Contests. (A) If a written claim shall be made against and received by any Indemnitee for any Tax for which Borrower is obligated to indemnify pursuant to this Section 6(b), such Indemnitee shall notify Borrower in writing of such claim within 30 days after its receipt, and shall provide Borrower such information regarding such claim as Borrower may reasonably request; provided, however, that the failure to provide such notice shall not release Borrower from any of its obligations to indemnify under Section 6 hereof unless, and only to the extent that, such failure effectively precludes Borrower’s contest rights. To the extent permitted under applicable law, such Indemnitee will not make any payments with respect to such claim for at least 30 days after giving notice of such claim to Borrower. (B) If requested by Borrower in writing within 30 days after its receipt of such notice or such shorter period as may be required by applicable law, such Indemnitee shall, at the expense of Borrower and subject to subparagraph (C) below, contest the validity, applicability or amount of such Taxes by, in the case of an Indemnitee-Controlled Contest, in such Indemnitee’s sole discretion or, in the case of a Borrower-Controlled Contest, in Borrower’s sole discretion, (1) resisting payment thereof if practicable, (2) not paying such Tax except under protest, (3) if protest is necessary and proper, and if payment of such Tax is made, using reasonable efforts to obtain a refund thereof, in appropriate administrative and judicial proceedings, and (4) in the case of an Indemnitee-Controlled Contest, considering in good faith any other reasonable action as Borrower may reasonably request. Each Indemnitee shall consult in good faith with Borrower and Borrower’s counsel, and Borrower shall consult in good faith with such Indemnitee and its counsel in the case of a Borrower-Controlled Contest. concerning the forum in which the contest is most likely to be favorably resolved and whether such contest shall be by (x) resisting payment of such Tax, (y) paying such Tax under protest or (z) paying such Tax and seeking a refund or other repayment thereof. (C) In no event shall an Indemnitee be required, or Borrower permitted, to contest the imposition of any Tax for which Borrower is obligated pursuant to this Section 6(b) unless (1) Borrower shall have agreed to pay and shall promptly be paying on request all reasonable costs and expenses that such Indemnitee incurs in contesting such claim or arising out of or relating to such contest (including legal fees, accounting fees, and disbursements, including those on appeal, if any); (2) such contest is not reasonably likely to result in a material danger of the sale, seizure, forfeiture or loss of the Aircraft, or the creation of any Lien thereon other than Liens for Taxes (i) either not yet due or being contested in good faith by appropriate proceedings and (ii) for which such reserves, if any, as are required to be provided under generally accepted accounting principles have been provided by Borrower, and there is no risk of criminal penalties; (3) if such contest shall be conducted in a manner requiring the payment of the claim, Borrower shall have advanced sufficient funds, on an interest-free basis, to make the payment required, and shall have agreed to indemnify the Indemnitee against any additional net after-Tax cost to such Indemnitee of such advance; (4) if requested by the Indemnitee in writing, such Indemnitee shall have received an opinion of independent Tax counsel selected by Borrower and reasonably acceptable to such Indemnitee and furnished at Borrower’s sole expense to the effect that a Realistic Possibility of Success exists for contesting such claim (or, in the case of an appeal of an adverse judicial determination, a written opinion from such independent Tax counsel to the effect that it is more likely than not that such adverse judicial determination will be reversed or substantially modified); (5) Borrower shall have delivered to such Indemnitee a written acknowledgment of Borrower’s obligation to indemnify such Indemnitee to the extent that the contest is not successful; provided, however, that Borrower will not be bound by its acknowledgment of liability if the contest is resolved on a clear and unambiguous basis showing no such liability under this Section 6(b) with respect to such Tax; (6) if a Specified Default or Event of Default shall have occurred and be continuing, Borrower shall have provided security for its obligation hereunder satisfactory to the Indemnitee by placing in escrow sufficient funds to cover any such contested Tax and the reasonably expected expenses of such contest on an After-Tax Basis, or otherwise providing satisfactory provisions for payment of such amounts determined by the Indemnitee in its sole discretion; (7) the aggregate amount of all indemnity payments that Borrower may be required to make to such Indemnitee with respect to such claim (or similar or related claims) is at least $60,000; and (8) the claim is not for a Tax the imposition of which has been previously contested by, or at the request of, Borrower hereunder, and such previous contest (including all allowable appeals) was decided adversely to Borrower, unless Borrower has delivered an opinion of independent Tax counsel selected by Borrower and reasonably acceptable to the Indemnitee to the effect that, on the basis of (i) a change in applicable law, or (ii) a difference in the underlying facts, there is currently a Realistic Possibility of Success for contesting such claim. (D) If any Indemnitee shall obtain a refund of all or any part of any Tax paid by Borrower, such Indemnitee shall pay Borrower, but not before Borrower shall have made all payments theretofore due to such Indemnitee pursuant to this Section 6(b) and any other payments theretofore due such Indemnitee under any of the Operative Documents, an amount equal to the amount of such refund (net of any Taxes imposed thereon), including interest received and attributable thereto (net of any Taxes imposed thereon) plus, if Borrower has paid an amount pursuant to the first sentence of Section 6(b)(iii)(A), any net Tax benefit (or minus any net Tax detriment) realized by such Indemnitee as a result of any refund received, and payment made, by such Indemnitee pursuant to this sentence; provided that the Indemnitee shall not be obligated to pay an amount under the preceding sentence to the extent that such amount would exceed the amount of such Taxes paid, reimbursed or advanced by Borrower to such Indemnitee (other than the cost of the contest thereof); provided, further, that any amount not paid to Borrower pursuant to the foregoing limitation shall be carried forward to reduce pro tanto any future payments that Borrower may be required to make to such Indemnitee pursuant to this Section 6(b). If any Indemnitee shall have paid Borrower any refund of all or part of any Tax paid by Borrower and it is subsequently determined that such Indemnitee was not entitled to the refund, such determination shall be treated as the imposition of a Tax for which Borrower is obligated to indemnify such Indemnitee pursuant to the provisions of this Section 6(b) without regard to the exclusions set forth in Section 6(b)(ii) (other than subparagraphs (4), (11) and (12) thereof). Provided no Specified Default or Event of Default has occurred and is continuing, an Indemnitee shall not settle any such claim or contest pursuant to this provision without the written consent of Borrower, which consent shall not be unreasonably withheld, conditioned or delayed; provided, that an Indemnitee may settle at any time without the consent of Borrower if the Indemnitee waives (by written notice to Borrower) the payment by Borrower of an indemnity in respect of such issue and any related issue the contest of which is effectively foreclosed by the settlement of such issue, including any payment arising from such issue in subsequent years or which by reason of the fact that such issue is of a continuing nature, and promptly pays to Borrower any Tax previously paid or any interest-free loan advanced by Borrower (other than expenses of such contests) with respect to such issue. (E) Nothing contained in this Section 6(b)(iv) shall require any Indemnitee to contest, or permit Borrower to contest in the name of such Indemnitee, a claim that such Indemnitee would otherwise be required to contest pursuant to this Section 6(b)(iv) if such Indemnitee shall waive payment by Borrower of any amount that might otherwise be payable by Borrower under this Section 6(b) in connection with such claim (other than the costs of contest previously incurred), nor shall any Indemnitee be required to pursue any appeal to the United States Supreme Court.
Appears in 1 contract
Sources: Loan Agreement (Skywest Inc)
Contests. (Ai) If a written claim Carrier (at Carrier’s own expense) shall be made against and received entitled to control the defense (including as to settlement, except as provided below) of any audit, litigation, proceeding, or other action with respect to Taxes (a “Tax Proceeding”) with respect to a Pre-Closing Tax Period (other than a Straddle Period, Straddle Periods being governed by any Indemnitee for any Tax for which Borrower is obligated Section 11.01(h)(iii) below) to indemnify pursuant the extent such audit, litigation, proceeding or other action relates to this Section 6(bthe Company or the Northeast Business Contributed Assets (“Pre-Closing Northeast Business Audits”), such Indemnitee shall notify Borrower in writing of such claim within 30 days after its receipt, and shall provide Borrower such information regarding such claim as Borrower may reasonably request; provided, however, that the failure to provide such notice Carrier shall not release Borrower from any of cause the Company to enter into a settlement that by its obligations to indemnify under Section 6 hereof unlessterms, and only without Watsco’s prior written consent, binds the Company for a Post-Closing Tax Period as a result of the settlement of such Pre-Closing Northeast Business Audit. The Company shall be entitled to control such Tax Proceeding (at Carrier’s expense) to the extent that, such failure effectively precludes Borrower’s contest rights. To the extent permitted under applicable law, such Indemnitee will Carrier does not make any payments with respect exercise its right to such claim for at least 30 days after giving notice of such claim to Borrower.
(B) If requested by Borrower in writing within 30 days after its receipt of such notice or such shorter period as may be required by applicable law, such Indemnitee shall, at the expense of Borrower and subject to subparagraph (C) below, contest the validity, applicability or amount of such Taxes by, in the case of an Indemnitee-Controlled Contest, in such Indemnitee’s sole discretion or, in the case of control a Borrower-Controlled Contest, in Borrower’s sole discretion, (1) resisting payment thereof if practicable, (2) not paying such Tax except under protest, (3) if protest is necessary and proper, and if payment of such Tax is made, using reasonable efforts to obtain a refund thereof, in appropriate administrative and judicial proceedings, and (4) in the case of an Indemnitee-Controlled Contest, considering in good faith any other reasonable action as Borrower may reasonably request. Each Indemnitee shall consult in good faith with Borrower and Borrower’s counsel, and Borrower shall consult in good faith with such Indemnitee and its counsel in the case of a Borrower-Controlled Contest. concerning the forum in which the contest is most likely to be favorably resolved and whether such contest shall be by (x) resisting payment of such Tax, (y) paying such Tax under protest or (z) paying such Tax and seeking a refund or other repayment thereof.
(C) In no event shall an Indemnitee be required, or Borrower permitted, to contest the imposition of any Tax for which Borrower is obligated Proceeding pursuant to this Section 6(b) unless (1) Borrower 11.01(h)(i). The Parties agree that the Company shall have agreed not be permitted to pay and shall promptly be paying on request all reasonable costs and expenses that such Indemnitee incurs in contesting such claim or arising out of or relating to such contest (including legal feessettle, accounting fees, and disbursements, including those on appeal, if any); (2) such contest is not reasonably likely to result in a material danger of the sale, seizure, forfeiture or loss of the Aircraftcompromise, or discharge any Pre-Closing Northeast Business Audit, or admit any liability with respect thereto, without the creation prior written consent of any Lien thereon other than Liens for Taxes (i) either not yet due or being contested in good faith by appropriate proceedings and Carrier.
(ii) for which such reserves, if any, as are required to be provided under generally accepted accounting principles have been provided by Borrower, and there is no risk of criminal penalties; Watsco (3at Watsco’s own expense) if such contest shall be conducted in entitled to control the defense (including as to settlement, except as provided below) of any Tax Proceeding with respect to a manner requiring the payment of the claimPre-Closing Tax Period (other than a Straddle Period, Borrower shall have advanced sufficient funds, on an interest-free basis, to make the payment required, and shall have agreed to indemnify the Indemnitee against any additional net after-Tax cost to such Indemnitee of such advance; (4Straddle Periods being governed by Section 11.01(h)(iv) if requested by the Indemnitee in writing, such Indemnitee shall have received an opinion of independent Tax counsel selected by Borrower and reasonably acceptable to such Indemnitee and furnished at Borrower’s sole expense to the effect that a Realistic Possibility of Success exists for contesting such claim (or, in the case of an appeal of an adverse judicial determination, a written opinion from such independent Tax counsel to the effect that it is more likely than not that such adverse judicial determination will be reversed or substantially modified); (5below) Borrower shall have delivered to such Indemnitee a written acknowledgment of Borrower’s obligation to indemnify such Indemnitee to the extent that such Tax Proceeding relates to the contest is not successful; Homans Business Contributed Assets (“Pre-Closing Homans Business Audit”), provided, however, that Borrower will Watsco shall not be bound cause the Company to enter into a settlement that by its acknowledgment terms, and without Carrier’s prior written consent, binds the Company for a Post-Closing Tax Period as a result of liability if the contest is resolved on a clear and unambiguous basis showing no settlement of such liability under this Section 6(bPre-Closing Homans Business Audit. The Company shall be entitled to control such Tax Proceeding (at Watsco’s expense) with respect to such Tax; (6) if a Specified Default or Event of Default shall have occurred and be continuing, Borrower shall have provided security for its obligation hereunder satisfactory to the Indemnitee by placing in escrow sufficient funds extent Watsco does not exercise its right to cover any such contested Tax and the reasonably expected expenses of such contest on an After-Tax Basis, or otherwise providing satisfactory provisions for payment of such amounts determined by the Indemnitee in its sole discretion; (7) the aggregate amount of all indemnity payments that Borrower may be required to make to such Indemnitee with respect to such claim (or similar or related claims) is at least $60,000; and (8) the claim is not for control a Tax the imposition of which has been previously contested by, or at the request of, Borrower hereunder, and such previous contest (including all allowable appeals) was decided adversely to Borrower, unless Borrower has delivered an opinion of independent Tax counsel selected by Borrower and reasonably acceptable to the Indemnitee to the effect that, on the basis of (i) a change in applicable law, or (ii) a difference in the underlying facts, there is currently a Realistic Possibility of Success for contesting such claim.
(D) If any Indemnitee shall obtain a refund of all or any part of any Tax paid by Borrower, such Indemnitee shall pay Borrower, but not before Borrower shall have made all payments theretofore due to such Indemnitee Proceeding pursuant to this Section 6(b11.01(h)(ii).
(iii) and any other payments theretofore due such Indemnitee under any of In the Operative Documents, an amount equal to the amount of such refund (net of any Taxes imposed thereon), including interest received and attributable thereto (net of any Taxes imposed thereon) plus, if Borrower has paid an amount pursuant to the first sentence of Section 6(b)(iii)(A), any net Tax benefit (or minus any net Tax detriment) realized by such Indemnitee as a result of any refund received, and payment made, by such Indemnitee pursuant to this sentence; provided that the Indemnitee shall not be obligated to pay an amount under the preceding sentence to the extent that such amount would exceed the amount of such Taxes paid, reimbursed or advanced by Borrower to such Indemnitee (other than the cost of the contest thereof); provided, further, that any amount not paid to Borrower pursuant to the foregoing limitation shall be carried forward to reduce pro tanto any future payments that Borrower may be required to make to such Indemnitee pursuant to this Section 6(b). If any Indemnitee shall have paid Borrower any refund of all or part of any Tax paid by Borrower and it is subsequently determined that such Indemnitee was not entitled to the refund, such determination shall be treated as the imposition case of a Tax Proceeding for which Borrower is obligated to indemnify such Indemnitee pursuant a Straddle Period with respect to the provisions of this Section 6(b) without regard Company or the Northeast Business Contributed Assets, if such Tax Proceeding relates or could reasonably be expected to relate to both a claim for Taxes with respect to the exclusions set forth Company or the Northeast Business Contributed Assets (“Northeast Business Taxes”) for a Pre-Closing Tax Period and a claim for Northeast Business Taxes for a Post-Closing Tax Period, and such claim for Northeast Business Taxes for a Pre-Closing Tax Period is not separable from such claim for Northeast Business Taxes for a Post-Closing Tax Period, the Company (if the claim for Northeast Business Taxes that are for a Post-Closing Tax Period exceeds or reasonably could be expected to exceed in Section 6(b)(iiamount the claim for Northeast Business Taxes for a Pre-Closing Tax Period) or otherwise Carrier (other than subparagraphs (4Carrier or the Company, as the case may be, the “Northeast Business Tax Contest Controlling Party”), shall be entitled to control the defense of such Tax Proceeding. In such case, the other Party (11the “Northeast Business Tax Contest Non-Controlling Party”) shall be entitled to participate fully (at the Northeast Business Tax Contest Non-Controlling Party’s sole expense) in the conduct of such Tax Proceeding and (12) thereof). Provided no Specified Default or Event of Default has occurred and is continuing, an Indemnitee the Northeast Business Tax Contest Controlling Party shall not settle any settle, compromise, or discharge such claim or contest pursuant to this provision Tax Proceeding without the written consent of Borrower, such Northeast Business Tax Contest Non-Controlling Party (which consent shall not be unreasonably withheld, conditioned withheld or delayed; provided). The costs and expenses of conducting the defense of such Tax Proceeding shall be reasonably apportioned based on the relative amounts of the claim for Northeast Business Taxes for a Pre-Closing Tax Period and the claim for Northeast Business Taxes for a Post-Closing Tax Period.
(iv) In the case of a Tax Proceeding for a Straddle Period with respect to the Homans Business Contributed Assets, if such Tax Proceeding relates or could reasonably be expected to relate to both a claim for Taxes with respect to the Homans Business Contributed Assets (“Homans Business Taxes”) for a Pre-Closing Tax Period and a claim for Homans Business Taxes for a Post-Closing Tax Period, and such claim for Homans Business Taxes for a Pre-Closing Tax Period is not separable from such claim for Homans Business Taxes for a Post-Closing Tax Period, the Company (if the claim for Homans Business Taxes that an Indemnitee are for a Post-Closing Tax Period exceeds or reasonably could be expected to exceed in amount the claim for Homans Business Taxes for a Pre-Closing Tax Period) or otherwise Watsco (Watsco or the Company, as the case may settle be, the “Homans Business Tax Contest Controlling Party”), shall be entitled to control the defense of such Tax Proceeding. In such case, the other Party (the “Homans Business Tax Contest Non-Controlling Party”) shall be entitled to participate fully (at any time the Homans Business Tax Contest Non-Controlling Party’s sole expense) in the conduct of such Tax Proceeding and the Homans Business Tax Contest Controlling Party shall not settle, compromise, or discharge such Tax Proceeding without the consent of Borrower if such Homans Business Tax Contest Non-Controlling Party (which consent shall not be unreasonably withheld or delayed). The costs and expenses of conducting the Indemnitee waives (by written notice to Borrower) the payment by Borrower of an indemnity in respect defense of such issue and any related issue Tax Proceeding shall be reasonably apportioned based on the contest of which is effectively foreclosed by the settlement of such issue, including any payment arising from such issue in subsequent years or which by reason relative amounts of the fact that such issue is of claim for Homans Business Taxes for a continuing nature, Pre-Closing Tax Period and promptly pays to Borrower any the claim for Homans Business Taxes for a Post-Closing Tax previously paid or any interest-free loan advanced by Borrower (other than expenses of such contests) with respect to such issuePeriod.
(E) Nothing contained in this Section 6(b)(iv) shall require any Indemnitee to contest, or permit Borrower to contest in the name of such Indemnitee, a claim that such Indemnitee would otherwise be required to contest pursuant to this Section 6(b)(iv) if such Indemnitee shall waive payment by Borrower of any amount that might otherwise be payable by Borrower under this Section 6(b) in connection with such claim (other than the costs of contest previously incurred), nor shall any Indemnitee be required to pursue any appeal to the United States Supreme Court.
Appears in 1 contract
Contests. Notwithstanding anything to the contrary contained in this Agreement:
(Aa) If After the Closing Date, Purchaser shall notify Seller in writing within ten (10) days of the date a written claim shall be is made against and received or threatened in writing by any Indemnitee for any Taxing Authority that, if successful, may reasonably result in an indemnity payment by Seller under Section 6.4 (a "Tax for which Borrower is obligated to indemnify pursuant to this Section 6(bClaim"), such Indemnitee . Such notice shall notify Borrower contain factual information describing in writing reasonable detail the nature and basis of such claim within 30 days after its receiptand the amount thereof, to the extent known, and shall provide Borrower include copies of any notice or other document received from any Taxing Authority in respect of any such information regarding asserted Tax liability. Failure by Purchaser to give such claim as Borrower notice to the Seller shall not relieve the Seller of any liability that it may reasonably requesthave on account of its indemnification obligation under this Article VI, except to the extent that Seller is materially and adversely prejudiced thereby in the defense of such Tax Claim; provided, however, that irrespective of whether the Seller is materially or adversely prejudiced, Seller shall be permitted to reduce any liability Seller may have on account of its indemnification obligation under this Article VI by the amount of its actual, out-of-pocket monetary damages that are caused by the Purchaser's failure to provide such timely give the notice shall not release Borrower from any of its obligations to indemnify under Section 6 hereof unless, and only to the extent that, such failure effectively precludes Borrower’s contest rights. To the extent permitted under applicable law, such Indemnitee will not make any payments with respect to such claim for at least 30 days after giving notice of such claim to Borrower.
(B) If requested by Borrower in writing within 30 days after its receipt of such notice or such shorter period as may be required by applicable law, such Indemnitee shall, at the expense of Borrower and subject to subparagraph (C) below, contest the validity, applicability or amount of such Taxes by, in the case of an Indemnitee-Controlled Contest, in such Indemnitee’s sole discretion or, in the case of a Borrower-Controlled Contest, in Borrower’s sole discretion, (1) resisting payment thereof if practicable, (2) not paying such Tax except under protest, (3) if protest is necessary and proper, and if payment of such Tax is made, using reasonable efforts to obtain a refund thereof, in appropriate administrative and judicial proceedings, and (4) in the case of an Indemnitee-Controlled Contest, considering in good faith any other reasonable action as Borrower may reasonably request. Each Indemnitee shall consult in good faith with Borrower and Borrower’s counsel, and Borrower shall consult in good faith with such Indemnitee and its counsel in the case of a Borrower-Controlled Contest. concerning the forum in which the contest is most likely to be favorably resolved and whether such contest shall be by (x) resisting payment of such Tax, (y) paying such Tax under protest or (z) paying such Tax and seeking a refund or other repayment thereof.
(C) In no event shall an Indemnitee be required, or Borrower permitted, to contest the imposition of any Tax for which Borrower is obligated pursuant to this Section 6(b6.7(a).
(b) Seller will have the right, at its option, upon timely notice to Purchaser, to assume at its own expense control of any audit or other defense of any Tax Claim (other than a Tax Claim relating solely to Taxes of RSA SLISI for a Straddle Period, which as described below, the parties shall jointly control) with its own counsel, provided that Seller's notice acknowledges Seller's indemnification liability for such claim. Seller's right to control a Tax Claim will be limited to issues in respect of which amounts in dispute would be paid by Seller or for which Seller would be liable pursuant to Section 6.4. Costs of defending or contesting such Tax Claims are to be borne by Seller unless (1) Borrower the Tax Claim relates to a Straddle Period, in which event such costs shall have agreed to pay be fairly apportioned as described below. Purchaser and RSA SLISI at their own expense each shall promptly be paying on request all reasonable costs and expenses that such Indemnitee incurs cooperate with Seller in contesting such claim or arising out any Tax Claim, which cooperation shall include the retention and, upon Seller's request, the provision of or relating records and information that are reasonably relevant to such contest (including legal fees, accounting fees, Tax Claim and disbursements, including those making employees available on appeal, if any); (2) such contest is not reasonably likely a mutually convenient basis to result in a material danger of the sale, seizure, forfeiture provide additional information or loss of the Aircraft, or the creation explanation of any Lien thereon other than Liens for Taxes (i) either not yet due or being contested in good faith by appropriate proceedings and (ii) for which such reservesmaterial provided hereunder. Notwithstanding the foregoing, if any, as are required to be provided under generally accepted accounting principles have been provided by Borrower, and there is no risk of criminal penalties; (3) if such contest Seller shall be conducted in a manner requiring the payment of the claim, Borrower shall have advanced sufficient funds, on an interest-free basis, to make the payment required, and shall have agreed to indemnify the Indemnitee against any additional net after-Tax cost to such Indemnitee of such advance; (4) if requested by the Indemnitee in writing, such Indemnitee shall have received an opinion of independent Tax counsel selected by Borrower and reasonably acceptable to such Indemnitee and furnished at Borrower’s sole expense neither consent nor agree to the effect that a Realistic Possibility settlement of Success exists for contesting such claim (or, in the case of an appeal of an adverse judicial determination, a written opinion from such independent any Tax counsel to the effect that it is more likely than not that such adverse judicial determination will be reversed or substantially modified); (5) Borrower shall have delivered to such Indemnitee a written acknowledgment of Borrower’s obligation to indemnify such Indemnitee to the extent that the contest is not successful; provided, however, that Borrower will not be bound by its acknowledgment of liability if the contest is resolved on a clear and unambiguous basis showing no such liability under this Section 6(b) Claim with respect to such Tax; any liability for Taxes that may affect the liability for any state, federal or foreign income tax of RSA SLISI or any affiliated group (6as defined in section 1504(a) if a Specified Default or Event of Default shall have occurred and be continuing, Borrower shall have provided security for its obligation hereunder satisfactory to the Indemnitee by placing in escrow sufficient funds to cover any such contested Tax and the reasonably expected expenses of such contest on an After-Tax Basis, or otherwise providing satisfactory provisions for payment of such amounts determined by the Indemnitee in its sole discretion; (7Code) the aggregate amount of all indemnity payments that Borrower may be required to make to such Indemnitee with respect to such claim (or similar or related claims) is at least $60,000; and (8) the claim is not for a Tax the imposition of which has been previously contested by, or at the request of, Borrower hereunder, and such previous contest (including all allowable appeals) was decided adversely to Borrower, unless Borrower has delivered an opinion of independent RSA SLISI is a member for any Post-Closing Tax counsel selected by Borrower and reasonably acceptable to the Indemnitee to the effect that, on the basis of (i) a change in applicable law, or (ii) a difference in the underlying facts, there is currently a Realistic Possibility of Success for contesting such claim.
(D) If any Indemnitee shall obtain a refund of all or any part of any Tax paid by Borrower, such Indemnitee shall pay Borrower, but not before Borrower shall have made all payments theretofore due to such Indemnitee pursuant to this Section 6(b) and any other payments theretofore due such Indemnitee under any of the Operative Documents, an amount equal to the amount of such refund (net of any Taxes imposed thereon), including interest received and attributable thereto (net of any Taxes imposed thereon) plus, if Borrower has paid an amount pursuant to the first sentence of Section 6(b)(iii)(A), any net Tax benefit (or minus any net Tax detriment) realized by such Indemnitee as a result of any refund received, and payment made, by such Indemnitee pursuant to this sentence; provided that the Indemnitee shall not be obligated to pay an amount under the preceding sentence to the extent that such amount would exceed the amount of such Taxes paid, reimbursed or advanced by Borrower to such Indemnitee (other than the cost of the contest thereof); provided, further, that any amount not paid to Borrower pursuant to the foregoing limitation shall be carried forward to reduce pro tanto any future payments that Borrower may be required to make to such Indemnitee pursuant to this Section 6(b). If any Indemnitee shall have paid Borrower any refund of all or part of any Tax paid by Borrower and it is subsequently determined that such Indemnitee was not entitled to the refund, such determination shall be treated as the imposition of a Tax for which Borrower is obligated to indemnify such Indemnitee pursuant to the provisions of this Section 6(b) without regard to the exclusions set forth in Section 6(b)(ii) (other than subparagraphs (4), (11) and (12) thereof). Provided no Specified Default or Event of Default has occurred and is continuing, an Indemnitee shall not settle any such claim or contest pursuant to this provision Period without the prior written consent of BorrowerPurchaser, which consent shall not be unreasonably withheld, conditioned or delayed; provided, and neither Seller, nor any Affiliate of Seller, shall file an amended Tax Return that an Indemnitee may settle at increase the liability for Taxes of RSA SLISI for any time Post-Closing Tax Period without the prior written consent of Borrower if the Indemnitee waives (by written notice to Borrower) the payment by Borrower of an indemnity in respect of such issue Purchaser, which consent shall not be unreasonably withheld, conditioned or delayed. Purchaser and any related issue the contest of which is effectively foreclosed by the settlement of such issue, including any payment arising from such issue in subsequent years or which by reason of the fact that such issue is of a continuing nature, and promptly pays to Borrower any Tax previously paid or any interest-free loan advanced by Borrower (other than expenses of such contests) with respect to such issue.
(E) Nothing contained in this Section 6(b)(iv) Seller shall require any Indemnitee to contest, or permit Borrower to contest in the name of such Indemnitee, a claim that such Indemnitee would otherwise be required to contest pursuant to this Section 6(b)(iv) if such Indemnitee shall waive payment by Borrower of any amount that might otherwise be payable by Borrower under this Section 6(b) jointly control all proceedings taken in connection with such claim (other than any Tax Claims relating solely to a Straddle Period of RSA SLISI and each party shall bear its own out-of-pocket costs and expenses of the contest and all joint costs and expenses of the contest previously incurred), nor shall any Indemnitee be required to pursue any appeal to borne in the United States Supreme Courtsame ratio as the applicable proposed Tax would be allocated.
Appears in 1 contract
Contests. (A) If a written any claim shall be made against and received by any Tax Indemnitee or if any proceeding shall be commenced against any Tax Indemnitee (including a written notice of such proceeding) for any Tax for Imposition as to which Borrower is obligated to indemnify the Lessee may have an indemnity obligation pursuant to this Section 6(b14.5(a), such or if any Tax Indemnitee shall determine that any Imposition as to which the Lessee may have an indemnity obligation pursuant to Section 14.5(a) may be payable, such Tax Indemnitee shall promptly notify Borrower Lessee in writing 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 thirty (30) days after the receipt of such claim within 30 days after its receipt, and shall provide Borrower such information regarding such claim as Borrower may reasonably requestnotice by Lessee; provided, however, that in the failure case of any such claim or proceeding, if such Tax Indemnitee shall be required by law or regulation to provide take action prior to the end of such thirty (30)-day period, such Tax Indemnitee shall in such notice to Lessee, so inform Lessee, and such Tax Indemnitee shall not release Borrower from take any of its obligations to indemnify under Section 6 hereof unless, and only to the extent that, such failure effectively precludes Borrower’s contest rights. To the extent permitted under applicable law, such Indemnitee will not make any payments action with respect to such claim claim, proceeding or Imposition without the consent of Lessee (such consent not to be unreasonably withheld or unreasonably delayed) for at least 30 ten (10) days after giving notice of such claim to Borrower.
(B) If requested by Borrower in writing within 30 days after its 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 may be the Tax Indemnitee has notified Lessee is required by applicable lawlaw or regulation for the Tax Indemnitee to commence such contest) to request in writing that such Tax Indemnitee contest the imposition of such Tax, such at Guarantor's and Lessee's joint and several expense and the Tax Indemnitee shall, at the joint and several expense of Borrower Guarantor and subject Lessee, in good faith conduct and control such contest (including, without limitation, by pursuit of appeals) related to subparagraph (C) below, contest the validity, applicability or amount of such Taxes Impositions (provided, however, that (A) if such contest involves a tax other than a tax on net income and can be pursued independently from any other proceeding involving a tax liability of such Tax Indemnitee, the Tax Indemnitee, at Lessee's request, shall allow Guarantor or Lessee to conduct and control such contest and (B) in the case of any contest, the Tax Indemnitee may request Guarantor or Lessee to conduct and control such contest) by, in the case of an Indemnitee-Controlled Contest, in such Indemnitee’s sole discretion or, in of the case of a Borrower-Controlled Contest, in Borrower’s sole discretionPerson conducting and controlling such contest, (1l) resisting payment thereof if practicablethereof, (2) not paying such Tax the same except under protest, (3) if protest is necessary and proper, and (3) if the payment of such Tax is be made, using reasonable efforts to obtain a refund thereof, thereof in appropriate administrative and judicial proceedings, and or (4) in the case of an Indemnitee-Controlled Contest, considering in good faith any taking such other reasonable action as Borrower may is reasonably requestrequested by Guarantor or Lessee from time to time. Each Indemnitee The party controlling any contest shall consult in good faith with Borrower the non-controlling party and Borrower’s counselshall keep the noncontrolling party reasonably informed as to the conduct of such contest; provided that, and Borrower all decisions ultimately shall consult in good faith with such Indemnitee and its counsel be made in the case sole discretion of the controlling party. The parties agree that a Borrower-Controlled Contest. concerning the forum in which Tax Indemnitee may at any time decline to take further action with respect to the contest is most likely to be favorably resolved of any Imposition and whether may settle such contest if such Tax Indemnitee shall waive its rights to any indemnity from Lessee that otherwise would be by (x) resisting payment payable in respect of such Taxclaim (and any future claim by any taxing authority, (ythe contest of which is precluded by reason of such resolution of such claim) paying such Tax under protest and shall pay to Lessee any amount previously paid or (z) paying such Tax and seeking a refund or other repayment thereof.
(C) In no event shall an Indemnitee be required, or Borrower permitted, to contest the imposition of any Tax for which Borrower is obligated advanced by Lessee pursuant to this Section 6(b) 14.5 by way of indemnification or advance for the payment of an Imposition other than expenses of such contest. Notwithstanding the foregoing provisions of this Section 14.5, a Tax Indemnitee shall not be required to take any action and neither Guarantor nor Lessee shall be permitted to contest any Impositions in its own name or that of the Tax Indemnitee unless (1A) Borrower Lessee shall have agreed to pay and shall promptly be paying pay to such Tax Indemnitee on request demand and on an After Tax Basis all reasonable costs costs, losses and expenses that such Tax Indemnitee actually incurs in connection with contesting such claim or arising out of or relating to such contest (including legal feesImpositions, including, without limitation, all reasonable legal, accounting fees, and investigatory fees and disbursements, including those on appeal, if any); (2B) such contest is Tax Indemnitee shall have reasonably determined that the action to be taken will not reasonably likely to result in a any material danger of the sale, seizure, forfeiture or loss of the Aircraftany Property, or any part thereof or interest therein, will not interfere with the creation payment of any Lien thereon other than Liens for Taxes (i) either not yet due or being contested in good faith by appropriate proceedings and (ii) for which such reserves, if any, as are required to be provided under generally accepted accounting principles have been provided by BorrowerRent, and there is no will not result in risk of criminal penalties; liability, (3C) if such contest shall be conducted in a manner requiring involve the payment of the claimImposition prior to the contest, Borrower Lessee shall have advanced sufficient funds, on provide to the Tax Indemnitee an interest-free basis, advance in an amount equal to make the payment required, and shall have agreed Imposition that the Tax Indemnitee is required to indemnify the Indemnitee against any pay (with no additional net after-Tax tax cost to such Tax Indemnitee), (D) in the case of a claim that must be pursued in the name of a Tax Indemnitee of such advance; (4) if requested by the Indemnitee in writingor an Affiliate thereof), such Indemnitee Lessee shall have received provided to such Tax Indemnitee an opinion of independent Tax tax counsel selected by Borrower the Lessee and reasonably acceptable satisfactory to such Tax Indemnitee and furnished at Borrower’s sole expense to the effect stating that a Realistic Possibility of Success reasonable basis exists for contesting to contest such claim (or, in the case of an appeal of an adverse judicial determination, a written an opinion from of such independent Tax counsel to the effect that it is the position asserted in such appeal will more likely than not that such adverse judicial determination will be reversed or substantially modified); prevail) and (5E) Borrower shall have delivered to such Indemnitee a written acknowledgment of Borrower’s obligation to indemnify such Indemnitee to the extent that the contest is not successful; provided, however, that Borrower will not be bound by its acknowledgment of liability if the contest is resolved on a clear and unambiguous basis showing no such liability under this Section 6(b) with respect to such Tax; (6) if a Specified Default or Event of Default hereunder shall have occurred and be continuing. Each Tax Indemnitee shall at Lessee's expense supply Lessee with such information and documents reasonably requested by Lessee as are in such Tax Indemnitee's possession and as are necessary or advisable for Lessee to participate in any action, Borrower shall have provided security for its obligation hereunder satisfactory suit or proceeding to the extent permitted by this Section 14.5(b); provided that, such Tax Indemnitee by placing in escrow sufficient funds to cover any such contested Tax and the reasonably expected expenses of such contest on an After-Tax Basis, or otherwise providing satisfactory provisions for payment of such amounts determined by the Indemnitee in its sole discretion; (7) the aggregate amount of all indemnity payments that Borrower may shall not be required to make disclose its tax return to Lessee to the extent that the information deemed necessary or desirable by Lessee contained therein is otherwise made available to the Lessee in a form which will not hinder Lessee's contest of such action, suit or proceeding. Notwithstanding anything contained herein to the contrary, a Tax Indemnitee will not be required to contest a claim with respect to the imposition of any Tax if such Tax Indemnitee shall waive its right to indemnification under this Section 14.5 with respect to such claim (or similar or related claims) is at least $60,000; and (8) the claim is not for a Tax the imposition of which has been previously contested by, or at the request of, Borrower hereunder, and such previous contest (including all allowable appeals) was decided adversely to Borrower, unless Borrower has delivered an opinion of independent Tax counsel selected by Borrower and reasonably acceptable to the Indemnitee to the effect that, on the basis of (i) a change in applicable law, or (ii) a difference in the underlying facts, there is currently a Realistic Possibility of Success for contesting such claim.
(D) If any Indemnitee shall obtain a refund of all or any part of any Tax paid by Borrower, such Indemnitee shall pay Borrower, but not before Borrower shall have made all payments theretofore due to such Indemnitee pursuant to this Section 6(b) and any other payments theretofore due such Indemnitee under any of the Operative Documents, an amount equal to the amount of such refund (net of any Taxes imposed thereon), including interest received and attributable thereto (net of any Taxes imposed thereon) plus, if Borrower has paid an amount pursuant to the first sentence of Section 6(b)(iii)(A), any net Tax benefit (or minus any net Tax detriment) realized by such Indemnitee as a result of any refund received, and payment made, by such Indemnitee pursuant to this sentence; provided that the Indemnitee shall not be obligated to pay an amount under the preceding sentence to the extent that such amount would exceed the amount of such Taxes paid, reimbursed or advanced by Borrower to such Indemnitee (other than the cost of the contest thereof); provided, further, that any amount not paid to Borrower pursuant to the foregoing limitation shall be carried forward to reduce pro tanto any future payments that Borrower may be required to make to such Indemnitee pursuant to this Section 6(b). If any Indemnitee shall have paid Borrower any refund of all or part of any Tax paid by Borrower and it is subsequently determined that such Indemnitee was not entitled to the refund, such determination shall be treated as the imposition of a Tax for which Borrower is obligated to indemnify such Indemnitee pursuant to the provisions of this Section 6(b) without regard to the exclusions set forth in Section 6(b)(ii) (other than subparagraphs (4), (11) and (12) thereof). Provided no Specified Default or Event of Default has occurred and is continuing, an Indemnitee shall not settle any such claim or contest pursuant to this provision without the written consent of Borrower, which consent shall not be unreasonably withheld, conditioned or delayed; provided, that an Indemnitee may settle at any time without the consent of Borrower if the Indemnitee waives (by written notice to Borrower) the payment by Borrower of an indemnity in respect of such issue and any related issue claim with respect to other taxable years the contest of which is effectively foreclosed by the settlement precluded or otherwise materially adversely affected as a result of such issue, including any payment arising from such issue in subsequent years or which by reason of the fact that such issue is of a continuing nature, and promptly pays to Borrower any Tax previously paid or any interest-free loan advanced by Borrower (other than expenses of such contests) with respect to such issuewaiver.
(E) Nothing contained in this Section 6(b)(iv) shall require any Indemnitee to contest, or permit Borrower to contest in the name of such Indemnitee, a claim that such Indemnitee would otherwise be required to contest pursuant to this Section 6(b)(iv) if such Indemnitee shall waive payment by Borrower of any amount that might otherwise be payable by Borrower under this Section 6(b) in connection with such claim (other than the costs of contest previously incurred), nor shall any Indemnitee be required to pursue any appeal to the United States Supreme Court.
Appears in 1 contract
Contests. (A) 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 written claim shall for indemnification in respect thereof is to be made against and received by any Indemnitee for any Tax for which Borrower is obligated to indemnify pursuant to this Section 6(b)the Lessee, such Indemnitee shall notify Borrower in writing of such claim within 30 days after its receipt, and shall provide Borrower such information regarding such claim as Borrower may reasonably request; provided, however, that the failure to provide such give notice shall not release Borrower from any of its obligations to indemnify under Section 6 hereof unless, and only thereof to the extent thatLessee. So long as no Event of Default is continuing, the Lessee, at its own expense, may elect to assume the defense of any such failure effectively precludes BorrowerClaim through its own counsel, which shall be subject to the reasonable approval of the Indemnitee, on behalf of the Indemnitee (with full right of subrogation to the Indemnitee’s contest rightsrights and defenses). To The Lessee must indicate its election to assume such defense by written notice to the extent permitted under applicable law, such Indemnitee will not make any payments with respect to such claim for at least 30 within forty-five (45) days after giving following receipt of Indemnitee’s notice of such the Claim, or in the case of a third-party claim to Borrower.
(B) If requested by Borrower in writing which requires a shorter time for response then within 30 days after its receipt of such notice or such shorter period as specified in the Indemnitee’s notice of Claim; provided that such Indemnitee has given the Lessee notice thereof. If the 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 of Indemnitee’s rights hereunder. If the Lessee shall have elected to assume the defense of any such Claim, then upon the request of the Lessee, the Indemnitee requesting payment of indemnity under Section 7.1(a) shall promptly furnish the Lessee with copies of any records or documents pertaining to the matter to be required indemnified and, to the extent known by applicable lawsuch Indemnitee, a reasonably detailed explanation of the circumstances giving rise to the claim of indemnification and the determination of the amount of the requested indemnity payment. Upon payment in full to Indemnitee of any indemnity pursuant to Section 7.1(a), the Lessee shall be subrogated to any right of Indemnitee in respect of the matter against which such indemnity has been paid. If the Lessee shall have elected to assume the defense of any such Claim, upon the written request at any time and from time to time of the Lessee, Indemnitee shall, at the expense of Borrower the Lessee, take such reasonable actions and subject execute such documents as are necessary or reasonably appropriate to subparagraph (C) belowassist the Lessee in the preservation and enforcement against third parties of the Lessee’s right of subrogation hereunder. The Indemnitee may employ separate counsel in any such Claim and participate in the defense thereof, contest but the validity, applicability or amount fees and expenses of such Taxes by, in counsel shall be at the case expense of an Indemnitee-Controlled Contest, the Indemnitee unless the Indemnitee and the Lessee shall have been advised by counsel that there exists a conflict of interest in such Indemniteecounsel’s sole discretion or, representation of the Indemnitee and the Lessee in which case the case of a Borrower-Controlled Contest, in Borrower’s sole discretion, (1) resisting payment thereof if practicable, (2) not paying such Tax except under protest, (3) if protest is necessary fees and proper, and if payment expenses of such Tax is made, using reasonable efforts to obtain a refund thereof, in appropriate administrative and judicial proceedings, and (4) in the case of an Indemnitee-Controlled Contest, considering in good faith any other reasonable action as Borrower may reasonably request. Each Indemnitee shall consult in good faith with Borrower and Borrower’s counsel, and Borrower shall consult in good faith with such Indemnitee and its separate counsel in the case of a Borrower-Controlled Contest. concerning the forum in which the contest is most likely to be favorably resolved and whether such contest shall be by (x) resisting payment for the account of such Tax, (y) paying such Tax under protest or (z) paying such Tax and seeking a refund or other repayment thereof.
(C) In no event shall an Indemnitee be required, or Borrower permitted, to contest the imposition of any Tax for which Borrower is obligated pursuant to this Section 6(b) unless (1) Borrower shall have agreed to pay and shall promptly be paying on request all reasonable costs Lessee. All fees and expenses that such Indemnitee incurs in contesting such claim or arising out of or relating to such contest (including legal fees, accounting fees, and disbursements, including those on appeal, if any); (2) such contest is not reasonably likely to result in a material danger of the sale, seizure, forfeiture or loss of the Aircraft, or the creation of any Lien thereon other than Liens for Taxes (i) either not yet due or being contested in good faith by appropriate proceedings and (ii) for which such reserves, if any, as are required to be provided under generally accepted accounting principles have been provided by Borrower, and there is no risk of criminal penalties; (3) if such contest shall be conducted in a manner requiring the payment of the claim, Borrower shall have advanced sufficient funds, on an interest-free basis, to make the payment required, and shall have agreed to indemnify the Indemnitee against any additional net after-Tax cost to such Indemnitee of such advance; (4) if requested by the Indemnitee in writing, such Indemnitee shall have received an opinion of independent Tax counsel selected by Borrower and reasonably acceptable to such Indemnitee and furnished at Borrower’s sole expense to the effect that a Realistic Possibility of Success exists for contesting such claim (or, in the case of an appeal of an adverse judicial determination, a written opinion from such independent Tax counsel to the effect that it is more likely than not that such adverse judicial determination will be reversed or substantially modified); (5) Borrower shall have delivered to such Indemnitee a written acknowledgment of Borrower’s obligation to indemnify such Indemnitee to the extent that the contest is not successful; provided, however, that Borrower will not be bound by its acknowledgment of liability if the contest is resolved on a clear and unambiguous basis showing paid periodically as incurred. So long as no such liability under this Section 6(b) with respect to such Tax; (6) if a Specified Default or Event of Default shall have occurred and be continuing, Borrower shall have provided security for its obligation hereunder satisfactory to the Indemnitee by placing in escrow sufficient funds to cover any such contested Tax and the reasonably expected expenses of such contest on an After-Tax Basis, or otherwise providing satisfactory provisions for payment of such amounts determined by the Indemnitee in its sole discretion; (7) the aggregate amount of all indemnity payments that Borrower may be required to make to such Indemnitee with respect to such claim (or similar or related claims) is at least $60,000; and (8) the claim is not for a Tax the imposition of which has been previously contested by, or at the request of, Borrower hereunder, and such previous contest (including all allowable appeals) was decided adversely to Borrower, unless Borrower has delivered an opinion of independent Tax counsel selected by Borrower and reasonably acceptable to the Indemnitee to the effect that, on the basis of (i) a change in applicable law, or (ii) a difference in the underlying facts, there is currently a Realistic Possibility of Success for contesting such claim.
(D) If any Indemnitee shall obtain a refund of all or any part of any Tax paid by Borrower, such Indemnitee shall pay Borrower, but not before Borrower shall have made all payments theretofore due to such Indemnitee pursuant to this Section 6(b) and any other payments theretofore due such Indemnitee under any of the Operative Documents, an amount equal to the amount of such refund (net of any Taxes imposed thereon), including interest received and attributable thereto (net of any Taxes imposed thereon) plus, if Borrower has paid an amount pursuant to the first sentence of Section 6(b)(iii)(A), any net Tax benefit (or minus any net Tax detriment) realized by such Indemnitee as a result of any refund received, and payment made, by such Indemnitee pursuant to this sentence; provided that the Indemnitee Lessee shall not be obligated to pay an amount under the preceding sentence to the extent that such amount would exceed the amount of such Taxes paid, reimbursed or advanced by Borrower to such Indemnitee (other than the cost of the contest thereof); provided, further, that liable for any amount not paid to Borrower pursuant to the foregoing limitation shall be carried forward to reduce pro tanto any future payments that Borrower may be required to make to such Indemnitee pursuant to this Section 6(b). If any Indemnitee shall have paid Borrower any refund of all or part settlement of any Tax paid by Borrower such Claim effected without its consent unless the Lessee shall fail to, or elect in writing not to, assume the defense thereof in which case the Indemnitee, without waiving any rights to indemnification hereunder, may defend such Claim and it is subsequently determined that such Indemnitee was not entitled to the refund, such determination shall be treated as the imposition of a Tax for which Borrower is obligated to indemnify such Indemnitee pursuant to the provisions of this Section 6(b) without regard to the exclusions set forth in Section 6(b)(ii) (other than subparagraphs (4), (11) and (12) thereof). Provided no Specified Default or Event of Default has occurred and is continuing, an Indemnitee shall not settle enter into any such claim or contest pursuant to this provision good faith settlement thereof without the prior written consent of Borrowerthe Lessee. The Lessee shall not, which without the prior written consent shall (not to be unreasonably withheld) of the Indemnitee, conditioned or delayed; provided, that effect any settlement of any such Claim unless such settlement includes an Indemnitee may settle at any time without the consent unconditional release of Borrower if the Indemnitee waives (by written notice to Borrower) from all liabilities that are the payment by Borrower of an indemnity in respect subject of such issue and Claim. The parties agree to cooperate in any related issue the contest of which is effectively foreclosed by the defense or settlement of any such issue, including any payment arising from such issue in subsequent years or which by reason of the fact that such issue is of a continuing nature, Claim and promptly pays to Borrower any Tax previously paid or any interest-free loan advanced by Borrower (give each other than expenses of such contests) with respect reasonable access to such issue.
(E) Nothing contained in this Section 6(b)(iv) shall require any Indemnitee all information relevant thereto subject to contest, or permit Borrower to contest appropriate confidentiality agreements. The parties will similarly cooperate in the name of such Indemnitee, a claim that such Indemnitee would otherwise be required to contest pursuant to this Section 6(b)(iv) if such Indemnitee shall waive payment by Borrower prosecution of any amount that might otherwise be payable by Borrower under this Section 6(b) in connection with such claim (other than the costs of contest previously incurred), nor shall or lawsuit against any Indemnitee be required to pursue any appeal to the United States Supreme Courtthird party.
Appears in 1 contract
Contests. (Aa) If a written claim an adjustment shall be made against and received proposed by any Indemnitee for any Tax the IRS in writing that, if sustained, would result in a Loss for which Borrower is obligated Old Dominion could be required to indemnify pursuant the Owner Participant under this Agreement, the Owner Participant agrees promptly to this Section 6(b), such Indemnitee shall notify Borrower Old Dominion in writing of such claim within 30 days after its receiptproposed adjustment; PROVIDED, and shall provide Borrower such information regarding such claim as Borrower may reasonably request; provided, howeverHOWEVER, that the any failure to provide such notice shall not release Borrower from relieve Old Dominion of any of its obligations obligation to indemnify under Section 6 hereof unless, and only to the extent that, Owner Participant hereunder unless such failure effectively precludes Borrower’s or materially adversely effects the initiation or continuation of the contest rightsof such adjustment. To the extent permitted under applicable law, such Indemnitee will not make any payments with respect to such claim for at least 30 If (i) within 90 days after giving notice of such claim to Borrower.
(B) If requested by Borrower in writing within 30 days after its receipt of such notice or Old Dominion shall request in writing that the Owner Participant contest such shorter period as may be required by applicable law, such Indemnitee shall, at the expense of Borrower and subject to subparagraph (C) below, contest the validity, applicability or amount of such Taxes by, in the case of an Indemnitee-Controlled Contest, in such Indemnitee’s sole discretion or, in the case of a Borrower-Controlled Contest, in Borrower’s sole discretion, (1) resisting payment thereof if practicable, (2) not paying such Tax except under protest, (3) if protest is necessary and proper, and if payment of such Tax is made, using reasonable efforts to obtain a refund thereof, in appropriate administrative and judicial proceedings, and (4) in the case of an Indemnitee-Controlled Contest, considering in good faith any other reasonable action as Borrower may reasonably request. Each Indemnitee shall consult in good faith with Borrower and Borrower’s counsel, and Borrower shall consult in good faith with such Indemnitee and its counsel in the case of a Borrower-Controlled Contest. concerning the forum in which the contest is most likely to be favorably resolved and whether such contest shall be by (x) resisting payment of such Tax, (y) paying such Tax under protest or (z) paying such Tax and seeking a refund or other repayment thereof.
(C) In no event shall an Indemnitee be required, or Borrower permitted, to contest the imposition of any Tax for which Borrower is obligated pursuant to this Section 6(b) unless (1) Borrower shall have agreed to pay and shall promptly be paying on request all reasonable costs and expenses that such Indemnitee incurs in contesting such claim or arising out of or relating to such contest (including legal fees, accounting fees, and disbursements, including those on appeal, if any); (2) such contest is not reasonably likely to result in a material danger of the sale, seizure, forfeiture or loss of the Aircraft, or the creation of any Lien thereon other than Liens for Taxes (i) either not yet due or being contested in good faith by appropriate proceedings proposed adjustment and (ii) for which such reservesthe Owner Participant shall have received, if any, as are required to be provided under generally accepted accounting principles have been provided by Borrower, and there is no risk of criminal penalties; (3) if such contest shall be conducted in a manner requiring at the payment commencement of the claimcontest and before each level of judicial proceeding, Borrower shall have advanced sufficient funds, on an interest-free basis, to make the payment required, and shall have agreed to indemnify the Indemnitee against any additional net after-Tax cost to such Indemnitee of such advance; (4) if requested by the Indemnitee in writing, such Indemnitee shall have received an opinion of independent Independent Tax counsel selected by Borrower and reasonably acceptable to such Indemnitee and furnished at Borrower’s sole expense Counsel, to the effect that there is a Realistic Possibility of Success exists Reasonable Basis for contesting such claim the proposed adjustment (orand, in the case of an appeal of from an adverse judicial determination, a written an opinion from such independent Tax counsel to the effect that there is a substantial possibility (which is a higher standard than Reasonable Basis, although it is not necessarily more likely than not not) that such adverse judicial determination will be reversed or substantially modified); (5) Borrower shall have delivered to such Indemnitee modified upon appeal in a written acknowledgment of Borrower’s obligation to indemnify such Indemnitee manner favorable to the extent taxpayer) (which opinions (a) will be furnished at Old Dominion's expense, and (b) the Owner Participant will assist in good faith and with diligence in promptly procuring), the Owner Participant shall contest such proposed adjustment; PROVIDED, HOWEVER, that the Owner Participant may, in its sole discretion, either pay the tax proposed and ▇▇▇ for a refund or contest is not successful; providedthe proposed adjustment in any permissible forum considering, however, that Borrower will in good faith such requests as Old Dominion may make concerning the most appropriate forum in which to proceed. Notwithstanding the foregoing, the Owner Participant shall not be bound required to pursue any such contest unless (v) Old Dominion shall have agreed in writing to pay and shall pay on demand all reasonable costs and expenses that the Owner Participant shall incur in connection with contesting such proposed adjustment, including, without limitation, reasonable attorneys', accountants' and investigatory fees and disbursements; (w) the proposed adjustment that could result in a payment by its acknowledgment Old Dominion (if a lump-sum amount were to be paid pursuant to Section 4(b)(2) hereof) in connection with such proposed adjustment, taking into account the amount of liability if the contest is resolved on a clear all similar and unambiguous basis showing no such liability under this Section 6(b) logically related adjustments with respect to such Taxthe transactions contemplated by the Operative Documents that could be raised in an audit of any other taxable year of the Owner Participant (including any future taxable year) not barred by the statute of limitations shall be at least $100,000 and at least $250,000 with respect to any judicial appeal; (6x) if a Specified no Payment Default or Event of Default shall have occurred and be continuing; and (y) if the Owner Participant shall determine to pay the tax proposed and ▇▇▇ for a refund, Borrower Old Dominion shall have provided security for its obligation hereunder satisfactory advance to the Indemnitee by placing in escrow Owner Participant on an interest-free basis and with no additional net after-tax cost to the Owner Participant sufficient funds to cover any such contested Tax pay the tax and the reasonably expected expenses of such contest on an After-Tax Basisinterest, or otherwise providing satisfactory provisions for payment of such amounts determined by the Indemnitee in its sole discretion; (7) the aggregate amount of all indemnity payments that Borrower may be required penalties and additions to make to such Indemnitee tax payable with respect to such claim (or similar or related claims) is at least $60,000; and (8) the claim is not for a Tax the imposition of which has been previously contested by, or at the request of, Borrower hereunder, and such previous contest (including all allowable appeals) was decided adversely to Borrower, unless Borrower has delivered an opinion of independent Tax counsel selected by Borrower and reasonably acceptable to the Indemnitee to the effect that, on the basis of (i) a change in applicable law, or (ii) a difference in the underlying facts, there is currently a Realistic Possibility of Success for contesting such claim.
(D) If any Indemnitee shall obtain a refund of all or any part of any Tax paid by Borrower, such Indemnitee shall pay Borrower, but not before Borrower shall have made all payments theretofore due to such Indemnitee pursuant to this Section 6(b) and any other payments theretofore due such Indemnitee under any of the Operative Documents, an amount equal to the amount of such refund (net of any Taxes imposed thereon), including interest received and attributable thereto (net of any Taxes imposed thereon) plus, if Borrower has paid an amount pursuant to the first sentence of Section 6(b)(iii)(A), any net Tax benefit (or minus any net Tax detriment) realized by such Indemnitee as a result of any refund received, and payment made, by such Indemnitee pursuant to this sentence; provided that the Indemnitee shall not be obligated to pay an amount under the preceding sentence to the extent that such amount would exceed the amount of such Taxes paid, reimbursed or advanced by Borrower is indemnified against pursuant to such Indemnitee Section 4 hereof (other than the cost of the contest thereofan "Advance")); providedand PROVIDED, furtherHOWEVER, that any amount not paid to Borrower pursuant to the foregoing limitation shall be carried forward to reduce pro tanto any future payments that Borrower may be required to make to such Indemnitee pursuant to this Section 6(b). If any Indemnitee shall have paid Borrower any refund of all or part of any Tax paid by Borrower and it is subsequently determined that such Indemnitee was not entitled to the refund, such determination shall be treated as the imposition of a Tax for which Borrower is obligated to indemnify such Indemnitee pursuant to the provisions of this Section 6(b) without regard to the exclusions set forth in Section 6(b)(ii) (other than subparagraphs (4), (11) and (12) thereof). Provided no Specified Default or Event of Default has occurred and is continuing, an Indemnitee Owner Participant shall not settle any such claim or contest pursuant to this provision without the written consent of Borrower, which consent shall not be unreasonably withheld, conditioned or delayed; provided, that an Indemnitee may settle at any time without the consent of Borrower if the Indemnitee waives (by written notice to Borrower) the payment by Borrower of an indemnity in respect of such issue and any related issue the contest of which is effectively foreclosed by the settlement of such issue, including any payment arising from such issue in subsequent years or which by reason of the fact that such issue is of a continuing nature, and promptly pays to Borrower any Tax previously paid or any interest-free loan advanced by Borrower (other than expenses of such contests) with respect to such issue.
(E) Nothing contained in this Section 6(b)(iv) shall require any Indemnitee to contest, or permit Borrower to contest in the name of such Indemnitee, a claim that such Indemnitee would otherwise be required to contest pursuant to this Section 6(b)(iv) if such Indemnitee shall waive payment by Borrower of any amount that might otherwise be payable by Borrower under this Section 6(b) in connection with such claim (other than the costs of contest previously incurred), nor shall any Indemnitee be required to pursue any appeal to the United States Supreme Court.
(b) The Owner Participant also shall not be required to contest any proposed adjustment if the subject matter thereof shall be of a continuing nature and there shall have been a Final Determination with respect thereto, unless there shall have been a change in facts or law (including, without limitation, amendments to statutes or Treasury Regulations, administrative rulings and court decisions), and the Owner Participant shall have received an opinion of Independent Tax Counsel (which opinion (i) will be furnished at Old Dominion's expense, and (ii) the Owner Participant will assist in good faith and with diligence in promptly procuring) to the effect that as the result of such change in facts or law there is a substantial possibility (which is a higher standard than Reasonable Basis, although it is not necessarily more likely than not) that the Owner Participant will prevail in the contest of such proposed adjustment.
(c) In connection with any proposed adjustment described in Section 6(a) hereof, the Owner Participant shall not make payment of such proposed adjustment for at least 30 days after the giving of written notice of such proposed adjustment to Old Dominion (except that if the Owner Participant shall be required by law or regulation to take action with respect to any such adjustment prior to the end of such 30-day period, the Owner Participant shall, in such notice to Old Dominion, so inform Old Dominion, and the Owner Participant shall not take any action with respect to such adjustment without the consent of Old Dominion (not unreasonably to be withheld) before the date on which the Owner Participant shall be required to take action). Notwithstanding anything herein to the contrary, the Owner Participant shall have full control over any contest pursuant to this Section 6 and shall determine in its sole discretion the nature of all actions to be taken in connection with any contest including the right to pursue or forego any administrative proceedings; PROVIDED, HOWEVER, that the Owner Participant shall contest such claim at the administrative level if such action shall be necessary to preserve available judicial remedies; and PROVIDED, FURTHER, the Owner Participant shall consult in good faith with Old Dominion and its counsel in the contest of any claim and shall keep such counsel reasonably informed regarding such contest. Nothing contained in this Section 6 shall require the Owner Participant to contest a proposed adjustment that it would otherwise be required to contest pursuant to this Section 6 if the Owner Participant (i) waives the payment by Old Dominion of any amount that might otherwise be payable by Old Dominion under this Agreement by way of indemnity in respect of such proposed adjustment and (ii) pays to Old Dominion any amount of taxes, interest, penalties and additions to tax previously paid or advanced by Old Dominion pursuant to this Agreement with respect to such proposed adjustment, plus interest on such amounts at the IRS rate for refunds, payable from the date of payment by Old Dominion to the Owner Participant of such amounts to (but excluding) the date of repayment of such amounts by the Owner Participant to Old Dominion; PROVIDED, HOWEVER, that if the Owner Participant settles a proposed adjustment such that Old Dominion is precluded as a matter of law from initiating or continuing a contest hereunder of any adjustment for any other taxable period, the Owner Participant shall be deemed to have waived the payment by Old Dominion under this Agreement of any indemnity amounts in respect of such other adjustment.
(d) If Old Dominion shall have requested the Owner Participant to contest a proposed adjustment as above provided and shall have duly complied with all the terms of this Section 6, Old Dominion's liability for indemnification due under Section 4 hereof shall, at Old Dominion's election (except for amounts provided for under Section 6(a) hereof), be deferred until Final Determination of the liability of the Owner Participant. At such time, Old Dominion shall become obligated for the payment of any indemnification due under Section 4 hereof resulting from the outcome of such contest. Upon payment in full by Old Dominion of any indemnity amounts due under this Agreement, the Owner Participant shall become obligated to refund to Old Dominion an amount equal to any amount received as a refund of income taxes by the Owner Participant or credited to the Owner Participant (including any refund or credit that would have been received but for a counterclaim or other claim not indemnified by Old Dominion hereunder) that is fairly attributable to advances or indemnity payments made by Old Dominion under this Agreement, together with any interest received (or that would have been received) by the Owner Participant on such refund, plus an amount equal to any tax benefit realized by the Owner Participant as the result of the payment contemplated by this sentence. Such obligations of the Owner Participant and Old Dominion will first be set off against each other, and any difference owing by either party shall be paid within 30 days after such Final Determination but not prior to the date determined in accordance with Section 4(b) hereof.
Appears in 1 contract
Sources: Tax Indemnity Agreement (Old Dominion Electric Cooperative)
Contests. (A) If a written any claim shall be made against and received by any Tax Indemnitee or if any proceeding shall be commenced against any Tax Indemnitee (including a written notice of such proceeding) for any Tax for Imposition as to which Borrower is obligated to indemnify the Lessee may have an indemnity obligation pursuant to this Section 6(b)26.5, or if any Tax Indemnitee shall determine that any Imposition as to which the Lessee may have an indemnity obligation pursuant to this Section 26.5 may be payable, such Tax Indemnitee shall promptly (and in any event, within 30 days) notify Borrower the Lessee in writing of such claim (provided that failure to so notify the Lessee within 30 days after its receipt, shall not alter such Tax Indemnitee's rights under this Section 26.5 except to the extent such failure precludes or materially adversely affects the ability to conduct a contest of any indemnified Taxes) and shall provide Borrower not take any action with respect to such information regarding claim, proceeding or Imposition without the written consent of the Lessee (such claim as Borrower may reasonably requestconsent 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 failure case of any such claim or proceeding, if such Tax Indemnitee shall be required by law or regulation to provide 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 release Borrower from take any of its obligations to indemnify under Section 6 hereof unless, and only to the extent that, such failure effectively precludes Borrower’s contest rights. To the extent permitted under applicable law, such Indemnitee will not make any payments action with respect to such claim claim, proceeding or Imposition without the consent of the Lessee (such consent not to be unreasonably withheld or unreasonably delayed) for at least 30 10 days after giving notice of such claim to Borrower.
(B) If requested by Borrower in writing within 30 days after its the receipt of such notice by the 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 Lessee shall be entitled for a period of 30 days from receipt of such notice from the Tax Indemnitee (or such shorter period as may be the Tax Indemnitee has notified the Lessee is required by applicable lawlaw or regulation for the Tax Indemnitee to commence such contest), to request in writing that such Tax Indemnitee shallcontest the Imposition, at the expense Lessee's expense. If (x) such contest can be pursued in the name of Borrower the Lessee and subject to subparagraph (C) below, contest the validity, applicability or amount independently from any other proceeding involving a Tax liability of such Taxes byTax Indemnitee for which the Lessee has not agreed to indemnify such Tax Indemnitee, (y) such contest must be pursued in the case name of an the Tax Indemnitee-Controlled Contest, in but can be pursued independently from any other proceeding involving a Tax liability of such Indemnitee’s sole discretion orTax Indemnitee for which the Lessee has not agreed to indemnify such Tax Indemnitee or (z) 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 Borrower-Controlled Contestcontest described in clause (y), in Borrower’s sole discretion, (1) resisting payment thereof if practicable, (2) not paying such the Tax except under protest, (3) if protest is necessary and proper, and if payment of such Tax is made, using reasonable efforts to obtain a refund thereof, in appropriate administrative and judicial proceedings, and (4) in the case of an Indemnitee-Controlled Contest, considering Indemnitee determines in good faith any other reasonable action as Borrower that such contest by the Lessee could have a material adverse impact on the business or operations of the Tax Indemnitee and provides a written explanation to the Lessee of such determination, the Tax Indemnitee may reasonably request. Each Indemnitee shall consult in good faith with Borrower and Borrower’s counselelect to control or reassert control of the contest, and Borrower shall consult in good faith with such Indemnitee and its counsel in provided, that by taking control of the case of a Borrower-Controlled Contest. concerning contest, Lessee acknowledges that it is responsible for the forum in which the contest is most likely Imposition ultimately determined to be favorably resolved due by reason of such claim, and whether such contest shall be by provided, further, that in determining the application of clauses (x) resisting payment of such Tax, and (y) paying of the preceding sentence, 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, the Tax Indemnitee shall control the contest of such Tax under protest or (z) paying such Tax and seeking a refund or other repayment thereof.
(C) claim, acting through counsel reasonably acceptable to the Lessee. In no event shall an the Lessee be permitted to contest (or the Tax Indemnitee be requiredrequired 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 Borrower permitted, to contest the imposition creation of any Lien (other than a Permitted Lien) on the Property 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 satisfactory to the relevant Tax Indemnitee in respect of the Taxes subject to such claim and any and all expenses for which Borrower the Lessee is obligated pursuant to this Section 6(bresponsible hereunder reasonably foreseeable in connection with the contest of such claim, (C) unless (1) Borrower the Lessee shall have agreed to pay and shall promptly be paying pay, to such Tax Indemnitee on request demand all reasonable costs out-of-pocket costs, losses and expenses that such Tax Indemnitee incurs may incur in connection with contesting such claim or arising out of or relating to such contest (Imposition including legal feesall reasonable legal, accounting fees, and investigatory fees and disbursements, including those on appeal, if any); or (2) such contest is not reasonably likely to result in a material danger of the sale, seizure, forfeiture or loss of the Aircraft, or the creation of any Lien thereon other than Liens for Taxes (i) either not yet due or being contested in good faith by appropriate proceedings and (ii) for which such reserves, if any, as are required to be provided under generally accepted accounting principles have been provided by Borrower, and there is no risk of criminal penalties; (3D) if such contest shall be conducted in a manner requiring involve the payment of the claimTax prior to the contest, Borrower unless the Lessee shall have advanced sufficient funds, on provide to the Tax Indemnitee an interest-free basis, advance in an amount equal to make the payment required, and shall have agreed to indemnify Imposition that the Indemnitee against any is required to pay (with no additional net after-Tax cost 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: (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 advance; Tax Indemnitee for which the Lessee may be liable to pay an indemnity under this Section 26.5(b)) exceeds $500,000 and (4B) unless, if requested by the Indemnitee in writingTax Indemnitee, such Indemnitee the Lessee shall have received provided to the Tax Indemnitee an opinion of independent Tax counsel selected by Borrower and reasonably acceptable to such Indemnitee and furnished at Borrower’s sole expense to the effect that a Realistic Possibility of Success exists for contesting such claim Lessee (orwhich may be in-house counsel) (except, in the case of income taxes indemnified hereunder which shall be an opinion of independent tax counsel selected by the Tax Indemnitee and reasonably acceptable to the Lessee) that a reasonable basis exists to contest such claim. In no event shall a Tax Indemnitee be required to appeal of an adverse judicial determination, a written opinion from such independent Tax counsel determination to the effect that it is more likely than not that such adverse judicial determination will be reversed or substantially modified); (5) Borrower United States Supreme Court. The party conducting the contest shall have delivered to such Indemnitee a written acknowledgment of Borrower’s obligation to indemnify such Indemnitee consult in good faith with the other party and its counsel with respect to the extent that contest of such claim for Taxes (or claim for refund) but the contest is not successful; decisions regarding what actions to be taken shall be made by the controlling party in its sole judgement, provided, however, that Borrower will not be bound by its acknowledgment of liability 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 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 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 resolved on a clear and unambiguous basis showing no such liability entitled to be indemnified under this Section 6(b26.5 (and with respect to which contest is required under this Section 26.5(b)) without the prior written consent of the Lessee, unless such Tax Indemnitee waives its right to be indemnified under this Section 26.5 with respect to such Tax; (6) if a Specified Default or Event of Default shall have occurred and be continuing, Borrower shall have provided security for its obligation hereunder satisfactory claim. Notwithstanding anything contained herein to the contrary, a Tax Indemnitee by placing in escrow sufficient funds to cover any such contested Tax and the reasonably expected expenses of such contest on an After-Tax Basis, or otherwise providing satisfactory provisions for payment of such amounts determined by the Indemnitee in its sole discretion; (7) the aggregate amount of all indemnity payments that Borrower may will not be required to make contest (and the Lessee shall not be permitted to contest) a claim with respect to the imposition of any Tax if such Tax Indemnitee shall waive its right to indemnification under this Section 26.5 with respect to such claim (or similar or related claims) is at least $60,000; and (8) the any claim is not for a Tax the imposition of which has been previously contested by, or at the request of, Borrower hereunder, and with respect to such previous contest (including all allowable appeals) was decided adversely to Borrower, unless Borrower has delivered an opinion of independent Tax counsel selected by Borrower and reasonably acceptable to the Indemnitee to the effect that, on the basis of (i) a change in applicable law, or (ii) a difference in the underlying facts, there is currently a Realistic Possibility of Success for contesting such claim.
(D) If any Indemnitee shall obtain a refund of all year or any part of any Tax paid by Borrower, such Indemnitee shall pay Borrower, but not before Borrower shall have made all payments theretofore due to such Indemnitee pursuant to this Section 6(b) and any other payments theretofore due such Indemnitee under any of the Operative Documents, an amount equal to the amount of such refund (net of any Taxes imposed thereon), including interest received and attributable thereto (net of any Taxes imposed thereon) plus, if Borrower has paid an amount pursuant to the first sentence of Section 6(b)(iii)(A), any net Tax benefit (or minus any net Tax detriment) realized by such Indemnitee as a result of any refund received, and payment made, by such Indemnitee pursuant to this sentence; provided that the Indemnitee shall not be obligated to pay an amount under the preceding sentence to the extent that such amount would exceed the amount of such Taxes paid, reimbursed or advanced by Borrower to such Indemnitee (other than the cost of the contest thereof); provided, further, that any amount not paid to Borrower pursuant to the foregoing limitation shall be carried forward to reduce pro tanto any future payments that Borrower may be required to make to such Indemnitee pursuant to this Section 6(b). If any Indemnitee shall have paid Borrower any refund of all or part of any Tax paid by Borrower and it is subsequently determined that such Indemnitee was not entitled to the refund, such determination shall be treated as the imposition of a Tax for which Borrower is obligated to indemnify such Indemnitee pursuant to the provisions of this Section 6(b) without regard to the exclusions set forth in Section 6(b)(ii) (other than subparagraphs (4), (11) and (12) thereof). Provided no Specified Default or Event of Default has occurred and is continuing, an Indemnitee shall not settle any such claim or contest pursuant to this provision without the written consent of Borrower, which consent shall not be unreasonably withheld, conditioned or delayed; provided, that an Indemnitee may settle at any time without the consent of Borrower if the Indemnitee waives (by written notice to Borrower) the payment by Borrower of an indemnity in respect of such issue and any related issue taxable year the contest of which is effectively foreclosed by the settlement materially adversely affected as a result of such issuewaiver), including any payment arising from unless the failure to contest such issue claim -55- 57 would, in subsequent years or which by reason the reasonable judgement of the fact that Lessee, have an adverse effect on the Lessee (except for such issue effect which is not material), in which case such claim may be contested at the request and expense of a continuing naturethe Lessee, and promptly pays to Borrower any Tax previously paid or any interest-free loan advanced by Borrower (other than expenses of such contests) with respect to such issue.
(E) Nothing contained in this Section 6(b)(iv) shall require any Indemnitee to contest, or permit Borrower to contest in the name of such Indemnitee, a claim that such Indemnitee would otherwise be required to contest pursuant to this Section 6(b)(iv) if such Indemnitee shall waive payment by Borrower of any amount that might otherwise be payable by Borrower under this Section 6(b) in connection with such claim (other than the costs of contest previously incurred), nor shall any Indemnitee be required to pursue any appeal remaining subject to the United States Supreme Courtindemnification provided hereunder.
Appears in 1 contract
Sources: Lease and Security Agreement (Alternative Living Services Inc)
Contests. (Aa) After the Closing, the Purchaser shall reasonably promptly after becoming aware notify the Seller in writing of the commencement of any Tax audit or administrative or judicial proceeding and shall also separately notify the Seller in writing of any demand or claim on the Purchaser or the Company which, if determined adversely to the taxpayer or after the lapse of time would be grounds for indemnification by the Seller under this Article VII. Such notice shall contain factual information (to the extent known to the Purchaser or the Company) describing the asserted Tax liability in reasonable detail and shall include copies of any notice or other document received from any taxing authority in respect of any such asserted Tax liability. If a written claim the Purchaser fails to give the Seller reasonably prompt notice of an asserted Tax liability as required by this Section 7.04, then (i) if the Seller is precluded by the failure to give reasonably prompt notice from contesting the asserted Tax liability in both the administrative and judicial forums, then the Seller shall be made against and received by not have any Indemnitee obligation to indemnify for any loss or damage arising out of such asserted Tax for liability, and (ii) if the Seller is not so precluded from contesting but such failure to give reasonably prompt notice results in an actual detriment to the Seller, then any amount which Borrower the Seller is obligated otherwise required to indemnify pay the Purchaser pursuant to this Section 6(b), Article VII with respect to such Indemnitee liability shall notify Borrower in writing be reduced by the amount of such detriment.
(b) The Seller, promptly after receiving notice, may elect to direct, through counsel of its own choosing and at its own expense, any audit, claim within 30 days after its receiptfor refund and administrative or judicial proceeding involving any asserted liability with respect to which indemnity may be sought against the Seller under this Article VII (any such audit, claim for refund or proceeding relating to an asserted Tax liability are referred to herein collectively as a "CONTEST"). If the Seller elects to direct the Contest of an asserted Tax liability, the Purchaser shall cooperate in all reasonable respects and shall provide Borrower cause the Company or its successor to cooperate in all reasonable respects, at the Seller's expense, in each phase of such information regarding such claim as Borrower may Contest. If the Seller does not either reasonably request; provided, however, that promptly give notice to direct the failure to provide such notice shall not release Borrower from any Contest or commence the direction of the Contest or if it contests its obligations obligation to indemnify under Section 6 hereof unless7.01, the Purchaser or the Company may pay, compromise or contest, at its own expense, such asserted liability without waiving any of its rights to indemnification hereunder. However, in such case, neither the Purchaser nor the Company may settle or compromise any asserted liability over the objection of the Seller; PROVIDED, HOWEVER, that the Seller's consent to settlement or compromise shall not be unreasonably withheld or delayed. In any event, each of the Purchaser (or the Company) and only the Seller may participate, at their own expense, in the Contest. If the Seller chooses to direct the Contest, the Purchaser shall promptly empower and shall cause the Company or its successor promptly to empower (by power of attorney and such other documentation as may be appropriate) such representatives of the Seller as it may designate to represent the Purchaser or the Company or its successor in the Contest insofar as the Contest involves an asserted Tax liability for which the Seller would be liable under this Article VII, PROVIDED that the Seller shall not, without the Purchaser's consent, which shall not be unreasonably withheld or delayed, (x) agree to any settlement with respect to any Tax if such settlement would likely materially adversely affect the future Tax liability of the Purchaser or the Company for any periods ending after the Reference Date other than through the use of losses or credits arising in periods or portions thereof ending on or prior to the extent thatReference Date or (y) agree to any settlement of such claim or cease to defend against such claim if, pursuant to or as a result of such failure effectively precludes Borrower’s settlement or cessation, injunctive or other equitable relief would be imposed against the Purchaser or the Company. If, with respect to any proposed settlement referred to in clause (x) of the previous sentence, the Seller proposes in good faith to settle a claim, suit, action or proceeding with respect to any Tax, which settlement offer is accepted by the relevant taxing authority, the Purchaser may elect to continue to contest rights. To such claim, suit, action or proceeding; PROVIDED that notwithstanding how such matter is ultimately settled or decided, the extent permitted under applicable law, such Indemnitee will not make any payments liability of the Seller with respect to such claim for at least 30 days after giving notice of such claim claim, suit, action or proceeding shall be no greater than the amount which would have been payable if the Purchaser had consented to Borrowerthe settlement proposed by the Seller.
(Bc) If requested by Borrower in writing within 30 days after its receipt of such notice or such shorter period as may be required by applicable law, such Indemnitee shallThe Purchaser shall have the sole obligation and right to direct, at its own expense, a Contest regarding any Tax Return relating to the expense of Borrower and subject to subparagraph Company for any taxable period commencing after the Reference Date (C) below, contest or the validity, applicability or amount of such Taxes by, in the case of an Indemnitee-Controlled Contest, in such Indemnitee’s sole discretion or, Closing Date in the case of a Borrower-Controlled ContestTax Return which is filed on a combined, in Borrower’s sole discretionconsolidated, unitary or similar basis); PROVIDED, HOWEVER, that the Purchaser shall advise and consult with the Seller regarding the status of any such Contest that involves the Company and provided further that, without the prior written consent of the Seller (1) resisting payment thereof if practicable, (2) which shall not paying such Tax except under protest, (3) if protest is necessary and properbe unreasonably withheld or delayed), and except as provided in Section 7.04(b), the Purchaser shall not (i) make any election, change any annual accounting period or adopt or change any accounting method if payment any such election, adoption or change would have the effect of such Tax is madeincreasing the tax liability of the Seller in any tax period or portion thereof ending on or before the Reference Date, using reasonable efforts or (ii) file any amended return, enter into any closing agreement, settle any tax claim or assessment relating to obtain the Company, surrender any right to claim a refund thereofof Taxes, consent to any extension or waiver of the limitation period applicable to any tax claim or assessment relating to the Company or take any action, if any such amendment, agreement, settlement, surrender, consent or other action would have the effect of increasing the tax liability of the Seller in appropriate administrative and judicial proceedings, and any tax period or portion thereof ending on or before the Reference Date (4) in or the case of an Indemnitee-Controlled Contest, considering in good faith any other reasonable action as Borrower may reasonably request. Each Indemnitee shall consult in good faith with Borrower and Borrower’s counsel, and Borrower shall consult in good faith with such Indemnitee and its counsel Closing Date in the case of a Borrower-Controlled Contest. concerning the forum in Tax Return which the contest is most likely to be favorably resolved and whether such contest shall be by (x) resisting payment of such Taxfiled on a combined, (y) paying such Tax under protest consolidated, unitary or (z) paying such Tax and seeking a refund or other repayment thereof.
(C) In no event shall an Indemnitee be requiredsimilar basis), or Borrower permitted, to contest the imposition of any Tax for which Borrower is obligated pursuant to this Section 6(b) unless (1) Borrower shall have agreed to pay and shall promptly be paying on request all reasonable costs and expenses that such Indemnitee incurs in contesting such claim or arising out of or relating to such contest (including legal fees, accounting fees, and disbursements, including those on appeal, if any); (2) such contest is not reasonably likely to result in a material danger of the sale, seizure, forfeiture or loss of the Aircraft, or the creation of any Lien thereon other than Liens for Taxes (i) either not yet due or being contested in good faith by appropriate proceedings and (ii) for which such reserves, if any, as are required to be provided under generally accepted accounting principles have been provided by Borrower, and there is no risk of criminal penalties; (3) if such contest shall be conducted in a manner requiring the payment of the claim, Borrower shall have advanced sufficient funds, on an interest-free basis, to make the payment required, and shall have agreed to indemnify the Indemnitee against any additional net after-Tax cost to such Indemnitee of such advance; (4) if requested by the Indemnitee in writing, such Indemnitee shall have received an opinion of independent Tax counsel selected by Borrower and reasonably acceptable to such Indemnitee and furnished at Borrower’s sole expense to the effect that a Realistic Possibility of Success exists for contesting such claim (or, in the case of an appeal of an adverse judicial determination, a written opinion from such independent Tax counsel to the effect that it is more likely than not that such adverse judicial determination will be reversed or substantially modified); (5) Borrower shall have delivered to such Indemnitee a written acknowledgment of Borrower’s obligation to indemnify such Indemnitee except to the extent that the contest Seller is not successful; provided, however, that Borrower will not to be bound fully indemnified by its acknowledgment of liability if the contest is resolved on a clear and unambiguous basis showing no such liability under this Section 6(b) with respect to such Tax; (6) if a Specified Default or Event of Default shall have occurred and be continuing, Borrower shall have provided security for its obligation hereunder satisfactory to the Indemnitee by placing in escrow sufficient funds to cover Purchaser against any such contested Tax and the reasonably expected expenses of such contest on an After-Tax Basis, increase under Section 7.05 or otherwise providing satisfactory provisions for payment of such amounts determined by the Indemnitee in its sole discretion; (7) the aggregate amount of all indemnity payments that Borrower may be required to make to such Indemnitee with respect to such claim (or similar or related claims) is at least $60,000; and (8) the claim is not for a Tax the imposition of which has been previously contested by, or at the request of, Borrower hereunder, and such previous contest (including all allowable appeals) was decided adversely to Borrower, unless Borrower has delivered an opinion of independent Tax counsel selected by Borrower and reasonably acceptable to the Indemnitee to the effect that, on the basis of (i) a change in applicable law, or (ii) a difference in the underlying facts, there is currently a Realistic Possibility of Success for contesting such claimotherwise.
(D) If any Indemnitee shall obtain a refund of all or any part of any Tax paid by Borrower, such Indemnitee shall pay Borrower, but not before Borrower shall have made all payments theretofore due to such Indemnitee pursuant to this Section 6(b) and any other payments theretofore due such Indemnitee under any of the Operative Documents, an amount equal to the amount of such refund (net of any Taxes imposed thereon), including interest received and attributable thereto (net of any Taxes imposed thereon) plus, if Borrower has paid an amount pursuant to the first sentence of Section 6(b)(iii)(A), any net Tax benefit (or minus any net Tax detriment) realized by such Indemnitee as a result of any refund received, and payment made, by such Indemnitee pursuant to this sentence; provided that the Indemnitee shall not be obligated to pay an amount under the preceding sentence to the extent that such amount would exceed the amount of such Taxes paid, reimbursed or advanced by Borrower to such Indemnitee (other than the cost of the contest thereof); provided, further, that any amount not paid to Borrower pursuant to the foregoing limitation shall be carried forward to reduce pro tanto any future payments that Borrower may be required to make to such Indemnitee pursuant to this Section 6(b). If any Indemnitee shall have paid Borrower any refund of all or part of any Tax paid by Borrower and it is subsequently determined that such Indemnitee was not entitled to the refund, such determination shall be treated as the imposition of a Tax for which Borrower is obligated to indemnify such Indemnitee pursuant to the provisions of this Section 6(b) without regard to the exclusions set forth in Section 6(b)(ii) (other than subparagraphs (4), (11) and (12) thereof). Provided no Specified Default or Event of Default has occurred and is continuing, an Indemnitee shall not settle any such claim or contest pursuant to this provision without the written consent of Borrower, which consent shall not be unreasonably withheld, conditioned or delayed; provided, that an Indemnitee may settle at any time without the consent of Borrower if the Indemnitee waives (by written notice to Borrower) the payment by Borrower of an indemnity in respect of such issue and any related issue the contest of which is effectively foreclosed by the settlement of such issue, including any payment arising from such issue in subsequent years or which by reason of the fact that such issue is of a continuing nature, and promptly pays to Borrower any Tax previously paid or any interest-free loan advanced by Borrower (other than expenses of such contests) with respect to such issue.
(E) Nothing contained in this Section 6(b)(iv) shall require any Indemnitee to contest, or permit Borrower to contest in the name of such Indemnitee, a claim that such Indemnitee would otherwise be required to contest pursuant to this Section 6(b)(iv) if such Indemnitee shall waive payment by Borrower of any amount that might otherwise be payable by Borrower under this Section 6(b) in connection with such claim (other than the costs of contest previously incurred), nor shall any Indemnitee be required to pursue any appeal to the United States Supreme Court.
Appears in 1 contract
Sources: Stock Purchase Agreement (White Mountains Insurance Group Inc)
Contests. (A) If a written any claim shall be made against and received by any Tax Indemnitee -------- or if any proceeding shall be commenced against any Tax Indemnitee (including a written notice of such proceeding) for any Tax for Imposition as to which Borrower is obligated to indemnify the Lessee may have an indemnity obligation pursuant to this Section 6(b)------- 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, such Tax Indemnitee shall promptly (and in any event, within 30 days) notify Borrower the Lessee in writing of such claim (provided that failure to so -------- notify the Lessee within 30 days after its receipt, shall not alter such Tax Indemnitee's rights under this Section 26.5 except to the extent such failure precludes ------------ or materially adversely affects the ability to conduct a contest of any indemnified Taxes) and shall provide Borrower not take any action with respect to such information regarding claim, proceeding or Imposition without the written consent of the Lessee (such claim as Borrower may reasonably requestconsent 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 failure case of any such claim or proceeding, if such Tax Indemnitee shall be required by law or regulation to provide 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 release Borrower from take any of its obligations to indemnify under Section 6 hereof unless, and only to the extent that, such failure effectively precludes Borrower’s contest rights. To the extent permitted under applicable law, such Indemnitee will not make any payments action with respect to such claim claim, proceeding or Imposition without the consent of the Lessee (such consent not to be unreasonably withheld or unreasonably delayed) for at least 30 10 days after giving notice of such claim to Borrower.
(B) If requested by Borrower in writing within 30 days after its the receipt of such notice by the 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 Lessee shall be entitled for a period of 30 days from receipt of such notice from the Tax Indemniteee (or such shorter period as may be the Tax Indemnitee has notified the Lessee is required by applicable lawlaw or regulation for the Tax Indemnitee to commence such contest), to request in writing that such Tax Indemnitee shallcontest the imposition of such Tax, at the expense Lessee's expense. If (x) such contest can be pursued in the name of Borrower the Lessee and subject to subparagraph (C) below, contest the validity, applicability or amount independently from any other proceeding involving a Tax liability of such Taxes byTax Indemnitee for which the Lessee has not agreed to indemnify such Tax Indemnitee, (y) such contest must be pursued in the case name of an the Tax Indemnitee-Controlled Contest, in but can be pursued independently from any other proceeding involving a Tax liability of such Indemnitee’s sole discretion orTax Indemnitee for which the Lessee has not agreed to indemnify such Tax Indemnitee or (z) 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 Borrower-Controlled Contestcontest described in clause (y), in Borrower’s sole discretion, (1) resisting payment thereof if practicable, (2) not paying such -------- ---------- the Tax except under protest, (3) if protest is necessary and proper, and if payment of such Tax is made, using reasonable efforts to obtain a refund thereof, in appropriate administrative and judicial proceedings, and (4) in the case of an Indemnitee-Controlled Contest, considering Indemnitee determines in good faith any other reasonable action as Borrower that such contest by the Lessee could have a material adverse impact on the business or operations of the Tax Indemnitee and provides a written explanation to the Lessee of such determination, the Tax Indemnitee may reasonably request. Each Indemnitee shall consult in good faith with Borrower and Borrower’s counselelect to control or reassert control of the contest, and Borrower shall consult in good faith with such Indemnitee and its counsel in provided, that by taking control of the case of a Borrower-Controlled Contest. concerning contest, Lessee -------- acknowledges that it is responsible for the forum in which the contest is most likely Imposition ultimately determined to be favorably resolved due by reason of such claim, and whether such contest shall be by provided, further, that -------- ------- in determining the application of clauses (x) resisting payment of such Tax, and (y) paying of the preceding ----------- --- sentence, 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, the Tax Indemnitee shall control the contest of such Tax under protest or (z) paying such Tax and seeking a refund or other repayment thereof.
(C) claim, acting through counsel reasonably acceptable to the Lessee. In no event shall an the Lessee be permitted to contest (or the Tax Indemnitee be requiredrequired 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 Borrower permitted, to contest the imposition 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 Borrower the Lessee is obligated pursuant to this Section 6(bresponsible hereunder reasonably foreseeable in connection with the contest of such claim, (C) unless (1) Borrower the Lessee shall have agreed to pay and shall promptly be paying on request pay, to such Tax Indemnitee within ten (10) Business Days after demand all reasonable costs out-of-pocket costs, losses and expenses that such Tax Indemnitee incurs may incur in connection with contesting such claim or arising out of or relating to such contest (Imposition including legal feesall reasonable legal, accounting fees, and investigatory fees and disbursements, including those on appeal, if any); or (2) such contest is not reasonably likely to result in a material danger of the sale, seizure, forfeiture or loss of the Aircraft, or the creation of any Lien thereon other than Liens for Taxes (i) either not yet due or being contested in good faith by appropriate proceedings and (ii) for which such reserves, if any, as are required to be provided under generally accepted accounting principles have been provided by Borrower, and there is no risk of criminal penalties; (3D) if such contest shall be conducted in a manner requiring involve the payment of the claimTax prior to the contest, Borrower unless the Lessee shall have advanced sufficient funds, on provide to the Tax Indemnitee an interest-free basis, advance in an amount equal to make the payment required, and shall have agreed to indemnify Imposition that the Indemnitee against any is required to pay (with no additional net after-Tax cost 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: (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 advance; Tax Indemnitee for which the Lessee may be liable to pay an indemnity under this Section 26.5(b) --------------- exceeds $500,000 and (4B) unless, if requested by the Indemnitee in writingTax Indemnitee, such Indemnitee the Lessee shall have received provided to the Tax Indemnitee an opinion of independent Tax counsel selected by Borrower and reasonably acceptable to such Indemnitee and furnished at Borrower’s sole expense to the effect that a Realistic Possibility of Success exists for contesting such claim Lessee (orwhich may be in-house counsel) (except, in the case of an appeal of an adverse judicial determination, a written opinion from such independent Tax counsel to the effect that it is more likely than not that such adverse judicial determination will income taxes indemnified hereunder which shall be reversed or substantially modified); (5) Borrower shall have delivered to such Indemnitee a written acknowledgment of Borrower’s obligation to indemnify such Indemnitee to the extent that the contest is not successful; provided, however, that Borrower will not be bound by its acknowledgment of liability if the contest is resolved on a clear and unambiguous basis showing no such liability under this Section 6(b) with respect to such Tax; (6) if a Specified Default or Event of Default shall have occurred and be continuing, Borrower shall have provided security for its obligation hereunder satisfactory to the Indemnitee by placing in escrow sufficient funds to cover any such contested Tax and the reasonably expected expenses of such contest on an After-Tax Basis, or otherwise providing satisfactory provisions for payment of such amounts determined by the Indemnitee in its sole discretion; (7) the aggregate amount of all indemnity payments that Borrower may be required to make to such Indemnitee with respect to such claim (or similar or related claims) is at least $60,000; and (8) the claim is not for a Tax the imposition of which has been previously contested by, or at the request of, Borrower hereunder, and such previous contest (including all allowable appeals) was decided adversely to Borrower, unless Borrower has delivered an opinion of independent Tax tax counsel selected by Borrower the Tax Indemnitee and reasonably acceptable to the Indemnitee Lessee) that a reasonable basis exists to the effect that, on the basis of (i) a change in applicable law, or (ii) a difference in the underlying facts, there is currently a Realistic Possibility of Success for contesting contest such claim.
(D) If any Indemnitee . In no event shall obtain a refund of all or any part of any Tax paid by Borrower, such Indemnitee shall pay Borrower, but not before Borrower shall have made all payments theretofore due to such Indemnitee pursuant to this Section 6(b) and any other payments theretofore due such Indemnitee under any of the Operative Documents, an amount equal to the amount of such refund (net of any Taxes imposed thereon), including interest received and attributable thereto (net of any Taxes imposed thereon) plus, if Borrower has paid an amount pursuant to the first sentence of Section 6(b)(iii)(A), any net Tax benefit (or minus any net Tax detriment) realized by such Indemnitee as a result of any refund received, and payment made, by such Indemnitee pursuant to this sentence; provided that the Indemnitee shall not be obligated to pay an amount under the preceding sentence to the extent that such amount would exceed the amount of such Taxes paid, reimbursed or advanced by Borrower to such Indemnitee (other than the cost of the contest thereof); provided, further, that any amount not paid to Borrower pursuant to the foregoing limitation shall be carried forward to reduce pro tanto any future payments that Borrower may be required to make to such Indemnitee pursuant to this Section 6(b). If any Indemnitee shall have paid Borrower any refund of all or part of any Tax paid by Borrower and it is subsequently determined that such Indemnitee was not entitled to the refund, such determination shall be treated as the imposition of a Tax for which Borrower is obligated to indemnify such Indemnitee pursuant to the provisions of this Section 6(b) without regard to the exclusions set forth in Section 6(b)(ii) (other than subparagraphs (4), (11) and (12) thereof). Provided no Specified Default or Event of Default has occurred and is continuing, an Indemnitee shall not settle any such claim or contest pursuant to this provision without the written consent of Borrower, which consent shall not be unreasonably withheld, conditioned or delayed; provided, that an Indemnitee may settle at any time without the consent of Borrower if the Indemnitee waives (by written notice to Borrower) the payment by Borrower of an indemnity in respect of such issue and any related issue the contest of which is effectively foreclosed by the settlement of such issue, including any payment arising from such issue in subsequent years or which by reason of the fact that such issue is of a continuing nature, and promptly pays to Borrower any Tax previously paid or any interest-free loan advanced by Borrower (other than expenses of such contests) with respect to such issue.
(E) Nothing contained in this Section 6(b)(iv) shall require any Indemnitee to contest, or permit Borrower to contest in the name of such Indemnitee, a claim that such Indemnitee would otherwise be required to contest pursuant to this Section 6(b)(iv) if such Indemnitee shall waive payment by Borrower of any amount that might otherwise be payable by Borrower under this Section 6(b) in connection with such claim (other than the costs of contest previously incurred), nor shall any Indemnitee be required to pursue any 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, 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 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 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 entitled to be indemnified under this Section ------- -38-
Appears in 1 contract
Contests. (Aa) If a written claim shall be made against and received by any Indemnitee for any Taxing Authority asserts an Income Tax for which Borrower is obligated to indemnify pursuant to this Section 6(b)Claim, such Indemnitee shall notify Borrower in writing then the party hereto first receiving notice of such claim within 30 days after its receipt, and Income Tax Claim promptly shall provide Borrower such information regarding such claim as Borrower may reasonably requestwritten notice thereof to the other party or parties hereto; provided, however, that the failure of such party to provide give such prompt notice shall not release Borrower from relieve the other party of any of its obligations to indemnify under Section 6 hereof unlessthis Article VIII, and only to the extent that, such failure effectively precludes Borrower’s contest rights. To the extent permitted under applicable law, such Indemnitee will not make any payments with respect to such claim for at least 30 days after giving notice of such claim to Borrower.
(B) If requested by Borrower in writing within 30 days after its receipt of such notice or such shorter period as may be required by applicable law, such Indemnitee shall, at the expense of Borrower and subject to subparagraph (C) below, contest the validity, applicability or amount of such Taxes by, in the case of an Indemnitee-Controlled Contest, in such Indemnitee’s sole discretion or, in the case of a Borrower-Controlled Contest, in Borrower’s sole discretion, (1) resisting payment thereof if practicable, (2) not paying such Tax except under protest, (3) if protest is necessary and proper, and if payment of such Tax is made, using reasonable efforts to obtain a refund thereof, in appropriate administrative and judicial proceedings, and (4) in the case of an Indemnitee-Controlled Contest, considering in good faith any other reasonable action as Borrower may reasonably request. Each Indemnitee shall consult in good faith with Borrower and Borrower’s counsel, and Borrower shall consult in good faith with such Indemnitee and its counsel in the case of a Borrower-Controlled Contest. concerning the forum in which the contest is most likely to be favorably resolved and whether such contest shall be by (x) resisting payment of such Tax, (y) paying such Tax under protest or (z) paying such Tax and seeking a refund or other repayment thereof.
(C) In no event shall an Indemnitee be required, or Borrower permitted, to contest the imposition of any Tax for which Borrower is obligated pursuant to this Section 6(b) unless (1) Borrower shall have agreed to pay and shall promptly be paying on request all reasonable costs and expenses that such Indemnitee incurs in contesting such claim or arising out of or relating to such contest (including legal fees, accounting fees, and disbursements, including those on appeal, if any); (2) such contest is not reasonably likely to result in a material danger of the sale, seizure, forfeiture or loss of the Aircraft, or the creation of any Lien thereon other than Liens for Taxes (i) either not yet due or being contested in good faith by appropriate proceedings and (ii) for which such reserves, if any, as are required to be provided under generally accepted accounting principles have been provided by Borrower, and there is no risk of criminal penalties; (3) if such contest shall be conducted in a manner requiring the payment of the claim, Borrower shall have advanced sufficient funds, on an interest-free basis, to make the payment required, and shall have agreed to indemnify the Indemnitee against any additional net after-Tax cost to such Indemnitee of such advance; (4) if requested by the Indemnitee in writing, such Indemnitee shall have received an opinion of independent Tax counsel selected by Borrower and reasonably acceptable to such Indemnitee and furnished at Borrower’s sole expense to the effect that a Realistic Possibility of Success exists for contesting such claim (or, in the case of an appeal of an adverse judicial determination, a written opinion from such independent Tax counsel to the effect that it is more likely than not that such adverse judicial determination will be reversed or substantially modified); (5) Borrower shall have delivered to such Indemnitee a written acknowledgment of Borrower’s obligation to indemnify such Indemnitee to the extent that the contest other party is not successfulactually prejudiced thereby. Such notice shall specify in reasonable detail the basis for such Income Tax Claim and shall include a copy of the relevant portion of any correspondence received from the Taxing Authority.
(b) Sellers shall, upon written notice to Buyer, have the right to control, at their own expense, any audit, examination, contest, litigation or other proceeding by or against any Taxing Authority (a “Tax Proceeding”) in respect of the Company or any Company Subsidiary for any taxable period that ends on or before the Closing Date; provided, however, that Borrower will not be bound by its acknowledgment if such action could have an adverse impact on Buyer, any Affiliate of liability if Buyer or the contest is resolved on a clear and unambiguous basis showing no such liability under this Section 6(b) with respect to such Tax; (6) if a Specified Default Company or Event of Default shall have occurred and be continuingany Company Subsidiary, Borrower shall have provided security for its obligation hereunder satisfactory to the Indemnitee by placing in escrow sufficient funds to cover any such contested Tax and the reasonably expected expenses of such contest on an After-Tax Basis, or otherwise providing satisfactory provisions for payment of such amounts determined by the Indemnitee in its sole discretion; (7) the aggregate amount of all indemnity payments that Borrower may be required to make to such Indemnitee with respect to such claim (or similar or related claims) is at least $60,000; and (8) the claim is not for a Tax the imposition of which has been previously contested by, or at the request of, Borrower hereunder, and such previous contest (including all allowable appeals) was decided adversely to Borrower, unless Borrower has delivered an opinion of independent Tax counsel selected by Borrower and reasonably acceptable to the Indemnitee to the effect that, on the basis of (i) Sellers shall provide Buyer with a change in applicable lawtimely and reasonably detailed account of each phase of such Tax Proceeding, or (ii) a difference Sellers shall consult with Buyer before taking any significant action in connection with such Tax Proceeding, (iii) Sellers shall consult with Buyer and offer Buyer an opportunity to comment before submitting any written materials prepared or furnished in connection with such Tax Proceeding, (iv) Sellers shall defend such Tax Proceeding diligently and in good faith as if they were the underlying factsonly party in interest in connection with such Tax Proceeding, there is currently a Realistic Possibility (v) Buyer (or an Affiliate of Success for contesting Buyer) shall be entitled to participate, at its own expense, in such claim.
(D) If any Indemnitee shall obtain a refund of all or any part Tax Proceeding and receive copies of any Tax paid by Borrower, such Indemnitee shall pay Borrower, but not before Borrower shall have made all payments theretofore due written materials relating to such Indemnitee pursuant to this Section 6(b) and any other payments theretofore due such Indemnitee under any of Tax Proceeding received from the Operative Documents, an amount equal to the amount of such refund (net of any Taxes imposed thereon), including interest received and attributable thereto (net of any Taxes imposed thereon) plus, if Borrower has paid an amount pursuant to the first sentence of Section 6(b)(iii)(A), any net Tax benefit (or minus any net Tax detriment) realized by such Indemnitee as a result of any refund receivedrelevant Taxing Authority, and payment made, by such Indemnitee pursuant to this sentence; provided that the Indemnitee (vi) Sellers shall not be obligated to pay an amount under the preceding sentence to the extent that such amount would exceed the amount of such Taxes paidsettle, reimbursed compromise or advanced by Borrower to such Indemnitee (other than the cost of the contest thereof); provided, further, that any amount not paid to Borrower pursuant to the foregoing limitation shall be carried forward to reduce pro tanto any future payments that Borrower may be required to make to such Indemnitee pursuant to this Section 6(b). If any Indemnitee shall have paid Borrower any refund of all or part of any Tax paid by Borrower and it is subsequently determined that such Indemnitee was not entitled to the refund, such determination shall be treated as the imposition of a Tax for which Borrower is obligated to indemnify such Indemnitee pursuant to the provisions of this Section 6(b) without regard to the exclusions set forth in Section 6(b)(ii) (other than subparagraphs (4), (11) and (12) thereof). Provided no Specified Default or Event of Default has occurred and is continuing, an Indemnitee shall not settle abandon any such claim or contest pursuant to this provision Tax Proceeding without obtaining the prior written consent of BorrowerBuyer, which consent shall not be unreasonably withheld, conditioned or delayed.
