Document:

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                                                                     EXHIBIT 10

                              EMPLOYMENT AGREEMENT

THE UNDERSIGNED:

1.   RELIANT ENERGY EUROPE, INC., a Delaware corporation registered in the
     Netherlands as a Dutch branch, having its corporate seat at 1111 Louisiana,
     Houston, Texas 77002, and its registered address in the Netherlands at
     Strawinskylaan 2001, 1077 ZZ Amsterdam, hereinafter referred to as: "the
     Company"; for this reason duly represented by Robert W. Harvey;

and

2.   MR G.L.M.A. VAN LANSCHOT, residing at Tapijtweg 1 NL-2591 KG Den Haag,
     hereinafter referred to as: "the Executive".

WHEREAS

o    The Executive will be employed as President of the Company and will perform
     services for the Company in its Dutch branch.

o    The Executive will be appointed by the general meeting of shareholders ("de
     algemene vergadering van aandeelhouders") of Reliant Energy Trading &
     Marketing B.V., a private company with limited liability, incorporated
     under the law of the Netherlands, having its corporate seat at Siriusdreef
     32, 2132 WT Hoofddorp, the Netherlands and its registered address at the
     Netherlands, hereinafter referred to as: "RETM", as chairman of

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     the Board of Managing Directors of RETM ("Voorzitter van de Raad van
     Bestuur") at its first meeting after August 1, 2000.

o    The Executive in his position as President of the Company and chairman of
     the Board of Managing Directors of RETM will be responsible for the
     business unit Reliant Energy Europe. At the date of signing this agreement
     the position entails oversight over N.V. UNA and RETM. Over time it is
     expected that business will be expanded to other countries within Europe
     which will fall under his responsibility as well.

HEREBY AGREE AS FOLLOWS:

ARTICLE 1: TASKS AND DUTIES

1.1. The Company hereby employs the Executive as President of the Company and as
     chairman of the Board of Managing Directors of RETM ("Voorzitter van de
     Raad van Bestuur") and the Executive hereby accepts such employment, upon
     the terms and conditions as set forth in this Agreement. The Executive's
     initial responsibilities are generally described in the job description set
     forth in Annex A, provided that the Company may alter the Executive's
     duties and the Company's organizational structure in its discretion from
     time to time, so long as the Executive's duties and responsibilities are
     not materially reduced.

1.2. The Executive shall, as President of the Company and chairman of the Board
     of Managing Directors of RETM, have all the rights and obligations
     associated with such position with the Company and in accordance with the
     articles of association of RETM ("statuten"). The Executive agrees to
     devote at all times his best efforts, attentions and abilities to the
     business and to the affairs of the Company, RETM and their affiliates and
     to the business unit Reliant Energy Europe.

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1.3. The Executive shall not undertake any other paid or time consuming unpaid
     duties or activities without the previous consent of the Chairman of the
     Board of Directors of the Company.

ARTICLE 2: DURATION OF THE AGREEMENT AND TERMINATION

2.1. This Agreement shall last for an indefinite period of time. The effective
     date of this Agreement is 1 August 2000. This Agreement shall terminate by
     operation of law when the Executive has reached the age of 62 years.

2.2. Subject to the limitations set forth in Article 2.3, each party can
     terminate the Agreement by giving the other party written notice of the
     termination. The Company shall observe a notice period of at least 4
     months. The Executive shall observe a notice period of at least 2 months.

     If the Company provides the Executive written notice of termination
     pursuant to this article (for reasons other than urgent cause ("dringende
     reden") within the meaning of articles 7:677, section 1 and 7:678 of the
     Dutch Civil Code) after August 1, 2001, then the Executive shall continue
     to receive only his base salary as provided in Article 3 and the emoluments
     set forth in Articles 6, 7, and 8 of this Agreement during the notice
     period until the date of termination of the Agreement, and, upon
     termination of the Agreement, the Executive shall receive a lump sum
     payment equal to the sum of (i) his gross annual base salary as provided in
     Article 3 and in effect at the time of termination, (ii) his target annual
     bonus as provided in Article 4 (67% of gross annual base salary) in effect
     at the time of termination and (iii) for each whole year of employment that
     has elapsed since August 1, 2000, two months of gross base salary as
     provided in Article 3 and in effect at the time of termination.
     Notwithstanding the foregoing, the number of months of gross base salary
     that will be paid to the Executive under subparagraph (iii) above shall not
     be less than 8 months and shall not be more than 20 months; provided,
     however, that the number of months of base salary payable under
     subparagraph (iii) above shall not exceed the number of months between the
     date of termination of the Agreement and the date the

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     Executive will reach age 62. In addition, if the Company's written notice
     of termination is given after August 1, 2001 and before December 1, 2001,
     then the Executive shall also receive a lump sum payment equal to a month
     of gross base salary as provided in Article 3 for each whole month between
     the date of the written notice of termination and December 1, 2001.

     If the Executive provides the Company written notice of termination
     pursuant to this article, then the Executive shall continue to receive only
     his base salary as provided in Article 3 and the emoluments set forth in
     Articles 6, 7, and 8 of this Agreement until the date of termination of the
     Agreement; provided that the Executive shall be entitled to receive payment
     of any bonus for which the applicable bonus period has been completed prior
     to the date that notice is given.

     Should the Executive be removed from his position as President of the
     Company and chairman of the Board of Managing Directors of RETM, the
     Executive shall not be entitled to any annual bonus payments pursuant to
     Article 4.1 nor any new long-term incentive awards or payments, and any
     outstanding option shall be treated as provided in the applicable option
     plan and agreement; provided that the Executive shall be entitled to
     receive payment of any bonus for which the applicable bonus period has been
     completed prior to the date that notice is given.

     The Executive waives his rights to other or higher payments, entitlements
     or benefits during the term of notice or in connection with the
     termination, except as provided in Article 2.5 in connection with a Change
     in Control. In no event shall the Executive be entitled to both the
     benefits provided in this Article 2.2 and the benefits provided in Article
     2.5.

2.3. The Company cannot terminate or have the Agreement terminated before August
     1, 2001 other than on the basis of an urgent cause ("dringende reden")
     within the meaning of articles 7:677, section 1 and 7:678 of the Dutch
     Civil Code.

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2.4. Within 90 days after August 1, 2002, the Company and the Executive shall
     enter into negotiations about a possible improvement of the terms and
     conditions of employment.

2.5. If the Agreement is terminated by or at the initiative of the Executive
     after August 1, 2000 or by or at the initiative of the Company after August
     1, 2001, and such termination of employment (i) occurs within one year
     after a Change in Control (as defined in Annex B) and (ii) is preceded by,
     or occurs in combination with, a Change in Employment (as defined in Annex
     B), the Executive shall be entitled to a fixed severance payment of 2.0
     times the sum of (A) the Executive's fixed gross annual base salary as
     provided in Article 3 and in effect at the time of termination and (B) the
     Executive's target annual bonus as stated in Article 4 (67% of gross annual
     base salary) in effect at the time of the termination of the Agreement. The
     Executive waives his rights to other or higher severance payments,
     indemnities or compensations. In case of conflict, the provisions of this
     Article 2.5 shall prevail over those of Article 2.2, but without prejudice
     to Article 2.2 if the circumstances set forth in this Article 2.5 do not
     occur.

2.6. Payments to which the Executive may be entitled in accordance with Articles
     2.2. or 2.5 are to be paid by the Company as soon as practicable after the
     day on which this Agreement terminates in a manner to be specified by the
     Executive, so long as it is not 'contra legem'. In accordance with the
     Ruling, as defined in Article 3.2, the Company and the Executive will
     jointly request that the tax authorities approve that an amount equivalent
     to 35% (thirty-five percent) of the Executive's payments pursuant to
     Articles 2.2 or 2.5 shall be deemed to be a tax-exempt reimbursement of
     additional expenses incurred by the Executive in relation to his employment
     in the Netherlands, provided that the Company is not required to incur any
     substantial expenses in assisting with this request.

