<PAGE>   1

                                                               EXHIBIT 10(aa)(4)


                              SEPARATION AGREEMENT


                  THIS SEPARATION AGREEMENT (this "Agreement") is entered into
by and between RELIANT ENERGY, INCORPORATED, a Texas corporation (said
corporation, together with its successors and assigns permitted under this
Agreement, hereinafter referred to as the "Company"), and DON D. JORDAN (the
"Executive"), this first day of December, 1999.


                              W I T N E S S E T H:

                  WHEREAS, effective as of June 1, 1999, the Company and the
Executive entered into an Amended and Restated Employment Agreement (the
"Employment Agreement") under which the Executive would be employed by the
Company until December 31, 2000; and

                  WHEREAS, Executive, with the express consent of the Board, has
elected to terminate his employment with the Company by reason of Retirement and
is therefore entitled to the payment of certain benefits pursuant to the
Employment Agreement; and

                  WHEREAS, the Company and Executive desire to confirm and
clarify their agreements regarding the termination of Executive's employment, as
well as to provide for certain additional matters set forth herein;

                  NOW, THEREFORE, in consideration of the mutual covenants and
agreements herein contained, the parties hereto agree to the following:

         1. CERTAIN DEFINITIONS:

                  "ADJUSTED BASE SALARY" shall mean an annual amount of
$1,635,000.

                  "ANNUAL BASE SALARY" shall mean the salary of the Executive
provided for in Section 3(B)(i) of the Employment Agreement, as adjusted
pursuant to Section 3(A)(i) for the calendar year 2000.

                  "BENEFICIARY" shall mean the person or persons, trustee or
trustees of a trust, partnership, corporation, limited liability partnership,
limited liability company or other entity named, in a writing filed with the
Company, to receive any compensation or benefit payable hereunder following the
Executive's death or, in the event no such person or entity is named or survives
the Executive, his estate. In the event of the Executive's death or a judicial
determination of his incompetence, reference in this Agreement to the Executive
shall be deemed, where appropriate, to refer to his Beneficiary, estate or other
legal representative.

                  "BOARD" shall mean the Board of Directors of the Company.

                  "CODE" shall mean the Internal Revenue Code of 1986, as in
effect on the Effective Date and as thereafter amended.



<PAGE>   2



                  "DATE OF TERMINATION" shall mean December 31, 1999.

                  "DEFERRED COMPENSATION PLAN" shall mean each of the Deferred
Compensation Plan (amended and restated effective January 1, 1991), the Deferred
Compensation Plan (amended and restated effective January 1, 1989) and the
Deferred Compensation Plan (amended and restated effective September 1, 1985),
each of which is sponsored by the Company, as in effect from time to time.

                  "DIVIDEND DEFERRAL ACCOUNT" shall mean the bookkeeping account
maintained by the Company to track the dividends (and associated accumulated
interest) payable with respect to Stock Deferrals.

                  "EICP" shall mean the Company's Executive Incentive
Compensation Plan, as in effect from time to time, or any similar successor plan
adopted by the Company.

                  "EMPLOYMENT AGREEMENT" shall mean that certain Amended and
Restated Employment Agreement For Don D. Jordan effective as of June 1, 1999.

                  "EMPLOYMENT PERIOD" shall mean the period commencing on June
1, 1999 and ending on December 31, 2000.

                  "LICP" shall mean the Company's Long-Term Incentive
Compensation Plan, as in effect from time to time, or any similar successor plan
adopted by the Company.

                  "RETIREMENT" shall mean the retirement of the Executive with
the express consent of the Board.

                  "SERP" shall mean the Benefit Restoration Plan of the Company.

                  "STOCK" shall mean the Common Stock, without par value, of the
Company.

                  "STOCK DEFERRALS" shall mean the shares of Stock and
accumulated dividends payable pursuant to Section 6 of the Employment Agreement,
but delivery of which is deferred pursuant to Section 4 of this Agreement.

                  "STOCK DELIVERY DATE" shall mean January 1, 2001.

         2. RETIREMENT OF EXECUTIVE PURSUANT TO EMPLOYMENT AGREEMENT:
Executive's employment with the Company shall terminate by reason of his
Retirement on the Date of Termination. The Company and Executive agree that
Executive's termination is a "retirement with the express consent of the Board"
within the meaning of the Employment Agreement. Except as specifically modified
herein, the Employment Agreement remains in effect.


