Exhibit 10(yyy)

EXECUTION VERSION

 

Energy Future Holdings Corp.

  Texas Energy Future

Energy Plaza

  Holdings Limited Partnership

1601 Bryan Street

  301 Commerce Street, Suite 3300

Dallas, TX 75201

  Fort Worth, TX 76102

October 10, 2007

Kohlberg Kravis Roberts & Co L.P.

9 West 57th Street, Suite 4200

New York, NY 10019

TPG Capital, L.P.

301 Commerce Street, Suite 3300

Fort Worth, TX 76102

Goldman, Sachs & Co.

85 Broad Street

New York, NY 10004

Lehman Brothers Inc.

745 Seventh Avenue

New York, New York 10019

Ladies and Gentlemen:

This letter serves to confirm the retention by Energy Future Holdings Corp. (the
“Company”) of Kohlberg Kravis Roberts & Co. L.P. (the “KKR Manager”), TPG
Capital, L.P. (the “TPG Manager”), Goldman, Sachs & Co. (the “GS Manager” and
together with the KKR Manager and the TPG Manager, the “Managers” and each a
“Manager”) to provide management, consulting and financial services to the
Company and its divisions, subsidiaries and affiliates (collectively, the
“Company Group”), as follows:

1. The Company has retained the Managers, and each Manager hereby agrees to
accept such retention, to provide to the Company Group, when and if called upon,
certain management, consulting and financial services of the type customarily
performed by such Managers. Commencing on the date hereof (the “Effective
Date”), the Company agrees to pay the Managers an aggregate annual fee (the
“Advisory Fee”) in an amount equal to $35,000,000 (thirty five million dollars),
which amount shall increase by 2% annually, payable in quarterly

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installments in arrears at the end of each calendar quarter. The initial
Advisory Fee shall be pro rated to reflect the portion of the current fiscal
year which has elapsed prior to the Effective Date. The Managers shall split the
Advisory Fee so that (i) the KKR Manager shall initially receive a portion of
the Advisory Fee equal to $12,727,500 (twelve million seven hundred twenty seven
thousand and five hundred dollars) (ii) the TPG Manager shall initially receive
a portion of the Advisory Fee equal to $12,727,500 (twelve million seven hundred
twenty seven thousand and five hundred dollars) and (iii) the Goldman Manager
shall initially receive a portion of the Advisory Fee equal to $9,545,000 (nine
million five hundred and forty five thousand dollars). Increases in the Advisory
Fee in subsequent years shall be paid to the Managers in the same proportion as
the initial Advisory Fee.

2. To the extent the Company is not permitted to pay the Advisory Fee by reason
of any prohibition on such payment pursuant to the terms of any debt financing
agreement or instrument of the Company or any of its subsidiaries, the payment
by the Company to the Managers, of the Advisory Fee shall be deferred and shall
not be due and payable until immediately on the earlier of (i) the first date on
which the payment of such deferred Advisory Fee is no longer prohibited under
the applicable agreement or instrument and the Company is otherwise able to make
such payment, and (ii) total or partial liquidation, dissolution or winding up
of the Company.

3. In consideration for structuring services rendered by the Managers and Lehman
Brothers Inc. in connection with the acquisition of the outstanding shares of
the Company by Parent pursuant to the Agreement and Plan of Merger, dated as of
February 25, 2007, by and among Texas Energy Future Holdings Limited Partnership
(“Parent”), Texas Energy Future Merger Sub Corp. and the Company (the “Merger
Agreement”), which services included, but were not limited to, financial
advisory services and capital structure review (the “Initial Services”), the
Company agrees to also pay the Managers and Lehman Brothers Inc. a one-time
transaction fee in an aggregate amount equal to $300,000,000 (three hundred
million dollars) (the “Merger Fee”), payable immediately upon the Closing (as
defined in the Merger Agreement), which Merger Fee shall be apportioned so that
(i) the KKR Manager shall receive a portion of the Merger Fee equal to
$106,840,909.09 (one hundred and six million eight hundred and forty thousand
nine hundred and nine dollars and nine cents), (ii) the TPG Manager shall
receive a portion of the Merger Fee equal to $106,840,909.09 (one hundred and
six million eight hundred and forty thousand nine hundred and nine dollars and
nine cents), (iii) the Goldman Manager shall receive a portion of the Merger Fee
equal to $80,130,681.82 (eighty million one hundred and thirty thousand and six
hundred eighty one dollars and eighty two cents) and (iv) Lehman Brothers Inc.
shall receive a portion of the Merger Fee equal to $6,187,500.00 (six million
one hundred and eighty seven thousand and five hundred dollars).

