Document:

TXU Corp. Executive Annual Incentive Plan

 Exhibit 10.5 
  
 TXU EXECUTIVE ANNUAL INCENTIVE PLAN 
  
 Plan Document 
  
 Effective as of January 1, 2005 
  

  
 TXU EXECUTIVE ANNUAL
INCENTIVE PLAN 
  
 Article I. Purpose. 
  
 The TXU Executive Annual Incentive Plan (“Plan”) is adopted
effective as of January 1, 2005. The Plan provides for annual cash incentive award opportunities for eligible Participants. The Plan supersedes and replaces the TXU Annual Incentive Plan, which was originally effective May 19, 1995, and was
terminated effective as of December 31, 2004. 
  
 The principal
purposes of the Plan are to attract, motivate and retain key employees; to align the interests of Participants, Participating Employers and Company shareholders by rewarding performance that satisfies established performance goals; to motivate
Participant behaviors that drive successful results at the corporate, business unit and individual levels; and to support collaboration across essential organizational interfaces. 
  
 Article II. Definitions. 
  
 When used in the Plan, the following terms shall have the meanings set forth below: 
  
 (a) “Aggregate Incentive Pool” means the amount equal to the Target Incentive Pool multiplied by the
Weighted Funding Percentage. 
  
 (b) “Allocation
Criteria” means the criteria or methodology established by the SLT to allocate the Aggregate Incentive Pool among the Participating Employers, as described in Article V. 
  
 (c) “Award” means the amount payable to a Participant under this Plan for any Plan Year, as determined in
accordance with the terms of the Plan. 
  
 (d) “Base
Salary” means the annualized base salary designated for the Participant in the applicable payroll records of the Participating Employer, prior to any deferrals, and excluding any overtime pay, bonuses, incentive compensation, expense
reimbursements and fringe benefits of any kind for the applicable Plan Year. 
  
 (e) “Business Unit” means, individually, or “Business Units” means, collectively, the following: (i) the business unit of the Company known as the “Electric Delivery” business
unit; (ii) the business unit of the Company known as the “Energy” business unit; (iii) the business unit of the Company known as the “Power” business unit; and (iv) the business unit of the Company known as the
“Corporate” business unit. 
  
 (f)
“Company” means TXU Corp., and its successors and assigns. 
  
 (g) “Disability” or “Disabled” means disability as determined under the TXU Long-Term Disability Income Plan, or any successor plan covering Participants. 
  
 (h) “Individual Performance Modifier” means individual
Participant performance established by the SLT and used in determining a Participant’s Award. The Individual Performance Modifier may include, without limitation, Company or Business Unit financial or 

  

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operational measures, individual management and other goals, personal job objectives and competencies, the demonstration of team building and support
attributes, and general demeanor and behavior. 
  
 (i)
“O&C Committee” means the Organization and Compensation Committee of the Board of Directors of the Company. 
  
 (j) “Operating Cash Flow” means cash flow from operating activities as defined in SFAS Number 95, Statement of Cash Flows, adjusted for
cash impacts and events classified as “special items” for the Company’s earnings disclosure purposes. 
  
 (k) “Operating Cash Flow Funding Percentage” means a percentage used to calculate the Aggregate Incentive Pool established by the O&C
Committee based on the amount or level of Operating Cash Flow for the particular Plan Year. 
  
 (l) “Operating EPS” means the Company’s net income after taxes, excluding extraordinary items, divided by average common shares outstanding, in either case adjusted by the O&C Committee to
reflect recapitalizations, nonrecurring and unusual transactions or events, stock dividends, and the like. 
  
 (m) “Operating EPS Funding Percentage” means a percentage used to calculate the Aggregate Incentive Pool established by the O&C
Committee based on the amount or level of Operating EPS for the particular Plan Year. 
  
 (n) “Participant” means an individual who is an elected officer of a Participating Employer having a title of vice president or above. 
  
 (o) “Participating Employer” means, the Company and each of the Business Units. Additional Participating
Employers may be added with the approval of the O&C Committee, and participation in the Plan by any such additional Participating Employers will commence as of the effective date designated by the O&C Committee. 
  
 (p) “Plan” means this TXU Executive Annual Incentive Plan.

  
 (q) “Plan Year” means the twelve (12) month
period beginning January 1 and ending December 31. 
  
