Exhibit 4(a)_1
PP&L
EMPLOYEE STOCK OWNERSHIP PLAN
EFFECTIVE JANUARY 1, 1975
Amended and Restated
Effective January 1, 1998
PP&L
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-1
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-4
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-4
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-7
2.22 Matching Contributions................................... II-7
2.23 Market Value............................................. II-7
2.24 Officer.................................................. II-7
2.25 Participant.............................................. II-7
2.26 PAYSOP Contributions..................................... II-7
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2.27 Plan..................................................... II-8
2.28 Plan Year................................................ II-8
2.29 PP&L..................................................... II-8
2.30 Qualified Military Service............................... II-8
2.31 Resources................................................ II-8
2.32 Retirement Plan.......................................... II-8
2.33 Returning Veteran........................................ II-8
2.34 Spouse................................................... II-8
2.35 Stock.................................................... II-8
2.36 Total Disability......................................... II-8
2.37 TRASOP Contributions..................................... II-8
2.38 Trust or Trust Agreement................................. II-9
2.39 Trustee.................................................. II-9
2.40 Uniformed Services....................................... II-9
2.41 Valuation Date........................................... II-9
III. ELIGIBILITY.................................................... III-1
3.1 Eligibility............................................... III-1
3.2 Participation............................................. III-2
3.3 Reemployment after Break of Service....................... III-2
3.4 Officers, Directors, and Shareholders..................... III-2
3.5 Rights Affected........................................... III-2
3.6 Data...................................................... III-2
IV. CONTRIBUTIONS TO THE FUND...................................... IV-1
4.1 TRASOP Contributions...................................... IV-1
4.2 Matching Contributions.................................... IV-3
4.3 PAYSOP Contributions...................................... IV-4
4.4 Dividend-based Contribution............................... IV-5
4.5 Investment in Stock....................................... IV-5
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-7
4.8 Suspension of Matching Contributions...................... IV-9
V. ALLOCATION..................................................... V-1
5.1 Accounts.................................................. V-1
5.2 Allocation of Contributions............................... V-1
5.3 Allocation of Earnings.................................... V-3
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5.4 Special Allocation Rule................................... V-4
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
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VII. DISTRIBUTION.................................................... VII-1
7.1 General.................................................... VII-1
7.2 Death...................................................... VII-1
7.3 Beneficiary Designation.................................... VII-1
7.4 Disability................................................. VII-3
7.5 Termination of Employment.................................. VII-3
7.6 Valuation for Distribution................................. VII-4
7.7 Timing of Distribution..................................... VII-4
7.8 Mode of Distribution....................................... VII-5
7.9 Withdrawals................................................ VII-6
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
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-3
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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-2
(c) "Key Employee"........................................ XI-2
(d) "Key Employee Ratio".................................. XI-3
(e) "Non-Key Employee".................................... XI-5
(f) "Super Top Heavy Plan"................................ XI-5
(g) "Top Heavy Plan"...................................... XI-5
11.3 Minimum Contributions for Non-Key
Employees............................................. XI-5
11.4 Social Security....................................... XI-7
11.5 Adjustment to Maximum Allocation
Limitation............................................ XI-7
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
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WHEREAS, PP&L, Inc. ("PP&L") adopted the PP&L Employee Stock Ownership
Plan, effective January 1, 1975, for certain of its employees; and
WHEREAS, PP&Ldesires to amend and restate the PP&L Employee Stock
Ownership Plan;
NOW, THEREFORE, effective January 1, 1998, except as may be provided to
the contrary herein, the PP&L 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 (a) to provide for a portion of the present
and future capital needs of PP&L (b) to provide Employees some ownership of
stock of PP&L Resources, Inc., substantially in proportion to their relative
incomes, without requiring any reduction in pay or other employee benefits, or
the surrender of any other rights on the part of Employees, and (c) to invest
primarily in the stock of PP&L Resources, Inc.
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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 PP&L 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 (a) such
subsidiaries of PP&L (or companies under common control with PP&L) which would
qualify as includible corporations within the meaning of section 1563(a) of the
Code; (b) such trades or businesses under common control with PP&L, as
determined under section 414(c) of the Code; and (c) such members of an
affiliated service group, as determined under section 414(m) of the Code, of
which PP&L is a member. "50% AFFILIATED COMPANY" shall mean an Affiliated
Company, but with the phrase "more than 50%" substituted for the phrase "at
least 80%" of section 1563(a) 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
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such Eligible Employees for the Plan Year.
2.5 "BOARD OF DIRECTORS" shall mean the Board of Directors of PP&L or the
Executive Committee of the Board of Directors with respect to any powers which
have been assigned thereto by the Board of Directors.