                                        2

<PAGE>   3



         3. AGREEMENTS WITH RESPECT TO CERTAIN PAYMENTS AND BENEFITS:

         A. For purposes of fulfilling the Company's obligations with respect to
Section 5(B)(i)(a) of the Employment Agreement:

                  (i) Executive's Annual Base Salary for the calendar year 2000
         shall be deemed to be the Adjusted Base Salary.

                  (ii) Executive's EICP bonuses for the 1999 and 2000 calendar
         years shall become payable on or before December 31, 1999, shall be
         deemed to have been achieved at the "maximum" or "opportunity" level,
         and shall be treated as regular bonuses subject to Executive's current
         deferral election under the Deferred Compensation Plan.

                  (iii) Executive's Annual Base Salary that would have been
         earned through December 31, 2000, shall become payable in full on or
         before December 31, 1999, and shall be treated as regular salary
         subject to Executive's current deferral election under the Deferred
         Compensation Plan.

                  (iv) Executive's outstanding award under the LICP for the
         1997-99 performance cycle shall be paid, depending on the achievement
         of the relevant performance goals, in January 2000 in accordance with
         the terms of the LICP. The amount paid pursuant to this subsection (iv)
         shall not be eligible for deferral under the Deferred Compensation
         Plan.

                  (v) Upon payment and/or crediting to Executive of the amounts
         outlined above in subsections (i) - (iv), the Company's obligations
         with respect to Section 5(B)(i)(a) of the Employment Agreement shall be
         satisfied.

         B. Executive's benefits under the company's retirement plan and SERP
will commence according to the terms of such plans as provided in Section
5(B)(i)(b) of the Employment Agreement. For purposes of determining Executive's
benefit payable pursuant to the SERP under Section 5(B)(i)(c) of the Employment
Agreement, Executive shall be treated as if he continued to earn the Annual Base
Salary throughout the remainder of the Employment Period and EICP bonuses for
1999 and for 2000 were credited in December 1999 and December 2000,
respectively, each at the "maximum" or "opportunity" level. For this purpose,
Executive's Annual Base Salary for the calendar year 2000 shall be deemed to be
the Adjusted Base Salary.

         C. Executive and his family shall remain eligible for the Company's
welfare benefit plans until the end of the Employment Period as provided in
Section 5(B)(i)(d) of the Employment Agreement. Thereafter, Executive shall be
entitled to the welfare benefits in accordance with the plans, practices,
programs and policies of the Company to the extent applicable generally to other
peer executives of the Company.

         D. During January 2000, Company shall pay to Executive a lump sum equal
to the amount that the Company would have contributed as an employer
contribution to the tax-qualified

                                        3

<PAGE>   4



Savings Plan of the Company for the remainder of the Employment Period, had
Executive contributed at the maximum rate during said period. For this purpose,
Executive's Annual Base Salary for the calendar year 2000 shall be the Adjusted
Base Salary.

         E. As provided in Section 5(B)(iii) of the Employment Agreement,
Executive shall be entitled, for the remainder of the Employment Period, to the
prompt reimbursement of all expenses incurred for civic or industry activities
undertaken on behalf of the Company which are of a similar nature and scope to
those expenses reimbursable by the Company to the Executive on the Effective
Date. In this connection, the Executive shall also be afforded reasonable use of
any Company aircraft.

         F. The increase in Executive's Annual Base Salary for the year 2000
will satisfy the Company's obligation to provide off-site office space pursuant
to Section 5(D) for the calendar year 2000. After January 1, 2001, the Company
will continue to provide Executive with suitable executive office space and
secretarial help at an acceptable location outside the premises of any Company
location, as required pursuant to Section 5(D) of the Employment Agreement and
as specified in a letter to Executive from Robert Cruikshank dated September 2,
1998, until such time as mutually agreed by the parties to be no longer
necessary.

         G. Executive's lump-sum payments pursuant to the Deferred Compensation
Plan shall commence as soon as practicable after January 1, 2001. Executive's
installment payments pursuant to the Deferred Compensation Plan shall commence
only as provided in Section 16 of the Employment Agreement.