(c) In the case of a Tax Proceeding for a Straddle Period of the Company or any Company Subsidiary, the Controlling Party shall have the right to control, at its own expense, such Tax Proceeding; provided, however, that an Indemnitee may settle at any time without the consent of Borrower if the Indemnitee waives (by written notice to Borroweri) the payment by Borrower Controlling Party shall provide the Non-Controlling Party with a timely and reasonably detailed account of an indemnity in respect each phase of such issue Tax Proceeding, (ii) the Controlling Party shall consult with the Non-Controlling Party before taking any significant action in connection with such Tax Proceeding, (iii) the Controlling Party shall consult with the Non-Controlling Party and offer the Non-Controlling Party an opportunity to comment before submitting any related issue written materials prepared or furnished in connection with such Tax Proceeding, (iv) the contest Controlling Party shall defend such Tax Proceeding diligently and in good faith as if it were the only party in interest in connection with such Tax Proceeding, (v) the Non-Controlling Party shall be entitled to participate in such Tax Proceeding, at its own expense, if such Tax Proceeding could have an adverse impact on the Non-Controlling Party or any of its Affiliates and (vi) the Controlling Party shall not settle, compromise or abandon any such Tax Proceeding without obtaining the prior written consent, which is effectively foreclosed by the settlement of such issueconsent shall not be unreasonably withheld, including any payment arising from such issue in subsequent years conditioned or which by reason delayed, of the fact that Non-Controlling Party if such issue settlement, compromise or abandonment could have an adverse impact on the Non-Controlling Party or any of its Affiliates. “Controlling Party” means whichever of Sellers or Buyer is of reasonably expected to bear the greater Tax liability in connection with a continuing natureStraddle Period Tax Proceeding, and promptly pays to Borrower any Tax previously paid “Non-Controlling Party” means whichever of Sellers or any interest-free loan advanced by Borrower (other than expenses of such contests) Buyer is not the Controlling Party with respect to such issueStraddle Period Tax Proceeding.
(E) Nothing contained in this Section 6(b)(iv) shall require any Indemnitee to contest, or permit Borrower to contest in the name of such Indemnitee, a claim that such Indemnitee would otherwise be required to contest pursuant to this Section 6(b)(iv) if such Indemnitee shall waive payment by Borrower of any amount that might otherwise be payable by Borrower under this Section 6(b) in connection with such claim (other than the costs of contest previously incurred), nor shall any Indemnitee be required to pursue any appeal to the United States Supreme Court.
Appears in 1 contract
Sources: Securities Purchase Agreement (Friedman Billings Ramsey Group Inc)
Contests. (A) If a New Holdco agrees to give written claim shall be made against and received notice to the ▇▇▇▇▇▇▇ Appointees of the receipt of any written notice by any Indemnitee for AINC Party, and the Bennetts agree to give to New Holdco written notice of the receipt of any written notice by any of them or MJB Investments, of a Tax Claim which could result in liability for, or could reasonably be expected to adversely affect, the other Party. The ▇▇▇▇▇▇▇ Appointees shall have the right (but not the obligation) to control, at their own expense (taking into account payments made under the Transition Cost Sharing Agreement), the contest or resolution of any Tax for which Borrower is obligated Claim that relates solely to indemnify pursuant a Pre-Closing Tax Period; provided, that, (a) the ▇▇▇▇▇▇▇ Appointees will have provided written notice to this Section 6(b), such Indemnitee shall notify Borrower in writing of such claim New Holdco within 30 days after its receiptof the receipt of written notice of the Tax Claim of their intention to control such Tax Claim, and shall provide Borrower such information regarding such claim as Borrower may reasonably request; provided, however, that (b) the failure to provide such notice shall not release Borrower from any ▇▇▇▇▇▇▇ Appointees will obtain the prior written consent of its obligations to indemnify under Section 6 hereof unless, and only to the extent that, such failure effectively precludes Borrower’s contest rights. To the extent permitted under applicable law, such Indemnitee New Holdco (which consent will not make be unreasonably withheld or delayed) before entering into any payments with respect to such claim for at least 30 days after giving notice of such claim to Borrower.
(B) If requested by Borrower in writing within 30 days after its receipt of such notice settlement or such shorter period as may be required by applicable law, such Indemnitee shall, at the expense of Borrower and subject to subparagraph (C) below, contest the validity, applicability or amount of such Taxes by, in the case of an Indemnitee-Controlled Contest, in such Indemnitee’s sole discretion or, in the case of a Borrower-Controlled Contest, in Borrower’s sole discretion, (1) resisting payment thereof if practicable, (2) not paying such Tax except under protest, (3) if protest is necessary and proper, and if payment concession of such Tax is made, using reasonable efforts to obtain a refund thereof, in appropriate administrative and judicial proceedings, and (4) in the case of an Indemnitee-Controlled Contest, considering in good faith any other reasonable action as Borrower may reasonably request. Each Indemnitee shall consult in good faith with Borrower and Borrower’s counsel, and Borrower shall consult in good faith with such Indemnitee and its counsel in the case of a Borrower-Controlled Contest. concerning the forum in which the contest is most likely to be favorably resolved and whether such contest shall be by (x) resisting payment of such Tax, (y) paying such Tax under protest or (z) paying such Tax and seeking a refund or other repayment thereof.
(C) In no event shall an Indemnitee be required, or Borrower permitted, to contest the imposition of any Tax for which Borrower is obligated pursuant to this Section 6(b) unless (1) Borrower shall have agreed to pay and shall promptly be paying on request all reasonable costs and expenses that such Indemnitee incurs in contesting such claim or arising out of or relating to such contest (including legal fees, accounting fees, and disbursements, including those on appeal, if any); (2) such contest is not reasonably likely to result in a material danger of the sale, seizure, forfeiture or loss of the Aircraft, or the creation of any Lien thereon other than Liens for Taxes (i) either not yet due or being contested in good faith by appropriate proceedings and (ii) for which such reserves, if any, as are required to be provided under generally accepted accounting principles have been provided by Borrower, and there is no risk of criminal penalties; (3) Claim if such contest shall settlement or concession could reasonably be conducted in a manner requiring the payment of the claim, Borrower shall have advanced sufficient funds, on an interest-free basis, expected to make the payment required, and shall have agreed to indemnify the Indemnitee against adversely affect any additional net after-Tax cost to such Indemnitee of such advance; (4) if requested by the Indemnitee in writing, such Indemnitee shall have received an opinion of independent Tax counsel selected by Borrower and reasonably acceptable to such Indemnitee and furnished at Borrower’s sole expense to the effect that a Realistic Possibility of Success exists for contesting such claim (or, in the case of an appeal of an adverse judicial determination, a written opinion from such independent Tax counsel to the effect that it is more likely than not that such adverse judicial determination will be reversed or substantially modified); (5) Borrower shall have delivered to such Indemnitee a written acknowledgment of Borrower’s obligation to indemnify such Indemnitee to the extent that the contest is not successful; provided, however, that Borrower will not be bound by its acknowledgment of liability if the contest is resolved on a clear and unambiguous basis showing no such liability under this Section 6(b) with respect to such Tax; (6) if a Specified Default or Event of Default shall have occurred and be continuing, Borrower shall have provided security for its obligation hereunder satisfactory to the Indemnitee by placing in escrow sufficient funds to cover any such contested Tax and the reasonably expected expenses of such contest on an After-Tax Basis, or otherwise providing satisfactory provisions for payment of such amounts determined by the Indemnitee in its sole discretion; (7) the aggregate amount of all indemnity payments that Borrower may be required to make to such Indemnitee with respect to such claim (or similar or related claims) is at least $60,000; and (8) the claim is not for a Tax the imposition of which has been previously contested by, or at the request of, Borrower hereunder, and such previous contest (including all allowable appeals) was decided adversely to Borrower, unless Borrower has delivered an opinion of independent Tax counsel selected by Borrower and reasonably acceptable to the Indemnitee to the effect that, on the basis of (i) a change in applicable law, or (ii) a difference in the underlying facts, there is currently a Realistic Possibility of Success for contesting such claim.
(D) If any Indemnitee shall obtain a refund of all or any part of any Tax paid by Borrower, such Indemnitee shall pay Borrower, but not before Borrower shall have made all payments theretofore due to such Indemnitee pursuant to this Section 6(b) and any other payments theretofore due such Indemnitee under any of the Operative Documents, an amount equal to the amount of such refund (net of any Taxes imposed thereon), including interest received and attributable thereto (net of any Taxes imposed thereon) plus, if Borrower has paid an amount pursuant to the first sentence of Section 6(b)(iii)(A), any net Tax benefit (or minus any net Tax detriment) realized by such Indemnitee as a result of any refund received, and payment made, by such Indemnitee pursuant to this sentence; provided that the Indemnitee shall not be obligated to pay an amount under the preceding sentence to the extent that such amount would exceed the amount of such Taxes paid, reimbursed or advanced by Borrower to such Indemnitee (other than the cost of the contest thereof)AINC Party; provided, further, that to the extent such Tax Claim could reasonably be expected to adversely affect any amount AINC Party or relates to any entity-level Tax liability of a Remington Company, (x) New Holdco will be entitled to participate in the defense of such Tax Contest and to employ counsel of its choice for such purpose, the fees and expenses of which separate counsel will be borne by New Holdco, and (y) the ▇▇▇▇▇▇▇ Appointee will promptly keep New Holdco reasonably informed of all material developments related to such Tax Claim, promptly provide New Holdco with copies of (and a reasonable opportunity to comment on) all written materials to be provided to the applicable Governmental Authority (including good faith consideration of any such comments) related to such Tax Claim (or the relevant excerpts thereof), and promptly provide New Holdco with copies of any correspondence received from the applicable Governmental Authority related to such Tax Claim (or relevant excerpts thereof). The AINC Parties may control the contest or resolution of and defend against any Tax Claim to the extent the ▇▇▇▇▇▇▇ Appointees are not paid entitled to Borrower control such Tax Claim, or have not timely notified the AINC Parties that they will control such Tax Claim, pursuant to the foregoing limitation shall preceding sentence, at the sole cost and expense of the AINC Parties; provided that the AINC Parties will promptly notify the ▇▇▇▇▇▇▇ Appointees upon taking control of such Tax Claim and the ▇▇▇▇▇▇▇ Appointees will be carried forward entitled to reduce pro tanto any future participate in the defense of such Tax Claim and to employ counsels of their choice for such purpose, the fees and expenses of which separate counsel will be borne by the respective Remington Parties (taking into account payments made under the Transition Cost Sharing Agreement); provided further that Borrower (i) such Tax Claim may not be required to make settled or conceded without the prior written consent of the ▇▇▇▇▇▇▇ Appointees, which consent will not be unreasonably withheld or delayed, and (ii) the AINC Parties will promptly keep the ▇▇▇▇▇▇▇ Appointees reasonably informed of all material developments related to such Indemnitee pursuant Tax Claim, promptly provide the ▇▇▇▇▇▇▇ Appointees with copies of (and a reasonable opportunity to comment on) all written materials to be provided to the applicable Governmental Authority (including good faith consideration of any such comments) related to such Tax Claim (or the relevant excerpts thereof), and promptly provide the ▇▇▇▇▇▇▇ Appointees with copies of any correspondence received from the applicable Governmental Authority related to such Tax Claim (or the relevant excerpts thereof). In the event of a conflict between this Section 6(b)7.05 and any other section of this Agreement, this Section 7.05 will govern with respect to the control of Tax Claims. If Notwithstanding anything to the contrary in this Article VII, subject to the Transition Cost Sharing Agreement, none of the AINC Parties will have any Indemnitee shall have paid Borrower any refund of all or part of rights with respect to any Tax paid by Borrower and it Claim with respect to Kylemore Investments, LP (including any Tax Claim with respect to an affiliated, combined, consolidated, unitary or similar group that includes Kylemore Investments, LP) that is subsequently determined that such Indemnitee was not entitled with respect to the refund, such determination shall be treated as the imposition of a Tax for which Borrower is obligated to indemnify such Indemnitee pursuant to the provisions of this Section 6(b) without regard to the exclusions set forth in Section 6(b)(ii) any Remington Company (other than subparagraphs (4RHC), (11) and (12) thereof). Provided no Specified Default or Event of Default has occurred and is continuing, an Indemnitee shall not settle any such claim or contest pursuant to this provision without the written consent of Borrower, which consent shall not be unreasonably withheld, conditioned or delayed; provided, that an Indemnitee may settle at any time without the consent of Borrower if the Indemnitee waives (by written notice to Borrower) the payment by Borrower of an indemnity in respect of such issue and any related issue the contest of which is effectively foreclosed by the settlement of such issue, including any payment arising from such issue in subsequent years or which by reason of the fact that such issue is of a continuing nature, and promptly pays to Borrower any Tax previously paid or any interest-free loan advanced by Borrower (other than expenses of such contests) with respect to such issue.
(E) Nothing contained in this Section 6(b)(iv) shall require any Indemnitee to contest, or permit Borrower to contest in the name of such Indemnitee, a claim that such Indemnitee would otherwise be required to contest pursuant to this Section 6(b)(iv) if such Indemnitee shall waive payment by Borrower of any amount that might otherwise be payable by Borrower under this Section 6(b) in connection with such claim (other than the costs of contest previously incurred), nor shall any Indemnitee be required to pursue any appeal to the United States Supreme Court.
Appears in 1 contract
Sources: Combination Agreement (Ashford Inc.)
Contests. (Aa) Nothing in this Agreement shall be construed to prevent UpREIT from contesting, through its Tax Matters Partner in accordance with the Partnership Agreement as part of the unified audit of the UpREIT, any claim in respect of any "partnership" item of the UpREIT that, if successful, would result in an Income Inclusion (a "Partnership Level Issue").
(b) If UpREIT contests a written claim shall Partnership Level Issue that, if successful, would result in an Income Inclusion, UpREIT's liability for indemnification under Section 4 hereof (other than reasonable costs and expenses described in Section 6(f) of the Agreement) shall, at UpREIT's election, be made against and received by deferred until thirty (30) days after a Final Determination of such ▇▇▇▇▇ Indemnitee's federal income tax liability in respect of an Income Inclusion.
(c) If any Indemnitee for any Tax for audit or proceeding involving an indemnifiable adjustment is being conducted in a proceeding involving such ▇▇▇▇▇ Indemnitee, which Borrower is obligated cannot be transferred to indemnify pursuant to this Section 6(bthe UpREIT as a partnership item (a "▇▇▇▇▇ Level Issue"), such ▇▇▇▇▇ Indemnitee shall hereby agrees (i) promptly to notify Borrower UpREIT in writing of such claim within 30 days after adjustment (and the failure of such ▇▇▇▇▇ Indemnitee to so notify UpREIT shall preclude any indemnity hereunder to the extent UpREIT's right to effect its receiptcontest rights hereunder has been precluded by such failure), and shall provide Borrower (ii) upon UpREIT's delivery to of a written opinion of nationally recognized tax counsel reasonably acceptable to such information regarding ▇▇▇▇▇ Indemnitee ("Tax Counsel") to the effect that there is a Realistic Possibility of Success upon contest of such claim as Borrower may reasonably request▇▇▇▇▇ Level Issue, such ▇▇▇▇▇ Indemnitee will contest that adjustment by filing a protest and administrative appeal and prosecuting the same in good faith; provided, however, that the failure to provide such notice shall not release Borrower from any of its obligations to indemnify under Section 6 hereof unless, and only to the extent that, such failure effectively precludes Borrower’s contest rights. To the extent permitted under applicable law, such ▇▇▇▇▇ Indemnitee will not make any payments be obligated to pursue an administrative appeal if such ▇▇▇▇▇ Indemnitee instead pursues relief in Tax Court or a court having refund jurisdiction.
(d) If, within 30 days following the failure of such administrative proceedings with respect to such claim for at least 30 days after giving notice of such claim a ▇▇▇▇▇ Level Issue, UpREIT delivers to Borrower.
(B) If requested by Borrower in writing within 30 days after its receipt of such notice or such shorter period as may be required by applicable law, such a ▇▇▇▇▇ Indemnitee shall, at the expense of Borrower and subject to subparagraph (C) below, contest the validity, applicability or amount of such Taxes by, in the case of an Indemnitee-Controlled Contest, in such Indemnitee’s sole discretion or, in the case of a Borrower-Controlled Contest, in Borrower’s sole discretion, (1) resisting payment thereof if practicable, (2) not paying such Tax except under protest, (3) if protest is necessary and proper, and if payment of such Tax is made, using reasonable efforts to obtain a refund thereof, in appropriate administrative and judicial proceedings, and (4) in the case of an Indemnitee-Controlled Contest, considering in good faith any other reasonable action as Borrower may reasonably request. Each Indemnitee shall consult in good faith with Borrower and Borrower’s counsel, and Borrower shall consult in good faith with such Indemnitee and its counsel in the case of a Borrower-Controlled Contest. concerning the forum in which the contest is most likely to be favorably resolved and whether such contest shall be by (x) resisting payment of such Tax, (y) paying such Tax under protest or (z) paying such Tax and seeking a refund or other repayment thereof.
(C) In no event shall an Indemnitee be required, or Borrower permitted, to contest the imposition of any Tax for which Borrower is obligated pursuant to this Section 6(b) unless (1) Borrower shall have agreed to pay and shall promptly be paying on request all reasonable costs and expenses that such Indemnitee incurs in contesting such claim or arising out of or relating to such contest (including legal fees, accounting fees, and disbursements, including those on appeal, if any); (2) such contest is not reasonably likely to result in a material danger of the sale, seizure, forfeiture or loss of the Aircraft, or the creation of any Lien thereon other than Liens for Taxes (i) either not yet due or being contested in good faith by appropriate proceedings and (ii) for which such reserves, if any, as are required to be provided under generally accepted accounting principles have been provided by Borrower, and there is no risk of criminal penalties; (3) if such contest shall be conducted in a manner requiring the payment of the claim, Borrower shall have advanced sufficient funds, on an interest-free basis, to make the payment required, and shall have agreed to indemnify the Indemnitee against any additional net after-Tax cost to such Indemnitee of such advance; (4) if requested by the Indemnitee in writing, such Indemnitee shall have received an written opinion of independent Tax counsel selected by Borrower and reasonably acceptable to such Indemnitee and furnished at Borrower’s sole expense Counsel to the effect that there is a Realistic Possibility of Success exists if the proposed adjustment is presented to a court for contesting resolution, then such claim (or, ▇▇▇▇▇ Indemnitee will contest the proposed adjustment in good faith in the case Tax Court or by paying the tax (and any applicable interest and penalties) and suing for refund in the Court of an appeal Federal Claims or appropriate Federal District Court. If, within 30 days following a final adverse decision of an adverse judicial determinationsuch court with respect to such ▇▇▇▇▇ Level Issue, UpREIT delivers to such ▇▇▇▇▇ Indemnitee a written opinion from such independent of Tax counsel Counsel to the effect that it is more likely than not that such adverse judicial determination will decision would be reversed on appeal, then such ▇▇▇▇▇ Indemnitee will appeal such decision to the appropriate Federal Court of Appeals. With respect to any of the above-described proceedings, such ▇▇▇▇▇ Indemnitee will keep UpREIT and its counsel informed as to the progress of such proceedings, give UpREIT and its counsel the opportunity to review and comment in advance on all written submissions and filings relevant to indemnifiable issues (after making appropriate redactions to preserve the confidentiality of the such ▇▇▇▇▇ Indemnitee return as to other issues), and consider in good faith any suggestions made by UpREIT or substantially modifiedits counsel.
(e) Such ▇▇▇▇▇ Indemnitee shall present any settlement offer provided to such ▇▇▇▇▇ Indemnitee pursuant to a ▇▇▇▇▇ Level Issue to UpREIT. If UpREIT recommends acceptance of a settlement offer of a ▇▇▇▇▇ Level Issue or if the Tax Matters Partner recommends acceptance of a settlement offer in respect of a Partnership Level Issue, but such ▇▇▇▇▇ Indemnitee declines to accept such offer in writing within 30 days (if such ▇▇▇▇▇ Indemnitee does not respond within 30 days, such lack of response shall be treated as acceptance of UpREIT's or the Tax Matters Partner's recommendation, respectively); , (51) Borrower the obligation of UpREIT to make indemnity payments as the result of any such contest or proceedings shall not thereafter exceed the obligation that it would have had if such contest had been settled or proceeding terminated on the basis recommended by UpREIT or the Tax Matters Partner, as applicable, and (2) in the case of a ▇▇▇▇▇ Level Issue, UpREIT shall have delivered no further liability for costs or other expenses in respect of such contest.
(f) Notwithstanding the foregoing, such ▇▇▇▇▇ Indemnitee will have no obligation to contest any action with respect to a ▇▇▇▇▇ Level Issue (i) unless such items could give rise to a federal income tax liability (disregarding other items in the assessment and considering effects in future years) in excess of $ __________ , (ii) without UpREIT paying when due, reasonable third-party costs and out-of-pocket expenses including reasonable legal, witness and accounting fees and other expenses and, in the case of proceedings before the Court of Federal Claims or Federal District Court, the amount of tax (and any applicable interest and penalties) for which refund is claimed, and (iii) to the extent such ▇▇▇▇▇ Indemnitee a written acknowledgment of Borrower’s waives in writing UpREIT's obligation to indemnify such ▇▇▇▇▇ Indemnitee to the extent that the contest is not successful; providedfor such items, however, that Borrower will not be bound by its acknowledgment of liability if the contest is resolved on a clear in which case all third-party costs and unambiguous basis showing no such liability under this Section 6(b) with respect to such Tax; (6) if a Specified Default or Event of Default shall have occurred and be continuing, Borrower shall have provided security for its obligation hereunder satisfactory to the Indemnitee by placing out-of-pocket expenses described in escrow sufficient funds to cover any such contested Tax and the reasonably expected expenses of such contest on an After-Tax Basis, or otherwise providing satisfactory provisions for payment of such amounts determined by the Indemnitee in its sole discretion; (7) the aggregate amount of all indemnity payments that Borrower may be required to make to such Indemnitee with respect to such claim (or similar or related claims) is at least $60,000; and (8) the claim is not for a Tax the imposition of which has been previously contested by, or at the request of, Borrower hereunder, and such previous contest (including all allowable appeals) was decided adversely to Borrower, unless Borrower has delivered an opinion of independent Tax counsel selected by Borrower and reasonably acceptable to the Indemnitee to the effect that, on the basis of (i) a change in applicable law, or clause (ii) a difference in the underlying facts, there is currently a Realistic Possibility of Success for contesting thereafter incurred and all taxes would be paid by such claim▇▇▇▇▇ Indemnitee.
(Dg) If any Indemnitee shall obtain a refund of all or any part of any Tax paid by Borrower, such Indemnitee shall pay Borrower, but not before Borrower shall have made all payments theretofore due to such Indemnitee pursuant to this Section 6(b) and any other payments theretofore due such Indemnitee under any of the Operative Documents, an amount equal to the amount of such refund (net of any Taxes imposed thereon), including interest received and attributable thereto (net of any Taxes imposed thereon) plus, if Borrower has paid an amount pursuant to the first sentence of Section 6(b)(iii)(A), any net Tax benefit (or minus any net Tax detriment) realized by such Indemnitee as a result of any refund received, and payment made, by such Indemnitee pursuant to this sentence; provided that the Indemnitee shall not be obligated to pay an amount under the preceding sentence to the extent that such amount would exceed the amount of such Taxes paid, reimbursed or advanced by Borrower to such Indemnitee (other than the cost of the contest thereof); provided, further, that any amount not paid to Borrower pursuant to the foregoing limitation shall be carried forward to reduce pro tanto any future payments that Borrower may be required to make to such Indemnitee pursuant to this Section 6(b). If any Indemnitee shall have paid Borrower any refund of all or part of any Tax paid by Borrower and it is subsequently determined that such Indemnitee was not entitled to the refund, such determination shall be treated as the imposition of a Tax for which Borrower is obligated to indemnify such Indemnitee pursuant to the provisions of this Section 6(b) without regard to the exclusions set forth in Section 6(b)(ii) (other than subparagraphs (4), (11) and (12) thereof). Provided no Specified Default or Event of Default has occurred and is continuing, an ▇▇▇▇▇ Indemnitee shall not settle any such claim or contest pursuant to this provision ▇▇▇▇▇ Level Issue without the written consent of Borrower, which consent UpREIT's consent; provided that such ▇▇▇▇▇ Indemnitee shall not be unreasonably withheld, conditioned or delayed; provided, that an Indemnitee required to contest any proposed adjustment and may settle at any time without the consent of Borrower such proposed adjustment if the such ▇▇▇▇▇ Indemnitee waives (by written notice shall waive its right to Borrower) the payment by Borrower of an indemnity in respect of such issue and any related issue the contest of which is effectively foreclosed by the settlement of such issue, including any payment arising from such issue in subsequent years or which by reason of the fact that such issue is of a continuing nature, and promptly pays to Borrower any Tax previously paid or any interest-free loan advanced by Borrower (other than expenses of such contests) under this Agreement with respect to such issueadjustment and any Income Inclusion that results from such adjustment and, in the case of proceedings before the Court of Federal Claims or Federal District Court, shall pay to UpREIT the amount of tax (and any applicable interest and penalties) previously paid or advanced by UpREIT with respect to such adjustment or the contest of such adjustment under Section 6(f), plus interest at ___% computed from the time such amounts were paid or advanced by UpREIT.
(Eh) Nothing contained Within thirty (30) days after a Final Determination of the liability of such ▇▇▇▇▇ Indemnitee in this Section 6(b)(ivrespect of a ▇▇▇▇▇ Level Issue, UpREIT and each Indemnitee agree to pay each other, as applicable, the net amount of (i) shall require the payment owed by the UpREIT to such ▇▇▇▇▇ Indemnitee of any indemnification hereunder, not theretofore paid resulting from the outcome of such contest, and (ii) in the case of proceedings before the Court of Federal Claims or Federal District Court, the repayment owed by such ▇▇▇▇▇ Indemnitee to contest, UpREIT of the amount of tax (and any applicable interest and penalties) previously paid or permit Borrower advanced by UpREIT with respect to such adjustment or the contest in the name of such Indemnitee, a claim that such Indemnitee would otherwise be required to contest pursuant to this adjustment under Section 6(b)(iv) if such Indemnitee shall waive payment by Borrower of any amount that might otherwise be payable by Borrower under this Section 6(b) in connection with such claim (other than the costs of contest previously incurred6(f), nor shall together with any interest received by or credited to such ▇▇▇▇▇ Indemnitee be required that is attributable to pursue any appeal to the United States Supreme Courtsuch advance.
Appears in 1 contract
Contests. (A) If a written claim Tenant shall be made against and received by any Indemnitee for any Tax for which Borrower is obligated to indemnify pursuant to this Section 6(b)have the right, such Indemnitee shall notify Borrower in writing of such claim within 30 days after its receipt, and shall provide Borrower such information regarding such claim as Borrower may reasonably request; provided, however, that the failure to provide such notice shall not release Borrower from any of its obligations to indemnify under Section 6 hereof unless, and only to the extent that, such failure effectively precludes Borrower’s contest rights. To the extent permitted under applicable law, such Indemnitee will not make any payments with respect to such claim for at least 30 ten (10) days after giving prior written notice of such claim to Borrower.
Landlord (B) If requested by Borrower in writing within 30 days after its receipt of such notice or such shorter period as may be required by applicable law, such Indemnitee shall, at Law in order to preserve the expense of Borrower and subject right to subparagraph (C) below, contest the validity, applicability or amount of such Taxes by, in the case of an Indemnitee-Controlled Contest, in such Indemnitee’s sole discretion or, in the case of a Borrower-Controlled Contest, in Borrower’s sole discretion, (1) resisting payment thereof if practicable, (2) not paying such Tax except under protest, (3) if protest is necessary and proper, and if payment of such Tax is made, using reasonable efforts to obtain a refund thereof, in appropriate administrative and judicial proceedings, and (4) in the case of an Indemnitee-Controlled Contest, considering in good faith any other reasonable action as Borrower may reasonably request. Each Indemnitee shall consult in good faith with Borrower and Borrower’s counsel, and Borrower shall consult in good faith with such Indemnitee and its counsel in the case of a Borrower-Controlled Contest. concerning the forum in which the contest is most likely to be favorably resolved and whether such contest shall be by (x) resisting payment of such Tax, (y) paying such Tax under protest or (z) paying such Tax and seeking a refund or other repayment thereof.
(C) In no event shall an Indemnitee be required, or Borrower permitteddo so), to contest the imposition amount or validity of any Tax for Imposition or Law or lien by appropriate proceedings conducted in good faith and with due diligence, at its sole cost and expense. If Tenant has not yet made the Minimum Investment, or deposited into escrow under terms and conditions reasonably satisfactory to Landlord the amount by which Borrower the Minimum Investment then exceeds the Investment, then, Tenant shall furnish to Landlord security reasonably satisfactory to Landlord against any claim, loss, liability or expense incurred as a result of such nonpayment or delay therein. In the event of any such contest, if the final determination thereof is obligated pursuant adverse to this Section 6(b) unless (1) Borrower Tenant, then Tenant shall have agreed to pay and shall promptly be paying on request all reasonable fully the amounts involved in such contest, together with any penalties, fines, interests, costs and expenses that such Indemnitee incurs in contesting such claim may have accrued thereon or arising out of or relating to that may result from any such contest (including legal fees, accounting feesby Tenant, and disbursementsafter such payment by Tenant, including those on appealLandlord will promptly return to Tenant such security as Landlord shall have received in connection with such contest, unless such adverse determination results directly from or is otherwise directly related to Landlord's failure to comply with its obligations under this Lease, or Landlord's negligence or misconduct, in which event, Landlord shall immediately after written notice of such adverse determination return such deposit to Tenant. Landlord shall join in any such proceeding if any); (2) any Law now or hereafter in effect shall require that such contest is not reasonably likely to result proceedings be brought by and/or in a material danger the name of Landlord or any owner of the sale, seizure, forfeiture or loss of Private Parcel. Neither Landlord nor the Aircraft, or the creation of any Lien thereon other than Liens for Taxes (i) either not yet due or being contested in good faith by appropriate proceedings and (ii) for which such reserves, if any, as are required to be provided under generally accepted accounting principles have been provided by Borrower, and there is no risk of criminal penalties; (3) if such contest Private Parcel shall be conducted in a manner requiring subjected to any liability for the payment of the claimany costs, Borrower shall have advanced sufficient fundsfees, on an interest-free basisincluding attorneys' fees, to make the payment required, and shall have agreed to indemnify the Indemnitee against any additional net after-Tax cost to such Indemnitee of such advance; (4) if requested by the Indemnitee or expenses in writing, such Indemnitee shall have received an opinion of independent Tax counsel selected by Borrower and reasonably acceptable to such Indemnitee and furnished at Borrower’s sole expense to the effect that a Realistic Possibility of Success exists for contesting such claim (or, in the case of an appeal of an adverse judicial determination, a written opinion from such independent Tax counsel to the effect that it is more likely than not that such adverse judicial determination will be reversed or substantially modified); (5) Borrower shall have delivered to such Indemnitee a written acknowledgment of Borrower’s obligation to indemnify such Indemnitee to the extent that the contest is not successful; provided, however, that Borrower will not be bound by its acknowledgment of liability if the contest is resolved on a clear and unambiguous basis showing no such liability under this Section 6(b) connection with respect to such Tax; (6) if a Specified Default or Event of Default shall have occurred and be continuing, Borrower shall have provided security for its obligation hereunder satisfactory to the Indemnitee by placing in escrow sufficient funds to cover any such contested Tax and the reasonably expected expenses of such contest on an After-Tax Basis, or otherwise providing satisfactory provisions for payment of such amounts determined by the Indemnitee in its sole discretion; proceeding (7) the aggregate amount of all indemnity payments that Borrower may be required to make to such Indemnitee with respect to such claim (or similar or related claims) is at least $60,000; and (8) the claim is not for a Tax the imposition of which has been previously contested by, or at the request of, Borrower hereunder, and such previous contest (including all allowable appeals) was decided adversely to Borrower, unless Borrower has delivered an opinion of independent Tax counsel selected by Borrower and reasonably acceptable to the Indemnitee to the effect that, on the basis of (i) a change in applicable law, or (ii) a difference in the underlying facts, there is currently a Realistic Possibility of Success for contesting such claim.
(D) If any Indemnitee shall obtain a refund of all or any part of any Tax paid by Borrower, such Indemnitee shall pay Borrower, but not before Borrower shall have made all payments theretofore due to such Indemnitee pursuant to this Section 6(b) and any other payments theretofore due such Indemnitee under any of the Operative Documents, an amount equal to the amount of such refund (net of any Taxes imposed thereon), including interest received and attributable thereto (net of any Taxes imposed thereon) plus, if Borrower has paid an amount pursuant to the first sentence of Section 6(b)(iii)(A), any net Tax benefit (or minus any net Tax detriment) realized by such Indemnitee as a result of any refund received, and payment made, by such Indemnitee pursuant to this sentence; provided that the Indemnitee shall not be obligated to pay an amount under the preceding sentence except to the extent that such amount would exceed the amount of such Taxes paidadverse determination results from or is otherwise related to Landlord's failure tocomply with its obligations under this Lease, reimbursed or advanced by Borrower to such Indemnitee (other than the cost of the contest thereofLandlord's negligence or misconduct); provided, further, that any amount not paid to Borrower pursuant to the foregoing limitation . Tenant shall be carried forward entitled to reduce pro tanto any future payments that Borrower may be required to make to such Indemnitee pursuant to this Section 6(b). If any Indemnitee shall have paid Borrower any refund of all any such Imposition and penalties or part of any Tax interest thereon, which shall have been paid by Borrower and it is subsequently determined that such Indemnitee was not entitled to the refundTenant or paid by Landlord, such determination shall be treated as the imposition of a Tax for which Borrower is obligated to indemnify such Indemnitee pursuant to the provisions of this Section 6(b) without regard to the exclusions set forth in Section 6(b)(ii) (other than subparagraphs (4), (11) and (12) thereof). Provided no Specified Default or Event of Default has occurred and is continuing, an Indemnitee Landlord shall not settle any such claim or contest pursuant to this provision without the written consent of Borrower, which consent shall not be unreasonably withheld, conditioned or delayed; provided, that an Indemnitee may settle at any time without the consent of Borrower if the Indemnitee waives (by written notice to Borrower) the payment by Borrower of an indemnity in respect of such issue and any related issue the contest of which is effectively foreclosed by the settlement of such issue, including any payment arising from such issue in subsequent years or which by reason of the fact that such issue is of a continuing nature, and promptly pays to Borrower any Tax previously paid or any interest-free loan advanced by Borrower (other than expenses of such contests) with respect to such issuehave been fully reimbursed.
(E) Nothing contained in this Section 6(b)(iv) shall require any Indemnitee to contest, or permit Borrower to contest in the name of such Indemnitee, a claim that such Indemnitee would otherwise be required to contest pursuant to this Section 6(b)(iv) if such Indemnitee shall waive payment by Borrower of any amount that might otherwise be payable by Borrower under this Section 6(b) in connection with such claim (other than the costs of contest previously incurred), nor shall any Indemnitee be required to pursue any appeal to the United States Supreme Court.
Appears in 1 contract
Sources: Parcel Lease (Premier Parks Inc)
Contests. (A) If a written claim shall be is made against and received by any an Indemnitee for any Tax Taxes with respect to which Lessee is or may be liable for which Borrower is obligated to indemnify pursuant to this Section 6(b)a payment or indemnity hereunder, such Indemnitee shall notify Borrower will promptly give Lessee notice in writing of such claim within 30 days after its receipt, and shall provide Borrower such information regarding such claim as Borrower may reasonably requestclaim; provided, however, that such Indemnitee's failure to give notice will not relieve Lessee of its obligations hereunder, except to the extent the failure to provide give such notice shall not release Borrower from any of its obligations to indemnify under Section 6 hereof unless, and only to the extent that, such failure effectively precludes Borrower’s a contest rights. To the extent permitted under applicable law, such Indemnitee will not make any payments with respect to such claim for at least 30 days after giving notice of such claim in the manner contemplated herein. So long as (a) a contest of such Taxes does not involve any danger of the sale, forfeiture or loss of the Aircraft or any interest therein, (b) Lessee has provided the relevant Indemnitee with an opinion of independent tax counsel acceptable to Borrower.
such Indemnitee that a meritorious basis exists for contesting such claim, (Bc) If requested Lessee has made adequate reserves for such Taxes or, if required by Borrower the relevant Indemnitee, an adequate bond has been posted by Lessee, and (d) Lessee has acknowledged in writing within 30 days after its receipt obligation to indemnify for such Taxes, then such Indemnitee at Lessee's written request will in good faith, with due diligence and at Lessee's sole cost and expense, contest (or, if permitted by Law, permit Lessee to contest in the name of such notice or such shorter period as may be required by applicable law, such Indemnitee shall, at the expense of Borrower and subject to subparagraph (CIndemnitee) below, contest the validity, applicability or amount of such Taxes by, in the case of an Indemnitee-Controlled Contest, in such Indemnitee’s sole discretion or, in the case of a Borrower-Controlled Contest, in Borrower’s sole discretion, (1) resisting payment thereof if practicable, (2) not paying such Tax except under protest, (3) if protest is necessary and proper, and if payment of such Tax is made, using reasonable efforts to obtain a refund thereof, in appropriate administrative and judicial proceedings, and (4) in the case of an Indemnitee-Controlled Contest, considering in good faith any other reasonable action as Borrower may reasonably requestTaxes. Each Indemnitee shall consult in good faith with Borrower and Borrower’s counsel, and Borrower shall consult in good faith with such Indemnitee and its counsel in the case of a Borrower-Controlled Contest. concerning the forum in which the contest is most likely to be favorably resolved and whether such contest shall be by (x) resisting payment of such Tax, (y) paying such Tax under protest or (z) paying such Tax and seeking a refund or other repayment thereof.
(C) In no event shall an Indemnitee be required, or Borrower permitted, to contest the imposition of any Tax for which Borrower is obligated pursuant to this Section 6(b) unless (1) Borrower shall have agreed to pay and shall promptly be paying on request all reasonable costs and expenses that such Indemnitee incurs in contesting such claim or arising out of or relating to such contest (including legal fees, accounting fees, and disbursements, including those on appeal, if any); (2) If such contest is not reasonably likely to result in a material danger of the sale, seizure, forfeiture or loss of the Aircraft, or the creation of any Lien thereon other than Liens for Taxes (i) either not yet due or being contested in good faith by appropriate proceedings and (ii) for which such reserves, if any, as are required to be provided under generally accepted accounting principles have been provided initiated by Borrowerthe payment of, and there is no risk the claiming of criminal penalties; a refund for, any Taxes, Lessee shall advance to the relevant Indemnitee sufficient funds (3) if such contest shall be conducted in a manner requiring the payment of the claim, Borrower shall have advanced sufficient funds, on an interest-free basis, ) to make the payment required, such payments and shall have agreed to indemnify the Indemnitee against any additional net after-Tax cost to such Indemnitee for any tax consequences resulting from such advance of such advance; (4) if requested by funds. Although the relevant Indemnitee may consult in writinggood faith with Lessee concerning the conduct of any contest, such Indemnitee shall have received an opinion control the conduct of independent Tax counsel selected by Borrower and reasonably acceptable all proceedings relating to such Indemnitee and furnished at Borrower’s sole expense to the effect that a Realistic Possibility of Success exists for contesting such claim (or, in the case of an appeal of an adverse judicial determination, a written opinion from such independent Tax counsel to the effect that it is more likely than not that such adverse judicial determination will be reversed or substantially modified); (5) Borrower shall have delivered to such Indemnitee a written acknowledgment of Borrower’s obligation to indemnify such Indemnitee to the extent that the contest is not successful; provided, however, that Borrower will not be bound by its acknowledgment of liability if the contest is resolved on a clear and unambiguous basis showing no such liability under this Section 6(b) with respect to such Tax; (6) if a Specified Default or Event of Default shall have occurred and be continuing, Borrower shall have provided security for its obligation hereunder satisfactory to the Indemnitee by placing in escrow sufficient funds to cover any such contested Tax and the reasonably expected expenses contest which is brought by or on behalf of such Indemnitee. Any contest on an After-Tax Basis, or otherwise providing satisfactory provisions for payment of such amounts determined by the Indemnitee in its sole discretion; (7) the aggregate amount of all indemnity payments that Borrower initiated hereunder may be required to make to such Indemnitee with respect to such claim (settled or similar or related claims) is discontinued at least $60,000; and (8) the claim is not for a Tax the imposition of which has been previously contested by, or at the request of, Borrower hereunder, and such previous contest (including all allowable appeals) was decided adversely to Borrower, unless Borrower has delivered an opinion of independent Tax counsel selected by Borrower and reasonably acceptable to the Indemnitee to the effect that, on the basis of (i) a change in applicable law, or (ii) a difference in the underlying facts, there is currently a Realistic Possibility of Success for contesting such claim.
(D) If any Indemnitee shall obtain a refund of all or any part of any Tax paid by Borrower, such Indemnitee shall pay Borrower, but not before Borrower shall have made all payments theretofore due to such Indemnitee pursuant to this Section 6(b) and any other payments theretofore due such Indemnitee under any of the Operative Documents, an amount equal to the amount of such refund (net of any Taxes imposed thereon), including interest received and attributable thereto (net of any Taxes imposed thereon) plus, if Borrower has paid an amount pursuant to the first sentence of Section 6(b)(iii)(A), any net Tax benefit (or minus any net Tax detriment) realized by such Indemnitee as a result of any refund received, and payment made, by such Indemnitee pursuant to this sentence; time provided that the Indemnitee shall not be obligated to pay an amount under the preceding sentence to the extent that such amount would exceed the amount of such Taxes paid, reimbursed or advanced by Borrower to such Indemnitee (other than the cost of the contest thereof); provided, further, that any amount not paid to Borrower pursuant to the foregoing limitation shall be carried forward to reduce pro tanto any future payments that Borrower may be required to make to such Indemnitee pursuant to this Section 6(b). If any relevant Indemnitee shall have paid Borrower waived any refund of all or part of any Tax paid by Borrower and it is subsequently determined that such Indemnitee was not entitled right to indemnification for the refund, such determination shall be treated as the imposition of a Tax for which Borrower is obligated to indemnify such Indemnitee pursuant to the provisions of this Section 6(b) without regard to the exclusions set forth in Section 6(b)(ii) (other than subparagraphs (4), (11) and (12) thereof). Provided no Specified Default or Event of Default has occurred and is continuing, an Indemnitee shall not settle any such claim or contest pursuant to this provision without the written consent of Borrower, which consent shall not be unreasonably withheld, conditioned or delayed; provided, that an Indemnitee may settle at any time without the consent of Borrower if the Indemnitee waives (by written notice to Borrower) the payment by Borrower of an indemnity in respect of such issue and any related issue the contest of which is effectively foreclosed by the settlement of such issue, including any payment arising from such issue in subsequent years or which by reason of the fact that such issue is of a continuing nature, and promptly pays to Borrower any Tax previously paid or any interest-free loan advanced by Borrower (other than expenses of such contests) with respect to such issueTaxes being contested.
(E) Nothing contained in this Section 6(b)(iv) shall require any Indemnitee to contest, or permit Borrower to contest in the name of such Indemnitee, a claim that such Indemnitee would otherwise be required to contest pursuant to this Section 6(b)(iv) if such Indemnitee shall waive payment by Borrower of any amount that might otherwise be payable by Borrower under this Section 6(b) in connection with such claim (other than the costs of contest previously incurred), nor shall any Indemnitee be required to pursue any appeal to the United States Supreme Court.
Appears in 1 contract
Sources: Lease Agreement (Pan Am Corp /Fl/)
Contests. (Aa) If a written claim After the Closing, Purchaser shall be made against and received by any Indemnitee for promptly notify Seller in writing of the proposed assessment or the commencement of any Tax for which Borrower is obligated audit or administrative or judicial proceeding or Action or of any demand or claim on Purchaser, its Affiliates, the Companies or any Company Subsidiary which, if determined adversely to indemnify the taxpayer or after the lapse of time, could result in a Tax liability to Seller or an indemnification obligation of Seller under this Agreement. Such notice shall contain factual information (to the extent known to Purchaser, its Affiliates, or the Company Group) describing the 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. If Purchaser fails to give Seller prompt notice of an asserted Tax liability as required by this Section 6.3, the Seller’s obligations pursuant to this Section 6(b), such Indemnitee shall notify Borrower in writing of such claim within 30 days after its receipt, and shall provide Borrower such information regarding such claim as Borrower may reasonably request; provided, however, that the failure to provide such notice Agreement shall not release Borrower from any of its obligations be relieved except to indemnify under Section 6 hereof unlessthe extent, and only to the extent thatsuch extent, that failure to give such failure effectively precludes Borrower’s contest rights. To the extent permitted under applicable law, such Indemnitee will not make any payments with respect notice results in a material detriment to such claim for at least 30 days after giving notice of such claim to BorrowerSeller.
(Bb) If requested by Borrower in writing within 30 days after its receipt of such notice or such shorter period as may be required by applicable law, such Indemnitee shall, at the expense of Borrower and subject to subparagraph (C) below, contest the validity, applicability or amount of such Taxes by, in the case of an Indemnitee-Controlled Contest, in such Indemnitee’s sole discretion or, in In the case of a Borrower-Controlled Tax audit or administrative or judicial Action that relates to taxable periods (or portions thereof) ending on or before the date of the Closing (a “Contest”), in Borrower’s Seller shall have the sole discretion, (1) resisting payment thereof if practicable, (2) not paying such Tax except under protest, (3) if protest is necessary and proper, and if payment right to control the conduct of such Tax is made, using reasonable efforts Contest so long as such Contest could not reasonably be expected to obtain have an impact in a refund tax period (or portion thereof, in appropriate administrative and judicial proceedings, and (4) in beginning after the case Closing Date. Purchaser shall have the sole right to control the conduct of an Indemnitee-Controlled Contest, considering in good faith any other reasonable action as Borrower may reasonably request. Each Indemnitee shall consult in good faith with Borrower and Borrower’s counsel, and Borrower shall consult in good faith with such Indemnitee and its counsel in the case of a Borrower-Controlled Contest. concerning the forum in which the contest is most likely to be favorably resolved and whether such contest shall be Contest not controlled by (x) resisting payment of such Tax, (y) paying such Tax under protest or (z) paying such Tax and seeking a refund or other repayment thereofSeller.
(Cc) In no event The non-controlling party shall an Indemnitee be requiredhave the right to participate in any such Contest, or Borrower permittedat its own expense, to contest and the imposition controlling party shall keep the non-controlling party reasonably apprised of any Tax for which Borrower is obligated pursuant to this Section 6(b) unless (1) Borrower shall have agreed to pay and shall promptly be paying on request all reasonable costs and expenses that materially developments during such Indemnitee incurs in contesting such claim or arising out of or relating to such contest (including legal fees, accounting fees, and disbursements, including those on appeal, if any); (2) such contest is not reasonably likely to result in a material danger of the sale, seizure, forfeiture or loss of the Aircraft, or the creation of any Lien thereon other than Liens for Taxes (i) either not yet due or being contested in good faith by appropriate proceedings and (ii) for which such reserves, if any, as are required to be provided under generally accepted accounting principles have been provided by Borrower, and there is no risk of criminal penalties; (3) if such contest shall be conducted in a manner requiring the payment of the claim, Borrower shall have advanced sufficient funds, on an interest-free basis, to make the payment required, and shall have agreed to indemnify the Indemnitee against any additional net after-Tax cost to such Indemnitee of such advance; (4) if requested by the Indemnitee in writing, such Indemnitee shall have received an opinion of independent Tax counsel selected by Borrower and reasonably acceptable to such Indemnitee and furnished at Borrower’s sole expense to the effect that a Realistic Possibility of Success exists for contesting such claim (or, in the case of an appeal of an adverse judicial determination, a written opinion from such independent Tax counsel to the effect that it is more likely than not that such adverse judicial determination will be reversed or substantially modified); (5) Borrower shall have delivered to such Indemnitee a written acknowledgment of Borrower’s obligation to indemnify such Indemnitee to the extent that the contest is not successful; provided, however, that Borrower will not be bound by its acknowledgment of liability if the contest is resolved on a clear and unambiguous basis showing no such liability under this Section 6(b) with respect to such Tax; (6) if a Specified Default or Event of Default shall have occurred and be continuing, Borrower shall have provided security for its obligation hereunder satisfactory to the Indemnitee by placing in escrow sufficient funds to cover any such contested Tax and the reasonably expected expenses of such contest on an After-Tax Basis, or otherwise providing satisfactory provisions for payment of such amounts determined by the Indemnitee in its sole discretion; (7) the aggregate amount of all indemnity payments that Borrower Contest. The controlling party may be required to make to such Indemnitee with respect to such claim (or similar or related claims) is at least $60,000; and (8) the claim is not for a Tax the imposition of which has been previously contested by, or at the request of, Borrower hereunder, and such previous contest (including all allowable appeals) was decided adversely to Borrower, unless Borrower has delivered an opinion of independent Tax counsel selected by Borrower and reasonably acceptable to the Indemnitee to the effect that, on the basis of (i) a change in applicable law, or (ii) a difference in the underlying facts, there is currently a Realistic Possibility of Success for contesting such claim.
(D) If any Indemnitee shall obtain a refund of all or any part of any Tax paid by Borrower, such Indemnitee shall pay Borrower, but not before Borrower shall have made all payments theretofore due to such Indemnitee pursuant to this Section 6(b) and any other payments theretofore due such Indemnitee under any of the Operative Documents, an amount equal to the amount of such refund (net of any Taxes imposed thereon), including interest received and attributable thereto (net of any Taxes imposed thereon) plus, if Borrower has paid an amount pursuant to the first sentence of Section 6(b)(iii)(A), any net Tax benefit (or minus any net Tax detriment) realized by such Indemnitee as a result of any refund received, and payment made, by such Indemnitee pursuant to this sentence; provided that the Indemnitee shall not be obligated to pay an amount under the preceding sentence to the extent that such amount would exceed the amount of such Taxes paid, reimbursed or advanced by Borrower to such Indemnitee (other than the cost of the contest thereof); provided, further, that any amount not paid to Borrower pursuant to the foregoing limitation shall be carried forward to reduce pro tanto any future payments that Borrower may be required to make to such Indemnitee pursuant to this Section 6(b). If any Indemnitee shall have paid Borrower any refund of all or part of any Tax paid by Borrower and it is subsequently determined that such Indemnitee was not entitled to the refund, such determination shall be treated as the imposition of a Tax for which Borrower is obligated to indemnify such Indemnitee pursuant to the provisions of this Section 6(b) without regard to the exclusions set forth in Section 6(b)(ii) (other than subparagraphs (4), (11) and (12) thereof). Provided no Specified Default or Event of Default has occurred and is continuing, an Indemnitee shall not settle or compromise any such claim or contest pursuant to this provision Contest without the prior written consent of Borrowerthe non-controlling party, which such consent shall not to be unreasonably withheld, conditioned conditioned, or delayed; provided, that an Indemnitee may settle at any time without the consent of Borrower if the Indemnitee waives (by written notice to Borrower) the payment by Borrower of an indemnity in respect of such issue and any related issue the contest of which is effectively foreclosed by the settlement of such issue, including any payment arising from such issue in subsequent years or which by reason of the fact that such issue is of a continuing nature, and promptly pays to Borrower any Tax previously paid or any interest-free loan advanced by Borrower (other than expenses of such contests) with respect to such issue.
(Ed) Nothing contained in this Section 6(b)(ivPurchaser and Seller agree to cooperate, and ▇▇▇▇▇▇▇▇▇ agrees to cause the Companies (or any Company Subsidiary) shall require any Indemnitee to contestcooperate, or permit Borrower to contest in the name of such Indemnitee, a claim that such Indemnitee would otherwise be required to contest pursuant to this Section 6(b)(iv) if such Indemnitee shall waive payment by Borrower defense against or compromise of any amount that might otherwise be payable by Borrower under this Section 6(b) claim in connection with such claim (other than the costs of contest previously incurred), nor shall any Indemnitee be required to pursue any appeal to the United States Supreme CourtContest.
Appears in 1 contract
Sources: Equity Purchase Agreement (FiscalNote Holdings, Inc.)
Contests. (A) If a written any claim shall be made against and received by any Indemnitee or if any proceeding shall be commenced against any Indemnitee (including a written notice of such proceeding) for any Tax for Taxes as to which Borrower is obligated to indemnify Lessee may have an indemnity obligation pursuant to this Section 6(b)SECTION 8.1, or if any Indemnitee shall determine that any Taxes as to which Lessee may have an indemnity obligation pursuant to SECTION 8.1 may be payable, such Indemnitee shall promptly notify Borrower in writing of Lessee. Lessee shall be entitled, at its expense, acting through counsel reasonably acceptable to such claim within 30 days after its receiptIndemnitee, to participate in, and, to the extent that Lessee desires to, assume and shall provide Borrower such information regarding such claim as Borrower may reasonably requestcontrol the defense thereof; providedPROVIDED, howeverHOWEVER, that Lessee shall not be entitled to assume and control the failure defense of any such action, suit or proceeding if and to the extent that (A) Lessee is not able to provide such notice shall not release Borrower from any Indemnitee with a legal opinion of its obligations counsel reasonably acceptable to indemnify under Section 6 hereof unless, and only to the extent that, such failure effectively precludes Borrower’s contest rights. To the extent permitted under applicable law, such Indemnitee will that such action, suit or proceeding does not make involve (x) a risk of imposition of criminal liability or (y) any payments with respect to such claim for at least 30 days after giving notice material risk of such claim to Borrower.
(B) If requested by Borrower in writing within 30 days after its receipt of such notice or such shorter period as may be required by applicable law, such Indemnitee shall, at the expense of Borrower and subject to subparagraph (C) below, contest the validity, applicability or amount of such Taxes by, in the case of an Indemnitee-Controlled Contest, in such Indemnitee’s sole discretion or, in the case of a Borrower-Controlled Contest, in Borrower’s sole discretion, (1) resisting payment thereof if practicable, (2) not paying such Tax except under protest, (3) if protest is necessary and proper, and if payment of such Tax is made, using reasonable efforts to obtain a refund thereof, in appropriate administrative and judicial proceedings, and (4) in the case of an Indemnitee-Controlled Contest, considering in good faith any other reasonable action as Borrower may reasonably request. Each Indemnitee shall consult in good faith with Borrower and Borrower’s counsel, and Borrower shall consult in good faith with material civil liability on such Indemnitee and its counsel in the case of a Borrower-Controlled Contest. concerning the forum in which the contest is most likely to be favorably resolved and whether such contest shall be by (x) resisting payment of such Tax, (y) paying such Tax under protest or (z) paying such Tax and seeking a refund or other repayment thereof.
(C) In no event shall an Indemnitee be required, or Borrower permitted, to contest the imposition of any Tax for which Borrower is obligated pursuant to this Section 6(b) unless (1) Borrower shall have agreed to pay and shall promptly be paying on request all reasonable costs and expenses that such Indemnitee incurs in contesting such claim or arising out of or relating to such contest (including legal fees, accounting fees, and disbursements, including those on appeal, if any); (2) such contest is will not reasonably likely to result in involve a material danger risk of the sale, seizure, forfeiture or loss of the Aircraftof, or the creation of any Lien thereon (other than Liens for Taxes (ia Permitted Encumbrance) either not yet due on the Equipment, the Trust Estate or being contested in good faith by appropriate proceedings and (ii) for which such reservesany part thereof, if any, as are required to be provided under generally accepted accounting principles have been provided by Borrower, and there is no risk of criminal penalties; (3) if such contest shall be conducted in a manner requiring the payment of the claim, Borrower shall have advanced sufficient funds, on an interest-free basis, to make the payment required, and shall have agreed to indemnify the Indemnitee against any additional net after-Tax cost to such Indemnitee of such advance; (4) if requested by the Indemnitee in writing, such Indemnitee shall have received an opinion of independent Tax counsel selected by Borrower and reasonably acceptable to such Indemnitee and furnished at Borrower’s sole expense to the effect that a Realistic Possibility of Success exists for contesting such claim (orunless, in the case of an appeal of an adverse judicial determinationthis CLAUSE (y), Lessee contemporaneously with such opinion shall have posted a written opinion from such independent Tax counsel bond or other security satisfactory to the effect that it is more likely than not that such adverse judicial determination will be reversed or substantially modified); (5) Borrower shall have delivered to such relevant Indemnitee a written acknowledgment of Borrower’s obligation to indemnify such Indemnitee to the extent that the contest is not successful; provided, however, that Borrower will not be bound by its acknowledgment of liability if the contest is resolved on a clear and unambiguous basis showing no such liability under this Section 6(b) with in respect to such Tax; risk, (6B) if the control of such action, suit or proceeding would involve a Specified Default or Event bona fide conflict of Default shall have occurred interest, (C) such proceeding involves Claims not fully indemnified by Lessee which Lessee and be continuing, Borrower shall have provided security for its obligation hereunder satisfactory to the Indemnitee by placing in escrow sufficient funds have been unable to cover any such contested Tax and sever from the reasonably expected expenses of such contest on an After-Tax Basisindemnified claim(s), or otherwise providing satisfactory provisions for payment of such amounts determined by the Indemnitee in its sole discretion; (7) the aggregate amount of all indemnity payments that Borrower may be required to make to such Indemnitee with respect to such claim (or similar or related claims) is at least $60,000; and (8) the claim is not for a Tax the imposition of which has been previously contested by, or at the request of, Borrower hereunder, and such previous contest (including all allowable appeals) was decided adversely to Borrower, unless Borrower has delivered an opinion of independent Tax counsel selected by Borrower and reasonably acceptable to the Indemnitee to the effect that, on the basis of (i) a change in applicable law, or (ii) a difference in the underlying facts, there is currently a Realistic Possibility of Success for contesting such claim.
(D) If any Indemnitee shall obtain a refund of all or any part of any Tax paid by Borrower, such Indemnitee shall pay Borrower, but not before Borrower shall have made all payments theretofore due to such Indemnitee pursuant to this Section 6(b) and any other payments theretofore due such Indemnitee under any of the Operative Documents, an amount equal to the amount of such refund (net of any Taxes imposed thereon), including interest received and attributable thereto (net of any Taxes imposed thereon) plus, if Borrower has paid an amount pursuant to the first sentence of Section 6(b)(iii)(A), any net Tax benefit (or minus any net Tax detriment) realized by such Indemnitee as a result of any refund received, and payment made, by such Indemnitee pursuant to this sentence; provided that the Indemnitee shall not be obligated to pay an amount under the preceding sentence to the extent that such amount would exceed the amount of such Taxes paid, reimbursed or advanced by Borrower to such Indemnitee (other than the cost of the contest thereof); provided, further, that any amount not paid to Borrower pursuant to the foregoing limitation shall be carried forward to reduce pro tanto any future payments that Borrower may be required to make to such Indemnitee pursuant to this Section 6(b). If any Indemnitee shall have paid Borrower any refund of all or part of any Tax paid by Borrower and it is subsequently determined that such Indemnitee was not entitled to the refund, such determination shall be treated as the imposition of a Tax for which Borrower is obligated to indemnify such Indemnitee pursuant to the provisions of this Section 6(b) without regard to the exclusions set forth in Section 6(b)(ii) (other than subparagraphs (4), (11) and (12) thereof). Provided no Specified Default or Lease Event of Default has occurred and is continuing, an (E) such action, suit or proceeding involves matters which extend beyond or are unrelated to the transaction contemplated by the Operative Documents and if determined adversely could be materially detrimental to the interests of such Indemnitee notwithstanding indemnification by Lessee or (F) Lessee shall not settle any have acknowledged in writing its obligation to indemnify fully such claim or contest pursuant to this provision without the written consent of Borrower, which consent shall not be unreasonably withheld, conditioned or delayed; provided, that an Indemnitee may settle at any time without the consent of Borrower if the Indemnitee waives (by written notice to Borrower) the payment by Borrower of an indemnity in respect of such issue action, suit or proceeding. The Indemnitee may participate in a reasonable manner at its own expense and with its own counsel in any related issue proceeding conducted by Lessee in accordance with the contest of which is effectively foreclosed by the settlement of such issue, including any payment arising from such issue in subsequent years or which by reason of the fact that such issue is of a continuing nature, and promptly pays to Borrower any Tax previously paid or any interest-free loan advanced by Borrower (other than expenses of such contests) with respect to such issueforegoing.
(E) Nothing contained in this Section 6(b)(iv) shall require any Indemnitee to contest, or permit Borrower to contest in the name of such Indemnitee, a claim that such Indemnitee would otherwise be required to contest pursuant to this Section 6(b)(iv) if such Indemnitee shall waive payment by Borrower of any amount that might otherwise be payable by Borrower under this Section 6(b) in connection with such claim (other than the costs of contest previously incurred), nor shall any Indemnitee be required to pursue any appeal to the United States Supreme Court.
Appears in 1 contract
Contests. (A) If a written any claim shall be made against and received by any Tax Indemnitee or if any proceeding shall be commenced against any Tax Indemnitee (including a written notice of such proceeding) for any Tax for Taxes as to which Borrower is obligated to indemnify the Lessees may have an indemnity obligation pursuant to this Section 6(b)7.4, or if any Tax Indemnitee shall determine that any Taxes as to which the Lessees may have an indemnity obligation pursuant to Section 7.4 may be payable, such Tax Indemnitee shall promptly notify Borrower in writing of such claim within 30 days after Concord. Concord shall be entitled, at its receiptexpense, to participate in, and, to the extent that Concord desires to, assume and shall provide Borrower such information regarding such claim as Borrower may reasonably requestcontrol the defense thereof; provided, however, that Concord shall have acknowledged in writing its and each Lessee's obligation to fully indemnify such Tax Indemnitee in respect of such action, suit or proceeding if the failure to provide such notice contest is unsuccessful; and, provided further, that Concord shall not release Borrower from be entitled to assume and control the defense of any such action, suit or proceeding (but the Tax Indemnitee shall then contest, at the sole cost and expense of its obligations Concord and such other Lessees, on behalf of Concord with representatives reasonably satisfactory to indemnify under Section 6 hereof unless, Concord) if and only to the extent that, such failure effectively precludes Borrower’s contest rights. To the extent permitted under applicable law, such Indemnitee will not make any payments with respect to such claim for at least 30 days after giving notice of such claim to Borrower.
(BA) If requested by Borrower in writing within 30 days after its receipt of such notice or such shorter period as may be required by applicable law, such Indemnitee shall, at the expense of Borrower and subject to subparagraph (C) below, contest the validity, applicability or amount of such Taxes by, in the case of an Indemnitee-Controlled Contest, in such Indemnitee’s sole discretion or, in the case of a Borrower-Controlled Contest, in Borrower’s sole discretion, (1) resisting payment thereof if practicable, (2) not paying such Tax except under protest, (3) if protest is necessary and proper, and if payment reasonable opinion of such Tax is madeIndemnitee, using reasonable efforts to obtain a refund thereofsuch action, in appropriate administrative and judicial proceedings, and (4) in the case of an Indemnitee-Controlled Contest, considering in good faith any other reasonable action as Borrower may reasonably request. Each Indemnitee shall consult in good faith with Borrower and Borrower’s counsel, and Borrower shall consult in good faith with such Indemnitee and its counsel in the case of a Borrower-Controlled Contest. concerning the forum in which the contest is most likely to be favorably resolved and whether such contest shall be by suit or proceeding (x) resisting payment involves any meaningful risk of imposition of criminal liability or any material risk of material civil liability on such Tax, Tax Indemnitee or (y) paying such Tax under protest or (z) paying such Tax and seeking a refund or other repayment thereof.
(C) In no event shall an Indemnitee be required, or Borrower permitted, to contest the imposition of any Tax for which Borrower is obligated pursuant to this Section 6(b) unless (1) Borrower shall have agreed to pay and shall promptly be paying on request all reasonable costs and expenses that such Indemnitee incurs in contesting such claim or arising out of or relating to such contest (including legal fees, accounting fees, and disbursements, including those on appeal, if any); (2) such contest is not reasonably likely to result in will involve a material danger risk of the sale, seizure, forfeiture or loss of the Aircraftof, or the creation of any Lien thereon (other than Liens for Taxes a Permitted Lien) on any Leased Property or any part thereof unless a Lessee shall have posted a bond or other security reasonably satisfactory to the relevant Tax Indemnitees in respect to such risk, (B) such proceeding involves Claims not fully indemnified by the Lessees which Concord and the Tax Indemnitee have been unable to sever from the indemnified claim(s), (C) an Event of Default has occurred and is continuing, (D) such action, suit or proceeding involves matters which extend beyond or are unrelated to the Transaction and if determined adversely could be materially detrimental to the interests of such Tax Indemnitee notwithstanding indemnification by the Lessees or (E) such action, suit or proceeding involves the federal or any state income tax liability of the Tax Indemnitee not indemnified by the Lessees. With respect to any contests controlled by a Tax Indemnitee, (i) either not yet due or being contested in good faith by appropriate proceedings and (ii) for which such reserves, if any, as are required to be provided under generally accepted accounting principles have been provided by Borrower, and there is no risk of criminal penalties; (3) if such contest relates to the federal or any state income tax liability of such Tax Indemnitee, such Tax Indemnitee shall be conducted in a manner requiring the payment of the claim, Borrower required to conduct such contest only if Concord shall have advanced sufficient funds, on an interest-free basis, to make the payment required, and shall have agreed to indemnify the Indemnitee against any additional net after-Tax cost provided to such Tax Indemnitee of such advance; (4) if requested by the Indemnitee in writing, such Indemnitee shall have received an opinion of independent Tax tax counsel selected by Borrower the Tax Indemnitee and reasonably acceptable satisfactory to such Indemnitee and furnished at Borrower’s sole expense to the effect Concord stating that a Realistic Possibility of Success reasonable basis exists for contesting to contest such claim or (or, ii) in the case of an appeal of an adverse judicial determinationdetermination of any contest relating to any Taxes, a written an opinion from of such independent Tax counsel to the effect that it such appeal is more likely than not that such adverse judicial determination will to be reversed or substantially modified); (5) Borrower shall have delivered to such Indemnitee a written acknowledgment of Borrower’s obligation to indemnify such Indemnitee to the extent that the contest is not successful; , provided, however, that Borrower will not be bound by its acknowledgment of liability if the contest is resolved on a clear and unambiguous basis showing such Tax Indemnitee shall in no such liability under this Section 6(b) with respect to such Tax; (6) if a Specified Default or Event of Default shall have occurred and be continuing, Borrower shall have provided security for its obligation hereunder satisfactory to the Indemnitee by placing in escrow sufficient funds to cover any such contested Tax and the reasonably expected expenses of such contest on an After-Tax Basis, or otherwise providing satisfactory provisions for payment of such amounts determined by the Indemnitee in its sole discretion; (7) the aggregate amount of all indemnity payments that Borrower may event be required to make to such Indemnitee with respect to such claim (or similar or related claims) is at least $60,000; and (8) the claim is not for a Tax the imposition of which has been previously contested by, or at the request of, Borrower hereunder, and such previous contest (including all allowable appeals) was decided adversely to Borrower, unless Borrower has delivered appeal an opinion of independent Tax counsel selected by Borrower and reasonably acceptable to the Indemnitee to the effect that, on the basis of (i) a change in applicable law, or (ii) a difference in the underlying facts, there is currently a Realistic Possibility of Success for contesting such claim.
(D) If any Indemnitee shall obtain a refund of all or any part of any Tax paid by Borrower, such Indemnitee shall pay Borrower, but not before Borrower shall have made all payments theretofore due to such Indemnitee pursuant to this Section 6(b) and any other payments theretofore due such Indemnitee under any of the Operative Documents, an amount equal to the amount of such refund (net of any Taxes imposed thereon), including interest received and attributable thereto (net of any Taxes imposed thereon) plus, if Borrower has paid an amount pursuant to the first sentence of Section 6(b)(iii)(A), any net Tax benefit (or minus any net Tax detriment) realized by such Indemnitee as a result of any refund received, and payment made, by such Indemnitee pursuant to this sentence; provided that the Indemnitee shall not be obligated to pay an amount under the preceding sentence to the extent that such amount would exceed the amount of such Taxes paid, reimbursed or advanced by Borrower to such Indemnitee (other than the cost of the contest thereof); provided, further, that any amount not paid to Borrower pursuant to the foregoing limitation shall be carried forward to reduce pro tanto any future payments that Borrower may be required to make to such Indemnitee pursuant to this Section 6(b). If any Indemnitee shall have paid Borrower any refund of all or part of any Tax paid by Borrower and it is subsequently determined that such Indemnitee was not entitled to the refund, such adverse determination shall be treated as the imposition of a Tax for which Borrower is obligated to indemnify such Indemnitee pursuant to the provisions of this Section 6(b) without regard to the exclusions set forth in Section 6(b)(ii) (other than subparagraphs (4), (11) and (12) thereof). Provided no Specified Default or Event of Default has occurred and is continuing, an Indemnitee shall not settle any such claim or contest pursuant to this provision without the written consent of Borrower, which consent shall not be unreasonably withheld, conditioned or delayed; provided, that an Indemnitee may settle at any time without the consent of Borrower if the Indemnitee waives (by written notice to Borrower) the payment by Borrower of an indemnity in respect of such issue and any related issue the contest of which is effectively foreclosed by the settlement of such issue, including any payment arising from such issue in subsequent years or which by reason of the fact that such issue is of a continuing nature, and promptly pays to Borrower any Tax previously paid or any interest-free loan advanced by Borrower (other than expenses of such contests) with respect to such issue.
(E) Nothing contained in this Section 6(b)(iv) shall require any Indemnitee to contest, or permit Borrower to contest in the name of such Indemnitee, a claim that such Indemnitee would otherwise be required to contest pursuant to this Section 6(b)(iv) if such Indemnitee shall waive payment by Borrower of any amount that might otherwise be payable by Borrower under this Section 6(b) in connection with such claim (other than the costs of contest previously incurred), nor shall any Indemnitee be required to pursue any appeal to the United States Supreme Court. The Tax Indemnitee may participate in a reasonable manner at its own expense and with its own counsel in any proceeding conducted by Concord in accordance with the foregoing.
Appears in 1 contract
Sources: Master Agreement (Concord Efs Inc)
Contests. (A) If a written any claim shall be made against and received by any Tax Indemnitee or if any proceeding shall be commenced against any Tax Indemnitee (including a written notice of such proceeding) for any Tax for Imposition as to which Borrower is obligated to indemnify the Lessee may have an indemnity obligation pursuant to this Section 6(b)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, such Tax Indemnitee shall promptly (and in any event, within 30 days) notify Borrower the Lessee in writing of such claim (provided that failure to so notify the Lessee within 30 days after its receipt, shall not alter such Tax Indemnitee's rights under this Section 26.5 except to the extent such failure precludes or materially adversely affects the ability to conduct a contest of any indemnified Taxes) and shall provide Borrower not take any action with respect to such information regarding claim, proceeding or Imposition without the written consent of the Lessee (such claim as Borrower may reasonably requestconsent 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 failure case of any such claim or proceeding, if such Tax Indemnitee shall be required by law or regulation to provide 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 release Borrower from take any of its obligations to indemnify under Section 6 hereof unless, and only to the extent that, such failure effectively precludes Borrower’s contest rights. To the extent permitted under applicable law, such Indemnitee will not make any payments action with respect to such claim claim, proceeding or Imposition without the consent of the Lessee (such consent not to be unreasonably withheld or unreasonably delayed) for at least 30 10 days after giving notice of such claim to Borrower.
(B) If requested by Borrower in writing within 30 days after its the receipt of such notice by the 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 Lessee shall be entitled for a period of 30 days from receipt of such notice from the Tax Indemnitee (or such shorter period as may be the Tax Indemnitee has notified the Lessee is required by applicable lawlaw or regulation for the Tax Indemnitee to commence such contest), to request in writing that such Tax Indemnitee shallcontest the imposition of such Tax, at the expense Lessee's expense. If (x) such contest can be pursued in the name of Borrower the Lessee and subject to subparagraph (C) below, contest the validity, applicability or amount independently from any other proceeding involving a Tax liability of such Taxes byTax Indemnitee for which the Lessee has not agreed to indemnify such Tax Indemnitee, (y) such contest must be pursued in the case name of an the Tax Indemnitee-Controlled Contest, in but can be pursued independently from any other proceeding involving a Tax liability of such Indemnitee’s sole discretion orTax Indemnitee for which the Lessee has not agreed to indemnify such Tax Indemnitee or (z) 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 Borrower-Controlled Contestcontest described in clause (y), in Borrower’s sole discretion, (1) resisting payment thereof if practicable, (2) not paying such the Tax except under protest, (3) if protest is necessary and proper, and if payment of such Tax is made, using reasonable efforts to obtain a refund thereof, in appropriate administrative and judicial proceedings, and (4) in the case of an Indemnitee-Controlled Contest, considering Indemnitee determines in good faith any other reasonable action as Borrower that such contest by the Lessee could have a material adverse impact on the business or operations of the Tax Indemnitee and provides a written explanation to the Lessee of such determination, the Tax Indemnitee may reasonably request. Each Indemnitee shall consult in good faith with Borrower and Borrower’s counselelect to control or reassert control of the contest, and Borrower shall consult in good faith with such Indemnitee and its counsel in provided, that by taking control of the case of a Borrower-Controlled Contest. concerning contest, Lessee acknowledges that it is responsible for the forum in which the contest is most likely Imposition ultimately determined to be favorably resolved due by reason of such claim, and whether such contest shall be by provided, further, that in determining the application of clauses (x) resisting payment of such Tax, and (y) paying this sentence, 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, the Tax Indemnitee shall control the contest of such Tax under protest or (z) paying such Tax and seeking a refund or other repayment thereof.
(C) claim, acting through counsel reasonably acceptable to the Lessee. In no event shall an the Lessee be permitted to contest (or the Tax Indemnitee be requiredrequired 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 Borrower permitted, to contest the imposition 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 Borrower the Lessee is obligated pursuant to this Section 6(bresponsible hereunder reasonably foreseeable in connection with the contest of such claim, (C) unless (1) Borrower the Lessee shall have agreed to pay and shall promptly be paying on request pay, to such Tax Indemnitee within ten (10) Business Days after demand all reasonable costs out-of-pocket costs, losses and expenses that such Tax Indemnitee incurs may incur in connection with contesting such claim or arising out of or relating to such contest (Imposition including legal feesall reasonable legal, accounting fees, and investigatory fees and disbursements, including those on appeal, if any); or (2) such contest is not reasonably likely to result in a material danger of the sale, seizure, forfeiture or loss of the Aircraft, or the creation of any Lien thereon other than Liens for Taxes (i) either not yet due or being contested in good faith by appropriate proceedings and (ii) for which such reserves, if any, as are required to be provided under generally accepted accounting principles have been provided by Borrower, and there is no risk of criminal penalties; (3D) if such contest shall be conducted in a manner requiring involve the payment of the claimTax prior to the contest, Borrower unless the Lessee shall have advanced sufficient funds, on provide to the Tax Indemnitee an interest-free basis, advance in an amount equal to make the payment required, and shall have agreed to indemnify Imposition that the Indemnitee against any is required to pay (with no additional net after-Tax cost 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: (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 advance; Tax Indemnitee for which the Lessee may be liable to pay an indemnity under this Section 26.5(b)) exceeds $500,000 and (4B) unless, if requested by the Indemnitee in writingTax Indemnitee, such Indemnitee the Lessee shall have received provided to the Tax Indemnitee an opinion of independent Tax counsel selected by Borrower and reasonably acceptable to such Indemnitee and furnished at Borrower’s sole expense to the effect that a Realistic Possibility of Success exists for contesting such claim Lessee (orwhich may be in-house counsel) (except, in the case of income taxes indemnified hereunder which shall be an opinion of independent tax counsel selected by the Tax Indemnitee and reasonably acceptable to the Lessee) that a reasonable basis exists to contest such claim. In no event shall a Tax Indemnitee be required to appeal of an adverse judicial determination, a written opinion from such independent Tax counsel determination to the effect that it is more likely than not that such adverse judicial determination will be reversed or substantially modified); (5) Borrower United States Supreme Court. The party conducting the contest shall have delivered to such Indemnitee a written acknowledgment of Borrower’s obligation to indemnify such Indemnitee consult in good faith with the other party and its counsel with respect to the extent that contest of such claim for Taxes (or claim for refund) but the contest is not successful; decisions regarding what actions to be taken shall be made by the controlling party in its sole judgement, provided, however, that Borrower will not be bound by its acknowledgment of liability 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 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 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 resolved on a clear and unambiguous basis showing no such liability entitled to be indemnified under this Section 6(b26.5 (and with respect to which contest is required under this Section 26.5(b)) without the prior written consent of the Lessee, unless such Tax Indemnitee waives its right to be indemnified under this Section 26.5 with respect to such Tax; (6) if a Specified Default or Event of Default shall have occurred and be continuing, Borrower shall have provided security for its obligation hereunder satisfactory claim. Notwithstanding anything contained herein to the contrary, a Tax Indemnitee by placing in escrow sufficient funds to cover any such contested Tax and the reasonably expected expenses of such contest on an After-Tax Basis, or otherwise providing satisfactory provisions for payment of such amounts determined by the Indemnitee in its sole discretion; (7) the aggregate amount of all indemnity payments that Borrower may will not be required to make contest (and the Lessee shall not be permitted to contest) a claim with respect to the imposition of any Tax if such Tax Indemnitee shall waive its right to indemnification under this Section 26.5 with respect to such claim (or similar or related claims) is at least $60,000; and (8) the any claim is not for a Tax the imposition of which has been previously contested by, or at the request of, Borrower hereunder, and with respect to such previous contest (including all allowable appeals) was decided adversely to Borrower, unless Borrower has delivered an opinion of independent Tax counsel selected by Borrower and reasonably acceptable to the Indemnitee to the effect that, on the basis of (i) a change in applicable law, or (ii) a difference in the underlying facts, there is currently a Realistic Possibility of Success for contesting such claim.
(D) If any Indemnitee shall obtain a refund of all year or any part of any Tax paid by Borrower, such Indemnitee shall pay Borrower, but not before Borrower shall have made all payments theretofore due to such Indemnitee pursuant to this Section 6(b) and any other payments theretofore due such Indemnitee under any of the Operative Documents, an amount equal to the amount of such refund (net of any Taxes imposed thereon), including interest received and attributable thereto (net of any Taxes imposed thereon) plus, if Borrower has paid an amount pursuant to the first sentence of Section 6(b)(iii)(A), any net Tax benefit (or minus any net Tax detriment) realized by such Indemnitee as a result of any refund received, and payment made, by such Indemnitee pursuant to this sentence; provided that the Indemnitee shall not be obligated to pay an amount under the preceding sentence to the extent that such amount would exceed the amount of such Taxes paid, reimbursed or advanced by Borrower to such Indemnitee (other than the cost of the contest thereof); provided, further, that any amount not paid to Borrower pursuant to the foregoing limitation shall be carried forward to reduce pro tanto any future payments that Borrower may be required to make to such Indemnitee pursuant to this Section 6(b). If any Indemnitee shall have paid Borrower any refund of all or part of any Tax paid by Borrower and it is subsequently determined that such Indemnitee was not entitled to the refund, such determination shall be treated as the imposition of a Tax for which Borrower is obligated to indemnify such Indemnitee pursuant to the provisions of this Section 6(b) without regard to the exclusions set forth in Section 6(b)(ii) (other than subparagraphs (4), (11) and (12) thereof). Provided no Specified Default or Event of Default has occurred and is continuing, an Indemnitee shall not settle any such claim or contest pursuant to this provision without the written consent of Borrower, which consent shall not be unreasonably withheld, conditioned or delayed; provided, that an Indemnitee may settle at any time without the consent of Borrower if the Indemnitee waives (by written notice to Borrower) the payment by Borrower of an indemnity in respect of such issue and any related issue taxable year the contest of which is effectively foreclosed by the settlement materially adversely affected as a result of such issue, including any payment arising from such issue in subsequent years or which by reason of the fact that such issue is of a continuing nature, and promptly pays to Borrower any Tax previously paid or any interest-free loan advanced by Borrower (other than expenses of such contests) with respect to such issuewaiver).
(E) Nothing contained in this Section 6(b)(iv) shall require any Indemnitee to contest, or permit Borrower to contest in the name of such Indemnitee, a claim that such Indemnitee would otherwise be required to contest pursuant to this Section 6(b)(iv) if such Indemnitee shall waive payment by Borrower of any amount that might otherwise be payable by Borrower under this Section 6(b) in connection with such claim (other than the costs of contest previously incurred), nor shall any Indemnitee be required to pursue any appeal to the United States Supreme Court.
Appears in 1 contract
Contests. (A) If In respect of the indemnification provided under Section 11.1(a), promptly after receipt by an Indemnitee of notice of any pending or threatened Claim, such Indemnitee shall, if a written claim shall for indemnification in respect thereof is to be made against and received by any Indemnitee for any Tax for which Borrower is obligated Lessee give written notice thereof to indemnify pursuant to this Section 6(b), such Indemnitee shall notify Borrower in writing of such claim within 30 days after its receipt, and shall provide Borrower such information regarding such claim as Borrower may reasonably requestLessee; provided, however, provided that the failure to provide such prompt notice shall not release Borrower from limit Lessee's obligations or prejudice any rights of its obligations to indemnify such Indemnitee under Section 6 hereof unless, and only to the extent that, such failure effectively precludes Borrower’s contest rights. To the extent permitted under applicable law, such Indemnitee will not make any payments 11.1(a) with respect to such claim for Claim, except to the extent that such failure to provide prompt notice adversely affects Lessee's indemnification obligations hereunder. So long as no Lease Event of Default is continuing, Lessee at least 30 days after giving 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 Indemnitee, on behalf of the Indemnitee (with full right of subrogation to the Indemnitee's rights and defenses). Lessee must indicate its election to assume such defense by written notice of such claim to Borrower.
(B) If requested by Borrower in writing the Indemnitee within 30 days after its following receipt of such 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 as specified in the Indemnitee's notice of Claim; provided that such Indemnitee has given Lessee notice thereof. 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 of Indemnitee's rights hereunder and with no further obligation to inform Lessee of the status of the Claim and no right of Lessee to approve or disapprove any actions taken in connection therewith by the Indemnitee. If Lessee shall have elected to assume the defense of any such Claim, then upon the request of Lessee, the Indemnitee requesting payment of indemnity under Section 11.1(a) shall promptly furnish Lessee with copies of any records or documents pertaining to the matter to be required indemnified and, to the extent known by applicable lawsuch Indemnitee, a reasonably detailed explanation of the circumstances giving rise to the claim of indemnification and the determination of the amount of the requested indemnity payment. Upon payment in full to Indemnitee of any indemnity pursuant to Section 11.1(a), 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 elected to assume the defense of any such Claim, upon the written request at any time and from time to time of Lessee, Indemnitee shall, at the expense of Borrower Lessee, take such reasonable actions and subject execute such documents as are necessary or reasonably appropriate to subparagraph (C) belowassist Lessee in the preservation and enforcement against third parties of Lessee's right of subrogation hereunder. The Indemnitee may employ separate counsel in any such Claim and participate in the defense thereof, contest but the validity, applicability or amount fees and expenses of such Taxes by, in the case of an Indemnitee-Controlled Contest, in such Indemnitee’s sole discretion or, in the case of a Borrower-Controlled Contest, in Borrower’s sole discretion, (1) resisting payment thereof if practicable, (2) not paying such Tax except under protest, (3) if protest is necessary and proper, and if payment of such Tax is made, using reasonable efforts to obtain a refund thereof, in appropriate administrative and judicial proceedings, and (4) in the case of an Indemnitee-Controlled Contest, considering in good faith any other reasonable action as Borrower may reasonably request. Each Indemnitee shall consult in good faith with Borrower and Borrower’s counsel, and Borrower shall consult in good faith with such Indemnitee and its counsel in the case of a Borrower-Controlled Contest. concerning the forum in which the contest is most likely to be favorably resolved and whether such contest shall be by (x) resisting payment of such Tax, (y) paying such Tax under protest or (z) paying such Tax and seeking a refund or other repayment thereof.
(C) In no event shall an Indemnitee be required, or Borrower permitted, to contest at the imposition of any Tax for which Borrower is obligated pursuant to this Section 6(b) unless (1) Borrower shall have agreed to pay and shall promptly be paying on request all reasonable costs and expenses that such Indemnitee incurs in contesting such claim or arising out of or relating to such contest (including legal fees, accounting fees, and disbursements, including those on appeal, if any); (2) such contest is not reasonably likely to result in a material danger expense of the sale, seizure, forfeiture or loss of Indemnitee unless the Aircraft, or the creation of any Lien thereon other than Liens for Taxes (i) either not yet due or being contested in good faith by appropriate proceedings and (ii) for which such reserves, if any, as are required to be provided under generally accepted accounting principles have been provided by Borrower, and there is no risk of criminal penalties; (3) if such contest shall be conducted in a manner requiring the payment of the claim, Borrower shall have advanced sufficient funds, on an interest-free basis, to make the payment required, and shall have agreed to indemnify the Indemnitee against any additional net after-Tax cost to such Indemnitee of such advance; (4) if requested by the Indemnitee in writing, such Indemnitee shall have received an opinion been advised by its counsel that a conflict of independent Tax counsel selected by Borrower and reasonably acceptable to such interest exists in Lessee's counsel's representations of the Indemnitee and furnished at Borrower’s sole expense to the effect that a Realistic Possibility of Success exists for contesting such claim (orLessee, in which case the case fees and expenses of an appeal such Indemnitee's counsel shall be for the account of an adverse judicial determination, a written opinion from such independent Tax counsel to the effect that it is more likely than not that such adverse judicial determination will Lessee. All fees and expenses shall be reversed or substantially modified); (5) Borrower shall have delivered to such Indemnitee a written acknowledgment of Borrower’s obligation to indemnify such Indemnitee to the extent that the contest is not successful; provided, however, that Borrower will not be bound by its acknowledgment of liability if the contest is resolved on a clear and unambiguous basis showing paid periodically as incurred. So long as no such liability under this Section 6(b) with respect to such Tax; (6) if a Specified Default or Lease Event of Default shall have occurred and be continuing, Borrower shall have provided security for its obligation hereunder satisfactory to the Indemnitee by placing in escrow sufficient funds to cover any such contested Tax and the reasonably expected expenses of such contest on an After-Tax Basis, or otherwise providing satisfactory provisions for payment of such amounts determined by the Indemnitee in its sole discretion; (7) the aggregate amount of all indemnity payments that Borrower may be required to make to such Indemnitee with respect to such claim (or similar or related claims) is at least $60,000; and (8) the claim is not for a Tax the imposition of which has been previously contested by, or at the request of, Borrower hereunder, and such previous contest (including all allowable appeals) was decided adversely to Borrower, unless Borrower has delivered an opinion of independent Tax counsel selected by Borrower and reasonably acceptable to the Indemnitee to the effect that, on the basis of (i) a change in applicable law, or (ii) a difference in the underlying facts, there is currently a Realistic Possibility of Success for contesting such claim.
(D) If any Indemnitee shall obtain a refund of all or any part of any Tax paid by Borrower, such Indemnitee shall pay Borrower, but not before Borrower shall have made all payments theretofore due to such Indemnitee pursuant to this Section 6(b) and any other payments theretofore due such Indemnitee under any of the Operative Documents, an amount equal to the amount of such refund (net of any Taxes imposed thereon), including interest received and attributable thereto (net of any Taxes imposed thereon) plus, if Borrower has paid an amount pursuant to the first sentence of Section 6(b)(iii)(A), any net Tax benefit (or minus any net Tax detriment) realized by such Indemnitee as a result of any refund received, and payment made, by such Indemnitee pursuant to this sentence; provided that the Indemnitee Lessee shall not be obligated to pay an amount under the preceding sentence to the extent that such amount would exceed the amount of such Taxes paid, reimbursed or advanced by Borrower to such Indemnitee (other than the cost of the contest thereof); provided, further, that liable for any amount not paid to Borrower pursuant to the foregoing limitation shall be carried forward to reduce pro tanto any future payments that Borrower may be required to make to such Indemnitee pursuant to this Section 6(b). If any Indemnitee shall have paid Borrower any refund of all or part LSI Logic Corporation Lease B settlement of any Tax paid by Borrower such Claim effected without its consent unless Lessee shall fail to, or elect in writing not to, assume the defense thereof in which case the Indemnitee, without waiving any rights to indemnification hereunder, may defend such Claim and it is subsequently determined that such Indemnitee was not entitled to the refund, such determination shall be treated as the imposition of a Tax for which Borrower is obligated to indemnify such Indemnitee pursuant to the provisions of this Section 6(b) without regard to the exclusions set forth in Section 6(b)(ii) (other than subparagraphs (4), (11) and (12) thereof). Provided no Specified Default or Event of Default has occurred and is continuing, an Indemnitee shall not settle enter into any such claim or contest pursuant to this provision good faith settlement thereof without the prior written consent of BorrowerLessee. Lessee shall not, which without the prior written consent shall (not to be unreasonably withheld) of the Indemnitee, conditioned or delayed; provided, that effect any settlement of any such Claim unless such settlement includes an Indemnitee may settle at any time without the consent unconditional release of Borrower if the Indemnitee waives (by written notice to Borrower) from all liabilities that are the payment by Borrower of an indemnity in respect subject of such issue and Claim. The parties agree to cooperate in any related issue the contest of which is effectively foreclosed by the defense or settlement of any such issue, including any payment arising from such issue in subsequent years or which by reason of the fact that such issue is of a continuing nature, Claim and promptly pays to Borrower any Tax previously paid or any interest-free loan advanced by Borrower (give each other than expenses of such contests) with respect reasonable access to such issue.
(E) Nothing contained in this Section 6(b)(iv) shall require any Indemnitee all information relevant thereto subject to contest, or permit Borrower to contest appropriate confidentiality agreements. The parties will similarly cooperate in the name of such Indemnitee, a claim that such Indemnitee would otherwise be required to contest pursuant to this Section 6(b)(iv) if such Indemnitee shall waive payment by Borrower prosecution of any amount that might otherwise be payable by Borrower under this Section 6(b) in connection with such claim (other than the costs of contest previously incurred), nor shall or lawsuit against any Indemnitee be required to pursue any appeal to the United States Supreme Courtthird party.
Appears in 1 contract
Contests. (A) If a written any claim shall be made against and received by any Tax Indemnitee or if any proceeding shall be commenced against any Tax Indemnitee (including a written notice of such proceeding) for any Tax for Imposition as to which Borrower is obligated to indemnify the Lessee may have an indemnity obligation pursuant to this Section 6(b)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, such Tax Indemnitee shall promptly (and in any event, within 30 days) notify Borrower the Lessee in writing of such claim (PROVIDED that failure to so notify the Lessee within 30 days after its receipt, and shall provide Borrower such information regarding such claim as Borrower may reasonably request; provided, however, that the failure to provide such notice shall not release Borrower from any of its obligations to indemnify alter such Tax Indemnitee's rights under Section 6 hereof unless, and only this SECTION 13.5 except to the extent that, such failure effectively precludes Borrower’s or materially adversely affects the ability to conduct a contest rights. To the extent permitted under applicable law, such Indemnitee will of any indemnified Taxes) and shall not make take any payments action with respect to such claim claim, proceeding or Imposition without the written consent of the Lessee (such consent not to be unreasonably withheld or unreasonably delayed) for at least 30 days after giving notice of such claim to Borrower.
(B) If requested by Borrower in writing within 30 days after its the receipt of such notice by the 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 the Lessee, so inform the Lessee, and such Tax Indemnitee shall not take any action with respect to such claim, proceeding or Imposition 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 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 30 days from receipt of such notice from such Tax Indemnitee (or such shorter period as may be such Tax Indemnitee has notified the Lessee is required by applicable lawlaw or regulation for such Tax Indemnitee to commence such contest), to request in writing that such Tax Indemnitee shallcontest the imposition of such Tax, at the expense Lessee's expense. If (x) such contest can be pursued in the name of Borrower the Lessee and subject to subparagraph (C) below, contest the validity, applicability or amount independently from any other proceeding involving a Tax liability of such Taxes byTax Indemnitee for which the Lessee has not agreed to indemnify such Tax Indemnitee, (y) such contest must be pursued in the case name of an such Tax Indemnitee-Controlled Contest, in but can be pursued independently from any other proceeding involving a Tax liability of such Indemnitee’s sole discretion orTax Indemnitee for which the Lessee has not agreed to indemnify such Tax Indemnitee or (z) such Tax Indemnitee so requests, then the Lessee shall be permitted to control the contest of such claim, PROVIDED that in the case of a Borrower-Controlled Contestcontest described in CLAUSE (y), in Borrower’s sole discretion, (1) resisting payment thereof if practicable, (2) not paying such Tax except under protest, (3) if protest is necessary Indemnitee determines reasonably and proper, and if payment in good faith that such contest by the Lessee could have a material adverse impact on the business or operations of such Tax is madeIndemnitee and provides a written explanation to the Lessee of such determination, using reasonable efforts such Tax Indemnitee may elect to obtain a refund thereof, in appropriate administrative and judicial proceedingscontrol or reassert control of the contest, and (4) in PROVIDED, that by taking control of the case contest, the Lessee acknowledges that it is responsible for the Imposition ultimately determined to be due by reason of an Indemnitee-Controlled Contest, considering in good faith any other reasonable action as Borrower may reasonably request. Each Indemnitee shall consult in good faith with Borrower and Borrower’s counselsuch claim, and Borrower shall consult PROVIDED, FURTHER, that in good faith with such Indemnitee and its counsel in determining the case application of a Borrower-Controlled Contest. concerning the forum in which the contest is most likely to be favorably resolved and whether such contest shall be by CLAUSES (x) resisting payment of such Tax, and (y) paying of the preceding sentence, 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 under protest or (z) paying Indemnitee shall control the contest of such Tax and seeking a refund or other repayment thereof.
(C) claim, acting through counsel reasonably acceptable to the Lessee. In no event shall an the Lessee be permitted to contest (or such Tax Indemnitee be requiredrequired 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 Borrower permitted, to contest the imposition creation of any Lien (other than a Permitted Lien) on any 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 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 satisfactory to the relevant Tax Indemnitee in respect of the Taxes subject to such claim and any and all expenses for which Borrower the Lessee is obligated pursuant to this Section 6(bresponsible hereunder reasonably foreseeable in connection with the contest of such claim, (C) unless (1) Borrower the Lessee shall have agreed to pay and shall promptly be paying pay, to such Tax Indemnitee on request demand all reasonable costs out-of-pocket costs, losses and expenses that such Tax Indemnitee incurs may incur in connection with contesting such claim or arising out of or relating to such contest (Imposition including legal feesall reasonable legal, accounting fees, and investigatory fees and disbursements, including those on appeal, if any); or (2) such contest is not reasonably likely to result in a material danger of the sale, seizure, forfeiture or loss of the Aircraft, or the creation of any Lien thereon other than Liens for Taxes (i) either not yet due or being contested in good faith by appropriate proceedings and (ii) for which such reserves, if any, as are required to be provided under generally accepted accounting principles have been provided by Borrower, and there is no risk of criminal penalties; (3D) if such contest shall be conducted in a manner requiring involve the payment of the claimTax prior to the contest, Borrower unless the Lessee shall have advanced sufficient funds, on provide to such Tax Indemnitee an interest-free basis, advance in an amount equal to make the payment required, and shall have agreed to indemnify Imposition that the Indemnitee against any is required to pay (with no additional net after-Tax cost tax costs to such Tax Indemnitee). In addition for Tax Indemnitee controlled contests and claims contested in the name of such advance; Tax Indemnitee in a public forum, no contest shall be required: (4A) 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 $75,000 or (B) unless, if requested by such Tax Indemnitee, the Indemnitee in writing, such Indemnitee Lessee shall have received provided to such Tax Indemnitee an opinion of independent Tax counsel selected by Borrower and reasonably acceptable to such Indemnitee and furnished at Borrower’s sole expense to the effect that a Realistic Possibility of Success exists for contesting such claim Lessee (orwhich may be in-house counsel) (except, in the case of income taxes indemnified hereunder which 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. In no event shall a Tax Indemnitee be required to appeal of an adverse judicial determination, a written opinion from such independent Tax counsel determination to the effect 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, PROVIDED, HOWEVER, that it if such Tax Indemnitee is more likely than not that the controlling party and the Lessee recommends the acceptance of a settlement offer made by the relevant Governmental Authority and such adverse judicial determination Tax Indemnitee rejects such settlement offer then the amount for which the Lessee will be reversed or substantially modified); (5) Borrower shall have delivered to such Indemnitee a written acknowledgment of Borrower’s obligation 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 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 that 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 with respect to any claim which is entitled to be indemnified under this SECTION 13.5 (and with respect to which contest is not successful; provided, however, that Borrower will not be bound by its acknowledgment of liability if the contest is resolved on a clear and unambiguous basis showing no such liability required under this Section 6(bSECTION 13.5(b)) without the prior written consent of the Lessee, unless such Tax Indemnitee waives its right to be indemnified under this SECTION 13.5 with respect to such Tax; (6) if a Specified Default or Event of Default shall have occurred and be continuing, Borrower shall have provided security for its obligation hereunder satisfactory claim. Notwithstanding anything contained herein to the contrary, a Tax Indemnitee by placing in escrow sufficient funds to cover any such contested Tax and the reasonably expected expenses of such contest on an After-Tax Basis, or otherwise providing satisfactory provisions for payment of such amounts determined by the Indemnitee in its sole discretion; (7) the aggregate amount of all indemnity payments that Borrower may will not be required to make contest (and the Lessee shall not be permitted to contest) a claim with respect to the imposition of any Tax if such Tax Indemnitee shall waive its right to indemnification from Lessee under this SECTION 13.5 with respect to such claim (or similar or related claims) is at least $60,000; and (8) the any claim is not for a Tax the imposition of which has been previously contested by, or at the request of, Borrower hereunder, and with respect to such previous contest (including all allowable appeals) was decided adversely to Borrower, unless Borrower has delivered an opinion of independent Tax counsel selected by Borrower and reasonably acceptable to the Indemnitee to the effect that, on the basis of (i) a change in applicable law, or (ii) a difference in the underlying facts, there is currently a Realistic Possibility of Success for contesting such claim.
(D) If any Indemnitee shall obtain a refund of all year or any part of any Tax paid by Borrower, such Indemnitee shall pay Borrower, but not before Borrower shall have made all payments theretofore due to such Indemnitee pursuant to this Section 6(b) and any other payments theretofore due such Indemnitee under any of the Operative Documents, an amount equal to the amount of such refund (net of any Taxes imposed thereon), including interest received and attributable thereto (net of any Taxes imposed thereon) plus, if Borrower has paid an amount pursuant to the first sentence of Section 6(b)(iii)(A), any net Tax benefit (or minus any net Tax detriment) realized by such Indemnitee as a result of any refund received, and payment made, by such Indemnitee pursuant to this sentence; provided that the Indemnitee shall not be obligated to pay an amount under the preceding sentence to the extent that such amount would exceed the amount of such Taxes paid, reimbursed or advanced by Borrower to such Indemnitee (other than the cost of the contest thereof); provided, further, that any amount not paid to Borrower pursuant to the foregoing limitation shall be carried forward to reduce pro tanto any future payments that Borrower may be required to make to such Indemnitee pursuant to this Section 6(b). If any Indemnitee shall have paid Borrower any refund of all or part of any Tax paid by Borrower and it is subsequently determined that such Indemnitee was not entitled to the refund, such determination shall be treated as the imposition of a Tax for which Borrower is obligated to indemnify such Indemnitee pursuant to the provisions of this Section 6(b) without regard to the exclusions set forth in Section 6(b)(ii) (other than subparagraphs (4), (11) and (12) thereof). Provided no Specified Default or Event of Default has occurred and is continuing, an Indemnitee shall not settle any such claim or contest pursuant to this provision without the written consent of Borrower, which consent shall not be unreasonably withheld, conditioned or delayed; provided, that an Indemnitee may settle at any time without the consent of Borrower if the Indemnitee waives (by written notice to Borrower) the payment by Borrower of an indemnity in respect of such issue and any related issue taxable year the contest of which is effectively foreclosed by the settlement materially adversely affected as a result of such issue, including any payment arising from such issue in subsequent years or which by reason of the fact that such issue is of a continuing nature, and promptly pays to Borrower any Tax previously paid or any interest-free loan advanced by Borrower (other than expenses of such contests) with respect to such issuewaiver).
(E) Nothing contained in this Section 6(b)(iv) shall require any Indemnitee to contest, or permit Borrower to contest in the name of such Indemnitee, a claim that such Indemnitee would otherwise be required to contest pursuant to this Section 6(b)(iv) if such Indemnitee shall waive payment by Borrower of any amount that might otherwise be payable by Borrower under this Section 6(b) in connection with such claim (other than the costs of contest previously incurred), nor shall any Indemnitee be required to pursue any appeal to the United States Supreme Court.
Appears in 1 contract
Contests. (Ai) If a written claim Seller (at Seller’s own expense) shall be made against and received entitled to control the defense (including as to settlement, except as provided below) of any audit, litigation, proceeding, or other action with respect to Taxes (a “Tax Proceeding”) with respect to a Pre-Closing Tax Period (other than a Straddle Period, Straddle Periods being governed by Section 8.02(i)(iii) below) to the extent such audit, litigation, proceeding or other action relates to the Company or any Indemnitee for any Tax for which Borrower is obligated to indemnify pursuant to this Section 6(bof its Subsidiaries (“Pre-Closing Audits”), such Indemnitee shall notify Borrower in writing of such claim within 30 days after its receipt, and shall provide Borrower such information regarding such claim as Borrower may reasonably request; provided, however, that the failure to provide such notice Seller shall not release Borrower from cause the Company or any of its obligations Subsidiaries to indemnify under Section 6 hereof unlessenter into a settlement that by its terms, and only without Buyer’s prior written consent, binds the Company or any of its Subsidiaries for a Post-Closing Tax Period as a result of the settlement of such Pre-Closing Audit. The Company shall be entitled to control such Tax Proceeding (at Seller’s expense) to the extent thatSeller does not exercise its right to control a Tax Proceeding pursuant to this Section 8.02(i)(i). The Parties agree that neither the Company nor any Subsidiary shall be permitted to settle, such failure effectively precludes Borrowercompromise, or discharge any Pre-Closing Audit, or admit any liability with respect thereto, without the prior written consent of Seller.
(ii) Notwithstanding Section 8.02(i)(i), Buyer (at Buyer’s contest rights. To own expense) shall be entitled to control the extent permitted under applicable lawdefense (including as to settlement, such Indemnitee will not make except as provided below) of any payments Tax Proceeding with respect to a Pre-Closing Tax Period (other than a Straddle Period, Straddle Periods being governed by Section 8.02(i)(iv) below) to the extent such Tax Proceeding relates to the Comfort Products Contributed Assets (“Pre-Closing Comfort Products Audit”), provided, however, that Buyer shall not cause the Company or any of its Subsidiaries to enter into a settlement that by its terms, and without Seller’s prior written consent, binds the Company or any its Subsidiaries for a Post-Closing Tax Period as a result of the settlement of such Pre-Closing Comfort Products Audit. The Company shall be entitled to control such Tax Proceeding (at Buyer’s expense) to the extent Buyer does not exercise its right to control a Tax Proceeding pursuant to this Section 8.02(i)(ii).
(iii) In the case of a Tax Proceeding for a Straddle Period, if such Tax Proceeding relates or could reasonably be expected to relate to both a claim for Company Taxes for a Pre-Closing Tax Period and a claim for Company Taxes for a Post-Closing Tax Period, and such claim for at least 30 days after giving notice Company Taxes for a Pre-Closing Tax Period is not separable from such claim for Company Taxes for a Post-Closing Tax Period, the Company (if the claim for Company Taxes that are for a Post-Closing Tax Period exceeds or reasonably could be expected to exceed in amount the claim for Company Taxes for a Pre-Closing Tax Period) or otherwise Seller (Seller or the Company, as the case may be, the “Tax Contest Controlling Party”), shall be entitled to control the defense of such Tax Proceeding. In such case, the other Party (the “Tax Contest Non-Controlling Party”) shall be entitled to participate fully (at the Tax Contest Non-Controlling Party’s sole expense) in the conduct of such Tax Proceeding and the Tax Contest Controlling Party shall not settle, compromise, or discharge such Tax Proceeding without the consent of such Tax Contest Non-Controlling Party (which consent shall not be unreasonably withheld or delayed). The costs and expenses of conducting the defense of such Tax Proceeding shall be reasonably apportioned based on the relative amounts of the claim to Borrowerfor Company Taxes for a Pre-Closing Tax Period and the claim for Company Taxes for a Post-Closing Tax Period.
