Exhibit 10(q)

 

PPL CORPORATION

INCENTIVE COMPENSATION PLAN
FOR KEY EMPLOYEES

EFFECTIVE JANUARY 1, 1997

 

 

 

 

Amended and Restated Effective January 1, 2003
Plan Terminates January 1, 2013

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PPL CORPORATION

INCENTIVE COMPENSATION PLAN
FOR KEY EMPLOYEES

EFFECTIVE JANUARY 1, 1997

TABLE OF CONTENTS

SECTION   PAGE       1 Purpose I-1       2 Definitions II-1   (a) Affiliated
Company or Affiliated Companies II-1   (b) Award II-1   (c) Beneficiary II-1  
(d) Board II-1   (e) Cause II-1   (f) Change in Control II-2   (g) CLC II-4  
(h) Code II-4   (i) Common Stock II-4   (j) Date of Grant II-4   (k) Disability
or Disabled II-4   (l) Dividend Equivalents II-5   (m) Eligible Employee II-5  
(n) Exchange Act II-5   (o) Fair Market Value II-5   (p) Good Reason II-6   (q)
Key Employee II-9   (r) Option or Stock Option II-9   (s) Other Stock-Based
Awards II-9   (t) Participant II-9   (u) Person II-9   (v) Plan II-10   (w)
Potential Change in Control II-10   (x) PPL II-10   (y) PPL Corporation II-10  
(z) Restricted Stock II-10   (aa) Restricted Stock Unit II-11   (bb) Restriction
Period II-11   (cc) Retirement II-11   (dd) Termination II-11       3 Effective
Date and Duration III-1       4 Administration of the Plan IV-1       5 Grant of
Awards and Limitation     of Number of Shares Awarded V-1       6 Eligibility
VI-1       7 Restricted Stock and Restricted Stock Units VII-1       8 Stock
Options VIII-1       9 Amendment of the Plan IX-1       10 Miscellaneous
Provisions X-1       11 Other Stock-Based Awards XI-1

 

PPL CORPORATION

INCENTIVE COMPENSATION PLAN
FOR KEY EMPLOYEES

 

SECTION 1. PURPOSE.

The purpose of the Incentive Compensation Plan for Key Employees (the "Plan") is
to provide a method whereby key employees of PPL Corporation, PPL Electric
Utilities Corporation and other Affiliated Companies may be awarded additional
remuneration in a manner which increases their ownership interest, aligns their
interest with that of shareowners and encourages them to remain in the employ of
PPL Corporation or an Affiliated Company.

 

SECTION 2. DEFINITIONS.

The following definitions are applicable to the Plan:

(a)  "Affiliated Company" or "Affiliated Companies" shall mean any parent or
subsidiaries of PPL Corporation (or companies under common control with PPL
Corporation) which are members of the same controlled group of corporations
(within the meaning of section 1563(a) of the Code) as PPL Corporation or are
companies under common control with PPL Corporation (within the meaning of
Section 414(c) of the Code).

(b)  "Award" means, individually or collectively, Options, Restricted Stock,
Restricted Stock Units, or Other Stock-Based Awards granted hereunder.

(c)  "Beneficiary" means the beneficiary to be paid Common Stock or Dividend
Equivalents, or to whom an Option is to be transferred, on the death of a
Participant. The Participant may designate a Beneficiary in writing by filing a
beneficiary form with the Administrator. An alternate Beneficiary may also be
named. The last form on file with the Administrator shall control. If no
Beneficiary or alternate Beneficiary is designated, or if they have predeceased
the Participant, then the Beneficiary shall be the participant's estate.

(d)  "Board" means the Board of Directors of PPL Corporation.

(e)  "Cause" for termination by PPL Corporation or an Affiliated Company of a
Participant's employment means (i) the willful and continued failure by
Participant to substantially perform Participant's duties with PPL Corporation
or an Affiliated Company (other than any such failure resulting from
Participant's incapacity due to physical or mental illness or, if applicable,
any such actual or anticipated failure after the issuance of any "Notice of
Termination for Good Reason" by the Participant pursuant to any severance
agreement between Participant and PPL Corporation or an Affiliated Company)
after a written demand for substantial performance is delivered to Participant
by the Board, which demand specifically identifies the manner in which the Board
believes that Participant has not substantially performed Participant's duties,
or (ii) the willful engaging by Participant in conduct which is demonstrably and
materially injurious to PPL Corporation or an Affiliated Company, monetarily or
otherwise. For purposes of clauses (i) and (ii) of this definition, (x) no act
or failure to act, on Participant's part shall be deemed "willful" unless done,
or omitted to be done, by Participant not in good faith and without reasonable
belief that Participant's act, or failure to act, was in the best interest of
PPL Corporation or an Affiliated Company and (y) in the event of a dispute
concerning the application of this provision, no claim by PPL Corporation or an
Affiliated Company that Cause exists shall be given effect unless PPL
Corporation or the Affiliated Company establishes to the Board by clear and
convincing evidence that Cause exists.

If at the time of determination, a Participant is employed by an Affiliated
Company, for purposes of this definition, the board of directors of such
Affiliated Company shall be substituted for the Board.

