EXHIBIT 10.M
KENTUCKY UTILITIES COMPANY
DIRECTOR DEFERRED COMPENSATION PLAN
(As Amended and Restated Effective As Of January 1, 1995)
ARTICLE I
Purpose
The Kentucky Utilities Company Director Deferred
Compensation Plan (the "Plan") was established, effective June 1,
1989, to provide eligible directors of Kentucky Utilities Company
with the opportunity to defer some or all of the compensation
which may be payable to them for services to be performed as
members of the Board of Directors of Kentucky Utilities Company.
The terms and conditions of the Plan, as amended and restated
effective as of January 1, 1995, are set forth below.
ARTICLE II
Definitions
The following words and phrases shall have the meanings
set forth below unless a different meaning is clearly required by
the context:
(a) Account: The account maintained
for each Participant showing his or her
interest under the Plan which shall be
divided into Subaccount I and Subaccount II
as provided in Section 4.1.
(b) Accounting Date: Each March 31,
June 30, September 30 and December 31 of each
calendar year. The first Accounting Date
under the Plan was June 30, 1989.
(c) Beneficiary: The person or persons
(natural or otherwise) designated, in
accordance with Section 5.4, to receive the
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distribution of a Participant's Account
balance in the event of the Participant's
death.
(d) Board: The Board of Directors of
the Company.
(e) Committee: The Compensation
Committee of the Board.
(f) Company: Kentucky Utilities
Company, a corporation organized and existing
under the laws of the Commonwealth of
Kentucky.
(g) Compensation: Any retainer and
meeting fees payable to the Director by the
Company for services rendered as a member of
the Board or any committee thereof.
(h) Director: Any member of the Board
on or after the Effective Date who is
separately compensated for his or her
services as a member of the Board.
(i) Effective Date: June 1, 1989.
(j) Fair Market Value: The closing
price of the Parent's Common Stock as
reported in the listing of the New York Stock
Exchange - Composite Transactions on a
specified date.
(k) Parent: KU Energy Corporation or
any successor thereto.
(l) Participant: A Director
participating in the Plan in accordance with
the provisions of Section 3.2, or a former
Director whose Account balance under the Plan
has not been paid in full.
(m) Plan: The Kentucky Utilities
Company Director Deferred Compensation Plan
set forth in this instrument, as it may be
amended from time to time.
(n) Service: An individual's service
on the Board and on the boards of the Parent
or any Subsidiary.
(o) Subsidiary: An entity in which the
Company or the Parent directly or indirectly
beneficially owns 50% or more of the voting
securities.
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ARTICLE III
Eligibility and Participation
3.1 Eligibility: Each member of the Board who was a
Director on the Effective Date was eligible to participate in the
Plan as of the Effective Date. Each other Director shall be
eligible to participate in the Plan as of the first day of the
month next following the date he or she becomes a Director.
3.2 Participation: A Director may elect to
participate in the Plan effective as of the date the Director
first becomes eligible to participate as provided in Section 3.1,
or effective as of the January 1st of any calendar year beginning
after such date, by filing written notice of such election with
the Company prior to the effective date of such election. Such
notice shall be accompanied by (i) an election to defer
Compensation as provided in Section 3.4, (ii) an election with
respect to Account adjustments as provided in Section 4.3, and
(iii) an election as to the method of payment as provided in
Section 5.1. Upon filing such election notice, the Director
shall become a Participant in the Plan effective as of the date
elected as permitted in this Section 3.2.
3.3 Crediting of Compensation: Commencing on the
effective date of a Participant's participation in the Plan and
continuing during the period that Compensation is to be credited
to the Participant's Account under the Plan, the Company shall
defer payment of and credit to the Participant's Account all or
such portion, as elected by the Participant under Section 3.4, of
the Compensation that the Participant would have received for
services rendered by the Participant during such period as a
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member of the Board but for his participation in the Plan, such
credits to be made as provided in Section 4.2(b).
3.4 Election to Defer: At the time a Director elects
to become a Participant, the Director shall elect to have from
10% to 100%, in specified multiples of 10%, of his or her
Compensation for services rendered subsequent to the date the
Director becomes a Participant deferred under the Plan and
credited to his or her Account as provided in Section 3.3. Such
election shall remain in effect until changed or terminated as
hereinafter provided.
