Exhibit 10.8.6
TAX INDEMNIFICATION AGREEMENT
among
NRG GENERATING (NEWARK) COGENERATION INC.,
NRG GENERATING (XXXXXX) COGENERATION INC.,
NRG GENERATING (U.S.) INC.
and
CREDIT SUISSE, as Agent
Dated as of June 28, l996
TABLE OF CONTENTS
1. Definitions 1
2. Obligations with respect to Taxes 2
3. Method of Payment 4
4. No Setoff 4
5. Nature of Obligations 5
6. Representations and Warranties 6
7. Covenants and Agreements 6
8. Enforcement 7
9. Notices 7
10. Survival of Representations and
Warranties 7
11. Severability 7
12. Amendment 8
13. Successors and Assigns 8
14. Number and Gender 8
15. Headings Descriptive 8
16. Governing Law; Jurisdiction; Waiver of
Trial by Jury 8
17. Counterparts 9
18. Term 10
(i)
TAX INDEMNIFICATION AGREEMENT
This TAX INDEMNIFICATION AGREEMENT, dated as of June 28, 1996
(this "Agreement"), is made by and among (i) NRG GENERATING (NEWARK)
COGENERATION INC., a Delaware corporation ("NRG Newark"), NRG GENERATING
(XXXXXX) COGENERATION INC., a Delaware corporation ("NRG Xxxxxx") (each
of the foregoing parties, individually, a "Borrower" and, collectively,
"Borrowers"), (ii) NRG GENERATING (U.S.) INC., a Delaware corporation
("NRG Generating"), and (iii) CREDIT SUISSE, as agent ("Agent") on behalf
of and for the benefit of the Secured Parties (as defined in the Credit
Agreement referred to below).
W I T N E S S E T H :
WHEREAS, Borrowers and Agent have previously entered into the
Credit Agreement, dated as of May 17, 1996, by and among (i) each of
the Borrowers (ii) Credit Suisee and each Purchasing Lender and
(iii) Agent (as the same may be amended, modified or supplemented from
time to time, the "Credit Agreement"), pursuant to which the Lenders
are willing to provide the Loans and the Commitments to Borrowers on
the terms and subject to the conditions set forth in the Credit
Agreement;
WHEREAS, NRG Generating owns 100% of the issued and
outstanding capital stock of each Borrower and is willing to pay on
behalf of, and defer collection of, certain tax-related obligations of
each Borrower due to NRG Generating; and
WHEREAS, it is a condition precedent to the making of the
Additional Loans and the availability of the Debt Service Line of Credit
Facility Commitment by the Lenders under the Credit Agreement that NRG
Generating and Borrowers shall have entered into this Agreement;
NOW, THEREFORE, in consideration of the mutual covenants
contained herein and for other good and valuable consideration, the receipt
and sufficiency of which hereby are acknowledged, and in order to induce
the Lenders and Agent to enter into the Credit Agreement with Borrowers,
the parties hereto hereby agree as follows:
1. DEFINITIONS.
Unless otherwise defined herein, all capitalized terms used
herein which are defined in the Credit Agreement shall have their
respective meanings as therein defined and the terms set forth immediately
below shall have the respective meanings assigned thereto.
"Income Tax" or "Income Taxes" means any Tax based upon, measured
by, or calculated with respect to (i) net income or profits (including, but
not limited to, any capital gains, minimum tax and any Tax on items of tax
preference, but not including sales, use, real property gains, real or
personal property, gross or net receipts, transfer or similar Taxes) or
(ii) multiple bases (including, but not limited to, corporate franchise,
doing business or occupation Taxes) if one or more of the bases upon which
such Tax may be based upon, measured by, or calculated with respect to, is
described in clause (i) above.
"Income Tax Return" means any return, filing, questionnaire,
information return or other document required to be filed, including
requests for extensions of time, filings made with estimated tax payments,
claims for refund and amended returns that may be filed, for any period
with any taxing authority (whether domestic or foreign) in connection with
any Income Tax or Income Taxes (whether or not a payment is required to be
made with respect to such filing).
"Minimum Net Worth" means the Net Worth of NRG Generating as set
forth in the June 30, 1996 audited financial statements of NRG Generating.
