Document:

<PAGE>   1
                                                                EXHIBIT 10(u)(3)

                         HOUSTON INDUSTRIES INCORPORATED
                             MASTER RETIREMENT TRUST

               (As Amended and Restated Effective January 1, 1999)

                          RELIANT ENERGY, INCORPORATED
                             MASTER RETIREMENT TRUST

                       (As Renamed Effective May 5, 1999)

<PAGE>   2

                         HOUSTON INDUSTRIES INCORPORATED
                             MASTER RETIREMENT TRUST

               (As Amended and Restated Effective January 1, 1999)

                          RELIANT ENERGY, INCORPORATED
                             MASTER RETIREMENT TRUST

                       (As Renamed Effective May 5, 1999)

                                    I N D E X

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ARTICLE I        DEFINITIONS AND CONSTRUCTION...........................................................3
Section:
         1.1     Definitions............................................................................3
                 Affiliated Corporation.................................................................3
                 Code...................................................................................3
                 Committee..............................................................................3
                 Company................................................................................3
                 Company Stock..........................................................................3
                 ERISA..................................................................................3
                 Group Trust(s).........................................................................3
                 Insurance Contracts....................................................................3
                 Investment Manager.....................................................................3
                 Master Trust...........................................................................4
                 Master Trust Fund......................................................................4
                 Participant............................................................................4
                 Participating Plan.....................................................................4
                 Plan...................................................................................4
                 Plan Administrator.....................................................................4
                 Prior Plan.............................................................................4
                 Prior Trust Agreement..................................................................4
                 Trustee................................................................................4
                 Valuation Date.........................................................................4
         1.2     Construction...........................................................................4

ARTICLE II       MASTER TRUST; PARTICIPATING PLANS......................................................6
Section:
         2.1     Continuation of Master Trust...........................................................6
         2.2     Participating Plans....................................................................6

ARTICLE III      GENERAL DUTIES OF THE PARTIES..........................................................8
Section:
         3.1     General Duties of the Company..........................................................8
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         3.2     Investment Guidelines; Contributions; Employee Records.................................8
         3.3     General Duties of Trustee..............................................................8

ARTICLE IV       ACCOUNTS OF PARTICIPATING PLANS;
                 AUTHORITY OF COMPANY AND COMMITTEE....................................................10
Section:
         4.1     Accounts of Participating Plans; Valuation............................................10
         4.2     Exclusive Benefit of Employees Under Participating Plans..............................11
         4.3     Authority of Company and Committee....................................................11

ARTICLE V        INVESTMENT, ADMINISTRATION AND
                 DISBURSEMENT OF MASTER TRUST FUND.....................................................13
Section:
         5.1     Investment of Master Trust Fund.......................................................13
         5.2     Direction of Investment...............................................................15
         5.3     Insurance or Annuity Contracts........................................................18
         5.4     Voting of Securities..................................................................21
         5.5     Powers of Trustee.....................................................................21
         5.6     Payments and Distributions from Master Trust Fund.....................................23
         5.7     Trustee's Dealings with Third Parties.................................................24
         5.8     Ancillary Trustee.....................................................................25

ARTICLE VI       FOR THE PROTECTION OF THE TRUSTEE.....................................................26
Section:
         6.1     Composition of Committee and Plan Administrators......................................26
         6.2     Evidence of Action by Company or Committee............................................26
         6.3     Communications........................................................................27
         6.4     Advice of Counsel or Plan Administrator...............................................27
         6.5     Miscellaneous.........................................................................27
         6.6     Fiduciary Responsibilities............................................................28

ARTICLE VII      TAXES, EXPENSES AND COMPENSATION OF TRUSTEE...........................................30
Section:
         7.1     Taxes and Expenses....................................................................30
         7.2     Compensation of the Trustee...........................................................30

ARTICLE VIII     SETTLEMENT OF ACCOUNTS; DETERMINATION OF INTERESTS
                 UNDER MASTER TRUST....................................................................31
Section:
         8.1     Settlement of Accounts of Trustee.....................................................31
         8.2     Determination of Rights and Benefits of Persons Claiming an Interest
                 in the Master Trust Fund; Enforcement of Master Trust Fund............................32
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ARTICLE IX       RESIGNATION, REMOVAL AND SUBSTITUTION OF
                 THE TRUSTEE...........................................................................33
Section:
         9.1     Resignation of Trustee................................................................33
         9.2     Removal of Trustee....................................................................33
         9.3     Appointment of Successor Trustee......................................................33
         9.4     Transfer of Master Trust Fund to Successor............................................33

ARTICLE X        DURATION AND TERMINATION OF MASTER TRUST;
                 AMENDMENT.............................................................................34
Section:
         10.1    Duration and Termination..............................................................34
         10.2    Distribution Upon Termination.........................................................34
         10.3    Loss of Qualification of a Participating Plan; Certain Withdrawals....................34
         10.4    Amendment.............................................................................35
         10.5    Acceptance or Rejection of Amendment by Affiliated Corporations.......................35

ARTICLE XI       MISCELLANEOUS.........................................................................36
Section:
         11.1    Governing Law; No Bond Required of Trustee............................................36
         11.2    Interest in Master Trust Fund; Assignment.............................................36
         11.3    Invalid Provisions....................................................................36
         11.4    Remedies..............................................................................36
         11.5    Prohibition of Diversion..............................................................36
         11.6    Headings for Convenience Only.........................................................36
         11.7    Successors and Assigns................................................................36
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<PAGE>   5

                         HOUSTON INDUSTRIES INCORPORATED
                             MASTER RETIREMENT TRUST

               (As Amended and Restated Effective January 1, 1999)

                          RELIANT ENERGY, INCORPORATED
                             MASTER RETIREMENT TRUST

                       (As Renamed Effective May 5, 1999)

        THIS TRUST AGREEMENT made and entered into as of the 1st day of January,
1999, by and between HOUSTON INDUSTRIES INCORPORATED (now known as Reliant
Energy, Incorporated), a Texas corporation (the "Company"), and THE NORTHERN
TRUST COMPANY, an Illinois corporation, as trustee;

                              W I T N E S S E T H:

        WHEREAS, by Agreement (the "1978 Trust Agreement") dated August 29, 1978
but effective as of October 1, 1978, between the Company and Texas Commerce Bank
National Association (the "Prior Trustee"), the Company amended, restated and
continued a trust established, effective July 1, 1953, in connection with the
Retirement Plan for Employees of Houston Lighting & Power Company, as adopted by
the Company effective July 1, 1953 (the "1953 Plan", said Plan as it presently
exists in the form of the Houston Industries Incorporated Retirement Plan,
amended and restated effective December 1, 1995 and as amended through the date
hereof, being incorporated herein by reference as fully as if set out in full
herein, together with any amendments thereto hereafter made); and

        WHEREAS, the Company amended and restated the 1978 Trust Agreement in
the form of the Houston Industries Incorporated Master Retirement Trust,
effective January 1, 1994 (the "1994 Trust Agreement"), to accommodate the
consolidation with the KBLCOM Trust Agreement, as established effective January
1, 1991, and to provide for the investment and administration on a commingled
basis, together with the assets of other defined benefit plans of the Company or
such Affiliated Corporations; and

        WHEREAS, effective December 1, 1995, the Company amended and restated
the 1953 Plan to provide for a retiree welfare benefits account pursuant to
Section 401(h) of the Internal Revenue Code of 1986, as amended (the "Code") and
to make certain other changes therein (the "Prior Plan"); and

        WHEREAS, effective as of July 1, 1998, the Company appointed the Trustee
to replace the Prior Trustee as trustee of the 1994 Trust Agreement and in
connection therewith, the Company and Trustee amended, restated and continued
the 1994 Trust Agreement in the form of the Houston Industries Incorporated
Master Retirement Trust ("Prior Trust Agreement"); and

                                       -1-

<PAGE>   6

        WHEREAS, as a result of the merger by and among NorAm Energy Corp.
("NorAm"), Houston Industries Incorporated, Houston Lighting & Power Company and
HI Merger Inc., NorAm became a wholly owned subsidiary of the Company and the
Company assumed the sponsorship of the NorAm Energy Corp. Employees Retirement
Plan (the "NorAm Plan") and the Minnegasco Division Employees' Pension Plan (the
"Minnegasco Plan"), and adopted the NorAm Energy Corp. Master Retirement Trust
(the "NorAm Trust") which held the assets of both the NorAm Plan and the
Minnegasco Plan, and the Company assumed all duties, rights and responsibilities
thereto as a party to the respective trust agreements in the place and stead of
NorAm and the Minnegasco division of NorAm, as applicable, effective as of
August 6, 1997.

        WHEREAS, effective as of January 1, 1999, the Company authorized and
directed that the NorAm Plan and the Minnegasco Plan be consolidated with,
merged into, and continued in the form of the Prior Plan, and the Prior Plan be
amended, restated and continued in the form of the Reliant Energy, Incorporated
Retirement Plan, in order to reflect the merger, implement a cash balance plan,
and make certain other changes therein. In connection therewith, the Company
authorized and directed effective as of January 1, 1999, that all assets held
under the NorAm Trust be merged with and into the assets held under the Prior
Trust Agreement, and the Prior Trust Agreement be amended, restated and
continued in the form of the Houston Industries Incorporated Master Retirement
Trust.

        WHEREAS, effective as of May 5, 1999, the name of the Company was
changed to Reliant Energy, Incorporated and the trust was renamed the Reliant
Energy, Incorporated Master Retirement Trust.

        NOW, THEREFORE, the Trustee accepts the trust created hereby and
covenants that it will hold all property which it may receive hereunder, IN
TRUST, upon the terms and conditions hereinafter stated; and the parties hereto
agree as follows:

                                       -2-

<PAGE>   7

                                    ARTICLE I

                          DEFINITIONS AND CONSTRUCTION

         1.1 Definitions: As used in the Master Trust, the following words and
phrases shall have the following meanings unless the context clearly requires a
different meaning:

                  AFFILIATED CORPORATION: Houston Industries Incorporated
         (renamed Reliant Energy, Incorporated effective May 5, 1999), a Texas
         corporation, and any corporation in which the shares owned or
         controlled directly or indirectly by Houston Industries Incorporated
         shall represent 50% or more of the voting power of the issued and
         outstanding capital stock of such corporation.

                  CODE: The Internal Revenue Code of 1986, as from time to time
         amended.

                  COMMITTEE: The Benefits Committee appointed by the Board of
         Directors of the Company, which shall serve as a "named fiduciary"
         hereunder and assist in the administration of the Master Trust Fund and
         whose duties also include the administration of the Plan.

                  COMPANY: Prior to May 5, 1999, Houston Industries
         Incorporated, a Texas corporation, and on and after May 5, 1999,
         Reliant Energy, Incorporated or a successor to Reliant Energy,
         Incorporated in the ownership of substantially all of its assets.

                  COMPANY STOCK: The common stock of the Company.

                  ERISA: Public Law No. 93-406, the Employee Retirement Income
         Security Act of 1974, as from time to time amended.

                  GROUP TRUST(S): The Dietche & Field Investment Trust A, the
         Sarofim Trust Co. Employee Benefit Investment Trust, the Oechsle
         International Group Trust Fund for Employee Benefit Trusts, The Beutel
         Trust and The Accel Fund or any other common, collective, group or
         commingled trust selected by the Committee which is qualified under
         Code Section 401(a) and exempt from tax under Code Section 501(a).

                  INSURANCE CONTRACTS: The insurance and annuity contracts as
         provided in Section 5.2 hereof.

                  INVESTMENT MANAGER: The fiduciary or fiduciaries, if any,
         appointed hereunder by the Committee and meeting the definition set
         forth in Section 3(38) of ERISA.

                                       -3-

<PAGE>   8

                  MASTER TRUST: The Houston Industries Incorporated Master
         Retirement Trust, as amended and restated effective January 1, 1999,
         and as the same may hereafter be amended from time to time. Effective
         May 5, 1999, the Master Trust was renamed the Reliant Energy,
         Incorporated Master Retirement Trust.

                  MASTER TRUST FUND: The fund or funds to be established under
         the Master Trust and from which benefits under the Participating Plans
         are to be paid. Such fund shall consist of all assets, money and
         property, all investments made therewith and proceeds thereof and all
         earnings and profits thereon, less the payments or other distributions
         which, at the time of reference, shall have been made by the Trustee,
         as authorized herein.

                  PARTICIPANT: Each employee, former employee, spouse or
         beneficiary of an employee who is or was participating in the Plan in
         accordance with the terms thereof.

                  PARTICIPATING PLAN: An employee benefit plan which is
         maintained by the Company or an Affiliated Corporation and which
         participates hereunder pursuant to Section 2.2 and as listed in Exhibit
         A attached hereto.

                  PLAN: The Houston Industries Incorporated Retirement Plan, as
         amended and restated effective January 1, 1999, and as thereafter
         amended. Effective May 5, 1999, the Plan was renamed the Reliant
         Energy, Incorporated Retirement Plan.

                  PLAN ADMINISTRATOR: The person or persons, or committee whose
         duties include service as a "named fiduciary" hereunder and the
         authority to control and manage the operation and administration of
         each applicable Participating Plan.

                  PRIOR PLAN: The Houston Industries Incorporated Retirement
         Plan, as amended and restated effective December 1, 1995 and as
         thereafter amended.

                  PRIOR TRUST AGREEMENT: The trust agreement dated July 1, 1998
         as thereafter amended, between the Company and the Trustee.

                  TRUSTEE: The Northern Trust Company, an Illinois corporation,
         and its successors, which shall carry out its duties hereunder as a
         "fiduciary" as provided in Section 3(21) of ERISA and shall have
         discretion and authority as set fort herein.

                  VALUATION DATE: The close of business on the last business day
         of each calendar month and any such other date or dates as the
         Committee may deem appropriate; provided, however, that any such
         interim valuation shall be exercised on a uniform and
         non-discriminatory basis.

         1.2 Construction: The masculine gender, where appearing in the Master
Trust, shall be deemed to include the feminine gender, and the singular may
include the plural, unless the context

                                       -4-

<PAGE>   9

clearly indicates to the contrary. The words "hereof," "herein," "hereunder" and
other similar compounds of the words "here" shall mean and refer to the entire
Master Trust, not to any particular provision or section. Article and Section
headings are included for convenience of reference and are not intended to add
to or subtract from the terms of the Master Trust.

