Employment Agreement - C. John Wilder
First Amendment to Employment Agreement
Executive Change in Control Policy
 
 
                              EMPLOYMENT AGREEMENT
 
         THIS EMPLOYMENT AGREEMENT ("Agreement") is made by and between TXU
CORP. ("Company"), and C. John Wilder ("Executive"), and is dated as of February
21, 2004. The Agreement is designed to strengthen the link between Executive's
compensation and long-term shareholder value.
 
                                   WITNESSETH:
 
         WHEREAS, Company desires to employ Executive and Executive desires to
accept such employment commencing on the Effective Date (as defined below), in
each case on the terms and conditions set forth herein;
 
         NOW, THEREFORE, 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 February 23, 2004 (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.
 
        1.2 Positions. From and after the Effective Date, Company shall employ
            ---------
Executive in the positions of President and Chief Executive Officer of Company
and shall, for the full term of Executive's employment hereunder, cause
Executive to be nominated for election as a director of Company and use its best
efforts to secure such election. Executive shall be appointed as a director of
Company at the regularly scheduled Board of Directors meeting coinciding with or
next following the Effective Date. In addition, effective as of the Board of
Directors meeting immediately following the Company's 2005 annual meeting of
shareholders, Company shall use its best efforts to cause the Board to elect
Executive as Chairman of the Board of Directors.
 
        1.3 Duties and Services. Executive agrees to serve in the positions
            -------------------
referred to in paragraph 1.2 and, if appointed or elected, as a director of
Company and/or Chairman of the Board of Directors, to perform diligently and to
the best of his abilities the duties and services appertaining to such offices
as set forth in the Bylaws of Company in effect on the Effective Date, as well
as such additional duties and services appropriate to such offices which the
parties mutually may agree upon from time to time. During the Term (as defined
below)Executive shall report directly to the Board of Directors.
 
Article 2:  TERM AND TERMINATION OF EMPLOYMENT
            ----------------------------------
 
        2.1 Term. Unless sooner terminated pursuant to other provisions hereof,
Company agrees to employ Executive for a five-year period beginning on the
Effective Date ("Term"), provided that the Term shall be automatically renewed
for successive one-year periods following the expiration of the five-year period
described above, unless either party provides the other party with notice (at
least one year before the expiration of the applicable 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.
 
<PAGE>
 
 
Notwithstanding anything to the contrary herein, (i) in the event of a Change
in Control (as defined below) when there is less than two (2)years 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) 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. Notwithstanding the provisions of
paragraph 2.1, Company, acting pursuant to an express resolution of the Board of
Directors, shall have the right to terminate Executive's employment under this
Agreement at any time for any of the following reasons:
 
        (i)      upon Executive's death;
 
        (ii)     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");
 
        (iii)    if, in carrying out his duties hereunder, Executive engages in
    conduct that constitutes (1) a breach of his fiduciary duty to Company or
    its shareholders, (II) gross neglect or (III) gross misconduct resulting,
    in any case, in material economic harm to Company, or upon the
    conviction of Executive for a felony or other crime involving moral
    turpitude; or
 
        (iv)     for any other reason whatsoever, in the sole discretion of the
    Board of Directors.
 
    For purposes of this Agreement, a termination by Company under clause
(iii) above shall constitute a termination by Company for "Cause."
Notwithstanding the foregoing, Company may not terminate Executive's employment
for Cause unless (i) a determination that Cause exists is made and approved by a
majority of Company's Board of Directors, (ii) Executive is given at least
thirty (30) days written notice of the Board of Directors meeting called to make
such determination, and (iii) Executive and his legal counsel are given the
opportunity to address such meeting.
 
     2.3      Executive's  Right to  Terminate.  Notwithstanding  the
              --------------------------------
provisions  of  paragraph  2.1, Executive  shall have the right to terminate his
employment  under this Agreement at any time for any of the following reasons:
 
                                       2
<PAGE>
 
          (i)   the assignment to Executive by the Board of Directors of duties
     materially inconsistent with the duties associated with the positions
     described in paragraph 1.2 as such duties are constituted as of the
     Effective Date, or the failure of Company or the Board of Directors to
     elect or reelect Executive to any of the positions described in
     paragraph 1.2 or the removal of him from any such positions;
 
          (ii)  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, including a change in the reporting structure so
     that Executive reports to someone other than the Board of Directors;
 
          (iii) the occurrence of acts or conduct on the part of Company, its
     Board of Directors, or its officers, representatives or stockholders
     which prevent Executive from, or substantively hinder Executive in,
     performing his duties or responsibilities pursuant to this Agreement;
 
          (iv) Company requiring Executive to be permanently based anywhere
     outside of Dallas County or Tarrant County, Texas;
 
          (v)  the taking of any action by Company that would materially
     adversely affect the corporate amenities enjoyed by Executive on the
     Effective Date;
 
          (vi) a material breach by Company of any provision of this Agreement
     which, if correctable, remains uncorrected for 30 days following
     written notice of such breach by Executive to Company, it being agreed
     that any reduction in Executive's then current annual base salary, any
     reduction in Executive's Target Bonus (as defined below) or any failure
     to make the annual restricted stock awards provided for in Section 3.6,
     shall constitute a material breach by Company of this Agreement;
 
          (vii)  failure to appoint Executive as a director at or before the
     regularly scheduled Board of Directors meeting coinciding with or next
     following the Effective Date;
 
          (viii) failure to elect Executive as Chairman of the Board of
     Directors at or before the regularly scheduled Board or Directors meeting
     immediately following the Company's 2005 annual meeting of
     shareholders;
 
          (ix) within six months after a Change in Control, for any reason
     in the sole discretion of Executive; or
 
          (x) before a Change in Control or after the sixth month after a Change
     in Control, for any other reason whatsoever, in the sole discretion of
     Executive.
 
For purposes of this Agreement, (I) a termination of employment by
Executive under any of clauses (i) through (viii), and a termination of
employment by Executive under clause (ix) where the Change in Control
occurs after the fourth annual anniversary of the Effective Date, shall
constitute a termination of employment by Executive for "Good Reason," (II)
a termination of employment by Executive under clause (ix) where the Change
in Control occurs on or before
                                        3
<PAGE>
 
the fourth annual anniversary of the Effective Date shall constitute
a termination of employment by Executive following a Change in Control as
described in Section 4.5 herein, and (III) a termination of employment by
Executive under clause (x) 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 hereunder at any time prior to expiration of the term of
employment as provided in paragraph 2.1, 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.
 
      2.5 Liability for Damages. Notwithstanding anything herein to the
          ---------------------
contrary, Company agrees not to pursue any claim against Executive resulting
from Executive's termination of this Agreement prior to the expiration of the
Term.
 
Article 3:        COMPENSATION AND BENEFITS
                  -------------------------
 
      3.1 Base Salary. During the Term, Executive shall receive an annual base
          -----------
salary equal to $1,250,000, or such higher amounts as determined in the sole
discretion of the Board. 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.  On the  Effective  Date,  Company  shall
          -----------------------
make a lump-sum  cash payment to Executive in the amount of $1,000,000.
 
 
      3.3 Annual Bonus. In addition to the 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 ("AIP"). For purposes of
this Agreement, Executive's "Target Bonus" shall be 200% of Executive's
annualized base salary. It is expected that the AIP will be administered such
that there is an equal probability of Executive's Bonus exceeding the Target
Bonus as there is of Executive's Bonus being less than the Target Bonus. To the
extent the limitation on awards provided for under the AIP would limit the
amount of the Bonus contemplated herein, any amount over and above such AIP
limit will be paid by Company contemporaneously with the payment under the AIP.
Executive's Bonus for calendar year 2004 shall be no less than his full Target
Bonus.
 
