Exhibit 10(p)

 

 

 

 

 

PPL CORPORATION

INCENTIVE COMPENSATION PLAN

EFFECTIVE JANUARY 1, 1987

 

 

 

 

 

Amended and Restated Effective January 1, 2003

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PPL CORPORATION

INCENTIVE COMPENSATION PLAN

EFFECTIVE JANUARY 1, 1987

 

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) Code II-4   (h) Committee II-4   (i) Common Stock II-4   (j) Date of Grant
II-4   (k) Disability or Disabled II-5   (l) Dividend Equivalents II-5   (m)
Eligible Employee II-5   (n) Exchange Act II-5   (o) Fair Market Value II-6  
(p) Good Reason II-6   (q) Incentive Stock Option II-10   (r) Option or Stock
Option II-10   (s) Other Stock-Based Award II-10   (t) Participant II-10   (u)
Performance-Based Award II-10   (v) Person II-10   (w) Plan II-10   (x)
Potential Change in Control II-10   (y) PPL II-11   (z) PPL Corporation II-11  
(aa) Restricted Stock II-11   (bb) Restricted Stock Unit II-11   (cc)
Restriction Period II-11   (dd) Retirement II-12   (ee) Termination II-12      
  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

 

SECTION 1. PURPOSE.

The purpose of the PPL Corporation Incentive Compensation Plan (the "Plan") is
to provide a method whereby officers and other 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.

The Plan was originally adopted by PPL Electric Utilities Corporation, effective
January 1, 1987, and at that time was named the Pennsylvania Power & Light
Company Incentive Compensation Plan. Sponsorship of the Plan is now being
assumed by PPL Corporation and the Plan is hereby renamed as the PPL Corporation
Incentive Compensation Plan.

 

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 or
Restricted Stock Unit 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) "Code" means the Internal Revenue Code of 1986, as may be amended from time
to time. Reference in the 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.

(h) "Committee" means two or more non-employee directors, unless otherwise
determined by the Board, who have been designated by the Board to act as the
Committee and qualify as non-employee directors under the Exchange Act and
outside directors under Section162(m) of the Code.

(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 the Committee or such later date as may be specified by the
Committee 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. The
Committee shall have the discretion to adjust the value of Dividend Equivalents,
to reflect changes in law or dividend paying practices of PPL Corporation. The
Committee 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.

(n) "Exchange Act" means the Securities Exchange Act of 1934, as amended from
time to time. Reference in this Plan to any section of the Exchange Act shall be
deemed to include any amendments or successor provisions to such section and any
rules promulgated thereunder.

(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,

(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; or

(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) "Incentive Stock Option" means an incentive stock option within the meaning
of Section 422 of the Code.

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

(s) "Other Stock-Based Award" means an award granted under Section 11.

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

(u) "Performance-Based Award" means an Other Stock-Based Award granted under
Section 11.

(v) "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.

(w) "Plan" means the PPL Corporation Incentive Compensation Plan, as amended and
restated.

(x) "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.

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

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

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

(bb) "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 the Committee shall
determine.

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

(dd) "Retirement" means

(i) 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; or

(ii) for all other Participants, termination of employment with PPL Corporation
and all of its Affiliated Companies after (a) attaining age 65, or (b) after
attaining age 50, if the Committee, in its sole discretion determines that such
termination constitutes "Retirement" for purposes of this Plan.

(ee) "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.

Upon the approval of the predecessor plan by the holders of a majority of the
shares of 41/2% Preferred Stock, Series Preferred Stock, Preference Stock and
Common Stock of PPL present (either in person or by proxy) at the 1987 Annual
Meeting of shareowners, the predecessor plan became effective on January 1,
1987. This Plan was amended and restated effective as of January 1, 1999 upon
the approval of the Plan by the holders of a majority of the shares of PPL
Corporation Common Stock present (either in person or by proxy) at the 1999
Annual Meeting of Shareowners. Awards of Incentive Stock Options may be made
under the Plan for a period of ten years after January 1, 1999. This Plan shall
continue in effect until all matters relating to the payment of Awards and the
administration of the Plan have been settled. The Plan was amended and restated
effective February 14, 2000 to recognize the change in corporate names of PPL
Corporation and PPL Electric Utilities Corporation.

 

SECTION 4. ADMINISTRATION OF THE PLAN.

