Document:

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                                                                    EXHIBIT 10.6

                                RETAIL AGREEMENT

     THIS RETAIL AGREEMENT (the "Agreement") is entered into as of December 31,
2000, by and between Reliant Energy, Incorporated ("REI"), a Texas corporation,
and Reliant Resources, Inc. ("Resources"), a Delaware corporation, as an
Ancillary Agreement pursuant to that certain Master Separation Agreement ("MSA")
between REI and Resources, dated as of December 31, 2000, as follows:

1.   Definitions. Unless otherwise defined herein, terms used herein which are
     defined in the MSA shall have the meanings ascribed to them in the MSA.

2.   Scope of Agreement. In order to implement the Business Separation Plan,
     effective as of January 1, 2001, all retail electric functions performed by
     REI shall become the responsibility of Resources, and personnel performing
     those functions shall become employees of a member of the Resources Group
     as of that date. This Agreement sets forth the understanding of the parties
     regarding the transfer of those functions and personnel and regarding
     certain transition services to be performed between REI and Resources to
     implement the transfer of those functions until the Choice Date as defined
     in the MSA but which is currently expected to be January 1, 2002.

3.   Customer Care Services.

     3.1  Customer Care Personnel. On or before January 1, 2001, REI shall
          terminate from its employment and Reliant Energy Customer Care LLC
          ("Customer Care") shall employ those personnel of REI (including
          management and contractor personnel) who are then engaged in providing
          the following services for the Reliant Energy HL&P Division ("HL&P")
          (and, in the case of remittance processing services, REI's regulated
          gas utility divisions Entex and Arkla):

     (a)      Call Center services,

     (b)      Credit and Collections,

     (c)      Remittance processing, and

     (d)      Revenue accounting,

     excepting only those certain individuals identified by REI to Resources as
     required to be retained by REI in order to prepare for the implementation
     similar functions on behalf of REI following Choice Date.

     3.2  Equipment. As of January 1, 2001, REI shall contribute to Customer
          Care the remittance processing equipment described on

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          Schedule 2.2, which will be used by Customer Care to provide services
          to the REI Group.

          In addition, REI does hereby grant to Customer Care the right and
          license to use its remaining remittance processing machine and other
          equipment of REI currently utilized in providing customer care
          services but which is not sold hereunder until such time as Customer
          Care ceases to provide services under this Agreement to REI with
          respect to retail electric customers. Customer Care shall utilize this
          machine as a backup for its processing, and shall be responsible for
          operation and maintenance costs associated with the machine until its
          rights to use such machine terminate.

          Such right and license is granted to Customer Care on a no-cost basis,
          AS IS AND WITHOUT WARRANTY OR REPRESENTATION AND WITH ALL FAULTS.

     3.3  Office Space. REI will lease to Customer Care approximately 150,000
          square feet of office and equipment space currently occupied in space
          owned or leased by REI in order to perform services under this
          Agreement for the duration of services provided by Customer Care.
          Office services and other shared service support functions will be
          provided by REI to Customer Care pursuant to the terms of the
          Transition Services Agreement executed between REI and Resources
          contemporaneously with the MSA (the "Transition Services Agreement").

     3.4  Other Services by REI. REI will continue to provide services for
          printing retail electric bills and inserting them for mailing. These
          services will be provided by REI personnel pursuant to the Transition
          Services Agreement. Following Choice Date, REI will continue to
          provide these services pursuant to the terms of the Transition
          Services Agreement to the member of the Resources Group succeeding to
          its retail electric customers.

     3.5  Services Provided by Customer Care to HL&P. During the period from
          January 1, 2001 until Choice Date, Customer Care shall provide the
          services traditionally provided by the personnel transferred pursuant
          to Section 3.1 for REI and its regulated electric and gas distribution
          utility operations, including providing call center, credit and
          collections and revenue accounting services for HL&P and receiving and
          processing payments for HL&P, Arkla and Entex. Such services shall be
          provided with personnel hired by Customer Care from HL&P and other
          personnel hired or otherwise engaged by Customer Care to provide such
          services. Customer Care shall provide no services to other members of
          the Resources Group (except processing payments under the General Land
          Office contract for Reliant Energy Solutions, Inc. and with respect to
          customers purchasing from members of the Resources

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          Group under the retail pilot program provided for in the Utilities
          Code) or to third parties during the period services are provided
          under this section. The parties shall develop a mutually agreeable
          service level agreement regarding such services which will provide for
          levels of service generally consistent with those historically
          provided by HL&P and which, when developed, shall be attached hereto
          as Schedule 3.5. The parties recognize that Resources will need to
          train Customer Care personnel on its new systems that will be in place
          as of Choice Date. To that end, Resources shall be free to rotate its
          personnel into training after September 2001 provided that (i)
          Resources substitutes appropriate contractor personnel to ensure that
          customer service does not decline during the training period and (ii)
          the costs to HL&P during the training are not greater than costs would
          have been had the training rotations not been made.

     3.6  Termination of Services. Services provided by Customer Care shall
          terminate at Choice Date, and Resources shall be free to provide these
          services to other business units of the Resources Group or to third
          parties.

     3.7  Changes to Services. Customer Care agrees to add or delete specific
          services upon reasonable request from a member of the REI Group so
          long as they are generally within the scope of the services provided
          under this Section 3, provided that the costs of any increase or
          decrease in personnel or equipment required to implement such change
          are borne by the member of the REI Group requesting them.

     3.8  Code of Conduct and Reporting Requirements. During the period Customer
          Care provides services related to retail electric customers of REI,
          all personnel of Customer Care shall continue to observe the Code of
          Conduct adopted for HL&P personnel, and management personnel of
          Customer Care shall report for operational and organizational purposes
          only to an Executive Vice President of Resources and not to any
          personnel of Resources who are engaged in providing unregulated retail
          electric service for any business in the Resources Group.

     3.9  Charges for Services. For the services provided by Customer Care,
          members of the REI Group shall reimburse Customer Care for the fully
          allocated direct and indirect costs incurred by Customer Care to
          provide the services, and shall reimburse Customer Care for
          out-of-pocket expenditures to third parties incurred to perform
          services. Charges will be made on a basis that allocates such costs on
          a fair nondiscriminatory basis. It is understood that all salary and
          salary-related costs attributable to the personnel transferred to
          Customer Care from HL&P shall be borne by the REI Group for services
          prior to Choice Date.

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     3.10 Payment Terms. Charges and collections for services rendered pursuant
          to this Agreement shall continue to be made using the methodology and
          procedures for intracompany billing in use as of the date of this
          Agreement unless and until either party elects to discontinue such
          procedures, in which case Customer Care shall thereafter bill members
          of the REI Group receiving the services monthly for all charges
          pursuant to this Agreement and such members receiving the services
          shall pay Customer Care for all services within thirty days after
          receipt of an invoice therefor. Charges shall be supported by
          reasonable documentation (which may be maintained in electronic form),
          consistent with past practices. Late payments shall bear interest at
          the lesser of the prime rate announced by The Chase Manhattan Bank and
          in effect from time to time plus two percent (2%) per annum or the
          maximum non-usurious rate of interest permitted by applicable law.

     3.11 Error Correction; True-ups; Accounting. Customer Care shall make
          adjustments to charges as required to reflect the discovery of errors
          or omissions in charges. Customer Care and REI shall conduct an annual
          true up process to adjust charges based on a reconciliation of
          differences in budgeted usage and costs with actual experience. It is
          the intent of the parties that such true-up process will be conducted
          using substantially the same process, procedures and methods of review
          as have been heretofore in effect among members of the REI Group.
          Services under this Agreement and charges therefor shall be subject to
          the provisions of Section 10.5 of the Separation Agreement (Audit
          Rights).

     3.12 Severance Costs. Upon the termination of services provided by Customer
          Care, REI will reimburse Resources for the actual costs of severance
          incurred under a previously approved severance plan for personnel (i)
          who were hired by Customer Care from REI pursuant to this Agreement,
          (ii) who are terminated by Resources within 60 days after Customer
          Care terminates its services for REI (other than employees who are
          terminated during such period due to death, disability or cause) and
          (iii) who are not employed by a member of the REI Group within 30 days
          after their separation from the Resources Group. No severance costs
          shall be payable with respect to any personnel hired by any member of
          the Resources Group from REI other than personnel hired by Customer
          Care to perform services under this Section 3 of this Agreement. Nor
          shall REI be responsible for severance costs related to personnel
          initially hired by Customer Care from REI but who subsequently are
          transferred to employment by another member of the Resources Group
          prior to their termination from Resources.