     3.4 Special Long-Term Incentive Compensation. The Company will, as soon as
         ----------------------------------------
reasonably practical and in any event within thirty (30) days following the
Effective Date, contribute 500,000 shares of the Company's common stock ("Trust
Shares") to a trust to be established by the Company ("Trust"). Executive's
right to receive such Trust Shares shall be nonforfeitable at all times. The
trustee of the Trust shall be an independent trustee mutually agreeable to
Executive and Company. The sole beneficiary of the Trust shall be Executive. The
sole purpose of the Trust shall be to hold the Trust Shares and distribute them
to Executive in accordance with the terms of the Trust, which shall be
consistent with the provisions of this Section.
 
                                       4
<PAGE>
 
         Dividends on the Trust Shares, while held in the Trust, will be
reinvested in Company common stock and maintained in the Trust, and will be
deemed to constitute Trust Shares. Prior to distribution of the Trust Shares in
accordance with the provisions of this Section, the trustee of the Trust shall
have and exercise all incidents of ownership with respect to the Trust Shares,
and Executive shall have no right or interest in the Trust Shares other than the
right to receive the Trust Shares in accordance with, and subject to, the
provisions of this Section.
 
         Unless Executive has made an election to defer distribution of such
Trust Shares, (1) upon the third annual anniversary of the Effective Date the
Company shall direct the trustee of the Trust to immediately distribute to
Executive 50% of such Trust Shares and (2) upon the sixth annual anniversary of
the Effective Date the Company shall direct the trustee of the Trust to
immediately distribute to Executive the remaining and then existing Trust
Shares, and the trust will thereupon terminate. Upon such distributions,
Executive will own the Trust Shares so distributed without any restrictions or
limitations of any kind other than legal restrictions and limitations relating
to Executive's position with the Company. Notwithstanding anything in the
foregoing to the contrary, Executive may elect in his sole discretion to receive
his distributions in cash rather than Trust Shares.
 
         In the event that Executive's employment with the Company terminates
prior to the third or sixth annual anniversaries of the Effective Date, as
applicable, the timing of the distribution of the Trust Shares shall be
determined in accordance with Article 4 herein.
 
         Company shall, if Executive so requests, satisfy any income tax
withholding obligations in respect of the delivery of the Trust Shares otherwise
issuable to Executive by instructing the Trustee to issue the appropriate number
of Trust Shares necessary to satisfy Company's withholding tax obligations to
Company.
 
        3.5      Phantom  Performance  Shares.  On the  Effective  Date,
                 ----------------------------
Executive  will be awarded  theequivalent  of  1,000,000  shares  ("Performance
Units") of the  common  stock of  Company.  The Performance Units shall be
segregated and maintained in three (3) separate record keeping accounts
("Accounts") of 333,333, 333,333 and 333,334 Performance Units respectively. If
and when dividends are paid on Company common stock, each Account shall be
credited with additional Performance Units in an amount equal to the value of
the number of full and fractional shares of Company common stock which could
have been purchased with the amount of the dividend that would have been paid if
such stock were held in the Account. For purposes of crediting this theoretical
dividend to the Accounts, each Performance Unit shall be equivalent to one share
of Company common stock. In the event of any reorganization, recapitalization,
reclassification, stock split, reverse stock split, combination, share exchange,
or other similar event involving Company common stock, an appropriate adjustment
shall be made in the Accounts to prevent the enlargement or dilution of rights.
 
         The Accounts shall vest and be distributed to Executive in accordance
with the following table if and when, during the period ending on the eighth
annual anniversary of the Effective Date, Company's common stock, as reported on
the principal exchange on which Company's common stock trades, attains the share
price set forth below and maintains no less than such share price for a period
of thirty (30) consecutive trading days:
 
                                       5
<PAGE>
 
         Account               Threshold Strike
                                     Price
         --------------------------------------
         1st Account (originally          $29
         compromising 333,333
         Performance Units)
         --------------------------------------
         2nd Account (originally          $31
         compromising 333,333
         Performance Units)
         --------------------------------------
         3rd Account (originally          $33
         compromising 333,334
         Performance Units)
         --------------------------------------
 
         Unless Executive has made an election to defer distribution of such
Performance Units, such distributions shall occur immediately after the
above-described threshold share price is achieved or as provided in Article 4
hereto. Executive shall have the right in his sole discretion to elect to
receive the distribution of such Performance Units in the form of cash or common
stock of the Company. Except as provided in Article 4 herein, in the event
Company's common stock does not meet one of the threshold share prices as set
forth above on or before the eighth annual anniversary of the Effective Date,
the applicable Account (and corresponding Performance Units) will be forfeited.
 
         Company shall, if Executive so requests, satisfy any income tax
withholding obligations in respect of the distributions described above by
withholding appropriate amounts in shares or cash from such distributions.
 
        3.6 Annual Lops:-Term Incentive Compensation Grants. Executive will be
            -----------------------------------------------
entitled to receive annual restricted stock awards under and subject to the
terms of the TXU Long-Term Incentive Compensation Plan ("LTICP") as described in
this Section 3.6. Each such award will be made following, and in connection
with, the executive officer annual review by the Organization & Compensation
Committee of Company's Board of Directors ("O&C Committee"), and will, except
as expressly described herein, be subject to terms, conditions and restrictions
comparable to those contained in awards heretofore granted to executive officers
under the LTICP, or such other terms, conditions and restrictions as may be
approved by the O&C Committee with the concurrence of Executive.
 
         Performance-Based Restricted Stock Awards. In 2004, Executive will be
         -----------------------------------------
entitled to receive two "performance-based" restricted stock awards, with a
target of 150,000 shares each, one such award having a two-year performance
period (i.e., April 1, 2004 through March 31, 2006), and the other award having
a three-year performance period (i.e., April 1, 2004 through March 31, 2007). In
addition to such awards in 2004, Executive will be entitled to receive a
"performance-based" award of restricted stock of 150,000 shares in each of 2005,
2006 and 2007, as well as in each year that this Agreement is extended beyond
the initial five (5) year Term. Subject to any limitations under the LTICP,
Company shall distribute the shares underlying each award simultaneously with
the distribution of comparable awards to other
 
                                       6
<PAGE>
 
executives of Company after the above-described performance objectives are
certified by the O&C Committee to have been achieved, or as provided in Article
4 hereof. Each Performance-Based Restricted Stock Award also earns the cash
equivalent of the dividends paid during the performance period. Dividends during
the performance period attributable to such restricted stock awards will be
reinvested in Company common stock and shall become additional shares of
restricted stock.
 
         As the following chart illustrates, and notwithstanding any provisions
of the LTICP to the contrary, performance for all Performance-Based Restricted
Stock Awards granted under this Section 3.6 shall be measured by Company's total
shareholder return ("TSR") relative to the other companies that comprise the
Standard and Poors Electric Utilities Index ("SPELEC") over the performance
period. Minimum, target and maximum performance levels are set in terms of
Company's TSR performance against the SPELEC quartiles.
 
 
<TABLE>
<S>                      <C>             <C>             <C>             <C>          <C>                    <c>
 Perfor-
 mance
 Levels                Zero           Minimum          Target           125% of        150% of              Maximum
                                                                       Target          Target
 
 TSR                 40.99th         41st to           51st to         61st to         71st to                81st
 Ranges             percentile       50.99th           60.99th         70.99th         80.99th              percentile
                    and below      percentiles     percentiles      percentiles      percentiles            and above
 
Payouts             No payout      Interpolate     Interpolate       Interpolate      Interpolate             Maximum
                                     between           between          between        between                payout
                                      Minimum          100% of          125% of        150% of               (200% of
                                    and Target       Target and      Target and       Target and              Target)
                                     (50% to           125% of          150% of        Maximum
                                     100% of           Target          Target          (150% and
                                     Target)                                           200% of
                                                                                       Target
 
 Number of              0          75,000 to         150,000 to       187,500 to      225,000 to              300,000
 Shares                             149,999           187,499          224,999         299,999
 (150,000
 share target)
 excluding
 reinvested
 dividends
</TABLE>
 
         Except as provided in Section 4.3, once such awards have been granted,
they shall be paid in full at the end of the performance period based on actual
performance regardless of whether Executive's employment has previously
terminated. In the event Executive's employment with Company terminates prior to
any of the above-described awards being granted to Executive, such awards shall
be subject to the provisions of Article 4 herein. In the event that Company is
unable to make restricted stock awards or distributions under the LTICP at one
or more of the above-
 
                                       7
<PAGE>
 
referenced times, Executive will be entitled to receive an
award or distribution in cash equal in value to the applicable award or
distribution provided for above.
 
