adverse determinationrespect to such claim. Notwithstanding anything contained in this Section 7.1herein to the contrary, a Tax Indemnitee will not be required to contest (and the Lessee shall not be permitted to contest) a claim with respect to the imposition of any Tax and shall be permitted to settle or compromise any claim without the Lessee's consent if (i) such Tax Indemnitee (A) shall waive its right to indemnity indemnification under this Section 7.1 13.4 with respect to such Tax claim (and any claim the outcome of which is determined based upon the outcome of such claim) and (B) shall pay to the Lessee any amount previously paid or advanced by the Lessee pursuant to this Section 7.1 with respect to such year or any other taxable year, the contest of which is materially adversely affected as a result of such waiver) or (ii) such Tax Claimis the sole result of a claim of a continuing and consistent nature, less any reasonable costs which claim has previously been resolved against the relevant Tax Indemnitee (unless a change in Applicable Law or facts has occurred since such prior adverse resolution and expenses 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 Tax Indemnitee prior to such payment in respect of such Tax Claimclaim at issue).
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 claim is made by any taxing authority against a Tax Indemnitee notice of such proceeding) for any Taxes with respect as to which the Lessee may be required to indemnify against hereunder or if a Tax Indemnitee shall determine that any tax to which the Lessee may have an indemnity obligation hereunder may be payable (a "Tax Claim")pursuant to Section 19.02, then such Tax Indemnitee shall give promptly notify Lessee in writing and shall not take any action with respect to such claim or Tax without the consent of Lessee written notice of such Tax Claim promptly for thirty (but in any event within twenty (2030) days after its receipt sending such notice to Lessee; provided 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 written end of such 30-day period, such Tax Claim or its determinationIndemnitee shall, as applicable)in such notice to Lessee, so inform Lessee, and shall furnish Lessee with copies of such Tax Claim and all other writings received from the taxing authority to the extent relating Indenmitee shall not take any action with respect to such claim or Tax without the consent of Lessee (but not to be unreasonably withheld) before ten (10) days from the receipt of such notice by Lessee unless the Tax Indemnitee shall be required by law or regulation to take action prior to the end of such 10 day period; provided, that failure to so notify the Lessee shall not relieve the Lessee of its affect Lessee's obligations to indemnify hereunder except to the extent that it effectively precludes the ability of the Lessee is precluded from any contest and actually and materially harmed thereby. If requested by Lessee in a written request to conduct a contest of the Tax Claim). The Tax Indemnitee shall not pay such Tax Claim until at least Indenmitee within thirty (30) days after providing the Lessee with such written notice, unless (a) the Tax Indemnitee is required to do so by law or regulation or the failure to pay such Tax Claim could result in a material adverse financial, legal or other consequence to the Tax Indemnitee and (b) in the written notice described above, the Tax Indemnitee has notified the Lessee of such requirement or such material adverse consequence (such notice however shall not require the disclosure of the Tax Indemnitee's confidential information, as determined in the sole discretion of such Tax Indemnitiee, or the Tax Indemnitee's tax returns, books, or records). If the Lessee shall so request within 30 days after receipt of such notice (or such shorter period as is reasonably specified by referred to in the Tax Indemnitee if any contest of the Tax must be commenced prior proviso to the expiration first sentence in this Section 19.02(e)) after its receipt of 30 days)such notice, then such Tax Indemnitee (i) in the case of a Tax which may be contested independently (without joinder, contribution or otherwise) from any Tax that is not subject to indemnification by the Lessee, shall permit Lessee to in good faith at Lessee's sole expense contest such Tax or permit the Lessee to contest such Tax, as such Tax Indemnitee shall elect; provided, however, that to the extent (i) the contest involves only Taxes constituting property taxes, sales taxes, or use taxes, (ii) the contest does not involve any taxes that the Lessee is not required to indemnify the Tax Indemnitee or taxes and other issues relating to a Tax Indemnitee that are unrelated to the transactions contemplated by the Operative Agreements, (iii) the contest can be pursued in the name of the Lessee and independently from any other proceeding involving a Tax Claim of a Tax Indemnitee for which Lessee has not agreed in writing to indemnify such Tax Indemnitee, and (iv) no Equity Insufficiency Circumstance exists, such contest shall be undertaken by the Lessee at the Lessee's sole expense and the after-tax costs of the Lessor, the Owner Participant, or other Tax Indemnitee shall be reimbursed by the Lessee. Notwithstanding the preceding sentence, if (a) such contest would involve any other type of Tax, any taxes that the Lessee is not required to indemnify the Tax Indemnitee or taxes and other issues relating to a Tax Indemnitee which are unrelated to the transactions contemplated by the Operative Agreements, (b) the Tax Indemnitee determines that such contest conducted by the Lessee could have a material adverse impact on such Tax Indemnitee's business or operations or involve risk of the imposition of criminal liability on a Tax Indemnitee, or (c) an Equity Insufficiency Circumstance exists, then such Tax Indemnitee may, in its sole discretion, control such contest (including selecting the forum for such contestincluding, without limitation, by pursuit of appeals and determining whether administrative procedures) (any such contest shall be conducted by (i) paying such Tax under protest a "Lessee-Controlled Contest"), or (ii) resisting payment of such Tax in the case or (iii) paying such Tax and seeking a refund thereof; providedcontest which is not a Lessee-Controlled Contest shall itself or, however, that at such Tax Indemnitee's optionrequest, the Lessee shall, in good faith contest (including, without limitation, by pursuit of appeals and administrative procedures), the validity, applicability or amount of such contest Indemnified Taxes (A) by resisting payment thereof, (B) by not paying the same except under protest (which protest must be pursued using reasonable efforts in appropriate administrative and/or judicial proceedings) if protest shall be conducted necessary and proper or (C) if payment shall be made, by the Lessee using reasonable efforts to obtain a refund thereof in the name of such Tax Indemnitee). In appropriate administrative and/or judicial proceedings; provided that in no event shall such Tax Indemnitee be required or the Lessee be permitted to contest any Tax for which the Lessee is obligated to indemnify pursuant to this Section 7.1 unless: (i) the Lessee shall have acknowledged in writing (x) that it is solely responsible for any Indemnified Tax resulting from any contest under its control, (y) its liability to such Tax Indemnitee for all reasonable out of pocket costs, losses and expenses that the Tax Indemnitees may incur in connection with contesting the Indemnified Tax (including, but not limited to, any reasonable legal, accounting and investigatory fees and disbursements), and (z) its liability for an indemnity payment pursuant to this Section 7.1 as a result of such claim if and to the extent such Tax Indemnitee or the Lessee, as the case may be, shall not prevail in the contest of such claim; provided, however, that the Lessee shall not be required to indemnify for such Taxes to the extent the results of the contest clearly demonstrate that the Tax is not an Indemnified Tax unless the Lessee's conduct of the contest materially prejudiced the Tax Indemnitee; (ii) such Tax Indemnitee shall have received the opinion of independent tax counsel selected by the Tax Indemnitee and reasonably satisfactory to the Lessee and furnished at the Lessee's sole expense, opining that a reasonable basis exists for contesting such claim or, in the event of an appeal of an adverse court or administrative agency decision, that as a result of a change in law or fact it is more likely than not that an appellate court or an administrative agency or decision making body with appellate jurisdiction, as the case may be, will reverse or substantially modify the adverse determination; (iii) the Lessee shall have agreed to pay such Tax Indemnitee on demand (and at no after tax costs to the Lessor, the Owner Participant and any Tax Indemnitee) all reasonable costs and expenses that such Tax Indemnitee may incur in connection with contesting such claim (including, without limitation, all reasonable legal and accounting fees and disbursements); (iv) no Lease Default described in Section 14(a), 14(b), 14(c), 14(g) or 14(h) of the Lease or a Lease Event of Default shall have occurred and shall have been continuing, unless the Tax Indemnitee in its sole discretion exercised in good faith allows the Lessee to post a satisfactory bond or other security that does not involve a possibility of a Lien on the Equipment or any portion thereof or on any interest therein, and which bond or other security will be for an amount equal to the sum of (I) the costs of such contest (as reasonably estimated by such Tax Indemnitee in good faith) and the Taxes which may be required to be indemnified and (II) if such Lease Default or Lease Event of Default involves a payment obligation under an Operative Agreement that is currently not paid in full, the unpaid amount of such obligation, plus the present value of the amounts not yet due pursuant to such obligation; (v) such Tax Indemnitee shall have determined that the action to be taken will not result in any risk of sale, forfeiture or loss of, or the creation of any Lien, or the Lessee shall have or otherwise made a provision to protect the interest of such Tax Indemnitee (in a manner satisfactory to such Tax Indemnitee in its sole discretion), on the Equipment or any portion thereof or any interest therein; (vi) the amount of such claims alone, or, if the subject matter thereof shall be of a continuing or recurring nature, when aggregated with substantially identical potential claims with respect to the transactions contemplated by the Operative Agreements shall be at least $25,000; (vii) if such contest shall be conducted in a manner requiring the payment or deposit of the claim, the Lessee shall have paid the amount required (and at no after-tax costs to the Lessor, the Owner Participant or other Tax Indemnitee); and (viii) there is no risk of imposition of criminal liability or penalties. The Lessee shall cooperate with the Tax Indemnitee in good faith with respect to any contest controlled and conducted by the Tax Indemnitee and the Tax Indemnitee in good faith shall consult with the Lessee regarding the conduct of such contest. A Tax Indemnitee shall not be required to pursue an appeal to the U.S. Supreme Court or the highest court in Canada or Mexico. The Tax Indemnitee shall cooperate with respect to any contest controlled and conducted by the Lessee and the Lessee shall consult with the Tax Indemnitee regarding the conduct of such contest. Notwithstanding anything to the contrary contained in this Section 7.1, no Tax Indemnitee shall be required to contest any claim if the subject matter thereof shall be of a continuing or recurring nature and shall have previously been adversely decided to the for any Tax Indemnitee pursuant to the contest provisions of this Section 7.1 unless there shall have been a change in the law (including, without limitation, amendments to statutes or regulations, administrative rulings (excluding private letter rulings and other rulings or materials that may not be relied upon by such Tax Indemnitee as precedent1) or court decisions in the applicable jurisdiction) enacted, promulgated or effective after such claim shall have been so previously decided, and such Tax Indemnitee shall have received an opinion of independent tax counsel selected by the Tax Indemnitee and reasonably satisfactory to the Lessee, furnished at the Lessee's sole expense, to the effect that such change is favorable to the position which such Tax Indemnitee or the Lessee, as the case may be, had asserted in such previous contest and as a result of such change, it is more likely than not that the Tax Indemnitee will prevail or, in the event of an appeal of an adverse court or administrative agency decision, that it is more likely than not that an appellate court or an administrative agency tribunal or decision making body with appellate jurisdiction, as the case may be, will reverse or substantially modify the adverse determination. Notwithstanding anything contained in this Section 7.1, a Tax Indemnitee will not be required to contest the imposition of any Tax and shall be permitted to settle or compromise any claim without the Lessee's consent if such Tax Indemnitee (A) shall waive its right to indemnity under this Section 7.1 with respect to such Tax (and any claim the outcome of which is determined based upon the outcome of such claim) and (B) shall pay to the Lessee any amount previously paid or advanced by the Lessee pursuant to this Section 7.1 with respect to such Tax Claim, less any reasonable costs and expenses of the Tax Indemnitee prior to such payment in respect of such Tax Claim.-Controlled Contest;
Appears in 1 contract
Contests. If a written claim is made by Buyer and Seller will each promptly notify the other in writing upon its receipt of any taxing authority against a Tax Indemnitee for any Taxes with respect to which the Lessee may be required to indemnify against hereunder or if a Tax Indemnitee shall determine that any tax to which the Lessee may have an indemnity obligation hereunder may be payable (a "Tax Claim"), then such Tax Indemnitee shall give the Lessee written notice of such Tax Claim promptly (but in any event within twenty (20) days after its receipt pending or threatened audit or other examination by any Governmental Authority, or any judicial or administrative proceedings, relating to Taxes of the written Company (each, a “Tax Claim Contest”); provided, however, that no failure or its determination, as applicable), and delay in delivering such notice shall furnish Lessee with copies of such Tax Claim and all other writings received from the taxing authority to the extent relating to such claim (but failure to so notify the Lessee shall not relieve the Lessee any party of its obligations hereunder except to the extent that it effectively precludes the ability of the Lessee to conduct a contest of the Tax Claim)such party is actually and materially prejudiced by such failure or delay. The Tax Indemnitee shall not pay If such Tax Claim until at least thirty Contest relates solely to any Pre-Closing Tax Period (30other than a Straddle Period), Seller shall have the right (but not the obligation), to be exercised within ten (10) days after providing the Lessee with such written notice, unless (a) the Tax Indemnitee is required to do so by law or regulation or the failure to pay such Tax Claim could result in a material adverse financial, legal or other consequence to the Tax Indemnitee and (b) in Business Days following its receipt of the written notice described above, the Tax Indemnitee has notified the Lessee of such requirement or such material adverse consequence (such notice however shall not require the disclosure of the Tax Indemnitee's confidential information, as determined in the sole discretion of such Tax IndemnitieeContest by delivering written notice to Buyer, or to assume and thereafter conduct and control the Tax Indemnitee's tax returns, books, or records). If the Lessee shall so request within 30 days after receipt defense of such notice Tax Contest (or with counsel of Seller’s choice) and, for so long as Seller is conducting and controlling such shorter period as is reasonably specified by defense, Buyer shall have the Tax Indemnitee if any contest right, but not the obligation, to participate in such defense with separate counsel of the Tax must be commenced prior to the expiration of 30 days), then such Tax Indemnitee shall in good faith its choosing at Lessee's its sole expense contest such Tax or permit the Lessee to contest such Tax, as such Tax Indemnitee shall electcost and expense; provided, however, that Seller shall not be permitted to consent to the extent entry of any judgment or enter into any settlement of such Tax Contest which may adversely impact Buyer, the Company, or the Tax attributes of the Company without the prior written consent of Buyer (not to be unreasonably withheld, conditioned, or delayed). Unless and until Seller assumes the defense of such Tax Contest, Buyer may defend against such Tax Contest in any manner it may reasonably deem appropriate (with counsel of Buyer’s choice), in which case Seller (i) the contest involves only Taxes constituting property taxesshall cooperate with Buyer in such defense and make available to Buyer and its Representatives all witnesses, sales taxespertinent records, materials, and information in or use taxesunder their possession or control relating thereto as may be reasonably requested by Buyer, and (ii) the contest does not involve any taxes that the Lessee is not required to indemnify the Tax Indemnitee or taxes and other issues relating to a Tax Indemnitee that are unrelated to the transactions contemplated by the Operative Agreements, (iii) the contest can be pursued in the name of the Lessee and independently from any other proceeding involving a Tax Claim of a Tax Indemnitee for which Lessee has not agreed in writing to indemnify such Tax Indemnitee, and (iv) no Equity Insufficiency Circumstance exists, such contest shall be undertaken by the Lessee at the Lessee's sole expense and the after-tax costs of the Lessor, the Owner Participant, or other Tax Indemnitee shall be reimbursed by the Lessee. Notwithstanding the preceding sentence, if (a) such contest would involve any other type of Tax, any taxes that the Lessee is not required to indemnify the Tax Indemnitee or taxes and other issues relating to a Tax Indemnitee which are unrelated to the transactions contemplated by the Operative Agreements, (b) the Tax Indemnitee determines that such contest conducted by the Lessee could have a material adverse impact on such Tax Indemnitee's business or operations or involve risk of the imposition of criminal liability on a Tax Indemnitee, or (c) an Equity Insufficiency Circumstance exists, then such Tax Indemnitee may, in its sole discretion, control such contest (including selecting the forum for such contest, and determining whether any such contest shall be conducted by (i) paying such Tax under protest or (ii) resisting payment of such Tax or (iii) paying such Tax and seeking a refund thereof; provided, however, that at such Tax Indemnitee's option, such contest shall be conducted by the Lessee in the name of such Tax Indemnitee). In no event shall such Tax Indemnitee be required or the Lessee be permitted to contest any Tax for which the Lessee is obligated to indemnify pursuant to this Section 7.1 unless: (i) the Lessee shall have acknowledged in writing (x) that it is solely responsible for any Indemnified Tax resulting from any contest under its control, (y) its liability to such Tax Indemnitee for all reasonable out of pocket costs, losses and expenses that the Tax Indemnitees may incur in connection with contesting the Indemnified Tax (includingright, but not limited tothe obligation, any reasonable legal, accounting to participate in such defense with separate counsel of its choosing at its sole cost and investigatory fees and disbursements), and (z) its liability for an indemnity payment pursuant to this Section 7.1 as a result expense. The conduct of such claim if and to the extent such Tax Indemnitee or the Lessee, as the case may be, shall not prevail in the contest of such claim; provided, however, that the Lessee defense by Buyer shall not be required to indemnify for such Taxes to the extent the results of the contest clearly demonstrate that the Tax is not an Indemnified Tax unless the Lessee's conduct of the contest materially prejudiced the Tax Indemnitee; (ii) such Tax Indemnitee shall have received the opinion of independent tax counsel selected by the Tax Indemnitee and reasonably satisfactory to the Lessee and furnished at the Lessee's sole expense, opining that a reasonable basis exists for contesting such claim or, in the event of an appeal of an adverse court or administrative agency decision, that as a result of a change in law or fact it is more likely than not that an appellate court or an administrative agency or decision making body with appellate jurisdiction, as the case may be, will reverse or substantially modify the adverse determination; (iii) the Lessee shall have agreed to pay such Tax Indemnitee on demand (and at no after tax costs to the Lessor, the Owner Participant and any Tax Indemnitee) all reasonable costs and expenses that such Tax Indemnitee may incur in connection with contesting such claim (including, without limitation, all reasonable legal and accounting fees and disbursements); (iv) no Lease Default described in Section 14(a), 14(b), 14(c), 14(g) or 14(h) of the Lease or a Lease Event of Default shall have occurred and shall have been continuing, unless the Tax Indemnitee in its sole discretion exercised in good faith allows the Lessee to post a satisfactory bond or other security that does not involve a possibility of a Lien on the Equipment or any portion thereof or on any interest therein, and which bond or other security will be for an amount equal to the sum of (I) the costs of such contest (as reasonably estimated by such Tax Indemnitee in good faith) and the Taxes which may be required construed to be indemnified and (II) if such Lease Default or Lease Event a waiver of Default involves a payment obligation under an Operative Agreement that is currently not paid in full, the unpaid amount of such obligation, plus the present value of the amounts not yet due pursuant to such obligation; (v) such Tax Indemnitee shall have determined that the action to be taken will not result in any risk of sale, forfeiture or loss of, or the creation of any Lien, or the Lessee shall have or otherwise made a provision to protect the interest of such Tax Indemnitee (in a manner satisfactory to such Tax Indemnitee in its sole discretion), on the Equipment or any portion thereof or any interest therein; (vi) the amount of such claims alone, or, if the subject matter thereof shall be of a continuing or recurring nature, when aggregated with substantially identical potential claims with respect to the transactions contemplated by the Operative Agreements shall be at least $25,000; (vii) if such contest shall be conducted in a manner requiring the payment or deposit of the claim, the Lessee shall have paid the amount required (and at no after-tax costs to the Lessor, the Owner Participant or other Tax Indemnitee); and (viii) there is no risk of imposition of criminal liability or penalties. The Lessee shall cooperate with the Tax Indemnitee in good faith with respect to any contest controlled and conducted by the Tax Indemnitee and the Tax Indemnitee in good faith shall consult with the Lessee regarding the conduct of such contest. A Tax Indemnitee shall not be required to pursue an appeal to the U.S. Supreme Court or the highest court in Canada or Mexico. The Tax Indemnitee shall cooperate with respect to any contest controlled and conducted by the Lessee and the Lessee shall consult with the Tax Indemnitee regarding the conduct of such contest. Notwithstanding anything to the contrary contained in this Section 7.1, no Tax Indemnitee shall be required to contest any claim if the subject matter thereof shall be of a continuing or recurring nature and shall have previously been adversely decided to the Tax Indemnitee pursuant to the contest provisions of this Section 7.1 unless there shall have been a change in the law (including, without limitation, amendments to statutes or regulations, administrative rulings (excluding private letter rulings and other rulings or materials that may not be relied upon by such Tax Indemnitee as precedent) or court decisions in the applicable jurisdiction) enacted, promulgated or effective after such claim shall have been so previously decided, and such Tax Indemnitee shall have received an opinion of independent tax counsel selected by the Tax Indemnitee and reasonably satisfactory to the Lessee, furnished at the Lessee's sole expense, to the effect that such change is favorable to the position which such Tax Indemnitee or the Lessee, as the case may be, had asserted in such previous contest and as a result of such change, it is more likely than not that the Tax Indemnitee will prevail or, in the event of an appeal of an adverse court or administrative agency decision, that it is more likely than not that an appellate court or an administrative agency tribunal or decision making body with appellate jurisdiction, as the case may be, will reverse or substantially modify the adverse determination. Notwithstanding anything contained in this Section 7.1, a Tax Indemnitee will not be required to contest the imposition of any Tax and shall be permitted to settle or compromise any claim without the Lessee's consent if such Tax Indemnitee (A) shall waive its Buyer’s right to indemnity under this Section 7.1 indemnification with respect to such Tax (and any claim the outcome of which is determined based upon the outcome of such claim) and (B) shall pay to the Lessee any amount previously paid or advanced by the Lessee pursuant to this Section 7.1 with respect to such Tax Claim, less any reasonable costs and expenses of the Tax Indemnitee prior to such payment in respect of such Tax ClaimContest.