         H. For purposes of the Executive Benefits Plan, Executive's salary
shall be the Adjusted Base Salary.

         I. Notwithstanding any provision of the EICP to the contrary, the
Company hereby agrees to cause the EICP to be administered so that any and all
amounts of salary and/or bonus earned by Executive with respect to calendar
years 1984 and 1985 and theretofore deferred by Executive and held under the
EICP with instructions from the Executive to pay in 15 annual installments (a)
shall be paid in said 15 annual installments, (b) shall remain in the EICP
earning interest at the rate prescribed therein until installment distributions
are made and (c) shall commence on June 1, 2002 and shall be paid at the same
times as the amounts payable under the second sentence of Section 3G above are
payable.

         4. PRIOR STOCK AWARD:

         A. DEFERRAL: By executing this Agreement, the Executive hereby
irrevocably elects to defer the receipt of any amounts which may be payable, or
shares of Stock which may be deliverable, to him on account of Section 6 of the
Employment Agreement (the "Stock Deferrals"). The Stock Deferrals shall be
implemented by a credit to a bookkeeping account maintained by the Company
evidencing the Executive's unfunded right to receive shares of Stock of the
Company on the Stock Deferral Date.


                                        4

<PAGE>   5



         B. DIVIDENDS AND INTEREST: The Company shall maintain a separate
bookkeeping account (the "Dividend Deferral Account") to reflect the dividends
accumulated on shares of Stock credited to the Deferral Account. The beginning
balance of the Dividend Deferral Account shall be the amount of any cash payment
to which the Executive would be entitled pursuant to Section 6(B) of the
Employment Agreement on account of accumulated dividends. From the date the
Stock Deferrals would otherwise be payable until the Stock Delivery Date, the
Dividend Deferral Account shall be credited, as of the date any dividend is
payable, with the amount of the dividend payable with respect to the shares of
Stock represented in the Deferral Account. Until paid to the Executive, amounts
credited to the Dividend Deferral Account shall be credited, on a quarterly
basis, with interest calculated at an annual rate equal to the composite yield
on Moody's Long-Term Corporate Bond Index for the applicable calendar quarter as
determined from Moody's Bond Record published by Moody's Investors' Service,
Inc. (or any successor thereto), or, if such yield is no longer published, a
substantially similar average selected by the Compensation Committee, plus 2%.

         C. PAYMENT: Within 30 days after the Stock Delivery Date, shares of
Stock representing the Stock Deferrals shall be registered in the name of the
Executive and certificates representing such shares of Stock shall be delivered
to Executive. Unless the Company determines otherwise, shares of Stock delivered
to Executive shall consist of shares of Stock theretofore held by the Company in
its treasury or by a subsidiary of the Company. In addition, within 30 days
after the Stock Delivery Date, the Company shall deliver to the Executive a
lump-sum cash payment equal to the amount of the Dividend Deferral Account.

         5. POST-EMPLOYMENT OBLIGATIONS:

         A. Executive shall continue to be subject to the fiduciary and
confidentiality obligations of Section 10 of the Employment Agreement.

         B. Until June 1, 2002, Executive shall make himself available to the
Company for consultation on a reasonable basis from time to time, and shall use
his best efforts to promote the goodwill of the Company through his various
civic and industry activities.

         C. As a material inducement to the Company to enter into this
Agreement, Executive agrees that he will not (i) publicly criticize or disparage
the Company or any affiliate, or privately criticize or disparage the Company or
any affiliate in a manner intended or reasonably calculated to result in public
embarrassment to, or injury to the reputation of, the Company or any affiliate
in any community in which the Company or any affiliate is engaged in business;
(ii) directly or indirectly, acting alone or acting in concert with others,
institute or prosecute, or assist any person in any manner in instituting or
prosecuting, any legal proceedings of any nature against the Company or any
affiliate; subject, however, with respect to any legal action relating to
Executive's employment; (iii) commit damage to the property of the Company or
any affiliate or otherwise engage in any misconduct which is injurious to the
business or reputation of the Company or any affiliate; or (iv) take any other
action, or assist any person in taking any other action, that is materially
adverse to the interests of the Company or any affiliate or inconsistent with
fostering the goodwill of the Company or any affiliate; provided, however, that
the Executive will not be in breach of the covenant contained in (ii) above
solely by reason of his testimony which is compelled by process of law. As used
in this section, the term "affiliate" means the Company, any subsidiary, any
officer,

                                        5

<PAGE>   6



director or executive of the Company or any subsidiary, and any former officer,
director or executive of the Company or any subsidiary.

