Contest Provisions. a. The New General Partner shall be entitled to contest, as tax matters partner of CTA in accordance with the CTA Agreement as part of the unified audit of CTA, any claim in respect of any "partnership" item of CTA that, if successful, would result in a Tax Event (a "Partnership Level Issue"). Each Indemnitee shall take such action or refrain from taking such action as may be reasonably necessary in order to cause each item which is the subject of a potential Tax Event to be contested as a Partnership Level Issue. If the New General Partner contests a Partnership Level Issue that, if successful, would result in a Tax Event, Prime's obligation to pay any Tax Indemnity Amounts shall, at Prime's election, be deferred until thirty (30) days after a Final Determination of the Indemnitees' respective federal income tax liabilities in respect of a Tax Event, provided that, upon receipt of the 30-day letter from the Internal Revenue Service, Prime furnishes the Indemnification Security. b. If an audit or proceeding involving a potential Tax Event is being conducted in a proceeding involving an Indemnitee, which cannot be transferred to CTA as a partnership item (an "Indemnitee Level Issue"), such Indemnitee hereby agrees to promptly notify Prime in writing of such adjustment, and such Indemnitee shall tender the defense of such Indemnitee Level Issue to such legal counsel as Prime may select and which is reasonably acceptable to such Indemnitee ("Contest Counsel"). Such Indemnitee agrees to reasonably cooperate with Contest Counsel in connection with any such proceedings and to follow the advice of Contest Counsel with respect to decisions as to whether to contest such Indemnitee Level Issue, the extent and choice of forum with respect to such contest and other material issues relating thereto. Contest Counsel shall represent an Indemnitee only in connection with such issues as could potentially result in a Tax Event with respect to such Indemnitee, and, unless such Indemnitee, in its sole discretion, otherwise consents, Contest Counsel shall not represent such Indemnitee with respect to any other issues, without regard to whether such other issues are being concurrently challenged by the Internal Revenue Service or other tax authority or appear on the same tax return as the Indemnitee Level Issue in question. Each Indemnitee shall make available to Contest Counsel copies of such Indemnitee's tax returns and other information and materials pertinent to the contest of the Indemnitee Level Issue; provided, however, if any information relating to matters other than the Indemnitee Level Issue in question are included in materials furnished to Contest Counsel, such materials shall be furnished only upon the agreement by Contest Counsel to maintain such information on a strictly confidential basis and to not disclose any such information to any person (including without limitation Prime, New General Partner or any Affiliates of either of them) without the prior written consent of such Indemnitee. c. If Prime recommends acceptance of a settlement offer in respect of an Indemnitee Level Issue or if the New General Partner recommends the acceptance of a settlement offer in respect of a Partnership Level Issue, but the Indemnitees decline to accept such offer in writing within 30 days (i) the obligation of Prime 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 proceedings terminated on the basis recommended by Prime or the New General Partner, as applicable, and (ii) in the case of an Indemnitee Level Issue, Prime shall have no further liability for costs or other expenses in respect of such contest. d. Notwithstanding the foregoing, neither Indemnitee will have any obligation to contest any action with respect to an Indemnitee 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) unless Prime furnishes the Indemnification Security as set forth herein, (iii) without Prime 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 (subject to the agreement by Prime to not litigate in Tax Court, which agreement may be withheld in Prime's sole discretion), the amount of tax (and any applicable interest and penalties) for which refund is claimed, and (iv) to the extent such Indemnitee waives in writing Prime's obligation to indemnify such Indemnitee for such items, in which case all third-party costs and out-of-pocket expenses described in clause (iii) thereafter incurred by such Indemnitee and all taxes of such Indemnitee would be paid by such Indemnitee. e. An Indemnitee shall not settle any Indemnitee Level Issue without Prime's prior written consent; provided that an Indemnitee shall not be required to contest any proposed adjustment and may settle any such proposed adjustment if such Indemnitee shall waive his right to indemnity under this Agreement with respect to such adjustment and any Tax Event that results from such adjustment and, in the case of proceedings before the Court of Federal Claims or Federal District Court, shall pay to Prime the amount of tax (and any applicable interest and penalties) previously paid or advanced by Prime with respect to such adjustment or the contest of such adjustment.
Appears in 2 contracts
Samples: Tax Indemnity Agreement, Tax Indemnity Agreement (Prime Group Realty Trust)
Contest Provisions. a. The New General Partner (a) If a claim shall be entitled to contestmade by any Taxing or Government Authority, as tax matters partner of CTA in accordance with the CTA Agreement as part of the unified audit of CTA, any claim in respect of any "partnership" item of CTA that, if successful, would might result in a Tax Event payment on behalf of Parent to Purchaser under Section 8.2 Purchaser shall promptly notify Parent with such potential liability in writing (a "Partnership Level Issue")“Tax Notice”) of such claim (a “Tax Claim”) provided that Purchaser's failure to deliver such Tax Notice to Parent shall not limit Purchaser's rights under Section 8.2 except to the extent Parent's position or defense is actually and materially prejudiced by such failure. Each Indemnitee Such Tax Notice shall take such action or refrain from taking such action as may be reasonably necessary in order provide reasonable detail to cause each item which is the subject of a potential Tax Event to be contested as a Partnership Level Issue. If the New General Partner contests a Partnership Level Issue that, if successful, would result in a Tax Event, Prime's obligation to pay any Tax Indemnity Amounts shall, at Prime's election, be deferred until thirty (30) days after a Final Determination apprise Parent of the Indemnitees' respective federal income tax liabilities in respect of a Tax Event, provided that, upon receipt nature of the 30-day letter from Tax Claim, taking into account the Internal Revenue Service, Prime furnishes the Indemnification Security.
b. If an audit or proceeding involving a potential Tax Event is being conducted in a proceeding involving an Indemnitee, which cannot be transferred to CTA as a partnership item (an "Indemnitee Level Issue"), such Indemnitee hereby agrees to promptly notify Prime in writing of such adjustment, facts and such Indemnitee shall tender the defense of such Indemnitee Level Issue to such legal counsel as Prime may select and which is reasonably acceptable to such Indemnitee ("Contest Counsel"). Such Indemnitee agrees to reasonably cooperate with Contest Counsel in connection with any such proceedings and to follow the advice of Contest Counsel with respect to decisions as to whether to contest such Indemnitee Level Issue, the extent and choice of forum circumstances with respect to such contest Tax Claim.
(b) With respect to a Tax Claim or proceeding arising therefrom relating exclusively to a Pre-Closing Period, Purchaser shall have the right, at Parent's sole expense (but subject to the same limitation on expenses as provided in Section 8.2(a)(vii)(G)), to represent the interests of the Target Companies with respect to such a Tax Claim or proceeding; provided, that:
(i) Purchaser shall provide Parent with copies of all correspondence, notices and other material issues relating thereto. Contest Counsel written materials received from any Taxing Authorities and shall represent an Indemnitee only otherwise keep Parent and its tax advisors advised of significant developments in the audit or dispute and of significant communications involving representatives of the Taxing Authorities;
(ii) Parent shall have the right to consent to the selection of outside counsel or other advisors in connection with such issues as could potentially Tax Claim or proceeding (which consent shall not be unreasonably withheld);
(iii) Purchaser shall keep Parent reasonably informed and consult seriously and in good faith with Parent and its tax advisors with respect to any issue relating to such audit or dispute;
(iv) Parent may request that Purchaser take a position in respect of such audit or proceeding, and Purchaser shall do so provided that (X) there exists a reasonable basis in fact and law for such position and (Y) the adoption of such position would not reasonably be expected to adversely affect the Tax liability of any of the Target Companies for any post-Closing period or portion thereof (unless Parent agrees to indemnify and hold harmless such Target Companies from such adverse effect);
(v) Purchaser shall provide Parent with a copy of any material written submission to be sent to a Taxing Authority prior to the submission thereof and shall give serious and good faith consideration to any comments or suggested revisions that Parent or its tax advisors may have with respect thereto;
(vi) Parent shall have the right to have a representative attend any portion of a meeting between Purchaser or any Target Company, on the one hand, and a Taxing Authority, on the other, in which any Tax for which Parent may be liable pursuant to Section 8.2(a)(vii) is discussed, provided that Purchaser shall have the right to set the agenda and strategy for such meeting; and
(vii) there will be no settlement, resolution, or closing or other agreement with respect thereto without the consent of Parent, which consent will not be unreasonably withheld, conditioned or delayed. For the avoidance of doubt, Parent may reasonably withhold its consent to any settlement, resolution or closing or other agreement with respect to any Tax Claim or proceeding arising therefrom if Parent can supply Purchaser with an opinion of nationally recognized tax counsel in the relevant jurisdiction that there is a reasonable basis in law and fact for Parent to achieve a more favorable result than the settlement, resolution, closing or other agreement, in which case Purchaser will continue to pursue the relevant tax audit or proceeding.
(c) With respect to a Tax Event Claim or proceeding arising therefrom relating to a Straddle Period, Purchaser shall have the right, at its sole expense (but subject to indemnity pursuant to Section 8.2(a)(vii), reasonably allocated taking into account the portion of the total Tax Claim that related to a Pre-Closing Period), to represent the interests of the Target Companies with respect to such Indemnitee, and, unless such Indemnitee, in its sole discretion, otherwise consents, Contest Counsel shall not represent such Indemnitee with respect to any other issues, without regard to whether such other issues are being concurrently challenged by the Internal Revenue Service a Tax Claim or other tax authority or appear on the same tax return as the Indemnitee Level Issue in question. Each Indemnitee shall make available to Contest Counsel copies of such Indemnitee's tax returns and other information and materials pertinent to the contest of the Indemnitee Level Issueproceeding; provided, however, if any information relating to matters other than the Indemnitee Level Issue in question are included in materials furnished to Contest Counsel, such materials shall be furnished only upon the agreement by Contest Counsel to maintain such information on a strictly confidential basis and to not disclose any such information to any person (including without limitation Prime, New General Partner or any Affiliates of either of them) without the prior written consent of such Indemnitee.that:
c. If Prime recommends acceptance of a settlement offer in respect of an Indemnitee Level Issue or if the New General Partner recommends the acceptance of a settlement offer in respect of a Partnership Level Issue, but the Indemnitees decline to accept such offer in writing within 30 days (i) Parent shall have the obligation of Prime right, at its sole expense, to make indemnity payments as have a representative attend any proceedings and negotiations and to review any written materials sent to or received from 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 proceedings terminated on the basis recommended by Prime or the New General Partner, as applicable, and Taxing Authority;
(ii) Purchaser shall reasonably cooperate with Parent in the case of an Indemnitee Level Issue, Prime shall have no further liability for costs or other expenses in respect of connection with such contest.attendance;
d. Notwithstanding the foregoing, neither Indemnitee will have any obligation to contest any action with respect to an Indemnitee 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) unless Prime furnishes the Indemnification Security as set forth herein, (iii) without Prime 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 (subject to the agreement by Prime to not litigate in Tax Court, which agreement may be withheld in Prime's sole discretion), the amount of tax (and any applicable interest and penalties) for which refund is claimed, and (iv) to the extent such Indemnitee waives in writing Prime's obligation to indemnify such Indemnitee for such items, in which case all third-party costs and out-of-pocket expenses described in clause (iii) thereafter incurred by such Indemnitee and all taxes of such Indemnitee would be paid by such Indemnitee.
e. An Indemnitee Purchaser shall not settle any Indemnitee Level Issue Tax Claim or proceeding arising therefrom without PrimeParent's prior written consent; provided that an Indemnitee shall consent (such consent not to be required to contest any proposed adjustment and may settle any such proposed adjustment if such Indemnitee shall waive his right to indemnity under this Agreement with respect to such adjustment and any Tax Event that results from such adjustment andunreasonably withheld, in the case of proceedings before the Court of Federal Claims conditioned or Federal District Court, shall pay to Prime the amount of tax (and any applicable interest and penalties) previously paid or advanced by Prime with respect to such adjustment or the contest of such adjustmentdelayed).
Appears in 2 contracts
Samples: Purchase and Sale Agreement (General Motors Co), Purchase and Sale Agreement (General Motors Financial Company, Inc.)
Contest Provisions. a. The New General Partner shall be entitled to contest, as tax matters partner of CTA in accordance with the CTA Agreement as part of the unified audit of CTA, any claim in respect of any "partnership" item of CTA that, if successful, would result in a Tax Event (a "Partnership Level Issue"). Each Indemnitee shall take such action or refrain from taking such action as may be reasonably necessary in order to cause each item which is the subject of a potential Tax Event to be contested as a Partnership Level Issue. If the New General Partner contests a Partnership Level Issue that, if successful, would result in a Tax Event, Prime's obligation to pay any Tax Indemnity Amounts shall, at Prime's election, be deferred until requested by Lessee within thirty (30) days after a Final Determination of the Indemnitees' respective federal income tax liabilities in respect of a Tax Event, provided that, upon receipt of the 30-day letter from Adjustment Notice, Lessor shall in good faith contest or (if desired by Lessor) permit Lessee to contest the Internal Revenue Servicevalidity, Prime furnishes the Indemnification Security.
b. If an audit or proceeding involving a potential Tax Event is being conducted in a proceeding involving an Indemnitee, which cannot be transferred to CTA as a partnership item (an "Indemnitee Level Issue"), such Indemnitee hereby agrees to promptly notify Prime in writing of such adjustmentapplicability, and such Indemnitee shall tender the defense amount of such Indemnitee Level Issue any proposed adjustment that would give rise to such legal counsel as Prime may select and which is reasonably acceptable to such Indemnitee ("Contest Counsel"). Such Indemnitee agrees to reasonably cooperate with Contest Counsel in connection with any such proceedings and to follow the advice of Contest Counsel with respect to decisions as to whether to contest such Indemnitee Level Issue, the extent and choice of forum with respect to such contest and other material issues relating thereto. Contest Counsel shall represent an Indemnitee only in connection with such issues as could potentially result in a Tax or Inclusion Event with respect to such Indemnitee, andby (a) not making payment thereof for at least thirty (30) days after providing the Adjustment Notice, unless such Indemniteeotherwise required by applicable law or regulations, (b) not paying same except under protest, if protest is necessary and proper, or (c) if payment is made, using reasonable efforts to obtain a refund thereof in its sole discretion, otherwise consents, Contest Counsel shall not represent such Indemnitee with respect to any other issues, without regard to whether such other issues are being concurrently challenged by the Internal Revenue Service or other tax authority or appear on the same tax return as the Indemnitee Level Issue in question. Each Indemnitee shall make available to Contest Counsel copies of such Indemnitee's tax returns appropriate administrative and other information and materials pertinent to the contest of the Indemnitee Level Issuejudicial proceedings; provided, however, if any information relating to matters other than the Indemnitee Level Issue in question are included in materials furnished to Contest Counsel, such materials shall be furnished only upon the agreement by Contest Counsel to maintain such information on a strictly confidential basis and to not disclose any such information to any person that (including without limitation Prime, New General Partner or any Affiliates of either of them) without the prior written consent of such Indemnitee.
c. If Prime recommends acceptance of a settlement offer in respect of an Indemnitee Level Issue or if the New General Partner recommends the acceptance of a settlement offer in respect of a Partnership Level Issue, but the Indemnitees decline to accept such offer in writing within 30 days (i) the obligation of Prime 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 proceedings terminated on the basis recommended by Prime or the New General Partner, as applicable, and (iiaa) in the case of an Indemnitee Level Issueincome tax contest, Prime shall have no further liability for costs or other expenses in respect as a condition to the commencement of such contest.
d. Notwithstanding , Lessor shall have received a written opinion of its independent tax counsel selected by Lessor and reasonably acceptable to Lessee to the foregoing, neither Indemnitee will have any obligation to contest any action with respect to an Indemnitee Level Issue (i) unless effect that there is a Reasonable Basis for contesting 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 $25,000proposed adjustment, (iibb) unless Prime furnishes the Indemnification Security as set forth herein, (iii) without Prime 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 (subject to the agreement by Prime to not litigate in Tax Court, which agreement may be withheld in Prime's sole discretion), the amount of tax (and any applicable interest and penalties) for which refund is claimed, and (iv) to the extent such Indemnitee waives in writing Prime's obligation to indemnify such Indemnitee for such items, in which case all third-party costs and out-of-pocket expenses described in clause (iii) thereafter incurred by such Indemnitee and all taxes of such Indemnitee would be paid by such Indemnitee.
e. An Indemnitee shall not settle any Indemnitee Level Issue without Prime's prior written consent; provided that an Indemnitee Lessor shall not be required to contest any proposed adjustment and may settle any such proposed adjustment if such Indemnitee shall waive his right to indemnity under this Agreement the aggregate amount of the indemnity, on a before-tax basis, together with the amounts payable with respect to such adjustment and any Tax Event that results from such adjustment andfuture related claim, would be less than $250,000 in the case of proceedings before an administrative contest or less than $500,000 in the Court case of Federal Claims or Federal District Courta judicial contest, (cc) Lessee shall have agreed in writing to pay to Prime Lessor, on demand, all reasonable out-of-pocket costs and expenses which Lessor incurs in connection with and reasonably allocable to contesting such adjustment, including all reasonable legal, accountants', and investigatory fees and disbursements; (dd) a Lessee Event of Default shall not have occurred and be continuing (provided however, that if a Lessee Event of Default other than as a result of a payment default or bankruptcy shall exist, the amount foregoing restriction shall not apply if Lessee posts a bond to secure payment of tax amounts that will fall due in the event of an adverse resolution of the controversy), (ee) Lessor has determined, in good faith, that the contest will not result in a material risk of the loss or forfeiture of the Leased Facility (unless Lessee has provided to Lessor a bond or other sufficient protection against such risk of loss or forfeiture reasonably satisfactory to Lessor) or the imposition of criminal penalties, and any applicable interest and penalties(ff) previously paid or advanced by Prime Lessee shall have acknowledged, in writing, that the contest is with respect to a liability that is Lessee's responsibility under this Schedule 19.2, provided however that such adjustment acknowledgement is not required other than to the extent the basis for the IRS's claim is or becomes reasonably clear. If requested by Lessee in writing, Lessor will appeal (or, if desired by Lessor, permit Lessee to appeal) any adverse judicial determination, provided that Lessor shall receive an opinion of its independent tax counsel selected by Lessor and reasonably acceptable to Lessee to the contest effect that there is substantial authority under ABA Standards and within the meaning of Section 6662 of the Code for a favorable result as a result of such adjustmentappeal. Lessor shall not be required to appeal any adverse judicial determination to the United States Supreme Court.
Appears in 2 contracts
Samples: Facility Lease Agreement (Wisconsin Electric Power Co), Facility Lease Agreement (Wisconsin Electric Power Co)
Contest Provisions. a. The New General Partner If requested by the Lessee in writing, a Tax Indemnified Party shall be entitled in good faith contest in the name of such Tax Indemnified Party or, if requested by the Lessee and if such contest does not in such Tax Indemnified Party's reasonable discretion involve or potentially involve taxes imposed on such Tax Indemnified Party that are not indemnified against hereunder, to contest, as tax matters partner of CTA contest in accordance with the CTA Agreement as part name of the unified audit Lessee (or permit the Lessee, if requested by the Lessee, to contest in the name of CTAthe Lessee or the Tax Indemnified Party) the validity, any claim in respect applicability and amount of the imposition of any "partnership" item Tax or any proposed adjustment that would give rise to the proposed imposition of CTA thatany Tax by (a) resisting payment thereof, if successful, would result in a such Tax Event (a "Partnership Level Issue"). Each Indemnitee shall take such action or refrain from taking such action as may be reasonably necessary in order to cause each item which is the subject of a potential Tax Event to be contested as a Partnership Level Issue. If the New General Partner contests a Partnership Level Issue that, if successful, would result in a Tax Event, Prime's obligation to pay any Tax Indemnity Amounts shall, at Prime's election, be deferred until thirty (30) days after a Final Determination of the Indemnitees' respective federal income tax liabilities in respect of a Tax Event, provided that, upon receipt of the 30-day letter from the Internal Revenue Service, Prime furnishes the Indemnification Security.
b. If an audit or proceeding involving a potential Tax Event is being conducted in a proceeding involving an Indemnitee, which cannot be transferred to CTA as a partnership item (an "Indemnitee Level Issue"), such Indemnitee hereby agrees to promptly notify Prime in writing of such adjustment, and such Indemnitee shall tender the defense of such Indemnitee Level Issue to such legal counsel as Prime may select and which is reasonably acceptable to such Indemnitee ("Contest Counsel"). Such Indemnitee agrees to reasonably cooperate with Contest Counsel in connection with any such proceedings and to follow the advice of Contest Counsel with respect to decisions as to whether to contest such Indemnitee Level Issue, the extent and choice of forum with respect to such contest and other material issues relating thereto. Contest Counsel shall represent an Indemnitee only in connection with such issues as could potentially result in a Tax Event with respect to such Indemnitee, and, unless such Indemnitee, Indemnified Party in its sole discretionand reasonable discretion shall determine such course of action to be appropriate, otherwise consents, Contest Counsel shall (b) not represent such Indemnitee with respect to any other issues, without regard to whether such other issues are being concurrently challenged by the Internal Revenue Service or other tax authority or appear on paying the same tax return as the Indemnitee Level Issue except under protest, if protest is necessary and proper, or (c) if payment shall be made, using reasonable efforts to obtain a refund thereof in question. Each Indemnitee shall make available to Contest Counsel copies of such Indemnitee's tax returns appropriate administrative and other information and materials pertinent to the contest of the Indemnitee Level Issuejudicial proceedings; provided, however, if any information relating to matters other than the Indemnitee Level Issue in question are included in materials furnished to Contest Counsel, that (u) such materials shall be furnished only upon the agreement by Contest Counsel to maintain such information on a strictly confidential basis and to not disclose any such information to any person (including without limitation Prime, New General Partner or any Affiliates of either of them) without the prior written consent of such Indemnitee.