 (r)
“Retirement” means retirement from active employment with the Company upon attaining at least age 55, completing at least 15 years of accredited service, or otherwise meeting the criteria for retiring under the TXU Retirement Plan,
or a successor plan. 
  
 (s) “SLT” means the
group of executive officers of the Company referred to internally as the Senior Leadership Team. 
  
 (t) “Target Award” means an Award level of an individual Participant, expressed as a percentage of the Participant’s Base Salary,
which is anticipated based on target performance of Company, Business Unit and individual Participant performance. The Target Award shall be used in calculating an individual’s actual Award for a Plan year. 
  

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 (u) “Target Incentive Pool” means the amount equal to the aggregate of the Target Awards
for all Participants, or a selected group of Participants, as the context may require. 
  
 (v) “Target Operating Cash Flow” means the target amount of Operating Cash Flow established by the O&C Committee and used in determining the Aggregate Incentive Pool. 
  
 (w) “Target Operating EPS” means the target amount of
Operating EPS established by the O&C Committee and used in determining the Aggregate Incentive Pool. 
  
 (x) “Threshold Operating Cash Flow” means an amount of Operating Cash Flow established by the O&C Committee, which is necessary to
fund any portion of the Aggregate Incentive Pool. 
  
 (y)
“Threshold Operating EPS” means an amount of Operating Cash Flow established by the O&C Committee, which is necessary to fund any portion of the Aggregate Incentive Pool attributable to Operating EPS. 
  
 (z) “Weighted Funding Percentage” means the percentage that
is the average of the Operating Cash Flow Funding Percentage and the Operating EPS Funding Percentage. 
  
 Article III. Eligibility and Participation. 
  
 All individuals who, as of the first day of a Plan Year, meet the definition of a Participant hereunder, shall be eligible to participate in this Plan for such Plan Year. Awards, if any, for individuals who become
Participants during the Plan Year or whose participation in this Plan is terminated during the Plan Year, shall be determined under, and in accordance with, Article VIII hereof. Participation in this Plan for any Plan Year shall not entitle an
individual to future participation. 
  
 Article IV. Establishment of
Performance Goals. 
  
 For each Plan Year, the O&C
Committee, will establish (i) the Threshold Operating EPS, (ii) the Threshold Operating Cash Flow, (iii) the Target Award Level for each Participant, and (iv) the Target Incentive Pool Amount. For each Plan Year, the SLT, with input from the Chief
Executive Officer of the applicable Business Unit, will determine the Target Award Level for each Participant, the Target Incentive Pool Amount, the Allocation Criteria and the Individual Performance Modifier. Such determinations by the O&C
Committee and the SLT shall be made at such times and shall be based on such criteria as the O&C Committee and the SLT shall determine, respectively, in their sole discretion. The O&C Committee and the SLT shall each have full authority and
discretion, for any particular Plan Year, to modify any of their respective determinations hereunder, including determinations which affect the calculation or amount of Awards, in order to take into consideration extraordinary events affecting the
financial results of the Company or a Business Unit. Once determined, or modified, such determinations shall be communicated to Participants in such form and manner as the SLT determines to be appropriate. 
  

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 Article V. Establishment of Awards. 
  
 A. Determining Performance Results and Aggregate Incentive Pool. 
  
 After the end of the Plan Year, the O&C Committee shall certify the
amount or level of the Company’s Operating Cash Flow and Operating EPS, and determine whether the Threshold level of each such measure have been attained for such Plan Year. The O&C Committee shall also determine the Operating Cash Flow
funding Percentage, the Operating EPS Funding Percentage, the Weighted Funding Percentage, and the resulting Aggregate Incentive Pool for the Plan Year. 
  
 B. Allocation of Aggregate Incentive Pool Among Participating Employers. 
  

Upon the O&C Committee’s determination of the Aggregate Incentive Pool under Section V.A. above, the SLT shall allocate the Aggregate
Incentive Pool among the Participating Employers using the Allocation Criteria. In making such allocation, the SLT may take into consideration such factors as it shall determine to be appropriate, including without limitation, the financial and
operational performance of each Business Unit, the impact of Business Unit performance on overall corporate goals and results, extraordinary circumstances, and general business conditions. The allocation of the Aggregate Annual Incentive Pool among
the Participating Employers shall be made by the SLT in its sole discretion, and there is no requirement that such allocation be made proportionally among the Business Units. However, in no case may the total amount allocated among the Participating
Employers exceed the Aggregate Incentive Pool. 
  
