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Exhibit
10(zzz)
EXECUTION VERSION
TAX SHARING
AGREEMENT
THIS AGREEMENT, dated as of
October 10, 2007, is among TXU Corp., a Texas corporation
(“ TXU ”), Oncor Electric Delivery Holdings LLC,
a Delaware limited liability company (“ Oncor Holdings
”), a wholly owned subsidiary of Energy Future Intermediate
Holding Company LLC, a Delaware limited liability company (“
EFI ”), which is itself a direct wholly-owned
subsidiary of TXU, and Oncor Electric Delivery Company LLC, a
Delaware liability company and a wholly owned subsidiary of Oncor
Holdings (“ Oncor ” and TXU, Oncor Holdings and
Oncor collectively, the “ Parties ”).
RECITALS:
WHEREAS, TXU and EFI are
members of an affiliated group of corporations of which TXU is the
common parent corporation, as those terms are defined in
Section 1504 of the Code and the Treasury Regulations
promulgated thereunder;
WHEREAS, the TXU Group and
members of the Oncor Holdings Group wish to file consolidated and
combined Tax Returns (as if they were corporations) and allocate
their mutual rights and obligations in respect of their Taxes
amongst themselves;
WHEREAS, the Parties wish to
apply similar provisions with respect to any Tax Returns now or
hereafter filed by TXU in any foreign, state or local
jurisdiction;
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NOW, THEREFORE, in
consideration of these promises and of the mutual agreements and
covenants herein contained, the Parties agree as
follows:
SECTION 1. Definitions
. The following terms shall have the following meanings (such
meanings to be equally applicable to both the singular and plural
forms of the terms defined):
“ Additional TXU
Group Tax Liability ” has the meaning set forth in
Section 9.
“ Affiliate
” means any Person that directly or indirectly through one or
more intermediaries, Controls, is Controlled by, or is under common
Control with a specified Person. In determining whether an
Affiliate is an Affiliate of Oncor Holdings or TXU for any period,
no member of the Oncor Holdings Group (including Oncor Holdings)
shall be an Affiliate of TXU, and no member of the TXU Group
(including TXU ) shall be an Affiliate of Oncor
Holdings.
“ Agreement
Disputes ” has the meaning set forth in
Section 12.
“ Applicable Tax
Returns ” has the meaning set forth in
Section 10.
“ Applicable Taxable
Year ” means a taxable year relating to an Applicable Tax
Return.
“ Business Day
” shall mean any day ending at 11:59 p.m. (Eastern Time)
other than a Saturday or Sunday or a day on which banks are
required or authorized to close in the City of New York.
“ Code ”
means the Internal Revenue Code of 1986, as amended.
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“ Control
” or “ Controlled ” means, in respect of
any Person, the presence of the legal, beneficial or equitable
ownership, directly or indirectly, of more than 50% (by vote or
value) of the capital or voting stock (or other ownership or voting
interest, if not a corporation) of such Person.
“ Estimated Tax
Installment Date ” means the estimated Tax installment
due dates prescribed in Section 6655(c) of the Code (currently
April 15, June 15, September 15, and
December 15), as may be extended under applicable law and any
other date on which an installment of estimated Taxes is required
to be made (including March 15, to the extent relevant for any
extension payment).
“ Final
Determination ” means in respect of any issue (a) a
decision, judgment, decree or other order by any court of competent
jurisdiction, which decision, judgment, decree or other order has
become final and not subject to further appeal, (b) a closing
agreement whether or not entered into under Section 7121 of
the Code or any other binding settlement agreement (whether or not
with the Internal Revenue Service) entered into in connection with
or in contemplation of an administrative or judicial proceeding,
(c) the completion of the highest level of administrative
proceedings if a judicial contest is not or is no longer available,
or (d) any other final disposition, including by reason of the
expiration of the applicable statute of limitations or any other
event that the parties agree in writing is a final and irrevocable
determination of the liability at issue.
“ Governmental
Authority ” shall mean any federal, state, local
(including any municipal or political subdivision), foreign or
international court, government, department, commission, board,
bureau, agency, instrumentality, self-regulatory authority, stock
exchange or other regulatory, administrative or governmental
authority.
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“ Jointly Owned
Entity ” means any Person, that is not treated as a
flow-through entity for tax purposes, whose ownership interests are
owned at the same time by at least two of the following entities:
(i) a member of the TXU Group, (ii) a member of the Oncor
Holdings Group (excluding any member of the Oncor Group) and
(iii) a member of the Oncor Group.
