PPL
EMPLOYEE STOCK OWNERSHIP PLAN
EFFECTIVE JANUARY 1, 1975
Amended and Restated
Effective January 1, 2000
PPL
EMPLOYEE STOCK OWNERSHIP PLAN
EFFECTIVE January 1, 1975
TABLE OF CONTENTS
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ARTICLE PAGE
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I. PURPOSE....................................................................................... I-1
II. DEFINITIONS....................................................................................... II-1
2.1 Account.............................................................................. II-1
2.2 Additional Investment Credit......................................................... II-1
2.3 Affiliated Company or Affiliated Companies........................................... II-1
2.4 Average Contribution Percentage...................................................... II-2
2.5 Board of Directors................................................................... II-2
2.6 Code................................................................................. II-2
2.7 Compensation......................................................................... II-2
2.8 Contribution Percentage.............................................................. II-3
2.9 Credited Service..................................................................... II-3
2.10 Deferred Savings Plan................................................................ II-3
2.11 Dividend-based Contribution.......................................................... II-4
2.12 Effective Date....................................................................... II-4
2.13 Eligible Employee.................................................................... II-4
2.14 Employee............................................................................. II-4
2.15 Employee Benefit Plan Board.......................................................... II-4
2.16 Employee Savings Plan................................................................ II-5
2.17 ERISA................................................................................ II-5
2.18 Fund................................................................................. II-5
2.19 Highly Compensated Eligible Employee................................................. II-5
2.20 Hour of Service...................................................................... II-6
2.21 Limitation Year...................................................................... II-6
2.22 Matching Contributions............................................................... II-7
2.23 Market Value......................................................................... II-7
2.24 Officer.............................................................................. II-7
2.25 Participant.......................................................................... II-7
2.26 Participating Company................................................................ II-8
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2.27 PAYSOP Contributions................................................................. II-8
2.28 Plan................................................................................. II-8
2.29 Plan Year............................................................................ II-8
2.31 PPL.................................................................................. II-8
2.30 PPL Corporation...................................................................... II-8
2.32 Qualified Military Service........................................................... II-8
2.33 Retirement Plan...................................................................... II-8
2.34 Returning Veteran.................................................................... II-9
2.35 Spouse............................................................................... II-9
2.36 Stock................................................................................ II-9
2.37 Total Disability..................................................................... II-9
2.38 TRASOP Contributions................................................................. II-9
2.39 Trust or Trust Agreement............................................................. II-9
2.40 Trustee.............................................................................. II-9
2.41 Uniformed Services................................................................... II-9
2.42 Valuation Date....................................................................... II-9
III. ELIGIBILITY..................................................................................... II-1
3.1 Eligibility.......................................................................... II-1
3.2 Participation........................................................................ II-1
3.3 Reemployment after Break of Service.................................................. II-2
3.4 Officers, Directors, and Shareholders................................................ II-2
3.5 Rights Affected...................................................................... II-2
3.6 Data................................................................................. II-2
IV. CONTRIBUTIONS TO THE FUND....................................................................... IV-1
4.1 TRASOP Contributions................................................................. IV-1
4.2 Matching Contributions............................................................... IV-2
4.3 PAYSOP Contributions................................................................. IV-4
4.4 Dividend-based Contribution.......................................................... IV-4
4.5 Investment in Stock.................................................................. IV-4
4.6 Limitation on Matching Contributions
and TRASOP Contributions............................................................. IV-5
4.7 Prevention of Violation of Limitation
on Matching Contributions and TRASOP
Contributions........................................................................ IV-6
4.8 Suspension of Matching Contributions................................................. IV-8
V. ALLOCATION...................................................................................... V-1
5.1 Accounts............................................................................. V-1
5.2 Allocation of Contributions.......................................................... V-1
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5.3 Allocation of Earnings............................................................ V-3
5.4 Special Allocation Rule........................................................... V-3
5.5 Maximum Allocation ............................................................... V-4
VI. PARTICIPANTS' ACCOUNTS....................................................................... VI-1
6.1 Accounts ......................................................................... VI-1
6.2 Valuation......................................................................... VI-1
6.3 Accounting for Allocations........................................................ VI-1
VII. DISTRIBUTION................................................................................. VII-1
7.1 General........................................................................... VII-1
7.2 Death............................................................................. VII-1
7.3 Beneficiary Designation........................................................... VII-1
7.4 Disability ....................................................................... VII-2
7.5 Termination of Employment......................................................... VII-3
7.6 Valuation for Distribution........................................................ VII-3
7.7 Timing of Distribution............................................................ VII-3
7.8 Mode of Distribution.............................................................. VII-5
7.9 Withdrawals....................................................................... VII-5
7.10 Optional Direct Transfer of Eligible Rollover Distributions ...................... VII-7
VIII. ADMINISTRATION............................................................................... VIII-1
8.1 Administration by Employee Benefit Plan Board..................................... VIII-1
8.2 Duties and Powers of Employee Benefit Plan Board ................................. VIII-2
8.3 Reliance on Reports and Certificates.............................................. VIII-4
8.4 Functions......................................................................... VIII-4
8.5 Indemnification of the Employee Benefit Plan Board................................ VIII-4
8.6 Allocation of Fiduciary Responsibilities.......................................... VIII-5
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IX. THE FUND........................................................................................ IX-1
9.1 Designation of Trustee .............................................................. IX-1
9.2 Exclusive Benefit.................................................................... IX-1
9.3 No Interest in Fund.................................................................. IX-1
9.4 Trustee.............................................................................. IX-1
9.5 Expenses............................................................................. IX-1
X. AMENDMENT OR TERMINATION OF THE PLAN............................................................ X-1
10.1 Amendment............................................................................ X-1
10.2 Termination.......................................................................... X-1
10.3 Special Rule......................................................................... X-2
10.4 Merger............................................................................... X-2
XI. TOP HEAVY PROVISIONS............................................................................ XI-1
11.1 General.............................................................................. XI-1
11.2 Definitions.......................................................................... XI-1
(a) "Aggregation Group"......................................................... XI-1
(b) "Determination Date"........................................................ XI-1
(c) "Key Employee".............................................................. XI-2
(d) "Key Employee Ratio"........................................................ XI-3
(e) "Non-Key Employee".......................................................... XI-4
(f) "Super Top Heavy Plan"...................................................... XI-4
(g) "Top Heavy Plan"............................................................ XI-5
11.3 Minimum Contributions for Non-Key Employees ....................................... XI-5
11.4 Social Security .................................................................... XI-6
11.5 Adjustment to Maximum Allocation
Limitation .......................................................................... XI-6
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XII. GENERAL PROVISIONS............................................................................ XII-1
12.1 No Employment Rights .............................................................. XII-1
12.2 Source of Benefits ................................................................ XII-1
12.3 Governing Law .................................................................... XII-1
12.4 Spendthrift Clause ................................................................ XII-1
12.5 Incapacity ........................................................................ XII-2
12.6 Gender and Number ................................................................ XII-3
12.7 Voting or Tendering Shares ........................................................ XII-3
12.8 Use of Loan Proceeds............................................................... XII-6
12.9 Put Option ........................................................................ XII-6
12.10 Compliance with Rule 16b-3......................................................... XII-8
XIII. TREATMENT OF RETURNING VETERANS
13.1 Applicability and Effective Date................................................... XIII-1
13.2 Eligibility to Participate......................................................... XIII-1
13.3 Restoration of TRASOP, PAYSOP, and Dividend-based Contributions.................... XIII-1
13.4 Restoration of Matching Contributions.............................................. XIII-2
13.5 Determination of Compensation...................................................... XIII-2
13.6 Application of Certain Limitations................................................. XIII-3
13.7 Administrative Rules and Procedures................................................ XIII-3
Schedule A ................................................................................... A-1
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WHEREAS, PPL Electric Utilities Corporation ("PPL") adopted the PPL
Employee Stock Ownership Plan, effective January 1, 1975, for certain of its
employees; and
WHEREAS, PPL desires to amend and restate the PPL Employee Stock
Ownership Plan;
NOW, THEREFORE, effective January 1, 2000, except as may be provided
to the contrary herein, the PPL Employee Stock Ownership Plan is continued,
amended and restated as hereinafter set forth:
ARTICLE I
PURPOSE
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1.1 The purpose of this Plan is to provide Employees some ownership of
stock ofPPL Corporation, without requiring any reduction in pay or other
employee benefits, or the surrender of any other rights on the part of
Employees, and to invest primarily in the stock of PPL Corporation.
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ARTICLE II
DEFINITIONS
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2.1 "Account" shall mean the separate record maintained at the direction
of the Employee Benefit Plan Board which represents the individual interest of a
Participant in the Fund.
2.2 "Additional Investment Credit" shall mean that portion of the
investment tax credit provided for under the Code which is allowable as a tax
credit by reason of the fact that PPL will make a contribution to the Plan equal
in amount thereto and shall include (a) the one percent (1%) additional
investment tax credit which is allowable without regard to Matching
Contributions by Participants and (b) the one-half percent (0.5%) additional
investment tax credit which is allowable if Matching Contributions are made by
Participants.
2.3 "Affiliated Company" or "Affiliated Companies" shall mean with respect
to any Participating Company, (a) any corporation that is a member of a
controlled group of corporations, as determined under section 414(b) of the
Code, which includes such Participating Company; (b) any member of an affiliated
service group, as determined under section 414(m) of the Code, of which such
Participating Company is a member; (c) any trade or business (whether or not
incorporated) that is under common control with such Participating Company, as
determined under section 414(c) of the Code; and (d) any other organization or
entity which is required to be aggregated with the Participating Company under
section 414(o) of the Code and regulations issued thereunder. "50% Affiliated
Company" means an Affiliated Company, but determined with "more than
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50%" substituted for the phrase "at least 80%" in section 1563(a) of the Code,
when applying sections 414(b) and (c) of the Code.
2.4 "Average Contribution Percentage" shall mean for a specified group of
Eligible Employees for a Plan Year the average of the Contribution Percentages
for such Eligible Employees for the Plan Year.
2.5 "Board of Directors" shall mean the Board of Directors of PPL or the
Executive Committee of the Board of Directors with respect to any powers which
have been assigned thereto by the Board of Directors. Effective upon the
closing of the PPL Corporation corporate realignment pursuant to which PPL will
separate its electric generation and energy marketing operations from its
regulated electric transmission and distribution business, "Board of Directors"
shall mean the Board of Directors of PPL Services Corporation.
