Exhibit 10.65


 


LG&E ENERGY CORP. LONG-TERM PERFORMANCE UNIT
PLAN


 


Effective
January 1, 2003


 


ARTICLE 1.  ESTABLISHMENT, PURPOSE, AND DURATION


 


1.1.         Establishment of the Plan.


 


LG&E Energy Corp, (hereinafter referred to as the “Company”)
establishes as of the date set forth above the “LG&E Energy Corp. Long-Term
Performance Unit Plan” (hereinafter referred to as the “Plan”), which permits
the grant of Performance Units, as hereinafter defined, to employees of
LG&E Energy Corp. and its Subsidiaries. The Plan was approved by the Board
of Directors of the Company in a consent resolution dated April 25, 2003.


 


1.2.         Purpose of the Plan.


 


The purpose of the Plan is to promote the success of the Company and
its Subsidiaries by providing incentives to Key Employees that will link their
personal interests to the long-term financial success of the Company and
its Subsidiaries and to growth in Parent shareholder value.  The Plan is designed to provide flexibility
to the Company and its Subsidiaries in their ability to motivate, attract, and
retain the services of Key Employees upon whose judgment, interest, and special
effort the successful conduct of their operations is largely dependent.  Grants under the Plan may be made in conjunction
with grants of phantom options under the E.ON Phantom Option Plan in the case
of certain Key Employees.


 


1.3.         Duration of the Plan.


 


The Plan is effective as of January 1, 2003.  The Plan shall remain in effect, subject to the right of the
Board of Directors to terminate the Plan at any time pursuant to Article 9
herein.


 


ARTICLE 2.  DEFINITIONS AND CONSTRUCTION


 


2.1.         Definitions.


 


Whenever used in the Plan, the following terms shall have the meanings
set forth below and, when the meaning is intended, the initial letter of the
word is capitalized:


 


(a)                                  “Award”
means a grant under this Plan of Performance Units.


 

















 


(b)                                 “Beneficial
Ownership” shall have the meaning ascribed to such term in Rule 13d-3 of
the General Rules and Regulations under the Exchange Act.


 


(c)                                  “Board”
or “Board of Directors” means the Board of Directors of the Company.


 


(d)                                 “Cause”
shall mean the occurrence of any one of the following:


 


(i)                                     The
willful and continued failure by a Participant to substantially perform his/her
duties (other than any such failure resulting from the Participant’s
disability), after a written demand for substantial performance is delivered to
the Participant that specifically identifies the manner in which the Company or
any of its Subsidiaries, as the case may be, believes that the Participant has
not substantially performed his/her duties, and the Participant has failed to
remedy the situation within ten (10) business days of receiving such notice; or


 


(ii)                                  the
Participant’s conviction for committing a felony in connection with the
employment relationship; or


 


(iii)                               the
willful engaging by the Participant in gross misconduct materially and
demonstrably injurious to the Company or any of its Subsidiaries. However, no
act, or failure to act, on the Participant’s part shall be considered “willful”
unless done, or omitted to be done, by the Participant not in good faith and
without reasonable belief that his/her action or omission was in the best
interest of the Company or any of its Subsidiaries.


 


(e)                                  “Change
in Control” shall be deemed to have occurred if the conditions set forth in any
one of the following paragraphs shall have been satisfied:


 


(i)                                     Parent is notified by a third party that it
has acquired 25 percent or more of the voting rights of Parent in accordance
with § 21 of the German Securities Trading Act (WpHG), or


 


(ii)                                  a third party on its own or together with
voting rights attributable to him in accordance with § 22 German Securities
Trading Act (WpHG) has acquired a share in voting rights which, at Parent’s
Annual Shareholders’ Meeting, would represent or which, at Parent’s last Annual
Shareholders’ Meeting, would have represented the majority of the voting rights
present at such a Meeting, or


 

















 


(iii)                               an affiliation agreement is concluded with
Parent as controlled company in accordance with §§ 291 ff. of the German Stock
Corporation Act (AktG), or


 


(iv)                              Parent is being integrated in accordance with
§§ 319 ff. of the German Stock Corporation Act (AktG), or


