Exhibit 10.4

Execution Version

TRANSITION SERVICES AGREEMENT

by and between

PPL CORPORATION

and

PPL ENERGY SUPPLY, LLC

dated as of

June 1, 2015

--------------------------------------------------------------------------------

TABLE OF CONTENTS

 

          Page  

ARTICLE I

  

TRANSITION SERVICES

  

1.1.

   Transition Services; TSA Releases      1   

1.2.

   Period Transition Services Will Be Provided      3   

1.3.

   Term      3   

1.4.

   Commingling of Assets      3   

ARTICLE II

  

COMPENSATION FOR TRANSITION SERVICES

  

2.1.

   Fees      3   

2.2.

   Payment Terms      3   

2.3.

   Audit Rights      4   

2.4.

   Dispute Resolution      4   

2.5.

   Cooperation, Information and Access; Monthly Meeting      5   

2.6.

   Additional Resources      5   

2.7.

   Third Party Consents      5   

2.8.

   Energy Supply Assets and Separation Costs      6   

ARTICLE III

  

DISCLAIMERS; LIMITATION OF LIABILITY; INDEMNIFICATION

  

3.1.

   Disclaimers      6   

3.2.

   Limitation of Liability      7   

3.3.

   Indemnification      7   

ARTICLE IV

  

TERMINATION

  

4.1.

   Termination of Transition Services and Agreement for Convenience      8   

4.2.

   Unavoidable Delays      8   

4.3.

   Cancellation Costs      8   

4.4.

   Survival Upon Expiration or Termination      8   

4.5.

   Actions Upon Termination      9   

ARTICLE V

  

NOTICES AND DEMANDS

  

5.1.

   Notices      9   

 

- i -

--------------------------------------------------------------------------------

ARTICLE VI

MISCELLANEOUS

6.1.

Relationship of the Parties   10   

6.2.

Employees   10   

6.3.

Assignment   10   

6.4.

Confidentiality   11   

6.5.

Severability   11   

6.6.

Third Party Beneficiaries   11   

6.7.

Governing Law   11   

6.8.

Consent to Jurisdiction; Waiver of Jury Trial   11   

6.9.

Executed in Counterparts   12   

6.10.

Construction   12   

6.11.

Entire Agreement   12   

6.12.

Amendments and Waivers   12   

6.13.

Remedies Cumulative   13   

6.14.

Taxes   13   

 

 

- ii -

--------------------------------------------------------------------------------

Exhibits

 

Exhibit A Form of TSA Release Exhibit B Compensation for Transition Services

--------------------------------------------------------------------------------

TRANSITION SERVICES AGREEMENT

This Transition Services Agreement (the “Agreement”), dated as of June 1, 2015,
is entered into by and between PPL Corporation, a Pennsylvania corporation
(“PPL”), and PPL Energy Supply, LLC, a Delaware limited liability company
(“Energy Supply”). Both PPL and Energy Supply may be individually referred to
herein as a “Party” or collectively as the “Parties.”

WHEREAS, PPL and Energy Supply are parties to that certain Transaction
Agreement, dated as of June 9, 2014 (the “Transaction Agreement”), and that
certain Separation Agreement, dated as of June 9, 2014 (the “Separation
Agreement”);

WHEREAS, capitalized terms used and not otherwise defined herein shall have the
respective meanings given such terms in the Transaction Agreement or, if not
defined therein, the Separation Agreement;

WHEREAS, as contemplated by Section 8.15 of the Transaction Agreement, PPL is
willing to provide (or cause to be provided) to the Combined Group, and Energy
Supply is willing to provide (or cause to be provided) to the Parent Group,
certain transition services (as further described below, the “Transition
Services”) on the terms and conditions set forth herein; and

WHEREAS, (i) references to “Provider” herein shall mean (A) PPL or its
designated affiliate with respect to Transition Services provided (or caused to
be provided) to Energy Supply or its designated affiliate, and (B) Energy Supply
or its designated affiliate with respect to Transition Services provided (or
caused to be provided) to PPL or its designated affiliate; and (ii) references
to “Recipient” herein shall mean (A) Energy Supply or its designated affiliate
with respect to Transition Services provided (or caused to be provided) by PPL
or its designated affiliate, and (B) PPL or its designated affiliate with
respect to Transition Services provided (or caused to be provided) by Energy
Supply;

NOW, THEREFORE, in consideration of the mutual promises and agreements set forth
herein, the Parties hereto agree as follows:

ARTICLE I

TRANSITION SERVICES

1.1 Transition Services; TSA Releases.

(a) The Transition Services to be provided hereunder shall be set forth in more
detail in individual TSA Releases (each, a “TSA Release”), which shall set forth
the Transition Services to be provided pursuant thereto in a manner and level of
detail reasonably satisfactory to both the Provider and the Recipient
thereunder. The TSA Releases shall be numbered sequentially and shall be in
substantially the form of Exhibit A attached hereto.

