Document:

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                                                                    EXHIBIT 10.1

                                  May 15, 2002

Mr. Joe Bob Perkins
12214 Beauregard
Houston, TX 77024

               Re: Separation from Employment

Dear Joe Bob:

         The purpose of this letter agreement ("Agreement") is to set forth our
understanding of the terms and conditions of your separation from Reliant
Resources, Inc. (the "Company") on May 15, 2002 ("Termination Date").

         In consideration for entering into this Agreement and agreeing to abide
by the terms and conditions hereof, the Company will pay you severance benefits
as specified herein.

         1. Termination and Accrued Compensation. Your employment with the
Company is terminated effective as of the Termination Date. On or before June 3,
2002, you will be paid your base salary earned up to the Termination Date plus
the value of your accrued but unused vacation, as well as a lump sum cash
payment equal to $206,250. In addition, on or before June 3, 2002, the Company
will pay to you all compensation which you have deferred under the Company's
1989 Deferred Compensation Plan including earnings as provided under the terms
of the plan.

         2. Severance. In exchange for your release of claims as provided in
Section 10 and your agreement to certain other obligations as described below,
the Company will pay to you, as a severance payment, a lump sum cash payment
equal to $550,000 on or before the third business day following the expiration
of the revocation period provided in Section 10 (without your revoking the
waiver and release).

         3. Contingent Payment if Not Reemployed. If you have not accepted a
Comparable Position (as defined below) by November 15, 2002 and are in
compliance with the other provisions of this Agreement set forth below, the
Company will pay to you a lump sum cash payment equal to $550,000 on January 2,
2003.

                  If you accept a Comparable Position prior to November 15,
2002, then you shall have no right to receive the payment set forth in this
Section 3. For purposes of this Agreement, "Comparable Position" means
employment as an employee or engagement as an independent contractor by any
person or entity (other than the Company) in a position or capacity is a
position comparable to or better than your position with the Company, including,
without

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limitation, size of business, rank, reporting relationships and which will pay
you a base salary equal to or greater than your highest base salary with the
Company and offer you the opportunity to earn other compensation and benefits
which in the aggregate are substantially comparable to or better than your base
salary and other compensation and benefits with the Company immediately prior to
the Termination Date. You agree to promptly inform the Company of any employment
or engagement as a consultant that occurs during the period from the Termination
Date until November 15, 2002, together with sufficient details to allow the
Company to evaluate your aggregate compensation and benefits from such
employment or engagement, and you agree to reimburse the Company for any payment
made under this Section 3 (i) after you have secured Comparable Employment,
and/or (ii) after you were in breach of this Agreement.

         4. If you meet the COBRA eligibility requirements, you are eligible for
continuation of medical, dental and vision benefits for the applicable period
required by federal law. The required employee premium for the 18 month COBRA
period will be at the active employee contribution rate. Under the Company's
Executive Life Insurance Plan, the Company will pay the premium on your life
insurance policy that will be due in September, 2002 which will provide coverage
for you for one year from that date. In September, 2003, you will be offered the
opportunity to take over the policy (including any cash value thereunder) by
continuing to make payments directly to MetLife. Under the Company's Group Life
Insurance Plan, you may convert the supplemental life, spousal life, and
personal accident coverage you currently have to a personal policy with the
insurance provider, CIGNA, per their guidelines. You will be responsible for all
notifications, correspondence, and premium payments to CIGNA. Conversion
insurance will become effective on the 15th day after you have been notified of
your conversion right if your application is received by CIGNA and the required
premium is paid by that date.

         5. Commencing as soon as practicable after the Termination Date, the
Company will pay for senior executive outplacement services through your choice
of either (i) the Spherion Flagship Service Program (unlimited duration) or (ii)
the Drake Beam Morin Center for Executive Options Program (18 consecutive months
of coverage).

         6. You understand and agree that you are not otherwise entitled to the
payments provided for under Sections 2 or 3 of this Agreement (the "Payments").
The Company is providing this benefit in consideration and return for the
promises and covenants you agree to herein. The Company will withhold any taxes
required by federal or state law from the payments described above.

         7. Your rights under any benefit or compensation plan, program or
agreement of the Company not specifically provided for herein are controlled by
the terms and conditions of such plan, program or arrangement. With respect to
your rights under the Company's incentive plans, all of your options to purchase
shares of stock in the Company or Reliant Energy, Incorporated (the "Parent"),
other than outstanding options under the Company's Employee Stock Purchase Plan,
shall be fully vested and exercisable and shall remain exercisable for a period
of 3 years following the Termination Date.

         8. The Company agrees to retain you commencing May 16, 2002 (the
"Effective Date"), as an independent consultant, and you agree to render
consulting services for the period described in Section 8(a) hereof and upon the
other terms and conditions herein provided.

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                  (a) The period your engagement as a consultant shall commence
         on the Effective Date and continue until the date 18 months following
         the Effective Date unless terminated earlier pursuant to Section 8(g)
         hereof; provided, however, that the term of this engagement shall be
         automatically extended for an additional year upon expiration of the
         original term and each anniversary of such expiration (until the third
         such anniversary) unless the Company gives written notice six months in
         advance of such expiration or anniversary, as applicable, that it
         intends not to extend the term.

                  (b) The Company hereby engages you to provide during the term
         of this engagement such services of a consulting or advisory nature as
         the Company may reasonably request with respect to matters arising out
         of the conduct of the Company's business during the period that you
         were an employee of the Company. You will provide consulting services
         with respect to matters including but not limited to assisting the
         Company in responding to (i) investigations, inquiries or any other
         proceeding relating to the Company's activities by the Federal Energy
         Regulatory Commission, the Securities Exchange Commission, the
         Commodity Futures Trading Commission, any state or federal legislative
         committee or subcommittee or any other governmental agency or entity or
         (ii) disputes or litigation in California or elsewhere involving the
         Company or any of its subsidiaries. Subject to your obligations and
         responsibilities with respect to any other employment you obtain, you
         will devote your efforts and time as shall be reasonably necessary to
         perform your duties and to advance the interests of the Company. You
         will act solely in a consulting capacity hereunder and in consequence
         shall not have authority to act for the Company or to give instructions
         or orders on behalf of the Company or otherwise to make commitments for
         or on behalf of the Company. You will not be an employee of the Company
         during the term of this engagement, but shall act in the capacity of an
         independent contractor. The Company shall not exercise control over the
         detail, manner or methods of the performance of the services by you as
         a consultant under this Agreement.

                  (c) Compensation. The Company shall pay you at the rate of
         $530.00 per hour for consulting services actually performed under this
         Agreement, but the Company is committed to utilizing your services at a
         level such that the total of all such payments shall not be less than
         $275,000 for the initial 18-month term of this Agreement.

                  (d) The Company shall reimburse you for reasonable expenses
         incurred in the performance of services hereunder, including travel and
         the cost of necessary office equipment or supplies.

                  (e) Your sole compensation for the services rendered pursuant
         to this Agreement following the Termination Date shall be the rate
         provided for above in Section 8(c). You will not be entitled to
         participate in any employee benefit or compensation plan or arrangement
         of the Company with respect to the work done under this Agreement as a
         consultant, and no service pursuant to this Agreement shall be credited
         as service for any purposes under any employee benefit or compensation
         plan or arrangement of the Company. You hereby waive any rights to
         benefits under any

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         employee benefit or compensation plan or arrangement should any
         judicial or administrative determination conclude that you were
         otherwise eligible for such plan or arrangement.

                  (f) You will submit monthly invoices for charges and
         reimbursements due for services as a consultant under this Agreement to
         P. O. Box 1384, Houston, Texas 77251-1384, Attention: General Counsel.
         Each invoice must detail any reasonable and necessary reimbursable
         expenses incurred in performing your obligation under this Agreement
         and include any other information the Company reasonably requests.
         Payment for said invoiced amounts shall be payable by the Company
         within 15 days after receipt of invoice by the Company. Should the
         Company dispute any portion of your monthly invoice, the Company shall
         pay the undisputed portion of the invoice and advise you in writing of
         the disputed portion.

                  (g) Your engagement as a consultant will terminate
         automatically upon your death, or upon your disability rendering you
         unable to perform services hereunder for a period of 90 days. The
         Company may terminate your engagement as a consultant hereunder upon
         five days written notice at any time. You may terminate this engagement
         at any time upon five days written notice to the Company. In the event
         of a termination of the engagement under this Section 8, the Company
         shall continue to be obligated to pay you amounts owed under Section
         8(c) (for services performed prior to the date of termination of the
         consulting engagement), and reimburse you for all expenses described in
         Section 8(d) (to the extent incurred prior to the termination of the
         consulting agreement); provided that if you terminate the engagement,
         you shall not be guaranteed the minimum total payment described in
         Section 8(c). Upon any termination or expiration of your engagement
         hereunder, you shall continue to be subject to the provisions of
         Section 9 hereof (it being understood and agreed that such provisions
         shall survive any termination or expiration of your engagement
         hereunder for any reason).

                  (h) Since you will not be an employee of the Company during
         the term of this Agreement, but shall act in the capacity of an
         independent contractor, the Company will not withhold from any amounts
         payable for your services as a consultant under this Agreement federal,
         state, city or any other taxes. It is your responsibility to pay all
         such taxes that shall be required pursuant to any law or governmental
         regulation or ruling and you agree to indemnify and hold the Company
         harmless from any liability for such taxes. If the Internal Revenue
         Service makes a claim, which, if successful, would require the Company
         to make a payment or withhold any such taxes, you agree to cooperate in
         good faith with the Company concerning the contest of the claim.

                  (i) In the event of your death or disability, all unpaid
         amounts described in Sections 2, 3, 8(c) or 8(d) shall become
         immediately due and payable in full.

