<PAGE>
                                                                     EXHIBIT 4.1





                             RELIANT RESOURCES, INC.

                                  DEFERRAL PLAN

                   (As Established Effective January 1, 2002)





<PAGE>


                             RELIANT RESOURCES, INC.
                                  DEFERRAL PLAN

                                    I N D E X

<TABLE>
<CAPTION>
                                                                                                               Page
<S>                   <C>                                                                                      <C>
ARTICLE I             DEFINITIONS.................................................................................2

ARTICLE II            ADMINISTRATION..............................................................................6
         2.1          Plan Administrator..........................................................................6
         2.2          Records of Committee........................................................................6
         2.3          Committee Action............................................................................6
         2.4          Compensation, Expenses and Advisors of the Committee........................................6
         2.5          Liability of the Committee..................................................................6
         2.6          Powers and Duties of the Committee..........................................................7
         2.7          General Powers of Committee.................................................................7
         2.8          Participation by Committee..................................................................7
         2.9          Information From Employers..................................................................7

ARTICLE III           ACCOUNTS AND INVESTMENTS....................................................................8
         3.1          Accounts....................................................................................8
         3.2          Deemed Investment of Funds..................................................................8
         3.3          Distribution of Benefits....................................................................9
         3.4          Nature of Company's Obligation..............................................................9
         3.5          Administrative Costs.......................................................................10
         3.6          Forfeitures................................................................................10

ARTICLE IV            RIGHTS OF PARTICIPANTS.....................................................................11
         4.1          No Employment Agreement....................................................................11
         4.2          Assignability..............................................................................11
         4.3          Prerequisites to Benefits..................................................................12

ARTICLE V             BENEFICIARY DESIGNATIONS...................................................................13
         5.1          Beneficiary Designations...................................................................13

ARTICLE VI            CLAIMS FOR BENEFITS........................................................................14
         6.1          Presenting Claims for Benefits.............................................................14
         6.2          Claims Review Procedure....................................................................14
         6.3          Disputed Benefits..........................................................................15

ARTICLE VII           AMENDMENT, TERMINATION AND  ADOPTION OF PLAN...............................................16
         7.1          Amendment or Termination of the Plan.......................................................16
         7.2          Designation of Employers...................................................................16
</TABLE>



                                       i
<PAGE>

<TABLE>
<CAPTION>
                                                                                                               Page
<S>                   <C>                                                                                      <C>
ARTICLE VIII          MISCELLANEOUS..............................................................................17
         8.1          Reliance Upon Information..................................................................17
         8.2          Governing Law..............................................................................17
         8.3          Severability...............................................................................17
         8.4          Notice.....................................................................................17
         8.5          Withholding of Taxes.......................................................................17

PROGRAM A

ARTICLE I              DEFINITIONS..............................................................................A-1

ARTICLE II            PARTICIPATION.............................................................................A-1
         2.1          Eligibility...............................................................................A-1
         2.2          Designation of Participants...............................................................A-1
         2.3          Election to Participate...................................................................A-2

ARTICLE III           DEFERRALS.................................................................................A-2
         3.1          Employee Deferrals........................................................................A-2
         3.2          Director Deferrals........................................................................A-2
         3.3          Waiver or Suspension of Deferral..........................................................A-3

ARTICLE IV            INVESTMENTS OF ACCOUNTS...................................................................A-3
         4.1          Crediting of Accounts.....................................................................A-3
         4.2          Deemed Investment.........................................................................A-3

ARTICLE V             DISTRIBUTIONS.............................................................................A-3
         5.1          Distribution Elections....................................................................A-3
         5.2          Optional Forms of Distribution............................................................A-5
         5.3          Distribution Upon Early Termination.......................................................A-6
         5.4          Early Withdrawal With Penalty.............................................................A-6

PROGRAM B

ARTICLE I             DEFINITIONS...............................................................................B-1

ARTICLE II            PARTICIPATION.............................................................................B-1
         2.1          Eligibility...............................................................................B-1

ARTICLE III           RESTORATION BENEFITS......................................................................B-1
         3.1          Amount of Savings Restoration Benefit.....................................................B-1

ARTICLE IV            INVESTMENT OF ACCOUNTS....................................................................B-2
         4.1          Crediting of Accounts.....................................................................B-2
         4.2          Deemed Investment.........................................................................B-2

ARTICLE V             DISTRIBUTIONS.............................................................................B-2
         5.1          Distribution Elections....................................................................B-2
         5.2          Distribution Upon Termination of Employment...............................................B-3
</TABLE>



                                       ii
<PAGE>
<TABLE>
<CAPTION>
                                                                                                               Page
<S>                   <C>                                                                                      <C>
         5.3          Distribution Upon Disability..............................................................B-3
         5.4          Vesting...................................................................................B-4

PROGRAM C

ARTICLE I             DEFINITIONS...............................................................................C-1

ARTICLE II            PARTICIPATION.............................................................................C-1
         2.1          Eligibility...............................................................................C-1

ARTICLE III           RESTORATION BENEFITS......................................................................C-1
         3.1          Retirement Plan Restoration Benefit.......................................................C-1

ARTICLE IV            DISTRIBUTIONS.............................................................................C-2
         4.1          Distribution..............................................................................C-2
         4.2          Deemed Investment.........................................................................C-3

PROGRAM D

ARTICLE I             DEFINITIONS...............................................................................D-1

ARTICLE II            PARITICPATION.............................................................................D-1
         2.1          Eligibility...............................................................................D-1

ARTICLE III           ACCOUNTS AND INVESTMENTS..................................................................D-2
         3.1          Establishment of Account..................................................................D-2
         3.2          Crediting of Benefits.....................................................................D-2
         3.3          Deemed Investment.........................................................................D-2

ARTICLE IV            DISTRIBUTIONS.............................................................................D-2
         4.1          Distribution Upon Termination of Employment...............................................D-2
         4.2          Distribution Upon Disability..............................................................D-3

PROGRAM E

ARTICLE I             DEFINITIONS...............................................................................E-1

ARTICLE II            PARTICIPATION.............................................................................E-2
         2.1          Eligibility...............................................................................E-2

ARTICLE III           ACCOUNTS AND INVESTMENTS..................................................................E-2
         3.1          Transfers to 1985 Plan Deferral Accounts..................................................E-2
         3.2          Transfers of 1989 Plan Deferral Accounts..................................................E-2
         3.3          Deemed Investment.........................................................................E-2

ARTICLE IV            DISTRIBUTIONS.............................................................................E-2
         4.1          Distribution of 1985 Plan Deferral Accounts...............................................E-2
         4.2          Distribution of 1989 Plan Deferral Accounts...............................................E-3
         4.3          Early Withdrawal With Penalty.............................................................E-5
</TABLE>





                                      iii
<PAGE>


                             RELIANT RESOURCES, INC.

                                  DEFERRAL PLAN

                   (As Established Effective January 1, 2002)

                                    RECITALS

                  Reliant Resources, Inc., a Delaware corporation, with its
principal place of business in Houston, Harris County, Texas, hereby establishes
the Reliant Resources, Inc. Deferral Plan, effective January 1, 2002, for the
benefit of its eligible non-union employees and directors. The Plan provides
various separate Benefit Programs, as further described below.

                  The purpose of Program A is to permit the deferral of
compensation on favorable terms and thereby provide greater incentives to
Participants to remain in service with the Company and maintain the highest
standards of performance. The purpose of Program B is to restore to Participants
employer matching and annual employer profit sharing contributions that they are
unable to receive under the Reliant Resources, Inc. Savings Plan as a result of
annual compensation and contribution limits under Sections 401(a)(17) and 415 of
the Code.

                  The purpose of Programs C, D and E is to permit Employees
whose employment was transferred to the Company directly from Reliant Energy,
Incorporated to transfer the benefits, if any, they had accrued under certain
non-qualified benefits plans of Reliant Energy, Incorporated to the Plan.

                  Programs A and E are intended to qualify for the exemptions
provided under Title I of ERISA for plans that are not tax-qualified and that
are maintained primarily to provide deferred compensation for a select group of
management or highly compensated employees. Programs B, C, and D are intended to
qualify for the exemptions provided under Title I of ERISA for plans that are
excess benefit plans.




                                       1
<PAGE>


                                   ARTICLE I
                                  DEFINITIONS

                  Each term below shall have the meaning assigned thereto for
all purposes of this Plan unless the context requires a different construction.
Capitalized terms used herein that are not defined below but that are defined in
the Savings Plan shall have the meanings assigned thereto in the Savings Plan.

                  "ACCOUNT" means an individual account, established on behalf
of a Participant pursuant to a Benefit Program, to which contributions, earnings
and/or losses, and other benefits are credited and/or debited on his behalf.

                  "AFFILIATE" means any corporation which is a member of a
controlled group of corporations under Code Section 424(f) or is a member of an
affiliated service group, under Code Section 414(m), of which the Company or any
other Employer is a member, and any other business which together with the
Company is under common control pursuant to Code Section 414(c).

                  "ANNUAL INSTALLMENT PAYMENTS" means annual payments made to a
Participant pursuant to the terms of a Benefit Program, each of which shall be
calculated based on the total value of the Participant's relevant Account
balance(s) on the date immediately preceding the date of payment, multiplied by
a fraction, the numerator of which shall be one and the denominator of which
shall be the number of annual payments, including the payment to be made,
remaining in the payment period. For purposes of making any annual installment
distributions, the Investment Funds in which the Account(s) that are subject to
distribution are invested shall be liquidated on a pro rata basis.

                  "BENEFICIARY" means the person or entity to whom benefits are
payable in respect of a Participant hereunder after the Participant's death, as
provided in the applicable Benefit Program.

                  "BENEFIT PROGRAM" means each of the various programs of
benefits attached hereto, as amended from time to time, each of which is hereby
incorporated by reference as part of the Plan, under which specific benefits are
granted to Participants.

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

                  "BONUS" means a bonus payable in cash to the Employee by an
Employer under the Reliant Resources, Inc. Annual Incentive Compensation Plan or
such other equivalent plan as approved by management for inclusion hereunder.

                  "BRP ACCOUNT" means an account established pursuant to Program
C to which a Participant's benefits under the Reliant Energy, Incorporated
Benefit Restoration Plan or the Reliant Resources, Inc. Benefit Restoration
Plan, as applicable, are transferred, and deemed investment performance and
costs are credited and debited from time to time.


                                       2
<PAGE>


                  "COMMITTEE" means the Benefits Committee of the Company or
such other committee as shall be appointed by the Board to administer the Plan
pursuant to Article II hereof.

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

                  "COMPENSATION" means the base salary and/or Bonus payable to
an Employee by an Employer, and the meeting attendance fees and/or retainer fees
payable to a Director by an Employer.

                  "DEFERRAL ACCOUNT" means an account established pursuant to
Program A to which participant compensation deferrals, deemed investment
performance and costs are credited and debited from time to time.

