Common use of Tax Protections Clause in Contracts

Tax Protections. (a) Subject to Section 12.2(a) (i) and (ii) below, for the benefit of the Contributor (including any person who holds an interest in Contributor, either directly or through one or more pass-through or disregarded entities and is otherwise required to include all or a portion of the income of such Contributor in its own gross income) who receives Units at the Closing (the “Protected Partners”), prior to the termination of the Protection Period (as defined below) with respect to the Project, neither SCOLP, nor any entity in which SCOLP holds a direct or indirect interest, will consummate a sale, transfer, exchange or other disposition of the Project or a successor project acquired in a Section 1031 exchange or any other non-recognition transaction in which a substituted basis or carryover basis is applied (each, a “Protected Project”) or any indirect interest therein, in a transaction (including a merger) that results in the recognition by any Protected Partner, for federal income tax purposes, of all or any portion of the built-in gain under Section 704(c)(1) the Internal Revenue Code of 1986, as amended (the “Code”). Notwithstanding anything to the contrary herein, this covenant shall not apply to any transferee of Units by a Protected Partner whose tax basis has been determined under Sections 1014 or 1012 of the Code. In the event that SCOLP breaches this Section 12.2, SCOLP shall pay to each Protected Partner: if the breach occurs during the first one half of the Protection Period, an amount equal to the federal, state and local income taxes incurred by such Protected Partner as a result of such breach and arising solely under Section 704(c); and if the breach occurs during the remaining period of the Protection Period, an amount equal to the excess of (A) the federal, state and local income taxes incurred by such Protected Partner solely as a result of such breach and arising solely under Section 704 (c), over (B) the net present value of such taxes, as of the date such Protected Partner actually pays such taxes, assuming for this purpose that payment of such taxes had been made on the last day of the applicable Protection Period and using a discount rate equal to five (5%) percent. Within ninety (90) days after the closing of a transfer or other transaction giving rise to a breach requiring a payment hereunder, SCOLP shall provide to each of the Protected Partners an estimate of such Protected Partner’s allocable share of the Section 704(c) gain from such transaction, and an estimate of total taxes payable based on the highest marginal rates applicable to such Protected Partner for all federal, state, and local tax purposes. SCOLP shall pay such Protected Partner cash equal to the estimated amount of taxes payable as so calculated. If it is later determined that the taxes payable by the Protected Partner with respect to such gain exceeds the estimated amount calculated and paid by SCOLP, then, SCOLP shall pay such excess to such Protected Partners within ninety (90) days after demand is made therefor, and if it is determined the estimated amount calculated and paid by SCOLP exceeds the amount required to be paid by the Protected Partner with respect to such gain, then the Protected Partner shall refund such excess to SCOLP within thirty (30) days of such request. The parties shall cooperate in confirming the determinations referenced in the prior sentence by providing copies of tax returns and certifications from certified public accountants at the request of either party. (i) For purposes of this Section 12.2(a), “Protection Period” shall mean, the Protection Period set forth in the Summary of Terms.