“ Law ”
shall mean all laws, statutes and ordinances and all regulations,
rules and other pronouncements of Governmental Authorities having
the effect of law of the United States, any foreign country, or any
domestic or foreign state, province, commonwealth, city, country,
municipality, territory, protectorate, possession or similar
instrumentality, or any Governmental Authority thereof.
“ Oncor
Distributions Group ” shall mean each member of the Oncor
Holdings Group, excluding the Oncor Group.
“ Oncor Group
” means Oncor and any Subsidiaries of Oncor.
“ Oncor Holdings
Excess Separate Tax Liability ” shall mean an amount
equal to the excess of (i) the Oncor Holdings Separate Tax
Liability over (ii) the Oncor Separate Tax
Liability.
“ Oncor Holdings
Group ” means Oncor Holdings and any Subsidiaries of
Oncor Holdings.
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“ Oncor Holdings
Indemnified Party ” shall include each member of the
Oncor Holdings Group, each of their Representatives and Affiliates,
and each of their respective heirs, executors, trustees,
administrators, successors and assigns.
“ Oncor Holdings
Separate Tax Liability ” shall mean (A) with respect
to Applicable Taxable Years that ended prior to the date of this
Agreement, an amount equal to the Tax liability of Oncor with
respect to such Applicable Taxable Years determined in accordance
with the prior practice of the parties, and (B) with respect
to Applicable Taxable Years ending after the date of this
Agreement, an amount equal to the sum of (i) the Tax liability
that the Oncor Holdings Group and each member of the Oncor Holdings
Group would have incurred if Oncor Holdings had filed a
consolidated or combined Tax Return (assuming Oncor Holdings was
treated as a corporation for tax purposes) for itself and each
member of the Oncor Holdings Group separate and apart from the TXU
Group and any member of the TXU Group and (ii) where a
consolidated or combined Tax Return is not available under
applicable law, the Tax liability that Oncor Holdings (for the
avoidance of doubt, treating Oncor Holdings as a corporation for
tax purposes) and/or each member of the Oncor Holdings Group would
have incurred if Oncor Holdings and/or such member of the Oncor
Holdings Group had filed such Tax Return for itself. For the
avoidance of doubt, the Oncor Holdings Separate Tax Liability shall
take into account any Tax Attribute that is (x) reflected on
the balance sheet of Oncor Holdings as of the date of this
Agreement or (y) properly allocable to any member of the Oncor
Holdings Group following the execution of this Agreement. In the
event that Oncor Holdings becomes a partnership for U.S. federal
income tax purposes, then the “Oncor Holdings Separate Tax
Liability” shall be calculated (i) as if Oncor Holdings
were a corporation and (ii) by reducing the taxable income of
Oncor Holdings to the extent taxable income is allocated to equity
holders of Oncor Holdings that are not Controlled by
TXU.
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“ Oncor Separate Tax
Liability ” shall mean (A) with respect to
Applicable Taxable Years that ended prior to the date of this
Agreement, an amount equal to the Tax liability of Oncor with
respect to such Applicable Taxable Years determined in accordance
with the prior practice of the parties, and (B) with respect
to Applicable Taxable Years ending after the date of this
Agreement, an amount equal to the sum of (i) the Tax liability
that the Oncor Group and each member of the Oncor Group would have
incurred if Oncor had filed a consolidated or combined Tax Return
(assuming Oncor was treated as a corporation for tax purposes) for
itself and each member of the Oncor Group separate and apart from
the TXU Group, the Oncor Distributions Group and any member of the
TXU Group or the Oncor Distributions Group and (ii) where a
consolidated or combined Tax Return is not available under
applicable law, the Tax liability that Oncor (for the avoidance of
doubt, treating Oncor as a corporation for tax purposes) and/or
each member of the Oncor Group would have incurred if Oncor and/or
such member of the Oncor Group had filed such Tax Return for
itself. For the avoidance of doubt, the Oncor Separate Tax
Liability shall take into account any Tax Attribute that is
(x) reflected on the balance sheet of Oncor as of the date of
this Agreement or (y) properly allocable to any member of the
Oncor Group following the execution of this Agreement. In the event
that Oncor becomes a partnership for U.S. federal income tax
purposes, then the “Oncor Separate Tax Liability” shall
be calculated (i) as if Oncor were a corporation and
(ii) by reducing the taxable income of Oncor to the extent
taxable income is allocated to equity holders of Oncor that are not
Controlled by TXU.
