Exhibit 10.75


 


 


 


 


RETENTION AND SEVERANCE AGREEMENT


AMONG


LG&E ENERGY CORP.


E.ON AG


AND


 


 


 


 


[
April/May 2002 ]


 


 


 


 












 


 


 


 


 


 


 


 


 


 


 


 


 


 


 













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






















 











RETENTION AND
SEVERANCE AGREEMENT


 


 


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


 





















 


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 cash
offer, whereby Parent or its subsidiary will acquire ownership of the
Corporation;


 


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


 


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


 


        D.  
WHEREAS,
the Company and the Executive previously entered into a letter agreement dated
November 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 interests
to retain the services of the Executive following the Acquisition Date; and


 


        F.  
WHEREAS,
the Parent, the Company and the Executive desire to provide for certain
additional severance and retention payments upon the occurrence of certain
events.


 


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, the
Parent, the Corporation, or any subsidiary of the Company, the Parent or the
Corporation, hereinafter collectively referred to as “Employer”.  The CIC and the Letter Agreement,
collectively referred to as the “Prior Agreements”, shall continue in full
force and effect in accordance the terms contained therein. Nothing contained
in this Agreement shall amend or modify the terms of the Prior Agreements.  Further, nothing contained in this Agreement
shall constitute a failure or breach of an Employer under the Prior Agreements,
or give rise to a condition that would constitute “Good Reason” under Section
2.6 of the CIC Agreement, as defined therein.


 


 


 


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2.   Term.  The
term of this Agreement shall commence on the Acquisition Date, and shall
continue in effect, except as otherwise provided herein, until the fourth
anniversary of the Acquisition Date; provided, however, that commencing on the
fourth anniversary of the Acquisition Date, and on each anniversary of the
Acquisition Date thereafter, the term of this Agreement shall automatically be
extended for one year unless the Employer has given written notice to the
Executive at least ninety days prior thereto that the term of this Agreement
shall not be so extended (“Term”).  In
addition 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 of
the Company(“Board”), the Executive’s employment by an Employer may be  terminated for Cause (as hereinafter
defined).  For purposes of this Agree­ment,
the term “Cause” shall mean:


 


(a)  The repeated gross
negligence by the Executive in performing the reasonably assigned duties on
behalf of an Employer required by and in accordance with his employment by such
Employer.


 


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


 


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


 


2.3     Other Termination


 


    (a) Employer.  The
Executive acknowledges that no representations or promises have been made
concerning the grounds for termination or the future of the Employer’s
business, and that nothing contained herein or otherwise stated by or on behalf
of the Employer modifies or amends the right of the Employer to terminate
Executive at any time, with or without Cause.


 


    (b) Executive.  The Executive may terminate employment for any reason by giving
the Employer, not less than 14 days but not 
more than 90 days prior written notice of such termination. Termination
by 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) prior
to the fourth anniversary of the Acquisition Date an Employer relocates the
Executive’s present place of employment in excess of one hundred miles.


 


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


 


 


2

















 


this Agreement,
“Base Amount” shall mean the Executive’s annual base salary from an Employer in
effect at the time of payment, including all amounts of annual base salary that
are deferred under any qualified or non-qualified employee benefit plan of an
Employer; provided, however, if an Employer has reduced the Executive’s annual
base salary, the Base Amount shall be the annual base salary in effect prior to
the reduction.  For purposes of this
Agreement, “Bonus Amount” shall mean the target annual bonus of the Executive
under the annual incentive plan of the Employer at the time of payment;
provided however, that if an Employer has reduced the target annual bonus of
the Executive, the Bonus Amount shall be the target annual bonus in effect
prior to the reduction.  If on or prior
to the second anniversary of the Acquisition Date, the Executive’s employment
with the Employer is terminated (i) by the Employer for other than Cause, death
or Disability or (ii) by the Executive for Good Reason, the Employer shall pay
to the Executive the Retention Payment within 10 business days of the
termination date; provided however, that if an Accounting Firm (as defined in
the CIC Agreement) determines pursuant to Section 6(b) of the CIC Agreement that
such Retention Payment creates or increases an Excise Tax (as defined in the
CIC Agreement),  such Retention Payment
shall be reduced in whole or in part, to the extent necessary to reduce to zero
the 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 into
consideration.