(Biv) If requested by Borrower in writing within 30 days after its receipt of such notice or such shorter period as may be required by applicable law, such Indemnitee shall, at the expense of Borrower and subject to subparagraph (C) below, contest the validity, applicability or amount of such Taxes by, in the case of an Indemnitee-Controlled Contest, in such Indemnitee’s sole discretion orNotwithstanding Section 8.02(i)(iii), in the case of a Borrower-Controlled ContestTax Proceeding for a Straddle Period with respect to the Comfort Products Contributed Assets, in Borrower’s sole discretion, (1) resisting payment thereof if practicable, (2) not paying such Tax except under protest, Proceeding relates or could reasonably be expected to relate to both a claim for Taxes with respect to the Comfort Products Contributed Assets (3“Comfort Products Taxes”) if protest is necessary for a Pre-Closing Tax Period and propera claim for Comfort Products Taxes for a Post-Closing Tax Period, and such claim for Comfort Products Taxes for a Pre-Closing Tax Period is not separable from such claim for Comfort Products Taxes for a Post-Closing Tax Period, the Company (if payment the claim for Comfort Products Taxes that are for a Post-Closing Tax Period exceeds or reasonably could be expected to exceed in amount the claim for Comfort Products Taxes for a Pre-Closing Tax Period) or otherwise Buyer (Buyer or the Company, as the case may be, the “Comfort Products Tax Contest Controlling Party”), shall be entitled to control the defense of such Tax is madeProceeding. In such case, using reasonable efforts the other Party (the “Comfort Products Tax Contest Non-Controlling Party”) shall be entitled to obtain a refund thereof, in appropriate administrative and judicial proceedings, and participate fully (4at the Comfort Products Tax Contest Non-Controlling Party’s sole expense) in the case of an Indemnitee-Controlled Contest, considering in good faith any other reasonable action as Borrower may reasonably request. Each Indemnitee shall consult in good faith with Borrower and Borrower’s counsel, and Borrower shall consult in good faith with such Indemnitee and its counsel in the case of a Borrower-Controlled Contest. concerning the forum in which the contest is most likely to be favorably resolved and whether such contest shall be by (x) resisting payment conduct of such TaxTax Proceeding and the Comfort Products Tax Contest Controlling Party shall not settle, (y) paying compromise, or discharge such Tax under protest or (z) paying such Tax and seeking a refund or other repayment thereof.
(C) In no event shall an Indemnitee be required, or Borrower permitted, to contest Proceeding without the imposition of any Tax for which Borrower is obligated pursuant to this Section 6(b) unless (1) Borrower shall have agreed to pay and shall promptly be paying on request all reasonable costs and expenses that such Indemnitee incurs in contesting such claim or arising out of or relating to such contest (including legal fees, accounting fees, and disbursements, including those on appeal, if any); (2) such contest is not reasonably likely to result in a material danger of the sale, seizure, forfeiture or loss of the Aircraft, or the creation of any Lien thereon other than Liens for Taxes (i) either not yet due or being contested in good faith by appropriate proceedings and (ii) for which such reserves, if any, as are required to be provided under generally accepted accounting principles have been provided by Borrower, and there is no risk of criminal penalties; (3) if such contest shall be conducted in a manner requiring the payment of the claim, Borrower shall have advanced sufficient funds, on an interest-free basis, to make the payment required, and shall have agreed to indemnify the Indemnitee against any additional net after-Tax cost to such Indemnitee consent of such advance; Comfort Products Tax Contest Non-Controlling Party (4) if requested by the Indemnitee in writing, such Indemnitee shall have received an opinion of independent Tax counsel selected by Borrower and reasonably acceptable to such Indemnitee and furnished at Borrower’s sole expense to the effect that a Realistic Possibility of Success exists for contesting such claim (or, in the case of an appeal of an adverse judicial determination, a written opinion from such independent Tax counsel to the effect that it is more likely than not that such adverse judicial determination will be reversed or substantially modified); (5) Borrower shall have delivered to such Indemnitee a written acknowledgment of Borrower’s obligation to indemnify such Indemnitee to the extent that the contest is not successful; provided, however, that Borrower will not be bound by its acknowledgment of liability if the contest is resolved on a clear and unambiguous basis showing no such liability under this Section 6(b) with respect to such Tax; (6) if a Specified Default or Event of Default shall have occurred and be continuing, Borrower shall have provided security for its obligation hereunder satisfactory to the Indemnitee by placing in escrow sufficient funds to cover any such contested Tax and the reasonably expected expenses of such contest on an After-Tax Basis, or otherwise providing satisfactory provisions for payment of such amounts determined by the Indemnitee in its sole discretion; (7) the aggregate amount of all indemnity payments that Borrower may be required to make to such Indemnitee with respect to such claim (or similar or related claims) is at least $60,000; and (8) the claim is not for a Tax the imposition of which has been previously contested by, or at the request of, Borrower hereunder, and such previous contest (including all allowable appeals) was decided adversely to Borrower, unless Borrower has delivered an opinion of independent Tax counsel selected by Borrower and reasonably acceptable to the Indemnitee to the effect that, on the basis of (i) a change in applicable law, or (ii) a difference in the underlying facts, there is currently a Realistic Possibility of Success for contesting such claim.
(D) If any Indemnitee shall obtain a refund of all or any part of any Tax paid by Borrower, such Indemnitee shall pay Borrower, but not before Borrower shall have made all payments theretofore due to such Indemnitee pursuant to this Section 6(b) and any other payments theretofore due such Indemnitee under any of the Operative Documents, an amount equal to the amount of such refund (net of any Taxes imposed thereon), including interest received and attributable thereto (net of any Taxes imposed thereon) plus, if Borrower has paid an amount pursuant to the first sentence of Section 6(b)(iii)(A), any net Tax benefit (or minus any net Tax detriment) realized by such Indemnitee as a result of any refund received, and payment made, by such Indemnitee pursuant to this sentence; provided that the Indemnitee shall not be obligated to pay an amount under the preceding sentence to the extent that such amount would exceed the amount of such Taxes paid, reimbursed or advanced by Borrower to such Indemnitee (other than the cost of the contest thereof); provided, further, that any amount not paid to Borrower pursuant to the foregoing limitation shall be carried forward to reduce pro tanto any future payments that Borrower may be required to make to such Indemnitee pursuant to this Section 6(b). If any Indemnitee shall have paid Borrower any refund of all or part of any Tax paid by Borrower and it is subsequently determined that such Indemnitee was not entitled to the refund, such determination shall be treated as the imposition of a Tax for which Borrower is obligated to indemnify such Indemnitee pursuant to the provisions of this Section 6(b) without regard to the exclusions set forth in Section 6(b)(ii) (other than subparagraphs (4), (11) and (12) thereof). Provided no Specified Default or Event of Default has occurred and is continuing, an Indemnitee shall not settle any such claim or contest pursuant to this provision without the written consent of Borrower, which consent shall not be unreasonably withheld, conditioned withheld or delayed; provided, that an Indemnitee may settle at any time without ). The costs and expenses of conducting the consent of Borrower if the Indemnitee waives (by written notice to Borrower) the payment by Borrower of an indemnity in respect defense of such issue and any related issue Tax Proceeding shall be reasonably apportioned based on the contest of which is effectively foreclosed by the settlement of such issue, including any payment arising from such issue in subsequent years or which by reason relative amounts of the fact that such issue is of claim for Comfort Products Taxes for a continuing nature, Pre-Closing Tax Period and promptly pays to Borrower any the claim for Comfort Products Taxes for a Post-Closing Tax previously paid or any interest-free loan advanced by Borrower (other than expenses of such contests) with respect to such issuePeriod.
(E) Nothing contained in this Section 6(b)(iv) shall require any Indemnitee to contest, or permit Borrower to contest in the name of such Indemnitee, a claim that such Indemnitee would otherwise be required to contest pursuant to this Section 6(b)(iv) if such Indemnitee shall waive payment by Borrower of any amount that might otherwise be payable by Borrower under this Section 6(b) in connection with such claim (other than the costs of contest previously incurred), nor shall any Indemnitee be required to pursue any appeal to the United States Supreme Court.
Appears in 1 contract
Contests. (A) If a written any claim shall be made against and received by any Tax Indemnitee or if any proceeding shall be commenced against any Tax Indemnitee (including a written notice of such proceeding) for any Tax for Imposition as to which Borrower is obligated to indemnify the Lessee may have an indemnity obligation pursuant to this Section 6(b)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, such Tax Indemnitee shall promptly (and in any event, within 30 days) notify Borrower the Lessee in writing of such claim (provided that failure to so notify the Lessee within 30 days after its receipt, shall not alter such Tax Indemnitee's rights under this Section 26.5 except to the extent such failure precludes or materially adversely affects the ability to conduct a contest of any indemnified Taxes) and shall provide Borrower not take any action with respect to such information regarding claim, proceeding or Imposition without the written consent of the Lessee (such claim as Borrower may reasonably requestconsent 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 failure case of any such claim or proceeding, if such Tax Indemnitee shall be required by law or regulation to provide 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 release Borrower from take any of its obligations to indemnify under Section 6 hereof unless, and only to the extent that, such failure effectively precludes Borrower’s contest rights. To the extent permitted under applicable law, such Indemnitee will not make any payments action with respect to such claim claim, proceeding or Imposition without the consent of the Lessee (such consent not to be unreasonably withheld or unreasonably delayed) for at least 30 10 days after giving notice of such claim to Borrower.
(B) If requested by Borrower in writing within 30 days after its the receipt of such notice by the 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 Lessee shall be entitled for a period of 30 days from receipt of such notice from the Tax Indemnitee (or such shorter period as may be the Tax Indemnitee has notified the Lessee is required by applicable lawlaw or regulation for the Tax Indemnitee to commence such contest), to request in writing that such Tax Indemnitee shallcontest the imposition of such Tax, at the expense Lessee's expense. If (x) such contest can be pursued in the name of Borrower the Lessee and subject to subparagraph (C) below, contest the validity, applicability or amount independently from any other proceeding involving a Tax liability of such Taxes byTax Indemnitee for which the Lessee has not agreed to indemnify such Tax Indemnitee, (y) such contest must be pursued in the case name of an the Tax Indemnitee-Controlled Contest, in but can be pursued independently from any other proceeding involving a Tax liability of such Indemnitee’s sole discretion orTax Indemnitee for which the Lessee has not agreed to indemnify such Tax Indemnitee or (z) 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 Borrower-Controlled Contestcontest described in clause (y), in Borrower’s sole discretion, (1) resisting payment thereof if practicable, (2) not paying such the Tax except under protest, (3) if protest is necessary and proper, and if payment of such Tax is made, using reasonable efforts to obtain a refund thereof, in appropriate administrative and judicial proceedings, and (4) in the case of an Indemnitee-Controlled Contest, considering Indemnitee determines in good faith any other reasonable action as Borrower that such contest by the Lessee could have a material adverse impact on the business or operations of the Tax Indemnitee and provides a written explanation to the Lessee of such determination, the Tax Indemnitee may reasonably request. Each Indemnitee shall consult in good faith with Borrower and Borrower’s counselelect to control or reassert control of the contest, and Borrower shall consult in good faith with such Indemnitee and its counsel in provided, that by taking control of the case of a Borrower-Controlled Contest. concerning contest, Lessee acknowledges that it is responsible for the forum in which the contest is most likely Imposition ultimately determined to be favorably resolved due by reason of such claim, and whether such contest shall be by provided, further, that in determining the application of clauses (x) resisting payment of such Tax, and (y) paying of the preceding sentence, 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, the Tax Indemnitee shall control the contest of such Tax under protest or (z) paying such Tax and seeking a refund or other repayment thereof.
(C) claim, acting through counsel reasonably acceptable to the Lessee. In no event shall an the Lessee be permitted to contest (or the Tax Indemnitee be requiredrequired 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 Borrower permitted, to contest the imposition 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 Borrower the Lessee is obligated pursuant to this Section 6(bresponsible hereunder reasonably foreseeable in connection with the contest of such claim, (C) unless (1) Borrower the Lessee shall have agreed to pay and shall promptly be paying on request pay, to such Tax Indemnitee within ten (10) Business Days after demand all reasonable costs out-of-pocket costs, losses and expenses that such Tax Indemnitee incurs may incur in connection with contesting such claim or arising out of or relating to such contest (Imposition including legal feesall reasonable legal, accounting fees, and investigatory fees and disbursements, including those on appeal, if any); or (2) such contest is not reasonably likely to result in a material danger of the sale, seizure, forfeiture or loss of the Aircraft, or the creation of any Lien thereon other than Liens for Taxes (i) either not yet due or being contested in good faith by appropriate proceedings and (ii) for which such reserves, if any, as are required to be provided under generally accepted accounting principles have been provided by Borrower, and there is no risk of criminal penalties; (3D) if such contest shall be conducted in a manner requiring involve the payment of the claimTax prior to the contest, Borrower unless the Lessee shall have advanced sufficient funds, on provide to the Tax Indemnitee an interest-free basis, advance in an amount equal to make the payment required, and shall have agreed to indemnify Imposition that the Indemnitee against any is required to pay (with no additional net after-Tax cost 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: (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 advance; Tax Indemnitee for which the Lessee may be liable to pay an indemnity under this Section 26.5(b)) exceeds $500,000 and (4B) unless, if requested by the Indemnitee in writingTax Indemnitee, such Indemnitee the Lessee shall have received provided to the Tax Indemnitee an opinion of independent Tax counsel selected by Borrower and reasonably acceptable to such Indemnitee and furnished at Borrower’s sole expense to the effect that a Realistic Possibility of Success exists for contesting such claim Lessee (orwhich may be in- house counsel) (except, in the case of income taxes indemnified hereunder which shall be an opinion of independent tax counsel selected by the Tax Indemnitee and reasonably acceptable to the Lessee) that a reasonable basis exists to contest such claim. In no event shall a Tax Indemnitee be required to appeal of an adverse judicial determination, a written opinion from such independent Tax counsel determination to the effect that it is more likely than not that such adverse judicial determination will be reversed or substantially modified); (5) Borrower United States Supreme Court. The party conducting the contest shall have delivered to such Indemnitee a written acknowledgment of Borrower’s obligation to indemnify such Indemnitee consult in good faith with the other party and its counsel with respect to the extent that contest of such claim for Taxes (or claim for refund) but the contest is not successful; decisions regarding what actions to be taken shall be made by the controlling party in its sole judgement, provided, however, that Borrower will not be bound by its acknowledgment of liability 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 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 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 resolved on a clear and unambiguous basis showing no such liability entitled to be indemnified under this Section 6(b26.5 (and with respect to which contest is required under this Section 26.5(b)) without the prior written consent of the Lessee, unless such Tax Indemnitee waives its right to be indemnified under this Section 26.5 with respect to such Tax; (6) if a Specified Default or Event of Default shall have occurred and be continuing, Borrower shall have provided security for its obligation hereunder satisfactory claim. Notwithstanding anything contained herein to the contrary, a Tax Indemnitee by placing in escrow sufficient funds to cover any such contested Tax and the reasonably expected expenses of such contest on an After-Tax Basis, or otherwise providing satisfactory provisions for payment of such amounts determined by the Indemnitee in its sole discretion; (7) the aggregate amount of all indemnity payments that Borrower may will not be required to make contest (and the Lessee shall not be permitted to contest) a claim with respect to the imposition of any Tax if such Tax Indemnitee shall waive its right to indemnification under this Section 26.5 with respect to such claim (or similar or related claims) is at least $60,000; and (8) the any claim is not for a Tax the imposition of which has been previously contested by, or at the request of, Borrower hereunder, and with respect to such previous contest (including all allowable appeals) was decided adversely to Borrower, unless Borrower has delivered an opinion of independent Tax counsel selected by Borrower and reasonably acceptable to the Indemnitee to the effect that, on the basis of (i) a change in applicable law, or (ii) a difference in the underlying facts, there is currently a Realistic Possibility of Success for contesting such claim.
(D) If any Indemnitee shall obtain a refund of all year or any part of any Tax paid by Borrower, such Indemnitee shall pay Borrower, but not before Borrower shall have made all payments theretofore due to such Indemnitee pursuant to this Section 6(b) and any other payments theretofore due such Indemnitee under any of the Operative Documents, an amount equal to the amount of such refund (net of any Taxes imposed thereon), including interest received and attributable thereto (net of any Taxes imposed thereon) plus, if Borrower has paid an amount pursuant to the first sentence of Section 6(b)(iii)(A), any net Tax benefit (or minus any net Tax detriment) realized by such Indemnitee as a result of any refund received, and payment made, by such Indemnitee pursuant to this sentence; provided that the Indemnitee shall not be obligated to pay an amount under the preceding sentence to the extent that such amount would exceed the amount of such Taxes paid, reimbursed or advanced by Borrower to such Indemnitee (other than the cost of the contest thereof); provided, further, that any amount not paid to Borrower pursuant to the foregoing limitation shall be carried forward to reduce pro tanto any future payments that Borrower may be required to make to such Indemnitee pursuant to this Section 6(b). If any Indemnitee shall have paid Borrower any refund of all or part of any Tax paid by Borrower and it is subsequently determined that such Indemnitee was not entitled to the refund, such determination shall be treated as the imposition of a Tax for which Borrower is obligated to indemnify such Indemnitee pursuant to the provisions of this Section 6(b) without regard to the exclusions set forth in Section 6(b)(ii) (other than subparagraphs (4), (11) and (12) thereof). Provided no Specified Default or Event of Default has occurred and is continuing, an Indemnitee shall not settle any such claim or contest pursuant to this provision without the written consent of Borrower, which consent shall not be unreasonably withheld, conditioned or delayed; provided, that an Indemnitee may settle at any time without the consent of Borrower if the Indemnitee waives (by written notice to Borrower) the payment by Borrower of an indemnity in respect of such issue and any related issue taxable year the contest of which is effectively foreclosed by the settlement materially adversely affected as a result of such issue, including any payment arising from such issue in subsequent years or which by reason of the fact that such issue is of a continuing nature, and promptly pays to Borrower any Tax previously paid or any interest-free loan advanced by Borrower (other than expenses of such contests) with respect to such issuewaiver).
(E) Nothing contained in this Section 6(b)(iv) shall require any Indemnitee to contest, or permit Borrower to contest in the name of such Indemnitee, a claim that such Indemnitee would otherwise be required to contest pursuant to this Section 6(b)(iv) if such Indemnitee shall waive payment by Borrower of any amount that might otherwise be payable by Borrower under this Section 6(b) in connection with such claim (other than the costs of contest previously incurred), nor shall any Indemnitee be required to pursue any appeal to the United States Supreme Court.
Appears in 1 contract
Contests. (A) If a the Buyer or the Company receives written claim shall be made against and received notice of any pending or threatened audit or other examination by any Indemnitee for Governmental Authority, or any judicial or administrative proceedings relating to Taxes (each, a “Tax for which Borrower is obligated Contest”) that would reasonably be expected to indemnify pursuant result in Losses that are indemnifiable under this Agreement, the Buyer shall promptly notify the Sellers’ Representative. If the Sellers’ Representative or any Seller receives written notice of a Tax Contest that would reasonably be expected to result in Losses that are indemnifiable under this Section 6(bAgreement, such Party shall promptly notify the Buyer. In each case within this clause (v), such Indemnitee shall notify Borrower in writing of such claim within 30 days after its receipt, and shall provide Borrower such information regarding such claim as Borrower may reasonably request; provided, however, that the failure to provide or delay in delivering such notice shall not release Borrower from any relieve a Party of its obligations to indemnify under Section 6 hereof unless, and only hereunder except to the extent that, that such Party is actually and materially prejudiced by such failure effectively precludes Borrower’s contest rights. To the extent permitted under applicable law, such Indemnitee will not make any payments with respect to such claim for at least 30 days after giving notice of such claim to Borroweror delay.
(B) If requested by Borrower in writing such Tax Contest relates solely to any Past Period, and not to the Straddle Period or any post-Closing period, the Sellers’ Representative shall have the right (but not the obligation), to be exercised within 30 days after ten (10) Business Days following its receipt of such the written notice or such shorter period as may be required by applicable law, such Indemnitee shall, at the expense of Borrower and subject to subparagraph (C) below, contest the validity, applicability or amount of such Taxes by, in the case of an Indemnitee-Controlled Contest, in such Indemnitee’s sole discretion or, in the case of a Borrower-Controlled Contest, in Borrower’s sole discretion, (1) resisting payment thereof if practicable, (2) not paying such Tax except under protest, (3) if protest is necessary and proper, and if payment of such Tax Contest by delivering written notice to the Buyer, to assume and thereafter conduct and control the defense of such Tax Contest (with counsel of the Sellers’ Representative’s choice). For so long as the Sellers’ Representative is madeconducting and controlling such defense, using reasonable efforts the Buyer shall have the right, but not the obligation, to obtain participate in such defense with separate counsel of its choosing at its sole cost and expense. None of the Sellers or the Sellers’ Representative shall be permitted to consent to the entry of any judgment or enter into any settlement of such Tax Context which may adversely impact the Buyer or the Company for a refund thereof, in appropriate administrative and judicial proceedings, and post-Closing period or the Tax attributes of the Company without the prior written consent of the Buyer (4) in the case of an Indemnitee-Controlled Contest, considering in good faith any other reasonable action as Borrower may reasonably request. Each Indemnitee shall consult in good faith with Borrower and Borrower’s counsel, and Borrower shall consult in good faith with such Indemnitee and its counsel in the case of a Borrower-Controlled Contest. concerning the forum in which the contest is most likely not to be favorably resolved and whether such contest shall be by (x) resisting payment of such Taxunreasonably withheld, (y) paying such Tax under protest conditioned, or (z) paying such Tax and seeking a refund or other repayment thereofdelayed).
(C) In no event Unless and until the Sellers’ Representative assumes the defense of such Tax Contest, the Buyer may defend against such Tax Contest in any manner it may reasonably deem appropriate (with counsel of the Buyer’s choice), in which case the Sellers’ Representative (I) shall an Indemnitee be requiredcooperate with the Buyer in such defense and make available to the Buyer and its Representatives all witnesses, or Borrower permittedpertinent records, to contest the imposition of any Tax for which Borrower is obligated pursuant to this Section 6(b) unless (1) Borrower shall have agreed to pay and shall promptly be paying on request all reasonable costs and expenses that such Indemnitee incurs in contesting such claim or arising out of or relating to such contest (including legal fees, accounting feesmaterials, and disbursements, including those on appeal, if any); (2) such contest is not information in or under the Sellers’ Representative’s possession or control relating thereto as may be reasonably likely to result in a material danger of the sale, seizure, forfeiture or loss of the Aircraft, or the creation of any Lien thereon other than Liens for Taxes (i) either not yet due or being contested in good faith by appropriate proceedings and (ii) for which such reserves, if any, as are required to be provided under generally accepted accounting principles have been provided by Borrower, and there is no risk of criminal penalties; (3) if such contest shall be conducted in a manner requiring the payment of the claim, Borrower shall have advanced sufficient funds, on an interest-free basis, to make the payment required, and shall have agreed to indemnify the Indemnitee against any additional net after-Tax cost to such Indemnitee of such advance; (4) if requested by the Indemnitee in writingBuyer, such Indemnitee and (II) shall have received an opinion the right, but not the obligation, to participate in such defense with separate counsel of independent Tax counsel selected its choosing at its sole cost and expense. The conduct of such defense by Borrower and reasonably acceptable to such Indemnitee and furnished at Borrower’s sole expense to the effect that a Realistic Possibility of Success exists for contesting such claim (or, in the case of an appeal of an adverse judicial determination, a written opinion from such independent Tax counsel to the effect that it is more likely than not that such adverse judicial determination will be reversed or substantially modified); (5) Borrower Buyer shall have delivered to such Indemnitee a written acknowledgment of Borrower’s obligation to indemnify such Indemnitee to the extent that the contest is not successful; provided, however, that Borrower will not be bound by its acknowledgment construed to be a waiver of liability if the contest is resolved on a clear and unambiguous basis showing no such liability under this Section 6(b) Buyer’s right to indemnification with respect to such Tax; (6) if a Specified Default or Event of Default shall have occurred and be continuing, Borrower shall have provided security for its obligation hereunder satisfactory to the Indemnitee by placing in escrow sufficient funds to cover any such contested Tax and the reasonably expected expenses of such contest on an After-Tax Basis, or otherwise providing satisfactory provisions for payment of such amounts determined by the Indemnitee in its sole discretion; (7) the aggregate amount of all indemnity payments that Borrower may be required to make to such Indemnitee with respect to such claim (or similar or related claims) is at least $60,000; and (8) the claim is not for a Tax the imposition of which has been previously contested by, or at the request of, Borrower hereunder, and such previous contest (including all allowable appeals) was decided adversely to Borrower, unless Borrower has delivered an opinion of independent Tax counsel selected by Borrower and reasonably acceptable to the Indemnitee to the effect that, on the basis of (i) a change in applicable law, or (ii) a difference in the underlying facts, there is currently a Realistic Possibility of Success for contesting such claimContest.
(D) If any Indemnitee shall obtain a refund For the avoidance of all or any part of doubt, the procedures relating to any Tax paid Contest shall be governed by Borrower, such Indemnitee shall pay Borrower, but not before Borrower shall have made all payments theretofore due to such Indemnitee pursuant to this Section 6(bclause (v) and any other payments theretofore due such Indemnitee under any of the Operative Documents, an amount equal to the amount of such refund (net of any Taxes imposed thereonnot by Section 7(d)(ii), including interest received and attributable thereto (net of any Taxes imposed thereon) plus, if Borrower has paid an amount pursuant to the first sentence of Section 6(b)(iii)(A), any net Tax benefit (or minus any net Tax detriment) realized by such Indemnitee as a result of any refund received, and payment made, by such Indemnitee pursuant to this sentence; provided that the Indemnitee shall not be obligated to pay an amount under the preceding sentence to the extent that such amount would exceed the amount of such Taxes paid, reimbursed or advanced by Borrower to such Indemnitee (other than the cost of the contest thereof); provided, further, that any amount not paid to Borrower pursuant to the foregoing limitation shall be carried forward to reduce pro tanto any future payments that Borrower may be required to make to such Indemnitee pursuant to this Section 6(b). If any Indemnitee shall have paid Borrower any refund of all or part of any Tax paid by Borrower and it is subsequently determined that such Indemnitee was not entitled to the refund, such determination shall be treated as the imposition of a Tax for which Borrower is obligated to indemnify such Indemnitee pursuant to the provisions of this Section 6(b) without regard to the exclusions set forth in Section 6(b)(ii) (other than subparagraphs (4), (11) and (12) thereof). Provided no Specified Default or Event of Default has occurred and is continuing, an Indemnitee shall not settle any such claim or contest pursuant to this provision without the written consent of Borrower, which consent shall not be unreasonably withheld, conditioned or delayed; provided, that an Indemnitee may settle at any time without the consent of Borrower if the Indemnitee waives (by written notice to Borrower) the payment by Borrower of an indemnity in respect of such issue and any related issue the contest of which is effectively foreclosed by the settlement of such issue, including any payment arising from such issue in subsequent years or which by reason of the fact that such issue is of a continuing nature, and promptly pays to Borrower any Tax previously paid or any interest-free loan advanced by Borrower (other than expenses of such contests) with respect to such issue.
(E) Nothing contained in this Section 6(b)(iv) shall require any Indemnitee to contest, or permit Borrower to contest in the name of such Indemnitee, a claim that such Indemnitee would otherwise be required to contest pursuant to this Section 6(b)(iv) if such Indemnitee shall waive payment by Borrower of any amount that might otherwise be payable by Borrower under this Section 6(b) in connection with such claim (other than the costs of contest previously incurred), nor shall any Indemnitee be required to pursue any appeal to the United States Supreme Court.
Appears in 1 contract
Sources: Stock Purchase Agreement (Travelzoo)
Contests. (A) If a written any claim shall be made against and received by any Tax Indemnitee or if any proceeding shall be commenced against any Tax Indemnitee (including a written notice of such proceeding) for any Tax for Imposition as to which Borrower is obligated to indemnify the Lessee may have an indemnity obligation pursuant to this Section 6(b)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, such Tax Indemnitee shall within thirty (30) days notify Borrower the Lessee in writing (provided, that failure to so notify the Lessee within thirty (30) days shall not alter such Tax Indemnitee's rights under this Section 13.5 except to the extent such failure precludes the ability 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 Lessee (such consent not to be unreasonably withheld or unreasonably delayed) for thirty (30) days after the receipt of such claim within 30 days after its receipt, and shall provide Borrower such information regarding such claim as Borrower may reasonably requestnotice by the Lessee; provided, however, that in the failure case of any such claim or proceeding, if such Tax Indemnitee shall be required by Applicable Law to provide take action prior to the end of such thirty (30) day period, such Tax Indemnitee shall in such notice to the Lessee, so inform the Lessee, and such Tax Indemnitee shall not release Borrower from take any of its obligations to indemnify under Section 6 hereof unless, and only to the extent that, such failure effectively precludes Borrower’s contest rights. To the extent permitted under applicable law, such Indemnitee will not make any payments action with respect to such claim claim, proceeding or Imposition without the consent of the Lessee (such consent not to be unreasonably withheld or unreasonably delayed) for at least 30 ten (10) days after giving notice of such claim to Borrower.
(B) If requested by Borrower in writing within 30 days after its the receipt of such notice by the Lessee unless such Tax Indemnitee shall be required by Applicable Law or regulation to take action prior to the end of such ten (10) day period, provided, further, however, that the failure of the Tax Indemnitee to give notice referred to in this sentence shall not diminish Lessee's obligations hereunder except to the extent that such failure precludes Lessee from contesting such claim. The 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 may be such Tax Indemnitee has notified the Lessee is required by applicable law, Applicable Law for such Tax Indemnitee shallto commence such contest) to request in writing that such Tax Indemnitee contest the imposition of such Tax, at the expense Lessee's sole cost and expense. If (i) such contest can be pursued in the name of Borrower the Lessee and subject to subparagraph (C) below, contest the validity, applicability or amount independently from any other proceeding involving a Tax liability of such Taxes byTax Indemnitee for which the Lessee has not agreed to indemnify such Tax Indemnitee, (ii) such contest must be pursued in the case name of an such Tax Indemnitee-Controlled Contest, in but can be pursued independently from any other proceeding involving a Tax liability of such Indemnitee’s sole discretion orTax Indemnitee for which the Lessee has not agreed to indemnify such Tax Indemnitee or (iii) such Tax Indemnitee so requests, then the Lessee shall be permitted to control the contest of such claim, provided, that in the case of a Borrower-Controlled Contestcontest described in clause (ii), in Borrower’s sole discretion, (1) resisting payment thereof if practicable, (2) not paying such Tax except under protest, (3) if protest is necessary and proper, and if payment Indemnitee reasonably determines that such contest by the Lessee could have an adverse impact on the business or operations of such Tax is madeIndemnitee, using reasonable efforts such Tax Indemnitee may elect to obtain a refund thereof, in appropriate administrative and judicial proceedingscontrol or reassert control of the contest, and (4) in provided, that by taking control of the case contest, the Lessee acknowledges that it is responsible for the Imposition ultimately determined to be due by reason of an Indemnitee-Controlled Contestsuch claim. In all other claims requested to be contested by the Lessee, considering in good faith any other reasonable action as Borrower may reasonably request. Each such Tax Indemnitee shall consult in good faith with Borrower and Borrower’s counsel, and Borrower shall consult in good faith with such Indemnitee and its counsel in the case of a Borrower-Controlled Contest. concerning the forum in which control the contest is most likely to be favorably resolved and whether such contest shall be by (x) resisting payment of such Taxclaim, (y) paying such Tax under protest or (z) paying such Tax and seeking a refund or other repayment thereof.
(C) acting through counsel reasonably acceptable to the Lessee. In no event shall an the Lessee be permitted to contest (or such Tax Indemnitee be requiredrequired 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 could involve a material risk of the sale, forfeiture or loss of, or Borrower permitted, to contest the imposition creation of any Lien (other than a Permitted Property Lien of the type described in clause (a), (b), (g) or (h) of the definition thereof) on the Property or any part of any thereof unless the Lessee shall have posted and maintained a bond or other security satisfactory to the relevant Tax Indemnitee in respect to such risk, (B) if a CAA Event of Default, Unwind Event or 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 Borrower the Lessee is obligated pursuant to this Section 6(bresponsible hereunder reasonably foreseeable in connection with the contest of such claim, (C) unless (1) Borrower the Lessee shall have agreed to pay and shall promptly be paying pay, to such Tax Indemnitee on request demand all reasonable costs out-of-pocket costs, losses and expenses that such Tax Indemnitee incurs may incur in connection with contesting such claim or arising out of or relating to such contest (Imposition including legal feesall reasonable legal, accounting fees, and investigatory fees and disbursements, including those on appeal, if any); or (2) such contest is not reasonably likely to result in a material danger of the sale, seizure, forfeiture or loss of the Aircraft, or the creation of any Lien thereon other than Liens for Taxes (i) either not yet due or being contested in good faith by appropriate proceedings and (ii) for which such reserves, if any, as are required to be provided under generally accepted accounting principles have been provided by Borrower, and there is no risk of criminal penalties; (3D) if such contest shall be conducted in a manner requiring involve the payment of the claimTax prior to the contest, Borrower unless the Lessee shall have advanced sufficient funds, on provide to such Tax Indemnitee an interest-free basis, advance in an amount equal to make the payment required, and shall have agreed Imposition that the Tax Indemnitee is required to indemnify the Indemnitee against any pay (with no additional net after-Tax cost tax costs to such Tax Indemnitee). In addition, for Tax Indemnitee controlled contests and claims contested in the name of such advance; Tax Indemnitee in a public forum, no contest shall be required unless: (4A) 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 $50,000, (B) if requested by such Tax Indemnitee, the Indemnitee in writing, such Indemnitee Lessee shall have received provided to such Tax Indemnitee an opinion of counsel selected by the Lessee (except, in the case of income taxes indemnified hereunder, in which case such opinion shall be an opinion of independent Tax tax counsel selected by Borrower such Tax Indemnitee and reasonably acceptable to such Indemnitee and furnished at Borrower’s sole expense to the effect Lessee) that a Realistic Possibility of Success reasonable basis exists for contesting to contest such claim (or, in the case of an appeal of an adverse judicial determination, a written an opinion from of such independent Tax counsel to the effect that it there is more likely than not that substantial authority for the position asserted in such adverse judicial determination will be reversed or substantially modified); appeal) and (5C) Borrower Lessee shall have delivered acknowledged in writing to such the Tax Indemnitee a written acknowledgment of Borrower’s its obligation to pay the costs and expenses thereof and to indemnify such Indemnitee to the extent that the contest is not successful; provided, however, that Borrower will not be bound by its acknowledgment of liability if the contest is resolved on a clear and unambiguous basis showing no such liability under this Section 6(b) with respect to such Tax; (6) if a Specified Default or Event of Default shall have occurred and be continuing, Borrower shall have provided security for its obligation hereunder satisfactory to the Indemnitee by placing in escrow sufficient funds to cover any such contested Tax and the reasonably expected expenses of such contest on an After-Tax Basis, or otherwise providing satisfactory provisions for payment of such amounts determined by the Indemnitee in its sole discretion; (7) the aggregate amount of all indemnity payments that Borrower may be required to make to such Indemnitee with respect to such claim (or similar or related claims) is at least $60,000; and (8) the claim is not for a Tax the imposition of which has been previously contested by, or at the request of, Borrower hereunder, and such previous contest (including all allowable appeals) was decided adversely to Borrower, unless Borrower has delivered an opinion of independent Tax counsel selected by Borrower and reasonably acceptable to the Indemnitee to the effect that, on the basis of (i) a change in applicable law, or (ii) a difference in the underlying facts, there is currently a Realistic Possibility of Success for contesting such claim.
(D) If any Indemnitee shall obtain a refund of all or any part of any Tax paid by Borrower, such Indemnitee shall pay Borrower, but not before Borrower shall have made all payments theretofore due to such Indemnitee pursuant to this Section 6(b) and any other payments theretofore due such Indemnitee under any of 13.5 for the Operative Documents, an amount equal Taxes subject to the amount of such refund (net of any Taxes imposed thereon), including interest received and attributable thereto (net of any Taxes imposed thereon) plusproposed contest, if Borrower has paid an amount pursuant to the first sentence of Section 6(b)(iii)(A), any net Tax benefit (or minus any net Tax detriment) realized by such Indemnitee as a result of any refund received, and payment made, by such Indemnitee pursuant to this sentence; provided that the Indemnitee shall not be obligated to pay an amount under the preceding sentence to the extent that such amount would exceed the amount of such Taxes paid, reimbursed or advanced by Borrower to such Indemnitee (other than the cost of the contest thereof); provided, further, that any amount not paid to Borrower pursuant to the foregoing limitation shall be carried forward to reduce pro tanto any future payments that Borrower may be required to make to such Indemnitee pursuant to this Section 6(b). If any Indemnitee shall have paid Borrower any refund of all or part of any Tax paid by Borrower and it is subsequently determined that such Indemnitee was not entitled to the refund, such determination shall be treated as the imposition of a Tax for which Borrower is obligated to indemnify such Indemnitee pursuant to the provisions of this Section 6(b) without regard to the exclusions set forth in Section 6(b)(ii) (other than subparagraphs (4), (11) and (12) thereof). Provided no Specified Default or Event of Default has occurred and is continuing, an Indemnitee shall not settle any such claim or contest pursuant to this provision without the written consent of Borrower, which consent shall not be unreasonably withheld, conditioned or delayed; provided, that an Indemnitee may settle at any time without the consent of Borrower if the Indemnitee waives (by written notice to Borrower) the payment by Borrower of an indemnity in respect of such issue and any related issue the contest of which is effectively foreclosed by the settlement of such issue, including any payment arising from such issue in subsequent years or which by reason of the fact that such issue is of a continuing nature, and promptly pays to Borrower any Tax previously paid or any interest-free loan advanced by Borrower (other than expenses of such contests) with respect to such issue.
(E) Nothing contained in this Section 6(b)(iv) shall require any Indemnitee to contest, or permit Borrower to contest in the name of such Indemnitee, a claim that such Indemnitee would otherwise be required to contest pursuant to this Section 6(b)(iv) if such Indemnitee shall waive payment by Borrower of any amount that might otherwise be payable by Borrower under this Section 6(b) in connection with such claim (other than the costs of contest previously incurred), nor shall any Indemnitee be required to pursue any appeal to the United States Supreme Court.is
Appears in 1 contract
Contests. (A) If a written any claim shall be made against and received by any Tax Indemnitee or if any proceeding shall be commenced against any Tax Indemnitee (including a written notice of such proceeding) for any Tax for Imposition as to which Borrower is obligated to indemnify the Lessee may have an indemnity obligation pursuant to this Section 6(b)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, such Tax Indemnitee shall promptly (and in any event, within thirty (30) days) notify Borrower the Lessee in writing (provided that failure to so notify the Lessee within thirty (30) days shall not alter such Tax Indemnitee’s rights under this Section 13.5 except to the extent such failure precludes or materially adversely affects the ability 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 Lessee (such consent not to be unreasonably withheld or unreasonably delayed) for thirty (30) days after the receipt of such claim within 30 days after its receipt, and shall provide Borrower such information regarding such claim as Borrower may reasonably requestnotice by the Lessee; provided, however, that in the failure case of any such claim or proceeding, if such Tax Indemnitee shall be required by law or regulation to provide take action prior to the end of such thirty (30) day period, such Tax Indemnitee shall in such notice to the Lessee, so inform the Lessee and such Tax Indemnitee shall not release Borrower from take any of its obligations to indemnify under Section 6 hereof unless, and only to the extent that, such failure effectively precludes Borrower’s contest rights. To the extent permitted under applicable law, such Indemnitee will not make any payments action with respect to such claim claim, proceeding or Imposition without the consent of the Lessee (such consent not to be unreasonably withheld or unreasonably delayed) for at least 30 10 days after giving notice of such claim to Borrower.
(B) If requested by Borrower in writing within 30 days after its 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 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 may be such Tax Indemnitee has notified the Lessee is required by applicable lawlaw or regulation for such Tax Indemnitee to commence such contest), to request in writing that such Tax Indemnitee shallcontest the imposition of such Tax, at the expense Lessee’s expense. If (x) such contest can be pursued in the name of Borrower the Lessee and subject to subparagraph (C) below, contest the validity, applicability or amount independently from any other proceeding involving a Tax liability of such Taxes byTax Indemnitee for which the Lessee has not agreed to indemnify such Tax Indemnitee, (y) such contest must be pursued in the case name of an such Tax Indemnitee-Controlled Contest, in but can be pursued independently from any other proceeding involving a Tax liability of such Indemnitee’s sole discretion orTax Indemnitee for which the Lessee has not agreed to indemnify such Tax Indemnitee or (z) such Tax Indemnitee so requests, then the Lessee shall be permitted to control the contest of such claim, provided that in the case of a Borrower-Controlled Contestcontest described in clause (y), in Borrower’s sole discretion, (1) resisting payment thereof if practicable, (2) not paying such Tax except under protest, (3) if protest is necessary Indemnitee determines reasonably and proper, and if payment in good faith that such contest by the Lessee could have a material adverse impact on the business or operations of such Tax is madeIndemnitee and provides a written explanation to the Lessee of such determination, using reasonable efforts such Tax Indemnitee may elect to obtain a refund thereof, in appropriate administrative and judicial proceedingscontrol or reassert control of the contest, and (4) in provided that by taking control of the case contest, the Lessee acknowledges that it is responsible for the Imposition ultimately determined to be due by reason of an Indemnitee-Controlled Contest, considering in good faith any other reasonable action as Borrower may reasonably request. Each Indemnitee shall consult in good faith with Borrower and Borrower’s counselsuch claim, and Borrower shall consult provided, further, that in good faith with such Indemnitee and its counsel in determining the case application of a Borrower-Controlled Contest. concerning the forum in which the contest is most likely to be favorably resolved and whether such contest shall be by clauses (x) resisting payment of such Tax, and (y) paying 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 Tandem Health Care of Ohio, Inc. Participation Agreement contest of the former. In all other claims requested to be contested by the Lessee, such Tax under protest or (z) paying Indemnitee shall control the contest of such Tax and seeking a refund or other repayment thereof.
(C) claim, acting through counsel reasonably acceptable to the Lessee. In no event shall an the Lessee be permitted to contest (or such Tax Indemnitee be requiredrequired 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 material civil liability on such Tax Indemnitee or will involve a material risk of the sale, forfeiture or loss of, or Borrower permitted, to contest the imposition creation of any Tax Lien (other than a Permitted Property Lien) on the Properties or any other Lessee Collateral or any part thereof unless, with respect to civil liability only, the Lessee shall have agreed in writing to be responsible for which Borrower such risk or shall have posted a bond or other security against such risk satisfactory to such Indemnitee, (B) if an Event of Default under the Lease has occurred and is obligated pursuant to this Section 6(bcontinuing, (C) unless (1) Borrower the Lessee shall have agreed to pay and shall promptly be paying pay, to such Tax Indemnitee on request demand all reasonable costs out-of-pocket costs, losses and expenses that such Tax Indemnitee incurs may incur in connection with contesting such claim or arising out of or relating to such contest (Imposition including legal feesall reasonable legal, accounting fees, and investigatory fees and disbursements, including those on appeal, if any); or (2) such contest is not reasonably likely to result in a material danger of the sale, seizure, forfeiture or loss of the Aircraft, or the creation of any Lien thereon other than Liens for Taxes (i) either not yet due or being contested in good faith by appropriate proceedings and (ii) for which such reserves, if any, as are required to be provided under generally accepted accounting principles have been provided by Borrower, and there is no risk of criminal penalties; (3D) if such contest shall be conducted in a manner requiring involve the payment of the claimTax prior to the contest, Borrower unless the Lessee shall have advanced sufficient funds, on provide to such Tax Indemnitee an interest-free basis, advance in an amount equal to make the payment required, and shall have agreed to indemnify Imposition that the Indemnitee against any is required to pay (with no additional net after-Tax cost tax costs to such Tax Indemnitee). In addition for Tax Indemnitee controlled contests and claims contested in the name of such advance; Tax Indemnitee in a public forum, no contest shall be required: (4A) 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 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 Indemnitee in writing, such Indemnitee Lessee shall have received provided to such Tax Indemnitee an opinion of independent Tax counsel selected by Borrower and reasonably acceptable to such Indemnitee and furnished at Borrower’s sole expense to the effect Lessee (which may be in-house counsel) that a Realistic Possibility of Success reasonable basis exists for contesting to contest such claim (or, in the case of an claim. In no event shall a Tax Indemnitee be required to appeal of an adverse judicial determination, a written opinion from such independent Tax counsel determination to the effect that it is more likely than not that such adverse judicial determination will be reversed or substantially modified); (5) Borrower United States Supreme Court. The party conducting the contest shall have delivered to such Indemnitee a written acknowledgment of Borrower’s obligation to indemnify such Indemnitee consult in good faith with the other party and its counsel with respect to the extent that contest of such claim for Taxes (or claim for refund) but the contest is not successful; decisions regarding what actions are to be taken shall be made by the controlling party in its sole judgment, provided, however, that Borrower 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 be bound 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 its acknowledgment of liability if 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 expense, cooperate with and 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 Tandem Health Care of Ohio, Inc. Participation Agreement contrary, no Tax Indemnitee shall enter into any settlement or other compromise or fail to appeal an adverse ruling with respect to any claim which is resolved on a clear and unambiguous basis showing no such liability entitled to be indemnified under this Section 6(b13.5 (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 waives its right to be indemnified under this Section 13.5 with respect to such Tax; (6) if a Specified Default or Event of Default shall have occurred and be continuing, Borrower shall have provided security for its obligation hereunder satisfactory claim pursuant to the next paragraph. Notwithstanding anything contained herein to the contrary, a Tax Indemnitee by placing in escrow sufficient funds to cover any such contested Tax and the reasonably expected expenses of such contest on an After-Tax Basis, or otherwise providing satisfactory provisions for payment of such amounts determined by the Indemnitee in its sole discretion; (7) the aggregate amount of all indemnity payments that Borrower may will not be required to make 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 if such Tax Indemnitee shall waive its right to indemnification under this Section 13.5 with respect to such claim (or similar or related claims) is at least $60,000; and (8) the any claim is not for a Tax the imposition of which has been previously contested by, or at the request of, Borrower hereunder, and with respect to such previous contest (including all allowable appeals) was decided adversely to Borrower, unless Borrower has delivered an opinion of independent Tax counsel selected by Borrower and reasonably acceptable to the Indemnitee to the effect that, on the basis of (i) a change in applicable law, or (ii) a difference in the underlying facts, there is currently a Realistic Possibility of Success for contesting such claim.
(D) If any Indemnitee shall obtain a refund of all year or any part of any Tax paid by Borrower, such Indemnitee shall pay Borrower, but not before Borrower shall have made all payments theretofore due to such Indemnitee pursuant to this Section 6(b) and any other payments theretofore due such Indemnitee under any of the Operative Documents, an amount equal to the amount of such refund (net of any Taxes imposed thereon), including interest received and attributable thereto (net of any Taxes imposed thereon) plus, if Borrower has paid an amount pursuant to the first sentence of Section 6(b)(iii)(A), any net Tax benefit (or minus any net Tax detriment) realized by such Indemnitee as a result of any refund received, and payment made, by such Indemnitee pursuant to this sentence; provided that the Indemnitee shall not be obligated to pay an amount under the preceding sentence to the extent that such amount would exceed the amount of such Taxes paid, reimbursed or advanced by Borrower to such Indemnitee (other than the cost of the contest thereof); provided, further, that any amount not paid to Borrower pursuant to the foregoing limitation shall be carried forward to reduce pro tanto any future payments that Borrower may be required to make to such Indemnitee pursuant to this Section 6(b). If any Indemnitee shall have paid Borrower any refund of all or part of any Tax paid by Borrower and it is subsequently determined that such Indemnitee was not entitled to the refund, such determination shall be treated as the imposition of a Tax for which Borrower is obligated to indemnify such Indemnitee pursuant to the provisions of this Section 6(b) without regard to the exclusions set forth in Section 6(b)(ii) (other than subparagraphs (4), (11) and (12) thereof). Provided no Specified Default or Event of Default has occurred and is continuing, an Indemnitee shall not settle any such claim or contest pursuant to this provision without the written consent of Borrower, which consent shall not be unreasonably withheld, conditioned or delayed; provided, that an Indemnitee may settle at any time without the consent of Borrower if the Indemnitee waives (by written notice to Borrower) the payment by Borrower of an indemnity in respect of such issue and any related issue taxable year the contest of which is effectively foreclosed by the settlement materially adversely affected as a result of such issue, including any payment arising from such issue in subsequent years or which by reason of waiver) and returns to the fact that such issue is of a continuing nature, and promptly pays Lessee all amounts previously advanced to Borrower any Tax previously paid or any interest-free loan advanced by Borrower (other than expenses of such contests) the Indemnitee with respect to such issue.
(E) Nothing contained in this Section 6(b)(iv) shall require any Indemnitee to contest, or permit Borrower to the contest in the name of such Indemnitee, a claim that such Indemnitee would otherwise be required to contest pursuant to this Section 6(b)(iv) if such Indemnitee shall waive payment by Borrower of any amount that might otherwise be payable by Borrower under this Section 6(b) in connection with such claim (other than the costs of contest previously incurred), nor shall any Indemnitee be required to pursue any appeal to the United States Supreme Courtclaim.
Appears in 1 contract
Contests. Buyer agrees to give written notice to Sellers upon receipt of any written notice relating to the assertion of any claim, or the commencement of any Proceeding by a Governmental Authority in respect of Taxes for which the Sellers may be liable pursuant to §9(a) (A) If each, a written claim “Tax Claim”); provided, that any failure or delay in giving such notice shall be made against and received by any Indemnitee for not affect Buyer’s right to indemnification hereunder, unless the failure or delay in giving such notice results in a bar or forfeiture of the right or privilege to contest, protest or appeal the Tax Claim. In such event, Buyer will have no right to indemnification of the Tax Claim. With respect to any Tax for which Borrower is obligated Claim relating to indemnify pursuant to this Section 6(b)a Pre-Closing Tax Period, the Sellers may assume and control all proceedings taken in connection with such Indemnitee shall notify Borrower in writing of such claim within 30 days after its receipt, and shall provide Borrower such information regarding such claim as Borrower may reasonably requestTax Claim; provided, however, the Sellers shall consult with Buyer in the negotiation and settlement of any such Tax Claim and Sellers shall not, without the written consent of Buyer, settle or compromise any Tax Claim in a manner that would reasonably be expected to have a Material Adverse Effect on any Tax period of Company ending after the failure to provide such notice shall not release Borrower from any of its obligations to indemnify under Section 6 hereof unless, and only to the extent that, such failure effectively precludes Borrower’s contest rightsClosing Date. To the extent permitted under applicable law, such Indemnitee will not make any payments All other Tax Claims with respect to such claim for at least 30 days after giving notice of such claim to Borrower.
(B) If requested by Borrower in writing within 30 days after its receipt of such notice or such shorter period as may be required by applicable law, such Indemnitee shall, at the expense of Borrower and subject to subparagraph (C) below, contest the validity, applicability or amount of such Taxes by, in the case of an Indemnitee-Controlled Contest, in such Indemnitee’s sole discretion or, in the case of a Borrower-Controlled Contest, in Borrower’s sole discretion, (1) resisting payment thereof if practicable, (2) not paying such Tax except under protest, (3) if protest is necessary and proper, and if payment of such Tax is made, using reasonable efforts to obtain a refund thereof, in appropriate administrative and judicial proceedings, and (4) in the case of an Indemnitee-Controlled Contest, considering in good faith any other reasonable action as Borrower may reasonably request. Each Indemnitee shall consult in good faith with Borrower and Borrower’s counsel, and Borrower shall consult in good faith with such Indemnitee and its counsel in the case of a Borrower-Controlled Contest. concerning the forum in which the contest is most likely to be favorably resolved and whether such contest Company shall be controlled by (x) resisting payment of such Tax, (y) paying such Tax under protest or (z) paying such Tax and seeking a refund or other repayment thereof.
(C) In no event shall an Indemnitee be required, or Borrower permitted, to contest the imposition of any Tax for which Borrower is obligated pursuant to this Section 6(b) unless (1) Borrower shall have agreed to pay and shall promptly be paying on request all reasonable costs and expenses that such Indemnitee incurs in contesting such claim or arising out of or relating to such contest (including legal fees, accounting fees, and disbursements, including those on appeal, if any); (2) such contest is not reasonably likely to result in a material danger of the sale, seizure, forfeiture or loss of the Aircraft, or the creation of any Lien thereon other than Liens for Taxes (i) either not yet due or being contested in good faith by appropriate proceedings and (ii) for which such reserves, if any, as are required to be provided under generally accepted accounting principles have been provided by Borrower, and there is no risk of criminal penalties; (3) if such contest shall be conducted in a manner requiring the payment of the claim, Borrower shall have advanced sufficient funds, on an interest-free basis, to make the payment required, and shall have agreed to indemnify the Indemnitee against any additional net after-Tax cost to such Indemnitee of such advance; (4) if requested by the Indemnitee in writing, such Indemnitee shall have received an opinion of independent Tax counsel selected by Borrower and reasonably acceptable to such Indemnitee and furnished at Borrower’s sole expense to the effect that a Realistic Possibility of Success exists for contesting such claim (or, in the case of an appeal of an adverse judicial determination, a written opinion from such independent Tax counsel to the effect that it is more likely than not that such adverse judicial determination will be reversed or substantially modified); (5) Borrower shall have delivered to such Indemnitee a written acknowledgment of Borrower’s obligation to indemnify such Indemnitee to the extent that the contest is not successfulBuyer; provided, however, that Borrower will not be bound by its acknowledgment Buyer shall consult with the Sellers in the negotiation and settlement of liability if the contest is resolved on a clear and unambiguous basis showing no such liability under this Section 6(b) with respect to such Tax; (6) if a Specified Default or Event of Default shall have occurred and be continuing, Borrower shall have provided security for its obligation hereunder satisfactory to the Indemnitee by placing in escrow sufficient funds to cover any such contested post-Closing Tax and the reasonably expected expenses of such contest on an After-Tax Basis, or otherwise providing satisfactory provisions for payment of such amounts determined by the Indemnitee in its sole discretion; (7) the aggregate amount of all indemnity payments that Borrower may be required to make to such Indemnitee with respect to such claim (or similar or related claims) is at least $60,000; and (8) the claim is not for a Tax the imposition of which has been previously contested by, or at the request of, Borrower hereunder, and such previous contest period (including all allowable appealsany Straddle Period) was decided adversely to BorrowerTax Claim and Buyer shall not, unless Borrower has delivered an opinion of independent Tax counsel selected by Borrower and reasonably acceptable to the Indemnitee to the effect that, on the basis of (i) a change in applicable law, or (ii) a difference in the underlying facts, there is currently a Realistic Possibility of Success for contesting such claim.
(D) If any Indemnitee shall obtain a refund of all or any part of any Tax paid by Borrower, such Indemnitee shall pay Borrower, but not before Borrower shall have made all payments theretofore due to such Indemnitee pursuant to this Section 6(b) and any other payments theretofore due such Indemnitee under any of the Operative Documents, an amount equal to the amount of such refund (net of any Taxes imposed thereon), including interest received and attributable thereto (net of any Taxes imposed thereon) plus, if Borrower has paid an amount pursuant to the first sentence of Section 6(b)(iii)(A), any net Tax benefit (or minus any net Tax detriment) realized by such Indemnitee as a result of any refund received, and payment made, by such Indemnitee pursuant to this sentence; provided that the Indemnitee shall not be obligated to pay an amount under the preceding sentence to the extent that such amount would exceed the amount of such Taxes paid, reimbursed or advanced by Borrower to such Indemnitee (other than the cost of the contest thereof); provided, further, that any amount not paid to Borrower pursuant to the foregoing limitation shall be carried forward to reduce pro tanto any future payments that Borrower may be required to make to such Indemnitee pursuant to this Section 6(b). If any Indemnitee shall have paid Borrower any refund of all or part of any Tax paid by Borrower and it is subsequently determined that such Indemnitee was not entitled to the refund, such determination shall be treated as the imposition of a Tax for which Borrower is obligated to indemnify such Indemnitee pursuant to the provisions of this Section 6(b) without regard to the exclusions set forth in Section 6(b)(ii) (other than subparagraphs (4), (11) and (12) thereof). Provided no Specified Default or Event of Default has occurred and is continuing, an Indemnitee shall not settle any such claim or contest pursuant to this provision without the written consent of Borrowerthe Sellers, which consent shall not be unreasonably withheld, conditioned settle or delayed; provided, compromise any such Tax Claim in a manner that an Indemnitee may settle at could have any time without material impact on the consent of Borrower if the Indemnitee waives (by written notice to Borrower) the payment by Borrower of an indemnity in respect of such issue and any related issue the contest of which is effectively foreclosed by the settlement of such issue, including any payment arising from such issue in subsequent years or which by reason of the fact that such issue is of a continuing nature, and promptly pays to Borrower any Tax previously paid or any interest-free loan advanced by Borrower (other than expenses of such contests) with respect to such issueSellers’ indemnification obligations hereunder.
(E) Nothing contained in this Section 6(b)(iv) shall require any Indemnitee to contest, or permit Borrower to contest in the name of such Indemnitee, a claim that such Indemnitee would otherwise be required to contest pursuant to this Section 6(b)(iv) if such Indemnitee shall waive payment by Borrower of any amount that might otherwise be payable by Borrower under this Section 6(b) in connection with such claim (other than the costs of contest previously incurred), nor shall any Indemnitee be required to pursue any appeal to the United States Supreme Court.
Appears in 1 contract
Contests. (A) If a written any claim shall be made against and received by any Tax Indemnitee or if any proceeding shall be commenced against any Tax Indemnitee (including a written notice of such proceeding) for any Tax for Imposition as to which Borrower is obligated to indemnify the Lessee or the Guarantor may have an indemnity obligation pursuant to this Section 6(b)13.4, or if any Tax Indemnitee shall determine that any Imposition to which the Lessee or the Guarantor may have an indemnity obligation pursuant to this Section 13.4 may be payable, such Tax Indemnitee shall promptly (and in any event, within fifteen (15) Business Days) notify Borrower the Guarantor in writing (provided that failure to so notify the Guarantor within fifteen (15) Business Days shall not alter such Tax Indemnitee's rights under this Section 13.4 except to the extent such failure precludes or materially adversely affects the ability to conduct a contest of any indemnified Taxes) and shall not take any action with respect to such claim, proceeding or Imposition without the written consent of the Guarantor (such consent not to be unreasonably withheld or unreasonably delayed) for thirty (30) days after the receipt of such claim within 30 days after its receipt, and shall provide Borrower such information regarding such claim as Borrower may reasonably requestnotice by the Guarantor; provided, however, that in the failure case of any such claim or proceeding, if such Tax Indemnitee shall be required by law or regulation to provide take action prior to the end of such thirty (30) day period, such Tax Indemnitee shall in such notice to the Guarantor, so inform the Guarantor, and such Tax Indemnitee shall not release Borrower from take any of its obligations to indemnify under Section 6 hereof unless, and only to the extent that, such failure effectively precludes Borrower’s contest rights. To the extent permitted under applicable law, such Indemnitee will not make any payments action with respect to such claim claim, proceeding or Imposition without the consent of the Guarantor (such consent not to be unreasonably withheld or unreasonably delayed) for at least 30 ten (10) days after giving notice of such claim to Borrower.
(B) If requested by Borrower in writing within 30 days after its the receipt of such notice by the Guarantor unless such Tax Indemnitee shall be required by law or regulation to take action prior to the end of such ten (10) day period. The Guarantor shall be entitled for a period of thirty (30) days from receipt of such notice from such Tax Indemnitee (or such shorter period as such Tax Indemnitee has notified the Guarantor is required by law or regulation for such Tax Indemnitee to commence such contest), to request in writing that such Tax Indemnitee contest the imposition of such Tax, at the Guarantor's expense. If (x) such contest can be pursued in the name of the Guarantor or the Lessee and independently from any other proceeding involving a Tax liability of such Tax Indemnitee for which the Lessee and the Guarantor have not agreed to indemnify such Tax Indemnitee, (y) such contest must be pursued in the name of such Tax Indemnitee, but can be pursued independently from any other proceeding involving a Tax liability of such Tax Indemnitee for which the Lessee and the Guarantor have not agreed to indemnify such Tax Indemnitee or (z) such Tax Indemnitee so requests, then the Guarantor or such Lessee shall be permitted to control the contest of such claim, provided that in the case of a contest described in clause (y) if such Tax Indemnitee determines reasonably and in good faith that such contest by the Guarantor or the Lessee could have a material adverse impact on the business or operations of such Tax Indemnitee and provides a written explanation to the Guarantor of such determination, such Tax Indemnitee may elect to control or reassert control of the contest, and provided that the taking control by the Guarantor or the Lessee of any contest shall not alter the applicable Tax Indemnitee's rights to indemnification hereunder, and provided, further, that in determining the application of clauses (x) and (y) of the preceding sentence, each Tax Indemnitee shall take any and all reasonable steps to segregate claims for any Taxes for which the Lessee and the Guarantor indemnify hereunder from Taxes for which the Lessee and the Guarantor are not obligated to indemnify hereunder, so that the Guarantor can control the contest of the former. In all other claims requested to be contested by the Guarantor, such Tax Indemnitee shall control the contest of such claim, acting through counsel selected by such Tax Indemnitee and reasonably acceptable to the Guarantor. In no event shall the Guarantor be permitted to contest (or such Tax Indemnitee be required to contest) any claim, (A) if such Tax Indemnitee provides the Guarantor with a legal opinion of counsel reasonably acceptable to the Guarantor that such action, suit or proceeding involves a risk of imposition of criminal liability or will involve a material risk of the sale, forfeiture or loss of, or the creation of any Lien (other than a Permitted Lien) on the Property or any part thereof unless the Guarantor shall have posted and maintained a bond or other security reasonably satisfactory to the relevant Tax Indemnitee in respect to such risk, (B) if a Lease Event of Default has occurred and is continuing unless the Guarantor shall have posted and maintained a bond or other security reasonably satisfactory to the relevant Tax Indemnitee in respect of the Taxes subject to such claim and any and all expenses for which the Guarantor or the Lessee is responsible hereunder reasonably foreseeable in connection with the contest of such claim, (C) unless the Guarantor shall have agreed to pay and shall pay, to such Tax Indemnitee on written demand all reasonable, documented out-of-pocket costs, losses and expenses that such Tax Indemnitee may incur in connection with contesting such Imposition including all reasonable legal, accounting and investigatory fees and disbursements and (if applicable) reasonable, allocable internal overhead costs determined in accordance with normal bank operating procedures, or (D) if such contest shall involve the payment of the Tax prior to the contest, unless the Guarantor shall provide to such Tax Indemnitee an interest-free advance in an amount equal to the Imposition that such Tax Indemnitee is required to pay (with no additional net after-tax costs to such Tax Indemnitee). In addition, for contests controlled by such Tax Indemnitee and claims contested in the name of such Tax Indemnitee in a public forum, no contest shall be required: (A) unless the amount of the potential indemnity (taking into account all similar or logically related claims that have been or could be raised in any audit involving any or all such Tax Indemnitees with respect to any period for which the Guarantor or the Lessee may be liable to pay an indemnity under this Section 13.4(b)) exceeds (1) with respect to the Lessor, $25,000 and (2) with respect to any Tax Indemnitee other than the Lessor, $75,000 and (B) unless, if requested by such Tax Indemnitee, the Guarantor shall have provided to such Tax Indemnitee an opinion of counsel selected by the Guarantor (which may be in-house counsel) (except, in the case of income taxes indemnified hereunder, in which case such opinion shall be an opinion of independent tax counsel selected by the Guarantor and reasonably acceptable to such Tax Indemnitee) that a reasonable basis exists to contest such claim. In no event shall a Tax Indemnitee be required to appeal an adverse judicial determination to the United States Supreme Court. The party conducting the contest shall consult in good faith with the other party and its counsel with respect to the contest of such claim for Taxes (or claim for refund) but the decisions regarding what actions to be taken shall be made by applicable lawthe controlling party in its sole judgment; provided, however, that if such Tax Indemnitee is the controlling party and the Guarantor recommends the acceptance of a settlement offer made by the relevant Governmental Authority and such Tax Indemnitee rejects such settlement offer, then the amount for which a Lessee and the Guarantor will be required to indemnify such Tax Indemnitee with respect to the Taxes subject to such offer shall not exceed the amount which it would have owed if such settlement offer had been accepted provided that any Tax Indemnitee shall be entitled to reject any indemnity payment it would otherwise be entitled to hereunder if such Tax Indemnitee reasonably determines that accepting such offer would have an unindemnified impact on such Tax Indemnitee and provided further that no Tax Indemnitee may reject any such indemnity payment if the Guarantor agrees to pay to such Tax Indemnitee the amount of such unindemnified impact, as reasonably determined by such Tax Indemnitee. In addition, the controlling party shall keep the noncontrolling party reasonably informed as to the progress of the contest, and shall provide the noncontrolling party with a copy of (or appropriate excerpts from) any reports or claims issued by the relevant auditing agents or taxing authority to the controlling party thereof, in connection with such claim or the contest thereof, provided, however, that such obligation shall not obligate any Tax Indemnitee to disclose its tax returns or information or documentation unrelated to such claim or contest. Each Tax Indemnitee shall, at the expense of Borrower the Lessee and subject to subparagraph (C) belowthe Guarantor, contest supply the validity, applicability Lessee or amount of such Taxes by, in the case of an Indemnitee-Controlled Contest, in such Indemnitee’s sole discretion or, in the case of a Borrower-Controlled Contest, in Borrower’s sole discretion, (1) resisting payment thereof if practicable, (2) not paying such Tax except under protest, (3) if protest is necessary and proper, and if payment of such Tax is made, using reasonable efforts to obtain a refund thereof, in appropriate administrative and judicial proceedings, and (4) in the case of an Indemnitee-Controlled Contest, considering in good faith any other reasonable action as Borrower may reasonably request. Each Indemnitee shall consult in good faith with Borrower and Borrower’s counsel, and Borrower shall consult in good faith Guarantor with such Indemnitee information and its counsel in the case of a Borrower-Controlled Contest. concerning the forum in which the contest is most likely to be favorably resolved and whether such contest shall be by (x) resisting payment of such Tax, (y) paying such Tax under protest or (z) paying such Tax and seeking a refund or other repayment thereof.
(C) In no event shall an Indemnitee be required, or Borrower permitted, to contest the imposition of any Tax for which Borrower is obligated pursuant to this Section 6(b) unless (1) Borrower shall have agreed to pay and shall promptly be paying on request all reasonable costs and expenses that such Indemnitee incurs in contesting such claim or arising out of or relating to such contest (including legal fees, accounting fees, and disbursements, including those on appeal, if any); (2) such contest is not documents reasonably likely to result in a material danger of the sale, seizure, forfeiture or loss of the Aircraft, or the creation of any Lien thereon other than Liens for Taxes (i) either not yet due or being contested in good faith by appropriate proceedings and (ii) for which such reserves, if any, as are required to be provided under generally accepted accounting principles have been provided by Borrower, and there is no risk of criminal penalties; (3) if such contest shall be conducted in a manner requiring the payment of the claim, Borrower shall have advanced sufficient funds, on an interest-free basis, to make the payment required, and shall have agreed to indemnify the Indemnitee against any additional net after-Tax cost to such Indemnitee of such advance; (4) if requested by the Indemnitee Lessee or the Guarantor as are necessary or advisable for such Person to participate in writingany action, such Indemnitee shall have received an opinion of independent Tax counsel selected by Borrower and reasonably acceptable to such Indemnitee and furnished at Borrower’s sole expense to the effect that a Realistic Possibility of Success exists for contesting such claim (or, in the case of an appeal of an adverse judicial determination, a written opinion from such independent Tax counsel to the effect that it is more likely than not that such adverse judicial determination will be reversed suit or substantially modified); (5) Borrower shall have delivered to such Indemnitee a written acknowledgment of Borrower’s obligation to indemnify such Indemnitee proceeding to the extent that the contest is not successfulpermitted by this Section 13.4(b); provided, however, that Borrower will such Tax Indemnitee shall not be bound by required to provide to such Lessee or the Guarantor copies of its acknowledgment of liability if tax returns or any other information, documentation, or materials that it deems to be confidential or proprietary. Notwithstanding anything in this Section 13.4(b) to the contest 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 resolved on a clear and unambiguous basis showing no such liability entitled to be indemnified under this Section 6(b13.4 (and with respect to which contest is required under this Section 13.4(b)) without the prior written consent of the Guarantor, unless such Tax Indemnitee waives its right to be indemnified under this Section 13.4 with respect to such Tax; (6) if a Specified Default or Event of Default shall have occurred and be continuing, Borrower shall have provided security for its obligation hereunder satisfactory claim. Notwithstanding anything contained herein to the contrary, a Tax Indemnitee by placing in escrow sufficient funds to cover any such contested Tax and the reasonably expected expenses of such contest on an After-Tax Basis, or otherwise providing satisfactory provisions for payment of such amounts determined by the Indemnitee in its sole discretion; (7) the aggregate amount of all indemnity payments that Borrower may shall not be required to make contest (and neither the Lessee nor the Guarantor shall be permitted to contest in any judicial forum if such contest could, in a Tax Indemnitee's reasonable judgment, be materially adverse to it) a claim with respect to the imposition of any Tax if such Tax Indemnitee shall have waived its right to indemnification under this Section 13.4 with respect to such claim (or similar or related claims) is at least $60,000; and (8) the any claim is not for a Tax the imposition of which has been previously contested by, or at the request of, Borrower hereunder, and with respect to such previous contest (including all allowable appeals) was decided adversely to Borrower, unless Borrower has delivered an opinion of independent Tax counsel selected by Borrower and reasonably acceptable to the Indemnitee to the effect that, on the basis of (i) a change in applicable law, or (ii) a difference in the underlying facts, there is currently a Realistic Possibility of Success for contesting such claim.
(D) If any Indemnitee shall obtain a refund of all year or any part of any Tax paid by Borrower, such Indemnitee shall pay Borrower, but not before Borrower shall have made all payments theretofore due to such Indemnitee pursuant to this Section 6(b) and any other payments theretofore due such Indemnitee under any of the Operative Documents, an amount equal to the amount of such refund (net of any Taxes imposed thereon), including interest received and attributable thereto (net of any Taxes imposed thereon) plus, if Borrower has paid an amount pursuant to the first sentence of Section 6(b)(iii)(A), any net Tax benefit (or minus any net Tax detriment) realized by such Indemnitee as a result of any refund received, and payment made, by such Indemnitee pursuant to this sentence; provided that the Indemnitee shall not be obligated to pay an amount under the preceding sentence to the extent that such amount would exceed the amount of such Taxes paid, reimbursed or advanced by Borrower to such Indemnitee (other than the cost of the contest thereof); provided, further, that any amount not paid to Borrower pursuant to the foregoing limitation shall be carried forward to reduce pro tanto any future payments that Borrower may be required to make to such Indemnitee pursuant to this Section 6(b). If any Indemnitee shall have paid Borrower any refund of all or part of any Tax paid by Borrower and it is subsequently determined that such Indemnitee was not entitled to the refund, such determination shall be treated as the imposition of a Tax for which Borrower is obligated to indemnify such Indemnitee pursuant to the provisions of this Section 6(b) without regard to the exclusions set forth in Section 6(b)(ii) (other than subparagraphs (4), (11) and (12) thereof). Provided no Specified Default or Event of Default has occurred and is continuing, an Indemnitee shall not settle any such claim or contest pursuant to this provision without the written consent of Borrower, which consent shall not be unreasonably withheld, conditioned or delayed; provided, that an Indemnitee may settle at any time without the consent of Borrower if the Indemnitee waives (by written notice to Borrower) the payment by Borrower of an indemnity in respect of such issue and any related issue taxable year the contest of which is effectively foreclosed by the settlement precluded or materially adversely affected as a result of such issue, including any payment arising from such issue in subsequent years or which by reason of the fact that such issue is of a continuing nature, and promptly pays to Borrower any Tax previously paid or any interest-free loan advanced by Borrower (other than expenses of such contests) with respect to such issuewaiver).
(E) Nothing contained in this Section 6(b)(iv) shall require any Indemnitee to contest, or permit Borrower to contest in the name of such Indemnitee, a claim that such Indemnitee would otherwise be required to contest pursuant to this Section 6(b)(iv) if such Indemnitee shall waive payment by Borrower of any amount that might otherwise be payable by Borrower under this Section 6(b) in connection with such claim (other than the costs of contest previously incurred), nor shall any Indemnitee be required to pursue any appeal to the United States Supreme Court.
Appears in 1 contract
Contests. (Ai) If a written claim After the Closing, Buyer shall be made against and received by any Indemnitee for any Tax for which Borrower is obligated to indemnify pursuant to this Section 6(b), such Indemnitee shall promptly notify Borrower Seller in writing of such (x) any correspondence from any Tax authority relating to any Tax Return filed by Seller pursuant to Section 5.15(b)(i) or by Buyer pursuant to Section 5.15(b)(ii) and (y) any written notice of a proposed assessment or claim within 30 days after its receiptin an audit or administrative or judicial proceeding involving CMI, CEL or any of their Subsidiaries (clauses (x) and shall provide Borrower such information regarding such claim as Borrower may reasonably request(y) together, a "TAX CONTEST") which, if determined adversely to the taxpayer, would be grounds for indemnification by Seller (including any payment under Section 5.15(c)); providedPROVIDED, howeverHOWEVER, that the a failure to provide give such notice shall will not release Borrower from affect Buyer's right to indemnification (including any of its obligations to indemnify payment under Section 6 hereof unless, and only 5.15(d)) hereunder except to the extent extent, if any, that, but for such failure effectively precludes Borrower’s contest rights. To the extent permitted under applicable lawfailure, such Indemnitee will not make any payments with respect to such claim for at least 30 days after giving notice of such claim to BorrowerGroup Company and Seller could have avoided the Tax liability in question.
(Bii) If requested by Borrower in writing within 30 days after its receipt of such notice or such shorter period as may be required by applicable law, such Indemnitee shall, at the expense of Borrower and subject to subparagraph (C) below, contest the validity, applicability or amount of such Taxes by, in the case of an Indemnitee-Controlled Contest, in such Indemnitee’s sole discretion or, in In the case of a BorrowerTax Contest that relates to a Pre-Controlled ContestClosing Period, in Borrower’s sole discretion, (1) resisting payment thereof if practicable, (2) not paying such Tax except under protest, (3) if protest is necessary and proper, and if payment Seller shall have the right at its expense to control the conduct of such Tax is made, using reasonable efforts to obtain a refund thereof, in appropriate administrative and judicial proceedings, and (4) in the case of an Indemnitee-Controlled Contest, considering in good faith any other reasonable action as Borrower may reasonably request. Each Indemnitee shall consult in good faith with Borrower and Borrower’s counsel, and Borrower shall consult in good faith with such Indemnitee and its counsel in the case of a Borrower-Controlled Contest. concerning the forum in which the contest is most likely to be favorably resolved and whether such contest shall be by ; PROVIDED that (x) resisting payment Seller shall indemnify any Group Company in respect of all third-party costs and expenses incurred by such TaxGroup Company at Seller's request in connection with such Tax Contest, (y) paying such Seller shall keep Buyer informed of all material progress (and shall send Buyer copies of all material correspondence relating thereto) of the Tax under protest or Contest and (z) paying Seller shall not enter into any compromise or agree to settle any claim pursuant to such Tax and seeking a refund or other repayment thereof.
(C) In no event shall an Indemnitee be required, or Borrower permitted, to contest the imposition of any Tax for which Borrower is obligated pursuant to this Section 6(b) unless (1) Borrower shall have agreed to pay and shall promptly be paying on request all reasonable costs and expenses that such Indemnitee incurs in contesting such claim or arising out of or relating to such contest (including legal fees, accounting fees, and disbursements, including those on appeal, if any); (2) such contest is not reasonably likely to result in a material danger of the sale, seizure, forfeiture or loss of the Aircraft, or the creation of any Lien thereon other than Liens for Taxes (i) either not yet due or being contested in good faith by appropriate proceedings and (ii) for which such reserves, if any, as are required to be provided under generally accepted accounting principles have been provided by Borrower, and there is no risk of criminal penalties; (3) if such contest shall be conducted in a manner requiring the payment of the claim, Borrower shall have advanced sufficient funds, on an interest-free basis, to make the payment required, and shall have agreed to indemnify the Indemnitee against any additional net after-Tax cost to such Indemnitee of such advance; (4) if requested by the Indemnitee in writing, such Indemnitee shall have received an opinion of independent Tax counsel selected by Borrower and reasonably acceptable to such Indemnitee and furnished at Borrower’s sole expense to the effect that a Realistic Possibility of Success exists for contesting such claim (or, in the case of an appeal of an adverse judicial determination, a written opinion from such independent Tax counsel to the effect that it is more likely than not that such adverse judicial determination will be reversed or substantially modified); (5) Borrower shall have delivered to such Indemnitee a written acknowledgment of Borrower’s obligation to indemnify such Indemnitee to the extent that the contest is not successful; provided, however, that Borrower will not be bound by its acknowledgment of liability if the contest is resolved on a clear and unambiguous basis showing no such liability under this Section 6(b) Contest with respect to such Tax; (6) if a Specified Default any issue that recurs for any Straddle Period or Event of Default shall have occurred and be continuing, Borrower shall have provided security for its obligation hereunder satisfactory to the Indemnitee by placing in escrow sufficient funds to cover any such contested Tax and the reasonably expected expenses of such contest on an AfterPost-Tax Basis, or otherwise providing satisfactory provisions for payment of such amounts determined by the Indemnitee in its sole discretion; (7) the aggregate amount of all indemnity payments that Borrower may be required to make to such Indemnitee with respect to such claim (or similar or related claims) is at least $60,000; and (8) the claim is not for a Tax the imposition of which has been previously contested by, or at the request of, Borrower hereunder, and such previous contest (including all allowable appeals) was decided adversely to Borrower, unless Borrower has delivered an opinion of independent Tax counsel selected by Borrower and reasonably acceptable to the Indemnitee to the effect that, on the basis of (i) a change in applicable law, or (ii) a difference in the underlying facts, there is currently a Realistic Possibility of Success for contesting such claim.
(D) If any Indemnitee shall obtain a refund of all Closing Period or any part of item resulting in a reciprocal adjustment to any Tax paid by Borrower, such Indemnitee shall pay Borrower, but not before Borrower shall have made all payments theretofore due to such Indemnitee pursuant to this Section 6(b) and any other payments theretofore due such Indemnitee under any of the Operative Documents, an amount equal to the amount of such refund (net of any Taxes imposed thereon), including interest received and attributable thereto (net of any Taxes imposed thereon) plus, if Borrower has paid an amount pursuant to the first sentence of Section 6(b)(iii)(A), any net Tax benefit (Straddle Period or minus any net Tax detriment) realized by such Indemnitee as a result of any refund received, and payment made, by such Indemnitee pursuant to this sentence; provided that the Indemnitee shall not be obligated to pay an amount under the preceding sentence to the extent that such amount would exceed the amount of such Taxes paid, reimbursed or advanced by Borrower to such Indemnitee (other than the cost of the contest thereof); provided, further, that any amount not paid to Borrower pursuant to the foregoing limitation shall be carried forward to reduce pro tanto any future payments that Borrower may be required to make to such Indemnitee pursuant to this Section 6(b). If any Indemnitee shall have paid Borrower any refund of all or part of any Tax paid by Borrower and it is subsequently determined that such Indemnitee was not entitled to the refund, such determination shall be treated as the imposition of a Tax for which Borrower is obligated to indemnify such Indemnitee pursuant to the provisions of this Section 6(b) without regard to the exclusions set forth in Section 6(b)(ii) (other than subparagraphs (4), (11) and (12) thereof). Provided no Specified Default or Event of Default has occurred and is continuing, an Indemnitee shall not settle any such claim or contest pursuant to this provision Post-Closing Period without the prior written consent of Borrower, Buyer (which consent shall not be unreasonably withheld, conditioned or delayed; provided). Buyer also may participate at its own expense in any such Tax Contest and, that an Indemnitee if Seller does not notify Buyer within 30 days of receiving notice of such Tax Contest pursuant to Section 5.15(e)(i) hereof of its intent to assume the defense of such Tax Contest, Buyer may settle at any time without defend the consent of Borrower if the Indemnitee waives (by same in such manner as it may deem appropriate, including, but not limited to, settling such Tax Contest after giving five days' prior written notice to BorrowerSeller setting forth the terms and conditions of settlement.
(iii) In the case of a Tax Contest that relates to a Straddle Period, (x) each of Seller and Buyer may participate in the Tax Contest, and (y) the payment Tax Contest shall be controlled by Borrower that party which would bear the burden of an indemnity the greater portion of the adjustment (the "CONTROLLING PARTY"); PROVIDED that (a) the Controlling Party shall indemnify any Group Company in respect of all third-party costs and expenses incurred by such issue and any related issue Group Company at the contest of which is effectively foreclosed by the settlement of such issue, including any payment arising from such issue in subsequent years or which by reason of the fact that such issue is of a continuing nature, and promptly pays to Borrower any Tax previously paid or any interest-free loan advanced by Borrower (other than expenses of such contests) with respect to such issue.
(E) Nothing contained in this Section 6(b)(iv) shall require any Indemnitee to contest, or permit Borrower to contest in the name of such Indemnitee, a claim that such Indemnitee would otherwise be required to contest pursuant to this Section 6(b)(iv) if such Indemnitee shall waive payment by Borrower of any amount that might otherwise be payable by Borrower under this Section 6(b) Controlling Party's request in connection with such Tax Contest, (b) the Controlling Party shall keep the other party informed of all material progress (and shall send such party copies of all material correspondence relating thereto) of the Tax Contest and (c) if Seller is the Controlling Party, Seller shall not enter into any compromise or agree to settle any claim pursuant to such Tax Contest with respect to any issue that recurs for any Straddle Period or Post-Closing Period or any item resulting in a reciprocal adjustment to any Straddle Period or Post-Closing Period without the prior written consent of Buyer (which consent shall not be unreasonably withheld, conditioned or delayed). The principle set forth in clause (b) of the preceding sentence also shall govern for purposes of deciding any issue that must be decided jointly (in particular, choice of judicial forum) in situations in which separate issues are otherwise controlled hereunder by Buyer and Seller.
(iv) In the case of a Tax Contest that relates to a Post-Closing Period, Buyer shall have the right at its expense to control the conduct of such Tax Contest.
(v) Except as provided in paragraph (ii) above, neither Buyer nor Seller shall enter into any compromise or agree to settle any claim pursuant to any Tax Contest which would adversely affect the other than the costs of contest previously incurredparty for such year or a subsequent year, or which would result in a payment under Section 5.15(d), nor shall without the written consent of the other party, which consent may not be unreasonably withheld. Buyer and Seller agree to cooperate, and Buyer agrees to cause CMI, CEL and any Indemnitee be required of their Subsidiaries to pursue cooperate, in the defense against or compromise of any appeal to the United States Supreme Courtclaim in any Tax Contest.
Appears in 1 contract
Sources: Purchase and Sale Agreement (Crown Media Holdings Inc)
Contests. (A) If a written claim shall be is made against and received by any an Indemnitee for any Taxes with respect 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 Borrower is obligated to indemnify pursuant to this Section 6(b)Lessee could have an indemnity obligation hereunder, such Indemnitee shall notify Borrower promptly give Lessee notice in writing of such claim within 30 days after (provided, that failure to so notify Lessee shall not relieve Lessee of its receipt, indemnity obligations hereunder unless such failure to notify effectively forecloses Lessee's rights to require a contest of such claim) and shall provide Borrower such information regarding such claim as Borrower may reasonably request; provided, however, that the failure to provide such notice shall not release Borrower from any of its obligations to indemnify under Section 6 hereof unless, and only to the extent that, such failure effectively precludes Borrower’s contest rights. To the extent permitted under applicable law, such Indemnitee will not make any payments take no action with respect to such claim without the prior written consent of Lessee for at least 30 days after giving notice following the receipt of such notice by Lessee; provided, that, in the case of a claim made against an Indemnitee, if such Indemnitee shall be required by law to Borrower.
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 a Indemnitee shall be entitled to pay the Tax claimed and s▇▇ for a refund prior to the end of such 30-day period if (i)(A) 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 materially prejudice the right to contest or (B) the failure to so pay would result in criminal penalties and (ii) such Indemnitee shall take any action so required in connection with so paying the Tax in a manner that is the least prejudicial to the pursuit of the contest). 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 relating to such Taxes with respect to which Lessee may be required to indemnify hereunder. If requested by Borrower Lessee in writing within 30 days after its receipt of such notice or such shorter period as may be required by applicable lawnotice, such Indemnitee shall, at the expense of Borrower Lessee (including all reasonable out-of-pocket costs and subject reasonable attorneys' and accountants' fees), in good faith contest (or, if permitted by applicable law, allow Lessee to subparagraph (Ccontest) below, contest through appropriate administrative and judicial proceedings the validity, applicability or amount of such Taxes by, in the case of an Indemnitee-Controlled Contest, in such Indemnitee’s sole discretion or, in the case of a Borrower-Controlled Contest, in Borrower’s sole discretion, by (1I) resisting payment thereof if practicablethereof, (2II) not paying such Tax the same except under protest, (3) protest if protest is necessary and proper, and proper or (III) if the payment of such Tax is made, using reasonable efforts to obtain a refund thereofthereof in an appropriate administrative and/or judicial proceeding. If requested to do so by Lessee, the Indemnitee shall appeal any adverse administrative or judicial decision, except that the Indemnitee shall not be required to pursue any appeals to the United States Supreme Court. If and to the extent the Indemnitee is able to separate the contested issue or issues from other issues arising in the same administrative or judicial proceeding that are unrelated to the transactions contemplated by the Operative Agreements without, in appropriate administrative and judicial proceedings, and (4) in the case of an Indemnitee-Controlled Contest, considering in good faith any other reasonable action as Borrower may reasonably request. Each judgment of such Indemnitee, adversely affecting such Indemnitee, such Indemnitee shall consult in good faith with Borrower permit Lessee to control the conduct of any such proceeding and Borrower’s counsel, shall provide to Lessee (at Lessee's cost and Borrower shall consult in good faith expense) with such Indemnitee and its counsel 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 Borrower-Controlled Contest. concerning contest controlled by a Indemnitee, such Indemnitee shall consult with Lessee in good faith regarding the forum in which manner of contesting such claim and shall keep Lessee reasonably informed regarding the contest is most likely to be favorably resolved and whether such contest shall be by (x) resisting payment progress of such Taxcontest. An Indemnitee shall not fail to take any action expressly required by this Section 6(b)(iv) (including, without limitation, any action regarding any appeal of an adverse determination with respect to any claim) or settle or compromise any claim without the prior written consent of the Lessee (y) paying such Tax under protest or (z) paying such Tax and seeking a refund or other repayment thereof.
(C) In except as contemplated by this Section 6(b)(iv). Notwithstanding the foregoing, in no event shall an Indemnitee be requiredrequired to pursue any contest (or to permit Lessee to pursue any contest) unless (i) Lessee shall have agreed to pay such Indemnitee on demand all reasonable out-of-pocket costs and reasonable attorneys' and accountants' fees, (ii) if such contest shall involve the payment of the claim, Lessee shall advance the amount thereof (to the extent indemnified hereunder) plus interest, penalties and additions to tax with respect thereto that are required to be paid prior to the commencement of such contest on an interest-free after- Tax basis to such Indemnitee (and such Indemnitee shall promptly pay to the Lessee any net realized tax benefits resulting from such advance including any tax benefits resulting from making such payment), (iii) such Indemnitee shall have reasonably determined that the action to be taken will not result in any material risk of forfeiture, sale or Borrower permittedloss of the Aircraft (unless Lessee shall have made provisions to protect the interests of any such Indemnitee in a manner reasonably satisfactory to such Indemnitee) (provided, that such Indemnitee agrees to notify Lessee in writing promptly after it becomes aware of any such risk), (iv) no Lease Event of Default shall have occurred and be continuing unless Lessee has provided security for its obligations hereunder by advancing to such Indemnitee before proceeding or continuing with such contest, the amount of the Tax being contested, plus any interest and penalties and an amount estimated in good faith by such Indemnitee for expenses, and (v) prior to commencing any judicial action controlled by Lessee, Lessee shall have acknowledged its liability for such claim hereunder, provided that Lessee shall not be bound by its acknowledgment if the Final Determination articulates conclusions of law and fact that demonstrate that Lessee has no liability for the contested amounts hereunder. 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 written permission of Lessee, Lessee's obligation to indemnify such Indemnitee with respect to such claim (and all directly related claims and claims based on the outcome of such claim) shall terminate, subject to this Section 6(b)(iii), and subject to Section 6(b)(iii), such Indemnitee shall repay to Lessee any amount previously paid or advanced to such Indemnitee with respect to such claim, plus interest at the rate that would have been payable by the relevant Taxing Authority with respect to a refund of such Tax. Notwithstanding anything contained in this Section 6(b), a Indemnitee will not be required to contest the imposition of any Tax for which Borrower is obligated pursuant to this Section 6(b) unless (1) Borrower shall have agreed to pay and shall promptly be paying on request all reasonable costs and expenses that permitted to settle or compromise any claim without Lessee's consent if such Indemnitee incurs in contesting such claim or arising out of or relating to such contest (including legal fees, accounting fees, and disbursements, including those on appeal, if any); (2) such contest is not reasonably likely to result in a material danger of the sale, seizure, forfeiture or loss of the Aircraft, or the creation of any Lien thereon other than Liens for Taxes (i) either not yet due or being contested in good faith by appropriate proceedings and (ii) for which such reserves, if any, as are required shall waive its right to be provided under generally accepted accounting principles have been provided by Borrower, and there is no risk of criminal penalties; (3) if such contest shall be conducted in a manner requiring the payment of the claim, Borrower shall have advanced sufficient funds, on an interest-free basis, to make the payment required, and shall have agreed to indemnify the Indemnitee against any additional net after-Tax cost to such Indemnitee of such advance; (4) if requested by the Indemnitee in writing, such Indemnitee shall have received an opinion of independent Tax counsel selected by Borrower and reasonably acceptable to such Indemnitee and furnished at Borrower’s sole expense to the effect that a Realistic Possibility of Success exists for contesting such claim (or, in the case of an appeal of an adverse judicial determination, a written opinion from such independent Tax counsel to the effect that it is more likely than not that such adverse judicial determination will be reversed or substantially modified); (5) Borrower shall have delivered to such Indemnitee a written acknowledgment of Borrower’s obligation to indemnify such Indemnitee to the extent that the contest is not successful; provided, however, that Borrower will not be bound by its acknowledgment of liability if the contest is resolved on a clear and unambiguous basis showing no such liability indemnity under this Section 6(b) with respect to such Tax; Tax (6) if a Specified Default or Event and any directly related claim and any claim the outcome of Default shall have occurred and be continuing, Borrower shall have provided security for its obligation hereunder satisfactory to which is determined based upon the Indemnitee by placing in escrow sufficient funds to cover any such contested Tax and the reasonably expected expenses outcome of such contest on an After-Tax Basisclaim), or otherwise providing satisfactory provisions for payment of such amounts determined by the Indemnitee in its sole discretion; (7) the aggregate amount of all indemnity payments that Borrower may be required to make to such Indemnitee with respect to such claim (or similar or related claims) is at least $60,000; and (8) the claim is not for a Tax the imposition of which has been previously contested by, or at the request of, Borrower hereunder, and such previous contest (including all allowable appeals) was decided adversely to Borrower, unless Borrower has delivered an opinion of independent Tax counsel selected by Borrower and reasonably acceptable to the Indemnitee to the effect that, on the basis of (i) a change in applicable law, or (ii) a difference in the underlying facts, there is currently a Realistic Possibility of Success for contesting such claim.
(D) If any Indemnitee shall obtain a refund of all or any part of any Tax paid by Borrower, such Indemnitee shall pay Borrower, but not before Borrower shall have made all payments theretofore due to such Indemnitee Lessee any amount previously paid or advanced by Lessee pursuant to this Section 6(b) and any other payments theretofore due such Indemnitee under any of the Operative Documents, an amount equal to the amount of such refund (net of any Taxes imposed thereon), including interest received and attributable thereto (net of any Taxes imposed thereon) plus, if Borrower has paid an amount pursuant to the first sentence of Section 6(b)(iii)(A), any net Tax benefit (or minus any net Tax detriment) realized by such Indemnitee as a result of any refund received, and payment made, by such Indemnitee pursuant to this sentence; provided that the Indemnitee shall not be obligated to pay an amount under the preceding sentence to the extent that such amount would exceed the amount of such Taxes paid, reimbursed or advanced by Borrower to such Indemnitee (other than the cost of the contest thereof); provided, further, that any amount not paid to Borrower pursuant to the foregoing limitation shall be carried forward to reduce pro tanto any future payments that Borrower may be required to make to such Indemnitee pursuant to this Section 6(b). If any Indemnitee shall have paid Borrower any refund of all or part of any Tax paid by Borrower and it is subsequently determined that such Indemnitee was not entitled to the refund, such determination shall be treated as the imposition of a Tax for which Borrower is obligated to indemnify such Indemnitee pursuant to the provisions of this Section 6(b) without regard to the exclusions set forth in Section 6(b)(ii) (other than subparagraphs (4), (11) and (12) thereof). Provided no Specified Default or Event of Default has occurred and is continuing, an Indemnitee shall not settle any such claim or contest pursuant to this provision without the written consent of Borrower, which consent shall not be unreasonably withheld, conditioned or delayed; provided, that an Indemnitee may settle at any time without the consent of Borrower if the Indemnitee waives (by written notice to Borrower) the payment by Borrower of an indemnity in respect of such issue and any related issue the contest of which is effectively foreclosed by the settlement of such issue, including any payment arising from such issue in subsequent years or which by reason of the fact that such issue is of a continuing nature, and promptly pays to Borrower any Tax previously paid or any interest-free loan advanced by Borrower (other than expenses of such contests) with respect to such issue.
Tax, plus interest at the rate that would have been payable by the relevant Taxing Authority with respect to a refund of such Tax, and (E) Nothing contained in this Section 6(b)(iviii) shall require agree to discuss with Lessee the views or positions of any Indemnitee relevant Taxing Authority with respect to contest, or permit Borrower to contest in the name imposition of such Indemnitee, a claim that such Indemnitee would otherwise be required to contest pursuant to this Section 6(b)(iv) if such Indemnitee shall waive payment by Borrower of any amount that might otherwise be payable by Borrower under this Section 6(b) in connection with such claim (other than the costs of contest previously incurred), nor shall any Indemnitee be required to pursue any appeal to the United States Supreme CourtTax.
Appears in 1 contract
Contests. (Ai) If After the Cut-off 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 the Entities 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 5.4 by the other party (the "Tax Indemnifying Party" and a written claim "Tax Claim"). Such notice shall contain factual information describing any asserted Tax liability in reasonable detail and shall include copies of any notice or other document received from any Tax authority in respect of any such asserted Tax liability. Failure to give such notification shall not affect the indemnification provided in this Section 5.4 except to the extent the Tax Indemnifying Party shall have been prejudiced as a result of such failure (except that the Tax Indemnifying Party shall not be made against liable for any expenses incurred during the period in which the Tax Indemnified Party failed to give such notice). Thereafter, the Tax Indemnified Party shall deliver to the Tax Indemnifying Party, as promptly as possible but in no event later than ten (10) days after the Tax Indemnified Party's receipt thereof, copies of all relevant notices and documents (including court papers) received by the Tax Indemnified Party.
(ii) In the case of an audit or administrative or judicial proceeding involving any Indemnitee asserted liability for Taxes relating to any Tax for which Borrower is obligated Taxable years or periods ending on or before the Cut-off Date or any Straddle Period, Seller shall have the right, at its expense, to indemnify pursuant to this Section 6(b), such Indemnitee shall notify Borrower in writing control the conduct of such claim within 30 days after its receipt, and shall provide Borrower such information regarding such claim as Borrower may reasonably requestaudit or proceeding; provided, however, that the failure (A) with respect to provide such notice Straddle Periods, Seller shall not release Borrower from any of its obligations to indemnify under Section 6 hereof unless, and only keep Buyer reasonably informed with respect to the extent that, status of such failure effectively precludes Borrower’s contest rights. To the extent permitted under applicable law, such Indemnitee will not make any payments audit or proceeding and provide Buyer with copies of all written correspondence with respect to such claim for at least 30 days after giving notice of such claim to Borrower.
audit or proceeding in a timely manner and (B) If requested by Borrower in writing within 30 days after its receipt of if such notice audit or such shorter period as may proceeding would be required by applicable law, such Indemnitee shall, at the expense of Borrower and subject to subparagraph (C) below, contest the validity, applicability or amount of such Taxes by, in the case of an Indemnitee-Controlled Contest, in such Indemnitee’s sole discretion or, in the case of a Borrower-Controlled Contest, in Borrower’s sole discretion, (1) resisting payment thereof if practicable, (2) not paying such Tax except under protest, (3) if protest is necessary and proper, and if payment of such Tax is made, using reasonable efforts to obtain a refund thereof, in appropriate administrative and judicial proceedings, and (4) in the case of an Indemnitee-Controlled Contest, considering in good faith any other reasonable action as Borrower may reasonably request. Each Indemnitee shall consult in good faith with Borrower and Borrower’s counsel, and Borrower shall consult in good faith with such Indemnitee and its counsel in the case of a Borrower-Controlled Contest. concerning the forum in which the contest is most likely to be favorably resolved and whether such contest shall be by (x) resisting payment of such Tax, (y) paying such Tax under protest or (z) paying such Tax and seeking a refund or other repayment thereof.
(C) In no event shall an Indemnitee be required, or Borrower permitted, to contest the imposition of any Tax for which Borrower is obligated pursuant to this Section 6(b) unless (1) Borrower shall have agreed to pay and shall promptly be paying on request all reasonable costs and expenses that such Indemnitee incurs in contesting such claim or arising out of or relating to such contest (including legal fees, accounting fees, and disbursements, including those on appeal, if any); (2) such contest is not reasonably likely expected to result in a material danger increase in Tax liability of the sale, seizure, forfeiture or loss of the Aircraft, or the creation of any Lien thereon other than Liens for Taxes (i) either not yet due or being contested in good faith by appropriate proceedings and (ii) Entities for which such reservesBuyer would be liable under this Section 5.6, if any, as are required to be provided under generally accepted accounting principles have been provided by Borrower, and there is no risk of criminal penalties; (3) if such contest shall be conducted Buyer may participate in a manner requiring the payment of the claim, Borrower shall have advanced sufficient funds, on an interest-free basis, to make the payment required, and shall have agreed to indemnify the Indemnitee against any additional net after-Tax cost to such Indemnitee conduct of such advance; audit or proceeding at its own expense.
(4iii) if requested by the Indemnitee in writing, such Indemnitee shall have received an opinion of independent Tax counsel selected by Borrower and reasonably acceptable to such Indemnitee and furnished at Borrower’s sole expense to the effect that a Realistic Possibility of Success exists for contesting such claim (or, in In the case of an appeal of an adverse audit or administrative or judicial determinationproceeding involving any asserted liability for Taxes relating to any Taxable years or periods beginning after the Cut-off Date, a written opinion from such independent Tax counsel to the effect that it is more likely than not that such adverse judicial determination will be reversed or substantially modified); (5) Borrower Buyer shall have delivered the right, at its expense, to such Indemnitee a written acknowledgment of Borrower’s obligation to indemnify such Indemnitee to control the extent that the contest is not successful; provided, however, that Borrower will not be bound by its acknowledgment of liability if the contest is resolved on a clear and unambiguous basis showing no such liability under this Section 6(b) with respect to such Tax; (6) if a Specified Default or Event of Default shall have occurred and be continuing, Borrower shall have provided security for its obligation hereunder satisfactory to the Indemnitee by placing in escrow sufficient funds to cover any such contested Tax and the reasonably expected expenses conduct of such contest on an After-audit or proceeding.
(iv) Buyer and Seller shall reasonably cooperate in connection with any Tax Basis, or otherwise providing satisfactory provisions for payment of such amounts determined by the Indemnitee in its sole discretion; (7) the aggregate amount of all indemnity payments that Borrower may be required to make to such Indemnitee with respect to such claim (or similar or related claims) is at least $60,000; and (8) the claim is not for a Tax the imposition of which has been previously contested by, or at the request of, Borrower hereunderClaim, and such previous contest (including all allowable appeals) was decided adversely to Borrower, unless Borrower has delivered an opinion of independent Tax counsel selected by Borrower and reasonably acceptable cooperation shall include the provision to the Indemnitee Tax Indemnifying Party of records and information which are reasonably relevant to the effect that, such Tax Claim and making employees available on the a mutually convenient basis of (i) a change in applicable law, or (ii) a difference in the underlying facts, there is currently a Realistic Possibility of Success for contesting such claim.
(D) If any Indemnitee shall obtain a refund of all or any part to provide additional information and explanation of any Tax paid by Borrower, such Indemnitee shall pay Borrower, but not before Borrower shall have made all payments theretofore due to such Indemnitee pursuant to this Section 6(b) and any other payments theretofore due such Indemnitee under any of the Operative Documents, an amount equal to the amount of such refund (net of any Taxes imposed thereon), including interest received and attributable thereto (net of any Taxes imposed thereon) plus, if Borrower has paid an amount pursuant to the first sentence of Section 6(b)(iii)(A), any net Tax benefit (or minus any net Tax detriment) realized by such Indemnitee as a result of any refund received, and payment made, by such Indemnitee pursuant to this sentence; material provided that the Indemnitee shall not be obligated to pay an amount under the preceding sentence to the extent that such amount would exceed the amount of such Taxes paid, reimbursed or advanced by Borrower to such Indemnitee (other than the cost of the contest thereof); provided, further, that any amount not paid to Borrower pursuant to the foregoing limitation shall be carried forward to reduce pro tanto any future payments that Borrower may be required to make to such Indemnitee pursuant to this Section 6(b). If any Indemnitee shall have paid Borrower any refund of all or part of any Tax paid by Borrower and it is subsequently determined that such Indemnitee was not entitled to the refund, such determination shall be treated as the imposition of a Tax for which Borrower is obligated to indemnify such Indemnitee pursuant to the provisions of this Section 6(b) without regard to the exclusions set forth in Section 6(b)(ii) (other than subparagraphs (4), (11) and (12) thereof). Provided no Specified Default or Event of Default has occurred and is continuing, an Indemnitee shall not settle any such claim or contest pursuant to this provision without the written consent of Borrower, which consent shall not be unreasonably withheld, conditioned or delayed; provided, that an Indemnitee may settle at any time without the consent of Borrower if the Indemnitee waives (by written notice to Borrower) the payment by Borrower of an indemnity in respect of such issue and any related issue the contest of which is effectively foreclosed by the settlement of such issue, including any payment arising from such issue in subsequent years or which by reason of the fact that such issue is of a continuing nature, and promptly pays to Borrower any Tax previously paid or any interest-free loan advanced by Borrower (other than expenses of such contests) with respect to such issuehereunder.