         9. Post-Employment Obligations:

                  (a) The Company has provided you with Confidential Information
         regarding the Company and the Company's business and will continue to
         provide you with such

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         Confidential Information, and has agreed to make certain payments to
         which you are not otherwise entitled. In return for this and the other
         consideration provided under this Agreement, you agree that you will
         not disclose or make available to any other person or entity, or use
         for your own personal gain, any Confidential Information, except for
         such disclosures consented to by the Company or as required (i) by law
         or legal process, (ii) in connection with the enforcement of your
         rights under this Agreement, or (iii) in connection with the defense or
         settlement of any claim, suit or action brought against you.
         Furthermore, you agree that, if compelled by process of law to disclose
         Confidential Information pursuant to clause (i) of the prior sentence,
         you will provide prior written notice to the Company of the nature of
         the Confidential Information proposed to be disclosed and the
         circumstances which purportedly justify its disclosure so as to permit
         the Company to seek a protective order or other protective measure, and
         you agree to provide such notice as soon as reasonably practicable and
         with all due diligence recognizing that disclosure of Confidential
         Information could be harmful to the Company. For purposes of this
         Agreement, "Confidential Information" shall mean any and all
         information, data and knowledge that has been created, discovered,
         developed or otherwise become known to the Company or in which property
         rights have been assigned or otherwise conveyed to the Company, which
         information, data or knowledge has commercial value in the business in
         which the Company is engaged, except such information, data or
         knowledge as is or becomes known to the public without violation of the
         terms of this Agreement. By way of illustration, but not limitation,
         Confidential Information includes business trade secrets, secrets
         concerning the Company's plans and strategies, nonpublic information
         concerning pending investigations, disputes or litigation involving the
         Company, market information pertaining to the Company or its
         operations, material market opportunities, technical trade secrets,
         processes, formulas, know-how, improvements, discoveries, developments,
         designs, inventions, techniques, marketing plans, manuals, records of
         research, reports, memoranda, computer software, strategies, forecasts,
         new products, unpublished financial statements or parts thereof,
         budgets or other financial information, projections, licenses, prices,
         costs, and employee, customer information, customer lists and supplier
         lists or parts thereof.

                  (b) You agree that as of the Termination Date you will deliver
         to the Company (and will not keep in your possession, recreate or
         deliver to anyone else) all Confidential Information as well as all
         other devices, records, data, notes, reports, proposals, lists,
         correspondence, specifications, drawings, blueprints, sketches,
         materials, equipment, customer or client lists or information, or any
         other documents or property (including all reproductions of the
         aforementioned items) belonging to the Company, regardless of whether
         such items were prepared by you.

                  (c) Additionally, for consideration provided to you pursuant
         to this Agreement, including the provision of Confidential Information,
         you agree to be bound by the following restrictive covenants:

                           1. You agree that for a period of one year following
                  the Termination Date that you will not directly or indirectly,
                  acting alone or in conjunction with others: (a) solicit,
                  encourage or take any action that is

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                  intended, directly or indirectly, to induce any other employee
                  of the Company to terminate employment with the Company; (b)
                  interfere in any manner with the contractual or employment
                  relationship between the Company and any other employee of the
                  Company; or (c) use Confidential Information to solicit,
                  directly or indirectly, any customer of the Company.

                           2. You acknowledge that these restrictive covenants
                  under this Agreement, for which you received consideration
                  from the Company as provided in this Agreement, are ancillary
                  to otherwise enforceable provisions of this Agreement and that
                  these restrictive covenants contain limitations as to time,
                  geographical area, and scope of activity to be restrained that
                  are reasonable and do not impose a greater restraint than is
                  necessary to protect the goodwill or other business interests
                  of the Company, such as the Company's need to protect its
                  Confidential Information.

                  (d) As a material inducement to the Company to enter into this
         Agreement, you agree that you will not (i) publicly criticize or
         disparage the Company or any Related Party (as defined below), or
         privately criticize or disparage the Company or any Related Party in a
         manner intended or reasonably calculated to result in public
         embarrassment to, or injury to the reputation of, the Company or any
         Related Party; (ii) commit damage to the property of the Company or any
         Related Party or otherwise engage in any misconduct which is injurious
         to the business or reputation of the Company or any Related Party; or
         (iii) take any other action, or assist any person in taking any other
         action, that is materially adverse to the interests of the Company or
         any Related Party or inconsistent with fostering the goodwill of the
         Company or any Related Party. In addition, you agree not to make any
         public statements regarding the Company or its business without prior
         written consent of the Company. As used in this section, the term
         "Related Party" means the Company, any officer, director or executive
         of the Company, and any former officer, director or executive of the
         Company.

                  (e) As a material inducement to you to enter into this
         Agreement, the Company agrees that neither it or any of its affiliates,
         officers, directors or executives will publicly criticize or disparage
         you or privately criticize or disparage you in a manner intended or
         reasonably calculated to result in public embarrassment to, or injury
         to your reputation in any community in which you are employed or
         conduct business.

                  (f) In addition to your obligations under your engagement as a
         consultant pursuant to Section 8, you agree to furnish such information
         and proper assistance as may be reasonably necessary in connection with
         any inquiry, investigation, dispute, litigation, regulatory proceeding
         or other action in which the Company is or may become involved insofar
         as it relates to matters arising out of your employment, and if you are
         called upon to serve as a witness or provide assistance in or with
         respect to any such proceeding, you agree to cooperate with the Company
         to the full extent permitted by law, and the Company agrees that any
         such call shall be with reasonable notice, shall not unreasonably

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         interfere with your later employment, and shall provide for payment for
         your time and costs incurred in such matters at the rates set forth in
         Section 8. Furthermore, you will promptly give written notice to the
         Company of any inquiry, approach or other notice you receive or are
         informed of by or from any governmental entity regarding any inquiry,
         investigation, dispute, litigation, regulatory proceeding or other
         action involving the Company. The foregoing procedural requirements
         represent important provisions of this Agreement, but they shall not be
         construed so as to prevent or limit your right and duty and that of the
         Company to produce evidence and give testimony truthfully in the course
         of a proceeding before any court or agency or when otherwise duly
         required to do so by lawful authority. The provisions of this Agreement
         shall not apply to or restrict in any way the communication of
         information by you to any state or federal law enforcement agency or
         require notice to the Company thereof.

                  (g) The Company agrees to indemnify you for any claims,
         including associated legal fees and expenses, that may be asserted
         against you on account of your good-faith execution of (i) your
         employment duties with the Company and (ii) your consulting services
         under this Agreement, but only to the extent that and under the
         conditions that you were indemnified by the Company against such claims
         during your employment with the Company. In the event you require
         separate individual legal representation related to the performance of
         your duties while employed by the Company, any arrangement relating to
         the cost of such representation shall be the subject of a separate
         agreement.

                  (h) If it is determined by a court of competent jurisdiction
         in Texas that any restriction in this Section 9 is excessive in
         duration or scope or is unreasonable or unenforceable under the laws of
         Texas, it is the intention of the parties that such restriction may be
         modified or amended by the court to render it enforceable to the
         maximum extent permitted by the laws of Texas.

                  (i) You acknowledge that in the event of a breach by you of
         the provisions of this Agreement, money damages will not be a
         sufficient remedy, and the covenants may be enforced by temporary
         restraining order, preliminary or temporary injunction, and permanent
         injunction. In that connection, you acknowledge that, in the event of a
         breach, the Company will suffer irreparable injury for which there is
         no adequate legal remedy, in part because damages caused by the breach
         may be difficult to prove with any reasonable degree of certainty.

                  (j) Notwithstanding any provision of this Agreement to the
         contrary, for purposes of your obligations under this Agreement,
         "Company" means the Company or an Affiliate or any successor to the
         Company or an Affiliate and "employment" means employment as an
         employee with the Company, any Affiliate or any such successor. For
         purposes of this Agreement, the term "Affiliate" means (i) any
         corporation or other entity in which the shares or other measure of
         ownership owned or controlled directly or indirectly by the Company
         shall represent 10% or more of the voting power of the issued and
         outstanding stock or other measure of ownership of such corporation or
         entity and (ii) any other company or organization controlled by,
         controlling or under common

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         control with the Company within the meaning of Section 414 of the
         Internal Revenue Code of 1986, as amended.

         10. As a condition precedent to the receipt of the benefits under this
Agreement, you must execute a waiver and release of claims, in the form attached
to this Agreement as Exhibit A, and allow for the expiration of the seven day
revocation period without revoking such waiver and release.

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

         12. Miscellaneous:

         A. This Agreement shall be governed by and construed in accordance with
the laws of the State of Texas, without reference to principles of conflict of
laws. Except with respect to injunctive relief as provided in paragraph 9(i),
any dispute, controversy, or claim arising out of or relating to this Agreement
shall be settled by final and binding arbitration before a single arbitrator in
Houston, Harris County, Texas, conducted in accordance with the procedures of
the Center for Public Resources of New York ("CPR"). The decision of the
arbitrator will be final and binding on the parties, and judgment thereon may be
had and will be enforceable in any court having jurisdiction over the parties.
Arbitration awards will bear interest at an annual rate of the Prime Rate plus
2% per annum, subject to any maximum amount permitted by Texas law. To the
extent that the provisions of this Agreement and the prevailing rules of the CPR
conflict, the provisions of this Agreement shall govern. The arbitrator shall be
selected by mutual agreement of the parties, if possible. If the parties fail to
reach agreement regarding appointment of an arbitrator within 30 days following
receipt by one party of the other party's notice of desire to arbitrate, the
arbitrator shall be selected in accordance with CPR rules except that, if the
parties continue to fail to select an arbitrator, CPR shall not have the power
to make the appointment but shall continue to attempt to locate a mutually
acceptable arbitrator until an arbitrator has been selected. All legal, witness
and other fees and expenses of the arbitration other than the fees and expenses
of the arbitrator shall be borne by the Company, including (1) all litigation
fees for work done outside the arbitration that is directly related to such
arbitration, and (2) a written transcript and statement of facts if requested.
The fees and expenses of the arbitrator will be borne by the losing party. Any
action to enforce or vacate the arbitrator's award shall be governed by the
Federal Arbitration Act if applicable, and otherwise by Texas state law. The
captions of this Agreement are not part of the provisions hereof and shall have
no force or effect. This Agreement may not be amended or modified otherwise than
by a written agreement executed by the parties hereto or their respective
successors and legal representatives.

