AGREEMENT
THIS AGREEMENT, effective as of January 1, 1998, is
made by and between PP&L Resources, Inc., a Pennsylvania
corporation and ___________ (the "Executive").
WHEREAS, the Company considers it essential to the
best interests of its shareowners to xxxxxx the continued
employment of key management personnel; and
WHEREAS, the Board of Directors of the Company (the
"Board") recognizes that, as is the case with many
publicly-held corporations, the possibility of a Change in
Control (as defined in the last Section hereof) 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 shareowners; 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, including the Executive, to their
assigned duties without distraction in the face of
potentially disturbing circumstances arising from the
possibility of a Change in Control;
[WHEREAS, the Executive and [the Company/insert other
entity] have entered into a severance agreement dated as of
[insert date of prior agreement] (the "Prior Severance
Agreement"), which the Executive and the Company desire to
terminate, in its entirety, effective as of the date
hereof, and in lieu thereof, enter into this Agreement] 1);
NOW THEREFORE, in consideration of the premises and
the mutual covenants herein contained, the Company and the
Executive hereby agree as follows:
1. Defined Terms. The definitions of capitalized
terms used in this Agreement are provided in the last
Section hereof.
2. Term of Agreement. The Term of this Agreement
shall commence on the date hereof and shall continue in
effect through December 31, 1999; provided, however, that
commencing on January 1, 1999 and each January 1
thereafter, the Term shall automatically be extended for
one additional year unless, either the Company or the
Executive gives at least 15 months advance notice of
termination by, not later than September 30 of the year
preceding the year in which the Term is then scheduled to
expire, giving notice not to extend the Term; and further
provided, however, that if a Change in Control shall have
occurred during the Term, the Term shall expire no earlier
than thirty-six (36) months beyond the month in which such
Change in Control occurred. Notwithstanding the foregoing,
and subject to any extensions pursuant to Section 7.3, in
the event that prior to the occurrence of a Change in
Control or Potential Change in Control, the Executive's
employment is terminated for any reason, then this
Agreement shall terminate as of the date that the
Executive's employment is terminated.
3. Company's Covenants Summarized. In order to
induce the Executive to remain in the employ of the Company
and in consideration of the Executive's covenants set forth
in Section 4 hereof, the Company agrees, under the
conditions described herein, to pay the Executive the
Severance Payments and the other payments and benefits
described herein. Except as provided in Section 9.1
hereof, no Severance Payments shall be payable under this
Agreement unless there shall have been (or, under the terms
of the second sentence of Section 6.1 hereof, there shall
be deemed to have been) a termination of the Executive's
employment with the Company following a Change in Control
and during the Term. This Agreement shall not be construed
as creating an express or implied contract of employment
and, except as otherwise agreed to in writing between the
Executive and the Company, the Executive shall not have any
right to be retained in the employ of the Company.
4. The Executive's Covenants. The Executive agrees
that, subject to the terms and conditions of this
Agreement, in the event of a Potential Change in Control
during the Term, the Executive will remain in the employ of
the Company until the earliest of (i) a date which is six
(6) months after the date of such Potential Change of
Control, (ii) the date of a Change in Control, (iii) the
date of termination by the Executive of the Executive's
employment for Good Reason or by reason of death,
Disability or Retirement, or (iv) the termination by the
Company of the Executive's employment for any reason.
5. Compensation Other Than Severance Payments.
5.1 Following a Change in Control and during the
Term, during any period that the Executive fails to perform
the Executive's full-time duties with the Company as a
result of incapacity due to physical or mental illness, the
Company shall pay the Executive's full salary to the
Executive at the rate in effect at the commencement of any
such period, together with all compensation and benefits
payable to the Executive under the terms of any
compensation or benefit plan, program or arrangement
maintained by the Company during such period, until the
Executive's employment is terminated by the Company for
Disability.
5.2 If the Executive's employment shall be
terminated for any reason following a Change in Control and
during the Term, the Company shall pay to the Executive the
Executive's full base salary through the Date of
Termination at the rate in effect immediately prior to the
Date of Termination, or if higher, the rate in effect
immediately prior to the first occurrence of an event or
circumstance constituting Good Reason, together with all
compensation and benefits payable to the Executive through
the Date of Termination under the terms of the Company's
compensation or benefit plans, programs or arrangements as
in effect immediately prior to the Date of Termination, or
if more favorable to the Executive, as in effect
immediately prior to the first occurrence of an event or
circumstance constituting Good Reason.
5.3 If the Executive's employment shall be
terminated for any reason following a Change in Control and
during the Term, the Company shall pay to the Executive the
Executive's normal post-termination compensation and
benefits due the Executive as such payments become due.
Such post-termination compensation and benefits shall be
determined under, and paid in accordance with, the
Company's retirement, insurance and other compensation or
benefit plans, programs and arrangements as in effect
immediately prior to the Date of Termination or, if more
favorable to the Executive, as in effect immediately prior
to the occurrence of the first event or circumstance
constituting Good Reason.