 


(v)                                 Parent changes its legal status in accordance
with §§ 190 ff. of the German Conversion Law (UmwG), or


 


(vi)                              Parent is being merged with another legal
entity, provided that the enterprise value of such legal entity is more than 20
percent of the enterprise value of Parent at the time of adopting the
resolution by Parent.  The methods of
valuation acknowledged by the professional association of qualified auditors
(Stellungnahme des Hauptfachausschusses des Instituts der Wirtschaftsprüfer HF
2/1983 = Grundsätze zur Durchführung von Untemehmensbewertungen sowie die
neueren Verlautbarungen des Berufsstandes) shall be used to determine the value
of both entities, to the extent that both enterprise values will be determined
according to said methods in connection with the merger.  Otherwise, the market capitalization of both
legal entities at the time the resolution is adopted by Parent will be deemed
as their respective enterprise values. 
If a market capitalization cannot be determined, the enterprise values
agreed upon by both legal entities will be deemed as their respective values.


 


(vii)                           Company ceases to be an affiliated company of
Parent as defined in § 15 of the German Stock Corporation Act or where the
following apply:


 


(a)                                  A complete liquidation or dissolution of the
Company unless, the Parent continues to own directly or indirectly all or
substantially all of the Company’s assets;


 


(b)                                 An agreement for the sale or other
disposition of all or substantially all of the assets of the Company to any
person or entity (other than a subsidiary of the Parent);


 


(c)                                  A merger or other combination involving the
Company as a result of which Parent ceases to beneficially own more that 50% of
the outstanding Voting Stock, of the successor to the Company, unless the
Parent or its subsidiary continues to own directly or indirectly all or substantially
all of the Company’s assets; or


 

















 


(d)                                 Any person or entity acquires Beneficial
Ownership of a greater percentage of the Voting Stock of the Company than the
percentage or such Voting Stock then held, directly or indirectly by Parent.


 


(f)                                    “Committee”
means the Senior Vice President, Group Corporate Officer Resources -of the
Parent and any other person, if any, designated by the Chairman and Chief
Executive Officer of the Parent to administer the Plan pursuant to Article 3
herein.


 


(g)                                 “Company”
means LG&E Energy Corp., a Kentucky corporation, or any successor thereto
as provided in Article 11 herein.


 


(h)                                 
“Exchange Act” means the Securities Exchange Act of 1934, as amended from time
to time.


 


(i)                                     “Key
Employee” means (i) an employee of the Company or any of its Subsidiaries,
including an employee who is an officer or a director of the Company or any of
its Subsidiaries, who, in the opinion of the Committee, can contribute
significantly to the growth and profitability of the Company and its Subsidiaries,
(ii) may include employees who are members of the Board who are employees, or
(iii) any other employee, identified by the Committee, in special situations
involving extraordinary performance, promotion, retention, or recruitment.  The granting of an Award under this Plan
shall be deemed a determination by the Committee that such employee is a Key
Employee, but shall not create a right to remain a Key Employee.


 


(j)                                     “Parent”
means E.ON AG, an anktiengesellschaft formed under the Federal Republic of
Germany, or any successor thereto as provided in Article 11 herein.


 


(k)                                  “Participant”
means a Key Employee who has been granted an Award under the Plan.


 


(l)                                     “Performance
Unit” means an Award, designated as a performance unit, granted to a
Participant pursuant to Article 5 herein.


 


(m)                               “Person”
shall have the meaning ascribed to such term in Section 3(a) (9) of the
Exchange Act and used in Sections 13(d) and 14(d) thereof, including a “group”
as defined in Section 13(d) thereof.


 


(n)                                 “Plan”
means this LG&E Energy Corp. Long-Term Performance Unit Plan, as
herein described and as hereafter from time to time amended.


 


(o)                                 “Subsidiary”
shall mean any corporation of which more than 50% (by number of votes) of the
Voting Stock at the time outstanding is owned, directly or indirectly, 


 

















 


by the Company.