                                       -5-

<PAGE>   10

                                   ARTICLE II

                        MASTER TRUST; PARTICIPATING PLANS

        2.1 Continuation of Master Trust: The Company hereby continues with the
Trustee a Master Trust for the exclusive purposes of providing benefits to
employees of the Company and the Affiliated Corporations, and to the
beneficiaries of such employees, under each Participating Plan and defraying
reasonable expenses of administering such Participating Plans. Each such
Participating Plan, and each such Affiliated Corporation, as of the date hereof,
is listed in Exhibit A attached hereto. The Master Trust shall consist of (a)
such cash and other property held in trust by the Trustee under the Prior Trust
Agreement at the close of business on December 31, 1998, (b) such cash and other
property held in trust under the NorAm Energy Corp. Master Retirement Trust at
the close of business on December 31, 1998, and which was transferred to this
Master Trust, (c) such assets as may hereafter be transferred to the Trustee
from any separate trust or other funding medium established under any
Participating Plan and (d) such sums of money and such property acceptable to
the Trustee as shall from time to time be paid or delivered to the Trustee as a
contribution in respect of any Participating Plan, together with the income and
gains therefrom. All such assets, money and property, all investments made
therewith and proceeds thereof and all earnings and profits thereon, less the
payments or other distributions which, at the time of reference, shall have been
made by the Trustee, as authorized herein, are referred to herein as the "Master
Trust Fund." The Master Trust shall be maintained at all times as a domestic
trust in the United States.

        2.2 Participating Plans: An employee benefit plan which is not already a
Participating Plan hereunder (as listed in Exhibit A attached hereto) may become
a Participating Plan hereunder only if the Company has determined that all of
the following requirements are met:

                  (a) The Company, any Affiliated Corporation or any combination
         thereof, has established the plan;

                  (b) The plan is a "defined benefit plan" as defined in Section
         3(35) of ERISA;

                  (c) The plan (and any other trust all or a part of whose
         assets are to be transferred to the Master Trust) is qualified under
         Section 401(a) of the Code;

                  (d) The Master Trust is exempt from taxation under Code
         Section 501(a);

                  (e) The Master Trust has been adopted as a trust under the
         plan and as part of the plan by due corporate action of the Company or
         Affiliated Corporation which maintains the plan, the Committee has
         consented thereto and an instrument in the form attached hereto as
         Exhibit B has been executed by the Company or Affiliated Corporation
         and such Committee and delivered to the Trustee; and

                                       -6-

<PAGE>   11

                  (f) The Committee has notified the Trustee in writing of the
         adoption of the Master Trust as a trust under such plan and the Trustee
         has acknowledged thereto by execution of such instrument.

                                       -7-

<PAGE>   12

                                   ARTICLE III

                          GENERAL DUTIES OF THE PARTIES

         3.1      General Duties of the Company:

         A. The Company shall provide the Trustee with evidence acceptable to
the Trustee that each Participating Plan (and any such other trust) has been
duly adopted by the Company or Affiliated Corporation and has been determined to
be qualified under Code Section 401(a).

         B. The Board of Directors of the Company shall appoint a Benefits
Committee, consisting of at least three individuals, which shall be authorized
under each Participating Plan to serve as a "named fiduciary" (within the
meaning of Section 402(a)(2) of ERISA) of the Participating Plans to assist in
the administration of the Master Trust as hereinafter provided. Each member of
the Committee shall serve at the pleasure of the Board of Directors of the
Company and the Company shall certify to the Trustee the names and specimen
signatures of the members of the Committee serving from time to time hereunder.
The Company shall indemnify and hold harmless each member of the Committee from
any and all claims, losses, damages, expenses (including counsel fees approved
by the Committee), and liabilities (including any amounts paid in settlement
with the Committee's approval but excluding any excise tax assessed against any
member or members of the Committee pursuant to the provisions of Code Section
4975) arising from any act or omission of such member in connection with his
duties and responsibilities under this Trust Agreement, except when the same is
judicially determined to be due to the gross negligence and willful misconduct
of such member.

        C. The Company shall from time to time certify to the Trustee the
name(s) (and specimen signature(s)) of the Plan Administrator.

        3.2 Investment Guidelines; Contributions; Employee Records: From time to
time the Committee shall communicate in writing to any Investment Manager who
may be acting pursuant to Section 5.2 (and to the Trustee, if it is managing the
investment of any of the assets of the Master Trust pursuant to such Section)
the investment guidelines governing the portion of the assets of the Master
Trust managed by such Investment Manager or the Trustee. The Company shall make,
and shall cause the Affiliated Corporations to make, contributions to the
Participating Plans as the same may be allowed in accordance with the Plan and
applicable law and shall specify in writing to the Trustee the amount of such
contributions allocable to each Participating Plan. The Company shall keep and
shall cause the Affiliated Corporations to keep accurate books and records with
respect to their respective employees, including, without limitation, records as
to the periods of employment, compensation and ages of such employees.

        3.3 General Duties of Trustee: The Trustee shall hold all property
received by it hereunder, which, together with the income and gains therefrom
and additions thereto, and less payments and other distributions therefrom,
shall constitute the Master Trust Fund. Except as otherwise hereinafter
provided, the Trustee shall manage, invest and reinvest the Master Trust Fund,
collect the income thereof, and make payments therefrom, all in accordance with
the terms of this

                                       -8-

<PAGE>   13

Agreement. The Trustee shall be responsible only for the property actually
received by it hereunder. It shall have no duty or authority to compute any
amount to be paid to it by the Company, by any Affiliated Corporation or by any
participant in any Participating Plan, or to bring any action or proceeding to
enforce the collection from any such person of any contribution to the Master
Trust in respect of any Participating Plan.

                                       -9-

<PAGE>   14

                                   ARTICLE IV

                        ACCOUNTS OF PARTICIPATING PLANS;
                       AUTHORITY OF COMPANY AND COMMITTEE

         4.1 Accounts of Participating Plans; Valuation: The Trustee shall
maintain separate accounts reflecting the proportional share in the Master Trust
Fund of each Participating Plan. The Trustee shall determine the value of the
assets of the Master Trust Fund as of each Valuation Date. Each such valuation
shall be made as promptly as practicable after the Valuation Date as of which it
is made. Each contribution to and payment and distribution from the Master Fund
shall be made as of the Valuation Date next preceding the date on which, as
applicable, the Trustee receives such contribution or receives notice from the
Company, the Committee or the appropriate Plan Administrator that such payment
or distribution is to be made, on the basis of the valuation of the Master Trust
Fund and of the proportional share of each Participating Plan in the Master
Trust Fund as of such Valuation Date (taking into account the liabilities of the
Master Trust Fund as of such Date). The assets in the Master Trust Fund shall be
allocated on a pro rata basis reflecting the interest in the Master Trust Fund
of each Participating Plan unless the Committee shall direct in writing that a
separate account or accounts are to be created within the Master Trust Fund to
hold assets allocable solely to a particular Participating Plan or Plans. If
such an account is created, income, distributions and gains and losses with
respect to the assets or group of assets held therein shall be attributable
solely to the proportional share of such Participating Plan or Plans.

                  At the close of business on the Valuation Date, the Trustee
shall render to the Committee a statement of account for the Master Trust Fund
using its pricing services for each respective type of security. In the absence
of a readily ascertainable value, the Trustee shall rely conclusively on the
determination of any Investment Manager (or the Committee if it has
responsibility for a portion of the Master Trust Fund) with respect to the fair
market value of those assets allocated such Investment Manager (or the
Committee), and the Trustee shall have no responsibility with respect to the
determination of the fair market value of such assets. Notwithstanding any other
provision of this Section, the Committee or its agent, in determining the
equitable share in the Master Trust Fund of any Participating Plan, may rely
upon the determination of the issuer of any insurance contract held as part of
the Master Trust Fund with respect to the value of such contract and may rely
upon the determination of any Investment Manager with respect to the value of
any interest of the Master Trust in any common, collective, commingled or group
trust fund maintained by such Investment Manager in which assets of the Master
Trust are permitted to be invested by Section 5.5(j) of this Agreement.

                  Any Investment Manager or the Committee who may be acting
pursuant to Section 5.2 (and the Trustee, if it is managing the investment of
any assets of the Master Trust pursuant to such Section) may in its discretion
transfer or direct the transfer to a liquidating account of any investment of
the portion of the Master Trust under its management which it determines should
be liquidated for the benefit of those Participating Plans whose assets are
commingled in the Master Trust on the date of determination and whose equitable
share in the Master Trust Fund on such date includes such investment. Any
investment that has been transferred to a liquidating account shall be
segregated and administered or realized upon solely for the benefit ratably of
such

                                      -10-

<PAGE>   15

Participating Plans and shall be excluded in determining the equitable share in
the Master Trust Fund of any Participating Plan thereafter.

                  Notwithstanding the foregoing requirements of this Section
4.1, the Committee may direct the Trustee to establish and maintain a "Welfare
Benefits Account" or a "Post-Retirement Medical Benefit Account" within the
Master Trust Fund for one or more Participating Plans (hereinafter referred to
as a "Post-Retirement Medical Benefit Account"). Each such Post-Retirement
Medical Benefit Account shall be maintained for the sole purpose of paying
certain medical claims incurred by retired employees who are entitled to pension
benefits under the related Participating Plan and their eligible dependents in
accordance with Section 401(h) of the Code. The assets of each such
Post-Retirement Medical Benefit Account shall be separately accounted for on the
Trustee's books and records as a part of a particular Participating Plan but may
be commingled and invested with other assets of the Master Trust Fund at the
Committee's discretion. Additions to a Post-Retirement Medical Benefit Account
may be contributions from the Company or an Affiliated Corporation or by the
transfer(s) of assets from the portion of the related Participating Plan which
is not accounted for on the Trustee's books and records as a Post-Retirement
Medical Benefit Account, as directed by the Committee, which direction shall be
in accordance with Section 420 of the Code. The Committee shall designate the
contributions which are allocable to a Post-Retirement Medical Benefit Account
and shall designate the portion of the assets attributable to a Participating
Plan which is not accounted for on the Trustee's books and records as a
Post-Retirement Medical Benefit Account that is to be transferred to the
Post-Retirement Medical Benefit Account maintained within such Participating
Plan. The Trustee shall make the payments from a Post-Retirement Medical Benefit
Account at the written direction of the Committee, which direction shall be
pursuant to the related Participating Plan document and in accordance with
Section 420 of the Code and other applicable law. Such direction may provide for
the direct reimbursement of the Company or an Affiliated Corporation from the
Participating Plan's Post-Retirement Medical Benefit Account for certain
expenses the Company or an Affiliated Corporation has previously paid to provide
post-retirement medical plan coverage to retired employees who are entitled to
pension benefits under the related Participating Plan and their eligible
dependents. Upon the Committee's determination that all liabilities for benefit
payments under a Post-Retirement Medical Benefit Account have been satisfied,
the Committee shall direct the Trustee in writing to remit any remaining amounts
credited to such Account to the Company or one or more Affiliated Corporations,
except to the extent that such remaining amounts are attributable to a transfer
of assets from the portion of the Participating Plan which does not constitute a
Post-Retirement Medical Benefit Account, in which event such remaining amounts
shall be transferred back to such other portion of the Participating Plan.

         4.2 Exclusive Benefit of Employees Under Participating Plans: At no
time prior to the satisfaction of all liabilities with respect to employees and
their beneficiaries under any Participating Plan shall any part of the equitable
share of such Participating Plan in the Master Trust Fund be used for, or
diverted to, any purposes other than for the exclusive benefit of such employees
and their beneficiaries or the payment of Participating Plan or Master Trust
administrative expenses.

         4.3 Authority of Company and Committee: When the Master Trust is the
trust under the plan of any Affiliated Corporation, such Affiliated Corporation
shall be bound by the decisions,

                                      -11-

<PAGE>   16

instructions, actions and directions of the Company, the Committee (or its
representative), each Plan Administrator (or their designees), and each
Investment Manager under this Agreement and the Trustee shall be indemnified by
the Company and such Affiliated Corporation for expenses and liabilities
incurred by relying upon such decisions, instructions, actions and directions,
or in the event such expenses or liabilities were incurred by the Trustee due to
the failure of such parties to carry out their responsibilities under the Plan
and each Participating Plan. The Trustee shall not be required to give notice to
or obtain the consent of any such Affiliated Corporation with respect to any
action which is taken by the Trustee pursuant to this Agreement.

                                      -12-

<PAGE>   17

                                    ARTICLE V

                         INVESTMENT, ADMINISTRATION AND
                        DISBURSEMENT OF MASTER TRUST FUND

         5.1 Investment of Master Trust Fund: Except as provided elsewhere in
this Agreement, the Master Trust Fund may be invested, in accordance with the
procedures prescribed by Section 5.2, in any property, real, personal or mixed,
wherever situated, and whether or not productive of income or consisting of
wasting assets, including, without limitation, (i) common and preferred stocks,
bonds, notes and debentures (including convertible stocks and securities but not
including any stocks or securities of the Trustee or its affiliates), (ii)
leaseholds, mortgages (including, without limitation, any collective or part
interest in any bond and mortgage or note and mortgage), (iii) certificates of
deposit, demand or time deposits (including any such deposit with any bank
serving as trustee hereunder), (iv) shares of investment companies and mutual
funds, (v) interests in partnerships, trusts and limited liability companies,
insurance policies and contracts (including individual or group annuity
contracts), (vi) oil, mineral or gas properties, royalties, interests or rights
(including equipment pertaining thereto), without being limited to the classes
of property in which trustees are authorized to invest trust funds by any law,
or any rule of court, of any state and without regard to the proportion any such
property may bear to the entire amount of the Master Trust Fund, and (vii) any
common, collective, group or commingled trust fund, including but not limited to
the Dietche & Field Investment Trust A, the Sarofim Trust Co. Employee Benefit
Investment Trust, the Oechsle International Group Trust Fund for Employee
Benefit Trusts, The Beutel Trust and The Accel Fund and the Trustee may cause
the assets of the Master Trust Fund to be invested as part of the funds created
pursuant to the agreements of trust establishing the Dietche & Field Investment
Trust A, the Sarofim Trust Co. Employee Benefit Investment Trust, the Oechsle
International Group Trust Fund for Employee Benefit Trusts, The Beutel Trust and
The Accel Fund or any other common, collective, group or commingled trust for
the commingled, collective and common investment of assets of eligible
participating trusts, subject to all of the provisions of said agreements of
trust, such agreements of trust being herein incorporated by this reference as
fully as if set forth herein; provided, however, that (i) investments shall be
so diversified as to minimize the risk of large losses unless under the
circumstances it is clearly prudent not to do so, in the sole judgment of the
person who is directing the investment of the Master Trust Fund under the
provisions of Section 5.2, or in the sole judgment of the Trustee if it is
managing the Master Trust Fund under such provisions and (ii) investments shall
at all times be subject to the limitations set forth in the next following
paragraph.