6. Severance Payments.
6.1 [Subject to Section 6.2 hereof,]2) [T]he
Company shall pay the Executive the payments, and provide
the Executive the benefits, described in this Section 6.1
(the "Severance Payments") upon the termination of the
Executive's employment following a Change in Control and
during the Term, in addition to the payments and benefits
described in Section 5 hereof, unless such termination is
(i) by the Company for Cause, (ii) by reason of death,
Disability or Retirement, or (iii) by the Executive without
Good Reason. For purposes of this Agreement, the
Executive's employment shall be deemed to have been
terminated following a Change in Control by the Company
without Cause or by the Executive with Good Reason if (A)
the Executive's employment is terminated by the Company
without Cause prior to a Change in Control (whether or not
a Change in Control ever occurs) and such termination was
at the request or direction of a Person who has entered
into an agreement with the Company the consummation of
which would constitute a Change in Control or (B) if the
Executive terminates his employment for Good Reason prior
to a Change in Control (whether or not a Change in Control
ever occurs) and the circumstance or event which
constitutes Good Reason occurs at the request or direction
of such Person, or (C) the Executive's employment is
terminated by the Company without Cause or by the Executive
for Good Reason and such termination or the circumstance or
event which constitutes Good Reason is otherwise in
connection with or in anticipation of a Change in Control
(whether or not a Change in Control ever occurs). For
purposes of any determination regarding the applicability
of the immediately preceding sentence, any position taken
by the Executive shall be presumed to be correct unless the
Company establishes to the Board by clear and convincing
evidence that such position is not correct.
(A) In lieu of any further salary payments to the
Executive for periods subsequent to the Date of Termination
and in lieu of any severance benefit otherwise payable to
the Executive including any payments under the Executive
Retirement Security Plan or the Displaced Managers Policy
(SPM Policy 606) or any similar plan, policy or procedure
or arrangement, [or the Executive's Prior Severance
Agreement]3) or any employment agreement or arrangement
between the Executive and the Company, to the extent
provided in Section 11 of this Agreement, the Company shall
pay to the Executive a lump sum severance payment, in cash,
equal to three times the sum of (i) the Executive's base
salary as in effect immediately prior to the Date of
Termination or, if higher, in effect immediately prior to
the first occurrence of an event or circumstance
constituting Good Reason, and (ii) the highest annual bonus
earned by the Executive pursuant to any annual bonus or
incentive plan maintained by the Company in respect of any
of the last three fiscal years ending immediately prior to
the fiscal year in which occurs the Date of Termination or,
if higher, immediately prior to the fiscal year in which
occurs the first event or circumstance constituting Good
Reason (including as an amount so paid any amount that
would have been so paid but for the Executive's request
that the amount not be paid). For purposes of determining
the value of the annual bonus earned by the Executive in
any calendar year, with respect to any calendar year prior
to 1998, the value of any restricted stock awards earned by
the Executive in any such year (but not including any
dividends distributed thereon) shall be included in the
value of the annual bonus for such year, and with respect
to the 1998 calendar year and any subsequent calendar year,
the value of any restricted stock awards earned by the
Executive in any such year shall not be included in the
value of the annual bonus for such year;
(B) For the thirty-six (36) month period immediately
following the Date of Termination, the Company shall
arrange to provide the Executive and his dependents, life,
disability, accident and health insurance benefits
substantially similar to those provided to the Executive
and his dependents immediately prior to the Date of
Termination (without giving effect to any reduction in such
benefits subsequent to a Change in Control which reduction
constitutes Good Reason) or, if more favorable to the
Executive, those provided to the Executive and his
dependents immediately prior to the first occurrence of an
event or circumstance constituting Good Reason, at no
greater cost to the Executive than the cost to the
Executive immediately prior to such date or occurrence;
provided, however, that, unless the Executive consents to
a different method (after taking into account the effect of
such method on the calculation of "parachute payments"
pursuant to Section 6.2 hereof), such health insurance
benefits shall be provided through a third-party insurer.
Benefits otherwise receivable by the Executive pursuant to
this Section 6.1(B) shall be reduced to the extent benefits
of the same type are received by or made available to the
Executive during the thirty-six (36) month period following
the Date of Termination (and any such benefits received by
or made available to the Executive shall be reported to the
Company by the Executive); provided, however, that the
Company shall reimburse the Executive for the excess, if
any, of the cost of such benefits to the Executive over
such cost immediately prior to the Date of Termination or,
if more favorable to the Executive, the first occurrence of
an event or circumstance constituting Good Reason. [If the
Severance Payments shall be decreased pursuant to Section
6.2 hereof, and the Section 6.1(B) benefits that remain
payable after the application of 6.2 hereof are thereafter
reduced pursuant to the immediately preceding sentence, the
Company shall, no later than five (5) business days
following such reduction, pay to the Executive the least of
(a) the amount of the decrease made in the Severance
Payments pursuant to Section 6.2 hereof, (b) the amount of
the subsequent reduction in these Section 6.1 benefits or
(c) the maximum amount that can be paid to the Executive
without being, or causing any other payment to be,
nondeductible by reason of section 280G of the Code).]4)
(C) Notwithstanding any provision of any annual or
long-term incentive plan to the contrary, the Company shall
pay to the Executive a lump sum amount, in cash, equal to
the sum of (i) any unpaid incentive compensation that has
been allocated or awarded to the Executive for a completed
fiscal year or other measuring period preceding the Date of
Termination under any such plan and which, as of the Date
of Termination, is contingent only upon the continued
employment of the Executive to a subsequent date, and (ii)
to the extent not otherwise paid or deferred at the
Executive's election, pursuant to the terms of the
applicable plan, a pro rata portion to the Date of
Termination of the aggregate value of all contingent
incentive compensation awards to the Executive for all then
uncompleted periods under any such plan, calculated as to
each such award by multiplying the award that the Executive
would have earned on the last day of the performance award
period, assuming the achievement, at the level that would
produce the maximum award, of the individual and corporate
performance goals established with respect to such award,
by the fraction obtained by dividing the number of full
months and any fractional portion of a month during such
performance award period through the Date of Termination by
the total number of months contained in such performance
award period.