         Company shall, if Executive so requests, satisfy any income tax
withholding obligations in respect of the payment of any amounts under the LTICP
by withholding shares or cash otherwise issuable to Executive.
 
        3.7 Vacation and Sick Leave. During each year of his employment,
            -----------------------
Executive shall be entitled to vacation and sick leave benefits equal to the
maximum available to any Company executive, determined without regard to the
period of service that might otherwise be necessary to entitle Executive to
such vacation or sick leave under standard Company policy.
 
        3.8 Other Employee Benefits. Executive shall be entitled to participate
            -----------------------
in all of Company's employee benefit plans, programs, arrangements and fringe
benefit policies made available to similarly situated senior executives of the
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.
 
        3.9 Other  Perquisites.  During his employment  hereunder,  Executive
            ------------------
shall be afforded the following benefits as incidences of his employment:
 
            (i)  Business  and  Entertainment  Expenses  - Subject to Company's
         standard policies and procedures with respect to expense reimbursement
         as applied to its executive  employees generally, Company shall
         reimburse Executive for, or pay on behalf of Executive, reasonable and
         appropriate expenses incurred by Executive  for  business  related
         purposes,  including dues and fees to industry and professional
         organizations,  costs of entertainment and business development, and
         costs reasonably  incurred as a result of Executive's spouse
         accompanying  Executive on business travel. Company shall also pay on
         behalf of Executive the expenses of one club  selected by Executive.
         Company shall also reimburse Executive for all of the professional
         fees and expenses  incurred by him in connection with the negotiation
         and documentation of this Agreement.
 
            (ii) Parking - Company shall provide at no expense to Executive a
         reserved parking place convenient to Executive's headquarters office.
 
            (iii)Security and Safety: Use of Company Airplane - For personal
         security and safety,  during the Term,  Company  shall  provide
         Executive  and his  spouse  with the use of  Company airplane, private
         jet service or first class commercial airline tickets for travel in
         connection  with Company  business.  The Company will seek to qualify
         Executive for the IRS  Security  Rule  that apply to an  employee that
         is part of an  overall  security program.  This will include conducting
         a security study by an  independent  security consultant for Executive
         and his immediate family and taking the necessary steps to implement
         the recommendations of the study at the expense of Company.  Company
         will provide  Executive and his immediate family members with air
         travel  (including  use, subject to reasonable  availability,  of
         Company  airplane)  between Company offices and his residence in
         Mandeville,  Louisiana, and will provide Executive with an income tax
         gross-up payment for any income tax attributable to such  travel.  In
         addition,  for reasons
 
                                       8
<PAGE>
 
         of security and safety,  Executive and his family members may use
         Company's airplane, subject to reasonable availability,  for personal
         travel; provided, that such use will result in imputed income to
         Executive  (which  will  not be  grossed-up), determined in accordance
         with Internal Revenue Service rules and regulations.
 
             (iv) Relocation  Expenses - Company  shall  reimburse  Executive
         for all costs incurred by Executive in connection with the relocation
         of Executive and his family from Mandeville, Louisiana to Dallas,
         Texas, with the objective of keeping Executive whole financially with
         respect to his relocation to Dallas,  Texas. To the extent that any of
         the relocation expense  reimbursements  constitute taxable income to
         Executive,  Company will provide Executive with income tax gross-up
         payments for any income tax attributable to such reimbursement.  If
         Executive so requests in writing, Company shall provide Executive with
         a payment equal to the greater of (a) Executive's actual equity in his
         current residence in Mandeville, Louisiana, as evidenced by receipts
         provided by Executive to Company, or (b) the  appraised  value of such
         residence  pursuant to an appraisal performed by an independent
         appraiser (the "Equity").  Company shall engage a relocation company to
         sell such residence at Company's  expense.  In the event that the
         actual sales price of Executive's residence is greater than the Equity,
         Company shall retain such excess. In the event that the actual sales
         price of  Executive's  residence is less  than the  Equity, Company
         shall  bear such loss and Executive shall not be responsible for
         paying any additional amounts to Company.
 
              (v) Temporary Living Expenses - In addition to amounts available
         for temporary living expenses under Company's standard relocation
         policy, Company shall, for a period of eighteen (18) months from the
         Effective Date, pay Executive $8,000 per month as a housing allowance,
         plus gross-up payments for any income tax attributable to such housing
         allowance.
 
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:
 
            (i) 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.
 
           (ii) Company shall pay Executive a pro rata annual Bonus for the year
         of termination based on actual performance at the time when bonuses
         are paid to senior executives generally.
 
           (iii) All outstanding awards which had been made to Executive
         pursuant to Section 3.6 under the heading "Performance-Based Restricted
         Stock Awards" (for
 
                                      9
<PAGE>
         purposes of this Article 4, "Performance-Based Restricted
         Stock Awards") shall be paid at the times and in the amounts and
         subject to the terms and conditions of such awards.
 
           (iv) To the extent not previously paid, the award of Performance
         Units made to Executive under Section 3.5 shall not forfeit and shall
         be paid if and when the performance criteria for distribution of such
         award are satisfied at any time on or before the eighth annual
         anniversary of the Effective Date.
 
           (v) 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.
 
           (vi) Company's obligations under Sections 4.6, 5.3 and 5.5 shall
         continue.
 
           (vii) Company shall, at its cost, provide Executive with Office and
         Related Services (as defined below in Section 4.8).
 
           (viii) 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, including the awards under Section
         3.4 herein and any annual Bonus earned in the prior calendar year or a
         portion thereof as described in Section 3.3.
 
         4.2 By Company Without Cause or By Executive for Good Reason Prior to
             -----------------------------------------------------------------
Expiration of Term. If Executive's employment hereunder shall be terminated by
------------------
Company without Cause, or by Executive for Good Reason, prior to the expiration
of the nTerm 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 his spouse does not survive him):
 
           (i) 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.
 
           (ii)Company 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 due as described in 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.
 
            (iii) Company shall pay Executive a pro rata annual Bonus for the
         year of termination based on actual performance at the time when
         bonuses are paid to senior executives generally.
 
            (iv)  All outstanding Performance-Based Restricted Stock Awards
         shall be paid at the times and in the amounts and subject to the terms
         and conditions of such awards.
 
                                       10
<PAGE>
 
         Additionally,  all ungranted  Performance-Based  Restricted Stock
         Awards that would have been made to Executive pursuant to Section 3.6
         on or prior to the  expiration  date of the initial 5-year Term shall
         be immediately  granted.  The performance  period for each such
         previously ungranted Performance-Based Restricted Stock Award shall be
         the performance period that would have applied had the award been made
         at the time provided for in Section 3.6. Each such previously ungranted
         Performance-Based Restricted Stock Award shall be delivered or paid
         following  the  applicable performance period in  accordance with the
         terms of the award.
 
             (v) To the extent not previously paid, the award of Performance
         Units made to Executive under Section 3.5 shall not forfeit and shall
         be paid if and when the performance criteria for distribution of such
         award are satisfied at any time on or before the eighth annual
         anniversary of the Effective Date.
 