4. The Company shall, with respect to each proposed transaction, including,
without limitation, any proposed acquisition, merger, full or partial
recapitalization, structural reorganization (including any divestiture of one or
more subsidiaries or operating divisions of any member of the Company Group),
reorganization of the shareholdings or other ownership structure of the Company
Group, sales or dispositions of assets or equity interests or any other similar
transaction (each, a “Transaction”) directly or indirectly involving the members
of the Company Group, pay to the Managers an aggregate fee (a “Transaction Fee”)
equal to 1% of the Transaction Value, or such lesser amount as the Managers and
the Company may agree, any such Transaction Fee to be apportioned so that
(i) the KKR Manager shall receive a portion of

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any Transaction Fee equal to four elevenths of such Transaction Fee (ii) the TPG
Manager shall receive a portion of any Transaction Fee equal to four elevenths
of such Transaction Fee and (iii) the Goldman Manager shall receive a portion of
any Transaction Fee equal to three elevenths of such Transaction Fee. The
Company, on behalf of the members of the Company Group, may agree to pay a
Transaction Fee in excess of 1% of the Transaction Value of a Transaction,
subject to the consent of the board of directors of the Company. As used herein,
“Transaction Value” means the total value of the applicable Transaction,
including, without limitation, the aggregate amount of the cash funds and the
aggregate value of the other securities or obligations required to complete such
Transaction (excluding any fees payable pursuant to this paragraph 4), including
any indebtedness, guarantees, capital stock or similar items issued or made to
facilitate, and the amount of any revolving credit or other liquidity facilities
or arrangements established in connection with, such Transaction or assumed,
refinanced or left outstanding in connection with or immediately following such
Transaction. For purposes of calculating a Transaction Fee, the value of any
securities included in the Transaction Value will be determined by the average
of the last sales prices for such securities on the five trading days ending
five days prior to the consummation of the applicable Transaction, provided that
if such securities do not have an existing public trading market, the value of
the securities shall be their fair market value as mutually reasonably agreed
between the Managers and the Company, on behalf of the members of the Company
Group, on the day prior to consummation of such Transaction. For the avoidance
of doubt, no Transaction Fee (other than the Merger Fee) shall be payable to any
Manager in respect of the Initial Services.

5. In addition to any fees that may be payable to the Managers under this
agreement, the Company shall, or shall cause one or more of its affiliates to,
on behalf of itself and the other members of the Company Group (subject to
paragraph 6), reimburse the Managers and their affiliates and their respective
employees and agents, from time to time upon request, for all reasonable
out-of-pocket expenses incurred, including unreimbursed expenses incurred prior
to the date hereof, in connection with this retention and/or transactions
contemplated by the Merger Agreement, including travel expenses and expenses of
any legal, accounting or other professional advisors to the Managers or their
affiliates. The Managers may submit monthly expense statements to the Company or
any other member of the Company Group, which statements shall be payable within
thirty days. Nothing in this paragraph 5 shall limit any obligations of Parent
to reimburse any costs and expenses to the Managers, their subsidiaries or
affiliates as provided in the Amended and Restated Limited Partnership Agreement
of Parent, dated as of the date hereof, among the parties thereto, as the same
may be amended from time to time (the “Partnership Agreement”), or in the
Amended and Restated Limited Liability Company Agreement of Texas Energy Future
Capital Holdings LLC, dated as of the date hereof, among the parties thereto.

6. Parent and the Company (on behalf of itself and the other members of the
Company Group) hereby acknowledge and agree that the obligations of the Company
under paragraphs 1- 5 shall be borne jointly and severally by each member of the
Company Group.

7. Parent and the Company (on behalf of itself and the other members of the
Company Group) hereby acknowledge and agree that the services provided by the
Managers hereunder are being provided subject to the terms of the
Indemnification Agreement, dated as of the date hereof, between Parent, the
Company, and the Managers (as the same may be amended from time to time, the
“Indemnification Agreement”).

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8. Any advice or opinions provided by the Managers may not be disclosed or
referred to publicly or to any third party (other than the Company Group’s
legal, tax, financial or other advisors), except in accordance with our prior
written consent.