c. If Prime recommends acceptance of a settlement offer in respect of an Indemnitee Level Issue or if the New General Partner recommends the acceptance of a settlement offer in respect of a Partnership Level Issue, but the Indemnitees decline to accept such offer in writing within 30 days (i) the obligation of Prime 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 proceedings terminated on the basis recommended by Prime or the New General Partner, as applicable, and (ii) in the case of an Indemnitee Level Issue, Prime shall have no further liability for costs or other expenses in respect of such contest.
d. Notwithstanding the foregoing, neither Indemnitee will have any obligation to contest any action with respect to an Indemnitee 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) unless Prime furnishes the Indemnification Security as set forth herein, (iii) without Prime 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 (subject to the agreement by Prime to not litigate in Tax Court, which agreement may be withheld in Prime's sole discretion), the amount of tax (and any applicable interest and penalties) for which refund is claimed, and (iv) to the extent such Indemnitee waives in writing Prime's obligation to indemnify such Indemnitee for such items, in which case all third-party costs and out-of-pocket expenses described in clause (iii) thereafter incurred by such Indemnitee and all taxes of such Indemnitee would be paid by such Indemnitee.
e. An Indemnitee shall not settle any Indemnitee Level Issue without Prime's prior written consent; provided that an Indemnitee Indemnified Party shall not be required to contest any proposed adjustment and may settle any such imposition or proposed adjustment if the aggregate amount of an indemnity on an after-tax basis, would be less than $25,000, (v) no Lessee Event of Default has occurred and is continuing, (w) such Indemnitee Tax Indemnified Party has been provided with an opinion of independent tax counsel selected by such Tax Indemnified Party and reasonably acceptable to the Lessee (the cost of which shall waive his right be borne by the Lessee) to indemnity under this Agreement the effect that a reasonable basis in law or in fact exists that such Tax Indemnified Party will prevail in such contest, (x) such Tax Indemnified Party, at its sole option, may at any time forego any and all administrative appeals, proceedings, hearings and conferences with respect any Taxing Authority and, in lieu thereof, continue to contest the claim in any permissible judicial forum selected -51- by such adjustment and any Tax Event that results from Indemnified Party, (y) Lessee shall have agreed to pay such adjustment andTax Indemnified Party (or, in the case of proceedings before item (iii) below, lend to such Tax Indemnified Party on an interest-free basis (and in such case pay any additional amount as shall be required to hold such Tax Indemnified Party harmless on a net after-tax basis from any adverse tax consequences attributable to the Court of Federal Claims loan), on demand, all reasonable out-of-pocket costs and expenses which such Tax Indemnified Party incurs in connection with and reasonably allocable to contesting such imposition or Federal District Courtadjustment, shall pay to Prime including, without limitation, (i) all legal, accountants' and investigatory fees and disbursements, (ii) the amount of any interest, penalties or additions to tax (to the date such payment is made) payable as a result of contesting such adjustment, and (iii) if such contest is to be initiated by the payment of, and the claiming of a refund for, the amount of such imposition or adjustment, funds sufficient to make such payment of, and the claiming of a refund for, the amount of such imposition or adjustment, funds sufficient to make such payment (and in the event such contest is finally determined adversely, the amount of such loan shall be applied against the Lessee's obligation to indemnify such Tax Indemnified Party for the Tax which was the subject of such contest), and (z) such proceedings do not involve any applicable risk (other than a remote risk) of the sale, forfeiture or loss of the Aircraft, the Airframe, any Serviced Engine or any Part or interest therein or, if there is such a risk, Lessee has provided to such Tax Indemnified Party a bond in form and substance reasonably satisfactory to such Tax Indemnified Party in an amount sufficient to protect such Tax Indemnified Party from any detriment that would be suffered by the Lessor as a result of such sale, forfeiture, or loss or has otherwise protected such Tax Indemnified Party in a manner acceptable to such Tax Indemnified Party and there is no risk or the imposition of criminal penalties) previously paid or advanced . Such Tax Indemnified Party will consult with Lessee regarding any contest and will consider in good faith any suggestions made by Prime Lessee with respect to the most favorable forum for, and the conduct of, such adjustment contest; provided, however, that, unless such Tax Indemnified Party elects to permit Lessee to conduct such contest, such contest shall be controlled by such Tax Indemnified Party and conducted by independent counse selected by such Tax Indemnified Party or by "in-house" counsel of such Tax Indemnified Party and reasonably acceptable to Lessee. In the event that such Tax Indemnified Party elects to permit the Lessee to conduct such contest, the independent counsel selected by the Lessee to conduct such contest shall be reasonably satisfactory to such Tax Indemnified Party. If requested by the Lessee in writing, such Tax Indemnified Party will appeal (or, if desired by such Tax Indemnified Party, permit the Lessee to appeal) any adverse judicial determination, provided that, as a condition to the commencement of the appeal of such adverse judicial determination, (a) such Tax Indemnified Party shall receive, at the Lessee's expense, an opinion of independent counsel, selected by such Tax Indemnified Party and reasonably satisfactory to Lessee, to the effect that a more likely than not probability of success exists for such appeal and (b) Lessee shall have acknowledged its liability to such Indemnified Party for an indemnity payment as a result of such tax claim if such Tax Indemnified Party shall not prevail in the contest; provided, however, that such Tax Indemnified Party shall not be required to appeal any adverse judicial determination to the United States Supreme Court. Notwithstanding anything contained in this subsection 16(g) to the contrary, no Tax Indemnified Party shall be required to contest any claim if the subject matter thereof shall be of a continuing nature and shall have previously been decided pursuant to the contest provisions of this subsection 16(g) (including a contest pursuant to the contest provisions hereof in which the Tax Indemnified Party may be required to contest such a claim if there shall have been a change in the law (including, without limitation, amendments to statutes or regulations, administrative ruling and court decisions)) or Lessee shall have provided new facts after such claim shall have been so previously decided, and such Tax Indemnified Party shall have received an opinion of independent tax counsel selected by such Tax Indemnified Party and approved by the Lessee (the cost of which shall be borne by the Lessee) to the effect that, as a result of such change or new facts, it is more likely than not that the position which such Tax Indemnified Party or the contest Lessee, as the case may be, had asserted in such previous contest, would prevail; PROVIDED that the provisions of such adjustmentthis paragraph shall not require an Tax Indemnified Party to file an amended tax return or refund claim for any prior taxable period.
Appears in 2 contracts
Samples: Aircraft Lease Agreement (Hawaiian Airlines Inc/Hi), Aircraft Lease Agreement (Hawaiian Airlines Inc/Hi)
Contest Provisions. a. The New General Partner shall be entitled to contest, as tax matters partner of CTA in accordance with the CTA Agreement as part of the unified audit of CTA, any claim in respect of any "partnership" item of CTA that, if successful, would result in If requested by a Tax Event (a "Partnership Level Issue"). Each Indemnitee shall take such action or refrain from taking such action as may be reasonably necessary in order to cause each item which is the subject of a potential Tax Event to be contested as a Partnership Level Issue. If the New General Partner contests a Partnership Level Issue that, if successful, would result in a Tax Event, Prime's obligation to pay any Tax Indemnity Amounts shall, at Prime's election, be deferred until thirty (30) Indemnifying Party within 30 days after a Final Determination of the Indemnitees' respective federal income tax liabilities in respect of a Tax Event, provided that, upon receipt of the 30-day letter from the Internal Revenue Service, Prime furnishes the Indemnification Security.
b. If an audit or proceeding involving a potential Tax Event is being conducted in a proceeding involving an Indemnitee, which cannot be transferred to CTA as a partnership item (an "Indemnitee Level Issue")Adjustment Notice, such Tax Indemnitee hereby agrees shall in good faith contest, or (if desired by such Tax Indemnitee) permit a Tax Indemnifying Party to promptly notify Prime in writing of such adjustmentcontest the validity, applicability, and such Indemnitee shall tender the defense amount of such Indemnitee Level Issue any proposed adjustment that would give rise to such legal counsel as Prime may select and which is reasonably acceptable to such Indemnitee ("Contest Counsel"). Such Indemnitee agrees to reasonably cooperate with Contest Counsel in connection with any such proceedings and to follow the advice of Contest Counsel with respect to decisions as to whether to contest such Indemnitee Level Issue, the extent and choice of forum with respect to such contest and other material issues relating thereto. Contest Counsel shall represent an Indemnitee only in connection with such issues as could potentially result in a Tax or Inclusion Event with respect to such Indemnitee, andby (a) not making payment thereof for at least 30 days after providing the Adjustment Notice, unless such Indemniteeotherwise required by applicable Law, (b) not paying same except under protest, if protest is necessary and proper, or (c) if payment is made, using reasonable efforts to obtain a refund thereof in its sole discretion, otherwise consents, Contest Counsel shall not represent such Indemnitee with respect to any other issues, without regard to whether such other issues are being concurrently challenged by the Internal Revenue Service or other tax authority or appear on the same tax return as the Indemnitee Level Issue in question. Each Indemnitee shall make available to Contest Counsel copies of such Indemnitee's tax returns appropriate administrative and other information and materials pertinent to the contest of the Indemnitee Level Issuejudicial proceedings; provided, however, if any information relating to matters other than the Indemnitee Level Issue in question are included in materials furnished to Contest Counsel, such materials shall be furnished only upon the agreement by Contest Counsel to maintain such information on a strictly confidential basis and to not disclose any such information to any person (including without limitation Prime, New General Partner or any Affiliates of either of them) without the prior written consent of such Indemnitee.
c. If Prime recommends acceptance of a settlement offer in respect of an Indemnitee Level Issue or if the New General Partner recommends the acceptance of a settlement offer in respect of a Partnership Level Issue, but the Indemnitees decline to accept such offer in writing within 30 days that (i) the obligation of Prime 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 proceedings terminated on the basis recommended by Prime or the New General Partner, as applicable, and (ii) in the case of an Indemnitee Level Issueincome tax contest, Prime shall have no further liability for costs or other expenses in respect as a condition to the commencement of such contest.
d. Notwithstanding , such Tax Indemnitee shall have received a written opinion of its independent tax counsel selected by such Tax Indemnitee and reasonably acceptable to Tax Indemnifying Party to the foregoing, neither Indemnitee will have any obligation to contest any action with respect to an Indemnitee Level Issue (i) unless effect that there is a Reasonable Basis for contesting 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 $25,000proposed adjustment, (ii) unless Prime furnishes the Indemnification Security as set forth herein, (iii) without Prime 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 (subject to the agreement by Prime to not litigate in such Tax Court, which agreement may be withheld in Prime's sole discretion), the amount of tax (and any applicable interest and penalties) for which refund is claimed, and (iv) to the extent such Indemnitee waives in writing Prime's obligation to indemnify such Indemnitee for such items, in which case all third-party costs and out-of-pocket expenses described in clause (iii) thereafter incurred by such Indemnitee and all taxes of such Indemnitee would be paid by such Indemnitee.
e. An Indemnitee shall not settle any Indemnitee Level Issue without Prime's prior written consent; provided that an Indemnitee shall not be required to contest any proposed adjustment and may settle any such proposed adjustment if such Indemnitee shall waive his right to indemnity under this Agreement the aggregate amount of the indemnity, on a before-tax basis, together with the amounts payable with respect to such adjustment and any Tax Event that results from such adjustment andfuture related claim, would be less than $100,000 in the case of proceedings before an administrative contest or less than $250,000 in the Court case of Federal Claims or Federal District Courta judicial contest, (iii) Tax Indemnifying Party shall have agreed in writing to pay to Prime such Tax Indemnitee, on demand, all reasonable out-of-pocket costs and expenses which such Tax Indemnitee incurs in connection with and reasonably allocable to contesting such adjustment, including all reasonable legal, accountants’, and investigatory fees and disbursements; (iv) the Tax Indemnitee has determined, in good faith, that the contest will not result in a material risk of the loss or forfeiture of its Composite Component Ownership Interest (unless Tax Indemnifying Party has provided to such Tax Indemnitee a bond or other sufficient protection against such risk of loss or forfeiture reasonably satisfactory to such Tax Indemnitee) or the imposition of criminal penalties; (v) if such contest is to be initiated by the payment of, and the claiming of a refund for such Taxes, Tax Indemnifying Party shall advance the amount thereof plus, interest, penalties and additions to Tax with respect thereof to such Tax Indemnitee on an interest free basis with no additional after-tax cost to such Tax Indemnitee to make such payment and shall indemnify such Tax Indemnitee against any adverse tax consequences arriving from such advance (and if such contest is finally determined adversely, the amount of such loan shall be applied against Tax Indemnifying Party’s obligation to indemnify such Tax Indemnitee for a Tax which was the subject of such contest), and (vi) in the case of an income tax contest, Tax Indemnifying Party shall have acknowledged in writing its liability to indemnify the Tax Indemnitee in respect of such contested Tax in the event such contest is unsuccessful; provided, that Tax Indemnifying Party shall not be bound by such acknowledgment to the extent there is a Final Determination of the contest which clearly demonstrates that the Tax Indemnitee is not liable for such Tax. If requested by Tax Indemnifying Party in writing, such Tax Indemnitee will appeal (or, if desired by such Tax Indemnitee, permit Tax Indemnifying Party to appeal) any adverse judicial determination, provided that such Tax Indemnitee shall receive an opinion of its independent tax counsel selected by such Tax Indemnitee and any applicable interest and penalties) previously paid or advanced by Prime with respect reasonably acceptable to such adjustment or Tax Indemnifying Party to the contest effect that it is more likely than not under the ABA Standards and within the meaning of Code Section 6662 that a favorable result will result from such adjustmentappeal. A Tax Indemnitee shall not be required to appeal any adverse judicial determination to the United States Supreme Court.
Appears in 2 contracts
Samples: New Common Facilities Ownership Agreement, Common Facilities Ownership Agreement (Mge Energy Inc)
Contest Provisions. a. The New General Partner shall be entitled to contest, as tax matters partner of CTA in accordance with the CTA Agreement as part of the unified audit of CTA, any claim in respect of any "partnership" item of CTA that, if successful, would result in a Tax Event (a "Partnership Level Issue"). Each Indemnitee shall take such action or refrain from taking such action as may be reasonably necessary in order to cause each item which is the subject of a potential Tax Event to be contested as a Partnership Level Issue. If the New General Partner contests a Partnership Level Issue that, if successful, would result in a Tax Event, Prime's obligation to pay any Tax Indemnity Amounts shall, at Prime's election, be deferred until requested by Lessee within thirty (30) days after a Final Determination of the Indemnitees' respective federal income tax liabilities in respect of a Tax Event, provided that, upon receipt of the 30-day letter from Adjustment Notice, Lessor shall in good faith contest, or (if desired by Lessor) permit Lessee to contest the Internal Revenue Servicevalidity, Prime furnishes the Indemnification Security.
b. If an audit or proceeding involving a potential Tax Event is being conducted in a proceeding involving an Indemnitee, which cannot be transferred to CTA as a partnership item (an "Indemnitee Level Issue"), such Indemnitee hereby agrees to promptly notify Prime in writing of such adjustmentapplicability, and such Indemnitee shall tender amount of any proposed adjustment that would give rise to a Tax, Inclusion Event or Loss by (a) not making payment thereof for at least thirty (30) days after providing the defense of such Indemnitee Level Issue to such legal counsel as Prime may select and which is reasonably acceptable to such Indemnitee ("Contest Counsel"). Such Indemnitee agrees to reasonably cooperate with Contest Counsel in connection with any such proceedings and to follow the advice of Contest Counsel with respect to decisions as to whether to contest such Indemnitee Level Issue, the extent and choice of forum with respect to such contest and other material issues relating thereto. Contest Counsel shall represent an Indemnitee only in connection with such issues as could potentially result in a Tax Event with respect to such Indemnitee, andAdjustment Notice, unless such Indemniteeotherwise required by applicable law or regulations, (b) not paying same except under protest, if protest is necessary and proper, or (c) if payment is made, using reasonable efforts to obtain a refund thereof in its sole discretion, otherwise consents, Contest Counsel shall not represent such Indemnitee with respect to any other issues, without regard to whether such other issues are being concurrently challenged by the Internal Revenue Service or other tax authority or appear on the same tax return as the Indemnitee Level Issue in question. Each Indemnitee shall make available to Contest Counsel copies of such Indemnitee's tax returns appropriate administrative and other information and materials pertinent to the contest of the Indemnitee Level Issuejudicial proceedings; provided, however, if any information relating to matters other than the Indemnitee Level Issue in question are included in materials furnished to Contest Counsel, such materials shall be furnished only upon the agreement by Contest Counsel to maintain such information on a strictly confidential basis and to not disclose any such information to any person that (including without limitation Prime, New General Partner or any Affiliates of either of them) without the prior written consent of such Indemnitee.
c. If Prime recommends acceptance of a settlement offer in respect of an Indemnitee Level Issue or if the New General Partner recommends the acceptance of a settlement offer in respect of a Partnership Level Issue, but the Indemnitees decline to accept such offer in writing within 30 days (i) the obligation of Prime 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 proceedings terminated on the basis recommended by Prime or the New General Partner, as applicable, and (iiaa) in the case of an Indemnitee Level Issueincome tax contest, Prime shall have no further liability for costs or other expenses in respect as a condition to the commencement of such contest.
d. Notwithstanding , Lessor shall have received a written opinion of its independent tax counsel selected by Lessor and reasonably acceptable to Lessee to the foregoing, neither Indemnitee will have any obligation to contest any action with respect to an Indemnitee Level Issue (i) unless effect that there is a Reasonable Basis for contesting 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 $25,000proposed adjustment, (iibb) unless Prime furnishes the Indemnification Security as set forth herein, (iii) without Prime 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 (subject to the agreement by Prime to not litigate in Tax Court, which agreement may be withheld in Prime's sole discretion), the amount of tax (and any applicable interest and penalties) for which refund is claimed, and (iv) to the extent such Indemnitee waives in writing Prime's obligation to indemnify such Indemnitee for such items, in which case all third-party costs and out-of-pocket expenses described in clause (iii) thereafter incurred by such Indemnitee and all taxes of such Indemnitee would be paid by such Indemnitee.
e. An Indemnitee shall not settle any Indemnitee Level Issue without Prime's prior written consent; provided that an Indemnitee Lessor shall not be required to contest any proposed adjustment and may settle any such proposed adjustment if such Indemnitee shall waive his right to indemnity under this Agreement the aggregate amount of the indemnity, on a before-tax basis, together with the amounts payable with respect to such adjustment and any Tax Event that results from such adjustment andfuture related claim, would be less than $250,000 in the case of proceedings before an administrative contest or less than $500,000 in the Court case of Federal Claims or Federal District Courta judicial contest, (cc) Lessee shall have agreed in writing to pay to Prime Lessor, on demand, all reasonable out-of-pocket costs and expenses which Lessor incurs in connection with and reasonably allocable to contesting such adjustment, including all reasonable legal, accountants’, and investigatory fees and disbursements; (dd) a Lessee Event of Default shall not have occurred and be continuing (provided however, that if a Lessee Event of Default other than as a result of a payment default or bankruptcy shall exist, the amount foregoing restriction shall not apply if Lessee posts a bond to secure payment of tax amounts that will fall due in the event of an adverse resolution of the controversy), (ee) Lessor has determined, in good faith, that the contest will not result in a material risk of the loss or forfeiture of the Leased Facility (unless Lessee has provided to Lessor a bond or other sufficient protection against such risk of loss or forfeiture reasonably satisfactory to Lessor) or the imposition of criminal penalties, and any applicable interest and penalties(ff) previously paid or advanced by Prime Lessee shall have acknowledged, in writing, that the contest is with respect to a liability that is Lessee’s responsibility under this Schedule 19.2, provided however that such adjustment acknowledgement is not required other than to the extent the basis for the IRS’s claim is or becomes reasonably clear. If requested by Lessee in writing, Lessor will appeal (or, if desired by Lessor, permit Lessee to appeal) any adverse judicial determination, provided that Lessor shall receive an opinion of its independent tax counsel selected by Lessor and reasonably acceptable to Lessee to the contest effect that there is substantial authority under ABA Standards and within the meaning of Section 6662 of the Code for a favorable result as a result of such adjustmentappeal. Lessor shall not be required to appeal any adverse judicial determination to the United States Supreme Court.
Appears in 2 contracts
Samples: Facility Lease Agreement (Wisconsin Energy Corp), Facility Lease Agreement (Wisconsin Energy Corp)
Contest Provisions. a. The New General Partner shall be entitled (a) Each party agrees to contest, as tax matters partner give prompt notice to the other party of CTA in accordance with the CTA Agreement as part of the unified audit of CTA, any claim for Taxes or the commencement of any suit, action or proceeding (including Tax audits) (a “Tax Claim”) in respect of any "partnership" item which indemnity may be sought under Section 9.1(a) or 9.1(c) (specifying with reasonable detail the basis therefor). No failure or delay in providing notice hereunder shall relieve either party of CTA thatits obligations hereunder, if successful, would result in except to the extent it is actually prejudiced by such delay or failure.