                  "DIRECTOR" means a member of the Board who is not an Employee.

                  "DISTRIBUTION DATE" means the date on which Reliant Energy,
Incorporated distributes to the holders of its common stock, by means of a pro
rata distribution, all of the shares of Company common stock it then owns.

                  "EFFECTIVE DATE" means January 1, 2002.

                  "EMPLOYEE" means any person, including an officer of any
Employer (whether or not he is also a member of the Board), who is employed by
an Employer and whose employment is not covered by the terms of a collective
bargaining agreement between an Employer and a union.

                  "EMPLOYER" means the Company and each Affiliate or other
employing organization in which the Company has a direct or indirect ownership
interest and that has been designated by the Committee as a participating
Employer pursuant to Section 7.2, and the successors, if any, to such
organizations.

                  "EMPLOYMENT" means employment as an Employee or the current
holding of a position as a Director of an Employer. Neither the transfer of an
Employee Participant from employment by the Company to employment by an
Affiliate nor the transfer of an Employee Participant from employment by an
Affiliate to employment by the Company shall be deemed to be a termination of
Employment of such Participant. Moreover, the Employment of a Participant shall
not be deemed to have been terminated because of his absence from active
employment on account of temporary illness or during authorized vacation or
during temporary leaves of absence, granted by the Employer for reasons of
professional advancement, education, health or government service, or during
military leave for any period if the Participant returns to active employment
within 90 days after the termination of his military leave, or during any period
required to be treated as a leave of absence by virtue of any valid law or
agreement.

                  "INVESTMENT FUND" means one or more of the investment funds
designated by the Committee at the time of reference. The Committee from time to
time may revise the number and type of Investment Funds.



                                       3
<PAGE>


                  "1985 PLAN DEFERRAL ACCOUNT" means an account established
pursuant to Program E to which certain of a Participant's benefits accrued under
the Reliant Energy, Incorporated 1985 Deferred Compensation Plan are
transferred.

                  "1989 PLAN DEFERRAL ACCOUNT" means an account established
pursuant to Program E to which certain of a Participant's benefits accrued under
the Reliant Energy, Incorporated 1989 Deferred Compensation Plan are
transferred.

                  "PARTICIPANT" means an Employee or a Director who is eligible
to participate in one or more Benefit Programs according to the terms thereof
and, if applicable, has elected to so participate.

                  "PARTICIPANT-DIRECTED ACCOUNT" means an Account with respect
to which an individual Participant has the right to direct the manner in which
the funds held therein shall be allocated among the available Investment Funds.

                  "PARTICIPATION YEAR" means (i) with respect to Compensation in
the form of a Bonus, the Plan Year during which the Bonus would have been paid
if not deferred, (ii) with respect to Compensation in the form of base salary,
the Plan Year during which a Participant performs services for the Employer for
such base salary, and (iii) with respect to Compensation in the form of a
Director's meeting attendance fees and a Director's retainer fees, the Plan Year
during which a Participant performs services for the Employer for such fees.

                  "PLAN" means the Reliant Resources, Inc. Deferral Plan,
established effective January 1, 2002, as set forth herein, and as may hereafter
be amended from time to time.

                  "PLAN YEAR" means the 12-month period commencing on January 1
and ending on December 31.

                  "ROLLOVER DISTRIBUTION ELECTION" means the election, if any,
made by the Participant and filed with the Committee prior to the Effective Date
indicating the Participant's desired method of distribution for his BRP Account
and/or his Savings Restoration Account.

                  "SAVINGS PLAN" means the applicable of the Reliant Energy,
Incorporated Savings Plan, as amended and restated effective April 1, 1999, as
thereafter amended from time to time, and the Reliant Resources, Inc. Savings
Plan, as established and thereafter amended from time to time.

                  "SAVINGS PLAN YEAR" means the "Plan Year" as defined in the
Savings Plan.

                  "SAVINGS RESTORATION ACCOUNT" means an account established
pursuant to Program B or Program D to which benefits accrued under Programs B
and D, deemed investment performance and costs are credited and debited from
time to time.

                  "TRUST" means the trust, if any, established under the Trust
Agreement.


                                       4
<PAGE>


                  "TRUST AGREEMENT" means the agreement, if any, entered into
between the Company and the Trustee pursuant to Section 3.4.

                  "TRUST FUND" means the funds and properties, if any, held
pursuant to the provisions of the Trust Agreement, together with all income,
profits, and increments thereto.

                  "TRUSTEE" means the trustee or trustees qualified and acting
under the Trust Agreement at any time.

                  Words used in this Plan in the singular shall include the
plural and in the plural the singular, and the gender of words used shall be
construed to include whichever may be appropriate under any particular
circumstances of the masculine, feminine or neuter genders.




                                       5
<PAGE>

                                   ARTICLE II
                                 ADMINISTRATION

         2.1 Plan Administrator. The Plan shall be administered by the
Committee, which shall be the primary fiduciary with respect to the operation
and administration of this Plan and shall serve as Plan administrator and named
fiduciary for purposes of ERISA Section 402(a)(i).

         2.2 Records of Committee. The Committee shall keep appropriate records
of its proceedings and the administration of the Plan. The Committee shall make
available to Participants and their Beneficiaries for examination, during
business hours, such records of the Benefit Program as pertain to the examining
person and such documents relating to the Benefit Program as are required by
ERISA.

         2.3 Committee Action. The Committee shall act by a majority of its
members at the time in office and such action may be taken either by vote at a
meeting or in writing without a meeting. The Committee shall keep a record of
all its meetings or other actions and shall forward all necessary communications
to the Employers and the Trustee. The Committee may adopt such rules,
regulations and bylaws as it deems desirable for the conduct of its affairs. The
Committee may authorize any one or more of its members or an agent to execute
any document or documents on behalf of the Committee and, in the event such
document affects the Trustee, the Committee shall notify the Trustee in writing
of such action and the name or names of its member or members or other agent so
designated. The Trustee thereafter shall accept and rely upon any document
executed by such member or members or agent as representing the action of the
Committee, until the Committee shall file with the Trustee a written revocation
of such designation. Upon the approval of a majority of the members of the
Committee, the Committee may (i) allocate among any of its members any of the
responsibilities of the Committee under the Plan and Trust Agreement and/or (ii)
designate any person, firm or corporation that is not a member of the Committee
to carry out any of the responsibilities of the Committee under the Plan and/or
Trust Agreement. Any such allocation or designation shall be made pursuant to a
Committee resolution. The Chairman of the Committee shall be agent of the Plan
and the Committee for the service of legal process at the principal office of
the Company.

         2.4 Compensation, Expenses and Advisors of the Committee. The members
of the Committee shall serve without bond (unless otherwise required by law) and
without compensation for their services as such. The Committee may select, and
authorize the Trustee to compensate suitably, such attorneys, agents and
representatives as it may deem necessary or advisable to the performance of its
duties. All expenses of the Committee that shall arise in connection with the
administration of the Plan shall be paid by the Employers or by the Trustee out
of the Trust Fund.

         2.5 Liability of the Committee. Except to the extent that such
liability is created by ERISA, no member of the Committee shall be liable for
any act or omission of any other member of the Committee, nor for any act or
omission on his own part except for his own gross negligence or willful
misconduct, nor for the exercise of any power or discretion in the performance
of any duty assumed by him hereunder. The Company shall indemnify and hold
harmless each member of the Committee from any and all claims, losses, damages,
expenses


                                       6
<PAGE>

(including counsel fees approved by such Committee), and liabilities
arising from any act or omission of such member in connection with duties and
responsibilities under the Plan and Trust Agreement, except when the same is
judicially determined to be due to the gross negligence or willful misconduct of
such member.

         2.6 Powers and Duties of the Committee. The Committee, on behalf of the
Participants and their Beneficiaries, shall enforce this Plan in accordance with
its terms and shall have all powers necessary for the accomplishment of that
purpose, including, but not by way of limitation, the following powers:

                  (a) to determine all questions relating to the eligibility of
         Employees and Directors to become Participants;

                  (b) to authorize all disbursements by the Trustee from the
         Trust Fund;

                  (c) to interpret and construe all terms, provisions,
         conditions and limitations of this Plan and of any Benefit Program
         adopted hereunder and to reconcile any inconsistency or supply any
         omitted detail that may appear in this Plan or in any Benefit Program
         adopted hereunder in such manner and to such extent, consistent with
         the general terms of the Plan and of any Benefit Program adopted
         hereunder, as the Committee shall deem necessary and proper to
         effectuate the Plan and any Benefit Program adopted hereunder for the
         greatest benefit of all parties interested in the Plan; and

                  (d) to make and enforce such rules and regulations for the
         administration of the Plan as are not inconsistent with the terms set
         forth herein.

         2.7 General Powers of Committee. In addition to all other powers herein
granted, and in general consistent with the provisions hereof, the Committee
shall have all other rights and powers reasonably necessary to supervise and
control the administration of this Plan. The determination of any fact by the
Committee and the construction placed by the Committee upon the provisions of
this Plan shall be binding upon all of the Participants under this Plan, their
Beneficiaries and the Employers.

         2.8 Participation by Committee. Members of the Committee may be
Participants under the Plan, but no member may vote on any matter relating to
his benefits under the Plan (except to the extent the vote applies to Plan
benefits generally).

         2.9 Information From Employers. The Employers shall supply full and
timely information to the Committee and its delegates as they may require in
administration of the Plan.



                                       7
<PAGE>

                                  ARTICLE III
                            ACCOUNTS AND INVESTMENTS

         3.1 Accounts. A separate Account(s) shall be established and maintained
for each Participant in accordance with the provisions of the Benefit Programs
in which he participates. Each Account shall clearly reflect the contributions
made to the Plan under the relevant Benefit Program(s) on behalf of the
Participant, whether by the Participant or by an Employer. All Accounts shall
also reflect the consequences of the deemed investment provided for in the
applicable Benefit Program. All interest, dividends, charges for premiums,
capital changes or market changes applicable to each Account shall be credited
or debited to the Account as they are deemed to occur. Until otherwise provided
by the Committee, Accounts shall be valued daily. A written report of the status
of each Account shall be furnished to the Participant from time to time, but no
less frequently than annually, based on the net fair market value of the assets
as of the reporting date calculated based on such deemed investment.

         3.2 Deemed Investment of Funds.

                  (a) Participant-Directed Accounts. All Accounts designated as
         Participant-Directed Accounts in the relevant provisions of the
         applicable Benefit Program shall be deemed to be invested among the
         Investment Funds in accordance with the directions of the Participant
         and following the relevant rules and procedures prescribed by the
         Committee. Except as otherwise expressly provided herein, interest,
         dividends and other income and all profits, gains and losses deemed to
         have been produced by each Investment Fund shall be credited or debited
         in such Investment Fund.

