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Exhibit
10(t)
EXECUTION
COPY
SEVERANCE AND RELEASE
AGREEMENT
This Severance and Release
Agreement (the “ Agreement ”) is entered into
between TXU CORP., a Texas corporation (the “ Company
”), and C. John Wilder, an individual who as of the effective
date of this Agreement serves as the Chairman of the Board and
Chief Executive Officer of the Company (“ Executive
”). Executive and Company are referred to in this Agreement
as the “ Parties .”
RECITALS
WHEREAS , Executive
has been employed by and served as an officer and director of the
Company and its Affiliates (defined below);
WHEREAS , the Company,
Texas Energy Future Holding Limited Partnership (“TEF
LP”) and Texas Energy Future Merger Sub Corp (“Merger
Sub”), entered into a merger agreement dated
February 25, 2007, and TEF LP has indicated its intent to
convert the Company to a private enterprise and operate the
Company’s principal businesses such that they are
substantially separate from each other and with a limited range of
corporate management functions at the Company;
WHEREAS , Executive
and Company agree that, upon approval of the merger by the
Company’s shareholders and the effective time of the merger
(the “ Closing ”), Executive’s right to
terminate his employment with the Company for Good Reason, as
defined in the employment agreement between Executive and Company
dated February 21, 2004 (“ Employment Agreement
”), will have been triggered;
WHEREAS , Executive
has advised the Company of the Executive’s intention to
terminate his employment with the Company for Good Reason effective
on the next calendar day after Closing, and the Company is waiving
any rights it may have to cure such Good Reason;
WHEREAS , the Company
and Executive desire to enter into this Agreement setting forth the
terms of Executive’s separation from the Company following
Closing.
NOW, THEREFORE , in
consideration of the promises and mutual agreements in this
Agreement, and for other good and valuable consideration, the
receipt and legal sufficiency which are acknowledged, the Company
and Executive agree as follows:
ARTICLE 1
RESIGNATION AND
TERMINATION OF EMPLOYMENT
Effective at Closing,
Executive will resign from all positions he holds as a director of
the Company and any entity that controls, is controlled by, or is
under common control with the Company (an “ Affiliate
”), including, but not limited to, those Affiliates listed on
Exhibit 1 to this Agreement. Effective on the next calendar day
after Closing (the “ Separation Date ”),
Executive’s employment with the Company and any Affiliates
will also end.
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At or before the Separation
Date, Executive will return all property of the Company and its
Affiliates, including all Confidential Information (as defined
below), in his possession. If Executive discovers, or comes into
possession of, any such Confidential Information after the
Separation Date, he shall promptly return it to the Executive Vice
President and General Counsel of the Company.
Executive shall have seven
(7) business days after the Separation Date to remove his
personal property from the Company’s offices, and the Company
shall reasonably cooperate with Executive in connection with the
removal of Executive’s personal property. Executive will
reasonably cooperate with the Company in connection with his
departure by permitting the Company to inspect his home computer(s)
and copy, prepare back-ups of, then physically remove and delete
any Confidential Information contained therein. The Company shall
also inspect any boxes and other materials Executive removes from
the premises of Energy Plaza. After the Company has completed such
inspections and, if so satisfied, it will provide Executive with a
statement that all Confidential Information has been removed from
Executive’s home computer(s) and that none of the boxes or
other material removed by Executive and inspected by the Company
contained Confidential Information.
