Exhibit 10.2

 

EMPLOYMENT AGREEMENT

 

THIS EMPLOYMENT AGREEMENT (“Agreement”) is made by and between TXU Energy
Company LLC (“Company”), and James Burke (“Executive”), and is dated as of
October 11, 2004 (“Effective Date”).

 

For and in consideration of the mutual promises, covenants and obligations
contained herein, Company and Executive agree as follows:

 

ARTICLE 1: EMPLOYMENT AND DUTIES

 

1.1 Employment; Effective Date. Company agrees to employ Executive and Executive
agrees to be employed by Company, beginning on the Effective Date and continuing
for the period of time set forth in Article 2 of this Agreement, subject to the
terms and conditions of this Agreement. Executive understands and agrees that
this Agreement is subject to final ratification and approval by the Organization
and Compensation Committee of the Board of Directors of Company and by the Board
of Directors of Company.

 

1.2 Position. From and after the Effective Date, Company shall employ Executive
in the position of Senior Vice President, Consumer Markets.

 

1.3 Duties and Services. Executive agrees to serve in the positions referred to
in paragraph 1.2. Executive agrees to perform diligently and to the best of his
abilities the duties and services appropriate to such offices which the parties
mutually may agree upon from time to time.

 

ARTICLE 2: TERM AND TERMINATION OF EMPLOYMENT

 

2.1 Term. Unless sooner terminated in accordance with the provisions of this
Article 2, Company agrees to employ Executive for a three-year period beginning
on the Effective Date, provided that the Term shall be automatically renewed for
successive one-year periods following the expiration of the three-year period
described above, unless either party provides the other party with notice (at
least ninety (90) days before the expiration of the then current Term) of its
(or his) intention not to renew the Term, in which case the Term shall expire at
the end of the current Term. As used herein, “Term” refers to such three- year
period and successive one-year periods as to which a notice of non-renewal has
not been given. Notwithstanding anything to the contrary herein, (i) in the
event of a Change in Control (as defined below) when there is less than one (1)
year left to the Term, or (ii) if, at the time this Agreement would otherwise
expire, Company is in the process of negotiating, with the approval of the Board
of Directors or a committee thereof, with a third party pursuant to a letter of
intent, memorandum of understanding, confidentiality agreement or other similar
evidence of active negotiation concerning a potential transaction or event
which, if consummated, would constitute a Change in Control (“Contemplated
Change in Control”), in either case (i) or (ii) above this Agreement shall not
expire and the Term shall automatically be extended to the earlier of (a) the
end of the Term that existed when negotiations commenced (or, if the

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expiration such Term is less than sixty (60) days), sixty (60) days after a
formal decision by Company or the third party to cease negotiations concerning
such Contemplated Change in Control, such formal decision to be evidenced by
correspondence between Company and the third party, or a resolution of the Board
of Directors or a committee thereof); or (b) two (2) years following the
consummation of the Change in Control described in clause (i) above or resulting
from such negotiation as described in clause (ii) above.

 

2.2 Company’s Right to Terminate. Company shall have the right to terminate
Executive’s employment under this Agreement at any time for any of the following
reasons:

 

(a) upon Executive’s death;

 

(b) upon Executive’s becoming disabled within the meaning of Company’s Long-Term
Disability Plan, provided such plan requires Executive to be unable to perform
his duties hereunder due to sickness or injury for a period of at least 180
consecutive days (a “Disability”);

 

(c) if, (i) in carrying out his duties hereunder, Executive engages in conduct
that constitutes (A) a breach of his fiduciary duty to Company or its
shareholders, (B) gross neglect or (C) gross misconduct resulting, in any such
case, in material economic harm to Company, or (ii) upon the indictment of
Executive for a felony or other crime involving dishonesty, theft or moral
turpitude; or (iii) Executive misappropriates a material business opportunity of
Company; or (iv) Executive breaches Company’s Code of Conduct or an express
employment policy or rule of Company governing employee conduct; or

 

(d) for any other reason whatsoever, in the sole discretion of Company.

 

For purposes of this Agreement, a termination by Company under clause (c) above
shall constitute a termination by Company for “Cause.” Notwithstanding the
foregoing, Company may not terminate Executive’s employment for Cause unless
Company has provided Executive with thirty (30) days written notice specifying
the reason(s) for such termination, and, if the circumstances surrounding such
termination may be cured by Executive, Executive has failed to cure the matter
to the reasonable satisfaction of Company within thirty (30) days of Executive’s
receipt of such notice.