ARTICLE 3: SALARY

3.1. The Executive shall be entitled to a fixed gross annual base salary
     (hereafter: "the gross annual base salary") of $475,000, to be paid in 12
     equal monthly installments at the end of each calendar month. Payment will
     be made according to the instructions of the Executive

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     as long as this is not `contra legem'. The aforementioned gross annual base
     salary includes an 8% holiday allowance. Gross annual base salary will be
     reviewed periodically by the Company and may be increased in the Company's
     discretion.

3.2. In accordance with the Decree of the Deputy Minister of Finance, number
     DB95/119M, of 29 May 1995, the Company and the Executive will jointly
     request that the tax authorities approve that an amount equivalent to 35%
     (thirty-five percent) of the Executive's remuneration (the gross annual
     base salary referred to in Article 3 plus the bonus and incentives referred
     to in Article 4) shall be deemed to be a tax-exempt reimbursement of
     additional expenses incurred by the Executive in relation to his employment
     in the Netherlands (the "Ruling"); provided, however, that the application
     of the Ruling shall not reduce the Executive's pensionable salary. The
     Company shall assist the Executive in the preparation and submission of
     documentation necessary to obtain an extension of the Ruling.

3.3. The gross annual base salary payments shall be subject to normal statutory
     withholdings such as taxes and social security contributions, but taking
     into account the Ruling.

3.4. The base salary and annual bonus amounts denominated in U.S. dollars in
     this Agreement will be payable to the Executive in EUROs. Prior to August
     1, 2003, the conversion rate for converting U.S. dollar amounts to EUROs
     will be 0.95 USD/EURO. Effective August 1, 2003, the exchange rate for
     salary and bonus payments under the contract from each August 1 to July 31
     shall be based on the average of the conversion rates determined by the
     Company for the five business days immediately prior to each August 1.
     Notwithstanding the foregoing, amounts payable in EUROs pursuant to the
     preceding sentences before January 1, 2002 may be paid to the Executive in
     Dutch Guilders.

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ARTICLE 4: BONUS AND INCENTIVES

4.1. The Executive shall be eligible for an annual bonus at a target level of
     67% of gross annual base salary. For the first year of his employment, a
     bonus of $318,250, or 67% of gross annual base salary is guaranteed
     (hereafter: the "initial guaranteed bonus"). The first portion of this
     initial guaranteed bonus over the period from entering into employment of
     the Company through December 31, 2000 will be payable in March 2001 and
     shall be at least $132,604. The remainder of the initial guaranteed bonus
     ($185,646, the bonus for the period from January 1, 2001 through July 31,
     2001) will be included in the bonus over the year 2001, which bonus will be
     payable in March 2002.

     For the second and third years of the Executive's employment, a bonus of
     $225,000 per year is guaranteed (hereafter: the "secondary guaranteed
     bonus") so long as the Executive remains employed and in his position
     performing his duties through the applicable bonus period described below.
     The first portion of this secondary guaranteed bonus over the period from
     August 1, 2001 through December 31, 2001 will be included in the bonus over
     the year 2001, which bonus will be payable in March 2002 and shall be at
     least $93,750. Thus, combining the initial guaranteed bonus and secondary
     guaranteed bonus, the bonus over the year 2001 will be no less than
     $279,396. The second portion of this secondary guaranteed bonus (the bonus
     for the year 2002) will be payable in March 2003, and shall be at least
     $225,000. The final portion of this secondary guaranteed bonus ($131,250,
     the bonus for the period from January 1, 2003 through July 31, 2003) will
     be included in the bonus over the year 2003, which bonus will be payable in
     March 2004. For years after 2003 any bonuses over a particular calendar
     year will be paid in March of the subsequent year.

     The annual bonus target is 67% of annual gross base salary but can range
     from 0 - 134% of the then applicable annual gross base salary depending on
     performance, except for the first year of employment (during which it can
     range between 67% - 134% of the applicable gross annual base salary:
     $475,000) and the second and third years of employment (during which it can
     range between $225,000 and 134% of the applicable gross annual

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     base salary). The annual bonus payout will depend on achievement of overall
     business objectives, business unit objectives and individual performance.
     The percentage of the bonus will be determined at the sole discretion of
     the Chairman of the Board of Directors of the Company and will be dependent
     on the performances of REI (as defined below), the business unit Reliant
     Energy Europe, the Company and the Executive.

4.2. The Executive shall be eligible for a long term incentive in the form of a
     annual grant of a certain amount of options to purchase shares of common
     stock of Reliant Energy, Incorporated, a Texas corporation (hereafter:
     "REI"), as approved by the Special Stock Award Committee of REI (or other
     appropriate committee as determined by the Board of REI) (hereafter: "the
     Committee") from time to time, or such other form of award as may be
     determined by the Committee. The granting of these awards is at the sole
     discretion of the Committee and is dependent on the performances of REI,
     the Company and the Executive, and the terms of such awards will be
     determined by the Committee at the time of grant. The long-term incentive
     target shall be based on 44% of Executive's gross annual base salary.

     The long-term incentive grant for the calendar year 2000 shall be made in
     the form of immediately exercisable options to purchase 38,000 shares of
     common stock of REI. This option grant will be made effective as of the
     date specified in a Stock Option Agreement to be entered into by the
     Company and the Executive. The Company and the Executive will use all best
     efforts to enter into a Stock Option Agreement and take all other actions
     necessary to effectuate the grant of options as soon as possible.

4.3. All payments shall be subject to the normal statutory withholdings such as
     tax on wages and social security contributions.

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ARTICLE 5: ILLNESS

In the event that the Executive is unable to perform his duties due to illness
or disability, the Company shall continue to pay 100% of the fixed gross annual
base salary and the emoluments set forth in Articles 6, 7, and 8 of this
Agreement for a period of the first 52 weeks following the day on which the
Executive ceased to perform his duties due to illness. Notwithstanding the
provisions of Article 4.1, if the Executive is unable to perform his duties due
to illness or disability for a period of less than 3 consecutive months, he will
remain eligible for annual bonus payments covering such period of illness or
disability. For this purpose, two periods of absence separated by a period of
two weeks or less shall be considered one consecutive period.

ARTICLE 6: MEDICAL COVERAGE AND ALLOWANCE

RETM has a group medical plan with NVS, which will provide medical coverage on
the basis of the NVS policy with surplus supplement, at class 2b level without
own risk deductible. The contribution of the Company to the NVS policy will be
50% of the premium for the Executive and the Executive's family. Should the
Executive decide not to make use of the NVS policy the Company will contribute
to the Executive's private medical plan up to the maximum amount the Company
would have contributed with NVS. The Executive will have 30 days after signing
of this Agreement to inform the Company which policy he will elect.

ARTICLE 7: DISABILITY ALLOWANCE

7.1. RETM has established a disability plan with Amev, the insurer of the
     pension plan. This will provide cover on gross annual base salary up to
     EURO 158,823 without medical evidence of good health.

     The disability plan comprises two parts:

     o    WAO Gap insurance

     o    Long term disability

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7.2. WAO GAP

     The Company will pay 50% of the premium payable for the WAO-gap insurance
     taken out with Amev. The remaining 50% of the premium will be paid by the
     Executive.

7.3. LONG TERM DISABILITY

     The RETM long term disability policy provides coverage on annual salary in
     excess of EURO 37,789 (WAO ceiling--year 2000). The RETM long term
     disability plan will provide on full disability, 70% of excess salary up to
     an annual salary cap of EURO 158,823, with proportional amounts for partial
     disability. This will be paid for entirely by the Company.

     The Company will also provide to the Executive 70% cover on the Executive's
     full gross annual base salary exceeding EURO 158,823, on the condition that
     an insurer is willing to cover this risk, up to a maximum premium of EURO
     25 per EURO 454 insured disability benefit with proportional amounts per
     partial disability.