         D. Executive agrees that for a period of five years after the Date of
Termination, Executive will furnish such information and proper assistance as
may be reasonably necessary in connection with any litigation in which the
Company or any subsidiary is then or may become involved.

         E. Executive and the Company agree to the press release set forth as
Exhibit A.

         F. Executive and the Company agree that the Company's obligations
outlined in Sections 8, 9 and 16 of the Employment Agreement remain in effect as
outlined in those sections.

         6. WAIVER AND RELEASE: As a condition precedent to the receipt of the
benefits under this Agreement, Executive shall execute a waiver and release of
claims, in substantially the form attached hereto as Exhibit B.

         7. SUCCESSORS:

         A. This Agreement is personal to the Executive and without the prior
written consent of the Company shall not be assignable by the Executive
otherwise than by will or the laws of descent and distribution. This Agreement
shall inure to the benefit of and be enforceable by the Executive's legal
representatives.

         B. This Agreement shall inure to the benefit of and be binding upon the
Company and its successors and assigns.

         C. The Company will require any successor (whether direct or indirect,
by purchase, merger, consolidation or otherwise) to all or substantially all of
the business and/or assets of the Company to assume expressly and agree to
perform this Agreement in the same manner and to the same extent that the
Company would be required to perform it if no such succession had taken place.
As used in this Agreement, "Company" shall mean the Company as hereinbefore
defined and any successor to its business and/or assets as aforesaid which
assumes and agrees to perform this Agreement by operation of law, or otherwise.

         8. SOURCE OF PAYMENTS: All payments provided in this Agreement shall,
unless the plan or program pursuant to which they are made provide otherwise, be
paid in cash from the general funds of the Company, and no special or separate
funds shall be established and no other segregation of assets shall be made to
assure payment. The Executive shall have no right, title or interest whatever in
or to any investments which the Company may make to aid the Company in meeting
its obligations hereunder. Nothing contained in this Agreement, and no action
taken pursuant to this provision, shall create or be construed to create a trust
of any kind, or a fiduciary relationship, between the Company and the Executive
or any other person. To the extent that any person acquires a right to receive
payments from the Company hereunder, such right shall be no greater than the
right of an unsecured creditor of the Company.


                                        6

<PAGE>   7



         9. CONSOLIDATION, MERGER OR SALE OF ASSETS: Nothing in this Agreement
shall preclude the Company from consolidating or merging into or with, or
transferring all or substantially all of its assets to, another corporation
which assumes this Agreement and all obligations and undertakings of the Company
hereunder; provided that no such action shall diminish the Executive's rights
hereunder. Upon such a consolidation, merger or transfer of assets and
assumption, the term "Company" as used herein shall mean such other corporation.

         10. MISCELLANEOUS:

         A. This Agreement shall be governed by and construed in accordance with
the laws of the State of Texas, without reference to principles of conflict of
laws. The captions of this Agreement are not part of the provisions hereof and
shall have no force or effect. This Agreement may not be amended or modified
otherwise than by a written agreement executed by the parties hereto or their
respective successors and legal representatives.

         B. All notices and other communications hereunder shall be in writing
and shall be given by hand delivery to the other party or by registered or
certified-mail, return receipt requested, postage prepaid, addressed as follows:

             If to the Executive:    Don D. Jordan
                                     5 Stayton Circle
                                     Houston, Texas 77024

               If to the Company:    Reliant Energy, Incorporated
                                     P.O. Box 4567
                                     Houston, Texas 77210

                                     ATTENTION: Mr. Hugh Rice Kelly
                                                Vice President, General Counsel
                                                and Secretary

or to such other address as either party shall have furnished to the other in
writing in accordance herewith. Notice and communications shall be effective
when actually received by the addressee.

         C. The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other provision
of this Agreement.

         D. The Company may withhold from any amounts payable under this
Agreement such Federal, state or local taxes as shall be required to be withheld
pursuant to any applicable law or regulation.