                      Prior to or upon the initial crediting of contributions to
         a Participant-Directed Account on behalf of a Participant, the
         Participant, in accordance with procedures established by the
         Committee, shall file with the Company an initial investment
         instruction indicating the manner in which his Participant-Directed
         Accounts shall be deemed allocated among the available Investment
         Funds. If no such instruction shall have been received by the Company,
         the Participant's Participant-Directed Accounts initially shall be
         deemed allocated among the available Investment Funds in the manner
         determined by the Committee. A Participant's investment instruction,
         including any permitted changes thereto as described below, shall apply
         to all contributions subsequently credited to a Participant-Directed
         Account on behalf of the Participant unless otherwise specified in the
         applicable Benefit Program or by the Committee.

                      Until such time as the Committee provides otherwise,
         Participants shall be permitted to change investment instructions in
         the manner approved by the Committee at any time with unlimited
         frequency. Any such change in investment instructions shall be
         effective as soon as reasonably practicable following receipt of the
         change of investment instructions by the Company or its appointed
         agent, but in no event shall such change be effective earlier than the
         close of business on the date on which such change is received.



                                       8
<PAGE>

                  (b) All Other Accounts. All Accounts other than
         Participant-Directed Accounts shall be deemed to be invested in the
         manner set forth in the applicable Benefit Program.

                  (c) Company Ownership. All contracts and other evidence of the
         investment of all assets related to this Plan shall be registered in
         the name of the Company, which shall be the owner/beneficiary thereof.
         While the Company may choose to invest assets equal to Account balances
         in accordance with the deemed investments described herein, it reserves
         the right not to make any such investment.

         3.3 Distribution of Benefits. A Participant's Accounts shall be
distributed to him in the manner set forth in the applicable Benefit Program.

         3.4 Nature of Company's Obligation. Plan benefits herein provided are a
contractual obligation of the Company and shall be paid out of the Company's
general assets. Neither a Participant nor a Beneficiary shall acquire any
interest greater than that of an unsecured creditor. Nevertheless, subject to
the terms hereof and of a Trust Agreement, the Company may transfer money or
property to a Trustee to provide, in whole or in part, the Plan benefits
hereunder, and the Trustee shall pay such Plan benefits to Participants and
their Beneficiaries out of the Trust Fund. To the extent the Company transfers
assets to a Trustee pursuant to a Trust Agreement, the Committee may, but need
not, establish procedures for the Trustee to invest the Trust Fund in accordance
with each Participant's designated deemed investments pursuant to Section 3.2(a)
respecting the portion of the Trust Fund assets equal to such Participant's
Participant-Directed Accounts.

         The Committee, in its sole discretion, may establish such a Trust and
direct the Company to enter into a Trust Agreement. In such event, the Company
shall remain the owner of all assets in the Trust Fund and the assets shall be
subject to the claims of the Company's creditors if the Company ever becomes
insolvent. For purposes hereof, the Company shall be considered "insolvent" if
(a) the Company is unable to pay its debts as they become due or (b) the Company
is subject to a pending proceeding as a debtor under the United States
Bankruptcy Code (or any successor federal statute). The chief executive officer
of the Company and the Board shall have the duty to inform the Trustee in
writing if the Company becomes insolvent. Such notice given under the preceding
sentence by any party shall satisfy all of the parties' duty to give notice.
When so informed, the Trustee shall suspend payments to the Participants and
hold the Trust Fund for the benefit of the Company's general creditors. If the
Company subsequently alleges that it is no longer insolvent or if the Trustee
receives a written allegation from a third party that the Company is insolvent,
the Trustee shall determine in accordance with the Trust Agreement whether the
Company is insolvent. If the Trustee determines that the Company is not
insolvent, the Trustee shall resume payments to the Participants. No Participant
or Beneficiary shall have any preferred claim to, or any beneficial ownership
interest in, any assets of the Trust Fund, and, upon commencement of
participation in the Plan, each Participant shall have agreed to waive his
priority credit position, if any, under applicable state law with respect to the
assets of the Trust Fund.


                                       9
<PAGE>


         3.5 Administrative Costs. All expenses incident to the administration,
termination or protection of the Plan and Trust Fund, including, but not limited
to, legal, accounting, Investment Manager and Trustee fees, shall be paid by the
Company, which may require reimbursement from the other Employers for their
proportionate shares, or, if not paid by the Company, shall be paid by the
Trustee from the Trust Fund and, until paid, shall constitute a first and prior
claim and lien against the Trust Fund. The Committee may, in its discretion,
charge Participants on a uniform basis for the administrative costs associated
with administering or implementing the Plan. Such amounts shall be reflected as
a reduction to Participant's Accounts in such manner as the Committee deems
appropriate.

         3.6 Forfeitures. Any amounts forfeited by a Participant under the terms
of the Plan will be applied to reduce, to the extent of such forfeitures, the
future contribution obligations of the Company hereunder.





                                       10
<PAGE>

                                   ARTICLE IV
                             RIGHTS OF PARTICIPANTS

         4.1 No Employment Agreement. Nothing in this agreement shall give a
Participant any rights to (or impose any obligations for) continued Employment
by the Company or any Affiliate or subsidiary thereof or successor thereto, nor
shall it give such entities any rights (or impose any obligations) with respect
to continued performance of duties by a Participant.

         4.2 Assignability.

                  (a) Restrictions on Assignment. Except as otherwise provided
         in Section 4.2(b), a Participant's right to receive payments or
         benefits under this Plan shall not 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 ERISA, or the rules thereunder. Any attempted assignment
         or transfer in violation of this Section 4.2(a) shall be null and void.

                  (b) Additional Permitted Assignments. Section 4.2(a) shall not
         apply to an irrevocable disposition of a right or benefit under this
         Plan to a "Permitted Assignee," as defined below, by (x) a Participant
         age 55 or older (an "Eligible Participant"), or (y) a Permitted
         Assignee who has received an assignment from an Eligible Participant
         pursuant to this sentence.

                      (i) Permitted Assignee. The term "Permitted Assignee"
                  shall mean:

                          (A) the Eligible Participant;

                          (B) a spouse of the Eligible Participant;

                          (C) any person who is a lineal ascendant or descendant
                              of the Eligible Participant or the Eligible
                              Participant's spouse;

                          (D) any brother or sister of the Eligible Participant;

                          (E) any spouse of any individual described in
                              subparagraph (C) or (D);

                          (F) a trustee of any trust which, at the applicable
                              time, is 100% Actuarially Held, as defined below,
                              for a Permitted Assignee or Assignees;

                          (G) any corporation in which, at the applicable time,
                              each class of stock is 100% owned by a Permitted
                              Assignee or Permitted Assignees;



                                       11
<PAGE>


                          (H) any partnership in which, at the applicable time,
                              each class of partnership interest is 100% owned
                              by a Permitted Assignee or Permitted Assignees; or

                          (I) any limited liability company or other form of
                              incorporated or unincorporated business
                              organization in which each class of stock,
                              membership or other equity interest is 100% owned
                              by a Permitted Assignee or Assignees.

                  (ii) Subsequent Assignees. This Section 4.2(b) shall be fully
         applicable to all Permitted Assignees, and the provisions of this
         Section 4.2(b) shall be fully applicable to any right or benefit
         transferred by an Eligible Participant to any Permitted Assignee as if
         such Permitted Assignee were an Eligible Participant; provided,
         however, that no Permitted Assignee shall be deemed an Eligible
         Participant for determining the persons who constitute Permitted
         Assignees under Section 4.2(b)(i). Any Permitted Assignee acquiring a
         right or benefit under this Plan shall execute and deliver to the
         Committee an agreement in the form specified by the Committee pursuant
         to which such Permitted Assignee agrees to be bound by all of the terms
         and provisions of the Plan, provided that the failure to execute and
         deliver such an agreement shall not be deemed to relieve such Permitted
         Assignee of the restrictions imposed by the Plan. Any attempted
         disposition of a right or benefit under this Plan in breach of this
         Section 4.2(b), whether voluntary, involuntary, by operation of law or
         otherwise shall be null and void.

                  (iii) Actuarially Held. In making the determination whether a
         trust is 100% Actuarially Held for Permitted Assignee(s), a trust, at
         the applicable point in time, is 100% Actuarially Held for Permitted
         Assignee or Assignees when 100% of the actuarial value of the
         beneficial interests of the trust, except as provided in the following
         sentence, are held for a Permitted Assignee or Permitted Assignees. For
         purposes of making the determination described above, the possibility
         that an interest in a trust may be appointed pursuant to a special or
         general power of appointment shall be ignored; provided, however, that
         the actual exercise of any such power of appointment shall not be
         ignored.

         4.3 Prerequisites to Benefits. No Participant, nor any Beneficiary or
other person claiming through a Participant, shall have any right or interest in
the Plan, or any benefits hereunder, unless and until all the terms, conditions,
and provisions of the Plan which affect such Participant or such other person
shall have been complied with as specified herein.



                                       12


<PAGE>

                                   ARTICLE V
                            BENEFICIARY DESIGNATIONS

         5.1 Beneficiary Designations. Each Participant shall file with the
Company a designation of one or more Beneficiaries to whom the Participant's
Account balance(s) shall be distributed in the event of the Participant's death
prior to the complete distribution of the Account balance(s) payable with
respect to the Participant. Such designation shall be effective when received in
writing and accepted by the Company (the "Beneficiary Designation"). The
Participant may from time to time revoke or change the Beneficiary Designation
by a written document delivered to and accepted by the Company. If there is no
valid Beneficiary Designation on file with the Company at the time of the
Participant's death, or if all of the Beneficiaries designated by the
Participant in the Beneficiary Designation shall have predeceased the
Participant or otherwise ceased to exist, the Beneficiary shall be the
Participant's spouse, if the Participant was legally married at the time of the
Participant's death and if the Participant's spouse survives the Participant, or
otherwise to the Participant's estate. If the Beneficiary, whether under a valid
Beneficiary Designation or under the preceding sentence, shall survive the
Participant but die before receiving all payments hereunder, the balance of the
benefits which would have been paid to that Beneficiary had that Beneficiary
lived shall, unless the Beneficiary Designation provided otherwise, be
distributed to that Beneficiary's estate.





                                       13
<PAGE>

                                   ARTICLE VI
                               CLAIMS FOR BENEFITS

         6.1 Presenting Claims for Benefits. A "Claims Administrator" shall be
appointed by the Committee or, absent such appointment, shall be the Company's
director of benefits, with such Claims Administrator authorized by the Committee
to conduct the initial review and render a decision as provided in this Section
for all claims for benefits under the Plan. Any Participant or any other person
claiming under any deceased Participant (collectively, the "Applicant") may
submit written application to the Claims Administrator for the payment of any
benefit asserted to be due him under the Plan. Such application shall set forth
the nature of the claim and such other information as the Claims Administrator
may reasonably request.

