Document:

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                                                                   Exhibit 10(f)

================================================================================

TXU Annual Incentive Plan

Adopted May 19, 1995

Restated Effective As of August 17, 2001

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                            TXU Annual Incentive Plan
                                Table of Contents

<TABLE>
<CAPTION>
Description                                                           Section
-----------                                                           -------
<S>                                                                   <C>
Purpose of the Plan                                                         I

Definitions                                                                II

Administration of the Plan                                                III

Eligibility                                                                IV

Designation of Tier Groups                                                  V

Target EPS Level                                                           VI

Target Award Level                                                        VII

Participant Performance Measurement Process                              VIII

Participant Personal Modifier                                              IX

Supplemental Awards Fund                                                    X

Form and Timing of Awards                                                  XI

Termination of Employment                                                 XII

Miscellaneous                                                            XIII
</TABLE>

<PAGE>

I.   Purpose of the Plan
     -------------------

The purpose of the TXU Annual Incentive Plan (hereinafter the "Plan") is to
provide annual incentive compensation opportunities to the eligible officers of
the Company and its participating subsidiary companies who contribute
significantly to the growth and success of the Company; to attract and retain
individuals of outstanding ability; to comply with Section 162(m) of the
Internal Revenue Code such that the federal income tax deduction of the payment
of annual incentive awards to officers will not be limited by such Code section;
and to further align the interests of those who hold positions of major
responsibility in the Company with the interests of Company shareholders.

II.  Definitions
     ------------

When used in the Plan, the following terms shall have the following meanings:

(a)  "Award" means the incentive award paid to a Participant pursuant to the
     terms and conditions of this Plan.

(b)  "Base Salary" means the annual base salary rate in effect as of the date of
     any Award under the Plan.

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

(d)  "Code" means the Internal Revenue Code of 1986, as amended from time to
     time.

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

(f)  "Committee" means the Organization and Compensation Committee of the Board
     of Directors, and, as appropriate, with respect to matters affecting the
     Awards of employees of subsidiaries of the Company, the Organization and
     Compensation Committee of the board of directors of the applicable
     subsidiary.

                                       1

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(g)  "Earnings Per Share", or "EPS", means the Company's net income after taxes,
     exclusive of extraordinary items, divided by average common shares
     outstanding, appropriately adjusted by the Committee to reflect
     recapitalizations, stock dividends, and the like.

(h)  "Maximum Award Level" means the maximum Award which may be made to a
     Participant hereunder. The maximum Award Level is the lesser of one hundred
     percent (100%) of the Participant's Base Salary, or one million dollars
     ($1,000,000).

(i)  "Maximum EPS" means the level of EPS established by the Committee, the
     attainment of which will allow payment of Awards up to the Maximum Award
     Level.

(j)  "Participant" means an individual who is an officer of a Participating
     Employer with a title of vice president or above, and, with respect to an
     officer of a Participating Employer organized and existing under the laws
     of the United States, is an elected officer, as well as other officer level
     employees of Participating Employers, having responsibilities commensurate
     with a Vice President level, approved by the Committee for participation in
     this Plan from time to time.

(k)  "Participating Employer" means the Company and each of its subsidiaries,
     affiliates or Business Units which are approved by the Company or the
     Committee for participation in this Plan. The Participating Employers, as
     of the date of the restatement of this Plan, are listed on Exhibit "A"
     attached hereto. Participation in the Plan by additional Participating
     Employers will commence as of the effective date designated by the Company
     or the Committee approval of such participation.

(l)  "Plan" means the TXU Annual Incentive Plan described herein.

(m)  "Plan Year" means the period commencing January 1 and ending December 31.

                                       2

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(n)  "Target Award Level" means the target level of annual incentive
     compensation which a Participant may earn for any Plan Year, expressed as a
     percentage of a Participant's Base Salary.

(o)  "Target EPS" means the level of EPS established by the Committee, the
     attainment of which will allow the payment of Awards pursuant to the terms
     of this Plan.

(p)  "Tier Group" means a group of Participants, designated in accordance with
     Section V hereof for purposes of determining such Participants' Target
     Award Level.

III. Administration of the Plan
     --------------------------

The Plan will be administered by the Committee. The Committee will be comprised
of two (2) or more outside directors, as defined in Code Section 162(m), and
will include only directors who serve on the Board who are not currently, or
have not been, full-time employees of the Company.