(f)  "Change in Control" means the occurrence of any one of the following
events: (1) the following individuals cease for any reason to constitute a
majority of the number of directors then serving: individuals who, on the date
hereof, constitute the Board of Directors of PPL Corporation and any new
director (other than a director whose initial assumption of office is in
connection with an actual or threatened election contest, including but not
limited to a consent solicitation, relating to the election of directors of PPL
Corporation) whose appointment or election by the Board of Directors of PPL
Corporation or nomination for election by PPL Corporation's shareowners was
approved or recommended by a vote of at least two-thirds (2/3) of the directors
then still in office who either were directors on the date hereof or whose
appointment, election or nomination for election was previously so approved or
recommended; (2) any Person becomes the beneficial owner (within the meaning of
Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of PPL
Corporation representing 20% or more of the combined voting power of PPL
Corporation's then outstanding securities entitled to vote generally in the
election of directors; (3) there is consummated a merger or consolidation of PPL
Corporation or any direct or indirect subsidiary of PPL Corporation with any
other corporation or other entity, other than (A) a merger or consolidation
which would result in the voting securities of PPL Corporation outstanding
immediately prior to such merger or consolidation continuing to represent
(either by remaining outstanding or by being converted into voting securities of
the surviving entity or any parent thereof), in combination with the ownership
of any trustee or other fiduciary holding securities under an employee benefit
plan of PPL Corporation or any subsidiary of PPL Corporation, at least 60% of
the combined voting power of the securities of PPL Corporation or at least 60%
of the combined voting power of the securities of such surviving entity or any
parent thereof outstanding immediately after such merger or consolidation; or
(B) a merger or consolidation effected to implement a recapitalization of PPL
Corporation (or similar transaction) in which no Person is or becomes the
beneficial owner, directly or indirectly, of securities of PPL Corporation
(excluding in the securities beneficially owned by such Person any securities
acquired directly from PPL Corporation or its Affiliates) representing 20% or
more of the combined voting power of PPL Corporation's then outstanding
securities; (4) the shareowners of PPL Corporation approve a plan of complete
liquidation or dissolution of PPL Corporation; or (5) the Board of Directors of
PPL Corporation adopts a resolution to the effect that a "Change in Control" has
occurred or is anticipated to occur.

(g)  "CLC" means the Corporate Leadership Council of PPL Corporation or the
successor senior management body responsible for setting policy for PPL
Corporation.

(h)  "Code" means the Internal Revenue Code of 1986, as may be amended from time
to time. Reference in this Plan to any section of the Code shall be deemed to
include any amendments or successor provisions to such section and any
regulations promulgated thereunder.

(i)  "Common Stock" means the common stock of PPL Corporation.

(j)  "Date of Grant" means the date on which the granting of an Award is
authorized by CLC or such later date as may be specified by CLC in such
authorization.

(k)  "Disability" or "Disabled" means the inability of the Participant to
perform each and every duty pertaining to the Participant's regular occupation
by reason of any medically determinable physical or mental impairment which can
be expected to result in death or which has lasted or can be expected to last
for a continuous period of not less than six months.

(l)  "Dividend Equivalents" means cash compensation paid to a Participant who
has received an Award of Restricted Stock Units or Options, generally to be paid
in the same amount and at the same time as dividends would be paid if the
Participant actually owned the number of shares of Common Stock represented by
such Restricted Stock Units or underlying such Options, as applicable. CLC shall
have the discretion to adjust the value of Dividend Equivalents, to reflect
changes in law or dividend paying practices of PPL Corporation. CLC shall also
have discretion to award Dividend Equivalents to a Participant who has received
Restricted Stock, to reflect changes in law or dividend paying practices of PPL
Corporation.

(m)  "Eligible Employee" means any person employed by PPL Corporation, or an
Affiliated Company, on a regularly scheduled basis, during any portion of a
period for which an Award can be made and who satisfies all of the requirements
of Section 6 effective July 1, 2000.

(n)  "Exchange Act" means the Securities Exchange Act of 1934, or amended from
time to time.

(o)  "Fair Market Value" means the average of the high and low sale prices of
the Common Stock as reflected in the New York Stock Exchange Composite
Transactions on the date as of which Fair Market Value is being determined or,
if no Common Stock is traded on the date as of which Fair Market Value is being
determined, Fair Market Value shall be the average of the high and low sale
prices of the Common Stock as reflected in the New York Stock Exchange Composite
Transactions on the next preceding day on which the Common Stock was traded.

(p)  "Good Reason" for termination of Participant's employment with PPL
Corporation or an Affiliated Company by such Participant means the occurrence
(without Participant's express written consent) after a Change in Control or
after a Potential Change in Control (treating all references to a "Change in
Control" in paragraphs (a) through (g), below, as including references to a
"Potential Change in Control" to the extent appropriate ), of any one of the
following acts, or failures to act, by PPL Corporation or an Affiliated Company:

(i)  the assignment to Participant of any duties inconsistent with Participant's
status as an executive officer or key employee of PPL Corporation or an
Affiliated Company or a substantial adverse alteration in the nature or status
of Participant's responsibilities from those in effect immediately prior to a
Change in Control;

(ii)  a reduction by PPL Corporation or an Affiliated Company of Participant's
annual base salary as in effect immediately prior to date the Change of Control
or Potential Change of Control occurs or as the same may be increased from time
to time, except that across-the-board decreases uniformly affecting management,
key employees and salaried employees of PPL Corporation or an Affiliated
Company, or the business unit in which Participant is then employed shall not be
treated as Good Reason;