ARTICLE 2
SEVERANCE PAYMENT AND
BENEFITS
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a. |
Consistent with the Employment Agreement, and in consideration
for the promises contained in this Agreement, the Company will
provide Executive with the severance payments and benefits
described below: |
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(i) |
Cash Severance Payment . The Company will pay Executive
a one-time, lump-sum cash severance payment equal to two times the
sum of Executive’s base salary and target annual bonus under
the Company’s Executive Annual Incentive Plan (“
EAIP ”). The payment, net of all taxes and required
withholdings, shall be paid to Executive on the Separation Date, or
as soon thereafter as administratively possible, but in no event
later than the third (3rd) business day after the Separation
Date. |
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(ii) |
Pro-Rata Annual Bonus for 2007 . The Company will pay
Executive a one-time bonus consistent with the bonuses paid under
the EAIP. The bonus shall be based on actual performance for 2007
as determined by the TXU Corp. Board of Directors’
Organization and Compensation Committee (“O&C
Committee”) prior to Closing up to the maximum level of
performance and pro-rated for the portion of the performance period
that Executive was employed by the Company. The payment, net of all
taxes and required withholdings, shall be paid to Executive on the
Separation Date, or as soon thereafter as administratively
possible, but in no event later than the third (3rd) business
day after the Separation Date. |
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(iii) |
Cash Payment for Outstanding LTIP Awards . The Company
will pay Executive an additional one-time lump-sum cash payment for
the performance-based long-term incentive compensation awards
(“ LTIP Awards ”) granted in 2005, 2006 and 2007
pursuant to Executive’s Employment Agreement. The performance
units shall be valued based upon the product of: (x) the
number of shares payable pursuant to each performance award
(adjusted to reflect the Company’s attainment or
non-attainment of the performance criteria set forth in the
Employment Agreement as determined by the Company’s O&C
Committee prior to the effective time of the Closing); and
(y) the price of TXU Corp.’s stock paid in connection
with the merger at Closing (“ Per Share Merger
Consideration ”), provided, however, that that with
respect to awards granted in 2007, the performance adjustment has
been capped at one hundred percent (100%). The cash payment
representing the LTIP Award payment described in this
Sub-Section 2.1(a)(iii) will be deposited in a rabbi trust
held by Wells Fargo Bank (“ Wells Fargo Rabbi Trust
”) and the cash invested as directed by the Company. The cash
(plus any accumulated earnings) will be distributed to Executive on
the later of the Separation Date or January 2,
2008. |
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(iv)
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Office and Related
Services . Payment for appropriate and suitable furnished
office space at a mutually agreeable location, together with
secretarial assistance, phone and internet service, for a period of
one (1) year beginning on the Separation Date. Executive shall
be provided two lump-sum payments in connection with the office
related expenses provided under this Agreement. The first payment
will cover such expenses for the period from the Separation Date
through December 31, 2007 and shall be made net of all taxes
and other withholdings on the Separation Date or as soon thereafter
as administratively possible, but in no event later than the third
(3 rd ) business day after the Separation Date. The second
payment will be deposited into the Wells Fargo Rabbi Trust on or
before the Separation Date, will cover such expenses for the period
from January 1, 2008 through the end of the one year period
and shall be distributed by the Trust to the Executive on
January 2, 2008. Such secretarial assistance shall be provided
at Company’s expense for such one (1) year period by
Executive’s current administrative assistant, Janice Wallace,
who shall remain subject to the Company’s policies and
procedures for as long as she is employed by the Company. Following
such one (1) year period and consistent with prior practice
for the departing Chairman and Chief Executive Officer, Executive
can elect to reimburse the Company at costs for services of
Ms. Wallace during her employment with the Company.
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(v) |
Accrued Obligations . A one-time, lump sum cash payment
for: a) Executive’s base salary through the Separation Date,
to the extent it has not already been paid; b) Executive’s
unused vacation days as of the Separation Date, to the extent it
remains unused and he has not otherwise been paid for it; and c)
any expense reimbursements to which Executive is entitled through
the Separation Date, to the extent it has not already been paid.
The payment shall be paid to Executive on the Separation Date, or
as soon thereafter as administratively possible, but in no event
later than the third (3rd) business day after the Separation
Date. |
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(vi)
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COBRA . To the extent
Executive elects to continue medical benefits pursuant to the
Consolidated Omnibus Budget Reconciliation Act of 1985 (“
COBRA ”), the Company will offer Executive and his
eligible dependents COBRA coverage for eighteen (18) months,
subject to COBRA’s provisions. The Company will provide
Executive on the Separation Date, or as soon thereafter as
administratively possible, but in no event later than the third
(3 rd ) business day after the Separation Date, a one-time,
lump-sum payment, net of all taxes and other withholdings, of the
difference between the total cost of COBRA coverage and the
employee rate that Executive will be required to
contribute.