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

         C. Except as specifically contemplated by this Agreement, this
Agreement constitutes the entire agreement between us with respect to the
subject matter hereof and supersedes any and all prior written or oral
agreements, arrangements or understandings between you and the Company.

         D. Within 30 days after the date of this Agreement, the Company will
reimburse your legal and accounting fees and expenses incurred in the review and
negotiation of this Agreement.

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

            If to you:             Joe Bob Perkins
                                   [Address Intentionally Omitted]

            If to the Company:     Reliant Resources, Inc.
                                   1111 Louisiana
                                   Houston, TX 77002
                                          -or-
                                   P.O. Box 1384
                                   Houston, TX 77251-1384

                                   ATTENTION: Hugh Rice Kelly,
                                              Senior Vice President, General
                                              Counsel and Corporate Secretary

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                  Please sign both copies of this Agreement to indicate your
agreement to the foregoing, and return one original signed copy to me.

                              Sincerely,

                              /s/ R. Steve Letbetter
                              ----------------------
                              R.S. Letbetter
                              Chairman of the Board and Chief Executive Officer

Agreed to and Accepted this 2nd day of
July, 2002.

/s/ Joe Bob Perkins
-------------------
Joe Bob Perkins

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                                    EXHIBIT A

                               WAIVER AND RELEASE

                  In exchange for the payment to me of a severance payment and
certain other consideration (the "Benefits") pursuant to that certain letter
agreement between Reliant Resources, Inc. (the "Company") and me dated as of May
15, 2002 (the "Agreement"), which are in addition to any remuneration or
benefits to which I am already entitled, I agree not to sue and to release and
forever discharge the Company and all of its parents, subsidiaries, affiliates
and unincorporated divisions, and its respective officers, directors, agents,
servants, employees, successors, assigns, insurers, employee benefit plans and
fiduciaries, and agents of any of the foregoing (collectively, the "Corporate
Group"), and any and all other persons, firms, organizations, and corporations,
from any and all damages, losses, causes of action, expenses, demands,
liabilities, and claims on behalf of myself, my heirs, executors,
administrators, and assigns with respect to all matters relating to or arising
out of my employment with or separation from any member of the Corporate Group,
other than claims arising under the Agreement, under any employee benefit plan
or claims for indemnity arising as a result of my being an officer of the
Company. The release does not apply to claims or causes of action accruing after
the date hereof.

                  I ACKNOWLEDGE THAT SIGNING THIS WAIVER AND RELEASE IS AN
IMPORTANT LEGAL ACT AND THAT I HAVE BEEN ADVISED IN WRITING TO CONSULT AN
ATTORNEY PRIOR TO EXECUTION. I ALSO UNDERSTAND THAT, IN ORDER TO BE ELIGIBLE FOR
BENEFITS UNDER THE AGREEMENT, I MUST SIGN AND RETURN THIS WAIVER AND RELEASE TO
HUGH RICE KELLY. I ACKNOWLEDGE THAT I HAVE BEEN GIVEN AT LEAST 21 DAYS TO
CONSIDER WHETHER TO EXECUTE THIS WAIVER AND RELEASE.

                  In exchange for the payment to me of Benefits pursuant to the
Agreement, which is in addition to any remuneration or benefits to which I am
already entitled, (1) I agree not to sue in any local, state and/or federal
court regarding or relating in any way to my employment with or separation from
any member of the Corporate Group, and (2) I knowingly and voluntarily waive all
claims and release the Corporate Group from any and all claims, demands,
actions, liabilities, and damages, whether known or unknown, arising out of or
relating in any way to my employment with or separation from any member of the
Corporate Group, except to the extent that my rights are vested under the terms
of employee benefit plans sponsored by the Corporate Group rights described in
the Agreement, claims for indemnity from the Company arising as a result of
being an officer of the Company and except with respect to such rights or claims
as may arise after the date this Waiver and Release is executed. This Waiver and
Release includes, but is not limited to, claims and causes of action under:
Title VII of the Civil Rights Act of 1964, as amended ("Title VII"); the Age
Discrimination in Employment Act of 1967, as amended, including the Older
Workers Benefit Protection Act of 1990 ("ADEA"); the Civil Rights Act of 1866,
as amended; the Civil Rights Act of 1991; the Americans with Disabilities Act of
1990 ("ADA"); the Energy Reorganization Act, as amended, 42 U.S.C. Section 5851;
the Workers Adjustment and Retraining Notification Act of 1988; the Pregnancy
Discrimination Act of 1978; the Employee Retirement Income Security Act of 1974,
as amended; the Family and Medical Leave Act of 1993; the Fair Labor Standards
Act; the Occupational Safety and Health Act; the Texas Labor Code Section 21.001
et. seq.; the Texas Labor Code; claims in connection with workers' compensation
or "whistle blower" statutes; and/or contract, tort, defamation, slander,

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wrongful termination or any other state or federal regulatory, statutory or
common law. Further, I expressly represent that no promise or agreement which is
not expressed in the Agreement or this Waiver and Release has been made to me in
executing this Waiver and Release, and that I am relying on my own judgment in
executing this Waiver and Release, and that I am not relying on any statement or
representation of any member of the Corporate Group or any of their agents. I
agree that this Waiver and Release is valid, fair, adequate and reasonable, is
with my full knowledge and consent, was not procured through fraud, duress or
mistake and has not had the effect of misleading, misinforming or failing to
inform me. I acknowledge and agree that the Corporate Group will withhold any
taxes required by federal or state law from the Benefits otherwise payable to
me.

                  I affirm and agree that my employment relationship will end on
my Termination Date as defined in the Agreement and I then will withdraw
unequivocally, completely and finally from my employment and waive all rights in
connection with such relationship except to vested benefits and the payments and
benefits described in the Agreement. I acknowledge that no member of the
Corporate Group has promised me continued employment or represented to me that I
will be rehired in the future. I acknowledge that my employer and I contemplate
an unequivocal, complete and final dissolution of my employment relationship. I
acknowledge that this Waiver and Release does not create any right on my part to
be rehired by any member of the Corporate Group and I hereby waive any right to
future employment by any member of the Corporate Group.

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

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

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

                  I agree that the terms of this Waiver and Release are
CONFIDENTIAL and that any disclosure to anyone for any purpose whatsoever (save
and except disclosure to my spouse, to financial institutions as part of a
financial statement, to immediate family members and/or heirs, financial, tax
and legal advisors, outplacement, executive search and/or legal placement
advisors, or as required by law) by me or my agents, representatives, heirs,
spouse, employees or spokespersons shall be a breach of this Waiver and Release.
The above is not intended to restrict me from seeking or engaging in other
employment and, in that connection, from making confidential disclosure to
potential employers of such facts or opinions as I may elect to convey,
(consistent with any obligations under Section 9 of the Agreement).

                                       12
<PAGE>

                  I acknowledge that payment of Benefits pursuant to the
Agreement is not an admission by any member of the Corporate Group that they
engaged in any wrongful or unlawful act or that any member of the Corporate
Group violated any federal or state law or regulation. I understand that nothing
in this Waiver and Release is intended to prohibit, restrict or otherwise
discourage me from engaging in any activity related to matters of public or
employee health or safety, specifically to include activity protected under 42
U.S.C. Section 5851 and 10 C.F.R. Section 50.7, including, but not limited to,
providing information to the Nuclear Regulatory Commission ("NRC") regarding
nuclear safety or quality concerns, potential violations or other matters within
the NRC's jurisdiction. Similarly, nothing herein is intended to prohibit,
restrict or otherwise discourage me or any other individual from making reports
of unsafe, wrongful or illegal conduct to any agency or branch of the local,
state or federal government, including law enforcement authorities, public
utility commissions, energy regulatory commissions or any other lawful
authority.

                  I understand and agree that in the event of any breach of the
provisions of the Agreement, or threatened breach, by me, any member of the
Corporate Group may, in their discretion, initiate appropriate action as
provided in the Separation Agreement for any alleged breach by you and may
recover all lawful damages which it may prove by a preponderance of the evidence
in accordance with the law specified in that paragraph.

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

 /s/ Joe Bob Perkins
---------------------------
Joe Bob Perkins

[Intentionally Omitted]
---------------------------
Social Security Number

July 2, 2002
---------------------------
Signature Date

                                       13<PAGE>
                                                                    EXHIBIT 10.2

                              EMPLOYMENT AGREEMENT

                  This EMPLOYMENT AGREEMENT (this "Agreement") is entered into
on July 15, 2002, but is effective as of July 29, 2002 (the "Effective Date"),
by and among RELIANT ENERGY, INCORPORATED, a Texas corporation ("REI" herein),
RELIANT RESOURCES, INC., a Delaware corporation and a majority owned subsidiary
of REI ("RRI" herein) and MARK M. JACOBS ("Executive").

                                  WITNESSETH:

                  WHEREAS, REI and RRI desire to secure the experience,
abilities and service of Executive by employing Executive upon the terms and
conditions specified herein; and

                  WHEREAS, Executive is willing to enter into this Agreement
upon the terms and conditions specified herein;

                  NOW, THEREFORE, in consideration of the premises, the terms
and provisions set forth herein, the mutual benefits to be gained by the
performance thereof and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:

                  SECTION 1. Employment.

