Exhibit 10(zzz) EXECUTION VERSION TAX SHARING AGREEMENT THIS AGREEMENTTax Allocation or Sharing Agreement |
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ENERGY FUTURE HOLDINGS CORP /TX/ | Energy Future Intermediate Holding Company LLC | Oncor Electric Delivery Company LLC | Oncor Electric Delivery Holdings LLC | TXU Corp. RealDealDocs™ contains millions of easily searchable legal documents and clauses from top law firms. Search for free - click here. |
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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