             (vi)The Special Long-Term Incentive Compensation Award provided
        for in Section 3.4 shall immediately be distributed to Executive.
 
             (vii) 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. Thereafter, Executive and
         his eligible dependents shall be deemed eligible for any retiree
         medical coverage maintained by Company.
 
             (viii) Company's obligations under Sections 4.6, 5.3 and 5.5 shall
         continue.
 
             (ix)  Company shall, at its cost, provide Executive with Office
         and Related Services.
 
             (x)   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, including any unpaid annual Bonus
         earned in the prior calendar year or portion thereof as described in
         Section 3.3.
 
         4.3 By Executive Without Good Reason or By Company for Cause. If
             --------------------------------------------------------
Executive's employment hereunder shall be terminated by Company with 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:
 
             (i) 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.
 
             (ii) Company shall provide Executive and his eligible dependents
         with COBRA Coverage at the prevailing employee COBRA rate for up to
         eighteen (18)months from such termination.
 
                                       11
<PAGE>
 
 
            (iii)Company's obligations under Sections 4.6, 5.3 and 5.5 shall
          continue.
 
            (iv) 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, including any awards under Section
         3.4 herein and any annual Bonus earned in the prior calendar year or
         portion thereof as described in Section 3.3.
 
            (v) Any unvested or ungranted awards described in Sections 3.5 and
         shall be forfeited.
 
         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 his spouse does not
survive him) will be entitled to receive the following:
 
            (i) 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.
 
            (ii) Company shall immediately pay Executive (or Executive's
        surviving spouse or estate, as the case may be) a lump sum payment
        equal to two (2) times the sum of Executive's then current annualized
        base salary provided for under Section 3.1 plus the Target Bonus
        defined in Section 3.3.
 
            (iii) Company shall pay Executive a pro rata annual Bonus for the
        year of termination based on actual performance at the time when bonuses
        are paid to senior executives generally.
 
            (iv)  All outstanding Performance-Based Restricted Stock Awards
         shall be paid at the times and in the amounts and subject to the terms
         and conditions  of  such  awards. Additionally, all ungranted
         Performance-Based Restricted Stock Awards that would have been made to
         Executive  pursuant to Section 3.6 during the two (2) year period
         following the date of Executive's death or Disability shall be
         immediately granted.  The performance period for each such previously
         ungranted Performance-Based Stock Award shall be the performance
         period that would have applied had the award been made at the
         time  provided  for in Section 3.6.  Each such  previously  ungranted
         Performance-Based Restricted Stock Award shall be delivered or paid
         following the applicable  performance period in accordance with the
         terms of the  award.  Any  Performance-Based  Restricted Stock Awards
         provided for in Section 3.6 which remain  ungranted after application
         of this subsection 4.4(iv) shall be forfeited.
 
            (v) To the extent not previously paid, the award of Performance
         Units made to executive under Section 3.5 shall not forfeit and shall
         be paid if and when the performance criteria for distribution of such
         award are satisfied at any time on or before the eighth annual
         anniversary of the Effective Date.
 
                                           12
<PAGE>
 
            (vi) The Special Long-Term Incentive Compensation award provided for
         in Section 3.4 shall immediately be distributed to Executive or to his
         estate, as applicable.
 
            (vii) 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.
 
            (viii) Company's obligations under Sections 4.6, 5.3 and 5.5 shall
         continue.
 
            (ix) 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, including any annual Bonus earned in
         the prior calendar year or portion thereof as described in Section 3.3.
 
         4.5 Termination by Executive Following Change in Control.
             ----------------------------------------------------
If Executive terminates his employment with Company (or its successor) within
six months after a Change in Control that occurs on or before the fourth annual
anniversary of the Effective Date for any reason in his sole discretion,
Executive will be entitled to the following benefits:
 
            (i) 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.
 
            (ii) Company (or its successor) shall pay Executive a pro rata
         annual Bonus for the year of termination based on actual performance at
         the time when bonuses are paid to senior executives generally.
 
            (iii) All outstanding Performance-Based Restricted Stock Awards
         shall not forfeit and shall be paid at the times and in the amounts
         and subject to the terms and conditions of such awards. However, any
         ungranted Performance-Based Restricted Stock Awards shall be forfeited.
 
            (iv) To the extent not previously paid, the award of Performance
         Units made to Executive under Section 3.5 shall not forfeit and shall
         be paid if and when the performance criteria for distribution of such
         award are satisfied at any time on or before the eighth annual
         anniversary of the Effective Date.
 
            (v) 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.
         Thereafter, Executive and his eligible dependents shall be deemed
         eligible for any retiree medical coverage maintained by the Company.
 
            (vi) Company's (or its  successor's) obligations under Sections 4.6,
         5.3 and 5.5  shall continue.
 
                                       13
<PAGE>
 
            (vii) Company (or its successor) shall, at its cost, provide
         Executive with Office and Related Services.
 
            (viii) 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, including any awards under
         Section 3.4 herein and any Annual Bonus earned in the prior calendar
         year or portion thereof as described in Section 3.3.
 
         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.
 
          4.7 Payment Obligations Absolute. Company's obligation to pay
              ----------------------------
Executive the amounts and to make the arrangements provided in this Article 4
shall be absolute and unconditional and shall not be affected by any
circumstances, including, without limitation, any set-off, counterclaim,
recoupment, defense or other right which Company (including its
 
                                        14
<PAGE>
 
subsidiaries and affiliates) may have against him or anyone else. All amounts
payable by Company shall be paid without notice or demand. Executive shall not
be obligated to seek other employment in mitigation of the amounts payable or
arrangements made under any provision of this Article 4, and the obtaining of
any such other employment (or the engagement in any endeavor as an independent
contractor, sole proprietor, partner, or joint venturer) shall in no event
effect any reduction of Company's obligations to make (or cause to be made) the
payments and arrangements required to be made under this Article 4.
 
         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 upon any
termination of his employment, upon Company's payment of all amounts and
satisfaction of all other obligations due immediately upon termination, and the
scheduling of all other payments and obligations due to Executive under this
Agreement to the satisfaction of Executive, Executive shall execute a release of
claims arising out of Executive's employment with, and termination of employment
from, Company in the form attached hereto as Exhibit A (adjusted as necessary to
                                             ---------
conform to then existing legal requirements). Such release shall in no way limit
or release Company from or delay Company's obligation to pay or distribute
amounts, or provide other benefits, required to be paid, distributed or provided
before or after execution of such release.
 
4.8      Certain Defined Terms.  For purposes of this  Agreement,  the following
         ---------------------
terms shall have the following meanings:
 
         (i)  "Change in  Control"  means a change in  control of 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
   Company  representing  20% or more of the combined voting power of Company's
   then outstanding securities having the right to vote at elections of
   directors of Company ("Voting Securities"); (ii) individuals who constitute
   the board of directors of 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 Company's shareholders, was approved by at least
   three-quarters of Company's directors comprising the Incumbent Board (either
   by a specific vote or by approval of the proxy statement of 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 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
 
 
                                       15
<PAGE>
 
   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 of Company are liquidated or
   transferred to an unrelated  party;  or (v) Company is a party to a merger,
   consolidation, reorganization or similar transaction pursuant to which
   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 Company,  a
   subsidiary of Company or any employee benefit plan(s) sponsored or maintained
   by Company or any subsidiary  thereof, and the term "Independent Shareholder"
   shall mean any shareholder of Company except any employee(s) or director(s)
   of Company or any employee benefit plan(s)sponsored or maintained by Company
   or any subsidiary thereof
 
         (ii) "Office and Related Services" shall mean appropriate and suitable
   furnished office space at a mutually agreeable location, together with
   appropriate and suitable secretarial assistance and phone and internet
   service at Company's cost and for a period of one (1) year beginning on
   the date of Executive's termination of employment.
 