 

2.3 Executive’s Right to Terminate. Executive shall have the right to terminate
his employment under this Agreement at any time for any of the following
reasons:

 

(a) a material diminution in the nature or scope of Executive’s authority,
responsibilities, or titles from those applicable to him as of the Effective
Date;

 

(b) the occurrence of acts or conduct on the part of Company or any of its
affiliates, or their board of directors, officers, representatives or
stockholders, which prevent Executive from, or substantively hinder Executive
in, performing his duties or responsibilities pursuant to this Agreement;

 

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(c) (i) a reduction in Executive’s base salary: or (ii); a material reduction in
the aggregate value of the employee benefit plans and programs for which
Executive is eligible as of the Effective Date of this Agreement (exclusive of
changes or reductions which are consistently applied to all similarly situated
executives), or (iii) a failure by Company to award Executive any targeted LTIP
and/or AIP awards, as defined in, Section 3.3 and 3.4 below (nothing herein is
intended to or should be construed as requiring the company to award Executive
any targeted LTIP or AIP awards, such awards to be governed by respective plan
documents).; or (iv) if Company requires Executive to be permanently based
anywhere outside of Dallas County, Tarrant or Denton Counties, Texas; or

 

(d) for any other reason whatsoever, in the sole discretion of Executive.

 

For purposes of this Agreement: (1) a termination of employment by Executive
under any of clauses (a) through (c), shall constitute a termination of
employment by Executive for “Good Reason;” and (2) a termination of employment
by Executive under clause (d) above shall constitute a termination of employment
by Executive “without Good Reason”.

 

2.4 Notice of Termination. If Company or Executive desires to terminate
Executive’s employment under Section 2.2 or Section 2.3 at any time prior to the
expiration of the Term, it or he shall do so by giving written notice to the
other party that it or he has elected to terminate Executive’s employment
hereunder, and stating the effective date and reason for such termination,
provided that no such action shall alter or amend any other provisions hereof or
rights arising hereunder.

 

ARTICLE 3: COMPENSATION AND BENEFITS

 

3.1 Base Salary. During the Term, Executive shall receive an annual base salary
equal to 275,000, or such greater amounts as determined in the sole discretion
of Company; provided that Executive understands that it is Company’s current
intent not to increase Executive’s base salary during the period of at least the
Term and, if the Term is renewed beyond the initial three-year Term in
accordance with Section 2.1, the two years thereafter. Executive’s annual base
salary shall be paid in equal installments in accordance with Company’s standard
policy regarding payment of compensation to executives.

 

3.2 Special Signing Bonus. Company shall pay Executive a signing bonus in the
aggregate amount of $100,000, which shall be payable in two equal installments
of $50,000 each, the first such installment to be made on, or as soon as
reasonably practical after, the Effective Date, and the second such installment
to be made on, or as soon as reasonably practical following, the one-year
anniversary of the Effective Date. Except as provided for in Sections 4.2 and
4.5 hereof, Executive shall forfeit any right to receive the second installment
of the signing bonus in the event he is, for any reason not described in said
Sections 4.2, 4.4 or 4.5, not in the employment of Company on the one-year
anniversary of the Effective Date.

 

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3.3 Annual Bonus. In addition to base salary, during each calendar year during
the Term commencing with calendar year 2004, Executive shall have the
opportunity to earn an annual cash bonus (“Bonus”) under and subject to the
terms and conditions of the TXU Annual Incentive Plan, or any successor plan
(“AIP”). For purposes of this Agreement, Executive’s “Target Bonus” shall be 50%
of Executive’s annualized base salary. The determination of the amount of the
Bonus actually paid to Executive each year shall be determined in accordance
with the relevant provisions of the AIP, and the Bonus for 2004 shall be
prorated for the portion of the year that Executive is employed by Company or
such longer proration period as may be determined in the sole discretion of
Company. In addition, Company will award Executive a minimum payout for the 2005
performance year at a level equal to targeted level.

 

3.4 Annual Long-Term Incentive Compensation Grants. Executive will be entitled
to receive annual performance-based awards (“LTIP Awards”) under and subject to
the terms of the TXU Long-Term Incentive Compensation Plan, or any successor
plan (“LTIP”) each year during the Term of this Agreement commencing in 2004.
The LTIP Award for 2004 shall have a target value equal to 18,250 shares of TXU
Corp. common stock, shall be made as soon as reasonably practical following the
Effective Date, and shall be on terms and conditions consistent with other 2004
annual LTIP awards made to Company executive officers. The LTIP Award for each
succeeding year during the Term shall have a minimum target value equal to
$400,000 and shall be made following, and in connection with, the executive
officer annual review by the Organization & Compensation Committee of the Board
of Directors of TXU Corp. (“O&C Committee”). Except as expressly described
herein, all such LTIP Awards shall be subject to terms, conditions and
restrictions comparable to those contained in awards granted for the
corresponding year to executive officers under the LTIP, or such other terms,
conditions and restrictions as may be approved by the O&C Committee.

 

In the event Executive’s employment with Company terminates prior to any of the
above-described awards being distributed or granted to Executive, such awards
shall be subject to the provisions of Article 4 herein.

 

Company shall, if Executive so requests, satisfy any income tax withholding
obligations in respect of the payment of any amounts under the LTIP by
withholding amounts otherwise issuable to Executive under such award.