IV.  Eligibility
     -----------

Eligibility for participation in the Plan will be limited to individuals who are
officers of Participating Employers with a title of Vice President or above and,
with respect to officers of Participating Employers established and maintained
under the laws of the United States, are elected officers, as well as other
officer level employees of Participating Employers, having responsibilities
commensurate with a Vice President level, approved by the Committee for
participation in this Plan from time to time. Individuals who served as eligible
officers during a Plan Year but who were not serving in such capacity at the
time that Awards for such Plan Year are paid may be eligible for an Award (full,
prorated or some other amount) under the Plan at the Committee's discretion.
Individuals who were serving as eligible officers at the end of a Plan Year and
who continue to serve in such capacity at the time that Awards for such Plan
Year are made, but who did not serve in such

                                       3

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capacity during the entire Plan Year may be eligible for an Award (full,
prorated or some other amount) under the Plan at the Committee's discretion.

V.   Designation of Tier Groups
     --------------------------

Participants in the Plan shall be assigned to Tier Groups. Such assignments
shall be made by management of the Company subject to review by the Committee.
All decisions by the Company and/or the Committee relating to Tier Groups and
the assignment of Participants thereto shall be in the sole discretion of the
Company and/or the Committee, as the case may be, and shall be final and binding
on all parties. Participants may be designated to Tier Groups based on
competitive market data relating to compensation of officers, the Participant's
title, position, responsibilities and/or reporting level, or on such other
criteria as the Company and/or the Committee may determine to be appropriate.
Although not determinative, the following guidelines may be applied generally to
the designation of Tier Groups:

             Tier Group                    Positions
             ----------                    ---------
                 A          Chairman; Chief Executive of the Company

                 B          Vice Chairman;  Group Heads; President of the
                            Company; Chief Financial Officer of the Company

                 C          Presidents; Executive Vice Presidents

                 D          Senior Vice Presidents; Certain Vice Presidents

                 E          Certain Vice Presidents

                                       4

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VI.  Target and Maximum EPS Levels
     -----------------------------

Within the first ninety (90) days of the Plan Year, the Committee shall
establish the Target EPS and Maximum EPS levels for each Plan Year. Following
the conclusion of the Plan Year, the Committee will certify whether the Target
EPS or Maximum EPS levels were achieved. The Target EPS shall determine the
threshold earnings per share of the Company which must be attained in order for
Awards to be paid hereunder. If the Target EPS level was achieved, the Committee
will determine Awards for Participants in accordance with the provisions of
Sections VIII, IX and X herein. If the Maximum EPS level was achieved, the
Committee may exercise its discretion in determining whether an Award in excess
of that determined in accordance with the provisions of Sections VIII, IX and X
herein, up to the Maximum Award Level, will be awarded. Notwithstanding any
other provision of this Plan, however, in no event, may an Award exceed the
Maximum Award Level.

VII. Target Award Level
     ------------------

For each Plan Year, the Company and/or the Committee will assign a Target Award
Level for each Participant, which shall be expressed as a percentage of the
Participant's Base Salary and shall be consistent with the schedule set forth
below, which said schedule is first effective for the Plan Year beginning
January 1, 2001:

             Tier Group                Target Award Level
             ----------                ------------------

                 A                            75%
                 B                            50%
                 C                            40%  to 50%
                 D                            25%  to 40%
                 E                            20%  to 35%

For Participants within Tier Groups for which the above schedule expresses the
Target Award Level as a range, the Company and/or the Committee shall have the
absolute discretion in determining each

                                       5

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such Participant's Target Award Level. The decisions of the Company and/or the
Committee shall be final and binding.

In no event shall a Participant's Award exceed such Participant's Maximum Award
Level, even after application of the personal modifier provided or in IX of the
Plan, or the supplemental awards fund provided for in Section X of the Plan.

VIII. Participant Performance Measurement Process
      -------------------------------------------

If the Company achieves the Target EPS level, then the actual Award
determination for each Participant will be subject to further performance
measurement by the Committee. The actual Award for each Participant will be
based upon an assessment of the performance of the Company, the Participant's
group, business unit, function and/or the Participant individually. Two (2)
performance criteria categories will be established for each Participant similar
to those described on Exhibit "B" attached hereto; provided that the performance
criteria categories applicable to each Participant, as well as the relative
weighting to be applied to each criteria category, shall be determined by the
Committee in its sole discretion. Company, group, function or business unit
performance, respectively, will be evaluated on the basis of a number of
criteria, such as those set forth on Exhibit "C" attached hereto. With respect
to each applicable performance criteria category, a determination will be made
in the sole discretion of the Committee as to whether a Participant's actual
performance was "outstanding", "good" or "inconsistent". Based upon the
foregoing evaluations, each performance criteria category will be rated under
the following schedule:

                  Rating for Each Performance Criteria Category
                  ---------------------------------------------

     Assessment                 First Performance      Second Performance

                                        6

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     Of Performance             Criteria Category      Criteria Category
     --------------             -----------------      -----------------

Outstanding Performance                  1                     1
Good Performance                         2                     2
Inconsistent Performance                 3                     3

This performance evaluation process will result in a rating of either 1, 2, or 3
for each criteria category. These two ratings will be applied in the following
schedule which will determine the award to be provided to the Participant as a
percentage of the Target Award Level:

         First Performance       Second Performance         Percent of
         Criteria Category       Criteria Category         Target Award
              Rating                   Rating                  Level
         ------------------     --------------------      --------------

                1                             1                     150%
                1                     2                    125%
                1                             3                      50%

                2                     1                    125%
                2                             2                     100%
                2                     3                     25%

                3                     1                     50%
                3                             2                      25%
                3                             3                       0%

IX.  Participant Personal Modifier
     -----------------------------

The amount of a Participant's award determined in accordance with Section VIII
above may be increased or decreased by up to ten percent (10%) in the discretion
of the Committee on the basis of the Participant's individual performance and
contribution for the Plan Year. The criteria to be used in applying this
personal modifier to the Participant's award shall be determined in the sole
discretion of the Committee, and may include, without limitation, the
demonstration of desired competencies,

                                       7

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the demonstration of support and team building attributes within the
Participant's organization, and the general demeanor and behavior of the
Participant.

X.   Supplemental Awards Fund
     ------------------------

If the Company is considered by the Committee to be the top performing electric
utility among the ten largest electric utility companies in the U.S., a
Supplemental Awards Fund will be established which will be equal to thirty
percent (30%) of the aggregate of Participants' Base Salaries. If the Company
receives a performance rating of "1" by the Committee, such Supplemental Awards
Fund will be equal to twenty percent (20%) of the aggregate of the Participants'
Base Salaries. If the Company receives a performance rating of "2" by the
Committee, the Supplemental Awards Fund will be equal to ten percent (10%) of
the aggregate of the Participants' Base Salaries. Notwithstanding the foregoing,
the Committee will have full authority and discretion, in any Plan Year, to
increase the amount of the Supplemental Awards Fund above the amounts provided
for hereinabove, and will have full discretion to make awards from this
Supplemental Awards Fund to any Participant to such extent as it may desire to
recognize their contributions to the success of the Company. All or any part of
the fund may be awarded in any Plan Year by the Committee; and any portion of
the Supplemental Awards Fund which is not awarded by the Committee for any Plan
Year will not be carried over to any future Plan Year.

XI.  Form and Timing of Awards
     -------------------------

Beginning with the 2001 Plan Year, all awards will be paid in cash as soon as
reasonably practical following the establishment of the Award. All Awards shall
be subject to the normal rules and regulations regarding the withholding for
taxes and other deductions, if any, as may be in effect at the time of payment.

                                       8

<PAGE>

XII. Termination of Employment
     -------------------------

In the event of death, disability or retirement, Participants may be entitled to
receive prorated awards based upon the number of months in which they have
participated in the Plan for the applicable Plan Year. Decisions regarding
prorated awards will be made by the Committee in its sole discretion and will be
final and binding on all parties. In the event of termination for reason of
misconduct, fraud, or other act adverse to the Company to any substantial
extent, as determined by the Committee in its discretion, the Participant will
not be entitled to any award, whether prorated or not, for the Plan Year. Such
determinations by the Committee shall be final and binding on all parties.

XIII. Miscellaneous
      -------------

Participants will have no right to anticipate, alienate, sell, transfer, assign,
pledge or encumber any right to receive any award made under the Plan nor will
any Participant have any lien on any assets of the Company by reason of any
award made under the Plan.

Nothing in the Plan, including an employee's eligibility for participation in
the Plan, will confer any right of employment on such employee.

The adoption of the Plan or any amendment or suspension hereof does not imply
any commitment to continue to maintain the same plan, or any modification
thereof, or any other plan for incentive compensation for any succeeding year.

The Board of Directors, subject to approval by the shareholders of the Company
in the event of any amendment to the Plan which changes the material terms of
the performance goals, increases the maximum amount payable under the Plan or is
otherwise required by the provisions of Code Section 162(m), may amend, suspend
or terminate the Plan at any time, provided no such amendment,

                                       9

<PAGE>

suspension or termination shall adversely affect the right to receive any amount
to which Participants have become entitled prior to such amendment, suspension
or termination.