(b) Each TSA Release shall specify if the Provider and/or Recipient thereunder
is to be one or more designated affiliates of the Parties. In such event,
references herein to “Provider” and “Recipient” shall mean such designated
affiliate(s), provided that it is understood and agreed that such designated
affiliates shall not thereby become parties to this Agreement or the TSA Release
and each Party shall be responsible to the other Party and its respective
affiliates (but not to any third parties) for the acts or omissions of their
respective designated affiliates as Provider or Recipient, as applicable,
pursuant to this Agreement.

--------------------------------------------------------------------------------

(c) Where PPL or its designated affiliate is the Provider hereunder, the
Provider shall perform, or cause to be performed, the Transition Services in a
manner (including quality) substantially consistent with, and in no event more
extensive in type and scope than, the provision of similar or comparable
services provided by the Parent Group to the Energy Supply Group prior to the
date of the Transaction Agreement (it being understood that the provision by the
Parent Group of Transition Services to any member of the Combined Group that was
not a Subsidiary of Parent prior to the date of the Transaction Agreement, and
services performed in connection with the consummation of the Transactions,
shall not be deemed to be more extensive in type or scope than the provision of
similar or comparable services by the Parent Group to the Energy Supply Group
prior to the date of the Transaction Agreement). Where Energy Supply or its
designated affiliate is the Provider hereunder, the Provider shall perform, or
cause to be performed, the Transition Services in a manner (including quality)
substantially consistent with, and in no event more extensive in type and scope
than, the provision of similar or comparable services provided by Energy Supply
Employees (as defined in the Employee Matters Agreement) to the Parent Group
prior to the date of the Transaction Agreement (it being understood that
services performed in connection with the consummation of the Transactions shall
not be deemed to be more extensive than the provision of similar or comparable
services by such employees to the Parent Group prior to the date of the
Transaction Agreement).

(d) During the Term (as defined below), the Provider shall consider in good
faith any reasonable requests of Recipient for the provision of additional
transition services not provided for under existing TSA Releases. To the extent
the Parties reach agreement on the provision of such additional services or any
other revisions to an existing TSA Release, the Parties shall enter into a new
or revised TSA Release, which shall be effective when signed by an Authorized
Representative and the TSA Coordinator (as defined below) of each Party.

(e) If requested by the Recipient, the Provider shall include in the TSA Release
a good faith estimate of the Provider Cost (as defined in Section 2.1 below)
associated with the applicable Transition Services (to the extent such costs are
reasonably estimable); provided, however that the provision of such estimate
shall not be deemed to cap the Provider’s right to payment for such Transition
Services at the estimate amount.

(f) Each TSA Release shall provide the name and contact details of one or more
persons who are authorized to coordinate the provision of the applicable
Transition Services for each Party (each such person with respect to the
applicable TSA Release, the “TSA Coordinator”). The TSA Coordinator shall have
no authority to amend or waive any provision of this Agreement or, except as
specifically set forth therein, the TSA Release.

(g) In the event of any inconsistency between a TSA Release and the terms of
this Agreement, the terms of this Agreement shall control unless expressly
agreed in a separate writing signed by an Authorized Representative of the Party
against whom enforcement is sought.

(h) For purposes of this Agreement, Authorized Representative shall mean (i) any
authorized executive officer of PPL and Energy Supply, respectively; and
(ii) with respect to TSA Releases or other matters, those individuals as
designated in a notice pursuant to Section 5.1 hereof.

 

- 2 -

--------------------------------------------------------------------------------

1.2 Period Transition Services Will Be Provided. Transition Services shall be
provided beginning as of the Closing Date and shall continue through the
expiration of the term relating to each Transition Service as set forth in the
applicable TSA Release, unless (a) the Recipient terminates a particular
Transition Service in accordance with the terms and conditions of this
Agreement, (b) otherwise mutually agreed by the Parties in writing, or (c) this
Agreement is terminated pursuant to its terms at an earlier date. If no
expiration date is stated, the Transition Service will continue for the Term (as
defined below).

1.3 Term. The term of this Agreement (the “Term”) shall commence as of the
Closing Date and shall continue until the date that is twenty four (24) months
from the Closing Date (the “Expiration Date”), subject to earlier termination
pursuant to Article IV or written agreement otherwise by the Parties.

1.4 Commingling of Assets. To the extent a Provider shall have charge or
possession of any of the Recipient’s cash or cash equivalents in connection with
the provision of the Transition Services, such Provider shall (i) hold such cash
or cash equivalents in the name and for the benefit of the Recipient and
(ii) separately maintain, and not commingle, such cash or cash equivalents with
any cash or cash equivalents of the Provider, its affiliates or any other
person.

ARTICLE II

COMPENSATION FOR TRANSITION SERVICES

2.1 Fees. As consideration for the Transition Services received, the Recipient
shall pay to the Provider for each Transition Service an amount equal to the
cost of providing such Transition Services, in each case, in accordance with
PPL’s cost allocation methodology in effect on the date of the Transaction
Agreement (without subsidization of the Recipient’s business operations or
margin to the Provider) as further set forth on Exhibit B attached hereto (the
“Provider Cost”); provided that (i) to the extent the Transition Services are
provided by a franchised public utility that has captive customers or that owns
or provides transmission service the price of such Transition Services shall be
the higher of Provider Cost or market as described in 35 C.F.R. § 35.44 (b)(2),
and (ii) to the extent the Transition Services are provided to a franchised
public utility that has captive customers or that owns or provides transmission
service the price of such Transition Services shall be the lower of Provider
Cost or market as described in 35 C.F.R. § 35.44(b)(2). The Parties shall
specify in the applicable TSA Release whether Transition Services are expected
to be provided by or to a franchised public utility Affiliate, and shall use
commercially reasonable efforts to cause the Transition Services to be provided
by or to Affiliates that are not franchised public utilities.