 

3.5 Vacation. During each year of his employment, Executive shall be entitled to
up to four (4) weeks of vacation without regard to the period of service that
might otherwise be necessary to entitle Executive to such vacation under
Company’s vacation policy.

 

3.6 Relocation. In connection with his relocation to Dallas, Texas, Employee
shall be entitled to relocation benefits under the Company’s standard Category
III relocation policy.

 

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3.7 Other Employee Benefits. Executive shall be entitled to participate in all
of Company’s employee benefit plans, programs, arrangements, fringe benefits and
prerequisites made available to similarly situated executives of Company to the
extent he is qualified to do so by virtue of his employment with Company,
subject to the terms, conditions and limitations of such plans, arrangements and
policies, as they may be amended from time to time.

 

ARTICLE 4: EFFECT OF TERMINATION ON COMPENSATION

 

4.1 By Expiration of Term. If Executive’s employment hereunder shall terminate
upon expiration of the Term, then all compensation and all benefits to Executive
hereunder shall terminate contemporaneously with termination of his employment,
except that:

 

(a) Company shall pay to Executive all Accrued Obligations (as defined below in
Section 4.8) in a lump sum in cash within thirty (30) days after the date of
termination of Executive’s employment (the “Date of Termination”). For the
avoidance of doubt, salary, annual bonus, vacation and sick leave, other
employee benefits (except for COBRA Coverage (as defined below) and other
perquisites shall cease to accrue as of the Date of Termination.

 

(b) All outstanding LTIP Awards shall not be forfeited and shall be paid at the
times and in the amounts provided for in such awards, as if Executive had
continued to be employed through the maturity of each such award.

 

(c) Company shall provide Executive and his eligible dependents with continuous
health care coverage under and subject to the provisions of the Consolidated
Omnibus Budget Reconciliation Act of 1985 (“COBRA Coverage”) at the prevailing
active employee rate for up to eighteen (18) months from such termination.

 

(d) Company’s obligations under Sections 4.6 and 5.1 shall continue.

 

(e) Company shall pay any amounts owed but unpaid to Executive under any plan,
policy or program of Company as of the date of termination at the time provided
by, and in accordance with the terms of, such plan, policy or program.

 

(f) If Company or Executive elects not to the renew for a successive one-year
period or do not enter into a new employment agreement, then Company shall pay
Executive a one-time lump sum severance payment in the aggregate amount equal to
(i) the product of 1.5 multiplied by (a) the Executive’s then current annualized
base salary provided for under Section 3.1 and (b) an amount equal to the
annualized Target Bonus. In addition, Company shall pay Executive an amount
equal to the Target Bonus prorated based on the number of days Executive was
employed during the bonus year in which employment terminated. Such aggregate
severance amount shall be paid to Executive within thirty (30) days of his
execution of a release of claims pursuant to Section 4.7.

 

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(g) Company shall, upon request, provide benefits to Executive consistent with a
Category III relocation plan.

 

Executive agrees that, in the event of the breach of any of Executive’s
obligations under Section 4.9 or Section 4.10 hereof, any right of Executive to
receive any payments or benefits provided for in this Section 4.1 shall
immediately cease and/or be forfeited and Company shall be under no further
obligation to provide any payments or benefits to Executive other than benefits
which had accrued and to which Executive had become fully vested, and benefits
which Company is legally obligated to provide.

 

4.2 By Company Without Cause or By Executive for Good Reason Prior to Expiration
of Term. If Executive’s employment hereunder is terminated by Company without
Cause, or by Executive for Good Reason, prior to the expiration of the Term
then, upon such termination, the payments and benefits described below will, be
provided to Executive, or in the event of Executive’s death, to his spouse (or
his estate if he is not married or his spouse does not survive him):

 

(a) Company shall pay to the Executive all Accrued Obligations in a lump sum in
cash within thirty (30) days after the Date of Termination. For the avoidance of
doubt, salary, annual bonus, vacation and sick leave, other employee benefits
(except for COBRA Coverage and retiree medical) and other perquisites shall
cease to accrue as of the Date of Termination.

 

(b) Company shall pay Executive a one-time lump sum severance payment in the
aggregate amount equal to: (i) the product of 1.5 multiplied by (a) the
Executive’s then current annualized base salary provided for under Section 3.1
and (b) an amount equal to the annualized Target Bonus; (ii) any unpaid
installment of the signing bonus provided for under Section 3.2, and an amount
equal to the Target Bonus prorated based on the number of days Executive was
employed during the bonus year in which employment terminated; (iii) the
forfeited portion of Executive’s accounts under the TXU Deferred and Incentive
Compensation Plan (“DICP”) and the TXU Salary Deferral Program (“SDP”), or any
successor plans, valued as of the date of such termination in accordance with
the valuation methodology used under such plans; and (iv) the matching
contributions which would have been made on behalf of Executive under the DICP
and/or SDP had Executive continued his participation in such plans as in effect
on the date of such termination for an additional twelve (12) months. Such
aggregate severance amount shall be paid to Executive within thirty (30) days of
his execution of a release of claims pursuant to Section 4.7

 

(c) All outstanding LTIP Awards shall not be forfeited and shall be paid at the
times and in the amounts provided for in such awards, as if Executive had
continued to be employed through the maturity of each such award

 

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(d) Company shall provide Executive and his eligible dependents with COBRA
Coverage at the prevailing active employee rate for up to eighteen (18) months
from such termination.