(b) Other than with respect to a Tax Event (a "Partnership Level Issue"). Each Indemnitee shall take such action or refrain from taking such action as may be reasonably necessary in order to cause each item which is the subject of a potential Tax Event to be contested as a Partnership Level Issue. If the New General Partner contests a Partnership Level Issue that, if successful, would result in a Tax Event, Prime's obligation to pay any Tax Indemnity Amounts shall, at Prime's election, be deferred until thirty (30) days after a Final Determination of the Indemnitees' respective federal income tax liabilities Claim in respect of Taxes relating to a Straddle Period that is governed by Section 9.2(c), the Indemnifying Person may, at its own expense, (i) participate in any Tax Claim and (ii) with respect to any Tax Claim that relates solely to indemnified Taxes where Seller is the Indemnifying Person or solely to indemnified Taxes where Purchaser is the Indemnifying Person, as the case may be, assume the defense of any such Tax Claim; provided that in the event that the Tax Indemnifying Party assumes the defense of a Tax EventClaim pursuant to clause (ii) of this paragraph, provided that(A) the Tax Indemnified Party shall have the right (but not the duty) to participate in the defense thereof and to employ counsel, at its own expense (which, for the avoidance of doubt, the costs of such voluntary participation will not give rise to any indemnity under Section 9.1(a) or 9.1(b)), separate from the counsel employed by the Tax Indemnifying Party, (B) the Tax Indemnifying Party shall keep the Tax Indemnified Party reasonably informed regarding the status of such Tax Claim and consult with the Tax Indemnified Party upon receipt the Tax Indemnified Party’s reasonable request for such consultation with respect to such Tax Claim, and (C) the Tax Indemnifying Party shall not, without the Tax Indemnified Party’s consent, which consent shall not be unreasonably withheld or delayed, agree to any settlement of such Tax Claim. Whether or not the Tax Indemnifying Party chooses to defend or prosecute any claim, all of the 30-day letter from parties hereto shall cooperate in the Internal Revenue Servicedefense or prosecution thereof and the Tax Indemnified Party shall not settle or make payment on account of any Tax Claim in respect of which indemnity may be sought without the consent of the Tax Indemnifying Party, Prime furnishes the Indemnification Securitywhich consent shall not be unreasonably withheld or delayed.
b. If an audit or proceeding involving (c) With respect to a potential Tax Event is being conducted Claim in respect of Taxes relating to a proceeding involving an IndemniteeStraddle Period, which cannot be transferred to CTA as a partnership item (an "Indemnitee Level Issue")Purchaser and Seller shall, such Indemnitee hereby agrees to promptly notify Prime in writing of such adjustmentgood faith, and such Indemnitee shall tender jointly control the defense of such Indemnitee Level Issue to such legal counsel as Prime may select and which is reasonably acceptable to such Indemnitee ("Contest Counsel"). Such Indemnitee agrees to reasonably cooperate with Contest Counsel in connection with any such proceedings and to follow the advice of Contest Counsel with respect to decisions as to whether to contest such Indemnitee Level Issue, the extent and choice of forum with respect to such contest and other material issues relating thereto. Contest Counsel shall represent an Indemnitee only in connection with such issues as could potentially result in a Tax Event with respect to such Indemnitee, and, unless such Indemnitee, in its sole discretion, otherwise consents, Contest Counsel shall not represent such Indemnitee Claim with respect to any other issues, without regard item that relates to whether such other issues are being concurrently challenged by the Internal Revenue Service or other tax authority or appear on the same tax return as the Indemnitee Level Issue in question. Each Indemnitee shall make available to Contest Counsel copies of such Indemnitee's tax returns both a Pre-Closing Tax Period and other information and materials pertinent to the contest of the Indemnitee Level Issuea Post-Closing Tax Period; provided, however, if any information relating to matters other than the Indemnitee Level Issue in question are included in materials furnished to Contest Counsel, such materials shall be furnished only upon the agreement by Contest Counsel to maintain such information on a strictly confidential basis and to not disclose any such information to any person (including without limitation Prime, New General Partner or any Affiliates of either of them) without the prior written consent of such Indemnitee.
c. If Prime recommends acceptance of a settlement offer in respect of an Indemnitee Level Issue or if the New General Partner recommends the acceptance of a settlement offer in respect of a Partnership Level Issue, but the Indemnitees decline to accept such offer in writing within 30 days that (i) control over any claims with respect to any item that relates solely to a Pre-Closing Tax Period shall be governed by the obligation provisions of Prime 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 proceedings terminated on the basis recommended by Prime or the New General Partner, as applicable, this Section 9.2(c) and (ii) in the case of an Indemnitee Level Issue, Prime Purchaser shall have no further liability for costs or other expenses in respect of such contest.
d. Notwithstanding the foregoing, neither Indemnitee will have control any obligation to contest any action claims with respect to an Indemnitee Level Issue (i) unless such items could give rise item that relates solely to a federal income tax liability Post-Closing Tax Period.
(disregarding other items in d) To the assessment extent that there is an inconsistency between this Section 9.2 and considering effects in future years) in excess of $25,000, (ii) unless Prime furnishes the Indemnification Security as set forth herein, (iii) without Prime 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 (subject to the agreement by Prime to not litigate in Tax Court, which agreement may be withheld in Prime's sole discretion)Section 10.3, the amount provisions of tax (and any applicable interest and penalties) for which refund is claimed, and (iv) to the extent such Indemnitee waives in writing Prime's obligation to indemnify such Indemnitee for such items, in which case all third-party costs and out-of-pocket expenses described in clause (iii) thereafter incurred by such Indemnitee and all taxes of such Indemnitee would be paid by such Indemniteethis Section 9.2 shall govern.
e. An Indemnitee shall not settle any Indemnitee Level Issue without Prime's prior written consent; provided that an Indemnitee shall not be required to contest any proposed adjustment and may settle any such proposed adjustment if such Indemnitee shall waive his right to indemnity under this Agreement with respect to such adjustment and any Tax Event that results from such adjustment and, in the case of proceedings before the Court of Federal Claims or Federal District Court, shall pay to Prime the amount of tax (and any applicable interest and penalties) previously paid or advanced by Prime with respect to such adjustment or the contest of such adjustment.
Appears in 2 contracts
Samples: Securities Purchase Agreement (BATS Global Markets, Inc.), Securities Purchase Agreement (KCG Holdings, Inc.)
Contest Provisions. a. The New General Partner (a) After the Closing Date, the Acquiror (or a Designated Acquiror) and the Parent shall be entitled to contestpromptly notify the other in writing upon receipt by any Acquiror Indemnified Party or Parent Indemnified Party, as tax matters partner the case may be, of CTA in accordance with the CTA Agreement as part of the unified audit of CTA, any claim in respect written notice of any "partnership" item of CTA thatpending or threatened tax audits, if successful, would result in a Tax Event examinations or assessments (a "Partnership Level Issue"). Each Indemnitee shall take such action “Tax Claim”) which would reasonably be expected to affect the Tax liabilities for which the Parent or refrain from taking such action as the Acquiror may be reasonably necessary liable under Section 7.01; provided, that the failure by the Acquiror or the Parent, as the case may be, to notify the other of any Tax Claim shall not relieve the Parent or the Acquiror (or a Designated Acquiror), as the case may be, of its obligations under this Article VII in order whole or in part except to cause each item which the extent the Parent or the Acquiror, as the case may be, is the subject of a potential Tax Event to be contested materially prejudiced as a Partnership Level Issue. If consequence of such failure.
(i) The Parent shall have the New General Partner contests a Partnership Level Issue that, if successful, would result in a Tax Event, Prime's obligation right to pay control the contest of any Tax Indemnity Amounts shallClaim for which the Parent is solely liable under this Agreement; provided, that (A) the Acquiror shall have the right, at Prime's electionits own expense, be deferred until thirty to participate in (30but not control) days after a Final Determination of the Indemnitees' respective federal income tax liabilities in respect of a Tax Event, provided that, upon receipt of the 30-day letter from the Internal Revenue Service, Prime furnishes the Indemnification Security.
b. If an audit or proceeding involving a potential Tax Event is being conducted in a proceeding involving an Indemnitee, which cannot be transferred to CTA as a partnership item (an "Indemnitee Level Issue"), such Indemnitee hereby agrees to promptly notify Prime in writing of such adjustment, and such Indemnitee shall tender the defense of such Indemnitee Level Issue all proceedings related to such legal counsel as Prime may select Tax Claim, (B) the Parent shall promptly furnish to the Acquiror copies of all relevant correspondence and which is reasonably acceptable to such Indemnitee ("Contest Counsel"). Such Indemnitee agrees to reasonably cooperate with Contest Counsel documentation in connection with any such proceedings Tax Claim and shall provide the Acquiror with the opportunity to follow comment on all proposed correspondence and submissions to the advice relevant tax authority, which comments the Parent shall consider in good faith, (C) the Parent shall consult in good faith with the Acquiror regarding the conduct of Contest Counsel the contest of any such Tax Claim and (D) the Parent shall use good faith reasonable efforts to take positions in any contest that are consistent with the positions taken in prior settlements with respect to decisions as substantially similar issues if the failure to whether take a consistent position would give rise to contest such Indemnitee Level Issuea material adverse effect to any of the Companies or the Transferred Subsidiaries. The Parent shall not, the extent and choice of forum with respect to such contest and other material issues relating thereto. Contest Counsel shall represent an Indemnitee only in connection with such issues as could potentially result in a Tax Event with respect to such Indemnitee, and, unless such Indemnitee, in its sole discretion, otherwise consents, Contest Counsel shall not represent such Indemnitee with respect to permit any other issuesrelevant party to, without regard to whether such other issues are being concurrently challenged by the Internal Revenue Service enter into any settlement or other tax authority or appear on the same tax return as the Indemnitee Level Issue in question. Each Indemnitee shall make available to Contest Counsel copies of such Indemnitee's tax returns and other information and materials pertinent to the contest of the Indemnitee Level Issue; provided, however, if any information relating to matters other than the Indemnitee Level Issue in question are included in materials furnished to Contest Counsel, such materials shall be furnished only upon the agreement by Contest Counsel to maintain such information on a strictly confidential basis and to not disclose otherwise compromise any such information to any person (including without limitation Prime, New General Partner or any Affiliates of either of them) Tax Claim without the prior written consent of the Acquiror, provided, that if the Acquiror shall refuse to consent to any settlement or compromise that the relevant tax authorities and the Parent propose to accept (a “Proposed Settlement”) and such IndemniteeProposed Settlement would not reasonably be expected to result in a material Tax cost to the Acquiror Indemnified Parties that is not indemnified by the Parent, then (X) the liability of the Parent with respect to the subject matter of the Proposed Settlement shall be limited to the amount that such liability would have been to the Parent were the Proposed Settlement accepted, and (Y) the Acquiror shall thereafter be entitled to assume control of the contest, settlement and compromise of such Tax Claim and shall bear its own costs and expenses in connection with such Tax Claim.
c. If Prime recommends acceptance (ii) With respect to any Straddle Period, the Parent and the Acquiror shall jointly control the contest, settlement and compromise of any relevant Tax Claim and each party shall cooperate with the other party at its own expense and no settlement or compromise with respect thereto shall be entered into without the consent of the other party, which consent shall not be unreasonably withheld.
(iii) Within 20 days of receiving notice from the Acquiror of a settlement offer Tax Claim pursuant to Section 7.03(a), the Parent shall notify the Acquiror in respect writing if its intention to control the contest of an Indemnitee Level Issue any Tax Claim that is the subject of such notice and that the Parent is otherwise entitled to control (or jointly control) pursuant to Section 7.03(b)(i) or Section 7.03(b)(ii). If the Acquiror does not receive such notice from the Parent within such period, or if the New General Partner recommends Parent shall notify the acceptance of a settlement offer in respect of a Partnership Level Issue, but the Indemnitees decline Acquiror that it does not wish to accept such offer in writing within 30 days control (ior jointly control) the obligation of Prime 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 proceedings terminated on the basis recommended by Prime or the New General Partner, as applicable, and (ii) in the case of an Indemnitee Level Issue, Prime shall have no further liability for costs or other expenses in respect of such contest.
d. Notwithstanding the foregoing, neither Indemnitee will have Tax Claim (or any obligation to contest any action with respect to an Indemnitee 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) unless Prime furnishes the Indemnification Security as set forth herein, (iii) without Prime 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 (subject to the agreement by Prime to not litigate in Tax Court, which agreement may be withheld in Prime's sole discretionClaim), the amount Acquiror thereupon shall be entitled to control the contest, settlement and compromise of tax such Tax Claim in its sole discretion; provided, however, that the failure of the Parent to provide notice shall not result in the Parent waiving any of its rights under this Agreement (and any applicable interest and penaltiesincluding its right to control the contest of the Tax Claim) for which refund in whole or in part except to the extent the Acquiror is claimed, and materially prejudiced as a consequence of such failure.
(iv) Except as otherwise expressly provided, nothing contained in this Section 7.03(b) shall be construed as limiting the Acquiror Indemnified Parties’ right to indemnification under Section 7.01, provided, that the Acquiror may elect (by written notice to the extent such Indemnitee waives in writing Prime's obligation Parent) to indemnify such Indemnitee forgo indemnification under Section 7.01 for such itemsa Tax Claim or portion thereof, in which case all third-party costs the Acquiror shall be entitled to control the contest, settlement and out-of-pocket expenses described in clause (iii) thereafter incurred by such Indemnitee and all taxes compromise of such Indemnitee would be paid by such IndemniteeTax Claim or applicable portion thereof in its sole discretion and at its own expense.
e. An Indemnitee (v) The foregoing provisions of this Section 7.03(b) shall not settle any Indemnitee Level Issue without Prime's prior written consent; provided that an Indemnitee shall not be required apply to contest any proposed adjustment the Parent and may settle any such proposed adjustment if such Indemnitee shall waive his right its Affiliates, on the one hand, and to indemnity under this Agreement with respect to such adjustment the Acquiror and any Tax Event that results from such adjustment andits Affiliates, in on the case of proceedings before the Court of Federal Claims or Federal District Courtother hand, shall pay to Prime the amount of tax (and any applicable interest and penalties) previously paid or advanced by Prime with respect to such adjustment or the contest of such adjustmentmutatis mutandis.
Appears in 2 contracts
Samples: Stock Purchase Agreement (American International Group Inc), Stock Purchase Agreement (Prudential Financial Inc)
Contest Provisions. a. The New General Partner Each of the Buyer and the Stockholders’ Representative shall promptly notify (a “Tax Claim Notice”) the other upon receipt of notice of any pending or threatened audits, assessments, adjustments, or other proceedings with respect to Taxes for which such other party (or such other party’s Affiliates) may be liable hereunder (each a “Tax Matter”), provided that a party’s failure to comply with this notice provision shall not affect such party’s right to indemnification hereunder unless (and only to the extent that) the other party is materially adversely prejudiced as a consequence of such failure. Such Tax Claim Notice shall include (i) a description in reasonable detail (to the extent known by such Buyer Indemnified Party (as defined below)) of the facts constituting the basis for such claim and the amount of the Losses claimed, if known and quantifiable, (ii) a statement that such Buyer Indemnified Party is entitled to indemnification under Section 8.3 and a reasonable explanation of the basis therefor and (iii) a demand for payment in the amount of Losses set forth in the Tax Claim Notice. The Buyer shall have the right to control, conduct, contest, as tax matters partner of CTA in accordance with the CTA Agreement as part and defend all Tax Matters relating to Taxes or Tax Returns of the unified audit Company or any of CTA, any claim in respect of any "partnership" item of CTA that, if successful, would result in a Tax Event (a "Partnership Level Issue"). Each Indemnitee shall take such action or refrain from taking such action as may be reasonably necessary in order to cause each item which is the subject of a potential Tax Event to be contested as a Partnership Level Issue. If the New General Partner contests a Partnership Level Issue that, if successful, would result in a Tax Event, Prime's obligation to pay any Tax Indemnity Amounts shall, at Prime's election, be deferred until thirty (30) days after a Final Determination of the Indemnitees' respective federal income tax liabilities in respect of a Tax Eventits Subsidiaries, provided that, upon receipt of the 30-day letter from the Internal Revenue Service, Prime furnishes the Indemnification Security.
b. If an audit or proceeding involving a potential Tax Event is being conducted Stockholders’ Representative shall be entitled (at its sole cost and expense) (A) to participate in a proceeding involving an Indemnitee, which cannot be transferred to CTA as a partnership item (an "Indemnitee Level Issue"), such Indemnitee hereby agrees to promptly notify Prime in writing of such adjustment, and such Indemnitee shall tender the defense of such Indemnitee Level Issue and, at its option, after providing written notice to such legal counsel as Prime may select and which is reasonably acceptable the Buyer, take control of the complete defense of, any Tax Matter, but only to such Indemnitee ("Contest Counsel"). Such Indemnitee agrees to reasonably cooperate with Contest Counsel in connection with any such proceedings and to follow the advice of Contest Counsel with respect to decisions as to whether to contest such Indemnitee Level Issue, the extent and choice of forum with respect that such Tax Matter pertains solely to such contest and other material issues relating thereto. Contest Counsel shall represent an Indemnitee only in connection with such issues as could potentially result in a Tax Event with respect to such Indemnitee, and, unless such Indemnitee, in its sole discretion, otherwise consents, Contest Counsel shall not represent such Indemnitee with respect to any other issues, without regard to whether such other issues are being concurrently challenged by taxable periods ending on or before the Internal Revenue Service or other tax authority or appear on the same tax return as the Indemnitee Level Issue in question. Each Indemnitee shall make available to Contest Counsel copies of such Indemnitee's tax returns and other information and materials pertinent to the contest of the Indemnitee Level Issue; provided, however, if any information relating to matters other than the Indemnitee Level Issue in question are included in materials furnished to Contest Counsel, such materials shall be furnished only upon the agreement by Contest Counsel to maintain such information on a strictly confidential basis and to not disclose any such information to any person (including without limitation Prime, New General Partner or any Affiliates of either of them) without the prior written consent of such Indemnitee.
c. If Prime recommends acceptance of a settlement offer in respect of an Indemnitee Level Issue or if the New General Partner recommends the acceptance of a settlement offer in respect of a Partnership Level Issue, but the Indemnitees decline to accept such offer in writing within 30 days (i) the obligation of Prime 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 proceedings terminated on the basis recommended by Prime or the New General Partner, as applicableClosing Date, and (iiB) in the case to employ counsel of an Indemnitee Level Issue, Prime shall have no further liability its choice for costs or other expenses in respect purposes of such contest.
d. Notwithstanding the foregoing. The Buyer shall, neither Indemnitee at the cost of the Stockholders’ Representative (provided that the Stockholders’ Representative will have any obligation to contest any action with respect to an Indemnitee 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) unless Prime furnishes the Indemnification Security as set forth herein, (iii) without Prime paying when due, only be liable for reasonable third-party costs and out-of-pocket expenses including reasonable legaland such expenses shall be paid first from the Reserve Amount), witness procure all assistance that the Stockholders’ Representative may reasonably require in relation to any action taken with respect to any Tax Matter with respect to which the Stockholders’ Representative has assumed control in accordance with the immediately preceding sentence. The Buyer shall procure such evidence that the Stockholders’ Representative is authorized to take such action on behalf and accounting fees and other expenses and, in the case name of proceedings before the Court of Federal Claims or Federal District Court (subject to Surviving Corporation and its Subsidiaries as the agreement by Prime to not litigate in Tax Court, which agreement Stockholders’ Representative may be withheld in Prime's sole discretion), the amount of tax (and any applicable interest and penalties) for which refund is claimed, and (iv) to the extent such Indemnitee waives in writing Prime's obligation to indemnify such Indemnitee for such items, in which case all third-party costs and out-of-pocket expenses described in clause (iii) thereafter incurred by such Indemnitee and all taxes of such Indemnitee would be paid by such Indemnitee.
e. An Indemnitee shall not settle any Indemnitee Level Issue without Prime's prior written consent; provided that an Indemnitee shall not be required to contest any proposed adjustment and may settle any such proposed adjustment if such Indemnitee shall waive his right to indemnity under this Agreement reasonably request with respect to such adjustment Tax Matter, including responding (in writing or otherwise) to any audit inquiry from any Taxing Authority, attending and conducting interviews, meetings, discussions and negotiations with any Taxing Authority, negotiating and concluding compromises, agreements and settlements with any Taxing Authority, lodging requests for ruling, opinions or determinations with any Taxing Authority or lodging or instituting objections, applications, appeals and other Litigations with any Taxing Authority, tribunal or court. A party in control of a Tax Event that results from Matter for which the other party (or such adjustment and, in other party’s Affiliates) may be liable hereunder shall (i) keep the case of proceedings before other party fully informed regarding the Court of Federal Claims or Federal District Court, shall pay to Prime the amount of tax (status and any applicable interest and penalties) previously paid or advanced by Prime with respect to such adjustment or the contest progress of such adjustment.Tax Matter and (ii) provide to the other party drafts of any correspondence to or from any Taxing Authority and consider in good faith any comments of the other party (or its advisors) with regard to such
Appears in 1 contract
Samples: Agreement and Plan of Merger (Endo International PLC)
Contest Provisions. a. (a) The New General Partner shall be entitled to contest, as tax matters partner of CTA in accordance with Party responsible for Taxes under Article II (the CTA Agreement as part of the unified audit of CTA, any claim in respect of any "partnership" item of CTA that, if successful, would result in a Tax Event (a "Partnership Level Issue"). Each Indemnitee shall take such action or refrain from taking such action as may be reasonably necessary in order to cause each item which is the subject of a potential Tax Event to be contested as a Partnership Level Issue. If the New General Partner contests a Partnership Level Issue that, if successful, would result in a Tax Event, Prime's obligation to pay any Tax Indemnity Amounts “Responsible Party”) shall, at Prime's election, be deferred until thirty (30) days after a Final Determination of the Indemnitees' respective federal income tax liabilities in respect of a Tax Event, provided that, upon receipt of the 30-day letter from the Internal Revenue Service, Prime furnishes the Indemnification Security.