"Net Worth" means, as to any Person, all items which in conformity
with GAAP would be included under stockholders' equity on a balance sheet
of such Person.
"Tax" or "Taxes" means all forms of taxation, whenever created or
imposed, and whether of the United States or elsewhere, and whether imposed
by a local, municipal, governmental, state, foreign, federal or other body,
together with any related interest, penalties and additions to any such
tax, or additional amounts imposed by any taxing authority (domestic or
foreign) upon NRG Generating and any of its Subsidiaries.
2. OBLIGATIONS WITH RESPECT TO INCOME TAXES.
(a) Filing of Income Tax Returns. Until all Obligations have
been indefeasibly paid in full, NRG Generating shall prepare and timely
file or shall cause to be prepared and timely filed all appropriate
Federal, state, local or foreign Income Tax Returns that are required to be
filed which include either of the Borrowers. Each Borrower hereby
irrevocably designates NRG Generating as its agent to take any and all
actions necessary or incidental to the preparation and filing of such
Income Tax Returns and agrees to cooperate in good faith with NRG
Generating in the preparation of such Income Tax Returns. Neither Borrower
shall file any amended Income Tax Return for which such Borrower is not
obligated to prepare or cause to be prepared the original of such Income
Tax Return pursuant to this Section 2(a) without the prior written consent
of NRG Generating.
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(b) Payment of Income Taxes. NRG Generating shall timely pay or
cause to be paid, without contribution from either of the Borrowers (except
out of amounts distributed or distributable pursuant to Section 5.1(c)(x)
of the Credit Agreement), all Income Taxes (including estimated Income
Taxes) with respect to Income Tax Returns which include either of the
Borrowers and which NRG Generating is required to prepare and file or cause
to be prepared and filed pursuant to this Agreement.
(c) Refunds. NRG Generating shall be entitled to retain or
receive immediate payment from the Borrowers of any refund or credit
arising with respect to either of the Borrowers (including, without
limitation, refunds and credits arising by reason of amended Income Tax
Returns or otherwise) relating to Income Taxes paid by NRG Generating
pursuant to this Agreement.
(d) Tax Cooperation. Each of the Borrowers agrees to provide
NRG Generating with such cooperation, information and records as NRG
Generating shall reasonably request in connection with the preparation or
filing of any Income Tax Return or claim for refund or in conducting any
audit or other proceeding in respect of Taxes. Such cooperation and
information shall include, without limitation, making such officers,
directors, employees and agents available as may reasonably be requested by
NRG Generating in connection with the preparation of any Income Tax Return
or any Income Tax audit or other Income Tax proceeding that relates to such
Borrower, promptly forwarding copies of appropriate notices and forms or
other communications received from or sent to any taxing authority which
relate to Income Taxes of such Borrower, providing copies of all relevant
Income Tax Returns, together with accompanying schedules and related
workpapers, documents relating to rulings or other determinations by taxing
authorities, and records concerning the ownership and Tax basis of
property. Each Borrower shall prepare or cause to be prepared prior to the
due date for filing any Income Tax Return or the making of any Income Tax
payment (including estimated payment thereof) the tax workpaper preparation
package or packages and calculations necessary to enable NRG Generating to
prepare the Income Tax Returns NRG Generating is required to prepare or
cause to be prepared and to pay the Income Taxes NRG is required to pay or
cause to be paid pursuant to this Agreement.
(e) Indemnity. NRG Generating shall indemnify, defend and hold
harmless each Borrower from and against (A) all liability for Income Taxes
("Tax Liabilities") of such Borrower, whether incurred as a result of the
filing of a consolidated Federal Income Tax Return in which such Borrower
is included or a separate state Income Tax Return on behalf of such
Borrower or otherwise and (B) all claims, damages, losses, liabilities,
costs or expenses (including, without limitation, reasonable legal,
accounting and appraisal fees and expenses) arising out of, relating to or
resulting from any Income Tax Liability.
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(f) Tax Contests.
(i) If a claim shall be made by any taxing authority which, if
successful, might result in an indemnity payment under this Agreement, the
relevant Borrower shall promptly notify NRG Generating of such claim (a
"Tax Claim"); provided, however, that the failure to give such notice shall
not affect the indemnification provided hereunder.