Appears in 1 contract
Sources: Membership Interest Purchase Agreement (Andover National 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 claim is made by any taxing authority against a Tax Indemnitee notice of such proceeding) for any Taxes with respect to which the Lessee may be required to indemnify against hereunder or if a Tax Indemnitee shall determine that any tax Imposition as to which the Lessee may have an indemnity obligation hereunder pursuant to this Section 13.5, or if any Tax Indemnitee shall reasonably and in good faith determine that any Imposition to which the Lessee may have an indemnity obligation pursuant to this Section 13.5 may be payable (a "Tax Claim")payable, then such Tax Indemnitee shall give promptly (and in any event, within thirty (30) days) notify the Lessee written notice of such Tax Claim promptly in writing (but in any event within twenty (20) days after its receipt of the written Tax Claim or its determination, as applicable), and shall furnish Lessee with copies of such Tax Claim and all other writings received from the taxing authority to the extent relating to such claim (but provided that failure to so notify the Lessee within thirty (30) days shall not relieve the Lessee of its obligations hereunder alter such Tax Indemnitee's rights under this Section 13.5 except to the extent that it effectively such failure precludes or materially adversely affects the ability of the Lessee to conduct a contest of the Tax Claim). The Tax Indemnitee any Impositions) and shall not pay take any action with respect to such Tax Claim until at least claim, proceeding or Imposition without the written consent of the Lessee (such consent not to be unreasonably withheld or unreasonably delayed) for thirty (30) days after providing the Lessee with receipt of such written noticenotice by the Lessee; provided, unless (a) however, that in the case of any such claim or proceeding, if such Tax Indemnitee is shall be required to do so by law or regulation or to take action prior to the failure to pay end of such thirty (30) day period, such Tax Claim could result Indemnitee shall, in a material adverse financial, legal or other consequence such notice to the Lessee, so inform the Lessee and such Tax Indemnitee and shall not take any action with respect to such claim, proceeding or Imposition without the consent of the Lessee (bsuch consent not to be unreasonably withheld or unreasonably delayed) in for ten (10) days after the written receipt of such notice described above, by the 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 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 Lessee of such requirement is required by law or such material adverse consequence (such notice however shall not require the disclosure of the Tax Indemnitee's confidential information, as determined in the sole discretion of such Tax Indemnitiee, or the Tax Indemnitee's tax returns, books, or records). If the Lessee shall so request within 30 days after receipt of such notice (or such shorter period as is reasonably specified by the Tax Indemnitee if any contest of the Tax must be commenced prior to the expiration of 30 days), then regulation for such Tax Indemnitee shall to commence such contest), to request in good faith writing that such Tax Indemnitee contest the Imposition, at the Lessee's sole expense contest expense. If (x) such Tax or permit the Lessee to contest such Tax, as such Tax Indemnitee shall elect; provided, however, that to the extent (i) the contest involves only Taxes constituting property taxes, sales taxes, or use taxes, (ii) the contest does not involve any taxes that the Lessee is not required to indemnify the Tax Indemnitee or taxes and other issues relating to a Tax Indemnitee that are unrelated to the transactions contemplated by the Operative Agreements, (iii) the contest can be pursued in the name of the Lessee and independently from any other proceeding involving a Tax Claim an Imposition of a such Tax Indemnitee for which the Lessee has not agreed in writing to indemnify such Tax IndemniteeIndemnitee or (y) such Tax Indemnitee so requests, and (iv) no Equity Insufficiency Circumstance exists, such contest then the Lessee shall be undertaken by permitted to control the Lessee at contest of such claim, provided that in the Lessee's sole expense and the after-tax costs case of the Lessor, the Owner Participant, or other Tax Indemnitee shall be reimbursed by the Lessee. Notwithstanding the preceding sentenceany such contest, if (a) such contest would involve any other type of Tax, any taxes that the Lessee is not required to indemnify the Tax Indemnitee or taxes and other issues relating to a Tax Indemnitee which are unrelated to the transactions contemplated by the Operative Agreements, (b) the Tax Indemnitee determines reasonably and in good faith that such contest conducted by the Lessee could have a material adverse impact on such Tax Indemnitee's the business or operations or involve risk of the imposition of criminal liability on a Tax Indemnitee, or (c) an Equity Insufficiency Circumstance exists, then such Tax Indemnitee may(and in the case of clause (x), in its sole discretionwill not have a material adverse impact on Lessee) and provides a written explanation to the Lessee of such determination, such Tax Indemnitee may elect to control such or reassert control of the contest (including selecting the forum for and reasonably pursue resolution of such contest, and determining whether any such contest shall be conducted provided that by (i) paying such Tax under protest or (ii) resisting payment taking control of such Tax or (iii) paying such Tax and seeking a refund thereof; providedthe contest, however, that at such Tax Indemnitee's option, such contest shall be conducted by the Lessee in the name of such Tax Indemnitee). In no event shall such Tax Indemnitee be required or the Lessee be permitted to contest any Tax for which the Lessee is obligated to indemnify pursuant to this Section 7.1 unless: (i) the Lessee shall have acknowledged in writing (x) acknowledges that it is solely responsible for the Imposition ultimately determined to be due by reason of such contest, and provided, further, that in determining the application of clause (x) above, each Tax Indemnitee shall take any Indemnified and all reasonable steps to segregate claims for any Taxes for which the Lessee indemnifies hereunder from Taxes for which the Lessee is not obligated to indemnify hereunder, so that the Lessee can control the contest of the former. In all other claims relating to Impositions requested to be contested by the Lessee, such Tax resulting from Indemnitee shall control the contest of such claim, acting through counsel reasonably acceptable to the Lessee. Notwithstanding anything to the contrary contained herein, in no event shall the Lessee be permitted to pursue or continue any contest under its control(or such Tax Indemnitee be required to pursue or continue any contest) of any Imposition or claim thereof through any action, suit or proceeding (A) if such Tax Indemnitee provides the Lessee with a legal opinion of independent counsel reasonably acceptable to the Lessee that such action, suit or proceeding involves a risk of imposition of criminal liability on any Tax Indemnitee or will involve a material risk of imposition of civil liability on any Tax Indemnitee or the sale, forfeiture or loss of, or the creation of any Lien (other than a Permitted Property Lien) on the Property or any part thereof or any interference with the payment of Rent unless, with respect to civil liability only, the Lessee shall have posted a bond or other security reasonably satisfactory to the relevant Tax Indemnitees in respect of such risk, (yB) its liability if a Lease Default or Lease Event of Default has occurred and is continuing, (C) unless the Lessee shall have agreed to pay and shall pay to such Tax Indemnitee for on demand and on an After Tax Basis all reasonable out of out-of-pocket costs, losses and expenses that the such Tax Indemnitees Indemnitee may incur in connection with contesting the Indemnified Tax (includingsuch Imposition or claim thereof, but not limited to, any including all reasonable legal, accounting and investigatory fees and disbursements)disbursements as well as the Impositions which are the subject of such contest to the extent the contest is unsuccessful, or (D) if such contest shall involve the payment of the Imposition prior to the contest, unless the Lessee shall provide to such Tax Indemnitee an interest-free advance in an amount equal to the Imposition that the Tax Indemnitee is so required to pay on an After Tax Basis and (zE) prior to commencing any contest, the Lessee shall have acknowledged in writing its liability for an indemnity payment pursuant to this Section 7.1 as a result of such claim the Imposition (if and to the extent such that the Tax Indemnitee or the Lessee, as the case may be, shall not prevail in the contest in respect of the Imposition). In addition, no contest of any Imposition shall be required: (A) unless the amount of the potential indemnities (taking into account all similar or logically related claims that have been or are likely to be raised in any audit involving such claim; providedTax Indemnitees for which the Lessee may be liable to pay an indemnity under this Section 13.5(b)) exceeds $50,000 and (B) unless, howeverif requested by such Tax Indemnitee, that the Lessee shall not be required have provided to indemnify for such Taxes to the extent the results of the contest clearly demonstrate that the Tax is not an Indemnified Tax unless the Lessee's conduct of the contest materially prejudiced the Tax Indemnitee; (ii) such Tax Indemnitee shall have received the opinion of independent tax counsel selected by the Tax Indemnitee and reasonably satisfactory to the Lessee and furnished at the Lessee's sole expense, opining an opinion of independent counsel selected by the Lessee and reasonably acceptable to the Tax Indemnitee that a reasonable basis exists for contesting to contest such claim Imposition (or, in the event case of an appeal from an adverse judicial determination, that there is substantial authority for a reversal or favorable modification of such decision of such 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 and controlling the contest of an adverse court Imposition shall consult in good faith with the other party and its counsel with respect to such contest (or administrative agency decisionclaim for refund) but the decisions regarding what actions are to be taken with respect to such contest shall be made by the controlling party in its sole judgment. In addition, that the party controlling the contest shall keep the non-controlling party reasonably informed as to the progress of the contest, and shall provide the noncontrolling party with a result copy of a change in law (or fact it is more likely than not that an appellate court appropriate excerpts from) any reports or an administrative agency or decision making body with appellate jurisdictionclaims issued by the relevant Governmental Authority to the controlling party thereof, as relating to such contest. Each Tax Indemnitee shall, at the case may beLessee's sole expense, will reverse or substantially modify the adverse determination; (iii) supply the Lessee shall have agreed with such information and documents reasonably requested by the Lessee as are necessary or advisable for the Lessee to pay such Tax Indemnitee on demand (and at no after tax costs participate in any action, suit or proceeding to the Lessorextent permitted by this Section 13.5(b) so long as such information or documents are not, in the Owner Participant and any reasonable judgment of the Tax Indemnitee, confidential information or documents. Notwithstanding anything in this Section 13.5(b) all reasonable costs and expenses that such Tax Indemnitee may incur in connection with contesting such claim (includingto the contrary, without limitation, all reasonable legal and accounting fees and disbursements); (iv) so long as no Lease Default described in Section 14(a), 14(b), 14(c), 14(g) or 14(h) of the Lease or a Lease Event of Default shall have occurred and shall have been be continuing, unless the Tax Indemnitee in its sole discretion exercised in good faith allows the Lessee to post a satisfactory bond or other security that does not involve a possibility of a Lien on the Equipment or any portion thereof or on any interest therein, and which bond or other security will be for an amount equal to the sum of (I) the costs of such contest (as reasonably estimated by such Tax Indemnitee in good faith) and the Taxes which may be required to be indemnified and (II) if such Lease Default or Lease Event of Default involves a payment obligation under an Operative Agreement that is currently not paid in full, the unpaid amount of such obligation, plus the present value of the amounts not yet due pursuant to such obligation; (v) such Tax Indemnitee shall have determined that the action to be taken will not result in any risk of sale, forfeiture or loss of, or the creation of any Lien, or the Lessee shall have or otherwise made a provision to protect the interest of such Tax Indemnitee (in a manner satisfactory to such Tax Indemnitee in its sole discretion), on the Equipment or any portion thereof or any interest therein; (vi) the amount of such claims alone, or, if the subject matter thereof shall be of a continuing or recurring nature, when aggregated with substantially identical potential claims with respect to the transactions contemplated by the Operative Agreements shall be at least $25,000; (vii) if such contest shall be conducted in a manner requiring the payment or deposit of the claim, the Lessee shall have paid the amount required (and at no after-tax costs to the Lessor, the Owner Participant or other Tax Indemnitee); and (viii) there is no risk of imposition of criminal liability or penalties. The Lessee shall cooperate with the Tax Indemnitee in good faith with respect to any contest controlled and conducted by the Tax Indemnitee and the Tax Indemnitee in good faith shall consult with the Lessee regarding the conduct of such contest. A Tax Indemnitee shall not be required to pursue an appeal to the U.S. Supreme Court or the highest court in Canada or Mexico. The Tax Indemnitee shall cooperate with respect to any contest controlled and conducted by the Lessee and the Lessee shall consult with the Tax Indemnitee regarding the conduct of such contest. Notwithstanding anything to the contrary contained in this Section 7.1, no Tax Indemnitee shall be required enter into any settlement or other compromise or fail to contest appeal an adverse determination with respect to any claim if for an Imposition for which it is entitled to be indemnified under this Section 13.5 (and with respect to which contest is required under this Section 13.5(b)) without the subject matter thereof prior written consent of the Lessee (which shall not be of a continuing unreasonably withheld or recurring nature and shall have previously been adversely decided to the delayed), unless such Tax Indemnitee waives its right to be indemnified under this Section 13.5 with respect to such claim pursuant to the contest provisions of this Section 7.1 unless there shall have been a change in the law (including, without limitation, amendments to statutes or regulations, administrative rulings (excluding private letter rulings and other rulings or materials that may not be relied upon by such Tax Indemnitee as precedent) or court decisions in the applicable jurisdiction) enacted, promulgated or effective after such claim shall have been so previously decided, and such Tax Indemnitee shall have received an opinion of independent tax counsel selected by the Tax Indemnitee and reasonably satisfactory to the Lessee, furnished at the Lessee's sole expense, to the effect that such change is favorable to the position which such Tax Indemnitee or the Lessee, as the case may be, had asserted in such previous contest and as a result of such change, it is more likely than not that the Tax Indemnitee will prevail or, in the event of an appeal of an adverse court or administrative agency decision, that it is more likely than not that an appellate court or an administrative agency tribunal or decision making body with appellate jurisdiction, as the case may be, will reverse or substantially modify the adverse determinationnext paragraph. Notwithstanding anything contained in this Section 7.1herein to the contrary, a Tax Indemnitee will not be required to contest or continue to contest (and the imposition of Lessee shall not be permitted to contest or continue to contest) a claim with respect to any Tax Imposition and shall be permitted to settle or compromise commence any such claim without the Lessee's consent of Lessee if (i) such Tax Indemnitee (A) shall waive its right to indemnity indemnification under this Section 7.1 13.5 with respect to such Tax claim (and any claim the outcome of which is determined based upon the outcome of such claim) and (B) shall pay to the Lessee any amount previously paid or advanced by the Lessee pursuant to this Section 7.1 with respect to such Tax Claim, less year or any reasonable costs other taxable year the contest of which is materially adversely affected as a result of such waiver) and expenses of the Tax Indemnitee prior returns to such payment in the Lessee all amounts previously advanced to the Indemnitee with respect to the contest of such claim 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 ClaimIndemnitee (unless a change in law or facts has occurred since such prior adverse resolution and the Lessee provides an opinion of independent tax counsel reasonably satisfactory to the Tax Indemnitee 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 claim is made by any taxing authority against a Tax Indemnitee notice of such proceeding) for any Taxes with respect to which the Lessee may be required to indemnify against hereunder or if a Tax Indemnitee shall determine that any tax Imposition as to which the Lessee may have an indemnity obligation hereunder may be payable (a "Tax Claim")pursuant to this Section 13.5, then such or if ------------ any Tax Indemnitee shall give determine that any Imposition to which the Lessee written notice of may have an indemnity obligation pursuant to this Section 13.5 may be payable, such ------------ Tax Claim promptly Indemnitee shall, within thirty (but 30) days, notify the Lessee in any event within twenty writing (20) days after its receipt of the written Tax Claim or its determination, as applicable), and shall furnish Lessee with copies of such Tax Claim and all other writings received from the taxing authority to the extent relating to such claim (but provided that failure to so notify the Lessee within thirty (30) days shall not relieve the Lessee of its obligations hereunder alter such Tax Indemnitee's rights under this Section 13.5 except to the extent that it effectively ------------ such failure precludes the ability of the Lessee to conduct a contest of the Tax Claim). The Tax Indemnitee any indemnified Taxes) and shall not pay take any action with respect to such Tax Claim until at least claim, proceeding or Impositions without the written consent of the Lessee (such consent not to be unreasonably withheld or unreasonably delayed) for thirty (30) days after providing the Lessee with receipt of such written noticenotice by the Lessee; provided, unless (a) however, that in the case of any -------- ------- such claim or proceeding, if such Tax Indemnitee is shall be required to do so by law or regulation or to take action prior to the failure to pay end of such 30-day period, such Tax Claim could result Indemnitee shall in a material adverse financial, legal or other consequence such notice to the Lessee, so inform the Lessee, and such Tax Indemnitee and shall not take any action with respect to such claim, proceeding or Impositions without the consent of the Lessee (bsuch consent not to be unreasonably withheld or unreasonably delayed) in for ten (10) days after the written receipt of such notice described above, by the Lessee unless such Tax Indemnitee shall be required by law or regulation to take action prior to the end of such 10-day period. The Lessee shall be entitled for a period of sixty (60) days from receipt of such notice from such Tax Indemnitee (or such shorter period as such Tax Indemnitee has notified the Lessee of such requirement is required by law or such material adverse consequence (such notice however shall not require the disclosure of the Tax Indemnitee's confidential information, as determined in the sole discretion of such Tax Indemnitiee, or the Tax Indemnitee's tax returns, books, or records). If the Lessee shall so request within 30 days after receipt of such notice (or such shorter period as is reasonably specified by the Tax Indemnitee if any contest of the Tax must be commenced prior to the expiration of 30 days), then regulation for such Tax Indemnitee shall to commence such contest), to request in good faith at Lessee's sole expense contest writing that such Tax or permit Indemnitee contest the Lessee to contest imposition of such Tax, as at the Lessee's expense. If (x) such Tax Indemnitee shall elect; provided, however, that to the extent (i) the contest involves only Taxes constituting property taxes, sales taxes, or use taxes, (ii) the contest does not involve any taxes that the Lessee is not required to indemnify the Tax Indemnitee or taxes and other issues relating to a Tax Indemnitee that are unrelated to the transactions contemplated by the Operative Agreements, (iii) the contest can be pursued in the name of the Lessee and independently from any other proceeding involving a Tax Claim liability of a such Tax Indemnitee for which the Lessee has not agreed in writing to indemnify such Tax IndemniteeIndemnitee or (y) such Tax Indemnitee so requests, and (iv) no Equity Insufficiency Circumstance existsthen the Lessee shall be permitted to control the contest of such claim, provided, that by taking control of the contest, the Lessee acknowledges that it is responsible for the Impositions ultimately determined to be due by reason of such claim. In all other claims requested to be contested by the Lessee, such contest shall be undertaken by the Lessee at the Lessee's sole expense and the after-tax costs of the Lessor, the Owner Participant, or other Tax Indemnitee shall be reimbursed by control the contest of such claim, acting through counsel reasonably acceptable to the Lessee. Notwithstanding the preceding sentence, if (a) such contest would involve any other type of Tax, any taxes that the Lessee is not required to indemnify the Tax Indemnitee or taxes and other issues relating to a Tax Indemnitee which are unrelated to the transactions contemplated by the Operative Agreements, (b) the Tax Indemnitee determines that such contest conducted by the Lessee could have a material adverse impact on such Tax Indemnitee's business or operations or involve risk of the imposition of criminal liability on a Tax Indemnitee, or (c) an Equity Insufficiency Circumstance exists, then such Tax Indemnitee may, in its sole discretion, control such contest (including selecting the forum for such contest, and determining whether any such contest shall be conducted by (i) paying such Tax under protest or (ii) resisting payment of such Tax or (iii) paying such Tax and seeking a refund thereof; provided, however, that at such Tax Indemnitee's option, such contest shall be conducted by the Lessee in the name of such Tax Indemnitee). In no event shall such Tax Indemnitee be required or the Lessee be permitted to contest (or such Tax Indemnitee required to contest) any claim (A) if such Tax Indemnitee provides the Lessee with a legal opinion of counsel reasonably acceptable to the 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 Property Lien) on the Property or any part of any thereof unless the Lessee shall have posted and maintained a bond or other security 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, unless the Lessee shall have posted and maintained a bond or other security 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 Lessee is obligated to indemnify pursuant to this Section 7.1 unless: (i) the Lessee shall have acknowledged in writing (x) that it responsible hereunder is solely responsible for any Indemnified Tax resulting from any contest under its control, (y) its liability to such Tax Indemnitee for all reasonable out of pocket costs, losses and expenses that the Tax Indemnitees may incur reasonably foreseeable in connection with contesting the Indemnified Tax (including, but not limited to, any reasonable legal, accounting and investigatory fees and disbursements), and (z) its liability for an indemnity payment pursuant to this Section 7.1 as a result of such claim if and to the extent such Tax Indemnitee or the Lessee, as the case may be, shall not prevail in the contest of such claim; provided, however, that the Lessee shall not be required to indemnify for such Taxes to the extent the results of the contest clearly demonstrate that the Tax is not an Indemnified Tax (C) unless the Lessee's conduct of the contest materially prejudiced the Tax Indemnitee; (ii) such Tax Indemnitee shall have received the opinion of independent tax counsel selected by the Tax Indemnitee and reasonably satisfactory to the Lessee and furnished at the Lessee's sole expense, opining that a reasonable basis exists for contesting such claim or, in the event of an appeal of an adverse court or administrative agency decision, that as a result of a change