         The Claims Administrator shall notify the Applicant of the benefits
determination within a reasonable time after receipt of the claim, such time not
to exceed 90 days unless special circumstances require an extension of time for
processing the application. If such an extension of time for processing is
required, written notice of the extension shall be furnished to the Applicant
prior to the end of the initial 90-day period. In no event shall such extension
exceed a period of 90 days from the end of such initial period. The extension
notice shall indicate the special circumstances requiring an extension of time
and the date by which the Claims Administrator expects to render its final
decision. Notice of the Claims Administrator's decision to deny a claim in whole
or in part shall be set forth in a manner calculated to be understood by the
Applicant and shall contain the following:

                  (a) the specific reason or reasons for the denial;

                  (b) specific reference to the pertinent Plan provisions on
         which the denial is based;

                  (c) a description of any additional material or information
         necessary for the Applicant to perfect the claim and an explanation of
         why such material or information is necessary; and

                  (d) an explanation of the claims review procedures set forth
         in Section 6.2 hereof, including a statement of the claimant's right to
         bring a civil action under Section 502(a) of ERISA following a denial
         on review.

If notice of denial is not furnished and if the claim is not granted within the
period of time set forth above, the claim shall be deemed denied for purposes of
proceeding to the review stage described in Section 6.2. Applicants shall be
given timely written notice of the time limits set forth herein for
determination on claims, appeal of claim denial and decisions on appeal.

         6.2 Claims Review Procedure. If an application filed by an Applicant
under Section 6.1 above shall result in a denial by the Claims Administrator of
the benefit applied for, either in whole or in part, such Applicant shall have
the right, to be exercised by written request filed with the Committee within 60
days after receipt of notice of the denial of his application or, if no such
notice has been given, within 60 days after the application is deemed denied
under Section 6.1, for the review of his application and of his entitlement to
the benefit for which he



                                       14
<PAGE>

applied, by the Committee. Such request for review may contain such additional
information and comments as the Applicant may wish to present. The Committee
shall reconsider the application in light of such additional information and
comments as the Applicant may have presented and, if the Applicant shall have so
requested, may grant the Applicant a formal hearing before the Committee in its
discretion. The Committee shall also permit the Applicant or his designated
representative to review pertinent documents in its possession, including copies
of the Plan document and information provided by the Employer relating to the
Applicant's entitlement to such benefit. The Committee shall render a decision
no later than the date of the Committee meeting next following receipt of the
request for review, except that (i) a decision may be rendered no later than the
second following Committee meeting if the request is received within 30 days of
the first meeting and (ii) under special circumstances which require an
extension of time for rendering a decision (including but not limited to the
need to hold a hearing), the decision may be rendered not later than the date of
the third Committee meeting following the receipt of the request for review. If
such an extension of time for review is required because of special
circumstances, written notice of the extension shall be furnished to the
Applicant prior to the commencement of the extension. Notice of the Committee's
final decision shall be furnished to the Applicant in writing, in a manner
calculated to be understood by him, and if the Applicant's claim on review is
denied in whole or in part, the notice shall set forth the specific reason or
reasons for the denial and the specific reference to the pertinent plan
provisions on which the denial is based, the Applicant's right to receive upon
request, free of charge, reasonable access to, and copies of, all relevant
documents, records and other information to his claim, and his right to bring a
civil action under Section 502(a) of ERISA. If the decision on review is not
furnished within the time period set forth above, the claim shall be deemed
denied on review. Benefits under this Plan will only be paid if the Committee
decides in its discretion that the Applicant is entitled to them.

         6.3 Disputed Benefits. If any dispute shall arise between a Participant
or other person claiming under a Participant and the Committee after review of a
claim for benefits, or in the event any dispute shall develop as to the person
to whom the payment of any benefit under the Plan shall be made, the Trustee may
withhold the payment of all or any part of the benefits payable hereunder to the
Participant or other person claiming under the Participant until such dispute
has been resolved by a court of competent jurisdiction or settled by the parties
involved.




                                       15
<PAGE>

                                  ARTICLE VII
                           AMENDMENT, TERMINATION AND
                                ADOPTION OF PLAN

         7.1 Amendment or Termination of the Plan. The Board or the Committee
may amend or, in the case of the Committee, with the consent of the Board,
terminate this Plan from time to time or at any time. Such right of amendment
shall include the right to change the Investment Funds offered under the Plan,
to add new Benefit Programs or to amend or terminate existing Benefit Programs
from time to time or at any time. Other than the right to change Investment
Funds prospectively, any such amendment or termination shall not, however,
without the written consent of the affected Participant, adversely affect the
rights of a Participant with respect to amounts credited to his Account prior to
the later of the date that such amendment is executed or effective. In the event
of a termination of the Plan, unpaid benefits shall continue to be an obligation
of the Company and shall be paid as scheduled.

         7.2 Designation of Employers. The Committee may designate any Affiliate
as an Employer by written instrument delivered to the Company, the Trustee, and
the designated Affiliate. Such written instrument shall specify the effective
date of such designated participation and shall become, as to such designated
Affiliate and its Employees, a part of the Plan. Each designated Affiliate shall
be conclusively presumed to have consented to its designation and to have agreed
to be bound by the terms of the Plan and any and all amendments thereto with
respect to its eligible Employees upon its submission of information to the
Committee required by the terms of or with respect to the Plan or upon making a
contribution pursuant to the terms of the Plan. Each designated Affiliate shall
authorize and designate the Company as its agent to act for it in all
transactions affecting the administration of the Plan and shall authorize and
designate the Committee to act for such Affiliate and its Participants in the
same manner in which the Committee may act for the Company and its Participants
hereunder.



                                       16
<PAGE>

                                  ARTICLE VIII
                                  MISCELLANEOUS

         8.1 Reliance Upon Information. The Committee shall not be liable for
any decision or action taken in good faith in connection with the administration
of this Plan. Without limiting the generality of the foregoing, any such
decision or action taken by the Committee in reliance upon any information
supplied to it by an officer of the Company, the Company's legal counsel, or the
Company's independent accountants in connection with the administration of this
Plan shall be deemed to have been taken in good faith.

         8.2 Governing Law. This Plan shall be construed, administered, and
governed in all respects under applicable federal law, and to the extent that
federal law is inapplicable, under the laws of the State of Texas. If any
provision of this Plan shall be held by a court of competent jurisdiction to be
invalid or unenforceable, the remaining provisions hereof shall continue to be
fully effective.

         8.3 Severability. If any term, provision, covenant or condition of the
Plan is held to be invalid, void or otherwise unenforceable, the rest of the
Plan shall remain in full force and effect and shall in no way be affected,
impaired or invalidated.

         8.4 Notice. Any notice or filing required or permitted to be given to
the Committee under this Plan shall be sufficient if in writing and hand
delivered, or sent by registered or certified mail, to the principal office of
the Company. Such notice shall be deemed given as of the date of delivery or, if
delivery is made by mail, as of the date shown on the postmark on the receipt
for registration or certification.

         8.5 Withholding of Taxes. The Company will withhold from any benefits
payable under this Plan all federal, state, city or other taxes as may be
required pursuant to any law or governmental regulation or ruling and take other
action as may be necessary in the opinion of the Company to satisfy all
obligations for withholding of such taxes.




                                       17
<PAGE>


         IN WITNESS WHEREOF, the Company has executed these presents as
evidenced by the signatures affixed hereto of its officers hereunto duly
authorized and by its corporate seal being affixed hereto, in a number of
copies, all of which shall constitute but one and the same instrument which may
be sufficiently evidenced by any executed copy hereof, this 7th day of
December, 2001, but effective as of January 1, 2002.


                                       RELIANT RESOURCES, INC.



                                        By       /s/ PHILIP J. BAZELIDES
                                          --------------------------------------
                                          Philip J. Bazelides
                                          Senior Vice President-Human Resources




                                       18
<PAGE>

                             RELIANT RESOURCES, INC.

                                  DEFERRAL PLAN

                   (As Established Effective January 1, 2002)


                                    PROGRAM A
                              DEFERRED COMPENSATION

                                   ARTICLE I
                                   DEFINITIONS

                  This Program A is part of the Reliant Resources, Inc. Deferral
Plan (the "Plan"), and all capitalized terms defined therein shall have the same
meaning when used in this Program A. In addition, each term below shall have the
meaning assigned thereto for all purposes of this Program A unless the context
requires a different construction.

                  "ATTENDANCE FEE DEFERRAL" means the amounts withheld from the
meeting attendance fees otherwise payable to a Director Participant in the
applicable Participation Year, as described in Section 3.2(a).

                  "BONUS DEFERRAL" means the amount withheld from an Employee
Participant's Bonus for the applicable Participation Year, as described in
Section 3.1(b).

                  "RETAINER FEE DEFERRAL" means the amount withheld from the
retainer fee otherwise payable to a Director Participant in the applicable
Participation Year, as described in Section 3.2(b).

                  "SALARY DEFERRAL" means the amounts withheld from an Employee
Participant's base salary for the applicable Participation Year, as described in
Section 3.1(a).

                  All section references used in this Program A refer to the
applicable section in this Program A except where otherwise noted.

                                   ARTICLE II
                                  PARTICIPATION

         2.1 Eligibility. Each Director shall be eligible for designation by the
Committee for participation in Program A as of the first day of the Plan Year
coincident with or next following the date on which he is first installed as a
Director. All select key Employees who are highly-compensated Employees shall be
eligible for designation by the Committee for participation in Program A. The
Committee may, from time to time, establish additional eligibility requirements
for participation in Program A.

         2.2 Designation of Participants. Prior to the commencement of any
Participation Year, the Committee shall designate and notify in writing the
Employees and/or Directors who it


                                      A-1
<PAGE>

selects as eligible to elect to defer Compensation under this Program A for such
Participation Year. A designation of an Employee or Director as eligible to
defer Compensation for a particular Participation Year shall not automatically
entitle such Participant to participate with respect to any other Participation
Year.

         2.3 Election to Participate. After an Employee or Director has been
notified by the Committee that he is eligible to participate in Program A for a
Participation Year, he must notify the Committee by such method as the Committee
shall designate if he chooses to defer Compensation for such Participation Year.
A Participant's election to defer Compensation with respect to a Participation
Year (i) shall specify the type or types and the amount or amounts of
Compensation, as described in Article III hereof, that he wishes to defer,
subject to such limitations as the Committee may impose from time to time; (ii)
shall specify the manner of distribution the Participant chooses with respect to
such deferrals pursuant to Article V; (iii) in the event a Participant-Directed
Account shall not previously have been established on behalf of the Participant,
shall specify an initial investment instruction pursuant to Section 3.2(a) of
the Plan indicating the manner in which his Participant-Directed Accounts shall
be deemed allocated among the available Investment Funds; and (iv) shall be
effective upon receipt by the Committee. A Participant's election to defer the
payment of any form of Compensation must be made prior to the first day of the
Participation Year in which such Compensation would otherwise be paid to the
Participant and will be irrevocable as of the December 31 preceding such
Participation Year.