The Plan shall be construed in accordance with and governed by the laws of the
State of Texas.

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

                                    TXU CORP.

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

                                       10

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                                   EXHIBIT "A"

                             PARTICIPATING EMPLOYERS
                              AS OF AUGUST 17, 2001

     TXU Corp. and all direct and indirect subsidiaries of TXU Corp. except:

                     TXU Communications Ventures Company and
                            each of its subsidiaries

                           TXU Energy Trading Company
                 (other than the President of TXU Energy Trading
                     Company who is eligible to participate
                                  in this Plan)

                                       11

<PAGE>

                                   EXHIBIT "B"

                         PERFORMANCE CRITERIA CATEGORIES
                                 AND WEIGHTINGS

<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------
                                  Company           Group        Business Unit / Function/
   Organizational Level            Goals            Goals            Individual Goals
-----------------------------------------------------------------------------------------------
<S>                               <C>              <C>                 <C>
Chairman & Chief Executive          100%             -                         -
-----------------------------------------------------------------------------------------------
Group Head                           50%             50%                       -
-----------------------------------------------------------------------------------------------
Business Unit Head                   -               50%                       50%
-----------------------------------------------------------------------------------------------
Direct Reports to
Business Unit Heads                  -               -                      50% / 50%
-----------------------------------------------------------------------------------------------
Staff - Corporate                    50%             -                         50%
-----------------------------------------------------------------------------------------------
Staff-Shared Services                -               50%                       50%
-----------------------------------------------------------------------------------------------
Staff - Group                        -               50%                       50%
-----------------------------------------------------------------------------------------------
Staff - Business Unit                -               -                      50% / 50%
-----------------------------------------------------------------------------------------------
</TABLE>

                                       12

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                                   EXHIBIT "C"

                            COMPANY, GROUP, FUNCTION
                                AND BUSINESS UNIT
                              PERFORMANCE CRITERIA

                                        Group, Function or Business Unit
TXU Corp. Criteria Categories           Criteria Categories
-----------------------------           -----------------------------------

..   Total Return to Shareholders        .   EBIT or Net Income

..   Return on Invested Capital          .   Cash Flow from Operations

..   EPS Growth                          .   Return on Invested Capital

..   Attainment of Annual Objectives     .   Attainment of Annual Objectives

                                       13<PAGE>

                                                                   Exhibit 10(g)

                                       TXU

                       SPLIT-DOLLAR LIFE INSURANCE PROGRAM

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

     1.1 Purpose. The TXU Split-Dollar Life Insurance Program (the "Plan") was
         -------
established effective July 1, 1995, was amended and restated effective August 1,
1997 and May 12, 2000, and is hereby amended and restated effective August 17,
2001. The purpose of the Plan is to provide eligible executives of Participating
Employers with insurance on the life of each such executive in recognition of
the contributions of such executives to the Company and for the purpose of
continuing to maintain a competitive level of benefits. This Plan is designed as
an "unfunded or insured welfare" plan maintained by the Company "for the purpose
of providing benefits for a select group of management or highly compensated
employees" and, therefore, is designed to be exempt from the reporting and
disclosure requirements of Part 1 of Title I of the Employee Retirement Income
Security Act of 1974 ("ERISA"). Regulation Section 2520.104-24 of the Department
of Labor.

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

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

     (a)  "AIP Award" means the award provided under the TXU Annual Incentive
          Plan.

     (b)  "Beneficiary" means the person or persons designated by the
          Participant to receive the Benefit payable from the Policy upon the
          death of the Participant.

     (c)  "Benefit" means the benefits payable under the terms of the Policy of
          life insurance issued on the life of the Participant pursuant to the
          Participation Agreement.

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

     (e)  "Business Unit" means a subsidiary, division or operating unit of the
          Company designated by the Chief Executive of the Company which will
          focus on its own unique products, services and markets.

     (f)  "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

                                       1

<PAGE>

          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 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.

     (g)  "Collateral Assignment" means the document assigning an interest in
          the Policy to the Company, as set forth in Section 4.4 herein, a form
          of which document is attached as Exhibit A and incorporated herein.

                                       2

<PAGE>

     (h)  "Committee" means the Administrative Committee, whose members shall be
          appointed from time to time by the Board of Directors.

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

     (j)  "Compensation" means the annual rate of base salary, calculated
          without regard to any deferrals, as of: (i) with respect to Plan Years
          beginning on or prior to July 1, 2001, the June 1 immediately
          preceding the Plan Year; and (ii) with respect to Plan Years beginning
          on and after April 1, 2002, the March 1 immediately preceding the Plan
          Year, plus, in either case, the average of the AIP Award over the
          immediately preceding three-year period; provided, however, no more
          than the Target Award Level, as defined and provided for under the AIP
          will be included in such average and, in years prior to the
          accumulation of AIP Award data for the immediately preceding
          three-year period, the average shall be determined with data for such
          shorter period.

