Document:

<PAGE>

                                                                   Exhibit 10(d)
                                       TXU
                           DEFERRED COMPENSATION PLAN
                                       for
                                OUTSIDE DIRECTORS

                           (Effective August 17, 2001)

                               Section 1. Purpose
                               ------------------

1.1    Purpose.  The TXU Deferred Compensation Plan for Outside Directors (the
       -------
"Plan") was established, effective July 1, 1995, was renamed and restated
effective May 12, 2000 in connection with the corporate name change of the
Company, was amended and restated effective August 18, 2000, and is hereby
further amended and restated effective August 17, 2001. The primary purpose of
the Plan is to provide deferred compensation to Outside Directors which is
directly related to the performance of common stock of the Company. The Plan is
designed as an unfunded arrangement under the provisions of the Employee
Retirement Income Security Act of 1974 and of the Internal Revenue Code.

                             Section 2. Definitions
                             ----------------------

2.1    Definitions.  Whenever used hereinafter, the following terms shall have
       -----------
the meanings set forth below:

(a)    "Beneficiary" means the person or persons named by the Participant as the
recipient(s) of any distribution remaining to be paid to the Participant under
the Plan upon the Participant's death.

(b)    "Board of Directors" means the Board of Directors of the Company.

(c)    "Change in Control" means a change in control of the Company of a nature
that would be required to be reported in response to Item 1(a) of the Securities
and Exchange Commission Form 8-K, as in effect on the date hereof, pursuant to
Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended
("Exchange Act"), or would have been required to be so reported but for the fact
that such event had been "previously reported" as that term is defined in Rule
12b-2 of Regulation 12B under the Exchange Act; provided that, without
limitation, such a change in control shall be deemed to have occurred if: (i)
any Person is or becomes the beneficial owner (as defined in Rule 13-d3 under
the Exchange Act), directly or indirectly, of securities of the Company
representing 20% or more of the combined voting power of the Company's then
outstanding securities ordinarily (apart from rights accruing under special
circumstances) having the right to vote at elections of directors ("Voting
Securities"); or (ii) individuals who constitute the Board of Directors on the
date hereof (the "Incumbent Board") cease for any reason to constitute at least
a majority thereof, provided that any person becoming a director subsequent to
the date hereof whose election, or nomination for election by the Company's
shareholders, was approved by a vote of at least three-quarters of the directors
comprising the Incumbent Board (either by a specific vote or by approval of the
proxy statement of the Company in which such person is named as a nominee for
director, without objection to such nomination) shall be, for

<PAGE>

purposes of this clause (ii), considered as though such person were a member of
the Incumbent Board; or (iii) a recapitalization of the Company occurs which
results in either a decrease by 33% or more in the aggregate percentage
ownership of Voting Securities held by Independent Shareholders (on a primary
basis or on a fully diluted basis after giving effect to the exercise of stock
options and warrants) or 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%; or (iv) all or substantially all of the assets of
the Company are liquidated or transferred to an unrelated party; or (v) the
Company is a party to a merger, consolidation, reorganization or other business
combination transaction pursuant to which the Company is not the surviving
ultimate parent entity; or (vi) the Company is a party to a merger,
consolidation, reorganization or other business combination transaction which
requires the approval of the shareholders of the Company and which results in an
increase of 20% or more in the number of Voting Securities outstanding. For
purposes of this definition, the term "Person" shall mean and include any
individual, corporation, partnership, group, association or other "person", as
such term is used in Section 14(d) of the Exchange Act, other than the Company,
a subsidiary of the Company or any employee benefit plan(s) sponsored or
maintained by the Company or any subsidiary thereof, and the term "Independent
Shareholder" shall mean any shareholder of the Company except any employee(s) or
director(s) of the Company or any employee benefit plan(s) sponsored or
maintained by the Company or any subsidiary thereof.

(d)    "Committee" means the Organization and Compensation Committee of the
Board of Directors.

(e)    "Company" means TXU Corp., its successors and assigns.

(f)    "Compensation" means the annual retainer payable to Directors.

(g)    "Director" means a member of the Board of Directors of the Company.

(h)    "Maturity Period" means the period over which compensation deferrals and
Matching Awards are deferred as elected by a Participant in accordance with the
provisions of this Plan.

(i)    "Outside Director" means a Director who is not a current or former
officer or employee of the Company or any of its subsidiaries.

(j)    "Participant" means an Outside Director who elects to participate in the
Plan and whose account(s) has not been completely distributed.

(k)    "Performance Unit" means a measure of participation under the Plan having
a value equal to the value of a share of Stock, as determined by the value of
such Stock in the Trust.

(l)    "Plan Administrator" means the person appointed to assist the Committee
in carrying out the operations of the Plan.

                                       -2-

<PAGE>

(m)    "Plan Year" means the twelve-month period beginning July 1 and ending
June 30.

(n)    "Retirement" means the first day of the month following the later of (i)
attaining age sixty-five or (ii) termination of service on the Board for any
reason other than death or disability.

(o)    "Stock" means common stock of the Company.

(p)    "Trust" means the irrevocable grantor trust established by the Company to
purchase, hold, and sell shares of Stock so as to establish the number and value
of Performance Units allocable to Participants' accounts and from which benefits
under the Plan will be paid.

                 Section 3. Deferral Participation and Election
                 ----------------------------------------------

3.1    Participation.  Each Outside Director may elect to defer a percentage of
       -------------
Compensation (in 25 percent increments up to 100 percent) by filing with the
Plan Administrator, prior to the applicable Plan Year, an irrevocable written
election to defer such amount and to elect the Maturity Period for such
deferral. A Participant may, subject to, and in accordance with, procedures and
guidelines approved from time to time by the Plan Administrator, modify the
Maturity Period relating to any such deferral provided that: (i) any such
modification must be made at least twelve (12) months prior to: (a) the date
that the deferrals would otherwise mature, in the case of a requested extension
of the Maturity Period, or (b) the desired maturity date, in the case of a
requested reduction of the Maturity Period; and (ii) the Maturity Period must
continue to be within the limits provided for in Section 4.2 hereof.

3.2    Compensation Reductions.  Compensation deferred under the Plan will be
       -----------------------
ratably deducted in each quarter of the Plan Year.

                        Section 4. Company Matching Award
                        ---------------------------------

4.1    Matching Award.  A Matching Award shall be credited to each Participant's
       --------------
account by the Company in an amount equal to 100 percent of the amount deferred
by the Participant. Such Matching Award shall be deemed to occur on the first
day of the Plan Year.

4.2    Maturity Period.  Compensation deferrals and Matching Awards shall have a
       ---------------
Maturity Period of not fewer than three nor more than ten years as indicated in
the written election. The Maturity Period shall begin on the first day of the
Plan Year in which the Compensation deferral and Matching Award is made.

                         Section 5. Participant Accounts
                         -------------------------------

5.1    Separate Accounts.  The Plan Administrator shall establish and maintain
       -----------------
an individual account for Compensation deferrals elected by each Participant and
the Matching Awards for each Plan Year. The account shall be credited as of the
first day of the Plan Year with the amount of Compensation to be deferred during
the Plan Year and the related Matching Award.

