AMENDMENT NO. 18
TO
PENNSYLVANIA POWER & LIGHT COMPANY
EMPLOYEE STOCK OWNERSHIP PLAN
WHEREAS, Pennsylvania Power & Light Company ("Company") has
adopted the Pennsylvania Power & Light Company Employee Stock
Ownership Plan ("Plan") effective January 1, 1975; and
WHEREAS, the Plan was amended and restated effective Janu-
ary 1, 1987, and subsequently amended by Amendment Nos. 1, 2, 3,
4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14, 15, 16 and 17; and
WHEREAS, the Company desires to further amend the Plan;
NOW, THEREFORE, the Plan is hereby amended as follows:
I. Effective December 12, 1994, the following sections of
Articles II are amended to read:
2.31 "Qualified Military Service" means any service (either
voluntary or involuntary) by an individual in the Uniformed Ser-
vices if such individual is entitled to reemployment rights with
the Company with respect to such service.
2.34 "Returning Veteran" means a former Employee who on or
after December 12, 1994, returns from Qualified Military Service
to employment by the Company within the period of time during
which his reemployment rights are protected by law.
2.41 "Uniformed Services" means the Armed Forces, the Army
National Guard and Air National Guard (when engaged in active
duty for training, inactive duty training, or full-time National
Guard duty), the commissioned corps of the Public Health Service,
and any other category of persons designated by the President of
the United States in time of war or emergency.
II. Effective December 12, 1994, Article XIII is added to
read:
ARTICLE XIII
TREATMENT OF RETURNING VETERANS
13.1 Applicability and Effective Date. The rights of any
Returning Veteran who resumes employment with the Company on or
after December 12, 1994 shall be modified as set forth in this
Article.
13.2 Eligibility to Participate. For purposes of Section
3.1,
(a) A Returning Veteran who was an Eligible Employee imme-
diately prior to his Qualified Military Service shall be deemed
to have remained an Eligible Employee throughout his Qualified
Military Service.
(b) A Returning Veteran who would have become an Eligible
Employee during the period of his Qualified Military Service, but
for the resulting absence from employment, shall be deemed to
have become an Eligible Employee as of the date he would have
become an Eligible Employee if he had not entered into Qualified
Military Service.
13.3 Restoration of TRASOP, PAYSOP, and Dividend-based Con-
tributions. With respect to any Plan Year for which a Returning
Veteran would have been a Participant, but failed to share in
TRASOP, PAYSOP, or Dividend-based Contributions under Sections
4.1, 4.3 and 4.4 solely by reason of his Qualified Military Ser-
vice, the Company shall contribute to such Participant's Account
an amount equal to the TRASOP, PAYSOP, and Dividend-based Contri-
butions that would have been allocated to his Account, but for
his absence for Qualified Military Service. Such contribution
shall not include the earnings that would have accrued on such
amount.
13.4 Restoration of Matching Contributions.
(a) Each Returning Veteran who, during his period of Quali-
fied Military Service, would have been eligible to make Matching
Contributions shall be permitted to contribute an amount equal to
the Matching Contributions that he could have made during such
absence from employment. Such "make-up" contributions shall be
made during the period that begins with his reemployment by the
Company and ends with (1) the expiration of a period of five
years, or (2) if shorter, a period of three times the period of
Qualified Military Service.
(b) Any make-up contributions described in Subsection (a)
hereof shall be in addition to those Matching Contributions that
the Participant may elect to make pursuant to Section 4.2.
13.5 Determination of Compensation. For purposes of deter-
mining the amount of any make-up contributions under Section 13.3
or Section 13.4 and for applying the limits of Section 5.5, a
Participant's compensation during any period of Qualified Mili-
tary Service shall be deemed to equal either:
(a) the compensation he would have received but for such
Qualified Military Service, based on the rate of pay he would
have received from the Company; or
(b) if the amount described in (a) above is not reasonably
certain, his average compensation from the Company during the
12-month period immediately preceding the Qualified Military
Service (or, if shorter, the period of employment immediately
preceding the Qualified Military Service). Such amount shall be
adjusted as necessary to reflect the length of the Participant's
Qualified Military Service.
