**Exhibit 10.75**

 

 

 

 

**RETENTION AND SEVERANCE AGREEMENT**

**AMONG**

**LG&E ENERGY CORP.**

**E.ON AG**

**AND**

 

 

 

 

# [April/May 2002 ]

 

 

 

 

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# **TABLE OF CONTENTS**

 
| ***Section***                                      |   |
|----------------------------------------------------|--------|
|                                               |   |
| 1.  Effectiveness, Effect on Prior Agreements |   |
|                                               |   |
| 2.  Term                                      |   |
| 2.1 Termination  for Cause                         |   |
| 2.2 Death or  Disability                           |   |
| 2.3 Other  Termination                             |   |
|                                               |   |
| 3.  Retention Bonus                           |   |
|                                               |   |
| 4.  Payment Upon  Termination of Employment   |   |
| 4.1 Accrued Compensation  Payment                  |   |
| 4.2 Severance  Payment                             |   |
| 4.3 Timing of  Payments                            |   |
|                                               |   |
| 5.  Tax Withholding and  Tax Payments         |   |
|                                               |   |
| 6.  Notices                                   |   |
|                                               |   |
| 7.  Governing Law                             |   |
|                                               |   |
| 8.  Entire Agreement                          |   |
|                                               |   |
| 9.  Amendment                                 |   |
|                                               |   |
| 10  Assignment                                |   |
|                                               |   |
| 11.Binding Effect                                  |   |
|                                               |   |
| 12.Headings; Section References                    |   |
|                                               |   |
| 13.Construction                                    |   |
|                                               |   |
| 14.Survival                                        |   |
|                                               |   |
| 15.Acceptance                                      |   |

 

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**GLOSSARY OF DEFINED TERMS**

 
| ***Defined Term*** |   | ***Section*** |
|--------------------|--------|---------------|
|               |   |          |
| Acquisition Date   |   | Recitals      |
| Agreement          |   | Preamble      |
| Base Amount        |   | 3             |
| Bonus Amount       |   | 3             |
| Cause              |   | 2.1           |
| CIC Agreement      |   | Recitals      |
| Company            |   | Preamble      |
| Corporation        |   | Recitals      |
| Disabled           |   | 2.2           |
| Employer           |   | 1             |
| Executive          |   | Preamble      |
| Good Reason        |   | 2.3(b)        |
| Letter Agreement   |   | Recitals      |
| Parent             |   | Preamble      |
| Prior Agreements   |   | 1             |
| Retention Payment  |   | 3             |
| Term               |   | 2             |
|               |   |          |

III

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#### **RETENTION ANDSEVERANCE AGREEMENT**

 

 

**This Retention and Severance Agreement** (“Agreement”) is made and entered intoas of the       day of [ April/May], 2002 by and among (i) **LG&E Energy Corp.**,a Kentucky corporation (“Company”), (ii) **E.ON AG,**anaktiengesellschaft formed under the Federal Republic of Germany (“Parent”), and(“Executive”).

 

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**Recitals****:**

 

        **A.  WHEREAS**,the Parent and Powergen, plc, a United Kingdom public limited company(“Corporation”), have agreed to the terms of a recommended pre-conditional cashoffer, whereby Parent or its subsidiary will acquire ownership of theCorporation;

 

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

 

        **C.**  **WHEREAS**,the Company and the Executive previously entered into a Change in ControlAgreement dated February 6, 2001, (“CIC Agreement”);

 

        **D.**  **WHEREAS**,the Company and the Executive previously entered into a letter agreement datedNovember 29, 2000, which provided for certain retention and severance payments(“Letter Agreement”);

 

**        E.**  **WHEREAS**,the Parent, and the Company have determined that it is in their best intereststo retain the services of the Executive following the Acquisition Date; and

 

**        F.**  **WHEREAS**,the Parent, the Company and the Executive desire to provide for certainadditional severance and retention payments upon the occurrence of certainevents.

 

**Agreement****:**

 

        **Now, Therefore**,the parties hereby agree as follows:

 

1.     **  Effectiveness, Effect on Prior Agreements**.  This Agreement shall become effective at the Acquisition Date,provided that on such date, the Executive is employed by the Company, theParent, the Corporation, or any subsidiary of the Company, the Parent or theCorporation, hereinafter collectively referred to as “Employer”.  The CIC and the Letter Agreement,collectively referred to as the “Prior Agreements”, shall continue in fullforce and effect in accordance the terms contained therein. Nothing containedin this Agreement shall amend or modify the terms of the Prior Agreements.  Further, nothing contained in this Agreementshall constitute a failure or breach of an Employer under the Prior Agreements,or give rise to a condition that would constitute “Good Reason” under Section2.6 of the CIC Agreement, as defined therein.