 Article VI. Application of
Individual Performance Modifier and Determination of Individual Participant Awards. 
  
 A. Individual Participant Awards. 
  
 The SLT shall determine each Participant’s Award for a Plan Year by: (i) multiplying the Participant’s Target Award by the ratio of (a) the portion of the Aggregate Incentive Pool allocated to the
Participant’s Participating Employer after application of the Allocation Criteria, to (b) the aggregate Target Incentive Pool for all Participant’s of the Participating Employer; and (ii) multiplying such amount by the applicable
Individual Performance Modifier determined in accordance with Section VII.B. below. 
  
 B. Application of Individual Performance Modifier. 
  
 (i) As described in Section VI.A. above, the amount determined by applying the formula set forth in Section VI.A shall be adjusted by applying the Individual Performance Modifier for each Participant in the sole discretion of the SLT.

  

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 (ii) To determine Participant’s Individual Performance Modifier, the SLT shall assign a performance
rating to the Participant based on the Participant’s performance against his/her performance level in accordance with the following table: 
  

					
	 Performance Rating

	  	Rating

	  	 Individual Performance
 Modifier Range

	 Outstanding
	  	5	  	150% - 200%
	 Exceeds
	  	4	  	110% - 150%
	 Meets
	  	3	  	75% - 110%
	 Inconsistent
	  	2	  	25% -   75%
	 Unacceptable
	  	1	  	0%          
	 Too new to rate
	  	0	  	50% - 110%

  
 The Participant’s
Individual Performance Modifier shall be established by the SLT in its sole discretion within the applicable range set forth in the above table. In no event may the aggregate of the Awards determined to be payable to all Participants of a
Participating Employer, exceed the portion of the Aggregate Incentive Pool allocated to the Participating Employer; and in no event may the aggregate of all Awards determined to be payable to all Participants exceed the Aggregate Incentive Pool.

  
 Article VII. Payment of Awards. 
  
 A. Time and Manner of Award Payments. All Awards will be paid in cash
to Participants by March 15 of the year following the applicable Plan Year, subject to applicable tax withholding requirements. 
  
 B. Maximum Awards to Covered Employees. Notwithstanding any provision of this Plan, the maximum Award that may be paid to any Participant who has
been determined under the provisions of the TXU 2005 Omnibus Incentive Plan (“Omnibus Plan”) to be a Covered Employee for such Plan Year, shall not exceed the maximum annual incentive award that has been established for such Participant
for such Plan Year under the Omnibus Plan. 
  
 Article VIII. Termination of
Employment and Partial Awards. 
  
 Participation in the Plan
shall cease immediately upon a Participant’s resignation or termination of employment for any reason (with or without cause), or upon the Participant’s death, Disability or Retirement. In such event, the Participant may be eligible for a
partial award for such Plan Year in accordance with and subject to the provisions of this Article VIII: 
  
 A. Resignation or Termination. 
  
 If a Participant resigns or his/her employment with a Participating Employer is terminated (with or without cause) prior to the payment of an Award for
reasons other than death, Disability, Retirement, or transfer to an affiliate of the Company, such Participant shall forfeit any right to receive such Award. 
  

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 B. Death, Disability or Retirement. 
  
 If a Participant dies, becomes Disabled or Retires during a Plan Year after
having attained at least three (3) full months of participation in the Plan during such Plan Year, the Participant, or the Participant’s beneficiary in the case of the Participant’s death, may, in the sole discretion of the SLT, be
entitled to receive a partial Award, prorated for the number of months that the individual was a Participant hereunder during the Plan Year. For purposes of applying this proration, a month shall include each month during which the individual was
employed by a Participating Employer through at least the 15th day of such month prior to the individual’s
death, Disability or Retirement. Any such Award shall be paid at the time and in the form that all other Awards are paid for such Plan Year. The decisions of the SLT with respect to such Awards shall be final and binding on all parties. For purposes
of this provision, a Participant’s beneficiary shall be his/her surviving spouse or, if he/she has no surviving spouse, his/her estate. 
  
