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Exhibit
10(cc)
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PRIVILEGED AND CONFIDENTIAL |
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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.
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(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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