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 mean the annual compensation received by an Employee
from PP&Las reported on Internal Revenue Service Form W-2 or a successor form
plus the Employee's elective deferrals under the Employee Savings Plan or
Deferred Savings Plan; provided, however, that Compensation shall not include
fringe benefits not normally included in compensation, such as tuition refunds,
moving expenses, etc. and shall not, for purposes of allocation under Section
5.2(a), include any amount in excess of (i) for the 1975 and 1976 Plan Years,
$16,000 and (ii) commencing with the 1977 Plan Year, the median annual
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. For an Employee
classified as a Managers Compensation Plan employee, Compensation shall also
include the full amount of any single-sum award paid to the Participant from the
fund credited annually with a percentage of annualized base pay salaries in
accordance with the Managers Compensation Plan.
2.8 "CONTRIBUTION PERCENTAGE" shall mean the ratio of (a) the sum of an
Eligible
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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 contributions for the year under
any other qualified retirement plan maintained by PP&L 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 PP&L 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 PP&L 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 PP&L Deferred Savings Plan for
Managers Compensation Plan Employees.
2.11 "DIVIDEND-BASED CONTRIBUTION" shall mean the contribution made by PP&L
or Resources in accordance with Section 4.4.
2.12 "EFFECTIVE DATE" shall mean January 1, 1998, the effective date of this
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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, effective November 6, 1997, any person
classified by PP&L as an employee of PP&L, including officers, shareholders, or
directors who are employees, but excluding:
(a) persons covered by a collective bargaining agreement unless such
agreement specifically provides for participation under the Retirement Plan;
(b) persons classified by PP&Las independent contractors, regardless of
whether they are subsequently determined to be employees for employment tax or
any other purpose;
(c) persons classified by PP&L as leased employees, whether or not as
described in section 414(n) of the Code;
(d) persons classified by PP&L as specific professional employees,
cooperative associates, or college interns, as those terms are defined under
PP&L policy.
2.15 "EMPLOYEE BENEFIT PLAN BOARD" shall mean the Board described in Article
VIII.
2.16 "EMPLOYEE SAVINGS PLAN" shall mean 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,
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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 PP&L or
an Affiliated Company in the immediately preceding Plan Year, and
(2) if so elected by PP&L, was among the top 20% of Employees of
PP&Land Affiliated Companies ranked by Compensation (excluding Employees
described in section 414(q)(5) of the Code to the extent (A) permitted under the
Code and regulations thereunder and (B) elected by the Employee Benefit Plan
Board, for purposes of identifying the number of Employees in the top 20%).
For purposes of this Section 2.20 "compensation" shall have the meaning set
forth in section 415(c)(3) of the Code, but including amounts that would be
excluded from an Employee's gross income under a plan described in section 125,
401(k) or 403(b) of the Code.
2.20 "HOUR OF SERVICE" shall mean an hour for which:
(a) an employee is directly or indirectly paid or entitled to payment by
PP&L 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
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(c) an employee is directly or indirectly paid or entitled to payment by
PP&L 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 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 PP&L.
2.22 "MATCHING CONTRIBUTIONS" shall mean the contributions made by
Participants in accordance with Section 4.2.
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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 "PAYSOP CONTRIBUTIONS" shall mean the contributions made by PP&L in
accordance with Section 4.3.
2.27 "PLAN" shall mean 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.
2.28 "PLAN YEAR" shall mean the fiscal year of PP&L, which shall commence
each January 1 and end on the next following December 31.
2.29 "PP&L" shall mean PP&L, Inc. and its successors.
2.30 "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 PP&L with respect to such service.
2.31 "RESOURCES" shall mean PP&L Resources, Inc. and its successors.
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2.32 "RETIREMENT PLAN" shall mean the PP&L Retirement Plan.
2.33 "RETURNING VETERAN" means a former Employee who on or after December 12,
1994, returns from Qualified Military Service to employment by PP&L within the
period of time during which his reemployment rights are protected by law.
2.34 "SPOUSE" shall mean the person to whom a Participant is married on any
date of reference.
2.35 "STOCK" shall mean the common stock of Resources.
2.36 "TOTAL DISABILITY" shall mean a disability of a nature which renders a
Participant eligible to participate in PP&L's Long Term Disability Plan.
2.37 "TRASOP CONTRIBUTIONS" shall mean the contributions made by PP&L in
accordance with Sections 4.1(a) and 4.1(b).
2.38 "TRUST" or "TRUST AGREEMENT" shall mean the Agreement and Declaration
of Trust, if any, executed under this Plan.
2.39 "TRUSTEE" shall mean the corporate Trustee or one or more individuals
collectively appointed and acting under the Trust Agreement, if any.
2.40 "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.
