Exhibit 10.74

 

THIRD AMENDMENT TO THE

EMPLOYMENT AND SEVERANCE AGREEMENT

OF

VICTOR A. STAFFIERI

 

 

                This Third Amendment to the Employment and Severance Agreement
of Victor A. Staffieri (“Third Amendment”) is made and entered into this 1st day
of July, 2002 by and among (i) LG&E Energy Corp., a Kentucky corporation
(“Company”), (ii) Powergen, plc, a United Kingdom public limited company
(“Parent”), (iii) E.ON AG, an anktiengesellschaft formed under the Federal
Republic of Germany (“German Parent”), and (iv) Victor A. Staffieri
(“Executive”), collectively referred to as the “Parties”.

 

                WHEREAS, the Executive, the Company and the Parent entered into
an Employment and Severance Agreement, dated February 25, 2000 (“Agreement”);

 

                WHEREAS, the Agreement was previously amended by the Executive,
the Company and the Parent in a document dated December 8, 2000 (“First
Amendment”);

 

                WHEREAS, the Agreement was also amended by the Executive, the
Company and the Parent in a document effective as of April 30, 2001 (“Second
Amendment”);

 

                WHEREAS, the Parent and German Parent have agreed to the terms
of a recommended pre-conditional cash offer, whereby German Parent or its
subsidiary will acquire ownership of the Parent;

 

                WHEREAS, the Parent and the German Parent have determined that
the acquisition of the Parent by the German Parent shall be completed by way of
a scheme of arrangement, whereby the acquisition will become effective in
accordance with the terms of the scheme (“Acquisition Date”); and

 

                WHEREAS, the Parties have determined that it is now desirable to
amend the Agreement to reflect certain changes resulting from the German
Parent’s acquisition of the Parent.

 

AGREEMENT:

 

                NOW THEREFORE, in consideration of the respective agreements of
the Parties contained herein, it is agreed as follows:

 

1.   A new Section 1.4 shall be added to the end of Article 1 to read as
follows:

 

“1.4         On the Acquisition Date, the Company, the Parent, the German
Parent, or any subsidiary of the Company, the Parent or the German Parent,
hereinafter referred to as the

 

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“Employer”, shall pay to the Executive a lump sum cash payment in an amount
equal to $800,570, provided that the Executive is employed by an Employer on the
Acquisition Date.  Additionally, the Employer shall pay the Executive, as
provided herein, the following: (i) $800,570 on the first anniversary of the
Acquisition Date, (ii) $800,570 on the second anniversary of the Acquisition
Date, and (iii) $800,570 on the thirty month anniversary of the Acquisition
Date, collectively hereinafter referred to as the “Additional Retention
Payments.”  The Additional Retention Payments shall be credited to the
Executive’s account under the deferred compensation plan of the Company on the
Acquisition Date and shall be payable in a lump sum cash payment (including
adjustment for any increases in Executive’s account under the deferred
compensation plan), if the Executive so elects, within ten (10) days after the
earliest to occur of (i) any termination of the Executive’s employment with an
Employer, other than a termination by the Executive without Good Reason, (ii) a
Change in Control that occurs during the thirty months following the Acquisition
Date, so long as the Executive is still employed by an Employer immediately
prior to such Change in Control, or (iii) the respective first year, second year
and thirty month anniversaries of the Acquisition Date, so long as the Executive
is still employed by an Employer on such dates.  In the event that the Executive
elects to continue to defer the foregoing lump sum payments, such amounts shall
nevertheless vest as set forth above, and shall continue to be held in the
Executive’s deferred compensation plan account, which shall continue to be
adjusted and shall be distributed in accordance with the terms of the deferred
compensation plan.”

 

2.             Section 3.1 shall be deleted and replaced in its entirety to read
as follows:

 

“3.1         The Company agrees to employ Executive, and Executive agrees to
serve during the term hereof as Chief Executive Officer of the Company. 
Executive shall report to Ulrich Hartmann, or his successor.  In addition,
German Parent shall (i) cause the Executive to be elected as a member of the
Board of Directors of the Company (the “Board”), (ii) secure Executive’s
election as a member of the Board of Directors of Parent (the “Parent Board”),
and (iii) secure Executive’s election as a member of the management board or
board of directors (as applicable) of E.ON U.S. Verwaltungs GMBH or any other
similar entity

 

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the German Parent utilizes to establish its presence, through acquisition or
other development activity, in the United States’ energy industry (“Primary U.S.
Acquisition Board”), and Executive agrees to serve in such capacities.”

 

3.  Section 3.2 shall be deleted and replaced in its entirety to read as
follows:

 

“3.2         Executive agrees to devote his full working time and efforts, to
the best of his ability, experience and talent, to the performance of services,
duties and responsibilities in connection with the position named above. 
Executive shall perform such duties and exercise such powers, commensurate with
his position, as Chief Executive Officer of the Company, as Ulrich Hartmann or
his successor shall from time to time delegate to him on such terms and
conditions and subject to such restrictions as Ulrich Hartmann or his successor
may reasonably from time to time impose.”

 

4.               Section 3.4 shall be deleted and replaced in its entirety to
read as follows:

 

“3.4.        The Executive will perform his services at the Company’s
headquarters in Louisville, Kentucky, with the understanding that he will be
required to travel as reasonably required (including travel to the United
Kingdom and Germany) for the performance of his duties under this Agreement.”

