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                                                                     EXHIBIT 4.5

                             RELIANT RESOURCES, INC.

                                 2002 STOCK PLAN

         1. PLAN. This Reliant Resources, Inc. 2002 Stock Plan (the "Plan") is
adopted by Reliant Resources, Inc. (the "Company") to reward certain Employees
(excluding Officers) of Reliant Resources, Inc.

         2. OBJECTIVES. The purpose of this Plan is to further the interests of
the Company, its Subsidiaries and its shareholders by providing incentives in
the form of awards to Employees (excluding Officers). Such awards will recognize
and reward outstanding performances and individual contributions and give
Participants in the Plan an interest in the Company parallel to that of the
shareholders, thus enhancing the proprietary and personal interest of such
Participants in the Company's continued success and progress. This Plan will
also enable the Company and its Subsidiaries to attract and retain such
Employees.

         3. DEFINITIONS. As used herein, the terms set forth below shall have
the following respective meanings:

                  "AUTHORIZED OFFICER" means the Chairman of the Board or the
         Chief Executive Officer of the Company (or any other senior officer of
         the Company to whom either of them shall delegate the authority to
         execute any Award Agreement, where applicable).

                  "AWARD" means any Option, SAR, Stock Award, Cash Award or
         Performance Award granted, whether singly, in combination or in tandem,
         to a Participant who is an Employee pursuant to such applicable terms,
         conditions and limitations (including treatment as a Performance Award)
         as the Committee may establish in order to fulfill the objectives of
         the Plan.

                  "AWARD AGREEMENT" means a written agreement setting forth the
         terms, conditions and limitations applicable to an Award.

                  "BOARD" means the Board of Directors of the Company.

                  "CASH AWARD" means an award denominated in cash.

                  A "CHANGE OF CONTROL" shall be deemed to have occurred upon
         the occurrence of any of the following events:

                           (a) 30% OWNERSHIP CHANGE: Any Person makes an
                  acquisition of Outstanding Voting Stock and is, immediately

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                  thereafter, the beneficial owner of 30% or more of the then
                  Outstanding Voting Stock, unless such acquisition is made
                  directly from the Company in a transaction approved by a
                  majority of the Incumbent Directors; or any group is formed
                  that is the beneficial owner of 30% or more of the Outstanding
                  Voting Stock; or

                           (b) BOARD MAJORITY CHANGE: Individuals who are
                  Incumbent Directors cease for any reason to constitute a
                  majority of the members of the Board; or

                           (c) MAJOR MERGERS AND ACQUISITIONS: Consummation of a
                  Business Combination unless, immediately following such
                  Business Combination, (i) all or substantially all of the
                  individuals and entities that were the beneficial owners of
                  the Outstanding Voting Stock immediately prior to such
                  Business Combination beneficially own, directly or indirectly,
                  more than 70% of the then outstanding shares of voting stock
                  of the parent corporation resulting from such Business
                  Combination in substantially the same relative proportions as
                  their ownership, immediately prior to such Business
                  Combination, of the Outstanding Voting Stock, (ii) if the
                  Business Combination involves the issuance or payment by the
                  Company of consideration to another entity or its
                  shareholders, the total fair market value of such
                  consideration plus the principal amount of the consolidated
                  long-term debt of the entity or business being acquired (in
                  each case, determined as of the date of consummation of such
                  Business Combination by a majority of the Incumbent Directors)
                  does not exceed 50% of the sum of the fair market value of the
                  Outstanding Voting Stock plus the principal amount of the
                  Company's consolidated long-term debt (in each case,
                  determined immediately prior to such consummation by a
                  majority of the Incumbent Directors), (iii) no Person (other
                  than any corporation resulting from such Business Combination)
                  beneficially owns, directly or indirectly, 30% or more of the
                  then outstanding shares of voting stock of the parent
                  corporation resulting from such Business Combination and (iv)
                  a majority of the members of the board of directors of the
                  parent corporation resulting from such Business Combination
                  were Incumbent Directors of the Company immediately prior to
                  consummation of such Business Combination; or

