Exhibit 10.110
CHANGE-IN-CONTROL AGREEMENT
THIS AGREEMENT made this DATE, by and between LG&E ENERGY CORP. (the
"Company") and _____________________("Executive").
WHEREAS, the Board of Directors of the Company (the "Board") recognizes
that the possibility of a Change in Control (as hereinafter defined) exists and
that the occurrence of a Change in Control can result in significant
distractions of its key management personnel because of the uncertainties
inherent in such a situation;
WHEREAS, the Board has determined that it is essential and in the best
interest of the Company and Powergen, plc (the "Parent") to retain the services
of the Executive in the event of a Change in Control and to ensure his continued
dedication and efforts in such event without undue concern for his personal
financial and employment security; and
WHEREAS, in order to induce the Executive to remain in the employ of
the Company or a Subsidiary (as hereinafter defined), as the case may be,
particularly in the event of a threat or the occurrence of a Change in Control,
the Company desires to enter into this Agreement with the Executive to provide
the Executive with certain benefits in the event his employment is terminated as
a result of, or in connection with, a Change in Control.
NOW, THEREFORE, in consideration of the respective agreements of the
parties contained herein, it is agreed as follows:
1. TERM OF AGREEMENT. This Agreement shall commence as of the _____ day
of _________________, 2000, and shall continue in effect until SAME MONTH/DAY,
2002, provided, however, that commencing on SAME MONTH/DAY, 2002, and on SAME
MONTH/DAY thereafter, the term of this Agreement shall automatically be extended
for one (1) year unless either the Company or the Executive shall have given
written notice to the other at least ninety (90) days prior thereto that the
term of this Agreement shall not be so extended; and provided, further, however,
that notwithstanding any such notice by the Company not to extend, the term of
this Agreement shall not expire prior to the expiration of twenty-four (24)
months after any Change in Control which occurs while this Agreement is in
effect.
2. DEFINITIONS.
2.1 BASE AMOUNT; BONUS AMOUNT. For purposes of this Agreement,
"Base Amount" shall mean the greater of the Executive's annual base
salary from the Company and its Subsidiaries (a) at the rate in effect
on the Termination Date (as hereinafter defined) or (b) at the highest
rate in effect at any time during the ninety (90) day period prior to
the Change in Control, and shall include all amounts of base salary
that are deferred under any qualified and non-qualified employee
benefits plans of the Company or any Subsidiary or under any other
agreement or arrangement. For purposes of this Agreement; "Bonus
Amount" shall mean the greater of (a) the most recent annual bonus paid
or payable to the Executive, (b) the annual bonus paid or payable to
the Executive under the Short Term Incentive Plan for the full fiscal
year ended prior to the fiscal year during which a Change in Control
occurred or (c) the Executive's target award under the Short Term
Incentive Plan for the full fiscal year ended prior to the fiscal year
during which a Change in Control occurred.
2.2 CAUSE. For purposes of this Agreement, a termination for
"Cause" is a termination evidenced by a resolution adopted in good
faith by at least seventy-five percent (75%) of the Board that (i)
there has been repeated gross negligence by the Executive in performing
the reasonably assigned duties on behalf of an Employer required by and
in accordance with his employment by such Employer, or (ii) the
Executive has committed a felony in the course of performing those
duties. Notwithstanding anything contained in this Agreement to the
contrary, no failure to perform by the Executive after a Notice of
Termination (as hereinafter defined) is given by the Executive shall
constitute Cause for purposes of this Agreement. No act, or failure to
act, on Executive's part shall be deemed to be "repeated" unless the
Executive shall have received a written notice from seventy-five
percent (75%) of the Board setting forth in detail the particulars of
the act, or the failure to act, which the Company contends would
constitute Cause when repeated and Executive then repeats such act or
failure to act.
2.3 CHANGE IN CONTROL.
For purposes of this Agreement, a "Change in Control" shall mean the occurrence
during the term of this Agreement of any of the following events:
(a) An acquisition (other than directly from Parent) of any
securities of Parent entitled generally to vote on the election of
directors (the "Voting Securities") by any "Person" (as the term person
is used for purposes of Section 13(d) or 14(d) of the Securities
Exchange Act of 1934, as amended (the "1934 Act")) immediately after
which such Person has "Beneficial Ownership" (within the meaning of
Rule 13d-3 promulgated under the 0000 Xxx) of fifteen percent (15%) or
more of the combined voting power of Parent's then outstanding Voting
Securities; PROVIDED, HOWEVER, in determining whether a Change in
Control has occurred, Voting Securities which are acquired in a
"Non-Control Acquisition" (as hereinafter defined) shall not constitute
an acquisition which would cause a Change in Control. A "Non-Control
Acquisition" shall mean an acquisition by (1) an employee benefit plan
(or a trust forming a part thereof) maintained by (a) Parent or (b) any
corporation or other Person of which a majority of its voting power or
its equity securities or equity interest is owned directly and
indirectly by Parent (a "Subsidiary") or (2) Parent or any Subsidiary.
(b) The individuals who, as of the date this Agreement was
approved by the Board, are members of the Board (the "Incumbent
Board"), cease for any reason to constitute at least two-thirds of the
Board; provided, however, that if the election, or nomination for
election by Parent's stockholders, of any new director was approved by
a vote of at least two-thirds of the Incumbent Board, such new director
shall, for purposes of the Agreement, be considered as a member of the
Incumbent Board; or
(c) Approval by stockholders of Parent of:
(1) A merger, consolidation or reorganization involving
Parent; unless
(i) the stockholders of Parent immediately before
such merger, consolidation or reorganization, own, directly or
indirectly immediately following such merger, consolidation or
reorganization, at least seventy-five percent (75%) of the
combined voting power of the outstanding voting securities of
the corporation resulting from such merger or consolidation or
reorganization (the "Surviving Corporation") in substantially
the same proportion to each other as their ownership of the
Voting Securities immediately before such merger,
consolidation or reorganization, and
(ii) the individuals who were members of the
Incumbent Board immediately prior to the execution of the
agreement providing for such merger, consolidation or
reorganization constitute at least two-thirds of the members
of the board of directors of the Surviving Corporation;
(2) A complete liquidation or dissolution of Parent or the
Company; unless, in the case of the Company, Parent continues
to own directly or indirectly all or substantially all of the
Company's assets;
(3) An agreement for the sale or other disposition of all or
substantially all of the assets of Parent or the Company to
any Person (other than a transfer to a Subsidiary);
(4) A merger or other combination involving the Company as a
result of which Parent ceases to beneficially own more than
50% of the outstanding Voting Securities of the successor to
the Company, unless Parent continues to own directly or
indirectly all or substantially all of the Company's assets;
or
(5) Any Person acquires Beneficial Ownership of a greater
percentage of the Voting Securities of the Company than the
percentage of such Voting Securities then held, directly or
indirectly, by Parent.
(d) Notwithstanding the foregoing clauses (a), (b), and (c), a Change in
Control shall not be deemed to occur solely because any Person (the "Subject
Person") acquired Beneficial Ownership of more than the permitted amount of the
outstanding Voting Securities as a result of the acquisition of Voting
Securities by Parent which, by reducing the number of Voting Securities
outstanding, increases the proportional number of shares, provided that if a
Change in Control would occur (but for the operation of this sentence) as a
result of the acquisition of Voting Securities by Parent, and after such share
acquisition by Parent, the Subject Person or entity becomes the Beneficial Owner
of any additional Voting Securities which increases the percentage of the then
outstanding Voting Securities Beneficially Owned by the Subject Person, then a
Change in Control shall occur.