2.2 Payment Terms. The Provider shall present the Recipient (on account of
Transition Services provided to such other Party as Recipient) with monthly
invoices for the Transition Services it provides. The format of such invoices
shall include, without limitation, a brief description of the applicable
Transition Service, the billing period, applicable fees, and such other
information as the applicable Recipient(s) may reasonably request to verify the
amount and allocation of costs for the Transition Services. The Recipient shall
pay the undisputed amount of the monthly invoiced amount within thirty (30) days
after the date such monthly invoice was

 

- 3 -

--------------------------------------------------------------------------------

received. If the Recipient in good faith disputes any portion of the amount due
on any invoice, the Recipient shall notify the Provider in writing of the nature
and basis of the dispute as soon as commercially reasonable, but no later than
one hundred eighty (180) days from the date of such invoice.

2.3 Audit Rights. During the Term, and for a period of six (6) months
thereafter, the Recipient shall have the right, at its own costs and expense, to
conduct or cause to be conducted, a reasonable audit of the data, books and
records and other pertinent information of the Provider concerning the provision
of Transition Services hereunder, including without limitation, for purposes of
disputing the calculation of any fees charged under this Agreement or for
preparing financial statements. Without limiting the generality of the
foregoing, in connection with the exercise of the Recipient’s audit right, the
Provider shall also provide the Recipient with reasonable access to the
Provider’s pertinent personnel and third-party financial, accounting and tax
advisors and allow Recipient to perform testing procedures, including
inspection, observation and inquiries related to the design and operations of
the controls related to the processes performed by the Provider; provided that
the Recipient (including its personnel) and its third-party advisors shall not
be required to provide information to the Recipient that (x) could reasonably be
expected to result in competitive harm to the Provider as a result of such
disclosure or (y) would waive any legal privilege. The Recipient shall provide
at least ten (10) Business Day’s advance notice of any such audit, and shall
conduct such audit during normal business hours and in such a manner so as to
reasonably minimize disruptions to the Provider and its Affiliates. If the
Provider objects to the scope of any such audit requested, the Parties shall
work together, in good faith, to mutually reach agreement on the proper scope of
such audit.

2.4 Dispute Resolution. If the Recipient raises a dispute with respect any
charges under this Agreement within the period set forth in Section 2.2, then
the Parties shall negotiate in good faith and attempt to resolve the dispute.
Should such negotiations fail to result in an agreement within sixty (60) days
after receipt by the Provider of such written dispute from the Recipient, then
the matter shall be submitted to a mutually agreeable independent arbitrator
which may, but does not necessarily have to be, the Independent Accountant. The
arbitrator will deliver to the Parties a written determination (along with a
statement of reasons therefor) of the amounts payable under this Agreement with
respect to any such dispute within 30 days (or such other time period as may be
agreed) following the submission of the dispute to the arbitrator, which
determination shall be final, binding non-appealable and conclusive on the
Parties. The determination of the arbitrator shall be based solely on
presentations and written materials submitted by the Provider and the Recipient
and the terms of this Agreement and not on the basis of an independent review.
The Recipient and the Provider will, and will cause their respective
representatives to, cooperate and assist the arbitrator as reasonably requested
by the arbitrator in the conduct of the review and resolution referred to in
this Section 2.4, including the making available, to the extent necessary,
books, records, work papers, and personnel relevant to the dispute. Each Party
to the dispute shall pay its own costs and expenses incurred under this
Section 2.4. All fees and expenses relating to the work, if any, to be performed
by the arbitrator pursuant to this Section 2.4 will be allocated between the
Parties to the dispute in inverse proportion as each shall prevail in respect of
the dollar amount of disputed items so submitted (as finally determined by the
arbitrator). Any disputed amount determined by the Provider and Recipient, or if
submitted to the arbitrator and determined by the arbitrator, to be payable to
the Provider, together with interest thereon at the rate of ten percent
(10%) per annum from the thirtieth (30th) day after the

 

- 4 -

--------------------------------------------------------------------------------

applicable invoice was received by the Recipient through the date of payment,
shall be due and payable to the Provider by wire transfer of immediately
available funds to such account or accounts as shall be specified by the
Provider within three (3) Business Days after such amounts are finally
determined as provided in this Section 2.4.

2.5 Cooperation, Information and Access; Monthly Meeting.

(a) The Parties will cooperate in good faith in all matters relating to the
provision and receipt of the Transition Services. Without limiting the
generality of the foregoing, the Recipient will provide (or cause to be
provided) to the applicable Provider in a timely manner, access to facilities
and information required or reasonably requested by the Provider in connection
with providing the Transition Services; provided, however, the Recipient shall
not be required to provide access to information that (x) could reasonably be
expected to result in competitive harm to the Provider as a result of such
disclosure, (y) would be in violation of applicable Law or (z) would waive any
legal privilege.