                           (d) MAJOR ASSET DISPOSITIONS: Consummation of a Major
                  Asset Disposition unless, immediately following such Major
                  Asset Disposition, (i) individuals and entities that were
                  beneficial

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                  owners of the Outstanding Voting Stock immediately prior to
                  such Major Asset Disposition beneficially own, directly or
                  indirectly, more than 70% of the then outstanding shares of
                  voting stock of the Company (if it continues to exist) and of
                  the entity that acquires the largest portion of such assets
                  (or the entity, if any, that owns a majority of the
                  outstanding voting stock of such acquiring entity) and (ii) a
                  majority of the members of the board of directors of the
                  Company (if it continues to exist) and of the entity that
                  acquires the largest portion of such assets (or the entity, if
                  any, that owns a majority of the outstanding voting stock of
                  such acquiring entity) were Incumbent Directors of the Company
                  immediately prior to consummation of such Major Asset
                  Disposition.

For purposes of the foregoing,

                           (1) the term "Person" means an individual, entity or
                  group;

                           (2) the term "group" is used as it is defined for
                  purposes of Section 13(d)(3) of the Securities Exchange Act of
                  1934 (the "Exchange Act");

                           (3) the term "beneficial owner" is used as it is
                  defined for purposes of Rule 13d-3 under the Exchange Act;

                           (4) the term "Outstanding Voting Stock" means
                  outstanding voting securities of the Company entitled to vote
                  generally in the election of directors; and any specified
                  percentage or portion of the Outstanding Voting Stock (or of
                  other voting stock) shall be determined based on the combined
                  voting power of such securities;

                           (5) the term "Incumbent Director" means a director of
                  the Company (x) who was a director of the Company on January
                  1, 2002 or (y) who becomes a director subsequent to such date
                  and whose election, or nomination for election by the
                  Company's shareholders, was approved by a vote of a majority
                  of the Incumbent Directors at the time of such election or
                  nomination, except that any such director shall not be deemed
                  an Incumbent Director if his or her initial assumption of
                  office occurs as a result of an actual or threatened election
                  contest or other actual or threatened solicitation of proxies
                  by or on behalf of a Person other than the Board;

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                           (6) the term "election contest" is used as it is
                  defined for purposes of Rule 14a-11 under the Exchange Act;

                           (7) the term "Business Combination" means (x) a
                  merger or consolidation involving the Company or its stock or
                  (y) an acquisition by the Company, directly or through one or
                  more subsidiaries, of another entity or its stock or assets;

                           (8) the term "parent corporation resulting from a
                  Business Combination" means the Company if its stock is not
                  acquired or converted in the Business Combination and
                  otherwise means the entity which as a result of such Business
                  Combination owns the Company or all or substantially all the
                  Company's assets either directly or through one or more
                  subsidiaries; and

                           (9) the term "Major Asset Disposition" means the sale
                  or other disposition in one transaction or a series of related
                  transactions of 70% or more of the assets of the Company and
                  its subsidiaries on a consolidated basis; and any specified
                  percentage or portion of the assets of the Company shall be
                  based on fair market value, as determined by a majority of the
                  Incumbent Directors.

                  Notwithstanding anything herein to the contrary, (i) solely
         for purposes of this Change of Control definition and the terms defined
         herein, prior to the proposed spin-off of the Company from Reliant, the
         term "Company" shall mean either the Company or Reliant; and (ii) the
         proposed spin-off of the Company from Reliant will not constitute a
         Change of Control as contemplated herein.

                  "CODE" means the Internal Revenue Code of 1986, as amended
         from time to time.

                  "COMMITTEE" means the Compensation Committee of the Board or
         such other committee of the Board as is designated by the Board to
         administer the Plan.

                  "COMMON STOCK" means the Common Stock, par value $0.001 per
         share, of the Company.

                  "COMPANY" means Reliant Resources, Inc., a Delaware
         corporation, or any successor thereto.