 C. Transfers. 
  
 If a Participant (i) transfers from a Participating Employer to an affiliate of the Company after having attained at least three (3) full months of
participation in the Plan during the Plan Year, and (ii) continues to be employed by an affiliate of the Company through the remainder of the Plan Year, such individual shall, based on criteria determined by the SLT in its sole discretion, be
entitled to receive a partial Award hereunder, prorated on the basis of the number of months such individual was employed by the Participating Employer during the Plan Year. For purposes of applying this proration, a Participant shall be deemed to
have been employed by the Participating Employer for a month if such Participant was employed by the Participating Employer on the 15th day of such month. Any such Award shall be paid at the time and in the form that all other Awards are paid for such Plan Year. The decisions of the SLT with respect to such Awards shall be final and binding on all parties.

  
 Article IX. Administrative Provisions. 
  
 A. Administration. The Plan shall be administered and interpreted by the
Participating Employers through the individuals who have been provided authority hereunder to carry out the administration of this Plan. The O&C Committee and its members, the SLT and its members, and any other individual to whom the O&C
and/or SLT has delegated their responsibilities regarding the administration of this Plan, shall have full authority, discretion and power necessary or desirable to administer and interpret this Plan. Without in any way limiting the foregoing, all
such individuals shall have complete authority, discretion and power to: (i) determine the Participants for each Plan Year; (ii) determine the Individual Performance Modifier applicable to each Participant; (iii) evaluate and determine the
performance of Participants; (iv) determine the amount of the Award for each Participant; (v) interpret the provisions of this Plan and any other documentation used in connection with this Plan, including documentation specifying individual
Performance Goals, Award opportunities and the like; (vi) establish and interpret rules and procedures (written or by practice) for the administration of the Plan; and (vii) make all other determinations and take all other actions necessary or
desirable for the administration or interpretation of this Plan. All actions, decisions and interpretations of such individuals shall be final, conclusive and binding on all parties. 
  

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 B. No Right to Continued Employment. Nothing in this Plan shall be deemed by implication, action or otherwise to
constitute a contract of employment, or otherwise to provide a Participant with any right of continued employment or impose any limitation on any right of a Participating Employer to terminate a Participant’s employment at any time. 

 
 C. No Assignment. A Participant or Participant’s beneficiary shall have no
right to anticipate, alienate, sell, transfer, assign, pledge or encumber any right to receive any incentive made under the Plan, nor will any Participant or Participant’s beneficiary have any lien on any assets of any Participating Employer,
or any affiliate thereof, by reason of any award made under the Plan. 
  
 D.
Withholding. The Participating Employers shall have the right to deduct or withhold, or require a Participant to remit to the applicable Participating Employer, any taxes required by law to be withheld from Awards made under this Plan.

  
 E. Amendment of Plan. The Plan may be amended, suspended or terminated
at any time and from time to time, by action of the O&C Committee, provided no such amendment, suspension or termination adversely affects any Participant’s right to receive any amount to which they have become entitled under the terms of
this Plan prior to such amendment, suspension or termination. In order to be effective, any amendment of this Plan or any Award must be in writing. No oral statement, representation or the like shall have the effect of amending or modifying this
Plan or any Award, or otherwise have any binding effect on the Company, the O&C Committee, the SLT, or any individual who has been delegated authority by the O&C Committee or the SLT to administer this Plan. 
  
 F. No Obligation to Continue Plan. The adoption of the Plan does not imply any
commitment to continue to maintain the Plan, or any modified version of the Plan, or any other plan for incentive compensation for any succeeding year. 
  
 G. Governing Law. The Plan shall be construed in accordance with, and governed by, the laws of the State of Texas. Any disputes arising under this Plan and any
action to enforce any provisions hereof, shall be maintained exclusively in the appropriate courts of Dallas County, Texas. 
  
 H. Severability. In case any provision of the Plan shall be held illegal or void, such illegality or invalidity shall not affect the remaining provisions of this
Plan, but shall be fully severable, and the Plan shall be construed and enforced as if said illegal or invalid provisions had never been inserted herein. 
  
 I. Limitation of Liability. Except for their own gross negligence or willful misconduct regarding the performance of the duties specifically assigned to them
under, or their willful breach of the terms of this Plan, the Participating Employer, the O&C Committee and its members, the SLT and its members, and any other entity or individual administering any aspect of this Plan shall be held harmless by
the Participants and their respective representatives, heirs, successors, and assigns, against liability or losses occurring by reason of any act or omission under the Plan. 
  

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 Executed effective as of the 1st day of January, 2005. 
  

			
	TXU Corp.
		
