Reservation and Limitation of Rights. (a) This Agreement and the terms and conditions hereof shall not be deemed to be an admission by Vencor or Ventas in respect of any matter whatsoever. (b) Notwithstanding anything in the Tax Allocation Agreement or the Tax Stipulation to the contrary, each Party hereby waives any claim it may have against the other Party and releases the other Party with respect to (i) any and all obligations in respect of any Tax Deficiency paid out of the Escrow Funds as provided in Section 7(b) above, (ii) any and all amounts of the Escrow Funds applied to satisfy any Tax Deficiency, (iii) any and all claims and obligations respecting any Tax Deficiency paid from the Vencor Account or the Ventas Account maintained under the Tax Stipulation prior to the Effective Date in accordance with the terms of such Tax Stipulation, and (iv) any and all claims under the Tax Allocation Agreement (including with respect to any Tax Attributes absorbed under applicable law by tax adjustments or Tax Deficiencies), except for (x) claims with respect to Excess Tax Liabilities as provided for in Section 8(d) hereof and (y) claims for breach of Article X of the Tax Allocation Agreement as amended hereby. (c) Notwithstanding anything in the Tax Allocation Agreement to the contrary, the Parties agree that each expressly reserves the right at any time during the term of this Agreement to bring an arbitration proceeding under Article VIII of the Tax Allocation Agreement in order to resolve a dispute between the Parties regarding any aspect of their joint conduct of matters referred to in Section 5 above, except that all such dispute costs shall be paid by the non-prevailing Party or as the arbiter may direct. (d) Notwithstanding anything in the Tax Allocation Agreement to the contrary the Parties agree: (i) that each Party expressly reserves the right during the term of this Agreement to bring an arbitration proceeding under Article VIII of the Tax Allocation Agreement at any time within the first 6 months after the final determination (being an uncontested determination by a taxing authority or the final decision (not subject to further appeal) of any court having jurisdiction over the subject matter) in respect of the portion of any assessment, or payment by one or more Parties of any Subject Tax or Taxes that in the aggregate exceed the amount of Escrow Funds remaining in the Escrow Account after all required payments therefrom pursuant to Section 7 and which cannot therefore be paid in full out of the remaining Escrow Funds ("Excess Tax Liabilities"); (ii) the sole purpose of any such arbitration shall be to determine under the terms of the Tax Allocation Agreement, as amended hereby, the liability, if any, of each of Vencor and Ventas for any Excess Tax Liabilities, taking into account their relative entitlement to the aggregate amount of Subject Refunds and their relative liability for the aggregate amount of Subject Taxes under the Tax Allocation Agreement, as amended hereby, as such amounts have been finally determined by the relevant taxing or judicial authority, and, (iii) that the rights, duties and obligations of a Party hereunder, including with respect to Excess Tax Liabilities, shall not be affected by any order of a bankruptcy court discharging, disallowing or releasing the liability of a Party to a third party. (e) The principles of paragraph (d) above are illustrated by the following examples: (i) Assume that there are adjustments to income or deductions that eliminate the net losses that gave rise to $30 of Subject Refunds, and give rise to an additional tax deficiency of $20. The funds in escrow are used to pay $30 of the total tax deficiency of $50. There are no other Subject Refunds. There are therefore Excess Taxes of $20. Further assume that it is determined under the Tax Allocation Agreement, pursuant to section 8(d)(i) hereof, that Party A is obligated to pay $12 of the Excess Taxes of $20 and Party B is obligated to pay $8. Party A would be obligated to pay $12 of the Excess Taxes and Party B would be obligated to pay $8. (ii) Assume the following: (x) there are state tax deficiencies (i.e., Subject Taxes) of $40; (y) the Subject Refunds were not eliminated but the $30 of Escrow Funds were used to pay the state tax deficiencies. There are therefore Excess Taxes of $10 (the excess of the $40 in state taxes over the $30 in the escrow account). (a) Assume that it is determined under the Tax Allocation Agreement, pursuant to section 8(d)(i) hereof, that Party A was entitled to all $30 of the Subject Refunds and was liable for $20 of the Subject Taxes, and that Party B was entitled to none of the Subject Refunds and was liable for $20 of the Subject Taxes. Because Party A was entitled to $30 of Subject Refunds and only liable to pay $20 of Subject Taxes, it does not have any obligation to pay any of the Excess Taxes. Therefore Party B must pay the $10 of Excess Taxes. Under the terms of Section 8(b) hereof, Party A may not make any additional claim against Party B with respect to amounts in the escrow fund that were used to satisfy the Subject Taxes or any obligations in respect of the Subject Taxes. (b) Assume that it is determined under the Tax Allocation Agreement, pursuant to section 8(d)(i) hereof, that Party A was entitled to all $30 of the Subject Refunds and was liable for $35 of the Subject Taxes, and that Party B was entitled to none of the Subject Refunds and was liable for $5 of the Subject Taxes. Because Party A was entitled to $30 of Subject Refunds and liable to pay $35 of Subject Taxes, it must pay $5 of the Excess Taxes. Party B must pay the other $5 of Excess Taxes. (c) Assume that it is determined under the Tax Allocation Agreement, pursuant to section 8(d)(i) hereof, that Party A was entitled to $10 of the Subject Refunds and was liable for $35 of the Subject Taxes, and that Party B was entitled to $20 of the Subject Refunds and was liable for $5 of the Subject Taxes. Because Party A was entitled to $10 of Subject Refunds and liable to pay $35 of Subject Taxes, it must pay the entire $10 of Excess Taxes. Party B pays none of the Excess Taxes. Under the terms of Section 8(b) hereof, Party B may not make any additional claim against Party A with respect to amounts in the escrow fund that were used to satisfy the Subject Taxes or any obligations in respect of the Subject Taxes. (f) Each Party determined, as provided in paragraphs (d) and (e) above, under the Tax Allocation Agreement to be liable for all or any part of any Excess Tax Liability shall immediately pay on demand the amount of such liability for such excess to the applicable tax authority and, if one Party shall have paid any such amount for which the other Party is liable under this Agreement, the Party liable shall pay the other Party the entire amount thereof plus interest on such amount at a compound rate of LIBOR plus 7% per annum until the entire amount due has been paid to such Party. (g) Each Party agrees that it shall not bring an action against the other in respect of the Tax Allocation Agreement except as provided in paragraphs (d), (e) and (f) above and except as to breaches of Article X of the Tax Allocation Agreement, as amended by this Agreement.
Appears in 1 contract
Reservation and Limitation of Rights. (a) This Agreement and the terms and conditions hereof shall not be deemed to be an admission by Vencor or Ventas in respect of any matter whatsoever.
(b) Notwithstanding anything in the Tax Allocation Agreement or the Tax Stipulation to the contrary, each Party hereby waives any claim it may have against the other Party and releases the other Party with respect to (i) any and all obligations in respect of any Tax Deficiency paid out of the Escrow Funds as provided in Section 7(b) above, (ii) any and all amounts of the Escrow Funds applied to satisfy any Tax Deficiency, (iii) any and all claims and obligations respecting any Tax Deficiency paid from the Vencor Account or the Ventas Account maintained under the Tax Stipulation prior to the Effective Date in accordance with the terms of such Tax Stipulation, and (iv) any and all claims under the Tax Allocation Agreement (including with respect to any Tax Attributes absorbed under applicable law by tax adjustments or Tax Deficiencies), except for (x) ------ claims with respect to Excess Tax Liabilities as provided for in Section 8(d) hereof and (y) claims for breach of Article X of the Tax Allocation Agreement as amended hereby.
(c) Notwithstanding anything in the Tax Allocation Agreement to the contrary, the Parties agree that each expressly reserves the right at any time during the term of this Agreement to bring an arbitration proceeding under Article VIII of the Tax Allocation Agreement in order to resolve a dispute between the Parties regarding any aspect of their joint conduct of matters referred to in Section 5 above, except that all such dispute costs shall be paid by the non-prevailing Party or as the arbiter may direct.
(d) Notwithstanding anything in the Tax Allocation Agreement to the contrary the Parties agree:
(i) that each Party expressly reserves the right during the term of this Agreement to bring an arbitration proceeding under Article VIII of the Tax Allocation Agreement at any time within the first 6 months after the final determination (being an uncontested determination by a taxing authority or the final decision (not subject to further appeal) of any court having jurisdiction over the subject matter) in respect of the portion of any assessment, or payment by one or more Parties of any Subject Tax or Taxes that in the aggregate exceed the amount of Escrow Funds remaining in the Escrow Account after all required payments therefrom pursuant to Section 7 and which cannot therefore be paid in full out of the remaining Escrow Funds ("Excess Tax Liabilities");
(ii) the sole purpose of any such arbitration shall be to determine under the terms of the Tax Allocation Agreement, as amended hereby, the liability, if any, of each of Vencor and Ventas for any Excess Tax Liabilities, taking into account their relative entitlement to the aggregate amount of Subject Refunds and their relative liability for the aggregate amount of Subject Taxes under the Tax Allocation Agreement, as amended hereby, as such amounts have been finally determined by the relevant taxing or judicial authority, and,
(iii) that the rights, duties and obligations of a Party hereunder, including with respect to Excess Tax Liabilities, shall not be affected by any order of a bankruptcy court discharging, disallowing or releasing the liability of a Party to a third party.
