**Exhibit10.63**

 

**First Amendment to the**

**Employment and Severance Agreement**

**of**

**John R. McCall**

 

 

**WHEREAS,**John R. McCall (the “Executive”) and LG&E Energy Corp., a Kentuckycorporation (the “Company”) and Powergen, plc, a United Kingdom public limitedcompany (the “Parent”) entered into an Employment and Severance Agreement,dated February 25, 2000 (the “Agreement”);

 

**WHEREAS,**Parent, Company, a Delaware corporation to be formed as anindirect wholly owned subsidiary of Parent (“US Subholdco 2”) and a Kentucky corporationto be formed as a direct wholly owned subsidiary of US Subholdco 2 (“MergerSub”), have executed a merger agreement (the “Merger Agreement”) which willbecome effective at the Effective Time (as defined in the Merger Agreement);

 

**WHEREAS,**Company and the Parent have determined that it is desirableto amend the Agreement to provide greater retention incentives to the Executiveas a further inducement for the Executive to remain in the employment of theCompany;

 

**WHEREAS,**An****amendment to the Merger Agreement hasnecessitated a corresponding amendment to the Agreement; and

 

**WHEREAS,**the parties wish to correct the definition of a Change in Control contained inthe Agreement.

 

**NOWTHEREFORE,** in consideration of the respective agreements ofthe parties contained herein, it is agreed as follows:

 

1.               Section 1.1 shallbe deleted and replaced in its entirety to read as follows:

 

“This Agreement shall become effective at the Effective Time, providedthe Company employs the Executive on that date.  As of the Effective Time, the Change-in-Control Agreement shall,except as otherwise provided herein, terminate and become null and void.  In consideration of the services rendered bythe Executive to the Company prior to the Effective Time, the Executive’swillingness to enter into this Agreement which provides additional retentionvalue to the Company, and the satisfaction of all of the Company’s obligationsunder the Change-in-Control Agreement, the Company shall pay the Executive incash $650,000 on the Effective Date, if said time occurs prior to January 1,2001. Additionally, if the Effective Time occurs prior to January 1, 2001 theCompany shall pay the Executive in cash the following: $405,000 on the sixmonth anniversary of the Effective Time, $405,000 on the twelve monthanniversary of the Effective Time, and $455,944 on the eighteen monthanniversary of the Effective Time, collectively the “Retention Payments”, solong as the Executive is still employed by the Company on

 

----

 

such dates.  The Retention Paymentsshall be credited to Executive’s account under the Deferred Compensation Planof the Company (or such other plan or arrangement as may be mutually agreedupon by the parties hereto) at the Effective Time and shall be payable in alump sum cash payment (including adjustment for any increases or decreases inExecutive’s account under the Deferred Compensation Plan), if the Executive soelects, within ten (10) days after the earliest to occur of (i) a terminationof employment, other than a termination by the Executive without Good Reason,which occurs at any time during the eighteen consecutive months immediatelyfollowing the Effective Time (the “Transition Period”), (ii) a Change inControl that occurs during the Transition Period, so long as the Executive isstill employed by the Company immediately prior to the Change in Control, and(iii) the scheduled six, twelve, and eighteen month anniversaries.  In the event that Executive elects not toreceive the foregoing lump sum payments, Executive may otherwise elect to deferreceipt of such payments and have such payments continue to be held in hisDeferred Compensation Plan account (which account shall continue to be adjustedin accordance with the terms of the Deferred Compensation Plan, or such other planor arrangement as may be mutually agreed upon by the parties hereto).  If the Effective Date occurs on or afterJanuary 1, 2001, the Company shall pay the Executive in cash 60% of the amountcalculated and payable under Sections 3.1(b) and 6 of the Change-in-ControlAgreement (the “Initial Change-in-Control Payment”) within 10 days followingthe Effective Time conditioned upon delivery by the Executive of an executedform of release of all claims against the Company with respect to theChange-in-Control Agreement (other than with respect to Section 6 of suchAgreement) (on a form to be provided by the Company).  Additionally, if the Effective Date Occurs on or after January 1,2001, the balance of the amount calculated under Sections 3.1(b) and 6 of theChange-in-Control Agreement (the “Deferred Change-in-Control Payment”) shall becredited to Executive’s account under the Deferred Compensation Plan of theCompany (or such other plan or arrangement as may be mutually agreed upon bythe parties hereto) and shall be payable in a lump sum cash payment (includingadjustment for any increases or decreases in Executive’s account under theDeferred Compensation Plan), if the Executive so elects, within ten (10) daysafter the earliest to occur of (i) a termination of employment, other than atermination by the Executive without Good Reason, which occurs at any timeduring the eighteen consecutive months immediately following the Effective Time(the “Transition Period”), (ii) a Change in Control that occurs during theTransition Period, so long as the Executive is still employed by the Companyimmediately prior to the Change in Control, and (iii) the end of the TransitionPeriod, so long as the Executive is still employed on such date.  In the event that Executive elects not toreceive the foregoing lump sum payment, Executive may otherwise elect to deferreceipt of such payment and have such payment continue to be held in hisDeferred Compensation Plan account (which account shall continue to be adjustedin accordance with the terms of the Deferred Compensation Plan, or such otherplan or arrangement as may be mutually agreed upon by the parties hereto).