     (k)  "Disability Plan" means the TXU Long-Term Disability Income Plan, or
          any successor plan providing long-term disability benefits and
          covering Participants.

     (l)  "Early Termination" means any one or more of the following: (1)
          termination of employment with the Company or ceasing to meet the
          criteria of an Eligible Employee prior to reaching age fifty-five and
          obtaining fifteen years of Accredited Service (as defined in the
          Retirement Plan); (2) termination of employment with the Company or
          ceasing to meet the criteria of an Eligible Employee prior to becoming
          fully vested in the Benefit as set forth in Section 5.2 hereof; or (3)
          termination for cause, as determined, for purposes of the Plan, solely
          in the discretion of the Plan Administrator.

     (m)  "Eligible Employee" means: (i) for Plan Years beginning on or prior to
          July 1, 2001, an individual who is elected as a corporate officer of a
          Participating Employer with a title of Vice President or above; and
          (ii) for Plan Years beginning on and after April 1, 2002, an officer
          of a Participating Employer who is designated in the Company's
          internal records as a category A, B, or C officer as determined by the
          Company in its sole discretion. Individuals who become Eligible
          Employees will be notified of their eligibility to participate in this
          Plan.

     (n)  "Insurer" means the insurance company or companies selected by the
          Committee to issue Policies pursuant to the Participation Agreements
          hereunder.

     (o)  "Participant" means an Eligible Employee who enters into a
          Participation Agreement with the Company and whose Participation
          Agreement has not terminated.

                                       3

<PAGE>

     (p)  "Participating Employer" means the Company and each of its
          subsidiaries, affiliates or Business Units which are approved by the
          Committee for participation in the Plan. The Participating Employers,
          as of the date of this restatement of this Plan, are listed on Exhibit
          "C" attached hereto. Participation in the Plan by additional
          Participating Employers will commence as of the date established by
          the Committee.

     (q)  "Participation Agreement" or "Agreement" means the agreement between
          the Participant and the Company for performance of obligations
          incident to the provision of Benefits, a form of which document is
          attached as Exhibit B and incorporated herein. The form of the
          Participation Agreement may be changed from time to time by the
          Committee.

     (r)  "Plan Administrator" means the person(s) or entities appointed to
          assist the Committee in carrying out the operations of the Plan.

     (s)  "Plan Retirement Date" means July 1 immediately following the
          Participant's attainment of age sixty-five.

     (t)  "Plan Year" means, with respect to Plan Years beginning on or prior to
          July 1, 2001, the twelve-month period beginning July 1 and ending June
          30. The Plan Year beginning July 1, 2001, shall be a short Plan Year
          ending on March 31, 2002, and, thereafter, Plan Year shall mean the
          twelve-month period beginning April 1 and ending March 31.

     (u)  "Policy" means the policy or policies of life insurance issued
          pursuant to the Participation Agreements hereunder and shall include
          any substitutions, replacements, additional or supplemental policies.
          In certain interim situations, as set forth in the Participation
          Agreements, "Policy" means term life insurance.

     (v)  "Retirement Plan" means the TXU Retirement Plan.

     (w)  "Trust" means the rabbi trust established by TXU Corp. to assist it in
          meeting its obligations under the Plan.

     (x)  "Trustee" means the trustee appointed by the Committee to hold assets
          of the Plan.

Section 3. Eligibility
----------------------

     Each Eligible Employee who shall not have attained the age of sixty-five
may become a Participant in the Plan effective as of: (i) with respect to Plan
Years beginning on or prior to July 1, 2001, the July 1 immediately following
their becoming an Eligible Employee; and (ii) with respect to Plan Years
beginning on and after April 1, 2002, the April 1 immediately following their
becoming an Eligible Employee, in either case by executing a Participation
Agreement and filing such

                                       4

<PAGE>

Participation Agreement with the Plan Administrator, as evidenced in the records
of the Plan Administrator.

Section 4. Policies
-------------------

     4.1 Issuance. Each Participant, pursuant to the Participation Agreement,
         --------
will take the required actions set forth in the Participation Agreement to cause
a Policy to be issued by the Insurer on the life of the Participant and to be
maintained in force at all times to provide the Benefits set forth herein.