	By:	 	 
	 Name:
	 	 
	 Title:
	 	 

  

 8TXU Corp. Executive Change in Control Policy

 Exhibit 10.6 
  
 TXU Corp. 
  
 Executive Change in Control Policy 
  
 Effective May 20, 2005 
  
 1. Policy Purpose. The purpose of the TXU Corp. Change in Control Policy (“Policy”) is to establish uniform provisions for the payment of
transition benefits to eligible executives of TXU Corp. (“Company”) and its Subsidiaries (as defined herein), in the event of their termination of employment without Cause (as defined herein) from the Company or a successor within
twenty-four (24) months following a Change in Control (as defined herein), all as set forth herein. 
  
 2. Eligible Executives. Employees who are eligible for the benefits provided for in this Policy (“Eligible Executives”) are employees of the Company and its Subsidiaries who: (a) immediately
prior to the effective time of a Change in Control, are designated by the Company as members of the Company’s Leadership Team or Senior Leadership Team; and (b) are not parties to an employment or other agreement with the Company or any of its
Subsidiaries, pursuant to which the employee may become eligible for benefits under certain circumstances, described in such agreement, following a change in control of the Company. The Senior Leadership Team is comprised of the direct reports to
the Chief Executive Officer of the Company, as determined in accordance with the Company’s internal organizational structure. Generally, the Leadership Team is comprised of elected officers of the Company and its Subsidiaries having a title of
Vice President or above; provided that the Company may determine the specific members of the Leadership Team from time to time, and at any particular time. However, the Company shall, effective immediately prior to the effective time of a Change in
Control determine and communicate the list of Eligible Executives, and such determination shall be final and binding on all parties. 
  
 Notwithstanding any other provision of this Policy, absent a Change in Control, severance benefits for Eligible Executives will be provided under the
terms and conditions of the TXU Executive Severance Plan and not under this Policy. In this connection, it is the intent of the Company that Eligible Executives not be eligible for duplicate severance benefits under multiple plans. 
  
 3. Available Benefits. In the event that: (i) an Eligible Executive is
terminated without Cause (as defined herein) by the Company or any of its Subsidiaries or by a Surviving Corporation or a Parent Corporation (each, as defined herein) (or any of their respective subsidiaries) without Cause (as defined herein); or
(ii) an Eligible Executive resigns with Good Reason (as defined herein) from his/her employment with the Company, a Surviving Corporation, a Parent Corporation or any of their respective subsidiaries, in either case within twenty-four (24) months
following a Change in Control, the Eligible Executive will, subject to his/her timely execution of the Agreement and Release provided for in Section 4 hereof, be entitled to receive the following benefits: 
  
 a. Cash Severance Payment. Eligible Executives will receive a one-time
lump sum cash severance payment in an amount equal to a multiple of the aggregate of: (i) the Eligible Executive’s annualized base salary in effect immediately before the termination or resignation, or the Executive’s annualized base
salary in effect as of the effective date of the Change in Control, 

  

 
whichever is greater, plus (ii) the Eligible Executive’s target annual incentive award for the year of the termination or resignation. The multiple will
be determined as set forth in the following chart, and will be based on the Eligible Executive’s position with the Company immediately prior to the termination or resignation, or the Eligible Executive’s position immediately prior to the
Change in Control, whichever position is more senior: 
  

			
	 Position

	  	 Multiple of Base Salary
 +
 Target Annual Incentive

	 Chief Executive Officer
	  	3x
		
	 Member of Senior Leadership Team
	  	2x
		
	 Member of Leadership Team
	  	1x

  
 The severance payment
will be made as soon as reasonably practical following the Eligible Executive’s timely execution of the Agreement and Release; provided that, if the Eligible Executive is a “key employee” within the meaning of Section 409A of the
Internal Revenue Code of 1986, as amended, the severance payment will be made as soon as reasonably practical following the expiration of six months from the date of Eligible Executive’s termination (subject to the Eligible Executive having
timely executed the Agreement and Release). The severance payment will be subject to all applicable tax withholdings and will also be reduced by the amount of any obligations which the Eligible Executive owes to the Company. Such obligations may
include, but not be limited to, some or all of the following: 
  

	 	(1)	The entire balance, if any, owed under the Company’s appliance purchase plan, energy conservation program or employee relocation plan; and 

  

	 	(2)	Any amounts owed on Company issued or sponsored travel or credit cards or any other expenses or payments for which the Company should be reimbursed. 