 

(e) Company’s obligations under Sections 4.6 and 5.1 shall continue.

 

(f) Company shall pay any amounts owed but unpaid to Executive under any plan,
policy or program of Company as of the date of termination at the time provided
by, and in accordance with the terms of, such plan, policy or program.

 

(g) Company shall, upon request, provide benefits to Executive consistent with a
Category III relocation plan.

 

Executive agrees that, in the event of the breach of any of Executive’s
obligations under Section 4.9 or Section 4.10 hereof, any right of Executive to
receive any further payments or benefits provided for in this Section 4.2 shall
immediately cease and/or be forfeited and Company shall be under no further
obligation to provide any payments or benefits to Executive other than benefits
which had accrued and in which Executive had become fully vested, and benefits
which Company is legally obligated to provide.

 

4.3 By Executive Without Good Reason or By Company for Cause. If Executive’s
employment hereunder is terminated by Company for Cause or by Executive without
Good Reason, then all compensation and benefits to Executive hereunder shall
terminate contemporaneously with the termination of such employment, except
that:

 

(a) Company shall pay to Executive all Accrued Obligations in a lump sum in cash
within thirty (30) days after the Date of Termination. For the avoidance of
doubt, salary, annual bonus, vacation and sick leave, other employee benefits
(except for COBRA Coverage) and other perquisites shall cease to accrue as of
the Date of Termination.

 

(b) Company shall provide Executive and his eligible dependents with COBRA
Coverage at the prevailing COBRA rate for up to eighteen (18) months from such
termination.

 

(c) Company’s obligations under Sections 4.6 and 5.1 shall continue.

 

(d) Company shall pay any amounts owed but unpaid to Executive under any plan,
policy or program of Company as of the date of termination at the time provided
by, and in accordance with the terms of, such plan, policy or program.

 

(e) All unvested LTIP Awards shall be forfeited.

 

Executive agrees that, in the event of the breach of any of Executive’s
obligations under Section 4.9 or Section 4.10 hereof, any right of Executive to
receive any further payments or benefits provided for in this Section 4.3 shall
immediately cease and/or be forfeited and Company shall be under no further
obligation to provide any payments or benefits to Executive other than benefits
which had accrued and in which Executive had become fully vested, and benefits
which Company is legally obligated to provide.

 

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4.4 Upon Executive’s Death or Disability. In the event of Executive’s death or
Disability during the Term, this Agreement shall terminate, and Executive, or
Executive’s spouse in the event of his death (or his estate in the event he is
not married or his spouse does not survive him) will be entitled to receive the
following:

 

(a) Company shall pay to the Executive all Accrued Obligations in a lump sum in
cash within thirty (30) days after the Date of Termination. For the avoidance of
doubt, salary, annual bonus, vacation and sick leave, other employee benefits
(except for COBRA Coverage) and other perquisites shall cease to accrue as of
the Date of Termination.

 

(b) Company shall immediately pay Executive (or Executive’s surviving spouse or
estate, as the case may be) a lump sum severance payment in the aggregate amount
equal to (i) the product of 1.5 multiplied by (a) the Executive’s then current
annualized base salary provided for under Section 3.1 and (b) an amount equal to
the annualized Target Bonus. In addition Executive would receive any unpaid
installment of the signing bonus provided for under Section 3.2. In addition,
Company shall pay Executive an amount equal to the Target Bonus prorated based
on the number of days Executive was employed during the bonus year in which
employment terminated.

 

(c) All outstanding LTIP Awards shall not be forfeited and shall be paid at the
times and in the amounts provided for in such awards, vesting as if Executive
had continued to be employed through the maturity of each such award.

 

(d) Company shall provide Executive and his eligible dependents with COBRA
Coverage at the prevailing active employee rate for up to thirty-six (36) months
from such termination.

 

(e) Company’s obligations under Sections 4.6 and 5.1 shall continue.

 

(f) Company shall pay any amounts owed but unpaid to Executive under any plan,
policy or program of Company as of the date of termination at the time provided
by, and in accordance with the terms of, such plan, policy or program.

 

(g) Company shall, upon request, provide benefits to Executive consistent with a
Category III relocation plan.