                  A. Duties and Authority. For purposes of this Agreement, (1)
the term "CEO" means the Chief Executive Officer of REI prior to the
Distribution (as such term is hereafter defined), and such term means the Chief
Executive Office of RRI from and after the Distribution, and (2) the term
"Company" means REI and RRI collectively prior to the Distribution, and such
term means RRI after the Distribution (except as provided in Section 6.D.).
During the Term, as defined in Section 2, REI and RRI agree to employ Executive
in the capacity of Executive Vice President and Chief Financial Officer of REI
and RRI, and Executive hereby accepts such employment, all upon the terms and
conditions set forth herein. Executive shall perform such duties and
responsibilities consistent with his title and shall be assigned by the CEO. The
Executive, in carrying out his duties under this Agreement, shall only report to
the CEO. Effective as of the distribution by REI to the holders of its common
stock of all of the shares of the common stock, par value $0.001 per share, of
RRI it then owns (the "Distribution"), Executive shall relinquish his duties as
Executive Vice President and Chief Financial Officer of REI and shall serve
solely in the capacity of Executive Vice President and Chief Financial Officer
of RRI, and references in this Agreement to employment of Executive by the
Company and similar references shall mean employment of Executive solely by RRI.
At the time of the Distribution, Executive hereby agrees to release REI from any
and all obligations it has under this Agreement and look solely to RRI for the
performance hereof (except to the extent Executive retains an equity-based or
incentive award relating to REI or its common stock).

                                      -1-
<PAGE>

                  B. Full-Time Duties. During the Term, and excluding any
periods of vacation or sick leave to which Executive is entitled, Executive
agrees to devote his full attention and time, during normal business hours, to
the business and affairs of the Company and, to the extent necessary to
discharge the responsibilities assigned to Executive hereunder, to use
Executive's reasonable best efforts to perform faithfully and efficiently such
responsibilities. Notwithstanding anything herein to the contrary, Executive
shall be allowed to (a) manage Executive's personal investments and affairs and
(b)(i) serve on boards or committees of civic or charitable organizations or
trade associations and (ii) with the prior approval of the CEO, serve on the
board of directors of any corporation or as an advisory director of any
corporation; provided that such activities do not materially interfere with the
proper performance of his duties and responsibilities specified in Section 1.A.
No such activities will be deemed to materially interfere with Executive's
duties until he has received written notice from the Company specifying the
interference in reasonable detail and given a reasonable opportunity to cure the
same.

                  SECTION 2. Term. Subject to the terms and conditions of this
Agreement, Executive shall be employed by the Company commencing on the
Effective Date. Executive's employment pursuant to the terms of this Agreement
shall terminate on the close of business on July 31, 2005 (the "Term"), unless
sooner terminated pursuant to Section 4 of this Agreement, and Executive shall
thereafter serve as an employee at will in the discretion of the Company.
Notwithstanding the foregoing, Executive's rights to benefits and payments,
including option exerciseability, as more fully described in Sections 3.D.1.,
3.D.2., 3.D.3., and the provisions of Sections 5 and 6 shall survive Executive's
termination of employment pursuant to the Agreement or otherwise.

                  SECTION 3. Compensation.

                  A. Base Salary. RRI shall pay Executive a salary (the "Base
Salary") of at least $39,583.33 per month. The Base Salary shall be payable by
RRI in accordance with the general payroll practices of RRI in effect from time
to time. During the Term, the Base Salary and other elements of compensation
shall be reviewed at the same time as the compensation of the CEO and other
senior executives of REI prior to the Distribution and RRI from and after the
Distribution for increase in the discretion of the Board of Directors of REI
prior to the Distribution and the Board of Directors of RRI from and after the
Distribution. Any increase in Base Salary shall not serve to limit or reduce any
other obligation to Executive under this Agreement. Base Salary shall not be
reduced; provided, however, that Base Salary may be reduced if such reduction is
generally applicable to all senior executives of REI prior to the Distribution
or to all senior executives of RRI after the Distribution, and the percentage
reduction of Executive's Base Salary is no more than the average percentage
reduction applied to the applicable senior executive group, but in no event
shall the aggregate reduction in Base Salary during the term of this Agreement
exceed 15% of the Base Salary in effect on the Effective Date.

                  B. Short-Term Incentive. Executive shall be eligible for an
annual short-term incentive bonus payable under the terms of the Company's
Annual Incentive Compensation Plan or similar successor plan (the "AICP"). The
annual short-term incentive bonus shall be based on

                                      -2-
<PAGE>

the short-term incentive target bonus of 100% of Annual Base Salary with a
maximum payout which is currently two times target and is periodically reviewed
by the Compensation Committee of the Board of Directors of REI prior to the
Distribution and the Board of Directors of RRI from and after the Distribution,
and will be determined by the Company in a manner consistent with the AICP based
on Company and individual performance.

                  C. Retention Bonus. Executive shall be eligible for a special
Retention Bonus in the amount of $650,000 payable in cash as soon as practicable
following the expiration of the Term. Such Retention Bonus shall include
interest at the rate of 7% per annum, compounded annually, from the Effective
Date until paid to Executive. Except as otherwise expressly provided in Sections
5.B., 5.C. and 5.D. herein, such bonus shall be paid as soon as practicable
following July 31, 2005, if and only if Executive remains in the active employ
of the Company through July 31, 2005. Notwithstanding the foregoing to the
contrary, if Executive's employment is terminated for Cause for the reasons set
forth in Section 4.D.(iv), he shall be entitled to receive payment of the
Retention Bonus as soon as practicable following such termination.

                  D. Equity Compensation.

                  1. Initial Option Awards. As of the Effective Date, Executive
         shall be granted option awards as follows (the "Initial Options") (a)
         an option to purchase 179,334 shares of the common stock, par value
         $0.001 per share, of RRI ("RRI Common Stock") pursuant to RRI's 2002
         Long-Term Incentive Plan (the "LTIP"), and (b) an option to purchase
         192,971 shares of common stock of REI ("REI Common Stock") under the
         REI Long-Term Incentive Plan ("REI LTIP") (which at Distribution will
         be adjusted in the same manner as all other REI stock options granted
         to employees after May 4, 2001) at an exercise price per share equal to
         the Fair Market Value (as defined in the LTIP and the REI LTIP) per
         share of the shares subject to the respective options on the Effective
         Date. So long as Executive remains continuously employed by the
         Company, the Initial Options shall become exercisable 33 1/3% on July
         29, 2003, 33 1/3% on July 29, 2004 and 33 1/3% on July 29, 2005 (unless
         accelerated pursuant to the LTIP, the REI LTIP or another provision of
         this Agreement), such that the Initial Options will become 100%
         exercisable on July 29, 2005. These Initial Options are considered
         tandem stock option grants meaning that the exercise of an RRI stock
         option cancels the entire REI stock option grant and vice-versa. In
         addition, Executive must choose which stock option award to keep at the
         Distribution and forfeit the other. If Distribution does not occur,
         Executive must choose at the time of exercise as described above. The
         Initial Options shall have a ten-year term and (i) in the case of a
         termination under Section 4.A., 4.B., 4.C., 4.D.(iv) or 4.E., Executive
         shall be 100% vested and have three years after such termination (but
         in no event beyond the original option term) to exercise and (ii) in
         the case of a termination under Section 4.D. (for reasons other than
         4.D.(iv)) or 4.F., Executive shall have the right to exercise the
         option within 90 days after termination (but in no event beyond the
         original option term) to the extent (if any) he was vested in the
         option at the time of termination. As related to the above

                                      -3-
<PAGE>

         termination events, the tandem provisions apply meaning that, if not
         previously determined, the Executive (or his beneficiary) must choose
         at the time of termination which award applies and the other award will
         be forfeited. The Initial Options will be evidenced in the same manner
         as all other option grants to executive employees under the LTIP or REI
         LTIP to the extent that the terms of such grant agreements are not
         inconsistent with and not less favorable to Executive than the
         provisions of this Agreement.

                  2. Initial Restricted Stock. As of the Effective Date,
         Executive will be granted restricted stock awards (the "Initial
         Restricted Stock Awards") as follows: (i) under the LTIP, a restricted
         stock award of 205,488 shares of RRI Common Stock and (ii), under the
         REI LTIP, a REI restricted stock award with respect to a number of
         shares of REI Common Stock determined by taking the product of (A)
         205,488 and (B) the RRI Common Stock closing market price on the
         Effective Date, divided by (C) the REI Common Stock closing market
         price on the Effective Date. These two Initial Restricted Stock Awards
         shall be tandem stock awards, meaning that the Executive must elect at
         the time hereinafter provided to receive one or the other, and the
         choice of the RRI Common Stock award cancels the related or companion
         REI Common Stock award and vice-versa. Executive must choose which
         stock award to keep at Distribution and forfeit the other. If
         Distribution does not occur, Executive shall choose at time of vesting.
         The Initial Restricted Stock Award denominated in REI Common Stock will
         become a CenterPoint Stock Award which will be adjusted at Distribution
         as necessary to account for the decrease in the value of such award as
         a result of the Distribution and such adjustment will be made in the
         same manner as similar REI awards made after May 4, 2001. So long as
         Executive remains continuously employed by the Company, these Initial
         Restricted Stock Awards shall become vested 66 2/3% on July 29, 2004
         and 33 1/3% on July 29, 2005 (unless accelerated pursuant to the LTIP,
         the REI LTIP or another provision of this Agreement) such that the
         Initial Restricted Stock Awards shall become 100% vested on July 29,
         2005. Regardless of the above, if Distribution occurs prior to July 29,
         2004, then 33 1/3% of the Initial Restricted Stock Award retained by
         Executive will have the vesting accelerated from July 29, 2004 to the
         later of July 29, 2003 or the date of Distribution. The remaining
         vesting schedule would be 33 1/3% on July 29, 2004 and 33 1/3% on July
         29, 2005. The Initial Restricted Stock Awards will be evidenced in the
         same manner as all other time-based restricted stock grants to
         executive employees under the LTIP or REI LTIP to the extent that the
         terms of such grant agreements are not inconsistent with and not less
         favorable to Executive than the provisions of this Agreement and (i) in
         the case of a termination under Section 4.A., 4.B., 4.C., 4.D.(iv) or
         4.E., Executive shall be 100% vested and (ii) in the case of a
         termination under Section 4.D. (for reasons other than 4.D.(iv)) or
         4.F., Executive shall be entitled to receive such Initial Restricted
         Stock Awards to the extent (if any) he was vested in the award at the
         time of termination. As related to the above termination events, the
         tandem provisions apply meaning that, if not

                                      -4-
<PAGE>

         previously determined, the Executive (or his beneficiary) must choose
         at time of termination which award applies and the other award will be
         forfeited.