 

 

 

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2.   **Term**.  Theterm of this Agreement shall commence on the Acquisition Date, and shallcontinue in effect, except as otherwise provided herein, until the fourthanniversary of the Acquisition Date; provided, however, that commencing on thefourth anniversary of the Acquisition Date, and on each anniversary of theAcquisition Date thereafter, the term of this Agreement shall automatically beextended for one year unless the Employer has given written notice to theExecutive at least ninety days prior thereto that the term of this Agreementshall not be so extended (“Term”).  Inaddition to the foregoing termination by notice not to extend this Agreement,the Term shall cease, in the event of:

 

2.1   ***  Termination for Cause***.  By a vote of a seventy-five percent of the Board of Directors ofthe Company(“Board”), the Executive’s employment by an Employer may be  terminated for Cause (as hereinafterdefined).  For purposes of this Agree­ment,the term “Cause” shall mean:

 

(a)  The repeated grossnegligence by the Executive in performing the reasonably assigned duties onbehalf of an Employer required by and in accordance with his employment by suchEmployer.

 

(b)*** ***The commission by theExecutive of a felony in the course of performing his duties on behalf of anEmployer required by and in accordance with his employment by such Employer.

 

2.2     *** Death or Disability***.  If the  Executive dies orbecomes Disabled (as hereinafter defined), the Term shall cease.  For purposes of this Agreement, the Executiveshall be considered “Disabled” if he is so considered under a disabilityinsurance policy maintained by the Employer, if any, or, if no such disabilityinsurance policy is in effect, on the date that the Board determines, in itsreasonable discre­tion, but based upon competent medical advice, that theExecutive is, or will be, unable by reason of illness or accident to performhis duties hereunder for a continuous period of 180 days, or for a period ofmore than 180 days in any 270-day period.

 

2.3   ***Other Termination***

 

    ***(a) Employer. ***TheExecutive acknowledges that no representations or promises have been madeconcerning the grounds for termination or the future of the Employer’sbusiness, and that nothing contained herein or otherwise stated by or on behalfof the Employer modifies or amends the right of the Employer to terminateExecutive at any time, with or without Cause.

 

    ***(b) Executive.*** The Executive may terminate employment for any reason by givingthe Employer, not less than 14 days but not more than 90 days prior written notice of such termination. Terminationby the Executive shall be for “Good Reason” if:  (i) the Executive’s base salary, annual target bonus percentage,or long term target bonus percentage is reduced by an Employer, or (ii) priorto the fourth anniversary of the Acquisition Date an Employer relocates theExecutive’s present place of employment in excess of one hundred miles.

 

3.  **Retention Bonus**  If theExecutive is employed on the day following the second anniversary of theAcquisition Date by an Employer, the Employer shall pay to the Executive a lumpsum cash payment “Retention Payment” in an amount equal to the Executive’s BaseAmount (as hereinafter defined) and Bonus Amount (as hereinafter defined).  For purposes of 

 

 

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this Agreement,“Base Amount” shall mean the Executive’s annual base salary from an Employer ineffect at the time of payment, including all amounts of annual base salary thatare deferred under any qualified or non-qualified employee benefit plan of anEmployer; provided, however, if an Employer has reduced the Executive’s annualbase salary, the Base Amount shall be the annual base salary in effect prior tothe reduction.  For purposes of thisAgreement, “Bonus Amount” shall mean the target annual bonus of the Executiveunder the annual incentive plan of the Employer at the time of payment;provided however, that if an Employer has reduced the target annual bonus ofthe Executive, the Bonus Amount shall be the target annual bonus in effectprior to the reduction.  If on or priorto the second anniversary of the Acquisition Date, the Executive’s employmentwith the Employer is terminated (i) by the Employer for other than Cause, deathor Disability or (ii) by the Executive for Good Reason, the Employer shall payto the Executive the Retention Payment within 10 business days of thetermination date; provided however, that if an Accounting Firm (as defined inthe CIC Agreement) determines pursuant to Section 6(b) of the CIC Agreement thatsuch Retention Payment creates or increases an Excise Tax (as defined in theCIC Agreement),  such Retention Paymentshall be reduced in whole or in part, to the extent necessary to reduce to zerothe Excise Tax resulting from the Retention Payment.  For purposes of the foregoing calculation of Excise Tax, if any,the Retention Payment shall be deemed to be the last item taken intoconsideration.

 

4.**   Payment Upon Termination of Employment**

 

4.1   ***Accrued Compensation Paymen******t****.*****  If the Executive’s employment is terminatedfor any reason by the Employer or by the Executive, the Executive shall beentitled to receive any earned but unpaid base salary as of the date oftermination, together with any earned, but unpaid (i) vacation and (ii) annualbonus for the prior performance year, as determined pursuant to the terms ofthe plan.