13.6 Application of Certain Limitations.
(a) For purposes of applying the limitations of Section
5.5, any TRASOP, PAYSOP, or Dividend-based Contributions
described in Section 13.3, and any make-up contributions
described in Section 13.4, shall be treated as contributions for
the Limitation Year to which they relate, rather than the Limita-
tion Year in which they are actually made.
(b) For purposes of applying the limitations of Section
4.6, any make-up contributions described in Section 13.4 shall be
disregarded, both for the Plan Year to which the contributions
relate, and for the Plan Year in which they are actually made.
13.7 Administrative Rules and Procedures. The Employee
Benefit Plan Board shall establish such rules and procedures as
it deems necessary or desirable to implement the provisions of
this Article, provided that they are not in violation of the
Uniformed Services Employment and Reemployment Rights Act of
1994, any regulations thereunder, or any other applicable law.
III. Effective January 1, 1997, Articles II and IV are
amended to read:
2.8 "Compensation" shall mean the annual compensation
received by an Employee from the Company as reported on Internal
Revenue Service Form W-2 or a successor form plus the Employee's
elective deferrals under the Employee Savings Plan or Deferred
Savings Plan; provided, however, that Compensation shall not
include fringe benefits not normally included in compensation,
such as tuition refunds, moving expenses, etc. and shall not, for
purposes of allocation under Section 5.2(a), include any amount
in excess of (i) for the 1975 and 1976 Plan Years, $16,000 and
(ii) commencing with the 1977 Plan Year, the median annual com-
pensation of all Participants during the Plan Year or $100,000,
whichever is less. Such median compensation shall be determined
as of the close of a Plan Year and shall be rounded to an even
thousand dollars. For an MCP Employee, Compensation shall also
include the full amount of any single-sum award paid to the Par-
ticipant from the fund credited annually with a percentage of
annualized base pay salaries in accordance with the Managers
Compensation Plan.
2.15 "Employee" shall mean any person employed by the
Company including officers, shareholders, or directors who are
employees, but excluding (a) persons covered by a collective
bargaining agreement unless such agreement specifically provides
for participation under the Retirement Plan, (b) leased employees
whether or not described in Section 414(n) of the Code, and (c)
persons classified by the Company as independent contractors,
regardless of whether they are subsequently determined to be
employees for employment tax or any other purpose.
2.20 "Highly Compensated Eligible Employee" shall mean an
Eligible Employee who:
(a) is a five-percent owner, as defined in section 416(i) of
the Code, either for the current Plan Year or the immediately
preceding Plan Year; or
(b)(1) received more than $80,000 (as indexed) in
Compensation from the Company or an Affiliated Company in the
immediately preceding Plan Year, and
(2) if so elected by the Company, was among the top 20%
of Employees of the Company and Affiliated Companies ranked by
Compensation (excluding Employees described in section 414(q)(5)
of the Code to the extent (A) permitted under the Code and
regulations thereunder and (B) elected by the Employee Benefit
Plan Board, for purposes of identifying the number of Employees
in the top 20%).
For purposes of this Section 2.20 "compensation" shall have
the meaning set forth in Section 415(c)(3) of the Code, but
including amounts that would be excluded from an Employee's gross
income under a plan described in Section 125, 401(k) or 403(b) of
the Code.
4.7 Prevention of Violation of Limitation on Matching
Contributions and TRASOP Contributions. The Employee Benefit
Plan Board shall monitor the level of Participants' Matching
Contributions and TRASOP Contributions under Section 4.1(b) and
elective deferrals, employee contributions, and employer matching
contributions under any other qualified retirement plan main-
tained by the Company or any Affiliated Company to ensure against
exceeding the limitations of Section 4.6 for any Plan Year. If
the Employee Benefit Plan Board determines that the limitations
of Section 4.6 may be or have been exceeded, it shall take the
appropriate following actions for such Plan Year:
(a) The Average Contribution Percentage for the Highly Com-
pensated Eligible Employees shall be reduced to the extent neces-
sary to satisfy at least one of the tests in Section 4.6(a) and
the test in Section 4.6(b).
