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ADDITIONAL PAYMENT AGREEMENT

Fee Agreement

ADDITIONAL PAYMENT AGREEMENT | Document Parties: ENERGY FUTURE HOLDINGS CORP /TX/ | Competitive Electric Holdings LLC | Energy Future Holdings Corp | Energy Future Holdings Limited Partnership | Parent, Texas Energy Future Merger Sub Corp | TXU Corp You are currently viewing:
This Fee Agreement involves

ENERGY FUTURE HOLDINGS CORP /TX/ | Competitive Electric Holdings LLC | Energy Future Holdings Corp | Energy Future Holdings Limited Partnership | Parent, Texas Energy Future Merger Sub Corp | TXU Corp

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Title: ADDITIONAL PAYMENT AGREEMENT
Governing Law: Texas     Date: 3/31/2008
Industry: Electric Utilities     Sector: Utilities

ADDITIONAL PAYMENT AGREEMENT, Parties: energy future holdings corp /tx/ , competitive electric holdings llc , energy future holdings corp , energy future holdings limited partnership , parent  texas energy future merger sub corp , txu corp
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Exhibit 10(cc)

 

       PRIVILEGED AND CONFIDENTIAL
       Execution Version DPP

ADDITIONAL PAYMENT AGREEMENT

ADDITIONAL PAYMENT AGREEMENT, dated as of the 10th day of October, 2007 (this “ Agreement ”), by and between TXU Corp. (which is expected to be renamed Energy Future Holdings Corp. following the Merger (as defined below)), a Texas corporation (the “ Company ”), Texas Energy Future Holdings Limited Partnership, a Delaware limited partnership (the “ Parent ”), Texas Competitive Electric Holdings LLC, a Delaware limited liability company (the “ Holdings ”), and David P. Poole (the “ Executive ”).

WHEREAS, pursuant to an Agreement and Plan of Merger (the “ Merger Agreement ”) dated February 25, 2007, by and among Parent, Texas Energy Future Merger Sub Corp, a Texas corporation (“ Merger Sub ”), and the Company, Merger Sub will be merged with and into the Company (the “ Merger ”), with the Company surviving the Merger as a subsidiary of Parent.

WHEREAS, the Company and Executive have previously agreed that, in consideration of Executive’s dedicated service to the Company and in order to ensure that the compensation and benefits expectations of Executive will be satisfied, in the event it shall be determined that any payment, benefit or distribution in the nature of compensation (within the meaning of section 280G(b)(2) of the Code) to or for the benefit of Executive, whether paid, payable or provided by the Company or any of its affiliates or their respective successors or assigns, pursuant to this Agreement, any benefit plan, stock incentive plan, employment or severance agreement or otherwise (collectively, the “ Payments ”), would be subject to the excise tax imposed by section 4999 of the Code (together with any interest or penalties imposed with respect to such excise tax, the “ Excise Tax ”), then Executive shall be entitled to receive an additional payment (the “ Gross-Up Payment ”) in an amount such that, after payment by Executive of all taxes (and any interest or penalties imposed with respect to such taxes), including, without limitation, any income taxes (and any interest and penalties imposed with respect thereto) and the Excise Tax imposed upon the Gross-Up Payment, Executive retains an amount of the Gross-Up Payment equal to the Excise Tax imposed upon the Payments.

WHEREAS, the parties hereto agree that Executive will be entitled to receive a Gross-Up Payment in an amount such that, after payment of all taxes imposed pursuant to Section 409A of the Code (and any interests and penalties imposed with respect to such taxes) resulting from Executive’s execution of this Agreement and the establishment and funding of the Trust, Executive retains an amount of the Gross-Up Payment equal to the excise tax imposed upon the Payments; provided, however, Executive shall not be entitled under this Agreement to an additional payment in respect of any taxes, interests or penalties imposed with respect to such taxes pursuant to Section 409A of the Code in connection with any payments or benefits not covered hereunder.

WHEREAS, the Company agrees to calculate the amount of the Gross-Up Payment payable on behalf of Executive to the Internal Revenue Service (the “ Service ”) in good faith and in accordance with a reasonable interpretation of the Code as to the amount of the Excise Tax which may be imposed on Executive with respect to payments made by the Company and, in reliance on the Company’s commitments set forth in this Agreement, Executive agrees to accept such calculation.