2.6 "Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time or any predecessor or successor thereto.
2.7 "Compensation" shall have the meaning set forth in Schedule A, for
Participants in the Participating Company listed therein.
2.8 "Contribution Percentage" shall mean the ratio of (a) the sum of an
Eligible Employee's Matching Contributions and TRASOP Contributions under
section 4.1(b) for the Plan Year, plus such other amounts required or (at the
election of the Employee Benefit Plan Board) permitted to be taken into account
in accordance with section 401(m) of the Code and governmental regulations
thereunder, including in the case of a Highly Compensated Eligible Employee, (1)
any employee contributions and employer matching
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contributions for the year under any other qualified retirement plan maintained
by PPL or any Affiliated Company, and (2) at the election of the Employee
Benefit Plan Board, any portion of the Eligible Employee's elective deferrals
for the year under any other qualified retirement plan maintained by PPL or any
Affiliated Company that may be disregarded without causing such plan to fail to
satisfy the requirements of section 401(k)(3) of the Code, as adjusted in
accordance with governmental regulations for purposes of Section 4.6(b), to (b)
the Eligible Employee's compensation (as defined in section 414(s) of the Code,
but subject to the limitation of section 401(a)(17) of the Code) for the Plan
Year.
2.9 "Credited Service" shall mean that portion of an Employee's employment
with PPL and all Affiliated Companies which is used to calculate the Employee's
eligibility for participation and vesting status hereunder.
2.10 "Deferred Savings Plan" shall mean the PPL Electric Deferred Savings
Plan.
2.11 "Dividend-based Contribution" shall mean the contribution made by a
Participating Company or PPL Corporation in accordance with Section 4.4.
2.12 "Effective Date" shall mean January 1, 2000, the effective date of
this amended and restated Plan, except as provided to the contrary herein. The
Plan was effective originally on January 1, 1975.
2.13 "Eligible Employee" shall mean an Employee who has satisfied the
eligibility requirements of Section 3.1.
2.14 "Employee" shall mean any person classified by a Participating Company
as an employee of such Participating Company, including officers, shareholders,
or directors
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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) persons classified by the Participating Company as independent
contractors, regardless of whether they are subsequently determined to be
employees for employment tax or any other purpose. In no event shall the term
"Employee" include persons classified by a Participating Company as independent
contractors, regardless of whether they are subsequently determined to be
employees for employment tax or any other reason, or persons classified by a
Participating Company as leased employees, whether or not described in section
414(n) of the Code. For purposes of the preceding sentence, an "independent
contractor" shall be an individual who is classified by the Participating
Company in accordance with objective business criteria as an independent
contractor in a good faith determination consistent with the factors set forth
in Revenue Ruling 87-41 or any successor thereto, provided that the
Participating Company has communicated to the individual that he has been
engaged as an independent contractor rather than as an Employee. The foregoing
exclusion is intended solely to prevent the retroactive participation by
individuals classified in good faith as independent contractors in the event
that such status should be determined, for employment tax or any other purposes,
to be incorrect;
(c) persons classified by the Participating Company as leased employees,
whether or not as described in section 414(n) of the Code;
(d) persons classified by the Participating Company as cooperative
associates or
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college interns, as those terms are defined under Participating
Company policy.
2.15 "Employee Benefit Plan Board" shall mean the Board described in
Article VIII.
2.16 "Employee Savings Plan" shall mean the PPL Employee Savings Plan
(prior to February 14, 2000, the PP&L Employee Savings Plan).
2.17 "ERISA" shall mean the Employee Retirement Income Security Act of
1974, as it may be amended from time to time.
2.18 "Fund" shall mean the separate fund established for this Plan,
administered under the Trust Agreement, out of which benefits payable under this
Plan shall be paid.
2.19 "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 PPL
or an Affiliated Company in the immediately preceding Plan Year, and
(2) if so elected by PPL, was among the top 20% of Employees of PPL
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 2.19 "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
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plan described in section 125, 401(k) or 403(b) of the Code.
2.20 "Hour of Service" shall mean an hour for which:
(a) an employee is directly or indirectly paid or entitled to payment by
PPL or an Affiliated Company for the performance of employment duties;
(b) back pay, irrespective of mitigation of damages, is either awarded or
agreed to; or
(c) an employee is directly or indirectly paid or entitled to payment by
PPL or an Affiliated Company on account of a period of time during which no
duties are performed due to vacation, holiday, illness, incapacity (including
disability), layoff, jury duty, military duty, or leave of absence.
There shall be excluded from the foregoing those periods during which
payments are made or due under a plan maintained solely for the purpose of
complying with applicable workers' for the compensation, unemployment
compensation or disability insurance laws. No more than 501 Hours of Service
shall be credited under Subsection (c) on account of any single continuous
period during which no duties are performed except to the extent otherwise
provided in this Plan. An Hour of Service shall not be credited where an
employee is being reimbursed solely for medical or medically related expenses.
An Hour of Service shall be credited in accordance with the rules set forth in
U.S. Department of Labor Reg. (S)2530.200b-2(b) and (c).
Hours of Service shall also be credited for any individual who is
considered a leased employee for purposes of this Plan under section 414(n) of
the Code.
Notwithstanding the foregoing, Hours of Service shall be credited for an
employee for
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whom no records of hours are maintained on the basis of 45 Hours of Service for
each week of employment.
2.21 "Limitation Year" shall mean the Plan Year or such other twelve-
consecutive-month period as may be designated by PPL.
2.22 "Matching Contributions" shall mean the contributions made by
Participants in accordance with Section 4.2.
2.23 "Market Value" shall mean, with respect to the Stock the average of
the closing prices of the Stock based on consolidated trading as defined by the
Consolidated Tape Association and reported as part of the consolidated trading
prices of New York Stock Exchange listed securities for the twenty consecutive
trading days immediately preceding the date on which the Stock is contributed to
the Plan.
2.24 "Officer" shall mean those persons who are defined as officers in Rule
16a-1(f) promulgated under the Securities Exchange Act of 1934.
2.25 "Participant" shall mean an Employee entitled to participate in this
Plan under Article III hereof or any former Employee for whom an Account is
maintained under the Plan.
2.26 "Participating Company" shall mean PPL (prior to February 14, 2000,
PP&L, Inc.), PPL EnergyPlus, LLC (prior to February 14, 2000, PP&L EnergyPlus
Co., LLC) and each other Affiliated Company which is authorized by the Board to
adopt this Plan by action of its board of directors.
2.27 "PAYSOP Contributions" shall mean the contributions made by PPL in
accordance with Section 4.3.
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2.28 "Plan" shall mean the PPL Employee Stock Ownership Plan (prior to
February 14, 2000, the PP&L Employee Stock Ownership Plan), an employee stock
ownership plan within the meaning of section 4975(e)(7) of the Code, as set
forth herein and as hereafter amended from time to time.
2.29 "Plan Year" shall mean the fiscal year of PPL, which shall commence
each January 1 and end on the next following December 31.
2.30 "PPL" shall mean PPL Electric Utilities Corporation and its
successors. Prior to February 14, 2000, "PPL" shall mean PP&L, Inc.
2.31 "PPL Corporation" shall mean PPL Corporation and its successors. Prior
to February 14, 2000, "PPL Corporation" shall mean PP&L Resources, Inc.
2.32 "Qualified Military Service" means any service (either voluntary or
involuntary) by an individual in the Uniformed Services if such individual is
entitled to reemployment rights with a Participating Company with respect to
such service.
2.33 "Retirement Plan" shall mean the PPL Retirement Plan.
2.34 "Returning Veteran" means a former Employee who on or after December
12, 1994, returns from Qualified Military Service to employment by a
Participating Company within the period of time during which his reemployment
rights are protected by law.
2.35 "Spouse" shall mean the person to whom a Participant is married on any
date of reference.
2.36 "Stock" shall mean the common stock of PPL Corporation.
2.37 "Total Disability" shall mean a disability of a nature which renders a
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Participant eligible to participate in PPL's Long Term Disability Plan.
2.38 "TRASOP Contributions" shall mean the contributions made by PPL in
accordance with Sections 4.1(a) and 4.1(b).
2.39 "Trust" or "Trust Agreement" shall mean the Agreement and Declaration
of Trust, if any, executed under this Plan.
2.40 "Trustee" shall mean the corporate Trustee or one or more individuals
collectively appointed and acting under the Trust Agreement, if any.
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.
2.42 "Valuation Date" shall mean the last day of each Plan Year and each
interim date on which a valuation of the Fund is made.
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ARTICLE III
ELIGIBILITY
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3.1 Eligibility.
(a) All persons who were participants in the Plan immediately prior to the
Effective Date and who are in the employ of a Participating Company on the
Effective Date shall be Participants hereunder as of such date. All Employees
as of the Effective Date (but who are not eligible to participate under the
preceding sentence) who have completed one year of Credited Service shall be
Participants as of that date. Other Employees shall become Participants on the
first day of the calendar month next following the date on which an Employee
completes one year of Credited Service, or if later, on which an individual
becomes an Employee. A "year of Credited Service," for the purposes of this
Article, shall require completion of at least 1,000 Hours of Service during the
12 months from commencement of employment. An Employee who fails to complete
1,000 Hours of Service during his initial 12 months of employment shall complete
a year of Credited Service as of the end of any Plan Year in which he completes
1,000 Hours of Service; provided, however, that the first Plan Year during which
such Employee shall have the opportunity to complete such 1,000 Hours of Service
shall include the anniversary of his commencement of employment.
(b) An Employee may elect in writing not to become a Participant by filing
such election with the Employee Benefit Plan Board.
3.2 Participation. A Participant shall share in contributions under
Article V for any Plan Year during which he (a) completes at least one Hour of
Service and (b)
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receives Compensation. A Participant shall cease to be a Participant on the date
on which his entire Account is distributed to him. Notwithstanding the
foregoing, for Plan Year 1990, any Participant who is totally and permanently
disabled shall share in contributions under Article V.
3.3 Reemployment after Break of Service. In the event a Participant ceases
to be an Employee and subsequently again becomes an Employee, he shall be
readmitted as a Participant as of the date of his reemployment.
3.4 Officers, Directors, and Shareholders. Officers, directors, and
shareholders of a Participating Company who are Participants shall participate
in the Plan on the same basis as other Participants.
