Exhibit 10(a)
AGREEMENT
THIS AGREEMENT, effective as of _______________,
____, is made by and between PPL Corporation, a Pennsylvania
corporation and _______________ (the "Executive").
WHEREAS, the Company considers it essential to
the best interests of its shareowners to foster 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 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 have
entered into a Severance Agreement effective as of
__________________ (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;
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, ____;
provided, however, that commencing on January 1, ____ 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) the last day of the Potential
Change in Control Period, (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 (other than any
disability plan), 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 (i) 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, (ii) the value of any annual bonus or cash incentive plan
payment that would have been paid for service in the final calendar
year of employment, as if 100% of target goals were achieved, but
prorated by multiplying by a fraction equal to the number of full
calendar months of service completed divided by 12, and (iii) the
value of any Restricted Stock Units that would have been awarded
for service in the final calendar year of employment, as if 100% of
target goals were achieved, but prorated by multiplying by a
fraction equal to the number of full calendar months of service
completed divided by 12.
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.
6.1 The Company shall pay the
Executive the payments, and provide the Executive the benefits,
described in Section 6.2 (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.
6.2 The following shall constitute
the Severance Payments under this Agreement:
(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 Separation Policy
(GP401) or any similar plan, policy or procedure or arrangement, if
eligible, or the Executive’s Prior Severance Agreement 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, the
value of any restricted stock awards or stock options 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 after-tax cost
to the Executive than the after-tax 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 6.3 hereof), such health
insurance benefits shall be provided through a third-party
insurer. Benefits otherwise receivable by the Executive
pursuant to this Section 6.2(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.
(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 may be entitled under each Pension
Plan, if any, 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 (and if any Pension
Plan imposes a maximum number of months for purposes of accrual of
benefits thereunder, such thirty-six (36) additional months shall
be reduced, 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 6.2(D), does
not exceed such maximum number of months) 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
6.2(D), "actuarial equivalent" shall be determined using the same
assumptions utilized under the PPL Supplemental Executive
Retirement Plan or any successor 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 6.2 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.
6.3 (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, and
after taking into account the phase out of itemized deductions and
personal exemptions attributable to 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, (x) 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, and (y) the Executive
shall be deemed to be subject to the loss of itemized deductions
and personal exemptions to the maximum extent provided by the Code
for each dollar of incremental income.
(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 (
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