 

5.               Section 4.1 shall be deleted and replaced in its entirety to
read as follows:

 

“4.1.        SALARY.  The Company shall pay Executive an annual base salary
(“Base Salary”) of not less than $630,000.  The Base Salary shall be payable in
accordance with the ordinary payroll practices of the Company.  The Base Salary
shall be reviewed by Ulrich Hartmann or his successor in December of each year
during the term of this Agreement and may be increased in the discretion of
Ulrich Hartmann or his successor at that or any other time and, as so increased,
shall constitute “Base Salary” hereunder.   At no time shall Ulrich Hartmann or
his successor be able to decrease the Base Salary.”

 

6.     Subsection 6.5(a) shall be deleted and replaced in its entirety to read
as follows:

 

“(a)         For purposes of this Agreement, “Good Reason” shall mean the
occurrence of any of

 

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the events or conditions described in subsections (1) through (10) hereof:

 

                (1)           a reduction by the Company in the Executive’s Base
Salary or annual target bonus opportunity as in effect prior to such reduction
or any failure to pay the Executive any compensation or benefits to which the
Executive is entitled within thirty days of the applicable due date, provided
that the Company may correct such reduction or failure within thirty (30) days
of its commission;

 

                (2)           German Parent, Parent or the Company require the
Executive to be relocated anywhere in excess of fifty (50) miles of his present
office location, except for required travel on German Parent, Parent or Company
business consistent with his business travel obligations as in effect prior to
the Effective Time and as provided in Section 3.4 of this Agreement;

 

                (3)           a failure by Parent or the Company to maintain
plans providing benefits at least as beneficial in the aggregate as those
provided by any benefit or compensation plan, retirement or pension plan, stock
option plan, bonus plan, long-term incentive plan, life insurance plan, health
and accident plan or disability plan in which the Executive is participating
prior to the Effective Time, the Change in Control, the Second Amendment, or
this Third Amendment, as applicable, or if the Company or Parent has taken any
action which would adversely affect the Executive’s participation in or
materially reduce the Executive’s benefits under any of such plans or deprive
him of any material fringe benefit enjoyed by him prior to the Effective Time,
the Change in Control, the Second Amendment or this Third Amendment, as
applicable, or if the Company or Parent has failed to provide him with the
number of paid vacation days to which he would be entitled in accordance with
the Company’s normal vacation policy immediately prior to the Effective Time,
the Change in Control, the Second Amendment, or this Third Amendment as
applicable;

 

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                (4)           Parent or the Company materially reduces,
individually or in the aggregate, the Executive’s title, job authorities or
responsibilities as in effect prior to such reduction;

 

                (5)           Parent or the Company fails to obtain the
assumption of the obligations contained in this Agreement by any successor as
contemplated in Section 11 hereof;

 

                (6)           any purported termination of the Executive’s
employment by Parent or the Company which is not effected pursuant to a Notice
of Termination satisfying the requirements of Section 8, hereof; and, for
purposes of this Agreement, no such purported termination shall be effective;

 

                (7)           any material breach by Parent or the Company of
any provision of this Agreement;

 

                (8)           any purported termination of the Executive’s
employment for Cause by Parent or the Company which does not comply with the
terms of Section 6.2 of this Agreement;

 

                (9)           any removal of the Executive from the position of
Chief Executive Officer of the Company, except for Cause; or

 

                (10)         any removal of Executive from, the Board, the
Parent Board, or the Primary U.S. Acquisition Board, except for Cause.”

 

7.               The introduction to Section 7.1 shall be deleted and replaced
in its entirety to read as follows:

 

“7.1         If, during the term of this Agreement, the Executive’s employment
with the Company shall be terminated within twenty-four months after the
effective time of any Change in Control occurring after the Acquisition Date,
then the Executive shall be entitled to the following compensation and
benefits:”

 

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8.               The introduction to Section 7.2 shall be deleted and replaced
in its entirety to read as follows:

 

“7.2.        If, during the term of this Agreement, but not during a twenty-four
month period following the effective time of any Change in Control occurring
after the Acquisition Date, the Executive’s employment with the Company shall be
terminated, the Executive shall be entitled to the following:”

 

                IN WITNESS WHEREOF, the Company, the German Parent, and the
Parent have caused this Third Amendment to be executed by its duly authorized
representative and the Executive has executed this Third Amendment as of the
date set forth below, but which shall be effective as of the later of (i) the
Acquisition Date, provided the Company employs Executive on that date, or (ii)
the date the Executive executes a release in the form attached hereto.  Except
as provided herein, nothing contained in this Third Amendment shall alter the
terms and conditions of the Agreement, the First Amendment, or the Second
Amendment.

 

E. ON. AG

 

 

 

 

 

By:

/s/ Ulrich Hartmann

 

 

 

Name

 

 

 

 

Title

 

 

 

 

 

 

Date:

1/7/2002

 

 

 

 

 

LG&E ENERGY CORP.

 

 

 

 

 

By:

/s/ John R. McCall

 

 

 

Name

John R. McCall

 

 

 

Title

EVP, General Counsel and Corporate Secretary

 

 

 

 

 

Date:

 

 

 

 

 

 

POWERGEN, plc

 

 

 

 

 

By:

/signed/

 

 

 

Name

 

 

 

 

Title

 

 

 

 

 

 

Date:

 

 

 

 

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EXECUTIVE

 

 

 

 

 

By:

/s/ Victor A. Staffieri

 

 

 

VICTOR A. STAFFIERI

 

 

 

 

 

Date:

 

 

 

 

 

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