     In case the insurer is not willing to cover the risk or should the
     Executive decide to insure the whole benefit elsewhere, the Company's
     contribution to that policy will be limited to a maximum premium of EURO 25
     per EURO 454 insured disability benefit. The Executive will have until the
     earlier of (i) 90 days after signing of this Agreement or (ii) 30 days
     after the receipt of a completely documented quotation from an insurance
     company to inform the Company whether he will decide to insure the whole
     benefit elsewhere or not.

ARTICLE 8: PENSION ALLOWANCE

8.1. A pension contribution will be paid by the Company over the gross annual
     base salary as per January 1 of each year as far as the gross annual base
     salary is payable in The Netherlands, less an offset of EURO 13,908
     (indexed annually to CPI all households), and the annual bonus (as stated
     in article 3.2), as described in the separate letter agreement

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     between the Company and the Executive regarding pension issues (the
     "Pension Letter"). The contribution will be based on the age-bracketed
     table percentages shown below. Such amounts will be paid dependent on the
     election of the Executive either into RETM's group pension plan insured
     with Amev (hereafter: the "RETM Pension Plan"), or a qualified individual C
     Policy selected by the Executive.

     The Executive will have until the earlier of (i) 90 days after signing of
     this Agreement or (ii) 30 days after the receipt of a completely documented
     quotation from an insurance company to inform the Company which policy he
     will elect. Amounts will be paid annually in advance, as soon as
     administratively feasible after January 1 of each year.

     Should the Executive leave during the course of the year he will ensure
     that pro rata contributions paid in advance will be refunded to the
     Company.

<TABLE>
<CAPTION>

            Age            Base pensionable salary          Bonus
<S>                         <C>                             <C>
          50 - 54                    13%                      7%
          55 - 59                    14%                      9%
          60 - 64                    15%                     12%
</TABLE>

     The above contributions are deemed to be sufficient to cover retirement,
     death and waiver of premium on disability benefits. Upon the termination of
     this Agreement, Company contributions to the RETM Pension Plan (or
     Executive's own C Policy) shall cease, and Executive's retirement benefit
     shall be determined in accordance with the terms of the RETM Pension Plan
     (or Executive's own C Policy), and Executive shall not be entitled to
     compensation for the termination of this Agreement prior to the Executive
     attaining the target retirement age set forth in the Pension Letter (other
     than as specifically set forth in Article 2).

8.2. Should the Executive decide to elect his own C Policy rather than the RETM
     Pension Plan, the Executive waives any rights or entitlement he or his
     dependants, or survivors, may have to benefits under the RETM Pension Plan.
     Should the Executive decide to

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      participate in the RETM Pension Plan, all provisions of the RETM Pension
      Plan are deemed applicable (summary hereof see Annex C).

ARTICLE 9: COMPANY LEASE CAR

The Company will make available a company lease car with a catalogue value of
approximately NLG 125,000, inclusive of VAT, as well as a driver for business
purposes. The Company will provide the Executive with a company car lease
arrangement that specifies the terms and conditions under which the company car
will be made available. Subject to the terms and conditions of this Agreement,
the Executive has entered, or will enter into, a company car user agreement, a
copy of which will be made available to the Executive. The Executive may use the
company car for private purposes. The Company shall reimburse all costs
(including the costs for private purposes) incurred by the Executive concerning
the use of the company car but shall not reimburse the Executive for the flat
rate charge referred to in Section 42 of the Wet op de inkomstenbelasting 1964
(the so-called fictitious motor vehicle cost).

ARTICLE 10: EXPENSE REIMBURSEMENTS

10.1. The Company shall reimburse all expenses (including mobile phone expenses)
      incurred by the Executive with respect to the performance of his duties
      hereunder on a monthly basis upon provision of relevant receipts. These
      expenses also cover private telephone expenses.

10.2. Furthermore, the Company shall pay a monthly allowance of EURO 400 for
      representation expenses.

10.3. Notwithstanding the foregoing, the expenses reimbursed in this Article 10
      will be paid to the Executive only to the extent the reimbursements are
      tax-deductible to the Company or an affiliate.

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ARTICLE 11: HOLIDAYS

The Executive shall annually be entitled to 30 holidays (public holidays
excluded). Holidays shall be taken in mutual consultation between the Executive
and the Chairman of the Board of Directors of the Company.

ARTICLE 12: CONFIDENTIALITY AND RETURN OF COMPANY PROPERTY

12.1. The Executive agrees during the employment and thereafter to maintain the
      confidentiality of all Confidential Information (as hereinafter defined)
      that he obtains or develops in the course of his employment with the
      Company or any of its affiliates. Confidential Information shall mean for
      purposes of this Agreement any non-public, proprietary or commercially
      sensitive information relating to or pertaining to Company or any of its
      affiliates within the business unit Reliant Energy Europe or customers,
      including but not limited to, information about business and commercial
      affairs, business plans, forecasts, economic models, credit policies,
      labor relations, governmental relations, compensation programs, condition
      of assets and liabilities, acquisitions, mergers or other transactions,
      business relationships, trading policies (including option and hedge
      strategies utilized in the business and operations of trading and
      marketing operations of the Company or any of its affiliates within the
      business unit Reliant Energy Europe) and/or any other aspect of the
      business and operations the Company or any of its affiliates within the
      business unit Reliant Energy Europe.

12.2. When leaving the Company, the Executive shall return to the Company in
      their entirety, all objects belonging to the Company and/or its affiliates
      which are still in his possession, as well as all documents concerning
      matters of the aforementioned companies specifically, documents, printed
      matter, notes, drafts, sketches, samples as well as all copies, carbon
      copies or other copies. The Executive has no right to withhold such
      objects and documents.

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12.3. If the Executive violates the obligations pursuant to Article 12.1 and
      12.2, the Company shall have the option of either requiring that the
      Executive to pay to the Company a penalty of EURO 100,000 as liquidated
      damages for each violation of the obligations contained in this Article 12
      or recovering through judicial proceedings, in lieu of such liquidated
      damages, the amount representing any direct or indirect damages incurred
      by the Company as a result of such breach.

12.4. The Executive shall treat all items of the Company such as books,
      documents, computer floppy disks, other information carriers, resolutions,
      drawings, computations and similar material as well as his business notes
      as property of the Company, and he will keep such materials and documents
      as well as the copies thereof locked away. The Executive will not use any
      item in an other way or keep any item longer than necessary for the proper
      performance of his duties.

ARTICLE 13: NON-COMPETITION

13.1. During the term of this Agreement and for a period of one year after the
      date that the Company or the Executive gives notice of intent to terminate
      the Agreement pursuant to Article 2.2 (or, if no such notice has been
      given, the date that the Agreement has come to an end), the Executive will
      not, without the prior written consent of the Company, engage in any
      activities in competition with the Company, or any of its affiliates in
      the business unit Reliant Energy Europe as described in Annex A, including
      without limitation, accepting employment with or performing services for a
      firm, company, partnership or group of individuals engage in activities
      that are in competition with the business of the Company or any of its
      affiliates in the business unit Reliant Energy Europe as described in
      Annex A.

13.2. If the Executive violates the obligations pursuant to Article 13.1 the
      Company shall have the option of either requiring that the Executive pay
      to the Company a penalty of EURO 100,000 as liquidated damages for each
      violation of the obligations contained in this Article 13 or recovering
      through judicial proceedings, in lieu of such liquidated damages,

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      an amount representing any direct or indirect damages incurred by the
      Company as a result of such breach.

13.3. The Executive shall not at any time, whether during or after the
      termination of his employment, except at the explicit request or after
      having obtained the prior written consent of the Company, use, disclose or
      permit others to disclose to any third party any technical, commercial and
      financial information, directly or indirectly related to the business of
      the Company or information with respect to any affiliate within the
      business unit Reliant Energy Europe, including information related to
      suppliers, customers or other relations, or any other details relating
      thereto, which he knows or reasonably can assume to be secret or
      confidential, or of which he reasonably can assume to be harmful to the
      Company or any affiliate within the business unit Reliant Energy Europe,
      unless and to the extent that disclosure is necessary in the performance
      of the Executive's duties, or is required by law.