3.5 Rights Affected. Except as expressly provided to the contrary in the
Plan, any former Employee who has retired or whose employment has terminated
before the Effective Date shall receive no additional rights as a result of this
amended and restated Plan, but shall have his rights and benefits determined
solely under the Plan as it existed prior to the Effective Date. However, any
former Employee who has terminated employment and who is reemployed as an
Employee after the Effective Date shall have the rights and benefits provided
hereunder.
3.6 Data. Each Participant shall furnish to the Employee Benefit Plan
Board such data as may be considered necessary by the Employee Benefit Plan
Board for the determination of his rights and benefits under the Plan.
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ARTICLE IV
CONTRIBUTIONS TO THE FUND
-------------------------
4.1 TRASOP Contributions.
(a) With respect to each Plan Year, PPL shall contribute to the Plan an
amount equal to the one percent (1%) Additional Investment Credit claimed on its
United States corporation income tax return for such Plan Year which is
allowable without regard to whether Matching Contributions are made by
Participants.
(b) Commencing with the 1977 Plan Year, PPL shall also contribute, with
respect to each Plan Year, an amount equal to the one-half percent (0.5%)
Additional Investment Credit claimed on its United States corporation income tax
return for such Plan Year which is allowable if Matching Contributions are made
by Participants.
(c) Contributions pursuant to this Section 4.1 shall be made within 30
days following the due date (including extensions of time) for filing PPL's
United States corporation income tax return for such Plan Year; provided,
however, that if the Additional Investment Credit cannot be utilized in such
Plan Year and results in a carryover to future years, the contribution with
respect to the Additional Investment Credit carried over may be made no later
than 30 days after the due date (including extensions of time) for filing PPL's
federal corporation income tax return for the Plan Year to which such Additional
Investment Credit is carried over.
(d) If PPL is subsequently determined to be entitled to an Additional
Investment Credit for any Plan Year that is larger than that claimed, PPL shall
contribute, with respect to such Plan Year, an amount equal to the increase in
the Additional Investment Credit
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within 30 days of the date such determination becomes final.
(e) If PPL is subsequently determined to be entitled to an Additional
Investment Credit that is less than that claimed, or if any Additional
Investment Credit is recaptured, PPL may reduce its contributions for the Plan
Year (or any succeeding Plan Year) in which such determination or recapture
becomes final by the amount of the reduction in, or recapture of, the Additional
Investment Credit.
(f) If the aggregate total amount of Matching Contributions by
Participants with respect to a Plan Year, determined no later than the close of
the second Plan Year following such Plan Year, is less than the aggregate total
amount of PPL's TRASOP Contributions under Section 4.1(b) with respect to such
Plan Year, the excess of such TRASOP Contributions over Matching Contributions
may be withdrawn from the Plan by PPL.
(g) Notwithstanding the foregoing, PPL shall not be under any obligation
to make any TRASOP Contributions under the Plan with respect to any Plan Year in
which it is not entitled to an Additional Investment Credit equal to the amount
of such TRASOP Contributions.
4.2 Matching Contributions.
(a) Commencing with the 1977 Plan Year, a Participant may elect to make
Matching Contributions on a prospective basis, subject to Sections 4.6, 4.7 and
4.8. Such election shall be made on a form prescribed by the Employee Benefit
Plan Board and shall specifically designate that the contributions are intended
to be matched by TRASOP Contributions made by PPL under Section 4.1(b).
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(b) The amount that a Participant may contribute as a Matching
Contribution with respect to a Plan Year shall be determined by the Employee
Benefit Plan Board, subject to Sections 4.6, 4.7 and 4.8. Initially, the amount
which may be contributed by each Participant shall bear the same proportion to
the total amount which may be contributed under this Section 4.2 as the amount
of Compensation paid to such Participant bears to the total Compensation paid to
all Participants during such Plan Year. If all Participants do not elect to, or
fail to, contribute the maximum amount permitted, the Employee Benefit Plan
Board may permit other Participants to elect to increase their contributions
proportionately.
(c) Matching Contributions by Participants may be made by payroll
deductions or in cash and shall be made no later than the close of the second
Plan Year following the Plan Year with respect to which they are made; provided,
however, if PPL is determined to be entitled to an Additional Investment Credit
that is larger than that claimed, additional Matching Contributions may be made
by Participants who are still Employees no later than the second Plan Year
following the Plan Year in which such determination becomes final. All Matching
Contributions shall be invested in Stock each month. The Employee Benefit Plan
Board may prescribe such rules and regulations with respect to Matching
Contributions by Participants as it deems desirable.
(d) If the aggregate total amount of Matching Contributions by
Participants with respect to a Plan Year, determined as of the close of the
second Plan Year following such Plan Year, is greater than the aggregate total
amount of PPL's TRASOP Contributions under Section 4.1(b) with respect to such
Plan Year, each Participant's proportionate
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share of such excess shall be returned to him.
(e) Any election by an Officer to make Matching Contributions must be made
not less than six months prior to the allocation of such Matching Contributions
to such Officers' account and such election shall be irrevocable.
4.3 PAYSOP Contributions.
(a) For each Plan Year for which a tax credit is allowed under the Code,
PPL may contribute to the Fund an amount up to one-half percent (0.5%) of the
Compensation of all Participants for such Plan Year. Such amount shall be paid
within 30 days following the due date (including extensions of time) for filing
PPL's federal corporation income tax return for such Plan Year.
(b) All PAYSOP Contributions shall remain in the Plan, as allocated, even
though all or a part of the employee stock ownership credit for which such
contributions may qualify under section 41 of the Code is redetermined.
4.4 Dividend-based Contribution. Commencing with the 1990 Plan Year, a
Participating Company or PPL Corporation may contribute to the Plan an amount
determined at the sole discretion of PPL or PPL Corporation relating to the
reduction in taxes arising out of the payment of dividends to participants and
the contribution thereof to the Plan. The Dividend-based Contribution is in
addition to contributions made pursuant to Sections 4.1, 4.2 and 4.3. All
contributions by PPL, PPL Corporation or a Participating Company are expressly
conditioned upon their deductibility for federal income tax purposes.
4.5 Investment in Stock. All TRASOP, PAYSOP, Dividend-based, and
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Matching Contributions may be in cash or in Stock; provided, however, that (a)
if a Contribution is in cash, the Trustee shall use such Contribution to
purchase Stock from PPL Corporation or others on or before the last day on which
the Contribution could have been made under Section 4.1(c) and (b) if a
Contribution is in Stock, the number of shares contributed will be determined by
the Market Value of the Stock.
4.6 Limitation on Matching Contributions and TRASOP Contributions.
(a) For any Plan Year, the Average Contribution Percentage for the Highly
Compensated Eligible Employees shall not exceed the greater of (1) or (2) as
follows:
(1) The Average Contribution Percentage for all other Eligible
Employees, multiplied by one hundred twenty-five percent (125%); or
(2) The Average Contribution Percentage for all other Eligible
Employees, multiplied by two hundred percent (200%); provided, however, the
Average Contribution Percentage for the Highly Compensated Eligible Employees
may not exceed the Average Contribution Percentage for all other Eligible
Employees by more than two percentage points.
(b) Effective January 1, 1989, for any Plan Year in which a Participant in
this Plan is also a participant in any other qualified retirement plan
maintained by PPL or any Affiliated Company under which the Participant makes
elective deferrals, the sum of the actual deferral percentage (as defined in
section 401(k)(3)(B) of the Code and regulations thereunder) and the Average
Contribution Percentage for the Highly Compensated Eligible Employees shall not
exceed the sum of:
(1) One hundred twenty-five percent (125%) multiplied by the greater of
IV-5
the actual deferral percentage or the Average Contribution Percentage for all
other Eligible Employees; plus
(2) The lesser of
(A) Two hundred percent (200%) multiplied by the lesser of the
actual deferral percentage or the Average Contribution Percentage for all other
Eligible Employees; or
(B) Two (2) percentage points plus the lesser of the actual
deferral percentage or the Average Contribution Percentage for all other
Eligible Employees.
(c) The application of this Section 4.6 shall satisfy such other
requirements as may be prescribed by the Secretary of the Treasury.
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 maintained by PPL 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 Compensated
Eligible Employees shall be reduced to the extent necessary to satisfy at least
one of the tests in Section 4.6(a) and the test in Section 4.6(b).
IV-6
(b) The reduction shall be accomplished by reducing the maximum
Contribution Percentage for any Highly Compensated Eligible 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 PPL or any Affiliated Company 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.
(c) (1) To the extent practicable, the Employee Benefit Plan Board shall
prospectively limit a Highly Compensated Eligible Employee's (A) voluntary
employee contributions under the Employee Savings Plan, (B) voluntary employee
contributions under the Deferred Savings Plan and (C) Matching Contributions to
reduce his Contribution Percentage to his adjusted maximum Contribution
Percentage.
(2) In addition, not later than two and one half months after the
close of the Plan Year for which such contributions were made, the remaining
difference between a Highly Compensated Eligible Employee's Contribution
Percentage and the Highly Compensated Eligible Employee's adjusted maximum
contribution Percentage, with
IV-7
earnings attributable thereto, shall be paid to the Highly Compensated Eligible
Employee; provided, however, that, for any Participant who is also a Participant
in any other qualified retirement plan maintained by PPL or any Affiliated
Company under which the Participant makes elective deferrals or employee
contributions or is credited with employer matching contributions for such year,
the Employee Benefit Plan Board shall coordinate corrective actions under this
Plan and such other plan for the year.
4.8 Suspension of Matching Contributions. In the event that a Participant
takes a withdrawal from his salary reduction account under the Deferred Savings
Plan or the Employee Savings Plan prior to his attainment of age 59 1/2, the
Participant shall not be permitted to make any additional Matching Contributions
under this Plan for a period of twelve (12) months commencing on the date of his
receipt of the withdrawal.
IV-8
ARTICLE V
ALLOCATION
----------
5.1 Accounts. A separate Account shall be created for each Participant.
Separate subaccounts shall also be maintained with respect to the Stock acquired
with (a) TRASOP and PAYSOP Contributions, (b) Matching Contributions and (c)
Dividend-based Contributions. Additional subaccounts may be established at the
Employee Benefit Plan Board's discretion.
5.2 Allocation of Contributions. Contributions made for any Plan Year
shall be allocated among the Participants entitled to share in the allocation of
contributions pursuant to Section 3.2 in accordance with the following rules.
