Special Tax Indemnity. (a) Tenant hereby represents, warrants and covenants to Landlord as follows: (i) during the Term, Tenant will not construct or install any component, improvement, alteration, or addition on any Leased Property, without prior written consent from Landlord, if such construction or installation would cause such Leased Property, or any part thereof, to be “limited use property,” as such term is used in Section 5 of Revenue Procedure 2001-28, (ii) Tenant is not a “tax-exempt entity” within the meaning of Section 168(h)(2) of the Code and will not take any action that would cause any Leased Property, or any part thereof, to constitute “tax-exempt use property” within the meaning of Section 168(h) of the Code; (iii) neither Tenant nor any Affiliate will claim the Depreciation Deductions or otherwise take the position that it is the owner of any Leased Property, or any part thereof, for federal income tax purposes; (iv) as of the Commencement Date, no Leased Property will require any improvement, modification or addition in order to be rendered complete for its intended use by Tenant; and (v) to the best of Tenant’s knowledge, all written information of a factual nature with respect to any Leased Property that was provided to Landlord or an appraiser engaged by Landlord to appraise such Leased Property by or on behalf of Tenant or any Affiliate of Tenant was true and accurate in all material respects as of the date provided to Landlord or such appraiser. Notwithstanding the provisions of clause (iii) above, Tenant may take the position that it is the owner of a Leased Property for federal income tax purposes if Tenant provides to Landlord an opinion of independent tax counsel that such treatment is required by law, and Landlord consents to such treatment, which consent shall not be unreasonably withheld, conditioned or delayed or to the extent required as a result of the Internal Revenue Service making a claim or adjustment against Tenant in connection with such tax reporting, and tax counsel (or Tenant’s outside accounting firm) has concluded that such Internal Revenue Service claim or adjustment has a reasonable basis. (b) If as a result of an Event of Default, or the misrepresentation of or breach by Tenant of any of the warranties, representations and covenants set forth in clause (a) of this Paragraph 30, the Depreciation Deductions are lost, disallowed, eliminated, reduced, recaptured, compromised, delayed or otherwise made unavailable to Landlord in computing its liability for federal income tax (a “Deduction Loss”), or, if as a result of the occurrence of an Event of Default, Landlord is required to include in its income from this Lease amounts other than Anticipated Lease Income (an “Inclusion”, any Inclusion or Deduction Loss referred to as a “Loss”), subject to clause (c) of this Paragraph 30, Tenant shall make the Tax Indemnity Payment to Landlord in accordance with this Paragraph 30. The “Tax Indemnity Payment” shall be the amount that is required to be paid to Landlord in order to insure that Landlord’s after-tax net return from this Lease (the “Net Return”) will be equal to, but no greater than, the Net Return Lessor expected to receive as of the Commencement Date (the “Expected Net Return”). The amount of the Tax Indemnity Payment shall be computed using the same methodology and assumptions used in computing the Expected Net Return, including without limitation, that the Depreciation Deductions are Landlord’s only tax deductions with respect to this Lease, that Landlord is able to fully utilize the Depreciation Deductions and, in the case of Inclusions, is fully taxable on its net income at the maximum federal income tax rate then in effect for corporations. If Tenant requests that the amount of the Tax Indemnity Payment be verified, Tenant and Landlord shall appoint a mutually acceptable unrelated recognized lease broker or lease advisor (such acceptance not to be unreasonably withheld) to confirm the calculations of the Tax Indemnity Payment. Landlord shall provide such broker or advisor with the methodology and assumptions used in computing the Expected Net Return, as well as all other information utilized by Landlord in computing the Tax Indemnity Payment, provided that such broker or advisor agrees to maintain the confidentiality of such information (including from Tenant) pursuant to a written agreement reasonably acceptable to Landlord. The conclusion of such broker or advisor shall be conclusive and binding on Landlord and Tenant with respect to the related Tax Indemnity Payment. If such broker or advisor concludes that Landlord’s calculation of the Tax Indemnity Payment is correct or is lower than the correct Tax Indemnity Payment, Tenant shall pay for the costs and expenses of such broker or advisor; if such broker or advisor concludes that Landlord’s calculation of the Tax Indemnity Payment is too high, Landlord shall pay the costs and expenses of such broker or advisor. (c) Tenant shall pay to Landlord the Tax Indemnity Payment within 30 days of receiving written notice from Landlord describing the Loss and the calculation of the Tax Indemnity Payment; provided, however that Tenant shall not be required to pay the Tax Indemnity Payment with respect to any Loss so long as such Loss is being contested pursuant to this Paragraph 30. (d) Landlord shall promptly notify Tenant in writing of any actual or proposed claim, adjustment or other action of any tax authority received by Landlord in writing with respect to which Tenant may be required to provide indemnification under this Paragraph 30 (“Proposed Adjustment”) (but failure of Landlord to so notify Tenant shall not relieve Tenant of its obligations hereunder except to the extent that Tenant’s contest rights hereunder are materially adversely affected). If Tenant shall request in writing within sixty (60) days after Landlord’s notice described above that the Proposed Adjustment be contested (or such shorter period specified in Landlord’s notice as the time period within which Landlord is required by the applicable Governmental Authority to take action), Landlord shall contest the Proposed Adjustment and will not settle any contest thereof without the consent of Tenant, which consent shall not be unreasonably withheld; provided, however, that: (i) prior to taking such action, Tenant shall have furnished Landlord with an opinion of independent tax advisor chosen by Tenant and reasonably acceptable to Landlord, to the effect that Landlord has a reasonable possibility of success in contesting the claim; (ii) prior to taking such action, Tenant shall have (A) acknowledged its obligation to indemnify Landlord hereunder in the event Landlord does not prevail in such contest and (B) agreed to reimburse Landlord promptly on demand (or, if so requested by Landlord, in advance) for all reasonable out-of-pocket costs and expenses that Landlord incurs in connection with contesting such claim, including without limitation reasonable attorneys’ and accountants’ fees and expenses; (iii) no Event of Default shall exist and be continuing; (iv) Landlord shall not be obligated to contest any proposed amount that is less than $100,000; and (v) Landlord shall in all events control the contest, and Tenant shall not have any right to inspect the books and records of Landlord, but shall have reasonable opportunity to review and comment on portions of documentation, protests, memoranda or briefs (which may be redacted portions) relating exclusively to a Proposed Adjustment. (e) In the event Landlord pays the tax claimed and then seeks a refund, Landlord may require Tenant to advance funds sufficient to pay the tax that would be indemnified by Tenant hereunder if the refund claim were resolved adversely to Landlord. To the extent the refund claim is successful, the refund received from the taxing authority and attributable to funds advanced by Tenant shall be refunded to Tenant, including any interest actually received and fairly attributable to amounts advanced by Tenant, unless the refund is needed to pay an indemnity. Notwithstanding anything to the contrary in this Pxxxxxxxx 00, Xxxxxxxx may at any time decline to take any further action with respect to a Proposed Adjustment or may settle any contest without the consent of Tenant; provided, however, that if Tenant has properly requested such action pursuant to this Pxxxxxxxx 00, Xxxxxxxx shall notify Tenant in writing that Landlord waives its right to any indemnity payment by Tenant (other than with respect to the expenses of the contest incurred prior to such notice) that Tenant would otherwise be obligated to pay pursuant to this Paragraph 30 in respect of such adjustment, including any indemnities arising from such adjustment in subsequent years or that would arise by reason of the fact that the subject matter of such adjustment is of a continuing nature. In the case of any such waiver by Landlord of its rights to an indemnity payment from Tenant, Landlord shall return to Tenant any amounts previously paid by Tenant to Landlord for expenses or costs related to the contest (to the extent not yet expended) and, if applicable, any amounts paid by Tenant for taxes with respect to which Landlord has waived its right to an indemnity (plus interest on such tax payment at the rate then applicable under the Code to refunds of federal income taxes). (f) For purposes of this Paragraph 30, “Landlord” shall be deemed to include the consolidated Federal taxpayer group of which Landlord is a member. (g) If as a result of a Tax Loss for which Tenant has paid an indemnity hereunder, Landlord shall actually realize any federal, state or local income tax savings that it would not have realized but for such Tax Loss (or the event or circumstance giving rise thereto), which tax savings have not previously been taken into account in computing the amount of the Tax Indemnity Payment hereunder, then Landlord shall promptly pay to Tenant an amount equal to the sum of (A) the amount of such tax savings and (B) the amount of any additional federal, state and local income tax savings as a result of any payment made pursuant to this sentence; provided, however, Landlord shall not be required to make any such payment to the extent that the cumulative amount of such payments would exceed the amount of all Tax Indemnity Payment by Tenant to Landlord pursuant to Paragraph 30 with respect to such Tax Loss. If for any reason any tax benefit or savings taken into account in computing the amount of any Tax Indemnity Payment or any payment to the Tenant pursuant to this Paragraph 30, shall be lost or otherwise determined to be unavailable, such loss or unavailability shall be treated as a Loss for which Tenant is required to indemnify the Landlord under this Paragraph 30. Landlord shall act in good faith in filing its returns, dealing with tax authorities and pursuing tax benefits and savings that would, in each case, minimize Tenant’s indemnity obligations hereunder. (h) Notwithstanding anything herein to the contrary, the provisions of this Paragraph 30 shall survive the earlier termination of this Lease.

Appears in 5 contracts

Samples: Master Lease Agreement (Old National Bancorp /In/), Master Lease Agreement (Old National Bancorp /In/), Master Lease Agreement (Old National Bancorp /In/)

Special Tax Indemnity. (a) Tenant hereby represents, warrants and covenants to Landlord as follows: (i) during the Term, Tenant will not construct or install any component, improvement, alteration, or addition on ~~any~~ the Leased ~~Property~~Premises, without prior written consent from Landlord, if such construction or installation would cause ~~such~~ the Leased ~~Property~~Premises, or any part thereof, to be “limited use property,” as such term is used in Section 5 of Revenue Procedure 2001-28, (ii) Tenant is not a “tax-exempt entity” within the meaning of Section 168(h)(2) of the Code and will not take any action that would cause ~~any~~ the Leased ~~Property~~Premises, or any part thereof, to constitute “tax-exempt use property” within the meaning of Section 168(h) of the Code; (iii) neither Tenant nor any Affiliate will claim the Depreciation Deductions or otherwise take the position that it is the owner of ~~any~~ the Leased ~~Property~~Premises, or any part thereof, for federal income tax purposes; (iv) as of the Commencement Date, no the Leased ~~Property~~ Premises will not require any improvement, modification or addition in order to be rendered complete for its intended use by Tenant; and (v) to the best of Tenant’s knowledge, all written information of a factual nature with respect to ~~any~~ the Leased ~~Property~~ Premises that was provided to Landlord or an appraiser engaged by Landlord to appraise ~~such~~ the Leased ~~Property~~ Premises by or on behalf of Tenant or any Affiliate of Tenant was true and accurate in all material respects as of the date provided to Landlord or such appraiser. Notwithstanding the provisions of clause (iii) above, Tenant may take the position that it is the owner of a the Leased ~~Property~~ Premises for federal income tax purposes if Tenant provides to Landlord an opinion of independent tax counsel that such treatment is required by law, and Landlord consents to such treatment, which consent shall not be unreasonably withheld, ~~conditioned or delayed~~ or to the extent required as a result of the Internal Revenue Service making a claim or adjustment against Tenant in connection with such tax reporting, and tax counsel (or Tenant’s outside accounting firm) has concluded that such Internal Revenue Service claim or adjustment has a reasonable basis. (b) If as a result of an Event of Default, or the misrepresentation of or breach by Tenant of any of the warranties, representations and covenants set forth in clause (a) of this Paragraph 30, the Depreciation Deductions are lost, disallowed, eliminated, reduced, recaptured, compromised, delayed or otherwise made unavailable to Landlord in computing its liability for federal income tax (a “Deduction Loss”), or, if as a result of the occurrence of an Event of Default, Landlord is required to include in its income from this Lease amounts other than Anticipated Lease Income (an “Inclusion”, any Inclusion or Deduction Loss referred to as a “Loss”), subject to clause (c) of this Paragraph 30, Tenant shall make the Tax Indemnity Payment to Landlord in accordance with this Paragraph 30. The “Tax Indemnity Payment” shall be the amount that is required to be paid to Landlord in order to insure that Landlord’s after-tax net return from this Lease (the “Net Return”) will be equal to, but no greater than, the Net Return Lessor expected to receive as of the Commencement Date (the “Expected Net Return”). The amount of the Tax Indemnity Payment shall be computed using the same methodology and assumptions used in computing the Expected Net Return, including without limitation, that the Depreciation Deductions are Landlord’s only tax deductions with respect to this Lease, that Landlord is able to fully utilize the Depreciation Deductions and, in the case of Inclusions, is fully taxable on its net income at the maximum federal income tax rate then in effect for corporations. If Tenant requests that the amount of the Tax Indemnity Payment be verified, Tenant and Landlord shall appoint a mutually acceptable unrelated recognized lease broker or lease advisor (such acceptance not to be unreasonably withheld) to confirm the calculations of the Tax Indemnity Payment. Landlord shall provide such broker or advisor with the methodology and assumptions used in computing the Expected Net Return, as well as all other information utilized by Landlord in computing the Tax Indemnity Payment, provided that such broker or advisor agrees to maintain the confidentiality of such information (including from Tenant) pursuant to a written agreement reasonably acceptable to Landlord. The conclusion of such broker or advisor shall be conclusive and binding on Landlord and Tenant with respect to the related Tax Indemnity Payment. If such broker or advisor concludes that Landlord’s calculation of the Tax Indemnity Payment is correct or is lower than the correct Tax Indemnity Payment, Tenant shall pay for the costs and expenses of such broker or advisor; if such broker or advisor concludes that Landlord’s calculation of the Tax Indemnity Payment is too high, Landlord shall pay the costs and expenses of such broker or advisor. (c) Tenant shall pay to Landlord the Tax Indemnity Payment within 30 days of receiving written notice from Landlord describing the Loss and the calculation of the Tax Indemnity Payment; provided, however that Tenant shall not be required to pay the Tax Indemnity Payment with respect to any Loss so long as such Loss is being contested pursuant to this Paragraph 30. (d) Landlord shall promptly notify Tenant in writing of any actual or proposed claim, adjustment or other action of any tax authority received by Landlord in writing with respect to which Tenant may be required to provide indemnification under this Paragraph 30 (“Proposed Adjustment”) (but failure of Landlord to so notify Tenant shall not relieve Tenant of its obligations hereunder except to the extent that Tenant’s contest rights hereunder are materially adversely affected). If Tenant shall request in writing within sixty (60) days after Landlord’s notice described above that the Proposed Adjustment be contested (or such shorter period specified in Landlord’s notice as the time period within which Landlord is required by the applicable Governmental Authority to take action), Landlord shall contest the Proposed Adjustment and will not settle any contest thereof without the consent of Tenant, which consent shall not be unreasonably withheld; provided, however, that: (i) prior to taking such action, Tenant shall have furnished Landlord with an opinion of independent tax advisor chosen by Tenant and reasonably acceptable to Landlord, to the effect that Landlord has a reasonable possibility of success in contesting the claim; (ii) prior to taking such action, Tenant shall have (A) acknowledged its obligation to indemnify Landlord hereunder in the event Landlord does not prevail in such contest and (B) agreed to reimburse Landlord promptly on demand (or, if so requested by Landlord, in advance) for all reasonable out-of-pocket costs and expenses that Landlord incurs in connection with contesting such claim, including without limitation reasonable attorneys’ and accountants’ fees and expenses; (iii) no Event of Default shall exist and be continuing; (iv) Landlord shall not be obligated to contest any proposed amount that is less than $100,000; and (v) Landlord shall in all events control the contest, and Tenant shall not have any right to inspect the books and records of Landlord, but shall have reasonable opportunity to review and comment on portions of documentation, protests, memoranda or briefs (which may be redacted portions) relating exclusively to a Proposed Adjustment. (e) In the event Landlord pays the tax claimed and then seeks a refund, Landlord may require Tenant to advance funds sufficient to pay the tax that would be indemnified by Tenant hereunder if the refund claim were resolved adversely to Landlord. To the extent the refund claim is successful, the refund received from the taxing authority and attributable to funds advanced by Tenant shall be refunded to Tenant, including any interest actually received and fairly attributable to amounts advanced by Tenant, unless the refund is needed to pay an indemnity. Notwithstanding anything to the contrary in this Pxxxxxxxx 00, Xxxxxxxx may at any time decline to take any further action with respect to a Proposed Adjustment or may settle any contest without the consent of Tenant; provided, however, that if Tenant has properly requested such action pursuant to this Pxxxxxxxx 00, Xxxxxxxx shall notify Tenant in writing that Landlord waives its right to any indemnity payment by Tenant (other than with respect to the expenses of the contest incurred prior to such notice) that Tenant would otherwise be obligated to pay pursuant to this Paragraph 30 in respect of such adjustment, including any indemnities arising from such adjustment in subsequent years or that would arise by reason of the fact that the subject matter of such adjustment is of a continuing nature. In the case of any such waiver by Landlord of its rights to an indemnity payment from Tenant, Landlord shall return to Tenant any amounts previously paid by Tenant to Landlord for expenses or costs related to the contest (to the extent not yet expended) and, if applicable, any amounts paid by Tenant for taxes with respect to which Landlord has waived its right to an indemnity (plus interest on such tax payment at the rate then applicable under the Code to refunds of federal income taxes). (f) For purposes of this Paragraph 30, “Landlord” shall be deemed to include the consolidated Federal taxpayer group of which Landlord is a member. (g) If as a result of a Tax Loss for which Tenant has paid an indemnity hereunder, Landlord shall actually realize any federal, state or local income tax savings that it would not have realized but for such Tax Loss (or the event or circumstance giving rise thereto), which tax savings have not previously been taken into account in computing the amount of the Tax Indemnity Payment hereunder, then Landlord shall promptly pay to Tenant an amount equal to the sum of (A) the amount of such tax savings and (B) the amount of any additional federal, state and local income tax savings as a result of any payment made pursuant to this sentence; provided, however, Landlord shall not be required to make any such payment to the extent that the cumulative amount of such payments would exceed the amount of all Tax Indemnity Payment by Tenant to Landlord pursuant to Paragraph 30 with respect to such Tax Loss. If for any reason any tax benefit or savings taken into account in computing the amount of any Tax Indemnity Payment or any payment to the Tenant pursuant to this Paragraph 30, shall be lost or otherwise determined to be unavailable, such loss or unavailability shall be treated as a Loss for which Tenant is required to indemnify the Landlord under this Paragraph 30. Landlord shall act in good faith in filing its returns, dealing with tax authorities and pursuing tax benefits and savings that would, in each case, minimize Tenant’s indemnity obligations hereunder. (h) Notwithstanding anything herein to the contrary, the provisions of this Paragraph 30 shall survive the earlier termination of this Lease.