ARTICLE 14: INDEMNIFICATION

The Company (or RETM, as determined in the Company's discretion) shall take out
a managing director's liability policy on behalf of the Executive in
consultation with the Executive. The annual premium for this insurance policy
shall be paid by the Company. In addition and to the extent not covered by the
director's liability policy or otherwise, the Company shall compensate the
Executive for taxes owed by the Company for which the Executive becomes liable
solely by reason of his position as an executive of the Company, provided and to
the extent that the Executive substantiates that the Company's nonpayment is not
the result of the Executive's misconduct.

ARTICLE 15: GUARANTEE BY RELIANT ENERGY POWER GENERATION, INC. AND RETM

All obligations of the Company under this Agreement are unconditionally and
irrevocably guaranteed by RETM and by Reliant Energy Power Generation, Inc. a
Delaware corporation ("REPG") which is a subsidiary of REI. Notwithstanding the
foregoing, the Company may substitute any other related credit-worthy party as
the guarantor of the Company's obligations under

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this Agreement, subject to the consent of the Executive, which consent shall not
be unreasonably withheld.

ARTICLE 16: GENERAL

16.1. This Agreement contains the entire agreement between the parties relating
      to the subject matter thereof and supersedes all prior agreements and
      understandings whether oral or written between all parties.

16.2. This Agreement is in substitution for all previous contracts of employment
      or service agreements between the Executive and the Company or any
      associated company, which shall be deemed to have been terminated by
      mutual consent as from the date on which this contract is executed.

16.3. The expiration or termination of this Agreement, howsoever arising shall
      not operate to affect such of the provisions of this Agreement as are
      expressed or have effect thereafter.

16.4. Neither this Agreement nor any term thereof may be changed, waived,
      discharged or terminated orally, but only by an instrument in writing
      signed by the party against which enforcement of such change, waiver,
      discharge or termination is sought.

16.5. The Executive acknowledges that, by signing this Agreement or otherwise,
      he is not nor will he become an employee of REI, REPG, RETM or any of
      their respective affiliates (other than the Company), and that nothing in
      this Agreement will entitle the Executive to benefits under any employee
      benefit plan or arrangement offered or sponsored by REI, REPG, RETM or any
      of their respective affiliates (other than the Company), other than as
      specifically provided with respect to certain benefits outlined in Article
      6, 7 and 8.

ARTICLE 17: GOVERNING LAW

This Agreement shall be governed by and construed in accordance with Dutch law.

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ARTICLE 18: COMPETENT COURT

All conflicts arising with regard to this Agreement will be submitted to the
competent Dutch court.

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This Agreement is signed in twofold by the parties, the 30th day of July, 2000.

ON BEHALF OF RELIANT ENERGY EUROPE, INC.

/s/ ROBERT HARVEY                              /s/ G.L.M.A. van LANSCHOT
-------------------------------              ------------------------------
MR. R.W. HARVEY                              MR. G.L.M.A. VAN LANSCHOT

ON BEHALF OF RELIANT ENERGY POWER GENERATION, INC.

/s/ ROBERT HARVEY
-------------------------------
MR. R.W. HARVEY

ON BEHALF OF RELIANT ENERGY TRADING AND MARKETING, B.V.

/s/ ROBERT HARVEY
-------------------------------

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                                     ANNEX A

                              POSITION DESCRIPTION
                       PRESIDENT & CHIEF OPERATING OFFICER
                              RELIANT ENERGY EUROPE

Principal operating officer for Reliant Energy's business presence in Europe,
currently styled "Reliant Energy Europe".

Key member of Reliant Energy's overall management team, with membership on the
Reliant Energy Executive Committee.

Reporting directly to the Office of the CEO of REI, with direct access to the
Chairman, President & CEO (R. Steve Letbetter), and day-to-day oversight from
and consultation with a vice chairman (R. Harvey).

Responsible for developing and executing a strategy for building Reliant's
overall presence in Europe in a manner that contributes near-term operating
profits, earnings growth, and shareholder value. The general strategic focus is
on establishing a "wholesale energy merchant" position across much of Europe,
complete with requisite assets, trading and marketing skills, and commercial
relationships.

All operating units in Europe report directly or indirectly to this position, as
do all staff functions physically located in Europe (with the exception,
currently, of risk control and legal). Also, most staff functions would retain a
"dotted line" (i.e., secondary) reporting relationship to functional leadership
at corporate. These include financial and accounting, and human resources.

Note: some corporate services are provided from the corporate headquarters in
Houston and report, solid-line, to Reliant corporate management in Houston.
These include, for example, Information Technology, Purchasing, Corporate
Security, Accounts Payable, and Cash Management functions.

Currently, the position entails oversight of two key operating units, NV UNA
(the Dutch generating company) and RETM BV (Reliant's trading and marketing unit
for Europe). Over time, the business is expected to expand to other countries in
Europe, with both assets (principally generation, possibly including electric
transmission or distribution, gas transmission and storage) and
trading/commercial presence. If the expansion of the business so requires, the
Executive may be offered a position as a director of a company or branch in any
of the other countries in the discretion of the Company.

Strategic and operating plans are developed by the unit in consultation with,
and ultimately with the approval of, the Office of the CEO. Capital budgets are
also developed in a similar fashion. Major capital transactions and/or other
corporate commitments require the approval of the Office of the CEO.

NOTE: major "corporate transactions" are typically developed and executed from
corporate with participation from the business unit (in this case Reliant Energy
Europe) as appropriate.

                                       19
<PAGE>   20

                                     ANNEX B

A "Change of Control" shall be deemed to have occurred if Reliant Energy,
Incorporated, or any successor corporation ("Reliant Energy"), shall:

1.    Sell all or substantially all of the assets of its business unit known as
      Reliant Energy Europe in connection with, or pursuant to, a general
      discontinuation of the business operations of Reliant Energy in Europe; or

2.    Effect a sale of the capital stock of, or a merger of, any subsidiary of
      Reliant Energy that owns all or substantially all of the assets of Reliant
      Energy Europe to, or with, a third party; provided, however, that a
      "Change of Control" shall not be deemed to have occurred if the assets and
      operations of the business unit are sold or transferred to, or merged
      with, a corporation, partnership, joint venture or other entity in which
      Reliant Energy retains a majority or controlling ownership interest.

A "Change in Employment" shall mean any one or more of the following events
which occurs without the consent of the Executive after or in connection with a
Change in Control:

1.    A material and significant reduction in the duties or responsibilities of
      Executive from those applicable to him immediately prior to the date on
      which a Change in Control occurs; or

2.    Any significant reduction in Executive's total remuneration (including
      salary, bonus, retirement benefits, welfare benefits and any other
      executive benefits) from that provided to Executive immediately prior to
      the date on which a Change in Control occurs; provided, however, that a
      diminution of or reduction in retirement benefits and/or welfare benefits
      which is of general application and which uniformly and contemporaneously
      reduces or diminishes the benefits of all covered executives shall be
      ignored and not be considered a reduction in total remuneration for
      purposes of this paragraph 2.

                                       20
<PAGE>   21

                                     ANNEX C

                           DESCRIPTION OF PENSION PLAN

                           DUTCH PENSION PLAN SUMMARY

                                       FOR

                   RELIANT ENERGY TRADING AND MARKETING, B.V.

<TABLE>
<CAPTION>
Type of Plan                            :  Flexible defined contribution plan
Insurer                                 :  Amev
<S>                                     <C>
GENERAL TERMS
Eligibility                                : All employees of (Client) who
                                             have attained the age of 21, and
                                             have a contract for a period that
                                             exceeds 6 months. Eligibility
                                             commences on the first day of the
                                             month in which age 21 is attained
                                             or actual date of joining if later.

Normal Retirement Date                     : First day of the month in which
                                             the (former) participant reaches
                                             the age of 65.

Flexible Retirement Date                   : The individual employee may elect
                                             for a retirement date between age
                                             55 and 65.