     4.2 Ownership. Subject to the Collateral Assignment of the Policy to the
         ---------
Company, each Participant or such Participant's designee shall be the owner of
the Policy ("Owner") on such Participant's life issued pursuant to the
applicable Participation Agreement and, as such Owner and subject to Sections
8.2 and 10.2 herein, may exercise all rights of ownership with respect to such
Policy.

     4.3 Payment of Premiums. All premiums on the Policies acquired pursuant to
         -------------------
Participation Agreements hereunder shall be promptly paid by the Company when
and as they become due in accordance with and subject to the applicable
Participation Agreement. The Company may pay such premiums from general
corporate assets or it may choose to pay such premiums from Trust assets;
provided that, upon and following a Change in Control, the provisions of Section
11 hereof shall control.

     It is the Company's intention that the Company's financial obligation with
respect to each Policy will be structured to be terminated upon the later of:
(1) the Participant's fifteenth year of full participation in the Plan, as set
forth in Section 5.4 herein; or (2) the Participant's attainment of age
sixty-five, at which time the Policy is expected to have a cash surrender value
sufficient, at least, to maintain the Policy in force at its level at such time.

     4.4 Collateral Assignment of Policy. As security for the Participant's
         -------------------------------
obligations under the Participation Agreement, each Participant shall assign to
the Company, by Collateral Assignment, an interest in the cash value and
Benefits of the Policy on such Participant's life. The Collateral Assignment of
any Policy shall be in the form(s) approved, from time to time, by the Company
in its sole discretion.

Section 5. Benefits
-------------------

     5.1 Level. Benefits, subject to the Collateral Assignment and, for
         -----
individuals who become Eligible Employees on or after October 15, 1996, to the
vesting schedule set forth in Section 5.2 below, shall be payable from the
Policy. The amount of the Benefit provided under the Policy with respect to each
Participant shall be determined in accordance with provisions of subsection
5.1(a) or 5.1(b) below, as applicable.

                                       5

<PAGE>

          (a)  Individuals who Become Participants after January 1, 2002. For
               ---------------------------------------------------------
Eligible Employees who become Participants after January 1, 2002, the Benefit
provided for under the Policy shall be an amount equal to a multiple of the
Participant's Compensation depending on the Participant's officer category as
set forth in the following table:

          Participant's Officer Category              Benefit
          ------------------------------              -------
                   A                                  4 x Compensation
                   B                                  3 x Compensation
                   C                                  2 x Compensation

     The determination of a Participant's officer category shall be made by the
Company in its sole discretion using such factors as it may deem appropriate and
all decisions of the Company shall be final and binding on all parties. Each
Participant's Benefit amount shall be communicated to him upon his becoming a
Participant hereunder, and shall be subject to change in accordance with the
table set forth above in the event, and to the extent, that a Participant's
officer category changes.

          (b)  Individuals who Become Participants before January 1, 2002. For
               ----------------------------------------------------------
Eligible Employees who become Participants before January 1, 2002, a
determination will be made as to the vested portion of each such Participant's
Benefit as of January 1, 2002. The Benefit which shall be available to such
Participants hereunder shall be the greater of: (i) such vested Benefit amount;
or (ii) the Benefit provided for in the table set forth in subsection 5.1(a)
above, provided that each such Participant shall be entitled to a Benefit of not
less than 2 x Compensation. If, pursuant to the preceding sentence, a
Participant is entitled to a Benefit greater than his vested Benefit as of
January 1, 2002, he shall be required to vest in the difference between such
vested Benefit and the Benefit to which he is entitled under the preceding
sentence in accordance with the vesting schedule set forth in Section 5.2 below.
Notwithstanding any other provision herein, an Early Termination shall not be
deemed to have occurred merely because a Participant covered under this
subsection 5.1(b) is not, as of January 1, 2002, designated as a category A, B
or C officer or he ceases at any time thereafter to be so designated.

     A Participant's Benefit shall not be decreased because of lower
Compensation; provided that, the Company reserves the right to adjust the face
amount of any Policy which cannot be issued by the Insurer under standard cost
in the following manner: to the extent that the premium would exceed one hundred
and fifty percent (150%) of the standard cost ("Premium Amount"), the Committee
may reduce the face amount of coverage to the level such Premium Amount would
purchase or in such other manner as the Committee deems appropriate.