Appears in 3 contracts

Samples: Lease Agreement (Old National Bancorp /In/), Lease Agreement (Old National Bancorp /In/), Lease Agreement (Old National Bancorp /In/)

Special Tax Indemnity. ~~(a) Tenant hereby represents, warrants and covenants to Landlord as follows:~~ (i) ~~during~~ All references to "Lessor" in this Section 7(c) shall include (A) Lessor's successors and assigns, and (B) each member of the ~~Term~~affiliated group of corporations, Tenant will not construct or install any component, improvement, alteration, or addition on any Leased Property, without prior written consent from Landlord, if such construction or installation would cause such Leased Property, or any part thereof, to be “limited use property,” as ~~such term is used~~ defined in Section ~~5 of Revenue Procedure 2001-28, (ii~~1504(a) Tenant is not a “tax-exempt entity” within the meaning of Section 168(h)(2) of the Code and will not take any action that would cause any Leased Property, or any part thereof, to constitute “tax-exempt use property” within the meaning of Section 168(h) of the Code; (iii) neither Tenant nor any Affiliate will claim the Depreciation Deductions or otherwise take the position that it is the owner of any Leased Property, or any part thereof, for federal income tax purposes; (iv) as of the Commencement Date, no Leased Property will require any improvement, modification or addition in order to be rendered complete for its intended use by Tenant; and (v) to the best of Tenant’s knowledge, all written information of a factual nature with respect to any Leased Property that was provided to Landlord or an appraiser engaged by Landlord to appraise such Leased Property by or on behalf of Tenant or any Affiliate of Tenant was true and accurate in all material respects as of the date provided to Landlord or such appraiser. Notwithstanding the provisions of clause (iii) above, Tenant may take the position that it is the owner of a Leased Property for federal income tax purposes if Tenant provides to Landlord an opinion of independent tax counsel that such treatment is required by law, and Landlord consents to such treatment, which consent shall not be unreasonably withheld, conditioned or delayed or to the extent required as a result of the Internal Revenue ~~Service making a claim or adjustment against Tenant in connection with such tax reporting~~Code of 1986, ~~and tax counsel~~ as amended (~~or Tenant’s outside accounting firm) has concluded that such Internal Revenue Service claim or adjustment has a reasonable basis. (b) If as a result of an Event of Default, or~~ the misrepresentation of or breach by Tenant of any of the warranties, representations and covenants set forth in clause (a) of this Paragraph 30, the Depreciation Deductions are lost, disallowed, eliminated, reduced, recaptured, compromised, delayed or otherwise made unavailable to Landlord in computing its liability for federal income tax (a “Deduction Loss”"Code"), ~~or, if as a result~~ of the occurrence of an Event of Default, Landlord is required to include in its income from this Lease amounts other than Anticipated Lease Income (an “Inclusion”, any Inclusion or Deduction Loss referred to as a “Loss”), subject to clause (c) of this Paragraph 30, Tenant shall make the Tax Indemnity Payment to Landlord in accordance with this Paragraph 30. The “Tax Indemnity Payment” shall be the amount that is required to be paid to Landlord in order to insure that Landlord’s after-tax net return from this Lease (the “Net Return”) will be equal to, but no greater than, the Net Return which Lessor expected to receive as of the Commencement Date (the “Expected Net Return”). The amount of the Tax Indemnity Payment shall be computed using the same methodology and assumptions used in computing the Expected Net Return, including without limitation, that the Depreciation Deductions are Landlord’s only tax deductions with respect to this Lease, that Landlord is able to fully utilize the Depreciation Deductions and, in the case of Inclusions, is fully taxable on its net income at the maximum federal income tax rate then in effect for corporations. If Tenant requests that the amount of the Tax Indemnity Payment be verified, Tenant and Landlord shall appoint a mutually acceptable unrelated recognized lease broker or lease advisor (such acceptance not to be unreasonably withheld) to confirm the calculations of the Tax Indemnity Payment. Landlord shall provide such broker or advisor with the methodology and assumptions used in computing the Expected Net Return, as well as all other information utilized by Landlord in computing the Tax Indemnity Payment, provided that such broker or advisor agrees to maintain the confidentiality of such information (including from Tenant) pursuant to a written agreement reasonably acceptable to Landlord. The conclusion of such broker or advisor shall be conclusive and binding on Landlord and Tenant with respect to the related Tax Indemnity Payment. If such broker or advisor concludes that Landlord’s calculation of the Tax Indemnity Payment is correct or is lower than the correct Tax Indemnity Payment, Tenant shall pay for the costs and expenses of such broker or advisor; if such broker or advisor concludes that Landlord’s calculation of the Tax Indemnity Payment is too high, Landlord shall pay the costs and expenses of such broker or advisor. (c) Tenant shall pay to Landlord the Tax Indemnity Payment within 30 days of receiving written notice from Landlord describing the Loss and the calculation of the Tax Indemnity Payment; provided, however that Tenant shall not be required to pay the Tax Indemnity Payment with respect to any Loss so long as such Loss is being contested pursuant to this Paragraph 30. (d) Landlord shall promptly notify Tenant in writing of any actual or proposed claim, adjustment or other action of any tax authority received by Landlord in writing with respect to which Tenant may be required to provide indemnification under this Paragraph 30 (“Proposed Adjustment”) (but failure of Landlord to so notify Tenant shall not relieve Tenant of its obligations hereunder except to the extent that Tenant’s contest rights hereunder are materially adversely affected). If Tenant shall request in writing within sixty (60) days after Landlord’s notice described above that the Proposed Adjustment be contested (or such ~~shorter period specified in Landlord’s notice as the time period within which Landlord~~ successor or assign is required by the applicable Governmental Authority to take action), Landlord shall contest the Proposed Adjustment and will not settle any contest thereof without the consent of Tenant, which consent shall not be unreasonably withheld; provided, however, that: (i) prior to taking such action, Tenant shall have furnished Landlord with an opinion of independent tax advisor chosen by Tenant and reasonably acceptable to Landlord, to the effect that Landlord has a reasonable possibility of success in contesting the claim; (ii) prior to taking such action, Tenant shall have (A) acknowledged its obligation to indemnify Landlord hereunder in the event Landlord does not prevail in such contest and (B) agreed to reimburse Landlord promptly on demand (or, if so requested by Landlord, in advance) for all reasonable out-of-pocket costs and expenses that Landlord incurs in connection with contesting such claim, including without limitation reasonable attorneys’ and accountants’ fees and expenses; (iii) no Event of Default shall exist and be continuing; (iv) Landlord shall not be obligated to contest any proposed amount that is less than $100,000; and (v) Landlord shall in all events control the contest, and Tenant shall not have any right to inspect the books and records of Landlord, but shall have reasonable opportunity to review and comment on portions of documentation, protests, memoranda or briefs (which may be redacted portions) relating exclusively to a Proposed Adjustment. (e) In the event Landlord pays the tax claimed and then seeks a refund, Landlord may require Tenant to advance funds sufficient to pay the tax that would be indemnified by Tenant hereunder if the refund claim were resolved adversely to Landlord. To the extent the refund claim is successful, the refund received from the taxing authority and attributable to funds advanced by Tenant shall be refunded to Tenant, including any interest actually received and fairly attributable to amounts advanced by Tenant, unless the refund is needed to pay an indemnity. Notwithstanding anything to the contrary in this Pxxxxxxxx 00, Xxxxxxxx may at any time decline to take any further action with respect to a Proposed Adjustment or may settle any contest without the consent of Tenant; provided, however, that if Tenant has properly requested such action pursuant to this Pxxxxxxxx 00, Xxxxxxxx shall notify Tenant in writing that Landlord waives its right to any indemnity payment by Tenant (other than with respect to the expenses of the contest incurred prior to such notice) that Tenant would otherwise be obligated to pay pursuant to this Paragraph 30 in respect of such adjustment, including any indemnities arising from such adjustment in subsequent years or that would arise by reason of the fact that the subject matter of such adjustment is of a continuing nature. In the case of any such waiver by Landlord of its rights to an indemnity payment from Tenant, Landlord shall return to Tenant any amounts previously paid by Tenant to Landlord for expenses or costs related to the contest (to the extent not yet expended) and, if applicable, any amounts paid by Tenant for taxes with respect to which Landlord has waived its right to an indemnity (plus interest on such tax payment at the rate then applicable under the Code to refunds of federal income taxes). (f) For purposes of this Paragraph 30, “Landlord” shall be deemed to include the consolidated Federal taxpayer group of which Landlord is a member. (gii) ~~If as a result of a Tax Loss~~ Lessor shall be treated for which Tenant has paid an indemnity hereunder, Landlord shall actually realize any federal, state or local income tax savings that it would not have realized but for such Tax Loss (or the event or circumstance giving rise thereto), which tax savings have not previously been taken into account in computing the amount of the Tax Indemnity Payment hereunder, then Landlord shall promptly pay to Tenant an amount equal to the sum of (A) the amount of such tax savings and (B) the amount of any additional federalFederal, state and local income tax ~~savings~~ purposes as the owner of the Units and shall be entitled to take into account in computing its income tax liabilities all items of income, deduction (including depreciation consistent with Lessee's representation in the applicable Schedule), credit, gain or loss relating to ownership of the Units as are provided to owners of similar equipment under the Code and applicable state and local tax laws as in effect on the Acceptance Date of such Units (collectively, the "Tax Benefits"). (iii) If (A) Lessor loses, is delayed in claiming, is required to recapture (other than in connection with a sale of the Unit following the end of the lease term, provided Lessee is not then in default), is not allowed or does not claim as a result of ~~any payment made pursuant~~ a written opinion of Lessor tax counsel to ~~this sentence; provided, however, Landlord shall~~ the effect that Lessor's claiming of such Tax Benefits probably would not be upheld by a court if the matter were litigated (that is, that the chances of a finding against Lessor are at least as great as the chances of a finding in favor of Lessor) all or any portion of any Tax Benefits, under any circumstances, at any time and for any reason, or (B) Lessor is required under Section 467 of the Code or otherwise to include in its gross income with respect to any Lease or Unit any amount at any time other than rentals and other amounts as and when accrued in accordance with the express terms of the Lease (together, "Tax Loss"), then, upon Lessor's demand and at Lessor's option, either: (x) all further rental payments with respect to such Unit, if any, shall be increased by an amount, or (y) Lessee shall pay to Lessor a lump sum amount, which shall in either case maintain the net economic after-tax yield, cash-flow and rate of return Lessor originally anticipated, based on an assumed combined Federal, state and local income tax rate for Lessor of 38.20% and other assumptions originally used by Lessor in evaluating the transaction and setting the rental therefor and the other terms thereof. Lessee shall also pay to Lessor on demand all interest, costs (including Attorney Costs), penalties and additions to tax associated with the Tax Loss. (iv) Lessee shall be under no obligation to make ~~any such~~ a payment under the preceding paragraph (iii) relating to a Tax Loss to the extent that the ~~cumulative amount of such payments would exceed the amount of all~~ Tax ~~Indemnity Payment~~ Loss is caused by ~~Tenant~~ Lessor's failure to ~~Landlord pursuant~~ have sufficient taxable income to ~~Paragraph 30 with respect~~ benefit from any Tax Benefits. Lessor shall have no obligation to ~~such~~ contest any Tax Loss. If for any reason any tax benefit or savings taken into account in computing the amount of any Tax Indemnity Payment or any payment to the Tenant pursuant to this Paragraph 30, shall be lost or otherwise determined to be unavailable, such loss or unavailability shall be treated as a Loss for which Tenant is required to indemnify the Landlord under this Paragraph 30. Landlord shall act in good faith in filing its returns, dealing with tax authorities and pursuing tax benefits and savings that would, in each case, minimize Tenant’s indemnity obligations hereunder. ~~(h) Notwithstanding anything herein to the contrary, the provisions of this Paragraph 30 shall survive the earlier termination of this Lease.~~

Appears in 2 contracts

Samples: Lease Agreement (Freds Inc), Lease Agreement (Tripath Imaging Inc)

Special Tax Indemnity. ~~(a) Tenant hereby represents, warrants and covenants to Landlord as follows:~~ (i) ~~during~~ All references to "Lessor" in this Section 7(c) shall include (A) Lessor's successors and assigns, and (B) each member of the ~~Term~~affiliated group of corporations, Tenant will not construct or install any component, improvement, alteration, or addition on any Leased Property, without prior written consent from Landlord, if such construction or installation would cause such Leased Property, or any part thereof, to be “limited use property,” as ~~such term is used~~ defined in Section ~~5 of Revenue Procedure 2001-28, (ii~~1504(a) Tenant is not a “tax-exempt entity” within the meaning of Section 168(h)(2) of the Code and will not take any action that would cause any Leased Property, or any part thereof, to constitute “tax-exempt use property” within the meaning of Section 168(h) of the Code; (iii) neither Tenant nor any Affiliate will claim the Depreciation Deductions or otherwise take the position that it is the owner of any Leased Property, or any part thereof, for federal income tax purposes; (iv) as of the Commencement Date, no Leased Property will require any improvement, modification or addition in order to be rendered complete for its intended use by Tenant; and (v) to the best of Tenant’s knowledge, all written information of a factual nature with respect to any Leased Property that was provided to Landlord or an appraiser engaged by Landlord to appraise such Leased Property by or on behalf of Tenant or any Affiliate of Tenant was true and accurate in all material respects as of the date provided to Landlord or such appraiser. Notwithstanding the provisions of clause (iii) above, Tenant may take the position that it is the owner of a Leased Property for federal income tax purposes if Tenant provides to Landlord an opinion of independent tax counsel that such treatment is required by law, and Landlord consents to such treatment, which consent shall not be unreasonably withheld, conditioned or delayed or to the extent required as a result of the Internal Revenue ~~Service making a claim or adjustment against Tenant in connection with such tax reporting~~Code of 1986, ~~and tax counsel~~ as amended (~~or Tenant’s outside accounting firm) has concluded that such Internal Revenue Service claim or adjustment has a reasonable basis. (b) If as a result of an Event of Default, or~~ the misrepresentation of or breach by Tenant of any of the warranties, representations and covenants set forth in clause (a) of this Paragraph 30, the Depreciation Deductions are lost, disallowed, eliminated, reduced, recaptured, compromised, delayed or otherwise made unavailable to Landlord in computing its liability for federal income tax (a “Deduction Loss”"Code"), ~~or, if as a result~~ of the occurrence of an Event of Default, Landlord is required to include in its income from this Lease amounts other than Anticipated Lease Income (an “Inclusion”, any Inclusion or Deduction Loss referred to as a “Loss”), subject to clause (c) of this Paragraph 30, Tenant shall make the Tax Indemnity Payment to Landlord in accordance with this Paragraph 30. The “Tax Indemnity Payment” shall be the amount that is required to be paid to Landlord in order to insure that Landlord’s after-tax net return from this Lease (the “Net Return”) will be equal to, but no greater than, the Net Return which Lessor expected to receive as of the Commencement Date (the “Expected Net Return”). The amount of the Tax Indemnity Payment shall be computed using the same methodology and assumptions used in computing the Expected Net Return, including without limitation, that the Depreciation Deductions are Landlord’s only tax deductions with respect to this Lease, that Landlord is able to fully utilize the Depreciation Deductions and, in the case of Inclusions, is fully taxable on its net income at the maximum federal income tax rate then in effect for corporations. If Tenant requests that the amount of the Tax Indemnity Payment be verified, Tenant and Landlord shall appoint a mutually acceptable unrelated recognized lease broker or lease advisor (such acceptance not to be unreasonably withheld) to confirm the calculations of the Tax Indemnity Payment. Landlord shall provide such broker or advisor with the methodology and assumptions used in computing the Expected Net Return, as well as all other information utilized by Landlord in computing the Tax Indemnity Payment, provided that such broker or advisor agrees to maintain the confidentiality of such information (including from Tenant) pursuant to a written agreement reasonably acceptable to Landlord. The conclusion of such broker or advisor shall be conclusive and binding on Landlord and Tenant with respect to the related Tax Indemnity Payment. If such broker or advisor concludes that Landlord’s calculation of the Tax Indemnity Payment is correct or is lower than the correct Tax Indemnity Payment, Tenant shall pay for the costs and expenses of such broker or advisor; if such broker or advisor concludes that Landlord’s calculation of the Tax Indemnity Payment is too high, Landlord shall pay the costs and expenses of such broker or advisor. (c) Tenant shall pay to Landlord the Tax Indemnity Payment within 30 days of receiving written notice from Landlord describing the Loss and the calculation of the Tax Indemnity Payment; provided, however that Tenant shall not be required to pay the Tax Indemnity Payment with respect to any Loss so long as such Loss is being contested pursuant to this Paragraph 30. (d) Landlord shall promptly notify Tenant in writing of any actual or proposed claim, adjustment or other action of any tax authority received by Landlord in writing with respect to which Tenant may be required to provide indemnification under this Paragraph 30 (“Proposed Adjustment”) (but failure of Landlord to so notify Tenant shall not relieve Tenant of its obligations hereunder except to the extent that Tenant’s contest rights hereunder are materially adversely affected). If Tenant shall request in writing within sixty (60) days after Landlord’s notice described above that the Proposed Adjustment be contested (or such ~~shorter period specified in Landlord’s notice as the time period within which Landlord~~ successor or assign is required by the applicable Governmental Authority to take action), Landlord shall contest the Proposed Adjustment and will not settle any contest thereof without the consent of Tenant, which consent shall not be unreasonably withheld; provided, however, that: (i) prior to taking such action, Tenant shall have furnished Landlord with an opinion of independent tax advisor chosen by Tenant and reasonably acceptable to Landlord, to the effect that Landlord has a reasonable possibility of success in contesting the claim; (ii) prior to taking such action, Tenant shall have (A) acknowledged its obligation to indemnify Landlord hereunder in the event Landlord does not prevail in such contest and (B) agreed to reimburse Landlord promptly on demand (or, if so requested by Landlord, in advance) for all reasonable out-of-pocket costs and expenses that Landlord incurs in connection with contesting such claim, including without limitation reasonable attorneys’ and accountants’ fees and expenses; (iii) no Event of Default shall exist and be continuing; (iv) Landlord shall not be obligated to contest any proposed amount that is less than $100,000; and (v) Landlord shall in all events control the contest, and Tenant shall not have any right to inspect the books and records of Landlord, but shall have reasonable opportunity to review and comment on portions of documentation, protests, memoranda or briefs (which may be redacted portions) relating exclusively to a Proposed Adjustment. (e) In the event Landlord pays the tax claimed and then seeks a refund, Landlord may require Tenant to advance funds sufficient to pay the tax that would be indemnified by Tenant hereunder if the refund claim were resolved adversely to Landlord. To the extent the refund claim is successful, the refund received from the taxing authority and attributable to funds advanced by Tenant shall be refunded to Tenant, including any interest actually received and fairly attributable to amounts advanced by Tenant, unless the refund is needed to pay an indemnity. Notwithstanding anything to the contrary in this Pxxxxxxxx 00, Xxxxxxxx may at any time decline to take any further action with respect to a Proposed Adjustment or may settle any contest without the consent of Tenant; provided, however, that if Tenant has properly requested such action pursuant to this Pxxxxxxxx 00, Xxxxxxxx shall notify Tenant in writing that Landlord waives its right to any indemnity payment by Tenant (other than with respect to the expenses of the contest incurred prior to such notice) that Tenant would otherwise be obligated to pay pursuant to this Paragraph 30 in respect of such adjustment, including any indemnities arising from such adjustment in subsequent years or that would arise by reason of the fact that the subject matter of such adjustment is of a continuing nature. In the case of any such waiver by Landlord of its rights to an indemnity payment from Tenant, Landlord shall return to Tenant any amounts previously paid by Tenant to Landlord for expenses or costs related to the contest (to the extent not yet expended) and, if applicable, any amounts paid by Tenant for taxes with respect to which Landlord has waived its right to an indemnity (plus interest on such tax payment at the rate then applicable under the Code to refunds of federal income taxes). (f) For purposes of this Paragraph 30, “Landlord” shall be deemed to include the consolidated Federal taxpayer group of which Landlord is a member. (gii) ~~If as a result of a Tax Loss~~ Lessor shall be treated for which Tenant has paid an indemnity hereunder, Landlord shall actually realize any federal, state or local income tax savings that it would not have realized but for such Tax Loss (or the event or circumstance giving rise thereto), which tax savings have not previously been taken into account in computing the amount of the Tax Indemnity Payment hereunder, then Landlord shall promptly pay to Tenant an amount equal to the sum of (A) the amount of such tax savings and (B) the amount of any additional federalFederal, state and local income tax ~~savings~~ purposes as the owner of the Units and shall be entitled to take into account in computing its income tax liabilities all items of income, deduction (including depreciation consistent with Lessee's representation in the applicable Schedule), credit, gain or loss relating to ownership of the Units as are provided to owners of similar equipment under the Code and applicable state and local tax laws as in effect on the Acceptance Date of such Units (collectively, the "Tax Benefits"). (iii) If (A) Lessor loses, is delayed in claiming, is required to recapture (other than in connection with a sale of the Unit following the end of the lease term, provided Lessee is not then in default), is not allowed or does not claim as a result of ~~any payment made pursuant~~ a written opinion of Lessor tax counsel to ~~this sentence; provided, however, Landlord shall~~ the effect that Lessor's claiming of such Tax Benefits probably would not be upheld by a court if the matter were litigated (that is, that the chances of a finding against Lessor are at least as great as the chances of a finding in favor of Lessor) all or any portion of any Tax Benefits, under any circumstances, at any time and for any reason, or (B) Lessor is required under Section 467 of the Code or otherwise to include in its gross income with respect to any Lease or Unit any amount at any time other than rentals and other amounts as and when accrued in accordance with the express terms of the Lease (together, "Tax Loss"), then, upon Lessor's demand and at Lessor's option, either: (x) all further rental payments with respect to such Unit, if any, shall be increased by an amount, or (y) Lessee shall pay to Lessor a lump sum amount, which shall in either case maintain the net economic after-tax yield, cash-flow and rate of return Lessor originally anticipated, based on an assumed combined Federal, state and local income tax rate for Lessor of 38.2% and other assumptions originally used by Lessor in evaluating the transaction and setting the rental therefor and the other terms thereof. Lessee shall also pay to Lessor on demand all interest, costs (including Attorney Costs), penalties and additions to tax associated with the Tax Loss. (iv) Lessee shall be under no obligation to make ~~any such~~ a payment under the preceding paragraph (iii) relating to a Tax Loss to the extent that the ~~cumulative amount of such payments would exceed the amount of all~~ Tax ~~Indemnity Payment~~ Loss is caused by ~~Tenant~~ Lessor's failure to ~~Landlord pursuant~~ have sufficient taxable income to ~~Paragraph 30 with respect~~ benefit from any Tax Benefits. Lessor shall have no obligation to ~~such~~ contest any Tax Loss. If for any reason any tax benefit or savings taken into account in computing the amount of any Tax Indemnity Payment or any payment to the Tenant pursuant to this Paragraph 30, shall be lost or otherwise determined to be unavailable, such loss or unavailability shall be treated as a Loss for which Tenant is required to indemnify the Landlord under this Paragraph 30. Landlord shall act in good faith in filing its returns, dealing with tax authorities and pursuing tax benefits and savings that would, in each case, minimize Tenant’s indemnity obligations hereunder. ~~(h) Notwithstanding anything herein to the contrary, the provisions of this Paragraph 30 shall survive the earlier termination of this Lease.~~