The Plan shall be administered by the Committee. The Committee shall have full
power and authority to make Awards to Eligible Employees pursuant to the
provisions of the Plan, to interpret the provisions of the Plan and to supervise
the administration of the Plan and to delegate any of the foregoing
responsibilities to any Person, who, in its sole discretion, it deems
appropriate, provided such delegation is consistent with the requirements of
Section 162(m) of the Internal Revenue Code, if applicable. Such person or
persons shall be referred to as the "Administrator" herein.

All decisions made by the Committee 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.

The Committee may, from time to time, grant Awards to one or more Eligible
Employees, provided that: (i) subject to any adjustment pursuant to Section 10G
and any limitation pursuant to Section 10H, the maximum number of shares of
Common Stock subject to Awards (including Incentive Stock Options) shall not
exceed annually 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 year; (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.

A. Covered Employees. Officers and other key employees of PPL Corporation or an
Affiliated Company (including officers or employees who are members of the Board
or the Board of Directors of PPL Corporation and/or any Affiliated Company, but
excluding directors who are not officers or employees).

B. Selection of Participants. Subject to the provisions of the Plan, the
Committee shall from time to time select from the Eligible Employees those to
whom Awards shall be granted and determine the amount of such Award. No officer
or employee of PPL Corporation or an Affiliated Company shall have any right to
be granted an Award under the Plan.

 

SECTION 7. RESTRICTED STOCK.

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 (together with a stock power endorsed
in blank) 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.

The Committee 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 the
Committee 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 the
Committee, 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 the Committee 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, the Committee 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, the Committee is also 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 the Committee 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;
provided, however, that no acceleration or removal of restrictions pursuant to
this clause (ii) shall result in payout of Common Stock to the Participant less
than six months after the Date of Grant, except pursuant to Section 7C below
upon the Termination, death, Disability or Retirement of the Participant. The
Committee 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 the Committee 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:

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

(b) 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.

(c) 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.

(d) 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.

(e) Conversions between Restricted Stock and Restricted Stock Units. The
Committee 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.

In any instance where payout of a Restricted Stock or Restricted Stock Units
Award is to be prorated, the Committee 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.

Notwithstanding anything in this Section 7C to the contrary, in the event that
prior to any payout of Common Stock a Participant described in paragraph (c)
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.

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 Eligible Employee
designated by the Committee in such amounts and subject to such terms and
conditions as the Committee 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, the Committee 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 the Committee 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 by the Committee,
which may include, without limitation, provisions to qualify Incentive Stock
Options as such under Section 422 of the Code; 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 the Committee,
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 the Committee. Notwithstanding the
foregoing, if the Committee 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 the Committee
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, the Committee 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 the Committee 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
period, as shall be set forth in the Notification.

G. Right to Exercise. 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 if a Change in
Control 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 the
Committee), the Option will be exercisable as follows:

(a) Each Option shall be exercisable in its entirety or in such installments,
which need not be equal, and upon such contingencies, as the Committee 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.

(b) 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, except for 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) The Committee 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 the Committee 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, the Committee 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 non-compete 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 the Committee 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 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, the Committee 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. Early Disposition of Common Stock. If a Participant shall dispose of any
shares of Common Stock purchased pursuant to an Incentive Stock Option within
one year from the date the shares were acquired or within two years from the
Date of Grant of the Option under which such shares of Common Stock were
purchased, then, to provide PPL Corporation with the opportunity to claim the
benefit of any income tax deduction which may be available to it under the
circumstances, the Participant shall within ten days of such disposition notify
PPL Corporation of the dates of acquisition and disposition of such shares of
Common Stock, the number of shares so disposed and the consideration, if any,
received therefor.

L. Individual Dollar Limitations. In the case of an Incentive Stock Option, the
aggregate fair market value (determined at the time such Option is granted) of
the Common Stock with respect to which an Incentive Stock Option is exercisable
for the first time by an Eligible Employee during any calendar year (whether
under this Plan or another plan or arrangement of PPL Corporation or an
Affiliated Company) shall not exceed $100,000 (or such other limit as may be in
effect under the Code on the date of exercise).