     5.2  Vesting. Individuals who become Eligible Employees on or after October
          -------
15, 1996, shall not be immediately fully vested in the Benefit, but shall vest
in the Benefit periodically over time based on the number of years of their
participation in the Plan in accordance with the vesting schedule set forth
below:

                                       6

<PAGE>

                                           Percentage of Death
               Number of Full Years         Benefit of Policy
                Of Participation           To Which Participant
                 In the Plan                    Is Vested
                 -----------                    ---------

               Under 2 Full Years                    0%
               Completion of 2 Years                25%
               Completion of 3 Years                50%
               Completion of 4 Years                75%
               Completion of 5 Years               100%

     5.3 Company's Limited Obligation. The Company shall have no further
         ----------------------------
obligation to provide Benefits than to pay premiums under Section 4.3 herein to
maintain the Policy at the level set forth in Section 5.1 herein. The
Participant, other Owner, or, in the event of the Participant's death, the
Beneficiary shall look solely to the Insurer and the Policy for payment of
Benefits under the Plan.

     5.4 Termination of Agreement. As set forth in the Agreement, the Agreement
         ------------------------
shall terminate on the earlier of (a) Early Termination, (b) death of the
Participant, (c) the July 1 following the later of (i) obtaining age sixty-five
or (ii) fifteen years of full participation in the Plan, or (d) termination of
the Plan by the Board of Directors. Full participation in the Plan shall not
include the period during which the Policy is a policy of term life insurance.

     5.5 Distribution. If the Agreement terminates because of Early Termination,
         ------------
the Participant will pay to the Company an amount equal to the lesser of (a) the
total amount of premiums paid with respect to the vested portion of the Policy;
or (b) the cash surrender value of the vested portion of the Policy. Upon
receipt of this amount, the Company will release the Collateral Assignment with
respect to the vested portion of the Policy. If the Policy is comprised of more
than one life insurance policy, the Committee will determine in its sole
discretion how and in which order such life insurance policies will vest. The
Policy or the balance, if any, payable under the Policy will then be fully
distributable according to the terms of the Policy.

     Notwithstanding anything herein seemingly to the contrary, in the event
that the Participant retires under the Retirement Plan, ceases to be an Eligible
Employee upon reaching age fifty-five and fifteen years of Accredited Service,
or becomes eligible for benefits under the Disability Plan, such Participant
will remain a Participant in the Plan until the Participation Agreement
otherwise terminates. Retirement under the Retirement Plan, in general, is
retirement upon obtaining age fifty-five and fifteen years of Accredited
Service, if early, or upon obtaining age sixty-five.

     If the Agreement terminates because of reasons other than Early
Termination, the Company will receive the total amount of premiums paid with
respect to the Policy from the cash surrender value or, in the event of the
Participant's death, the Company will receive the amount in excess of the level
of the vested Benefits payable from the proceeds of the Policy. The Participant,
if such amount is not paid directly to the Company by the Insurer, agrees,
pursuant to the Participation Agreement,

                                       7

<PAGE>

to reimburse the Company for such amount. Upon receipt of this amount, the
Company will release the Collateral Assignment with respect to the Policy. The
Policy or the balance, if any, payable under the Policy, or, in the event of the
Participant's death, the level of the vested Benefits payable from the proceeds
of the Policy will be fully distributable according to the terms of the Policy.

     Notwithstanding any other provision of this Plan or of any Agreement, upon
a Change in Control, the provisions of Section 11 shall apply.

     5.6  Tax Offset Payments. Upon reaching retirement, to the extent that a
          -------------------
Participant may be deemed to realize gross income in any year for Federal income
tax purposes on the economic benefit of the Policy on the Participant's life,
the Company, in the discretion of the Plan Administrator, may pay to each such
Participant such amount as will fully compensate the Participant for all such
taxes attributable to the receipt of such income and such payment in order to
preserve for the Participant on an after-tax basis the full Benefits intended to
be conferred by this Plan.

     5.7  Claims. All claims for Benefits shall be filed with the Insurer.
          ------

Section 6. Transferability and Spend Thrift Provision
-----------------------------------------------------

     6.1  Nontransferability. Any assignment of the Policy by the Participant
          ------------------
for estate planning, tax planning or other purposes shall be subject to the
Collateral Assignment; and such Assignment shall so provide. Any rights to
Benefits under the Plan are not subject in any manner to anticipation,
alienation, sale, transfer, assignment, pledge, encumbrance, attachment, or
garnishment by creditors of the Participant, other Owner or the Beneficiary.

Section 7. Designation of Beneficiaries
---------------------------------------

     7.1  Specified Beneficiary. The Owner shall designate a Beneficiary or
          ---------------------
Beneficiaries who, upon the Participant's death, are to receive, subject to the
Collateral Assignment, the proceeds of the Policy. All Beneficiary designations
shall be in writing and signed by the Owner, and shall be effective only if and
when delivered to the Insurer during the lifetime of the Participant. The Owner
may, from time to time during the Participant's lifetime, change the Beneficiary
or Beneficiaries by a signed, written instrument delivered to the Insurer. The
payment of amounts shall be in accordance with the last unrevoked written
designation of the Beneficiary that has been signed and so delivered.