(b) The reduction shall be accomplished by reducing the
maximum Contribution Percentage for any Highly Compensated Elig-
ible Employee to an adjusted maximum Contribution Percentage,
which shall be the highest Contribution Percentage that would
cause one of the tests in Section 4.6(a) and the test in Section
4.6(b) to be satisfied, if each Highly Compensated Eligible
Employee with a higher Contribution Percentage had instead the
adjusted maximum Contribution Percentage, reducing the Highly
Compensated Eligible Employees' Matching Contributions, TRASOP
Contributions under Section 4.1(b), and employee contributions
and employer matching contributions under any other qualified
retirement plan maintained by the Company or any Affiliated Com-
pany in order of priority based on the dollar amount of each
Eligible Highly Compensated Employee's Matching Contributions and
TRASOP Contributions, beginning with the Highly Compensated
Eligible Employee(s) with the highest dollar amount of Matching
Contributions and TRASOP Contributions.
IV. Effective January 1, 1998, Article V is amended to
read:
5.5 Maximum Allocation. The provisions of this Section
shall be construed to comply with Section 415 of the Code.
(m) For the purpose of this Section 5.5, "compensation"
shall be defined in accordance with Section 415(c)(3) of the Code
and regulations thereunder so that, for years beginning on or
after January 1, 1998, "compensation" shall also include amounts
excluded from gross income under Sections 125, 402(e)(3),
402(h)(1)(B) or 403(b).
V. Effective January 1, 2000, Article V is amended to read:
5.5 Maximum Allocation. The provisions of this Section
shall be construed to comply with Section 415 of the Code.
(j)(1) If in any Limitation Year beginning before January 1,
2000, a Participant in this Plan is also a participant in one or
more qualified defined benefit plans maintained by the Company or
any 50% Affiliated Company, the projected annual benefit under
such qualified defined benefit plan or plans shall be reduced if
necessary, so that the sum of the fractions described in (A) and
(B) does not exceed 1.0 for such Limitation Year:
(A) Defined Benefit Fraction -- a fraction, the
numerator of which is the Participant's projected
annual benefit under the defined benefit pension
plans in which he has participated, determined as
of the close of the limitation years of such
plans, and the denominator of which is the lesser
of: (i) 1.25 x $90,000 or (ii) 140% of the
Participant's highest average compensation over
any three consecutive calendar years. For
purposes of this Section, "projected annual
benefit" shall mean the annual benefit to which a
participant would be entitled under the terms of a
qualified defined benefit plan if he had continued
employment until his normal retirement date under
such plan and if his compensation for the purpose
of such plan continued at the same rate.
(B) Defined Contribution Fraction -- A fraction, the
numerator of which is the sum of the annual
additions to the Participant's accounts under all
defined contribution plans sponsored by the
Company or any 50% Affiliated Company for all
limitation years, and the denominator of which is
the sum of the lesser of the following amounts,
determined for each of such Limitation Years and
for each prior limitation year of service with the
Company or 50% Affiliated Company: (i) 1.25 x
$30,000 or (ii) 35% of the Participant's
compensation for such limitation year.
(2) If the Plan and the defined benefit plan referred to
in Subsection (j)(1)(A) satisfied Section 415 of the Code for the
Limitation Year ended December 31, 1986, an amount shall be
subtracted from the numerator of the fraction described in
Subsection (j)(1)(B) (not exceeding such numerator). The amount
to be subtracted shall be the product of:
(A) the sum of the defined contribution fraction under
Subsection (j)(1)(B) plus the defined benefit
fraction under Subsection (j)(1)(A) as of December
31, 1986, minus one, multiplied by
(B) the denominator of the defined contribution plan
fraction under Subsection (j)(1)(B) as of December
31, 1986.
VI. Except as provided for in this Amendment No. 18, all
other provisions of the Plan shall remain in full force and
effect.
IN WITNESS WHEREOF, this Amendment No. 18 is executed this
24th day of July, 1997.
PENNSYLVANIA POWER & LIGHT COMPANY
/s/ John M. Chappelear
By:_______________________________
John M. Chappelear
Vice President-Investments &
Pensions