(e) Notwithstanding anything contained in this Agreement to the contrary,
if the Executive's employment is terminated during the term of this Agreement
and the Executive reasonably demonstrates that such termination (i) was at the
request of a third party who has indicated an intention or taken steps
reasonably calculated to effect a Change in Control and who effectuates a Change
in Control (a "Third Party") or (ii) otherwise occurred in connection with, or
in anticipation of, a Change in Control which actually occurs, then for all
purposes of this Agreement, the date of a Change in Control with respect to the
Executive shall mean the date immediately prior to the date of such termination
of the Executive's employment.
2.4 DISABILITY. For purposes of this Agreement, "Disability" shall mean (i)
a physical or mental infirmity which has been determined to be total and
permanent disability under and in accordance with the provisions of the
Company's Long Term Disability Plan for Employees of Louisville Gas and Electric
Company who are not members of a Bargaining Unit or (ii) in the event the
Company does not maintain such plan at the time of the determination of the
Executive's Disability, a physical or mental infirmity which impairs the
Executive's ability to substantially perform his duties with an Employer which
continues for a period of at least one hundred eighty (180) consecutive days.
2.5 AN EMPLOYER. For the purposes of this Agreement, "an Employer" shall
mean: (i) in the event the Executive is an officer of the Company and not of any
of its Subsidiaries at the time of a Change in Control, the Company; (ii) in the
event the Executive is an officer of one or more Subsidiaries of the Company,
but not of the Company, at the time of a Change in Control, any such Subsidiary;
and (iii) in the event the Executive is an officer of the Company and one or
more Subsidiaries at the time of a Change in Control, any such entity of which
the Executive is an officer at the time of the Change in Control.
2.6 GOOD REASON.
(a) For purposes of this Agreement, "Good Reason" shall mean the
occurrence after a Change in Control of any of the events or conditions
described in subsections (1) through (8) hereof:
(7) a reduction by the Company in the Executive's Base
Salary or annual target bonus opportunity as in
effect prior to such reduction or any failure to pay
the Executive any compensation or benefits to which
the Executive is entitled within thirty days of the
applicable due date, provided that the Company may
correct such reduction or failure within thirty (30)
days of its commission;
(8) Parent or the Company require the Executive to be
relocated anywhere in excess of one hundred (100)
miles of his present office location, except for
required travel on Parent or Company business
consistent with his business travel obligations;
(3) a failure by Parent or the Company to maintain plans
providing benefits at least as beneficial in the
aggregate as those provided by any benefit or
compensation plan, retirement or pension plan, stock
option plan, bonus plan, long-term incentive plan,
life insurance plan, health and accident plan or
disability plan in which the Executive is
participating prior the Change in Control, or if the
Company or Parent has taken any action which would
adversely affect the Executive's participation in or
materially reduce the Executive's benefits under any
of such plans or deprive him of any material fringe
benefit enjoyed by him prior to the Change in
Control, or if the Company or Parent has failed to
provide him with the number of paid vacation days to
which he would be entitled in accordance with the
Company's normal vacation policy immediately prior to
the Change in Control, as applicable;
(4) Parent or the Company fails to obtain the assumption
of the obligations contained in this Agreement by any
successor as contemplated in Section 7 hereof;
(5) any purported termination of the Executive's
employment by Parent or the Company which is not
effected pursuant to a Notice of Termination
satisfying the requirements of Section 4 below; and,
for purposes of this Agreement, no such purported
termination shall be effective;
(6) any material breach by Parent or the Company of any
provision of this Agreement;
(9) any purported termination of the Executive's
employment for Cause by Parent or the Company which
does not comply with the terms of Section 2.2 of this
Agreement;
(10) the Company materially reduces, individually or in
the aggregate, the Executive's title, job authorities
or responsibilities as in effect prior to such
reduction; or
(b) Any event or condition described in this Section 2.6(a)(1)
through (8) above, which occurs prior to a Change in Control but which
the Executive reasonably demonstrates (i) was at the request of a
Third Party, or (ii) otherwise arose in connection with or in
anticipation of a Change in Control which actually occurs, shall
constitute Good Reason for purposes of this Agreement notwithstanding
that it occurred prior to the Change in Control.
(c) Until the Executive's Disability, the Executive's rights to
terminate his employment pursuant to this Section 2.6 shall not be
affected by his incapacity due to physical or mental illness.
3. TERMINATION OF EMPLOYMENT.
3.1 If, during the term of this Agreement, the Executive's
employment with an Employer shall be terminated within twenty-four (24) months
following a Change in Control, then the Executive shall be entitled to the
following compensation and benefits:
(a) If the Executive's employment with an Employer shall be
terminated (1) by an Employer for Cause or Disability, (2) by reason of
the Executive's death, or (3) by the Executive other than for Good
Reason, the Company shall pay the Executive all amounts earned or
accrued for or on behalf of the Company or any of its Subsidiaries
through the Termination Date (as hereinafter defined) but not paid as
of the Termination Date, including (i) base salary, (ii) reimbursement
for reasonable and necessary expenses incurred by the Executive on
behalf of the Company or any Subsidiary during the period ending on the
Termination Date and (iii) vacation pay (collectively, "Accrued
Compensation").
(b) If the Executive's employment with an Employer shall be
terminated for any reason other than as specified in clause (1) or (2)
of Section 3.1(a) or if the Executive's employment is terminated by the
Executive for Good Reason, the Executive shall be entitled to the
following:
(i) The Company shall pay the Executive all Accrued
Compensation;
(ii) For terminations occurring within the first
twenty-four months of the Effective Date, the Company shall
pay, as a severance amount to the Executive after the
Termination Date, an amount equal to the sum of (a) the Base
Amount and (b) the Bonus Amount. For terminations occurring
after the first twenty-four months of the Effective Date, the
Company shall pay, as a severance amount to the Executive
after the Termination Date an amount equal to 2.99 times the
sum of (a) the Base Amount and (b) the Bonus Amount;
(iii) For a number of months equal to the lesser of
(a) twenty-four (24) or (b) the number of months remaining
until the Executive's 65th birthday (the "Continuation
Period"), the Company shall at its expense continue on behalf
of the Executive and his dependents and beneficiaries (to the
same extent provided to the dependents and beneficiaries prior
to the Executive's termination) the life insurance,
disability, medical, dental, and hospitalization benefits
provided (x) to the Executive by the Company and/or its
Subsidiaries at any time within ninety (90) days preceding a
Change in Control or at any time thereafter, or (y) to other
similarly situated executives who continue in the employ of
the Company or its Subsidiaries during the Continuation
Period. The coverage and benefits (including deductibles and
costs) provided in this Section 3.1(b)(iii) during the
Continuation Period shall be no less favorable to the
Executive and his dependents and beneficiaries, than the most
favorable of such coverages and benefits set forth in clauses
(x) and (y) above. The Company's obligation hereunder with
respect to the foregoing benefits shall be limited to the
extent that the Executive obtains any such benefits pursuant
to a subsequent employer's benefit plans, in which case the
Company may reduce the coverage of any benefits it is required
to provide the Executive hereunder as long as the aggregate
coverages and benefits of the combined benefit plans are no
less favorable to the Executive than the coverages and
benefits required to be provided hereunder. This
Subsection (iii) shall not be interpreted so as to limit any
benefits to which the Executive or his dependents may be
entitled under any of the Company's or any Subsidiary's
employee benefit plans, programs or practices following the
Executive's termination of employment, including without
limitation, retiree medical and life insurance benefits; and
(iv) The Company shall provide to the Executive
outplacement services in an amount up to twenty percent
(20%) of the Base Amount.