in law or fact it is more likely than not that an appellate court or an administrative agency or decision making body with appellate jurisdiction, as the case may be, will reverse or substantially modify the adverse determination; (iii) the Lessee shall have agreed to pay and shall pay, to such Tax Indemnitee on demand (and at no after tax costs to the Lessor, the Owner Participant and any Tax Indemnitee) all reasonable costs out-of-pocket costs, losses and expenses that such Tax Indemnitee may incur in connection with contesting such claim (including, without limitation, Impositions including all reasonable legal legal, accounting and accounting investigatory fees and disbursements); , or (ivD) no Lease Default described in Section 14(a), 14(b), 14(c), 14(g) or 14(h) if such contest shall involve the payment of the Lease or a Lease Event of Default shall have occurred and shall have been continuingTax prior to the contest, unless the Lessee shall provide to such Tax Indemnitee an interest-free advance in its sole discretion exercised in good faith allows the Lessee to post a satisfactory bond or other security that does not involve a possibility of a Lien on the Equipment or any portion thereof or on any interest therein, and which bond or other security will be for an amount equal to the sum of Impositions that the Tax Indemnitee is required to pay (I) with no additional net after-tax costs to such Tax Indemnitee). In addition, for Tax Indemnitee controlled contests and claims contested in the costs name of such Tax Indemnitee in a public forum, no contest shall be required: (as 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 such Tax Indemnitee with respect to any period for which the Lessee may be liable to pay an indemnity under this Section 13.5(b)) exceeds $100,000 and (B) unless, if requested by such Tax -------------- Indemnitee, the Lessee shall have provided to such Tax Indemnitee an opinion of counsel selected by the Lessee and reasonably estimated acceptable to such Tax 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 such Tax Indemnitee and reasonably acceptable to the Lessee) that a reasonable basis exists to contest such claim (or, in good faith) the case of an appeal of an adverse determination, and opinion of such counsel to the Taxes which may effect that there is substantial authority for the position asserted in such appeal). In no event shall an Tax Indemnitee be required to be indemnified and (II) if such Lease Default or Lease Event of Default involves a payment obligation under appeal an Operative Agreement that is currently not paid in fulladverse judicial determination to the United States Supreme Court. In addition, the unpaid amount of such obligation, plus the present value of the amounts not yet due pursuant to such obligation; (v) such an Tax Indemnitee shall have determined that the action not be required to be taken will not result in contest any risk of sale, forfeiture or loss of, or the creation of any Lien, or the Lessee shall have or otherwise made a provision to protect the interest of such Tax Indemnitee (in a manner satisfactory to such Tax Indemnitee claim in its sole discretion), on the Equipment name (or any portion thereof or any interest therein; (vithat of an Affiliate) the amount of such claims alone, or, if the subject matter thereof shall be of a continuing or recurring nature, when aggregated with substantially identical potential claims with respect to the transactions contemplated by the Operative Agreements shall be at least $25,000; (vii) if such contest shall be conducted in a manner requiring the payment or deposit of the claim, the Lessee shall have paid the amount required (and at no after-tax costs to the Lessor, the Owner Participant or other Tax Indemnitee); and (viii) there is no risk of imposition of criminal liability or penalties. The Lessee shall cooperate with the Tax Indemnitee in good faith with respect to any contest controlled and conducted by the Tax Indemnitee and the Tax Indemnitee in good faith shall consult with the Lessee regarding the conduct of such contest. A Tax Indemnitee shall not be required to pursue an appeal to the U.S. Supreme Court or the highest court in Canada or Mexico. The Tax Indemnitee shall cooperate with respect to any contest controlled and conducted by the Lessee and the Lessee shall consult with the Tax Indemnitee regarding the conduct of such contest. Notwithstanding anything to the contrary contained in this Section 7.1, no Tax Indemnitee shall be required to contest any claim if the subject matter thereof shall be of a continuing or recurring nature and shall have previously been decided adversely decided to the Tax Indemnitee by a court of competent jurisdiction pursuant to the contest provisions of this Section 7.1 13.5(b), unless there shall have been a -------------- change in the law (including, without limitation, amendments to statutes or regulations, administrative rulings (excluding private letter rulings interpretation thereof) and other rulings or materials that may not be relied upon by such Tax Indemnitee as precedent) or court decisions in the applicable jurisdiction) enacted, promulgated or effective after such claim shall have been so previously decided, and such Tax Indemnitee shall have received received, at the Lessee's expense, an opinion of independent tax counsel selected by the Lessee and reasonably acceptable to the Tax Indemnitee and reasonably satisfactory to the Lessee, furnished at the Lessee's sole expense, to the effect stating that such change is favorable to the position which such Tax Indemnitee or the Lessee, as the case may be, had asserted in such previous contest and as a result of such changechange in law (or interpretation thereof), it is more likely than not that the Tax Indemnitee will prevail orin 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 but the decisions regarding what actions to be taken shall be made by the controlling party in its sole judgement. 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 event of an contest thereof. Each Tax Indemnitee shall, at the Lessee's expense, supply the Lessee with such information and documents reasonably requested by the Lessee as are necessary or advisable for the Lessee to participate in any action, suit or proceeding to the extent permitted by this Section 13.5(b). Notwithstanding -------------- anything in this Section 13.5(b) to the contrary, no Tax Indemnitee shall enter -------------- into any settlement or other compromise or fail to appeal of an adverse court or administrative agency decisionruling with respect to any claim which is entitled to be indemnified under this Section 13.5 ------------ (and with respect to which contest is required under this Section 13.5(b)) -------------- without the prior written consent of the Lessee, that it is more likely than unless such Tax Indemnitee waives its right to be indemnified under this Section 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 that an appellate court or an administrative agency tribunal or decision making body with appellate jurisdiction, as the case may be, will reverse or substantially modify the adverse determinationbe unreasonably withheld. Notwithstanding anything contained in this Section 7.1herein to the contrary, a Tax Indemnitee will not be required to contest (and the Lessee shall not be permitted to contest) a claim with respect to the imposition of any Tax and shall be permitted to settle or compromise any claim without the Lessee's consent if such Tax Indemnitee (A) shall waive its right to indemnity indemnification under this Section 7.1 13.5 ------------ with respect to such Tax claim (and any claim the outcome of which is determined based upon the outcome of such claim) and (B) shall pay to the Lessee any amount previously paid or advanced by the Lessee pursuant to this Section 7.1 with respect to such Tax Claim, less year or any reasonable costs and expenses other taxable year the contest of the Tax Indemnitee prior to such payment in respect which is materially adversely affected as a result of such Tax Claimwaiver).
Appears in 1 contract
Sources: Participation Agreement (Palm Inc)
Contests. If any claim shall be made against any Indemnitee or if any proceeding shall be commenced against any Indemnitee (including a written claim is made by any taxing authority against a Tax Indemnitee notice of such proceeding) for any Taxes with respect Imposition as to which the Lessee reasonably may be required have an indemnity obligation pursuant to indemnify against hereunder this Section 11.2, or if a Tax any Indemnitee reasonably shall determine that any tax to Imposition for which the Lessee may have an indemnity obligation hereunder pursuant to this Section 11.2 may be payable (a "Tax Claim")payable, then such Tax LSI Logic Corporation Lease B Indemnitee shall give the Lessee written notice of such Tax Claim promptly (but and in any event event, within twenty 30 days) notify Lessee in writing (20) days after its receipt of the written Tax Claim or its determination, as applicable), and shall furnish Lessee with copies of such Tax Claim and all other writings received from the taxing authority to the extent relating to such claim (but provided that failure to so notify the Lessee within 30 days shall not relieve the Lessee of its obligations hereunder alter such Indemnitee's rights under this Section 11.2, except to the extent that it effectively such failure precludes or materially adversely affects the ability of the Lessee to conduct a contest of any indemnified Imposition, in which case Lessee shall have no indemnification obligation hereunder to the Tax Claim). The Tax 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 Lessee (such consent not to be unreasonably withheld or unreasonably delayed) for 30 days after the receipt of such notice by Lessee; provided, however, that in the case of any such claim or proceeding, if such Indemnitee shall not pay such Tax Claim until at least thirty (30) days after providing the Lessee with such written notice, unless (a) the Tax Indemnitee is be required to do so by law or regulation or the failure to pay such Tax Claim could result in a material adverse financial, legal or other consequence take action prior to the Tax Indemnitee and (b) in the written notice described above, the Tax Indemnitee has notified the Lessee end of such requirement 30-day period, such Indemnitee shall in such notice to Lessee, so inform Lessee, and such Indemnitee shall not take any action with respect to such claim, proceeding or such material adverse consequence Imposition without the consent of Lessee (such notice however shall consent not require the disclosure of the Tax Indemnitee's confidential information, as determined in the sole discretion of such Tax Indemnitiee, to be unreasonably withheld or the Tax Indemnitee's tax returns, books, or records). If the Lessee shall so request within 30 unreasonably delayed) for 10 days after the receipt of such notice by Lessee, unless the Indemnitee shall be required by law or regulation to take action prior to the end of such 10-day period. Lessee shall be entitled for a period of 30 days from receipt of such notice from the Indemnitee (or such shorter period as the Indemnitee has notified Lessee is reasonably specified required by law or regulation for the Tax Indemnitee if any contest of the Tax must be commenced prior to the expiration of 30 dayscommence such contest), then to request in writing that such Tax Indemnitee shall contest in good faith of such Imposition, at Lessee's sole expense contest expense. If (x) such Tax or permit the Lessee to contest such Tax, as such Tax Indemnitee shall elect; provided, however, that to the extent (i) the contest involves only Taxes constituting property taxes, sales taxes, or use taxes, (ii) the contest does not involve any taxes that the Lessee is not required to indemnify the Tax Indemnitee or taxes and other issues relating to a Tax Indemnitee that are unrelated to the transactions contemplated by the Operative Agreements, (iii) the contest can be pursued in the name of the Lessee and independently from any other proceeding involving a Tax Claim of a Tax Indemnitee an Imposition for which Lessee has not agreed in writing to indemnify such Tax Indemnitee, and (iv) no Equity Insufficiency Circumstance exists, such contest shall be undertaken by the Lessee at the Lessee's sole expense and the after-tax costs of the Lessor, the Owner Participant, or other Tax Indemnitee shall be reimbursed by the Lessee. Notwithstanding the preceding sentence, if (ay) such contest would involve must be pursued in the name of the Indemnitee, but can be pursued independently from any other type of Tax, any taxes that the proceeding involving an Imposition for which Lessee is has not required agreed to indemnify the Tax such Indemnitee or taxes and other issues relating (z) the Indemnitee so requests, then Lessee shall be permitted to control the contest of such claim, provided that in the case of a Tax Indemnitee which are unrelated to the transactions contemplated by the Operative Agreementscontest described in any of clause (x), (by) or (z) if the Tax Indemnitee determines in good faith that such contest conducted by the Lessee reasonably could have a material adverse impact on such Tax Indemnitee's the business or operations or involve risk of the imposition Indemnitee and provides a written explanation to Lessee of criminal liability on a Tax Indemniteesuch determination, the Indemnitee may elect to control or (c) an Equity Insufficiency Circumstance exists, then such Tax Indemnitee may, in its sole discretion, reassert control such contest (including selecting of the forum for such contest, and determining whether any such contest shall provided, that by taking control of the contest, Lessee acknowledges that it is responsible for the Imposition ultimately determined to be conducted due by (i) paying such Tax under protest or (ii) resisting payment reason of such Tax or (iii) paying such Tax and seeking a refund thereofclaim, and; provided, howeverfurther, that at in determining the application of clauses (x) and (y), each Indemnitee shall take any and all reasonable steps to segregate claims for any Impositions for which Lessee indemnifies hereunder from Impositions for which Lessee is not obligated to indemnify hereunder, so that Lessee can control the contest of the former. In all other claims requested to be contested by Lessee, the Indemnitee shall control the contest of such Tax claim, acting through counsel reasonably acceptable to Lessee. In any contest controlled by an Indemnitee's option, the Indemnitee shall conduct such contest shall be conducted by the Lessee in the name of such Tax Indemnitee)good faith. In no event shall such Tax Indemnitee be required or the Lessee be permitted to contest any Tax for which the Lessee is obligated to indemnify pursuant to this Section 7.1 unless: (i) the Lessee shall have acknowledged in writing (x) that it is solely responsible for any Indemnified Tax resulting from any contest under its control, (y) its liability to such Tax Indemnitee for all reasonable out of pocket costs, losses and expenses that the Tax Indemnitees may incur in connection with contesting the Indemnified Tax (including, but not limited to, any reasonable legal, accounting and investigatory fees and disbursements), and (z) its liability for an indemnity payment pursuant to this Section 7.1 as a result of such claim if and to the extent such Tax Indemnitee or the Lessee, as the case may be, shall not prevail in the contest of such claim; provided, however, that the Lessee shall not be Indemnitee required to indemnify for contest) any claim (A) if such Taxes to the extent the results of the contest clearly demonstrate that the Tax is not an Indemnified Tax unless the Lessee's conduct of the contest materially prejudiced the Tax Indemnitee; (ii) such Tax Indemnitee shall have received the provides Lessee with a legal opinion of independent tax counsel selected by the Tax Indemnitee and reasonably satisfactory to the Lessee and furnished at the Lessee's sole expense, opining that a reasonable basis exists for contesting such claim or, in the event of an appeal of an adverse court or administrative agency decision, that as a result of a change in law or fact it is more likely than not that an appellate court or an administrative agency or decision making body with appellate jurisdiction, as the case may be, will reverse or substantially modify the adverse determination; (iii) the Lessee shall have agreed to pay such Tax Indemnitee on demand (and at no after tax costs to the Lessor, the Owner Participant and any Tax Indemnitee) all reasonable costs and expenses that such Tax Indemnitee may incur in connection with contesting such claim (includingaction, without limitation, all reasonable legal and accounting fees and disbursements); (iv) no Lease Default described in Section 14(a), 14(b), 14(c), 14(g) suit or 14(h) proceeding involves a material risk of imposition of criminal liability or will involve a material risk of the Lease or a Lease Event of Default shall have occurred and shall have been continuing, unless the Tax Indemnitee in its sole discretion exercised in good faith allows the Lessee to post a satisfactory bond or other security that does not involve a possibility of a Lien on the Equipment or any portion thereof or on any interest therein, and which bond or other security will be for an amount equal to the sum of (I) the costs of such contest (as reasonably estimated by such Tax Indemnitee in good faith) and the Taxes which may be required to be indemnified and (II) if such Lease Default or Lease Event of Default involves a payment obligation under an Operative Agreement that is currently not paid in full, the unpaid amount of such obligation, plus the present value of the amounts not yet due pursuant to such obligation; (v) such Tax Indemnitee shall have determined that the action to be taken will not result in any risk of sale, forfeiture or loss of, or the creation of any Lien (other than a Permitted Lien, ) on any Item or the Items of Equipment or any part thereof or any other Lessee Collateral unless Lessee shall have posted and maintained a bond or otherwise made other security reasonably satisfactory to the relevant Indemnitee in respect to such risk, (B) if a provision Lease Event of Default has occurred and is continuing, unless LSI Logic Corporation Lease B Lessee shall have posted and maintained a bond or other security reasonably satisfactory to protect the interest relevant Indemnitee in respect of the Impositions subject to such claim and any and all expenses for which Lessee is responsible hereunder reasonably foreseeable in connection with the contest of such Tax Indemnitee claim, (in a manner satisfactory C) unless Lessee shall have agreed to pay and shall pay to such Tax Indemnitee on demand all reasonable out-of-pocket costs, losses and expenses that such Indemnitee may incur in its sole discretion)connection with contesting such Imposition, on the Equipment including all reasonable legal, accounting and investigatory fees and disbursements, or any portion thereof or any interest therein; (vi) the amount of such claims alone, or, if the subject matter thereof shall be of a continuing or recurring nature, when aggregated with substantially identical potential claims with respect to the transactions contemplated by the Operative Agreements shall be at least $25,000; (viiD) if such contest shall be conducted involve the payment of the Impositions prior to the contest, unless Lessee shall provide to the Indemnitee an interest-free advance in an amount equal to the Imposition that the Indemnitee is required to pay (with no additional net after-tax costs (including Taxes) to such Indemnitee). In addition, for Indemnitee-controlled contests and claims contested in the name of the Indemnitee in a manner requiring public forum, no contest shall be required: (A) unless the payment or deposit amount of the claimpotential indemnity (taking into account all similar or logically related claims that have been or could be raised in any audit involving such Indemnitee for which Lessee may be liable to pay an indemnity under this Section 11.2) exceeds $75,000 and (B) unless, if requested by the Indemnitee, the Lessee shall have paid the amount required (and at no after-tax costs provided to the Lessor, Indemnitee an opinion of counsel selected by Lessee that a reasonable basis exists to contest such claim. In no event shall an Indemnitee be required to appeal an adverse judicial determination to the Owner Participant or other Tax Indemnitee); and (viii) there is no risk of imposition of criminal liability or penaltiesUnited States Supreme Court. The Lessee party conducting the contest shall cooperate with the Tax Indemnitee consult in good faith with the other party and its counsel with respect to the contest of such claim for Impositions (or claim for refund) but the decisions regarding what actions to be taken shall be made by the controlling party in its sole judgement; provided, however, that if the Indemnitee is the controlling party, no settlement offer with respect to such 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 Lessee recommends the acceptance of a settlement offer made by the relevant Governmental Agency and such Indemnitee rejects such settlement offer then the amount for which Lessee will be required to indemnify such 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. 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 agent or taxing authority to the controlling party thereof, in connection with such claim or the contest thereof. Each Indemnitee shall supply Lessee with such information and documents reasonably requested by Lessee as is necessary or advisable for Lessee to participate in any action, suit or proceeding to the extent permitted by this Section 11.2(b), and Lessee shall promptly reimburse such Indemnitee for the reasonable out-of-pocket expenses of supplying such information and documents. 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 11.2 (and with respect to which contest controlled and conducted by is required under this Section 11.2(b)) without the Tax prior written consent of Lessee (such consent not to be unreasonably withheld), unless such Indemnitee and waives its right to be indemnified under this Section 11.2 with respect to such claim. LSI Logic Corporation Lease B Notwithstanding anything contained herein to the Tax contrary, an Indemnitee in good faith shall consult with the Lessee regarding the conduct of such contest. A Tax Indemnitee shall will not be required to pursue an appeal contest (and Lessee shall not be permitted to the U.S. Supreme Court or the highest court in Canada or Mexico. The Tax Indemnitee shall cooperate contest) a claim with respect to any Imposition if (i) such Indemnitee shall waive its right to indemnification under this Section 11.2 with respect to such claim (and any claim with respect to such year or any other taxable year, the contest controlled and conducted by the Lessee and the Lessee shall consult with the Tax Indemnitee regarding the conduct of which is materially adversely affected as a result of such contest. Notwithstanding anything to waiver) or (ii) such Imposition is the contrary contained in this Section 7.1, no Tax Indemnitee shall be required to contest any sole result of a claim if the subject matter thereof shall be of a continuing or recurring nature and shall have consistent nature, which claim has previously been adversely decided to resolved against the Tax relevant Indemnitee pursuant to the contest provisions of this Section 7.1 (unless there shall have been a change in the law (including, without limitation, amendments to statutes or regulations, administrative rulings (excluding private letter rulings facts has occurred since such prior adverse resolution and other rulings or materials that may not be relied upon by such Tax Indemnitee as precedent) or court decisions in the applicable jurisdiction) enacted, promulgated or effective after such claim shall have been so previously decided, and such Tax Indemnitee shall have received Lessee provides an opinion of independent tax counsel selected by the Tax Indemnitee and reasonably satisfactory to the Lessee, furnished at the Lessee's sole expense, to the effect that such change is favorable to the position which such Tax Indemnitee or the Lessee, as the case may be, had asserted in such previous contest and as a result of such change, it is more likely than not that the Tax Indemnitee will prevail or, in the event of an appeal of an adverse court or administrative agency decision, that it is more likely than not that an appellate court such change in law or an administrative agency tribunal or decision making body with appellate jurisdiction, as the case may be, facts will reverse or substantially modify the adverse determination. Notwithstanding anything contained result in this Section 7.1, a Tax Indemnitee will not be required to contest the imposition of any Tax and shall be permitted to settle or compromise any claim without the Lessee's consent if such Tax Indemnitee (A) shall waive its right to indemnity under this Section 7.1 with respect to such Tax (and any claim the outcome of which is determined based upon the outcome of such claim) and (B) shall pay to the Lessee any amount previously paid or advanced by the Lessee pursuant to this Section 7.1 with respect to such Tax Claim, less any reasonable costs and expenses favorable resolution of the Tax Indemnitee prior to such payment in respect of such Tax Claimclaim at issue).