DEFINITIONS
Annual Salary                              : 12 times fixed monthly salary at
                                             the key date, increased with
                                             holiday allowance.

Pensionable Salary                         : Annual salary less an offset NLG
                                             30,649 in 2000. Thereafter this
                                             offset will rise in line with the
                                             CPI, adjusted per 1 January
                                             reflecting the price index increase
                                             over the preceding year (CPI all
                                             households period Dec till Dec).

Bonus                                      : The total of fluctuating emoluments
                                             received over the 12 months
                                             preceding the key date

Key Date                                   : January 1 or date of entry in first
                                             year.
</TABLE>

                                       21
<PAGE>   22

<TABLE>
<S>                                        <C>
Credited Service                           : Years and full months of service
                                             between the date of entry into the
                                             plan and normal retirement date.
                                             Partial months will be ignored.

Defined Contribution Table                 :
</TABLE>

<TABLE>
<CAPTION>
                                              EMPLOYEE
                                              CONTRIBUTION
  AGE RANGE               EMPLOYER CORE       RANGE                EMPLOYER MATCH        TOTAL RANGE
  ---------               -------------       ------------         --------------        -----------
<S>                       <C>                 <C>                  <C>                   <C>
  21 - 29                 2.0%                0% - 2.0%            0% - 2.0%             6.0% of PS
  30 - 34                 2.5%                0% - 2.5%            0% - 2.5%             7.5% of PS
  35 - 39                 3.5%                0% - 3.5%            0% - 3.5%             10.5% of PS
  40 - 44                 4.5%                0% - 4.5%            0% - 4.5%             13.5% of PS
  45 - 49                 5.5%                0% - 5.5%            0% - 5.5%             16.5% of PS
  50 - 54                 6.5%                0% - 6.5%            0% - 6.5%             19.5% of PS
  55 - 59                 7.0%                0% - 7.0%            0% - 7.0%             21.0% of PS
  60 - 65                 7.5%                0% - 7.5%            0% - 7.5%             22.5% of PS
</TABLE>

       Defined contribution table over bonus:

<TABLE>
<CAPTION>
                          EMPLOYEE
                          CONTRIBUTION        MULTIPLE FOR
  AGE RANGE               RANGE               MATCH                EMPLOYER MATCH        TOTAL RANGE
  ---------               ------------        ------------         --------------        -----------
<S>                       <C>                 <C>                  <C>                   <C>
  21 - 29                 0% - 1%             2                    0% - 2.0%             3.0% of Bonus
  30 - 34                 0% - 1%             2                    0% - 2.0%             3.0% of Bonus
  35 - 39                 0% - 1.5%           2                    0% - 3.0%             4.5% of Bonus
  40 - 44                 0% - 2%             2                    0% - 4.0%             6.0% of Bonus
  45 - 49                 0% - 2.5%           2                    0% - 5.0%             7.5% of Bonus
  50 - 54                 0% - 3.5%           2                    0% - 7.0%             10.5% of Bonus
  55 - 59                 0% - 4.5%           2                    0% - 9.0%             13.5% of Bonus
  60 - 65                 0% - 6%             2                    0% - 12%              18% of Bonus
</TABLE>

Comment:

o     Should an employee fail to make a choice the maximum contribution will be
      assumed.

o     The age of all employees, both existing and new, will be assessed per the
      key date to determine the contribution payable.

o     In the event of new entrants who join mid-month a partial contribution
      will be paid, whereby all months are assumed to be 30 days.

o     Contributions paid over the bonus and pensionable salary will be invested
      in separate accounts over which differing investment choices can apply.

                                       22
<PAGE>   23

<TABLE>
<S>                                        <C>
BENEFITS
Retirement Benefit                        :  The accumulated value of all
                                             contributions will be used to
                                             purchase retirement pension (and -
                                             if desired - survivors pension)

Death in Service Benefit                  :  For married and cohabiting
                                             employees a death-in-service
                                             benefit is insured on a risk
                                             premium basis, of 1.4% of the
                                             pensionable salary plus the average
                                             bonus received over the preceding
                                             three years, at date of death per
                                             year of potential service (max 35).
                                             Orphan's pension amounts per child
                                             to 0.28% of the pensionable salary
                                             plus the average bonus received
                                             over the preceding three years, per
                                             year of potential service (max 35)

                                             Note: cohabiting partners (same
                                             sex/different sex) are only covered
                                             if there is a co-habitation
                                             agreement in place, or if the
                                             co-habitation period is longer than
                                             five years.

The risk premiums necessary to finance this benefit are deducted from the
defined contribution.

Death after Retirement                    :  The employee is free to choose
                                             whether or not to apply part of the
                                             accumulated capital for post
                                             retirement dependant's benefits.

Disability Benefit                        :* For all employees a waiver of
                                             premium will be insured. The cost
                                             of the premium waiver will be
                                             deducted from the defined
                                             contribution.
                                           * For all employees a so-called
                                             WAO-Shortfall insurance is provided.
                                             This insurance supplements the
                                             state WAO benefit to secures a
                                             continuation of income of up to 70%
                                             of last salary up to a maximum
                                             salary NLG 83,275 in 2000 (State
                                             ceiling)
                                           * For employees with an annual salary
                                             above the State ceiling an
                                             additional disability pension of up
                                             to 70% of the excess salary is
                                             provided.

Preliminary coverage                      :  For employees who do not fulfil the
                                             eligibility requirements temporary
                                             death-in-service risk coverage is
                                             provided. Additionally if candidate
                                             employees have a contract for an
                                             indefinite period disability
                                             coverage will be provided.
</TABLE>

                                       23
<PAGE>   24

<TABLE>
<S>                                        <C>
CONTRIBUTIONS
Employee Contributions                    :  1. Voluntary defined contribution
                                             expressed in the table.
                                             2. Half of the premium for the
                                             WAO-Shortfall insurance.

Employer Contributions                    :  Total premium excluding employee
                                             contributions. This includes the
                                             cost of supplemental disability
                                             pension that will be paid in
                                             addition to the DC table.

Additional Voluntary Contributions        :  Encouraged. Level dependent on
                                             individual circumstances and chosen
                                             retirement date, subject to fiscal
                                             restrictions.

MISCELLANEOUS
Investment                                :  The defined contribution plus
                                             additional voluntary contributions
                                             are invested in the investment fund
                                             of the employee's choice. All
                                             investment returns are credited to
                                             the employees accrued capital.

Early Leavers                             :  Benefits vest immediately. The
                                             invested capital will continue to
                                             grow in line with investment
                                             returns over the period from
                                             leaving to retirement. The employee
                                             may chose to continue the policy on
                                             an individual basis or transfer the
                                             accumulated value to the new
                                             employers pension plan.
                                             Upon leaving the death in service
                                             and disability cover will lapse.
                                             The employee may however, elect to
                                             convert his capital to a form with
                                             restitution on death.

Wage Savings Plan:                        :  A wage savings plan will be
                                             established alongside the pension
                                             plan. An employee may save annually
                                             from gross salary NLG 1,736 in
                                             2000. The saved amounts may be
                                             de-blocked and applied to the
                                             company pension plan so long as
                                             legislation facilitates this.
</TABLE>

                                       24<PAGE>   1

                                                                    EXHIBIT 10.1

                               BMC SOFTWARE, INC.

                       2000 EMPLOYEE STOCK INCENTIVE PLAN

                                   I. PURPOSE

      The purpose of the BMC SOFTWARE, INC. 2000 EMPLOYEE STOCK INCENTIVE PLAN
(the "Plan") is to provide a means through which BMC SOFTWARE, INC., a Delaware
corporation (the "Company"), and its subsidiaries may attract able persons to
serve as consultants or advisors or to enter the employ of the Company or its
subsidiaries and to provide a means whereby those individuals upon whom the
responsibilities of the successful administration and management of the Company
and its subsidiaries rest, and whose present and potential contributions to the
welfare of the Company and its subsidiaries are of importance, can acquire and
maintain stock ownership, thereby strengthening their concern for the welfare of
the Company and its subsidiaries. A further purpose of the Plan is to provide
such individuals with additional incentive and reward opportunities designed to
enhance the profitable growth of the Company and its subsidiaries. Accordingly,
the Plan provides for granting Options and Restricted Stock Awards, or any
combination of the foregoing, as is best suited to the circumstances of the
particular employee, consultant, or advisor as provided herein.