(D) In addition to the retirement benefits to which
the Executive is entitled under each Pension Plan or any
successor plan thereto, the Company shall pay the Executive
a lump sum amount, in cash, equal to the excess of (i) the
actuarial equivalent of the aggregate retirement pension
(taking into account any early retirement subsidies
associated therewith and determined as a straight life
annuity commencing at the date (but in no event earlier
than the third anniversary of the Date of Termination) as
of which the actuarial equivalent of such annuity is
greatest) which the Executive would have accrued under the
terms of all Pension Plans (without regard to any amendment
to any Pension Plan made subsequent to a Change in Control
and on or prior to the Date of Termination, which amendment
adversely affects in any manner the computation of
retirement benefits thereunder), determined as if the
Executive were fully vested thereunder and had accumulated
after the Date of Termination thirty-six (36) additional
months of service credit thereunder (reducing such thirty-
six (36) additional months, but not below zero, to the
extent necessary so that the total number of months of
service credited thereunder, including the number of months
credited pursuant to this Section 6.1(D), does not exceed
360) and had been credited under each Pension Plan during
such period with compensation equal to the Executive's
compensation (as defined in such Pension Plan) during the
twelve (12) months immediately preceding the Date of
Termination or, if higher, during the twelve months
immediately prior to the first occurrence of an event or
circumstance constituting Good Reason, over (ii) the
actuarial equivalent of the aggregate retirement pension
(taking into account any early retirement subsidies
associated therewith and determined as a straight life
annuity commencing at the date (but in no event earlier
than the Date of Termination) as of which the actuarial
equivalent of such annuity is greatest) which the Executive
had accrued pursuant to the provisions of the Pension Plans
as of the Date of Termination. For purposes of this
Section 6.1(D), "actuarial equivalent" shall be determined
using the same assumptions utilized under the Supplemental
Executive Retirement Plan immediately prior to the Date of
Termination, or, if more favorable to the Executive,
immediately prior to the first occurrence of an event or
circumstance constituting Good Reason.
(E) If the Executive would have become entitled to
benefits under the Company's post-retirement health care or
life insurance plans, as in effect immediately prior to the
Date of Termination or, if more favorable to the Executive,
as in effect immediately prior to the first occurrence of
an event or circumstance constituting Good Reason, had the
Executive's employment terminated at any time during the
period of thirty-six (36) months after the Date of
Termination, the Company shall provide such post-retirement
health care or life insurance benefits to the Executive and
the Executive's dependents commencing on the later of (i)
the date on which such coverage would have first become
available and (ii) the date on which benefits described in
subsection (B) of this Section 6.1 terminate.
(F) The Company shall provide the Executive with
outplacement services suitable to the Executive's position
for a period of three years or, if earlier, until the first
acceptance by the Executive of an offer of employment.
[Gross Up Alternative 6.2] (A) Whether or not the
Executive becomes entitled to the Severance Payments, if
any of the payments or benefits received or to be received
by the Executive in connection with a Change in Control or
the Executive's termination of employment (whether pursuant
to the terms of this Agreement or any other plan,
arrangement or agreement with the Company, any Person whose
actions result in a Change in Control or any Person
affiliated with the Company or such Person) (such payments
or benefits, excluding the Gross-Up Payment, being
hereinafter referred to as the "Total Payments") will be
subject to the Excise Tax, the Company shall pay to the
Executive an additional amount (the "Gross-Up Payment")
such that the net amount retained by the Executive, after
deduction of any Excise Tax on the Total Payments and any
federal, state and local income and employment taxes and
Excise Tax upon the Gross-Up Payment, shall be equal to the
Total Payments.
(B) For purposes of determining whether any of the
Total Payments will be subject to the Excise Tax and the
amount of such Excise Tax, (i) all of the Total Payments
shall be treated as "parachute payments" (within the
meaning of section 280G(b)(2) of the Code) unless, in the
opinion of tax counsel ("Tax Counsel") reasonably
acceptable to the Executive and selected by the accounting
firm which was, immediately prior to the Change in Control,
the Company's independent auditor (the "Auditor"), such
payments or benefits (in whole or in part) do not
constitute parachute payments, including by reason of
section 280G(b)(4)(A) of the Code, (ii) all "excess
parachute payments" within the meaning of section
280G(b)(l) of the Code shall be treated as subject to the
Excise Tax unless, in the opinion of Tax Counsel, such
excess parachute payments (in whole or in part) represent
reasonable compensation for services actually rendered
(within the meaning of section 280G(b)(4)(B) of the Code)
in excess of the Base Amount (within the meaning of Section
280G(b)(3) of the Code) allocable to such reasonable
compensation, or are otherwise not subject to the Excise
Tax, and (iii) the value of any noncash benefits or any
deferred payment or benefit shall be determined by the
Auditor in accordance with the principles of sections
280G(d)(3) and (4) of the Code. For purposes of determining
the amount of the Gross-Up Payment, the Executive shall be
deemed to pay federal income tax at the highest marginal
rate of federal income taxation in the calendar year in
which the Gross-Up Payment is to be made and state and
local income taxes at the highest marginal rate of taxation
in the state and locality of the Executive's residence on
the Date of Termination (or if there is no Date of
Termination, then the date on which the Gross-Up Payment is
calculated for purposes of this Section 6.2), net of the
maximum reduction in federal income taxes which could be
obtained from deduction of such state and local taxes.