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                  "DIVIDEND EQUIVALENTS" means, with respect to shares of
         Restricted Stock that are to be issued at the end of the Restriction
         Period, an amount equal to all dividends and other distributions (or
         the economic equivalent thereof) that are payable to stockholders of
         record during the Restriction Period on a like number of shares of
         Common Stock.

                  "EMPLOYEE" means (i) an employee (other than an Officer) of
         the Company or any of its Subsidiaries, and (ii) an individual who has
         agreed to become an employee (other than an Officer) of the Company or
         any of its Subsidiaries and is expected to become such an employee
         within the following six months.

                  "FAIR MARKET VALUE" of a share of Common Stock means, as of a
         particular date, (i) if shares of Common Stock are listed on a national
         securities exchange, the average of the highest and lowest sales price
         per share of Common Stock on the consolidated transaction reporting
         system for the principal national securities exchange on which shares
         of Common Stock are listed on that date, or, if there shall have been
         no such sale so reported on that date, on the next preceding date on
         which such sale was so reported, or, at the discretion of the
         Committee, the price prevailing on the exchange at the time of
         exercise, (ii) if shares of Common Stock are not so listed but are
         quoted on the Nasdaq National Market, the average of the highest and
         lowest sales price per share of Common Stock reported by the Nasdaq
         National Market on that date, or, if there shall have been no such sale
         so reported on that date, on the next preceding date on which such a
         sale was so reported, or, at the discretion of the Committee, the price
         prevailing on the Nasdaq National Market at the time of exercise, (iii)
         if the Common Stock is not so listed or quoted, the average of the
         closing bid and asked price on that date, or, if there are no
         quotations available for such date, on the next preceding date on which
         such quotations shall be available, as reported by the Nasdaq Stock
         Market, or, if not reported by the Nasdaq Stock Market, by the National
         Quotation Bureau Incorporated or (iv) if shares of Common Stock are not
         publicly traded, the most recent value determined by an independent
         appraiser appointed by the Company for such purpose.

                  "GRANT DATE" means the date an Award is granted to a
         Participant pursuant to the Plan.

                  "GRANT PRICE" means the price at which a Participant may
         exercise his or her right to receive cash or Common Stock, as
         applicable, under the terms of an Award.

                  "OFFICER" means an officer of the Company or any of its
         Subsidiaries, as such term is defined in Rule 16a-1 under the Exchange
         Act.

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                  "OPTION" means a right to purchase a specified number of
         shares of Common Stock at a specified Grant Price, not including an
         Option that is intended to comply with the requirements set forth in
         Section 422 of the Code.

                  "PARTICIPANT" means an Employee to whom an Award has been
         granted under this Plan.

                  "PERFORMANCE AWARD" means an award made pursuant to this Plan
         that is subject to the attainment of one or more Performance Goals.

                  "PERFORMANCE GOAL" means a standard established by the
         Committee, to determine in whole or in part whether a Performance Award
         shall be earned.

                  "RELIANT" means Reliant Energy, Incorporated, a Texas
         corporation.

                  "RESTRICTED STOCK" means Common Stock that is restricted or
         subject to forfeiture provisions.

                  "RESTRICTION PERIOD" means a period of time beginning as of
         the Grant Date of an Award of Restricted Stock and ending as of the
         date upon which the Common Stock subject to such Award is no longer
         restricted or subject to forfeiture provisions.

                  "STOCK APPRECIATION RIGHT" OR "SAR" means a right to receive a
         payment, in cash or Common Stock, equal to the excess of the Fair
         Market Value or other specified valuation of a specified number of
         shares of Common Stock on the date the right is exercised over a
         specified Grant Price, in each case, as determined by the Committee.

                  "STOCK AWARD" means an Award in the form of shares of Common
         Stock or units denominated in shares of Common Stock, including an
         award of Restricted Stock.