b. If an audit or proceeding involving a potential Tax Event is being conducted in a proceeding involving an Indemnitee, which cannot be transferred to CTA as a partnership item (an "Indemnitee Level Issue"), such Indemnitee hereby agrees to promptly notify Prime in writing of such adjustment, and such Indemnitee shall tender the defense of such Indemnitee Level Issue to such legal counsel as Prime may select and which is reasonably acceptable to such Indemnitee ("Contest Counsel"). Such Indemnitee agrees to reasonably cooperate with Contest Counsel in connection with any such proceedings and to follow the advice of Contest Counsel with respect to decisions as a Tax Return, have the exclusive right to whether to control, contest such Indemnitee Level Issueand represent the interests of Exelon, the extent Constellation, and choice of forum with respect their respective Affiliates in any Tax Controversy related to such contest and other material issues relating thereto. Contest Counsel shall represent an Indemnitee only in connection with such issues as could potentially result in a Tax Event with respect to such Indemnitee, and, unless such Indemnitee, in its sole discretion, otherwise consents, Contest Counsel shall not represent such Indemnitee with respect to any other issues, without regard to whether such other issues are being concurrently challenged by the Internal Revenue Service or other tax authority or appear on the same tax return as the Indemnitee Level Issue in question. Each Indemnitee shall make available to Contest Counsel copies of such Indemnitee's tax returns and other information and materials pertinent to the contest of the Indemnitee Level IssueReturn; provided, however, if that Exelon shall in all events be the Responsible Party with respect to any information relating Tax Return reflecting Separation Taxes. Such right to matters other than control shall include the Indemnitee Level Issue right, in question are included the Responsible Party’s reasonable discretion, to waive or extend any statute of limitations in materials furnished to Contest Counsel, such materials shall be furnished only upon the agreement by Contest Counsel to maintain such information on a strictly confidential basis connection with any Tax Controversy and to not disclose any such information resolve, settle or agree to any person (including without limitation Primedeficiency, New General Partner claim or any Affiliates of either of them) without the prior written consent of such Indemnitee.
c. If Prime recommends acceptance of adjustment proposed, asserted or assessed in connection with or as a settlement offer in respect of an Indemnitee Level Issue or if the New General Partner recommends the acceptance of a settlement offer in respect of a Partnership Level Issue, but the Indemnitees decline to accept such offer in writing within 30 days (i) the obligation of Prime to make indemnity payments as the result of any such Tax Controversy; provided, however, that (i) at the request of Exelon or at Constellation’s option, Constellation shall have the right, at its own expense, to reasonably participate (to the extent allowed by Law) in the contest or proceedings shall not thereafter exceed the obligation that it would have had if such contest had been settled or proceedings terminated on the basis recommended by Prime or the New General Partner, as applicable, of a Tax Controversy relating to Separation Taxes and Taxes described in Sections 2.02(a)(i)(A) and (C) and (ii) at Exelon’s option, Exelon shall have the right, at its own expense, to reasonably participate (to the extent allowed by Law) in the case contest of an Indemnitee Level Issue, Prime shall have no further liability for costs or other expenses a Tax Controversy relating to Taxes described in respect of such contestSections 2.02(a)(ii)(A).
d. Notwithstanding (b) Exelon shall use reasonable efforts to keep Constellation advised as to the foregoing, neither Indemnitee will have any obligation to contest any action with respect to an Indemnitee Level Issue status of Tax Controversies involving (i) unless such items any issue that relates to a Tax of any member of the Constellation Group or that could reasonably be expected to give rise to a federal income tax liability of Constellation or any of its Affiliates under this Agreement (disregarding other items in the assessment and considering effects in future yearseach case, a “Liability Issue”) in excess of $25,000, or (ii) unless Prime furnishes that could reasonably be expected to affect any Tax Attribute of any member of the Indemnification Security Constellation Group for any Post-Distribution Period (an “Attribute Issue”). Exelon shall promptly furnish to Constellation copies of any inquiries or requests for information from any Taxing Authority or any other administrative, judicial, or other governmental authority concerning any Liability Issue or Attribute Issue pertaining to Constellation. Exelon shall use reasonable efforts to provide the information described in this Section 5.03(b) to Constellation no later than ten (10) Business Days after becoming aware of, or in possession of, such information.
(c) Except as otherwise set forth hereinin Section 5.03(a), (iii) without Prime paying when dueany costs and expenses incurred by a Responsible Party in connection with a Tax Controversy shall be borne solely by the Responsible Party; provided, however, that Constellation shall reimburse Exelon for its share of any reasonable third-third party costs and out-of-pocket expenses including reasonable legal, witness borne by Exelon or its Affiliates in connection with Tax Controversies relating to Taxes described in Section 2.02(a)(i)(A) and accounting fees and other expenses and, in the case (C). For purposes of proceedings before the Court of Federal Claims or Federal District Court (subject to the agreement by Prime to not litigate in Tax Court, which agreement may be withheld in Prime's sole discretionthis Section 5.03(c), the amount Constellation’s share of tax (and any applicable interest and penalties) for which refund is claimed, and (iv) to the extent such Indemnitee waives in writing Prime's obligation to indemnify such Indemnitee for such items, in which case all third-third party costs and out-of-pocket expenses described in clause (iii) thereafter incurred shall be determined by such Indemnitee and all taxes reference to the Constellation Allocable Audit Portion of the total amount Taxes due as a result of such Indemnitee would be paid by such IndemniteeTax Controversy.
e. An Indemnitee shall not settle any Indemnitee Level Issue without Prime's prior written consent; provided that an Indemnitee shall not be required to contest any proposed adjustment and may settle any such proposed adjustment if such Indemnitee shall waive his right to indemnity under this Agreement with respect to such adjustment and any Tax Event that results from such adjustment and, in the case of proceedings before the Court of Federal Claims or Federal District Court, shall pay to Prime the amount of tax (and any applicable interest and penalties) previously paid or advanced by Prime with respect to such adjustment or the contest of such adjustment.
Appears in 1 contract
Samples: Tax Matters Agreement (Exelon Corp)
Contest Provisions. a. The New General Partner shall Upon receipt by a party entitled to any indemnification provided for under this Agreement, including this Section 6.11 or Section 2.8 (for purposes of this paragraph, the "indemnified party"), of notice of any audit, written inquiry, claim or demand by a taxing authority, in each case (i) related to Taxes with respect to which the indemnified party would be entitled to contest, as tax matters partner indemnification under this Agreement to any extent or (ii) that could result in the disallowance of CTA any deduction or similar Tax item previously claimed with respect to a Payment in accordance with Section 6.11(a)(v) whether or not indemnification payments would be owing upon such disallowance (any such audit, written inquiry, claim or demand by a taxing authority, hereinafter a "Tax Assertion"), the CTA Agreement as part indemnified party shall notify the party obligated to provide such indemnification (for purposes of this paragraph, the "INDEMNIFYING PARTY") in writing of the unified audit of CTA, Tax Assertion as promptly as practicable but in any claim in respect of any "partnership" item of CTA that, if successful, would result in a Tax Event event within fifteen (a "Partnership Level Issue"). Each Indemnitee shall take such action or refrain from taking such action as may be reasonably necessary in order to cause each item which is the subject of a potential Tax Event to be contested as a Partnership Level Issue. If the New General Partner contests a Partnership Level Issue that, if successful, would result in a Tax Event, Prime's obligation to pay any Tax Indemnity Amounts shall, at Prime's election, be deferred until thirty (3015) days after a Final Determination receipt by such indemnified party of the Indemnitees' respective federal income tax liabilities in respect of a Tax Event, provided that, upon receipt of the 30-day letter from the Internal Revenue Service, Prime furnishes the Indemnification Security.
b. If an audit or proceeding involving a potential Tax Event is being conducted in a proceeding involving an Indemnitee, which cannot be transferred to CTA as a partnership item (an "Indemnitee Level Issue"), such Indemnitee hereby agrees to promptly notify Prime in writing notice of such adjustment, and such Indemnitee shall tender the defense of such Indemnitee Level Issue to such legal counsel as Prime may select and which is reasonably acceptable to such Indemnitee ("Contest Counsel"). Such Indemnitee agrees to reasonably cooperate with Contest Counsel in connection with any such proceedings and to follow the advice of Contest Counsel with respect to decisions as to whether to contest such Indemnitee Level Issue, the extent and choice of forum with respect to such contest and other material issues relating thereto. Contest Counsel shall represent an Indemnitee only in connection with such issues as could potentially result in a Tax Event with respect to such Indemnitee, and, unless such Indemnitee, in its sole discretion, otherwise consents, Contest Counsel shall not represent such Indemnitee with respect to any other issues, without regard to whether such other issues are being concurrently challenged by the Internal Revenue Service or other tax authority or appear on the same tax return as the Indemnitee Level Issue in question. Each Indemnitee shall make available to Contest Counsel copies of such Indemnitee's tax returns and other information and materials pertinent to the contest of the Indemnitee Level IssueAssertion; provided, however, if any information that failure to give such notification shall not affect the indemnification provided hereunder except to the extent the indemnifying party shall have been prejudiced as a result of such failure. Thereafter, the indemnified party shall deliver to the indemnifying party, promptly after the indemnified party's receipt thereof, copies of all notices and documents (including court papers) received by the indemnified party relating to matters other than such Tax Assertion. If a Tax Assertion is made, the Indemnitee Level Issue in question are included in materials furnished to Contest Counsel, such materials shall be furnished only upon the agreement by Contest Counsel to maintain such information on a strictly confidential basis and to not disclose any such information to any person (including without limitation Prime, New General Partner indemnifying party or any Affiliates of either of them) without Person designated by the prior written consent of indemnifying party (the indemnifying party or such Indemnitee.
c. If Prime recommends acceptance of a settlement offer in respect of an Indemnitee Level Issue or if the New General Partner recommends the acceptance of a settlement offer in respect of a Partnership Level Issue, but the Indemnitees decline to accept such offer in writing within 30 days (i) the obligation of Prime 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 proceedings terminated on the basis recommended by Prime or the New General PartnerPerson, as applicable, and (ii) in relevant as determined by the case of an Indemnitee Level Issue, Prime shall have no further liability for costs or other expenses in respect of such contest.
d. Notwithstanding the foregoing, neither Indemnitee will have any obligation to contest any action indemnifying party with respect to an Indemnitee Level Issue each reference herein, the "RELEVANT PARTY") will be entitled to choose to defend and solely control the defense of such Tax Assertion (iat the Relevant Party's expense) unless with counsel selected by the Relevant Party (at the Relevant Party's expense). If the Relevant Party chooses to defend or prosecute any Tax Assertion, all of the parties hereto shall cooperate in the defense or prosecution thereof. Such cooperation shall include taking all reasonable steps necessary to retain and (upon the Relevant Party's request) to provide to the Relevant Party records and information which are reasonably relevant to such items could give rise Tax Assertion, and making employees available on a mutually convenient basis to provide additional information and explanation of any material provided hereunder. Notwithstanding anything herein to the contrary, the indemnified party shall have the sole right to defend any issue relating to a federal income tax liability (disregarding other items in the assessment and considering effects in future years) in excess of $25,000, (ii) unless Prime furnishes the Indemnification Security as set forth herein, (iii) without Prime 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 (subject to the agreement by Prime to Tax Assertion not litigate in Tax Court, which agreement may be withheld in Prime's sole discretion), the amount of tax (and any applicable interest and penalties) for which refund is claimed, and (iv) to the extent such Indemnitee waives in writing Prime's obligation to indemnify such Indemnitee for such items, in which case all third-party costs and out-of-pocket expenses described in clause (iiiii) thereafter incurred by such Indemnitee and all taxes of such Indemnitee would be paid by such Indemnitee.
e. An Indemnitee the definition thereof to the extent the indemnified party shall not settle have agreed to forego any Indemnitee Level Issue without Prime's prior written consent; provided that an Indemnitee shall not be required to contest any proposed adjustment and may settle any such proposed adjustment if such Indemnitee shall waive his right to indemnity indemnification under this Agreement with respect to such adjustment and thereto. Whether or not the Relevant Party shall have assumed the defense of a Tax Assertion, neither the indemnified party nor the Relevant Party shall admit any Tax Event that results from such adjustment and, in the case of proceedings before the Court of Federal Claims or Federal District Court, shall pay to Prime the amount of tax (and any applicable interest and penalties) previously paid or advanced by Prime liability with respect to to, or settle, such adjustment or Tax Assertion without the contest of such adjustmentRelevant Party's prior written consent.
Appears in 1 contract
Contest Provisions. a. The New General Partner shall be entitled to contest, as tax matters partner of CTA in accordance with the CTA Agreement as part of the unified audit of CTA, any claim in respect of any "partnership" item of CTA that, if successful, would result in If requested by a Tax Event (a "Partnership Level Issue"). Each Indemnitee shall take such action or refrain from taking such action as may be reasonably necessary in order to cause each item which is the subject of a potential Tax Event to be contested as a Partnership Level Issue. If the New General Partner contests a Partnership Level Issue that, if successful, would result in a Tax Event, Prime's obligation to pay any Tax Indemnity Amounts shall, at Prime's election, be deferred until thirty (30) Indemnifying Party within 30 days after a Final Determination of the Indemnitees' respective federal income tax liabilities in respect of a Tax Event, provided that, upon receipt of the 30-day letter from the Internal Revenue Service, Prime furnishes the Indemnification Security.
b. If an audit or proceeding involving a potential Tax Event is being conducted in a proceeding involving an Indemnitee, which cannot be transferred to CTA as a partnership item (an "Indemnitee Level Issue")Adjustment Notice, such Tax Indemnitee hereby agrees Party shall in good faith contest, or (if desired by such Tax Indemnitee) permit a Tax Indemnifying Party to promptly notify Prime in writing of such adjustmentcontest the validity, applicability, and such Indemnitee shall tender the defense amount of such Indemnitee Level Issue any proposed adjustment that would give rise to such legal counsel as Prime may select and which is reasonably acceptable to such Indemnitee ("Contest Counsel"). Such Indemnitee agrees to reasonably cooperate with Contest Counsel in connection with any such proceedings and to follow the advice of Contest Counsel with respect to decisions as to whether to contest such Indemnitee Level Issue, the extent and choice of forum with respect to such contest and other material issues relating thereto. Contest Counsel shall represent an Indemnitee only in connection with such issues as could potentially result in a Tax or Inclusion Event with respect to such Indemnitee, andby (a) not making payment thereof for at least 30 days after providing the Adjustment Notice, unless such Indemniteeotherwise required by applicable Law, (b) not paying same except under protest, if protest is necessary and proper, or (c) if payment is made, using reasonable efforts to obtain a refund thereof in its sole discretion, otherwise consents, Contest Counsel shall not represent such Indemnitee with respect to any other issues, without regard to whether such other issues are being concurrently challenged by the Internal Revenue Service or other tax authority or appear on the same tax return as the Indemnitee Level Issue in question. Each Indemnitee shall make available to Contest Counsel copies of such Indemnitee's tax returns appropriate administrative and other information and materials pertinent to the contest of the Indemnitee Level Issuejudicial proceedings; provided, however, if any information relating to matters other than the Indemnitee Level Issue in question are included in materials furnished to Contest Counsel, such materials shall be furnished only upon the agreement by Contest Counsel to maintain such information on a strictly confidential basis and to not disclose any such information to any person (including without limitation Prime, New General Partner or any Affiliates of either of them) without the prior written consent of such Indemnitee.
c. If Prime recommends acceptance of a settlement offer in respect of an Indemnitee Level Issue or if the New General Partner recommends the acceptance of a settlement offer in respect of a Partnership Level Issue, but the Indemnitees decline to accept such offer in writing within 30 days that (i) the obligation of Prime 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 proceedings terminated on the basis recommended by Prime or the New General Partner, as applicable, and (ii) in the case of an Indemnitee Level Issueincome tax contest, Prime shall have no further liability for costs or other expenses in respect as a condition to the commencement of such contest.
d. Notwithstanding , such Tax Indemnitee Party shall have received a written opinion of its independent tax counsel selected by such Tax Indemnitee Party and reasonably acceptable to Tax Indemnifying Party to the foregoing, neither Indemnitee will have any obligation to contest any action with respect to an Indemnitee Level Issue (i) unless effect that there is a Reasonable Basis for contesting 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 $25,000proposed adjustment, (ii) unless Prime furnishes the Indemnification Security as set forth herein, (iii) without Prime 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 (subject to the agreement by Prime to not litigate in such Tax Court, which agreement may be withheld in Prime's sole discretion), the amount of tax (and any applicable interest and penalties) for which refund is claimed, and (iv) to the extent such Indemnitee waives in writing Prime's obligation to indemnify such Indemnitee for such items, in which case all third-party costs and out-of-pocket expenses described in clause (iii) thereafter incurred by such Indemnitee and all taxes of such Indemnitee would be paid by such Indemnitee.
e. An Indemnitee shall not settle any Indemnitee Level Issue without Prime's prior written consent; provided that an Indemnitee Party shall not be required to contest any proposed adjustment and may settle any such proposed adjustment if such Indemnitee shall waive his right to indemnity under this Agreement the aggregate amount of the indemnity, on a before-tax basis, together with the amounts payable with respect to such adjustment and any Tax Event that results from such adjustment andfuture related claim, would be less than $100,000 in the case of proceedings before an administrative contest or less than $250,000 in the Court case of Federal Claims or Federal District Courta judicial contest, (iii) Tax Indemnifying Party shall have agreed in writing to pay to Prime such Tax Indemnitee, on demand, all reasonable out-of-pocket costs and expenses which such Tax Indemnitee Party incurs in connection with and reasonably allocable to contesting such adjustment, including all reasonable legal, accountants’, and investigatory fees and disbursements; (iv) the Tax Indemnitee Party has determined, in good faith, that the contest will not result in a material risk of the loss or forfeiture of its Unit 2 Ownership Interest (unless Tax Indemnifying Party has provided to such Tax Indemnitee Party a bond or other sufficient protection against such risk of loss or forfeiture reasonably satisfactory to such Tax Indemnitee) or the imposition of criminal penalties; (v) if such contest is to be initiated by the payment of, and the claiming of a refund for such Taxes, Tax Indemnifying Party shall advance the amount thereof plus, interest, penalties and additions to Tax with respect thereof to such Tax Indemnitee Party on an interest free basis with no additional after-tax cost to such Tax Indemnitee Party to make such payment and shall indemnify such Tax Indemnitee Party against any adverse tax consequences arriving from such advance (and if such contest is finally determined adversely, the amount of such loan shall be applied against Tax Indemnifying Party’s obligation to indemnify such Tax Indemnitee Party for a Tax which was the subject of such contest), and (vi) in the case of an income tax contest, Tax Indemnifying Party shall have acknowledged in writing its liability to indemnify the Tax Indemnitee Party in respect of such contested Tax in the event such contest is unsuccessful; provided, that Tax Indemnifying Party shall not be bound by such acknowledgment to the extent there is a Final Determination of the contest which clearly demonstrates that the Tax Indemnitee Party is not liable for such Tax. If requested by Tax Indemnifying Party in writing, such Tax Indemnitee Party will appeal (or, if desired by such Tax Indemnitee, permit Tax Indemnifying Party to appeal) any adverse judicial determination, provided that such Tax Indemnitee Party shall receive an opinion of its independent tax counsel selected by such Tax Indemnitee Party and any applicable interest and penalties) previously paid or advanced by Prime with respect reasonably acceptable to such adjustment or Tax Indemnifying Party to the contest effect that it is more likely than not under the ABA Standards and within the meaning of Code Section 6662 that a favorable result will result from such adjustmentappeal. A Tax Indemnitee Party shall not be required to appeal any adverse judicial determination to the United States Supreme Court.
