EXHIBIT 10.13
TAX INDEMNIFICATION AGREEMENT
between
XXXXXX X. XXXXXX, INC.,
on behalf of itself
and the members
of the ADL GROUP
and
NUVERA FUEL CELLS, INC.,
on behalf of itself
and the members
of the NUVERA GROUP
TAX INDEMNIFICATION AGREEMENT
This Agreement is entered into as of the 26th of October, 2000 between
Xxxxxx X. Xxxxxx, Inc. ("ADL"), a Massachusetts corporation, on behalf of
itself and the members of The ADL Group, and Nuvera Fuel Cells, Inc., formerly
known as Epyx, Inc., ("Nuvera"), a Delaware corporation, on behalf of itself
and the members of the Nuvera Group.
W I T N E S S E T H:
WHEREAS, prior to April 4, 2000, ADL was the common parent of an
affiliated group of corporations that included Nuvera; this group and the
members thereof have elected to file consolidated federal income tax returns as
well as certain consolidated, combined or unitary state income tax returns;
WHEREAS, on April 4, 2000 (the "Deconsolidation Date"), Nuvera issued
capital stock equal to 50% of its outstanding capital stock after such issuance
(the "Exchange") in exchange for 100% of the capital stock of De Xxxx Fuel
Cells, S.p.A., ("Fuel Cells") a wholly-owned Italian subsidiary of De Xxxx New
Energy Investments BV ("De Xxxx BV") and simultaneously with the Exchange, ADL
sold 5% of its capital stock in Nuvera to Amerada Xxxx (the "AH Sale", together
with the Exchange, the "Deconsolidation"); and the Nuvera Group is no longer
eligible to file consolidated federal income tax returns or consolidated,
combined or unitary state income tax returns with ADL;
WHEREAS, ADL desires to set forth in this agreement its indemnity
obligations to Nuvera with respect to federal, state and local tax liabilities
that may be imposed on Nuvera as a result of Nuvera or any member of the Nuvera
Group having been a member of the ADL Consolidated Group prior to the
Deconsolidation Date;
NOW, THEREFORE, in consideration of the mutual covenants and agreements
hereinafter set forth, the parties agree as follows:
1. Definitions.
(a) As used in this Agreement:
"ADL Consolidated Group" shall mean ADL and each direct and indirect
corporate subsidiary, including a member of the Nuvera Group, that is eligible
to join with ADL in the filing of (i) for Federal Tax purposes, a
consolidated federal income tax return, and (ii) for Combined State Tax
purposes, a Combined State Tax Return.
"ADL Group" shall mean, at any time, ADL and each of its direct and
indirect corporate subsidiaries other than those subsidiaries that are members
of the Nuvera Group.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Combined State Tax" shall mean, with respect to each state or local
taxing jurisdiction, any income, franchise or similar tax (together with any
related interest or penalty) payable to such state or local taxing jurisdiction
in which a member of the Nuvera Group files tax returns with a member of the
ADL Group, on a consolidated, combined or unitary basis.
"Federal Tax" shall mean any tax imposed under Subtitle A of the Code and
any related interest or penalty imposed under Subtitle F of the Code.
"Final Determination" shall mean (i) with respect to Federal Taxes, a
"determination" as defined in Section 1313(a) of the Code or execution of an
IRS Form 870AD and, with respect to taxes other than Federal Taxes, any final
determination of liability in respect of a tax that, under applicable law, is
not subject to further appeal, review or modification through proceedings or
otherwise, (ii) any final disposition of a tax issue by reason of the
expiration of a statute of limitations or (iii) the payment of tax by Nuvera
with respect to any item disallowed or adjusted by any taxing authority where
Nuvera determines in good faith that no action should be taken to recoup such
payment.
"FY 2000" shall mean the tax year of ADL ending on December 31, 2000.
"IRS" shall mean the Internal Revenue Service.
"Nuvera Group" shall mean, at any time, Nuvera and any direct or indirect
corporate subsidiaries of Nuvera that would be eligible to join with Nuvera
with respect to Federal Taxes, in the filing of a consolidated federal income
tax return and, with respect to Combined State Taxes, in the filing of a
consolidated, combined or unitary income or franchise tax return, including any
predecessors thereto.
