Common use of Process for Determining Damages Clause in Contracts

Process for Determining Damages. (a) At the time the Partnership (or a Subsidiary) enters into an agreement to consummate a transaction that, if consummated, would result in a breach of the Partnership’s obligations under Article 2, Article 3 or Article 6 hereof (a “Prohibited Transaction”), and in any case not less than thirty (30) days prior to consummating such Prohibited Transaction, the Partnership shall notify each affected Protected Partner (or Indirect Owner) in writing, which such notice shall include the approximate sales price or other amount to be realized for income tax purposes in connection with such Prohibited Transaction and all other relevant details of the Prohibited Transaction and shall request from the Protected Partner (or Indirect Owner) such information that is within the Protected Partner’s (or Indirect Owner’s) possession or control and is relevant to the calculation of the indemnity set forth in Section 4.1 hereof within ten (10) days of such request. Within ten (10) days after receipt of such information from the Protected Partner (or Indirect Owner) (or, if no such information is requested, at the same time the Partnership notifies the Protected Partner (or Indirect Owner) of the Prohibited Transaction as provided above), the Partnership shall provide to the Protected Partner a computation of the indemnity payment, if any, owing to the Protected Partner pursuant to Section 4.1 resulting from such Prohibited Transaction. The Protected Partner (or Indirect Owner) shall have five (5) days from its receipt of the Partnership’s calculation of the amount of the indemnity due under Section 4.1 hereof to review and raise any objections to such calculation. The Partnership and the Protected Partner (or Indirect Owner) hereby agree to negotiate in good faith any objections raised by the Protected Partner (or Indirect Owner) to such indemnity calculation. (b) Notwithstanding anything to the contrary contained herein, the Partnership may not enter into a Prohibited Transaction unless, at least fourteen (14) days prior to entering into such transaction, the Partnership will have provided the Protected Partner with evidence reasonably satisfactory to the Protected Partner that, following such transaction, and including any proceeds from such transaction, the Partnership will have the requisite liquidity to make any necessary indemnification payments required pursuant to this Agreement. The Protected Partner shall have the right to seek and obtain specific performance or injunctive relief with respect to this Section 4.2(b).

Appears in 3 contracts

Samples: Tax Protection Agreement (Campus Crest Communities, Inc.), Tax Protection Agreement (Campus Crest Communities, Inc.), Tax Protection Agreement (Campus Crest Communities, Inc.)