                  "SUBSIDIARY" means (i) in the case of a corporation, any
         corporation of which the Company directly or indirectly owns shares
         representing 50% or more of the combined voting power of the shares of
         all classes or series of capital stock of such corporation which have
         the right to vote generally on matters submitted to a vote of the
         stockholders of such corporation and (ii) in the case of a partnership
         or other business entity not organized as a corporation, any such
         business entity of which the Company directly or indirectly owns 50% or
         more of the voting, capital or profits interests (whether in the form
         of partnership interests, membership interests or otherwise).

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         4. ELIGIBILITY. All Employees are eligible for the grant of Awards
under this Plan.

         5. COMMON STOCK AVAILABLE FOR AWARDS. Subject to the provisions of
paragraph 14 hereof, no Award shall be granted if it shall result in the
aggregate number of shares of Common Stock issued under the Plan plus the number
of shares of Common Stock covered by or subject to Awards then outstanding
(after giving effect to the grant of the Award in question) to exceed 6,000,000
shares. No more than 25% of such shares of Common Stock shall be available for
Stock Awards. The number of shares of Common Stock that are subject to Awards
under this Plan that are forfeited or terminated, expire unexercised, are
settled in cash in lieu of Common Stock or in a manner such that all or some of
the shares covered by an Award are not issued to a Participant or are exchanged
for Awards that do not involve Common Stock, shall again immediately become
available for Awards hereunder. In the event that any Option or other Award
granted hereunder is exercised through the delivery of shares of Common Stock or
in the event that withholding tax liabilities arising from such Award are
satisfied by the withholding of shares of Common Stock by the Company, the
number of shares of Common Stock available for Awards under the Plan shall be
increased by the number of shares of Common Stock so surrendered or withheld.
The Committee may from time to time adopt and observe such procedures concerning
the counting of shares against the Plan maximum as it may deem appropriate. The
Board and the appropriate officers of the Company shall from time to time take
whatever actions are necessary to file any required documents with governmental
authorities, stock exchanges and transaction reporting systems to ensure that
shares of Common Stock are available for issuance pursuant to Awards.

         6. ADMINISTRATION.

                  (a) This Plan shall be administered by the Committee except as
         otherwise provided herein.

                  (b) Subject to the provisions hereof, the Committee shall have
         full and exclusive power and authority to administer this Plan and to
         take all actions that are specifically contemplated hereby or are
         necessary or appropriate in connection with the administration hereof.
         The Committee shall also have full and exclusive power to interpret
         this Plan and to adopt such rules, regulations and guidelines for
         carrying out this Plan as it may deem necessary or proper, all of which
         powers shall be exercised in the best interests of the Company and in
         keeping with the objectives of this Plan. The Committee may, in its
         discretion, provide for the extension of the exercisability of an
         Award, accelerate the vesting or exercisability of an Award, eliminate
         or make less restrictive any restrictions applicable to an Award, waive
         any restriction or other provision of this Plan or of an Award or
         otherwise amend or modify an Award in any manner that is either (i) not
         adverse to the Participant to whom such Award was granted or (ii)
         consented to by such Participant. The Committee may grant an Award to
         an Employee who it expects to become an employee of the Company or any
         of its

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         Subsidiaries within the following six months, with such Award being
         subject to the individual's actually becoming an employee within such
         time period, and subject to such other terms and conditions as may be
         established by the Committee. The Committee may correct any defect or
         supply any omission or reconcile any inconsistency in this Plan or in
         any Award in the manner and to the extent the Committee deems necessary
         or desirable to further the Plan purposes. Any decision of the
         Committee in the interpretation and administration of this Plan shall
         lie within its sole and absolute discretion and shall be final,
         conclusive and binding on all parties concerned.

                  (c) No member of the Committee or officer of the Company to
         whom the Committee has delegated authority in accordance with the
         provisions of paragraph 7 of this Plan shall be liable for anything
         done or omitted to be done by him or her, by any member of the
         Committee or by any officer of the Company in connection with the
         performance of any duties under this Plan, except for his or her own
         willful misconduct or as expressly provided by statute.