        (iii) 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.
 
         (iv) "Accrued  Obligations"  shall  mean,  as of the Date of
   Termination,  the  sum of (A) Executive's  base salary through the Date of
   Termination  to the extent not previously paid, (B) the signing bonus
   provided for in Section 3.2 to the extent not previously paid, (C) except as
   otherwise previously requested by Executive, the amount of any bonus,
   incentive compensation,  deferred compensation  and other cash compensation
   accrued by Executive as of the Date of Termination to the extent not
   previously paid and (D) any vacation pay, expense  reimbursements and other
   cash entitlements accrued by Executive as of the Date of Termination 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. 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
 
                                       16
<PAGE>
 
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.
 
        4.10 Non-Solicitation. In the event this Agreement is terminated
             ----------------
pursuant to the provisions of Section 4.2 or 4.5 above, Executive agrees that
for a period of one (1) year after such termination, Executive shall not,
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) 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 (b) 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).
 
Article 5: MISCELLANEOUS
           -------------
 
        5.1  Interest and Indemnification; D&O Insurance.
             -------------------------------------------
 
             (i) If any payment to Executive  provided for in this Agreement is
        not made by Company when due, Company shall pay to Executive interest on
        the amount payable from the date that such payment should have been made
        until such payment is made,  which interest shall be calculated at 3%
        plus the prime or base rate of interest announced by JP Morgan Chase
        Bank,  N.A. at its principal office in Dallas, Texas (but not in excess
        of the highest lawful rate),  and such interest rate shall change when
        and as any such change in such prime or base rate shall be announced by
        such bank. If Executive shall obtain any money judgment or otherwise
        prevail with  respect to any litigation brought by Executive or Company
        to enforce or interpret any provision contained herein,  Company, to the
        fullest extent permitted by applicable law, hereby indemnifies
        Executive for his reasonable attorneys' fees and disbursements incurred
        by Executive in such litigation and hereby agrees (i) to pay in full all
        such fees and  disbursements  and (ii) to pay  prejudgment interest on
        any money judgment obtained by Executive from the earliest date that
        payment to him should have been made under this Agreement until such
        judgment shall have been paid in full, which interest shall be
        calculated at the rate set forth in the preceding sentence.
 
                                        17
<PAGE>
 
            (ii) Company agrees that if Executive is made a party or
        threatened to be made a party to any action, suit or proceeding, whether
        civil, criminal, administrative or investigative by reason of the fact
        that Executive is or was an employee of 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"),
        Executive shall be indemnified and held harmless by Company to the
        fullest extent permitted by applicable law.
 
               (iii) 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.
 
        Company's obligations under this Section 5.1(a), (b) and (c) 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 Corp.
                                  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.
 
        5.3 Representation by Company. Company represents to Executive that
            -------------------------
Company is in material compliance with all financial reporting requirements
under the securities laws and is not aware of any material misstatement in any
financial document that has been publicly issued or filed with the U.S.
Securities and Exchange Commission prior to the Effective Date. Company shall
indemnify and hold harmless Executive for any damages or liability that
Executive may incur as a result of any non-compliance by Company of any
financial reporting requirements whether or not related to a breach by Company
of this representation.
 
         5.4 Applicable  Law.  This contract is entered into under, and shall
             ---------------
be governed  for all purposes by, the laws of the State of Texas.
 
         5.5 Registration and Resale of Securities. Company represents to
             -------------------------------------
Executive that the offer, grant and sale of all shares of common stock of
Company contemplated by this Agreement are the subject of an effective
registration statement or statements filed with the Securities and Exchange
Commission ("SEC") under the Securities Act of 1933, as amended
("Registration
 
                                       18
<PAGE>
 
Statements"). Company agrees (i) to use its best efforts to
maintain the effectiveness of the Registration Statements during the Term;
(ii) to use its best efforts to ensure that all future offers, grants and sales
of shares of common stock of Company to Executive by Company are the subject of
Registration Statements and (iii) in the event that any future grant or sale by
Company of shares of common stock of Company to Executive during the Term is not
the subject of Registration Statements, to enter into a registration rights
agreement with Executive on mutually agreeable terms. Executive agrees during
the Term to make no sale of common stock of Company that would exceed the
applicable volume limitations contained in paragraph (e) of Rule 144 promulgated
by the SEC as in effect from time to time, inclusive of any successor to such
rule ("Rule 144"). Company agrees during the Term to use its best efforts to
satisfy all of the current public information requirements of paragraph (c) of
Rule 144 so as to make Rule 144 available at all times to Executive for resales
of common stock of Company by Executive.
 
        5.6 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.
 
        5.7 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.
 
        5.8 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.
 
        5.9 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.
 
        5.10 Headings. The paragraph headings have been inserted for purposes
             --------
of convenience and shall not be used for interpretive purposes.
 
        5.11 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.
 
        5.12 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.
 
                                       19
<PAGE>
 
        5.13 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 4.5, 4.6, 4.7, 5.1, 5.3 and 5.5 of this
Agreement.
 
        5.14 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. In the event of any conflict between the
terms of this Agreement and the terms of any policy, plan or program of Company,
the terms of this Agreement shall govern.
 
        5.15 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 an automatic resignation of Executive from
the Board of Directors and from the board of directors of any affiliate of
Company, and 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.
 
         IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date set forth above.
 
 
                             TXU CORP.
 
                             By: /s/ Erle Nye
                                 -------------------------------
                                 Name: Erle Nye
                                       -------------------------
                                 Title:Chairman
                                       -------------------------
 
 
                             C. JOHN WILDER
 
                             /s/ C. John Wilder
                             -----------------------------------
 
 
 
 
                                     20
<PAGE>
 
 
                                    EXHIBIT A
 
                                 FORM OF RELEASE
 
                                 GENERAL RELEASE
 
         1. For valuable consideration, the adequacy of which is hereby
acknowledged, the undersigned ("Executive"), for himself, his spouse, heirs,
administrators, children, representatives, executors, successors, assigns, and
all other persons claiming through Executive, if any (collectively,
"Releasers"), knowingly and voluntarily releases and forever discharges TXU
CORP., its affiliates, subsidiaries, divisions, successors and assigns and the
current, future and former employees, officers, directors, trustees and agents
thereof (collectively referred to throughout this General Release as "Company")
from any and all claims, causes of action, demands, fees and liabilities of any
kind whatsoever, whether known and unknown, against Company, Executive has, has
ever had or may have as of the date of execution of this General Release,
including, but not limited to, any alleged violation of
 
        o        The National Labor Relations Act, as amended;
 
        o        Title VII of the Civil Rights Act of 1964, as amended;
 
        o        The Civil Rights Act of 1991;
 
        o        Sections 1981 through 1988 of Title 42 of the United States
                 Code, as amended;
 
        o        The Employee Retirement Income Security Act of 1974, as
                 amended;
 
        o        The Immigration Reform and Control Act, as amended;
 
        o        The Americans with Disabilities Act of 1990, as amended;
 
        o        The Age Discrimination in Employment Act of 1967, as amended;
 
        o        The Older Workers Benefit Protection Act of 1990;
 
        o        The Worker Adjustment and Retraining Notification Act, as
                 amended;
 
        o        The Occupational Safety and Health Act, as amended;
 
        o        The Family and Medical Leave Act of 1993;
 
        o        Any other federal, state or local civil or human rights law or
                 any otherlocal, state or federal law, regulation or ordinance;
                 or
 
        o        Any public policy, contract, tort, or common law.
 