Appears in 1 contract
Contests. If a written claim is made (i) After the Closing Date, Seller and Buyer each shall notify the other party in writing within ten (10) days of the commencement of any Tax audit or administrative or judicial proceeding affecting the Taxes of any of Panhandle or the Panhandle Subsidiaries that, if determined adversely to the taxpayer (the "Tax Indemnified Party") or after the lapse of time would be grounds for indemnification under this Section 5.7 by any taxing authority against a the other party (the "Tax Indemnitee for any Taxes with respect to which the Lessee may be required to indemnify against hereunder or if a Tax Indemnitee shall determine that any tax to which the Lessee may have an indemnity obligation hereunder may be payable (Indemnifying Party" and a "Tax Claim"), then such . Such notice shall contain factual information describing any asserted Tax Indemnitee shall give the Lessee written notice of such Tax Claim promptly (but liability in any event within twenty (20) days after its receipt of the written Tax Claim or its determination, as applicable), reasonable detail and shall furnish Lessee with include copies of such Tax Claim and all any notice or other writings document received from the taxing any Tax authority in respect of any such asserted Tax liability. Failure to the extent relating to give such claim (but failure to so notify the Lessee notification shall not relieve affect the Lessee of its obligations hereunder indemnification provided in this Section 5.7 except to the extent that it effectively precludes the ability of the Lessee to conduct a contest of the Tax ClaimIndemnifying Party shall have been prejudiced as a result of such failure (except that the Tax Indemnifying Party shall not be liable for any expenses incurred during the period in which the Tax Indemnified Party failed to give such notice). The Thereafter, the Tax Indemnitee Indemnified Party shall not pay such deliver to the Tax Claim until at least thirty Indemnifying Party, as promptly as possible but in no event later than ten (3010) days after providing the Lessee with such written notice, unless (a) the Tax Indemnitee is required to do so by law or regulation or the failure to pay such Tax Claim could result in a material adverse financialIndemnified Party's receipt thereof, legal or other consequence to the Tax Indemnitee copies of all relevant notices and documents (bincluding court papers) in the written notice described above, the Tax Indemnitee has notified the Lessee of such requirement or such material adverse consequence (such notice however shall not require the disclosure of the Tax Indemnitee's confidential information, as determined in the sole discretion of such Tax Indemnitiee, or the Tax Indemnitee's tax returns, books, or records). If the Lessee shall so request within 30 days after receipt of such notice (or such shorter period as is reasonably specified received by the Tax Indemnitee if Indemnified Party.
(ii) In the case of an audit or administrative or judicial proceeding involving any contest asserted liability for Taxes relating to any Taxable years or periods ending on or before the Closing Date, Seller shall have the right, at its expense, to control the conduct of the Tax must be commenced prior to the expiration of 30 days), then such Tax Indemnitee shall in good faith at Lessee's sole expense contest such Tax audit or permit the Lessee to contest such Tax, as such Tax Indemnitee shall electproceeding; provided, however, that to the extent (i) the contest involves only Taxes constituting property taxes, sales taxes, or use taxes, (ii) the contest if Seller does not involve timely take control of such audit or proceeding, Buyer may, at its expense, control the conduct of the audit or proceeding. In the case of an audit or administrative or judicial proceeding involving any taxes that the Lessee is not required to indemnify the Tax Indemnitee or taxes and other issues asserted liability for Taxes relating to a Tax Indemnitee that are unrelated any Straddle Period, Buyer shall have the right, at its expense, to control the transactions contemplated by the Operative Agreements, (iii) the contest can be pursued in the name of the Lessee and independently from any other proceeding involving a Tax Claim of a Tax Indemnitee for which Lessee has not agreed in writing to indemnify such Tax Indemnitee, and (iv) no Equity Insufficiency Circumstance exists, such contest shall be undertaken by the Lessee at the Lessee's sole expense and the after-tax costs of the Lessor, the Owner Participant, or other Tax Indemnitee shall be reimbursed by the Lessee. Notwithstanding the preceding sentence, if (a) such contest would involve any other type of Tax, any taxes that the Lessee is not required to indemnify the Tax Indemnitee or taxes and other issues relating to a Tax Indemnitee which are unrelated to the transactions contemplated by the Operative Agreements, (b) the Tax Indemnitee determines that such contest conducted by the Lessee could have a material adverse impact on such Tax Indemnitee's business or operations or involve risk of the imposition of criminal liability on a Tax Indemnitee, or (c) an Equity Insufficiency Circumstance exists, then such Tax Indemnitee may, in its sole discretion, control such contest (including selecting the forum for such contest, and determining whether any such contest shall be conducted by (i) paying such Tax under protest or (ii) resisting payment conduct of such Tax audit or (iii) paying such Tax and seeking a refund thereofproceeding; provided, however, that at such Tax Indemnitee's option, such contest (A) Buyer shall be conducted by the Lessee in the name of such Tax Indemnitee). In no event shall such Tax Indemnitee be required or the Lessee be permitted to contest any Tax for which the Lessee is obligated to indemnify pursuant to this Section 7.1 unless: (i) the Lessee shall have acknowledged in writing (x) that it is solely responsible for any Indemnified Tax resulting from any contest under its control, (y) its liability to such Tax Indemnitee for all reasonable out of pocket costs, losses and expenses that the Tax Indemnitees may incur in connection with contesting the Indemnified Tax (including, but not limited to, any reasonable legal, accounting and investigatory fees and disbursements), and (z) its liability for an indemnity payment pursuant to this Section 7.1 as a result of such claim if and to the extent such Tax Indemnitee or the Lessee, as the case may be, shall not prevail in the contest of such claim; provided, however, that the Lessee shall not be required to indemnify for such Taxes to the extent the results of the contest clearly demonstrate that the Tax is not an Indemnified Tax unless the Lessee's conduct of the contest materially prejudiced the Tax Indemnitee; (ii) such Tax Indemnitee shall have received the opinion of independent tax counsel selected by the Tax Indemnitee and keep Seller reasonably satisfactory to the Lessee and furnished at the Lessee's sole expense, opining that a reasonable basis exists for contesting such claim or, in the event of an appeal of an adverse court or administrative agency decision, that as a result of a change in law or fact it is more likely than not that an appellate court or an administrative agency or decision making body with appellate jurisdiction, as the case may be, will reverse or substantially modify the adverse determination; (iii) the Lessee shall have agreed to pay such Tax Indemnitee on demand (and at no after tax costs to the Lessor, the Owner Participant and any Tax Indemnitee) all reasonable costs and expenses that such Tax Indemnitee may incur in connection with contesting such claim (including, without limitation, all reasonable legal and accounting fees and disbursements); (iv) no Lease Default described in Section 14(a), 14(b), 14(c), 14(g) or 14(h) of the Lease or a Lease Event of Default shall have occurred and shall have been continuing, unless the Tax Indemnitee in its sole discretion exercised in good faith allows the Lessee to post a satisfactory bond or other security that does not involve a possibility of a Lien on the Equipment or any portion thereof or on any interest therein, and which bond or other security will be for an amount equal to the sum of (I) the costs of such contest (as reasonably estimated by such Tax Indemnitee in good faith) and the Taxes which may be required to be indemnified and (II) if such Lease Default or Lease Event of Default involves a payment obligation under an Operative Agreement that is currently not paid in full, the unpaid amount of such obligation, plus the present value of the amounts not yet due pursuant to such obligation; (v) such Tax Indemnitee shall have determined that the action to be taken will not result in any risk of sale, forfeiture or loss of, or the creation of any Lien, or the Lessee shall have or otherwise made a provision to protect the interest of such Tax Indemnitee (in a manner satisfactory to such Tax Indemnitee in its sole discretion), on the Equipment or any portion thereof or any interest therein; (vi) the amount of such claims alone, or, if the subject matter thereof shall be of a continuing or recurring nature, when aggregated with substantially identical potential claims informed with respect to the transactions contemplated by the Operative Agreements shall be at least $25,000; status of such audit or proceeding and provide Seller with copies of all written correspondence with respect to such audit or proceeding in a timely manner and (viiB) if such contest shall audit or proceeding would be conducted reasonably expected to result in a manner requiring material increase in Tax liability of Panhandle or the payment or deposit of the claim, the Lessee shall have paid the amount required (and at no after-tax costs to the Lessor, the Owner Participant or other Tax Indemnitee); and (viii) there is no risk of imposition of criminal liability or penalties. The Lessee shall cooperate with the Tax Indemnitee Panhandle Subsidiaries for which Seller would be liable under this Section 5.7 Seller may participate in good faith with respect to any contest controlled and conducted by the Tax Indemnitee and the Tax Indemnitee in good faith shall consult with the Lessee regarding the conduct of such contest. A Tax Indemnitee shall not be required to pursue audit or proceeding at its own expense.
(iii) In the case of an appeal to the U.S. Supreme Court audit or the highest court in Canada administrative or Mexico. The Tax Indemnitee shall cooperate with respect judicial proceeding involving any asserted liability for Taxes relating to any contest controlled and conducted by Taxable years or periods beginning after the Lessee and Closing Date, Buyer shall have the Lessee shall consult with the Tax Indemnitee regarding right, at its expense, to control the conduct of such contest. Notwithstanding anything to audit or proceeding.
(iv) Buyer and Seller shall reasonably cooperate in connection with any Tax Claim, and such cooperation shall include the contrary contained in this Section 7.1, no Tax Indemnitee shall be required to contest any claim if the subject matter thereof shall be of a continuing or recurring nature and shall have previously been adversely decided provision to the Tax Indemnitee pursuant to the contest provisions Indemnifying Party of this Section 7.1 unless there shall have been a change in the law (including, without limitation, amendments to statutes or regulations, administrative rulings (excluding private letter rulings records and other rulings or materials that may not be relied upon by such Tax Indemnitee as precedent) or court decisions in the applicable jurisdiction) enacted, promulgated or effective after such claim shall have been so previously decided, and such Tax Indemnitee shall have received an opinion of independent tax counsel selected by the Tax Indemnitee and information which are reasonably satisfactory to the Lessee, furnished at the Lessee's sole expense, to the effect that such change is favorable to the position which such Tax Indemnitee or the Lessee, as the case may be, had asserted in such previous contest and as a result of such change, it is more likely than not that the Tax Indemnitee will prevail or, in the event of an appeal of an adverse court or administrative agency decision, that it is more likely than not that an appellate court or an administrative agency tribunal or decision making body with appellate jurisdiction, as the case may be, will reverse or substantially modify the adverse determination. Notwithstanding anything contained in this Section 7.1, a Tax Indemnitee will not be required to contest the imposition of any Tax and shall be permitted to settle or compromise any claim without the Lessee's consent if such Tax Indemnitee (A) shall waive its right to indemnity under this Section 7.1 with respect relevant to such Tax (Claim and making employees available on a mutually convenient basis to provide additional information and explanation of any claim the outcome of which is determined based upon the outcome of such claim) and (B) shall pay to the Lessee any amount previously paid or advanced by the Lessee pursuant to this Section 7.1 with respect to such Tax Claim, less any reasonable costs and expenses of the Tax Indemnitee prior to such payment in respect of such Tax Claimmaterial provided hereunder.