(c) The amounts provided for in Section 3.1(a) and 3.1(b)(i) and
(ii) shall be paid in a lump sum within thirty (30) days after the
Executive's Termination Date.
(d) The Executive shall not be required to mitigate the amount of
any payments provided for in this Agreement by seeking other employment
or otherwise and no such payment shall be offset or reduced by the
amount of any compensation or benefits provided to the Executive in any
subsequent employment except as provided in Section 3.1(b)(iii).
3.2 The provisions of this Agreement, and any payment provided
for hereunder, shall not reduce or increase any amounts otherwise
payable, or in any way diminish or enhance the Executive's existing
rights, or rights which would accrue solely as a result of the passage
of time, under any benefit plan, incentive plan, or securities plan,
employment agreement or other contract, plan or arrangement with the
Company, any Subsidiary or any other party, including, but not limited
to, those specified in Exhibit A attached hereto, provided, however,
the Company shall not be required to make duplicative payments of
Accrued Compensation. A determination of a Change in Control under this
Agreement is effective only with respect to benefits payable hereunder,
and is not determinative of a change in control under any benefit plan,
incentive plan, or securities plan, employment agreement or other
contract, plan or arrangement with the Company, any Subsidiary or any
other party.
4. NOTICE OF TERMINATION. Any purported termination by an Employer
or by the Executive shall be communicated by written Notice of Termination to
the other. For purposes of this Agreement, a "Notice of Termination" shall mean
a notice which indicates 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. For purposes of this Agreement, no such purported
termination shall be effective without such Notice of Termination.
5. TERMINATION DATE. "Termination Date" shall mean, in the case of
the Executive's death, his date of death and, in all other cases, the date
specified in the Notice of Termination subject to the following:
(a) If the Executive's employment is terminated by an Employer
for Cause or due to Disability, the date specified in the Notice of
Termination shall be at least thirty (30) days from the date the Notice
of Termination is given to the Executive, provided that, in the case of
Disability, the Executive shall not have returned to the full-time
performance of his duties during such period of at least (30) days; and
(b) If the Executive's employment is terminated for Good Reason,
the date specified in the Notice of Termination shall not be more than
sixty (60) days from the date the Notice of Termination is given to the
Employer.
6. CERTAIN ADDITIONAL PAYMENTS
(a) Notwithstanding anything in the Agreement to the contrary, in
the event that a Change in Control occurs and it is determined (as
hereafter provided) that any payment or distribution by the Company or
any affiliates to or for the benefit of the Executive, whether paid or
payable or distributed or distributable pursuant to the terms of this
Agreement or otherwise pursuant to or by reason of any other agreement,
policy, plan, program or arrangement, including without limitation any
stock option, stock appreciation right or similar right, or the lapse
or termination of any restriction on or the vesting or exercisability
of any of the foregoing (individually and collectively a "Payment"),
would be subject to the excise tax imposed by Section 4999 (or any
successor provision thereto) of the Internal Revenue Code of 1986, as
amended (the "Code") by reason of being considered "contingent on a
change in ownership or control" of the Company or the Parent, within
the meaning of Section 280G of the Code (or any successor provision
thereto), or to any similar tax imposed by state or local law, or any
interest or penalties with respect to any such taxes (such taxes,
together with any such interest and penalties, being hereafter
collectively referred to as the "Excise Tax"), then the Executive shall
be entitled to receive an additional payment or payments (individually
and collectively, a "Gross-Up Payment"). The Gross-Up Payment shall be
in an amount such that, after payment by the Executive of all taxes
(including any interest or penalties imposed with respect to such
taxes), including any Excise Tax imposed upon the Gross-Up Payment, the
Executive retains an amount of the Gross-Up Payment equal to the Excise
Tax imposed upon the Payment.
(b) Subject to the provisions of Section 6(f) hereof, all
determinations required to be made under this Section 6, including
whether an Excise Tax is payable by the Executive and the amount of
such Excise Tax and whether a Gross-Up Payment is required to be paid
to the Executive and the amount of such Gross-Up Payment, if any, shall
be made by a nationally recognized accounting firm (the "Accounting
Firm") selected by the Executive in his sole discretion. The Executive
shall direct the Accounting Firm to submit its determination and
detailed supporting calculations to both the Company and the Executive
within thirty (30) calendar days after the Termination Date, if
applicable, and any such other time or times as may be requested by the
Company or the Executive. If the Accounting Firm determines that any
Excise Tax is payable by the Executive, the Company shall pay or cause
to be paid the required Gross-Up Payment in cash to the Executive
within five (5) business days after receipt of such determination and
calculations with respect to any Payment to the Executive. If the
Accounting Firm determines that no Excise Tax is payable by the
Executive, it shall, at the same time as it makes such determination,
furnish the Company and the Executive an opinion that the Executive has
substantial authority not to report any Excise Tax on his federal,
state or local income or other tax return. As a result of the
uncertainty in the application of Section 4999 of the Code (or any
successor provision thereto) at the time of any determination by the
Accounting Firm hereunder, it is possible that Gross-Up Payments which
will not have been made by the Company should have been made (an
"Underpayment"), consistent with the calculations required to be made
hereunder. In the event that the Company exhausts or fails to pursue
its remedies pursuant to Section 6(f) hereof and the Executive
thereafter is required to make a payment of any Excise Tax, the
Executive shall direct the Accounting Firm to determine the amount of
the Underpayment that has occurred and to submit its determination and
detailed supporting calculations to both the Company and the Executive
as promptly as possible. Any such Underpayment shall be promptly paid
by the Company in cash to, or for the benefit of, the Executive within
five (5) business days after receipt of such determination and
calculations.
(c) The Company and the Executive shall each provide the
Accounting Firm access to and copies of any books, records and
documents in the possession of the Company or the Executive, as the
case may be, reasonably requested by the Accounting Firm, and otherwise
cooperative with the Accounting Firm in connection with the preparation
and issuance of the determinations and calculations contemplated by
Section 6(b) hereof. Any determination by the Accounting Firm as to the
amount of the Gross-Up Payment will be binding on the Company and the
Executive.
(d) The federal, state, and local income or other tax returns
filed by the Executive will be prepared and filed on a consistent basis
with the determination of the Accounting Firm with respect to the
Excise Tax payable by the Executive. The Executive will make proper
payment of the amount of any Excise Payment and, at the request of the
Company, provide to the Company true and correct copies (with any
amendments) of the Executive's federal income tax return as filed with
the Internal Revenue Service and corresponding state and local tax
returns, if relevant, as filed with the applicable taxing authority,
and such other documents reasonably requested by the Company,
evidencing such payment. If prior to the filing of the Executive's
federal income tax return, or corresponding state or local tax return,
if relevant, the Accounting Firm determines that the amount of the
Gross-Up Payment should be reduced, the Executive will within five (5)
business days pay to the Company the amount of such reduction.
(e) The fees and expenses of the Accounting Firm for its services
in connection with the determinations and calculations contemplated by
Section 6(b) hereof shall be borne by the Company. If such fees and
expenses are initially paid by the Executive, the Company shall
reimburse the Executive the full amount of such fees and expenses
within five (5) business days after receipt from the Executive of a
statement therefor and reasonable evidence of his payment thereof.