                                        7

<PAGE>   8



                  IN WITNESS WHEREOF, the Executive has hereunto set the
Executive's hand and, pursuant to the authorization from its Board of Directors,
the Company has caused these presents to be executed in its name and on its
behalf, all on the day and year first above written, but effective as of the
Effective Date.

                                   RELIANT ENERGY, INCORPORATED



                                   By   /s/ ROBERT J. CRUIKSHANK
                                      ------------------------------------------
                                        Robert J. Cruikshank, Chairman of the
                                        Compensation Committee of the
                                        Board of Directors



                                   By   /s/ R.S. LETBETTER
                                      ------------------------------------------
                                        R.S. Letbetter, Chief Executive Officer


                                   EXECUTIVE



                                   /s/ DON D. JORDAN
                                   ---------------------------------------------
                                   Don D. Jordan


                                        8

<PAGE>   9


                        EXHIBIT A - AGREED PRESS RELEASE




<PAGE>   10


To:      All Reliant Energy Employees

From:    Hugh Rice Kelly -- Corporate Secretary

Subject: New Chairman of the Reliant Energy Board of Directors


Don D. Jordan has announced that he will retire as Chairman of the Board
effective December 31, 1999, after more than 44 years with the company. R. Steve
Letbetter, who has been serving as President and Chief Executive Officer since
June of 1999, has been named Chairman, President and Chief Executive Officer of
the company.

Mr. Letbetter joined Houston Lighting & Power Company (then Reliant Energy's
principal operating unit) as assistant secretary and assistant treasurer in
1974. He later served as assistant comptroller, then comptroller, and was
elected vice president and comptroller in 1981. From 1983 to 1988 he was vice
president of regulatory relations. He then served as group vice president
finance and regulatory relations and in 1993, was elected president and chief
operating officer. He was named president and chief operating officer of Reliant
Energy in January 1997.

Mr. Letbetter serves on the board of directors of the Electric Power Research
Institute, the Association of Electric Companies of Texas, and the American Gas
Association. He also serves on the boards of Chase Bank - Houston, Central
Houston, Greater Houston Partnership and the Houston International Festival. He
also is a member of the Governor's Business Council, the Task Force Committee of
Texas A & M University Vision 2020, the Council of Overseers for the Rice
University Jesse H. Jones Graduate School of Management, and Lt. Governor Rick
Perry's Special Commission on 21st Century Colleges and Universities. In 1998 he
was a recipient of the Outstanding Alumnus Award from Texas A&M's Lowry Mays
College & Graduate School of Business, where he serves on the college's
Development Council.



<PAGE>   11



During his 25 years with Reliant Energy, Steve Letbetter has been instrumental
in shaping the company into the international energy business it is today. As
one of Reliant Energy's primary strategists, he has overseen our transition to a
combination gas/electric/energy services company and he has guided Reliant
Energy through the deregulation of our core businesses and the opening of new
markets.

Don Jordan's tenure as chairman and chief executive officer is among the longest
in the energy industry. He was initially elected chief executive officer of
Houston Lighting & Power Company in 1977 and named chairman in 1982.

A highly visible and public executive, Mr. Jordan has, throughout his career,
been very active in civic, industry and public affairs. He has just completed
three terms as president and then chairman of the Houston Livestock Show &
Rodeo, is a member of the boards of directors of the Greater Houston
Partnership, Edison Electric Institute and the Association of Electric Companies
of Texas. He is president of the World Energy Council and served as chairman of
the World Energy Congress in Houston, in September 1998. He is a director of
AEGIS Services, Inc., BJ Services Company, the Texas Medical Center, the Texas
Heart Institute, and is a member of the board of trustees of South Texas College
of Law. He is advisory director of Chase Bank of Texas, N.A. Mr. Jordan has also
served as chairman of nearly every national energy industry association as well
as numerous leading Houston organizations.

Some of the honors he has received include 1999 Honoree of the Houston Chapter
of the Texas Society of Certified Public Accountants; Wetlands Conservation
Award from Ducks Unlimited; International Businessman of the Year from the World
Affairs Council; People of Vision Award; Distinguished Alumnus from both the
University of Texas and South Texas College of Law; Distinguished Non-alumnus of
the University of Houston; South Texan of the Year from the Texas Chamber of
Commerce; 1998 Executive of the Year from World Cogeneration Magazine; Community
Service Award from the Houston Citizens Chamber of Commerce and 1998
Distinguished Citizen from the Rotary Club of Houston.