(iii)  the relocation of Participant's principal work location to a location
more than 30 miles from such work location immediately prior to a Change in
Control, or PPL Corporation's or an Affiliated Company's requiring the
Participant to be based anywhere other than such principal place of employment
(or permitted relocation thereof) except for required travel on PPL
Corporation's or an Affiliated Company's business to an extent substantially
consistent with the Participant's present business travel obligations as in
effect immediately prior to the Change in Control;

(iv)  the failure by PPL Corporation or an Affiliated Company to pay to
Participant any portion of Participant's current compensation or to pay to
Participant any portion of an installment of deferred compensation under any
deferred compensation program of PPL Corporation or an Affiliated Company,
within seven (7) days of the date such compensation is due except for
across-the-board compensation deferrals uniformly affecting management, key
employees and salaried employees of PPL Corporation or an Affiliated Company, or
the business unit in which Participant is then employed;

(v)  the failure by PPL Corporation or an Affiliated Company to continue in
effect any compensation or benefit plan in which Participant participates
immediately prior to a Change in Control which is material to Participant's
total compensation, or any substitute plans adopted prior to a Change in
Control, unless an equitable arrangement (embodied in an ongoing substitute or
alternative plan) has been made with respect to such plan, or the failure by PPL
Corporation or Affiliated Company to continue Participant's participation
therein (or in such substitute or alternative plan) on a basis not materially
less favorable, both in terms of the amount or timing of payment of benefits
provided and the level of Participant's participation relative to other
participants, as existed immediately prior to the Change in Control, or

(vi)  the failure by PPL Corporation or an Affiliated Company to continue to
provide Participant with benefits substantially similar to those enjoyed by
Participant under any of PPL Corporation's or an Affiliated Company's pension,
retirement, savings, life insurance, medical, health and accident, or disability
plans in which Participant was participating immediately prior to a Change in
Control, except for across-the-board changes to any such plans uniformly
affecting all participants in such plans, the taking of any action by PPL
Corporation or an Affiliated Company which would directly or indirectly
materially reduce any of such benefits or deprive Participant of any material
fringe benefit enjoyed by Participant immediately prior to a Change in Control,
or the failure by PPL Corporation or an Affiliated Company to provide
Participant with the number of paid vacation days to which Participant is
entitled on the basis of years of service with PPL Corporation or an Affiliated
Company in accordance with PPL Corporation's or an Affiliated Company's normal
vacation policy in effect at the time of the Change in Control.

(vii)  any purported termination of the Participant's employment which is not
effected in the manner required by any severance agreement between the
Participant and PPL Corporation or an Affiliated Company.

Participant's right to terminate his or her employment with PPL Corporation or
an Affiliated Company for Good Reason shall not be affected by Participant's
incapacity due to physical or mental illness. Participant's continued employment
shall not constitute consent to, or a waiver of rights with respect to, any act
or failure to act constituting Good Reason hereunder.

For purposes of any determination regarding the existence of Good Reason, any
claim by the Participant that Good Reason exists shall be presumed correct
unless PPL Corporation or an Affiliated Company establishes to the Board by
clear and convincing evidence that Good Reason does not exist. If at the time of
any such determination, the Participant is employed by an Affiliated Company,
such determination shall be made by the board of directors of such Affiliated
Company, rather than the Board.

(q)  "Key Employee" means an Eligible Employee who in the opinion of CLC, has
responsibility for the continued growth, development and financial success of
PPL Corporation or its Affiliated Companies.

(r)  "Option" or "Stock Option" means a nonqualified stock option granted under
Section 8 with respect to Common Stock.

(s)  "Other Stock-Based Awards" means an award granted under section 11.

(t)  "Participant" means a Key Employee who has been granted an Award under the
Plan.

(u)  "Person" shall have the meaning given in section 3(a)(9) of the Exchange
Act, as modified and used in sections 13(d) and 14(d) thereof; provided,
however, a Person shall not include (1) PPL Corporation or any of its
subsidiaries, (2) a trustee or other fiduciary holding securities under an
employee benefit plan of PPL Corporation or any of its subsidiaries, (3) an
underwriter temporarily holding securities pursuant to an offering of such
securities, or (4) a corporation owned, directly or indirectly, by the
stockholders of PPL Corporation in substantially the same proportions as their
ownership of stock of PPL Corporation.

(v)  "Plan" means the PPL Corporation Incentive Compensation Plan for Key
Employees (prior to February 14, 2000, the PP&L Resources Incentive Compensation
Plan for Key Employees).

(w)  "Potential Change in Control" means the occurrence of any one of the
conditions set forth in the following clauses: (i) PPL Corporation enters into
an agreement, the consummation of which would result in the occurrence of a
Change in Control; (ii) any Person publicly announces an intention to take or to
consider taking actions which if consummated would constitute a Change in
Control; (iii) any Person is or becomes the beneficial owner, directly or
indirectly, of securities of PPL Corporation representing 5% or more of the
combined voting power of PPL Corporation then outstanding securities entitled to
vote generally in the election of directors; or (iv) the Board adopts a
resolution to the effect that, for purposes of this Plan, a Potential Change in
Control has occurred.