                  The Committee shall not direct the Trustee to invest any
assets of the Master Trust Fund in any Company security which is not a
"qualifying Company security" nor in any Company real property which is not
"qualifying Company real property." Moreover, the Committee shall not direct the
Trustee to acquire any "qualifying Company securities" and/or "qualifying
Company real property" as an investment if such acquisition will result in the
Master Trust Fund holding more than 10% of the then fair market value of the
assets of the Master Trust Fund in "qualifying Company securities" and/or
"qualifying Company real property." For purposes of this paragraph, the term
"qualifying Company securities" means stock or marketable obligations of the
Company or an Affiliated Corporation, as defined in Section 407 of ERISA. The
term "qualifying Company real

                                      -13-

<PAGE>   18

property" means parcels of real property leased to the Company or an Affiliated
Corporation if a substantial number of the parcels are disbursed geographically
and if each parcel is suitable for or adaptable to more than one use, as defined
in Section 407 of ERISA.

                  The Committee shall have the sole investment responsibility
with respect to retention, sale, purchase or voting of any Company Stock which
has not been allocated to an Investment Manager. The Trustee shall have custody
of such Company Stock and shall act with respect thereto only as directed by the
Committee. The Trustee shall not make any investment review of, consider the
propriety of holding or selling, or vote any such Company Stock. With respect to
such Company Stock, the Committee shall have the investment power granted to the
Trustee by Section 5.5 as limited by 4.2 and 5.1 of this Agreement, as if all
references therein to the Trustee referred to the Committee.

                  To the extent that any portion of the Master Trust Fund is
invested in mutual fund shares or bank commingled funds, the Committee shall
initially select funds to be invested in and shall be responsible for retaining
the availability of or terminating the availability of such funds. To the extent
the Trustee is required to enter into a custody agreement with the sponsor of a
bank commingled fund or such other type of fund, the Committee shall direct the
Trustee to enter into such agreement.

                  With the prior approval of the Committee, the Trustee or the
person directing the investment of a portion or all of the Master Trust Fund may
utilize investment practices and techniques which include but are not limited to
(i) securities lending, (ii) investments in futures contracts, forwards
contracts and options, (iii) swap agreements and (iv) indexed securities in
which value is linked to currencies, interest rates, commodities indices or
other financial indicators.

                  With regard to the lending of securities, the Committee may
direct the Trustee as fiduciary to lend securities of the Trust Fund held by the
Trustee by entering into a written agreement with the Trustee. The terms of the
agreement between the Committee and the Trustee shall be consistent with
Department of Labor Prohibited Transaction Exemption 81-6 or any successor
exemption. The written agreement between the Committee and the Trustee shall
direct the Trustee to enter into a loan agreement with a borrower or borrowers.

                  The Trustee shall transfer securities to the borrower and
invest or hold on behalf of the Trust Fund the collateral received in exchange
for the securities. Notwithstanding anything in this agreement to the contrary,
the borrower shall have the authority and responsibility to vote securities it
has borrowed. The Trustee shall maintain a record of the market value of the
loaned securities and shall be paid reasonable compensation as agreed to by the
Trustee and the Committee.

                  With regard to investments in futures, the Committee may
direct the Trustee to: (i) enter into such agreements as are necessary to
implement investment in futures contracts and options on futures contracts; (ii)
transfer initial margin to a futures commission merchant or third party
safekeeping bank pursuant to directions from an Investment Manager and (iii) pay
or demand margin in accordance with industry practice to or from such futures
commission merchant based on

                                      -14-

<PAGE>   19

daily mark to market calculations. The Trustee shall have no investment or
custodial responsibility with respect to assets transferred to a futures
commission merchant or third party safekeeping bank.

                  Any property at any time received by the Trustee may be
retained in the Master Trust Fund. To the extent that the Trustee is managing
the Master Trust Fund under the provisions of Section 5.2, the Trustee may
invest and reinvest all or any portion of the Master Trust Fund collectively
with funds of other pension and profit-sharing trusts exempt from tax under
Section 501(a) of the Code by reason of qualifying under Section 401(a) of said
Code either in obligations selected by the Trustee or by investment collectively
through the medium of any common, collective or commingled trust fund which has
been or hereafter may be established by the Trustee or by any other bank in the
United States, the instrument or instruments establishing such trust fund or
funds, as amended from time to time, being made a part of this Agreement so long
as any portion of the Master Trust Fund shall be invested through the medium
thereof.

                  With respect to any portion of the Master Trust Fund which is
under the management of an Investment Manager or the Committee and except as
otherwise provided in paragraph three of this section regarding the lending of
securities, the Trustee shall not make any investment review of, consider the
propriety of holding or selling, or vote other than as directed by an Investment
Manager or the Committee, any assets of the Trust Fund allocated to an
Investment Manager or the Committee in accordance with Section 5.2, except that
if the Trustee shall not have received contrary instructions from the Investment
Manager or the Committee, the Trustee shall invest for short term purposes any
cash consisting of U.S. dollars, for which an Investment Manager or the
Committee has investment responsibility, in its custody in the short-term
collective investment fund maintained by the Trustee. For currencies other than
U.S. dollars, the Trustee shall invest cash for which an Investment Manager or
the Committee has investment responsibility as directed by the Investment
Manager or the Committee with respect to those assets of the Master Trust Fund
for which the Investment Manager or the Committee has investment responsibility
and such investments may include an interest bearing account of a foreign
custodian.

         5.2 Direction of Investment: The Committee shall from time to time
specify by written notice to the Trustee whether the investment of the Master
Trust Fund (other than the portion thereof consisting of Insurance Contracts),
in the manner provided in Section 5.1, shall be managed solely by the Trustee,
or shall be directed by one or more Investment Managers, or whether both the
Trustee and one or more Investment Managers are to participate in investment
management and if so how the investment responsibility is to be divided with
respect to assets. In the event that the Committee shall fail to specify
pursuant to this Section 5.2 the person or persons who are to manage the
investment of the Master Trust Fund or any portion or portions thereof (other
than the portion or portions consisting of Insurance Contracts) the Trustee
shall manage the Master Trust Fund or such portion or portions pursuant to the
investment guidelines established by the Committee given in the exercise of that
Committee's responsibility.

                  Any Investment Manager appointed to manage the investment of a
part (or all) of the Master Trust Fund (other than the portion or portions
thereof consisting of Insurance Contracts) shall either (i) be registered as an
investment adviser under the Investment Advisers Act of 1940 or under the laws
of any state, (ii) be a bank, as defined in that Act or under the laws of any
state, or (iii) be

                                      -15-

<PAGE>   20

an insurance company qualified to perform investment management services under
the laws of more than one State. If investment of the Master Trust Fund (other
than the portion or portions thereof consisting of Insurance Contracts) is to be
directed in whole or in part by an Investment Manager, the Trustee shall be
given copies of the instruments appointing the Investment Manager and evidencing
his acceptance of such appointment and acknowledgment that he is a fiduciary of
each Participating Plan, and a certificate evidencing the Investment Manager's
registration under said Act or status as a bank or insurance company described
in the next preceding sentence. The Trustee may continue to rely upon such
instruments and certificate until otherwise notified in writing by the
Committee.

                  The Trustee shall follow the directions of the Investment
Manager regarding the investment and reinvestment of the portion or portions of
the Master Trust Fund as shall be under management by the Investment Manager,
and shall be under no duty or obligation to review any investment to be
acquired, held or disposed of pursuant to such directions nor to make any
recommendations with respect to the disposition or continued retention of any
such investment. The Trustee shall have no liability or responsibility for
acting without question on the direction of, or failing to act in the absence of
any direction from, the Investment Manager, unless the Trustee participated
knowingly in or knowingly undertook to conceal an act or omission of an
Investment Manager knowing such act or omission to be a breach of fiduciary
responsibility. The processing of investment orders by the Trustee pursuant to
the direction of an Investment Manager shall not constitute participating
knowingly.

                  The Investment Manager at any time and from time to time may
issue orders for the purchase or sale of securities directly to a broker, and in
order to facilitate such transaction the Trustee upon request shall execute and
deliver appropriate trading authorizations. Written notification of the issuance
of each such order shall be given promptly to the Trustee by the Investment
Manager, and the execution of each such order shall be confirmed to the Trustee
by the broker. Such notification shall be authority for the Trustee to pay for
securities purchased against receipt thereof and to deliver securities sold
against payment therefor, as the case may be. All notifications concerning
investments made by the Investment Manager shall be signed by such person or
persons, acting on behalf of the Investment Manager as may be duly authorized in
writing; provided, however, that the transmission to the Trustee of such
notifications by photostatic teletransmission with duplicate or facsimile
signature or signatures shall be considered a delivery in writing of the
aforesaid notifications until the Trustee is notified in writing by the
Investment Manager that the use of such devices with duplicate or facsimile
signatures is no longer authorized. The Trustee shall be entitled to rely upon
such directions which it receives by such means if so authorized by the
Investment Manager and shall in no way be responsible for the consequences of
any unauthorized use of such device which was not, in fact, known by the Trustee
at the time to be unauthorized. The Trustee shall, as promptly as possible,
comply with any written directions given by the Investment Manager hereunder,
and, where such directions are given by photostatic teletransmission with
facsimile signature or signatures, the Trustee shall be entitled to presume any
directions so given are fully authorized.

                  In the event that an Investment Manager should resign or be
removed by the Committee, the Trustee shall, upon receiving written notice of
such resignation or removal, manage,

                                      -16-

<PAGE>   21

pursuant to Section 5.1, the investment of the portion of the Master Trust Fund
under management by such Investment Manager at the time of its resignation or
removal, unless and until it shall be notified of the appointment of another
Investment Manager as provided in this Section 5.2, for such portion of the
Master Trust Fund.

                  At any time and from time to time, the Committee may direct
the Trustee to transfer a specified portion or all of the Trust Fund as it shall
deem advisable to the trustees of the Dietche & Field Investment Trust A, the
Sarofim Trust Co. Employee Benefit Investment Trust, the Oechsle International
Group Trust Fund for Employee Benefit Trusts, The Beutel Trust and The Accel
Fund or any other common, collective, group or commingled trust described in
Section 5.1 (which trusts are hereinafter collectively called the "Group
Trusts"), if and only if a Group Trust is qualified under Code Section 401(a)
and exempt from tax under Code Section 501(a), and is maintained as a medium for
the commingled, collective and common investment of assets of eligible
participating trusts; and the Committee may direct the Trustee to withdraw all
or any part of the Trust Fund so transferred. The terms and provisions of the
agreements of trust establishing the Dietche & Field Investment Trust A, the
Sarofim Trust Co. Employee Benefit Investment Trust, the Oechsle Inter national
Group Trust Fund for Employee Benefit Trusts, The Beutel Trust and The Accel
Fund and the provisions of any amendments thereto, are hereby incorporated
herein by reference and shall be deemed a part of this Trust Agreement so long
as any portion of the Trust Fund shall be invested through the medium thereof.
The Trustee shall make any such transfer or withdrawal of all or any part of the
Trust Fund only upon the express direction of the Committee. The Trustee shall
be under no duty or obligation to review any investment acquired, held or
disposed of by the trustees of a Group Trust pursuant to the provisions thereof,
nor shall the Trustee be under a duty or obligation to review any investment
acquired, held or disposed of by the duly appointed trustees of any Group Trust
pursuant to the provisions establishing said Group Trust, and said trustees
shall have all fiduciary powers, responsibilities and liabilities arising under
this Trust Agreement with respect to the portion of the Trust Fund transferred
to them pursuant to the Committee's directions to be held under the terms and
provisions of the Group Trust. The Company shall indemnify and hold harmless the
Trustee from any and all claims, losses, damages, expenses (including counsel
fees approved by the Trustee) and liabilities (including any amounts paid in
settlement with the Trustee's approval but excluding any excise tax assessed
against the Trustee under Code Section 4975) arising from any act or omission of
the trustees of a Group Trust in connection with their duties and
responsibilities under this Trust Agreement with respect to the portion of Trust
Fund transferred to them, except to any extent prohibited under ERISA.

                  The Trustee shall have custody of and custodial responsibility
for all assets of the Master Trust Fund except as otherwise provided in this
agreement or as follows:

                  (a) The subtrustee of a subtrust shall have custody of and
         custodial responsibility for any portion of the Master Trust Fund for
         which investment responsibility has been allocated to it by the
         Committee;

                  (b) The trustee of a collective or group trust fund (including
         without limitation an Investment Manager or its bank affiliate) shall
         have custody of and custodial responsibility for any portion of the
         Master Trust Fund for which

                                      -17-

<PAGE>   22

         investment responsibility has been allocated to it by the Committee and
         has been invested in such collective or group trust fund; and

                  (c) The Committee may direct in writing that the custody of
         additional assets of the Master Trust Fund (other than those referred
         to in paragraphs (a) and (b) immediately preceding this paragraph (c))
         be maintained with one or more persons or entities designated by the
         Committee to maintain custody of assets of a portion of the Master
         Trust Fund (a "Custodial Agent"). In such event, the Committee shall
         approve, and direct the Trustee to enter into, a custody agreement with
         the Custodial Agent (which custody agreement may authorize the
         Custodial Agent to maintain custody of such assets with one or more
         subagents, including a broker or dealer registered under the Securities
         Exchange Act of 1934 or a nominee of such broker or dealer). The
         Custodial Agent shall have custodial responsibility for any assets
         maintained with the Custodial Agent or its subagents pursuant to the
         custody agreement. Notwithstanding any other provision of this
         agreement, the Company (which has the authority to do so under the laws
         of the state of Texas) agrees to indemnify the Trustee from any
         liability, loss and expense, including legal fees and expenses, which
         the Trustee may sustain by reason of acting in accordance with any
         directions of the Committee pursuant to this paragraph (c). This
         paragraph shall survive the termination of this agreement.