Appears in 1 contract
Sources: Stock Purchase Agreement (Panhandle Eastern Pipe Line 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 written claim is made by any taxing authority against a Tax Indemnitee notice of such proceeding) for any Taxes with respect to which the Lessee may be required to indemnify against hereunder or if a Tax Indemnitee shall determine that any tax Imposition as to which the Lessee may have an indemnity obligation hereunder pursuant to this Section 13.5, or if any Tax Indemnitee shall determine that any Imposition to which the Lessee may have an indemnity obligation pursuant to this Section 13.5 may be payable (a "Tax Claim")payable, then such Tax Indemnitee shall give promptly (and in any event, within thirty (30) days) notify the Lessee written notice of such Tax Claim promptly in writing (but in any event within twenty (20) days after its receipt of the written Tax Claim or its determination, as applicable), and shall furnish Lessee with copies of such Tax Claim and all other writings received from the taxing authority to the extent relating to such claim (but provided that failure to so notify the Lessee within thirty (30) days shall not relieve the Lessee of its obligations hereunder alter such Tax Indemnitee's rights under this Section 13.5 except to the extent that it effectively such failure precludes or materially adversely affects the ability of the Lessee to conduct a contest of the Tax Claim). The Tax Indemnitee any Impositions) and shall not pay take any action with respect to such Tax Claim until at least claim, proceeding or Imposition without the written consent of the Lessee (such consent not to be unreasonably withheld or unreasonably delayed) for thirty (30) days after providing the Lessee with receipt of such written noticenotice by the Lessee; provided, unless (a) however, that in the case of any such claim or proceeding, if such Tax Indemnitee is shall be required to do so by law or regulation or to take action prior to the failure to pay end of such thirty (30) day period, such Tax Claim could result Indemnitee shall, in a material adverse financial, legal or other consequence such notice to the Lessee, so inform the Lessee and such Tax Indemnitee and shall not take any action with respect to such claim, proceeding or Imposition without the consent of the Lessee (bsuch consent not to be unreasonably withheld or unreasonably delayed) in for ten (10) days ▇▇▇ Research Corporation Participation Agreement after the written receipt of such notice described above, by the 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 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 Lessee of such requirement is required by law or such material adverse consequence (such notice however shall not require the disclosure of the Tax Indemnitee's confidential information, as determined in the sole discretion of such Tax Indemnitiee, or the Tax Indemnitee's tax returns, books, or records). If the Lessee shall so request within 30 days after receipt of such notice (or such shorter period as is reasonably specified by the Tax Indemnitee if any contest of the Tax must be commenced prior to the expiration of 30 days), then regulation for such Tax Indemnitee shall to commence such contest), to request in good faith writing that such Tax Indemnitee contest the Imposition, at the Lessee's sole expense contest expense. If (x) such Tax or permit the Lessee to contest such Tax, as such Tax Indemnitee shall elect; provided, however, that to the extent (i) the contest involves only Taxes constituting property taxes, sales taxes, or use taxes, (ii) the contest does not involve any taxes that the Lessee is not required to indemnify the Tax Indemnitee or taxes and other issues relating to a Tax Indemnitee that are unrelated to the transactions contemplated by the Operative Agreements, (iii) the contest can be pursued in the name of the Lessee and independently from any other proceeding involving a Tax Claim an Imposition of a such Tax Indemnitee for which the Lessee has not agreed in writing to indemnify such Tax Indemnitee, and (iv) no Equity Insufficiency Circumstance exists, such contest shall be undertaken by the Lessee at the Lessee's sole expense and the after-tax costs of the Lessor, the Owner Participant, or other Tax Indemnitee shall be reimbursed by the Lessee. Notwithstanding the preceding sentence, if (ay) such contest would involve must be pursued in the name of such Tax Indemnitee, but can be pursued independently from any other type of Tax, any taxes that proceeding involving an Imposition on such Tax Indemnitee for which the Lessee is has not required agreed to indemnify the such Tax Indemnitee or taxes and other issues relating to a (z) such Tax Indemnitee which are unrelated so requests, then the Lessee shall be permitted to control the transactions contemplated by contest of such claim, provided that in the Operative Agreementscase of any such contest, (b) the if such Tax Indemnitee determines reasonably and in good faith that such contest conducted by the Lessee could have a material adverse impact on such Tax Indemnitee's the business or operations or involve risk of the imposition of criminal liability on a Tax Indemnitee, or (c) an Equity Insufficiency Circumstance exists, then such Tax Indemnitee mayand provides a written explanation to the Lessee of such determination, in its sole discretion, such Tax Indemnitee may elect to control such contest (including selecting or reassert control of the forum for such contest, and determining whether any such contest shall be conducted provided that by (i) paying such Tax under protest or (ii) resisting payment taking control of such Tax or (iii) paying such Tax and seeking a refund thereof; providedthe contest, however, that at such Tax Indemnitee's option, such contest shall be conducted by the Lessee in the name of such Tax Indemnitee). In no event shall such Tax Indemnitee be required or the Lessee be permitted to contest any Tax for which the Lessee is obligated to indemnify pursuant to this Section 7.1 unless: (i) the Lessee shall have acknowledged in writing (x) acknowledges that it is solely responsible for any Indemnified Tax resulting from any contest under its controlthe Imposition ultimately determined to be due by reason of such contest, and provided, further, that in determining the application of clauses (x) and (y) its liability above, each Tax Indemnitee shall take any and all reasonable steps to segregate claims for any Taxes for which the Lessee indemnifies hereunder from Taxes for which the Lessee is not obligated to indemnify hereunder, so that the Lessee can control the contest of the former. In all other claims relating to Impositions requested to be contested by the Lessee, such Tax Indemnitee for all reasonable out of pocket costs, losses and expenses that the Tax Indemnitees may incur in connection with contesting the Indemnified Tax (including, but not limited to, any reasonable legal, accounting and investigatory fees and disbursements), and (z) its liability for an indemnity payment pursuant to this Section 7.1 as a result of such claim if and to the extent such Tax Indemnitee or the Lessee, as the case may be, shall not prevail in control the contest of such claim; provided, howeveracting through counsel reasonably acceptable to the Lessee. Notwithstanding anything to the contrary contained herein, in no event shall the Lessee be permitted to pursue or continue any contest (or such Tax Indemnitee be required to pursue or continue any contest) of any Imposition or claim thereof through any action, suit or proceeding (A) if such Tax Indemnitee provides the Lessee with a legal opinion of independent counsel reasonably acceptable to the Lessee that such action, suit or proceeding involves a risk of imposition of criminal liability on any Tax Indemnitee or will involve a material risk of imposition of civil liability on any Tax Indemnitee or the sale, forfeiture or loss of, or the creation of any Lien (other than a Permitted Property Lien) on the Properties or any part thereof or any interference with the payment of Rent unless, with respect to civil liability only, the Lessee shall not be required to indemnify for such Taxes to the extent the results of the contest clearly demonstrate that the Tax is not an Indemnified Tax unless the Lessee's conduct of the contest materially prejudiced the Tax Indemnitee; (ii) such Tax Indemnitee shall have received the opinion of independent tax counsel selected by the Tax Indemnitee and posted a bond or other security reasonably satisfactory to the Lessee relevant Tax Indemnitees in respect of such risk, (B) if a Lease Default or Lease Event of Default has occurred and furnished at the Lessee's sole expenseis continuing, opining that a reasonable basis exists for contesting such claim or, in the event of an appeal of an adverse court or administrative agency decision, that as a result of a change in law or fact it is more likely than not that an appellate court or an administrative agency or decision making body with appellate jurisdiction, as the case may be, will reverse or substantially modify the adverse determination; (iiiC) unless the Lessee shall have agreed to pay and shall pay to such Tax Indemnitee on demand (and at no after tax costs to the Lessor, the Owner Participant and any on an After Tax Indemnitee) Basis all reasonable costs out-of-pocket costs, losses and expenses that such Tax Indemnitee may incur in connection with contesting such Imposition or claim (includingthereof, without limitation, including all reasonable legal legal, accounting and accounting investigatory fees and disbursements); disbursements as well as the Impositions which are the subject of such contest to the extent the contest is unsuccessful, or (ivD) no Lease Default described in Section 14(a), 14(b), 14(c), 14(g) or 14(h) if such contest shall involve the payment of the Lease or a Lease Event of Default shall have occurred and shall have been continuingImposition prior to the contest, unless the Lessee shall provide to such Tax Indemnitee an interest-free advance in its sole discretion exercised in good faith allows the Lessee to post a satisfactory bond or other security that does not involve a possibility of a Lien on the Equipment or any portion thereof or on any interest therein, and which bond or other security will be for an amount equal to the sum of (I) Imposition that the costs of such contest (as reasonably estimated by such Tax Indemnitee in good faith) and the Taxes which may be is so required to be indemnified pay on an After Tax Basis and (II) if such Lease Default or Lease Event of Default involves a payment obligation under an Operative Agreement that is currently not paid in full, the unpaid amount of such obligation, plus the present value of the amounts not yet due pursuant prior to such obligation; (v) such Tax Indemnitee shall have determined that the action to be taken will not result in commencing any risk of sale, forfeiture or loss of, or the creation of any Lien, or contest the Lessee shall have or otherwise made a provision to protect acknowledged its liability for the interest of such Tax Indemnitee Imposition (in a manner satisfactory to such Tax Indemnitee in its sole discretion), on the Equipment or any portion thereof or any interest therein; (vi) the amount of such claims alone, or, if the subject matter thereof shall be of a continuing or recurring nature, when aggregated with substantially identical potential claims with respect and to the transactions contemplated by extent that the Operative Agreements shall be at least $25,000; (vii) if such contest shall be conducted in a manner requiring the payment or deposit of the claim, the Lessee shall have paid the amount required (and at no after-tax costs to the Lessor, the Owner Participant or other Tax Indemnitee); and (viii) there is no risk of imposition of criminal liability or penalties. The Lessee shall cooperate with the Tax Indemnitee in good faith with respect to any contest controlled and conducted by the Tax Indemnitee and the Tax Indemnitee in good faith shall consult with the Lessee regarding the conduct of such contest. A Tax Indemnitee shall not be required to pursue an appeal to the U.S. Supreme Court or the highest court in Canada or Mexico. The Tax Indemnitee shall cooperate with respect to any contest controlled and conducted by the Lessee and the Lessee shall consult with the Tax Indemnitee regarding the conduct of such contest. Notwithstanding anything to the contrary contained in this Section 7.1, no Tax Indemnitee shall be required to contest any claim if the subject matter thereof shall be of a continuing or recurring nature and shall have previously been adversely decided to the Tax Indemnitee pursuant to the contest provisions of this Section 7.1 unless there shall have been a change in the law (including, without limitation, amendments to statutes or regulations, administrative rulings (excluding private letter rulings and other rulings or materials that may not be relied upon by such Tax Indemnitee as precedent) or court decisions in the applicable jurisdiction) enacted, promulgated or effective after such claim shall have been so previously decided, and such Tax Indemnitee shall have received an opinion of independent tax counsel selected by the Tax Indemnitee and reasonably satisfactory to the Lessee, furnished at the Lessee's sole expense, to the effect that such change is favorable to the position which such Tax Indemnitee or the Lessee, as the case may be, had asserted ▇▇▇ Research Corporation Participation Agreement shall not prevail in such previous the contest and as a result in respect of the Imposition). In addition, no contest of any Imposition shall be required: (A) unless the amount of the potential indemnities (taking into account all similar or logically related claims that have been or are likely to be raised in any audit involving any or all of such changeTax Indemnitees for which the Lessee may be liable to pay an indemnity under this Section 13.5(b)) exceeds $75,000 and (B) unless, it is more likely than not that if requested by such Tax Indemnitee, the Lessee shall have provided to such Tax Indemnitee at the Lessee's sole expense, an opinion of independent counsel selected by the Lessee and reasonably acceptable to the Tax Indemnitee will prevail that a reasonable basis exists to contest such Imposition (or, in the event case of an appeal from an adverse judicial determination, that there is substantial authority for a reversal or favorable modification of such decision of such 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 and controlling the contest of an Imposition shall consult in good faith with the other party and its counsel with respect to such contest (or claim for refund) but the decisions regarding what actions are to be taken with respect to such contest shall be made by the controlling party in its sole judgment. In addition, the party controlling the contest shall keep the 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 reports or claims issued by the relevant Governmental Authority to the controlling party thereof, relating to such contest. Each Tax Indemnitee shall, at the Lessee's sole expense, supply the Lessee with such information and documents reasonably requested by the Lessee as are necessary or advisable for the Lessee to participate in any action, suit or proceeding to the extent permitted by this Section 13.5(b) so long as such information or documents are not, in the reasonable judgment of the Tax Indemnitee, confidential information or documents. Notwithstanding anything in this Section 13.5(b) to the contrary, so long as no Lease Event of Default shall have occurred and be continuing, no Tax Indemnitee shall enter into any settlement or other compromise or fail to appeal an adverse court or administrative agency decision, that determination with respect to any claim for an Imposition for which it is more likely than entitled to be indemnified under this Section 13.5 (and with respect to which contest is required under this Section 13.5(b)) without the prior written consent of the Lessee (which shall not that an appellate court be unreasonably withheld or an administrative agency tribunal or decision making body delayed), unless such Tax Indemnitee waives its right to be indemnified under this Section 13.5 with appellate jurisdiction, as respect to such claim pursuant to the case may be, will reverse or substantially modify the adverse determinationnext paragraph. Notwithstanding anything contained in this Section 7.1herein to the contrary, a Tax Indemnitee will not be required to contest or continue to contest (and the imposition of Lessee shall not be permitted to contest or continue to contest) a claim with respect to any Tax Imposition and shall be permitted to settle or compromise commence any such claim without the Lessee's consent of the Lessee if (i) such Tax Indemnitee (A) shall waive its right to indemnity indemnification under this Section 7.1 13.5 with respect to such Tax claim (and any claim the outcome of which is determined based upon the outcome of such claim) and (B) shall pay to the Lessee any amount previously paid or advanced by the Lessee pursuant to this Section 7.1 with respect to such Tax Claim, less year or any reasonable costs other taxable year the contest of which is materially adversely affected as a result of such waiver) and expenses of the Tax Indemnitee prior returns to such payment in the Lessee all amounts previously advanced to the Indemnitee with respect to the contest of such claim 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 ClaimIndemnitee (unless a change in law or facts has occurred since such prior adverse resolution and the Lessee provides an opinion of independent tax counsel reasonably satisfactory to the Tax Indemnitee to the effect that it is more ▇▇▇ Research Corporation Participation Agreement 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 a written claim is made by any taxing authority against a In the event Purchaser, Sellers or Former Tax Indemnitee for any Taxes with respect to which the Lessee may be required to indemnify against hereunder or if a Tax Indemnitee shall determine that any tax to which the Lessee may have an indemnity obligation hereunder may be payable (a "Tax Claim"), then such Tax Indemnitee shall give the Lessee Parent receives written notice of such Tax Claim promptly (but in any event within twenty (20) days after its receipt of the written Tax Claim audit, examination, claim, settlement, proposed adjustment, administrative or its determination, as applicable), and shall furnish Lessee with copies of such Tax Claim and all other writings received from the taxing authority to the extent relating to such claim (but failure to so notify the Lessee shall not relieve the Lessee of its obligations hereunder except to the extent that it effectively precludes the ability of the Lessee to conduct a contest of the Tax Claim). The Tax Indemnitee shall not pay such Tax Claim until at least thirty (30) days after providing the Lessee with such written notice, unless (a) the Tax Indemnitee is required to do so by law or regulation or the failure to pay such Tax Claim could result in a material adverse financial, legal or other consequence to the Tax Indemnitee and (b) in the written notice described above, the Tax Indemnitee has notified the Lessee of such requirement or such material adverse consequence (such notice however shall not require the disclosure of the Tax Indemnitee's confidential information, as determined in the sole discretion of such Tax Indemnitiee, or the Tax Indemnitee's tax returns, books, or records). If the Lessee shall so request within 30 days after receipt of such notice (or such shorter period as is reasonably specified by the Tax Indemnitee if any contest of the Tax must be commenced prior to the expiration of 30 days), then such Tax Indemnitee shall in good faith at Lessee's sole expense contest such Tax or permit the Lessee to contest such Tax, as such Tax Indemnitee shall elect; provided, however, that to the extent (i) the contest involves only Taxes constituting property taxes, sales taxes, or use taxes, (ii) the contest does not involve any taxes that the Lessee is not required to indemnify the Tax Indemnitee or taxes and other issues relating to a Tax Indemnitee that are unrelated to the transactions contemplated by the Operative Agreements, (iii) the contest can be pursued in the name of the Lessee and independently from any other proceeding involving a Tax Claim of a Tax Indemnitee for which Lessee has not agreed in writing to indemnify such Tax Indemnitee, and (iv) no Equity Insufficiency Circumstance exists, such contest shall be undertaken by the Lessee at the Lessee's sole expense and the after-tax costs of the Lessor, the Owner Participantjudicial proceeding, or other matter (“Tax Indemnitee shall be reimbursed by the Lessee. Notwithstanding the preceding sentenceClaim”) related to any Pre-Closing Taxes, if (a) such contest would involve any other type of TaxTransfer Taxes or Overlap Period Taxes, any taxes that the Lessee is not required to indemnify the Purchaser, Sellers or Former Tax Indemnitee or taxes and other issues relating to a Tax Indemnitee which are unrelated to the transactions contemplated by the Operative Agreements, (b) the Tax Indemnitee determines that such contest conducted by the Lessee could have a material adverse impact on such Tax Indemnitee's business or operations or involve risk of the imposition of criminal liability on a Tax Indemnitee, or (c) an Equity Insufficiency Circumstance exists, then such Tax Indemnitee may, in its sole discretion, control such contest (including selecting the forum for such contest, and determining whether any such contest shall be conducted by (i) paying such Tax under protest or (ii) resisting payment of such Tax or (iii) paying such Tax and seeking a refund thereof; provided, however, that at such Tax Indemnitee's option, such contest shall be conducted by the Lessee in the name of such Tax Indemnitee). In no event shall such Tax Indemnitee be required or the Lessee be permitted to contest any Tax for which the Lessee is obligated to indemnify pursuant to this Section 7.1 unless: (i) the Lessee shall have acknowledged in writing (x) that it is solely responsible for any Indemnified Tax resulting from any contest under its control, (y) its liability to such Tax Indemnitee for all reasonable out of pocket costs, losses and expenses that the Tax Indemnitees may incur in connection with contesting the Indemnified Tax (including, but not limited to, any reasonable legal, accounting and investigatory fees and disbursements), and (z) its liability for an indemnity payment pursuant to this Section 7.1 as a result of such claim if and to the extent such Tax Indemnitee or the LesseeParent, as the case may be, shall not prevail notify the other Parties in the contest writing as soon as reasonably practical (but in no event more than ten (10) Business Days) after receipt of such claimnotice. If either Seller or Former Tax Parent notifies Purchaser in writing within thirty (30) Business Days following receipt of such written notice that they intend to exercise their rights pursuant to this Section 8.6, they shall be entitled to control the defense, prosecution, settlement or compromise of such Tax Claim, at their own expense. Purchaser shall take such action in contesting such Tax Claim as Sellers shall reasonably request from time to time, including the selection of counsel and experts and execution of powers of attorney. Purchaser shall not make any payments of such Tax Claim for at least thirty (30) days (or such shorter period as may be required by applicable Law) after giving the notice required by this Section 8.6, shall give the Sellers and Former Tax Parent any information requested relating to such Tax Claim, shall give any Tax Authority any information requested by Sellers or Former Tax Parent relating to such Tax Claim, and otherwise shall cooperate with and make internal resources available to the Sellers and Former Tax Parent in good faith in order to effectively contest any such Tax Claim. Purchaser shall not settle or otherwise compromise any such Tax Claim with any Taxing Authority or prosecute such contest to a determination in court or other tribunal or initial or appellate jurisdiction unless instructed to do so by the Sellers or Former Tax Parent. Any of the Sellers or Former Tax Parent may settle or otherwise compromise any such Tax Claim without Purchaser’s prior written consent, except that if as a result of such settlement or compromise the Taxes payable by Purchaser would be materially increased, none of Sellers or Former Tax Parent may settle or compromise such matter without Purchaser’s prior written consent, which consent shall not be unreasonably withheld; provided, however, that in the Lessee event Purchaser does not promptly consent to such settlement or compromise, Sellers may pay to Purchaser such settled or compromised amount and Purchaser shall not be required agree to indemnify assume all obligations for such Taxes Tax Claim Liability. In connection with any proceeding taken with respect to the extent the results such matters, (i) Sellers shall keep Purchaser informed of the contest clearly demonstrate that the Tax is not an Indemnified Tax unless the Lessee's conduct of the contest materially prejudiced the Tax Indemnitee; all material developments and events relating to such matters if involving a material liability for Taxes, and (ii) such Tax Indemnitee Purchaser shall have received the opinion of independent tax counsel selected by the Tax Indemnitee and reasonably satisfactory to the Lessee and furnished right, at the Lessee's sole expense, opining that a reasonable basis exists for contesting such claim or, in the event of an appeal of an adverse court or administrative agency decision, that as a result of a change in law or fact it is more likely than not that an appellate court or an administrative agency or decision making body with appellate jurisdiction, as the case may be, will reverse or substantially modify the adverse determination; (iii) the Lessee shall have agreed to pay such Tax Indemnitee on demand (and at no after tax costs to the Lessor, the Owner Participant and any Tax Indemnitee) all reasonable costs and expenses that such Tax Indemnitee may incur in connection with contesting such claim (including, without limitation, all reasonable legal and accounting fees and disbursements); (iv) no Lease Default described in Section 14(a), 14(b), 14(c), 14(g) or 14(h) of the Lease or a Lease Event of Default shall have occurred and shall have been continuing, unless the Tax Indemnitee in its sole discretion exercised in good faith allows the Lessee to post a satisfactory bond or other security that does not involve a possibility of a Lien on the Equipment or any portion thereof or on any interest therein, and which bond or other security will be for an amount equal to the sum of (I) the costs of such contest (as reasonably estimated by such Tax Indemnitee in good faith) and the Taxes which may be required to be indemnified and (II) if such Lease Default or Lease Event of Default involves a payment obligation under an Operative Agreement that is currently not paid in full, the unpaid amount of such obligation, plus the present value of the amounts not yet due pursuant to such obligation; (v) such Tax Indemnitee shall have determined that the action to be taken will not result in any risk of sale, forfeiture or loss of, or the creation of any Lien, or the Lessee shall have or otherwise made a provision to protect the interest of such Tax Indemnitee (in a manner satisfactory to such Tax Indemnitee in its sole discretion), on the Equipment or any portion thereof or any interest therein; (vi) the amount of such claims alone, or, if the subject matter thereof shall be of a continuing or recurring nature, when aggregated with substantially identical potential claims with respect to the transactions contemplated by the Operative Agreements shall be at least $25,000; (vii) if such contest shall be conducted in a manner requiring the payment or deposit of the claim, the Lessee shall have paid the amount required (and at no after-tax costs to the Lessor, the Owner Participant or other Tax Indemnitee); and (viii) there is no risk of imposition of criminal liability or penalties. The Lessee shall cooperate with the Tax Indemnitee in good faith with respect to any contest controlled and conducted by the Tax Indemnitee and the Tax Indemnitee in good faith shall consult with the Lessee regarding the conduct of such contest. A Tax Indemnitee shall not be required to pursue an appeal to the U.S. Supreme Court or the highest court in Canada or Mexico. The Tax Indemnitee shall cooperate with respect to any contest controlled and conducted by the Lessee and the Lessee shall consult with the Tax Indemnitee regarding the conduct of such contest. Notwithstanding anything to the contrary contained in this Section 7.1, no Tax Indemnitee shall be required to contest any claim if the subject matter thereof shall be of a continuing or recurring nature and shall have previously been adversely decided to the Tax Indemnitee pursuant to the contest provisions of this Section 7.1 unless there shall have been a change in the law (including, without limitation, amendments to statutes or regulations, administrative rulings (excluding private letter rulings and other rulings or materials that may not be relied upon by such Tax Indemnitee as precedent) or court decisions in the applicable jurisdiction) enacted, promulgated or effective after such claim shall have been so previously decided, and such Tax Indemnitee shall have received an opinion of independent tax counsel selected by the Tax Indemnitee and reasonably satisfactory to the Lessee, furnished at the Lessee's sole expense, to the effect that participate in any such change is favorable proceedings. Purchaser shall cooperate with Sellers and Former Tax Parent by giving them and their representatives, on prior reasonable notice, reasonable access and cooperation during normal business hours to the position which such Tax Indemnitee or the Lesseeall information, as the case may bebooks and records pertaining to Transfer Taxes, had asserted in such previous contest Pre-Closing Taxes and as a result of such change, it is more likely than not that the Tax Indemnitee will prevail or, in the event of an appeal of an adverse court or administrative agency decision, that it is more likely than not that an appellate court or an administrative agency tribunal or decision making body with appellate jurisdiction, as the case may be, will reverse or substantially modify the adverse determination. Notwithstanding anything contained in this Section 7.1, a Tax Indemnitee will not be required to contest the imposition of any Tax and shall be permitted to settle or compromise any claim without the Lessee's consent if such Tax Indemnitee (A) shall waive its right to indemnity under this Section 7.1 with respect to such Tax (and any claim the outcome of which is determined based upon the outcome of such claim) and (B) shall pay to the Lessee any amount previously paid or advanced by the Lessee pursuant to this Section 7.1 with respect to such Tax Claim, less any reasonable costs and expenses of the Tax Indemnitee prior to such payment in respect of such Tax ClaimOverlap Period Taxes.