(C) In the event that the Excise Tax is finally
determined to be less than the amount taken into account
hereunder in calculating the Gross-Up Payment, the
Executive shall repay to the Company, within five (5)
business days following the time that the amount of such
reduction in the Excise Tax is finally determined, the
portion of the Gross-Up Payment attributable to such
reduction (plus that portion of the Gross-Up Payment
attributable to the Excise Tax and federal, state and local
income and employment taxes imposed on the Gross-Up Payment
being repaid by the Executive, to the extent that such
repayment results in a reduction in the Excise Tax and a
dollar-for-dollar reduction in the Executive's taxable
income and wages for purposes of federal, state and local
income and employment taxes, plus interest on the amount of
such repayment at 120% of the rate provided in section
1274(b)(2)(B) of the Code). In the event that the Excise
Tax is determined to exceed the amount taken into account
hereunder in calculating the Gross-Up Payment (including by
reason of any payment the existence or amount of which
cannot be determined at the time of the Gross-Up Payment),
the Company shall make an additional Gross-Up Payment in
respect of such excess (plus any interest, penalties or
additions payable by the Executive with respect to such
excess) within five (5) business days following the time
that the amount of such excess is finally determined. The
Executive and the Company shall each reasonably cooperate
with the other in connection with any administrative or
judicial proceedings concerning the existence or amount of
liability for Excise Tax with respect to the Total
Payments.
[Alternative 6.2 - "Valley"] (A) Notwithstanding any
other provisions of this Agreement, in the event that any
payment or benefit received or to be received by the
Executive in connection with a Change in Control or the
termination of the Executive's employment (whether pursuant
to the terms of this Agreement or any other plan,
arrangement or agreement with the Company, any Person whose
actions result in a Change in Control or any Person
affiliated with the Company or such Person) (all such
payments and benefits, including the Severance Payments,
being hereinafter called "Total Payments") would be subject
(in whole or part), to the Excise Tax, then the cash
Severance Payments shall be reduced (if necessary to zero)
to the extent necessary so that no portion of the Total
Payments is subject to the Excise Tax (after taking into
account any reduction in the Total Payments provided by
reason of section 280G of the Code in such other plan,
arrangement or agreement) and all other Severance Payments
shall thereafter be reduced (if necessary, to zero) so that
no portion of the Total Payments is subject to the Excise
Tax, if (i) the net amount of such Total Payments, as so
reduced, (and after deduction of the net amount of federal,
state and local income tax on such reduced Total Payments)
is greater than (ii) the excess of (x) the net amount of
such Total Payments, without reduction (but after deduction
of the net amount of federal, state and local income tax on
such Total Payments), over (y) the amount of Excise Tax to
which the Executive would be subject in respect of such
Total Payments.
Notwithstanding the foregoing paragraph, if the
Executive's Severance Payments will be reduced pursuant to
the foregoing paragraph, then the Executive may elect to
have the noncash Severance Payments reduced (or eliminated)
prior to any reduction of the cash Severance Payments.
(B) For purposes of determining whether and the
extent to which the Total Payments will be subject to the
Excise Tax, (i) no portion of the Total Payments the
receipt or enjoyment of which the Executive shall have
waived at such time and in such manner as not to constitute
a "payment" within the meaning of section 280G(b) of the
Code shall be taken into account, (ii) no portion of the
Total Payments shall be taken into account which, in the
opinion of tax counsel selected by the accounting firm that
was, immediately prior to the Change in Control, the
Company's independent auditor (the "Auditor"), does not
constitute a "parachute payment" within the meaning of
section 280G(b)(2) of the Code, (including by reason of
section 280G(b)(4)(A) of the Code) and, in calculating the
Excise Tax, no portion of such Total Payments shall be
taken into account which constitutes reasonable
compensation for services actually rendered, within the
meaning of section 280G(b)(4)(B) of the Code, in excess of
the Base Amount allocable to such reasonable compensation,
and (iii) the value of any non-cash benefit or any deferred
payment or benefit included in the Total Payments shall be
determined by the Company in accordance with the principles
of sections 280G(d)(3) and (4) of the Code. Prior to the
payment date set forth in Section 6.3 hereof, the Company
shall provide the Executive with its calculation of the
amounts referred to in this Section and such supporting
materials as are reasonably necessary for the Executive to
evaluate the Company's calculations. If the Executive
objects to the Company's calculations, the Company shall
pay to the Executive such portion of the Severance Payments
(up to 100% thereof) as the Executive determines is
necessary to result in the Executive receiving the greater
of clauses (i) and (ii) of Section 6.2(A) hereof.
(C) If it is established pursuant to a final
determination of a court or an Internal Revenue Service
proceeding that, notwithstanding the good faith of the
Executive and the Company in applying the terms of this
Section 6.2, the Total Payments paid to or for the
Executive's benefit are in an amount that would result in
any portion of such Total Payments being subject to the
Excise Tax, then, if such repayment would result in (i) no
portion of the remaining Total Payments being subject to
the Excise Tax and (ii) a dollar-for-dollar reduction in
the Executive's taxable income and wages for purposes of
federal, state and local income and employment taxes, the
Executive shall have an obligation to pay the Company upon
demand an amount equal to the sum of (i) the excess of the
Total Payments paid to or for the Executive's benefit over
the Total Payments that could have been paid to or for the
Executive's benefit without any portion of such Total
Payments being subject to the Excise Tax; and (ii) interest
on the amount set forth in clause (i) of this sentence at
the rate provided in section 1274(b)(2)(B) of the Code from
the date of the Executive's receipt of such excess until
the date of such payment.