(a) All Stock acquired through TRASOP and PAYSOP Contributions made with
respect to a Plan Year under Sections 4.1(a) and 4.3(a) shall be allocated, as
of the close of such Plan Year, to the Account of each Participant (who was a
Participant at any time during such Plan Year). The amount of such Stock
allocated to each Participant's Account shall bear the same proportion to the
total amount of such Stock allocated with respect to such Plan Year as the
amount of the Compensation paid to such Participant bears to the total
Compensation paid to all Participants during such Plan Year.
(b) Stock acquired through TRASOP Contributions made with respect to a
Plan Year under Section 4.1(b) and dividends thereon, shall be allocated, as of
the close of such Plan Year, to the Account of each Participant (who made
Matching Contributions for such Plan Year); such allocation shall be made no
later than the end of the second Plan Year following the Plan Year with respect
to which such Contributions were made. The
V-1
amount of such Stock allocated to a Participant's Account as provided by this
Section 5.2(b) shall bear the same proportion to the total amount of such Stock
allocated with respect to such Plan Year as the amount of Matching Contributions
made by such Participant bears to the total Matching Contributions made by all
Participants with respect to such Plan Year.
(c) Stock acquired with Matching Contributions by Participants shall be
allocated to the Accounts of each Participant making such contributions.
(d) Subject to Section 5.2(e), Stock acquired with the Dividend-based
Contribution made with respect to a Plan Year shall be allocated, as of the
close of such Plan Year, as follows:
(1) 75% of the Dividend-based Contribution shall be allocated to the
Account of each Participant to whom or on whose behalf dividends
were paid at any time during the portion of such Plan Year in
which the Participant was an Employee. The amount of such Stock
allocated to each Participant's Account shall bear the same
proportion to the total amount of such Stock allocated with
respect to such Plan Year as the amount of dividends paid to such
Participant during the portion of the Plan Year in which he was
an Employee bears to the total amount of dividends paid to all
Participants during the portion of such Plan Year in which they
were Employees; and
(2) 25% of the Dividend-based Contribution shall be allocated to the
Account of each Participant who was a Participant at any time
during
V-2
such Plan Year. The amount of such Stock allocated to each
Participant's Account shall bear the same proportion to the total
amount of such Stock allocated with respect to such Plan Year as
the amount of the Compensation paid to such Participant bears to
the total Compensation paid to all Participants during such Plan
Year.
(e) In the event the allocation under Section 5.2(d)(1) above for any Plan
Year discriminates in favor of the Highly Compensated Eligible Employees, as
determined under section 401(a)(4) of the Code and regulations thereunder, then
the percentage of the Dividend-based Contribution to be allocated under Section
5.2(d)(1) shall be decreased and the percentage to be allocated under Section
5.2(d)(2) shall be correspondingly increased until the allocation under Section
5.2(d)(1) no longer discriminates in favor of the Highly Compensated Eligible
Employees.
5.3 Allocation of Earnings. Any dividends or other distributions on the
Stock allocated to a Participant's Account shall be paid no later than 90 days
after the close of the Plan Year to the Participant in cash either by the
Trustee or directly by PPL, a Participating Company or PPL Corporation.
5.4 Special Allocation Rule.
(a) The TRASOP and PAYSOP Contributions shall be allocated in accordance
with Section 5.2; however, no more than one-third of TRASOP and PAYSOP
Contributions with respect to a Plan Year may be allocated to the group of
Employees consisting of Highly Compensated Eligible Employees.
V-3
(b) No Participant may receive an allocation under the Dividend-based
Contribution provided for in Section 5.2(d) above which equals or exceeds 5% of
such Participant's Compensation for the Plan Year for which such allocation is
being made.
5.5 Maximum Allocation. The provisions of this Section shall be construed
to comply with section 415 of the Code.
(a) Notwithstanding anything in this Article to the contrary, in no event
shall the sum of (1) any Participating Company or PPL Corporation contributions
and other employer contributions, (2) any forfeitures and (3) the Participant's
own contributions, if any, allocated for any Limitation Year to any Participant
under this and any other defined contribution plan maintained by PPL or any 50%
Affiliated Company, exceed the lesser of (A) $30,000 plus the lesser of $30,000
or the value of the Stock contributed to the Plan for such Plan Year or (B)
twenty-five percent (25%) of any Participant's compensation for the Limitation
Year. Amounts described in sections 415(l) and 419A(d)(2) of the Code
contributed for any Plan Year for the benefit of any Participant shall be
treated as annual additions to the extent provided in such Sections.
(b) If the amount otherwise allocable to the accounts of a Participant
would exceed the amount described in Section 5.5(a) as a result of a reasonable
error in estimating the Participant's Compensation, the Employee Benefit Plan
Board shall determine which portion of such excess amount is attributable to the
Participant's (1) voluntary employee contributions under the Employee Savings
Plan, (2) voluntary employee contributions under the Deferred Savings Plan, (3)
elective deferrals under the Employee Savings Plan, (4) elective deferrals under
the Deferred Savings Plan, (5)
V-4
Matching Contributions under Section 4.2, (6) Company Contributions under the
Deferred Savings Plan and (7) TRASOP, PAYSOP, or Dividend-based Contributions
under Article IV.
(c) Amounts attributable to voluntary employee contributions under the
Employee Savings Plan under Section 5.5(b)(1) and earnings thereon shall be
returned to the Participant.
(d) Amounts attributable to voluntary employee contributions under the
Deferred Savings Plan under Section 5.5(b)(2) and earnings thereon shall be
returned to the Participant.
(e) Amounts attributable to elective deferrals under the Employee Savings
Plan under Section 5.5(b)(3) shall be treated as voluntary employee
contributions and, along with earnings thereon, returned to the Participant.
(f) Amounts attributable to elective deferrals under the Deferred Savings
Plan under Section 5.5(b)(4) shall be treated as voluntary employee
contributions and, along with earnings thereon, returned to the Participant.
(g) Amounts attributable to a Participant's Matching Contributions under
Section 5.5(b)(5) and earnings thereon shall be returned to the Participant.
(h) Amounts attributable to Company Contributions under the Deferred
Savings Plan under Section 5.5(b)(6) will be held in a suspense account until
the following Plan Year at which time the amounts will be used to reduce Company
Contributions for the year.
(i) Amounts attributable to excess TRASOP, PAYSOP, or Dividend-based
V-5
Contributions under Section 5.5(b)(7) shall be allocated to the accounts of
other Participants in accordance with Section 5.2. Any excess Contributions or
Stock purchased with such Contributions which cannot be allocated in a Plan Year
to Participants' Accounts shall be held in a suspense account until the Plan
Year in which it is first possible to allocate such Contributions or Stock to
Participants' Accounts.
(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 PPL 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 PPL or any 50% Affiliated Company for
all limitation
V-6
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 PPL 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.
(k) (1) The dollar limitations described in Subsections (a) and (j) shall
be adjusted in accordance with governmental regulations prescribing the method
and amount of such adjustments.
(2) The dollar limitations described in Subsections (a) and (j) shall
not reduce the annual additions to the Accounts of any Participant under the
Plan prior to the Effective Date using the applicable maximum dollar limitations
then in effect.
(l) (1) To the extent that any qualified defined contribution was in
existence on July 1, 1982, the Employee Benefit Plan Board may elect to apply
Subsection (j)(1)(B)
V-7
with respect to any Plan Year ending after December 31, 1982, by calculating the
denominator under Subsection (j)(1)(B) for all Plan Years ending before January
1, 1983. The alternate amount shall be equal to the amount determined for the
denominator under Subsection (j)(1)(B) as in effect for the Plan Year ending in
1982, multiplied by the "transition fraction."
(2) The transition fraction shall be a fraction determined as
follows:
(A) The numerator shall consist of the lesser of: (i) $51,875,
or (ii) thirty-five percent (35%) of the Participant's compensation for the Plan
Year ending in 1981.
(B) The denominator shall consist of the lesser of: (i) $41,500,
or (ii) twenty-five percent (25%) of the Participant's compensation for the Plan
Year ending in 1981.
(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).
ARTICLE VI
PARTICIPANTS' ACCOUNTS
----------------------
6.1 Accounts. All contributions and earnings thereon may be invested in
one commingled Fund for the benefit of all Participants. However, in order that
the interest of each Participant may be accurately determined and computed, a
separate Account shall be maintained for each Participant which shall represent
his interest in the Fund.
6.2 Valuation. The value of each investment medium in the Fund shall be
computed by the Trustee as of the close of business on each Valuation Date on
the basis of the fair market value of all assets of the Fund.
6.3 Accounting for Allocations. The Employee Benefit Plan Board shall
provide for the establishment of accounting procedures for the purpose of making
the allocations, valuations and adjustments to Participants' Accounts provided
for in this Article. From time to time, such procedures may be modified for the
purpose of achieving equitable and nondiscriminatory allocations among the
Accounts of Participants in accordance with the general concepts of the Plan and
the provisions of this Article.
VI-1
ARTICLE VII
DISTRIBUTION
------------
7.1 General. The interest of each Participant in the Fund shall be
distributed in the manner, in the amount and at the time provided in this
Article, except that in the event of termination of the Plan the provisions of
Article X shall govern. Each Participant shall have a nonforfeitable right to
all Stock allocated to his Account, except as set forth in Sections 4.1(f),
4.7(c) and 5.5. The provisions of this Article shall be construed in accordance
with section 401(a)(9) of the Code and regulations thereunder.
7.2 Death. If a Participant dies either while in the employment of a
Participating Company or after termination of employment but prior to the
commencement of benefit payments, the full amount of his interest in the Fund
shall be paid to the Participant's beneficiary in a single sum.
7.3 Beneficiary Designation.
(a) Death benefits under the Plan shall be paid to the surviving Spouse of
a Participant, including the Spouse of a Participant who has retired or whose
employment has terminated before the Effective Date, (1) unless (A) such Spouse
consents in writing not to receive such benefit and consents to the specific
beneficiary designated by the Participant, (B) such consent acknowledges its own
effect, and (C) such consent is witnessed by a Plan representative or notary
public; or (2) unless the Participant establishes to the satisfaction of a Plan
representative either that he has no Spouse, that his Spouse cannot be located,
or that his Spouse's consent is not required under such other circumstances as
are prescribed under governmental regulations.