"Post-Deconsolidation Tax Period" means (i) any tax period beginning after
the Deconsolidation Date and (ii) with respect to a tax period that begins on
or before and ends after the Deconsolidation Date, the portion of the tax
period that commences on the day immediately after the Deconsolidation Date.
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"Pre-Deconsolidation Tax Period" means (i) any tax period ending before or
on the Deconsolidation Date and (ii) with respect to a period that begins
before and ends after the Deconsolidation Date, the portion of the tax period
ending on and including the Deconsolidation Date.
"Prime" shall mean, the rate announced from time to time as "prime" by
Federal Reserve Bank of Massachusetts, as its prime rate with respect to the
applicable currency.
"Return" shall mean any tax return, statement, report or form (including
estimated tax returns and reports, extension requests and forms, and
information returns and reports) required to be filed with any taxing
authority.
"Separate State Tax" shall mean, with respect to each state or local
taxing jurisdiction, any income, franchise or similar tax (together with any
related interest or penalty) payable to such state or local taxing jurisdiction
in which a member of the Nuvera Group files a separate state or local tax
return.
"Tax Proceeding" shall mean any tax audit, dispute or proceeding (whether
administrative or judicial).
(b) Any term used in this Agreement that is not defined in this Agreement
shall, to the extent the context requires, have the meaning assigned to it in
the Code or the applicable Treasury regulations thereunder (as interpreted in
administrative pronouncements and judicial decisions) or in comparable
provisions of applicable law.
2. Administrative and Compliance Matters.
(a) Sole Tax Indemnification Agreement. Any and all existing tax sharing
or indemnification agreements or arrangements, written or unwritten, between
any member of the ADL Group and any member of the Nuvera Group shall be
terminated as of the date of this Agreement.
(b) Designation of Agent. Each member of the Nuvera Group hereby
irrevocably authorizes and designates ADL as its agent, coordinator, and
administrator, for the purpose of taking any and all actions (including the
execution of waivers of applicable statutes of limitation) necessary or
incidental to the filing of any Return, any amended Return, or any claim for
refund (even where an item or Tax asset giving rise to an amended Return or
refund claim arises in a Post-Deconsolidation Tax Period), credit or offset of
tax or any other proceedings, and for the purpose of making payments to, or
collecting refunds from, any taxing authority, in each case relating only to
any Pre-Deconsolidation Tax Period. ADL
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covenants to Nuvera that it shall be responsible to see that all such
administrative matters relating thereto shall be handled promptly and
appropriately.
(c) Pre-Deconsolidation Tax Period Returns.
(i) Preparation of Returns. ADL will prepare, consistently with past
practice and applicable law and with the assistance of the Nuvera Group, the
consolidated Federal Tax Returns and Combined State Tax Returns of the ADL
Consolidated Group and the separate returns of Nuvera Group for all Tax Periods
that end on or prior to the Deconsolidation Date. ADL shall have the right with
respect to such Returns to determine (A) the manner in which such returns,
documents or statements shall be prepared and filed, including, without
limitation, the manner in which any item of income, gain, loss, deduction or
credit shall be reported, (B) whether any extensions should be requested, and
(C) the elections that will be made by any member of the ADL Group or the
Nuvera Group. At the time ADL files the ADL Consolidated Group's consolidated
Federal Tax Returns for FY 2000, ADL shall deliver to Nuvera a copy of the
portion of such returns relating to Nuvera. At the time ADL files any Combined
State Tax Returns that include Nuvera or any separate state and local tax
returns for Nuvera, ADL shall deliver a copy of such returns to Nuvera.
(ii) Audits and Refunds. With respect to all consolidated Federal Tax
Returns and Combined State Tax Returns of the ADL Consolidated Group for all
Tax Periods that end on or prior to the Deconsolidation Date, ADL shall have
the right to (A) contest, compromise or settle any adjustment or deficiency
proposed, asserted or assessed as a result of any audit of any return filed by
ADL, (B) file, prosecute, compromise or settle any claim for refund, and (C)
determine whether any refunds to which the ADL Consolidated Group may be
entitled shall be received by way of refund or credit against the tax liability
of the ADL Consolidated Group.