(b) The TSA Coordinators shall conduct a joint monthly meeting at a mutually
agreed time to discuss, inter alia, cost/quality of Transition Services, scope
changes, and coordination of activities including spin-down, current and future
projects; provided, however, each such meeting may be canceled in advance upon
the mutual agreement of the applicable TSA Coordinators.

2.6 Additional Resources. Except as may be required to comply with its
mitigation obligations under Section 4.2, in providing the Transition Services,
the Provider is not obligated to (i) hire any additional employees,
(ii) maintain the employment of any specific employee, (iii) purchase, lease, or
license any additional equipment or materials, or (iv) enter into new contracts
or extend current contracts, except as otherwise provided in the Separation
Agreement, the Transaction Agreement or the Employee Matters Agreement. The
Provider may engage one or more subcontractors to provide all or any portion of
the Transition Services, provided that PPL or Energy Supply, as applicable,
remains directly responsible to the other (but not to third parties) for the
obligations of it or its designated affiliate as Provider hereunder.

2.7 Third Party Consents.

(a) To the extent that the provision of any Transition Services to any Recipient
under this Agreement requires any new or additional third party consents,
licenses, rights, approvals or permissions by or on behalf of the Provider (the
“Third Party Consents”) for the Recipient to receive and enjoy the full benefit
of the Transition Services, and to use any deliverables provided in connection
therewith, the obligation to provide such Transition Services are contingent
upon receipt by the Provider of such Third Party Consents, it being acknowledged
and understood that those third parties are not bound to this Agreement. Each
TSA Release will set forth a list of all identified material Third Party
Consents required for performance of the Transition Services.

(b) Any fees or other reasonable out-of-pocket costs to obtain any Third Party
Consents (the “TSA Consent Fees”) necessary to separate assets, including but
not limited to licenses and data, shall be paid (or reimbursed) by the Provider.
Any TSA Consent Fees necessary for the Provider to provide Transition Services
to the Recipient shall, except as otherwise provided in the Separation
Agreement, the Transaction Agreement or the Employee Matters Agreement,

 

- 5 -

--------------------------------------------------------------------------------

be paid (or reimbursed) by the Recipient as part of the applicable fees;
provided that, (i) the Provider shall use reasonable efforts to provide the
Recipient with at least ten (10) Business Days written notice before the payment
of any proposed TSA Consent Fees; (ii) the Provider shall use reasonable efforts
to fulfill its obligations under this Agreement in a cost-efficient manner and
without the incurrence of TSA Consent Fees; and (iii) the Recipient may decline
all or part of any applicable Transition Services as necessary to avoid such TSA
Consent Fees. Without limitation of any of its obligations under the Separation
Agreement, the Transaction Agreement or the Employee Matters Agreement, the
Provider shall use commercially reasonable efforts to obtain such Third Party
Consents as promptly as practicable, and the Recipient shall reasonably assist
the Provider in such efforts. The Provider shall provide the Recipient with
copies of the vendor invoices for such Third Party Consents in reasonably
sufficient detail to verify the terms of such Third Party Consents. No Provider
shall have any obligation to commence performance of any Transition Service
until the requisite Third Party Consent has been obtained. If the Provider fails
to obtain the requisite Third Party Consent for any Transition Service after
commencement of such service, the Provider shall use commercially reasonable
efforts to give the Recipient at least thirty (30) days’ notice before
discontinuing the Transition Service for which the requisite Third Party Consent
was not obtained, and, for purposes of Section 5.12(a) of the Transaction
Agreement, such discontinued Transition Service shall thereafter not be
considered a service provided pursuant to this Agreement.

2.8 Energy Supply Assets and Separation Costs. To the extent that any of the
Transition Services provided to Energy Supply or its designated affiliates (as
Recipient) by or on behalf of PPL or its designated affiliate (as Provider)
include any Energy Supply Assets, Spin Transactions, Separation Costs and/or
Shared Contracts (or other items the cost of which are to be borne by PPL or
Parent pursuant to the Separation Agreement, the Transaction Agreement and/or
the Employee Matters Agreement), Energy Supply or its designated affiliates (as
Recipient) may, in accordance with and subject to Section 2.2, dispute the
amount on any invoice related to such Transition Services to reduce or adjust
the net amounts paid or payable by such Recipient to such Provider for such
Transition Services so that PPL bears the costs of such Energy Supply Assets,
Spin Transactions, Separation Costs, Shared Contracts and/or other items, in
each case in accordance with, and solely to the extent provided for in, the
Separation Agreement, the Transaction Agreement and/or the Employee Matters
Agreement.