Appears in 1 contract
Contest Provisions. a. The New General Partner shall be entitled if, subsequent to contestthe Closing, as tax matters partner of CTA in accordance with the CTA Agreement as part of Purchaser or the unified audit of CTA, any claim in respect of any "partnership" item of CTA that, if successful, would result in a Tax Event (a "Partnership Level Issue"). Each Indemnitee shall take such action or refrain from taking such action as may be reasonably necessary in order to cause each item which is the subject of a potential Tax Event to be contested as a Partnership Level Issue. If the New General Partner contests a Partnership Level Issue that, if successful, would result in a Tax Event, Prime's obligation to pay any Tax Indemnity Amounts shall, at Prime's election, be deferred until thirty (30) days after a Final Determination of the Indemnitees' respective federal income tax liabilities in respect Company receives notice of a Tax Event, provided that, upon receipt of the 30-day letter from the Internal Revenue Service, Prime furnishes the Indemnification Security.
b. If an audit or proceeding involving a potential Tax Event is being conducted in a proceeding involving an Indemnitee, which cannot be transferred to CTA as a partnership item (an "Indemnitee Level Issue"), such Indemnitee hereby agrees to promptly notify Prime in writing of such adjustment, and such Indemnitee shall tender the defense of such Indemnitee Level Issue to such legal counsel as Prime may select and which is reasonably acceptable to such Indemnitee ("Contest Counsel"). Such Indemnitee agrees to reasonably cooperate with Contest Counsel in connection with any such proceedings and to follow the advice of Contest Counsel with respect to decisions as to whether to contest such Indemnitee Level Issue, the extent and choice of forum with respect to such contest and other material issues relating thereto. Contest Counsel shall represent an Indemnitee only in connection with such issues as could potentially result in a Tax Event with respect to such Indemnitee, and, unless such Indemnitee, in its sole discretion, otherwise consents, Contest Counsel shall not represent such Indemnitee with respect to any other issuesperiod with respect to which the Purchaser can claim a right to indemnification relating to Taxes under this Agreement, without regard to whether such other issues are being concurrently challenged by the Internal Revenue Service or other tax authority or appear on the same tax return as the Indemnitee Level Issue in question. Each Indemnitee shall make available to Contest Counsel copies then within ten (10) Business Days after receipt of such Indemnitee's tax returns notice, the Purchaser shall notify the Sellers' Agent of such notice. The Sellers' Agent may elect to control the conduct and other information and materials pertinent resolution of such Pre-Closing Tax Period contest solely to the extent that such Tax contest relates to a Pre-Closing Tax Period provided that (i) the Sellers' Agent shall permit the Purchaser to participate in such Pre-Closing Tax Period contest (using counsel of its own choosing), (ii) Sellers' Agent shall keep the Indemnitee Level Issue; provided, however, if any information relating to matters other than the Indemnitee Level Issue in question are included in materials furnished to Contest Counsel, such materials shall be furnished only upon the agreement by Contest Counsel to maintain such information Purchaser reasonably informed of all material developments on a strictly confidential timely basis and with respect to not disclose any such information to Pre-Closing Tax Period contest, and (iii) the Sellers' Agent shall not enter into any person (including without limitation Primesettlement of, New General Partner otherwise compromise or abandon any Affiliates of either of them) Pre-Closing Tax Period contest without the prior written consent of the Purchaser, which consent shall not be unreasonably withheld, conditioned or delayed. With respect to any Tax contest (i) involving Tax matters or items that could reasonably be expected to form the basis for a claim of indemnification against the Sellers pursuant to this Agreement and (ii) that the Sellers' Agent does not or cannot elect to control pursuant to the preceding clause, the Purchaser will control such Indemnitee.
c. If Prime recommends acceptance of a Tax contest, including the defense and settlement offer in respect of an Indemnitee Level Issue or if the New General Partner recommends the acceptance of a settlement offer in respect of a Partnership Level Issue, but the Indemnitees decline to accept such offer in writing within 30 days thereof; provided that (i) the obligation Purchaser shall permit the Sellers' Agent to participate in such Tax contest (using counsel of Prime its own choosing), (ii) the Purchaser shall keep the Sellers' Agent reasonably informed of all material developments on a timely basis with respect 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 proceedings terminated on the basis recommended by Prime or the New General Partner, as applicableTax contest, and (iiiii) the Purchaser shall not enter into any settlement of, otherwise compromise or abandon any such Tax contest without the prior written consent of the Sellers' Agent, which consent shall not be unreasonably withheld, conditioned or delayed. Each party (in the case of an Indemnitee Level Issuethe Sellers' Agent, Prime on behalf of the Sellers) shall have no further liability bear its own costs for costs or other expenses participating in respect such Tax contest. To the extent of such contest.
d. Notwithstanding the foregoing, neither Indemnitee will have any obligation to contest any action with respect to an Indemnitee Level Issue (i) unless such items could give rise to a federal income tax liability (disregarding other items in the assessment inconsistency between this clause 8.7 and considering effects in future years) in excess of $25,000, (ii) unless Prime furnishes the Indemnification Security as set forth herein, (iii) without Prime 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 (subject to the agreement by Prime to not litigate in Tax Court, which agreement may be withheld in Prime's sole discretion)clause 9.3, the amount provisions of tax (and any applicable interest and penalties) for which refund is claimed, and (iv) to the extent such Indemnitee waives in writing Prime's obligation to indemnify such Indemnitee for such items, in which case all third-party costs and out-of-pocket expenses described in this clause (iii) thereafter incurred by such Indemnitee and all taxes of such Indemnitee would be paid by such Indemnitee8.7 shall control.
e. An Indemnitee shall not settle any Indemnitee Level Issue without Prime's prior written consent; provided that an Indemnitee shall not be required to contest any proposed adjustment and may settle any such proposed adjustment if such Indemnitee shall waive his right to indemnity under this Agreement with respect to such adjustment and any Tax Event that results from such adjustment and, in the case of proceedings before the Court of Federal Claims or Federal District Court, shall pay to Prime the amount of tax (and any applicable interest and penalties) previously paid or advanced by Prime with respect to such adjustment or the contest of such adjustment.
Appears in 1 contract
Samples: Binding Offer to Purchase (Ultimate Software Group Inc)
Contest Provisions. a. The New General Partner shall be entitled to contest, as tax matters partner of CTA in accordance with the CTA Agreement as part of the unified audit of CTA, any claim in respect of any "partnership" item of CTA that, if successful, would result in If requested by a Tax Event (a "Partnership Level Issue"). Each Indemnitee shall take such action or refrain from taking such action as may be reasonably necessary in order to cause each item which is the subject of a potential Tax Event to be contested as a Partnership Level Issue. If the New General Partner contests a Partnership Level Issue that, if successful, would result in a Tax Event, Prime's obligation to pay any Tax Indemnity Amounts shall, at Prime's election, be deferred until thirty (30) Indemnifying Party within 30 days after a Final Determination of the Indemnitees' respective federal income tax liabilities in respect of a Tax Event, provided that, upon receipt of the 30-day letter from the Internal Revenue Service, Prime furnishes the Indemnification Security.
b. If an audit or proceeding involving a potential Tax Event is being conducted in a proceeding involving an Indemnitee, which cannot be transferred to CTA as a partnership item (an "Indemnitee Level Issue")Adjustment Notice, such Tax Indemnitee hereby agrees Party shall in good faith contest, or (if desired by such Tax Indemnitee) permit a Tax Indemnifying Party to promptly notify Prime in writing of such adjustmentcontest the validity, applicability, and such Indemnitee shall tender the defense amount of such Indemnitee Level Issue any proposed adjustment that would give rise to such legal counsel as Prime may select and which is reasonably acceptable to such Indemnitee ("Contest Counsel"). Such Indemnitee agrees to reasonably cooperate with Contest Counsel in connection with any such proceedings and to follow the advice of Contest Counsel with respect to decisions as to whether to contest such Indemnitee Level Issue, the extent and choice of forum with respect to such contest and other material issues relating thereto. Contest Counsel shall represent an Indemnitee only in connection with such issues as could potentially result in a Tax or Inclusion Event with respect to such Indemnitee, andby (a) not making payment thereof for at least 30 days after providing the Adjustment Notice, unless such Indemniteeotherwise required by applicable Law, (b) not paying same except under protest, if protest is necessary and proper, or (c) if payment is made, using reasonable efforts to obtain a refund thereof in its sole discretion, otherwise consents, Contest Counsel shall not represent such Indemnitee with respect to any other issues, without regard to whether such other issues are being concurrently challenged by the Internal Revenue Service or other tax authority or appear on the same tax return as the Indemnitee Level Issue in question. Each Indemnitee shall make available to Contest Counsel copies of such Indemnitee's tax returns appropriate administrative and other information and materials pertinent to the contest of the Indemnitee Level Issuejudicial proceedings; provided, however, if any information relating to matters other than the Indemnitee Level Issue in question are included in materials furnished to Contest Counsel, such materials shall be furnished only upon the agreement by Contest Counsel to maintain such information on a strictly confidential basis and to not disclose any such information to any person (including without limitation Prime, New General Partner or any Affiliates of either of them) without the prior written consent of such Indemnitee.
c. If Prime recommends acceptance of a settlement offer in respect of an Indemnitee Level Issue or if the New General Partner recommends the acceptance of a settlement offer in respect of a Partnership Level Issue, but the Indemnitees decline to accept such offer in writing within 30 days that (i) the obligation of Prime 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 proceedings terminated on the basis recommended by Prime or the New General Partner, as applicable, and (ii) in the case of an Indemnitee Level Issueincome tax contest, Prime shall have no further liability for costs or other expenses in respect as a condition to the commencement of such contest.
d. Notwithstanding , such Tax Indemnitee Party shall have received a written opinion of its independent tax counsel selected by such Tax Indemnitee Party and reasonably acceptable to Tax Indemnifying Party to the foregoing, neither Indemnitee will have any obligation to contest any action with respect to an Indemnitee Level Issue (i) unless effect that there is a Reasonable Basis for contesting 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 $25,000proposed adjustment, (ii) unless Prime furnishes the Indemnification Security as set forth herein, (iii) without Prime 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 (subject to the agreement by Prime to not litigate in such Tax Court, which agreement may be withheld in Prime's sole discretion), the amount of tax (and any applicable interest and penalties) for which refund is claimed, and (iv) to the extent such Indemnitee waives in writing Prime's obligation to indemnify such Indemnitee for such items, in which case all third-party costs and out-of-pocket expenses described in clause (iii) thereafter incurred by such Indemnitee and all taxes of such Indemnitee would be paid by such Indemnitee.
e. An Indemnitee shall not settle any Indemnitee Level Issue without Prime's prior written consent; provided that an Indemnitee Party shall not be required to contest any proposed adjustment and may settle any such proposed adjustment if such Indemnitee shall waive his right to indemnity under this Agreement the aggregate amount of the indemnity, on a before-tax basis, together with the amounts payable with respect to such adjustment and any Tax Event that results from such adjustment andfuture related claim, would be less than $100,000 in the case of proceedings before an administrative contest or less than $250,000 in the Court case of Federal Claims or Federal District Courta judicial contest, (iii) Tax Indemnifying Party shall have agreed in writing to pay to Prime such Tax Indemnitee, on demand, all reasonable out-of-pocket costs and expenses which such Tax Indemnitee Party incurs in connection with and reasonably allocable to contesting such adjustment, including all reasonable legal, accountants’, and investigatory fees and disbursements; (iv) the Tax Indemnitee Party has determined, in good faith, that the contest will not result in a material risk of the loss or forfeiture of its Xxxx 0 Facility Ownership Interest (unless Tax Indemnifying Party has provided to such Tax Indemnitee Party a bond or other sufficient protection against such risk of loss or forfeiture reasonably satisfactory to such Tax Indemnitee) or the imposition of criminal penalties; (v) if such contest is to be initiated by the payment of, and the claiming of a refund for such Taxes, Tax Indemnifying Party shall advance the amount thereof plus, interest, penalties and additions to Tax with respect thereof to such Tax Indemnitee Party on an interest free basis with no additional after-tax cost to such Tax Indemnitee Party to make such payment and shall indemnify such Tax Indemnitee Party against any adverse tax consequences arriving from such advance (and if such contest is finally determined adversely, the amount of such loan shall be applied against Tax Indemnifying Party’s obligation to indemnify such Tax Indemnitee Party for a Tax which was the subject of such contest), and (vi) in the case of an income tax contest, Tax Indemnifying Party shall have acknowledged in writing its liability to indemnify the Tax Indemnitee Party in respect of such contested Tax in the event such contest is unsuccessful; provided, that Tax Indemnifying Party shall not be bound by such acknowledgment to the extent there is a Final Determination of the contest which clearly demonstrates that the Tax Indemnitee Party is not liable for such Tax. If requested by Tax Indemnifying Party in writing, such Tax Indemnitee Party will appeal (or, if desired by such Tax Indemnitee, permit Tax Indemnifying Party to appeal) any adverse judicial determination, provided that such Tax Indemnitee Party shall receive an opinion of its independent tax counsel selected by such Tax Indemnitee Party and any applicable interest and penalties) previously paid or advanced by Prime with respect reasonably acceptable to such adjustment or Tax Indemnifying Party to the contest effect that it is more likely than not under the ABA Standards and within the meaning of Code Section 6662 that a favorable result will result from such adjustmentappeal. A Tax Indemnitee Party shall not be required to appeal any adverse judicial determination to the United States Supreme Court.
Appears in 1 contract
Samples: Ownership Agreement (Mge Energy Inc)
Contest Provisions. a. The New General Partner Buyer shall promptly notify the Seller Representative in writing upon receipt by Buyer or the Company of notice of any pending or threatened federal, state, local or foreign income or franchise Tax audits or assessments which may materially affect the Taxes and other Losses of the Company for which Sellers would be required to indemnify Buyer pursuant to Section 7 (a “Tax Claim”); provided that failure to comply with this provision shall not affect Buyer’s right to indemnification hereunder. Buyer shall have the right to represent the interests of the Company in any Tax Claim; provided, that with respect to any such Tax Claim for which Sellers may have liability under this Agreement, the Seller Representative may, at its election, control the disposition of such Tax Claim to the extent Seller Representative acknowledges Sellers’ liability with respect to such Tax Claim and provides collateral reasonably acceptable to Buyer in an amount equal to the maximum amount for which Sellers could be liable with respect to such Tax Claim (as determined by Buyer in its reasonable discretion). In the event the Seller Representative elects to control any Tax Claim pursuant to the terms of this Section 6.1(c), then (i) Buyer shall be entitled to contest, as tax matters partner of CTA participate in accordance with the CTA Agreement as part of the unified audit of CTA, any claim in respect of any "partnership" item of CTA that, if successful, would result in a Tax Event (a "Partnership Level Issue"). Each Indemnitee shall take such action or refrain from taking such action as may be reasonably necessary in order to cause each item which is the subject of a potential Tax Event to be contested as a Partnership Level Issue. If the New General Partner contests a Partnership Level Issue that, if successful, would result in a Tax Event, Prime's obligation to pay any Tax Indemnity Amounts shall, at Prime's election, be deferred until thirty (30) days after a Final Determination of the Indemnitees' respective federal income tax liabilities in respect of a Tax Event, provided that, upon receipt of the 30-day letter from the Internal Revenue Service, Prime furnishes the Indemnification Security.
b. If an audit or proceeding involving a potential Tax Event is being conducted in a proceeding involving an Indemnitee, which cannot be transferred to CTA as a partnership item (an "Indemnitee Level Issue"), such Indemnitee hereby agrees to promptly notify Prime in writing of such adjustment, and such Indemnitee shall tender the defense of such Indemnitee Level Issue to such legal counsel as Prime may select and which is reasonably acceptable to such Indemnitee ("Contest Counsel"). Such Indemnitee agrees to reasonably cooperate with Contest Counsel in connection with any such proceedings contest; (ii) Seller Representative shall keep Buyer reasonably informed and to follow consult with the advice of Contest Counsel with respect to decisions as to whether to contest such Indemnitee Level Issue, the extent Buyer and choice of forum with respect to such contest and other material issues relating thereto. Contest Counsel shall represent an Indemnitee only in connection with such issues as could potentially result in a Tax Event with respect to such Indemnitee, and, unless such Indemnitee, in its sole discretion, otherwise consents, Contest Counsel shall not represent such Indemnitee tax advisors with respect to any other issues, without regard issue relating to whether such other issues are being concurrently challenged by the Internal Revenue Service or other tax authority or appear on the same tax return as the Indemnitee Level Issue in question. Each Indemnitee Tax Claims; (iii) Seller Representative shall make available to Contest Counsel provide Buyer with copies of such Indemnitee's tax returns all correspondence, notices and other information written materials received from any governmental authority relating to such Tax Claim and materials pertinent shall otherwise keep the Seller Representative and its tax advisors promptly advised of significant developments and significant communications involving representatives shall not be entitled of the governmental authority with respect thereto; (iv) Seller Representative shall provide Buyer with a copy of any written submission to a governmental authority prior to the contest of the Indemnitee Level Issue; provided, however, if any information relating to matters other than the Indemnitee Level Issue in question are included in materials furnished to Contest Counsel, such materials submission thereof and shall be furnished only upon the agreement by Contest Counsel to maintain such information on a strictly confidential basis give serious and to not disclose any such information good faith consideration to any person comments or suggested revisions that Buyer or its tax advisors may have with respect thereto; and (including without limitation Prime, New General Partner or any Affiliates of either of themiv) Seller Representative shall not settle such Tax Claim without the prior written consent of such Indemnitee.
c. If Prime recommends acceptance of a settlement offer in respect of an Indemnitee Level Issue or if the New General Partner recommends the acceptance of a settlement offer in respect of a Partnership Level Issue, but the Indemnitees decline to accept such offer in writing within 30 days (i) the obligation of Prime 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 proceedings terminated on the basis recommended by Prime or the New General Partner, as applicable, and (ii) in the case of an Indemnitee Level Issue, Prime shall have no further liability for costs or other expenses in respect of such contest.
d. Notwithstanding the foregoing, neither Indemnitee will have any obligation to contest any action with respect to an Indemnitee 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) unless Prime furnishes the Indemnification Security as set forth herein, (iii) without Prime 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 (subject to the agreement by Prime to not litigate in Tax CourtBuyer, which agreement may be withheld in Prime's sole discretion), the amount of tax (and any applicable interest and penalties) for which refund is claimed, and (iv) to the extent such Indemnitee waives in writing Prime's obligation to indemnify such Indemnitee for such items, in which case all third-party costs and out-of-pocket expenses described in clause (iii) thereafter incurred by such Indemnitee and all taxes of such Indemnitee would be paid by such Indemnitee.
e. An Indemnitee shall not settle any Indemnitee Level Issue without Prime's prior written consent; provided that an Indemnitee consent shall not be required to contest any proposed adjustment and may settle any such proposed adjustment if such Indemnitee shall waive his right to indemnity under this Agreement with respect to such adjustment and any Tax Event that results from such adjustment and, in the case of proceedings before the Court of Federal Claims unreasonably withheld or Federal District Court, shall pay to Prime the amount of tax (and any applicable interest and penalties) previously paid or advanced by Prime with respect to such adjustment or the contest of such adjustmentdelayed.
Appears in 1 contract
Contest Provisions. a. The New General Partner (i) Each of Buyer, on one hand, and each Seller, on the other hand, shall be entitled to contest, as tax matters partner of CTA promptly notify the other in accordance with the CTA Agreement as part of the unified audit of CTA, any claim in respect of any "partnership" item of CTA that, if successful, would result in a Tax Event (a "Partnership Level Issue"). Each Indemnitee shall take such action or refrain from taking such action as may be reasonably necessary in order to cause each item which is the subject of a potential Tax Event to be contested as a Partnership Level Issue. If the New General Partner contests a Partnership Level Issue that, if successful, would result in a Tax Event, Prime's obligation to pay any Tax Indemnity Amounts shall, at Prime's election, be deferred until thirty (30) days after a Final Determination of the Indemnitees' respective federal income tax liabilities in respect of a Tax Event, provided that, writing upon receipt of the 30-day letter from the Internal Revenue Service, Prime furnishes the Indemnification Securitynotice of any pending or threatened audits or assessments with respect to Taxes for which such other party (or such other party’s Affiliates) may be liable hereunder.
b. If an audit (ii) Each Seller (at its sole cost and expense) shall have the right to control all applicable Tax proceedings and may make any decisions in connection with any applicable Tax proceeding related to a Pre-Closing Tax Period or proceeding involving a potential Consolidated Tax Event is being conducted Return; provided that: (A) the Buyer Indemnified Parties may at their own expense participate in a proceeding involving an Indemniteethe proceedings related to such Tax proceeding, which cannot be transferred (B) such Seller shall keep the Buyer Indemnified Parties reasonably and timely informed with respect to CTA as a partnership item (an "Indemnitee Level Issue")the commencement, such Indemnitee hereby agrees to promptly notify Prime in writing status and nature of such adjustmentTax proceeding, and (C) such Indemnitee Seller shall tender consider any reasonable comments proposed by the Buyer Indemnified Parties that are related to the defense of such Indemnitee Level Issue Tax proceeding, and (D) such Seller shall not settle, compromise or dispose of such Tax proceeding if such settlement, compromise or disposition would reasonably be expected to adversely affect the Tax Liability of the Buyer Indemnified Parties in a Post-Closing Tax Period without the prior written consent of the Buyer Indemnified Parties, such legal counsel as Prime consent not to be unreasonably withheld, conditioned or delayed, provided, however, that with respect to Consolidated Tax Returns for any Pre-Closing Tax Period, none of clause (D) above shall apply.
(iii) With respect to any Tax proceeding related to a Straddle Period (other than a Tax with respect to a Consolidated Tax Return), Buyer shall have the right to control all proceedings and may select and which is reasonably acceptable to such Indemnitee ("Contest Counsel"). Such Indemnitee agrees to reasonably cooperate with Contest Counsel make any decisions in connection with any such proceedings and to follow the advice of Contest Counsel with respect to decisions as to whether to contest such Indemnitee Level Issue, the extent and choice of forum with respect Tax proceeding related to such contest and other material issues relating thereto. Contest Counsel shall represent an Indemnitee only in connection with such issues as could potentially result in a Tax Event with respect to such Indemnitee, and, unless such Indemnitee, in its sole discretion, otherwise consents, Contest Counsel shall not represent such Indemnitee with respect to any other issues, without regard to whether such other issues are being concurrently challenged by the Internal Revenue Service or other tax authority or appear on the same tax return as the Indemnitee Level Issue in question. Each Indemnitee shall make available to Contest Counsel copies of such Indemnitee's tax returns and other information and materials pertinent to the contest of the Indemnitee Level IssueStraddle Period; provided, however, if any information relating that, (A) each applicable Seller may at its own expense participate in the proceedings related to matters other than such Tax proceeding, (B) Buyer shall keep such Seller reasonably and timely informed with respect to the Indemnitee Level Issue in question are included in materials furnished to Contest Counselcommencement, status and nature of such materials Tax proceeding, and (C) Buyer shall be furnished only upon the agreement by Contest Counsel to maintain not settle, compromise or dispose of such information on a strictly confidential basis and to not disclose any such information to any person (including without limitation Prime, New General Partner or any Affiliates of either of them) Tax proceeding without the prior written consent of such IndemniteeSeller, such consent not to be unreasonably withheld, conditioned, or delayed.
c. If Prime recommends acceptance of a settlement offer in respect of an Indemnitee Level Issue or if the New General Partner recommends the acceptance of a settlement offer in respect of a Partnership Level Issue, but the Indemnitees decline to accept such offer in writing within 30 days (i) the obligation of Prime 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 proceedings terminated on the basis recommended by Prime or the New General Partner, as applicable, and (ii) in the case of an Indemnitee Level Issue, Prime shall have no further liability for costs or other expenses in respect of such contest.
d. Notwithstanding the foregoing, neither Indemnitee will have any obligation to contest any action with respect to an Indemnitee 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) unless Prime furnishes the Indemnification Security as set forth herein, (iii) without Prime 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 (subject to the agreement by Prime to not litigate in Tax Court, which agreement may be withheld in Prime's sole discretion), the amount of tax (and any applicable interest and penalties) for which refund is claimed, and (iv) The Buyer Indemnified Parties shall have the right to the extent such Indemnitee waives in writing Prime's obligation to indemnify such Indemnitee for such items, in which case control all third-party costs and out-of-pocket expenses described in clause (iii) thereafter incurred by such Indemnitee and all taxes of such Indemnitee would be paid by such Indemnitee.
e. An Indemnitee shall not settle any Indemnitee Level Issue without Prime's prior written consent; provided that an Indemnitee shall not be required to contest any proposed adjustment proceedings and may settle make any such proposed adjustment if such Indemnitee shall waive his right to indemnity under this Agreement decisions in connection with respect to such adjustment and any all Tax Event proceedings for Post-Closing Tax Periods that results from such adjustment and, in the case of proceedings before the Court of Federal Claims or Federal District Court, shall pay to Prime the amount of tax (and any applicable interest and penalties) previously paid or advanced by Prime with respect to such adjustment or the contest of such adjustmentdo not include a Straddle Period.