Appears in 1 contract

Samples: Lease Agreement (R B Rubber Products Inc)

Special Tax Indemnity. ~~(a) Tenant hereby represents, warrants and covenants to Landlord as follows:~~ (i) ~~during~~ All references to “Lessor” in this Section 7(c) shall include (A) Lessor’s successors and permitted assigns, and (B) each member of the ~~Term~~affiliated group of corporations, Tenant will not construct or install any component, improvement, alteration, or addition on any Leased Property, without prior written consent from Landlord, if such construction or installation would cause such Leased Property, or any part thereof, to be “limited use property,” as ~~such term is used~~ defined in Section ~~5 of Revenue Procedure 2001-28, (ii~~1504(a) Tenant is not a “tax-exempt entity” within the meaning of Section 168(h)(2) of the Code and will not take any action that would cause any Leased Property, or any part thereof, to constitute “tax-exempt use property” within the meaning of Section 168(h) of the Code; (iii) neither Tenant nor any Affiliate will claim the Depreciation Deductions or otherwise take the position that it is the owner of any Leased Property, or any part thereof, for federal income tax purposes; (iv) as of the Commencement Date, no Leased Property will require any improvement, modification or addition in order to be rendered complete for its intended use by Tenant; and (v) to the best of Tenant’s knowledge, all written information of a factual nature with respect to any Leased Property that was provided to Landlord or an appraiser engaged by Landlord to appraise such Leased Property by or on behalf of Tenant or any Affiliate of Tenant was true and accurate in all material respects as of the date provided to Landlord or such appraiser. Notwithstanding the provisions of clause (iii) above, Tenant may take the position that it is the owner of a Leased Property for federal income tax purposes if Tenant provides to Landlord an opinion of independent tax counsel that such treatment is required by law, and Landlord consents to such treatment, which consent shall not be unreasonably withheld, conditioned or delayed or to the extent required as a result of the Internal Revenue ~~Service making a claim or adjustment against Tenant in connection with such tax reporting~~Code of 1986, ~~and tax counsel~~ as amended (~~or Tenant’s outside accounting firm) has concluded that such Internal Revenue Service claim or adjustment has a reasonable basis. (b) If as a result of an Event of Default, or~~ the misrepresentation of or breach by Tenant of any of the warranties, representations and covenants set forth in clause (a) of this Paragraph 30, the Depreciation Deductions are lost, disallowed, eliminated, reduced, recaptured, compromised, delayed or otherwise made unavailable to Landlord in computing its liability for federal income tax (a “~~Deduction Loss~~Code”), ~~or, if as a result~~ of the occurrence of an Event of Default, Landlord is required to include in its income from this Lease amounts other than Anticipated Lease Income (an “Inclusion”, any Inclusion or Deduction Loss referred to as a “Loss”), subject to clause (c) of this Paragraph 30, Tenant shall make the Tax Indemnity Payment to Landlord in accordance with this Paragraph 30. The “Tax Indemnity Payment” shall be the amount that is required to be paid to Landlord in order to insure that Landlord’s after-tax net return from this Lease (the “Net Return”) will be equal to, but no greater than, the Net Return which Lessor expected to receive as of the Commencement Date (the “Expected Net Return”). The amount of the Tax Indemnity Payment shall be computed using the same methodology and assumptions used in computing the Expected Net Return, including without limitation, that the Depreciation Deductions are Landlord’s only tax deductions with respect to this Lease, that Landlord is able to fully utilize the Depreciation Deductions and, in the case of Inclusions, is fully taxable on its net income at the maximum federal income tax rate then in effect for corporations. If Tenant requests that the amount of the Tax Indemnity Payment be verified, Tenant and Landlord shall appoint a mutually acceptable unrelated recognized lease broker or lease advisor (such acceptance not to be unreasonably withheld) to confirm the calculations of the Tax Indemnity Payment. Landlord shall provide such broker or advisor with the methodology and assumptions used in computing the Expected Net Return, as well as all other information utilized by Landlord in computing the Tax Indemnity Payment, provided that such broker or advisor agrees to maintain the confidentiality of such information (including from Tenant) pursuant to a written agreement reasonably acceptable to Landlord. The conclusion of such broker or advisor shall be conclusive and binding on Landlord and Tenant with respect to the related Tax Indemnity Payment. If such broker or advisor concludes that Landlord’s calculation of the Tax Indemnity Payment is correct or is lower than the correct Tax Indemnity Payment, Tenant shall pay for the costs and expenses of such broker or advisor; if such broker or advisor concludes that Landlord’s calculation of the Tax Indemnity Payment is too high, Landlord shall pay the costs and expenses of such broker or advisor. (c) Tenant shall pay to Landlord the Tax Indemnity Payment within 30 days of receiving written notice from Landlord describing the Loss and the calculation of the Tax Indemnity Payment; provided, however that Tenant shall not be required to pay the Tax Indemnity Payment with respect to any Loss so long as such Loss is being contested pursuant to this Paragraph 30. (d) Landlord shall promptly notify Tenant in writing of any actual or proposed claim, adjustment or other action of any tax authority received by Landlord in writing with respect to which Tenant may be required to provide indemnification under this Paragraph 30 (“Proposed Adjustment”) (but failure of Landlord to so notify Tenant shall not relieve Tenant of its obligations hereunder except to the extent that Tenant’s contest rights hereunder are materially adversely affected). If Tenant shall request in writing within sixty (60) days after Landlord’s notice described above that the Proposed Adjustment be contested (or such ~~shorter period specified in Landlord’s notice as the time period within which Landlord~~ successor or assign is required by the applicable Governmental Authority to take action), Landlord shall contest the Proposed Adjustment and will not settle any contest thereof without the consent of Tenant, which consent shall not be unreasonably withheld; provided, however, that: (i) prior to taking such action, Tenant shall have furnished Landlord with an opinion of independent tax advisor chosen by Tenant and reasonably acceptable to Landlord, to the effect that Landlord has a reasonable possibility of success in contesting the claim; (ii) prior to taking such action, Tenant shall have (A) acknowledged its obligation to indemnify Landlord hereunder in the event Landlord does not prevail in such contest and (B) agreed to reimburse Landlord promptly on demand (or, if so requested by Landlord, in advance) for all reasonable out-of-pocket costs and expenses that Landlord incurs in connection with contesting such claim, including without limitation reasonable attorneys’ and accountants’ fees and expenses; (iii) no Event of Default shall exist and be continuing; (iv) Landlord shall not be obligated to contest any proposed amount that is less than $100,000; and (v) Landlord shall in all events control the contest, and Tenant shall not have any right to inspect the books and records of Landlord, but shall have reasonable opportunity to review and comment on portions of documentation, protests, memoranda or briefs (which may be redacted portions) relating exclusively to a Proposed Adjustment. (e) In the event Landlord pays the tax claimed and then seeks a refund, Landlord may require Tenant to advance funds sufficient to pay the tax that would be indemnified by Tenant hereunder if the refund claim were resolved adversely to Landlord. To the extent the refund claim is successful, the refund received from the taxing authority and attributable to funds advanced by Tenant shall be refunded to Tenant, including any interest actually received and fairly attributable to amounts advanced by Tenant, unless the refund is needed to pay an indemnity. Notwithstanding anything to the contrary in this Pxxxxxxxx 00, Xxxxxxxx may at any time decline to take any further action with respect to a Proposed Adjustment or may settle any contest without the consent of Tenant; provided, however, that if Tenant has properly requested such action pursuant to this Pxxxxxxxx 00, Xxxxxxxx shall notify Tenant in writing that Landlord waives its right to any indemnity payment by Tenant (other than with respect to the expenses of the contest incurred prior to such notice) that Tenant would otherwise be obligated to pay pursuant to this Paragraph 30 in respect of such adjustment, including any indemnities arising from such adjustment in subsequent years or that would arise by reason of the fact that the subject matter of such adjustment is of a continuing nature. In the case of any such waiver by Landlord of its rights to an indemnity payment from Tenant, Landlord shall return to Tenant any amounts previously paid by Tenant to Landlord for expenses or costs related to the contest (to the extent not yet expended) and, if applicable, any amounts paid by Tenant for taxes with respect to which Landlord has waived its right to an indemnity (plus interest on such tax payment at the rate then applicable under the Code to refunds of federal income taxes). (f) For purposes of this Paragraph 30, “Landlord” shall be deemed to include the consolidated Federal taxpayer group of which Landlord is a member. (gii) ~~If as a result of a Tax Loss~~ Lessor and Lessee intend that Lessor shall be treated for which Tenant has paid an indemnity hereunder, Landlord shall actually realize any federal, state or local income tax savings that it would not have realized but for such Tax Loss (or the event or circumstance giving rise thereto), which tax savings have not previously been taken into account in computing the amount of the Tax Indemnity Payment hereunder, then Landlord shall promptly pay to Tenant an amount equal to the sum of (A) the amount of such tax savings and (B) the amount of any additional federalFederal, state and local income tax ~~savings~~ purposes as the owner of the Units and shall be entitled to take into account in computing its income tax liabilities all items of income, deduction (including depreciation), credit, gain or loss relating to ownership of the Units as are provided to owners of similar equipment under the Code and applicable state and local tax laws as in effect on the Acceptance Date of such Units (collectively, the “Tax Benefits”). (iii) If due to any Lessee Act (A) Lessor loses, is delayed in claiming, is required to recapture (other than in connection with a sale of the Unit following the end of the lease term, provided Lessee is not then in default), is not allowed or does not claim as a result of ~~any payment made pursuant~~ a written opinion of Lessor tax counsel to ~~this sentence; provided, however, Landlord shall~~ the effect that Lessor’s claiming of such Tax Benefits probably would not be ~~required to make any such payment to~~ upheld by a court if the ~~extent~~ matter were litigated (that is, that the ~~cumulative~~ chances of a finding against Lessor are at least as great as the chances of a finding in favor of Lessor) all or any portion of any Tax Benefits, or (B) Lessor is required under Section 467 of the Code or otherwise to include in its gross income with respect to any Lease or Unit any amount at any time other than rentals and other amounts as and when accrued in accordance with the express terms of ~~such~~ the Lease (together, “Tax Loss”), then, upon Lessor’s demand and at Lessor’s option, either: (x) all further rental payments ~~would exceed the amount of all Tax Indemnity Payment by Tenant to Landlord pursuant to Paragraph 30~~ with respect to such Unit, if any, shall be increased by an amount, or (y) Lessee shall pay to Lessor a lump sum amount, which shall in either case maintain the net economic after-tax yield, cash-flow and rate of return Lessor originally anticipated, based on an assumed combined Federal, state and local income tax rate for Lessor of 38.20% and other assumptions originally used by Lessor in evaluating the transaction and setting the rental therefor and the other terms thereof. Lessee shall also pay to Lessor on demand all interest, costs (including Attorney Costs), penalties and additions to tax associated with the Tax Loss. ~~If for~~ . “Lessee Act” means any ~~reason~~ act or failure to act by Lessee, any ~~tax benefit~~ direct or ~~savings taken into account in computing the amount~~ indirect assignee or sublessee of Lessee or other user of any ~~Tax Indemnity Payment~~ Unit, or affiliate of the foregoing, or breach of any ~~payment to~~ representation, warranty or agreement by Lessee in any Lease, other than (1) the ~~Tenant pursuant to this Paragraph 30~~exercise of any purchase or renewal option under any Lease, ~~shall be lost~~ or ~~otherwise determined to be unavailable, such loss or unavailability shall be treated as a Loss for which Tenant is required to indemnify~~ (2) the Landlord under this Paragraph 30. Landlord shall act in good faith in filing its returns, dealing with tax authorities and pursuing tax benefits and savings that would, in each case, minimize Tenant’s indemnity obligations hereundermaking of any non-severable improvement permitted by Revenue Procedure 79-48. ~~(h) Notwithstanding anything herein to the contrary, the provisions of this Paragraph 30 shall survive the earlier termination of this Lease.~~

Appears in 1 contract

Samples: Lease Agreement (Hub Group Inc)

Special Tax Indemnity. (a) Tenant hereby represents, warrants and covenants to Landlord as follows: (i) during the Term, Tenant will not construct or install any component, improvement, alteration, or addition on ~~any~~ the Leased ~~Property~~Premises, without prior written consent from Landlord, if such construction or installation would cause ~~such~~ the Leased ~~Property~~Premises, or any part thereof, to be “limited use property,” as such term is used in Section 5 of Revenue Procedure 2001-28, (ii) Tenant is not a “tax-exempt entity” within the meaning of Section 168(h)(2) of the Code and will not take any action that would cause ~~any~~ the Leased ~~Property~~Premises, or any part thereof, to constitute “tax-exempt use property” within the meaning of Section 168(h) of the Code; (iii) neither Tenant nor any Affiliate will claim the Depreciation Deductions or otherwise take the position that it is the owner of ~~any~~ the Leased ~~Property~~Premises, or any part thereof, for federal income tax purposes; and (iv~~) as of the Commencement Date, no Leased Property will require any improvement, modification or addition in order to be rendered complete for its intended use by Tenant; and (v~~) to the best of Tenant’s knowledge, all written information of a factual nature with respect to ~~any~~ the Leased ~~Property~~ Premises that was provided to Landlord or an appraiser engaged by Landlord to appraise ~~such~~ the Leased ~~Property~~ Premises by or on behalf of Tenant or any Affiliate of Tenant was true and accurate in all material respects as of the date provided to Landlord or such appraiser. Notwithstanding the provisions of clause (iii) above, Tenant may take the position that it is the owner of a the Leased ~~Property~~ Premises for federal income tax purposes if Tenant provides to Landlord an opinion of independent tax counsel that such treatment is required by law, and Landlord consents to such treatment, which consent shall not be unreasonably withheld, ~~conditioned or delayed~~ or to the extent required as a result of the Internal Revenue Service making a claim or adjustment against Tenant in connection with such tax reporting, and tax counsel (or Tenant’s outside accounting firm) has concluded that such Internal Revenue Service claim or adjustment has a reasonable basis. (b) If as a result of an Event of Default, or the misrepresentation of or breach by Tenant of any of the warranties, representations and covenants set forth in clause (a) of this Paragraph 30, the Depreciation Deductions are lost, disallowed, eliminated, reduced, recaptured, compromised, delayed or otherwise made unavailable to Landlord in computing its liability for federal income tax (a “Deduction Loss”), or, if as a result of the occurrence of an Event of Default, Landlord is required to include in its income from this Lease amounts other than Anticipated Lease Income (an “Inclusion”, any Inclusion or Deduction Loss referred to as a “Loss”), subject to clause (c) of this Paragraph 30, Tenant shall make the Tax Indemnity Payment to Landlord in accordance with this Paragraph 30. The “Tax Indemnity Payment” shall be the amount that is required to be paid to Landlord in order to insure that Landlord’s after-tax net return from this Lease (the “Net Return”) will be equal to, but no greater than, the Net Return ~~Lessor~~ Landlord expected to receive as of the Commencement Date (the “Expected Net Return”). The amount of the Tax Indemnity Payment shall be computed using the same methodology and assumptions used in computing the Expected Net Return, including without limitation, that the Depreciation Deductions are Landlord’s only tax deductions with respect to this Lease, that Landlord is able to fully utilize the Depreciation Deductions and, in the case of Inclusions, is fully taxable on its net income at the maximum federal income tax rate then in effect for corporations. If Tenant requests that the amount of the Tax Indemnity Payment be verified, Tenant and Landlord shall appoint a mutually acceptable unrelated recognized lease broker or lease advisor (such acceptance not to be unreasonably withheld) to confirm the calculations of the Tax Indemnity Payment. Landlord shall provide such broker or advisor with the methodology and assumptions used in computing the Expected Net Return, as well as all other information utilized by Landlord in computing the Tax Indemnity Payment, provided that such broker or advisor agrees to maintain the confidentiality of such information (including from Tenant) pursuant to a written agreement reasonably acceptable to Landlord. The conclusion of such broker or advisor shall be conclusive and binding on Landlord and Tenant with respect to the related Tax Indemnity Payment. If such broker or advisor concludes that Landlord’s calculation of the Tax Indemnity Payment is correct or is lower than the correct Tax Indemnity Payment, Tenant shall pay for the costs and expenses of such broker or advisor; if such broker or advisor concludes that Landlord’s calculation of the Tax Indemnity Payment is too high, Landlord shall pay the costs and expenses of such broker or advisor. (c) Tenant shall pay to Landlord the Tax Indemnity Payment within 30 days of receiving written notice from Landlord describing the Loss and the calculation of the Tax Indemnity Payment; provided, however that Tenant shall not be required to pay the Tax Indemnity Payment with respect to any Loss so long as such Loss is being contested pursuant to this Paragraph 30. (d) Landlord shall promptly notify Tenant in writing of any actual or proposed claim, adjustment or other action of any tax authority received by Landlord in writing with respect to which Tenant may be required to provide indemnification under this Paragraph 30 (“Proposed Adjustment”) (but failure of Landlord to so notify Tenant shall not relieve Tenant of its obligations hereunder except to the extent that Tenant’s contest rights hereunder are materially adversely affected). If Tenant shall request in writing within sixty (60) days after Landlord’s notice described above that the Proposed Adjustment be contested (or such shorter period specified in Landlord’s notice as the time period within which Landlord is required by the applicable Governmental Authority to take action), Landlord shall contest the Proposed Adjustment and will not settle any contest thereof without the consent of Tenant, which consent shall not be unreasonably withheld; provided, however, that: (i) prior to taking such action, Tenant shall have furnished Landlord with an opinion of independent tax advisor chosen by Tenant and reasonably acceptable to Landlord, to the effect that Landlord has a reasonable possibility of success in contesting the claim; (ii) prior to taking such action, Tenant shall have (A) acknowledged its obligation to indemnify Landlord hereunder in the event Landlord does not prevail in such contest and (B) agreed to reimburse Landlord promptly on demand (or, if so requested by Landlord, in advance) for all reasonable out-of-pocket costs and expenses that Landlord incurs in connection with contesting such claim, including without limitation reasonable attorneys’ and accountants’ fees and expenses; (iii) no Event of Default shall exist and be continuing; (iv) Landlord shall not be obligated to contest any proposed amount that is less than $100,000; and (v) Landlord shall in all events control the contest, and Tenant shall not have any right to inspect the books and records of Landlord, but shall have reasonable opportunity to review and comment on portions of documentation, protests, memoranda or briefs (which may be redacted portions) relating exclusively to a Proposed Adjustment. (e) In the event Landlord pays the tax claimed and then seeks a refund, Landlord may require Tenant to advance funds sufficient to pay the tax that would be indemnified by Tenant hereunder if the refund claim were resolved adversely to Landlord. To the extent the refund claim is successful, the refund received from the taxing authority and attributable to funds advanced by Tenant shall be refunded to Tenant, including any interest actually received and fairly attributable to amounts advanced by Tenant, unless the refund is needed to pay an indemnity. Notwithstanding anything to the contrary in this Pxxxxxxxx 00, Xxxxxxxx may at any time decline to take any further action with respect to a Proposed Adjustment or may settle any contest without the consent of Tenant; provided, however, that if Tenant has properly requested such action pursuant to this Pxxxxxxxx 00, Xxxxxxxx shall notify Tenant in writing that Landlord waives its right to any indemnity payment by Tenant (other than with respect to the expenses of the contest incurred prior to such notice) that Tenant would otherwise be obligated to pay pursuant to this Paragraph 30 in respect of such adjustment, including any indemnities arising from such adjustment in subsequent years or that would arise by reason of the fact that the subject matter of such adjustment is of a continuing nature. In the case of any such waiver by Landlord of its rights to an indemnity payment from Tenant, Landlord shall return to Tenant any amounts previously paid by Tenant to Landlord for expenses or costs related to the contest (to the extent not yet expended) and, if applicable, any amounts paid by Tenant for taxes with respect to which Landlord has waived its right to an indemnity (plus interest on such tax payment at the rate then applicable under the Code to refunds of federal income taxes). (f) For purposes of this Paragraph 30, “Landlord” shall be deemed to include the consolidated Federal taxpayer group of which Landlord is a member. (g) If as a result of a Tax Loss for which Tenant has paid an indemnity hereunder, Landlord shall actually realize any federal, state or local income tax savings that it would not have realized but for such Tax Loss (or the event or circumstance giving rise thereto), which tax savings have not previously been taken into account in computing the amount of the Tax Indemnity Payment hereunder, then Landlord shall promptly pay to Tenant an amount equal to the sum of (A) the amount of such tax savings and (B) the amount of any additional federal, state and local income tax savings as a result of any payment made pursuant to this sentence; provided, however, Landlord shall not be required to make any such payment to the extent that the cumulative amount of such payments would exceed the amount of all Tax Indemnity Payment by Tenant to Landlord pursuant to Paragraph 30 with respect to such Tax Loss. If for any reason any tax benefit or savings taken into account in computing the amount of any Tax Indemnity Payment or any payment to the Tenant pursuant to this Paragraph 30, shall be lost or otherwise determined to be unavailable, such loss or unavailability shall be treated as a Loss for which Tenant is required to indemnify the Landlord under this Paragraph 30. Landlord shall act in good faith in filing its returns, dealing with tax authorities and pursuing tax benefits and savings that would, in each case, minimize Tenant’s indemnity obligations hereunder. (h) Notwithstanding anything herein to the contrary, the provisions of this Paragraph 30 shall survive the earlier termination of this Lease.