A Participant may change his or her election under this
Section 3.4 effective as of the January 1st of any calendar year
with respect to Compensation for services to be rendered as a
Director on or subsequent to such January 1st, by giving the
Company written notice of such change prior to such January 1st.
Any change may (i) increase or decrease, within the limits
prescribed in the preceding paragraph, the portion of
Compensation to be deferred and credited to the Participant's
Account as provided in Section 3.3, (ii) terminate an election to
defer Compensation under this Section 3.4 or (iii) resume the
deferral of Compensation under the Plan within the limits
prescribed in the preceding paragraph. A change in the portion
of Compensation deferred or the termination of a Participant's
election to defer Compensation shall not entitle the Participant
to receive payment of his or her Account balance, which shall be
payable only as provided in Article V.
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Any election or change in election under this
Section 3.4 shall be made on a form provided or prescribed by the
Company.
ARTICLE IV
Participants' Accounts
4.1 Individual Accounts: A separate Account shall be
maintained by the Company on its books for each Participant.
Such Account shall be divided into subaccounts to specifically
identify the portion of the Account subject to adjustment under
Section 4.3(a) ("Subaccount I") and the portion of the Account
subject to adjustment under Section 4.3(b) ("Subaccount II"). As
of January 1, 1995, each Participant's Account shall be allocated
to Subaccount I unless the Participant has elected otherwise as
of such date as provided in Section 4.3.
4.2 Accounting Procedures: Each Participant's Account
shall be adjusted as of each Accounting Date as follows and in
the following order:
(a) The amount of any transfer to or
from Subaccount I or Subaccount II of the
Participant's Account, pursuant to a change
in election or deemed election under Section
4.3, made as of the first day of the calendar
quarter ending on such Accounting Date shall
be added to or subtracted from, as the case
may be, the applicable Subaccounts as of the
first day of such calendar quarter.
(b) Each Participant's Account shall
next be credited with the amount of
Compensation to be credited to his or her
Account as provided in Section 3.3 during the
calendar quarter ending on such Accounting
Date. Credits shall be made as of the last
business day of the respective calendar
months in which such Compensation would have
been paid to the Participant by the Company
but for his or her participation in the Plan
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and shall be allocated to Subaccount I or
Subaccount II in accordance with the
Participant's election or deemed election as
in effect as of the respective dates as of
which the credits are made.
(c) Each Participant's Account shall
next be charged as of such Accounting Date
with the amount of any distributions under
the Plan to the Participant or to his or her
Beneficiary effective as of or prior to such
Accounting Date.
(d) Subaccount I of each Participant's
Account shall next be credited with the
amount equivalent to interest, as determined
under Section 4.3(a), to be added to the
Participant's Account as of such Accounting
Date.
(e) Subaccount II of each Participant's
Account shall next be adjusted upwards or
downwards, as the case may be, in accordance
with Section 4.3(b), to reflect the Fair
Market Value of the hypothetical shares of
Parent Common Stock allocated to Subaccount
II of the Participant's Account as of such
Accounting Date.
4.3 Election With Respect to Subaccount Adjustments:
Subaccount I and Subaccount II of a Participant's Account are
subject to adjustment as provided in Section 4.2 as follows:
(a) Subaccount I Adjustments.
Subaccount I of a Participant's Account shall
be adjusted as of an applicable Accounting
Date by the addition of an amount equivalent
to interest. The interest equivalent to be
credited as of an Accounting Date shall be
equal to the interest that would be earned on
the average of the balances in Subaccount I
of the Participant's Account at the end of
each calendar month during the calendar
quarter ending on such Accounting Date, at a
rate per annum which equals the average prime
rate charged by banks as reported in the
Federal Reserve Bulletin published on or next
prior to such Accounting Date.