6.3 The payments provided in subsection 6.1(A), (C)
and (D) hereof [and Section 6.2 hereof] 5) shall be made
not later than the fifth day following the Date of
Termination; provided, however, that if the amounts of such
payments, [and the limitation on such payments set forth in
Section 6.2 hereof,] 6) cannot be finally determined on or
before such day, the Company shall pay to the Executive on
such day an estimate, as determined in good faith by the
Company, [or, in the case of payments under Section 6.2
hereof, in accordance with Section 6.2 hereof,] 7) of the
minimum amount of such payments to which the Executive is
clearly entitled and shall pay the remainder of such
payments (together with interest on the unpaid remainder
(or on such payments to the extent the Company fails to
make such payments when due) at 120% of the rate provided
in section 1274(b)(2)(B) of the Code) as soon as the amount
thereof can be determined but in no event later than the
thirtieth (30th) day after the Date of Termination. In the
event that the amount of the estimated payments exceeds the
amount subsequently determined to have been due, such
excess shall constitute a loan by the Company to the
Executive, payable on the fifth (5th) business day after
demand by the Company (together with interest at 120% of
the rate provided in section 1274(b)(2)(B) of the Code).
At the time that payments are made under this Agreement,
the Company shall provide the Executive with a written
statement setting forth the manner in which such payments
were calculated and the basis for such calculations
including, without limitation, any opinions or other advice
the Company has received from Tax Counsel, the Auditor or
other advisors or consultants (and any such opinions or
advice which are in writing shall be attached to the
statement).
6.4 The Company also shall pay to the Executive all
legal fees and expenses incurred by the Executive in
disputing in good faith any issue hereunder relating to the
termination of the Executive's employment hereunder or in
seeking in good faith to obtain or enforce any benefit or
right provided by this Agreement or in connection with any
tax audit or proceeding to the extent attributable to the
application of section 4999 of the Code to any payment or
benefit provided hereunder. Such payments shall be made
within five (5) business days after delivery of the
Executive's written requests for payment accompanied with
such evidence of fees and expenses incurred as the Company
reasonably may require.
7. Termination Procedures and Compensation During
Dispute.
7.1 Notice of Termination. After a Change in Control
and during the Term, any purported termination of the
Executive's employment (other than by reason of death)
shall be communicated by written Notice of Termination from
one party hereto to the other party hereto in accordance
with Section 10 hereof. For purposes of this Agreement, a
"Notice of Termination" shall mean a notice which shall
indicate the specific termination provision in this
Agreement relied upon and shall set forth in reasonable
detail the facts and circumstances claimed to provide a
basis for termination of the Executive's employment under
the provision so indicated. Further, a Notice of
Termination for Cause is required to include a copy of a
resolution duly adopted by the affirmative vote of not less
than three-quarters (3/4) of the entire membership of the
Board at a meeting of the Board which was called and held
for the purpose of considering such termination (after
reasonable notice to the Executive and an opportunity for
the Executive, together with the Executive's counsel, to be
heard before the Board) finding that, in the good faith
opinion of the Board, the Executive was guilty of conduct
set forth in clause (i) or (ii) of the definition of Cause
herein, and specifying the particulars thereof in detail.
7.2 Date of Termination. "Date of Termination", with
respect to any purported termination of the Executive's
employment after a Change in Control and during the Term,
shall mean (i) if the Executive's employment is terminated
for Disability, thirty (30) days after Notice of
Termination is given (provided that the Executive shall not
have returned to the full-time performance of the
Executive's duties during such thirty (30) day period), and
(ii) if the Executive's employment is terminated for any
other reason, the date specified in the Notice of
Termination (which, in the case of a termination by the
Company, shall not be less than thirty (30) days (except in
the case of a termination for Cause) and, in the case of a
termination by the Executive, shall not be less than
fifteen (15) days nor more than sixty (60) days,
respectively, from the date such Notice of Termination is
given).
7.3 Dispute Concerning Termination. If within fifteen
(15) days after any Notice of Termination is given, or, if
later, prior to the Date of Termination (as determined
without regard to this Section 7.3), the party receiving
such Notice of Termination notifies the other party that a
dispute exists concerning the termination, the Date of
Termination shall be extended until the earlier of (i) the
date on which the Term ends or (ii) the date on which the
dispute is finally resolved, either by mutual written
agreement of the parties or by a final judgment, order or
decree of an arbitrator or a court of competent
jurisdiction (which is not appealable or with respect to
which the time for appeal therefrom has expired and no
appeal has been perfected); provided, however, that the
Date of Termination shall be extended by a notice of
dispute given by the Executive only if such notice is given
in good faith and the Executive pursues the resolution of
such dispute with reasonable diligence.
7.4 Compensation During Dispute. If a purported
termination occurs following a Change in Control and during
the Term and the Date of Termination is extended in
accordance with Section 7.3 hereof, the Company shall
continue to pay the Executive the full compensation in
effect when the notice giving rise to the dispute was given
(including, but not limited to, salary) and continue the
Executive as a participant in all compensation, benefit and
insurance plans in which the Executive was participating
when the notice giving rise to the dispute was given, until
the Date of Termination, as determined in accordance with
Section 7.3 hereof. Amounts paid under this Section 7.4
are in addition to all other amounts due under this
Agreement (other than those due under Section 5.2 hereof)
and shall not be offset against or reduce any other amounts
due under this Agreement.