                                       -3-

<PAGE>

5.2    Performance Units.  Any and all amounts credited to a Participant's
       -----------------
account shall be converted into Performance Units as of the applicable date.
After notification of the number of shares acquired by the Trust with the
aggregate credits to Participants, as provided in Subsection 6.2, the Plan
Administrator will allocate an equal number of Performance Units, including
fractional units, to individual accounts based on the percentage relationship of
each Participant's credits to the total of such credits for all Participants.

5.3    Dividend Equivalent Credits.  Additional Performance Units shall be
       ---------------------------
credited to a Participant's account as Dividend Equivalent Credits. Such amount
shall be determined by multiplying the Performance Units recorded in a
Participant's account by the amount of any regular or special cash dividend
declared on each share of the Stock and dividing the product by the amount paid
by the Trust for a share of Stock with the dividend amounts.

5.4    Date of Credit.  Dividend Equivalent Credits shall be credited to a
       --------------
Participant's account as of the same date as the cash dividend on the Stock is
paid to shareholders.

5.5    Unsecured Interest.  All Performance Units credited to the account of
       ------------------
each Participant shall be for record purposes only. No Participant or
Beneficiary shall have any security interest whatsoever in any assets of the
Company. To the extent that any person acquires a right to receive payments
under the Plan, such right shall not be secured or represented by any issued
Stock or common stock to be issued.

                        Section 6. Investment and Funding
                        ---------------------------------

6.1    Grantor Trust.  The benefits to be derived by Participants in the Plan
       -------------
will be funded through the Trust; provided, however, that any Stock, cash, or
other property held by the Trust that was contributed by the Company shall at
all times be subject to the claims of general creditors of the Company.

6.2    Funding of Trust.  Upon determination of the total credits to
       ----------------
Participants' accounts for a Plan Year, the Company shall promptly provide the
Trust with resources in the aggregate of such amounts. The Trustee will invest
such aggregate amounts in shares of the Stock and promptly notify the Plan
Administrator of the number of shares so acquired. The Trustee will use any cash
dividends received on Stock held in the Trust to buy additional shares of Stock
and promptly notify the Plan Administrator of the number of shares so acquired.

6.3    Distributions from Trust.  The Trustee, upon notification from the Plan
       ------------------------
Administrator, will make the distributions of matured benefits to Participants
or their Beneficiaries as provided in the Plan. If Trust assets are insufficient
to pay the amount of a matured benefit, the Company will pay such deficiency
directly to the Participant or Beneficiary. Any assets held in the Trust which
the Trustee determines to be in excess of those required to pay the benefits
when due to Participants may be returned to the Company.

6.4    Voting of Stock Held in Trust.  Stock held in the Trust shall be voted by
       -----------------------------
the Trustee in its discretion.

                                       -4-

<PAGE>

                    Section 7. Distribution of Account Values
                    -----------------------------------------

7.1  Value of a Participant's Account. The value of a Participant's account will
     --------------------------------
equal the net proceeds received by the Trust from the sale of shares equal in
number to the number of Performance Units representing the Participant's
deferred amount and Matching Award applicable to the designated Maturity Period,
together with all Dividend Equivalent Credits earned thereon.

7.2  Form and Timing of Distribution. The value of a Participant's account at
     -------------------------------
maturity shall be determined as provided in Subsection 7.1. The value of the
Participant's account at maturity shall be paid in cash. Payment shall be made
as soon as practicable, but in event later than thirty (30) days, following
maturity of the Participant's account. No interest shall accrue or be paid from
date of maturity to date of payment on such amounts.

                        Section 8. Termination of Service
                        ---------------------------------

8.1  Termination of Service Due to Death or Disability. In the event a
     -------------------------------------------------
Participant's service is terminated by reason of death or disability, all
amounts credited to the account shall mature upon such termination. The
Participant or the Participant's Beneficiary shall then receive, as soon as
practicable after the date of such termination, a distribution of the
Participant's account based on the value of the account as provided in
Subsection 7.1.

8.2  Termination of Service Prior to the End of the Plan Year. In the event a
     --------------------------------------------------------
Participant's service is terminated for any reason prior to the end of the Plan
Year, the deferred amount, Matching Award, and Dividend Equivalent Credits for
such Plan Year will be recomputed as of the date of termination. The value of
the recomputed account shall be an amount equal to the product of the value of
the Performance Units at the date of termination credited to the Participant's
account multiplied by a fraction, the numerator of which is the actual
Compensation reduction for the portion of the Plan Year preceding termination,
and the denominator of which is the Compensation reduction elected for the
entire Plan Year.

                          Section 9. Nontransferability
                          -----------------------------

9.1  Nontransferability. In no event shall the Company make any distribution or
     ------------------
payment under this Plan to any assignee or creditor of a Participant or a
Beneficiary. Prior to the time of a distribution or payment hereunder, a
Participant or a Beneficiary shall have no rights by way of anticipation or
otherwise to assign or otherwise dispose of any interest under this Plan.

                    Section 10. Designation of Beneficiaries
                    ----------------------------------------

10.1 Specified Beneficiary. A Participant shall designate a Beneficiary or
     ---------------------
Beneficiaries who, upon the Participant's death, are to receive the amounts
which otherwise would have been paid to the Participant. All Beneficiary
designations shall be in writing and signed by the Participant, and shall be
effective only if and when delivered to the Plan Administrator during the
lifetime of the Participant. A Participant may, from time to time during the
Participant's lifetime, change

                                      -5-

<PAGE>

the Beneficiary or Beneficiaries by a signed, written instrument delivered to
the Plan Administrator. The payment of amounts shall be in accordance with the
last unrevoked written designation of the Beneficiary that has been signed and
so delivered.

10.2 Estate as Beneficiary. If a Participant designates a Beneficiary without
     ---------------------
providing in the designation that the Beneficiary must be living at the time of
each distribution, the designation shall vest in the Beneficiary all of the
distributions whether payable before or after the Beneficiary's death, and any
distributions remaining upon the Beneficiary's death shall be made to the
Beneficiary's estate. In the event a Participant shall not designate a
Beneficiary or Beneficiaries, or if for any reason such designation shall be
ineffective, in whole or in part, as determined solely in the discretion of the
Plan Administrator, the distribution that otherwise would have been paid to such
Participant shall be paid to the Participant's estate and in such event the term
"Beneficiary" shall include the Participant's estate.

                       Section 11. Rights of Participants
                       ----------------------------------

11.1 Board Membership. All Participants understand that they are elected by the
     ----------------
shareholders; therefore, nothing in the Plan shall interfere with or limit in
any way the manner in which a Director is elected and serves in such capacity
nor confer upon a Participant any additional right to continue to serve as a
Director.

                           Section 12. Administration
                           --------------------------

12.1 Administration. The Committee, in accordance with administrative
     --------------
guidelines, shall be responsible for the administration of the Plan. The
Committee is authorized to interpret the Plan, to prescribe, amend, and rescind
rules and regulations relating to the Plan, provide for conditions and
assurances deemed necessary or advisable to protect the interests of the
Company, and to make all other determinations necessary or advisable for the
administration of the Plan or to delegate such duties to the Plan Administrator.
The determination of the Committee, interpretation or other action made or taken
pursuant to the provisions of the Plan, shall be final, binding and conclusive
for all purposes and upon all persons whomsoever. The Committee shall appoint a
Plan Administrator to assist in carrying out the operations of the Plan.