         Notwithstanding anything herein to the contrary, this General Release
shall not apply to: (i) Executive's rights of indemnification and directors and
officers liability insurance coverage to
 
                                       21
<PAGE>
 
which he was entitled immediately prior to DATE with regard to his service as an
officer of Company (including, without limitation, under Sections 5.1 of that
certain Employment Agreement between Company and Executive dated as of February
21, 2004 (the "Employment Agreement")); (ii)Executive's rights under any
tax-qualified pension or claims for accrued vested benefits under any other
employee benefit plan, policy or arrangement maintained by Company or under
COBRA; (iii) Executive's rights under the provisions of the Employment Agreement
which are intended to survive termination of employment; or (iv) Executive's
rights as a stockholder. Excluded from this General Release are any claims
which cannot be waived by law.
 
         2. Executive acknowledges and recites that:
 
         (a) Executive has executed this General Release knowingly and
voluntarily;
 
         (b) Executive has read and understands this General Release in its
entirety, including the waiver of rights under the Age Discrimination in
Employment Act;
 
         (c) Executive has been advised and directed orally and in writing (and
this subparagraph (c) constitutes such written direction) to seek legal counsel
and any other advice he wishes with respect to the terms of this General Release
before executing it;
 
         (d) Executive has sought such counsel, or freely and voluntarily waives
the right to consult with counsel, and Executive has had an opportunity, if he
so desires, to discuss with counsel the terms of this General Release and their
meaning;
 
         (e) Executive enters into this General Release knowingly and
voluntarily, without duress or reservation of any kind, and after having given
the matter full and careful consideration; and
 
         (f) Executive has been offered 21 calendar days after receipt of this
General Release to consider its terms before executing it.
 
         3. This General Release shall be governed by the internal laws (and not
the choice of law principles) of the State of Texas, except for the application
of pre-emptive Federal law.
 
         4. Executive shall have 7 days from the date hereof to revoke this
General Release by providing written notice of the revocation to Company's
General Counsel, as provided in Section 5.2 of the Employment Agreement, in
which event this General Release shall be unenforceable and null and void.
 
 
 
 
                                       22
 
 
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                                 FIRST AMENDMENT
                                     TO THE
                              EMPLOYMENT AGREEMENT
                                     BETWEEN
                          TXU CORP. AND C. JOHN WILDER
 
     The Employment Agreement, by and between TXU CORP. ("Company") and C. John
Wilder ("Executive"), dated as of February 21, 2004, is hereby amended, as of
June 21, 2005, as follows:
 
     1.   Section 3.6 is hereby amended to read as follows:
 
          3.6 Annual Long-Term Incentive Compensation Grants. Executive will be
     entitled to receive annual performance-based awards under and subject to
     the terms of the TXU Long-Term Incentive Compensation Plan or such other
     shareholder approved long-term incentive plan of the Company in effect from
     time to time ("LTICP") as described in this Section 3.6. Each such award
     will be made following, and in connection with, the executive officer
     annual review by the Organization & Compensation Committee of Company's
     Board of Directors ("O&C Committee"), and will, except as expressly
     described herein, be subject to terms, conditions and restrictions
     comparable to those contained in awards heretofore granted to executive
     officers under the LTICP, or such other terms, conditions and restrictions
     as may be approved by the O&C Committee with the concurrence of Executive.
 
          Performance-Based Restricted Stock Awards. In 2004, Executive will be
     entitled to receive two "performance-based" restricted stock awards, with a
     target of 150,000 shares each, one such award having a two-year performance
     period (i.e., April 1, 2004 through March 31, 2006), and the other award
     having a three-year performance period (i.e., April 1, 2004 through March
     31, 2007). In addition to such awards in 2004, Executive will be entitled
     to receive a "performance-based" LTICP award having a target value of
     150,000 shares in each of 2005, 2006 and 2007, as well as in each year that
     this Agreement is extended beyond the initial five (5) year Term. Subject
     to any limitations under the LTICP, Company shall distribute the award
     payments simultaneously with the distribution of comparable awards to other
     executives of Company after the performance objectives described below are
     certified by the O&C Committee to have been achieved, or as provided in
     Article 4 hereof. Each such LTICP award shall also earn the cash equivalent
     of the dividends paid during the performance period (and during any period
     between the end of the performance period and the ultimate distribution)
     with respect to the restricted stock (or, for awards made in the form of
     performance units, dividends that would have been paid had the performance
     units been shares of Company common stock). Such dividends during the
     performance period (and during any deferral period) will be reinvested in
     Company common stock and shall become additional shares of restricted stock
     (or deferred stock), or equivalent performance units, as applicable.
 
 
<PAGE>
 
 
          As the following chart illustrates, and notwithstanding any provisions
     of the LTICP to the contrary, performance for all Performance-Based
     Restricted Stock Awards granted under this Section 3.6 shall be measured by
     Company's total shareholder return ("TSR") relative to the other companies
     that comprise the Standard and Poors Electric Utilities Index ("SPELEC")
     over the performance period. Minimum, target and maximum performance levels
     are set in terms of Company's TSR performance against the SPELEC quartiles.
 
<TABLE>
<CAPTION>
 
 
PERFORMANCE             Zero            Minimum          Target      125% of Target   150% of Target      Maximum
LEVELS
 
 
<S>                    <C>              <C>             <C>              <C>              <C>               <C>
TSR RANGES             40.99th          41st to         51st to          61st to          71st to           81st
                   percentile and       50.99th         60.99th          70.99th          80.99th        percentile
                        below         percentiles     percentiles      percentiles      percentiles      and above
 
PAYOUTS               No payout       Interpolate     Interpolate      Interpolate      Interpolate       Maximum
                                        between       between 100%    between 125%     between 150%     payout (200%
                                      Minimum and    of Target and    of Target and    of Target and     of Target)
                                    Target (50% to   125% of Target  150% of Target    Maximum (150%
                                    100% of Target)                                     and 200% of
                                                                                          Target
 
NUMBER OF SHARES          0            75,000 to       150,000 to      187,500 to       225,000 to        300,000
(150,000 SHARE                          149,999         187,499          224,999          299,999
TARGET)
EXCLUDING
REINVESTED
DIVIDENDS
</TABLE>
 
 
 
          Except as provided in Section 4.3, once such awards have been granted,
     they shall be paid in full at the end of the performance period based on
     actual performance regardless of whether Executive's employment has
     previously terminated. In the event Executive's employment with Company
     terminates prior to any of the above-described awards being granted to
     Executive, such awards shall be subject to the provisions of Article 4
     herein. With respect to LTICP awards granted or payable in Company stock,
     except as provided in the next succeeding sentence, in the event that
     Company is unable, for any reason, to grant such awards in stock, or
     distribute shares of stock upon the maturity of such award, at one or more
     of the above-referenced times, Executive will be entitled to receive an
     award in cash equal in value to the applicable award provided for above.
     Notwithstanding any other provision of this Agreement, in the event that
     the Company is unable to make distributions under limitations provided
     under the LTICP at one or more of the above-referenced times, the
 
 
                                       2
<PAGE>
 
 
     distributions of shares above the limitation shall automatically be
     deferred, and Executive (or his estate) shall receive such distributions on
     the April 1st following the calendar year in which the Executive ceases to
     be employed by the Company (or such later date as required to comply with
     the requirements of Section 409A of the Internal Revenue Code).
 
          Company shall, if Executive so requests, satisfy any income tax
     withholding obligations in respect of the payment of any amounts under the
     LTICP by withholding shares or cash otherwise issuable to Executive.
 
     2.   Section 4.2(iv) is hereby amended to delete the final three sentences
thereof (deleting all references to previously ungranted Performance-Based
Restricted Stock Awards) so that it reads as follows:
 
          All outstanding Performance-Based Restricted Stock Awards shall be
     paid at the times and in the amounts and subject to the terms and
     conditions of such awards.
 
     3.   In all other respects, the Agreement shall remain in full force and
effect.
 
 
                                            TXU CORP.
 