Appears in 1 contract
Samples: Stock Purchase Agreement (Liberty Latin America Ltd.)
Contest Provisions. a. (a) The New General Partner Owner Participant shall be entitled to contest, as tax matters partner notify the Lessee within 30 days of CTA in accordance with receipt from the CTA Agreement as part of the unified audit of CTA, any claim in respect of any "partnership" item of CTA that, if successful, would result in a Tax Event (a "Partnership Level Issue"). Each Indemnitee shall take such action or refrain from taking such action as may be reasonably necessary in order to cause each item which is the subject Internal Revenue Service of a potential Tax Event to be contested as written proposed or final revenue agent's report, a Partnership Level Issue. If the New General Partner contests a Partnership Level Issue that, if successful, would result in a Tax Event, Prime's obligation to pay any Tax Indemnity Amounts shall, at Prime's election, be deferred until thirty (30) days after a Final Determination of the Indemnitees' respective federal income tax liabilities in respect of a Tax Event, provided that, upon receipt of the 30-day letter or a notice of deficiency (as described in Section 6212 of the Code), in which an adjustment is proposed to the federal income taxes of the Owner Participant for which the Lessee would be required to indemnify the Owner Participant pursuant to this Agreement. The failure of the Owner Participant to promptly notify the Lessee pursuant to the preceding sentence shall not relieve the Lessee of its obligation to indemnify the Owner Participant pursuant to this Agreement, except to the extent such failure materially adversely impairs the Lessee's ability to contest such adjustment. If, within 15 days of receipt of notice from the Owner Participant, Lessee requests, in writing, the Owner Participant to do so, the Owner Participant shall contest the proposed adjustment, shall consider in good faith any suggestions made by the Lessee as to the method of pursuing such contest, and, provided the Lessee is complying with its obligations under this Section 7, shall not, without the consent of the Lessee, except as provided in this Section 7(a), settle such proposed adjustment; PROVIDED, HOWEVER, that the Owner Participant shall not be obligated to contest such adjustment unless (i) Owner Participant shall have received a written opinion of independent tax counsel selected by the Owner Participant and reasonably acceptable to the Lessee ("Tax Counsel") that there is a Reasonable Basis for contesting the matter in question, (ii) the amount of the indemnity potentially payable by Lessee in respect of such adjustment is in excess of $75,000, (iii) no Lease Event of Default shall have occurred and be continuing (PROVIDED, HOWEVER, that if a Lease Event of Default other than as a result of a payment default or bankruptcy shall exist, the foregoing restriction shall not apply if the Lessee posts a bond to secure payment of amounts that will fall due in the event of an adverse resolution of the controversy), (iv) the Owner Participant has determined, in good faith, that the contest shall not result in a material risk of the loss or forfeiture of the Aircraft (unless the Lessee has provided to the Owner Participant a bond or other sufficient protection against such risk of loss or forfeiture reasonably satisfactory to the Owner Participant) or the imposition of criminal penalties and (v) the Lessee shall have acknowledged, in writing, that the contest is with respect to a liability that is the Lessee's responsibility pursuant to this Agreement except that the Lessee shall not be bound by its acknowledgment of liability to the extent that the Final Determination articulates conclusions of law and fact that clearly and unambiguously demonstrate that the Lessee is not liable under this Agreement for the contested amounts hereunder. The Owner Participant shall afford Lessee reasonable opportunities to consult with Owner Participant and shall keep Lessee reasonably informed regarding communications from the Internal Revenue Service, Prime furnishes the Indemnification Security.
b. If an audit or proceeding involving a potential Tax Event is being conducted in a proceeding involving an Indemnitee, which cannot be transferred to CTA as a partnership item (an "Indemnitee Level Issue"), such Indemnitee hereby agrees to promptly notify Prime in writing of such adjustment, and such Indemnitee shall tender the defense of such Indemnitee Level Issue to such legal counsel as Prime may select and which is reasonably acceptable to such Indemnitee ("Contest Counsel"). Such Indemnitee agrees to reasonably cooperate with Contest Counsel in connection with any judicial proceeding, and the nature of all actions proposed to be taken to contest such proceedings proposed adjustment and consider in good faith such requests as the Lessee shall make concerning the most appropriate forum and manner in which to follow proceed, including (w) the advice arguments to be made in contesting the proposed adjustment, (x) whether any action to contest such proposed adjustment will initially be by way of Contest Counsel judicial or administrative proceedings, or both, (y) whether any such proposed adjustment will be contested by resisting payment thereof or by paying the same and seeking a refund thereof and (z) if the Owner Participant shall undertake judicial action with respect to decisions as such proposed adjustment, the court or other judicial body before which such action will be commenced; but in all cases the Owner Participant shall have ultimate discretion to determine the nature (and forum) of, and shall control the prosecution of, all such actions. The Owner Participant shall, if requested by the Lessee in a timely written request, seek judicial review of any adverse administrative determination and shall, if Tax Counsel is of the opinion that such appeal is more likely than not to prevail, appeal an adverse determination by any judicial court; PROVIDED, HOWEVER, that the Owner Participant shall not be required to appeal, or seek leave to appeal, an adverse determination to the United States Supreme Court. At any time, whether before or after commencing to take the action set forth in this Section 7, the Owner Participant may decline to contest or appeal all or any portion of a proposed adjustment, or may compromise or settle any such Indemnitee Level Issueproposed adjustment, by notifying the extent and choice Lessee in writing that the Lessee is relieved of forum its obligation to indemnify the Owner Participant with respect to such adjustment or such portion, as the case may be; PROVIDED, HOWEVER, that the Lessee shall not be obligated to indemnify the Owner Participant hereunder with respect to any other Tax Loss for which a successful contest or appeal is foreclosed as a result of the failure to take action with respect to such contest and other material issues relating thereto. Contest Counsel shall represent an Indemnitee only in connection with such issues as could potentially result in a Tax Event with respect to such Indemnitee, and, unless such Indemnitee, in its sole discretion, otherwise consents, Contest Counsel shall not represent such Indemnitee with respect to any other issues, without regard to whether such other issues are being concurrently challenged by or appeal (or the Internal Revenue Service settlement or other tax authority or appear on the same tax return as the Indemnitee Level Issue in question. Each Indemnitee shall make available to Contest Counsel copies compromise of such Indemnitee's tax returns and other information and materials pertinent to the contest of the Indemnitee Level Issue; provided, however, if any information relating to matters other than the Indemnitee Level Issue in question are included in materials furnished to Contest Counsel, such materials shall be furnished only upon the agreement by Contest Counsel to maintain such information on a strictly confidential basis and to not disclose any such information to any person (including without limitation Prime, New General Partner or any Affiliates of either of them) without the prior written consent of such Indemnitee.
c. If Prime recommends acceptance of a settlement offer in respect of an Indemnitee Level Issue or if the New General Partner recommends the acceptance of a settlement offer in respect of a Partnership Level Issue, but the Indemnitees decline to accept such offer in writing within 30 days (i) the obligation of Prime to make indemnity payments as the result of any such contest or proceedings shall not thereafter exceed appeal without the obligation that it would have had if such contest had been settled or proceedings terminated on consent of the basis recommended by Prime or the New General Partner, as applicableLessee), and the Owner Participant shall repay to the Lessee such amounts theretofore advanced or paid by the Lessee related to such adjustment, contest or appeal (ii) other than amounts described in the case first sentence of an Indemnitee Level Issue, Prime shall have no further liability for costs or other expenses in respect of such contest.
d. Section 7(b)). Notwithstanding the foregoing, neither Indemnitee will have any obligation if the Owner Participant notifies the Lessee that it does not wish to contest any action an issue which the Owner Participant has previously contested in accordance with respect to an Indemnitee Level Issue (i) unless such items could give rise to a federal income tax liability (disregarding other items in the assessment this Section 7 and considering effects in future years) in excess of $25,000, (ii) unless Prime furnishes the Indemnification Security as set forth herein, (iii) without Prime 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 (subject which was resolved adversely to the agreement by Prime to Owner Participant for an earlier taxable year in a judicial proceeding, then unless the Owner Participant shall have received an opinion of Tax Counsel that as a result of a change in law, it is more likely than not litigate that a contest of the matter in Tax Court, which agreement may question will be withheld in Prime's sole discretion)successful, the amount of tax (and any applicable interest and penalties) for which refund is claimed, and (iv) to the extent such Indemnitee waives in writing Prime's obligation to indemnify such Indemnitee for such items, in which case all third-party costs and out-of-pocket expenses described in clause (iii) thereafter incurred by such Indemnitee and all taxes of such Indemnitee would be paid by such Indemnitee.
e. An Indemnitee shall not settle any Indemnitee Level Issue without Prime's prior written consent; provided that an Indemnitee Owner Participant shall not be required to contest such issue.
(b) The Owner Participant shall not be required to take any action pursuant to this Section 7 unless and until the Lessee shall have agreed in writing to reimburse the Owner Participant in a manner reasonably satisfactory to Owner Participant (on demand and on a basis grossed-up for all applicable federal, state, local and foreign taxes) for all reasonable out-of-pocket fees and expenses, any statutory or regulatory penalties, interest, additions to tax, or other similar liabilities, costs or losses which the Owner Participant may incur as a result of contesting the validity of any proposed adjustment (including, without limitation, any reasonable fees and may settle disbursements of outside counsel incurred in connection with taking any action or rendering any opinion described in Section 7(a)). If the Owner Participant determines to contest any adjustment by paying the additional tax and suing for a refund, the Lessee shall timely lend to the Owner Participant on an interest-free basis an amount equal to the sum of any tax, interest, penalties and additions to tax required to be paid and shall indemnify the Owner Participant in a manner reasonably satisfactory to the Owner Participant against any adverse tax consequences resulting from such advance. Upon receipt by the Owner Participant of a refund (or upon application of an amount otherwise refundable against another tax liability of the Owner Participant) of any amount paid by it, in respect of which amount the Owner Participant shall have been paid or advanced an equivalent amount by the Lessee, the Owner Participant shall pay to the Lessee the amount of such refund (plus any amounts otherwise refundable but applied against another tax liability of the Owner Participant) (which, in the case of any contest in which a loan has been advanced pursuant to this paragraph, shall be deemed to be in repayment of the loan advanced by the Lessee to the extent fairly attributable thereto), together with any interest received (including by way of credit or offset) by the Owner Participant on such refund or application that is fairly attributable to the amount and the period of such payment or advance by the Lessee (net of any taxes incurred by the Owner Participant with respect to the receipt or accrual of such interest), plus any net additional federal, state, local and foreign tax benefits actually realized by the Owner Participant as the result of such payment (or any payment under this paragraph); and, upon disallowance of any such proposed adjustment refund, the Lessee shall forgive the amount of the loan fairly attributable thereto and shall pay to the Owner Participant the balance of the amount of its indemnity obligation hereunder (including such amount as shall be equal to the sum, on an after-tax basis, of any tax, interest, penalties or additions to tax payable with respect to the forgiveness of such loan) or if such Indemnitee advance exceeds the amount of such indemnity obligation, the Owner Participant shall waive his right pay such excess to indemnity the Lessee. Any subsequent loss of such refund shall be treated as a Tax Loss subject to indemnification pursuant to Section 5 hereof without regard to Section 6 (other than Sections 6(c) or (h)) hereof of this Section 7.
(c) If any adjustment referred to in this Section 7 shall be proposed and the Lessee shall have requested the Owner Participant to contest such adjustment as above provided and the Lessee shall have duly complied with its obligations under this Agreement Section 7, then notwithstanding any provision to the contrary in Section 5 hereof, the Lessee's liability with respect to such adjustment and any Tax Event that results from such adjustment and, in the case of proceedings before the Court of Federal Claims or Federal District Court, shall pay to Prime the amount of tax (and any applicable interest and penalties) previously paid or advanced by Prime with respect to such adjustment or the contest become fixed upon a "Final Determination" of such adjustment.; PROVIDED, HOWEVER, that if the opinion of Tax Counsel provided pursuant to paragraph (a) of this
Appears in 1 contract
Samples: Tax Indemnity Agreement (Republic Airways Holdings Inc)
Contest Provisions. a. The New General Partner shall be entitled to contest, (a) Except as tax matters partner of CTA provided in accordance with the CTA Agreement as part of the unified audit of CTA, any claim in respect of any "partnership" item of CTA that, if successful, would result in a Tax Event (a "Partnership Level Issue"Section 5.3(b) and Section 5.3(c). Each Indemnitee shall take such action or refrain from taking such action as may be reasonably necessary in order to cause each item which is the subject of a potential Tax Event to be contested as a Partnership Level Issue. If the New General Partner contests a Partnership Level Issue that, if successful, would result in a Tax Event, Prime's obligation to pay any Tax Indemnity Amounts shall, at Prime's election, be deferred until thirty (30) days after a Final Determination of the Indemnitees' respective federal income tax liabilities in respect of a Tax Event, provided that, upon receipt of the 30-day letter from the Internal Revenue Service, Prime furnishes the Indemnification Security.
b. If an audit or proceeding involving a potential Tax Event is being conducted in a proceeding involving an Indemnitee, which cannot be transferred to CTA as a partnership item (an "Indemnitee Level Issue"), such Indemnitee hereby agrees to promptly notify Prime in writing of such adjustment, and such Indemnitee shall tender the defense of such Indemnitee Level Issue to such legal counsel as Prime may select and which is reasonably acceptable to such Indemnitee ("Contest Counsel"). Such Indemnitee agrees to reasonably cooperate with Contest Counsel in connection with any such proceedings and to follow the advice of Contest Counsel with respect to decisions as to whether to contest such Indemnitee Level Issue, the extent and choice of forum with respect to such contest and other material issues relating thereto. Contest Counsel shall represent an Indemnitee only in connection with such issues as could potentially result in a Tax Event with respect to such Indemnitee, and, unless such Indemnitee, in its sole discretion, otherwise consents, Contest Counsel shall not represent such Indemnitee with respect to any other issues, without regard to whether such other issues are being concurrently challenged by the Internal Revenue Service or other tax authority or appear on the same tax return as the Indemnitee Level Issue in question. Each Indemnitee shall make available to Contest Counsel copies of such Indemnitee's tax returns and other information and materials pertinent to the contest of the Indemnitee Level Issue; provided, however, if any information relating to matters other than the Indemnitee Level Issue in question are included in materials furnished to Contest Counsel, such materials shall be furnished only upon the agreement by Contest Counsel to maintain such information on a strictly confidential basis and to not disclose any such information to any person (including without limitation Prime, New General Partner or any Affiliates of either of them) without the prior written consent of such Indemnitee.
c. If Prime recommends acceptance of a settlement offer in respect of an Indemnitee Level Issue or if the New General Partner recommends the acceptance of a settlement offer in respect of a Partnership Level Issue, but the Indemnitees decline to accept such offer in writing within 30 days (i) the obligation of Prime 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 proceedings terminated on the basis recommended by Prime or the New General Partner, as applicable, and (ii) in the case of an Indemnitee Level Issue, Prime shall have no further liability for costs or other expenses in respect of such contest.
d. Notwithstanding the foregoing, neither Indemnitee will have any obligation to contest any action with respect to an Indemnitee 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) unless Prime furnishes the Indemnification Security as set forth herein, (iii) without Prime 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 any Tax Proceeding that relates to Taxes for which a Party is responsible under Article II (the Court of Federal Claims or Federal District Court (subject to the agreement by Prime to not litigate in Tax Court, which agreement may be withheld in Prime's sole discretion“Responsible Party”), the amount Responsible Party shall have the exclusive right at its own cost, to control, contest and represent the interests of tax (and any applicable interest and penalties) for which refund is claimedHEI, ASB Hawaii, and their respective Affiliates in any such Tax Proceeding. Subject to Section 5.3(b) and Section 5.3(c), such right to control shall include the right, in the Responsible Party’s reasonable discretion, to resolve, settle or agree to any deficiency, claim or adjustment proposed, asserted or assessed in connection with or as a result of any such Tax Proceeding.
(ivb) Notwithstanding anything to the extent such Indemnitee waives contrary in writing Prime's obligation Section 5.3(a), a Party shall have the right to indemnify such Indemnitee for such items, in which case all third-party costs and out-of-pocket expenses reasonably participate as described in clause (iii) thereafter incurred Section 5.4 in a Tax Proceeding if the consequences of the resolution of such Tax Proceeding could reasonably be expected to affect the Tax liability or Tax Attributes of such Party for any taxable period or give rise to an indemnification obligation by such Indemnitee and all taxes of such Indemnitee would be paid by such IndemniteeParty under this Agreement.
e. An Indemnitee shall not settle any Indemnitee Level Issue without Prime's prior written consent; provided that an Indemnitee shall not be required (c) Notwithstanding anything to contest any proposed adjustment and may settle any such proposed adjustment if such Indemnitee shall waive his right the contrary in Section 5.3(a), but subject to indemnity under this Agreement Section 5.3(b), with respect to such adjustment and any Tax Event that results from Returns for Straddle Periods for members of the Bank Group, ASB Hawaii shall have the right to control and contest any Tax Proceeding related to such adjustment andTax Return; provided, that, at the request of ASB Hawaii, HEI shall actively participate in contesting and defending any such Tax Proceeding. Reasonable documented costs incurred by ASB Hawaii shall be paid and borne by the case Parties in accordance with their relative share of proceedings before the Court reduction of Federal Claims or Federal District Court, shall pay to Prime any Tax liabilities (including the amount avoidance of tax (and any applicable interest and penaltiesincrease in Tax liabilities) previously paid or advanced by Prime with respect to any contests described in this Section 5.3(c). If there is no reduction in Tax liabilities (including the avoidance of any increase in tax liabilities) then any costs incurred resulting from any Tax claim with respect to any contests described in this Section 5.3(c) shall be paid and borne by ASB Hawaii.
(d) HEI shall use reasonable efforts to keep ASB Hawaii advised as to the status of any Tax Proceeding involving any issue that relates to a Tax of ASB Hawaii or any ASB Hawaii Affiliate or that could reasonably be expected to have an adverse Tax effect on ASB Hawaii or any of its Subsidiaries (including by giving rise to a liability under this Agreement), and ASB Hawaii shall use reasonable efforts to keep HEI advised as to the status of any Tax Proceeding involving any issue that relates to a Tax of HEI or any of its Affiliates or that could reasonably be expected to have an adverse Tax effect on HEI or any HEI Subsidiary (including by giving rise to a liability under this Agreement). Each Party shall, on a timely basis, keep the other Party informed of all developments in the Tax Proceeding and provide such adjustment or the contest other Party with copies of such adjustmentall pleadings, briefs, orders, and other correspondence pertaining thereto.