WHEREAS, because of the uncertainties involved in calculating the exact amount of the payments that will be subject to the Excise Tax, which in turn affects the extent to which a Gross-Up Payment is necessary, the parties desire to have the Company set aside certain proceeds in order to satisfy any subsequent claims by the Service that the amount of Excise Tax that was paid on such Payments was insufficient.

 


WHEREAS, in the event the Gross-Up Payment made by the Company to Executive is insufficient to cover the additional Excise Tax that becomes due and owing to the Service, the Company agrees to indemnify and hold Executive harmless in respect of any Excise Tax by setting aside in the Trust (as defined below), the amount set forth on Exhibit A representing the difference between a calculation using a method consistent with Treasury Regulation § 1.280G-1 and a calculation assuming that all payments are subject to Excise Tax (the “ Additional Payment ”).

WHEREAS, the Company has also agreed that, in addition to the Additional Payment, the Company shall indemnify and hold Executive harmless from any and all liabilities (including interest and penalties) that result from Executive entering into this Agreement and the funding of the Trust.

WHEREAS, the Company and Executive previously agreed to the terms of the cash award that will be payable to Executive for the 2007 calendar year and the parties desire to memorialize the terms and conditions of such bonus in this Agreement.

NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:

1. Effective Time . This Agreement shall become effective upon the Effective Time (as defined in the Merger Agreement) and shall remain in effect until the later of (i) the closing of the later of (A) the Company’s or (B) Executive’s, tax year that follows the expiration of the statute of limitations for which the Service may audit the tax year in which the Service could claim that an underpayment of the Excise Tax for such year was paid and (ii) the resolution and settlement with the Service as to any contested claim. If the Merger Agreement is terminated in accordance with its terms prior to the Effective Time, this Agreement shall automatically terminate and shall be null and void ab initio and of no further force and effect.

2. 2007 Bonus Payment . Executive shall be entitled to receive a cash bonus with respect to the 2007 calendar year (the “ 2007 Award ”) under and subject to the terms and conditions of the Company’s Annual Incentive Plan (the “ AIP ”); provided that such bonus payment shall not be less than the percentage of the Target Incentive Pool (as defined in the AIP) used in determining the 2007 Award for all other participants in the AIP and with a personal modifier of at least 100%; provided further, in the event that Executive’s employment with the Company terminates (i) prior to December 31, 2007, Executive shall be entitled to receive an amount of the 2007 Award prorated on the basis of the number of months Executive was employed by the Company during 2007, with the month of termination counting as a full month for this purpose, or (ii) on or after December 31, 2007, but prior to the date that the 2007 Award is paid to Executive, then Executive shall receive the same 2007 Award as Executive would have received if Executive was employed by the Company on the date that the 2007 Award is paid. The 2007 Award shall be paid to Executive at the same time that the 2007 Award is paid to other recipients of such award who are employed by the Company.

3. Amount of Additional Gross-up Payment . (a) The determinations as to the Additional Payment for purposes of this Agreement shall be made by Alvarez & Marsal Taxand LLC (“ A&M ”), and approved by Deloitte & Touche USA LLP, such approval not to be unreasonably withheld (the “ Accounting Firm ”). All fees and expenses of A&M and the Accounting Firm shall be borne solely by the Company.

 

2

 


(b) (i) If at any time after the Effective Time, Executive receives a claim from the Service of an underpayment of the Excise Tax on the Payments, Executive shall notify the Company in writing of such claim by the Service. Such notification shall be given as soon as practicable after Executive receives actual notice in writing of such claim by the Service. The Executive shall apprise the Company of the nature of such claim and the date on which such claim is requested to be paid. The Executive shall not pay such claim prior to the expiration of the 30-day period following the date on which Executive gives such notice to the Company (or the date that any payment of taxes with respect to such claim is due pursuant to the notice from the Service, if shorter). The Company shall provide notice to Executive in writing regarding whether it will contest such claim no later than 5 business days prior to the date on which the amount of such claim is required to be paid. To the extent the Trust has sufficient funds available, the Company shall direct the Trustee to pay


 
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