12.2 Annual Reports. The Plan Administrator shall render annually a written
     --------------
report to each Participant which shall set forth, at a minimum, the
Participant's account balances as of the end of the most recent Plan Year.

12.3 Costs. Participants shall bear costs equal to the costs incurred by the
     -----
Trust related to the purchase and sale of Stock by the Trust. The Company hall
pay all other costs of the Plan and the Trust.

                Section 13. Amendment or Termination of the Plan
                ------------------------------------------------

13.1 Amendment or Termination of the Plan. The Board of Directors may amend,
     ------------------------------------
terminate, or suspend the Plan at any time. Any such amendment, termination, or
suspension of the Plan shall

                                       -6-

<PAGE>

be effective on such date as the Board of Directors may determine. An amendment
or modification of the Plan may affect Participants at the time thereof as well
as future Participants, but no amendment or modification of the Plan for any
reason may diminish any Participant's account as of the effective date thereof.
Upon Plan termination, Subsection 8.2 shall apply as if the Plan termination
date were the termination of service date.

                          Section 14. Change in Control
                          -----------------------------

14.1 Notwithstanding anything in this Plan to the contrary, in the event of a
Change in Control: (a) the provisions set forth in Section 8.2 relating to the
recomputation of a Participant's account shall no longer apply such that, upon
distribution of a Participant's account, such Participant shall be entitled to
the full value of all Performance Units being distributed without forfeiture or
recomputation of any kind; (b) all amounts that would mature within twelve (12)
months of such Change in Control shall be deemed to have matured and be paid in
full promptly, and in any event within thirty (30) days, following such Change
in Control; and (c) with respect to all amounts that would mature more than
twelve (12) months following such Change in Control, Participants shallbe
entitled to elect, as of the date of such Change in Control, to have such
amounts mature and be paid on the first anniversary of such Change in Control or
as of the date they would otherwise mature under the terms of the Plan.

                         Section 15. Requirements of Law
                         -------------------------------

15.1 Governing Law. The Plan, and all agreements hereunder, shall be construed
     -------------
in accordance with and governed by the laws of the State of Texas.

                          Section 16. Withholding Taxes
                          -----------------------------

16.1 Withholding Taxes. The Company shall have the right to deduct from all cash
     -----------------
payments under the Plan or from a Participant's compensation an amount necessary
to satisfy any Federal, state, or local withholding tax requirements.

                                      -7-

<PAGE>

             EXECUTED effective as of the 17/th/ day of August, 2001.

                                    TXU CORP.

              By: /s/ Peter B. Tinkham
                  --------------------------------------------
                               Peter B. Tinkham,
                        Secretary and Assistant Treasurer

                                      -8-<PAGE>

                                                                   Exhibit 10(e)

                                       TXU

                      Long-Term Incentive Compensation Plan

This document constitutes part of a prospectus covering securities that have
been registered under the Securities Act of 1933.

August 17, 2001

<PAGE>

                                       TXU

                      LONG-TERM INCENTIVE COMPENSATION PLAN

Section 1. Purpose

     The TXU Long-Term Incentive Compensation Plan (the "Plan") was established
effective May 23, 1997 and is renamed and restated effective May 12, 2000 in
connection with the corporate name change of the Company. The primary purpose of
the Plan is to promote the interests of the Company and its shareholders through
the (i) attraction and retention of executive officers and other key employees
essential to the success of the Company; (ii) motivation of executive officers
and other key employees using performance-related incentives linked to
long-range performance goals and the interests of Company shareholders; and
(iii) enabling of such employees to share in the long-term growth and success of
the Company. The Plan permits the grant of Incentive Stock Options (intended to
qualify under Section 422 of the Code), Nonqualified Stock Options, Stock
Appreciation Rights, Restricted Stock, Restricted Stock Units, Performance
Shares, Performance Units, Bonus Stock, and any other Stock Unit Awards or
stock-based forms of awards as the Committee, in its sole and complete
discretion, may determine to be appropriate in carrying out the intent and
purposes of this Plan.

Section 2. Definitions

     When used in this Plan, the following terms shall have the meanings set
forth below:

     2.1  "Affiliate" shall have the meaning ascribed to such term in Rule 12b-2
          under the Exchange Act.

     2.2  "Agreement" means a written agreement between the Company and a
          Participant implementing the grant, and setting forth the particular
          terms, conditions and restrictions of each Award. With respect to the
          grant of an Option, the Agreement may be referred to herein as an
          "Option Agreement," and with respect to any other Award hereunder, the
          Agreement may be referred to herein as an "Award Agreement."

     2.3  "Award" means a grant under the Plan of Nonqualified Stock Options,
          Incentive Stock Options, Stock Appreciation Rights, Restricted Stock,
          Restricted Stock Units, Performance Units, Performance Shares, Bonus
          Stock, or other Stock Unit Awards.

     2.4  "Award Date" or "Grant Date" means the date on which an Award is made
          by the Committee under the Plan.

     2.5  "Beneficial Owner" shall have the meaning ascribed to such term in
          Rule 13d-3 under the Exchange Act.

                                       2

<PAGE>

     2.6  "Board" or "Board of Directors" means the Board of Directors of the
          Company.

     2.7  "Bonus Stock" means an Award granted pursuant to Section 10 of the
          Plan.

     2.8  "Cashless Exercise" means the exercise of an Option by the Participant
          through the use of a brokerage firm to make payment to the Company of
          the exercise price either from the proceeds of a loan to the
          Participant from the brokerage firm or from the proceeds of the sale
          of Stock issued pursuant to the exercise of the Option, and upon
          receipt of such payment, the Company delivers the exercised Shares to
          the brokerage firm.

     2.9  "Cause", for purposes of applying the provisions of Section 13 hereof
          relating to a Change in Control of the Company, shall mean:

          (a)  Participant's breach of his fiduciary duty to the Company and/or
               its shareholders as applicable;

          (b)  any action or failure to act on the part of Participant which
               results in material injury to the assets, business prospects or
               reputation of the Company or any affiliate of the Company;

          (c)  the appropriation by Participant of a material business
               opportunity of the Company or any affiliate of the Company,
               including Participant's attempting to secure or securing any
               personal profit in connection with any transaction entered into
               on behalf of the Company; or

          (d)  Participant's breach of the Company's Code of Conduct or a
               material express employment policy of the Company."