 


(p)                                 “Voting
Stock” shall mean securities of any class or classes of stock of a corporation,
the holders of which are ordinarily, in the absence of contingencies, entitled
to elect a majority of the corporate directors.


 


2.2.         Gender and Number.


 


Except where otherwise indicated by the context, any masculine term
used herein also shall include the feminine, the plural shall include the
singular, and the singular shall include the plural.


 


2.3.         Severability.


 


In the event any provision of the Plan shall be held illegal or invalid
for any reason, the illegality or invalidity shall not affect the remaining
parts of the Plan, and the Plan shall be construed and enforced as if the
illegal or invalid provision had not been included.


 


 


ARTICLE 3.  ADMINISTRATION


 


3.1.         The Committee.


 


The Plan shall be administered by the Committee as permitted by law and
Article 3.5.


 


3.2.         Authority of the Committee.


 


Subject to the provisions of the Plan, the Committee shall have full
power to construe and interpret the Plan; to establish, amend or waive rules
and regulations for its administration; to accelerate the end of a performance
period or the termination of any award agreement; and (subject to the
provisions of Article 9 herein) to amend the terms and conditions of any
outstanding Award to the extent such terms and conditions are within the
discretion of the Committee as provided in the Plan. The Committee shall not
have authority to resolve disputed claims under the Plan.


 


3.3.         Selection of Participants.


 


The Committee shall have the authority to grant Awards under the Plan,
from time to time, to such Key Employees (including officers and directors who
are employees) as may be selected by it. 
The Committee shall select Participants from among those whom they have
identified as being Key Employees.


 


3.4.         Decisions and Appeals.


 


All determinations and decisions made by Committee pursuant to the
provisions of the Plan may be reviewed by the Chairman and Chief Executive
Officer of the Parent, upon


 

















 


the written request of either the Committee or a Participant.  Any determination made by the Chairman and
Chief Executive Officer of the Parent, pursuant to this section shall be final,
conclusive and binding on all persons, including the Company and its
Subsidiaries, its shareholders, employees, and Participants and their estates
and beneficiaries, and such determinations and decisions shall not be subject
to review.


 


3.5.         Delegation of Certain
Responsibilities.


 


The Committee may delegate to an appropriate party any of its
responsibilities under the Plan.


 


3.6.         Procedures of the Committee.


 


To the extent the Committee is comprised of more than one member, all
determinations of the Committee or any delegates shall be made by not less than
a majority of members present at any meeting (in person or otherwise) at which
a quorum is present.  A majority of the
entire Committee or the number of delegates at a given time shall constitute a
quorum for the transaction of business. 
Any action required or permitted to be taken at a meeting of the
Committee or the delegates may be taken without a meeting if a unanimous
written consent, which sets forth the action, is signed by each member of the
Committee and filed with the minutes for proceedings of the Committee or
delegates.


 


3.7.         Award Agreements.


 


Each Award under the Plan shall be evidenced by an award agreement
which shall be signed by an authorized officer of the Company and by the
Participant, and shall contain such terms and conditions as may be approved by
the Committee.  Such terms and
conditions need not be the same in all cases.


 


ARTICLE 4.  ELIGIBILITY AND PARTICIPATION


 


4.1.         Eligibility.


 


Persons eligible to participate in this Plan include all employees of
the Company and its Subsidiaries who, in the opinion of the Committee, are Key
Employees.


 


4.2.         Actual Participation.


 


Subject to the provisions of the Plan, the Committee may from time to
time select those Key Employees to whom Awards shall be granted and determine
the nature and amount of each Award.  No
employee shall have any right to be granted an Award under this Plan even if
previously granted an Award.


 

















 


ARTICLE 5.  PERFORMANCE UNITS


 


5.1.         Grant of Performance Units.


 


Subject to the terms and provisions of the Plan, Performance Units may
be granted to Participants at any time and from time to time as shall be
determined by the Committee or any delegate who shall have complete discretion
in determining the number of Performance Units granted to each Key Employee.