VII-1
(b) Except as provided in this Section, each Participant shall have the
unrestricted right at any time to designate the beneficiary or beneficiaries who
shall receive, upon or after his death, his interest in the Fund by executing
and filing with the Employee Benefit Plan Board a written instrument in such
form as may be prescribed by the Employee Benefit Plan Board for that purpose.
Except as provided in this Section, the Participant shall have the unrestricted
right to revoke and to change, at any time and from time to time, any
beneficiaries previously designated by him by executing and filing with the
Employee Benefit Plan Board a written instrument in such form as may be
prescribed by the Employee Benefit Plan Board for that purpose. No designation,
revocation or change of beneficiaries shall be valid and effective unless and
until filed with the Employee Benefit Plan Board.
If no designation is made, or if the beneficiaries named in such
designation predecease the Participant, or if the beneficiary cannot be located
by the Employee Benefit Plan Board, the interest of the deceased Participant
shall be paid to the surviving spouse or if none, to the Participant's estate.
The amount payable upon the death of a Participant shall be paid in Stock
or cash as elected by the recipients.
7.4 Disability.
(a) If a Participant suffers a Total Disability prior to his termination
of employment with PPL and all Affiliated Companies and is on inactive status on
account of such Total Disability, the full amount of his interest in the Fund
shall be paid to him or applied for his benefit upon Participant's consent in
writing to such payment or application
VII-2
following the determination of his Total Disability in accordance with the
provisions of this Article VII.
(b) Total Disability shall be determined by the Employee Benefit Plan
Board which may consult with a medical examiner selected by it. The medical
examiner shall have the right to make such physical examinations and other
investigations as may be reasonably required to determine Total Disability.
7.5 Termination of Employment. Upon a Participant's retirement or other
termination of employment with PPL and all Affiliated Companies, he shall be
entitled to receive his interest in the Fund. Subject to Subsection 7.7(b), (a)
if the value of his interest in the Fund exceeds, or exceeded at the time of any
prior distribution, $5,000, his interest shall not be paid to him or applied for
his benefit until (1) he consents in writing to such payment or application, or
(2) he attains his 65th birthday or (3) he dies; whichever occurs first; (b)
otherwise, his interest shall be paid to him or applied for his benefit in a
single sum within 60 days after such termination takes place.
7.6 Valuation for Distribution. For the purposes of paying the amounts to
be distributed to a Participant or his beneficiaries under the provisions of
this Article, the value of the Fund and the amount of the Participant's interest
shall be determined in accordance with the provisions of Article VI as of the
Valuation Date coincident with or next following the event which gives rise to a
payment under this Article. There shall be added to such amount the additional
contributions, if any, which are to be allocated to the Participant's Account
pursuant to Article IV.
7.7 Timing of Distribution.
VII-3
(a) Subject to Subsection (b), a Participant entitled to receive benefits
under this Article shall commence to receive benefits as soon as
administratively practicable, but in no event shall any Participant receive
benefits later than the earliest of the dates determined under (1), (2) or (3)
below:
(1) the 60th day after the close of the Plan Year in which occurs the
later of (A) the Participant's attainment of age 65 or (B) the Participant's
termination of employment with PPL and all Affiliated Companies;
(2) the April 1st after the end of the calendar year in which occurs
the Participant's attainment of age 70 1/2; or
(3) in the event of the Participant's death, December 31 of the
calendar year following the year of the Participant's death.
(b) A Participant who terminates employment with a Participating Company
on or after age 55, and whose Account exceeds, or exceeded at the time of any
prior distribution, $5,000, shall be entitled to defer payment of his benefits
until a date not later than that specified in Section 7.7(a)(2).
(c) The Employee Benefit Plan Board shall supply to each Participant who
is entitled to distribution before his death or attainment of age 65 and the
value of whose Account exceeds, or exceeded at the time of any prior
distribution, $5,000, written information relating to his right to defer
distribution under Section 7.4, 7.5 or 7.7(b). Such notice shall be furnished
not less than 30 days nor more than 90 days prior to the Participant's benefit
commencement date, except that such notice may be furnished less than 30 days
prior to the Participant's benefit commencement date if (1) the Employee
VII-4
Benefit Plan Board informs the Participant that the Participant has the right to
a period of at least 30 days after receiving such notice to consider the
decision whether to elect a distribution, and the mode in which he desires such
distribution to be made, and (2) the Participant, after receiving such notice,
affirmatively elects a distribution.
7.8 Mode of Distribution. The sole form of benefit under Sections 7.2, 7.4
and 7.5 shall be a single sum payment. Any additional Stock which is
subsequently allocated to the Participant's Account shall be distributed within
60 days following the date on which such allocation is actually made. At the
election of the Participant, all distributions will be either in cash or in full
shares of Stock and cash in lieu of fractional shares based on the price at
which the Trustee sells such Stock or the fair market value thereof, if the
Stock is not sold.
7.9 Withdrawals.
(a) A Participant may, by filing a written election with the Employee
Benefit Plan Board, withdraw from his Account all Stock which has been allocated
with respect to a Plan Year ending at least 84 months prior to the end of the
Plan Year in which such election was made. The number of shares eligible for
withdrawal during a Plan Year will be determined on or before October 1 of the
preceding Plan Year. Elections must be received by the first day of March, June,
September or December of the year in which the withdrawal is made. Payments of
withdrawals under this Subsection 7.9(a) will be made within 60 days following
the end of the quarter for which the election is made.
(b) (1) Any Participant who has completed at least ten years of
participation in the Plan and attained age 55 may elect within 90 days after the
close of each Plan
VII-5
Year in the election period (as defined in Subsection (b)(2) below) to withdraw
25% of his Account attributable to Stock acquired by or contributed to the Plan
on or after December 31, 1986 to the extent such portion of his Account exceeds
the sum of (A) the amount to which a prior election under this Subsection
applies and (B) any amount withdrawn under Subsection (a) pursuant to an
election made within 90 days after the close of any Plan Year in the election
period. In the case of a Participant's final election, "50%" shall be
substituted for "25%" in the preceding sentence to determine the amount the
Participant may withdraw. The determination of the date on which Stock is
acquired by or contributed to the Plan shall be made in accordance with section
401(a)(28) of the Code and regulations thereunder.
(2) The election period for purposes of this Subsection is the six
Plan Year period that begins with the Plan Year in which occurs the later of (A)
the Participant's attainment of age 55 or (B) the first Plan Year in which the
Participant has completed ten years of participation, except that the election
period shall not begin before December 31, 1986.
(3) Payments of withdrawals under this Subsection 7.9(b) will be made
within 90 days following the end of the 90-day period during which the
withdrawal election is made.
(c) Notwithstanding the provisions of Section 7.9(a) and (b) above,
Officers may not withdraw any Stock which has been in the Plan less than six
months. Any election by an Officer to make a withdrawal pursuant to this Section
7.9 must be made not less than six months prior to the date of the withdrawal
and such election shall be irrevocable.
VII-6
7.10 Optional Direct Transfer of Eligible Rollover Distributions.
(a) Except to the extent otherwise provided by section 401(a)(31) of the
Code and regulations thereunder, a Participant or an alternate payee under a
Qualified Domestic Relations Order who is the spouse or former spouse of a
Participant, entitled to receive a withdrawal or distribution from the Plan may
elect to have the Trustee transfer all or a portion of the amount to be
distributed directly to:
(1) an individual retirement account described in section 408(a) of
the Code,
(2) an individual retirement annuity described in section 408(b) of
the Code (other than an endowment contract),
(3) a qualified defined contribution retirement plan described in
section 401(a) of the Code, the terms of which permit the acceptance of rollover
contributions from this Plan, or
(4) an annuity plan described in section 403(a), the terms of which
permit the acceptance of rollover contributions from this Plan.
A beneficiary entitled to receive a distribution from the Plan who is the spouse
of a Participant shall have the right to transfer all or a portion of the amount
to be distributed directly to a section 408(a) or 408(b) plan described in
Subsections (a)(1) and (a)(2) above.
(b) the Participant or beneficiary must specify the name of the plan to
which the amount is to be transferred, on a form and in a manner prescribed by
the Employee Benefit Plan Board.
VII-7
(c) Subsection (a) shall not apply to the following distributions:
(1) any distribution of Matching Contributions,
(2) any distribution which is one of a series of substantially equal
installments over either (1) a period of ten (10) years or more, or (2) a period
equal to the life or life expectancy of the Participant or the joint lives or
life expectancy of the Participant and his beneficiary,
(3) that portion of any distribution after the Participant's Required
Beginning Date that is required to be distributed to the Participant by the
minimum distribution rules of section 401(a)(9) of the Code, or
(4) such other distributions as may be exempted by applicable statute
or regulation from the requirements of section 401(a)(31) of the Code.
VII-8
ARTICLE VIII
ADMINISTRATION
--------------
8.1 Administration by Employee Benefit Plan Board.
(a) The Plan shall be administered by an Employee Benefit Plan Board,
consisting of not more than five persons nor fewer than three persons. Members
of the Employee Benefit Plan Board shall be appointed from time to time by the
Board of Directors of PPL Corporation and shall serve at the pleasure of the
Board of Directors of PPL Corporation. Vacancies shall be filled in the same
manner as appointments. Any member of the Employee Benefit Plan Board may
resign by delivering a written resignation to the Board of Directors or to the
Secretary of the Employee Benefit Plan Board effective upon delivery or at any
other future date specified therein.
(b) The Employee Benefit Plan Board shall elect a chairman from its
members and shall appoint a secretary who may be, but need not be, a member of
the Employee Benefit Plan Board. The Employee Benefit Plan Board shall not
receive any compensation for its services.
(c) The Employee Benefit Plan Board may act at a meeting or in writing
without a meeting. A majority of the members of the Employee Benefit Plan Board
at the time in office shall constitute a quorum for the transaction of business
at all meetings and a majority of those present at any meeting shall be required
for action. All decisions by the Employee Benefit Plan Board arrived at without
a meeting shall be made by the vote or assent of a majority of its members. No
member of the Employee Benefit Plan Board may act, vote or otherwise influence a
decision of the Employee Benefit Plan Board
VIII-1
specifically relating to the Employee Benefit Plan Board member's own
participation under the Plan.
(d) The Employee Benefit Plan Board may adopt such rules and regulations
as it deems desirable for the conduct of its affairs. All rules and decisions of
the Employee Benefit Plan Board shall be uniformly and consistently applied. The
Employee Benefit Plan Board shall have the final right of interpretation,
construction and determination under the Plan and decisions of the Employee
Benefit Plan Board are final and conclusive for all purposes.