Appears in 1 contract

Samples: Lease Agreement (Old National Bancorp /In/)

Special Tax Indemnity. ~~(a) Tenant hereby represents, warrants and covenants to Landlord as follows:~~ (i) ~~during~~ All references to "Lessor" in this Section 7(c) shall include (A) Lessor's successors and assigns, and (B) each member of the ~~Term~~affiliated group of corporations, Tenant will not construct or install any component, improvement, alteration, or addition on any Leased Property, without prior written consent from Landlord, if such construction or installation would cause such Leased Property, or any part thereof, to be “limited use property,” as ~~such term is used~~ defined in Section ~~5 of Revenue Procedure 2001-28, (ii~~1504(a) Tenant is not a “tax-exempt entity” within the meaning of Section 168(h)(2) of the Code and will not take any action that would cause any Leased Property, or any part thereof, to constitute “tax-exempt use property” within the meaning of Section 168(h) of the Code; (iii) neither Tenant nor any Affiliate will claim the Depreciation Deductions or otherwise take the position that it is the owner of any Leased Property, or any part thereof, for federal income tax purposes; (iv) as of the Commencement Date, no Leased Property will require any improvement, modification or addition in order to be rendered complete for its intended use by Tenant; and (v) to the best of Tenant’s knowledge, all written information of a factual nature with respect to any Leased Property that was provided to Landlord or an appraiser engaged by Landlord to appraise such Leased Property by or on behalf of Tenant or any Affiliate of Tenant was true and accurate in all material respects as of the date provided to Landlord or such appraiser. Notwithstanding the provisions of clause (iii) above, Tenant may take the position that it is the owner of a Leased Property for federal income tax purposes if Tenant provides to Landlord an opinion of independent tax counsel that such treatment is required by law, and Landlord consents to such treatment, which consent shall not be unreasonably withheld, conditioned or delayed or to the extent required as a result of the Internal Revenue ~~Service making a claim or adjustment against Tenant in connection with such tax reporting~~Code of 1986, ~~and tax counsel~~ as amended (~~or Tenant’s outside accounting firm) has concluded that such Internal Revenue Service claim or adjustment has a reasonable basis. (b) If as a result of an Event of Default, or~~ the misrepresentation of or breach by Tenant of any of the warranties, representations and covenants set forth in clause (a) of this Paragraph 30, the Depreciation Deductions are lost, disallowed, eliminated, reduced, recaptured, compromised, delayed or otherwise made unavailable to Landlord in computing its liability for federal income tax (a “Deduction Loss”"Code"), ~~or, if as a result~~ of the occurrence of an Event of Default, Landlord is required to include in its income from this Lease amounts other than Anticipated Lease Income (an “Inclusion”, any Inclusion or Deduction Loss referred to as a “Loss”), subject to clause (c) of this Paragraph 30, Tenant shall make the Tax Indemnity Payment to Landlord in accordance with this Paragraph 30. The “Tax Indemnity Payment” shall be the amount that is required to be paid to Landlord in order to insure that Landlord’s after-tax net return from this Lease (the “Net Return”) will be equal to, but no greater than, the Net Return which Lessor expected to receive as of the Commencement Date (the “Expected Net Return”). The amount of the Tax Indemnity Payment shall be computed using the same methodology and assumptions used in computing the Expected Net Return, including without limitation, that the Depreciation Deductions are Landlord’s only tax deductions with respect to this Lease, that Landlord is able to fully utilize the Depreciation Deductions and, in the case of Inclusions, is fully taxable on its net income at the maximum federal income tax rate then in effect for corporations. If Tenant requests that the amount of the Tax Indemnity Payment be verified, Tenant and Landlord shall appoint a mutually acceptable unrelated recognized lease broker or lease advisor (such acceptance not to be unreasonably withheld) to confirm the calculations of the Tax Indemnity Payment. Landlord shall provide such broker or advisor with the methodology and assumptions used in computing the Expected Net Return, as well as all other information utilized by Landlord in computing the Tax Indemnity Payment, provided that such broker or advisor agrees to maintain the confidentiality of such information (including from Tenant) pursuant to a written agreement reasonably acceptable to Landlord. The conclusion of such broker or advisor shall be conclusive and binding on Landlord and Tenant with respect to the related Tax Indemnity Payment. If such broker or advisor concludes that Landlord’s calculation of the Tax Indemnity Payment is correct or is lower than the correct Tax Indemnity Payment, Tenant shall pay for the costs and expenses of such broker or advisor; if such broker or advisor concludes that Landlord’s calculation of the Tax Indemnity Payment is too high, Landlord shall pay the costs and expenses of such broker or advisor. (c) Tenant shall pay to Landlord the Tax Indemnity Payment within 30 days of receiving written notice from Landlord describing the Loss and the calculation of the Tax Indemnity Payment; provided, however that Tenant shall not be required to pay the Tax Indemnity Payment with respect to any Loss so long as such Loss is being contested pursuant to this Paragraph 30. (d) Landlord shall promptly notify Tenant in writing of any actual or proposed claim, adjustment or other action of any tax authority received by Landlord in writing with respect to which Tenant may be required to provide indemnification under this Paragraph 30 (“Proposed Adjustment”) (but failure of Landlord to so notify Tenant shall not relieve Tenant of its obligations hereunder except to the extent that Tenant’s contest rights hereunder are materially adversely affected). If Tenant shall request in writing within sixty (60) days after Landlord’s notice described above that the Proposed Adjustment be contested (or such ~~shorter period specified in Landlord’s notice as the time period within which Landlord~~ successor or assign is required by the applicable Governmental Authority to take action), Landlord shall contest the Proposed Adjustment and will not settle any contest thereof without the consent of Tenant, which consent shall not be unreasonably withheld; provided, however, that: (i) prior to taking such action, Tenant shall have furnished Landlord with an opinion of independent tax advisor chosen by Tenant and reasonably acceptable to Landlord, to the effect that Landlord has a reasonable possibility of success in contesting the claim; (ii) prior to taking such action, Tenant shall have (A) acknowledged its obligation to indemnify Landlord hereunder in the event Landlord does not prevail in such contest and (B) agreed to reimburse Landlord promptly on demand (or, if so requested by Landlord, in advance) for all reasonable out-of-pocket costs and expenses that Landlord incurs in connection with contesting such claim, including without limitation reasonable attorneys’ and accountants’ fees and expenses; (iii) no Event of Default shall exist and be continuing; (iv) Landlord shall not be obligated to contest any proposed amount that is less than $100,000; and (v) Landlord shall in all events control the contest, and Tenant shall not have any right to inspect the books and records of Landlord, but shall have reasonable opportunity to review and comment on portions of documentation, protests, memoranda or briefs (which may be redacted portions) relating exclusively to a Proposed Adjustment. (e) In the event Landlord pays the tax claimed and then seeks a refund, Landlord may require Tenant to advance funds sufficient to pay the tax that would be indemnified by Tenant hereunder if the refund claim were resolved adversely to Landlord. To the extent the refund claim is successful, the refund received from the taxing authority and attributable to funds advanced by Tenant shall be refunded to Tenant, including any interest actually received and fairly attributable to amounts advanced by Tenant, unless the refund is needed to pay an indemnity. Notwithstanding anything to the contrary in this Pxxxxxxxx 00, Xxxxxxxx may at any time decline to take any further action with respect to a Proposed Adjustment or may settle any contest without the consent of Tenant; provided, however, that if Tenant has properly requested such action pursuant to this Pxxxxxxxx 00, Xxxxxxxx shall notify Tenant in writing that Landlord waives its right to any indemnity payment by Tenant (other than with respect to the expenses of the contest incurred prior to such notice) that Tenant would otherwise be obligated to pay pursuant to this Paragraph 30 in respect of such adjustment, including any indemnities arising from such adjustment in subsequent years or that would arise by reason of the fact that the subject matter of such adjustment is of a continuing nature. In the case of any such waiver by Landlord of its rights to an indemnity payment from Tenant, Landlord shall return to Tenant any amounts previously paid by Tenant to Landlord for expenses or costs related to the contest (to the extent not yet expended) and, if applicable, any amounts paid by Tenant for taxes with respect to which Landlord has waived its right to an indemnity (plus interest on such tax payment at the rate then applicable under the Code to refunds of federal income taxes). (f) For purposes of this Paragraph 30, “Landlord” shall be deemed to include the consolidated Federal taxpayer group of which Landlord is a member. (gii) ~~If as a result of a Tax Loss~~ Lessor shall be treated for which Tenant has paid an indemnity hereunder, Landlord shall actually realize any federal, state or local income tax savings that it would not have realized but for such Tax Loss (or the event or circumstance giving rise thereto), which tax savings have not previously been taken into account in computing the amount of the Tax Indemnity Payment hereunder, then Landlord shall promptly pay to Tenant an amount equal to the sum of (A) the amount of such tax savings and (B) the amount of any additional federalFederal, state and local income tax ~~savings~~ purposes as the owner of the Units and shall be entitled to take into account in computing its income tax liabilities all items of income, deduction (including depreciation consistent with Lessee's representation in the applicable Schedule), credit, gain or loss relating to ownership of the Units as are provided to owners of similar equipment under the Code and applicable state and local tax laws as in effect on the Acceptance Date of such Units (collectively, the "Tax Benefits"). (iii) If (A) Lessor loses, is delayed in claiming, is required to recapture (other than in connection with a sale of the Unit following the end of the lease term, provided Lessee is not then in default), is not allowed or does not claim as a result of ~~any payment made pursuant~~ a written opinion of Lessor tax counsel to ~~this sentence; provided, however, Landlord shall~~ the effect that Lessor's claiming of such Tax Benefits probably would not be upheld by a court if the matter were litigated (that is, that the chances of a finding against Lessor are at least as great as the chances of a finding in favor of Lessor) all or any portion of any Tax Benefits, under any circumstances, at any time and for any reason, or (B) Lessor is required under Section 467 of the Code or otherwise to include in its gross income with respect to any Lease or Unit any amount at any time other than rentals and other amounts as and when accrued in accordance with the express terms of the Lease (together, "Tax Loss"), then, upon Lessor's demand and at Lessor's option, either: (x) all further rental payments with respect to such Unit, if any, shall be increased by an amount, or (y) Lessee shall pay to Lessor a lump sum amount, which shall in either case maintain the net economic after-tax yield, cash-flow and rate of return Lessor originally anticipated, based on an assumed combined Federal, state and local income tax rate for Lessor of 38.20% and other assumptions originally used by Lessor in evaluating the transaction and setting the rental therefor and the other terms thereof. Lessee shall also pay to Lessor on demand all interest, costs (including Attorney Costs), penalties and additions to tax associated with the Tax Loss. (iv) Lessee shall be under no obligation to make ~~any such~~ a payment under the preceding paragraph (iii) relating to a Tax Loss to the extent that the ~~cumulative amount of such payments would exceed the amount of all~~ Tax ~~Indemnity Payment~~ Loss is caused by ~~Tenant~~ Lessor's failure to ~~Landlord pursuant~~ have sufficient taxable income to ~~Paragraph 30 with respect~~ benefit from any Tax Benefits. Lessor shall have no obligation to ~~such~~ contest any Tax Loss. If for any reason any tax benefit or savings taken into account in computing the amount of any Tax Indemnity Payment or any payment to the Tenant pursuant to this Paragraph 30, shall be lost or otherwise determined to be unavailable, such loss or unavailability shall be treated as a Loss for which Tenant is required to indemnify the Landlord under this Paragraph 30. Landlord shall act in good faith in filing its returns, dealing with tax authorities and pursuing tax benefits and savings that would, in each case, minimize Tenant’s indemnity obligations hereunder8. ~~(h) Notwithstanding anything herein to the contrary, the provisions of this Paragraph 30 shall survive the earlier termination of this Lease.~~

Appears in 1 contract

Samples: Lease Agreement (Tor Minerals International Inc)