(x)  "PPL" means PPL Electric Utilities Corporation (prior to February 14, 2000,
PP&L, Inc.).

(y)  "PPL Corporation" means PPL Corporation (prior to February 14, 2000, PP&L
Resources, Inc.).

(z)  "Restricted Stock" means Common Stock awarded to a Participant under
Section 7.

(aa)  "Restricted Stock Unit" means an award based on the Fair Market Value of
Common Stock, payable at a specified future time in a specified number of shares
of Common Stock, and dependent on such conditions as CLC shall determine.

(bb)  "Restriction Period" means that period of time determined by CLC pursuant
to Section 7B that a Restricted Stock Award or Restricted Stock Unit Award is
subject to a restriction on its transfer.

(cc)  "Retirement" means:

(a)  for a Participant who is entitled to benefits under the PPL Retirement
Plan, termination of employment with PPL Corporation and all of its Affiliated
Companies after satisfying the conditions for early retirement, normal
retirement or late retirement under such plan;

(b)  for all other Participants, termination of employment with PPL Corporation
and all of its Affiliated Companies after (i) attaining age 65, or (ii) for a
Participant who at the time of termination of employment is an officer of PPL
Corporation or any of its Affiliated Companies, after attaining age 50, if CLC,
in its sole discretion, determines that such termination constitutes
"Retirement" for purposes of this Plan.

(dd)  "Termination" means a Participant's resignation or discharge from
employment with PPL Corporation and all of its Affiliated Companies for any
reason other than death, Disability or Retirement.

 

SECTION 3. EFFECTIVE DATE AND DURATION.

This Plan shall be effective as of January 1, 1997. The Plan shall continue in
effect until all matters relating to the granting and exercise of Awards and the
administration of the Plan have been settled, but shall automatically terminate
in any event on January 1, 2013.

 

SECTION 4. ADMINISTRATION OF THE PLAN.

The Plan shall be administered by CLC. CLC shall have full power and authority
to make Awards to Key Employees pursuant to the provisions of the Plan, to
interpret the provisions of the Plan, to supervise the administration of the
Plan and to delegate any of the foregoing responsibilities to any such person
who, in its sole discretion, it deems appropriate. Such person or persons shall
be referred to as the "Administrator" herein.

All decisions made by CLC pursuant to the provisions of the Plan shall be final,
conclusive and binding upon all parties affected thereby.

 

SECTION 5.  GRANT OF AWARDS AND LIMITATION OF NUMBER OF SHARES AWARDED.

CLC may, from time to time, grant Awards to one or more Key Employees, provided
that: (i) subject to any adjustment pursuant to Section 10G, the maximum number
of shares of Common Stock subject to Awards shall not exceed 2% of the
outstanding Common Stock of PPL Corporation on the first day of each calendar
year commencing on and after January 1, 1999; (ii) the maximum number of Options
awarded to any single Eligible Employee in any calendar year shall not exceed
1.5 million shares; provided that any portion of such maximum number of shares
that has not been granted may be carried over and used in any subsequent years;
(iii) to the extent that an Award lapses or is forfeited or the rights of the
Participant to whom an Award was granted terminate, any shares of Common Stock
subject to such Award shall again be available for the grant of an Award under
the Plan; and (iv) shares delivered under the Plan may be authorized and
unissued Common Stock, Common Stock held in the treasury of PPL Corporation or
Common Stock purchased on the open market (including private purchases) in
accordance with applicable securities laws.

 

SECTION 6. ELIGIBILITY.

Subject to the provisions of the Plan, CLC shall from time to time designate the
Key Employees to whom Awards shall be granted and determine the form and amount
of each such Award. No Eligible Employee of PPL Corporation or an Affiliated
Company shall have any right to be granted an Award under the Plan.

 

SECTION 7. RESTRICTED STOCK, RESTRICTED STOCK UNITS.

A. Grants of Restricted Stock or Restricted Stock Units. An Award of Restricted
Stock shall be granted in the form of shares of Common Stock, restricted as
provided in this Section 7. An Award of Restricted Stock Units shall be granted
as a notification to the Participant that a specified number of shares of Common
Stock will be granted at the close of a Restriction Period. The Restricted Stock
or Restricted Stock Units shall be issued without the payment of consideration
by the Participant. The certificates for the Restricted Stock shall be issued,
in the name of the Participant to whom the Award is made, shall be retained by
PPL Corporation on behalf of the Participant and shall bear a restrictive legend
prohibiting the sale, transfer, pledge or hypothecation of the Restricted Stock
until the expiration of the Restriction Period. Awards of Restricted Stock made
without the issuance of a certificate will be reflected in PPL Corporation's
stock register in the appropriate Participant's name and with a notation that
the shares are restricted.

CLC may also impose such other restrictions and conditions on the Restricted
Stock or Restricted Stock Units as it deems appropriate.

Upon the issuance to a Participant of Restricted Stock, the Participant shall
have the right (i) to vote the Restricted Stock, (ii) to receive cash dividends
distributable with respect to such Restricted Stock, and (iii) if granted by CLC
to reflect changes in law or dividend paying practices of PPL Corporation, to
receive Dividend Equivalents. Upon issuance to a Participant of Restricted Stock
Units, the Participant shall have the right, if granted by CLC, to receive an
Award of Dividend Equivalents, which generally shall provide for payout until
the earlier of the time Common Stock is issued under the terms of the Award of
Restricted Stock Units, such Award is forfeited or such later time as determined
by CLC in its discretion.