ARTICLE III

DISCLAIMERS; LIMITATION OF LIABILITY; INDEMNIFICATION

3.1 Disclaimers. EXCEPT AS OTHERWISE SET FORTH IN THIS AGREEMENT, THE TRANSITION
SERVICES AND ACCESS TO THE PARTIES’ AND THEIR RESPECTIVE AFFILIATES’ COMPUTER
AND OTHER SYSTEMS OR OTHER FACILITIES OR ASSETS ARE PROVIDED ON AN “AS IS”
BASIS, WITHOUT WARRANTY OF ANY KIND, EXPRESS OR IMPLIED, INCLUDING WARRANTIES OF
MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE OR OTHER WARRANTIES,
CONDITIONS, GUARANTEES OR REPRESENTATIONS, WHETHER EXPRESS OR IMPLIED. EXCEPT AS
OTHERWISE PROVIDED IN SECTION 3.3, THE PROVIDER’S SOLE AND EXCLUSIVE
RESPONSIBILITY TO THE RECIPIENT AND ITS AFFILIATES, AND THEIR SUCCESSORS AND
ASSIGNS, FOR ERRORS OR OMISSIONS IN THE TRANSITION SERVICES SHALL BE TO FURNISH
CORRECT INFORMATION OR RE-PERFORM THE RELEVANT SERVICES AT NO ADDITIONAL COST OR
EXPENSE UPON NOTICE OF SUCH ERROR OR OMISSION FROM THE RECIPIENT DURING THE
TERM.

 

- 6 -

--------------------------------------------------------------------------------

3.2 Limitation of Liability. NO PARTY NOR ANY STOCKHOLDER, OFFICER, DIRECTOR,
AGENT, OTHER REPRESENTATIVE, OR AFFILIATE THEREOF SHALL BE LIABLE TO ANY OTHER
PARTY, ANY STOCKHOLDER, OFFICER, DIRECTOR, AGENT, OTHER REPRESENTATIVE, OR
AFFILIATE THEREOF OR ANY OTHER THIRD PERSON FOR ANY SPECIAL, PUNITIVE,
EXEMPLARY, INCIDENTAL, CONSEQUENTIAL OR INDIRECT DAMAGES OR LOST PROFITS, OR
LOSSES CALCULATED BY REFERENCE TO ANY MULTIPLE OF EARNINGS OR EARNINGS BEFORE
INTEREST, TAX, DEPRECIATION OR AMORTIZATION (OR ANY OTHER VALUATION METHODOLOGY)
WHETHER BASED ON CONTRACT, TORT, STRICT LIABILITY, OTHER LAW OR OTHERWISE AND
WHETHER OR NOT ARISING FROM THE OTHER PARTY’S SOLE, JOINT OR CONCURRENT
NEGLIGENCE, STRICT LIABILITY OR OTHER FAULT, IN EACH CASE, ARISING IN CONNECTION
WITH THIS AGREEMENT OR ANY ACTS OR OMISSIONS RELATING TO THE TRANSITION
SERVICES, WHETHER LIABILITY IS BASED ON CONTRACT, TORT, STRICT LIABILITY OR
OTHER FAULT FOR ANY MATTER RELATING TO THIS AGREEMENT AND THE TRANSACTIONS
CONTEMPLATED HEREBY; PROVIDED, HOWEVER, THAT IF A PARTY IS HELD LIABLE TO A
THIRD PARTY FOR ANY OF SUCH DAMAGES AND THE OTHER PARTY IS OBLIGATED TO
INDEMNIFY SUCH PARTY FOR THE MATTER THAT GAVE RISE TO SUCH DAMAGES, THEN SUCH
INDEMNIFYING PARTY SHALL BE LIABLE FOR, AND OBLIGATED TO REIMBURSE THE OTHER
PARTY FOR, THE TOTAL AMOUNT OF SUCH DAMAGES HOWSOEVER CHARACTERIZED.

3.3 Indemnification. (a) Recipient will indemnify, defend and hold harmless
Provider and its Affiliates and their respective stockholders, members,
managers, officers, directors, agents and other representatives (collectively,
the “Provider Indemnitees”) from any and all claims, demands, suits, losses,
liabilities, penalties, actions and damages(“Claims”) brought against such
Provider Indemnitees instituted by a third party directly arising out of or
resulting from the provision and use of Transition Services hereunder (other
than such Claims resulting from gross negligence or willful or intentional
misconduct on the part of Provider or its Affiliates under this Agreement).

(b) Energy Supply will indemnify, defend and hold harmless PPL and its
Affiliates and their respective stockholders, members, managers, officers,
directors, agents, other representatives (collectively, the “PPL Indemnitees”)
from any and all claims, demands, suits, losses, liabilities, penalties, actions
and damages suffered, paid or incurred by such PPL Indemnitees and arising out
of or resulting from any gross negligence or willful or intentional misconduct
on the part of Energy Supply or its Affiliates under this Agreement.

(c) PPL will indemnify, defend and hold harmless Energy Supply and its
Affiliates and their respective stockholders, members, managers, officers,
directors, agents, other representatives (collectively, the “Energy Supply
Indemnitees”) from any and all claims, demands, suits, losses, liabilities,
penalties, actions and damages suffered, paid or incurred by such Energy Supply
Indemnitees and arising out of or resulting from any gross negligence or willful
or intentional misconduct on the part of PPL or its Affiliates under this
Agreement.