2.41 "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 PP&L 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 PP&L 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, PP&L 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, PP&L 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 PP&L'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 PP&L's federal
corporation income tax return for the Plan Year to which such Additional
Investment Credit is carried over.
(d) If PP&L is subsequently determined to be entitled to an Additional
Investment Credit for any Plan Year that is larger than that claimed, PP&L shall
contribute, with respect to such Plan Year, an amount equal to the increase in
the
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Additional Investment Credit within 30 days of the date such determination
becomes final.
(e) If PP&L 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, PP&L 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
PP&L'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 PP&L.
(g) Notwithstanding the foregoing, PP&L 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
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to be matched by TRASOP Contributions made by PP&L under Section 4.1(b).
(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 PP&L 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
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following such Plan Year, is greater than the aggregate total amount of PP&L's
TRASOP Contributions under Section 4.1(b) with respect to such Plan Year, each
Participant's proportionate 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, PP&L
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
PP&L'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, PP&L or
Resources may contribute to the Plan an amount determined at the sole discretion
of PP&L or Resources 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 PP&L are expressly conditioned
upon their deductibility for federal income tax purposes.
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4.5 INVESTMENT IN STOCK. All TRASOP, PAYSOP, Dividend-based, and 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 Resources 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 PP&L 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:
IV-5
(1) One hundred twenty-five percent (125%) multiplied by the greater of
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 PP&L 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
IV-6
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).
(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 PP&L 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
IV-7
between a Highly Compensated Eligible Employee's Contribution Percentage and the
Highly Compensated Eligible Employee's adjusted maximum contribution Percentage,
with 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 PP&L 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
V-1
of the second Plan Year following the Plan Year with respect to which such
Contributions were made. The 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
V-2
(2) 25% of the Dividend-based Contribution shall be allocated 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.
(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 PP&L or Resources.
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
V-3
with respect to a Plan Year may be allocated to the group of Employees
consisting of Highly Compensated Eligible Employees.
(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 PP&L or Resources 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 PP&L 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
V-4
employee contributions under the Deferred Savings Plan, (3) elective deferrals
under the Employee Savings Plan, (4) elective deferrals under the Deferred
Savings Plan, (5) 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
V-5
year.
(i) Amounts attributable to excess TRASOP, PAYSOP, or Dividend-based
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 PP&L 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
V-6
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 PP&L or any 50% Affiliated Company for
all limitation years, and the denominator of which is the sum of the lesser of
the following amounts, determined for each of such Limitation Years and for each
prior limitation year of service with PP&L 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
V-7
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) 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).
V-8
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 PP&L 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
VII-1
consent is not required under such other circumstances as are prescribed under
governmental regulations.
(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 PP&L and all Affiliated Companies and is on inactive status on
account of such
VII-2
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 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 PP&L 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
VII-3
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.
(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 PP&L 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 PP&L 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
VII-4
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 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
VII-5
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 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 the Effective Date 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 the Effective Date.
(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
VII-6
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.
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
VII-7
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.
(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 and shall serve at the pleasure of the Board of Directors.
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
VIII-1
Employee Benefit Plan Board 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. 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:
(a) 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
PP&L;
(b) to make such amendments as provided for in Article X;
(c) to establish a claims procedure 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
forth the specific reasons for such denial. Such claims procedure shall also
provide an opportunity for
VIII-2
full and fair review by the Employee Benefit Plan Board;
(d) to enact uniform and nondiscriminatory rules and regulations to carry out
the provisions of the Plan;
(e) to compute the amount of any distribution payable to a Participant or
other amounts payable under the Plan and authorize disbursement from the Fund;
(f) to resolve questions or disputes relating to eligibility for
distributions or the amount of distributions under the Plan;
(g) to interpret the provisions of the Plan;
(h) 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;
(i) to evaluate administrative procedures; and
(j) 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.
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 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 PP&L and Resources shall be
entitled to rely upon all valuations, certificates and reports made by the
Trustee or by
VIII-3
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 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 PP&L against expenses (other than amounts paid
in settlement to which PP&L 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 PP&L. 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 PP&L or
Resources, if he serves in such other capacity as well.
VIII-4
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 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-5
ARTICLE IX
THE FUND
--------
9.1 DESIGNATION OF TRUSTEE. PP&L, by appropriate resolution of its Board
of Directors, shall name and designate a Trustee and enter into a Trust
Agreement with such Trustee. PP&L 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 the Participating Companies.