9. Each Manager shall act as an independent contractor, with duties solely to
the Company Group. The provisions hereof shall inure to the benefit of and shall
be binding upon the parties hereto and their respective successors and assigns.
Nothing in this agreement, expressed or implied, is intended to confer on any
person other than the parties hereto or their respective successors and assigns,
any rights or remedies under or by reason of this agreement. Without limiting
the generality of the foregoing, the parties acknowledge that nothing in this
agreement, expressed or implied, is intended to confer on any present or future
holders of any securities of the Company or its subsidiaries or affiliates, or
any present or future creditor of the Company or its subsidiaries or affiliates,
any rights or remedies under or by reason of this agreement or any performance
hereunder.

10. This agreement shall be governed by and construed in accordance with the
internal laws of the State of New York.

11. All notices and other communications provided for hereunder shall be in
writing and shall be sent by first class mail, telex, telecopier or hand
delivery:

 

If to Parent:   

Texas Energy Future Holdings Limited Partnership

301 Commerce Street, Suite 3300
Fort Worth, TX 76102
Attention: Clive D. Bode
Facsimile: (817) 871-4001

with a copy to:
(which shall not
constitute notice)   

Simpson Thacher & Bartlett LLP
425 Lexington Avenue
New York, New York 10017
Attention: David J. Sorkin

                  Andrew W. Smith
Facsimile:(212) 455-2502

If to the Company:   

Energy Future Holdings Corp.
Energy Plaza
1601 Bryan Street

Dallas, TX 75201
Attention: General Counsel

Facsimile: (214) 812 4600

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with a copy to:
(which shall not constitute notice)    Simpson Thacher & Bartlett LLP
425 Lexington Avenue
New York, New York 10017
Attention: David J. Sorkin
                  Andrew W. Smith
Facsimile:(212) 455-2502 If to the KKR
Manager:    Kohlberg Kravis Roberts & Co. L.P.
9 West 57th Street, Suite 4200
New York, NY 10019
Attention: Marc Lipschultz
Facsimile: (212) 750-0003 with copies to:
(which shall not constitute notice)   

Simpson Thacher & Bartlett LLP
425 Lexington Avenue
New York, New York 10017

Attention: David J. Sorkin
                  Andrew W. Smith
Facsimile:(212) 455-2502

If to the TPG
Manager:    TPG Capital, L.P.
301 Commerce Street
Fort Worth, TX 76102
Attention: Clive Bode
Facsimile: (813) 871 4001 with copies to:
(which shall not constitute notice)    Simpson Thacher & Bartlett LLP
425 Lexington Avenue
New York, New York 10017
Attention: David J. Sorkin
                  Andrew W. Smith
Facsimile:(212) 455-2502 If to the GS Manager:    Goldman, Sachs & Co.
85 Broad Street
New York, New York 10004
Attention: Kenneth A. Pontarelli
Facsimile: (212) 357-5505 with copies to:
(which shall not constitute notice)    Fried, Frank, Harris, Shriver & Jacobson
LLP
One New York Plaza
New York, New York 10004
Attention: Robert C. Schwenkel
                  Brian Mangino
Facsimile: (212) 859-4000

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If to Lehman Brothers Inc.:   

Lehman Brothers Inc.

745 Seventh Avenue

New York, New York 10019

Attention: Martin Laguerre

Facsimile: 646-758-4126

with copies to:
(which shall not constitute notice)   

Lehman Brothers Inc.

399 Park Avenue

New York, New York 10022

Attention: Ashvin Rao

Facsimile: 646-834-4769

or to such other address as any of the above shall have designated in writing to
the other above. All such notices and communications shall be deemed to have
been given or made (i) when delivered by hand, (ii) five business days after
being deposited in the mail, postage prepaid or (iii) when telecopied, receipt
acknowledged.

12. This agreement shall continue in effect from year to year unless amended or
terminated by mutual consent. In addition, in connection with the consummation
of a Change of Control (as defined in the Partnership Agreement) or an IPO (as
defined in the Partnership Agreement), the Company may terminate this agreement
by delivery of a written notice of termination to the Managers. In the event of
such a termination by the Company of this agreement, the Company shall pay in
cash to the Managers (i) all unpaid Advisory Fees payable to such Manager
hereunder, all unpaid fees payable to such Manager pursuant to Section 4 of this
agreement and all expenses due under this agreement to such Manager with respect
to periods prior to the termination date, plus (ii) the net present value (using
a discount rate equal to the yield as of such termination date on U.S. Treasury
securities of like maturity based on the times such payments would have been
due) of the Advisory Fees that would have been payable with respect to the
period from the termination date through the twelfth anniversary of the
Effective Date, or, if terminated following the twelfth anniversary of the
Effective Date, through the first anniversary of the Effective Date occurring
after the termination date, any such fees payable pursuant to this clause
(ii) to be apportioned so that (i) the KKR Manager shall receive a portion of
such fees equal to four elevenths of the aggregate amount of such fees (ii) the
TPG Manager shall receive a portion of such fees equal to four elevenths of the
aggregate amount of such fees and (iii) the Goldman Manager shall receive a
portion of such fees equal to three elevenths of the aggregate amount of such
fees.