         7. DELEGATION OF AUTHORITY. The Committee may delegate to the Chief
Executive Officer and to other senior officers of the Company its duties under
this Plan pursuant to such conditions or limitations as the Committee may
establish. The Committee may engage or authorize the engagement of a third party
administrator to carry out administrative functions under the Plan.

         8. TYPES OF AWARDS. The Committee shall determine the type or types of
Awards to be made under this Plan and shall designate from time to time the
Employees who are to be the recipients of such Awards. Each Award shall be
embodied in an Award Agreement, which shall contain such terms, conditions and
limitations as shall be determined by the Committee in its sole discretion and,
if required by the Committee, shall be signed by the Participant to whom the
Award is granted and by an Authorized Officer for and on behalf of the Company.
Awards may consist of those listed in this paragraph 8(a) and may be granted
singly, in combination or in tandem. Awards may also be granted in combination
or in tandem with, in replacement of, or as alternatives to, grants or rights
under this Plan or any other employee plan of the Company or any of its
Subsidiaries, including the plan of any acquired entity. An Award may provide
for the grant or issuance of additional, replacement or alternative Awards upon
the occurrence of specified events, including the exercise of the original Award
granted to a Participant. All or part of an Award may be subject to conditions
established by the Committee, which may include, but are not limited to,
continuous service with the Company and its Subsidiaries, achievement of
specific business objectives, increases in specified indices, attainment of
specified growth rates and other comparable measurements of performance. Upon
the death, disability or termination of employment by a Participant who is an
Employee, any unexercised, deferred, unvested or unpaid Awards shall be treated
as set forth in the applicable Award Agreement.

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                  (a) OPTION. An Award may be in the form of an Option. The
         Grant Price of an Option shall be not less than the Fair Market Value
         of the Common Stock on the Grant Date. Subject to the foregoing
         provisions, the terms, conditions and limitations applicable to any
         Options awarded to Employees pursuant to this Plan, including the Grant
         Price, the term of the Options and the date or dates upon which they
         become exercisable, shall be determined by the Committee.

                  (b) STOCK APPRECIATION RIGHTS. An Award may be in the form of
         an SAR. The terms, conditions and limitations applicable to any SARs
         awarded to Employees pursuant to this Plan, including the Grant Price,
         the term of any SARs and the date or dates upon which they become
         exercisable, shall be determined by the Committee.

                  (c) STOCK AWARD. An Award may be in the form of a Stock Award.
         The terms, conditions and limitations applicable to any Stock Awards
         granted pursuant to this Plan shall be determined by the Committee.

                  (d) CASH AWARD. An Award may be in the form of a Cash Award.
         The terms, conditions and limitations applicable to any Cash Awards
         granted pursuant to this Plan shall be determined by the Committee.

                  (e) PERFORMANCE AWARD. Without limiting the type or number of
         Awards that may be made under the other provisions of this Plan, an
         Award may be in the form of a Performance Award. A Performance Award
         shall be paid, vested or otherwise deliverable solely on account of the
         attainment of one or more objective Performance Goals established by
         the Committee. The Committee shall generally establish Performance
         Goals prior to the granting of any such Award, but may, in the
         Committee's discretion, establish Performance Goals during the term of
         a performance cycle. Once established, Performance Goals may be
         changed, adjusted or amended only upon authorization by the Committee.
         Subject to the foregoing provisions, the terms, conditions and
         limitations applicable to any Performance Awards made pursuant to this
         Plan shall be determined by the Committee.