"All Reliant Energy employees can be proud to have had a leader like Don
Jordan," said Steve Letbetter.

"Don has worked tirelessly and extraordinarily effectively over a four-decade
career. He has led this organization successfully through energy shortages,
nuclear difficulties, regulatory and political obstacles, and a host of other
challenges. He's never failed to be concerned about employees and, as a result,
maintains personal friendships at every level of the organization. On top of
that, there has probably never been an executive in this city who has devoted
more of his personal time and energy to make Houston a better place to live. We
all wish him well in his future endeavors, and are proud to call him a friend
and colleague."

*******************************************************************************

Comments, suggestions and news items may be distributed to Reliant Energy
Corporate Communications via the following avenues:



<PAGE>   12
f

                                                                       EXHIBIT B


                               WAIVER AND RELEASE

                              SEPARATION AGREEMENT
                          RELIANT ENERGY, INCORPORATED
                                AND DON D. JORDAN


                  In exchange for the payment to me of benefits pursuant to that
certain Separation Agreement between Reliant Energy, Incorporated ("REI") and me
dated December 1, 1999 (the "Separation Agreement"), which are in addition to
any remuneration or benefits to which I am already entitled, I agree not to sue
and to release and forever discharge REI, and all of its subsidiaries,
affiliates and unincorporated divisions, and their respective officers,
directors, agents, servants, employees, successors, assigns, insurers, employee
benefit plans and fiduciaries, and agents of any of the foregoing (collectively,
the "Corporate Group"), and any and all other persons, firms, organizations, and
corporations, from any and all damages, losses, causes of action, expenses,
demands, liabilities, and claims on behalf of myself, my heirs, executors,
administrators, and assigns with respect to all matters relating to or arising
out of my employment with or separation from any member of the Corporate Group;
provided, however, that this Waiver and Release shall not apply to any claim or
cause of action to enforce or interpret any provision contained in the
Separation Agreement. Any claim or cause of action to enforce or interpret any
provision contained in the Separation Agreement must be asserted within the
later of 90 days after the date of this Waiver and Release, or 90 days after the
date I actually discover circumstances giving rise to such claim or cause of
action.

                  This Waiver and Release includes, but is not limited to,
claims and causes of action under: Title VII of the Civil Rights Act of 1964, as
amended; the Age Discrimination in Employment Act of 1967, as amended, including
the Older Workers Benefit Protection Act of 1990; the Civil Rights Act of 1866,
as amended; the Civil Rights Act of 1991; the Americans with Disabilities Act of
1990; the Energy Reorganization Act, as amended, 42 U.S.C. Section 5851; the
Workers Adjustment and Retraining Notification Act of 1988; the Pregnancy
Discrimination Act of 1978; the Employee Retirement Income Security Act of 1974,
as amended; the Family and Medical Leave Act of 1993; the Fair Labor Standards
Act; the Occupational Safety and Health Act; the Texas Labor Code; claims in
connection with workers' compensation or "whistle blower" status; and/or
contract, tort, bodily injury or death, defamation, slander, wrongful
termination or any other state or federal regulatory, statutory or common law.

                  I affirm and agree that my employment relationship will end on
my Date of Termination as defined in the Separation Agreement and I then will
withdraw unequivocally, completely and finally from my employment and waive all
rights in connection with such relationship except to vested benefits and the
payments and benefits described in the Separation Agreement. I agree that this
Waiver and Release is valid. I agree that this Waiver and Release is


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<PAGE>   13


fair, adequate and reasonable. I agree that my consent to this Waiver and
Release was with my full knowledge and was not procured through fraud, duress or
mistake.

                  I have read the Separation Agreement and it is incorporated
herein by reference.

                  I acknowledge that signing this Waiver and Release is an
important legal act and that I have been advised in writing to consult an
attorney prior to execution. I also understand that, in order to be eligible for
benefits under the Separation Agreement, I must sign and return this Waiver and
Release to the Corporate Secretary of REI no later than 5:30 p.m. on December
31, 1999. I acknowledge that I have been given 21 days to consider whether to
execute this Waiver and Release.