                  3. 2002 Long Term Compensation.

                           (a) Performance Shares. As of the Effective Date,
                  Executive shall be granted a Performance Share Restricted
                  Stock Award under the LTIP at the target amount of 25,488
                  shares of RRI Common Stock payable as soon as practicable
                  after December 31, 2004, based on RRI's total shareholder
                  return in relation to a peer group of companies in accordance
                  with the LTIP as approved by the Compensation Committee of the
                  Board of Directors of RRI. So long as Executive remains
                  continuously employed by the Company, the Performance Share
                  Restricted Stock Award will vest according to the terms of the
                  LTIP at the end of the three-year performance cycle that began
                  on January 1, 2002 and will end on December 31, 2004 (unless
                  accelerated pursuant to the LTIP or another provision of this
                  Agreement), if and to the extent RRI has achieved the
                  performance goals established for such performance cycle. In
                  addition, as of the Effective Date, Executive will be granted
                  an REI performance unit grant valued at $100 per unit on the
                  Effective Date, with the number of such units determined by
                  taking the product of 25,488 times the RRI Common Stock
                  closing market price on the Effective Date, divided by $100.
                  (This award will vest at the end of the performance cycle
                  subject to achievement of performance goals as described in
                  Exhibit A for the REI performance unit grant.) These two
                  performance share/unit grants contain the following forfeiture
                  provisions:

                           (1)      RRI: If Distribution does not occur by
                                    December 31, 2004, the performance share
                                    grant is forfeited.

                           (2)      REI: Except as provided below, if Executive
                                    is not employed by REI at time of vesting
                                    (December 31, 2004), the performance unit
                                    grant is forfeited.

                  In the event that Executive terminates his employment due to
                  death under Section 4.A. or Disability under Section 4.B.,
                  such performance shares or units (of the applicable award)
                  shall be vested pro rata based on the ratio of the number of
                  days that have elapsed during the performance cycle prior to
                  such termination to 1,095 days. (For purposes of the REI
                  performance unit grant, the time period from January 1, 2002
                  to the Effective Date will count

                                      -5-
<PAGE>

                  in the number of days which have elapsed.) Such performance
                  shares or units shall be vested in accordance with the above
                  as of the date of such termination due to death or Disability
                  and shall be paid as soon as practicable after such
                  termination. In the event of any other termination prior to
                  December 31, 2004, Executive shall forfeit the entire award.
                  As related to the above termination events of death or
                  Disability, if one of the awards has not already been
                  forfeited, the RRI award will be forfeited and the payout will
                  be determined by using the REI award. The Performance Share
                  Restricted Stock Awards will be evidenced in the same manner
                  as all other performance share awards to executive employees
                  under the LTIP or REI LTIP in effect for 2002 as of the date
                  hereof, to the extent that the terms of such award agreements
                  are not inconsistent with and not less favorable to Executive
                  than the provisions of this Agreement.

                           (b) Stock Option. As of the Effective Date, Executive
                  will be granted additional options as follows (the "LTIP
                  Options"): (a) an option to purchase 139,333 shares of RRI
                  Common Stock pursuant to the LTIP and (b) an option to
                  purchase 149,928 shares of REI Common Stock (which at
                  Distribution is adjusted in the same manner as REI stock
                  options granted to employees under the REI LTIP after May 4,
                  2001) at an exercise price per share equal to the Fair Market
                  Value (as defined in the LTIP and the REI LTIP) per share of
                  the shares subject to the respective option on the Effective
                  Date. So long as Executive remains continuously employed by
                  the Company, the LTIP Options shall become exercisable 33 1/3%
                  on July 29, 2003, 33 1/3% on July 29, 2004 and an additional
                  33 1/3% on July 29, 2005 (unless accelerated pursuant to the
                  LTIP, the REI LTIP or another provision of this Agreement),
                  such that the LTIP Options will become 100% exercisable on
                  July 29, 2005. These two option grants are considered tandem
                  stock option grants meaning that the exercise of an RRI stock
                  option cancels the REI stock option grant and vice-versa. In
                  addition, Executive must choose which stock option award to
                  keep at Distribution and forfeit the other. If Distribution
                  does not occur, Executive must choose at the time of exercise
                  as described above. The LTIP Options shall have a 10-year
                  term. The LTIP Options will be evidenced in the same manner as
                  all other option grants to executive employees under the LTIP
                  and REI LTIP to the extent the terms of such grant agreements
                  are not inconsistent with and not less favorable to Executive
                  than the provisions of this Agreement. In the event that
                  Executive terminates his employment due to death under Section
                  4.A. or Disability under Section 4.B., such LTIP Options shall
                  be 100% vested and Executive or his estate shall have three
                  years after such

                                      -6-
<PAGE>

                  termination (but in no event beyond the original option term)
                  to exercise the option. In the event Executive terminates his
                  employment for any reason other than death, Disability or
                  Cause (for reasons other than Section 4.D.(iv)), he shall be
                  entitled to exercise such option to the extent it was vested
                  as of such termination within 90 days thereafter (but in no
                  event beyond the original option term). In the event
                  Executive's employment is terminated by the Company for Cause
                  (for reasons other than Section 4.D.(iv)), he shall
                  immediately forfeit all of the unexercised LTIP Options. As
                  related to the above termination events, the tandem provisions
                  apply meaning that, if not previously determined, the
                  Executive (or his beneficiary) must choose at time of
                  termination which award applies and the other award will be
                  forfeited.

                  4. Supplemental Bonus. In the event that the Target Bonus (as
hereinafter defined) does not exceed $1,850,000 at the end of the Term, the
Company will pay Executive a lump sum cash payment equal to the difference (the
"Supplemental Bonus") as soon as practicable after the last day of the Term. The
Target Bonus shall be equal to the sum of (i) the Fair Market Value (as defined
in the LTIP or the REI LTIP, as applicable, except such value shall be
determined by using the average of the first 20 trading days of the 30 trading
days immediately preceding the expiration of the Term) of the Initial Restricted
Stock Awards (205,488 shares of RRI Common Stock or the number of shares of REI
Common Stock determined pursuant to Section 3.D.2, whichever, if any, has not
been forfeited pursuant to Section 3.D.2.) as of the end of the Term, plus (ii)
the value of the Initial Options (179,334 options to purchase RRI Common Stock
or 192,971 options to purchase REI Common Stock, whichever, if any, has not been
forfeited pursuant to Section 3.D.1.) as of the end of the Term determined by
multiplying the excess (if any) between the Fair Market Value (as defined above)
of the RRI Common Stock or REI Common Stock, as applicable, as of the end of the
Term over the option grant or strike price multiplied by 179,334 or 192,971,
whichever applies. For purposes of determining the portion of the Target Bonus
described in clause (ii) of the preceding sentence, if neither the Initial
Option to purchase RRI Common Stock nor the Initial Option to purchase REI
Common Stock has been forfeited on or before the last day of the Term, then the
Initial Option with the greatest value as of the end of the Term (as determined
pursuant to such clause) shall be utilized and the other Initial Option shall
not be considered. In the event of a termination of the employment of Executive
under Section 4.A., 4.B., 4.C., 4.D.(iv) or 4.E. prior to the last day of the
Term, the Supplemental Bonus otherwise provided above shall be paid to Executive
(or his beneficiary) as soon as practicable following such termination and such
amount shall be valued as of the date of termination pursuant to Section 4.A.,
4.B., 4.C., 4.D.(iv) or 4.E utilizing the definition of Fair Market Value (as
defined in the LTIP or the REI LTIP, as applicable, except such value shall be
determined by using the average of the first 20 trading days of the 30 trading
days immediately preceding the termination of employment). In the event of a
termination of Executive under Section 4.D. (for reasons other than that
described in 4.D.(iv)) or 4.F., Executive shall forfeit the Supplemental Bonus
provided under this Section.

                                      -7-
<PAGE>

                  5. Other Incentive Compensation During Term. During the term
of this Agreement, Executive shall be eligible for grants of stock options,
restricted stock and other incentive awards at the sole discretion of the
Compensation Committee of the Board of Directors of REI before the Distribution
(except to the extent Executive is to receive awards denominated in RRI stock)
and the Compensation Committee of the Board of Directors of RRI from and after
the Distribution, provided that Executive shall receive such incentive
compensation at such times and on comparable terms and amounts as other
similarly situated senior executives of the Company.

                  6. Non-Duplication of Stock-Based Awards. The awards of stock
options and restricted stock and/or performance units to Executive are all
intended to be non-duplicative and to operate in tandem as described in Section
3.D. so that the exercise of any REI stock option or the vesting of REI
restricted stock shall automatically terminate the entire right to exercise or
vest in, as applicable, the tandem award in RRI stock options or restricted
stock and vice-versa.

