PERFORMANCE UNIT AWARD AGREEMENT
Exhibit
10.4
THIS
PERFORMANCE UNIT AWARD AGREEMENT (“Award Agreement”) is made and entered
effective as of the 1st
day of April, 2007, by and between TXU CORP., a Texas corporation (“Company”),
and «Participant»
(“Participant”).
WHEREAS,
the Company has adopted the TXU Corp. 2005 Omnibus Incentive Plan (“Plan”), the
purpose of which is to assist the Company in attracting, retaining and
motivating executive officers and other key employees essential to the
success
of the Company through performance-related incentives linked to long-range
performance goals; and
WHEREAS,
the Plan provides for various types of stock and cash based incentive
compensation awards, as well as covered employee annual incentive awards
to be
made to eligible Employees; and
WHEREAS,
in accordance with the provisions of the Plan, the Participant has been
designated as being eligible to receive an award of performance units (“Award”)
payable in, and valued on the basis of, Company common stock as described
herein
(“Performance Units”) in order to carry out the intent and purposes of the Plan
all as set forth herein; and
WHEREAS,
this Award Agreement constitutes part of a prospectus covering the Performance
Units which are being awarded hereunder, where Company common stock constituting
the value of the Award has been registered under the Securities Act of
1933;
and
WHEREAS,
Company and Participant agree that this Award Agreement is subject to the
terms
and conditions of the Merger Agreement, dated February 25, 2007, among
TXU Corp.
and Texas Energy Future Holdings Limited Partnership (“Merger Agreement”) and no
term(s) or condition(s) of this Award Agreement is intended to, nor does
it,
alter any of the terms and conditions of the Merger Agreement; and
WHEREAS,
Company and the Participant also agree that if the merger, as described
in the
Merger Agreement, closes as set forth in the Merger Agreement (“Closing”), this
Award Agreement will be modified automatically, as provided for
herein.
NOW
THEREFORE, in consideration of the covenants herein set forth and other
good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties agree as follows:
1. Award
of Performance Units.
The Company hereby awards to Participant «Award»
Performance Units, each such Performance Unit having a value equal to one
share
of the Company’s common stock, without par value (“Company Stock”), pursuant to
the terms and subject to the conditions and restrictions set forth
herein.
2. Performance
Period and Adjustment of Number of Performance Units.
The award of Performance Units shall be subject to comparative total shareholder
return performance criteria as described below. For purposes of determining
the
adjustments to the number of Performance Units under this section, the
Target
Award (“Target”) shall be the number of Performance Units awarded under Section
1 hereof plus any additional Performance Units added
to
this Award during the Performance Period by virtue of the “dividends” provisions
of Section 6 hereof.
(a) During
the period commencing April 1, 2007 and ending at either March 31, 2010
or at
Closing, if it occurs before March 31, 2010 (“Performance Period”), the
Company’s financial performance, measured in terms of total shareholder return,
shall be compared to, and measured against, the performance of other companies
within a peer group consisting of the Standard & Poor’s 500 Electric
Utilities Index (“Peer Group”). Upon the expiration of the Performance Period,
the Committee will compare the Company’s total shareholder return with the total
shareholder return of the companies within the Peer Group and determine
the
Company’s percentile ranking within the Peer Group during the Performance
Period.
(b) Based
on the Company’s performance within the Peer Group during the Performance
Period, the number of Performance Units shall be adjusted in accordance
with the
methodology set forth below. For purposes of this Agreement, the term
Performance Units will include such adjusted number of Performance
Units.
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Performance
Levels
|
Total
Shareholder Return Ranges
|
Initial
Number of Performance Units Adjusted by the
Following:
|
|
Maximum
|
81st
Percentile & Above
|
Maximum
payout (200% of Target)
|
|
150%
of Target
|
71st
- 80.99th
Percentiles
|
Interpolate
between 150% of Target & Maximum (150% & 200% of
Target)
|
|
125%
of Target
|
61st
- 70.99th
Percentiles
|
Interpolate
between 125% of Target & 150% of Target
|
|
Target
|
51st
- 60.99th
Percentiles
|
Interpolate
between 100% of Target & 125% of Target
|
|
Minimum
|
41st
- 50.99th
Percentiles
|
Interpolate
between Minimum & Target (50% to 100% of Target)
|
|
Zero
|
40.99th
Percentile & Below
|
No
payout
|
3. Vesting,
Valuation and Payment of Award.