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     3.13 Indemnification. REI agrees to defend, indemnify and hold Resources
          and Customer Care and their respective personnel harmless against
          liability on claims made by the personnel for whom REI has agreed to
          reimburse Resources for severance (the "Personnel") to the extent
          claims relate to: (i) the severance of the Personnel and their
          severance payments, (ii) employment of the Personnel with REI prior to
          their transfer to Customer Care (including their selection for
          transfer to Customer Care), (iii) policies and personnel of REI and
          (iv) benefits provided to the Personnel with respect to their
          employment with REI, including in such indemnity, indemnification
          against employment grievances, equal employment or sexual harassment
          charges or other employment related claims of the Personnel. As a
          condition for REI providing this indemnity, Resources and Customer
          Care agree to cooperate fully with REI on the defense of such claims
          and to provide REI with all information available to them and, to the
          extent within their control, witnesses necessary with respect to the
          defense of such claims. The compromise or settlement of any claims
          against Resources or Customer Care for which indemnity is provided by
          REI shall be the sole responsibility of REI, provided that any such
          compromise or settlement, unless Resources shall otherwise agree,
          shall include a full and unconditional release of Resources and
          Customer Care from liability and shall not impose injunctive relief or
          require admissions of fault or liability from Resources or Customer
          Care. This indemnity shall not extend to, and REI will not indemnify
          Resources against, claims related to employment grievances, equal
          employment or sexual harassment charges or other employment related
          claims made by the Personnel with respect to policies or conduct of
          Resources during the period the Personnel are employed by Customer
          Care; provided, however, that REI will on request of Resources assume
          the defense of Resources against any such claims which are asserted in
          conjunction with claims for which REI has agreed to indemnify
          Resources. Resources shall be responsible for and shall control the
          compromise or settlement of claims for which REI has not indemnified
          Resources.

4.   Services After Choice Date. As of the Choice Date and thereafter, the
     electric retail customers of Reliant Energy HL&P will become customers of
     an unregulated Retail Electric Provider pursuant to the Utilities Code, and
     a member of the Resources Group which qualifies as a Retail Electric
     Provider will succeed to those customers who do not elect an alternative
     supplier. For those customers, all customer care functions will be assumed
     by a member of the Resources Group. Following Choice Date, Customer Care
     will provide no further services for REI to REI's electric customers, and
     REI will provide customer care functions related to its electric
     transmission and distribution functions from its own resources.

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     4.1  Services to Members of REI Group. Following Choice Date, Reliant
          Energy Retail Services LLC (Retail Services), or another member of the
          Resources Group providing customer services will, upon request,
          provide remittance processing services to the gas utilities which are
          members of the REI Group. Compensation for these services will be on
          the same basis as compensation paid to Customer Care for similar
          services prior to Choice Date. The members of the REI Group may
          terminate such services at any time upon ninety (90) days prior
          written notice, and in any event such services shall terminate as of
          January 1, 2004, unless continued under a separate agreement between
          the parties.

5.   Limitation of Liability. Neither Resources nor Customer Care shall have any
     liability to any member of the REI Group with respect to its furnishing any
     of the services hereunder except for liabilities arising out of or
     resulting from the gross negligence or willful misconduct of Resources or
     any member of the Resources Group. Resources will indemnify, defend and
     hold harmless each member of the REI Group receiving services under this
     Agreement in respect of all such liabilities arising out of or resulting
     from such gross negligence or willful misconduct. Such indemnification
     obligation shall be a Liability of Resources for purposes of the MSA and
     the provisions of Article III of the MSA with respect to indemnification
     shall govern with respect thereto. IN NO EVENT SHALL RESOURCES OR ANY
     MEMBER OF THE RESOURCES GROUP HAVE ANY LIABILITY UNDER THIS AGREEMENT OR
     OTHERWISE ARISING OUT OF OR RESULTING FROM THE PERFORMANCE OF, OR THE
     FAILURE TO PERFORM, SERVICES FOR LOSS OF ANTICIPATED PROFITS BY REASON OF
     ANY BUSINESS INTERRUPTION, FACILITY SHUTDOWN OR NON-OPERATION, LOSS OF DATA
     OR OTHERWISE OR FOR ANY INCIDENTAL, INDIRECT, SPECIAL OR CONSEQUENTIAL
     DAMAGES, WHETHER OR NOT CAUSED BY OR RESULTING FROM NEGLIGENCE, INCLUDING
     GROSS NEGLIGENCE, AND WHETHER OR NOT RESOURCES OR ANY MEMBER OF THE
     RESOURCES GROUP WAS INFORMED OF THE POSSIBILITY OF THE EXISTENCE OF SUCH
     DAMAGES. IN NO EVENT SHALL RESOURCES OR ANY MEMBER OF THE RESOURCES GROUP
     HAVE ANY LIABILITY HEREUNDER OR OTHERWISE ARISING OUT OF OR RESULTING FROM
     THE PERFORMANCE OF, OR FAILURE TO PERFORM, SERVICES IN AN AGGREGATE AMOUNT
     EXCEEDING THE TOTAL CHARGES PAID OR PAYABLE TO RESOURCES HEREUNDER.

     REI shall indemnify and hold harmless Customer Care in respect of all
     Liabilities arising out of or resulting from Customer Care's furnishing or
     failing to furnish the services provided for in this Agreement, other than
     Liabilities arising out of or resulting from the gross negligence or
     willful misconduct of Customer Care or any other member of the Resources
     Group. The provisions of this indemnity shall apply only to losses which
     relate directly to the provision of services hereunder. Such
     indemnification obligation shall be a Liability of REI for purposes of the
     Separation Agreement and the provisions of Article III of the Separation
     Agreement with respect to indemnification shall govern with respect
     thereto. IN NO EVENT SHALL REI OR ANY MEMBER OF THE REI GROUP HAVE

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     ANY LIABILITY UNDER THIS AGREEMENT OR OTHERWISE ARISING OUT OF OR RESULTING
     FROM THE PERFORMANCE OF, OR THE FAILURE TO PERFORM, SERVICES FOR LOSS OF
     ANTICIPATED PROFITS BY REASON OF ANY BUSINESS INTERRUPTION, FACILITY
     SHUTDOWN OR NON-OPERATION, LOSS OF DATA OR OTHERWISE OR FOR ANY INCIDENTAL,
     INDIRECT, SPECIAL OR CONSEQUENTIAL DAMAGES, WHETHER OR NOT CAUSED BY OR
     RESULTING FROM NEGLIGENCE, INCLUDING GROSS NEGLIGENCE, OR BREACH OF
     OBLIGATIONS HEREUNDER AND WHETHER OR NOT REI OR ANY MEMBER OF THE REI GROUP
     WAS INFORMED OF THE POSSIBILITY OF THE EXISTENCE OF SUCH DAMAGES.

6.   Taxes. (a)(a) Each member of the REI Group receiving services under this
     Agreement shall bear all sales and use taxes, duties and other similar
     charges (and any related interest and penalties), imposed as a result of
     their receipt of services under this Agreement.

          (b) Sales Tax Liability and Payment. Notwithstanding Section 6(a),
     each member of the REI Group that receives services under this Agreement
     shall be liable for and will indemnify and hold harmless each member of the
     Resources Group from all sales, use and similar taxes (plus any penalties,
     fines or interest thereon) (collectively, "Sales Taxes") assessed, levied
     or imposed by any governmental or taxing authority on the providing of
     services by a member of the Resources Group to a member of the REI Group.
     Resources shall collect from REI any Sales Tax that is due on the service
     it provides to a member of the REI Group and shall pay such Sales Tax so
     collected to the appropriate governmental or taxing authority.

7.   Responsibility for Errors; Delays. Customer Care's sole responsibility to
     the member of the REI Group receiving the services:

          (i) for errors or omissions in services, shall be to furnish correct
     information and/or adjustment in the services, at no additional cost or
     expense to the receiving company; provided, the receiving company must
     promptly advise Customer Care of any such error or omission of which it
     becomes aware after having used reasonable efforts to detect any such
     errors or omissions in accordance with the standard of care provided for in
     this Agreement; and provided, further, that the responsibility to furnish
     correct information or an adjustment of services at no additional cost or
     expense to the receiving company shall not be construed to require Customer
     Care to make any payment or incur any Liability for which it is not
     responsible, or with respect to which it is provided indemnity, under
     Section 5; and

          (ii) for failure to deliver any service because of Impracticability,
     shall be to use commercially reasonable efforts, subject to the next
     sentence, to make the services available and/or to resume performing the
     services as promptly as reasonably practicable. Customer Care shall not be
     required to provide any service to the extent the performance of such
     service becomes "Impracticable" as a result of a cause or causes outside
     the reasonable control of Customer Care including

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     unfeasible technological requirements, or to the extent the performance of
     such services would require Customer Care to violate any applicable laws,
     rules or regulations or would result in the breach of any software license
     or other applicable contract in effect on the date of this Agreement.