                  E. Benefit Plans. Except as otherwise provided herein, during
the Term, Executive shall be entitled to participate in all incentive, savings
and retirement plans, practices, policies and programs applicable generally to
other peer executives of RRI. Executive and/or Executive's family, as the case
may be, shall be eligible for participation in, and shall receive all benefits
under, welfare benefit plans, practices, policies and programs provided by RRI
(including, without limitation, medical, prescription, dental, disability, group
life, accidental death and travel accident insurance plans and programs) to the
extent applicable generally to other peer executives of RRI. However, for all
purposes of the benefit plans of RRI, other than tax-qualified benefit plans,
Executive shall be given credit for his 13 years of employment with Goldman,
Sachs & Co.

                  F. Other Benefits.

                  1. Executive shall be entitled to receive reimbursement by RRI
         for all reasonable, out-of-pocket expenses incurred by him in
         performing services under this Agreement upon the submission by
         Executive of such accounts and records as may be required under RRI
         policy.

                  2. During the Term, Executive shall be entitled to paid
         vacation and fringe benefits in accordance with the plans, practices,
         programs and policies of RRI generally applicable to other similarly
         situated senior executives; provided, however, that (1) for all such
         purposes (except tax-qualified plans), Executive shall be given credit
         for his 13 years of employment with Goldman, Sachs & Co., and (2) for
         the balance of the calendar year 2002, Executive shall be provided with
         two weeks' paid vacation.

                  SECTION 4. Termination of Employment.

                  Notwithstanding the provisions of Section 2, Executive's
employment hereunder may terminate under any of the following conditions:

                  A. Death. Executive's employment under this Agreement shall
terminate automatically upon his death.

                                      -8-
<PAGE>

                  B. Disability. Executive's employment under this Agreement may
be terminated due to his Disability. "Disability" shall have the same meaning
ascribed to that term under the RRI's Long-Term Disability Plan except that
Executive shall not be deemed disabled until he commences to receive benefits
under said Disability Plan.

                  C. Termination by Company Without Cause. The Board of
Directors of REI prior to the Distribution and the Board of Directors of RRI
from and after the Distribution may terminate Executive's employment hereunder
without Cause (as defined below) on 30 days' prior written notice to Executive.

                  D. Termination by Company for Cause. Executive's employment
hereunder may be terminated for Cause by the Board of Directors of REI prior to
the Distribution and the Board of Directors of RRI from and after the
Distribution. For purposes of this Agreement, "Cause" shall mean (i) the
conviction of Executive of a felony involving moral turpitude; (ii) the
conviction of Executive by a state or federal court of competent jurisdiction of
embezzlement or misappropriation of funds of the Company or any Affiliate, as
defined in Section 6.D.; (iii) the gross negligence or willful misconduct of
Executive which causes a material injury, monetary or otherwise, to the Company
and its Affiliates, taken as a whole; or (iv) continued failure (for reasons
other than a physical or mental illness or injury) to substantially perform
material duties of his position with the Company, but only if Executive has been
given written notice of his failure and is given a reasonable period, not less
than 30 days, to cure the continued failure by taking such reasonable corrective
action as is within his power at the time of reference.

                  E. Termination by Executive for Good Reason. Executive may
terminate his employment hereunder for "Good Reason." For purposes of this
Agreement, "Good Reason" for termination shall exist if, without the written
consent of Executive, any of the following events occur:

                  1. a reduction in Executive's Base Salary; provided, however,
         that Good Reason for termination shall in no event exist in the case of
         (i) a Base Salary reduction permitted under Section 3.A. or (ii) a
         benefit reduction or elimination generally applicable to all senior
         executives of RRI; OR

                  2. a breach by the Company of this Agreement, which breach
         continues for more than 30 days following written notice given by
         Executive to the Company; OR

                  3. For years following 2002, Executive's total compensation
         for the taxable year is not required to be reported to shareholders
         under the Securities Exchange Act of 1934 by reason of Executive's
         failure to be among the 5 highest compensated officers (including the
         CEO) of RRI for the taxable year; OR

                  4. Executive's services are required to be performed at a
         location which is (i) not the headquarters of RRI or (ii) more than 50
         miles from the location of the headquarters of RRI as of the Effective
         Date; OR

                                      -9-
<PAGE>

                  5. an adverse change in the duties, responsibilities or status
         of Executive but only if the Company is given written notice of
         Executive's intent to invoke this provision and the Company fails to
         correct such change within thirty (30) days of the notice.

                  F. Termination by Executive Without Good Reason. Executive may
terminate his employment hereunder at any time on 30 days' written notice to the
Company.

                  SECTION 5. Payments Upon Termination.

                  A. General. Upon termination of Executive's employment for any
reason prior to the last day of the Term, the Company shall be obligated to pay
as soon as practicable following such termination, and Executive shall be
entitled to receive:

                  1. all accrued and unpaid Base Salary under Section 3.A. to
         the date of termination;

                  2. any unpaid annual short-term incentive bonus under Section
         3.B. for the calendar year ended prior to the date of termination
         (assuming Executive terminates after the close of such calendar year
         but prior to payment of such bonus);

                  3. all incurred but unreimbursed expenses for which Executive
         is entitled to reimbursement under Section 3.F.; and

                  4. any benefits to which Executive is entitled under the terms
         of any applicable employee pension or benefit plan or program, or
         applicable law.

                  B. Death. Upon termination of Executive's employment upon the
death of Executive pursuant to Section 4.A. prior to the last day of the Term,
the Company shall be obligated to pay as soon practicable following such
termination, and Executive's designated beneficiary, or if none, his estate,
shall be entitled to receive:

                  1. all of the amounts and benefits described in Section 5.A.;

                  2. any death benefit payable to or on behalf of the Executive
         under a plan or policy provided by the Company;

                  3. any unpaid Retention Bonus under Section 3.C ;

                  4. any Supplemental Bonus under Section 3.D.4; and

                  5. a continuation of health benefit coverage during the period
         required under COBRA except that the premium shall be at the active
         employee rate.

                                      -10-
<PAGE>

                  C. Disability. Upon termination of Executive's employment upon
the Disability of Executive pursuant to Section 4.B. prior to the last day of
the Term, the Company shall be obligated to pay as soon as practicable following
such termination, and Executive shall be entitled to receive:

                  1. all of the amounts and benefits described in Section 5.A.;

                  2. payments to which Executive is entitled under any plans or
         programs of the Company providing long-term disability or retirement
         benefits;

                  3. any unpaid Retention Bonus under Section 3.C;

                  4. any Supplemental Bonus under Section 3.D.4; and

                  5. a continuation of health benefit coverage during the period
         required under COBRA except that the premium shall be at the active
         employee rate.

                  D. Without Cause or for Good Reason. Upon termination of
Executive's employment prior to the last day of the Term (i) by the Company
without Cause pursuant to Section 4.C., or (ii) by Executive for Good Reason
pursuant to Section 4.E., the Company shall be obligated to pay as soon as
practicable following such termination, and Executive shall be entitled to
receive:

                  1. all of the amounts and benefits described in Section 5.C.;

                  2. a lump sum cash amount equal to the sum of (A) and (B)
         multiplied by (C), where (A) is the Base Salary in effect as of the
         date of termination of employment and (B) is the short-term incentive
         bonus at target and where (C) is 3.0; and

                  3. a continuation of health benefit coverage during the period
         required under COBRA, except that the premium shall be at the active
         employee rate

                  Payment under Section 5.D.2. is conditioned on the execution
by Executive or Executive's representative of a waiver and release of all
employment-related claims substantially in the form attached hereto as Exhibit
B; provided, however, that such waiver and release shall be contingent upon the
Company's satisfaction of all terms and conditions of this Agreement.

                  SECTION 6. Confidentiality.

                  A. Confidentiality. The Company agrees to provide Executive
with Confidential Information regarding the Company and the Company's business.
In return for this and other consideration provided under this Agreement,
Executive agrees that he will not, during the Term and thereafter, disclose or
make available to any other person or entity, or use for his own personal gain,
any Confidential Information, except for such disclosures as required in the

                                      -11-
<PAGE>

performance of his duties hereunder as may otherwise be required by law or legal
process. For purposes of this Agreement, "Confidential Information" shall mean
any and all information, data and knowledge that has been created, discovered,
developed or otherwise become known to the Company or any of its affiliates or
ventures or in which property rights have been assigned or otherwise conveyed to
the Company or any of its affiliates or ventures, which information, data or
knowledge has commercial value in the business in which the Company is engaged,
except such information, data or knowledge as is or becomes known to the public
without violation of the terms of this Agreement. By way of illustration, but
not limitation, Confidential Information includes business trade secrets,
secrets concerning the Company's plans and strategies, nonpublic information
concerning material market opportunities, technical trade secrets, processes,
formulas, know-how, improvements, discoveries, developments, designs,
inventions, techniques, marketing plans, manuals, records of research, reports,
memoranda, computer software, strategies, forecasts, new products, unpublished
financial statements or parts thereof, budgets or other financial information,
projections, licenses, prices, costs, and employee, customer and supplier lists
or parts thereof.

                  B. Return of Property. Executive agrees that at the time of
leaving the Company's employ, he will deliver to the Company (and will not keep
in his possession, recreate or deliver to anyone else) all Confidential
Information as well as all other devices, records, data, notes, reports,
proposals, lists, correspondence, specifications, drawings, blueprints,
sketches, materials, equipment, customer or client lists or information, or any
other documents or property (including all reproductions of the aforementioned
items) belonging to the Company or any of its affiliates or ventures, regardless
of whether such items were prepared by Executive.