(a) The
Performance Units, as adjusted in accordance with the provisions of Sections
2(a) and 2(b) above, shall become vested upon the expiration of the Performance
Period, and shall be valued as of the date of the Committee’s determination of
the Company’s performance within the Peer Group during the Performance Period
(“Valuation Date”), at which time the adjustment described in Section 2(b) shall
be made. In calculating the value of the Award, each Performance Unit will
equal
the value of the average of the high and low trading price of one (1) share
of
Company Stock on the Valuation Date.
(b) This
Award shall be paid to Participant in the form of shares of Company Stock
having
an aggregate value equal to the value of the Award determined in accordance
with
the valuation methodology described in Section 3(a) above. Such distribution
of
Company Stock, net of applicable tax withholding, shall be made as soon
as
reasonably practicable (and in any event within forty-five (45) days) following
the Valuation Date. The Valuation Date and the
2
distribution
of the Company Stock shall occur within the same calendar year as the expiration
of the Performance Period.
(c) Notwithstanding
any provision of Sections 3(a) and 3(b) to the contrary, at the Closing
of the
merger described herein, the Award will immediately vest. The Award will
be paid
to the Participant in cash and valued at the Closing price set by the Merger
Agreement. The Award will be paid to Participant as soon as reasonably
practicable, at the end of the three-year performance period of March 31,
2010.
4. Forfeiture
of Performance Units Under Certain Circumstances.
(a) Forfeiture
Upon Termination of Employment under Certain Circumstances.
If Participant’s employment with the Company shall, at any time during the
Performance Period, be terminated by the Company for Cause (as defined
in that
certain Employment Agreement between the Company and Participant dated
as of
«Date_of_Emp_Agt»,
(“Employment Agreement”)) or by Participant without Good Reason (as defined in
the Employment Agreement), this Award and all Performance Units covered
hereunder shall immediately be forfeited by Participant. Upon such forfeiture,
Participant shall have no further right, title or interest in or to this
Award
or any Performance Units.
(b) Continuation
Following Termination of Employment Under Certain Circumstances.
If Participant’s employment with the Company shall, at any time during the
Performance Period, be terminated under circumstances which, pursuant to
the
terms and conditions of the Employment Agreement, do not result in the
forfeiture of this Award, this Award shall not forfeit and shall be paid
at the
time and in the amount provided for in, and subject to the terms and conditions
of, this Agreement, consistent with the provisions of the Employment
Agreement.
(c) Consistency
With Terms of Employment Agreement.
The terms of this Section 4 are intended to be consistent with the terms
of the
Employment Agreement regarding the forfeiture or the continuation of this
Award
under the various circumstances described in the Employment Agreement,
and this
Section 4 shall be so construed. In the event of any conflict between the
provisions of this Agreement and the Employment Agreement relating to the
terms
of this Award, the provisions of the Employment Agreement will
control.
5. Nontransferability.
No right of the Participant hereunder may be sold, transferred, pledged,
assigned or otherwise alienated, hypothecated or disposed of and any attempt
to
effect any such sale, transfer, pledge, assignment or disposition shall
be null
and void and of no force or effect whatsoever.
6. Dividends.
If and when dividends are paid on Company Stock, the number of Performance
Units
covered by the Award will be increased by: (a) in the case of a dividend
paid in
cash, the number of full and fractional shares of Company Stock which could
have
been purchased with the amount of the dividend that would have been paid
had
each Performance Unit been one (1) share of Company Stock and as if the
Performance Units had been invested in the TXU Direct Stock Purchase and
Dividend Reinvestment Plan; or (b) in the case of a dividend paid in stock,
the
number of full and fractional shares of Company Stock which would have
been
3
distributed
in connection with such dividend had each Performance Unit been one (1)
share of
Company Stock.
7. Capital
Adjustments.