8.   Dispute Resolution. Any dispute arising under this Agreement among REI,
     Resources or a member of their respective groups shall be exclusively
     resolved under the dispute resolution provisions of Article IX of the MSA,
     and each party, for itself and all its Affiliates, hereby waives any right
     to seek judicial resolution of such disputes except for enforcement of an
     arbitration award made in accordance with such dispute resolution
     provisions.

9.   Miscellaneous Provisions.

     9.1  Amendments. This Agreement shall not be supplemented, amended or
          modified in any manner whatsoever (including by course of dealing or
          of performance or usage of trade) except in writing signed by the
          parties.

     9.2  Successors and Assignments. This Agreement shall be binding upon and
          inure to the benefit of the parties and their respective successors
          and permitted assigns. No party shall assign this Agreement or any
          rights herein without the prior written consent of the other party,
          which may be withheld for any or no reason.

     9.3  Books and Records and Audit Rights. Maintenance of books and records
          relating to this Agreement and audit rights shall be as prescribed in
          the MSA.

     9.4  Notices. Any notice, demand, offer, request or other communication
          required or permitted to be given by either party pursuant to the
          terms of this Agreement shall be in writing and shall be deemed
          effectively given the earlier of (i) when received, (ii) when
          delivered personally, (iii) one (1) business day after being delivered
          by facsimile (with receipt of appropriate confirmation), (iv) one (1)
          business day after being deposited with an overnight courier service
          or (v) four (4) days after being deposited in the U.S. mail, First
          Class with postage prepaid, and addressed to the attention of the
          party's General Counsel at the address of its principal executive
          office or such other address as a party may request by notifying the
          other in writing.

     9.5  Governing Law. This Agreement shall be governed by and construed in
          accordance with the laws of the State of Texas.

     9.6  Headings. The various headings used in this Agreement are for
          convenience only and are not to be used in interpreting the text of
          the Articles or Sections in which they appear or to which they relate.

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     9.7  Severability. Wherever possible, each provision of this Agreement
          shall be interpreted in such a manner as to be effective and valid
          under applicable law. If any portion of this Agreement is declared
          invalid for any reason, such declaration shall have no effect upon the
          remaining portions of this Agreement, which shall continue in full
          force and effect as if this Agreement had been executed with the
          invalid portions thereof deleted.

     9.8  Counterparts. This Agreement may be executed in two or more
          counterparts, each of which shall be deemed an original, and all of
          which shall constitute one and the same instrument.

     9.9  Rights of the Parties. Nothing expressed or implied in this Agreement
          is intended or will be construed to confer upon or give any person or
          entity, other than the Parties and their respective Subsidiaries and
          Affiliates, as the case may be, any rights or remedies under or by
          reason of this Agreement or any transaction contemplated thereby.

     9.10 Waiver of Rights. The waiver by either party of any of its rights or
          remedies afforded hereunder or at law is without prejudice and shall
          not operate to waive any other rights or remedies which that party
          shall have available to it, nor shall such waiver operate to waive the
          party's rights to any remedies due to a future breach, whether of a
          similar or different nature. The failure or delay of a party in
          exercising any rights granted to it hereunder shall not constitute a
          waiver of any such right and that party may exercise that right at any
          time. Any single or partial exercise of any particular right by a
          party shall exhaust the same or constitute a waiver of any other
          right.

     9.11 Entire Agreement. All understandings, representations, warranties and
          agreements, if any, heretofore existing between the parties regarding
          the subject matter hereof are merged into this Agreement, which fully
          and completely express the agreement of the parties with respect to
          the subject matter hereof.

     9.12 No Sale, Transfer, Assignment. Neither REI nor any member of the REI
          Group may sell, transfer, assign or otherwise use the services
          provided hereunder, in whole or in part, for the benefit of any Person
          other than a member of the REI Group.

     9.13 Resolution of Disputes. If a dispute, claim or controversy results
          from or arises out of or in connection with this Agreement or the
          performance of, or failure to perform, the services required to be
          provided hereunder, the parties agree to use the procedures set forth
          in Article IX of the MSA, in lieu of other available remedies, to
          resolve the same.

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     IN WITNESS WHEREOF, the parties have executed this Agreement to be
effective as of the date first written above.

                                       RELIANT ENERGY, INCORPORATED

                                       By  /s/ David M. McClanahan
                                           ------------------------------
                                              David M. McClanahan
                                              Vice Chairman

                                       RELIANT RESOURCES, INC.

                                       By  /s/ R. S. Letbetter
                                           ------------------------------
                                              R. S. Letbetter
                                              Chairman, President and
                                              Chief Executive Officer

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                                                                   EXHIBIT 10.7

                          REGISTRATION RIGHTS AGREEMENT

            REGISTRATION RIGHTS AGREEMENT (this "Agreement"), dated as of
December 31, 2000, between Reliant Energy, Incorporated, a Texas corporation
("REI"), and Reliant Resources, Inc., a Delaware corporation (the "Company").

            WHEREAS, REI is the owner of all of the shares of common stock, par
value $.001 per share ("Common Stock"), of the Company outstanding on the date
of this Agreement.

            WHEREAS, as provided in Master Separation Agreement dated the date
hereof between REI and the Company (the "Separation Agreement"), the Company,
with the consent of REI, has determined to offer to the public (the "Public
Offering") shares of Common Stock.

            WHEREAS, in partial consideration for the consent of REI to the
Public Offering by the Company, the Company has, among other things, agreed to
grant to REI certain registration rights applicable to Registrable Securities
(as defined below) held by REI.

            WHEREAS, the parties hereto desire to enter into this Agreement to
set forth the terms of such registration rights.

            NOW, THEREFORE, upon the premises and based on the mutual promises
herein contained, and for other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the parties agree as follows:

         1. Certain Definitions. As used in this Agreement, the following
initially capitalized terms shall have the following meanings:

            (a) "Affiliate" means, with respect to any person, any other person
who, directly or indirectly, is in control of, is controlled by or is under
common control with the former person; and "control" (including the terms
"controlling," "controlled by," and "under common control with") means the
possession, direct or indirect, of the power to direct or cause the direction of
the management and policies of a person, whether through the ownership of voting
securities, by contract or otherwise.

            (b) "Company Securities" has the meaning set forth in Section 3
hereof.

            (c) "Exchangeable Securities" has the meaning set forth in Section 6
of this Agreement.

            (d) "Fair Market Value" means, with respect to any security, (i) if
the security is listed on a national securities exchange or authorized for
quotation on a national market quotation system, the closing price, regular way,
of the security on such exchange or quotation system, as the case may be, or if
no such reported sale of the security shall have occurred on such date, on the
next preceding date on which there was such a reported sale, or (ii) if the
security is

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not listed for trading on a national securities exchange or authorized for
quotation on a national market quotation system, the average of the closing bid
and asked prices as reported by the National Association of Securities Dealers
Automated Quotation System or such other reputable entity or system engaged in
the regular reporting of securities prices and on which such prices for such
security are reported or, if no such prices shall have been reported for such
date, on the next preceding date for which such prices were so reported, or
(iii) if the security is not publicly traded, the fair market value of such
security as determined by a nationally recognized investment banking or
appraisal firm mutually acceptable to the Company and the Holders, the fair
market value of whose Registrable Securities is to be determined.

            (e) "Holder" means REI or any Permitted Transferee.

            (f) "Initiating Holders" has the meaning set forth in Section 3 of
this Agreement.

            (g) "Other Holders" has the meaning set forth in Section 3 hereof.

            (h) "Other Securities" has the meaning set forth in Section 3
hereof.

            (i) "Other Voting Securities" means any options, rights, warrants or
other securities convertible into or exchangeable for Voting Stock of the
Company.

            (j) "Permitted Transferee" has the meaning set forth in Section 11
hereof.

            (k) "Person" means any individual, partnership, corporation, limited
liability company, business trust, joint stock company, trust, unincorporated
association, joint venture, or other entity of whatever nature.

            (l) "Registrable After-Acquired Securities" means any securities of
the Company acquired by REI (or any permitted transferee).

            (m) "Registrable Securities" means (i) all shares of Common Stock
(as presently constituted) owned on the date hereof by REI, (ii) all Registrable
After-Acquired Securities, (iii) any stock or other securities into which or for
which such Common Stock or Registrable After-Acquired Securities may hereafter
be changed, converted or exchanged, and (iv) any other securities issued to
holders of such Common Stock or Registrable After-Acquired Securities (or such
stock or other securities into which or for which such Common Stock or
Registrable After-Acquired Securities are so changed, converted or exchanged)
upon any reclassification, share combination, share subdivision, share dividend,
merger, consolidation or similar transaction or event, provided that any such
securities shall cease to be Registrable Securities when such securities are
sold in any manner to a person who is not a Permitted Transferee.