(f) The Executive shall notify the Company in writing of any
claim by the Internal Revenue Service or any other taxing authority
that, if successful, would require the payment by the Company of a
Gross-Up Payment. Such notification shall be given as promptly as
practicable but no later than ten (10) business days after the
Executive actually receives notice of such claim and the Executive
shall further apprise the Company of the nature of such claim and the
date on which such claim is requested to be paid (in each case, to the
extent known by the Executive). The Executive shall not pay such claim
prior to the earlier of (i) the expiration of the thirty (30)
calendar-day period following the date on which he gives such notice to
the Company and (ii) the date that any payment of amount with respect
to such claim is due. If the Company notifies the Executive in writing
prior to the expiration of such period that it desires to contest such
claim, the Executive shall:
1. provide the Company with any written records or
documents in his possession relating to such claim
reasonably requested by the Company;
2. take such action in connection with contesting such
claim as the Company shall reasonably request in
writing from time to time, including without
limitation accepting legal representation with
respect to such claim by an attorney competent in
respect of the subject matter and reasonably selected
by the Company;
3. cooperate with the Company in good faith in order
effectively to contest such claim; and
4. permit the Company to participate in any proceedings
relating to such claim;
provided, however, that the Company shall bear and pay directly all costs and
expenses (including interest and penalties) incurred in connection with such
contest and shall indemnify and hold harmless the Executive, on an after-tax
basis, for and against any Excise Tax or income tax, including interest and
penalties with respect thereto, imposed as a result of such representation and
payment of costs and expenses. Without limiting the foregoing provisions of this
Section 6(f), the Company shall control all proceedings taken in connection with
the contest of any claim contemplated by this Section 6(f) and, at its sole
option, may pursue or forego any and all administrative appeals, proceedings,
hearings and conferences with the taxing authority in respect of such claim
(provided, however, that the Executive may participate therein at his own cost
and expense) and may, at its option, either direct the Executive to pay the tax
claimed and xxx for a refund or contest the claim in any permissible manner, and
the Executive agrees to prosecute such contest to a determination before any
administrative tribunal, in a court of initial jurisdiction and in one or more
appellate courts, as the Company shall determine; provided, however, that if the
Company directs the Executive to pay the tax claimed and xxx for a refund, the
Company shall advance the amount of such payment to the Executive on an
interest-free basis and shall indemnify and hold the Executive harmless, on an
after-tax basis, from any Excise Tax or income tax, including interest or
penalties with respect thereto, imposed with respect to such advance; and
provided further, however, that any extension of the statute of limitations
relating to payment of taxes for the taxable year of the Executive with respect
to which the contested amount is claimed to be due is limited solely to such
contested amount. Furthermore, the Company's control of any such contested claim
shall be limited to issues with respect to which a Gross-Up Payment would be
payable hereunder and the Executive shall be entitled to settle or contest, as
the case may be, any other issue raised by the Internal Revenue Service or any
other taxing authority.
(g) If, after the receipt by the Executive of an amount advanced
by the Company pursuant to Section 6(f) hereof, the Executive receives
any refund with respect to such claim, the Executive shall (subject to
the Company's complying with the requirements of Section 6(f) hereof)
promptly pay the Company the amount of such refund (together with any
interest paid or credited thereon after any taxes applicable thereto).
If, after the receipt by the Executive of an amount advanced by the
Company pursuant to Section 6(f) hereof, a determination is made that
the Executive shall not be entitled to any refund with respect to such
claim and the Company does not notify the Executive in writing of its
intent to contest such denial or refund prior to the expiration of
thirty (30) calendar days after such determination, then such advance
shall be forgiven and shall not be required to be repaid and the amount
of any such advance shall offset, to the extent thereof, the amount of
Gross-Up Payment required to be paid by the Company to the Executive
pursuant to this Section 6.
7. SUCCESSORS; BINDING AGREEMENT.
(a) This Agreement shall be binding upon and shall inure to the
benefit of the Company, its successors and assigns and, at the time of
any such succession or assignment, the Company shall require any
successor or assign 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 or assignment had
taken place. The term "the Company" as used herein shall include such
successors and assigns. The term "successors and assigns" as used
herein shall mean a corporation or other entity acquiring ownership,
directly or indirectly, of all or substantially all the assets and
business of the Company (including this Agreement) whether by operation
of law or otherwise.
(b) Neither this Agreement nor any right or interest hereunder
shall be assignable or transferable by the Executive, his beneficiaries
or legal representatives, except by will or by the laws of descent and
distribution. This Agreement shall inure to the benefit of and be
enforceable by the Executive's legal personal representative.
8. FEES AND EXPENSES. The Company shall pay legal fees and related
expenses (including the cost of experts, evidence and counsel) incurred by the
Executive as they become due as a result of (a) the Executive's termination of
employment (including all such fees and expenses, if any, incurred in contesting
or disputing any such termination of employment), or (b) the Executive seeking
to obtain or enforce any right or benefit provided by this Agreement; provided,
however, that the circumstances set forth in clauses (a) and (b) (other than as
a result of the Executive's termination of employment under circumstances
described in Section 2.3(d)) occurred on or after a Change in Control.
9. NOTICE. For the purpose of this Agreement, notices and all other
communications provided for in the Agreement (including the Notice of
Termination) shall be in writing and shall be deemed to have been duly given
when personally delivered or sent by certified mail, return receipt requested,
postage prepaid, addressed to the respective addresses last given by each party
to the other, provided that all notices to an Employer shall be directed to the
attention of the Board with a copy to the Secretary of such Employer. All
notices and communications shall be deemed to have been received on the date of
delivery thereof or on the third business day after the mailing thereof, except
that notice of change of address shall be effective only upon receipt.
10. NON-EXCLUSIVITY OF RIGHTS. Nothing in this Agreement shall
prevent or limit the Executive's continuing or future participation in any
benefit, bonus, incentive or other plan or program provided by the Company or
any of its Subsidiaries and for which the Executive may qualify, nor shall
anything herein limit or reduce such rights as the Executive may have under any
other agreements with the Company or any of its Subsidiaries. Amounts which are
vested benefits or which the Executive is otherwise entitled to receive under
any plan or program of the Company or any of its Subsidiaries shall be payable
in accordance with such plan or program.
11. SETTLEMENT OF CLAIMS. The Company's obligation to make the
payments provided for in this Agreement and otherwise to perform its obligations
hereunder shall not be affected by any circumstances, including, without
limitation, any set-off, counterclaim, recoupment, defense or other right which
the Company or any of its Subsidiaries may have against the Executive or others.
12. 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 the Company. No waiver by either
party hereto at any time of any breach by the other party hereto of, or
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. No agreement or
representations, oral or otherwise, express or implied, with respect to the
subject matter hereof have been made by either party which are not expressly set
forth in this Agreement. No additional compensation provided under any benefit
or compensation plans to the Executive shall be deemed to modify or otherwise
affect the terms of this Agreement or any of the Executive's entitlements
hereunder.
13. GOVERNING LAW. This Agreement shall be governed by and construed
and enforced in accordance with the laws of the Commonwealth of Kentucky.
14. SEVERABILITY. The provisions of this Agreement shall be deemed
severable and the invalidity or unenforceability of any provision shall not
affect the validity or enforceability of the other provisions hereof.
15. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
between the parties hereto and supersedes all prior agreements, if any,
understandings and arrangements, oral or written, between the parties hereto
with respect to the subject matter hereof, including, without limiting the
foregoing, his prior Change-In-Control Agreement (if any), as previously
amended, which shall cease to be of any further effect.
IN WITNESS WHEREOF, the Company has caused this Agreement to be executed
by its duly authorized representative and the Executive has executed this
Agreement as of the day and year first above written.
LG&E ENERGY CORP.