         9. PAYMENT OF AWARDS.

                  (a) GENERAL. Payment made to a Participant pursuant to an
         Award may be made in the form of cash or Common Stock, or a combination
         thereof, and may include such restrictions as the Committee shall
         determine, including, in the case of Common Stock, restrictions on
         transfer and forfeiture provisions. If such payment is made in the form
         of Restricted Stock, the applicable Award Agreement relating to such
         shares shall specify whether they are to be issued at the beginning or
         end of the Restriction Period. In the event that shares of Restricted
         Stock are to be issued at the beginning of the Restriction Period, the
         certificates evidencing such shares (to the extent that such shares are
         so evidenced) shall contain appropriate legends and restrictions that
         describe the

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         terms and conditions of the restrictions applicable thereto. In the
         event that shares of Restricted Stock are to be issued at the end of
         the Restricted Period, the right to receive such shares shall be
         evidenced by book entry registration or in such other manner as the
         Committee may determine.

                  (b) DEFERRAL. With the approval of the Committee, amounts
         payable in respect of Awards may be deferred and paid either in the
         form of installments or as a lump-sum payment. The Committee may permit
         selected Participants to elect to defer payments of some or all types
         of Awards or any other compensation otherwise payable by the Company in
         accordance with procedures established by the Committee. Any deferred
         payment pursuant to an Award, whether elected by the Participant or
         specified by the Award Agreement or by the Committee, may be forfeited
         if and to the extent that the Award Agreement so provides.

                  (c) DIVIDENDS, EARNINGS AND INTEREST. Rights to dividends or
         Dividend Equivalents may be extended to and made part of any Stock
         Award, subject to such terms, conditions and restrictions as the
         Committee may establish. The Committee may also establish rules and
         procedures for the crediting of interest or other earnings on deferred
         cash payments and Dividend Equivalents for Stock Awards.

                  (d) SUBSTITUTION OF AWARDS. At the discretion of the
         Committee, a Participant may be offered an election to substitute an
         Award for another Award or Awards of the same or different type.

                  (e) CASH-OUT OF AWARDS. At the discretion of the Committee, an
         Award that is an Option or SAR may be settled by a cash payment equal
         to the difference between the Fair Market Value per share of Common
         Stock on the date of exercise and the Grant Price of the Award,
         multiplied by the number of shares with respect to which the Award is
         exercised.

         10. OPTION EXERCISE. The Grant Price shall be paid in full at the time
of exercise in cash or, if permitted by the Committee and elected by the
optionee, the optionee may purchase such shares by means of tendering Common
Stock or surrendering another Award, including Restricted Stock, or any
combination thereof. If shares of Common Stock are used to pay the Grant Price,
such shares shall be valued based on the fair market value of Common Stock when
the Option is exercised in accordance with such uniform rules and procedures as
the Committee determines appropriate. The Committee shall determine acceptable
methods for Participants to tender Common Stock or other Awards. The Committee
may provide for procedures to permit the exercise or purchase of such Awards by
use of the proceeds to be received from the sale of Common Stock issuable
pursuant to an Award. Unless otherwise provided in the applicable Award
Agreement, in the event shares of Restricted Stock are tendered as consideration
for the exercise of an Option, a number of the shares issued upon the exercise
of the Option, equal to the number of shares of Restricted Stock used as
consideration therefor, shall be subject to the same

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restrictions as the Restricted Stock so submitted as well as any additional
restrictions that may be imposed by the Committee. The Committee may adopt
additional rules and procedures regarding the exercise of Options from time to
time, provided that such rules and procedures are not inconsistent with the
provisions of this paragraph.

         11. TAXES. The Company or its designated third party administrator
shall have the right to deduct taxes at the applicable supplemental rate from
any Award payment and withhold, at the time of delivery or vesting of cash or
shares of Common Stock under this Plan, an appropriate amount of cash or number
of shares of Common Stock or a combination thereof for payment of taxes or other
amounts required by law or to take such other action as may be necessary in the
opinion of the Company to satisfy all obligations for withholding of such taxes,
provided that withholding obligations with respect to Options may only be
satisfied in cash as long as withholding of stock following the exercise of an
Option would result in a charge to earnings. The Committee may also permit
withholding to be satisfied by the transfer to the Company of shares of Common
Stock theretofore owned by the holder of the Award with respect to which
withholding is required, except with respect to Options. If shares of Common
Stock are used to satisfy tax withholding, such shares shall be valued based on
the fair market value of Common Stock when the tax withholding is required to be
made in accordance with such uniform rules and procedures as the Committee
determines appropriate.