            (n) "Registration Expenses" means all out-of-pocket expenses
incurred in connection with any registration of Registrable Securities pursuant
to this Agreement including, without limitation, the following; (i) SEC filing
fees; (ii) the fees, disbursements and expenses of the Company's counsel(s) and
accountants in connection with the registration of the Registrable Securities to
be disposed of; (iii) all expenses in connection with the preparation, printing
and

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filing of the registration statement, any preliminary prospectus or final
prospectus and amendments and supplements thereto and the mailing and delivering
of copies thereof to any Holders, underwriters and dealers and all expenses
incidental to delivery of the Registrable Securities; (iv) the cost of printing
or producing any underwriting agreement, agreement among underwriters, agreement
between syndicates, selling agreement, blue sky or legal investment memorandum
or other document in connection with the offering, sale or delivery of the
Registrable Securities to be disposed of; (v) all expenses in connection with
the qualification of the Registrable Securities to be disposed of for offering
and sale under state securities laws, including the fees and disbursements of
counsel for the underwriters in connection with such qualification and the
preparation of any blue sky and legal investments surveys; (vi) the filing fees
incident to securing any required review by the National Association of
Securities Dealers, Inc. of the terms of the sale of the Registrable Securities
to be disposed of; (vii) transfer agents', depositaries' and registrars' fees
and the fees of any other agent appointed in connection with such offering;
(viii) all security engraving and security printing expenses, (ix) all fees and
expenses payable in connection with the listing of the Registrable Securities on
any securities exchange or inter-dealer quotation system; and (x) any one-time
payment for directors and officers insurance directly related to such offering,
provided the insurer provides a separate statement for such payment.

            (o) "Rule 144" means Rule 144 promulgated under the Securities Act,
or any successor rule to similar effect.

            (p) "SEC" means the United States Securities and Exchange
Commission.

            (q) "Securities Act" means the Securities Act of 1933, as amended,
or any successor statute.

            (r) "Selling Expenses" means all underwriting discounts and
commissions, selling concessions and stock transfer taxes applicable to the sale
by the Holders of Registrable Securities pursuant to this Agreement and all fees
and disbursements of any legal counsel, investment banker, accountant or other
professional advisor retained by a Holder.

            (s) "Selling Holder" has the meaning set forth in Section 5 hereof.

            (t) "Transactional Deferral" has the meaning set forth in Section 2
of this Agreement.

            (u) "Voting Stock" means shares of the Company's capital stock
having the power under ordinary circumstances (and not merely upon the happening
of a contingency) to vote in the election of directors of the Company.

         2. Demand Registration.

            (a) At any time prior to such time as the rights under this Section
2 terminate with respect to a Holder as provided in Section 2(e) hereof, upon
written notice from such Holder in the manner set forth in Section 12(h) hereof
requesting that the Company effect the registration under the Securities Act of
any or all of the Registrable Securities held by such Holder, which notice shall
specify the intended method or methods of disposition of such

                                      -3-
<PAGE>   4

Registrable Securities, the Company shall use its best efforts to effect, in the
manner set forth in Section 5, the registration under the Securities Act of such
Registrable Securities for disposition in accordance with the intended method or
methods of disposition stated in such request (including in an offering on a
delayed or continuous basis under Rule 415 (or any successor rule of similar
effect) promulgated under the Securities Act), provided that:

                (i) if, within 5 business days of receipt of a registration
            request pursuant to this Section 2(a), the Holder or Holders making
            such request are advised in writing that the Company has in good
            faith commenced the preparation of a registration statement for an
            underwritten public offering prior to receipt of the notice
            requesting registration pursuant to this Section 2(a) and the
            managing underwriter of the proposed offering has determined that in
            such firm's good faith opinion, a registration at the time and on
            the terms requested would materially and adversely affect the
            offering that is contemplated by the Company, the Company shall not
            be required to effect a registration pursuant to this Section 2(a)
            (a "Transactional Deferral") until the earliest of (A) the
            abandonment of such offering by the Company, (B) 60 days after
            receipt by the Holder or Holders requesting registration of the
            managing underwriter's written opinion referred to above in this
            clause (i), unless the registration statement for such offering has
            become effective and such offering has commenced on or prior to such
            60th day, and (C) if the registration statement for such offering
            has become effective and such offering has commenced on or prior to
            such 60th day, the day on which the restrictions on the Holders
            contained in Section 10 hereof lapse, provided, however, that the
            Company shall not be permitted to delay a requested registration in
            reliance on this clause (i) more than once in any 12-month period;

                (ii) if, while a registration request is pending pursuant to
            this Section 2(a), the Company determines, following consultation
            with and receiving advice from its legal counsel, that the filing of
            a registration statement would require the disclosure of material
            information that the Company has a bona fide business purpose for
            preserving as confidential and the disclosure of which the Company
            determines reasonably and in good faith would have a material
            adverse effect on the Company, the Company shall not be required to
            effect a registration pursuant to this Section 2(a) until the
            earlier of (A) the date upon which such material information is
            otherwise disclosed to the public or ceases to be material and (B)
            90 days after the Company makes such determination;

                (iii) the Company shall not be obligated to file a registration
            statement relating to a registration request pursuant to this
            Section 2: (A) prior to 180 days following the closing of the Public
            Offering, (B) within a period of 90 calendar days after the
            effective date of any other registration statement of the Company
            demanded pursuant to this Section 2(a), or (C) if such registration
            request is for a number of Registrable Securities having a Fair
            Market Value on the business day immediately preceding the date of
            such registration request of less than $100,000,000; and

                                      -4-
<PAGE>   5

                (iv) the Company shall not be obligated to file a registration
            statement relating to a registration request pursuant to this
            Section 2: (A) in the case of a registration request by REI or any
            Permitted Transferee that has acquired, in the transaction in which
            it became a Permitted Transferee, at least a majority of the then
            issued and outstanding Voting Stock, on more than three occasions
            after such time as REI or such Permitted Transferee, as the case may
            be, owns less than a majority of the voting power of the outstanding
            capital stock of the Company (it being acknowledged that so long as
            REI or such Permitted Transferee owns a majority of the voting power
            of the outstanding capital stock of the Company, there shall be no
            limit to the number of occasions on which REI or such Permitted
            Transferee may exercise such rights), or (B) in the case of a Holder
            other than REI or a Permitted Transferee described in clause (A)
            above, on more than the number of occasions permitted such Holder in
            accordance with Section 11 hereof.

            (b) Notwithstanding any other provision of this Agreement to the
contrary:

                (i) a registration requested by a Holder pursuant to this
            Section 2 shall not be deemed to have been effected (and, therefore,
            not requested for purposes of Section 2(a)), (A) unless the
            registration statement filed in connection therewith has become
            effective, (B) if after such registration statement has become
            effective, it becomes subject to any stop order, or there is issued
            an injunction or other order or decree of the SEC or other
            governmental agency or court for any reason other than a
            misrepresentation or an omission by such Holder, which injunction,
            order or decree prohibits or otherwise materially and adversely
            affects the offer and sale of the Registrable Securities so
            registered prior to the completion of the distribution thereof in
            accordance with the plan of distribution set forth in the
            registration statement or (C) if the conditions to closing specified
            in the purchase agreement or underwriting agreement entered into in
            connection with such registration are not satisfied by reason of
            some act, misrepresentation or omission by the Company and are not
            waived by the purchasers or underwriters; and

               (ii) nothing herein shall modify a Holder's obligation to pay
            Registration Expenses, in accordance with Section 4 hereof, that are
            incurred in connection with any withdrawn registration requested by
            such Holder.

            (c) In the event that any registration pursuant to this Section 2
shall involve, in whole or in part, an underwritten offering, Holders owning at
least 50.1% of the Fair Market Value of the Registrable Securities to be
registered in connection with such offering shall have the right to designate an
underwriter reasonably satisfactory to the Company as the lead managing
underwriter of such underwritten offering, and the Company shall have the right
to designate one underwriter reasonably satisfactory to such Holders as a
co-manager of such underwritten offering.

            (d) The Company shall have the right to cause the registration of
additional securities for sale for the account of any person (including the
Company) in any registration of Registrable Securities requested by any Holder
pursuant to Section 2(a) only to the extent the

                                      -5-
<PAGE>   6

managing underwriter or other independent marketing agent for such offering (if
any) determines that, in its opinion, the additional securities proposed to be
sold will not materially and adversely affect the offering and sale of the
Registrable Securities to be registered in accordance with the intended method
or methods of disposition then contemplated by such Holder. The rights of a
Holder to cause the registration of additional Registrable Securities held by
such Holder in any registration of Registrable Securities requested by another
Holder pursuant to Section 2(a) shall be governed by the agreement of the
Holders with respect thereto as provided in Section 11(a).