------------------------------------
Xxxxx X. Xxxx
Chairman and Chief Executive Officer
------------------------------------
Executive
CHANGE-IN-CONTROL AGREEMENT
THIS AGREEMENT made this DATE, by and between LG&E ENERGY CORP. (the
"Company") and _____________________("Executive").
WHEREAS, the Board of Directors of the Company (the "Board") recognizes
that the possibility of a Change in Control (as hereinafter defined) exists and
that the occurrence of a Change in Control can result in significant
distractions of its key management personnel because of the uncertainties
inherent in such a situation;
WHEREAS, the Board has determined that it is essential and in the best
interest of the Company and Powergen, plc (the "Parent") to retain the services
of the Executive in the event of a Change in Control and to ensure his continued
dedication and efforts in such event without undue concern for his personal
financial and employment security; and
WHEREAS, in order to induce the Executive to remain in the employ of
the Company or a Subsidiary (as hereinafter defined), as the case may be,
particularly in the event of a threat or the occurrence of a Change in Control,
the Company desires to enter into this Agreement with the Executive to provide
the Executive with certain benefits in the event his employment is terminated as
a result of, or in connection with, a Change in Control.
NOW, THEREFORE, in consideration of the respective agreements of the
parties contained herein, it is agreed as follows:
1. TERM OF AGREEMENT. This Agreement shall commence as of the
_____ day of _________________, 2000, and shall continue in effect until SAME
MONTH/DAY, 2002, provided, however, that commencing on SAME MONTH/DAY, 2002, and
on SAME MONTH/DAY thereafter, the term of this Agreement shall automatically be
extended for one (1) year unless either the Company or the Executive shall have
given written notice to the other at least ninety (90) days prior thereto that
the term of this Agreement shall not be so extended; and provided, further,
however, that notwithstanding any such notice by the Company not to extend, the
term of this Agreement shall not expire prior to the expiration of twenty-four
(24) months after any Change in Control which occurs while this Agreement is in
effect.
2. DEFINITIONS.
2.1 BASE AMOUNT; BONUS AMOUNT. For purposes of this
Agreement, "Base Amount" shall mean the greater of the Executive's
annual base salary from the Company and its Subsidiaries (a) at the
rate in effect on the Termination Date (as hereinafter defined) or (b)
at the highest rate in effect at any time during the ninety (90) day
period prior to the Change in Control, and shall include all amounts of
base salary that are deferred under any qualified and non-qualified
employee benefits plans of the Company or any Subsidiary or under any
other agreement or arrangement. For purposes of this Agreement; "Bonus
Amount" shall mean the greater of (a) the most recent annual bonus paid
or payable to the Executive, (b) the
annual bonus paid or payable to the Executive under the Short Term
Incentive Plan for the full fiscal year ended prior to the fiscal year
during which a Change in Control occurred or (c) the Executive's target
award under the Short Term Incentive Plan for the full fiscal year
ended prior to the fiscal year during which a Change in Control
occurred.
2.2 CAUSE. For purposes of this Agreement, a termination for
"Cause" is a termination evidenced by a resolution adopted in good
faith by at least seventy-five percent (75%) of the Board that (i)
there has been repeated gross negligence by the Executive in performing
the reasonably assigned duties on behalf of an Employer required by and
in accordance with his employment by such Employer, or (ii) the
Executive has committed a felony in the course of performing those
duties. Notwithstanding anything contained in this Agreement to the
contrary, no failure to perform by the Executive after a Notice of
Termination (as hereinafter defined) is given by the Executive shall
constitute Cause for purposes of this Agreement. No act, or failure to
act, on Executive's part shall be deemed to be "repeated" unless the
Executive shall have received a written notice from seventy-five
percent (75%) of the Board setting forth in detail the particulars of
the act, or the failure to act, which the Company contends would
constitute Cause when repeated and Executive then repeats such act or
failure to act.
2.3 CHANGE IN CONTROL.
For purposes of this Agreement, a "Change in Control" shall mean the occurrence
during the term of this Agreement of any of the following events:
(a) An acquisition (other than directly from Parent)
of any securities of Parent entitled generally to vote on the
election of directors (the "Voting Securities") by any
"Person" (as the term person is used for purposes of Section
13(d) or 14(d) of the Securities Exchange Act of 1934, as
amended (the "1934 Act")) immediately after which such Person
has "Beneficial Ownership" (within the meaning of Rule 13d-3
promulgated under the 0000 Xxx) of fifteen percent (15%) or
more of the combined voting power of Parent's then outstanding
Voting Securities; PROVIDED, HOWEVER, in determining whether a
Change in Control has occurred, Voting Securities which are
acquired in a "Non-Control Acquisition" (as hereinafter
defined) shall not constitute an acquisition which would cause
a Change in Control. A "Non-Control Acquisition" shall mean an
acquisition by (1) an employee benefit plan (or a trust
forming a part thereof) maintained by (a) Parent or (b) any
corporation or other Person of which a majority of its voting
power or its equity securities or equity interest is owned
directly and indirectly by Parent (a "Subsidiary") or (2)
Parent or any Subsidiary.
(b) The individuals who, as of the date this
Agreement was approved by the Board, are members of the Board
(the "Incumbent Board"), cease for any reason to constitute at
least two-thirds of the Board; provided, however, that if the
election, or nomination for election by Parent's stockholders,
of any new director was approved by a vote of at least two-
thirds of the Incumbent Board, such new director shall, for
purposes of the Agreement, be considered as a member of the
Incumbent Board; or
(c) Approval by stockholders of Parent of:
(1) A merger, consolidation or reorganization
involving Parent; unless
(i) the stockholders of Parent
immediately before such merger, consolidation or
reorganization, own, directly or indirectly
immediately following such merger, consolidation
or reorganization, at least seventy-five percent
(75%) of the combined voting power of the
outstanding voting securities of the corporation
resulting from such merger or consolidation or
reorganization (the "Surviving Corporation") in
substantially the same proportion to each other as
their ownership of the Voting Securities
immediately before such merger, consolidation or
reorganization, and
(ii) the individuals who were
members of the Incumbent Board immediately prior
to the execution of the agreement providing for
such merger, consolidation or reorganization
constitute at least two-thirds of the members of
the board of directors of the Surviving
Corporation;
(2) A complete liquidation or dissolution of
Parent or the Company; unless, in the case of the
Company, Parent continues to own directly or
indirectly all or substantially all of the
Company's assets;
(3) An agreement for the sale or other
disposition of all or substantially all of the
assets of Parent or the Company to any Person
(other than a transfer to a Subsidiary);
(4) A merger or other combination involving
the Company as a result of which Parent ceases to
beneficially own more than 50% of the outstanding
Voting Securities of the successor to the Company,
unless Parent continues to own directly or
indirectly all or substantially all of the
Company's assets; or
(5) Any Person acquires Beneficial Ownership
of a greater percentage of the Voting Securities
of the Company than the percentage of such Voting
Securities then held, directly or indirectly, by
Parent.
(d) Notwithstanding the foregoing clauses (a), (b), and (c),
a Change in Control shall not be deemed to occur solely because any
Person (the "Subject Person") acquired Beneficial Ownership of more
than the permitted amount of the
outstanding Voting Securities as a result of the acquisition of Voting
Securities by Parent which, by reducing the number of Voting Securities
outstanding, increases the proportional number of shares, provided that
if a Change in Control would occur (but for the operation of this
sentence) as a result of the acquisition of Voting Securities by
Parent, and after such share acquisition by Parent, the Subject Person
or entity becomes the Beneficial Owner of any additional Voting
Securities which increases the percentage of the then outstanding
Voting Securities Beneficially Owned by the Subject Person, then a
Change in Control shall occur.