8. No Mitigation. The Company agrees that, if the
Executive's employment with the Company terminates during
the Term, the Executive is not required to seek other
employment or to attempt in any way to reduce any amounts
payable to the Executive by the Company pursuant to Section
6 or Section 7.4 hereof. Further, the amount of any
payment or benefit provided for in this Agreement (other
than in Section 6.1(B) hereof) shall not be reduced by any
compensation earned by the Executive as the result of
employment by another employer, by retirement benefits, by
offset against any amount claimed to be owed by the
Executive to the Company, or otherwise.
9. Successors; Binding Agreement.
9.1 In addition to any obligations imposed by law upon
any successor to the Company, 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 expressly
assume 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. Failure of the Company to obtain such assumption
and agreement prior to the effectiveness of any such
succession shall be a breach of this Agreement and shall
entitle the Executive to compensation from the Company in
the same amount and on the same terms as the Executive
would be entitled to hereunder if the Executive were to
terminate the Executive's employment for Good Reason after
a Change in Control, except that, for purposes of
implementing the foregoing, the date on which any such
succession becomes effective shall be deemed the Date of
Termination.
9.2 This Agreement shall inure to the benefit of and
be enforceable by the Executive's personal or legal
representatives, executors, administrators, successors,
heirs, distributees, devisees and legatees. If the
Executive shall die while any amount would still be payable
to the Executive hereunder (other than amounts which, by
their terms, terminate upon the death of the Executive) if
the Executive had continued to live, all such amounts,
unless otherwise provided herein, shall be paid in
accordance with the terms of this Agreement to the
executors, personal representatives or administrators of
the Executive's estate.
10. Notices. For the purpose of this Agreement,
notices and all other communications provided for in the
Agreement shall be in writing and shall be deemed to have
been duly given when delivered or mailed by United States
registered mail, return receipt requested, postage prepaid,
addressed, to the Executive at the last known address
maintained in the Company's personnel records, and to the
Company, to the address set forth below, or to such other
address as either party may have furnished to the other in
writing in accordance herewith, except that notice of
change of address shall be effective only upon actual
receipt:
To the Company:
PP&L Resources, Inc.
Xxx Xxxxx 0xx Xxxxxx
Xxxxxxxxx, Xxxxxxxxxxxx 00000
Attention: Corporate Secretary
11. Miscellaneous. No provision of this Agreement
may be modified, waived or discharged unless such waiver,
modification or discharge is agreed to in writing and
signed by the Executive and such officer as may be
specifically designated by the Board. No waiver by either
party hereto at any time of any breach by the other party
hereto of, or any lack of compliance with, any condition or
provision of this Agreement to be performed by such other
party shall be deemed a waiver of similar or dissimilar
provisions or conditions at the same or at any prior or
subsequent time. This Agreement supersedes any other
agreements or representations, oral or otherwise, express
or implied, with respect to the subject matter hereof,
which have been made by either party [including but not
limited to, the Prior Severance Agreement] 8); provided,
however, that this Agreement shall supersede any agreement
setting forth the terms and conditions of the Executive's
employment with the Company only in the event that the
Executive's employment with the Company is terminated on or
following a Change in Control, by the Company other than
for Cause or by the Executive other than for Good Reason.
The validity, interpretation, construction and performance
of this Agreement shall be governed by the laws of the
Commonwealth of Pennsylvania. All references to sections
of the Exchange Act or the Code shall be deemed also to
refer to any successor provisions to such sections. Any
payments provided for hereunder shall be paid net of any
applicable withholding required under federal, state or
local law and any additional withholding to which the
Executive has agreed. The obligations of the Company and
the Executive under this Agreement that by their nature may
require either partial or total performance after the
expiration of the Term (including, without limitation,
those under Sections 6 and 7 hereof) shall survive such
expiration.
12. Validity; Pooling. The invalidity or
unenforceability of any provision of this Agreement shall
not affect the validity or enforceability of any other
provision of this Agreement, which shall remain in full
force and effect. In the event that the Company is party
to a transaction that is otherwise intended to qualify for
"pooling of interests" accounting treatment then (a) this
Agreement shall, to the extent practicable, be interpreted
so as to permit such accounting treatment, and (b) to the
extent that the application of the first sentence of this
Section 12 does not preserve the availability of such
accounting treatment, then, to the extent that any
provision of this Agreement disqualifies the transaction as
a "pooling" transaction (including, if applicable, the
entire Agreement), such provision shall be null and void as
of the date hereof. All determinations under this Section
12 shall be made by the accounting firm whose opinion with
respect to "pooling of interests" is required as a
condition to the consummation of such transaction.
13. Counterparts. This Agreement may be executed in
several counterparts, each of which shall be deemed to be
an original but all of which together will constitute one
and the same instrument.
14. Settlement of Disputes; Arbitration. The Board
shall make all determinations as to the Executive's right
to benefits under this Agreement. Any denial by the Board
of a claim for benefits under this Agreement shall be
stated in writing and delivered or mailed to the Executive
and such notice shall set forth the specific reasons for
the denial and the specific provisions of this Agreement
relied upon, and shall be written in a manner that may be
understood without legal or actuarial counsel. In
addition, the Board shall afford a reasonable opportunity
to the Executive for a review of the decision denying the
Executive's claim and, in the event of continued
disagreement, the Executive may appeal within a period of
60 days after receipt of notification of denial. Failure
to perfect an appeal within the 60-day period shall make
the decision conclusive. Any further dispute or
controversy arising under or in connection with this
Agreement shall be settled exclusively by arbitration in
Philadelphia, Pennsylvania in accordance with the rules of
the American Arbitration Association then in effect;
provided, however, that the evidentiary standards set forth
in this Agreement shall apply. Judgment may be entered on
the arbitrator's award in any court having jurisdiction.