Upon completion of the Restriction Period for Restricted Stock and Restricted
Stock Units, all restrictions on the Award will expire and certificates
representing the Restricted Stock or Restricted Stock Units will be issued (or,
in the case of Awards of Restricted Stock made without the issuance of
certificates, the Administrator will cause the PPL Corporation's stock register
to reflect the removal of such restrictions). As a condition precedent to the
receipt of the above-referenced certificates or stock register entries, the
Participant (or the Participant's Beneficiary or personal representative) will
agree to make payment to PPL Corporation or an Affiliated Company of the amount
of any federal, state or local taxes, payable by the Participant, which are
required to be withheld by PPL Corporation or an Affiliated Company with respect
to the Award.

B. Restriction Period. At the time a Restricted Stock or Restricted Stock Units
Award is granted, CLC shall establish a Restriction Period applicable to such
Award which shall be not less than three years. Each Restricted Stock or
Restricted Stock Units Award may have a different Restriction Period.

Notwithstanding the other provisions of this Section 7: (i) in the event of a
Change in Control, the Restriction Periods on all Restricted Stock or Restricted
Stock Units Awards previously granted shall lapse and (ii) apart from a Change
in Control, CLC is authorized in its sole discretion to accelerate the time at
which any or all of the restrictions on all or any part of a Restricted Stock or
Restricted Stock Units Award shall lapse or to remove any or all of such
restrictions whenever CLC may decide that changes in tax or other laws or other
circumstances arising after the granting of a Restricted Stock or Restricted
Stock Units Award make such action appropriate. CLC may, in its discretion,
authorize a deferral of stock award gains program which covers any Restricted
Stock Units prior to the end of the Restriction Period or any unexercised
Options. If CLC does so authorize such a program, a Participant may defer
receipt of Common Stock as permitted under that program.

C. Forfeiture or Payout of Award. During the Restriction Period, Restricted
Stock or Restricted Stock Units Awards are subject to forfeiture or payout
(i.e., removal of restrictions) as indicated for each of the following events:

(i)  Termination - In this event, the Restricted Stock or Restricted Stock Units
Award will be completely forfeited.

(ii)  Retirement - In this event, Restricted Stock will be completely forfeited,
but payout of the Restricted Stock Units Award will be made with complete
removal of restrictions if the Participant is eligible for and actually receives
retirement benefits. If retirement or severance benefits are payable under a
separation program or policy, the restrictions will be modified, but only in
accordance with the express terms of such separation program or policy, and in
the absence of such express terms there shall be a complete forfeiture of
Restricted Stock or Restricted Stock Units.

(iii)  Disability - In this event, payout of the Restricted Stock or Restricted
Stock Units Award will be prorated as if the Participant had maintained active
employment until age 65.

(iv)  Death - In this event, payout of the Restricted Stock or Restricted Stock
Units Award will be prorated as if the Participant had maintained active
employment until age 65, and will be made to the Beneficiary.

(v)  Conversions between Restricted Stock and Restricted Stock Units. CLC has
the discretion to convert with the consent of the Participant any or all
Restricted Stock into Restricted Stock Units of equivalent value, and to convert
any or all Restricted Stock Units into Restricted Stock of equivalent value,
prior to the end of the applicable Restriction Period. Upon any such conversion,
the Restricted Stock or Restricted Stock Units so converted will be completely
forfeited, and the Participant shall have the rights with respect to Restricted
Stock, Restricted Stock Units and Dividend Equivalents (if applicable) as may be
specified in the conversion notice.

Notwithstanding anything in this Section 7C to the contrary, in the event that
prior to any payout of Common Stock a Participant described in this section 7C
violates any noncompete agreements between Participant and PPL Corporation or an
Affiliated Company, his Restricted Stock or Restricted Stock Units Award, and
any Dividend Equivalents, will be completely forfeited.

In any instance where payout of a Restricted Stock or Restricted Stock Units
Award is to be prorated, CLC may choose in its sole discretion to provide the
Participant (or the Participant's Beneficiary) with the entire Award rather than
the prorated portion thereof.

Any Restricted Stock which is forfeited hereunder will be transferred to PPL
Corporation.

D. Section 83(b) Election. As a condition of receiving Restricted Stock, a
Participant shall agree in writing to notify PPL Corporation within 30 days of
the Date of Grant whether or not the Participant has made an election under
section 83(b) of the Code to report the value of the Restricted Stock as income
on the Date of Grant.

 

SECTION 8. STOCK OPTIONS.

A. Grant of Option. One or more Options may be granted to any Key Employee
designated by CLC in such amounts and subject to such terms and conditions as
CLC may from time to time in its sole discretion determine, but which are
consistent with the terms of this Plan. In connection with the grant of an
Option, CLC may also grant an Award of Dividend Equivalents, which shall provide
for payout until the earlier of the time that such Option is exercised, the term
of such Option ends or such later time as determined by CLC in its discretion.