 

Executive agrees that, in the event of termination by reason of Executive’s
Disability, if Executive breaches any of Executive’s obligations under Section
4.9 or Section 4.10 hereof, any right of Executive to receive any payments or
benefits provided for in this Section 4.4 shall immediately cease and/or be
forfeited and Company shall be under no further obligation to provide any
payments or benefits to Executive other than benefits which had accrued and in

 

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which Executive had become fully vested, and benefits which Company is legally
obligated to provide. Additionally, in the event of any such breach, Company
shall be entitled to recover from Executive an amount equal to all payments and
benefits previously provided to Executive under paragraphs (b) and (c) of this
Section 4.4.

 

4.5 Termination Following Change in Control. If Executive’s employment is
terminated by Company (or its successor) without Cause or Executive terminates
his employment with Company (or its successor) with Good Reason in either case
within twenty-four (24) months after a Change in Control (as defined in Section
4.8 below) Executive will be entitled to the following benefits:

 

(a) Company (or its successor) shall pay to the Executive all Accrued
Obligations in a lump sum in cash within thirty (30) days after the Date of
Termination. For the avoidance of doubt, salary, annual bonus, vacation and sick
leave, other employee benefits (except for COBRA Coverage and retiree medical)
and other perquisites shall cease to accrue as of the Date of Termination.

 

(b) Company (or its successor) shall immediately pay Executive a lump sum
payment equal to the then current annualized base salary provided for under
Section 3.1 and the Target Bonuses provided for under Section 3.3, through the
remainder of the Term, provided that the lump sum shall not be less than two (2)
times the sum of Executive’s annualized base salary and Target Bonus.

 

(c) All outstanding LTIP Awards shall not be forfeited and shall be paid at the
times and in the amounts provided for in such awards, vesting as if Executive
had continued to be employed through the maturity of each such award

 

(d) Company (or its successor) shall immediately pay Executive any unpaid
installment of the signing bonus provided for under Section 3.2.

 

(e) Company shall pay Executive an amount equal to: (i) the forfeited portion of
Executive’s accounts under the TXU Deferred and Incentive Compensation Plan
(“DICP”) and the TXU Salary Deferral Program (“SDP”) (valued as of the date of
such termination in accordance with the valuation methodology used under such
plans); and (ii) the matching contributions which would have been made on behalf
of Executive under the DICP had Executive continued to defer salary under the
DICP at the rate in effect as of the date of such termination for an additional
twenty-four (24) months.

 

(f) Company (or its successor) shall provide Executive and his eligible
dependents with COBRA Coverage at the prevailing active employee rate for up to
eighteen (18) months from such termination.

 

(g) Company’s (or its successor’s) obligations under Sections 4.6 and 5.1 shall
continue.

 

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(h) Company (or its successor) shall pay any amounts owed but unpaid to
Executive under any plan, policy or program of Company as of the date of
termination at the time provided by, and in accordance with the terms of, such
plan, policy or program.

 

(i) Company shall, upon request, provide benefits to Executive consistent with a
Category III relocation plan.

 

4.6 Certain Additional Payments by Company. Notwithstanding anything to the
contrary in this Agreement, if any payment, distribution or provision of a
benefit by Company to or for the benefit of Executive, whether paid or payable,
distributed or distributable or provided or to be provided pursuant to the terms
of this Agreement or otherwise (a “Payment”), would be subject to an excise or
other special additional tax that would not have been imposed absent such
Payment (including, without limitation, any excise tax imposed by Section 4999
of the Internal Revenue Code of 1986, as amended), or any interest or penalties
with respect to such excise or other additional tax (such excise or other
additional tax, together with any such interest or penalties, are hereinafter
collectively referred to as the “Excise Tax”), Company shall pay to Executive an
additional payment (a “Gross-up Payment”) in an amount such that after payment
by Executive of all taxes (including any interest or penalties imposed with
respect to such taxes), including any income taxes and Excise Taxes imposed on
any Gross-up Payment, Executive retains an amount of the Gross-up Payment
(taking into account any similar gross-up payments to Executive under any stock
incentive or other benefit plan or program of Company) equal to the Excise Tax
imposed upon the Payments. Company and Executive shall make an initial
determination as to whether a Gross-up Payment is required and the amount of any
such Gross-up Payment. Executive shall notify Company in writing of any claim by
the Internal Revenue Service which, if successful, would require Company to make
a Gross-up Payment (or a Gross-up Payment in excess of that, if any, initially
determined by Company and Executive) within ten business days after the receipt
of such claim. Company shall notify Executive in writing at least ten business
days prior to the due date of any response required with respect to such claim
if it plans to contest the claim. If Company decides to contest such claim,
Executive shall cooperate fully with Company in such action; provided, however,
Company shall bear and pay directly or indirectly all costs and expenses
(including additional interest and penalties) incurred in connection with such
action and shall indemnify and hold Executive harmless, on an after-tax basis,
for any Excise Tax or income tax, including interest and penalties with respect
thereto, imposed as a result of Company’s action. If, as a result of Company’s
action with respect to a claim, Executive receives a refund of any amount paid
by Company with respect to such claim, Executive shall promptly pay such refund
to Company. If Company fails to timely notify Executive whether it will contest
such claim or Company determines not to contest such claim, then Company shall
immediately pay to Executive the portion of such claim, if any, which it has not
previously paid to Executive. Company’s obligation under this Section 4.6 shall
continue after the termination or expiration of the Term.