(e) Notwithstanding anything contained in this Agreement to
the contrary, if the Executive's employment is terminated during the
term of this Agreement and the Executive reasonably demonstrates that
such termination (i) was at the request of a third party who has
indicated an intention or taken steps reasonably calculated to effect a
Change in Control and who effectuates a Change in Control (a "Third
Party") or (ii) otherwise occurred in connection with, or in
anticipation of, a Change in Control which actually occurs, then for
all purposes of this Agreement, the date of a Change in Control with
respect to the Executive shall mean the date immediately prior to the
date of such termination of the Executive's employment.
2.4 DISABILITY. For purposes of this Agreement, "Disability" shall
mean (i) a physical or mental infirmity which has been determined to be total
and permanent disability under and in accordance with the provisions of the
Company's Long Term Disability Plan for Employees of Louisville Gas and Electric
Company who are not members of a Bargaining Unit or (ii) in the event the
Company does not maintain such plan at the time of the determination of the
Executive's Disability, a physical or mental infirmity which impairs the
Executive's ability to substantially perform his duties with an Employer which
continues for a period of at least one hundred eighty (180) consecutive days.
2.5 AN EMPLOYER. For the purposes of this Agreement, "an Employer"
shall mean: (i) in the event the Executive is an officer of the Company and not
of any of its Subsidiaries at the time of a Change in Control, the Company; (ii)
in the event the Executive is an officer of one or more Subsidiaries of the
Company, but not of the Company, at the time of a Change in Control, any such
Subsidiary; and (iii) in the event the Executive is an officer of the Company
and one or more Subsidiaries at the time of a Change in Control, any such entity
of which the Executive is an officer at the time of the Change in Control.
2.6 GOOD REASON.
(a) For purposes of this Agreement, "Good Reason" shall mean
the occurrence after a Change in Control of any of the events or
conditions described in subsections (1) through (8) hereof:
(1) a reduction by the Company in the
Executive's Base Salary or annual target bonus
opportunity as in effect prior to such reduction
or any failure to pay the Executive any
compensation or benefits to which the Executive is
entitled within thirty days of the applicable due
date, provided that the Company may correct
such reduction or failure within thirty (30) days
of its commission;
(2) Parent or the Company require the Executive
to be relocated anywhere in excess of one hundred
(100) miles of his present office location, except
for required travel on Parent or Company business
consistent with his business travel obligations;
(3) a failure by Parent or the Company to
maintain plans providing benefits at least as
beneficial in the aggregate as those provided by
any benefit or compensation plan, retirement or
pension plan, stock option plan, bonus plan,
long-term incentive plan, life insurance plan,
health and accident plan or disability plan in
which the Executive is participating prior the
Change in Control, or if the Company or Parent has
taken any action which would adversely affect the
Executive's participation in or materially reduce
the Executive's benefits under any of such plans
or deprive him of any material fringe benefit
enjoyed by him prior to the Change in Control, or
if the Company or Parent has failed to provide him
with the number of paid vacation days to which he
would be entitled in accordance with the Company's
normal vacation policy immediately prior to the
Change in Control, as applicable;
(4) Parent or the Company fails to obtain the
assumption of the obligations contained in this
Agreement by any successor as contemplated in
Section 7 hereof;
(5) any purported termination of the Executive's
employment by Parent or the Company which is not
effected pursuant to a Notice of Termination
satisfying the requirements of Section 4 below;
and, for purposes of this Agreement, no such
purported termination shall be effective;
(6) any material breach by Parent or the Company of
any provision of this Agreement;
(7) any purported termination of the Executive's
employment for Cause by Parent or the Company
which does not comply with the terms of Section
2.2 of this Agreement;
(8) the Company materially reduces, individually
or in the aggregate, the Executive's title, job
authorities or responsibilities as in effect prior
to such reduction; or
(b) Any event or condition described in this Section 2.6(a)
(1) through (8) above, which occurs prior to a Change in Control but
which the Executive reasonably
demonstrates (i) was at the request of a Third Party, or (ii) otherwise
arose in connection with or in anticipation of a Change in Control
which actually occurs, shall constitute Good Reason for purposes of
this Agreement notwithstanding that it occurred prior to the Change in
Control.
(c) Until the Executive's Disability, the Executive's rights
to terminate his employment pursuant to this Section 2.6 shall not be
affected by his incapacity due to physical or mental illness.
3. TERMINATION OF EMPLOYMENT.
3.1 If, during the term of this Agreement, the Executive's
employment with an Employer shall be terminated within twenty-four (24) months
following a Change in Control, then the Executive shall be entitled to the
following compensation and benefits:
(a) If the Executive's employment with an Employer
shall be terminated (1) by an Employer for Cause or
Disability, (2) by reason of the Executive's death, or (3) by
the Executive other than for Good Reason, the Company shall
pay the Executive all amounts earned or accrued for or on
behalf of the Company or any of its Subsidiaries through the
Termination Date (as hereinafter defined) but not paid as of
the Termination Date, including (i) base salary, (ii)
reimbursement for reasonable and necessary expenses incurred
by the Executive on behalf of the Company or any Subsidiary
during the period ending on the Termination Date and (iii)
vacation pay (collectively, "Accrued Compensation").
(b) If the Executive's employment with an Employer
shall be terminated for any reason other than as specified in
clause (1) or (2) of Section 3.1(a) or if the Executive's
employment is terminated by the Executive for Good Reason, the
Executive shall be entitled to the following:
(i) The Company shall pay the Executive all
Accrued Compensation;
(ii) The Company shall pay, as a severance amount
to the Executive after the Termination Date, an amount
equal to 2.99 times the sum of (a) the Base Amount and
(b) the Bonus Amount;
(iii) For a number of months equal to the lesser
of (a) twenty-four (24) or (b) the number of months
remaining until the Executive's 65th birthday (the
"Continuation Period"), the Company shall at its expense
continue on behalf of the Executive and his dependents
and beneficiaries (to the same extent provided to the
dependents and beneficiaries prior to the Executive's
termination) the life insurance, disability, medical,
dental, and hospitalization benefits provided (x) to the
Executive by the Company and/or its Subsidiaries at any
time within ninety (90) days preceding a Change in
Control or at any time thereafter, or (y) to other
similarly situated executives
who continue in the employ of the Company or its
Subsidiaries during the Continuation Period. The
coverage and benefits (including deductibles and costs)
provided in this Section 3.1(b)(iii) during the
Continuation Period shall be no less favorable to the
Executive and his dependents and beneficiaries, than the
most favorable of such coverages and benefits set forth
in clauses (x) and (y) above. The Company's obligation
hereunder with respect to the foregoing benefits shall
be limited to the extent that the Executive obtains any
such benefits pursuant to a subsequent employer's
benefit plans, in which case the Company may reduce the
coverage of any benefits it is required to provide the
Executive hereunder as long as the aggregate coverages
and benefits of the combined benefit plans are no less
favorable to the Executive than the coverages and
benefits required to be provided hereunder. This
Subsection (iii) shall not be interpreted so as to limit
any benefits to which the Executive or his dependents
may be entitled under any of the Company's or any
Subsidiary's employee benefit plans, programs or
practices following the Executive's termination of
employment, including without limitation, retiree
medical and life insurance benefits; and
(iv) The Company shall provide to the Executive
outplacement services in an amount up to twenty percent
(20%) of the Base Amount.