Special Tax Indemnity. ~~(a) Tenant~~ Lessee shall pay and assume all liability for and does hereby ~~represents~~agree to indemnify each Indemnified Person and, ~~warrants and covenants to Landlord as follows: (i) during the Term~~in each case, ~~Tenant will not construct or install any component~~their accountants, improvement, alteration, or addition on any Leased Property, without prior written consent from Landlord, if such construction or installation would cause such Leased Property, or any part thereof, to be “limited use property,” as such term is used in Section 5 of Revenue Procedure 2001-28, (ii) Tenant is not a “tax-exempt entity” within the meaning of Section 168(h)(2) of the Code and will not take any action that would cause any Leased Property, or any part thereof, to constitute “tax-exempt use property” within the meaning of Section 168(h) of the Code; (iii) neither Tenant nor any Affiliate will claim the Depreciation Deductions or otherwise take the position that it is the owner of any Leased Property, or any part thereof, for federal income tax purposes; (iv) as of the Commencement Date, no Leased Property will require any improvement, modification or addition in order to be rendered complete for its intended use by Tenant; and (v) to the best of Tenant’s knowledge, all written information of a factual nature with respect to any Leased Property that was provided to Landlord or an appraiser engaged by Landlord to appraise such Leased Property by or on behalf of Tenant or any Affiliate of Tenant was true and accurate in all material respects as of the date provided to Landlord or such appraiser. Notwithstanding the provisions of clause (iii) above, Tenant may take the position that it is the owner of a Leased Property for federal income tax purposes if Tenant provides to Landlord an opinion of independent tax counsel that such treatment is required by lawlawyers, and ~~Landlord consents~~ other advisors (each, a "Tax Registration Indemnitee") on an After Tax Basis for any tax, addition to ~~such treatment~~tax, ~~which consent shall not be unreasonably withheld, conditioned~~ penalty or ~~delayed or to the extent required~~ other cost as a result of a breach, inaccuracy or incorrectness of the representation found in Section 7.3(dd); provided, however, that this indemnity shall not apply to any tax, additional tax, penalty or other cost arising from (i) the gross negligence or willful misconduct of such Tax Registration Indemnitee; (ii) the inaccuracy or incompleteness of any information provided by such Tax Registration Indemnitee to Lessee to the extent such information is included in the registration form or other related materials and to the extent such failure results in the imposition of increased taxes, additions to tax, penalties or other costs; or (iii) the activities of such Tax Registration Indemnitee unrelated to the transactions contemplated herein that result in the transactions contemplated herein being deemed to be a confidential corporate tax shelter if the transactions contemplated herein would not otherwise have been deemed to be a confidential corporate tax shelter. If a written claim is made or any proceeding is commenced by the Internal Revenue Service ~~making a claim or adjustment~~ against ~~Tenant in connection with such tax reporting, and tax counsel (or Tenant’s outside accounting firm)~~ any Tax Registration Indemnitee for any amount as to which Lessee has ~~concluded that such Internal Revenue Service claim or adjustment has a reasonable basis. (b) If as a result of~~ an Event of Default, or the misrepresentation of or breach by Tenant of any of the warranties, representations and covenants set forth in clause (a) of this Paragraph 30, the Depreciation Deductions are lost, disallowed, eliminated, reduced, recaptured, compromised, delayed or otherwise made unavailable to Landlord in computing its liability for federal income tax (a “Deduction Loss”), or, if as a result of the occurrence of an Event of Default, Landlord is required to include in its income from this Lease amounts other than Anticipated Lease Income (an “Inclusion”, any Inclusion or Deduction Loss referred to as a “Loss”), subject to clause (c) of this Paragraph 30, Tenant shall make the Tax Indemnity Payment to Landlord in accordance with this Paragraph 30. The “Tax Indemnity Payment” shall be the amount that is required to be paid to Landlord in order to insure that Landlord’s after-tax net return from this Lease (the “Net Return”) will be equal to, but no greater than, the Net Return Lessor expected to receive as of the Commencement Date (the “Expected Net Return”). The amount of the Tax Indemnity Payment shall be computed using the same methodology and assumptions used in computing the Expected Net Return, including without limitation, that the Depreciation Deductions are Landlord’s only tax deductions with respect to this Lease, that Landlord is able to fully utilize the Depreciation Deductions and, in the case of Inclusions, is fully taxable on its net income at the maximum federal income tax rate then in effect for corporations. If Tenant requests that the amount of the Tax Indemnity Payment be verified, Tenant and Landlord shall appoint a mutually acceptable unrelated recognized lease broker or lease advisor (such acceptance not to be unreasonably withheld) to confirm the calculations of the Tax Indemnity Payment. Landlord shall provide such broker or advisor with the methodology and assumptions used in computing the Expected Net Return, as well as all other information utilized by Landlord in computing the Tax Indemnity Payment, provided that such broker or advisor agrees to maintain the confidentiality of such information (including from Tenant) pursuant to a written agreement reasonably acceptable to Landlord. The conclusion of such broker or advisor shall be conclusive and binding on Landlord and Tenant with respect to the related Tax Indemnity Payment. If such broker or advisor concludes that Landlord’s calculation of the Tax Indemnity Payment is correct or is lower than the correct Tax Indemnity Payment, Tenant shall pay for the costs and expenses of such broker or advisor; if such broker or advisor concludes that Landlord’s calculation of the Tax Indemnity Payment is too high, Landlord shall pay the costs and expenses of such broker or advisor. (c) Tenant shall pay to Landlord the Tax Indemnity Payment within 30 days of receiving written notice from Landlord describing the Loss and the calculation of the Tax Indemnity Payment; provided, however that Tenant shall not be required to pay the Tax Indemnity Payment with respect to any Loss so long as such Loss is being contested indemnity obligation pursuant to this ~~Paragraph 30. (d) Landlord shall~~ Section 12.9, such Tax Registration Indemnitee agrees to notify the Lessee promptly ~~notify Tenant~~ in writing of ~~any actual~~ such proposed claim or ~~proposed claim~~proceeding, ~~adjustment or other action of any tax authority received by Landlord in writing with respect to which Tenant may be required~~ but the failure to provide ~~indemnification under this Paragraph 30 (“Proposed Adjustment”) (but failure of Landlord to so notify Tenant~~ such notice shall not ~~relieve Tenant of~~ release Lessee from its ~~obligations~~ indemnity obligation hereunder except to the extent that ~~Tenant’s contest rights hereunder are~~ it is materially adversely ~~affected)~~affected thereby. ~~If Tenant~~ Lessee shall ~~request in writing within sixty (60) days after Landlord’s notice described above~~ be entitled, at its expense, to require that ~~the Proposed Adjustment~~ any amount for which it may be obligated to indemnify a Tax Registration Indemnitee pursuant to this Section 12.9 be contested and to withhold payment during pendency of such contest (or if such ~~shorter period specified in Landlord’s notice as the time period within which Landlord~~ forbearance is ~~required~~ permitted by ~~the applicable Governmental Authority to take action~~law), ~~Landlord~~ provided that Lessee will pay any cost, expense, interest or penalty associated with such forbearance. A Tax Registration Indemnitee shall ~~contest the Proposed Adjustment and will not settle~~ have control over any contest ~~thereof without~~ commenced pursuant to this Section 12.9(b) but Lessee shall have, upon request, the ~~consent of Tenant, which consent~~ right to participate (including its counsel) in all proceedings and such Tax Registration Indemnitee shall ~~not be unreasonably withheld; provided, however, that: (i) prior~~ keep Lessee informed as to taking such action, Tenant shall have furnished Landlord with an opinion of independent tax advisor chosen by Tenant and reasonably acceptable to Landlord, to the effect that Landlord has a reasonable possibility of success in contesting the claim; (ii) prior to taking such action, Tenant shall have (A) acknowledged its obligation to indemnify Landlord hereunder in the event Landlord does not prevail all material developments in such contest and (B) agreed to reimburse Landlord promptly on demand (or, if so requested by Landlord, in advance) for all reasonable out-of-pocket costs and expenses that Landlord incurs in connection with contesting such claim, including without limitation reasonable attorneys’ and accountants’ fees and expenses; (iii) no Event of Default shall exist and be continuing; (iv) Landlord shall not be obligated to contest any proposed amount that is less than $100,000; and (v) Landlord shall in all events control the contest, and Tenant shall not have any right to inspect the books and records of Landlord, but shall have reasonable afford Lessee an opportunity to review and comment on portions of documentation, protests, memoranda or briefs (which may be redacted portions) relating exclusively to a Proposed Adjustment. (e) In the event Landlord pays the tax claimed and then seeks a refund, Landlord may require Tenant to advance funds sufficient to pay the tax that would be indemnified by Tenant hereunder if the refund claim were resolved adversely to Landlord. To the extent the refund claim is successful, the refund received from the taxing authority and attributable to funds advanced by Tenant shall be refunded to Tenant, including any interest actually received and fairly attributable to amounts advanced by Tenant, unless the refund is needed to pay an indemnity. Notwithstanding anything to the contrary in this Pxxxxxxxx 00, Xxxxxxxx may at any time decline to take any further action discuss with respect to a Proposed Adjustment or may settle any contest without the consent of Tenant; provided, however, that if Tenant has properly requested such action pursuant to this Pxxxxxxxx 00, Xxxxxxxx shall notify Tenant in writing that Landlord waives its right to any indemnity payment by Tenant (other than with respect to the expenses of the contest incurred prior to such notice) that Tenant would otherwise be obligated to pay pursuant to this Paragraph 30 in respect of such adjustment, including any indemnities arising from such adjustment in subsequent years or that would arise by reason of the fact that the subject matter of such adjustment is of a continuing nature. In the case of any such waiver by Landlord of its rights to an indemnity payment from Tenant, Landlord shall return to Tenant any amounts previously paid by Tenant to Landlord for expenses or costs related to the contest (to the extent not yet expended) and, if applicable, any amounts paid by Tenant for taxes with respect to which Landlord has waived its right to an indemnity (plus interest on such tax payment at the rate then applicable under the Code to refunds of federal income taxes). (f) For purposes of this Paragraph 30, “Landlord” shall be deemed to include the consolidated Federal taxpayer group of which Landlord is a member. (g) If as a result of a Tax Loss for which Tenant has paid an indemnity hereunder, Landlord shall actually realize any federal, state or local income tax savings that it would not have realized but for such Tax Loss (or the event or circumstance giving rise thereto), which tax savings have not previously been taken into account in computing the amount of the Tax Indemnity Payment hereunder, then Landlord shall promptly pay to Tenant an amount equal to the sum of (A) the amount of such tax savings and (B) the amount of any additional federal, state and local income tax savings as a result of any payment made pursuant to this sentence; provided, however, Landlord shall not be required to make any such payment to the extent that the cumulative amount of such payments would exceed the amount of all Tax Indemnity Payment by Tenant to Landlord pursuant to Paragraph 30 Registration Indemnitee Lessee's interests with respect to such contest. Lessee and each Tax ~~Loss. If for~~ Registration Indemnitee agree to cooperate with each other with respect to maintaining any ~~reason any~~ required documentation or other information in connection with the tax ~~benefit or savings taken into account in computing the amount~~ shelter registration provisions of any Tax Indemnity Payment or any payment to the Tenant pursuant to this Paragraph 30, shall be lost or otherwise determined to be unavailable, such loss or unavailability shall be treated as a Loss for which Tenant is required to indemnify the Landlord under this Paragraph 30. Landlord shall act in good faith in filing its returns, dealing with tax authorities and pursuing tax benefits and savings that would, in each case, minimize Tenant’s indemnity obligations hereunder. (h) Notwithstanding anything herein to the contraryCode Section 6111, the investor list provisions of ~~this Paragraph 30 shall survive~~ Code Section 6112 44 51 and the ~~earlier termination~~ disclosure statement provisions of ~~this Lease~~Code Section 6011 (and any of the regulations thereunder).

Appears in 1 contract

Samples: Participation Agreement (McData Corp)

Special Tax Indemnity. ~~(a)~~ a. Tenant hereby represents, warrants and covenants to Landlord as follows: (i) ~~during~~ Tenant believes that at the ~~Term~~end of the Lease Term there will probably be potential lessees or buyers for the Leased Premises, (other than the Tenant ~~will not construct~~ or ~~install any component~~its Affiliates) as contemplated by current U.S. income tax law, ~~improvement~~as embodied in Revenue Procedure 76-30, ~~alteration~~1976 C.B. 647, or addition on any Leased Property, without prior written consent from Landlord, if such construction or installation would cause such Leased Property, or any part thereof, to be “limited use property,” as ~~such term is used in Section 5 of~~ modified and superseded by Revenue Procedure 2001-28, ~~(ii)~~ 2001 C.B. 1156 and accordingly, the Tenant ~~is not~~ believes that neither the Leased Premises as a whole nor the Equipment constitutes “~~tax-exempt entity” within the meaning of Section 168(h)(2) of the Code and will not take any action that would cause any Leased Property, or any part thereof, to constitute “tax-exempt~~ limited use property” within the meaning of those provisions; (ii) the Tenant is not a “tax exempt entity” under current law as defined in Section 168(h) of the Code; (iii) except to the extent required by Legal Requirements, neither Tenant nor any Affiliate will claim any depreciation or cost recovery deductions with respect to the ~~Depreciation Deductions or otherwise take the position that it is the owner of any~~ Leased ~~Property,~~ Premises or any ~~part~~ portion thereof, ~~for~~ and has taken or will take any other action in connection with filing its or their federal income tax ~~purposes~~returns that would be a primary factor resulting in a Loss or Inclusion (in each case, as defined in Paragraph 30(b) below); and (iv) as of the ~~Commencement Date~~date hereof none of the Improvements, no the Equipment and the Leased ~~Property will~~ Premises require any improvement, modification or addition in order to be rendered substantially complete for ~~its~~ their intended use by Tenant; , except for repairs and ~~(v) to~~ maintenance required in the ~~best~~ ordinary course of Tenant’s ~~knowledge~~business, ~~all written information of a factual nature with respect to any Leased Property that was provided to Landlord or an appraiser engaged~~ if any. b. If, by ~~Landlord to appraise such Leased Property by or on behalf of Tenant or any Affiliate of Tenant was true and accurate in all material respects as~~ reason of the date provided to Landlord or such appraiser. Notwithstanding the provisions of clause (iii) above, Tenant may take the position that it is the owner of a Leased Property for federal income tax purposes if Tenant provides to Landlord an opinion of independent tax counsel that such treatment is required by law, and Landlord consents to such treatment, which consent shall not be unreasonably withheld, conditioned or delayed or to the extent required as a result of the Internal Revenue Service making a claim or adjustment against Tenant in connection with such tax reporting, and tax counsel (or Tenant’s outside accounting firm) has concluded that such Internal Revenue Service claim or adjustment has a reasonable basis. (b) If as a result of an Event of Default, or the misrepresentation of inaccuracy or breach by Tenant of any of the ~~warranties~~representations, ~~representations~~ warranties and covenants ~~set forth~~ contained in ~~clause (a) of~~ this Paragraph 30, ~~the Depreciation Deductions~~ any anticipated depreciation deductions are lost, disallowed, eliminated, reduced, recaptured, compromised, delayed or otherwise made unavailable to Landlord ~~in computing its liability for federal income tax~~ (a “~~Deduction~~ Loss”~~), or, if as~~ ) or Landlord incurs a ~~result of the occurrence of an Event of Default,~~ tax detriment because Landlord is required to include amounts in ~~its~~ income ~~from this Lease amounts~~ other than Anticipated Lease Income (an “Inclusion”~~, any Inclusion or Deduction Loss referred to as a “Loss”~~), ~~subject to clause (c) of this Paragraph 30~~Tenant shall, ~~Tenant shall make the~~ upon notice from Landlord promptly pay such Person designated by Landlord on demand in immediately available funds, as an indemnity an amount which, on an After-Tax ~~Indemnity Payment to Landlord in accordance with this Paragraph 30. The “Tax Indemnity Payment”~~ Basis, shall be equal to the ~~amount that is required~~ sum of (x) the increase in federal, state, local and foreign income tax liability for the respective taxable year attributable to ~~be paid~~ such Loss or Inclusion plus (y) the amounts of interest, penalties and additions to ~~Landlord in order to insure that Landlord’s after-~~tax ~~net return from this Lease~~ (~~the “Net Return”) will be equal to~~including, but no greater than, the Net Return Lessor expected to receive as of the Commencement Date (the “Expected Net Return”). The amount of the Tax Indemnity Payment shall be computed using the same methodology and assumptions used in computing the Expected Net Return, including without limitation, ~~that~~ any additions to tax because of underpayment of estimated tax), which are assessed against Landlord for such taxable year by the ~~Depreciation Deductions~~ Internal Revenue Service or any relevant state, local or foreign taxing authority and which are ~~Landlord’s only tax deductions with respect~~ attributable to this Lease, that Landlord is able to fully utilize the Depreciation Deductions and, in the case of Inclusions, is fully taxable on its net income at the maximum federal income tax rate then in effect for corporations. If Tenant requests that the amount of the Tax Indemnity Payment be verified, Tenant and such Loss or Inclusion. c. Landlord shall appoint a mutually acceptable unrelated recognized lease broker or lease advisor (such acceptance not to be unreasonably withheld) to confirm the calculations of the Tax Indemnity Payment. Landlord shall provide such broker or advisor with the methodology and assumptions used in computing the Expected Net Return, as well as all other information utilized by Landlord in computing the Tax Indemnity Payment, provided that such broker or advisor agrees to maintain the confidentiality of such information (including from Tenant) pursuant to a written agreement reasonably acceptable to Landlord. The conclusion of such broker or advisor shall be conclusive and binding on Landlord and Tenant with respect to the related Tax Indemnity Payment. If such broker or advisor concludes that Landlord’s calculation of the Tax Indemnity Payment is correct or is lower than the correct Tax Indemnity Payment, Tenant shall pay for the costs and expenses of such broker or advisor; if such broker or advisor concludes that Landlord’s calculation of the Tax Indemnity Payment is too high, Landlord shall pay the costs and expenses of such broker or advisor. (c) Tenant shall pay to Landlord the Tax Indemnity Payment within 30 days of receiving written notice from Landlord describing the Loss and the calculation of the Tax Indemnity Payment; provided, however that Tenant shall not be required to pay the Tax Indemnity Payment with respect to any Loss so long as such Loss is being contested pursuant to this Paragraph 30. (d) Landlord shall promptly notify Tenant in writing of any actual or proposed claim, adjustment or other action of any tax authority received by Landlord in writing with respect to which Tenant may be required to provide indemnification under this Paragraph 30 (“Proposed Adjustment”) (but failure of Landlord to so notify Tenant shall not relieve Tenant of its obligations hereunder except to the extent that ~~Tenant’s~~ Tenant is precluded from any contest ~~rights hereunder are~~ and actually and materially ~~adversely affected~~harmed thereby). If Tenant shall request in writing within ~~sixty~~ thirty (6030) days after Landlord’s notice described above that the Proposed Adjustment be contested (or such shorter period ~~specified~~ in ~~Landlord’s notice as~~ which the ~~time period within which~~ Landlord is may be required ~~by the applicable Governmental Authority~~ to take action), Landlord shall contest the Proposed ~~Adjustment and will not settle any contest thereof without the consent of Tenant, which consent shall not be unreasonably withheld~~Adjustment; provided, however, that: (i) prior to taking such action, Tenant shall have furnished Landlord with an opinion of independent tax advisor chosen by Tenant and reasonably acceptable to Landlord, to the effect that Landlord has a reasonable possibility of success in contesting the claim; (ii) prior to taking such action, Tenant shall have (A) acknowledged its obligation to indemnify Landlord hereunder in the event Landlord does not prevail in such contest and (B) agreed to reimburse Landlord promptly on demand for (or, if so requested by Landlord, in advance~~) for~~ ), all ~~reasonable out-of-pocket~~ costs and expenses that Landlord ~~incurs~~ may incur in connection with contesting such claim, including without limitation reasonable attorneys’ and accountants’ fees and expenses; (iii) no Event of Default shall exist and be continuing; (iv) Landlord shall not be obligated to contest any proposed amount that is less than Twenty-Five Thousand and 00/100 Dollars ($~~100,000~~25,000.00); and (v) Landlord shall in all events control the contest, and Tenant shall not have any right to inspect the books and records of Landlord, but shall have reasonable opportunity to review and comment on portions of documentation, protests, memoranda or briefs ~~(which may be redacted portions)~~ relating exclusively to a Proposed Adjustment~~. (e)~~ . In the event Landlord pays the tax claimed and then seeks a refund, Landlord may require Tenant to advance funds sufficient to pay the tax that would be indemnified by Tenant hereunder if the refund claim were resolved adversely to Landlord. To the extent the refund claim is successful, the refund received from the taxing authority and attributable to funds advanced by Tenant shall be refunded to Tenant, ~~including any interest actually received and fairly attributable to amounts advanced by Tenant,~~ unless the refund is needed to pay an indemnity. Notwithstanding anything to the contrary in this ~~Pxxxxxxxx 00~~Paragraph 30(c), ~~Xxxxxxxx~~ Landlord may at any time decline to take any further action with respect to a Proposed Adjustment or may settle any contest without the consent of Tenant; provided, however, that if Tenant has ~~properly requested such action pursuant to~~ complied with all the terms of this ~~Pxxxxxxxx 00~~Paragraph 30(c), ~~Xxxxxxxx shall notify~~ and Tenant has reasonably withheld in writing ~~that Landlord waives~~ its ~~right~~ consent to ~~any indemnity payment by Tenant (other than with respect to the expenses~~ all or part of such assessment or settlement based upon its evaluation of the ~~contest incurred prior to such notice) that~~ merits, Tenant ~~would otherwise~~ will not be obligated to ~~pay pursuant to this Paragraph 30 in respect~~ indemnify Landlord for the portion of such ~~adjustment, including any indemnities arising from such adjustment in subsequent years~~ assessment or that would arise by reason of the fact that the subject matter of such adjustment is of a continuing nature. In the case of any such waiver by Landlord of its rights to an indemnity payment from Tenant, Landlord shall return to Tenant any amounts previously paid by Tenant to Landlord for expenses or costs related to the contest (to the extent not yet expended) and, if applicable, any amounts paid by Tenant for taxes with respect settlement to which ~~Landlord~~ Tenant has ~~waived~~ reasonably withheld its ~~right to an indemnity (plus interest on such tax payment at~~ consent. For the ~~rate then applicable under the Code to refunds of federal income taxes). (f) For~~ purposes of ~~this Paragraph 30~~Paragraphs 30 and 31, “Landlord” shall ~~be deemed~~ include Landlord’s successor and assigns and, in the case of any flow-through entity, the member or other equity owners of Landlord required to report the gross or net income of Landlord and/or other items of income, expense, deduction and credit with respect thereto, and “Landlord” and the owners thereof shall include the consolidated ~~Federal taxpayer~~ group of which ~~Landlord~~ any such Person is a ~~member~~part for income tax purposes. (g) If as a result of a Tax Loss for which Tenant has paid an indemnity hereunder, Landlord shall actually realize any federal, state or local income tax savings that it would not have realized but for such Tax Loss (or the event or circumstance giving rise thereto), which tax savings have not previously been taken into account in computing the amount of the Tax Indemnity Payment hereunder, then Landlord shall promptly pay to Tenant an amount equal to the sum of (A) the amount of such tax savings and (B) the amount of any additional federal, state and local income tax savings as a result of any payment made pursuant to this sentence; provided, however, Landlord shall not be required to make any such payment to the extent that the cumulative amount of such payments would exceed the amount of all Tax Indemnity Payment by Tenant to Landlord pursuant to Paragraph 30 with respect to such Tax Loss. If for any reason any tax benefit or savings taken into account in computing the amount of any Tax Indemnity Payment or any payment to the Tenant pursuant to this Paragraph 30, shall be lost or otherwise determined to be unavailable, such loss or unavailability shall be treated as a Loss for which Tenant is required to indemnify the Landlord under this Paragraph 30. Landlord shall act in good faith in filing its returns, dealing with tax authorities and pursuing tax benefits and savings that would, in each case, minimize Tenant’s indemnity obligations hereunder. (h) d. Notwithstanding anything herein to the contrary, the provisions of this Paragraph 30 shall survive the earlier termination of this Lease.