13. Each party hereto represents and warrants that the execution and delivery of
this agreement by such party has been duly authorized by all necessary action of
such party.

14. If any term or provision of this agreement or the application thereof shall,
in any jurisdiction and to any extent, be invalid and unenforceable, such term
or provision shall be ineffective, as to such jurisdiction, solely to the extent
of such invalidity or unenforceability without rendering invalid or
unenforceable any remaining terms or provisions hereof or affecting the validity
or enforceability of such term or provision in any other jurisdiction. To the
extent permitted by applicable law, the parties hereto waive any provision of
law that renders any term or provision of this agreement invalid or
unenforceable in any respect.

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15. Each party hereto waives all right to trial by jury in any action,
proceeding or counterclaim (whether based upon contract, tort or otherwise)
related to or arising out of our retention pursuant to, or our performance of
the services contemplated by this agreement.

16. It is expressly understood that the foregoing paragraphs 2-6, 9 and 13 - 17,
in their entirety, survive any termination of this agreement.

17. Except in cases of gross negligence or willful misconduct, none of the
Managers, their respective affiliates or any of their respective employees,
officers, directors, partners, consultants, members, stockholders or their
respective affiliates shall have any liability of any kind whatsoever to any
member of the Company Group for any damages, losses or expenses (including,
without limitation, special, punitive, incidental or consequential damages and
interest, penalties and fees and disbursements of attorneys, accountants,
investment bankers and other professional advisors) with respect to the
provision of services hereunder.

18. This letter agreement, the Partnership Agreement and the Indemnification
Agreement contain the complete and entire understanding and agreement between
the Managers and the Company with respect to the subject matter hereof and
supersede all prior and contemporaneous understandings, conditions and
agreements, whether written or oral, express or implied, in respect of the
subject matter hereof. The Company acknowledges and agrees that neither Manager
makes any representations or warranties in connection with this letter agreement
or its provision of services pursuant hereto. The Company agrees that any
acknowledgment or agreement made by the Company in this letter agreement is made
on behalf of the Company and the other members of the Company Group.

19. A Manager may assign the right to receive any fees payable to the Manager
under this Agreement to an affiliate of such Manager or an investment fund
managed by such Manager or a subsidiary thereof upon written notice to the
Company.

20. This agreement may be executed in counterparts, each of which shall be
deemed an original agreement, but all of which together shall constitute one and
the same instrument.

[Remainder of page intentionally left blank.]

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If the foregoing sets forth the understanding between us, please so indicate on
the enclosed signed copy of this letter in the space provided therefor and
return it to us, whereupon this letter shall constitute a binding agreement
among us.

 

Very truly yours, ENERGY FUTURE HOLDINGS CORP. By:   /s/ Jeffrey Liaw   Name:  
Jeffrey Liaw   Title:   Authorized Signatory

 

TEXAS ENERGY FUTURE HOLDINGS
LIMITED PARTNERSHIP By:   Texas Energy Future Capital Holdings
LLC, its general partner By:       Name:     Title:  

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Very truly yours, ENERGY FUTURE HOLDINGS CORP. By:       Name:     Title:  

 

TEXAS ENERGY FUTURE HOLDINGS
LIMITED PARTNERSHIP By:   Texas Energy Future Capital Holdings
LLC, its general partner By:   /s/ Jonathan D. Smidt   Name:   Jonathan D. Smidt
  Title:   Vice-President and Treasurer

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AGREED TO AND ACCEPTED BY: KOHLBERG KRAVIS ROBERTS & CO. L.P. By:   KKR & Co.
L.L.C., its general partner By:   /s/ Marc S. Lipschultz   Name:   Marc S.
Lipschultz   Title:   Member

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TPG CAPITAL, L.P. By:   Tarrant Capital, LLC By:   /s/ Clive Bode   Name:  
Clive Bode   Title:   Vice-President

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GOLDMAN, SACHS & CO. By:   /s/ Kenneth A. Pontarelli   Name:   Kenneth A.
Pontarelli   Title:   Managing Director

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LEHMAN BROTHERS INC. By:   /s/ Ashvin Rao   Name:   Ashvin Rao   Title:   Vice
President