Appears in 1 contract
Contest Provisions. a. (a) The New General Partner Deep Dish Stockholder Representative and Parent shall be entitled give prompt notice to contest, as tax matters partner of CTA in accordance with the CTA Agreement as part of the unified audit of CTA, any claim in respect other of any "partnership" item of CTA that, if successful, would result in a Tax Event (a "Partnership Level Issue"). Each Indemnitee shall take such action or refrain from taking such action as may be reasonably necessary in order to cause each item which is the subject of a potential Tax Event to be contested as a Partnership Level Issue. If the New General Partner contests a Partnership Level Issue that, if successful, would result in a Tax Event, Prime's obligation to pay any Tax Indemnity Amounts shall, at Prime's election, be deferred until thirty (30) days after a Final Determination of the Indemnitees' respective federal income tax liabilities in respect of a Tax Event, provided that, upon receipt of the 30-day letter from the Internal Revenue Service, Prime furnishes the Indemnification Security.
b. If an audit or proceeding involving a potential Tax Event is being conducted in a proceeding involving an Indemnitee, which cannot be transferred to CTA as a partnership item (an "Indemnitee Level Issue"), such Indemnitee hereby agrees to promptly notify Prime in writing of such adjustment, and such Indemnitee shall tender the defense of such Indemnitee Level Issue to such legal counsel as Prime may select and which is reasonably acceptable to such Indemnitee ("Contest Counsel"). Such Indemnitee agrees to reasonably cooperate with Contest Counsel in connection with any such proceedings and to follow the advice of Contest Counsel with respect to decisions as to whether to contest such Indemnitee Level Issue, the extent and choice of forum with respect to such contest and other material issues relating thereto. Contest Counsel shall represent an Indemnitee only in connection with such issues as could potentially result in a Tax Event with respect to such Indemnitee, and, unless such Indemnitee, in its sole discretion, otherwise consents, Contest Counsel shall not represent such Indemnitee with respect to any other issues, without regard Tax Return of Deep Dish or any Deep Dish Subsidiary for a Pre-Closing Tax Period. Parent shall have the right to whether such other issues are being concurrently challenged by control the Internal Revenue Service or other tax authority or appear on the same tax return as the Indemnitee Level Issue in question. Each Indemnitee shall make available to Contest Counsel copies conduct and resolution of such Indemnitee's tax returns and other information and materials pertinent to the contest of the Indemnitee Level IssueTax Contest; provided, however, if the Deep Dish Stockholder Representative may control any information relating such Tax Contest to matters other than the Indemnitee Level Issue extent such Tax Contest could reasonably be expected to result in question are included Taxes payable by the Deep Dish Post-Merger Equityholders pursuant to their indemnification obligations hereunder, but, in materials furnished to Contest Counselsuch case, such materials (i) Parent shall be furnished only upon permitted at its own expense to participate in the agreement portion of such Tax Contest that is controlled by the Deep Dish Stockholder Representative, and (ii) any settlement, compromise, or discharge of such Tax Contest Counsel by the Deep Dish Stockholder Representative shall be subject to maintain such information on a strictly confidential basis and to not disclose any such information to any person (including without limitation Prime, New General Partner or any Affiliates of either of them) without the prior written consent of such IndemniteeParent, not to be unreasonably withheld, conditioned or delayed.
c. If Prime recommends acceptance (b) Thin Crust Equityholder LLC and the Thin Crust Equityholder Corp. Stockholder Representative, on the one hand, and Parent, on the other hand, shall give prompt notice to the other of any Tax Contest with respect to any Tax Return of Thin Crust or any Thin Crust Subsidiary for a settlement offer Pre-Closing Tax Period. Parent shall have the right to control the conduct and resolution of such Tax Contest; provided, however, Thin Crust Equityholder LLC and the Thin Crust Equityholder Corp. Stockholder Representative may control any such Tax Contest to the extent such Tax Contest could reasonably be expected to result in respect Taxes payable by the Thin Crust Equityholders pursuant to their indemnification obligations hereunder or otherwise or payable by ARAMARK Holdings Corporation or any of an Indemnitee Level Issue its Subsidiaries or if any of the New General Partner recommends direct or indirect owners of the acceptance of a settlement offer Thin Crust Equityholders, but, in respect of a Partnership Level Issue, but the Indemnitees decline to accept such offer in writing within 30 days case (i) Parent shall be permitted at its own expense to participate in the obligation portion of Prime to make indemnity payments as such Tax Contest that is controlled by Thin Crust Equityholder LLC and 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 proceedings terminated on the basis recommended by Prime or the New General Partner, as applicableThin Crust Equityholder Corp. Stockholder Representative, and (ii) in the case of an Indemnitee Level Issueany settlement, Prime shall have no further liability for costs compromise, or other expenses in respect discharge of such contestTax Contest by the Thin Crust Equityholder LLC and the Thin Crust Equityholder Corp. Stockholder Representative shall be subject to the prior written consent of Parent, not to be unreasonably withheld, conditioned or delayed.
d. Notwithstanding (c) Thin Crust Equityholder Corp. Stockholder Representative and Parent shall give prompt notice to the foregoing, neither Indemnitee will have other of any obligation to contest any action Tax Contest with respect to an Indemnitee Level Issue (i) unless any Tax Return of Thin Crust Equityholder Corp. for a Pre-Closing Tax Period. Parent shall have the right to control the conduct and resolution of 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 $25,000Tax Contest; provided, (ii) unless Prime furnishes the Indemnification Security as set forth herein, (iii) without Prime 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 (subject to the agreement by Prime to not litigate in Tax Court, which agreement may be withheld in Prime's sole discretion)however, the amount of tax (and Thin Crust Equityholder Corp. Stockholder Representative may control any applicable interest and penalties) for which refund is claimed, and (iv) such Tax Contest to the extent such Indemnitee waives Tax Contest could reasonably be expected to result in writing Prime's obligation Taxes payable by the Thin Crust Equityholder Corp. Stockholders pursuant to indemnify such Indemnitee for such itemstheir indemnification obligations hereunder, but, in which such case all third-party costs and out-of-pocket expenses described (i) Parent shall be permitted at its own expense to participate in clause (iii) thereafter incurred by such Indemnitee and all taxes the portion of such Indemnitee would Tax Contest that is controlled by the Thin Crust Equityholder Corp. Stockholder Representative, and (ii) any settlement, compromise, or discharge of such Tax Contest by the Thin Crust Equityholder Corp. Stockholder Representative shall be paid by such Indemnitee.
e. An Indemnitee subject to the prior written consent of Parent, not to be unreasonably withheld, conditioned or delayed; provided, however, the foregoing shall not settle apply to any Indemnitee Level Issue without Prime's prior written consent; provided that an Indemnitee shall not be Tax Contests relating to any consolidated, combined, unitary or similar Tax Returns filed or required to contest be filed by any proposed adjustment and may settle group the common parent of which is ARAMARK Holdings Corporation or any such proposed adjustment if such Indemnitee of its Subsidiaries), which shall waive his right to indemnity under this Agreement with respect to such adjustment and any Tax Event that results from such adjustment andbe solely controlled by ARAMARK Holdings Corporation of its Subsidiaries (but, in for the case avoidance of proceedings before the Court of Federal Claims or Federal District Courtdoubt, shall pay be subject to Prime the amount of tax (and any applicable interest and penalties) previously paid or advanced by Prime with respect to such adjustment or rights of Parent under the contest of such adjustmentTax Matters Agreement).
Appears in 1 contract
Samples: Reorganization and Contribution Agreement (GrubHub Inc.)
Contest Provisions. a. The New General Partner shall be entitled to contest, as tax matters partner If Bitstream receives a written notice of CTA in accordance with the CTA Agreement as part of the unified audit of CTA, any claim in respect of any "partnership" item of CTA by the Internal Revenue Service or a state or local taxing authority that, if successfulsustained, would result in a require Marlborough to pay an indemnity under this Tax Event Indemnity Agreement (a "Partnership Level Issue"“Claim”). Each Indemnitee shall take , Bitstream will (a) so notify Marlborough in writing within 30 days of such action or refrain from taking receipt, (b) if permitted by law, not make payment of the tax claimed for at least 30 days after giving such action as may be reasonably necessary notice, and (c) if requested by Marlborough in order to cause each item which is the subject writing within 30 days after receipt of a potential Tax Event to be contested as a Partnership Level Issue. If the New General Partner contests a Partnership Level Issue thatsuch notice by Marlborough (or, if successfulless, would result in a Tax Eventwithin the period ending five days prior to the date, Prime's obligation including extensions, on which Bitstream is required to pay any Tax Indemnity Amounts shall, at Prime's election, be deferred until thirty (30) days after a Final Determination of the Indemnitees' respective federal income tax liabilities in respect of a Tax Event, provided that, upon receipt of the 30-day letter from respond to the Internal Revenue Service, Prime furnishes the Indemnification Security.
b. If an audit Service or proceeding involving a potential Tax Event is being conducted in a proceeding involving an Indemnitee, which cannot be transferred to CTA as a partnership item (an "Indemnitee Level Issue"), such Indemnitee hereby agrees to promptly notify Prime in writing of such adjustment, and such Indemnitee shall tender the defense of such Indemnitee Level Issue to such legal counsel as Prime may select and which is reasonably acceptable to such Indemnitee ("Contest Counsel"). Such Indemnitee agrees to reasonably cooperate with Contest Counsel in connection with any such proceedings and to follow the advice of Contest Counsel with respect to decisions as to whether to contest such Indemnitee Level Issue, the extent and choice of forum state or local taxing authority with respect to such Claim, but in no event less than five Business Days after receipt by Marlborough of such written notice from Bitstream), contest in good faith the validity, applicability and/or amount of such adjustment or such action or proposed action by the Internal Revenue Service or such other taxing authority in any and other material issues relating thereto. Contest Counsel shall represent an Indemnitee only all administrative and judicial forums as may be legally available (including appellate forums in connection with such issues as could potentially result in a Tax Event with respect which the administrative or judicial body is required to such Indemnitee, and, unless such Indemnitee, in its sole discretion, otherwise consents, Contest Counsel hear the appeal); provided that Bitstream shall not represent be required to initiate or continue any such Indemnitee with respect contest unless (x) Bitstream shall have received, at the expense of Marlborough, an Opinion of Marlborough’s Tax Counsel to any other issuesthe effect that there is Substantial Authority for contesting such Claim, without regard (y) Marlborough shall have agreed to whether pay and shall advance upon demand all reasonable expenses to be incurred by Bitstream to contest such other issues are being concurrently challenged action or proposed action by the Internal Revenue Service or other taxing authority (including, without limitation, reasonable attorneys’ and accountants’ fees and disbursements), and (z) in the event that Bitstream elects in its sole discretion to pay the tax authority or appear on the same tax return as the Indemnitee Level Issue in question. Each Indemnitee claimed and seek a refund thereof, Marlborough shall make available an interest free advance to Contest Counsel copies Bitstream in the amount of such Indemnitee's tax returns and interest, additions to tax and penalties thereon, if any, and shall agree to indemnify Bitstream on an After Tax Basis against any adverse tax consequences resulting from such interest free advance. Provided that Marlborough has complied with clauses (x), (y) and (z) of the preceding paragraph, Bitstream shall consult with Marlborough and its counsel in good faith prior to taking any action to contest such Claim. Bitstream, at its sole option, may determine (a) the forum of any judicial contest, and (b) whether to pay the tax claimed and then seek a refund thereof, or not to pay the tax claimed and contest the Claim in the United States Tax Court or other information and materials pertinent appropriate forum. Upon a Final Determination with respect to the contest liabilities of Bitstream, or the Indemnitee Level Issue; providedreceipt of a refund by Bitstream (or the application of such refund against other tax liability of Bitstream) with respect to a Claim contested hereunder, howeverBitstream shall offset against the amount due (including for this purpose any reasonable expenses not otherwise advanced or reimbursed) any amount advanced by Marlborough to Bitstream on an interest free basis pursuant to this Section 5, and either (q) Marlborough shall pay to Bitstream any excess of such amount due over the amount of such interest free advance, or (r) Bitstream shall repay to Marlborough any excess of such interest free advance over such amount due, in either case within 30 days thereafter and, if Marlborough shall have paid an indemnity to Bitstream with respect to the adverse tax consequences of any information relating interest free advance, the amount of any tax savings resulting from any payment by Bitstream to matters other than Marlborough pursuant to this sentence that are actually realized in the Indemnitee Level Issue year of such payment. Any interest received by Bitstream (or which would have been received but for offset by unrelated matters) in question are included connection with any refund that is allocable to indemnified taxes in materials furnished to Contest Counsel, such materials respect of which Marlborough has made an interest free advance shall be furnished only upon for the agreement account of Marlborough and shall be paid to Marlborough promptly after receipt thereof by Contest Counsel to maintain Bitstream, including application of such information on a strictly confidential basis refund against other tax liability of Bitstream. Notwithstanding the foregoing, Bitstream, after consulting in good faith with Marlborough and to not disclose any such information to any person (including without limitation Prime, New General Partner or any Affiliates of either of them) without its counsel and with the prior written consent of such Indemnitee.
c. If Prime recommends acceptance of Marlborough, may refrain from contesting, or enter into a settlement offer in with respect of an Indemnitee Level Issue to, any Claim; provided that Bitstream may refrain from contesting, or if the New General Partner recommends the acceptance of may enter into a settlement offer with respect to, a Claim without consulting with Marlborough and its counsel and receiving Marlborough’s consent if Bitstream expressly and unconditionally waives Bitstream’s rights to the indemnities set forth in Section 3 with respect of a Partnership Level Issueto such Claim. In the event that Bitstream so expressly and unconditionally waives its rights, but the Indemnitees decline to accept such offer in writing within 30 days (i) the obligation of Prime 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 proceedings terminated on the basis recommended by Prime or the New General Partner, as applicable, and (ii) in the case of an Indemnitee Level Issue, Prime Marlborough shall have no further liability for costs or other expenses in respect of such contest.
d. Notwithstanding the foregoing, neither Indemnitee will have any obligation to contest any action with respect to an Indemnitee 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) unless Prime furnishes the Indemnification Security as set forth herein, (iii) without Prime 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 (subject to the agreement by Prime to not litigate in Tax Court, which agreement may be withheld in Prime's sole discretion), the amount of tax (and any applicable interest and penalties) for which refund is claimed, and (iv) to the extent such Indemnitee waives in writing Prime's obligation to indemnify such Indemnitee for such items, in which case all third-party costs and out-of-pocket expenses described in clause (iii) thereafter incurred by such Indemnitee and all taxes of such Indemnitee would be paid by such Indemnitee.
e. An Indemnitee shall not settle any Indemnitee Level Issue without Prime's prior written consent; provided that an Indemnitee shall not be required to contest any proposed adjustment and may settle any such proposed adjustment if such Indemnitee shall waive his right to indemnity Bitstream under this Tax Indemnity Agreement with respect to such adjustment Claim, and any Tax Event that results from such adjustment and, in the case of proceedings before the Court of Federal Claims or Federal District Court, Bitstream shall promptly pay to Prime Marlborough the amount of tax (any interest free advance made to Bitstream pursuant to this Section 5. Bitstream shall provide Marlborough with copies of or reasonable access to all documents and any applicable interest and penalties) previously paid or advanced by Prime with respect information to such adjustment or the extent relating to the contest reasonably requested by Marlborough (other than tax returns related to periods commencing on or after the Closing Date and other confidential information) and will in good faith keep Marlborough fully informed regarding all relevant aspects of any contest. Bitstream shall allow Marlborough and its counsel a reasonable opportunity to comment on all written submissions to the extent relating to a Claim, shall consider in good faith its requests concerning the most appropriate forum in which to proceed and other related matters and shall, if requested by Marlborough, consult in good faith with Marlborough’s counsel regarding the conduct of such adjustmentcontest.
Appears in 1 contract
Samples: Tax Indemnity Agreement (Marlborough Software Development Holdings Inc.)
Contest Provisions. a. The New General Partner If requested by the Lessee in writing, a Tax Indemnified Party shall be entitled in good faith contest in the name of such Tax Indemnified Party or, if requested by the Lessee and if such contest does not in such Tax Indemnified Party's reasonable discretion involve or potentially involve taxes imposed on such Tax Indemnified Party that are not indemnified against hereunder, to contest, as tax matters partner of CTA contest in accordance with the CTA Agreement as part name of the unified audit Lessee (or permit the Lessee, if requested by the Lessee, to contest in the name of CTAthe Lessee or the Tax Indemnified Party) the validity, any claim in respect applicability and amount of the imposition of any "partnership" item Tax or any proposed adjustment that would give rise to the proposed imposition of CTA thatany Tax by (a) resisting payment thereof, if successful, would result in a such Tax Event (a "Partnership Level Issue"). Each Indemnitee shall take such action or refrain from taking such action as may be reasonably necessary in order to cause each item which is the subject of a potential Tax Event to be contested as a Partnership Level Issue. If the New General Partner contests a Partnership Level Issue that, if successful, would result in a Tax Event, Prime's obligation to pay any Tax Indemnity Amounts shall, at Prime's election, be deferred until thirty (30) days after a Final Determination of the Indemnitees' respective federal income tax liabilities in respect of a Tax Event, provided that, upon receipt of the 30-day letter from the Internal Revenue Service, Prime furnishes the Indemnification Security.
b. If an audit or proceeding involving a potential Tax Event is being conducted in a proceeding involving an Indemnitee, which cannot be transferred to CTA as a partnership item (an "Indemnitee Level Issue"), such Indemnitee hereby agrees to promptly notify Prime in writing of such adjustment, and such Indemnitee shall tender the defense of such Indemnitee Level Issue to such legal counsel as Prime may select and which is reasonably acceptable to such Indemnitee ("Contest Counsel"). Such Indemnitee agrees to reasonably cooperate with Contest Counsel in connection with any such proceedings and to follow the advice of Contest Counsel with respect to decisions as to whether to contest such Indemnitee Level Issue, the extent and choice of forum with respect to such contest and other material issues relating thereto. Contest Counsel shall represent an Indemnitee only in connection with such issues as could potentially result in a Tax Event with respect to such Indemnitee, and, unless such Indemnitee, Indemnified Party in its sole discretionand reasonable discretion shall determine such course of action to be appropriate, otherwise consents, Contest Counsel shall (b) not represent such Indemnitee with respect to any other issues, without regard to whether such other issues are being concurrently challenged by the Internal Revenue Service or other tax authority or appear on paying the same tax return as the Indemnitee Level Issue except under protest, if protest is necessary and proper, or (c) if payment shall be made, using reasonable efforts to obtain a refund thereof in question. Each Indemnitee shall make available to Contest Counsel copies of such Indemnitee's tax returns appropriate administrative and other information and materials pertinent to the contest of the Indemnitee Level Issuejudicial proceedings; provided, however, if any information relating to matters other than the Indemnitee Level Issue in question are included in materials furnished to Contest Counsel, that (u) such materials shall be furnished only upon the agreement by Contest Counsel to maintain such information on a strictly confidential basis and to not disclose any such information to any person (including without limitation Prime, New General Partner or any Affiliates of either of them) without the prior written consent of such Indemnitee.
c. If Prime recommends acceptance of a settlement offer in respect of an Indemnitee Level Issue or if the New General Partner recommends the acceptance of a settlement offer in respect of a Partnership Level Issue, but the Indemnitees decline to accept such offer in writing within 30 days (i) the obligation of Prime 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 proceedings terminated on the basis recommended by Prime or the New General Partner, as applicable, and (ii) in the case of an Indemnitee Level Issue, Prime shall have no further liability for costs or other expenses in respect of such contest.
d. Notwithstanding the foregoing, neither Indemnitee will have any obligation to contest any action with respect to an Indemnitee 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) unless Prime furnishes the Indemnification Security as set forth herein, (iii) without Prime 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 (subject to the agreement by Prime to not litigate in Tax Court, which agreement may be withheld in Prime's sole discretion), the amount of tax (and any applicable interest and penalties) for which refund is claimed, and (iv) to the extent such Indemnitee waives in writing Prime's obligation to indemnify such Indemnitee for such items, in which case all third-party costs and out-of-pocket expenses described in clause (iii) thereafter incurred by such Indemnitee and all taxes of such Indemnitee would be paid by such Indemnitee.
e. An Indemnitee shall not settle any Indemnitee Level Issue without Prime's prior written consent; provided that an Indemnitee Indemnified Party shall not be required to contest any proposed adjustment and may settle any such imposition or proposed adjustment if the aggregate amount of an indemnity on an after-tax basis, would be less than $25,000, (v) no Lessee Event of Default has occurred and is continuing, (w) such Indemnitee Tax Indemnified Party has been provided with an opinion of independent tax counsel selected by such Tax Indemnified Party and reasonably acceptable to the Lessee (the cost of which shall waive his right be borne by the Lessee) to indemnity under this Agreement the effect that a reasonable basis in law or in fact exists that such Tax Indemnified Party will prevail in such contest, (x) such Tax Indemnified Party, at its sole option, may at any time forego any and all administrative appeals, proceedings, hearings and conferences with respect any Taxing Authority and, in lieu thereof, continue to contest the claim in any permissible judicial forum selected by such adjustment and any Tax Event that results from Indemnified Party, (y) Lessee shall have agreed to pay such adjustment andTax Indemnified Party (or, in the case of proceedings before item (iii) below, lend to such Tax Indemnified Party on an interest-free basis (and in such case pay any additional amount as shall be required to hold such Tax Indemnified Party harmless on a net after-tax basis from any adverse tax consequences attributable to the Court of Federal Claims loan), on demand, all reasonable out-of-pocket costs and expenses which such Tax Indemnified Party incurs in connection with and reasonably allocable to contesting such imposition or Federal District Courtadjustment, shall pay to Prime including, without limitation, (i) all legal, accountants' and investigatory fees and disbursements, (ii) the amount of any interest, penalties or additions to tax (to the date such payment is made) payable as a result of contesting such adjustment, and (iii) if such contest is to be initiated by the payment of, and the claiming of a refund for, the amount of such imposition or adjustment, funds sufficient to make such payment of, and the claiming of a refund for, the amount of such imposition or adjustment, funds sufficient to make such payment (and in the event such contest is finally determined adversely, the amount of such loan shall be applied against the Lessee's obligation to indemnify such Tax Indemnified Party for the Tax which was the subject of such contest), and (z) such proceedings do not involve any applicable risk (other than a remote risk) of the sale, forfeiture or loss of the Aircraft, the Airframe, any Serviced Engine or any Part or interest therein or, if there is such a risk, Lessee has provided to such Tax Indemnified Party a bond in form and substance reasonably satisfactory to such Tax Indemnified Party in an amount sufficient to protect such Tax Indemnified Party from any detriment that would be suffered by the Lessor as a result of such sale, forfeiture, or loss or has otherwise protected such Tax Indemnified Party in a manner acceptable to such Tax Indemnified Party and there is no risk or the imposition of criminal penalties) previously paid or advanced . Such Tax Indemnified Party will consult with Lessee regarding any contest and will consider in good faith any suggestions made by Prime Lessee with respect to the most favorable forum for, and the conduct of, such adjustment contest; provided, however, that, unless such Tax Indemnified Party elects to permit Lessee to conduct such contest, such contest shall be controlled by such Tax Indemnified Party and conducted by independent counsel selected by such Tax Indemnified Party or by "in-house" counsel of such Tax Indemnified Party and reasonably acceptable to Lessee. In the event that such Tax Indemnified Party elects to permit the Lessee to conduct such contest, the independent counsel selected by the Lessee to conduct such contest shall be reasonably satisfactory to such Tax Indemnified Party. If requested by the Lessee in writing, such Tax Indemnified Party will appeal (or, if desired by such Tax Indemnified Party, permit the Lessee to appeal) any adverse judicial determination, provided that, as a condition to the commencement of the appeal of such adverse judicial determination, (a) such Tax Indemnified Party shall receive, at the Lessee's expense, an opinion of independent counsel, selected by such Tax Indemnified Party and reasonably satisfactory to Lessee, to the effect that a more likely than not probability of success exists for such appeal and (b) Lessee shall have acknowledged its liability to such Indemnified Party for an indemnity payment as a result of such tax claim if such Tax Indemnified Party shall not prevail in the contest; provided, however, that such Tax Indemnified Party shall not be required to appeal any adverse judicial determination to the United States Supreme Court. Notwithstanding anything contained in this subsection 16(g) to the contrary, no Tax Indemnified Party shall be required to contest any claim if the subject matter thereof shall be of a continuing nature and shall have previously been decided pursuant to the contest provisions of this subsection 16(g) (including a contest pursuant to the contest provisions hereof in which the Tax Indemnified Party may be required to contest such a claim if there shall have been a change in the law (including, without limitation, amendments to statutes or regulations, administrative ruling and court decisions)) or Lessee shall have provided new facts after such claim shall have been so previously decided, and such Tax Indemnified Party shall have received an opinion of independent tax counsel selected by such Tax Indemnified Party and approved by the Lessee (the cost of which shall be borne by the Lessee) to the effect that, as a result of such change or new facts, it is more likely than not that the position which such Tax Indemnified Party or the contest Lessee, as the case may be, had asserted in such previous contest, would prevail; PROVIDED that the provisions of such adjustmentthis paragraph shall not require an Tax Indemnified Party to file an amended tax return or refund claim for any prior taxable period.