The number of Performance Units covered by this Award shall be subject
to
adjustment, if any, as the Committee deems appropriate upon the occurrence
of
certain events and in the manner as described in Section 4.4 of the
Plan.
8. No
Right to Employment.
Neither this Award Agreement, nor the Award of the Performance Units provided
for herein, shall be construed as giving Participant any right of employment
or
continued employment with the Company or any affiliated entity of the
Company.
9. Withholding.
Participant understands and agrees that the Company shall deduct or withhold
any
taxes required by law to be withheld in connection with the Award provided
for
herein.
10. Subject
to Plan.
The Award of the Performance Units and this Award Agreement are subject
to all
of the terms and conditions of the Plan (as the Plan may be amended from
time to
time). In the event of any conflict between the terms and conditions of
the Plan
and those set forth herein, other than those terms or conditions relating
to the
Merger Agreement or the Employment Agreement, the terms and conditions
of the
Plan shall control.
11. Governing
Law.
This Award Agreement shall be governed, construed, interpreted and administered
in accordance with the laws of the State of Texas. This Award Agreement
is being
entered into and shall be performed, in whole or in part, in Dallas County,
Texas, and the parties hereby acknowledge and agree that, in any dispute
involving this Award Agreement, venue shall be in the appropriate court
in
Dallas County, Texas.
12. Severability.
In the event any provision of this Award Agreement shall be held invalid,
illegal or unenforceable, in whole or in part, for any reason, such
determination shall not affect the validity, legality or enforceability
of any
remaining provision or portion of provision, which shall remain in full
force
and effect as if this Award Agreement had not contained the invalid, illegal
or
unenforceable provision or portion.
13. Amendment.
The Committee shall have the right at any time and from time to time, without
the approval or consent of Participant, to amend this Award Agreement if
additions and/or changes are made to the Internal Revenue Code of 1986,
as
amended, any federal or state securities law, or other law or regulation
applicable to the Award provided for herein. The Committee shall have the
right
at any time, and from time to time, to amend this Award Agreement for any
other
reason with the consent of Participant.
14. Award
Not Benefit Eligible.
Participant understands and agrees that the Award of Performance Units
shall be
considered as extraordinary, special incentive compensation and will not
be
included as “earnings,” “wages,” “salary” or “compensation” in any pension,
welfare, life insurance, or other employee benefit plan or arrangement
of the
Company.
15. Notices.
Any notice required or permitted hereunder shall be given in writing and
shall
be deemed effectively given upon personal delivery or upon deposit in the
United
States
4
Post
Office, by registered or certified mail, with postage and fees prepaid,
addressed to the other party hereto at the address shown opposite his,
her or
its signature below or at such other address as such party may designate
by not
less than five (5) days’ advance written notice to the other party
hereto.
16. Further
Assurances.
The parties agree to execute such further instruments and to take such
further
action as may reasonably be necessary to carry out the intent of this Award
Agreement.
17. Entire
Agreement.
This Award Agreement constitutes the entire agreement of the parties with
respect to the subject matter hereof.
18. Binding
Effect.
This Award Agreement shall be binding upon and inure to the benefit of
the
parties hereto and their respective successors, heirs, executors,
administrators, guardians and personal representatives. Nothing in this
Award
Agreement shall be construed to give any person or entity other than the
parties
hereto and their respective successors any legal or equitable right, remedy
or
claim under this Award Agreement.
19. Capitalized
Terms.
Unless otherwise defined herein, each of the capitalized terms used herein
shall
have the meaning given to such term in the Plan.
20. Headings.
Headings of the several sections of this Award Agreement are inserted for
convenience only and shall not control or affect the meaning or construction
of
any of the provisions hereof.
IN
WITNESS WHEREOF, the parties hereto have entered into this Award
Agreement.
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TXU
CORP.
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Address:
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By:
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/s/
M. Riz Chand
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0000
Xxxxx Xxxxxx
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M.
Riz Chand
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Xxxxxx,
XX 00000
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Senior
Vice President
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Attn:
Corporate Secretary
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Human
Resources
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PARTICIPANT
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Address:
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««Participant»»
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