(d) Allocation. ADL may, at its option, elect and Nuvera will join ADL (if
necessary) in electing to ratably allocate items (other than extraordinary
items) of the Nuvera Group in accordance with relevant provisions of Treasury
Regulation Section 1.1502-76. If ADL exercises its option to make the election,
each member of the Nuvera Group will provide a statement stating its consent to
such election as required under the regulations.
(e) Short-Year State and Local Returns. ADL and Nuvera agree that Combined
State Tax Returns and separate state and local returns filed for tax periods
beginning prior to the Deconsolidation Date will reflect a short taxable year
for Nuvera ending on the Deconsolidation Date in any state or local taxing
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jurisdiction in which such tax year is allowed by administrative practice,
whether or not required by law.
3. Indemnities.
(a) ADL Indemnities. ADL will indemnify Nuvera and the members of the
Nuvera Group that were members of the ADL Consolidated Group (that included a
member of the ADL Group) against and hold them harmless from:
(i) any Tax Liability imposed on the Nuvera Group solely as a result
of Nuvera or any member of the Nuvera Group having been a member of the ADL
Consolidated Group; and
(ii) all liabilities, costs, expenses (including, without limitation,
reasonable expenses of investigation and attorneys' fees and expenses), losses,
damages, assessments, settlements or judgments arising out of or incident to
the imposition, assessment or assertion of any tax liability or damage
described in (i), including those incurred in the contest in good faith in
appropriate proceedings relating to the imposition, assessment or assertion of
any such tax, liability or damage.
(b) Discharge of Indemnity. ADL and the members of the ADL Group shall
discharge their obligations under Section 3(a) hereof, respectively, by paying
the relevant amount in immediately available funds within 30 days of demand
therefor. After a Final Determination of an obligation under Section 3(a) of
ADL, Nuvera shall send a statement to ADL showing the amount due thereunder.
Notwithstanding the foregoing, if either Nuvera, ADL or any member of the
Nuvera Group disputes in good faith the fact or the amount of its obligation
under Section 3(a), then no payment of the amount in dispute shall be required
until any such good faith dispute is resolved in accordance with Section 10
hereof; provided, however, that any amount not paid within 30 days of demand
therefor shall bear interest at a rate equal to Prime for each day until paid.
4. Communication and Cooperation.
(a) Consult and Cooperate. Nuvera and ADL shall consult and cooperate (and
shall cause each member of the Nuvera Group or the ADL Group, respectively, to
cooperate) fully at such time and to such extent as are reasonably requested by
the other party in connection with all matters subject to this Agreement.
(b) Tax Attribute Matters. ADL and Nuvera shall advise each other with
respect to any proposed tax adjustments relating to a Pre-Deconsolidation Tax
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Period, which are the subject of an audit or investigation, or are the subject
of any proceeding or litigation, and which may affect any tax liability or any
tax attribute of ADL, Nuvera, the ADL Group, the Nuvera Group or any member of
the Nuvera Group or the ADL Group (including, but not limited to, basis in an
asset or the amount of earnings and profits). Except as otherwise provided
herein, ADL shall determine the apportionment of tax attributes between the ADL
Group and the Nuvera Group in accordance with applicable laws.
5. Audits and Contest.
Notwithstanding anything in this Agreement to the contrary, ADL shall have
full control over all matters relating to any tax return or any Tax Proceeding
relating to any tax matters of the ADL Consolidated Group. ADL shall have
absolute discretion with respect to any decisions to be made, or the nature of
any action to be taken, with respect to any matter described in the preceding
sentence.
6. Notices.
Any notice, demand, claim, or other communication under this Agreement
shall be in writing and shall be deemed to have been given upon the delivery or
mailing thereof, as the case may be, if delivered personally or sent by
certified mail, return receipt requested, postage prepaid, to the parties at
the following addresses (or at such other address as a party may specify by
notice to the other):
If to ADL, to:
Xxxxxx X. Xxxxxx, Inc.
