Exhibit 10.4
 
 

PERFORMANCE UNIT AWARD AGREEMENT
 
THIS PERFORMANCE UNIT AWARD AGREEMENT (“Award Agreement”) is made and entered
effective as of the 1st 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
 

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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 - 80.99th 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

 
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 of Company Stock on the Valuation Date.
 
(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
 

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distribution of the Company Stock shall occur within the same calendar year as
the expiration of the Performance Period.
 
(c) Notwithstanding any provision of Sections 3(a) and 3(b) to the contrary, at
the Closing of the merger described herein, the Award will immediately vest. The
Award will be paid to the Participant in cash and valued at the Closing price
set by the Merger Agreement. The Award will be paid to Participant as soon as
reasonably practicable, at the end of the three-year performance period of March
31, 2010.
 
4. Forfeiture of Performance Units Under Certain Circumstances.
 
(a) Forfeiture Upon Termination of Employment under Certain Circumstances. If
Participant’s employment with the Company shall, at any time during the
Performance Period, be terminated by the Company for Cause (as defined in that
certain Employment Agreement between the Company and Participant dated as of
«Date_of_Emp_Agt», (“Employment Agreement”)) or by Participant without Good
Reason (as defined in the Employment Agreement), this Award and all Performance
Units covered hereunder shall immediately be forfeited by Participant. Upon such
forfeiture, Participant shall have no further right, title or interest in or to
this Award or any Performance Units.

(b) Continuation Following Termination of Employment Under Certain
Circumstances. If Participant’s employment with the Company shall, at any time
during the Performance Period, be terminated under circumstances which, pursuant
to the terms and conditions of the Employment Agreement, do not result in the
forfeiture of this Award, this Award shall not forfeit and shall be paid at the
time and in the amount provided for in, and subject to the terms and conditions
of, this Agreement, consistent with the provisions of the Employment Agreement.

(c) Consistency With Terms of Employment Agreement. The terms of this Section 4
are intended to be consistent with the terms of the Employment Agreement
regarding the forfeiture or the continuation of this Award under the various
circumstances described in the Employment Agreement, and this Section 4 shall be
so construed. In the event of any conflict between the provisions of this
Agreement and the Employment Agreement relating to the terms of this Award, the
provisions of the Employment Agreement will control.

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
 

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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.
 
8. No Right to Employment. Neither this Award 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 Award 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, other than those terms or
conditions relating to the Merger Agreement or the Employment Agreement, the
terms and conditions of the Plan shall control.
 
11. Governing Law. This Award Agreement shall be governed, construed,
interpreted and administered in accordance with the laws of the State of Texas.
This Award 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 Award Agreement, venue shall be in the
appropriate court in Dallas County, Texas.
 
12. Severability. In the event any provision of this Award 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 Award 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 Award
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 Award 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
 

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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 Award Agreement.
 
17. Entire Agreement. This Award Agreement constitutes the entire agreement of
the parties with respect to the subject matter hereof.
 
18. Binding Effect. This Award 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 Award
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 Award 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 Award 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 Award Agreement.
 

     
TXU CORP.
 
 
Address:
 
By:
/s/ M. Riz Chand
 
1601 Bryan Street
   
M. Riz Chand
 
Dallas, TX 75201
   
Senior Vice President
 
Attn: Corporate Secretary
   
Human Resources
                 
PARTICIPANT
 
 
Address:
             
««Participant»»
                     

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