 

- 7 -

--------------------------------------------------------------------------------

(d) Except in the case of fraud or breach of Section 6.4, the exclusive remedy
for any Party for monetary damages arising from a breach of this Agreement shall
be the indemnification provided under this Section 3.3.

ARTICLE IV

TERMINATION

4.1 Termination of Transition Services and Agreement for Convenience. Recipient
shall have the right to terminate any Transition Service, in whole or in part,
upon sixty (60) days prior written notice to the Provider, unless the individual
applicable TSA Release specifies otherwise. Provider may not terminate any
Transition Service, in whole or in part, during the Term unless such right of
termination by Provider is specifically provided for in the applicable TSA
Release and provides for termination upon a specified number of days of advance
notice.

4.2 Unavoidable Delays. Provider shall not be liable for delays or interruptions
in performing its obligations (other than obligations to make monetary payments)
primarily arising from any act, delay or failure to act on the part of any
governmental authority; acts of God; disruptions such as fire or explosions;
failure or delay beyond Provider’s reasonable control in securing necessary
materials, services or facilities; labor difficulty such as strikes, slow-downs
or shortages; or other causes beyond Provider’s reasonable control. In the event
of any occurrence which Provider determines will prevent or cause a significant
delay in its performance, Provider shall notify Recipient promptly in writing.
Provider shall use reasonable efforts to overcome the circumstances created by
such event as quickly as possible and to mitigate the impact of such
circumstances on its provision of Transition Services hereunder, and shall
notify Recipient promptly in writing when such circumstances have ceased to
affect the provision of Transition Services. So long as such circumstances
persist, Recipient shall have the right to terminate any Transition Service in
whole or in part upon 30 days prior written notice to Provider.

4.3 Cancellation Costs. Except as otherwise provided in the Separation
Agreement, the Transaction Agreement or the Employee Matters Agreement, in the
event of early termination by Recipient, other than pursuant to Section 4.2,
Recipient shall be liable for all costs and expenses incurred by Provider to the
extent directly attributable thereto and which would not have been incurred but
for the provision of such Transition Services, including fees for early
termination or cancellation of contracts (provided such contracts were extended
for the benefit of the Recipient for purposes of providing Transition Services)
and payments under employee retention agreements for key employees (provided
such retention agreements were approved in writing by Recipient in advance). In
the event of termination by Provider if permitted by the applicable TSA Release,
Recipient shall not be responsible for any such costs.

4.4 Survival Upon Expiration or Termination. The provisions of Article III
(Disclaimers; Limitation of Liability; Indemnification), Article V (Notices and
Demands) and Article VI (Miscellaneous) shall survive the termination or
expiration of this Agreement unless otherwise agreed to in writing by both
Parties; provided that, the provisions of Article II (Compensation for
Transition Services) shall survive such termination and the Recipient shall
remain liable to the Provider for all amounts payable thereunder in respect of
Transition Services provided prior to the effective date of such termination.

 

- 8 -

--------------------------------------------------------------------------------

4.5 Actions Upon Termination. Except as otherwise provided in the Separation
Agreement, the Transaction Agreement or the Employee Matters Agreement, upon the
termination of any Transition Service with respect to which either Party holds
equipment, books, records, files or any other documents or other property owned
by (or required by the Transaction Agreement or any Other Transaction Document
to be delivered to) the other Party, the Party in possession of such property
(including intellectual property) shall promptly return or deliver (or cause to
be returned or delivered) all such property of the other Party. Each Party shall
bear its reasonable costs and expenses associated with the return thereof,
except as otherwise provided in the Transaction Agreement or the Other
Transaction Documents. In addition, upon the termination of any of the
Transition Services which involved the compilation of records including data on
the Provider’s computer systems, the Provider will use commercially reasonable
efforts to promptly deliver (or to cause to be promptly delivered) such records
to the Recipient. Electronic records will be provided on magnetic media in
readable format mutually acceptable to the Parties, which format will be capable
of being read by a computer mutually acceptable to the Parties, all data files
maintained by Provider to the extent that they contain information which is the
property of Recipient (or otherwise required to be delivered to the Recipient
pursuant to the Transaction Agreement or any Other Transaction Document),
together with printed file descriptions sufficient to identify such data files
and their contents and structure. The Recipient will pay all of the Provider’s
reasonable costs and expenses associated with the provision and delivery of such
material, except as otherwise provided in the Transaction Agreement or the Other
Transaction Documents.