(ii) NRG Generating shall control all proceedings and make all
decisions taken in connection with such Tax Claim (including selection of
counsel) and, without limiting the foregoing, may in its sole discretion
pursue or forego any and all administrative appeals, proceedings, hearings
and conferences with any taxing authority with respect thereto, and may, in
its sole discretion, either pay the Tax claimed and xxx for a refund where
applicable law permits such refund suits or contest the Tax Claim in any
permissible manner. NRG Generating shall keep the relevant Borrower
informed and shall consult in good faith with such Borrower prior to making
decisions with regard to such proceedings.
(iii) Each of NRG Generating and the Borrowers shall cooperate in
contesting any Tax Claim, which cooperation shall include the retention and
(upon request) the provision to the requesting party of records and
information which are reasonably relevant to such Tax Claim, and making
employees available on a mutually convenient basis to provide additional
information or explanation of any material provided hereunder or to testify
at proceedings relating to such Tax Claim.
3. Method of Payment. Any payment required to be made pursuant
to Section 2(e) hereof shall be paid in cash in immediately available funds
within 10 Business Days after the affected Borrower or Agent makes written
demand upon NRG Generating, together with reasonable documentation of the
liability to be indemnified pursuant to Section 2(e)(A) or the expense to
be indemnified pursuant to Section 2(e)((B). Any such payment shall be
made directly to the appropriate taxing authorities, if such liability has
not yet been paid by Borrowers, or, to the extent Borrowers have incurred
an out-of-pocket expense as a result of such liability, to Agent for
deposit in the Project Account. Nothing contained in this Agreement shall
require either Borrower to pay or expend any sums with respect to this
Agreement at any time before or after the making of a claim under this
Agreement.
4. No Setoff. The payment obligations of NRG Generating
hereunder shall be satisfied in all events at the times and in the amounts
set forth herein without offset, abatement, withholding or reduction of any
kind.
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5. Nature Of Obligations.
(a) Subrogation, etc. Notwithstanding any payment or payments
made by NRG Generating hereunder or the exercise by Agent of any of the
remedies provided under any Project Agreement, until all Obligations have
been paid in full, NRG Generating shall not seek any reimbursement,
indemnity, exoneration or contribution from either Borrower in respect of
payments made by NRG Generating hereunder (other than from amounts
distributed or distributable pursuant to Section 5.1(c)(x) of the Credit
Agreement). Notwithstanding the foregoing, if any amount shall be paid to
NRG Generating on account of such subrogation, reimbursement, indemnity,
exoneration or contribution rights at any time prior to such time as all
Obligations are indefeasibly paid in full (other than from distributed or
distributable pursuant to Section 5.1(c)(x) of the Credit Agreement), such
amount shall be held by NRG Generating in trust for the Secured Parties,
segregated from other funds of NRG Generating, and shall be turned over to
Agent for the benefit of the Secured Parties, in the exact form received by
NRG Generating (duly endorsed to Agent for the benefit of the Secured
Parties, if required), to be applied against such amounts in such order as
Agent may elect.
(b) Unconditional Obligations. The obligations of NRG
Generating hereunder are absolute and unconditional, without regard to any
circumstance of any nature whatsoever that constitutes or might constitute
an equitable or legal discharge of either Borrower of any of its respective
obligations under the Loan Instruments, in bankruptcy or in any other
instance. NRG Generating hereby waives diligence, presentment, protest,
demand for payment and notice of default or non-payment to or upon either
Borrower or itself with respect to any amounts due under the Credit
Agreement or any other Loan Instrument. NRG Generating shall remain
obligated hereunder notwithstanding that, without any reservation of rights
by or against NRG Generating and without notice to or further assent by NRG
Generating, any demand for payment of any amount due pursuant to the Credit
Agreement or any other Loan Instrument may be rescinded by the Secured
Parties, or any of the loans or other extensions of credit thereunder
continued or such amounts, or the liability of any other Person upon or for
any part thereof, or any collateral security or guaranty therefor or right
of offset with respect thereto, may, from time to time, in whole or part,
be renewed, extended, amended, modified, accelerated, compromised, waived,
surrendered or released by the Secured Parties, or the Credit Agreement,
the Notes or any other Loan Instrument or any other document executed in
connection therewith may be amended, modified, supplemented or terminated,
in whole or in part, as the Secured Parties may deem advisable from time to
time, or any collateral security or guaranty or right of offset at any time
held by the Secured Parties for the payment of such amounts may be sold,
exchanged, waived, surrendered or released.