8.2 Duties and Powers of Employee Benefit Plan Board and Administrative
Committee.
(a) In addition to the duties and powers described elsewhere hereunder,
the Employee Benefit Plan Board shall have all such powers as may be necessary
to discharge its duties hereunder including but not limited to the following
specific duties and powers:
(1) to retain such consultants, accountants, agents, clerical
assistants and attorneys as may be deemed necessary or desirable to render
statements, reports and advice with respect to the Plan and to assist the
Employee Benefit Plan Board in complying with all applicable rules and
regulations affecting the Plan. Any consultants, accountants, or attorneys may
be the same as those retained by PPL;
(2) to make such amendments as provided for in Article X;
(3) to enact uniform and nondiscriminatory rules and regulations to
carry out the provisions of the Plan;
VIII-2
(4) to compute the amount of any distribution payable to a
Participant or other amounts payable under the Plan and authorize disbursement
from the Fund;
(5) to interpret the provisions of the Plan;
(6) to determine whether any domestic relations order received by the
Plan is a qualified domestic relations order as provided in section 414(p) of
the Code;
(7) to evaluate administrative procedures;
(8) to delegate such duties and powers as the Employee Benefit Plan
Board shall determine from time to time to any person or persons or to an
administrative committee. To the extent of any such delegation, the delegate
shall have the duties, powers, authority, and discretion of the Employee Benefit
Plan Board; and
(9) to establish a claims procedure under which claims will be
reviewed by the Manager-Employee Benefits of PPL (effective upon the closing of
the PPL Corporation corporate realignment pursuant to which PPL will separate
its electric generation and energy marketing operations from its regulated
electric transmission and distribution business, by the Manager-Employee
Benefits of PPL Services Corporation), or such other individual as may be
designated by the Vice President-Human Resources of PPL (effective upon the
closing of the PPL Corporation corporate realignment pursuant to which PPL will
separate its electric generation and energy marketing operations from its
regulated electric transmission and distribution business, by the Vice
President-Human Resources of PPL Services Corporation) and under which each
claimant shall receive notice in writing in the event any claim for benefits
with respect to a Participant's participation in the Plan has been denied; such
notice shall set
VIII-3
forth the specific reasons for such denial. Such claims procedure shall also
provide an opportunity for full and fair review by the Administrative Committee
of the Employee Benefit Plan Board;
(b) In addition, to any other duties and powers it may possess, the
Administrative Committee of the Employee Benefit Plan Board shall have the
following specific duties and powers:
(1) to resolve questions or disputes relating to eligibility for
distributions or the amount of distributions under the Plan;
(2) to interpret the provisions of the Plan;
The Employee Benefit Plan Board and the Administrative Committee of the
Employee Benefit Plan Board shall have the discretionary authority and final
right to interpret, construe and make benefit determinations (including
eligibility and amount) under the Plan. The decisions of the Employee Benefit
Plan Board and the Administrative Committee of the Employee Benefit Plan Board
are final and conclusive for all purposes.
8.3 Reliance on Reports and Certificates. The members of the Employee
Benefit Plan Board and the officers and directors of PPL, any Participating
Company and PPL Corporation shall be entitled to rely upon all valuations,
certificates and reports made by the Trustee or by any duly appointed
accountant, and upon all opinions given by any duly appointed legal counsel.
8.4 Functions. The Employee Benefit Plan Board shall cause to be
maintained such books of account, records and other data as may be necessary or
advisable in its
VIII-4
judgment for the purpose of the proper administration of the Plan.
8.5 Indemnification of the Employee Benefit Plan Board. Each member of the
Employee Benefit Plan Board, the Administrative Committee, and each of their
designees shall be indemnified by the Participating Companies against expenses
(other than amounts paid in settlement to which a Participating Company does not
consent) reasonably incurred by him in connection with any action to which he
may be a party by reason of the delegation to him of administrative functions
and duties, except in relation to matters as to which he shall be adjudged in
such action to be personally guilty of negligence or willful misconduct in the
performance of his duties. The foregoing right to indemnification shall be in
addition to such other rights as the member of the Employee Benefit Plan Board,
the Administrative Committee, and each of their designees may enjoy as a matter
of law or by reason of insurance coverage of any kind. Rights granted hereunder
shall be in addition to and not in lieu of any rights to indemnification to
which the member of the Employee Benefit Plan Board, the Administrative
Committee and each of their designees may be entitled pursuant to the bylaws of
PPL. Service on the Employee Benefit Plan Board shall be deemed in partial
fulfillment of the Employee Benefit Plan Board member's function as an employee,
officer and/or director of PPL or PPL Corporation, if he serves in such other
capacity as well.
8.6 Allocation of Fiduciary Responsibilities. A fiduciary shall have only
those specific powers, duties, responsibilities and obligations as are
specifically given under this Plan or the Trust Agreement. A fiduciary may serve
in more than one fiduciary capacity with respect to the Plan. It is intended
that each fiduciary shall be responsible for the
VIII-5
proper exercise of the fiduciary's own powers, duties, responsibilities and
obligations under this Plan and the Trust Agreement, and generally shall not be
responsible for any act or failure to act of another fiduciary.
VIII-6
ARTICLE IX
THE FUND
--------
9.1 Designation of Trustee. PPL, by appropriate resolution of its Board of
Directors, shall name and designate a Trustee and enter into a Trust Agreement
with such Trustee. PPL shall have the power to amend the Trust Agreement, remove
the Trustee, and designate a successor Trustee, all as provided in the Trust
Agreement. All of the assets of the Plan shall be held by the Trustee for use in
accordance with this Plan in providing for the benefits hereunder.
9.2 Exclusive Benefit. Prior to the satisfaction of all liabilities under
the Plan in the event of termination of the Plan, no part of the corpus or
income of the Fund shall be used for or diverted to purposes other than for the
exclusive benefit of Participants and their beneficiaries except as expressly
provided in this Plan and in the Trust Agreement.
9.3 No Interest in Fund. No persons shall have any interest in, or right
to, any part of the assets or income of the Fund, except as to and to the extent
expressly provided in this Plan and in the Trust Agreement.
9.4 Trustee. The Trustee shall be the fiduciary with respect to management
and control of Plan assets held by it and shall have exclusive and sole
responsibility for the custody and investment thereof in accordance with the
Trust Agreement.
9.5 Expenses. All expenses of administration of this Plan shall be paid
from the Fund unless they are paid directly by a Participating Company.
IX-1
ARTICLE X
AMENDMENT OR TERMINATION OF THE PLAN
------------------------------------
10.1 Amendment. Each Participating Company shall have the power to amend
the Plan by or pursuant to action of its board of directors, but any such
amendment to the Plan must be approved by PPL Services Corporation, and shall
only apply to those Participants who are employees of the Participating Company
authorizing the amendment. Any amendment that significantly affects the cost of
the Plan or significantly alters the benefit design or eligibility requirements
of the Plan shall be adopted by both PPL Services Corporation and any
Participating Company whose employees are affected. In addition, the Employee
Benefit Plan Board may adopt any amendment that does not significantly affect
the cost of the Plan or significantly alter the benefit design or eligibility
requirements of the Plan. Each amendment to the Plan will be binding on the
Participating Company to which it applies. Except as expressly provided
elsewhere in the Plan, prior to the satisfaction of all liabilities with respect
to the benefits provided under this Plan, no such amendment or termination shall
cause any part of the monies contributed hereunder to revert to PPL or to be
diverted to any purpose other than for the exclusive benefit of Participants and
their beneficiaries. No amendment shall have the effect of retroactively
depriving Participants of benefits already accrued under the Plan. Upon complete
termination of the Plan without establishment or maintenance of a successor plan
(other than an employee stock ownership plan as defined in section 4975(e)(7) of
the Code), Participants may receive distribution of their Accounts. Amendments
to the allocation formulas contained in Article V shall not be
X-1
made more frequently than once every six months.
10.2 Termination. The Plan and the Fund forming part of the Plan may be
terminated or contributions completely discontinued at any time by or pursuant
to action of the board of directors of PPL Corporation. In the event of a
termination, partial termination, or a complete discontinuance of contributions
or in the event PPL Corporation is dissolved, liquidated, or adjudicated a
bankrupt, the interest of the Participants, their estates and beneficiaries,
shall be nonforfeitable and shall be fully vested, and distributions shall be
made to them in full shares of Stock and cash in lieu of fractional shares based
on the price at which the Trustee sells such Stock or the fair market value
thereof. When all assets have been paid out by the Trustee, the Fund shall
cease. Any distribution after termination of the Plan may be made at any time,
and from time to time, in whole or in part in full shares of Stock and cash in
lieu of fractional shares based on the price at which the Trustee sells such
Stock or the fair market value thereof; provided, however, that no Stock may be
distributed to a Participant within seven years after the month in which such
Stock was allocated to the Participant's Account except in the case of the
Participant's retirement, Total Disability, death or other termination of
employment with PPL and all Affiliated Companies. In making such distributions,
any and all determinations, divisions, appraisals, apportionments and allotments
so made shall be final and conclusive.
10.3 Special Rule. In the event that the Plan is terminated in accordance
with Section 10.2, unallocated amounts held in a suspense account described in
Section 5.5 shall be allocated among Participants, subject to the limitations of
Section 5.5, in the year
X-2
of termination and amounts which cannot be allocated by reason of the
limitations of Section 5.5 may be withdrawn from the Fund and returned to PPL or
PPL Corporation.
10.4 Merger. The Plan shall not be merged with or consolidated with, or its
assets be transferred to, any other qualified retirement plan unless each
Participant would (assuming the Plan then terminated) receive a benefit after
such merger, consolidation or transfer which is of actuarial value equal to or
greater than the benefit he would have received from the value of his Account if
the Plan had been terminated on the day before such merger, consolidation or
transfer. No amounts shall be transferred to this Plan which would cause the
Plan to be a direct or indirect transferee of a plan to which the joint and
survivor annuity and pre-retirement survivor annuity requirements of sections
401(a)(11) and 417 of the Code apply.
X-3
ARTICLE XI
TOP HEAVY PROVISIONS
--------------------
11.1 General. The following provisions shall apply automatically to the
Plan and shall supersede any contrary provisions for each Plan Year in which the
Plan is a Top Heavy Plan. It is intended that this Article shall be construed in
accordance with the provisions of section 416 of the Code.