         12. AMENDMENT, MODIFICATION, SUSPENSION OR TERMINATION OF THE PLAN. The
Board may amend, modify, suspend or terminate this Plan for the purpose of
meeting or addressing any changes in legal requirements or for any other purpose
permitted by law, except that (i) no amendment or alteration that would
adversely affect the rights of any Participant under any Award previously
granted to such Participant shall be made without the consent of such
Participant and (ii) no amendment or alteration shall be effective prior to its
approval by the stockholders of the Company to the extent such approval is
required by applicable legal requirements.

         13. ASSIGNABILITY. Unless otherwise determined by the Committee and
provided in the Award Agreement, no Award or any other benefit under this Plan
shall be assignable or otherwise transferable except by will or the laws of
descent and distribution or pursuant to a qualified domestic relations order as
defined by the Code or Title I of the Employee Retirement Income Security Act,
or the rules thereunder. The Committee may prescribe and include in applicable
Award Agreements other restrictions on transfer. Any attempted assignment of an
Award or any other benefit under this Plan in violation of this paragraph 13
shall be null and void.

                  Subject to approval by the Committee in its sole discretion,
all or a portion of the Awards granted to a Participant under the Plan may be
transferable by the Participant, to the extent and only to the extent specified
in such approval, to (i) the spouse, parent, brother, sister, children or
grandchildren (including adopted and stepchildren and grandchildren) of the
Participant ("Immediate Family Members"), (ii) a trust or trusts for the
exclusive benefit of such

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Immediate Family Members ("Immediate Family Member Trusts"), or (iii) a
partnership or partnerships in which such Immediate Family Members have at least
99% of the equity, profit and loss interests ("Immediate Family Member
Partnerships"); provided that the Award Agreement pursuant to which such Awards
are granted (or an amendment thereto) must expressly provide for transferability
in a manner consistent with this paragraph. Subsequent transfers of transferred
Awards shall be prohibited except by will or the laws of descent and
distribution, unless such transfers are made to the original Participant or a
person to whom the original Participant could have made a transfer in the manner
described herein. No transfer shall be effective unless and until written notice
of such transfer is provided to and approved by the Committee, in the form and
manner prescribed by the Committee. Following transfer, any such Awards shall
continue to be subject to the same terms and conditions as were applicable
immediately prior to transfer, and, except as otherwise provided herein, the
term "Participant" shall be deemed to refer to the transferee. The consequences
of termination of employment or service shall continue to be applied with
respect to the original Participant, following which the Awards shall be
exercisable by the transferee only to the extent and for the periods specified
in this Plan and the Award Agreement.

         14. ADJUSTMENTS.

                  (a) The existence of outstanding Awards shall not affect in
         any manner the right or power of the Company or its stockholders to
         make or authorize any or all adjustments, recapitalizations,
         reorganizations or other changes in the capital stock of the Company or
         its business or any merger or consolidation of the Company, or any
         issue of bonds, debentures, preferred or prior preference stock
         (whether or not such issue is prior to, on a parity with or junior to
         the Common Stock) or the dissolution or liquidation of the Company, or
         any sale or transfer of all or any part of its assets or business, or
         any other corporate act or proceeding of any kind, whether or not of a
         character similar to that of the acts or proceedings enumerated above.