(E) Nothing contained in this Section 6(b)(iv) shall require any Indemnitee to contest, or permit Borrower to contest in the name of such Indemnitee, a claim that such Indemnitee would otherwise be required to contest pursuant to this Section 6(b)(iv) if such Indemnitee shall waive payment by Borrower of any amount that might otherwise be payable by Borrower under this Section 6(b) in connection with such claim (other than the costs of contest previously incurred), nor shall any Indemnitee be required to pursue any appeal to the United States Supreme Court.
Appears in 1 contract
Sources: Agreement of Purchase and Sale (Consumers Energy Co)
Contests. (A) If a written any claim shall be made against and received by any Tax Indemnitee or if any proceeding shall be commenced against any Tax Indemnitee (including a written notice of such proceeding) for any Tax for Imposition as to which Borrower is obligated to indemnify the Lessees may have an indemnity obligation pursuant to this Section 6(b)SECTION 11.5, or if any Tax Indemnitee shall receive notice that any Imposition to which the Lessees may have an indemnity obligation pursuant to this SECTION 11.5 may be payable, such Tax Indemnitee shall promptly (and, in any event, within thirty (30) days) notify Borrower the Company, as agent for the Lessees, in writing of such claim within 30 days after its receipt, and shall provide Borrower such information regarding such claim as Borrower may reasonably request; provided, however, (PROVIDED that the failure to provide such notice so promptly notify the Company within thirty (30) days shall not release Borrower from any of its obligations to indemnify alter such Tax Indemnitee's rights under Section 6 hereof unless, and only this SECTION 11.5 except to the extent that, such failure effectively precludes Borrower’s or materially adversely affects the ability to conduct a contest rights. To the extent permitted under applicable law, such Indemnitee will of any indemnified Taxes) and shall not make take any payments action with respect to such claim claim, proceeding or Imposition without the written consent of the Company, as agent for at least 30 the Lessees, (such consent not to be unreasonably withheld or unreasonably delayed) for thirty (30) days after giving notice of such claim to Borrower.
(B) If requested by Borrower in writing within 30 days after its 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 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 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 ten (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 Indemnitee shall be required by law or regulation to take action prior to the end of such 10-day period. The Company shall be entitled for a period of thirty (30) days from receipt of such notice from such Tax Indemnitee (or such shorter period as may be such Tax Indemnitee has notified the Lessees is required by applicable lawlaw or regulation for such Tax Indemnitee to commence such contest), to request in writing that such Tax Indemnitee shallcontest the imposition of such Tax, at the expense of Borrower the applicable Lessee. If (x) such contest can be pursued in the name of the applicable Lessee and subject to subparagraph (C) below, contest the validity, applicability or amount independently from any other proceeding involving a Tax liability of such Taxes byTax Indemnitee for which the applicable Lessee has not agreed to indemnify such Tax Indemnitee, (y) such contest must be pursued in the case name of an such Tax Indemnitee-Controlled Contest, in but can be pursued independently from any other proceeding involving a Tax liability of such Indemnitee’s sole discretion orTax Indemnitee for which the applicable Lessee has not agreed to indemnify such Tax Indemnitee or (z) such Tax Indemnitee so requests, then the applicable Lessee shall be permitted to control the contest of such claim, PROVIDED that in the case of a Borrower-Controlled Contestcontest described in CLAUSE (y), in Borrower’s sole discretion, (1) resisting payment thereof if practicable, (2) not paying such Tax except under protest, (3) if protest is necessary Indemnitee determines reasonably and proper, and if payment in good faith that such contest by the applicable Lessee could have a material adverse impact on the business or operations of such Tax is madeIndemnitee and provides a written explanation to such Lessee of such determination, using reasonable efforts such Tax Indemnitee may elect to obtain a refund thereof, in appropriate administrative and judicial proceedingscontrol or reassert control of the contest, and (4) in PROVIDED, that by taking control of the case contest, the applicable Lessee acknowledges that such Lessee has an indemnification obligation under Section 11.5 for the Imposition ultimately determined to be due by reason of an Indemnitee-Controlled Contest, considering in good faith any other reasonable action as Borrower may reasonably request. Each Indemnitee shall consult in good faith with Borrower and Borrower’s counselsuch claim, and Borrower shall consult PROVIDED, FURTHER, that in good faith with such Indemnitee and its counsel in determining the case application of a Borrower-Controlled Contest. concerning the forum in which the contest is most likely to be favorably resolved and whether such contest shall be by CLAUSES (x) resisting payment of such Tax, and (y) paying above, each Tax Indemnitee shall take any and all reasonable steps to segregate claims (including claims that are part of a single examination or investigation) 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 of the former. In all other claims requested to be contested by the Company, as agent for the Lessees, such Tax under protest or (z) paying Indemnitee shall control the contest of such Tax and seeking a refund or other repayment thereof.
(C) claim, acting through counsel reasonably acceptable to the Company, as agent for the Lessees. In no event shall an the applicable Lessee be permitted to contest (or such Tax Indemnitee be requiredrequired 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 Borrower permitted, to contest the imposition creation of any Lien (other than a Permitted Property 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 a Lease 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 Borrower the applicable Lessee is obligated pursuant to this Section 6(bresponsible hereunder reasonably foreseeable in connection with the contest of such claim, (C) unless (1) Borrower the applicable Lessee shall have agreed to pay and shall promptly be paying on request pay, to such Tax Indemnitee within thirty (30) days of receiving an itemized list thereof, all reasonable costs out-of-pocket costs, losses and expenses that such Tax Indemnitee incurs may incur in connection with contesting such claim or arising out of or relating to such contest (Imposition including legal feesall reasonable legal, accounting fees, and investigatory fees and disbursements, including those on appeal, if any); or (2) such contest is not reasonably likely to result in a material danger of the sale, seizure, forfeiture or loss of the Aircraft, or the creation of any Lien thereon other than Liens for Taxes (i) either not yet due or being contested in good faith by appropriate proceedings and (ii) for which such reserves, if any, as are required to be provided under generally accepted accounting principles have been provided by Borrower, and there is no risk of criminal penalties; (3D) if such contest shall be conducted in a manner requiring involve the payment of the claimTax prior to the contest, Borrower unless the applicable Lessee shall have advanced sufficient funds, on provide to such Tax Indemnitee an interest-free basis, advance in an amount equal to make the payment required, and shall have agreed to indemnify Imposition that the Indemnitee against any is required to pay (with no additional net after-Tax cost tax costs to such Tax Indemnitee). In addition for Tax Indemnitee controlled contests and claims contested in the name of such advance; Tax Indemnitee in a public forum, no contest shall be required: (4A) 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 applicable Lessee may be liable to pay an indemnity under this SECTION 11.5(B)) exceeds $10,000 and (B) unless, if requested by such Tax Indemnitee, the Indemnitee in writing, such Indemnitee applicable Lessee shall have received provided to such Tax Indemnitee an opinion of independent Tax counsel selected by Borrower and reasonably acceptable to such Indemnitee and furnished at Borrower’s sole expense to the effect Company (which may be in-house counsel) that a Realistic Possibility of Success reasonable basis exists for contesting to contest such claim (or, in the case of an claim. In no event shall a Tax Indemnitee be required to appeal of an adverse judicial determination, a written opinion from such independent Tax counsel determination to the effect 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, PROVIDED, HOWEVER, that it if such Tax Indemnitee is more likely than not that the controlling party and the applicable Lessee recommends the acceptance of a settlement offer made by the relevant Governmental Authority and such adverse judicial determination Tax Indemnitee rejects such settlement offer then the amount for which the applicable Lessee will be reversed or substantially modified); (5) Borrower shall have delivered to such Indemnitee a written acknowledgment of Borrower’s obligation 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 Guarantor as are necessary or advisable for the applicable Lessee to participate in any action, suit or proceeding to the extent that permitted by this SECTION 11.5(b). Notwithstanding anything in this SECTION 11.5(b) to the contest is not successful; providedcontrary, however, that Borrower will not be bound 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 its acknowledgment of liability if the contest is resolved on a clear and unambiguous basis showing no such liability under this Section 6(bapplicable Lessee) with respect to any claim which may be entitled to be indemnified under this SECTION 11.5 without the prior written consent of the applicable Lessee, such Tax; (6) if entering into of a Specified Default settlement or Event compromise, or such failure to appeal, without such consent, shall constitute a waiver of Default shall have occurred and be continuing, Borrower shall have provided security for its obligation hereunder satisfactory all rights to indemnification under this SECTION 11.5 with respect to such claim. Notwithstanding anything contained herein to the contrary, a Tax Indemnitee by placing in escrow sufficient funds to cover any such contested Tax and the reasonably expected expenses of such contest on an After-Tax Basis, or otherwise providing satisfactory provisions for payment of such amounts determined by the Indemnitee in its sole discretion; (7) the aggregate amount of all indemnity payments that Borrower may will not be required to make contest (and the applicable Lessee shall not be permitted to contest) a claim with respect to the imposition of any Tax if such Tax Indemnitee shall waive in writing, in a form acceptable to the Lessees, its right to indemnification under this SECTION 11.5 with respect to such claim (or similar or related claims) is at least $60,000; and (8) the any claim is not for a Tax the imposition of which has been previously contested by, or at the request of, Borrower hereunder, and with respect to such previous contest (including all allowable appeals) was decided adversely to Borrower, unless Borrower has delivered an opinion of independent Tax counsel selected by Borrower and reasonably acceptable to the Indemnitee to the effect that, on the basis of (i) a change in applicable law, or (ii) a difference in the underlying facts, there is currently a Realistic Possibility of Success for contesting such claim.
(D) If any Indemnitee shall obtain a refund of all year or any part of any Tax paid by Borrower, such Indemnitee shall pay Borrower, but not before Borrower shall have made all payments theretofore due to such Indemnitee pursuant to this Section 6(b) and any other payments theretofore due such Indemnitee under any of the Operative Documents, an amount equal to the amount of such refund (net of any Taxes imposed thereon), including interest received and attributable thereto (net of any Taxes imposed thereon) plus, if Borrower has paid an amount pursuant to the first sentence of Section 6(b)(iii)(A), any net Tax benefit (or minus any net Tax detriment) realized by such Indemnitee as a result of any refund received, and payment made, by such Indemnitee pursuant to this sentence; provided that the Indemnitee shall not be obligated to pay an amount under the preceding sentence to the extent that such amount would exceed the amount of such Taxes paid, reimbursed or advanced by Borrower to such Indemnitee (other than the cost of the contest thereof); provided, further, that any amount not paid to Borrower pursuant to the foregoing limitation shall be carried forward to reduce pro tanto any future payments that Borrower may be required to make to such Indemnitee pursuant to this Section 6(b). If any Indemnitee shall have paid Borrower any refund of all or part of any Tax paid by Borrower and it is subsequently determined that such Indemnitee was not entitled to the refund, such determination shall be treated as the imposition of a Tax for which Borrower is obligated to indemnify such Indemnitee pursuant to the provisions of this Section 6(b) without regard to the exclusions set forth in Section 6(b)(ii) (other than subparagraphs (4), (11) and (12) thereof). Provided no Specified Default or Event of Default has occurred and is continuing, an Indemnitee shall not settle any such claim or contest pursuant to this provision without the written consent of Borrower, which consent shall not be unreasonably withheld, conditioned or delayed; provided, that an Indemnitee may settle at any time without the consent of Borrower if the Indemnitee waives (by written notice to Borrower) the payment by Borrower of an indemnity in respect of such issue and any related issue taxable year the contest of which is effectively foreclosed by the settlement materially adversely affected as a result of such issue, including any payment arising from such issue in subsequent years or which by reason of the fact that such issue is of a continuing nature, and promptly pays to Borrower any Tax previously paid or any interest-free loan advanced by Borrower (other than expenses of such contests) with respect to such issuewaiver).
(E) Nothing contained in this Section 6(b)(iv) shall require any Indemnitee to contest, or permit Borrower to contest in the name of such Indemnitee, a claim that such Indemnitee would otherwise be required to contest pursuant to this Section 6(b)(iv) if such Indemnitee shall waive payment by Borrower of any amount that might otherwise be payable by Borrower under this Section 6(b) in connection with such claim (other than the costs of contest previously incurred), nor shall any Indemnitee be required to pursue any appeal to the United States Supreme Court.
Appears in 1 contract
Sources: Master Lease and Open End Mortgage (Cardinal Health Inc)
Contests. (Aa) Nothing in this Agreement shall be construed to prevent UpREIT from contesting, through its Tax Matters Partner in accordance with the Partnership Agreement as part of the unified audit of the UpREIT, any claim in respect of any "partnership" item of the UpREIT that, if successful, would result in an Income Inclusion (a "Partnership Level Issue").
(b) If UpREIT contests a written claim shall Partnership Level Issue that, if successful, would result in an Income Inclusion, UpREIT's liability for indemnification under Section 4 hereof (other than reasonable costs and expenses described in Section 6(f) of the Agreement) shall, at UpREIT's election, be made against and received by deferred until thirty (30) days after a Final Determination of such ▇▇▇▇▇ Indemnitee's federal income tax liability in respect of an Income Inclusion.
(c) If any Indemnitee for any Tax for audit or proceeding involving an indemnifiable adjustment is being conducted in a proceeding involving such ▇▇▇▇▇ Indemnitee, which Borrower is obligated cannot be transferred to indemnify pursuant to this Section 6(bthe UpREIT as a partnership item (a "▇▇▇▇▇ Level Issue"), such ▇▇▇▇▇ Indemnitee shall hereby agrees (i) promptly to notify Borrower UpREIT in writing of such claim within 30 days after adjustment (and the failure of such ▇▇▇▇▇ Indemnitee to so notify UpREIT shall preclude any indemnity hereunder to the extent UpREIT's right to effect its receiptcontest rights hereunder has been precluded by such failure), and shall provide Borrower (ii) upon UpREIT's delivery to of a written opinion of nationally recognized tax counsel reasonably acceptable to such information regarding ▇▇▇▇▇ Indemnitee ("Tax Counsel") to the effect that there is a Realistic Possibility of Success upon contest of such claim as Borrower may reasonably request▇▇▇▇▇ Level Issue, such ▇▇▇▇▇ Indemnitee will contest that adjustment by filing a protest and administrative appeal and prosecuting the same in good faith; provided, however, that the failure to provide such notice shall not release Borrower from any of its obligations to indemnify under Section 6 hereof unless, and only to the extent that, such failure effectively precludes Borrower’s contest rights. To the extent permitted under applicable law, such ▇▇▇▇▇ Indemnitee will not make any payments be obligated to pursue an administrative appeal if such ▇▇▇▇▇ Indemnitee instead pursues relief in Tax Court or a court having refund jurisdiction.
(d) If , within 30 days following the failure of such administrative proceedings with respect to such claim for at least 30 days after giving notice of such claim a ▇▇▇▇▇ Level Issue, UpREIT delivers to Borrower.
(B) If requested by Borrower in writing within 30 days after its receipt of such notice or such shorter period as may be required by applicable law, such a ▇▇▇▇▇ Indemnitee shall, at the expense of Borrower and subject to subparagraph (C) below, contest the validity, applicability or amount of such Taxes by, in the case of an Indemnitee-Controlled Contest, in such Indemnitee’s sole discretion or, in the case of a Borrower-Controlled Contest, in Borrower’s sole discretion, (1) resisting payment thereof if practicable, (2) not paying such Tax except under protest, (3) if protest is necessary and proper, and if payment of such Tax is made, using reasonable efforts to obtain a refund thereof, in appropriate administrative and judicial proceedings, and (4) in the case of an Indemnitee-Controlled Contest, considering in good faith any other reasonable action as Borrower may reasonably request. Each Indemnitee shall consult in good faith with Borrower and Borrower’s counsel, and Borrower shall consult in good faith with such Indemnitee and its counsel in the case of a Borrower-Controlled Contest. concerning the forum in which the contest is most likely to be favorably resolved and whether such contest shall be by (x) resisting payment of such Tax, (y) paying such Tax under protest or (z) paying such Tax and seeking a refund or other repayment thereof.
(C) In no event shall an Indemnitee be required, or Borrower permitted, to contest the imposition of any Tax for which Borrower is obligated pursuant to this Section 6(b) unless (1) Borrower shall have agreed to pay and shall promptly be paying on request all reasonable costs and expenses that such Indemnitee incurs in contesting such claim or arising out of or relating to such contest (including legal fees, accounting fees, and disbursements, including those on appeal, if any); (2) such contest is not reasonably likely to result in a material danger of the sale, seizure, forfeiture or loss of the Aircraft, or the creation of any Lien thereon other than Liens for Taxes (i) either not yet due or being contested in good faith by appropriate proceedings and (ii) for which such reserves, if any, as are required to be provided under generally accepted accounting principles have been provided by Borrower, and there is no risk of criminal penalties; (3) if such contest shall be conducted in a manner requiring the payment of the claim, Borrower shall have advanced sufficient funds, on an interest-free basis, to make the payment required, and shall have agreed to indemnify the Indemnitee against any additional net after-Tax cost to such Indemnitee of such advance; (4) if requested by the Indemnitee in writing, such Indemnitee shall have received an written opinion of independent Tax counsel selected by Borrower and reasonably acceptable to such Indemnitee and furnished at Borrower’s sole expense Counsel to the effect that there is a Realistic Possibility of Success exists if the proposed adjustment is presented to a court for contesting resolution, then such claim (or, ▇▇▇▇▇ Indemnitee will contest the proposed adjustment in good faith in the case Tax Court or by paying the tax (and any applicable interest and penalties) and suing for refund in the Court of an appeal Federal Claims or appropriate Federal District Court. If, within 30 days following a final adverse decision of an adverse judicial determinationsuch court with respect to such ▇▇▇▇▇ Level Issue, UpREIT delivers to such ▇▇▇▇▇ Indemnitee a written opinion from such independent of Tax counsel Counsel to the effect that it is more likely than not that such adverse judicial determination will decision would be reversed on appeal, then such ▇▇▇▇▇ Indemnitee will appeal such decision to the appropriate Federal Court of Appeals. With respect to any of the above-described proceedings, such ▇▇▇▇▇ Indemnitee will keep UpREIT and its counsel informed as to the progress of such proceedings, give UpREIT and its counsel the opportunity to review and comment in advance on all written submissions and filings relevant to indemnifiable issues (after making appropriate redactions to preserve the confidentiality of the such ▇▇▇▇▇ Indemnitee return as to other issues), and consider in good faith any suggestions made by UpREIT or substantially modifiedits counsel.
(e) Such ▇▇▇▇▇ Indemnitee shall present any settlement offer provided to such ▇▇▇▇▇ Indemnitee pursuant to a ▇▇▇▇▇ Level Issue to UpREIT. If UpREIT recommends acceptance of a settlement offer of a ▇▇▇▇▇ Level Issue or if the Tax Matters Partner recommends acceptance of a settlement offer in respect of a Partnership Level Issue, but such ▇▇▇▇▇ Indemnitee declines to accept such offer in writing within 30 days (if such ▇▇▇▇▇ Indemnitee does not respond within 30 days, such lack of response shall be treated as acceptance of UpREIT's or the Tax Matters Partner's recommendation, respectively); , (51) Borrower the obligation of UpREIT to make indemnity payments as the result of any such contest or proceedings shall not thereafter exceed the obligation that it would have had if such contest had been settled or proceeding terminated on the basis recommended by UpREIT or the Tax Matters Partner, as applicable, and (2) in the case of a ▇▇▇▇▇ Level Issue, UpREIT shall have delivered no further liability for costs or other expenses in respect of such contest.
(f) Notwithstanding the foregoing, such ▇▇▇▇▇ Indemnitee will have no obligation to contest any action with respect to a ▇▇▇▇▇ Level Issue (i) unless such items could give rise to a federal income tax liability (disregarding other items in the assessment and considering effects in future years) in excess of $10,000, (ii) without UpREIT paying when due, reasonable third-party costs and out-of-pocket expenses including reasonable legal, witness and accounting fees and other expenses and, in the case of proceedings before the Court of Federal Claims or Federal District Court, the amount of tax (and any applicable interest and penalties) for which refund is claimed, and (iii) to the extent such ▇▇▇▇▇ Indemnitee a written acknowledgment of Borrower’s waives in writing UpREIT's obligation to indemnify such ▇▇▇▇▇ Indemnitee to the extent that the contest is not successful; providedfor such items, however, that Borrower will not be bound by its acknowledgment of liability if the contest is resolved on a clear in which case all third-party costs and unambiguous basis showing no such liability under this Section 6(b) with respect to such Tax; (6) if a Specified Default or Event of Default shall have occurred and be continuing, Borrower shall have provided security for its obligation hereunder satisfactory to the Indemnitee by placing out-of-pocket expenses described in escrow sufficient funds to cover any such contested Tax and the reasonably expected expenses of such contest on an After-Tax Basis, or otherwise providing satisfactory provisions for payment of such amounts determined by the Indemnitee in its sole discretion; (7) the aggregate amount of all indemnity payments that Borrower may be required to make to such Indemnitee with respect to such claim (or similar or related claims) is at least $60,000; and (8) the claim is not for a Tax the imposition of which has been previously contested by, or at the request of, Borrower hereunder, and such previous contest (including all allowable appeals) was decided adversely to Borrower, unless Borrower has delivered an opinion of independent Tax counsel selected by Borrower and reasonably acceptable to the Indemnitee to the effect that, on the basis of (i) a change in applicable law, or clause (ii) a difference in the underlying facts, there is currently a Realistic Possibility of Success for contesting thereafter incurred and all taxes would be paid by such claim▇▇▇▇▇ Indemnitee.
(Dg) If any Indemnitee shall obtain a refund of all or any part of any Tax paid by Borrower, such Indemnitee shall pay Borrower, but not before Borrower shall have made all payments theretofore due to such Indemnitee pursuant to this Section 6(b) and any other payments theretofore due such Indemnitee under any of the Operative Documents, an amount equal to the amount of such refund (net of any Taxes imposed thereon), including interest received and attributable thereto (net of any Taxes imposed thereon) plus, if Borrower has paid an amount pursuant to the first sentence of Section 6(b)(iii)(A), any net Tax benefit (or minus any net Tax detriment) realized by such Indemnitee as a result of any refund received, and payment made, by such Indemnitee pursuant to this sentence; provided that the Indemnitee shall not be obligated to pay an amount under the preceding sentence to the extent that such amount would exceed the amount of such Taxes paid, reimbursed or advanced by Borrower to such Indemnitee (other than the cost of the contest thereof); provided, further, that any amount not paid to Borrower pursuant to the foregoing limitation shall be carried forward to reduce pro tanto any future payments that Borrower may be required to make to such Indemnitee pursuant to this Section 6(b). If any Indemnitee shall have paid Borrower any refund of all or part of any Tax paid by Borrower and it is subsequently determined that such Indemnitee was not entitled to the refund, such determination shall be treated as the imposition of a Tax for which Borrower is obligated to indemnify such Indemnitee pursuant to the provisions of this Section 6(b) without regard to the exclusions set forth in Section 6(b)(ii) (other than subparagraphs (4), (11) and (12) thereof). Provided no Specified Default or Event of Default has occurred and is continuing, an ▇▇▇▇▇ Indemnitee shall not settle any such claim or contest pursuant to this provision ▇▇▇▇▇ Level Issue without the written consent of Borrower, which consent UpREIT's consent; provided that such ▇▇▇▇▇ Indemnitee shall not be unreasonably withheld, conditioned or delayed; provided, that an Indemnitee required to contest any proposed adjustment and may settle at any time without the consent of Borrower such proposed adjustment if the such ▇▇▇▇▇ Indemnitee waives (by written notice shall waive its right to Borrower) the payment by Borrower of an indemnity in respect of such issue and any related issue the contest of which is effectively foreclosed by the settlement of such issue, including any payment arising from such issue in subsequent years or which by reason of the fact that such issue is of a continuing nature, and promptly pays to Borrower any Tax previously paid or any interest-free loan advanced by Borrower (other than expenses of such contests) under this Agreement with respect to such issueadjustment and any Income Inclusion that results from such adjustment and, in the case of proceedings before the Court of Federal Claims or Federal District Court, shall pay to UpREIT the amount of tax (and any applicable interest and penalties) previously paid or advanced by UpREIT with respect to such adjustment or the contest of such adjustment under Section 6(f), plus interest at the rate per annum equal to the weighted average cost of debt capital to the UpREIT, computed from the time such amounts were paid or advanced by UpREIT.
(Eh) Nothing contained Within thirty (30) days after a Final Determination of the liability of such ▇▇▇▇▇ Indemnitee in this Section 6(b)(ivrespect of a ▇▇▇▇▇ Level Issue, UpREIT and each Indemnitee agree to pay each other, as applicable, the net amount of (i) shall require the payment owed by the UpREIT to such ▇▇▇▇▇ Indemnitee of any Indemnitee to indemnification hereunder, not theretofore paid resulting from the outcome of such contest, or permit Borrower to contest in the name of such Indemnitee, a claim that such Indemnitee would otherwise be required to contest pursuant to this Section 6(b)(iv) if such Indemnitee shall waive payment by Borrower of any amount that might otherwise be payable by Borrower under this Section 6(b) in connection with such claim (other than the costs of contest previously incurred), nor shall any Indemnitee be required to pursue any appeal to the United States Supreme Court.and
Appears in 1 contract
Sources: Tax Indemnification Agreement (Prime Group Realty Trust)
Contests. (Ai) If a written claim The ▇▇▇▇▇ Representative and its duly appointed representatives shall be made against and received have the authority to control any audit or examination by any Indemnitee for any Tax for which Borrower is obligated to indemnify pursuant to this Section 6(b), such Indemnitee shall notify Borrower in writing of such claim within 30 days after its receipttaxing authority, and shall provide Borrower such information regarding such claim as Borrower may reasonably request; providedcontest, howeverresolve and defend against any assessment for additional Taxes, that the failure to provide such notice shall not release Borrower from any of its obligations to indemnify under Section 6 hereof unless, and only to the extent that, such failure effectively precludes Borrower’s contest rights. To the extent permitted under applicable law, such Indemnitee will not make any payments with respect to such claim for at least 30 days after giving notice of such claim to Borrower.
(B) If requested by Borrower in writing within 30 days after its receipt of such notice or such shorter period as may be required by applicable law, such Indemnitee shall, at the expense of Borrower and subject to subparagraph (C) below, contest the validity, applicability or amount of such Taxes by, in the case of an Indemnitee-Controlled Contest, in such Indemnitee’s sole discretion or, in the case of a Borrower-Controlled Contest, in Borrower’s sole discretion, (1) resisting payment thereof if practicable, (2) not paying such Tax except under protest, (3) if protest is necessary and proper, and if payment of such Tax is made, using reasonable efforts to obtain a refund thereof, in appropriate administrative and judicial proceedings, and (4) in the case of an Indemnitee-Controlled Contest, considering in good faith any other reasonable action as Borrower may reasonably request. Each Indemnitee shall consult in good faith with Borrower and Borrower’s counsel, and Borrower shall consult in good faith with such Indemnitee and its counsel in the case of a Borrower-Controlled Contest. concerning the forum in which the contest is most likely to be favorably resolved and whether such contest shall be by (x) resisting payment of such Tax, (y) paying such Tax under protest or (z) paying such Tax and seeking a refund deficiency or other repayment thereof.
(C) In no event shall an Indemnitee be required, or Borrower permitted, to contest the imposition adjustment of any Tax for which Borrower is obligated pursuant to this Section 6(b) unless (1) Borrower shall have agreed to pay and shall promptly be paying on request all reasonable costs and expenses that such Indemnitee incurs in contesting such claim or arising out Taxes of or relating to such contest (including legal feesany liability of ▇▇▇▇▇ and its subsidiaries for all ▇▇▇▇▇ Pre-Closing Periods; PROVIDED, accounting feesHOWEVER, and disbursements, including those on appeal, if any); (2) such contest is not reasonably likely to result in a material danger that neither the ▇▇▇▇▇ Representative nor any duly appointed representative of the sale▇▇▇▇▇ Representative shall, seizure, forfeiture or loss of the Aircraft, or the creation of any Lien thereon other than Liens for Taxes (i) either not yet due or being contested in good faith by appropriate proceedings and (ii) for which such reserves, if any, as are required to be provided under generally accepted accounting principles have been provided by Borrower, and there is no risk of criminal penalties; (3) if such contest shall be conducted in a manner requiring the payment of the claim, Borrower shall have advanced sufficient funds, on an interest-free basis, to make the payment required, and shall have agreed to indemnify the Indemnitee against any additional net after-Tax cost to such Indemnitee of such advance; (4) if requested by the Indemnitee in writing, such Indemnitee shall have received an opinion of independent Tax counsel selected by Borrower and reasonably acceptable to such Indemnitee and furnished at Borrower’s sole expense to the effect that a Realistic Possibility of Success exists for contesting such claim (or, in the case of an appeal of an adverse judicial determination, a written opinion from such independent Tax counsel to the effect that it is more likely than not that such adverse judicial determination will be reversed or substantially modified); (5) Borrower shall have delivered to such Indemnitee a written acknowledgment of Borrower’s obligation to indemnify such Indemnitee to the extent that the contest is not successful; provided, however, that Borrower will not be bound by its acknowledgment of liability if the contest is resolved on a clear and unambiguous basis showing no such liability under this Section 6(b) with respect to such Tax; (6) if a Specified Default or Event of Default shall have occurred and be continuing, Borrower shall have provided security for its obligation hereunder satisfactory to the Indemnitee by placing in escrow sufficient funds to cover any such contested Tax and the reasonably expected expenses of such contest on an After-Tax Basis, or otherwise providing satisfactory provisions for payment of such amounts determined by the Indemnitee in its sole discretion; (7) the aggregate amount of all indemnity payments that Borrower may be required to make to such Indemnitee with respect to such claim (or similar or related claims) is at least $60,000; and (8) the claim is not for a Tax the imposition of which has been previously contested by, or at the request of, Borrower hereunder, and such previous contest (including all allowable appeals) was decided adversely to Borrower, unless Borrower has delivered an opinion of independent Tax counsel selected by Borrower and reasonably acceptable to the Indemnitee to the effect that, on the basis of (i) a change in applicable law, or (ii) a difference in the underlying facts, there is currently a Realistic Possibility of Success for contesting such claim.
(D) If any Indemnitee shall obtain a refund of all or any part of any Tax paid by Borrower, such Indemnitee shall pay Borrower, but not before Borrower shall have made all payments theretofore due to such Indemnitee pursuant to this Section 6(b) and any other payments theretofore due such Indemnitee under any of the Operative Documents, an amount equal to the amount of such refund (net of any Taxes imposed thereon), including interest received and attributable thereto (net of any Taxes imposed thereon) plus, if Borrower has paid an amount pursuant to the first sentence of Section 6(b)(iii)(A), any net Tax benefit (or minus any net Tax detriment) realized by such Indemnitee as a result of any refund received, and payment made, by such Indemnitee pursuant to this sentence; provided that the Indemnitee shall not be obligated to pay an amount under the preceding sentence to the extent that such amount would exceed the amount of such Taxes paid, reimbursed or advanced by Borrower to such Indemnitee (other than the cost of the contest thereof); provided, further, that any amount not paid to Borrower pursuant to the foregoing limitation shall be carried forward to reduce pro tanto any future payments that Borrower may be required to make to such Indemnitee pursuant to this Section 6(b). If any Indemnitee shall have paid Borrower any refund of all or part of any Tax paid by Borrower and it is subsequently determined that such Indemnitee was not entitled to the refund, such determination shall be treated as the imposition of a Tax for which Borrower is obligated to indemnify such Indemnitee pursuant to the provisions of this Section 6(b) without regard to the exclusions set forth in Section 6(b)(ii) (other than subparagraphs (4), (11) and (12) thereof). Provided no Specified Default or Event of Default has occurred and is continuing, an Indemnitee shall not settle any such claim or contest pursuant to this provision without the written prior consent of BorrowerUbiquiTel Parent, which consent shall not be unreasonably withheld, conditioned enter into any settlement of any contest or delayedotherwise compromise any issue that would have a material adverse effect on the Tax benefits of UbiquiTel Parent or ▇▇▇▇▇ or any subsidiary for taxable years ending after the Closing Date. UbiquiTel Parent and its duly appointed Representatives shall have the exclusive authority to control any audit or examination by any taxing authority, initiate any claim for refund, amend any Tax Return and contest, resolve and defend against any assessment for additional Taxes, notice of Tax deficiency or other adjustment of Taxes of or relating to any liability of ▇▇▇▇▇ and its subsidiaries for Taxes for any taxable year or other taxable period ending after the Closing Date (the "POST-CLOSING PERIODS"); providedPROVIDED, HOWEVER, that an Indemnitee may settle at (a) none of UbiquiTel Parent, ▇▇▇▇▇, its subsidiaries nor any time of their duly appointed representatives shall, without the prior written consent of Borrower if the Indemnitee waives ▇▇▇▇▇ Representative, enter into any settlement of any contest or otherwise compromise any issue that adversely affects the liability of the ▇▇▇▇▇ Stockholders for any ▇▇▇▇▇ Pre-Closing Period Taxes, and (by written notice to Borrowerb) none of UbiquiTel Parent, ▇▇▇▇▇, its subsidiaries nor any of their duly appointed representatives shall, without the prior consent of the ▇▇▇▇▇ Representative, enter into any settlement of any contest or otherwise compromise any issue that would require payment by Borrower of an indemnity in respect of such issue and any related issue the contest of which is effectively foreclosed by the settlement of such issue, including any payment arising from such issue in subsequent years or which by reason of the fact that such issue is of a continuing nature, and promptly pays to Borrower any Tax previously paid or any interest-free loan advanced by Borrower Controlling ▇▇▇▇▇ Stockholders (other than expenses of such contestsas defined herein) with respect to such issue.
(E) Nothing contained in this Section 6(b)(iv) shall require any Indemnitee to contest, or permit Borrower to contest in the name of such Indemnitee, a claim that such Indemnitee would otherwise be required to contest pursuant to this Section 6(b)(iv) if such Indemnitee shall waive payment by Borrower of any amount that might otherwise be payable by Borrower under this Section 6(b) in connection with such claim (other than Agreement unless UbiquiTel Parent shall have waived or caused to be waived for itself and ▇▇▇▇▇ and its subsidiaries any right to indemnification for Taxes from the costs of contest previously incurred), nor shall any Indemnitee be required to pursue any appeal to the United States Supreme CourtControlling ▇▇▇▇▇ Stockholders.
Appears in 1 contract
Contests. (Aa) Nothing in this Agreement shall be construed to prevent UpREIT from contesting, as the Tax Matters Partner in accordance with the Partnership Agreement as part of the unified audit of the Partnership, any claim involving a UpREIT item that, if successful, would result in an Income Inclusion (a "Partnership Level Issue").
(b) If UpREIT contests a written claim shall Partnership Level Issue that, if successful, would result in an Income Inclusion, UpREIT's liability for indemnification under Section 4 hereof shall, at UpREIT's election, be made against and received by deferred until thirty (30) days after a Final Determination of such Hadesman Indemnitee's federal income tax liability in respect of an Income Inclusion.
(c) If any Indemnitee for any Tax for audit or proceeding involving an indemnifiable adjustment is being conducted in a proceeding involving such Hadesman Indemnitee, which Borrower is obligated cannot be transferred to indemnify pursuant to this Section 6(bthe UpREIT as a partnership item (a "Hadesman Level Issue"), such Hadesman Indemnitee shall hereby agrees (i) promptly to notify Borrower UpREIT in writing of such claim within 30 days after adjustment (and the failure of such Hadesman Indemnitee to so notify UpREIT shall preclude any indemnity hereunder to the extent UpREIT's right to effect its receiptcontest rights hereunder has been precluded by such failure), and shall provide Borrower (ii) upon UpREIT's delivery to Hadesman of a written opinion of nationally recognized tax counsel reasonably acceptable to such information regarding Hadesman Indemnitee ("Tax Counsel") to the effect that there is a Realistic Possibility of Success upon contest, such claim as Borrower may reasonably requestHadesman Indemnitee will contest that adjustment by filing a protest and administrative appeal and prosecuting the same in good faith; provided, however, that the failure to provide such notice shall not release Borrower from any of its obligations to indemnify under Section 6 hereof unless, and only to the extent that, such failure effectively precludes Borrower’s contest rights. To the extent permitted under applicable law, such Hadesman Indemnitee will not make any payments be obligated to pursue an administrative appeal if such Hadesman Indemnitee instead pursues relief in Tax Court or a court having refund jurisdiction.
(d) If, within 30 days following the failure of such administrative proceedings with respect to such claim for at least 30 days after giving notice of such claim a Hadesman Level Issue, UpREIT delivers to Borrower.
(B) If requested by Borrower in writing within 30 days after its receipt of such notice or such shorter period as may be required by applicable law, such Hadesman Indemnitee shall, at the expense of Borrower and subject to subparagraph (C) below, contest the validity, applicability or amount of such Taxes by, in the case of an Indemnitee-Controlled Contest, in such Indemnitee’s sole discretion or, in the case of a Borrower-Controlled Contest, in Borrower’s sole discretion, (1) resisting payment thereof if practicable, (2) not paying such Tax except under protest, (3) if protest is necessary and proper, and if payment of such Tax is made, using reasonable efforts to obtain a refund thereof, in appropriate administrative and judicial proceedings, and (4) in the case of an Indemnitee-Controlled Contest, considering in good faith any other reasonable action as Borrower may reasonably request. Each Indemnitee shall consult in good faith with Borrower and Borrower’s counsel, and Borrower shall consult in good faith with such Indemnitee and its counsel in the case of a Borrower-Controlled Contest. concerning the forum in which the contest is most likely to be favorably resolved and whether such contest shall be by (x) resisting payment of such Tax, (y) paying such Tax under protest or (z) paying such Tax and seeking a refund or other repayment thereof.
(C) In no event shall an Indemnitee be required, or Borrower permitted, to contest the imposition of any Tax for which Borrower is obligated pursuant to this Section 6(b) unless (1) Borrower shall have agreed to pay and shall promptly be paying on request all reasonable costs and expenses that such Indemnitee incurs in contesting such claim or arising out of or relating to such contest (including legal fees, accounting fees, and disbursements, including those on appeal, if any); (2) such contest is not reasonably likely to result in a material danger of the sale, seizure, forfeiture or loss of the Aircraft, or the creation of any Lien thereon other than Liens for Taxes (i) either not yet due or being contested in good faith by appropriate proceedings and (ii) for which such reserves, if any, as are required to be provided under generally accepted accounting principles have been provided by Borrower, and there is no risk of criminal penalties; (3) if such contest shall be conducted in a manner requiring the payment of the claim, Borrower shall have advanced sufficient funds, on an interest-free basis, to make the payment required, and shall have agreed to indemnify the Indemnitee against any additional net after-Tax cost to such Indemnitee of such advance; (4) if requested by the Indemnitee in writing, such Indemnitee shall have received an written opinion of independent Tax counsel selected by Borrower and reasonably acceptable to such Indemnitee and furnished at Borrower’s sole expense Counsel to the effect that there is a Realistic Possibility of Success exists if the proposed adjustment is presented to a court for contesting resolution, then such claim (or, Hadesman Indemnitee will contest the proposed adjustment in good faith in the case Tax Court or by paying the tax (and any applicable interest and penalties) and suing for refund in the Court of an appeal Federal Claims or appropriate Federal District Court. If, within 30 days following a final adverse decision of an adverse judicial determinationsuch court with respect to such Hadesman Level Issue, UpREIT delivers to such Hadesman Indemnitee a written opinion from such independent of Tax counsel Counsel to the effect that it is more likely than not that such adverse judicial determination will decision would be reversed on appeal, then such Hadesman Indemnitee will appeal such decision to the appropriate Federal Court of Appeals. With respect to any of the above-described proceedings, such Hadesman Indemnitee will keep UpREIT and its counsel informed as to the progress of such proceedings, give UpREIT and its counsel the opportunity to review and comment in advance on all written submissions and filings relevant to indemnifiable issues (after making appropriate redactions to preserve the confidentiality of the such Hadesman Indemnitee return as to other issues), and consider in good faith any suggestions made by UpREIT or substantially modifiedits counsel.
(e) Such Hadesman Indemnitee shall present any settlement offer provided to such Hadesman Indemnitee pursuant to a Hadesman Level Issue to UpREIT. If UpREIT recommends acceptance of a settlement offer of a Hadesman Level Issue or if the Tax Matters Partner recommends acceptance of a settlement offer in respect of a Partnership Level Issue, but such Hadesman Indemnitee declines to accept such offer in writing within 30 days (if such Hadesman Indemnitee does not respond within 30 days, such lack of response shall be treated as acceptance of UpREIT's or the Tax Matters Partner's recommendation, respectively); , (51) Borrower the obligation of UpREIT to make indemnity payments as the result of any such contest or proceedings shall not thereafter exceed the obligation that it would have had if such contest had been settled or proceeding terminated on the basis recommended by UpREIT or the Tax Matters Partner, as applicable, and (2) in the case of a Hadesman Level Issue, UpREIT shall have delivered no further liability for costs or other expenses in respect of such contest.
(f) Notwithstanding the foregoing, such Hadesman Indemnitee will have no obligation to contest any action with respect to a Hadesman Level Issue (i) unless such items could give rise to a federal income tax liability (disregarding other items in the assessment and considering effects in future years) in excess of $25,000, (ii) without UpREIT paying when due, reasonable third-party costs and out-of-pocket expenses including reasonable legal, witness and accounting fees and other expenses and, in the case of proceedings before the Court of Federal Claims or Federal District Court, the amount of tax (and any applicable interest and penalties) for which refund is claimed, and (iii) to the extent such Hadesman Indemnitee a written acknowledgment of Borrower’s waives in writing UpREIT's obligation to indemnify such Hadesman Indemnitee to the extent that the contest is not successful; providedfor such items, however, that Borrower will not be bound by its acknowledgment of liability if the contest is resolved on a clear in which case all third- party costs and unambiguous basis showing no such liability under this Section 6(b) with respect to such Tax; (6) if a Specified Default or Event of Default shall have occurred and be continuing, Borrower shall have provided security for its obligation hereunder satisfactory to the Indemnitee by placing out-of-pocket expenses described in escrow sufficient funds to cover any such contested Tax and the reasonably expected expenses of such contest on an After-Tax Basis, or otherwise providing satisfactory provisions for payment of such amounts determined by the Indemnitee in its sole discretion; (7) the aggregate amount of all indemnity payments that Borrower may be required to make to such Indemnitee with respect to such claim (or similar or related claims) is at least $60,000; and (8) the claim is not for a Tax the imposition of which has been previously contested by, or at the request of, Borrower hereunder, and such previous contest (including all allowable appeals) was decided adversely to Borrower, unless Borrower has delivered an opinion of independent Tax counsel selected by Borrower and reasonably acceptable to the Indemnitee to the effect that, on the basis of (i) a change in applicable law, or clause (ii) a difference in the underlying facts, there is currently a Realistic Possibility of Success for contesting thereafter incurred and all taxes would be paid by such claimHadesman Indemnitee.
(Dg) If any Indemnitee shall obtain a refund of all or any part of any Tax paid by Borrower, such Indemnitee shall pay Borrower, but not before Borrower shall have made all payments theretofore due to such Indemnitee pursuant to this Section 6(b) and any other payments theretofore due such Indemnitee under any of the Operative Documents, an amount equal to the amount of such refund (net of any Taxes imposed thereon), including interest received and attributable thereto (net of any Taxes imposed thereon) plus, if Borrower has paid an amount pursuant to the first sentence of Section 6(b)(iii)(A), any net Tax benefit (or minus any net Tax detriment) realized by such Indemnitee as a result of any refund received, and payment made, by such Indemnitee pursuant to this sentence; provided that the Indemnitee shall not be obligated to pay an amount under the preceding sentence to the extent that such amount would exceed the amount of such Taxes paid, reimbursed or advanced by Borrower to such Indemnitee (other than the cost of the contest thereof); provided, further, that any amount not paid to Borrower pursuant to the foregoing limitation shall be carried forward to reduce pro tanto any future payments that Borrower may be required to make to such Indemnitee pursuant to this Section 6(b). If any Indemnitee shall have paid Borrower any refund of all or part of any Tax paid by Borrower and it is subsequently determined that such Indemnitee was not entitled to the refund, such determination shall be treated as the imposition of a Tax for which Borrower is obligated to indemnify such Indemnitee pursuant to the provisions of this Section 6(b) without regard to the exclusions set forth in Section 6(b)(ii) (other than subparagraphs (4), (11) and (12) thereof). Provided no Specified Default or Event of Default has occurred and is continuing, an Hadesman Indemnitee shall not settle any such claim or contest pursuant to this provision Hadesman Level Issue without the written consent of Borrower, which consent UpREIT's consent; provided that such Hadesman Indemnitee shall not be unreasonably withheld, conditioned or delayed; provided, that an Indemnitee required to contest any proposed adjustment and may settle at any time without the consent of Borrower such proposed adjustment if the such Hadesman Indemnitee waives (by written notice shall waive its right to Borrower) the payment by Borrower of an indemnity in respect of such issue and any related issue the contest of which is effectively foreclosed by the settlement of such issue, including any payment arising from such issue in subsequent years or which by reason of the fact that such issue is of a continuing nature, and promptly pays to Borrower any Tax previously paid or any interest-free loan advanced by Borrower (other than expenses of such contests) under this Agreement with respect to such issueadjustment and any Income Inclusion that results from such adjustment and, in the case of proceedings before the Court of Federal Claims or Federal District Court, shall pay to UpREIT the amount of tax (and any applicable interest and penalties) previously paid or advanced by UpREIT with respect to such adjustment or the contest of such adjustment under Section 6(f), plus interest at ___% computed from the time such amounts were paid or advanced by UpREIT.
(Eh) Nothing contained Within thirty (30) days after a Final Determination of the liability of such Hadesman Indemnitee in this Section 6(b)(ivrespect of a Hadesman Level Issue, UpREIT and each Hadesman Indemnitee agree to pay each other, as applicable, the net amount of (i) shall require the payment owed by the UpREIT to such Hadesman Indemnitee of any indemnification hereunder, not theretofore paid resulting from the outcome of such contest, and (ii) in the case of proceedings before the Court of Federal Claims or Federal District Court, the repayment owed by such Hadesman Indemnitee to contest, UpREIT of the amount of tax (and any applicable interest and penalties) previously paid or permit Borrower advanced by UpREIT with respect to such adjustment or the contest in the name of such Indemnitee, a claim that such Indemnitee would otherwise be required to contest pursuant to this adjustment under Section 6(b)(iv) if such Indemnitee shall waive payment by Borrower of any amount that might otherwise be payable by Borrower under this Section 6(b) in connection with such claim (other than the costs of contest previously incurred6(f), nor shall together with any interest received by or credited to such Hadesman Indemnitee be required that is attributable to pursue any appeal to the United States Supreme Courtsuch advance.
Appears in 1 contract
Sources: Tax Indemnification Agreement (Prime Group Realty Trust)
Contests. (A) If a written any claim shall be made against and received by any Tax Indemnitee or if any proceeding shall be commenced against any Tax Indemnitee (including a written notice of such proceeding) for any Tax for Imposition as to which Borrower is obligated to indemnify the Lessee may have an indemnity obligation pursuant to this Section 6(b)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, such Tax Indemnitee shall notify Borrower promptly and in writing of such claim any event, within 30 days after its receipta Responsible Officer of such Tax Indemnitee has actual knowledge thereof notify the Lessee in 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 alter such Tax Indemnitee’s rights under this Section 13.4, except to the extent such failure precludes or materially adversely affects the ability to conduct a contest of any indemnified Taxes) and shall provide Borrower not take any action with respect to such information regarding claim, proceeding or Imposition without the written consent of the Lessee (such claim as Borrower may reasonably requestconsent 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 failure case of any such claim or proceeding, if such Tax Indemnitee shall be required by law or regulation to provide 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 release Borrower from take any of its obligations to indemnify under Section 6 hereof unless, and only to the extent that, such failure effectively precludes Borrower’s contest rights. To the extent permitted under applicable law, such Indemnitee will not make any payments action with respect to such claim claim, proceeding or Imposition without the consent of the Lessee (such consent not to be unreasonably withheld or unreasonably delayed) for at least 30 10 days after giving notice of such claim to Borrower.
(B) If requested by Borrower in writing within 30 days after its the receipt of such notice by the 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 Lessee shall be entitled for a period of 60 days from receipt of such notice from the Tax Indemnitee (or such shorter period as may be the Tax Indemnitee has notified the Lessee is required by applicable lawlaw or regulation for the Tax Indemnitee to commence such contest), such Indemnitee shall, at the expense of Borrower and subject to subparagraph (C) belowthe immediately following sentence, contest the validity, applicability or amount to assume control of such Taxes bycontest or if such contest is of a type that must be pursued, if at all, in the case name of an such Tax Indemnitee-Controlled Contest, require that such Tax Indemnitee pursue such contest. If (x) such contest can be pursued in the name of the Lessee and independently from any other proceeding involving a Tax liability of such Tax Indemnitee for which the Lessee has not agreed to indemnify such Tax Indemnitee’s sole discretion or, (y) such contest must be pursued in the name of the Tax Indemnitee, but can be pursued independently from any other proceeding involving a Tax liability of such Tax Indemnitee for which the Lessee has not agreed to indemnify such Tax Indemnitee or (z) 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 Borrower-Controlled Contest, contest described in Borrower’s sole discretion, (1) resisting payment thereof if practicable, (2) not paying such Tax except under protest, (3) if protest is necessary and proper, and if payment any of such Tax is made, using reasonable efforts to obtain a refund thereof, in appropriate administrative and judicial proceedings, and (4) in the case of an Indemnitee-Controlled Contest, considering in good faith any other reasonable action as Borrower may reasonably request. Each Indemnitee shall consult in good faith with Borrower and Borrower’s counsel, and Borrower shall consult in good faith with such Indemnitee and its counsel in the case of a Borrower-Controlled Contest. concerning the forum in which the contest is most likely to be favorably resolved and whether such contest shall be by clause (x) resisting payment of such Tax), (y) paying such Tax under protest or (z) paying if the Tax Indemnitee determines reasonably and in good faith that such contest by the Lessee could have a material adverse effect on the business or operations of the Tax Indemnitee and seeking provides a refund written explanation to the Lessee of such determination, the Tax Indemnitee may elect to control or reassert control of the contest, and provided, that by taking control of the contest, 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) of the preceding sentence, 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 repayment thereof.
(C) claims requested to be contested by the Lessee, the Tax Indemnitee shall control the contest of such claim, acting through counsel of its selection reasonably acceptable to the Lessee. In no event shall an the Lessee be permitted to contest (or the Tax Indemnitee be requiredrequired 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 Borrower permitted, to contest the imposition creation of any Lien (other than a Permitted Lien) on the Subject Property, the CSC Sublease, any Fifth Floor Sublease 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 satisfactory to the relevant Tax Indemnitee in respect of the Taxes subject to such claim and any and all expenses for which Borrower Lessee is obligated pursuant to this Section 6(bresponsible hereunder, (C) unless (1) Borrower the Lessee shall have agreed to pay and shall promptly be paying pay to such Tax Indemnitee on request demand all reasonable costs out-of-pocket costs, losses and expenses that such Tax Indemnitee incurs may incur in connection with contesting such claim or arising out of or relating to such contest (Imposition, including legal feesall reasonable legal, accounting fees, and disbursements, including those on appeal, if any); (2) investigatory fees and disbursements as well as the Impositions which are the subject of such claim to the extent the contest is not reasonably likely to result in a material danger of the sale, seizure, forfeiture or loss of the Aircraftunsuccessful, or the creation of any Lien thereon other than Liens for Taxes (i) either not yet due or being contested in good faith by appropriate proceedings and (ii) for which such reserves, if any, as are required to be provided under generally accepted accounting principles have been provided by Borrower, and there is no risk of criminal penalties; (3D) if such contest shall be conducted in a manner requiring involve the payment of the claimTax prior to the contest, Borrower unless the Lessee shall have advanced sufficient funds, on provide to the Tax Indemnitee an interest-free basis, advance in an amount equal to make the payment required, and shall have agreed to indemnify Imposition that the Indemnitee against any is required to pay (with no additional net after-Tax cost 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: (1) 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 advance; Tax Indemnitee for which the Lessee may be liable to pay an indemnity under this Section 13.4(b)) exceeds $50,000 and (42) unless, if requested by the Indemnitee in writingTax Indemnitee, such Indemnitee the Lessee shall have received provided to the Tax Indemnitee an opinion of independent Tax from counsel or a tax accountancy firm selected by Borrower the Lessee and reasonably acceptable to such the Tax Indemnitee and furnished at Borrower’s sole expense to the effect confirming that a Realistic Possibility of Success reasonable basis exists for contesting to contest such claim (or, or in the case of an appeal of an adverse judicial determination, an opinion of such counsel to the effect that it is more likely than not that the determination may be reversed on appeal). In no event shall a Tax Indemnitee be required to appeal an adverse judicial determination to the United States Supreme Court. The party conducting the contest shall consult in good faith with the other party and its counsel with respect to the contest of such claim for Taxes (or claim for refund). 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 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, unless such Tax Indemnitee waives its right to be indemnified under this Section 13.4 with respect to such claim. Notwithstanding anything contained herein to the contrary, a Tax Indemnitee 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 Tax Indemnitee shall waive its right to indemnification under this Section 13.4 with respect to such claim (and any claim with respect to such year or any other taxable year, the contest of which is materially adversely affected as a result of such waiver) or (ii) such Tax is the sole result of a claim of a continuing and consistent nature, which claim has previously been resolved against the relevant Tax Indemnitee (unless a change in law or facts has occurred since such prior adverse resolution and Lessee provides an opinion from such of independent Tax tax counsel to the effect that it is more likely than not that such adverse judicial determination change in law or facts will be reversed or substantially modified); (5) Borrower shall have delivered to such Indemnitee result in a written acknowledgment favorable resolution of Borrower’s obligation to indemnify such Indemnitee to the extent that the contest is not successful; provided, however, that Borrower will not be bound by its acknowledgment of liability if the contest is resolved on a clear and unambiguous basis showing no such liability under this Section 6(b) with respect to such Tax; (6) if a Specified Default or Event of Default shall have occurred and be continuing, Borrower shall have provided security for its obligation hereunder satisfactory to the Indemnitee by placing in escrow sufficient funds to cover any such contested Tax and the reasonably expected expenses of such contest on an After-Tax Basis, or otherwise providing satisfactory provisions for payment of such amounts determined by the Indemnitee in its sole discretion; (7) the aggregate amount of all indemnity payments that Borrower may be required to make to such Indemnitee with respect to such claim (or similar or related claims) is at least $60,000; and (8) the claim is not for a Tax the imposition of which has been previously contested by, or at the request of, Borrower hereunder, and such previous contest (including all allowable appeals) was decided adversely to Borrower, unless Borrower has delivered an opinion of independent Tax counsel selected by Borrower and reasonably acceptable to the Indemnitee to the effect that, on the basis of (i) a change in applicable law, or (ii) a difference in the underlying facts, there is currently a Realistic Possibility of Success for contesting such claimissue).
(D) If any Indemnitee shall obtain a refund of all or any part of any Tax paid by Borrower, such Indemnitee shall pay Borrower, but not before Borrower shall have made all payments theretofore due to such Indemnitee pursuant to this Section 6(b) and any other payments theretofore due such Indemnitee under any of the Operative Documents, an amount equal to the amount of such refund (net of any Taxes imposed thereon), including interest received and attributable thereto (net of any Taxes imposed thereon) plus, if Borrower has paid an amount pursuant to the first sentence of Section 6(b)(iii)(A), any net Tax benefit (or minus any net Tax detriment) realized by such Indemnitee as a result of any refund received, and payment made, by such Indemnitee pursuant to this sentence; provided that the Indemnitee shall not be obligated to pay an amount under the preceding sentence to the extent that such amount would exceed the amount of such Taxes paid, reimbursed or advanced by Borrower to such Indemnitee (other than the cost of the contest thereof); provided, further, that any amount not paid to Borrower pursuant to the foregoing limitation shall be carried forward to reduce pro tanto any future payments that Borrower may be required to make to such Indemnitee pursuant to this Section 6(b). If any Indemnitee shall have paid Borrower any refund of all or part of any Tax paid by Borrower and it is subsequently determined that such Indemnitee was not entitled to the refund, such determination shall be treated as the imposition of a Tax for which Borrower is obligated to indemnify such Indemnitee pursuant to the provisions of this Section 6(b) without regard to the exclusions set forth in Section 6(b)(ii) (other than subparagraphs (4), (11) and (12) thereof). Provided no Specified Default or Event of Default has occurred and is continuing, an Indemnitee shall not settle any such claim or contest pursuant to this provision without the written consent of Borrower, which consent shall not be unreasonably withheld, conditioned or delayed; provided, that an Indemnitee may settle at any time without the consent of Borrower if the Indemnitee waives (by written notice to Borrower) the payment by Borrower of an indemnity in respect of such issue and any related issue the contest of which is effectively foreclosed by the settlement of such issue, including any payment arising from such issue in subsequent years or which by reason of the fact that such issue is of a continuing nature, and promptly pays to Borrower any Tax previously paid or any interest-free loan advanced by Borrower (other than expenses of such contests) with respect to such issue.
(E) Nothing contained in this Section 6(b)(iv) shall require any Indemnitee to contest, or permit Borrower to contest in the name of such Indemnitee, a claim that such Indemnitee would otherwise be required to contest pursuant to this Section 6(b)(iv) if such Indemnitee shall waive payment by Borrower of any amount that might otherwise be payable by Borrower under this Section 6(b) in connection with such claim (other than the costs of contest previously incurred), nor shall any Indemnitee be required to pursue any appeal to the United States Supreme Court.
Appears in 1 contract
Contests. (A) If a written claim shall be is made against and received by an Indemnitee or if any proceeding is commenced against an Indemnitee (including a written notice of such proceeding) for any 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 Borrower is obligated to indemnify pursuant to this Section 6(b)Lessee could have an indemnity obligation hereunder, such Indemnitee shall notify Borrower promptly give Lessee notice in writing of such claim within 30 days after its receipt, and shall provide Borrower such information regarding such claim as Borrower may reasonably request; (provided, however, that the failure to provide such notice shall not release Borrower from any of its affect Lessee's obligations to indemnify under Section 6 hereof unless, and only hereunder to the extent that, Owner Participant unless such failure effectively precludes Borrower’s shall materially adversely affect the right to contest rights. To the extent permitted under applicable law, such Indemnitee will claim) and shall not make take any payments action with respect to such claim or Tax without the consent of Lessee for at least 30 days after giving notice following the receipt of such claim notice by Lessee; provided, however, that, if such Indemnitee shall be required by law to Borrower.
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 relating to such Taxes with respect to which Lessee may be required to indemnify hereunder. If requested by Borrower Lessee in writing within 30 days after its receipt of such notice or such shorter period as may be required by applicable lawnotice, such Indemnitee shall, at the expense of Borrower Lessee (including all reasonable out-of-pocket costs, in-house attorney fees and subject outside attorney and accountants fees), in good faith contest (or, if permitted by applicable law, allow Lessee to subparagraph (Ccontest, 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) below, contest through appropriate administrative and judicial proceedings the validity, applicability or amount of such Taxes by, in the case of an Indemnitee-Controlled Contest, in such Indemnitee’s sole discretion or, in the case of a Borrower-Controlled Contest, in Borrower’s sole discretion, by (1X) resisting payment thereof if practicablethereof, (2Y) not paying such Tax the same except under protest, (3) protest if protest is necessary and proper, and proper or (Z) if the payment of such Tax is made, using reasonable efforts to obtain a refund thereofthereof in an appropriate administrative and/or judicial proceeding. If requested to do so by Lessee in writing, the Indemnitee shall appeal any adverse administrative or judicial decision, except that the Indemnitee shall not be required to pursue any appeals to the United States Supreme Court. If and to the extent the Indemnitee is able to separate the contested issue or issues from other issues arising in the same administrative or judicial proceeding that are unrelated to the transactions contemplated by the Operative Documents without, in appropriate administrative and judicial proceedings, and (4) in the case of an Indemnitee-Controlled Contest, considering in good faith any other reasonable action as Borrower may reasonably request. Each judgment of such Indemnitee, adversely affecting such Indemnitee, such Indemnitee shall consult permit Lessee to control the conduct of any such proceeding and shall provide to Lessee such information or data that is in good faith with Borrower and Borrower’s counsel, and Borrower shall consult in good faith with such Indemnitee and its counsel in Indemnitee's control or possession that is reasonably necessary to conduct such contest. In the case of a Borrower-Controlled Contest. concerning contest controlled by an Indemnitee, such Indemnitee shall consult with Lessee in good faith regarding the forum in which manner of contesting such claim and shall keep Lessee reasonably informed regarding the contest is most likely to be favorably resolved and whether such contest shall be by (x) resisting payment progress of such Taxcontest. An Indemnitee shall not fail to take any action expressly required by this Section 6(b)(iv) (including, without limitation, any action regarding any appeal of an adverse determination with respect to any claim) or settle or compromise any claim without the prior written consent of Lessee (y) paying such Tax under protest or (z) paying such Tax and seeking a refund or other repayment thereof.
(C) In except as contemplated by this Section 6(b)(iv)). Notwithstanding the foregoing, in no event shall an Indemnitee be required, required to pursue any contest (or Borrower permitted, to contest the imposition of permit Lessee to pursue any Tax for which Borrower is obligated pursuant to this Section 6(bcontest) unless (1A) Borrower Lessee shall have agreed to pay and shall promptly be paying such Indemnitee on request demand all reasonable costs out-of-pocket costs, in-house attorney fees and expenses outside attorney and accountants fees that such Indemnitee incurs shall incur in connection with contesting such claim or arising out of or relating to such contest claim, (including legal fees, accounting fees, and disbursements, including those on appeal, if any); (2) such contest is not reasonably likely to result in a material danger of the sale, seizure, forfeiture or loss of the Aircraft, or the creation of any Lien thereon other than Liens for Taxes (i) either not yet due or being contested in good faith by appropriate proceedings and (ii) for which such reserves, if any, as are required to be provided under generally accepted accounting principles have been provided by Borrower, and there is no risk of criminal penalties; (3B) if such contest shall be conducted in a manner requiring involve the payment of the claim, Borrower Lessee shall have advanced sufficient fundsadvance the amount thereof plus (to the extent indemnified hereunder) interest, penalties and additions to tax with respect thereto that are required to be paid prior to the commencement of such contest on an interest-free basis, to make the payment required, basis and shall have agreed to indemnify the Indemnitee against any with no additional net after-Tax after- tax cost to such Indemnitee of (and such advance; 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), (4C) if requested by the Indemnitee in writing, such Indemnitee shall have received an opinion reasonably determined that the action to be taken will not result in any material risk of independent Tax counsel selected by Borrower and reasonably acceptable to such Indemnitee and furnished at Borrower’s sole expense to forfeiture, sale or loss of the effect that a Realistic Possibility of Success exists for contesting such claim Aircraft (or, in the case of an appeal of an adverse judicial determination, a written opinion from such independent Tax counsel to the effect that it is more likely than not that such adverse judicial determination will be reversed or substantially modified); (5) Borrower unless Lessee shall have delivered made provisions to protect the interests of any such Indemnitee a written acknowledgment of Borrower’s obligation to indemnify such Indemnitee to the extent that the contest is not successful; providedIndemnitee), however, that Borrower will not be bound by its acknowledgment of liability if the contest is resolved on a clear and unambiguous basis showing (D) no such liability under this Section 6(b) with respect to such Tax; (6) if a Specified Default or Lease Event of Default shall have occurred and be continuing, Borrower shall have continuing at the time the contest is begun unless Lessee has provided security for its obligation obligations hereunder satisfactory by advancing to such Indemnitee before proceeding with such contest, 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, (E) in the case of a contest that is being pursued by placing in escrow sufficient funds to cover any such contested Tax and the reasonably expected expenses of such contest on an After-Tax BasisIndemnitee, or otherwise providing satisfactory provisions for payment of such amounts determined by the Indemnitee in its sole discretion; (7) the aggregate amount of the claim (together with the amount of all related claims that 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 payments obligation under this Section 6(b)(iv)) is at least $50,000 and (F) if requested prior to or during the contest by the Indemnitee, independent tax counsel selected by Lessee and reasonably acceptable to the Indemnitee, renders to the Indemnitee a written opinion that Borrower there is a reasonable basis (under the standard set forth in ABA Formal Opinion 85-352 or any successor thereto) for contesting such claim. Notwithstanding the foregoing, (X) Lessee shall not be permitted to contest in the name of the Indemnitee if such contest involves Taxes based on or measured by the gross or net income of the Indemnitee and, provided, that if the Indemnitee determines in good faith that it is reasonably likely that such contest may have a material adverse impact on the Indemnitee, such Indemnitee may retain or reassert control of any contest Lessee would otherwise be permitted to contest, and (Y) if any Indemnitee shall release, waive, compromise or settle any claim which may be required indemnifiable by Lessee pursuant to make this Section 6(b) without the written permission of Lessee, Lessee's obligation to indemnify such Indemnitee with respect to such claim (or similar or related claims) is at least $60,000; and (8) the claim is not for a Tax the imposition of which has been previously contested by, or at the request of, Borrower hereunder, and such previous contest (including all allowable appeals) was decided adversely to Borrower, unless Borrower has delivered an opinion of independent Tax counsel selected by Borrower and reasonably acceptable to the Indemnitee to the effect that, on the basis of (i) a change in applicable law, or (ii) a difference in the underlying facts, there is currently a Realistic Possibility of Success for contesting such claim.
(D) If any Indemnitee shall obtain a refund of all or any part of any Tax paid by Borrower, such Indemnitee shall pay Borrower, but not before Borrower shall have made all payments theretofore due to such Indemnitee pursuant to this Section 6(b) and any other payments theretofore due such Indemnitee under any of the Operative Documents, an amount equal to the amount of such refund (net of any Taxes imposed thereon), including interest received and attributable thereto (net of any Taxes imposed thereon) plus, if Borrower has paid an amount pursuant to the first sentence of Section 6(b)(iii)(A), any net Tax benefit (or minus any net Tax detriment) realized by such Indemnitee as a result of any refund received, and payment made, by such Indemnitee pursuant to this sentence; provided that the Indemnitee shall not be obligated to pay an amount under the preceding sentence to the extent that such amount would exceed the amount of such Taxes paid, reimbursed or advanced by Borrower to such Indemnitee (other than the cost of the contest thereof); provided, further, that any amount not paid to Borrower pursuant to the foregoing limitation shall be carried forward to reduce pro tanto any future payments that Borrower may be required to make to such Indemnitee pursuant to this Section 6(b). If any Indemnitee shall have paid Borrower any refund of all or part of any Tax paid by Borrower and it is subsequently determined that such Indemnitee was not entitled to the refund, such determination shall be treated as the imposition of a Tax for which Borrower is obligated to indemnify such Indemnitee pursuant to the provisions of this Section 6(b) without regard to the exclusions set forth in Section 6(b)(ii) (other than subparagraphs (4), (11) and (12) thereof). Provided no Specified Default or Event of Default has occurred and is continuing, an Indemnitee shall not settle any such claim or contest pursuant to this provision without the written consent of Borrower, which consent shall not be unreasonably withheld, conditioned or delayed; provided, that an Indemnitee may settle at any time without the consent of Borrower if the Indemnitee waives (by written notice to Borrower) the payment by Borrower of an indemnity in respect of such issue and any related issue the contest of which is effectively foreclosed by the settlement of such issue, including any payment arising from such issue in subsequent years or which by reason materially prejudiced as a result of the fact that such issue is of a continuing naturerelease, waiver, compromise or settlement) shall terminate, subject to this Section 6(b)(iv), and promptly pays subject to Borrower Section 6(b)(iii), such Indemnitee shall repay to Lessee any Tax amount previously paid or any interest-free loan advanced by Borrower (other than expenses of to such contests) Indemnitee with respect to such issue.
(E) Nothing contained in this Section 6(b)(iv) shall require any Indemnitee claim, plus interest at the rate that would have been payable by the relevant taxing authority with respect to contest, or permit Borrower to contest in the name a refund of such Indemnitee, a claim that such Indemnitee would otherwise be required to contest pursuant to this Section 6(b)(iv) if such Indemnitee shall waive payment by Borrower of any amount that might otherwise be payable by Borrower under this Section 6(b) in connection with such claim (other than the costs of contest previously incurred), nor shall any Indemnitee be required to pursue any appeal to the United States Supreme CourtTax.
Appears in 1 contract
Contests. (Ai) If After the Closing, each party shall promptly notify the other party of any demand, claim or notice of the commencement of a written claim shall be made against and Tax Proceeding received by any Indemnitee for any Tax with respect to Taxes for which Borrower OpCo or Buyer is obligated to indemnify liable pursuant to this Section 6(b), such Indemnitee shall notify Borrower in writing of such claim within 30 days after its receipt, and shall provide Borrower such information regarding such claim as Borrower may reasonably requestAgreement; provided, however, that the a party’s failure to provide give such notice shall not release Borrower from any of its obligations to indemnify under Section 6 hereof unless, and only to the extent that, such failure effectively precludes Borrower’s contest rights. To the extent permitted under applicable law, such Indemnitee will not make any payments with respect affect the other party’s rights to such claim for at least 30 days after giving notice of such claim to Borrower.
(B) If requested by Borrower in writing within 30 days after its receipt of such notice or such shorter period as may be required by applicable law, such Indemnitee shall, at the expense of Borrower and subject to subparagraph (C) below, contest the validity, applicability or amount of such Taxes by, in the case of an Indemnitee-Controlled Contest, in such Indemnitee’s sole discretion or, in the case of a Borrower-Controlled Contest, in Borrower’s sole discretion, (1) resisting payment thereof if practicable, (2) not paying such Tax except indemnification under protest, (3) if protest is necessary and proper, and if payment of such Tax is made, using reasonable efforts to obtain a refund thereof, in appropriate administrative and judicial proceedings, and (4) in the case of an Indemnitee-Controlled Contest, considering in good faith any other reasonable action as Borrower may reasonably request. Each Indemnitee shall consult in good faith with Borrower and Borrower’s counsel, and Borrower shall consult in good faith with such Indemnitee and its counsel in the case of a Borrower-Controlled Contest. concerning the forum in which the contest is most likely to be favorably resolved and whether such contest shall be by (x) resisting payment of such Tax, (y) paying such Tax under protest or (z) paying such Tax and seeking a refund or other repayment thereof.
(C) In no event shall an Indemnitee be required, or Borrower permitted, to contest the imposition of any Tax for which Borrower is obligated pursuant to this Section 6(b) unless (1) Borrower shall have agreed to pay and shall promptly be paying on request all reasonable costs and expenses that such Indemnitee incurs in contesting such claim or arising out of or relating to such contest (including legal fees, accounting fees, and disbursements, including those on appeal, if any); (2) such contest is not reasonably likely to result in a material danger of the sale, seizure, forfeiture or loss of the Aircraft, or the creation of any Lien thereon other than Liens for Taxes (i) either not yet due or being contested in good faith by appropriate proceedings and (ii) for which such reserves, if any, as are required to be provided under generally accepted accounting principles have been provided by Borrower, and there is no risk of criminal penalties; (3) if such contest shall be conducted in a manner requiring the payment of the claim, Borrower shall have advanced sufficient funds, on an interest-free basis, to make the payment required, and shall have agreed to indemnify the Indemnitee against any additional net after-Tax cost to such Indemnitee of such advance; (4) if requested by the Indemnitee in writing, such Indemnitee shall have received an opinion of independent Tax counsel selected by Borrower and reasonably acceptable to such Indemnitee and furnished at Borrower’s sole expense to the effect that a Realistic Possibility of Success exists for contesting such claim (or, in the case of an appeal of an adverse judicial determination, a written opinion from such independent Tax counsel to the effect that it is more likely than not that such adverse judicial determination will be reversed or substantially modified); (5) Borrower shall have delivered to such Indemnitee a written acknowledgment of Borrower’s obligation to indemnify such Indemnitee 6.1 except to the extent that the other party is materially prejudiced thereby. Such notice shall contain factual information (to the extent known) describing the asserted Tax liability and shall include copies of the relevant portion of any notice or other document received from any Tax Authority or any other Person in respect of any such asserted Tax liability.
(ii) At OpCo’s request and expense, Buyer shall contest is not successful; provided(or cause to be contested) any asserted Pre-Closing Tax Period Tax liability for which OpCo may have an indemnity obligation under Section 6.1(a)(i). If OpCo so elects, howeverOpCo shall control the conduct, that Borrower will not be bound by through counsel of its acknowledgment own choosing and at its own expense, of any Tax Proceeding involving any asserted Pre-Closing Tax Period Tax liability if the contest is resolved on a clear and unambiguous basis showing no such liability under this Section 6(b) with respect to such Tax; (6) if a Specified Default or Event of Default shall have occurred and be continuing, Borrower shall have provided security the Company and/or its Subsidiaries relating to Pre-Closing Tax Period Taxes for its obligation hereunder satisfactory to the Indemnitee by placing in escrow sufficient funds to cover any such contested Tax and the reasonably expected expenses of such contest on an After-Tax Basis, or otherwise providing satisfactory provisions for payment of such amounts determined by the Indemnitee in its sole discretion; (7) the aggregate amount of all indemnity payments that Borrower may be required to make to such Indemnitee with respect to such claim (or similar or related claims) which OpCo is at least $60,000; and (8) the claim is not for a Tax the imposition of which has been previously contested by, or at the request of, Borrower hereunder, and such previous contest (including all allowable appeals) was decided adversely to Borrower, unless Borrower has delivered an opinion of independent Tax counsel selected by Borrower and reasonably acceptable to the Indemnitee to the effect that, on the basis of (i) a change in applicable law, or (ii) a difference in the underlying facts, there is currently a Realistic Possibility of Success for contesting such claim.
(D) If any Indemnitee shall obtain a refund of all or any part of any Tax paid by Borrower, such Indemnitee shall pay Borrower, but not before Borrower shall have made all payments theretofore due to such Indemnitee liable pursuant to this Section 6(b) and any other payments theretofore due such Indemnitee under any of the Operative Documents, an amount equal to the amount of such refund (net of any Taxes imposed thereon6.1(a)(i), including interest received and attributable thereto (net of any Taxes imposed thereon) plus, if Borrower has paid an amount pursuant to the first sentence of Section 6(b)(iii)(A), any net Tax benefit (or minus any net Tax detriment) realized by such Indemnitee as a result of any refund received, and payment made, by such Indemnitee pursuant to this sentence; provided that Buyer and its Affiliates shall have the Indemnitee right to participate in such Tax Proceeding, including through counsel of their choosing, at their own expense. OpCo shall keep Buyer fully informed on a timely basis of all matters relating to any Tax Proceeding controlled by OpCo hereunder. OpCo shall not be obligated to pay an amount under the preceding sentence to the extent that such amount would exceed the amount of such Taxes paid, reimbursed accept any proposed adjustment or advanced by Borrower to such Indemnitee (other than the cost of the contest thereof); provided, further, that enter into any amount not paid to Borrower pursuant to the foregoing limitation shall be carried forward to reduce pro tanto any future payments that Borrower may be required to make to such Indemnitee pursuant to this Section 6(b). If any Indemnitee shall have paid Borrower any refund of all settlement or part of agreement in compromise regarding any Tax paid Proceeding controlled by Borrower and it is subsequently determined that such Indemnitee was not entitled to the refund, such determination shall be treated as the imposition of a Tax for which Borrower is obligated to indemnify such Indemnitee pursuant to the provisions of this Section 6(b) without regard to the exclusions set forth in Section 6(b)(ii) (other than subparagraphs (4), (11) and (12) thereof). Provided no Specified Default or Event of Default has occurred and is continuing, an Indemnitee shall not settle any such claim or contest pursuant to this provision OpCo without the written consent of BorrowerBuyer, which consent shall not be unreasonably withheld, conditioned or delayed.
(iii) In the case of a Tax Proceeding that relates to a Straddle Period, Buyer shall control the conduct of such Tax Proceeding, but OpCo shall have the right to participate in such Tax Proceeding at its own expense; providedprovided that Buyer shall not accept any proposed adjustment or enter into any settlement or agreement in compromise regarding any such Tax Proceeding without OpCo’s prior written consent (such consent not to be unreasonably withheld, that an Indemnitee may settle at conditioned or delayed). Buyer shall keep OpCo fully informed on a timely basis of all matters relating to any time without the consent Tax Proceeding controlled by Buyer hereunder.
(iv) Payment by OpCo of Borrower if the Indemnitee waives any amount due under Section 6.1(a)(i) shall be made within ten (by 10) days following written notice to Borrower) the by Buyer that payment by Borrower of an indemnity in respect of such issue and amounts to the appropriate Tax Authority or other applicable third party is due; provided that OpCo shall not be required to make any related issue payment earlier than ten (10) days before it is due to the contest appropriate Tax Authority or applicable third party. Payment by Buyer of which is effectively foreclosed any amount due under Section 6.1(a)(ii) shall be made within ten (10) days following written notice by the settlement OpCo that payment of such issue, including amounts to the appropriate Tax Authority or other applicable third party is due; provided that Buyer shall not be required to make any payment arising from such issue in subsequent years earlier than ten (10) days before it is due to the appropriate Tax Authority or which by reason of applicable third party. In the fact that such issue is case of a continuing natureTax that is contested in accordance with the provisions of this Section 6.1(d), and promptly pays to Borrower any Tax previously paid or any interest-free loan advanced by Borrower (other than expenses payment of such contests) contested Tax will not be considered due earlier than the date a “final determination” to such effect is made by such Tax Authority. For this purpose, a “final determination” shall mean a settlement, compromise, or other agreement with the relevant Tax Authority, a deficiency notice with respect to such issue.
(E) Nothing contained in this Section 6(b)(iv) shall require any Indemnitee to contestwhich the period for filing a petition with the Tax court or the relevant state, local or permit Borrower to contest in the name of such Indemnitee, foreign tribunal has expired or a claim that such Indemnitee would otherwise be required to contest pursuant to this Section 6(b)(iv) if such Indemnitee shall waive payment by Borrower decision of any amount court of competent jurisdiction that might otherwise be payable by Borrower under this Section 6(b) in connection with such claim (other than is not subject to appeal or as to which the costs of contest previously incurred), nor shall any Indemnitee be required to pursue any time for appeal to the United States Supreme Courthas expired.
Appears in 1 contract
Sources: Equity Purchase Agreement (Health Care Reit Inc /De/)
Contests. (A) If Subject to the rights of insurers under policies of -------- insurance maintained pursuant to Section 16 of the Charter, the Charterer shall have the right, at its sole cost and expense, to investigate, and the right in its sole discretion to defend or compromise, any Claim for which indemnification is sought under this Section 13.1, and the Indemnitee shall cooperate, at the Charterer's expense, with all reasonable requests of the Charterer in connection therewith. The Charterer will provide the Indemnitee with such information not within the control of such Indemnitee, as is in the Charterer's control or is reasonably available to the Charterer, which such Indemnitee may reasonably request and shall otherwise cooperate with such Indemnitee so as to enable such Indemnitee to fulfill its obligations under this Section 13.
1. Where the Charterer or the insurers under a written policy of insurance maintained by the Charterer undertake the defense of an Indemnitee with respect to a Claim, no additional legal fees or expenses of such Indemnitee in connection with the defense of such claim shall be made against and received by any Indemnitee for any Tax for which Borrower is obligated to indemnify pursuant to this Section 6(b), indemnified hereunder unless such Indemnitee shall notify Borrower in writing fees or expenses were incurred at the request of the Charterer or such claim within 30 days after its receipt, and shall provide Borrower such information regarding such claim as Borrower may reasonably requestinsurers; provided, however, that if (i) in the failure written opinion of counsel to provide such notice -------- ------- Indemnitee an actual or potential material conflict of interest exists where it is advisable for such Indemnitee to be represented by separate counsel or (ii) such Indemnitee has been indicted or otherwise charged in a criminal complaint in connection with a Claim not excluded by Section 13.1(a) and such Indemnitee informs the Charterer that such Indemnitee desires to be represented by separate counsel, the reasonable fees and expenses of such separate counsel shall not release Borrower from any of its obligations to indemnify under Section 6 hereof unless, and only be borne by the Charterer. Subject to the extent thatrequirements of any policy of insurance, an Indemnitee may participate at its own expense in any judicial proceeding controlled by the Charterer pursuant to the preceding provisions; provided that -------- such failure effectively precludes Borrower’s contest rights. To the extent permitted under applicable law, such Indemnitee will not make any payments with respect to such claim for at least 30 days after giving notice of such claim to Borrower.
(B) If requested by Borrower in writing within 30 days after its receipt of such notice or such shorter period as may be required by applicable law, such Indemnitee shall, at the expense of Borrower and subject to subparagraph (C) below, contest the validity, applicability or amount of such Taxes byparty's participation does not, in the case reasonable opinion of an Indemnitee-Controlled Contest, in the independent counsel appointed by the Charterer or its insurers to conduct such Indemnitee’s sole discretion or, in the case of a Borrower-Controlled Contest, in Borrower’s sole discretion, (1) resisting payment thereof if practicable, (2) not paying such Tax except under protest, (3) if protest is necessary and proper, and if payment of such Tax is made, using reasonable efforts to obtain a refund thereof, in appropriate administrative and judicial proceedings, and (4) in the case of an Indemnitee-Controlled Contest, considering in good faith any other reasonable action as Borrower may reasonably request. Each Indemnitee shall consult in good faith with Borrower and Borrower’s counsel, and Borrower shall consult in good faith significantly interfere with such Indemnitee control; and its counsel such participation shall not constitute a waiver of the right to receive the indemnification provided in this Section 13.1. Notwithstanding anything to the case of a Borrower-Controlled Contest. concerning the forum in which the contest is most likely to be favorably resolved and whether such contest shall be by contrary contained herein, (x) resisting payment of such Tax, (y) paying such Tax the Charterer shall not under protest or (z) paying such Tax and seeking a refund or other repayment thereof.
(C) In no event shall an Indemnitee any circumstances be required, or Borrower permitted, to contest liable for the imposition of any Tax for which Borrower is obligated pursuant to this Section 6(b) unless (1) Borrower shall have agreed to pay and shall promptly be paying on request all reasonable costs fees and expenses that such Indemnitee incurs in contesting such claim or arising out of or relating to such contest (including legal fees, accounting fees, and disbursements, including those on appeal, if any); (2) such contest is not reasonably likely to result in a material danger more than one counsel for each of the sale, seizure, forfeiture or loss of the Aircraft, or the creation of any Lien thereon other than Liens for Taxes (i) either not yet due or being contested in good faith by appropriate proceedings the Owner Participant, the Owner Trustees and the Owner Trust (and their respective successors and permitted assigns, agents and servants) and (ii) for which such reservesthe Loan Participants and the Indenture Trustee (and their respective successors and permitted assigns, if any, as are required to be provided under generally accepted accounting principles have been provided by Borroweragents and servants), and there is no risk (y) during the continuance of criminal penalties; (3) if such contest shall be conducted in a manner requiring the payment of the claim, Borrower shall have advanced sufficient funds, on an interest-free basis, to make the payment required, and shall have agreed to indemnify the Indemnitee against any additional net after-Tax cost to such Indemnitee of such advance; (4) if requested by the Indemnitee in writing, such Indemnitee shall have received an opinion of independent Tax counsel selected by Borrower and reasonably acceptable to such Indemnitee and furnished at Borrower’s sole expense to the effect that a Realistic Possibility of Success exists for contesting such claim (or, in the case of an appeal of an adverse judicial determination, a written opinion from such independent Tax counsel to the effect that it is more likely than not that such adverse judicial determination will be reversed or substantially modified); (5) Borrower shall have delivered to such Indemnitee a written acknowledgment of Borrower’s obligation to indemnify such Indemnitee to the extent that the contest is not successful; provided, however, that Borrower will not be bound by its acknowledgment of liability if the contest is resolved on a clear and unambiguous basis showing no such liability under this Section 6(b) with respect to such Tax; (6) if a Specified Default or specified Charter Event of Default shall have occurred and be continuing---------------- Default, Borrower shall have provided security for its obligation hereunder satisfactory to the Indemnitee by placing in escrow sufficient funds to cover any such contested Tax and the reasonably expected expenses of such contest on an After-Tax Basis, or otherwise providing satisfactory provisions for payment of such amounts determined by the Indemnitee in its sole discretion; (7) the aggregate amount of all indemnity payments that Borrower may be required to make to such Indemnitee with respect to such claim (or similar or related claims) is at least $60,000; and (8) the claim is not for a Tax the imposition of which has been previously contested by, or at the request of, Borrower hereunder, and such previous contest (including all allowable appeals) was decided adversely to Borrower, unless Borrower has delivered an opinion of independent Tax counsel selected by Borrower and reasonably acceptable to the Indemnitee to the effect that, on the basis of (i) a change in applicable law, or (ii) a difference in the underlying facts, there is currently a Realistic Possibility of Success for contesting such claim.
(D) If any Indemnitee shall obtain a refund of all or any part of any Tax paid by Borrower, such Indemnitee shall pay Borrower, but not before Borrower shall have made all payments theretofore due to such Indemnitee pursuant to this Section 6(b) and any other payments theretofore due such Indemnitee under any of the Operative Documents, an amount equal to the amount of such refund (net of any Taxes imposed thereon), including interest received and attributable thereto (net of any Taxes imposed thereon) plus, if Borrower has paid an amount pursuant to the first sentence of Section 6(b)(iii)(A), any net Tax benefit (or minus any net Tax detriment) realized by such Indemnitee as a result of any refund received, and payment made, by such Indemnitee pursuant to this sentence; provided that the Indemnitee Charterer shall not be obligated to pay an amount under the preceding sentence to the extent that such amount would exceed the amount of such Taxes paid, reimbursed or advanced by Borrower to such Indemnitee (other than the cost of the contest thereof); provided, further, that compromise any amount not paid to Borrower pursuant to the foregoing limitation shall be carried forward to reduce pro tanto any future payments that Borrower may be required to make to such Indemnitee pursuant to this Section 6(b). If any Indemnitee shall have paid Borrower any refund of all or part of any Tax paid by Borrower and it is subsequently determined that such Indemnitee was not entitled to the refund, such determination shall be treated as the imposition of a Tax for which Borrower is obligated to indemnify such Indemnitee pursuant to the provisions of this Section 6(b) without regard to the exclusions set forth in Section 6(b)(ii) (other than subparagraphs (4), (11) and (12) thereof). Provided no Specified Default or Event of Default has occurred and is continuing, an Indemnitee shall not settle any such claim or contest pursuant to this provision without the written consent of Borrower, which consent shall not be unreasonably withheld, conditioned or delayed; provided, that an Indemnitee may settle at any time Claim without the consent of Borrower if the Indemnitee waives (by written notice to Borrower) the payment by Borrower of an indemnity in respect of such issue and any related issue the contest of which is effectively foreclosed by the settlement of such issue, including any payment arising from such issue in subsequent years or which by reason of the fact that such issue is of a continuing nature, and promptly pays to Borrower any Tax previously paid or any interest-free loan advanced by Borrower (other than expenses of such contests) with respect to such issue.
(E) Nothing contained in this Section 6(b)(iv) shall require any Indemnitee to contest, or permit Borrower to contest in the name of such ------- applicable Indemnitee, a claim that such Indemnitee would otherwise consent not to be required to contest pursuant to this Section 6(b)(iv) if such Indemnitee shall waive payment by Borrower of any amount that might otherwise be payable by Borrower under this Section 6(b) in connection with such claim (other than the costs of contest previously incurred), nor shall any Indemnitee be required to pursue any appeal to the United States Supreme Courtunreasonably withheld.
Appears in 1 contract
Sources: Participation Agreement (Mobil Corp)
Contests. (A) If a written any claim shall be made against and received by any Tax Indemnitee or if any proceeding shall be commenced against any Tax Indemnitee (including a written notice of such proceeding) for any Tax for Taxes as to which Borrower is obligated to indemnify the Lessees may have an indemnity obligation pursuant to this Section 6(b)SECTION 7.4, or if any Tax Indemnitee shall determine that any Taxes as to which the Lessees may have an indemnity obligation pursuant to SECTION 7.4 may be payable, such Tax Indemnitee shall promptly notify Borrower ADESA. ADESA shall be entitled, at its expense, to participate in, and, to the extent that ADESA desires to, assume and control the defense thereof; PROVIDED, HOWEVER, that ADESA, shall have acknowledged in writing its and each Lessee's obligation to fully indemnify such Tax Indemnitee in respect of such claim within 30 days after its receiptaction, and shall provide Borrower such information regarding such claim as Borrower may reasonably requestsuit or proceeding if the contest is unsuccessful; providedand, howeverPROVIDED FURTHER, that the failure to provide such notice ADESA shall not release Borrower from be entitled to assume and control the defense of any such action, suit or proceeding (but the Tax Indemnitee shall then contest, at the sole cost and expense of its obligations ADESA and the Lessees, on behalf of ADESA with representatives reasonably satisfactory to indemnify under Section 6 hereof unless, ADESA or a Lessee) if and only to the extent that, such failure effectively precludes Borrower’s contest rights. To the extent permitted under applicable law, such Indemnitee will not make any payments with respect to such claim for at least 30 days after giving notice of such claim to Borrower.
(BA) If requested by Borrower in writing within 30 days after its receipt of such notice or such shorter period as may be required by applicable law, such Indemnitee shall, at the expense of Borrower and subject to subparagraph (C) below, contest the validity, applicability or amount of such Taxes by, in the case of an Indemnitee-Controlled Contest, in such Indemnitee’s sole discretion or, in the case of a Borrower-Controlled Contest, in Borrower’s sole discretion, (1) resisting payment thereof if practicable, (2) not paying such Tax except under protest, (3) if protest is necessary and proper, and if payment reasonable opinion of such Tax is madeIndemnitee, using reasonable efforts to obtain a refund thereofsuch action, in appropriate administrative and judicial proceedings, and (4) in the case of an Indemnitee-Controlled Contest, considering in good faith any other reasonable action as Borrower may reasonably request. Each Indemnitee shall consult in good faith with Borrower and Borrower’s counsel, and Borrower shall consult in good faith with such Indemnitee and its counsel in the case of a Borrower-Controlled Contest. concerning the forum in which the contest is most likely to be favorably resolved and whether such contest shall be by suit or proceeding (x) resisting payment involves any risk of imposition of criminal liability or any material risk of civil liability in excess of $5,000,000 on such Tax, Tax Indemnitee or (y) paying such Tax under protest or (z) paying such Tax and seeking a refund or other repayment thereof.
(C) In no event shall an Indemnitee be required, or Borrower permitted, to contest the imposition of any Tax for which Borrower is obligated pursuant to this Section 6(b) unless (1) Borrower shall have agreed to pay and shall promptly be paying on request all reasonable costs and expenses that such Indemnitee incurs in contesting such claim or arising out of or relating to such contest (including legal fees, accounting fees, and disbursements, including those on appeal, if any); (2) such contest is not reasonably likely to result in will involve a material danger risk of the sale, seizure, forfeiture or loss of the Aircraftof, or the creation of any Lien thereon (other than Liens for Taxes a Permitted Lien) on any Leased Property or any part thereof unless ADESA or a Lessee shall have posted a bond or other security satisfactory to the relevant Tax Indemnitees in respect to such risk, (B) such proceeding involves Claims not fully indemnified by the Lessees which ADESA and the Tax Indemnitee have been unable to sever from the indemnified claim(s), (C) an Event of Default has occurred and is continuing, (D) such action, suit or proceeding involves matters which extend beyond or are unrelated to the Transaction and if determined adversely could be materially detrimental to the interests of such Tax Indemnitee notwithstanding indemnification by the Lessees or (E) such action, suit or proceeding involves the federal or any state income tax liability of the Tax Indemnitee. With respect to any contests controlled by a Tax Indemnitee, (i) either not yet due or being contested in good faith by appropriate proceedings and (ii) for which such reserves, if any, as are required to be provided under generally accepted accounting principles have been provided by Borrower, and there is no risk of criminal penalties; (3) if such contest relates to the federal or any state income tax liability of such Tax Indemnitee, such Tax Indemnitee shall be conducted in a manner requiring the payment of the claim, Borrower required to conduct such contest only if ADESA shall have advanced sufficient funds, on an interest-free basis, to make the payment required, and shall have agreed to indemnify the Indemnitee against any additional net after-Tax cost provided to such Tax Indemnitee of such advance; (4) if requested by the Indemnitee in writing, such Indemnitee shall have received an opinion of independent Tax tax counsel selected by Borrower the Tax Indemnitee and reasonably acceptable satisfactory to such Indemnitee and furnished at Borrower’s sole expense to the effect ADESA stating that a Realistic Possibility of Success reasonable basis exists for contesting to contest such claim or (or, ii) in the case of an appeal of an adverse judicial determinationdetermination of any contest relating to any Taxes, a written an opinion from of such independent Tax counsel to the effect that it such appeal is more likely than not that to be successful, PROVIDED, HOWEVER, such adverse judicial determination will be reversed or substantially modified); (5) Borrower Tax Indemnitee shall have delivered to such Indemnitee a written acknowledgment of Borrower’s obligation to indemnify such Indemnitee to the extent that the contest is not successful; provided, however, that Borrower will not be bound by its acknowledgment of liability if the contest is resolved on a clear and unambiguous basis showing in no such liability under this Section 6(b) with respect to such Tax; (6) if a Specified Default or Event of Default shall have occurred and be continuing, Borrower shall have provided security for its obligation hereunder satisfactory to the Indemnitee by placing in escrow sufficient funds to cover any such contested Tax and the reasonably expected expenses of such contest on an After-Tax Basis, or otherwise providing satisfactory provisions for payment of such amounts determined by the Indemnitee in its sole discretion; (7) the aggregate amount of all indemnity payments that Borrower may event be required to make to such Indemnitee with respect to such claim (or similar or related claims) is at least $60,000; and (8) the claim is not for a Tax the imposition of which has been previously contested by, or at the request of, Borrower hereunder, and such previous contest (including all allowable appeals) was decided adversely to Borrower, unless Borrower has delivered appeal an opinion of independent Tax counsel selected by Borrower and reasonably acceptable to the Indemnitee to the effect that, on the basis of (i) a change in applicable law, or (ii) a difference in the underlying facts, there is currently a Realistic Possibility of Success for contesting such claim.
(D) If any Indemnitee shall obtain a refund of all or any part of any Tax paid by Borrower, such Indemnitee shall pay Borrower, but not before Borrower shall have made all payments theretofore due to such Indemnitee pursuant to this Section 6(b) and any other payments theretofore due such Indemnitee under any of the Operative Documents, an amount equal to the amount of such refund (net of any Taxes imposed thereon), including interest received and attributable thereto (net of any Taxes imposed thereon) plus, if Borrower has paid an amount pursuant to the first sentence of Section 6(b)(iii)(A), any net Tax benefit (or minus any net Tax detriment) realized by such Indemnitee as a result of any refund received, and payment made, by such Indemnitee pursuant to this sentence; provided that the Indemnitee shall not be obligated to pay an amount under the preceding sentence to the extent that such amount would exceed the amount of such Taxes paid, reimbursed or advanced by Borrower to such Indemnitee (other than the cost of the contest thereof); provided, further, that any amount not paid to Borrower pursuant to the foregoing limitation shall be carried forward to reduce pro tanto any future payments that Borrower may be required to make to such Indemnitee pursuant to this Section 6(b). If any Indemnitee shall have paid Borrower any refund of all or part of any Tax paid by Borrower and it is subsequently determined that such Indemnitee was not entitled to the refund, such adverse determination shall be treated as the imposition of a Tax for which Borrower is obligated to indemnify such Indemnitee pursuant to the provisions of this Section 6(b) without regard to the exclusions set forth in Section 6(b)(ii) (other than subparagraphs (4), (11) and (12) thereof). Provided no Specified Default or Event of Default has occurred and is continuing, an Indemnitee shall not settle any such claim or contest pursuant to this provision without the written consent of Borrower, which consent shall not be unreasonably withheld, conditioned or delayed; provided, that an Indemnitee may settle at any time without the consent of Borrower if the Indemnitee waives (by written notice to Borrower) the payment by Borrower of an indemnity in respect of such issue and any related issue the contest of which is effectively foreclosed by the settlement of such issue, including any payment arising from such issue in subsequent years or which by reason of the fact that such issue is of a continuing nature, and promptly pays to Borrower any Tax previously paid or any interest-free loan advanced by Borrower (other than expenses of such contests) with respect to such issue.
(E) Nothing contained in this Section 6(b)(iv) shall require any Indemnitee to contest, or permit Borrower to contest in the name of such Indemnitee, a claim that such Indemnitee would otherwise be required to contest pursuant to this Section 6(b)(iv) if such Indemnitee shall waive payment by Borrower of any amount that might otherwise be payable by Borrower under this Section 6(b) in connection with such claim (other than the costs of contest previously incurred), nor shall any Indemnitee be required to pursue any appeal to the United States Supreme Court. The Tax Indemnitee may participate in a reasonable manner at its own expense and with its own counsel in any proceeding conducted by ADESA in accordance with the foregoing.
Appears in 1 contract
Sources: Master Agreement (Allete Inc)
Contests. (Aa) If a Buyer agrees to give prompt written claim shall notice to Seller Representative of the receipt of any written notice by the Company, Buyer or any of Buyer’s Affiliates which involves the assertion of any claim, or the commencement of any Action, in respect of which an indemnity may be made against and received sought by any Buyer Indemnitee for any Tax for which Borrower is obligated to indemnify pursuant to this Section 6(bArticle VII (a “Tax Claim”), such Indemnitee shall notify Borrower in writing of such claim within 30 days after its receipt, and shall provide Borrower such information regarding such claim as Borrower may reasonably request; provided, however, that the failure to provide such notice comply with this provision shall not release Borrower from any of its obligations affect a Buyer Indemnitee’s right to indemnify under Section 6 hereof unless, and only indemnification hereunder except to the extent thatthe defense of the Claim is prejudiced thereby.
(b) Within fifteen (15) Business Days after receipt by Seller Representative of a notice respecting a Tax Claim, such failure effectively precludes Borrower’s contest rights. To the extent permitted under applicable lawSeller Representative may elect, such Indemnitee will not make any payments so long as Sellers have an obligation to indemnify Buyer Indemnitees hereunder with respect to such claim for at least 30 days after giving Tax Claim, by written notice of such claim to Borrower.
(B) If requested by Borrower in writing within 30 days after its receipt of such notice or such shorter period as may be required by applicable law, such Indemnitee shall, at the expense of Borrower and subject to subparagraph (C) below, contest the validity, applicability or amount of such Taxes by, in the case of an Indemnitee-Controlled Contest, in such Indemnitee’s sole discretion or, in the case of a Borrower-Controlled Contest, in Borrower’s sole discretion, (1) resisting payment thereof if practicable, (2) not paying such Tax except under protest, (3) if protest is necessary and proper, and if payment of such Tax is made, using reasonable efforts to obtain a refund thereof, in appropriate administrative and judicial proceedings, and (4) in the case of an Indemnitee-Controlled Contest, considering in good faith any other reasonable action as Borrower may reasonably request. Each Indemnitee shall consult in good faith with Borrower and Borrower’s counsel, and Borrower shall consult in good faith with such Indemnitee and its counsel in the case of a Borrower-Controlled Contest. concerning the forum in which the contest is most likely to be favorably resolved and whether such contest shall be by (x) resisting payment of such Tax, (y) paying such Tax under protest or (z) paying such Tax and seeking a refund or other repayment thereof.
(C) In no event shall an Indemnitee be required, or Borrower permittedBuyer, to contest the imposition Tax Claim in the name of the Company. If Seller Representative so elects, Sellers shall be solely responsible for the defense of the item or items at issue to the extent it relates to a Pre-Closing Tax Period, except that (a) the Seller Representative will keep Buyer informed with respect to the commencement, status and nature of any Tax for which Borrower is obligated pursuant to this Section 6(b) unless (1) Borrower shall have agreed to pay such proceeding, and shall promptly be paying on request all reasonable costs will reasonably cooperate with Buyer and expenses that such Indemnitee incurs in contesting such claim or arising out consult with Buyer regarding the conduct of or relating to positions taken in any such contest (including legal fees, accounting feesproceedings in the event the settlement would create a Tax liability on part of Buyer, and disbursements, including those on appeal, if any); (2b) Sellers will not enter into any settlement or otherwise compromise any such contest is proceeding without the prior written consent of Buyer (such consent not reasonably likely to result in a material danger of the sale, seizure, forfeiture or loss of the Aircraft, or the creation of any Lien thereon other than Liens for Taxes (i) either not yet due or being contested in good faith by appropriate proceedings and (ii) for which such reserves, if any, as are required to be provided under generally accepted accounting principles have been provided by Borrowerunreasonably withheld, and there is no risk of criminal penalties; (3conditioned or delayed) if such contest shall be conducted in a manner requiring settlement would have the payment effect of materially increasing the Tax liability or materially reducing any Tax asset of the claim, Borrower shall have advanced sufficient funds, on an interestCompany in respect of any Post-free basis, Closing Tax Period. Buyer will cause the Company to make the payment required, and shall have agreed to indemnify the Indemnitee against any additional net after-Tax cost to such Indemnitee of such advance; (4) if requested by the Indemnitee in writing, such Indemnitee shall have received an opinion of independent Tax counsel selected by Borrower and reasonably acceptable to such Indemnitee and furnished at Borrower’s sole expense to the effect that a Realistic Possibility of Success exists for contesting such claim (orcooperate, in the case contest of an appeal such Tax Claim by making relevant documents and employees available to Sellers and/or Seller Representative, and to execute such documents (including powers of an adverse judicial determinationattorney) as may be reasonably necessary to allow Sellers and/or Seller Representative to conduct the defense.
(c) With respect to any other Tax Claim, including a written opinion from such independent Tax counsel Claim related to a Straddle Period and a Tax Claim that the effect that it is more likely than Seller does not that such adverse judicial determination will be reversed or substantially modified); (5) Borrower elect to control, Buyer shall have delivered sole responsibility for the defense of the item or items at issue provided (a) Sellers will have the right (but not the duty) to participate in the defense of such Indemnitee a written acknowledgment of Borrower’s obligation proceeding and to indemnify such Indemnitee to the extent that the contest is not successful; providedemploy counsel, howeverat their own expense, that Borrower separate from counsel employed by Buyer, (b) Buyer will not be bound by its acknowledgment of liability if the contest is resolved on a clear and unambiguous basis showing no such liability under this Section 6(b) keep Sellers informed with respect to such Tax; (6) if a Specified Default or Event the commencement, status and nature of Default shall have occurred and be continuing, Borrower shall have provided security for its obligation hereunder satisfactory to the Indemnitee by placing in escrow sufficient funds to cover any such contested Tax proceeding, and will reasonably cooperate with Sellers and consult with them regarding the reasonably expected expenses conduct of or positions taken in any such contest on an After-Tax Basisproceeding, and (c) Buyer will not enter into any settlement or otherwise providing satisfactory provisions for payment of compromise any such amounts determined by proceeding without the Indemnitee in its sole discretion; (7) the aggregate amount of all indemnity payments that Borrower may be required to make to such Indemnitee with respect to such claim (or similar or related claims) is at least $60,000; and (8) the claim is not for a Tax the imposition of which has been previously contested by, or at the request of, Borrower hereunder, and such previous contest (including all allowable appeals) was decided adversely to Borrower, unless Borrower has delivered an opinion of independent Tax counsel selected by Borrower and reasonably acceptable to the Indemnitee to the effect that, on the basis of (i) a change in applicable law, or (ii) a difference in the underlying facts, there is currently a Realistic Possibility of Success for contesting such claim.
