THIS SEVERANCE AGREEMENT ("Agreement") is made and effective as of the 14th day of January, 2003,
by and between RELIANT RESOURCES, INC., a Delaware corporation having its principal place of business
in Houston, Harris County, Texas, and Hugh Rice Kelly, an individual currently residing in Harris County, Texas
WHEREAS, the Company considers it essential to the best interests of its stockholders to foster the continued
employment of key management personnel; and
WHEREAS, the Board recognizes that, as is the case with many publicly held corporations, the possibility of a
Change of Control exists and that such possibility, and the uncertainty and questions which it may raise among
management, may result in the departure or distraction of management personnel to the detriment of the
Company and its stockholders; and
WHEREAS, the Board has determined that appropriate steps should be taken to reinforce and encourage the
continued attention and dedication of members of the Company's management to their assigned duties without
distraction in the face of potentially disturbing circumstances arising from the possibility of a Change of Control;
NOW, THEREFORE, the Company and Executive have entered into this Agreement, on the terms and
conditions hereinafter stated.
1. DEFINITIONS: The following terms shall have the meanings set forth below.
"AFFILIATE" means any company controlled by, controlling or under common control with the Company within
the meaning of Section 414 of the Internal Revenue Code of 1986, as amended (the "Code").
"BOARD" means the board of directors of the Company.
"CAUSE" means Executive's (a) gross negligence in the performance of Executive's duties, (b) intentional and
continued failure to perform Executive's duties, (c) intentional engagement in conduct which is materially injurious
to the Company or its Affiliates (monetarily or otherwise) or (d) conviction of a felony, which, in the case of
clauses (a), (b) or (c) has