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 claim is made by any taxing authority against a Tax Indemnitee notice of such proceeding) for any Taxes with respect Imposition as to which the Lessee may be required have an indemnity obligation pursuant to indemnify against hereunder this Section 13.4, or if a any Tax Indemnitee shall determine that any tax to Imposition for which the Lessee may have an indemnity obligation hereunder pursuant to this Section 13.4 may be payable (a "Tax Claim")payable, then such Tax Indemnitee shall give the Lessee written notice of such Tax Claim promptly (but and in any event event, within twenty (20) days) notify Lessee in writing (provided that failure to so notify Lessee within twenty (20) days after its receipt of the written Tax Claim or its determination, as applicable), and shall furnish Lessee with copies of not alter such Tax Claim and all other writings received from the taxing authority to the extent relating to such claim (but failure to so notify the Lessee shall not relieve the Lessee of its obligations hereunder Indemnitee’s rights under this Section 13.4, except to the extent that it effectively such failure precludes or materially adversely affects the ability of the Lessee to conduct a contest of the Tax Claim). The Tax Indemnitee any indemnified Taxes) and shall not pay take any action with respect to such Tax Claim until at least claim, proceeding or Imposition without the written consent of Lessee (such consent not to be unreasonably withheld or unreasonably delayed) for thirty (30) days after providing the Lessee with receipt of such written noticenotice by Lessee; provided, unless (a) however, that in the case of any such claim or proceeding, if such Tax Indemnitee is shall be required to do so by law or regulation or to take action prior to the failure to pay end of such thirty (30) day period, such Tax Claim could result Indemnitee shall in a material adverse financialsuch notice to Lessee, legal or other consequence to the so inform Lessee, and such Tax Indemnitee and (b) in shall not take any action with respect to such claim, proceeding or Imposition without the written notice described above, the Tax Indemnitee has notified the consent of Lessee of such requirement or such material adverse consequence (such notice however shall consent not require the disclosure of the Tax Indemnitee's confidential information, as determined in the sole discretion of such Tax Indemnitiee, to be unreasonably withheld or the Tax Indemnitee's tax returns, books, or records). If the Lessee shall so request within 30 unreasonably delayed) for ten (10) days after the receipt of such notice by Lessee, unless the Tax Indemnitee shall be required by law or regulation to take action prior to the end of such ten (10) day period. Lessee shall be entitled for a period of thirty (30) days from receipt of such notice from the Tax Indemnitee (or such shorter period as is reasonably specified by the Tax Indemnitee if any contest of has notified Lessee is required by law or regulation for the Tax must be commenced prior Indemnitee to the expiration of 30 dayscommence such contest), then to request in writing that such Tax Indemnitee shall in good faith at Lessee's sole expense contest such Tax or permit the Lessee to contest imposition of such Tax, as at Lessee’s expense. If (x) such Tax Indemnitee shall elect; provided, however, that to the extent (i) the contest involves only Taxes constituting property taxes, sales taxes, or use taxes, (ii) the contest does not involve any taxes that the Lessee is not required to indemnify the Tax Indemnitee or taxes and other issues relating to a Tax Indemnitee that are unrelated to the transactions contemplated by the Operative Agreements, (iii) the contest can be pursued in the name of the Lessee and independently from any other proceeding involving a Tax Claim liability of a such Tax Indemnitee for which Lessee has not agreed in writing to indemnify such Tax Indemnitee, and (iv) no Equity Insufficiency Circumstance exists, such contest shall be undertaken by the Lessee at the Lessee's sole expense and the after-tax costs of the Lessor, the Owner Participant, or other Tax Indemnitee shall be reimbursed by the Lessee. Notwithstanding the preceding sentence, if (ay) such contest would involve must be pursued in the name of the Tax Indemnitee, but can be pursued independently from any other type proceeding involving a Tax liability of Tax, any taxes that the such Tax Indemnitee for which Lessee is has not required agreed to indemnify the such Tax Indemnitee or taxes and other issues relating to a Tax Indemnitee which are unrelated to the transactions contemplated by the Operative Agreements, (bz) the Tax Indemnitee so requests, then 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 the Tax Indemnitee determines in good faith that such contest conducted by the Lessee could have a material adverse impact on such Tax Indemnitee's the business or operations or involve risk of the imposition of criminal liability on a Tax Indemnitee, or (c) an Equity Insufficiency Circumstance exists, then such Tax Indemnitee mayand provides a written explanation to Lessee of such determination, in its sole discretion, the Tax Indemnitee may elect to control such contest (including selecting or reassert control of the forum for such contest, and determining whether any such contest shall provided, that by taking control of the contest, Lessee acknowledges that it is responsible for the Imposition ultimately determined to be conducted due by (i) paying such Tax under protest or (ii) resisting payment reason of such Tax or (iii) paying such Tax claim, and seeking a refund thereof; provided, howeverfurther, that at such in determining the application of clauses (x) and (y) of the preceding sentence, each Tax Indemnitee's optionIndemnitee shall take any and all reasonable steps to segregate claims for any Taxes for which Lessee indemnifies hereunder from Taxes for which Lessee is not obligated to indemnify hereunder, such so that Lessee can control the contest of the former. In all other claims requested to be contested by Lessee, the Tax Indemnitee shall be conducted by control the Lessee in the name contest of such Tax Indemnitee)claim, acting through counsel reasonably acceptable to Lessee. In no event shall such Tax Indemnitee be required or the Lessee be permitted to contest (or the Tax Indemnitee required to contest) any Tax for which the Lessee is obligated to indemnify pursuant to this Section 7.1 unless: (i) the Lessee shall have acknowledged in writing (x) that it is solely responsible for any Indemnified Tax resulting from any contest under its controlclaim, (yA) its liability to if such Tax Indemnitee for all reasonable out of pocket costs, losses and expenses that the Tax Indemnitees may incur in connection provides Lessee with contesting the Indemnified Tax (including, but not limited to, any reasonable legal, accounting and investigatory fees and disbursements), and (z) its liability for an indemnity payment pursuant to this Section 7.1 as a result of such claim if and to the extent such Tax Indemnitee or the Lessee, as the case may be, shall not prevail in the contest of such claim; provided, however, that the Lessee shall not be required to indemnify for such Taxes to the extent the results of the contest clearly demonstrate that the Tax is not an Indemnified Tax unless the Lessee's conduct of the contest materially prejudiced the Tax Indemnitee; (ii) such Tax Indemnitee shall have received the legal opinion of independent tax counsel selected by the Tax Indemnitee and reasonably satisfactory to the Lessee and furnished at the Lessee's sole expense, opining that a reasonable basis exists for contesting such claim or, in the event of an appeal of an adverse court or administrative agency decision, that as a result of a change in law or fact it is more likely than not that an appellate court or an administrative agency or decision making body with appellate jurisdiction, as the case may be, will reverse or substantially modify the adverse determination; (iii) the Lessee shall have agreed to pay such Tax Indemnitee on demand (and at no after tax costs to the Lessor, the Owner Participant and any Tax Indemnitee) all reasonable costs and expenses that such Tax Indemnitee may incur in connection with contesting such claim (includingaction, without limitation, all reasonable legal and accounting fees and disbursements); (iv) no Lease Default described in Section 14(a), 14(b), 14(c), 14(g) suit or 14(h) proceeding involves a risk of imposition of criminal liability or will involve a material risk of the Lease or a Lease Event of Default shall have occurred and shall have been continuing, unless the Tax Indemnitee in its sole discretion exercised in good faith allows the Lessee to post a satisfactory bond or other security that does not involve a possibility of a Lien on the Equipment or any portion thereof or on any interest therein, and which bond or other security will be for an amount equal to the sum of (I) the costs of such contest (as reasonably estimated by such Tax Indemnitee in good faith) and the Taxes which may be required to be indemnified and (II) if such Lease Default or Lease Event of Default involves a payment obligation under an Operative Agreement that is currently not paid in full, the unpaid amount of such obligation, plus the present value of the amounts not yet due pursuant to such obligation; (v) such Tax Indemnitee shall have determined that the action to be taken will not result in any risk of sale, forfeiture or loss of, or the creation of any Lien (other than a Permitted Lien, ) on the Leased Property or the any part of any thereof unless Lessee shall have or otherwise made posted and maintained a provision to protect the interest of such Tax Indemnitee (in a manner satisfactory to such Tax Indemnitee in its sole discretion), on the Equipment or any portion thereof or any interest therein; (vi) the amount of such claims alone, or, if the subject matter thereof shall be of a continuing or recurring nature, when aggregated with substantially identical potential claims with respect to the transactions contemplated by the Operative Agreements shall be at least $25,000; (vii) if such contest shall be conducted in a manner requiring the payment or deposit of the claim, the Lessee shall have paid the amount required (and at no after-tax costs to the Lessor, the Owner Participant bond or other Tax Indemnitee); and (viii) there is no risk of imposition of criminal liability or penalties. The Lessee shall cooperate with the Tax Indemnitee in good faith with respect to any contest controlled and conducted by the Tax Indemnitee and the Tax Indemnitee in good faith shall consult with the Lessee regarding the conduct of such contest. A Tax Indemnitee shall not be required to pursue an appeal to the U.S. Supreme Court or the highest court in Canada or Mexico. The Tax Indemnitee shall cooperate with respect to any contest controlled and conducted by the Lessee and the Lessee shall consult with the Tax Indemnitee regarding the conduct of such contest. Notwithstanding anything to the contrary contained in this Section 7.1, no Tax Indemnitee shall be required to contest any claim if the subject matter thereof shall be of a continuing or recurring nature and shall have previously been adversely decided to the Tax Indemnitee pursuant to the contest provisions of this Section 7.1 unless there shall have been a change in the law (including, without limitation, amendments to statutes or regulations, administrative rulings (excluding private letter rulings and other rulings or materials that may not be relied upon by such Tax Indemnitee as precedent) or court decisions in the applicable jurisdiction) enacted, promulgated or effective after such claim shall have been so previously decided, and such Tax Indemnitee shall have received an opinion of independent tax counsel selected by the Tax Indemnitee and security reasonably satisfactory to the Lessee, furnished at the Lessee's sole expense, to the effect that such change is favorable to the position which such relevant Tax Indemnitee or the Lessee, as the case may be, had asserted in such previous contest and as a result of such change, it is more likely than not that the Tax Indemnitee will prevail or, in the event of an appeal of an adverse court or administrative agency decision, that it is more likely than not that an appellate court or an administrative agency tribunal or decision making body with appellate jurisdiction, as the case may be, will reverse or substantially modify the adverse determination. Notwithstanding anything contained in this Section 7.1, a Tax Indemnitee will not be required to contest the imposition of any Tax and shall be permitted to settle or compromise any claim without the Lessee's consent if such Tax Indemnitee (A) shall waive its right to indemnity under this Section 7.1 with respect to such risk, (B) if an Event of Default is continuing, unless 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 claim and all expenses for which Lessee is responsible hereunder reasonably foreseeable in connection with the outcome of which is determined based upon the outcome contest of such claim) and (B) shall pay to the Lessee any amount previously paid or advanced by the Lessee pursuant to this Section 7.1 with respect to such Tax Claim, less any reasonable costs and expenses of the Tax Indemnitee prior to such payment in respect of such Tax Claim.,
Appears in 1 contract
Sources: Participation Agreement
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 claim is made by any taxing authority against a Tax Indemnitee notice of such proceeding) for any Taxes with respect as to which the Lessee may be required to indemnify against hereunder or if a Tax Indemnitee shall determine that any tax to which the Lessee may have an indemnity obligation hereunder may be payable (a "Tax Claim")pursuant to Section 19.2, then such Tax Indemnitee shall give the promptly notify Lessee in writing together with all documentation received from a taxing authority. If requested by Lessee in a written notice of request to such Tax Claim promptly Indemnitee within thirty (but in any event within twenty (2030) days after its receipt of the written Tax Claim or its determination, as applicable), and shall furnish Lessee with copies of such Tax Claim and all other writings received from the taxing authority to the extent relating to such claim (but failure to so notify the Lessee shall not relieve the Lessee of its obligations hereunder except to the extent that it effectively precludes the ability of the Lessee to conduct a contest of the Tax Claim). The Tax Indemnitee shall not pay such Tax Claim until at least thirty (30) days after providing the Lessee with such written notice, unless (a) the Tax Indemnitee is required to do so by law or regulation or the failure to pay such Tax Claim could result in a material adverse financial, legal or other consequence to the Tax Indemnitee and (b) in the written notice described above, the Tax Indemnitee has notified the Lessee of such requirement or such material adverse consequence (such notice however shall not require the disclosure of the Tax Indemnitee's confidential information, as determined in the sole discretion of such Tax Indemnitiee, or the Tax Indemnitee's tax returns, books, or records). If the Lessee shall so request within 30 days after receipt of such notice (or such shorter period as is reasonably specified by the Tax Indemnitee if any contest of the Tax must be commenced prior to the expiration of 30 days), then such Tax Indemnitee shall permit Lessee to in good faith at Lessee's sole expense contest such Tax or permit the Lessee to contest such Tax, as such Tax Indemnitee shall elect; provided, however, that to the extent (i) control the contest involves only Taxes constituting property taxes, sales taxes, or use taxes, (ii) the contest does not involve any taxes that the Lessee is not required to indemnify the Tax Indemnitee or taxes and other issues relating to a Tax Indemnitee that are unrelated to the transactions contemplated by the Operative Agreements, (iii) the contest can be pursued in the name of the Lessee and independently from any other proceeding involving a Tax Claim of a Tax Indemnitee for which Lessee has not agreed in writing to indemnify such Tax Indemnitee, and (iv) no Equity Insufficiency Circumstance exists, such contest shall be undertaken by the Lessee at the Lessee's sole expense and the after-tax costs of the Lessor, the Owner Participant, or other Tax Indemnitee shall be reimbursed by the Lessee. Notwithstanding the preceding sentence, if (a) such contest would involve any other type of Tax, any taxes that the Lessee is not required to indemnify the Tax Indemnitee or taxes and other issues relating to a Tax Indemnitee which are unrelated to the transactions contemplated by the Operative Agreements, (b) the Tax Indemnitee determines that such contest conducted by the Lessee could have a material adverse impact on such Tax Indemnitee's business or operations or involve risk of the imposition of criminal liability on a Tax Indemnitee, or (c) an Equity Insufficiency Circumstance exists, then such Tax Indemnitee may, in its sole discretion, control such contest (including selecting the forum for such contest, and determining whether any such contest shall be conducted by (i) paying such Tax under protest or (ii) resisting payment of such Tax or (iii) paying such Tax and seeking a refund thereof; provided, however, that at such Tax Indemnitee's option, such contest shall be conducted by the Lessee in the name of such Tax Indemnitee). In no event shall such Tax Indemnitee be required or the Lessee be permitted to contest any Tax for which the Lessee is obligated to indemnify pursuant to this Section 7.1 unless: (i) the Lessee shall have acknowledged in writing (x) that it is solely responsible for any Indemnified Tax resulting from any contest under its control, (y) its liability to such Tax Indemnitee for all reasonable out of pocket costs, losses and expenses that the Tax Indemnitees may incur in connection with contesting the Indemnified Tax (including, but not limited to, any reasonable legal, accounting and investigatory fees and disbursements), and (z) its liability for an indemnity payment pursuant to this Section 7.1 as a result of such claim if and to the extent such Tax Indemnitee or the Lessee, as the case may be, shall not prevail in the contest of such claim; provided, however, that the Lessee shall not be required to indemnify for such Taxes to the extent the results of the contest clearly demonstrate that the Tax is not an Indemnified Tax unless the Lessee's conduct of the contest materially prejudiced the Tax Indemnitee; (ii) such Tax Indemnitee shall have received the opinion of independent tax counsel selected by the Tax Indemnitee and reasonably satisfactory to the Lessee and furnished at the Lessee's sole expense, opining that a reasonable basis exists for contesting such claim or, in the event of an appeal of an adverse court or administrative agency decision, that as a result of a change in law or fact it is more likely than not that an appellate court or an administrative agency or decision making body with appellate jurisdiction, as the case may be, will reverse or substantially modify the adverse determination; (iii) the Lessee shall have agreed to pay such Tax Indemnitee on demand (and at no after tax costs to the Lessor, the Owner Participant and any Tax Indemnitee) all reasonable costs and expenses that such Tax Indemnitee may incur in connection with contesting such claim (including, without limitation, all reasonable legal by pursuit of appeals and accounting fees and disbursements); (ivadministrative procedures) no Lease Default described except if the Tax in Section 14(a), 14(b), 14(c), 14(g) issue from such claim or 14(h) any set of the Lease similar or a Lease Event of Default shall have occurred and shall have been continuing, unless related claims is less than $10,000 in which case the Tax Indemnitee in its sole discretion exercised may in good faith allows control the contest or elect to have Lessee to post a satisfactory bond or other security that does not involve a possibility of a Lien on control the Equipment or any portion thereof or on any interest thereinsame. If Lessee controls the contest, and which bond or other security will be for an amount equal to the sum of (I) the costs of such contest (as reasonably estimated by such Tax Indemnitee in good faith) and the Taxes which may be required to be