(D) If any Indemnitee shall obtain a refund of all or any part of any Tax paid by Borrower, such Indemnitee shall pay Borrower, but not before Borrower shall have made all payments theretofore due to such Indemnitee pursuant to this Section 6(b) and any other payments theretofore due such Indemnitee under any prior written consent of the Operative Documents, an amount equal to the amount of such refund (net of any Taxes imposed thereon), including interest received and attributable thereto (net of any Taxes imposed thereon) plus, Seller Representative if Borrower has paid an amount pursuant to the first sentence of Section 6(b)(iii)(A), any net Tax benefit (or minus any net Tax detriment) realized by such Indemnitee as a result of any refund received, and payment made, by such Indemnitee pursuant to this sentence; provided that the Indemnitee shall not Sellers would be obligated to pay an amount under the preceding sentence or indemnify with respect to the extent that such amount would exceed the amount of such Taxes paid, reimbursed or advanced by Borrower to such Indemnitee (other than the cost of the contest thereof); provided, further, that any amount not paid to Borrower pursuant to the foregoing limitation shall be carried forward to reduce pro tanto any future payments that Borrower may be required to make to such Indemnitee pursuant to this Section 6(b). If any Indemnitee shall have paid Borrower any refund of all or part of any Tax paid by Borrower and it is subsequently determined that such Indemnitee was not entitled to the refund, such determination shall be treated as the imposition of a Tax for which Borrower is obligated to indemnify such Indemnitee pursuant to the provisions of under this Section 6(b) without regard to the exclusions set forth in Section 6(b)(ii) (other than subparagraphs (4), (11) and (12) thereof). Provided no Specified Default or Event of Default has occurred and is continuing, an Indemnitee shall not settle any such claim or contest pursuant to this provision without the written consent of BorrowerAgreement, which consent shall will not be unreasonably withheld, conditioned or delayed; provided, that an Indemnitee may settle at any time without the consent of Borrower if the Indemnitee waives (by written notice to Borrower) the payment by Borrower of an indemnity in respect of such issue and any related issue the contest of which is effectively foreclosed by the settlement of such issue, including any payment arising from such issue in subsequent years or which by reason of the fact that such issue is of a continuing nature, and promptly pays to Borrower any Tax previously paid or any interest-free loan advanced by Borrower (other than expenses of such contests) with respect to such issue.
(E) Nothing contained in this Section 6(b)(iv) shall require any Indemnitee to contest, or permit Borrower to contest in the name of such Indemnitee, a claim that such Indemnitee would otherwise be required to contest pursuant to this Section 6(b)(iv) if such Indemnitee shall waive payment by Borrower of any amount that might otherwise be payable by Borrower under this Section 6(b) in connection with such claim (other than the costs of contest previously incurred), nor shall any Indemnitee be required to pursue any appeal to the United States Supreme Court.
Appears in 1 contract
Contests. (A) If a written claim shall be is made against and received by any a Tax Indemnitee for any Tax for with respect to which Borrower is obligated to indemnify pursuant to Lessee has an obligation under this Section 6(b9(c), such Lessor shall cause Tax Indemnitee shall to promptly notify Borrower in writing of such claim within 30 days after its receipt, and shall provide Borrower such information regarding such claim as Borrower may reasonably requestthe Lessee; provided, however, that the failure to provide such notice so notify Lessee shall not release Borrower from any of its diminish Lessee's obligations to indemnify under this Section 6 hereof unless, and only to the extent that, such failure effectively precludes Borrower’s contest rights9(c). To the extent permitted under applicable law, such Indemnitee will not make any payments with respect to such claim for at least 30 days after giving notice of such claim to Borrower.
(B) If reasonably requested by Borrower the Lessee in writing within 30 days after its receipt and provided no Event of such notice or such shorter period as may be required by applicable lawDefault shall have occurred and is continuing, such Indemnitee shallLessor, at the sole expense of Borrower the Lessee, shall itself (or shall cause such Tax Indemnitee to) in good faith and subject diligently contest (and not settle without Lessee's written consent) or shall (or shall cause such Tax Indemnitee to) permit the Lessee, if desired by the Lessee, to subparagraph (C) below, contest in the name of the Lessee the validity, applicability or amount of such Taxes byTax. Lessor shall cause such Tax Indemnitee to contest, in or shall permit the case of an Indemnitee-Controlled Contest, in such Indemnitee’s sole discretion or, in the case of a Borrower-Controlled Contest, in Borrower’s sole discretion, Lessee to contest by (1a) resisting payment thereof if practicable, (2b) not paying such Tax the same except under protestprotest with funds advanced by Lessee on an interest-free basis, (3) if protest is necessary and proper, and (c) if payment of such Tax is payments be made, using reasonable efforts to obtain a refund thereof, thereof in appropriate administrative and judicial proceedings; provided, however, that, in each such instance, the Lessor and such Tax Indemnitee shall not be required to undertake any contest or permit the Lessee to contest unless:
(4A) Lessee shall have provided Lessor and the Tax Indemnitee with an opinion of legal counsel reasonably acceptable to Lessor and the Tax Indemnitee to the effect that a reasonable basis exists to contest such claim (provided, however, that no such opinion shall be necessary in order to contest such claim in meetings with auditors, revenue agents, or in other informal meetings with staff members of the applicable tax authority) and, prior to the commencement of any appeal of an adverse judicial decision, with an opinion of such legal counsel to the effect that a reasonable basis exists to appeal such adverse judicial decision (which opinions shall be obtained at Lessee's sole cost and expense); [Amended and Restated Lease Agreement]
(B) such proceedings, in the case sole reasonable discretion of an Lessor and the Tax Indemnitee-Controlled Contest, considering in good faith do not involve any other reasonable action as Borrower may reasonably request. Each Indemnitee shall consult in good faith with Borrower and Borrower’s counsel, and Borrower shall consult in good faith with such Indemnitee and its counsel in the case of a Borrower-Controlled Contest. concerning the forum in which the contest is most likely to be favorably resolved and whether such contest shall be by (x) resisting payment of such Tax, (y) paying such Tax under protest material risk or (z) paying such Tax and seeking a refund or other repayment thereof.
(C) In no event shall an Indemnitee be required, or Borrower permitted, to contest the imposition of any Tax for which Borrower is obligated pursuant to this Section 6(b) unless (1) Borrower shall have agreed to pay and shall promptly be paying on request all reasonable costs and expenses that such Indemnitee incurs in contesting such claim or arising out of or relating to such contest (including legal fees, accounting fees, and disbursements, including those on appeal, if any); (2) such contest is not reasonably likely to result in a material danger of the sale, seizure, forfeiture or loss of the Aircraft, Aircraft or any part thereof or interest therein or the imposition of criminal penalties or sanctions against Lessor or such Tax Indemnitee or the creation of any Lien thereon other than Liens a Lien for Taxes (i) either not yet due or being being, contested in good faith by appropriate proceedings proceedings, and (ii) for payment of which such reserves, reserves if any, as are required to be provided under generally accepted accounting principles have been made unless Lessee has provided by Borrower, and there is no risk to the Tax Indemnitee a bond or other security reasonably satisfactory to the Tax Indemnitee (provided that in the case of criminal penalties; (3) if penalties or sanctions such contest bond or other security shall be conducted satisfactory to the Tax Indemnitee in a manner requiring its sole discretion) to protect against such risk or danger;
(C) in the payment event that the subject matter of the claimcontest is of a continuing nature and has previously been decided adversely pursuant to the contest provisions of this Section 9(c) by the highest court to which an appeal could be taken (other than the U.S. Supreme Court), Borrower there has been a change in the law (including, without limitation, amendments to statutes or regulations, administrative rulings and court decisions) after such claim shall have advanced sufficient funds, on an interest-free basis, to make been so previously decided and the payment required, and shall have agreed to indemnify the Indemnitee against any additional net after-Tax cost to such Indemnitee of such advance; (4) if requested by the Indemnitee in writing, such Indemnitee shall have received an opinion of independent Tax tax counsel selected by Borrower the Lessee and reasonably acceptable to such Indemnitee and furnished the Tax Indemnitee, which opinion shall be obtained at Borrower’s the Lessee's sole expense expense, to the effect that that, as a Realistic Possibility result of Success exists for contesting such claim (orchange, in the case of an appeal of an adverse judicial determination, a written opinion from such independent Tax counsel to the effect that it is more likely than not that the position which the Tax Indemnitee or the Lessee, as the case may be, had asserted in such adverse judicial determination will previous contest would prevail.
(D) no Event of Default shall have occurred and be reversed continuing,
(E) prior to the commencement of any contest undertaken by the Lessee or substantially modified); (5) Borrower any contest undertaken by any Tax Indemnitee, the Lessee shall have delivered to such Tax Indemnitee a written acknowledgment of Borrower’s its obligation to indemnify fully Lessor and such Tax Indemnitee to the extent that the contest is not successful;
(F) if such contest is to be initiated by the payment of, and the claiming of a refund for, such Tax, Lessee shall have advanced to the Tax Indemnitee sufficient funds (on an interest-free basis) to make such payments, provided, however, that Lessee shall indemnify such Tax Indemnitee for any adverse tax consequences resulting from such advance. Lessee shall not be deemed to be in default under any of the above indemnification provisions of this Section 9(c) so long as Lessee shall diligently prosecute a contest in conformity with the requirements of this Section 9(c)(vi), or in the case where the Lessor or a Tax Indemnitee shall be prosecuting such contest pursuant to [Amended and Restated Lease Agreement] this Section 9(c)(vi), Lessee has fulfilled all of its obligations under this Section 9(c)(vi) with respect to such contest. Notwithstanding the foregoing, if a claim is made against a Tax Indemnitee which, if successful, would result in a Tax under circumstances which would require the Lessee to indemnify such Tax Indemnitee, such Tax Indemnitee shall be released from its responsibility to contest such claim, or part thereof, if it agrees in writing with Lessee not to seek indemnification from Lessee in respect of the claim, or such part thereof to be contested. In the event a Tax Indemnitee fails diligently to contest, or refuses to permit the Lessee to contest, a claim or part thereof which such Tax Indemnitee has the obligation to contest or to permit Lessee to contest under this Section 9(c), then Lessee shall not be obligated to indemnify such Tax Indemnitee for such claim or such part thereof and such Tax Indemnitee shall refund to Lessee any amounts paid or advanced by Lessee in connection with such Tax that were the subject of such claim (plus interest from the date payment is due at the rate established for refunds by the authority imposing such Tax); provided, however, that Borrower will this sentence shall not be bound by its acknowledgment of liability if apply where a Tax Indemnitee permits the Lessee to contest is resolved on a clear and unambiguous basis showing no such liability under this Section 6(b) with respect to such Tax; (6) if a Specified Default or Event of Default shall have occurred and be continuing, Borrower shall have provided security for its obligation hereunder satisfactory to the Indemnitee by placing in escrow sufficient funds to cover any such contested Tax and the reasonably expected expenses of such contest on an After-Tax Basis, or otherwise providing satisfactory provisions for payment of such amounts determined by the Indemnitee in its sole discretion; (7) the aggregate amount of all indemnity payments that Borrower may be required Lessee falls to make to such Indemnitee with respect to such claim (or similar or related claims) is at least $60,000; and (8) the claim is not for a Tax the imposition of which has been previously contested by, or at the request of, Borrower hereunder, and such previous contest (including all allowable appeals) was decided adversely to Borrower, unless Borrower has delivered an opinion of independent Tax counsel selected by Borrower and reasonably acceptable to the Indemnitee to the effect that, on the basis of (i) a change in applicable law, or (ii) a difference in the underlying facts, there is currently a Realistic Possibility of Success for contesting such claimdiligently contest.
(D) If any Indemnitee shall obtain a refund of all or any part of any Tax paid by Borrower, such Indemnitee shall pay Borrower, but not before Borrower shall have made all payments theretofore due to such Indemnitee pursuant to this Section 6(b) and any other payments theretofore due such Indemnitee under any of the Operative Documents, an amount equal to the amount of such refund (net of any Taxes imposed thereon), including interest received and attributable thereto (net of any Taxes imposed thereon) plus, if Borrower has paid an amount pursuant to the first sentence of Section 6(b)(iii)(A), any net Tax benefit (or minus any net Tax detriment) realized by such Indemnitee as a result of any refund received, and payment made, by such Indemnitee pursuant to this sentence; provided that the Indemnitee shall not be obligated to pay an amount under the preceding sentence to the extent that such amount would exceed the amount of such Taxes paid, reimbursed or advanced by Borrower to such Indemnitee (other than the cost of the contest thereof); provided, further, that any amount not paid to Borrower pursuant to the foregoing limitation shall be carried forward to reduce pro tanto any future payments that Borrower may be required to make to such Indemnitee pursuant to this Section 6(b). If any Indemnitee shall have paid Borrower any refund of all or part of any Tax paid by Borrower and it is subsequently determined that such Indemnitee was not entitled to the refund, such determination shall be treated as the imposition of a Tax for which Borrower is obligated to indemnify such Indemnitee pursuant to the provisions of this Section 6(b) without regard to the exclusions set forth in Section 6(b)(ii) (other than subparagraphs (4), (11) and (12) thereof). Provided no Specified Default or Event of Default has occurred and is continuing, an Indemnitee shall not settle any such claim or contest pursuant to this provision without the written consent of Borrower, which consent shall not be unreasonably withheld, conditioned or delayed; provided, that an Indemnitee may settle at any time without the consent of Borrower if the Indemnitee waives (by written notice to Borrower) the payment by Borrower of an indemnity in respect of such issue and any related issue the contest of which is effectively foreclosed by the settlement of such issue, including any payment arising from such issue in subsequent years or which by reason of the fact that such issue is of a continuing nature, and promptly pays to Borrower any Tax previously paid or any interest-free loan advanced by Borrower (other than expenses of such contests) with respect to such issue.
(E) Nothing contained in this Section 6(b)(iv) shall require any Indemnitee to contest, or permit Borrower to contest in the name of such Indemnitee, a claim that such Indemnitee would otherwise be required to contest pursuant to this Section 6(b)(iv) if such Indemnitee shall waive payment by Borrower of any amount that might otherwise be payable by Borrower under this Section 6(b) in connection with such claim (other than the costs of contest previously incurred), nor shall any Indemnitee be required to pursue any appeal to the United States Supreme Court.
Appears in 1 contract
Sources: Lease Agreement (Turn Works Acquisition Iii Sub a Inc)
Contests. (A) If a written any claim shall be made against and received by any Tax Indemnitee or if any proceeding shall be commenced against any Tax Indemnitee (including a written notice of such proceeding) for any Tax for Taxes as to which Borrower is obligated to indemnify Lessees may have an indemnity obligation pursuant to this Section 6(b)SECTION 7.4, or if any Tax Indemnitee shall determine that any Taxes as to which the Lessees may have an indemnity obligation pursuant to SECTION 7.4 may be payable, such Tax Indemnitee shall promptly notify Borrower in writing of such claim within 30 days after the Company. The Company shall be entitled, at its receiptexpense, to participate in, and, to the extent that the Company desires to, assume and shall provide Borrower such information regarding such claim as Borrower may reasonably requestcontrol the defense thereof; providedPROVIDED, howeverHOWEVER, that the failure Company shall have acknowledged in writing its obligation to provide fully indemnify such notice Tax Indemnitee in respect of such action, suit or proceeding if the contest is unsuccessful; and, PROVIDED FURTHER, that the Company shall not release Borrower from be entitled to assume and control the defense of any such action, suit or proceeding (but the Tax Indemnitee shall then contest, at the sole cost and expense of its obligations the Company, on behalf of the Company with representatives reasonably satisfactory to indemnify under Section 6 hereof unless, the Company) if and only to the extent that, (A) in the reasonable opinion of such failure effectively precludes Borrower’s contest rights. To the extent permitted under applicable lawTax Indemnitee, such action, suit or proceeding involves any meaningful risk of imposition of criminal liability or any material risk of civil liability on such Tax Indemnitee will in excess of $5,000,000,(B) such proceeding involves Claims not make any payments with respect fully indemnified by the Lessees which the Company and the Tax Indemnitee have been unable to such claim for at least 30 days after giving notice of such claim to Borrower.
(B) If requested by Borrower in writing within 30 days after its receipt of such notice or such shorter period as may be required by applicable lawsever from the indemnified claim(s), such Indemnitee shall, at the expense of Borrower and subject to subparagraph (C) below, contest the validity, applicability or amount an Event of such Taxes by, in the case of an Indemnitee-Controlled Contest, in such Indemnitee’s sole discretion or, in the case of a Borrower-Controlled Contest, in Borrower’s sole discretionDefault has occurred and is continuing, (1D) resisting payment thereof if practicablesuch action, (2) not paying such Tax except under protest, (3) if protest is necessary and proper, suit or proceeding involves matters which extend beyond or are unrelated to the Transaction and if payment determined adversely could be materially detrimental to the interests of such Tax is madeIndemnitee notwithstanding indemnification by Lessees or (E) such action, using reasonable efforts suit or proceeding involves the federal or any state income tax liability of the Tax Indemnitee. With respect to obtain any contests controlled by a refund thereof, in appropriate administrative and judicial proceedings, and (4) in the case of an Tax Indemnitee-Controlled Contest, considering in good faith any other reasonable action as Borrower may reasonably request. Each Indemnitee shall consult in good faith with Borrower and Borrower’s counsel, and Borrower shall consult in good faith with such Indemnitee and its counsel in the case of a Borrower-Controlled Contest. concerning the forum in which the contest is most likely to be favorably resolved and whether such contest shall be by (x) resisting payment of such Tax, (y) paying such Tax under protest or (z) paying such Tax and seeking a refund or other repayment thereof.
(C) In no event shall an Indemnitee be required, or Borrower permitted, to contest the imposition of any Tax for which Borrower is obligated pursuant to this Section 6(b) unless (1) Borrower shall have agreed to pay and shall promptly be paying on request all reasonable costs and expenses that such Indemnitee incurs in contesting such claim or arising out of or relating to such contest (including legal fees, accounting fees, and disbursements, including those on appeal, if any); (2) such contest is not reasonably likely to result in a material danger of the sale, seizure, forfeiture or loss of the Aircraft, or the creation of any Lien thereon other than Liens for Taxes (i) either not yet due or being contested in good faith by appropriate proceedings and (ii) for which such reserves, if any, as are required to be provided under generally accepted accounting principles have been provided by Borrower, and there is no risk of criminal penalties; (3) if such contest relates to the federal or any state income tax liability of such Tax Indemnitee, such Tax Indemnitee shall be conducted in a manner requiring required to conduct such contest only if the payment of the claim, Borrower Company shall have advanced sufficient funds, on an interest-free basis, to make the payment required, and shall have agreed to indemnify the Indemnitee against any additional net after-Tax cost provided to such Tax Indemnitee of such advance; (4) if requested by the Indemnitee in writing, such Indemnitee shall have received an opinion of independent Tax tax counsel selected by Borrower the Tax Indemnitee and reasonably acceptable to such Indemnitee and furnished at Borrower’s sole expense satisfactory to the effect Company stating that a Realistic Possibility of Success reasonable basis exists for contesting to contest such claim or (or, ii) in the case of an appeal of an adverse judicial determinationdetermination of any contest relating to any Taxes, a written an opinion from of such independent Tax counsel to the effect that it such appeal is more likely than not that to be successful, PROVIDED, HOWEVER, such adverse judicial determination will be reversed or substantially modified); (5) Borrower Tax Indemnitee shall have delivered to such Indemnitee a written acknowledgment of Borrower’s obligation to indemnify such Indemnitee to the extent that the contest is not successful; provided, however, that Borrower will not be bound by its acknowledgment of liability if the contest is resolved on a clear and unambiguous basis showing in no such liability under this Section 6(b) with respect to such Tax; (6) if a Specified Default or Event of Default shall have occurred and be continuing, Borrower shall have provided security for its obligation hereunder satisfactory to the Indemnitee by placing in escrow sufficient funds to cover any such contested Tax and the reasonably expected expenses of such contest on an After-Tax Basis, or otherwise providing satisfactory provisions for payment of such amounts determined by the Indemnitee in its sole discretion; (7) the aggregate amount of all indemnity payments that Borrower may event be required to make to such Indemnitee with respect to such claim (or similar or related claims) is at least $60,000; and (8) the claim is not for a Tax the imposition of which has been previously contested by, or at the request of, Borrower hereunder, and such previous contest (including all allowable appeals) was decided adversely to Borrower, unless Borrower has delivered appeal an opinion of independent Tax counsel selected by Borrower and reasonably acceptable to the Indemnitee to the effect that, on the basis of (i) a change in applicable law, or (ii) a difference in the underlying facts, there is currently a Realistic Possibility of Success for contesting such claim.
(D) If any Indemnitee shall obtain a refund of all or any part of any Tax paid by Borrower, such Indemnitee shall pay Borrower, but not before Borrower shall have made all payments theretofore due to such Indemnitee pursuant to this Section 6(b) and any other payments theretofore due such Indemnitee under any of the Operative Documents, an amount equal to the amount of such refund (net of any Taxes imposed thereon), including interest received and attributable thereto (net of any Taxes imposed thereon) plus, if Borrower has paid an amount pursuant to the first sentence of Section 6(b)(iii)(A), any net Tax benefit (or minus any net Tax detriment) realized by such Indemnitee as a result of any refund received, and payment made, by such Indemnitee pursuant to this sentence; provided that the Indemnitee shall not be obligated to pay an amount under the preceding sentence to the extent that such amount would exceed the amount of such Taxes paid, reimbursed or advanced by Borrower to such Indemnitee (other than the cost of the contest thereof); provided, further, that any amount not paid to Borrower pursuant to the foregoing limitation shall be carried forward to reduce pro tanto any future payments that Borrower may be required to make to such Indemnitee pursuant to this Section 6(b). If any Indemnitee shall have paid Borrower any refund of all or part of any Tax paid by Borrower and it is subsequently determined that such Indemnitee was not entitled to the refund, such adverse determination shall be treated as the imposition of a Tax for which Borrower is obligated to indemnify such Indemnitee pursuant to the provisions of this Section 6(b) without regard to the exclusions set forth in Section 6(b)(ii) (other than subparagraphs (4), (11) and (12) thereof). Provided no Specified Default or Event of Default has occurred and is continuing, an Indemnitee shall not settle any such claim or contest pursuant to this provision without the written consent of Borrower, which consent shall not be unreasonably withheld, conditioned or delayed; provided, that an Indemnitee may settle at any time without the consent of Borrower if the Indemnitee waives (by written notice to Borrower) the payment by Borrower of an indemnity in respect of such issue and any related issue the contest of which is effectively foreclosed by the settlement of such issue, including any payment arising from such issue in subsequent years or which by reason of the fact that such issue is of a continuing nature, and promptly pays to Borrower any Tax previously paid or any interest-free loan advanced by Borrower (other than expenses of such contests) with respect to such issue.
(E) Nothing contained in this Section 6(b)(iv) shall require any Indemnitee to contest, or permit Borrower to contest in the name of such Indemnitee, a claim that such Indemnitee would otherwise be required to contest pursuant to this Section 6(b)(iv) if such Indemnitee shall waive payment by Borrower of any amount that might otherwise be payable by Borrower under this Section 6(b) in connection with such claim (other than the costs of contest previously incurred), nor shall any Indemnitee be required to pursue any appeal to the United States Supreme Court. The Tax Indemnitee may participate in a reasonable manner at its own expense and with its own counsel in any proceeding conducted by the Company in accordance with the foregoing.
Appears in 1 contract
Contests. (A) If a written any claim shall be made against and received by any Indemnitee or if any proceeding shall be commenced against any Indemnitee (including a written notice of such proceeding) for any Tax for Imposition as to which Borrower is obligated to indemnify Lessee reasonably may have an indemnity obligation pursuant to this Section 6(b)7.2, or if any Indemnitee reasonably shall determine that any Imposition for which Lessee may have an indemnity obligation pursuant to this Section 7.2 may be payable, such Indemnitee shall promptly (and in any event, within 30 days) notify Borrower Lessee in writing of such claim (provided that failure to so notify Lessee within 30 days after its receiptshall not alter such Indemnitee's rights under this Section 7.2, except to the extent such failure precludes or materially adversely affects the ability to conduct a contest of any indemnified Imposition, in which case Lessee shall have no indemnification obligation hereunder to the extent such failure precludes or materially affects their ability to conduct a contest) and shall provide Borrower not take any action with respect to such information regarding claim, proceeding or Imposition without the written consent of Lessee (such claim as Borrower may reasonably requestconsent not to be unreasonably withheld or unreasonably delayed) for 30 days after the receipt of such notice by Lessee; provided, however, that in the failure case of any such claim or proceeding, if such Indemnitee shall be required by law or regulation to provide such notice shall not release Borrower from any of its obligations to indemnify under Section 6 hereof unless, and only take action prior to the extent that, end of such failure effectively precludes Borrower’s contest rights. To the extent permitted under applicable law30-day period, such Indemnitee will shall in such notice to Lessee, so inform Lessee, and such Indemnitee shall not make take any payments action with respect to such claim claim, proceeding or Imposition without the consent of Lessee (such consent not to be unreasonably withheld or unreasonably delayed) for at least 30 10 days after giving notice of such claim to Borrower.
(B) If requested by Borrower in writing within 30 days after its 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 may be the Indemnitee has notified Lessee is required by applicable lawlaw or regulation for the Indemnitee to commence such contest), to request in writing that such Indemnitee shallcontest in good faith of such Imposition, at Lessee's expense. If (x) such contest can be pursued in the expense name of Borrower Lessee and subject independently from any other proceeding involving an Imposition for which Lessee has not agreed to subparagraph indemnify such Indemnitee, (Cy) belowsuch contest must be pursued in the name of the Indemnitee, but can be pursued independently from any other proceeding involving an Imposition for which Lessee has not agreed to indemnify such Indemnitee or (z) the Indemnitee so requests, then Lessee shall be permitted to control the contest the validity, applicability or amount of such Taxes byclaim, in the case of an Indemnitee-Controlled Contest, in such Indemnitee’s sole discretion or, provided that in the case of a Borrower-Controlled Contest, contest described in Borrower’s sole discretion, (1) resisting payment thereof if practicable, (2) not paying such Tax except under protest, (3) if protest is necessary and proper, and if payment any of such Tax is made, using reasonable efforts to obtain a refund thereof, in appropriate administrative and judicial proceedings, and (4) in the case of an Indemnitee-Controlled Contest, considering in good faith any other reasonable action as Borrower may reasonably request. Each Indemnitee shall consult in good faith with Borrower and Borrower’s counsel, and Borrower shall consult in good faith with such Indemnitee and its counsel in the case of a Borrower-Controlled Contest. concerning the forum in which the contest is most likely to be favorably resolved and whether such contest shall be by clause (x) resisting payment of such Tax), (y) paying such Tax under protest or (z) paying if the Indemnitee determines in good faith that such Tax contest by Lessee reasonably could have a material adverse impact on the business or operations of the Indemnitee and seeking provides a refund written explanation to Lessee of such determination, the Indemnitee may elect to control or reassert control of the contest, and provided, that by taking control of the contest, 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), each Indemnitee LSI Trust No. 2001-A Participation Agreement 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 claim, acting through counsel reasonably acceptable to Lessee. In any contest controlled by an Indemnitee, the Indemnitee shall conduct such contest in good faith. In no event shall Lessee be permitted to contest (or the Indemnitee required to contest) any claim (A) if such 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 sale, forfeiture or loss of, or the creation of any Lien (other than a Permitted Lien) on any Item or Items of Equipment or any part thereof unless Lessee shall have posted and maintained a bond or other repayment thereof.
security reasonably satisfactory to the relevant Indemnitee in respect to such risk, (B) if a Lease 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 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 claim, (C) unless 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 Imposition, including all reasonable legal, accounting and investigatory fees and disbursements, or (D) if such contest shall 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 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 Indemnitee for which Lessee may be liable to pay an indemnity under this Section 7.2) exceeds $75,000 and (B) unless, if requested by the Indemnitee, the Lessee shall have provided to the Indemnitee an opinion of counsel selected by Lessee that a reasonable basis exists to contest such claim. In no event shall an Indemnitee be requiredrequired 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 judgement, provided, however, that if the Indemnitee is the controlling party, no settlement offer with respect to such claims shall be made or Borrower permittedaccepted by the Indemnitee without the prior consent of the Lessee (which consent shall not unreasonably be withheld), to contest and provided further, that if the imposition Indemnitee is the controlling party and Lessee recommends the acceptance of any Tax a settlement offer made by the relevant Governmental Agency and such Indemnitee rejects such settlement offer then the amount for which Borrower is obligated pursuant Lessee will be required to this Section 6(b) unless (1) Borrower indemnify such Indemnitee with respect to the Taxes subject to such offer shall not exceed the amount which it would have agreed owed if such settlement offer had been accepted. In addition, the controlling party shall keep the noncontrolling party reasonably informed as to pay the progress of the contest, and shall promptly be paying on request all reasonable costs and expenses that such Indemnitee incurs provide the noncontrolling party with a copy of (or appropriate excerpts from) any reports or claims issued LSI Trust No. 2001-A Participation Agreement by the relevant auditing agent or taxing authority to the controlling party thereof, in contesting connection with such claim or arising out 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 7.2(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 relating other compromise or fail to appeal an adverse ruling with respect to any claim which is entitled to be indemnified under this Section 7.2 (and with respect to which contest is required under this Section 7.2(b)) without the prior written consent of Lessee (such consent not to be unreasonably withheld), unless such Indemnitee waives its right to be indemnified under this Section 7.2 with respect to such claim. Notwithstanding anything contained herein to the contrary, an Indemnitee will not be required to contest (including legal fees, accounting fees, and disbursements, including those on appeal, Lessee shall not be permitted to contest) a claim with respect to any Imposition if any); (2) such contest is not reasonably likely to result in a material danger of the sale, seizure, forfeiture or loss of the Aircraft, or the creation of any Lien thereon other than Liens for Taxes (i) either not yet due such Indemnitee shall waive its right to indemnification under this Section 7.2 with respect to such claim (and any claim with respect to such year or being contested in good faith by appropriate proceedings and any other taxable year, the contest of which is materially adversely affected as a result of such waiver) or (ii) for such Imposition is the sole result of a claim of a continuing and consistent nature, which claim has previously been resolved against the relevant Indemnitee (unless a change in law or facts has occurred since such reserves, if any, as are required to be provided under generally accepted accounting principles have been provided by Borrower, prior adverse resolution and there is no risk of criminal penalties; (3) if such contest shall be conducted in a manner requiring the payment of the claim, Borrower shall have advanced sufficient funds, on an interest-free basis, to make the payment required, and shall have agreed to indemnify the Indemnitee against any additional net after-Tax cost to such Indemnitee of such advance; (4) if requested by the Indemnitee in writing, such Indemnitee shall have received Lessee provides an opinion of independent Tax counsel selected by Borrower and reasonably acceptable to such Indemnitee and furnished at Borrower’s sole expense to the effect that a Realistic Possibility of Success exists for contesting such claim (or, in the case of an appeal of an adverse judicial determination, a written opinion from such independent Tax tax counsel to the effect that it is more likely than not that such adverse judicial determination change in law or facts will be reversed or substantially modified); (5) Borrower shall have delivered to such Indemnitee result in a written acknowledgment favorable resolution of Borrower’s obligation to indemnify such Indemnitee to the extent that the contest is not successful; provided, however, that Borrower will not be bound by its acknowledgment of liability if the contest is resolved on a clear and unambiguous basis showing no such liability under this Section 6(b) with respect to such Tax; (6) if a Specified Default or Event of Default shall have occurred and be continuing, Borrower shall have provided security for its obligation hereunder satisfactory to the Indemnitee by placing in escrow sufficient funds to cover any such contested Tax and the reasonably expected expenses of such contest on an After-Tax Basis, or otherwise providing satisfactory provisions for payment of such amounts determined by the Indemnitee in its sole discretion; (7) the aggregate amount of all indemnity payments that Borrower may be required to make to such Indemnitee with respect to such claim (or similar or related claims) is at least $60,000; and (8) the claim is not for a Tax the imposition of which has been previously contested by, or at the request of, Borrower hereunder, and such previous contest (including all allowable appeals) was decided adversely to Borrower, unless Borrower has delivered an opinion of independent Tax counsel selected by Borrower and reasonably acceptable to the Indemnitee to the effect that, on the basis of (i) a change in applicable law, or (ii) a difference in the underlying facts, there is currently a Realistic Possibility of Success for contesting such claimissue).
(D) If any Indemnitee shall obtain a refund of all or any part of any Tax paid by Borrower, such Indemnitee shall pay Borrower, but not before Borrower shall have made all payments theretofore due to such Indemnitee pursuant to this Section 6(b) and any other payments theretofore due such Indemnitee under any of the Operative Documents, an amount equal to the amount of such refund (net of any Taxes imposed thereon), including interest received and attributable thereto (net of any Taxes imposed thereon) plus, if Borrower has paid an amount pursuant to the first sentence of Section 6(b)(iii)(A), any net Tax benefit (or minus any net Tax detriment) realized by such Indemnitee as a result of any refund received, and payment made, by such Indemnitee pursuant to this sentence; provided that the Indemnitee shall not be obligated to pay an amount under the preceding sentence to the extent that such amount would exceed the amount of such Taxes paid, reimbursed or advanced by Borrower to such Indemnitee (other than the cost of the contest thereof); provided, further, that any amount not paid to Borrower pursuant to the foregoing limitation shall be carried forward to reduce pro tanto any future payments that Borrower may be required to make to such Indemnitee pursuant to this Section 6(b). If any Indemnitee shall have paid Borrower any refund of all or part of any Tax paid by Borrower and it is subsequently determined that such Indemnitee was not entitled to the refund, such determination shall be treated as the imposition of a Tax for which Borrower is obligated to indemnify such Indemnitee pursuant to the provisions of this Section 6(b) without regard to the exclusions set forth in Section 6(b)(ii) (other than subparagraphs (4), (11) and (12) thereof). Provided no Specified Default or Event of Default has occurred and is continuing, an Indemnitee shall not settle any such claim or contest pursuant to this provision without the written consent of Borrower, which consent shall not be unreasonably withheld, conditioned or delayed; provided, that an Indemnitee may settle at any time without the consent of Borrower if the Indemnitee waives (by written notice to Borrower) the payment by Borrower of an indemnity in respect of such issue and any related issue the contest of which is effectively foreclosed by the settlement of such issue, including any payment arising from such issue in subsequent years or which by reason of the fact that such issue is of a continuing nature, and promptly pays to Borrower any Tax previously paid or any interest-free loan advanced by Borrower (other than expenses of such contests) with respect to such issue.
(E) Nothing contained in this Section 6(b)(iv) shall require any Indemnitee to contest, or permit Borrower to contest in the name of such Indemnitee, a claim that such Indemnitee would otherwise be required to contest pursuant to this Section 6(b)(iv) if such Indemnitee shall waive payment by Borrower of any amount that might otherwise be payable by Borrower under this Section 6(b) in connection with such claim (other than the costs of contest previously incurred), nor shall any Indemnitee be required to pursue any appeal to the United States Supreme Court.
Appears in 1 contract
Contests. (A) If Tenant shall have the right at its own expense to contest the amount or validity, in whole or in part, of any Imposition by appropriate proceedings diligently conducted in good faith but only after payment of such Imposition unless such payment would operate as a written claim bar to such contest or interfere materially with the prosecution thereof, in which event, notwithstanding the provisions of SECTION 4.1 hereof, payment of such Imposition shall be made postponed if and only so long as:
4.3.1 neither the Premises nor any part thereof would by reason of such postponement or deferment be, in the reasonable judgment of Landlord, in danger of being forfeited or lost, and
4.3.2 Landlord would not be, by reason of such postponement or deferment, subject to any actual or threatened criminal sanctions or penalties or personal liability, as Landlord shall determine in its reasonable judgment, and
4.3.3 Tenant shall have deposited with the affected governmental unit or Landlord cash or other security reasonably acceptable to Landlord in the amount so contested and unpaid, together with all interest and penalties in connection therewith and all charges that may or might be assessed against and received or become a charge on the Premises or any part thereof in such proceedings, and
4.3.4 no Mortgage would by reason of such postponement or deferment be, in the reasonable judgment of Landlord, in danger of being put in default or foreclosure. Upon the termination of such proceedings, it shall be the obligation of Tenant to pay the amount of such Imposition or part thereof as finally determined in such proceedings, the payment of which may have been deferred during the prosecution of such proceedings, together with any Indemnitee for any Tax for which Borrower is obligated to indemnify pursuant to this Section 6(bcosts, fees (including reasonable counsel fees), such Indemnitee shall notify Borrower interest, penalties or other liabilities in writing of such claim within 30 days after its receiptconnection therewith, and upon such payment in full, Landlord shall provide Borrower such information regarding such claim as Borrower may reasonably request; provided, however, that the failure return to provide such notice shall not release Borrower from Tenant any of its obligations to indemnify under Section 6 hereof unless, and only to the extent that, such failure effectively precludes Borrower’s contest rights. To the extent permitted under applicable law, such Indemnitee will not make any payments amount deposited with it with respect to such claim for Imposition as aforesaid. If at least 30 days after giving notice any time during the continuance of such claim to Borrower.
(B) If requested by Borrower in writing within 30 days after its receipt proceedings Landlord shall reasonably deem the amount deposited as aforesaid insufficient, Tenant shall, upon demand, make an additional deposit of such notice additional sums or such shorter period other acceptable security as Landlord reasonably may request, and upon failure of Tenant so to do, the amount theretofore deposited may be required applied by applicable lawLandlord to the payment, such Indemnitee shall, at the expense of Borrower removal and subject to subparagraph (C) below, contest the validity, applicability or amount discharge of such Taxes byImposition and the interest and penalties in connection therewith and any costs, fees (including reasonable counsel fees) or other liability accruing against Landlord or the Premises in the case of an Indemnitee-Controlled Contest, in any such Indemnitee’s sole discretion or, in the case of a Borrower-Controlled Contest, in Borrower’s sole discretion, (1) resisting payment thereof if practicable, (2) not paying such Tax except under protest, (3) if protest is necessary and proper, and if payment of such Tax is made, using reasonable efforts to obtain a refund thereof, in appropriate administrative and judicial proceedings, and (4) in the case of an Indemnitee-Controlled Contest, considering in good faith any other reasonable action as Borrower may reasonably request. Each Indemnitee shall consult in good faith with Borrower and Borrower’s counsel, and Borrower shall consult in good faith with such Indemnitee and its counsel in the case of a Borrower-Controlled Contest. concerning the forum in which the contest is most likely to be favorably resolved and whether such contest shall be by (x) resisting payment of such Tax, (y) paying such Tax under protest or (z) paying such Tax and seeking a refund or other repayment thereof.
(C) In no event shall an Indemnitee be required, or Borrower permitted, to contest the imposition of any Tax for which Borrower is obligated pursuant to this Section 6(b) unless (1) Borrower shall have agreed to pay and shall promptly be paying on request all reasonable costs and expenses that such Indemnitee incurs in contesting such claim or arising out of or relating to such contest (including legal fees, accounting fees, and disbursements, including those on appeal, if any); (2) such contest is not reasonably likely to result in a material danger of the sale, seizure, forfeiture or loss of the Aircraft, or the creation of any Lien thereon other than Liens for Taxes (i) either not yet due or being contested in good faith by appropriate proceedings and (ii) for which such reservesbalance, if any, as are required to be provided under generally accepted accounting principles have been provided by Borrower, and there is no risk of criminal penalties; (3) if such contest shall be conducted in a manner requiring returned to Tenant or the payment of the claimdeficiency, Borrower if any, shall have advanced sufficient funds, on an interest-free basis, to make the payment required, and shall have agreed to indemnify the Indemnitee against any additional net after-Tax cost to such Indemnitee of such advance; (4) if requested by the Indemnitee in writing, such Indemnitee shall have received an opinion of independent Tax counsel selected by Borrower and reasonably acceptable to such Indemnitee and furnished at Borrower’s sole expense to the effect that a Realistic Possibility of Success exists for contesting such claim (or, in the case of an appeal of an adverse judicial determination, a written opinion from such independent Tax counsel to the effect that it is more likely than not that such adverse judicial determination will be reversed or substantially modified); (5) Borrower shall have delivered to such Indemnitee a written acknowledgment of Borrower’s obligation to indemnify such Indemnitee to the extent that the contest is not successful; provided, however, that Borrower will not be bound by its acknowledgment of liability if the contest is resolved on a clear and unambiguous basis showing no such liability under this Section 6(b) with respect to such Tax; (6) if a Specified Default or Event of Default shall have occurred and be continuing, Borrower shall have provided security for its obligation hereunder satisfactory to the Indemnitee by placing in escrow sufficient funds to cover any such contested Tax and the reasonably expected expenses of such contest on an After-Tax Basis, or otherwise providing satisfactory provisions for payment of such amounts determined by the Indemnitee in its sole discretion; (7) the aggregate amount of all indemnity payments that Borrower may be required to make to such Indemnitee with respect to such claim (or similar or related claims) is at least $60,000; and (8) the claim is not for a Tax the imposition of which has been previously contested by, or at the request of, Borrower hereunder, and such previous contest (including all allowable appeals) was decided adversely to Borrower, unless Borrower has delivered an opinion of independent Tax counsel selected by Borrower and reasonably acceptable to the Indemnitee to the effect that, on the basis of (i) a change in applicable law, or (ii) a difference in the underlying facts, there is currently a Realistic Possibility of Success for contesting such claim.
(D) If any Indemnitee shall obtain a refund of all or any part of any Tax paid by Borrower, such Indemnitee shall pay Borrower, but not before Borrower shall have made all payments theretofore due Tenant to such Indemnitee pursuant to this Section 6(b) and any other payments theretofore due such Indemnitee under any of the Operative Documents, an amount equal to the amount of such refund (net of any Taxes imposed thereon), including interest received and attributable thereto (net of any Taxes imposed thereon) plus, if Borrower has paid an amount pursuant to the first sentence of Section 6(b)(iii)(A), any net Tax benefit (or minus any net Tax detriment) realized by such Indemnitee as a result of any refund received, and payment made, by such Indemnitee pursuant to this sentence; provided that the Indemnitee shall not be obligated to pay an amount under the preceding sentence to the extent that such amount would exceed the amount of such Taxes paid, reimbursed or advanced by Borrower to such Indemnitee (other than the cost of the contest thereof); provided, further, that any amount not paid to Borrower pursuant to the foregoing limitation shall be carried forward to reduce pro tanto any future payments that Borrower may be required to make to such Indemnitee pursuant to this Section 6(b). If any Indemnitee shall have paid Borrower any refund of all or part of any Tax paid by Borrower and it is subsequently determined that such Indemnitee was not entitled to the refund, such determination shall be treated as the imposition of a Tax for which Borrower is obligated to indemnify such Indemnitee pursuant to the provisions of this Section 6(b) without regard to the exclusions set forth in Section 6(b)(ii) (other than subparagraphs (4), (11) and (12) thereof). Provided no Specified Default or Event of Default has occurred and is continuing, an Indemnitee shall not settle any such claim or contest pursuant to this provision without the written consent of Borrower, which consent shall not be unreasonably withheld, conditioned or delayed; provided, that an Indemnitee may settle at any time without the consent of Borrower if the Indemnitee waives (by written notice to Borrower) the payment by Borrower of an indemnity in respect of such issue and any related issue the contest of which is effectively foreclosed by the settlement of such issue, including any payment arising from such issue in subsequent years or which by reason of the fact that such issue is of a continuing nature, and promptly pays to Borrower any Tax previously paid or any interest-free loan advanced by Borrower (other than expenses of such contests) with respect to such issueLandlord on demand.
(E) Nothing contained in this Section 6(b)(iv) shall require any Indemnitee to contest, or permit Borrower to contest in the name of such Indemnitee, a claim that such Indemnitee would otherwise be required to contest pursuant to this Section 6(b)(iv) if such Indemnitee shall waive payment by Borrower of any amount that might otherwise be payable by Borrower under this Section 6(b) in connection with such claim (other than the costs of contest previously incurred), nor shall any Indemnitee be required to pursue any appeal to the United States Supreme Court.
Appears in 1 contract
Sources: Lease Agreement (Empire Resorts Inc)
Contests. (Aa) After the Closing, the Purchaser shall reasonably promptly after becoming aware thereof notify the Seller in writing of the commencement of any Tax audit or administrative or judicial proceeding and shall also separately notify the Seller in writing of any demand or claim on the Purchaser which, if determined adversely to the taxpayer or after the lapse of time would be grounds for indemnification by the Seller under this Article VII. Such notice shall contain factual information (to the extent known to the Purchaser) describing the asserted Tax liability in reasonable detail and shall include copies of any notice or other document received from any taxing authority in respect of any such asserted Tax liability. If a written claim the Purchaser fails to give the Seller reasonably prompt notice of an asserted Tax liability as required by this Section 7.04, then (i) if the Seller is precluded by the failure to give reasonably prompt notice from contesting the asserted Tax liability in both the administrative and judicial forums, then the Seller shall be made against and received by not have any Indemnitee obligation to indemnify for any loss or damage arising out of such asserted Tax for liability, and (ii) if the Seller is not so precluded from contesting but such failure to give reasonably prompt notice results in an actual detriment to the Seller, then any amount which Borrower the Seller is obligated otherwise required to indemnify pay the Purchaser pursuant to this Section 6(b), Article VII with respect to such Indemnitee liability shall notify Borrower in writing be reduced by the amount of such claim within 30 days detriment.
(b) The Seller, promptly after its receiptreceiving notice, and shall provide Borrower such information regarding such claim as Borrower may reasonably request; providedelect to direct, however, that the failure to provide such notice shall not release Borrower from any through counsel of its obligations own choosing and at its own expense, any audit, claim for refund and administrative or judicial proceeding involving any asserted liability with respect to which indemnity may be sought against the Seller under this Article VII (any such audit, claim for refund or proceeding relating to an asserted Tax liability are referred to herein collectively as a "CONTEST"). If the Seller elects to direct the Contest of an asserted Tax liability, the Purchaser shall cooperate in all reasonable respects, at the Seller's expense, in each phase of such Contest. If the Seller does not either reasonably promptly give notice to direct the Contest or commence the direction of the Contest or if it contests its obligation to indemnify under Section 6 hereof unless7.01, and only to the extent thatPurchaser may pay, compromise or contest, at its own expense, such failure effectively precludes Borrower’s asserted liability without waiving any of its rights to indemnification hereunder. However, in such case, the Purchaser may not settle or compromise any asserted liability over the objection of the Seller; PROVIDED, HOWEVER, that the Seller's consent to settlement or compromise shall not be unreasonably withheld or delayed. In any event, each of the Purchaser and the Seller may participate, at their own expense, in the Contest. If the Seller chooses to direct the Contest, the Purchaser shall promptly empower (by power of attorney and such other documentation as may be appropriate) such representatives of the Seller as Seller may designate to represent the Purchaser or its successor in the Contest insofar as the Contest involves an asserted Tax liability for which the Seller would be liable under this Article VII. If, with respect to any proposed settlement referred to in clause (x) of the previous sentence, the Seller proposes in good faith to settle a claim, suit, action or proceeding with respect to any Tax, which settlement offer is accepted by the relevant taxing authority, the Purchaser may elect to continue to contest rights. To such claim, suit, action or proceeding; PROVIDED that notwithstanding how such matter is ultimately settled or decided, the extent permitted under applicable law, such Indemnitee will not make any payments liability of the Seller with respect to such claim for at least 30 days after giving notice of such claim claim, suit, action or proceeding shall be no greater than the amount which would have been payable if the Purchaser had consented to Borrowerthe settlement proposed by the Seller.
(Bc) If requested by Borrower in writing within 30 days after its receipt of such notice or such shorter period as may be required by applicable law, such Indemnitee shallThe Purchaser shall have the sole obligation and right to direct, at its own expense, a Contest regarding any Tax Return for any taxable period commencing after the expense of Borrower and subject to subparagraph (C) below, contest the validity, applicability or amount of such Taxes by, in the case of an Indemnitee-Controlled Contest, in such Indemnitee’s sole discretion or, Closing Date in the case of a Borrower-Controlled ContestTax Return which is filed on a combined, in Borrower’s sole discretionconsolidated, (1) resisting payment thereof if practicableunitary or similar basis with the Purchaser; PROVIDED, (2) not paying HOWEVER, that the Purchaser shall advise and consult with the Seller regarding the status of any such Contest that involves an asserted Tax except under protest, (3) if protest is necessary and proper, and if payment of such Tax is made, using reasonable efforts to obtain a refund thereof, in appropriate administrative and judicial proceedings, and (4) in the case of an Indemnitee-Controlled Contest, considering in good faith any other reasonable action as Borrower may reasonably request. Each Indemnitee shall consult in good faith with Borrower and Borrower’s counsel, and Borrower shall consult in good faith with such Indemnitee and its counsel in the case of a Borrower-Controlled Contest. concerning the forum in liability for which the contest is most likely to Seller would be favorably resolved and whether such contest shall be by (x) resisting payment of such Tax, (y) paying such Tax under protest or (z) paying such Tax and seeking a refund or other repayment thereof.
(C) In no event shall an Indemnitee be required, or Borrower permitted, to contest the imposition of any Tax for which Borrower is obligated pursuant to this Section 6(b) unless (1) Borrower shall have agreed to pay and shall promptly be paying on request all reasonable costs and expenses that such Indemnitee incurs in contesting such claim or arising out of or relating to such contest (including legal fees, accounting fees, and disbursements, including those on appeal, if any); (2) such contest is not reasonably likely to result in a material danger of the sale, seizure, forfeiture or loss of the Aircraft, or the creation of any Lien thereon other than Liens for Taxes (i) either not yet due or being contested in good faith by appropriate proceedings and (ii) for which such reserves, if any, as are required to be provided under generally accepted accounting principles have been provided by Borrower, and there is no risk of criminal penalties; (3) if such contest shall be conducted in a manner requiring the payment of the claim, Borrower shall have advanced sufficient funds, on an interest-free basis, to make the payment required, and shall have agreed to indemnify the Indemnitee against any additional net after-Tax cost to such Indemnitee of such advance; (4) if requested by the Indemnitee in writing, such Indemnitee shall have received an opinion of independent Tax counsel selected by Borrower and reasonably acceptable to such Indemnitee and furnished at Borrower’s sole expense to the effect that a Realistic Possibility of Success exists for contesting such claim (or, in the case of an appeal of an adverse judicial determination, a written opinion from such independent Tax counsel to the effect that it is more likely than not that such adverse judicial determination will be reversed or substantially modified); (5) Borrower shall have delivered to such Indemnitee a written acknowledgment of Borrower’s obligation to indemnify such Indemnitee to the extent that the contest is not successful; provided, however, that Borrower will not be bound by its acknowledgment of liability if the contest is resolved on a clear and unambiguous basis showing no such liability liable under this Section 6(b) with respect to such Tax; (6) if a Specified Default or Event of Default shall have occurred Article VII and be continuingPROVIDED, Borrower shall have provided security for its obligation hereunder satisfactory to the Indemnitee by placing in escrow sufficient funds to cover any such contested Tax and the reasonably expected expenses of such contest on an After-Tax BasisFURTHER, or otherwise providing satisfactory provisions for payment of such amounts determined by the Indemnitee in its sole discretion; (7) the aggregate amount of all indemnity payments that Borrower may be required to make to such Indemnitee with respect to such claim (or similar or related claims) is at least $60,000; and (8) the claim is not for a Tax the imposition of which has been previously contested by, or at the request of, Borrower hereunder, and such previous contest (including all allowable appeals) was decided adversely to Borrower, unless Borrower has delivered an opinion of independent Tax counsel selected by Borrower and reasonably acceptable to the Indemnitee to the effect that, on the basis of (i) a change in applicable lawPurchaser shall not, or (ii) a difference in the underlying facts, there is currently a Realistic Possibility of Success for contesting such claim.
(D) If any Indemnitee shall obtain a refund of all or any part of any Tax paid by Borrower, such Indemnitee shall pay Borrower, but not before Borrower shall have made all payments theretofore due to such Indemnitee pursuant to this Section 6(b) and any other payments theretofore due such Indemnitee under any of the Operative Documents, an amount equal to the amount of such refund (net of any Taxes imposed thereon), including interest received and attributable thereto (net of any Taxes imposed thereon) plus, if Borrower has paid an amount pursuant to the first sentence of Section 6(b)(iii)(A), any net Tax benefit (or minus any net Tax detriment) realized by such Indemnitee as a result of any refund received, and payment made, by such Indemnitee pursuant to this sentence; provided that the Indemnitee shall not be obligated to pay an amount under the preceding sentence to the extent that such amount would exceed the amount of such Taxes paid, reimbursed or advanced by Borrower to such Indemnitee (other than the cost of the contest thereof); provided, further, that any amount not paid to Borrower pursuant to the foregoing limitation shall be carried forward to reduce pro tanto any future payments that Borrower may be required to make to such Indemnitee pursuant to this Section 6(b). If any Indemnitee shall have paid Borrower any refund of all or part of any Tax paid by Borrower and it is subsequently determined that such Indemnitee was not entitled to the refund, such determination shall be treated as the imposition of a Tax for which Borrower is obligated to indemnify such Indemnitee pursuant to the provisions of this Section 6(b) without regard to the exclusions set forth in Section 6(b)(ii) (other than subparagraphs (4), (11) and (12) thereof). Provided no Specified Default or Event of Default has occurred and is continuing, an Indemnitee shall not settle any such claim or contest pursuant to this provision without the prior written consent of Borrower, the Seller (which consent shall not be unreasonably withheld, conditioned withheld or delayed; provided, that an Indemnitee may ) settle at any time without the consent of Borrower if the Indemnitee waives (by written notice to Borrower) the payment by Borrower of an indemnity in respect of such issue and any related issue the contest of which is effectively foreclosed by the settlement of such issue, including any payment arising from such issue in subsequent years or which by reason of the fact that such issue is of a continuing nature, and promptly pays to Borrower any Tax previously paid or any interest-free loan advanced by Borrower (other than expenses of such contests) with respect to such issuecontest.
(E) Nothing contained in this Section 6(b)(iv) shall require any Indemnitee to contest, or permit Borrower to contest in the name of such Indemnitee, a claim that such Indemnitee would otherwise be required to contest pursuant to this Section 6(b)(iv) if such Indemnitee shall waive payment by Borrower of any amount that might otherwise be payable by Borrower under this Section 6(b) in connection with such claim (other than the costs of contest previously incurred), nor shall any Indemnitee be required to pursue any appeal to the United States Supreme Court.
Appears in 1 contract
Sources: Asset Purchase Agreement (White Mountains Insurance Group LTD)
Contests. (A) If a written any claim shall be made against and received by any Tax Indemnitee or if any proceeding shall be commenced against any Tax Indemnitee (including a written notice of such proceeding) for any Tax for Imposition as to which Borrower is obligated to indemnify Lessee may have an indemnity obligation pursuant to this Section 6(b)SECTION 12.5, or if any Tax Indemnitee shall determine that any Imposition for which Lessee may have an indemnity obligation pursuant to this SECTION 12.5 may be payable, such Tax Indemnitee shall promptly (and in any event, within thirty (30) days) notify Borrower Lessee in writing of such claim within 30 days after its receipt, and shall provide Borrower such information regarding such claim as Borrower may reasonably request; provided, however, (PROVIDED that the failure to provide such notice so notify Lessee within thirty (30) days shall not release Borrower from any of its obligations to indemnify alter such Tax Indemnitee's rights under Section 6 hereof unlessthis SECTION 12.5, and only except to the extent that, such failure effectively precludes Borrower’s or materially adversely affects the ability to conduct a contest rights. To the extent permitted under applicable law, such Indemnitee will of any indemnified Taxes) and shall not make take any payments action with respect to such claim claim, proceeding or Imposition without the written consent of Lessee (such consent not to be unreasonably withheld or unreasonably delayed) for at least 30 thirty (30) days after giving notice of such claim to Borrower.
(B) If requested by Borrower in writing within 30 days after its 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, proceeding or Imposition without the consent of Lessee (such consent not to be unreasonably withheld or unreasonably delayed) for ten (10) days after the receipt of such notice by Lessee, unless the 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 may be the Indemnitee has notified Lessee is required by applicable lawlaw or regulation for the Tax Indemnitee to commence such contest), to request in writing that such Tax Indemnitee shallcontest such Imposition, at the expense of Borrower and subject to subparagraph (C) below, contest the validity, applicability or amount of such Taxes by, in the case of an Indemnitee-Controlled Contest, in such Indemnitee’s sole discretion or, in the case of a Borrower-Controlled Contest, in Borrower’s sole discretion, (1) resisting payment thereof if practicable, (2) not paying such Tax except under protest, (3) if protest is necessary and proper, and if payment of such Tax is made, using reasonable efforts to obtain a refund thereof, in appropriate administrative and judicial proceedings, and (4) in the case of an Indemnitee-Controlled Contest, considering in good faith any other reasonable action as Borrower may reasonably requestLessee's expense. Each Indemnitee shall consult in good faith with Borrower and Borrower’s counsel, and Borrower shall consult in good faith with such Indemnitee and its counsel in the case of a Borrower-Controlled Contest. concerning the forum in which the contest is most likely to be favorably resolved and whether such contest shall be by If (x) resisting payment such contest can be pursued in the name of Lessee and independently from any other proceeding involving an Imposition for which Lessee has not agreed to indemnify such TaxTax Indemnitee, (y) paying 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 under protest Indemnitee or (z) paying 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 (y) of the preceding sentence, each Tax Indemnitee shall take any and seeking a refund or all reasonable steps to segregate claims for any Taxes for which Lessee indemnifies hereunder from Taxes Lessee is not obligated to indemnify hereunder, so that Lessee can control the contest of the former. In all other repayment thereof.
(C) claims requested to be contested by Lessee, the Tax Indemnitee shall control the contest of such claim, acting through counsel reasonably acceptable to Lessee. In no event shall an Lessee be permitted to contest (or the Tax Indemnitee be requiredrequired to contest) any claim (A) if such Tax 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 sale, forfeiture or loss of, or Borrower permitted, to contest the imposition creation of any Lien (other than a Permitted Lien) on the Leased Property or any part thereof unless 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 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 all expenses for which Borrower Lessee is obligated pursuant to this Section 6(bresponsible hereunder reasonably foreseeable in connection with the contest of such claim, (C) unless (1) Borrower Lessee shall have agreed to pay and shall promptly be paying pay to such Tax Indemnitee on request demand all reasonable costs out-of-pocket costs, losses and expenses that such Tax Indemnitee incurs may incur in connection with contesting such claim or arising out of or relating to such contest (Imposition, including legal feesall reasonable legal, accounting fees, and investigatory fees and disbursements, including those on appeal, if any); or (2) such contest is not reasonably likely to result in a material danger of the sale, seizure, forfeiture or loss of the Aircraft, or the creation of any Lien thereon other than Liens for Taxes (i) either not yet due or being contested in good faith by appropriate proceedings and (ii) for which such reserves, if any, as are required to be provided under generally accepted accounting principles have been provided by Borrower, and there is no risk of criminal penalties; (3D) if such contest shall be conducted in a manner requiring involve the payment of the claimImpositions prior to the contest, Borrower unless Lessee shall have advanced sufficient funds, on provide to the Tax Indemnitee an interest-free basis, advance in an amount equal to make the payment required, and shall have agreed Imposition that the Tax Indemnitee is required to indemnify the Indemnitee against any pay (with no additional net after-Tax cost tax costs (including Taxes) to such Indemnitee Tax Indemnitee). In addition, for Tax Indemnitee-controlled contests and claims contested in the name of such advance; (4) if requested by the Tax Indemnitee in writinga public forum, such Indemnitee no contest shall have received an opinion of independent Tax counsel selected by Borrower and reasonably acceptable to such Indemnitee and furnished at Borrower’s sole expense to the effect that a Realistic Possibility of Success exists for contesting such claim be required: (orA) 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 pay an indemnity under this SECTION 12.5) exceeds $50,000 and (B) unless, if requested by the Tax Indemnitee, Lessee shall have provided to the Indemnitee an opinion of counsel selected by Lessee (which may be in-house counsel, except that in the case of income taxes indemnified hereunder such opinion shall be that of independent tax counsel selected by the Tax Indemnitee and reasonably acceptable to Lessee) that a reasonable basis exists to contest such claim. In no event shall a Tax Indemnitee be required to appeal of an adverse judicial determinationdetermination 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, PROVIDED, HOWEVER, that if the Tax Indemnitee is the 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 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 12.5(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 an adverse ruling with respect to any claim which is entitled to be indemnified under this SECTION 12.5 (and with respect to which contest is required under this SECTION 12.5(b)) without the prior written consent of Lessee (such consent not to be unreasonably withheld), unless such Tax Indemnitee waives its right to be indemnified under this SECTION 12.5 with respect to such claim. Notwithstanding anything contained herein to the contrary, a written Tax Indemnitee will not be required to contest (and Lessee shall not be permitted to contest) a claim with respect to any Imposition if (i) such Tax Indemnitee shall waive its right to indemnification under this SECTION 12.5 with respect to such claim (and any claim 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 Indemnitee (unless a change in law or facts has occurred since such prior adverse resolution and Lessee provides an opinion from such of independent Tax tax counsel to the effect that it is more likely than not that such adverse judicial determination change in law or facts will be reversed or substantially modified); (5) Borrower shall have delivered to such Indemnitee result in a written acknowledgment favorable resolution of Borrower’s obligation to indemnify such Indemnitee to the extent that the contest is not successful; provided, however, that Borrower will not be bound by its acknowledgment of liability if the contest is resolved on a clear and unambiguous basis showing no such liability under this Section 6(b) with respect to such Tax; (6) if a Specified Default or Event of Default shall have occurred and be continuing, Borrower shall have provided security for its obligation hereunder satisfactory to the Indemnitee by placing in escrow sufficient funds to cover any such contested Tax and the reasonably expected expenses of such contest on an After-Tax Basis, or otherwise providing satisfactory provisions for payment of such amounts determined by the Indemnitee in its sole discretion; (7) the aggregate amount of all indemnity payments that Borrower may be required to make to such Indemnitee with respect to such claim (or similar or related claims) is at least $60,000; and (8) the claim is not for a Tax the imposition of which has been previously contested by, or at the request of, Borrower hereunder, and such previous contest (including all allowable appeals) was decided adversely to Borrower, unless Borrower has delivered an opinion of independent Tax counsel selected by Borrower and reasonably acceptable to the Indemnitee to the effect that, on the basis of (i) a change in applicable law, or (ii) a difference in the underlying facts, there is currently a Realistic Possibility of Success for contesting such claimissue).
(D) If any Indemnitee shall obtain a refund of all or any part of any Tax paid by Borrower, such Indemnitee shall pay Borrower, but not before Borrower shall have made all payments theretofore due to such Indemnitee pursuant to this Section 6(b) and any other payments theretofore due such Indemnitee under any of the Operative Documents, an amount equal to the amount of such refund (net of any Taxes imposed thereon), including interest received and attributable thereto (net of any Taxes imposed thereon) plus, if Borrower has paid an amount pursuant to the first sentence of Section 6(b)(iii)(A), any net Tax benefit (or minus any net Tax detriment) realized by such Indemnitee as a result of any refund received, and payment made, by such Indemnitee pursuant to this sentence; provided that the Indemnitee shall not be obligated to pay an amount under the preceding sentence to the extent that such amount would exceed the amount of such Taxes paid, reimbursed or advanced by Borrower to such Indemnitee (other than the cost of the contest thereof); provided, further, that any amount not paid to Borrower pursuant to the foregoing limitation shall be carried forward to reduce pro tanto any future payments that Borrower may be required to make to such Indemnitee pursuant to this Section 6(b). If any Indemnitee shall have paid Borrower any refund of all or part of any Tax paid by Borrower and it is subsequently determined that such Indemnitee was not entitled to the refund, such determination shall be treated as the imposition of a Tax for which Borrower is obligated to indemnify such Indemnitee pursuant to the provisions of this Section 6(b) without regard to the exclusions set forth in Section 6(b)(ii) (other than subparagraphs (4), (11) and (12) thereof). Provided no Specified Default or Event of Default has occurred and is continuing, an Indemnitee shall not settle any such claim or contest pursuant to this provision without the written consent of Borrower, which consent shall not be unreasonably withheld, conditioned or delayed; provided, that an Indemnitee may settle at any time without the consent of Borrower if the Indemnitee waives (by written notice to Borrower) the payment by Borrower of an indemnity in respect of such issue and any related issue the contest of which is effectively foreclosed by the settlement of such issue, including any payment arising from such issue in subsequent years or which by reason of the fact that such issue is of a continuing nature, and promptly pays to Borrower any Tax previously paid or any interest-free loan advanced by Borrower (other than expenses of such contests) with respect to such issue.
(E) Nothing contained in this Section 6(b)(iv) shall require any Indemnitee to contest, or permit Borrower to contest in the name of such Indemnitee, a claim that such Indemnitee would otherwise be required to contest pursuant to this Section 6(b)(iv) if such Indemnitee shall waive payment by Borrower of any amount that might otherwise be payable by Borrower under this Section 6(b) in connection with such claim (other than the costs of contest previously incurred), nor shall any Indemnitee be required to pursue any appeal to the United States Supreme Court.
Appears in 1 contract
Contests. (Ai) If After the Cut-off 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 the Entities 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 5.4 by the other party (the “Tax Indemnifying Party” and a written claim “Tax Claim”). Such notice shall contain factual information describing any asserted Tax liability in reasonable detail and shall include copies of any notice or other document received from any Tax authority in respect of any such asserted Tax liability. Failure to give such notification shall not affect the indemnification provided in this Section 5.4 except to the extent the Tax Indemnifying Party shall have been prejudiced as a result of such failure (except that the Tax Indemnifying Party shall not be made against liable for any expenses incurred during the period in which the Tax Indemnified Party failed to give such notice). Thereafter, the Tax Indemnified Party shall deliver to the Tax Indemnifying Party, as promptly as possible but in no event later than ten (10) days after the Tax Indemnified Party’s receipt thereof, copies of all relevant notices and documents (including court papers) received by the Tax Indemnified Party.
(ii) In the case of an audit or administrative or judicial proceeding involving any Indemnitee asserted liability for Taxes relating to any Tax for which Borrower is obligated Taxable years or periods ending on or before the Cut-off Date or any Straddle Period, Seller shall have the right, at its expense, to indemnify pursuant to this Section 6(b), such Indemnitee shall notify Borrower in writing control the conduct of such claim within 30 days after its receipt, and shall provide Borrower such information regarding such claim as Borrower may reasonably requestaudit or proceeding; provided, however, that the failure (A) with respect to provide such notice Straddle Periods, Seller shall not release Borrower from any of its obligations to indemnify under Section 6 hereof unless, and only keep Buyer reasonably informed with respect to the extent that, status of such failure effectively precludes Borrower’s contest rights. To the extent permitted under applicable law, such Indemnitee will not make any payments audit or proceeding and provide Buyer with copies of all written correspondence with respect to such claim for at least 30 days after giving notice of such claim to Borrower.
audit or proceeding in a timely manner and (B) If requested by Borrower in writing within 30 days after its receipt of if such notice audit or such shorter period as may proceeding would be required by applicable law, such Indemnitee shall, at the expense of Borrower and subject to subparagraph (C) below, contest the validity, applicability or amount of such Taxes by, in the case of an Indemnitee-Controlled Contest, in such Indemnitee’s sole discretion or, in the case of a Borrower-Controlled Contest, in Borrower’s sole discretion, (1) resisting payment thereof if practicable, (2) not paying such Tax except under protest, (3) if protest is necessary and proper, and if payment of such Tax is made, using reasonable efforts to obtain a refund thereof, in appropriate administrative and judicial proceedings, and (4) in the case of an Indemnitee-Controlled Contest, considering in good faith any other reasonable action as Borrower may reasonably request. Each Indemnitee shall consult in good faith with Borrower and Borrower’s counsel, and Borrower shall consult in good faith with such Indemnitee and its counsel in the case of a Borrower-Controlled Contest. concerning the forum in which the contest is most likely to be favorably resolved and whether such contest shall be by (x) resisting payment of such Tax, (y) paying such Tax under protest or (z) paying such Tax and seeking a refund or other repayment thereof.
(C) In no event shall an Indemnitee be required, or Borrower permitted, to contest the imposition of any Tax for which Borrower is obligated pursuant to this Section 6(b) unless (1) Borrower shall have agreed to pay and shall promptly be paying on request all reasonable costs and expenses that such Indemnitee incurs in contesting such claim or arising out of or relating to such contest (including legal fees, accounting fees, and disbursements, including those on appeal, if any); (2) such contest is not reasonably likely expected to result in a material danger increase in Tax liability of the sale, seizure, forfeiture or loss of the Aircraft, or the creation of any Lien thereon other than Liens for Taxes (i) either not yet due or being contested in good faith by appropriate proceedings and (ii) Entities for which such reservesBuyer would be liable under this Section 5.6, if any, as are required to be provided under generally accepted accounting principles have been provided by Borrower, and there is no risk of criminal penalties; (3) if such contest shall be conducted Buyer may participate in a manner requiring the payment of the claim, Borrower shall have advanced sufficient funds, on an interest-free basis, to make the payment required, and shall have agreed to indemnify the Indemnitee against any additional net after-Tax cost to such Indemnitee conduct of such advance; audit or proceeding at its own expense.
(4iii) if requested by the Indemnitee in writing, such Indemnitee shall have received an opinion of independent Tax counsel selected by Borrower and reasonably acceptable to such Indemnitee and furnished at Borrower’s sole expense to the effect that a Realistic Possibility of Success exists for contesting such claim (or, in In the case of an appeal of an adverse audit or administrative or judicial determinationproceeding involving any asserted liability for Taxes relating to any Taxable years or periods beginning after the Cut-off Date, a written opinion from such independent Tax counsel to the effect that it is more likely than not that such adverse judicial determination will be reversed or substantially modified); (5) Borrower Buyer shall have delivered the right, at its expense, to such Indemnitee a written acknowledgment of Borrower’s obligation to indemnify such Indemnitee to control the extent that the contest is not successful; provided, however, that Borrower will not be bound by its acknowledgment of liability if the contest is resolved on a clear and unambiguous basis showing no such liability under this Section 6(b) with respect to such Tax; (6) if a Specified Default or Event of Default shall have occurred and be continuing, Borrower shall have provided security for its obligation hereunder satisfactory to the Indemnitee by placing in escrow sufficient funds to cover any such contested Tax and the reasonably expected expenses conduct of such contest on an After-audit or proceeding.
(iv) Buyer and Seller shall reasonably cooperate in connection with any Tax Basis, or otherwise providing satisfactory provisions for payment of such amounts determined by the Indemnitee in its sole discretion; (7) the aggregate amount of all indemnity payments that Borrower may be required to make to such Indemnitee with respect to such claim (or similar or related claims) is at least $60,000; and (8) the claim is not for a Tax the imposition of which has been previously contested by, or at the request of, Borrower hereunderClaim, and such previous contest (including all allowable appeals) was decided adversely to Borrower, unless Borrower has delivered an opinion of independent Tax counsel selected by Borrower and reasonably acceptable cooperation shall include the provision to the Indemnitee Tax Indemnifying Party of records and information which are reasonably relevant to the effect that, such Tax Claim and making employees available on the a mutually convenient basis of (i) a change in applicable law, or (ii) a difference in the underlying facts, there is currently a Realistic Possibility of Success for contesting such claim.
(D) If any Indemnitee shall obtain a refund of all or any part to provide additional information and explanation of any Tax paid by Borrower, such Indemnitee shall pay Borrower, but not before Borrower shall have made all payments theretofore due to such Indemnitee pursuant to this Section 6(b) and any other payments theretofore due such Indemnitee under any of the Operative Documents, an amount equal to the amount of such refund (net of any Taxes imposed thereon), including interest received and attributable thereto (net of any Taxes imposed thereon) plus, if Borrower has paid an amount pursuant to the first sentence of Section 6(b)(iii)(A), any net Tax benefit (or minus any net Tax detriment) realized by such Indemnitee as a result of any refund received, and payment made, by such Indemnitee pursuant to this sentence; material provided that the Indemnitee shall not be obligated to pay an amount under the preceding sentence to the extent that such amount would exceed the amount of such Taxes paid, reimbursed or advanced by Borrower to such Indemnitee (other than the cost of the contest thereof); provided, further, that any amount not paid to Borrower pursuant to the foregoing limitation shall be carried forward to reduce pro tanto any future payments that Borrower may be required to make to such Indemnitee pursuant to this Section 6(b). If any Indemnitee shall have paid Borrower any refund of all or part of any Tax paid by Borrower and it is subsequently determined that such Indemnitee was not entitled to the refund, such determination shall be treated as the imposition of a Tax for which Borrower is obligated to indemnify such Indemnitee pursuant to the provisions of this Section 6(b) without regard to the exclusions set forth in Section 6(b)(ii) (other than subparagraphs (4), (11) and (12) thereof). Provided no Specified Default or Event of Default has occurred and is continuing, an Indemnitee shall not settle any such claim or contest pursuant to this provision without the written consent of Borrower, which consent shall not be unreasonably withheld, conditioned or delayed; provided, that an Indemnitee may settle at any time without the consent of Borrower if the Indemnitee waives (by written notice to Borrower) the payment by Borrower of an indemnity in respect of such issue and any related issue the contest of which is effectively foreclosed by the settlement of such issue, including any payment arising from such issue in subsequent years or which by reason of the fact that such issue is of a continuing nature, and promptly pays to Borrower any Tax previously paid or any interest-free loan advanced by Borrower (other than expenses of such contests) with respect to such issuehereunder.
(E) Nothing contained in this Section 6(b)(iv) shall require any Indemnitee to contest, or permit Borrower to contest in the name of such Indemnitee, a claim that such Indemnitee would otherwise be required to contest pursuant to this Section 6(b)(iv) if such Indemnitee shall waive payment by Borrower of any amount that might otherwise be payable by Borrower under this Section 6(b) in connection with such claim (other than the costs of contest previously incurred), nor shall any Indemnitee be required to pursue any appeal to the United States Supreme Court.
Appears in 1 contract
Contests. (A) If a written any claim shall be or claims is or are made against and received by any Indemnitee for any Tax for which Borrower is obligated subject to indemnify pursuant to this indemnification as provided in Section 6(b7.2(a), such Indemnitee shall as soon as practicable, but in no event more than thirty (30) days after receipt of formal written notice of the Tax or proposed Tax, notify Borrower in writing the Lessee and shall not take action with respect to such Tax without the consent of the Lessee (such consent not to be unreasonably withheld, conditioned or delayed) for thirty (30) days after the receipt of such claim within 30 days after its receipt, and shall provide Borrower such information regarding such claim as Borrower may reasonably requestnotice by the Lessee; provided, however, that in the failure to provide case of any such notice Tax, if action shall not release Borrower from any of its obligations to indemnify under Section 6 hereof unless, and only to the extent that, such failure effectively precludes Borrower’s contest rights. To the extent permitted under applicable law, such Indemnitee will not make any payments with respect to such claim for at least 30 days after giving notice of such claim to Borrower.
(B) If requested by Borrower in writing within 30 days after its receipt of such notice or such shorter period as may be required by applicable lawApplicable Law to be taken prior to the end of such period of thirty (30) days, such Indemnitee shall, at in such notice to the expense of Borrower and subject to subparagraph (C) belowLessee, contest inform the validity, applicability or amount Lessee of such Taxes byshorter period, and no action shall be taken with respect to such Tax without the consent of the Lessee (such consent not to be unreasonably withheld, conditioned or delayed) before seven (7) days before the end of such shorter period. If, in the case good faith opinion of an Indemnitee-Controlled the Lessee there exists a reasonable basis to contest such Tax (and if the provisos of the definition of “Permitted Contest” continue to be satisfied), the Lessee at its expense may, to the extent permitted by Applicable Laws and provided that it has acknowledged in writing its liability for the Tax at issue if the contest is not successful, contest such Indemnitee’s sole discretion orTax, and subsequently may appeal any adverse determination (other than to the United States Supreme Court), in the case of a Borrower-Controlled Contest, in Borrower’s sole discretion, (1) resisting payment thereof if practicable, (2) not paying such Tax except under protest, (3) if protest is necessary and proper, and if payment of such Tax is made, using reasonable efforts to obtain a refund thereof, in appropriate administrative and judicial proceedingslegal forums; provided, and (4) that in all other circumstances, upon notice from the case of an Indemnitee-Controlled Contest, considering in good faith any other reasonable action as Borrower may reasonably request. Each Indemnitee shall consult in good faith with Borrower and Borrower’s counsel, and Borrower shall consult in good faith with such Indemnitee and its counsel in the case of a Borrower-Controlled Contest. concerning the forum in which the contest is most likely to be favorably resolved and whether such contest shall be by (x) resisting payment of such Tax, (y) paying such Tax under protest or (z) paying such Tax and seeking a refund or other repayment thereof.
(C) In no event shall an Indemnitee be required, or Borrower permitted, to contest the imposition of any Tax for which Borrower is obligated pursuant to this Section 6(b) unless (1) Borrower shall have agreed to pay and shall promptly be paying on request all reasonable costs and expenses that such Indemnitee incurs in contesting such claim or arising out of or relating to such contest (including legal fees, accounting fees, and disbursements, including those on appeal, if any); (2) such contest is not reasonably likely to result in a material danger of the sale, seizure, forfeiture or loss of the Aircraft, or the creation of any Lien thereon other than Liens for Taxes (i) either not yet due or being contested in good faith by appropriate proceedings and (ii) for which such reserves, if any, as are required to be provided under generally accepted accounting principles have been provided by Borrower, and there is no risk of criminal penalties; (3) if such contest shall be conducted in a manner requiring the payment of the claim, Borrower shall have advanced sufficient funds, on an interest-free basis, to make the payment required, and shall have agreed to indemnify the Indemnitee against any additional net after-Tax cost Lessee to such Indemnitee of that there exists a reasonable basis to contest any such advance; (4) if requested by the Indemnitee in writing, such Indemnitee shall have received an opinion of independent Tax counsel selected by Borrower and reasonably acceptable to such Indemnitee and furnished at Borrower’s sole expense to the effect that a Realistic Possibility of Success exists for contesting such claim (or, in the case of an appeal of an adverse judicial determination, a written opinion from the position asserted in such independent Tax counsel to the effect that it is appeal will more likely than not that prevail (in each case, as supported by an opinion of tax counsel to the Lessee reasonably acceptable to the Indemnitee), the Indemnitee, at the Lessee’s expense, shall contest any such adverse judicial determination will Tax (so long as the provisos of the definition of “Permitted Contest” continue to be reversed satisfied and, in the case of a Tax on gross or substantially modifiednet income, the aggregate amount of the Tax exceeds $50,000, which amount shall be verified and certified by an independent public accounting firm mutually acceptable to the Lessee and the applicable Indemnitee in accordance with Section 7.2(a)(v); . The Lessee shall pay all out-of-pocket expenses incurred by the Indemnitee in contesting any such Tax (5) Borrower including, without limitation, all reasonable attorney’s and accountants’ fees and expenses), upon demand by the Indemnitee. The Lessee shall have delivered the right to such Indemnitee a written acknowledgment participate in the conduct of Borrower’s obligation to indemnify such any proceedings controlled by the Indemnitee to the extent that such participation by the contest is Lessee does not successful; provided, however, that Borrower will not be bound by its acknowledgment of liability if interfere with the contest is resolved on a clear and unambiguous basis showing no such liability under this Section 6(b) with respect to such Tax; (6) if a Specified Default or Event of Default shall have occurred and be continuing, Borrower shall have provided security for its obligation hereunder satisfactory to the Indemnitee by placing in escrow sufficient funds to cover any such contested Tax and the reasonably expected expenses Indemnitee’s control of such contest on an After-Tax Basisand the Lessee shall in all events be kept informed, or otherwise providing satisfactory provisions for payment of such amounts determined by the Indemnitee in its sole discretion; (7) the aggregate amount of all indemnity payments that Borrower may be required to make to such Indemnitee with respect to such claim (or similar or related claims) is at least $60,000; and (8) the claim is not for a Tax the imposition of which has been previously contested by, or at the request of, Borrower hereunder, and such previous contest (including all allowable appeals) was decided adversely to Borrower, unless Borrower has delivered an opinion of independent Tax counsel selected by Borrower and reasonably acceptable to the Indemnitee to the effect that, on the basis of (i) a change in applicable law, or (ii) a difference in the underlying facts, there is currently a Realistic Possibility of Success for contesting such claim.
(D) If any Indemnitee shall obtain a refund of all or any part of any Tax paid by Borrower, such Indemnitee shall pay Borrower, but not before Borrower shall have made all payments theretofore due to such Indemnitee pursuant to this Section 6(b) and any other payments theretofore due such Indemnitee under any of the Operative Documents, an amount equal to the amount of such refund (net of any Taxes imposed thereon), including interest received and attributable thereto (net of any Taxes imposed thereon) plus, if Borrower has paid an amount pursuant to the first sentence of Section 6(b)(iii)(A), any net Tax benefit (or minus any net Tax detriment) realized by such Indemnitee as a result of any refund received, and payment made, by such Indemnitee pursuant to this sentence; provided that the Indemnitee shall not be obligated to pay an amount under the preceding sentence to the extent that such amount would exceed the amount practicable, of such Taxes paid, reimbursed or advanced by Borrower material developments relative to such Indemnitee (other than the cost of the contest thereof); provided, further, that any amount not paid to Borrower pursuant to the foregoing limitation shall be carried forward to reduce pro tanto any future payments that Borrower may be required to make to such Indemnitee pursuant to this Section 6(b). If any Indemnitee shall have paid Borrower any refund of all or part of any Tax paid by Borrower and it is subsequently determined that such Indemnitee was not entitled to the refund, such determination shall be treated as the imposition of a Tax for which Borrower is obligated to indemnify such Indemnitee pursuant to the provisions of this Section 6(b) without regard to the exclusions set forth in Section 6(b)(ii) (other than subparagraphs (4), (11) and (12) thereof). Provided no Specified Default or Event of Default has occurred and is continuing, an Indemnitee shall not settle any such claim or contest pursuant to this provision without the written consent of Borrower, which consent shall not be unreasonably withheld, conditioned or delayed; provided, that an Indemnitee may settle at any time without the consent of Borrower if the Indemnitee waives (by written notice to Borrower) the payment by Borrower of an indemnity in respect of such issue and any related issue the contest of which is effectively foreclosed by the settlement of such issue, including any payment arising from such issue in subsequent years or which by reason of the fact that such issue is of a continuing nature, and promptly pays to Borrower any Tax previously paid or any interest-free loan advanced by Borrower (other than expenses of such contests) with respect to such issue.
(E) Nothing contained in this Section 6(b)(iv) shall require any Indemnitee to contest, or permit Borrower to contest in the name of such Indemnitee, a claim that such Indemnitee would otherwise be required to contest pursuant to this Section 6(b)(iv) if such Indemnitee shall waive payment by Borrower of any amount that might otherwise be payable by Borrower under this Section 6(b) in connection with such claim (other than the costs of contest previously incurred), nor shall any Indemnitee be required to pursue any appeal to the United States Supreme Court.such
Appears in 1 contract
Contests. (AIn respect of the indemnification provided under Section 7.1(a) If or Section 7.8, promptly after receipt by an Indemnitee of notice of any pending or threatened Claim, such Indemnitee shall, if a written claim shall in respect thereof is to be made against and received by Lessee, give notice thereof to Lessee. So long as no Lease Event of Default is continuing, Lessee, at its own expense, may elect to assume the defense of any Indemnitee for any Tax for such Claim through its own counsel, which Borrower is obligated to indemnify pursuant to this Section 6(b), such Indemnitee shall notify Borrower in writing of such claim within 30 days after its receipt, and shall provide Borrower such information regarding such claim as Borrower may reasonably request; provided, however, that the failure to provide such notice shall not release Borrower from any of its obligations to indemnify under Section 6 hereof unless, and only be subject to the extent thatreasonable approval of the Required Participants, on behalf of the Indemnitee (with full right of subrogation to the Indemnitee's rights and defenses). Lessee must indicate its election to assume such failure effectively precludes Borrower’s contest rights. To defense by written notice to the extent permitted under applicable law, such Indemnitee will not make any payments with respect to such claim for at least 30 within 90 days after giving following receipt of Indemnitee's notice of such the Claim, or in the case of a third party claim to Borrower.
(B) If requested by Borrower in writing which requires a shorter time for response then within 30 days after its receipt of such notice or such shorter period as specified in the Indemnitee's notice of Claim provided that such Indemnitee has given Lessee notice thereof. 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 of Indemnitee's rights hereunder and with no further obligation to inform Lessee of the status of the Claim and no right of Lessee to approve or disapprove any actions taken in connection therewith by the Indemnitee. If Lessee shall have elected to assume the defense of any such Claim, then upon the request of Lessee, the Indemnitee requesting payment of indemnity under Section 7.1(a) or Section 7.8 shall promptly furnish Lessee with copies of any records or documents pertaining to the matter to be required indemnified and, to the extent known by applicable lawsuch Indemnitee, a reasonably detailed explanation of the circumstances giving rise to the claim of indemnification and the determination of the amount of the requested indemnity payment. Upon payment in full to Indemnitee of any indemnity pursuant to Section 7.1(a) or Section 7.8, 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 elected to assume the defense of any such Claim, upon the written request at any time and from time to time of Lessee, Indemnitee shall, at the expense of Borrower Lessee, take such reasonable actions and subject execute such documents as are necessary or reasonably appropriate to subparagraph (C) belowassist Lessee in the preservation and enforcement against third parties of Lessee's right of subrogation hereunder. The Indemnitee may employ separate counsel at its expense in any such Claim and participate in the defense thereof, contest but the validity, applicability or amount fees and expenses of such Taxes by, in the case of an Indemnitee-Controlled Contest, in such Indemnitee’s sole discretion or, in the case of a Borrower-Controlled Contest, in Borrower’s sole discretion, (1) resisting payment thereof if practicable, (2) not paying such Tax except under protest, (3) if protest is necessary and proper, and if payment of such Tax is made, using reasonable efforts to obtain a refund thereof, in appropriate administrative and judicial proceedings, and (4) in the case of an Indemnitee-Controlled Contest, considering in good faith any other reasonable action as Borrower may reasonably request. Each Indemnitee shall consult in good faith with Borrower and Borrower’s counsel, and Borrower shall consult in good faith with such Indemnitee and its counsel in the case of a Borrower-Controlled Contest. concerning the forum in which the contest is most likely to be favorably resolved and whether such contest shall be by (x) resisting payment of such Tax, (y) paying such Tax under protest or (z) paying such Tax and seeking a refund or other repayment thereof.
(C) In no event shall an Indemnitee be required, or Borrower permitted, to contest at the imposition of any Tax for which Borrower is obligated pursuant to this Section 6(b) unless (1) Borrower shall have agreed to pay and shall promptly be paying on request all reasonable costs and expenses that such Indemnitee incurs in contesting such claim or arising out of or relating to such contest (including legal fees, accounting fees, and disbursements, including those on appeal, if any); (2) such contest is not reasonably likely to result in a material danger expense of the sale, seizure, forfeiture or loss of Indemnitee unless the Aircraft, or the creation of any Lien thereon other than Liens for Taxes (i) either not yet due or being contested in good faith by appropriate proceedings and (ii) for which such reserves, if any, as are required to be provided under generally accepted accounting principles have been provided by Borrower, and there is no risk of criminal penalties; (3) if such contest shall be conducted in a manner requiring the payment of the claim, Borrower shall have advanced sufficient funds, on an interest-free basis, to make the payment required, and shall have agreed to indemnify the Indemnitee against any additional net after-Tax cost to such Indemnitee of such advance; (4) if requested by the Indemnitee in writing, such Indemnitee shall have received an opinion been advised by its counsel that there exists a conflict of independent Tax counsel selected by Borrower and reasonably acceptable to interest in such counsel's representation of the Indemnitee and furnished at Borrower’s sole expense to the effect that a Realistic Possibility of Success exists for contesting such claim (orLessee, in the case of an appeal of an adverse judicial determination, a written opinion from such independent Tax counsel to the effect that it is more likely than not that such adverse judicial determination will be reversed or substantially modified); (5) Borrower shall have delivered to such Indemnitee a written acknowledgment of Borrower’s obligation to indemnify such Indemnitee to the extent that the contest is not successful; providedbeing understood, however, that Borrower will not be bound by its acknowledgment of liability if the contest is resolved on a clear and unambiguous basis showing no such liability under this Section 6(b) Lessee shall not, in connection with respect to such Tax; (6) if a Specified Default any one action or Event of Default shall have occurred and be continuing, Borrower shall have provided security for its obligation hereunder satisfactory to the Indemnitee by placing in escrow sufficient funds to cover any such contested Tax and the reasonably expected expenses of such contest on an After-Tax Basis, or otherwise providing satisfactory provisions for payment of such amounts determined by the Indemnitee in its sole discretion; (7) the aggregate amount of all indemnity payments that Borrower may be required to make to such Indemnitee with respect to such claim (or separate but substantially similar or related claimsactions in the same jurisdiction arising out of the same general allegations or circumstances, be liable for the reasonable fees and expenses of more than one separate firm of attorneys (in addition to any local counsel) is at least $60,000; and (8) for the claim is not for a Tax the imposition of which has been previously contested by, or at the request of, Borrower hereunderIndemnitees, and such previous contest (including all allowable appeals) was decided adversely to Borrower, unless Borrower has delivered an opinion of independent Tax counsel selected firm shall be designated in writing by Borrower the Indemnitees. All fees and reasonably acceptable to the Indemnitee to the effect that, on the basis of (i) a change in applicable law, or (ii) a difference in the underlying facts, there is currently a Realistic Possibility of Success for contesting such claim.
(D) If any Indemnitee expenses shall obtain a refund of all or any part of any Tax be paid by Borrower, such Indemnitee shall pay Borrower, but not before Borrower shall have made all payments theretofore due to such Indemnitee pursuant to this Section 6(b) and any other payments theretofore due such Indemnitee under any of the Operative Documents, an amount equal to the amount of such refund (net of any Taxes imposed thereon), including interest received and attributable thereto (net of any Taxes imposed thereon) plus, if Borrower has paid an amount pursuant to the first sentence of Section 6(b)(iii)(A), any net Tax benefit (or minus any net Tax detriment) realized by such Indemnitee periodically as a result of any refund received, and payment made, by such Indemnitee pursuant to this sentence; provided that the Indemnitee incurred. Lessee shall not be obligated to pay an amount under the preceding sentence to the extent that such amount would exceed the amount of such Taxes paid, reimbursed or advanced by Borrower to such Indemnitee (other than the cost of the contest thereof); provided, further, that liable for any amount not paid to Borrower pursuant to the foregoing limitation shall be carried forward to reduce pro tanto any future payments that Borrower may be required to make to such Indemnitee pursuant to this Section 6(b). If any Indemnitee shall have paid Borrower any refund of all or part settlement of any Tax paid by Borrower such Claim effected without its consent unless Lessee shall elect in writing not to assume the defense thereof in which case the Indemnitee, without waiving any rights to indemnification hereunder, may defend such Claim and it is subsequently determined that such Indemnitee was not entitled to the refund, such determination shall be treated as the imposition of a Tax for which Borrower is obligated to indemnify such Indemnitee pursuant to the provisions of this Section 6(b) without regard to the exclusions set forth in Section 6(b)(ii) (other than subparagraphs (4), (11) and (12) thereof). Provided no Specified Default or Event of Default has occurred and is continuing, an Indemnitee shall not settle enter into any such claim or contest pursuant to this provision good faith settlement thereof without the prior written consent of BorrowerLessee. Lessee shall not, which without the prior written consent shall (not to be unreasonably withheld) of the Indemnitee, conditioned or delayed; provided, that effect any settlement of any such Claim unless such settlement includes an Indemnitee may settle at any time without the consent unconditional release of Borrower if the Indemnitee waives (by written notice to Borrower) from all liabilities that are the payment by Borrower of an indemnity in respect subject of such issue and Claim. The parties agree to cooperate in any related issue the contest of which is effectively foreclosed by the defense or settlement of any such issue, including any payment arising from such issue in subsequent years or which by reason of the fact that such issue is of a continuing nature, Claim and promptly pays to Borrower any Tax previously paid or any interest-free loan advanced by Borrower (give each other than expenses of such contests) with respect reasonable access to such issue.
(E) Nothing contained in this Section 6(b)(iv) shall require any Indemnitee all information relevant thereto subject to contest, or permit Borrower to contest appropriate confidentiality agreements. The parties will similarly cooperate in the name of such Indemnitee, a claim that such Indemnitee would otherwise be required to contest pursuant to this Section 6(b)(iv) if such Indemnitee shall waive payment by Borrower prosecution of any amount that might otherwise be payable by Borrower under this Section 6(b) in connection with such claim (other than the costs of contest previously incurred), nor shall or lawsuit against any Indemnitee be required to pursue any appeal to the United States Supreme Courtthird party.
Appears in 1 contract
Contests. (A) If a written any claim shall be made against and received by any Indemnitee Indemnified Party or if any proceeding shall be commenced against any Indemnified Party (including a written notice of such proceeding) for any Tax for Imposition as to which Borrower is obligated to indemnify the Lessee may have an indemnity obligation pursuant to this Section 6(b)6.3, or if any Indemnified Party shall determine that any Imposition with respect to which the Lessee may have an indemnity obligation pursuant to this Section 6.3 may be payable, such Indemnitee Indemnified Party shall promptly notify Borrower the Lessee in writing of such claim within 30 days after its receipt, and shall provide Borrower such information regarding such claim as Borrower may reasonably request; provided, however, (PROVIDED that the failure to provide such notice so notify the Lessee shall not release Borrower from any of its obligations to indemnify alter such Indemnified Party's rights under this Section 6 hereof unless, and only 6.3 except to the extent that, such failure effectively precludes Borrower’s or materially adversely affects the ability to conduct a contest rights. To the extent permitted under applicable law, such Indemnitee will of any Impositions) and shall not make take any payments action with respect to such claim claim, proceeding or Imposition without the written consent of the Lessee (such consent not to be unreasonably withheld or unreasonably delayed) for at least 30 days after giving notice of such claim to Borrower.
(B) If requested by Borrower in writing within 30 days after its the receipt of such notice by the Lessee; PROVIDED, HOWEVER, that in the case of any such claim or proceeding, if such Indemnified Party shall be required by law or regulation to take action prior to the end of such 30-day period, such Indemnified Party shall in such notice to the Lessee, so inform the Lessee and such Indemnified Party shall not take any action with respect to such claim, proceeding or Imposition 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 such Indemnified MW 1997-1 Trust Participation Agreement Party 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 such Indemnified Party (or such shorter period as may be such Indemnified Party has notified the Lessee is required by applicable lawlaw or regulation for such Indemnified Party to commence such contest), to request in writing that such Indemnitee shallIndemnified Party contest in good faith the imposition of such Tax, at the expense Lessee's expense. If (x) such contest can be pursued in the name of Borrower the Lessee and subject to subparagraph (C) below, contest the validity, applicability or amount independently from any other proceeding involving a Tax liability of such Taxes byIndemnified Party for which the Lessee has not agreed to indemnify such Indemnified Party, (y) such contest must be pursued in the case name of an Indemnitee-Controlled Contestsuch Indemnified Party, in but can be pursued independently from any other proceeding involving a Tax liability of such Indemnitee’s sole discretion orIndemnified Party for which the Lessee has not agreed to indemnify such Indemnified Party or (z) such Indemnified Party so requests, then the Lessee shall be permitted to control the contest of such claim, PROVIDED that in the case of a Borrower-Controlled Contestcontest described in clause (y), in Borrower’s sole discretion, (1) resisting payment thereof if practicable, (2) not paying such Tax except under protest, (3) if protest is necessary Indemnified Party determines reasonably and proper, and if payment of such Tax is made, using reasonable efforts to obtain a refund thereof, in appropriate administrative and judicial proceedings, and (4) in the case of an Indemnitee-Controlled Contest, considering in good faith any other reasonable action as Borrower that such contest by the Lessee could have a material adverse impact on the business or operations of such Indemnified Party and provides a written explanation to the Lessee of such determination, such Indemnified Party may reasonably request. Each Indemnitee shall consult in good faith with Borrower and Borrower’s counselelect to control or reassert control of the contest, and Borrower shall consult in good faith with such Indemnitee and its counsel in PROVIDED that by taking control of the case of a Borrower-Controlled Contest. concerning contest, the forum in which Lessee acknowledges that it is responsible for the contest is most likely Imposition ultimately determined to be favorably resolved due by reason of such claim, and whether such contest shall be by PROVIDED, FURTHER, that in determining the application of clauses (x) resisting payment of such Tax, and (y) paying above, each Indemnified Party 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 under protest or (z) paying Indemnified Party shall control the contest of such Tax and seeking a refund or other repayment thereof.
(C) claim, acting through counsel reasonably acceptable to the Lessee. In no event shall an Indemnitee the Lessee be requiredpermitted to contest (or such Indemnified Party be required to contest) any claim, (A) if such Indemnified Party 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 Borrower permitted, to contest the imposition creation of any Tax for which Borrower Lien (other than a Permitted Lien) on the Equipment or any part thereof unless the Lessee shall have posted and maintained a bond or other security satisfactory to the relevant Indemnified Party in respect to such risk, (B) if an Event of Default has occurred and is obligated pursuant to this Section 6(bcontinuing, (C) unless (1) Borrower the Lessee shall have agreed to pay and shall promptly be paying pay, to such Indemnified Party on request demand all reasonable costs out-of-pocket costs, losses and expenses that such Indemnitee Indemnified Party actually incurs in connection with contesting such claim or arising out of or relating to such contest (Imposition including legal feesall reasonable legal, accounting fees, and investigatory fees and disbursements, including those on appeal, if any); or (2) such contest is not reasonably likely to result in a material danger of the sale, seizure, forfeiture or loss of the Aircraft, or the creation of any Lien thereon other than Liens for Taxes (i) either not yet due or being contested in good faith by appropriate proceedings and (ii) for which such reserves, if any, as are required to be provided under generally accepted accounting principles have been provided by Borrower, and there is no risk of criminal penalties; (3D) if such contest shall be conducted in a manner requiring involve the payment of the claimTax prior to the contest, Borrower unless the Lessee shall have advanced sufficient funds, on provide to such Indemnified Party an interest-free basis, advance in an amount equal to make the payment required, and shall have agreed Imposition that the Indemnified Party is required to indemnify the Indemnitee against any pay (with no additional net after-Tax cost tax costs to such Indemnitee Indemnified Party). In addition for Indemnified Party controlled contests and claims contested in the name of such advance; Indemnified Party in a public forum, no contest shall be required: (4A) 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 Indemnified Parties with respect to any period for which the Lessee may be liable to MW 1997-1 Trust Participation Agreement pay an indemnity under this Section 6.3(b)) exceeds $250,000 and (B) unless, if requested by such Indemnified Party, the Indemnitee in writing, such Indemnitee Lessee shall have received provided to such Indemnified Party an opinion of counsel selected by the Lessee (which may be in-house counsel) (except, in the case of income Taxes indemnified hereunder, in which case such opinion shall be an opinion of independent Tax tax counsel selected by Borrower such Indemnified Party and reasonably acceptable to such Indemnitee and furnished at Borrower’s sole expense to the effect Lessee) that a Realistic Possibility of Success reasonable basis exists for contesting to contest such claim (or, in the case of an appeal of an any adverse judicial determination, a written an opinion from of such independent Tax counsel to the effect that it is the position asserted in such appeal will more likely than not that such prevail). In no event shall an Indemnified Party be required to appeal an adverse judicial determination to the United States Supreme Court. The party controlling the contest shall consult in good faith with the other party and its counsel with respect to the contest of such claim for Taxes (or claim for refund) but the decisions regarding what actions are to be taken shall be made by the controlling party in its sole judgment, PROVIDED, HOWEVER, that if such Indemnified Party is the controlling party and the Lessee recommends the acceptance of a settlement offer made by the relevant Governmental Authority and such Indemnified Party rejects such settlement offer then the amount for which the Lessee will be reversed or substantially modified); (5) Borrower shall have delivered to such Indemnitee a written acknowledgment of Borrower’s obligation required to indemnify such Indemnitee Indemnified Party with respect to the Taxes subject to such offer shall not exceed the amount which it would have owed if such settlement offer had been accepted. 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 Indemnified Party 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 that permitted by this Section 6.3(b). Notwithstanding anything in this Section 6.3(b) to the contest is not successful; providedcontrary, however, that Borrower will not no Indemnified Party shall enter into any settlement or other compromise or fail to appeal an adverse ruling with respect to any claim for which it may be bound by its acknowledgment of liability if the contest is resolved on a clear and unambiguous basis showing no such liability entitled to be indemnified under this Section 6(b6.3 (and with respect to which contest is required under this Section 6.3(b)) without the prior written consent of the Lessee, unless such Indemnified Party waives its right to be indemnified under this Section 6.3 with respect to such Tax; (6) if a Specified Default or Event of Default shall have occurred and be continuing, Borrower shall have provided security for its obligation hereunder satisfactory claim. Notwithstanding anything contained herein to the Indemnitee by placing in escrow sufficient funds to cover any such contested Tax and the reasonably expected expenses of such contest on contrary, an After-Tax Basis, or otherwise providing satisfactory provisions for payment of such amounts determined by the Indemnitee in its sole discretion; (7) the aggregate amount of all indemnity payments that Borrower may Indemnified Party will not be required to make contest (and the Lessee shall not be permitted to contest) a claim with respect to the imposition of any Tax if such Indemnitee Indemnified Party shall waive its right to indemnification under this Section 6.3 with respect to such claim (or similar or related claims) is at least $60,000; and (8) the any claim is not for a Tax the imposition of which has been previously contested by, or at the request of, Borrower hereunder, and with respect to such previous contest (including all allowable appeals) was decided adversely to Borrower, unless Borrower has delivered an opinion of independent Tax counsel selected by Borrower and reasonably acceptable to the Indemnitee to the effect that, on the basis of (i) a change in applicable law, or (ii) a difference in the underlying facts, there is currently a Realistic Possibility of Success for contesting such claim.