11.2 Definitions. The following definitions shall supplement those set
forth in Article II of the Plan:
(a) "Aggregation Group" shall mean:
(1) each plan (including a frozen plan or a plan which has been
terminated during the 60-month period ending on the Determination Date) of PPL
or an Affiliated Company in which a Key Employee is a participant,
(2) each other plan (including a frozen plan or a plan which has
been terminated during the 60-month period ending on the Determination Date) of
PPL or an Affiliated Company which enables any plan in which a Key Employee
participates to meet the requirements of section 401(a)(4) or 410 of the Code,
and
(3) each other plan (including a frozen plan or a plan which has
been terminated during the 60-month period ending on the Determination Date) of
PPL or an Affiliated Company which is included by the Employee Benefit Plan
Board if the Aggregation Group, including such plan, would continue to meet the
requirements of sections 401(a)(4) and 410 of the Code.
(b) "Determination Date" shall mean the last day of the preceding Plan
Year,
XI-1
except for the first Plan Year, it shall mean the last day of that Plan Year.
(c) "Key Employee" shall mean any employee, former employee or beneficiary
of either who at any time during the 60-month period ending on the Determination
Date is described in subparagraphs 1 through 4 below of this Subsection ll.2(c).
Notwithstanding the foregoing, the number of persons described in Subsection
(c)(2) for the entire 60-month period shall be limited to 10.
(1) an officer of PPL having annual compensation, as defined in
section 414(q)(7) of the Code, from PPL and all Affiliated Companies for a Plan
Year during such period greater than fifty percent (50%) of the amount in effect
under section 415(b)(1)(A) of the Code for the calendar year in which such Plan
Year ends;
(2) one of the ten employees with annual compensation, as defined
in section 414(q)(7) of the Code, from PPL and all Affiliated Companies greater
than the amount described in section 415(c)(1)(A) of the Code owning (or
considered as owning within the meaning of section 318 of the Code) the largest
interests in PPL or any Affiliated Company, provided that such interest exceeds
one-half of one percent (.5%) of the total share ownership of PPL or Affiliated
Company;
(3) a five percent (5%) owner of PPL; or
(4) a one percent (1%) owner of PPL who has annual compensation, as
defined in section 414(q)(7) of the Code, from PPL and all Affiliated Companies,
which in the aggregate is in excess of $150,000.
The above determinations will be made in accordance with section 416(i) of
the Code. No more than fifty (50) employees (or, if less, the greater of three
employees or
XI-2
ten percent (10%) of the greatest number of employees, including leased
employees within the meaning of section 414(n) of the Code, but excluding
employees described in section 414(q)(8) of the Code, employed by PPL and all
Affiliated Companies during the 60-month period ending on the Determination
Date) shall be treated as officers.
(d) "Key Employee Ratio" shall mean the ratio for any Plan Year,
calculated as of the Determination Date of such Plan Year, determined by
comparing the amount described in Subsection (d)(1) with the amount described in
Subsection (d)(2) after deducting from each such amount any portion thereof
described in Subsection (d)(3).
(1) The sum of (A) the present value of all accrued benefits of Key
Employees under all qualified defined benefit plans included in the Aggregation
Group, (B) the balances in all of the accounts of Key Employees under all
qualified defined contribution plans included in the Aggregation Group, and (C)
the amounts distributed from all plans in such Aggregation Group to or on behalf
of any Key Employee during the period of five Plan Years ending on the
Determination Date, except benefits paid on account of death in excess of the
accrued benefit or account balances immediately prior to death.
(2) The sum of (A) the present value of all accrued benefits of all
participants under all qualified defined benefit plans included in the
Aggregation Group, (B) the balances in all of the accounts of all participants
under all qualified defined contribution plans included in the Aggregation Group
and (C) the amounts distributed from all plans in such Aggregation Group to or
on behalf of any participant during the period of five Plans Years ending on the
Determination Date.
XI-3
(3) The sum of (A) all rollover contributions (or fund to fund
transfers) to the Plan by an Employee after December 31, 1983, from a plan
sponsored by an employer which is not PPL or an Affiliated Company, (B) any
amount that is included in Subsections (d)(1) and (2) for a person who is a Non-
Key Employee as to the Plan Year of reference but who was a Key Employee as to
any earlier Plan Year, and (C) for Plan Years beginning after December 31, 1984,
any amount that is included in Subsections (d)(1) and (2) for a person who had
not performed any services for PPL during the five-year period ending on the
Determination Date.
(4) The present value of accrued benefits under all qualified
defined benefit plans included in the Aggregation Group shall be determined (A)
on the basis of the 1971 TPF&C Forecast Mortality Table and an interest rate of
six and one-half percent (6 1/2%) and (B) under the accrual method used for all
qualified defined benefit plans maintained by PPL or any Affiliated Company, if
a single method is used for all such plans, or otherwise, the slowest accrual
method permitted under section 411 (b) (1) (C) of the Code.
(e) "Non-Key Employee" shall mean any person who is an Employee or a
former Employee of PPL or an Affiliated Company in any Plan Year but who is not
a Key Employee as to that Plan Year. The term Non-Key Employee shall also
include the beneficiaries of such persons.
(f) "Super Top Heavy Plan" shall mean each plan in an Aggregation Group
if, as of the applicable Determination Date, the Key Employee Ratio in the plan
exceeds ninety percent (90%), determined in accordance with section 416 of the
Code.
XI-4
(g) "Top Heavy Plan" shall mean each plan in an Aggregation Group if, as
of the applicable Determination Date, the Key Employee Ratio exceeds sixty
percent (60%) determined in accordance with section 416 of the Code.
11.3 Minimum Contributions for Non-Key Employees.
(a) In each Plan Year in which the Plan is a Top Heavy Plan, each Eligible
Employee who is not a Key Employee (except an Eligible Employee who is not a Key
Employee as to the Plan Year of reference but who was a Key Employee as to any
earlier Plan Year or an Eligible Employee who is covered by a collective
bargaining agreement) and who is actively employed by PPL on the last day of
such Plan Year will receive a total minimum Company Contribution (including
forfeitures) under all plans described in Section 11.2(a)(1) and (2) of not less
than three percent (3%) of the Eligible Employee's annual compensation as
defined in Section 5.5(m). Salary reduction contributions to such plans made on
behalf of an Eligible Employee in plan years beginning after December 31, 1984
but before January 1, 1989, shall be deemed to be Company Contributions for the
purpose of this Subsection.
(b) The percentage set forth in Section 11.3(a) shall be reduced to the
percentage at which contributions, including forfeitures are made (or are
required to be made) for a Plan Year for the Key Employee for whom such
percentage is the highest for such Plan Year. This percentage shall be
determined for each Key Employee by dividing the contribution for such Key
Employee by his compensation, as defined in Section 5.5(m), for the Plan Year,
determined under Section 11.4. All defined contribution plans required to be
included in an Aggregation Group shall be treated as one plan for the
XI-5
purpose of this Section 11.3; however, this Section 11.3(b) shall not apply to
any plan which is required to be included in an Aggregation Group if such plan
enables a defined benefit plan in such group to meet the requirements of section
401(a)(4) or section 410 of the Code.
(c) If a Non-Key Employee described in Subsection (a), participates in
both a defined benefit plan and a defined contribution plan described in
Sections 11.2(a)(1) and (2) maintained by PPL, PPL is not required to provide
such Employee with both the minimum benefit and the minimum contribution.
Regulations prescribed by the Secretary of the Treasury shall serve to prevent
inappropriate omissions or duplications of minimum benefits or contributions.
11.4 Social Security. The Plan for each Plan Year in which it is a Top
Heavy Plan, must meet the requirements of this Article XI without regard to any
Social Security or similar contributions or benefits.
11.5 Adjustment to Maximum Allocation Limitation.
(a) For each Plan Year in which the Plan is (1) a Super Top Heavy Plan or
(2) a Top Heavy Plan and the Employee Benefit Plan Board does not make the
election described in Subsection (c) and for which a similar election has not
been made as to another plan in the Aggregation Group, the 1.25 factor in the
defined benefit and defined contribution fractions described in Article V shall
be reduced to 1.0. The adjustment described in this Subsection shall not apply
to any Participant during the period in which the Participant earns no
additional accrued benefit under any defined benefit plan and has no employer
contributions, forfeitures, or voluntary contributions allocated in his
XI-6
accounts under any defined contribution plan.
(b) In the case of any Top Heavy Plan to which Section 5.5(l) applies,
"$41,500" shall be substituted for "$51,875" in the calculation of the
transition fraction.
(c) If, in any Plan Year in which the Plan is a Top Heavy Plan but not a
Super Top Heavy Plan, the Aggregation Group described in Sections 11.2(a)(1) and
(2) also includes a defined benefit plan, the Employee Benefit Plan Board may
elect to use a factor of 1.25 in computing the denominator of the defined
benefit and defined contribution fractions described in Article V. In the event
of such an election, the minimum Company Contribution described in Section
11.3(a) for each Non-Key Employee who is not covered under a defined benefit
plan shall be increased from three percent (3%) to four percent (4%), and the
minimum benefit described in Section 11.3(c) for each Non-Key Employee who is
covered under a defined benefit plan shall be increased in accordance with the
terms of such defined benefit plan.
XI-7
ARTICLE XII
GENERAL PROVISIONS
------------------
12.1 No Employment Rights. Neither the action of PPL in establishing the
Plan, nor any provisions of the Plan, nor any action taken by it or by the
Employee Benefit Plan Board shall be construed as giving to any employee of a
Participating Company the right to be retained in its employ, or any right to
payment except to the extent of the benefits provided in the Plan to be paid
from the Fund.
12.2 Source of Benefits. All benefits payable under the Plan shall be paid
or provided for solely from the Fund, and neither any Participating Company nor
PPL Corporation assume liability or responsibility therefor.
12.3 Governing Law. All questions pertaining to the validity, construction
and operation of the Plan shall be determined in accordance with the laws of
Pennsylvania, except to the extent superseded by ERISA.
12.4 Spendthrift Clause.
(a) No benefit payable at any time under this Plan, and no interest or
expectancy herein shall be anticipated, assigned, or alienated by any
Participant or beneficiary, or be subject to attachment, garnishment, levy,
execution or other legal or equitable process, except for (1) an amount
necessary to satisfy a federal tax levy made pursuant to section 6331 of the
Code and (2) any benefit payable pursuant to a domestic relations order within
the meaning of the Code.