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(c) Reinstatement. The obligations of NRG Generating set forth
herein shall continue to be effective or reinstated, as the case may be, if
at any time and for any reason, any payment made hereunder by NRG
Generating is rescinded or otherwise returned by either Borrower or the
Secured Parties, all as though such payment had not been made. Without
limiting the generality of the foregoing NRG Generating agrees that, to the
extent that NRG Generating makes a payment or payments hereunder, which
payment or payments or any part thereof are subsequently invalidated or
repaid to NRG Generating, its estate, trustee, receiver or any other party
under any bankruptcy law, state or federal law, common law or equitable
cause, then to the extent of such payment or repayment, the obligations of
NRG Generating hereunder or part thereof which has been paid, reduced or
satisfied by such amount shall be reinstated and the obligations set forth
herein shall be continued in full force and effect as though such payment,
reduction or satisfaction had not been made or occurred.
6. REPRESENTATIONS AND WARRANTIES.
NRG Generating hereby makes each and every representation and
warranty made by it in Section 6 of the Guaranty to the same extent as if
each such representation and warranty had been set forth in full herein,
and each such representation and warranty is hereby incorporated by
reference in this Section 6.
7. COVENANTS AND AGREEMENTS.
NRG Generating hereby covenants and agrees that it shall
faithfully observe and fulfill, and shall cause to be observed and
fulfilled, each and all of the following covenants until all
Obligations have been paid and performed in full; provided, that
compliance with such covenants shall not be required for so long as NRG
Generating maintains an investment grade rating by a nationally
recognized rating agency; provided, further, that if NRG Generating
subsequently fails to maintain an investment grade rating by a
nationally recognized rating agency, it shall have a period of up to
six months from the time of such failure to comply with such covenants:
(a) Net Worth. NRG Generating shall not permit its Net Worth to
be less than (i) the Minimum Net Worth on December 31, 1996; (ii) the
Minimum Net Worth plus $2,000,000 on December 31, 1997; (iii) the Minimum
Net Worth plus $6,000,000 on December 31, 1998; (iv) the Minimum Net Worth
plus $11,000,000 on December 31, 1999; (v) the Minimum Net Worth plus
$16,000,000 on December 31, 2000; (vi) the Minimum Net Worth plus
$21,000,000 on December 31, 2001; and (vii) the Minimum Net Worth plus
$26,000,000 on December 31 of each year thereafter. For purposes of this
Section 7(a), Net Worth shall be reduced by any repayments or prepayments
of the principal amount of subordinated debt owed by NRG Generating in
excess of $15,000,000.
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(b) Liquidity. NRG Generating shall not permit at any time its
cash on hand (including short-term investments and other investments which
are catergorized as cash under GAAP) to be less than the amount of all
Income Taxes which is projected to be due and payable for the following
twelve months.
(c) Working Capital. NRG Generating shall not permit at any time its
current assets minus current liabilities as determined in
conformity with GAAP to be less than the amount of all Income
Taxes which is projected to be due and payable for the following
twelve months.
8. ENFORCEMENT.
NRG Generating hereby agrees that Agent on behalf of the
Secured Parties and/or Borrowers shall have the right to directly
enforce the provisions hereof against it and NRG Generating agrees to
pay all costs, including reasonable attorneys' fees, incurred by Agent
with respect to any such enforcement.
9. Notices.
All notices, demands, requests and other communications required
or permitted hereunder shall be in writing, and shall be given and deemed
to have been given in accordance with Section 8.1 of the Credit Agreement
and the information set forth immediately below shall apply to NRG
Generating:
If to NRG Generating:
NRG Generating (U.S.) Inc.