     2.10 "Change in Control" means a change in control of the Company of a
          nature that would be required to be reported in response to Item 1(a)
          of the Securities and Exchange Commission Form 8-K, as in effect on
          the date hereof, pursuant to Section 13 or 15(d) of the Securities
          Exchange Act of 1934, as amended ("Exchange Act"), or would have been
          required to be so reported but for the fact that such event had been
          "previously reported" as that term is defined in Rule 12b-2 of
          Regulation 12B under the Exchange Act; provided that, without
          limitation, such a change in control shall be deemed to have occurred
          if: (i) any Person is or becomes the beneficial owner (as defined in
          Rule 13-d3 under the Exchange Act), directly or indirectly, of
          securities of the Company representing 20% or more of the combined
          voting power of the Company's then outstanding securities ordinarily
          (apart from rights accruing under special circumstances) having the
          right to vote at elections of directors ("Voting Securities"); or (ii)
          individuals who constitute the Board of Directors on the date hereof
          (the "Incumbent Board") cease for any reason to constitute at least a
          majority

                                       3

<PAGE>

          thereof, provided that any person becoming a director subsequent to
          the date hereof whose election, or nomination for election by the
          Company's shareholders, was approved by a vote of at least
          three-quarters of the directors comprising the Incumbent Board (either
          by a specific vote or by approval of the proxy statement of the
          Company in which such person is named as a nominee for director,
          without objection to such nomination) shall be, for purposes of this
          clause (ii), considered as though such person were a member of the
          Incumbent Board; or (iii) a recapitalization of the Company occurs
          which results in either a decrease by 33% or more in the aggregate
          percentage ownership of Voting Securities held by Independent
          Shareholders (on a primary basis or on a fully diluted basis after
          giving effect to the exercise of stock options and warrants) or 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%; or (iv) all or substantially all of the
          assets of the Company are liquidated or transferred to an unrelated
          party; or (v) the Company is a party to a merger, consolidation,
          reorganization or other business combination transaction pursuant to
          which the Company is not the surviving ultimate parent entity; or (vi)
          the Company is a party to a merger, consolidation, reorganization or
          other business combination transaction which requires the approval of
          the shareholders of the Company and which results in an increase of
          20% or more in the number of Voting Securities outstanding. For
          purposes of this definition, the term "Person" shall mean and include
          any individual, corporation, partnership, group, association or other
          "person", as such term is used in Section 14(d) of the Exchange Act,
          other than the Company, a subsidiary of the Company or any employee
          benefit plan(s) sponsored or maintained by the Company or any
          subsidiary thereof, and the term "Independent Shareholder" shall mean
          any shareholder of the Company except any employee(s) or director(s)
          of the Company or any employee benefit plan(s) sponsored or maintained
          by the Company or any subsidiary thereof.

     2.11 "Code" means the Internal Revenue Code of 1986 and the rules and
          regulations promulgated thereunder, or any successor law, as amended
          from time to time.

     2.12 "Committee" means the Organization and Compensation Committee of the
          Board.

     2.13 "Common Stock" or "Stock" means the Common Stock of the Company,
          without par value, or such other security or right or instrument into
          which such Common Stock may be changed or converted in the future.

     2.14 "Company" means TXU Corp., including all Affiliates and wholly-owned
          subsidiaries, or any successor thereto.

     2.15 "Covered Participant" means a Participant who is a "covered employee"
          as defined in Code Section 162(m)(3) and the regulations promulgated
          thereunder.

                                       4

<PAGE>

     2.16 "Designated Beneficiary" means the beneficiary designated by the
          Participant, pursuant to procedures established by the Committee, to
          receive amounts due to the Participant in the event of the
          Participant's death. If the Participant does not make an effective
          designation, then the Designated Beneficiary will be deemed to be the
          Participant's estate.

     2.17 "Disability" means (i) the mental or physical disability of the
          Participant defined as "Disability" under the terms of the TXU
          Long-Term Disability Income Plan, as amended from time to time in
          accordance with the provisions of such plan; or (ii) a determination
          by the Committee, in its sole discretion, of total disability (based
          on medical evidence) that precludes the Participant from engaging in
          any occupation or employment for wage or profit for at least six (6)
          months and appears to be permanent. All decisions by the Committee
          relating to a Participant's Disability (including a decision that a
          Participant is not disabled), shall be final and binding on all
          parties.

     2.18 "Divestiture" means the sale of, or closing by, the Company of the
          business operations in which the Participant is employed.

     2.19 "Early Retirement" means Earlier-than-Normal Retirement of a
          Participant under, and subject to, the provisions of the Retirement
          Plan.

     2.20 "Exchange Act" means the Securities Exchange Act of 1934 and the rules
          and regulations promulgated thereunder, or any successor law as
          amended from time to time.

     2.21 "Executive Officer" means any employee considered by the Company to be
          an Executive Officer.

     2.22 "Fair Market Value" means, on any given date, the closing price of
          Stock as reported on the New York Stock Exchange composite tape on
          such day or, if no Shares were traded on the New York Stock Exchange
          on such day, then on the next preceding day that Stock was traded on
          such exchange, all as reported by The Wall Street Journal or such
                                            -----------------------
          other source as the Committee may select.

     2.23 "Full-time Employee" means an individual who is employed by the
          Company or a Subsidiary in a customary employer-employee relationship,
          is on the payroll of the Company or such Subsidiary, receives
          compensation directly from the Company or such Subsidiary, and is
          designated in the internal payroll or other records of the Company or
          a Subsidiary as a regular, full-time employee. This designation
          excludes all leased employees (within the meaning of Code Section
          414(n)), part-time employees, temporary employees, or contract
          employees, as well as all consultants to, the Company.

                                       5

<PAGE>

     2.24 "Incentive Stock Option" or "ISO" means an option to purchase Stock,
          granted under Section 6 herein, which is designated as an incentive
          stock option and is intended to meet the requirements of Code Section
          422.

     2.25 "Key Employee" means a Full-time Employee who is an officer or other
          key employee of the Company or its Subsidiaries as designated or
          determined by the Committee.

     2.26 "Nonqualified Stock Option" or "NQSO" means an option to purchase
          Stock, granted under Article 6 herein, which is not intended to
          qualify as, or constitute an Incentive Stock Option.

     2.27 "Normal Retirement" means Normal Retirement of a Participant under,
          and subject to, the provisions of the Retirement Plan.

     2.28 "Option" means an Incentive Stock Option or a Nonqualified Stock
          Option.

     2.29 "Other Stock Unit Award" means awards of Stock or other Awards that
          are valued in whole or in part by reference to, or are otherwise based
          on, the value of the Company's Common Stock.

     2.30 "Participant" means a Key Employee who has been granted an Award under
          the Plan.

     2.31 "Performance Criteria" means the objectives established by the
          Committee for a Performance Period, for the purpose of determining
          when an Award subject to such objectives has been earned.

     2.32 "Performance Award" means a performance-based Award made under Section
          9 herein, which may be in the form of either Performance Shares or
          Performance Units.

     2.33 "Performance Period" means the time period designated by the Committee
          during which performance goals must be met in order for a Participant
          to obtain a performance-based Award.

     2.34 "Performance Share" means an Award, designated as a Performance Share,
          granted to a Participant pursuant to Section 9 herein, the value of
          which is determined, in whole or in part, by the value of Company
          Stock in a manner deemed appropriate by the Committee and described in
          the applicable Agreement.

     2.35 "Performance Unit" means an Award, designated as a Performance Unit,
          granted to a Participant pursuant to Section 9 herein, the value of
          which is determined, in whole or in part, by the attainment of
          pre-established Performance Criteria as deemed appropriate by the
          Committee and described in the Agreement.

                                       6

<PAGE>

     2.36 "Period of Restriction" means the period during which the transfer of
          Shares of Restricted Stock is restricted, pursuant to Section 8
          herein.

     2.37 "Person" shall have the meaning ascribed to such term in Section
          3(a)(9) of the Exchange Act and used in Sections 13(d) and 14(d)
          thereof, including a "group" as defined in Section 13(d).

     2.38 "Plan" means the TXU Long-Term Incentive Compensation Plan as herein
          established and as hereafter amended from time to time.

     2.39 "Restricted Stock" means an Award of Stock granted to a Participant
          pursuant to Section 8 herein.