Appears in 1 contract

Samples: Real Estate Sale Agreement (Axcelis Technologies Inc)

Special Tax Indemnity. (a) Tenant hereby represents, warrants and covenants to Landlord as follows: (i) ~~during~~ Tenant believes that at the ~~Term~~end of the Lease Term there will probably be potential lessees or buyers for the Leased Premises, (other than the Tenant ~~will not construct~~ or ~~install any component~~its Affiliates) as contemplated by current U.S. income tax law, ~~improvement~~as embodied in Revenue Procedure 76-30, ~~alteration~~1976 C.B. 647, or addition on any Leased Property, without prior written consent from Landlord, if such construction or installation would cause such Leased Property, or any part thereof, to be “limited use property,” as ~~such term is used in Section 5 of~~ modified and superseded by Revenue Procedure 2001-28, ~~(ii)~~ 2001 C.B. 1156 and accordingly, the Tenant ~~is not~~ believes that neither the Leased Premises as a whole nor the Equipment constitutes “~~tax-exempt entity” within the meaning of Section 168(h)(2) of the Code and will not take any action that would cause any Leased Property, or any part thereof, to constitute “tax-exempt~~ limited use property” within the meaning of those provisions; (ii) the Tenant is not a “tax exempt entity” under current law as defined in Section 168(h) of the Code; (iii) except to the extent required by Legal Requirements, neither Tenant nor any Affiliate will claim any depreciation or cost recovery deductions with respect to the ~~Depreciation Deductions or otherwise take the position that it is the owner of any~~ Leased ~~Property,~~ Premises or any ~~part~~ portion thereof, ~~for~~ and has taken or will take any other action in connection with filing its or their federal income tax ~~purposes~~returns that would be a primary factor resulting in a Loss or Inclusion (in each case, as defined in Paragraph 30(b) below); and (iv) as of the ~~Commencement Date~~date hereof none of the Improvements, no the Equipment and the Leased ~~Property will~~ Premises require any improvement, modification or addition in order to be rendered substantially complete for ~~its~~ their intended use by Tenant; , except for repairs and ~~(v) to~~ maintenance required in the ~~best~~ ordinary course of Tenant’s ~~knowledge~~business, all written information of a factual nature with respect to any Leased Property that was provided to Landlord or an appraiser engaged by Landlord to appraise such Leased Property by or on behalf of Tenant or any Affiliate of Tenant was true and accurate in all material respects as of the date provided to Landlord or such appraiser. Notwithstanding the provisions of clause (iii) above, Tenant may take the position that it is the owner of a Leased Property for federal income tax purposes if Tenant provides to Landlord an opinion of independent tax counsel that such treatment is required by law, and Landlord consents to such treatment, which consent shall not be unreasonably withheld, conditioned or delayed or to the extent required as a result of the Internal Revenue Service making a claim or adjustment against Tenant in connection with such tax reporting, and tax counsel (or Tenant’s outside accounting firm) has concluded that such Internal Revenue Service claim or adjustment has a reasonable basisany. (b) ~~If as a result~~ If, by reason of ~~an Event of Default, or~~ the ~~misrepresentation of~~ inaccuracy or breach by Tenant of any of the ~~warranties~~representations, ~~representations~~ warranties and covenants ~~set forth~~ contained in ~~clause (a) of~~ this Paragraph 30, ~~the Depreciation Deductions~~ any anticipated depreciation deductions are lost, disallowed, eliminated, reduced, recaptured, compromised, delayed or otherwise made unavailable to Landlord ~~in computing its liability for federal income tax~~ (a “~~Deduction~~ Loss”~~), or, if as~~ ) or Landlord incurs a ~~result of the occurrence of an Event of Default,~~ tax detriment because Landlord is required to include amounts in ~~its~~ income ~~from this Lease amounts~~ other than Anticipated Lease Income (an “Inclusion”~~, any Inclusion or Deduction Loss referred to as a “Loss”~~), ~~subject to clause (c) of this Paragraph 30~~Tenant shall, ~~Tenant shall make the~~ upon notice from Landlord promptly pay such Person designated by Landlord on demand in immediately available funds, as an indemnity an amount which, on an After-Tax ~~Indemnity Payment to Landlord in accordance with this Paragraph 30. The “Tax Indemnity Payment”~~ Basis, shall be equal to the ~~amount that is required~~ sum of (x) the increase in federal, state, local and foreign income tax liability for the respective taxable year attributable to ~~be paid~~ such Loss or Inclusion plus (y) the amounts of interest, penalties and additions to ~~Landlord in order to insure that Landlord’s after-~~tax ~~net return from this Lease~~ (~~the “Net Return”) will be equal to~~including, but no greater than, the Net Return Lessor expected to receive as of the Commencement Date (the “Expected Net Return”). The amount of the Tax Indemnity Payment shall be computed using the same methodology and assumptions used in computing the Expected Net Return, including without limitation, ~~that~~ any additions to tax because of underpayment of estimated tax), which are assessed against Landlord for such taxable year by the ~~Depreciation Deductions~~ Internal Revenue Service or any relevant state, local or foreign taxing authority and which are ~~Landlord’s only tax deductions with respect~~ attributable to this Lease, that Landlord is able to fully utilize the Depreciation Deductions and, in the case of Inclusions, is fully taxable on its net income at the maximum federal income tax rate then in effect for corporations. If Tenant requests that the amount of the Tax Indemnity Payment be verified, Tenant and Landlord shall appoint a mutually acceptable unrelated recognized lease broker such Loss or lease advisor (such acceptance not to be unreasonably withheld) to confirm the calculations of the Tax Indemnity Payment. Landlord shall provide such broker or advisor with the methodology and assumptions used in computing the Expected Net Return, as well as all other information utilized by Landlord in computing the Tax Indemnity Payment, provided that such broker or advisor agrees to maintain the confidentiality of such information (including from Tenant) pursuant to a written agreement reasonably acceptable to Landlord. The conclusion of such broker or advisor shall be conclusive and binding on Landlord and Tenant with respect to the related Tax Indemnity Payment. If such broker or advisor concludes that Landlord’s calculation of the Tax Indemnity Payment is correct or is lower than the correct Tax Indemnity Payment, Tenant shall pay for the costs and expenses of such broker or advisor; if such broker or advisor concludes that Landlord’s calculation of the Tax Indemnity Payment is too high, Landlord shall pay the costs and expenses of such broker or advisorInclusion. (c) Tenant shall pay to Landlord the Tax Indemnity Payment within 30 days of receiving written notice from Landlord describing the Loss and the calculation of the Tax Indemnity Payment; provided, however that Tenant shall not be required to pay the Tax Indemnity Payment with respect to any Loss so long as such Loss is being contested pursuant to this Paragraph 30. (d) Landlord shall ~~promptly~~ notify Tenant in writing of any actual or proposed claim, adjustment or other action of any tax authority received by Landlord in writing with respect to which Tenant may be required to provide indemnification under this Paragraph 30 (“Proposed Adjustment”) (but failure of Landlord to so notify Tenant shall not relieve Tenant of its obligations hereunder except to the extent that ~~Tenant’s~~ Tenant is precluded from any contest ~~rights hereunder are~~ and actually and materially ~~adversely affected~~harmed thereby). If Tenant shall request in writing within ~~sixty~~ thirty (6030) days after Landlord’s notice described above that the Proposed Adjustment be contested (or such shorter period ~~specified~~ in ~~Landlord’s notice as~~ which the ~~time period within which~~ Landlord is may be required ~~by the applicable Governmental Authority~~ to take action), Landlord shall contest the Proposed ~~Adjustment and will not settle any contest thereof without the consent of Tenant, which consent shall not be unreasonably withheld~~Adjustment; provided, however, that: (i) prior to taking such action, Tenant shall have furnished Landlord with an opinion of independent tax advisor chosen by Tenant and reasonably acceptable to Landlord, to the effect that Landlord has a reasonable possibility of success in contesting the claim; (ii) prior to taking such action, Tenant shall have (A) acknowledged its obligation to indemnify Landlord hereunder in the event Landlord does not prevail in such contest and (B) agreed to reimburse Landlord promptly on demand for (or, if so requested by Landlord, in advance~~) for~~ ), all ~~reasonable out-of-pocket~~ costs and expenses that Landlord ~~incurs~~ may incur in connection with contesting such claim, including without limitation reasonable attorneys’ and accountants’ fees and expenses; (iii) no Event of Default shall exist and be continuing; (iv) Landlord shall not be obligated to contest any proposed amount that is less than Twenty-Five Thousand and 00/100 Dollars ($~~100,000~~25,000.00); and (v) Landlord shall in all events control the contest, and Tenant shall not have any right to inspect the books and records of Landlord, but shall have reasonable opportunity to review and comment on portions of documentation, protests, memoranda or briefs ~~(which may be redacted portions)~~ relating exclusively to a Proposed Adjustment~~. (e)~~ . In the event Landlord pays the tax claimed and then seeks a refund, Landlord may require Tenant to advance funds sufficient to pay the tax that would be indemnified by Tenant hereunder if the refund claim were resolved adversely to Landlord. To the extent the refund claim is successful, the refund received from the taxing authority and attributable to funds advanced by Tenant shall be refunded to Tenant, ~~including any interest actually received and fairly attributable to amounts advanced by Tenant,~~ unless the refund is needed to pay an indemnity. Notwithstanding anything to the contrary in this ~~Pxxxxxxxx 00~~Paragraph 30(c), ~~Xxxxxxxx~~ Landlord may at any time decline to take any further action with respect to a Proposed Adjustment or may settle any contest without the consent of Tenant; provided, however, that if Tenant has ~~properly requested such action pursuant to~~ complied with all the terms of this ~~Pxxxxxxxx 00~~Paragraph 30(c), ~~Xxxxxxxx shall notify~~ and Tenant has reasonably withheld in writing ~~that Landlord waives~~ its ~~right~~ consent to ~~any indemnity payment by Tenant (other than with respect to the expenses~~ all or part of such assessment or settlement based upon its evaluation of the ~~contest incurred prior to such notice) that~~ merits, Tenant ~~would otherwise~~ will not be obligated to ~~pay pursuant to this Paragraph 30 in respect~~ indemnify Landlord for the portion of such ~~adjustment, including any indemnities arising from such adjustment in subsequent years~~ assessment or that would arise by reason of the fact that the subject matter of such adjustment is of a continuing nature. In the case of any such waiver by Landlord of its rights to an indemnity payment from Tenant, Landlord shall return to Tenant any amounts previously paid by Tenant to Landlord for expenses or costs related to the contest (to the extent not yet expended) and, if applicable, any amounts paid by Tenant for taxes with respect settlement to which ~~Landlord~~ Tenant has ~~waived~~ reasonably withheld its ~~right to an indemnity (plus interest on such tax payment at~~ consent. For the ~~rate then applicable under the Code to refunds of federal income taxes). (f) For~~ purposes of ~~this Paragraph 30~~Paragraphs 30 and 31, “Landlord” shall ~~be deemed~~ include Landlord’s successor and assigns and, in the case of any flow-through entity, the member or other equity owners of Landlord required to report the gross or net income of Landlord and/or other items of income, expense, deduction and credit with respect thereto, and “Landlord” and the owners thereof shall include the consolidated ~~Federal taxpayer~~ group of which ~~Landlord~~ any such Person is a ~~member~~part for income tax purposes. (g) If as a result of a Tax Loss for which Tenant has paid an indemnity hereunder, Landlord shall actually realize any federal, state or local income tax savings that it would not have realized but for such Tax Loss (or the event or circumstance giving rise thereto), which tax savings have not previously been taken into account in computing the amount of the Tax Indemnity Payment hereunder, then Landlord shall promptly pay to Tenant an amount equal to the sum of (A) the amount of such tax savings and (B) the amount of any additional federal, state and local income tax savings as a result of any payment made pursuant to this sentence; provided, however, Landlord shall not be required to make any such payment to the extent that the cumulative amount of such payments would exceed the amount of all Tax Indemnity Payment by Tenant to Landlord pursuant to Paragraph 30 with respect to such Tax Loss. If for any reason any tax benefit or savings taken into account in computing the amount of any Tax Indemnity Payment or any payment to the Tenant pursuant to this Paragraph 30, shall be lost or otherwise determined to be unavailable, such loss or unavailability shall be treated as a Loss for which Tenant is required to indemnify the Landlord under this Paragraph 30. Landlord shall act in good faith in filing its returns, dealing with tax authorities and pursuing tax benefits and savings that would, in each case, minimize Tenant’s indemnity obligations hereunder. (hd) Notwithstanding anything herein to the contrary, the provisions of this Paragraph 30 shall survive the earlier termination of this Lease.

Appears in 1 contract

Samples: Lease Agreement (Axcelis Technologies Inc)

Special Tax Indemnity. (a) ~~Tenant~~ Lessee shall pay and assume all liability for and does hereby ~~represents~~agree to indemnify each Indemnified Person and, ~~warrants and covenants to Landlord as follows: (i) during the Term~~in each case, ~~Tenant will not construct or install any component~~their accountants, improvement, alteration, or addition on any Leased Property, without prior written consent from Landlord, if such construction or installation would cause such Leased Property, or any part thereof, to be “limited use property,” as such term is used in Section 5 of Revenue Procedure 2001-28, (ii) Tenant is not a “tax-exempt entity” within the meaning of Section 168(h)(2) of the Code and will not take any action that would cause any Leased Property, or any part thereof, to constitute “tax-exempt use property” within the meaning of Section 168(h) of the Code; (iii) neither Tenant nor any Affiliate will claim the Depreciation Deductions or otherwise take the position that it is the owner of any Leased Property, or any part thereof, for federal income tax purposes; (iv) as of the Commencement Date, no Leased Property will require any improvement, modification or addition in order to be rendered complete for its intended use by Tenant; and (v) to the best of Tenant’s knowledge, all written information of a factual nature with respect to any Leased Property that was provided to Landlord or an appraiser engaged by Landlord to appraise such Leased Property by or on behalf of Tenant or any Affiliate of Tenant was true and accurate in all material respects as of the date provided to Landlord or such appraiser. Notwithstanding the provisions of clause (iii) above, Tenant may take the position that it is the owner of a Leased Property for federal income tax purposes if Tenant provides to Landlord an opinion of independent tax counsel that such treatment is required by lawlawyers, and ~~Landlord consents~~ other advisors (each, a "Tax Registration Indemnitee") on an After Tax Basis for any tax, addition to ~~such treatment~~tax, ~~which consent shall not be unreasonably withheld, conditioned~~ penalty or ~~delayed or to the extent required~~ other cost as a result of a breach, inaccuracy or incorrectness of the ~~Internal Revenue Service making~~ representation found in Section 7.3(ff); provided, however, that this indemnity shall not apply to any tax, additional tax, penalty or other cost arising from (i) the gross negligence or willful misconduct of such Tax Registration Indemnitee; (ii) the inaccuracy or incompleteness of any information provided by such Tax Registration Indemnitee to Lessee to the extent such information is included in the registration form or other related materials and to the extent such failure results in the imposition of increased taxes, additions to tax, penalties or other costs; or (iii) the activities of such Tax Registration Indemnitee unrelated to the transactions contemplated herein that result in the transactions contemplated herein being deemed to be a ~~claim or adjustment against Tenant in connection with such~~ confidential corporate tax ~~reporting, and~~ shelter if the transactions contemplated herein would not otherwise have been deemed to be a confidential corporate tax ~~counsel (or Tenant’s outside accounting firm) has concluded that such Internal Revenue Service claim or adjustment has a reasonable basis~~shelter. (b) If as a result of an Event of Default, or the misrepresentation of or breach by Tenant of any of the warranties, representations and covenants set forth in clause (a) of this Paragraph 30, the Depreciation Deductions are lost, disallowed, eliminated, reduced, recaptured, compromised, delayed or otherwise made unavailable to Landlord in computing its liability for federal income tax (a “Deduction Loss”), or, if as a result of the occurrence of an Event of Default, Landlord is required to include in its income from this Lease amounts other than Anticipated Lease Income (an “Inclusion”, any Inclusion or Deduction Loss referred to as a “Loss”), subject to clause (c) of this Paragraph 30, Tenant shall make the Tax Indemnity Payment to Landlord in accordance with this Paragraph 30. The “Tax Indemnity Payment” shall be the amount that is required to be paid to Landlord in order to insure that Landlord’s after-tax net return from this Lease (the “Net Return”) will be equal to, but no greater than, the Net Return Lessor expected to receive as of the Commencement Date (the “Expected Net Return”). The amount of the Tax Indemnity Payment shall be computed using the same methodology and assumptions used in computing the Expected Net Return, including without limitation, that the Depreciation Deductions are Landlord’s only tax deductions with respect to this Lease, that Landlord is able to fully utilize the Depreciation Deductions and, in the case of Inclusions, is fully taxable on its net income at the maximum federal income tax rate then in effect for corporations. If Tenant requests that the amount of the Tax Indemnity Payment be verified, Tenant and Landlord shall appoint a mutually acceptable unrelated recognized lease broker or lease advisor (such acceptance not to be unreasonably withheld) to confirm the calculations of the Tax Indemnity Payment. Landlord shall provide such broker or advisor with the methodology and assumptions used in computing the Expected Net Return, as well as all other information utilized by Landlord in computing the Tax Indemnity Payment, provided that such broker or advisor agrees to maintain the confidentiality of such information (including from Tenant) pursuant to a written ~~agreement reasonably acceptable~~ claim is made or any proceeding is commenced by the Internal Revenue Service against any Tax Registration Indemnitee for any amount as to Landlord. The conclusion of such broker or advisor shall be conclusive and binding on Landlord and Tenant with respect to the related Tax Indemnity Payment. If such broker or advisor concludes that Landlord’s calculation of the Tax Indemnity Payment is correct or is lower than the correct Tax Indemnity Payment, Tenant shall pay for the costs and expenses of such broker or advisor; if such broker or advisor concludes that Landlord’s calculation of the Tax Indemnity Payment is too high, Landlord shall pay the costs and expenses of such broker or advisor. (c) Tenant shall pay to Landlord the Tax Indemnity Payment within 30 days of receiving written notice from Landlord describing the Loss and the calculation of the Tax Indemnity Payment; provided, however that Tenant shall not be required to pay the Tax Indemnity Payment with respect to any Loss so long as such Loss is being contested which Lessee has an indemnity obligation pursuant to this ~~Paragraph 30. (d) Landlord shall~~ Section 12.9, such Tax Registration Indemnitee agrees to notify the Lessee promptly ~~notify Tenant~~ in writing of ~~any actual~~ such proposed claim or ~~proposed claim~~proceeding, ~~adjustment or other action of any tax authority received by Landlord in writing with respect to which Tenant may be required~~ but the failure to provide ~~indemnification under this Paragraph 30 (“Proposed Adjustment”) (but failure of Landlord to so notify Tenant~~ such notice shall not ~~relieve Tenant of~~ release Lessee from its ~~obligations~~ indemnity obligation hereunder except to the extent that ~~Tenant’s contest rights hereunder are~~ it is materially adversely ~~affected)~~affected thereby. ~~If Tenant~~ Lessee shall ~~request in writing within sixty (60) days after Landlord’s notice described above~~ be entitled, at its expense, to require that ~~the Proposed Adjustment~~ any amount for which it may be obligated to indemnify a Tax Registration Indemnitee pursuant to this Section 12.9 be contested and to withhold payment during pendency of such contest (or if such ~~shorter period specified in Landlord’s notice as the time period within which Landlord~~ forbearance is ~~required~~ permitted by ~~the applicable Governmental Authority to take action~~law), ~~Landlord~~ provided that Lessee will pay any cost, expense, interest or penalty associated with such forbearance. A Tax Registration Indemnitee shall ~~contest the Proposed Adjustment and will not settle~~ have control over any contest ~~thereof without~~ commenced pursuant to this Section 12.9(b) but Lessee shall have, upon request, the ~~consent of Tenant, which consent~~ right to participate (including its counsel) in all proceedings and such Tax Registration Indemnitee shall ~~not be unreasonably withheld; provided, however, that: (i) prior~~ keep Lessee informed as to taking such action, Tenant shall have furnished Landlord with an opinion of independent tax advisor chosen by Tenant and reasonably acceptable to Landlord, to the effect that Landlord has a reasonable possibility of success in contesting the claim; (ii) prior to taking such action, Tenant shall have (A) acknowledged its obligation to indemnify Landlord hereunder in the event Landlord does not prevail all material developments in such contest and (B) agreed to reimburse Landlord promptly on demand (or, if so requested by Landlord, in advance) for all reasonable out-of-pocket costs and expenses that Landlord incurs in connection with contesting such claim, including without limitation reasonable attorneys’ and accountants’ fees and expenses; (iii) no Event of Default shall exist and be continuing; (iv) Landlord shall not be obligated to contest any proposed amount that is less than $100,000; and (v) Landlord shall in all events control the contest, and Tenant shall not have any right to inspect the books and records of Landlord, but shall have reasonable afford Lessee an opportunity to review and comment on portions of documentation, protests, memoranda or briefs (which may be redacted portions) relating exclusively to a Proposed Adjustment. (e) In the event Landlord pays the tax claimed and then seeks a refund, Landlord may require Tenant to advance funds sufficient to pay the tax that would be indemnified by Tenant hereunder if the refund claim were resolved adversely to Landlord. To the extent the refund claim is successful, the refund received from the taxing authority and attributable to funds advanced by Tenant shall be refunded to Tenant, including any interest actually received and fairly attributable to amounts advanced by Tenant, unless the refund is needed to pay an indemnity. Notwithstanding anything to the contrary in this Pxxxxxxxx 00, Xxxxxxxx may at any time decline to take any further action discuss with respect to a Proposed Adjustment or may settle any contest without the consent of Tenant; provided, however, that if Tenant has properly requested such action pursuant to this Pxxxxxxxx 00, Xxxxxxxx shall notify Tenant in writing that Landlord waives its right to any indemnity payment by Tenant (other than with respect to the expenses of the contest incurred prior to such notice) that Tenant would otherwise be obligated to pay pursuant to this Paragraph 30 in respect of such adjustment, including any indemnities arising from such adjustment in subsequent years or that would arise by reason of the fact that the subject matter of such adjustment is of a continuing nature. In the case of any such waiver by Landlord of its rights to an indemnity payment from Tenant, Landlord shall return to Tenant any amounts previously paid by Tenant to Landlord for expenses or costs related to the contest (to the extent not yet expended) and, if applicable, any amounts paid by Tenant for taxes with respect to which Landlord has waived its right to an indemnity (plus interest on such tax payment at the rate then applicable under the Code to refunds of federal income taxes). (f) For purposes of this Paragraph 30, “Landlord” shall be deemed to include the consolidated Federal taxpayer group of which Landlord is a member. (g) If as a result of a Tax Loss for which Tenant has paid an indemnity hereunder, Landlord shall actually realize any federal, state or local income tax savings that it would not have realized but for such Tax Loss (or the event or circumstance giving rise thereto), which tax savings have not previously been taken into account in computing the amount of the Tax Indemnity Payment hereunder, then Landlord shall promptly pay to Tenant an amount equal to the sum of (A) the amount of such tax savings and (B) the amount of any additional federal, state and local income tax savings as a result of any payment made pursuant to this sentence; provided, however, Landlord shall not be required to make any such payment to the extent that the cumulative amount of such payments would exceed the amount of all Tax Indemnity Payment by Tenant to Landlord pursuant to Paragraph 30 Registration Indemnitee Lessee's interests with respect to such Tax Loss. If for any reason any tax benefit or savings taken into account in computing the amount of any Tax Indemnity Payment or any payment to the Tenant pursuant to this Paragraph 30, shall be lost or otherwise determined to be unavailable, such loss or unavailability shall be treated as a Loss for which Tenant is required to indemnify the Landlord under this Paragraph 30. Landlord shall act in good faith in filing its returns, dealing with tax authorities and pursuing tax benefits and savings that would, in each case, minimize Tenant’s indemnity obligations hereundercontest. (hc) ~~Notwithstanding anything herein~~ Lessee and each Tax Registration Indemnitee agree to cooperate with each other with respect to maintaining any required documentation or other information in connection with the ~~contrary~~tax shelter registration provisions of Code Section 6111, the investor list provisions of ~~this Paragraph 30 shall survive~~ Code Section 6112 and the ~~earlier termination~~ disclosure statement provisions of ~~this Lease~~Code Section 6011 (and any of the regulations thereunder).