                  C. Restrictive Covenants. Executive acknowledges that the
nature of his position at the Company will bring him into close contact with
much of the Company's Confidential Information. Accordingly, for the
Confidential Information and other consideration provided to Executive pursuant
to this Agreement, Executive agrees to be bound by the following restrictive
covenant:

                  1. Executive agrees that while employed by the Company and for
         a period of one (1) year thereafter, he shall not at any time, directly
         or indirectly, (i) induce, entice or solicit (or attempt to induce,
         entice or solicit) any employee of the Company or any of its affiliates
         or ventures to leave the employment of the Company or any of its
         affiliates or ventures or (ii) solicit or attempt to solicit the
         business of any customer or acquisition prospect of the Company or any
         of its affiliates or ventures with whom Executive had any actual
         contact while employed at the Company.

                  2. Executive acknowledges that the restrictive covenant under
         this Section 6, for which he received consideration from the Company as
         provided in this Section 6, are ancillary to otherwise enforceable
         provisions of this Agreement and that the restrictive covenant contains
         limitations as to time and scope of activity to be restrained that are
         reasonable and do not impose a greater restraint than is necessary to
         protect the goodwill or other business interests of the Company, such
         as the Company's need to protect its confidential and proprietary

                                      -12-
<PAGE>

         information. Executive acknowledges that in the event of a breach by
         Executive of the restrictive covenant, money damages will not be a
         sufficient remedy, and the restrictive covenant may be enforced by
         temporary restraining order, preliminary or temporary injunction, and
         permanent injunction. In that connection, Executive acknowledges that,
         in the event of a breach, the Company will suffer irreparable injury
         for which there is no adequate legal remedy, in part because damages
         caused by the breach may be difficult to prove with any reasonable
         degree of certainty.

                  D. Employment by Affiliates. Notwithstanding any provision of
this Agreement to the contrary, for purposes of the obligations of this Section
6, "Company" means the Company or an Affiliate and "employment" means employment
as an employee with the Company or any Affiliate. For purposes of this
Agreement, the term "Affiliate" means (i) any corporation or other entity in
which the shares or other measure of ownership owned or controlled directly or
indirectly by the Company shall represent 40% or more of the voting power of the
issued and outstanding stock or other measure of ownership of such corporation
or entity and (ii) any other company or organization controlled by, controlling
or under common control with the Company within the meaning of Section 414 of
the Internal Revenue Code of 1986, as amended. From and after the date that is
one year after the Distribution, for purposes of the obligations of this Section
6, "Company" shall mean RRI (and not REI).

                  E. Survival of Provisions. The obligations contained in this
Section 6 shall, to the extent provided in this Section 6, survive the
termination or expiration of Executive's employment with the Company and, as
applicable, shall be fully enforceable thereafter in accordance with the terms
of this Agreement. If it is determined by a court of competent jurisdiction in
any state that any restriction in this Section 6 is excessive in duration or
scope or is unreasonable or unenforceable under the laws of that state, it is
the intention of the parties that such restriction may be modified or amended by
the court to render it enforceable to the maximum extent permitted by the law of
that state.

                  SECTION 7. Amendment; Waiver. The terms and provisions of this
Agreement may be modified or amended only by a written instrument executed by
each of the parties hereto, and compliance with the terms and provisions hereof
may be waived only by a written instrument executed by each party entitled to
the benefits thereof. No failure or delay on the part of any party in exercising
any right, power or privilege granted hereunder shall constitute a waiver
thereof nor shall any single or partial exercise of any such right, power or
privilege preclude any other or further exercise thereof or the exercise of any
other right, power or privilege granted hereunder.

                  SECTION 8. Entire Agreement. Except as provided below and as
otherwise specifically contemplated by this Agreement, this Agreement
constitutes the entire agreement between the parties with respect to the subject
matter hereof and supersedes any and all prior written or oral agreements,
arrangements or understandings between the Company and Executive. If the Company
enters into an Executive Severance Agreement (governing the consequences of
certain terminations in anticipation of, on or following a change in control of
the Company) with any of its senior executives whose total compensation is
required to be

                                      -13-
<PAGE>

reported to shareholders under the Securities Act of 1934, it shall enter into
an agreement with Executive that is at least as favorable in all respects to
Executive as the most favorable of such agreements. If Executive is terminated
under circumstances that entitle him to compensation and benefits provided by
this Agreement and to compensation and benefits provided by any Executive
Severance Agreement, the benefits and payments provided under the Executive
Severance Agreement shall be reduced or offset by the same or similar benefits
and payments, if any, provided under this Agreement so that there is no
duplication of benefits or payments; provided, however, in no event shall the
payments and benefits described in Sections 3.C., 3.D.1., 3.D.2., and 3.D.4.
hereunder constitute an offset to any benefit or payment provided under the
Executive Severance Agreement. By way of illustration, in the event a severance
payment is to be made under Section 5.D hereof and under an Executive Severance
Agreement, then the amount of such payment under the Executive Severance
Agreement shall be reduced and offset by the amount of the severance payment
under Section 5.D. hereof. If Executive is terminated under circumstances that
do not entitle him to the compensation and benefits provided by the Executive
Severance Agreement, Executive shall be paid the compensation and benefits
provided by the applicable part of Section 5.

                  SECTION 9. Notices. All notices or communications hereunder
shall be in writing, addressed as follows or to any address subsequently
provided to the other party:

                  To the Company:

                                      REI:

                                      Reliant Energy, Incorporated
                                      1111 Louisiana
                                      Houston, TX 77002
                                               -or-
                                      P.O. Box 1384
                                      Houston, TX 77251-1384
                                      ATTENTION:      Hugh Rice Kelly,
                                                      Senior Vice President,
                                                      General Counsel and
                                                      Corporate Secretary

                                      RRI:

                                      Reliant Resources Inc.
                                      1111 Louisiana
                                      Houston, TX 77002
                                               -or-
                                      P.O. Box 1384
                                      Houston, TX 77251-1384

                                      -14-
<PAGE>

                                      ATTENTION:      Hugh Rice Kelly,
                                                      Senior Vice President,
                                                      General Counsel and
                                                      Corporate Secretary

                  To Executive:

                                                      Mark M. Jacobs
                                                      [Address Intentionally
                                                      Omitted]

All such notices shall be conclusively deemed to be received and shall be
effective (i) if sent by hand delivery or overnight courier, upon receipt, (ii)
if sent by telecopy or facsimile transmission, upon confirmation of receipt by
the sender of such transmission or (iii) if sent by registered or certified
mail, on the fifth day after the day on which such notice is mailed.

                  SECTION 10. Severability. In the event that any term or
provision of this Agreement is found to be invalid, illegal or unenforceable,
the validity, legality and enforceability of the remaining terms and provisions
hereof shall not be in any way affected or impaired thereby, and this Agreement
shall be construed as if such invalid, illegal or unenforceable provision had
never been contained therein.

                  SECTION 11. Binding Effect; Assignment. This Agreement shall
be binding upon and inure to the benefit of the parties and their respective
successors and assigns (it being understood and agreed that, except as expressly
provided herein, nothing contained in this Agreement is intended to confer upon
any other person or entity any rights, benefits or remedies of any kind or
character whatsoever). No rights or obligations of the Company under this
Agreement may be assigned or transferred by the Company except that such rights
or obligations may be assigned or transferred pursuant to a merger or
consolidation in which the Company is not the continuing entity, or the sale or
liquidation of all or substantially all of the assets of the Company, provided
that the assignee or transferee is the successor to all or substantially all of
the assets of the Company and such assignee or transferee assumes the
liabilities, obligations and duties of the Company, as contained in this
Agreement, either contractually or as a matter of law. The Company further
agrees that, in the event of a sale of assets or liquidation as described in the
preceding sentence, it shall take whatever action it legally can in order to
cause such assignee or transferee to expressly assume the liabilities,
obligations and duties of the Company hereunder.

                  SECTION 12. Governing Law. This Agreement shall be governed by
and construed in accordance with the laws of the State of Texas (except that no
effect shall be given to any conflicts of law principles thereof that would
require the application of the laws of another jurisdiction).

                  SECTION 13. Arbitration of Disputes: Any dispute, controversy,
or claim arising out of or relating to this Agreement shall be settled by final
and binding arbitration before a single arbitrator in Houston, Harris County,
Texas, conducted in accordance with the procedures of the Center for Public
Resources of New York ("CPR"). The decision of the arbitrator will be

                                      -15-
<PAGE>

final and binding on the parties, and judgment thereon may be had and will be
enforceable in any court having jurisdiction over the parties. Arbitration
awards will bear interest at an annual rate of the prime rate (as published in
the Wall Street Journal) plus 2% per annum, subject to any maximum amount
permitted by Texas law. To the extent that the provisions of this Agreement and
the prevailing rules of the CPR conflict, the provisions of this Agreement shall
govern. The arbitrator shall be selected by mutual agreement of the parties, if
possible. If the parties fail to reach agreement regarding appointment of an
arbitrator within 30 days following receipt by one party of the other party's
notice of desire to arbitrate, the arbitrator shall be selected in accordance
with CPR rules except that, if the parties continue to fail to select an
arbitrator, CPR shall not have the power to make the appointment but shall
continue to attempt to locate a mutually acceptable arbitrator until an
arbitrator has been selected. All legal, witness and other fees and expenses of
the arbitration other than the fees and expenses of the arbitrator shall be
borne by the Company, including (1) all litigation fees for work done outside
the arbitration that is directly related to such arbitration, and (2) a written
transcript and statement of facts if requested. The fees and expenses of the
arbitrator will be borne by the losing party. Any action to enforce or vacate
the arbitrator's award shall be governed by the Federal Arbitration Act if
applicable, and otherwise by Texas state law.

                  SECTION 14. Certain Legal Expenses. The Company will pay or
reimburse Executive for the reasonable legal fees and expenses incurred in the
review and negotiation of this Agreement. The Company's reimbursement obligation
shall not extend to any dispute arising under this Agreement following
execution.

                  SECTION 15. Headings. The headings of the sections contained
in this Agreement are for convenience only and shall not be deemed to control or
affect the meaning or construction of any provision of this Agreement.