(D) If any Indemnitee shall obtain a refund of all year or any part of any Tax paid by Borrower, such Indemnitee shall pay Borrower, but not before Borrower shall have made all payments theretofore due to such Indemnitee pursuant to this Section 6(b) and any other payments theretofore due such Indemnitee under any of the Operative Documents, an amount equal to the amount of such refund (net of any Taxes imposed thereon), including interest received and attributable thereto (net of any Taxes imposed thereon) plus, if Borrower has paid an amount pursuant to the first sentence of Section 6(b)(iii)(A), any net Tax benefit (or minus any net Tax detriment) realized by such Indemnitee as a result of any refund received, and payment made, by such Indemnitee pursuant to this sentence; provided that the Indemnitee shall not be obligated to pay an amount under the preceding sentence to the extent that such amount would exceed the amount of such Taxes paid, reimbursed or advanced by Borrower to such Indemnitee (other than the cost of the contest thereof); provided, further, that any amount not paid to Borrower pursuant to the foregoing limitation shall be carried forward to reduce pro tanto any future payments that Borrower may be required to make to such Indemnitee pursuant to this Section 6(b). If any Indemnitee shall have paid Borrower any refund of all or part of any Tax paid by Borrower and it is subsequently determined that such Indemnitee was not entitled to the refund, such determination shall be treated as the imposition of a Tax for which Borrower is obligated to indemnify such Indemnitee pursuant to the provisions of this Section 6(b) without regard to the exclusions set forth in Section 6(b)(ii) (other than subparagraphs (4), (11) and (12) thereof). Provided no Specified Default or Event of Default has occurred and is continuing, an Indemnitee shall not settle any such claim or contest pursuant to this provision without the written consent of Borrower, which consent shall not be unreasonably withheld, conditioned or delayed; provided, that an Indemnitee may settle at any time without the consent of Borrower if the Indemnitee waives (by written notice to Borrower) the payment by Borrower of an indemnity in respect of such issue and any related issue taxable year the contest of which is effectively foreclosed by the settlement materially adversely affected as a result of such issue, including any payment arising from such issue in subsequent years or which by reason of the fact that such issue is of a continuing nature, and promptly pays to Borrower any Tax previously paid or any interest-free loan advanced by Borrower (other than expenses of such contests) with respect to such issuewaiver).
(E) Nothing contained in this Section 6(b)(iv) shall require any Indemnitee to contest, or permit Borrower to contest in the name of such Indemnitee, a claim that such Indemnitee would otherwise be required to contest pursuant to this Section 6(b)(iv) if such Indemnitee shall waive payment by Borrower of any amount that might otherwise be payable by Borrower under this Section 6(b) in connection with such claim (other than the costs of contest previously incurred), nor shall any Indemnitee be required to pursue any appeal to the United States Supreme Court.
Appears in 1 contract
Contests. Lessee shall pay (A) If a written claim 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 any claim or claims is or are made against and received by any Indemnitee for any Tax for which Borrower is obligated subject to indemnify pursuant to this indemnification as provided in Section 6(b9.2(a), such Indemnitee shall notify Borrower shall, as soon as practicable, but in writing of such claim within 30 no event more than thirty (30) days after its receiptreceipt of formal written notice of the Tax or proposed Tax, and shall provide Borrower such information regarding such claim as Borrower may reasonably requestnotify Lessee; provided, however, that the failure to provide give such notice shall not release Borrower from any of its limit Lessee's obligations to indemnify under Section 6 hereof unless, and only 9.2
(a) except to the extent that, that such failure effectively precludes Borrower’s the ability to conduct a contest rightsof any indemnifiable Taxes. To the extent permitted under applicable law, such The Indemnitee will shall not make take any payments action with respect to such claim claim, proceeding or Imposition without the written consent of Lessee (such consent not to be unreasonably withheld or unreasonably delayed) for at least 30 days after giving notice of such claim to Borrower.
(B) If requested by Borrower in writing within 30 days after its the receipt of such notice by Lessee; provided, however, that in the case of any such claim or proceeding, if such Indemnitee shall be required by law or regulation 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 not take any action with respect to such claim, proceeding or Tax without the consent of Lessee (such consent not to be unreasonably withheld or 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 may be the Indemnitee has notified Lessee is required by applicable lawlaw or regulation for the Indemnitee to commence such contest), to request in writing that such Indemnitee shallpermit Lessee to contest the imposition of such tax, at Lessee's sole cost and expense. If (x) such contest can be pursued in the expense name of Borrower Lessee and subject to subparagraph (C) below, contest the validity, applicability or amount independently from any other proceeding involving a liability of such Taxes byIndemnitee for which Lessee has not agreed to indemnify such Indemnitee, (y) such contest must be pursued in the case name of an the Indemnitee-Controlled Contest, in but can be pursued independently from any other proceeding involving a Tax liability of such Indemnitee’s sole discretion orIndemnitee for which Lessee has not agreed to indemnify such Indemnitee or (z) the Indemnitee so requests, then Lessee shall be permitted to control the contest of such claim, provided that in the case of a Borrower-Controlled Contest, contest described in Borrower’s sole discretion, (1) resisting payment thereof if practicable, (2) not paying such Tax except under protest, (3) if protest is necessary and proper, and if payment any of such Tax is made, using reasonable efforts to obtain a refund thereof, in appropriate administrative and judicial proceedings, and (4) in the case of an Indemnitee-Controlled Contest, considering in good faith any other reasonable action as Borrower may reasonably request. Each Indemnitee shall consult in good faith with Borrower and Borrower’s counsel, and Borrower shall consult in good faith with such Indemnitee and its counsel in the case of a Borrower-Controlled Contest. concerning the forum in which the contest is most likely to be favorably resolved and whether such contest shall be by clause (x) resisting payment of such Tax), (y) paying such Tax under protest or (z) paying ), if such Tax Indemnitee reasonably determines that such contest by Lessee could have an adverse impact on the business or operations of the Indemnitee and seeking a refund Indemnitee provides notice to Lessee of such determination, the Indemnitee may elect to control or reassert control of the contest. In all other repayment thereof.
(C) claims requested to be contested by Lessee, the Indemnitee shall control the contest of such claim, acting through counsel reasonably acceptable to Lessee. In no event shall an Indemnitee Lessee be required, or Borrower permitted, permitted to contest (or the Indemnitee required to contest) any claim, (A) if such Indemnitee provides Lessee with a legal PARTICIPATION AGREEMENT opinion of independent counsel that such action, suit or proceeding involves a risk of imposition of any Tax for which Borrower is obligated pursuant to this Section 6(b) unless (1) Borrower shall have agreed to pay and shall promptly be paying on request all reasonable costs and expenses that such Indemnitee incurs in contesting such claim criminal liability or arising out of or relating to such contest (including legal fees, accounting fees, and disbursements, including those on appeal, if any); (2) such contest is not reasonably likely to result in will involve a material danger meaningful risk of the sale, seizure, forfeiture or loss of the Aircraftof, or the creation of any Lien thereon (other than Liens for Taxes (ia Permitted Lien) either not yet due or being contested in good faith by appropriate proceedings and (ii) for which such reserves, if any, as are required to be provided under generally accepted accounting principles have been provided by Borrower, and there is no risk of criminal penalties; (3) if such contest shall be conducted in a manner requiring the payment of the claim, Borrower shall have advanced sufficient funds, on an interest-free basis, to make the payment required, and shall have agreed to indemnify the Indemnitee against any additional net after-Tax cost to such Indemnitee of such advance; (4) if requested by the Indemnitee in writing, such Indemnitee shall have received an opinion of independent Tax counsel selected by Borrower and reasonably acceptable to such Indemnitee and furnished at Borrower’s sole expense to the effect that a Realistic Possibility of Success exists for contesting such claim (or, in the case of an appeal of an adverse judicial determination, a written opinion from such independent Tax counsel to the effect that it is more likely than not that such adverse judicial determination will be reversed or substantially modified); (5) Borrower shall have delivered to such Indemnitee a written acknowledgment of Borrower’s obligation to indemnify such Indemnitee to the extent that the contest is not successful; provided, however, that Borrower will not be bound by its acknowledgment of liability if the contest is resolved on a clear and unambiguous basis showing no such liability under this Section 6(b) with respect to such Tax; (6) if a Specified Default or Event of Default shall have occurred and be continuing, Borrower shall have provided security for its obligation hereunder satisfactory to the Indemnitee by placing in escrow sufficient funds to cover any such contested Tax and the reasonably expected expenses of such contest on an After-Tax Basis, or otherwise providing satisfactory provisions for payment of such amounts determined by the Indemnitee in its sole discretion; (7) the aggregate amount of all indemnity payments that Borrower may be required to make to such Indemnitee with respect to such claim (or similar or related claims) is at least $60,000; and (8) the claim is not for a Tax the imposition of which has been previously contested by, or at the request of, Borrower hereunder, and such previous contest (including all allowable appeals) was decided adversely to Borrower, unless Borrower has delivered an opinion of independent Tax counsel selected by Borrower and reasonably acceptable to the Indemnitee to the effect that, on the basis of (i) a change in applicable law, or (ii) a difference in the underlying facts, there is currently a Realistic Possibility of Success for contesting such claim.
(D) If any Indemnitee shall obtain a refund of all Property or any part of any Tax paid by Borrowerthereof, such Indemnitee shall pay Borrower, but not before Borrower unless Lessee shall have made all payments theretofore due posted and maintained a bond or other security reasonably satisfactory to the relevant Indemnitee in respect to such Indemnitee pursuant to this Section 6(b) and any other payments theretofore due such Indemnitee under any of the Operative Documents, an amount equal to the amount of such refund (net of any Taxes imposed thereon), including interest received and attributable thereto (net of any Taxes imposed thereon) plus, if Borrower has paid an amount pursuant to the first sentence of Section 6(b)(iii)(A), any net Tax benefit (or minus any net Tax detriment) realized by such Indemnitee as a result of any refund received, and payment made, by such Indemnitee pursuant to this sentence; provided that the Indemnitee shall not be obligated to pay an amount under the preceding sentence to the extent that such amount would exceed the amount of such Taxes paid, reimbursed or advanced by Borrower to such Indemnitee (other than the cost of the contest thereof); provided, further, that any amount not paid to Borrower pursuant to the foregoing limitation shall be carried forward to reduce pro tanto any future payments that Borrower may be required to make to such Indemnitee pursuant to this Section 6(b). If any Indemnitee shall have paid Borrower any refund of all or part of any Tax paid by Borrower and it is subsequently determined that such Indemnitee was not entitled to the refund, such determination shall be treated as the imposition of a Tax for which Borrower is obligated to indemnify such Indemnitee pursuant to the provisions of this Section 6(b) without regard to the exclusions set forth in Section 6(b)(ii) (other than subparagraphs (4)risk, (11B) and (12) thereof). Provided no Specified if an Event of Default or a Lease Event of Default has occurred and is continuing, an unless Lessee shall have posted and maintained a bond or other security reasonably satisfactory to the relevant Indemnitee shall not settle any such claim or contest pursuant to this provision without the written consent of Borrower, which consent shall not be unreasonably withheld, conditioned or delayed; provided, that an Indemnitee may settle at any time without the consent of Borrower if the Indemnitee waives (by written notice to Borrower) the payment by Borrower of an indemnity in respect of the Taxes subject to such issue claim and any related issue and all expenses for which Lessee is responsible hereunder reasonably foreseeable in connection with the contest of such claim, (C) unless Lessee shall have agreed to pay and shall pay (provided that during the Construction Period Lessee shall request an Advance, the proceeds of which is effectively foreclosed by shall be used to 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 imposition, including all reasonable legal, accounting and investigatory fees and disbursements as well as the settlement impositions which are the subject of such issueclaim to the extent the contest is unsuccessful, including any or (D) if such contest shall involve the payment arising from such issue in subsequent years or which by reason of the fact that such issue is of a continuing natureTax prior to the contest, and promptly pays unless Lessee shall provide to Borrower any Tax previously paid or any the Indemnitee an interest-free loan advanced by Borrower advance in an amount equal to the Imposition that the Indemnitee is required to pay (other than expenses of with no additional net after-tax costs (including Taxes) but taking into account any net tax savings associated with such contests) with respect advance to such issue.
(E) Nothing contained in this Section 6(b)(iv) shall require any Indemnitee). In addition, for Indemnitee to contest, or permit Borrower to contest controlled contests and claims contested in the name of such Indemniteethe Indemnitee in a public forum, a claim 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 Indemnitee would otherwise for which Lessee may be required liable to contest pursuant to this Section 6(b)(iv) if such Indemnitee shall waive payment by Borrower of any amount that might otherwise be payable by Borrower pay an indemnity under this Section 6(b9.2) in connection with exceeds $100,000 and (B) unless, if requested by the Indemnitee, Lessee shall have provided to the Indemnitee an opinion of independent tax counsel selected by the Indemnitee and reasonably acceptable to Lessee) that a reasonable basis exists to contest such claim (other than the costs of contest previously incurred), nor claim. In no event shall any an Indemnitee be required to pursue any 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 Indemnitee is the controlling party and 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 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 Lessee with such information and documents within such Indemnitee's possession 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 9.2(b), and Lessee shall promptly reimburse such Indemnitee for the reasonable out-of-pocket expenses of supplying such information and documents.
Appears in 1 contract
Sources: Participation Agreement (Human Genome Sciences Inc)
Contests. (A) 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 written claim shall for indemnification in respect thereof is to be made against Lessee give written notice thereof to Lessee. So long as no Lease Event of Default is continuing, Lessee at its own expense, may elect to assume the defense of any such Claim through its own counsel, which shall be subject to the reasonable approval of the Indemnitee, on behalf of the Indemnitee (with full right of subrogation to the Indemnitee's rights and received defenses). Lessee must indicate its election to assume such defense by any written notice to the Indemnitee for any Tax for which Borrower is obligated to indemnify pursuant to this Section 6(b), such Indemnitee shall notify Borrower in writing of such claim within 30 days after its receipt, and shall provide Borrower such information regarding such claim as Borrower may reasonably request; provided, however, that the failure to provide such notice shall not release Borrower from any following receipt of its obligations to indemnify under Section 6 hereof unless, and only to the extent that, such failure effectively precludes Borrower’s contest rights. To the extent permitted under applicable law, such Indemnitee will not make any payments with respect to such claim for at least 30 days after giving Indemnitee's notice of such the Claim, or in the case of a third party claim to Borrower.
(B) If requested by Borrower in writing which requires a shorter time for response then within 30 days after its receipt of such notice or such shorter period as specified in the Indemnitee's notice of Claim; provided that such Indemnitee has given Lessee notice thereof. 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 of Indemnitee's rights hereunder and with no further obligation to inform Lessee of the status of the Claim and no right of Lessee to approve or disapprove any actions taken in connection therewith by the Indemnitee. If Lessee shall have elected to assume the defense of any such Claim, then upon the request of Lessee, the Indemnitee requesting payment of indemnity under Section 7.1(a) shall promptly furnish Lessee with copies of any records or documents pertaining to the matter to be required indemnified and, to the extent known by applicable lawsuch Indemnitee, a reasonably LSI Trust No. 2001-A Participation Agreement detailed explanation of the circumstances giving rise to the claim of indemnification and the determination of the amount of the requested indemnity payment. Upon payment in full to Indemnitee of any indemnity pursuant to Section 7.1(a), 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 elected to assume the defense of any such Claim, upon the written request at any time and from time to time of Lessee, Indemnitee shall, at the expense of Borrower Lessee, take such reasonable actions and subject execute such documents as are necessary or reasonably appropriate to subparagraph (C) belowassist Lessee in the preservation and enforcement against third parties of Lessee's right of subrogation hereunder. The Indemnitee may employ separate counsel in any such Claim and participate in the defense thereof, contest but the validity, applicability or amount fees and expenses of such Taxes by, in the case of an Indemnitee-Controlled Contest, in such Indemnitee’s sole discretion or, in the case of a Borrower-Controlled Contest, in Borrower’s sole discretion, (1) resisting payment thereof if practicable, (2) not paying such Tax except under protest, (3) if protest is necessary and proper, and if payment of such Tax is made, using reasonable efforts to obtain a refund thereof, in appropriate administrative and judicial proceedings, and (4) in the case of an Indemnitee-Controlled Contest, considering in good faith any other reasonable action as Borrower may reasonably request. Each Indemnitee shall consult in good faith with Borrower and Borrower’s counsel, and Borrower shall consult in good faith with such Indemnitee and its counsel in the case of a Borrower-Controlled Contest. concerning the forum in which the contest is most likely to be favorably resolved and whether such contest shall be by (x) resisting payment of such Tax, (y) paying such Tax under protest or (z) paying such Tax and seeking a refund or other repayment thereof.
(C) In no event shall an Indemnitee be required, or Borrower permitted, to contest at the imposition of any Tax for which Borrower is obligated pursuant to this Section 6(b) unless (1) Borrower shall have agreed to pay and shall promptly be paying on request all reasonable costs and expenses that such Indemnitee incurs in contesting such claim or arising out of or relating to such contest (including legal fees, accounting fees, and disbursements, including those on appeal, if any); (2) such contest is not reasonably likely to result in a material danger expense of the sale, seizure, forfeiture or loss of Indemnitee unless the Aircraft, or the creation of any Lien thereon other than Liens for Taxes (i) either not yet due or being contested in good faith by appropriate proceedings and (ii) for which such reserves, if any, as are required to be provided under generally accepted accounting principles have been provided by Borrower, and there is no risk of criminal penalties; (3) if such contest shall be conducted in a manner requiring the payment of the claim, Borrower shall have advanced sufficient funds, on an interest-free basis, to make the payment required, and shall have agreed to indemnify the Indemnitee against any additional net after-Tax cost to such Indemnitee of such advance; (4) if requested by the Indemnitee in writing, such Indemnitee shall have received an opinion been advised by its counsel that a conflict of independent Tax counsel selected by Borrower and reasonably acceptable to such interest exists in Lessee's counsel's representations of the Indemnitee and furnished at Borrower’s sole expense to the effect that a Realistic Possibility of Success exists for contesting such claim (orLessee, in which case the case fees and expenses of an appeal such Indemnitee's counsel shall be for the account of an adverse judicial determination, a written opinion from such independent Tax counsel to the effect that it is more likely than not that such adverse judicial determination will Lessee. All fees and expenses shall be reversed or substantially modified); (5) Borrower shall have delivered to such Indemnitee a written acknowledgment of Borrower’s obligation to indemnify such Indemnitee to the extent that the contest is not successful; provided, however, that Borrower will not be bound by its acknowledgment of liability if the contest is resolved on a clear and unambiguous basis showing paid periodically as incurred. So long as no such liability under this Section 6(b) with respect to such Tax; (6) if a Specified Default or Lease Event of Default shall have occurred and be continuing, Borrower shall have provided security for its obligation hereunder satisfactory to the Indemnitee by placing in escrow sufficient funds to cover any such contested Tax and the reasonably expected expenses of such contest on an After-Tax Basis, or otherwise providing satisfactory provisions for payment of such amounts determined by the Indemnitee in its sole discretion; (7) the aggregate amount of all indemnity payments that Borrower may be required to make to such Indemnitee with respect to such claim (or similar or related claims) is at least $60,000; and (8) the claim is not for a Tax the imposition of which has been previously contested by, or at the request of, Borrower hereunder, and such previous contest (including all allowable appeals) was decided adversely to Borrower, unless Borrower has delivered an opinion of independent Tax counsel selected by Borrower and reasonably acceptable to the Indemnitee to the effect that, on the basis of (i) a change in applicable law, or (ii) a difference in the underlying facts, there is currently a Realistic Possibility of Success for contesting such claim.
(D) If any Indemnitee shall obtain a refund of all or any part of any Tax paid by Borrower, such Indemnitee shall pay Borrower, but not before Borrower shall have made all payments theretofore due to such Indemnitee pursuant to this Section 6(b) and any other payments theretofore due such Indemnitee under any of the Operative Documents, an amount equal to the amount of such refund (net of any Taxes imposed thereon), including interest received and attributable thereto (net of any Taxes imposed thereon) plus, if Borrower has paid an amount pursuant to the first sentence of Section 6(b)(iii)(A), any net Tax benefit (or minus any net Tax detriment) realized by such Indemnitee as a result of any refund received, and payment made, by such Indemnitee pursuant to this sentence; provided that the Indemnitee Lessee shall not be obligated to pay an amount under the preceding sentence to the extent that such amount would exceed the amount of such Taxes paid, reimbursed or advanced by Borrower to such Indemnitee (other than the cost of the contest thereof); provided, further, that liable for any amount not paid to Borrower pursuant to the foregoing limitation shall be carried forward to reduce pro tanto any future payments that Borrower may be required to make to such Indemnitee pursuant to this Section 6(b). If any Indemnitee shall have paid Borrower any refund of all or part settlement of any Tax paid by Borrower such Claim effected without its consent unless Lessee shall fail to, or elect in writing not to, assume the defense thereof in which case the Indemnitee, without waiving any rights to indemnification hereunder, may defend such Claim and it is subsequently determined that such Indemnitee was not entitled to the refund, such determination shall be treated as the imposition of a Tax for which Borrower is obligated to indemnify such Indemnitee pursuant to the provisions of this Section 6(b) without regard to the exclusions set forth in Section 6(b)(ii) (other than subparagraphs (4), (11) and (12) thereof). Provided no Specified Default or Event of Default has occurred and is continuing, an Indemnitee shall not settle enter into any such claim or contest pursuant to this provision good faith settlement thereof without the prior written consent of BorrowerLessee. Lessee shall not, which without the prior written consent shall (not to be unreasonably withheld) of the Indemnitee, conditioned or delayed; provided, that effect any settlement of any such Claim unless such settlement includes an Indemnitee may settle at any time without the consent unconditional release of Borrower if the Indemnitee waives (by written notice to Borrower) from all liabilities that are the payment by Borrower of an indemnity in respect subject of such issue and Claim. The parties agree to cooperate in any related issue the contest of which is effectively foreclosed by the defense or settlement of any such issue, including any payment arising from such issue in subsequent years or which by reason of the fact that such issue is of a continuing nature, Claim and promptly pays to Borrower any Tax previously paid or any interest-free loan advanced by Borrower (give each other than expenses of such contests) with respect reasonable access to such issue.
(E) Nothing contained in this Section 6(b)(iv) shall require any Indemnitee all information relevant thereto subject to contest, or permit Borrower to contest appropriate confidentiality agreements. The parties will similarly cooperate in the name of such Indemnitee, a claim that such Indemnitee would otherwise be required to contest pursuant to this Section 6(b)(iv) if such Indemnitee shall waive payment by Borrower prosecution of any amount that might otherwise be payable by Borrower under this Section 6(b) in connection with such claim (other than the costs of contest previously incurred), nor shall or lawsuit against any Indemnitee be required to pursue any appeal to the United States Supreme Courtthird party.
Appears in 1 contract
Contests. (A1) If a written claim shall be is made against and received by Lessor or if any Indemnitee proceeding is commenced against Lessor (including a written notice of such proceeding) for any Tax Taxes as to which Lessee could be liable for which Borrower is obligated to indemnify pursuant to this Section 6(b)payment or indemnity hereunder, such Indemnitee Lessor shall notify Borrower promptly give Lessee notice in writing of such claim within 30 days after its receipt(PROVIDED, and shall provide Borrower such information regarding such claim as Borrower may reasonably request; provided, howeverHOWEVER, that the failure to provide such notice shall not release Borrower from any of its affect Lessee's obligations to indemnify under Section 6 hereof unless, and only hereunder to the extent that, Lessor unless such failure shall effectively precludes Borrower’s preclude Lessee's right to contest rights. To the extent permitted under applicable law, such Indemnitee will claim) and shall not make take any payments action with respect to such claim or Tax without the consent of Lessee for at least 30 thirty (30) days after giving notice of such claim to Borrower.
(B) If requested by Borrower in writing within 30 days after its following the receipt of such notice by Lessee; PROVIDED, HOWEVER, that, if Lessor shall be required by Law to take action prior to the end of such 30-day period, Lessor shall, in such notice to Lessee, so inform Lessee, and Lessor shall take no action without the consent of Lessee for as long as it is legally able to do so (it being understood that Lessor shall be entitled to pay the Tax claimed and sue for a refund prior to the end of such 30-day period if (i) (A) ▇he failure to so pay the Tax would result in penalties (unless immediately reimbursed by Lessee) or (B) the failure to so pay would result in criminal penalties and (ii) Lessor uses its good faith efforts to take any action so required in connection with so paying the Tax in a manner that is the least prejudicial to the pursuit of the contest). In addition, Lessor shall (PROVIDED that Lessee shall have agreed to keep such information confidential other than to the extent necessary in order to contest the claim in writing in a manner reasonable satisfactory to Lessor) furnish Lessee with copies of any requests for information from any taxing authority relating to such Taxes with respect to which Lessee may be required to indemnify hereunder. If requested by Lessee in writing within thirty (30) days or such shorter period as may be required by applicable lawLaw after its receipt of such notice, such Indemnitee Lessor shall, at the expense of Borrower Lessee (including all reasonable out-of-pocket costs, and subject reasonable in-house or outside attorney and accountants fees), in good faith contest (or, if permitted by applicable law, allow Lessee to subparagraph (C) belowcontest), contest through appropriate administrative and judicial proceedings the validity, applicability or amount of such Taxes by, in the case of an Indemnitee-Controlled Contest, in such Indemnitee’s sole discretion or, in the case of a Borrower-Controlled Contest, in Borrower’s sole discretion, (1) by resisting payment thereof if practicablethereof, (2) not paying such Tax the same except under protest, (3) protest if protest is necessary and proper, and proper or if the payment of such Tax is made, using reasonable efforts to obtain a refund thereof, thereof in an appropriate administrative and judicial proceedings, and (4) in the case of an Indemnitee-Controlled Contest, considering in good faith any other reasonable action as Borrower may reasonably request. Each Indemnitee shall consult in good faith with Borrower and Borrower’s counsel, and Borrower shall consult in good faith with such Indemnitee and its counsel in the case of a Borrower-Controlled Contest. concerning the forum in which the contest is most likely to be favorably resolved and whether such contest shall be by (x) resisting payment of such Tax, (y) paying such Tax under protest or (z) paying such Tax and seeking a refund or other repayment thereof.
(C) In no event shall an Indemnitee be required, or Borrower permitted, to contest the imposition of any Tax for which Borrower is obligated pursuant to this Section 6(b) unless (1) Borrower shall have agreed to pay and shall promptly be paying on request all reasonable costs and expenses that such Indemnitee incurs in contesting such claim or arising out of or relating to such contest (including legal fees, accounting fees, and disbursements, including those on appeal, if any); (2) such contest is not reasonably likely to result in a material danger of the sale, seizure, forfeiture or loss of the Aircraft, or the creation of any Lien thereon other than Liens for Taxes (i) either not yet due or being contested in good faith by appropriate proceedings and (ii) for which such reserves, if any, as are required to be provided under generally accepted accounting principles have been provided by Borrower, and there is no risk of criminal penalties; (3) if such contest shall be conducted in a manner requiring the payment of the claim, Borrower shall have advanced sufficient funds, on an interest-free basis, to make the payment required, and shall have agreed to indemnify the Indemnitee against any additional net after-Tax cost to such Indemnitee of such advance; (4) if requested by the Indemnitee in writing, such Indemnitee shall have received an opinion of independent Tax counsel selected by Borrower and reasonably acceptable to such Indemnitee and furnished at Borrower’s sole expense to the effect that a Realistic Possibility of Success exists for contesting such claim (or, in the case of an appeal of an adverse judicial determination, a written opinion from such independent Tax counsel to the effect that it is more likely than not that such adverse judicial determination will be reversed or substantially modified); (5) Borrower shall have delivered to such Indemnitee a written acknowledgment of Borrower’s obligation to indemnify such Indemnitee to the extent that the contest is not successful; provided, however, that Borrower will not be bound by its acknowledgment of liability if the contest is resolved on a clear and unambiguous basis showing no such liability under this Section 6(b) with respect to such Tax; (6) if a Specified Default or Event of Default shall have occurred and be continuing, Borrower shall have provided security for its obligation hereunder satisfactory to the Indemnitee by placing in escrow sufficient funds to cover any such contested Tax and the reasonably expected expenses of such contest on an After-Tax Basis, or otherwise providing satisfactory provisions for payment of such amounts determined by the Indemnitee in its sole discretion; (7) the aggregate amount of all indemnity payments that Borrower may be required to make to such Indemnitee with respect to such claim (or similar or related claims) is at least $60,000; and (8) the claim is not for a Tax the imposition of which has been previously contested by, or at the request of, Borrower hereunder, and such previous contest (including all allowable appeals) was decided adversely to Borrower, unless Borrower has delivered an opinion of independent Tax counsel selected by Borrower and reasonably acceptable to the Indemnitee to the effect that, on the basis of (i) a change in applicable law, or (ii) a difference in the underlying facts, there is currently a Realistic Possibility of Success for contesting such claim.
(D) If any Indemnitee shall obtain a refund of all or any part of any Tax paid by Borrower, such Indemnitee shall pay Borrower, but not before Borrower shall have made all payments theretofore due to such Indemnitee pursuant to this Section 6(b) and any other payments theretofore due such Indemnitee under any of the Operative Documents, an amount equal to the amount of such refund (net of any Taxes imposed thereon), including interest received and attributable thereto (net of any Taxes imposed thereon) plus, if Borrower has paid an amount pursuant to the first sentence of Section 6(b)(iii)(A), any net Tax benefit (or minus any net Tax detriment) realized by such Indemnitee as a result of any refund received, and payment made, by such Indemnitee pursuant to this sentence; provided that the Indemnitee shall not be obligated to pay an amount under the preceding sentence to the extent that such amount would exceed the amount of such Taxes paid, reimbursed or advanced by Borrower to such Indemnitee (other than the cost of the contest thereof); provided, further, that any amount not paid to Borrower pursuant to the foregoing limitation shall be carried forward to reduce pro tanto any future payments that Borrower may be required to make to such Indemnitee pursuant to this Section 6(b). If any Indemnitee shall have paid Borrower any refund of all or part of any Tax paid by Borrower and it is subsequently determined that such Indemnitee was not entitled to the refund, such determination shall be treated as the imposition of a Tax for which Borrower is obligated to indemnify such Indemnitee pursuant to the provisions of this Section 6(b) without regard to the exclusions set forth in Section 6(b)(ii) (other than subparagraphs (4), (11) and (12) thereof). Provided no Specified Default or Event of Default has occurred and is continuing, an Indemnitee shall not settle any such claim or contest pursuant to this provision without the written consent of Borrower, which consent shall not be unreasonably withheld, conditioned or delayed; provided, that an Indemnitee may settle at any time without the consent of Borrower if the Indemnitee waives (by written notice to Borrower) the payment by Borrower of an indemnity in respect of such issue and any related issue the contest of which is effectively foreclosed by the settlement of such issue, including any payment arising from such issue in subsequent years or which by reason of the fact that such issue is of a continuing nature, and promptly pays to Borrower any Tax previously paid or any interest-free loan advanced by Borrower (other than expenses of such contests) with respect to such issue.
(E) Nothing contained in this Section 6(b)(iv) shall require any Indemnitee to contest, or permit Borrower to contest in the name of such Indemnitee, a claim that such Indemnitee would otherwise be required to contest pursuant to this Section 6(b)(iv) if such Indemnitee shall waive payment by Borrower of any amount that might otherwise be payable by Borrower under this Section 6(b) in connection with such claim (other than the costs of contest previously incurred), nor shall any Indemnitee be required to pursue any appeal to the United States Supreme Court.and/or judicial
Appears in 1 contract
Contests. (A) If a written any claim shall be made against and received by any Tax Indemnitee or if any proceeding shall be commenced against any Tax Indemnitee (including a written notice of such proceeding) for any Tax for Imposition as to which Borrower is obligated to indemnify the Lessee or the Guarantor may have an indemnity obligation pursuant to this Section 6(b)13.4, or if any Tax Indemnitee shall determine that any Imposition to which the Lessee or the Guarantor may have an indemnity obligation pursuant to this Section 13.4 may be payable, such Tax Indemnitee shall promptly (and in any event, within fifteen (15) Business Days) notify Borrower the Guarantor in writing (provided that failure to so notify the Guarantor within fifteen (15) Business Days shall not alter such Tax Indemnitee's rights under this Section 13.4 except to the extent such failure precludes or materially adversely affects the ability to conduct a contest of any indemnified Taxes) and shall not take any action with respect to such claim, proceeding or Imposition without the written consent of the Guarantor (such consent not to be unreasonably withheld or unreasonably delayed) for thirty (30) days after the receipt of such claim within 30 days after its receipt, and shall provide Borrower such information regarding such claim as Borrower may reasonably requestnotice by the Guarantor; provided, however, that in the failure case of any such claim or proceeding, if such Tax Indemnitee shall be required by law or regulation to provide take action prior to the end of such thirty (30) day period, such Tax Indemnitee shall in such notice to the Guarantor, so inform the Guarantor, and such Tax Indemnitee shall not release Borrower from take any of its obligations to indemnify under Section 6 hereof unless, and only to the extent that, such failure effectively precludes Borrower’s contest rights. To the extent permitted under applicable law, such Indemnitee will not make any payments action with respect to such claim claim, proceeding or Imposition without the consent of the Guarantor (such consent not to be unreasonably withheld or unreasonably delayed) for at least 30 ten (10) days after giving notice of such claim to Borrower.
(B) If requested by Borrower in writing within 30 days after its the receipt of such notice by the Guarantor unless such Tax Indemnitee shall be required by law or regulation to take action prior to the end of such ten (10) day period. The Guarantor shall be entitled for a period of thirty (30) days from receipt of such notice from such Tax Indemnitee (or such shorter period as such Tax Indemnitee has notified the Guarantor is required by law or regulation for such Tax Indemnitee to commence such contest), to request in writing that such Tax Indemnitee contest the imposition of such Tax, at the Guarantor's expense. If (x) such contest can be pursued in the name of the Guarantor or the Lessee and independently from any other proceeding involving a Tax liability of such Tax Indemnitee for which the Lessee and the Guarantor have not agreed to indemnify such Tax Indemnitee, (y) such contest must be pursued in the name of such Tax Indemnitee, but can be pursued independently from any other proceeding involving a Tax liability of such Tax Indemnitee for which the Lessee and the Guarantor have not agreed to indemnify such Tax Indemnitee or (z) such Tax Indemnitee so requests, then the Guarantor or such Lessee shall be permitted to control the contest of such claim, provided that in the case of a contest described in clause (y) if such Tax Indemnitee determines reasonably and in good faith that such contest by the Guarantor or the Lessee could have a material adverse impact on the business or operations of such Tax Indemnitee and provides a written explanation to the Guarantor of such determination, such Tax Indemnitee may elect to control or reassert control of the contest, and provided that the taking control by the Guarantor or the Lessee of any contest shall not alter the applicable Tax Indemnitee's rights to indemnification hereunder, and provided, further, that in determining the application of clauses (x) and (y) of the preceding sentence, each Tax Indemnitee shall take any and all reasonable steps to segregate claims for any Taxes for which the Lessee and the Guarantor indemnify hereunder from Taxes for which the Lessee and the Guarantor are not obligated to indemnify hereunder, so that the Guarantor can control the contest of the former. In all other claims requested to be contested by the Guarantor, such Tax Indemnitee shall control the contest of such claim, acting through counsel selected by such Tax Indemnitee and reasonably acceptable to the Guarantor. In no event shall the Guarantor be permitted to contest (or such Tax Indemnitee be required to contest) any claim, (A) if such Tax Indemnitee provides the Guarantor with a legal opinion of counsel reasonably acceptable to the Guarantor that such action, suit or proceeding involves a risk of imposition of criminal liability or will involve a material risk of the sale, forfeiture or loss of, or the creation of any Lien (other than a Permitted Lien) on the Property or any part thereof unless the Guarantor shall have posted and maintained a bond or other security reasonably satisfactory to the relevant Tax Indemnitee in respect to such risk, (B) if an Event of Default has occurred and is continuing unless the Guarantor shall have posted and maintained a bond or other security reasonably satisfactory to the relevant Tax Indemnitee in respect of the Taxes subject to such claim and any and all expenses for which the Guarantor or the Lessee is responsible hereunder reasonably foreseeable in connection with the contest of such claim, (C) unless the Guarantor shall have agreed to pay and shall pay, to such Tax Indemnitee on written demand all reasonable, documented out-of- pocket costs, losses and expenses that such Tax Indemnitee may incur in connection with contesting such Imposition including all reasonable legal, accounting and investigatory fees and disbursements and (if applicable) reasonable, allocable internal overhead costs determined in accordance with normal bank operating procedures, or (D) if such contest shall involve the payment of the Tax prior to the contest, unless the Guarantor shall provide to such Tax Indemnitee an interest-free advance in an amount equal to the Imposition that such Tax Indemnitee is required to pay (with no additional net after-tax costs to such Tax Indemnitee). In addition, for contests controlled by such Tax Indemnitee and claims contested in the name of such Tax Indemnitee in a public forum, no contest shall be required: (A) unless the amount of the potential indemnity (taking into account all similar or logically related claims that have been or could be raised in any audit involving any or all such Tax Indemnitees with respect to any period for which the Guarantor or the Lessee may be liable to pay an indemnity under this Section 13.4(b)) exceeds (1) with respect to the Lessor or the New Partners, $25,000 and (2) with respect to any Tax Indemnitee other than the Lessor or the New Partners, $75,000 and (B) unless, if requested by such Tax Indemnitee, the Guarantor shall have provided to such Tax Indemnitee an opinion of counsel selected by the Guarantor (which may be in-house counsel) (except, in the case of income taxes indemnified hereunder, in which case such opinion shall be an opinion of independent tax counsel selected by the Guarantor and reasonably acceptable to such Tax Indemnitee) that a reasonable basis exists to contest such claim. In no event shall a Tax Indemnitee be required to appeal an adverse judicial determination to the United States Supreme Court. The party conducting the contest shall consult in good faith with the other party and its counsel with respect to the contest of such claim for Taxes (or claim for refund) but the decisions regarding what actions to be taken shall be made by applicable lawthe controlling party in its sole judgment; provided, however, that if such Tax Indemnitee is the controlling party and the Guarantor recommends the acceptance of a settlement offer made by the relevant Governmental Authority and such Tax Indemnitee rejects such settlement offer, then the amount for which a Lessee and the Guarantor will be required to indemnify such Tax Indemnitee with respect to the Taxes subject to such offer shall not exceed the amount which it would have owed if such settlement offer had been accepted provided that any Tax Indemnitee shall be entitled to reject any indemnity payment it would otherwise be entitled to hereunder if such Tax Indemnitee reasonably determines that accepting such offer would have an unindemnified impact on such Tax Indemnitee and provided further that no Tax Indemnitee may reject any such indemnity payment if the Guarantor agrees to pay to such Tax Indemnitee the amount of such unindemnified impact, as reasonably determined by such Tax Indemnitee. In addition, the controlling party shall keep the noncontrolling party reasonably informed as to the progress of the contest, and shall provide the noncontrolling party with a copy of (or appropriate excerpts from) any reports or claims issued by the relevant auditing agents or taxing authority to the controlling party thereof, in connection with such claim or the contest thereof, provided, however, that such obligation shall not obligate any Tax Indemnitee to disclose its tax returns or information or documentation unrelated to such claim or contest. Each Tax Indemnitee shall, at the expense of Borrower the Lessee and subject to subparagraph (C) belowthe Guarantor, contest supply the validity, applicability Lessee or amount of such Taxes by, in the case of an Indemnitee-Controlled Contest, in such Indemnitee’s sole discretion or, in the case of a Borrower-Controlled Contest, in Borrower’s sole discretion, (1) resisting payment thereof if practicable, (2) not paying such Tax except under protest, (3) if protest is necessary and proper, and if payment of such Tax is made, using reasonable efforts to obtain a refund thereof, in appropriate administrative and judicial proceedings, and (4) in the case of an Indemnitee-Controlled Contest, considering in good faith any other reasonable action as Borrower may reasonably request. Each Indemnitee shall consult in good faith with Borrower and Borrower’s counsel, and Borrower shall consult in good faith Guarantor with such Indemnitee information and its counsel in the case of a Borrower-Controlled Contest. concerning the forum in which the contest is most likely to be favorably resolved and whether such contest shall be by (x) resisting payment of such Tax, (y) paying such Tax under protest or (z) paying such Tax and seeking a refund or other repayment thereof.
(C) In no event shall an Indemnitee be required, or Borrower permitted, to contest the imposition of any Tax for which Borrower is obligated pursuant to this Section 6(b) unless (1) Borrower shall have agreed to pay and shall promptly be paying on request all reasonable costs and expenses that such Indemnitee incurs in contesting such claim or arising out of or relating to such contest (including legal fees, accounting fees, and disbursements, including those on appeal, if any); (2) such contest is not documents reasonably likely to result in a material danger of the sale, seizure, forfeiture or loss of the Aircraft, or the creation of any Lien thereon other than Liens for Taxes (i) either not yet due or being contested in good faith by appropriate proceedings and (ii) for which such reserves, if any, as are required to be provided under generally accepted accounting principles have been provided by Borrower, and there is no risk of criminal penalties; (3) if such contest shall be conducted in a manner requiring the payment of the claim, Borrower shall have advanced sufficient funds, on an interest-free basis, to make the payment required, and shall have agreed to indemnify the Indemnitee against any additional net after-Tax cost to such Indemnitee of such advance; (4) if requested by the Indemnitee Lessee or the Guarantor as are necessary or advisable for such Person to participate in writingany action, such Indemnitee shall have received an opinion of independent Tax counsel selected by Borrower and reasonably acceptable to such Indemnitee and furnished at Borrower’s sole expense to the effect that a Realistic Possibility of Success exists for contesting such claim (or, in the case of an appeal of an adverse judicial determination, a written opinion from such independent Tax counsel to the effect that it is more likely than not that such adverse judicial determination will be reversed suit or substantially modified); (5) Borrower shall have delivered to such Indemnitee a written acknowledgment of Borrower’s obligation to indemnify such Indemnitee proceeding to the extent that the contest is not successfulpermitted by this Section 13.4(b); provided, however, that Borrower will such Tax Indemnitee shall not be bound by required to provide to such Lessee or the Guarantor copies of its acknowledgment of liability if tax returns or any other information, documentation, or materials that it deems to be confidential or proprietary. Notwithstanding anything in this Section 13.4(b) to the contest 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 resolved on a clear and unambiguous basis showing no such liability entitled to be indemnified under this Section 6(b13.4 (and with respect to which contest is required under this Section 13 .4(b) without the prior written consent of the Guarantor, unless such Tax Indemnitee waives its right to be indemnified under this Section 13.4 with respect to such Tax; (6) if a Specified Default or Event of Default shall have occurred and be continuing, Borrower shall have provided security for its obligation hereunder satisfactory claim. Notwithstanding anything contained herein to the contrary, a Tax Indemnitee by placing in escrow sufficient funds to cover any such contested Tax and the reasonably expected expenses of such contest on an After-Tax Basis, or otherwise providing satisfactory provisions for payment of such amounts determined by the Indemnitee in its sole discretion; (7) the aggregate amount of all indemnity payments that Borrower may shall not be required to make contest (and neither the Lessee nor the Guarantor shall be permitted to contest in any judicial forum if such contest could, in a Tax Indemnitee's reasonable judgment, be materially adverse to it) a claim with respect to the imposition of any Tax if such Tax Indemnitee shall have waived its right to indemnification under this Section 13.4 with respect to such claim (or similar or related claims) is at least $60,000; and (8) the any claim is not for a Tax the imposition of which has been previously contested by, or at the request of, Borrower hereunder, and with respect to such previous contest (including all allowable appeals) was decided adversely to Borrower, unless Borrower has delivered an opinion of independent Tax counsel selected by Borrower and reasonably acceptable to the Indemnitee to the effect that, on the basis of (i) a change in applicable law, or (ii) a difference in the underlying facts, there is currently a Realistic Possibility of Success for contesting such claim.
(D) If any Indemnitee shall obtain a refund of all year or any part of any Tax paid by Borrower, such Indemnitee shall pay Borrower, but not before Borrower shall have made all payments theretofore due to such Indemnitee pursuant to this Section 6(b) and any other payments theretofore due such Indemnitee under any of the Operative Documents, an amount equal to the amount of such refund (net of any Taxes imposed thereon), including interest received and attributable thereto (net of any Taxes imposed thereon) plus, if Borrower has paid an amount pursuant to the first sentence of Section 6(b)(iii)(A), any net Tax benefit (or minus any net Tax detriment) realized by such Indemnitee as a result of any refund received, and payment made, by such Indemnitee pursuant to this sentence; provided that the Indemnitee shall not be obligated to pay an amount under the preceding sentence to the extent that such amount would exceed the amount of such Taxes paid, reimbursed or advanced by Borrower to such Indemnitee (other than the cost of the contest thereof); provided, further, that any amount not paid to Borrower pursuant to the foregoing limitation shall be carried forward to reduce pro tanto any future payments that Borrower may be required to make to such Indemnitee pursuant to this Section 6(b). If any Indemnitee shall have paid Borrower any refund of all or part of any Tax paid by Borrower and it is subsequently determined that such Indemnitee was not entitled to the refund, such determination shall be treated as the imposition of a Tax for which Borrower is obligated to indemnify such Indemnitee pursuant to the provisions of this Section 6(b) without regard to the exclusions set forth in Section 6(b)(ii) (other than subparagraphs (4), (11) and (12) thereof). Provided no Specified Default or Event of Default has occurred and is continuing, an Indemnitee shall not settle any such claim or contest pursuant to this provision without the written consent of Borrower, which consent shall not be unreasonably withheld, conditioned or delayed; provided, that an Indemnitee may settle at any time without the consent of Borrower if the Indemnitee waives (by written notice to Borrower) the payment by Borrower of an indemnity in respect of such issue and any related issue taxable year the contest of which is effectively foreclosed by the settlement precluded or materially adversely affected as a result of such issue, including any payment arising from such issue in subsequent years or which by reason of the fact that such issue is of a continuing nature, and promptly pays to Borrower any Tax previously paid or any interest-free loan advanced by Borrower (other than expenses of such contests) with respect to such issuewaiver).
(E) Nothing contained in this Section 6(b)(iv) shall require any Indemnitee to contest, or permit Borrower to contest in the name of such Indemnitee, a claim that such Indemnitee would otherwise be required to contest pursuant to this Section 6(b)(iv) if such Indemnitee shall waive payment by Borrower of any amount that might otherwise be payable by Borrower under this Section 6(b) in connection with such claim (other than the costs of contest previously incurred), nor shall any Indemnitee be required to pursue any appeal to the United States Supreme Court.
Appears in 1 contract
Contests. (A1) If a written claim shall be is made against and received by Lessor or if any Indemnitee proceeding is commenced against Lessor (including a written notice of such proceeding) for any Tax Taxes as to which Lessee could be liable for which Borrower is obligated to indemnify pursuant to this Section 6(b)payment or indemnity hereunder, such Indemnitee Lessor shall notify Borrower promptly give Lessee notice in writing of such claim within 30 days after its receipt(PROVIDED, and shall provide Borrower such information regarding such claim as Borrower may reasonably request; provided, howeverHOWEVER, that the failure to provide such notice shall not release Borrower from any of its affect Lessee's obligations to indemnify under Section 6 hereof unless, and only hereunder to the extent that, Lessor unless such failure shall effectively precludes Borrower’s preclude Lessee's right to contest rights. To the extent permitted under applicable law, such Indemnitee will claim) and shall not make take any payments action with respect to such claim or Tax without the consent of Lessee for at least 30 thirty (30) days after giving notice of such claim to Borrower.
(B) If requested by Borrower in writing within 30 days after its following the receipt of such notice by Lessee; PROVIDED, HOWEVER, that, if Lessor shall be required by Law to take action prior to the end of such 30-day period, Lessor shall, in such notice to Lessee, so inform Lessee, and Lessor shall take no action without the consent of Lessee for as long as it is legally able to do so (it being understood that Lessor shall be entitled to pay the Tax claimed and sue for a refund prior to the end of such 30-day period if (i)(A) t▇▇ failure to so pay the Tax would result in penalties (unless immediately reimbursed by Lessee) or (B) the failure to so pay would result in criminal penalties and (ii) Lessor uses its good faith efforts to take any action so required in connection with so paying the Tax in a manner that is the least prejudicial to the pursuit of the contest). In addition, Lessor shall (PROVIDED that Lessee shall have agreed to keep such information confidential other than to the extent necessary in order to contest the claim in writing in a manner reasonable satisfactory to Lessor) furnish Lessee with copies of any requests for information from any taxing authority relating to such Taxes with respect to which Lessee may be required to indemnify hereunder. If requested by Lessee in writing within thirty (30) days or such shorter period as may be required by applicable lawLaw after its receipt of such notice, such Indemnitee Lessor shall, at the expense of Borrower Lessee (including all reasonable out-of-pocket costs, and subject reasonable in-house or outside attorney and accountants fees), in good faith contest (or, if permitted by applicable law, allow Lessee to subparagraph (C) belowcontest), contest through appropriate administrative and judicial proceedings the validity, applicability or amount of such Taxes by, in the case of an Indemnitee-Controlled Contest, in such Indemnitee’s sole discretion or, in the case of a Borrower-Controlled Contest, in Borrower’s sole discretion, (1) by resisting payment thereof if practicablethereof, (2) not paying such Tax the same except under protest, (3) protest if protest is necessary and proper, and proper or if the payment of such Tax is made, using reasonable efforts to obtain a refund thereofthereof in an appropriate administrative and/or judicial proceeding. If requested to do so by Lessee in writing, Lessor shall appeal any adverse administrative or judicial decision, except that Lessor shall not be required to (nor shall Lessee have the right to) pursue any appeals to the United States Supreme Court. If and to the extent Lessor by exercise of reasonable good faith efforts is able to separate the contested issue or issues (which cannot include income tax issues) from other issues arising in the same administrative or judicial proceeding that are unrelated to the transactions contemplated by the Operative Documents without, in appropriate administrative and judicial proceedings, and (4) in the case of an Indemnitee-Controlled Contest, considering in good faith judgment of Lessor, materially adversely affecting it, Lessor shall permit Lessee to control the conduct of any other reasonable action as Borrower may such proceeding and shall provide to Lessee such information or data that is in such Lessor's control or possession that is reasonably request. Each Indemnitee necessary to conduct such contest and Lessee shall consult in good faith with Borrower the Lessor and Borrower’s counsel, and Borrower shall consult in good faith with keep it reasonably informed of the progress of such Indemnitee and its counsel in contest. In the case of a Borrower-Controlled Contest. concerning contest controlled by Lessor, Lessor shall conduct and control such contest, PROVIDED Lessor consults with Lessee in good faith regarding the forum in which manner of contesting such claim and shall keep Lessee reasonably informed regarding the contest is most likely to be favorably resolved and whether progress of such contest but Lessor shall be by (x) resisting payment have ultimate control over all aspects of such Taxcontest. Lessor shall not fail to take any action expressly required by this SECTION 3(i)(D) (including, (ywithout limitation, any action regarding an appeal of an adverse determination with respect to any claim) paying such Tax under protest or (zsettle or compromise any claim without the prior written consent of Lessee except as contemplated by SECTION 3(i)(D) paying such Tax and seeking a refund or other repayment thereofherein.
(C2) In Notwithstanding the foregoing, in no event shall an Indemnitee Lessor be required, required to take any action (or Borrower permitted, to contest the imposition of permit Lessee to take any Tax for which Borrower is obligated pursuant to this Section 6(baction) unless and until (1A) Borrower Lessee shall have agreed to pay and shall promptly be paying Lessor on request demand on an After-tax Basis all reasonable costs and expenses that such Indemnitee incurs Lessor shall incur in connection with contesting such claim or arising out of or relating to such contest claim, (including without limitation, all costs, expenses, losses, reasonable legal fees, and accounting fees, and disbursements, including those on appealpenalties, fines, additions to Tax or interest thereon), (B) if any); (2) such contest is shall involve the payment of the claim, Lessee shall advance the amount thereof plus (to the extent indemnified hereunder) interest, penalties and additions to tax with respect thereto that are required to be paid prior to the commencement of such contest on an interest-free basis and with no additional net after-tax cost to Lessor (and Lessor 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 net tax benefits resulting from making any such payment), (C) Lessor shall have reasonably determined that the action to be taken will not reasonably likely to result in a any material danger risk of the saleforfeiture, seizureforeclosure, forfeiture sale or loss of the Aircraft, Aircraft or the creation of any Lien thereon (other than Liens for Taxes a Permitted Lien) (i) either not yet due unless Lessee shall have adequately bonded such Lien or being contested in good faith by appropriate proceedings and (ii) for which such reserves, if any, as are required otherwise made provisions to be provided under generally accepted accounting principles have been provided by Borrower, and there is no risk protect the interests of criminal penalties; (3) if such contest shall be conducted Lessor in a manner requiring the payment of the claimreasonably satisfactory to Lessor in its sole discretion), Borrower shall have advanced sufficient funds, on an interest-free basis, to make the payment required, and shall have agreed to indemnify the Indemnitee against any additional net after-Tax cost to such Indemnitee of such advance; (4D) if requested by the Indemnitee in writing, such Indemnitee shall have received an opinion of independent Tax counsel selected by Borrower and reasonably acceptable to such Indemnitee and furnished at Borrower’s sole expense to the effect that a Realistic Possibility of Success exists for contesting such claim (or, in the case of an appeal of an adverse judicial determination, a written opinion from such independent Tax counsel to the effect that it is more likely than not that such adverse judicial determination will be reversed or substantially modified); (5) Borrower shall have delivered to such Indemnitee a written acknowledgment of Borrower’s obligation to indemnify such Indemnitee to the extent that the contest is not successful; provided, however, that Borrower will not be bound by its acknowledgment of liability if the contest is resolved on a clear and unambiguous basis showing no such liability under this Section 6(b) with respect to such Tax; (6) if a Specified Default or Event of Default shall have occurred and be continuing, Borrower shall have continuing at the time the contest is begun unless Lessee has provided security for its obligation obligations hereunder satisfactory by advancing to Lessor before proceeding with such contest, the Indemnitee amount of the Tax being contested, plus any interest and penalties and an amount estimated in good faith by placing Lessor for reasonable expenses, (E) in escrow sufficient funds to cover any such contested Tax and the reasonably expected expenses case of such a contest on an After-Tax Basisthat is being pursued by Lessor, or otherwise providing satisfactory provisions for payment of such amounts determined by the Indemnitee in its sole discretion; (7) the aggregate amount of the claim together with the amount of all related claims that have been or could be raised with any or all of the other Aircraft leased by Lessor to Lessee or raised in any other audit for which Lessee would have an indemnity payments obligation under this SECTION 3(i)(D) is at least $50,000, and (F) if requested prior to or during the contest by Lessor, independent tax counsel selected by Lessee and reasonably acceptable to Lessor, renders to Lessor a written opinion that Borrower there is a reasonable basis (under the standard set forth in ABA Formal Opinion 85-352 or any successor thereto) for contesting such claim. In the case of any contest controlled by the Lessee hereunder, Lessor (including its counsel (at Lessor's expense)) shall have the right to participate in all proceedings and Lessee shall consult with Lessor in good faith regarding the manner of contesting such claim and shall keep Lessor reasonably informed regarding the progress of such contest and, if requested by Lessor, provide an opinion of tax counsel selected by Lessee and reasonably acceptable to Lessor to the effect that there is a Reasonable Basis for contesting such claims. Notwithstanding the foregoing, Lessee shall not be permitted to control or conduct any contest if such contest involves Taxes based on or measured by the gross or net income of Lessor and PROVIDED, that if Lessor determines in good faith that it is reasonably likely that such contest may have a material adverse impact on it, Lessor may retain or reassert control of any contest Lessee would otherwise be permitted to contest, and if Lessor shall release, waive, compromise or settle any claim which may be required indemnifiable by Lessee pursuant to make this SECTION 3(i) without the written permission of Lessee, Lessee's obligation to such Indemnitee indemnify Lessor with respect to such claim (or similar or related claims) is at least $60,000; and (8) the claim is not for a Tax the imposition of which has been previously contested by, or at the request of, Borrower hereunder, and such previous contest (including all allowable appeals) was decided adversely to Borrower, unless Borrower has delivered an opinion of independent Tax counsel selected by Borrower and reasonably acceptable to the Indemnitee to the effect that, on the basis of (i) a change in applicable law, or (ii) a difference in the underlying facts, there is currently a Realistic Possibility of Success for contesting such claim.
(D) If any Indemnitee shall obtain a refund of all or any part of any Tax paid by Borrower, such Indemnitee shall pay Borrower, but not before Borrower shall have made all payments theretofore due to such Indemnitee pursuant to this Section 6(b) and any other payments theretofore due such Indemnitee under any of the Operative Documents, an amount equal to the amount of such refund (net of any Taxes imposed thereon), including interest received and attributable thereto (net of any Taxes imposed thereon) plus, if Borrower has paid an amount pursuant to the first sentence of Section 6(b)(iii)(A), any net Tax benefit (or minus any net Tax detriment) realized by such Indemnitee as a result of any refund received, and payment made, by such Indemnitee pursuant to this sentence; provided that the Indemnitee shall not be obligated to pay an amount under the preceding sentence to the extent that such amount would exceed the amount of such Taxes paid, reimbursed or advanced by Borrower to such Indemnitee (other than the cost of the contest thereof); provided, further, that any amount not paid to Borrower pursuant to the foregoing limitation shall be carried forward to reduce pro tanto any future payments that Borrower may be required to make to such Indemnitee pursuant to this Section 6(b). If any Indemnitee shall have paid Borrower any refund of all or part of any Tax paid by Borrower and it is subsequently determined that such Indemnitee was not entitled to the refund, such determination shall be treated as the imposition of a Tax for which Borrower is obligated to indemnify such Indemnitee pursuant to the provisions of this Section 6(b) without regard to the exclusions set forth in Section 6(b)(ii) (other than subparagraphs (4), (11) and (12) thereof). Provided no Specified Default or Event of Default has occurred and is continuing, an Indemnitee shall not settle any such claim or contest pursuant to this provision without the written consent of Borrower, which consent shall not be unreasonably withheld, conditioned or delayed; provided, that an Indemnitee may settle at any time without the consent of Borrower if the Indemnitee waives (by written notice to Borrower) the payment by Borrower of an indemnity in respect of such issue and any related issue the contest of which is effectively foreclosed by the settlement of such issue, including any payment arising from such issue in subsequent years or which by reason materially prejudiced as a result of the fact that such issue is of a continuing naturerelease, waiver, compromise or settlement) shall terminate, subject to this SECTION 3(i)(D), and promptly pays subject to Borrower SECTION 3(i)(C), Lessor shall repay to Lessee any Tax amount previously paid or any interest-free loan advanced by Borrower (other than expenses of such contests) to Lessor with respect to such issueclaim (but not amounts paid or advanced for costs and expenses of any contests to the extent such amounts have already been expended) plus interest at the rate that would have been payable by the relevant taxing authority with respect to a refund of such Tax.
(E3) Notwithstanding anything contained in this SECTION 3(i) to the contrary, Lessor shall not be required to contest any claim if the subject matter thereof shall be of a continuing nature and shall previously have been decided adversely by a court of competent jurisdiction pursuant to the contest provisions of this SECTION 3(i)(D), unless there shall have been a change in Law (or interpretation thereof) or a change in facts after the date with respect to which such previous contest shall have been decided, and Lessor shall have received, at Lessee's expense, an opinion of independent tax counsel selected by Lessee and reasonably acceptable to Lessor to the effect that as a result of such change in Law (or interpretation thereof) or change in facts, it is more likely than not that Lessor will prevail in such contest.
(4) Nothing contained in this Section 6(b)(ivSECTION 3(i) shall require any Indemnitee Lessor to contest, contest or permit Borrower Lessee to contest in the name of such Indemnitee, a claim that such Indemnitee which it would otherwise be required to contest pursuant to this Section 6(b)(ivSECTION 3(i) if such Indemnitee Lessor shall waive payment by Borrower Lessee of any amount that might otherwise be payable by Borrower Lessee under this Section 6(bSECTION 3(i) by way of indemnity in connection with respect of such claim (and any other than claim for Taxes with respect to any other taxable year the costs contest of contest previously incurred), nor shall any Indemnitee be required which is effectively precluded by Lessor's declination to pursue any appeal take action with respect to the United States Supreme Courtclaim).
Appears in 1 contract
Contests. (A) If a written any claim shall be made against and received by any Indemnitee or if any proceeding shall be commenced against any Indemnitee (including a written notice of such proceeding) for any Tax for Imposition as to which Borrower is obligated to indemnify Lessee may have an indemnity obligation pursuant to this Section 6(b)12.5, or if any Indemnitee shall determine that any Imposition for which Lessee may have an indemnity obligation pursuant to this Section 12.5 may be payable, such Indemnitee shall promptly (and in any event, within 30 days) notify Borrower Lessee in writing of such claim (provided that failure to so notify Lessee within 30 days after its receiptshall not alter such Indemnitee's rights under this Section 12.5, except to the extent such failure precludes or materially adversely affects the ability to conduct a contest of any indemnified Imposition) and shall provide Borrower not take any action with respect to such information regarding claim, proceeding or Imposition without the written consent of Lessee (such claim as Borrower may reasonably requestconsent not to be unreasonably withheld or unreasonably delayed) for 30 days after the receipt of such notice by Lessee; provided, however, that in the failure case of any such claim or proceeding, if such Indemnitee shall be required by law or regulation to provide such notice shall not release Borrower from any of its obligations to indemnify under Section 6 hereof unless, and only take action prior to the extent that, end of such failure effectively precludes Borrower’s contest rights. To the extent permitted under applicable law30-day period, such Indemnitee will shall in such notice to Lessee, so inform Lessee, and such Indemnitee shall not make take any payments action with respect to such claim claim, proceeding or Imposition without the consent of Lessee (such consent not to be unreasonably withheld or unreasonably delayed) for at least 30 10 days after giving notice of such claim to Borrower.
(B) If requested by Borrower in writing within 30 days after its 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 may be the Indemnitee has notified Lessee is required by applicable lawlaw or regulation for the Indemnitee to commence such contest), to request in writing that such Indemnitee shallcontest such Imposition, at Lessee's expense. If (x) such contest can be pursued in the expense name of Borrower Lessee and subject independently from any other proceeding involving an Imposition for which Lessee has not agreed to subparagraph indemnify such Indemnitee, (Cy) belowsuch contest must be pursued in the name of the Indemnitee, but can be pursued independently from any other proceeding involving an Imposition for which Lessee has not agreed to indemnify such Indemnitee or (z) the Indemnitee so requests, then Lessee shall be permitted to control the contest the validity, applicability or amount of such Taxes byclaim, in the case of an Indemnitee-Controlled Contest, in such Indemnitee’s sole discretion or, provided that in the case of a Borrower-Controlled Contest, contest described in Borrower’s sole discretion, (1) resisting payment thereof if practicable, (2) not paying such Tax except under protest, (3) if protest is necessary and proper, and if payment any of such Tax is made, using reasonable efforts to obtain a refund thereof, in appropriate administrative and judicial proceedings, and (4) in the case of an Indemnitee-Controlled Contest, considering in good faith any other reasonable action as Borrower may reasonably request. Each Indemnitee shall consult in good faith with Borrower and Borrower’s counsel, and Borrower shall consult in good faith with such Indemnitee and its counsel in the case of a Borrower-Controlled Contest. concerning the forum in which the contest is most likely to be favorably resolved and whether such contest shall be by clause (x) resisting payment of such Tax), (y) paying such Tax under protest or (z) paying if the Indemnitee determines in good faith that such Tax contest by Lessee could have a material adverse impact on the business or operations of the Indemnitee and seeking provides a refund written explanation to Lessee of such determination, the Indemnitee may elect to control or reassert control of the contest, and provided, that by taking control of the contest, 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) of the preceding sentence, 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 claim, acting through counsel reasonably acceptable to Lessee. In no event shall Lessee be permitted to contest (or the Indemnitee required to contest) any claim (A) if such 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 sale, forfeiture or loss of, or the creation of any Lien (other than a Permitted Lien) on the Premises or any part of any thereof unless Lessee shall have posted and maintained a bond or other repayment thereof.
security reasonably satisfactory to the relevant Indemnitee in respect to such risk, (B) 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 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 claim, (C) unless 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 Imposition, including all reasonable legal, accounting and investigatory fees and disbursements, or (D) if such contest shall 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 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 Indemnitee for which Lessee may be liable to pay an indemnity under this Section 12.5 exceeds $50,000 and (B) unless, if requested by the Indemnitee, Lessee shall have provided to the Indemnitee an opinion of counsel selected by Lessee (which may be in-house counsel) that a reasonable basis exists to contest such claim. In no event shall an Indemnitee be requiredrequired 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 judgement, or Borrower permittedprovided, to contest however, that if the imposition Indemnitee is the controlling party and Lessee recommends the acceptance of any Tax a settlement offer made by the relevant Governmental Authority and such Indemnitee rejects such settlement offer then the amount for which Borrower is obligated pursuant Lessee will be required to this Section 6(b) unless (1) Borrower indemnify such Indemnitee with respect to the Taxes subject to such offer shall not exceed the amount which it would have agreed owed if such settlement offer had been accepted. In addition, the controlling party shall keep the noncontrolling party reasonably informed as to pay the progress of the contest, and shall promptly be paying on request all reasonable costs and expenses that such Indemnitee incurs 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 contesting connection with such claim or arising out the contest thereof. Each 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 12.5(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 relating other compromise or fail to appeal an adverse ruling with respect to any claim which is entitled to be indemnified under this Section 12.5 (and with respect to which contest is required under this Section 12.5(b)) without the prior written consent of Lessee (such consent not to be unreasonably withheld), unless such Indemnitee waives its right to be indemnified under this Section 12.5 with respect to such claim. Notwithstanding anything contained herein to the contrary, an Indemnitee will not be required to contest (including legal fees, accounting fees, and disbursements, including those on appeal, Lessee shall not be permitted to contest) a claim with respect to any Imposition if any); (2) such contest is not reasonably likely to result in a material danger of the sale, seizure, forfeiture or loss of the Aircraft, or the creation of any Lien thereon other than Liens for Taxes (i) either not yet due such Indemnitee shall waive its right to indemnification under this Section 12.5 with respect to such claim (and any claim with respect to such year or being contested in good faith by appropriate proceedings and any other taxable year, the contest of which is materially adversely affected as a result of such waiver) or (ii) for such Imposition is the sole result of a claim of a continuing and consistent nature, which claim has previously been resolved against the relevant Indemnitee (unless a change in law or facts has occurred since such reserves, if any, as are required to be provided under generally accepted accounting principles have been provided by Borrower, prior adverse resolution and there is no risk of criminal penalties; (3) if such contest shall be conducted in a manner requiring the payment of the claim, Borrower shall have advanced sufficient funds, on an interest-free basis, to make the payment required, and shall have agreed to indemnify the Indemnitee against any additional net after-Tax cost to such Indemnitee of such advance; (4) if requested by the Indemnitee in writing, such Indemnitee shall have received Lessee provides an opinion of independent Tax counsel selected by Borrower and reasonably acceptable to such Indemnitee and furnished at Borrower’s sole expense to the effect that a Realistic Possibility of Success exists for contesting such claim (or, in the case of an appeal of an adverse judicial determination, a written opinion from such independent Tax tax counsel to the effect that it is more likely than not that such adverse judicial determination change in law or facts will be reversed or substantially modified); (5) Borrower shall have delivered to such Indemnitee result in a written acknowledgment favorable resolution of Borrower’s obligation to indemnify such Indemnitee to the extent that the contest is not successful; provided, however, that Borrower will not be bound by its acknowledgment of liability if the contest is resolved on a clear and unambiguous basis showing no such liability under this Section 6(b) with respect to such Tax; (6) if a Specified Default or Event of Default shall have occurred and be continuing, Borrower shall have provided security for its obligation hereunder satisfactory to the Indemnitee by placing in escrow sufficient funds to cover any such contested Tax and the reasonably expected expenses of such contest on an After-Tax Basis, or otherwise providing satisfactory provisions for payment of such amounts determined by the Indemnitee in its sole discretion; (7) the aggregate amount of all indemnity payments that Borrower may be required to make to such Indemnitee with respect to such claim (or similar or related claims) is at least $60,000; and (8) the claim is not for a Tax the imposition of which has been previously contested by, or at the request of, Borrower hereunder, and such previous contest (including all allowable appeals) was decided adversely to Borrower, unless Borrower has delivered an opinion of independent Tax counsel selected by Borrower and reasonably acceptable to the Indemnitee to the effect that, on the basis of (i) a change in applicable law, or (ii) a difference in the underlying facts, there is currently a Realistic Possibility of Success for contesting such claimissue).
(D) If any Indemnitee shall obtain a refund of all or any part of any Tax paid by Borrower, such Indemnitee shall pay Borrower, but not before Borrower shall have made all payments theretofore due to such Indemnitee pursuant to this Section 6(b) and any other payments theretofore due such Indemnitee under any of the Operative Documents, an amount equal to the amount of such refund (net of any Taxes imposed thereon), including interest received and attributable thereto (net of any Taxes imposed thereon) plus, if Borrower has paid an amount pursuant to the first sentence of Section 6(b)(iii)(A), any net Tax benefit (or minus any net Tax detriment) realized by such Indemnitee as a result of any refund received, and payment made, by such Indemnitee pursuant to this sentence; provided that the Indemnitee shall not be obligated to pay an amount under the preceding sentence to the extent that such amount would exceed the amount of such Taxes paid, reimbursed or advanced by Borrower to such Indemnitee (other than the cost of the contest thereof); provided, further, that any amount not paid to Borrower pursuant to the foregoing limitation shall be carried forward to reduce pro tanto any future payments that Borrower may be required to make to such Indemnitee pursuant to this Section 6(b). If any Indemnitee shall have paid Borrower any refund of all or part of any Tax paid by Borrower and it is subsequently determined that such Indemnitee was not entitled to the refund, such determination shall be treated as the imposition of a Tax for which Borrower is obligated to indemnify such Indemnitee pursuant to the provisions of this Section 6(b) without regard to the exclusions set forth in Section 6(b)(ii) (other than subparagraphs (4), (11) and (12) thereof). Provided no Specified Default or Event of Default has occurred and is continuing, an Indemnitee shall not settle any such claim or contest pursuant to this provision without the written consent of Borrower, which consent shall not be unreasonably withheld, conditioned or delayed; provided, that an Indemnitee may settle at any time without the consent of Borrower if the Indemnitee waives (by written notice to Borrower) the payment by Borrower of an indemnity in respect of such issue and any related issue the contest of which is effectively foreclosed by the settlement of such issue, including any payment arising from such issue in subsequent years or which by reason of the fact that such issue is of a continuing nature, and promptly pays to Borrower any Tax previously paid or any interest-free loan advanced by Borrower (other than expenses of such contests) with respect to such issue.
(E) Nothing contained in this Section 6(b)(iv) shall require any Indemnitee to contest, or permit Borrower to contest in the name of such Indemnitee, a claim that such Indemnitee would otherwise be required to contest pursuant to this Section 6(b)(iv) if such Indemnitee shall waive payment by Borrower of any amount that might otherwise be payable by Borrower under this Section 6(b) in connection with such claim (other than the costs of contest previously incurred), nor shall any Indemnitee be required to pursue any appeal to the United States Supreme Court.
Appears in 1 contract
Sources: Participation Agreement (Adc Telecommunications Inc)
Contests. (A) If a written any claim shall be made against and received by any Indemnitee or if any proceeding shall be commenced against any Indemnitee (including a written notice of such proceeding) for any Tax for Imposition as to which Borrower is obligated to indemnify the Lessee may have an indemnity obligation pursuant to this Section 6(b)12.2, or if any Indemnitee shall determine that any Imposition to which the Lessee may have an indemnity obligation pursuant to this Section 12.2 may be payable, such Indemnitee shall shall, within thirty (30) days, notify Borrower the Lessee in writing (provided that failure to so notify the Lessee within thirty (30) days shall not alter such Indemnitee's rights under this Section 12.2 except to the extent such failure materially prejudices the ability to conduct a contest of any Impositions) and shall not take any action with respect to such claim, proceeding or Impositions without the written consent of the Lessee (such consent not to be unreasonably withheld or unreasonably delayed) for sixty (60) days after the receipt of such claim within 30 days after its receipt, and shall provide Borrower such information regarding such claim as Borrower may reasonably requestnotice by the Lessee; provided, however, that in the failure case of any such claim or proceeding, if such Indemnitee shall be required by law or regulation to provide such notice shall not release Borrower from any of its obligations to indemnify under Section 6 hereof unless, and only take action prior to the extent that, end of such failure effectively precludes Borrower’s contest rights. To the extent permitted under applicable law60-day period, such Indemnitee will shall in such notice to the Lessee, so inform the Lessee, and such Indemnitee shall not make take any payments action with respect to such claim claim, proceeding or Impositions without the consent of the Lessee (such consent not to be unreasonably withheld or unreasonably delayed) for at least 30 ten (10) days after giving notice of such claim to Borrower.
(B) If requested by Borrower in writing within 30 days after its 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; further provided that the failure of the Indemnitee to give notice referred to in this sentence shall not diminish Lessor's obligations hereunder except to the extent that such failure materially prejudices Lessee's ability to contest all or part of such Claim. The Lessee shall be entitled for a period of sixty (60) days from receipt of such notice from such Indemnitee (or such shorter period as may be such Indemnitee has notified the Lessee is required by applicable law, law or regulation for such Indemnitee shallto commence such contest), to request in writing that such Indemnitee contest the imposition of such Imposition, at the expense of Borrower and subject to subparagraph (C) below, contest the validity, applicability or amount of such Taxes by, in the case of an Indemnitee-Controlled Contest, in such Indemnitee’s sole discretion or, in the case of a Borrower-Controlled Contest, in Borrower’s sole discretion, (1) resisting payment thereof if practicable, (2) not paying such Tax except under protest, (3) if protest is necessary and proper, and if payment of such Tax is made, using reasonable efforts to obtain a refund thereof, in appropriate administrative and judicial proceedings, and (4) in the case of an Indemnitee-Controlled Contest, considering in good faith any other reasonable action as Borrower may reasonably requestLessee's expense. Each Indemnitee shall consult in good faith with Borrower and Borrower’s counsel, and Borrower shall consult in good faith with such Indemnitee and its counsel in the case of a Borrower-Controlled Contest. concerning the forum in which the contest is most likely to be favorably resolved and whether such contest shall be by If (x) resisting payment such contest can be pursued in the name of the Lessee and independently from any other proceeding involving a Tax liability of such TaxIndemnitee for which the Lessee has not agreed to indemnify such Indemnitee, (y) paying such Tax under protest contest involves Impositions imposed on SPC, or (z) paying such Tax and seeking a refund or Indemnitee so requests, then the Lessee shall be permitted to control the contest of such claim (including choice of counsel), 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 repayment thereof.
(C) claims requested to be contested by the Lessee, such Indemnitee shall control the contest of such claim, acting through counsel reasonably acceptable to the Lessee. In no event shall an the Lessee be permitted to contest (or such Indemnitee be requiredrequired to contest) any claim (A) if such 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 Borrower permitted, to contest the imposition creation of any Tax Lien (other than a Permitted Lien) on the Property Interest or any part of any thereof unless the Lessee shall have posted and maintained a bond or other security satisfactory to the relevant 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 Indemnitee in its sole discretion in respect of the Impositions subject to such claim and any and all expenses for which Borrower the Lessee is obligated pursuant to this Section 6(bresponsible hereunder is reasonably foreseeable in connection with the contest of such claim, (C) unless (1) Borrower the Lessee shall have agreed to pay and shall promptly be paying pay, to such Indemnitee on request demand all reasonable costs out-of-pocket costs, losses and expenses that such Indemnitee incurs may incur in connection with contesting such claim or arising out of or relating to such contest (Impositions including legal feesall reasonable legal, accounting fees, and investigatory fees and disbursements, including those on appeal, if any); or (2) such contest is not reasonably likely to result in a material danger of the sale, seizure, forfeiture or loss of the Aircraft, or the creation of any Lien thereon other than Liens for Taxes (i) either not yet due or being contested in good faith by appropriate proceedings and (ii) for which such reserves, if any, as are required to be provided under generally accepted accounting principles have been provided by Borrower, and there is no risk of criminal penalties; (3D) if such contest shall be conducted in a manner requiring involve the payment of the claimImpositions prior to the contest, Borrower unless the Lessee shall have advanced sufficient funds, on provide to such Indemnitee an interest-free basis, advance in an amount equal to make the payment required, and shall have agreed to indemnify Impositions that the Indemnitee against any is required to pay (with no additional net after-Tax cost tax costs to such Indemnitee). In addition, for Indemnitee controlled contests and claims contested in the name of such Indemnitee, 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 Indemnitee with respect to any period for which the Lessee may be liable to pay an indemnity under this Section 12.2(b)) exceeds $20,000, (B) unless, if requested by such Indemnitee, the Lessee shall have provided to such Indemnitee of such advance; (4) if requested by the Indemnitee in writing, such Indemnitee shall have received an opinion of independent Tax counsel selected by Borrower 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 furnished at Borrower’s sole expense reasonably acceptable to the effect Lessee) that a Realistic Possibility of Success reasonable basis exists for contesting to contest such claim (or, in the case of an appeal of an adverse judicial determination, a written an opinion from of such independent Tax counsel to the effect that there is substantial authority for the position asserted in such appeal), and (C) Lessee shall have acknowledged in writing to the Indemnitee its obligation to pay the costs and expenses thereof and to indemnify such Indemnitee pursuant to this Section 12.2 for the Impositions subject to the proposed contest, if such contest is unsuccessful. In no event shall an Indemnitee be required to appeal an adverse judicial determination to the United States Supreme Court. In addition, an Indemnitee shall not be required to contest any claim in its name (or that of an Affiliate) if the subject matter thereof shall be of a continuing nature and shall have previously been decided adversely by a court of competent jurisdiction against such Indemnitee pursuant to the contest provisions of this Section 12.2(b), unless there shall have been a change in law (or interpretation thereof) and the Indemnitee shall have received, at the Lessee's expense, an opinion of independent tax counsel selected by the Lessee and reasonably acceptable to the Indemnitee stating that as a result of such change in law (or interpretation thereof), it is more likely than not that the Indemnitee will prevail in such adverse judicial determination will 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 Impositions but the decisions regarding what actions to be reversed taken shall be made by the controlling party in its sole judgment. 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 substantially modified); (5appropriate excerpts from) Borrower shall have delivered 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 a written acknowledgment of Borrower’s obligation 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 indemnify such Indemnitee participate in any action, suit or proceeding to the extent that permitted by this Section 12.2(b). Notwithstanding anything in this Section 12.2(b) to the contest contrary, no Indemnitee shall enter into any settlement or other compromise or fail to appeal an adverse ruling with respect to any claim which is not successful; provided, however, that Borrower will not entitled to be bound by its acknowledgment of liability if the contest is resolved on a clear and unambiguous basis showing no such liability indemnified under this Section 6(b12.2 (and with respect to which contest is required under this Section 12.2(b)) without the prior written consent of the Lessee, unless such Indemnitee waives its right to be indemnified under this Section 12.2 with respect to such Tax; (6) if a Specified Default or Event claim. No settlement of Default shall have occurred and any contest may be continuing, Borrower shall have provided security for its obligation hereunder satisfactory to the Indemnitee by placing in escrow sufficient funds to cover any such contested Tax and the reasonably expected expenses of such contest on an After-Tax Basis, or otherwise providing satisfactory provisions for payment of such amounts determined made by the Indemnitee in its sole discretion; (7) the aggregate amount of all indemnity payments that Borrower may be required to make to such Indemnitee with respect to such claim (or similar or related claims) is at least $60,000; and (8) the claim is not for a Tax the imposition of which has been previously contested by, or at the request of, Borrower hereunder, and such previous contest (including all allowable appeals) was decided adversely to Borrower, unless Borrower has delivered an opinion of independent Tax counsel selected by Borrower and reasonably acceptable to the Indemnitee to the effect that, on the basis of (i) a change in applicable law, or (ii) a difference in the underlying facts, there is currently a Realistic Possibility of Success for contesting such claim.
(D) If any Indemnitee shall obtain a refund of all or any part of any Tax paid by Borrower, such Indemnitee shall pay Borrower, but not before Borrower shall have made all payments theretofore due to such Indemnitee pursuant to this Section 6(b) and any other payments theretofore due such Indemnitee under any of the Operative Documents, an amount equal to the amount of such refund (net of any Taxes imposed thereon), including interest received and attributable thereto (net of any Taxes imposed thereon) plus, if Borrower has paid an amount pursuant to the first sentence of Section 6(b)(iii)(A), any net Tax benefit (or minus any net Tax detriment) realized by such Indemnitee as a result of any refund received, and payment made, by such Indemnitee pursuant to this sentence; provided that the Indemnitee shall not be obligated to pay an amount under the preceding sentence to the extent that such amount would exceed the amount of such Taxes paid, reimbursed or advanced by Borrower to such Indemnitee (other than the cost of the contest thereof); provided, further, that any amount not paid to Borrower pursuant to the foregoing limitation shall be carried forward to reduce pro tanto any future payments that Borrower may be required to make to such Indemnitee pursuant to this Section 6(b). If any Indemnitee shall have paid Borrower any refund of all or part of any Tax paid by Borrower and it is subsequently determined that such Indemnitee was not entitled to the refund, such determination shall be treated as the imposition of a Tax for which Borrower is obligated to indemnify such Indemnitee pursuant to the provisions of this Section 6(b) without regard to the exclusions set forth in Section 6(b)(ii) (other than subparagraphs (4), (11) and (12) thereof). Provided no Specified Default or Event of Default has occurred and is continuing, an Indemnitee shall not settle any such claim or contest pursuant to this provision Lessee without the Indemnitee's written consent of Borrowerconsent, which consent shall not be unreasonably withheld, conditioned or delayed; provided, that however, such consent shall not be necessary if the settlement does not involve (i) the admission by the Indemnitee of guilt, complicity or culpability or (ii) the incurrence of any payment obligation or other civil or any criminal liability on the part of such Indemnitee. Notwithstanding anything contained herein to the contrary, an Indemnitee may settle at will not be required to contest (and the Lessee shall not be permitted to contest) a claim with respect to the imposition of any time without the consent of Borrower Tax if the such Indemnitee waives shall waive its right to indemnification under this Section 12.2 with respect to such claim (by written notice to Borrower) the payment by Borrower of an indemnity in respect of such issue and any related issue claim with respect to such year or any other taxable year the contest of which is effectively foreclosed by the settlement materially adversely affected as a result of such issue, including any payment arising from such issue in subsequent years or which by reason of the fact that such issue is of a continuing nature, and promptly pays to Borrower any Tax previously paid or any interest-free loan advanced by Borrower (other than expenses of such contests) with respect to such issuewaiver).
(E) Nothing contained in this Section 6(b)(iv) shall require any Indemnitee to contest, or permit Borrower to contest in the name of such Indemnitee, a claim that such Indemnitee would otherwise be required to contest pursuant to this Section 6(b)(iv) if such Indemnitee shall waive payment by Borrower of any amount that might otherwise be payable by Borrower under this Section 6(b) in connection with such claim (other than the costs of contest previously incurred), nor shall any Indemnitee be required to pursue any appeal to the United States Supreme Court.
Appears in 1 contract
Contests. (A) If a written any claim shall be made against and received by any Tax Indemnitee or if any proceeding shall be commenced against any Tax Indemnitee (including a written notice of such proceeding) for any Tax for Imposition as to which Borrower is obligated to indemnify the Lessee may have an indemnity obligation pursuant to this Section 6(b)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, such Tax Indemnitee shall promptly (and in any event, within 30 days) notify Borrower the Lessee in writing of such claim (provided that failure to so notify the Lessee within 30 days after its receipt, shall not alter such Tax Indemnitee's rights under this Section 26.5 except to the extent such failure precludes or materially adversely affects the ability to conduct a contest of any indemnified Taxes) and shall provide Borrower not take any action with respect to such information regarding claim, proceeding or Imposition without the written consent of the Lessee (such claim as Borrower may reasonably requestconsent 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 failure case of any such claim or proceeding, if such Tax Indemnitee shall be required by law or regulation to provide 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 release Borrower from take any of its obligations to indemnify under Section 6 hereof unless, and only to the extent that, such failure effectively precludes Borrower’s contest rights. To the extent permitted under applicable law, such Indemnitee will not make any payments action with respect to such claim claim, proceeding or Imposition without the consent of the Lessee (such consent not to be unreasonably withheld or unreasonably delayed) for at least 30 10 days after giving notice of such claim to Borrower.
(B) If requested by Borrower in writing within 30 days after its the receipt of such notice by the 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 Lessee shall be entitled for a period of 30 days from receipt of such notice from the Tax Indemnitee (or such shorter period as may be the Tax Indemnitee has notified the Lessee is required by applicable lawlaw or regulation for the Tax Indemnitee to commence such contest), to request in writing that such Tax Indemnitee shallcontest the imposition of such Tax, at the expense Lessee's expense. If (x) such contest can be pursued in the name of Borrower the Lessee and subject to subparagraph (C) below, contest the validity, applicability or amount independently from any other proceeding involving a Tax liability of such Taxes byTax Indemnitee for which the Lessee has not agreed to indemnify such Tax Indemnitee, (y) such contest must be pursued in the case name of an the Tax Indemnitee-Controlled Contest, in but can be pursued independently from any other proceeding involving a Tax liability of such Indemnitee’s sole discretion orTax Indemnitee for which the Lessee has not agreed to indemnify such Tax Indemnitee or (z) 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 Borrower-Controlled Contestcontest described in clause (y), in Borrower’s sole discretion, (1) resisting payment thereof if practicable, (2) not paying such the Tax except under protest, (3) if protest is necessary and proper, and if payment of such Tax is made, using reasonable efforts to obtain a refund thereof, in appropriate administrative and judicial proceedings, and (4) in the case of an Indemnitee-Controlled Contest, considering Indemnitee determines in good faith any other reasonable action as Borrower that such contest by the Lessee could have a material adverse impact on the business or operations of the Tax Indemnitee and provides a written explanation to the Lessee of such determination, the Tax Indemnitee may reasonably request. Each Indemnitee shall consult in good faith with Borrower and Borrower’s counselelect to control or reassert control of the contest, and Borrower shall consult in good faith with such Indemnitee and its counsel in provided, that by taking control of the case of a Borrower-Controlled Contest. concerning contest, Lessee acknowledges that it is responsible for the forum in which the contest is most likely Imposition ultimately determined to be favorably resolved due by reason of such claim, and whether such contest shall be by provided, further, that in determining the application of clauses (x) resisting payment of such Tax, and (y) paying this sentence, 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, the Tax Indemnitee shall control the contest of such Tax under protest or (z) paying such Tax and seeking a refund or other repayment thereof.
(C) claim, acting through counsel reasonably acceptable to the Lessee. In no event shall an the Lessee be permitted to contest (or the Tax Indemnitee be requiredrequired 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 Borrower permitted, to contest the imposition 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 Borrower the Lessee is obligated pursuant to this Section 6(bresponsible hereunder reasonably foreseeable in connection with the contest of such claim, (C) unless (1) Borrower the Lessee shall have agreed to pay and shall promptly be paying on request pay, to such Tax Indemnitee within ten (10) Business Days after demand all reasonable costs out-of-pocket costs, losses and expenses that such Tax Indemnitee incurs may incur in connection with contesting such claim or arising out of or relating to such contest (Imposition including legal feesall reasonable legal, accounting fees, and investigatory fees and disbursements, including those on appeal, if any); or (2) such contest is not reasonably likely to result in a material danger of the sale, seizure, forfeiture or loss of the Aircraft, or the creation of any Lien thereon other than Liens for Taxes (i) either not yet due or being contested in good faith by appropriate proceedings and (ii) for which such reserves, if any, as are required to be provided under generally accepted accounting principles have been provided by Borrower, and there is no risk of criminal penalties; (3D) if such contest shall be conducted in a manner requiring involve the payment of the claimTax prior to the contest, Borrower unless the Lessee shall have advanced sufficient funds, on provide to the Tax Indemnitee an interest-free basis, advance in an amount equal to make the payment required, and shall have agreed to indemnify Imposition that the Indemnitee against any is required to pay (with no additional net after-Tax cost 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: (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 advance; Tax Indemnitee for which the Lessee may be liable to pay an indemnity under this Section 26.5(b)) exceeds $500,000 and (4B) unless, if requested by the Indemnitee in writingTax Indemnitee, such Indemnitee the Lessee shall have received provided to the Tax Indemnitee an opinion of independent Tax counsel selected by Borrower and reasonably acceptable to such Indemnitee and furnished at Borrower’s sole expense to the effect that a Realistic Possibility of Success exists for contesting such claim Lessee (orwhich may be in-house counsel) (except, in the case of an appeal of an adverse judicial determination, a written opinion from such independent Tax counsel to the effect that it is more likely than not that such adverse judicial determination will income taxes indemnified hereunder which shall be reversed or substantially modified); (5) Borrower shall have delivered to such Indemnitee a written acknowledgment of Borrower’s obligation to indemnify such Indemnitee to the extent that the contest is not successful; provided, however, that Borrower will not be bound by its acknowledgment of liability if the contest is resolved on a clear and unambiguous basis showing no such liability under this Section 6(b) with respect to such Tax; (6) if a Specified Default or Event of Default shall have occurred and be continuing, Borrower shall have provided security for its obligation hereunder satisfactory to the Indemnitee by placing in escrow sufficient funds to cover any such contested Tax and the reasonably expected expenses of such contest on an After-Tax Basis, or otherwise providing satisfactory provisions for payment of such amounts determined by the Indemnitee in its sole discretion; (7) the aggregate amount of all indemnity payments that Borrower may be required to make to such Indemnitee with respect to such claim (or similar or related claims) is at least $60,000; and (8) the claim is not for a Tax the imposition of which has been previously contested by, or at the request of, Borrower hereunder, and such previous contest (including all allowable appeals) was decided adversely to Borrower, unless Borrower has delivered an opinion of independent Tax tax counsel selected by Borrower the Tax Indemnitee and reasonably acceptable to the Indemnitee Lessee) that a reasonable basis exists to the effect that, on the basis of (i) a change in applicable law, or (ii) a difference in the underlying facts, there is currently a Realistic Possibility of Success for contesting contest such claim.
(D) If any Indemnitee . In no event shall obtain a refund of all or any part of any Tax paid by Borrower, such Indemnitee shall pay Borrower, but not before Borrower shall have made all payments theretofore due to such Indemnitee pursuant to this Section 6(b) and any other payments theretofore due such Indemnitee under any of the Operative Documents, an amount equal to the amount of such refund (net of any Taxes imposed thereon), including interest received and attributable thereto (net of any Taxes imposed thereon) plus, if Borrower has paid an amount pursuant to the first sentence of Section 6(b)(iii)(A), any net Tax benefit (or minus any net Tax detriment) realized by such Indemnitee as a result of any refund received, and payment made, by such Indemnitee pursuant to this sentence; provided that the Indemnitee shall not be obligated to pay an amount under the preceding sentence to the extent that such amount would exceed the amount of such Taxes paid, reimbursed or advanced by Borrower to such Indemnitee (other than the cost of the contest thereof); provided, further, that any amount not paid to Borrower pursuant to the foregoing limitation shall be carried forward to reduce pro tanto any future payments that Borrower may be required to make to such Indemnitee pursuant to this Section 6(b). If any Indemnitee shall have paid Borrower any refund of all or part of any Tax paid by Borrower and it is subsequently determined that such Indemnitee was not entitled to the refund, such determination shall be treated as the imposition of a Tax for which Borrower is obligated to indemnify such Indemnitee pursuant to the provisions of this Section 6(b) without regard to the exclusions set forth in Section 6(b)(ii) (other than subparagraphs (4), (11) and (12) thereof). Provided no Specified Default or Event of Default has occurred and is continuing, an Indemnitee shall not settle any such claim or contest pursuant to this provision without the written consent of Borrower, which consent shall not be unreasonably withheld, conditioned or delayed; provided, that an Indemnitee may settle at any time without the consent of Borrower if the Indemnitee waives (by written notice to Borrower) the payment by Borrower of an indemnity in respect of such issue and any related issue the contest of which is effectively foreclosed by the settlement of such issue, including any payment arising from such issue in subsequent years or which by reason of the fact that such issue is of a continuing nature, and promptly pays to Borrower any Tax previously paid or any interest-free loan advanced by Borrower (other than expenses of such contests) with respect to such issue.
(E) Nothing contained in this Section 6(b)(iv) shall require any Indemnitee to contest, or permit Borrower to contest in the name of such Indemnitee, a claim that such Indemnitee would otherwise be required to contest pursuant to this Section 6(b)(iv) if such Indemnitee shall waive payment by Borrower of any amount that might otherwise be payable by Borrower under this Section 6(b) in connection with such claim (other than the costs of contest previously incurred), nor shall any Indemnitee be required to pursue any 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, 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 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 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 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 prior written consent of the Lessee, unless such Tax Indemnitee waives its right to be indemnified under this Section 26.5 with respect to such claim. Notwithstanding anything contained herein 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 if such Tax Indemnitee shall waive its right to indemnification under this
Appears in 1 contract
Contests. (A) If Subject to the rights of insurers under policies of -------- insurance maintained pursuant to Section 16 of the Charter, the Charterer shall have the right, at its sole cost and expense, to investigate, and the right in its sole discretion to defend or compromise, any Claim for which indemnification is sought under this Section 13.1, and the Indemnitee shall cooperate, at the Charterer's expense, with all reasonable requests of the Charterer in connection therewith. The Charterer will provide the Indemnitee with such information not within the control of such Indemnitee, as is in the Charterer's control or is reasonably available to the Charterer, which such Indemnitee may reasonably request and shall otherwise cooperate with such Indemnitee so as to enable such Indemnitee to fulfill its obligations under this Section 13.
1. Where the Charterer or the insurers under a written policy of insurance maintained by the Charterer undertake the defense of an Indemnitee with respect to a Claim, no additional legal fees or expenses of such Indemnitee in connection with the defense of such claim shall be made against and received by any Indemnitee for any Tax for which Borrower is obligated to indemnify pursuant to this Section 6(b), indemnified hereunder unless such Indemnitee shall notify Borrower in writing fees or expenses were incurred at the request of the Charterer or such claim within 30 days after its receipt, and shall provide Borrower such information regarding such claim as Borrower may reasonably requestinsurers; provided, however, that if (i) in the failure written opinion of counsel to provide such notice -------- ------- Indemnitee an actual or potential material conflict of interest exists where it is advisable for such Indemnitee to be represented by separate counsel or (ii) such Indemnitee has been indicted or otherwise charged in a criminal complaint in connection with a Claim not excluded by Section 13.1(a) and such Indemnitee informs the Charterer that such Indemnitee desires to be represented by separate counsel, the reasonable fees and expenses of such separate counsel shall not release Borrower from any of its obligations to indemnify under Section 6 hereof unless, and only be borne by the Charterer. Subject to the extent thatrequirements of any policy of insurance, an Indemnitee may participate at its own expense in any judicial proceeding controlled by the Charterer pursuant to the preceding provisions; provided that such failure effectively precludes Borrower’s contest rights. To the extent permitted under applicable law, such Indemnitee will not make any payments with respect to such claim for at least 30 days after giving notice of such claim to Borrower.
(B) If requested by Borrower in writing within 30 days after its receipt of such notice or such shorter period as may be required by applicable law, such Indemnitee shall, at the expense of Borrower and subject to subparagraph (C) below, contest the validity, applicability or amount of such Taxes byparty's participation -------- does not, in the case reasonable opinion of an Indemnitee-Controlled Contest, in the independent counsel appointed by the Charterer or its insurers to conduct such Indemnitee’s sole discretion or, in the case of a Borrower-Controlled Contest, in Borrower’s sole discretion, (1) resisting payment thereof if practicable, (2) not paying such Tax except under protest, (3) if protest is necessary and proper, and if payment of such Tax is made, using reasonable efforts to obtain a refund thereof, in appropriate administrative and judicial proceedings, and (4) in the case of an Indemnitee-Controlled Contest, considering in good faith any other reasonable action as Borrower may reasonably request. Each Indemnitee shall consult in good faith with Borrower and Borrower’s counsel, and Borrower shall consult in good faith significantly interfere with such Indemnitee control; and its counsel such participation shall not constitute a waiver of the right to receive the indemnification provided in this Section 13.1. Notwithstanding anything to the case of a Borrower-Controlled Contest. concerning the forum in which the contest is most likely to be favorably resolved and whether such contest shall be by contrary contained herein, (x) resisting payment of such Tax, (y) paying such Tax the Charterer shall not under protest or (z) paying such Tax and seeking a refund or other repayment thereof.
(C) In no event shall an Indemnitee any circumstances be required, or Borrower permitted, to contest liable for the imposition of any Tax for which Borrower is obligated pursuant to this Section 6(b) unless (1) Borrower shall have agreed to pay and shall promptly be paying on request all reasonable costs fees and expenses that such Indemnitee incurs in contesting such claim or arising out of or relating to such contest (including legal fees, accounting fees, and disbursements, including those on appeal, if any); (2) such contest is not reasonably likely to result in a material danger more than one counsel for each of the sale, seizure, forfeiture or loss of the Aircraft, or the creation of any Lien thereon other than Liens for Taxes (i) either not yet due or being contested in good faith by appropriate proceedings the Owner Participant, the Owner Trustees and the Owner Trust (and their respective successors and permitted assigns, agents and servants) and (ii) for which such reservesthe Loan Participants and the Indenture Trustee (and their respective successors and permitted assigns, if any, as are required to be provided under generally accepted accounting principles have been provided by Borroweragents and servants), and there is no risk (y) during the continuance of criminal penalties; (3) if such contest shall be conducted in a manner requiring the payment of the claim, Borrower shall have advanced sufficient funds, on an interest-free basis, to make the payment required, and shall have agreed to indemnify the Indemnitee against any additional net after-Tax cost to such Indemnitee of such advance; (4) if requested by the Indemnitee in writing, such Indemnitee shall have received an opinion of independent Tax counsel selected by Borrower and reasonably acceptable to such Indemnitee and furnished at Borrower’s sole expense to the effect that a Realistic Possibility of Success exists for contesting such claim (or, in the case of an appeal of an adverse judicial determination, a written opinion from such independent Tax counsel to the effect that it is more likely than not that such adverse judicial determination will be reversed or substantially modified); (5) Borrower shall have delivered to such Indemnitee a written acknowledgment of Borrower’s obligation to indemnify such Indemnitee to the extent that the contest is not successful; provided, however, that Borrower will not be bound by its acknowledgment of liability if the contest is resolved on a clear and unambiguous basis showing no such liability under this Section 6(b) with respect to such Tax; (6) if a Specified Default or specified Charter Event of Default shall have occurred and be continuingDefault, Borrower shall have provided security for its obligation hereunder satisfactory to the Indemnitee by placing in escrow sufficient funds to cover any such contested Tax and the reasonably expected expenses of such contest on an After-Tax Basis, or otherwise providing satisfactory provisions for payment of such amounts determined by the Indemnitee in its sole discretion; (7) the aggregate amount of all indemnity payments that Borrower may be required to make to such Indemnitee with respect to such claim (or similar or related claims) is at least $60,000; and (8) the claim is not for a Tax the imposition of which has been previously contested by, or at the request of, Borrower hereunder, and such previous contest (including all allowable appeals) was decided adversely to Borrower, unless Borrower has delivered an opinion of independent Tax counsel selected by Borrower and reasonably acceptable to the Indemnitee to the effect that, on the basis of (i) a change in applicable law, or (ii) a difference in the underlying facts, there is currently a Realistic Possibility of Success for contesting such claim.
(D) If any Indemnitee shall obtain a refund of all or any part of any Tax paid by Borrower, such Indemnitee shall pay Borrower, but not before Borrower shall have made all payments theretofore due to such Indemnitee pursuant to this Section 6(b) and any other payments theretofore due such Indemnitee under any of the Operative Documents, an amount equal to the amount of such refund (net of any Taxes imposed thereon), including interest received and attributable thereto (net of any Taxes imposed thereon) plus, if Borrower has paid an amount pursuant to the first sentence of Section 6(b)(iii)(A), any net Tax benefit (or minus any net Tax detriment) realized by such Indemnitee as a result of any refund received, and payment made, by such Indemnitee pursuant to this sentence; provided that the Indemnitee Charterer ------------------------ shall not be obligated to pay an amount under the preceding sentence to the extent that such amount would exceed the amount of such Taxes paid, reimbursed or advanced by Borrower to such Indemnitee (other than the cost of the contest thereof); provided, further, that compromise any amount not paid to Borrower pursuant to the foregoing limitation shall be carried forward to reduce pro tanto any future payments that Borrower may be required to make to such Indemnitee pursuant to this Section 6(b). If any Indemnitee shall have paid Borrower any refund of all or part of any Tax paid by Borrower and it is subsequently determined that such Indemnitee was not entitled to the refund, such determination shall be treated as the imposition of a Tax for which Borrower is obligated to indemnify such Indemnitee pursuant to the provisions of this Section 6(b) without regard to the exclusions set forth in Section 6(b)(ii) (other than subparagraphs (4), (11) and (12) thereof). Provided no Specified Default or Event of Default has occurred and is continuing, an Indemnitee shall not settle any such claim or contest pursuant to this provision without the written consent of Borrower, which consent shall not be unreasonably withheld, conditioned or delayed; provided, that an Indemnitee may settle at any time Claim without the consent of Borrower if the Indemnitee waives (by written notice to Borrower) the payment by Borrower of an indemnity in respect of such issue and any related issue the contest of which is effectively foreclosed by the settlement of such issue, including any payment arising from such issue in subsequent years or which by reason of the fact that such issue is of a continuing nature, and promptly pays to Borrower any Tax previously paid or any interest-free loan advanced by Borrower (other than expenses of such contests) with respect to such issue.
(E) Nothing contained in this Section 6(b)(iv) shall require any Indemnitee to contest, or permit Borrower to contest in the name of such applicable Indemnitee, a claim that such Indemnitee would otherwise consent not to be required to contest pursuant to this Section 6(b)(iv) if such Indemnitee shall waive payment by Borrower of any amount that might otherwise be payable by Borrower under this Section 6(b) in connection with such claim (other than the costs of contest previously incurred), nor shall any Indemnitee be required to pursue any appeal to the United States Supreme Courtunreasonably withheld.
Appears in 1 contract
Sources: Participation Agreement (Mobil Corp)
Contests. (Aa) If Each Party will promptly notify the other Party in writing upon receipt by such Party (or any of its Affiliates) of notice of any pending or threatened audit, examination or proceeding by a written claim shall Governmental Authority in respect of which an indemnity may be made against and received by any Indemnitee for any Tax for which Borrower is obligated to indemnify sought pursuant to this Section 6(bArticle VI (a “Tax Claim”), such Indemnitee shall notify Borrower in writing of such claim within 30 days after its receipt, and shall provide Borrower such information regarding such claim as Borrower may reasonably request; provided, however, that the failure of such party to provide such give prompt notice shall not release Borrower from relieve the other party of any of its obligations to indemnify under Section 6 hereof unless, and only this Article VI except to the extent that, such failure effectively precludes Borrower’s contest rights. To the extent permitted under applicable law, such Indemnitee will not make any payments with respect to such claim for at least 30 days after giving notice of such claim to Borrower.
(B) If requested by Borrower in writing within 30 days after its receipt of such notice or such shorter period as may be required by applicable law, such Indemnitee shall, at the expense of Borrower and subject to subparagraph (C) below, contest the validity, applicability or amount of such Taxes by, in the case of an Indemnitee-Controlled Contest, in such Indemnitee’s sole discretion or, in the case of a Borrower-Controlled Contest, in Borrower’s sole discretion, (1) resisting payment thereof if practicable, (2) not paying such Tax except under protest, (3) if protest is necessary and proper, and if payment of such Tax is made, using reasonable efforts to obtain a refund thereof, in appropriate administrative and judicial proceedings, and (4) in the case of an Indemnitee-Controlled Contest, considering in good faith any other reasonable action as Borrower may reasonably request. Each Indemnitee shall consult in good faith with Borrower and Borrower’s counsel, and Borrower shall consult in good faith with such Indemnitee and its counsel in the case of a Borrower-Controlled Contest. concerning the forum in which the contest is most likely to be favorably resolved and whether such contest shall be by (x) resisting payment of such Tax, (y) paying such Tax under protest or (z) paying such Tax and seeking a refund or other repayment thereof.