         5.3 Insurance or Annuity Contracts: With respect to the investment of
the Master Trust Fund in Insurance Contracts, the Committee shall direct the
Trustee in the exercise of the powers set forth in Section 5.2 and the Trustee
shall exercise such powers in the manner directed in writing by the Committee.
It shall be the duty of the Trustee to act strictly in accordance with each
direction of the Committee relating to the investment of the Master Trust Fund
in Insurance Contracts and the Trustee shall not have any duty to question any
such direction. The Trustee shall not have any duty to review any such Insurance
Contracts held in the Master Trust Fund pursuant to such direction, or to make
suggestions to the Committee with respect to the exercise or non-exercise of any
of the said powers. The Trustee shall be under no liability for any loss of any
kind which may result by reason of any action taken by it in accordance with any
direction of the Committee or by reason of its failure to exercise any of the
said powers in respect of such Insurance Contracts because of the failure of the
Committee to give such direction, unless the Trustee knows that by following
such direction it will be participating in a breach of fiduciary duty by the
Committee. The processing of investment orders or other ministerial tasks taken
by the Trustee pursuant to the direction of the Committee shall not constitute
knowledge.

                  (a) The Trustee, upon written direction of the Committee,
         shall pay from the Master Trust Fund such sums to such insurance
         company or companies or other financial institutions (collectively
         referred to as an "insurance company") as the Committee or the
         appropriate Plan Administrator may direct for the purpose of procuring
         individual or group annuity contracts and/or policies or contracts of
         life insurance (hereinafter in this Section 5.3 referred to as
         "Contracts"). The Committee shall prepare, or cause to be prepared in
         such form as it shall prescribe, the application for any Contract to be
         applied for under any or all of the Participating

                                      -18-

<PAGE>   23

         Plans and this Master Trust and the Trustee shall execute such
         application. The Trustee shall receive and hold in the Master Trust
         Fund, subject to the provisions hereinafter set forth in this Section,
         all Contracts obtained pursuant to the Participating Plans.

                  (b) The Trustee shall be the complete and absolute owner of
         Contracts held in the Master Trust Fund and, upon written direction of
         the Committee, shall have power, without the consent of any other
         person, to collect and receive all dividends or other payments of any
         kind payable with respect to any Contract held in the Master Trust Fund
         or to leave the same with the issuing insurance company; to convert
         from one form to another any Contract held in the Master Trust Fund; to
         change the person or persons designated in any Contract to receive the
         proceeds; to designate any mode of settlement of the proceeds of any
         Contract held in the Master Trust Fund; to sell or assign any Contract
         held in the Master Trust Fund; to surrender for cash any Contract held
         in the Master Trust Fund; to borrow sums of money from the issuing
         insurance company upon any Contract or Contracts issued by it and held
         in the Master Trust Fund, provided that the Trustee shall borrow such
         sums only in respect of all Contracts for the time being held in the
         Master Trust Fund and upon a uniform basis; to agree with the insurance
         company issuing any Contract to any release, reduction, modification or
         amendment thereof; and, without limitation of any of the foregoing, to
         exercise any and all of the rights, options or privileges that belong
         to the absolute owner of any Contract held in the Master Trust Fund or
         that are granted by the terms of any such Contract or by the terms of
         this Agreement. The Trustee shall have no discretion with respect to
         the exercise of any of the foregoing powers or to take any other action
         permitted by any Contract held in the Master Trust Fund, but shall
         exercise such powers or take such action only upon the written
         direction of the Committee; the Trustee shall have no duty to exercise
         any of such powers or to take any such action unless and until it shall
         have received such direction. The Trustee, upon the written direction
         of the Committee, shall deliver any Contract held in the Master Trust
         Fund to such person or persons as may be specified in the direction.

                  (c) The Trustee shall hold in the Master Trust Fund the
         proceeds of any sale, assignment or surrender of any Contract held in
         the Master Trust Fund and any and all dividends and other payments of
         any kind received in respect to any Contract held in the Master Trust
         Fund, and shall distribute and/or allocate such proceeds in accordance
         with the directions of the Committee.

                  (d) If the Trustee shall have borrowed any sums of money upon
         any Contract held in the Master Trust Fund, it shall have no duty to
         repay any part of the money so borrowed, notwithstanding the fact that
         thereafter it may have sufficient funds to make such repayment, unless
         and until it shall have received written direction from the Committee
         to make the repayment.

                                      -19-

<PAGE>   24

                  (e) Upon the written direction of the Committee, the Trustee
         shall pay from the Master Trust Fund premiums, assessments, dues,
         charges and interest, if any, upon any Contract held in the Master
         Trust Fund. The Trustee shall have no duty to make any such payment
         unless and until it shall have received such direction. The written
         direction of the Committee to pay the premiums becoming due on any
         Contract specified in the direction shall be sufficient authority for
         the Trustee to pay any and all bills presented to it for premiums or
         the amount specified in any premium notice received from the insurance
         company issuing the Contract, and for such purposes the Trustee may use
         any money held by it as part of the Master Trust Fund at the time the
         payment is due, unless the Committee shall have directed that such
         money shall not be used for such purpose.

                  (f) Upon the direction of the Committee, the Trustee shall
         have power to execute all necessary receipts and releases to any
         insurance company issuing any Contract or Contracts held in the Master
         Trust Fund, and, upon written advice from the Committee that the
         proceeds of any Contract held in the Master Trust Fund have become
         payable, shall make reasonable efforts to collect such sums as may
         appear to be due; but the Trustee shall have no duty to begin or
         maintain any action, suit or legal proceeding to collect the proceeds
         of any Contract unless it is in possession of funds sufficient for the
         purpose or unless it has been indemnified to its satisfaction for its
         counsel fees, costs, disbursements and all other expenses and
         liabilities to which it in its judgment may be subjected by beginning
         or maintaining the action, suit or other legal proceeding. The Trustee
         may use the proceeds of any Contract held in the Master Trust Fund to
         defray the expenses incurred in connection with enforcing payment of
         that Contract. The Trustee shall have power, with the written approval
         of the Committee, to compromise and adjust claims arising out of any
         Contract held in the Master Trust Fund upon such terms and conditions
         as it may deem just, and the discretion of the Trustee shall be binding
         and conclusive upon all persons interested in the Master Trust Fund.

                  (g) Any insurance company may deal with the Trustee as sole
         owner of any Contract issued by it and held in the Master Trust Fund,
         without inquiry as to the authority of the Trustee to act, and may
         accept and rely upon any written notice, instruction, direction,
         certificate or other communication from the Trustee believed by it to
         be genuine and to be signed by an officer of the Trustee. No insurance
         company shall be required to look into the terms of this Agreement, or
         to question any action of the Trustee or to see that any action of the
         Trustee is authorized by the terms of this Agreement.

                  (h) The Trustee shall follow directions of the Committee
         concerning the exercise or non-exercise of any powers or options
         concerning any Contract held in the Master Trust Fund. Notwithstanding
         any other provision of this Agreement to the contrary, the Company
         hereby agrees to indemnify the Trustee and hold it harmless from and
         against any claim or liability which may be asserted against the
         Trustee by reason of its acting on any direction from the Committee or
         failing to act

                                      -20-

<PAGE>   25

         in the absence of any such direction with respect to any Contract or
         the acquisition of any Contract or exercise of any right of option
         thereunder.

         5.4 Voting of Securities: The Committee or its agent authorized to act
for the Committee pursuant to Section 6.2 herein shall have the power in its
discretion to exercise all voting rights with respect to any investment held in
the Master Trust Fund and to grant proxies, discretionary or otherwise, with
respect thereto, except that (a) at any time when an Investment Manager shall be
acting as provided in Section 5.2, the Investment Manager shall exercise its
discretion with respect to voting any securities under its management and shall
exercise all voting rights with respect thereto, (b) the Committee, as provided
in Section 5.1, shall have the sole responsibility with respect to the voting of
any Company Stock which has not been allocated to an Investment Manager and (c)
at any time when the securities are loaned as provided in Section 5.1, the
borrower shall have the authority and responsibility to vote securities it has
borrowed.

         5.5 Powers of Trustee: Except as provided elsewhere in this Agreement,
the Trustee shall have the power to:

                  (a) Manage, sell, contract to sell, grant options to purchase,
         convey, exchange, transfer, abandon, improve, repair, insure, lease for
         any term even though commencing in the future or extending beyond the
         term of the Trust, and otherwise deal with all property, real or
         personal, in such manner, for such considerations and on such terms and
         conditions as the Trustee decides;

                  (b) Participate in any plan of reorganization, consolidation,
         merger, combination, liquidation or other similar plan relating to any
         property held in the Master Trust Fund, and to consent to or oppose any
         such plan or any action thereunder, or any contract, lease, mortgage,
         purchase, sale or other action by any person or corporation;

                  (c) Deposit any property with any protective, reorganization
         or similar committee; and to pay and agree to pay part of the expenses
         and compensation of any such committee and any assessments levied with
         respect to any property so deposited;

                  (d) Exercise conversion and subscription rights pertaining to
         any property held in the Master Trust Fund;

                  (e) Extend the time of payment of any obligation held in the
         Master Trust Fund;

                  (f) Enter into stand-by agreements for future investment,
         either with or without a stand-by fee;

                  (g) Temporarily, hold any part of the assets in cash, without
         liability for interest, pending investment thereof or the payment of
         expenses or making of

                                      -21-

<PAGE>   26

         distributions therewith, notwithstanding the Trustee's receipt of
         "float" from such uninvested cash;

                  (h) Invest in any type of deposit of the Trustee (or of a bank
         related to the Trustee within the meaning of Code Section 414(b)) at a
         reasonable rate of interest or in a common trust fund, as described in
         Code Section 584, or in a collective investment fund, the provisions of
         which govern the investment of such assets and which the Plan
         incorporates by this reference, which the Trustee (or its affiliate as
         defined in Code Section 1504) maintains exclusively for the collective
         investment of money contributed by the bank (or the affiliate) in its
         capacity as trustee and which conforms to the rules of the Comptroller
         of the Currency;

                  (i) For the purposes of the Trust and with the prior approval
         of the Committee, to borrow money from others, to issue its promissory
         note or notes therefor, and to secure the repayment thereof by pledging
         any property in its possession; provided, however, that the amount or
         amounts of such loans shall not exceed in the aggregate 10% of the
         market value of the Master Trust Fund as of the date of the borrowing,
         and further provided that no such loan or advance shall be made by the
         Trustee hereunder other than temporary advances to the Master Trust
         Fund, on a cash or overdraft basis, on which no interest is payable;
         and

                  (j) If an Investment Manager directing investment under
         Section 5.2 is a bank, as defined in the Investment Advisers Act of
         1940, to transfer to such Investment Manager all or any specified
         assets in that part of the Master Trust Fund which is subject to such
         Investment Manager's direction, for investment by such Investment
         Manager through the medium of any common, collective, commingled or
         group trust fund maintained by it which consists solely of assets of
         trusts qualified under Code Section 401(a) and which is exempt from tax
         under Code Section 501(a), whereupon the instrument establishing such
         common, collective, commingled or group trust fund, as amended from
         time to time, shall constitute a part of each Participating Plan the
         assets of which are included in such part of the trust fund as long as
         any portion of such assets shall be invested through the medium of such
         common, collective, commingled or group trust fund.

                  (k) Notwithstanding any provision of this Article V to the
         contrary, the Committee may authorize the Trustee to exercise in its
         sole discretion the powers relating to the lending of securities (and
         such other powers as may be incidental thereto) with respect to
         securities or other property held in the Master Trust Fund and
         designated to be subject to the discretion of the Trustee or an
         Investment Manager as otherwise provided hereunder ("Subject Account").
         If the Subject Account is otherwise subject to the discretion of an
         Investment Manager, such Investment Manager shall retain investment
         authority over such account other than the exercise or direction of the
         powers relating to the lending of securities vested in the Trustee,
         and, subject to the requirements of ERISA, shall not be responsible for
         any act or omission of the Trustee.

                                      -22-

<PAGE>   27

                  (l) The Trustee shall have the power in its discretion:

                           (i) To cause any investment to be registered and held
                  in its own name, in the name of a nominee, in the name of a
                  nominee of any system for the centralized handling of
                  securities, or in book-entry or bearer form (provided,
                  however, that the Trustee's books and records shall at all
                  times show that all such investments are a part of the Master
                  Trust Fund);

                           (ii) To collect and receive any and all money and
                  other property due to the Master Trust Fund and to give full
                  discharge therefor;

                           (iii) To settle, compromise or submit to arbitration
                  any claims, debts or damages due or owing to or from the
                  Master Trust; to commence or defend suits or legal proceedings
                  to protect any interest of the Master Trust; and to represent
                  the Master Trust in all suits or legal proceedings in any
                  court or before any other body or tribunal;

                           (iv) To organize under the laws of any state a
                  corporation for the purpose of acquiring and holding title to
                  any property which it is authorized to acquire under this
                  Agreement and to exercise with respect thereto any or all of
                  the powers set forth in this Agreement;

                           (v) To manage, operate, repair, improve, develop,
                  preserve, mortgage or lease for any period any real property
                  or any oil, mineral or gas properties, royalties, interests or
                  rights held by it directly or through any corporation, either
                  alone or by joining with others, using other Trust assets for
                  any of such purposes; to modify, extend, renew, waive or
                  otherwise adjust any or all of the provisions of any such
                  mortgage or lease; and to make provision for amortization of
                  the investment in or depreciation of the value of such
                  property; and

                           (vi) Generally to do all acts, whether or not
                  expressly authorized, which the Trustee may deem necessary or
                  desirable for the protection of the Master Trust Fund.