indemnified and (II) if such Lease Default or Lease Event of Default involves a payment obligation under an Operative Agreement that is currently not paid in full, the unpaid amount of such obligation, plus the present value of the amounts not yet due pursuant to such obligation; (v) such Tax Indemnitee shall have determined that the action provide to be taken will not result Lessee and its representatives a power of attorney in any risk of sale, forfeiture or loss of, or the creation of any Lien, or the form reasonably satisfactory to Lessee shall have or otherwise made a provision and such other documentation as Lessee may reasonably request to protect the interest pursue such contest on behalf of such Tax Indemnitee (Indemnitee. Lessee shall consult in a manner satisfactory to such good faith with the Tax Indemnitee in its sole discretion), on the Equipment or any portion thereof or any interest therein; (vi) the amount of such claims alone, or, if the subject matter thereof shall be of a continuing or recurring nature, when aggregated with substantially identical potential claims with respect to the transactions contemplated by contest of such claim but the Operative Agreements decisions regarding what actions to be taken shall be at least $25,000; (vii) if such contest shall be conducted made by Lessee in a manner requiring the payment or deposit of the claimits sole judgment. In addition, the Lessee shall have paid the amount required (and at no after-tax costs to the Lessor, the Owner Participant or other Tax Indemnitee); and (viii) there is no risk of imposition of criminal liability or penalties. The Lessee shall cooperate with keep the Tax Indemnitee in good faith with respect reasonably informed as to any contest controlled the progress of the contest, and conducted by shall provide the Tax Indemnitee and with a copy of (or appropriate excerpts from) any reports or claims issued by the Tax Indemnitee relevant auditing agents or taxing authority in good faith shall consult connection with such claim or the Lessee regarding the conduct of such contestcontest thereof. A Notwithstanding anything contained in this Section 19.2, a Tax Indemnitee shall not be required to pursue an appeal to the U.S. Supreme Court contest any claim or the highest court in Canada or Mexico. The Tax Indemnitee shall cooperate with respect to any contest controlled and conducted by the permit Lessee and the Lessee shall consult with the Tax Indemnitee regarding the conduct of such contest. Notwithstanding anything to the contrary contained in this Section 7.1, no Tax Indemnitee shall be required to contest any claim if the subject matter thereof shall be of a continuing or recurring nature and shall have previously been adversely decided to the Tax Indemnitee pursuant to the may settle any contest provisions of this Section 7.1 unless there shall have been a change in the law (including, without limitation, amendments to statutes or regulations, administrative rulings (excluding private letter rulings and other rulings or materials that may not be relied upon by such Tax Indemnitee as precedent) or court decisions in the applicable jurisdiction) enacted, promulgated or effective after such claim shall have been so previously decided, and such Tax Indemnitee shall have received an opinion of independent tax counsel selected by the Tax Indemnitee and reasonably satisfactory to the Lessee, furnished at the Lessee's sole expense, to the effect that such change is favorable to the position which such Tax Indemnitee or the Lessee, as the case may be, had asserted in such previous contest and as a result of such change, it is more likely than not that the Tax Indemnitee will prevail or, in the event of an appeal of an adverse court or administrative agency decision, that it is more likely than not that an appellate court or an administrative agency tribunal or decision making body with appellate jurisdiction, as the case may be, will reverse or substantially modify the adverse determination. Notwithstanding anything contained in this Section 7.1, a Tax Indemnitee will not be required to contest the imposition of any Tax and shall be permitted to settle or compromise any claim without the Lessee's consent of Lessee if such Tax Indemnitee (A) shall waive its right to indemnity under this Section 7.1 19.2 with respect to such Tax (and any claim the outcome of which is determined based upon the outcome of for such claim) Tax, and (B) shall pay to the Lessee any amount of Tax previously paid or advanced by the Lessee pursuant to this Section 7.1 with respect to such Tax Claim, less any reasonable 19.2 other than the costs and expenses of the contest of such claim paid by the Lessee, together with interest thereon at the underpayment rate, as defined in Section 6621 of the Code. Notwithstanding any of the foregoing in this Section 19.2(e), Lessee may, at any time and with notice to the Lessor, contest the property taxes, ad valorem taxes and other Impositions for which the Lessee has an obligation to indemnify any Tax Indemnitee prior hereunder. Each Tax Indemnitee shall, upon the Lessee's request provide to Lessee and its representatives a power of attorney in form reasonably satisfactory to Lessee and such payment in other documentation as Lessee may reasonably request to permit Lessee to conduct any such contest. If any Tax Indemnitee or any Affiliate thereof shall obtain a refund (including by way of credit) of all or any part of any Tax with respect to which the Lessee shall have paid on behalf of such Tax ClaimIndemnitee or reimbursed such Tax Indemnitee, then such Tax Indemnitee shall, so long as no Lease Event of Default shall have occurred and be continuing, pay to the Lessee any such refund (including any applicable interest received with respect to such refund or that would have been received with respect to such refund but for a counterclaim or other claim not indemnified by Lessee hereunder) plus any tax savings realized by such Tax Indemnitee as a result of a payment pursuant to this sentence (it being understood that the calculation of such tax savings shall take into account any additional income taxes incurred by such Tax Indemnitee as a result of the receipt or accrual of such refund). The Tax Indemnitee shall make any payments to the Lessee under this Section 19.2(e) within ten (10) days of the receipt of such refund.
Appears in 1 contract
Sources: Lease Agreement (Griffin Capital Essential Asset REIT II, Inc.)
Contests. (a) If a written claim is shall be made by any taxing authority against Taxing Authority that, if successful, would result in the indemnification of a Tax Indemnitee for any Taxes with respect to which party (the Lessee may be required to indemnify against hereunder or if a Tax Indemnitee shall determine that any tax to which the Lessee may have an indemnity obligation hereunder may be payable (a "Tax ClaimIndemnified Party"), then such Tax Indemnitee shall give the Lessee written notice of such Tax Claim promptly (but in any event within twenty (20) days after its receipt of the written Tax Claim or its determination, as applicable), and shall furnish Lessee with copies of such Tax Claim and all other writings received from the taxing authority to the extent relating to such claim (but failure to so notify the Lessee shall not relieve the Lessee of its obligations hereunder except to the extent that it effectively precludes the ability of the Lessee to conduct a contest of the Tax Claim). The Tax Indemnitee shall not pay such Tax Claim until at least thirty (30) days after providing the Lessee with such written notice, unless (a) the Tax Indemnitee is required to do so by law or regulation or the failure to pay such Tax Claim could result in a material adverse financial, legal or other consequence to the Tax Indemnitee and (b) in the written notice described aboveunder this Article VII, the Tax Indemnitee has notified Indemnified Party shall promptly notify the Lessee party (the "Tax Indemnifying Party") obligated under this Article VII to indemnify the Tax Indemnified Party in writing of such requirement or such material adverse consequence (such notice however shall not require the disclosure of the Tax Indemnitee's confidential information, as determined in the sole discretion of such Tax Indemnitiee, or the Tax Indemnitee's tax returns, books, or records). If the Lessee shall so request within 30 days after receipt of such notice (or such shorter period as is reasonably specified by the Tax Indemnitee if any contest of the Tax must be commenced prior to the expiration of 30 days), then such Tax Indemnitee shall in good faith at Lessee's sole expense contest such Tax or permit the Lessee to contest such Tax, as such Tax Indemnitee shall electfact; provided, however, that a failure to give such notice shall not affect the Tax Indemnified Party's right to indemnification under this Article VII except to the extent, if any, that, but for such failure, the Tax Indemnifying Party could have avoided all or a portion of the Tax liability in question. Such notice shall contain factual information (to the extent (i) the contest involves only Taxes constituting property taxes, sales taxes, or use taxes, (ii) the contest does not involve any taxes that the Lessee is not required known to indemnify the Tax Indemnitee Indemnified Party) describing the asserted Tax liability in reasonable detail and shall include copies of any notice or taxes and other issues relating to a Tax Indemnitee that are unrelated to the transactions contemplated by the Operative Agreements, (iii) the contest can be pursued in the name of the Lessee and independently document received from any other proceeding involving a Taxing Authority in respect of such asserted Tax Claim of a Tax Indemnitee for which Lessee has not agreed in writing to indemnify such Tax Indemnitee, and (iv) no Equity Insufficiency Circumstance exists, such contest shall be undertaken by the Lessee at the Lessee's sole expense and the after-tax costs of the Lessor, the Owner Participant, or other Tax Indemnitee shall be reimbursed by the Lessee. Notwithstanding the preceding sentence, if (a) such contest would involve any other type of Tax, any taxes that the Lessee is not required to indemnify the Tax Indemnitee or taxes and other issues relating to a Tax Indemnitee which are unrelated to the transactions contemplated by the Operative Agreements, liability.
(b) The Tax Indemnifying Party shall determine the method of any contest of any claim under Section 7.04(a) and shall control the conduct thereof. If the contest or appeal of such claim requires that all or a portion of the contested Taxes (or a bond in respect thereof) be paid as a jurisdictional prerequisite, the Tax Indemnitee determines that Indemnifying Party shall advance to the Tax Indemnified Party the amount of such contest conducted by the Lessee could have a material adverse impact on such Tax Indemnitee's business Taxes or operations or involve risk of the imposition of criminal liability on a Tax Indemnitee, or (c) an Equity Insufficiency Circumstance exists, then such Tax Indemnitee may, in its sole discretion, control such contest (including selecting the forum fee for such contest, and determining whether any such contest shall be conducted by bond (i) paying such Tax under protest or (ii) resisting payment of such Tax or (iii) paying such Tax and seeking a refund thereof; provided, however, that at such Tax Indemnitee's option, such contest shall be conducted by the Lessee but in the name of such Tax Indemnitee). In no event shall the amount of such Tax Indemnitee be required or the Lessee be permitted to contest any Tax for which the Lessee is obligated to indemnify pursuant to this Section 7.1 unless: (i) the Lessee shall have acknowledged in writing (x) that it is solely responsible for any Indemnified Tax resulting from any contest under its control, (y) its liability to such Tax Indemnitee for all reasonable out of pocket costs, losses and expenses that advance exceed the Tax Indemnitees may incur Indemnifying Party's liability under this Agreement). The Tax Indemnified Party shall take such action in connection with contesting the Indemnified Tax (including, but not limited to, any reasonable legal, accounting and investigatory fees and disbursements), and (z) its liability for an indemnity payment pursuant to this Section 7.1 as a result of such claim if and to the extent such Tax Indemnitee or the Lessee, as the case may beTax Indemnifying Party shall request in writing from time to time, shall not prevail in including the contest selection of such claimcounsel and experts and the execution of powers of attorney; provided, however, that the Lessee Tax Indemnified Party shall not be required to indemnify for take any such Taxes action, unless, within 30 calendar days after delivery of the notice required by Section 7.04(a) to the extent the results Tax Indemnifying Party (or such earlier date that any payment of the contest clearly demonstrate that the Tax Taxes is not an Indemnified Tax unless the Lessee's conduct of the contest materially prejudiced the Tax Indemnitee; (ii) such Tax Indemnitee shall have received the opinion of independent tax counsel selected due by the Tax Indemnitee and reasonably satisfactory to Indemnified Party but in no event earlier than five calendar days after the Lessee and furnished at Tax Indemnifying Party's receipt of such notice), the Lessee's sole expense, opining Tax Indemnifying Party requests that a reasonable basis exists for contesting such claim or, in the event of an appeal of an adverse court or administrative agency decision, that as a result of a change in law or fact it is more likely than not that an appellate court or an administrative agency or decision making body with appellate jurisdiction, as the case may be, will reverse or substantially modify the adverse determination; (iii) the Lessee shall have agreed be contested and agrees to pay such to or on behalf of the Tax Indemnitee on demand (Indemnified Party any and at no after tax costs to the Lessor, the Owner Participant and any Tax Indemnitee) all reasonable out-of-pocket costs and expenses that such incurred by the Tax Indemnitee may incur Indemnified Party in connection with contesting such claim (claim, including, without limitation, all the reasonable legal fees of outside advisors, attorneys and accounting fees and disbursements); (iv) no Lease Default described in Section 14(a), 14(b), 14(c), 14(g) or 14(h) of the Lease or a Lease Event of Default accountants. The Tax Indemnified Party shall have occurred and shall have been continuing, unless the Tax Indemnitee in its sole discretion exercised in good faith allows the Lessee not be required to post a satisfactory bond or other security that does not involve a possibility of a Lien on the Equipment or make any portion thereof or on any interest therein, and which bond or other security will be for an amount equal to the sum of (I) the costs payment of such contest claim for at least 30 calendar days (or such shorter period as reasonably estimated by such Tax Indemnitee in good faith) and the Taxes which may be required to be indemnified and (IIby applicable Law) if such Lease Default or Lease Event of Default involves a payment obligation under an Operative Agreement that is currently not paid in full, after the unpaid amount of such obligation, plus the present value delivery of the amounts not yet due pursuant notice required by this subsection, shall timely give to the Tax Indemnifying Party any information reasonably requested by the Tax Indemnifying Party relating to such obligation; (v) such Tax Indemnitee shall have determined that the action to be taken will not result in any risk of sale, forfeiture or loss of, or the creation of any Lien, or the Lessee shall have or otherwise made a provision to protect the interest of such Tax Indemnitee (in a manner satisfactory to such Tax Indemnitee in its sole discretion), on the Equipment or any portion thereof or any interest therein; (vi) the amount of such claims alone, or, if the subject matter thereof shall be of a continuing or recurring nature, when aggregated with substantially identical potential claims with respect to the transactions contemplated by the Operative Agreements shall be at least $25,000; (vii) if such contest shall be conducted in a manner requiring the payment or deposit of the claim, the Lessee shall have paid the amount required (and at no after-tax costs to the Lessor, the Owner Participant or other Tax Indemnitee); and (viii) there is no risk of imposition of criminal liability or penalties. The Lessee otherwise shall cooperate with the Tax Indemnitee Indemnifying Party in good faith order to contest effectively any such claim.
(c) Subject to the provisions of Section 7.04(b), the Tax Indemnified Party shall enter into a settlement of such contest with the applicable Taxing Authority or prosecute such contest to a determination in a court, all as the Tax Indemnifying Party may request.
(d) Promptly after the extent of the liability of the Tax Indemnified Party with respect to any contest controlled and conducted a claim shall be established by the Tax Indemnitee final judgment or decree of a court or a final and binding settlement with a Taxing Authority having jurisdiction thereof, the Tax Indemnitee in good faith Indemnifying Party shall consult with the Lessee regarding the conduct of such contest. A Tax Indemnitee shall not be required to pursue an appeal to the U.S. Supreme Court or the highest court in Canada or Mexico. The Tax Indemnitee shall cooperate with respect to any contest controlled and conducted by the Lessee and the Lessee shall consult with pay the Tax Indemnitee regarding Indemnified Party the conduct amount of such contest. any Taxes to which the Tax Indemnified Party may become entitled by reason of the provisions of this Section 7.04.
(e) Notwithstanding anything to the contrary contained in this Section 7.1Article VII, no any interest, penalties, fines, assessments or additions to any Tax Indemnitee resulting from or attributable to the failure of the Tax Indemnified Party to act in a timely manner, including in filing Tax Returns, responding to Tax audits or other inquiries or making payments shall not be indemnifiable hereunder and shall be required to contest the sole responsibility of the Tax Indemnified Party.
(f) The indemnification provided in this Article VII shall be the sole remedy for any claim if in respect of Taxes. In the subject matter thereof shall be event of a continuing or recurring nature and shall have previously been adversely decided to conflict between the Tax Indemnitee pursuant to the contest provisions of this Section 7.1 unless there shall have been a change in the law (including, without limitation, amendments to statutes or regulations, administrative rulings (excluding private letter rulings and other rulings or materials that may not be relied upon by such Tax Indemnitee as precedent) or court decisions in the applicable jurisdiction) enacted, promulgated or effective after such claim shall have been so previously decided, and such Tax Indemnitee shall have received an opinion of independent tax counsel selected by the Tax Indemnitee and reasonably satisfactory to the Lessee, furnished at the Lessee's sole expense, to the effect that such change is favorable to the position which such Tax Indemnitee or the Lessee, as the case may be, had asserted in such previous contest and as a result of such change, it is more likely than not that the Tax Indemnitee will prevail or, in the event of an appeal of an adverse court or administrative agency decision, that it is more likely than not that an appellate court or an administrative agency tribunal or decision making body with appellate jurisdiction, as the case may be, will reverse or substantially modify the adverse determination. Notwithstanding anything contained in this Section 7.1, a Tax Indemnitee will not be required to contest the imposition of any Tax and shall be permitted to settle or compromise any claim without the Lessee's consent if such Tax Indemnitee (A) shall waive its right to indemnity under this Section 7.1 with respect to such Tax (Article VII and any claim other provisions of this Agreement, the outcome provisions of which is determined based upon the outcome of such claim) and (B) this Article VII shall pay to the Lessee any amount previously paid or advanced by the Lessee pursuant to this Section 7.1 with respect to such Tax Claim, less any reasonable costs and expenses of the Tax Indemnitee prior to such payment in respect of such Tax Claimcontrol.