                                 II. DEFINITIONS

      The following definitions shall be applicable throughout the Plan unless
specifically modified by any paragraph:

      (a) "AWARD" means, individually or collectively, any Option or Restricted
Stock Award.

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

      (c) "CODE" means the Internal Revenue Code of 1986, as amended. Reference
in the Plan to any section of the Code shall be deemed to include any amendments
or successor provisions to such section and any regulations under such section.

      (d) "COMMITTEE" means a committee of the Board that is selected by the
Board as provided in Paragraph IV(a).

      (e) "COMMON STOCK" means the common stock, par value $.01 per share, of
the Company, or any security into which such Common Stock may be changed by
reason of any transaction or event of the type described in Paragraph IX.

      (f) "COMPANY" means BMC Software, Inc., a Delaware corporation.

                                      -1-
<PAGE>   2

      (g) "CONSULTANT" means any person who is not an employee and who is
providing advisory or consulting services to the Company or any parent or
subsidiary corporation (as defined in section 424 of the Code).

      (h) "DIRECTOR" means an individual elected to the Board by the
stockholders of the Company or by the Board under applicable corporate law who
is serving on the Board on the date the Plan is adopted by the Board or is
elected to the Board after such date.

      (i) An "EMPLOYEE" means any person (including a Director) in an employment
relationship with the Company or any parent or subsidiary corporation (as
defined in section 424 of the Code).

      (j) "FAIR MARKET VALUE" means, as of any specified date, the mean of the
high and low sales prices of the Common Stock (i) reported by the National
Market System of NASDAQ on that date or (ii) if the Common Stock is listed on a
national stock exchange, reported on the stock exchange composite tape on that
date; or, in either case, if no prices are reported on that date, on the last
preceding date on which such prices of the Common Stock are so reported. If the
Common Stock is traded over the counter at the time a determination of its fair
market value is required to be made hereunder, its fair market value shall be
deemed to be equal to the average between the reported high and low or closing
bid and asked prices of Common Stock on the most recent date on which Common
Stock was publicly traded. In the event Common Stock is not publicly traded at
the time a determination of its value is required to be made hereunder, the
determination of its fair market value shall be made by the Committee in such
manner as it deems appropriate.

      (k) "HOLDER" means an employee, Consultant, or Director who has been
granted an Award.

      (l) "1934 ACT" means the Securities Exchange Act of 1934, as amended.

      (m) "OPTION" means an Award granted under Paragraph VII of the Plan.

      (n) "OPTION AGREEMENT" means a written agreement between the Company and a
Holder with respect to an Option.

      (o) "PLAN" means the BMC Software, Inc. 2000 Employee Stock Incentive
Plan, as amended from time to time.

      (p) "RESTRICTED STOCK AGREEMENT" means a written agreement between the
Company and a Holder with respect to a Restricted Stock Award.

      (q) "RESTRICTED STOCK AWARD" means an Award granted under Paragraph VIII
of the Plan.

      (r) "RULE 16B-3" means SEC Rule 16b-3 promulgated under the 1934 Act, as
such may be amended from time to time, and any successor rule, regulation or
statute fulfilling the same or a similar function.

                                      -2-
<PAGE>   3

      (s) "STOCK APPRECIATION RIGHT" shall have the meaning assigned to such
term in Paragraph VII(c) of the Plan.

                  III. EFFECTIVE DATE AND DURATION OF THE PLAN

      The Plan shall become effective upon the date of its adoption by the
Board. No further Awards may be granted under the Plan after ten years from the
date the Plan is adopted by the Board. The Plan shall remain in effect until all
Options granted under the Plan have been satisfied or expired, and all
Restricted Stock Awards granted under the Plan have vested or been forfeited.

                               IV. ADMINISTRATION

      (a) COMPOSITION OF COMMITTEE. The Plan shall be administered by a
committee of, and appointed by, the Board that shall be comprised solely of two
or more non-employee directors (within the meaning of "Non-Employee Director" as
defined in Rule 16b-3).

      (b) POWERS. Subject to the express provisions of the Plan, the Committee
shall have authority, in its discretion, to determine which employees,
Consultants, or Directors shall receive an Award, the time or times when such
Award shall be made, and the number of shares to be subject to each Option or
Restricted Stock Award. In making such determinations, the Committee shall take
into account the nature of the services rendered by the respective employees,
Consultants, or Directors, their present and potential contribution to the
Company's success and such other factors as the Committee in its discretion
shall deem relevant.

      (c) ADDITIONAL POWERS. The Committee shall have such additional powers as
are delegated to it by the other provisions of the Plan. Subject to the express
provisions of the Plan, this shall include the power to construe the Plan and
the respective agreements executed hereunder, to prescribe rules and regulations
relating to the Plan, to determine the terms, restrictions and provisions of the
agreement relating to each Award, and to make all other determinations necessary
or advisable for administering the Plan. The Committee may correct any defect or
supply any omission or reconcile any inconsistency in the Plan or in any
agreement relating to an Award in the manner and to the extent it shall deem
expedient to carry it into effect. The determinations of the Committee on the
matters referred to in this Paragraph IV shall be conclusive.

                V. SHARES SUBJECT TO THE PLAN; GRANT OF OPTIONS;
                        GRANT OF RESTRICTED STOCK AWARDS

      (a) SHARES SUBJECT TO THE PLAN. Subject to adjustment in the same manner
as provided in Paragraph IX with respect to shares of Common Stock subject to
Options then outstanding, the aggregate number of shares of Common Stock that
may be issued under the Plan shall not exceed 12,000,000 shares. Shares shall be
deemed to have been issued under the Plan only (i) to the extent actually issued
and delivered pursuant to an Award or (ii) to the extent an Award is settled in
cash. To the extent that an Award lapses or the rights of its Holder terminate,
any shares of Common Stock subject to such Award shall again be available for
the grant of an Award under the Plan.

                                      -3-
<PAGE>   4

      (b) GRANT OF OPTIONS. The Committee may from time to time grant Options to
one or more employees, Consultants, or Directors determined by it to be eligible
for participation in the Plan in accordance with the terms of the Plan.

      (c) GRANT OF RESTRICTED STOCK AWARDS. The Committee may from time to time
grant Restricted Stock Awards to one or more employees, Consultants, or
Directors determined by it to be eligible for participation in the Plan in
accordance with the terms of the Plan.

      (d) STOCK OFFERED. Subject to the limitations set forth in Paragraph V(a),
the stock to be offered pursuant to the grant of an Award may be authorized but
unissued Common Stock or Common Stock previously issued and outstanding and
reacquired by the Company. Any of such shares which remain unissued and which
are not subject to outstanding Awards at the termination of the Plan shall cease
to be subject to the Plan but, until termination of the Plan, the Company shall
at all times make available a sufficient number of shares to meet the
requirements of the Plan.

                                 VI. ELIGIBILITY

      Awards may be granted only to persons who, at the time of grant, are
employees, Consultants, or Directors; provided, however, that Awards may not be
granted to any Director who is not an employee. An Award may be granted on more
than one occasion to the same person, and, subject to the limitations set forth
in the Plan, such Award may include an Option, a Restricted Stock Award, or any
combination thereof.

                               VII. STOCK OPTIONS

      (a) OPTION PERIOD. The term of each Option shall be as specified by the
Committee at the date of grant.

      (b) LIMITATIONS ON EXERCISE OF OPTION. An Option shall be exercisable in
whole or in such installments and at such times as determined by the Committee.