IX-1
ARTICLE X
AMENDMENT OR TERMINATION OF THE PLAN
------------------------------------
10.1 AMENDMENT. The Plan may be amended or terminated at any time by or
pursuant to action of the board of directors of Resources. In addition, the
EBPB may make such amendments to the Plan as it deems necessary or desirable
except those amendments which substantially increase the cost of the Plan to
PP&L or significantly alter the benefit design or eligibility requirements of
the Plan. 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 PP&L 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 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 Resources. In the event of a
termination, partial termination, or a complete discontinuance of contributions
or in the event PP&L is
X-1
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 PP&L. 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 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 PP&L or Resources.
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
X-2
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 PP&L
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 PP&L
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 PP&L
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 PP&L having annual compensation, as defined in
section 414(q)(7) of the Code, from PP&L 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 PP&L 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 PP&L or any Affiliated Company, provided that such interest exceeds
one-half of one percent (.5%) of the total share ownership of PP&L or Affiliated
Company;
(3) a five percent (5%) owner of PP&L; or
(4) a one percent (1%) owner of PP&L who has annual compensation, as
defined in section 414(q)(7) of the Code, from PP&L 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
XI-2
or 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 PP&L 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
XI-3
during the period of five Plans Years ending on the Determination Date.
(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 PP&L 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 PP&L 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 PP&L 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 PP&L 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
XI-4
ninety percent (90%), determined in accordance with Section 416 of the Code.
(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 PP&L 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
XI-5
defined contribution plans required to be included in an Aggregation Group shall
be treated as one plan for the 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 PP&L, PP&L 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
XI-6
benefit plan and has no employer contributions, forfeitures, or voluntary
contributions allocated in his 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 PP&L 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 PP&L
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 PP&L nor Resources 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
XII-1
subject to 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
XII-2
discharge to the extent thereof of any and all liability of PP&L, Resources, 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 SHARES. 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 (such
proportionate 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 (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 shares at any stockholders' meeting of
PP&L. PP&L shall use its best efforts to timely distribute or cause to be
distributed to each Participant (or beneficiary) the information distributed to
stockholders of PP&L in connection with any such stockholders' meeting, together
with a form requesting confidential instructions to the Trustee on how such
shares 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 (including fractional shares).
XII-3
The instructions received by the Trustee from individual Participants (or
beneficiaries) shall be held by the Trustee in strict confidence and shall not
be divulged to any person, including employees, officers and directors of PP&L
or any affiliate; provided, however, that, to the extent necessary for the
operation of the Plan, such instructions may be relayed by the Trustee to a
recordkeeper, auditor or other person providing services to the Plan if such
person (i) is not PP&L, an affiliate or any employee, officer or director
thereof, and (ii) agrees not to divulge such directions to any other person,
including employees, officers and directors of PP&L and its affiliates. An
individual's proportionate number of shares held in the trust shall be equal to
the product of multiplying the total number of shares by a fraction, the
numerator of which shall be the respective number of shares 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 such shares 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 (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 shares. PP&L 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 PP&L in connection
with any such tender or exchange offer. Upon timely receipt of such
instructions, the Trustee shall respond as
XII-4
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 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. The instructions received by
the Trustee from individual Participants (or beneficiaries) shall be held by the
Trustee in strict confidence and shall not be divulged or released to any
person, including employees, officers and directors of PP&L or an Affiliated
Company; provided, however, that, to the extent necessary for the operation of
the Plan, such instructions may be relayed by the Trustee to a recordkeeper,
auditor or other person providing services to the Plan if such person (i) is not
PP&L, an Affiliated Company or any employee, officer or director thereof, and
(ii) agrees not to divulge such instructions to any other person, including
employees, officers and directors of PP&L and Affiliated Companies. An
individual's proportionate number of shares shall be equal to the product of
multiplying the total number of shares 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.
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.
XII-5
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), PP&L or Resources 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 PP&L or
Resources, 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, 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 PP&L to purchase Stock
tendered to PP&L or Resources 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
XII-6
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 the 1934 Act. To the extent any provision of the Plan or
action by the Board of Directors, the board of directors of Resources 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 Resources or Employee Benefit Plan Board.
XII-7
ARTICLE XIII
TREATMENT OF RETURNING VETERANS
-------------------------------
13.1 APPLICABILITY AND EFFECTIVE DATE. The rights of any Returning Veteran
who resumes employment with PP&L 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, PP&L 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 contribution shall not include the earnings that would have
accrued on such amount.
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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 PP&L 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 PP&L; or
(b) if the amount described in (a) above is not reasonably certain, his
average compensation from PP&L during the 12-month period immediately preceding
the Qualified Military Service (or, if shorter, the period of employment
immediately preceding the Qualified Military Service). Such amount shall be
adjusted as necessary to reflect the length of the Participant's Qualified
Military Service.
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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 ____________, 1998.
PP&L, INC.
By ___________
John M. Chappelear
Vice President
Investments & Pension
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