 
                                            By:/s/ J.E. Oesterreicher
                                               --------------------------------
                                                   J.E. Oesterreicher
                                                   Chair of the Organization and
                                                   Compensation Committee
 
 
 
                                                   C. JOHN WILDER
 
 
                                               /s/ C. John Wilder
                                               --------------------------------
 
 
                                       3
 
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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

 

2


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

 

3


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

Exhibit 10.7

 

TXU Corp.

 

2005 Executive Severance Plan

and

Summary Plan Description

 

INTRODUCTION

 

This document constitutes the TXU Corp. 2005 Executive Severance Plan, effective May 20, 2005 (the “Executive Severance Plan” or the “Plan”), as well as the Summary Plan Description for the Executive Severance Plan.

 

The principal purpose of the Executive Severance Plan is to provide certain benefits, described herein, to eligible executive management personnel of the Company and its subsidiaries upon their termination of employment in accordance with the terms and subject to the conditions set forth herein.

 

The Company expressly reserves the right at any time, and from time to time, for any reason in the Company’s sole discretion, to change, modify, alter or amend this Plan in any respect and to terminate this Plan in full. All provisions of this Plan relating to other employee benefit plans of the Company, or any of the Company’s affiliates, are expressly limited by the provisions of such other employee benefit plans. The provisions of this Plan may not grant or create any rights other than as expressly provided for under such other employee benefit plans.

 

KEY TERMS

 

 

 

 

Agreement and Release :

  

A legal document prepared by the Company which must be signed and dated as a condition to participating in the Plan.

 

 

COBRA :

  

The Consolidated Omnibus Reconciliation Act of 1985, which sets forth certain requirements regarding continued health coverage.

 

 

COBRA Rate :

  

The required premium for coverage under COBRA.

 

 

Code :

  

The Internal Revenue Code of 1986, as amended.

 

 

Company :

  

TXU Corp., a Texas corporation.

 

 

ERISA :

  

The Employee Retirement Income Security Act of 1974, as amended.

 

 

Leadership Team :

  

An internal designation by the Company of certain key management personnel. Generally, members of the Leadership Team are comprised of elected officers of the Company and its subsidiaries with a title of Vice President and above. Determinations as to the individuals comprising the Leadership Team from time to time, and at any particular time, will be made by the Company in its sole and absolute discretion.

 

1


 

 

 

Participating Companies :

  

The Company, and each of its direct and indirect wholly-owned United States subsidiary entities participate in the Plan.

 

 

Plan Administrator :

  

TXU Business Services Company.

 

 

Retirement Plan :

  

The TXU Retirement Plan, as amended, or any successor plan.

 

 

Senior Leadership Team :

  

The Chief Executive Officer of the Company and his direct reports, as determined in accordance with the Company’s internal organizational structure.

 

 

Term :

  

The period beginning on May 20, 2005 and ending at the time that this Plan is terminated by action of the Compensation Committee of the Board of Directors of the Company.

 

Eligibility to Participate In the Plan

 

 

 

Who is eligible to participate in the Plan?

 

You are eligible to participate in the Executive Severance Plan, and are referred to herein as a “Participant”, only if: (1) immediately prior to the time of your termination, you are designated by the Company as a member of its Leadership Team; (2) a Participating Company terminates your employment during the Term of this Executive Severance Plan involuntarily for reason(s) other than: (a) Cause (as defined herein); (b) participation in the TXU Long-Term Disability Income Plan, or any successor plan; or (c) in connection with a transaction of any kind involving the Company or any of its affiliates if you are offered employment with an acquiring, succeeding or other entity involved in or related to such transaction; (3) you are not eligible for severance benefits under any other plan or program of a Participating Company, or pursuant to an employment or other agreement with a Participating Company; and (4) you agree to all of the terms and conditions of this Executive Severance Plan, including the signing of the Agreement and Release in the form provided by the Company.

 

Notwithstanding any other provision of this Plan, in the event of a Change in Control of the Company (as defined in the Executive TXU Change in Control Policy), severance benefits for Eligible Executives under the Executive TXU Change in Control Policy will be provided under the terms of such policy and not this Plan. In this connection, it is the intent of the Company that employees not be eligible for duplicate severance benefits under multiple plans.

 

Upon notification by the Company of your eligibility for this Executive Severance Plan, you will have a period of forty-five (45) days to consider whether you wish to participate and receive the benefits provided for herein. In order to participate in this Plan, you must sign and date the Agreement and Release, and provide the completed Agreement and Release to the Company’s representative or department designated in the Agreement and Release within such forty-five (45) day period.

 

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If I elect to participate, will I have a chance to reconsider my decision to participate in this Executive Severance Plan?

 

Yes, you will have a period of seven (7) days following the date you sign the Agreement and Release to revoke your acceptance of this Executive Severance Plan (the “Revocation Period”). To effectively revoke, you must deliver or mail a written statement to the Company’s Human Resources Department, c/o                      , within this Revocation Period notifying the Company of your decision. If you effectively revoke, the Agreement and Release will no longer be in effect and you will not be entitled to receive the severance benefits.

 

 

 

What is considered to be a for “Cause” termination for purposes of this Executive Severance Plan?

 

You will not be eligible for benefits under this Executive Severance Plan if your termination is for Cause. For purposes of this Executive Severance Plan, “Cause” means any one or more of the following: (a) a Participant’s breach of fiduciary duty to the Company or its shareholders; (b) a Participant’s gross negligence; (c) a Participant’s misconduct resulting in material economic harm to the Company; (d) a Participant’s indictment or plea of nolo contendere or guilty for a felony or other crime involving fraud theft, embezzlement or moral turpitude; (e) a Participant’s misappropriation of a material business opportunity of the Company; (f) a Participant’s breach of the Company’s Code of Conduct or an express employment policy or rule of the Company governing employee conduct; or (g) a Participant’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.

 

Benefits Available Under this Executive Severance Plan

 

 

 

What benefits will I receive if I participate in this Executive Severance Plan?

 

A Participant who is covered under this Executive Severance Plan will receive the following benefits:

 

 

1.

Severance Payment

 

Participants in this Executive Severance Plan will receive a one-time lump sum cash severance payment in an amount equal to: (i) a multiple of the Participant’s annualized base salary, such multiple to be based on the Participant’s position with the Company immediately prior to the termination as set forth in the following chart plus (ii) the Participant’s target annual incentive award for the year of the termination, prorated for the portion of the year prior to such termination.

 

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Position


 

  

Multiple of Base Salary


 

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 Participant’s timely execution of the Agreement and Release and the expiration of the Revocation Period; provided that, if the Participant is a “key employee” within the meaning of Code Section 409A, the severance payment will be made as soon as reasonably practical following the expiration of six months from the date of Participant’s termination (subject to the Participant having timely signed 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 Participant 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.

 

 

2.

Health Care Benefits

 

Participants who, under the terms and conditions of the applicable health care plans covering them immediately prior to their severance, are eligible for retiree health care coverage will be able to participate in, and receive, such retiree health care coverage subject to the terms and conditions of the relevant health care plan documents as they may be amended (or terminated) from time to time. Participants who are not eligible for, or who do not choose coverage under, the Company’s retiree health care coverage, 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 Participant for such continued coverage will be the applicable employee rate, unless and until the Participant 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 Participant’s available COBRA coverage period.

 

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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

 

 

3.

Outplacement Assistance

 

Participants 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

 

 

4.

Final Pay Check and Vacation

 

Participants will receive their final paycheck, as well as pay for vacation, if any, pursuant to the Company’s standard payroll and/or vacation policy.

 

 

5.

Other Benefit Plans

 

Participants will receive any vested, accrued benefits to which they have become entitled under any of the Company’s employee benefit plans covering the Participant in accordance with and subject to the respective provisions of such employee benefit plans as they may be amended from time to time.