            (e) The Company shall not be obligated to file a registration
statement relating to a registration request by a Holder pursuant to this
Section 2 from and after such time as such Holder first owns Registrable
Securities representing (assuming for this purpose the conversion, exchange or
exercise of all Registrable Securities then owned by such Holder that are
convertible into or exercisable or exchangeable for Voting Stock of the Company)
less than 10% of the then issued and outstanding Voting Stock of the Company.

         3. Piggyback Registration. If the Company at any time proposes to
register any of its Common Stock or any other of its securities (collectively,
"Other Securities") under the Securities Act, whether or not for sale for its
own account, in a manner which would permit registration of Registrable
Securities for sale for cash to the public under the Securities Act, it will at
such time give prompt written notice to each Holder of its intention to do so at
least 10 business days prior to the anticipated filing date of the registration
statement relating to such registration. Such notice shall offer each such
Holder the opportunity to include in such registration statement such number of
Registrable Securities as each such Holder may request. Upon the written request
of any such Holder made within 5 business days after the receipt of the
Company's notice (which request shall specify the number of Registrable
Securities intended to be disposed of and the intended method of disposition
thereof), the Company shall effect, in the manner set forth in Section 5, in
connection with the registration of the Other Securities, the registration under
the Securities Act of all Registrable Securities which the Company has been so
requested to register, to the extent required to permit the disposition (in
accordance with such intended methods thereof) of the Registrable Securities so
requested to be registered, provided that:

            (a) if at any time after giving written notice of its intention to
register any securities and prior to the effective date of such registration,
the Company shall determine for any reason not to register or to delay
registration of such securities, the Company may, at its election, give written
notice of such determination to the Holders and, thereupon, (A) in the case of a
determination not to register, the Company shall be relieved of its obligation
to register any Registrable Securities in connection with such registration and
(B) in the case of a determination to delay such registration, the Company shall
be permitted to delay registration of any Registrable Securities requested to be
included in such registration for the same period as the delay in registering
such other securities, but, in either such case, without prejudice to the rights
of the Holders under Section 2;

            (b) (i) if the registration referred to in the first sentence of
this Section 3 is to be a registration in connection with an underwritten
offering on behalf of either the Company or holders of securities (other than
Registrable Securities) of the Company ("Other Holders"), and the managing
underwriter for such offering advises the Company in writing that, in such
firm's

                                      -6-
<PAGE>   7

opinion, such offering would be materially and adversely affected by the
inclusion therein of Registrable Securities requested to be included therein
because such Registrable Securities are not of the same type, class or series as
the securities to be offered and sold in such offering on behalf of the Company
and/or the Other Holders, the Company may exclude all such Registrable
Securities from such offering provided that the Holder is permitted to
substitute for the Registrable Securities so excluded an equal number of
Registrable Securities of the same type, class or series as those being
registered by the Company or the Other Holders, if and to the extent such Holder
owns Registrable Securities of such type, class or series or can acquire
Registrable Securities of such type, class or series upon exercise or conversion
of other Registrable Securities; and

            (ii) if the registration referred to in the first sentence of this
Section 3 is to be a registration in connection with an underwritten primary
offering on behalf of the Company, and the managing underwriter for such
offering advises the Company in writing that, in such firm's opinion, such
offering would be materially and adversely affected by the inclusion therein of
the Registrable Securities requested to be included therein because the number
or principal amount of such Registrable Securities, considered together with the
number or principal amount of securities proposed to be offered by the Company,
exceeds the aggregate number or principal amount of securities which, in such
firm's opinion, can be sold in such offering without materially and adversely
affecting the offering, the Company shall include in such registration: (1)
first, all securities the Company proposes to sell for its own account ("Company
Securities") and (2) second, the number or principal amount of Registrable
Securities and securities, if any, requested to be included therein by Other
Holders in excess of the number or principal amount of Company Securities which,
in the opinion of such underwriter, can be so sold without materially and
adversely affecting such offering (allocated pro rata among the Holders and the
Other Holders on the basis of the number of securities (including Registrable
Securities) requested to be included therein by each Holder and each such Other
Holder); and

            (iii) if the registration referred to in the first sentence of this
Section 3 is to be a registration in connection with an underwritten secondary
offering on behalf of Other Holders made pursuant to demand registration rights
granted by the Company to such Other Holders (the "Initiating Holders"), and the
managing underwriter for such offering advises the Company in writing that, in
such firm's opinion, such offering would be materially and adversely affected by
the inclusion therein of the Registrable Securities requested to be included
therein because the number or principal amount of such Registrable Securities,
considered together with the number or principal amount of securities proposed
to be offered by the Initiating Holders, exceeds the aggregate number or
principal amount of securities which, in such firm's opinion, can be sold in
such offering without materially and adversely affecting the offering, the
Company shall include in such registration; (1) first, to the extent the
registration rights granted to an Initiating Holder permit it to exclude other
securities from its registration on substantially the same basis as that set
forth in the first sentence of Section 2(d) hereof, all securities any such
Initiating Holder proposes to sell for its own account, and (2) second, the
number or principal amount of additional securities (including Registrable
Securities) that such managing underwriter advises can be sold without
materially and adversely affecting such offering, allocated pro rata among any
Other Holders to which clause (1) does not apply and the Holders on the basis of
the number of securities (including Registrable Securities) requested to be
included therein by each Holder and each such Other Holder,

                                      -7-
<PAGE>   8

            (c) the Company shall not be required to effect any registration of
Registrable Securities under this Section 3 incidental to the registration of
any of its securities in connection with stock option or other executive or
employee benefit or compensation plans of the Company;

            (d) no registration of Registrable Securities effected under this
Section 3 shall relieve the Company of its obligation to effect any registration
of Registrable Securities required of the Company pursuant to Section 2 hereof;
and

            (e) the Company shall not be required to effect any registration of
Registrable Securities under this Section for any Holder from and after such
time as such Holder is able to dispose of all of its Registrable Securities
within a three-month period pursuant to Rule 144.

         4. Expenses. The Holders, on the one hand, by accepting Registrable
Securities, and the Company, on the other hand, each agree to pay one-half of
all Registration Expenses with respect to a registration pursuant to Section 2
hereof, provided that to the extent a registration pursuant to Section 2
includes the registration of shares for the Company or another person in
connection therewith, the Company or such other person shall pay all incremental
expenses of including such additional shares in the registration. The Holders'
portion of any Registration Expenses shall be allocated among them pro rata
based on each Holder's number or principal amount of Registrable Securities
included in such offering. The Company agrees to pay all Registration Expenses
with respect to a registration pursuant to Section 3 hereof. All Registration
Expenses to be paid by the Holder shall be paid within 30 days of the delivery
of a statement from the Company, such statements to be delivered not more
frequently than once every 60 days. All internal expenses of the Company or a
Holder in connection with any offering pursuant to this Agreement, including,
without limitation, the salaries and expenses of officers and employees,
including in-house attorneys, shall be borne by the party incurring them. All
Selling Expenses of the Holders participating in any registration pursuant to
this Agreement shall be borne by such Holders pro rata based on each Holder's
number of Registrable Securities included in such registration.

         5. Registration and Qualification. If and whenever the Company is
required to use its best efforts to effect the registration of any Registrable
Securities under the Securities Act as provided in Section 2 or 3 hereof, the
Company, subject to Section 4 hereof, shall:

            (a) prepare and file a registration statement under the Securities
Act relating to the Registrable Securities to be offered as soon as practicable,
but in no event later than 30 days (45 days if the applicable registration form
is other than Form S-3) after the date notice is given, and use its best efforts
to cause the same to become effective within 60 days after the date notice is
given (90 days if the applicable registration form is other than Form S-3);

            (b) prepare and file with the SEC such amendments and supplements to
such registration statement and the prospectus used in connection therewith as
may be necessary to keep such registration statement effective with respect to
the disposition of all Registrable Securities until the earlier of (i) such time
as all of such Registrable Securities have been disposed of in accordance with
the intended methods of disposition set forth in such registration statement and
(ii) the expiration of nine months after such registration statement becomes

                                      -8-
<PAGE>   9

effective; provided, that such nine-month period shall be extended for such
number of days that equals the number of days elapsing from (A) the date the
written notice contemplated by paragraph (f) below is given by the Company to
(B) the date on which the Company delivers to the Holders of Registrable
Securities the supplement or amendment contemplated by paragraph (f) below; and
provided further, that in the case of a registration to permit the exercise or
exchange of Exchangeable Securities for, or the conversion of Exchangeable
Securities into, Registrable Securities, the time limitation contained in clause
(ii) above shall be disregarded to the extent that, in the written opinion of
REI's counsel delivered to the Company, such Registrable Securities are required
to be covered by an effective registration statement under the Securities Act at
the time such Registrable Securities are issued upon exercise, exchange or
conversion of Registrable Securities in order for such Registrable Securities to
be freely tradeable by any person who is not an Affiliate of the Company or REI;