     2.40 "Restricted Stock Unit" means a fixed or variable dollar denominated
          right to acquire Stock, which may or may not be subject to
          restrictions, contingently awarded under Section 8 of the Plan.

     2.41 "Retirement Plan" means the TXU Retirement Plan, as it may be amended
          from time to time.

     2.42 "Rule 16b-3" means Rule 16b-3 under Section 16(b) of the Exchange Act
          as adopted in Exchange Act Release No. 34-37260 (May 30, 1996), or any
          successor rule as amended from time to time.

     2.43 "Section 162(m)" means Section 162(m) of the Code, or any successor
          section under the Code, as amended from time to time and as
          interpreted by final or proposed regulations promulgated thereunder
          from time to time.

     2.44 "Securities Act" means the Securities Act of 1933 and the rules and
          regulations promulgated thereunder, or any successor law, as amended
          from time to time.

     2.45 "Stock" or "Shares" means the Common Stock of the Company.

     2.46 "Stock Appreciation Right" means the right to receive an amount equal
          to the excess of the Fair Market Value of a share of Stock (as
          determined on the date of exercise) over the Exercise Price of a
          related Option or the Fair Market Value of the Stock on the Grant Date
          of the Stock Appreciation Right.

     2.47 "Stock Unit Award" means an award of Common Stock or units granted
          under Section 11.

                                       7

<PAGE>

     2.48 "Subsidiary" means a corporation in which the Company owns, either
          directly or through one or more of its Subsidiaries, at least 50% of
          the total combined voting power of all classes of stock.

Section 3. Administration

     3.1 The Committee. The Plan shall be administered and interpreted by the
         -------------
Committee which shall have full authority, discretion and power necessary or
desirable for such administration and interpretation. The express grant in this
Plan of any specific power to the Committee shall not be construed as limiting
any power or authority of the Committee. In its sole and complete discretion the
Committee may adopt, alter, suspend and repeal any such administrative rules,
regulations, guidelines, and practices governing the operation of the Plan as it
shall from time to time deem advisable. In addition to any other powers and,
subject to the provisions of the Plan, the Committee shall have the following
specific powers: (i) to determine the terms and conditions upon which Awards may
be made and exercised; (ii) to determine the Participants to which Awards shall
be made; (iii) to determine all terms and provisions of each Agreement, which
need not be identical for types of Awards nor for the same type of Award to
different Participants; (iv) to construe and interpret all terms, conditions and
provisions of the Plan and all Agreements; (v) to establish, amend, or waive
rules or regulations for the Plan's administration; (vi) to accelerate the
exercisability of any Award, the length of a Performance Period or the
termination of any Period of Restriction; and (vii) to make all other
determinations and take all other actions necessary or advisable for the
administration or interpretation of the Plan. The Committee may seek the
assistance or advice of any persons it deems necessary to the proper
administration of the Plan.

     3.2 Committee Decisions. Unless strictly and expressly prohibited by law,
         -------------------
all determinations and decisions made by the Committee pursuant to the
provisions of this Plan shall be final, conclusive, and binding upon all
persons, including Participants, Designated Beneficiaries, the Company, its
shareholders and employees.

     3.3 Rule 16b-3 and Section 162(m) Requirements. Notwithstanding any other
         ------------------------------------------
provision of the Plan, the Committee may impose such conditions on any Award as
it may deem to be advisable or required to satisfy the requirements of Rule
16b-3 or Section 162(m).

Section 4. Eligibility

     The Committee shall have sole and complete discretion in determining those
Key Employees who shall participate in the Plan. The Committee may request
recommendations for individual awards from the Company's Chief Executive Officer
and may delegate to the Chief Executive Officer the authority to make Awards to
Participants who are not Executive Officers of the Company.

Section 5. Shares Subject to the Plan

                                       8

<PAGE>

     5.1 Number of Shares. Subject to adjustment as provided for in Section 5.4
         ----------------
below, the maximum aggregate number of Shares that may be issued pursuant to
Awards made under the Plan shall not exceed 2,500,000 Shares, which may be in
any combination of Options, Restricted Stock, Restricted Stock Units,
Performance Shares, Bonus Shares, or Other Stock Unit Award. Shares of Common
Stock may be available from the authorized but unissued Shares, Shares issued
and reacquired by the Company or Shares purchased in the open market for
purposes of the Plan. Except as provided in Sections 5.2 and 5.3 herein, the
issuance of Shares in connection with the exercise of, or as other payment for,
Awards under the Plan shall reduce the number of Shares available for future
Awards under the Plan.

     5.2 Lapsed Awards or Forfeited Shares. In the event that: (i) any Option or
         ---------------------------------
other Award granted under the Plan terminates, expires, or lapses for any reason
without having been exercised in accordance with its terms; (ii) Shares issued
pursuant to the Awards are canceled or forfeited for any reason; or (iii) Awards
are paid in cash, the Shares subject to such Award shall thereafter be again
available for grant of an Award under the Plan.

     5.3 Delivery of Shares as Payment. In the event a Participant pays for any
         -----------------------------
Option or other Award granted under the Plan through the delivery of previously
acquired shares of Common Stock, the number of shares of Common Stock available
for Awards under the Plan shall be increased by the number of shares surrendered
by the Participant.

     5.4 Capital Adjustments. The number and class of Shares subject to each
         -------------------
outstanding Award, the Option Price and the aggregate number, type and class of
Shares for which Awards thereafter may be made shall be subject to adjustment,
if any, as the Committee deems appropriate, based on the occurrence of a number
of specified and non-specified events. Such specified events are discussed in
this Section 5.4, but such discussion is not intended to provide an exhaustive
list of such events which may necessitate adjustments.

     (a)  If the outstanding Shares are increased, decreased or exchanged
          through merger, consolidation, sale of all or substantially all of the
          property of the Company, reorganization, recapitalization,
          reclassification, stock dividend, stock split, reverse stock split or
          other distribution in respect to such Shares, for a different number
          or type of Shares, or if additional Shares or new or different Shares
          are distributed with respect to such Shares, an appropriate and
          proportionate adjustment shall be made in: (i) the maximum number of
          shares of Stock available for the Plan as provided in Section 5.1
          herein; (ii) the type of shares or other securities available for the
          Plan; (iii) the number of shares of Stock subject to any then
          outstanding Awards under the Plan; and (iv) the price (including
          Exercise Price) for each share of Stock (or other kind of shares or
          securities) subject to then outstanding Awards, but without change in
          the aggregate purchase price as to which such Options remain
          exercisable or Restricted Stock releasable.

                                       9

<PAGE>

     (b)  In the event other events not specified above in this Section 5.4,
          such as any extraordinary cash dividend, split-up, reverse split,
          spin-off, combination, exchange of shares, warrants or rights offering
          to purchase Common Stock, or other similar corporate event, affect the
          Common Stock such that an adjustment is necessary to maintain the
          benefits or potential benefits intended to be provided under this
          Plan, then the Committee in its discretion may make adjustments to any
          or all of: (i) the number and type of shares which thereafter may be
          optioned and sold or awarded or made subject to Stock Appreciation
          Rights under the Plan; (ii) the grant, exercise or conversion price of
          any Award made under the Plan thereafter; and (iii) the number and
          price (including Exercise Price) of each share of Stock (or other kind
          of shares or securities) subject to the then outstanding Awards.