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Process for Determining Damages. (a) At the time the Partnership (or If any Party receives a Subsidiary) enters into an agreement to consummate a transaction that, if consummated, would result in a breach of the Partnership’s obligations under Article 2, Article 3 or Article 6 hereof (a “Prohibited Transaction”), and in any case not less than thirty (30) days prior to consummating such Prohibited Transaction, the Partnership shall notify each affected Protected Partner (or Indirect Owner) in writing, which such notice shall include the approximate sales price or other amount to be realized for income tax purposes in connection with such Prohibited Transaction and all other relevant details of the Prohibited Transaction and shall request from the Protected Partner (or Indirect Owner) such information that is within the Protected Partner’s (or Indirect Owner’s) possession or control and is relevant to the calculation of the indemnity set forth in Section 4.1 hereof within ten (10) days of such request. Within ten (10) days after receipt of such information from the Protected Partner (or Indirect Owner) (or, if no such information is requested, at the same time the Partnership notifies the Protected Partner (or Indirect Owner) of the Prohibited Transaction as provided above), the Partnership shall provide to the Protected Partner a computation of the indemnity payment, if any, owing to the Protected Partner pursuant to Section 4.1 resulting from such Prohibited Transaction. The Protected Partner (or Indirect Owner) shall have five (5) days from its receipt of 2.7 hereunder, the Partnership’s calculation of the amount of the indemnity due under Section 4.1 hereof to review and raise any objections to such calculation. The Operating Partnership and the Protected Partner (or Indirect Owner) hereby Members agree to negotiate in good faith to resolve any objections raised disagreements regarding any Tax Protection Period Transfer or any breach or violation of any covenant set forth in Article II and the amount of damages, if any, payable to such Protected Member under Section 2.4. If any such disagreement cannot be resolved by the Operating Partnership and such Protected Member within sixty (60) days after notice is provided under Section 2.7 hereunder, then: (a) to the extent that the disagreement relates solely to the computation of the amount of a payment due hereunder, the Operating Partnership and the Protected Members agree to jointly retain a nationally recognized independent public accounting firm (an “Accounting Firm”) to act as an arbitrator to resolve such computational disagreement as expeditiously as possible. All computational determinations made by the Accounting Firm pursuant to this Section 2.5(a) shall be final, conclusive and binding on the Operating Partnership and the Protected Member. The fees and expenses of any Accounting Firm incurred in connection with any such determination shall be shared equally by the Operating Partnership and the Protected Member, provided that if the amount determined by the Accounting Firm to be owed by the Operating Partnership to the Protected Member is more than five percent (5%) higher than the amount proposed by the Operating Partnership to be owed to such Protected Member prior to the submission of the matter to the Accounting Firm, then all of the fees and expenses of any Accounting Firm incurred in connection with any such determination shall be paid by the Operating Partnership and if the amount determined by the Accounting Firm to be owed by the Operating Partnership to the Protected Member is more than five percent (5%) less than the amount proposed by the Operating Partnership to be owed to such Protected Member prior to the submission of the matter to the Accounting Firm, then all of the fees and expenses of any Accounting Firm incurred in connection with any such determination shall be paid by the Protected Partner (or Indirect Owner) to such indemnity calculation.Member; and (b) Notwithstanding anything to the contrary contained herein, the Partnership may not enter into a Prohibited Transaction unless, at least fourteen (14) days prior to entering into such transaction, the Partnership will have provided the Protected Partner with evidence reasonably satisfactory to the Protected Partner that, following such transaction, and including any proceeds from such transaction, the Partnership will have the requisite liquidity to make any necessary indemnification payments required pursuant to this Agreement. The Protected Partner shall have the right to seek and obtain specific performance or injunctive relief with respect to all points of disagreement, any controversy, dispute or claim under, arising out of, in connection with or in relation to this Agreement that are not addressed in Section 2.5(a), including without limitation the negotiation, execution, interpretation, construction, coverage, scope, performance, non-performance, breach, damages, computations of the amount of a payment due hereunder (provided such computation is not the sole item in dispute), termination, validity or enforceability of this Agreement (“Dispute”), will be finally settled, at the request of any party, by binding arbitration conducted in accordance with this Section 4.2(b2.5(b) and the Commercial Arbitration Rules of the American Arbitration Association (“AAA”) then in effect (the “Rules”). The arbitration shall be held in New York, New York before a panel of three neutral and impartial arbitrators, one of whom will be selected by the Operating Partnership, the second of whom will be selected by the Protected Member, within thirty (30) days of receipt by respondent(s) of the demand for arbitration. The third arbitrator, who will chair the arbitral tribunal, will be selected by the other two arbitrators within thirty (30) days of the appointment of the second arbitrator. If any party fails to timely appoint an arbitrator, or if the two party-appointed arbitrators fail to timely agree on a third arbitrator, on the request of any party such arbitrator shall be appointed by the AAA in accordance with the listing, ranking and striking procedure in the Rules. Decisions of the tribunal will be made by not less than a majority of the arbitrators comprising such tribunal. The arbitration will be governed by the Federal Arbitration Act (9 U.S.C. §§ 1 et seq.). The award shall be final and binding upon the parties to the maximum extent permitted by law and shall be the sole and exclusive remedy between the parties regarding any claims, counter-claims, issues or accounting submitted to the arbitral tribunal. Arbitration under this Section 2.5(b) will be conducted in accordance with the following provisions: (i) The arbitration will be conducted in accordance with rules of procedure adopted by the arbitrators to allow the parties to the Dispute to present evidence and argument to the arbitrators; (ii) Except as may be otherwise provided in this Agreement, the statutes of limitations of the State of New York applicable to the commencement of a lawsuit will apply to the commencement of an arbitration hereunder; (iii) Upon the request of any party, the arbitrators shall order such discovery (including third-party discovery) as the arbitrators determine to be reasonable under the circumstances. The arbitrators will, however, impose reasonable schedules and deadlines to ensure that discovery is conducted and concluded on a timely basis and may impose sanctions on any party for abuse or delay of discovery; (iv) The arbitrators will, in all cases, as promptly as possible hold hearings and reach a final determination with regard to the Dispute. A determination and award of damages (if any) of the majority of the arbitrators, will be conclusive and binding upon the parties to the maximum extent permitted by law. Such award shall be in writing, and shall state the findings of fact and conclusions of law on which it is based. Judgment upon any award rendered by the arbitrators shall be final and binding on the parties and may be enforced by any court having jurisdiction thereof; and (v) By agreeing to arbitration, the parties do not intend to deprive any court of its jurisdiction to issue a pre-arbitral injunction, pre-arbitral attachment or other order in aid of arbitration proceedings and the enforcement of any award. Without prejudice to such provisional remedies as may be available under the jurisdiction of a court, the arbitral tribunal shall have full authority to grant provisional remedies or order the parties to request that a court modify or vacate any temporary or preliminary relief issued by a such court, and to award damages for the failure of any party to respect the arbitral tribunal’s orders to that effect.

Appears in 1 contract

Samples: Tax Protection Agreement (Colony NorthStar, Inc.)

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