Tax Protections. (a) Subject to Section 12.2(a) (i) and (ii) below, for the benefit of Associates and the Contributor Limited Partners (including any person who holds an interest in ContributorAssociates or a Limited Partner, either directly or through one or more pass-through or disregarded entities and is otherwise required to include all or a portion of the income of Associates or such Contributor Limited Partner in its own gross income) who receives Units at the Closing (the “Protected Partners”), prior to the termination of the Protection Period (as defined below) with respect to the Project, neither SCOLP, nor any entity in which SCOLP holds a direct or indirect interest, will consummate a sale, transfer, exchange or other disposition of the Project or a successor project acquired in a Section 1031 exchange or any other non-recognition transaction in which a substituted basis or carryover basis is applied (each, a “Protected Project”) or any indirect interest therein, in a transaction (including a merger) that results in the recognition by any Protected Partner, for federal income tax purposes, of all or any portion of the built-in gain under Section 704(c)(1) the Internal Revenue Code of 1986, as amended (the “Code”). Notwithstanding anything to the contrary herein, this covenant shall not apply to any transferee of Units by a Protected Partner whose tax basis has been determined under Sections 1014 or 1012 of the Code. In the event that SCOLP breaches this Section 12.2, SCOLP shall pay to each Protected Partner: if the breach occurs during the first one half of the Protection Period, an amount equal to the federal, state and local income taxes incurred by such Protected Partner as a result of such breach and arising solely under Section 704(c); and if the breach occurs during the remaining period of the Protection Period, an amount equal to the excess of (A) the federal, state and local income taxes incurred by such Protected Partner solely as a result of such breach and arising solely under Section 704 (c), over (B) the net present value of such taxes, as of the date such Protected Partner actually pays such taxes, assuming for this purpose that payment of such taxes had been made on the last day of the applicable Protection Period and using a discount rate equal to five (5%) percent. Within ninety (90) days after the closing of a transfer or other transaction giving rise to a breach requiring a payment hereunder, SCOLP shall provide to each of the Protected Partners an estimate of such Protected Partner’s allocable share of the Section 704(c) gain from such transaction, and an estimate of total taxes payable based on the highest marginal rates applicable to such Protected Partner for all federal, state, and local tax purposes. SCOLP shall pay such Protected Partner cash equal to the estimated amount of taxes payable as so calculated. If it is later determined that the taxes payable by the Protected Partner with respect to such gain exceeds the estimated amount calculated and paid by SCOLP, then, SCOLP shall pay such excess to such Protected Partners within ninety (90) days after demand is made therefor, and if it is determined the estimated amount calculated and paid by SCOLP exceeds the amount required to be paid by the Protected Partner with respect to such gain, then the Protected Partner shall refund such excess to SCOLP within thirty (30) days of such request. The parties shall cooperate in confirming the determinations referenced in the prior sentence by providing copies of tax returns and certifications from certified public accountants at the request of either party. (i) For purposes of this Section 12.2(a), “Protection Period” shall mean, the Protection Period set forth in the Summary of Terms.

Tax Protections. (a) Subject to Section 12.2(a) (i) and (ii) below, for the benefit of the Contributor (including any person who holds an interest in Contributor, either directly or through one or more pass-through or disregarded entities and is otherwise required to include all or a portion of the income of such Contributor in its own gross income) who receives Units at the Closing (the “Protected Partners”), prior to the termination of the Protection Period (as defined below) with respect to the Project, neither SCOLP, nor any entity in which SCOLP holds a direct or indirect interest, will consummate a sale, transfer, exchange or other disposition of the Project or a successor project acquired in a Section 1031 exchange or any other non-recognition transaction in which a substituted basis or carryover basis is applied (each, a “Protected Project”) or any indirect interest therein, in a transaction (including a merger) that results in the recognition by any Protected Partner, for federal income tax purposes, of all or any portion of the built-in gain under Section 704(c)(1) the Internal Revenue Code of 1986, as amended (the “Code”). Notwithstanding anything to the contrary herein, this covenant shall not apply to any transferee of Units by a Protected Partner whose tax basis has been determined under Sections 1014 or 1012 of the Code. In the event that SCOLP breaches this Section 12.2, SCOLP shall pay to each Protected Partner: if the breach occurs during the first one half of the Protection Period, an amount equal to the federal, state and local income taxes incurred by such Protected Partner as a result of such breach and arising solely under Section 704(c); and if the breach occurs during the remaining period of the Protection Period, an amount equal to the excess of (A) the federal, state and local income taxes incurred by such Protected Partner solely as a result of such breach and arising solely under Section 704 (c), over (B) the net present value of such taxes, as of the date such Protected Partner actually pays such taxes, assuming for this purpose that payment of such taxes had been made on the last day of the applicable Protection Period and using a discount rate equal to five (5%) percent. Within ninety (90) days after the closing of a transfer or other transaction giving rise to a breach requiring a payment hereunder, SCOLP shall provide to each of the Protected Partners an estimate of such Protected Partner’s allocable share of the Section 704(c) gain from such transaction, and an estimate of total taxes payable based on the highest marginal rates applicable to such Protected Partner for all federal, state, and local tax purposes. SCOLP shall pay such Protected Partner cash equal to the estimated amount of taxes payable as so calculated. If it is later determined that the taxes payable by the Protected Partner with respect to such gain exceeds the estimated amount calculated and 30 paid by SCOLP, then, SCOLP shall pay such excess to such Protected Partners within ninety (90) days after demand is made therefor, and if it is determined the estimated amount calculated and paid by SCOLP exceeds the amount required to be paid by the Protected Partner with respect to such gain, then the Protected Partner shall refund such excess to SCOLP within thirty (30) days of such request. The parties shall cooperate in confirming the determinations referenced in the prior sentence by providing copies of tax returns and certifications from certified public accountants at the request of either party. (i) For purposes of this Section 12.2(a), “Protection Period” shall mean, the Protection Period set forth in the Summary of Terms.