(b) Subaccount II Adjustments:
Subaccount II of a Participant's Account
shall be adjusted as of an applicable
Accounting Date occurring after December 31,
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1994 to equal the Fair Market Value as of
such Accounting Date (or, if the Accounting
Date is not a trading date, as of the trading
date next preceding such Accounting Date) of
the number of hypothetical shares of Parent
Common Stock allocated to Subaccount II of
the Participant's Account as of such
Accounting Date. The number of hypothetical
shares of Parent Common Stock allocated to
Subaccount II of a Participant's Account as
of any date shall be equal to the number of
shares of Parent Common Stock that would be
allocated to the Account as of such date if
(i) the Compensation credited to the
Participant's Account to be allocated to
Subaccount II was invested in the Parent's
Common Stock at Fair Market Value on the
trading day that is coincident with or next
preceding the last day of the calendar month
in which such Compensation would have been
paid to the Participant but for participation
in the Plan, (ii) any balance transferred
effective as of January 1, 1995 from
Subaccount I due to the one-time election
permitted under the following provisions of
this Section 4.3 was invested in the Parent's
Common Stock at the average Fair Market Value
on trading days during the month of December,
1994, (iii) cash dividends on the shares of
Parent Common Stock treated as allocated to
Subaccount II of the Participant's Account
were automatically reinvested in the Parent's
Common Stock at Fair Market Value on the
trading day that is coincident with or next
following the applicable dividend payment
date, and (iv) any transfers to Subaccount I
due to a change in election under Section 4.3
or any distributions from Subaccount II of
the Participant's Account were made at Fair
Market Value on the trading day that is
coincident with or next preceding the
effective date of such change of election or
distribution of the number of hypothetical
shares of Parent Common Stock needed to make
such transfer or distribution, which
hypothetical shares shall be subtracted from
the number of shares treated as allocated to
Subaccount II of the Participant's Account as
of the effective date of the transfer or
distribution.
At the time a Director elects to become a Participant
or as of January 1, 1995, if later, the Director shall elect to
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have the Compensation thereafter deferred under Section 3.4 and
credited to the Participant's Account allocated, in specified
multiples of 10%, to Subaccount I or Subaccount II. If a
Director who is a Participant as of December 31, 1994 fails to
make an election hereunder as of January 1, 1995, he shall be
deemed to have elected to have Compensation deferred on or after
January 1, 1995 allocated to Subaccount I. A Participant's
election or deemed election under this Section 4.3 shall remain
in effect until changed as hereinafter provided.
A Participant may change his or her election or deemed
election under this Section 4.3 effective as of the January 1st
of any calendar year beginning on or after January 1, 1995 by
giving the Company written notice of such change prior to such
January 1st. Any change shall direct that subsequent
Compensation credits under Section 3.3 be allocated, in specified
multiples of 10%, to Subaccount I or Subaccount II. Such change
shall be effective commencing with the January 1st elected and
shall remain in effect until further changed as provided herein.
In addition, a Director who is a Participant as of December 31,
1994 may make a one-time election to have the Balance (as
hereinafter defined) credited to the Participant's Account as of
December 31, 1994 transferred, in specified multiples of 10%, to
Subaccount II effective as of January 1, 1995. For purposes of
the preceding sentence, "Balance" shall mean the portion of the
amount credited to the Participant's Account as of December 31,
1994 attributable to Compensation deferred under the Plan
subsequent to April 30, 1992 plus the interest equivalent
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credited to the Account in respect of such Compensation since
April 30, 1992 through December 31, 1994.
Any election or change in election under this Section
4.3 shall be made on a form provided or prescribed by the
Company.
Notwithstanding the foregoing provisions of this
Section 4.3, if a Participant terminates his or her Service and
the balance credited to his or her Account is to be paid in
accordance with Payment Method II or Payment Method III as
provided in Section 5.1, any balance in Subaccount II of the
Participant's Account shall be transferred by a deemed election
to Subaccount I of the Participant's Account as of the day after
the Accounting Date that is coincident with or next following the
Participant's termination of Service.
ARTICLE V
Distribution of Benefits
5.1 Termination For Reasons Other Than Death: Within
15 days after the Accounting Date coincident with or next
following the date on which the Participant terminates his or her
Service for any reason other than death (but not earlier than
July 1, 1995 if a Participant made the one-time election
permitted under Section 4.3 to transfer all or part of his or her
Account to Subaccount II effective as of January 1, 1995) the
Company shall pay, or commence to pay, to the Participant in cash
the amount credited to his or her Account. Payment shall be made
in accordance with Payment Method I, Payment Method II or Payment
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Method III, below, as elected by the Director at the time the
Director elects to become a Participant:
(a) Payment Method I - By payment in a
lump sum of the amount credited to the
Participant's Account as of the Accounting
Date coincident with or next following the
date on which the Participant terminates his
or her Service.