                                  ARTICLE III
                                    DEFERRALS

         3.1 Employee Deferrals.

                  (a) Salary Deferrals. When making an election under Section
         2.3, an Employee Participant may elect to defer a certain percentage of
         the annual base salary otherwise payable to him after the withholding
         of any applicable FICA taxes, from a minimum of 1% up to a maximum of
         80% of such amount, for the applicable Participation Year. The
         percentage of base salary so elected to be deferred shall be withheld
         from the Employee Participant's base salary during each pay period of
         the applicable Participation Year.

                  (b) Bonus Deferrals. When making an election under Section
         2.3, an Employee Participant may elect to defer a certain percentage of
         the Bonus otherwise payable to him after the withholding of any
         applicable FICA taxes, from a minimum of 1% up to a maximum of 100% of
         such amount, for the applicable Participation Year. The amount of Bonus
         elected to be deferred shall be withheld from the Employee
         Participant's Bonus otherwise payable during the Participation Year.

         3.2 Director Deferrals.

                  (a) Attendance Fee Deferrals. When making an election under
         Section 2.3, a Director Participant may elect to defer a certain
         percentage of the meeting attendance



                                      A-2
<PAGE>

         fees earned by him in the applicable Participation Year from a minimum
         of 1% up to a maximum of 100%. The amount of meeting attendance fees so
         elected to be deferred shall not be paid but shall be withheld from the
         Director Participant's meeting attendance fees otherwise payable during
         the Participation Year.

                  (b) Retainer Fee Deferrals. When making an election under
         Section 2.3, a Director Participant may elect to defer a certain
         percentage of the retainer fees earned by him in the applicable
         Participation Year from a minimum of 1% up to a maximum of 100%. The
         amount of retainer fees so elected to be deferred shall not be paid but
         shall be withheld from the Director Participant's retainer fees
         otherwise payable during the Participation Year.

         3.3 Waiver or Suspension of Deferral. The Committee may, in its sole
discretion, grant a waiver or suspension of a Participant's irrevocable deferral
election under this Program A for such time as the Committee may deem to be
necessary upon a finding that the Participant has suffered a financial hardship.
The Committee may also, in its sole discretion, permit a Participant to take
prospective remedial action within the same year in order to bring his total
Compensation deferral for the Participation Year in which the event resulting in
a waiver or suspension occurred to the level of his original deferral election,
provided that any otherwise applicable limits of Program A, whether contained
herein or established by the Committee, are not thereby exceeded.

                                   ARTICLE IV
                             INVESTMENTS OF ACCOUNTS

         4.1 Crediting of Accounts. A separate Deferral Account shall be
established and maintained for each Participant who makes deferrals of
Compensation under this Program A. All Compensation deferred by a Participant
under this Program A shall not be paid to the Participant but shall be credited
to the Participant's Deferral Account on the date such Compensation otherwise
would have been paid to the Participant.

         4.2 Deemed Investment. All Deferral Accounts established pursuant to
this Program A shall be Participant-Directed Accounts such that the amounts
contributed thereto are deemed to be invested in accordance with the provisions
of Section 3.2(a) of the Plan.

                                   ARTICLE V
                                  DISTRIBUTIONS

         5.1 Distribution Elections.

                  (a) Employee Participants. At the time an Employee Participant
         elects to defer Compensation for a Participation Year and in accordance
         with procedures established by the Committee, he shall elect (x) a
         method(s) of distribution for the benefits attributable to his Salary
         Deferrals, if any, for such Participation Year and (y) a method(s) of
         distribution for the benefits attributable to his Bonus Deferrals, if
         any, for such Participation Year, as follows:


                                      A-3
<PAGE>


                      (i) the Employee Participant shall elect a form(s) of
                  distribution from among those set forth in Section 5.2, below;

                      (ii) if he elects one of the early distribution options
                  set forth in Sections 5.2(a) and 5.2(b) below, the Employee
                  Participant shall elect a calendar year during which such
                  early distribution shall be paid, which shall in no event be
                  prior to the fourth calendar following the Plan Year in which
                  the Participant deferred the Compensation;

                      (iii) if he elects the lump-sum distribution option set
                  forth in Section 5.2(c) below, the Employee Participant shall
                  elect the age between ages 55 and 65 following his attainment
                  of which the lump-sum distribution shall be paid, except as
                  otherwise indicated in Section 5.2(c)(i), below; and

                      (iv) if he elects the annual installment option set forth
                  in Section 5.2(d) below, the Employee Participant shall elect
                  (x) whether such Annual Installment Payments shall be
                  distributed over a 5, 10 or 15 year term, and (y) the age
                  between ages 55 and 65 following his attainment of which the
                  annual installment payments shall commence, except as
                  otherwise indicated in Section 5.2(d)(i), below.

                  (b) Director Participants. At the time a Director Participant
         elects to defer Compensation for a Participation Year and in accordance
         with procedures established by the Committee, he shall elect (x) a
         method(s) of distribution for the benefits attributable to his
         Attendance Fee Deferrals, if any, for such Participation Year and (y) a
         method(s) of distribution for the benefits attributable to his Retainer
         Fee Deferrals, if any, for such Participation Year, as follows:

                      (i) the Director Participant shall elect a form(s) of
                  distribution from among those set forth in Section 5.2, below;

                      (ii) if he elects one of the early distribution options
                  set forth in Sections 5.2(a) and 5.2(b) below, the Director
                  Participant shall elect a calendar year during which such
                  early distribution shall be paid, which shall in no event be
                  prior to the fourth calendar year following the Plan Year in
                  which the Participant deferred the Compensation;

                      (iii) if he elects the lump-sum distribution option set
                  forth in Section 5.2(c) below, the Director Participant shall
                  elect the age, up to age 70, following his attainment of which
                  the lump-sum distribution shall be paid, except as otherwise
                  indicated in Section 5.2(c)(ii) below; and

                      (iv) if he elects the annual installment option set forth
                  in Section 5.2(d) below, the Director Participant shall elect
                  (x) whether such Annual Installment Payments shall be
                  distributed over a 5, 10 or 15 year term, and (y) the age, up
                  to age 70, following his attainment of which the annual
                  installment payments shall commence, except as otherwise
                  indicated in Section 5.2(d)(ii), below.


                                      A-4
<PAGE>


                  (c) Failure to Elect Method of Distribution. If a Participant
         fails to make an election as to the manner in which Compensation
         deferred in a particular Participation Year shall be distributed,
         benefits attributable to such deferred Compensation shall be
         distributed in the form of a lump-sum distribution as soon as
         administratively practicable following the Participant's termination of
         Employment.

         5.2 Optional Forms of Distribution. Pursuant to Section 5.1, a
Participant may elect that the amounts of Compensation deferred on his behalf
pursuant to this Program A in each Participation Year be paid in one or more of
the following methods:

                  (a) Complete Early Distribution. The Participant may elect to
         receive an early lump-sum distribution in cash equal to 100% of his
         Deferral Account balance at the time of the distribution that is
         attributable to the amounts of Compensation deferred to which such
         election applies, and such early distribution shall be paid on or as
         soon as administratively practicable after the January 1 of the year
         elected by the Participant pursuant to Section 5.1(a)(ii) or
         5.1(b)(ii), as applicable.

                  (b) Partial Early Distribution. The Participant may elect to
         receive an early lump-sum distribution equal to 50% of his Deferral
         Account balance at the time of the distribution that is attributable to
         the amounts of Compensation deferred to which such election applies,
         and such early distribution shall be paid on or as soon as
         administratively practicable after the January 1 of the year elected by
         the Participant pursuant to Section 5.1(a)(ii) or 5.1(b)(ii), as
         applicable. If the Participant elects this partial early distribution
         option, he must elect an additional method of distribution for the
         remaining benefits attributable to his deferrals for that Participation
         Year.

                  (c) Lump-Sum Distribution. The Participant may elect to
         receive a single lump-sum distribution equal to his Deferral Account
         balance at the time of the distribution that is attributable to the
         amounts of Compensation deferred to which such election applies. Any
         such lump-sum distribution shall be paid as follows:

                      (i) a lump-sum distribution to an Employee Participant
                  shall be paid on or as soon as administratively practicable
                  after the January 1 following the later of (A) the
                  commencement of the calendar year selected by the Employee
                  Participant pursuant to Section 5.1(a)(iii), or (B) the
                  Employee Participant's termination of Employment.

                      (ii) a lump-sum distribution to a Director Participant
                  shall commence on or as soon as administratively practicable
                  after the July 1 following the later of (A) the commencement
                  of the calendar year selected by the Director Participant
                  pursuant to Section 5.1(b)(iii), or (B) the Director
                  Participant's termination of Employment.

                  (d) Annual Installment Payments. The Participant may elect to
         receive Annual Installment Payments over a term of 5, 10, or 15 years.
         Amounts remaining unpaid shall be subject to adjustment for costs
         pursuant to Section 3.5 of the Plan and



                                      A-5
<PAGE>

         deemed investment performance pursuant to Section 4.2. Any such Annual
         Installment Payments shall commence as follows:

                      (i) Annual Installment Payments to an Employee Participant
                  shall commence on or as soon as administratively practicable
                  after the January 1 following the later of (A) the Employee
                  Participant's attainment of the commencement age selected by
                  him pursuant to Section 5.1(a)(iv), or (B) the Employee
                  Participant's termination of Employment.

                      (ii) Annual Installment Payments to a Director Participant
                  shall commence on or as soon as administratively practicable
                  after the July 1 following the later of (A) the Director
                  Participant's attainment of the commencement age selected by
                  him pursuant to Section 5.1(b)(iv), but not prior to the end
                  of the Participation year in which the attributable
                  Compensation was deferred, or (B) the Director Participant's
                  termination of Employment.

         At the request of the Participant, or in the event of his death his
         Beneficiary, and in the sole discretion of the Committee, any such
         annual installment payments may be commuted to a lump-sum payment or
         may be paid over a shorter period of time.

         5.3 Distribution Upon Early Termination. Notwithstanding anything in
this Article V to the contrary, if an Employee Participant's Employment is
terminated for any reason prior to his attainment of age 55, any distribution
election made by the Participant pursuant to Section 5.1 that was not previously
effectuated shall be disregarded, and the Participant's Deferral Account balance
will be distributed to him in the form of a lump-sum as soon as administratively
practicable following his termination of Employment.