Acorn Park
Cambridge, MA 02140-2390
Attention: Xxxxx Xxxxxxx
Fax: (000)000-0000
If to Nuvera, to:
Nuvera Fuel Cells, Inc.
00 Xxxxx Xxxx
Xxxxxxxxx, XX 00000
Attention: Xxxxx Xxxx
Fax: (000)000-0000
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7. Effectiveness; Termination and Survival.
This Agreement shall become effective upon execution. All rights and
obligations arising hereunder with respect to a Pre-Deconsolidation Tax Period
shall survive until they are fully effectuated or performed. Notwithstanding
anything in this Agreement to the contrary, this Agreement shall remain in
effect and its provisions shall survive for the full period of all applicable
statutes of limitation (giving effect to any extension, waiver or mitigation
thereof).
8 Entire Agreement; Amendments and Waivers.
(a) Entire Agreement. This Agreement contains the entire understanding of
the parties hereto with respect to the subject matter contained herein. No
alteration, amendment, modification, or waiver of any of the terms of this
Agreement shall be valid unless made by an instrument signed by an authorized
officer of each of ADL and Nuvera, or in the case of a waiver, by the party
against whom the waiver is to be effective.
(b) Amendments and Waivers. No failure or delay by any party in exercising
any right, power or privilege hereunder shall operate as a waiver thereof nor
shall any single or partial exercise thereof preclude any other or further
exercise thereof, or the exercise of any right, power or privilege. This
Agreement shall not be waived, amended or otherwise modified except as in
writing, duly executed by all of the parties hereto.
9 . Governing Law and Interpretation.
This Agreement has been made in, and shall be construed and enforced in
accordance with the laws of, the state of Massachusetts without giving effect
to laws and principles relating to conflicts of law.
10. Dispute Resolution
If the parties hereto are unable to resolve any disagreement or dispute
relating to this Agreement within 20 days, such disagreement or dispute shall
be resolved by a recognized law firm or accounting firm that is expert in tax
matters in the relevant jurisdiction or that is mutually acceptable to the
parties hereto (a "Referee"). A Referee so chosen shall resolve any such
disagreement or dispute pursuant to such procedures as it may deem advisable.
Any such resolution shall be binding on the parties hereto without further
recourse. Except as otherwise provided herein, the costs of any Referee shall
be apportioned between ADL and Nuvera as determined by such Referee in such
manner as the Referee deems
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reasonable, taking into account the circumstances of the disagreement or
dispute, the conduct of the parties and the result of the disagreement or
dispute.
11. Assignments; Third Party Beneficiaries.
Except as provided below, this Agreement shall be binding upon and shall
inure only to the benefit of the parties hereto and their respective successors
and assigns, by merger, acquisition of assets or otherwise (including but not
limited to any successor of a party hereto succeeding to the tax attributes of
such party under applicable law). This Agreement is not intended to benefit any
person other than the parties hereto and such successors and assigns, and no
other person shall be a third party beneficiary hereof.
12. Authorization.
Each of the parties hereto hereby represents and warrants that it has the
power and authority to execute, deliver and perform this Agreement, that this
Agreement has been duly authorized by all necessary corporate action on the
part of such party, that this Agreement constitutes a legal, valid and binding
obligation of each such party and that the execution, delivery and performance
of this Agreement by such party does not contravene or conflict with any
provision or law or of its charter or bylaws or any agreement, instrument or
order binding on such party.
IN WITNESS WHEREOF, the parties have executed and delivered this Agreement
as of the day and year first written above.
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ADL on its own behalf and on behalf
of each member of the ADL Group.
By: /s/ Xxx Xxxxxxxx
-------------------------------
Name: Xxx Xxxxxxxx
Title: General Counsel
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Nuvera on its own behalf and on
behalf of each member of the Nuvera
Group.
By: /s/ Xxxxx Xxxx
-------------------------------
Name: Xxxxx Xxxx
Title: Controller
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