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“ Person ”
shall mean an individual, a general or limited partnership, a joint
venture, a corporation (including not-for-profit), a trust, a
limited liability company, an association, an unincorporated
organization or a government or any department or agency
thereof.
“ Representative
” shall mean, with respect to any Person, any of such
Person’s directors, officers, managers, employees, agents,
consultants, advisors, accountants, attorneys and other
representatives.
“ Subsidiary
” shall mean with respect to any specified Person, any
corporation or other legal entity of which such Person or any of
its subsidiaries controls or owns, directly or indirectly, more
than 50% of the stock or other equity interest entitled to vote on
the election of members to the board of directors or similar
governing body; provided , however , that for
purposes of this Agreement, Oncor Holdings and its Subsidiaries
shall not be deemed to be Subsidiaries of any member of the TXU
Group.
“ Tax ” or
“ Taxes ” whether used in the form of a noun or
adjective, means all forms of taxation, whenever created or
imposed, including, but not limited to, taxes on or measured by
income, franchise, gross receipts, sales, use, excise, payroll,
personal property (tangible or intangible), real property,
ad valorem, value-added, leasing, leasing use or other taxes,
levies, imposts, duties, charges or withholdings of any nature
whether imposed by a country, locality, municipality, government,
state, federation, or other governmental body, including any
penalties, fines and additions to tax and any interest on
tax.
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“ Tax Attribute
” means any credit, deduction or other attribute (including
any alternative minimum tax preference item) that may have the
effect of decreasing any Tax.
“ Tax Proceeding
” means any audit, review, assessment, deficiency, competent
authority determination or any other administrative or judicial
proceeding with the purpose or effect of determining (including
redetermining) any Taxes (including, without limitation, any
administrative or judicial review of any formal or informal claim
for refund). For the avoidance of doubt, an appeal of a Tax
Proceeding is a Tax Proceeding.
“ Tax
Professional ” means a nationally recognized Tax attorney
or Tax accountant that is a member of a nationally recognized law
firm or accounting firm, which attorney or accountant being
acceptable to both TXU and EFI for the purposes of
Section 12.
“ Tax Returns
” means all reports, returns, information statements,
questionnaires, election statements or other documents required to
be filed or that may be filed for any period with any Taxing
Authority (whether domestic or foreign) in connection with any Tax
or Taxes (whether domestic or foreign). For the avoidance of doubt,
an amended Tax Return or an amendment to a Tax Return is a Tax
Return.
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“ Taxing
Authority ” means any governmental entity imposing Taxes
or empowered or authorized to administer any Taxes imposed by any
country, locality, municipality, government, state, federation or
other governmental body.
“ True-up
Payment ” has the meaning set forth in
Section 6(d).
“ True-up Payment
Date ” has the meaning set forth in
Section 6(d).
“ TXU Group
” means TXU and its Subsidiaries other than members of the
Oncor Holdings Group.
“ TXU Indemnified
Party ” shall include each member of the TXU Group, each
of their Representatives and Affiliates, and each of their
respective heirs, executors, trustees, administrators, successors
and assigns.
SECTION 2. Consent
.
(a) TXU shall prepare and
file all Tax Returns in respect of and on behalf of, as applicable,
each member of the TXU Group and the Oncor Holdings Group for any
Applicable Taxable Year, provided that , Oncor
Holdings shall have the right to review such Tax Returns within a
reasonable time prior to filing and consent (such consent not to be
unreasonably conditioned, delayed or withheld) to the positions
taken on such Tax Returns to the extent such positions would
increase the Oncor Holdings Excess Separate Tax Liability, and
provided that Oncor shall have the right to review
such Tax returns within a reasonable time prior to filing and
consent (such consent not to be unreasonably conditioned, delayed
or withheld) to the positions taken on such Tax Returns to the
extent such positions would increase the Oncor Separate Tax
Liability. Any dispute in respect of any Tax Return prepared
pursuant to this Section 2(a) shall be resolved pursuant to
Section 12.
