PERFORMANCE UNIT AWARD AGREEMENT
THIS PERFORMANCE UNIT
AWARD AGREEMENT (“Award Agreement”) is made and entered
effective as of the 1 st 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.
|
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 -
80.99 th
Percentiles
|
Interpolate
between 150% of Target & Maximum (150% & 200% of
Target)
|
|
125% of
Target
|
61st -
70.99 th
Percentiles
|
Interpolate
between 125% of Target & 150% of Target
|
|
Target
|
51st -
60.99 th
Percentiles
|
Interpolate
between 100% of Target & 125% of Target
|
|
Minimum
|
41st -
50.99 th
Percentiles
|
Interpolate
between Minimum & Target (50% to 100% of Target)
|
|
Zero
|
40.99
th Percentile & Below
|
No
payout
|
(c) Notwithstanding
any provision of Section 2(b) to the contrary, at the Closing of
the merger described herein, the payout of the Award will be
adjusted to provide for a maximum Award payout of 100% of the
Target, plus dividends.
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