         5.6 Payments and Distributions from Master Trust Fund: The Trustee
shall make such payments and distributions from the Master Trust Fund at such
time or times and to such person or persons, including a paying agent or agents
designated by the Committee or by a Plan Administrator as paying agent, as the
Committee shall direct in writing (or as a Plan Administrator of a Participating
Plan shall direct, with respect to the equitable share of such Plan in the
Master Trust Fund), provided, however, (i) that disbursements for ordinary
transaction costs associated with

                                      -23-

<PAGE>   28

effecting the investment of transactions of the Master Trust Fund need not be
authorized by the Committee and (ii) that no payment or distribution in respect
of a Participating Plan shall exceed the equitable share in the Master Trust
Fund of such Participating Plan on the date such payment or distribution is
made. Any cash or property so paid or delivered to any such paying agent shall
be held in trust by such payee until disbursed in accordance with the
Participating Plan with respect to which the payment or distribution is made.
Upon written direction by the Committee, the Trustee shall transfer and deliver
such part of the equitable share of a Participating Plan or Plans in the Master
Trust Fund as may be specified in such direction to any other trust established
for the purpose of funding benefits under such Participating Plan or Plans or
under any other plan, qualifying under Code Section 401 established for the
benefit of participants in such Participating Plan or Plans or their
beneficiaries by the Company, any Affiliated Corporation or any successor or
transferee of the Company or such Affiliated Corporation; provided such transfer
shall be in conformity with the requirements of Federal law. Any written
direction of the Committee or of a Plan Administrator shall constitute a
certification that the distribution or payment so directed is one which the
Committee or Plan Administrator, as the case may be, is authorized to direct and
the Trustee shall not be responsible for the adequacy of the equitable share of
any Participating Plan to meet and discharge such distribution or payment.

                  The Trustee may make any distribution or payment required to
be made by it hereunder by mailing its check for the specified amount, or
delivering the specified property, to the person to whom such distribution or
payment is to be made, at such address as may have been last furnished to the
Trustee, or, if no such address shall have been so furnished, to such person in
care of the Company or the Committee or the appropriate Plan Administrator, or
(if so directed by the Committee or the appropriate Plan Administrator) by
crediting the account of such person or by transferring funds to such person's
account by bank wire or transfer. If a payment or distribution from the Trust is
not claimed, the Trustee shall promptly notify the Committee thereof and
thereafter handle such payment in accordance with the subsequent direction of
the Committee.

                  In the event that the Trustee is negligent in making any
distribution or payment hereunder and such negligence results in the making of
such distribution or payment in excess of the amount instructed by the Committee
or, in the case of a payment or distribution instructed by a Plan Administrator,
in excess of the amount instructed by the Plan Administrator, it shall be the
duty and the responsibility of the Trustee to pursue any action or proceeding
necessary, including the payment of all attorney fees and related fees and
expenses, to recover any such excess amounts. If the Trustee fails to recover
such amounts, the Trustee shall be solely responsible for the reimbursement of
the Master Trust Fund for such amounts to include reasonable interest thereon.

         5.7 Trustee's Dealings with Third Parties: Any corporation, transfer
agent or other third party dealing with the Trustee shall not make, nor be
required by any person to make, any inquiry whether the Trustee has authority to
take or omit any action under this Trust Agreement or whether the Committee or a
Plan Administrator has instructed the Trustee to take or omit any such action,
but shall be fully protected in relying upon the certificate of the Trustee that
it has authority to take or omit such proposed action. The seal of the Trustee
affixed to any instrument executed by it shall constitute the Trustee's
certificate that it is authorized as Trustee hereunder to execute such

                                      -24-

<PAGE>   29

instrument and proceed as may be provided for therein. No third party shall be
required to follow the application by the Trustee of any money or property which
may be paid or transferred to it.

         5.8 Ancillary Trustee: If at any time the Master Trust Fund shall
consist in whole or in part of assets located in a jurisdiction in which the
Trustee is not authorized to act, the Trustee may appoint an individual or
corporation in such jurisdiction as ancillary trustee and may confer upon such
ancillary trustee, power to act solely with reference to such assets, and such
ancillary trustee shall remit all net income or proceeds from the sale of such
assets to the Trustee. The Trustee may pay such ancillary trustee reasonable
compensation and may absolve it from any requirement that it furnish bond or
other security unless otherwise required by law.

                                      -25-

<PAGE>   30

                                   ARTICLE VI

                        FOR THE PROTECTION OF THE TRUSTEE

         6.1 Composition of Committee and Plan Administrators: The Plan and each
Participating Plan, if any, shall be administered by the applicable Plan
Administrator, and the Trustee shall not be responsible in any respect for such
administration. The Company shall indemnify and hold harmless each member of the
Committee, or, in the case of a Participating Plan, any Plan Administrator, from
any and all claims, losses, damages, expenses (including counsel fees approved
by the Committee), and liabilities (including any amounts paid in settlement
with the Committee's approval but excluding any excise tax assessed against any
member or members of the Committee pursuant to the provisions of Code Section
4975) arising from any act or omission of such member in connection with his
duties and responsibilities under this Trust Agreement, except when the same is
judicially determined to be due to the gross negligence and willful misconduct
of such member. The foregoing right of indemnification shall be in addition to
any rights to which any member of the Committee, or, in the case of a
Participating Plan, any Plan Administrator, may otherwise be entitled as a
matter of law. When any member of the Committee, or, in the case of a
Participating Plan, any Plan Administrator, shall cease to act, the Company
shall promptly give written notice to that effect to the Trustee, but until such
notice is received by the Trustee it shall be fully protected in continuing to
rely upon the authority of such persons. If the full number of members of the
Committee, as provided under the Plan, or the full number of members of a Plan
Administrator provided for in a Participating Plan shall not at any time have
been designated, the remaining member or members acting at such time shall be
deemed to have all of the powers and duties of the Committee or such Plan
Administrator; or, if at any time there is no member of the Committee or of a
Plan Administrator, the Board of Directors of the Company or of such Affiliated
Corporation shall be deemed to be the Committee or such Plan Administrator, as
applicable.

         6.2 Evidence of Action by Company or Committee: The Committee and each
Plan Administrator, respectively, shall certify to the Trustee the name or names
of any person or persons authorized to act for the Committee or for such Plan
Administrator. Until the Committee or the appropriate Plan Administrator
notifies the Trustee that any such person is no longer authorized to act for the
Committee or for such Plan Administrator, the Trustee may continue to rely on
the authority of such person. The Trustee may rely upon any certificate, notice
or direction purporting to have been signed on behalf of the Committee or on
behalf of a Plan Administrator which the Trustee believes to have been signed by
the Committee or by a Plan Administrator or the person or persons authorized to
act for the Committee or for a Plan Administrator.

                  Any action required by any provision of this Agreement to be
taken by the Board of Directors of the Company or of an Affiliated Corporation
shall be evidenced by a resolution of its Board of Directors, certified to the
Trustee over the signature of its Secretary or Assistant Secretary, and the
Trustee may rely upon, and shall be fully protected in acting in accordance
with, such resolution so certified to it. Unless other evidence with respect
thereto has been expressly prescribed in this Agreement, any other action of the
Company or of an Affiliated Corporation under any provision of this Agreement,
including any approval of, or exceptions to the Trustee's accounts, shall

                                      -26-

<PAGE>   31

be evidenced by a certificate signed by an officer of the Company or of an
Affiliated Corporation, as the case may be, and the Trustee shall be fully
protected in relying upon such certificate.

                  Any action by the Trustee pursuant to any of the provisions of
this Agreement shall be sufficiently evidenced by a certification of one of its
Vice Presidents, Assistant Vice Presidents or other appropriate Trust Officers,
and the Company, each Affiliated Corporation which has adopted this Master
Trust, each Plan Administrator, the Committee and all other persons in interest
may rely upon, and shall be fully protected in acting in accordance with, such
certification.

         6.3 Communications: Communications to the Trustee shall be addressed to
it at 50 LaSalle Street, Chicago, Illinois, 60675. Communications to the
Committee, each Plan Administrator, the Company or any Affiliated Corporation
shall be addressed to it at 1111 Louisiana, Houston, Texas 77002, with a copy to
the Benefits Committee, attention: Secretary, P.O. Box 61867, Houston, Texas
77208, unless the Trustee, the Committee, the appropriate Plan Administrator,
the Company or any Affiliated Corporation, respectively, shall request that
communications be sent to another address. No communication shall be binding
upon the Master Trust Fund or the Trustee, or upon the Committee, any Plan
Administrator, the Company or any Affiliated Corporation until it is received by
the Trustee, the Committee, the appropriate Plan Administrator, the Company or
the appropriate Affiliated Corporation, as the case may be.

         6.4 Advice of Counsel or Plan Administrator: The Trustee may consult
with any legal counsel, including counsel to the Company, the Committee or a
Plan Administrator, with respect to the construction of this Trust Agreement,
its duties hereunder, or any act which it proposes to take or omit.

         6.5 Miscellaneous: The Trustee shall discharge its duties hereunder
with the care, skill, prudence and diligence under the circumstances then
prevailing that a prudent man acting in a like capacity and familiar with such
matters would use in the conduct of an enterprise of a like character and with
like aims. The Trustee, to the extent that it has investment discretion, shall
not be liable for any loss sustained by the Master Trust Fund by reason of the
purchase, retention, sale or exchange of any investment in good faith and in
accordance with the provisions of this Trust Agreement and of any applicable
Federal law.

                  The Trustee's duties and obligations shall be limited to those
expressly imposed upon it by this Master Trust, notwithstanding any reference to
the Participating Plans.

                  The Company, any Affiliated Corporation, the Committee or any
Plan Administrator, or all of them, at any time may employ as agent (to perform
any act, keep any records or accounts, or make any computations required of the
Company, an Affiliated Corporation, the Committee or any Plan Administrator by
this Trust Agreement or any Participating Plan) the corporation serving as
Trustee hereunder. Nothing done by said corporation as such agent shall affect
its responsibility or liability as Trustee hereunder.

                                      -27-

<PAGE>   32

         6.6 Fiduciary Responsibilities:

         A. The Trustee, the Investment Managers, if any, the members of the
Committee and each Plan Administrator shall discharge their duties with respect
to the Master Trust solely in the interest of the participants in the respective
Participating Plans and their beneficiaries and with the care, skill, prudence,
and diligence under the circumstances then prevailing that a prudent man acting
in a like capacity and familiar with such matters would use in the conduct of an
enterprise of a like character and with like aims.

         B. No "fiduciary" (as such term is defined in Section 3(21) of ERISA,
or any successor statutory provision) under this Trust Agreement shall be liable
for an act or omission of another person in carrying out any fiduciary
responsibility where such fiduciary responsibility is allocated to such other
person by this Trust Agreement or pursuant to a procedure established in this
Trust Agreement except to the extent that:

                  (i) such fiduciary participated knowingly in, or knowingly
         undertook to conceal, an act or omission of such other person, knowing
         such act or omission to be a breach of fiduciary responsibility;

                  (ii) such fiduciary, by his failure to comply with Section
         404(a)(1) of ERISA (or any successor statutory provision) in the
         administration of his specific responsibilities which give rise to his
         status as a fiduciary, has enabled such other person to commit a breach
         of fiduciary responsibility;

                  (iii) such fiduciary has knowledge of a breach of fiduciary
         responsibility by such other person, unless he makes reasonable efforts
         under the circumstances to remedy the breach; or

                  (iv) such fiduciary is a "named fiduciary" (as such term is
         defined in Section 402(a)(2) of ERISA, or any successor statutory
         provision) and has violated his duties under Section 404(a)(1) of ERISA
         (or any successor statutory provision):

                           (a) with respect to the allocation of fiduciary
                  responsibilities among named fiduciaries or the designation of
                  persons other than named fiduciaries to carry out fiduciary
                  responsibilities under this Trust Agreement;

                           (b) with respect to the establishment or
                  implementation of procedures for allocating fiduciary
                  responsibilities among named fiduciaries or for designating
                  persons other than named fiduciaries to carry out fiduciary
                  responsibilities under this Trust Agreement; or

                           (c) in continuing the allocation of fiduciary
                  responsibilities among named fiduciaries or the designation of

                                      -28-

<PAGE>   33

                  persons other than named fiduciaries to carry out fiduciary
                  responsibilities under this Trust Agreement.

         C. In the event that the Company incurs any liability, loss, claim,
suit or expense (including reasonable attorneys' fees) in connection with or
arising out of the negligent, intentionally tortious, fraudulent or criminal act
of the Trustee in carrying out its responsibilities under this agreement, the
Trustee shall indemnify and hold the Company harmless from and against any such
direct liability, loss, claim, suit or expense. Notwithstanding the above,
nothing contained in this Section 6.6C. shall limit the Trustee's right to
indemnification under Section 5.2(c) of this agreement or require the Trustee to
indemnify the Company for any action or inaction pursuant to Section 5.2(c) of
this agreement.

                                      -29-

<PAGE>   34

                                   ARTICLE VII

                   TAXES, EXPENSES AND COMPENSATION OF TRUSTEE

         7.1 Taxes and Expenses: Brokerage fees, commissions, stock transfer
taxes and other charges and expenses incurred in connection with the purchase
and sale of securities for the Master Trust Fund or distribution thereof shall
be paid by the Trustee from the Master Trust Fund. All taxes imposed or levied
with respect to the Master Trust Fund or any part thereof, under existing or
future laws, shall be paid from the Master Trust Fund. The Trustee shall pay
from the Master Trust Fund, to the extent not paid by the Company and/or the
Affiliated Corporations which have adopted this Master Trust, its reasonable
expenses of management and administration of the Master Trust, including
reasonable compensation of counsel and any agents engaged by the Trustee to
assist it in such management and administration, the fees of any Investment
Manager and any specified expenses of administration of any Participating Plan
including, but not limited to, audit fees, investment consulting fees, and
actuarial and recordkeeping expenses.

                  Any amount paid from the Master Trust Fund which is
specifically allocable to a particular Participating Plan or Plans shall be
charged against the equitable share of such Participating Plan or Plans; any
amount paid from the Master Trust Fund which is allocable to all of the
Participating Plans shall be allocated to such Participating Plans on a pro rata
basis.

         7.2 Compensation of the Trustee: The Trustee shall receive for its
services as Trustee hereunder such reasonable compensation which may be agreed
upon from time to time by the Company and the Trustee. All amounts due the
Trustee as compensation for its services shall be paid by the Company, or
prorated among the Company and the Affiliated Corporations which have adopted
this Master Trust in such a manner as they deem equitable, or disbursed by the
Trustee out of the Master Trust Fund, and, until paid, shall constitute a charge
upon the Master Trust Fund.