     (c)  Any adjustment made by the Committee pursuant to the provisions of
          this Section 5.4 shall be final, binding and conclusive. A notice of
          such adjustment, including identification of the event causing such
          adjustment, the calculation method of such adjustment, and the change
          in price and the number of shares of Stock, or securities, cash or
          property purchasable subject to each Award shall be sent to each
          Participant. No fractional interests shall be issued under the Plan
          based on such adjustments.

Section 6. Stock Options

     6.1 Grant of Stock Options. Subject to the terms and provisions of the Plan
         ----------------------
and applicable law, the Committee, at any time and from time to time, may grant
Options to Key Employees as it shall determine. The Committee shall have sole
and complete discretion in determining the type of Option granted, the Option
Price (as hereinafter defined), the duration of the Option, the number of Shares
to which an Option pertains, any conditions imposed upon the exercisability or
the transferability of the Options, including vesting conditions, the conditions
under which the Option may be terminated, and any such other provisions as may
be warranted to comply with the law or rules of any securities trading system or
stock exchange. Each Option grant shall have such specified terms and conditions
detailed in an Option Agreement. The Option Agreement shall specify whether the
Option is intended to be an Incentive Stock Option or a Nonqualified Stock
Option.

     6.2 Option Price. The exercise price per share of Stock covered by an
         ------------
Option ("Option Price") shall be determined on the Grant Date by the Committee;
provided that the Option Price shall not be less than 100% of the Fair Market
Value of the Common Stock on the Grant Date.

     6.3 Exercisability. Options granted under the Plan shall be exercisable at
         --------------
such times and be subject to such restrictions and conditions as the Committee
shall determine, which will be specified in the Option Agreement and need not be
the same for each Participant. However, no Option granted under the Plan may be
exercisable until the expiration of at least six months after the Grant Date
(except that such limitations shall not apply in the case of death or Disability
of the Participant, or a Change in Control), nor after the expiration of ten
years from the Grant Date.

                                       10

<PAGE>

     6.4 Method of Exercise. Options shall be exercised by the delivery of a
         ------------------
written notice from the Participant to the Company in a form prescribed by the
Committee setting forth the number of Shares with respect to which the Option is
to be exercised, accompanied by full payment or provision for full payment for
the Shares. The Option Price shall be payable to the Company in full in cash, or
its equivalent, or by delivery of Shares of Stock (not subject to any security
interest or pledge) having a Fair Market Value at the time of exercise equal to
the exercise price of the Shares, or by a combination of the foregoing. In
addition, at the request of the Participant, and subject to applicable laws and
regulations, the Company may (but shall not be required to) cooperate in a
Cashless Exercise of the Option. As soon as practicable, after receipt of
written notice and full payment of the Option Price, the Company shall deliver
to the Participant a stock certificate, issued in the Participant's name,
evidencing the number of Shares with respect to which the Option was exercised.

Section 7. Stock Appreciation Rights

     7.1 Grant of Stock Appreciation Rights. Subject to the terms and provisions
         ----------------------------------
of the Plan and applicable law, the Committee, at any time and from time to
time, may grant freestanding Stock Appreciation Rights, Stock Appreciation
Rights in tandem with an Option, or Stock Appreciation Rights in addition to an
Option. Stock Appreciation Rights granted in tandem with an Option or in
addition to an Option may be granted at the time of the Option or at a later
time. No Stock Appreciation Rights granted under the Plan may be exercisable
until the expiration of at least six months after the Grant Date (except that
such limitations shall not apply in the case of death or Disability of the
Participant, or a Change in Control), nor after the expiration of ten years from
the Grant Date.

     7.2 Price. The exercise price of each Stock Appreciation Right shall be
         -----
determined at the time of grant by the Committee, subject to the limitation that
the grant price shall not be less than 100% of Fair Market Value of the Common
Stock on the Grant Date.

     7.3 Exercise. Stock Appreciation Rights shall be exercised by the delivery
         --------
of a written notice from the Participant to the Company in a form prescribed by
the Committee. Upon such exercise, the Participant shall be entitled to receive
an amount equal to the excess of the Fair Market Value of a Share over the grant
price thereof on the date of exercise of the Stock Appreciation Right multiplied
by the number of Shares for which the Stock Appreciation Right was granted.

     7.4 Payment. Payment upon exercise of the Stock Appreciation Right shall be
         -------
in the amount of the full exercise price therefor, and shall be made in the form
of cash, cash installments, Shares of Common Stock, or a combination thereof, as
determined in the sole and complete discretion of the Committee. However, if any
payment in the form of Shares results in a fractional share, such payment for
the fractional share shall be made in cash.

Section 8. Restricted Stock and Restricted Stock Units

                                       11

<PAGE>

     8.1 Grant of Restricted Stock. Subject to the terms and provisions of the
         -------------------------
Plan and applicable law, the Committee, at any time and from time to time, may
grant shares of Restricted Stock and Restricted Stock Units under the Plan to
such Participants, and in such amounts and for such duration and/or
consideration as it shall determine.

     8.2 Restricted Stock Award Agreement. Each Restricted Stock and Restricted
         --------------------------------
Stock Unit granted hereunder shall be evidenced by an Award Agreement that shall
specify the Period of Restriction, the conditions which must be satisfied prior
to removal of the restriction, the number of Shares of Restricted Stock or
Restricted Stock Units granted, payment terms for each such Award (e.g. whether
the Award will be paid in shares of Stock, cash or a combination thereof, and
whether payment will be in a lump sum or installments), and such other
provisions as the Committee shall determine. The Committee may specify, but is
not limited to, the following types of restrictions in the Award Agreement: (i)
restrictions on acceleration or achievement of terms or vesting based on any
Performance Criteria, including, but not limited to, absolute or relative
increases in total shareholder return, revenues, sales, net income, or net worth
of the Company, any of its Subsidiaries, divisions, business units or other
areas of the Company; and (ii) any other restrictions which the Committee may
deem advisable, including requirements established pursuant to the Securities
Act, the Exchange Act, the Code and any securities trading system or stock
exchange upon which such Shares under the Plan are listed.

     8.3 Nontransferability. Except as provided in this Section 8, the Shares of
         ------------------
Restricted Stock or Restricted Stock Units granted under the Plan may not be
sold, transferred, pledged, assigned, or otherwise alienated or hypothecated
until the termination of the applicable Period of Restriction or upon earlier
satisfaction of other conditions as specified by the Committee in its sole
discretion and set forth in the applicable Award Agreement. All rights with
respect to the Restricted Stock and Restricted Stock Units granted to a
Participant under the Plan shall be exercisable during his or her lifetime only
by such Participant or his or her guardian or legal representative.

     8.4 Removal of Restrictions. Except as otherwise noted in this Section 8,
         -----------------------
Restricted Stock and Restricted Stock Units covered by each Award made under the
Plan shall become freely transferable by the Participant after the last day of
the Period of Restriction and/or upon the satisfaction of other conditions as
determined by the Committee.

     8.5 Voting Rights. During the Period of Restriction, Participants in whose
         ------------
name Restricted Stock is granted under the Plan may exercise full voting rights
with respect to those shares.