 

4.2  *** Severance Payment****.*****  In addition to the payment provided inSection 4.1, if the Executive’s employment is terminated after the secondanniversary of the Acquisition Date (i) by the Employer for other than Cause,death or Disability, or (ii) by the Executive for Good Reason, the Executiveshall be entitled to receive a lump sum cash payment in an amount equal to theExecutive’s Base Amount and Bonus Amount. Notwithstanding the foregoing, if the Executive becomes entitled to apayment of severance benefits pursuant to Section 3.1 of the CIC Agreement, nobenefit shall be payable pursuant to this Section 4.2.

 

4.3  *** Timing of Payments***.  All of the amounts provided for above shallbe paid to the Executive (or his successor-in-interest in the event of hisdeath) no later than 10 days following his termination of employment.

 

5.     ** TaxWithholding and Tax Payments**. Executive acknowledges that amounts paid or deferred pursuant to thisAgreement may be subject to federal, state and local tax payments andwithholdings.  All amounts paid to theExecutive shall be net of such withholding. In the case of amounts deferred pursuant to this Agreement, Executivehereby agrees to timely provide the Company with sufficient funds to enable itto meet its withholding and deposit obligations with respect to such taxes.

 

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6.     **Notices**.  Any notices required or permitted to be given under this Agreementshall be in writing and be personally delivered against a written receipt,delivered to a reputable messenger service (such as Federal Express, DHLCourier, United Parcel Service, etc.) for overnight delivery, transmitted byconfirmed telephonic transmission (fax) or transmitted by regis­tered,certified or express mail, return receipt requested, postage prepaid, addressedto the residence of the Executive as shown on the Employer’s records, or theprincipal place of business of the Employer­, respectively.  All notices shall be effective and shall bedeemed given upon being personally delivered against a written receipt, whendelivered to a reputable messenger service, upon transmission of a confirmedfax or upon being deposited in the United States mail in the manner provided inthis Section.

 

7.     **Governing Law**.  This Agreement shall be gov­erned by, andconstrued in accordance with, the laws of the Commonwealth of Kentucky withoutregard to its conflict of laws rules.

 

8.     **Entire Agreement**  This Agreement contains the entire agreementbetween the parties hereto with respect to the subject matter hereof.

 

9.       **Amendment**.  This Agreement maynot be amended orally, but only by an agreement in writing signed by the partyagainst whom enforce­ment of any waiver, change, modifi­cation, extension ordischarge is sought.

 

10.   **Assignment**.  The rights and obligations of the Executive under this Agreementare personal and may not be assigned or delegated.  The Employer may not assign their rights and obligations under thisAgreement, by operation of law or otherwise, without the prior written consentof the Executive.

 

11.   **Binding Effect**.  This Agreement shall be binding upon, inureto the benefit of, and be enforceable by, the parties hereto and theirrespective executors, administrators, heirs, successors and assigns.

 

12.   **Headings; Section References**.  The Section headings contained in this Agreement are forconvenience only and shall not be deemed a part of this Agreement in construingor inter­preting the provisions hereof. All Section references herein shall refer to Sections of this Agreementunless the context otherwise requires.

 

13.   **Construction**.  Each of theparties acknowledge that they and their respective counsel have negotiated anddrafted this Agreement jointly and that the rule of construction thatambiguities are to be resolved against the drafting party shall not apply inthe interpretation or construction of this Agreement.

 

14.   **Survival**.  The terms of Section 4 shall survive thetermination of this Agreement regardless of who terminates this Agreement orthe reasons therefor.

 

15.     **Acceptance of Agreement**.  The benefits contained in this Agreement are conditioned uponacceptance of this Agreement by the Executive. Executive shall indicate such acceptance of this Agreement by returningan executed copy to the Senior Vice President and Chief Administrative Officerof the Company by 5:00 p.m. on May 6, 2002. Failure by the Executive

 

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to accept the Agreementas provided in this Section 15 shall result in a loss of eligibility for thebenefits contained herein.

 

 

        **IN WITNESS WHEREOF**, the parties hereto haveexecuted this Agreement as of the day and year first above written.

 
|   | **LG&E Energy Corp.**          |
|--------|----------------------------------------------|
|   |                                         |
|   | By:   _________________________________ |
|   | Title: ________________________________      |
|   | (“Company”)                        |
|   |                                         |
|   |                                         |
|   | **E.ON AG**                   |
|   |                                         |
|   | By:   _________________________________ |
|   | Title: ________________________________      |
|   | (“Parent”)                         |
|   |                                         |
|   | _____________________________________        |
|   | (“Executive”)                      |

 

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