(c) The amounts provided for in Section 3.1(a) and 3.1(b)(i)
and (ii) shall be paid in a lump sum within thirty (30) days after the
Executive's Termination Date.
(d) The Executive shall not be required to mitigate the
amount of any payments provided for in this Agreement by seeking other
employment or otherwise and no such payment shall be offset or reduced
by the amount of any compensation or benefits provided to the Executive
in any subsequent employment except as provided in Section 3.1(b)(iii).
3.2 The provisions of this Agreement, and any payment
provided for hereunder, shall not reduce or increase any amounts
otherwise payable, or in any way diminish or enhance the Executive's
existing rights, or rights which would accrue solely as a result of the
passage of time, under any benefit plan, incentive plan, or securities
plan, employment agreement or other contract, plan or arrangement with
the Company, any Subsidiary or any other party, including, but not
limited to, those specified in Exhibit A attached hereto, provided,
however, the Company shall not be required to make duplicative payments
of Accrued Compensation. A determination of a Change in Control under
this Agreement is effective only with respect to benefits payable
hereunder, and is not determinative of a change in control under any
benefit plan, incentive plan, or securities plan, employment agreement
or other contract, plan or arrangement with the Company, any Subsidiary
or any other party.
4. NOTICE OF TERMINATION. Any purported termination by an
Employer or by the Executive shall be communicated by written Notice of
Termination to the other. For purposes of this Agreement, a "Notice of
Termination" shall mean a notice which indicates
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. For purposes of this Agreement, no such purported termination shall
be effective without such Notice of Termination.
5. TERMINATION DATE. "Termination Date" shall mean, in the case
of the Executive's death, his date of death and, in all other cases, the date
specified in the Notice of Termination subject to the following:
(a) If the Executive's employment is terminated by an
Employer for Cause or due to Disability, the date specified in the
Notice of Termination shall be at least thirty (30) days from the date
the Notice of Termination is given to the Executive, provided that, in
the case of Disability, the Executive shall not have returned to the
full-time performance of his duties during such period of at least (30)
days; and
(b) If the Executive's employment is terminated for Good
Reason, the date specified in the Notice of Termination shall not be
more than sixty (60) days from the date the Notice of Termination is
given to the Employer.
6. CERTAIN ADDITIONAL PAYMENTS
(a) Notwithstanding anything in the Agreement to the
contrary, in the event that a Change in Control occurs and it is
determined (as hereafter provided) that any payment or distribution by
the Company or any affiliates to or for the benefit of the Executive,
whether paid or payable or distributed or distributable pursuant to the
terms of this Agreement or otherwise pursuant to or by reason of any
other agreement, policy, plan, program or arrangement, including
without limitation any stock option, stock appreciation right or
similar right, or the lapse or termination of any restriction on or the
vesting or exercisability of any of the foregoing (individually and
collectively a "Payment"), would be subject to the excise tax imposed
by Section 4999 (or any successor provision thereto) of the Internal
Revenue Code of 1986, as amended (the "Code") by reason of being
considered "contingent on a change in ownership or control" of the
Company or the Parent, within the meaning of Section 280G of the Code
(or any successor provision thereto), or to any similar tax imposed by
state or local law, or any interest or penalties with respect to any
such taxes (such taxes, together with any such interest and penalties,
being hereafter collectively referred to as the "Excise Tax"), then the
Executive shall be entitled to receive an additional payment or
payments (individually and collectively, a "Gross-Up Payment"). The
Gross-Up Payment shall be in an amount such that, after payment by the
Executive of all taxes (including any interest or penalties imposed
with respect to such taxes), including any Excise Tax imposed upon the
Gross-Up Payment, the Executive retains an amount of the Gross-Up
Payment equal to the Excise Tax imposed upon the Payment.
(b) Subject to the provisions of Section 6(f) hereof, all
determinations required to be made under this Section 6, including
whether an Excise Tax is payable by the Executive and the amount of
such Excise Tax and whether a Gross-Up Payment is required to be paid
to the Executive and the amount of such Gross-Up
Payment, if any, shall be made by a nationally recognized accounting
firm (the "Accounting Firm") selected by the Executive in his sole
discretion. The Executive shall direct the Accounting Firm to submit
its determination and detailed supporting calculations to both the
Company and the Executive within thirty (30) calendar days after the
Termination Date, if applicable, and any such other time or times as
may be requested by the Company or the Executive. If the Accounting
Firm determines that any Excise Tax is payable by the Executive, the
Company shall pay or cause to be paid the required Gross-Up Payment in
cash to the Executive within five (5) business days after receipt of
such determination and calculations with respect to any Payment to the
Executive. If the Accounting Firm determines that no Excise Tax is
payable by the Executive, it shall, at the same time as it makes such
determination, furnish the Company and the Executive an opinion that
the Executive has substantial authority not to report any Excise Tax on
his federal, state or local income or other tax return. As a result of
the uncertainty in the application of Section 4999 of the Code (or any
successor provision thereto) at the time of any determination by the
Accounting Firm hereunder, it is possible that Gross-Up Payments which
will not have been made by the Company should have been made (an
"Underpayment"), consistent with the calculations required to be made
hereunder. In the event that the Company exhausts or fails to pursue
its remedies pursuant to Section 6(f) hereof and the Executive
thereafter is required to make a payment of any Excise Tax, the
Executive shall direct the Accounting Firm to determine the amount of
the Underpayment that has occurred and to submit its determination and
detailed supporting calculations to both the Company and the Executive
as promptly as possible. Any such Underpayment shall be promptly paid
by the Company in cash to, or for the benefit of, the Executive within
five (5) business days after receipt of such determination and
calculations.
(c) The Company and the Executive shall each provide the
Accounting Firm access to and copies of any books, records and
documents in the possession of the Company or the Executive, as the
case may be, reasonably requested by the Accounting Firm, and otherwise
cooperative with the Accounting Firm in connection with the preparation
and issuance of the determinations and calculations contemplated by
Section 6(b) hereof. Any determination by the Accounting Firm as to the
amount of the Gross-Up Payment will be binding on the Company and the
Executive.
(d) The federal, state, and local income or other tax
returns filed by the Executive will be prepared and filed on a
consistent basis with the determination of the Accounting Firm with
respect to the Excise Tax payable by the Executive. The Executive will
make proper payment of the amount of any Excise Payment and, at the
request of the Company, provide to the Company true and correct copies
(with any amendments) of the Executive's federal income tax return as
filed with the Internal Revenue Service and corresponding state and
local tax returns, if relevant, as filed with the applicable taxing
authority, and such other documents reasonably requested by the
Company, evidencing such payment. If prior to the filing of the
Executive's federal income tax return, or corresponding state or local
tax return, if relevant, the Accounting Firm determines that the amount
of the Gross-Up Payment should be reduced, the Executive will within
five (5) business days pay to the Company the amount of such reduction.
(e) The fees and expenses of the Accounting Firm for its
services in connection with the determinations and calculations
contemplated by Section 6(b) hereof shall be borne by the Company. If
such fees and expenses are initially paid by the Executive, the Company
shall reimburse the Executive the full amount of such fees and expenses
within five (5) business days after receipt from the Executive of a
statement therefor and reasonable evidence of his payment thereof.