ARTICLE V

NOTICES AND DEMANDS

5.1 Notices. All notices, requests and other communications hereunder shall be
in writing (including wire or similar writing) and shall be sent, delivered
mailed or addressed:

(a) if to Energy Supply, to:

Talen Energy Corporation

Legal Department

835 W. Hamilton Street

Allentown, Pennsylvania 18101

Attention: General Counsel

with a copy to:

PPL Energy Supply, LLC

835 W. Hamilton Street

Allentown, Pennsylvania 18101

Attention: Cheryl A. Dally

 

- 9 -

--------------------------------------------------------------------------------

(b) if to PPL, to:

PPL Corporation

Office of General Counsel

Two North Ninth Street

Allentown, Pennsylvania 18101

Attention: General Counsel

with a copy to:

PPL Corporation

Two North Ninth Street

Allentown, Pennsylvania 18101

Attention: Timothy D. Stephens

All notices, requests and other communications to be given or delivered to a
Party under or by reason of the provisions of this Agreement shall be in writing
(including in electronic form) and shall be deemed to have been given (i) if
personally delivered, delivered by express courier service of national standing
(with charges prepaid), or deposited in the United States mail, first class
postage prepaid, on the date of physical receipt or (ii) if delivered by
facsimile or electronic mail, if delivered (and, in each case, receipt confirmed
in writing) on or before 5:00 p.m. Philadelphia time on a Business Day, and if
delivered after 5:00 p.m. Philadelphia time, or during a non-Business Day, on
the following Business Day, in each case, to such Party at the address set forth
above.

ARTICLE VI

MISCELLANEOUS

6.1 Relationship of the Parties. The Parties declare and agree that each Party
is engaged in a business that is independent from that of the other Party and
the applicable Provider shall perform its obligations as an independent
contractor. It is expressly understood and agreed that nothing contained herein
is intended to create an agency relationship, or a partnership or joint venture.
Neither Party is an agent or employee of the other. Neither Party has authority
to represent the other Party as to any matters, except as authorized herein or
in writing by the other Party from time to time.

6.2 Employees. Each Provider shall be solely responsible for payment of
compensation to its employees and those of any of its Affiliates engaged in
providing any Transition Services and for any injury to them in the course of
their employment. Each Provider shall assume full responsibility for payment of
all federal, state, and local taxes or contributions imposed or required under
unemployment insurance, social security, and income Tax Laws with respect to
such persons.

6.3 Assignment. Neither this Agreement nor any of the rights or obligations
hereunder shall be assigned by any of the Parties hereto without the prior
written consent of the other Party which consent shall not be unreasonably
withheld. Subject to the preceding sentence, this Agreement will be binding
upon, inure to the benefit of and be enforceable by the Parties

 

- 10 -

--------------------------------------------------------------------------------

and their respective successors and permitted assigns. Any attempted assignment
in violation of the terms of this Section 6.3 shall be null and void, ab initio.
In the event that all or some portion of a TSA Release or this Agreement in its
entirety inures to the benefit of, or is enforceable by a Recipient that is a
successor or permitted assign of the Parties, and such successor or assign is
not an affiliate of one of the Parties hereto, the Provider thereunder shall
have the right to require that such successor in interest or permitted assign
agree to a reasonable and mutually acceptable modification of the fee
arrangement in Section 2.1 as a condition to continuance of the applicable
Transition Services.

6.4 Confidentiality. The Parties acknowledge that certain Confidential
Information may be shared or disclosed during the performance of this Agreement.
The Parties agree that all Confidential Information will be subject to the
confidentiality provisions of Article VII of the Separation Agreement. For
purposes of this Agreement, the term “Confidential Information” shall mean any
information, observation or data that is confidential, proprietary or otherwise
not generally known to the public concerning, arising from, owned by, or related
to the applicable Party. Confidential Information shall not include any
information, observation or data that has been made generally available to the
public other than as a result of a disclosure in breach of this Agreement or the
Separation Agreement.

6.5 Severability. The provisions of this Agreement shall be deemed severable and
the invalidity or unenforceability of any provision shall not affect the
validity or enforceability of the other provisions hereof. If any provision of
this Agreement, or the application thereof to any Person or any circumstance, is
found to be invalid or unenforceable in any jurisdiction, (a) a suitable and
equitable provision shall be substituted therefor in order to carry out, so far
as may be valid or enforceable, such provision and (b) the remainder of this
Agreement and the application of such provision to other Persons or
circumstances shall not be affected by such invalidity or unenforceability, nor
shall such invalidity or unenforceability affect the validity or enforceability
of such provision, or the application thereof, in any other jurisdiction.

6.6 Third Party Beneficiaries. The terms and provisions of this Agreement are
intended solely for the benefit of the Parties and their respective successors,
Affiliates and permitted assigns, and it is not the intention of the Parties to
confer third-party beneficiary rights upon any other Person. Should any third
party institute proceedings, this Agreement shall not provide any such person
with any remedy, claim, liability, reimbursement, cause of action, or other
right.

6.7 Governing Law. This Agreement shall be governed by and construed in
accordance with the Laws of the Commonwealth of Pennsylvania.

6.8 Consent to Jurisdiction; Waiver of Jury Trial.

(a) Except as provided in Section 2.4 with respect to such disputes, each of the
Parties hereto irrevocably and unconditionally agrees that any Action with
respect to this Agreement and the rights and obligations arising hereunder, or
for the recognition and enforcement of any judgment in respect of this Agreement
and the rights and obligations arising hereunder brought by any other Party or
Parties or their respective successors or assigns, shall be brought and
determined exclusively in a state or federal court within the Commonwealth of
Pennsylvania.