                                      -30-

<PAGE>   35

                                  ARTICLE VIII

                             SETTLEMENT OF ACCOUNTS;
                  DETERMINATION OF INTERESTS UNDER MASTER TRUST

         8.1 Settlement of Accounts of Trustee: The Trustee shall keep accurate
and detailed accounts of all of its receipts, investments and disbursements
under this Agreement on a modified cash basis. The financial statements, books
and records of the Trustee with respect to the Master Trust shall be open to
inspection during business hours of the Trustee by the Company or the Committee
or their representatives, including, without limitation, independent certified
public accountants engaged by the Company or the Committee, on behalf of all
participants in the Participating Plans, to permit compliance with the reporting
and disclosure requirements of ERISA. However, such financial statements, books
and records may not be audited more frequently than twice in each fiscal year.
If an examination of the financial statements of the Participating Plans
requires a review of the underlying transactions affecting such financial
statements, such independent certified public accountants shall rely on the
report of the independent certified public accountants engaged by the Trustee to
review its procedures and controls, to the extent such reliance is permitted by
generally accepted auditing standards.

                  Within 90 days after the close of each calendar year, or any
termination of the duties of the Trustee, the Trustee shall prepare, sign and
mail in duplicate to the Company and the Committee an account of its acts and
transactions as Trustee hereunder. Such account shall include a statement of the
equitable share in the Master Trust Fund and in its component accounts of each
Participating Plan (and where appropriate of each Affiliated Corporation which
has adopted a Participating Plan) as of the last day of such year or other
period and a statement of the portion of the Master Trust Fund under management
by any Investment Manager as of the same date. If the Company finds the account
to be correct, the Company shall sign the instrument of settlement annexed to
one counterpart of the account and return such counterpart to the Trustee,
whereupon the account shall become an account stated. If within 90 days after
receipt of the account or any amended account the Company has not signed and
returned a counterpart to the Trustee, nor filed with the Trustee notice of any
objection to any act or transaction of the Trustee, the account or amended
account shall become an account stated. If any objection has been filed, and if
the Company is satisfied that it should be withdrawn or if the account is
adjusted to its satisfaction, the Company shall in writing filed with the
Trustee signify its approval of the account and it shall become an account
stated. In each case in which an account becomes an account stated, the account
shall be an account stated between the Trustee and the Company and any
Affiliated Corporation which had adopted a Participating Plan.

                  When an account becomes an account stated, such account shall
be finally settled, and the Trustee shall be completely discharged and released,
as if such account had been settled and allowed by a judgment or decree of a
court of competent jurisdiction in an action or proceeding in which the Trustee,
the Company and any Affiliated Corporation which has adopted a Participating
Plan were parties.

                                      -31-

<PAGE>   36

                  The account of the Trustee's acts and transactions delivered
to the Committee shall be settled, and shall become an account stated, in the
same manner as the account delivered to the Company hereunder. When an account
becomes an account stated as between the Trustee and the Committee, the account
shall be finally settled and the Trustee shall be completely discharged and
released, as if such account had been settled and allowed by a judgment or
decree of a court of competent jurisdiction in an action or proceeding in which
the Trustee and the Committee were parties.

                  The Trustee, the Committee or the Company shall have the right
to apply at any time to a court of competent jurisdiction for judicial
settlement of any account of the Trustee not previously settled as hereinabove
provided. In any such action or proceeding it shall be necessary to join as
parties only the Trustee, the Committee and the Company (although the Trustee
may also join such other parties as it may deem appropriate), and any judgment
or decree entered therein shall be conclusive.

         8.2 Determination of Rights and Benefits of Persons Claiming an
Interest in the Master Trust Fund; Enforcement of Master Trust Fund: The
Committee shall have authority to determine the existence, non-existence, nature
and amount of the rights and interests of all persons under the Participating
Plan and in or to the Master Trust Fund, and the Trustee shall have no power,
authority, or duty in respect of such matters, or to question or examine any
determination made by the Committee, or any direction given by the Committee to
the Trustee. The Company, other Employers and the Committee shall have
authority, either jointly or severally, to enforce this Trust Agreement on
behalf of any and all persons having or claiming any interest in the Master
Trust Fund or under this Trust Agreement or the Participating Plans.

                                      -32-

<PAGE>   37

                                   ARTICLE IX

              RESIGNATION, REMOVAL AND SUBSTITUTION OF THE TRUSTEE

         9.1 Resignation of Trustee: The Trustee may resign its duties hereunder
by filing with the Committee its written resignation. No such resignation shall
take effect until 60 days from the date thereof unless shorter notice is
acceptable to the Committee.

         9.2 Removal of Trustee: The Trustee may be removed by the Board of
Directors of the Company at any time upon not less than 60 days' notice to the
Trustee, but such notice may be waived by the Trustee. Such removal shall be
effected by delivering to the Trustee a written notice of its removal executed
by the Company, and by giving notice to the Trustee of the appointment of a
successor Trustee in the manner hereinafter set forth.

         9.3 Appointment of Successor Trustee: The appointment of a successor
Trustee hereunder shall be accomplished by and shall take effect upon the
delivery to the resigning or removed Trustee, as the case may be, of (a) an
instrument in writing appointing such successor Trustee, executed by the
Company, together with a certified copy of the resolution of the Board of
Directors of the Company to such effect and (b) an acceptance in writing of the
office of successor Trustee hereunder executed by the successor so appointed,
both of which documents shall be acknowledged in like manner as this Trust
Agreement. The Company shall send notice of such appointment to each Affiliated
Corporation which has a Participating Plan, and to each member of the Committee
then in office and to each Plan Administrator. Any successor Trustee hereunder
may be either a corporation authorized and empowered to exercise trust powers or
one or more individuals. All of the provisions set forth herein with respect to
the Trustee shall relate to each successor Trustee so appointed with the same
force and effect as if such successor Trustee had been originally named herein
as the Trustee hereunder. If within 60 days after notice of resignation shall
have been given under the provisions of this Article IX a successor Trustee
shall not have been appointed, the resigning Trustee or any member of the
Committee may apply to any court of competent jurisdiction for the appointment
of a successor Trustee.

         9.4 Transfer of Master Trust Fund to Successor: Upon the appointment of
a successor Trustee, the resigning or removed Trustee shall transfer and deliver
the Master Trust Fund and the records relating thereto to such successor
Trustee, after reserving such reasonable amount as it shall deem necessary to
provide for its expenses in the settlement of its accounts, the amount of any
compensation due it and any sums chargeable against the Master Trust Fund for
which it may be liable, but if the sums so reserved are not sufficient for such
purposes, the resigning or removed Trustee shall be entitled to reimbursement
for any deficiency from the successor Trustee and from the Company and each
Affiliated Corporation which has a Participating Plan, who shall be jointly and
severally liable therefor.

                                      -33-

<PAGE>   38

                                    ARTICLE X

               DURATION AND TERMINATION OF MASTER TRUST; AMENDMENT

         10.1 Duration and Termination: This Trust Agreement shall continue for
such time as may be necessary to accomplish the purpose for which it was created
but may be terminated at any time by the Company by action of its Board of
Directors. Notice of such termination shall be given to the Trustee by an
instrument in writing executed by the Company and acknowledged in the same form
as this Agreement, together with a certified copy of the resolution of the Board
of Directors of the Company authorizing such termination. The Company shall
notify the Committee and each Plan Administrator of such termination.

         10.2 Distribution Upon Termination: If this Trust Agreement is
terminated, the Trustee upon the written direction of the Committee shall
liquidate the Master Trust Fund to the extent required for distribution and,
after its final account has been settled as provided in Article VIII, shall
distribute the net balance thereof to such person or persons, at such time or
times and in such proportions and manner as may be directed by the Committee or,
with respect to the equitable share of any Participating Plan, by the
appropriate Plan Administrator, or in the absence of such direction, as may be
directed by a judgment or decree of a court of competent jurisdiction. Upon
making such distributions, the Trustee shall be relieved from all further
responsibility. The powers of the Trustee hereunder shall continue so long as
any assets of the Master Trust Fund remain in its hands. Notwithstanding the
foregoing provisions of this Section 10.2, the Company may promptly advise the
appropriate District Director of Internal Revenue of the termination of the
Master Trust and the Trustee may delay the final distribution to Participants in
the terminated Participating Plans until said District Director shall advise in
writing that such termination does not adversely affect the previously qualified
status of the terminated Participating Plan or Plans or the exemption from tax
of the Master Trust under Code Section 401(a) or 501(a).

         10.3 Loss of Qualification of a Participating Plan; Certain
Withdrawals: The equitable share of any Participating Plan shall be immediately
segregated and withdrawn from the Master Trust Fund if the Plan ceases to be
qualified under Code Section 401(a) and the Company shall promptly notify the
Trustee of any determination by the Internal Revenue Service that any
Participating Plan has ceased to be so qualified. Each Affiliated Corporation
which has adopted the Master Trust shall have the right to withdraw from this
Master Trust upon six months' written notice to the Trustee and the Committee,
which written notice may be waived by the Trustee and the Committee. In the
event that any Affiliated Corporation which has adopted the Master Trust shall
cease to be an Affiliated Corporation of the Company, such corporation shall
withdraw from this Master Trust as soon as arrangements may be reasonably made
therefor, but in any event such withdrawal shall be made not more than six
months after the date such corporation ceases to be an Affiliated Corporation.
Upon such withdrawal, the Committee shall certify to the Trustee the interest in
the Master Trust Fund of the participants of such withdrawing corporation and
the Trustee shall thereupon separate such interest from the Master Trust Fund as
provided below in this Section. The Committee may at any time direct the Trustee
to segregate and withdraw the equitable share of any Participating Plan or that
portion of such equitable share as may be certified to the Trustee by the
Committee as allocable to any specified group or groups of employees or
beneficiaries.

                                      -34-

<PAGE>   39

Whenever segregation is required, the Trustee shall withdraw from the Master
Trust Fund such assets as it shall in its absolute discretion deem to be equal
in value to the equitable share to be segregated. Such withdrawal from the
Master Trust Fund shall be in cash or in any property held in such Fund, or in a
combination of both, in the direction of the Committee. The Trustee shall
thereafter hold the assets so withdrawn as a separate trust fund in accordance
with the provisions either of this Agreement (which shall be construed in
respect of such assets as if the employer maintaining such Participating Plan
(determined without regard to whether any subsidiaries or affiliates of such
employer have joined in such Participating Plan) had been named as the Company
hereunder and as if the Plan Administrator for such Plan had been named as the
Plan Administrator hereunder) or of a separate trust agreement. Such segregation
shall not preclude later readmission to the Master Trust.

         10.4 Amendment: By an instrument in writing delivered to the Trustee
executed pursuant to the order of the Company's Board of Directors and
acknowledged in the same form as this Agreement, the Company shall have the
right at any time and from time to time to amend this Agreement in whole or in
part except that the duties and responsibilities of the Trustee shall not be
increased without the Trustee's written consent; provided, however, that no such
amendment shall authorize or permit, at any time prior to the satisfaction of
all liabilities with respect to employees and their beneficiaries under any
Participating Plan, any part of the equitable share of such Participating Plan
in the Master Trust Fund to be used for, or diverted to, any purposes other than
for the exclusive benefit of such employees and their beneficiaries.
Notwithstanding the foregoing, the Committee may authorize any amendment or
modification to Article V of this Agreement regarding the selection of
investment advisors or investment options in which the Master Trust Fund may be
invested including, without limitation, the Group Trusts.

                  Any such amendment shall become effective upon (a) delivery to
the Trustee of the written instrument of amendment executed by the appropriate
officers of the Company, together with a certified copy of the resolution of the
Board of Directors of the Company authorizing such amendment and (b) endorsement
by the Trustee on such instrument of its receipt thereof, together with its
consent thereto if such consent is required.

         10.5 Acceptance or Rejection of Amendment by Affiliated Corporations:
Each Affiliated Corporation which has a Participating Plan shall be presumed to
have consented to any amendment hereof made by the Company unless it shall
object thereto in writing within 30 days after receiving written notice of such
amendment. Any Affiliated Corporation not consenting to any amendment may obtain
a separation of its interest in the Master Trust Fund in accordance with the
provisions of Section 10.3 hereof, any time after 30 days after receipt of
written notice of such amendment, to which such Affiliated Corporation shall not
so consent.

                                      -35-

<PAGE>   40

                                   ARTICLE XI

                                  MISCELLANEOUS

         11.1 Governing Law; No Bond Required of Trustee: Subject to the
provisions of ERISA, as they may be amended from time to time, which may be
applicable and provide to the contrary, this Trust Agreement and the Trust
hereby created shall be governed, construed, administered and regulated in all
respects under the laws of the State of Texas. No bond or other security for the
faithful performance of its duties hereunder shall be required of the Trustee
unless otherwise required by law.

         11.2 Interest in Master Trust Fund; Assignment: No document shall be
issued evidencing any interest in the Master Trust or in the Master Trust Fund,
and no Participating Plan shall have the power to assign all or any part of its
equitable share of the Master Trust Fund or of its interest therein.

         11.3 Invalid Provisions: If any provision or provisions of this Trust
Agreement shall be held illegal or invalid for any reason, said illegality or
invalidity shall not affect the remaining provisions of this Trust Agreement,
but shall be fully severable and the Trust Agreement shall be construed and
enforced as if said illegal or invalid provisions had never been inserted
herein.

         11.4 Remedies: If a dispute arises between the Company and the Trustee,
such dispute shall be settled by agreement between the parties. In the absence
of an acceptable agreement resolving the dispute, such dispute shall be
submitted to a court of competent jurisdiction for judicial settlement thereof.

         11.5 Prohibition of Diversion: Except as provided in Article VII
hereof, it shall be impossible under this Trust Agreement for any part of the
corpus or income of the Master Trust Fund to be used for, or diverted to,
purposes other than for the exclusive benefit of employees of the Company and
Affiliated Corporations which have a Participating Plan and the beneficiaries of
such employees. It shall also be impossible under this Trust Agreement for any
part of the Master Trust Fund to revert directly or indirectly to the Company or
any Affiliated Corporation which has a Participating Plan, except to the extent
such reversions are specifically authorized under Section 403(c)(2) of ERISA.