     8.6 Dividends and Other Distributions. During the Period of Restriction,
         ---------------------------------
Participants in whose name Restricted Stock is granted under the Plan shall be
entitled to receive all dividends and other distributions paid with respect to
those Shares. If any such dividends or distributions are paid in Shares, the
Shares shall be subject to the same restrictions on transferability and
forfeitability as the Restricted Stock with respect to which they were
distributed.

                                       12

<PAGE>

Section 9. Performance Awards

     9.1 Grant of Performance Awards. Subject to the terms and provisions of the
         ---------------------------
Plan and applicable law, the Committee, at any time and from time to time, may
issue Performance Awards in the form of either Performance Units or Performance
Shares to Participants subject to the Performance Criteria, Performance Period
and other consideration or restrictions as it shall determine. The Committee
shall have complete discretion in determining the number and value of
Performance Units or Performance Shares granted to each Participant.

     9.2 Value of Performance Awards. The Committee shall determine the number
         ---------------------------
and value of Performance Units or Performance Shares granted to each Participant
as a Performance Award. The Committee shall set Performance Criteria in its
discretion for each Participant who is granted a Performance Award. The extent
to which such Performance Criteria are met will determine the value of the
Performance Unit or Performance Share to the Participant. Such Performance
Criteria may be particular to a Participant, may relate to the performance of
the Company or Subsidiary which employs him or her, may be based on the division
or business unit which employs him or her, may be based on the performance of
the Company and its Subsidiaries generally, or any combination of the foregoing.
The Performance Criteria may be based on achievement of balance sheet or income
statement objectives, or any other objectives established by the Committee. The
Performance Criteria may be absolute in their terms or measured against, or in
relationship to, other companies comparably, similarly or otherwise situated.
The terms and conditions of each Performance Award will be set forth in an Award
Agreement.

     9.3 Settlement of Performance Awards. After a Performance Period has ended,
         --------------------------------
the holder of a Performance Unit or Performance Share shall be entitled to
receive the value thereof based on the degree to which the Performance Criteria
established by the Committee and set forth in the Award Agreement have been
satisfied.

     9.4 Form of Payment. Payment of the amount to which a Participant shall be
         ---------------
entitled upon the settlement of the Performance Award shall be made in cash,
Stock, or a combination thereof and may be made in a lump sum or installments
all as determined by the Committee and set forth in the related Award Agreement.

Section 10. Bonus Stock

     Subject to the terms and provisions of the Plan and applicable law, the
Committee may, at any time and from time to time, award shares of Bonus Stock to
participants under the Plan without cash consideration. The Committee shall
determine and indicate in the related Award Agreement whether such shares of
Bonus Stock shall be unencumbered of any restrictions (other than those which
the Committee deems necessary or advisable to comply with law) or shall be
subject to restrictions and limitations similar to those referred to in Section
9. In the event the Committee assigns any restrictions on the shares of Bonus
Stock, then such shares shall be subject to at least the following restrictions:

                                       13

<PAGE>

     (a)  No Shares of Bonus Stock may be sold, transferred, pledged, assigned
          or otherwise alienated or hypothecated if such Shares are subject to
          restrictions which have not lapsed or been satisfied.

     (b)  If any condition of vesting of the shares of Bonus Stock are not met,
          all such Shares subject to such vesting shall be delivered to the
          Company (in a manner determined by the Committee) within 60 days of
          the failure to meet such conditions without any payment from the
          Company.

Section 11. Other Stock Based Awards

     11.1 Grant of Other Stock Based Awards. Subject to the terms and provisions
          ---------------------------------
of the Plan and applicable law, the Committee may, at any time and from time to
time, issue to Participants, either alone or in addition to other Awards made
under the Plan, Stock Unit Awards which may be in the form of Common Stock or
other securities. The value of each such Award shall be based, in whole or in
part, on the value of the underlying Common Stock on the Grant Date. The
Committee, in its sole and complete discretion, may determine that an Award,
either in the form of a Stock Unit Award under this Section 11 or as an Award
granted pursuant to Sections 6 through 10, may provide to the Participant (i)
dividends or dividend equivalents (payable on a current or deferred basis) and
(ii) cash payments in lieu of or in addition to an Award. Subject to the
provisions of the Plan, the Committee, in its sole and complete discretion,
shall determine the terms, restrictions, conditions, vesting requirements, and
payment rules of the Award. The Award Agreement shall specify the rules of each
Award as determined by the Committee. However, each Stock Unit Award need not be
subject to identical rules.

     11.2 Rules. The Committee, in its sole and complete discretion, may grant a
          -----
Stock Unit Award subject to the following rules:

     (a)  Common Stock or other securities issued pursuant to Stock Unit Awards
          may not be sold, transferred, pledged, assigned or otherwise alienated
          or hypothecated by a Participant until the expiration of at least six
          months from the Grant Date, except that such limitation shall not
          apply in the case of death or Disability of the Participant or a
          Change in Control. To the extent Stock Unit Awards are deemed to be
          derivative securities within the meaning of Rule 16b-3, the rights of
          a Participant who is subject to Section 16 of the Exchange Act with
          respect to such Awards shall not vest or be exercisable until the
          expiration of at least six months from the Award Date. All rights with
          respect to such Stock Unit Awards granted to a Participant under the
          Plan shall be exercisable during his or her lifetime only by such
          Participant or his or her guardian or legal representative.

     (b)  Stock Unit Awards may require the payment of cash consideration by the
          Participant in receipt of the Award or provide that the Award, and any
          Common Stock or other

                                       14

<PAGE>

          securities issued in conjunction with the Award, be delivered without
          the payment of cash consideration.

     (c)  The Committee, in its sole and complete discretion, may establish
          certain Performance Criteria that may relate in whole or in part to
          receipt of Stock Unit Awards.

     (d)  Stock Unit Awards may be subject to a deferred payment schedule and/or
          vesting over a specified period.

     (e)  The Committee, in its sole and complete discretion, as a result of
          certain circumstances, may waive or otherwise remove, in whole or in
          part, any restriction or condition imposed on a Stock Unit Award.

Section 12. Special Provisions Applicable to Covered Participants

     Awards to Covered Participants shall be governed by the conditions of this
Section 12 in addition to the requirements of Sections 6 through 11 above.
Should conditions set forth under this Section 12 conflict with the requirements
of Sections 6 through 11, the conditions of this Section 12 shall prevail.

     (a)  All Performance Criteria relating to Covered Participants for a
          relevant Performance Period shall be established by the Committee in
          writing prior to the beginning of the Performance Period, or by such
          other later date for the Performance Period as may be permitted under
          Section 162(m) of the Code. Performance Criteria may include
          alternative and multiple Performance Criteria and will be based on one
          or more of the following business criteria: business or financial
          goals of the Company, including absolute or relative levels of total
          shareholder return, revenues, sales, net income, or net worth of the
          Company, any of its Subsidiaries, divisions, business units, or other
          areas of the Company.

     (b)  The Performance Criteria must be objective and must satisfy third
          party "objectivity" standards under Code Section 162(m), and the
          regulations promulgated thereunder.

     (c)  The Performance Criteria shall not allow for any discretion by the
          Committee as to an increase in any Award, but discretion to lower an
          Award is permissible.