                  (b) In the event of any subdivision or consolidation of
         outstanding shares of Common Stock, declaration of a dividend payable
         in shares of Common Stock or other stock split, then (i) the number of
         shares of Common Stock reserved under this Plan, (ii) the number of
         shares of Common Stock covered by outstanding Awards, (iii) the Grant
         Price or other price in respect of such Awards, and (iv) the
         appropriate Fair Market Value and other price determinations for such
         Awards shall each be proportionately adjusted by the Committee as
         appropriate to reflect such transaction. In the event of any other
         recapitalization or capital reorganization of the Company, any
         consolidation or merger of the Company with another corporation or
         entity, the adoption by the Company of any plan of exchange affecting
         the Common Stock or any distribution to holders of Common Stock of
         securities or property (other than normal cash dividends or dividends
         payable in Common Stock), the Committee shall make appropriate
         adjustments to (i) the number of shares of Common Stock covered by
         Awards, (ii) the Grant Price or other price in respect of such Awards,
         and (iii) the appropriate Fair Market Value and other

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         price determinations for such Awards to reflect such transaction;
         provided that such adjustments shall only be such as are necessary to
         maintain the proportionate interest of the holders of the Awards and
         preserve, without increasing, the value of such Awards. In the event of
         a corporate merger, consolidation, acquisition of property or stock,
         separation, reorganization or liquidation, the COMMITTEE shall be
         authorized (x) to issue or assume Awards by means of substitution of
         new Awards, as appropriate, for previously issued Awards or to assume
         previously issued Awards as part of such adjustment or (y) to cancel
         Awards that are Options or SARs and give the Participants who are the
         holders of such Awards notice and opportunity to exercise for 30 days
         prior to such cancellation.

         15. RESTRICTIONS. No Common Stock or other form of payment shall be
issued with respect to any Award unless the Company shall be satisfied based on
the advice of its counsel that such issuance will be in compliance with
applicable federal and state securities laws. Certificates evidencing shares of
Common Stock delivered under this Plan (to the extent that such shares are so
evidenced) may be subject to such stop transfer orders and other restrictions as
the Committee may deem advisable under the rules, regulations and other
requirements of the Securities and Exchange Commission, any securities exchange
or transaction reporting system upon which the Common Stock is then listed or to
which it is admitted for quotation and any applicable federal or state
securities law. The Committee may cause a legend or legends to be placed upon
such certificates (if any) to make appropriate reference to such restrictions.

         16. UNFUNDED PLAN. This Plan shall be unfunded. Although bookkeeping
accounts may be established with respect to Participants under this Plan, any
such accounts shall be used merely as a bookkeeping convenience. The Company
shall not be required to segregate any assets for purposes of this Plan or
Awards hereunder, nor shall the Company, the Board or the Committee be deemed to
be a trustee of any benefit to be granted under this Plan. Any liability or
obligation of the Company to any Participant with respect to an Award under this
Plan shall be based solely upon any contractual obligations that may be created
by this Plan and any Award Agreement, and no such liability or obligation of the
Company shall be deemed to be secured by any pledge or other encumbrance on any
property of the Company. Neither the Company nor the Board nor the Committee
shall be required to give any security or bond for the performance of any
obligation that may be created by this Plan.

         17. AWARDS TO FOREIGN NATIONALS AND EMPLOYEES OUTSIDE THE UNITED
STATES. To the extent the Committee deems it necessary, appropriate or desirable
to comply with foreign law or practice and to further the purpose of the Plan,
the Committee may, without amending the Plan, (i) establish special rules
applicable to Awards granted to Participants who are foreign nationals, are
employed outside the United States, or both, including rules that differ from
those set forth in this Plan, and (ii) grant Awards to such Participants in
accordance with those rules.

         18. GOVERNING LAW. This Plan and all determinations made and actions
taken pursuant hereto, to the extent not otherwise governed by mandatory
provisions of the Code or the

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<PAGE>

securities laws of the United States, shall be governed by and construed in
accordance with the laws of the State of Texas.

         19. EFFECTIVENESS. The Plan, as approved by the Board, shall be
effective as set forth herein as of March 1, 2002.

                  IN WITNESS WHEREOF, the Company has executed this Plan this
_____day of ____________, 2002, but effective as of March 1, 2002.


                                                     RELIANT RESOURCES, INC.




                                                     By
                                                       -------------------------
                                                       Philip J. Bazelides
                                                       Senior Vice President-
                                                       Human Resources

ATTEST:


----------------------------



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