            (c) furnish to the Holders and to any underwriter of such
Registrable Securities such number of conformed copies of such registration
statement and of each such amendment and supplement thereto (in each case
including all exhibits), such number of copies of the prospectus included in
such registration statement (including each preliminary prospectus and any
summary prospectus), in conformity with the requirements of the Securities Act,
and such other documents, as the Holders or such underwriter may reasonably
request in order to facilitate the public sale of the Registrable Securities,
and a copy of any and all transmittal letters or other correspondence to, or
received from, the SEC or any other governmental agency or self-regulatory body
or other body having jurisdiction (including any domestic or foreign securities
exchange) relating to such offering;

            (d) use its best efforts to register or qualify all Registrable
Securities covered by such registration statement under the securities or blue
sky laws of such jurisdictions (domestic or foreign) as the Holders or any
underwriter of such Registrable Securities shall request, and use its best
efforts to obtain all appropriate registrations, permits and consents required
in connection therewith, and do any and all other acts and things which may be
necessary or advisable to enable the Holders or any such underwriter to
consummate the disposition in such jurisdictions of its Registrable Securities
covered by such registration statement; provided that the Company shall not for
any such purpose be required to register or qualify generally to do business as
a foreign corporation in any jurisdiction wherein it is not so qualified, or to
subject itself to taxation in any such jurisdiction, or to consent to general
service of process in any such jurisdiction;

            (e) (i) use its best efforts to furnish an opinion of counsel for
the Company addressed to the underwriters and each Holder of Registrable
Securities included in such registration (each a "Selling Holder") and dated the
date of the closing under the underwriting agreement (if any) (or if such
offering is not underwritten, dated the effective date of the registration
statement), and (ii) use its best efforts to furnish a "cold comfort" letter
addressed to each Selling Holder, if permissible under applicable accounting
practices, and signed by the independent public accountants who have audited the
Company's financial statements included in such registration statement, in each
such case covering substantially the same matters with respect to such
registration statement (and the prospectus included therein) as are customarily
covered in opinions of issuer's counsel and in accountants' letters delivered to
underwriters in underwritten public offerings of securities and such other
matters as the Selling Holders may

                                      -9-
<PAGE>   10

reasonably request and, in the case of such accountants' letter, with respect to
events subsequent to the date of such financial statements;

            (f) immediately notify the Selling Holders in writing (i) at any
time when a prospectus relating to a registration pursuant to Section 2 or 3
hereof is required to be delivered under the Securities Act of the happening of
any event as a result of which the prospectus included in such registration
statement, as then in effect, includes an untrue statement of a material fact or
omits to state any material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading, and (ii) if any request by the SEC or any other regulatory
body or other body having jurisdiction for any amendment of or supplement to any
registration statement or other document relating to such offering, and in
either such case (i) or (ii) at the request of the Selling Holders, subject to
Section 4 hereof, prepare and furnish to the Selling Holders a reasonable number
of copies of a supplement to or an amendment of such prospectus as may be
necessary so that, as thereafter delivered to the purchasers of such Registrable
Securities, such prospectus shall not include an untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary
to make the statements therein, in light of the circumstances under which they
arc made, not misleading;

            (g) use its best efforts to list all such Registrable Securities
covered by such registration on each securities exchange and inter-dealer
quotation system on which the Common Stock is then listed, with expenses in
connection therewith (not including any future periodic assessments or fees for
such additional listing, which shall be paid by the Company) to be paid in
accordance with Section 4 hereof;

            (h) use its best efforts to list all Registrable Securities covered
by such registration statement on any securities exchange or inter-dealer
quotation system (in each case, domestic or foreign) not described in paragraph
(g) above as the Selling Holders or any underwriter of such Registrable
Securities shall request, and use its best efforts to obtain all appropriate
registrations, permits and consents required in connection therewith, and to do
any and all other acts and things which may be necessary or advisable to effect
such listing; provided, however, that, (i) notwithstanding Section 4, the
Holders of the Registrable Securities to be so listed shall pay all costs and
expenses incurred by the Company in connection with such listing and (ii) the
Company shall have no obligation to use its best efforts to so list Registrable
Securities if in the good faith opinion of counsel for the Company such listing
shall impose on the Company an ongoing material compliance obligation;

            (i) to the extent reasonably requested by the lead or managing
underwriters in connection with any underwritten offering, send appropriate
officers of the Company to attend any "road shows" scheduled in connection with
any such registration; and

            (j) furnish for delivery in connection with the closing of any
offering of Registrable Securities unlegended certificates representing
ownership of the Registrable Securities being sold in such denominations as
shall be requested by the Selling Holders or the underwriters.

                                      -10-
<PAGE>   11

         6. Exchangeable Securities. REI shall be entitled, if it intends to
offer any options, rights, warrants or other securities issued or to be issued
by it or any other person that are exercisable or exchangeable for or
convertible into any Registrable Securities ("Exchangeable Securities"), to
register the Registrable Securities underlying such options, rights, warrants or
other securities pursuant to (and subject to the limitations contained in)
Section 2 of this Agreement.

         7. Underwriting; Due Diligence.

            (a) If requested by the underwriters for any underwritten offering
of Registrable Securities pursuant to a registration requested under this
Agreement, the Company shall enter into an underwriting agreement, with such
underwriters for such offering, such agreement to contain such representations
and warranties by the Company and such other terms and provisions as are
customarily contained in underwriting agreements with respect to secondary
distributions, including, without limitation, indemnities and contribution
substantially to the effect and to the extent provided in Section 8 hereof and
the provision of opinions of counsel and accountants' letters to the effect and
to the extent provided in Section 5(e) hereof. The Selling Holders on whose
behalf the Registrable Securities are to be distributed by such underwriters
shall be parties to any such underwriting agreement and the representations and
warranties by, and the other agreements on the part of, the Company to and for
the benefit of such underwriters, shall also be made to and for the benefit of
such Selling Holders. Such underwriting agreement shall also contain such
representations and warranties by the Selling Holders on whose behalf the
Registrable Securities are to be distributed as are customarily contained in
underwriting agreements with respect to secondary distributions. The Selling
Holders may require that any additional securities included in an offering
proposed by a Holder be included on the same terms and conditions as the
Registrable Securities that are included therein.

            (b) In the event that any registration pursuant to Section 3 shall
involve, in whole or in part, an underwritten offering, the Company may require
the Registrable Securities requested to be registered pursuant to Section 3 to
be included in such underwritten offering on the same terms and conditions as
shall be applicable to the other securities being sold through underwriters
under such registration. If requested by the underwriters for such underwritten
offering, the Selling Holders on whose behalf the Registrable Securities are to
be distributed shall enter into an underwriting agreement with such
underwriters, such agreement to contain such representations and warranties by
the Selling Holders and such other terms and provisions as are customarily
contained in underwriting agreements with respect to secondary distributions,
including, without limitation, indemnities and contribution substantially to the
effect and to the extent provided in Section 8 hereof. Such underwriting
agreement shall also contain such representations and warranties by the Company
and such other person or entity for whose account securities are being sold in
such offering as are customarily contained in underwriting agreements with
respect to secondary distributions.

            (c) In connection with the preparation and filing of each
registration statement registering Registrable Securities under the Securities
Act, the Company shall give the Holders of such Registrable Securities and the
Underwriters, if any, and their respective counsel and accountants, such
reasonable and customary access to its banks and records and such

                                      -11-
<PAGE>   12

opportunities to discuss the business of the Company with its officers and the
independent public accountants who have certified the Company's financial
statements as shall be necessary, in the opinion of such Holders and such
underwriters or their respective counsel, to conduct a reasonable investigation
within the meaning of the Securities Act.