 

- 11 -

--------------------------------------------------------------------------------

(b) Each of the Parties hereby irrevocably submits with regard to any such
Action described in clause (a) of this Section 6.8 for itself and in respect of
its property, generally and unconditionally, to the personal jurisdiction of the
aforesaid courts and agrees that it will not bring any Action relating to this
Agreement in any court other than a state or federal court within the
Commonwealth of Pennsylvania. Each of the Parties hereby irrevocably waives, and
agrees not to assert, by way of motion, as a defense, counterclaim or otherwise,
in any Action with respect to this Agreement, (i) any claim that it is not
personally subject to the jurisdiction of the above named courts for any reason
other than the failure to serve in accordance with this Section 6.8, (ii) any
claim that it or its property is exempt or immune from jurisdiction of any such
court or from any legal process commenced in such courts (whether through
service of notice, attachment prior to judgment, attachment in aid of execution
of judgment, execution of judgment or otherwise) and (iii) to the fullest extent
permitted by applicable Law, any claim that (x) the Action in such court is
brought in an inconvenient forum, (y) the venue of such Action is improper or
(z) this Agreement, or the subject matter hereof, may not be enforced in or by
such courts.

(c) EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO
TRIAL BY JURY IN ANY ACTION ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY.

6.9 Executed in Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original and all of which shall,
taken together, be considered one and the same agreement. Any facsimile or
electronically transmitted copies hereof or signature hereon shall, for all
purposes, be deemed originals.

6.10 Construction. The headings and numbering of articles, sections and
paragraphs in this Agreement are for convenience only and shall not be construed
to define or limit any of the terms or affect the scope, meaning, or
interpretation of this Agreement or the particular Article or Section to which
they relate. This Agreement and the provisions contained herein shall not be
construed or interpreted for or against any Party because that Party drafted or
caused its legal representative to draft any of its provisions.

6.11 Entire Agreement. This Agreement, including all exhibits and attachments
hereto and all TSA Releases, and together with the Transaction Agreement and the
Other Transaction Documents, constitutes the entire Agreement between the
Parties with respect to the Transition Services, and supersedes all prior oral
or written agreements, representations, statements, negotiations,
understandings, proposals and undertakings with respect to the Transition
Services to be provided hereunder. In the event of any inconsistency between
this Agreement, on the one hand, and any of the Transaction Agreement, the
Separation Agreement or the Employee Matters Agreement, on the other hand, the
terms of the Transaction Agreement, the Separation Agreement or the Employee
Matters Agreement, as applicable, will control.

6.12 Amendments and Waivers. This Agreement may not be amended, supplemented or
modified except by an instrument in writing signed on behalf of both Parties.
Any term or condition of this Agreement may be waived at any time by the Party
that is entitled to the benefit thereof, but no such waiver shall be effective
unless set forth in a written instrument duly executed by or on behalf of the
Party waiving such term or condition. No waiver by any Party of

 

- 12 -

--------------------------------------------------------------------------------

any term or condition of this Agreement, in any one or more instances, shall be
deemed to be or construed as a waiver of the same or any other term or condition
of this Agreement on any future occasion.

6.13 Remedies Cumulative. Unless otherwise provided for under this Agreement
(including, for the avoidance of doubt, Section 3.3), all rights of termination
or cancellation, or other remedies set forth in this Agreement, are cumulative
and are not intended to be exclusive of other remedies to which the injured
Party may be entitled by Law or equity in case of any breach or threatened
breach by the other Party of any provision in this Agreement. Unless otherwise
provided for under this Agreement, use of one or more remedies shall not bar use
of any other remedy for the purpose of enforcing any provision of this
Agreement. With respect to Section 6.4, each Party acknowledges and agrees that
money damages would not be a sufficient remedy for any breach of this Agreement
by it, and that in addition to all other remedies, the other Party shall be
entitled to specific performance and injunctive or other equitable relief as a
remedy for any such breach.

6.14 Taxes. The Recipient shall pay, or reimburse the Provider for, the gross
amount of any sales, use, excise, value-added or other similar tax (whether now
existing or subsequently enacted) applicable to the amounts charged by the
Provider for Transition Services hereunder. The Provider shall include such
taxes on the invoices provided in accordance with Section 2.2 hereof and shall
be responsible for remitting such taxes to the applicable taxing authority. Each
of Provider and Recipient shall be solely responsible for the payment of any and
all of their own other taxes imposed with respect to the provision of any
Transition Services and any fees or charges in respect thereof, including
without limitation franchise and similar taxes on capital, employment taxes
associated with its employees, property taxes, gross receipts taxes, and taxes
based on income.

[Signature Page Follows]

 

- 13 -

--------------------------------------------------------------------------------

IN WITNESS WHEREOF, the Parties hereto have caused this Transition Services
Agreement to be executed by their duly authorized officers as of the date first
written above.

 

PPL ENERGY SUPPLY, LLC By:

/s/ Paul A. Farr

Name: Paul A. Farr Title: President and Chief Executive Officer PPL CORPORATION
By:

/s/ William H. Spence

Name: William H. Spence Title: Chairman, President and Chief Executive Officer

- Signature Page to Transition Services Agreement-