 

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4.7 Release of Claims. Executive acknowledges and agrees that the payments and
benefits provided for in this Article 4 constitute the exclusive remedy of
Executive upon termination of employment for any reason. Executive further
agrees that, as a condition to receiving such payments and benefits, Executive
shall execute a release of claims arising out of Executive’s employment with,
and termination of employment from, Company in a form reasonably requested by
Company.

 

4.8 Certain Defined Terms. For purposes of this Agreement, the following terms
shall have the following meanings:

 

(a) “Change in Control” means a change in control of the Company of a nature
that would be required to be reported in response to Item 1(a) of the Securities
and Exchange Commission Form 8-K, as in effect on the date hereof, pursuant to
Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended
(“Exchange Act”), or would have been required to be so reported but for the fact
that such event had been “previously reported” as that term is defined in Rule
12b-2 of Regulation 12B under the Exchange Act; provided that, without in any
way limiting the foregoing, a Change in Control shall be deemed to have occurred
if any one or more of the following events occurs: (i) any Person is or becomes
the beneficial owner (as defined in Rule 13d-3 under the Exchange Act), directly
or indirectly, of securities of the Company representing 20% or more of the
combined voting power of the Company then outstanding securities having the
right to vote at elections of directors of the Company (“Voting Securities”);
(ii) individuals who constitute the board of directors of the Company on the
Effective Date of this Agreement (the “Incumbent Board”) cease for any reason to
constitute at least a majority thereof, provided that any person becoming a
director subsequent to the Effective Date of this Agreement whose election, or
nomination for election by the Company shareholders, was approved by at least
three-quarters of the Company’s directors comprising the Incumbent Board (either
by a specific vote or by approval of the proxy statement of the Company in which
such person is named as a nominee for director, without objection to such
nomination) shall, for purposes of this clause (ii), be considered as though
such person were a member of the Incumbent Board; (iii) a recapitalization or
reclassification of the Voting Securities of the Company, which results in
either (a) a decrease by 33% or more in the aggregate percentage ownership of
Voting Securities held by Independent Shareholders (on a primary basis or on a
fully diluted basis after giving effect to the exercise of stock options and
warrants), or (b) an increase in the aggregate percentage ownership of Voting
Securities held by non-Independent Shareholders (on a primary basis or on a
fully diluted basis after giving effect to the exercise of stock options and
warrants) to greater than 50%; (iv) all or substantially all of the assets
constituting the core business of the Company are liquidated or transferred to
an unrelated party; or (v) the Company is a party to a merger, consolidation,
reorganization or similar transaction pursuant to which the Company is not the
surviving ultimate parent entity. For purposes of this definition, the terms
“Person” shall mean and include any individual, corporation, partnership, group
association or other “person,” as such term is used in Section 14(d) of the
Exchange Act, other than the Company, a subsidiary of the Company or any
employee benefit plan(s) sponsored or maintained by the Company or any
subsidiary thereof, and the term “Independent Shareholder” shall mean

 

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any shareholder of the Company except any employee(s) or director(s) of the
Company or any employee benefit plan(s) sponsored or maintained by the Company
or any subsidiary thereof.

 

(b) The term “immediately” wherever used herein to refer to the timing of a
payment or other performance requirement of this Agreement, shall mean within
ten (10) business days after the date such payment or performance becomes due.

 

(c) “Accrued Obligations” shall mean, as of the Date of Termination, the sum of
(i) Executive’s base salary through the Date of Termination to the extent not
previously paid, (ii) the amount of any incentive compensation, deferred
compensation and other cash compensation accrued and payable to Executive as of
the Date of Termination under the terms of any applicable plan to the extent not
previously paid, and (iii) any vacation pay, expense reimbursements and other
cash entitlements accrued by and/or payable to Executive as of the Date of
Termination under the terms of any applicable plan or policy to the extent not
previously paid.