Notwithstanding any provision of this Agreement to the
contrary, the Executive shall be entitled to seek specific
performance of the Executive's right to be paid until the
Date of Termination during the pendency of any dispute or
controversy arising under or in connection with this
Agreement.
15. Definitions. For purposes of this Agreement, the
following terms shall have the meanings indicated below:
(A) "Base Amount" shall have the meaning set forth in
section 280G(b)(3) of the Code.
(B) "Beneficial Owner" shall have the meaning set
forth in Rule 13d-3 under the Exchange Act.
(C) "Board" shall mean the Board of Directors of the
Company.
(D) "Cause" for termination by the Company of the
Executive's employment shall mean (i) the willful and
continued failure by the Executive to substantially perform
the Executive's duties with the Company (other than any
such failure resulting from the Executive's incapacity due
to physical or mental illness or any such actual or
anticipated failure after the issuance of a Notice of
Termination for Good Reason by the Executive pursuant to
Section 7.1 hereof) after a written demand for substantial
performance is delivered to the Executive by the Board,
which demand specifically identifies the manner in which
the Board believes that the Executive has not substantially
performed the Executive's duties, or (ii) the willful
engaging by the Executive in conduct which is demonstrably
and materially injurious to the Company or its
subsidiaries, monetarily or otherwise. For purposes of
clauses (i) and (ii) of this definition, (x) no act, or
failure to act, on the Executive's part shall be deemed
"willful" unless done, or omitted to be done, by the
Executive not in good faith and without reasonable belief
that the Executive's act, or failure to act, was in the
best interest of the Company, and (y) in the event of a
dispute concerning the application of this provision, no
claim by the Company that Cause exists shall be given
effect unless the Company establishes to the Board by clear
and convincing evidence that Cause exists.
(E) "Change in Control" means the occurrence of any
one of the following events: (I) any change in the control
of the Company of a nature that would be required to be
reported in response to Item 1(a) of Form 8-K under the
Securities Exchange Act of 1934, as amended (the "Exchange
Act"); (II) during any period of not more than two
consecutive years, individuals who at the beginning of such
period constitute the Board and any new director (other
than a director designated by a Person who has entered into
an agreement with the Company to effect a transaction
described in clause (I), (III) or (IV) of this paragraph)
whose election by the Board or nomination for election by
the Company's shareowners was approved or recommended by a
vote of at least two-thirds (2/3) of the directors then
still in office who either were directors at the beginning
of the period or whose election or nomination for election
was previously so approved or recommended, cease for any
reason to constitute at least a majority thereof; (III) any
Person becomes the Beneficial Owner, directly or
indirectly, of securities of the Company representing 20%
or more of the combined voting power of the Company's then
outstanding securities entitled to vote generally in the
election of directors; (IV) there is consummated any merger
or consolidation of the Company or any direct or indirect
subsidiary of the Company with any other corporation or the
sale or other disposition of all or substantially all of
the assets of the Company to any other person or persons
unless, after giving effect thereto, (1) holders of the
Company's then outstanding securities entitled to vote
generally in the election of directors will own a majority
of the outstanding stock entitled to vote generally in the
election of directors of the continuing, surviving or
transferee corporation or any parent (within the meaning of
Rule 12b-2 under the Exchange Act) thereof and (2) the
incumbent members of the Board as constituted immediately
prior thereto shall constitute at least a majority of the
directors of the continuing, surviving or transferee
corporation and any parent thereof; (V) the shareowners of
the Company approve a plan of complete liquidation or
dissolution of the Company; or (VI) the Board adopts a
resolution to the effect that a "Change in Control" has
occurred or is anticipated to occur.
(F) "Code" shall mean the Internal Revenue Code of
1986, as amended from time to time.
(G) "Company" shall mean PP&L Resources, Inc. and,
except in determining, under Section 15(E) hereof, whether
or not any Change in Control of the Company has occurred in
connection with such succession, shall include its
subsidiaries and any successor to its business and/or
assets which assumes and agrees to perform this Agreement
by operation of law, or otherwise.
(H) "Date of Termination" shall have the meaning set
forth in Section 7.2 hereof.
(I) "Disability" shall be deemed the reason for the
termination by the Company of the Executive's employment,
if, as a result of the Executive's incapacity due to
physical or mental illness, the Executive shall have been
absent from the full-time performance of the Executive's
duties with the Company for a period of six (6) consecutive
months, the Company shall have given the Executive a Notice
of Termination for Disability, and, within thirty (30) days
after such Notice of Termination is given, the Executive
shall not have returned to the full-time performance of the
Executive's duties.
(J) "Exchange Act" shall mean the Securities Exchange
Act of 1934, as amended from time to time.
(K) "Excise Tax" shall mean any excise tax imposed
under section 4999 of the Code.
(L) "Executive" shall mean the individual named in
the first paragraph of this Agreement.