  
 b. Continued Eligibility for Prorated LTIP Awards. Notwithstanding any
provision of the LTIP or of any award agreement entered into thereunder, outstanding and unvested long-term incentive awards previously made to an Eligible Executive will not forfeit as a result of the Eligible Executive’s termination or
resignation satisfying the requirements of this Policy. Following the expiration of the relevant performance or restriction period of each such award, the Eligible Executive will receive a distribution in accordance with its terms, but the amount of
such distribution will be prorated for the period of his/her employment during the relevant performance or restriction period prior to the Eligible Executive’s termination or resignation (e.g., if the Eligible Executive is terminated on the
one-year anniversary date of a three-year LTIP award performance period, the Eligible Executive will, following the expiration of the performance period, receive a distribution equal to one-third of the award value). In the event of a termination or
resignation satisfying the requirements of this Policy, each then outstanding and unvested long-term incentive award previously made to an Eligible Executive under the LTIP shall be amended to incorporate the provisions of this paragraph.

  
 c. Health Care Benefits. Eligible Executives will be
eligible for continued health care coverage under the Company’s health care plans for the period set forth in the following chart. The required contribution by the Eligible Executive for such continued coverage will be 

  

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the applicable employee rate unless and until the Eligible Executive becomes eligible for coverage for a particular type of benefit through employment with
another employer, at which time the required contribution for continuing such benefit coverage hereunder shall be the applicable COBRA rate for such benefit. The period of continued health care coverage provided for herein shall run concurrently
with the Eligible Executive’s available COBRA coverage period. 
  

			
	 Position

	  	Period of Continued Health
Care Coverage

	 Chief Executive Officer
	  	3 Years
		
	 Member of Senior Leadership Team
	  	2 Years
		
	 Member of Leadership Team
	  	1 Year

  
 d. Outplacement
Assistance. Eligible Executives will be eligible for outplacement services at the Company’s expense performed by an independent executive outplacement consulting firm selected by the Company, for up to the period set forth in the following
chart: 
  

			
	 Position

	  	Period of Outplacement Services

	 Chief Executive Officer
	  	2 Years
		
	 Member of Senior Leadership Team
	  	18 Months
		
	 Member of Leadership Team
	  	1 Year

  
 e. Final Pay Check
and Vacation. Eligible Executives will receive their final paycheck, as well as pay for vacation, if any, pursuant to the Company’s standard payroll and/or vacation policy. 
  
 f. Other Benefit Plans. Eligible Executives will receive any vested, accrued benefits to which they have become
entitled under any of the Company’s employee benefit plans covering the Eligible Executive in accordance with and subject to the respective provisions of such employee benefit plans as they may be amended from time to time. 
  
 g. Tax Gross-up. If any payment, distribution or provision of a
benefit hereunder (a “Payment”) would be subject to an excise tax pursuant to Sections 280G and 4999 of the Internal Revenue Code of 1986, as amended (“Code”), or any interest or penalties with respect to such excise or other
additional tax (such excise tax, together with any such interest or penalties, are hereinafter collectively referred to as the “Excise Tax”), the Company, Parent Corporation, Surviving Corporation or any Subsidiary, as applicable (for
purposes of this Section, all such entities are referred to as the “Surviving Company”) shall pay to the Eligible Executive an additional payment (“Gross-up Payment”) in an amount such that, after payment by the Eligible
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, the Eligible Executive retains an amount of the Gross-up Payment equal to
the Excise Tax imposed upon the Payments. Notwithstanding the foregoing, however, if the aggregate value of the Payments (as determined in accordance with Code 

  