 

 

6.

Non-Raiding

 

For a period of one (1) year after a termination contemplated in this Plan, Participants shall not solicit, recruit, induce, encourage or in any way cause any employee, consultant or contractor then engaged by any Participating Company to terminate his/her employment or contractual relationship with the Participating Company.

 

ADMINISTRATIVE INFORMATION

 

Filing a Claim for Benefits Under the Executive Severance Plan

 

Claims for benefits under this Executive Severance Plan should be made in writing to the Company, in care of the Company’s Benefits Director of Total Rewards, 1601 Bryan Street, Dallas, Texas 75201. If your claim is denied, a written or electronic notification of the denial normally will be sent to you within 90 days of receipt of your claim. The notice will explain:

 

 

 

The reasons for the denial,

 

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The provisions of this Executive Severance Plan on which it is based,

 

 

 

Any additional material or information needed to make the claim acceptable and the reason it is necessary, and

 

 

 

The review procedures and the time limits applicable to such procedures, including a statement that you may have the right to bring a civil action under Section 502(a) of ERISA following review of the denial.

 

 

 

If special circumstances require additional time for processing of the claim, this initial review period may be extended for up to an additional ninety (90) days. If an extension is necessary, you will be notified of that fact in writing prior to the expiration of the initial ninety (90)-day review period. The extension notice which you receive will:

 

 

 

Explain what special circumstances make an extension necessary, and

 

 

 

Indicate the date a final decision is expected to be made.

 

If no response of any kind is received within 90 days of receipt of a claim, or by the end of an extension period, you should consider the claim denied. If a claim is denied and you wish to bring a civil action, you or your beneficiary must:

 

 

 

Submit a written request to the Company, in care of the Company’s Director of Total Rewards, 1601 Bryan Street, Dallas, Texas 75201, for an appeal of the denial, within 60 days of receipt of notice of the denial,

 

 

 

Review and receive copies, upon request, or all documents, records, and other information relevant to the claim; and

 

 

 

Submit written comments, documents, records and other information relating to the claim.

 

A decision on the denial will normally be made within sixty (60) days after a request for a review is received. The Company will send you written or electronic notification of the decision. If you lose on appeal, the notice will include the specific reasons for the decision and references to the provisions of the Plan on which it is based. The notice will also include a statement that you are entitled to receive, upon request and free of charge, access to copies of all documents, records and other information relevant to the claim and a statement that you may have the right to bring a civil action under Section 502(a) of ERISA.

 

If special circumstances require an extension of the review period, the time for making a final decision may be extended to an additional sixty (60) days. You will be notified of the extension prior to the expiration of the initial sixty (60)-day review period. The extension notice will explain what special circumstances make an extension necessary and indicate the date a final decision is expected to be made. .

 

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If you do not file a claim for benefits according to the above procedures or if you do not appeal an adverse initial decision, the Company may assert that you have waived any claim for benefits whether asserted in subsequent litigation or otherwise.

 

Plan Sponsor and Plan Administrator

 

The Executive Severance Plan, is considered an employee welfare severance plan under ERISA and is part of the TXU Welfare Benefit Plan. It is sponsored by TXU Corp. The Plan Administrator is TXU Business Services Company, 1601 Bryan Street, Dallas, Texas 75201, whose telephone number is (214) 812-4600.

 

The Plan Administrator and its designees, to the extent so designated, are responsible for the administration of the Executive Severance Plan and each has all such powers, authority and discretion as may be necessary to implement and carry out the provisions of the Executive Severance Plan and to interpret and construe all of the terms, provisions and limitations of the Executive Severance Plan. Such power, authority and discretion include, but are not limited to, the power, authority and discretion to: (a) determine all questions regarding eligibility to participate in the Executive Severance Plan, as well as all questions regarding the status of particular employees and others in relation to the Executive Severance Plan; (b) determine all questions regarding eligibility to receive benefits under the Executive Severance Plan, the date of commencement and termination of the payment of benefits and the amount of benefits; (c) interpret and construe all terms, provisions and limitations of the Executive Severance Plan, including without limitation, any and all doubtful, disputed or ambiguous provisions; (d) evaluate the compliance by Participants of their obligations and responsibilities under the Executive Severance Plan; and (e) promulgate binding rules for the administration and implementation of the Executive Severance Plan. Such decision made by the Plan Administrator and its designees are to be final and binding on all parties. No benefits are payable under this Plan unless approved by the Plan Administrator.

 

Plan Identification

 

Each of your benefit plans are filed with the United States Department of Labor under two numbers: the Employer Identification Number (EIN) and the Plan Number (PN). The EIN for all TXU Corp. benefit plans is 75-0705930. The Executive Severance Plan is part of the TXU Welfare Benefit Plan and its plan number is              .

 

Plan Year

 

Records for the Plan are kept on a calendar-year basis.

 

Agent for Service of Legal Process

 

Any service of legal process about the Executive Severance Plan should be delivered to Eric Peterson, Executive Vice President and General Counsel, TXU Corp., 1601 Bryan Street, Dallas, Texas 75201.

 

Employee Retirement Income Security Act

 

As a Participant in the Executive Severance Plan, you are entitled to certain rights and protections under the Employee Retirement Income Security Act of 1974 (ERISA). ERISA provides that all plan participants shall be entitled to:

 

 

 

Examine, without charge, at the Plan Administrator’s office and at other specified locations, such as work sites and union halls, all documents governing the Executive Severance Plan, including a copy of the latest annual report (Form 5500 Series), if required to have been filed by the Executive Severance Plan with the U.S. Department of Labor.

 

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Obtain, upon written request to the Executive Severance Plan Administrator, copies of documents governing the operation of the Executive Severance Plan. The Plan Administrator may make a reasonable charge for the copies.

 

In addition to creating rights for Plan Participants, ERISA imposes duties upon the people who are responsible for the operation of the Plan. The people who operate the Plan, called “fiduciaries” of the Plan, have a duty to do so prudently and in the interest of you and other Plan Participants and beneficiaries. No one, including your employer or any other person, may fire you or otherwise discriminate against you in any way to prevent you from obtaining a benefit or exercising your rights under ERISA.

 

If your claim for a benefit is denied or ignored, in whole or in part, you have a right to know why this was done, to obtain copies of documents relating to the decision without charge, and to appeal any denial, all within certain time schedules.

 

Under ERISA, there are steps you can take to enforce the above rights. For instance, if you request a copy of plan documents or the latest annual report, if required to have been filed, from the Plan and do not receive them within 30 days, you may file suit in a Federal court. In such a case, the court may require the Plan Administrator to provide the materials and pay you up to $110 a day until you receive the materials, unless the materials were not sent because of reasons beyond the control of the Plan Administrator. If you have a claim for benefits which is denied or ignored, in whole or in part, you may file suit in a state or Federal court. If it should happen that you are discriminated against for asserting your rights, you may seek assistance from the U.S. Department of Labor, or you may file suit in a Federal court. The court will decide who should pay court costs and legal fees. If you are successful, the court may order the person you have sued to pay these costs and fees. If you lose, the court may order you to pay these costs and fees (for example, if it finds your claim is frivolous).

 

If you have any questions about the Plan, you should contact the Plan Administrator. If you have any questions about this statement or about your rights under ERISA, or if you need assistance in obtaining documents from the Plan Administrator, you should contact the nearest office of the Employee Benefits Security Administration, U.S. Department of Labor, listed in your telephone directory or the Division of Technical Assistance and Inquiries, Employee Benefits Security Administration, U.S. Department of Labor, 200 Constitution Avenue N.W., Washington, D.C. 20210. You may also obtain certain publications about your rights and responsibilities under ERISA by calling the publications hotline of the Employee Benefits Security Administration.

 

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