Appears in 1 contract
Samples: Aircraft Lease Agreement (Hawaiian Airlines Inc/Hi)
Contest Provisions. a. The New General Partner (a) If a claim shall be entitled to contestmade by any Taxing Authority, as tax matters partner of CTA in accordance with the CTA Agreement as part of the unified audit of CTA, any claim in respect of any "partnership" item of CTA thatwhich, if successful, would might result in a Tax Event an indemnity payment pursuant to Section 7.3, the Permal Contributor, the EnTrust Contributor or the Company, as the case may be, shall give prompt written notice to the Party with the potential indemnity obligation, in writing, of such claim (a "Partnership Level Issue"“Tax Claim”). Each Indemnitee ; provided, however, that the failure to give such notice shall take such action or refrain from taking such action as may be reasonably necessary in order not affect the indemnification provided hereunder except to cause each item which is the subject of a potential Tax Event to be contested extent the Indemnifying Party has been actually prejudiced as a Partnership Level Issue. If the New General Partner contests a Partnership Level Issue that, if successful, would result in a Tax Event, Prime's obligation of such failure.
(b) With respect to pay any Tax Indemnity Amounts shallClaim relating to a taxable period ending on or prior to the Closing Date, at Prime's election, be deferred until thirty (30) days after a Final Determination of the Indemnitees' respective federal income tax liabilities in respect of a Tax Event, provided that, upon receipt of the 30-day letter from the Internal Revenue Service, Prime furnishes the Indemnification Security.
b. If an audit or proceeding involving a potential Tax Event is being conducted in a proceeding involving an Indemnitee, which cannot be transferred to CTA as a partnership item (an "Indemnitee Level Issue"), such Indemnitee hereby agrees to promptly notify Prime in writing of such adjustment, and such Indemnitee Indemnifying Party shall tender the defense of such Indemnitee Level Issue to such legal counsel as Prime may select and which is reasonably acceptable to such Indemnitee ("Contest Counsel"). Such Indemnitee agrees to reasonably cooperate with Contest Counsel in connection with any such control all proceedings and to follow the advice of Contest Counsel with respect to may make all decisions as to whether to contest such Indemnitee Level Issue, the extent and choice of forum with respect to such contest and other material issues relating thereto. Contest Counsel shall represent an Indemnitee only taken in connection with such issues as could potentially result Tax Claim (including selection of counsel) and, without limiting the foregoing, may in a Tax Event its sole discretion pursue or forego any and all administrative appeals, proceedings, hearings and conferences with any taxing authority with respect to such Indemniteethereto, and, unless such Indemniteeand may, in its sole discretion, otherwise consentseither pay the Tax claimed and xxx for a refund where applicable law permits such refund suits (for the avoidance of doubt, Contest Counsel any such Tax payment shall not represent be the sole obligation of and any such Indemnitee with respect to any other issues, without regard to whether such other issues are being concurrently challenged by Tax refund shall be the Internal Revenue Service or other tax authority or appear on the same tax return as the Indemnitee Level Issue in question. Each Indemnitee shall make available to Contest Counsel copies of such Indemnitee's tax returns and other information and materials pertinent to the contest sole entitlement of the Indemnitee Level IssueIndemnifying Party) or contest the Tax Claim in any permissible manner; provided, however, if that the Indemnifying Party, which is one of the Contributors, shall not take any information relating to matters other than action that could result in an increase in the Indemnitee Level Issue in question are included in materials furnished to Contest CounselTax liability of any of the Permal Group Members, such materials shall be furnished only upon the agreement by Contest Counsel to maintain such information on a strictly confidential basis EnTrust Group Members and to not disclose any such information to any person (including without limitation Primethe Company, New General Partner or any Affiliates of either of them) as applicable, without the prior written consent of such Indemnitee.
c. If Prime recommends acceptance of a settlement offer in respect of an Indemnitee Level Issue or if the New General Partner recommends the acceptance of a settlement offer in respect of a Partnership Level Issueother Contributor, but the Indemnitees decline to accept such offer in writing within 30 days (i) the obligation of Prime to make indemnity payments as the result of any such contest or proceedings which consent shall not thereafter exceed the obligation that it would have had if such contest had been settled be unreasonably withheld, conditioned or proceedings terminated on the basis recommended by Prime or the New General Partner, as applicable, and (ii) in the case of an Indemnitee Level Issue, Prime shall have no further liability for costs or other expenses in respect of such contest.
d. delayed. Notwithstanding the foregoing, neither Indemnitee will the Indemnifying Party shall not settle or otherwise compromise any Tax Claim without the prior written consent of the other Contributor, not to be unreasonably withheld, conditioned or delayed. Furthermore, the Contributor from the party to be indemnified, and counsel of its own choosing, shall have any obligation the right to contest any action with respect to an Indemnitee Level Issue (i) unless participate fully in all aspects of the prosecution or defense of such items could give rise to a federal income tax liability (disregarding Tax Claim, and the Indemnifying Party shall inform the other items Contributor, reasonably promptly in advance, of the assessment date, time and considering effects in future years) in excess place of $25,000all administrative and judicial conferences, (ii) unless Prime furnishes the Indemnification Security as set forth herein, (iii) without Prime paying when due, reasonable third-party costs and out-of-pocket expenses including reasonable legal, witness and accounting fees hearings and other expenses andproceedings relating to such Tax Claim and shall provide to the other Contributor all information, document requests and responses, proposed notices of deficiency, notices of deficiencies, revenue agents reports, protests, petitions and any other documents relating to such Tax Claim promptly upon receipt from, or in advance of submission to (as the case of proceedings before the Court of Federal Claims or Federal District Court (subject to the agreement by Prime to not litigate in Tax Court, which agreement may be withheld in Prime's sole discretionbe), the amount of tax (and any applicable interest and penalties) for which refund is claimed, and (iv) to the extent such Indemnitee waives in writing Prime's obligation to indemnify such Indemnitee for such items, in which case all third-party costs and out-of-pocket expenses described in clause (iii) thereafter incurred by such Indemnitee and all taxes of such Indemnitee would be paid by such Indemniteerelevant Taxing Authority.
e. An Indemnitee shall not settle any Indemnitee Level Issue without Prime's prior written consent; provided that an Indemnitee shall not be required to contest any proposed adjustment and may settle any such proposed adjustment if such Indemnitee shall waive his right to indemnity under this Agreement with respect to such adjustment and any Tax Event that results from such adjustment and, in the case of proceedings before the Court of Federal Claims or Federal District Court, shall pay to Prime the amount of tax (and any applicable interest and penalties) previously paid or advanced by Prime with respect to such adjustment or the contest of such adjustment.
Appears in 1 contract
Contest Provisions. a. The New General Partner Following the Closing, Buyer shall promptly notify Dohmxx xx writing upon receipt by Buyer or RESTAT of notice of any pending or threatened federal, state, local, foreign or other Tax audits, examinations or assessments of RESTAT (a “Tax Audit”) for any taxable year or period that ends on or before the Closing Date. Such notice shall describe the asserted Tax Audit in reasonable detail and shall include copies of any notices and other documents received from any Governmental Authority in respect of such Tax Audit. Dohmxx xxxll be entitled to control the legal defense (with counsel of its choosing) of any such Tax Audit provided, however, that Dohmxx xxxees with Buyer that, as between Buyer and Dohmxx, Xxhmxx xxxll be liable for and indemnify each Buyer Group Member for any and all Losses and Expenses relating to Taxes that result from such Tax Audit. To the extent that Dohmxx xxxtrols any Tax Audit in accordance with this Section 6.3, (i) Dohmxx xxxll provide Buyer with a timely and reasonably detailed account of each phase of such Tax Audit, (ii) Dohmxx xxxll reasonably consult with Buyer before taking any significant action in connection with such Tax Audit, (iii) Dohmxx xxxll reasonably consult with Buyer and offer Buyer an opportunity to make reasonable comments before submitting any written materials prepared or furnished in connection with such Tax Audit, (iv) Dohmxx xxxll defend such Tax Audit diligently and in good faith as if it were the only party in interest in connection with such Tax Audit, (v) Buyer shall be entitled to contestparticipate, as tax matters partner of CTA at its own expense, in accordance with the CTA Agreement as part of the unified audit of CTA, any claim in respect such Tax Audit and receive copies of any "partnership" item of CTA thatwritten materials relating to such Tax Audit received from the relevant Governmental Authority and (vi) Dohmxx xxxll not settle, compromise or abandon any such Tax Audit, if successful, would result in a Tax Event (a "Partnership Level Issue"). Each Indemnitee shall take such action would reasonably be expected to have an adverse impact on Buyer or refrain from taking such action as may be reasonably necessary in order to cause each item which is the subject of a potential Tax Event to be contested as a Partnership Level Issue. If the New General Partner contests a Partnership Level Issue that, if successful, would result in a Tax Event, Prime's obligation to pay any Tax Indemnity Amounts shall, at Prime's election, be deferred until thirty (30) days after a Final Determination of the Indemnitees' respective federal income tax liabilities in respect of a Tax Event, provided that, upon receipt of the 30-day letter from the Internal Revenue Service, Prime furnishes the Indemnification Security.
b. If an audit or proceeding involving a potential Tax Event is being conducted in a proceeding involving an Indemnitee, which cannot be transferred to CTA as a partnership item (an "Indemnitee Level Issue"), such Indemnitee hereby agrees to promptly notify Prime in writing of such adjustment, and such Indemnitee shall tender the defense of such Indemnitee Level Issue to such legal counsel as Prime may select and which is reasonably acceptable to such Indemnitee ("Contest Counsel"). Such Indemnitee agrees to reasonably cooperate with Contest Counsel in connection with any such proceedings and to follow the advice of Contest Counsel with respect to decisions as to whether to contest such Indemnitee Level Issue, the extent and choice of forum with respect to such contest and other material issues relating thereto. Contest Counsel shall represent an Indemnitee only in connection with such issues as could potentially result in a Tax Event with respect to such Indemnitee, and, unless such Indemnitee, in its sole discretion, otherwise consents, Contest Counsel shall not represent such Indemnitee with respect to any other issuesRESTAT, without regard to whether such other issues are being concurrently challenged by the Internal Revenue Service or other tax authority or appear on the same tax return as the Indemnitee Level Issue in question. Each Indemnitee shall make available to Contest Counsel copies of such Indemnitee's tax returns and other information and materials pertinent to the contest of the Indemnitee Level Issue; provided, however, if any information relating to matters other than the Indemnitee Level Issue in question are included in materials furnished to Contest Counsel, such materials shall be furnished only upon the agreement by Contest Counsel to maintain such information on a strictly confidential basis and to not disclose any such information to any person (including without limitation Prime, New General Partner or any Affiliates of either of them) without obtaining the prior written consent of such Indemnitee.
c. If Prime recommends acceptance of a settlement offer in respect of an Indemnitee Level Issue or if the New General Partner recommends the acceptance of a settlement offer in respect of a Partnership Level IssueBuyer, but the Indemnitees decline to accept such offer in writing within 30 days (i) the obligation of Prime to make indemnity payments as the result of any such contest or proceedings which consent shall not thereafter exceed be unreasonably conditioned, withheld or delayed. Buyer shall have the obligation that it would have had if such contest had been settled right to control (or proceedings terminated on the basis recommended by Prime or the New General Partnerto assume control, as applicable, and (ii) in the case event that the requirement set forth in clause (iv) of an Indemnitee Level Issuethe preceding sentence ceases to be satisfied), Prime at its own expense, any other Tax Audit. Nothing herein shall have no further liability for costs or other expenses in respect of such contest.
d. Notwithstanding the foregoing, neither Indemnitee will have be construed to impose on Buyer any obligation to contest defend RESTAT in any action Tax audit or administrative or court proceeding. Any proceeding with respect to an Indemnitee Level Issue (i) unless such items could give rise to a federal income tax liability (disregarding other items which Dohmxx xxxs not control in accordance with this Section 6.3 may be settled or compromised in the assessment and considering effects in future years) in excess discretion of $25,000Buyer, (ii) unless Prime furnishes the Indemnification Security as set forth herein, (iii) without Prime 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 (subject to the agreement by Prime to not litigate in Tax Court, which agreement may be withheld in Prime's sole discretion), the amount of tax (and any applicable interest and penalties) for which refund is claimed, and (iv) to the extent such Indemnitee waives in writing Prime's obligation to indemnify such Indemnitee for such items, in which case all third-party costs and out-of-pocket expenses described in clause (iii) thereafter incurred by such Indemnitee and all taxes of such Indemnitee would be paid by such Indemnitee.
e. An Indemnitee settlement or compromise shall not settle affect any Indemnitee Level Issue without Prime's prior written consent; provided that an Indemnitee shall not be required to contest any proposed adjustment and may settle any such proposed adjustment if such Indemnitee shall waive his Buyer Group Member’s right to indemnity indemnification under this Agreement with respect to such adjustment and any Tax Event that results from such adjustment and, in the case of proceedings before the Court of Federal Claims or Federal District Court, shall pay to Prime the amount of tax (and any applicable interest and penalties) previously paid or advanced by Prime with respect to such adjustment or the contest of such adjustmentAgreement.
Appears in 1 contract
Samples: Membership Interest Purchase Agreement (Catamaran Corp)
Contest Provisions. a. The New General Partner shall be entitled to contest, as tax matters partner of CTA in accordance with the CTA Agreement as part of the unified audit of CTA, any claim in respect of any "partnership" item of CTA that, if successful, would result in If requested by a Tax Event (a "Partnership Level Issue"). Each Indemnitee shall take such action or refrain from taking such action as may be reasonably necessary in order to cause each item which is the subject of a potential Tax Event to be contested as a Partnership Level Issue. If the New General Partner contests a Partnership Level Issue that, if successful, would result in a Tax Event, Prime's obligation to pay any Tax Indemnity Amounts shall, at Prime's election, be deferred until thirty (30) Indemnifying Participant within 30 days after a Final Determination of the Indemnitees' respective federal income tax liabilities in respect of a Tax Event, provided that, upon receipt of the 30-day letter from the Internal Revenue Service, Prime furnishes the Indemnification Security.
b. If an audit or proceeding involving a potential Tax Event is being conducted in a proceeding involving an Indemnitee, which cannot be transferred to CTA as a partnership item (an "Indemnitee Level Issue")Adjustment Notice, such Tax Indemnitee hereby agrees Participant shall in good faith contest, or (if desired by such Tax Indemnitee) permit a Tax Indemnifying Participant to promptly notify Prime in writing of such adjustmentcontest the validity, applicability, and such Indemnitee shall tender the defense amount of such Indemnitee Level Issue any proposed adjustment that would give rise to such legal counsel as Prime may select and which is reasonably acceptable to such Indemnitee ("Contest Counsel"). Such Indemnitee agrees to reasonably cooperate with Contest Counsel in connection with any such proceedings and to follow the advice of Contest Counsel with respect to decisions as to whether to contest such Indemnitee Level Issue, the extent and choice of forum with respect to such contest and other material issues relating thereto. Contest Counsel shall represent an Indemnitee only in connection with such issues as could potentially result in a Tax or Inclusion Event with respect to such Indemnitee, andby (a) not making payment thereof for at least 30 days after providing the Adjustment Notice, unless such Indemniteeotherwise required by applicable Law, (b) not paying same except under protest, if protest is necessary and proper, or (c) if payment is made, using reasonable efforts to obtain a refund thereof in its sole discretion, otherwise consents, Contest Counsel shall not represent such Indemnitee with respect to any other issues, without regard to whether such other issues are being concurrently challenged by the Internal Revenue Service or other tax authority or appear on the same tax return as the Indemnitee Level Issue in question. Each Indemnitee shall make available to Contest Counsel copies of such Indemnitee's tax returns appropriate administrative and other information and materials pertinent to the contest of the Indemnitee Level Issuejudicial proceedings; provided, however, if any information relating to matters other than the Indemnitee Level Issue in question are included in materials furnished to Contest Counsel, such materials shall be furnished only upon the agreement by Contest Counsel to maintain such information on a strictly confidential basis and to not disclose any such information to any person (including without limitation Prime, New General Partner or any Affiliates of either of them) without the prior written consent of such Indemnitee.
c. If Prime recommends acceptance of a settlement offer in respect of an Indemnitee Level Issue or if the New General Partner recommends the acceptance of a settlement offer in respect of a Partnership Level Issue, but the Indemnitees decline to accept such offer in writing within 30 days that (i) the obligation of Prime 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 proceedings terminated on the basis recommended by Prime or the New General Partner, as applicable, and (ii) in the case of an Indemnitee Level Issueincome tax contest, Prime shall have no further liability for costs or other expenses in respect as a condition to the commencement of such contest.
d. Notwithstanding , such Tax Indemnitee Participant shall have received a written opinion of its independent tax counsel selected by such Tax Indemnitee Participant and reasonably acceptable to Tax Indemnifying Participant to the foregoing, neither Indemnitee will have any obligation to contest any action with respect to an Indemnitee Level Issue (i) unless effect that there is a Reasonable Basis for contesting 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 $25,000proposed adjustment, (ii) unless Prime furnishes the Indemnification Security as set forth herein, (iii) without Prime 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 (subject to the agreement by Prime to not litigate in such Tax Court, which agreement may be withheld in Prime's sole discretion), the amount of tax (and any applicable interest and penalties) for which refund is claimed, and (iv) to the extent such Indemnitee waives in writing Prime's obligation to indemnify such Indemnitee for such items, in which case all third-party costs and out-of-pocket expenses described in clause (iii) thereafter incurred by such Indemnitee and all taxes of such Indemnitee would be paid by such Indemnitee.
e. An Indemnitee shall not settle any Indemnitee Level Issue without Prime's prior written consent; provided that an Indemnitee Participant shall not be required to contest any proposed adjustment and may settle any such proposed adjustment if such Indemnitee shall waive his right to indemnity under this Agreement the aggregate amount of the indemnity, on a before-tax basis, together with the amounts payable with respect to such adjustment and any Tax Event that results from such adjustment andfuture related claim, would be less than $100,000 in the case of proceedings before an administrative contest or less than $250,000 in the Court case of Federal Claims or Federal District Courta judicial contest, (iii) Tax Indemnifying Participant shall have agreed in writing to pay to Prime such Tax Indemnitee, on demand, all reasonable out-of-pocket costs and expenses which such Tax Indemnitee Participant incurs in connection with and reasonably allocable to contesting such adjustment, including all reasonable legal, accountants', and investigatory fees and disbursements; (iv) the Tax Indemnitee Participant has determined, in good faith, that the contest will not result in a material risk of the loss or forfeiture of its Ownership Interest (unless Tax Indemnifying Participant has provided to such Tax Indemnitee Participant a bond or other sufficient protection against such risk of loss or forfeiture reasonably satisfactory to such Tax Indemnitee) or the imposition of criminal penalties; (v) if such contest is to be initiated by the payment of, and the claiming of a refund for such Taxes, Tax Indemnifying Participant shall advance the amount thereof plus, interest, penalties and additions to Tax with respect thereof to such Tax Indemnitee Participant on an interest free basis with no additional after-tax cost to such Tax Indemnitee Participant to make such payment and shall indemnify such Tax Indemnitee Participant against any adverse tax consequences arriving from such advance (and if such contest is finally determined adversely, the amount of such loan shall be applied against Tax Indemnifying Participant's obligation to indemnify such Tax Indemnitee Participant for a Tax which was the subject of such contest), and (vi) in the case of an income tax contest, Tax Indemnifying Participant shall have acknowledged in writing its liability to indemnify the Tax Indemnitee Participant in respect of such contested Tax in the event such contest is unsuccessful; provided, that Tax Indemnifying Participant shall not be bound by such acknowledgment to the extent there is a Final Determination of the contest which clearly demonstrates that the Tax Indemnitee Participant is not liable for such Tax. If requested by Tax Indemnifying Participant in writing, such Tax Indemnitee Participant will appeal (or, if desired by such Tax Indemnitee, permit Tax Indemnifying Participant to appeal) any adverse judicial determination, provided that such Tax Indemnitee Participant shall receive an opinion of its independent tax counsel selected by such Tax Indemnitee Participant and any applicable interest and penalties) previously paid or advanced by Prime with respect reasonably acceptable to such adjustment or Tax Indemnifying Participant to the contest effect that it is more likely than not under the ABA Standards and within the meaning of Code Section 6662 that a favorable result will result from such adjustmentappeal. A Tax Indemnitee Participant shall not be required to appeal any adverse judicial determination to the United States Supreme Court.
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