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Section 280G) is less than 110% of the product (such product to be referred to herein as the “Excise Tax Threshold”) of three times the Eligible
Executive’s “base amount” (as such term is defined in Code Section 280G), then the Eligible Executive shall not be entitled to a Gross-up Payment and the Payments shall be reduced so that their aggregate value is equal to $1.00 less
than the Excise Tax Threshold. The Surviving Company will coordinate with the Eligible Executive to make an initial determination as to whether a Gross-up Payment is required and the amount of any such Gross-up Payment. The Eligible Executive shall
notify the Surviving Company in writing of any claim by the Internal Revenue Service which, if successful, would require a Gross-up Payment (or a Gross-up Payment in excess of that initially determined). The Surviving Company shall notify the
Eligible Executive in writing at least ten (10) business days prior to the due date of any response required with respect to such claim if it plans to contest the claim. If the Surviving Company decides to contest such claim, the Eligible Executive
shall cooperate with the Surviving Company in such action; provided, however, the Surviving Company shall bear and pay all costs and expenses (including additional interest and penalties) incurred in connection with such action and shall indemnify
and hold the Eligible 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 the Surviving Company’s action. If, as a result of the Surviving
Company’s action with respect to any such claim, the Eligible Executive receives a refund of any amount paid by the Surviving Company with respect to such claim, the Eligible Executive shall promptly pay such refund to the Surviving Company. If
the Surviving Company fails to timely notify the Eligible Executive whether it will contest such claim or the Surviving Company determines not to contest such claim, then the Surviving Company shall immediately pay to the Eligible Executive the
portion of such claim, if any, which it has not previously paid to the Eligible Executive. 
  
 4. Agreement and Release. Notwithstanding any other provisions of this Policy, any Eligible Executive’s eligibility for any of the benefits described herein will be subject to, and conditioned upon,
the Eligible Executive executing an Agreement and Release in the form provided by the Company. 
  
 5. Definition of Cause. For purposes of this Policy, a termination for “Cause” shall mean any one or more of the following: (a) an Eligible Executive’s breach of fiduciary duty to the
Company or its shareholders; (b) an Eligible Executive’s gross negligence; (c) an Eligible Executive’s misconduct resulting in material economic harm to the Company; (d) an Eligible Executive’s indictment or plea of nolo contendere or
guilty for a felony or other crime involving fraud theft, embezzlement or moral turpitude; (e) an Eligible Executive’s misappropriation of a material business opportunity of the Company; (f) an Eligible Executive’s breach of the
Company’s Code of Conduct or an express employment policy or rule of the Company governing employee conduct; or (g) an Eligible Executive’s continued failure to perform the tasks, duties and responsibilities he/she is called upon to
perform from time to time, as determined in the reasonable business judgment of the Company. For purposes of this Section 5, the term “Company” shall be deemed to include the Company, as well as a Surviving Corporation, a Parent
Corporation or any Subsidiary thereof. 
  
 6. Definition of Good Reason.
For purposes of this Policy, the term “Good Reason” shall mean any one or more of the following events or actions which are taken without the express, voluntary consent of the Eligible Executive: (a) a reduction in the Eligible
Executive’s base salary, other than a broad-based reduction of base salaries of all similarly situated executives of the Surviving Corporation, Parent Corporation or subsidiary, as applicable, unless such broad- 

  

 4 

 
based reduction only applies to former executives of TXU; or (b) a material reduction in the aggregate level or value of benefits for which the Eligible
Executive is eligible, immediately prior to the Change in Control, other than a broad-based reduction applicable on a comparable basis to all similarly situated executives. 
  
 7. Definition of Change in Control. For purposes of this Policy, the term “Change in Control” shall mean the
occurrence of any one or more of the following events: 
  
 (i) individuals who, on May 20, 2005, constitute the Board of Directors (the “Board”) of the Company (the “Incumbent Directors”) cease for any reason to constitute at least a majority of the Board, provided that any
person becoming a director subsequent to May 20, 2005 whose election or nomination for election was approved by a vote of at least two-thirds of the Incumbent Directors then on the 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 written objection to such nomination) shall be an Incumbent Director; provided, however, that no individual initially elected or nominated as a
director of the Company as a result of an actual or threatened election contest with respect to directors or as a result of any other actual or threatened solicitation of proxies or consents by or on behalf of any person other than the Board shall
be deemed to be an Incumbent Director; 
  
 (ii)
any “person” (as such term is defined in Section 3(a)(9) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and as used in Sections 13(d)(3) and 14(d)(2) of the Exchange Act) is or becomes a “beneficial
owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing 25% or more of the combined voting power of the Company’s then outstanding securities eligible to vote for the
election of the Board (the “Company Voting Securities”); provided, however, that the event described in this paragraph (ii) shall not be deemed to be a Change in Control by virtue of any of the following acquisitions: (A) by
the Company or any entity a majority of the voting securities or other voting interests of which are owned, directly or indirectly, by the Company (“Subsidiary”), (B) by any employee benefit plan (or related trust) sponsored or maintained
by the Company or any Subsidiary, (C) by any underwriter temporarily holding securities pursuant to an offering of such securities, (D) pursuant to a Non-Qualifying Transaction (as defined in paragraph (iii) below), (E) with respect to any Eligible
Executive, pursuant to any acquisition by such Eligible Executive or any group of persons including such Eligible Executive (or any entity controlled by such Eligible Executive or controlled by any group of persons including such Eligible
Executive); or (F) a transaction (other than one described in paragraph (iii) below) in which Company Voting Securities are acquired from the Company, if a majority of the Incumbent Directors approve a resolution providing expressly that the
acquisition pursuant to this clause (F) does not constitute a Change in Control under this paragraph (ii); 
  