B. Notification of the Grant of an Option. Each Option granted under the Plan
shall be evidenced by a Notification of the Grant of an Option ("Notification").
The Notification shall contain such provisions as determined appropriate by CLC;
provided, however, that each Notification must at a minimum include the
following terms and conditions: (i) that the Options are exercisable either in
whole or in part, with a partial exercise not affecting the exercisability of
the balance of the Option; (ii) every share of Common Stock purchased through
the exercise of an Option shall be paid for in full at the time of the exercise;
(iii) each Option shall cease to be exercisable, as to any share of Common
Stock, upon the first to occur of (a) the Participant's purchase of the Common
Stock to which the Option relates; or (b) the lapse of the Option; and (iv)
unless authorized by CLC, Options shall not be transferable by the Participant
except by will or the laws of descent and distribution and shall be exercisable
during the Participant's lifetime only by the Participant or by the
Participant's guardian or legal representative.

C. Exercise of an Option. A Participant shall exercise an Option by executing
and delivering to PPL Corporation an "Election to Exercise an Option." The
Election to Exercise an Option shall be in such form and shall contain such
provisions consistent with the terms of this Plan and the Notification with
respect to such Option, as are determined by CLC. Notwithstanding the foregoing,
if CLC determines that issuance of shares of Common Stock should be delayed
pending (A) registration under federal or state securities laws, (B) the receipt
of an opinion of counsel satisfactory to CLC that an appropriate exemption from
such registration is available, (C) the listing or inclusion of the shares of
Common Stock on any securities exchange or an automated quotation system or (D)
the consent or approval of any governmental regulatory body whose consent or
approval is necessary in connection with the issuance of such Common Stock, CLC
may defer exercise of any Option granted hereunder until any of the events
described in this sentence has occurred.

D. Option Price. The Option price per share of Common Stock shall be set forth
in the Notification, but shall not be less than 100% of the Fair Market Value
per share as of the Date of Grant.

E. Form of Payment. At the time of the exercise of the Option, the Option price
shall be payable in United States dollars by (i) check, (ii) in other shares of
Common Stock, (iii) by such other mode of payment as CLC may approve, including
payment through a broker in accordance with procedures permitted by Regulation T
of the Federal Reserve Board, or (iv) in a combination of forms (i), (ii) and
(iii). When Common Stock is used in full or partial payment of the Option price:
(i) it must have been held by the Participant for at least six months, (ii) it
shall be valued at its Fair Market Value on the date the Option is exercised,
and (iii) it shall be designated by attestation, rather than delivered by the
physical delivery of stock certificates.

F. Other Terms and Conditions. Provided the Option price is paid in full, the
Option shall be exercisable in whole or in part in such manner and during such
periods as shall be set forth in the Notification.

G. Right to Exercise.

(a)  Nothwithstanding anything in this Plan to the contrary other than the last
sentence of Section 8(J), effective May 1, 2002, CLC is authorized in its sole
discretion to accelerate the time at which all or any part of an Option may be
exercisable.

(b)  Each Participant must remain in the continuous employ of PPL Corporation or
an Affiliated Company for one year from the date the Participant's Option is
granted before the Participant can exercise any part thereof; provided, that
such one year of continuous employment requirement shall not apply to an Option
and an Option shall be exercisable in full (i) if a Change in Control occurs
prior to the end of such one year period, or (ii) subject to (c) below, the
Participant's Retirement occurs prior to the end of such one year period.
Following the satisfaction of the one year of continuous employment requirement
(or at the time such requirement is no longer applicable as a result of a Change
in Control, a Participant's Retirement or a modification of the Option by CLC),
the Option will be exercisable as follows:

(i)  Each Option shall be exercisable in its entirety or in such installments,
which need not be equal, and upon such contingencies, as CLC shall determine in
its discretion, provided that in no event shall the right to exercise an Option
extend beyond the day before the tenth anniversary of the Date of Grant.

(ii)  The right to exercise a portion of the Option included in any exercisable
installment is cumulative; once such right has become exercisable, it may be
exercised in whole at any time or in part from time to time until the expiration
of the Option term.

(c)  Unless specifically prohibited by the terms of the Option, all restrictions
on exercise of an Option, including the one year of continuous employment
requirement, shall lapse and the Option shall be immediately exercisable on the
date of a Participant's Retirement, provided the Participant has elected an
immediate commencement of retirement benefits and provided the Participant does
not receive improved retirement benefits under a separation program or policy.
If the Participant receives improved retirement benefits under a separation
program or policy, the restrictions on the exercise of an Option shall be
modified only in accordance with the express terms of such separation program or
policy.

(d)  CLC may, in its discretion, authorize a deferral of stock award gains
program which covers any Restricted Stock Units prior to the end of the
Restriction Period or any unexercised Options. If CLC does so authorize such a
program, a Participant may defer receipt of Common Stock as permitted under that
program.

H. Term of Option. At the time an Option is granted, CLC shall establish an
Option term applicable to such Award. Except as otherwise provided in this Plan
or in the Notification, the Option term for any Award shall not end later than
the earliest of the following:

(a)  the date a Participant violates any noncompete agreement entered into by
the Participant and PPL Corporation or an Affiliated Company;

(b)  the day before the tenth anniversary of the Date of Grant for such Award;
or

(c)  the applicable date below:

(1)  Termination - The Option term with respect to all Awards to a Participant
who has a Termination that is not for Cause shall end 60 days after the date of
such Termination; provided, however, that CLC is authorized in its sole
discretion to extend the Option term for a reasonable period after such 60 day
period. The Option term with respect to all Awards to a Participant who has a
Termination for Cause shall end on the date of Termination.