(e) The principles of paragraph (d) above are illustrated by the following examples:
(i) Assume that there are adjustments to income or deductions that eliminate the net losses that gave rise to $30 of Subject Refunds, and give rise to an additional tax deficiency of $20. The funds in escrow are used to pay $30 of the total tax deficiency of $50. There are no other Subject Refunds. There are therefore Excess Taxes of $20. Further assume that it is determined under the Tax Allocation Agreement, pursuant to section 8(d)(i) hereof, that Party A is obligated to pay $12 of the Excess Taxes of $20 and Party B is obligated to pay $8. Party A would be obligated to pay $12 of the Excess Taxes and Party B would be obligated to pay $8.
(ii) Assume the following: (x) there are state tax deficiencies (i.e., Subject Taxes) of $40; (y) the Subject Refunds were not eliminated but the $30 of Escrow Funds were used to pay the state tax deficiencies. There are therefore Excess Taxes of $10 (the excess of the $40 in state taxes over the $30 in the escrow account).
(a) Assume that it is determined under the Tax Allocation Agreement, pursuant to section 8(d)(i) hereof, that Party A was entitled to all $30 of the Subject Refunds and was liable for $20 of the Subject Taxes, and that Party B was entitled to none of the Subject Refunds and was liable for $20 of the Subject Taxes. Because Party A was entitled to $30 of Subject Refunds and only liable to pay $20 of Subject Taxes, it does not have any obligation to pay any of the Excess Taxes. Therefore Party B must pay the $10 of Excess Taxes. Under the terms of Section 8(b) hereof, Party A may not make any additional claim against Party B with respect to amounts in the escrow fund that were used to satisfy the Subject Taxes or any obligations in respect of the Subject Taxes.
(b) Assume that it is determined under the Tax Allocation Agreement, pursuant to section 8(d)(i) hereof, that Party A was entitled to all $30 of the Subject Refunds and was liable for $35 of the Subject Taxes, and that Party B was entitled to none of the Subject Refunds and was liable for $5 of the Subject Taxes. Because Party A was entitled to $30 of Subject Refunds and liable to pay $35 of Subject Taxes, it must pay $5 of the Excess Taxes. Party B must pay the other $5 of Excess Taxes.
(c) Assume that it is determined under the Tax Allocation Agreement, pursuant to section 8(d)(i) hereof, that Party A was entitled to $10 of the Subject Refunds and was liable for $35 of the Subject Taxes, and that Party B was entitled to $20 of the Subject Refunds and was liable for $5 of the Subject Taxes. Because Party A was entitled to $10 of Subject Refunds and liable to pay $35 of Subject Taxes, it must pay the entire $10 of Excess Taxes. Party B pays none of the Excess Taxes. Under the terms of Section 8(b) hereof, Party B may not make any additional claim against Party A with respect to amounts in the escrow fund that were used to satisfy the Subject Taxes or any obligations in respect of the Subject Taxes.
(f) Each Party determined, as provided in paragraphs (d) and (e) above, under the Tax Allocation Agreement to be liable for all or any part of any Excess Tax Liability shall immediately pay on demand the amount of such liability for such excess to the applicable tax authority and, if one Party shall have paid any such amount for which the other Party is liable under this Agreement, the Party liable shall pay the other Party the entire amount thereof plus interest on such amount at a compound rate of LIBOR plus 7% per annum until the entire amount due has been paid to such Party.
(g) Each Party agrees that it shall not bring an action against the other in respect of the Tax Allocation Agreement except as provided in paragraphs (d), (e) and (f) above and except as to breaches of Article X of the Tax Allocation Agreement, as amended by this Agreement.
Appears in 1 contract
Sources: Tax Refund Escrow Agreement (Kindred Healthcare Inc)