(b) Any attempt to alienate or assign such benefit, whether presently or
thereafter payable, shall be void. No benefit shall in any manner be liable for
or subject to
XII-1
the debts or liability of any Participant or beneficiary. If any
Participant or beneficiary shall attempt to, or shall, alienate or assign his
benefits under the Plan or any part thereof, or if by reason of his bankruptcy
or other event happening at any time, such benefits would devolve upon anyone
else or would not be enjoyed by him, then the Employee Benefit Plan Board may
terminate payment of such benefit and hold or apply it to or for the benefit of
the Participant or beneficiary.
(c) The Employee Benefit Plan Board shall review any domestic relations order
to determine whether it is qualified within the meaning of section 414(p) of the
Code. An order shall not be qualified unless it complies with all applicable
provisions of the Plan concerning mode of payment and manner of elections.
Notwithstanding the preceding sentence and any restrictions on timing of
distributions and withdrawals under the Plan, an order may provide for
distribution immediately or at any other time specified in the order.
12.5 Incapacity. If the Employee Benefit Plan Board deems any Participant
who is entitled to receive payments hereunder incapable of receiving or
disbursing the same by reason of age, illness or infirmity or incapacity of any
kind, the Employee Benefit Plan Board may direct the Trustee to apply such
payment directly for the comfort, support and maintenance of such Participant or
to pay the same to any responsible person caring for the Participant as
determined by the Employee Benefit Plan Board to be qualified to receive and
disburse such payments for the Participant's benefit, and the receipt of benefit
such person shall be a complete acquittance for the payment of benefit.
Payments pursuant to this Section 12.5 shall be complete discharge to the extent
thereof
XII-2
of any and all liability of the Participating Companies, PPL Corporation, the
Employee Benefit Plan Board, the Administrative Committee (if any), the Trustee,
and the Fund.
12.6 Gender and Number. Except where otherwise clearly indicated by
context, the masculine shall include the feminine, the singular shall include
the plural, and vice versa.
12.7 Voting or Tendering Stock. Each Participant (or, in the event of his
or her death, his or her beneficiary) is, for purposes of this Section 12.7,
hereby designated a "named fiduciary," within the meaning of section 403(a)(1)
of ERISA with respect to his or her proportionate number of shares of Stock
(such proportionate number of shares being determined at the respective times
such fiduciary rights are exercisable, as set forth below).
(a) Voting Rights. Each Participant (or beneficiary) shall have the
right, to the extent of his or her proportionate number of shares of Stock (as
determined in the last sentence of this Section 12.7(a)) to instruct the Trustee
in writing as to the manner in which to vote such Stock at any stockholders'
meeting of PPL Corporation. PPL shall use its best efforts to timely distribute
or cause to be distributed to each Participant (or beneficiary) the information
distributed to stockholders of PPL Corporation in connection with any such
stockholders' meeting, together with a form requesting confidential instructions
to the Trustee on how such shares of Stock shall be voted on each such matter.
Upon timely receipt of such instructions, the Trustee shall, on each such
matter, vote as directed the appropriate number of shares of Stock (including
fractional shares). An individual's proportionate number of shares of Stock
held in the trust shall be equal to
XII-3
the product of multiplying the total number of shares of Stock by a fraction,
the numerator of which shall be the respective number of shares of Stock which
are held in such individual's account for which he or she provides instructions
to the Trustee and the denominator of which shall be the number of shares of
Stock in all such accounts for which instructions are provided to the Trustee.
(b) Rights on Tender or Exchange Offer. Each Participant (or
beneficiary) shall have the right, to the extent of his or her proportionate
number of shares of Stock (as determined in the last sentence of this Section
12.7(b)) of shares to instruct the Trustee in writing as to the manner in which
to respond to a tender or exchange offer with respect to such Stock. PPL shall
use its best efforts to timely distribute or cause to be distributed to each
such Participant (or beneficiary) the information distributed to stockholders of
PPL Corporation in connection with any such tender or exchange offer. Upon
timely receipt of such instructions, the Trustee shall respond as instructed
with respect to such shares. If, and to the extent that, the Trustee shall not
have received timely instructions from any individual given a right to instruct
the Trustee with respect to certain shares of Stock by the first sentence of
this Section 12.7(b), such individual shall be deemed to have timely instructed
the Trustee not to tender or exchange such shares of Stock. An individual's
proportionate number of shares of Stock shall be equal to the product of
multiplying the total number of shares of Stock by a fraction, the numerator of
which shall be the number of shares which are held in such individual's account
and the denominator of which shall be the total number of shares of Stock.
(c) Confidentiality. All instructions received by the Trustee from
XII-4
individual participants (or beneficiaries) pursuant to this Section 12.7 shall
be held by the Trustee in strict confidence and shall not be divulged or
released to any person; provided, that, to the extent necessary for the
operation of the Plan or compliance with applicable law, such instructions may
be relayed by the Trustee to a recordkeeper, auditor or other person providing
services to the Plan or responsible for monitoring compliance with applicable
laws, if such person is either:
(1) a person who is not a Participating Company or an
Affiliated Company or an employee, officer or director
of a Participating Company or an Affiliated Company and
who agrees not to divulge such instructions to any
other person, including a Participating Company, an
Affiliated Company, or employees, officers and
directors of a Participating Company or an Affiliated
Company; or
(2) a person who is an employee of a Participating Company
or an Affiliated Company, if such person is
specifically authorized by the Employee Benefit Plan
Board to receive such information pursuant to
confidentiality procedures designed to safeguard the
confidentiality of such information. The Employee
Benefit Plan Board shall be responsible for monitoring
compliance with such procedures, for the adequacy of
XII-5
such procedures, and for appointing an independent
fiduciary to carry out activities relating to any
situation that, in the determination of the Employee
Benefit Plan Board, involves a potential for undue
employer influence on Participants (or beneficiaries)
with regard to their exercise of rights under this
Section 12.7.
12.8 Use of Loan Proceeds. Subject to 12.9, no Stock acquired with the
proceeds of an exempt loan (within the meaning of section 4975(e)(7) of the
Code) shall be subject to a put, call, or other option or buy-sell or similar
arrangement while held by or when distributed from the Plan, whether or not the
Plan is an employee stock ownership plan at such time.
12.9 Put Option. In the event the Stock is ever not readily tradeable on an
established market (whether or not the Plan is an employee stock ownership plan
at such time), PPL or PPL Corporation shall issue a "put option" to each
Participant or beneficiary receiving a distribution of Stock from the Plan.
Such put option shall permit the Participant or beneficiary to sell such Stock
to PPL or PPL Corporation, at any time during two option periods (described
below), at the then fair-market value, as determined by an independent appraiser
(as defined in section 401(a)(28) of the Code). The first put option period
shall be a period of 60 days commencing on the date the Stock is distributed to
the Participant or beneficiary. If the put option is not exercised within that
period, it will temporarily lapse. Upon the close of the Plan Year in which
such temporary lapse of the put option occurs, the Employee Benefit Plan Board
shall establish the value of the Stock,
XII-6
as determined by an independent appraiser, and shall notify each distributee who
did not exercise the initial put option prior to its temporary lapse in the
preceding Plan Year of the revised value of the Stock. The second period during
which the put option may be exercised shall commence on the date such notice of
revaluation is given and shall permanently terminate 60 days thereafter. The
Trustee may be permitted by PPL to purchase Stock tendered to PPL or PPL
Corporation under a put option. The Participant may elect that the payment for
Stock sold pursuant to a put option shall be made in one of the following forms:
(a) in substantially equal annual installments commencing within 30
days from the date of the exercise of the put option and over a period not
exceeding five years, with interest payable at a reasonable rate on any unpaid
installment balance, with adequate security provided, and without penalty for
any prepayment of such installments; or
(b) in a lump sum as soon as practicable after the exercise of the put
option.
The Trustee, on behalf of the Trust, may offer to purchase any shares of
Stock (which are not sold pursuant to a put option) from any former Participant
or beneficiary, at any time in the future, at their then fair-market value as
determined by an independent appraiser.
12.10 Compliance with Rule 16b-3. With respect to Participants subject to
section 16 of the Securities Exchange Act of 1934, transactions under this Plan
are intended to comply with all applicable conditions of Rule 16b-3 or its
successors under
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the 1934 Act. To the extent any provision of the Plan or action by the Board of
Directors, the board of directors of PPL Corporation or Employee Benefit Plan
Board involving such a Participant is deemed not to comply with an applicable
condition of Rule 16b-3, it shall be deemed null and void to the extent
permitted by law and deemed advisable by the Board of Directors, the board of
directors of PPL Corporation or Employee Benefit Plan Board.
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ARTICLE XIII
TREATMENT OF RETURNING VETERANS
-------------------------------
13.1 Applicability and Effective Date. The rights of any Returning Veteran
who resumes employment with a Participating 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 immediately 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 Contributions. 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 Service, the Participating Company shall contribute to such
Participant's Account an amount equal to the TRASOP, PAYSOP, and Dividend-based
Contributions that would have been allocated to his Account, but for his absence
for Qualified Military Service. Such
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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 Qualified 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 a Participating 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 determining 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 Military 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 a Participating
Company; or
(b) if the amount described in (a) above is not reasonably certain, his
average compensation from a Participating Company during the 12-month period
immediately
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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 Limitation 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.
Executed this day of, 2000.
PPL ELECTRIC UTILITIES CORPORATION
By
Charles P. Pinto
Vice President-Human Resources
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Schedule A
----------
A. For all Participating Companies, "Compensation" shall mean the annual
compensation received by an Employee from a Participating 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 bonuses or 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
compensation 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. Compensation
shall also include the additional compensation listed below, for Participants
in the Participating Company listed herein.
B. Effective January 1, 2000 only the following additional compensation for the
following Participating Companies shall be included in Compensation, as
defined in this Schedule A.
1. PPL Electric Utilities Corporation (formerly PP&L, Inc.) and PPL
EnergyPlus, LLC (formerly PP&L EnergyPlus Co., LLC);
a) Any single sum award paid from the variable compensation fund
created annually with a percentage of annualized base salaries in
accordance with the Managers Compensation Plan.
A-1
2. PPL EnergyPlus, LLC (formerly PP&L EnergyPlus Co., LLC):
a) Any sales incentive award paid as a single sum on an annual
basis.
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