 (iii) the consummation of a merger, consolidation, statutory share exchange or similar form of corporate transaction involving the Company
or any of its Subsidiaries that requires the approval of the Company’s shareholders other than approval required solely by Article XI of the Company’s articles of incorporation, whether for such 

  

 5 

 
transaction or the issuance of securities in the transaction (a “Business Combination”), unless immediately following such Business Combination:
(A) more than 50% of the total voting power of (x) the corporation or other entity resulting from such Business Combination (the “Surviving Corporation”), or (y) if applicable, the ultimate parent corporation or other entity that, directly
or indirectly, has beneficial ownership of at least 95% of the voting securities eligible to elect directors (or persons performing similar functions) of the Surviving Corporation (the “Parent Corporation”), is represented by Company
Voting Securities that were outstanding immediately prior to such Business Combination (or, if applicable, is represented by voting securities into which such Company Voting Securities were converted or for which such Company Voting Securities were
exchanged pursuant to such Business Combination), and such voting power of the Parent Corporation (or, if there is no Parent Corporation, the Surviving Corporation) among the holders thereof is held in substantially the same proportion as the voting
power of such Company Voting Securities held by the holders thereof immediately prior to the Business Combination, (B) no person (other than any employee benefit plan (or related trust) sponsored or maintained by the Surviving Corporation or the
Parent Corporation, as the case may be, or any Subsidiary thereof), is or becomes the beneficial owner, directly or indirectly, of 25% or more of the total voting power of the outstanding voting securities eligible to elect directors (or persons
performing similar functions) of the Parent Corporation (or, if there is no Parent Corporation, the Surviving Corporation) and (C) at least a majority of the members of the board of directors (or similar governing body) of the Parent Corporation
(or, if there is no Parent Corporation, the Surviving Corporation) following the consummation of the Business Combination were Incumbent Directors at the time of the Board’s approval of the execution of the initial agreement providing for such
Business Combination or, if any director was elected after such time but prior to the consummation of such Business Combination, such director was elected to fill a vacancy on the Board created in the ordinary course and qualifies as an Incumbent
Director (any Business Combination which satisfies all of the criteria specified in (A), (B) and (C) above shall be deemed to be a “Non-Qualifying Transaction”); or 
  
 (iv) the consummation of a complete liquidation or dissolution of the Company required to be approved by the
Company’s shareholders or a sale of all or substantially all of the assets of the Company and its Subsidiaries, considered as a whole. 
  
 Notwithstanding the foregoing, a Change in Control of the Company shall not be deemed to occur solely because any person acquires beneficial ownership of more than 25% of
the Company Voting Securities as a result of the acquisition of Company Voting Securities by the Company which reduces the number of Company Voting Securities outstanding; provided, that if after such acquisition by the Company such
person becomes the beneficial owner of additional Company Voting Securities that increases the percentage of outstanding Company Voting Securities beneficially owned by such person, a Change in Control of the Company shall then occur. 
  
 8. Successor Bound by Policy. It is the intent of the Company that this Policy
will be assumed by, and be binding upon, a successor employer of Eligible Executive following a Change in Control. The Company intends to seek the express assumption of this Policy by any 

  

 6 

 
such successor employer. If a successor employer fails or refuses to expressly assume this Policy prior to the effective date of a Change in Control, the
Eligible Executives will, effective immediately prior to the effective time of a Change in Control, be eligible for the benefits provided for in this Policy. 
  
 9. Amendments. This Policy may be amended at any time by the Board of Directors of the Company (“Board”) or a duly authorized committee thereof;
provided, however, that no such amendment that materially adversely affects the benefits available to Eligible Executives may be made at a time that the Company is in the process of negotiating, with the approval of the Board or a duly authorized
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. 
  

 7

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