Appears in 1 contract

Samples: Participation Agreement (Inktomi Corp)

Special Tax Indemnity. (a) Tenant hereby represents, warrants and covenants to Landlord as follows: (i) ~~during~~ under current law, neither any Individual Leased Premises as a whole, the ~~Term, Tenant will not construct or install any component, improvement, alteration, or addition on any~~ Leased ~~Property, without prior written consent from Landlord, if such construction or installation would cause such Leased Property, or any part thereof, to be~~ Premises as a whole nor the Equipment constitutes “limited use property,” within the meaning of Revenue Procedure 76-30, 1976 C.B. 647, as ~~such term is used in Section 5 of~~ modified and superseded by Revenue Procedure 2001-28, 2001 C.B. 1156; (ii) ~~Tenant is not a “tax-exempt entity” within~~ at no time during the ~~meaning of Section 168(h)(2) of~~ Term will the ~~Code and will not take any action that would cause any~~ Leased ~~Property,~~ Premises or any ~~part thereof, to~~ portion thereof constitute “~~tax-~~tax exempt use property” within the meaning of Section 168(h) of the Code; (iii) neither Tenant nor any Affiliate will claim any depreciation or cost recovery deductions with respect to the ~~Depreciation Deductions or otherwise take the position that it is the owner of any~~ Leased ~~Property,~~ Premises or any ~~part~~ portion thereof, ~~for~~ and has taken or will take any other action in connection with filing its or their federal income tax ~~purposes~~returns that would be a primary factor resulting in a Loss or Inclusion (in each case, as defined in Paragraph 30(b) below); (iv) as of the ~~Commencement Date~~date hereof with respect to the (I) Improvements and Fixtures and (II) the Equipment, no the Leased ~~Property~~ Premises and any Individual Leased Premises will not require any improvement, modification or addition in order to be rendered complete for its intended use by Tenant; and (v) ~~to the best of Tenant’s knowledge,~~ all written information ~~of a factual nature with respect~~ supplied, caused to be supplied or to be supplied to any ~~Leased Property that was provided to Landlord or an~~ appraiser ~~engaged by Landlord to appraise such Leased Property~~ by or on behalf of Tenant or any Affiliate of Tenant with respect to the Leased Premises or any portion thereof was or will be, as the case may be, true and accurate in all material respects as of the date provided to Landlord or such appraiser. Notwithstanding the provisions of clause (iii) above, Tenant may take the position that it is the owner of a Leased Property for federal income tax purposes if Tenant provides to Landlord an opinion of independent tax counsel that such treatment is required by law, and Landlord consents to such treatment, which consent shall not be unreasonably withheld, conditioned or delayed or to the extent required as a result of the Internal Revenue Service making a claim or adjustment against Tenant in connection with such tax reporting, and tax counsel (or Tenant’s outside accounting firm) has concluded that such Internal Revenue Service claim or adjustment has a reasonable basiswhen supplied. (b) ~~If as a result~~ If, by reason of ~~an Event~~ any act or omission of ~~Default,~~ Tenant or by any other Person in possession of each Individual Leased Premises or any portion thereof or by reason of the ~~misrepresentation of~~ inaccuracy or breach by Tenant of any of the ~~warranties~~representations, ~~representations~~ warranties and covenants ~~set forth~~ contained in ~~clause (a) of~~ this Paragraph 3030 in any material respect, ~~the Depreciation Deductions~~ any depreciation deductions are lost, disallowed, eliminated, reduced, recaptured, compromised, delayed or otherwise made unavailable to Landlord ~~in computing~~ due to the acts of Tenant or its ~~liability for federal income tax~~ Affiliate (a “~~Deduction~~ Loss”~~), or, if as~~ ) or Landlord incurs a ~~result of the occurrence of an Event of Default,~~ tax detriment because Landlord is required to include amounts in ~~its~~ income ~~from this Lease amounts~~ other than Anticipated Lease Income (an “Inclusion”~~, any Inclusion or Deduction Loss referred to as a “Loss”~~), ~~subject to clause (c) of this Paragraph 30~~Tenant shall, ~~Tenant shall make the~~ upon notice from Landlord promptly pay such Person designated by Landlord on demand in immediately available funds, as an indemnity an amount which, on an After-Tax ~~Indemnity Payment to Landlord in accordance with this Paragraph 30. The “Tax Indemnity Payment”~~ Basis, shall be equal to the ~~amount that is required~~ sum of (x) the increase in federal, state or local income tax liability for the respective taxable year attributable to ~~be paid~~ such Loss or Inclusion plus (y) the amounts of interest, penalties and additions to ~~Landlord in order to insure that Landlord’s after-~~tax ~~net return from this Lease~~ (~~the “Net Return”) will be equal to~~including, but no greater than, the Net Return Lessor expected to receive as of the Commencement Date (the “Expected Net Return”). The amount of the Tax Indemnity Payment shall be computed using the same methodology and assumptions used in computing the Expected Net Return, including without limitation, ~~that~~ any additions to tax because of underpayment of estimated tax), which are assessed against Landlord for such taxable year by the ~~Depreciation Deductions~~ Internal Revenue Service or any relevant state, local or foreign taxing authority and which are ~~Landlord’s only tax deductions with respect~~ attributable to this Lease, that Landlord is able to fully utilize the Depreciation Deductions and, in the case of Inclusions, is fully taxable on its net income at the maximum federal income tax rate then in effect for corporations. If Tenant requests that the amount of the Tax Indemnity Payment be verified, Tenant and Landlord shall appoint a mutually acceptable unrelated recognized lease broker such Loss or lease advisor (such acceptance not to be unreasonably withheld) to confirm the calculations of the Tax Indemnity Payment. Landlord shall provide such broker or advisor with the methodology and assumptions used in computing the Expected Net Return, as well as all other information utilized by Landlord in computing the Tax Indemnity Payment, provided that such broker or advisor agrees to maintain the confidentiality of such information (including from Tenant) pursuant to a written agreement reasonably acceptable to Landlord. The conclusion of such broker or advisor shall be conclusive and binding on Landlord and Tenant with respect to the related Tax Indemnity Payment. If such broker or advisor concludes that Landlord’s calculation of the Tax Indemnity Payment is correct or is lower than the correct Tax Indemnity Payment, Tenant shall pay for the costs and expenses of such broker or advisor; if such broker or advisor concludes that Landlord’s calculation of the Tax Indemnity Payment is too high, Landlord shall pay the costs and expenses of such broker or advisorInclusion. (c) Tenant shall pay to Landlord the Tax Indemnity Payment within 30 days of receiving written notice from Landlord describing the Loss and the calculation of the Tax Indemnity Payment; provided, however that Tenant shall not be required to pay the Tax Indemnity Payment with respect to any Loss so long as such Loss is being contested pursuant to this Paragraph 30. (d) Landlord shall ~~promptly~~ notify Tenant in writing of any actual or proposed claim, adjustment or other action of any tax authority received by Landlord in writing with respect to which Tenant may be required to provide indemnification under this Paragraph 30 (“Proposed Adjustment”~~) (but failure of Landlord to so notify Tenant shall not relieve Tenant of its obligations hereunder except to the extent that Tenant’s contest rights hereunder are materially adversely affected~~). If Tenant shall request in writing within ~~sixty~~ thirty (6030) days after Landlord’s notice described above that the Proposed Adjustment be contested (or such shorter period ~~specified~~ in ~~Landlord’s notice as~~ which the ~~time period within which~~ Landlord is may be required ~~by the applicable Governmental Authority~~ to take action), Landlord shall contest the Proposed ~~Adjustment and will not settle any contest thereof without the consent of Tenant, which consent shall not be unreasonably withheld~~Adjustment; provided, however, that: (i) prior to taking such action, Tenant shall have furnished Landlord with an opinion of independent tax advisor chosen by Tenant and reasonably acceptable to Landlord, to the effect that Landlord has a reasonable possibility of success in contesting the claim; (ii) prior to taking such action, Tenant shall have (A) acknowledged its obligation to indemnify Landlord hereunder in the event Landlord does not prevail in such contest and (B) agreed to reimburse Landlord promptly on demand for (or, if so requested by Landlord, in advance~~) for~~ ), all ~~reasonable out-of-pocket~~ costs and expenses that Landlord ~~incurs~~ may incur in connection with contesting such claim, including without limitation reasonable attorneys’ and accountants’ fees and expenses; (iii) no Event of Default shall exist and be continuing; (iv) Landlord shall not be obligated to contest any proposed amount that is less than Twenty-Five Thousand and 00/100 Dollars ($~~100,000~~25,000.00); and (v) Landlord shall in all events control the contest, and Tenant shall ~~not~~ have any right to inspect the books and records of ~~Landlord~~Landlord during reasonable business hours and with at least forty-eight (48) hours’ notice, ~~but~~ and shall have reasonable opportunity to review and comment on portions of documentation, protests, memoranda or briefs ~~(which may be redacted portions)~~ relating exclusively to a Proposed Adjustment~~. (e)~~ . In the event Landlord pays the tax claimed and then seeks a refund, Landlord may require Tenant to advance funds sufficient to pay the tax that would be indemnified by Tenant hereunder if the refund claim were resolved adversely to Landlord. To the extent the refund claim is successful, the refund received from the taxing authority and attributable to funds advanced by Tenant shall be refunded to Tenant, ~~including any interest actually received and fairly attributable to amounts advanced by Tenant,~~ unless the refund is needed to pay an indemnity. Notwithstanding anything to the contrary in this ~~Pxxxxxxxx 00~~Paragraph 30(c), ~~Xxxxxxxx~~ Landlord may at any time decline to take any further action with respect to a Proposed Adjustment or may settle any contest without the consent of Tenant; provided, however, that if Tenant has ~~properly requested such action pursuant to~~ complied with all the terms of this ~~Pxxxxxxxx 00~~Paragraph 30(c), ~~Xxxxxxxx shall notify~~ and Tenant has reasonably withheld in writing ~~that Landlord waives~~ its ~~right~~ consent to ~~any indemnity payment by Tenant (other than with respect to the expenses~~ all or part of such assessment or settlement based upon its evaluation of the ~~contest incurred prior to such notice) that~~ merits, Tenant ~~would otherwise~~ will not be obligated to ~~pay pursuant to this Paragraph 30 in respect~~ indemnify Landlord for the portion of such ~~adjustment, including any indemnities arising from such adjustment in subsequent years~~ assessment or that would arise by reason of the fact that the subject matter of such adjustment is of a continuing nature. In the case of any such waiver by Landlord of its rights to an indemnity payment from Tenant, Landlord shall return to Tenant any amounts previously paid by Tenant to Landlord for expenses or costs related to the contest (to the extent not yet expended) and, if applicable, any amounts paid by Tenant for taxes with respect settlement to which ~~Landlord~~ Tenant has ~~waived~~ reasonably withheld its ~~right to an indemnity (plus interest on such tax payment at~~ consent. For the ~~rate then applicable under the Code to refunds of federal income taxes). (f) For~~ purposes of ~~this Paragraph 30~~Paragraphs 30 and 31, “Landlord” shall ~~be deemed~~ include Landlord’s successor and assigns and, in the case of any flow through entity, the member or other equity owners of Landlord required to ~~include~~ report the ~~consolidated Federal taxpayer group~~ gross or net income of ~~which~~ Landlord ~~is a member~~and/or other items of income, expense, deduction and credit with respect thereto, and “Landlord”. (g) If as a result of a Tax Loss for which Tenant has paid an indemnity hereunder, Landlord shall actually realize any federal, state or local income tax savings that it would not have realized but for such Tax Loss (or the event or circumstance giving rise thereto), which tax savings have not previously been taken into account in computing the amount of the Tax Indemnity Payment hereunder, then Landlord shall promptly pay to Tenant an amount equal to the sum of (A) the amount of such tax savings and (B) the amount of any additional federal, state and local income tax savings as a result of any payment made pursuant to this sentence; provided, however, Landlord shall not be required to make any such payment to the extent that the cumulative amount of such payments would exceed the amount of all Tax Indemnity Payment by Tenant to Landlord pursuant to Paragraph 30 with respect to such Tax Loss. If for any reason any tax benefit or savings taken into account in computing the amount of any Tax Indemnity Payment or any payment to the Tenant pursuant to this Paragraph 30, shall be lost or otherwise determined to be unavailable, such loss or unavailability shall be treated as a Loss for which Tenant is required to indemnify the Landlord under this Paragraph 30. Landlord shall act in good faith in filing its returns, dealing with tax authorities and pursuing tax benefits and savings that would, in each case, minimize Tenant’s indemnity obligations hereunder. (hd) Notwithstanding anything herein to the contrary, the provisions of this Paragraph 30 shall survive the earlier termination of this Lease.

Appears in 1 contract

Samples: Master Lease Agreement (CVSL Inc.)