 


5.2.         Value of Performance Units .


 


The Committee shall set performance goals over certain periods to be
determined in advance by the Committee (“Performance Periods”).  The initial value for each Performance Unit
shall be one dollar.  With regard to
each grant of Performance Units, the Committee in consultation with the Senior
Vice President Controlling of the Parent shall set the performance goals that
will be used to determine the extent to which the Participant receives a
payment of the value of the Performance Units awarded for such Performance
Period.  These goals will be based on
the attainment, by the Parent, Company, or its Subsidiaries, of certain
objective performance measures.  With
respect to each such performance measure utilized during a Performance Period,
the Committee shall assign percentages to various levels of performance which
shall be applied to determine the extent to which the Participant shall receive
a payout of the value of Performance Units.


 


5.3.         Payment of Performance Units.


 


After a Performance Period has ended, the holder of a Performance Unit
shall be entitled to receive the value thereof as determined by the
Committee.  The Committee shall make
this determination by first determining the extent to which the performance
goals set pursuant to Section 5.2 have been met.  It will then determine the applicable percentage (which may be
greater or lesser than 100%) to be applied to, and will apply such percentage
to, the value of Performance Units to determine the payout to be received by
the Participant.  In addition, with
respect to Performance Units granted to any Key Employee, no payout shall be
made hereunder except upon written certification by the Committee that the
applicable performance goal or goals have been satisfied to a particular
extent.


 


5.4.         Discretion to Adjust Awards.


 


The Committee shall have the authority to modify, amend, or adjust the
terms and conditions of any Performance Unit award, at any time or from time to
time, including but not limited to the performance goals.


 

















 


5.5.         Form and Timing of Payment.


 


The payment described in Section 5.3 herein shall be made in a cash
lump sum as soon as administratively practical upon the determination by the
Committee provided for in Section 5.3, unless the Participant has previously
elected to defer such payment in a manner prescribed by the Committee.  If any payment is permitted by the Committee
to be made on a deferred basis, the Committee may provide for earnings to be
credited on such amount in a manner they determine.


 


5.6.         Termination of Employment Due to
Death, Disability, or Retirement.


 


In the case of death, disability, or retirement (each of disability and
retirement as defined under the established rules of the Company or any of its
Subsidiaries, as the case may be), the holder of a Performance Unit shall
receive a prorated payment based on the Participant’s number of full months of
service during the Performance Period, further adjusted based on the
achievement of the performance goals during the entire Performance Period, as
computed by the Committee.  Payment
shall be made at the time payments are made to Participants who did not
terminate service during the Performance Period.


 


5.7.         Termination of Employment for Other
Reasons.


 


In the event that a Participant terminates employment with the Company
or any of its Subsidiaries for any reason other than death, disability, or
retirement, prior to the end of the Performance Period all Performance Units
shall be forfeited; provided however, in the case of any termination not for
Cause, the Committee in its sole discretion may waive the automatic forfeiture
provisions and make a prorated payment to the holder of a Performance
Unit.  Payment made pursuant to this
Section shall be made at the time payments are made to Participants who did not
terminate service during the Performance Period.  In the event of a Participant’s termination of employment
pursuant to this Section after completion of the respective Performance Period
of a Performance Unit, but prior to payment pursuant to Section 5.5, the
Participant shall be entitled to payment without proration.


 


5.8.         Nontransferability.


 


No Performance Units granted under the Plan may be sold, transferred,
pledged, assigned, or otherwise alienated or hypothecated, other than by will
or by the laws of descent and distribution until the termination of the
applicable performance period.  All
rights with respect to Performance Units granted to a Participant under the
Plan shall be exercisable during his lifetime only by such Participant.


 

















 


ARTICLE 6.  BENEFICIARY DESIGNATION


 


Each Participant under the Plan may, from time to time, name any
beneficiary or beneficiaries (who may be named contingently or successively and
who may include a trustee under a will or living trust) to whom any benefit
under the Plan is to be paid in case of his death before he receives any or all
of such benefit.  Each designation will
revoke all prior designations by the same Participant, shall be in a form
prescribed by the Committee, and will be effective only when filed by the
Participant in writing with the Committee during his lifetime.  In the absence of any such designation or if
all designated beneficiaries predecease the Participant, benefits remaining
unpaid at the Participant’s death shall be paid to the Participant’s estate.