      (c) OPTION AGREEMENT. Each Option shall be evidenced by an Option
Agreement in such form and containing such provisions not inconsistent with the
provisions of the Plan as the Committee from time to time shall approve. Each
Option Agreement shall specify the effect of termination of (i) employment or
(ii) the consulting or advisory relationship, as applicable, on the
exercisability of the Option. An Option Agreement may provide for the payment of
the option price, in whole or in part, by the delivery of a number of shares of
Common Stock (plus cash if necessary) having a Fair Market Value equal to such
option price. Moreover, an Option Agreement may provide for a "cashless
exercise" of the Option by establishing procedures satisfactory to the Committee
with respect thereto. Further, an Option Agreement may provide for the surrender
of the right to purchase shares under the Option in return for a payment in cash
or shares of Common Stock or a combination of cash and shares of Common Stock
equal in value to the excess of the Fair Market Value of the shares with respect
to which the right to purchase is surrendered over the option price therefor
("Stock Appreciation Rights"), on such terms and conditions as the Committee in
its sole discretion may prescribe. The terms and conditions of the respective
Option Agreements need not be identical.

                                      -4-
<PAGE>   5

      (d) OPTION PRICE AND PAYMENT. The price at which a share of Common Stock
may be purchased upon exercise of an Option shall be determined by the Committee
but, subject to adjustment as provided in Paragraph IX, such purchase price of
an Option shall not be less than the Fair Market Value of a share of Common
Stock on the date such Option is granted. The Option or portion thereof may be
exercised by delivery of an irrevocable notice of exercise to the Company, as
specified by the Committee. The purchase price of the Option or portion thereof
shall be paid in full in the manner prescribed by the Committee. Options granted
under the Plan shall not be treated as incentive stock options within the
meaning of section 422(b) of the Code.

      (e) STOCKHOLDER RIGHTS AND PRIVILEGES. The Holder shall be entitled to all
the privileges and rights of a stockholder only with respect to such shares of
Common Stock as have been purchased under the Option and for which certificates
of stock have been registered in the Holder's name.

      (f) OPTIONS AND RIGHTS IN SUBSTITUTION FOR STOCK OPTIONS GRANTED BY OTHER
CORPORATIONS. Options and Stock Appreciation Rights may be granted under the
Plan from time to time in substitution for stock options held by individuals
employed by corporations who become employees as a result of a merger or
consolidation or other business combination of the employing corporation with
the Company or any subsidiary.

                          VIII. RESTRICTED STOCK AWARDS

      (a) FORFEITURE RESTRICTIONS TO BE ESTABLISHED BY THE COMMITTEE. Shares of
Common Stock that are the subject of a Restricted Stock Award shall be subject
to restrictions on disposition by the Holder and an obligation of the Holder to
forfeit and surrender the shares to the Company under certain circumstances (the
"Forfeiture Restrictions"). The Forfeiture Restrictions shall be determined by
the Committee in its sole discretion, and the Committee may provide that the
Forfeiture Restrictions shall lapse upon (i) the attainment of one or more
performance targets established by the Committee, (ii) the Holder's continued
employment with the Company or continued service as a Consultant for a specified
period of time, (iii) the occurrence of any event or the satisfaction of any
other condition specified by the Committee in its sole discretion, or (iv) a
combination of any of the foregoing. Each Restricted Stock Award may have
different Forfeiture Restrictions, in the discretion of the Committee.

      (b) OTHER TERMS AND CONDITIONS. Common Stock awarded pursuant to a
Restricted Stock Award shall be represented by a stock certificate registered in
the name of the Holder of such Restricted Stock Award. The Holder shall have the
right to receive dividends with respect to Common Stock subject to a Restricted
Stock Award, to vote Common Stock subject thereto and to enjoy all other
stockholder rights, except that (i) the Holder shall not be entitled to delivery
of the stock certificate until the Forfeiture Restrictions have expired, (ii)
the Company shall retain custody of the stock until the Forfeiture Restrictions
have expired, (iii) the Holder may not sell, transfer, pledge, exchange,
hypothecate or otherwise dispose of the stock until the Forfeiture Restrictions
have expired, and (iv) a breach of the terms and conditions established by the
Committee pursuant to the Restricted Stock Agreement shall cause a forfeiture of
the Restricted Stock Award. At the time of such Award, the Committee may, in its
sole discretion, prescribe additional terms, conditions

                                      -5-
<PAGE>   6

or restrictions relating to Restricted Stock Awards, including, but not limited
to, rules pertaining to the termination of employment or service as a Consultant
(by retirement, disability, death or otherwise) of a Holder prior to expiration
of the Forfeiture Restrictions. Such additional terms, conditions or
restrictions shall be set forth in a Restricted Stock Agreement made in
conjunction with the Award.

      (c) PAYMENT FOR RESTRICTED STOCK. The Committee shall determine the amount
and form of any payment for Common Stock received pursuant to a Restricted Stock
Award, provided that in the absence of such a determination, a Holder shall not
be required to make any payment for Common Stock received pursuant to a
Restricted Stock Award, except to the extent otherwise required by law.

      (d) COMMITTEE'S DISCRETION TO ACCELERATE VESTING OF RESTRICTED STOCK
AWARDS. The Committee may, in its discretion and as of a date determined by the
Committee, fully vest any or all Common Stock awarded to a Holder pursuant to a
Restricted Stock Award and, upon such vesting, all restrictions applicable to
such Restricted Stock Award shall terminate as of such date. Any action by the
Committee pursuant to this Subparagraph may vary among individual Holders and
may vary among the Restricted Stock Awards held by any individual Holder.

      (e) RESTRICTED STOCK AGREEMENTS. At the time any Award is made under this
Paragraph VIII, the Company and the Holder shall enter into a Restricted Stock
Agreement setting forth each of the matters contemplated hereby and such other
matters as the Committee may determine to be appropriate. The terms and
provisions of the respective Restricted Stock Agreements need not be identical.

                     IX. RECAPITALIZATION OR REORGANIZATION

      (a) NO EFFECT ON RIGHT OR POWER. The existence of the Plan and the Awards
granted hereunder shall not affect in any way the right or power of the Board or
the stockholders of the Company to make or authorize any adjustment,
recapitalization, reorganization or other change in the Company's or any
subsidiary's capital structure or its business, any merger or consolidation of
the Company or any subsidiary, any issue of debt or equity securities ahead of
or affecting Common Stock or the rights thereof, the dissolution or liquidation
of the Company or any subsidiary or any sale, lease, exchange or other
disposition of all or any part of its assets or business or any other corporate
act or proceeding.

      (b) SUBDIVISION OR CONSOLIDATION OF SHARES; STOCK DIVIDENDS. The shares
with respect to which Options may be granted are shares of Common Stock as
presently constituted, but if, and whenever, prior to the expiration of an
Option theretofore granted, the Company shall effect a subdivision or
consolidation of shares of Common Stock or the payment of a stock dividend on
Common Stock without receipt of consideration by the Company, the number of
shares of Common Stock with respect to which such Option may thereafter be
exercised (i) in the event of an increase in the number of outstanding shares
shall be proportionately increased, and the purchase price per share shall be

                                      -6-
<PAGE>   7

proportionately reduced, and (ii) in the event of a reduction in the number of
outstanding shares shall be proportionately reduced, and the purchase price per
share shall be proportionately increased. Any fractional share resulting from
such adjustment shall be rounded up to the next whole share.