         5.4 Early Withdrawal With Penalty. Notwithstanding the provisions of
this Article V, the Plan or any applicable distribution election to the
contrary, a Participant may elect, in accordance with procedures established by
the Committee, to receive a lump-sum payment equal to the sum of the entire
balance(s) in his Deferral Account, 1985 Plan Deferral Account (if any), and
1989 Plan Deferral Account (if any) at any time prior to the date(s) otherwise
designated for the distribution of such Account(s). Such payment shall be made
as soon as practicable following the date as of which the Participant requests
such payment. The Committee shall impose a penalty for such early payment, in an
amount equal to 10% of the Account balance(s) to be distributed, and such
penalty shall be deducted from the distribution and forfeited by the
Participant. Immediately upon receipt of any such early withdrawal payment, the
Participant shall be suspended from further participation in Program A for the
remainder of the Participation Year in which such early withdrawal is made.


                                      A-6
<PAGE>

                             RELIANT RESOURCES, INC.

                                  DEFERRAL PLAN

                   (As Established Effective January 1, 2002)

                                    PROGRAM B
                          SAVINGS RESTORATION BENEFITS

                                   ARTICLE I
                                   DEFINITIONS

                  This Program B is part of the Reliant Resources, Inc. Deferral
Plan (the "Plan"), and all capitalized terms defined therein shall have the same
meaning when used in this Program B. In addition, each term below shall have the
meaning assigned thereto for all purposes of this Program B unless the context
requires a different construction.

                  "MATCHED CONTRIBUTION" means an amount deferred by a
Participant as a Pre-Tax Matched Contribution and/or an After-Tax Matched
Contribution under the Savings Plan.

                  "SAVINGS RESTORATION BENEFIT" means the Employer contributions
made to a Savings Restoration Account on behalf of a Participant in the
applicable Plan Year pursuant to Section 3.1.

                  All section references used in this Program B refer to the
applicable section in this Program B except where otherwise noted.

                                   ARTICLE II
                                  PARTICIPATION

         2.1 Eligibility. An Employee shall be entitled to a Savings Restoration
Benefit for each Plan Year (i) in which the Employee is a highly-compensated
Employee, (ii) in which the Participant makes the maximum Matched Contribution
permitted under the Savings Plan for the coinciding Savings Plan Year and (iii)
during which the Employer Matching Contributions or Annual Profit Sharing
Contributions made by the Employer under the Savings Plan are limited due to the
limitations under Code Section 401(a)(17) or the limitations under Code Section
415.

                                  ARTICLE III
                              RESTORATION BENEFITS

         3.1 Amount of Savings Restoration Benefit. The Savings Restoration
Benefit credited on behalf of a Participant under this Program B for each Plan
Year shall be equal to the difference between (i) the aggregate amount of
Employer Matching Contributions and Annual Profit Sharing Contributions which
would have been allocated in respect of the Participant under the Savings Plan
for the Savings Plan Year that coincides with such Plan Year if the Participant
had made the maximum Matched Contribution to the Savings Plan without regard to
the limitations imposed by Code Section 401(a)(17) and the limitations imposed
by Code Section


                                      B-1
<PAGE>

415; and (ii) the aggregate amount of Employer Matching Contributions and Annual
Profit Sharing Contributions actually allocated in respect of the Participant
for such Savings Plan Year.

                                   ARTICLE IV
                             INVESTMENT OF ACCOUNTS

         4.1 Crediting of Accounts. A Savings Restoration Account shall be
established for each Participant who is credited with a Savings Restoration
Benefit under this Program B, unless a Saving Restoration Account has previously
been established for that Participant pursuant to Program D. Savings Restoration
Benefits shall be credited to a Participant's Savings Restoration Account (i)
with respect to restored Employer Matching Contributions, as soon as
administratively practicable after the close of each payroll period for which
the Participant is entitled to restored Employer Matching Contributions pursuant
to Section 3.1 and (ii) with respect to restored Annual Profit Sharing
Contributions, no later than 90 days following the end of the Plan Year to which
such contributions relate.

         4.2 Deemed Investment. All Savings Restoration Accounts shall be
Participant-Directed Accounts such that the amounts contributed thereto are
deemed to be invested in accordance with the provisions of Section 3.2(a) of the
Plan.

                                   ARTICLE V
                                  DISTRIBUTIONS

         5.1 Distribution Elections.

                  (a) Prior Election Applies. If, prior to becoming eligible for
         a Savings Restoration Benefit, a Participant made a Rollover
         Distribution Election, then such election shall apply to his Savings
         Restoration Account.

                  (b) Election Upon Becoming Eligible. If a Participant has not
         made a Rollover Distribution Election, then upon becoming eligible for
         a Savings Restoration Benefit the Participant shall, in accordance with
         procedures established by the Committee, elect a method of distribution
         for his Savings Restoration Account, if any, from among the following
         options:

                      (i) Lump-Sum Distribution. The Participant may elect to
                  receive a single lump-sum distribution equal to the vested
                  balance in his Savings Restoration Account as of the date of
                  distribution in the form of a lump-sum distribution. Any such
                  lump-sum payment shall be made as soon as administratively
                  practicable following the date of the Participant's
                  termination of Employment, and any additional contributions
                  made on behalf of the Participant following such payment shall
                  be distributed to him as soon as administratively practicable
                  after the crediting of such additional contributions to the
                  Participant's Savings Restoration Account.

                      (ii) Annual Installment Payments. The Participant may
                  elect to receive the vested balance in his Savings Restoration
                  Account in the form of Annual


                                      B-2
<PAGE>

                  Installment Payments over a term of 5, 10 or 15 years. Any
                  such Annual Installment Payments shall commence on or as soon
                  as administratively practicable after the January 1 following
                  the Participant's termination of Employment, and amounts
                  remaining unpaid shall continue to be subject to adjustment
                  for costs pursuant to Section 3.5 of the Plan and deemed
                  investment performance pursuant to Section 4.2. At the request
                  of the Participant or Beneficiary and in the sole discretion
                  of the Committee, any such Annual Installment Payments may be
                  commuted to a lump-sum payment or may be paid over a shorter
                  period of time.

                  (c) Failure to Elect Method of Distribution. If a Participant
         fails to make an election as to the manner in which his Savings
         Restoration Account shall be distributed pursuant to this Section 5.1,
         the vested balance in his Savings Restoration Account shall be
         distributed in the form of a lump-sum distribution at the time and in
         the manner described in Section 5.1(b)(i).

         5.2 Distribution Upon Termination of Employment.

                  (a) $50,000 or Less. Upon a Participant's termination of
         Employment, if the combined balance of the Participant's Savings
         Restoration Account and BRP Account does not exceed $50,000, then
         notwithstanding anything herein to the contrary, the Participant, or in
         the event of his death his Beneficiary, shall receive the vested
         balance in such Participant's Savings Restoration Account as of the
         date of distribution in the form of a lump-sum distribution at the time
         and in the manner described in Section 5.1(b)(i). Any unvested amounts
         in the Participant's Savings Restoration Account as of the date of his
         termination of Employment shall be forfeited in their entirety.

                  (b) More Than $50,000. Upon a Participant's termination of
         Employment, if the combined balance of the Participant's Savings
         Restoration Account and BRP Account exceeds $50,000, then the
         Participant, or in the event of his death his Beneficiary, shall
         receive the vested balance in such Participant's Savings Restoration
         Account as of the date of distribution in accordance with the
         Participant's distribution election made pursuant to Section 5.1. Any
         unvested amounts in the Participant's Savings Restoration Account as of
         the date of his termination of Employment shall be forfeited in their
         entirety.

         5.3 Distribution Upon Disability. If a Participant satisfies the
   definition of "disability" under the long-term disability plan of the Company
   and commences to receive disability benefits thereunder, notwithstanding his
   continued Employment such Participant shall be entitled to receive the vested
   balance in his Savings Restoration Account in accordance with Section 5.2 as
   if the Participant's Employment was terminated on the date of the disability.
   The determination of whether a Participant has become "disabled" under the
   long-term disability plan of the Company by such disability plan's
   administrator shall be final and binding on all parties concerned.


                                      B-3
<PAGE>

         5.4 Vesting. A Participant shall become vested in his Savings
   Restoration Account at the same time that he becomes vested in his Employer
   Matching Contributions and Annual Profit Sharing Contributions under the
   Savings Plan. However, a Participant (and his Beneficiary) shall have no
   right to his Savings Restoration Account if the Committee determines that the
   Participant engaged in a willful, deliberate or gross act of commission or
   omission which is injurious to the finances or reputation of the Company or
   any of its Affiliates.


                                      B-4
<PAGE>
                             RELIANT RESOURCES, INC.

                                  DEFERRAL PLAN

                   (As Established Effective January 1, 2002)

                                    PROGRAM C
                          BENEFIT RESTORATION BENEFITS

                                    ARTICLE I
                                   DEFINITIONS

                  This Program C is part of the Reliant Resources Inc. Deferral
Plan (the "Plan"), and all capitalized terms defined therein shall have the same
meaning when used in this Program C. In addition, each term below shall have the
meaning assigned thereto for all purposes of this Program C unless the context
requires a different construction.

                  "REI RETIREMENT PLAN" means the Reliant Energy, Incorporated
Retirement Plan, as amended and restated effective January 1, 1999, and as
thereafter amended.

                  "RESTORATION PLAN" means the applicable of the Reliant Energy,
Incorporated Benefit Restoration Plan, as amended and restated and as in effect
from time to time, or the Reliant Resources, Inc. Benefit Restoration Plan, as
in effect from time to time.

                  "RETIREMENT PLAN RESTORATION BENEFIT" means the benefit to
which a Participant is entitled pursuant to Section 3.1.

                  All section references used in this Program C refer to the
applicable section in this Program C except where otherwise noted.

                                   ARTICLE II
                                  PARTICIPATION

         2.1 Eligibility. An Employee with an accrued benefit under the
Restoration Plan immediately preceding the Distribution Date shall be eligible
to participate in this Program C as of the Distribution Date.

                                  ARTICLE III
                              RESTORATION BENEFITS

         3.1 Retirement Plan Restoration Benefit. When a Participant's
retirement benefit commences or a death benefit payable with respect to a
Participant commences under the REI Retirement Plan, the Company will calculate
a benefit equal to the excess of the amount of the retirement benefit or death
benefit, as the case may be, which would have been payable under the REI
Retirement Plan without regard to the limitations imposed by Code Section 415
and the limitations imposed by Code Section 401(a)(17) over the amount of the
retirement benefit or death benefit actually payable under the REI Retirement
Plan, which excess is referred to herein


                                      C-1
<PAGE>

as the "Retirement Plan Restoration Benefit." A Participant's Retirement Plan
Restoration Benefit will be distributed to him in accordance with Article IV.

                                   ARTICLE IV
                                  DISTRIBUTIONS

         4.1 Distribution. The distribution of a Participant's Retirement Plan
Restoration Benefit shall be made or shall commence, as applicable, upon the
Participant's commencement of benefits under the REI Retirement Plan as follows:

                  (a) Annuity Distribution. If the Participant's benefit under
         the REI Retirement Plan is to be paid in the form of an annuity
         distribution, then the Participant's Retirement Plan Restoration
         Benefit shall be paid at such time and in such manner as the
         Participant's REI Retirement Plan benefit is payable pursuant to the
         terms of the REI Retirement Plan.