 

Parent shall, or shall cause the Company to pay to the Executive a lumpsum cash payment in an amount equal to $172,028 if the closing occurs prior toJanuary 1, 2001 or an amount equal to 25% of the Deferred Change-in-ControlPayment if the closing occurs on or after January 1, 2001 (without adjustmentfor any increases or decreases in Executive’s account under the DeferredCompensation Plan) in either event (the

 

2

----

 

“Premium Payment”) within ten (10) days after the earliest to occur of(i) the date that Executive’s employment is terminated by the Company withoutCause, by Executive for Good Reason, or as a result of Executive’s death orDisability, at any time during the eighteen consecutive months immediatelyfollowing the Effective Time (the “Transition Period”), (ii) a Change inControl that occurs during the Transition Period, so long as the Executive isstill employed by the Company immediately prior to the Change in Control, and(iii) the end of the Transition Period, so long as the Executive is stillemployed on such date.  In the eventthat Executive elects not to receive the foregoing lump sum payment, Executivemay otherwise elect to defer receipt of such payment and have such paymentcontinue to be held in his Deferred Compensation Plan account (which accountshall continue to be adjusted in accordance with the terms of the DeferredCompensation Plan, or such other plan or arrangement as may be mutually agreedupon by the parties hereto).”

 

2.               Section 4.5 shallbe deleted and replaced in its entirety to read as follows:

 

“4.5  EXISTING STOCKOPTIONS.  In accordance with the MergerAgreement and any amendments thereto, Executive may elect in writing deliveredto Parent to convert each Company stock option he holds (each, a “CompanyOption”), whether vested or unvested, into an option to acquire, on the same termsand conditions as were applicable under such Company Option, the number ofADS’s, equal to the result (rounded down to the nearest whole ADS) ofmultiplying the number of shares subject to the Company Option immediatelyprior to the Effective Time by the Conversion Ratio (as defined in the MergerAgreement), at an exercise price per share equal to the result (rounded up tothe nearest whole cent) of dividing the per share exercise price of suchCompany Option immediately prior to the Effective Time by the Conversion Ratio(it being understood that the exercise price shall be converted into dollars atthe rate prevailing at the close of business on the business day prior to theEffective Time).  If Executive makes suchelection and holds the Company Option or the ADS’s acquired upon the exerciseof such Company Option for two years after the Effective Time, then upon thelater of (i) the end of the 24th month after the Effective Time, or (ii) theexercise of such Company Option, the Parent shall issue Executive oneadditional ADS for every 4 ADS’s acquired as a result of such exercise; provided,however in the event that either (i) a Change in Control occurs withinthe two years after the Effective Time and the Executive is still employed bythe Company immediately prior to the Change in Control, immediately prior tosuch time, the Executive shall receive one additional ADS for every 4 ADS’s (A)acquired by the Executive as a result of the exercise of any Company Optionduring the period prior to such Change in Control and (B) underlying eachunexercised Company Option held by the Executive immediately prior to suchChange in Control or (ii) the Executive’s employment is terminated for anyreason (other than by the Company for Cause or by the Executive without GoodReason (other than as a result of death or Disability)) at any time during thetwo years after the Effective Time and prior to any Change in Control, theExecutive shall receive, within 10 days after the termination of employment,one additional ADS for every 4 ADS’s (A) acquired by the Executive as a resultof the exercise of any Company Option during the period prior to suchtermination of

 

3

----

 

employment and (B) underlying each unexercised Company Option held bythe Executive immediately prior to such termination of employment.”

3.Section 6.3(c)(5) shall be deleted and replaced in its entirety toread as follows:

 

(5)          Any Person acquiresBeneficial Ownership of a greater percentage of the Voting Securities of theCompany than the percentage of such Voting Securities then held, directly orindirectly, by Parent.

 

4.               A new Section6.3(d) shall be added to read as follows:

 

“6.3 (d)  Notwithstanding the foregoing clauses (a),(b), and (c), a Change in Control shall not be deemed to occur solely becauseany Person (the “Subject Person”) acquired Beneficial Ownership of more thanthe permitted amount of the outstanding Voting Securities as a result of theacquisition of Voting Securities by Parent which, by reducing the number ofVoting Securities outstanding, increases the proportional number of sharesBeneficially Owned by the Subject Person, provided that if a Change in Controlwould occur (but for the operation of this sentence) as a result of the acquisitionof Voting Securities by Parent, and after such share acquisition by Parent, theSubject Person or entity becomes the Beneficial Owner of any additional VotingSecurities which increases the percentage of the then outstanding VotingSecurities Beneficially Owned by the Subject Person, then a Change in Controlshall occur.”

 

5.  Section 6.3(d) of the existing Agreementshall be renumbered as Section 6.3(e) to read as follows:

 

“6.3(e) Notwithstanding anything contained in this Agreement to the contrary, ifthe Executive’s employment is terminated during the term of this Agreement andthe Executive reasonably demonstrates that such termination (i) was at therequest of a third party who has indicated an intention or taken stepsreasonably calculated to effect a Change in Control and who effectuates aChange in Control (a “Third Party”) or (ii) otherwise occurred in connectionwith, or in anticipation of, a Change in Control which actually occurs, thenfor all purposes of this Agreement, the date of a Change in Control withrespect to the Executive shall mean the date immediately prior to the date ofsuch termination of the Executive’s employment.”

 
|   | /s/ John R. McCall    |
|--------|-----------------------|
|   | John R. McCall        |
|   |                  |
|   | 12/11/00              |
|   | Date                  |
|   |                  |
|   | LG&E Energy Corp. |
|   |                  |
|   | By:                   |   |
|   |                  |
|   | Powergen,plc          |
|   |                  |
|   | By:                   |   |

 

4

----