(f) The Executive shall notify the Company in writing of any
claim by the Internal Revenue Service or any other taxing authority
that, if successful, would require the payment by the Company of a
Gross-Up Payment. Such notification shall be given as promptly as
practicable but no later than ten (10) business days after the
Executive actually receives notice of such claim and the Executive
shall further apprise the Company of the nature of such claim and the
date on which such claim is requested to be paid (in each case, to the
extent known by the Executive). The Executive shall not pay such claim
prior to the earlier of (i) the expiration of the thirty (30)
calendar-day period following the date on which he gives such notice to
the Company and (ii) the date that any payment of amount with respect
to such claim is due. If the Company notifies the Executive in writing
prior to the expiration of such period that it desires to contest such
claim, the Executive shall:
1. provide the Company with any written records or
documents in his possession relating to such claim
reasonably requested by the Company;
2. take such action in connection with contesting
such claim as the Company shall reasonably request
in writing from time to time, including without
limitation accepting legal representation with
respect to such claim by an attorney competent in
respect of the subject matter and reasonably
selected by the Company;
3. cooperate with the Company in good faith in order
effectively to contest such claim; and
4. permit the Company to participate in any
proceedings relating to such claim;
provided, however, that the Company shall bear and pay directly all costs and
expenses (including interest and penalties) incurred in connection with such
contest and shall indemnify and hold harmless the Executive, on an after-tax
basis, for and against any Excise Tax or income tax, including interest and
penalties with respect thereto, imposed as a result of such representation and
payment of costs and expenses. Without limiting the foregoing provisions of this
Section 6(f), the Company shall control all proceedings taken in connection with
the contest of any claim contemplated by this Section 6(f) and, at its sole
option, may pursue or forego any and all administrative appeals, proceedings,
hearings and conferences with the taxing authority in respect of such claim
(provided, however, that the Executive may participate therein at his own cost
and expense) and may, at its option, either direct the Executive to pay the tax
claimed and xxx for a refund or contest the claim in any permissible manner, and
the Executive agrees to prosecute such contest to a determination before any
administrative tribunal, in a court of initial jurisdiction and in one or more
appellate courts, as the Company shall determine; provided, however, that if the
Company directs the Executive to pay the tax claimed and xxx for a refund, the
Company shall advance the amount of such payment to the Executive on an
interest-free basis and shall indemnify and hold the Executive harmless, on an
after-tax basis, from any Excise Tax or income tax, including interest or
penalties with respect thereto, imposed with respect to such advance; and
provided further, however, that any extension of the statute of limitations
relating to payment of taxes for the taxable year of the Executive with respect
to which the contested amount is claimed to be due is limited solely to such
contested amount. Furthermore, the Company's control of any such contested claim
shall be limited to issues with respect to which a Gross-Up Payment would be
payable hereunder and the Executive shall be entitled to settle or contest, as
the case may be, any other issue raised by the Internal Revenue Service or any
other taxing authority.
(g) If, after the receipt by the Executive of an amount
advanced by the Company pursuant to Section 6(f) hereof, the Executive
receives any refund with respect to such claim, the Executive shall
(subject to the Company's complying with the requirements of Section
6(f) hereof) promptly pay the Company the amount of such refund
(together with any interest paid or credited thereon after any taxes
applicable thereto). If, after the receipt by the Executive of an
amount advanced by the Company pursuant to Section 6(f) hereof, a
determination is made that the Executive shall not be entitled to any
refund with respect to such claim and the Company does not notify the
Executive in writing of its intent to contest such denial or refund
prior to the expiration of thirty (30) calendar days after such
determination, then such advance shall be forgiven and shall not be
required to be repaid and the amount of any such advance shall offset,
to the extent thereof, the amount of Gross-Up Payment required to be
paid by the Company to the Executive pursuant to this Section 6.
7. SUCCESSORS; BINDING AGREEMENT.
(a) This Agreement shall be binding upon and shall inure to
the benefit of the Company, its successors and assigns and, at the time
of any such succession or assignment, the Company shall require any
successor or assign 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 or assignment had
taken place. The term "the Company" as used herein shall include such
successors and assigns. The term "successors and assigns" as used
herein shall mean a corporation or other entity acquiring ownership,
directly or indirectly, of all or substantially all the assets and
business of the Company (including this Agreement) whether by operation
of law or otherwise.
(b) Neither this Agreement nor any right or interest
hereunder shall be assignable or transferable by the Executive, his
beneficiaries or legal representatives, except by will or by the laws
of descent and distribution. This Agreement shall inure to the benefit
of and be enforceable by the Executive's legal personal representative.
8. FEES AND EXPENSES. The Company shall pay legal fees and
related expenses (including the cost of experts, evidence and counsel) incurred
by the Executive as they
become due as a result of (a) the Executive's termination of employment
(including all such fees and expenses, if any, incurred in contesting or
disputing any such termination of employment), or (b) the Executive seeking to
obtain or enforce any right or benefit provided by this Agreement; provided,
however, that the circumstances set forth in clauses (a) and (b) (other than as
a result of the Executive's termination of employment under circumstances
described in Section 2.3(d)) occurred on or after a Change in Control.
9. NOTICE. For the purpose of this Agreement, notices and all
other communications provided for in the Agreement (including the Notice of
Termination) shall be in writing and shall be deemed to have been duly given
when personally delivered or sent by certified mail, return receipt requested,
postage prepaid, addressed to the respective addresses last given by each party
to the other, provided that all notices to an Employer shall be directed to the
attention of the Board with a copy to the Secretary of such Employer. All
notices and communications shall be deemed to have been received on the date of
delivery thereof or on the third business day after the mailing thereof, except
that notice of change of address shall be effective only upon receipt.
10. NON-EXCLUSIVITY OF RIGHTS. Nothing in this Agreement shall
prevent or limit the Executive's continuing or future participation in any
benefit, bonus, incentive or other plan or program provided by the Company or
any of its Subsidiaries and for which the Executive may qualify, nor shall
anything herein limit or reduce such rights as the Executive may have under any
other agreements with the Company or any of its Subsidiaries. Amounts which are
vested benefits or which the Executive is otherwise entitled to receive under
any plan or program of the Company or any of its Subsidiaries shall be payable
in accordance with such plan or program.
11. SETTLEMENT OF CLAIMS. The Company's obligation to make the
payments provided for in this Agreement and otherwise to perform its obligations
hereunder shall not be affected by any circumstances, including, without
limitation, any set-off, counterclaim, recoupment, defense or other right which
the Company or any of its Subsidiaries may have against the Executive or others.
12. 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 the Company. No waiver by either
party hereto at any time of any breach by the other party hereto of, or
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. No agreement or
representations, oral or otherwise, express or implied, with respect to the
subject matter hereof have been made by either party which are not expressly set
forth in this Agreement. No additional compensation provided under any benefit
or compensation plans to the Executive shall be deemed to modify or otherwise
affect the terms of this Agreement or any of the Executive's entitlements
hereunder.
13. GOVERNING LAW. This Agreement shall be governed by and
construed and enforced in accordance with the laws of the Commonwealth of
Kentucky.
14. SEVERABILITY. The provisions of this Agreement shall be deemed
severable and the invalidity or unenforceability of any provision shall not
affect the validity or enforceability of the other provisions hereof.
15. ENTIRE AGREEMENT. This Agreement constitutes the entire
agreement between the parties hereto and supersedes all prior agreements, if
any, understandings and arrangements, oral or written, between the parties
hereto with respect to the subject matter hereof, including, without limiting
the foregoing, his prior Change-In-Control Agreement (if any), as previously
amended, which shall cease to be of any further effect.
IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed by its duly authorized representative and the Executive has executed
this Agreement as of the day and year first above written.
LG&E ENERGY CORP.
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Xxxxx X. Xxxx
Chairman and Chief Executive Officer
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Executive