Special Tax Indemnity. ~~(a)~~ Tenant hereby represents, warrants and covenants to Landlord as follows: (i) during the Term, Tenant will not construct or install any component, improvement, alteration, or addition on ~~any~~ the Leased ~~Property~~Premises, without prior written consent from Landlord, if such construction or installation would cause ~~such~~ the Leased ~~Property~~Premises, or any part thereof, to be “"limited use property,” " as such term is used in Section 5 of Revenue Procedure 2001-28, (ii) Tenant is not a “"tax-exempt entity” " within the meaning of Section 168(h)(2) of the Code and will not take any action that would cause ~~any~~ the Leased ~~Property~~Premises, or any part thereof, to constitute “"tax-exempt use property” " within the meaning of Section 168(h) of the Code; (iii) neither Tenant nor any Affiliate will claim the Depreciation Deductions or otherwise take the position that it is the owner of ~~any~~ the Leased ~~Property~~Premises, or any part thereof, for federal income tax purposes; and (iv~~) as of the Commencement Date, no Leased Property will require any improvement, modification or addition in order to be rendered complete for its intended use by Tenant; and (v~~) to the best of Tenant’s 's knowledge, all written information of a factual nature with respect to ~~any~~ the Leased ~~Property~~ Premises that was provided to Landlord or an appraiser engaged by Landlord to appraise ~~such~~ the Leased ~~Property~~ Premises by or on behalf of Tenant or any Affiliate of Tenant was true and accurate in all material respects as of the date provided to Landlord or such appraiser. Notwithstanding the provisions of clause (iii) above, Tenant may take the position that it is the owner of a the Leased ~~Property~~ Premises for federal income tax purposes if Tenant provides to Landlord an opinion of independent tax counsel that such treatment is required by law, and Landlord consents to such treatment, which consent shall not be unreasonably withheld, ~~conditioned or delayed~~ or to the extent required as a result of the Internal Revenue Service making a claim or adjustment against Tenant in connection with such tax reporting, and tax counsel (or Tenant’s 's outside accounting firm) has concluded that such Internal Revenue Service claim or adjustment has a reasonable basis~~. (b)~~ . If as a result of an Event of Default, or the misrepresentation of or breach by Tenant of any of the warranties, representations and covenants set forth in clause (a) of this Paragraph 30, the Depreciation Deductions are lost, disallowed, eliminated, reduced, recaptured, compromised, delayed or otherwise made unavailable to Landlord in computing its liability for federal income tax (a “"Deduction Loss”"), or, if as a result of the occurrence of an Event of Default, Landlord is required to include in its income from this Lease amounts other than Anticipated Lease Income (an “"Inclusion”", any Inclusion or Deduction Loss referred to as a “"Loss”"), subject to clause (c) of this Paragraph 30, Tenant shall make the Tax Indemnity Payment to Landlord in accordance with this Paragraph 30. The “"Tax Indemnity Payment” " shall be the amount that is required to be paid to Landlord in order to insure that Landlord’s 's after-tax net return from this Lease (the “"Net Return”") will be equal to, but no greater than, the Net Return ~~Lessor~~ Landlord expected to receive as of the Commencement Date (the “"Expected Net Return”"). The amount of the Tax Indemnity Payment shall be computed using the same methodology and assumptions used in computing the Expected Net Return, including without limitation, that the Depreciation Deductions are Landlord’s 's only tax deductions with respect to this Lease, that Landlord is able to fully utilize the Depreciation Deductions and, in the case of Inclusions, is fully taxable on its net income at the maximum federal income tax rate then in effect for corporations. If Tenant requests that the amount of the Tax Indemnity Payment be verified, Tenant and Landlord shall appoint a mutually acceptable unrelated recognized lease broker or lease advisor (such acceptance not to be unreasonably withheld) to confirm the calculations of the Tax Indemnity Payment. Landlord shall provide such broker or advisor with the methodology and assumptions used in computing the Expected Net Return, as well as all other information utilized by Landlord in computing the Tax Indemnity Payment, provided that such broker or advisor agrees to maintain the confidentiality of such information (including from Tenant) pursuant to a written agreement reasonably acceptable to Landlord. The conclusion of such broker or advisor shall be conclusive and binding on Landlord and Tenant with respect to the related Tax Indemnity Payment. If such broker or advisor concludes that Landlord’s 's calculation of the Tax Indemnity Payment is correct or is lower than the correct Tax Indemnity Payment, Tenant shall pay for the costs and expenses of such broker or advisor; if such broker or advisor concludes that Landlord’s 's calculation of the Tax Indemnity Payment is too high, Landlord shall pay the costs and expenses of such broker or advisor~~. (c)~~ . Tenant shall pay to Landlord the Tax Indemnity Payment within 30 days of receiving written notice from Landlord describing the Loss and the calculation of the Tax Indemnity Payment; provided, however that Tenant shall not be required to pay the Tax Indemnity Payment with respect to any Loss so long as such Loss is being contested pursuant to this Paragraph 30~~. (d)~~ . Landlord shall promptly notify Tenant in writing of any actual or proposed claim, adjustment or other action of any tax authority received by Landlord in writing with respect to which Tenant may be required to provide indemnification under this Paragraph 30 (“"Proposed Adjustment”") (but failure of Landlord to so notify Tenant shall not relieve Tenant of its obligations hereunder except to the extent that Tenant’s 's contest rights hereunder are materially adversely affected). If Tenant shall request in writing within sixty (60) days after Landlord’s 's notice described above that the Proposed Adjustment be contested (or such shorter period specified in Landlord’s 's notice as the time period within which Landlord is required by the applicable Governmental Authority to take action), Landlord shall contest the Proposed Adjustment and will not settle any contest thereof without the consent of Tenant, which consent shall not be unreasonably withheld; provided, however, that: (i) prior to taking such action, Tenant shall have furnished Landlord with an opinion of independent tax advisor chosen by Tenant and reasonably acceptable to Landlord, to the effect that Landlord has a reasonable possibility of success in contesting the claim; (ii) prior to taking such action, Tenant shall have (A) acknowledged its obligation to indemnify Landlord hereunder in the event Landlord does not prevail in such contest and (B) agreed to reimburse Landlord promptly on demand (or, if so requested by Landlord, in advance) for all reasonable out-of-pocket costs and expenses that Landlord incurs in connection with contesting such claim, including without limitation reasonable attorneys’ ' and accountants’ ' fees and expenses; (iii) no Event of Default shall exist and be continuing; (iv) Landlord shall not be obligated to contest any proposed amount that is less than $100,000; and (v) Landlord shall in all events control the contest, and Tenant shall not have any right to inspect the books and records of Landlord, but shall have reasonable opportunity to review and comment on portions of documentation, protests, memoranda or briefs (which may be redacted portions) relating exclusively to a Proposed Adjustment~~. (e)~~ . In the event Landlord pays the tax claimed and then seeks a refund, Landlord may require Tenant to advance funds sufficient to pay the tax that would be indemnified by Tenant hereunder if the refund claim were resolved adversely to Landlord. To the extent the refund claim is successful, the refund received from the taxing authority and attributable to funds advanced by Tenant shall be refunded to Tenant, including any interest actually received and fairly attributable to amounts advanced by Tenant, unless the refund is needed to pay an indemnity. Notwithstanding anything to the contrary in this ~~Pxxxxxxxx~~ Xxxxxxxxx 00, Xxxxxxxx may at any time decline to take any further action with respect to a Proposed Adjustment or may settle any contest without the consent of Tenant; provided, however, that if Tenant has properly requested such action pursuant to this ~~Pxxxxxxxx~~ Xxxxxxxxx 00, Xxxxxxxx shall notify Tenant in writing that Landlord waives its right to any indemnity payment by Tenant (other than with respect to the expenses of the contest incurred prior to such notice) that Tenant would otherwise be obligated to pay pursuant to this Paragraph 30 in respect of such adjustment, including any indemnities arising from such adjustment in subsequent years or that would arise by reason of the fact that the subject matter of such adjustment is of a continuing nature. In the case of any such waiver by Landlord of its rights to an indemnity payment from Tenant, Landlord shall return to Tenant any amounts previously paid by Tenant to Landlord for expenses or costs related to the contest (to the extent not yet expended) and, if applicable, any amounts paid by Tenant for taxes with respect to which Landlord has waived its right to an indemnity (plus interest on such tax payment at the rate then applicable under the Code to refunds of federal income taxes)~~. (f)~~ . For purposes of this Paragraph 30, “"Landlord” " shall be deemed to include the consolidated Federal taxpayer group of which Landlord is a member~~. (g)~~ . If as a result of a Tax Loss for which Tenant has paid an indemnity hereunder, Landlord shall actually realize any federal, state or local income tax savings that it would not have realized but for such Tax Loss (or the event or circumstance giving rise thereto), which tax savings have not previously been taken into account in computing the amount of the Tax Indemnity Payment hereunder, then Landlord shall promptly pay to Tenant an amount equal to the sum of (A) the amount of such tax savings and (B) the amount of any additional federal, state and local income tax savings as a result of any payment made pursuant to this sentence; provided, however, Landlord shall not be required to make any such payment to the extent that the cumulative amount of such payments would exceed the amount of all Tax Indemnity Payment by Tenant to Landlord pursuant to Paragraph 30 with respect to such Tax Loss. If for any reason any tax benefit or savings taken into account in computing the amount of any Tax Indemnity Payment or any payment to the Tenant pursuant to this Paragraph 30, shall be lost or otherwise determined to be unavailable, such loss or unavailability shall be treated as a Loss for which Tenant is required to indemnify the Landlord under this Paragraph 30. Landlord shall act in good faith in filing its returns, dealing with tax authorities and pursuing tax benefits and savings that would, in each case, minimize Tenant’s 's indemnity obligations hereunder~~. (h)~~ . Notwithstanding anything herein to the contrary, the provisions of this Paragraph 30 shall survive the earlier termination of this Lease.

Appears in 1 contract

Samples: Lease Agreement (Old National Bancorp /In/)

Special Tax Indemnity. ~~(a) Tenant hereby represents, warrants and covenants to Landlord as follows:~~ (i) ~~during~~ All references to “Lessor” in this Section 7(c) shall include (A) Lessor’s successors and assigns, and (B) each member of the ~~Term~~affiliated group of corporations, Tenant will not construct or install any component, improvement, alteration, or addition on any Leased Property, without prior written consent from Landlord, if such construction or installation would cause such Leased Property, or any part thereof, to be “limited use property,” as ~~such term is used~~ defined in Section 5 1504(a) of the Internal Revenue ~~Procedure 2001-28~~Code of 1986, as amended (the “Code”), of which Lessor or such successor or assign is at any time a member. (ii) ~~Tenant is not a “tax-exempt entity” within~~ Lessor shall be treated for Federal, state and local income tax purposes as the ~~meaning~~ owner of ~~Section 168(h)(2)~~ the Units and shall take into account in computing its income tax liabilities all items of income, deduction (including depreciation consistent with Lessee’s representation in the applicable Schedule), credit, gain or loss relating to ownership of the Units as are provided to owners of similar equipment under the Code and ~~will not take any action that would cause any Leased Property~~applicable state and local tax laws as in effect on the Acceptance Date of such Units (collectively, ~~or any part thereof, to constitute~~ the “~~tax-exempt use property” within the meaning of Section 168(h) of the Code;~~ Tax Benefits”). (iii) ~~neither Tenant nor~~ If (A) Lessor loses, is delayed in claiming, is required to recapture (other than in connection with a sale of the Unit following the end of the lease term, provided Lessee is not then in default), is not allowed or does not claim as a result of a written opinion of Lessor’s tax counsel to the effect that Lessor’s claiming of such Tax Benefits probably would not be upheld by a court if the matter were litigated (that is, that the chances of a finding against Lessor are at least as great as the chances of a finding in favor of Lessor) all or any ~~Affiliate will claim the Depreciation Deductions or otherwise take the position that it is the owner~~ portion of any ~~Leased Property~~Tax Benefits (unless Lessee provides Lessor with an opinion of its tax counsel that Lessor has substantial authority for claiming of such Tax Benefits), at any time and as the result of an act or omission by Lessee or a change in Federal income tax law (a “Tax Loss”), then, upon final determination of such Tax Loss, at Lessor’s option, either: (x) all further rental payments with respect to such Unit, if any, shall be increased by an amount, or (y) Lessee shall pay to Lessor a lump sum amount, which shall in either case maintain the net economic after-tax rate of return with respect to the affected Schedule (taking into account all Tax Benefits or deferred tax payments, including without limitation the deductibility of state taxes for Federal purposes, that may be generated by any ~~part thereof~~payment or change in treatment of the transaction for tax purposes), ~~for federal~~ based on an assumed combined Federal, state and local income tax ~~purposes;~~ rate for Lessor of 38.20%, the other terms of the transaction and the rental therefor. Lessee shall also pay to Lessor on demand all interest, costs (including Attorney Costs), penalties and additions to tax associated with the Tax Loss, net of any tax benefits associated with such payments. (iv) as Lessor shall provide Lessee with notice and copies of ~~the Commencement Date~~any claim, ~~no Leased Property will require~~ audit, or notice received by Lessor of or from any ~~improvement, modification or addition in order to be rendered complete for its intended use by Tenant; and (v) to the best of Tenant’s knowledge, all written information of a factual nature~~ taxing authority made with respect to any ~~Leased Property that was provided~~ Lease or the tax treatment thereof. Lessor shall have no obligation to ~~Landlord~~ contest any Tax Loss unless (x) it relates to a disallowance or ~~an appraiser engaged by Landlord~~ adjustment in excess of $100,000 of which a taxing authority has notified Lessor, (y) Lessee promptly requests Lessor to ~~appraise such Leased Property by or on behalf of Tenant or any Affiliate of Tenant was true~~ contest and accurate in all material respects as of the date provided to Landlord or such appraiser. Notwithstanding the provisions of clause (iii) above, Tenant may take the position that it is the owner of a Leased Property for federal income tax purposes if Tenant promptly provides ~~to Landlord~~ Lessor with an opinion of independent tax counsel opining that Lessor is more likely than not to prevail and with a full indemnity should Lessor not prevail and (z) Lessee promply pays (1) any amount Lessor elects to pay while suing for a refund and (2) all costs and expenses, including Attorneys Costs, as incurred by Lessor in connection with such ~~treatment~~ contest. Lessor shall maintain complete control of any contest; provided, however, that Lessee, or its representative, at Lessee’s expense, shall have the right to review all correspondence to and from the taxing authority at our about the same time such correspondence is ~~required by law, and Landlord consents to~~ sent or received. Lessor shall not settle such ~~treatment,~~ matter without Lessee’s consent (which consent shall not be unreasonably ~~withheld, conditioned~~ withheld or delayed or to the extent required as a result of the Internal Revenue Service making a claim or adjustment against Tenant in connection with such tax reporting, and tax counsel (or Tenant’s outside accounting firmdelayed) has concluded that such Internal Revenue Service claim or adjustment has a reasonable basis. (b) If as a result of an Event of Default, or the misrepresentation of or breach by Tenant of any of the warranties, representations and covenants set forth in clause (a) of this Paragraph 30, the Depreciation Deductions are lost, disallowed, eliminated, reduced, recaptured, compromised, delayed or otherwise made unavailable to Landlord in computing its liability for federal income tax (a “Deduction Loss”), or, if as a result of the occurrence of an Event of Default, Landlord is required to include in its income from this Lease amounts other than Anticipated Lease Income (an “Inclusion”, any Inclusion or Deduction Loss referred to as a “Loss”), subject to clause (c) of this Paragraph 30, Tenant shall make the Tax Indemnity Payment to Landlord in accordance with this Paragraph 30. The “Tax Indemnity Payment” shall be the amount that is required to be paid to Landlord in order to insure that Landlord’s after-tax net return from this Lease (the “Net Return”) will be equal to, but no greater than, the Net Return Lessor expected to receive as of the Commencement Date (the “Expected Net Return”). The amount of the Tax Indemnity Payment shall be computed using the same methodology and assumptions used in computing the Expected Net Return, including without limitation, that the Depreciation Deductions are Landlord’s only tax deductions with respect to this Lease, that Landlord is able to fully utilize the Depreciation Deductions and, in the case of Inclusions, is fully taxable on its net income at the maximum federal income tax rate then in effect for corporations. If Tenant requests that the amount of the Tax Indemnity Payment be verified, Tenant and Landlord shall appoint a mutually acceptable unrelated recognized lease broker or lease advisor (such acceptance not to be unreasonably withheld) to confirm the calculations of the Tax Indemnity Payment. Landlord shall provide such broker or advisor with the methodology and assumptions used in computing the Expected Net Return, as well as all other information utilized by Landlord in computing the Tax Indemnity Payment, provided that such broker or advisor agrees to maintain the confidentiality of such information (including from Tenant) pursuant to a written agreement reasonably acceptable to Landlord. The conclusion of such broker or advisor shall be conclusive and binding on Landlord and Tenant with respect to the related Tax Indemnity Payment. If such broker or advisor concludes that Landlord’s calculation of the Tax Indemnity Payment is correct or is lower than the correct Tax Indemnity Payment, Tenant shall pay for the costs and expenses of such broker or advisor; if such broker or advisor concludes that Landlord’s calculation of the Tax Indemnity Payment is too high, Landlord shall pay the costs and expenses of such broker or advisor. (c) Tenant shall pay to Landlord the Tax Indemnity Payment within 30 days of receiving written notice from Landlord describing the Loss and the calculation of the Tax Indemnity Payment; provided, however that Tenant shall not be required to pay the Tax Indemnity Payment with respect to any Loss so long as such Loss is being contested pursuant to this Paragraph 30. (d) Landlord shall promptly notify Tenant in writing of any actual or proposed claim, adjustment or other action of any tax authority received by Landlord in writing with respect to which Tenant may be required to provide indemnification under this Paragraph 30 (“Proposed Adjustment”) (but failure of Landlord to so notify Tenant shall not relieve Tenant of its obligations hereunder except to the extent that Tenant’s contest rights hereunder are materially adversely affected). If Tenant shall request in writing within sixty (60) days after Landlord’s notice described above that the Proposed Adjustment be contested (or such shorter period specified in Landlord’s notice as the time period within which Landlord is required by the applicable Governmental Authority to take action), Landlord shall contest the Proposed Adjustment and will not settle any contest thereof without the consent of Tenant, which consent shall not be unreasonably withheld; provided, however, that: (i) prior to taking such action, Tenant shall have furnished Landlord with an opinion of independent tax advisor chosen by Tenant and reasonably acceptable to Landlord, to the effect that Landlord has a reasonable possibility of success in contesting the claim; (ii) prior to taking such action, Tenant shall have (A) acknowledged its obligation to indemnify Landlord hereunder in the event Landlord does not prevail in such contest and (B) agreed to reimburse Landlord promptly on demand (or, if so requested by Landlord, in advance) for all reasonable out-of-pocket costs and expenses that Landlord incurs in connection with contesting such claim, including without limitation reasonable attorneys’ and accountants’ fees and expenses; (iii) no Event of Default shall exist and be continuing; (iv) Landlord shall not be obligated to contest any proposed amount that is less than $100,000; and (v) Landlord shall in all events control the contest, and Tenant shall not have any right to inspect the books and records of Landlord, but shall have reasonable opportunity to review and comment on portions of documentation, protests, memoranda or briefs (which may be redacted portions) relating exclusively to a Proposed Adjustment. (e) In the event Landlord pays the tax claimed and then seeks a refund, Landlord may require Tenant to advance funds sufficient to pay the tax that would be indemnified by Tenant hereunder if the refund claim were resolved adversely to Landlord. To the extent the refund claim is successful, the refund received from the taxing authority and attributable to funds advanced by Tenant shall be refunded to Tenant, including any interest actually received and fairly attributable to amounts advanced by Tenant, unless the refund is needed to pay an indemnity. Notwithstanding anything to the contrary in this Pxxxxxxxx 00, Xxxxxxxx may at any time decline to take any further action with respect to a Proposed Adjustment or may settle any contest without the consent of Tenant; provided, however, that if Tenant has properly requested such action pursuant to this Pxxxxxxxx 00, Xxxxxxxx shall notify Tenant in writing that Landlord it waives its right to any indemnity payment by Tenant (other than with respect to the expenses of the contest incurred prior to such notice) that Tenant would otherwise be obligated to pay pursuant to this Paragraph 30 in respect of such adjustment, including any indemnities arising from such adjustment in subsequent years or that would arise by reason of the fact that the subject matter of such adjustment is of a continuing nature. In the case of any such waiver by Landlord of its rights to an indemnity payment from Tenant, Landlord shall return to Tenant any amounts previously paid by Tenant to Landlord for expenses or costs related to the contest (to the extent not yet expended) and, if applicable, any amounts paid by Tenant for taxes with respect to which Landlord has waived its right to an indemnity (plus interest on such tax payment at the rate then applicable under the Code to refunds of federal income taxes). (f) For purposes of this Paragraph 30, “Landlord” shall be deemed to include the consolidated Federal taxpayer group of which Landlord is a member. (g) If as a result of a Tax Loss for which Tenant has paid an indemnity hereunder, Landlord shall actually realize any federal, state or local income tax savings that it would not have realized but for such Tax Loss (or the event or circumstance giving rise thereto), which tax savings have not previously been taken into account in computing the amount of the Tax Indemnity Payment hereunder, then Landlord shall promptly pay to Tenant an amount equal to the sum of (A) the amount of such tax savings and (B) the amount of any additional federal, state and local income tax savings as a result of any payment made pursuant to this sentence; provided, however, Landlord shall not be required to make any such payment to the extent that the cumulative amount of such payments would exceed the amount of all Tax Indemnity Payment by Tenant to Landlord pursuant to Paragraph 30 hereunder with respect to such Tax Loss. If for any reason any tax benefit or savings taken into account in computing the amount of any Tax Indemnity Payment or any payment to the Tenant pursuant to this Paragraph 30, shall be lost or otherwise determined to be unavailable, such loss or unavailability shall be treated as a Loss for which Tenant is required to indemnify the Landlord under this Paragraph 30. Landlord shall act in good faith in filing its returns, dealing with tax authorities and pursuing tax benefits and savings that would, in each case, minimize Tenant’s indemnity obligations hereundermatter. ~~(h) Notwithstanding anything herein to the contrary, the provisions of this Paragraph 30 shall survive the earlier termination of this Lease.~~

Appears in 1 contract

Samples: Lease Agreement (Spansion Inc.)

Common use of Special Tax Indemnity Clause in Contracts