(C) In no event shall an Indemnitee be required, or Borrower permitted, to contest the imposition of any Tax for which Borrower is obligated pursuant to this Section 6(b) unless (1) Borrower shall have agreed to pay and shall promptly be paying on request all reasonable costs and expenses that such Indemnitee incurs in contesting such claim or arising out of or relating to such contest (including legal fees, accounting fees, and disbursements, including those on appeal, if any); (2) such contest is not reasonably likely to result in a material danger of the sale, seizure, forfeiture or loss of the Aircraft, or the creation of any Lien thereon other than Liens for Taxes (i) either not yet due or being contested in good faith by appropriate proceedings and (ii) for which such reserves, if any, as are required to be provided under generally accepted accounting principles have been provided by Borrower, and there is no risk of criminal penalties; (3) if such contest shall be conducted in a manner requiring the payment of the claim, Borrower shall have advanced sufficient funds, on an interest-free basis, to make the payment required, and shall have agreed to indemnify the Indemnitee against any additional net after-Tax cost to such Indemnitee of such advance; (4) if requested by the Indemnitee in writing, such Indemnitee shall have received an opinion of independent Tax counsel selected by Borrower and reasonably acceptable to such Indemnitee and furnished at Borrower’s sole expense to the effect that a Realistic Possibility of Success exists for contesting such claim (or, in the case of an appeal of an adverse judicial determination, a written opinion from such independent Tax counsel to the effect that it is more likely than not that such adverse judicial determination will be reversed or substantially modified); (5) Borrower shall have delivered to such Indemnitee a written acknowledgment of Borrower’s obligation to indemnify such Indemnitee to the extent that the contest is not successful; provided, however, that Borrower will not be bound by its acknowledgment of liability if the contest is resolved on a clear and unambiguous basis showing no such liability under this Section 6(b) with respect to such Tax; (6) if a Specified Default or Event of Default shall have occurred and be continuing, Borrower shall have provided security for its obligation hereunder satisfactory to the Indemnitee by placing in escrow sufficient funds to cover any such contested Tax and the reasonably expected expenses of such contest on an After-Tax Basis, or otherwise providing satisfactory provisions for payment of such amounts determined by the Indemnitee in its sole discretion; (7) the aggregate amount of all indemnity payments that Borrower may be required to make to such Indemnitee with respect to such claim (or similar or related claims) is at least $60,000; and (8) the claim is not for a Tax the imposition of which has been previously contested by, or at the request of, Borrower hereunder, and such previous contest (including all allowable appeals) was decided adversely to Borrower, unless Borrower has delivered an opinion of independent Tax counsel selected by Borrower and reasonably acceptable to the Indemnitee to the effect that, on the basis of (i) a change in applicable law, or (ii) a difference in the underlying facts, there is currently a Realistic Possibility of Success for contesting such claim.
(D) If any Indemnitee shall obtain a refund of all or any part of any Tax paid by Borrower, such Indemnitee shall pay Borrower, but not before Borrower shall have made all payments theretofore due to such Indemnitee pursuant to this Section 6(b) and any other payments theretofore due such Indemnitee under any of the Operative Documents, an amount equal to the amount of such refund (net of any Taxes imposed thereon), including interest received and attributable thereto (net of any Taxes imposed thereon) plus, if Borrower has paid an amount pursuant to the first sentence of Section 6(b)(iii)(A), any net Tax benefit (or minus any net Tax detriment) realized by such Indemnitee party can demonstrate actual prejudice as a result of such failure.
(b) Seller (or Affiliate thereof) shall control any refund received, Tax Claim related to Consolidated Returns and payment made, by such Indemnitee pursuant Taxes of the Company Group to this sentence; provided that the Indemnitee be reported on or related to a Consolidated Return. Seller shall not be obligated to pay an amount under the preceding sentence keep Buyer fully and timely informed with respect to the extent that commencement, status and nature of any such amount would exceed the amount of such Tax Claim related to Taxes paid, reimbursed or advanced by Borrower to such Indemnitee (other than the cost of the contest thereof); providedCompany Group. Seller shall, furtherin good faith, that any amount not paid to Borrower pursuant to the foregoing limitation shall be carried forward to reduce pro tanto any future payments that Borrower may be required allow Buyer to make comments to Seller regarding the conduct of or positions taken in any such Indemnitee pursuant to this Section 6(b)proceeding. If any Indemnitee Buyer shall have paid Borrower the right to consent prior to any refund of all settlement with respect to (or part of any Tax paid by Borrower and it is subsequently determined that such Indemnitee was not entitled to the refund, such determination shall be treated as the imposition of a Tax for which Borrower is obligated to indemnify such Indemnitee pursuant to the provisions of this Section 6(babandonment of) without regard to the exclusions set forth in Section 6(b)(ii) (other than subparagraphs (4), (11) and (12) thereof). Provided no Specified Default or Event of Default has occurred and is continuing, an Indemnitee shall not settle any such claim or contest pursuant Tax Claim related to this provision without Taxes of the written Company Group (provided such consent of Borrower, which consent shall cannot be unreasonably withheld, conditioned or delayed; provided, that an Indemnitee may settle at ).
(c) Buyer (or Affiliate thereof) shall control any time without the consent of Borrower if the Indemnitee waives (by written notice Tax Claim related to Borrower) the payment by Borrower of an indemnity in respect of such issue and any related issue the contest of which is effectively foreclosed by the settlement of such issue, including any payment arising from such issue in subsequent years or which by reason Taxes of the fact that such issue is of a continuing nature, and promptly pays to Borrower any Tax previously paid or any interest-free loan advanced by Borrower (other than expenses of such contests) Company Group with respect to a Pre-Closing Tax Period and Straddle Period other than Tax Claims subject to Section 6.07(b). Buyer shall keep Seller fully and timely informed with respect to the commencement, status and nature of any such issue.
Tax Claim. Buyer shall, in good faith, allow Seller to make comments to Buyer regarding the conduct of or positions taken in any such proceeding. Seller shall have the right to consent prior to any settlement with respect to (Eor abandonment of) Nothing contained in this Section 6(b)(iv) shall require any Indemnitee to contestsuch Tax Claim (provided such consent cannot be unreasonably withheld, conditioned, or permit Borrower to contest in the name of such Indemnitee, a claim that such Indemnitee would otherwise be required to contest pursuant to this Section 6(b)(iv) if such Indemnitee shall waive payment by Borrower of any amount that might otherwise be payable by Borrower under this Section 6(b) in connection with such claim (other than the costs of contest previously incurreddelayed), nor shall any Indemnitee be required to pursue any appeal to the United States Supreme Court.
Appears in 1 contract
Contests. (A) If a written any claim shall be made against and received by any Indemnitee or if any -------- proceeding shall be commenced against any Indemnitee (including a written notice of such proceeding) for any Tax for Imposition as to which Borrower is obligated to indemnify the Lessee may have an indemnity obligation pursuant to this Section 6(b)24.4, or if any Indemnitee shall ------------ determine that any Imposition to which the Lessee may have an indemnity obligation pursuant to this Section 24.4 may be payable, such Indemnitee shall ------------ promptly (and in any event, within 30 days) notify Borrower the Lessee in writing of such claim (provided that failure to so notify the Lessee within 30 days after its receipt, shall not alter --------- such Indemnitee's rights under this Section 24.4 except to the extent such ------------ failure precludes or materially adversely affects the ability to conduct a contest of any indemnified Taxes) and shall provide Borrower not take any action with respect to such information regarding claim, proceeding or Imposition without the written consent of the Lessee (such claim as Borrower may reasonably requestconsent 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 failure case of any such claim or proceeding, if such Indemnitee shall be required by law or regulation to provide such notice shall not release Borrower from any of its obligations to indemnify under Section 6 hereof unless, and only take action prior to the extent that, end of such failure effectively precludes Borrower’s contest rights. To the extent permitted under applicable law30-day period, such Indemnitee will shall in such notice to the Lessee, so inform the Lessee, and such Indemnitee shall not make take any payments action with respect to such claim claim, proceeding or Imposition without the consent of the Lessee (such consent not to be unreasonably withheld or unreasonably delayed) for at least 30 10 days after giving notice of such claim to Borrower.
(B) If requested by Borrower in writing within 30 days after its 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 may be the Indemnitee has notified the Lessee is required by applicable lawlaw or regulation for the Indemnitee to commence such contest), to request in writing that such Indemnitee shallcontest the imposition of such Tax, at the expense Lessee's expense. If (x) such contest can be pursued in the name of Borrower the Lessee and subject to subparagraph (C) below, contest the validity, applicability or amount independently from any other proceeding involving a Tax liability of such Taxes byIndemnitee for which the Lessee has not agreed to indemnify such Indemnitee, (y) such contest must be pursued in the case name of an the Indemnitee-Controlled Contest, in but can be pursued independently from any other proceeding involving a Tax liability of such Indemnitee’s sole discretion orIndemnitee for which the Lessee has not agreed to indemnify such Indemnitee or (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 Borrower-Controlled Contestcontest described in clause (y), in Borrower’s sole discretion, (1) resisting payment thereof if practicable, (2) not paying such Tax except under protest, (3) if protest is necessary and proper, and if payment of such Tax is made, using reasonable efforts to obtain a refund thereof, in appropriate administrative and judicial proceedings, and (4) in the case of an Indemnitee-Controlled Contest, considering Indemnitee ---------- determines in good faith any other reasonable action as Borrower that such contest by the Lessee could have a material adverse impact on the business or operations of the Indemnitee and provides a written explanation to the Lessee of such determination, the Indemnitee may reasonably request. Each Indemnitee shall consult in good faith with Borrower and Borrower’s counselelect to control or reassert control of the contest, and Borrower shall consult in good faith with such Indemnitee and its counsel in provided, that by -------- taking control of the case of a Borrower-Controlled Contest. concerning contest, Lessee acknowledges that it is responsible for the forum in which the contest is most likely Imposition ultimately determined to be favorably resolved due by reason of such claim, and whether such contest shall be by provided, further, that in determining the application of clauses (x) resisting payment of such Tax, and (y) paying of -------- ------- ----------- --- the preceding sentence, 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 of the former. In all other claims requested to be contested by the Lessee, the Indemnitee shall control the contest of such Tax under protest or (z) paying such Tax and seeking a refund or other repayment thereof.
(C) claim, acting through counsel reasonably acceptable to the Lessee. In no event shall an the Lessee be permitted to contest (or the Indemnitee be requiredrequired to contest) any claim, (A) if such 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 Borrower permitted, to contest the imposition creation of any Tax Lien (other than a Permitted 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 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 satisfactory to the relevant Indemnitee in respect of the Taxes subject to such claim and any and all expenses for which Borrower the Lessee is obligated pursuant to this Section 6(bresponsible hereunder reasonably foreseeable in connection with the contest of such claim, (C) unless (1) Borrower the Lessee shall have agreed to pay and shall promptly be paying pay, to such Indemnitee on request demand all reasonable costs out-of-pocket costs, losses and expenses that such Indemnitee incurs may incur in connection with contesting such claim or arising out of or relating to such contest (Imposition including legal feesall reasonable legal, accounting fees, and investigatory fees and disbursements, including those on appeal, if any); or (2) such contest is not reasonably likely to result in a material danger of the sale, seizure, forfeiture or loss of the Aircraft, or the creation of any Lien thereon other than Liens for Taxes (i) either not yet due or being contested in good faith by appropriate proceedings and (ii) for which such reserves, if any, as are required to be provided under generally accepted accounting principles have been provided by Borrower, and there is no risk of criminal penalties; (3D) if such contest shall be conducted in a manner requiring involve the payment of the claimTax prior to the contest, Borrower unless the Lessee shall have advanced sufficient funds, on an interest-free basis, provide to make the payment required, and shall have agreed to indemnify the Indemnitee against any an interest- free advance in an amount equal to the Imposition that the Indemnitee is required to pay (with no additional net after-Tax cost tax costs to such Indemnitee). In addition for Indemnitee controlled contests and claims contested in the name of the Indemnitee in a public forum, no contest shall be required: (A) unless the amount of the potential indemnity (taking into account all similar or logically related claims that have been or could be raised in any audit involving such advance; Indemnitee for which the Lessee may be liable to pay an indemnity under this Section 24.4(b)) exceeds $500,000 and (4B) unless, if requested by the Indemnitee in writing--------------- Indemnitee, such Indemnitee the Lessee shall have received provided to the Indemnitee an opinion of independent Tax counsel selected by Borrower and reasonably acceptable to such Indemnitee and furnished at Borrower’s sole expense to the effect that a Realistic Possibility of Success exists for contesting such claim Lessee (orwhich may be in-house counsel) (except, in the case of an appeal of an adverse judicial determination, a written opinion from such independent Tax counsel to the effect that it is more likely than not that such adverse judicial determination will income taxes indemnified hereunder which shall be reversed or substantially modified); (5) Borrower shall have delivered to such Indemnitee a written acknowledgment of Borrower’s obligation to indemnify such Indemnitee to the extent that the contest is not successful; provided, however, that Borrower will not be bound by its acknowledgment of liability if the contest is resolved on a clear and unambiguous basis showing no such liability under this Section 6(b) with respect to such Tax; (6) if a Specified Default or Event of Default shall have occurred and be continuing, Borrower shall have provided security for its obligation hereunder satisfactory to the Indemnitee by placing in escrow sufficient funds to cover any such contested Tax and the reasonably expected expenses of such contest on an After-Tax Basis, or otherwise providing satisfactory provisions for payment of such amounts determined by the Indemnitee in its sole discretion; (7) the aggregate amount of all indemnity payments that Borrower may be required to make to such Indemnitee with respect to such claim (or similar or related claims) is at least $60,000; and (8) the claim is not for a Tax the imposition of which has been previously contested by, or at the request of, Borrower hereunder, and such previous contest (including all allowable appeals) was decided adversely to Borrower, unless Borrower has delivered an opinion of independent Tax tax counsel selected by Borrower the Indemnitee and reasonably acceptable to the Indemnitee Lessee) that a reasonable basis exists to the effect that, on the basis of (i) a change in applicable law, or (ii) a difference in the underlying facts, there is currently a Realistic Possibility of Success for contesting contest such claim.
(D) If any Indemnitee . In no event shall obtain a refund of all or any part of any Tax paid by Borrower, such Indemnitee shall pay Borrower, but not before Borrower shall have made all payments theretofore due to such Indemnitee pursuant to this Section 6(b) and any other payments theretofore due such Indemnitee under any of the Operative Documents, an amount equal to the amount of such refund (net of any Taxes imposed thereon), including interest received and attributable thereto (net of any Taxes imposed thereon) plus, if Borrower has paid an amount pursuant to the first sentence of Section 6(b)(iii)(A), any net Tax benefit (or minus any net Tax detriment) realized by such Indemnitee as a result of any refund received, and payment made, by such Indemnitee pursuant to this sentence; provided that the Indemnitee shall not be obligated to pay an amount under the preceding sentence to the extent that such amount would exceed the amount of such Taxes paid, reimbursed or advanced by Borrower to such Indemnitee (other than the cost of the contest thereof); provided, further, that any amount not paid to Borrower pursuant to the foregoing limitation shall be carried forward to reduce pro tanto any future payments that Borrower may be required to make to such Indemnitee pursuant to this Section 6(b). If any Indemnitee shall have paid Borrower any refund of all or part of any Tax paid by Borrower and it is subsequently determined that such Indemnitee was not entitled to the refund, such determination shall be treated as the imposition of a Tax for which Borrower is obligated to indemnify such Indemnitee pursuant to the provisions of this Section 6(b) without regard to the exclusions set forth in Section 6(b)(ii) (other than subparagraphs (4), (11) and (12) thereof). Provided no Specified Default or Event of Default has occurred and is continuing, an Indemnitee shall not settle any such claim or contest pursuant to this provision without the written consent of Borrower, which consent shall not be unreasonably withheld, conditioned or delayed; provided, that an Indemnitee may settle at any time without the consent of Borrower if the Indemnitee waives (by written notice to Borrower) the payment by Borrower of an indemnity in respect of such issue and any related issue the contest of which is effectively foreclosed by the settlement of such issue, including any payment arising from such issue in subsequent years or which by reason of the fact that such issue is of a continuing nature, and promptly pays to Borrower any Tax previously paid or any interest-free loan advanced by Borrower (other than expenses of such contests) with respect to such issue.
(E) Nothing contained in this Section 6(b)(iv) shall require any Indemnitee to contest, or permit Borrower to contest in the name of such Indemnitee, a claim that such Indemnitee would otherwise be required to contest pursuant to this Section 6(b)(iv) if such Indemnitee shall waive payment by Borrower of any amount that might otherwise be payable by Borrower under this Section 6(b) in connection with such claim (other than the costs of contest previously incurred), nor shall any Indemnitee be required to pursue any 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, 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 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 24.4(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 entitled to be indemnified under this Section 24.4 (and ------------ with respect to which contest is required under this Section 24.4(b)) without --------------- the prior written consent of the Lessee, unless such Indemnitee waives its right to be indemnified under this Section 26.5 with respect to such claim. ------------ Notwithstanding anything contained herein to the contrary, a 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 such Indemnitee shall waive its right to indemnification under this Section 24.4 with respect to ------------ such claim (and any claim with respect to such year or any other taxable year the contest of which is materially adversely affected as a result of such waiver).
Appears in 1 contract
Contests. (A1) If a written claim shall be is made against and received by a Sublessor or if any Indemnitee proceeding is commenced against Sublessor (including a written notice of such proceeding) for any Tax Taxes as to which Sublessee could be liable for which Borrower is obligated to indemnify pursuant to this Section 6(b)payment or indemnity hereunder, such Indemnitee Sublessor shall notify Borrower promptly give Sublessee notice in writing of such claim within 30 days after its receipt(PROVIDED, and shall provide Borrower such information regarding such claim as Borrower may reasonably request; provided, howeverHOWEVER, that the failure to provide such notice shall not release Borrower from any of its affect Sublessee's obligations to indemnify under Section 6 hereof unless, and only hereunder to the extent that, Sublessor unless such failure shall effectively precludes Borrower’s preclude Sublessee's right to contest rights. To the extent permitted under applicable law, such Indemnitee will claim and shall not make take any payments action with respect to such claim or Tax without the consent of Sublessee for at least 30 thirty (30) days after giving notice of such claim to Borrower.
(B) If requested by Borrower in writing within 30 days after its following the receipt of such notice by Sublessee; PROVIDED, HOWEVER, that, if Sublessor shall be required by Law to take action prior to the end of such 30-day period, Sublessor shall, in such notice to Sublessee, so inform Sublessee, and Sublessor shall take no action without the consent of Sublessee for as long as it is legally able to do so (it being understood that Sublessor shall be entitled to pay the Tax claimed and sue for a refund prior to the end of such 30-day period if (i) (A) ▇▇e failure to so pay the Tax would result in penalties (unless immediately reimbursed by Sublessee) or (B) the failure to so pay would result in criminal penalties and (ii) Sublessor uses its good faith efforts to take any action so required in connection with so paying the Tax in a manner that is the least prejudicial to the pursuit of the contest). In addition, Sublessor shall (provided that Sublessee shall have agreed to keep such information confidential other than to the extent necessary in order to contest the claim in writing in a manner reasonable satisfactory to Sublessor) furnish Sublessee with copies of any requests for information from any taxing authority relating to such Taxes with respect to which Sublessee may be required to indemnify hereunder. If requested by Sublessee in writing within thirty (30) days or such shorter period as may be required by applicable lawLaw after its receipt of such notice, such Indemnitee Sublessor shall, at the expense of Borrower Sublessee (including all reasonable out-of-pocket costs, and subject reasonable in-house or outside attorney and accountants fees), in good faith contest (or, if permitted by applicable law, allow Sublessee to subparagraph (C) belowcontest), contest through appropriate administrative and judicial proceedings the validity, applicability or amount of such Taxes by, in the case of an Indemnitee-Controlled Contest, in such Indemnitee’s sole discretion or, in the case of a Borrower-Controlled Contest, in Borrower’s sole discretion, (1) by resisting payment thereof if practicablethereof, (2) not paying such Tax the same except under protest, (3) protest if protest is necessary and proper, and proper or if the payment of such Tax is made, using reasonable efforts to obtain a refund thereofthereof in an appropriate administrative and/or judicial proceeding. If requested to do so by Sublessee in writing, Sublessor shall appeal any adverse administrative or judicial decision, except Sublease Agreement (MSN 30808) that Sublessor shall not be required to (nor shall Sublessee have the right to) pursue any appeals to the United States Supreme Court. If and to the extent Sublessor by exercise of reasonable good faith efforts is able to separate the contested issue or issues (which cannot include income tax issues) from other issues arising in the same administrative or judicial proceeding that are unrelated to the transactions contemplated by the Operative Documents without, in appropriate administrative and judicial proceedings, and (4) in the case of an Indemnitee-Controlled Contest, considering in good faith judgment of Sublessor, materially adversely affecting it, Sublessor shall permit Sublessee to control the conduct of any other reasonable action as Borrower may such proceeding and shall provide to Sublessee such information or data that is in such Sublessor's control or possession that is reasonably request. Each Indemnitee necessary to conduct such contest and Sublessee shall consult in good faith with Borrower the Sublessor and Borrower’s counsel, and Borrower shall consult in good faith with keep them reasonably informed of the progress of such Indemnitee and its counsel in contest. In the case of a Borrower-Controlled Contest. concerning contest controlled by Sublessor, Sublessor shall conduct and control such contest, provided Sublessor consults with Sublessee in good faith regarding the forum in which manner of contesting such claim and shall keep Sublessee reasonably informed regarding the contest is most likely to be favorably resolved and whether progress of such contest but Sublessor shall be by (x) resisting payment have ultimate control over all aspects of such Taxcontest. Sublessor shall not fail to take any action expressly required by this SECTION 3(j)(D) (including, (ywithout limitation, any action regarding an appeal of an adverse determination with respect to any claim) paying such Tax under protest or (zsettle or compromise any claim without the prior written consent of Sublessee except as contemplated by SECTION 3(j)(D) paying such Tax and seeking a refund or other repayment thereofherein.
(C2) In Notwithstanding the foregoing, in no event shall an Indemnitee Sublessor be required, required to take any action (or Borrower permitted, to contest the imposition of permit Sublessee to take any Tax for which Borrower is obligated pursuant to this Section 6(baction) unless and until (1A) Borrower Sublessee shall have agreed to pay and shall promptly be paying Sublessor on request demand on an After-tax Basis all reasonable costs and expenses that such Indemnitee incurs Sublessor shall incur in connection with contesting such claim or arising out of or relating to such contest claim, (including without limitation, all costs, expenses, losses, reasonable legal fees, and accounting fees, and disbursements, including those on appealpenalties, fines, additions to TAX or interest thereon), (B) if any); (2) such contest is shall involve the payment of the claim, Sublessee shall advance the amount thereof plus (to the extent indemnified hereunder) interest, penalties and additions to tax with respect thereto that are required to be paid prior to the commencement of such contest on an interest-free basis and with no additional net after- tax cost to Sublessor (and Sublessor shall promptly pay to Sublessee any net realized tax benefits resulting from any imputed interest deduction arising from such interest free advance from Sublessee plus any net tax benefits resulting from making any such payment), (C) Sublessor shall have reasonably determined that the action to be taken will not reasonably likely to result in a any material danger risk of the saleforfeiture, seizureforeclosure, forfeiture sale or loss of Sublessor's leasehold interest under the Head Lease, the Aircraft, the Trust Estate, the Trust Indenture Estate, or the creation of any Lien thereon (other than Liens for Taxes a Permitted Lien) (i) either not yet due unless Sublessee shall have adequately bonded such Lien or being contested in good faith by appropriate proceedings and (ii) for which such reserves, if any, as are required otherwise made provisions to be provided under generally accepted accounting principles have been provided by Borrower, and there is no risk protect the interests of criminal penalties; (3) if such contest shall be conducted Sublessor in a manner requiring the payment of the claimreasonably satisfactory to Sublessor in its sole discretion), Borrower shall have advanced sufficient funds, on an interest-free basis, to make the payment required, and shall have agreed to indemnify the Indemnitee against any additional net after-Tax cost to such Indemnitee of such advance; (4D) if requested by the Indemnitee in writing, such Indemnitee shall have received an opinion of independent Tax counsel selected by Borrower and reasonably acceptable to such Indemnitee and furnished at Borrower’s sole expense to the effect that a Realistic Possibility of Success exists for contesting such claim (or, in the case of an appeal of an adverse judicial determination, a written opinion from such independent Tax counsel to the effect that it is more likely than not that such adverse judicial determination will be reversed or substantially modified); (5) Borrower shall have delivered to such Indemnitee a written acknowledgment of Borrower’s obligation to indemnify such Indemnitee to the extent that the contest is not successful; provided, however, that Borrower will not be bound by its acknowledgment of liability if the contest is resolved on a clear and unambiguous basis showing no such liability under this Section 6(b) with respect to such Tax; (6) if a Specified Default or Sublease Event of Default shall have occurred and be continuing, Borrower shall have continuing at the time the contest is begun unless Sublessee has provided security for its obligation obligations hereunder satisfactory by advancing to Sublessor before proceeding with such contest, the Indemnitee amount of the Tax being contested, plus any interest and penalties and an amount estimated in good faith by placing Sublessor for reasonable expenses, (E) in escrow sufficient funds to cover any such contested Tax and the reasonably expected expenses case of such a contest on an After-Tax Basisthat is being pursued by Sublease Agreement (MSN 30808) Sublessor, or otherwise providing satisfactory provisions for payment of such amounts determined by the Indemnitee in its sole discretion; (7) the aggregate amount of the claim together with the amount of all related claims that have been or could be raised with any or all of the other Aircraft leased by Sublessor to Sublessee or raised in any other audit for which Sublessee would have an indemnity payments obligation under this SECTION 3(j)(D) is at least $50,000, and (F) if requested prior to or during the contest by Sublessor, independent tax counsel selected by Sublessee and reasonably acceptable to Sublessor, renders to Sublessor a written opinion that Borrower there is a reasonable basis (under the standard set forth in ABA Formal Opinion 85-352 or any successor thereto) for contesting such claim. In the case of any contest controlled by the Sublessee hereunder, Sublessor (including its counsel (at Sublessor's expense)) shall have the right to participate in all proceedings and Sublessee shall consult with Sublessor in good faith regarding the manner of contesting such claim and shall keep Sublessor reasonably informed regarding the progress of such contest and, if requested by Sublessor, provide an opinion of tax counsel selected by Sublessee and reasonably acceptable to Sublessor to the effect that there is a Reasonable Basis for contesting such claims. Notwithstanding the foregoing, Sublessee shall not be permitted to control or conduct any contest if such contest involves Taxes based on or measured by the gross or net income of Sublessor and, PROVIDED, THAT if Sublessor determines in good faith that it is reasonably likely that such contest may have a material adverse impact on it, Sublessor may retain or reassert control of any contest Sublessee would otherwise be permitted to contest, and if Sublessor shall release, waive, compromise or settle any claim which may be required indemnifiable by Sublessee pursuant to make this SECTION 3(j) without the written permission of Sublessee, Sublessee's obligation to such Indemnitee indemnify Sublessor with respect to such claim (or similar or related claims) is at least $60,000; and (8) the claim is not for a Tax the imposition of which has been previously contested by, or at the request of, Borrower hereunder, and such previous contest (including all allowable appeals) was decided adversely to Borrower, unless Borrower has delivered an opinion of independent Tax counsel selected by Borrower and reasonably acceptable to the Indemnitee to the effect that, on the basis of (i) a change in applicable law, or (ii) a difference in the underlying facts, there is currently a Realistic Possibility of Success for contesting such claim.
(D) If any Indemnitee shall obtain a refund of all or any part of any Tax paid by Borrower, such Indemnitee shall pay Borrower, but not before Borrower shall have made all payments theretofore due to such Indemnitee pursuant to this Section 6(b) and any other payments theretofore due such Indemnitee under any of the Operative Documents, an amount equal to the amount of such refund (net of any Taxes imposed thereon), including interest received and attributable thereto (net of any Taxes imposed thereon) plus, if Borrower has paid an amount pursuant to the first sentence of Section 6(b)(iii)(A), any net Tax benefit (or minus any net Tax detriment) realized by such Indemnitee as a result of any refund received, and payment made, by such Indemnitee pursuant to this sentence; provided that the Indemnitee shall not be obligated to pay an amount under the preceding sentence to the extent that such amount would exceed the amount of such Taxes paid, reimbursed or advanced by Borrower to such Indemnitee (other than the cost of the contest thereof); provided, further, that any amount not paid to Borrower pursuant to the foregoing limitation shall be carried forward to reduce pro tanto any future payments that Borrower may be required to make to such Indemnitee pursuant to this Section 6(b). If any Indemnitee shall have paid Borrower any refund of all or part of any Tax paid by Borrower and it is subsequently determined that such Indemnitee was not entitled to the refund, such determination shall be treated as the imposition of a Tax for which Borrower is obligated to indemnify such Indemnitee pursuant to the provisions of this Section 6(b) without regard to the exclusions set forth in Section 6(b)(ii) (other than subparagraphs (4), (11) and (12) thereof). Provided no Specified Default or Event of Default has occurred and is continuing, an Indemnitee shall not settle any such claim or contest pursuant to this provision without the written consent of Borrower, which consent shall not be unreasonably withheld, conditioned or delayed; provided, that an Indemnitee may settle at any time without the consent of Borrower if the Indemnitee waives (by written notice to Borrower) the payment by Borrower of an indemnity in respect of such issue and any related issue the contest of which is effectively foreclosed by the settlement of such issue, including any payment arising from such issue in subsequent years or which by reason materially prejudiced as a result of the fact that such issue is of a continuing naturerelease, waiver, compromise or settlement) shall terminate, subject to this SECTION 3(j)(D), and promptly pays subject to Borrower SECTION 3(j)(C), Sublessor shall repay to Sublessee any Tax amount previously paid or any interest-free loan advanced by Borrower (other than expenses of such contests) to Sublessor with respect to such issueclaim (but not amounts paid or advanced for costs and expenses of any contests to the extent such amounts have already been expended) plus interest at the rate that would have been payable by the relevant taxing authority with respect to a refund of such Tax.
(E3) Notwithstanding anything contained in this SECTION 3(j) to the contrary, Sublessor shall not be required to contest any claim if the subject matter thereof shall be of a continuing nature and shall previously have been decided adversely by a court of competent jurisdiction pursuant to the contest provisions of this SECTION 3(j)(D), unless there shall have been a change in Law (or interpretation thereof) or a change in facts after the date with respect to which such previous contest shall have been decided, and Sublessor shall have received, at Sublessee's expense, an opinion of independent tax counsel selected by Sublessee and reasonably acceptable to Sublessor to the effect that as a result of such change in Law (or interpretation thereof) or change in facts, it is more likely than not that Sublessor will prevail in such contest.
(4) Nothing contained in this Section 6(b)(ivSECTION 3(j) shall require any Indemnitee Sublessor to contest, contest or permit Borrower Sublessee to contest in the name of such Indemnitee, a claim that such Indemnitee which it would otherwise be required to contest pursuant to this Section 6(b)(ivSECTION 3(j) if such Indemnitee Sublessor shall waive payment by Borrower Sublease Agreement (MSN 30808) Sublessee of any amount that might otherwise be payable by Borrower Sublessee under this Section 6(bSECTION 3(j) by way of indemnity in connection with respect of such claim (and any other than claim for Taxes with respect to any other taxable year the costs contest of contest previously incurred), nor shall any Indemnitee be required which is effectively precluded by Sublessor's declination to pursue any appeal take action with respect to the United States Supreme Courtclaim).
Appears in 1 contract
Sources: Sublease Agreement (Atlas Air Worldwide Holdings Inc)
Contests. (Aa) If a written claim shall be made against and received by any Indemnitee for any Tax for which Borrower is obligated to indemnify pursuant to this Section 6(b), such Indemnitee shall notify Borrower in writing of such claim within 30 days after its receipt, and shall provide Borrower such information regarding such claim as Borrower may reasonably request; provided, however, that the failure to provide such notice shall not release Borrower from any of its obligations to indemnify under Section 6 hereof unless, and only to the extent that, such failure effectively precludes Borrower’s contest rights. To the extent permitted under applicable law, such Indemnitee will not make any payments with respect to such claim for at least 30 days after giving notice of such claim to Borrower.
(B) If requested by Borrower in writing within 30 days after its receipt of such notice or such shorter period as may be required by applicable law, such Indemnitee shall, at the expense of Borrower and subject to subparagraph (C) below, contest the validity, applicability or amount of such Taxes by, in In the case of an Indemnitee-Controlled Contestaudit or administrative or judicial proceeding that relates to periods ending on or before the Closing Date or for which the Purchaser may seek indemnity from the Sellers, the Sellers shall have the right, at their expense, to participate in such Indemnitee’s sole discretion or, in and control the case of a Borrower-Controlled Contest, in Borrower’s sole discretion, (1) resisting payment thereof if practicable, (2) not paying such Tax except under protest, (3) if protest is necessary and proper, and if payment conduct of such Tax is made, using reasonable efforts to obtain a refund thereof, in appropriate administrative and judicial proceedings, and (4) in the case of an Indemnitee-Controlled Contest, considering in good faith any other reasonable action as Borrower may reasonably request. Each Indemnitee shall consult in good faith with Borrower and Borrower’s counsel, and Borrower shall consult in good faith with such Indemnitee and its counsel in the case of a Borrower-Controlled Contest. concerning the forum in which the contest is most likely to be favorably resolved and whether such contest shall be by (x) resisting payment of such Tax, (y) paying such Tax under protest audit or (z) paying such Tax and seeking a refund or other repayment thereof.
(C) In no event shall an Indemnitee be required, or Borrower permitted, to contest the imposition of any Tax for which Borrower is obligated pursuant to this Section 6(b) unless (1) Borrower shall have agreed to pay and shall promptly be paying on request all reasonable costs and expenses that such Indemnitee incurs in contesting such claim or arising out of or relating to such contest (including legal fees, accounting fees, and disbursements, including those on appeal, if any); (2) such contest is not reasonably likely to result in a material danger of the sale, seizure, forfeiture or loss of the Aircraft, or the creation of any Lien thereon other than Liens for Taxes (i) either not yet due or being contested in good faith by appropriate proceedings and (ii) for which such reserves, if any, as are required to be provided under generally accepted accounting principles have been provided by Borrower, and there is no risk of criminal penalties; (3) if such contest shall be conducted in a manner requiring the payment of the claim, Borrower shall have advanced sufficient funds, on an interest-free basis, to make the payment required, and shall have agreed to indemnify the Indemnitee against any additional net after-Tax cost to such Indemnitee of such advance; (4) if requested by the Indemnitee in writing, such Indemnitee shall have received an opinion of independent Tax counsel selected by Borrower and reasonably acceptable to such Indemnitee and furnished at Borrower’s sole expense to the effect that a Realistic Possibility of Success exists for contesting such claim (or, in the case of an appeal of an adverse judicial determination, a written opinion from such independent Tax counsel to the effect that it is more likely than not that such adverse judicial determination will be reversed or substantially modified); (5) Borrower shall have delivered to such Indemnitee a written acknowledgment of Borrower’s obligation to indemnify such Indemnitee to the extent that the contest is not successful; provided, however, that Borrower will not be bound by its acknowledgment of liability if the contest is resolved on a clear and unambiguous basis showing no such liability under this Section 6(b) with respect to such Tax; (6) if a Specified Default or Event of Default shall have occurred and be continuing, Borrower shall have provided security for its obligation hereunder satisfactory to the Indemnitee by placing in escrow sufficient funds to cover any such contested Tax and the reasonably expected expenses of such contest on an After-Tax Basis, or otherwise providing satisfactory provisions for payment of such amounts determined by the Indemnitee in its sole discretion; (7) the aggregate amount of all indemnity payments that Borrower may be required to make to such Indemnitee with respect to such claim (or similar or related claims) is at least $60,000; and (8) the claim is not for a Tax the imposition of which has been previously contested by, or at the request of, Borrower hereunder, and such previous contest (including all allowable appeals) was decided adversely to Borrower, unless Borrower has delivered an opinion of independent Tax counsel selected by Borrower and reasonably acceptable to the Indemnitee to the effect that, on the basis of (i) a change in applicable law, or (ii) a difference in the underlying facts, there is currently a Realistic Possibility of Success for contesting such claim.
(D) If any Indemnitee shall obtain a refund of all or any part of any Tax paid by Borrower, such Indemnitee shall pay Borrower, proceeding but not before Borrower shall have made all payments theretofore due to such Indemnitee pursuant to this Section 6(b) and any other payments theretofore due such Indemnitee under any of the Operative Documents, an amount equal to the amount of such refund (net of any Taxes imposed thereon), including interest received and attributable thereto (net of any Taxes imposed thereon) plus, if Borrower has paid an amount pursuant to the first sentence of Section 6(b)(iii)(A), any net Tax benefit (or minus any net Tax detriment) realized by such Indemnitee as a result of any refund received, and payment made, by such Indemnitee pursuant to this sentence; provided that the Indemnitee shall not be obligated to pay an amount under the preceding sentence only to the extent that such amount audit or proceeding relates to a potential adjustment for which the Sellers have acknowledged the Sellers' liability and the issue underlying the potential adjustment does not recur for any period ending subsequent to the Closing Date. The Sellers shall keep the Purchaser fully informed of the progress of any such audit or proceeding and, if it appears in the sole discretion of the Purchaser, that such audit or proceeding may reasonably be expected to adversely affect the Purchaser or the Company, the Purchaser also may participate in any such audit or proceeding. If the Sellers do not assume the defense of any such audit or proceeding promptly, the Purchaser may defend and settle the same (for the Sellers' account and at the Sellers' expense) in such manner as it may deem appropriate. In the event that a potential adjustment as to which the Sellers would exceed be liable is present in the same proceeding as a potential adjustment for which the Purchaser would be liable, the Purchaser shall have the right, at its expense, to control the audit or proceeding with respect to the latter potential adjustment.
(b) With respect to a potential adjustment for which both the Sellers and the Purchaser or the Company could be liable, or which involves an issue that recurs for any period ending after the Closing Date (whether or not the subject of audit at such time), (i) both the Purchaser and the Sellers may participate in the audit or proceeding, each at its own expense, and (ii) the audit or proceeding shall be controlled by that party which would bear the burden of the greater portion of the dollar amount of such Taxes paid, reimbursed or advanced by Borrower to such Indemnitee (other than the cost of the contest thereof); provided, further, adjustment and any corresponding adjustments that any amount not paid to Borrower pursuant to the foregoing limitation shall may reasonably be carried forward to reduce pro tanto any anticipated for future payments that Borrower may be required to make to such Indemnitee pursuant to this Section 6(b)Tax periods. If any Indemnitee shall have paid Borrower any refund of all or part of any Tax paid by Borrower and it is subsequently determined that such Indemnitee was not entitled to the refund, such determination shall be treated as the imposition of a Tax for which Borrower is obligated to indemnify such Indemnitee pursuant to the provisions of this Section 6(b) without regard to the exclusions The principle set forth in the preceding sentence shall govern also for purposes of deciding any issue that must be decided jointly (in particular, choice of judicial forum) in circumstances in which separate issues are otherwise controlled hereunder by the Purchaser and the Sellers.
(c) Except as provided in Section 6(b)(ii8.4(a) (other than subparagraphs (4)above, (11) and (12) thereof). Provided no Specified Default neither the Purchaser nor the Sellers shall enter into any compromise or Event of Default has occurred and is continuing, an Indemnitee shall not agree to settle any such claim or contest pursuant to this provision any Tax audit or proceeding which would adversely affect the other party, or result in a material benefit to that party, for such year or a subsequent year without the written consent of Borrowerthe other party, which consent shall may not be unreasonably withheld, conditioned withheld or delayed; provided, that an Indemnitee may settle at any time without the consent of Borrower if the Indemnitee waives (by written notice to Borrower) the payment by Borrower of an indemnity in respect of such issue and any related issue the contest of which is effectively foreclosed by the settlement of such issue, including any payment arising from such issue in subsequent years or which by reason of the fact that such issue is of a continuing nature, and promptly pays to Borrower any Tax previously paid or any interest-free loan advanced by Borrower (other than expenses of such contests) with respect to such issue.
(E) Nothing contained in this Section 6(b)(iv) shall require any Indemnitee to contest, or permit Borrower to contest in the name of such Indemnitee, a claim that such Indemnitee would otherwise be required to contest pursuant to this Section 6(b)(iv) if such Indemnitee shall waive payment by Borrower of any amount that might otherwise be payable by Borrower under this Section 6(b) in connection with such claim (other than the costs of contest previously incurred), nor shall any Indemnitee be required to pursue any appeal to the United States Supreme Court.
Appears in 1 contract
Contests. (A) If a The following requirements shall apply to any appeal, objection or contest to any tax or assessment permitted to be made by Lessee under this Lease: the contest, opposition, or objection must be filed before the tax, assessment, or other charge at which it is directed becomes delinquent and written claim notice of the contest, opposition, or objection must be given to Lessor before the date the tax, assessment, or other charge becomes delinquent. No such contest, opposition, or objection shall be made against and received by any Indemnitee for any Tax for which Borrower is obligated to indemnify pursuant to this Section 6(b)continued or maintained after the date the tax, such Indemnitee shall notify Borrower in writing of such claim within 30 days after its receiptassessment, and shall provide Borrower such information regarding such claim as Borrower may reasonably request; provided, however, that the failure to provide such notice shall not release Borrower from any of its obligations to indemnify under Section 6 hereof unless, and only to the extent that, such failure effectively precludes Borrower’s contest rights. To the extent permitted under applicable law, such Indemnitee will not make any payments with respect to such claim for at least 30 days after giving notice of such claim to Borrower.
(B) If requested by Borrower in writing within 30 days after its receipt of such notice or such shorter period as may be required by applicable law, such Indemnitee shall, at the expense of Borrower and subject to subparagraph (C) below, contest the validity, applicability or amount of such Taxes by, in the case of an Indemnitee-Controlled Contest, in such Indemnitee’s sole discretion or, in the case of a Borrower-Controlled Contest, in Borrower’s sole discretion, (1) resisting payment thereof if practicable, (2) not paying such Tax except under protest, (3) if protest is necessary and proper, and if payment of such Tax is made, using reasonable efforts to obtain a refund thereof, in appropriate administrative and judicial proceedings, and (4) in the case of an Indemnitee-Controlled Contest, considering in good faith any other reasonable action as Borrower may reasonably request. Each Indemnitee shall consult in good faith with Borrower and Borrower’s counsel, and Borrower shall consult in good faith with such Indemnitee and its counsel in the case of a Borrower-Controlled Contest. concerning the forum in which the contest is most likely to be favorably resolved and whether such contest shall be by (x) resisting payment of such Tax, (y) paying such Tax under protest or (z) paying such Tax and seeking a refund or other repayment thereof.
(C) In no event shall an Indemnitee be required, or Borrower permitted, to contest the imposition of any Tax for charge at which Borrower it is obligated pursuant to this Section 6(b) directed becomes delinquent unless (1) Borrower shall have agreed to pay and shall promptly be paying on request all reasonable costs and expenses that such Indemnitee incurs in contesting such claim or arising out of or relating to such contest (including legal fees, accounting fees, and disbursements, including those on appeal, if any); (2) such contest is not reasonably likely to result in a material danger Lessee has met one of the sale, seizure, forfeiture or loss of the Aircraft, or the creation of any Lien thereon other than Liens for Taxes following conditions: (i) either not yet due or being contested in good faith by appropriate proceedings and (ii) for which paid such reservestax, if any, as are required to be provided under generally accepted accounting principles have been provided by Borrower, and there is no risk of criminal penalties; (3) if such contest shall be conducted in a manner requiring the payment of the claim, Borrower shall have advanced sufficient funds, on an interest-free basis, to make the payment required, and shall have agreed to indemnify the Indemnitee against any additional net after-Tax cost to such Indemnitee of such advance; (4) if requested by the Indemnitee in writing, such Indemnitee shall have received an opinion of independent Tax counsel selected by Borrower and reasonably acceptable to such Indemnitee and furnished at Borrower’s sole expense to the effect that a Realistic Possibility of Success exists for contesting such claim (or, in the case of an appeal of an adverse judicial determination, a written opinion from such independent Tax counsel to the effect that it is more likely than not that such adverse judicial determination will be reversed or substantially modified); (5) Borrower shall have delivered to such Indemnitee a written acknowledgment of Borrower’s obligation to indemnify such Indemnitee to the extent that the contest is not successful; provided, however, that Borrower will not be bound by its acknowledgment of liability if the contest is resolved on a clear and unambiguous basis showing no such liability under this Section 6(b) with respect to such Tax; (6) if a Specified Default or Event of Default shall have occurred and be continuing, Borrower shall have provided security for its obligation hereunder satisfactory to the Indemnitee by placing in escrow sufficient funds to cover any such contested Tax and the reasonably expected expenses of such contest on an After-Tax Basisassessment, or otherwise providing satisfactory provisions for payment of such amounts determined by the Indemnitee in other charge under protest prior to its sole discretionbecoming delinquent; (7) the aggregate amount of all indemnity payments that Borrower may be required to make to such Indemnitee with respect to such claim (or similar or related claims) is at least $60,000; and (8) the claim is not for a Tax the imposition of which has been previously contested by, or at the request of, Borrower hereunder, and such previous contest (including all allowable appeals) was decided adversely to Borrower, unless Borrower has delivered an opinion of independent Tax counsel selected by Borrower and reasonably acceptable to the Indemnitee to the effect that, on the basis of (i) a change in applicable law, or (ii) obtained and maintained a difference in the underlying facts, there is currently a Realistic Possibility of Success for contesting such claim.
(D) If any Indemnitee shall obtain a refund stay of all or any part of any Tax paid by Borrower, such Indemnitee shall pay Borrower, but not before Borrower shall have made all payments theretofore due to such Indemnitee pursuant to this Section 6(b) proceedings for enforcement and any other payments theretofore due such Indemnitee under any collection of the Operative Documentstax, assessment, or other charge by posting such bond or other matter required by law for such a stay; or (iii) delivered to Lessor a good and sufficient undertaking in a form reasonably acceptable to Lessor in an amount equal to one hundred twenty-five percent (125%) of the amount in controversy (inclusive of such refund (net of any Taxes imposed thereon)fines, including interest received interests, penalties, costs, and attributable thereto (net of any Taxes other expenses that may have accrued or been imposed thereon) plusand issued by a surety company authorized to issue undertakings in California, if Borrower has paid an amount pursuant to conditioned on the first sentence payment by Lessee of Section 6(b)(iii)(A)the tax, assessment, or charge together with any net Tax benefit (or minus any net Tax detriment) realized by such Indemnitee as a result of any refund receivedfines, interest, penalties, costs, and payment madeexpenses that may have accrued or been imposed thereon within thirty (30) days after final determination of Lessee’s contest, by opposition, or objection to such Indemnitee pursuant to this sentence; provided that the Indemnitee tax, assessment, or other charge. Lessor shall not be obligated to pay an amount under the preceding sentence to the extent that such amount would exceed the amount of such Taxes paid, reimbursed or advanced by Borrower to such Indemnitee (other than the cost of the contest thereof); provided, further, that any amount not paid to Borrower pursuant to the foregoing limitation shall be carried forward to reduce pro tanto any future payments that Borrower may be required to make to such Indemnitee pursuant to this Section 6(b). If join in any Indemnitee shall have paid Borrower any refund of all proceedings or part of any Tax paid contest brought by Borrower and it is subsequently determined that such Indemnitee was not entitled to the refund, such determination shall be treated as the imposition of a Tax for which Borrower is obligated to indemnify such Indemnitee pursuant to Lessee unless the provisions of this Section 6(b) without regard to any law requires the exclusions set forth in Section 6(b)(ii) (other than subparagraphs (4), (11) and (12) thereof). Provided no Specified Default or Event of Default has occurred and is continuing, an Indemnitee shall not settle any such claim proceeding or contest pursuant to this provision without the written consent of Borrower, which consent shall not be unreasonably withheld, conditioned brought by or delayed; provided, that an Indemnitee may settle at any time without the consent of Borrower if the Indemnitee waives (by written notice to Borrower) the payment by Borrower of an indemnity in respect of such issue and any related issue the contest of which is effectively foreclosed by the settlement of such issue, including any payment arising from such issue in subsequent years or which by reason of the fact that such issue is of a continuing nature, and promptly pays to Borrower any Tax previously paid or any interest-free loan advanced by Borrower (other than expenses of such contests) with respect to such issue.
(E) Nothing contained in this Section 6(b)(iv) shall require any Indemnitee to contest, or permit Borrower to contest in the name of Lessor or any successor in interest of the Site. In that case, Lessor shall join in the proceeding or contest or permit it to be brought in Lessor’s name but such Indemnitee, a claim that such Indemnitee would otherwise action shall be required without cost or other liability to contest pursuant Lessor and Lessee agrees to this Section 6(b)(iv) if such Indemnitee shall waive payment pay to Lessor all costs incurred by Borrower of any amount that might otherwise be payable by Borrower under this Section 6(b) Lessor in connection with such claim (other than the costs of contest previously incurred), nor shall any Indemnitee be required to pursue any appeal to the United States Supreme Courttherewith.
Appears in 1 contract
Sources: Billboard Site Lease
Contests. (A) If a written any claim shall be made against and received by any Indemnitee Indemnified Party or if any proceeding shall be commenced against any Indemnified Party (including a written notice of such proceeding) for any Tax for Imposition as to which Borrower is obligated to indemnify the Lessee may have an indemnity obligation pursuant to this Section 6(b)6.3, or if any Indemnified Party shall determine that any Imposition with respect to which the Lessee may have an indemnity obligation pursuant to this Section 6.3 may be payable, such Indemnitee Indemnified Party shall promptly notify Borrower the Lessee in writing (provided that failure to so notify the Lessee shall not alter such Indemnified Party's rights under this Section 6.3 except to the extent such failure effectively precludes or materially adversely affects the ability to conduct a contest of any Impositions) and shall not take any action with respect to such claim within 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 its receipt, and shall provide Borrower the receipt of such information regarding such claim as Borrower may reasonably requestnotice by the Lessee; provided, however, that in the failure case of any such claim or proceeding, if such Indemnified Party shall be required by law or regulation to provide take action prior to the end of such 30-day period, such Indemnified Party shall in such notice to the Lessee, so inform the Lessee and such Indemnified Party shall not release Borrower from take any of its obligations to indemnify under Section 6 hereof unless, and only to the extent that, such failure effectively precludes Borrower’s contest rights. To the extent permitted under applicable law, such Indemnitee will not make any payments action with respect to such claim claim, proceeding or Imposition without the consent of the Lessee (such consent not to be unreasonably withheld or unreasonably delayed) for at least 30 10 days after giving notice of such claim to Borrower.
(B) If requested by Borrower in writing within 30 days after its the receipt of such notice by the Lessee unless such Indemnified Party 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 such Indemnified Party (or such shorter period as may be such Indemnified Party has notified the Lessee is required by applicable lawlaw or regulation for such Indemnified Party to commence such contest), to request in writing that such Indemnitee shallIndemnified Party contest in good faith the imposition of such Tax, at the expense Lessee's expense. If (a) such contest can be pursued in the name of Borrower the Lessee and subject to subparagraph (C) below, contest the validity, applicability or amount independently from any other proceeding involving a Tax liability of such Taxes byIndemnified Party for which the Lessee has not agreed to indemnify such Indemnified Party, (b) such contest must be pursued in the case name of an Indemnitee-Controlled Contestsuch Indemnified Party, in but can be pursued independently from any other proceeding involving a Tax liability of such Indemnitee’s sole discretion orIndemnified Party for which the Lessee has not agreed to indemnify such Indemnified Party or (c) such Indemnified Party so requests, then the Lessee shall be permitted to control the contest of such claim, acting through counsel reasonably acceptable to the Indemnified Party, provided that in the case of a Borrower-Controlled Contestcontest described in clause (b), in Borrower’s sole discretion, (1) resisting payment thereof if practicable, (2) not paying such Tax except under protest, (3) if protest is necessary Indemnified Party determines reasonably and proper, and if payment of such Tax is made, using reasonable efforts to obtain a refund thereof, in appropriate administrative and judicial proceedings, and (4) in the case of an Indemnitee-Controlled Contest, considering in good faith any other reasonable action as Borrower that such contest by the Lessee could have a material adverse impact on the business or operations of such Indemnified Party and provides a written explanation to the Lessee of such determination, such Indemnified Party may reasonably request. Each Indemnitee shall consult in good faith with Borrower and Borrower’s counselelect to control or reassert control of the contest, and Borrower 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 (a) and (b) above, each Indemnified Party shall consult in good faith with such Indemnitee take any and its counsel in the case of a Borrower-Controlled Contest. concerning the forum in 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 is most likely of the former. In all other claims requested to be favorably resolved and whether contested by the Lessee, such Indemnified Party shall control the contest shall be by (x) resisting payment of such Taxclaim, (y) paying such Tax under protest or (z) paying such Tax and seeking a refund or other repayment thereof.
(C) acting through counsel reasonably acceptable to the Lessee. In no event shall an Indemnitee the Lessee be requiredpermitted to contest (or such Indemnified Party be required to contest) any claim, (a) if such Indemnified Party 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 Borrower permitted, to contest the imposition creation of any Tax for which Borrower Lien (other than a Permitted Lien) on the Equipment or any part thereof unless the Lessee shall have posted and maintained a bond or other security satisfactory to the relevant Indemnified Party in respect to such risk, (b) if a Default or an Event of Default has occurred and is obligated pursuant to this Section 6(bcontinuing, (c) unless (1) Borrower the Lessee shall have provided to such Indemnified Party an opinion of counsel reasonably acceptable to such Indemnified Party to the effect that such contest will, more likely than not, be successful, and unless the Lessee shall have agreed to pay and shall promptly be paying pay, to such Indemnified Party on request demand all reasonable costs out-of-pocket costs, losses and expenses that such Indemnitee Indemnified Party actually incurs in connection with contesting such claim or arising out of or relating to such contest (Imposition including legal feesall reasonable in-house and outside legal, accounting feesaccounting, administrative and investigatory fees and disbursements, including those on appeal, if any); or (2d) unless the Lessee makes full payment of the Tax prior to the contest. In addition for Indemnified Party controlled contests and claims contested in the name of such contest is not reasonably likely to result Indemnified Party in a material danger of the salepublic forum, seizure, forfeiture or loss of the Aircraft, or the creation of any Lien thereon other than Liens for Taxes (i) either not yet due or being contested in good faith by appropriate proceedings and (ii) for which such reserves, if any, as are required to be provided under generally accepted accounting principles have been provided by Borrower, and there is no risk of criminal penalties; (3) if such contest shall be conducted in a manner requiring required: (a) unless the payment 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 any or all such Indemnified Parties with respect to any period for which the Lessee may be liable to pay an indemnity under this Section 6.3(b)) exceeds $250,000 and (b) unless, Borrower shall have advanced sufficient funds, on an interest-free basis, to make the payment required, and shall have agreed to indemnify the Indemnitee against any additional net after-Tax cost to such Indemnitee of such advance; (4) if requested by such Indemnified Party, the Indemnitee in writing, such Indemnitee Lessee shall have received provided to such Indemnified Party an opinion of counsel selected by the Lessee (which counsel must be reasonably acceptable to such Indemnified Party) (except, in the case of income Taxes indemnified hereunder, in which case such opinion shall be an opinion of independent Tax tax counsel selected by Borrower such Indemnified Party and reasonably acceptable to such Indemnitee and furnished at Borrower’s sole expense to the effect Lessee) that a Realistic Possibility of Success reasonable basis exists for contesting to contest such claim (or, in the case of an appeal of an any adverse judicial determination, a written an opinion from of such independent Tax counsel to the effect that it is the position asserted in such appeal will more likely than not that such prevail). In no event shall an Indemnified Party be required to appeal an adverse judicial determination will be reversed or substantially modified); (5) Borrower shall have delivered to such Indemnitee a written acknowledgment of Borrower’s obligation to indemnify such Indemnitee to the extent that United States Supreme Court. The party controlling the contest is not successful; shall consult in good faith with the other party and its counsel with respect to the contest of such claim for Taxes (or claim for refund) but the decisions regarding what actions are to be taken shall be made by the controlling party in its sole judgment, provided, however, that Borrower if such Indemnified Party is the controlling party and the Lessee recommends the acceptance of a settlement offer made by the relevant Governmental Authority and such Indemnified Party rejects such settlement offer then the amount for which the Lessee will be required to indemnify such Indemnified Party with respect to the Taxes subject to such offer shall not be bound 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 its acknowledgment of liability if the relevant auditing agents or taxing authority to the controlling party thereof, in connection with such claim or the contest is resolved on thereof. Each Indemnified Party shall, at the Lessee's expense, supply the Lessee with such information and documents, in such Indemnified Party's possession (but not tax returns, documentation related thereto or in violation of a clear and unambiguous basis showing privilege or duty of confidentiality), 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 6.3(b). Notwithstanding anything in this Section 6.3(b) to the contrary, no such liability Indemnified Party shall enter into any settlement or other compromise or fail to appeal an adverse ruling with respect to any claim for which it may be entitled to be indemnified under this Section 6(b6.3 (and with respect to which contest is required under this Section 6.3(b)) without the prior written consent of the Lessee, unless such Indemnified Party waives its right to be indemnified under this Section 6.3 with respect to such Tax; (6) if a Specified Default or Event of Default shall have occurred and be continuing, Borrower shall have provided security for its obligation hereunder satisfactory claim. Notwithstanding anything contained herein to the Indemnitee by placing in escrow sufficient funds to cover any such contested Tax and the reasonably expected expenses of such contest on contrary, an After-Tax Basis, or otherwise providing satisfactory provisions for payment of such amounts determined by the Indemnitee in its sole discretion; (7) the aggregate amount of all indemnity payments that Borrower may Indemnified Party will not be required to make contest (and the Lessee shall not be permitted to contest) a claim with respect to the imposition of any Tax if such Indemnitee Indemnified Party shall waive its right to indemnification under this Section 6.3 with respect to such claim (or similar or related claims) is at least $60,000; and (8) the any claim is not for a Tax the imposition of which has been previously contested by, or at the request of, Borrower hereunder, and with respect to such previous contest (including all allowable appeals) was decided adversely to Borrower, unless Borrower has delivered an opinion of independent Tax counsel selected by Borrower and reasonably acceptable to the Indemnitee to the effect that, on the basis of (i) a change in applicable law, or (ii) a difference in the underlying facts, there is currently a Realistic Possibility of Success for contesting such claim.
(D) If any Indemnitee shall obtain a refund of all year or any part of any Tax paid by Borrower, such Indemnitee shall pay Borrower, but not before Borrower shall have made all payments theretofore due to such Indemnitee pursuant to this Section 6(b) and any other payments theretofore due such Indemnitee under any of the Operative Documents, an amount equal to the amount of such refund (net of any Taxes imposed thereon), including interest received and attributable thereto (net of any Taxes imposed thereon) plus, if Borrower has paid an amount pursuant to the first sentence of Section 6(b)(iii)(A), any net Tax benefit (or minus any net Tax detriment) realized by such Indemnitee as a result of any refund received, and payment made, by such Indemnitee pursuant to this sentence; provided that the Indemnitee shall not be obligated to pay an amount under the preceding sentence to the extent that such amount would exceed the amount of such Taxes paid, reimbursed or advanced by Borrower to such Indemnitee (other than the cost of the contest thereof); provided, further, that any amount not paid to Borrower pursuant to the foregoing limitation shall be carried forward to reduce pro tanto any future payments that Borrower may be required to make to such Indemnitee pursuant to this Section 6(b). If any Indemnitee shall have paid Borrower any refund of all or part of any Tax paid by Borrower and it is subsequently determined that such Indemnitee was not entitled to the refund, such determination shall be treated as the imposition of a Tax for which Borrower is obligated to indemnify such Indemnitee pursuant to the provisions of this Section 6(b) without regard to the exclusions set forth in Section 6(b)(ii) (other than subparagraphs (4), (11) and (12) thereof). Provided no Specified Default or Event of Default has occurred and is continuing, an Indemnitee shall not settle any such claim or contest pursuant to this provision without the written consent of Borrower, which consent shall not be unreasonably withheld, conditioned or delayed; provided, that an Indemnitee may settle at any time without the consent of Borrower if the Indemnitee waives (by written notice to Borrower) the payment by Borrower of an indemnity in respect of such issue and any related issue taxable year the contest of which is effectively foreclosed by the settlement materially adversely affected as a result of such issue, including any payment arising from such issue in subsequent years or which by reason of the fact that such issue is of a continuing nature, and promptly pays to Borrower any Tax previously paid or any interest-free loan advanced by Borrower (other than expenses of such contests) with respect to such issuewaiver).
(E) Nothing contained in this Section 6(b)(iv) shall require any Indemnitee to contest, or permit Borrower to contest in the name of such Indemnitee, a claim that such Indemnitee would otherwise be required to contest pursuant to this Section 6(b)(iv) if such Indemnitee shall waive payment by Borrower of any amount that might otherwise be payable by Borrower under this Section 6(b) in connection with such claim (other than the costs of contest previously incurred), nor shall any Indemnitee be required to pursue any appeal to the United States Supreme Court.
Appears in 1 contract
Contests. (A) If a After the Closing Date, Parent shall promptly notify the Representative of the receipt of any written claim shall be made against and received notice by any Indemnitee for any Tax for which Borrower is obligated to indemnify pursuant to this Section 6(b)the Surviving Corporation, such Indemnitee shall notify Borrower in writing of such claim within 30 days after its receipt, and shall provide Borrower such information regarding such claim as Borrower may reasonably request; provided, however, that the failure to provide such notice shall not release Borrower from Parent or any of its obligations to indemnify under Section 6 hereof unless, and only to Parent’s affiliates which involves the extent that, such failure effectively precludes Borrower’s contest rights. To the extent permitted under applicable law, such Indemnitee will not make any payments with respect to such claim for at least 30 days after giving notice of such claim to Borrower.
(B) If requested by Borrower in writing within 30 days after its receipt of such notice or such shorter period as may be required by applicable law, such Indemnitee shall, at the expense of Borrower and subject to subparagraph (C) below, contest the validity, applicability or amount of such Taxes by, in the case of an Indemnitee-Controlled Contest, in such Indemnitee’s sole discretion or, in the case of a Borrower-Controlled Contest, in Borrower’s sole discretion, (1) resisting payment thereof if practicable, (2) not paying such Tax except under protest, (3) if protest is necessary and proper, and if payment of such Tax is made, using reasonable efforts to obtain a refund thereof, in appropriate administrative and judicial proceedings, and (4) in the case of an Indemnitee-Controlled Contest, considering in good faith any other reasonable action as Borrower may reasonably request. Each Indemnitee shall consult in good faith with Borrower and Borrower’s counsel, and Borrower shall consult in good faith with such Indemnitee and its counsel in the case of a Borrower-Controlled Contest. concerning the forum in which the contest is most likely to be favorably resolved and whether such contest shall be by (x) resisting payment of such Tax, (y) paying such Tax under protest or (z) paying such Tax and seeking a refund or other repayment thereof.
(C) In no event shall an Indemnitee be required, or Borrower permitted, to contest the imposition assertion of any Tax for which Borrower is obligated pursuant to this Section 6(b) unless (1) Borrower shall have agreed to pay and shall promptly be paying on request all reasonable costs and expenses that such Indemnitee incurs in contesting such claim or arising out of or relating to such contest (including legal fees, accounting fees, and disbursements, including those on appeal, if any); (2) such contest is not reasonably likely to result in a material danger of the sale, seizure, forfeiture or loss of the Aircraftclaim, or the creation commencement of any Lien thereon other than Liens for Taxes (i) either not yet due or being contested in good faith by appropriate proceedings and (ii) for which such reserves, if any, as are required to be provided under generally accepted accounting principles have been provided by Borrower, and there is no risk of criminal penalties; (3) if such contest shall be conducted in a manner requiring the payment of the claim, Borrower shall have advanced sufficient funds, on an interest-free basis, to make the payment required, and shall have agreed to indemnify the Indemnitee against any additional net after-Tax cost to such Indemnitee of such advance; (4) if requested by the Indemnitee in writing, such Indemnitee shall have received an opinion of independent Tax counsel selected by Borrower and reasonably acceptable to such Indemnitee and furnished at Borrower’s sole expense to the effect that a Realistic Possibility of Success exists for contesting such claim (orAction, in the case respect of which an appeal of an adverse judicial determination, a written opinion from such independent Tax counsel to the effect that it is more likely than not that such adverse judicial determination will be reversed or substantially modified); (5) Borrower shall have delivered to such Indemnitee a written acknowledgment of Borrower’s obligation to indemnify such Indemnitee to the extent that the contest is not successful; provided, however, that Borrower will not be bound by its acknowledgment of liability if the contest is resolved on a clear and unambiguous basis showing no such liability under this Section 6(b) with respect to such Tax; (6) if a Specified Default or Event of Default shall have occurred and be continuing, Borrower shall have provided security for its obligation hereunder satisfactory to the Indemnitee by placing in escrow sufficient funds to cover any such contested Tax and the reasonably expected expenses of such contest on an After-Tax Basis, or otherwise providing satisfactory provisions for payment of such amounts determined by the Indemnitee in its sole discretion; (7) the aggregate amount of all indemnity payments that Borrower may be required to make to such Indemnitee with respect to such claim (or similar or related claims) is at least $60,000; and (8) the claim is not for a Tax the imposition of which has been previously contested by, or at the request of, Borrower hereunder, and such previous contest (including all allowable appeals) was decided adversely to Borrower, unless Borrower has delivered an opinion of independent Tax counsel selected sought by Borrower and reasonably acceptable to the Indemnitee to the effect that, on the basis of (i) a change in applicable law, or (ii) a difference in the underlying facts, there is currently a Realistic Possibility of Success for contesting such claim.
(D) If any Indemnitee shall obtain a refund of all or any part of any Tax paid by Borrower, such Indemnitee shall pay Borrower, but not before Borrower shall have made all payments theretofore due to such Indemnitee Parent pursuant to this Section 6(b) and any other payments theretofore due such Indemnitee under any of the Operative Documents, an amount equal to the amount of such refund Article VIII (net of any Taxes imposed thereon), including interest received and attributable thereto (net of any Taxes imposed thereon) plus, if Borrower has paid an amount pursuant to the first sentence of Section 6(b)(iii)(A), any net a “Tax benefit (or minus any net Tax detriment) realized by such Indemnitee as a result of any refund received, and payment made, by such Indemnitee pursuant to this sentence; provided that the Indemnitee shall not be obligated to pay an amount under the preceding sentence to the extent that such amount would exceed the amount of such Taxes paid, reimbursed or advanced by Borrower to such Indemnitee (other than the cost of the contest thereofClaim”); provided, furtherthat failure to comply with this provision shall not affect Parent’s right to indemnification hereunder, that any amount not paid to Borrower pursuant except to the foregoing limitation extent the Sellers shall have been materially prejudiced by such failure. The Representative shall be carried forward entitled (at the Sellers’ expense) to reduce pro tanto participate and, at its option, take control of the defense of any future payments that Borrower may be required pending or threatened Tax Claim, in whole or in part (including any resulting litigation), and to make to such Indemnitee pursuant to this Section 6(b)employ counsel of its choice at its expense. If any Indemnitee shall have paid Borrower any refund of all or part of any Tax paid by Borrower and it is subsequently determined that such Indemnitee was not entitled the Representative elects to assume the refund, such determination shall be treated as the imposition defense of a Tax Claim, the Representative shall keep Parent reasonably informed of all material developments relating to such Tax Claim, and shall allow Parent sufficient notice and opportunity to participate in the Tax Claim to the extent of any claims for Taxes for which Borrower is obligated Parent (or the Company or any Subsidiary) may be liable. Neither Parent nor the Representative shall settle or compromise (or cause to indemnify such Indemnitee pursuant to be settled or compromised) a matter involving a claim for Taxes for which the provisions of other party may be liable under this Section 6(b) without regard to the exclusions set forth in Section 6(b)(ii) (other than subparagraphs (4), (11) and (12) thereof). Provided no Specified Default or Event of Default has occurred and is continuing, an Indemnitee shall not settle any such claim or contest pursuant to this provision Agreement without the prior written consent of Borrowersuch other party, which consent shall not be unreasonably withhelddelayed, conditioned or delayed; providedwithheld, that an Indemnitee unless Parent or the Representative, as the case may settle at any time without be, waives the consent of Borrower if right to be indemnified for the Indemnitee waives (by written notice issue being conceded or settled. To the extent the Representative elects to Borrower) the payment by Borrower of an indemnity in respect of such issue and any related issue the contest of which is effectively foreclosed by the settlement of such issue, including any payment arising from such issue in subsequent years or which by reason of the fact that such issue is of control a continuing nature, and promptly pays to Borrower any Tax previously paid or any interest-free loan advanced by Borrower (other than expenses of such contests) with respect to such issue.
(E) Nothing contained in this Section 6(b)(iv) shall require any Indemnitee to contest, or permit Borrower to contest in the name of such Indemnitee, a claim that such Indemnitee would otherwise be required to contest Claim pursuant to this Section 6(b)(iv7.3, the Representative shall use (and shall cause the Sellers and their affiliates to use) if its commercially reasonable efforts to separate from any such Indemnitee shall waive payment Tax Claim any item in respect of which an indemnity is not sought by Borrower Parent pursuant to Article VIII, and to permit, to the greatest extent possible, Parent to control the contest of any amount that might otherwise be payable by Borrower under this Section 6(b) in connection with such claim (other than the costs of contest previously incurred), nor shall any Indemnitee be required to pursue any appeal to the United States Supreme Courtitem.
Appears in 1 contract
Sources: Merger Agreement (Ennis, Inc.)
Contests. (A) If a written any claim shall be made against and received by any Tax Indemnitee or if any proceeding shall be commenced against any Tax Indemnitee (including a written notice of such proceeding) for any Tax for Imposition as to which Borrower is obligated to indemnify the Lessee may have an indemnity obligation pursuant to this Section 6(b)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, such Tax Indemnitee shall promptly (and in any event, within 30 days) notify Borrower the Lessee in writing of such claim (provided that failure to so notify the Lessee within 30 days after its receipt, shall not alter such Tax Indemnitee's rights under this Section 13.5 except to the extent such failure precludes or materially adversely affects the ability to conduct a contest of any indemnified Taxes) and shall provide Borrower not take any action with respect to such information regarding claim, proceeding or Imposition without the written consent of the Lessee (such claim as Borrower may reasonably requestconsent 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 failure case of any such claim or proceeding, if such Tax Indemnitee shall be required by law or regulation to provide 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 release Borrower from take any of its obligations to indemnify under Section 6 hereof unless, and only to the extent that, such failure effectively precludes Borrower’s contest rights. To the extent permitted under applicable law, such Indemnitee will not make any payments action with respect to such claim claim, proceeding or Imposition without the consent of the Lessee (such consent not to be unreasonably withheld or unreasonably delayed) for at least 30 10 days after giving notice of such claim to Borrower.
(B) If requested by Borrower in writing within 30 days after its 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 30 days from receipt of such notice from such Tax Indemnitee (or such shorter period as may be such Tax Indemnitee has notified the Lessee is required by applicable lawlaw or regulation for such Tax Indemnitee to commence such contest), to request in writing that such Tax Indemnitee shallcontest the imposition of such Tax, at the expense Lessee's expense. If (x) such contest can be pursued in the name of Borrower the Lessee and subject to subparagraph (C) below, contest the validity, applicability or amount independently from any other proceeding involving a Tax liability of such Taxes byTax Indemnitee for which the Lessee has not agreed to indemnify such Tax Indemnitee, (y) such contest must be pursued in the case name of an such Tax Indemnitee-Controlled Contest, in but can be pursued independently from any other proceeding involving a Tax liability of such Indemnitee’s sole discretion orTax Indemnitee for which the Lessee has not agreed to indemnify such Tax Indemnitee or (z) such Tax Indemnitee so requests, then the Lessee shall be permitted to control the contest of such claim, provided that in the case of a Borrower-Controlled Contestcontest described in clause (y), in Borrower’s sole discretion, (1) resisting payment thereof if practicable, (2) not paying such Tax except under protest, (3) if protest is necessary Indemnitee determines reasonably and proper, and if payment in good faith that such contest by the Lessee could have a material adverse impact on the business or operations of such Tax is madeIndemnitee and provides a written explanation to the Lessee of such determination, using reasonable efforts such Tax Indemnitee may elect to obtain a refund thereof, in appropriate administrative and judicial proceedingscontrol or reassert control of the contest, and (4) in provided, that by taking control of the case contest, the Lessee acknowledges that it is responsible for the Imposition ultimately determined to be due by reason of an Indemnitee-Controlled Contest, considering in good faith any other reasonable action as Borrower may reasonably request. Each Indemnitee shall consult in good faith with Borrower and Borrower’s counselsuch claim, and Borrower shall consult provided, further, that in good faith with such Indemnitee and its counsel in determining the case application of a Borrower-Controlled Contest. concerning the forum in which the contest is most likely to be favorably resolved and whether such contest shall be by clauses (x) resisting payment of such Tax, and (y) paying of the preceding sentence, 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 under protest or (z) paying Indemnitee shall control the contest of such Tax and seeking a refund or other repayment thereof.
(C) claim, acting through counsel reasonably acceptable to the Lessee. In no event shall an the Lessee be permitted to contest (or such Tax Indemnitee be requiredrequired 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 Borrower permitted, to contest the imposition creation of any Lien (other than a Permitted Lien) on any 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 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 satisfactory to the relevant Tax Indemnitee in respect of the Taxes subject to such claim and any and all expenses for which Borrower the Lessee is obligated pursuant to this Section 6(bresponsible hereunder reasonably foreseeable in connection with the contest of such claim, (C) unless (1) Borrower the Lessee shall have agreed to pay and shall promptly be paying pay, to such Tax Indemnitee on request demand all reasonable costs out-of-pocket costs, losses and expenses that such Tax Indemnitee incurs may incur in connection with contesting such claim or arising out of or relating to such contest (Imposition including legal feesall reasonable legal, accounting fees, and investigatory fees and disbursements, including those on appeal, if any); or (2) such contest is not reasonably likely to result in a material danger of the sale, seizure, forfeiture or loss of the Aircraft, or the creation of any Lien thereon other than Liens for Taxes (i) either not yet due or being contested in good faith by appropriate proceedings and (ii) for which such reserves, if any, as are required to be provided under generally accepted accounting principles have been provided by Borrower, and there is no risk of criminal penalties; (3D) if such contest shall be conducted in a manner requiring involve the payment of the claimTax prior to the contest, Borrower unless the Lessee shall have advanced sufficient funds, on provide to such Tax Indemnitee an interest-free basis, advance in an amount equal to make the payment required, and shall have agreed to indemnify Imposition that the Indemnitee against any is required to pay (with no additional net after-Tax cost tax costs to such Tax Indemnitee). In addition for Tax Indemnitee controlled contests and claims contested in the name of such advance; Tax Indemnitee in a public forum, no contest shall be required: (4A) 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 $75,000 or (B) unless, if requested by such Tax Indemnitee, the Indemnitee in writing, such Indemnitee Lessee shall have received provided to such Tax Indemnitee an opinion of independent Tax counsel selected by Borrower and reasonably acceptable to such Indemnitee and furnished at Borrower’s sole expense to the effect that a Realistic Possibility of Success exists for contesting such claim Lessee (orwhich may be in-house counsel) (except, in the case of income taxes indemnified hereunder which 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. In no event shall a Tax Indemnitee be required to appeal of an adverse judicial determination, a written opinion from such independent Tax counsel determination to the effect that it is more likely than not that such adverse judicial determination will be reversed or substantially modified); (5) Borrower United States Supreme Court. The party conducting the contest shall have delivered to such Indemnitee a written acknowledgment of Borrower’s obligation to indemnify such Indemnitee consult in good faith with the other party and its counsel with respect to the extent that contest of such claim for Taxes (or claim for refund) but the contest is not successful; decisions regarding what actions to be taken shall be made by the controlling party in its sole judgement, provided, however, that Borrower 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 be bound exceed the amount which it would have owed if such -50- 52 Participation Agreement 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 its acknowledgment of liability if 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 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 an adverse ruling with respect to any claim which is resolved on a clear and unambiguous basis showing no such liability entitled to be indemnified under this Section 6(b13.5 (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 waives its right to be indemnified under this Section 13.5 with respect to such Tax; (6) if a Specified Default or Event of Default shall have occurred and be continuing, Borrower shall have provided security for its obligation hereunder satisfactory claim. Notwithstanding anything contained herein to the contrary, a Tax Indemnitee by placing in escrow sufficient funds to cover any such contested Tax and the reasonably expected expenses of such contest on an After-Tax Basis, or otherwise providing satisfactory provisions for payment of such amounts determined by the Indemnitee in its sole discretion; (7) the aggregate amount of all indemnity payments that Borrower may will not be required to make contest (and the Lessee shall not be permitted to contest) a claim with respect to the imposition of any Tax if such Tax Indemnitee shall waive its right to indemnification from Lessee under this Section 13.5 with respect to such claim (or similar or related claims) is at least $60,000; and (8) the any claim is not for a Tax the imposition of which has been previously contested by, or at the request of, Borrower hereunder, and with respect to such previous contest (including all allowable appeals) was decided adversely to Borrower, unless Borrower has delivered an opinion of independent Tax counsel selected by Borrower and reasonably acceptable to the Indemnitee to the effect that, on the basis of (i) a change in applicable law, or (ii) a difference in the underlying facts, there is currently a Realistic Possibility of Success for contesting such claim.
(D) If any Indemnitee shall obtain a refund of all year or any part of any Tax paid by Borrower, such Indemnitee shall pay Borrower, but not before Borrower shall have made all payments theretofore due to such Indemnitee pursuant to this Section 6(b) and any other payments theretofore due such Indemnitee under any of the Operative Documents, an amount equal to the amount of such refund (net of any Taxes imposed thereon), including interest received and attributable thereto (net of any Taxes imposed thereon) plus, if Borrower has paid an amount pursuant to the first sentence of Section 6(b)(iii)(A), any net Tax benefit (or minus any net Tax detriment) realized by such Indemnitee as a result of any refund received, and payment made, by such Indemnitee pursuant to this sentence; provided that the Indemnitee shall not be obligated to pay an amount under the preceding sentence to the extent that such amount would exceed the amount of such Taxes paid, reimbursed or advanced by Borrower to such Indemnitee (other than the cost of the contest thereof); provided, further, that any amount not paid to Borrower pursuant to the foregoing limitation shall be carried forward to reduce pro tanto any future payments that Borrower may be required to make to such Indemnitee pursuant to this Section 6(b). If any Indemnitee shall have paid Borrower any refund of all or part of any Tax paid by Borrower and it is subsequently determined that such Indemnitee was not entitled to the refund, such determination shall be treated as the imposition of a Tax for which Borrower is obligated to indemnify such Indemnitee pursuant to the provisions of this Section 6(b) without regard to the exclusions set forth in Section 6(b)(ii) (other than subparagraphs (4), (11) and (12) thereof). Provided no Specified Default or Event of Default has occurred and is continuing, an Indemnitee shall not settle any such claim or contest pursuant to this provision without the written consent of Borrower, which consent shall not be unreasonably withheld, conditioned or delayed; provided, that an Indemnitee may settle at any time without the consent of Borrower if the Indemnitee waives (by written notice to Borrower) the payment by Borrower of an indemnity in respect of such issue and any related issue taxable year the contest of which is effectively foreclosed by the settlement materially adversely affected as a result of such issue, including any payment arising from such issue in subsequent years or which by reason of the fact that such issue is of a continuing nature, and promptly pays to Borrower any Tax previously paid or any interest-free loan advanced by Borrower (other than expenses of such contests) with respect to such issuewaiver).
(E) Nothing contained in this Section 6(b)(iv) shall require any Indemnitee to contest, or permit Borrower to contest in the name of such Indemnitee, a claim that such Indemnitee would otherwise be required to contest pursuant to this Section 6(b)(iv) if such Indemnitee shall waive payment by Borrower of any amount that might otherwise be payable by Borrower under this Section 6(b) in connection with such claim (other than the costs of contest previously incurred), nor shall any Indemnitee be required to pursue any appeal to the United States Supreme Court.
Appears in 1 contract
Contests. (A) If a written any claim shall be or claims is or are made against and received by any Indemnitee for any Tax for which Borrower is obligated subject to indemnify pursuant to this indemnification as provided in Section 6(b7.2(a), such Indemnitee shall as soon as practicable, but in no event more than thirty (30) days after receipt of formal written notice of the Tax or proposed Tax, notify Borrower in writing the Lessee and shall not take action with respect to such Tax without the consent of the Lessee (such consent not to be unreasonably withheld, conditioned or delayed) for thirty (30) days after the receipt of such claim within 30 days after its receipt, and shall provide Borrower such information regarding such claim as Borrower may reasonably requestnotice by the Lessee; provided, however, that in the failure to provide case of any such notice Tax, if action shall not release Borrower from any of its obligations to indemnify under Section 6 hereof unless, and only to the extent that, such failure effectively precludes Borrower’s contest rights. To the extent permitted under applicable law, such Indemnitee will not make any payments with respect to such claim for at least 30 days after giving notice of such claim to Borrower.
(B) If requested by Borrower in writing within 30 days after its receipt of such notice or such shorter period as may be required by applicable lawApplicable Law to be taken prior to the end of such period of thirty (30) days, such Indemnitee shall, at in such notice to the expense of Borrower and subject to subparagraph (C) belowLessee, contest inform the validity, applicability or amount Lessee of such Taxes byshorter period, and no action shall be taken with respect to such Tax without the consent of the Lessee (such consent not to be unreasonably withheld, conditioned or delayed) before seven (7) days before the end of such shorter period. If, in the case good faith opinion of an Indemnitee-Controlled the Lessee there exists a reasonable basis to contest such Tax (and if the provisos of the definition of “Permitted Contest” continue to be satisfied), the Lessee at its expense may, to the extent permitted by Applicable Laws and provided that it has acknowledged in writing its liability for the Tax at issue if the contest is not successful, contest such Indemnitee’s sole discretion orTax, and subsequently may appeal any adverse determination (other than to the United States Supreme Court), in the case of a Borrower-Controlled Contest, in Borrower’s sole discretion, (1) resisting payment thereof if practicable, (2) not paying such Tax except under protest, (3) if protest is necessary and proper, and if payment of such Tax is made, using reasonable efforts to obtain a refund thereof, in appropriate administrative and judicial proceedingslegal forums; provided, and (4) that in all other circumstances, upon notice from the case of an Indemnitee-Controlled Contest, considering in good faith any other reasonable action as Borrower may reasonably request. Each Indemnitee shall consult in good faith with Borrower and Borrower’s counsel, and Borrower shall consult in good faith with such Indemnitee and its counsel in the case of a Borrower-Controlled Contest. concerning the forum in which the contest is most likely to be favorably resolved and whether such contest shall be by (x) resisting payment of such Tax, (y) paying such Tax under protest or (z) paying such Tax and seeking a refund or other repayment thereof.
(C) In no event shall an Indemnitee be required, or Borrower permitted, to contest the imposition of any Tax for which Borrower is obligated pursuant to this Section 6(b) unless (1) Borrower shall have agreed to pay and shall promptly be paying on request all reasonable costs and expenses that such Indemnitee incurs in contesting such claim or arising out of or relating to such contest (including legal fees, accounting fees, and disbursements, including those on appeal, if any); (2) such contest is not reasonably likely to result in a material danger of the sale, seizure, forfeiture or loss of the Aircraft, or the creation of any Lien thereon other than Liens for Taxes (i) either not yet due or being contested in good faith by appropriate proceedings and (ii) for which such reserves, if any, as are required to be provided under generally accepted accounting principles have been provided by Borrower, and there is no risk of criminal penalties; (3) if such contest shall be conducted in a manner requiring the payment of the claim, Borrower shall have advanced sufficient funds, on an interest-free basis, to make the payment required, and shall have agreed to indemnify the Indemnitee against any additional net after-Tax cost Lessee to such Indemnitee of that there exists a reasonable basis to contest any such advance; (4) if requested by the Indemnitee in writing, such Indemnitee shall have received an opinion of independent Tax counsel selected by Borrower and reasonably acceptable to such Indemnitee and furnished at Borrower’s sole expense to the effect that a Realistic Possibility of Success exists for contesting such claim (or, in the case of an appeal of an adverse judicial determination, a written opinion from the position asserted in such independent Tax counsel to the effect that it is appeal will more likely than not that prevail (in each case, as supported by an opinion of tax counsel to the Lessee reasonably acceptable to the Indemnitee), the Indemnitee, at the Lessee’s expense, shall contest any such adverse judicial determination will Tax (so long as the provisos of the definition of “Permitted Contest” continue to be reversed satisfied and, in the case of a Tax on gross or substantially modifiednet income, the aggregate amount of the Tax exceeds $50,000, which amount shall be verified and certified by an independent public accounting firm mutually acceptable to the Lessee and the applicable Indemnitee in accordance with Section 7.2(a)(v); . The Lessee shall pay all out-of-pocket expenses incurred by the Indemnitee in contesting any such Tax (5) Borrower including, without limitation, all reasonable attorney’s and accountants’ fees and expenses), upon demand by the Indemnitee. The Lessee shall have delivered the right to such Indemnitee a written acknowledgment participate in the conduct of Borrower’s obligation to indemnify such any proceedings controlled by the Indemnitee to the extent that such participation by the contest is Lessee does not successful; provided, however, that Borrower will not be bound by its acknowledgment of liability if interfere with the contest is resolved on a clear and unambiguous basis showing no such liability under this Section 6(b) with respect to such Tax; (6) if a Specified Default or Event of Default shall have occurred and be continuing, Borrower shall have provided security for its obligation hereunder satisfactory to the Indemnitee by placing in escrow sufficient funds to cover any such contested Tax and the reasonably expected expenses Indemnitee’s control of such contest on an After-Tax Basisand the Lessee shall in all events be kept informed, or otherwise providing satisfactory provisions for payment of such amounts determined by the Indemnitee in its sole discretion; (7) the aggregate amount of all indemnity payments that Borrower may be required to make to such Indemnitee with respect to such claim (or similar or related claims) is at least $60,000; and (8) the claim is not for a Tax the imposition of which has been previously contested by, or at the request of, Borrower hereunder, and such previous contest (including all allowable appeals) was decided adversely to Borrower, unless Borrower has delivered an opinion of independent Tax counsel selected by Borrower and reasonably acceptable to the Indemnitee to the effect that, on the basis of (i) a change in applicable law, or (ii) a difference in the underlying facts, there is currently a Realistic Possibility of Success for contesting such claim.
(D) If any Indemnitee shall obtain a refund of all or any part of any Tax paid by Borrower, such Indemnitee shall pay Borrower, but not before Borrower shall have made all payments theretofore due to such Indemnitee pursuant to this Section 6(b) and any other payments theretofore due such Indemnitee under any of the Operative Documents, an amount equal to the amount of such refund (net of any Taxes imposed thereon), including interest received and attributable thereto (net of any Taxes imposed thereon) plus, if Borrower has paid an amount pursuant to the first sentence of Section 6(b)(iii)(A), any net Tax benefit (or minus any net Tax detriment) realized by such Indemnitee as a result of any refund received, and payment made, by such Indemnitee pursuant to this sentence; provided that the Indemnitee shall not be obligated to pay an amount under the preceding sentence to the extent that such amount would exceed the amount practicable, of such Taxes paid, reimbursed or advanced by Borrower material developments relative to such Indemnitee (other than the cost of the contest thereof); provided, further, that any amount not paid to Borrower pursuant to the foregoing limitation shall be carried forward to reduce pro tanto any future payments that Borrower may be required to make to such Indemnitee pursuant to this Section 6(b). If any Indemnitee shall have paid Borrower any refund of all or part of any Tax paid by Borrower and it is subsequently determined that such Indemnitee was not entitled to the refund, such determination shall be treated as the imposition of a Tax for which Borrower is obligated to indemnify such Indemnitee pursuant to the provisions of this Section 6(b) without regard to the exclusions set forth in Section 6(b)(ii) (other than subparagraphs (4), (11) and (12) thereof). Provided no Specified Default or Event of Default has occurred and is continuing, an Indemnitee shall not settle any such claim or contest pursuant to this provision without the written consent of Borrower, which consent shall not be unreasonably withheld, conditioned or delayed; provided, that an Indemnitee may settle at any time without the consent of Borrower if the Indemnitee waives (by written notice to Borrower) the payment by Borrower of an indemnity in respect of such issue and any related issue the contest of which is effectively foreclosed by the settlement of such issue, including any payment arising from such issue in subsequent years or which by reason of the fact that such issue is of a continuing nature, and promptly pays to Borrower any Tax previously paid or any interest-free loan advanced by Borrower (other than expenses of such contests) with respect to such issue.
(E) Nothing contained in this Section 6(b)(iv) shall require any Indemnitee to contest, or permit Borrower to contest in the name of such Indemnitee, a claim that such Indemnitee would otherwise be required to contest pursuant to this Section 6(b)(iv) if such Indemnitee shall waive payment by Borrower of any amount that might otherwise be payable by Borrower under this Section 6(b) in connection with such claim (other than the costs of contest previously incurred), nor shall any Indemnitee be required to pursue any appeal to the United States Supreme Court.BUSINESS.29620189.12
Appears in 1 contract
Contests. (A) If a Newco Sub agrees to give written claim shall be made against and received notice to the Remington Holders of the receipt of any written notice by any Indemnitee Company Party, and the Remington Holders agree to give to Newco Sub written notice of the receipt of any written notice by them, that involves the assertion of any claim, or the commencement of any Action, with respect to the Target Companies which could result in a breach of a representation or warranty in Section 3.21 or relates to any Pre-Closing Tax Period of any Target Company (including, for the avoidance of doubt, any partnership-level proceeding or claim related to an IRS Form 1065 of the Target for an applicable period but excluding any partner-level proceeding or claim of any Remington Holder) (a “Tax Claim”). The Remington Holders will have the right (but not the obligation) to control the contest or resolution of any Tax for which Borrower is obligated to indemnify pursuant to this Section 6(b), such Indemnitee shall notify Borrower in writing of such claim within 30 days after its receipt, and shall provide Borrower such information regarding such claim as Borrower may reasonably requestClaim; provided, however, that (a) the failure Remington Holders will have provided written notice to provide such notice shall not release Borrower from any Newco Sub of its obligations intention to indemnify under Section 6 hereof unlesscontrol such Tax Claim, and only to (b) the extent that, such failure effectively precludes Borrower’s contest rights. To Remington Holders will obtain the extent permitted under applicable law, such Indemnitee prior written consent of the Target (which consent will not make be unreasonably withheld or delayed) before entering into any payments with respect to such claim for at least 30 days after giving notice of such claim to Borrower.
(B) If requested by Borrower in writing within 30 days after its receipt of such notice settlement or such shorter period as may be required by applicable law, such Indemnitee shall, at the expense of Borrower and subject to subparagraph (C) below, contest the validity, applicability or amount of such Taxes by, in the case of an Indemnitee-Controlled Contest, in such Indemnitee’s sole discretion or, in the case of a Borrower-Controlled Contest, in Borrower’s sole discretion, (1) resisting payment thereof if practicable, (2) not paying such Tax except under protest, (3) if protest is necessary and proper, and if payment concession of such Tax is madeClaim if such settlement or concession could reasonably be expected to adversely impact the liability of Newco Sub, using reasonable efforts to obtain a refund thereof, in appropriate administrative and judicial proceedings, and (4) in the case of an Indemnitee-Controlled Contest, considering in good faith any other reasonable action as Borrower may reasonably request. Each Indemnitee shall consult in good faith with Borrower and Borrower’s counsel, and Borrower shall consult in good faith with such Indemnitee and its counsel in the case of a Borrower-Controlled Contest. concerning the forum in which the contest is most likely to be favorably resolved and whether such contest shall be by (x) resisting payment of such Tax, (y) paying such Tax under protest Target or (z) paying such Tax and seeking a refund or other repayment thereof.
(C) In no event shall an Indemnitee be required, or Borrower permitted, to contest the imposition of any Tax for which Borrower is obligated pursuant to this Section 6(b) unless (1) Borrower shall have agreed to pay and shall promptly be paying on request all reasonable costs and expenses that such Indemnitee incurs in contesting such claim or arising out of or relating to such contest (including legal fees, accounting fees, and disbursements, including those on appeal, if any); (2) such contest is not reasonably likely to result in a material danger of the sale, seizure, forfeiture or loss of the Aircraft, or the creation of any Lien thereon other than Liens their Affiliates for Taxes (i) either not yet due or being contested in good faith by appropriate proceedings and (ii) for which such reserves, if any, as are required to be provided under generally accepted accounting principles have been provided by Borrower, and there is no risk of criminal penalties; (3) if such contest shall be conducted in a manner requiring the payment of the claim, Borrower shall have advanced sufficient funds, on an interestany Post-free basis, to make the payment required, and shall have agreed to indemnify the Indemnitee against any additional net after-Closing Tax cost to such Indemnitee of such advance; (4) if requested by the Indemnitee in writing, such Indemnitee shall have received an opinion of independent Tax counsel selected by Borrower and reasonably acceptable to such Indemnitee and furnished at Borrower’s sole expense to the effect that a Realistic Possibility of Success exists for contesting such claim (or, in the case of an appeal of an adverse judicial determination, a written opinion from such independent Tax counsel to the effect that it is more likely than not that such adverse judicial determination will be reversed or substantially modified); (5) Borrower shall have delivered to such Indemnitee a written acknowledgment of Borrower’s obligation to indemnify such Indemnitee to the extent that the contest is not successful; provided, however, that Borrower will not be bound by its acknowledgment of liability if the contest is resolved on a clear and unambiguous basis showing no such liability under this Section 6(b) with respect to such Tax; (6) if a Specified Default or Event of Default shall have occurred and be continuing, Borrower shall have provided security for its obligation hereunder satisfactory to the Indemnitee by placing in escrow sufficient funds to cover any such contested Tax and the reasonably expected expenses of such contest on an After-Tax Basis, or otherwise providing satisfactory provisions for payment of such amounts determined by the Indemnitee in its sole discretion; (7) the aggregate amount of all indemnity payments that Borrower may be required to make to such Indemnitee with respect to such claim (or similar or related claims) is at least $60,000; and (8) the claim is not for a Tax the imposition of which has been previously contested by, or at the request of, Borrower hereunder, and such previous contest (including all allowable appeals) was decided adversely to Borrower, unless Borrower has delivered an opinion of independent Tax counsel selected by Borrower and reasonably acceptable to the Indemnitee to the effect that, on the basis of (i) a change in applicable law, or (ii) a difference in the underlying facts, there is currently a Realistic Possibility of Success for contesting such claim.
(D) If any Indemnitee shall obtain a refund of all or any part of any Tax paid by Borrower, such Indemnitee shall pay Borrower, but not before Borrower shall have made all payments theretofore due to such Indemnitee pursuant to this Section 6(b) and any other payments theretofore due such Indemnitee under any of the Operative Documents, an amount equal to the amount of such refund (net of any Taxes imposed thereon), including interest received and attributable thereto (net of any Taxes imposed thereon) plus, if Borrower has paid an amount pursuant to the first sentence of Section 6(b)(iii)(A), any net Tax benefit (or minus any net Tax detriment) realized by such Indemnitee as a result of any refund received, and payment made, by such Indemnitee pursuant to this sentence; provided that the Indemnitee shall not be obligated to pay an amount under the preceding sentence to the extent that such amount would exceed the amount of such Taxes paid, reimbursed or advanced by Borrower to such Indemnitee (other than the cost of the contest thereof)Period; provided, further, that any amount Newco Sub will be entitled to participate in the defense of such Tax Contest and to employ counsel of its choice for such purpose, the fees and expenses of which separate counsel will be borne by Newco Sub. To the extent the Remington Holders do not paid control a Tax Claim, the Company Parties may defend against such Tax Claim; provided that the Remington Holders will be entitled to Borrower pursuant participate in the defense of such Tax Claim and to employ counsels of their choice for such purpose, the foregoing limitation shall fees and expenses of which separate counsel will be carried forward to reduce pro tanto any future payments that Borrower may be required to make to such Indemnitee pursuant to this Section 6(b). If any Indemnitee shall have paid Borrower any refund of all or part of any Tax paid borne by Borrower and it is subsequently determined the respective Remington Holders; provided further that such Indemnitee was Tax Claim may not entitled to the refund, such determination shall be treated as the imposition of a Tax for which Borrower is obligated to indemnify such Indemnitee pursuant to the provisions of this Section 6(b) without regard to the exclusions set forth in Section 6(b)(ii) (other than subparagraphs (4), (11) and (12) thereof). Provided no Specified Default settled or Event of Default has occurred and is continuing, an Indemnitee shall not settle any such claim or contest pursuant to this provision conceded without the prior written consent of Borrowerthe Remington Holders, which consent shall will not be unreasonably withheld, conditioned withheld or delayed; provided, that an Indemnitee may settle at any time without . In the consent event of Borrower if the Indemnitee waives (by written notice to Borrower) the payment by Borrower of an indemnity in respect of such issue a conflict between this Section 7.05 and any related issue the contest other section of which is effectively foreclosed by the settlement of such issuethis Agreement, including any payment arising from such issue in subsequent years or which by reason of the fact that such issue is of a continuing nature, and promptly pays to Borrower any Tax previously paid or any interest-free loan advanced by Borrower (other than expenses of such contests) this Section 7.05 will govern with respect to such issuethe control of Tax Claims.
(E) Nothing contained in this Section 6(b)(iv) shall require any Indemnitee to contest, or permit Borrower to contest in the name of such Indemnitee, a claim that such Indemnitee would otherwise be required to contest pursuant to this Section 6(b)(iv) if such Indemnitee shall waive payment by Borrower of any amount that might otherwise be payable by Borrower under this Section 6(b) in connection with such claim (other than the costs of contest previously incurred), nor shall any Indemnitee be required to pursue any appeal to the United States Supreme Court.
Appears in 1 contract
Sources: Acquisition Agreement (Ashford Inc)
Contests. (A) If a written any claim shall be made against and received by any Tax Indemnitee or if any proceeding shall be commenced against any Tax Indemnitee (including a written notice of such proceeding) for any Tax for Imposition as to which Borrower is obligated to indemnify the Lessee may have an indemnity obligation pursuant to this Section 6(b)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, such Tax Indemnitee shall promptly (and in any event, within 20 days) notify Borrower the Lessee in writing (provided that failure to so notify the Lessee within 20 days shall not alter such Tax Indemnitee's rights under this Section 13.5 except to the extent such failure precludes or materially adversely affects the ability to conduct a contest of any indemnified Taxes) and shall not take any action with respect to such claim within 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 its receipt, and shall provide Borrower the receipt of such information regarding such claim as Borrower may reasonably requestnotice by the Lessee; provided, however, that in the failure case of any such claim or proceeding, if such Tax Indemnitee shall be required by law or regulation to provide 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 release Borrower from take any of its obligations to indemnify under Section 6 hereof unless, and only to the extent that, such failure effectively precludes Borrower’s contest rights. To the extent permitted under applicable law, such Indemnitee will not make any payments action with respect to such claim claim, proceeding or Imposition without the consent of the Lessee (such consent not to be unreasonably withheld or unreasonably delayed) for at least 30 10 days after giving notice of such claim to Borrower.
(B) If requested by Borrower in writing within 30 days after its the receipt of such notice by the 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 Lessee shall be entitled for a period of 30 days from receipt of such notice from the Tax Indemnitee (or such shorter period as may be the Tax Indemnitee has notified the Lessee is required by applicable lawlaw or regulation for the Tax Indemnitee to commence such contest), to request in writing that such Tax Indemnitee shallcontest the imposition of such Tax, at the expense Lessee's expense. If (x) such contest can be pursued in the name of Borrower the Lessee and subject to subparagraph (C) below, contest the validity, applicability or amount independently from any other proceeding involving a Tax liability of such Taxes byTax Indemnitee for which the Lessee has not agreed to indemnify such Tax Indemnitee, (y) such contest must be pursued in the case name of an the Tax Indemnitee-Controlled Contest, in but can be pursued independently from any other proceeding involving a Tax liability of such Indemnitee’s sole discretion orTax Indemnitee for which the Lessee has not agreed to indemnify such Tax Indemnitee or (z) 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 Borrower-Controlled Contestcontest described in clause (y), in Borrower’s sole discretion, (1) resisting payment thereof if practicable, (2) not paying such the Tax except under protest, (3) if protest is necessary and proper, and if payment of such Tax is made, using reasonable efforts to obtain a refund thereof, in appropriate administrative and judicial proceedings, and (4) in the case of an Indemnitee-Controlled Contest, considering Indemnitee determines in good faith any other reasonable action as Borrower that such contest by the Lessee could have a material adverse impact on the business or operations of the Tax Indemnitee and provides a written explanation to the Lessee of such determination, the Tax Indemnitee may reasonably request. Each Indemnitee shall consult in good faith with Borrower and Borrower’s counselelect to control or reassert control of the contest, and Borrower shall consult in good faith with such Indemnitee and its counsel in provided, that by taking control of the case of a Borrower-Controlled Contest. concerning contest, Lessee acknowledges that it is responsible for the forum in which the contest is most likely Imposition ultimately determined to be favorably resolved due by reason of such claim, and whether such contest shall be by provided, further, that in determining the application of clauses (x) resisting payment of such Tax, and (y) paying of the preceding sentence, 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, the Tax Indemnitee shall control the contest of such Tax under protest or (z) paying such Tax and seeking a refund or other repayment thereof.