 

4.9 Confidentiality and Nondisclosure. Executive understands and agrees that he
will be given Confidential Information (as defined below), and specialized
training relating to such Confidential Information, during his employment with
Company relating to the business of Company and/or its affiliates. Except as
authorized within the course and scope of his employment, Executive hereby
expressly agrees to maintain in strictest confidence and not to use in any way
(including without limitation in any future business relationship of Executive),
publish, disclose or authorize anyone else to use, publish or disclose in any
way, any Confidential Information relating in any manner to the business or
affairs of Company and/or its affiliates. Executive agrees further not to remove
or retain any figures, calculations, letters, documents, lists, papers, or
copies thereof, which embody Confidential Information of Company and/or its
affiliates, and to return, prior to Executive’s termination of employment, any
such information in Executive’s possession. If Executive discovers or comes into
possession of any such information after his termination, he shall promptly
return it to Company. For purposes of this Agreement, “Confidential Information”
includes, but is not limited to, information in the possession of, prepared by,
obtained by, compiled by, or that is used by Company or any of its affiliates or
customers and (a) is proprietary to, about, or created by Company or its
affiliates or customers; (b) gives Company or its affiliates or customers some
competitive business advantage, the opportunity of obtaining such advantage, or
disclosure of which might be detrimental to the interest of Company or its
affiliates or customers; and (c) is not typically disclosed by Company or its
affiliates or customers, or known by persons who are not employed by Company or
its affiliates or customers. Without in any way limiting the foregoing and by
way of example, Confidential Information shall include information not generally
available to the public pertaining to Company’s business operations such as
financial and operational information and data, operational plans and
strategies, business and marketing strategies and plans for various products and
services, global operational planning, and acquisition and divestiture planning.

 

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4.10 Non-Solicitation and Non-Competition. Executive acknowledges and agrees
that: (1) in order to perform his obligations and job duties for Company,
Executive will gain training and access to Confidential Information regarding
Company and/or its affiliates or customers; (2) use of such Confidential
Information in competition with Company and/or its affiliates or customers would
be detrimental to the business interests of Company and/or its affiliates or
customers; and (3) Executive would not have been allowed to gain access to
Confidential Information, or to provide the obligations and job duties
contemplated under this Agreement without his promises and agreements contained
in the following paragraph. Executive also acknowledges and agrees that the
services he will be performing for Company, and the Confidential Information and
training he will be provided, relate to all operations of Company and will not
be limited to any specific geographic location within which Company, or any of
its affiliates, conducts business.

 

In the event this Agreement is terminated pursuant to the provisions of Sections
4.1, 4.2, 4.3, or 4.4 above, Executive agrees that for a period of one (1) year
after such termination, directly or knowingly indirectly, either as an employee,
employer, independent contractor, consultant, agent, principal, partner,
stockholder, officer, director, or in any other individual or representative
capacity, either for his own benefit or the benefit of any other person or
entity: (a) engage or participate in activities which involve retail marketing
and customer operations to end-use customers in the deregulated electricity
market within the State of Texas or which otherwise compete in a material manner
with TXU Energy LLC in offering retail products and services to customers within
the deregulated electricity market in Texas (b) solicit, induce, encourage or in
any way cause any of Company’s (or affiliate’s) customers, or prospective
customers, or any person, firm, corporation, company, partnership, association
or entity which was contacted or whose business was solicited, serviced or
maintained by Company (or its affiliates) during the term of Executive’s
employment with Company to reduce or terminate its business relationship with
Company (or such affiliate); or (c) solicit, recruit, induce, encourage or in
any way cause any employee of Company (or an affiliate) to terminate his/her
employment with Company (or such affiliate).

 

4.11 Damages; Injunctive Relief. Executive understands that Company would not
agree to the payment of the severance benefits under this Article 4 without
Executive’s agreement to the provisions of Sections 4.9 and 4.10 hereof.
Executive hereby agrees that the provisions contained in this Article 4 relating
to the repayment by Executive to Company of severance payments and benefits in
the event of Executive’s breach of any such provisions, are reasonable, and
Executive expressly confirms his repayment obligations under such circumstances.
Executive understands, however, that such repayment would not represent adequate
damages to Company or its affiliates in the event of a breach by Executive of
the obligations provided for under Section 4.9 or Section 4.10 hereof, and that,
upon any such breach, Company and/or its affiliates will suffer immediate and
irreparable harm, and that monetary damages alone will be inadequate to
compensate the Company or its affiliates for any such breach. Accordingly,
Executive agrees that Company and/or its affiliates shall, in addition to any
other remedies available to it at law or in equity, be entitled to temporary,
preliminary, and permanent injunctive relief and specific performance to enforce
the terms of Sections 4.9 and 4.10 without the necessity of proving inadequacy
of legal remedies or irreparable harm or posting bond.

 

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ARTICLE 5: MISCELLANEOUS

 

5.1 Attorneys’ Fees, Indemnity an D&O Insurance.

 

(a) If Executive shall prevail with respect to any substantive issue in
litigation brought to enforce or interpret any provision contained herein, the
Company shall reimburse Executive for his reasonable attorneys’ fees and
disbursements incurred by Executive in such litigation.

 

(b) Company shall fully indemnify and hold Executive harmless from all actual
and threatened claims, demands, lawsuits, actions, or proceedings, whether
civil, criminal, administrative or investigative by reason of the fact that
Executive is or was an employee of the Company, or any subsidiary of Company or
is or was serving at the request of Company, as a director, Officer, member,
employee or agent of another corporation or a partnership, joint venture, trust
or other enterprise (“Proceeding”). Notwithstanding the foregoing provision,
however, Company’s obligation and duty to fully indemnify and hold Executive
harmless shall cease upon, and with respect to, any reasonable determination by
Company that Executive has engaged in any intentional wrongdoing or tortious
conduct.