(M) "Good Reason" for termination of the Executive's
employment with the Company by such Executive shall mean
the occurrence (without the Executive's express written
consent) after a Change in Control, or prior to a Change in
Control under the circumstances described in clauses (B)
and (C) of the second sentence of Section 6.1 hereof
(treating all references in paragraphs (I) through (VII)
below to a "Change in Control" as references to a
"Potential Change in Control"), of any one of the following
acts by the Company, or failures by the Company to act:
(I) the assignment to the Executive of any
duties inconsistent with the Executive's status as an
executive officer or key employee of the Company or a
substantial adverse alteration in the nature or status of
the Executive's responsibilities from those in effect
immediately prior to a Change in Control;
(II) a reduction by the Company of the
Executive's annual base salary as in effect on the date of
this Agreement, or as the same may be increased from time
to time, except for across-the-board decreases uniformly
affecting management, key employees and salaried employees
of the Company or the business unit in which the Executive
is then employed;
(III) the relocation of the Executive's
principal work location to a location more than 30 miles
from the vicinity of such work location immediately prior
to a Change in Control or the Company's requiring the
Executive to be based anywhere other than such principal
place of employment (or permitted relocation thereof)
except for required travel on the Company's business to an
extent substantially consistent with the Executive's
present business travel obligations;
(IV) the failure by the Company to pay to the
Executive any portion of the Executive's current
compensation or to pay to the Executive any portion of an
installment of deferred compensation under any deferred
compensation program of the Company, within seven (7) days
of the date such compensation is due, except for across-
the-board compensation deferrals uniformly affecting
management, key employees and salaried employees of the
Company or the business unit in which the Executive is then
employed;
(V) the failure by the Company to continue in
effect any compensation or benefit plan in which the
Executive participates immediately prior to a Change in
Control which is material to the Executive's total
compensation, or any substitute plans adopted prior to a
Change in Control, unless an equitable arrangement
(embodied in an ongoing substitute or alternative plan) has
been made with respect to such plan, or the failure by the
Company to continue the Executive's participation therein
(or in such substitute or alternative plan) on a basis not
materially less favorable, both in terms of the amount or
timing of payment of benefits provided and the level of the
Executive's participation relative to other participants,
as existed immediately prior to the Change in Control, or
(VI) the failure by the Company to continue to
provide the Executive with benefits substantially similar
to those enjoyed by the Executive under any of the
Company's pension, savings, life insurance, medical, health
and accident, or disability plans in which the Executive
was participating immediately prior to a Change in Control,
except for across-the-board changes to any such plans
uniformly affecting all participants in such plans, the
taking of any other action by the Company which would
directly or indirectly materially reduce any of such
benefits or deprive the Executive of any material fringe
benefit enjoyed by the Executive at the time of the Change
in Control, or the failure by the Company to provide the
Executive with the number of paid vacation days to which
the Executive is entitled on the basis of years of service
with the Company in accordance with the Company's normal
vacation policy at the time of the Change in Control; or
(VII) any purported termination of the
Executive's employment which is not effected pursuant to a
Notice of Termination satisfying the requirements of
Section 7.1 hereof; For purposes of this Agreement, no such
purported termination shall be effective.
The Executive's right to terminate his or her
employment with the Company for Good Reason shall not be
affected by the Executive's incapacity due to physical or
mental illness. The Executive's continued employment shall
not constitute consent to, or a waiver of rights with
respect to, any act or failure to act constituting Good
Reason hereunder.
For purposes of any determination regarding the
existence of Good Reason, any claim by the Executive that
Good Reason exists shall be presumed correct unless the
Company established to the Board by clear and convincing
evidence that Good Reason does exist.
(N) "Notice of Termination" shall have the meaning
stated in Section 7.1 hereof.
(O) "Pension Plan" shall mean any tax-qualified,
supplemental or excess defined benefit pension plan
maintained by the Company and any other agreement entered
into between the Executive and the Company which is
designed to provide the Executive with supplemental
retirement benefits.
(P) "Person" shall have the meaning given in Section
3(a)(9) of the Exchange Act, as modified and used in
Sections 13(d) and 14(d) thereof; provided, however, a
Person shall not include (i) the Company or any of its
subsidiaries, (ii) a trustee or other fiduciary holding
securities under an employee benefit plan of the Company or
any of its subsidiaries, (iii) an underwriter temporarily
holding securities pursuant to an offering of such
securities, or (iv) a corporation owned, directly or
indirectly, by the stockholders of the Company in
substantially the same proportions as their ownership of
stock of the Company.
(Q) "Potential Change in Control" shall be deemed to
have occurred if the conditions set forth in any one of the
following paragraphs shall have been satisfied:
(I) the Company enters into an agreement, the
consummation of which would result in the occurrence of a
Change in Control;
(II) any Person publicly announces an intention
to take or to consider taking actions which if consummated
would constitute a Change in Control;
(III) any Person is or becomes the Beneficial
Owner, directly or indirectly, of securities of the Company
representing 5% or more of the combined voting power of the
Company's then outstanding securities entitled to vote
generally in the election of directors; or
(IV) the Board adopts a resolution to the effect
that, for purposes of this Agreement, a Potential Change in
Control has occurred.
(A) "Retirement" shall be deemed the reason for the
termination by the Executive of the Executive's employment
if such employment is terminated in accordance with the
Company's retirement policy, including early retirement,
generally applicable to its salaried employees.
(S) "Severance Payments" shall have the meaning set
forth in Section 6.1 hereof.
(T) "Term" shall mean the period of time described in
Section 2 hereof (including any extension, continuation or
termination described therein).
(U) "Total Payments" shall mean those payments
described in Section 6.2 hereof.
PP&L RESOURCES, INC.
By ________________________
Name:
Title:
___________________________
[Name of Executive]
FOOTNOTES
1) Include this section for Executives who have
existing severance agreements.
2) Delete this section for Executives receiving a
gross-up.
3) Include this section for Executives with existing
severance agreements.
4) Include this section for Executives not receiving
gross-up.
5) Include this section for Executive receiving a
gross-up.
6) Include this section for Executive not receiving
a gross-up.
7) Include this section for Executive receiving a
gross-up.
8) Insert this section for Executives who have
existing severance.