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(vii) |
Gross-up . Pursuant to Section 4.6 of the
Employment Agreement, if any payment, distribution or provision of
a benefit provided or to be provided under the terms of this
Agreement (“Payment”) is or would be subject to an
Excise Tax (as defined in the Employment Agreement), Executive
shall be paid the Gross-up Payment (as defined in the Employment
Agreement). |
The Company, along with its
outside tax advisors, will develop an estimate of the Gross-up
Payment and provide it to Executive prior to the Separation Date;
and that estimate will determine the Gross-up Payment. The Parties
agree that all Gross-up Payments will be determined, paid and
otherwise treated consistent with Exhibit 2 to this
Agreement.
The Company shall deposit
into the Wells Fargo Rabbi Trust, on or before the Separation Date,
funds to cover Executive’s excise taxes and Gross-up Payments
related to payments made pursuant to Sections 2.1(a)(iii),
2.1(a)(iv) and 2.2(c). The Company or, in the case of payments
under Sections 2.1(a)(iii), 2.1(a)(iv) and 2.2(c), the Wells Fargo
Rabbi Trust and/or any other trust established for the purpose of
funding Gross-up Payments, shall: (1) pay all of the excise taxes
that the Company and Executive believe are owed with respect to the
Payment no later than on the business day following the date of
payment; (2) impute such taxes paid into the income of the
Executive; and (3) pay all taxes related to such income
imputation no later than on the business day following the date of
payment. As a result of the foregoing tax payments by the
Company, the Payment made to the Executive will not be reduced by
any such excise taxes or additional taxes on the imputed
income. The Company shall
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report such additional income
and the total amount of taxes paid on the Executive’s Form
W-2 for the year of payment. Any other Gross-up Payment to which
Executive is entitled will be paid at the time when the relevant
tax is due. All these payments will be reduced by normal required
income and employment tax withholding and will be reported as
income on the Executive’s Form W-2 for the year in which
payment occurs. For the avoidance of doubt, this last
paragraph of Section 2.1(a)(vii) of this Agreement shall not
operate to reduce or eliminate any Gross-up Payment to which
Executive is entitled under Section 4.6 of the Employment
Agreement, but merely clarifies the timing of such
payments.
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b. |
The Company and Executive agree that the payments and benefits
described in Section 2.1(a) above shall be in lieu of any
other separation, severance incentive or benefits offered under any
plan, program or agreement (including the Employment Agreement) to
which Executive may have been, or to which Executive believes he
may be, entitled as a result of his employment with or separation
from the Company or any Affiliate, except for those distributions
specifically provided for in Section 2.2 below. Any such
payments shall be less any applicable tax and/or withholdings,
deductions or obligations, including any amounts owed to the
Company or an Affiliate by Executive on any Company issued or
sponsored travel or credit cards or any other expenses or payments
for which the Company is entitled to be reimbursed by
Executive. |
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a. |
It is agreed that, from and after the Separation Date,
Executive shall not be eligible to continue to participate in any
employee benefit plan, program or policy sponsored by the Company
or any Affiliate, except for rights that have vested as of the
Separation Date or as specifically provided in this
Agreement. |
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b. |
Executive will be entitled to receive a distribution of the
vested and deferred shares currently in a rabbi trust held by
Mellon Bank (“ Mellon Bank Rabbi Trust ”)
pursuant to the Special Incentive Compensation Award (as defined in
the Employment Agreement) made to Executive following his execution
of the Employment Agreement. As provided for in the Employment
Agreement, the receipt of such shares was deferred pursuant to the
terms of a letter dated June 20, 2005 from Executive to the
Company. The parties agree that, upon Closing, such deferred shares
will be converted into cash in an amount equal to the Per Share
Merger Consideration times the number of shares held in the Mellon
Bank Rabbi Trust. The cash will be invested consistent with the
terms of the Mellon Bank Rabbi Trust, and the cash (plus any
accumulated earnings), less applicable federal, state and local tax
withholding, will be distributed to Executive on the later of the
Separation Date or January 2, 2008. |
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c. |
Executive will be enti |
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