 


4.   Payment Upon Termination of Employment


 


4.1   Accrued Compensation Payment.    If the Executive’s employment is terminated
for any reason by the Employer or by the Executive, the Executive shall be
entitled to receive any earned but unpaid base salary as of the date of
termination, together with any earned, but unpaid (i) vacation and (ii) annual
bonus for the prior performance year, as determined pursuant to the terms of
the plan.


 


4.2   Severance Payment.    In addition to the payment provided in
Section 4.1, if the Executive’s employment is terminated after the second
anniversary of the Acquisition Date (i) by the Employer for other than Cause,
death or Disability, or (ii) by the Executive for Good Reason, the Executive
shall be entitled to receive a lump sum cash payment in an amount equal to the
Executive’s Base Amount and Bonus Amount. 
Notwithstanding the foregoing, if the Executive becomes entitled to a
payment of severance benefits pursuant to Section 3.1 of the CIC Agreement, no
benefit shall be payable pursuant to this Section 4.2.


 


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


 


5.        Tax
Withholding and Tax Payments. 
Executive acknowledges that amounts paid or deferred pursuant to this
Agreement may be subject to federal, state and local tax payments and
withholdings.  All amounts paid to the
Executive shall be net of such withholding. 
In the case of amounts deferred pursuant to this Agreement, Executive
hereby agrees to timely provide the Company with sufficient funds to enable it
to 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 Agreement
shall be in writing and be personally delivered against a written receipt,
delivered to a reputable messenger service (such as Federal Express, DHL
Courier, United Parcel Service, etc.) for overnight delivery, transmitted by
confirmed telephonic transmission (fax) or transmitted by regis­tered,
certified or express mail, return receipt requested, postage prepaid, addressed
to the residence of the Executive as shown on the Employer’s records, or the
principal place of business of the Employer­, respectively.  All notices shall be effective and shall be
deemed given upon being personally delivered against a written receipt, when
delivered to a reputable messenger service, upon transmission of a confirmed
fax or upon being deposited in the United States mail in the manner provided in
this Section.


 


7.     Governing Law.  This Agreement shall be gov­erned by, and
construed in accordance with, the laws of the Commonwealth of Kentucky without
regard to its conflict of laws rules.


 


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


 


9.       Amendment.  This Agreement may
not be amended orally, but only by an agreement in writing signed by the party
against whom enforce­ment of any waiver, change, modifi­cation, extension or
discharge is sought.


 


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


 


11.   Binding Effect.  This Agreement shall be binding upon, inure
to the benefit of, and be enforceable by, the parties hereto and their
respective executors, administrators, heirs, successors and assigns.


 


12.     Headings; Section References.  The Section headings contained in this Agreement are for
convenience only and shall not be deemed a part of this Agreement in construing
or inter­preting the provisions hereof. 
All Section references herein shall refer to Sections of this Agreement
unless the context otherwise requires.


 


13.     Construction.  Each of the
parties acknowledge that they and their respective counsel have negotiated and
drafted this Agreement jointly and that the rule of construction that
ambiguities are to be resolved against the drafting party shall not apply in
the interpretation or construction of this Agreement.


 


14.     Survival.  The terms of Section 4 shall survive the
termination of this Agreement regardless of who terminates this Agreement or
the reasons therefor.


 


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


 


4

















 


to accept the Agreement
as provided in this Section 15 shall result in a loss of eligibility for the
benefits contained herein.


 


 


        IN WITNESS WHEREOF, the parties hereto have
executed 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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