PERFORMANCE UNIT AWARD AGREEMENT
Exhibit
10.4
THIS
PERFORMANCE UNIT AWARD AGREEMENT (“Agreement”) is made and entered effective as
of the 1st
day of
April, 2006, 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 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 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.
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 and absolute 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, 2006 and ending March 31, 2009 (“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 all of the companies which
are included within either or both of the Standard & Poor’s (S&P’s) 500
Electric Utilities Index and the S&P’s
500
|
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
|
(b) During
the Performance Period, the Company’s financial performance, measured in terms
of the Company’s total shareholder return, shall be measured by the Committee.
Based on the Company’s aggregate total shareholder return over the Performance
Period, fifty percent (50%) of the number of Performance Units awarded to
Participant under Section 1 hereof shall be adjusted in accordance with the
methodology set forth below.
|
Performance
Levels
|
Aggregate
3-Year Total
Shareholder
Return
|
Initial
Number of Performance Units Adjusted by the
Following:
|
|
Maximum
|
≥
40.5%
|
Maximum payout (150% of Target)
|
|
Target
|
≥
29.5%
|
Interpolate between 100% of Target & Maximum (100% & 150% of
Target)
|
|
Minimum
|
≥
19.1%
|
Interpolate between 50% of Target & 100% of Target
|
|
Zero
|
<19.1%
|
No payout
|
(c) For
purposes of this Agreement, the term Performance Units will include the number
of Performance Units adjusted in accordance with Sections 2(a) and
2(b).
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 certification of
the Company’s performance against the performance criteria described in Sections
2(a) and 2(b) (“Valuation Date”), at which time the adjustments described in
Sections 2(a) and 2(b) shall be made. In calculating the value of this 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.
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(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 distribution of the Company
Stock
shall occur within the same calendar year as the expiration of the Performance
Period.
4. Forfeiture
of Performance Units Under Certain Circumstances.
(a) Cessation
of Employment During Performance Period for Reasons Other Than Retirement,
Death
or Disability.
If the
Participant shall, at any time during the Performance Period, cease to be an
Employee of the Company or a Subsidiary for any reason whatsoever other than
Participant’s retirement, death or total disability, all Performance Units shall
immediately be forfeited by Participant. Upon the forfeiture of the Performance
Units, the Participant shall have no further right, title or interest in or
to
the Performance Units so forfeited.
(b) Cessation
of Employment Due to Retirement, Death or Disability.
If,
during the Performance Period, the Participant shall cease to be an Employee
of
the Company or a Subsidiary due to Participant’s retirement, death or total
disability, then, to the extent the Participant would otherwise have been
entitled to a distribution under this Agreement, the Participant shall be
entitled to receive a portion of such distribution, prorated on the basis of
the
period of the Participant’s employment during the Performance Period compared to
the total Performance Period. The vesting and distribution of a portion of
the
Award under this Section 4(b) shall occur at the times provided for under
Section 3 hereof. The portion of this Award which is not distributed under
this
Section 4(b) shall be forfeited as of the Valuation Date, and the Participant
shall have no right, title or interest in or to such forfeited
portion.
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
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.
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8. No
Right to Employment.
Neither
this 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 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, the terms and conditions of the Plan shall
control.
11. Governing
Law.
This
Agreement shall be governed, construed, interpreted and administered in
accordance with the laws of the State of Texas. This 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
Agreement, venue shall be in the appropriate court in Dallas County,
Texas.
12. Severability.
In the
event any provision of this 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
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 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 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 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
Agreement.
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17. Entire
Agreement.
This
Agreement constitutes the entire agreement of the parties with respect to the
subject matter hereof.
18. Binding
Effect.
This
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 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
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 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 Agreement.
TXU
CORP.
Address:
By:
___________________________________
0000
Xxxxx Xxxxxx M.
Riz Chand
Xxxxxx,
XX 00000
Senior Vice President,
Attn:
Corporate Secretary
Human
Resources
PARTICIPANT
Address:
_______________________________________
_____________________________ «Participant»
_____________________________
_____________________________
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