 

(c) Company shall provide Executive with directors’ and officers’ liability
insurance at least as favorable as the insurance coverage provided to other
senior executive officers and directors of Company respecting liabilities,
costs, charges and expenses of any type whatsoever incurred or sustained by
Executive, (or Executive’s legal representative or other successors) in
connection with a Proceeding.

 

The parties’ obligations under this Section 5.1 shall continue after the
termination of this Agreement.

 

5.2 Notices. For purposes of this Agreement, notices and all other
communications provided for herein shall be in writing and shall be deemed to
have been duly given when personally delivered or three days after the date
mailed by United States registered or certified mail, return receipt requested,
or by a nationally known overnight courier, in either case postage prepaid and
addressed as follows:

 

If to Company to:

              TXU Energy Company                 1601 Bryan Street    

            Dallas, Texas 75201-3411

            Attention: General Counsel

If to Executive to:

              The most recent address on file with Company

 

or to such other address as either party may furnish to the other in writing in
accordance herewith, except that notices of changes of address shall be
effective only upon receipt.

 

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5.3 Applicable Law. This contract is entered into under, and shall be governed
for all purposes by, the laws of the State of Texas.

 

5.4 No Waiver. No failure by either party hereto at any time to give notice of
any breach by the other party of, or to require compliance with, any condition
or provision of this Agreement shall be deemed a waiver of similar or dissimilar
provisions or conditions at the same or at any prior or subsequent time.

 

5.5 Severability. If a court of competent jurisdiction determines that any
provision of this Agreement is invalid or unenforceable, then the invalidity or
unenforceability of that provision shall not affect the validity or
enforceability of any other provision of this Agreement, and all other
provisions shall remain in full force and effect.

 

5.6 Counterparts. This Agreement may be executed in one or more counterparts,
each of which shall be deemed to be original, but all of which together will
constitute one and the same Agreement.

 

5.7 Withholding of Taxes and Other Employee Deductions. Company may withhold
from any benefits and payments made pursuant to this Agreement all federal,
state, city and other taxes as may be required pursuant to any law or
governmental regulation or ruling and all other normal employee deductions made
with respect to Company’s employees generally. Executive agrees to complete all
appropriate tax forms and to take any and all further action as may be requested
by Company in order to permit Company to effect all such withholdings.

 

5.8 Headings. The paragraph headings have been inserted for purposes of
convenience and shall not be used for interpretive purposes.

 

5.9 Gender and Plurals. Wherever the context so requires, the masculine gender
includes the feminine or neuter, and the singular number includes the plural and
conversely.

 

5.10 Successors. This Agreement shall be binding upon and inure to the benefit
of Company and any successor of Company, including without limitation any
person, association, or entity which may hereafter acquire or succeed to all or
substantially all of the business or assets of Company by any means whether
direct or indirect, by purchase, merger, consolidation, or otherwise. Except as
provided in the preceding sentence, this Agreement, and the rights and
obligations of the parties hereunder, are personal and neither this Agreement,
nor any right, benefit or obligation of either party hereto, shall be subject to
voluntary or involuntary assignment, alienation or transfer, whether by
operation of law or otherwise, without the prior written consent of the other
party.

 

5.11 Term. The term of this Agreement is co-extensive with the Term of
employment as set forth in paragraph 2.1. Termination shall not affect any right
or obligation of any party which is accrued or vested prior to or upon such
termination or by its terms continues following the termination of the Term,
including without limitation sections 4.6, 4.7, 4.9, 4.10, 4.11 and 5.1 of this
Agreement.

 

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5.12 Entire Agreement; Conflict. This Agreement sets forth the entire agreement
of the parties with respect to the subject matter hereto. Any modification of
this Agreement shall be effective only if it is in writing and signed by the
party to be charged.

 

5.13 Deemed Resignations. Any termination of Executive’s employment shall
constitute an automatic resignation of Executive as an officer of Company and
each affiliate of Company, and, if applicable, an automatic resignation of
Executive from the board of directors of Company and/or any affiliate of
Company, and, if applicable, from the board of directors or similar governing
body of any corporation, limited liability company or other entity in which
Company or any affiliate holds an equity interest and with respect to which
board or similar governing body Executive serves as Company’s or such
affiliate’s designee or other representative. Executive shall execute such
resignation forms or certifications and take all such further action as Company
may reasonably request in connection with such resignations.

 

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date set forth above.

 

TXU ENERGY COMPANY LLC By:  

/s/ Paul O’Malley

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Name:   Paul O’Malley Title:   Chief Executive Officer EXECUTIVE:

/s/ James Burke

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James Burke

 

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