 


ARTICLE 7.  RIGHTS OF EMPLOYEES


 


7.1.         Employment.


 


Nothing in the Plan shall interfere with or limit in any way the right
of the Company or any of its Subsidiaries to terminate any Participant’s
employment at any time, nor confer upon any Participant any right to continue
in the employ of the Company or any of its Subsidiaries.


 


7.2.         Participation.


 


No employee shall have a right to be selected as a Participant, or,
having been so selected, to be selected again as a Participant.


 


7.3.         No Implied Rights; Rights on
Termination of Service.


 


Neither the establishment of the Plan nor any amendment thereof shall
be construed as giving any Participant, beneficiary, or any other person any
legal or equitable right unless such right shall be specifically provided for
in the Plan or conferred by specific action of the Committee in accordance with
the terms and provisions of the Plan. 
Except as expressly provided in this Plan, neither the Company nor any
of its Subsidiaries shall be required or be liable to make any payment under
the Plan.


 


7.4.         No Right to Company Assets.


 


Neither the Participant nor any other person shall acquire, by reason
of the Plan, any right in or title to any assets, funds or property of the
Parent, Company or any of its Subsidiaries whatsoever including, without
limiting the generality of the foregoing, any specific funds, assets, or other
property which the Parent, Company or any of its Subsidiaries, in its sole
discretion, may set aside in anticipation of a liability hereunder.  Any benefits which become payable hereunder
shall be paid from the general assets of the Parent, Company or the applicable
subsidiary.  The Participant shall have
only a contractual right to the amounts, if any, payable hereunder unsecured by
any asset of the Company or any of its Subsidiaries.  Nothing contained in the Plan constitutes a guarantee by the
Company or any of its Subsidiaries that the assets of the Company or the
applicable subsidiary shall be sufficient to pay any benefit to any person.


 

















 


ARTICLE 8.  CHANGE IN CONTROL


 


Notwithstanding any other provisions of the Plan, in the event of a
Change in Control, all Performance Unit awards granted under this Plan shall be
immediately paid out in cash.  The
amount of the payout shall be based on the higher of:


 


(i)            the extent, as determined
by the Committee, to which performance goals, established for the Performance
Period then in progress have been met up through and including the effective
date of the Change in Control or


 


(ii)           100% of the value on the
date of grant of the Performance Units.


 


ARTICLE 9.  AMENDMENT, MODIFICATION, AND
TERMINATION


 


9.1.         Amendment, Modification, and
Termination.


 


At any time and from time to time, the Board, upon recommendation by
the Committee, may terminate, amend, or modify the Plan.


 


9.2.         Awards Previously Granted.


 


No termination, amendment, or modification of the Plan shall in any
manner adversely affect any Award theretofore granted under the Plan, without
the written consent of the Participant.


 


ARTICLE 10.  TAX WITHHOLDING


 


The Company and any of its Subsidiaries shall have the power and the
right to deduct or withhold, or require a Participant to remit to the Company
or any of its Subsidiaries, an amount sufficient to satisfy taxes (including
the Participant’s FICA obligation) required by law to be withheld with respect
to any grant, exercise, or payment made under or as a result of this Plan.


 


ARTICLE 11.  PARENT AND SUCCESSORS


 


All obligations of the Company under the Plan, with respect to Awards
granted hereunder, shall be binding on the Parent and any successor to the
Company, whether the existence of such successor is the result of a direct or
indirect purchase, merger, consolidation or otherwise, of all or substantially
all of the business and/or assets of the Company.


 


ARTICLE 12.  REQUIREMENTS AND GOVERNING LAW


 


12.1.       Requirements of Law.


 


The granting of Awards under this Plan shall be subject to all
applicable laws, rules, and regulations, and to such approvals by any
governmental agencies or national securities exchanges as may be required.


 


12.2.       Governing Law.


 


The Plan, and all agreements hereunder, shall be construed in
accordance with and governed by the laws of the Commonwealth of Kentucky.