                  (b) Other Distribution Options. If the Participant's benefit
         under the REI Retirement Plan is to be paid in the form of a lump-sum
         distribution, then the Participant's Retirement Plan Restoration
         Benefit shall be distributed in one of the following forms in
         accordance with an election made by the Participant and filed with the
         Committee prior to the Effective Date:

                           (i) Lump-Sum Distribution: an actuarially equivalent
                  lump-sum distribution, as determined on the date of
                  distribution in accordance with the actuarial assumptions then
                  in use by the REI Retirement Plan, to be paid at such time as
                  the Participant's REI Retirement Plan benefit is payable
                  pursuant to the terms of the REI Retirement Plan; or

                           (ii) Rollover Distribution: the credit of an
                  actuarially equivalent lump-sum, as determined on the date of
                  such credit in accordance with the actuarial assumptions then
                  in use by the REI Retirement Plan, at the time the Participant
                  commences benefits under the REI Retirement Plan to a separate
                  BRP Account that is established and maintained pursuant to
                  this Program C on behalf of the Participant. No additional
                  contributions to the Participant's BRP Account shall be
                  allowed. The Participant's BRP Account shall be distributed in
                  accordance with the following:

                           (A) Combined Benefit of $50,000 or Less. Upon a
                           Participant's termination of Employment, if the
                           combined balance of the Participant's Savings
                           Restoration Account and BRP Account does not exceed
                           $50,000, then the Participant, or in the event of his
                           death his Beneficiary, shall receive the balance in
                           such Participant's BRP Account as of the date of
                           distribution in the form of a lump-sum distribution.
                           Any such lump-sum payment shall be made as soon as
                           administratively practicable following the date of
                           the Participant's termination of Employment.

                           (B) Combined Benefit of More Than $50,000. Upon a
                           Participant's termination of Employment, if the
                           combined balance of the Participant's



                                      C-2
<PAGE>

                           Savings Restoration Account and BRP Account exceeds
                           $50,000, then the Participant, or in the event of his
                           death his Beneficiary, shall receive the balance in
                           such Participant's BRP Account in one of the
                           following forms in accordance with the Participant's
                           Rollover Distribution Election made prior to the
                           Effective Date:

                                    (I) Lump-Sum Distribution: a single lump-sum
                                    distribution, which shall be made as soon as
                                    administratively practicable following the
                                    date of the Participant's termination of
                                    Employment; or,

                                    (II) Annual Installment Payments: Annual
                                    Installment Payments over a term of 5, 10 or
                                    15 years. Any such Annual Installment
                                    Payments shall commence on or as soon as
                                    administratively practicable after the
                                    January 1 following the Participant's
                                    termination of Employment, and amounts
                                    remaining unpaid shall continue to be
                                    subject to adjustment for costs pursuant to
                                    Section 3.5 of the Plan and deemed
                                    investment performance pursuant to Section
                                    4.2. At the request of the Participant or
                                    Beneficiary and in the sole discretion of
                                    the Committee, any such Annual Installment
                                    Payments may be commuted to a lump-sum
                                    payment or may be paid over a shorter period
                                    of time.

                           (C) Distribution Upon Disability. If a Participant
                           satisfies the definition of "disability" under the
                           long-term disability plan of the Company and
                           commences to receive disability benefits thereunder,
                           notwithstanding his continued Employment such
                           Participant shall be entitled to receive the balance
                           in his BRP Account in accordance with Section
                           4.1(b)(ii)(A) or 4.1(b)(ii)(B), as applicable, as if
                           the Participant's Employment was terminated on the
                           date of the disability. The determination of whether
                           a Participant has become "disabled" under the
                           long-term disability plan of the Company by such
                           disability plan's administrator shall be final and
                           binding on all parties concerned.

                           (iii) Failure to Elect Method of Distribution. If a
                  Participant has not made an election as required in this
                  Section 4.1(b), his Retirement Plan Restoration Benefit shall
                  be distributed in the form of a lump-sum distribution at the
                  time and in the manner described in Section 4.1(b)(i).

         4.2 Deemed Investment. Any BRP Account established pursuant to Section
4.1(b)(ii) shall be a Participant-Directed Account such that the amounts
contributed thereto are deemed to be invested in accordance with the provisions
of Section 3.2(a) of the Plan.


                                      C-3
<PAGE>

                             RELIANT RESOURCES, INC.

                                  DEFERRAL PLAN

                   (As Established Effective January 1, 2002)

                                    PROGRAM D
                    TRANSFERRED SAVINGS RESTORATION BENEFITS

                                    ARTICLE I
                                   DEFINITIONS

                  This Program D is part of the Reliant Resources Inc. Deferral
Plan (the "Plan"), and all capitalized terms defined therein shall have the same
meaning when used in this Program D. In addition, each term below shall have the
meaning assigned thereto for all purposes of this Program D unless the context
requires a different construction.

                  "NORAM ACCOUNT" means an account established pursuant to
Section 4.1 of the Prior Plan for each former participant in the NorAm Energy
Corp. Restoration of Accounts Plan to reflect his balance in such plan
immediately prior to January 1, 1999, plus the interest accrued thereon.

                  "NORAM ELECTION" means the election, if any, made by a
Participant pursuant to the terms and conditions of the Prior Plan and filed
with the Committee prior to the Effective Date indicating the Participant's
desire to transfer his NorAm Account balance to the Plan as of the Distribution
Date.

                  "PRIOR PLAN" means the Reliant Energy, Incorporated Savings
Restoration Plan, as amended and restated effective January 1, 1999.

                  All section references used in this Program D refer to the
applicable section in this Program D except where otherwise noted.

                                   ARTICLE II
                                  PARTICIPATION

         2.1 Eligibility. An Employee with an accrued benefit under the Prior
Plan immediately preceding the Distribution Date shall automatically be eligible
to participate in this Program D as of the Distribution Date. However, an
Employee whose only benefit under the Prior Plan is a NorAm Account shall be
eligible to participate in this Program D only if he made the NorAm Election.


                                      D-1
<PAGE>

                                  ARTICLE III
                            ACCOUNTS AND INVESTMENTS

         3.1 Establishment of Account. A Savings Restoration Account shall be
established on behalf of each Participant who is credited with a benefit under
this Program D, unless a Savings Restoration Account has previously been
established for that Participant pursuant to Program B.

         3.2 Crediting of Benefits. Each Participant's Savings Restoration
Account shall automatically be credited with the lump-sum value of the
Participant's accrued benefit under the Prior Plan (excluding amounts in the
Participant's NorAm Account unless such Participant made the NorAm Election) for
periods ending on or before December 31, 2001, as calculated in accordance with
Section 4.1 of the Prior Plan.

         3.3 Deemed Investment. Each Savings Restoration Account shall be a
Participant-Directed Account such that the amounts contributed thereto are
deemed to be invested in accordance with the provisions of Section 3.2(a) of the
Plan.

                                   ARTICLE IV
                                  DISTRIBUTIONS

         4.1 Distribution Upon Termination of Employment. The distribution of a
Participant's Savings Restoration Account shall be made or shall commence, as
applicable, upon the Participant's termination of Employment as follows:

                  (a) Combined Benefit of $50,000 or Less. Upon a Participant's
         termination of Employment, if the combined balance of the Participant's
         Savings Restoration Account and BRP Account does not exceed $50,000,
         then the Participant, or in the event of his death his Beneficiary,
         shall receive the balance in such Participant's Savings Restoration
         Account as of the date of distribution in the form of a lump-sum
         distribution. Any such lump-sum payment shall be made as soon as
         administratively practicable following the date of the Participant's
         termination of Employment.

                  (b) Combined Benefit of More Than $50,000. Upon a
         Participant's termination of Employment, if the combined balance of the
         Participant's Savings Restoration Account and BRP Account exceeds
         $50,000, then the Participant, or in the event of his death his
         Beneficiary, shall receive the balance in such Participant's Savings
         Restoration Account in one of the following forms in accordance with
         the Participant's Rollover Distribution Election made prior to the
         Effective Date:

                           (i) Lump-Sum Distribution: a single lump-sum
                  distribution, which shall be made as soon as administratively
                  practicable following the date of the Participant's
                  termination of Employment; or,

                           (ii) Annual Installment Payments: Annual Installment
                  Payments over a term of 5, 10 or 15 years. Any such Annual
                  Installment Payments shall commence on or as soon as
                  administratively practicable after the January 1


                                      D-2
<PAGE>

                  following the Participant's termination of Employment, and
                  amounts remaining unpaid shall continue to be subject to
                  adjustment for costs pursuant to Section 3.5 of the Plan and
                  deemed investment performance pursuant to Section 3.3. At the
                  request of the Participant or Beneficiary and in the sole
                  discretion of the Committee, any such Annual Installment
                  Payments may be commuted to a lump-sum payment or may be paid
                  over a shorter period of time.

                           (iii) Failure to Elect Method of Distribution. If a
                  Participant has not made an election as required in this
                  Section 4.1(b), his Savings Restoration Account shall be
                  distributed in the form of a lump-sum distribution at the time
                  and in the manner described in Section 4.1(b)(i).

         4.2 Distribution Upon Disability. If a Participant satisfies the
definition of "disability" under the long-term disability plan of the Company
and commences to receive disability benefits thereunder, notwithstanding his
continued Employment such Participant shall be entitled to receive the vested
balance in his Savings Restoration Account in accordance with Section 4.1 as if
the Participant's Employment was terminated on the date of the disability. The
determination of whether a Participant has become "disabled" under the long-term
disability plan of the Company by such disability plan's administrator shall be
final and binding on all parties concerned.



                                      D-3
<PAGE>

                             RELIANT RESOURCES, INC.

                                  DEFERRAL PLAN

                   (As Established Effective January 1, 2002)

                                    PROGRAM E
                   TRANSFERRED DEFERRED COMPENSATION BENEFITS

                                    ARTICLE I
                                   DEFINITIONS

                  This Program E is part of the Reliant Resources Inc. Deferral
Plan (the "Plan"), and all capitalized terms defined therein shall have the same
meaning when used in this Program E. In addition, each term below shall have the
meaning assigned thereto for all purposes of this Program E unless the context
requires a different construction.

                  "EARLY RETIREMENT DATE" means with respect to an Employee the
first day of the month coincident with or next following his 60th birthday or,
with respect to a distribution from a 1989 Plan Deferral Account, an earlier age
as may be authorized by the Committee in its sole discretion; and means with
respect to a Director the first day of the month coincident with or next
following his resignation or removal as a Director before his Normal Retirement
Date.

                  "1985 PLAN" means the Reliant Energy, Incorporated 1985
Deferred Compensation Plan, as amended and restated effective December 1, 2000.

                  "1989 PLAN" means the Reliant Energy, Incorporated 1989
Deferred Compensation Plan, as amended and restated effective December 1, 2000.