M. 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.

The Committee may at any time and from time to time alter, amend, suspend or
terminate the Plan in whole or in part, except: (i) no such action may be taken
without approval by the shareowners of PPL Corporation which materially
increases the benefits accruing to Participants pursuant to the Plan, increases
the number of shares of Common Stock which may be issued pursuant to the Plan
(except as provided in Section 10G) or materially modifies the requirements as
to eligibility for participation in the Plan; and (ii) 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 all 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's or an Affiliated Company's 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 any 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 the
foregoing withholding requirements by delivery of unrestricted shares of Common
Stock owned by Participant for at least six months (or such other period as PPL
Corporation may determine), 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. As a condition of accepting such delivery, PPL Corporation may
require Participant to furnish an opinion of counsel acceptable to PPL
Corporation to the effect that such delivery will not result in Participant
incurring any liability under Section 16(b) of the Exchange Act. Alternatively,
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 the Committee
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, the Committee or PPL Corporation's Board of Directors 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, the Committee and PPL
Corporation's Board of Directors 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, the Committee or PPL Corporation's Board of Directors 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. New York Stock Exchange Requirements. In accordance with the requirements of
the New York Stock Exchange (the "NYSE") for the listing of newly issued shares
of Common Stock subject to Awards, the Committee may not grant Awards under the
Plan to the extent that the aggregate number of shares subject to Awards granted
after approval of the Plan at the 1999 Annual Meeting of shareowners of PPL
Corporation would exceed 5% of the outstanding Common Stock of PPL Corporation
on the date of such Annual Meeting, unless the issuance of the shares of Common
Stock subject to any such additional Awards has been approved by the shareowners
of PPL Corporation to the extent required by the rules of the NYSE.

I. 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.

J. 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.

K. Relationship to Other Benefits. The value of Awards hereunder and dividends
paid on the Common Stock during the Restriction Period, will be considered
earnings for purposes of PPL's Supplemental Executive Retirement Plan to the
extent provided for therein. Otherwise, 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 any Affiliated
Company except as may be required by federal tax law and regulation or to meet
other applicable legal requirements.

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

M. 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

(a) Generally. The Committee, 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 the Committee 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, the Committee shall determine to whom and when Other Stock-Based
Awards will be made; the amount 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).

(b) Performance-Based Awards. Notwithstanding anything to the contrary herein,
certain Other Stock-Based Awards granted under this Section 11 may be granted in
a manner which is deductible by PPL Corporation under Section 162(m) of the Code
(or any successor section thereto)("Performance-Based Awards"). A Participant's
Performance-Based Award shall be determined based on the attainment of written
performance goals approved by the Committee for a performance period established
by the Committee (i) while the outcome for that performance period is
substantially uncertain and (ii) no more than 90 days after the commencement of
the performance period to which the performance goal relates or, if less, the
number of days which is equal to 25 percent of the relevant performance period.
The performance goals, which must be objective, shall be based upon one or more
of the following criteria: (i) earnings before or after taxes (including
earnings before interest, taxes, depreciation and amortization); (ii) net
income; (iii) operating income; (iv) earnings per share; (v) book value per
share; (vi) return on stockholders' equity; (vii) expense management; (viii)
return on investment before or after the cost of capital; (ix) improvements in
capital structure; (x) profitability of an identifiable business unit or
product; (xi) maintenance or improvement of profit margins; (xii) stock price;
(xiii) market share; (xiv) revenues or sales; (xv) costs; (xvi) cash flow;
(xvii) working capital; (xviii) changes in net assets (whether or not multiplied
by a constant percentage intended to represent the cost of capital); (xix)
return on assets; and (xx) independent industry ratings or assessments. The
foregoing criteria may relate to PPL Corporation, one or more of its
subsidiaries or one or more of its divisions, units, minority investments,
partnerships, joint ventures, product lines or products or any combination of
the foregoing, and may be applied on an absolute basis and/or be relative to one
or more peer group companies or indices, or any combination thereof, all as the
Committee shall determine. In addition, to the degree consistent with Section
162(m) of the Code (or any successor section thereto), the performance goals may
be calculated without regard to extraordinary items or accounting changes. The
maximum amount of a Performance-Based Award to any Participant with respect to a
fiscal year of PPL Corporation shall be 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 year. The Committee shall determine
whether, with respect to a performance period, the applicable performance goals
have been met with respect to a given Participant and, if they have, to so
certify and ascertain the amount of the applicable Performance-Based Award. No
Performance-Based Awards will be paid for such performance period until such
certification is made by the Committee. The amount of the Performance-Based
Award determined by the Committee for a performance period shall be paid to the
Participant at such time as determined by the Committee in its sole discretion
after the end of such performance period; provided, however, that a Participant
may, if and to the extent permitted by the Committee and consistent with the
provisions of Section 162(m) of the Code, elect to defer payment of a
Performance-Based Award.

Executed this 20th day of February, 2003.

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