                  SECTION 16. Withholding. The Company may withhold from any
payments to be made hereunder all federal, state, city, or other taxes as shall
be required under applicable law.

                  SECTION 17. Counterparts. This Agreement may be executed in
one or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.

                                      -16-
<PAGE>

                  IN WITNESS WHEREOF, the undersigned have executed this
Agreement effective as of the date set forth above.

                                     RELIANT ENERGY, INCORPORATED

                                     By /s/ R. S. Letbetter
                                        --------------------------------------
                                        R. S. Letbetter, Chairman of the Board

                                     RELIANT RESOURCES, INC.

                                     By /s/ R. S. Letbetter
                                        --------------------------------------
                                        R. S. Letbetter, Chairman of the Board

                                     EXECUTIVE

                                        /s/ Mark M. Jacobs
                                     -----------------------------------------
                                        Mark M. Jacobs

                                      -17-
<PAGE>

                                    EXHIBIT A

Reliant Energy 2002 Performance Unit Grant:

On the Effective Date, the Executive will be granted Performance Units (valued
at $100 each) under the REI LTIP that will be payable in shares of REI Common
Stock, with dividends over the applicable performance period, if any, as soon as
practicable after December 31, 2004.

The performance measurement will be based 100% on Total Shareholder Return
compared to a panel of companies as set forth below and the measurement period
will begin on the Effective Date and end on December 31, 2004.

A threshold award of 50% will be achieved if Reliant is in the top 50% of the
panel (top 8) and a maximum award of 150% will be achieved if Reliant is in the
top 20% of the panel (top 3). There will be a linear interpolation between these
two points.

Peer Group Companies

<Table>
<Caption>
Company              Ticker       Company              Ticker
-------              ------       -------              ------
<S>                  <C>          <C>                  <C>
Ameren                AEE         OGE Energy            OGE
Consolidated Edison   ED          Peoples Energy        PGL
DTE Energy            DTE         Pinnacle West         PNW
Energy East           EAS         Progess Energy        PGN
Exelon                EXC         PSE&G                 PEG
First Energy          FE          Reliant Energy        REI
Keyspan               KSE         Sempra Energy         SRE
NiSource              NI          Southern              SO
                                  Xcel Energy           XEL
</Table>

Future attrition from the peer group, should it occur, will reduce the number of
companies included in the panel.

<PAGE>

                                    EXHIBIT B

                               WAIVER AND RELEASE

                  In exchange for the payment to me of a severance payment (the
"Benefits") pursuant to Section 5.D.2. of that certain Employment Agreement
among Reliant Energy, Incorporated, Reliant Resources, Inc. (the "Company")(1)
and me effective as of July 29, 2002 (the "Agreement"), which is in addition to
any remuneration or benefits to which I am already entitled, I agree not to sue
and to release and forever discharge the Company and all of its parents,
subsidiaries, affiliates and unincorporated divisions, and its respective
officers, directors, agents, servants, employees, successors, assigns, insurers,
employee benefit plans and fiduciaries, and agents of any of the foregoing
(collectively, the "Corporate Group") from any and all damages, losses, causes
of action, expenses, demands, liabilities, and claims on behalf of myself, my
heirs, executors, administrators, and assigns with respect to all matters
relating to or arising out of my employment with or separation from any member
of the Corporate Group, other than claims arising under the Agreement, under any
award agreement contemplated under Section 3.D. of the Agreement, under any
Executive Severance Agreement contemplated in Section 8 of the Agreement, under
any separate incentive or other agreement between me and a member of the
Corporate Group, under any employee benefit plan or claims for indemnity arising
as a result of my being an officer or fiduciary of the Corporate Group. The
release does not apply to claims or causes of action accruing after the date
hereof.

                  I ACKNOWLEDGE THAT SIGNING THIS WAIVER AND RELEASE IS AN
IMPORTANT LEGAL ACT AND THAT I HAVE BEEN ADVISED IN WRITING TO CONSULT AN
ATTORNEY PRIOR TO EXECUTION. I ALSO UNDERSTAND THAT, IN ORDER TO BE ELIGIBLE FOR
THE BENEFITS, I MUST SIGN AND RETURN THIS WAIVER AND RELEASE TO HUGH RICE KELLY.
I ACKNOWLEDGE THAT I HAVE BEEN GIVEN AT LEAST 21 DAYS TO CONSIDER WHETHER TO
EXECUTE THIS WAIVER AND RELEASE.

                  In exchange for the payment to me of the Benefits, which is in
addition to any remuneration or benefits to which I am already entitled, (1) I
agree not to sue in any local, state and/or federal court regarding or relating
in any way to my employment with or separation from any member of the Corporate
Group, and (2) I knowingly and voluntarily waive all claims and release the
Corporate Group from any and all claims, demands, actions, liabilities, and
damages, whether known or unknown, arising out of or relating in any way to my
employment with or separation from any member of the Corporate Group, except to
the extent that my rights are vested under the terms of employee benefit plans
sponsored by the Corporate Group, rights described in the Agreement, claims for
indemnity from the Corporate Group arising as a result of being an officer or
fiduciary of the Corporate Group, rights described in any award agreement
contemplated under Section 3.D. of the Agreement, rights described in any
Executive Severance Agreement contemplated in Section 8 of the Agreement, rights
described in any separate incentive or other agreement between me and a member
of the Corporate

--------
(1)  Prior to Distribution, the "Company" will be defined as both REI and RRI.
     After the Distribution, the "Company" will be defined as only RRI.

<PAGE>

Group, and except with respect to such rights or claims as may arise after the
date this Waiver and Release is executed. Except for the matters identified
above that are not the subject of this Waiver and Release, this Waiver and
Release includes, but is not limited to, claims and causes of action under:
Title VII of the Civil Rights Act of 1964, as amended; the Age Discrimination in
Employment Act of 1967, as amended, including the Older Workers Benefit
Protection Act of 1990; the Civil Rights Act of 1866, as amended; the Civil
Rights Act of 1991; the Americans with Disabilities Act of 1990; the Energy
Reorganization Act, as amended, 42 U.S.C. Section 5851; the Workers Adjustment
and Retraining Notification Act of 1988; the Pregnancy Discrimination Act of
1978; the Employee Retirement Income Security Act of 1974, as amended; the
Family and Medical Leave Act of 1993; the Fair Labor Standards Act; the
Occupational Safety and Health Act; the Texas Labor Code Section 21.001 et.
seq.; the Texas Labor Code; claims in connection with workers' compensation or
"whistle blower" statutes; and/or contract, tort, defamation, slander, wrongful
termination or any other state or federal regulatory, statutory or common law.
Further, I expressly represent that no promise or agreement which is not
expressed in this Waiver and Release has been made to me in executing this
Waiver and Release, and that I am relying on my own judgment in executing this
Waiver and Release, and that I am not relying on any statement or representation
of any member of the Corporate Group or any of their agents. I agree that this
Waiver and Release is valid, fair, adequate and reasonable, is with my full
knowledge and consent, was not procured through fraud, duress or mistake and has
not had the effect of misleading, misinforming or failing to inform me. I
acknowledge and agree that the Corporate Group will withhold any taxes required
by federal or state law from the Benefits otherwise payable to me.

                  I affirm and agree that my employment relationship will end on
________________, 20___, and I then will withdraw unequivocally, completely and
finally from my employment and waive all rights in connection with such
relationship except to vested benefits, payment of the Benefits and as otherwise
expressly provided herein. I acknowledge that no member of the Corporate Group
has promised me continued employment or represented to me that I will be rehired
in the future. I acknowledge that my employer and I contemplate an unequivocal,
complete and final dissolution of my employment relationship. I acknowledge that
this Waiver and Release does not create any right on my part to be rehired by
any member of the Corporate Group and I hereby waive any right to future
employment by any member of the Corporate Group.

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

<PAGE>

                  I agree that the terms of this Waiver and Release are
CONFIDENTIAL and that any disclosure to anyone for any purpose whatsoever (save
and except disclosure to my spouse, to financial institutions as part of a
financial statement, to immediate family members and/or heirs, financial, tax
and legal advisors, outplacement, executive search and/or legal placement
advisors, or as required by law) by me or my agents, representatives, heirs,
spouse, employees or spokespersons shall be a breach of this Waiver and Release.
The above is not intended to restrict me from seeking or engaging in other
employment and, in that connection, from making confidential disclosure to
potential employers of such facts or opinions as I may elect to convey,
(consistent with any obligations under Section 6 of the Agreement).

                  I acknowledge that payment of the Benefits is not an admission
by any member of the Corporate Group that they engaged in any wrongful or
unlawful act or that any member of the Corporate Group violated any federal or
state law or regulation. I understand that nothing in this Waiver and Release is
intended to prohibit, restrict or otherwise discourage me from engaging in any
activity related to matters of public or employee health or safety, specifically
to include activity protected under 42 U.S.C. Section 5851 and 10 C.F.R. Section
50.7, including, but not limited to, providing information to the Nuclear
Regulatory Commission ("NRC") regarding nuclear safety or quality concerns,
potential violations or other matters within the NRC's jurisdiction. Similarly,
nothing herein is intended to prohibit, restrict or otherwise discourage me or
any other individual from making reports of unsafe, wrongful or illegal conduct
to any agency or branch of the local, state or federal government, including law
enforcement authorities, public utility commissions, energy regulatory
commissions or any other lawful authority.

                  I understand and agree that in the event of any breach of the
provisions of Section 6 of the Agreement, or threatened breach, by me, any
member of the Corporate Group may, in their discretion, initiate appropriate
action as provided in that Section and may recover all lawful damages which it
may prove by a preponderance of the evidence in accordance with the law
specified in that Section.

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

----------------------
Mark M. Jacobs

----------------------
Social Security Number

----------------------
Signature Date

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