0000 Xxxxxxxx Xxxx
Xxxxx 000
Xxxxxxxxxxx, Xxxxxxxxx 00000
Attention: President
Telecopy: (000) 000-0000
10. Survival of Representations and Warranties.
All agreements, representations and warranties made herein or
made in writing by NRG Generating in connection herewith shall survive the
execution and delivery of this Agreement and the performance of the
obligations contained herein, and shall be deemed to be material and to
have been relied upon by Agent and the Secured Parties, regardless of any
investigation made by or on behalf of Agent or the Secured Parties.
11. Severability.
Any provision of this Agreement which is prohibited,
unenforceable or not authorized in any jurisdiction shall, as to
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such jurisdiction, be ineffective to the extent of such prohibition,
unenforceability or non-authorization, without invalidating the remaining
provisions hereof or affecting the validity, enforceability or legality of
such provision in any other jurisdiction. Where provisions of any law or
regulation resulting in such prohibition or unenforceability may be waived
they are hereby waived by NRG Generating and Agent to the full extent
permitted by law so that this Agreement shall be deemed a valid, binding
agreement, enforceable in accordance with its terms.
12. Amendment.
This Agreement may be amended, modified or rescinded only by a
writing expressly referring to this Agreement and signed by all the parties
hereto.
13. Successors and Assigns.
This Agreement shall be binding upon and inure to the benefit of
the parties hereto and their respective successors and permitted assigns.
In the event of any assignment or transfer by any Secured Party of any
instrument evidencing all or any part of the Obligations, the holder of
such instrument shall, subject to the Credit Agreement, be entitled to the
benefits of this Agreement.
14. Number and Gender.
Whenever used in this Agreement, the singular number shall
include the plural and the plural the singular, and the use of any gender
shall be applicable to all genders.
15. Headings Descriptive.
The captions or headings of the several sections and subsections
and the table of contents of this Agreement are inserted for convenience
only and shall not in any way affect the meaning or construction of any
provision of this Agreement.
16. Governing Law; Jurisdiction; Waiver of Trial by Jury.
(a) Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York without
regard to the conflict of law rules thereof.
(b) Jurisdiction. With respect to any legal action or
proceeding brought by Agent or the Secured Parties against NRG Generating
arising out of or in connection with this Agreement, NRG Generating hereby
irrevocably (i) consents to the jurisdiction of any state or federal court
located in the State of New York, (ii) consents to the service of process
outside the territorial jurisdiction of said courts in any such action or
proceeding by
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mailing copies thereof by registered United States mail, postage prepaid,
to the address specified by NRG Generating for the receipt of notices if
such address is outside such territorial jurisdiction and (iii) waives any
objection to the venue of the aforesaid courts. NRG Generating hereby
irrevocably designates, appoints and empowers CT Corporation System (the
"Process Agent", which has consented thereto) as agent to receive for and
on behalf of NRG Generating service of process in the State of New York.
NRG Generating agrees it will at all times continuously maintain either a
registered office or an agent to receive service of process in the State of
New York on behalf of itself and its properties with respect to this
Agreement.
(c) Waiver of Trial by Jury. WITH REGARD TO THIS AGREEMENT,
EACH OF THE PARTIES HEREBY WAIVES THE RIGHT TO A TRIAL BY JURY IN ANY
ACTION OR PROCEEDING AND FOR ANY COUNTERCLAIM THEREIN.
17. Counterparts.
This Agreement may be executed in several counterparts, each of
which shall be an original, but all of which together shall constitute one
and the same agreement.
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18. Term.
This Agreement shall continue in effect until repayment in full
of all Obligations.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement through their duly authorized representatives as of the date
first written above.
NRG GENERATING (NEWARK) COGENERATION INC.
By: /s/ Xxxxxxx Xxxxx
Name: Xxxxxxx X. Xxxxx
Title: President
NRG GENERATING (XXXXXX) COGENERATION INC.
By: /s/ Xxxxxxx Xxxxx
Name: Xxxxxxx X. Xxxxx
Title: President
NRG GENERATING (U.S.) INC.
By: /s/ Xxxxxxx Xxxxx
Name: Xxxxxxx X. Xxxxx
Title: President
CREDIT SUISSE, as Agent
By: /s/ Xxxxx Xxxxxxxxx
Name: Xxxxx X. Xxxxxxxxx
Title: Associate
By: /s/ Xxxxxx Xxxx
Name: Xxxxxx Xxxx
Title: Associate