                  "NORMAL RETIREMENT DATE" means with respect to an Employee the
first day of the month coincident with or next following his 65th birthday, and
means with respect to a Director the first day of the month coincident with or
next following his 70th birthday.

                  "TRANSFER DATE" means the date on or as soon as
administratively practicable after January 31, 2002, on which Participants'
benefits are transferred from the 1985 Plan and the 1989 Plan to the Plan.

                  "TRANSFER ELECTION" means an election, if any, made by a
Participant pursuant to the terms and conditions of the 1985 Plan or the 1989
Plan, as applicable, and filed with the Committee prior to the Effective Date
indicating the Participant's desire to transfer his benefits under such plan to
the Plan as of the Transfer Date.

                  All section references used in this Program E refer to the
applicable section in this Program E except where otherwise noted.


                                      E-1
<PAGE>

                                   ARTICLE II
                                  PARTICIPATION

         2.1 Eligibility. An Employee or Director with an accrued benefit under
the 1985 Plan and/or the 1989 Plan immediately prior to the Transfer Date shall
be eligible to participate in this Program E as of the Transfer Date if such
Employee made a Transfer Election.

                                  ARTICLE III
                            ACCOUNTS AND INVESTMENTS

         3.1 Transfers to 1985 Plan Deferral Accounts. A separate 1985 Plan
Deferral Account shall be established and maintained on behalf of each
Participant who makes a Transfer Election with respect to his accrued benefits
under the 1985 Plan. On the Transfer Date, the 1985 Plan Deferral Account of
each such Participant shall be credited with the value of the Participant's
accrued benefit under the 1985 Plan as of the Transfer Date as determined using
the interest rate applicable to the Participant under the terms of the 1985
Plan. No additional contributions to the Participant's 1985 Plan Deferral
Account shall be allowed.

         3.2 Transfers of 1989 Plan Deferral Accounts. A separate 1989 Plan
Deferral Account shall be established and maintained on behalf of each
Participant who makes a Transfer Election with respect to his accrued benefits
under the 1989 Plan. On the Transfer Date, the 1989 Plan Deferral Account of
each such Participant shall be credited with the value of the Participant's
accrued benefit under the 1989 Plan as of the Transfer Date as determined using
the applicable Interest Crediting Rate, as such term is defined in the 1989
Plan. No additional contributions to the Participant's 1989 Plan Deferral
Account shall be allowed.

         3.3 Deemed Investment. Each 1985 Plan Deferral Account and each 1989
Plan Deferral Account established pursuant to this Article III shall be a
Participant-Directed Account such that the amounts contributed thereto are
deemed to be invested in accordance with the provisions of Section 3.2(a) of the
Plan.

                                   ARTICLE IV
                                  DISTRIBUTIONS

         4.1 Distribution of 1985 Plan Deferral Accounts. The distribution of a
Participant's 1985 Plan Deferral Account shall be made or shall commence, as
applicable, as follows:

                  (a) Annual Installment Payments. If the Participant's
         Employment is terminated on or after his Early Retirement Date, he
         shall receive the remaining balance in his 1985 Plan Deferral Account
         in 15 Annual Installment Payments commencing the month following the
         later of the month in which his Employment is terminated or the month
         of his Normal Retirement Date. At the discretion of the Committee, such
         commencement date may be accelerated, but in no event shall such
         benefits commence prior to the Participant's termination of Employment.
         Amounts remaining unpaid shall be subject to adjustment for costs
         pursuant to Section 3.5 of the Plan and deemed investment performance
         pursuant to Section 3.3. At the request of the Participant, or in the
         event of his death, his Beneficiary, and in the sole discretion of the
         Committee, any such Annual


                                      E-2
<PAGE>

         Installment Payments may be commuted to a lump-sum payment or may be
         paid over a shorter period of time.

                  (b) Early Termination. If a Participant's Employment is
         terminated for any reason other than death or retirement at or after
         his Early Retirement Date, he shall receive the remaining balance in
         his 1985 Plan Deferral Account as a lump-sum distribution on the first
         of the month coincident with or next following the expiration of 90
         days following the date of the Participant's termination of Employment.

                  (c) Disability. In the event of the disability of a
         Participant while in the employ of an Employer, the Participant shall
         be considered to have remained in the continuous employment of the
         Employer during such disability until his Normal Retirement Date or
         earlier death. The Participant's 1985 Plan Deferral Account shall then
         be distributed in the form of Annual Installment Payments in accordance
         with Section 4.1(a), above, except that at the request of the
         Participant and in the sole discretion of the Committee any such
         payments may be commuted to a lump-sum payment or may be paid over a
         shorter period of time.

                  (d) Death.

                           (i) Prior to Commencement of Normal Retirement
                  Distribution. If a Participant dies (A) prior to his Normal
                  Retirement Date and prior to his termination of employment or
                  (B) after his termination of employment after his Early
                  Retirement Date, but prior to the commencement of a Normal
                  Retirement Distribution payable in 15 Annual Installment
                  Payments, the Company shall pay the Participant's 1985 Plan
                  Deferral Account balance in the form of a lump-sum
                  distribution to the Participant's Beneficiary within 90 days
                  following the date of the Participant's death.

                           (ii) Death After Normal Retirement Date. If
                  Participant dies (A) after his Normal Retirement Date but
                  prior to his termination of employment, (B) after his
                  termination of employment, provided the Participant had
                  attained his Normal Retirement Date on or before the date of
                  such termination, or (C) after commencement of a Normal
                  Retirement Distribution in the form of 15 Annual Installment
                  Payments but prior to completion of all such payments, the
                  Company shall make (or continue to make) such payments to the
                  Participant's Beneficiary.

                  (e) Failure to Elect Method of Distribution. If a Participant
         did not make a distribution election under the 1985 Plan, his 1985 Plan
         Deferral Account shall be distributed in the form of a lump-sum
         distribution at the time and in the manner described in Section 4.1(b).

         4.2 Distribution of 1989 Plan Deferral Accounts. The distribution of a
Participant's 1989 Plan Deferral Account shall be made or shall commence, as
applicable, in accordance with the Participant's distribution election(s) under
the 1989 Plan as follows:


                                      E-3
<PAGE>

                  (a) Early Distribution. If the Participant elected to receive
         an early distribution of either 50% or 100% of the benefits
         attributable to compensation deferred in a prior year, then the portion
         of his 1989 Plan Deferral Account to which such election applies shall
         be distributed within 95 days of the beginning of the year selected by
         the Participant.

                  (b) Lump-Sum Distribution. If the Participant's Employment is
         terminated on or after his Early Retirement Date and he elected to
         receive his benefits in a lump-sum, he shall receive the remaining
         balance in his 1989 Plan Deferral Account as a lump-sum distribution in
         the January following the later of his termination of Employment or his
         Normal Retirement Date.

                  (c) Annual Installment Payments. If the Participant's
         Employment is terminated on or after his Early Retirement Date and he
         elected to receive his benefits in Annual Installment Payments, he
         shall receive the remaining balance in his 1989 Plan Deferral Account
         in 15 Annual Installment Payments commencing the month following the
         later of the month in which his Employment is terminated or the month
         of his Normal Retirement Date. At the discretion of the Committee, such
         commencement date may be accelerated, but in no event shall such
         benefits commence prior to the Participant's termination of Employment.
         Amounts remaining unpaid shall be subject to adjustment for costs
         pursuant to Section 3.5 of the Plan and deemed investment performance
         pursuant to Section 3.3. At the request of the Participant, or in the
         event of his death, his Beneficiary, and in the sole discretion of the
         Committee, any such Annual Installment Payments may be commuted to a
         lump-sum payment or may be paid over a shorter period of time.

                  (d) Early Termination. If a Participant's Employment is
         terminated for any reason other than death or retirement at or after
         his Early Retirement Date, he shall receive the remaining balance in
         his 1989 Plan Deferral Account as a lump-sum distribution within 95
         days following the date of his termination of Employment or as soon as
         practicable thereafter.

                  (e) Disability. In the event of the disability of a
         Participant while in the employ of an Employer, the Participant shall
         be considered to have remained in the continuous employment of the
         Employer during such disability until his Normal Retirement Date or
         earlier death. The Participant's 1989 Plan Deferral Account shall be
         paid in accordance with the Participant's distribution election(s)under
         the 1989 Plan, except that at the request of the Participant and in the
         sole discretion of the Committee any such payments may be commuted to a
         lump-sum payment or may be paid over a shorter period of time.

                  (f) Death.

                           (i) Prior to Commencement of Normal Retirement
                  Distribution. If a Participant dies (A) prior to his Normal
                  Retirement Date and prior to his termination of employment or
                  (B) after his termination of employment after his


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                  Early Retirement Date, but prior to the commencement of a
                  Normal Retirement Distribution payable in 15 Annual
                  Installment Payments, the payments otherwise elected by him
                  not theretofore made shall not be made, but the Company shall
                  pay the Participant's 1989 Plan Deferral Account balance in
                  the form of a lump-sum distribution to the Participant's
                  Beneficiary. Any such payments shall be made within
                  approximately 95 days following the date of Participant's
                  death.

                           (ii) Death After Normal Retirement Date. If
                  Participant dies (A) after his Normal Retirement Date but
                  prior to his termination of employment, (B) after his
                  termination of employment, provided the Participant had
                  attained his Normal Retirement Date on or before the date of
                  such termination, or (C) after commencement of a Normal
                  Retirement Distribution in the form of 15 Annual Installment
                  Payments but prior to completion of all such payments, the
                  Company shall make (or continue to make) such payments to the
                  Participant's Beneficiary.

                           (iii) Commutation of Death Benefit. Any death
                  benefits payable in the form of Annual Installment Payments,
                  at the request of the Beneficiary and in the sole discretion
                  of the Committee, may be commuted to a lump-sum payment or may
                  be paid over a shorter period of time.

                  (g) Failure to Elect Method of Distribution. If a Participant
         did not make a distribution election under the 1989 Plan, his 1989 Plan
         Deferral Account shall be distributed in the form of a lump-sum
         distribution at the time and in the manner described in Section 4.2(d).

         4.3 Early Withdrawal With Penalty. Notwithstanding the provisions of
this Article IV, the Plan or any applicable distribution election to the
contrary, a Participant may elect, in accordance with procedures established by
the Committee, to receive a lump-sum payment equal to the sum of the balance(s)
in his Deferral Account (if any), 1985 Plan Deferral Account (if any), and 1989
Plan Deferral Account (if any) at any time prior to the date(s) otherwise
designated for the distribution of such Account(s). Such payment shall be made
as soon as practicable following the date as of which the Participant requests
such payment. The Committee shall impose a penalty for such early payment, in an
amount equal to 10% of the Account balance(s) to be distributed, and such
penalty shall be deducted from the distribution and forfeited by the
Participant.


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