      (c) RECAPITALIZATIONS AND CORPORATE CHANGES. If the Company recapitalizes,
reclassifies its capital stock, or otherwise changes its capital structure (a
"recapitalization"), the number and class of shares of Common Stock covered by
an Option theretofore granted shall be adjusted so that such Option shall
thereafter cover the number and class of shares of stock and securities to which
the Holder would have been entitled pursuant to the terms of the
recapitalization if, immediately prior to the recapitalization, the Holder had
been the holder of record of the number of shares of Common Stock then covered
by such Option. If (i) the Company shall not be the surviving entity in any
merger or consolidation (or survives only as a subsidiary of an entity), (ii)
the Company sells, leases or exchanges or agrees to sell, lease or exchange all
or substantially all of its assets to any other person or entity, (iii) the
Company is to be dissolved and liquidated, (iv) any person or entity, including
a "group" as contemplated by Section 13(d)(3) of the 1934 Act, acquires or gains
ownership or control (including, without limitation, power to vote) of more than
50% of the outstanding shares of the Company's voting stock (based upon voting
power), or (v) as a result of or in connection with a contested election of
Directors, the persons who were Directors of the Company before such election
shall cease to constitute a majority of the Board (each such event is referred
to herein as a "Corporate Change"), no later than (x) ten days after the
approval by the stockholders of the Company of such merger, consolidation,
reorganization, sale, lease or exchange of assets or dissolution or such
election of Directors or (y) thirty days after a Corporate Change of the type
described in clause (iv), the Committee, acting in its sole discretion without
the consent or approval of any Holder, shall effect one or more of the following
alternatives, which alternatives may vary among individual Holders and which may
vary among Options held by any individual Holder: (1) accelerate the time at
which Options then outstanding may be exercised so that such Options may be
exercised in full for a limited period of time on or before a specified date
(before or after such Corporate Change) fixed by the Committee, after which
specified date all unexercised Options and all rights of Holders thereunder
shall terminate, (2) require the mandatory surrender to the Company by selected
Holders of some or all of the outstanding Options held by such Holders
(irrespective of whether such Options are then exercisable under the provisions
of the Plan) as of a date, before or after such Corporate Change, specified by
the Committee, in which event the Committee shall thereupon cancel such Options
and cause the Company to pay to each Holder an amount of cash per share equal to
the excess, if any, of the amount calculated in Subparagraph (d) below (the
"Change of Control Value") of the shares subject to such Option over the
exercise price(s) under such Options for such shares, (3) make such adjustments
to Options then outstanding as the Committee deems appropriate to reflect such
Corporate Change (provided, however, that the Committee may determine in its
sole discretion that no adjustment is necessary to Options then outstanding), or
(4) provide that the number and class of shares of Common Stock covered by an
Option theretofore granted shall be adjusted so that such Option shall
thereafter cover the number and class of shares of stock or other securities or
property (including, without limitation, cash) to which the Holder would have
been entitled pursuant to the terms of the agreement of merger, consolidation or
sale of assets and dissolution if, immediately prior to such merger,
consolidation or sale of assets and dissolution, the Holder had been the holder
of record of the number of shares of Common Stock then covered by such Option.

                                      -7-
<PAGE>   8

      (d) CHANGE OF CONTROL VALUE . For the purposes of clause (2) in
Subparagraph (c) above, the "Change of Control Value" shall equal the amount
determined in clause (i), (ii) or (iii), whichever is applicable, as follows:
(i) the per share price offered to stockholders of the Company in any such
merger, consolidation, sale of assets or dissolution transaction, (ii) the price
per share offered to stockholders of the Company in any tender offer or exchange
offer whereby a Corporate Change takes place, or (iii) if such Corporate Change
occurs other than pursuant to a tender or exchange offer, the fair market value
per share of the shares into which such Options being surrendered are
exercisable, as determined by the Committee as of the date determined by the
Committee to be the date of cancellation and surrender of such Options. In the
event that the consideration offered to stockholders of the Company in any
transaction described in this Subparagraph (d) or Subparagraph (c) above
consists of anything other than cash, the Committee shall determine the fair
cash equivalent of the portion of the consideration offered which is other than
cash.

      (e) OTHER CHANGES IN THE COMMON STOCK. In the event of changes in the
outstanding Common Stock by reason of recapitalizations, reorganizations,
mergers, consolidations, combinations, split-ups, split-offs, spin-offs,
exchanges or other relevant changes in capitalization or distributions to the
holders of Common Stock occurring after the date of the grant of any Award and
not otherwise provided for by this Paragraph IX, such Award and any agreement
evidencing such Award shall be subject to adjustment by the Committee at its
discretion as to the number and price of shares of Common Stock or other
consideration subject to such Award. In the event of any such change in the
outstanding Common Stock or distribution to the holders of Common Stock, the
aggregate number of shares available under the Plan and the maximum number of
shares that may be subject to Awards granted to any one individual may be
appropriately adjusted by the Committee, whose determination shall be
conclusive.

      (f) STOCKHOLDER ACTION. Any adjustment provided for in the above
Subparagraphs shall be subject to any required stockholder action.

      (g) NO ADJUSTMENTS UNLESS OTHERWISE PROVIDED. Except as hereinbefore
expressly provided, the issuance by the Company of shares of stock of any class
or securities convertible into shares of stock of any class, for cash, property,
labor or services, upon direct sale, upon the exercise of rights or warrants to
subscribe therefor, or upon conversion of shares or obligations of the Company
convertible into such shares or other securities, and in any case whether or not
for fair value, shall not affect, and no adjustment by reason thereof shall be
made with respect to, the number of shares of Common Stock subject to Awards
theretofore granted or the purchase price per share, if applicable.

                    X. AMENDMENT AND TERMINATION OF THE PLAN

      The Board in its discretion may terminate the Plan at any time with
respect to any shares of Common Stock for which Awards have not theretofore been
granted. The Board shall have the right to alter or amend the Plan or any part
thereof from time to time; provided that no change in any Award theretofore
granted may be made which would impair the rights of the Holder without the
consent of the Holder.

                                      -8-
<PAGE>   9

                                XI. MISCELLANEOUS

      (a) NO RIGHT TO AN AWARD. Neither the adoption of the Plan nor any action
of the Board or of the Committee shall be deemed to give an employee or
Consultant any right to be granted an Option, a right to a Restricted Stock
Award, or any other rights hereunder except as may be evidenced by an Option
Agreement or a Restricted Stock Agreement duly executed on behalf of the
Company, and then only to the extent and on the terms and conditions expressly
set forth therein. The Plan shall be unfunded. The Company shall not be required
to establish any special or separate fund or to make any other segregation of
funds or assets to assure the performance of its obligations under any Award.

      (b) NO EMPLOYMENT RIGHTS CONFERRED. Nothing contained in the Plan shall
(i) confer upon any employee or Consultant any right with respect to
continuation of employment or of a consulting or advisory relationship with the
Company or any subsidiary or (ii) interfere in any way with the right of the
Company or any subsidiary to terminate his or her employment or consulting or
advisory relationship at any time.

      (c) OTHER LAWS; WITHHOLDING. The Company shall not be obligated to issue
any Common Stock pursuant to any Award granted under the Plan at any time when
the shares covered by such Award have not been registered under the Securities
Act of 1933, as amended, and such other state and federal laws, rules and
regulations as the Company or the Committee deems applicable and, in the opinion
of legal counsel for the Company, there is no exemption from the registration
requirements of such laws, rules and regulations available for the issuance and
sale of such shares. No fractional shares of Common Stock shall be delivered,
nor shall any cash in lieu of fractional shares be paid. The Company shall have
the right to deduct in connection with all Awards any taxes required by law to
be withheld and to require any payments required to enable it to satisfy its
withholding obligations.

      (d) NO RESTRICTION ON CORPORATE ACTION. Nothing contained in the Plan
shall be construed to prevent the Company or any subsidiary from taking any
corporate action which is deemed by the Company or such subsidiary to be
appropriate or in its best interest, whether or not such action would have an
adverse effect on the Plan or any Award made under the Plan. No employee,
Consultant, Director, beneficiary or other person shall have any claim against
the Company or any subsidiary as a result of any such action.

      (e) RESTRICTIONS ON TRANSFER. An Award shall not be transferable otherwise
than (i) by will or the laws of descent and distribution, (ii) pursuant to a
qualified domestic relations order as defined by the Code or Title I of the
Employee Retirement Income Security Act of 1974, as amended, or the rules
thereunder, or (iii) with the consent of the Committee.

      (f) GOVERNING LAW. THE PLAN SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS
OF THE STATE OF DELAWARE.

                                      -9-

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