(b) Payment Method II - By payment in
quarterly installments, the number of which
shall be the lesser of (i) 40 or (ii) the
aggregate number of full calendar quarters
during which compensation was credited to the
Participant's Account under the Plan and to
his or her account under any similar plan of
the Parent or a Subsidiary (but not counting
any such calendar quarter more than once).
The amount of each installment shall be equal
to the quotient obtained by dividing the
balance credited to Participant's Account as
of the Accounting Date coincident with or
next preceding the date of such installment
payment by the number of installment payments
remaining to be made to such Participant at
the time of such calculation.
(c) Payment Method III - By payment in
annual installments, the number of which
shall be the lesser of (i) 10 or (ii) the
aggregate number of full calendar years (but
not less than one) during which compensation
was credited to the Participant's Account
under the Plan and to his or her account
under any similar plan of the Parent or a
Subsidiary (but not counting any such
calendar year more than once). The amount of
each installment shall be equal to the
quotient obtained by dividing the balance
credited to Participant's Account as of the
Accounting Date coincident with or next
preceding the date of such installment
payment by the number of installment payments
remaining to be made to such Participant at
the time of such calculation.
An election under this Section 5.1 shall be made on a form
provided or prescribed by the Company and once made shall be
irrevocable.
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5.2 Death: Upon the death of a Participant, whether
before or after termination as a member of the Board, prior to
the complete distribution of the balance credited to his or her
Account, any undistributed amount credited to the Participant's
Account as of the Accounting Date coincident with or next
following the Participant's date of death shall be paid in cash
in a lump sum to the Participant's Beneficiary within 15 days
after such Accounting Date (but not earlier than July 1, 1995 if
a Participant made the one-time election permitted under Section
4.3 to transfer all or part of his or her Account to Subaccount
II effective as of January 1, 1995).
5.3 Hardship Distribution: With the written consent
of the Committee, a Participant may withdraw, as of an Accounting
Date prior to termination of Service, from the portion of his or
her Account credited to Subaccount I as of such Accounting Date a
cash amount not in excess of the balance credited to Subaccount I
of the Participant's Account as of such Accounting Date. The
Committee, in its sole discretion, may consent to such withdrawal
but only if the withdrawal is necessary, upon demonstration by or
on behalf of the Participant, because of a substantial financial
hardship of the Participant as a result of accident, illness or
disability. The Committee, in its sole discretion, shall
determine the amount of such a distribution that is needed to
meet the need created by the hardship. Any such distribution
shall be charged to the Participant's Account credited to
Subaccount I.
5.4 Beneficiary: As used in the Plan, the term
"Beneficiary" means:
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(a) The last person designated as
Beneficiary by the Participant in a written
notice on a form prescribed by and filed with
the Company;
(b) If there is no designated
Beneficiary or if the person so designated
shall not survive the Participant, such
Participant's spouse; or
(c) If no such designated Beneficiary
and no such spouse is living upon the death
of a Participant, or if all such persons die
prior to the full distribution of the
Participant's Account, then the legal
representative of the last survivor of the
Participant and such persons, or, if the
Company shall not receive notice of the
appointment of any such legal representative
within one year after such death, the
heirs-at-law of such survivor (in the
proportions in which they would inherit his
intestate personal property) shall be the
Beneficiaries to whom the then remaining
balance of the Participant's Account shall be
distributed.
Any Beneficiary designation may be changed from time to time by
like notice similarly delivered. No notice given under this
Section shall be effective unless and until the Company actually
receives such notice and enters it in its records.
ARTICLE VI
Financing of Benefits
The Plan shall be a nonqualified and unfunded plan.
Benefit payments under the Plan shall represent an unsecured
general obligation of the Company and shall be paid by the
Company from its general assets. No special fund or trust shall
be created or held for the financing of benefits under the Plan.
ARTICLE VII
Facility of Payment
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Whenever a person entitled to receive any payment under
the Plan is a person under legal disability or a person not
adjudicated incompetent but who, by reason of illness or mental
or physical disability, is in the opinion of the Committee unable
properly to manage his or her affairs, then such payments shall
be paid in such of the following ways as the Committee deems
best: (a) to such person directly; (b) to the legally appointed
guardian or conservator of such person; (c) to some relative or
friend of such person for his or her benefit; (d) for the benefit
of such person in such manner as the Committee considers
advisable. Any payment made in accordance with the provisions of
this Article shall be a complete discharge of any liability for
the making of such payment under the Plan, and the distributee's
receipt shall be a sufficient discharge to the Company.