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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 claim is made by any taxing authority against a Tax Indemnitee notice of such proceeding) for any Taxes with respect Imposition as to which the Lessee Representative may be required have an indemnity obligation pursuant to indemnify against hereunder this Section 13.5, or if a any Tax Indemnitee shall determine that any tax Imposition to which the Lessee Representative may have an indemnity obligation hereunder pursuant to this Section 13.5 may be payable (a "Tax Claim")payable, then such Tax Indemnitee shall give the Lessee written notice of such Tax Claim promptly (but and in any event event, within twenty 30 days) notify the Representative in writing (20) days after its receipt of the written Tax Claim or its determination, as applicable), and shall furnish Lessee with copies of such Tax Claim and all other writings received from the taxing authority to the extent relating to such claim (but provided that failure to so notify the Lessee Representative within 30 days shall not relieve the Lessee of its obligations hereunder alter such Tax Indemnitee's rights under this Section 13.5 except to the extent that it effectively such failure precludes or materially adversely affects the ability of the Lessee to conduct a contest of any Impositions) and shall not take any action with respect to such claim, proceeding or Imposition without the written consent of the Representative (such consent not to be unreasonably withheld or unreasonably delayed) for 30 days after the receipt of such notice by the Representative; provided, however, that in the case of any such claim or proceeding, if such Tax Claim). The Indemnitee shall be required by law or regulation to take action prior to the end of such 30-day period, such Tax Indemnitee shall in such notice to the Representative, so inform the Representative and such Tax Indemnitee shall not pay take any action with respect to such claim, proceeding or Imposition without the consent of the Representative (such consent not to be unreasonably withheld or unreasonably delayed) for 10 days after the receipt of such notice by the Representative unless such Tax Claim until at least thirty (30) days after providing the Lessee with such written notice, unless (a) the Tax Indemnitee is shall be required to do so by law or regulation or to take action prior to the failure to pay end of such 10-day period. The Representative shall be entitled for a period of 30 days from receipt of such notice from such Tax Claim could result in a material adverse financial, legal Indemnitee (or other consequence to the Tax Indemnitee and (b) in the written notice described above, the such shorter period as such Tax Indemnitee has notified the Lessee of such requirement is required by law or such material adverse consequence (such notice however shall not require the disclosure of the Tax Indemnitee's confidential information, as determined in the sole discretion of such Tax Indemnitiee, or the Tax Indemnitee's tax returns, books, or records). If the Lessee shall so request within 30 days after receipt of such notice (or such shorter period as is reasonably specified by the Tax Indemnitee if any contest of the Tax must be commenced prior to the expiration of 30 days), then regulation for such Tax Indemnitee shall to commence such contest), to request in good faith at Lessee's sole expense contest writing that such Tax or permit Indemnitee contest the Lessee to contest imposition of such Tax, as at the Representative's expense. If (x) such Tax Indemnitee shall elect; provided, however, that to the extent (i) the contest involves only Taxes constituting property taxes, sales taxes, or use taxes, (ii) the contest does not involve any taxes that the Lessee is not required to indemnify the Tax Indemnitee or taxes and other issues relating to a Tax Indemnitee that are unrelated to the transactions contemplated by the Operative Agreements, (iii) the contest can be pursued in the name of the Lessee Representative and independently from any other proceeding involving a Tax Claim liability of a such Tax Indemnitee for which Lessee the Representative has not agreed in writing to indemnify such Tax Indemnitee, and (iv) no Equity Insufficiency Circumstance exists, such contest shall be undertaken by the Lessee at the Lessee's sole expense and the after-tax costs of the Lessor, the Owner Participant, or other Tax Indemnitee shall be reimbursed by the Lessee. Notwithstanding the preceding sentence, if (a) such contest would involve any other type of Tax, any taxes that the Lessee is not required to indemnify the Tax Indemnitee or taxes and other issues relating to a Tax Indemnitee which are unrelated to the transactions contemplated by the Operative Agreements, (b) the Tax Indemnitee determines that such contest conducted by the Lessee could have a material adverse impact on such Tax Indemnitee's business or operations or involve risk of the imposition of criminal liability on a Tax Indemnitee, or (c) an Equity Insufficiency Circumstance exists, then such Tax Indemnitee may, in its sole discretion, control such contest (including selecting the forum for such contest, and determining whether any such contest shall be conducted by (i) paying such Tax under protest or (ii) resisting payment of such Tax or (iii) paying such Tax and seeking a refund thereof; provided, however, that at such Tax Indemnitee's option, such contest shall be conducted by the Lessee in the name of such Tax Indemnitee). In no event shall such Tax Indemnitee be required or the Lessee be permitted to contest any Tax for which the Lessee is obligated to indemnify pursuant to this Section 7.1 unless: (i) the Lessee shall have acknowledged in writing (x) that it is solely responsible for any Indemnified Tax resulting from any contest under its control, (y) its liability to such Tax Indemnitee for all reasonable out of pocket costs, losses and expenses that the Tax Indemnitees may incur in connection with contesting the Indemnified Tax (including, but not limited to, any reasonable legal, accounting and investigatory fees and disbursements), and (z) its liability for an indemnity payment pursuant to this Section 7.1 as a result of such claim if and to the extent such Tax Indemnitee or the Lessee, as the case may be, shall not prevail in the contest of such claim; provided, however, that the Lessee shall not be required to indemnify for such Taxes to the extent the results of the contest clearly demonstrate that the Tax is not an Indemnified Tax unless the Lessee's conduct of the contest materially prejudiced the Tax Indemnitee; (ii) such Tax Indemnitee shall have received the opinion of independent tax counsel selected by the Tax Indemnitee and reasonably satisfactory to the Lessee and furnished at the Lessee's sole expense, opining that a reasonable basis exists for contesting such claim or, in the event of an appeal of an adverse court or administrative agency decision, that as a result of a change in law or fact it is more likely than not that an appellate court or an administrative agency or decision making body with appellate jurisdiction, as the case may be, will reverse or substantially modify the adverse determination; (iii) the Lessee shall have agreed to pay such Tax Indemnitee on demand (and at no after tax costs to the Lessor, the Owner Participant and any Tax Indemnitee) all reasonable costs and expenses that such Tax Indemnitee may incur in connection with contesting such claim (including, without limitation, all reasonable legal and accounting fees and disbursements); (iv) no Lease Default described in Section 14(a), 14(b), 14(c), 14(g) or 14(h) of the Lease or a Lease Event of Default shall have occurred and shall have been continuing, unless the Tax Indemnitee in its sole discretion exercised in good faith allows the Lessee to post a satisfactory bond or other security that does not involve a possibility of a Lien on the Equipment or any portion thereof or on any interest therein, and which bond or other security will be for an amount equal to the sum of (I) the costs of such contest (as reasonably estimated by such Tax Indemnitee in good faith) and the Taxes which may be required to be indemnified and (II) if such Lease Default or Lease Event of Default involves a payment obligation under an Operative Agreement that is currently not paid in full, the unpaid amount of such obligation, plus the present value of the amounts not yet due pursuant to such obligation; (v) such Tax Indemnitee shall have determined that the action to be taken will not result in any risk of sale, forfeiture or loss of, or the creation of any Lien, or the Lessee shall have or otherwise made a provision to protect the interest of such Tax Indemnitee (in a manner satisfactory to such Tax Indemnitee in its sole discretion), on the Equipment or any portion thereof or any interest therein; (vi) the amount of such claims alone, or, if the subject matter thereof shall be of a continuing or recurring nature, when aggregated with substantially identical potential claims with respect to the transactions contemplated by the Operative Agreements shall be at least $25,000; (vii) if such contest shall be conducted in a manner requiring the payment or deposit of the claim, the Lessee shall have paid the amount required (and at no after-tax costs to the Lessor, the Owner Participant or other Tax Indemnitee); and (viii) there is no risk of imposition of criminal liability or penalties. The Lessee shall cooperate with the Tax Indemnitee in good faith with respect to any contest controlled and conducted by the Tax Indemnitee and the Tax Indemnitee in good faith shall consult with the Lessee regarding the conduct of such contest. A Tax Indemnitee shall not be required to pursue an appeal to the U.S. Supreme Court or the highest court in Canada or Mexico. The Tax Indemnitee shall cooperate with respect to any contest controlled and conducted by the Lessee and the Lessee shall consult with the Tax Indemnitee regarding the conduct of such contest. Notwithstanding anything to the contrary contained in this Section 7.1, no Tax Indemnitee shall be required to contest any claim if the subject matter thereof shall be of a continuing or recurring nature and shall have previously been adversely decided to the Tax Indemnitee pursuant to the contest provisions of this Section 7.1 unless there shall have been a change in the law (including, without limitation, amendments to statutes or regulations, administrative rulings (excluding private letter rulings and other rulings or materials that may not be relied upon by such Tax Indemnitee as precedent) or court decisions in the applicable jurisdiction) enacted, promulgated or effective after such claim shall have been so previously decided, and such Tax Indemnitee shall have received an opinion of independent tax counsel selected by the Tax Indemnitee and reasonably satisfactory to the Lessee, furnished at the Lessee's sole expense, to the effect that such change is favorable to the position which such Tax Indemnitee or the Lessee, as the case may be, had asserted in such previous contest and as a result of such change, it is more likely than not that the Tax Indemnitee will prevail or, in the event of an appeal of an adverse court or administrative agency decision, that it is more likely than not that an appellate court or an administrative agency tribunal or decision making body with appellate jurisdiction, as the case may be, will reverse or substantially modify the adverse determination. Notwithstanding anything contained in this Section 7.1, a Tax Indemnitee will not be required to contest the imposition of any Tax and shall be permitted to settle or compromise any claim without the Lessee's consent if such Tax Indemnitee (A) shall waive its right to indemnity under this Section 7.1 with respect to such Tax (and any claim the outcome of which is determined based upon the outcome of such claim) and (B) shall pay to the Lessee any amount previously paid or advanced by the Lessee pursuant to this Section 7.1 with respect to such Tax Claim, less any reasonable costs and expenses of the Tax Indemnitee prior to such payment in respect of such Tax Claim.
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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 a written any claim is made by against any taxing authority against a Tax Indemnitee solely for any Taxes with respect Tax which is subject to which 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 required expected to indemnify against hereunder or 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 a Tax Indemnitee shall determine that any tax the PROVISOS of the definition of "Permitted Contest" continue to which be satisfied and so long as no Event of Default exists), the Lessee may have an indemnity obligation hereunder may be payable (a "Tax Claim")at its expense may, then such Tax Indemnitee shall give the Lessee written notice of such Tax Claim promptly (but in any event within twenty (20) days after its receipt of the written Tax Claim or its determination, as applicable), and shall furnish Lessee with copies of such Tax Claim and all other writings received from the taxing authority to the extent relating permitted by Applicable Law, contest such Tax; PROVIDED that in, all other circumstances, upon notice from the Lessee to such claim Indemnitee that there exists a basis to contest any such Tax which satisfies the requirements of ABA Formal Opinion 85-352 (but failure as supported by an opinion of tax counsel to so notify 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 all reasonable attorneys' and accountants' fees), upon written 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 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 Tax for which it has an obligation to contest under this SECTION 7.2(b) shall relieve the Lessee of its obligations hereunder except to such Indemnitee under SECTION 7.2(a) only to the extent that it effectively precludes such failure results in the ability loss of an effective contest. If Applicable Law requires the payment of a contested Tax as a condition to its being contested, and the Lessee chooses to conduct a contest of the Tax Claim). The Tax Indemnitee shall not pay such Tax Claim until at least thirty (30) days after providing the Lessee with such written notice, unless (a) the Tax Indemnitee is required to do so by law or regulation or the failure to pay such Tax Claim could result in a material adverse financial, legal or other consequence to the Tax Indemnitee and (b) in the written notice described above, the Tax Indemnitee has notified the Lessee of such requirement or such material adverse consequence (such notice however shall not require the disclosure of the Tax Indemnitee's confidential information, as determined in the sole discretion of such Tax Indemnitiee, or the Tax Indemnitee's tax returns, books, or records). If the Lessee shall so request within 30 days after receipt of such notice (or such shorter period as is reasonably specified by the Tax Indemnitee if any contest of the Tax must be commenced prior to the expiration of 30 days), then such Tax Indemnitee shall in good faith at Lessee's sole expense contest such Tax or permit to direct the Lessee Indemnitee to contest such Tax, as such Tax Indemnitee shall elect; provided, however, that to the extent (i) the contest involves only Taxes constituting property taxes, sales taxes, or use taxes, (ii) the contest does not involve any taxes that then the Lessee is not required shall provide the Indemnitee with the funds to indemnify the Tax Indemnitee or taxes and other issues relating to pay such Tax, as a Tax Indemnitee that are unrelated to the transactions contemplated by the Operative Agreements, (iii) the contest can be pursued in the name of the Lessee and independently from any other proceeding involving a Tax Claim of a Tax Indemnitee for which Lessee has not agreed in writing to indemnify such Tax Indemnitee, and (iv) no Equity Insufficiency Circumstance exists, such contest shall be undertaken non-interest bearing loan by the Lessee at the Lessee's sole expense and the after-tax costs of the Lessor, the Owner Participant, or other Tax Indemnitee shall be reimbursed by the Lessee. Notwithstanding the preceding sentence, if (a) such contest would involve any other type of Tax, any taxes that the Lessee is not required to indemnify the Tax Indemnitee or taxes and other issues relating to a Tax Indemnitee which are unrelated to the transactions contemplated Indemnitee to be repaid by the Operative Agreements, (b) the Tax Indemnitee determines that such contest conducted by the Lessee could have a material adverse impact on such Tax Indemnitee's business or operations or involve risk of the imposition of criminal liability on a Tax Indemnitee, or (c) an Equity Insufficiency Circumstance exists, then such Tax Indemnitee may, in its sole discretion, control such contest (including selecting the forum for such contest, and determining whether any such contest shall be conducted by (i) paying such Tax under protest or (ii) resisting payment recovery of such Tax or and any remaining unpaid amount to reduce the obligations to indemnify for such Tax. Lessee shall indemnify the Indemnitee on a grossed-up basis (iiiin accordance with SECTION 7.5) paying for and against any adverse tax consequences of such Tax and seeking interest-free loan. In the event that the Indemnitee receives a refund thereof; provided, however, that at such Tax Indemnitee's option, such contest shall be conducted by the Lessee (or other like adjustment) in the name respect of such Tax Indemnitee). In no event shall such Tax Indemnitee be required or the Lessee be permitted to contest any Tax for which the Lessee is obligated to indemnify pursuant to this Section 7.1 unless: (i) the Lessee shall have acknowledged in writing (x) that it is solely responsible for any Indemnified Tax resulting from any contest under its control, (y) its liability to such Tax Indemnitee for all reasonable out of pocket costs, losses and expenses that the Tax Indemnitees may incur in connection with contesting the Indemnified Tax (including, but not limited to, any reasonable legal, accounting and investigatory fees and disbursements), and (z) its liability for an indemnity payment pursuant to this Section 7.1 as a result of such claim if and to the extent such Tax Indemnitee or the has been reimbursed by Lessee, as the case may be, shall not prevail in the contest of such claim; provided, however, that the Lessee shall not be required to indemnify for such Taxes to the extent the results of the contest clearly demonstrate that the Tax is not an Indemnified Tax unless the Lessee's conduct of the contest materially prejudiced the Tax Indemnitee; (ii) such Tax Indemnitee shall have received the opinion of independent tax counsel selected by the Tax Indemnitee and reasonably satisfactory to the Lessee and furnished at the Lessee's sole expense, opining that a reasonable basis exists for contesting such claim or, in the event of an appeal of an adverse court or administrative agency decision, that as a result of a change in law or fact it is more likely than not that an appellate court or an administrative agency or decision making body with appellate jurisdiction, as the case may be, will reverse or substantially modify the adverse determination; (iii) the Lessee shall have agreed to pay such Tax Indemnitee on demand (and at no after tax costs to the Lessor, the Owner Participant and any Tax Indemnitee) all reasonable costs and expenses that such Tax Indemnitee may incur in connection with contesting such claim (including, without limitation, all reasonable legal and accounting fees and disbursements); (iv) no Lease Default described in Section 14(a), 14(b), 14(c), 14(g) or 14(h) of the Lease or a Lease Event of Default shall have occurred and shall have been continuing, unless the Tax Indemnitee in its sole discretion exercised in good faith allows the Lessee to post a satisfactory bond or other security that does not involve a possibility of a Lien on the Equipment or any portion thereof or on any interest therein, and which bond or other security will be for an amount equal to the sum of (I) the costs of such contest (as reasonably estimated by such Tax Indemnitee in good faith) and the Taxes which may be required to be indemnified and (II) if such Lease Default or Lease Event of Default involves a payment obligation under an Operative Agreement that is currently not paid in full, the unpaid amount of such obligation, plus the present value of the amounts not yet due pursuant to such obligation; (v) such Tax Indemnitee shall have determined that the action to be taken will not result in any risk of sale, forfeiture or loss of, or the creation of any Lien, or the Lessee shall have or otherwise made a provision to protect the interest of such Tax Indemnitee (in a manner satisfactory to such Tax Indemnitee in its sole discretion), on the Equipment or any portion thereof or any interest therein; (vi) immediately remit the amount of such claims alone, or, if the subject matter thereof shall be of a continuing or recurring nature, when aggregated with substantially identical potential claims with respect refund to the transactions contemplated by the Operative Agreements shall be at least $25,000; (vii) if such contest shall be conducted in a manner requiring the payment or deposit of the claim, the Lessee shall have paid the amount required (and at no after-tax costs to the Lessor, the Owner Participant or other Tax Indemnitee); and (viii) there is no risk of imposition of criminal liability or penalties. The Lessee shall cooperate with the Tax Indemnitee in good faith with respect to any contest controlled and conducted by the Tax Indemnitee and the Tax Indemnitee in good faith shall consult with the Lessee regarding the conduct of such contest. A Tax Indemnitee shall not be required to pursue an appeal to the U.S. Supreme Court or the highest court in Canada or Mexico. The Tax Indemnitee shall cooperate with respect to any contest controlled and conducted by the Lessee and the Lessee shall consult with the Tax Indemnitee regarding the conduct of such contest. Notwithstanding anything to the contrary contained in this Section 7.1, no Tax Indemnitee shall be required to contest any claim if the subject matter thereof shall be of a continuing or recurring nature and shall have previously been adversely decided to the Tax Indemnitee pursuant to the contest provisions of this Section 7.1 unless there shall have been a change in the law (including, without limitation, amendments to statutes or regulations, administrative rulings (excluding private letter rulings and other rulings or materials that may not be relied upon by such Tax Indemnitee as precedent) or court decisions in the applicable jurisdiction) enacted, promulgated or effective after such claim shall have been so previously decided, and such Tax Indemnitee shall have received an opinion of independent tax counsel selected by the Tax Indemnitee and reasonably satisfactory to the Lessee, furnished at the Lessee's sole expense, to the effect that such change is favorable to the position which such Tax Indemnitee or the Lessee, as the case may be, had asserted in such previous contest and as a result net of such change, it is more likely than not that the Tax Indemnitee will prevail or, in the event of an appeal of an adverse court or administrative agency decision, that it is more likely than not that an appellate court or an administrative agency tribunal or decision making body with appellate jurisdiction, as the case may be, will reverse or substantially modify the adverse determination. Notwithstanding anything contained in this Section 7.1, a Tax Indemnitee will not be required to contest the imposition of any Tax and shall be permitted to settle or compromise any claim without the Lessee's consent if such Tax Indemnitee (A) shall waive its right to indemnity under this Section 7.1 with respect to such Tax (and any claim the outcome of which is determined based upon the outcome of such claim) and (B) shall pay to the Lessee any amount previously paid or advanced by the Lessee pursuant to this Section 7.1 with respect to such Tax Claim, less any reasonable all costs and expenses of the Tax Indemnitee prior to incurred by such payment in respect of such Tax Claim.Indemnitee, together with any interest actually received thereon. 39 Participation Agreement
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