         8. Indemnification and Contribution.

            (a) In the case of each offering of Registrable Securities made
pursuant to this Agreement, the Company agrees to indemnify and hold harmless
each Holder, its officers and directors, each underwriter of Registrable
Securities so offered and each person, if any, who controls any of the foregoing
persons within the meaning of the Securities Act, from and against any and all
claims, liabilities, losses, damages, expenses and judgments, joint of several,
to which they or any of them may become subject, under the Securities Act or
otherwise, including any amount paid in settlement of any litigation commenced
or threatened, and shall promptly reimburse them, as and when incurred, for any
reasonable legal or other expenses incurred by them in connection with
investigating any claims and defending any actions, insofar as such losses,
claims, damages, liabilities or actions shall arise out of, or shall be based
upon, any untrue statement or alleged untrue statement of a material fact
contained in the registration statement (or in any preliminary or final
prospectus included therein) or any amendment thereof or supplement thereto, or
in any document incorporated by reference therein, or any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading; provided, however, that
the Company shall not be liable to a particular Holder in any such case to the
extent that any such loss, claim, damage, liability or action arises out of, or
is based upon, any untrue statement or alleged untrue statement, or any
omission, if such statement or omission shall have been made in reliance upon
and in conformity with information relating to such Holder furnished to the
Company in writing by or on behalf of such Holder specifically for use in the
preparation of the registration statement (or in any preliminary or final
prospectus included therein) or any amendment thereof or supplement thereto.
Such indemnity shall remain in full force and affect regardless of any
investigation made by or on behalf of a Holder and shall survive the transfer of
such securities. The foregoing indemnity agreement is in addition to any
liability which the Company may otherwise have to each Holder, any of such
Holder's directors or officers, underwriters of the Registrable Securities or
any controlling person of the foregoing; provided, further, that this indemnity
does not apply in favor of any underwriter or person controlling an underwriter
(or if a Selling Holder offers Registrable Securities directly without an
underwriter, the Selling Holder) with respect to any loss, liability, claim,
damage or expense arising out of or based upon any untrue statement or alleged
untrue statement or omission or alleged omission in any preliminary prospectus
if a copy of a final prospectus was not sent or given by or on behalf of an
underwriter (or the Selling Holder, if the Selling Holder offered the
Registrable Securities directly without an underwriter) to the person asserting
such loss, claim, damage, liability or action at or prior to the written
confirmation of the sale of the Registrable Securities as required by the
Securities Act and such untrue statement or omission had been corrected in such
final prospectus.

            (b) In the case of each offering made pursuant to this Agreement,
each Holder of Registrable Securities included in such offering, by exercising
its registration rights hereunder, agrees to indemnify and hold harmless the
Company, its officers and directors and each person, if any, who controls any of
the foregoing within the meaning of the Securities Act (and if

                                      -12-
<PAGE>   13

requested by the underwriters, each underwriter who participates in the offering
and each person, if any, who controls any such underwriter within the meaning of
the Securities Act), from and against any and all claims, liabilities, losses,
damages, expenses and judgments, joint or several, to which they or any of them
may become subject, under the Securities Act or otherwise, including any amount
paid in settlement of any litigation commenced or threatened, and shall promptly
reimburse them, as and when incurred, for any legal or other expenses incurred
by them in connection with investigating any claim and defending any actions,
insofar as any such losses, claims, damages, liabilities or actions shall arise
out of, or shall be based upon, any untrue statement or alleged untrue statement
of a material fact contained in the registration statement (or in any
preliminary or final prospectus included therein) or any amendment thereof or
supplement thereto, or any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, but in each case only to the extent that such untrue
statement of a material fact is contained in, or such material fact is omitted
from, information relating to such Holder furnished in writing to the Company by
or on behalf of such Holder specifically for use in the preparation of such
registration statement (or in any preliminary or final prospectus included
therein). The foregoing indemnity is in addition to any liability which such
Holder may otherwise have to the Company, any of its directors or officers,
underwriters of the Registrable Securities or any controlling person of the
foregoing; provided, however, that this indemnity does not apply in favor of any
underwriter or person controlling an underwriter (or if the Company offers
Registrable Securities directly without an underwriter, the Company) with
respect to any loss, liability, claim, damage or expense arising out of or based
upon any untrue statement or alleged untrue statement or omission or alleged
omission in any preliminary prospectus if a copy of a final prospectus was not
sent or given by or on behalf of an underwriter (or the Company, if the Company
offered the Registrable Securities directly without an underwriter) to the
person asserting such loss, claim, damage, liability or action at or prior to
the written confirmation of the sale of the Registrable Securities as required
by the Securities Act and such untrue statement or omission had been corrected
in such final prospectus.

         (c) Each party indemnified under Paragraph (a) or (b) of this Section 8
shall, promptly after receipt of notice of any claim or the commencement of any
action against such indemnified party in respect of which indemnity may be
sought, notify the indemnifying party in writing of the claim or the
commencement thereof; provided that the failure to notify the indemnifying party
shall not relieve it from any liability which it may have to an indemnified
party on account of the indemnity agreement contained in paragraph (a) or (b) of
this Section 8, except to the extent the indemnifying party was materially
prejudiced by such failure, and in no event shall relieve the indemnifying party
from any other liability which it may have to such indemnified party. If any
such claim or action shall be brought against an indemnified party, and it shall
notify the indemnifying party thereof, the indemnifying party shall be entitled
to participate therein, and, to the extent that it wishes, jointly with any
other similarly notified indemnifying party, to assume the defense thereof with
counsel reasonably satisfactory to the indemnified party. After notice from the
indemnifying party to the indemnified party of its election to assume the
defense of such claim or action, the indemnifying party shall not be liable to
the indemnified party under this Section 8 for any legal or other expenses
subsequently incurred by the indemnified party in connection with the defense
thereof other than reasonable costs of investigation; provided that each
indemnified party, its officers and directors, if any, and each person, if any,
who controls such indemnified party within the meaning of the Securities

                                      -13-
<PAGE>   14

Act, shall have the right to employ separate counsel reasonably approved by the
indemnifying party to represent them if the named parties to any action
(including any impleaded parties) include both such indemnified party and an
indemnifying party or an Affiliate of an indemnifying party, and such
indemnified party shall have been advised by counsel a conflict may exist
between such indemnified party and such indemnifying party or such Affiliate
that makes representation by the same counsel inadvisable, and in that event the
fees and expenses of one such separate counsel for all such indemnified parties
shall be paid by the indemnifying party. An indemnified party will not enter
into any settlement agreement which is not approved by the indemnifying party,
such approval not to be unreasonably withheld. The indemnifying party may not
agree to any settlement of any such claim or action which provides for any
remedy or relief other than monetary damages for which the indemnifying party
shall be responsible hereunder, without the prior written consent of the
indemnified party, which consent shall not be unreasonably withheld. In any
action hereunder as to which the indemnifying party has assumed the defense
thereof with counsel reasonably satisfactory to the indemnified party, the
indemnified party shall continue to be entitled to participate in the defense
thereof, with counsel of its own choice, but, except as set forth above, the
indemnifying party shall not be obligated hereunder to reimburse the indemnified
party for the costs thereof. In all instances, the indemnified party shall
cooperate fully with the indemnifying party or its counsel in the defense of
such claim or action.

         (d) If the indemnification provided for in this Section 8 shall for any
reason be unavailable to or insufficient to hold harmless an indemnified party
in respect of any loss, claim, damage or liability, or any action in respect
thereof, referred to herein, then each indemnifying party shall, in lieu of
indemnifying such indemnified party, contribute to the amount paid or payable by
such indemnified party as a result of such loss, claim, damage or liability, or
action in respect thereof, in such proportion as shall be appropriate to reflect
the relative fault of the indemnifying party on the one hand and the indemnified
party on the other with respect to the statements or omissions which resulted in
such loss, claim, damage or liability, or action in respect thereof, as well as
any other relevant equitable considerations. The relative fault shall be
determined by reference to whether the untrue or alleged untrue statement of a
material fact or omission or alleged omission to state a material fact relates
to information supplied by the indemnifying party on the one hand or the
indemnified party on the other, the intent of the parties and their relative
knowledge, access to information and opportunity to correct or prevent such
statement or omission, but not by reference to any indemnified party's stock
ownership in the Company. In no event, however, shall a Holder be required to
contribute in excess of the amount of the net proceeds received by such Holder
in connection with the sale of Registrable Securities in the offering which is
the subject of such loss, claim, damage or liability. The amount paid or payable
by an indemnified party as a result of the loss, claim, damage or liability, or
action in respect thereof, referred to above in this paragraph shall be deemed
to include, for purposes of this paragraph, any legal or other expenses
reasonably incurred by such indemnifying party in connection with investigating
or defending any such action or claim. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation.

         9. Rule 144. The Company shall take such measures and file such
information, documents and reports as shall be required by the SEC as a
condition to the availability of Rule 144 (or any successor provision). The
Company shall use its best efforts to cause all conditions

                                      -14-
<PAGE>   15

to the availability of Form S-3 (or any successor form thereto) under the
Securities Act for the filing of registration statements under this Agreement to
be met as soon as possible after the completion of the Public Offering.