(2)  Retirement, Death or Disability - The Option term with respect to all
Awards to a Participant who has a death or Disability shall end 36 months after
the date of such death or Disability. The Beneficiary shall have the right to
exercise the Option in the event of the Participant's death. The Option term
with respect to all awards to a Participant who has a Retirement shall end on
the earlier of the date specified in paragraph (a) or (b), above.

(3)  Change in Control - Notwithstanding anything in this Section 8H to the
contrary, the Option term with respect to all Awards to a Participant whose
employment terminates with PPL Corporation and all Affiliated Companies
following a Change in Control shall end 36 months after the date Participant's
employment terminates with PPL Corporation and all Affiliated Companies
following the Change in Control. A Participant's employment shall be treated as
having terminated following a Change in Control only if:

(I)  The Participant's employment terminates within 36 months after the month in
which a Change in Control occurs, unless such termination of employment is (1)
by PPL Corporation or an Affiliated Company for Cause, or (2) by the Participant
without Good Reason, or 3) by reason of death, Disability or Retirement, or

(II)  The Participant's employment is terminated prior to a Change in Control
(whether or not a Change in Control ever occurs)

(A)  by PPL Corporation or an Affiliated Company without Cause, at the request
or direction of a Person who has entered into an agreement with PPL Corporation
the consummation of which would constitute a Change in Control, or

(B)  at the Participant's initiative for Good Reason and the circumstance or
event which constitutes Good Reason occurs at the direction of such Person, or

(III)  the Participant's employment is terminated by PPL Corporation or an
Affiliated Company without Cause or is by the Participant 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 occurs).

For purposes of any determination regarding the applicability of Paragraphs (II)
and (III), above, any position taken by the Participant shall be presumed to be
correct unless PPL Corporation or an Affiliated Company establishes to the Board
by clear and convincing evidence that such position is not correct. Moreover, if
at the time of any such determination, a Participant is employed by an
Affiliated Company, such determination shall be made by the board of directors
of such Affiliated Company, rather than the Board.

I. Rights as a Shareowner. A Participant or a transferee of a Participant shall
have no rights as a shareowner with respect to any shares of Common Stock
covered by an Option until the date of the issuance of a certificate for such
shares of Common Stock (or, in the case of shares issued without the issuance of
a certificate, the date of the entry of ownership of such shares in PPL
Corporation's stock register). No adjustment shall be made for dividends
(ordinary or extraordinary, whether in cash, securities or other property) or
distributions or other rights for which the record date is prior to the date
such certificate is issued (or stock register entry is made), except as provided
in Section 10G.

J. Modification, Extension and Renewal of Options. Subject to the terms and
conditions and within the limitations of the Plan, CLC may modify, extend or
renew outstanding Options granted under the Plan, or accept the exchange of
outstanding Options (to the extent not theretofore exercised) for the granting
of new Options in substitution therefor. Notwithstanding the foregoing, no
modification of an Option shall, without the consent of the Participant, alter
or adversely affect the rights or obligations of a Participant under any Option
previously granted under the Plan.

K. No Obligation to Exercise Option. The granting of an Option shall impose no
obligation on the Participant to exercise such Option.

 

SECTION 9. AMENDMENT OF THE PLAN.

CLC may at any time and from time to time alter, amend, suspend or terminate the
Plan in whole or in part, except no such action may be taken without the consent
of the Participant to whom any Award shall previously have been granted, which
adversely affects the rights of such Participant concerning such Award, except
as such termination or amendment of the Plan is required by statute, or rules
and regulations promulgated thereunder.

 

SECTION 10. MISCELLANEOUS PROVISIONS.

A. Nontransferability. No benefit or right provided under the Plan shall be
subject to alienation or assignment by a Participant (or by any person entitled
to such benefit pursuant to the terms of the Plan) or subject to attachment or
other legal process of whatever nature. Any attempted alienation, assignment or
attachment shall be void and of no effect. Payment shall be made only to the
Participant entitled to receive the same or to the Participant's authorized
legal representative. If the Participant has died, payment shall be made to the
Beneficiary. Deposit of any sum in any financial institution to the credit of
any Participant (or of a person entitled to such sum pursuant to the terms of
the Plan) shall constitute payment to that Participant (or such person). PPL
Corporation and its Affiliated Companies will observe the terms of the Plan
unless and until ordered to do otherwise by a state or federal court. As a
condition of participation, each Participant agrees to hold PPL Corporation and
all Affiliated Companies harmless from any claim that arises out of PPL
Corporation or an Affiliated Company obeying any such order whether such order
affects a judgment of such court or is issued to enforce a judgment or order of
another court.

B. No Employment Right. Neither this Plan nor any action taken hereunder shall
be construed as giving any right to be retained as an employee of PPL
Corporation or an Affiliated Company.