                  I understand that for a period of 7 calendar days following my
signing this Waiver and Release, I may revoke my acceptance of the offer of
Separation Agreement benefits by delivering a written statement to the Corporate
Secretary of REI, by hand or by registered-mail, in which case the Waiver and
Release will not become effective. In the event I revoke my acceptance of this
offer, the Corporate Group shall have no obligation to provide me benefits under
the Separation Agreement. I understand that failure to revoke my acceptance of
the offer within 7 days after the date I sign this Waiver and Release will
result in this Waiver and Release being permanent and irrevocable.

                  I agree that I have returned or will return immediately, and
maintain in strictest confidence and will not use in any way, any proprietary,
confidential, or other nonpublic information or documents relating to the
business and affairs of REI, its subsidiaries, affiliates and unincorporated
divisions. I acknowledge my continuing obligation of confidentiality regarding
proprietary or confidential information of REI. I shall maintain the strictest
confidence with respect to any and all information concerning the business or
affairs of REI which I acquired during the course of employment. Such
information includes, but is not limited to, business plans and studies,
regulatory plans or strategy information, prices and related pricing
information, memoranda, agreements, research, litigation, legal advice and work
product, discounts, computer and information systems (including software),
future plans, policies, inventions, ideas, technical data, products, services,
processes, procedures, and all other knowledge in whatever form used in
management, engineering, marketing, finance, litigation, operations, or
otherwise concerning the business of REI which is of a proprietary or
confidential nature. I hereby covenant not to use or disclose, and not to allow
others to use or disclose, any such information at any time without the express
written consent of the General Counsel of REI unless I am legally compelled to
do so by proper legal process. Should I be served with legal process seeking to
compel me to disclose any such information, I agree to notify the General
Counsel immediately, in order that REI may seek to resist such process if it so
chooses. REI agrees that if I am called upon by or on behalf of REI to serve as
a witness or consultant in or with respect to any potential litigation,
litigation, or regulatory proceeding, any such call shall be with reasonable
notice, shall not unnecessarily interfere with my later employment, and shall
provide for payment for my time and costs expended in such matters.

                  Both REI and I agree that the terms of this Waiver and Release
are CONFIDENTIAL and that any disclosure to anyone for any purpose whatsoever
(save and except disclosure to my spouse, to financial institutions as part of a
financial statement, to immediate family members and/or


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<PAGE>   14


heirs, financial, tax and legal advisors, outplacement, executive search and/or
legal placement advisors, or as required by law; in the event confirmation of
any such information is requested, the request should be directed to the General
Counsel) by me or my agents, representatives, heirs, spouse, employees or
spokespersons shall be a breach of this Waiver and Release. REI and I also agree
to refrain from any criticisms or disparaging comments about each other or in
any way relating to my employment or separation, and REI and I specifically
acknowledge that our willingness to enter into this Waiver and Release is in
anticipation of our fidelity to this commitment. The above is not intended to
restrict me from seeking or engaging in other employment and, in that
connection, from making confidential disclosure to potential employers of such
facts or opinions as I may elect to convey, nor is it intended to restrict REI
from conducting such confidential internal communications as may be necessary to
manage this resignation in a businesslike way.

                  I understand that nothing in this Waiver and Release is
intended to prohibit, restrict or otherwise discourage me from engaging in any
activity related to matters of public or employee health or safety, specifically
to include activity protected under 42 U.S.C. Section 5851 and 10 C.F.R. Section
50.7, including, but not limited to, providing information to the Nuclear
Regulatory Commission ("NRC") or to REI regarding nuclear safety or quality
concerns, potential violations or other matters within the NRC's jurisdiction.

                  I acknowledge that this Waiver and Release and the Plan set
forth the entire understanding and agreement between me and the Corporate Group
concerning the subject matter of this Waiver and Release and supersede any prior
or contemporaneous oral and/or written agreements or representations, if any,
between me and REI or any other member of the Corporate Group. The invalidity or
enforceability of any provisions hereof shall in no way affect the validity or
enforceability of any other provision.


/s/ DON D. JORDAN                           /s/ R. STEVE LETBETTER
----------------------------------          ------------------------------------
Don D. Jordan                               R. Steve Letbetter

January 4, 2000                             January 5, 2000
----------------------------------          ------------------------------------
Don D. Jordan's Signature Date              Company's Execution Date


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