         10. Holdback.

            (a) Each Holder agrees by the acquisition of Registrable Securities,
if so required by the managing underwriter of any offering of equity securities
by the Company, not to sell, make any short sale of, loan, grant any option for
the purchase of, effect any public sale or distribution of or otherwise dispose
of any Registrable Securities owned by such Holder, during the 30 days prior to
and the 90 days after the registration statement relating to such offering has
become effective (or such shorter period as may be required by the underwriter),
except as part of such underwritten offering. Notwithstanding the foregoing
sentence, each Holder subject to the foregoing sentence shall be entitled to
sell during the foregoing period any securities of the Company owned by it in a
private sale. The Company may legend and may impose stop transfer instructions
on any certificate evidencing Registrable Securities relating to the
restrictions provided for in this Section 10.

            (b) The Company agrees, if so required by the managing underwriter
of any offering of Registrable Securities, not to sell, make any short sale of,
loan, grant any option for the purchase of (other than pursuant to employee
benefit plans), effect any public sale or distribution of or otherwise dispose
of any of its equity securities during the 30 days prior to and the 90 days
after any underwritten registration pursuant to Section 2 or 3 hereof has become
effective, except as part of such underwritten registration and except pursuant
to registrations on Form S-4, S-8 or any successor or similar forms thereto.

         11. Transfer of Registration Rights.

            (a) A Holder may transfer all or any portion of its rights under
this Agreement to any transferee of Registrable Securities that represent
(assuming the conversion, exchange or exercise of all Registrable Securities so
transferred that are convertible into or exercisable or exchangeable for the
Company's Voting Stock) at least 20% of the then issued and outstanding Voting
Stock of the Company (each, a "Permitted Transferee"); provided, however, that
(i) with respect to any transferee of less than a majority but more than 30% of
the then issued and outstanding Voting Stock, the Company shall not be obligated
to file a registration statement pursuant to a registration request made by such
transferee pursuant to Section 2 hereof on more than two occasions, and (ii)
with respect to any transferee of 30% or less of the then issued and outstanding
Voting Stock, the Company shall not be obligated to file a registration
statement pursuant to a registration request made by such transferee pursuant to
Section 2 hereof on more than one occasion. No transfer of registration rights
pursuant to this Section shall be effective unless the Company has received
written notice from the Holder of an intention to transfer at least 20 days
prior to the Holder's entering into a binding agreement to transfer Registrable
Securities (10 days in the event of an unsolicited offer). Such notice need not
contain proposed terms or name a proposed Permitted Transferee. On or before the
time of the transfer, the Company shall receive a written notice stating the
name and address of any Permitted Transferee and identifying the number and/or
aggregate principal amount of Registrable Securities with respect to which the
rights under this Agreement are being transferred and the scope of the rights

                                      -15-
<PAGE>   16

so transferred. In connection with any such transfer, the term REI as used in
this Agreement (other than in Section 2(a)(iv)) shall, where appropriate to
assign the rights and obligations hereunder to such Permitted Transferee, be
deemed to refer to the Permitted Transferee of such Registrable Securities. REI
and any Permitted Transferees may exercise the registration rights hereunder in
such priority, as among themselves, as they shall agree among themselves, and
the Company shall observe any such agreements of which it shall have notice as
provided above.

         (b) After any such transfer, the transferring Holder shall retain its
rights under this Agreement with respect to all other Registrable Securities
owned by such transferring Holder.

         (c) Upon the request of the transferring Holder, the Company shall
execute an agreement with a Permitted Transferee substantially similar to this
Agreement.

         12. Miscellaneous.

         (a) Injunctions. Each party acknowledges and agrees that irreparable
damage would occur in the event that any of the provisions of this Agreement was
not performed in accordance with its specific terms or was otherwise breached.
Therefore, each party shall be entitled to an injunction or injunctions to
prevent breaches of the provisions of this Agreement and to enforce specifically
the terms and provisions hereof in any court having jurisdiction, such remedy
being in addition to any other remedy to which such party may be entitled at law
or in equity.

         (b) Severability. If any term or provision of this Agreement is held by
a court of competent jurisdiction to be invalid, void or unenforceable, the
remainder of the terms and provisions set forth herein shall remain in full
force and effect and shall in no way be affected, impaired or invalidated, and
each of the parties shall use its best efforts to find and employ an alternative
means to achieve the same or substantially the same result as that contemplated
by such term or provision.

            (c) Further Assurances. Subject to the specific terms of this
Agreement, each of the parties hereto shall make, execute, acknowledge and
deliver such other instruments and documents, and take all such other actions,
as may be reasonably required in order to effectuate the purposes of this
Agreement and to consummate the transactions contemplated hereby.

            (d) Waivers, etc. Except as otherwise expressly set forth in this
Agreement, no failure or delay on the part of either party in exercising any
power or right hereunder shall operate as a waiver thereof, nor shall any single
or partial exercise of any such right or power, or any abandonment or
discontinuance of steps to enforce such a right or power, preclude any other or
further exercise thereof or the exercise of any other right or power. Except as
otherwise expressly set forth in this Agreement, no modification or waiver of
any provision of this Agreement nor consent to any departure therefrom shall in
any event be effective unless the same shall be in writing and signed by an
authorized officer of each of the parties, and then such waiver or consent shall
be effective only in the specific instance and for the purpose for which given.

                                      -16-
<PAGE>   17

            (e) Entire Agreement. This Agreement contains the final and complete
understanding of the parties with respect to its subject matter. This Agreement
supersedes all prior agreements and understandings between the parties, whether
written or oral, with respect to the subject matter hereof. The paragraph
headings contained in this Agreement are for reference purposes only, and shall
not affect in any manner the meaning or interpretation of this Agreement

            (f) Counterparts. For the convenience of the parties, this Agreement
may be executed in any number of counterparts, each of which shall be deemed to
be an original but all of which together shall be one and the same instrument.

            (g) Amendment. This Agreement may be amended only by a written
instrument duly executed by an authorized officer of each of the parties.

            (h) Notices. Unless expressly provided herein, all notices, claims,
certificates, requests, demands and other communications hereunder shall be in
writing and shall be deemed to be duly given (i) when personally delivered or
(ii) if mailed registered or certified mail, postage prepaid, return receipt
requested, on the date the return receipt is executed or the letter refused by
the addressee or its agent or (iii) if sent by overnight courier which delivers
only upon the signed receipt of the addressee, on the date the receipt
acknowledgment is executed or refused by the addressee or its agent or (iv) if
sent by facsimile or other generally accepted means of electronic transmission,
on the date confirmation of transmission is received (provided that a copy of
any notice delivered pursuant to this clause (iv) shall also be sent pursuant to
clause (ii) or (iii)), addressed as follows or sent by facsimile to the
following number (or to such other address or facsimile number for a party as it
shall have specified by like notice):

            (i)   if to REI, to:

                  Reliant Energy, Incorporated
                  1111 Louisiana Street
                  Houston, Texas
                  Attention:  Chief Executive Officer

            (ii)  if to the Company, to

                  Reliant Resources, Inc.
                  1111 Louisiana Street
                  Houston, Texas
                  Attention:  Chief Executive Officer

            (iii) if to a Holder of Registrable Securities, to the name and
       address as the same appear in the security transfer books of the Company,

or to such other address as either party (or other Holders of Registrable
Securities) may, from time to time, designate in a written notice in a like
manner.

                                      -17-
<PAGE>   18

            (i) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS, WITHOUT REGARD TO THE
CONFLICTS OF LAWS PRINCIPLES THEREOF.

            (j) Assignment. Except as specifically provided herein, the parties
may not assign their rights under this Agreement. The Company may not delegate
its obligations under this Agreement.

            (k) Conflicting Agreements. The Company shall not hereafter grant
any rights to any person to register securities of the Company, the exercise of
which would conflict with the rights granted to the Holders of the Registrable
Securities under this Agreement. The Company shall not hereafter grant to any
person demand registration rights permitting it to exclude the Holders from
including Registrable Securities in a registration on behalf of such person on a
basis more favorable than that set forth in Section 2(d) hereof with respect to
the Holders.

            (l) Resolution of Disputes. If a dispute, claim or controversy
results from or arises out of or in connection with this Agreement, the parties
agree to use the procedures set forth in Article IX of the Separation Agreement,
in lieu of other available remedies, to resolve the same.

                                      -18-
<PAGE>   19

                  IN WITNESS WHEREOF, REI and the Company have caused this
Agreement to be duly executed by their authorized representative as of the date
first above written.

                                     RELIANT ENERGY, INCORPORATED

                                     By: /s/  David M. McClanahan
                                         ----------------------------------
                                              David M. McClanahan
                                              Vice Chairman

                                     RELIANT RESOURCES, INC.

                                     By: /s/  R. S. Letbetter
                                         ----------------------------------
                                              R. S. Letbetter
                                              Chairman, President and
                                              Chief Executive Officer

                                      -19-

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