C. Tax Withholding. Whenever under the Plan Common Stock is to be delivered
pursuant to an Award, PPL Corporation may require as a condition of delivery
that Participant remit an amount sufficient to satisfy all federal, state and
local tax withholding requirements related thereto. In addition, PPL Corporation
may deduct from any salary or other payment due to such Participant, an amount
sufficient to satisfy all federal, state and local tax withholding requirements
related to the delivery of Common Stock under the Plan. Without limiting the
generality of the foregoing, Participant may elect to satisfy all or part of
foregoing withholding requirements by delivery of unrestricted shares of Common
Stock owned by Participant having a Fair Market Value (determined as of the date
of such delivery by Participant) equal to all or part of the amounts to be so
withheld. PPL Corporation may permit any such delivery to be made by withholding
shares of Common Stock from the shares otherwise issuable pursuant to the Award
giving rise to the tax withholding obligation (in which event the shares shall
be valued at their Fair Market Value on the date when the withholding taxes are
otherwise due).

D. Government and Other Regulations. The obligation of PPL Corporation to make
payment for any Awards shall be subject to all applicable laws, rules and
regulations, and to such approvals by any government agencies as CLC may
determine in its sole discretion to be required.

E. Indemnification. Each person who is or at any time serves as a member of the
Board, or CLC shall be indemnified and held harmless by PPL Corporation against
and from: (i) any loss, cost, liability or expense that may be imposed upon or
reasonably incurred by such person in connection with or resulting from any
claim, action, suit or proceeding to which such person may be a party or in
which such person may be involved by reason of any action or failure to act
under the Plan; and (ii) any and all amounts paid by such person in satisfaction
of judgment in any such action, suit or proceeding relating to the Plan. Each
person covered by this indemnification shall give PPL Corporation an
opportunity, at its own expense, to handle and defend the same before such
person undertakes to handle and defend it on such person's own behalf. The
foregoing right of indemnification shall not be exclusive of any other rights of
indemnification to which such persons may be entitled under the bylaws of PPL
Corporation, as a matter of law, or otherwise, or any power that PPL Corporation
may have to indemnify such person or hold such person harmless.

F. Reliance on Reports. Each member of the Board and CLC shall be fully
justified in relying or acting in good faith upon any report made by the
independent public accountants of, or counsel for, PPL Corporation and upon any
other information furnished in connection with the Plan. In no event shall any
person who is or shall have been a member of the Board or CLC be liable for any
determination made or other action taken or any failure to act in reliance upon
any such report or information or for any action taken, including without
limitation the furnishing of information, or failure to act, if in good faith.

G. Changes in Capital Structure. In the event of any change in the outstanding
shares of Common Stock by reason of any stock dividend or split,
recapitalization, combination or exchange of shares or other similar changes in
the Common Stock, appropriate adjustments shall be made in the shares of
Restricted Stock or Restricted Stock Units and Dividend Equivalents, if any,
theretofore awarded to the Participants, the shares of Common Stock subject to
outstanding and unexercised Options and the aggregate number of shares of Common
Stock which may be awarded pursuant to the Plan. Such adjustments shall be
conclusive and binding for all purposes. Additional shares of Restricted Stock
issued to a Participant as the result of any such change shall bear the same
restrictions as the shares of Common Stock to which they relate.

H. Company Successors. In the event PPL Corporation becomes a party to a merger,
consolidation, sale of substantially all of its assets or any other corporate
reorganization in which PPL Corporation will not be the surviving corporation or
in which the holders of the Common Stock will receive securities of another
corporation, then such other corporation shall assume the rights and obligations
of PPL Corporation under this Plan.

I. Governing Law. All matters relating to the Plan or to Awards granted
hereunder shall be governed by the laws of the Commonwealth of Pennsylvania
without regard to its conflict of laws principles.

J. Relationship to Other Benefits. Awards under the Plan shall not be taken into
account in determining any benefits under any pension, retirement, profit
sharing, disability or group insurance plan of PPL Corporation or an Affiliated
Company except as may be required by federal tax law and regulations or to meet
other applicable legal requirements.

K. Expenses. The expenses of administering the Plan shall be borne by PPL
Corporation and the Affiliated Companies whose Eligible Employees have been
granted Awards.

L. Titles and Headings. The titles and headings of the sections in the Plan are
for convenience of reference only, and in the event of any conflict, the text of
the Plan, rather than such titles or headings, shall control.

 

SECTION 11. OTHER STOCK-BASED AWARDS

CLC, in its sole discretion, may grant awards of Common Stock, awards of
restricted shares and awards that are valued in whole or in part by reference
to, or are otherwise based on the Fair Market Value of, Common Stock ("Other
Stock-Based Awards"). Such Other Stock-Based Awards shall be in such form, and
dependent on such conditions, as CLC shall determine, including, without
limitation, the right to receive one or more shares of Common Stock (or the
equivalent cash value of such Common Stock) upon the completion of a specified
period of service, the occurrence of an event and/or the attainment of
performance objectives. Other Stock-Based Awards may be granted alone or in
addition to any other Awards granted under the Plan. Subject to the provisions
of the Plan, CLC shall determine to whom and when Other Stock-Based Awards will
be made; the number of Common Stock to be awarded under (or otherwise related
to) such Other Stock-Based Awards; whether such Other Stock-Based Awards shall
be settled in cash. Common Stock or a combination of cash and Common Stock; and
all other terms and conditions of such Awards (including, without limitation,
the vesting provisions thereof).

Executed this 20th day of February, 2003.

  PPL SERVICES CORPORATION               By:  /s/ Ronald
Schwarz                         
Ronald Schwarz
Vice President-Human Resources