Section 8. Rights of Participants
---------------------------------

     8.1  Employment. All Participants understand that they are employees at
          ----------
will. Therefore, nothing in the Plan or Participation Agreement shall interfere
with or limit in any way the right of the Company to terminate, for any or no
reason, any Participant's employment at any time, nor confer upon a Participant
any right to continue in the employ of the Company.

                                       8

<PAGE>

     8.2  Loans. Prior to the termination of the Participation Agreement, the
          -----
Participant or other Owner shall not have the right to pledge the Policy as
security for a loan or to obtain from the Insurer a loan against the cash
surrender value of the Policy.

Section 9. Administration
-------------------------

     9.1  Administration. The Committee 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. 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.

Section 10. Rights of Company
-----------------------------

     10.1 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 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 Benefit as of the effective date thereof, including without
limitation any of the provisions of Section 11.1 hereof. Upon Plan termination,
all Participation Agreements shall terminate.

     10.2 Loans. The Company shall have the right to obtain from the Insurer a
          -----
loan against the cash surrender value of each Policy issued hereunder.

Section 11. Change in Control.
-----------------------------

     11.1 Funding of Vested Portion of Benefit Upon and Following Change in
          -----------------------------------------------------------------
Control. Notwithstanding any other provision of this Plan or any Agreement
-------
seemingly to the contrary, in the event of a Change in Control: (i) the Company
or its successor shall promptly, and in any event within thirty (30) days
following such Change in Control, make an irrevocable contribution to the Trust
in an amount determined by the Committee sufficient to fully pay from Trust
assets, the premiums on the then vested portion of all Policies in the manner
described in Section 4.3 hereof until such time as each Policy has a cash
surrender value sufficient, at least, to continue to maintain the then vested
portion of the Policies in force in an amount at least equal to the vested
Benefit level as of the date of the Change in Control; and (ii) with respect to
the vested portion of each Participant's Benefit as of the date of the Change in
Control, no Agreement shall terminate by reason of Early Termination or the
termination of this Plan, but each Agreement shall continue in effect until
otherwise terminated upon the death of the Participant or the July 1 following
the later of the Participant obtaining age sixty-five or fifteen years of full
participation in the Plan and/or under the Agreement, it being the

                                       9

<PAGE>

intent of this provision that, following a Change in Control, the vested portion
of each Participant's Benefit shall be fully funded in the Trust and
nonforfeitable. Thereafter, the Committee shall direct the Trustee to promptly
pay the premiums on all Policies when and as they become due. At least annually
prior to the premium due date of the Policies, the Committee shall evaluate the
amount of assets held in the Trust and shall make additional irrevocable
contributions to the Trust, in amounts determined by the Committee, such that,
at all times, the Trust shall maintain assets which, at a minimum, shall be
sufficient to pay the premiums on at least the vested portion of all Policies as
of the date of the Change in Control until such time as each Policy has a cash
surrender value sufficient, at least, to continue to maintain the Policies in
force in an amount at least equal to the vested level as of the date of the
Change in Control. 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 11, and the provisions
of this Section 11 shall control and take precedence over any contrary or
seemingly conflicting provision (or absence of a provision) elsewhere in this
Plan or in any Agreement.

Section 12. Requirements of Law.
--------------------------------

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

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

                                    TXU CORP.

                                    By : /s/ Peter B. Tinkham
                                         --------------------------------------
                                             Peter B. Tinkham, Secretary

                                       10

<PAGE>

                                   EXHIBIT "C"

                             PARTICIPATING EMPLOYERS
                              AS OF AUGUST 17, 2001

                                    TXU Corp.

                          TXU Energy Industries Company

                              TXU Electric Company

               TXU Gas Company, including its operating divisions
         TXU Gas Distribution Company and TXU Lone Star Pipeline Company

                            Generation Business Unit

                                TXU Fuel Company

                               TXU Mining Company

                          TXU Business Services Company

                              Basic Resources Inc.

                              CHACO Energy Company

                                TXU SESCO Company

                             TXU Processing Company

                             PARTICIPATING EMPLOYERS
                               AS OF APRIL 1, 2002

                TXU Corp. and each of its United States domestic
                           subsidiaries other than TXU
                  Communications Ventures Company ("Ventures")
                        and the subsidiaries of Ventures

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