         11.6 Headings for Convenience Only: The headings and subheadings in
this Trust Agreement are inserted for convenience of reference only and are not
to be used in construing this instrument or any provision thereof.

         11.7 Successors and Assigns: This Trust Agreement shall bind and inure
to the benefit of the successors and assigns of the Company and the Trustee,
respectively.

                                      -36-

<PAGE>   41

                  IN WITNESS WHEREOF, the Company and Trustee have caused these
presents to be executed by their duly authorized officers, in a number of copies
all of which shall constitute one and the same instrument which may be
sufficiently evidenced by any executed copy hereof, this 29th day of December,
1999, but effective as of January 1, 1999.

                                     RELIANT ENERGY, INCORPORATED

                                     By /s/ LEE W. HOGAN
                                       -----------------------------------------
                                       Name: Lee W. Hogan
                                            ------------------------------------
                                       Title: Chairman of the Benefits Committee
                                             -----------------------------------

ATTEST:

/s/ LYNN HARKEL-RUMFORD
-----------------------------------
Secretary of the Benefits Committee

                                     THE NORTHERN TRUST COMPANY, Trustee

                                     By /s/ PATTY A. WEILAND
                                       -----------------------------------------
                                       Name: Patty A. Weiland
                                            ------------------------------------
                                       Title: Vice President
                                             -----------------------------------

ATTEST:

/s/ JOHN H. ST. LAUER
-----------------------------------
Asst. Secretary

                                      -37-

<PAGE>   42

                                    EXHIBIT A

                           Participating Plans in the
                          Reliant Energy, Incorporated
                Master Retirement Trust, under a Trust Agreement
                        with The Northern Trust Company,
                           Dated as of January 1, 1999

<TABLE>
<CAPTION>
         Name of Plan                               Plan Number
         ------------                               -----------
<S>      <C>                                        <C>
1.       Reliant Energy,                                001
         Incorporated
         Retirement Plan
</TABLE>

                                       A-1

<PAGE>   43

                                    EXHIBIT B

To THE NORTHERN TRUST COMPANY, as Trustee:

                  The undersigned have duly adopted and hereby signify their
intention to join in and become a party to the Reliant Energy, Incorporated
Master Retirement Trust, dated as of January 1, 1999, between you and Reliant
Energy, Incorporated so that the defined benefit plans maintained for employees
of the undersigned may participate in the Master Trust established under such
Trust Agreement.

                  IN WITNESS WHEREOF, the undersigned have caused these presents
to be executed by their duly authorized officers and their seals to be hereto
affixed this _____ day of _______________________, 1999, but effective as of
January 1, 1999.

                                            [AFFILIATED CORPORATION]

                                            By
                                               ---------------------------------
                                               Name:
                                                    ----------------------------
                                               Title:
                                                     ---------------------------

ATTEST:

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

                                       B-1

<PAGE>   44

                        CONSENT BY THE BENEFITS COMMITTEE

                  The undersigned, being the Benefits Committee described in the
above-mentioned Trust Agreement, hereby consents to the above-mentioned
Affiliated Corporations joining in and becoming a party to such Trust Agreement.
The Benefits Committee hereby certifies to the Trustee that a copy of this
instrument has been received by each member of the Benefits Committee referred
to in such Trust Agreement.

                                            RELIANT ENERGY, INCORPORATED
                                              BENEFITS COMMITTEE

                                            By
                                               ---------------------------------
                                               Lee W. Hogan, Chairman

ATTEST:

---------------------------------
Secretary

                                       B-2<PAGE>   1

                                                               EXHIBIT 10(aa)(4)

                              SEPARATION AGREEMENT

                  THIS SEPARATION AGREEMENT (this "Agreement") is entered into
by and between RELIANT ENERGY, INCORPORATED, a Texas corporation (said
corporation, together with its successors and assigns permitted under this
Agreement, hereinafter referred to as the "Company"), and DON D. JORDAN (the
"Executive"), this first day of December, 1999.

                              W I T N E S S E T H:

                  WHEREAS, effective as of June 1, 1999, the Company and the
Executive entered into an Amended and Restated Employment Agreement (the
"Employment Agreement") under which the Executive would be employed by the
Company until December 31, 2000; and

                  WHEREAS, Executive, with the express consent of the Board, has
elected to terminate his employment with the Company by reason of Retirement and
is therefore entitled to the payment of certain benefits pursuant to the
Employment Agreement; and

                  WHEREAS, the Company and Executive desire to confirm and
clarify their agreements regarding the termination of Executive's employment, as
well as to provide for certain additional matters set forth herein;

                  NOW, THEREFORE, in consideration of the mutual covenants and
agreements herein contained, the parties hereto agree to the following:

         1. CERTAIN DEFINITIONS:

                  "ADJUSTED BASE SALARY" shall mean an annual amount of
$1,635,000.

                  "ANNUAL BASE SALARY" shall mean the salary of the Executive
provided for in Section 3(B)(i) of the Employment Agreement, as adjusted
pursuant to Section 3(A)(i) for the calendar year 2000.

                  "BENEFICIARY" shall mean the person or persons, trustee or
trustees of a trust, partnership, corporation, limited liability partnership,
limited liability company or other entity named, in a writing filed with the
Company, to receive any compensation or benefit payable hereunder following the
Executive's death or, in the event no such person or entity is named or survives
the Executive, his estate. In the event of the Executive's death or a judicial
determination of his incompetence, reference in this Agreement to the Executive
shall be deemed, where appropriate, to refer to his Beneficiary, estate or other
legal representative.

                  "BOARD" shall mean the Board of Directors of the Company.

                  "CODE" shall mean the Internal Revenue Code of 1986, as in
effect on the Effective Date and as thereafter amended.

<PAGE>   2

                  "DATE OF TERMINATION" shall mean December 31, 1999.

                  "DEFERRED COMPENSATION PLAN" shall mean each of the Deferred
Compensation Plan (amended and restated effective January 1, 1991), the Deferred
Compensation Plan (amended and restated effective January 1, 1989) and the
Deferred Compensation Plan (amended and restated effective September 1, 1985),
each of which is sponsored by the Company, as in effect from time to time.

                  "DIVIDEND DEFERRAL ACCOUNT" shall mean the bookkeeping account
maintained by the Company to track the dividends (and associated accumulated
interest) payable with respect to Stock Deferrals.

                  "EICP" shall mean the Company's Executive Incentive
Compensation Plan, as in effect from time to time, or any similar successor plan
adopted by the Company.

                  "EMPLOYMENT AGREEMENT" shall mean that certain Amended and
Restated Employment Agreement For Don D. Jordan effective as of June 1, 1999.

                  "EMPLOYMENT PERIOD" shall mean the period commencing on June
1, 1999 and ending on December 31, 2000.

                  "LICP" shall mean the Company's Long-Term Incentive
Compensation Plan, as in effect from time to time, or any similar successor plan
adopted by the Company.

                  "RETIREMENT" shall mean the retirement of the Executive with
the express consent of the Board.

                  "SERP" shall mean the Benefit Restoration Plan of the Company.

                  "STOCK" shall mean the Common Stock, without par value, of the
Company.

                  "STOCK DEFERRALS" shall mean the shares of Stock and
accumulated dividends payable pursuant to Section 6 of the Employment Agreement,
but delivery of which is deferred pursuant to Section 4 of this Agreement.

                  "STOCK DELIVERY DATE" shall mean January 1, 2001.

         2. RETIREMENT OF EXECUTIVE PURSUANT TO EMPLOYMENT AGREEMENT:
Executive's employment with the Company shall terminate by reason of his
Retirement on the Date of Termination. The Company and Executive agree that
Executive's termination is a "retirement with the express consent of the Board"
within the meaning of the Employment Agreement. Except as specifically modified
herein, the Employment Agreement remains in effect.

                                        2

<PAGE>   3

         3. AGREEMENTS WITH RESPECT TO CERTAIN PAYMENTS AND BENEFITS:

         A. For purposes of fulfilling the Company's obligations with respect to
Section 5(B)(i)(a) of the Employment Agreement:

                  (i) Executive's Annual Base Salary for the calendar year 2000
         shall be deemed to be the Adjusted Base Salary.

                  (ii) Executive's EICP bonuses for the 1999 and 2000 calendar
         years shall become payable on or before December 31, 1999, shall be
         deemed to have been achieved at the "maximum" or "opportunity" level,
         and shall be treated as regular bonuses subject to Executive's current
         deferral election under the Deferred Compensation Plan.

                  (iii) Executive's Annual Base Salary that would have been
         earned through December 31, 2000, shall become payable in full on or
         before December 31, 1999, and shall be treated as regular salary
         subject to Executive's current deferral election under the Deferred
         Compensation Plan.

                  (iv) Executive's outstanding award under the LICP for the
         1997-99 performance cycle shall be paid, depending on the achievement
         of the relevant performance goals, in January 2000 in accordance with
         the terms of the LICP. The amount paid pursuant to this subsection (iv)
         shall not be eligible for deferral under the Deferred Compensation
         Plan.

                  (v) Upon payment and/or crediting to Executive of the amounts
         outlined above in subsections (i) - (iv), the Company's obligations
         with respect to Section 5(B)(i)(a) of the Employment Agreement shall be
         satisfied.

         B. Executive's benefits under the company's retirement plan and SERP
will commence according to the terms of such plans as provided in Section
5(B)(i)(b) of the Employment Agreement. For purposes of determining Executive's
benefit payable pursuant to the SERP under Section 5(B)(i)(c) of the Employment
Agreement, Executive shall be treated as if he continued to earn the Annual Base
Salary throughout the remainder of the Employment Period and EICP bonuses for
1999 and for 2000 were credited in December 1999 and December 2000,
respectively, each at the "maximum" or "opportunity" level. For this purpose,
Executive's Annual Base Salary for the calendar year 2000 shall be deemed to be
the Adjusted Base Salary.

         C. Executive and his family shall remain eligible for the Company's
welfare benefit plans until the end of the Employment Period as provided in
Section 5(B)(i)(d) of the Employment Agreement. Thereafter, Executive shall be
entitled to the welfare benefits in accordance with the plans, practices,
programs and policies of the Company to the extent applicable generally to other
peer executives of the Company.

         D. During January 2000, Company shall pay to Executive a lump sum equal
to the amount that the Company would have contributed as an employer
contribution to the tax-qualified

                                        3

<PAGE>   4

Savings Plan of the Company for the remainder of the Employment Period, had
Executive contributed at the maximum rate during said period. For this purpose,
Executive's Annual Base Salary for the calendar year 2000 shall be the Adjusted
Base Salary.

         E. As provided in Section 5(B)(iii) of the Employment Agreement,
Executive shall be entitled, for the remainder of the Employment Period, to the
prompt reimbursement of all expenses incurred for civic or industry activities
undertaken on behalf of the Company which are of a similar nature and scope to
those expenses reimbursable by the Company to the Executive on the Effective
Date. In this connection, the Executive shall also be afforded reasonable use of
any Company aircraft.

         F. The increase in Executive's Annual Base Salary for the year 2000
will satisfy the Company's obligation to provide off-site office space pursuant
to Section 5(D) for the calendar year 2000. After January 1, 2001, the Company
will continue to provide Executive with suitable executive office space and
secretarial help at an acceptable location outside the premises of any Company
location, as required pursuant to Section 5(D) of the Employment Agreement and
as specified in a letter to Executive from Robert Cruikshank dated September 2,
1998, until such time as mutually agreed by the parties to be no longer
necessary.

         G. Executive's lump-sum payments pursuant to the Deferred Compensation
Plan shall commence as soon as practicable after January 1, 2001. Executive's
installment payments pursuant to the Deferred Compensation Plan shall commence
only as provided in Section 16 of the Employment Agreement.

         H. For purposes of the Executive Benefits Plan, Executive's salary
shall be the Adjusted Base Salary.

         I. Notwithstanding any provision of the EICP to the contrary, the
Company hereby agrees to cause the EICP to be administered so that any and all
amounts of salary and/or bonus earned by Executive with respect to calendar
years 1984 and 1985 and theretofore deferred by Executive and held under the
EICP with instructions from the Executive to pay in 15 annual installments (a)
shall be paid in said 15 annual installments, (b) shall remain in the EICP
earning interest at the rate prescribed therein until installment distributions
are made and (c) shall commence on June 1, 2002 and shall be paid at the same
times as the amounts payable under the second sentence of Section 3G above are
payable.

         4. PRIOR STOCK AWARD:

         A. DEFERRAL: By executing this Agreement, the Executive hereby
irrevocably elects to defer the receipt of any amounts which may be payable, or
shares of Stock which may be deliverable, to him on account of Section 6 of the
Employment Agreement (the "Stock Deferrals"). The Stock Deferrals shall be
implemented by a credit to a bookkeeping account maintained by the Company
evidencing the Executive's unfunded right to receive shares of Stock of the
Company on the Stock Deferral Date.

                                        4

<PAGE>   5

         B. DIVIDENDS AND INTEREST: The Company shall maintain a separate
bookkeeping account (the "Dividend Deferral Account") to reflect the dividends
accumulated on shares of Stock credited to the Deferral Account. The beginning
balance of the Dividend Deferral Account shall be the amount of any cash payment
to which the Executive would be entitled pursuant to Section 6(B) of the
Employment Agreement on account of accumulated dividends. From the date the
Stock Deferrals would otherwise be payable until the Stock Delivery Date, the
Dividend Deferral Account shall be credited, as of the date any dividend is
payable, with the amount of the dividend payable with respect to the shares of
Stock represented in the Deferral Account. Until paid to the Executive, amounts
credited to the Dividend Deferral Account shall be credited, on a quarterly
basis, with interest calculated at an annual rate equal to the composite yield
on Moody's Long-Term Corporate Bond Index for the applicable calendar quarter as
determined from Moody's Bond Record published by Moody's Investors' Service,
Inc. (or any successor thereto), or, if such yield is no longer published, a
substantially similar average selected by the Compensation Committee, plus 2%.

         C. PAYMENT: Within 30 days after the Stock Delivery Date, shares of
Stock representing the Stock Deferrals shall be registered in the name of the
Executive and certificates representing such shares of Stock shall be delivered
to Executive. Unless the Company determines otherwise, shares of Stock delivered
to Executive shall consist of shares of Stock theretofore held by the Company in
its treasury or by a subsidiary of the Company. In addition, within 30 days
after the Stock Delivery Date, the Company shall deliver to the Executive a
lump-sum cash payment equal to the amount of the Dividend Deferral Account.