ARTICLE VIII
Administration
The Plan shall be administered by the Compensation
Committee of the Board. The Committee shall have such duties
and powers as may be necessary to discharge its duties hereunder,
including, but not by way of limitation, to construe and
interpret the Plan, decide all questions of eligibility and
determine the amount and time of payment of benefits hereunder.
The Committee shall have no power to add to, subtract from or
modify any of the terms of the Plan, or to change or add to any
benefits provided under the Plan, or to waive or fail to apply
any requirements of eligibility for a benefit under the Plan. No
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Participant who is a member of such Committee may vote on any
question relating specifically to himself or herself.
ARTICLE IX
Miscellaneous
9.1 Other Agreements. The Plan shall not affect in
any way the rights or obligations of a Director under any
deferred compensation or other agreement between the Director and
the Company or the Parent, including, but not limited to, the
KU Energy Corporation Director Retirement Retainer Program or the
Kentucky Utilities Company Director Retirement Retainer Program.
9.2 Successors. The Company shall require any
successor (whether direct or indirect, by purchase, merger,
consolidation, reorganization or otherwise) to all or
substantially all of the business and/or assets of the Company
expressly to assume and to agree to perform this Plan in the same
manner and to the same extent the Company would be required to
perform if no such succession had taken place. This Plan shall
be binding upon and inure to the benefit of the Company and any
successor of or to the Company, including without limitation any
persons acquiring directly or indirectly all or substantially all
of the business and/or assets of the Company whether by sale,
merger, consolidation, reorganization or otherwise (and such
successor shall thereafter be deemed the "Company" for the
purposes of this Plan), and the heirs, executors and
administrators of each Director.
9.3 Interests Not Transferable. No person shall have
any right to commute, encumber, pledge or dispose of any right to
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receive payments hereunder, nor shall such payments be subject to
seizure, attachment or garnishment for the payments of any debts,
judgments, alimony or separate maintenance obligations or be
transferable by operation of law in the event of bankruptcy,
insolvency or otherwise, all payments and rights hereunder being
expressly declared to be nonassignable and nontransferable.
9.4 Amendment and Termination. The Plan may be
amended from time to time or terminated by the Board at any time,
but no amendment or termination may adversely affect the rights
of any person without his or her prior written consent.
9.5 Applicable Law. This Plan shall be construed in
accordance with and governed by the laws of the Commonwealth of
Kentucky.
9.6 Notices. For all purposes of this Plan, all
communications provided for herein shall be in writing and shall
be deemed to have been duly given when delivered or five business
days after having been mailed by United States registered or
certified mail, return receipt requested, postage prepaid,
addressed to the Company (to the attention of the Secretary of
the Company) at its principal executive office and to a
Participant at his or her principal residence, or to such other
address as any party may have furnished to the other in writing
and in accordance herewith, except that notices of change of
address shall be effective only upon receipt.
9.7 Severability: Each section, subsection and lesser
section of this Plan constitutes a separate and distinct
undertaking, covenant and/or provision hereof. Whenever
possible, each provision of this Plan shall be interpreted in
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such manner as to be effective and valid under applicable law.
In the event that any provision of this Plan shall finally be
determined to be unlawful, such provision shall be deemed severed
from this Plan, but every other provision of this Plan shall
remain in full force and effect, and in substitution for any such
provision held unlawful, there shall be substituted a provision
of similar import reflecting the original intention of the
parties hereto to the extent permissible under law.
9.8 Withholding of Taxes: The Company may withhold
from any amounts payable under this Plan all federal, state, city
and other taxes as shall be legally required.
IN WITNESS WHEREOF, Kentucky Utilities Company has
caused this instrument to be executed in its name by its Chairman
of the Board and Chief Executive Officer and its Corporate Seal
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to be hereunto affixed, attested by its Secretary, on this 21st
day of December, 1994.
KENTUCKY UTILITIES COMPANY
By /s/ John T. Newton
Chairman of the Board and
Chief Executive Officer
[Corporate Seal]
ATTEST:
/s/ George S. Brooks II
Secretary
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