     (d)  The Award and payment of any Award under this Plan to a Covered
          Participant with respect to a relevant Performance Period shall be
          contingent upon the attainment of the Performance Criteria that are
          applicable to such Award. The Committee shall certify in writing prior
          to payment of any such Award that such applicable Performance Criteria
          have been satisfied. Resolutions adopted by the Committee may be used
          for this purpose.

                                       15

<PAGE>

     (e)  The aggregate maximum Awards that may be paid (in cash or in shares of
          Stock or a combination thereof) to any Covered Participant under the
          Plan pursuant to Sections 8, 9, 10 and 11 during any calendar year
          shall be an amount equivalent to the fair market value of 100,000
          shares of Stock, such fair market value to be determined as of the
          first day of such calendar year.

     (f)  The aggregate maximum number of shares of Stock subject to Options and
          SARs made to any Covered Participant during any calendar year shall be
          100,000.

     (g)  All Awards to Covered Participants under this Plan shall be further
          subject to such other conditions, restrictions, and requirements as
          the Committee may determine to be necessary to carry out the purposes
          of this Section 12.

Section 13. Change In Control

     Notwithstanding any other provision of this Plan or of any Agreement
entered into in connection with an Award granted hereunder, in the event of a
Change in Control: (a) all outstanding Options or Stock Appreciation Rights
shall immediately become fully vested and exercisable; and (b) the forfeiture
provisions otherwise applicable to all other outstanding Awards, whether
provided for in this Plan or in any Agreement shall no longer apply to such
Awards, except (and only) with respect to any existing forfeiture provisions
applicable in the event of the termination of a Participant's employment for
Cause or the voluntary resignation of employment by a Participant. For purposes
of applying the foregoing provision, a voluntary resignation shall not be deemed
to have occurred in the event of circumstances which could reasonably constitute
or give rise to a constructive discharge. The provisions of this Section 13
shall take precedence over, and shall apply notwithstanding, any contrary or
seemingly conflicting provision (or absence of a provision) elsewhere in this
Plan or in any Agreement. Upon the occurrence of a Change in Control, each
outstanding Agreement shall automatically, and without any action on the part of
any party, be deemed to incorporate the provisions of this Section 13, and, for
purposes of Section 14.9 of this Plan, each Participant shall be deemed to have
consented to modifications of his respective Agreement(s) to effect the
incorporation of the provisions of this Section 13, except to the extent that a
Participant objects in writing to such modification.

Section 14. General Provisions

     14.1 Plan Term. The Plan was adopted by the Board on February 21, 1997, and
          ---------
became effective upon receiving shareholder approval on May 23, 1997. The Plan
was renamed and restated effective May 12, 2000 and August 17, 2001.

     The Plan shall terminate December 31, 2006; however, all Awards made prior
to, and which are outstanding on such date, shall remain valid in accordance
with their terms and conditions.

                                       16

<PAGE>

     14.2 Withholding. The Company shall have the right to deduct or withhold,
          -----------
or require a Participant to remit to the Company, any taxes required by law to
be withheld from Awards made under this Plan. In the event an Award is paid in
the form of Common Stock, the Committee may require the Participant to remit to
the Company the amount of any taxes required to be withheld from such payment in
Common Stock, or, in lieu thereof, the Company may withhold (or the Participant
may be provided the opportunity to elect to tender) the number of shares of
Common Stock equal in Fair Market Value to the amount required to be withheld.

     14.3 Awards. Each Award granted under the Plan shall be evidenced in a
          ------
corresponding Award Agreement or Option Agreement provided in writing to the
Participant, which shall specify the terms, conditions and any rules applicable
to the Award.

     14.4 Nontransferability. Except with respect to Nonqualified Stock
          ------------------
Options, no Award granted under the Plan may be sold, transferred, pledged,
assigned or otherwise alienated or hypothecated, except by will or the laws of
descent and distribution. Further, no lien, obligation, or liability of the
Participant may be assigned to any right or interest of any Participant in an
Award under this Plan.

     14.5 No Right to Employment. Neither the Plan, nor any Award made, or any
          ----------------------
other action taken, hereunder shall be construed as giving any Participant or
other person any right of employment or continued employment with the Company.

     14.6 Rights as Shareholder. Subject to the terms and conditions of each
          ---------------------
particular Award, no Participant or Designated Beneficiary shall be deemed a
shareholder of the Company nor have any rights as such with respect to any
shares of Common Stock to be provided under the Plan until he or she has become
the holder of such shares.

     14.7 Construction of the Plan. The Plan and all Agreements shall be
          ------------------------
governed, construed, interpreted and administered in accordance with the laws of
the State of Texas. In the event any provision of the Plan or any Agreement
shall be held invalid, illegal or unenforceable, in whole or in part, for any
reason, such determination shall not affect the validity, legality or
enforceability of any remaining provision, portion of provision or Plan overall,
which shall remain in full force and effect as if the Plan had been absent the
invalid, illegal or unenforceable provision or portion thereof.

     14.8 Amendment of Plan. The Committee or the Board of Directors may amend,
          -----------------
suspend, or terminate the Plan or any portion thereof at any time, provided such
amendment is made with shareholder approval if and to the extent such approval
is necessary to comply with any legal requirement, including for these purposes
any approval requirement which is a requirement for the performance-based
compensation exception under Code Section 162(m).

     14.9 Amendment of Award. In its sole and complete discretion, the Committee
          ------------------
may at any time amend any Award for the following reasons: (i) additions and/or
changes are made to the Code, any federal or state securities law, or other law
or regulations applicable to the Award; or (ii) any

                                       17

<PAGE>

other event not described in clause (i) occurs and the Participant gives his or
her consent to such amendment.

     14.10 Exemption from Computation of Compensation for Other Purposes. By
           -------------------------------------------------------------
acceptance of an applicable Award under this Plan, subject to the conditions of
such Award, each Participant shall be considered in agreement that all shares of
Stock sold or awarded and all Options granted under this Plan shall be
considered extraordinary, special incentive compensation and will not be
included as "earnings," "wages," "salary" or "compensation" in any pension,
welfare, life insurance, or other employee benefit arrangement of the Company.

     14.11 Legend. In its sole and complete discretion, the Committee may elect
           ------
to legend certificates representing Shares sold or awarded under the Plan, to
make appropriate references to the restrictions imposed on such Shares.

     14.12 Certain Participants. All Award Agreements for Participants subject
           --------------------
to Section 16(b) of the Exchange Act shall be deemed to include any such
additional terms, conditions, limitations and provisions as Rule 16b-3 requires,
unless the Committee in its discretion determines that any such Award should not
be governed by Rule 16b-3. All performance-based Awards to Covered Participants
shall be deemed to include any such additional terms, conditions, limitations
and provisions as are necessary to comply with the performance-based
compensation exemption of Code Section 162(m), unless the Committee, in its
discretion, determines that any such Award is not intended to qualify for the
exemption for performance-based compensation under Code Section 162(m).

     14.13 Unfunded Plan. The Plan is intended to constitute an unfunded
           -------------
deferred compensation arrangement for a select group of management or highly
compensated employees.

     EXECUTED effective as of the 17th day of August, 2001.

                                    TXU CORP.

                                    By: /s/ Peter B. Tinkham
                                        ----------------------------------------
                                            Peter B. Tinkham,
                                            Secretary and Assistant Treasurer

                                       18

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00034-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00034-of-00352.parquet"}]]