(C) claim, acting through counsel reasonably acceptable to the Lessee. In no event shall an the Lessee be permitted to contest (or the Tax Indemnitee be requiredrequired 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 material risk of imposition of criminal liability or will involve a material risk of the sale, forfeiture or loss of, or Borrower permitted, to contest the imposition creation of any Lien (other than a Permitted 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 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 satisfactory to the relevant Tax Indemnitee in respect of the Taxes subject to such claim and any and all expenses for which Borrower the Lessee is obligated pursuant to this Section 6(bresponsible hereunder reasonably foreseeable in connection with the contest of such claim, (C) unless (1) Borrower the Lessee shall have agreed to pay and shall promptly be paying pay, to such Tax Indemnitee on request demand all reasonable costs out-of-pocket costs, losses and expenses that such Tax Indemnitee incurs may incur in connection with contesting such claim or arising out of or relating to such contest (Imposition including legal feesall reasonable legal, accounting fees, and investigatory fees and disbursements, including those on appeal, if any); or (2) such contest is not reasonably likely to result in a material danger of the sale, seizure, forfeiture or loss of the Aircraft, or the creation of any Lien thereon other than Liens for Taxes (i) either not yet due or being contested in good faith by appropriate proceedings and (ii) for which such reserves, if any, as are required to be provided under generally accepted accounting principles have been provided by Borrower, and there is no risk of criminal penalties; (3D) if such contest shall be conducted in a manner requiring involve the payment of the claimTax prior to the contest, Borrower unless the Lessee shall have advanced sufficient funds, on provide to the Tax Indemnitee an interest-free basis, advance in an amount equal to make the payment required, and shall have agreed to indemnify Imposition that the Indemnitee against any is required to pay (with no additional net after-Tax cost 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: (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 advance; Tax Indemnitee for which the Lessee may be liable to pay an indemnity under this Section 13.5(b)) exceeds $500,000 and (4B) unless, if requested by the Indemnitee in writingTax Indemnitee, such Indemnitee the Lessee shall have received provided to the Tax Indemnitee an opinion of independent Tax counsel selected by Borrower and reasonably acceptable to such Indemnitee and furnished at Borrower’s sole expense to the effect that a Realistic Possibility of Success exists for contesting such claim Lessee (orwhich may be in-house counsel) (except, in the case of income taxes indemnified hereunder which shall be an opinion of independent tax counsel selected by the Tax Indemnitee and reasonably acceptable to the Lessee) that a reasonable basis exists to contest such claim. In no event shall a Tax Indemnitee be required to appeal of an adverse judicial determination, a written opinion from such independent Tax counsel determination to the effect that it is more likely than not that such adverse judicial determination will be reversed or substantially modified); (5) Borrower United States Supreme Court. The party conducting the contest shall have delivered to such Indemnitee a written acknowledgment of Borrower’s obligation to indemnify such Indemnitee consult in good faith with the other party and its counsel with respect to the extent that contest of such claim for Taxes (or claim for refund) but the contest is not successful; decisions regarding what actions to be taken shall be made by the controlling party in its sole judgement, provided, however, that Borrower will not be bound by its acknowledgment of liability 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 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), and the Lessee shall promptly reimburse such Indemnitee for the reasonable out-of-pocket expenses of supplying such information and documents. 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 resolved on a clear and unambiguous basis showing no such liability entitled to be indemnified under this Section 6(b13.5 (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 waives its right to be indemnified under this Section 13.5 with respect to such Tax; (6) if a Specified Default or Event of Default shall have occurred and be continuing, Borrower shall have provided security for its obligation hereunder satisfactory claim. Notwithstanding anything contained herein to the contrary, a Tax Indemnitee by placing in escrow sufficient funds to cover any such contested Tax and the reasonably expected expenses of such contest on an After-Tax Basis, or otherwise providing satisfactory provisions for payment of such amounts determined by the Indemnitee in its sole discretion; (7) the aggregate amount of all indemnity payments that Borrower may will not be required to make contest (and the Lessee shall not be permitted to contest) a claim with respect to the -52- Participation Agreement 57 imposition of any Tax if such Tax Indemnitee shall waive its right to indemnification under this Section 13.5 with respect to such claim (or similar or related claims) is at least $60,000; and (8) the any claim is not for a Tax the imposition of which has been previously contested by, or at the request of, Borrower hereunder, and with respect to such previous contest (including all allowable appeals) was decided adversely to Borrower, unless Borrower has delivered an opinion of independent Tax counsel selected by Borrower and reasonably acceptable to the Indemnitee to the effect that, on the basis of (i) a change in applicable law, or (ii) a difference in the underlying facts, there is currently a Realistic Possibility of Success for contesting such claim.
(D) If any Indemnitee shall obtain a refund of all year or any part of any Tax paid by Borrower, such Indemnitee shall pay Borrower, but not before Borrower shall have made all payments theretofore due to such Indemnitee pursuant to this Section 6(b) and any other payments theretofore due such Indemnitee under any of the Operative Documents, an amount equal to the amount of such refund (net of any Taxes imposed thereon), including interest received and attributable thereto (net of any Taxes imposed thereon) plus, if Borrower has paid an amount pursuant to the first sentence of Section 6(b)(iii)(A), any net Tax benefit (or minus any net Tax detriment) realized by such Indemnitee as a result of any refund received, and payment made, by such Indemnitee pursuant to this sentence; provided that the Indemnitee shall not be obligated to pay an amount under the preceding sentence to the extent that such amount would exceed the amount of such Taxes paid, reimbursed or advanced by Borrower to such Indemnitee (other than the cost of the contest thereof); provided, further, that any amount not paid to Borrower pursuant to the foregoing limitation shall be carried forward to reduce pro tanto any future payments that Borrower may be required to make to such Indemnitee pursuant to this Section 6(b). If any Indemnitee shall have paid Borrower any refund of all or part of any Tax paid by Borrower and it is subsequently determined that such Indemnitee was not entitled to the refund, such determination shall be treated as the imposition of a Tax for which Borrower is obligated to indemnify such Indemnitee pursuant to the provisions of this Section 6(b) without regard to the exclusions set forth in Section 6(b)(ii) (other than subparagraphs (4), (11) and (12) thereof). Provided no Specified Default or Event of Default has occurred and is continuing, an Indemnitee shall not settle any such claim or contest pursuant to this provision without the written consent of Borrower, which consent shall not be unreasonably withheld, conditioned or delayed; provided, that an Indemnitee may settle at any time without the consent of Borrower if the Indemnitee waives (by written notice to Borrower) the payment by Borrower of an indemnity in respect of such issue and any related issue taxable year the contest of which is effectively foreclosed by the settlement materially adversely affected as a result of such issue, including any payment arising from such issue in subsequent years or which by reason of the fact that such issue is of a continuing nature, and promptly pays to Borrower any Tax previously paid or any interest-free loan advanced by Borrower (other than expenses of such contests) with respect to such issuewaiver).
(E) Nothing contained in this Section 6(b)(iv) shall require any Indemnitee to contest, or permit Borrower to contest in the name of such Indemnitee, a claim that such Indemnitee would otherwise be required to contest pursuant to this Section 6(b)(iv) if such Indemnitee shall waive payment by Borrower of any amount that might otherwise be payable by Borrower under this Section 6(b) in connection with such claim (other than the costs of contest previously incurred), nor shall any Indemnitee be required to pursue any appeal to the United States Supreme Court.
Appears in 1 contract
Contests. (A) If a written any claim shall be made against and received by any Tax Indemnitee or if any proceeding shall be commenced against any Tax Indemnitee (including a written notice of such proceeding) for any Tax for Taxes as to which Borrower is obligated to indemnify the Lessees may have an indemnity obligation pursuant to this Section 6(b)7.4, or if any Tax Indemnitee shall determine that any Taxes as to which the Lessees may have an indemnity obligation pursuant to Section 7.4 may be payable, such Tax Indemnitee shall promptly notify Borrower in writing of such claim within 30 days after Concord. Concord shall be entitled, at its receiptexpense, to participate in, and, to the extent that Concord desires to, assume and shall provide Borrower such information regarding such claim as Borrower may reasonably requestcontrol the defense thereof; provided, however, that Concord shall have acknowledged in writing its and each Lessee’s obligation to fully indemnify such Tax Indemnitee in respect of such action, suit or proceeding if the failure to provide such notice contest is unsuccessful; and, provided further, that Concord shall not release Borrower from be entitled to assume and control the defense of any such action, suit or proceeding (but the Tax Indemnitee shall then contest, at the sole cost and expense of its obligations Concord and such other Lessees, on behalf of Concord with representatives reasonably satisfactory to indemnify under Section 6 hereof unless, Concord) if and only to the extent that, such failure effectively precludes Borrower’s contest rights. To the extent permitted under applicable law, such Indemnitee will not make any payments with respect to such claim for at least 30 days after giving notice of such claim to Borrower.
(BA) If requested by Borrower in writing within 30 days after its receipt of such notice or such shorter period as may be required by applicable law, such Indemnitee shall, at the expense of Borrower and subject to subparagraph (C) below, contest the validity, applicability or amount of such Taxes by, in the case of an Indemnitee-Controlled Contest, in such Indemnitee’s sole discretion or, in the case of a Borrower-Controlled Contest, in Borrower’s sole discretion, (1) resisting payment thereof if practicable, (2) not paying such Tax except under protest, (3) if protest is necessary and proper, and if payment reasonable opinion of such Tax is madeIndemnitee, using reasonable efforts to obtain a refund thereofsuch action, in appropriate administrative and judicial proceedings, and (4) in the case of an Indemnitee-Controlled Contest, considering in good faith any other reasonable action as Borrower may reasonably request. Each Indemnitee shall consult in good faith with Borrower and Borrower’s counsel, and Borrower shall consult in good faith with such Indemnitee and its counsel in the case of a Borrower-Controlled Contest. concerning the forum in which the contest is most likely to be favorably resolved and whether such contest shall be by suit or proceeding (x) resisting payment involves any meaningful risk of imposition of criminal liability or any material risk of material civil liability on such Tax, Tax Indemnitee or (y) paying such Tax under protest or (z) paying such Tax and seeking a refund or other repayment thereof.
(C) In no event shall an Indemnitee be required, or Borrower permitted, to contest the imposition of any Tax for which Borrower is obligated pursuant to this Section 6(b) unless (1) Borrower shall have agreed to pay and shall promptly be paying on request all reasonable costs and expenses that such Indemnitee incurs in contesting such claim or arising out of or relating to such contest (including legal fees, accounting fees, and disbursements, including those on appeal, if any); (2) such contest is not reasonably likely to result in will involve a material danger risk of the sale, seizure, forfeiture or loss of the Aircraftof, or the creation of any Lien thereon (other than Liens for Taxes a Permitted Lien) on any Leased Property or any part thereof unless a Lessee shall have posted a bond or other security reasonably satisfactory to the relevant Tax Indemnitees in respect to such risk, (B) such proceeding involves Claims not fully indemnified by the Lessees which Concord and the Tax Indemnitee have been unable to sever from the indemnified claim(s), (C) an Event of Default has occurred and is continuing, (D) such action, suit or proceeding involves matters which extend beyond or are unrelated to the Transaction and if determined adversely could be materially detrimental to the interests of such Tax Indemnitee notwithstanding indemnification by the Lessees or (E) such action, suit or proceeding involves the federal or any state income tax liability of the Tax Indemnitee not indemnified by the Lessees. With respect to any contests controlled by a Tax Indemnitee, (i) either not yet due or being contested in good faith by appropriate proceedings and (ii) for which such reserves, if any, as are required to be provided under generally accepted accounting principles have been provided by Borrower, and there is no risk of criminal penalties; (3) if such contest relates to the federal or any state income tax liability of such Tax Indemnitee, such Tax Indemnitee shall be conducted in a manner requiring the payment of the claim, Borrower required to conduct such contest only if Concord shall have advanced sufficient funds, on an interest-free basis, to make the payment required, and shall have agreed to indemnify the Indemnitee against any additional net after-Tax cost provided to such Tax Indemnitee of such advance; (4) if requested by the Indemnitee in writing, such Indemnitee shall have received an opinion of independent Tax tax counsel selected by Borrower the Tax Indemnitee and reasonably acceptable satisfactory to such Indemnitee and furnished at Borrower’s sole expense to the effect Concord stating that a Realistic Possibility of Success reasonable basis exists for contesting to contest such claim or (or, ii) in the case of an appeal of an adverse judicial determinationdetermination of any contest relating to any Taxes, a written an opinion from of such independent Tax counsel to the effect that it such appeal is more likely than not that such adverse judicial determination will to be reversed or substantially modified); (5) Borrower shall have delivered to such Indemnitee a written acknowledgment of Borrower’s obligation to indemnify such Indemnitee to the extent that the contest is not successful; , provided, however, that Borrower will not such Tax Indemnitee shall in no event be bound required to appeal an adverse determination to the United States Supreme Court. The Tax Indemnitee may participate in a reasonable manner at its own expense and with its own counsel in any proceeding conducted by its acknowledgment of liability if Concord in accordance with the contest is resolved on a clear foregoing. Each Tax Indemnitee shall, at the Lessees’ expense, supply Concord with such information and unambiguous basis showing no documents in such liability under Tax Indemnitee’s possession as are reasonably requested by Concord and are necessary or advisable for Concord to participate in any action, suit or proceeding to the extent permitted by this Section 6(b) with respect to such Tax; (6) if a Specified Default or 7.4. Unless an Event of Default shall have occurred and be continuing, Borrower no Tax Indemnitee shall have provided security for its obligation hereunder satisfactory to the Indemnitee by placing in escrow sufficient funds to cover enter into any such contested Tax and the reasonably expected expenses of such contest on an After-Tax Basis, settlement or otherwise providing satisfactory provisions for payment of such amounts determined by the Indemnitee in its sole discretion; (7) the aggregate amount of all indemnity payments that Borrower may be required to make to such Indemnitee other compromise with respect to such claim (or similar or related claims) any Claim which is at least $60,000; and (8) the claim is not for a Tax the imposition of which has been previously contested by, or at the request of, Borrower hereunder, and such previous contest (including all allowable appeals) was decided adversely entitled to Borrower, unless Borrower has delivered an opinion of independent Tax counsel selected by Borrower and reasonably acceptable to the Indemnitee to the effect that, on the basis of (i) a change in applicable law, or (ii) a difference in the underlying facts, there is currently a Realistic Possibility of Success for contesting such claim.
(D) If any Indemnitee shall obtain a refund of all or any part of any Tax paid by Borrower, such Indemnitee shall pay Borrower, but not before Borrower shall have made all payments theretofore due to such Indemnitee pursuant to be indemnified under this Section 6(b) and any other payments theretofore due such Indemnitee under any of the Operative Documents, an amount equal to the amount of such refund (net of any Taxes imposed thereon), including interest received and attributable thereto (net of any Taxes imposed thereon) plus, if Borrower has paid an amount pursuant to the first sentence of Section 6(b)(iii)(A), any net Tax benefit (or minus any net Tax detriment) realized by such Indemnitee as a result of any refund received, and payment made, by such Indemnitee pursuant to this sentence; provided that the Indemnitee shall not be obligated to pay an amount under the preceding sentence to the extent that such amount would exceed the amount of such Taxes paid, reimbursed or advanced by Borrower to such Indemnitee (other than the cost of the contest thereof); provided, further, that any amount not paid to Borrower pursuant to the foregoing limitation shall be carried forward to reduce pro tanto any future payments that Borrower may be required to make to such Indemnitee pursuant to this Section 6(b). If any Indemnitee shall have paid Borrower any refund of all or part of any Tax paid by Borrower and it is subsequently determined that such Indemnitee was not entitled to the refund, such determination shall be treated as the imposition of a Tax for which Borrower is obligated to indemnify such Indemnitee pursuant to the provisions of this Section 6(b) without regard to the exclusions set forth in Section 6(b)(ii) (other than subparagraphs (4), (11) and (12) thereof). Provided no Specified Default or Event of Default has occurred and is continuing, an Indemnitee shall not settle any such claim or contest pursuant to this provision 7.4 without the prior written consent of BorrowerConcord, which consent shall not be unreasonably withheld, conditioned or delayed; provided, that an Indemnitee may settle at any time without the consent of Borrower if the unless such Tax Indemnitee waives its right to be indemnified under this Section 7.4 with respect to such Claim. Notwithstanding anything contained herein to the contrary, (by written notice i) a Tax Indemnitee will not be required to Borrowercontest (and no Lessee shall be permitted to contest except on its own behalf) a claim with respect to the payment by Borrower imposition of an indemnity in any Tax if such Tax Indemnitee shall waive its right to indemnification under this Section 7.4 with respect of to such issue claim (and any related issue claim with respect to other taxable years the contest of which is effectively foreclosed by the settlement precluded as a result of such issue, including any payment arising from such issue in subsequent years or which by reason of the fact that such issue is of a continuing nature, waiver) and promptly pays to Borrower any (ii) no Tax previously paid or any interest-free loan advanced by Borrower (other than expenses of such contests) with respect to such issue.
(E) Nothing contained in this Section 6(b)(iv) Indemnitee shall require any Indemnitee to contest, or permit Borrower to contest in the name of such Indemnitee, a claim that such Indemnitee would otherwise be required to contest pursuant any claim if the subject matter thereof shall be of a continuing nature and shall have previously been decided adversely, unless Concord shall have provided to this Section 6(b)(iv) if such Tax Indemnitee shall waive payment an opinion of Tax Indemnitee’s counsel selected by Borrower of any amount the Tax Indemnitee and reasonably satisfactory to Concord stating that might otherwise be payable by Borrower under this Section 6(b) in connection with a reasonable basis exists to contest such claim (in light of such adverse decision. Each Tax Indemnitee and Concord shall consult in good faith with each other than regarding the costs conduct of such contest previously incurred), nor shall any Indemnitee be required to pursue any appeal to the United States Supreme Courtcontrolled by either.
Appears in 1 contract
Sources: Master Agreement (Concord Efs Inc)
Contests. (A) If Whenever any taxing authority asserts a written claim shall be made against and received claim, makes an assessment, or otherwise disputes the amount of Taxes owed by any Indemnitee for any Tax Company or Company Subsidiary for which Borrower is obligated to indemnify pursuant to Sellers are or may be liable under this Section 6(b)Agreement, such Indemnitee Buyer shall notify Borrower in writing promptly upon learning of such claim within 30 days after its receiptinform Sellers, and Sellers shall provide Borrower have the right to control any resulting proceedings and to determine whether and when to settle any such information regarding such claim as Borrower may reasonably request; providedclaim, however, that the failure to provide such notice shall not release Borrower from any of its obligations to indemnify under Section 6 hereof unless, and only assessment or dispute to the extent that, such failure effectively precludes Borrower’s contest rights. To the extent permitted under applicable law, such Indemnitee will not make any payments with respect to such claim for at least 30 days after giving notice of such claim to Borrower.
(B) If requested by Borrower in writing within 30 days after its receipt of such notice proceedings or such shorter period as may be required by applicable law, such Indemnitee shall, at the expense of Borrower and subject to subparagraph (C) below, contest the validity, applicability or amount of such Taxes by, in the case of an Indemnitee-Controlled Contest, in such Indemnitee’s sole discretion or, in the case of a Borrower-Controlled Contest, in Borrower’s sole discretion, (1) resisting payment thereof if practicable, (2) not paying such Tax except under protest, (3) if protest is necessary and proper, and if payment of such Tax is made, using reasonable efforts to obtain a refund thereof, in appropriate administrative and judicial proceedings, and (4) in the case of an Indemnitee-Controlled Contest, considering in good faith any other reasonable action as Borrower may reasonably request. Each Indemnitee shall consult in good faith with Borrower and Borrower’s counsel, and Borrower shall consult in good faith with such Indemnitee and its counsel in the case of a Borrower-Controlled Contest. concerning the forum in which the contest is most likely to be favorably resolved and whether such contest shall be by (x) resisting payment of such Tax, (y) paying such Tax under protest or (z) paying such Tax and seeking a refund or other repayment thereof.
(C) In no event shall an Indemnitee be required, or Borrower permitted, to contest the imposition of any Tax for which Borrower is obligated pursuant to this Section 6(b) unless (1) Borrower shall have agreed to pay and shall promptly be paying on request all reasonable costs and expenses that such Indemnitee incurs in contesting such claim or arising out of or relating to such contest (including legal fees, accounting fees, and disbursements, including those on appeal, if any); (2) such contest is not reasonably likely to result in a material danger of the sale, seizure, forfeiture or loss of the Aircraft, or the creation of any Lien thereon other than Liens for Taxes (i) either not yet due or being contested in good faith by appropriate proceedings and (ii) for which such reserves, if any, as are required to be provided under generally accepted accounting principles have been provided by Borrower, and there is no risk of criminal penalties; (3) if such contest shall be conducted in a manner requiring the payment of the claim, Borrower shall have advanced sufficient funds, on an interest-free basis, to make the payment required, and shall have agreed to indemnify the Indemnitee against any additional net after-Tax cost to such Indemnitee of such advance; (4) if requested by the Indemnitee in writing, such Indemnitee shall have received an opinion of independent Tax counsel selected by Borrower and reasonably acceptable to such Indemnitee and furnished at Borrower’s sole expense to the effect that a Realistic Possibility of Success exists for contesting such claim (or, in the case of an appeal of an adverse judicial determination, a written opinion from such independent Tax counsel to the effect that it is more likely than not that such adverse judicial determination will be reversed or substantially modified); (5) Borrower shall have delivered to such Indemnitee a written acknowledgment of Borrower’s obligation to indemnify such Indemnitee to the extent that the contest is not successful; provided, however, that Borrower will not be bound by its acknowledgment of liability if the contest is resolved on a clear and unambiguous basis showing no such liability under this Section 6(b) with respect to such Tax; (6) if a Specified Default or Event of Default shall have occurred and be continuing, Borrower shall have provided security for its obligation hereunder satisfactory to the Indemnitee by placing in escrow sufficient funds to cover any such contested Tax and the reasonably expected expenses of such contest on an After-Tax Basis, or otherwise providing satisfactory provisions for payment of such amounts determined by the Indemnitee in its sole discretion; (7) the aggregate amount of all indemnity payments that Borrower may be required to make to such Indemnitee with respect to such claim (or similar or related claims) is at least $60,000; and (8) the claim is not for a Tax the imposition of which has been previously contested by, or at the request of, Borrower hereunder, and such previous contest (including all allowable appeals) was decided adversely to Borrower, unless Borrower has delivered an opinion of independent Tax counsel selected by Borrower and reasonably acceptable to the Indemnitee to the effect that, on the basis of (i) a change in applicable law, or (ii) a difference in the underlying facts, there is currently a Realistic Possibility of Success for contesting such claim.
(D) If any Indemnitee shall obtain a refund of all or any part of any Tax paid by Borrower, such Indemnitee shall pay Borrower, but not before Borrower shall have made all payments theretofore due to such Indemnitee pursuant to this Section 6(b) and any other payments theretofore due such Indemnitee under any of the Operative Documents, an amount equal to determinations would materially affect the amount of such refund (net of any Taxes imposed thereon)for which Sellers are liable under this Agreement; PROVIDED, including interest received and attributable thereto (net of any Taxes imposed thereon) plus, if Borrower has paid an amount pursuant to the first sentence of Section 6(b)(iii)(A), any net Tax benefit (or minus any net Tax detriment) realized by such Indemnitee as a result of any refund received, and payment made, by such Indemnitee pursuant to this sentence; provided that the Indemnitee Sellers shall not be obligated to pay an amount under the preceding sentence to the extent that such amount would exceed the amount of such Taxes paid, reimbursed or advanced by Borrower to such Indemnitee (other than the cost of the contest thereof); provided, further, that any amount not paid to Borrower pursuant to the foregoing limitation shall be carried forward to reduce pro tanto any future payments that Borrower may be required to make to such Indemnitee pursuant to this Section 6(b). If any Indemnitee shall have paid Borrower any refund of all or part of any Tax paid by Borrower and it is subsequently determined that such Indemnitee was not entitled to the refund, such determination shall be treated as the imposition of a Tax for which Borrower is obligated to indemnify such Indemnitee pursuant to the provisions of this Section 6(b) without regard to the exclusions set forth in Section 6(b)(ii) (other than subparagraphs (4), (11) and (12) thereof). Provided no Specified Default or Event of Default has occurred and is continuing, an Indemnitee shall not settle enter into any such claim or contest pursuant to this provision settlement without the written consent of BorrowerBuyer, which consent shall not be unreasonably withheld, conditioned if such settlement could affect the amount of Taxes for which Buyer is liable under this Agreement. Whenever any Taxing Authority asserts a claim, makes an assessment or delayedotherwise disputes the amount of Taxes for which Buyer is liable under this Agreement, Sellers shall promptly upon learning of such claim inform Buyer, and Buyer shall have the right to control any resulting proceedings and to determine whether and when to settle any such claim, assessment or dispute to the extent such proceedings would materially affect the amount of Taxes for which Buyer is liable under this Agreement; providedPROVIDED, that an Indemnitee may settle at Buyer shall not enter into any time such settlement without the consent of Borrower the affected Seller, which consent shall not be unreasonably withheld, if such settlement could affect the Indemnitee waives (by written notice amount of Taxes for which Sellers are liable under this Agreement. With respect to Borrower) the payment by Borrower of an indemnity in respect of such issue Worldwide Companies and any related issue the contest of which is effectively foreclosed by the settlement of such issue, including any payment arising from such issue in subsequent years or which by reason Subsidiaries of the fact that such issue is Worldwide Companies, for a period of a continuing naturesix years after the Worldwide Closing, and promptly pays to Borrower any Tax previously paid or any interest-free loan advanced by Borrower (other than expenses of such contests) and, with respect to Compass Australia and the Australian Business, for a period of six years after the Australia Closing, and, if at the expiration thereof any tax audit or judicial proceeding is in progress or the applicable statute of limitations has been extended in writing, for such issue.
(E) Nothing contained longer period as such tax audit or judicial proceeding is in this Section 6(b)(iv) progress or such statutory period has been agreed to be extended, Buyer shall, and shall require cause the Companies and Company Subsidiaries to maintain and make available to Lend Lease U.S. and the Sellers, on the reasonable request of Lend Lease U.S. or the Sellers, copies of any Indemnitee to contestand all information, or permit Borrower to contest working papers, books and records used in the name preparation of or relating to the Tax Returns of each of the Companies and Company Subsidiaries. After such period, Buyer, the Companies and Company Subsidiaries may dispose of such Indemniteeinformation, a claim that such Indemnitee would otherwise be required to contest pursuant to this Section 6(b)(iv) if such Indemnitee shall waive payment by Borrower of any amount that might otherwise be payable by Borrower under this Section 6(b) in connection with such claim (other than the costs of contest previously incurred)working papers, nor shall any Indemnitee be required to pursue any appeal to the United States Supreme Courtbooks and records.
Appears in 1 contract
Contests. Buyer shall promptly notify Seller Parties in writing upon receipt by the Acquired Entities, Buyer or any of Buyer’s Affiliates of notice of any Tax Proceeding in respect of any of the Acquired Entities relating to any (Ai) If Pre-Closing Tax Period or (ii) Straddle Period, provided that the failure of Buyer to give notice of a written claim Tax Proceeding as provided in this Section 6.2(h) shall be made against not relieve Seller of its obligations under Section 6.2 except to the extent Seller is materially prejudiced thereby. Such notification shall specify in reasonable detail the basis for such Tax Proceeding and shall include a copy of the relevant portion of any correspondence received by from the Taxing Authority.
(i) Seller shall have the right to control any Indemnitee Tax Proceeding relating to income Taxes in respect of an Acquired Entity for any Pre-Closing Tax for which Borrower is obligated to indemnify pursuant to this Section 6(b), such Indemnitee shall notify Borrower in writing of such claim within 30 days after its receipt, and shall provide Borrower such information regarding such claim as Borrower may reasonably requestPeriod; provided, however, that (i) Buyer shall have the failure to provide such notice shall not release Borrower from any of its obligations to indemnify under Section 6 hereof unless, and only to the extent that, such failure effectively precludes Borrower’s contest rights. To the extent permitted under applicable law, such Indemnitee will not make any payments with respect to such claim for at least 30 days after giving notice of such claim to Borrower.
(B) If requested by Borrower in writing within 30 days after its receipt of such notice or such shorter period as may be required by applicable law, such Indemnitee shallright, at the expense of Borrower its sole cost and subject expense, to subparagraph (C) below, contest the validity, applicability or amount of participate in any such Taxes by, in the case of an Indemnitee-Controlled Contest, in such Indemnitee’s sole discretion or, in the case of a Borrower-Controlled Contest, in Borrower’s sole discretionTax Proceeding, (1ii) resisting payment thereof if practicable, (2) not paying such Tax except under protest, (3) if protest is necessary Seller shall provide Buyer with a timely and proper, and if payment reasonably detailed account of each stage of such Tax is made, using reasonable efforts to obtain a refund thereof, in appropriate administrative and judicial proceedings, and (4) in the case of an Indemnitee-Controlled Contest, considering in good faith any other reasonable action as Borrower may reasonably request. Each Indemnitee shall consult in good faith with Borrower and Borrower’s counsel, and Borrower shall consult in good faith with such Indemnitee and its counsel in the case of a Borrower-Controlled Contest. concerning the forum in which the contest is most likely to be favorably resolved and whether such contest shall be by (x) resisting payment of such TaxProceeding, (yiii) paying Seller shall not settle, compromise or abandon any such Tax under protest or (z) paying such Tax and seeking a refund or other repayment thereof.
(C) In no event shall an Indemnitee be required, or Borrower permitted, to contest Proceeding without obtaining the imposition of any Tax for which Borrower is obligated pursuant to this Section 6(b) unless (1) Borrower shall have agreed to pay and shall promptly be paying on request all reasonable costs and expenses that such Indemnitee incurs in contesting such claim or arising out of or relating to such contest (including legal fees, accounting fees, and disbursements, including those on appeal, if any); (2) such contest is not reasonably likely to result in a material danger of the sale, seizure, forfeiture or loss of the Aircraft, or the creation of any Lien thereon other than Liens for Taxes (i) either not yet due or being contested in good faith by appropriate proceedings and (ii) for which such reserves, if any, as are required to be provided under generally accepted accounting principles have been provided by Borrower, and there is no risk of criminal penalties; (3) if such contest shall be conducted in a manner requiring the payment of the claim, Borrower shall have advanced sufficient funds, on an interest-free basis, to make the payment required, and shall have agreed to indemnify the Indemnitee against any additional net after-Tax cost to such Indemnitee of such advance; (4) if requested by the Indemnitee in writing, such Indemnitee shall have received an opinion of independent Tax counsel selected by Borrower and reasonably acceptable to such Indemnitee and furnished at Borrower’s sole expense to the effect that a Realistic Possibility of Success exists for contesting such claim (or, in the case of an appeal of an adverse judicial determination, a written opinion from such independent Tax counsel to the effect that it is more likely than not that such adverse judicial determination will be reversed or substantially modified); (5) Borrower shall have delivered to such Indemnitee a written acknowledgment of Borrower’s obligation to indemnify such Indemnitee to the extent that the contest is not successful; provided, however, that Borrower will not be bound by its acknowledgment of liability if the contest is resolved on a clear and unambiguous basis showing no such liability under this Section 6(b) with respect to such Tax; (6) if a Specified Default or Event of Default shall have occurred and be continuing, Borrower shall have provided security for its obligation hereunder satisfactory to the Indemnitee by placing in escrow sufficient funds to cover any such contested Tax and the reasonably expected expenses of such contest on an After-Tax Basis, or otherwise providing satisfactory provisions for payment of such amounts determined by the Indemnitee in its sole discretion; (7) the aggregate amount of all indemnity payments that Borrower may be required to make to such Indemnitee with respect to such claim (or similar or related claims) is at least $60,000; and (8) the claim is not for a Tax the imposition of which has been previously contested by, or at the request of, Borrower hereunder, and such previous contest (including all allowable appeals) was decided adversely to Borrower, unless Borrower has delivered an opinion of independent Tax counsel selected by Borrower and reasonably acceptable to the Indemnitee to the effect that, on the basis of (i) a change in applicable law, or (ii) a difference in the underlying facts, there is currently a Realistic Possibility of Success for contesting such claim.
(D) If any Indemnitee shall obtain a refund of all or any part of any Tax paid by Borrower, such Indemnitee shall pay Borrower, but not before Borrower shall have made all payments theretofore due to such Indemnitee pursuant to this Section 6(b) and any other payments theretofore due such Indemnitee under any of the Operative Documents, an amount equal to the amount of such refund (net of any Taxes imposed thereon), including interest received and attributable thereto (net of any Taxes imposed thereon) plus, if Borrower has paid an amount pursuant to the first sentence of Section 6(b)(iii)(A), any net Tax benefit (or minus any net Tax detriment) realized by such Indemnitee as a result of any refund received, and payment made, by such Indemnitee pursuant to this sentence; provided that the Indemnitee shall not be obligated to pay an amount under the preceding sentence to the extent that such amount would exceed the amount of such Taxes paid, reimbursed or advanced by Borrower to such Indemnitee (other than the cost of the contest thereof); provided, further, that any amount not paid to Borrower pursuant to the foregoing limitation shall be carried forward to reduce pro tanto any future payments that Borrower may be required to make to such Indemnitee pursuant to this Section 6(b). If any Indemnitee shall have paid Borrower any refund of all or part of any Tax paid by Borrower and it is subsequently determined that such Indemnitee was not entitled to the refund, such determination shall be treated as the imposition of a Tax for which Borrower is obligated to indemnify such Indemnitee pursuant to the provisions of this Section 6(b) without regard to the exclusions set forth in Section 6(b)(ii) (other than subparagraphs (4), (11) and (12) thereof). Provided no Specified Default or Event of Default has occurred and is continuing, an Indemnitee shall not settle any such claim or contest pursuant to this provision without the prior written consent of BorrowerBuyer, which consent shall not be unreasonably withheld, conditioned or delayed; provided, further, that an Indemnitee Buyer, at its own cost and expense, may settle at control and contest any time Tax Proceeding for which Seller would otherwise have the right to control under this Section 6.2(h)(i) if Seller declines or fails to control such Tax Proceeding; provided, further, however, that if Buyer exercises its right to control any Tax Proceeding under the preceding clause, Buyer shall (A) provide Seller with a timely and reasonably detailed account of each stage of such Tax Proceeding, (B) not settle, compromise or abandon any such Tax Proceeding without obtaining the prior written consent of Borrower if Seller, which consent shall not be unreasonably withheld or delayed, and (C) consult with Seller in good faith concerning the Indemnitee waives appropriate strategy for contesting such Tax Proceeding.
(by written notice ii) Buyer shall have the right to Borrower) the payment by Borrower of an indemnity control, at its own expense, any Tax Proceeding in respect of an Acquired Entity for any Pre-Closing Tax Period other than related to income Taxes and for any Straddle Period; provided, however, that (i) Seller shall have the right to participate in any such issue Tax Proceeding, (ii) Buyer shall provide Seller with a timely and any related issue the contest reasonably detailed account of which is effectively foreclosed by the settlement each stage of such issue, including any payment arising from such issue Tax Proceeding and consult in subsequent years or which by reason of good faith concerning the fact that such issue is of a continuing natureappropriate strategy for contesting the Tax Proceeding, and promptly pays to Borrower (iii) Buyer shall not settle, compromise or abandon any such Tax previously paid Proceeding without obtaining the prior written consent of Seller, which consent shall not be unreasonably withheld or delayed, if such settlement, compromise or abandonment could affect Seller’s or any interest-free loan advanced by Borrower (other than expenses of such contests) with respect to such issueits owners’ liability for Taxes.
(E) Nothing contained in this Section 6(b)(iv) shall require any Indemnitee to contest, or permit Borrower to contest in the name of such Indemnitee, a claim that such Indemnitee would otherwise be required to contest pursuant to this Section 6(b)(iv) if such Indemnitee shall waive payment by Borrower of any amount that might otherwise be payable by Borrower under this Section 6(b) in connection with such claim (other than the costs of contest previously incurred), nor shall any Indemnitee be required to pursue any appeal to the United States Supreme Court.
Appears in 1 contract
Sources: Equity Securities Purchase Agreement (Meridian Waste Solutions, Inc.)
Contests. (A) If a written any claim shall be made against and received by any Tax Indemnitee or if any proceeding shall be commenced against any Tax Indemnitee (including a written notice of such proceeding) for any Tax for Imposition as to which Borrower is obligated to indemnify the Lessee may have an indemnity obligation pursuant to this Section 6(b)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, such Tax Indemnitee shall within thirty (30) days notify Borrower the Lessee in writing (provided, that failure to so notify the Lessee within thirty (30) days shall not alter such Tax Indemnitee’s rights under this Section 13.5 except to the extent such failure precludes the ability 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 Lessee (such consent not to be unreasonably withheld or unreasonably delayed) for thirty (30) days after the receipt of such claim within 30 days after its receipt, and shall provide Borrower such information regarding such claim as Borrower may reasonably requestnotice by the Lessee; provided, however, that in the failure case of any such claim or proceeding, if such Tax Indemnitee shall be required by Applicable Law to provide take action prior to the end of such thirty (30) day period, such Tax Indemnitee shall in such notice to the Lessee, so inform the Lessee, and such Tax Indemnitee shall not release Borrower from take any of its obligations to indemnify under Section 6 hereof unless, and only to the extent that, such failure effectively precludes Borrower’s contest rights. To the extent permitted under applicable law, such Indemnitee will not make any payments action with respect to such claim claim, proceeding or Imposition without the consent of the Lessee (such consent not to be unreasonably withheld or unreasonably delayed) for at least 30 ten (10) days after giving notice of such claim to Borrower.
(B) If requested by Borrower in writing within 30 days after its the receipt of such notice by the Lessee unless such Tax Indemnitee shall be required by Applicable Law or regulation to take action prior to the end of such ten (10) day period, provided, further, however, that the failure of the Tax Indemnitee to give notice referred to in this sentence shall not diminish Lessee’s obligations hereunder except to the extent that such failure precludes Lessee from contesting such claim. The 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 may be such Tax Indemnitee has notified the Lessee is required by applicable law, Applicable Law for such Tax Indemnitee shallto commence such contest) to request in writing that such Tax Indemnitee contest the imposition of such Tax, at the expense Lessee’s sole cost and expense. If (i) such contest can be pursued in the name of Borrower the Lessee and subject to subparagraph (C) below, contest the validity, applicability or amount independently from any other proceeding involving a Tax liability of such Taxes byTax Indemnitee for which the Lessee has not agreed to indemnify such Tax Indemnitee, (ii) such contest must be pursued in the case name of an such Tax Indemnitee-Controlled Contest, in but can be pursued independently from any other proceeding involving a Tax liability of such Indemnitee’s sole discretion orTax Indemnitee for which the Lessee has not agreed to indemnify such Tax Indemnitee or (iii) such Tax Indemnitee so requests, then the Lessee shall be permitted to control the contest of such claim, provided, that in the case of a Borrower-Controlled Contestcontest described in clause (ii), in Borrower’s sole discretion, (1) resisting payment thereof if practicable, (2) not paying such Tax except under protest, (3) if protest is necessary and proper, and if payment Indemnitee reasonably determines that such contest by the Lessee could have an adverse impact on the business or operations of such Tax is madeIndemnitee, using reasonable efforts such Tax Indemnitee may elect to obtain a refund thereof, in appropriate administrative and judicial proceedingscontrol or reassert control of the contest, and (4) in provided, that by taking control of the case contest, the Lessee acknowledges that it is responsible for the Imposition ultimately determined to be due by reason of an Indemnitee-Controlled Contestsuch claim. In all other claims requested to be contested by the Lessee, considering in good faith any other reasonable action as Borrower may reasonably request. Each such Tax Indemnitee shall consult in good faith with Borrower and Borrower’s counsel, and Borrower shall consult in good faith with such Indemnitee and its counsel in the case of a Borrower-Controlled Contest. concerning the forum in which control the contest is most likely to be favorably resolved and whether such contest shall be by (x) resisting payment of such Taxclaim, (y) paying such Tax under protest or (z) paying such Tax and seeking a refund or other repayment thereof.
(C) acting through counsel reasonably acceptable to the Lessee. In no event shall an the Lessee be permitted to contest (or such Tax Indemnitee be requiredrequired 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 could involve a material risk of the sale, forfeiture or loss of, or Borrower permitted, to contest the imposition creation of any Lien (other than a Permitted Property Lien of the type described in clause (a), (b), (g) or (h) of the definition thereof) on the Property or any part of any thereof unless the Lessee shall have posted and maintained a bond or other security satisfactory to the relevant Tax Indemnitee in respect to such risk, (B) if a Lease Event of Default has occurred and is continuing unless the 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 Borrower the Lessee is obligated pursuant to this Section 6(bresponsible hereunder reasonably foreseeable in connection with the contest of such claim, (C) unless (1) Borrower the Lessee shall have agreed to pay and shall promptly be paying pay, to such Tax Indemnitee on request demand all reasonable costs out-of-pocket costs, losses and expenses that such Tax Indemnitee incurs may incur in connection with contesting such claim or arising out of or relating to such contest (Imposition including legal feesall reasonable legal, accounting fees, and investigatory fees and disbursements, including those on appeal, if any); or (2) such contest is not reasonably likely to result in a material danger of the sale, seizure, forfeiture or loss of the Aircraft, or the creation of any Lien thereon other than Liens for Taxes (i) either not yet due or being contested in good faith by appropriate proceedings and (ii) for which such reserves, if any, as are required to be provided under generally accepted accounting principles have been provided by Borrower, and there is no risk of criminal penalties; (3D) if such contest shall be conducted in a manner requiring involve the payment of the claimTax prior to the contest, Borrower unless the Lessee shall have advanced sufficient funds, on provide to such Tax Indemnitee an interest-free basis, advance in an amount equal to make the payment required, and shall have agreed Imposition that the Tax Indemnitee is required to indemnify the Indemnitee against any pay (with no additional net after-Tax cost tax costs to such Tax Indemnitee). In addition, for Tax Indemnitee controlled contests and claims contested in the name of such advance; Tax Indemnitee in a public forum, no contest shall be required unless: (4A) 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 $50,000, (B) if requested by such Tax Indemnitee, the Indemnitee in writing, such Indemnitee Lessee shall have received provided to such Tax Indemnitee an opinion of counsel selected by the Lessee (except, in the case of income taxes indemnified hereunder, in which case such opinion shall be an opinion of independent Tax tax counsel selected by Borrower such Tax Indemnitee and reasonably acceptable to such Indemnitee and furnished at Borrower’s sole expense to the effect Lessee) that a Realistic Possibility of Success reasonable basis exists for contesting to contest such claim (or, in the case of an appeal of an adverse judicial determination, a written an opinion from of such independent Tax counsel to the effect that there is substantial authority for the position asserted in such appeal) and (C) Lessee shall have acknowledged in writing to the Tax Indemnitee its obligation to pay the costs and expenses thereof and to indemnify such Tax Indemnitee pursuant to this Section 13.5 for the Taxes subject to the proposed contest, if such contest is unsuccessful. In no event shall a Tax Indemnitee be required to appeal an adverse judicial determination to the United States Supreme Court. In addition, a Tax Indemnitee shall not be required to contest any claim in its name (or that of an Affiliate) if the subject matter thereof shall be of a continuing nature and shall have previously been decided adversely by a court of competent jurisdiction pursuant to the contest provisions of this Section 13.5(b), unless there shall have been a Change in Law and the Tax Indemnitee shall have received, at the Lessee’s expense, an opinion of independent tax counsel selected by the Lessee and reasonably acceptable to the Tax Indemnitee stating that, as a result of such Change in Law, it is more likely than not that the Tax Indemnitee will prevail in such adverse judicial determination will 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, provided, however, that the decisions regarding what actions to be reversed taken shall be made by the controlling party in its sole judgment. 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 substantially modified); (5appropriate excerpts from) Borrower shall have delivered 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 a written acknowledgment of Borrowershall, at the Lessee’s obligation sole cost and expense, supply the Lessee with such information and documents reasonably requested by the Lessee as are necessary or advisable for the Lessee to indemnify such Indemnitee participate in any action, suit or proceeding to the extent that the contest is not successfulpermitted by this Section 13.5(b); provided, however, that Borrower will such Tax Indemnitee shall not be bound by required to provide to the Lessee copies of (i) any information, documentation or materials that it reasonably deems to be confidential or proprietary or (ii) its acknowledgment tax returns or any other information, documentation or materials in respect of liability if such Tax Indemnitee’s financial position. Notwithstanding anything in this Section 13.5(b) to the contest 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 resolved on a clear and unambiguous basis showing no such liability entitled to be indemnified under this Section 6(b13.5 (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 waives its right to be indemnified under this Section 13.5 with respect to such Tax; (6) if a Specified Default or Event claim. No settlement of Default shall have occurred and any contest may be continuing, Borrower shall have provided security for its obligation hereunder satisfactory to the Indemnitee by placing in escrow sufficient funds to cover any such contested Tax and the reasonably expected expenses of such contest on an After-Tax Basis, or otherwise providing satisfactory provisions for payment of such amounts determined made by the Indemnitee in its sole discretion; (7) the aggregate amount of all indemnity payments that Borrower may be required to make to such Indemnitee with respect to such claim (or similar or related claims) is at least $60,000; and (8) the claim is not for a Tax the imposition of which has been previously contested by, or at the request of, Borrower hereunder, and such previous contest (including all allowable appeals) was decided adversely to Borrower, unless Borrower has delivered an opinion of independent Tax counsel selected by Borrower and reasonably acceptable to the Indemnitee to the effect that, on the basis of (i) a change in applicable law, or (ii) a difference in the underlying facts, there is currently a Realistic Possibility of Success for contesting such claim.
(D) If any Indemnitee shall obtain a refund of all or any part of any Tax paid by Borrower, such Indemnitee shall pay Borrower, but not before Borrower shall have made all payments theretofore due to such Indemnitee pursuant to this Section 6(b) and any other payments theretofore due such Indemnitee under any of the Operative Documents, an amount equal to the amount of such refund (net of any Taxes imposed thereon), including interest received and attributable thereto (net of any Taxes imposed thereon) plus, if Borrower has paid an amount pursuant to the first sentence of Section 6(b)(iii)(A), any net Tax benefit (or minus any net Tax detriment) realized by such Indemnitee as a result of any refund received, and payment made, by such Indemnitee pursuant to this sentence; provided that the Indemnitee shall not be obligated to pay an amount under the preceding sentence to the extent that such amount would exceed the amount of such Taxes paid, reimbursed or advanced by Borrower to such Indemnitee (other than the cost of the contest thereof); provided, further, that any amount not paid to Borrower pursuant to the foregoing limitation shall be carried forward to reduce pro tanto any future payments that Borrower may be required to make to such Indemnitee pursuant to this Section 6(b). If any Indemnitee shall have paid Borrower any refund of all or part of any Tax paid by Borrower and it is subsequently determined that such Indemnitee was not entitled to the refund, such determination shall be treated as the imposition of a Tax for which Borrower is obligated to indemnify such Indemnitee pursuant to the provisions of this Section 6(b) without regard to the exclusions set forth in Section 6(b)(ii) (other than subparagraphs (4), (11) and (12) thereof). Provided no Specified Default or Event of Default has occurred and is continuing, an Indemnitee shall not settle any such claim or contest pursuant to this provision Lessee without the Tax Indemnitee’s written consent of Borrower, (which consent shall not be unreasonably withheld). Notwithstanding anything contained herein to the contrary, conditioned or delayed; provided, that an a Tax Indemnitee may settle at will not be required to contest (and the Lessee shall not be permitted to contest) a claim with respect to the imposition of any time without the consent of Borrower Tax if the such Tax Indemnitee waives shall waive its right to indemnification under this Section 13.5 with respect to such claim (by written notice to Borrower) the payment by Borrower of an indemnity in respect of such issue and any related issue claim with respect to such year or any other taxable year the contest of which is effectively foreclosed by the settlement materially adversely affected as a result of such issue, including any payment arising from such issue in subsequent years or which by reason of the fact that such issue is of a continuing nature, and promptly pays to Borrower any Tax previously paid or any interest-free loan advanced by Borrower (other than expenses of such contests) with respect to such issuewaiver).
(E) Nothing contained in this Section 6(b)(iv) shall require any Indemnitee to contest, or permit Borrower to contest in the name of such Indemnitee, a claim that such Indemnitee would otherwise be required to contest pursuant to this Section 6(b)(iv) if such Indemnitee shall waive payment by Borrower of any amount that might otherwise be payable by Borrower under this Section 6(b) in connection with such claim (other than the costs of contest previously incurred), nor shall any Indemnitee be required to pursue any appeal to the United States Supreme Court.
Appears in 1 contract
Contests. (Aa) If any Taxing Authority asserts a written claim shall be made against and received by Tax Claim in respect of the Company or any Indemnitee for any Tax for which Borrower is obligated to indemnify pursuant to this Section 6(b)of its Subsidiaries, such Indemnitee shall notify Borrower in writing then the party hereto first receiving notice of such claim within 30 days after its receipt, and Tax Claim promptly shall provide Borrower such information regarding such claim as Borrower may reasonably requestwritten notice thereof to the other party or parties hereto; provided, however, that the failure of such party to provide give such prompt notice shall not release Borrower from relieve the other party of any of its obligations to indemnify under Section 6 hereof unlessthis Article VII, and only to the extent that, such failure effectively precludes Borrower’s contest rights. To the extent permitted under applicable law, such Indemnitee will not make any payments with respect to such claim for at least 30 days after giving notice of such claim to Borrower.
(B) If requested by Borrower in writing within 30 days after its receipt of such notice or such shorter period as may be required by applicable law, such Indemnitee shall, at the expense of Borrower and subject to subparagraph (C) below, contest the validity, applicability or amount of such Taxes by, in the case of an Indemnitee-Controlled Contest, in such Indemnitee’s sole discretion or, in the case of a Borrower-Controlled Contest, in Borrower’s sole discretion, (1) resisting payment thereof if practicable, (2) not paying such Tax except under protest, (3) if protest is necessary and proper, and if payment of such Tax is made, using reasonable efforts to obtain a refund thereof, in appropriate administrative and judicial proceedings, and (4) in the case of an Indemnitee-Controlled Contest, considering in good faith any other reasonable action as Borrower may reasonably request. Each Indemnitee shall consult in good faith with Borrower and Borrower’s counsel, and Borrower shall consult in good faith with such Indemnitee and its counsel in the case of a Borrower-Controlled Contest. concerning the forum in which the contest is most likely to be favorably resolved and whether such contest shall be by (x) resisting payment of such Tax, (y) paying such Tax under protest or (z) paying such Tax and seeking a refund or other repayment thereof.
(C) In no event shall an Indemnitee be required, or Borrower permitted, to contest the imposition of any Tax for which Borrower is obligated pursuant to this Section 6(b) unless (1) Borrower shall have agreed to pay and shall promptly be paying on request all reasonable costs and expenses that such Indemnitee incurs in contesting such claim or arising out of or relating to such contest (including legal fees, accounting fees, and disbursements, including those on appeal, if any); (2) such contest is not reasonably likely to result in a material danger of the sale, seizure, forfeiture or loss of the Aircraft, or the creation of any Lien thereon other than Liens for Taxes (i) either not yet due or being contested in good faith by appropriate proceedings and (ii) for which such reserves, if any, as are required to be provided under generally accepted accounting principles have been provided by Borrower, and there is no risk of criminal penalties; (3) if such contest shall be conducted in a manner requiring the payment of the claim, Borrower shall have advanced sufficient funds, on an interest-free basis, to make the payment required, and shall have agreed to indemnify the Indemnitee against any additional net after-Tax cost to such Indemnitee of such advance; (4) if requested by the Indemnitee in writing, such Indemnitee shall have received an opinion of independent Tax counsel selected by Borrower and reasonably acceptable to such Indemnitee and furnished at Borrower’s sole expense to the effect that a Realistic Possibility of Success exists for contesting such claim (or, in the case of an appeal of an adverse judicial determination, a written opinion from such independent Tax counsel to the effect that it is more likely than not that such adverse judicial determination will be reversed or substantially modified); (5) Borrower shall have delivered to such Indemnitee a written acknowledgment of Borrower’s obligation to indemnify such Indemnitee to the extent that the contest other party is not successfulactually prejudiced thereby. Such notice shall specify in reasonable detail the basis for such Tax Claim and shall include a copy of the relevant portion of any correspondence received from the Taxing Authority.
(b) Seller shall have the exclusive right to control, at its own expense, any audit, examination, contest, litigation or other proceeding by or against any Taxing Authority (a “Tax Proceeding”) in respect of the Company or any of its Subsidiaries for any taxable period that ends on or before the Closing Date; provided, however, that Borrower will not be bound by its acknowledgment of liability if the contest is resolved on a clear and unambiguous basis showing no such liability under this Section 6(b) with respect to any Tax Proceeding solely in respect of the Company or any of its Subsidiaries that would reasonably be expected to have an adverse impact that is material on Buyer and its Affiliates including the Company and its Subsidiaries after Closing, Seller shall consult with Buyer before taking any significant action in connection with such Tax; Tax Proceeding.
(6c) if In the case of a Specified Default Tax Proceeding for a Straddle Period of the Company or Event any of Default its Subsidiaries, Buyer shall have occurred and be continuingthe right to control, Borrower shall have provided security for at its obligation hereunder satisfactory to the Indemnitee by placing in escrow sufficient funds to cover any own expense, such contested Tax and the reasonably expected expenses of such contest on an After-Tax BasisProceeding; provided, or otherwise providing satisfactory provisions for payment of such amounts determined by the Indemnitee in its sole discretion; (7) the aggregate amount of all indemnity payments however, that Borrower may be required to make to such Indemnitee with respect to such claim (or similar or related claims) is at least $60,000; and (8) the claim is not for a Tax the imposition of which has been previously contested by, or at the request of, Borrower hereunder, and such previous contest (including all allowable appeals) was decided adversely to Borrower, unless Borrower has delivered an opinion of independent Tax counsel selected by Borrower and reasonably acceptable to the Indemnitee to the effect that, on the basis of (i) Buyer shall provide Seller with a change in applicable lawtimely and reasonably detailed account of each phase of such Tax Proceeding, or (ii) a difference Buyer shall consult with Seller before taking any significant action in connection with such Tax Proceeding, (iii) Buyer shall defend such Tax Proceeding diligently and in good faith as if it were the underlying factsonly party in interest in connection with such Tax Proceeding, there is currently a Realistic Possibility of Success for contesting (iv) Seller shall be entitled to participate in such claim.
(D) If any Indemnitee shall obtain a refund of all or any part of any Tax paid by BorrowerProceeding, such Indemnitee shall pay Borrower, but not before Borrower shall have made all payments theretofore due to such Indemnitee pursuant to this Section 6(b) and any other payments theretofore due such Indemnitee under any of the Operative Documents, an amount equal to the amount of such refund (net of any Taxes imposed thereon), including interest received and attributable thereto (net of any Taxes imposed thereon) plus, if Borrower has paid an amount pursuant to the first sentence of Section 6(b)(iii)(A), any net Tax benefit (or minus any net Tax detriment) realized by such Indemnitee as a result of any refund receivedat its own expense, and payment made, by such Indemnitee pursuant to this sentence; provided that the Indemnitee (v) Buyer shall not be obligated to pay an amount under the preceding sentence to the extent that such amount would exceed the amount of such Taxes paidsettle, reimbursed compromise or advanced by Borrower to such Indemnitee (other than the cost of the contest thereof); provided, further, that any amount not paid to Borrower pursuant to the foregoing limitation shall be carried forward to reduce pro tanto any future payments that Borrower may be required to make to such Indemnitee pursuant to this Section 6(b). If any Indemnitee shall have paid Borrower any refund of all or part of any Tax paid by Borrower and it is subsequently determined that such Indemnitee was not entitled to the refund, such determination shall be treated as the imposition of a Tax for which Borrower is obligated to indemnify such Indemnitee pursuant to the provisions of this Section 6(b) without regard to the exclusions set forth in Section 6(b)(ii) (other than subparagraphs (4), (11) and (12) thereof). Provided no Specified Default or Event of Default has occurred and is continuing, an Indemnitee shall not settle abandon any such claim or contest pursuant to this provision Tax Proceeding without obtaining the prior written consent of BorrowerSeller, which consent shall not be unreasonably withheld, conditioned or delayed.
(d) Buyer shall have the exclusive right to control, at its own expense, any Tax Proceeding involving the Company or any of its Subsidiaries (other than any Tax Proceeding described in Section 7.6(b) or (c)); provided, however, that if such Tax Proceeding would reasonably be expected to have an Indemnitee may settle at any time without the consent of Borrower if the Indemnitee waives (by written notice to Borrower) the payment by Borrower of an indemnity in respect of such issue and any related issue the contest of which is effectively foreclosed by the settlement of such issue, including any payment arising from such issue in subsequent years or which by reason of the fact that such issue is of a continuing nature, and promptly pays to Borrower any Tax previously paid adverse effect on Seller or any interest-free loan advanced by Borrower (other than expenses of such contests) its Affiliates that is material Buyer shall consult with respect to such issue.
(E) Nothing contained in this Section 6(b)(iv) shall require Seller before taking any Indemnitee to contest, or permit Borrower to contest in the name of such Indemnitee, a claim that such Indemnitee would otherwise be required to contest pursuant to this Section 6(b)(iv) if such Indemnitee shall waive payment by Borrower of any amount that might otherwise be payable by Borrower under this Section 6(b) significant action in connection with such claim (other than the costs of contest previously incurred), nor shall any Indemnitee be required to pursue any appeal to the United States Supreme CourtTax Proceeding.
Appears in 1 contract
Sources: Stock Purchase Agreement (PNC Financial Services Group Inc)
Contests. (A) If the Owner Participant receives written notice of a written claim shall be made against and received by any Indemnitee for any the IRS which, if sustained, would result in a Tax for which Borrower is obligated Loss requiring the payment of an indemnity by the Facility Lessee in excess of $50,000 as to indemnify pursuant to this Section 6(b)the Facility Interest, such Indemnitee then the Owner Participant shall notify Borrower the Facility Lessee in writing of such claim within 30 20 days after its receiptreceipt and, in the event that there are less than 20 days in which to respond to such claim, the Owner Participant agrees to request an extension of time to contest such claim so that the period remaining to initiate such contest is not less than 20 days from the date of the Owner Participant's notice to the Facility Lessee of such claim, and shall provide Borrower the Owner Participant agrees to take such information regarding action in contesting such claim as Borrower may reasonably request; providedthe Facility Lessee shall request from time to time, howeverincluding, that the failure to provide such notice shall but not release Borrower from any of its obligations to indemnify under Section 6 hereof unlesslimited to, (i) all administrative appeals, proceedings, hearings and only conferences with respect to the extent thatclaim, such failure effectively precludes Borrower’s contest rights. To the extent permitted under applicable law, such Indemnitee will not make any payments (ii) seeking a judicial determination with respect to such claim for at least 30 days after giving notice of such claim to Borrower.
(B) If requested by Borrower in writing within 30 days after its receipt of such notice or such shorter period as may be required by applicable law, such Indemnitee shall, at the expense of Borrower and subject to subparagraph (C) below, contest the validity, applicability or amount of such Taxes by, in the case of an Indemnitee-Controlled Contest, in such Indemnitee’s sole discretion or, in the case of a Borrower-Controlled Contest, in Borrower’s sole discretion, (1) resisting payment thereof if practicable, (2) not paying such Tax except under protest, (3) if protest is necessary and proper, and if payment of such Tax is made, using reasonable efforts to obtain a refund thereof, in appropriate administrative and judicial proceedings, and (4iii) in the case of an Indemnitee-Controlled Contest, considering in good faith any other reasonable action as Borrower may reasonably request. Each Indemnitee shall consult in good faith with Borrower and Borrower’s counsel, and Borrower shall consult in good faith with such Indemnitee and its counsel in the case of a Borrower-Controlled Contest. concerning the forum in which the contest is most likely to be favorably resolved and whether such contest shall be by (x) resisting payment of such Tax, (y) paying such Tax under protest or (z) paying such Tax and seeking a refund or other repayment thereof.
(C) In no event shall an Indemnitee be required, or Borrower permitted, to contest the imposition appeal of any Tax for which Borrower is obligated pursuant to this Section 6(b) unless (1) Borrower shall have agreed to pay and shall promptly be paying on request all reasonable costs and expenses that such Indemnitee incurs in contesting such claim or arising out of or relating to such contest (including legal fees, accounting fees, and disbursements, including those on appeal, if any); (2) such contest is not reasonably likely to result in a material danger of the sale, seizure, forfeiture or loss of the Aircraft, or the creation of any Lien thereon other than Liens for Taxes (i) either not yet due or being contested in good faith by appropriate proceedings and (ii) for which such reserves, if any, as are required to be provided under generally accepted accounting principles have been provided by Borrower, and there is no risk of criminal penalties; (3) if such contest shall be conducted in a manner requiring the payment of the claim, Borrower shall have advanced sufficient funds, on an interest-free basis, to make the payment required, and shall have agreed to indemnify the Indemnitee against any additional net after-Tax cost to such Indemnitee of such advance; (4) if requested by the Indemnitee in writing, such Indemnitee shall have received an opinion of independent Tax counsel selected by Borrower and reasonably acceptable to such Indemnitee and furnished at Borrower’s sole expense to the effect that a Realistic Possibility of Success exists for contesting such claim (or, in the case of an appeal of an adverse judicial determination, a written opinion from such independent Tax counsel to the effect that it is more likely than not that such adverse judicial determination will be reversed or substantially modified); (5) Borrower shall have delivered to such Indemnitee a written acknowledgment of Borrower’s obligation to indemnify such Indemnitee to the extent that the contest is not successful; provided, however, that Borrower will not be bound by its acknowledgment of liability if the contest is resolved on a clear and unambiguous basis showing no such liability under this Section 6(b) with respect to such Tax; claim (6but not to the U.S. Supreme Court), provided that:
(a) if a Specified Default or No Lease Event of Default shall have occurred and be continuing;
(b) the Owner Participant shall not have received prior to the time before which a response to such claim is due a written opinion, Borrower from independent tax counsel, selected by the Owner Participant and reasonably acceptable to the Facility Lessee, setting forth in reasonable detail the facts and analysis upon which such opinion is based (a copy of which is delivered to the Facility Lessee as soon as practicable after receipt), to the effect that, with respect to any initial contest, there is not a Reasonable Basis for such contest, (or it is not "more likely than not" in the case of an appeal of adverse judicial determination);
(c) the Facility Lessee shall have provided security for its obligation hereunder satisfactory agreed to the Indemnitee by placing in escrow sufficient funds to cover any such contested Tax and the reasonably expected expenses of such contest pay, on an After-Tax Basis, or otherwise providing satisfactory provisions for payment of such amounts determined all reasonable costs and expenses incurred by the Indemnitee Owner Participant in connection with any contest, including, without limitation, all reasonable legal and other documented out-of-pocket expenses, and shall have provided the Owner Participant with adequate assurances for the payment thereof; and
(d) the Facility Lessee shall have acknowledged in writing its liability to indemnify the Owner Participant in respect of the claim if the contest is Conemaugh Tax Indemnity Agreement not successful; provided, however, that such acknowledgment of liability will not be binding if the contest is resolved on a clearly articulated basis which establishes that the Facility Lessee is not liable to the Owner Participant. Subject to the foregoing, the Owner Participant may forego any and all administrative appeals, proceedings, hearings and conferences with the IRS in respect of any claim and may, at its sole discretionoption, contest the claim in any permissible forum selected by the Owner Participant, considering, however, in good faith such requests as the Facility Lessee and its counsel shall make concerning the prudent manner in which to contest such claim. The Owner Participant may, at its sole option, either pay the tax claimed and sue ▇▇▇ a refund or contest the claim in any permissible forum, considering in good faith, however, such requests as the Facility Lessee and its counsel shall make concerning the most appropriate forum in which to proceed and other related matters. If the Owner Participant chooses to pay the tax claimed and sue ▇▇▇ a refund, the Facility Lessee shall advance to the Owner Participant, on an interest-free basis and with no additional net after-tax cost to the Owner Participant, sufficient funds to pay the tax and any interest, penalties and additions to tax payable with respect thereto (to the extent such amount is indemnified-against by the Facility Lessee). The Owner Participant shall not settle any claim without the Facility Lessee's consent; (7) provided, that the aggregate amount of all indemnity payments that Borrower may Owner Participant shall not be required to make contest any proposed adjustment and may settle any such proposed adjustment if, (i) the Owner Participant shall waive its right to such Indemnitee indemnity with respect to such claim (or similar or related claims) is at least $60,000; adjustment and (8) the claim is not for a Tax the imposition of which has been previously contested by, or at the request of, Borrower hereunder, and such previous contest (including all allowable appeals) was decided adversely to Borrower, unless Borrower has delivered an opinion of independent Tax counsel selected by Borrower and reasonably acceptable shall pay to the Indemnitee Facility Lessee any amount previously paid or advanced by the Facility Lessee with respect to such adjustment or the contest of such adjustment (other than amounts paid or advanced pursuant to the effect that, on Facility Lessee's obligations to pay the basis costs of (i) a change in applicable lawthe contest), or (ii) the subject of such contest has previously been resolved in a difference in Final Determination for a prior taxable year adversely to the underlying factsOwner Participant, there is currently a Realistic Possibility of Success for contesting such claim.
(D) If any Indemnitee shall obtain a refund of all or any part of any Tax paid by Borrower, such Indemnitee shall pay Borrower, but not before Borrower unless the Facility Lessee shall have made all payments theretofore due to such Indemnitee pursuant to this Section 6(b) provided the Owner Participant with an opinion of independent tax counsel, selected by the Facility Lessee and any other payments theretofore due such Indemnitee under any of the Operative Documents, an amount equal reasonably satisfactory to the amount Owner Participant, setting forth in reasonable detail the facts and analysis upon which such opinion is based (a copy of such refund (net of any Taxes imposed thereonwhich is delivered to the Owner Participant), including interest received and attributable thereto (net of any Taxes imposed thereon) plus, if Borrower has paid an amount pursuant to the first sentence of Section 6(b)(iii)(A), any net Tax benefit (or minus any net Tax detriment) realized by such Indemnitee that as a result of a Tax Law Change or a change in fact, the prior Final Determination is no longer determinative of the issue. The Owner Participant (i) shall not make payment of any refund receivedclaim for at least 30 days after giving written notice of such claim to the Facility Lessee if such Conemaugh Tax Indemnity Agreement forbearance is permitted by law and shall inform the Facility Lessee in reasonable detail of the nature and extent of and purported basis (to the extent of the Owner Participant's knowledge thereof) for such claim, (ii) shall use good faith efforts to consult with and consider in good faith the Facility Lessee's and its counsel's suggestions regarding the conduct of such contest (but the manner in which such contest is conducted shall be determined in all respects by the Owner Participant in its sole discretion) and shall keep the Facility Lessee reasonably informed as to the progress of such contest, and (iii) shall provide the Facility Lessee and its counsel with copies of any correspondence (or excerpts thereof relating to the adjustment or the contest of such adjustment) or excerpts of other written material received by the Owner Participant in connection with the contest and shall provide to the Facility Lessee for comment within a reasonable period of time prior to submission written materials with respect to the claim submitted to the IRS, the courts or administrative tribunals or bodies involved with respect to the issues for which the Facility Lessee is liable for an indemnity hereunder (it being understood that the Facility Lessee shall not be permitted to review any portions of such documents or submissions that relate to issues unrelated to the transactions contemplated by the Operative Documents). The Facility Lessee and its counsel shall maintain confidentiality with respect to all such information.
(a) the Facility Lessee shall pay to the Owner Participant any excess of the full amount due hereunder over the amount of any advances previously made by the Facility Lessee and applied against the Facility Lessee's indemnity obligation as aforesaid or (b) the Owner Participant shall repay to the Facility Lessee any excess of such advances over such full amount due hereunder, together with any interest received by the Owner Participant that is properly attributable to such excess amount of such advances during the period such advances were outstanding, and, if the Facility Conemaugh Tax Indemnity Agreement Lessee shall have indemnified the Owner Participant with respect to the adverse tax consequences of any advances or payments hereunder, the amount of any tax savings resulting from any payment made, by such Indemnitee pursuant to this sentence; provided that the Indemnitee shall not be obligated to pay an amount under the preceding sentence to the extent that such amount would exceed the amount of such Taxes paid, reimbursed or advanced by Borrower to such Indemnitee (other than the cost of the contest thereof); provided, further, that any amount not paid to Borrower pursuant to the foregoing limitation shall be carried forward to reduce pro tanto any future payments that Borrower may be required to make to such Indemnitee pursuant to this Section 6(b). If any Indemnitee shall have paid Borrower any refund of all or part of any Tax paid by Borrower and it is subsequently determined that such Indemnitee was not entitled to the refund, such determination shall be treated as the imposition of a Tax for which Borrower is obligated to indemnify such Indemnitee pursuant to the provisions of this Section 6(b) without regard to the exclusions set forth in Section 6(b)(ii) (other than subparagraphs (4), (11) and (12) thereof). Provided no Specified Default or Event of Default has occurred and is continuing, an Indemnitee shall not settle any such claim or contest pursuant to this provision without the written consent of Borrower, which consent shall not be unreasonably withheld, conditioned or delayed; provided, that an Indemnitee may settle at any time without the consent of Borrower if the Indemnitee waives (by written notice to Borrower) the payment by Borrower of an indemnity in respect of such issue and any related issue the contest of which is effectively foreclosed by the settlement of such issue, including any payment arising from such issue in subsequent years or which by reason of the fact that such issue is of a continuing nature, and promptly pays to Borrower any Tax previously paid or any interest-free loan advanced by Borrower (other than expenses of such contests) with respect to such issue.
(E) Nothing contained in this Section 6(b)(iv) shall require any Indemnitee to contest, or permit Borrower to contest in the name of such Indemnitee, a claim that such Indemnitee would otherwise be required to contest pursuant to this Section 6(b)(iv) if such Indemnitee shall waive payment by Borrower of any amount that might otherwise be payable by Borrower under this Section 6(b) in connection with such claim (other than the costs of contest previously incurred), nor shall any Indemnitee be required to pursue any appeal to the United States Supreme Court.
Appears in 1 contract
Sources: Tax Indemnity Agreement (Reliant Energy Mid Atlantic Power Services Inc)
Contests. (A) If a written claim shall be made against and received Upon receipt by Buyer or any Indemnitee for Affiliate of Buyer of any Tax notice of any Audit with respect to Excluded Taxes or any other Taxes for which Borrower the Sellers may be liable hereunder (any such Audit, a "TAX MATTER"), Buyer will notify the Sellers of any such Tax Matter within (x) three Business Days if, under applicable Law, the written response to such Tax Matter is obligated required within 20 days after the receipt by Buyer of such notice of such Tax Matter, and (y) ten calendar days in all other cases. The Sellers may, at their expense, participate in and, upon notice to indemnify Buyer, assume the defense of any such Tax Matter. Upon receipt of such notice from Sellers, Buyer will grant to Sellers a special and limited power of attorney in favor of Sellers, duly authenticated by a Mexican notary public, for lawsuits and collections to permit Sellers to properly defend or contest such Tax Matter. No delay in or failure by Buyer to give notice of such Tax Matter or to deliver such power of attorney pursuant to this Section 6(b)8.3(d) will alter or relieve the Sellers of their obligation to indemnify Buyer, except to the extent that the Sellers are prejudiced thereby or are prevented or in any way restricted from being able to assume the defense of such Tax Matter. If the Sellers assume such defense, the Sellers will have the authority, with respect to any Tax Matter, to represent the interests of the applicable Purchased Subsidiary before the relevant Taxing Authority and will have the right to control the defense, compromise or other resolution of any such Tax Matter, including responding to inquiries and contesting, defending against and resolving any assessment for additional Taxes or notice of Tax deficiency or other adjustment of Taxes of, or relating to, such Indemnitee shall notify Borrower in writing of such claim within 30 days after its receipt, and shall provide Borrower such information regarding such claim as Borrower may reasonably requestTax Matter; provided, however, that the failure to provide such notice shall not release Borrower from any of its obligations to indemnify under Section 6 hereof unless, and only to the extent that, such failure effectively precludes Borrower’s contest rights. To the extent permitted under applicable law, such Indemnitee Sellers will not make enter into any payments with respect to such claim for at least 30 days after giving notice settlement of such claim to Borrower.
(B) If requested by Borrower in writing within 30 days after its receipt of such notice or such shorter period as may be required by applicable law, such Indemnitee shall, at the expense of Borrower and subject to subparagraph (C) below, contest the validity, applicability or amount of such Taxes by, in the case of an Indemnitee-Controlled Contest, in such Indemnitee’s sole discretion or, in the case of a Borrower-Controlled Contest, in Borrower’s sole discretion, (1) resisting payment thereof if practicable, (2) not paying otherwise compromise any such Tax except under protest, (3) if protest is necessary and proper, and if payment of such Tax is made, using reasonable efforts to obtain a refund thereof, in appropriate administrative and judicial proceedings, and (4) in the case of an Indemnitee-Controlled Contest, considering in good faith any other reasonable action as Borrower may reasonably request. Each Indemnitee shall consult in good faith with Borrower and Borrower’s counsel, and Borrower shall consult in good faith with such Indemnitee and its counsel in the case of a Borrower-Controlled Contest. concerning the forum in which the contest is most likely to be favorably resolved and whether such contest shall be by (x) resisting payment of such Tax, (y) paying such Tax under protest or (z) paying such Tax and seeking a refund or other repayment thereof.
(C) In no event shall an Indemnitee be required, or Borrower permitted, to contest the imposition of any Tax for which Borrower is obligated pursuant to this Section 6(b) unless (1) Borrower shall have agreed to pay and shall promptly be paying on request all reasonable costs and expenses that such Indemnitee incurs in contesting such claim or arising out of or relating to such contest (including legal fees, accounting fees, and disbursements, including those on appeal, if any); (2) such contest is not reasonably likely to result in a material danger of the sale, seizure, forfeiture or loss of the Aircraft, or the creation of any Lien thereon other than Liens for Taxes (i) either not yet due or being contested in good faith by appropriate proceedings and (ii) for which such reserves, if any, as are required to be provided under generally accepted accounting principles have been provided by Borrower, and there is no risk of criminal penalties; (3) if such contest shall be conducted in a manner requiring the payment of the claim, Borrower shall have advanced sufficient funds, on an interest-free basis, to make the payment required, and shall have agreed to indemnify the Indemnitee against any additional net after-Tax cost to such Indemnitee of such advance; (4) if requested by the Indemnitee in writing, such Indemnitee shall have received an opinion of independent Tax counsel selected by Borrower and reasonably acceptable to such Indemnitee and furnished at Borrower’s sole expense to the effect that a Realistic Possibility of Success exists for contesting such claim (or, in the case of an appeal of an adverse judicial determination, a written opinion from such independent Tax counsel to the effect that it is more likely than not that such adverse judicial determination will be reversed or substantially modified); (5) Borrower shall have delivered to such Indemnitee a written acknowledgment of Borrower’s obligation to indemnify such Indemnitee Matter to the extent that it could reasonably be expected to adversely affect the contest is not successful; provided, however, that Borrower will not be bound by its acknowledgment Tax liability of liability if the contest is resolved on any Purchased Subsidiary for a clear and unambiguous basis showing no such liability under this Section 6(b) with respect to such Tax; (6) if a Specified Default or Event of Default shall have occurred and be continuing, Borrower shall have provided security for its obligation hereunder satisfactory to the Indemnitee by placing in escrow sufficient funds to cover any such contested Tax and the reasonably expected expenses of such contest on an After-Tax Basis, or otherwise providing satisfactory provisions for payment of such amounts determined by the Indemnitee in its sole discretion; (7) the aggregate amount of all indemnity payments that Borrower may be required to make to such Indemnitee with respect to such claim period (or similar or related claimsportion thereof) is at least $60,000; and (8) beginning after the claim is not for a Tax the imposition of which has been previously contested by, or at the request of, Borrower hereunder, and such previous contest (including all allowable appeals) was decided adversely to Borrower, unless Borrower has delivered an opinion of independent Tax counsel selected by Borrower and reasonably acceptable to the Indemnitee to the effect that, on the basis of (i) a change in applicable law, or (ii) a difference in the underlying facts, there is currently a Realistic Possibility of Success for contesting such claim.
(D) If any Indemnitee shall obtain a refund of all or any part of any Tax paid by Borrower, such Indemnitee shall pay Borrower, but not before Borrower shall have made all payments theretofore due to such Indemnitee pursuant to this Section 6(b) and any other payments theretofore due such Indemnitee under any of the Operative Documents, an amount equal to the amount of such refund (net of any Taxes imposed thereon), including interest received and attributable thereto (net of any Taxes imposed thereon) plus, if Borrower has paid an amount pursuant to the first sentence of Section 6(b)(iii)(A), any net Tax benefit (or minus any net Tax detriment) realized by such Indemnitee as a result of any refund received, and payment made, by such Indemnitee pursuant to this sentence; provided that the Indemnitee shall not be obligated to pay an amount under the preceding sentence to the extent that such amount would exceed the amount of such Taxes paid, reimbursed or advanced by Borrower to such Indemnitee (other than the cost of the contest thereof); provided, further, that any amount not paid to Borrower pursuant to the foregoing limitation shall be carried forward to reduce pro tanto any future payments that Borrower may be required to make to such Indemnitee pursuant to this Section 6(b). If any Indemnitee shall have paid Borrower any refund of all or part of any Tax paid by Borrower and it is subsequently determined that such Indemnitee was not entitled to the refund, such determination shall be treated as the imposition of a Tax for which Borrower is obligated to indemnify such Indemnitee pursuant to the provisions of this Section 6(b) without regard to the exclusions set forth in Section 6(b)(ii) (other than subparagraphs (4), (11) and (12) thereof). Provided no Specified Default or Event of Default has occurred and is continuing, an Indemnitee shall not settle any such claim or contest pursuant to this provision Closing Date without the prior written consent of BorrowerBuyer, which consent shall not be unreasonably withheld. Buyer has the right (but not the duty) to participate in the defense of such Tax Matter and to employ counsel, conditioned at its own expense, separate from the counsel employed by the Sellers. If Buyer elects to participate in the defense of any Tax Matter, then (i) Buyer shall be entitled to (A) without in any way limiting or delayed; providedaffecting Sellers' right to assume the defense of such Tax Matter, participate fully in the conduct of such Tax Matter, including participating in all conferences and attending all meetings with the relevant authorities, and (B) consult with the Sellers, at its own expense, regarding any such Tax Matter, and Sellers shall consider in good faith any suggestions made by Buyer, (ii) the Sellers shall provide Buyer with a copy of all documents (or portions thereof) relating to such Tax Matter and (iii) the Sellers will not enter into any settlement of or otherwise compromise any such Tax Matter to the extent that an Indemnitee may settle at it could reasonably be expected to adversely affect the Tax liability of any time Purchased Subsidiary for a period (or portion thereof) beginning after the Closing Date without the prior written consent of Borrower if Buyer, which consent shall not be unreasonably withheld. The Sellers will allow Buyer to consult with Sellers regarding the Indemnitee waives (by written notice to Borrower) the payment by Borrower conduct of an indemnity or positions taken in respect of any such issue and any related issue the contest of which is effectively foreclosed by the settlement of such issue, including any payment arising from such issue in subsequent years or which by reason of the fact that such issue is of a continuing nature, and promptly pays to Borrower any Tax previously paid or any interest-free loan advanced by Borrower (other than expenses of such contests) with respect to such issueproceeding.
(E) Nothing contained in this Section 6(b)(iv) shall require any Indemnitee to contest, or permit Borrower to contest in the name of such Indemnitee, a claim that such Indemnitee would otherwise be required to contest pursuant to this Section 6(b)(iv) if such Indemnitee shall waive payment by Borrower of any amount that might otherwise be payable by Borrower under this Section 6(b) in connection with such claim (other than the costs of contest previously incurred), nor shall any Indemnitee be required to pursue any appeal to the United States Supreme Court.
Appears in 1 contract
Contests. (Aa) Nothing in this Agreement shall be construed to prevent UpREIT from contesting, through its Tax Matters Partner in accordance with the Partnership Agreement as part of the unified audit of the UpREIT, any claim in respect of any "partnership" item of the UpREIT that, if successful, would result in an Income Inclusion (a "Partnership Level Issue").
(b) If UpREIT contests a written claim shall Partnership Level Issue that, if successful, would result in an Income Inclusion, UpREIT's liability for indemnification under Section 4 hereof (other than reasonable costs and expenses described in Section 6(f) of the Agreement) shall, at UpREIT's election, be made against and received by deferred until thirty (30) days after a Final Determination of such ▇▇▇▇▇ Indemnitee's federal income tax liability in respect of an Income Inclusion.
(c) If any Indemnitee for any Tax for audit or proceeding involving an indemnifiable adjustment is being conducted in a proceeding involving such ▇▇▇▇▇ Indemnitee, which Borrower is obligated cannot be transferred to indemnify pursuant to this Section 6(bthe UpREIT as a partnership item (a "▇▇▇▇▇ Level Issue"), such ▇▇▇▇▇ Indemnitee shall hereby agrees (i) promptly to notify Borrower UpREIT in writing of such claim within 30 days after adjustment (and the failure of such ▇▇▇▇▇ Indemnitee to so notify UpREIT shall preclude any indemnity hereunder to the extent UpREIT's right to effect its receiptcontest rights hereunder has been precluded by such failure), and shall provide Borrower (ii) upon UpREIT's delivery to of a written opinion of nationally recognized tax counsel reasonably acceptable to such information regarding ▇▇▇▇▇ Indemnitee ("Tax Counsel") to the effect that there is a Realistic Possibility of Success upon contest of such claim as Borrower may reasonably request▇▇▇▇▇ Level Issue, such ▇▇▇▇▇ Indemnitee will contest that adjustment by filing a protest and administrative appeal and prosecuting the same in good faith; provided, however, that the failure to provide such notice shall not release Borrower from any of its obligations to indemnify under Section 6 hereof unless, and only to the extent that, such failure effectively precludes Borrower’s contest rights. To the extent permitted under applicable law, such ▇▇▇▇▇ Indemnitee will not make any payments be obligated to pursue an administrative appeal if such ▇▇▇▇▇ Indemnitee instead pursues relief in Tax Court or a court having refund jurisdiction.
(d) If, within 30 days following the failure of such administrative proceedings with respect to such claim for at least 30 days after giving notice of such claim a ▇▇▇▇▇ Level Issue, UpREIT delivers to Borrower.
(B) If requested by Borrower in writing within 30 days after its receipt of such notice or such shorter period as may be required by applicable law, such a ▇▇▇▇▇ Indemnitee shall, at the expense of Borrower and subject to subparagraph (C) below, contest the validity, applicability or amount of such Taxes by, in the case of an Indemnitee-Controlled Contest, in such Indemnitee’s sole discretion or, in the case of a Borrower-Controlled Contest, in Borrower’s sole discretion, (1) resisting payment thereof if practicable, (2) not paying such Tax except under protest, (3) if protest is necessary and proper, and if payment of such Tax is made, using reasonable efforts to obtain a refund thereof, in appropriate administrative and judicial proceedings, and (4) in the case of an Indemnitee-Controlled Contest, considering in good faith any other reasonable action as Borrower may reasonably request. Each Indemnitee shall consult in good faith with Borrower and Borrower’s counsel, and Borrower shall consult in good faith with such Indemnitee and its counsel in the case of a Borrower-Controlled Contest. concerning the forum in which the contest is most likely to be favorably resolved and whether such contest shall be by (x) resisting payment of such Tax, (y) paying such Tax under protest or (z) paying such Tax and seeking a refund or other repayment thereof.
(C) In no event shall an Indemnitee be required, or Borrower permitted, to contest the imposition of any Tax for which Borrower is obligated pursuant to this Section 6(b) unless (1) Borrower shall have agreed to pay and shall promptly be paying on request all reasonable costs and expenses that such Indemnitee incurs in contesting such claim or arising out of or relating to such contest (including legal fees, accounting fees, and disbursements, including those on appeal, if any); (2) such contest is not reasonably likely to result in a material danger of the sale, seizure, forfeiture or loss of the Aircraft, or the creation of any Lien thereon other than Liens for Taxes (i) either not yet due or being contested in good faith by appropriate proceedings and (ii) for which such reserves, if any, as are required to be provided under generally accepted accounting principles have been provided by Borrower, and there is no risk of criminal penalties; (3) if such contest shall be conducted in a manner requiring the payment of the claim, Borrower shall have advanced sufficient funds, on an interest-free basis, to make the payment required, and shall have agreed to indemnify the Indemnitee against any additional net after-Tax cost to such Indemnitee of such advance; (4) if requested by the Indemnitee in writing, such Indemnitee shall have received an written opinion of independent Tax counsel selected by Borrower and reasonably acceptable to such Indemnitee and furnished at Borrower’s sole expense Counsel to the effect that there is a Realistic Possibility of Success exists if the proposed adjustment is presented to a court for contesting resolution, then such claim (or, ▇▇▇▇▇ Indemnitee will contest the proposed adjustment in good faith in the case Tax Court or by paying the tax (and any applicable interest and penalties) and suing for refund in the Court of an appeal Federal Claims or appropriate Federal District Court. If, within 30 days following a final adverse decision of an adverse judicial determinationsuch court with respect to such ▇▇▇▇▇ Level Issue, UpREIT delivers to such ▇▇▇▇▇ Indemnitee a written opinion from such independent of Tax counsel Counsel to the effect that it is more likely than not that such adverse judicial determination will decision would be reversed on appeal, then such ▇▇▇▇▇ Indemnitee will appeal such decision to the appropriate Federal Court of Appeals. With respect to any of the above-described proceedings, such ▇▇▇▇▇ Indemnitee will keep UpREIT and its counsel informed as to the progress of such proceedings, give UpREIT and its counsel the opportunity to review and comment in advance on all written submissions and filings relevant to indemnifiable issues (after making appropriate redactions to preserve the confidentiality of the such ▇▇▇▇▇ Indemnitee return as to other issues), and consider in good faith any suggestions made by UpREIT or substantially modifiedits counsel.
(e) Such ▇▇▇▇▇ Indemnitee shall present any settlement offer provided to such ▇▇▇▇▇ Indemnitee pursuant to a ▇▇▇▇▇ Level Issue to UpREIT. If UpREIT recommends acceptance of a settlement offer of a ▇▇▇▇▇ Level Issue or if the Tax Matters Partner recommends acceptance of a settlement offer in respect of a Partnership Level Issue, but such ▇▇▇▇▇ Indemnitee declines to accept such offer in writing within 30 days (if such ▇▇▇▇▇ Indemnitee does not respond within 30 days, such lack of response shall be treated as acceptance of UpREIT's or the Tax Matters Partner's recommendation, respectively); , (51) Borrower the obligation of UpREIT to make indemnity payments as the result of any such contest or proceedings shall not thereafter exceed the obligation that it would have had if such contest had been settled or proceeding terminated on the basis recommended by UpREIT or the Tax Matters Partner, as applicable, and (2) in the case of a ▇▇▇▇▇ Level Issue, UpREIT shall have delivered no further liability for costs or other expenses in respect of such contest.
(f) Notwithstanding the foregoing, such ▇▇▇▇▇ Indemnitee will have no obligation to contest any action with respect to a ▇▇▇▇▇ Level Issue (i) unless such items could give rise to a federal income tax liability (disregarding other items in the assessment and considering effects in future years) in excess of $__________ , (ii) without UpREIT paying when due, reasonable third-party costs and out-of-pocket expenses including reasonable legal, witness and accounting fees and other expenses and, in the case of proceedings before the Court of Federal Claims or Federal District Court, the amount of tax (and any applicable interest and penalties) for which refund is claimed, and (iii) to the extent such ▇▇▇▇▇ Indemnitee a written acknowledgment of Borrower’s waives in writing UpREIT's obligation to indemnify such ▇▇▇▇▇ Indemnitee to the extent that the contest is not successful; providedfor such items, however, that Borrower will not be bound by its acknowledgment of liability if the contest is resolved on a clear in which case all third-party costs and unambiguous basis showing no such liability under this Section 6(b) with respect to such Tax; (6) if a Specified Default or Event of Default shall have occurred and be continuing, Borrower shall have provided security for its obligation hereunder satisfactory to the Indemnitee by placing out-of-pocket expenses described in escrow sufficient funds to cover any such contested Tax and the reasonably expected expenses of such contest on an After-Tax Basis, or otherwise providing satisfactory provisions for payment of such amounts determined by the Indemnitee in its sole discretion; (7) the aggregate amount of all indemnity payments that Borrower may be required to make to such Indemnitee with respect to such claim (or similar or related claims) is at least $60,000; and (8) the claim is not for a Tax the imposition of which has been previously contested by, or at the request of, Borrower hereunder, and such previous contest (including all allowable appeals) was decided adversely to Borrower, unless Borrower has delivered an opinion of independent Tax counsel selected by Borrower and reasonably acceptable to the Indemnitee to the effect that, on the basis of (i) a change in applicable law, or clause (ii) a difference in the underlying facts, there is currently a Realistic Possibility of Success for contesting thereafter incurred and all taxes would be paid by such claim▇▇▇▇▇ Indemnitee.
(Dg) If any Indemnitee shall obtain a refund of all or any part of any Tax paid by Borrower, such Indemnitee shall pay Borrower, but not before Borrower shall have made all payments theretofore due to such Indemnitee pursuant to this Section 6(b) and any other payments theretofore due such Indemnitee under any of the Operative Documents, an amount equal to the amount of such refund (net of any Taxes imposed thereon), including interest received and attributable thereto (net of any Taxes imposed thereon) plus, if Borrower has paid an amount pursuant to the first sentence of Section 6(b)(iii)(A), any net Tax benefit (or minus any net Tax detriment) realized by such Indemnitee as a result of any refund received, and payment made, by such Indemnitee pursuant to this sentence; provided that the Indemnitee shall not be obligated to pay an amount under the preceding sentence to the extent that such amount would exceed the amount of such Taxes paid, reimbursed or advanced by Borrower to such Indemnitee (other than the cost of the contest thereof); provided, further, that any amount not paid to Borrower pursuant to the foregoing limitation shall be carried forward to reduce pro tanto any future payments that Borrower may be required to make to such Indemnitee pursuant to this Section 6(b). If any Indemnitee shall have paid Borrower any refund of all or part of any Tax paid by Borrower and it is subsequently determined that such Indemnitee was not entitled to the refund, such determination shall be treated as the imposition of a Tax for which Borrower is obligated to indemnify such Indemnitee pursuant to the provisions of this Section 6(b) without regard to the exclusions set forth in Section 6(b)(ii) (other than subparagraphs (4), (11) and (12) thereof). Provided no Specified Default or Event of Default has occurred and is continuing, an ▇▇▇▇▇ Indemnitee shall not settle any such claim or contest pursuant to this provision ▇▇▇▇▇ Level Issue without the written consent of Borrower, which consent UpREIT's consent; provided that such ▇▇▇▇▇ Indemnitee shall not be unreasonably withheld, conditioned or delayed; provided, that an Indemnitee required to contest any proposed adjustment and may settle at any time without the consent of Borrower such proposed adjustment if the such ▇▇▇▇▇ Indemnitee waives (by written notice shall waive its right to Borrower) the payment by Borrower of an indemnity in respect of such issue and any related issue the contest of which is effectively foreclosed by the settlement of such issue, including any payment arising from such issue in subsequent years or which by reason of the fact that such issue is of a continuing nature, and promptly pays to Borrower any Tax previously paid or any interest-free loan advanced by Borrower (other than expenses of such contests) under this Agreement with respect to such issueadjustment and any Income Inclusion that results from such adjustment and, in the case of proceedings before the Court of Federal Claims or Federal District Court, shall pay to UpREIT the amount of tax (and any applicable interest and penalties) previously paid or advanced by UpREIT with respect to such adjustment or the contest of such adjustment under Section 6(f), plus interest at ___% computed from the time such amounts were paid or advanced by UpREIT.
(Eh) Nothing contained Within thirty (30) days after a Final Determination of the liability of such ▇▇▇▇▇ Indemnitee in this Section 6(b)(ivrespect of a ▇▇▇▇▇ Level Issue, UpREIT and each Indemnitee agree to pay each other, as applicable, the net amount of (i) shall require the payment owed by the UpREIT to such ▇▇▇▇▇ Indemnitee of any indemnification hereunder, not theretofore paid resulting from the outcome of such contest, and (ii) in the case of proceedings before the Court of Federal Claims or Federal District Court, the repayment owed by such ▇▇▇▇▇ Indemnitee to contest, UpREIT of the amount of tax (and any applicable interest and penalties) previously paid or permit Borrower advanced by UpREIT with respect to such adjustment or the contest in the name of such Indemnitee, a claim that such Indemnitee would otherwise be required to contest pursuant to this adjustment under Section 6(b)(iv) if such Indemnitee shall waive payment by Borrower of any amount that might otherwise be payable by Borrower under this Section 6(b) in connection with such claim (other than the costs of contest previously incurred6(f), nor shall together with any interest received by or credited to such ▇▇▇▇▇ Indemnitee be required that is attributable to pursue any appeal to the United States Supreme Courtsuch advance.
Appears in 1 contract
Sources: Tax Indemnification Agreement (Prime Group Realty Trust)
Contests. (A) Lessee shall pay on or before the time or times prescribed by law any Taxes that Lessee is liable for hereunder. If a written any claim shall be or claims is or are made against and received by any Indemnitee for any Tax for which Borrower is obligated subject to indemnify pursuant to this indemnification as provided in Section 6(b7.2(a), such Indemnitee shall notify Borrower as soon as practicable, but in writing of such claim within no event more than 30 days after its receipt, and shall provide Borrower such information regarding such claim as Borrower may reasonably request; provided, however, that the failure to provide such notice shall not release Borrower from any receipt of its obligations to indemnify under Section 6 hereof unless, and only to the extent that, such failure effectively precludes Borrower’s contest rights. To the extent permitted under applicable law, such Indemnitee will not make any payments with respect to such claim for at least 30 days after giving formal written notice of such claim to Borrower.
(B) the Tax or proposed Tax, notify the Lessee. If requested by Borrower Lessee in writing within 30 days after its of Lessee's receipt of such notice or such shorter period as may be required by applicable lawfrom the Indemnitee, such Indemnitee shallshall contest (including all judicial appeals other than to the United States Supreme Court), at the expense of Borrower Lessee, in the name of such Indemnitee (or such Indemnitee, in its sole discretion, may require Lessee, if permitted by Applicable Laws and subject Regulations, to subparagraph (Ccontest in the name of Lessee or such Indemnitee) below, contest the validity, applicability or amount of such Taxes by, in the case of an Indemnitee-Controlled Contest, in such Indemnitee’s sole discretion or, in the case of a Borrower-Controlled Contest, in Borrower’s sole discretion, (1) resisting payment thereof if practicable, (2) not paying such Tax except under protest, (3) if protest is necessary and proper, and if payment of such Tax is made, using reasonable efforts to obtain a refund thereof, in appropriate administrative and judicial proceedings, and (4) in the case of an Indemnitee-Controlled Contest, considering in good faith any other reasonable action as Borrower may reasonably request. Each Indemnitee shall consult in good faith with Borrower and Borrower’s counsel, and Borrower shall consult in good faith with such Indemnitee and its counsel in the case of a Borrower-Controlled Contest. concerning the forum in which the contest is most likely to be favorably resolved and whether Tax; provided that such contest shall be by required only if (xi) resisting payment in the reasonable opinion of Lessee and its tax counsel reasonably acceptable to such Indemnitee, there exists a reasonable basis, within the meaning of ABA Formal Opinion No. 85-352, to contest such Tax, (y) paying such Tax under protest or (z) paying such Tax and seeking a refund or other repayment thereof.
(C) In no event shall an Indemnitee be required, or Borrower permitted, to contest the imposition of any Tax for which Borrower is obligated pursuant to this Section 6(b) unless (1) Borrower shall have agreed to pay and shall promptly be paying on request all reasonable costs and expenses that such Indemnitee incurs in contesting such claim or arising out of or relating to such contest (including legal fees, accounting fees, and disbursements, including those on appeal, if any); (2) such contest is not reasonably likely to result in a material danger of the sale, seizure, forfeiture or loss of the Aircraft, or the creation of any Lien thereon other than Liens for Taxes (i) either not yet due or being contested in good faith by appropriate proceedings and (ii) for which such reserves, if any, as are required to be provided under generally accepted accounting principles have been provided by Borrower, and there is no risk of criminal penalties; (3) if such contest shall be conducted in a manner requiring the payment of the claim, Borrower shall have advanced sufficient funds, on an interest-free basis, to make the payment required, and shall have agreed to indemnify the Indemnitee against any additional net after-Tax cost to such Indemnitee of such advance; (4) if requested by the Indemnitee in writing, such Indemnitee shall have received an opinion of independent Tax counsel selected by Borrower and reasonably acceptable to such Indemnitee and furnished at Borrower’s sole expense to the effect that a Realistic Possibility of Success exists for contesting such claim (or, in the case of an appeal of an adverse judicial determination, a written opinion from such independent Tax counsel to the effect that it is more likely than not that such adverse judicial determination will be reversed or substantially modified); (5) Borrower shall have delivered to such Indemnitee a written acknowledgment of Borrower’s obligation to indemnify such Indemnitee to the extent that the contest is not successful; provided, however, that Borrower will not be bound by its acknowledgment of liability if the contest is resolved on a clear and unambiguous basis showing no such liability under this Section 6(b) with respect to such Tax; (6) if a Specified Default or Event of Default shall have occurred and be continuing, Borrower shall have provided security for its obligation hereunder satisfactory to the Indemnitee by placing in escrow sufficient funds to cover any such contested Tax and the reasonably expected expenses of such contest on an After-Tax Basis, or otherwise providing satisfactory provisions for payment of such amounts determined by the Indemnitee in its sole discretion; (7) the aggregate amount of all indemnity payments that Borrower may be required to make to such Indemnitee with respect to such claim (or similar or related claims) is at least $60,000; and (8) the claim is not for a Tax the imposition of which has been previously contested by, or at the request of, Borrower hereunder, and such previous contest (including all allowable appeals) was decided adversely to Borrower, unless Borrower has delivered an opinion of independent Tax counsel selected by Borrower and reasonably acceptable to the Indemnitee to the effect that, on the basis of (i) a change in applicable law, or (ii) a difference in the underlying facts, there is currently a Realistic Possibility of Success for contesting such claim.
(D) If any Indemnitee shall obtain a refund of all or any part of any Tax paid by Borrower, such Indemnitee shall pay Borrower, but not before Borrower shall have made all payments theretofore due to such Indemnitee pursuant to this Section 6(b) and any other payments theretofore due such Indemnitee under any of the Operative Documents, an amount equal to the amount of such refund (net of any Taxes imposed thereon), including interest received and attributable thereto (net of any Taxes imposed thereon) plus, if Borrower has paid an amount pursuant to the first sentence of Section 6(b)(iii)(A), any net Tax benefit (or minus any net Tax detriment) realized by such Indemnitee as a result of any refund received, and payment made, by such Indemnitee pursuant to this sentence; provided that the Indemnitee shall not be obligated to pay an amount under the preceding sentence to the extent that such amount would exceed the amount of such Taxes paid, reimbursed or advanced by Borrower to such Indemnitee (other than the cost of the contest thereof); provided, further, that any amount not paid to Borrower pursuant to the foregoing limitation shall be carried forward to reduce pro tanto any future payments that Borrower may be required to make to such Indemnitee pursuant to this Section 6(b). If any Indemnitee shall have paid Borrower any refund of all or part of any Tax paid by Borrower and it is subsequently determined that such Indemnitee was not entitled to the refund, such determination shall be treated as the imposition of a Tax for which Borrower is obligated to indemnify such Indemnitee pursuant to the provisions of this Section 6(b) without regard to the exclusions set forth in Section 6(b)(ii) (other than subparagraphs (4), (11) and (12) thereof). Provided no Specified Default or Lease Event of Default has occurred and is continuing, (iii) Lessee has acknowledged in writing its liability for the Tax at issue to the extent the contest is not successful, (iv) the contest will not result in a risk of criminal liability of an Indemnitee shall not settle or a material risk of sale, loss or forfeiture of the Aircraft or any part thereof or interest therein, (v) the amount of the Tax exceeds $25,000, and (vi) Lessee pays all reasonable expenses incurred by the Indemnitee in contesting any such Tax (including, without limitation, all reasonable attorneys' and accountants' fees), upon demand by the Indemnitee. Lessee shall have the right to participate in the conduct of any proceedings controlled by the Indemnitee to the extent that such participation by such Person does not interfere with the Indemnitee's control of such contest and Lessee shall in all events be kept informed, to the extent practicable, of material developments relative to such proceedings. The Indemnitee shall have the right to participate in the conduct of any proceedings controlled by Lessee to the extent that such participation by such Person does not interfere with Lessee's control of such contest, and the Indemnitee shall in all events be kept informed, to the extent practicable, of material developments relative to such proceedings. The Indemnitees agree that a contested claim for which Lessee would be required to make a reimbursement payment hereunder will not be settled or contest pursuant to this provision compromised without the Lessee's good faith prior written consent unless the Indemnitee waives its right to indemnification hereunder and repays the Taxes advanced by Lessee as a non-interest bearing loan by Lessee to such Indemnitee (as provided below) with interest at the Overdue Rate from the date of Borrower, which consent payment until receipt thereof by Lessee. Indemnitee shall not be unreasonably withheld, conditioned endeavor to settle or delayedcompromise any such contested claim in accordance with written instructions received from the Lessee; provided, that (x) Lessee on or before the date the Indemnitee executes a settlement or compromise pays the contested Tax to the extent agreed upon or makes an indemnification payment to the Indemnitee in an amount acceptable to the Indemnitee; and (y) the settlement or compromise does not, in the reasonable opinion of the Indemnitee, adversely affect the right of the Certificate Trustee or such Indemnitee to receive Rent or the Lease Balance or any other payment pursuant to the Operative Documents, or involve a material risk of sale, forfeiture or loss of any Aircraft or any interest therein. The failure of an Indemnitee may settle at to contest timely a claim against it for any time without the consent of Borrower if the Indemnitee waives (by written notice to Borrower) the payment by Borrower of an indemnity in respect of such issue and any related issue the contest of Tax which is effectively foreclosed subject to indemnification under Section 7.2(a) and for which it has an obligation to Lessee to contest under this Section 7.2(b) in the manner required by the settlement of such issue, including any payment arising from such issue in subsequent years or which by reason of the fact Applicable Laws and Regulations where Lessee has timely requested that such issue is Indemnitee contest such claim shall relieve Lessee of a continuing nature, and promptly pays its obligations to Borrower any Tax previously paid or any interest-free loan advanced by Borrower (other than expenses of such contestsIndemnitee under Section 7.2(a) with respect to such issue.
claim only to the extent such failure results in the loss of an effective contest. If Applicable Laws and Regulations require the payment of a contested Tax as a condition to, or regardless of, its being contested (E) Nothing contained in this Section 6(b)(iv) shall require any or if the Indemnitee controls such contest and decides to pursue such contest by paying the Tax and seeking a refund thereof), and Lessee chooses to contest such Tax or to direct the Indemnitee to contestcontest such Tax in accordance with this Section, or permit Borrower then Lessee shall provide the Indemnitee with the funds to contest in pay such Tax, such provision of funds to be deemed a non-interest bearing loan by Lessee to the name Indemnitee to be repaid by any recovery of such IndemniteeTax from such contest and remaining unpaid amount not recovered to offset Lessee's obligation to indemnify the Indemnitee for such Tax. Lessee shall indemnify the Indemnitee on an After-Tax Basis in accordance with Section 7.7 for and against any adverse consequences of any such interest-free loan. In the event that the Indemnitee receives a refund (or like adjustment) in respect of any Tax for which the Indemnitee has been reimbursed by Lessee, a claim that the Indemnitee shall promptly remit the amount of such refund (or like adjustment), plus any interest received thereon, to Lessee, net of all reasonable costs and expenses incurred by such Indemnitee would otherwise in connection therewith; provided, however, that the Indemnitee shall not be required to contest remit any amount pursuant to this sentence in excess of the amounts previously paid by Lessee to, or on behalf of, such Indemnitee with respect to such Tax pursuant to this Section 6(b)(iv) if such 7, plus any interest received thereon; provided, further, that Indemnitee shall waive payment by Borrower of any amount that might otherwise be payable by Borrower under this Section 6(b) in connection with such claim (other than the costs of contest previously incurred), nor shall any Indemnitee not be required to pursue remit any appeal amount pursuant to the United States Supreme Courtthis sentence for so long as a Lease Event of Default has occurred and is continuing.
Appears in 1 contract