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(b) Subject to the other
applicable provisions of this Agreement, Oncor Holdings irrevocably
designates, and agrees to cause each Oncor Holdings Affiliate to so
designate, TXU as its sole and exclusive agent and attorney-in-fact
to take such action (including execution of documents) as TXU, in
its sole reasonable discretion, may deem appropriate in any and all
matters (including Tax Proceedings) relating to any Tax Return
described in Section 2(a). Oncor Holdings or Oncor, as
appropriate, shall cause each Tax Return prepared on behalf of a
member of the Oncor Holdings Group pursuant to Section 2(a) to
be executed by the appropriate member of the Oncor Holdings Group.
With respect to TXU’s obligations pursuant to
Section 2(a), TXU Business Services Company, a wholly-owned
subsidiary of TXU, and Oncor have entered into a Corporate Support
Services Agreement pursuant to which TXU Business Services Company
provides corporate services to Oncor, including certain tax
services.
SECTION 3. Payment of Tax
Liability .
(a) Except for the Taxes that
Oncor Holdings or Oncor are liable for pursuant to
Section 6(b) and subject to indemnification under
Section 4(a), TXU shall pay all Taxes in respect of the Tax
Returns referenced in Section 2(a) for each Applicable Taxable
Year at such time and in such manner and at such times as such
payments are required to be made.
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(b) TXU shall indemnify and
hold each Oncor Holdings Indemnified Party harmless from and
against any and all Tax, interest, fine, penalty, damage, cost or
other expense of any kind (including reasonable attorneys’
fees and costs) that is attributable to, or results from, the
failure of TXU to timely make any payment required to be made
pursuant to Section 3(a).
SECTION 4. Allocation of
Liability . For each Applicable Taxable Year:
(a) Each of Oncor Holdings
and Oncor shall indemnify and hold each TXU Indemnified Party
harmless for an amount equal to the Oncor Holdings Excess Separate
Tax Liability and Oncor Separate Tax Liability, respectively. In
the event that Oncor does not make a payment for which it is liable
pursuant to the terms of this Agreement, then Oncor Holdings shall
be liable to make such payment.
(b) In the event that Oncor
or a member of the Oncor Distributions Group realizes a loss or
credit in an Applicable Taxable Year that would be permitted under
applicable provisions of the Code to be carried back to one or more
prior Applicable Taxable Years, the Oncor Holdings Excess Separate
Tax Liability or Oncor Separate Tax Liability, as appropriate,
shall be recomputed for each such prior Applicable Taxable Year to
take into account such carryback. TXU shall make an adjusting
payment to Oncor Holdings or Oncor, as appropriate, promptly after
the date when the benefit of such carryback would have been
realized by a member of the Oncor Distributions Group, or by Oncor,
if it had filed its own tax return reflecting such carryback, or as
soon as such adjustment can practicably be calculated, if later.
Such adjusting payment shall be in the amount required such that,
for each such prior Applicable Taxable Year, the
payments
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made by Oncor Holdings or
Oncor pursuant to the terms of this Agreement less the payments
made by TXU to Oncor Holdings or Oncor, respectively, pursuant to
the terms of this Agreement, or, with respect to Applicable Taxable
Years that ended prior to the date of this Agreement, such payments
that are actually made in accordance with prior practice, equals
the Oncor Holdings Excess Separate Tax Liability or the Oncor
Separate Tax Liability, as appropriate, for such taxable
year.
(c) For purposes of this
Agreement, except as set forth in Sections 4(b) and 8, all payments
that would have been due by one Party to another Party pursuant to
this Agreement with respect to Applicable Taxable Years that ended
prior to the date of this Agreement shall be treated as if they
were made on a timely basis.
(d) For the avoidance of
doubt, notwithstanding anything in this Agreement, Oncor shall
remain jointly and severally liable for Taxes of the TXU Group for
Applicable Taxable Years ending prior to the date of this Agreement
as a successor to Oncor Electric Delivery Company.
SECTION 5.
Calculations .
(a) TXU shall determine the
Oncor Holdings Excess Separate Tax Liability and Oncor Separate Tax
Liability (i) in accordance with this Agreement and TXU
Group’s method of federal income tax allocation, in a manner
that is consistent with Sections 1.1502-33(d) and 1.1552-1 of the
Treasury Regulations or, in the case of Taxes other than United
States federal income taxes, any other permissible allocation
methodology and (ii) consistent with general Tax accounting
principles and past practice.
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(b) For each Tax Return filed
by TXU, TXU shall provide Oncor Holdings or Oncor, as appropriate,
in good faith, within 5 Business Days prior to the due date of any
payment required to be made by O
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