         5. POST-EMPLOYMENT OBLIGATIONS:

         A. Executive shall continue to be subject to the fiduciary and
confidentiality obligations of Section 10 of the Employment Agreement.

         B. Until June 1, 2002, Executive shall make himself available to the
Company for consultation on a reasonable basis from time to time, and shall use
his best efforts to promote the goodwill of the Company through his various
civic and industry activities.

         C. As a material inducement to the Company to enter into this
Agreement, Executive agrees that he will not (i) publicly criticize or disparage
the Company or any affiliate, or privately criticize or disparage the Company or
any affiliate in a manner intended or reasonably calculated to result in public
embarrassment to, or injury to the reputation of, the Company or any affiliate
in any community in which the Company or any affiliate is engaged in business;
(ii) directly or indirectly, acting alone or acting in concert with others,
institute or prosecute, or assist any person in any manner in instituting or
prosecuting, any legal proceedings of any nature against the Company or any
affiliate; subject, however, with respect to any legal action relating to
Executive's employment; (iii) commit damage to the property of the Company or
any affiliate or otherwise engage in any misconduct which is injurious to the
business or reputation of the Company or any affiliate; or (iv) 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 affiliate or inconsistent with
fostering the goodwill of the Company or any affiliate; provided, however, that
the Executive will not be in breach of the covenant contained in (ii) above
solely by reason of his testimony which is compelled by process of law. As used
in this section, the term "affiliate" means the Company, any subsidiary, any
officer,

                                        5

<PAGE>   6

director or executive of the Company or any subsidiary, and any former officer,
director or executive of the Company or any subsidiary.

         D. Executive agrees that for a period of five years after the Date of
Termination, Executive will furnish such information and proper assistance as
may be reasonably necessary in connection with any litigation in which the
Company or any subsidiary is then or may become involved.

         E. Executive and the Company agree to the press release set forth as
Exhibit A.

         F. Executive and the Company agree that the Company's obligations
outlined in Sections 8, 9 and 16 of the Employment Agreement remain in effect as
outlined in those sections.

         6. WAIVER AND RELEASE: As a condition precedent to the receipt of the
benefits under this Agreement, Executive shall execute a waiver and release of
claims, in substantially the form attached hereto as Exhibit B.

         7. SUCCESSORS:

         A. This Agreement is personal to the Executive and without the prior
written consent of the Company shall not be assignable by the Executive
otherwise than by will or the laws of descent and distribution. This Agreement
shall inure to the benefit of and be enforceable by the Executive's legal
representatives.

         B. This Agreement shall inure to the benefit of and be binding upon the
Company and its successors and assigns.

         C. The Company will require any successor (whether direct or indirect,
by purchase, merger, consolidation or otherwise) to all or substantially all of
the business and/or assets of the Company to assume expressly and agree to
perform this Agreement in the same manner and to the same extent that the
Company would be required to perform it if no such succession had taken place.
As used in this Agreement, "Company" shall mean the Company as hereinbefore
defined and any successor to its business and/or assets as aforesaid which
assumes and agrees to perform this Agreement by operation of law, or otherwise.

         8. SOURCE OF PAYMENTS: All payments provided in this Agreement shall,
unless the plan or program pursuant to which they are made provide 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. The Executive shall 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 the Executive
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.

                                        6

<PAGE>   7

         9. CONSOLIDATION, MERGER OR SALE OF ASSETS: Nothing in this Agreement
shall preclude the Company from consolidating or merging into or with, or
transferring all or substantially all of its assets to, another corporation
which assumes this Agreement and all obligations and undertakings of the Company
hereunder; provided that no such action shall diminish the Executive's rights
hereunder. Upon such a consolidation, merger or transfer of assets and
assumption, the term "Company" as used herein shall mean such other corporation.

         10. 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. 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.

         B. 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 the Executive:    Don D. Jordan
                                     5 Stayton Circle
                                     Houston, Texas 77024

               If to the Company:    Reliant Energy, Incorporated
                                     P.O. Box 4567
                                     Houston, Texas 77210

                                     ATTENTION: Mr. Hugh Rice Kelly
                                                Vice President, General Counsel
                                                and Secretary

or to such other address as either party shall have furnished to the other in
writing in accordance herewith. Notice and communications shall be effective
when actually received by the addressee.

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

         D. The Company may withhold from any amounts payable under this
Agreement such Federal, state or local taxes as shall be required to be withheld
pursuant to any applicable law or regulation.

                                        7

<PAGE>   8

                  IN WITNESS WHEREOF, the Executive has hereunto set the
Executive's hand and, pursuant to the authorization from its Board of Directors,
the Company has caused these presents to be executed in its name and on its
behalf, all on the day and year first above written, but effective as of the
Effective Date.

                                   RELIANT ENERGY, INCORPORATED

                                   By   /s/ ROBERT J. CRUIKSHANK
                                      ------------------------------------------
                                        Robert J. Cruikshank, Chairman of the
                                        Compensation Committee of the
                                        Board of Directors

                                   By   /s/ R.S. LETBETTER
                                      ------------------------------------------
                                        R.S. Letbetter, Chief Executive Officer

                                   EXECUTIVE

                                   /s/ DON D. JORDAN
                                   ---------------------------------------------
                                   Don D. Jordan

                                        8

<PAGE>   9

                        EXHIBIT A - AGREED PRESS RELEASE

<PAGE>   10

To:      All Reliant Energy Employees

From:    Hugh Rice Kelly -- Corporate Secretary

Subject: New Chairman of the Reliant Energy Board of Directors

Don D. Jordan has announced that he will retire as Chairman of the Board
effective December 31, 1999, after more than 44 years with the company. R. Steve
Letbetter, who has been serving as President and Chief Executive Officer since
June of 1999, has been named Chairman, President and Chief Executive Officer of
the company.

Mr. Letbetter joined Houston Lighting & Power Company (then Reliant Energy's
principal operating unit) as assistant secretary and assistant treasurer in
1974. He later served as assistant comptroller, then comptroller, and was
elected vice president and comptroller in 1981. From 1983 to 1988 he was vice
president of regulatory relations. He then served as group vice president
finance and regulatory relations and in 1993, was elected president and chief
operating officer. He was named president and chief operating officer of Reliant
Energy in January 1997.

Mr. Letbetter serves on the board of directors of the Electric Power Research
Institute, the Association of Electric Companies of Texas, and the American Gas
Association. He also serves on the boards of Chase Bank - Houston, Central
Houston, Greater Houston Partnership and the Houston International Festival. He
also is a member of the Governor's Business Council, the Task Force Committee of
Texas A & M University Vision 2020, the Council of Overseers for the Rice
University Jesse H. Jones Graduate School of Management, and Lt. Governor Rick
Perry's Special Commission on 21st Century Colleges and Universities. In 1998 he
was a recipient of the Outstanding Alumnus Award from Texas A&M's Lowry Mays
College & Graduate School of Business, where he serves on the college's
Development Council.

<PAGE>   11

During his 25 years with Reliant Energy, Steve Letbetter has been instrumental
in shaping the company into the international energy business it is today. As
one of Reliant Energy's primary strategists, he has overseen our transition to a
combination gas/electric/energy services company and he has guided Reliant
Energy through the deregulation of our core businesses and the opening of new
markets.

Don Jordan's tenure as chairman and chief executive officer is among the longest
in the energy industry. He was initially elected chief executive officer of
Houston Lighting & Power Company in 1977 and named chairman in 1982.

A highly visible and public executive, Mr. Jordan has, throughout his career,
been very active in civic, industry and public affairs. He has just completed
three terms as president and then chairman of the Houston Livestock Show &
Rodeo, is a member of the boards of directors of the Greater Houston
Partnership, Edison Electric Institute and the Association of Electric Companies
of Texas. He is president of the World Energy Council and served as chairman of
the World Energy Congress in Houston, in September 1998. He is a director of
AEGIS Services, Inc., BJ Services Company, the Texas Medical Center, the Texas
Heart Institute, and is a member of the board of trustees of South Texas College
of Law. He is advisory director of Chase Bank of Texas, N.A. Mr. Jordan has also
served as chairman of nearly every national energy industry association as well
as numerous leading Houston organizations.

Some of the honors he has received include 1999 Honoree of the Houston Chapter
of the Texas Society of Certified Public Accountants; Wetlands Conservation
Award from Ducks Unlimited; International Businessman of the Year from the World
Affairs Council; People of Vision Award; Distinguished Alumnus from both the
University of Texas and South Texas College of Law; Distinguished Non-alumnus of
the University of Houston; South Texan of the Year from the Texas Chamber of
Commerce; 1998 Executive of the Year from World Cogeneration Magazine; Community
Service Award from the Houston Citizens Chamber of Commerce and 1998
Distinguished Citizen from the Rotary Club of Houston.

"All Reliant Energy employees can be proud to have had a leader like Don
Jordan," said Steve Letbetter.

"Don has worked tirelessly and extraordinarily effectively over a four-decade
career. He has led this organization successfully through energy shortages,
nuclear difficulties, regulatory and political obstacles, and a host of other
challenges. He's never failed to be concerned about employees and, as a result,
maintains personal friendships at every level of the organization. On top of
that, there has probably never been an executive in this city who has devoted
more of his personal time and energy to make Houston a better place to live. We
all wish him well in his future endeavors, and are proud to call him a friend
and colleague."

*******************************************************************************

Comments, suggestions and news items may be distributed to Reliant Energy
Corporate Communications via the following avenues:

<PAGE>   12
f

                                                                       EXHIBIT B

                               WAIVER AND RELEASE

                              SEPARATION AGREEMENT
                          RELIANT ENERGY, INCORPORATED
                                AND DON D. JORDAN

                  In exchange for the payment to me of benefits pursuant to that
certain Separation Agreement between Reliant Energy, Incorporated ("REI") and me
dated December 1, 1999 (the "Separation 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 REI, and all of its subsidiaries,
affiliates and unincorporated divisions, and their 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;
provided, however, that this Waiver and Release shall not apply to any claim or
cause of action to enforce or interpret any provision contained in the
Separation Agreement. Any claim or cause of action to enforce or interpret any
provision contained in the Separation Agreement must be asserted within the
later of 90 days after the date of this Waiver and Release, or 90 days after the
date I actually discover circumstances giving rise to such claim or cause of
action.

                  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; claims in
connection with workers' compensation or "whistle blower" status; and/or
contract, tort, bodily injury or death, defamation, slander, wrongful
termination or any other state or federal regulatory, statutory or common law.

                  I affirm and agree that my employment relationship will end on
my Date of Termination as defined in the Separation 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 Separation Agreement. I agree that this
Waiver and Release is valid. I agree that this Waiver and Release is

                                       10

<PAGE>   13

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 Separation Agreement and it is incorporated
herein by reference.

                  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 Separation Agreement, I must sign and return this Waiver and
Release to the Corporate Secretary of REI no later than 5:30 p.m. on December
31, 1999. I acknowledge that I have been given 21 days to consider whether to
execute this Waiver and Release.

                  I understand that for a period of 7 calendar days following my
signing this Waiver and Release, I may revoke my acceptance of the offer of
Separation Agreement benefits by delivering a written statement to the Corporate
Secretary of REI, 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 Separation Agreement. I understand that failure to revoke my acceptance of
the offer within 7 days after the date I sign this Waiver and Release will
result in this Waiver and Release being permanent and irrevocable.

                  I agree that I have returned or will return immediately, and
maintain in strictest confidence and will not use in any way, any proprietary,
confidential, or other nonpublic information or documents relating to the
business and affairs of REI, its subsidiaries, affiliates and unincorporated
divisions. I acknowledge my continuing obligation of confidentiality regarding
proprietary or confidential information of REI. I shall maintain the strictest
confidence with respect to any and all information concerning the business or
affairs of REI which I acquired during the course of employment. Such
information includes, but is not limited to, business plans and studies,
regulatory plans or strategy information, prices and related pricing
information, memoranda, agreements, research, litigation, legal advice and work
product, discounts, computer and information systems (including software),
future plans, policies, inventions, ideas, technical data, products, services,
processes, procedures, and all other knowledge in whatever form used in
management, engineering, marketing, finance, litigation, operations, or
otherwise concerning the business of REI which is of a proprietary or
confidential nature. I hereby covenant not to use or disclose, and not to allow
others to use or disclose, any such information at any time without the express
written consent of the General Counsel of REI unless I am legally compelled to
do so by proper legal process. Should I be served with legal process seeking to
compel me to disclose any such information, I agree to notify the General
Counsel immediately, in order that REI may seek to resist such process if it so
chooses. REI agrees that if I am called upon by or on behalf of REI to serve as
a witness or consultant in or with respect to any potential litigation,
litigation, or regulatory proceeding, any such call shall be with reasonable
notice, shall not unnecessarily interfere with my later employment, and shall
provide for payment for my time and costs expended in such matters.

                  Both REI and 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

                                       11

<PAGE>   14

heirs, financial, tax and legal advisors, outplacement, executive search and/or
legal placement advisors, or as required by law; in the event confirmation of
any such information is requested, the request should be directed to the General
Counsel) by me or my agents, representatives, heirs, spouse, employees or
spokespersons shall be a breach of this Waiver and Release. REI and I also agree
to refrain from any criticisms or disparaging comments about each other or in
any way relating to my employment or separation, and REI and I specifically
acknowledge that our willingness to enter into this Waiver and Release is in
anticipation of our fidelity to this commitment. 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, nor is it intended to restrict REI
from conducting such confidential internal communications as may be necessary to
manage this resignation in a businesslike way.

                  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") or to REI regarding nuclear safety or quality
concerns, potential violations or other matters within the NRC's jurisdiction.

                  I acknowledge that this Waiver and Release and the Plan 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 REI 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/ DON D. JORDAN                           /s/ R. STEVE LETBETTER
----------------------------------          ------------------------------------
Don D. Jordan                               R. Steve Letbetter

January 4, 2000                             January 5, 2000
----------------------------------          ------------------------------------
Don D. Jordan's Signature Date              Company's Execution Date

                                       12

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